♪ ♪ ♪ ♪ >> a record wipeout in oil. as june contracts go below $21. u.s. officials learn kim jong-un is in critical condition after a heart surgery last week and are seeking clarity. and president trump suspends immigration to the u.s. over coronavirus concerns, as some states end their lockdowns.

we've had a pretty eventful 36 hours. the price of oil, we look at the mechanisms that led to that. we will look at markets. we had an interesting note on the pound. brexit has taken a little bit of a back step with so much, the lockdown. yesterday was the first day of talks resuming on brexit between e.u.u.k. and e.u., the saying they will not extend the transition period. >> we begin this busy newsday with wti true -- crude again below 0 dollars a barrel, recovering from yesterday's wipeout which saw plunges in new york of up to -$41 a barrel, the first time they have gone negative in history. the june contract trading above

$20, spread reflecting growing concern over shortage of storage space. the u.s. has information north korean leader kim jong-un was in critical condition after surgery last week, according to an official. his current status is not known. the trump administration seeking more details. south korean officials say kim is conducting "normal business." president donald trump says he will sign an executive order temporarily suspending immigration into the united states, as the country tries to contain spread of coronavirus. the president announcing on twitter, not offering much specifics, but saying the plan would also protect american jobs. israeli prime minister benjamin netanyahu and rival benny gantz reached a power-sharing agreement, which brings the country nero to emerging from more than -- and nearer to emerging from more than a year

of political paralysis. benny gantz previously refused to serve with netanyahu but cited changing circumstances with the coronavirus pummeling the country and its health system. italy is expected to gradually ease its lockdown according to the government's post on facebook. trome is working with experts on twoan for so-called phase as people begin to get back to work. this is bloomberg. francine? francine: thank you so much. a pretty historic day when it comes to oil prices, crude crisis facing a wipeout. >> nobody's ever heard of negative oil before. >> we probably will not see this again in my lifetime, but it is

a reflection of how oversupplied the market is, how weak demand is and how tight the term structure has gotten. >> we could start to see this next year starting to come into balance, but it's a matter of going forward. >> north american production will be structurally impaired. >> a perfect storm for oil producers out there, and you see that in the prices today. >> an oil patch in this much trouble is not good for the u.s. economy. >> everyone will be looking at and taking signals what is ispening, whether the u.s. recovering. if not, june could follow may. francine: to talk about dislocation, oil prices and the easing of some lock in europe and elsewhere, we're joined by philip hildebrand, vice chair at blackrock.

thank you for giving us a little time. we've never seen anything like this price of oil. that would be a little too simple. we've never seen anything like the contraction of the global economy. 73%, thedemand down lowest since 1960 eight. global aviation traffic is 5% of what it would be a couple weeks ago. all this is not just a technical matter, but reflects in the big picture and extraordinary unprecedented situation in terms of the global economy. the microwhat are implications? philipp: it is a consequence of

what's happening in the global economy, rather than the cause. long isquestion, how this going to last? to what extent can we really be helpful some restarting of the economy, you mentioned european countries are in the process of restarting. happen,extent will that and to what extent will the bridging policies implemented throughout the world work in safeguarding some of the underlying production capacity, reopen,things begin to carefully and cautiously, we can go back to higher demand for oil? i think that's the real question here. oil marketse in today is a consequence of what's going on in the global economy, as opposed to a cause of things that will happen, so i think we

have to kind of reverse the logic here, begin with the global economy. francine: so are you saying the oil market could be telling us something about the state of the economy the rest isn't? does this give us a glimpse of how bad it will be? philipp: i think if you look at some of the numbers i quoted, then you can see how oil prices reflect this unprecedented contraction short-term that we see in the global economy. there are some technical dimensions that led to this very extreme price movement, in one-month contracts. but overall, what we see in oil prices is a reflection of what's going on underneath it more broadly in the global economy. this is an unprecedented contraction of activity, and the normal business cycle logic doesn't apply here.

