Opec offers a bleak estimate of Global Energy demand. Saudi arabia is cutting output to its lowest level since 2002. Shery a quick check of the markets. We are seeing u. S. Futures rebounding and gaining for tens of 1 . U. S. Stocks fell to that threeweek low. It was not just the fed chairs comments. We have u. S. Tensions with china flaring again. Every sector on the s p 500 was in the red and it is now heading its worst week since march 20. Take a look at what oil is doing. We are seeing slight gains above the 25 a barrel level, a gain of 1. 7 . This after it fell in the regular to session regular session. We still have some comments from the iea saying it will take more than a year for crude demand to recover. Lets turn to those comments by jay powell. He was clear when asked if they would be in favor of adopting a negative rate policy. Not only did he reject it unequivocally, he also said he would not even consider it. Kathleen hays is here to tell us why. How did the negative rate question get so big after fed officials said no way over and over . Kathleen it really is something, isnt it . Look at it this way. Openended launched qe, bond purchases. So many programs you can barely keep track of them. And still the economy is looking worse. Saidis what jay powell when he was asked about what he thinks of negative rates. It is not something we are considering. We think we have a good toolkit and that is what we are using. Kathleen what has been driving traders in that direction,obless claims for midmarch 33. 5 million. Take a look at the chart. January 2021 fed futures contract is back below zero. We are below that point where people would be saying, rates could go negative. Able the april contract is still kind of flat. Economist atr, the harvard has been writing a lot saying the Central Banks around the world should take their key rates down to 3 . It is the only way to deal with the debt load that so many are seeing. It would take some companies out of the risk of going into default. Just fed fund futures that think this is something everyone should consider. Nothing has moved powell yet. Also seem towell say he was pushing for more government spending. Why doesnt he think that what has been done is not the final chapter . Kathleen he is just worried that the longer the u. S. Stays at the kind of economy it is in now. Millions of people have lost their jobs. If people could get back to work , maybe you could have more of a lead on the second half, as powell has been forecasting. For now, he is worried about a long and deep recession. Some timey might take to gather momentum. It can turn liquidity problems into solvency problems. Additional fiscal support could be costly but worth it if it helps us avoid longterm damage and leaves us with a stronger recovery. Kathleen this is something that hit people who watch jay powell speak today at peterson institute. Not just the fact that he is rejecting negative rates but this pounding the table, we have done a lot and we will continue to do everything we can. The government has to step up. We know that getting more stimulus is caught in a bit of a political tugofwar between republicans and democrats. Demand for the 30 year bond not quite as good as it was for the three year and 10 year. The 20 year bond is going to be on sale. That is something that is making bond traders nervous. Kathleen hays with a wrap up of what the fed chief said. Lets get you to the big stories of the day. The coronavirus could erase four years of growth from the global economy. And push more than 100 Million People into extreme poverty. Attempts to find a vaccine for covid19 will only be the first step in a long road. The u. K. Is facing deep recession with the government admitting the worst is yet to come. The economy contracted by 6 in march. Readingsng the underlined an already weak economy. Slumpould be the deepest in three centuries. Malaysia surprised economist with an unexpected expansion and the First Quarter. The outlook is less optimistic. Domestic demand, that was still the slowest pace since 2009. The coronavirus has crippled exports from vietnam. Has aimed at Small Business and utilities. The government is making more than 50 million available with more funds in the pipeline. It is part of a 265 million plan that Prime Minister modi announced this week. Cashovernment is funneling to power companies. Australian job numbers today. Next, bucking the latest warnings. Hear why he is being constructive on stocks. David is the latest billionaire to challenge current stock valuations. He says stocks are the most overvalued ever outside of 1999. He joins carl icahn in warning about the stock market, which has rallied 30 from its march low. Lets get another point of view from jay pelosky. Great to have you on the phone. Phone. Do you see more support for equities . Jay it does not tend to go against voices like stan and david. There is a case to be made for risk assets continuing to perform as we go through the second half of the year. I will just