With Second Quarter volumes that may fall as much as 25 . Ap mollermaersk, the shipping company, said Second Quarter volumes will take a huge hit. You see a top german judge, one top german judge says the ecb is not the master of the universe and must be held accountable. This is Angela Merkel and Emmanuel Macron agreed to open the france germany border. U. S. Medical advisor Anthony Fauci ways in on the Market Sentiment, warning against reopening too soon. Stanley druckenmiller adds to the downbeat tone, saying the equity risk reward is the worst hes ever seen. Finally, a loss in the First Quarter. Putting aside one third of one billion euros for virus provisions. We speak with the chief Financial Officer between or lot in the next three minutes view minutes on the effect of the coronavirus. Ap mollermaersk, First Quarter revenue beating the estimate. 10 billion. 9. 57 billion in the First Quarter at maersk. The estimate was 9. 36 billion. The ceos who we are going to speak with momentarily. Operating earnings rose by 23 . Quarter is where people are focused after the lockdown said in in the Second Quarter. Volumes may fall by as much as 25 , according to maersk. The company has planned further reductions for the remainder of the year. We will talk to him in just 30 minutes time. Lets get into the u. K. Breaking across the bloomberg terminal, numbers for the First Quarter. The u. K. Economy strength shrank by 5. 8 in march. Thats a month on month figure. The estimate was for a drop of 7. 9 . Thats just for the month of march. If you look at the whole quarter, it shrank by 2 in the First Quarter from the previous quarter. Thats the month on month number. The economy shrunk by 1. 6 in the First Quarter versus a year earlier. A host of figures pointing downwards as you would expect. But number for march, 5. 8 retreat month on month. An estimate for something bigger than that. We went into lockdown on the 23rd of margin u. K. We had Something Like normal conditions. The lockdown tension was building. Life was not that normal. Overnight numbers from the brc, the worst april since records began. Shows a drop in march of 53 in terms of spending. The clues were all there that we were going to have something pretty devastating for march and a lot more so for able. Shrinking 5. 8 y in the month of march. Better than estimated but it is still a sizable contraction. Lets get into the conversation about these markets. We are joined by our emerging markets strategist for bloomberg, simon flynn. Economy, people are watching these figures for march and for the First Quarter. Thats all very well but we know that the merce worst is to come. Simon you are absolutely right. We had awful pmis in april. Its reasonable to expect that the q2 gdp contracts by double digits. Significantly worse than these q number q1 numbers. Route, we have very tough looking brexit negotiations in the second half of the year. Its difficult to see anything other than a really jacket, jagged, sawtooth recovery for britain. Matt what do you think about the prospect of more tariffs . This is an issue with britain and the eu. Maybe an even bigger issue with the u. S. China relationship and the global economy. Simon yes, definitely. Certainly u. S. China is most important for potential tariffs. I personally put the risk of before thearound 30 president ial election. Of course, tariffs make almost no economic sense for either side. There is a political imperative that donald trump has to Pay Attention to. If hes concerned about his poll perceiving to be tough on china, theres a risk. Heading into the november elections. Focus onres a real how long these lockdowns last. The global risk story, really interesting to see. James bullard talking yesterday about how he sees lockdown in the u. S. Lasting more than 120 days. That risk is something that looks more like a depression versus a recession. This is the kind of difficult decisionmaking that is ahead for the u. S. It is warned that lifting lockdown measures to early would be disastrous. I guess that markets are still hooked to this kind of detail around the u. S. Lockdown. Simon absolutely. That was the major region why markets reason why markets had such a tough overnight session. This morning by Anthony Fauci that we could see a significant increase in infections if we exit lockdown times prematurely. That will be my major focus. To some degree, for developed markets, it is better to make a down payment in terms of lockdown extended rather than reopening prematurely, having second waves of infection, and then increasing shutdowns. Matt thanks very much for joining us. Bloomberg emerging markets strategist simon flynn talking to us about some of the most important issues of the day. Setting up for trade. That fed story is pretty amazing. Large has come out strong on the lockdown. To its drawing on the need ease it up. There we go. We are going to continue covering this market for you. A lot going on today as the equity route rolls around the world. This is bloomberg. This is bloomberg. Matt welcome back. This is the european open. We are 50 minutes away from the cash open. Lets get the bloomberg first word news. Your top stories on the bloomberg terminal today. The European Central bank isnt a master of the universe, thats a quote. To the germanng judge who drafted the opinion on the banks quantitative easing program. He told the german newspaper, the court isnt making a huge demand of the central bank. Its just asking for it to take responsibility for the qe program and explain it to those negatively affected by it. Easing of the uks lockdown begins today with what Prime MinisterBoris Johnson has called baby steps towards reopening the economy. And england, people will begin to spend unlimited Time Outdoors and those who cannot work from home are being encouraged to go to their jobs. Meanwhile, the government has extended its furlough scheme until october. That total cost to reach 84 billion pounds. Twitter says its employees will be able to choose to work from home permanently when the coronavirus outbreak finally receives. The Company Staff is unlikely to reopen its physical offices before september. After that, most can work from wherever they want. Put employees around 5000 people in 35 offices around the world. