guidance again, reducing plans for spending in 2022 as low as $14 billion for the year -- in 2020 two as low as $14 billion for the year. apple does not provide a forecast for the first time in a decade. the haves and have-nots of big tech. in the white house takes aim at china. president trump place is more blame on the coronavirus. he's also considering an in chinese funds for -- in the market, if no one says sell in may and go away during the next two hours, i will be happy because that is what we were seeing. we had a great run in april for the s&p. now we are seeing a pretty steep selloff in the futures market. you're going to see some really weird volume coming in. a mixed dollar story.

dollar-yen pushing a bit higher. you are also looking at the 10 year going no real place, and oil trying to stabilize as earnings continue to rollout. honeywell the latest, suspending their full-year guidance. time for today's market moving news from new york and washington. let's start with earnings. we are about halfway through the seasons. oil giant chevron out this morning, cutting capex for the second time at about five weeks, warning profits will suffer. bloomberg's annmarie hordern has more. annmarie: that's right, that capex headline is really the one to take away from chevron. clearly, they are doing what they can to save cash. the original plan before they cut earlier was for $20 billion. $14 billion is roughly where chevron has been spending over

the past three years or so. dividends has been a big topic for the oil company. sayingre -- now they are they are doing everything they can to protect it. in just going to be out under 30 minutes. they said they are going to freeze it. one thing that is interesting is cuts aree output happening, the global production is up 6%. that is a 3.2 4 million barrels a day add from the previous year and a record for the quarter, so interesting to see if they can handle that. overnight, we have to talk about what happened with the tech world. amazon and apple both out with results. amazon really spooked the market and the fact that they may lose money. they are going to spend $4 billion or more potentially to help with warehouse capacity. they see a surge in demand, and also buying protective equipment for their workers. that stock was down overnight.

jeff bezos told investors, take a seat. apple boosted their share buybacks and dividends. what spooked the market for apple is the fact that they didn't give guidance for the fiscal third quarter, the first time in a decade. what i find so interesting is they were supposed to be well-positioned to deal with the pandemic. the trends we are seeing during lockdown favor both, more online shopping and more screen time, but the market wasn't buying it. alix: and marie horton, thank you. in washington -- annmarie hordern, thank you. in washington, president trump reignited the prospect of a trade war with china on speculation they could have spread the coronavirus. he said he does not have to cancel debt to punish china come but could do it another way. pres. trump: i could do it for more money just by putting on tariffs. alix: kevin cirilli joins me now. what is going on here? kevin: good morning. the is just the latest in

president exploring different policy options in the last 48 hours. in the reuters interview, he openly suggested just what you alluded to, that he could engage in more stringent policies on the trade front. take a look at this. the president also exploring backing off investing in chinese equities for the u.s. retirement savings fund. this is an option that now the president could utilize the viautive order, -- utilize executive order, and some that was voted on on the bipartisan commission board in the united states. from facing scrutiny replicants -- from republicans and democrats. latest attempt by lawmakers on capitol hill to look at different ways which the u.s. could untangle itself from

long-term chinese investments. i would also note that the republican study committee on capitol hill put out a plan last week that has different other policy options. andtors like tom cotton democrats like senator mark warner of the intelligence committee have also raised various policy prescription proposals to untangle the u.s. from china, not just from a trade front, but from a higher education front, a retirement investment front, and other in the construction industry as well. many of the tools that, quite frankly, i can tell you that we are going to be talking about for a long time ahead. kevin cirilli, thank you very much. one more thing we want to focus on is ryanair, now slashing 3000 jobs. the irish discount carrier says

it will carry less than 1% of its normal passenger volume during the quarter. >> this is going to be about 1/3 smaller this year. we are taking out about 15% of our staff. there's nothing else we can do. even remaining staff, we will be looking for pay cuts of about 20%. that is because the environment in europe has completely changed for airlines. alix: ryanair says it doesn't expect full recovery until december of 2022 at the earliest. issuerline also taking with government bailouts. coming up, much more on your morning trade and analysis on the markets in today's first take. we want to look at what is happening with earnings as well. chevron reducing its capex, cutting production in may. honeywell suspending its full-year dividend. they see second-quarter sales much is 15%.

this is bloomberg. happy friday, guys. ♪

alix: time now for bloomberg first take. joining me from our in-house team of wall street veterans and insiders, michael mckee, bloomberg international economics and policy correspondent, and damian sassower, bloomberg intelligence chief emerging-market credit strategist. i want to give you a choice on this friday. is this we had a nice rally over the april months, and now we take a little breather? is it disappointment with the ecb yesterday? or is it trade issues creeping

back into the market? michael: first, i am going to stay away from that phrase you mentioned because i want you buying the happy hour drinks, but it is a common nation of things that gets back to -- a combination of things that gets back to the idea that we are or are not going to be in this lockdown or have this virus hanging over us for quite some time. the china political aspect of it has just come back into it. it has always been an undercurrent. we were waiting to see the impact of the trade deal, but sanctions were still going to be in place on most of chinese goods. that is really an issue that has been around for a long time. it will be interesting to see if the president tries to block government funds or anyone else from investing in chinese equities. he would have support on the democratic side to do that. that could become an issue going forward. is more overhang, plus it being mayday, a lot of

people are at home in europe, and trading is lighter, so you have more of a volatility effect. alix: and you didn't say the phrase. kind of amazing. i just gave mike a multiple-choice as to why we are seeing a risk off mode today. no one has any guidance, so of course apple is not going to have any visibility in the second quarter. what is your take? damian: for me, may day is a time to take stock of just how far we have come. dollar weakness is fueling some positive sentiment across the world, including emerging markets. it is also time to look ahead, and unfortunately, we must brace for next week because the central bank meetings are off the charts. the data is unbelievable. german industrial output, china trade, durable goods as well, and a ton of earnings being reported. if i am taking stock of all of

these central bank meetings and some data prints which are going to come through, i would be sitting on my hands here as well. alix: ok, fair point. we also got south korea's exports falling in april by the most since the global financial crisis. i just one to get your take on the data we are going to get. is it bad because we know it is going to be bad? damian: south korea wasn't as bad as you would have thought. when you bring it together with taiwan, things are somewhat normalizing here. you're seeing demand from the greater china periphery. but things are going to be week. that china trade print coming on declined lastrves month, and we may see more weakness there as it tests the threshold. for me, you look at the delinquencies and the defaults which are building in the u.s.

