the european commission says the economy will shrink almost 8% this year. we will speak exclusively with the european commission executive vice president later in the show. and reopen at all costs. president trump pushes the u.s. to reopen the economy even if it means some americans will die. and the non-magical world of disney. the crisis cost $1 billion in the last quarter. gm set to report. welcome to "bloomberg daybreak" on this wednesday, may 6. i'm alix steel. building on the rally we saw yesterday. s&p futures trending higher. the euro moving lower. you have a selloff in the bond market in europe. not a huge one, but the european commission has some dire forecasts on what happens to the euro zone if they can't get it together for this crisis, really weighing on the currency. oil treading around, trying to get some kind of bid to support markets overall.

time for today's market moving news from our washington and new york bureaus. president trump is pushing to reopen the economy, even if it leads to more deaths. speaking in arizona in his first trip outside washington more than a month, the president is preparing for phase two of the u.s. response to the coronavirus. pres. trump: the people aren't going to accept it. they won't accept it, and we shouldn't accept it. we have a great country. we can't keep it closed. i've had doctors say, why don't we close it for a couple of years? this is the united states of america. will some people be affected badly? yes, but we have to get our country open, and we have to get it open soon. alix: kevin cirilli joins us with more. good morning, kevin. kevin: good morning. the president returns from that trip to arizona, really signaling that he is going to be taking his message of reopening

the economy back on the campaign trail in arizona, where polls have him trailing joe biden anywhere from 4% to 6%. clearly, arizona a state that republicans would like to win in 2020. still re-upping estimates of casualties from covid-19 to anywhere from 70,000, as they had said, to over 100,000 deaths. finally, interesting new development in terms of reopening the economy. lawmakers in congress continue to grapple with what exactly the next round of economic stimulus would look like, the battle lines being drawn. speaker pelosi says she wants to see increased funds for state workers as the president continues to dig in on adding a payroll tax cut. a bipartisan report lawmakers

known as the problem solvers caucus have also released a checklist that they say must be included to help small to include new assistance for them, to boost their businesses to better covid-19 from a small business perspective, adding things into our companies such as plexiglass, for example, to help them be better prepared for when they reopen. alix: we also heard president trump continue to place the blame on china. china now pushing back. walk us through what we'll learned overnight. kevin: the president continuing to increase rhetoric against beijing. china said they continue to deny . china has had development of that, really going after the united states.

it's the president, the secretary of state, even democrats on capitol hill looking at a handful of different policy tools at their disposal as it relates to untangling the relationship that the united states has with china, from higher education, big pharmaceutical companies and manufacturing, and of course, the president continuing to say that tariffs might also be on the table as well. quickly, from a political standpoint, this is something that is not going away. republicans i talk with say they feel that this is a strong point that they will be able to make for independent voters in states like michigan, i battle ground state, and former vice president joe biden, who chaired the senate foreign relations committee, that record is going to be front and center for the campaign as well. alix: kevin, thanks very much. now we move to politics in europe.

german chancellor angela merkel and german regional state premieres our meeting today to hash out a plan for reopening the economy. mckee,rg's michael international economics and policy correspondent, joins us now. a lot to michael: michael: unpack this morning. and if you are trading -- a lot to unpack this morning. michael: and if you are trading fundamentals out of europe this morning, the fundamentals are lousy. the forecast dismal, a contraction of 7.4% in some -- aries in the periphery contraction of 7.4%. in some countries in the periphery, more than 9%. , andumbers look terrible the european commission's warning that if that is how it plays out and nothing is done to help the southern region of the euro zone, it could lead to political pressures that could tear the euro zone apart. while, even with the numbers

terrell -- meanwhile, even with the numbers terrible, the german forming its own plans to reopen. and the limerick was meeting with leaders to form a plan this morning. -- angela merkel meeting with leaders to form a plan this morning. coordinate because some of the governors -- again, sounding familiar -- want to get political by announcing early. isela merkel saying if there a renewed outbreak, the local restrictions do have to come back. johns hopkins reporting this morning that germany's infection rate is going up. we mentioned the report on 15.6%, theers at

most since data collection started in 1991. i might just quickly note come on the other side of the world, china may not announce a goal ,or economic growth this year they may just give a gold instead of a numerical target. alix: and i take offense, you don't like the mullet that i am developing on my hair? michael: it is absolutely beautiful. i liked it in the 1970's. [laughter] alix: thank you. stay with me for a second. coming up in the next hour, i will speak exclusively to the european commission vice president, valdis dombrovskis. we also have a earnings coming out throughout the morning. wendy's higher by about 1% premarket area the first quarter results missed slightly and same-store sales dropped. they say they are seeing strong growth in their u.s. digital

business. kkr also remaining relatively unchanged in the first quarter. it saw declines on most of its businesses, including private inity, and earnings came right along with estimates. year onas up about 8.6% year. cvs shares weaving higher. they did beat expectations. comp sales jumping 9%, about three times as much is the estimates analysts expected. stay tuned. later in the hour, may interview with artan rich and hagen that's with martin richenhagen -- my interview with martin richenhagen, agco ceo. this is bloomberg. ♪

pm johnson: the work of the nhs to everyone from getting up 20,000 tests -- alix: you are looking at a live shot of u.k. prime minister boris johnson taking questions in parliament. i want to dive now into bloomberg first take. here to discuss from our in-house team of wall street veterans and insiders, michael mckee, and damian sassower our, bloomberg intelligence chief emerging-market credit strategist. whatt want to start with boris johnson is really talking about. how do you reopen in the midst of covid? it is the same situation anywhere around the world. china may not give a growth forecast for the year because of it. youan: i can barely hear

because i hear boris johnson in my ear, but let me answer that question on china. what we are seeing is the supply-side recovering. if you look at the korean cross currency basis, china auto sales, even refined copper demand, we are seeing domestic demand in china, but my goodness, we have trade coming in this evening. it is expected to climb from $9 billion to $20 billion on export losses, and the demand-side is still 17% below normal, and we are at a dangerous stage of recovery in my mind here in china. alix: and i wonder what kind of volatility we might be expecting for the u.n. when we have a potential trade war heating up. absolutely. the reality is this. you have seen some rhetoric from trump about new tariffs given its poor handling of the pandemic. it is blocking a small

investment. the pressure is ratcheting back up. but you are absolutely right, the fact that china is willing to drop its gdp growth target, , wes targeting 6% to 6.5% are seeing -- they are doing everything they can to get everything back up and running, but they are definitely managing you on -- managing yuan volatility, and we will see the extent of that this evening. alix: it all leads to how quickly everything reopens. that is really the question across the globe. the european commission came out and gave a pretty dire forecast. they did say they see next year, gross recovering 6.3%, much better than what the imf says. i just wonder how we are predicated, what we are predicated on of these models on. michael: they are doing their

best to model be shut down and what economic activity has been taken away, and what that means going forward. it is difficult to do because we don't have any real precedent for this. i think the most important thing to realize is that when you're talking percentages, it is different from levels. the math is different. a lot of people don't get this. if i have $10, a 50% cut leaves me with five dollars. if i grow 50% from their, i am at 7.5, so i am not going to get it all back. rise is still going to be well below where you were, so the economy is going to be smaller, and still struggling. that is the problem, not just for the european union, but for well.country, the u.s. as alix: i wonder how much we are talking about that existential risk to the euro zone and that unity based on covid. is that in the vocabulary yet? michael: it is.

