francine: credit suisse takes more than $1 billion in a write-down as the coronavirus hits earnings. newill speak with the banks chief executive in a few minutes. the european economy gets crushed, output plummeting. european leaders meet to discuss a $2.2 trillion revival plan. angela merkel says stimulus should be part of the eu

budget. this is "bloomberg surveillance ." i am francine lacqua. a lot of focus is on earnings, and a lot of focus on the banks. the credit suisse story, i am delighted to speak to the chief executive shortly. that will give us good indication of what the clients are doing. this is what the market is doing. a lot of focus on earnings, a lot of focus on the pmi figures. let's get the board up to get a sense of what the market is doing. april services pmi falling to it was 22.8, now it is worse than expected. manufacturing lower-than-expected, but in mind. the forecast was 38. that has fallen off a cliff.

the dollar is the one you do not want to get wrong in the next couple of months. stocks are fluctuating, oil advancing, and the dollar holding three days of gains. plentyures, we will have more on earnings. let's go to new york city for the first word news. we begin with economic activity in france and germany shrinking this month more than expected. french composite pmi dropping at a record pace down to 11.2. record lowmping to a 17.1, far lower than expected, and paint a grim snapshot to the start of the second quarter. in the u.s. nancy pelosi may class with its mcconnell, she says the near $500 billion aid before the house is an interim step. she wants a major package to

follow, but mcconnell once a slowdown. any major package will of the stateseds and localities, because that is where the health care delivery is, in public hospitals. korea, suffering .t's worth contraction global trade suggesting this year the country may not grow it all. first quarter gdp, the biggest keepss the coronavirus people housebound. the u.k. government surveyed 20,000 households to track the spread of the cod coronavirus. and how many people may have developed antibodies. boris johnson's government facing criticism for not doing enough to trace the outbreak. 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. this is bloomberg. francine: thank you so much. corporate news, unilever has with john guidance because of disruptions from the coronavirus. we spoke earlier to the chief executive and talked about that forecasting growth of 2.1%. >> it is a drastic human crisis we are dealing with. we think we are in the middle of it and not coming to the end of it anytime soon. we are managing our business more for responsiveness and agility to what happened to him walking in on a fixed scenario of the future. everyone who has tried to second-guess what happens with the evolution of this virus, the human impact, has regretted

locking in a position too soon, and that is the position we are taking. anna: should we think about this in the context of a lot of customers in european and u.s. countries stockpiling products, is that a feature of the first quarter, or did you manage -- was that something that did not affect you much? a our portfolio has been degree of internal hedge. we saw soft parts of our business, our food services and supplies for restaurants was very impacted particularly in china. is an area where there are not many tourists out and about. we have a strong hand and hygiene business. the meters on food service and ice cream were partially offset

by strength in her hygiene businesses. .hat has a bigger impact it is primarily limited to the united states. it is in the u.s. where we see a dramatic stocking up. not at all in emerging markets which make up 60% of unilever's business. your supply chain looking right now? have you had any snags? can you give us a view of what your supply chain recovery looks like? context. put it in our response to the crisis has reflected our business, so our first priority was looking after the communities we work in, then the supply of goods adjusting to new demand patterns, and finally worrying

about cash. on the supply front we have 221 factories around the world, and as of this week, the same as last week, we were running at 85% of capacity. thanks to some absolutely heroic work by people on the front line of our supply chain, adjusting to new patterns of demand, securing new supply routes for ingredients, and people coming to work to operate our factories, we have been able to keep her supply uninterrupted. francine: that was the unilever chief executive speaking on the supply chain and challenges. coming up, and exclusive conversation with the credit suisse chief executive, thomas p. gottstein. this is bloomberg. ♪

francine: good morning, good evening, good afternoon depending on where you are, this is "bloomberg surveillance." i am francine lacqua in london. an important conversation with the credit suisse chief executive, let's get straight to this. a $1 billion write-down of provisions, they join u.s. lenders taking a hit as the virus pummels economic activity. i am delighted to be joined by thomas p. gottstein, ceo, credit suisse, joining us for his first interview. thank you for giving us a little bit of your time.

