>> good morning london. this is "bloomberg daybreak: europe." the who considers a new mission to seek the source of the coronavirus in china. president trump says he is keeping the u.s. task force. to beme is likely temporary, u.s. private payrolls theped by 20.2 million,

worst in the history of the report. jobless claims out today. the u.k. is set to ease parts of its nationwide lockdown on monday. the pound fell to a two-week low ahead of a bank of england decision. we speak with governor andrew bailey. welcome to "daybreak: europe." we are getting a little bit of a .ift through risk assets unexpected rise on exports. backtronger yuan off the of that. still some red on the screen in asia. the s&p dropped for the first time in three days in yesterday's session. european futures in the green. earlier, we were seeing the yen at its strongest or near its strongest since mid-march. you wonder about the knee-jerk reaction. the painful jobs report, a grim foreshadowing of what we could get out of the nonfarm payrolls tomorrow.

ahead ofa two week low the boe decision. the expectation we could see more quantitative easing either this week or perhaps in june with the boe expected to hit its present the bond buying goal around the end of june. oil getting a little bit of a left, a little bit of that risk on. anchored near $24 a barrel. donald trump says he will keep his coronavirus task force running indefinitely. he said he would add or subtract members to the group as it refocuses on reopening the nation. toldpresident mike pence reporters the task force could be disbanded after memorial day. joining us live is annmarie hordern. great to have you with us. the task force stays, but it is changing. what is the next iteration? annmarie: what a difference 24 hours make. yesterday, we talked about the

dissolving of the task force. today, we talk about the expansion of it. president donald trump did not realize, he says, how popular it was. they want to focus on the reopening of the economy. mention those that could go were working and dealing with the ventilators, especially when there were not enough ventilators needed in the country. keeping the task force definitely comes under public outcry and worry from the health community that the united states could face a second wave and a bloomberg analysis shows about 20 states are opening up their economies, but do not meet the white house guidelines for that. city,i stand in new york the epicenter of the pandemic, governor cuomo was talking about in new york state we are seeing a decline of cases, but in other parts of the country there is an uptick. some data points to that.

texas yesterday saw deaths rise 4.6%. really devastating. biggest daily jump in fatalities in a week. as well as california, the biggest one-day increase of cases. california later today is going to be opening up and setting up guidelines for opening on friday. meanwhile, the who considering sending a new mission to china. what could we find out from this mission? annmarie: it would be about finding out and really getting to the heart of the start of the virus and the start of the pathogen. epidemiologists talked about the fact that without knowing where the animal origin is it is hard to prevent it from happening again. it is all about seeking that information to make sure we would not see another pandemic on the rise. this comes as we have seen a war of words between beijing and washington and pressure from the trump administration on the world health organization about the start of the pandemic and

the subsequent handling of it. in response to this new proposed mission, we have yet to hear from the foreign ministry. when there were calls about investigating the start of the pathogen, the foreign ministry did say that they are open to review at the appropriate time. it remains to be seen if they think now is the appropriate time. nejra: let's bring it from you to me and to the u.k.. it is expecting to start easing the lockdown from monday. what do we know so far in terms of how the easing might play out? annmarie: we will get all that information on sunday from the government. they will list a number of guidelines. newspapers and the united kingdom are talking about some of the potential easing could be things like unlimited exercise, sunbathing, picnics in the park. masks might have been mandatory when getting on public transportation.

a survey set only about half of firms would be able to operate at full capacity. it is going to be likely that we will see phases as these economies open. it will be something where in the united kingdom they are focused on testing and tracing and an app that would be able to do so to get people back into the office. nejra: great to have you with us, think so much for that round up. we are still in earnings season. red headline -- pulling dividend payment and scrapping the steel demand view. basically just to go through some of these numbers. pulling the forecast for steel consumption. debtill targets net objective in the near term. it is sticking with $7 billion net debt objective in the near term.