this is not something just happening. it is instigated by government, a deliberate policy to halt a significant part of the global economy in order to slow down the spread of the disease. that's what we are seeing, and we will start to see more and more of these consequences in data points, contraction of activity, and in this case the oil price. francine: are you worried about financial stability in the u.s., if the shale industry really gets into trouble? philipp: look. i think the number one concern i have, the number one priority certainly all policymakers should have, probably all market participants, is that we have to prevent this extraordinary contraction that again was done ll over into api

financial crisis, a credit crunch. so the key priority going forward is prevent this from ailling over and turning into financial crisis. so far, this is very different than 2008. so far, this is not yet a financial crisis. it is a health crisis that has caused an economic crisis, and the key now is to prevent it from becoming a financial crisis. in the end, what's going to determine longer-term asset prices, what's going to determine damage, is not really had deep the contraction is in the short-term. we know it is unprecedented, deeper than anything we've seen before. these are knowns. the key question, can we prevent it from causing huge damage over the long-term? the big question is going to be,

what's the cumulative loss of output over the next couple of to preventin order that from being huge, we have to prevent it from becoming a financial crisis. oil it self i don't think will lead to a financial crisis here, but of course you could see a wave of bankruptcies throughout the economy, and that could lead to a significant pressure on bank balance sheets, could lead to a credit crunch, and that's the thing to avoid going forward, so that we have a different outcome than what we had in 2008. francine: so what more do you think can be done? and is it policymakers? is it governments? is it everyone together, to make sure we avoid a financial crisis? philipp: i think that's absolutely, has to be the most important policy objective right now, to, as you know, throughout the globe, we have seen

extraordinary developments on the policy front. they now have to be executed effectively. the overarching priority is to prevent this from spilling into the banking sector and mutating into financial crisis. because if we get that, then we are going to have a very a propagationct, of this short-term contraction into the longer-term, and that will be extremely damaging. that's the number one priority. the good news, the public sector has reacted in a way that is absolutely extraordinary. the expansion, this one number of the expensing -- expansion of the balance sheet of the federal reserve in a few weeks, the last couple weeks, has been far greater. in fact, it's been a multiple of the entire expansion of the balance sheet in the years after the financial crisis. you sort of a

symbolic figure of how extreme the policy response has been. we have gone from working through financial markets to disturbing money directly to corporate and households. we now just have to make sure the execution of these policies is effective, so we can prevent the spilling over into a financial crisis. francine: thank you so much. philipp hildebrand, we continue the conversation in a couple minutes. coming up, plenty more on oil, a stellar lineup for you to try to figure out exactly the consequences of the wipeout in oil. 9:30 london time, we speak to the former chief executive. and later the former chief executive of bp, john browne, whose fund fund ceo posted their best month by betting against oil. all that and more coming up.

this is bloomberg. ♪

francine: welcome back. this is "bloomberg surveillance." i am francine lacqua in london. let's get straight back to philipp hildebrand of blackrock. we were having a good conversation about oil, and the this doeso make sure not turn into a financial crisis. when you look at the measures out there, the guarantees, loans by government, what are you worried about, that they are not big enough for the execution? philipp: i am worried about the execution. first of all, the size is bigger than anything we've seen before. you have to go back to world war ii to see any similar fiscal

expansion numbers. willrankly, the numbers get bigger as they need to get bigger. pretty clearly governments are committed to doing everything they can. is, can they be designed in a way that they work both in the short-term of getting money where it needs to avoid and longer-term, to societal problems around fraud, wrong placesthe causing major societal pushback down the road. these are the things i'd worry thet, not so much size as design and effectiveness, particularly the money that goes to corporate's to avoid bankruptcy. dangere: is there a companies propping up or sectors that need a lot more transformation? is there worry it's not reaching

