>> 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 300

thousand. u.s. infections rise more than expected. asia, a second wave is coming. japan's biggest banks are expected to join their global counterparts in bad loan costs. they could see the highest in a decade. take -- haidi: let's take a look at how we are setting up our final friday session. positively from wall street after a pretty volatile session. u.s. stocks faltered early on when president trump said he was not interested and did not want to speak to xi jinping about the simmering trade tensions. in the beaten-down bank stocks as well as energy names gaining on account of this jump we saw in crude prices. we are setting up positivity. futures, both in australia and hong kong, and also in japan, setting up for a higher open, sophie. ishie: president trump ratcheting up tensions with

china amid the coronavirus and trade war. this is what he said about talks with xi jinping. pres. trump: i have a very good relationship but i just, right now, i do not want to speak to him. there are many things we could do. we could cut off the whole relationship. if you did, what would happen? you would save $500 billion. sophie: let's bring in our congressional reporter, emily wilkins. with the u.s. economy facing a recession, given we have the lockdown measures, what can we make of the timing of trump's latest comments regarding trade ties with china? emily: it is very interesting. we have seen this continue for the last several weeks. it seems that as the u.s. continues to deal with higher and higher cases of people being infected and deaths to the coronavirus, the more they are trying to shift blame to china for the virus itself as well as covering this up and not being transparent with the international community.

it is interesting. you hear trump in one breath say he has a great relationship with president xi jinping and then the next breath say that he is considering ending the entire trading relationship. that the u.s.note would gain money from cutting off the relationship. it is not fully accurate. at this point, we are looking at a continuation between the u.s. and china. neither side has taken concrete action to end that relationship. in the last hour, we heard from the senate majority leader, mitch mcconnell, at once really criticizing the house democratic stimulus bill but also agreeing with what the fed chair, jay powell, said earlier in the week, which is that we will need to see another fiscal stimulus package. seeing chairman powell, and you are also seeing mr. kaplan come out and say we

need fiscal stimulus. the government needs to continue pumping money into the american economy to avoid long-term damage. mitch mcconnell is not happy with the bill that democrats have put forward. it is a $3 trillion bill, $1 trillion for states and includes more stimulus for the american people. as well as some things that do not have to do with the coronavirus and are simply democratic-socialist priorities. mcconnell does not want that bill. he wants to make it clear that he does not like that bill and things in that bill. he knows he will have to negotiate and i think he and other republicans are intending to get yet another stimulus bill out. it is not going to be what we are seeing democrats put forward right now. kaplan alsort weighing in on the need for fiscal stimulus in order to lower high jobless claims. the last thing we want is to

reopen and then have a virus flair. a lot of consideration to be had when it comes to fiscal stimulus. this trade risk adding to the pressures. seen kaplan saying things we heard from chairman powell, we heard from other experts, as the country starts to begin to reopen, as states began to come out with their own policies. there is a danger that we are going to have a flareup in the virus and that is going to hurt the economy anyway, so we are seeing these warnings come out from these experts, the cdc, releasing their own guidance for when businesses can begin to reopen while keeping people safe. that is sort of the next step in all of this. how do we begin to open up without making sure that more people are getting sick? emily wilkins for us in d.c. coming up next on "daybreak asia at -- he taking a look

takes us through his expectations when it comes to japan's megabanks as they join global counterparts in making huge loan loss provisions. says the next, -- recession will be deep, but we could end up with one of the shortest recessions ever. we will be hearing from him just ahead. this is bloomberg. ♪

>> you are watching "daybreak asia." i am karina metro at the first word headlines. global virus cases are approaching 4.5 million with deaths above 300,000. u.s. infections rose more than expected as the centers for disease control issues guidelines for the reopening of the economy. this earlier guidance was held back by the trump administration for being too prescriptive.

tokyo and osaka will remain under a state of emergency as japan lifts restrictions on other prefectures. coronavirus infections are on the decline but prime minister shinzo abe warns there is still a threat to major urban areas. the government is planning a second extra budget to help business and consumers during the lockdown including help for furloughed workers and rental payments. india faces its first annual economic contraction for 40 years as the coronavirus ravages industry and consumer demand. more than 50 days into a nationwide lockdown, the economy is weakening with infection rates continuing to climb. argot pmi readings are the lowest in the world with business activity stalling. government plans to lift restrictions are raising concerns on new infections. the first typhoon of the season has put the philippines under lockdown. he forced the evacuation of about 200,000 people. the storms now cutting a path towards manila, where evacuation

centers have been told to accept have normal capacity because of the coronavirus. dozens of churches are being opened to accept more people if needed. 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. i am karina mitchell. this is bloomberg. sophie. asian stocks look set for gains this morning on optimism that china's post launch on economic recovery is picking up steam. our next guest says that while deep, this recession could end up being the shortest ever. joining us now is the cofounder and coo of the economic cycle of research in two. -- institute. while we can see a recession being forced here, recovery, not so. how are you mapping out a post pandemic world given what we are seeing in global supply chains? >> i would love to touch on everything you said just now. certainly, you can flip a switch

and cause an economy to shut down, as we have seen around the world with shutdowns, but on the other, you cannot just flip a switch and have a recovery. the may end up being shortest, even though it is the deepest recession in terms of the depth or even pervasiveness of the recession. it may end up being one of the shortest recessions, let's say, in the u.s., ending sometime this summer. because of a partial reopening of a recovery, because activity will come off of its loans, and extent, a little bit of an upturn in activity, the stock market upturn that we have seen thatte is consistent with along with the fed intervention, but now, the ripple effects of that deep recession, and that very diverse or diffuse

allssion is going to ripple around the global economy, and so, you mentioned in the lead-in, china, or other asian economies, kind of restarting. korea, they have handled the pandemic relatively well, and they are trying to reopen and restart, but they are running right into this collapse in demand in the west with europe and the u.s. being shut down. that point, demand destruction has certainly been an issue. let's bring up this chart on the terminal showing how that has been reflected in export orders in china, which have been collapsing despite production activity having started on the mainland. what does this indicate to you? are we going to see this continuing even further? i think so. this is what we always called the bullwhip effect. small shifts -- this happens not in big cycles, in normal,