as i said, it is suspending the dividend payment. what else we are looking at here. it still sees second quarter within the range of $0.4 billion to $0.6 billion. it sees the second quarter editda within the range previously. elsewhere, we have some other numbers coming through in terms of the $2 billion portfolio optimization program progressing. 2020 steel shipments below the 2019 level. the crucial thing to look at, pulling dividend payments, scrapping steel demand. if you see the second quarter within the range previously of $0.4 billion to $0.6 billion. it also sees four-year capex -- full-year capex at $2.4 billion. revising down that full-year capex view. then to ab inbev.

droppingrter adjusted 13.7%. the estimate was a drop of 14.7%. although we are seeing a drop, not quite as bad as what was estimated. april global volume declined by about 32%. it sees the coronavirus impact on the second quarter materially worse than the first quarter. those are the key numbers coming through from ab inbev. let's get to the first word news. larry fink has a stark message for investors. things are likely to get worse. he sketched a grim outlook for corporate america, including mass bankruptcies, empty planes, and an increase in the corporate tax rate to a size 29%. the risk of the outbreak will be severe enough to leave a long lasting impact on the american psyche. president trump has vetoed legislation that would limit his

powers in relation to iran. he called it a very insulting piece of legislation. the veto was expected. israeli prime minister netanyahu can form a government despite the corruption charges against him, according to the country's highest court. it could end a year of political stalemate and form the first permanent government since 2018. the start of his criminal trial is set for late may. the netherlands has accelerated plans to reopen more of its economy amid signs the coronavirus outbreak is coming under control. germany is planning to reopen stores and restart its soccer league. spain is getting ready to relax more restrictions. it has extended its state of emergency to may 23. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. coming up, job losses surge in

the u.s.. more than 20 million americans out of a job in april. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." asia, japan, most markets back online right now. u.s. and european futures point to a higher open. perhaps the chinese export data giving a little bit of a lift. the yen at strongest since mid-march, but pulling back a little bit now. oil still in the green, but still anchored near $24 a barrel. let's turn to the u.s. and the adp data we had out overnight showed employment at u.s. companies plummeted in april by

20.2 million. that is according to the adp research institute. that is as coronavirus mitigation efforts broad business activity to a near standstill. we will also be on the watch for the government unemployment number out today. jobless claims, the number of americans filing for benefits is expected to come down slightly, but will still be extraordinarily high. jobless claims are expected to go down to 3 million from 3.8 million the week before. these numbers are harboring or of the april jobs report -- harbinger of the april jobs report. it is expected to show a 21 million decline in nonfarm payroll. joining us now is the global had a fundamental equities at rebecca. thank you so much for joining us. belook ahead to what could some have called unimaginable jobs report tomorrow, yet we are , isng green on the screen

the market going to wake up to lookingomic reality or through the economic data to the recovery and the stimulus on the other side? the marketo believe will have to wake up and it probably won't be a very happy awakening. market is expecting more of a v-shaped recovery. from everything we are seeing it will be a nonlinear recovery especially when the lockdown will be fully eliminated. when you see the majority of the workers going back to work coming you see the leisure activities eating out. you see the job not coming back. also in europe.

this means that the impact on the economy will probably be far more far-reaching. the fed has done a study which finds that hundreds of earnings calls they have looked through shows that they are more scared than 2008. american nonpublic companies are discussing cutting investments at the peak of the last recession it was only 25%. 27% are talking about equity payouts and 17% are focused on drawing down on credit lines. were ine proportions 2008. when you look across the spectrum of corporate america, where are you wanting to put your money right now? >> i think this is actually a time when the market has

probably been far too polarized. what we are seeing is that companies that are expected to be more resilient actually being overbid. you see valuations having reached excessive levels given what valuations would be. valuations now are probably discussed far more than they should. i think it will be somewhere in the middle. we see the consumer sector where you see the haves and have-nots. overvalued and some others discounted far more.

