nejra: good morning from london. manus cranny is in dubai. bloomberg: daybreak euro. the wti rebound after plunging below zero for the first time. u.s. crude for june delivery sits at $21. the kospi trades lower on reports that kim jong-un is in critical condition. donald trump said he will temporarily suspend immigration as some states look to reopen. larry kudlow said the president

will reopen the economy if it is safe. and the italy -- and italy and lowering in the number of cases. manus: we are getting some breaking news. we go to the heart of earning season. single structure. jennifer may will leave at the end of may. numbers, first quarter, non-ir four f. they see a solid start to 2020 despite the eye of the coronavirus storm. and first quarter results, they theyted some softness and

had said there was a little bit of a dent with a significant new business having been derailed. they see a solid start to 2020 amid this covid-19 crisis implying a strong rebound. in the structure at sap. we are waiting to see if any other news is coming through on their dividend. good morning. it is all about the oil market. nejra: absolutely. 20 7%revenue increased for sap. the tech sector is going to be in focus this week. in the u.s. as well, we have the following revenue and the pulling away of the forecast for ibm. tech has been resilient in the equity market. if that falls, we may question

the recent rally. front and center is the oil market. we had the unprecedented drop with negative prices on the wti on the may contract. we will question and dig into what happened there. did it have to do with people long wanting to roll over to june. and it reflects what we know what is been happening in the physical market for quite a long time. if you look at the markets, we are seeing a little bit of a rebound in the may contracts so we are back in positive territory. $21.contracts, around elsewhere, you are seeing red on the screen in terms of asian equities. dollar strength. the kiwi underperforms. we had some comments from adrian or in terms of the monetization of debt. around $25 a barrel. president donald trump says he will sign an executive order temporarily suspending immigration into the united states.

this comes as the country tries to contain the spread of the coronavirus. in a tweet he said his decision what also protect american jobs. thepresident has said pandemic has strengthened his desire to restrict access to the u.s. how did this announcement play into the trump administration's push to reopen the economy? >> another restriction for the u.s. border. one thing we don't know is the scope of who this will affect and that timeframe. we have seen more restrictions from the administration on the border with travel from china, europe, mexico, and canada. of also using this desire the president to restrict the border. this also plays to his base. this is something the president ran on in 20 16. cracking down on illegal immigration as well as construct

a wall with mexico. at this thing time he is pushing for the u.s. to reopen. some southern republican governors are pushing parts of their society to reopen this week. movie theaters reopening in georgia and beaches reopening in south carolina and florida. there are ongoing morning so that there is not enough widespread testing in the u.s. and many say we could have a second wave. a number of governors said they are not prepared to reopen because they don't feel they have the materials like slobs in order to do widespread testing. : this goes to the heart of what morgan stanley said over the weekend. can we talk about the oil market. yesterday was a catastrophe for may numbers. how do we repair the damage?

what do we know so far? >> yesterday was an extraordinary day. what many traders told me was that this has been playing out in the physical market for quite some time. the way the president describes of a financiale situation than an oil situation. in his press conference yesterday he talked about the securities petroleum reserve in the u.s. he said he would like congress to approve this but at a minimum, they will open this up for storage. getting that through congress will be a political battle. we have seen in other phases as with the relief package, that congress is not playing ball. the other thing potentially -- senator kevin cramer from north onota has pushed on tariffs saudi arabia. this is something that the

administration could look at. i know bob mcnally told you in the last hour that he thinks this is where they will start first. nejra: i know you're keeping a close eye on the texas railroad commission. goldman saying a violent rebalancing in u.s. production is coming. citigroup says if global storage loosens more quickly, wti could be chased to the bottom. the u.s. has information that north korean leader kim jong-un was in critical condition after surgery last week according to an official. not knownt status is and the trump administration is seeking more details. last weekent surgery and has now not recovered. back at.k., hitting criticism that there are encouraging signs the pandemic is slowing. set to of parliament are return and at the top of the

agenda, scrutinizing the response by the government to the outbreak. israeli prime minister benjamin netanyahu and his rival have reached a power-sharing agreement bringing the country closer to emerging from political paralysis. he had previously refused to serve with netanyahu but he cited changed circumstances. 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. manus? says mayrry kudlow could turn out to be the month of transition to a better economy. up next, we bring our interview on bringing america back to business. this is bloomberg. ♪

manus: this is bloomberg -- daybreak europe. i am in dubai. nejra cehic is in london. -- a realitys check for the rest of the world. imploding in the first 20 days of the month. that is knocking the asian markets. equity futures down. .com valuations --does that make sense? 2%. by over look at wti imploding yesterday on the may contract but studying around the $22 a barrel. as you can see there. the mayude -- that is contracts. down 40%. $1.45. that rebound in asian trade

after the historic trade. that or they would be forced to take delivery of an actual barrel of oil. is no place to put them. american companies are running out of storage. collapsejaw-dropping -- the june contract trading above $20 a barrel but that is likely to see downward pressure in the coming weeks. there will be a violent rebalancing in the american production storage situation. that is according to goldman sachs. let us take this to charles-henry monchau. we are waiting for a violent repricing and restructuring in the u.s. market. we saw a symbiotic relationship between the demise of crude and the drop in the s&p 500.