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna . Anna lets get the latest on the disease stateside. Has warned against reopening the economy in the u. S. Too soon, telling a senate panel that communities doing so risk new coronavirus outbreaks. There is a real risk that you will trigger an outbreak you might not be able to control. Back. T, it will set you not only leading to some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery. It would turn the clock back rather than going forward. Anna joining us now from new york, annmarie hordern. Great to have you on the program. Worst welling on what Anthony Fauci had to say. It was some of his commentary that spooked the markets a little bit. It took the edge off of some strength and led to selling. A little bit of risk reassessment. What did he have to say to the Senate Committee . Annmarie it was a different tone than what we saw 24 hours before that when President Trump claimed, we have prevailed. These are his top health at sports experts. They are warning of possible new outbreaks. It weighed on the markets. Communities look to ignore the federal guidelines for reopening and are in danger of new outbreaks. Thatys theres a real risk you could trigger an outbreak that you would not be able to control. There was a tone of caution from dr. Anthony fauci. Our data set showed last week, 20 states are working on lifting restrictions that dont meet those white house guidelines hes talking about. They are moving forward anyways. Thats what hes cautioning about. We heard from robert redfield. He said we are not out of the woods yet. A different tone than what we heard from the administration. This was in front of a Senate Committee. You might democrats and republicans. There was a moment getting a lot of play between fauci and ron paul of kentucky. It got testy. Tall was paul was concerned about schoolchildren not going back to school. Fauci said, we have to be careful and not think that children are completely immune. Ron paul said, fauci should not be the endall beall on this issue. Fauci responded to that specifically. He said hes just giving his best scientific evidence. Matt thanks very much. Issue thatn the looks to have set equities on a downturn, starting in the u. S. We are seeing it come around asia and european futures. Coming up, commerzbank took a 479 million euro hit to deal with the fallout from the coronavirus crisis. We will find out more in our upcoming interview with the chief Financial Officer of commerzbank, bettina orloff. This is bloomberg. Welcome back to Bloomberg Markets. This is the european open. We are just about 40 minutes away from the start of cash equity trading. It will be a down day. Futures down about 1 acrosstheboard on European Equity indexes. In frankfurt, commerzbank took a 479 million euro hit to deal with the fallout from the coronavirus crisis. Joining peers in marking down assets and boosting reserves to deal with bad month. The frank for based bank said more than half of its 326 Million Euros in credit provisions were directly related to the outbreak. We are joined now by the cfo out of frankfurt. Thanks so much for joining us. Let me ask you about the other part of this hit. In the 295 Million Euros. Alue of customer derivatives explain what that means. Dr. Orlopp its twofold. Widened on the customer derivatives. Thats one side of the story. The other side is that we had crosscountry topics on the treasury side. Matt investors are always trying to gauge what is the picture now, what is it like in this quarter. Surely you will take bigger loanloss provisions again in the Current Quarter. Are we likely to see another big number in the reduction of customer derivatives . Mean, we are pretty confident that we will see a recovery. We have already seen that in the past weeks. That is one part of the story. It is attributed to the coronavirus crisis. Approximately 11. 4 trillion euros until yearend. Side of on the one lockdown, which is important. Matt what are you expecting in terms of loans . Have somewhat of a ushaped recovery, there are bound to be a lot of bankruptcies or delinquencies at the very least. What is your expectation for this year due to the pandemic . Dr. Orlopp i mean, we looked at our portfolio. We have a well diversified portfolio. We will see hits. We should not forget that we have the benefit to be in germany. We have the most comprehensive Government Program possible. We will see hits, specifically the ones who had troubled Business Models beforehand, also increasing increasingly having problems. That is why we forecast something around 11. 4 billion. This is more than we predicted at the beginning of the year. It is quite an increase in comparison to our original guidance. Matt absolutely. You already planned cost cuts. You have a plan in operation right now. Last year, you announced you would cut 20 of the branch network. I wonder what you your thinking is currently. More people, even germans, are switching from cash to digitalization. A lot of people are doing their banking from home or remotely rather than going into branches. Do you see that plan being accelerated to reduce your widespread branches in germany . Dr. Orlopp we absolutely will. We are seeing a change of Customer Behavior at the moment. High in ourltime mobile banking up. 50 above the 2019 average. Behavior is changing. We are analyzing the situation. Also the impact on our Business Model. We will adjust to it. Customersent that will stick to this behavior even if the crisis and. We will take that into account. Matt you are planning to unveil new cost cuts at the end of the summer. Youve hired mackenzie to review your Business Model as well. Has that changed during this crisis . About a changeg to the strategy at the end of august, beginning of september still . Dr. Orlopp we announced it already in february when we talked about our 2019. We are looking into more costs again. We will definitely increase our profitability target. Corona has added some new life on it. We will incorporate that. We will update you for the summer. Tot have you been able reduce the stress on your staff due to the Government Programs that we have seen . We heard from Deutsche Bank today that they are going to reduce their headcount now as the worst of the pandemic is past. Is that true at commerzbank as well . All, imp first of really proud of our staff. Working0 of our staff remotely. Operations were fully stable. We still have lots of customer respect toth corporate clients. Our customers will remember that after the crisis is over. We are having our strategic plans. We launched a Cost Reduction program in september. We have a plan for that. We just sent out the letter for which we have just started. Eligibled out to 2000 employees and colleagues. We expect the feedback on that in the summer. Onwill start negotiations further headcount reduction in september this year. Matt let me ask you about your one ratio. Youve said that you expect it to be at least 12. 