haidi: good morning. welcome to "daybreak australia." amid concernebound about bleak economic data and rising trade tensions. global virus cases approaching 4.5 million, with deaths above 300,000. u.s. infections rise more than expected.

asia thanks a second wave is coming. stay talks with potential suitors are progressing well. let's take a look at how we are checking up on this friday session of the week. we had a pretty good lead, i'll be at a volatile session on wall street. volatile section on wall street. u.s. stocks falling after president trump said he did not want to talk about trade issues with xi jinping. going into the close, we saw a surge in oil prices, energy stocks, as well as beaten down bank and financial shares leading those gains. we are setting up for a pretty positive open here in asia. in new zealand, we are seeing trading get underway. it looks like we could pick up gains after two days of losses. we are seeing a positive lead when it comes to trading futures in japan, in hong kong, and in australia. it is a big day today when it comes to indicators out of

china. we get those domestic activity numbers out when it comes to retail sales and industrial production, which could give us an indication as to whether that nascent economic recovery is picking up speed. just a quick look at wti in this early part of the asian session, we did see that search overnight when it comes to oil prices, to the highest in more than i've months, and that was part of that positivity in their rally. president trump is ratcheting up tensions with china amid the coronavirus outbreak and the trade war, saying that he does not want to talk to his chinese counterpart xi jinping, and musing about potentially severing trade with beijing altogether. let's bring out emily wilkins. what is the president saying here? trump say aard number of different things today, but the main takeaway is that while he said at one moment that he had a good relationship with chinese president xi jinping, in the next moment he

said that he might end the entire trading relationship. he rejected the idea of trying to negotiate the current trade deal. it is something that has been a bit of a back-and-forth tension you have seen with the u.s. and china. as you continue to see deaths and increased cases in the united states, the more you have seen the trump administration try to shift blame to china for the virus itself as well as initially not being open and transparent about the virus and about how serious it was. in the meantime, we have the cdc setting guidelines as to what a potential reopening would look like. what do we know? emily: if you remember, a couple weeks back, the cdc guidelines actually leaked. they were not released initially. the white house said they were too prescriptive. now the cdc has posted this

advice publicly, for workplaces, for bars, for restaurants, and it says the kinds of things you would expect it to say. people still need to keep a safe distance when they are inside these establishments. these establishments need to make sure that their employees can be kept safe. they have suggestions on how to do that, but i think the bottom line is even when things start to open up, we are going to be a very long way from getting back to normal. haidi: emily wilkins, our congressional government reporter, with us. let's get you the first word news with karina mitchell. osaka willyo and remain under a state of emergency as japan lips restrictions on other prefectures. ononavirus infections are the decline, but prime minister shinzo abe warns there is still a threat to major urban areas. the government is planning a budget to help businesses and consumers during the lockdown,

including help for furloughed workers. its first india faces annual economic contraction in 40 years. more than 50 days into a nationwide lockdown, the economy is still weakening with infection rates continuing to climb. market pmi readings are the lowest in the world with business activity stalling. the government lands to live restrictions are raising concerns over new infections. emmanuel macron will summit a drugmaker to talks next week after the company said it would prioritize the u.s. in virus vaccine delivery. the ceo saying it would go to america first provoked outrage in france. 'he u.s. has helped fund sanofi is virus research. the european union is planning to sue the u.k. for breaches on the rules on free motion of people across the region.

the u.k. has been given four months to respond before the eu imposes fines or other penalties. day,l news 24 hours a powered by more than 2700 journalists and analysts in more than 120 countries. i'm karina mitchell. this is bloomberg. haidi: we do have breaking news when it comes to results out of aia. the asian insurer reporting that the value of their business out of the first quarter coming in at a contraction of 28%. this as the coronavirus and shutdowns really put a dent when it comes to product sales. first quarter value of new business coming in at $841 million. annualized new premiums have a contraction of almost 20%.

still ahead, we will be talking to the beijing ceo of the china-australia chamber of commerce. this as trade tensions between the two countries ever intensify. hilary kramer, will be with us. ♪ ♪

amid stocks rally trade tensions. joining us now is kramer capital research cio hilary kramer. are we basically running on

fumes and liquidity at this point? ry: the actual stock market itself is really federal reserve-driven. it is all about the fact that money has been injected into this system. the reason why the nasdaq is up for the year has to do 100% with the fact that there was this backstock put in by the federal reserve. knowledge that all companies are too big to fail. so, in that sense, if you are -- if you are a longer term investor, we look at the banks and some of the energy names getting a bit more love overnight, is this really a good time to take a look at these beaten-down valuations and picking companies that, in the longer-term term, are going to see probably an inevitable recovery after this?