that relationship giv diverged. without a significant lift in oil? charles-henry: that is a tough question. there are many divergents. , i don'time being think it is. [indiscernible] a narrow group of stocks. it looks like investors learned the lesson of the last 10 years higheru have qe and pay levels for growth. , yesterday to oil there was some technical explanations. real urgency there is no storage.

moving on to the june contracts. i don't see how the markets can [indiscernible] nejra: exactly. that point.p made if you continue to see the challenges in storage than brent will chase wti down to the bottom. in the asian session, we are seeing falls on that crude plunge. credit markets are responding as well. do you think we will see brent react in a similar way to wti? and what implications will that have for your strategy, if so? you can see in offshore.storage is

it is at 70% of capacity. brent will catch up definitely. my issue is on the iu market. the big question for the market cracks?ll we see some of the risk, the credit risk in the united states 30 oddica, it is -- if percent of america has been taken out of commission, what is the credit risk as a result of the demise of shale? that a-henry: we know

very high proportion of the market is coming from oil and this could put pressure on the oil market. this is why they did not have a box. -- a backstop. checked what happened yesterday. further first time ever [indiscernible] there is a huge amount of clo' s. will see if it can backstop that segment of the market. nejra: will you bring up an interesting point. aguest on the show did say few weeks ago that month i should do next and this was before they stepped into junk debt, he said the fed should be buying commodity futures.

should they do that next or do you see equities being next on the spectrum? is a goodnry: that point. i saw that yesterday. some investors saying the fed should buy oil futures. we are seeing a lot of dislocation. not just oil futures. inc. about gold futures. i think we see an indication that the fed was successful to butt the liquidity crunch we are seeing many parts of the insecure to are too fix the financial risk issue. we cannot get fully comfortable at this stage. monchau,arles-henry chief investment officer at al

mal capital. with many states pushing to reopen the economy, the trump administration is proposing a three phased plan. larry kudlow talks about the economic plan forward. the ruleson't think were bad to begin with. there may have been some glitches here and there. i think secretary mnuchin has done a terrific job at treasury working with sba. nothing is perfect but on the whole, judging on how fast the original $350 billion went out the door, i think it is a very good program. mind you, we are stepping up into the medium-sized area but that is being done principally through the federal reserve's main street lending facilities. tore will be some assistance large, important companies that have hardships like the airlines.

i think it is a pretty solid program. there are always tweaks here and there. the fact that it worked so quickly is testimony to its efficiency. jon: i agree. it acted much quicker than i thought it would. i accept that i was wrong about that. a one billion dollar company getting access to the paycheck protection program designed for small businesses, we have a bit of a problem. --that part of the agreement tweak things a little bit so the likes of shake shack, a $1 billion company listed in the u.s. does not get access to those funds for small businesses? larry: i am not -- i have not .ollowed the shake shack story apparently, there were some issues there. they may be able to seek financing through the federal reserve loan facility. i don't want to go there. there will always be tweaks.

we are trying to do this as expeditiously as we can. the whole point is -- we just want to stabilize, put enough cash, a enough liquidity into the economy to get us through the next couple of weeks. that is the whole purpose of this. small businesses and those that work for small businesses. the unemployment numbers are very bad although there is some evidence that perhaps they may be slightly less bad but it is a hardship situation. if we can get through the next couple of weeks and, as you know, the administration's scientists have given the governor's good guidance and a roadmap for reopening in several stages. may may be a transition month into a better economy, moving into the summer. when hopefully, the contraction will give way to some economic growth.

we are trying to set the stage for that and keep folks going with the direct treasury checks, with the deferral of the payroll tax, with the deferral of student loans and income taxes, and on and on. that is what we are trying to do. i think in a short period of time, i have to give credit -- the operating agency has done a good job. us move on to terrorists and trade. the latest announcement overnight is that we will be differing some terrorists on some goods. can you give some clarity as to the purpose of that? what have you done? larry: on the so-called most favored nations where there are hardship cases, we will suspend tariffs for a few months, i think three. we are not rolling back 301's or