critical companies that really need it, but reaching companies that shouldn't survive, zombie companies, companies that aren't viable? philipp: there's going to be some of that. i think that's unavoidable. the better-designed programs will alleviate some of these concerns. thatin countries' programs are badly designed will see more of this. is toe overall objective preserve the economic bridge the economy during this lockdown, and they will be some misallocation. i don't think we should be overly worried about that, frankly. more importantly is that the money actually gets into the economy. i think unfortunately some of

the issues we've seen in the last years about in equal -- inequality, the weak getting weaker as they get into this crisis, we will have significant fallout from all of this. that's been my experience from the financial crisis, and i worry that's something that will happen again. if you go into this crisis vulnerable, you are very likely to come out of it even more vulnerable. that's the reality of what's happening, and whatever we can do to address that, policy to address that, will be very important long-term. kind of financial one,s, if we end up in would it look like? much worse than 2008? would central banks have the tools to deal with it? philipp: i think we have to prevent it, frankly, francine. get the combination of

economich crisis, an crisis and have it mutate into financial crisis, that would be a devastating outcome. this is really all about theenting the spread into banking sector, ensuring viable companies do not go bankrupt, try to do whatever we can to avoid mass layoffs in viable sectors of the economy, building a bridge so that by the time the the diseasens, curve flattens, we can see the economy coming back to life with productive capacity still in place. i think that's the key objective here. we will see. we are now entering the opening phase, so we will see, i think, within weeks, certainly months, whether these policies are working. in some cases, i am quite

confident they will. but we have to stay focused on doing everything we can to prevent this from spilling over into the financial sector. francine: if you look at switzerland, u.s., europe, u.k. and asia, who is getting it right, and who is getting it wrong, with policy? i keep telling my colleagues in the u.s. and elsewhere at blackrock, over the next few weeks, we are entering a critical phase in europe. we saw some of this already in asia, to some extent, and now we are seeing it up close. when we reopen, can we contain the disease curve from rising again? which sectors do we open? how do we combine extensive testing with protective measures, continuing social distancing while we reopen?

i think the countries that have been able to design effective ways to bring money into the corporate sector and prevent mass layoffs in viable sectors will be the ones that will come out of this strong. somequite confident that of the schemes tested in many european countries during the crisis will be effective, including germany and other countries in europe. that will be important, so that when the economy can restart we don't end up with mass bankruptcies and mass layoffs. i think in europe, we have pretty good infrastructure for dispensing this money. so provided we can reopen gradually, without the disease weves once again steepening, should see some positive news coming out of this experiment in the next couple of weeks. but i'm not a scientist, so the

key here is to rely on the expertise of the scientists to determine the right timing, when we could reopen economies. let's hope that what is happening now is indeed the appropriate time. francine: thank you so much. philipp hildebrand, vice chair at blackrock. coming up, more conversations about the markets, many more conversations about crude oil. and a conversation you don't want to mess with the chief financial officer of coca-cola. this is bloomberg. ♪

francine: good morning. this is "bloomberg surveillance." coming up, a full round up of the price of oil. some of the industry had to actually pay consumers to take some of this oil. we will speak to john browne, former chief executive of bp. executive, shortly after this. this is bloomberg. ♪ ♪

francine: this is "bloomberg surveillance." i'm francine lacqua in london.

we had a dramatic fall in the price of oil. beneath $20 falling a barrel. in the may contract still in negative territory. we will have a full round up of oil new shortly, but let's get to new york city with first word news and viviana hurtado. viviana: we begin with encouraging signs the coronavirus pandemic in the u.k. is slowing. members of parliament are set to return. they will likely scrutinize the government's handling of the viral spread. yesterday, data showing the number of people hospitalized in london is falling. now to germany, where chancellor angela merkel is urging caution. to does not want the country move too quickly and relaxing its covid-19 restrictions. the country has not reached its target even though it has achieved a lot. governments around the world are trying to avoid a relapse in the pandemic as they work to reopen

their economies. and virgin australia collapsing as the coronavirus deprives the debt laden company of almost all its income. administrators have taken control of the carrier. before the announcement, sir richard branson saying without state help, the airline in the u.k. and australia will not survive. much trying to raise as money as he can against his caribbean base. revenue pulling its profit forecast for the year. in the first order, sales declining nearly 3.5%. it is the latest hurdle for the company in its transition cloud cloud computing. amid the pandemic, the company -- ibm proposed -- global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg.