hilary: it is the time to pick the companies that are going to have an inevitable recovery because they have to get acquired. once the financial stocks went up, that brought our whole market up in the united states. what really made it happen was the gossip that we had on the street. suddenly there was this rumor not goldman sachs could stand alone anymore. they have markets, their commercial bank division for the everyday banking person, and they want to buy wells fargo. it could be absolutely nothing. it's just rumor, but it was enough to bring wells fargo up over 7% to eventually close , and it brought all the financials up, because the realization is there about the mergers. it is no different than the way grubhub is in play as well right now.

we are going to see lots of that going on. that's what the future is going to look like. m&a is going to be cross-border. it is going to be strategic. don't look for the financial investors getting private equity. a lot of them are licking their chops, trying to figure out how to renegotiate their bonds and these heavy-duty debt levels they have. but do watch for that. and yes, we did have a reversal. one thing that was interesting in the market today as well was that those staples, general mills, gaas, always one of my favorites, hit a 52-week i today. why? because at the end of the day, people are looking for safety. we still don't know what happens with boeing. will know that boeing ba

be supported by the united states government. the united states government will not let boeing fail, but that does not mean it can't resend and trace down below $100 a share. general mills, everyone is still going to eat lucky charms and cheerios in the morning, and they are going to have betty crocker cake mix and muffins, but more importantly, there is fear we are going to have a recession in a long-term potential depression, and people think of general mills with their boxed potatoes, mashed potatoes, and their side dishes and their hamburger helper as the perfect play, just like one ormel the same h way. and the dividend is there. spam in aich sells can, also known as ham and a can, and it is the same thing.

the expectation is no one knows how bad it can get, so investors are willing to take 1.69% dividend yield tap the safety of knowing they are in fei company that regardless of what happens will do well. that is why we see companies like general electric at 52-we close, which is possibly one of the most notable in important pieces of action over the last few days. stock hundred six dollars, general electric will probably be without -- the banks are going to have a lot of business doing that. that also brings the banks' stock up. big business for them. it's going to be split up because no one wants them to go in bankruptcy. emily: hi -- ary, does biotech have good prospects after the therapeutic hype dies down? hilary: it is the best opportunity.

anyone out there who is risk-driven, who loves risky trade, and i preface that very importantly, there are biotech stocks that got thrown out. the baby got thrown out with the bathwater while all the attention has been turned, and rightfully so, to viruses and the study of viruses. research on viruses. everyone got in the act. all the focus is there. you have a number of companies who have upwards of 200 62% return potential within -- 260% return potential within 12 months. goldman sachs' potential is 300% plus within a year. those two stocks are sage therapeutics, and the other is bloomberg biotech. they have -- bluebird biotech. they have very important roles, but they became unimportant,

unloved, and thrown out not about every portfolio, because the focus is, will there be money allocated to a company ne therapy andge , andediting capability fortunately, oncology? bluebird bio, for example. and if you go to sage therapeutics, which has a number of approved therapies and drugs, that is one that there is a good is a 300% -- there upside there. three times is what it could do, so this $34 stock could easily be over $100. why? they treat central nervous system disorders and have been approved for a postpartum depression therapeutic that has

applications to other areas of depression. these are very important. dementia, and urology of all sorts, als. there are so many companies that have been forgotten that people need to be looking at. buy a falling to knife in this environment. is it time to take a chance and by united airlines? i trust united airlines. however, what would i be buying? i'm going to be buying what i consider large small-cap, market over $1 billion cap-valued companies, like , and motormotor oil oil quick lube centers that take care of -- they are drive-in, drive out. there is a lot of pent-up

demand. people are not buying cars anytime soon, and if they are, they are going to take good care of them. valvoline is down $15, and our valuation on it -- and this is airtight -- is $23 on valvoline. we don't see that it could possibly end up anywhere below there. it's just that right now, all the focus is on liquidity. itflix hit another 52-week today, and i know why. i know wipers. -- why personally. [indiscernible] haidi: hilary, we are going to have to leave it there, but really appreciate your time as always. are going tot, we get a gauge of china's economic health as the nation has started getting back to work after the

virus lockdown. we have a slew of economic data do in the coming hours. ♪

china's data is expected to show economy gradually on the mend, but i global demand slump. this from theg side of beijing. still a lot of uncertainty around these prospects, because we look to china to fuel the global and recovery story in the longer-term, and now they are starting to have the effects of what is happening elsewhere. >> absolutely, baby steps as a result of that external pressure in terms of the demand slump. you are seeing the bigger picture. to be a expected gradual improvement in all the metrics, but as you say, it is

