♪ >> london. .'m nejra cehic this is "bloomberg daybreak: europe." global stocks push higher. jp morgan is first up. don't miss our interview with wells fargo's cfo later today. trump says he hopes to reopen the nation ahead of schedule. he says he has total authority to do so. extendst macron

france's lockdown to may 11. u.k. is planning its own extension this week. the daily rate of death in britain is expected to keep rising. welcome to "daybreak europe." after the best week for equity , we do start on the front foot. exports in china dropping a little less than expected. u.s. futures in positive territory. as we head into one of the most uncertain earnings seasons on record. a great quote i saw from one of our own analysts talked about the first quarter being history, the second quarter being a mystery. that is how we are set up ahead of the earnings season in terms of equities. the 10-year treasury yield is steady. strongly asng london reopens today. we take a little bit of dollar weakness. you have the commodity

currencies outperforming. oil slightly on the front foot after the market seemed a little bit underwhelmed yesterday by the opec-plus deal. coronavirus,to global confirmed cases have reached 2 million and countries across the globe are weighing the timing for easing restrictions. this comes as the cdc says the outbreak has stabilized across the u.s. and other hotspots showed slower rates of infection. u.s. governors have formed coalitions to plan for the reopening of their economies. this may set up a potential clash with president donald trump who assisted he alone has that authority. he defended his record in the virus during a white house briefing. president trump: i've been having many discussions with my team and top experts and we are very close to completing a plan to open the country. hopefully, even ahead of schedule. joining us now is annmarie hordern.

tell us more about this clash between the governors and the president. annmarie: good morning. looks like a showdown between the federal government and the state governments. we have already seen quite a prickly relationship building between president trump and some of the governors at times. yesterday, he said the decision ultimately is under his total authority whether or not the states start to move off social distancing policies and reopen the economy. when challenged by the claim, president trump stated numerous provisions to support him and offered a legal brief that provided no specifics. over the weekend, his top economic advisors gave a grave picture on what the economy is looking like. we have been tracking some of these examples like the jobless claims. on record, millions of americans are out of work. some governors and legal experts have pointed to the 10th amendment of the united states constitution saying that the authorities that are not within the federal government those

have to go to the state legislature. what we see governors doing at the moment is they are starting to develop these regional alliances together. here in the northeast you have new york, new jersey, pennsylvania, and a number of others coming together to come up with their own plan of one to reopen businesses and schools. on the west coast, we are seeing that is well with california and oregon. the question is whether or not this will become a bit of a showdown between president trump and some of these governors. nejra: lots of comments coming through over the long weekend. we heard from bill de blasio that new york might not get back to any kind of normality until the autumn. we have also heard from anthony fauci and the cdc on some of the things that authorities are going to be looking at to gauge when we could see any kind of reopening in different stages and different ways across the u.s.. what are some of the key things they are looking at to judge whether reopening can happen? annmarie: i think one thing dr. anthony fauci has said that

looks like the white house would likely follow is that it is not going to be one-size-fits-all for every state and every city. it is going to depend on how badly the states were hit. new york may not be able to open up like a light switch. other parts of the country will. i think they will be taking all of this into account and we should get more information on this with the white house today and the press briefing. this is obviously something reporters have been asking about. i do think that when you look to reopen the u.s. economy, it is going to have to be in places in the country that are not hit as bad. wisconsin, and also has held its primary election, defying stay-at-home orders. what do the results tell us about the broader political landscape is bernie sanders now endorsed joe biden to mark annmarie: to key things out of wisconsin. it is really giving a boost to

joe biden. we know that sanders has dropped out of the race, but with two thirds of the precincts coming in, we saw 64% of the votes going to biden. 2016, bernie sanders beat hillary in wisconsin. last month, biden also took michigan, another state that bernie sanders beat hillary at. this just shows bidens electability, especially as we gear up to november. secondly, very big blow to the republicans with the state supreme court, and incumbent conservative judge was defeated by a liberal opponent. this judge was backed by president trump. it really exacerbates the situation in wisconsin. there was really a lot of debate leading up to whether or not to even have this primary do the pandemic. republicans wanted to go ahead with it, but the democrats were pushing it for it to be pushed back. the ended up having the primary, but we are seeing a bit of a lift for the democrats out of wisconsin. nejra: great to have you with

