♪ >> good morning from london. manus cranny is in dubai. this is bloomberg daybreak: europe. gilead lift sentiment on positive signs for coronavirus drugs. president trump is set to accelerate efforts for a vaccine. slams fascist stay-at-home orders. jay powell voices concern over the long-term damage from the outbreak. attention turns to christine lagarde.

facebook surges as advertising revenue holds up amid the pandemic. socgen.hear from later, shell ceo. don't miss it. manus: good morning to you. 1.7 3 billion people on facebook during covid-19. socgen doing more than being on facebook. it loses 326 million euros in the first quarter. the global banking division, revenue down. down by 27%. the revenue at the bank is down by 16%. you have a net loss in terms of guidance, expressing their guidance for the cost of risk in basis points. they are saying 70 basis points

in 2020. the underlying return on equity is a negative number, -0.5%. loss revenues dropped by 16%. global banking revenues crumbled by 27%. those are the top lines. we talked -- we talked to the societe generale ceo. we -- the-- nejra: virus clouding the future for the chemicals company. what we are getting right now is first quarter adjusted even at 1.6 4 billion euros. that's more than we have got there. we have the withdrawals of the outlook for the 2020 business year. that already came through yesterday. it is just that even number that we are looking at. line. just a

we talk about the empowerments. for bb ta, they are putting 1.294 --airments in at 1.433 for covid-19. there provisions were 3.9. taking impairment on the u.s. business with them saying that the impairment, a goodwill charge on the u.s.. over 2mpairment of billion. nejra: swiss coming through as well here. of $225quarter loss million. that's versus the profit of $429 million year on year. , -3.1%.quarter loss

pncfirst quarter reinsurance combined ratio at 110.8%. those are the key numbers to look at from the first quarter first with three. with every company we're looking at, it is the outlook we are looking at. not getting any guidance so far hear from that he. that's all the earnings we are looking at. we will be to the ceo later this morning as well. that is shortly after 8:30 a.m. u.k. time. to the markets. another positive day. a seven-week high for the s&p 500 yesterday. a lot of that on the optimism around progress on a drug from gilead. microsoft, facebook, tesla. tech earnings. nasdaq futures are getting a lift. s&p futures, positive as well along with european futures and green on the screen in asia.

equity markets look like they could be fairly good in today's session. yesterday, a downbeat news conference from jerome powell. no significant guidance in terms of what comes next from the fed. a lot of people look to june for that. the 10 year yield dips slightly. we're seeing strengthen oil today. surprise drop in america's gasoline stockpiles. we are seeing oil, wti, and brent. back to what to -- moved market yesterday, gilead with data from a trial for its covid-19 treatment. the ceo says he's talking to u.s. regulators over a possible emergency use approval. an infectious disease expert called the results good news. that it has aows clear-cut, significant positive effect in diminishing the time to recovery.

nejra: annmarie hordern is live in new york for us. great to have you with us. how much optimism should investors actually put into this trial from gilead treatments? annmarie: the next big question is the fda. when will they approve it? the new york times says we could see an emergency approval as soon as yesterday. that will be front and center. the gilead ceo says he's in constant communication with the authorities. how much faith should investors put in this? i'm not sure if the market is getting ahead of itself. this is not a cure. this is not a vaccine. , this couldug does help patients recover faster. that's what the trial shows. there's a lot of optimism about that. anthony fauci saying the fact that this trial met all of their main target and can help that patient recovery. we also need to note the fact

that data from this trial has only been shown in a press release. of salt amongbit the optimism we're seeing around this drug. me about what work speed is. this is a project which is about the coagulation of military along with pharma. what exactly is this? annmarie: operation work speed is a manhattan projects out project uniting private pharmaceutical companies, government agencies, and parts of the military. the idea is in the name. try to get to a vaccine as soon as possible. dr. anthony fauci repeatedly said that a vaccine would take about 12-18 months at best. people close to the matters -- great bloomberg scoop, by the way. close to the matter say

this would be 300 million doses of vaccine by january. that is the goal of this project. it's not just the trump administration. we've seen a lot of groups come together to go for the race for a vaccine. some optimistic and potential there. the bill and melinda gates foundation using a lot of money and resources. again, a grain of salt. vaccines take years. i want to bring up the fact that the ebola vaccine when typical -- went into trials in 2014. it only got approval in december. that was a five-year undertaking. some said it was a remarkable pace. it is a between you to think about when we talk about the vaccine. manus: the distance between headlines and reality. thank you. let's get you up to speed. your first word news. worried about the long-term economic impact of the coronavirus. he thinks a goodly permanent

