morning, chairman powell says america must use its great fiscal power. president lagarde has none. europe and the ecb must act fast. france decelerates as not seen since 1949. europe confronts outright deflation. nouriel roubini this our. millions of new jobless claims this our, pushing the timeline to 2023." good news at warp speed, dr. fauci says a drug shows proof of concept. facebook shows proof of concept in tech stocks, up. good morning. dynamicsng to see the and frankly, francine, this is getting old. we are hearing that from a lot

of people. much like us, advantage with jobs, but the united kingdom request of aid is extraordinary, the size of people struggling. francine: that figure which you say is very much like we are seeing in the u.s., was quite shocking. we know this is big and millions of people are losing their job, but the government saying 66% of businesses have asked for government support to pay wages. when you look at what central banks can do -- and this was clear from jay powell yesterday -- if you look at the stimulus they are putting in place for the recession are when the pandemic is here, now, and the second phase when a recovery takes place, three months, six months, even longer, what kind of tools and stimulus support will need then. tom: it is absolutely

fascinating. ,or those waking up in america i cannot convey that rotation of earth and data coming out of asia. data hasy of european been absolutely shocking this morning, and we will give you a brief on that. us nouriel roubini will join and we will have the lagarde press conference in the 8:00 hour. with your first word news, here is viviana hurtado. blaming donald trump china's coronavirus response on politics, saying they would do anything to see him lose the election. he did not provide any election -- evidence. he is considering various ways to punish the government. the chinese government says it has no interest in interfering. jerome powell worries about the

long-term economic damage from the coronavirus. chairman powell suggesting even if the economy starts to recover in the third quarter, the battle would be far from over and is urging congress to do more. the european central bank will vote today if a 1.1 trillion dollars stimulus is enough, including a genuine -- generous lending plan. christine lagarde is supposed to reiterate her pledge to do everything she can. the euro area economy plunged into a record contraction, shrinking at an annualized rate of 3.8%. that reflects shutdowns aimed at containing the coronavirus and more demands for fiscal support from governments. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg. tom: thanks so much.

equities with a fractional left. ,acebook out with earnings microsoft with earnings, and apple later today in new york. in the bond space, short-term paper coming in with a vengeance. the u.s. two-year well under .20%. that is the number one barometer going through those bloomberg headlines we will see from christine lagarde. what do you see? francine: i am seeing a similar data check. a lot of the focus is on earnings and u.s. jobs. that is also happening today and a lot of focus is on what christine lagarde can say in terms of extra stimulus. the economy is in a holding pattern and we got a look yesterday after encouraging news fauciach. -- which dr.

said was encouraging, from gilead. a medication in treating covid-19. tom: joining us is marcus ashworth and he can look at the economic tapestry we see from the ecb and pull it over to market dynamics. what are the markets telling madame lagarde right now? marcus: i think they are sending her a message which i'm a bit worried she may take too seriously which is mainly, look yields noter italian so long ago, a couple weeks ago when it got up to 2.15 or something. so 35, 45down at .18 basis points from the peak. that may send a message to the ecb they don't need to do more. i think they probably will not do much.

they will tweak but they will come in with extra firepower. that may be a mistake. they need to follow the fed and do more, particularly on investment-grade assets and make sure they stay low for everyone. tom: that is right where i wanted to go. jon ferro is better at this than i am, and color this for our american audience. explain -- explain the relationship between buying high-yield debt to the institution the european central bank? what is the relationship of garbage bonds with what goes on in frankfurt? nouriel: the point is -- marcus: the point is the moral hazard germany and the more fiscal governments have and a

bore in's to buying government -- abhorrencen's to buying government debt they have tried to stop a problem to gum up the banking system. -- doubleg double be, grade, below investment and a knock on effect would feed into lower credits even though they are not buying them. yield hunters constantly going to find things with tigger yields, that would send -- bigger yields, that would send a bigger signal. it does not have to be long, it can be that immortal word temporary. francine: how much does christine lagarde have to actually keep her firepower for