us, annmarie hordern. breaking news from ab invev cutting its final full year to 50nd proposal by 50% euro cents per share. that is the latest update in terms of the outlook for dividends this time from ab invev. let's get to the first word news. emmanuel macron says france was underprepared before the coronavirus pandemic hit. the country extended its locked in with a gradual reopening now planned for may 11. in a televised address, he also said that by that date, the country will be able to test all patients with symptoms. ♪ >> [speaking french] during this period, the only way is to act efficiently to halt the spread of the virus. possible ifonly be we continue to do our civic duty , act responsibly and respect the rules. the vice-chairman of the

fed says the central bank can keep the u.s. out of a deflationary trap. in an exclusive interview, he says the federal reserve will use tools until it is confident the economy has recovered from the coronavirus shock. almost 70 million people have filed for unemployment benefits in the u.s. in the last wee weeks. bernie sanders has endorsed joe biden for president in an effort supporters.his he has called on americans of all political affiliations to work to defeat president donald trump. the timing of the announcement is a surprise coming less than a week after sanders dropped out of the race. china's trade report better-than-expected last month. exports and imports declined less than expected as the coronavirus prompted business shutdowns around the world every it outbound shipments declined 3.5%. imports rose 2%. despite china returning to normal work, many countries are

still not running at full capacity. global news 24 hours per day powered by more than 2700 journalists and analysts in more than 120 countries. coming up, investors get their first look at how the coronavirus pandemic will affect the loan loss provision. we will focus on bank earnings next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." let's turn to u.s. banks. j.p. morgan and wells fargo reporting today. investors will be looking for clues about how badly credit has been hurt as the coronavirus pandemic has swept through the economy. the forward-looking metrics to watch include provisions and net chart. -- also in focus

will be dividends. we will be speaking to the cfo of wells fargo right here on bloomberg tv. speaking of credit, oaktree capital management was a strong buyer of corporate debt last month. however, the cofounder howard marks says he tried to be disciplined enough to have money left for the next day. he spoke to bloomberg exclusively about his risk reward calculation. >> hi thought that the lows, 23,h were reached on march ratio hadisk reward become significantly in favor of reward. the lower prices go. the more the potential from a rebound and the less the potential for further declines. point thatt at that

the ratio had become very favorable. today, obviously, less so. and as you mentioned, about half of the 34% that the market had declined between february 19 and march 23 had been made up. , half theion potential is gone. the risk has returned. >> is it possible that the best buying opportunities are behind us. >> it would defy comparisons to the past. for the most part, all we have are comparisons. knowledge of the future is the current working title for the memo i hope to get out today or tomorrow. we don't know what is going to happen in the future. if we work off analogies to the past.

in the past, compared to the past, this is a rally of record speed and proportion. past, most at the rallies in the middle of bear markets have been followed by subsequent declines. usually, markets don't rally straight up. >> so, it sounds to me and i don't want to put words in your mouth, but it sounds as if you wouldn't be surprised if these marketsidn't hold and were not necessarily going to retest the march 23 lows, the selloff from where we are right now? >> i would not be surprised. having said that, i do believe that we need be less defensive than we were.

since past rallies have always been interrupted by past retreats, then you could say i'd be surprised if it happened this time. latestwere counting your memo how aggressively oaktree bought debt in the first few months of the financial crisis back in 2008 before the ultimate lows were reached in march of 2009. how much has oaktree put to work since this crisis began? >> i can't give you a number. company, ia public don't want to disclose information that has been disclosed. i will merely say that we were strong buyers in the month of march. and in the panic or the motivated selling that accompanied the virus, there

were good buys to be had. >> you know whether the cochairmen, the ceo, everyone else back in los angeles were able to buy as much as they wanted? there was a lot of forced selling and many securities were selling at deep discounts of the had beene where they weeks earlier. bruce did a great job and he was a substantial buyer every it and by the way, back in 2008, we were going out at all the time, i think we are going too fast, i think we are going to slow, and you vacillate. buying in the midst of a cascade downward is always challenging and always filled with mixed emotions. so, we bopped, we tried to calibrate, we tried to buy a lot. but be disciplined. so as to have money left for the

next day. that was oaktree capital's cofounder howard marks. joining us now for the rest of the hour is the head of the global portfolio solutions for at goldmanmanagement sachs. we've come off the best week for equities since 1974, and a lot of the fed coming in. how much further can the latest move from the fed given lift for risk assets or do you expect that to fade in the coming days. >> good morning. thanks for having me. rally, wetes to the have seen an extraordinarily rapid pace. it has been unprecedented, but then the decline was equally rapid.