lackluster. industrial production is said to be one of the highlights. the bloomberg economic survey expect increases in industrial cuts of about 1.5% for april, compared to a contraction of 1.1% in march. bloomberg economics actually thinks it is going to be stronger. they are looking at a number of 2.5%. they are pointing to the back to work data having improved. they also highlight the solid production affects. they are a little confident about industrial production. retail sales is another one. it is important to look at the chinese consumer. does are excited to fall 6%, a slightly slower pace than the decline we saw in march.

but not nearly as severe as what we saw in march. a slight improvement in fixed , but still in contraction. expected it is going to be the public sector doing the heavy lifting. longer-term, that is the concern. of course, they want the private sector to pick up in terms of investment. a bit of a mixed picture. a gradual return to economic strength in china, but it is that external demand picture that remains a key drag. we are seeing photos of people lining up outside shops to talk about the so-called revenge consumption from chinese consumers. can we know hope on the sustained power of the chinese consumer driving this recovery? tom: i was talking to a luxury brand executive a couple days ago, and she sees strong demand

for luxury goods. but that is one particular demographic. there has been a focus on policy makers to shift away from supporting manufacturing to really focusing on services, which includes shops and restaurants, tourist attractions. those have been opening up. we saw shanghai disney opening this week. policymakers are giving out subsidies to encourage that consumption with, frankly, mixed results. but still, retail sales are expected to be held back somewhat, because people remain cautious about public gatherings, and you've got a squeeze on real incomes. we talked about bnp paribas' forecast where you may look at 100 50 million people unemployed in china, or furloughed. the official jobless rate is expected to improve to 5.8%, but that only accounts for urban workers, so that is the key caveat. what this means is we are looking for more policy responses and the international people's congress, but for more

details on that, the pboc has a more powerful set of policy measures, and we are waiting for those details. a trimming of the medium-term that we would be looking at yesterday. that may happen today as well. the retail sector remains on the pressure -- remains under pressure. emily: tom mackenzie there in beijing. of course, we are awaiting the slew of china numbers. we will get more analysis on the chinese economy from guests later on. let's get you a quick check of the latest business flash headlines. the ok tos has won enter china's credit rating market. says it will be allowed to conduct bond raising

operations in the chinese market. the news comes as a record amount of bonds are offered with chinese companies and local governments raising funds. tesla is cutting car production in china for the second time this month as competition heats up again in the electric vehicle market. the move applies to the long-range version of the locally made model three, with the price coming down almost $3000. it offsets the rebate being moved by the government later this year and aims to keep tesla competitive. delta airlines is to retire all its biggest planes by the end of the year and is morning of huge over staffing when it comes to pilots. delta. using its 18 boeing 777's and says it will have seven more pilots than needed by the fourth quarter. it will now rely on more efficient airbus three 50's and 330 planes to service the long

haul group. in apple's annual responsibility report, apple says it will help redesign floorplans where needed and will also consider staggered shifts. coming up next, we will be discussing the ongoing tensions between australia and china. this is bloomberg. ♪

emily: we are just getting some breaking news when it comes to senate majority leader mitch mcconnell speaking in a television interview in the u.s. interestingly, responding to some of the pressure being put down by the fed chair jay powell when he spoke yesterday about the idea that the government is going to need to do more fiscal stimulus. that we haven't reached the final chapter when it comes to fiscal stimulus. they said the republican senate majority is very much in jim. they are not prepared to put a date where the next team list bill will be put forth.

they will let us know when the time is right to move. and that fed chair jay powell is correct when it comes to stimulus but hasn't specified the timing. a jab at the democratic stimulus bill that was unveiled this week, calling it a parade of absurdities. let's get you other breaking news when it comes to home. we know the extraordinary levels manufacturings to , new zealand comes in at 26.1. and we are getting some expectations, of course, of contraction when it comes to manufacturing activity given that the country is just emerging from that stage three lockdown. nascentd start seeing a recovery taking place from here on forward.

tensions between the administration and china have been simmering for quite some time, but the potential for actual economic damage has become a lot more real over the last few days. they have seen increased strains with the largest trading partner. we are joined from the chinese capital. before,have seen this this sort of deterioration of diplomatic relations and uncertainty of the relationship that has been going on for a few years now. this time, it is different with a very quick escalation from beijing over the last couple of weeks. >> it is hard to put a precise commentary about if it is worse. i think at the moment, the focus is the media.