you have to be very careful. we have to make sure we navigate that well. you are looking at the nuance within the consumer sector. you have reduced industrials because you think it is still too high. what are the key things you are looking for. are you like many others looking at balance sheet growth potentials? i think the potential for dividend payout right now is not even an issue right now. we have to appreciate that a lot of companies are trying to save as much as much as they can because they want to get through this with the strongest balance sheet they can and there is so much uncertainty. to me, dividends are not the key, though they will affect the

overall performance of some of these companies. it is the ability of the company to whether the slowdown. ability, also where they are in the supply chain. you have to look at the suppliers, the distributors. a number of cases where companies have had to help both the suppliers and the distributors. for example in some emerging markets. these are obviously things that you don't look at immediately. you immediately think of the balance sheet. there is another important thing also. banks willy public have to do service going forward. regulated sectors will have to use the government to be in their comfort again. nejra: you stay with us. we will pick up on some of those

themes. we have a lot of breaking news we need to get through here. first of all, what i'm looking for is the liberty global and telefonica are to merge u.k. operations. around thelose middle of 2021. telefonica, bringing together virgin media and 02 and they see liberty and telefonica, the joint venture to deliver synergies valued at around 6.2 billion pounds. , 5.7 billionl pounds. that is one thing we are breaking here in terms of a big venture. also get to air france numbers.

first quarter operating loss, it sees a second quarter significantly worse. that is some of the guidance we are getting from air france. they are to cut structural capacity at least 20% in 2021. they see second quarter capacity down 95%. third quarter capacity down 80%. they also see a significantly negative full-year loss. forng passenger demand hurt several years. not several months. several years. of asee 455 million euros fuel overhead for the remainder of 2020. but really, the key thing to take away is that they are warning that it will take years after the losses have been mounting. we will speak to the san francisco fed president shortly after 4:00 p.m. u.k. time. this is bloomberg. ♪

nejra: china has released export data with april exports surprising economist for a 3.5% increase year on year. we have learned also that china's leader may not set a numerical gdp target at the nationals people's congress later this month, the first time they have not done so in at least two decades. the world's second-largest economy is on track for its second worst performance amid the global slumping demand. leadershipd china's with a choice.

our guest is still with us. given what we have learned about the potential growth target in china and about whether the export data left is going to be temporary, tell me why you've got conviction in north age and emerging-market equities. well, they clearly are the area in the world that has dealt for certain countries like korea the best with the pandemic and for other countries such as coming out of the pandemic. we think there on the better footing. it could be very short-term overnight. we are likely to see a negative purchasesm external

in all of these countries. out ofk that it will be the economic shutdown earlier than the rest of the world. one we were talking about the u.s. earlier, you were talking about making distinctions within the u.s. sector. >> it is interesting. we are seeing the same thing in more, where some of the defensive consumer companies have done extremely well in the number of others because they are weaker have seen extremely not in ae valuations linear way, not all companies

will be able to have the same kind of fundamentals. are clearly emerging as very interesting opportunities. nejra: what sectors would you want to be avoiding in the emerging-market space? >> one of the sectors we are most confirmed about our public banks. a lot of them are going to be called to do social service, which means they will have to support the local economy. banks can be convinced very easily. wes is one of the areas that have cut in our portfolios. are beings that we , very highous about

working capital needs, which we are not sure will be able to silence. what is the biggest change other than you have made in financials. >> you are starting to see governments replenish their coffers. regulated sectors should be looked at very carefully. nejra: thank you so much for joining us. you have also sort of been reducing some of your travel names both in developed and emerging markets. coming up, boe decision day after a rate cut and a qe boost in march, what are we going to

hear about the outlook for potentially more qe today? this is bloomberg. ♪ save hundreds on your wireless bill

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nejra: good morning from london. i'm nejra che edge. these are today's top stories. the who considers a new mission to seek the source of the coronavirus in china as mike pompeo renews criticism of beijing. president trump says he is keeping the u.s. coronavirus task force. china's exports unexpectedly rise, but the gain is likely temporary. u.s. private payrolls dropped by 20.2 million, the worst in the history of the adp report.

jobless claims out today. the u.k. is set to ease parts of its nationwide lockdown on monday. the pound falls to a two-week low head of an early-morning bank of england decision. we stick with governor andrew bailey. welcome to "daybreak europe." will this be the week where the equity market starts to wake up to some of the economic data as we look ahead to nonfarm payrolls after the painful adp report? today, we are seeing risk come back after the s&p 500 had its first drop in three days yesterday. and perhaps it is the china data giving these risk assets a little bit of a lift. asia is a little bit in the red. japan is reopening, so that has weighed in the index a little bit. u.s. futures in the green, european futures pointing to a positive open. what indicates the risk sentiment might be coming back as well as dollar-yen. we have seen the yen strength in for four days to its strongest in mid-march. it is pulling back slightly today against the dollar. cable is something to focus on.