people have been talking about the euro zone falling about -- falling apart for some time, obviously, but this is a bigger situation, particularly italy with its giant debt, involved. there aren't really any good options for these countries if they leave the euro zone. their economies will really suffer in the short run. gethe long run, you can your own currency and start growing at a faster pace, but it is going to be difficult for anyone outside the euro zone. most people don't think it will -- but but most people populism being what it is, it is definitely on people's radar screen. tox: it sort of sets you up devalue your currency to boost growth. it doesn't seem like that is going to be on the cards for emerging markets this time around. it feels like brazil's rate cut expected tonight could be front and center for that. damian: you are absolutely right.

central bank's across emerging markets are definitely more focused on domestic recovery then their currencies and fiscal sustainability is a reflection of that. we only get a handful of emerging market nations that report foreign holdings of local bonds on a daily basis. of the six that i look at, i have never -- i mean, amongst the majors -- i have never seen outflows of this magnitude ever. in indonesia, we have seen $8.3 billion in foreign outflows this year alone. it has never experienced a full year of foreign outflows in its 10 year bond history. of the outflows are egregious. that is why you are seeing quant easing across emerging markets. they need to flatten their yields. yields have remained high on a relative basis across these countries, so they can't borrow at these rates. it is prohibitive. i expect them to do whatever they can to flatten some of

these curves and bring foreign investors back in, but the currency volatility needs to come down for that to happen. the baby why -- the dxy up again today. we are probably going to see a cut from brazil. no question there. we saw malaysia yesterday. -- will probably remain on hold, and probably peru as well. especially in brazil, i think people are realizing that the government needs to draw foreign investment back into the country, and low yields are not going to cut it, especially with the currency volatility. with respect to argentina, some key deadlines we talked about previously coming up. what is interesting is you might see willingness on the part of existing creditors to extend the timeline, given the fact they

are negotiating a shorter grace period, higher coupons, and even a sweetener, collate gdp warrants or anything you want, but anything to keep creditors on board is key to helping argentina emerge from the current crisis. alix: just to wrap it up, i was interested with mark haefele saying that a rush into exits may feel like a safe choice, but they do think you should diversify into riskier, higher-yielding assets like lower credit quality or stocks. i wonder, at some point, does that seem push everyone out and help flatten that curve? michael: that is what the fed tried to do during the 2008 crisis. in this case, it is a little different because the crisis is so global and so focused and fundamentally caused by the virus that it is hard to know exactly what point we are going to start to see some recovery or model or quantify what earnings

could be going forward, from these various alternative assets. you have the problem that if everyone is trying to head for the exits at once, nobody gets out. so it is not something the fed is necessarily encouraging right now. there qe was designed in this case to just keep the plumbing open. maybe something they want to do down the road when we see a little more clarity on where markets can go from here. alix: guy's, thank a lot. really appreciate it. thanks for sticking with me. thecharts we use throughout two hours, go to gtv on your terminal. browse the features, check them out. tv . coming up, the world's largest entertainment company takes a $1 billion hit from the coronavirus pandemic. mcternan of rosenblatt securities will be joining me next. this is bloomberg. ♪

ritika: this is "bloomberg daybreak." bmw is joining other automakers and lowering its profit outlook for the year. it says fallout from the coronavirus is lasting longer than expected. bmw predicts the second quarter will be worse than the first. goal -- angela merkel fored the company's hopes auto subsidies. resolve concerns about competition by selling two products to nestle. they also gave astrazeneca the right to a treatment for crohn's disease being developed. investors in disney got a glimpse of how bad the coronavirus outbreak will be the world's largest entertainment company. disney said the crisis cost it 1.4 billion dollars in lost profit last quarter, and this

quarter is expected to be worse. inney did say it's resort shanghai will reopen next week. that is your bloomberg business flash. alix: thank you so much. for more on disney, i am joined by bernie mcternan, rosenblatt securities director and senior analyst. he has a buy rating on the stock with a $130 price target. thank you for joining me. is your writing predicated on everything -- is your rating predicated on everything returning to normal within a certain timeframe? bernie: yes, more or less. domestic parks reopen in september, as well as the in fl schedule. we do assume that the parks reopen, but the other thing is that while we are focused, and rightfully so, on the impact on the parks, the media networks,

the film studio, disney plus continues to flourish. they announced 50 million subs at the beginning of april, 54.5 million currently. we think that by the end of september, they could get to 65 million subscribers and reach profitability by 2023, a year earlier than originally guided. alix:alix: what is the profit margin difference between disney plus versus other areas where they still need to see a rebound? parks where the cash flow hubs of the business. consumer inirect to general is in invest area for the company. that is why pe multiples hiked up so much, because they are going from the core disney to investing for the future. that is why we've had a buy rating, that you have to own media stocks that can make this transition from the bundle,

which continues to shred. subscriber losses picked up again sequentially in the media networks. that is what they are doing with disney plus. we think it is one of the media companies that will be able to rival someone like netflix. alix: how do you look at a company like disney when we come out on the other side? your models, i would assume, are predicated on where we were before, and we have no idea what the margin will be, what kind of costs they will have to put into these parks to get them to reopen. how do you think about something like that? bernie: it's a great question. we got some clarity last night on what the fixed costs aspect of the business was. for the parks closing, we have $1.5 billion in losses for the segment in general. one interesting thing is we are looking for how these companies can maybe adapt their

structure and business model over the long term because there could be increase costs near-term as you are dealing with increased sanitation and different measures to combat the coronavirus. that is maybe going to come out if revenues are lower at higher margins. the profitability is unchanged or possibly even enhanced. that is a multiyear objective. alix: bernie, appreciate it. coming up, we are about 70% of the way through earnings season. more on how to think about that as we come out of covid-19 with anna han of wells fargo securities. this is bloomberg. ♪

alix: come to -- welcome to "bloomberg daybreak." you still have u.s. equity futures grinding their way higher.