the next phase, the recovery phase? marcus: i think they have got 2020 covered. i don't think there is an issue about not having enough money to buy bonds, they do need to plan for 2021. this will not go away. go virus may, let's hope away, but the impact will not for a while. whether they do an extra 500 billion today or wait is not the end of the world. they will buy as much as they can. give themselves constantly more flexibility, making sure the banking system doesn't gum up, making sure enough corporate's are getting enough access to borrow money. ,ook what the fed has done funding corporate's directly by commercial paper. that will not happen in europe, but they have been very flexible on bank regulations and need to

help with corporate's more directly. francine: where do you see the biggest concern? does italy need a bailout once this is over, and is there anything either the commission or ecb can do now to prevent that? it doesi don't think necessarily automatically mean a bailout it has to be able -- bailout. it has to be able to fund itself. three-daying given a -- three year pass the next two years, if it keeps its funding rate below 2%, that is what the ecb can do and is doing. it is more of a question of allowing some of the things that need to recover, to recover. corporate's need growth. let's bring it over to the

markets. this has been wonderful, and i get the gloom. there is a sea change of moving the vision from 2021 and as carl andadonna suggests, to 2022 2023. adjust that for how the stock market responds given global shock. everybody is putting out charts showing this is ugly, but the stock market is not. the stock market doesn't have to be ugly if the economy is ugly, right? marcus: true, but the point is let's say you have vision on where corporate earnings will be. we are back down to levels of last summer where corporate earnings were expected to be growing and there was vision. now there is no vision at all and it is a black hole. stimulus can do a lot not

everything, and key things like a high-yield market, we have had three issues in europe and a handful more in the u.s. we need to see that open to people who can get long-term finance. to get the five year or 10 year financing, you have to come through the main loan and bond markets and they are not open yet, and that is why the fed has worked so hard and the ecb needs to do its bit. i hope it does not fall asleep like it really does. .- normally does tom: if we see the ecb say to the commercial banks, let's issue paper, will we hear that from christine lagarde? marcus: i suspect not. i think they are working on it and want to get everyone on board. unfortunately -- this will sound awful -- but the crisis in

germany has been less than other places in the world and there is less sense of panic and need to do something. lagarde is a consensus builder and needs to get germany on side two realize that they need help. prevention is better than the cure and it could become an incurable. ashworth fromus bloomberg. we will be back and will talk much more about what christine lagarde can and cannot do at the european central bank. ae press conference starts little while from today is bloomberg. ♪

♪ francine: this is bloomberg "surveillance. -- shell had to cut dividends for the first time since the second world why -- world war. --omberg spoke exactly exclusively to the chief executive. >> it is of course a difficult day. on the other hand, it is also an inevitable moment. we are basically facing two problems, one is the poor macro economic environment which is getting worse, but the other problem which is probably bigger is that we basically have a crisis of uncertainty, uncertainty about demand, about

prices, maybe even uncertainty about the viability of some of our assets given the logistical issues we have. we have taken some strong and early countermeasures to protect the financial resilience of our company, and you have seen before we have taken a reduction in capital costs and operating costs, $89 billion over 12 months, but frankly speaking, these countermeasures are not enough to deal with the impressive amount of uncertainty we are seeing. the board decided it was prudent to reduce the dividends, and early this morning we have decided to reset the dividends to $.16 going forward, which is still a meaningful and affordable dividend. debt let me ask about your companies and countries are having to deal with higher gearing. you were already at your comfort

level before this crisis but changes will have to be made to our comfort levels. how high do you expect your gearing to go, and when do you want to turn it around and bring it down? ben: good question, and when i talk about financial resilience which is the key thing to protect with such an uncertain outlook, it is both about the debt levels that we feel are appropriate, but also the liquidity that we have. the debt levels are outside the range we would consider to be normal over the cycle. gearingp with a slightly less than 29%. we would really like to be below 25%, and of course in the next quarters and years, depending on how this plays out, we will do what we can to get our gearing back to the range we have. liquidity is fine. we do not have to worry about that.

