Markets. Lets look at what they are telling us in terms of risk out there burden out there. The market is focused on things we will see in the gradual reopening and what that means. Yesterdayarting since , also looking at oil. Is moving to block a Retirement Fund buying chinese stocks. It will give us more of an idea about whats going on between the u. S. And china. Plenty more on your markets. Lets get to bloomberg first word news. , confusion over Prime MinisterBoris Johnsons plan to get people back to work. Londons chamber of commerce is telling businesses not to change their plans. Companies are also asking for guidelines on what protective equipment can bought to buy. U. S. Won the battle to ramp up its Testing Capacity according to President Trump. More than three to thousand daily tests are being conducted. An Conference Also saw exchange with reporters. Areral reserve officials saying rates may go negative. They dont see the tool being used in the u. S. , it says it will start buying corporate debt etfs from today. The program is coming online as part of an emergency coronavirus response. To merkel is trying a key question is who should respond to the judges. The ecb our National Central bank. Local lawmakers could prove us controversial. It will take a support role with the ecb. Ania global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine lets get your conversation across the world. Wuhan set toity of tested and tire population of 11 million people. How are emerging planned to welcome to surveillance. Scenarios,s recovery how patchy is the recovery. You lay out three different scenarios. Good day and great to be talking to you. I think we have now is a situation of very high uncertainty. Its safer to think of different scenarios than just a single point forecast. Scenarios, this one constant. Emerging markets are likely to do relatively better than events in that the recovery is slightly stronger in emerging markets then advanced economies. China is now fact more advanced in terms of its digestion of the Coronavirus Crisis and it is already starting to increase economic activity. Markets,e is emerging particularly asia, taking the lead of the recovery. Its not going to be a fast recovery. One can think of different letters in the alphabet to and the this recovery one closest to what i think will ke shaped recovery. You had a sharp decline but the growth will be gradual, it you have a slope exit. Difference between emerging markets advanced economies is important. Those risk have to do with potential prolongation of the crisis. It infeeling the bulk of europe and the United States. And also a potential relapse which would be very disruptive. Francine what lesson are you learning from the bank and for the economy at large . What you learning in asia that the u. S. Could adopt in reopening the economy or getting people back to work . The i think its important reopening of the economies is based on the health situation. If you try to reopen too fast, it can only lead to a significant collapse and change back to a lockdown. Prudenceperating with and looking at the situation as the economy reopens and then proceeding depending on what happens, you can increase the speed of the exit or withdraw a little bit. I think thats important to be realistic and that data needs to continue to be applied by the experts, by the health professionals. Biggest what is your worry in terms of what kind of recovery will it be . You were talking about how you see it panning out. If we do have a second way of, what does that mean for banks in general but also economies at large . Banks, thenk situation of banks is closely linked to that of the economy. Last,nger the crisis there is a chance of a relapse. For households, for firms, and therefore the more problematic is going to be for them to repay the debts which they already have and which are not trivial. Those are closely linked. One important thing is banks have started this crisis from a position of strength in terms of much higher liquidity and much better Risk Management and this is something as we tend to say makes banks part of the solution rather than part of the problem. But its very important so banks can continue to be close to their clients and support their clients and customers but always from the basis that they can safeguard the financial strength. We want to be careful in terms of decisions i think these measures that are put in place in Central Banks have put in place or extrude nearly andrtant in the Economy Companies having more liquidity and banks being able to have a better situation. Also the banks have buffers and these would allow us to continue supporting the economy but of course we will need things to because the longer the situation last in terms of not having a recovery, the situation is going to be more dire for everyone and they need to be prepared to whether that situation. Lott the moment we focus a on very high unemployment, on the consumer being hit, when will we start worrying about debt, when will we worry about this u. S. China trade war back in the forefront . Time is nott this very helpful to have added to the problems that we already have on the health and economic front. The geopolitical tensions that ofe from an escalation disputes between the United States and china. I think that something that would be very detrimental to both countries in very detrimental to the world given the role that these countries play. Debt, it is a concern but i think that now the biggest concern is to leave the pandemic behind and then i think we will have to do with that deal with that at the right time with the right measures. Debte hand you have the and that already is in issue. In lessdeveloped countries which has been addressed by the world bank and imf and there are a number of actions in place. Be one thats going to of the main legacies of the crisis. Thats already a legacy of it and thats going to be compounded by the covid19 crisis and we will see how we deal with that and that is something which is not going to be easy. Is to find a thing great fight the crisis make sure it ends. Francine thank you so much. , we will bring you that exclusive interview, this is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua operating ls. s get more with jose vina economy. You were in a unique position to talk on supply chain, how they change and how they will change. And then covid19 on top of it. Will