about the think attention is much as we can. hopefully, we can find some common ground to move forward. the relations between the two countries, there are a lot of businesses between australia and china. this has come out. the last time we did a major australia, it was actually highlighted. a top business risk. it is extremely important. i don't want to oversell or get too involved. i think we need to get that opportunity to work its way forward.

is this an immediate concern among the membership that this is going to trigger the kind of ?onsumer led boycott >> some of the ambassador's comments were taken out of context. we are going to be focused on if it is a great product. we can really focus on it when it comes to consumer sentiment. that is certainly what friends of mine are around. but the atmospherics are important, of course. hopefully, we can look forward to these problems being resolved

. the governments are weeks and months ahead. in thewhen you are middle of the pandemic lockdown in mid february, the pressure on some of the smaller members and the smaller businesses that you represent within your membership, i wonder how they will come out of that given that we have started to see the green chutes of recovery in china. nick: there is no way to sugarcoat it, it has been an enormous lead difficult period. the pricing over here, it is a real way, businesses in australia at that point in time. for us, what do the green chutes look like?

getting back to normal with demand for imports on the trade side. ,hings like food and beverage it looks to me that demand for resources is picking up. definitely the smaller businesses have room to make up and we have members been monitoring the situation as best we can. and coming up, we hope to see some strong stimulus measures. more positive outlook. and it will certainly help with demands and consumers of the economy. emily: what policy measures are you expecting from the sessions

then? nick: it is too early to tell. we will find out a lot more starting next friday. artainly, we are expecting significant amount of fiscal stimulus and monetary stimulus. governments have made a lot of statements where they can strongly support consumers and businesses. has it been any kind of existential point for businesses in china, the questioning of their commitment to staying in for thehe reallocation dislocation we have seen in the supply chain? thatu hear from businesses are either diversifying or moving away from china? nick: no, i don't think so. i think if you are in the

market, operating, i don't think the case has changed a great deal at all as to what you want to invest in this market. aside,onavirus pandemic and yes, there have been some significant supply chain , we will see how that plays over the next six to 12 months. the case for being here is no different than it was six months ago or 12 month ago. that is what we see in beijing and across the country as well. see a change, yes. but i think we will managed to cope with those changes going forward.

we will survey members again shortly. picture from good a statistical perspective. emily: it will be a pretty long slog back to normal when it comes to the industries that are dependent on the listing of international travel restrictions. what are you hearing from businesses that operate within overseas education and international students, tourism, that kind of thing? nick: tourism is particularly tough for obvious reasons. everyone is managing is managing as best they possibly can. thes a huge sector for australia and china sector. it can be 25% to 30% of the members one way or the other.

i am seeing a lot of strong commitment from the university sector. they have their own domestic challenges. i suspect that they are very heavily focused on that at the moment. been supporting the students is much as possible. i think china will still remain hugely important market. knows. australiaook at how is handled and how china is it will be in light of this year into next year where effectivenaged a very fallout from the humans perspective which has been minimized.

the crisis in the administration has come out of it very well. there might be some silver linings. nick, thank you for joining us, as always. we appreciate your time. some breaking news crossing the bloomberg when it comes to the pandemic jewish and in brazil. brazil has reported a record .3,900 in terms of deaths, we are seeing 13,993 over the past 24 hours. of 202,918 covid-19

deaths after we saw a more than doubling of new cases over the last two weeks. the university of washington is estimating that deaths, when it comes to covid-19 in brazil could top 90,000. theeally does exacerbate political crisis that the leadership should be facing. not trulyers are reflective when it comes to the spread of the disease given the lack of widespread testing. the federal reserve bank of dallas president robert kaplan speaking at the moment saying the u.s. economy can't remain shut indefinitely. that there is a need for testing and the last thing we want to do is to reopen and have the flareup of the virus. he earlier repeated the opposition of seeing negative

rates in the u.s.. when the cdc releases guidelines on reopening some businesses, bloomberg has spoken to johns hopkins university about why social distancing remains so important. professionals as you would see a soldier at war. you can see health care workers relaxed in between those battles. i don't think the public should lack of urgency and our response. and by that urgency i mean continuing to be safer at home. are we out of it. tom: beautifully said. there is a huge tension between the lockdown, the stay-at-home. the wisconsin legislation that we have seen in the last 24 hours. how do you perceive the gray area between a strict lockdown