european stocks a touch mixed. european banks also highlighted, as you had unicredit putting aside funds due to coronavirus. you can see ripple effects from the european commission's terrible report on growth for the euro zone and what it means, particularly for the southern nations. it is a stronger dollar story in the g10 space, with the exception of the yen. dollar-yen down again as the safe haven continues to reign for choice. oil now sits at when he five dollars a barrel, a crazy change -- sits at $25 a barrel, a crazy change for wti. factory orders out of germany terrible, but you still have strong equity markets, whether looking at msci world or the s&p. ,oining me now is anna han wells fargo equity strategist. if you take a look at earnings

expectations globally, they keep going down, get equities keep going up. they are really in a v-shaped recovery. how do you explain something like that? anna: if you start with the u.s. markets, the s&p 500 is looking to open shy of 2900 this morning. the main driver of equity prices has been the decay in risk. that came in the form of tightening credit spreads and lower equity volatility. that is because we have gained more clarity and quantified the situation quite a bit compared to where we were in march. lessons certainty, and in the worst case scenario, not looking as bad as we initially feared when we were down to 2200. that is what we are seeing. since early april come our team projected equities to range between 2500 and 3000 in the near-term. 2900 at this point, we are ok with that. you put a good

valuation on equities when even companies don't know what they are going to be earning? we don't know what the buyback situation is going to be like. we don't know what dividends are going to look like. we don't know what the earnings power is going to be. how do you do that? anna: wicket break it down a little bit. -- we can break it down a little bit. things are looking murky. across companies, you are seeing some saying early signs of pent-up demand, while others are saying this could take multiple quarters to recover, but on the dividend front, we project a pretty flat dividend growth this year, compared to about 8% last year. with buybacks, we have been keeping track of the companies that have been canceling buybacks. out of those, compared to last year's 2019 net buyback amount, norths about 1/3, nearly of $600 billion net of buybacks. keeping those in mind, it is hard to put a valuation on the

equity market right now. we are looking at probably multiples of around 17 to 20, but no doubt it has been difficult. that is what happens when you hit pause on the economy. some conversation emerging that this will accelerate trends we saw even before covid in your supply chains, which is going to eat into margins because maybe you moved your supply chains and restock closer to home. how do you look at something like that? anna: the supply chain was a center of concern in 2019, if you recall, for trade and tariffs. we saw elasticity with the supply chain as companies were shifting around, trying to reduce their exposure that they had to this one large counterparty. now the coronavirus has only exposuresupply chain even more apparent, so companies

who have been thinking how to remove that sort of risk, but it will take time. alix: i want to talk about earnings for a quick second. general motors adjusted earnings for the first quarter coming in at $0.62. that looks to crush estimates by about double. they say they ended about 34 billion dollars in liquidity. they are set to preserve liquidity as i go forward. also taking a look at sales and revenue, also beat. they do see full-size truck demand remaining strong for many dealers, so that is interesting. fromsee the impact on ebit covid as -$1.4 billion. news isn't a complete washout, like it is ok, therefore, we are going to go buy stocks. is that the theme? that lesss uncertainty helping drive the

equity prices overall, but when you look at earnings reactions, just remember they are also very immediate and short-term. what we have gleaned so far from those quick reactions is that the market is favoring stocks that have been working over the last 12 months. that is if you look at s&p earnings overall. so these stocks that have been working are favored over the contrarian names, and with the lower risk stocks, they are behaving as they should. the reactions to them have been more muted compared to high risk stocks. we will have to see the rest of earnings area at this point, 80% of s&p 500 companies have reported. but it is really the guidance and reduced risk which is getting priced into the s&p. alix: so where do you keep safety in all of this? the: when you say safety, odds books believe we are going to get a massive other pullback,

retest the lows, and you've got to stand offensive. for us, a month ago we talked about that high quality stance that would provide that protection, but recently we started rotating into the value strategy. that is more putting risk on. we like that because these value stocks trade at a discount. they have a higher risk profile, and they got really beaten down during march's selloff because investors couldn't shed risk enough. now you have the fed backing this credit liquidity not just in ig markets, and high-yield as well, and that is a turning point for value and risk in our opinion. so we see the right incentives in place for those trades, and we are looking for value opportunities across sectors. when you are taking a look at the recovery and you look at whether you are on a v or u or whatever, what kind of recovery

are you modeling for the next 12 months? , it is the alphabet soup. that's been the beaten horse, but here's what we can say. we expect 22% gdp contraction, quarter over quarter annualized, and second quarter. we expect 15% unemployment rate in the second quarter as well. but in third and fourth, we think gdp will start expanding again and the hefty unemployment rate will subside. it is really a matter of how long will the recession go. we are watching the economic data and indicator that everyone else is. but it is hopeful to see parts of the u.s. economy reopening and companies and stores reopening. we think that is going to be the insight to recovery. alix: thanks so much. really appreciate that, anna han of wells fargo securities. in the next hour, we are looking at dealmaking more with citigroup's chairman of the

institutional clients group, and how he is looking at the market. one other story we are watching is if someone is really bullish on the gold market, yesterday there was a $12.4 million bet made on a rally by the end of the year. within 30 minutes, you had two call options bought. seesber, bank of america $3000 in the next 18 months. meanwhile, gold trading and exchange funds have soared above an all-time high. this year alone, more than 520 tons of gold have been added, more than all of last year. also want to break down gm real quick again. ock up almost 5% in premarket. earnings and sales topped estimates. we are still looking at operations. they are dealing with planning underway to restart north american operations, and they say they are focused on preserving liquidity.

they see the impact of their ebit, earnings before interest tax adjusted, at -$1.4 billion. this time now for first word news, an update on what is making news outside the business world. here's bloomberg's ritika gupta. ritika: president trump is ramping up his push to reopen the country. he said americans should begin returning to their everyday lives, even if that means more sickness and death from the pandemic. the president spoke in phoenix. may wind down the task force that has been steering the government response to the outbreak. u.k. minister boris in the was in parliament for prime minister's questions -- boris johnson in the u.k. was in parliament for prime minister's questions. pm johnson: we took the decisions we did, governed by one overriding principle, and that was to save lives and

protect our nhs. i believe that of course, there will be a time to look at what decisions we took and whether he could have taken different decisions. ritika: supreme court justice ruth bader ginsburg has been hospitalized. the court says she has a benign call better -- benign gallbladder condition and won't be released for a day or two. she plans to take part into arguments today being conducted by telephone. that is your latest first word update. alix: coming up, we are looking at the health of the agricultural sector. if you have a bloomberg terminal, check out tv . watch us online, click on our graphics or charts. go to tv on your terminal. this is bloomberg. ♪

