>> good morning in london. a break europerg and these are today's top stories. president trump clarifies comments u.s. prevails over coronavirus. anthony fauci testifies to the senate today. boris johnson waters down his plan for the u.k. reopening. shared debt is not the answer to the crisis. chancellor merkel reportedly has

a workaround for the dispute over ecb bond buying. crude edges higher on signs of demand recovery. we get a clear picture on the fallout as aramco reports results this hour. manus: a warm welcome to the show. allianz, a tough time for them, that is what they are reforming -- reaffirming this morning. an implosion by 30%. that was pretty much as they had warned the market. call toe, there is this preserve capital. were standing by the 2019 numbers. the word reopen, what is the view from the cfo? a drawdown of capital from pimco

. they have ripped up the guidance , we put those questions to the cfo very shortly. we will speak to the cfo, he joins us for his first interview of the day. what have you got? nejra: great to see you again after my day off. debt. first half net 7.5 5 billion euros. they say they could use up to one billion euros in the fiscal third quarter. at first half adjusted ebit -30 million euros. in the meantime, i'm back,

what'd i miss? nejra: you missed the whole debate -- manus: you missed of the whole debate about going into negative territory. two major voices to fight back. i can't see those numbers just yet. i think that is the market preoccupation. that was negative interest rate policy. it is really interesting. market, in the bond market, equities, it is interesting. could see another 18% drawdown in u.s. stocks. saying that the fear of missing out on the rally is

what has been driving gains. we are not seeing much of a rally today. are seeing a down day signaled. it seems to be a risk off. seeing the yen outperform. green on the screen. concerns around demand. yorks governor says the state economy is ready to begin with some regions authorized to do so this week. businesses including construction, curbside retail, and drive in movies will reopen on a regional basis. president trump told a white house news conference that we have "prevailed," as u.s. deaths

exceed 80,000. the news conference was abruptly ended after an awkward exchange over china with an asian-american reporter. this is what happened next. >> ok, anybody else? please, go ahead and the back. >> i have two questions. >> it's ok. >> next, next please. >> but you called on me. >> i did and you didn't respond and now i'm calling on the young lady in the back. >> i just wanted to let my colleague finish. >> ladies and gentlemen, thank you very much. thank you very much. joining us now in new york is annmarie hordern. we just saw it, a difficult exchange at the white house. what more have you got to tell us about it? some difficult exchanges and that abruptly ended this news conference that was supposed to celebrate the expansion of testing in the united states.

he later clarified what he meant was that was in terms of testing and the u.s. being able to test more. it comes at an interesting time for the white house. anyone who enters the west wing has to put on a mask. it comes as vice president mike pence's spokeswoman contracted the virus. we saw mike pence take the weekend off from the white house. back on campus on monday. not clear whether or not he came into contact with the president. it also comes as we have others going into quarantine due to the fact of what is happening with that infection in the white house, including dr. anthony fauci, who will be really front and center of the news cycle today. he will be testifying virtually to the senate. "the new york times" as his message to the senate is to say that americans would experience needless suffering and death if the nation opens up too quickly. that is were they going to be

first and foremost for the news agenda today, waiting for that testimony from dr. anthony fauci. manus: good to see you. it is almost kind of a hamsters loop of repetition. we talk about the roadmap to reopening, but the colonel of of the storykernel is not about hedge fund allie, it is about this core of new york, where small businesses are crippled, rent is not getting paid, and businesses are still shut. one point dr. anthony fauci wants to make his he doesn't want states reopening before they meet the guidelines outlined by the white house. governor cuomo said parts of new york could reopen as soon as this weekend. that is really about upstate new york, finger lakes, mohawk valley. this is not new york city and the tri-state area. drivehat could include,

in movie theaters. ony have to meet low rates virus hospitalizations as well as some set of instrumented track and trace. also a control room on monitoring these parts of the region opening up. he said it would be a miracle for new york state to reopen this week by friday. we heard from mayor bill de blasio who said the locked down in new york city and the tri-state area likely to extend and june. say, many, as you people talking about the news. stay safe in new york. annmarie hordern on the ground in the big city. to the first word news this tuesday morning. you have charlie evans and raphael bostic saying they don't think the tools being used in the u.s. as the central bank

says it will start buying that etf's. the program is coming online as part of the fed's emergency coronavirus response. german chancellor merkel is trying to diffuse the growing crisis after german court's ruling about the ecb. who should be responsible for the judgments? the ecb or the national central bank? berlin thinks it can be local policymakers, which proved less controversial. to suggestank seems it will take a support role with the ecb taking the lead. elon musk is reopening his tesla factory car plant in the u.s. and is daring authorities to arrest him. moscow -- elon musk has been furious at the shut down for weeks. governor newsom has already

sought to ease tensions, believing tesla will be able to restart as soon as next week. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. nejra? nejra: coming up, open borders key to jumpstarting growth. austria's chancellor spoke to bloomberg about the reopening of the economy. more from that next. this is bloomberg. ♪

it is "daybreak europe." we are back again.