and getting back to normal? >> you characterized it perfectly. we are seeing it across the world and we need to be paying very close attention and be vigilant about opening up and how the change in our behavior, the increase in social and physical distancing is going to impact new cases. we anticipate it will impact cases. you mentioned multiple times, the recession preventing cases, it and in many is a delicate balance between being able to open up and expand the environment while also being vigilant to prevent ongoing

transmission. guesstimate how many people so far have had covid? and how many of those people are immune? >> investigators across the world are really struggling with coming to grips with whether or not it will occur as a result of infection. we are seeing cases of relapse and reinfection, if you will. , ins critical to understand these patients with the suppose it relapse, did they test negative and repeatedly negative? they basically became convalescent. they recovered. we can detect antibodies. and if we follow those people over time, the infection can occur in those circumstances.

we follow people for at least 12 to see what the prevalent incidents of the virus is. it is a third wave of this infection. that was jason farley from johns hopkins university. he is the founder of bloomberg lp, the parent company of this network. daybreak next on australia, the energy markets get an injection of optimism. founder andm is the portfolio manager of jackson square capital. this is bluebird. ♪ -- this is bloomberg. ♪

emily: oil prices surged to a five-week high on a pair of bullish headlines. number one, opec and its allies are scaling back crude shipments. number two, the international energy agency is saying that crude demand will improve over the coming months. from an investor's perspective, let's bring in andrew graham, the founder and portfolio manager at jackson square capital. ray to have you with us, andrew. is this the time to start looking at some of the energy names given how beaten-down they are and given improving

expectations for recovery? yeah.: the low valuations make this sector attractive for deep value managers. probably long only managers like myself. i approach this thing as a generalist. looking at the forward curve 12 to 24 months out, you get to wti prices of $33 and $36 respectively. that is how it is that roughly $27. it spells good news from a storage standpoint. we can go forward and roll into the july contracts next week. it is not really a recipe for

the u.s. companies to make money. marginal economic levels are at $45 and $50. the priceking about of oil. a long only manager would look at the time value of money and figure it is probably better to be shopping elsewhere for names. it.ave to pay attention to it is certainly part of the whole mosaic. to stay on top of the story as it moves along and see if it gets to a tipping point. that would be the chance to come in and buy some names fairly cheaply. the market clearly has entered into a rebalancing phase. see a net drawll sometime in the august timeframe.

it will be below that 100 million barrel peak sometimes before the end of this year. it still doesn't spell out with the supply-side, a price bet that gets you to the economic breakeven. emily: and there are pretty big risks to the fragile recovery, right? >> the good news about the curve , the markets certainly have the collective intelligence of markets, telling you that storage story is really no longer a story to concern yourself with too much. participants are

maybe underappreciated the way that wti contract settles. contract likeal many commodity futures. .t settles in one place contractsding the found that there were no buyers. when they went ahead to issue fiscal delivery, in theory, there was no room. prices went negative. i don't think that exists anymore. the actual capacity of some of these tanks is a little bit unknown. product, crude doesn't

evaporate like jet fuel or anything like that. they estimate that probably 80% capacities, when you get to max storage capacity, it amounts to 90 million barrels. you are at the 80 million barrel range. a recipe for how prices can go negative. emily: andrew, very quickly, what a bout -- what about a potential return of u.s. shale? andrew: they have squeezed a lot out of that, right? a lot of efficiencies. if there is 10% more to go, you do certain companies in certain areas in the basis of what you get down to, the $40 breakeven levels. sensitivity in the

demand models that people are using. gdp number ina this environment. people are putting together high-frequency demand models. and there is some sensitivity in their. i think that market is fairly accurate. we think it falls short of levels. there are solid numbers and plenty of coverage. even when you bake the new prices. emily: i appreciate your time. andrew graham, jackson square capital portfolio manager. lots to come. this is bloomberg. ♪

emily: let's take a look at how we are setting up when it comes to the final trading session of the week here in asia. we had a pretty solid lead from wall street overnight with stocks earlier falling on president trump's comments that he was not interested in talking to his chinese counterpart about the simmering trade tensions. but then rallied after we saw the surge in oil as well. we saw new zealand stocks up another .1%, reversing some of

the losses that we had seen in the two consecutive days. this is how the kiwi is trading. we are looking at a positive set up to the opening in sydney. this is bloomberg. ♪

>> welcome to "daybreak asia." kamaruddin in hong kong alongside haidi stroud-watts. we are counting down to the opens in australia, japan, and south korea. look set to rise on indications china's recovery is picking up speed. u.s. shares gained. banks and energy leading the way. global virus cases approach 4.5 million with deaths above