♪ alix: adco first-quarter earnings -- agco first-quarter earnings came in line with estimates. going me to discuss is the ceo richenhagen.n porke u.s., about 50% of processing is currently suspended. you mentioned that would hurt you in the second quarter. when does that have to ramp up for you? martin: i hope it will ramp up pretty much at the end of the second quarter. we know that last month wasn't terrific, but we are expecting it to come back because food is essential to mankind, so the population is still growing.

the demand of food might be higher than even before after the pandemic. so i am slightly optimistic. alix: what is the biggest hurdle to ramping up that kind of operation? is it demand? is it supply? is it workers, safety? the proteinhis day, division is busily demand all of our facilities are at capacity, so therefore we need the market to come back. alix: what about in terms of worker safety and supply chain issues? have you had to revamp your facilities to make sure they are six feet apart, that you have protocols set? how laborious is that? martin: of course, safety of our associates comes first all over the world, and we have basically changed our layout. we provide masks and all kinds of devices for separation and so on.

[indiscernible] you can see about half the amount of people we would normally have on the shop floor in order to help us basically get to the right distance, which can be easily done because on you basically have a different task and a different difference between each individual. so then, on the supply chain issue, are there any key elements you are missing to restart, irrespective of worker safety? martin: no. , and wehave a few cases employ about 5000 people. you might see about a dozen -- about 25,000 people. you might see about a dozen.

when it comes to what we need, basically we have various administrations globally to interfere and shut the factories down or help us to open, so we need some consistency and some predictability when it comes to those regulations. the worst i would say is maybe germany because those regulations are not only different in every european country, but also different in every individual state in germany. they are speaking together today and they will announce. most of our factories are open and operating, including in china. go 100% demand were to higher tomorrow, would you be able to meet that demand? martin: yes, but we would have some work to do in order to ramp up.

one is our own factories, and the second is our supply chain. we have suppliers who are not really on track, and the need to be managed. amanda is good, so our order book is pretty normal, i would call it. good, so our order book is pretty normal, i would call it. alix: as we look forward over the next 12 to four months, what are some of the -- 12 to 24 months, what are some of the changes you and despite to manage for something like this -- you anticipate to manage for something like this? farmers moreally, or less don't work in groups. farming, they are in a

tractor cabin, so they are well protected. they don't have to take care of many of the things that other people are doing. when it comes to operations where you have a lot of people and harvest, we need to be more careful on how you manage your people. alix: do you think there will be usingalk about technology, robots, etc. to make all of this safer? that was already a conversation before. what do you anticipate that will be now? martin: we call that precision farming. we have a lot of solutions which help farmers automate their processes, and i think that will get quite a tailwind now because farmers will certainly be more interested in these offers in the future. alix: how does that windup

affecting the agribusiness? are we going to see even more consolidation, changes in business models? how do you come out of this? it can't be business as usual in 12 months. martin: i think in our industry, there's not a lot of consolidation possible because we are already very consolidated. there may be only three global players. specialthe smaller companies might be talking about mergers and maybe some bolt on acquisitions in the future. when it comes to our farmers and such, their lives didn't change so much. so they live in a world where they are still farming, still working on the fields, still plowing and planting, which tools for ussiness

are available, so the farming sector is different from airlines or things like that, or hotels. they are working. to round out the conversation and bring it back to your business on a quarter to quarter basis, you were able to expand your margins to 5.2% in the first quarter. do you think that is sustainable? the conversations i tend to be having now are the structural change in operating margins due to the changes you have to see in your business, due to the changes of your customers, if that winds up changing. martin: we worked on a project was called 10 by 10. we wanted to generate 10% margins, and we were very close. hits us,educed demand and the problem is it is very difficult to predict now. therefore, we also decided not to give guidance for the year

and the next quarter. soon aschange that as we have more precise information. martin, thanks a lot. really appreciate it. ,artin richenhagen of agco thank you. coming up, why south korea stands out among its emerging-market peers. that is coming up next in today's trader's take. this is bloomberg. ♪

alix: time for trader's take. joining me as damian sassower. you are looking at south korea. damian: we have seen record outflows of bond holdings by foreign investors into

emerging-market debt, but a major country which stands out is south korea. what we have seen this year is 22 billion dollars of foreign bond inflows. the reason for that is domestic man for dollars, which has reduced to cross currency basis between the dollar won. it increases the offer on a hedge basis for investing into korea. if you are expecting 25 basis points on five-year local money in korea, forget about it. on a hedge basis, you can get nearly 200 basis points. the carry-on on offer in place is like south korea and japan as well is higher than you would expect, some plea because the demand for dollars domestically is so high. that speaks to the fact that china is coming back online and demand for dollars to meet that demand coming out of china and other countries is starting to improve. basis, howbroader much of that also boils down to

the fact that south korea has been very successful in how it is handled the virus? is any of that playing into it, or is this purely a technical point of view? damian: it is just the way the economy is coming back online. this is all in reverse. the payment pressures you saw in south korea, now is coming back the other way. demand for dollars is rising in south korea because demand from china is coming back online. to satisfy that demand, they have to reduce their hedge costs. that is increasing local yields, and that is why you're seeing all of these bond inflows coming into south korea. alix: interesting. thanks a lot, damian sassower of bloomberg intelligence. coming up in the next hour, leon ria will -- leon calva be joining us. markets really focused on liquidity. they beat on the top and bottom line. this is bloomberg. ♪ these days staying connected is more important than ever.

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on this: americas" wednesday, may 6. i'm alix steel. let's take it right from the top. demand collapses in german factories in march, with demand following the most in years as data paints the picture of how bad economic activity could get. michael: the numbers look terrible, and the european commission is warning that if that is how it plays out and nothing is done to help the southern region of the eurozone, it could lead to political pressures that could tear the eurozone apart. alix: on deck for investors, u.s. jobs report on friday. pres. trump: well some people be affected? yes. will some people be affected badly? yes, but we have to get our country open soon. alix: president trump pushes to reopen the economy even if it leads to more americans falling sick and dying. trump also says phase ii will disband the run a virus task

force. >> it is signaling that he is going to be taking his message of reopening the economy back on the campaign trail in arizona, a state where he has been trailing vice president -- trailing former vice president joe biden. alix: meanwhile, an op-ed in the washington post try to into the blame game. >> unicredit has posted a 2.7 billion euro loss. provisions related to the coronavirus are adding to the pain. alix: unicredit set aside for bad loans to do with the virus impact. this comes on a heavy day for u.s. earnings, with automakers n focus, and some warning of future bankruptcies. some significant risk of cascading bankruptcies, where a bankruptcy at one firm then infects another firm, and then that infects a third firm. alix: disney second quarter