take a look at 30 datalink with the rates in mortgage-backed securities. we get testy 10% figure, which was the high end july of 2012 -- we could test the 10% figure, which was the high in july of 2012. ism construction spending today. that is going to fuel a lot of the link when sees, delays, payment triggers we are seeing in the market. alix: a really good article in the bloomberg about that, how there is a catch 22 snowball effect with that. we have been talking about this had aek, but jim vogel really great note out that encompassed something we have been dealing with, that prices appear to reflect the stimulus rather than future conditions. there's room for more market volatility, and you have the fed saying yesterday we are going to expand this main street lending

program, and yet today, equities are like, no thanks. we are good. michael: i think you can't look at a day by day trade to gauge that. the idea that we were up in while the rest of the world was falling apart, there is credence to the idea that there is a central bank put out there. all of that liquidity has to go somewhere. if their judgment is we will get through this and eventually start making profits again, they justify what they've been doing. in europe, you've got the central bank also putting a lot of credit into the economy. it makes a sort of distorted sense, what's been going on in the markets. i do have to give you a headline here. you said nobody has any visibility. i just saw this cross the bloomberg and couldn't help but laugh. clorox sees sales up 6% to 8% for the fiscal year. that is up from a 0% to 2%

forecast. so somebody is doing well. [laughter] alix: so that one product basically is going to have more visibility. totally fair. damian, you mentioned the dollar. are we at an inflection point as we take a break from the selloff we have seen over the last six days? damian: i don't think so. the reality is, yes, there should be demand for carry trades in emerging markets. $37 billion of em equities were polled in april, despite the rebound. 120 $7 billion in outflows out of em equities over the last three months alone. isa mentioned previously, the bloomberg dollar index has fallen from its mid-march high. structurally speaking, there is still very strong bid for the dollar. it is the fuel that makes the world go round. i don't expect that to change in the foreseeable future.

headlineaw a great from a journalist talking about how china is going to be public enemy number one in much of the world, we are getting to that story again. can emerging markets handle that narrative again? damian: yeah, no. with trump blocking this $50 billion investment into the msci all country, which china is roughly 4% of, that would be $2.1 billion of pension fund, government employee, u.s. pension fund assets moving into china. trump is not alone in trying to block that. this is been something that has been dallied about. new tariffsgesting on china given its poor handling of the pandemic, and this isn't good. it certainly builds a bit of a bearish tent toward china and all that is going on on the ground there. --have seen giving revenue

we have seen gaming revenue and macau plunge another 100% due to poor travel revenue. time, i feelsame like the conversation as we move out of this is going to be about supply chains. . you want to get some closer to home, regardless of trade issues, and now you have that public enemy number one conversation coming back up. michael: certainly there was momentum away from china in terms of supply chains, but not necessarily into the united states. a lot of people looking at countries like mexico, where costs are lower, but you are still very close to the u.s., so the supply chain isn't as much of an issue. now we are seeing more talk of supply chains moving into the u.s. in terms of vital industries. , certainly more people who make n95 masks, that sort of thing. how much momentum that has after this settles down is hard to judge at this point, given the

cost of moving supply chains, but also the cost of doing business in other countries versus the united states. if you can do it cheaper here, companies may be much more interested in doing that, but that probably means less labor, so is that a policy that a republican or democratic administration wants to talk about or push at this point in election year? more automation might make things cheaper here, but it isn't going to help anybody get jobs at a time when jobs are the real issue. look for this to be a discussion point going forward, but not necessarily something that is going to be front and center for most companies yet. alix: fair, but as they have to do with inventory and ramp-up. hsbc cut their 10-year treasury yield forecast by 50 basis points this year. they look at the year end 1%, next year at 0.5%. talk a lot about near-term disinflation, higher equilibrium rates.

i want to get your reaction as we get forecast after forecast coming down for the 10 year. michael: i think that is going to continue. i think people are pricing in the fact that not only are we going to have very low interest rates from central bank for a long time, but we are going to face a short bout of disinflation that could possibly tip over into deflation. down the road, you've got an inflation question because all of the stimulus, all the money that would be chasing too few goods in the future, but right now we are looking at serious disinflation. you're looking at rates that are going to be lower. the question in the longer run is due the central banks cap yields to keep them down? if you start raising interest rates, if market rates start going up, it is going to cost the government a lot. there's a calculation in here that we are going to see this kind of rate environment for many years to come. damian, you mentioned that

the carry trade makes sense right now, but we are not seeing it. what is the dynamic that starts to play out when you have end of 2021 forecasts from hsbc at 0.5%? damian: i hate to get into the technicals, but you have to look at how cheap -- are pricing in fed hawkish nest. vol curves remain inverted. vol has basically got to reverse for the market to recover. that is what is causing it. but i think mike had a really interesting point. 20% to 30% decline in the mexican, the brazilian real. at some point, you've got to look at that and sadie cost of labor in some of these emerging-market nations has gotten so ridiculously inexpensive, maybe i should be outsourcing to those domiciles. i think that is going to be a real question not today, but

certainly going forward. that, inm assuming theory, helps. if you have lower yields in developed countries, do you get people coming in? is that the bet? damian: i don't know if that is necessarily the bet you would near term, but if you look at the brazilian corporates, they are producing meat denominated in dollars, but output costs are denominated in real, so one would think that margins would be relatively healthy. i think you have to look at some of these companies and see how they perform in the near term to get a real sense of how multinationals might hope to perform if they do make the plunge into some of these markets. alix: great conversation, guys. i can buy you both a drink because no one said the phrase. damian sassower, michael mckee, thank you very much. any chart we use throughout the program over the next two hours,

go to gtv on your terminal. you can browse the features, check them out. gtv . this is bloomberg. ♪ omberg. ♪

viviana: you are watching "bloomberg daybreak." moderna is teaming up with laws a group to make one million coronavirus vaccines a year, one of several partnerships being struck up between drugmakers rushing to bring a vaccine to the market. the two say the first batches will be produced in the u.s. in july. make20, the u.s. wants to shots available for americans, but it could take longer. the pandemic taking a toll on manufacturing in the u.k. the april purchasing managers index, since it began in 1992, it fell to its weakest reading for march. every sub index declining. only companies producing medical or food related goods saw

increased orders or output. a grim statistic for a big indian carmaker. suzuki india produces more than half of cars on the country's roads. in march, it reported no sales. it was forced to close factories to comply with stay-at-home restrictions. that is your bloomberg business flash. alix: thanks so much. apollo global management is seeing opportunities in the distressed markets really soa r. the investment firm is looking to raise $20 million across new funds and expand its strategy of buying hybrid securities as it did with expedia in recent weeks. apollo isn't the only one seeking to invest. , oaktreet howard marks capital looking to raise credit funds. loss init experiences

the first quarter, looking forward for more color on what their portfolio looks like on the call. coming up on the program, chevron reducing capex guidance to as low as $14 billion. we will speak to ceo mike wirth. this is bloomberg. ♪

alix: welcome to "bloomberg daybreak." i'm alix steel. european markets are closed, with the exception of the u.k.