countries become more inward again . Jose i think there is going to be a reassessment of Global Supply chains. So far think the perspective has been looking at them from the point of view of efficiency, cost and the justintime approach. I think we will go from a justintime just in case where the resilience of these supply chains are good to be part of the equation and a more diversified view of the Global Supply chain so you dont have to lie on single producers. The second thing which is going to happen is this going to be some reassuring of certain elements of supply chains, particularly in the medical tor, things would have which have to do with National Health security, also some parts of the technology Global Supply thats that is something going to accelerate. A general we are going to see significant shift over time which is going to compound some before the crisis. Efficient, more resilient supply chain to come from this. When you look at the banks overall. A lot of people working from home. Said the charter for working at home has been successful. How do you think that will change the longerterm operation . Weve haderience during this crisis with many us to is going to lead change the way we work in the future and you just mentioned some of these dimensions. If you had asked me three months ago or four months ago whether we could function adequately with 70 of people working from peopler more than 90 of in a Global Business structure in places where we have a lot of control functions for the full group i would have said thats extremely difficult. Fast forward a few months and we have been able to keep all the trains running on time. With 70 of our staff working from home in some countries nearly 100 of the staff working they had extreme a high rates of people working from home like hong kong, taiwan and other locations. This is something which is important. Practicesg to rethink. Another thing we have seen in the crisis outbreak, already a couple of years ago we started introducing more horizontal practices in the organization and that lead to a lot more agile way of working. This has been put to excellent use during this crisis and now we need to make sure that this is something that gives us the theses to keep enshrining agile practices in organizations. When people that work from home, we need to be very secure in terms of our cyber environment, our clients are also working, many of our products which are digital have had its remand is demand during this crisis. We are going to be a lot more digital not only the way we work but in the way we serve our customers. Also theyre also lessons regarding the scales we need in our workforce so accelerating all the processes we have in place of the skills of the future workforce and what we need in terms of recruiting and training the people we have, i think this is likely to be an important consequence going forward. Lots of things, interesting things happening from the point of view for the way organizations are run as a result of this crisis. Francine how concerned are you about exposures that hit the banks in recent months . We have published for the First Quarter and we have tried to be very prudent because i think problems need to be recognized as soon as possible and in the long term, we have taken the First Quarter which had been as much of the permits we took last year to give you an idea of how practical weve been. It has been responding to loans that have gone back. The other half has been taken as a preventive measure regarding what may happen in the future in terms of the economic outlook. Seehe year advances we will seee some of where some of those it very much depends on how the economic in ouron evolves markets. I think you need air on the side on the side ofrr caution and prepare for the worst in a very balanced manner. Francine thank you so much for joining us today. Chairman of standard chartered. Elon musk reopens his california plant despite the rules. Detail on each details on elon musk next. This is bloomberg. Francine this is bloomberg surveillance, im Francine Lacqua. Elon musks daring authorities in california to arrest him. He is restarted production at his car plant which is roughly 20,000 employees in the San Francisco bay area. Health officials ordered remain closed. He tweeted he would be on the Assembly Line with everyone asks and asks he be the only one arrested. What im seeing in terms of oil. A lot of headlines on saudi aramco so we will get to that. The oil giant keeping on track for its dividend. If you look at oil it is actually rising. European stocks swinging from a loss to again. Administration looking to block investment in chinese Retirement Savings that could have wider implications. Coming up, open borders are the key to jump starting growth according to austrias chancellor. More from that interview next. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Here is ritika gupta. Ritika in the u. K. There is confusion over Prime Minister borden johnson Boris Johnsons plan to get people back to work. People are being told not to change their plans until there is more information on how to keep people safe. On whate guidelines technical equipment to buy. Boeing sees a rocky road ahead for u. S. Airlines. It is probably a Major Carrier will go out of business this year. He told in bc the recovery is going to be slow with demand to press. Factory deflation deepened in april with Consumer Price gain slowing. It is a signal of ongoing weakness in the worlds second largest economy. Make itfactory prices hard for companies to generate profits and expand businesses. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in ire than 120 countries, retake a good to. This is bloomberg i am retake a group to. This ifrancine . Francine open borders will be the key to jumpstarting it, according to the chancellor who spoke with matt miller. He also said italy cannot handle its debt load without the u. S. Assistance. Good cooperation on the european level to support countries like italy, france, and spain so that the package of more than 500 billion euros to support these countries and we hope this will be helpful. Matt do you think that will be enough, or will there need to be some sort of shared fiscal union your second help biggest partner. I think this package is good. But we are not in favor of ideas. Ike corona bonds matt even if it costs italy its european membership . How important to you is the membership of other e. U. Countries like italy . There is no debate about the membership of italy and the European Union. We are united in the European Union. There iss good cooperation and i think we will manage this crisis and we will also be able to manage the economic situation. But of course, it will be enormous difficulty, yes. Matt austria, germany, the netherlands all these countries were prepared before the crisis hit, but there are other European Countries like italy and spain which were already in a bad fiscal situation. Prepared to pay in order to keep the European Union together, in order to save those countries that were hit so much harder . Ust well, it is clear for that we want to support them and that we want to show solidarity, and i think it is good that the ministers for finance agreed on this 500 billion euros package to support these countries, and of course on the european level among the heads of state, we are in discussion if more help is needed. Matt do you think it is possible i mean, the austerity that you practice put you in a good position now, but your secondbiggest trading 150 debt toly, has gdp. Is it possible for them to get out of that kind of debt trap . Someill they do it without sort of Debt Forgiveness or shared debt . They would not be able to handle the situation without the European Union and countries like austria. I dont think the idea of shared debt is the right answer. Matt how long do you think mr. Chancellor is going to take like economies for economies like the austrian economy to get back to precrisis levels. Now you earmarked 38 billion euros and you have more measures to come. When do you see things getting back to precrisis levels . Isastian at the moment it difficult to say be held to say because we are quite dependent on austria separate tourism. There are some Industries Like automotive which has also been hit. So it is difficult to say now, very,20 will be there very difficult year. We hope the next year in 2021, there will be a positive development again. But probably it is going to take us a few years. Matt i know that you are already preparing measures like tax cuts, possibly infrastructure investment, reopening borders. What do you think is going to be to most important move revive the economy on the post corona side of the crisis . For sure, the reopening of the borders is most important, because we need the Single Market of the European Unit of the European Union. Important rolen in our country, so for the economy in general, but for tourism in particular, reopening the borders is very important. Francine that was the austrian chancellor, sebastian course, speaking with matt miller. At the nuncios vamp acute us. This riff that seems to not be able to heal in europe. Is this one of the most crucial moments for the euro . It is absolutely a very important problem. Many countries, particularly italy, assumes the problem even before the crisis. But now it will become much worse because of the session, negative impact on the fiscal balances from this crisis. , andse of the bailout because of what is likely to be a very weak recovery. Therefore, we are in a situation in which a number of countries we have seen from the europeans does not address the problem. You addressw would the problem . And if we dont address the problem headon, with that mutualization or some signed of that some sort of corona bonds, or something else, what does that do to europe . After the crisis, the europeans managed to muddle through down the road, i think this is possible because we are talking about debt levels. Italy is going to be at 160 of gdp. Greece, more than 200 of gdp. When we look at the critical evidence, how countries managed in the past with successive debt, either they grew or inflate their way out of it. Which now i think it is impossible given that we are in a recession. Structuring, which was primarily in emerging markets, i dont think this is an easy to and this could need could lead to the euro exit. Which again, is not an option for countries that do not have their own central bank and legally cannot do it. The only options for this problem is a euro bond or a corona bond, which would be large enough in order to make the debt and countries sustainable. Making these is just problem worse. Making it worse how . Does it impact solidarity . Does it give rise to populist movements . Or does it rise to the level of the euro . Thanos after this crisis, many countries will be forced into many years of fiscal austerity based on what they do. This is politically impossible ad even debt will lead to economy. We have seen an increase in the past 10 years weak growth. The scenario is that not only the debt will not be recused it may actually increase future in the future. This is definitely a negative risk for the euro. Not buying into they cannot continue supporting insolvent countries long after this crisis. I think there is not some kind of longterm solution. The longterm outlook for the euro is really negative. Francine thank you. Thanos vamvakidis stays with us. Coming up, profit drops 25 but will pay dividends. We will talk saudi rob saudi aramco shortly. This is bloomberg. Francine this is bloomberg surveillance. Saudi aramco is still on track for shareholders to have 75 billion this year. 25 is despite reporting a drop in firstquarter profit after a price war with russia and of course after the coronavirus and prices crushing. For more, Annmarie Hordern joins us from new york. It is pretty bold sticking to the defendant. Annmarie it is, but we know the dividend is crucial for all weak oil companies, especially for saudi aramco. That is because the kingdoms about government has 97 of a stake in shares in saudi aramco. Yesterday was a testament to the depth of the financial crisis in saudi arabia. From the energies ministry and the finance ministry, cutting another one Million Barrels a day. Reduction is below 70 below 7. 