5 by year end. That is pretty punchy. How do you come to that . Dr. Orlopp first of all, our original guidance was 12. 75 . Tolowered that down to 12. 5 take into account the relief we got from ecb with respect to our buffer and the guidance they gave us. They have a pretty comfortable situation. 13. 2 capital ratio. That gives us a lot of leeway to stand by the side of our clients and support them in whatever they need to do over the next months. Matt thanks so much for your time. Really appreciate it today. The cfo of commerzbank. We wish you well. Up next, shipping slowdown. Mollermaersk these volumes falling as much as 25 in the Second Quarter. We speak to the ceo, next. This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Matt welcome back to Bloomberg Markets. We are 30 minutes away from the start of cash equity trading. Theave 1 or more losses on major indices in terms of futures here in europe. Of course, we had a big loss in the u. S. Yesterday. The market fell the most it has in at least a week, more than 2 on the s p 500. Markets in some asian equity indexes were down as well. They have since recovered. That is important to point out. We do see gains in the asian equity indexes that are open, and as a result, we see futures not hit quite as hard in europe, still down by 1 . Let me tell you the top stories you should be watching. The European ExecutiveCommission Vice president will ecs travel and tourism roadmap. German chancellor Angela Merkel will give an update on the coronavirus pandemic can answer lawmakers questions. Topics are likely to include plans for relaxing the lockdown. Also, corporate rescues, including that of Deutsche Lufthansa and automakers subsidies, as they are taking a big hit. In the u. K. , Boris Johnson will pmqs, his first since changing the lockdown rules. Later, fed chairman Jerome Powell discuss Economic Issues via webinar, hosted by the Peterson Institute for national economics. Finally, an address for the european are limits on the parliament on the blocs recovery plan. Speaking of automakers, makinggens has resumed volkswagens luxury arm lamborghini has resumed making cars again. Lamborghinis ceo spoke with bloomberg about the demand for luxury cars as more countries are reopening their economies. I thick there is one thing we need to consider. As you are saying, we are 95 exports. China is growing rapidly. One important factor, we did not receive any customized orders. I can say for the majority of our customers that there is not a problem of liquidity. The environment for purchasing luxury goods like a car. If everything is closed, it is hard to buy. In south korea, the demand is soft. Week where i would say again. Pen [indiscernible] i can believe that the segment that will be good after the first month or week is the [indiscernible] we need to understand how we can deflect in order to foresee bigger demand next year. Good, but its very is important now that the markets react the right way. We launched this week a [indiscernible] we had a great success. We hope it is a reality. Stefano come up when do you anticipate italy will be out of recession stefano, when you anticipate italy will be out of recession and numbers go up again . There is no crystal ball here. We can see different numbers in different situations. The gdp is going 10 . Believe the first month will , and i hopeicult the region can relaunch all the segments [indiscernible] but as an italian, we hope normality will be back as soon as possible. Arbery going to see a plugin see a are we going to plugin hybrid . We are going to keep our portfolio full. We are in a great moment. We were very successful last year. The first month of this year was huge. [indiscernible] in the short term for sure. Interesting conversation. Lets move on to earnings reports we had this morning. Sees fallout driving down Moller Maersk sees volume down in the quarter. Joining us now is the ceo of skou. R maersk, soren can i ask you about the 25 number you put out today . Give me a sense of the visibility you have at the moment. What are you basing that kind of assessment on . Soren we know the First Quarter, our volumes were down 3. 5 . We are halfway into the Second Quarter now, and we have had volume consistent with this 20 to 25 drop in volumes. I presume it will be the worst courtroom this year, given worst quarter this year, given it was after china was closed down for several weeks. Now, of course, we have a demand slump in the west. That is what is driving the poor outlook for volumes. Matt now, of course, we have a d slump in the what kind of recovy trajectory are you expecting . Soren i think that question is probably not a Business Leader in the world that would like to know the exact answer to that. But we are, i think, expecting some sort of ushaped recovery. Right now, we believe we are at we willom and probably be here for a while, but in the Third Quarter, the Fourth Quarter, we should start to see some recovery. I think it is also important for me to say that we have had a First Quarter where we also saw a decline in volumes, but our earnings were up 23 yearoveryear, so we are managing the situation by taking cost out and adjusting our net worth and focusing on cash flow. So you focus on the selfhelp measures. Pastor of global trade look like with the pandemic . You talked about the volume reduction, but do you see goods moving to different places . Have we learned anything from this data, from china, for example, the fact that they are ahead of everybody else . Soren our longterm expectation is we will get back to seeing global trade more in line with global gdp. Obviously there are lots of discussions going on now as to how to design the supply chains not only for cost, but also for redundancy and resilience. Of ourre you see many customers moving away from single sourcing and the like. And for certain product categories, you might also be that such as personal protection equipment, we might actually see more regional supply chains. But we doubt there will be a wholesale shift to local supply chains, because the problems we have had in the supply chain during the pandemic has really not been related to distance. What kind of bankruptcies have you seen, or what kind of bankruptcies do you expect . Right now, i think one of the big worries of Financial Markets that you