♪ nejra: good morning from london. this is bloomberg daybreak: europe. these are today's top stories. global stocks fall as u.s. retail sales posted start declines. the fed says things will get worse. fomc voting member robert kaplan joins us today. global coronavirus cases top 2 million. president trump will unveil guidelines to reopen the economy

today. and south korea, the ruling party wins the election. oil sits near an 80 year low amid a record collapsing u.s. fuel demand. the trump is said to consider paying them to leave oil in the ground. we start this morning with a little bit of shaky ground. a reality check. for me, it's about the bond market. you saw that drop in yields yesterday by 13 basis points. it's crazy to hold bonds. i turned to blackrock. i like what rick writer is saying. basically, we will follow the fed. by bonds, etf's. what caught my eye, blackrock is getting ready to sell interest rates long. nejra: very interesting. a lot of people have been saying that in terms of buying what the fed is buying. if we get another initial

jobless claims print above 5.5 million which is the consensus, that would take the gains over four weeks in those initial jobless claims about 20 to you -- 22 million. one of the eight of the workforce out of work, wiping out the job gains since the last recession. staggering numbers you are looking at. looking like a certainty. we saw yields drop yesterday. the bond market reflecting pessimism. the drop in equities made up for the gains from the day before. how disconnected from reality is the equity market? read on the screen in asia. future slightly negative on the u.s.. another day of declines. european futures absolutely steady. a 12 basis point drop yesterday. a second day of dollar strength. kiwi is an underperformer along with the aussie. we had quite positive jobs data out of australia. oil making a comeback from an 18 year low.

still hovering around that $20 per barrel mark. global confirmed cases of coronavirus have reached 2 million. in the u.s., donald trump will unveil guidelines to ease stay at home rules. he says the virus is showing signs of plateauing in some regions. he held a marathon series of calls with dozens of business leaders. new reopening guidelines would be announced today after he speaks to governors. >> the battle continues but the data suggest that nationwide, we have passed the peak on new cases. hopefully that will continue and we will continue to make great progress. joining us now from new york is bloomberg's annmarie hordern. great to have you with us. has been pushing to reopen the economy for a while. what are we expecting to hear from him today? annmarie: he is pointing to data

points potentially seeing the peak a new cases. is this potentially a light at the end of the tunnel? we know he has been very eager to reopen the economy. we are set to get guidelines about relaxing the stay-at-home measures later today from the administration. they are looking at the dire economic picture. yesterday, we had record declines for u.s. retail sales and factory output. point isgrim data those jobless claims. 16 million americans lost their job. the survey is calling for another 5.5. truly devastating numbers. a senior director at johns hopkins says we are not out of the woods yet. we cannot have people going to work yet. they will not want to unless you have mass testing for the virus. this begs the question. even if donald trump does move for death move forward with reopening the economy, will americans feel safe to move forward?

that's where it is a global health crisis. the global health response before you can move forward. good to see you today. let's talk about south korea. this, middle of all of they went to the polls and the results were really quite stunning. >> the biggest vote we have seen in 28 years for south korea. it signals to world leaders that if you are going to have an election during the pandemic, how you deal with the pandemic is paramount on voters minds. it's the only thing voters were thinking about when they stepped into the booth to cast their vote. like most leaders, south korea did stumble in the beginning on the release of the pandemic at first. the government shifted to focus

on mass testing and isolation of the sick. there has been a sharp slowdown in the threat. you cases at the net -- lowest level since february. many countries will see how they went ahead with voting. it has been a serious debate with primaries for the democrats in the united states. -- you had tod a cover your face. you have to take your temperature a fast so. -- if asked to do so. manus: a whole new era. a whole new set of rules. the european commission executive vice president spoke exclusively to bloomberg and we asked her about the potential for corrugated a for european airlines, protecting businesses that have been impacted by the coronavirus pandemic. take a listen. lot on howds quite a long this will take.