profit trunk by more than half as the world's largest entertainment company was legend on all sides by the coronavirus, with the worst performance coming from a theme park division. let's take a check on where markets are trading. s&p futures continued to hold onto their highs of the session. you had a rally yesterday, and a mixed picture in the european equity markets. the euro is weaker on the day. german factory orders were terrible, but also, the european commission warning of the survival of the euro zone if this crisis is not handled well. a selloff in the bond market across the board. pretty modest, though. we get adp in the u.s. at 8:15. treasury funding at 8:30. all of that making treasuries trade a little bit heavy on the day. we are also about 70% of the way through earnings. general motors one of the most recent coming in, beating on sales, as well as revenue. for more on all of that, gina

martin adams joins me now. we are all focused on the fact that there is no guidance, so you have earnings estimates continuing to rotate lower. do they need to get even blower for the rest of the year and for 2021? gina: probably. there doesn't seem to be any sign of stopping them so far. it has been a stunning reduction in expectations for not only the quarter ahead, which is now forecast to show a 40% drop in earnings year-over-year, but for the entire year of 2020. wenking about may be how might start to dig out of this recession into 2021, but focused on the next couple of quarters, and frankly giving up. alix: why are equities higher? that's a great question. i think for a couple of reasons. first, the rate of infection peaked right around the time d.at equities troughes

we saw that occur around march 31. stocks hit their lows when we got the worst of the news on infection rates in the u.s.. at the same time, you had arguably the largest monetary as well as fiscal packages, so stocks have been rising mostly due to the fact that the worst of the worst has passed and you sheltering firepower us from greater declines, as well as the value that investors are willing to pay for stocks. alix: it feeds into this chart that shows basically, earnings estimates continue to go lower while the msci world index goes higher. you see the biggest dislocation

-- i'm wondering where you see the biggest dislocation in pricing versus economics. gina: i think you see the biggest dislocation in the u.s., and that this is powered by policy. no fiscal bank nor fiscal body has made the efforts the u.s. has made. the u.s. fiscal spending package is just enormous, for lack of a better word. we've never seen anything like this. at the same time, the fed is set .o double the balance sheet at the same time, the u.s. is in a general sense the safety trade , so to the extent that investors are willing to put equity capital to work, they generally move to the u.s. first, and that is being reflected in valuation multiples. at the same time to my gdp is contracting at a double-digit pace. with cut somewhere between 20 and 30 million people unemployed.

it is very dire near-term fundamental circumstances, but considering just the policy angle, we have seen the u.s. from expectations for reasonable recovery going into 2021, and commendation was set massive policy package. alix: really appreciate getting that break down. coming up, we will focus more now on dealmaking in the age of the coronavirus. deals getting done, deals that are not getting done, wes lyon -- not getting done, with leon calvaria next. ♪

sonali: welcome back to "bloomberg daybreak: americas." business across america has come to a screeching halt, and many deals are being canceled. ,ith me now is leon kalvaria citigroup institutional clients group chairman. thank you for joining me. i want to ask your opinion on distressed m&a because people believe that even though mergers and acquisitions on a large scale might not come back, at some point, people will start to make acquisitions out of distress. when might we start to see that, and what type of deals may that

be? leon: thanks, and good to talk to you. i think we will start to see that, but not quite yet. certain sectors will need that consolidation, particularly in energy, and i think distressed m&a will start to come about once people have an idea about how to actually protect the businesses. right now, the issue is making sure you understand how to protect your company and your earnings. people are looking at situations, but i think it will take a little while before you actually start to see transactions happening. sonali: with that said, there are a lot of rescue financings we are seeing. not quite buy outs by any means, but people putting money to work in big ways with significant terms. what types of rescue financing are you hearing in the pipeline here that we might see in the next couple of months? leon: whether you consider him them rescue or financing to

cover this period of time, you might see those in potentially smaller media companies, energy companies, and some in potentially areas like in technology that require financing to tide them over the next year. i think those are the areas you are starting to see yet. you obviously saw something significant in the case of airbnb which was large, and i think you may see more things along those lines where the fundamental business is good, but they will need capital to take them through the interim period until they come out the other side. be structured transactions, private equity, convertibles of that nature. alix: i am glad you brought up -- sonali: i am glad you brought up airbnb. expedia also. we saw a lot of private firms step up to the plate there. we are also seeing family offices when it comes to some of the mortgage rates. are you seeing more billionaires

step up for deals in this environment? leon: not quite yet. i think a lot of them are looking, but i think they are being quite careful right now in order to make sure that they have an idea of stabilize earnings pictures for the companies. you haven't seen as much. there's a lot of discussion going on, but at the moment, you haven't actually seen much cash being put to work in that area. i think that could change in the next month or two as we start to see a stabilized picture of the potential outlook for the second and third quarter in 22 anyone. -- in 2021. sonali: with that the billionaires -- without the billionaires stepping income of the last couple of weeks we saw these private equity firms take significant markdowns on their portfolios, sometimes more than 20%. kkr coming in at less than that this morning. is private equity really stepping up to the plate, or is all of that dry powder just a myth? leon: no, i think the dry powder

is there. there's $750 billion to $1 trillion of equity dry power. i think they have been working through their portfolios, assessing liquidity needs, ensuring that their companies are in good shape and looking after the safety of their employees. so going private, transactions like that are effectively on hold. but i think you will see more and more in the next month or two starting to put pipes into transactions, potentially convertibles and other securities that allow them to be able to start to invest in the valuation.or so i think the focus on port for lou companies, they have done there -- on portfolio companies, they have done their valuations. now they will focus on capital. , there wereso long

megamerger's. now you are seeing lbo's on hold. a lot of these financings will even take months to come across. have you had to redefine your job a bit as an investment banker in what we call the new normal? leon: i call it the interim normal. i refuse to call it the new normal. but from my standpoint, the substantial conversations with chief executives have been incredible. over the last eight weeks, i've probably spoken to more chief executives and had meetings that --ould have an 86 months would have in any six month .eriod it is about issues related to the businesses, where we can help each other. to be honest, the job has been incredibly busy during this time. there's no commuting. there's nothing that gets in the way, sitting around an airport. we have had incredible time in

conductivity right now, and the days are longer. there's no difference between a monday and a sunday at this point in time. they all blend together, as i am sure they do for you and your audience. sonali: i've spoken to a lot of folks in your industry who are actually quite enjoying not being on a plane every weekend. working from cape cod and the hamptons. i am wondering, you have 2000 some bankers, if i am not mistaken, under your wing, all working on different types of deals. if this going to be more normal for them to just be working from home? leon: i think it will be normal in the interim, but people missed the social and business interaction of being in the office and being with their clients. as you know, i travel a lot. there were moments when i could have done less of that. but do would have thought right now that i am dying to get on a plane into a business trip?