lay out five or six. First is the Global Policy support, is unprecedented, and i think ongoing. We call it rolling thunder. Economists economies have already bottomed. The thing about covid19 is the speed and people have trouble understanding that the worst of the Economic News is already behind us. Third, we have zero Interest Rates. Stocks look very attractive as growth vehicles with yield. The s p yielding over 2 . Reopeningsessful across the globe. We have bearish and underweight investors. They are not unique with their bearish views. Most surveys of Investors Show considerable bearishness. Unprecedentedan global science and Technology Community coming together to fight covid19. The old adage, dont bet against the fed, if you are bearish here, you are not only betting against the fed and other global Central Banks, you are betting against the Global Science Community as well. At this point and time, we have the iea saying they do not see a recovery in demand for oil for another year at least. Why would you be buying commodities now . Jay you have to buy things when they are outoffavor. The one asset class that has not bounced at all is commodities. We heard last week that the third shoot dropped when oil went negative. Since then, Energy Stocks have done considerably well and there are opportunities for cyclical ,tocks as the economies recover for cyclical stocks to do well. As Interest Rates rise, we expect a steepening of the yield curve. The back end of the yield curve will make increasing supply, continued signs of economic recovery, potential signs of inflation due to shortages, and supply chain interruptions, and all that leads us to believe , energyngs like metals stocks are particularly attractive during this time. The other part of the commodity sector we like is gold. Well in it plays whatever scenario one wants to design. So far, it has been a pretty clear preference for growth or value. Be taking the opportunity to do some bottom fishing at this point . Jay i think that is an excellent question. We have had an equal opportunity selloff in the u. S. Was not only the tech winners being sold but also the cyclical stocks and the small caps being hit anywhere between four and 6 in two days. What has stuck out, the nonus markets have significantly outperformed and the one thing covid19 has not been able to break, whether you think about politics or economics or society, the one thing it has not broken is the u. S. Tech lead Global Equity outperformance. If you look over the past month, you are starting to see times the countries have been able to reopen successfully are starting to outperform. In the asiapacific region, you have japan, china, south korea, all outperforming. There is a chance that the u. S. , because of its chaotic reopening and i have argued the risks in the u. S. Is the highest of any other major country because the u. S. Has not done the testing and the tracing necessary maybe we will see a change in leadership. This is something we focus on a lot. The potential for this bear market and recession to lead to new equity leadership. Value and cyclical. A day like today actually, in my view, is more like a day to look for opportunities to buy in some of those unloved sectors. U. S. Is the biggest bridge, does it make you tempted to look beyond u. S. Assets . Does that mean the doom and overdone . S jay that is absolutely right. The latin american segment of , asiaerging market space ofthe predominant weight e. M. Equity today. Asia is the first region out. China, in particular, has a lot of policy yet to put to work. I think we will see that after the national congress. Cycleve the tech benefiting south korea and taiwan. We think that will continue. I do think there is opportunity in japan and china, south korea, and taiwan. Those are more that we are active in and we like, particularly japan and china. How big is your China Holding . There are attractive factors to china at the same time, you are seeing more geopolitical tension , taiwan, so many issues at play. True and is also very i am writing our monthly in terms of the u. S. China renewal of tensions, a lot of smoke but no fire. There will be smoke and rhetoric from the u. S. In an election cycle where President Trump needs to deflect attention away from the poor relative performance in the u. S. In dealing with covid19. China has become the bogeyman for the united states. I do not think there will be any fire in terms of critical actions on tariffs or things of that nature. Technically, china is one of the few markets, if you look at mc hi, one of the few markets that technically looks solid. It is above its 200 day moving average. Most of the other nonus markets are still below their 200 day. China has dry powder. China has successfully reopened. It is a beneficiary of low oil prices. People are still underinvested in that particular market. Appreciate your time, jay pelosky. Warns of, the u. S. Hackers working for the Chinese Government to try to steal vaccine research. We have that