regular, or even small recessions. you would have a small shift in consumer demand. it gets amplified up the supply chain. the farther away your economic activity is from the end-user, you get a larger and larger cycle. it is an analogy to how a little flick of the wrist produces a big arc at the end of the whip, the end of the bullwhip. that is what has happened here with a collapse in the west, western demand. china, even though it is restarting, is going to have plummeting export orders either for consumer goods that are exported directly to the west were even for intermediate goods that gets exported to other asian supplier economies. so you are seeing, for example, korea. they have very prompt export data, and hits plunging, as you know, in may. you exports are at -80%, so see the korean exports for the u.s. and the e.u. have been cut

to less than half of a year ago. that is going to hurt. that is not over, that kind of bullwhip effect, up the supply chain to the supplier economies. we are in the thick of it now and it is not over. haidi: does your fortune depend on where your economy sits on that supply chain given we are talking about this potential longer-term dislocations and changes? where are you seeing opportunities in terms of geographically, then? lakshman: you see, certainly in the states, these tech companies have been minting money. as someone who can step in and thely the demand, disrupt demand we have had so far, what will be very interesting to see, and we are in the early stages of it, is how the service oriented economy is are customer facing meet, if they have

demand, and how they meet that demand in the coming weeks and months. looking farther ahead, this is a little premature, but looking farther ahead, this bullwhip effect, which is really slamming the supplier economies at the moment, it will work the other way once things bottom and begin to turn up, so it is going to get quite volatile. a reverse bullwhip effect some months from now. you have to keep a close eye out with that. thing really muddying the outlook here is that, typically, you will have an inventory driven kind of theund, but with most of destruction, demand destruction happening on the services side of all of these western economies, you do not have an inventory driven rebound, and weakerkes it probably a

jobs recovery. if you have a weaker jobs recovery, you ultimately have weaker consumer demand recovery. and we have to watch for that. the other missing piece will be wage growth. can we expect to see a consumer driven recovery without meaningful wage growth, which to be fair, inflation across most economies is weak anyway? lakshman: i would not hold my breath for that at all. i think we are in the early stages now of maybe some more stimulus packages at least in the u.s. and that is starting to be discussed. i think that will probably gain some traction because of the difficulty in replacing those lost services jobs. 21 million jobs lost, 20 million of them are in the service sector. we have not seen that before.

recovering out of the 2009 cycle, it is not going to feel like that, and certainly not the of we recovered out the 2001 cycle. when we were recovering out of the 2001 cycle, the early stages of that recovery, we saw a bottom in the markets in the fall of 2001, but then, we saw a new bottom in the markets in the fall of 2002. even though the timing was not in recession because it started to slow again. it was such a weak recovery in the early few years. i think we have to recognize that a weak recovery is on the table here, so technically, the recessions may end, but go ahead. that the weaker recovery is on the table, what kind of structural changes does this imply for the labor market, not only the u.s., but elsewhere? we are seeing millions of job losses.

lakshman: there is going to be a new new normal here, and wage growth may suffer as a result of that, to your earlier question. thatf the few truisms there is an economics is that recessions kill inflation. i know we have a lot of stimulus and a lot of money being poured into the economy around the eventually, that can be inflationary, but not anytime of broad inflation measures, so that includes wage inflation. of broad inflation measures,>> thank you so much fg us, as always. founder and coo of the economic cycle research institute, lakshman achuthan with us. we are just getting breaking news crossing the bloomberg when moremes to potential monetary policy tweaks out of the pboc and analysts saying

that they see the pboc could offer mlf later on in may according to a report in the securities journal. talke also expecting to with the facility on thursday of this week as well. coming up next, as we continue on china, just ahead, we get that domestic activity number. we will take a look at the data points later on this morning. this is bloomberg. ♪

haidi: china's april activity data is expected to show an economy gradually on the mend. being held back by weakness in global demand. let's get it over to beijing, where tom mackenzie is taking a look at what to expect. we are expecting this to be an investment driven recovery at least to begin with. what are we looking for in the numbers today? tom: there will be

a modest improvement across the board but also a reminder that we are unlikely to get this v-shaped recovery that some economists are touting at the early stages of this virus outbreak. in terms of how it breaks down, the survey expectations, industrial productions expect to increase 1.5% for the month of april after shrinking more than 1% in march. bloomberg economics, they actually think it will be stronger than that and they point to this back to work ratio of $.95 by mid april. they think that industrial production will look relatively healthy given all the pressure that it is under. in terms of retail sales, we are expecting contraction of 6%, so that compares to a drop of almost 16% back in march, so again, improving, but still at a much slower pace. fixed asset investment is expected to decline by 10%. not as severely as the march

number where we saw 60%, and we do expect the public sector to be doing the heavy lifting on that side rather than the private sector. the public sector, public push fort, will have a the infrastructure bond, special infrastructure bond at the local government level. that is funding investment. that is how we are expecting to break down. we get the official numbers expected at 10:00 a.m. local time. expecting that mild contraction in retail sales but can we anticipate a rebound in consumption? tom: policymakers have tried to shift their focus away from supporting the manufacturing sector. they really want to focus on the services sector. tourist attractions start to open up across mainland china as they tried to manage those parts of the economy. they have done things like issuing vouchers in certain

provinces to encourage people to get out and shop, but of course, there is still caution about the coronavirus, and of course, we have had these outbreaks in some of the northern parts of china as well as from these cities, which have been put on lockdown. there is a bit of anxiety around getting out and about and that is holding retail sales back, and also, we have the picture in terms of real income as these job losses continue to pilot. according to some estimates, you are looking at 130 million people unemployed or furloughed in china, so that is likely to weigh on real incomes. the other data set we expect is the unemployment rate. the official number is expected to actually improve and drop to 5.8% from 5.9%. the real rate is likely to be at least double that according to analysts.ng to this is reflected in consumer prices which have grown at a slower pace.