francine? thank you soiana, much. let's go back to the price of oil. a moment ago, wti for june falling below $24 a barrel -- $20 a barrel. sending shivers across the spines of everyone in the market yesterday when it went negative and is staying in negative territory. what didn't make sense is the absurdity of some of these industry needing to pay others to take their nonexistent storage, what that means for the industry at large. we are delighted to be joined by the former chief executive who led the company in 2014. why did opec plus, the agreement that happened 10 days ago not prevent the price of oil from falling so catastrophically? well, because this agreement 10 around cutting down

million barrels a day. late and too little, much too little. the consumption of oil in the middle -- 7070 million barrels a day against consumption of 100 million barrels a day. francine: is there anything opec-plus can do? would they be able to cut $30 million, or -- would it be it would to cut 30 million barrels, or is that o unpalatable? paolo: united states in the last five years has been cutting oil production by 6 million barrels, 7 million barrels a day. you cannot have the u.s. continuing to grow production and demand to russia and opec to

cut down production. totallysomething unacceptable. u.s. need to see the driving down their production, to of course we also need drive clean cars and to start the driving season in the u.s. for the consumption of oil to go up, otherwise prices are going to be depressed in the area of $20 a barrel -- i'm talking about the brand -- for the near future. francine: i find it so crazy. many people in the markets knew that we saw negative price of wti. this is explained because there is not enough storage. was there a storage problem? who created this concern? i know it is because we are suspending the economy, but if we -- do we have the right infrastructure going forward to

deal with these dislocations? infrastructure to stock wti is quite important in the u.s.. in oklahoma, the storage capacity is very high. but if consumption collapsed completely, storage capacity filled quite quickly. they are at the top. commercial storage is almost full. prices arelains why negative yesterday. i don't think this would last for very long, but much of this is linked to the limitation in , which coming flying still exists in the u.s. how do you see this playing out? you worry about the high-yield markets? about many companies having to

go bust because of this? well, certainly all of the companies involved around shale oil and shale gas are in deep trouble. i think -- i read somewhere that they have a level of debt of which are20 billion, probably at risk. billion of loans which will not be repaid i think is a problem for the u.s. as well. go, i alsoefore we want to get a sense of how much you worry about italy's economy. is the government putting the right measures in place? was there enough solidarity for europe, or is there a risk that italy will need a bailout come the end of this? i have to tell you, in my

view, the majors in the italian government are probably taking it in the right direction. from a bureaucratic point of view, it is quite difficult to have these measures really put in practice. money thatnt of should reach the consumers or the industrial sector or the commercial sector are so difficult to be put in place that for the time being, nobody which is theding real problem we are facing in italy. francine: thank you so much for joining us, paolo scaroni, the of any,hief executive now with rothschild. we will speak with john browne next. coming up shortly, we talked

about equities and north korea. this is bloomberg. ♪

francine: well, good morning, good afternoon, good evening. this is "bloomberg surveillance ." i'm printing lico working from home. -- i am francine lacqua working from home. hotel industry is being hit brutally by coronavirus, the fact that no one wants to travel. operators have seen their shares tank. here is the chief executive

intercontinental group speaking to bloomberg. >> we have a model where we are basically a franchise for most of our business, so most of the hotels we have around the world, 6000, are really small businesses, individually owned hotels that may employ 15 to 20 people. today havese people been furloughed or unemployed, so thankfully the u.s. passed the cares act and had the paycheck protection program, which enabled small businesses to hopefully retain a lot of staff. at the corporate level, we have been cutting people's salaries, cutting capital expenditures, focusing on liquidity to make sure we can get through this very challenging time in the industry. havingng said that and business, how has that protected you from falling into