light volume, also pressure from apple, as well as amazon. the street not loving what they turned out as far as earnings in their outlook. it is a mixed dollar story, although you are having the yen a little higher, so dollar-yen is weaker on the day. the pound extending gains as well. oil trying to stabilize here. it is to a pretty ugly, painful environment for oil companies. yields in the u.s. pretty good much go nowhere. we want to focus now on chevron. shares are off by about 2% and change in premarket. they are reducing their guidance guidance -- reducing their capex guidance. ceog me now is chevron's mike wirth. where are you cutting? mike: first of all, i would like

to say our thoughts remain with the victims of covid-19, and also with all of the workers out there on the front line in the health industry, and in our company and many others keeping the basic goods and services moving that everybody relies on. our first quarter was a solid quarter, and i think the results reflect that. second quarter certainly is a little bit tougher. we are in a different position than some of the others in our industry. we were prepared to execute our thencial priorities, and dividend is secure. we know what to do, and we are doing it. that includes making prudent adjust and -- prudent adjustments to our capital spending and operating adjustments. and we intend to continue to make the right moves as we go through this very challenging

quarter we are in. alix: so where are you cutting? ite: alix: it isn't -- mike: is in our flexible short cycle activities. that would include here in the united states and elsewhere in our portfolio. we've got some other projects where we can slow down activity and focus on critical paths and reduce spend on things that are not on the critical paths. there are reductions across our portfolio, but the primary area would be in shale, including in the permian basin. alix: can you give me some visibility on how quickly you will reduce rigs and production there, and what that does to your underlying production base? year with 17n the rigs running in the permian. we are down to five right now. alix: wow. lag: production tends to rig activity, so we are seeing production reflects wells that

came on in the last half of 2019 , the first quarter of this year. as you know, these have strong oury production, so production is a little disconnected from the rig decline. production at this point is still on an upward trend. what we have indicated is over the course of this year, we would expect to exit the year at about the level we entered. so we will see production higher than that through the middle part of the year, but we will end the year about flat and on a downward slope with this level of activity. alix: so does that mean we can expect lower permian production in 2021? it seems like that is what you are saying is you are really going to feel the effects of this capex cut. mike: i think you could expect that. certainly the other thing we will be talking to investors about today is the fact that there will be other reductions

in production, so not just impacts of our capital changes, but certainly in this market, we operate in some countries that are subject to the opec agreements, so there are likely to be some production curtailment's there. for logistics and economic reasons and other parts of our portfolio, we are also likely to curtail production. we will see production here in the month of may down probably 200,000 to 300,000 barrels per day, and in june, the same or perhaps a little greater than that. alix: i am glad you brought up the opec+ cuts and logistics. do you have a sense of how you are going to allocate your capex cuts? mike: certainly, our capital reductions are driven by our own views on where the opportunities are.

we've got a lot of short cycle capital in our budget. that is one of our advantages. we came into this with the strongest balance sheet in the ,ndustry, a very low breakeven so we are in control of those choices. the market signal right now isn't calling for more near-term production. that is why it makes sense to reduce capital and the short cycle part of our portfolio, and we are in control of that. the opec actions reflect flowing barrels as opposed to the investment capital into the future. we will reduce that primarily in our short cycle activity. production, the long production and the short cycle, how quickly can that come back? is any of that permanent? mike: it can come back relatively quickly. these are things that we actually do for maintenance purposes. we bring wells down and

facilities down for storms, hurricanes, things like that. so our people are very good at bringing production down safely, and then ramping it back up. so we will come back up in a matter of weeks, when we start to see the market signals that would suggest it. this can be done in a way that is very careful and doesn't cause damage to wells or reservoirs. alix: let's get to your balance sheet. you have the least debt among all the majors. you have been talking about how that puts you in a different spot coming in. l surprised everybody by cutting their dividend. this goes on for a while, would you ever consider borrowing to pay your dividends? mike: we are in a position right now where we did come in with the strongest balance sheet, and we have been setting the company up to compete in any kind of environment. while we didn't expect this exact circumstance, we were

prepared for it with a strong balance sheet, a low breakeven, and a flexible program. as we go through these extremely low prices, our costs and spending don't reset as fast as revenues do, and that is why you have a strong balance sheet. we have plenty of capacity to endure low prices for quite some time. i said earlier our financial priorities are unchanged. the dividend has always been our top priority, followed by investing to grow the business and support that dividend, and maintaining a strong balance sheet. so that framework is serving us very well in a time like this, and our dividend is safe, and we are prepared to support the dividend through the balance sheet and through these other moves. the purchase program, $5 billion a year. this year andop x next year. we are preserving cash to keep

the balance sheet strong so we can rely on it as we move through this period of time. alix: can i infer that you don't foresee a time when you have to take on debt to pay your dividend? i said we are keeping the balance sheet strong. we will rely on the balance sheet to take on debt to support our overall cash needs, which includes our capital program and the dividend. through a period of time what this -- of time like this, no one is set up to cover that route cash flow. that is why in a commodity business, you maintain a strong position. capital always matters, and your balance sheet is a tremendous asset that you really need. when times like this arrive, you use the balance sheet to meet all of those demands, maintain your priorities through the cycle, and that is certainly what our plan is.