a two-week low as investors look ahead to the decision from the boe and expect a signal from more qe to come. oil also getting a little bit wrapped up today in the risk sentiment. we are seeing wti anchored near $24 a barrel. says he will keep his coronavirus task force running indefinitely. he said he would add or subtract members to the group as it refocuses on reopening the nation for business. the comments come after mike pence told reporters the task force could be disbanded on may 25. the bank of england will set out next steps to combat the u.k. economic slump. head of the decision, the pound remains under pressure. against the dollar and a two-week low. joining us now is the senior

u.k. economist at hsbc. thank you for joining. what are the two key questions the market has going into the meeting today? >> good morning. i think the questions are first of all, if we are going to get more qe and a lot of people think we are, what will be the trick for that? the current round of purchases of 200 billion pounds, they are burning through a very rapid pace. if they carry on, they will be done by the end of june at the latest. would they want to preempt the end of that? would they wait until august? would their way longer than that? that is the big question. is there going to be more qe? expect it to happen? the second question i think is just how they are looking at the economy.

if you look at the other central banks, they have not given us much of an indication of what we expect. the ecb give us a wide range of potential gdp contraction numbers when they did their assessment. we are really looking to see whether they will be in the same pages them. that is kind of some of the lowest numbers or will the bank of england be more measured in their assessment? nejra: that is the outlook for gdp. on the inflation side, what you highlight in your note is what the bank of england is actually going to make about the balance of the hit to supply versus the hit to demand. what do you expect them to say about that? the output gap? liz: yes, it is tempting to think they have put in a huge,

massive hit to demand and inflation craters just like growth craters. of course, there is a hit to supply in this kind of crisis, as well, businesses that never reopen and that fundamentally reduces the u.k. ability to supply goods and services into the economy. if there are less goods and services out there, that can potentially be inflationary. i think the bank of england won't want to come down too hard either side because it is still very early days where this thing ends up, but i do think they will want to keep something in to say, actually, this is not necessarily going to be deflationary to or three years out. it is a lot of with the u.k. economy has been destroyed, so we do think that they still see inflation in their forecast coming back to target, not falling as much as you might expect, certainly over the medium term, because there isn't so much of an output gap as you might otherwise expect. nejra: yes.

the point you make in your note is that inflation would be returning to target, but only with the help of the exchange rate in the oil. also the conclusion you come to is that the boe will forecast a bigger hit to demand then to supply. if you are expecting a bigger falls more on the deflationary. what does that mean in terms of what we might see in terms of quantitative easing or even rate cuts in the future? if they do come down on that side, it does suggest a more deflationary side. get back, but only with the help of these external factors.

what that might mean in terms of policy, it certainly leaves the door open for them to do more qe down the road. i haven't put kind of a number or timing on it and we will certainly be listening for any hints that we get from the communications today, but as i said, the current round, if they carry on at this rate, will be done by sometime, so you expect to hear something around that time. , anyrms of rate cuts further cut takes you to zero or indeed into negative territory. what has been noticeable about the reaction from central banks around the world in this covid-19 crisis is that negative rates seem to be out of fashion. we have not seen a central bank go negative that was not already. we have not seen a central bank that was negative go deeper into negative territory. central banks are preferring to go on the asset purchase side. we have seen plenty of that.