the first wave of measures created an enormous amount of liquidity made available. later,be so that recapitalization may be needed. here we are just consulting on common european framework, if that is needed, in order to make sure that if member states would want to recapitalize businesses, it is done in the same way that we maintain a level playing field. that we try to limit the distortion of competition. we've had quite positive response to that with member states. it will take some days before we are ready to launch yet. >> did you turn a few heads a few days ago? you advocated for the states taking stakes in companies in order to keep china from taking over some of those companies. is that how you feel still, two days later? important it's very

that we are vigilant. we have come into this health crisis in different points of time. we are suffering from it to different degrees. things develop. you see secret -- some countries that are open. still are -- some are still deep in the crisis. that means that in the economic recovery, what's some will be stronger before others have fully recovered. urgess a risk that they -- businesses may be vulnerable to a hostile takeover. it's important not to be 90's. a number of sectors are strategic. a number of sectors are needed. here, it is important for the businesses to know that the states can step in if they want to and if need be. also, for the potential people who want to do a hostile takeover, we are vigilant. we will use the tools that we have available. that, you haven

in place at the moment a temporary framework that is allowing greater flexibility when it comes to the rules to protect businesses that have been affected by the virus, that could be subject to a takeover. how long do you see that temporary framework being in place? when the temporary element tends, whether or not you need a change to the current longer-term framework when it comes to competition within europe? foremost, we have already changed the temporary framework once to enable more aid to coronavirus research. to make sure that businesses who change production into protective gear, that they can get a no loss guarantee. we are in the process of changing it to enable

recapitalization in a way that limits distortion of competition. the entire framework is set to be in place until the end of the year. of course, we will evaluate, when we get to the other side of summer, if it is needed to be prolonged. at the same time, we are looking into all of our rules and guidelines in order to make sure they are fit. wherestill an economy technology is changing not only how we produce but also business models. it's very important that competition is fit for that purpose. i think that will be as relevant on the other side of the corona crisis as it was before. nejra: that was our excuse of interview with the european commission executive vice president. let's get you the first word news. president moon's ruling coalition has scored a

parliamentary election win in south korea. the ruling democratic party took 180 places in the 300 seat nationalism we. the largest election victory in more than 30 years. the results are being seen as a show of support for moon's handling of the coronavirus outbreak. five european union countries have extended their ban on the shortselling of socks for further month. france, spain, belgium, austria, and greece say the prohibition will continue until may 18. hedge funds are among those opposing the ban. israel's rival leaders have failed to reach a power-sharing deal by the deadline, making up for the election in a year increasingly likely. benjamin netanyahu and the opposition leader decided not to ask the president for more time. lawmakers may now be test with finding someone to put a workable government together. 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.

coming up, the fed says the u.s. economy has contracted sharply and there's worse to come. businesses are shuttered and retail spending craters in march. more on that, next. this is bloomberg. ♪

♪ manus: this is bloomberg daybreak: europe. snapshot of the markets.

no growth in asia for the first time in 60 years. , up 27% from the lows of mid-march. we are giving back this morning. we will get the jobless claims today. you are seeing blackrock say it is time to follow the fed. pimco are saying we are not through the worst. a number of issues at play. retail sales getting crushed. today, we wait for the jobs numbers. those are the markets in context. a little bit more dollar strength coming to play on the market. let's talk about the data out of the u.s.. the was economy sharply contracted as the coronavirus outbreak swept through the country, according to the fed. the central bank said august -- all districts reported highly uncertain outlooks. most expecting concert -- conditions to worsen. manus: yeah. let's discuss this and more with robert kaplan.

we did discuss this with robert kaplan. you don't want to miss those. [inaudible] let's talk about the economic pain in the u.s.. outputsales, factory posting historic declines in march. other figures showing that worse could still be to come. david moss is the cohead of global equities at bmo global asset management. thanks for being with us this morning. i look at the s&p 500. the american equities story. up 27% from march lows. trading at 19 times earnings. it's as if nothing happened. is that delusional? morning, everyone. it is delusional.