after eight weeks, i think people are tired of working at home. but on the other hand, it has been very efficient, and the interaction amongst all of our partners has been fantastic, between zoo meetings and all of the other interactions, people have really adjusted really well. i think we will work our way through this interim normal, and then there will be demand back into having human interaction, both fly into places and doing meetings, but it will take a while to get there. in the interim, it is working very well. alix: a little earlier this month, we spoke to your colleague over in europe, and one of the things he told our colleagues was that he believes there would be bigger national champions created in europe in light of this crisis. but if you look back in the u.s. , the bigs have already got bigger. there are talks about some of the big tech companies looking to deploy more dry powder into deals. does -- reallynt

start to kick in here? at what point have the big gotten too big in america? leon: i don't think we are at that point. manolo is that correct that you will see more european champions, and therefore there will be enter europe consolidation. and i think you will see a rise in m&a activity in the u.s. as some of the large companies consolidate potential weaker players. , and also depending on the sector, taking on this crisis in order to perhaps be less reliant on any one silo they had. so i think that is coming, and i think it is going to come in probably three or four months. we do think you will start to get a return of this activity, as you have seen when you looked at the dotcom crisis. there was a cap, and then people started to take their heads up

and started to do transactions when they were comfortable with valuations. sonali: some smaller tech companies were waiting for an exit with the ipo now frozen. debt, andsed money, their ipo is now further down the line potentially. they are also reportedly considering cutting a lot of staff here. the dream that existed for some of these smaller tech companies to enter private markets, how much has that died? leon: i get really depends company by company. i don't think the dream has died. in some cases, the dream has just been put on hold. i do believe that the ipo market will start to come back with companies that are suited for this environment, companies that have done well in this environment. i think you will see the ipo market coming. you have obviously seen a number of specs being issued, so people

going public through specs will increase going forward here. and then i think in the cases of the dream tear, the people that have formed these companies and run them are absolutely fantastic entrepreneurs. they will manage their way through it. the dream will be on hold for six months or a year, but it will come back. people like this are eternal optimists, and that is what our society is built on. sonali: thank you so much for joining us, working from home in the covid area. leon kalvaria of citigroup. l -- back to you, alix. alix: thank you. we got adp numbers for the u.s., and it is terrible. firms cut 22.3 million jobs in april, a little better than estimated, but nonetheless, a truly terrible number. cutting 20.2 3 million jobs in april, and marched revised lower as well -- and marched revised

lower for as well. that is a look at the u.s. in europe, it is equally as bad. you had orders in the factory sector in germany really wrecked in march. you can only imagine how much worse it is going to get in april. let's take a quick check on the markets. s&p futures still holding onto their gains, but just by about 10 points. we are off the highs of the session. over in europe as well, still the ftse holding onto gains, but the rest are turning negative. a quick check on the currency market as well. the euro down against the dollar. the yen and the dollar are the safe havens of space in -- of choice in the g10 space. the european commission says the eu is facing the biggest economic downturn in its history. the latest forecast addicts euro

area gdp will shrink 5.6% as debt surges. joining me for an exclusive ,nterview is valdis dombrovskis european commission vice president. great to chat with you. you expect a rebound in growth to about 6.3% next year. what needs to happen within europe to get there? mr. dombrovskis: indeed, if you look at our spring economic forecast with regards to the euro area, we expect a 7.7% recession this year, and quite strong rebound next year of 6.3%. this forecast is based on a scenario which foresees that confinement measures are concentrated in the first half thenis year, and we expect gradual lifting of confinement measures in the second half of the years, and also gradual resumption of economic activity,

which then allows for the economy to rebound quite strongly next year. but at the end of the day, what thisportant is that scenario materializes. alix: i guess the question is what support do we need to see to get us there. during the press conference, the european commissioner said you are discussing a possibility of an intervention of a pan-european tool. does that mean you would be looking at taking a stake in struggling companies, and equity stake in struggling companies? mr. dombrovskis: first of all, as regards the eu crisis response so far, we have mobilized at eu level and member euros,evel 3.4 trillion which is approximately 25% of eu

gdp, which is the largest crisis response ever. for the recovery phase, we are preparing what we call a recovery instrument, which will be a substantial increase in the financing power of the eu budget. we are talking about the next eu budget for seven years. as part of this, indeed we are looking also at how to support investment in equity of companies because we have provided major liquidity support to companies, but as the economy is in such a deep recession, we also need to see how we can provide direct, or rather indirect, equity response. what we see -- alix: is that basically a european sovereign wealth fund? mr. dombrovskis: not necessarily, but basically what

we see is that the capacity of member states to support companies is different. member states whose economy is able to support their companies on a major scale, and there are economies like more in southern central and eastern europe, where the capacity of member states to support companies is more limited. so what we want to do is to limit the economic divergence between the eu member states, and to provide the support to southern european and central eastern european countries. alix: that really sounds like you would be taking an equity stake in an italian company. i don't see how that is not a sovereign wealth fund, unless it is at a debt or granting loans sort of level. mr. dombrovskis: as i said, we are still discussing the exact forms of participation, whether

,t is direct were also indirect providing some reassurances for these or other ways of actually encouraging private investment in those companies. elements still some which we need. alix: what do you need right now, knowing that the recovery is going to be two-tiered? mr. dombrovskis: from the european commission side, we are emphasizing this recovery instrument, meaning that a withg eu budget substantially increased financing capacity and with a strong and frontloaded investment component, especially 2022, when the economy will be recovering. using those eu level instruments

to rebalance all sorts of things of economic recovery. alix: it was really good to catch up with you. thank you so much, valdez dabrowski's -- thank you so much, valdis dombrovskis, european commission executive vice president. coming up, we will be joined by stuart eizenstat, former u.s. treasury secretary. this is bloomberg. ♪

alix: welcome to "bloomberg daybreak." i am alix steel. s&p futures able to hang on

despite the fact that adp had a terrible number. 20.23 million jobs let go in the month of april. really grim number. we are still holding on. i want to take a look at the bond market. 67 basis points on the 10 year. having us all over the bond market as we wait for the treasury refunding announcement. the treasury is announcing $20 billion of 20 year bonds, the first sale for 20 euro bonds -- 20 year bonds in decades. for the second quarter, they're looking at $3 trillion of funding and we will get a look at how far they will push out the curve. michael mckee joints me now. it is a lot of data that winds up coming out as we had the deficit heading towards $4 trillion, walk me through the treasury. michael: i am confident no bond trader has seen anything like this.