like we are feel ever going to see a real recovery in u.s. shale, or is this really an historic collapse of that entire industry that will then be left to the large enp's in the majors like yourself? mike: i think we will see a recovery, certainly. the hydrocarbons are still there. it is a tremendous resource for our country and our economy. we have seen that it has underpinned a good part of economic growth in this country over the last decade. it's got strong trade and geopolitical benefits to our country, and it is a great asset and a great resource. exactly how it comes back and when it comes back is a function of how the health situation lays out, how the economy resumes in this country and around the world, and how oil markets respond. i think oil markets will be well

supplied as we come out of this, so the price signal will be modest as we go through a recovery, but we have found ways to make the permian basin highly competitive. it is attractive, and even at low prices can carry positive economics with it, so i think the fundamental equation there is strong. how it developed, how companies may restructure themselves to do that even more efficiently i think remains to be seen. just basedu expect, on what you said, a supply shut coming down? i feel like there's two schools of thought, one, that this will accelerate the peak oil demand story, and the other, that we will see a tight market because of the big cuts happening now. what is your best read? mike: it is really difficult when you are in the bottom of this for certain how that will play out. i think there's an undeniable the between how effectively

globe deals with the pandemic and is able to resume economic activity and how these markets will play out. we have really good progress and see the virus stay under control, and economies feel in a relatively consistent and positive manner, this overhang of inventory will work its way down, and you will see markets return to a circumstance similar to precrisis more quickly. if it is choppy or, we have implications of a second wave of the virus that will cause governments to re-implement some of these policies come up we could see these large inventory levels persist for a longer time, the cuts in opec and other source of ready supplied to come back into the markets, so i don't think we

should expect a supply constrained world in the next couple of years. we are going to have oil in storage, cuts in countries that would like to come back into the market quickly, so i think there will be readily available supply to meet demand as it resumes its growth output. alix: mike, last question. it is not actually an m&a question. what do you think about the government digitally providing support for smaller enp companies to say afloat? mike: in general, we believe in markets. we believe in markets in good times. we believe in markets in difficult times. nnd yet, this is a extraordinary time. certainly the government has taken access to make sure people -- taken action to make sure people have access to funds. every company is in a different situation.

companies that have been well-managed and prudent, and find themselves in a position rna short-term squeeze, programs to help them out could make sense. in favorl, we are not of targeted actions and bailouts for our industry. certainly, we think there needs to be some prudence as companies that have not positioned themselves in a way that would be prudent coming into a tough market, a bailout kind of reinforces the moral hazard argument. so i think anything should be measured. it should ensure the taxpayers are properly compensated for the use of the tax dollars. it should be pretty limited in application and duration to really help through the most difficult times. but we think markets should work. bailoutst in favor of

and market competition, and the strength of our industry it is a function of innovation, of meeting the challenge, of global competition and the creative destruction that goes along with that, as we all learn and improve and innovate. so we think that is a real source of long-term value in our industry, and i think market cycles are part of our industry. they always have been. we don't need the government to come in and protect us from part of our industry that we know and should prepare for. alix: i really appreciate your candor. thank you so much. mike wirth, chevron ceo, joining us there. tune in next hour. i will speak to edge and their investor andy hall. what did he think when we hit the -$40 wti price? exxon also reporting earnings within the last 10 minutes,

reporting a loss of $0.14 per share, the first quarterly loss in at least 32 years. -- comedy says it is due to the company says it is due to charges. earlier this week, exxon took the step of freezing its dividend for the first time in 13 years. shares are down about 2.5% in premarket. if you want extra exxon coverage, check out the "bloomberg businessweek" on digital and new stanton -- and newsstands. coming up, apple falls as the company skips its forecast for the first time in years. we will speak to james cakmak of clockwise capital. if you missed anything in my interviews in the last couple of hours, check out tv on your terminal. this is bloomberg. ♪ this is bloomberg.

♪

alix: apple shares lower by nearly 3% in premarket. joining me for more on earnings is james cakmak, clockwise capital partner. everyone is saying it is because they didn't provide a forecast for the first time in a decade. really? who can provide a forecast right now? james: it's a good point. well, amazon did, which i thought was a very bold move on their part. when it relates to apple, i think that is a knee-jerk reaction. this is a company where, yes, they are having hiccups cyclically as it relates to the iphone, but the fact of the matter is you actually look at the fundamentals of the business, they don't have to grow iphones for the stock to continue to work because their

services and wearables business is now 2/3 of their business, and that should eclipse iphone profit within the next couple of years. the growth levers of the business are continuing to be strong. thatix: alix: -- alix: means i would take it is a buying opportunity, right? james: we don't think you can really poke a hole in this earnings story. they have $200 billion in cash, commitment to the dividend. they are one of the best capitalized countries in the world -- capitalized companies in the world. all of the pressures we are seeing are largely cyclical in nature. i think the biggest question mark about apple long-term is what happens in that supply chain and where does it ultimately end up going. if it takes tim cook being the

supply chain guy, he's no doubt thinking about the next move there. that is not something you would really telegraph to china. alix: definitely not. which brings us to amazon. the cloud business didn't do as well as analysts were expecting in terms of the services revenue, but really, it is the investment they have to make in their warehouses now to meet all of this demand. how do you look at that risk-reward when you are dealing with amazon? james: they made it abundantly clear that this was a temporary step up in cost, but i think this is not only the right thing to do from a business standpoint, but also the right thing to do from an optical they aret because already perceived as the big bad wolf when it comes to retail, and they are putting their money where their mouth is, taking care of things as much as

possible for covid. ultimately, you are seeing a business where you are starting to see growth out of areas that have been sluggish for a long time, which is whole foods. you are seeing continued numbers,e in the prime not only from a retail perspective, but there is opportunity in the fact that people are understanding the opportunities beyond retail when it comes to prime, along with the services. alexa, prime now. overall, we think that the company is stronger coming out of this, and it is probably the only company we can argue across all of big tech that is in terms of consumer behavior across every aspect of the business. alix: james, appreciate the candor. james cakmak of clockwise capital, thank you very much. coming up, argentina teetering

on the brink of default again as the market value of its debt plunges. we will break it down more in today's trader's take. this is bloomberg. ♪ this is bloomberg. ♪

alix: time now for trader's take. joining me now, damian sassower of bloomberg intelligence. you are looking at argentina. damian: there is a virtual roadshow going on this week, where you've got the economic minister meeting with its key creditors ahead of next friday's may 8 deadline for the government's proposed debt exchange. value of76 billion in debt, trading at just 33% of that in market terms. there's still about 25 billion dollars worth of argentine debt that does have value. so what happens in a hard default? i feel at this is not the first

time argentina has been here. what would happen in that case? damian: it becomes a hermit economy because it can't access the global markets. it simply means it stops making payments. the 30 day grace period for expiresoupon payments may 22. you will get a much better picture of what the future has in store for argentina, but doesn't look good because the government is trying too hard line in the sand and doesn't early want any sweeteners to its creditors to stem the bleeding, so it looks to be a long and arduous restructuring projects -- restructuring process ahead. alix: thanks so much, damian sassower. coming up on the program, narayana kocherlakota, former minneapolis fed president, will be joining us. is use for the economy as well. and stay tuned for my interview with andy hall, legendary

investor, and what he think about it if oil prices. this is bloomberg. ♪ these days staying connected is more important than ever.