coming up next. This is bloomberg. U. S. Security agencies are warning that hackers working for the Chinese Government are trying to steal viable research pertaining to coronavirus vaccines from american companies. Emily wilkins joins us now. This is a growing distress this growing distress on both sides continues to play out. Emily we are hearing a lot of things go back and forth. It has not necessarily been founded in fact. See toplevelo officials within the white house blaming china for what we are seeing right now and trying to say that china is at fault for what we are seeing throughout the world. We continue to see the tensions flare up. Emily one of the things we have been seeing we saw Jerome Powell talk little bit today. He was talking about the need for the u. S. Government to continue to keep funding the economy. He emphasized that it was important for the longterm benefit of the nation, even though in the shortterm, we might see a rise in the deaths. We are seeing lots of government bills being brought forward, a lot of them directed at making a statement against chinese policy. What is the latest we are hearing from marco rubio customer emily marco rubio . Bill renames the street with the Chinese Embassy after the whistleblower. That is backed up by several republican senators. Several other bills moving through congress at this point that could be taken up in the next week or so. Emily wilkins. President trump says dr. Anthony faucis views on School Closures are not acceptable with republican split on whether to praise him or define him as an obstacle to reopening. Johns hopkins professor spoke to bloomberg tv earlier about his leadership. 8 is a steadfast expert. I think we have to trust that his path forward and vision for how we can safely reopen the important the most path to follow. We have to be safe and steadfast. This is the time when we need the voice of leadership. Lauren, good morning from london. Where can you find the voice of leadership . That is one of our biggest challenges. Fauci discussion with dr. , we saw that leadership gap. I dont feel like we have a Strong National leadership front that we can go to for support part normally, for support. Normally, you would expect that from the cdc and the cdc has been sidelined. Dr. Fauci is our best bet for taking advice safely. That demonstrated we still have that need. Was Johns Hopkins assistant professor lauren sauer. Lets get you a quick check of the latest business headlines. Amazon says business is returning to normal in the coronavirus era with one and to date deliveries returning. Amazon had restricted as the pandemic spread but says the situation is improving. The virus had closed traditional brickandmortar outlets. Uber has issued new safety guidelines to make drivers and passengers feel more comfortable during the coronavirus pandemic. It requires all people to where face masks as the infection spreads across the world. President trumps refusal to our projection has joined has an antimask movement in the u. S. American carriers punch their lowest since the 20th since 2013, and warnings that the air travel industry will not thrive until 2029. Plenty more to come on daybreak australia. This is bloomberg. U aree watching yo watching daybreak australia. Unprecedented threats from the coronavirus. Monetary and fiscal policy makers must rise to the challenge. Jay powell pushed back at negative rates, but says liquidity problems could turn into solvency issues. He added Additional Support would be costly, but worth it if it avoided longterm economic damage. Global oil is offering an even more bleak assessment of the market this quarter as the pandemic stresses demand. Opec is Cutting Supply requirements by 3 Million Barrels a day, or 15 . Saudi arabia, the uae, and kuwait will cut supplies. Saudi output is expected to be the lowest since 2002. Sentiment among merchants in japan has fallen to a record low on index of feeling among shopping first among shopkeepers fell to 7. 9, the first single digit reading going back to 2000. An early indication of how people are reacting to the spread of the pandemic and the government response. President trump has widened the you worse the u. S. Effort to curb huawei. An emergency order restricted huawei and zte from selling products in the u. S. As beijing battles for 5g supremacy. The administration is pressing allies to extend restrictions. Australias april on employment report is due. Expectations are it will show the largest increase in the number of people out of work on record. Australias largest job marketplace seeing marginal improvement. Zealand managing director joins us. I want to start with the chart for the benefit of our bloombergs the worst looking at the situation our bloomberg viewers looking at the situation in australia. Highest levels of on it limit and a quarter of a century. That could be the good news. Ugly givenly to be the data for april was collected earlier in the month. We know that in situations like that a lot of those jobs have