scars on the economy. the battle to save the economy is far from over. willuropean central bank decide today if trillions of euros of stimulus is enough for the euro area. some are expecting to see an increase in asset purchase plan. most expect the governing council to cause -- cause -- pause. the u.k. death toll from coronavirus has topped 26,000. that's after the government included fatalities outside of hospitals for the first century of the foreign secretary is warning the government won't ease the got down quickly. the factory data out of china today for april is showing a domestic recovery being undercut

by a global glut. manufacturing slipping. signal that the recovery in economic activity is likely to be an event and take longer than we presumed. global news -- 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. we will talk much more about what jay powell's call has been for the unlimited take and give. it is not spending. this is bloomberg. ♪

manus: i'm manus cranny in dubai. they rich a hitch alongside me in london. the french bank has delivered a

swing to a net loss in this quarter. over 320 million euros. i take your mind back to a year ago. i'm having a little terminal trouble. first quarter nest loss, 326 million euros. they lost as much as we understand. we have a red headline the other day. they lost as much as 200 million euros during the virus. what did that come from? the underlying return in equity down by 0.1%. a year ago, they made 686 million euros. let's move it along and talk about the fed. jay powell voiced concern that the coronavirus crisis could leave permanent scars on the u.s. economy.

all stripes need to do more, stand up and be counted in terms of limiting the damage. that was the sobering teleconference. the virus will be far from over, even if the economy begins to recover in the third quarter. the deep dive that we are seeing is the worst since the great depression. let's take a listen. >> congress has also reacted quite aggressively and strongly with the cares act. and other laws. that's appropriate. with enhanced unemployment insurance and the paycheck protection program, we have 16 -- seen a large reaction. i would say it may well be the case that the economy will need more support from all of us if the economy is to recover. james foley is ahead of fx strategy. great to have you with us this morning. it's interesting that the dollar turned around this morning. when you listen to jay powell yesterday, he really reaffirmed

-- we are a long way from recovery. that's a sobering delivery. your take? >> it is. the market has taken what they wanted from the pound. instance, the market is thinking that the fed will do whatever it takes. we have backstops. perhaps we can be optimistic. there is optimism is because we had some positive steps in covid-19 treatment. i think listening overall, there was a lot to worry about. the q1 gdp for the u.s.. more or less as expected. numbers down 4.8%. that opens the door for something really quite horrific for the second quarter. numbers may be down around 30%. something like that.

something really shock of all. we can look at the fact that cases againave rising in germany. we've seen something like that in singapore. there's an awful lot still to worry about. just because we see lockdown restrictions being lifted in europe and elsewhere, that doesn't mean we are out of the was by any stretch of the imagination. up, it willties go go down. we don't think this is the end of the bear trend just yet. nejra: great to speak with you this morning. the change of tone we had from powell yesterday in terms of urging congress to do more to help the economy, if we don't get more concrete guidance from will thewell in june, market mindset start to shift, combining that, given what you said about fiscal, to perhaps

not having so much faith in the fed backstop? jane? it looks like we've lost jane. we've lost jane. we are having technical issues. for now, let's go to scott meyer. the fed statement is a sobering look at reality. he told bloomberg that the idea of a fast recovery is not very likely or realistic. take a listen. likelihood that the fed is going to be able to jumpstart this economy with extremely accommodative monetary policy is remote. i frequently say, this is not the kind of stuff that monetary policy is designed to do. monetary policy is designed to

keep credit flowing and keep markets functioning. it's not there to stimulate growth. it's not there to deal with what our fundamental structural issues that along in the domain of congress. i'm wondering, the fed said it would continue to buy securities. it did not put any limit on it. it did not say how many they would buy. it did not say how long they are going to buy. does that bother you as an investor? would you rather have more clarity on what the fed is doing , with what people like to call qe? >> i like the way he referred to that. think that the lack of clarity on the part of the fed increases the likelihood of volatility. in volatility, there's opportunity as an investor. i guess purely from my investor sense, it pleases me to not be

more aggressive. is,question in my mind let's assume markets become more of the evera result evolving qe or non-qe purchases, however you want to refer to it. will spill into the bond market. in which case, the fed will be .ery quick to react one question i have for you is, [inaudible] powell leave jay us out of the six really situation? i know it is early days. you project unemployment to reach 30%. could still be an dental -- double digits by the end of the year. should that fed identify a specific threshold before even discussing an exit strategy for interest rates? >> i think that is inevitable.