we have more than 30 billion of funds we have access to, but we have to protect these levels of financial resilience, and that is why we have to take these drastic countermeasures and take them early and decisively. at this point in time, i would expect our gearing to stay slightly elevated but not at the level we should be concerned. >> with just a few minutes into the start of the trading day, shell shares falling some 3.5% at the gate. is that to be expected? investorserstand some will feel disappointed and they did not expect this to happen today? ben: i understand this will be a difficult day for our investors. it will be particularly difficult day for investors that are in our stock for income

particularly retail investors. believe me, i feel with them the pain that this causes. i hope it doesn't come as a surprise that measures like this need to be taken in order to ensure the viability of the future value of our company, and i expect that as the quarter wears on, as people will see the extent of the further uncertainty play out, and the distraction of the amount of certainty of assets viability, etc., will be seen as the only prudent and responsible step to take. the board was clear they would consider it irresponsible to borrow to pay a dividend that is fundamentally not sustainable

under the circumstances. that cannot be in the interest of any shareholder right now. tom: a historic day for royal dutch shell, big oil, and this economic contraction we are in. we have much more coming up. . a former finance minister of greece will join us and we will look forward to the ecb in in seveneginning hours, and the lagarde presser of the 8:00 hour as well. an important conversation with carl riccadonna of bloomberg economics. he has written a blistering essay extending out your timeline to 2023. please stay with us. this is bloomberg. ♪

♪ viviana: you are watching bloomberg "surveillance." shares of facebook are higher today. first quarter revenue, the social network reporting in 18% jump, showing advertising budgets were strong before the coronavirus out book -- outbreak. working at home boosting microsoft's quarterly profits. there was increased demand for inter-dutch internet-based

software -- internet-based software. that is your bloomberg business flash. francine: thank you so much. we will get back to viviana with everything you need to know in the news. your markets are pretty much focused on two things, the european central bank and u.s. jobs, laying that over with heard -- with what we heard from jay powell yesterday. liftther thing that gave a to the markets was the gilead trial. saying afrom dr. fauci little bit of optimism but a lot of caution because it could go either way. european stocks flat. 1.2515 after the government said 60% of businesses applied for some kind of wage relief. comes ast term paper

well, german two-year and the u.s. two-year decisively under .20 percent, not back to where it was in 2011, but the two year yields coming in. we will digress. we have done very little on corporations. we will speak to the analyst on apple. apple is out with earnings and we need to catch up on some of these corporate stories. please stay with us. this is bloomberg. good morning. ♪

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to talk about, the shock of the economic data we are seeing. also the shock of the tech corporate data we are seeing, not the big banks or beleaguered industrials or a collapsing oil business, it is a tech dodger -- technology juggernaut centered around five or six companies in each company is distinctive. us.h sankar joins a lift up to 335-ish. i want to cut to the chase -- what is your some of the parts of theon of apple -- sum parts valuation of apple? $335, and wed say look at the parts and we break down what you call your traditional hardware business, etc., andad, macbook,

the services and content. the hardware business is trading at 12 to 13 times multiples but now we give it an 18 multiple because it is going into a 5g cycle. get a 30 times multiple because they have a revenue with a higher premium valuation. tom: what is your number on that, three hundred 35 r 500? i cannot get an answer on a or 500?-- 335 i cannot get an answer on a correct valuation. krish: 335 over the next 12 months. we look at the earnings power for apple, which effectively from last october to this september the eps of the

company, and one reason why 2021, whether you look at a fiscal basis or calendar basis, that is the shining moment for 5g. tom: we have recently a moonshot in amazon, microsoft showed some good things, google has a struggle. todayre we going to see from the calls, from the presser from all the world about china, what will we see to position apple like these other companies? what will be the surprise to lift the stock? say a couple of things. apple as you said is a diversified company in today's terms, given that it is more than just an iphone, and iphones are consumer centric and are expected to be weak in the near givenbut the services,

the work from home environment we have been in, it should be more downloads and that should benefit apple as a whole. the other thing i would say is ,n general if you look at it many have gravitated to where there is more strength in tech. strength in technology seems to come from downstream demand. pcs have been strong in the near term. favoring the pc data center names, but qualcomm last evening highlighted that small phot -- smartphones will be down 35% on a year-over-year basis. tom: what i want to know is if i look at these 5, 6, 7 juggernaut