232's or other trade deals. but in some cases, the custom if therell be lifted are hardship cases. in particular, there was a lot andoncern about retailers related supply chains getting into the united states. it is a significant action. we want to help folks. certainway to help o industries. and it does not change the president's own trade policy. we are suspending and differing as we have with things like income taxes and payroll taxes and elsewhere in our recovery plan. kudlow sparring with jonathan. on the sectors hardest hit by the measures to contain coronavirus.

leisure stocks are still down. how is the industry coping with the prospect of a summer season with little revenue? and what steps are they taking when coronavirus measures are lifted? theave the marriott ceo and inter-not to -- and the intercontinental hotels group's leader. this is bloomberg. ♪ arun sorenson ada

--ra: this is bloomberg daybreak europe. i am nejra cehic in london. the u.s. senate will meet today for a potential vote on an emergency stimulus package. fundsgislation would add to the full business aid

program. house speaker nancy pelosi said negotiations are "down to the fine print." still with us is charles-henry monchau. we were discussing the view yesterday that u.s. equities because of the way the u.s. has moved quickly. -- has moved quickly to counter coronavirus. do you have a preference for u.s. equities in your global view? charles-henry: yes. more easilyly supported than any other markets. they are able to fine tune and engineer the economy with the treasury. also, the top five stocks make up 20% of the index. fasthey are growing very

and they are taking market share. they are driving the valuation higher. why they are pulling in a lot of domestic money. this is why we still like u.s. stocks. look at, you need to the u.s. versus north asia like korea, taiwan, or even china. they may be able to grow this year. manus: charles, we have that conference today about u.s. equities. charles-henry monchau. we are trading at 18 time the earnings.

up, we are going to talk about another leader. kim jong-un, we understand he is in critical condition. what is the latest news from north korea. ♪

manus: a very good morning. i am manus cranny alongside nejra cehic it -- nejra cehic in london. wti rebounds after plunging below zero for the first time after the may contracts expire. u.s. crude for june delivery is at $21. the kospi trades lower on reports that kim jong-un is in

critical condition. willd trump said he temporarily suspend immigration amidst the coronavirus as some states are preparing to reopen. larry kudlow said the president will reopen the economy if it is safe to do so. smaller gains in new virus cases in italy and the u.k. about the discussion around oil and what donald trump is prepared to do next to help us remain above zero. nejra: absolutely. welcome to daybreak europe. a devastating day for oil yesterday. we have some breaking news coming through. guide dueg its 2020 to coronavirus. this is amidst the uncertainty. it remains confident it can deliver on 2030 goals. in terms of the first quarter,

beat ons came in with a estimates. first quarter revenue coming in stronger than expected. it is the withdrawal of the 2020 guidance. the abandonment of that which is the key line to look at here. and to go back to oil, because i know we both want to talk about it, really devastating day yesterday. we asked how much of it had to do with the rolling over of the may contracts -- people that were long oil to get data that -- it reflects on what we have been saying for a while. the storage issues. manus: yes, absolutely. we are going to talk to harry tchilinguirian. with a whimper and out with a primal scream. what will donald trump be willing to do? there is a flotilla of saudi oil on its way to the u.s.

that is the worst optic. nejra: it is interesting because citigroup said -- if the storage challenges continue, you could see brent chase wti to the bottom and you have goldman also talking about volatility and some kind of disruption we could see in production as well. how are the markets looking? manus: it could be a violent reprising. that is what goldman sachs was saying. we dropped sub $40. volumes or 40 times higher. will there be a rebalancing -- goldman sachs says. this is all about tender and read tender. retail investors do not want to take delivery of a tanker of oil. you have that process going on. equity markets. 26% higher than the crushing low

of march the third. the hedge funds have wrapped up the short bets by 50%. since the 14th of april. the dollar is bid this morning. best yearoking at the since 2015 for the dollar as a federal reserve prepares to work -- prepares to return to work. i have put it at breakeven, the deflationary risk for oil. it is a clear and present danger for the fed. nejra: absolutely. i love that you put those breakevens in. you have pgim saying you may for buying tips. president donald trump said he will sign an executive order temporarily suspending immigration into the u.s.