they should establish a criteria. let's face it. let's assume for the moment that my projections are correct. unemploymentt that will be better than 10% at the end of the year. that was approximately the worst of the great recession. it took another, practically another decade of low interest to theo get the economy operating levels we were at in december and january of this past year. they do ultimately need to provide some kind of guidance in this area. you know, otherwise, i'm concerned that the market will get itself into a tantrum. we flew through the temper tantrum in 2013. we lived through the tantrum in the fourth quarter of 18.

those have not been very productive experiences. given the vulnerability of the economy, the fed is being forced to be more aggressive than it normally would be. >> let's get a real read on what the fed thinks of the longer-term damage. sayheir statement, they do that the economy is going to be affected over the medium term. generally, that is thought of as a year or two. do you read it that way? the fed is suggesting that we are going to have problems in the economy for a while. or narrowf a fee -- v u is off base? >> i was pleased with that part of the statement. it was a sobering look at reality. look, we all hope that we will have a v-shaped recovery and by the end of the year, we can be wonderful again. we will all be on airplanes and

going to hotels. at a practical level, that doesn't look very realistic. the fed is prepared to anticipate problems over the medium term. that is encouraging. it shows that they are taking this very serious. that was guggenheim global cio. coming up, the ecb decision day after one trillion euros of emergency stimulus. will christine lagarde announce more measures? what to expect from the meeting, next. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. foley is still with us. we reestablished,'s. let me ask you about the fed. powell's change of tone that we heard yesterday. that combined with no concrete guidance in june, will the all in terms of faith in the fed backstop? >> yeah. i think the chances are that we will have guidance from the fed. it is understandable that right now, the fed has done so much in such a short time. there are so many different influences going on in the market. i think it is fair enough that the fed wait until the dust settles. by june, the market will expect concrete guidance. the fed will have see more data, more economic data, more market data with that guidance

together. i think the market would be disappointed if we didn't have that. however, the pressure from central bankers on governments for more fiscal policy is likely to remain in place. you're listening to scott minard there. he warned of tantrums. we forget these. we forget the 2018 dislocation. he warned that that's a risk. i asked you about the rates. the market presumes there will be no rate hike until 2024. we put it into the gtv library for our viewers. look at the march spread. nothing there. the market believes rates will be low for an extended time. how does the fed reinforce that market feel -- view? jane: the fed has a bit of history on its side this time around. after the global financial

crisis, if we go back to the years when it was setting up its quantities easing regime, the market was anticipating that this would create a lot of inflation. what we got was very low inflation. we did not have my -- much by the way of wage inflation. the impact of that is going to say to the market, we will get past something of the same. market has been trained to anticipate that we've come to a certain stage in the development of our economies in the g10. we were not built to have a huge amount of inflation rate pressures coming through on cpi and wages. the market will anticipate that rates will be low for a very long time. that was the situation before the crisis. manus: jane. jane foley, thank you so much for your patience.

have the societe generale ceo waiting on the line right now. this is bloomberg. ♪

♪ manus: good morning. it's daybreak europe. your top stories this morning. gilead lifts sentiment with positive signs for coronavirus drug. president trump says the accelerated efforts for a vaccine are underway. elon musk slams fascist stay-at-home orders. concerned about the

long-term damage from the outbreak. attention turns to gritty lagarde. boostists don't expect a to the ecb asset purchases until december. facebook surges as advertising revenue holds up. frederick today right now. later, -- let's get straight to some breaking headlines that are pressing. by french economy shrank 5.8% in the first quarter of this year. the estimate was for a contraction of 4%. nowhere is that felt more aggressively than the french banking industry. investment falls 11.8%. let's bring some of the data to a man uses it on a daily basis. losses for thee

first quarter. its stock traders also wiped out by the market volatility in the wake of the coronavirus. we have the ceo of societe generale. welcome to the show. great to have you with us. the first quarter, you set aside 820 million euros for bad loans. thated you, what made up 820 million euros? were there any one item in their? can you guide the market for 2020 in terms of how bad that number could get? good morning. frederic: good morning to you. first, let me highlight one thing for the first quarter results. bank, we account for all taxes in the first quarter. in particular, we pay for the resident fun. spread these taxes --

