francine: global stocks push higher as trump outlines success to reopen the economy. 5 million more americans file for unemployment. -- frenchter gdp consumer says recovery could start soon after the pandemic causes sales to plunge in the first quarter. we will talk to the chief executive. good morning.

this is bloomberg surveillance. i am francine lacqua. a lot of thoughts on the markets . a lot of thoughts is not only on earnings and dividends but what we heard in the first trial of from gilead. people saying let's watch out for that. we could get something more. this is what your markets are doing. there is a left overall. when you look at euro-dollar and thinks we have been watching. gold down today. gold is less high than it was two days ago. nymex at $18. let's get to new york city with bloomberg's first word news. viviana: we begin with china's economy in the first quarter. for the first time in decades it contracted as the outbreak shut down large parts of the country. gdp shrinking, 6.8% from a year ago. this is the worst performance since 1992.

plunging moreo than 60% over that period. here is the united states president donald trump outlining plans to restart the u.s. economy. some state employers are being encouraged to abandon restrictions. the white house has been eager to help the country get back to work. 20 million people filing for unemployment aid. the u.s. has more than success at thousand coronavirus infections. coronas infections >> we are not opening all at once, but one careful step at a time. viviana: increased coronavirus infections as a europe ways easy lockdown measures. the virus climbing in spain, italy, france and germany.

cases copping one -- topping 100,000. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. this is bloomberg. francine. francine: thank you so much. let's get to the big interview. how's the world's three chilly and dollar hedge fund industry positioned as the global economy -- $3 trillion hedge fund industry positioned at the global economy is facing rising withdrawals. the unprecedented volatility that we are seeing in the markets. i'm pleased to be joined by luke ellis. how many clients are pulling money to meet their own cash

crunch? luke: that is what i was trying with the end of the first quarter, i decided to look at where their portfolios are, the indication of what happened in the overall portfolio. vca natural thing that would create more turnover of mandates. we talked about the fact that we expect there will be more investments in other things. just as clients try to get on top of things. we saw at the end of the quarter in beginning of this quarter and mix of redemptions caused by cash calls from markets. clients finding their alternatives were bigger than they need to be and we saw some examples where people needed the cash so we have money from a health care system in the u.s.

who called up and said, thank you. we need to spend the money now on covid treatments and those are the redemptions you like to get. francine: will this trend accelerate going forward? how difficult is it to predict the outlook given that it is unclear when the economy will be open? i don't know if this goes on for one more month. so i think what has to separate to thinks, this is the big picture about what is going on in the markets. the question of client portfolios. at -- ieen -- looking would imagine they will be a lot of churn and client portfolios over the rest of the year. you are likely to see heightened redemptions, but also heightened

-- as clients try to adjust to the new state of affairs. how long will it take us to understand what is going on in the economy? that is hard to judge. forces.t two enormous we have a very serious economic shutdown going on. we have enormous spending from central banks and government on the other side. the market is trying to find a balance between two very big forces. i think you will see changes in tone over the course of the rest of the year, and maybe beyond as we try to deal with all of that. francine: what has the outlook and for flows in the current quarter? -- been for flows in the current quarter? luke: we try to get a sense in the commentary. we had a quarter of net inflows

in the first quarter. let me correct something in terms of the result of the first quarter. while we had 10 billion of net negative performance, for us to recognize we run a mixture -- we run a large number of hedge run our hedgealso funds on average. strategies on average made money in the first quarter. our losses were in the earning side of the business. we had $50 billion of long earning equities. 25% or whatever in the first quarter, it is no surprise. think, as we talked to clients while some are disappointed --

when you have had such a big market moves, you've got some big winners and individual -- an individual hedge funds, and clearly in the credit market, people got caught in the relative value space. once you get these big market moves directional type of strategies tend to do very well. a big opportunity in the first quarter to make returns for clients. if you look forward to the rest of the year, it doesn't feel in any sense like a sort of disaster for the industry. it is going to be a lot of churn. francine: can you quantify churn? i know it is difficult at the moment. inflows50% difference -- 15% difference in flows?