the massive debt will call for massive treasury sales. $3 trillion this quarter alone. that doors anything we have seen before by many magnitudes of standards of deviation. last quarter treasury borrowed $389 billion. they forecast this quarter we would've had that redemption of $56 billion. not happening. here's how they will handle what is coming up. the initial refunding next week of $96 billion is record. we see $42 billion in three years, and $22 billion and 30. it will be about $37 billion in cash. they want extra cash on the books. they will start turning out the debt across all nominal debtors starting in may. each month they will go up as they try to raise more and more money. seven years goes up $3 billion a the new5 billion for -- no change10 and

in tips at this point but we will not see much inflation anyway. the initial offering of the 20 year will be $20 billion. that does not start until may 20. two more options in june and july of $17 billion in each. trillion here, a trillion there, you start talking about real money. alix: you look at the market and you see pressure on the back of the curve. you have 30 years up five basis points. one more question. is theyon they heavy will cannibalize the demand from the 30 year or the 20 year into the 10 year, or we have enough demand to make this work? where are people coming down? michael: the bet is there is enough demand to absorb everything. the treasury barmy advisory committee recommended treasury go more towards the long end and

move away from the short end. that is what they are doing. we will see how it works. you would expect to see rising yields given the norma's amount of supply. enormous is a perfect word. joining me is stuart eizenstat. during the clinton administration, he served as the u.s. ambassador to the european union under the secretary of state and commerce and deputy secretary of the treasury. thank you so much for joining me today. you heard we are seeing record borrowing, new issuance for the 20 year pushing everything out the end of the curve. what are the long-term implications of this kind of debt buildup? i think it was absently necessary to finance the three huge stabilization programs congress passed of $2 trillion on top of the existing

budget deficit. we have a historic decline in the economy and therefore we have to have a historic increase in borrowing. the congressional budget office estimates unemployment will average 15% in the second and third quarter. in addition to the $3 trillion, they are also announcing in the third quarter they will have to buy another $677 billion in debt. this is necessary, we can afford it. the dollar is a reserve currency. still the best place for foreigners to put their money. this will have real costs in the medium and long-term. for one thing, this historic amount of spending and borrowing is not being used for productive investments in health care and infrastructure and education that would produce growth and wealth. it robs us of the funds for these needed investments. in addition, corporate and household debt before the

pandemic was already very high. last year $16 trillion. if you take total government business and household debt, it has created a 250% of our annual gdp. just since march 1, our national debt has grown $1.5 trillion. we are on our way to the highest level since world war ii. this will also make it hard for the fed to unwind the dependence of private companies on their relief. loadpandemic, this debt will depress growth that otherwise might have occurred because individuals can be struggling with their credit card debt, their student loans, small businesses and even large ones will struggle to pay for the debts and the borrowing they're having to do from the fed and from treasury. alix: how do we fix it down the

road? are we going to be talking about massive tax increases on the wealthy? stuart: there are three ways to try to get out of this. if you look at the world war ii , thedent, -- precedent first way, which would clearly not work, is the kind of austerity we used after the financial crisis of 2008 to 2009. we raised taxes, we had a reduction in government spending, and we gradually reduced the debt to gdp ratio. that is not going to work. there is a huge demand to fix the problems in our health care intem that have been exposed this crisis. that will not work. the second is just a default in whole or in part. the third, which i think is what will be chosen, is with low inflation and low interest rates

, to try to grow our way out of this gradually. it will take years. from world war ii it took almost 35 or 40 years, but we gradually did reduce the debt, and i think that is the only way to do it. we have to have progrowth policies in the future to do it. thatis going to mean instead of having the v-shaped recovery, that will not happen. there is too much damage already done. it will be slow and gradual and painful. withe moving into a world more digital work, less demand for labor, and i think there is a real risk in terms of this long-term growth, that there'll be an increase in protectionism, nationalism, and xenophobia, that is where political leadership comes in. we have to create a sense of solidarity. we have to try to address

vulnerabilities that this pandemic have shown, and we must not go down the self-defeating protectionist, nationalist, and xenophobic path. that would be disastrous. it would also potentially lead to higher inflation if you have supply strange -- if you have supply chains retrenching in protectionism. we are talking about more tariffs on china. how do we avoid that? how do we get supply chains closer. how do we get higher inventory to protect against pandemic or natural disaster without creating nationalism? stuart: there is clearly a bipartisan feeling that we need those critical elements like ventilators and masks and test kits, we have to have these in a strategic stockpile like we did

for oil. therefore, we have a greater reliance u.s. produced health care products. we cannot let that loop over into a broader protectionist. if we take this conflict with china and we look for scapegoats, and the president imposes anything like tariffs or takes their sovereign immunity away, it will blow things up and cause a shutter in the markets. china is certainly responsible for their share of mistakes, as are we. to engage in tit-for-tat tariff war would be absolutely catastrophic. if this is happening all over the world, what is to prevent investors from not subsidizing all of this debt? why not go to the u.s. so treasury can keep accruing and this never comes home to roost?

for developing countries, as bad as it is it is for us, it is catastrophic for them. that is why we need to support institutions like the imf and the world bank. when you look at how we handle the 2008 to 2009 financial crisis, we did it with international cooperation in every country is now pledging to increase funding for the imf and the world bank to help developing countries but the united states. this is necessary not just to help them, but because with supply chains, we depend on those countries to supply inputs for our own products. we are in this together. i also think there'll be a great public demand to fix our health to keep insurance when we lose jobs, and have paid sick leave. we have a long list of things we need to do together. the u.s. is still best located

to borrow money that will keep interest rates and inflation low. we now have to be able to move from the stabilization, to start thinking about how we grow out of this problem and do it the as theay, not by ending administration is looking at capital gains taxes or cutting payroll taxes. that does not help. it only fuels the deficit. we have to do it in a smart way and we have to do it in a way that protects global supply chains and avoids protectionism. you so very much. it was a real pressure -- it was a real pleasure to talk to you. ambassador stuart eizenstat, thank you very much. i want to break down the news we got. that is the u.s. coupon debt sale increasing, pushing out where the treasury will be issuing on the curve. they will option $20 billion in 20 year bonds. that is new. they are also upping the others

to a record of $96 billion in the second quarter. you can see the pressure on the long end of the curve. 10-year up five basis points with all of the supply weighing on that curve. coming up, shifts in food demand. how food distributor cisco is adapting its restaurants and hotels we have an exclusive interview with kevin hourican, cisco ceo. bloomberg users, check out gtv on the terminal. go through any charts you would like. check them out, save them. gtv . this is bloomberg. ♪