in terms of the policy response, that is where we shift our focus. we will be looking ahead to the national people's congress, the annual parliamentary session which gets underway for more concrete policy responses and the state media is going to be drumming up the idea that we will get more aggressive measures announced at the national people's congress to support consumption and other parts of the economy which continue to remain under pressure here. [no audio] sophie: thank you so much to tom mackenzie in beijing, our bloomberg markets coanchor. we will have all of -- have more on china plus the senior economist, james, joins us later. let's get a quick check of the latest business flash headlines now. toch ratings has won the ok

enter china's credit rating market and a further sign of beijing opening up its financial system. the pboc says the agency will be allowed to set up a unit on the mainland. the news comes as a record amount of bonds are offered with chinese companies and local governments raising funds in the virus led slowdown. with chinese boost banks meeting digital technology to keep business flowing. customers seeking help to build apps. 200% when china had its lockdown in april. worth 200ial is chinese banks as a result. tesla cutting costs for the second time this month. competition heats up again in the electric vehicle market. coming down by $3000. a 6% reduction.

the rebate is being removed by the government. it aims to keep tesla competitive. let's get a quick check in on how markets are shaping up this friday after a choppy week for asia equities. we do have u.s. futures just holding steady here while kiwi stocks are adding .2%. we will be looking at upside moves in sydney at the start of cash trade. nikkei futures in chicago moving to the downside. this as we anticipate more potential measures for support from governments around the world. we are going to see more coming online this friday. up next, japan has lifted its state of emergency for most of infection cases slow. we will have the latest, next. this is bloomberg. ♪ these days staying connected is more important than ever.

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sophie: -- karina: you are watching "daybreak asia." i am karina mitchell. the number of americans seeking unemployment was in the millions . initial claims totaled a fraction under 3,000,003 main islands, slightly below the previous week but not as few as economists had predicted. more than 36 million people have now lost their jobs since the virus shut down. french president emmanuel macron will summon drugmaker sanofi to talk next week after the company said it would prioritize the delivery.rus vaccine the ceo's suggestion that a

potential cure would go to america first provoked outrage in france with the elysees vaccine musting a be for "the common good." brazil has reported the biggest a daily jump in virus cases yet as the pandemic shows no signs of slowing down. a fraction under 14,000 new infections were recorded thursday, making brazil the new global hotspot. the country's total number of cases has more than doubled in the past two weeks to 202,000. officials say that does not fully reflect the situation in a nation of 210 million. an indian tycoon is yet another step closer to being forced back to india after a london court made further challenges to extradition almost impossible. two judges ruled this case had no issues of public interest, all but denying an appeal to the u.k.'s supreme court. he was arrested three years ago after 17 banks accused him of willfully developing -- defaulting on more than $1

billion of debt. 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. i am karina mitchell. this is bloomberg. sophie. sophie: japan has lifted its state of emergency as infection cases slow but some areas will keep their lockdown measures in place as the government plans a second extra budget to support the economy. let's get to yvonne man with the latest on this. japan returning to some sort of normalcy. sophie: that's right -- yvonne: that's right. the infection rates have come down for most of the country, so out of the 47 prefectures, 39 have lifted their state of emergencies. osaka,t include tokyo, hokkaido. shinzo abe saying there is still

a risk in these urban areas. tokyo had 30 new infections yesterday. he is still urging people to not let their guard down. avoid traveling to other parts of the country or not go to andy places like bars karaoke venues. they will evaluate next week if they can start releasing those remaining areas before that state of emergency ends on may 31. the government also said they will start working on a second extra budget, which includes cash handouts to help with rent, student aid, raising the maximum subsidies for furloughed workers to $140 a day, also helping businesses of all sizes by boosting loan facilities. ory are aiming for two weeks so. keep in mind the economy certainly facing a huge blow back from this to. they report first quarter gdp next week but the country likely will see the worst economic contraction since world war ii in the current quarter.

the fear is with this virus and the collapse of oil prices, this could all push into a deflationary hold. india virus cases continuing to surge despite the 50 day nationwide lockdown. could we say that the country has reached a peak? yvonne: the peak has yet to come according to some experts. they are saying we will not see a peak in cases until perhaps june or july. they are seeing cases at a record pace in the country. on sunday alone, they confirmed 44 hundred cases, the highest of fresh infections in just one day. the total is more than 78,000, which is still far less than what we are seeing in countries like the u.s. and europe. the administration is saying it could be much worse had it not been for this lockdown.

cases are doubling every 12 days versus the three days or four days when it first began, but we have been talking about the economic devastation rippling through this nation, forcing the government to start using restrictions as new cases climb. we are expecting lockdown curves to loosen further next week in many parts of the country, but we have heard of just a nightmare when it comes through hundreds of thousands of laborers who migrated from india's villages. they were left with no choice but to start walking home. testing has ramped up to 80,000 a day. thisy not be enough at point. man with the latest on the virus front in hong kong. an insurance giant has been really crunching the numbers on how much this pandemic will be

costing businesses across the world, and when it comes to insurance claims and losses paid about thethe two -- impact to the global industry. is important that lloyd's stands up to be counted for the customers in claims. we have released our loss estimate today but we also estimated what we think the cost of covid-19 is for the insurance industry globally and that is just nonlife insurance. breakdown really into about $100 billion that we think will be paid out over time. that is the immediate impact of the loss. it will be the impact of the recession we are about to move into, and then the inflationary impact and recession on claims in the future. at the same time, as you know, insurance has their own investments. value of those investments has fallen by $100 billion.