luke: it is too early to predict a lot of things today. we are still right in the middle of an economic still. it is easy to get caught up in the fact that we've got -- but everybody that i talked to in the real economy says life is really bad out there, that real businesses are -- most businesses in the end came into this with a lot of leverage. the corporate world has been increasing leverage, whether it is through pushing to lighter balance sheet, whether it is through pe taking over thinks. that has led to a process where companies do not have that much runway, and so they are

suffering. that is why we have seen 20 million new unemployed people in the u.s. within a month. you have to look at what the real economic consequences are to than understand what the consequences for individual strategies. guess int want to terms of actual flows in the industry. what we were trying to get at is we think market volatility is going to be at heightened levels compared to where we have seen it. let's be clear, volatility was at a very low level. in heightened volatility, you will tend to get more change in client portfolio. francine: how do they handle the volatility in the crash in

liquidity in the markets last month? did you need human intervention? look -- luke: there is always a sense of human oversight. i think the models did pretty well. ctas is expected in the results were up. 6% to 10% over the course of the first quarter. that is a pretty good outcome considering everything going on in the market. came off the back of the fact that for the first month and a half we were positioned long recognizedhey quickly after the 20th that the environment had changed and they got out of the risk positions. our models are designed to get out quite quickly when we see a change in environment. they did that. we weren't caught long for very long.

we managed to take advantage of some of the moves, particularly in oil and the dollar. the model did pretty well. i would say more traditional models did better than some of the newer learning type of things. machine learning type of space would naturally given the space was trying to find a way to find dips and buying dips got you to be buying too early. there is a point of having too many models building into the same strategy to climb, you get the diversification and the risk naturally flows to the place which is into with the market which is how we made money in the first quarter. francine: luke ellis, thank you so much. do not go anywhere. he stays with us. slumpedp, revenue sales

in the first quarter as the coronavirus pandemic swept across the globe. goodalso have a pretty exposure to china. later on we will be speaking to the chief executive of l'oreal after the world's largest cosmetics maker says it sells significant impact in the next quarter. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua. we are having an interesting conversation with luke ellis. we are talking about some of the models run by man group.

let me ask you about your confidence in the fact that all of your portfolios lost money. are you confident that some of these portfolios can handle volatility better going forward? luke: yes, absolutely. overall, we made quite good money for clients from our quanta strategies. when you get these very volatile markets with strategies that are more directional, more momentum focused, the ones that do very well, the ones that had a tough time during march were very spread related. spread relationships in march were all over the place. in and had to come bailout fixed income relative value which is not our space. when you get those big market

moves, the relative type of world where the discretionary tends to have a tough time, the more directional stuff tends to do very well. what is important is anything about this thing of want the modelslatility have all of the information that the discretionary people have. they have all of the experience that the top consumer people have. sometimes you get it right and sometimes you get it wrong but the good thing about quantum models is it is never emotional. --y were able to trade very in a very clean way all the way through. a lot of our portfolio managers were able to stay calm through the discretionary. you have seen a lot of emotional behavior and that has led to some mispricing's.

is they thing of quan's do what they're supposed to do everyday. -- quants if they do what they are supposed to do everyday. francine: have you developed any models predict the end of the pandemic? terms.now, in simple we are not experts in pandemic modeling. we have offered the government assistance in the u.k., whether they are -- they are trying to deal with a new set of circumstances. we have offered some of our input to help them with that. we got some people with experience. what we are try to do is let market prices and data that is out there tell us what is going on. and to manage our portfolio using that. while the cause of this market

environment is clearly unique, when you look at what is happening in markets it is really a replay of things we have seen before in previous times. the question is, how that plays out going forward. you can let market pricing tell you what is going on in that. the government accept this help? they had a lot of people who offered to help. that was an rfp type of process. i don't think they have made a decision whose help they are going to take. will the selloff impact passes? passives? this is a story of passive relative to active.