i'm in dubai. they haven't taken away my residency card yet. china-u.s. relations souring. austria-china relations souring. trade misery pervasive. we got far too far ahead of ourselves. the only thing that is going to help italy, according to austria's sebastian kurz, is the eu. the fed is fighting back. dollar-yen, dollar stronger. enough to save the crude market? use of negative interest rates is absolutely up for debate. considering such moves in europe and japan. according to charles evans, he is the chicago fed president. he said it needs to be further

studied and he does not expect the fed to use that tool. meanwhile, raphael bostic says he is not a fan of going into the negative rate territory. the comments come after traders priced the possibility of cutting rates below zero. meanwhile, the fed is saying it is starting to buy corporate debt etf's. is part of the emergency coronavirus lending program and it launches today following weeks of anticipation. we are anticipating a great deal. there is republican support for another stimulus bill. which would send money to the states hammered by the economic impact of the coronavirus. u.s. senator bob menendez is cosponsoring the $500 billion stimulus bill. two or bill cassidy said three gop senators would be ready to commit to the proposal

by the end of the week. cio forst host is the wealth management. great to have you with me. we can debate negative interest rates. if it is not on the agenda, buying stocks or more explicit forward guidance, what is the priority and more likely to come earlier than we think? >> good morning. the fed buying stocks. i think this would be more important than negative interest rates. you don't just provide funding. money.nt i don't think it will ever happen. i know what happens in japan, switzerland, but i would be very surprised to see the fed doing that.

do they need to do negative interest rates? zero and you do this, it is the equivalent of putting rates and negative territory in my opinion. nejra: great to speak to you today, maurice. curve steepening is becoming a consensus trade on wall street based on the bets at the front end, but also in the expectation of the issuance at the longer end. is that a trade, curve steepening, that you are getting on board with? maurice: it is a good question. the further view is 1%. is a supply and demand effect. the demand is not matching it

because we have the fed buying the federal government would be issuing. , we like to see that it is not curve inversion anymore. markets look like they are anticipating growth to rebound, which is something we like. we would not let up in the medium-term because nobody can afford higher interest rates. long term, when inflation welcome back. it is probably another debate. on yourou are neutral for major caps. you have active positions in others. i want to understand why you are reluctant, you use the word very reluctant to have high yields on a day when we go live with the fed buying corporate that and reaching into those corporate debt etf's which will include

high-yield. why such reticence when you have such an amazing backstop to end all backstops? it is sometime when you think about, what is your mission? we do wealth management. frankly, i think the wave of bankruptcy, it is not as if we did not have alternatives, as well. quality and through emerging-market issuers. the u.s. is a very capitalist country. we are talking about buying

stocks. making some zombie companies survive. it is very good that they are here. i don't want to be stuck with paper just because the fed pulled them. nejra: ok, understood. maurice gravier stays with us. lots more to discuss. austria's economy may take a few years to reach precrisis level while open borders will be key to jump starting economic growth in the country and the european union. that is according to their chancellor, speaking exclusively to matt miller. he also said that italy can't handle its debt load without eu assistance. take a listen. chancellor kurz: there is a good cooperation on the european level to support countries like italy, france, and spain.

there is a package of more than 500 billion euros to support these countries and i hope this will be helpful. >> do you think that will be enough or will there need to be some sort of shared fiscal union yourrope to help second-biggest trading partner? i think thatrz: this package is good, but we are not in favor of ideas like corona bonds or ideas like that in the european union. italy it'sit costs european union membership? how important to you is the membership of other eu countries like italy? chancellor kurz: well, there is no debate about the membership of italy in the european union. we are united in the european union with good cooperation and i think we will manage this ables and we will also be

to manage the economic situation. be within it will norma's difficulty. >> austria, germany, the netherlands, all of these countries were well prepared before the crisis hit, but there are other european countries like italy and spain, which were already in a bad fiscal situation. paymuch are you prepared to in order to keep the european union together? in order to save the countries that were hit so much harder? maurice: it is clear --chancellor kurz: it is clear we want to support them and show solidarity. the minute they agreed on this 500 billion euro package to support these countries and in a european level, we are also in a discussion if more help is needed. >> so, do you think it is possible -- the austerity that you practiced put you in a good position now, but your