this is your first earnings results as the new chief executive, what a baptism of fire. for the $1 million provision and markdowns, what -- of february,e 14th within less than a month, a lot of things have changed. i am pleased with our results. income, record of net $1.3 billion, and from that perspective i am pleased with the fact we managed to incorporate the reserve build of $1 billion as mentioned, which completes roughly six and million dollars of credit unrealizedand

losses. as you may or may not know, we gap reporter, one of thatew european banks, and includes a meaningful portion within our credit provisions shy billion of write-downs. which are not single main fore-downs, but write-downs the entire lending bull. with respect to assumptions, we clearly assume a significant reduction in gdp in the second quarter of roughly 20% in the u.s., and huizinga biggest in europe. in switzerland we expect recessions not only in the u.s. but europe and to less of an extent in switzerland. our models assume recession for

this compilation. francine: is it the assumption that is reflecting current expectations of the lockdowns being eased, and the government functions working by may or june? or is it a bigger stress test? thomas: we assume recession for europe, the u.s. and switzerland, and we have done this on the basis of the end of march assumptions. we factor in the slow removal of lockdowns based on our current knowledge. , we work withy various scenarios as part of our calculations. francine: how has trading held

up in the month of april? thomas: quite good actually. volumes are still quite decent but have come down a bit. it has stabilized clearly, but transactional revenues are quite strong. look at oil,n you monday was an incredible day with wti turning negative. what is the impact of the oil meltdown on credit suisse? few of ourtouches a businesses, but one has to say oil and gas our exposure is less than $8 billion, and roughly two thirds is investment grade. reduction the way a from the levels

we had at the end of 2015. we have been reducing our oil and gas exposure over the last three years, but it touches our other businesses like chief finance, like commodity trade finance, but so far it has been actually a moderate impact. it did impact to some extent our credit provisioning. on a single name basis, it has been moderate. yourine: will it impact decision on how much more invested you are in this sector and how much more you will lend? tooas: no, i think it is early. we have to observe how the oil and gas market will develop. there are no strategic shifts at this stage. can you stick to your

pre-virus targets once economies reopen, or is it too soon to know how governments will progress? thomas: our target has been and continues to be to return 10% or more. if you look at the last four quarters, we have achieved that. clearly wee 10%, but have to be cautious about making for the second through fourth quarter given the circumstances. our midterm target clearly remains that we want to stay above 10% on tangible equity. francine: do you worry about anything being systemic? i do not know if there is concern about the fault in the shale oil in the u.s., or if there is a sector that can

become something that looks like the financial crisis. is in the first instance, health crisis and a broader economy crisis, not only about oil. this is about transportation, retail. if we look at the first quarter results of the u.s. banks, and our results, banks have held up very well. we are far from a financial we have to clearly stay disciplined going forward in terms of our capital and liquidity management, but in terms of our cost management. i am confident in the position we have, in a strong place to do that. suisse led thet ipo of a starbucks imitator in

china which was revealed to be a fraud. how are you responding to this? thomas: i do not want to comment on single names, apologies for that. francine: does it change your strategy? the liquidity strategy was to lend to entrepreneurs, does it change your strategy targeting wealthy entrepreneurs? thomas: not at all. , i believe in it because it combines our strength in private banking and investment banking, and we have had so many success stories all over the world. unfortunate that it happened, but we are still at the beginning of various investigations, a lot of parties are involved.