process edit individual thinks. if you're thinking of having an active euro stock portfolio or passive euro stock folio, i'm not sure the quant is about to change it. imagining that there is such a thing as a passive 60-40 portfolio and that having an ecstatic ways is possibly the right answer. it has been rather -- it has rather disproved market behavior. your timing of what of getting in and out of things. the way you get back in makes such a difference. when i say, i am talking 5% to 10% of impact. , i think passive

instruments are an important part of clients portfolios. passesey are looking for , i think for most people's objectives and what they're trying to get out of their -- willos, the passive not give them with the return they are looking for. they have to look at how they look at the overall portfolio return, active allocation or active management. francine: luke ellis, thank you so much for your time this morning. a good in-depth conversation about what hedge funds are going through. athave a great conversation 2:00 p.m. london time. this is bloomberg. ♪

francine: good morning. this is "bloomberg surveillance." i am francine lacqua. a lot of the focus is on what the markets are doing. the price of oil. a lot of focus is what has been going on when it comes to iliad. overall there is a bit of a risk. we are still looking at earnings and focused on what china numbers, not unexpected, but still an ugly number. the first contraction in a

decade. dollar and treasuries edging higher. texas/west at oil, texas oil slumping $290 a barrel. a volatile u.s. session yesterday. they said they would resume commercial production. also coming up, we will speak to the chief executive of l'oreal. he is jean-paul agon. this is bloomberg. ♪ these days you need faster internet that does all you

expect and way more. that's xfinity xfi. get powerful wifi coverage that leaves no room behind with xfi pods. and now xfi advanced security is free with the xfi gateway, giving you an added layer of network protection, so every device that's connected is protected. that's a $72 a year value. no one else offers this.

faster speed, coverage, and free advanced security at an unbeatable value with xfinity xfi. can your internet do that? francine: good morning, everyone. this is "bloomberg surveillance." i am francine lacqua could we have a great interview coming up with the chief executive of

l'oreal. we will talk with him about the demand and the numbers we saw in china. also some partnership with other brands. let's get to new york city with the bloomberg first word news. viviana: we begin with china's economy, first quarter contracted for the first time in decades. this as the coronavirus outbreak shut down large parts of the country. gdp, 6.8% from a year ago. this is the worst performance since at least 1992. investment also plunging more than 15%. here in the united states, trump outlining plans to restart the u.s. economy. some states employers being encouraged to abandon -- the --te house has been eager over the last four weeks, 22 million americans filing for unemployment aid. the u.s. currently has more than

650,000 infections. increased infections suggest no let up. virus climbinge in spain, italy, france and germany. the u.k. saying it has extended its lockdown by three weeks in cases topping 100,000 there. increased nearly 40%. showrooms were closed to help limit the coronavirus outbreaks. production -- passenger vehicle registration, only 52%. the european automobile manufacturers association saying that is the lowest since 1990. funds had toge provide hedge as the pandemic battered local markets. firms run by ray dalio were

among those suffering their worst ever losses this month. three out of four hedge funds losing money. some funds down up to 40% according to per limitary data. -- according to preliminary data. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. this is bloomberg. francine. francine: thank you so much. onto l'oreal. this is one of the most fascinating countries -- companies. the pandemic swept across the globe. closed many department stores. this is what we are seeing in terms of the figures. this is what we have seen. the impact closed department stores, hair salons. sales decline around 5% after record number. the consumer giant is seeking a

less severe slump in sales. fashion focused luxury companies like burberry have been slightly more resilient and it sells more products that are available in the supermarkets and drugstores which mostly remain open. joining us is the chief executive, jean-paul agon. mr. agon, thank you so much for joining us. you were adversely impacted because of the lockdown in china. are you seeing green shoots as the economy reopens there? have a dropes, we in the business, especially in thanks to our strength in e-commerce, our business in china was able to be 6%.tive with plus

that is pretty remarkable. as i said, it is due to the strength of the u.s. where we are 6% -- 60%. more than 60% of our sales. important to very mitigate the crisis. sorry? francine: go ahead. jean-paul: we are pretty optimistic for the weeks and months to come. we think that on april the consumptions of beauty products is back to growth. we expect to do a pretty strong second quarter in china.