a deeper crisis? keith: we were some of the less leveraged companies in the industry, and since we do not own a lot of assets, we had less exposure. our focus has been on customers and colleagues and on our owners and how we help all those individuals and stakeholders get through this. customers, it is about flux ability on bookings -- it is about flexibility on bookings and so forth. funding up to is 2500 pounds of someone's pay or accessing google employment in the u.s. with owners accessing small business loans that turns or grants. it has been very focused on that because those are the people who have been the hardest impacted. we know by looking after all the stakeholders in helping them get through this, we can come out of this the stronger business and the healthier business. people talk about challenging. i have been through the financial crisis, through 9/11, and we have never seen demand to

like this. an industry is going to have to think about how do we come out of this, how do we work as government and as an industry to help businesses stay vibrant, reopen, and what the new normal looks like going forward. carol cat we have been wondering what the long-term impacts will be on the travel industry -- carl: we have been wondering what the long-term impacts will be on the travel industry. before 9/11 we kind of easily went through. that changed dramatically. will there be temperature checks, some kind of tracing and tracking in order for the world to kind of go back to how we knew it? before the virus? it is an excellent question. we had that same conversation with other ceo's, and people said travel. i can still remember 9/11. was traveling- i

to the east coast when the planes hit the towers. we said will people travel again? we did, it is just different now. we take our shoes off. you cannot meet friends and family at the gates anymore. but we did get back to travel because from a business -- leisure travel is something that people love to do, but i think the experiences will change and travel as we learn from this. it may lead to temperature checks. francine: that is keith barr of intercontinental group. let's get to the investment director for personal investing is this at fidelity international. tom, great to have you on the program. what is the news for the industry -- what is the new for the industry? do you worry about companies going back group?

is less of ait problem than it looks. this is a very dramatic move. for the first time ever, oil prices have gone negative. it is also a technical issue. it has to do with the expiring of the contract for may delivery today. basically no one wants to hold andwhen there is no storage there is no where to put that oil. that is what has caused this very unusual situation. i think we need to look forward to the june contract to see what happens there. a message to pick up in demand that we will see a storage of shortage facilities in a month's time, just as we are currently. prices moveay see into negative territory again. does this mean this is a new normal for the oil price? no, i don't think so. if you look at the june contract , currently it is $20 a barrel.

this is a very low oil price. this is not good news for the oil industry. but i don't think we should expect negative prices to be the new normal. francine: if you look at the june contract, it has fallen below $20. do you worry that dislocation would happen somewhere else and commodities? think this is an oil-specific issue, and it is an issue specific to the nature of rolling contracts. if you hold oil, you don't want to take delivery come you have to roll it forward to next month's's contract. if you look at other commodities, the industrial metals, for example, you can see .hat prices are very low they are a reflection of the collapse in demand around the world because of the lockdown employed to counter the outbreak

of coronavirus. but this is something that will pass. once we move out of the lockdown phase, this is not like a physical disaster, like an earthquake where supply lines are destroyed. once we get back to work, once people are allowed out of their homes again, demand will pick up again. so therefore prices of industrial metals and oil will pick up. what we don't know is how long it is going to take to get there. francine: tom, where do you see the most value? what do you recommend clients buy right now? tom: the challenge at the moment is really it is a binary question for investors at the moment. it is about survival. if the company that you are analyzing survives the next few months and falls through into

the upturn, the chances are that it's shares are severely undervalued, and that is really across-the-board. and so it is not really a sectors of alighting on that you think are going to do well against sectors that are going to do badly, although there is an element of that. really it is a case of analyzing the fundamentals of a business. does it have the cash flow, the balance sheet strength to survive the next few months? and if it does, chances are that it's shares are an attractive entry point currently. tom, very quickly, what are you most fearful about? the does it mean for financial crisis, for your investment outlook? tom: i think the biggest fear at the moment in the short-term is that the rally that we have seen in share prices is really