this could be 1800 billion dollar loss which financially, as you said in your introduction -- in 2017. >> will it be a big event? industry is backed by something like $2 trillion of regulatory capital. it should be able to withstand this pretty easily, no? >> without a doubt. the industry is solvent. substantially above its minimum requirements. if 100% is what you are required to hold, we are in excess of 200%. no doubting the industry's ability to pay the claims but it is a significant earnings event for everybody. into thealso broken up various different categories. for example, event cancellations, about one third of the property losses. >> yes, it is. it is. for us, 70%. up to june 30, the losses will

be around $4.3 billion or up to $4.3 billion. 70% in three categories. from the high-profile events of the olympics to more local events. there is also quite a lot of property coverage, so where businesses have bought, we are saying about 30% of our lost will come from those claims. where we backed banks and financial institutions, there will be a credit crash as well and some of the losses will come from that. >> you are also getting ready for the hurricane season. already almost beginning. what are you anticipating in terms of claims for the rest of the year and how that will impact the business given you have already sustained such losses? >> there is something very important about lloyd's and that is we recapitalize in real time, recognizing the impact of covid-19. we have spoken to the participating insurers in our market to recapitalize and

reload in advance of the north american hurricane season. our allowances are set a time from what we anticipate will be the last activity from hurricanes. you never quite know. we feel ok. we are solvent and we are able not only to fulfill our obligations of covid-19, but all the other losses that will occur . perhaps even u.s. hurricanes through the balance of 2020. >> how many quarters before your business gets back to something resembling some kind of normality? prudential saying forget about this quarter. asia is looking terrible. nobody is buying any products right now. for the marketplace, what do you see, how many quarters? >> it will be difficult through 2020. i agree with that it meant. it will be early 2021 by the time people have properly got their arms around the impact of the loss, but you know, i think the other thing, and it might sound a little in congress to say that -- in congress -- incon

gruous to say this, it will have an impact on price and prices will have to go up. looking now and looking forward, you know, difficult though this is to say, insurers do rebound quite quickly and we talked about big events in the past, and then you see a year or two or possibly three with very good results. difficult 2020. a bit challenging into early 2021, but all things being equal, the outlook thereafter should be positive. sophie: up next, looking for guidance. we asked morningstar about the prospects for japanese banks as they navigate the coronavirus pandemic, plus do not miss a big guest later. we will hear exclusively from philippines economic secretary charles, about the prospects amid the virus. this is bloomberg. ♪

sophie: japan's biggest banks are expected to project the highest -- in a decade when they released their annual forecast after the bell on friday. this time, more than ever, investors will be laser focused on guidance for the financial year if any are released at all. let's get more from michael. he is the senior equity analyst at morningstar. when it comes to credit across, you are marking an increase of 30 basis points.

what are the implications here for the bottom line at japan's megabanks? >> for the coming year, my forecast, since the middle of march, has been for the megabanks to get about cost of about 30 basis point loans in the year that has just started. line,ms of the bottom that has an effect of bringing them from 6%, 7%, to 4% or so, maybe 5% at best, so 30 basis points of loans does have a pretty strong effect, but it is not just a large number. lowre starting off with the credit cost because interest rates are so low from japan and the banks do not make much money on that income that they have really depended on very low credit costs in order to maintain profits, so we are having an uptick in moderate had a costs and they have

relatively substantial effect. inhie: moderate uptick effect, potentially substantially. does this mean the financial industry is actually in trouble? it does not mean that. for the japanese banks, comparing the situation as we see it in 2020, 2021, if we compare that to after the global financial crisis in 2009 and 2010, it is not nearly as bad. certainly, the economy, we have to worry about a severe recession. it is hard to compare those two. it depends on how the pandemic is going to play out. the banks, they are better capitalized. i would not say that the japanese banks are strongly capitalized as banks in some jurisdictions, but compared to where they were going into 2008, they are in a much better situation so i am not expecting, you know, for example, after

2008, we saw the banks raise new capital. we are not expecting that this time. what i do expect is that dividends, which have been going up, will be maintained. , and other the temporary suspension on dividends. i ampan, we have not expecting banks to maintain their dividends and just refrain from share buybacks of the time being. probably just because of how it would be perceived. share buybacks likely not to be conducted. they are saying it would do so flexibly. thanks in japan are operating in a low rate environment. they have already cut headcount. they have been reducing the number of branches as well just to manage costs. what other cost-cutting measures are you anticipating? will we see more targets being rolled out by the megabanks today? john: i do not think we will see

them today, but this does accelerate -- the megabanks have multi-year,on a gradual, but relatively hefty cost reduction program starting in 2017 or so. we are actually two years or three years into that, but in the context of japan, where a lot of the two employees are lifetime applies, it is difficult for them to cut costs for just a year. they are already well into it. some have been -- i think this provides yet another push. they wanted to cut costs but also cost-cutting is very much related to digitalization and changing the business branches. this crisis also highlights the degree. in early april, when a lot of japanese people started working

from home, then suddenly, many businesses were closed and people were told to try to avoid close conduct but all the bank branches work crowded because -- work crowded because so many people had nonurgent things they had to take care of, maybe an address change or something like that, and the japanese banks, you have to do it in the branch between 9:00 a.m., and 3:00 p.m., monday through friday. the bank branch employees were trying to avoid people. i think it just highlights everybody. this is all connected. they need to you better digitalize -- to better digitalize. it is related to cost-cutting and that means they do not need as many employees. we have reduced hiring. one of the other things from this crisis is there's a lot of talk of japan shifting the start of the school year from april to september. i think some of those long time practices of hiring new people,

you know, only on april 1, a lot of them will be more flexible. banksuld better allow the to not just reduce employees but be more flexible with their approach. during the lockdown japan has faced, what kind of drag will that be in wholesale business? as wel: one thing is that see in the banks elsewhere, in the very short term, large corporate do have liquidity needs. in the short term, actually, loans tend to grow faster. we saw that in 2009 as well. it is different for corporate's to be trying to borrow money in order to invest for a growing economy than it is to just trying to be securing funds to

ensure liquidity. you get a short-term boost, but after that, things slow down, and i think, certainly in the securities business as well, we saw they short-term -- the short-term boost. after that, all of these second and third order effects, and we have a very slow or declining economy. basically, it will be negative for business. very slow growth or negative growth for quite a while. sophie: thank you so much. we are going to get more on japanese bank earnings later when we are joined by brian waterhouse. this is bloomberg. ♪

sophie: a quick check of the latest business flash headlines. a group's decline in business value accelerated in the first quarter as its two main markets were ravaged by the coronavirus. a measure of future profitability of new policies sells 28% to 841 million u.s. dollars. more than the estimates of a 25% decline. the past two quarters have seen the only falls in new business value since they listed nine years ago. nissan is said to be considering

models at itsault underutilized plant in the u.k. components --uses any shift in european production would be part of wide-ranging talks between the two companies as we work on new strategies. delta airlines is to retire all its biggest plans by the end of the year and is warning of over staffing as the coronavirus cripples air travel. delta will stop using its boeing 777. on the 330 planes. australia -- due by the end of friday with administrators saying discussions with high-quality parties -- our business reporter joins us now.