been lost wont ever be regained again. In terms of the data you are seeing, do you expect an improvement . How long does this downturn potentially last . That is certainly the big question. What we have seen on our sequence that was a sharp significant fall in job advertisement. The nature of that fall was across every industry we tracked. Some Industries Hit harder than others. Mining resources was less hit, but even they are seeing some impact in advertising since coronavirus restrictions came in. While april continues to be low in terms of job advertisement, we have seen a slight creep up in the first few weeks of may. It does look like there may be a slight turning point, at least in the number of businesses starting to think about hiring again. Expectmuch impact do you to continue to see in the medium and longerterm from the lack of incoming temporary foreign labor into australia . Have pluses and minuses for the australian job seeker. We had in the early times of coronavirus pandemic many offshore call centers returning their operations to australia rapidly, hiring thousands of people in australia quickly. If that continues, if we struggle to operate crossborder due to travel restrictions or immigration restrictions, that could mean there are more jobs being filled by australia. However i think it is early to say how this will play out. Most of our Job Advertisements job advertisers are quite cautious. They are holding back on these types of major Employment Decisions that will help us start to see what the way forward will look like. You have a presence in 18 countries or so. What are you seeing in terms of geography . In the u. S. We have seen millions of job losses. Around 30 million since the start of the pandemic. Are there any trends around the world in particular that stand out . In severalare markets, particularly across asia. The main trend we are seeing is that the timing looks different by country. For example, in china, that market was hit first by the coronavirus pandemic. Many of the businesses are hiring quite rapidly now. They are seeing more of a recovery. Not back to previous levels, but more of a recovery. Likewise hong kong restrictions are starting to lift more. We see that in australia. Whereas other countries, like singapore, has been up and down along with restrictions being changed and evolving as the Health Situation changes. Around the world, we have seen this new trend of retirees being more active in the job market, particularly in the parttime labor force. We have seen the Pandemic Take a disproportionate toll on the elderly population. What will the labor force post pandemic look like . Kendra that is a great question. It is hard for everyone in the labor force. The number of jobs down so significantly, yet more jobseekers coming onto the market, it is externally competitive for jobseekers in every industry and every age group or education background. While in some industries there might be some pockets of growth, really it has been quite challenging across the board. What more do you expect or think of the government in terms of the policy side should do to encourage a rejuvenation and retainment of the jobs that far . t been lost so kendra in australia, we have the Job Seeker Program which aims to help businesses hold onto their staff as long as they can. We certainly have seen that have an impact. I think that is likely to be quite a Successful Program in terms of keeping jobs open. A lot depends on the timing of how the Health Situation goes and how the economic restrictions open up or dont open up. What we hear from job advertisers is they are cautious to make investments right now and they wont start hiring until they see a stronger light at the end of the tunnel. Is fast that light brightens dependent on the Health Situation in the labor market. Kendra banks, thank you for joining us today. We have an alert on the bloomberg. We are hearing media reports that tyson foods is lowering some prices it charges supermarkets and restaurants for beef, this after the coronavirus driven disruption of meatpacking of meatpacking plants. Tyson foods is the top u. S. Meat supplier. Hiked up the price of beef around the united states. We are hearing from dow jones they are reducing some beef prices as the coronavirus pandemic pushes these Grocery Store costs higher. On daybreakoming up australia, we get a preview of the new zealand budget due later on, this as the nation emerges from its strict virus lockdown. This is bloomberg. We are watching daybreak australia. Lets see how it markets across asia are setting up after dire economic forecasts in the u. S. That decline in global stocks will likely persist throughout the asia session as we learn if japan may personally lift may partially lift the state of emergency. We will watch for potential mls cuts from china with the junk bond market adding to the impetus for easing despite the pickup we have seen in credit growth. We are seeing u. S. Futures hold a threeday loss. S p closed at a threeday