the company, the arbiters, law firms involved, etc., so too many parties involved to make any early -- to take any early conclusions. francine: you were trying to figure out losses in asia, and there is a reference to a food and drink company, and one counterparty which drove down results. can you give us specifics on who those are? no, the single party that was mentioned in global markets is a u.s. based client, and i do not think it is appropriate to talk about names. thank you. talking about whether there is an opportunity for european banks and credit suisse

to get market share from u.s. banks, because given the economic situation and interest rates. think we all have our challenges. we are supporting the swiss market, the u.s. banks are supporting to a larger extent lending.market to clearly what has changed is the interest rate differential. where we have negative interest rates and strong positive just rates in u.s. dollars has diminished. that is certainly something that is a little bit back in our favor, but nonetheless we are with ag our own strategy strong investment banking capability supporting our core business, private banking. that is a global effort which

includes the u.s., asia, emerging markets, but obviously our home market in switzerland and the rest of europe. francine: what about your business will permanently change after coronavirus? it is too early to say, but i was fascinated and positively surprised how well things worked with people working from home. able tomore than 90% work from home. we have on any given day 80% actually working from home. the main areas where it is less than that where people are still in the office is in hong kong in switzerland. in switzerland we have two thirds of our branches open, but 70% working from home. it has clearly accelerated the whole use of online banking and digitalization.

that will continue, and also will make us ask our question, should people work well from home. do we need that much office space and things like that. these are things we are definitely learning from this crisis. ,rancine: thomas p. gottstein thank you so much for giving us a little of your time. he is the chief executive of credit suisse. coming up, a great conversation with nancy pelosi, and the health minister from italy. we will talk the lockdown and where we are in the virus and on testing. this is bloomberg. ♪

francine: this is "bloomberg surveillance." european stocks are dropping, investors are trying to figure out the latest signs that the virus has on the global economy. we had some big figures in terms of us uprising slump in activity. wti rising to $15 a barrel in new york. this is bloomberg. ♪

francine: good morning, everyone. francine lacqua in london.

the focus is on coronavirus. numbersfocus on those that are ugly out of europe. european stocks currently down 0.1%. crude rising to about $15 a barrel in new york. we did have some pretty physical figures in terms of oil. we had a lot of figures in terms of what we are seeing. dollar holding onto some of the gains. we are expecting some pmi figures out of the u.k. dollar holding three days of gains against its major counterparts. we have u.k. data, april services pmi falling to 12.3%, from the 27 point 8% we were expecting. manufacturing at 32.9%. , it is, just like europe really services that are hit even analysts were expecting. we will get to that in a second.

we will also look at a great conversation with the deputy health minister of italy, but let's get straight to new york city with viviana hurtado. profit from traders inside information on russia's negotiations with other oil producers? the u.s. regulator is seeking answers. the regulator is probing of tips leaked out this potentially net it's some investors hundreds of millions of dollars in illegal wagers. withdrawinger financial guidance. like other consumer goods ispanies, you know lever benefiting from strong sales of cleaning products. inng offset by weakness other products like ben & jerry's. >> we have a new range of hygiene products that was ready

for launch in china. tohave accelerated that international based hygiene products. was a tinynitizers part of the business. in the last month, we have stood up 30 production facilities. viviana: we end with the european commission floating into trillion dollars recovery plan as it seeks a way recent divisions. says it as the ecb would accept some junk related debt as collateral. it is good news for the countries hardest hit by the coronavirus, including italy. italy faces a possible cut. dayal news 24 hours per powered by more than 2700 journalists and analysts, i'm viviana hurtado. this is bloomberg. let's talk about

another exclusive conversation. coronavirus infection rates are falling and pressure is mounting to reopen. we are delighted to be joined for an exclusive conversation for the deputy health minister. thank you for giving bloomberg a little bit of your time. can you give us an idea of how soon you think the nationwide lockdown will actually and? >> thank you for your kind invitation. we plan to gradually to ease our measures. start withthat we industries.