who are among the possible buyers here? >> it is certainly a diverse field that virgin australia has drawn. we have potential at least. brookfield asset management. canadian investment group. we have an indian billionaire. we have a couple of private equity groups. even the queen of the state it may offer a guarantee. it has drawn 20 possible acquirers. that will be whittled down to serious bidders and put money on the table today. strong interest seems a bit surprising. >> it does. this is the industry perhaps hardest hit by the coronavirus.

virgin australia and others collapse under the weight of a near halt in passenger revenue. it is interesting that the collapsed asset, for seven straight years, even before the virus is drawing on its interest. if you look at australia, it is essentially -- it was a two player market. dominated by qantas and virgin, although it was still competing at least. if new earners can turn virgin , it is potentially going to be wiped out. it is possible you could make oasis thate australia is at the moment. sophie: given the way the

australian domestic market has been going, what is the -- >> the australian domestic market is a lucrative market, dominated by qantas, which has north of 80% -- two thirds of the capacity market share, and close torly notches up one billion australian dollars of profit every year and that is really without a strong competitor. if you look at the years ahead, the airline industry is coming under pressure internationally and the australian market is an isolated pocket of income. -- domestic market. we see plans underway between australia and new zealand, perhaps to open up a unilateral -- a bilateral travel corridor, so it is in some degree isolated of thee broader pains

international aviation industry to it has just two carriers tap net profit pool. that is the draw for all these potential buyers. you so much. breaking lines here. flagging -- u.s. fda alerting the public early data that suggests potential false negative results from the point-of-care test to diagnose the coronavirus. a look at what is going on in markets right now. we will take a look at what is going on as we are shaping up to the count down in tokyo and seoul. we have potentially upside for asian stocks and a choppy week. we are keeping an eye on trade figures and we are getting april producer prices coming in lower by 2.2% on a yearly basis, slowing even further than

expected for the month of april given the sluggish prices we have seen in the oil patch. that is what we are looking at going into the open in tokyo, seoul, and sydney. this is bloomberg. ♪ staying connected your way is easier than ever.

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>> welcome to daybreak: asia. australia, japan, and south korea have just opened for trade. asian stocks set to rise and indications china's recovery is picking up steam. beijing released sales numbers. approach 4.5 one

million. u.s. infections rise more than expected. address says a second wave is coming. singapore airlines says travel demand is plummeting. >> let's look at what is going on with the open in tokyo on the friday session. nikkei 225 adding 1.2% this morning. watching japanese megabanks. looking at the yen, a little change to the downside. lower on the weekend as we digest the latest data. future prices-- falling. and we are looking at the boj regular bond buying with treatment -- with three-month

treasury bills on top. australia and india tapping bond markets. the kospi gaining ground this morning up 1/10 of 1%. korean won holding steady against the greenback. because back gaining ground. line-up, we are keeping an eye on korean air. asx 200 adding one third of 1% at the open of cash trade in sydney. aussie dollar slightly stronger but still under 65. yield lower by one basis point. kb stock holding steady. kiwi dollar -- kiwi stock

holding steady. let's get more on the markets with mark who joins us in singapore. a lot of factors are affecting dollar end trading. trading. and yuan mark: we are beginning to see the option market taking more seriously that there could be downside risk so we are seeing a build up activity of people expecting it to be a higher rate during the year, particularly for the six months that goes into november. things like he does not want to talk to xi jinping, you see an increase in activity of hedging. we might see more in the coming days if tension increases

between the u.s. and china. we could see more action in the option space, more people hedging themselves against the risk that the yuan could weaken later in the year. we have chinese activity data for april later today. how will it affect asian stocks? mark: people are hoping we see more evidence that china is starting to come out of their lockdown. the numbers themselves are not expected to be very good. they will mostly be negative but they might not be as bad as forecasts. we are seeing anecdotal signs that china is starting to pick up in terms of internal travel and some other activities, which suggests they are slowly recovering. asian markets are hoping they will get a reinforcement that china is starting to have signs of a rebound.

that should be good for the rest of asia. reassurance that things can get back to some type of normal, even if it is a slow process. days, we have seen negative rates capture market attention, despite the fed pushing back. we have seen it play out in markets. what could it mean for the dollar? process,will be a slow knocking the dollar off the number one position will not happen overnight. but when you have all the major currencies with their rates at practically at or below zero, it becomes a more even gain. now the u.s. is expected to retain very low rates for a few years. that puts the dollar in a similar situation to the euro and yen. there is no great advantage to

holding the dollar over other currencies. people probably get used to using, they hold a bit of euros and yen. gold has shown itself to be a good hedge during this turbulence. it is recovering to about 1700. it does not yield anything. but neither are major currencies. bitcoin is about to getting -- bitcoin is getting a bit of traction. anything is possible here. people use an approach where they have more than one exposure. not just relying on the u.s. dollar. but the process will take a long time, but probably over the next couple of years as the u.s. deficit situation gets worse and people get used to a very large fiscal deficit in america. it will undermine the dollar over time and we will probably

have to get used to the fact that the dollar gradually erodes it's lead as the major currency and starts sharing space with other currencies, and possibly bitcoin as well. >> thank you so much, mark. you can follow more on this story and daytrading on a live blog. let's get the latest lines from china regarding the case counts. 11 neweporting asymptomatic virus cases as of may 14. casesreporting four new for chelan, the northeast province of china that borders north korea. thel ahead, we assess potential impacts on katie.com. the vice president joins us. first, the rising risk of u.s.-china tension.