second-biggest trading partner, italy, has 158% debt to gdp. is it possible for them to get out? how would they possibly do it without sums of debt forgiveness or share debt? chancellor kurz: they wouldn't be able to handle the situation without the help of the european union and countries like austria, but i don't think that the idea of shared debt is the right answer. >> how long do you think, mr. chancellor, it is going to take for economies like the austrian economy to get back to precrisis levels? now that you earmarked 38 billion euros. you have more measures to come. back to ucs getting precrisis levels? chancellor kurz: well, at the moment, it is difficult to say because we are quite dependent on tourism. 15% of our gdp is tourism.

there are some industries like automotive which have also been hit. so it is difficult to say now, but this year will be a very , but we hope that at the next year in 2021, there will be a positive development again, but probably it could take us a few years. >> i know you are already preparing measures, possibly infrastructure investment, reopening borders with your neighbors -- what do you think is going to be the most important move to revive the economy on the post corona side of the crisis? chancellor kurz: for us, for sure, the reopening of the borders is most important. because we need the single market of the european union. we are an exporter orientated country. tourism also plays an important

role in our country. general,e economy in for tourism in particular, reopening the borders is very important. that was the austrian chancellor speaking exclusively to matt miller. china's core inflation readings add to the case the pboc may have to add to a stimulus package. we will discuss next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." maurice, let's talk about china and emerging markets. factory deflation deepening in april. i know you are overweight emerging markets. is that a bet on china? a lot of people have expressed concern broadly in em that if you get qe funding deficits, you

are going to cause outflows basically and capital flight and inflation is going to spike. maurice: that is such a broad question. up,strial production being which makes a huge difference. growth isarkets, the as big as ever in terms of asset valuations. we have a huge valuation. there is an opportunity. quantitative easing to your question, of course the question currently is not the cost of doing quantitative easing but that you have no choice. what they are doing and emerging markets is that a much smaller size than what is in and the west and we don't think relatively speaking that we will see capital outflows. manus: ok, maurice.

we will return to you very shortly. our guest host this morning, maurice gravier. as i say, we are going to talk about bonds. ♪

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manus: good morning from bloomberg's middle east headquarters in dubai, i'm manus cranny. me fromhic live with london. your top stories. president trump clarifies comments the u.s. prevails over coronavirus. anthony fauci testifies in the senate today. boris johnson waters down his plans for the u.k. reopening. the austrian chancellor tells bloomberg shared that is not the

answer to the crisis. chancellor angela merkel around thehas worked disputes of the ecb bond buying. on signs ofhigher demand recovery. we will get a clearer picture on the fallout for aramco as the saudi oil giant reports first-quarter results imminently. waiting for those aramco numbers to drop across the screen. what will happen with the dividend? what will happen with the capex? possibly the covid-19 causing peak oil. what has caught your attention this morning? nejra: yes, there are so many things especially as i have had a day off. we talked about the fed pushing back on negative rates. curve steepening becoming a consensus trade on wall street, but also where we go hear from equities. since global equities have

pretty much recovered half the losses from that march 23 low. manus: my favorite word this morning is conflagration. conflagation. can i talk enough until aramco drops? probably not. let's scroll back and have a look at markets. , the market futures is going to test of the fed. negative rates are not there. as you have one overarching theme which is blended isolation. you need to google what blended isolation really is.

rolet overcome a have a look at the s&p 500. offered.e dollar is market, is that custer's last stand? have won theht battle against shale, but what have they done? money flows in. talking about the curve steepening, this is one part of it. bond investors are set to absorb a record level of debt. refundinget to raise for the coronavirus pandemic. joining us with more is dani burger, our markets reporter. what has been the reaction? dani: in part it is exactly what you have been talking about and it is the steepening of the yield curve becoming the consensus trade. you have to look at exactly what

is being pulled. you would think that in times of a pandemic, investors would want the longer dated bonds. however, the treasury is reintroducing the 20 year option. it is going to auction about $20 billion worth of that. there is this huge duration risk coming to fruition. is going to insist on the higher yield. that is why they are seeing the action of the yield curve continuing to steepen. nejra: let's talk about the issue --manus: let's talk about the issuance. you dani: dani: have been talking mother record issuance of european -- you have been talking about the record issuance of european companies. dani: corporate bond issuance is