inuess the current pricing the markets is implying less growth in two years. quite a v-shaped recovery. a lot of that is clearly do to the extent and swiftness and targeted nature of this policy response and looking at the latest data as it relates to the flattening of the inflection curve. just to put that into context, we look at asset prices. similar to where we were a year ago, the economy was at full employment, we had a healthy, robust consumer read earnings growth for 2020 was expected to come in around 8%-10%, which suggest that looking through of economic pain and looking for a strong and swift recovery.

that would require a number of things to go right. we need to acknowledge a number of things that are still risks given the uncertainty. still quite a while to go before we get there. nejra: you are still cautious in your is issue and think. ?hat does that look like sure, yes, we are moderately cautious. we are small underweight to the equities. the convention is overweight. they are balancing this balance of risks between the uncertainty. on the other side, the extent of the policy response to protect businesses and the consumer,

which has clearly been considerable. the downside is likely contained. we think there is the potential for a swift economic recovery in the latter part of the year, but we are just mindful of this staging of containment measures being lifted. that is likely to be quite gradual. and all the impact on the economy still remain uncertain. , the view of adding into weakness. feda: now the move from the at the end of last week reverberated through credit through investment grade and high-yield spreads. one thing that might cause concerns is the triple c spread over the double v has been

widening. what do you make of that in prospect that we could get a wave of restructurings among the most leveraged companies? does that make you even more cautious as potentially another domino to fall? just infersink it the importance of relative positioning. clearly, the policy response, it , aroundmonetary policy the world, there was only so much room on that front. we had gone into the crisis with pretty low rates already. the next step from the central marketferenced proper functioning. given the extent of deleveraging that was taking place in march that required liquidity markets to function. treasuries and mortgages. that moved swiftly to unfreezing

the commercial paper market and the credit markets. last week, we saw the furthest moves from the fed beyond just looking to protect small businesses and supporting the consumer. we have seen some pretty extensive measures that have extended to supporting these companies that have been downgraded. showme ways, it goes to that you are balanced in your approach toward high-quality, strong balance sheet companies. and that is what is clearly being reflected by the upper performance in the last couple weeks. nejra: barclays said last week it expects high yields to reach 9%-10% in 2020. goldman even more bleak, predicting a trailing 12 month average of 13% later this year. shoqat bunglawala from goldman sachs asset management staying with us for the hour. let's get the bloomberg business flash.

softbank is now forecasting a loss of $12.5 billion for the year ended in march. the japanese company has written down the value of investments in andanies including we work satellite operator oneweb, which filed for bankruptcy last month. stephen mnuchin is said to be holding firm on strict repayment guidelines for airlines wanting taxpayer aid. bloomberg understands the u.s. will require large carriers to repay 30% of the assistance through low-interest loans due within five years. it will also seek stop or an sequel to 10% of those loans. the government is facing pressure to act soon with the industry facing a 95% drop off in passengers. apollo global management's hedge fund's posting gains this year. it had been quickly amassing holdings in investment grade paper in march before the market rallied after the fed intervened. that is your bloomberg business flash. coming up, the lockdown continues. we will look at the latest

coronavirus figures from some of the hardest hit countries in europe as well as the measures being taken to combat the outbreak and what it means for their economy. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." the u.k.'s planning to extend its lockdown this week. more than 11,000 people with coronavirus have died in the country so far and the government's chief scientific advisor says he expects the daily rate of death to continue to rise. spain has reported the smallest number of new infections in more than three weeks and the daily death has decreased. macronpresident emmanuel has extended his countries lockdown, the announcements came with the first increase in daily deaths in four days. during this period, the only

way is to act efficiently to halt the spread of the virus. may 11 will only be possible if we continue to do our civic, act responsibly, and respect the rules. from: shoqat bunglawala goldman sachs asset management is still with us. note out yesterday talking about advanced economies shrinking about 35% this quarter and he also said that your rep needs to do more. europe to lack the rest of the world in terms of having a worse recession and recovering slower to mark shoqat: they are estimating u.s. witho come in around -6.2% earnings declining just over 30% in the euro area.