i think it has gotten carried away. clearly, the market went down very quickly. the speed of declines shocked everyone. more and more bad news. what happened then is that we had the absolute bad news. we had a response going to the virus. , a very response aggressive response from central banks and governments around the world. aggressive than people initially thought. one thing is clear. authorities have learned the lessons of 2008 and nine. they acted very quickly. on the back of that, one can understand why we had the recovery we had. now we're back to saying, that's fine. what happens next? nejra: yeah. in terms of what happens next, we have our eyes trained on the

jobs market and how that will reverberate throughout the economy. looking ahead to initial jobless claims today. there were people earlier this week saying, look. the equity markets completely looking through bad data. just looking at the rebound on the other side. that the equity market does start to wake up to the bad data, what would you do in your allocation? david: we would do very little. our core investment philosophy has always been good quality businesses, good balance sheets. we would stick by that. we think that holds us in good stead in an environment like this. we will think more about individual stocks rather than what the market may do. our view at the moment is that this will be a very tough environment for a very long time. markets will be volatile around

that. we need to focus on fundamentals. it would not change what we would do. impact onsee individual businesses again. we've had chances to buy some great businesses at prices we have not seen for a long time. manus: let's dig into that. you say that you have reduced your position in cyclical businesses. we had a conversation with the ceo of asml. he said demand is good. demand without covid would be 50% up on this time last year. you just can't get the product to the end client. the supply chain issues. how do you play this cyclical shift? david: i think it's interesting. point, the starting

comment from asml is, going into this, everything looked very strong. economies looked like they were starting to accelerate. the covid crisis has stopped everything in its tracks. asml is a business that we are very big fans of. they have a tremendous position in the market and that will only grow over the next decade. that is a business with equality -- cyclicality and not one we would look to cut. we've been very wary of anything to do with the consumer. unemployment everywhere will be pretty drastic. who knows how quickly they recover? manus: we will pick up on some of those themes in a moment. mull that over in your mind.

coming up on the show, the coronavirus pandemic affects first quarter revenues. we look at goldman sachs numbers and take a look to morgan stanley. what can they stack up? this is bloomberg. ♪

somewhere in the vicinity of $5 trillion. in the world economy, probably somewhere in the vicinity of $20 trillion. we look particularly at who has what hold. and how they will be filled. economy, as a result of this, the real economy which is

good services production and all of that, in the world over the next year will probably have a fall of maybe 4-5%. this is a bigger event than the 2008 financial crisis. comparable to the 1930-45 time, in terms of the size of the hole. the on implement right -- rate. we will adapt. one of the great things about is greatest wars inhumanity the capacity of humans to adapt and change the way they do things. we are doing that right now. confident that the inventiveness, the adaptation will bring us to a new way of operating. ,f you take that decline

somewhere in that magnitude, it will be in a total new world order. the world won't resemble the world that we are used to. it will change in various ways. it's a big hole. it's not an unsustainable whole because the capacity of producing money and credit is unlimited. it means we have to work at what is the value of money as credit, ok? that new world. what is the value of money? what is the store hold of wealth? you just can't produce it without it having an effect on its value. production,k about we will adapt and get past it. how wealth will change will be very, very big and different. >> i'm going to come back to that in a moment. i keep saying i will come back to the things you are

mentioning. i promise i will. in your opinion, is what we have seen thus far in the way of fiscal stimulus from the federal government and monetary stimulus from the federal reserve appropriate? are both of those organs of the u.s. government doing what they should be doing? if they are not doing enough yet, what else should they be doing? >> yes. my reaction, there's no choice. like in the 2008 financial crisis, you are faced with a choice. do you want those banks to exist in the future? you want to get rid of those banks? they may have not had enough savings or done business they should face the consequent is up. you want to save the banks. similara crisis that is except it goes way beyond the banks. when you start to think, who do

you want to save? you have to think about, do you provide them with income? how do you deal with their balance sheets? if you don't do that, the consequences are enormous. be of theon needed to sort. we have to think about the consequences of producing all that money and credit. where does it come from? what does it mean? we will turn to that in a minute. it's just like the great depression. you will lead to do more. we will argue over what we should do and who gets what. that will be our big discussion. yes, there has to be more money and credit. you have to operate in a way where you save important things and you only impose a certain amount of suffering on people that they can bear. otherwise you will have a revolution. you won't have productivity.