low as briefly fell below 2800 more bigname investors voice skepticism on valuations. A key resistant level for the second time in two weeks, indicative of subdued Risk Appetite given fears over a. Econd wave of virus infections we have the dollar looking steady after pushback on negative rates, yet traders are still hedging on the possibility by the Second Quarter of an. Lets check in on new zealand assets. The central bank opens the door to subzero rates. You have the kiwi to we year yield on watch given the drop toward zero. Kiki stocks are losing ground by 4 10 of 1 . The kiwi dollar holding a threeday loss. This ahead of australian jobless data which has been seen rising to a mid90s. Mid 90s high. The new zealand Prime Minister says budget will prioritize jobs and spending to shelter the country from the impact of covid19. What do we know so far as to the situation new zealand finds itself in . Paul the situation is not terrific obviously. Two budget surpluses that is all over. The virus response alone will cost 20 billion. New zealands gdp is just over 200 billion. That is about 10 of what the country brings in. So spending is already rising before the virus hit and revenue falling. A fairly sizable deficit is probably instore. A few things get released in advance. One thing we know is there will be support for the tourism sector. Tourism generates 6 of new zealands gdp, 21 of Foreign Exchange earnings. It pretty much dropped to zero when the country closed its borders. That sector staring at about 100,000 job losses as well. A speech mentioning the word calling thes, budget and saying the government has been saving funds for a rainy day, which is now here. All will be revealed when the budget is handed down in a few ours time. The rbnz Parliamentary Panel has been speaking after signaling negative rates are a possibility. Is pleased with the effectiveness of new zealands kiwi program so far. Increase size of an asset persist an Asset Purchase Program to 60 billion. The balance of risk remains to the downside. Willingnesste that to use negative rates. That, yesterday saw the kiwi dollar fall pretty hard. Swaps market has new zealand in negative rates territory by 2021. Up byes the cash rate november. The government says while he is kiwi, retail rates will be awful for savers and pensioners. There is an election coming up in september. It is interesting times. Paul allen in sydney. The Worlds Largest container shipper sees a ushaped recovery after volumes collapsed in the Second Quarter. A ceo told us how his company is weathering the storm. We know the First Quarter are volumes were down 3. 5 . We are halfway into the Second Quarter now and we had volume consistent with this 20 to 25 drop in volumes. It is presumably the worst quarter this year given it is after china was closed down for several weeks after chinese new year. Now of course we have a demand ismp in the west , so that what is driving the poor outcome for volumes. What kind of recovery trajectory are you expecting . Probablyat question is every Business Leader in the world would probably want to know the answer. We are expecting some kind of ushaped recovery. Right now we believe we are at the bottom and we will probably be here for a while. In the third and fourth quarter, we should start to see some recovery. I think it is also important for had in our First Quarter where we also saw decline in volumes, but earnings were up 33 year on year. We are managing the situation by taking cost down and adjusting our net worth and focusing on cash flow. You focus on the selfhelp measures. What does the passage of global trade look like after the pandemic . You talked about the level of volume reduction, but do you see goods moving to different places . Have we learned anything from the data, from china for example, being ahead of everyone else . Soren our longterm expectation is we will see global trade growth more or less in line with global gdp. There are lots of discussions now as to how to design the supply chains, not only for costs, but also for redundancy and resilience. I am sure you will see many of our customers moving away from Single Source sourcing and the like. For certain product categories it might also be that there is some personal protective equipment that might see more regional supply chains. 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 not been related to distance. Was the maersk ceo. Still to come, tencent posted blowout results, but warns the momentum may not hold. We take a deeper look at the headwinds facing asias tech giant next. This is bloomberg. We have breaking news the moment. We are now hearing the federal judge is asking whether Michael Flynn should be held in contempt for perjury. The federal judge handling the case against Michael Flynn signaled earlier this week that he is not yet ready to grab the just to grant the Justice Department request to throw the former National Security advisor. Now he is asking whether flynn should be held in contempt for perjury. He is pointing to a former prosecutor as amicus. Lets get to tencent. Big earnings story here. It is proving to be one of the more resilient chinese tech giants throughout the covid19 lockdown. This as tencent posts revenue from its Online Gaming business. We are joined by Stephen Engle in hong kong. Tencents bread and butter powering through an otherwise turbulent first. Stephen First Quarter. Stephen all of those people staying home, homebound gamers spending more and more. Record net income. The revenue beat was quite considerable. Revenue rising 26 to the equivalent of 15. 