alix: time for bottom line. we focus on companies and sectors worth watching. today our focus is on food supply chains. who distributor cisco latest earnings missed estimates. it is highly dependent on restaurants customers in the u.s. and europe. joining us for an interview is kevin hourican, cisco ceo. so good to talk to you. give me a window into what you've done the last eight weeks to try to shift your business as we go to the grocery store and all restaurants need to close down. kevin: good morning. we appreciate you having us on. it is helpful to give context to who we are. we are the largest foodservice distribution company in the world, but our business is food away from home. everything other than what we see at the retail grocery store. restaurants, hotels, concert venues and schools and government buildings, etc., it is everything other than retail

grocery stores. when the epidemic kit and the shelter-in-place orders to lace, huge and ballast happened in the supply chain. -- huge imbalance happened in the supply chain. 50% was purchased in the home. that tilted overnight. the hotel business has been the hardest hit and the restaurant business was the second hardest hit. yesterday on earnings call we announced our top line sales bottom of60% at the this covid-19 crisis. what we did is what you just described. we needed to pivot ourselves to be able to support the grocery supply chain, which was under tremendous constraints and pressure. we have shipped hundreds of truckloads of products to retail grocery partners. we have limited labor to retail grocers and we have become the supplier for smaller regional players, and even set up our own

direct consumer business, something we have never done before. we are selling premium meats direct to consumers through two websites, one in canada and one in the united states. that is a quick highlight of where we have been over less last month. alix: that is a quick pivot. what happens if we pivot back? if we reopen? restaurants up and running 100%, how quickly can you go up and running 100% to the old model? kevin: we are supply chain company that is the business of our business. we do expect for the business to pivot back. people want to eat away from home. we call it food at home fatigue. people are tired of washing dishes and those types of things and the general experience of being able to go out to eat to celebrate a birthday or have a business dinner, how quickly that recovery takes place is subject for much debate. we are working through many different scenarios what the recovery curve will look like.

will have the financial flexibility in the supply chain prowess to be ahead of the curve. others will struggle with building inventory during a time of financial constraints. we have $6 billion of cash and liquidity on our balance sheet. that will afford us the opportunity to be ahead of that recovery curve, to position inventories and fresh categories , produce, dry goods, and the like. we are prepared for it. we are seeing recovery already, which is the good news as we exited april. we have been seeing sequential week over week improvement in restaurant trends, and as we roll into the month of may we are optimistic that will continue to improve as states in the united states begin to relax some of the shelter-in-place orders, we are seeing that across the globe and the other countries we operate in as well. alix: investors are trying to understand what is the economy

look like? we ever get back to pre-covid-19 world or do you think your your structural margins, your operating margin will be the same, do they change? how do you prep for that. kevin: let me cover a four part plant we have implemented and then i will answer the question about the longer-term forecast. the first thing we needed to do is ensure liquidity of the company. we have succeeded in that regard. $6 billion of cash and liquidity. second is we needed to drink dramatic expense out of the business, reducing our expenses to match the outgoing customer demand. we have taken $500 million out of our expenses in q4 alone. third is maximize business opportunities in the near-term, which i spoke to on his retail opportunities. fourth is what does the future look like? how do we prepare for new business environment, how do we

succeed in that climate? we are accelerating strategic initiatives to enable us to succeed in that environment. to answer your question, we do anticipate schools will be go back to school, that is a big business for us. restaurants will recover. the speed at which they recover is to be determined. we are prepared for it to take a long time. we hope it happens earlier and faster. we believe the slowest recovery will be in our hospitality sector. business travel will be constrained. we are planning for that as well. two points i would like to communicate vis-a-vis cisco -- vis-a-vis sysco and our financial help. we had the number one market share in the industry pre-covid. we had tremendous room to grow in a $300 billion business. even if the business were slightly smaller in the future, which we do not believe it will be, but if it were we have two mentors upside potential, and even with the customers we directly serve today, we have

we believe will increase our penetration with existing customers and we have the opportunity to grow topline in a post covid environment. world, can immediate you give me insight into the protein world? many talk about shipping their marketing focus to check in because of the issues. chicken because of these issues. where do you see the problems? kevin: the protein spaces under some strain. we are open for business across all lines of business. we have access to products. we have redundancy in suppliers. we have strong business relationships with those suppliers come and we do not have significant sources of supply challenges. wendy'sve been reports, as you just described has gone

public about challenges. i would submit the challenges will be time-based and they will be specific product category based in there'll be plenty to be purchased in the grocery channel, there'll be plenty of protein to be purchased away from the home. there might be specific cuts of meat or specific roddick categories that for a short -- and specific product categories that for short times have supply challenges. i am confident our partners are operating in a safe manner and taking the precaution to protect the workforce and they can ramp up their capacity quickly. i will say the challenges we are facing will be short duration and not endemic to the industry. alix: final question, we just have about one minute left. what kind of restaurant will i be eating in in two years? kevin: that is a great question. what is clear is what is happening is the fast food restaurants that have drive-through's are performing much better than other types of restaurant and that makes perfect sense. those chains are doing quite

well and comparisons to the others. the hardest hit restaurant has been the locally owned small restaurant in your community, and we are working harder than ever before. we taught them how to apply for cares packet, we are actually to help support those local restaurants. our hope is the majority of them will be successful. i think we will see an increase in bankruptcies. there'll be a smaller number of independently owned small restaurants over a period of time, maybe a year to 18 months. what i would submit is for the long-term there'll be many of those people who get back into business, perhaps as a new restaurant in a new location. people want to eat at the local restaurant. the trend was locally sourced, farm to table, someone you know who owns the restaurant. i think in the long term we will get back to that. alix: thank you so much. i appreciate the candor.

kevin hourican of sysco. great to talk to you. this is bloomberg. ♪

alix: that doesn't for me on "bloomberg daybreak: americas." " jaredup on "the open, woodard on a day we are seeing heavy selling on the back end of the curve. record treasury issuance. $20 billion in 20 year notes as well. this is bloomberg. happy wednesday. ♪

jonathan: from new york city for

our audience worldwide, good morning, good morning. the countdown to the open starts right now. 30 minutes away from the opening bell. straight your price action. after two days of gains on the s&p 500, we wait to add some weight to that. positive .5%. we could have a third day of gains. the optimism around the reopening of the economy. in the bond market, yields higher, the curb steeper as the treasury announces more long data will be issued. in the fx market, the euro weaker through much of this morning on the back of dreadful forecast from the european commission. that is your price action. here is the big issue. a damaged labor market, and ugly economy, and leaders across the country looking to get back to business. >> we are entering into the next phase this week. this is a very positive sign. it has happened only for one reason.