dalio.that was ray funny more to come on daybreak europe. u.s. future study. european futures into the green. the 10 year yield moves slightly higher after dropping 12 basis point yesterday. this is bloomberg. ♪

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manus: good morning. it's daybreak europe. your top stories this morning. global stocks fall as u.s. retail sales and factory output poster store declines. the fed says things will get worse. kaplanting member robert joins the bloomberg team today. global coronavirus cases top 2 million. president trump says he will

unveil guidelines to reopen the economy today. in south korea, the ruling party wins the election decisively amid a strong pandemic response. oil sits near an 18 year low amid a record collapse in u.s. fuel demand. the trump administration is said to consider paying drillers to leave oil in the ground. nejra: welcome to daybreak europe. we look ahead to more initial jobless claims data later today. the four-week total comes to 22 million. that would mean one in eight of the workforce out of work. that is staggering. it would wipe out job gains since the last recession. put that along with the data we had yesterday and the fact that we are looking at more earnings downgrades. put that all against the resilience of the equity market. we saw weakness yesterday but the rally since mid-march have been stunning. you really start to see it is mind-boggling the rally we have seen in risk assets. moss, i said to

him, are equity markets delusional? he said, they are not delusional. they might be a little bit carried away. therein lies the point. who do you track? blackrock? they say follow the fed. pimco? they say to get ready for another wave of closed down. those are the issues at play. what is the store of value? that is the questions we need answers to. let's have a look at the s&p futures. it will be about the jobless claims we see today. you sell the data yesterday. retail sales, factory orders. it's a messy unraveling that will come. to the bond market, we drop by 13 basis point yesterday. ray dalio says you would be crazy to hold bonds. blackrock wants to hold bonds.

they are selling interest-rate volatility which caught my eye. they are going longer duration. this would be monumental if the u.s. paid the drillers to keep the oil in the ground. that is what caused the double inflation. these markets need an oil rally to help them move a little bit higher. let's talk about the data. got the global confirmed cases of coronavirus that have reached 2 million. nejra: we have. we will come to that update in a second. i need to say that tsmc first quarter net income comes in at 116.99 billion. that beats the estimate of 109.73. you can follow those earnings. that is better-than-expected. a lot of people saying, the

first quarter is backward looking. what we are looking at is any guidance that we get on the future quarter. tsmc facing a challenging market? we spoke to the asml the deal. they see a lot of resilience in terms of orders. the first quarter growth market comes in at 51.8%. -- margin comes in a 51.8%. manus: it does. it will be important. let's get back to the numbers. this is what we do every day. we take the data and the facts. 2 million cases in the u.s. -- 2 million cases. donald trump is said to set guidelines to political leaders are struggling on strategies for easing the lockdown. that's the key issue. the german chancellor angela merkel announced tentative steps towards slowly starting to

return the country to normal. most restrictive measures will remain in place until the third of may. many aspects of public life in germany will be limited for weeks or months to come. the new norm. david moss is still with us. we listen to ray dalio a little bit earlier on. i want to focus on a paradigm shift. i want to understand a paradigm shift in health. neighbor, three different countries focused on our health. what does it mean for investing? david: that's the massive question. it's clear that we will be thinking about health, everyone will be. mostly, we don't know. we don't know how individuals, attitudes will change. we don't know how consumption behavior will change. we can make some guesses as ray

has done there. health will be the key thing looking forward. it's too early to tell, frankly. it will be at the top of most individuals priority list. ahead to we look earnings season on wall street, you said that this is probably the most useless earnings season ever. banks, takingthe the focus is loan-loss provisions. we got an update on the yesterday. we look ahead to more today. you were already underweight banks. you reduced holdings further since the crisis. that is one of the changes you have made. give us some specifics on those changes. we have been for a long time. it's a difficult environment to be a bank. towards the latter part of march, it has been the change in