start to get a cascade, maybe smaller players that infect mediumsized players and then larger players. If you mean on the , then certainly we are not in a situation where every single carrier, they have a strong balance sheet, rather than the opposite. Who knows what will happen. Aerskllow as far as m is concerned, we have come into the situation with a strong balance sheet. We have more than 9 billion of liquidity right now. On the back of a good First Quarter, we feel we are very well placed to weather this storm. How variousbout carriers are positioned differently going into this, soren, do you see this as an opportunity to do some deals, to do some m a if others are more precariously positioned . Soren i dont think so for mollermaersk. We had an acquisition at the end of 2017. We have almost 20 Global Market share. We believe we have the size and scale on the carrier side that we need to be competitive. Our focus as far as acquisitions will be entirely on the land side. Also,de logistics and possibly, container ports, and we will be looking for those opportunities. Matt i was thinking more of customers. How many customers do you see that are not just delaying deliveries, but simply wont be there anymore . Is that a concern . Soren absolutely. All container carriers, including maersk, are quite heavily exposed to retail customers. We have started to see retail customers, some prominent names in the u. S. Filing for chapter 11 and in some cases bankruptcy. That is, of course, a concern. I have to say that on an individual level, there is not one single customer that is very large, so therefore the exposure to the individual account is not much for us. Of course, if you have whole industries falling, than there will be something we can feel as well. You mentioned some of the selfhelp measures you can take around the balance sheet. Decisions the other that need to be made around headcount . Is that something you are considering acting on . Soren we have so far focused on the, if you will, it will be easier, things like hiring freeze, furloughing people, and the like. We believe if we can get through at year through this least for now with those types of measures, as long as we continue to believe in a ushaped recovery, we are going to need people, once we start to get through the recovery. Soren, thanks very much for joining us. Soren skou, ceo of maersk, talking to us about business through the crisis. Up next, cuts are back on the cards over at Deutsche Bank, restarting layoffs after pausing its costcutting program for the peak of the coronavirus. We will talk about bankers jobs, next. Matt welcome back. We are 13 minutes away from the start of cash trading in europe and the u. K. , and we are seeing futures down even after asian markets recovered well overnight. Deutsche bank is resuming job on holder putting them at the height of the coronavirus pandemic in march. Lender isment at the also renouncing a months pay. Christian sewing is driving to meet its costcutting targets, which involve a reduction in headcount. The bank also says consolidation in the European Bank it banking market will and must happen. Joining us is our german banks reporter. That was quick. We just got into a lockdown. Now we are talking about easing, and all of a sudden they are going to resume firing bankers. Quick reversal of that decision. It did not come unexpected as ising has said how bent he tug. Erachieving his cost it is his overriding goal. If he things he must fire people to achieve that goal, thats what he is going to do. Steven. It seems banks are taking provisions against coronavirus losses. The viruson worth of hit has provisions jump. Think these banks have a lot to go on, or is it that sort of high level estimates at the moment that we are seeing from these banks . Steven it is certainly the latter. The bank itself says it faces unknown certainty and cant give a reliable outlook. It has also detailed the assumptions it is making an has said it is suspecting the lockdown in germany, which is the biggest market by far, to gradually ease and not come back. We have seen a bit of easing in germany. The outlook may be ok. But it is a fairly optimistic one. Assume, for example, a smaller contraction in the euro area than the french and italian banks. Matt i thought it was interesting, his talk of consolidation, and clearly christian sewing does not consider Deutsche Bank a target, but rather a buyer. Teven yes, thats how he wants the bank to be seen. No ceo wants to be hunted and probably prefers to be the hunter. He clearly wants to project an image of strength. He seems to be convinced that that isnt a projection of strength. Of course, the Loan Portfolio will be hit. Like with commerzbank, the same question applies to Deutsche Bank. No one knows how hard the hit will be. Thanks for your time and analysis. Coming up on the program, the Legendary Hedge Fund manager sandra can miller says a vshaped recovery will happen. We heard about a ushaped recovery this morning. We will get further details shortly. This is bloomberg. Locum back. Welcome back. We have eight minutes to start until the European Equity we have eight minutes until the start of the European Equity trading day. Lets get the assessment of one u. S. Hedge fund manager. Stan druckenmiller says the riskreward calculation for equities is the worst he has seen in his career. He spoke in a webcast on tuesday, saying the prospect of a vshaped recovery for the u. S. Is a these comments might seem to contrast with a 30 gain in u. S. Stocks, or maybe he makes these comments because of the 30 gain in stocks since the lows. Dani he says investors who bid up the stocks that much are simply operating on a false premise, that the liquidity injection and the massive stimulus that the u. S. Economy has gotten will help the u. S. Survived the problems it has, miller says that is not the case, that the programs from the fed and congress are not enough to revive growth. He is critical of them, saying they amount to wealth transferors for people who are not going into work, and that they are supporting zombie companies. Issays the treasury borrowing to crowd out the private market, and he says that on the way is a slew of bankruptcies. We are certainly seeing more bankruptcies than typical. He has been critical of the trump administration, saying they will become the poster child of bad policy decisions on a riskreward basis. What stocks are you watching today . What should we keep an eye on today . David dani the earnings season continues to roll on. The worlds biggest holiday Packaging Company is cutting jobs. Their goal is to cut costs, encourage more local holidays, hoping that will bring a revive to travel during the summer. A lot of banks to keep an eye on. We had commerzbank reporting. The story continues to be low amro. Rovisions at abn some of that is due to soured loans. Matt, you spoke to the cfo earlier. I thought it was interesting she was saying a ushaped recovery. That seems to be the letter of the day. Also, setting aside more than 300 billion euros for provisions, about half of that going towards soured loans. Matt, anna . Anna danny, thank you very much, rightly pointing out that about their lesser yield. Druckenmiller, fear not. Lets talk about where we are expected to open at the start of the European Equity trading day. Markets down 1. 