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we're committed to keeping you connected. for more information on how you can stay connected, visit xfinity.com/prepare. ♪ alix: energy companies feeling

the strain. exxon posting its first quarterly loss in at least 32 years. chevron cutting capex guidance again. and big apple, big dividend, murky outlook. apple does not provide a forecast, while amazon warns about potential second-quarter loss. and the white house takes aim at china. president trump place is more blame on the coronavirus. he is also considering an investment ban in chinese stocks for government pension funds. welcome to "bloomberg daybreak" on this friday, may 1. i'm alix steel. definitely a risk obsession developing in the market. part of that is weak volumes because europe is closed. you wind up having the best month in april for s&p since 1987, something we would not have expected in the beginning of the month. no doubt saw some profit-taking for the equity market. you are seeing dollar a little bit weaker.

it is a mixed dollar story in the g10 space. oil pretty much goes nowhere. we getthis coming out as earnings from industrials, as well as big oil, and as well as tech. let's take a quick check on where some of these are trading. chevron is cutting their by 13% from their last -- is cutting there capex by 13% from their capex reduction. you have honeywell looking at suspending their full-year guidance. buzz getting some bad because they didn't have guidance for the full year. all of that reverberating within the market. for more on earnings, joining me now is mark stoeckle, adams fund ceo and fund manager. great to have you. make your case to me as to why you want to be invested in big oil stocks right now.

mark: i think the practical matter is that there's always going to be demand for oil. i think when you have companies like chevron, which reported a really good quarter today, you want to be with diversified companies. the upstream business is good. their downstream business is good. they have appeared to be really good stewards of capital. -- youtioned minnick ago mentioned a minute ago the reduced expenditures again. i think a lot of investors equate a very high premium, and i think they are doing iguodala with that. ,lix: do you then buy on dips or are you just not selling? mark: that is a really good

question. now,e not selling right certainly chevron if you are talking specifically about oil. do whatever heo prudent investor should be doing at this time, looking at how to upgrade their portfolio. what we are seeing today, and the axon results coming out a little bit later, our predisposition would be to thangger weight in chevron exxon. i think they proved today that is a smart thing. revenue 13 have beat out of the last 20 quarters, and beat eps 11 out of the last 20 quarters. they have a very different philosophy than chevron, and we think chevron is much more durable. alix: i also wonder how important dividends are to the stocks you invest in for two

reasons. one, exxon and chevron, exxon is very committed. apple increased their dividend at a time when many are suspending or cutting their dividend. how does that factor into your investment thesis. fund ise way we run our that dividends are not as big a component. it is certainly nice to have, but in this environment, you also need to be really careful. dividends significantly, and their stocks have gotten hit pretty hard by that. think exxon and chevron both have seen that, and they are very wary of that, which i think theyder the reasons why are not making a lot of noise about protecting their dividend. but for us specifically, we are growth and income

managers, so it is not a big -- not as big an issue for us as for others. alix: what do you make of the negative reactions the market had towards apple? how much of this is a promise versus delivery thing, or how much is apple a question mark going into the rest of the year? mark: i am not sure that this really matters, down 3% any market that is down anyway. i would say i think the apple quarter was a good, solid quarter. a couple of things that were really good, we did get a window into the fact that china, which is very important to apple, is beginning to turn. they talked specifically about the second half of april improving. we also saw ipads and macs benefit from work from home and learning at home. services were good, and 5g remains on track. i think that is really important. we heard qualcomm talk about the

uptake in china for 5g was good, moreor us, apple is also of a second half, 2021 story, mostly because of 5g. i think this is an interesting .pportunity the near term is very solid, and i think what we expect to see is for them to be very good. alix: what do you make of amazon, then? it is twofold. they have to spend a lot to increase wages for workers, hiring workers, change warehouses to meet demand. at the same time, they are under a lot of heat for how they are treating their workers. how do you view amazon right now? mark: i think what amazon date is brilliant. i said this for a very long

time, i think air is no ceo on the planet that thinks longer-term then jeff bezos. that being said, i think what he has done with this for billion-dollar commitment to investments is he's addressing some of the things where people have been critical of them, which is around workers, around infrastructure and those type of things. i think this commitment is deemed done at the right time. i think it is being done for the right reasons. there's a lot of pressure on their infrastructure to try to do what they've done the last two months. realizing that and addressing it , especially in this time where there are very few companies better positioned than amazon right now. the whole pandemic, people staying at home, their ability to operate in this environment has been nothing short of

stellar, and i think they are taking advantage that and reinvesting in the business, which is something just bezos has unapologetically said forever. this is the perfect time to do it. alix: part of the rhetoric was breadth hasrge-cap been so narrow, and it has been the large-cap tech names that really support for the s&p. then we see small caps over the last week or so outperform. what is your view on owning the momentum that was already working and buying into that, or trying to take on a little bit more risk for defense? mark: it is a very good question in this environment. it is something we have begun to talk a lot about. against the work moment and that's been working.