booming. they are tapping the bond markets because in the meantime they want liquidity, they want to short liquidity to make sure they can whether the pandemic. when we look at equal sales, the issuance was staggering and investment-grade alone, over 65 billion euros worth of bonds, more than double what we saw in prior years. this is really staggering. into assisttepping companies. able to get cheaper debt. there is the program that allows the company to better bring these two market and there is speculation that the ecb might start buying fallen angels between -- because companies have seen more downgrades. this environment is rich for companies who want to issue debt and get liquidity because they are doing so at a very rapid and in some cases a record rate. nejra: thank you so much, dani burger. let's get to the first word news. in the u.k., confusion of a

prime minister boris johnson's plan to get back to work. london's chamber of commerce is telling businesses not to change their plans until there is more information on how to keep staff safe. companies are asking for guidelines about what protective equipment to buy. the government is promising to outline arrangements for public transport today. the u.s. has won the battle to ramp up virus testing capacity at, according to president donald trump. more than 300,000 daily tests are being conducted. there was also a testy exchange with reporters. deaths in the u.s. have topped 80,000. federal reserve officials are pushing back on the market view that rates make a negative, the chicago's charles evans and atlanta raphael bostic don't see the tool being used in the u.s. the central bank says -- [no audio] global news, 24 hours a day, on

air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: indeed. well handled. this is one of those classic moments when not just markets move, but everything moves in front of you very quickly. let's dig. into that fed story you hinted at it. both federal reserve officials pushing back on the market. i think that is really one of the most interesting dynamics for the market to deal with. one of the questions we will put to the cfo. we also want to know about the flow of money from pimco? joining myself very shortly. let's see what shifted in the guidance. the cfo joins us in a couple of minutes. this is bloomberg. ♪

manus: this is "bloomberg daybreak europe." i'm manus cranny in dubai. nejra cehic alongside me in london. nejra: a little but of risk off. u.s. futures point to a lower open. european futures dead flat. you are generally seeing dollar strength. it also seems to be the outlier. generally a bit of concern creeping into the markets. china the data out of overnight. we get the deflation risk in terms of the factories.

concern around pmi's. the fed pushing back on negative rates. we are due for another drawdown in equities. the rally has been all about foam of. manus: what is the word around the goldman sachs? what is the word we discussed this morning? it is conflagation. nejra: i can't remember it. [laughter] manus: that was like 10 minutes ago. that is like my memory. that is nearly as bad as my memory. actually, that is worse than my memory and it is pretty bad. are we going to chat about allianz? let's look at the numbers from allianz. the whole point about conflagati on is about the debate from goldman sachs. the drawdown in the s&p 500, the market is too far ahead, and it won't be just of the market dynamics that changes, we have not flattened the curve. which arethe dynamics

going to provoke a repricing in the market. to allianz. to allianz. we have had the first quarter numbers that came in with profits of two point 3 billion euros. -- 2.3 billion euros. the insurance giant says the headwinds might continue in the coming quarters. allianz withdrew its 2020 profit target at the end of april. joining us now for a conversation is the allianz cfo from the headquarters in munich. it is giulio terzariol. he joins us now. thank you for joining us now. you withdrew the guidance. the world is reopening. china is planning to get back to normal. europe is going to beginning to try to reopen. has the narrative shifted at all for you since you guided and withdrew the guidance earlier? good morning and thank

you. i will say it is too early to say that things have changed. the situation is very dynamic. we see now there is an easing of the lockdown, also in europe. we see that china is getting back on a recovery. but there is still very much of an uncertainty. from that point of view, we remain cautious. we look at the numbers for q1. you can see there was an impact coming from covid. but i would like to stress that if you look at the numbers for the covid impact, if you adjust for that, the underlying numbers are very good. allianz will be focused on delivering on agenda and the underlying performance. the impact of covid is something we will have to handle as we go through the remainder of the year. manus: great to speak to you --nejra: great to speak to you this morning. let me ask about the covid impact. can you give us more detail and color on how exactly the corona

crisis is hitting the business? whether through claims or in other ways. yes, when we just look at the q1 numbers, we have quantified the impact coming from covid at about 700 million euro. from theon are coming public business. 300 coming from the life business. the life business, it is all about the capital markets. that turbulence. when we come to the property market, half of the 400 million losses are from underwriting and they are coming from entertainment. business inne of our industrial operations. then i will say the other half is coming from business interruption, business closure. experiencing underlying impact and businesses, so we will sing entertainment is a driver of the

losses we see in q1 and business interruption is a driver for what we saw in q1. about the we talk asset management business? you talk about an outflow in terms of the negative effect on the outflow. and netllion euros outflows of 46 billion, mostly in the month of march. have the outflows slowed down? what can you tell me about the pace of movement from the asset management business? yes, so we saw outflows in march -- as of february, we had inflows. march was a tough month. that is very important. what we saw in march is not allianz or pimco-specific. it was about investors going on the sideline. ascan also count that