pretty strong. francine: weather reopening of china's economy be enough to offset what you are seeing in europe and u.s.? jean-paul: we do not know yet. it is clear in the first quarter preserved business in western europe and north america , the second quarter is a most the opposite. at the same time, everything depends on how long the confinement measures will last. obviously, today what we are seeing is more kind of supply crisisrather than demand . consumers are really eager to buy our products. to buy ourger to go

products, but they cannot because they are confined to their homes. this is very, very much linked. this is a different type of crisis. when the lockdown measures will we will, we believe feel the progressive bounceback of the consumptions of our brands and products. happens as it appears to be planned, early may or middle america,rope and north -- that vote for a could be more positive. francine: overall, because shopping centers are closed but

supermarkets are open, are you looking in real shift and demand shift in demand? what audits are doing well? as some stores are closed and others are opened, definitely consumers will go where they can. the number one division for us is active cosmetics, because , first they are sold in pharmacies and drugstores, and also the are recommended by doctors like dermatologists. they have been doing pretty well. a 12% growth. they are going to do very well

in the second quarter. the consumer can vision -- the , likeer division maybelline, selling their products in the supermarkets, this will be protected. more difficult until the lockdown ends is the when drugstores are closed as long as the hairdressers are closed. news regarding hairdressers because in many countries, authorities understand very well that they cannot keep the hairdresser closed too long because people go back to their

hairdressers. this land will be -- the salon will be the first to reopen. whocine: i know many people need a haircut right now. do you think a pretty strong surges in terms of demand for hair dyes you can buy in supermarkets? how does that change your portfolio? beyou think there will trends that will have a legacy? jean-paul: what we are seeing right now is a huge demand on haircolor that you can do at home. called the ceo of of lucidity.oduct we are number one by far for

haircolor by home. thatis due to the fact women cannot go to hairdresser right now. i am not sure we are going to last after because i am pretty sure consumers and women are so frustrated right now to be able to see us alone. salon contrary, when the will open again, women will understand how precious it is to go to a salon regularly. , morea proven fact traffic and salon afterwards. -- in salon afterwards. francine: can you break down where you have seen this resilience in terms of demand for e-commerce products?

how does germany stack up with france? how does that stack up with u.s.? can you break down where you see consumers buying more things than other countries? jean-paul: e-commerce has been very strong. the growth has been very strong across the board, across all countries and across all divisions. the growth of e-commerce the first first quarter and it was really across the board. 40%, north america. with plusg in china 60%. also in other countries, like latin america, everywhere. the question depends on how strong the e-commerce in each of these countries, because the

weight of e-commerce is very different from country to country. it can go from the highest in the world which is china which is more than 50% of our business, to other countries like united states where it is around 16%. other countries like italy or spain which is 5%. this is why the impact of the e-commerce growth will be very different by country. crisis --re is this those who never did before. very little will have an impact on the evolution of the channels after the end of the pandemic.

francine: jean-paul agon, thank you so much for running us today. coming up, we will hear from morgan stanley's chief executive about the impact this has on global wall street. we will hear what he thinks -- when he thinks the pandemic will ease up. this is bloomberg. ♪