[inaudible] we get to 100 million underlying profit. as you said, one of these figures is going -- the increase of the cost of risk. yearred to the third last and twice what we had in mind at the beginning of the year before the crisis. is an underlying cost of risk. covidively, the impact of , with a mix of provisions and direct impact, effectively related files. it makes up the bulk of the increase. [inaudible]

let me highlight that we have a lot of curtains. according to different scenarios, we give the range of the risk that we expect to incur between 70 basis points in the best scenario of a 6.8 minus drop of gdp in the eurozone. for ae 100 basis points 13% minus drop in gdp in the eurozone. that we should be within this range for the full year. nejra: thank you so much for those clarifications. great to speak to you this morning. you set aside they hundred 20 million euros for bad loans in the first quarter. can you put any kind of number in terms of millions or billions for 2020, in terms of loan-loss provisions at societe generale? said, we have've

the prudence of all the uncertainty on the scenarios area also, the benefit of all the government. it is very specific in this crisis. france is probably the most giant in quickly implementing this. it makes a forecast very difficult. as i said, we have a base case of 70 basis points. 10 basis points represents 500 million euros of cost risk. for the full year in the base case scenarios, 3.5 billion euros. we start with 65 basis points. it is more or less level in the space case scenario. -6.8% overall gdp drop. points,re at 100 basis it is the more extreme and long-term scenario of low activity.

and potentially a second wave of coronavirus. manus: we've just broken the french gdp numbers. we expected to contract by 6% in the first quarter. each of the bank ceos we spoke about a drawdown of credit by major institutions. have you seen that? can you give us any numbers? our companies in the process of repaying you? contextualize that for us. yes,ric: what we saw, existing facilities which we have grown. it increases the risk rate that i said. i think it is overall not that significant. it happened at the beginning of the crisis. lots of companies have gone to the market successfully, raising funds. without issues. at the same time, it is specific to france, we have already put in place close to 80 billion

euros of guaranteed facilities by the government. this money will be in the accounts of the company in roughly two weeks. a lot has been credited. that has no impact on our capital. very minimal. 90% of guaranteed by the government. a lot of money is put on the table by the government to help the companies to go through this crisis. i would say, the good news, the guidance we give [inaudible] we will keep a good buffer on our capital for the full year. i think the action of the central bank, the action of the government should help to limit highamage of relatively drop in gdp. nejra: interesting. learn earlier this month

that socgen had several charges related to goods and receivables . this is according to documents filed on the website. can you tell us a little bit more about that and any other impacts on socgen of the trouble and chaos we have seen in oil markets recently? frederic: first of all, we'll comment -- we don't comment on anything specific. price, yes, there is already an impact. is relatively mitigated. it's important to look at the exposure we have. we communicate that 61% of our inclusion in oil -- it's large companies. even with smaller companies, some of them had edged the

production for 12 months. the impact we see is minimal. it depends on how long prices will last. beyond the fact that the u.s. government might change also. it's a fluid situation. we keep coming to the first quarter. we have to see. -- manus: what happens with the equity trading? it looks as it have -- if it has imploded. can you give us some color on that? we wrote a story the other day about your derivative loss. we understand it was related to dividend trading. is that correct? was there a part -- problem with mark to market?

with a substantial loss we have reported, can you give us context? frederic: absolutely. the activity in the first quarter. the other activity, financial services, the other activity, whether it's financing or business, did very well. yes, on the equity underlying product for different reasons. we went through extraordinary extrication's in the market for the second half of march. in the revenues, we have different things. first of all, an increase of reserves by 175 million euros in equities. second, we confirm the loss of 200 million euros. that is related to this brutal and then of dividends forward curve is used to value

the product. hence, we had to adjust the valuation of the portfolio because of these unexpected drops of dividends. we had iron -- higher edging cost for managing the portfolio in the dislocation environment. very low revenue. this is really the specific factor. the other activities, we've had good activities overall. nejra: fantastic to have you with us this morning. ceo of societe generale. we wish you a greater rest of the day. miss our exclusive interview with yves shuffle. this is labor. ♪ -- bloomberg. ♪