4 on euro stoxx 50. This is bloomberg. Anna good morning. One minutes ago until the start of the cash equity trading session in europe. Here are your headlines. This asn judge angela u. S. Medical advisor Anthony Fauci ways on Market Sentiment warning against opening too soon. Equity risk reward. Lossrzbank swings to a putting aside a third of a billion euros. This as Deutsche Bank says it will restart its job cut plan. Matt we are seeing futures across europe and in the u. K. That are down right now. Are more than 1 drops. We did have gains in the asian equity indexes, so we saw big drops, 2 in the u. S. , then asian equity indexes keeping their heads above water. European futures are now down. , the ibexs open down in madrid is down more than 1 . The euro stocks index, the benchmark is down 0. 5 as well. We are getting the dax down 1. 4 , worse than futures indicated. The dax dropping, 1. 3 . Down. C nerves to cold of the u. S. Market. The s p 500 was down more than 2 . Joining us now is sarah hewin, managing director chief economist americas europe, Standard Chartered bank. Just investors selling for ther 30 gains lows, or are there concerns we will see because of dr. Faucis speech problems with reopening the u. S. Economy . I think there are some concerns about how quickly some u. S. States are opening. It is clear in some cases states were in lockdown for a relatively short period of time, and reopening while infection rates are rising. For dr. Fauci, that is a concern. It is not all v or nike swoosh profile rather than continuing to see economies in prolonged recession. It is different from the Global Financial crisis where we saw obviously not a deeper decline, but quarter over quarter we saw further declines. This time around, a massive decline expected in the Current Quarter for europe and the u. S. But we think the Third Quarter we will start to see signs of recovery, and that continuing in the Fourth Quarter as well. I am emphasizing we do not expect to see gdp back to where it was at the end of last year, even by the end of this year. Matt one thing i thought was interesting is stanley jerk and miller saying government stimulus programs will not be enough to overcome realworld economic problems. He says the consensus seems to be, do not worry the fed will analysis back, and his shows this case. Some investors are saying the market is underestimating the stimulus we are getting, and druckenmiller is saying it is not enough. Policy action was swift, and that is something to recognize in this crisis. If we get back to the Global Financial crisis, it took a while before Central Banks acted to offset the damage caused, and to try to prevent the ripple affect around the financial Global Markets. Thatwere slow in coming to. This time around Central Banks have acted very swiftly, and in the case of the fed we have seen unlimited bond buying. The European Central bank is committed to such, although there are other constraints to the ecb. I would argue Central Banks have as much as they can be expected to do. There are limits to what policy can achieve in an environment like this, and that is where governments come in. The u. S. Stimulus has been substantial, probably more to come. On the european side it has been a mixture. Germany has done a lot. The u. K. Has done a lot. It has been smart trying to ensure businesses are able to get up and running again once conditions start to normalize. This, it isall of not going to be enough to offset the massive impact of this crisis. It can limit the damage. Anna we will talk more about the u. K. Shortly. Sarah hewin, managing director chief economist americas europe, Standard Chartered bank. Thank you very much for being with us, and staying with us. Coming up, we will talk about the u. K. Slowdown, the economy shrugging by 5. 8 in march. Matt welcome back to Bloomberg Markets european open. We are 10 minutes into the session and looking at drops of 1 to 1. 5 across continental indexes. 1 . Ftse almost down the Bloomberg Business flash, todays topic corporate stories. Commerzbank is taking a 480 million euro hit to deal with the coronavirus fallout. It is marking down assets and boosting reserves to deal with bad loans. Euros of185 million its provisions are directly related to the outbreak. The worlds biggest shipping container line is warning of a 25 slump in volume. Maersk is suspending its outlook, saying the pandemic is having an impact on activity. While the outlook is grim, they managed to deliver growth. With a higher than expected loss with higher provisions, the bank set aside a billion euros to cover the cost of loans going bad. The figure may rise to 2. 5 billion for the full year. Avm amro reported its first net loss in seven years. That is your Bloomberg Business flash. Back tots get conversation around u. K. Growth and the u. K. Economy. Contractions for the month of march, but the worst is yet to come. Sarah hewin, managing director chief economist americas europe, Standard Chartered bank joins us. 5. 