just to the right side of zero, but we haven't seen anybody taking the plunge into negative territory. nejra: liz, we've run out of time, but thank you for joining us. great to have you with us. coming up, we will bring you our interview with bank of england governor andrew bailey. that is not to be missed. the ability to keep essential goods moving around the world has been a key issue in the pandemic. with germany's biggest shipping company's ceo. >> our business has changed fence -- since things started in asia. we had reduced volumes out of china. that came back pretty fast. of course, we see now basically since the end of march, beginning of april the impact in other parts of the world, mainly in europe and increasingly in and that has a material impact on global flows and i believe the indications you get from so -- some of the

global institutes on an annualized basis will be not that wrong. >> what have you had to do in terms of changing routes? we are hearing a lot about companies turning inward. less globalization and more the need to source things internally during this time. have you had to change routes because of that? >> know, we have generally seen volumes come down and that is into the second quarter, but we would expect that on the back of this pandemic that you don't see a lot of change in sourcing just yet, but some of it might come if you look a couple years ahead. >> look, on the screen right now, we have your share price. it is up over the last year 504%. you just told me you are facing difficult times when it comes to container traffic. why is your share price up as much as it is? can you give us some degree of explanation? >> no, i don't think so.

it is not up to us to comment on that and to be honest we don't try to understand it as there is no obvious reason for it. >> so, explain to us the cost-cutting program. you are being proactive about trying to rein in costs even though you say things are moving and would likely improve in europe and the u.s., as well. what do you think you will have to do? will you have to lay off staff? will you have to decommission container ships? >> what we are doing when something like this happens, the first thing you need to do is control cost and manage cash and that is why we are looking at every single category to see where we can save some money. amountsnd, that quickly to a big sum of money in terms of people and we are being cautious in backfilling open positions, but right now we have

no plans to do any significant layoffs. >> talk to us about liquidity. you did get an outlook change at moody's, negative from stable. are you concerned about your ability to access capital markets? how much do you need to access capital markets? >> we are not concerned about that. we are taking some precautionary measures that probably everybody has done every it right now, we don't think we will need that. >> do you see consolidation in this sector? you indicated an interview a few days back, you talked about consolidation and what can happen and whether or not we are going to see other competitors going out of business. opportunity to roll up other businesses or do you think in the post covid-19 world that container demand, container volumes will be lower? and actually has these businesses go out of business, that will help to balance the market? >> it is difficult to say.

we are just into this crisis. also in the interview a couple days back i said i don't see anyone falling over anytime. if the crisis lasts a lot longer , then everybody thinks right now, that might change. but that is not in the cards right now. that was the ceo of aipac lloyd, germany's biggest shipping company. this is bloomberg. ♪

this is "bloomberg daybreak: europe." larry fink has a stark message for corporate america. the blackrock ceo laid out his ,oncern in a call with audience warning about everything from taxes to consumer demand.

what did we learn? fink definitely speaking and sharp contrast to what is going on in the market. his fears come from conversations he's having with bankers warning him about mass bankruptcies likely to hit corporate america. he pondered whether the fed needs to do more. pay for the relief in some manner and it probably isn't going to be on individuals. he sees the corporate tax rate moving even higher. that would severely water down what trump sees as one of his biggest accomplishments in his term, which is tax cut. likely to see not airlines and travel rebound anytime soon. restaurants in that category as well. one of his more grim messages directsaid the economic

on individuals could mean there is a rise of nationalism and there could be the rise of -- the people of the social order. onadvised donald trump helping mitigate some of the effects of the coronavirus. blackrock is trying to help ease market attention. this definitely comes with a very stark message. nejra: absolutely when you want to pay attention to. thank you so much to dani burger. we have numbers coming through. let's get to them. first quarter net sales. 18.2 one billion euros. the estimate was 18.24. ever so smaller there. the key is that they are committed to its dividend policy and buyback program. that is interesting. that has come through. everything they are looking out

for is less. they are maintaining their full year outlook. -- see free cash flow above. crisis,the coronavirus while a lot of companies have suffered, one of the areas that has held up because customers have been stockpiling is the growth sector. the maintenance of the full year outlook, we will speak to the ceo. this is bloomberg. ♪

this is "bloomberg daybreak: europe." let's get back to the numbers we just broke. the key thing to note is that they are maintaining full year outlook, committed to dividend policy and buyback program.