gradually, we would restart. gradually or this with some other measures. this is to avoid another outbreak. therotect working with population. we cannot jeopardize what this does with the lockdown saving thousands and thousands of lives. francine: can you give us more specifics on how you would reopen? were talking about distancing? is it also wearing masks that work? >> exactly. i think all the industry was distancing,te

changing the timing of working. think they can restart. system outside the work with the medicine increased. it is not just a matter of important hows you can check that it is positive. concentrating. it is creating conditions around isto check if somebody

positive during the reopening. it is a system. francine: [indiscernible] >> sorry? francine: sorry, go ahead. go ahead, finished. starting may? i interrupted you. saying that we will start and then gradually. say it will be complete normal life, but have restaurants, cinema, theater, i think those would be the beginning. pub would be a little bit harder. organize within the distancing. me, can youask restart football games, i would

say no? stadiumot reopen the for people. there not going to reopen school. i think we need more time. deputy minister, went to the virus actually hit milan so heavily and why is it proving so difficult to defeat? about 10 million people with very important industry and movement of people. even if we lock the country. there was already a massive spread of the virus. probably, there was a lack of the use of the swab, but you can imagine.

situation is becoming under control very well. the spread of the virus and the , it is considered two different places. , with a huge wave of virus, it has been protected. it will gradually and will beormal very similar to the rest of italy, but i think we need a few weeks of that. have had do people who coronavirus have immunity? viable testhave a to see the antibodies. is it just impossible to test? i think it is possible to test.

we know there are a bunch of but theat can be used, scientific paper pointed out this problem. virus, ile, i had the did the test, but nobody knows if this immunity will last and for how long it will last. , youif you got the virus need to use the protective and respect the rules. think you can have some kind of, i don't know how you can explain -- i don't think you can say, you got immunity, so you can do whatever you like. obviously, we will be out of this when there is a cure are much better if we got a vaccine. whatine: deputy minister,

lessons does italy have of how it handled the crisis, so what lessons can he give to other countries. there were some problems at the as a matter ofis see theu can organization had some problems in the beginning with the definition of a case. every country, especially in the beginning when they met the virus at first, they were little bit lost, especially in the beginning, so i think italy did well. , it can always be better to learn. it is very common to

every country. thank you so much, the deputy minister for health in italy joining us this morning for an exclusive conversation. on the have plenty more coronavirus. also, cheap travel is over. we will talk tourism and travel with a chief economist. this is bloomberg. ♪

francine: good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua in london.

a lot going on in the travel department. first with the bloomberg first word news, it is viviana hurtado. viviana: we begin with credit suisse building greater reserves to whether the coronavirus. that is the most since the financial crisis. profitability at the swiss lender rising, but the investment banking unit took a hit. it was much higher than predicted. ank delivered a loss in the first quarter after costs of the money laundering scandal eight into results. costs more than doubled. the swedish lender saying it will delay any reduction in shareholder payouts until the consequences of the pandemic are clear. daimlerith the abandoning its forecast for significantly higher annual profit this year.

the german carmaker saying the coronavirus pandemic makes it harder to assess, but they expect earnings to be last year's level. deliveries of mercedes-benz cars falling 15%. that is your bloomberg business flash. francine: thank you so much. coronavirus recovery for the aviation industry will be slow. domestic air travel has gone down 70% globally due to the pandemic. they talked about the grim outlook for low cost flights. the chief executive said in-flight social distancing will require higher fares. he basically said cheap travel is over for a while. we are delighted to be joined by the chief economist at iata. what is your base assumption? when you look at the with the lockdowns are continuing, some

of the measures put in place. assumption is that we will gradually reopen and see more flights and six-month, will it be sooner or later? >> i think we will see domestic markets opening first. we have seen it already in china. we have seen the china open their domestic market. we have seen some, but not a lot of recovery in that market. i think it is going to be much slower to see companies opening ning up international markets and travel restrictions. francine: what does that actually mean for travel overall. we see social distancing measures having to be put in place in airlines. how will it change? what will be the legacy and how we travel two years from now? >> two years from now is a long