8 shrinking in the u. K. Economy in the month of march. What do you expect the bank of england to do from here . We have seen action. Think Interest Rates are on the table in the u. K. . Daily suggesting nothing is being rolled out, even if he is not ruling it in. What are your thoughts . Sarah i think it is sensible for policymakers not to rule out any options at the current juncture given the crisis we are in. In the past the bank of england has bound to be were rates are currently. Negative rates are not ruled out. For the u. K. And the bank of england, we would expect them to prefer to expand qe in terms of easing policy further. That looks possible over the coming months. Moving to negative rates, there computations for what it means, and policymakers have to think about what signal that is sending, what is the problem they are trying to address here. If it is trying to make sure banks lend as much as possible, there are alternative ways of achieving that, rather than saying negative rates. Then they have in mind the thatended consequences banks may intentionally lend less if they are facing costs of negative rates. Matt unintended consequences for the whole economy, i think it is interesting how much the president wants to see this. We have a function on the bloomberg. Trumps all of donald tweets on twitter. As long as tweeted other countries are receiving the benefits of negative rates, the usa should accept the gift, big numbers. What do you think are the benefits of negative rates . Do you think the u. S. Is missing out on this gift the eu has given itself . Sarah yes, the European Central bank has a strong sense of its negative rate policy, against pushback from the Financial Sector and certain governments including germany. The view is that they have managed to avoid deflation, they lendingaged to ensure does stay positive. Up until the beginning of the crisis we were seeing positive rates of lending growth for the corporate sector and the household sector. Down moredoubled recently, lowering the targeted lending, intensifying lending by the tltros at 1 . I think that route in the current sense could be one that gains some traction. Banks, theal unlimitedncludes quantitative easing, and this is where the fed has the advantage over the European Central bank. The ecb commits to unlimited tv, but in reality the political constraint may limit what it can do. The fed does not have the same constraint in the way it achieves along the yield curve. Matt thank you very much for joining us. Sarah hewin, managing director chief economist americas europe, Standard Chartered bank. Now we will talk more about the ecb. It is not the master of the universe, that is what a top german judge said in a german newspaper. Up next, the latest from the continent. This is bloomberg. I think there are two factors to consider. , youasdaq composite index look at the companies on nasdaq, we have the companies that are defining the economy of tomorrow. We have companies from every sector on nasdaq, but when you look at companies doing well, they do tend, whether they are Biotech Companies, we have 94 of all Biotech Companies on nasdaq, as well as technology companies. They are demonstrate in great resilience. The second key factor is the fed. The Federal Reserve in general, if you look at the overall performance of the market, not Just Companies on the nasdaq, but the impact of the virus has been muted by the aggressive action of the fed to support the economy and companies to make sure we have easy access to capital, and we can manage our companies through this crisis. Do you need to bring your people back into the offices . Or do you think people may not want to come back because they are afraid of traveling and are comfortable working at home . It is a great point. We did a survey of every employee on coming back under certain conditions, and based on cities where we operate. We have some employees eager to come back. Some employees want to continue to see how things progress in the cities they operate. We have the luxury of patience, and the ability to work from home effectively. Wantll ask people if they to come back voluntarily, and if they can do it in a safe way, we would like to reopen offices. We will put a lot of protocols in place inside the offices to make sure they are safe while they are there. It will be voluntarily only, because we can work effectively from home. Talk about china. The u. S. China relationship is complicated at times. Are you taking Companies Public on nasdaq that are chinesebased . Listings accepting from china, we always have. Andaq in new york have been active market for companies from china. There are challenges the ftc has acknowledged that they will address to a roundtable. Issues with the ,ay disclosures are provided and from emerging markets including china. The ftc has acknowledged they have an issue to work on, and we are excited to work with them to find ways to improve the chinese experience. Be anlly we continue to activist listing exchange. Of people in the Business Community are lobbying congress to get support to help them. Have you been lobbying congress on behalf of your exchange or your members . We are in a fortunate position where we do not have to lobby on our behalf. Also the rules that govern the exchanges worked well through the crisis, so we have not had to work extensively with regulators. The Options Markets have operated quite well through the crisis. We did work with our companies to make sure they get the support they need. I am a member of the Business Roundtable and we are working hard to make sure the Small Businesses are getting access to capital that they need. We support the government as they think through their programs. I have been impressed with the federal government in terms of the fiscal support they have been giving and how fast they have moved. The fed did extraordinary things early on and they staved off, they tried to make sure they staved off this situation successfully. Nasdaq ceo,as the adena friuedman friedman. The ecb is not master of the universe and should not pretend otherwise. A german judge a draft of the Constitutional Court opinion program. The banks qe it wants to see accountability and an explanation for those hurt by it. What is starting to look as if the European Central bank was Collateral Damage in this fight, it looks like a standout between the national, whether you should follow your national registration, or european institutions should be guided through different criteria. Withve seen this play out other countries over other issues, and it does look like in abouty this is something accountability. Who is responsible . Alsony in this case, but the ecb response. Matt arent we hearing from members of the ecb that they do not want to make a big deal about this and are willing to put together a presentation that should take a few hours and send it to the german court . This is what we have been reporting for a week. Members of the ecb believe they can respond to questions quickly, and there is internal debate about whether they should provide this to a national court. It does not have that responsibility, this is not a court that has that power. Or should it be done through the German Central Bank . If you look at the key european , a statement was put out of the weekend saying it should be clear that the institutions at the eu are held accountable by the European Court of justice. If you try to not do that, we breaking the law. Matt it is an incredible story. Thank you for covering that, maria tadeo, a reporter on the ground in brussels. Coming up, the uks economy shrank 5. 