-- my heart goes out to the folks who were not that fortunate or who had underlying health issues in the very elderly who have really struggled and tragically passed away. it is a curse and i wish everybody well who gets it. we should stay hydrated, stay rested and wish them the best. this is much worse than the 2008 financial crisis. what kind of assumptions are you making at this point for the recession and recovery? james: i'm trying to think. i am not sure i agree with that. the economic impact, the gdp decline is much worse. it is so specific and it is built around the virus. what kind of world will we have

when we have immunity from it? there are so many unknowns. back in 2008, it was a on the mental collapse of the whole financial system. had the system not been rescued, who knows what long-term damage might have been to the economy? these were both truly tragic situations. from our perspective, there's a few things you have to focus on. we've got millions of clients trading trillions of dollars all over the world. our plan has to work. we have to be able to facilitate clients doing that so they can manage their businesses. they have to have the ability to manage their own liquidity and capital needs, and we play a critical role in that. one of the largest wealth managers in the world. the plant has to work. with 90% of our employees at

home, we have had almost no issues from our plant. .hat is a remarkable testament the second thing is, we voluntarily cut back on our buyback to zero. we thought it was best to preserve our capital to support our clients in need. we are doing everything do our communities with organizations like ours that are large and have resources should be doing. to make sure that our teams have properly coordinated given the remote isolation everybody is going through. we have spent an enormous amount of time communicating, setting up plans. what would it be like to bring people back to work? think about what the future might look like. >> you don't think it will be as bad for morgan stanley and perhaps not as bad for the banking industry as the 2008 financial crisis was. what about the water economy? -- what about the broader

economy? model the fathom or kinds of dislocation unemployment on the scale is going to produce? james: the shock to the global economic system is something we haven't seen to the -- we haven't seen since the great depression. we had this massive health crisis which is working its way around the world with devastating consequences. you cannot model this. what you've got to do is preserve your capital, make sure -- are well-positioned to and manage your way through this with a team that is working together. we have daily operating committee calls. the whole team is organized around how do we ensure we are doing our job for our clients. morgan stanley remains stable during a period of incredible

dislocation. eric: 80,000 employees are working from home. that is a staggering figure. one we have seen repeated across the industry. , with no major loss of capability. what i would like to know is, how does that change the way you think about the way this firm operates in the future? james: can i see a future where part of every week, certainly part of every month, our employees will be at home? absolutely. we will have less footprint. that is highly likely. we have proven we can operate with effectively no footprints. francine: that was mr. gorman spring to erik schatzker. coming up later we will be speaking the cleveland fed president. do not miss it.

this is bloomberg. ♪

>> what kind of world will we have when we have immunity from it? when we have the right testing? there are so many unknowns. back in 2008, it was a collapse of the whole financial system, and had it not been rescued, then who knows what long-term damage multi-decade might have been to the economies? >> the problem is gigantic. the result is we have to ploy our significant and we need to move very rapidly. >> more specifically, gdp is forecast to decline 30% in the second quarter before recovering in the third and fourth quarters resulting in an economic contraction for about 6% of the year. this compares to growth expectation just a few months ago. >> this is a crisis like no other. it is important for countries to use the monetary policy and use their fiscal tools to support

the economic activity. that will also help financial stability going forward when you can get a stronger recovery. francine: that can be used. this is what your markets are doing good we are seeing a little bit of a lift to the market. yesterday we had some pretty big numbers for unemployment. advancing with u.s. equity futures also advancing. i think what people and market participants are looking at our these baby steps for restarting the economy after we had a plan laid out by president trump. that is helping investors. helping them to look past the dismal data we had from china. treasuries edging lower.

oil slumping. the other thing i am looking at is gilead. this stock is one thing you have to watch. this is after there was a report inits strong improvement people with the virus taking this drug. chief executive officer of ubs wealth management. we will ask him what he sees. the complications with cleveland fed president on what happens next from policymakers. this is bloomberg. ♪

francine: global stocks push higher as trump outlines success to reopen the economy. 5 million more americans filed for unappointed. china's economy contracts for the first time in decades. first quarter gdp shrank to 6.8%. iliad surges in premarket. on coronavirus therapy working on patients. this is blumberg surveillance. tom keene in new york. we have some interesting dynamics in the markets. a lot of the focus is trying to look through these ugly numbers we had from china gdp. a look through the fact that the number of deaths are still climbing high to focus on what we heard overall from gilead and president trump try to reopen the economy. . tom: mixed messages on gilead.