this comes as a country tries to contain the spread of the coronavirus. in a tweet, he said his decision will also protect american drops. s. american job manus: let us get the very latest on north korea. the u.s. has received information that kim jong-un is in critical condition after artiodactyla surgery last week. according to unidentified u.s. officials, the administration is korean leader's condition and are seeking more information. engle.go to stephen bits of the known information? some officials would speak on a condition of anonymity. it all interrupted -- it all erupted this morning when there

the leader mayat be in grave danger after surgery. according to this u.s. official saidpoke to bloomberg, he his condition had turned worse after the surgery. there was a lot of speculation last week because he did not appear on his grandfather's birthday celebration. it is the day in the sun holiday. one of the biggest dates on the north korean calendar. there was a lot of speculation about where he was. that he would not normally miss these kinds of events. the unification agency in seoul said it was inappropriate to speculate about his absence. the south korean government said today's reports about him being gravely ill are not true the it did not give reasons as to why it believed it was not true. nejra: what do we know about

possible succession? reported tore is no the outside world a plan for succession. he is 36 years old. one thing we can probably look at is who has been elevated recently. after the february 2019 failed summit with donald trump in purged hisjong-un inner circle elevating others including his youngest sister. remember her? she came onto the global stage at the olympics in 2018 becoming the star of that olympic movement. she has been recently reappointed to a position within parliament and the politburo. she is 31 years old. she has also been appointed as liaison with donald trump. she has been thrust into the spotlight. there is speculation that if

indeed him jump on would be incapacitated or would succumb to these reported injuries that perhaps come again we are just speculating, that his youngest sister because it is a dynastic regime, that she could possibly take over. manus: there you go. a female leader possibly for north korea. our chief north asia correspondent, thank you for that information on the succession. collapsedtrillion has -- virgin australia has collapsed. deloitte has taken control of the carrier. branson said the airlines in the u.k. and australia will not survive without state help. he is also trying to raise as much money as possible. ibm is reporting falling

revenue. byes declined nearly three 5% in the first quarter. the latest in a hurdle for the company in transition. expects a demand for hardware to remain stable. co-chief executive jennifer morgan is leaving the company at the end of april. she was appointed to the position at the german software company in october. bridget klein will now be the sole leader. sap reduced month, its annual revenue forecast saying the virus had derailed significant amounts of business. that is your bloomberg business flash. said the dividends of 1.58 stays and will be dealt -- at their may 20

annual general meeting. let us look at the hardest hit sectors by the coronavirus. you had a rebound in march from a low. now, they are down more than a began ince the selloff late february. european hotel operators have seen their shares tank as occupancy levels plummet to record lows. here is the ceo of ihg speaking to bloomberg. for much a franchise of our business. most of our hotels are small businesses. they may employee 15-50 people. people that work in our hotels around the world and many of those people today have been furloughed or have

been unemployed. program past the cares and the payment protection program. at the corporate level, we have salariesing peoples and capital expenditures focusing on liquidity to make sure we can get through this challenging time in the industry. >> having an asset light business, how has that protected you as a company overall from falling into a deeper crisis? keith: we were some of the less leveraged hotel companies out there in this industry. we have less assets and therefor less exposure. we have been focused on customers, owners, and colleagues. customers -- we have given them flexibility on bookings. colleagues -- we have been helping them access the programs around the world. there is a program in the u.k. with the government is funding

up to 80% of someone's pay up to 2500 pounds. or accessing the local unemployment in the u.s. with our were owners accessing small business loans. we have been focused on that. those are the people being hardest impacted. we are looking after all of those stakeholders and we believe we can come out of this a stronger business. people talk about challenging. i have been through the financial crisis, through 9/11, and we have never seen demand dropped like this. the industry will have to think about how to come out of this and how do we work with government and as an industry to help businesses stay vibrant at this time. and stay open. >> we wanted to talk about the new normal but i wanted to ask you about the experience of your owners and your colleagues with the small business loans.

we are hearing very young reports about availability and we have heard some controversy. what is coming back to you as your colleagues report in? ihg hasor the record, not received any funds from the paycheck protection program. we have been hosting webinars from day one. we have had good success with them. a number of wonderful stories about hotels, the holiday inn express that was closed, they were able to access the program and reopen and hire back their staff. it is not been perfect. when you think about the small business association -- they did $300 billion in a month which is a testament to them trying to help out businesses, as many as they can. one of the things we have been saying to the government is -- great first effort but these

programs will need to expand and be extended. this will not be over in a month. theave to think about long-term health and stability of the industry. one in 10 jobs globally and in sector. are in this a lot of small businesses who buy from local vendors, who higher local construction workers to build the hotels. it is the interconnectedness of the economy. carol: does the government understand that? do they understand what really needs to be done? keith: i have had a couple of calls with the u.s. fed and we have been in gauging but the white house. they really do understand that they had to move quickly. they do seem to understand that they will have to do more. hopefully, we can get the next part of the package out. it is the responsibility of business to help educate them on the impact of this more broadly