companies that make up 82% of the s&p 500, it seems to be the differential is revenue growth. what are you modeling for revenue growth forward on apple? it is not amazon like or microsoft like? can they get to middle single digit or revert to something better than that? this, i wouldor say this year will be a little light but i do have them going pretty strong into fiscal 21 -- fiscal 2021 because of the 5g iphone cycle and over the last couple of years, your services 15% to 20% probably cable business over the years, so revenue growth can continue to grow into calendar 2021. the revenue between apple and google has always been a bigger

question, and in my view, given the diversity of revenue, apple has become a much more stable company than it used to be five or six years ago and it is solely dependent from the iphone cycle. you do have other vectors of growth from apple like the services. even within hardware, air pods are growing. it may not be enough to offset weakness, but they can do buffers. tom: we have got to do this in a couple of days when we see what the earnings are and what you do with your buy and price target. romaine will really go right to the data this afternoon. now in new york city with their first word news, viviana hurtado. isiana: donald trump says he

considering ways to punish china's government. politics beijing's response to the coronavirus outbreak and said china would do anything to see him lose the election. interest int has no interfering. is likelyil industry to become the next sector to get a bailout. the trump administration may announce as soon as today a rescue plan. oil companies could apply for loans and in return might have to give financial stakes to the government. packed and ready to ship, that ir the status of remdesiv according to gilead gilead needs -- gilead. gilead needs the green light from the u.s. dr. anthony fouts g said -- dr. anthony faucher said the drug --

fauci said the drug met its requirements. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: thank you so much. coming up, a conversation you don't want to miss about the markets, economy, and some stocks, a conversation with nouriel roubini. this is bloomberg. ♪

♪ good morning, good

afternoon, good evening. this is bloomberg "surveillance." let's get straight to nouriel roubini to talk about the markets. we were talking about his prediction for the next decade, professor of economics at the new york university school. sense of what you think the central banks should be doing better. is it now more stimulus or do they need to wait for the next phase, the recovery phase? nouriel: in terms of the policy response, one of my concerns is effectivee long run at monetizing fiscal deficits, this is a helicopter drop of money or modern monetary theory, and we will have economic stagnation and deflationary -- pressures.

the global economy is going in the direction of permanently negative supplies shocks and if , youanted fiscal deficit get deflation stagnation and stagflation like in the 1970's. it is not a problem for this [indiscernible] and effectively monetizing them leads to the possibility of inflationary pressures. in the short term, you can say the fed has the concern of helping more main street than wall street. the housing sector of

small and medium-sized enterprises, and a lot of the taxes are coming from the treasury or fed goes to bailing out archer corporations and larger institutions -- larger corporations and larger institutions. the fed is going in the direction of buying risky assets like high-yield bonds, that is another risk. francine: you basically talk about 10 risks and you lay it out very simply. you say these were risks pre-covid-19 that threaten to fuel a perfect storm that could sweep the entire global economy into a decade of despair. what would that mean right now for markets? our markets not seeing this? our markets not seeing the risk, and do we do a big correction on the markets? nouriel: there are scenarios for

the markets. my base one is there will be a u-shaped recovery. we will not end up into an l-shaped depression this year. currently, the markets instead of pricing in a v-shaped withery, is consistent having a v-shaped recovery of the economy. the other markets are not pricing in a v-shaped recovery. bond yields are not pricing in. it depends on which market you are looking. u.s. equities and some products like what has happened to the high-yield, now the fed has decided to buy corporate bonds like fallen angels. liquidity is driving it rather

than fundamentals. tom: the news flow is changing by the hour. verye beginning to see difficult data points. how does christine lagarde suggest to europe that it has to get its fiscal act together? chairman powell did that yesterday. she can't do that today. with the data we see, france back to 1949 economic decline. the netherlands was starving. how does madame lagarde charge the finance ministers of europe? jason: the way she does it -- nouriel: the way she does it is they have to pass the baton at least partially to the fiscal authorities, and the fiscal stimulus in the eurozone is occurring only at the national

level. cannot are 10%ly mygdp without having a spike share will be to do massive qe and monetizing and helping the e.u., but a stronger fiscal response has to occur not just at the national level but at the local level. the debates remain on the recovery. that should be much bigger on the order of 3 million to protect the companies that will be most affected by this crisis. a fiscal response has not been affected. tom: we talked the day osama bin laden died and we talked at dav

os but we have never seen the economic contraction we are in now. what do you need to see from our leadership, whether it is mr. trump or ms. merkel or boris johnson, what leadership does nouriel roubini need to see? nouriel: the political , the united states was a leader of an international coalition, the leader in 9/11, the leader after the global crisis. the united states is protectionist and not the leader and therefore everybody is on their own. these are problems, a global pandemic, global climate change, a common response cannot be a individual and the u.s. is totally awol.