this is bloomberg. ♪

>> you are watching bloomberg. nissan shares this morning are gaining ground up more than 5%. the carmaker has registered to sell ¥500 billion in corporate bonds in an attempt to turn around the fortune given the drop we have seen in the sales. financial results are due may 28. let's get to karina mitchell. >> global virus cases are approaching 4.5 million with deaths above 300,000. u.s. infections rose more than expected as the cdc issued guidelines for the reopening of the economy.

earlier guidance was held back by the trump administration for being restrictive. asian nations look to easing lockdowns. there are fears of a second wave. amanuel macron will summon drugmaker to talk next week after the company said they would prioritize the u.s. in vaccine deliveries. the ceo suggestion that a potential cure would go to america first outraged france. they insist a vaccine must be for the common good. the u.s. has helped fund the research. brazil reported the biggest daily jump in virus cases yet. the pandemic shows no signs of slowing. just under 14,000 new infections were recorded thursday, making brazil the new global hotspot. the total number of cases there has doubled in the last two weeks. 202,000. officials say it does not fully reflect the situation in a nation of 210 million people. tokyo and osaka will remain

under a state of emergency as liftsdelivers -- japan restrictions. coronavirus cases are declining but shinzo abe warns there is still a threat to major urban areas. the government plans to help business and consumers during the lockdown including help with rental payments. india faces their first annual economic contraction from 40 years as the virus ravages industries. more than 50 days into a lockdown the economy is weakening with infection rates continuing to climb. market readings are the lowest in the world. business activities are falling. government plans to lift restrictions are raising concerns over a new wave of infections. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

>> trump says he does not want to talk to his chinese counterpart right now and is talking -- as tensions rise. our next guest says there is a rising risk of the u.s. imposing more tariffs and putting a dealings out. a resurgence we are seeing between beijing and d.c., there is the question of what pressure that might add to either economy. we anticipate numbers from china later. let's look at the chart. activity data expected to show some improvement, particularly when it comes to the supply side and production. but recovery on the demand side is still flagging. what is your assessment of april? >> i think you just pointed out an interesting trend we see in

chinese monthly activity. but wither recovery demands, more gradual. we will see that again this month. your toon going back to your growth but retail sales and investments will see contraction the next few months. the headwind for growth recovery has shifted from productions caused by the shutdown earlier to demand that collapsed globally. a longer lasting impact on china, especially expert oriented manufacturing and services sectors. we might see a more profound drop in tours in outflows and in exports of goods. >> as china attempts to encourage more domestic demand and we await potential policy from the ftc, what is on your wish list? nbc should be

important to watch, especially on the stimulus side because china has seen more moderate in terms of stimulus. this market is also waiting for their congress to make announcement and -- on policy package. expect more fiscal stimulus coming through in the coming quarters to offset some external pressures with more domestic demand. i think there might be an announcement on infrastructure investments by expending local government special bond issuances and i am hopeful that will be more tax cuts coming through to help corporate cut through difficult times as well as cuts to help with domestic consumption. using.pboc has undergone there is some disappointment when they did not cut the mls rates thursday, allowing loans to mature.

what is your forecast for the type we see regarding potential cuts? >> i think the pboc is doing a graduating -- gradual using trend. they are asking for a room to ease further the next three at a 10ut they might be business point interval the next few months. i think they will conduct more credit easing in terms of accelerateoans and the pace of corporate and government bond issuances. this has been a good support for the yuan in medium-term. likely toard they are lower atne year rate the end of the year. issuance of debt

sales pick up, additional liquid easy -- additional liquidities as you pointed out. what is the impact on the bond market? we have seen yields pick up. you see further upside? is room forhere bond yields to go up because of the supply side. we will see more coming through, especially from local government bond issuance. it is replacing shadow banking financing in the past cycles. in terms of structural of credit supply we are seeing more bond issuance coming up. the banking sector was relatively stable and new bonds are picking up. i think we will see a continuation in the rest of the year. at the bigger picture

for china's economy as they attempt to restart activity. what impact do you see on gdp? will it have a rebound in the second half to offset the type of undermining of growth we have experienced? path largelye depends on the evolution of the pandemic. it seems to be stabilizing and if you countries but uncertain for others. -- stabilizing in a few countries but uncertain for others. gdp, i think we will in recovery to 1% growth second quarter. to 6% will pick up to 5% for longer term trend. >> thank you so much for joining

us. we will get more perspective on theese economy ahead with abv. .p next, singapore airlines we will have more details next. this is bloomberg. ♪

>> singapore airlines posted their biggest quarterly loss on record as the virus wipes out demand and is hedging losses with oil collapse. let's go to singapore. dyer numbers. -- dire numbers. >> it is true.

singapore air says there is no visibility or trajectory of the company and suggest maybe global demand will not return until 2025. a long way away and some analysts already say it is flights.there were not we have been stuck at home. losses.lion in sales dropped 22%. a net loss of $129 million. given the uncertainty, issued a saying we need to hold onto cash near-term. what also contributed to the awful numbers is the loss of over hedging. even so you from nonvisual expenditure, it was not enough

and the markets -- non-fuel expenditure and it was not enough. they dropped to the lowest in six years. they lost 30% from the day before. singapore airlines declared final dividends with no visibility on recovery. but how could recovery take shape as countries are still in lockdown? >> it is hard to say. we are uncertain with the new normal looks like and what flying would look like and what controls remain. return ofeter the travelers. international travel cannot restart with these conditions. singapore airlines does not have oromestic market like china australia. it is a small island. to goes 30 minutes by car from one end to the other.