can you hear me? nejra: shoqat bunglawala from goldman sachs asset management stays with us. we will come back with you in just a moment. we will talk about banks reporting kicking off earnings season. this is bloomberg. ♪

nejra: good morning from london. i'm nejra cehic. these are today's top stories. global stocks push higher along with oil. jp morgan is first up. don't miss our interview with wells fargo's cfo later today. deaths in new york state topped 10,000, but president trump says he hopes to reopen the nation ahead of schedule. he says he has total authority to do so. president macron extends

france's lockdown to may 11. the u.k.'s planning its own extension this week. the daily rate of death in britain is expected to keep rising. welcome to "daybreak: europe." let's get a look at markets up to the best week or equities since 1974 last week. we had into an earnings season with very little visibility, so much so that the equity does urgent hit a record in march every it we are starting with asia.on the screen and u.s. futures in the front foot. european futures up 1.5% as well. the 10 year yield is steady. a little bit of weakness for the dollar for a third day. commodity currencies outperformed. oil is in the front foot as well. the market was a little bit underwhelmed by the opec-plus deal yesterday. global coronavirus cases are nearing 2 million and countries

across the globe are weighing the timing for easing restrictions as the cdc said the outbreak had stabilized across the u.s. and other hotspots showed slower rates of infection. u.s. governors have formed coalitions to plan for the reopening of their economies. this sets up a potential clash for president, who assisted -- insisted he alone had that authority. he defended his plan. pres. trump: i've been having many discussions with my team and top experts and we are very close to completing a plan to open our country, hopefully even ahead of schedule. investors today will get their first look at how the coronavirus pandemic is impacting america's larger lenders. jp morgan and wells fargo kickoff earnings season today every it bank of america, goldman sachs, and citigroup following wednesday. morgan stanley results are expected later this week every it joining us to discuss is dani burger. great to have you with us.

i want to ask what the key metric we should be following the season are. one person said it is all credit, credit, credit. dani: it certainly is. part of that is just frankly because our normal metrics we care about, earnings-per-share, we just have such little clarity on what they should be. some estimates say they will miss 20%-30% off what wall street is currently forecasting. in that environment, as you say, all about credit. it is going to be about that balance sheet and just how much is set aside for credit losses. upn loss provision takes most importance because it gives us a sense of just how severely the economic turmoil is going to be impacting individuals. investors are set up to see an earnings issue, but not a balance sheet issue. banks are gearing up for bad debt. that is going to be problematic. not to mention that loan-loss revisions means less money for dividends and buybacks, which

already have been under pressure. exactly. investors will look to see with u.s. banks follow what we see from european banks from dividends and buybacks. usually, trading revenue and results are of intense focus during banks' earnings season. how was that likely to play out this time around austin mark dani: this is going to be interesting because this will be a stark dichotomy between winners and losers. the banks benefit from the high volatility, the equity volume. then on the other hand, you have all these banks that have high-yield bonds. you know just how widespread that is. that is likely to hurt a lot of banks. oppenheimer is estimating a drop of 16.5 sent in trading revenue, but we could see bright spots like citigroup. that was an area of strength, and a lot of hedging going on by client. citigroup with

hundreds of millions of dollars. manyanother factor, traders are working from home, that is something that we can model for an we will need to see how that ticket only plays out. nejra: bloomberg's dani burger, thank you so much. the fed has launched an acid and in range of emergency programs to support the economy during the programs. it includes as much is $2.3 million -- $2.3 billion in loans. the fed reserves vice-chairman richard clarida says the central bank has the tools needed to keep the u.s. out of a trap even as the coronavirus deals a severe blow. i'm very confident that is the economy recovers from this hit and begins to return and recover, that we at the appropriate time will be able to unwind these programs. tom and mike, there is nothing