5 Million Barrels a day. Credit suisse talking about bottom line, times are tough globally, but including for saudi arabia. By their calculation, they say by oil prices being low, the government will generate 130 billion in receipts from saudi aramco, a far cry to cover the original government budget of 250 billion. With more than 16 billion for the First Quarter sounds like a lot, it is still 25 lower from this time last year. That has to do with everything facing the oil market. A twin supply shock and demand destruction, and it will weigh on earnings for the rest of the year. Demand disruption, and it will weigh on earnings for the rest of the year. Francine when you look at the price of oil, is it symptomatic of something very ugly in the world economy, that it went negative, or is it more market functioning . Thanos i think the global , the large share of the Global Economy effectively in an induced coma. Before that, we also had the price war between saudi arabia and russia. Time, demand has collapsed. It becomes a huge issue. There was also liquidity in the market for some of it expiring. It was an fx storm. Rising at prices positive levels, but historically it is very low. I think today lower prices reflect the severe global recession. Francine what kind of severe global recession would you see, and what does that mean for dollar . Thanos weeks correct global we expect Global Growth at 3 . That there is a more severe recession and recovery, even as the economies open up, they are not going back to normal anytime soon. Many have been operating well below capacity. Investment, hiring remains repressed, given the high uncertainty. When the Global Economy does this will beect for the u. S. Dollar we believe it will appreciate further in this environment as long as the threat of coronavirus remains in the Global Economy and the Global Economy remains weak. You, thanosank vamvakidis. Coming up, we will discuss the u. S. Economy and what to expect from the worlds most important central bank. That is coming up next, and this is bloomberg. Pres. Trump anybody else . Please come in the back. I ask a question. Pres. Trump next please. You called on me. Pres. Trump i did, you didnt respond, and i am calling on the young lady in the back. Ladies and gentlemen, thank you very much. Appreciate it. Thank you very much. Francine that was President Trump ending a white house News Conference on the coronavirus outbreak. In exchange over china with an Asian American reporter. Federal reserve officials are pushing back on the market that it may go negative. It comes as the Central Bank Says it will start buying corporate debt etfs today. The program is part of a fed emergency coronavirus response. Vamvakidis. Thanos when you look at the fed, how much more can it do . Are we going to see treasuries really going negative, and what would that mean for the u. S. Economy . Think the fed has amountsdone a lot, the are increasing, open ended. In march this was a game changer for the market. Forward, they can keep monitoring markets for blind spots. But liquidity prices have been addressed. I think it would be a bad idea to go with negative rates. Theyve seen countries have not really lead to better economic outcomes or inflation, and it is extremely difficult to get out of the negative rates. And there are many distortions. See a situation in which we can expect the fed to do much more. I think the fed should continue to make sure markets are functioning properly, and there is available credit. I think there is much more on takeiscal authorities to advantage of the cheap liquidity the fed is providing to support the economy. Ncine what does it mean if you look at the u. S. China trade relationship, if this gets worse, if we go back to what we had 12, 18 months ago, what does that mean for the u. S. Economy . Is indeed a huge issue. One would expect in the middle of a Global Crisis border countries to realize trade, and countries that in order to support the Global Economy. Weever, the risk is that move in an opposite direction. Growth, collapsed growth of the crisis we are experiencing, some countries will focus their support on their own economies, and particularly between this and china, there is the blame game of who is responsible for this crisis, and they could lead to trade Production Commercial be exactly which will be exactly the wrong policy in this environment. They are shooting themselves in of a veryn the middle severe recession. Francine what kind of severe recession do you predict, and what does that mean for emerging markets, and therefore emergingmarket currencies . We still have a recession almost everywhere. China at 9. 2 . Now every single economy has growth at 5. 6 . In the euro zone will be worse. Now, most likely the recovery is not going to be a v or a u shape. It is likely to be a very weak. Ecovery in this environment, macroeconomic policies can help, in they are not as effective the economic shock is what is driving the recession. Francine what do you worry about the most in the terms of this recession. It is at the legacy, the debt that will come out of it . Is it the impact on fixed income, the consumer, the sure number of horrific unemployment figures that we are seeing . I think the first question in the next few months is whether countries will be able to gradually open up their economies, and whether the number of sectors will be able to continue operating below full capacity. There is also the risk that rates will decrease, in which when we look at the consensus forecast, they expect strong recovery the second half of the year. To whatthe debt will extent, it will be extreme important. Obviously whether there is some the vaccine would be a game changer, and that is important. Is thet issued i think most important, and how debt ors would increase in the public and private sectors, and getting out of this in an environment of low growth and low inflation is going to be very challenging. Deaf and activity of the Global Economy the definite activity of the Global Economy francine thank you so much. We will have to get thanos back to talk about inflationary and deflationary pressures. Thanos vamvakidis. This is bloomberg. Francine testing times. President trump says the u. S. Has prevailed in the battle to improve coronavirus Testing Capacity. Deaths in the u. S. Top 80,000. Oris johnson waters down his plan for restarting the economy. Boris johnson waters down his plan for restarting the economy. Interviewrom our enter with Sebastian Kurtz shortly. Tom keene is in new york. I am Francine Lacqua in london. Tom, things are creeping up slowly to the green. Saudi aramco said the huge dividend is still being played out, and of course we look at countries such as france and paris reopening their economies slowly. People adapting is how i would put it today. Extraordinary how each nation has a different story. We saw in america, probably in europe overnight, the