nothing more than a bear market rally. we have seen bear markets before . in late 2008 we saw a 25% raise -- rise in the u.s. stock market for lows in 2009. if you look at multiples, they are back to where they were in february before the crisis really began. so that is my fear, that this is a bear market rally and we are testing from here. francine: thank you so much, tom stephenson, investment director for personal investing business -- we go tol stephen engle with more analysis on what is going on in north korea. that is coming up shortly, and this is bloomberg. ♪

francine: let's get the latest on north korea. the u.s. has received information. we understand kim jong-un was in critical condition after a surgery. according to a self. news agency -- a south korean

news agency, the north korean leader is not conducting normal activities. joining us on the phone is our chief north asia correspondent, stephen engle. first of all, bring us up-to-date on what we actually know. was he in critical condition but got out? was he better? stephen: we don't know. even the most credible north korean expert cannot tell what is happening in the secretive state. when you get speculation like we saw today, it can run rampant. we have to go with what we understand, and we talked to a u.s. official on condition of anonymity that they said kim was perhaps in a critical state after undergoing cardiovascular surgical procedure of some sort last week. it is something other media like cnn did been with this morning, saying he was perhaps in grave danger after that surgery. but we are getting comments from south korea's government, saying kim is conducting normal

activities today in a rural part of north korea, according to their intelligence, and that no unusual activity had been detected across the border in the blue house, which is the equivalent to the white house. it has no information on those rumors. but still, there was lots of speculation following kim jong-un missing his grandfather's birthday celebration last week, which is a highlight of the north korean calendar. there was lots of speculation that perhaps he was not will. francine: what do we know about succession, possible succession? well, we don't. when kim jong-un took over his father, kim jong-il had sent out a plan of succession because kim jong-il was ill. keep in mind, kim jong-il and il-sung,father, kim both had heart issues. it is speculated that kim jong-un does as well.

he is a heavy smoker, only 36, but considered to be overweight. we don't know -- we are speculating based on the reshuffling of his cabinet following a field summit in hanover with troy eight -- with trump a year ago. kim jong-un shook up his inner circle and over the last year we have seen the escalation of his younger sister, who burst onto the international scene two years ago at the pyeongchang olympics, kind of was the star. she has been basically elevated into the politburo position there as well as parliament, and has also been taking charge of the correspondence with donald trump to a certain degree. so one could speculate that this is a dynastic regime in north korea, that it could potentially -- again, i am only speculating based on the information i know of the dynasty there -- that it could be his younger sister in line. thank you so much,

stephen engle in north asia. the day started like any other monday, and then we saw the oil price go negative. we will spend a good amount of time today to try to figure out exactly what happened, whether this can be reproduced in other markets. this is currently what we are seeing on the wti contract for may and june, so we did see a headline saying the june contract was below $20 a barrel. the may 1 remains in negative territory. now, screwed features plunged low zero for the first time ever. the move was actually so violent and shocking for many, that traders initially struggled to explain it. we also have to look at what it means for a of these oil companies. shell, bp. a conversation on oil with tom keene. this is bloomberg. ♪ nowadays you do more from home than ever before.

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francine: a record wipeout in oil. crude plunges below zero for the first time. june delivery contracts sits below $21. u.s. officials learn that kim jong-un was in a critical condition following cardiovascular surgery last week. washington wants clarity on the north korean leader's health. and president trump says he will suspend immigration to the u.s. over virus concerns, this as some states look to end the lockdown. well, good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance." i'm francine lacqua here in london. tom keene in new york. we are working from home, day 21, week 6 -- we're not sure. oil in negative territory. it took the market so much by surprise, some people actually had difficulty explaining it. tom: the mechanism of it yesterday was fascinating. i was going back-and-forth