so without international travel, it will suffer. and middle seats have to stay empty. maximum seat capacity would be below levels. it is not looking good for singapore airlines. they are bracing for a tough time ahead. >> alongside other carriers we have seen. management taking pay cuts. what other measures has singapore air taken to grapple with the situation? comfortingwhat is for them as they have a lifeline . we heard from the prime minister who said the government will do what ever they can to ensure they survive. they have the credit line with deep pockets. i think they are in a good position to ride through the

challenging times but they need to know how it will all work out. when we start traveling, how difficult it would be. we are already going through and safetyanges issues and that we have to look at health issues. there was a study recently suggesting 80% of travelers will wait six months before going on a plate -- on a flight. and people might just refrain. it will affect singapore airlines and all their peers. we are dealing with these lockdowns in various ways. thank you. let's get a check of the headlines. delta airlines set to retire

their biggest planes by the end of the year and warns there is huge over staffing about pilots. delta will stop using boeing 777's and have thousands more pilots than needed by the fourth quarter. they will rely on more efficient airbus ticket seats to serve as long-haul routes. tesla is cutting car prices in china for the second time this month. competition is heating up again in the market. they replied to the long-range version of the locally owned model three. down almost $3000. they aim to keep tesla competitive. more details about taiwan semiconductor plan to build a new chip plant in the u.s. location for the factory will be arizona. theast-moving talks with

trump administration expressed security concerns. they -- if tsmc will get financial help from washington. tokyo stocks have gained ground with the nikkei 225 holding above 20,000 points on the kospi resuming gains. moving to the upside in sydney. gaining more than 1% after a choppy week. key activity data from china and trade figures from india and indonesia and the onslaught of government debt sales continue with severalegion companies tapping bond markets. looking to the boj regular bond buying and the sale of a treasury bill on top. .lenty of debt sales online asian stocks in a second weekly

gain this morning. -- this is bloomberg. ♪

>> let's go to tokyo where we see calvi on the move. dropping as much as 13.4% this friday morning after forecasting an 11% year under your drop and full operating income. stock is basically giving back half the recovery from the march low. let's turn to oil. now on track for the third straight weekly advance as opec slams the brakes.

su keenan is on the line. there was an indication oil markets are reading. energyinternational agency put out an optimist the oilay they see market improving somewhat. i made a sharp drop in production. they say demand is stronger than expected on supply has been reined in by a brutal price crash. world oil production is on track for a historic decline, the lowest in nine years. opec and partners are cutting output like never before well the u.s. is forced to scale back exportsn, forcing opec of almost $6 million -- 6 million barrels. if you look at how west texas has traded, a five-week high and

the latest session. i 1.10%. at one point, -- it was at 10%. it closed up 9%. the saudi's were leading the way forward. at least some stability in oil price after a rocky ride. and a lot of growing opinion the negative price we saw for oil as the contract closed out as we approached the 20th of the month is unlikely to happen again. >> we are seeing divergence this morning and brent futures up 6/10 of a percent. try to sentiment on oil prices. trade sentiment on oil prices. >> a lot will point out the economic narrative is not solid

and that impairs any major price increase in the next couple months. the pointing out even report was a sharp shift in town from last month. agency chief the they pointed out that oil markets are in a difficult position after the price collapse of more than 50% since the virus shut down. onre is a lack of clarity the coordinated live down of shutdowns around the globe. sea are --s out at oil tankers out at sea are storing but the glut of supply is being eaten away by the latest numbers. latest. you for the up next, jd.com expected to

deliver growth despite the pandemic. a look ahead at the first quarter results. later,ig guest philistine -- philippine economic. this is bloomberg.

>> you are watching daybreak asia. stock in china might rise for the first time since the pandemic as the country looks to recover. a survey suggests the april industrial production might increase 1.5% compared to one year ago as return to hash workers returned to their jobs. -- as workers returned to their job. americans seeking unemployment benefits was in the millions for an eighth week as the economy stalls during the lockdown. initials claims totaled just under 3 million through may night, slightly below the week before. more than 36 million people have lost their jobs since the shut down in mid-march. the european union union is threatening to sue the u.k. for breaches.

the european commission says london failed to notify brussels about legislative changes restricting movement including making it harder for eu citizens to claim welfare payments. the u.k. has been given four months to respond before fines are imposed. the first typhoon of the season has hit the philippines under lockdown. ofre was a forced evacuation 200,000 people. the storm is cutting a path toward vanilla where of actuation -- manila where evacuation processes. dozens of churches are being open to accept people. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> jd.com do to report their recorder results in the next

didt says the coronavirus not have a negative impact short-term but expect 3% year on year revenue growth. comparing toms of some other e-commerce names benefiting from the pandemic, you do not see jd.com as having that advantage. [no audio] we will try to get back to vicki in a moment. a factory shining shipments in china when it comes to -- shutting shipments in china.

we will have a preview next. this is bloomberg. ♪

willt's get back to vicki -- vicky wu.

for jd.com, it was not really a stroke -- a step forward for the company. we expected the coronavirus to impact the margins and demand of key products like major appliances. as consumers by more online -- buy more online, it increased but we believe jd is performing. apparel is severely impacted. when it comes for a very small portion of jd. they have a higher market share show aucts and consumers strong demand for those categories during the pandemic. netstics network including -- including warehouse is jd helpinglated to

gain new users and attract returning users. compared to other platforms in 2020 growth first quarter we still expect approximately 13% revenue growth of jd. long-term we believe virus will accelerate the online shopping jd logistics proved capability during the pandemic helping to expand coverage in the future. do you expect a quick recovery in margins? side willeve margin decrease in the first and second

quarter two approximately 1% to 2% but we believe the margin in the second half of the year. comes to potential growth drivers, you have identified lower tier cities will be more enticing for jd.com and competitors. what will it mean for the cost of acquisition and potential growth? the increasing user base and lower tier cities for growth inant the next few years and we expect andtilize the sub branch the jd light version app.