2 u. S. Dollars. The consensus estimate leading into this was for a revenue rise of 15 . Online game sales, that is the bread and butter you talked about, rising 31 in the First Quarter. That really helping offset shrinking ad spending and the record contraction overall in the chinese economy. That is one of the big concerns Going Forward, will advertising spending on Online Platforms rebound given that there is a new normal in corporate spending, job losses and the like . Budgets are being revised. Nonetheless, investors liking what they are hearing from tencent, even though shares did dip ahead of the results. Shares in hong kong added 42 billion in our get value since the covid in market value since the covid19 outbreak. In march26 by the low when everyone was kneejerk responding to this outbreak. Right now 52 buys, zero sells are the analyst calls. Three brokerages on monday raised their 12 month price target to 2429. Investors, at least for now, are impressed. What are the challenges Going Forward . Stephen i mentioned getting advertising spending back up. That could be a problem Going Forward. Cloud idid ok, but cloud busines might be on the back burner. Other fintech elements. However, tencents chief Strategy Officer saying media and ad revenue will be under pressure into the Second Quarter. Ist said, the gaming revenue impressive. What mitchell is saying is the time spent on games now that people are going back to work is down, but now they have a bigger pool of players, more people buying into it. Keep in mind there are a lot of challengers out in the market for the core businesses. Competition is fierce and this lockdown has sharpened everyones claws. In gaming, they have a competitor by the makers of tictoc. Advertising versus everybody. Keep in mind as well the bread and butter games of tencent like honor of kings, they need some new titles to boost the Gaming MarketGoing Forward. Our chief north asia correspondent. Lets get a quick check of the latest business headlines. Deutsche bank says its plans to resume its program of job cuts after suspending dismissals during the coronavirus crisis. Its ceo made the comments ahead of next weeks meeting, planning to shed 18,000 jobs globally, or about 20 of its workforce as part of a Restructuring Program announced last year to cut cost. Deutsche bank also says top bosses will forgo a months pay. Korean air is planning to raise more than 800 million as it looks to stay afloat as coronavirus washed out 90 of its flights. The carrier is looking to sell new shares to existing investors. The price is initially estimated at a 30 discount. Shares of korean have slumped 35 since the start of the year as the virus ravages travel demand. Yales university stock portfolio surged last quarter as it added new investment during the market plunge. The endowments holding increased of 267 million at the end march from the end of last yea. Yale added tech shares including zoom video. Lets take a look at how we are faring when it comes to markets. Trading in new zealand is underway. We are looking at that country being released from this current pandemic lockdown, facing a great deal of uncertainty in terms of what that recovery looks like, but certainly when it comes to their financial coffers. New zealand in a better place than most at the moment. We are watching the kiwi dollar. Futures in australia are closed. We are looking at further downside for asian markets after u. S. Stocks fell after we heard from fed chair jay powell, unequivocally saying no to negative rates, but that he also fears the amount of fiscal stimulus done by the government will not be enough and more will be needed to deal with the post pandemic downturn uncertainty. Coming up next, we take a look at how the u. S. China trade tensions are playing out when it comes to the mood for investors. We will be speaking to Goldman Sachss global cohead of fx and em strategy for his views, including where the dollar goes. Plenty more to come on daybreak asia. This is bloomberg. Welcome to daybreak asia, im shery ahn in new york. We are counting down to market opens in japan and south korea. The top stories this hour, the fed says the u. S. Economy faces unprecedented threats from the coronavirus. Paypal says monetary and fiscal policy makers must meet the challenge. Asian stocks are set to fall after wall street hit a three week low on the comments. The s p 500 heading for the worst week since mid march