and also how we are part of the solution. we are trying to help out as much as we possibly can. hg ceo, keithas i barr. we discuss oil next. this is bloomberg. ♪

nejra: this is bloomberg -- daybreak gear. i am nejra cehic in london. active the oil story and the devastating day that took the wti may contracts into negative territory. joining us now is harry tchilinguirian from bnp paribas. are we going to see this happen again at the end of june? harry: i think there is a risk of repeat of this kind of price action with the expiration of

the june contract. a lot will depend on the storage and whether it is saturated which would lead to these parabolic moves that we have seen for the may contract. to be seen. will the u.s. government have a space in the strategic oil reserve allowing companies to park some of their excess supply there. we will see -- we will have to see about the saturation issue. manus: run us through the numbers. thatre deeply suspicious we have not run out of space at cushing. parabolicy then this implosion and the numbers on storage. harry: the argument for storage is a good one. the only thing we are concerned about is that we did not see the movement in the time spread so the shape of the curve between the june and july contract -- we did not see a move in that

spread towards a spread between may and june. essentially, the level of co-mingle was simply not reflected in the next set of price differences. we should have seen june discount a lot more. in effect, we have not reached y.orage capacit it does not mean that we won't. it leaves us with a liquidity problem. people long oil are desperate to get out of position. he unraveled, they had to discount their offers to the point of getting into negative prices. essentially paying someone not to be long oil by the time the contract expires. you would have to take physical delivery at cushing if that was the case. nejra: it is really interesting your thesis on what happened yesterday in terms of the funds needed to get out of that may

contract at any cost and your skepticism around cushing. with that in mind, you had citigroup cited -- look, if the storage challenge continues, brent will chase wti to the bottom. will that happen? and if so, how soon? harry: i think there is a good case in this instance. if you are saturated in terms of storage capacity, the u.s. may try to push out even more exports of crude oil. light u.s. crude oil coming to compete with brent could be the mechanism of a price convergence to the bottom as mr. morris has put out. i have some sympathy for that view. as you essentially fill up at home and you push your excess supply out to international markets, u.s. light oil will compete with the benchmark of the north sea leading to a price

convergence and taking down wti -- and taking down brent to a lower level. manus: how important was the firsting when on may the they would go to 8.5 million ? how important is that? harry: it is good for shaping sentiment for the longer. . yesterday was symptomatic of a particular expiration of a contract. difficulty with announcements of reductions in supply from opec plus and saudi in particular is that a lot of the nominations for cargoes have already taken place. the ability to reduce production even though the cuts are in. effective as of may 1 come a we will not see the sort of reduction promised off the bat in the first month. i think it is going to take some time before the reductions begin

to leave -- begin to reach the levels pledged by opec plus and as a result, we will have to live with surplus and concerns around how the surplus could lead to saturation of storage capacity globally. are u.s. production cuts coming? harry: i think we will have production cuts in the u.s. they are probably forthcoming faster than expected. a number of companies have already indicated that u.s. cuts, chevron, occidental, and there will be more as we go through the earnings season reports and i think we will get guidance there. looking at the results -- the number of idling and in active rigs in the u.s. come i think it is inevitable to see a sharp decline in production especially

if you bring back that storage capacity limit into the picture. i think that production will have to decline before we even hit that limit of storage. nejra: harry tchilinguirian, a pleasure to have you with us. and thank you for your patience. stay with us. this is bloomberg. ♪

manus: it is bloomberg -- daybreak year. nejra cehic is alongside me in london. lockdown.easing we will keep a sideline on that. it is all about the plans to reopen. easing the lockdown. that is an important headline for italy but also it is a

buildup to the euro virtual conference on thursday. what do you need to see out of that to stop the euro from dropping further? back in terms of the spreads widening recently. all eyes on the euro group. making an up or indecision. is will theymark come with something that is long-term effective? or will they kick the can down the road as has happened so many times? they need to come with support which is failing on the rising spreads. nejra: charles-henry monchau, great to have you with us and he why so much. that is it or daybreak year.

european futures down more than 2%. u.s. futures in the red as well as the may contract for wti rebounds slightly. this is bloomberg. ♪

anna: welcome to "bloomberg market: the european open." i am anna edwards live from london alongside matt miller in berlin. matt: markets today, mayday wti contract expiring, come off lows after hitting a -$40 a barrel in new york. european and u.s. futures follow asian stocks lower, the cash trade is an hour away. let's get your top stories