there's still a lot of growth there. good, solid companies, really good balance sheets. but we find ourselves with valuation spreads between growth and value the highest they have ever been. we believe you are beginning to get paid to start looking at some more value type stocks we have been looking selectively at opportunities to add some more value stocks, not because we think value is all of a sudden going to take off, but the valuation spread is so wide that it is almost more of a hedge than anything else, if in fact to growth stocks start slowing down and value starts picking up. selectively taking companies and adding more of a value to it, it is hard to fight to fight the liquidity in this market, so we

are not giving up on those. we are just hedging and barbelling those a little more. alix: what kind of stocks are you hedging with? mark: i can't talk about the stocks, but we are really looking at industrials, .inancials for stocks that have not shown up in the top formers over the last couple years, it is more that they haven't performed terribly well, but i nodded the position to talk specifically about the new things we have put in the portfolio. alix: fair enough. really appreciate it. great to catch up with you today. thanks very much. let's talk about some repurchasing here. apple sentiment has been charting against repurchases after shares hit, but not on alphabet. i day after the google parent

said it bought back half of its shares in the first quarter, the authorizations come as politicians all the way up to president trump have expressed unease about the practice at a time of worker hardship and cash shortages for some companies as well. /4 of last year's buyback totals have been polled by the s&p, and the bank expects s&p repurchases will decline by about 50% this year as well. exxon actually saying today it is going to continue to acquire shares to offset any dilution area coming up, governments should be planning for worst-case scenarios. that is what a former fed president is saying about the current economic conditions. we will speak to narayana kocherlakota, former minneapolis fed president, coming up. this is bloomberg. ♪

>> have you seen anything at this point that gives you a high degree of confidence that the wuhan virology was the center of this virus? pres. trump: yes i have. i have. trump hitting on china again. with us now is narayana kocherlakota, former minneapolis fed president. if you were talking to the ceo of a multinational integrated business, what would you be telling them right now about how they should be thinking about the 12 months in to two years? narayana: great question.

think we just got a report out of the institute of infectious disease in minnesota saying this, that really, we should plan on this not being a three-month episode, but something that is going to be longer. i think two years is really the best case scenario you should be thinking about because of the a veryat that would be fast rollout of a vaccine based on what i've read. usually vaccines take longer than that. if you're thinking about the , and some form, this virus is going to be with us, and that is going to affect people's willingness to spend, and in some form that is going to lead to restrictions of some form or another. into whatou tie that

we heard from president trump yesterday, i was already thing about things like increased protectionism, hoarding from different countries, supply chain movements to protect your inventory and line of product for these situations. are we in a world where that is going to happen, where we are going to see more protectionism, supply chains moving, and less connected global economy? narayana: it is definitely an outcome that is possible. myself in this category, no one knows for sure what is going to happen. but it is a possibility that you're going to see countries say, look, one of the deficiencies in our preparation for this pandemic was that he supply chains were linked to other countries, and that disrupted our ability to respond effectively, so you might think that countries will respond to this pandemic not just in the next year, not just in the next

two years, but over the long haul by saying we've got to move more of our key supply chains inside our borders. me, theguess for longer-term application of what that means on a central-bank level, gary shilling had a really interesting quote that said, "in the world we have forecast slow economic growth and massive debt overhang. none are zealous for imports, so global supply will continue to exceed worldwide demand, resulting in an even bigger savings glut and making chronic deflation a serious probability." do you agree with something like that? narayana: again, i think the idea that we are going to have supply overhangs is absolutely a risk, absolutely a possibility going forward. were already challenged to try to get back to their inflation targets.

we certainly could be in a situation where that would continue to be the case. central-bankake of thens, the impact zero lower bound, the fact that they are not able to make interest rates go too far below zero, that would be one way to get rid of the imbalance in supply and demand, to be able to get rid of interest rates lower. alix: i know you are a big proponent of negative interest rates. the fed does not seem interested in doing that, so i am wondering how you see the dynamics when it comes to the treasury market. are we looking at yield curve control if we are seeing a lot of spending out of the treasury as we have to come bent -- as we have to combat a potential he deflationary scenario? narayana: i think the fed is likely to try something along the lines of yield curve control. the challenge is that they just

don't have a lot of capacity. you look out to where long-term yields are right now, yield curve control means you try to control long-term yields, but they can't lower long-term yields that far. 4%y are not at 3% or long-term yields. they are a little over one person. they don't have a lot of capacity. the only way to get capacity for any of their tools by being negative and actually try to work on ways to go deeply negative. alix: what is the evidence that you find it has worked for europe, for example? challengerayana: the with what is happening in europe and japan is a couple of things. central banks there had acted like this is an emergency tool, something we don't what to do, but we are forced to do it by the economy.

if we ever do use negative rates, people will take it as the end of the world because they always said they were never use this. so you've got to set up your communication beforehand much more effectively. the other issue is whatever you cut interest rates by, it is very hard to tease out of a whole massive data whether or not, what kind of effect that had. i think the operating baseline is moderately more stimulative, 25 basis points, moderately more stimulative than being at positive basis points. alix: go ahead. narayana: the real question is, is there a way to try to go more negative than they -1% that seems to be the lower bound that even the most zealous central banks have found?

alix: quickly then, do you feel like debt monetization would be an equally effective communication tool? know, i think the challenge is really about how do you shake people's inflation ofectations and expectations future output going forward. i am not sure that just committing to quantities and saying we are willing to buy as isy treasuries as needed really the right communication. i think the fed has to find a way to expand its toolkit in a dramatic way in order to be convincing and credible in terms of whatever communication is put out there. alix: really good to catch up with you. appreciate the discussion. narayana kocherlakota, former minneapolis at president --

minneapolis fed president. more coming up. this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." exxon mobil posting a quarterly loss, the first time in at least 32 years. today it reported a $610 million loss, just the precursor for even starker figures to come. ended three period weeks before crude prices tumbled into negative territory for the first time. chevron slashing capital spending for the second time in five weeks. the oil company also warning as -- as the industry that earnings will suffer. ceo mike wirth has been aggressively cutting spending. we end with apple. for the first time in more than

a decade, it isn't providing a forecast. it is sparking concern that later this year, performance will suffer, despite reporting a 1% rise in quarterly revenue. this sent shares down. a strong online performance saw a retail sales hit a quarterly record. that is your bloomberg business flash. alix: thanks so much. the global smartphone market has suffered its worst contraction in history, according to idc and strategy analytics. they saw a double-digit decline from the same time last year. both firms attribute the shortfall largely to the pandemic. idc found that iphone shipments were mostly unchanged, close to 37 million, while samsung and huawei suffered heavy declines compared to the first quarter of 2019. coming up, a crude revival. demand for oil maybe returning. we will speak to legendary

investor andy hall, plus kevin o'brien, orbital insight chief , to make somecer good calls for the market. we will break it all down. this is bloomberg. ♪

alix: welcome to "bloomberg daybreak." we have made it to the beginning of may.