♪ nejra: this is bloomberg daybreak: europe. fell 8.2%ter sales for michelin. they set it had sufficient financing in place to manage a hit to values from the pandemic. they said the situation is too uncertain to reliable -- to issue reliable forecasts. they see cheaper materials compensating for a drop in volume. joining us is the cfo of michelin. thank you for joining us today. we understand that giving guidance is difficult for everyone in these times. can you give us a sense for your potential worst-case scenario

for new vehicle demand this year, globally, and whether you could withstand that worst-case scenario? yves: good morning. thank you. said, the environment is too uncertain to provide andance to the market market forecasts. as you know, michelin is relying on the market. the's why we prefer to show ability of the group to pass through the impact of this crisis. we have showed them to scenarios -- two scenarios. , thein the worst case

group has the financial means to pass through this crisis without drawing on back up lines. manus: good morning to you. i want to dig deeper to the forward-looking view. have you been able to restart the factories? what is the pace to restart your delivering? int is the biggest challenge that as you seek to reopen? the skill and momentum in your reopening is what i want to get a sense of. to reopen the factory, you need to conditions. sanitary measures that will make your teams confident to work, to go back to work. in february, we restocked our factory in china. we develop protocol to operate in a very safe way.

preserving social distancing, providing safety devices to our employees. that is the first condition. the second one is to have demand from the customer. operation,re chinese this week, they are at the level they were in january. that was the worst of the crisis in china. it took several weeks to go back. widely, we first resume the operation -- [inaudible] , mostly the transportation industries.

they are all restarting. [inaudible] nejra: yes. as you restart on the one hand, factories -- thank you for that detailed outline of exactly how you are doing that. on the flipside, as you restart, with the cost cuts you need to implement, will you simultaneously be closing some plants and implementing job losses? yves: absolutely not. considering that measure at this stage. we are monitoring on a weekly basis.

we are looking at production to the demand in order to see our inventories and perfect are cash. for the time being, it is out of the question. manus: as you look at managing the business going forward, there's a great discussion around the simplification of supply chains. whether that's in america, the u.k., or france. will you reconstruct the supply chain in any way? will you seek to bring more production, more supply chains back to france and core europe? has the local to local supply chain approach. mostlytory in europe brings to the european market. if i look at the factories in

serving theare only chinese market. our north american factories are the north american market. keen tolways very maximize local production, reduce as close as possible to customers. from an environmental standpoint, it is better for the planet. that is how you manage her supply chains at michelin. more broadly as well, do you see any kind of shift in globalization post coronavirus crisis as a result of the crisis? it is probably a bit early to draw any conclusions about the long-term consequences of the crisis.

for sure, we are learning a lot. we are learning that some activity can be handled very professionally without toessarily moving or adding the workplace or to travel. can we get one final quick response from you? the big debate. is this peak china? is this the end of china as the world's factory? existential question and a short response. yves: i'm not sure. china is a very strong manufacturing base. it's a huge market for us. as i said, we are processing and china for the chinese market. -- producing in china for the chinese market. manus: great to have you with us. nejra: [inaudible] yves: yes? nejra: very briefly.

it's been great to have you today. commodity prices. do you feel you are missing out in the drop we saw on commodity prices because demand is so low? yves: for sure. thee's a lag between commodity prices that you see in the market and the translation in our cost of sales. that's due to inventory. for sure, we will mostly benefit from the commodity prices dropping in the second half of the year. thank you very much for joining us. that's the cio of michelin. discussions,he next. a little bit of oil and energy. a beautiful day. u.k. equity futures indicated 1% high. this is bloomberg. ♪

manus: this is daybreak europe. james foley has been standing by. today is ecb. today is one of those moments when we might be more on the bpe a program. i look at the euro we have traveled from 115 to 108. do you think there is more weakness to come in the euro as a result of the current policy employed by the ecb? do we hold in this pattern for the moment? jane: we will hold in this pattern for the moment. liquidity at the ecb is extremely important. the politics in europe go back to that. the biggest threat to the euro if it wants to weaken further in the next couple months.

perhaps lagarde will want to keep the pressure on governments in europe to come up with some sort of fiscal response. while she has further ammunition and could use further ammunition, she will be very careful about not putting too much emphasis on policy at this stage and trying to keep that board and fiscal policy. we've got unemployment rising in europe. i think it will be a lot of bad sentiment in europe. i think that could potentially detract from the euro. nejra: very briefly, we have 20 seconds, what will the market take best? the scale of the bond buying or the parameters around it or perhaps starting to buy junk debt? jane: i think junk debt is already in the price. it is the whole package. the communication that lagarde puts out. she has to do the job in terms

of the link which uses. she needs to be very reassuring. nejra: yes. james foley, wonderfully done. thank you for joining us this morning. european futures up more than 1%. ♪

>> good morning. welcome to bloomberg markets: european open. i'm anna edwards alongside matt miller. say, let's capet off the april rebound despite gdb gloom and what many expected to be an earnings wipeout. global stocks head for the biggest monthly gain 2009. european futures are pointing higher as well.