it does not want any form of international government. states, that is why i blame the united states for not having an international approach to the problem. francine: too short a time. we will get you back on soon. coming up next, we have our daily up date on covid-19 with john's hopkins university, speaking to jason farley, professor of nursing. this is bloomberg. ♪

♪ "surveillance, "surveillance," from new york and london. conference andss with the backdrop of data over the last 24 hours, including chairman powell's conference, this will be history making. we are going to get an update from the johns hopkins

university with jason farley joining us, a professor there. i want to use a phrase from dr. fauci yesterday but take it across all of our medicine from this crisis, which is proof of concept. i don't want to talk about a drug or the fact that we will go at work speed and find some miracle drug. i want to talk about proof of concept in the halls of these hospitals, the nurses, the doctors. what is the proof of concept you are learning about caring for people will with this virus -- ill with this virus? jason: there are several. we have great data about how we position patients that will improve oxygen saturation or the amount of oxygen in the blood. down progressing the need toward ventilation by

placing them on their stomach in the prone position. patiento that before a gets ventilated or after. improve by gravity to the amount of oxygen in the blood. the second thing, more ofortantly the proof concept, do we have any drug that shows it can prove -- theove the way it causes virus to respond in the body? was is what dr. fauci talking about yesterday. tom: what is our proof of concept now with our testing? it seems to be complex, people talk about the swabs and the rest of it. is our testing of two proof of concept level? proof of concept level?

jason: proof of concept means we have theorized an issue and we understand that there is at least something that gives us an idea that the hypothesis we proposed has merit, and that is the proof of concept. right now, our proof of concept is that we can stand up across the united states without the united -- the federal government for testing. we are now testing across the united states hundreds of thousands of people a day. that being said, it remains a very slow process. we do need to scale up, and the administration's estimate of testing 2% of the general population per day, that would take approximately four years to get to the right level of testing that we need. we know we need to speed up our testing capacity, speed up the

number of people being tested. farley, what are you most hopeful about now? there are a couple of clinical sivir may beng remde working. when will we have an idea what drugs can be used in fighting this pandemic? nihn: the data from the yesterday was an interim analysis and that means there is a data safety and monitoring board that is independent. they look at the data and look at the analysis. there is a benefit in terms of recovery time, a four-day benefit. day time tod an 11

resolution whereas 15 days with a placebo. that is proof of concept the drug may have some level of benefit. when it comes to survival, there was a trend toward survivability that was not exactly statistically significant at this point, meaning the metric we look at as scientists to say is this different, drug a versus drug b, it appears it is moving in that direction but was not statistically different. what the data did show was 8% or sivir versus remde ceepo. -- the placebo. francine: dr. jason farley, a question asking whether corona can be passed on by mosquito

bites, we will hope to have an answer for the viewer. a big markets day. we look at the gilead trials and what it means for the market. today is also european central bank day so we will follow that conference live and in full. day, and on.s. jobs earnings, it is a mixed bag when you look at the european stocks, and a lot of focus on technology and apple. this is bloomberg. ♪

♪ alix: europe, bad growth and

dividend cuts. spain sees the worst growth since world war ii. big oil slashes dividends. powell worried about long-term growth, while ecb president christine lagarde faces pressure from investors to take on more credit risk. and strong results push shares of tech companies higher, while restaurants offer a cloudier outlook. we will speak to david gibbs, yum! brands ceo, later in the show. welcome to "bloomberg daybreak" on this thursday, april 30. some breaking earnings this morning. mcdonald's front and center. stronger than expected comes in a little bit light. that stock still eking out again of 0.6%.- out a gain