the s&p did have its best month in april since 1987. you having european markets closed so volume will be thin. you can see where other assets are trading. not a lot of movement in the treasury market. dollar-yen moving lower. crude trying to stabilize. crude at about $20 a barrel. amazon, honeywell, and floor. in the meantime, we want to give you an update on what is making headlines outside of the business world. viviana hurtado is here with first word news. viviana: joe biden is denying the sexual assault allegation made by a former senate staffer. the presumptive democratic nominee said "they are not true. this never happened." tara reade saying biden assaulted her when she worked

for his office in 1993 this is the first time biden has publicly commented on the accusation. the pandemic is likely to last as long as two years. this in a new report from infectious disease experts on the university of minnesota. the report also says the outbreak will not be under control until two thirds of the world population is immune and the expert says people may be at their most contagious before they have symptoms. state in japan where the of emergency set to end next week will stay in place at least another month. prime minister shinzo abe saying the country's medical systems are still under severe pressure. health officials say they have more than 14,000 coronavirus cases and more than 400 deaths. experts say the numbers could be significantly higher. 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. hurtado.ana this is bloomberg. alix: thanks so much.

my next guest has held a long bullish view on oil, predicting oil prices for more than a decade. now out of the oil trading business, he recent told bloomberg a bloat in commodity is a long-term decline. joining me is legendary oil investor andy hall. also with this is kevin o'brien, orbital insights officer. orbital insights provides a view of the world for satellite connected cars and gps. we will break down oil demand and supply issues with that. hitting 40.ve wti what did you think when you saw that? andy: it was pretty shocking, obviously. for commodities are not totally unknown. we have it happen before. not as dramatically as this.

not in crude oil. it was shocking to see it. do you think we ever get back to a normal oil world, and what i mean by normal is a world where we do not see negative benchmark pricing and where we have more balanced supply and demand? andy: it depends what you mean by normal. the negative prices we saw on wti last week, it is unlikely we will see that again, although not impossible. this was a bit of an unusual contracts,expiring and strange things happen when contracts going to expiration. -- go into expiration. , andamatic as it was

probably read too much into this , probably a better measure of the market is next month's contract or the three-month contract, i do not think we'll will ever see that going negative. one should over fact that the expiring futures contract went negative four hours. negative for hours. alix: either way, it is about supply and demand. let's talk about the supply part first. what is your data telling us about where we are in the global storage market. how much more room do we have? what is your data telling you? farn: what we are seeing so , the current inventory levels -- par 3re three point

.2 77 billion barrels of storage. .277 barrels of storage. 19.9 in opec, and we've seen an increase in the last 40 days of 142 million barrels excess storage going on in the market. interestingly, we've been tracking china quite closely. since january they have added about 80 billion barrels. about 12 billion and the last 30 days. we saw some flattening in the last week in the chinese market. is it an indicator they are getting up to capacity level? analysis we'ver been doing with the easing of restrictions in china. carsink about counting across entire cities in beijing and shanghai and have seen a material increase in car or

truck activity in the market. it could be a leading indicator of the recovery of that market. if you look at china, it is two months ahead of us in the united states. as well asactivity economic activity be a leading indicator and what we see in the u.s.? alix: let's get to the road car cap you have for beijing. have you noticed high frequency data of stop and start in terms of the data or are we seeing some short of u-shaped or v-shaped recovery? itin: it is sparse because is on high-resolution and medium resolution satellite imagery. we do not see any rapid recovery. it will not see a v-shaped. you look at a potential bathtub recovery. relatively flat, but leading growth more recently. if you look at some of the

do cell phonelso tracking in the united states and a panel of about 12 million tracking of that. you are seeing a similar pattern that introduced strict guidelines for movement, and four to five weeks later they are seeing specific activity. if you look at the activity we are seeing across the u.s., is a 55% drop. we looked at the 12 million panel and we are seeing in the past public weeks, that is beginning to uptick in anticipation of opening up more of the economy in the united states. alix: andy, from where you sit, do we get back to 2019 demand? we have the v-shaped recovery in the oil market? andy: that is the big question. i do not think anyone knows the answer. i saw this morning the ceo of

ryanair said he thought it would take at least two years for air travel to get back to the levels we saw in 2019. personally, i think that might be optimistic. indications from health experts are that covid-19 will sometimeay much before in 2021, and then how quickly are people going to go back to their prime -- to their prior behavior? maybe in some respects the answer is never. have seen a major recalibration of demand for oil globally. not only that, i think the growth trajectory has also probably been flattened as well. i've been feeling that at some point in the next 10 or 15 years

we would see inflation and demand for oil, and i think that point is probably brought forward in time. we will you feel if bring forward peak oil demand, is that i do not want to be exposed to oil so i will buy solar, or is that we will rethink the way we travel and do stuff so we will stay home more, can you fill that out for me? andy: i think both of those things. there is a question mark as to whether people will be traveling globally as much as much as they were before. we have all been thrown into a place we do not expect to be, and that is causing introspection. it is technology again. everyone is meeting by telephone.

i talked with a lot of people and they are saying this is a much more efficient way to run my affairs. do i really need to hop on a plane and spend hours traveling somewhere to have a 15 minute meeting with someone that i can just pick up the phone and do the same thing without going anywhere? i think there is a question to be asked. wilt people -- will people go back to traveling the way we used to? i think at the margin they will not, and that will have a measurable impact on travel and demand for oil. alix: which makes the u.s. reopening much more interesting on a state-by-state basis. kevin, i wonder if you have a cell phone mobility tracker that you take a look at within the u.s.. can you give me some insight into what you're noticing as we see states start to reopen? kevin: we have seen in the past

few weeks a moderate uptick in the activity of u.s. economy. took a very heavy dip for about five weeks when you started seeing the happy regulations coming in at the state and local level. after that five week period you are beginning to see more of an uptick in terms of activity across the united states. uncertainty,about we will be closely tracking a lot of consumer-based activity today. simon property group will open up 51 malls across the united states. we've been tracking malls for years. that will be interesting in the next few weeks to see how that begins to recover. can that be an indicator of other sectors? i would also go back into history. if you think about what happened in the airline industry over the past 10 or 15 years, you saw

consolidation of supply. production of routes. the economy was doing well. when you look at retail, if you see a consolidation, which you will, then you have to think about who will be the winners and losers of this in the long term? we are working with folks that are advising clients, previously it was using our analytics to do things like site selection, where to put a new retail location, now clients are coming to say i need to do those same analytics to do site closure, which store should i close based on inventory? that should be a painful process for some folks, but at the end you will have some reduced supplies and went demand comes back you will have people that benefit out of the recovery. interestings an data point to be able to talk about. similar to the oil market.