investors are going to come back. , when institutional side , we sawat the flows the stability coming to number that we were seeing. it got definitely more stable. we look forward coming back to the question. to the beginning of the conversation, some optimism thed on how the rest of year is going to play out. a lot of ceo's and cfo's along with the difficulty of forecasting. nonetheless, in terms of the 2020 outlook, i know you may not able to give precise numbers, but can you at least tell us whether 2020 will come in a

level last year's operating profit? significantly below perhaps? what isi can tell you definitely going to be below the operating profit of 2019. i would also say that we expect what significantly below we had last year. very good operating profit when you consider the circumstances, but clearly we are going to be short of the numbers that we posted last year. manus: you talk about the shift sentiment. i want to drill in on that from the institutional perspective. ecb actively engaged in the markets. to what extent is that driving the flows within the pimco business.

give it a sense of the flow of the money on the backstops. giulio: what the central banks are doing is not directly the assetmco or even side of the insurance business. clearly there is an indirect impact because there is more liquidity. from that point of view, definitely the intervention from central banks is for stability and the environment. the outflows were mostly on the retail side. it is going to help to restore investor confidence on the retail side and bring those flows as we go through the year. the german plan whereby

the government will backstop losses of 30 billion euros for commercial credit insurers this year and in return insurers will surrender 55% of their premiums to the government while continuing to provide coverage. i'm wondering whether allianz is working on credit insurer deals like that in germany in other countries? giulio: yes. governmentsng with in all countries, i would say, to find this kind of arrangement. the arrangement can be different country by country. you may have agreements similar to germany. in other situations, the situation might be different, but the outcome might be the same. we don't want to withdraw capacity. i think withdrawing capacity would not be helpful for the economy. on the other side, clearly we

cannot sit on an amount of risk that would be too large. that is the classical situation where governments and issuance companies have to come together to find a solution, which is the best for the ecosystem. on that,st to close obviously quite a backstop that germany has employed. it was warmly welcomed. do you see that it is highly likely to be extended into 2021? is it going to be necessary? is hard for me to say. i hope it is not going to be necessary. i'm not speaking now from an allianz interview. i merely hope that the world is going to be back to normal next year because we are dealing here with a disease which is also affecting people's lives. from that point of view, a hope it is not going to be the case. disclose if we have also a second wave of coronavirus this is something

that people are kind of debating. i cannot disclose that we might be in a situation where we might have to come to some sort of agreement like this also for 2021. of allianz,fo giulio terzariol, thank you so much for joining us this morning. coming up, as oil tics higher, we are awaiting first-quarter numbers from aramco. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london. manus cranny with me in dubai. injecting $3 billion into three state lenders to strengthen capital positions and minimize the coronavirus impact in

turkey. fresh capital would be used to help companies hard-hit after the coronavirus lockdown. maurice gravier is still with us. when we talk about the emerging markets universe impact of coronavirus, of course it is hugely diverse. we don't want to talk about it as one big area. but earlier, i was asking you whether you were concerned about qe-funded deficits fueling inflation and causing capital flight from emerging markets. you were so concerned about that. however, i want to come back to china. we have the data on inflation overnight and a lot of people when i say to them, do you like e.m. and utica little deeper, what they actually like is chinese tech. are you in that camp or are there other areas in e.m. that you are specifically more positive on? just give me an idea of how you express liking emerging markets. well, wow, that is

a good question. i would start with the big reason why we like emerging gdp per it is the capita expansion. term, we just accumulate for the long run. is part of this condition. , we seeame time probably the chinese currency becoming a retail currency. we are printing trillions of dollars of euros. in the center, you have china. forike china, we like india the long run. investors, i think

volatile, butt is you have these underlying trends. maurice, we have 45 seconds. you like gold, but can that act the billionsainst of printing? why do you like gold in 30 seconds? go. maurice: 30 seconds is torture. gold is a currency, as simple as that. in a zero yield world, gold is fine. [laughter] manus: you know, you are a good sport. foreconds might be torture a frenchman, it is agony for an irishman. cehic.

europe." the european market open is up next. smoother ride for anna and matt. ♪

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♪ anna: good morning. welcome to "bloomberg markets: european open." i am anna edwards, live in london alongside matt milliner berlin. matt: good morning. the markets say how long will this last? stocks drift. france said economic activity picked up, but slowly. let get your top headlines for you from the bloomberg terminal. no joint debt.