8 in march, how does that affect its investment potential . Anna welcome back to Bloomberg Markets european open. European equities under pressure this morning. We have in terms of where we are on various sectors, we have seen the stoxx 600 moving a little ground as we go through the morning. In the last halfhour to the downside. All of them in negative territory. Bond proxies are dividend payers , haven status sectors do perform the best, but they are in negative territory. Travel and leisure also to the downside. Banks and Industrial Services also to the downside. We have a u. K. Two year bond yield falling as the debate rumbles on about which central bank will or will not go to negative Interest Rate territory. Turning bond yield negative across the european space. Matt lets get the bloomberg first word news, these are todays top stories off the bloomberg terminal. President trump talked to the experts and told congress reopening the u. S. Economy too quickly threatens a new spike in coronavirus infections. Dr. Fauci told the Senate Health committee he is concerned about states relaxing without meeting guidelines on when it might be safe. The Indian Government has announced a 265 billion spending plan for the economy. It is set for its first full year contraction in four decades, and companies have been urging the government to increase support measures. Indias top motorcycle maker is urging the government to reduce taxes on its product to help consumers buy them. The tax is very high, 28 on motorcycles. For the common man, that is very high. We are asking for that to come down. Matt global coronavirus cases have topped 4. 2 million. In the u. S. The pace of new infections slowed to 1. 4 you to success in new york, the worst affected state. Gilead Sciences Says it is licensing remdesivir to five generic drug makers to help meet the anticipated demand. Korea has reported virus cases traced to an outbreak have reached 119. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Anna in the u. K. , the economy shrinking by an unprecedented 5. 8 in the month of march. Restrictions to control the coronavirus weighed on the the economy. Joining us now is laura foll, Portfolio Manager global equity, Henderson Global investors. Great to speak to you this morning. An income tough to be fund Portfolio Manager. Where you going to find income when we see one of the trends cutting back on dividends . Laura you are completely right. It is unprecedented, and we have seen dividend cuts we do not see during the financial crisis, and the speed is different as well. It is not uniform. There are sectors continuing to werecontinuing as they with good dividend increases. And sectors like utilities that are continuing to pay, tobacco, and some retailers. There is some income available,. Ut widespread sectors some insurers, Industrial Companies have cut across the board in some cases. Matt are you worried about the bankruptcies warned about as a possibility for u. S. Businesses . Do you see the possibility of bankruptcy spreading through supply chains like a contagion . Laura i think supply chains are something we need to be aware of. There is visibility on that where it is too hard to call. The difference with the financial crisis, banks have been willing to lend. In some cases to have waivers, so that is different than the financial crisis. Banks went in from a Strong Capital position. That is a difference. Chain, it is at a point of concern, but it is too early whether supply chain problems will pop up, but i expect that in some cases. When we see businesses in the u. K. Try to shore up their inance sheet, some of them capital markets, it is interesting to see the appetite investors have given the uncertainties surrounding the Business Models involved. The Investment Community seems to have an appetite. I completely agree, and we are pleasantly surprised by how much appetite we have seen. , you canaising money do that. In some cases in industries that are difficult, gym companies, bowling alleys where the sites are shut and it is not clear when they can reopen them or under what circumstances they can reopen them. Atyou have to run a gym reduced capacity . There is strong demand. What it is saying is investors are conservatively positioned going into all of this. There is cash on the sidelines ready to be used. Matt i want to call for that. Hart we showed you cannot see this, but i thought it was fascinating. I saw it yesterday, the u. S. Version that dave wilson posted. Shows is in historic slumps, when we see historic slumps in gdp and this is for the u. K. 12 months later always a pretty decent game for the ftse. We can see back in 1974 there was a huge gain a year later after the big drop. To the 1980s after big recessions, there was a jump a year later in ftse shares. During the financial crisis after the huge slump in gdp, we had a spring back in shares 12 months later. Does this trend accents to you . That is whatk drove april, we saw a weak period, and for the last few days we see more conservative positioning. The airlines are traveling less and not doing well. The difference this time around, this is a simultaneous supply and demand shock, the likes of which we have not seen before. The last time this happened to earnings, they bounced back weekly in the following year. The sheer lack of visibility as high, but you are right. Mode whether or not that is too optimistic, i do not know. I think it depends on how the phasing out of the lockdown works and if there is a second wave. It is a difficult one to call. I am not sure how that will work. This is a particularly difficult one to call is there is not an historic precedent. Anna none of us are epidemiologists. We thank you very much, laura foll, Portfolio Manager global equity, Henderson Global investors. Up next, remember the flash crash . It has been 10 years since a trillion dollars of the u. S. Stock market was wiped away. We will talk about that next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 43 minutes into the session, and looking at accelerating losses. The continental indexes down more than 2 . 1. 