rates, they were going to be lower longer. even with the pragmatic signal from the european bank, it's very difficult to see the returns. they have actually disappeared. just, we think in terms of their ability to help the people whether these losses, they are in a good position. it's a similar scenario to where we were 10 years ago. it's a hard environment to date -- make different -- significant returns is a bank. manus: within those banks, you have a number of institutions that you still favor on the european landscape. who are they and why? david: i'll give you one example. ubs. learned the lessons in the

last crisis. investment banking is different. they reported early and talk about a strong first quarter. volatility,of tremendous issuance for many companies. it is a world management business. yes, falling markets will hear -- hurt near-term. we know that our clients have been very long cash for a very long time. there are some signs that they are starting to put that to work. it's a very institutions than it was years ago. different from the other banks. outside not big lenders of the domestic market. nejra: yeah. intesa, oning and the flip side of that. you were saying earlier that you were looking to take advantage

of some of the weakness to add businesses that figure quality criteria that are available at better prices, away from banks, just in general. give us one of your top picks in terms of an example of that. david: a clear example. long blocks. in the first part of the , [inaudible] we saw many stocks. it's a very high-quality business. it is the largest producer globally of pharmaceutical drugs. [inaudible] they don't have the full manufacturing keep ability of some of the large global pharmaceutical companies. it invested ahead of time. it has the manufacturing capacity.

this is incredibly difficult and complex technology to manufacture these drugs. they took the opportunity to buy. we think this is a long-term winner. i would not say no matter what happens in the world. that's a great example of businesses that work today, were tomorrow. strong balance sheet and a quiddity in the meantime. -- liquidity in the meantime. manus: i was hoping you would go with your ferrari pick. david: [laughter] [laughter] manus: will come back to him. let's pivot to saudi arabia. it was well covered. nejra: we spoke with saudi arabia's finance minister on the

g20 historical agreement to help fight the coronavirus pandemic. take a listen. seen, swiftave actions by the g20 and courted in the imf and world bank. it is unprecedented. together 7ne has put trillion u.s. dollars so far. that obviously means that they and moveto import from the economy of other countries at the same time. wo is the imf support package that has been intrigued by -- approved by the g20. it ensures that sufficient liquidity is available to emerging economies. reboots are available for the central banks, packages that have already been announced. >> you are talking about this

remarkable move by the g20 earlier today to support economies around the world. let's go to more specifics. and important part of this was to suspend payments on sovereign debt. is this a restructuring for you? >> of course, of course. i think the idea is well recent election in might take time for bilateral agreements to be put in place, we wanted to make sure that we didn't waste time. g20 and saudi have committed to a swift, strong, significant action immediately. the suspension will give us time , will give poor countries time to consider rescheduling even relief from some of the debt throughout the next 3-6 months. we think that will be needed to ensure that we close. >> we have a question from a

viewer, a bloomberg viewer that i would like to ask you. i find it interesting. is it possible that this crisis might be an opportunity to consider open -- further opening of the saudi capital markets to foreign capital? is that on the table? >> absolutely. saudi capital markets have been relaxing significantly. now we receive significant investment from international investors. yes, absolutely. we will do whatever it takes to ensure easier access to international investors into the saudi market. finally, i can't talk to a saudi arabia official without talking about oil. it's a very tough time. we had a global agreement to try to curtail production. do you anticipate more will need to be done to really get a floor under oil? that is affecting the global

economy almost as much as the coronavirus at the moment. >> i think the significant agreement that has been reached has outlined, not only through the opec and opec-plus agreement , but also from producing countries from outside opec and opec-plus, it signifies that the world is responsive. we need to ensure that markets are balanced, as we have been doing for decades. the fact that the g20 energy ministers had an extra nearing meeting a couple days back, who welcomed that agreement and committed to ensuring that market stability is key to face covid-19. we would consider whatever action is needed to ensure that market balances there. let us or member also -- remember also that the world is impacted and a lot of sectors.