four lower tier cities with lower pricing products. userstly most of the new come from those apps. logistic capability has given it an advantage. do you see more potential when it comes to the capacity for warehousing and delivery? aggressive in warehouse and logistic networks in the last three years. they are in tier three and the tier six cities are largely complete. so we believe in the future the capacity will increase, but not that aggressively. chinesee waiting on

retail sales data for april to come out later this morning. we expect a mild contraction but some improvement. we have seen the online segment growing given the type of behaviors that have been adopted on the mainland. what kind of market share do you see jd.com taking from the bricks and mortar space? in the b2c market jd might have 25% to 30% market share during the first quarter. we believe it is gaining in market share during the pandemic . we believe the online penetration rates will increase further. so we think the jd market share

for the whole retail market is continuing to increase. much.nk you so googles foreman chairman and ceo says china should have alerted people more quickly about the spread of the virus. he spoke with david rubenstein about this and how the tech sector is trying to limit virus fallout. >> when the outbreak occurred in china, they published a map of the china. peopleickly in america like the broda institution identified where the receptors were. with that information, you can go find the combination of proteins that will stop and start the process. the formed the basis of madrona vaccine and trials. -- in trials. the government did one thing

bardaast year, creating which is an advanced research agency for this. some philanthropists have worked hard to get things ready for a vaccine. the problem with vaccines is you and thenest the host see if they produce anything, then to see if they actually impact. you can speed up the process but not in decades. it normally takes five to 10 years to produce a vaccine. were trying to do it in 12 to 18 months. >> if someone came up with a vaccine, would we have enough manufacturing capability to produce it for everyone? is that realistic? >> most people who afflicted this conclude that eventually, yes, but not under two years. there is universal agreement the

vaccine should first be available to health care workers, those most at risk, and people in nursing homes. the places who are worse. people working in meatpacking facilities with a high probability of transmission. my guess is they will be a vaccine within 12 months or so and then a big fight over who gets it. ideas and projects to think about how to do that ethically. it is a problem we will face when we get there. right now we just have to work on the vaccine. vaccine does not mutate, the virus doesn't mutate much, there is hope that the vaccine will work. >> many company stocks have gone up who are thought to be producing the vaccine. but who will own it? the company that helped produce it? the u.s. government? the world? >> i think most people believe the companies will essentially

run nonprofits at first. that's the presumption. i imagine the government could propertyw to force the be published. it is likely the disease is not going to go away. it might allow the firms to own an election will property because you are going to want to be vaccinated in the future. it is not obvious to me that the government should take the vaccine from the event or -- from the inventor in a brute way. -- i want to emphasize the scenario you describe is more than 18 months away. if we cannot get things restarted, there is an enormous amount of pain in our society. bankruptcy, job loss, permanent closure of restaurants. the damage that has been done to the travel industry is horrendous. it will take a decade to recover

if we do not do this carefully. >> do you fall to the chinese and anything related to technology? when they discovered they had the problem, should they have alerted more people to it? or do you think they did what they could do? >> a lot of fault is going around everywhere. chinese should have alerted people more quickly. they eventually did. let me put it this way. task. simple if something is doubling every three days, how do you get ahead of it? if you look at the countries that have done well compared to those in trouble, they all had one point. they acted extremely quickly when they saw the wave coming. america did not. china did after a delay. but the delay hurt. that was eric schmidt.

[no audio] i think it varies by industry. clearly there are some industries at the very center of this challenge and they are struggling with their revenues going to almost zero in 60 days. , you have biofarma working on therapeutics and vaccines that need infrastructure. you have testing companies where they are investing and supporting broad-based testing. other companies who are not asected as directly hospitality and airlines who are looking at how to modernize

infrastructure now and get rid of technical debt built up over the years in order to be prepared for a possible reemergence in the fall or for the next crisis. we want to be better prepared next time. i think we all know we can probably modernize our infrastructure. in,rom the outside looking you can see why it would be well positioned to help the push to work from home. aboutk there is confusion where are the secular tailwinds and cyclical headwinds? is there a secular tailwind right now for software? how do we understand what is going on in the business charts? >> i think there is a secular

tailwind to our security portfolio comprised of a significant amount of software. capabilitiestion with the webex platform exceeding well over 500 million attendees last month, 25 billion minutes. software in general is a tailwind. inthe endless conference 2017 we stated an objective to have our software be 30% of the revenue by the end of fy 2020 and have software and services be at 50%. we are on track to meet that. those are positive. i think the transition to a cloud will continue to provide an opportunity to help customers rearchitect infrastructure. 56 -- you havey 5g, wi-fi six.

ofs pandemic has reminded us the importance of technology infrastructure and everything we goes largely unnoticed because it works. i think it's a great testimony to what is being done. lot tohave done a promise your workforce they will not lose their jobs. you are sitting on a lot of cash. can you talk about if there is a social stigma attached to deploying the cash in an environment like this? do you feel a stigma at a time like this? i watch the news and there is clearly a backlash on buybacks right now. there are credible uses of capital can make sense

right now. m&a activity is fine as long as it is not predatory. but if you're companies are struggling through, they might welcome the ability for someone to come in and acquire them. us withanies like strong balance sheets if we continue to pay dividends to investors, we will look at those things in a balanced way. cisco chairman and ceo, chuck robbins. here are lines from ps and see confirming they are building a multibillion dollar plant in arizona. will be key. later we will look at a check of .he global tech supply chain

a w shaped recovery is likely as chinese manufacturing gets back to full capacity. a broader slow down in tech spending has been a drag. we hope to learn more about ambition for foxconn to diversify outside china and plan to invest in automation to cut costs and improve efficiency. as we continue to look at the global supply chain we will have more analysis on the .conomy in asia the philippines economic secretary will join us later on. our coverage will continue as we look to the start of trading in hong kong. stay with us. this is bloomberg. china open is almost upon us. ♪

♪ >> it is not :00 a.m. in beijing, shanghai, and singapore. welcome to bloomberg markets "china open." i'm selina wang. asian stocks move higher on expectations the china recoveries picking up steam. beijing releases numbers in the next hour. global coronavirus cases approach 4.5 million with deaths above 300000 and u.s.