way away. it is primarily a health issue. this really depends on how we see a resolution of the coronavirus, if we get a valid get a vaccine?we within 12 oraccine 18 months, then we will see the to more returning normal conditions. it is hard to say at the moment whether we have seen anything that will change behavior long-term. we are all used to teleconferencing now, so maybe that will hit business travel. how do you see government schemes actually working? as a chief economist, i don't know whether you think they've done enough and it is difficult

to get money to the right people and what will be the legacy for things like this? we're starting now to see failures. went toustralia voluntary administration this week. clearly, governments are still not doing enough. going to be is burning through cash at a rate of about $60 billion a quarter during the second quarter of this year. airlines started off the year with about two months worth of cash, so they burn through that. governments and some countries, we have seen the u.s., we have seen some parts of europe, governments have stepped up and provided support to airlines, but particularly with ticket refunds, airlines are burning through cash at a phenomenal rate at the moment. oil, is: the price of

that helped at all at the margins if it stays low? >> well, it would've airlines were using any jet fuel, but most of the fleets in europe and other regions are grounded. , they are perhaps 20% of the normal flights taking place. the price of jet fuel and oil does help at the margin. bill by cut the fuel $17 billion. if it was a normal year, it would cut it by $90 billion to $100 billion. it is still not enough really to make much of a difference. how difficult is that at this point to measure travel companies that will go bust because of what we are seeing? >> well, if government did

nothing, i think we would see widespread airline failure because we know that although the airline industry, particularly in the u.s. and some verye producing good financial results in the last few years before the virus, we know this was driven by relatively small number of companies, the long tail of airlines would be much more fragile. support,overnment central-bank support on capital markets and providing credit lines, we would certainly see airline failures. it really depends on the extent which governments are able to step up and how long it takes before governments are willing to relax travel restrictions and allow the industry to restart again and start connecting francine: willle

we ever go back to normal? in normal where we don't have to sit next to the space between someone else? >> i think we will, but that depends on us getting a vaccine, so that governments are comfortable in accepting inbound passengers from other countries. it depends on how long that will take. , i think we need to get air transport going again. it carries one third of international trade. chainsritical for supply , so it is critical to get aviation going. in the transition period, we are going to see some measures that will make it quite an unusual .ndustry

francine: thank you so much for joining us, the chief economist at iata. we will be speaking to the world bank president and ask him about some of the government schemes. this is bloomberg. ♪

this is "bloomberg surveillance." i'm francine lacqua in london. this is what we talk about on bloomberg surveillance. we also track the coronavirus and try to figure out what is coming up next in terms of the economy. let's talk about some of the figures we had. pmi for europe and the u.k. in europe, we had some pretty spectacular misses on pmi data. euro area services pmi fell to 11.7 from a forecast of 22.8. think about that. manufacturing dropped to 33.6 from a forecast of 38. here in the u.k., manufacturing pmi fell to 32 point nine, while services fell to 32.3.

we will have plenty more on that data and how it translates onto your markets. in to your markets is what we are looking at now. they did start the day on the high. they are dropping upon impact from the economy, showing we are trying to figure out what that means for corporate earnings. about $15 asing to barrel. coming up, more "bloomberg surveillance," tom keene joins us. we will be talking to the chief economist at hsbc and the global head of commodities for goldman sachs. this is bloomberg. ♪

francine: credit suisse it takes more than one billion and write-down and provisions for bad loans as the coronavirus hits earnings. it is the biggest such hit in more than a decade. the european economy gets crushed. output plummets in the region falling far below economists forecast. european union leaders meet today to discuss a $2.2 trillion revival plan. says stimulus should be part of the budget. tom and francine as always from london and new york. we talk about plans to test people in italy. why one region was hit so hard and what kind of advice he would give to other countries. interesting that italy is now on par with france and germany and terms are trying to open the economy gradually, still with a lot of health and safety rules by early may. tom: it is