, ay, i am looking at ccrv function that shows the oil curve. what we are seeing is a big re-rating in the back end higher. why? when a market like oil goes up, the back is up on the front of the market. i guess also there is a thought that with production being short and with ray katz following, with subplot -- with rate counts following, with supply being seduced -- being reduced, they are looking for a shortfall in the future. there is a real risk. setting ourselves up for potential future supply shock. to anyone who strongly feels all ofy, i would say

this production is not going away. it is all potentially there and it can be brought back fairly rapidly. , there is a term certain logic to the idea that underinvestment over the next up foro could set us some sort of supply crunch in the future. personally, i would not bet on that. the problem with all of this is in the timing, because if we do have some sort of supply shortfall at some future point, it will manifest itself in the nearby contracts. alix: is there anywhere in the commodity space you do like? i think there are easier

ways to make money right now than in the commodities market. oil -- as you pointed out, we .aw oil go -$40 last week we have had some wild and crazy moves. could someone predict those moves? possibly. there are better ways to invest one's money than trying to predict these chaotic movements. that is what they are. chaotic movements. alix: anywhere in particular you would like to invest? just sitting on some cash? interviewe was an last week in the wall street journal. i defer to charlie. business a in this

lot longer than i have. he was justwas happy to be spectators. that is the way i feel. alix: i appreciate it. it was a good perspective. great to talk to both of you. kevin o'brien of orbital insights, thanks very much. andy hall, thank you very much as well. coming up, we are about halfway through an unpredictable earnings season with many companies suspending their forecast for 2020. we'll take a look at a few of them in today's bottom line. bloomberg users, and i charts we use, go straight to gtv on your terminal. browse the features and check them out. this is bloomberg. ♪

alix: we take a look at companies in sectors worth watching this morning. joining me is brooke sutherland of bloomberg opinion. you're watching lots of stuff but honeywell is front and center. what did you notice? brooke: obviously sales were down as they are for pretty much every company. we did see margins strengthening in honeywell and this is why investors love the company, their ability to drive earnings higher even as sales take a hit. i will say they had 1% organic growth in their aerospace division, that was their only division to show growth. that was unlikely to hold as we go into the second quarter and we see the drop off in travel start to hit the aerospace companies. as you look at the landscape, honeywell is one of the better positioned companies to weather the downturn.

it has a pristine balance sheet and a lot of cash buildup. they have been holding off on doing anything major on m&a because everything was so expensive. if you look at coming out of the other side and come up and he is -- and companies are not on the position to only survive but capitalize on the opportunities. i would put honeywell in that category. alix: how they wind up capitalizing? do they eat other companies market share? how does that play out? brooke: i think you have to look at m&a. buybacks have become toxic in this environment and honeywell has been pretty vocal about wanting to do deals. obviously we are a while away from being at that point. ir pensioncash, the is in a good position, so they have the financial flexibility to do some of these acquisitions. the ceo has held off on doing a big deal even though analysts

called for him to do want to make up the revenue that was lost. you had the big spinoffs in late 2018. he did so because everything was expensive. the equity markets have been on a tear. as we get to the other end of this, there may be assets that cap more realistic in price and honeywell could pick up some of those. alix: do you have a read on the companies that will be struggling and do not have a good substantial foothold and good businesses that honeywell might want to pick up versus ones that will not make it? brooke: i would see consolidation in aerospace. we have been seeing this. likeook at the big deals united technologies merging with raytheon and smaller deals in aerospace. what was driving those is the idea that having scale on airplanes is beneficial in terms of negotiations with boeing and airbus. boeing is losing some of its marketing power with the crisis

and demand for new aircraft will drop significantly. the scale still is important and it will help you with better positioning the aftermarket, better positioning and digital services that could become more important as airlines try to save costs. i would love to aerospace for potentially deals, especially some of the weaker suppliers struggling to get through this crisis. alix: interesting. what about dividends and buybacks? how is the street and investors reacting to that these kind of companies. brooke: dividends have held up well. the exception would be boeing, which has a unique circumstance given everything it was already facing with the 737 max. other companies have remained committed to their dividends. that includes caterpillar, and includes names like 3m that have a long track record of raising their dividends. you will see some of the dividends aristocrats that raised their dividends like 3m

continued to view everything they can -- continue to do everything they can to keep the track record alive. buybacks are different story. those have been pulled across the board. part of that is looking to be prudent in terms of conserving cash, but there's a political element. given the nature of the downturn we are facing, so many people out of work, so many people facing health challenges, it is just not politically palatable to be talking about buybacks on the other end of this. i think that element of the typical recessionary playbook will not necessarily be a tool that companies rely on coming out of this. you'll see a lot of reticence to go down that path because of the potential blowback. alix: really great round up. thank you so much. appreciate the insight. brooke sutherland of bloomberg opinion. honeywell stopped down 1.3% in premarket but off the lows of the session. this is bloomberg. ♪

alix: we needed the whole show without saying cell in may and go -- without saying sell in may and go away. coming up on "the open" with jonathan ferro, mohamed el-erian. this is bloomberg. ♪

♪ jonathan: from new york city for

our audience worldwide, good morning. this is "the countdown to the open." the s&p 500 delivering its monthly gain since 1987, following the biggest monthly loss and's 2008. may begins. we are down two percent and change on the s&p 500. amazon and apple lower. treasuries shaping up as follows. your yields in two basis points to 0.62%. g10 is a mixed one for the u.s. dollars against the majors. stronger against the pound, weaker against the euro. euro coming up .2%. that is your price action. let's begin with the big issue. if notet to be one of, the defining subjects of the upcoming presidential campaign. china, and america's relationship with the chinese government.