fundamentally wrong with the u.s. economy. it came into the year in a strong position in terms of employment and growth and financial markets and i'm confident we can get back there and at the appropriate time, we can scale back these programs. up on that, dr. clarinet, and ask you this. with probably billions of dollars in loans to companies near zero for over four years, are you ever going to be able to raise interest rates again or are we looking at essentially the fed doing yield curve control for now? >> right now, we are not doing yield curve control, but we indicated in our march statement that we will keep rates where they are, which is basically very close to zero. until the economy is on track to a tree of its maximum employment and price stability. the path of the economy is going to dictate ultimately the path of rates. in terms of our programs, these facilities will be in place

during the period when the economy is being impacted by the virus. the term sheets for these programs, you will see that the to stopes are due lending in september of this year. obviously, we can extend that as needed. those loans will be in place. they will have a term of several years. at the appropriate time, i don't think that will be a challenge to us when it is appropriate, but again, that is a long way down the road. we think where rates are now is where they need to be given where the economy is. the notes he is getting from people asking questions and the when i get most often is why did you feel it necessary to go into buying junk? had put in place no fewer than nine facilities over the past several weeks in first and foremost, our focus in these facilities is making sure the

credit is slowing -- flowing to businesses and households. obviously, we are in the and weial paper market will be financing auto loans and credit cards. in our main street lending extendinge will be into businesses. the vast bulk of these programs is focused on new lending. there is an element of one of these programs that will be purchasing assets in the secondary market. i do think an important point for your listeners and viewers to recognize is that several important companies in the u.s. were investment-grade up until this crisis hit. what we said in our programs is that if they've been downgraded after the date of the crisis, they will have access to these civilities, but that is the focus for these programs. >> mr. vice-chairman, the elasticity here, the outcomes of

this pandemic are extraordinary. i'm not asking you to play epidemiologists unless you would like to, but what i would suggest is we don't know the speed about,. what do you do if we get a more optimistic outcome? what do you do as an institution if there is a rapidity to our recovery? tom, we are, looking at a wide range of scenarios as i'm sure our other central banks and policymakers. and we have gotten a lot of bad news in the last several weeks in terms of the spread of the virus and the impact on the 16 million initial claims over the last several weeks. the economy is taking a hit. there is nothing wrong with the economy. we've asked people to step back from economic activity. there are scenarios that are more optimistic and obviously, we certainly hope and pray that

they materialize. if they do, that will be a good situation to be in. we will have in place programs, we are building a bridge until the economy can get to the other side and begin to recover. if that happens sooner, we will know what to do at that time. nejra: that was richard clarida, the fed's vice-chairman. up next, saudi arabia's energy minister says he hopes the situation plaguing the oil market will be mitigated in the next couple months. we will bring you more from the interview next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." let's get a look at the risk

radar. risk in and equities. s&p futures in the front foot. europe looks to open higher. the 10 year yield is steady, seeing a little bit of dollar weakness even if dollar-yen is unchanged and oil slightly positive as well. shoqat bunglawala from goldman sachs asset management is still with us. we were talking earlier about your moderately cautious positioning, but you are also looking to take advantage of shorter-term technical opportunities that arise from market dislocations. what kind of tactical opportunities do you see right now? equitieso, firstly and , the u.s. market has available earnings mix. sectors like technology and health care have been more resilient during this crisis in contrast to the euro area and em, which have been more vulnerable given a greater share of earnings from financial and

commodity related sectors. preferable to have s&p exposure until we reach a trough in canonic activity. on the fixed income side, we have had a bias toward higher quality credit and developed markets. we have seen clearly spreads tighten considerably. in the oil market, it was a pretty substantial decline. wti crude. the back of weaker demand. in the earlier failure of the opec-plus countries to reach an agreement on the production cuts. we still think there is the potential for downside pressures. that is interesting. we are going to hear from the saudi energy minister in a moment. given you have a preference for u.s. equities, is there an argument to be made that there was going to be no true u.s.