5 . Se off more than this marks the 10 Year Anniversary of the flash crash which saw a trillion dollars markets in. S. Stock less than half an hour, and made me lose my hair. Rockets recovered but for years afterwards nobody was sure what happened, which is high because he traders highfrequency traders were blamed. There were arrests for market manipulation. How did a single man trading Financial Markets from his bedroom in his parents basement cause such a massive crash. Vaughan, the subject of his is outash crash tomorrow and being turned into a film with dev patel. What we all, tell me know about how this really happened. How much is myth and how much is real . Wanting to give the ending of the book away, the flash crash was a very dramatic mysterious event in 2010, in which the bottom fell out of the market. It was already highly volatile in the middle of the crisis, and suddenly markets around the world started plummeting like a runaway elevator. Byre was an investigation u. S. Authorities, and they settled on various explanations including highfrequency trading. Fast forward five years and the ,bi knocks on a guys door underneath the flight path of heathrow and arrested a man who has achieved mythical status andite his humble location the way he lived his life. He was a huge trader. Of thee years one leading traders on the s p 500, one of the biggest futures market in the world. Think because he was in he was not that trading significant size. That said, the idea he singlehandedly could have had a major effect on markets that day is a matter of dispute. I get into that in the book. Watchingmany people trading in their bedrooms were in their homes, strange times we find ourselves in. Tell me about how he managed to escape jail time. He proved incredibly useful to the authorities. Arrested ine was 2015, and at that point in time he was charged with 22 kernel counts by the u. S. Department of justice. The cumulative prison sentences, 390 years. When they knocked on his door all they knew about him is he up worth 70 million and set optional vehicles and bank accounts, and his interactions with the exchange were aggressive. They did not know what to expect. They knocked on the door and went to his bedroom, a single budget with a stuffed tiger toy in it. What eventually happened, they get to know nav, and they realized how incredibly gifted he is. U. S. Authorities with real knowledge and understanding of the dark arts of the market was rudimentary. , nav felt the markets were being rigged and cheated, and started videoing himself. Camcorder and on him is footage of him breaking the law. That did not help his legal case, but they had hours of footage. They sat down with the fbi and talked about the markets and what other people were doing. It proved incredibly helpful, and off the back of that ist the bottom line is he somewhat of a savant, at least a genius. Now. Der what he is doing is he making bank or wasting time on a call of duty stream . Never wanted nav to tell his family and friends isut the money, what he did he trusted Investment Advisors who promised him they could give him guaranteed returns of 11 per year. Ultimately he gets arrested. Set at 5 million quid. The lawyers cannot get a hold of the money. Even though he made all this money, he was ultimately taken for a ride. That is one of the big elements in the story, this socalled genius mastermind was a victim of ponzi schemers. He is not allowed to trade and he is under house arrest. I spoke to various hedge funders. Ho would hire him in a flash maybe he has a career on wall street after all. Anna thank you so much for bringing us a reminder of 10 years ago, and insight into your book. Of flashan, author crash. The most mysterious market crash in history. It is out tomorrow. Coming up, how will reopenings affect risk assets . That is our mliv question of the day. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Into equity trading, and we are in negative territory. Down on the dax by 1. 75 . Down on the cac by 1. 9 . Around u. K. Growth, the chancellor is saying it is likely the u. K. Faces a significant recession. Down, thiss gone negative picture . It was little better than the jury forecasts. Laura we saw firstquarter growth coming in with 2 contraction. A 2. 6 decline. The pound shrugged this off, because it was priced in already. What is facing markets now is how deep the contraction will thatecause it will be q2 the economy is the hardest hit. The bank of england has warned they see contraction by about 14 through the year, but this ofpredicated on the easing lockdowns over the nearterm. That presents the greatest Downside Risk as of now, because every two weeks of social distancing could shave 1. 25 off growth. Outlook,his is a dim and there is a great deal of uncertainty markets are not able to price in yet because they do not know how this will unfold. Matt your question of the day is how will reopenings affect risk assets . On one hand considering what you said, surely markets for the economies sake want to see reopening, but you do not want to see increases in cases of deaths. Are you hearing except volatility to pick up at high levels . As we get clarity on how these lockdowns will unfold, we expect to see market volatility. This is a crucial pivot point for the assumptions that have guided bears and bowls. The market rally we saw has been driven by prorisk collective arrative that it will be relatively quick recession, and we will have a sharp recovery. There is going to be an exceptional stimulus. But crucially at this stage, if we see it extent, that will weigh on Economic Activity further, and markets will have to reprice those assumptions. Bullard is saying the risk of a depression and there is a shelf life of 90 days to 120 days. If we see a second wave of infections come through and restrictions have to be put in place once again, it is likely the optimism we have seen through markets will be tested, and i expect risk assets to come under pressure. Thank you. Laura cooper, bloombergs mliv market strategist. Under pressures this morning. Matt i am headed over to radio now. Viewers can become listeners. Tune in if you are in the city in london on dab digital radio. Up next is bloomberg surveillance. This is bloomberg. Francine the u. K. Economy plunges into recession. Growth thanks 6 in march due to the pandemic. We talk this shadow chancellor shortly. Dr. Fauci ways on sentiment on reopening too soon. A top german judge says the ecb is not master of the universe and must be held accountable as merkel and