we are watching the sectors that are most impacted. fitgning the solutions that more than one sector. that was saudi arabia's finance minister speaking to bluebird. plenty more ahead. u.s. features look like they want to turn positive. european futures already there. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. u.k. retail sales fell at the fastest rate in march since records began as the coronavirus pandemic forced the continued

closure of nonessential shops. the governor is expected to spend deci-spend the partial lockdown intimate. the treasury has pledged billions in support. hotel shock a lot has been forced to close all 125 stores but is optimistic it can support debt survive online after raising 20 billion pounds. joining us now is the ceo and co-finder of -- cofounder of hotel chocolat. have you had to access any of the support from the government for small businesses at this point? if you have, has it been enough? , anyrst thing to say is support from the government is remarkable in times like this. the support we are looking for is around the necessary closure of our physical shops. rates is very

good. the ability to furlough our retail team and for us to top up to full salary, we have taken advantage of that. we are in negotiation with our landlords to come to a mutually rentinable solution on the for the time that we have to be closed. we've been able to pivot the business into being 100% online quite successfully, to mitigate the worst impact of that's with closure. we were in a position for weeks ago where we manufactured literally our entire easter a collection and easter bunnies and everything. they are all in stock waiting up and down the country. of theto lock the doors main channel into our consumers.

all 125 locations. since then, we have worked together as a team to get that stock back to our central warehouse and to be able to get organized to be able to work moving safely. we've been able to sell virtually all of that stock package throughout -- through a 100% online solution. manus: that's good news. the easter bunnies will arrive. thanks to the front line staff of the post office and delivery mechanisms. the financial side of the business, you canceled dividends. tell me what you are doing with that canceled dividends. is it in cash or did you redeploy to ramp up online? what did you use to canceled dividends and that capital? our cash cycle is quite cyclical. moneyally make all of our

in the back end of the calendar year and then invested through the year and then our week's cast position -- cash position is at the end of autumn. , we are quite resilient on actual cash. we are obviously being careful about how we maintain that cash. we also have an eye to what happens when you come out of this. clearly, we can see that we can do great things with our additional business which was the original part. we are making plans to accelerate the investments behind our digital sales. the 22 million that we raised is earmarked for post-fire us -- post-virus growth and development plans. it replaces the profits we would've had.

yeah, it is a case of trying to maintained the kospi's and reach out for the opportunity that will still be there when we come through this virus situation. nejra: if we look to the light at the end of the tunnel, what do you expect to see in terms of changes to your supply chain and consumer behavior? think we have seen a lot of our previously physical retail mind,uyers -- they're in we are a direct consumer model. we have a big database. we know who our customers are. we can track their behavior in a very granular way. we have seen huge cohorts of that previously retail only buying behavior switched online. when we come out of this, we

think they will be a legacy of our behavior of how easy it is to shop for many things, including chocolate, online. for us, that is a positive thing. as it regards to our supply base, we are integrated. we manufacture are chocolate in the u.k. in cambridgeshire. our distribution warehouse as well. we are plugged into the supply. we don't anticipate any big changes. well. we wish you we are always in the market for an easter bunny. farewell. ceo of hotel chocolat joining us on daybreak. no chocolate for me. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. david moss is still with us. you are always looking for active opportunities. is there anything that captures your eye next? david: there's nothing that jumps out in terms of individual stocks. we are looking at areas. clear the things which is from what has happened in the last three months is that more and more transactions will be done online. when we come out of this, it will be staggered. we are trying to look for businesses that will be beneficiaries of that. on top of what we already own. manus: exactly.

we are seeing a paradigm shift as we just discussed with the ceo of hotel chocolat. david moss. executive futures tick higher. ♪

>> good morning. welcome to bloomberg markets: the european open. i'm anna edwards, alongside matt miller. matt: today the markets say never waste an opportunity. futures term positive despite the process of more grim jobs data today as oaktree and guggenheim leave space for gains in debt markets. trade is less than an hour