as for the first quarter, net sales came in at 18.21 billion euros. the estimate was 18.24 billion euros. joining us now is the ceo. welcome to the show. thanks for joining us. the first question that springs to my mind, given how well growth has done in general with customer stockpiling and buying essential goodsis why you have not raised your full year outlook? i think you got a completely correct. we are in a very strong first quarter both in sales and profitability, but also very strong online sales at the same time. but the outlook is quite uncertain for the remainder of the year. in the first quarter, we had a theof european sales, in first quarter, we had a lot of u.s. sales, but not all the cost

of the corona crisis. that is why we see a different balance of cost and sales in the second order. outlookof the uncertain , we confirmed our guidance, the share buyback, the free cash flow, and also our capex expenditures of 2.5 billion euros. nejra: interesting. it's interesting you make the distinction between europe and the u.s. you'res of the u.s., if expecting perhaps some more cost to come through and this week we look ahead to what could be in unimaginable jobs number with 21 million losses, how bad could it get on the cost front in the u.s.? >> i think if we look at our own business, it is clear that we will see an economic downturn, both for u.s. and for europe. is to takeriority care of the health and safety of

our associates and our customers. we are seeing we have a lot of costs in our stores. we talk about ppe, we talk about security. we don't know how long corona will keep us busy. firm onwhy we are very we see more costs coming. we invest a lot in online and digital. we had 42% increase in online sales and we see also that online sales will start growing further and accelerate further into the u.s. we expect 50% growth full-year in the u.s. ended also comes with investments. mera: what can you tell about supply chain issues at the moment? are you having difficulties getting hold of what you need globally? >> yes. i think overall there is enough

food in the system. normalpe, we are back to shelf availability numbers. in the u.s., we are a couple of weeks behind europe because corona came later to the u.s. than it came to europe. in the u.s., we will be in a much better shape in the u.s. in the u.s., we will see that there are shortages on protein and we all know in poultry, pork, and beef we have some supply problems. with the new defense act working, i think we will see a repair of that supply chain on the meat side. furthermore, the normal things like sanitation products and the products like flour and eggs, the baking products. also in the u.s., there is enough food in the system. nejra: are you making any changes to your supply chain in any way. making it more domestic or anything else? >> in food, our supply chain is

all very domestic. we see is very good collaboration with our vendors, our supply chain partners to simplify a number of things. we see rationalization to make sure we simplify production processes to make sure we have fuller shelves and that collaboration is going extremely well and very pragmatically. we also tried to ramp up our time, we at the same hired 20,000 people in the u.s. and we hired 40,000 new associates and our total network. nejra: sort of linked to the supply chain issue is what happens in the demand side. customersf stockpiling in europe and the u.s. what can you tell us about that after the trend of the surge of stockpiling at the start of the crisis?

>> we see that demand gets more normalized. we still see growth in the system. in europe, out of home restaurants are still on the very low level of economic activity. but we see in the u.s. that the out of home market is much bigger in compared to europe. we see the bigger effects on our sales numbers. that is why also the start of the second quarter was strong in supermarket demand for us as well. we all hope that restaurants are coming soon back into business. and in europe we see now there is more relief and more release of locked in measures by governments. so hopefully we can soon have a good meal also in restaurants again. permanentyou see any changes to your business as a result of coronavirus? seees, i think that we customer behaviors changing. i think a number of them will be quite sticky. when you talk about further

online demand, we believe that that will stay there. verycompany, we are well-positioned for the combination of the stores and online, which we call in the channel in the u.s. and in europe. the second thing is that customers are more aware about health and therefore healthy solutions and healthy products for customers will also increase demand. the other thing is that you see customers also looking more toward private label and having different options. we talk about value, we talk about quality, and these kind of things. the last thing is i think that the social distancing will keep us busy for a little bit longer than the second quarter. so this changing type of logistics in stores and changing type of customer behavior as well. nejra: would love to carry on the conversation, we run out of time. ahold delhaize's ceo, we run out of time. thank you so much.

european futures flat ahead of the european market open. that is it for "daybreak: europe," later we speak to indra bailey from the bank of england. this is bloomberg. ♪ berg. ♪

♪ anna: good morning. welcome to "bloomberg markets: european co-i'm anna edwards in .ondon alongside matt miller matt: the cash trade is just an hour away. here are your top headlines. dial m for merger. liberty and