equity market recovery without an oil rally, given the importance of energy companies in the potential for defaults? we've already talked about risks in the lower rate of segments of high-yield. shoqat: in terms of the balance of the affected prices, i think it is net-net probably. low-end prices benefit. shale.e drag from on balance, i think we will look through that in the u.s. equity markets. it will be more broadly driven by the progress around the containment of the virus and getting the economy back to full utilization. that will probably be the largest driver for u.s. equities the rest of the year. nejra: yes, it makes sense. stays with us.la

as promised, oil had modest gains, so that is as investors weigh whether a deal by the world's biggest producer to cut out will be enough to offset the demand disruption caused by the coronavirus. saudi arabia has cut most of its crude pricing. the nation's energy minister told bloomberg he hopes the situation plaguing the oil market would be mitigated in the next couple of months. >> we are keeping all options open. i think the new spirit and the new arrangement, including cooperation with the other producers, mindful of their national circumstances, including the renewed spirit and what else to demonstrate than the magnitude show thes a way to whole world that we are up and running and acting responsibly. , it does notmind

take a hero to predict that this is created asent a result of the situation and would not also be attentive to any further requirement. we are still hoping that the situation can be mitigated within the next couple of months uncertainty will prevail as opposed to more uncertainty. i hope that once we turn to that from the curve, things will be a lot better. it in terms of readiness, yes believe i can speak of saudi arabia that as long as all of ready to do are

anything necessary, we will be the first to commit and the last to abandon our commitment. >> but just five weeks ago, you and russia were headed toward a quite nasty divorce. where does this leave the relationship now? could we see another price were potentially come back? i will carry on with your metaphor. i wouldn't call it a nasty divorce. like any family, they go through differences. but usually, families keep it indoors. know, it all depends on the bonds of the family. the bonds of the family are strong.

family, they go through tribulations, but it actually improves the resilience of any family once they go through some turbulent time. as a family, we are much more resilient and much more strong to whether any potential crisis that may emerge in the future. states now part of this family? sorry to disappoint, we don't need any divorce lawyers. [laughter] the want to know who is most important people in the deal? we've seen president trump tweet a lot about it. are you surprised that an american president is pushing for higher oil prices? certainly, it is not my job

to defend the president. himuld have to be fair to and speak the truth. truth is that the job of the president is to create jobs, create community, create growth, create income, create prosperity , a big contributor to gdp, creating service sectors. protected. president of any any country that would not do drop -- do their job. the saudit was arabian energy minister. breaking news, and italian autos

and fashion company may reopen in one week. on the show, we will talk more about every economy around the world taking a hit from the coronavirus pandemic. we will discuss how big that hit can ♪ be. this is bloomberg. ♪ ♪

nejra: this is "bloomberg daybreak: europe." goldman sachs sees advanced economies shrinking about 35% this quarter from the prior three months amid the coronavirus pandemic. that is four times as much as the previous record set in 2008 during the financial process. -- crisis. shoqat bunglawala is still with us. looking at some commentary from my colleague in the in life team

who says that right now, we are trading the hope of a future reopening of the global economy sustained by immense policy support, but there will soon come a time to trade the harsh economic reality of the months ahead in the underpriced negative consequences for individuals, companies, and savings. our risk assets still underpricing the downside? shoqat: it certainly seems as aough the price is implying v-shaped recovery. what that will probably require is limited disruption in supply chains. little changes to consumer behavior for reopening of the economy. no third wave surges in the virus after containment measures are listed after ongoing stimulus. on balance, it does seem somewhat optimistic given the uncertainty that still exists.

still 12-18 months away from a vaccine. we still have to see some pretty broad-based testing to be rolled out across all countries in order for that smooth reopening to take place. nejra: at the moment, most u.s.tors are trained in and europe, but could we see another leg lower in risk assets when investors wake up to the true impact on emerging markets. shoqat: something has already been priced and when it comes to emerging markets, significantly when it comes to emerging market debt down roughly around 13, 14%. real economic data is

certainly in the services pmi coming out of china. lows.roved off the at 28.e clearly the data is going to be bad and it is coming in pretty bad. the market is coming through that at the moment. extent, we do see improvement on the data front. moved to relaxing measures. it will be interesting to see how fast they returned to normal capacity. that would be a good thing to look out for. and emerging markets will very much be in focus with the imf meetings. thank you for joining us. shoqat: at goldman sachs --shoqat bunglawala at goldman sachs asset management. "european open" is up next.

looks like we can open and the green. 1%.pean futures up u.s. futures also strongly positive. this is bloomberg. ♪

>> good morning. welcome to bloomberg markets. this is the european open. i'm matt miller in berlin. the cac trade is less than han an hour r away. here are your top headlines. ultimate authority. president trump says he has the final say of opening the nation despite the opposition of two broad alliances of governors. investors are risk on ahead