i good morning from london, am nejra cehic. topal coronavirus deaths 300,000. the cdc publishes guidelines for u.s. businesses. the asian development bank says it could cost a trillion dollars. china's industrial output rises for the first time since the outbreak but retail sales shrink further amid political tension.

and president trump does not want to talk to president xi. the highestcords number of deaths in a week. and we have the gdp data from germany. welcome to daybreak europe and welcome to friday after a rocky week in the market. on thee bit of green screen coming through from asia. yesterday there was a rally on wall street. initially, u.s. stocks dropped after jobless claims again but we got a rally. making a comeback. the gap between tech stocks and banks getting to an extreme level. .utures, a mix for europe, right on the screen yesterday. european futures up 1% ahead of the german gdp data looking to post the worst contraction for germany since 2009.

10 year yield dropping about eight basis points through the week. the dollar heads for a weekly aim speaking to risk off as well and oil heading for a third weekly gain as well. some science the markets are slowly rebalancing. kick off the latest development of the coronavirus with the global death toll exceeding 300,000. cases fueled alarm among officials over a second wave in asia. have been., states issued of initial guidance on how to reopen restaurants, bars, and businesses. and recorder and joins us. -- annmarie hordern joins us. >> the guidelines for the political football. the cdc wanted to release something but the white house said the guidelines were too prescriptive.

the cdc well now release guidelines for states going through phased reopening. for washingactices hands and how to spot potential symptoms. for bars and restaurants, parties size. limiting routes to heavy transmission areas. the kinds of things we have been talking about for the last few weeks. this is coming into play for new york. in new york state, five of the 10 regions will begin reopening. not so quick for new york city, long island, and western new york. the epicenter come at the tri-state area will remain shut for the foreseeable future. one thing that might get traders excited is the new york stock exchange will reopen doors may 26 with a small contingent of brokers with masks. fair enough, we cling to

any signs of life at the end of the tunnel. speaking of the tunnel that still seems pretty long, if we turn to meet u.s.-china relations, this could be playing into the risk off sentiment. tough rhetoric from president trump. does it look like rhetoric or are the relations souring? a bombshell in beijing. the president of the united states saying he does not want to talk to his chinese counterpart. he also said the u.s. would save some $500 million if it cut off ties with china. it is just -- it is ever more clear that the relationship is 180 from and what a january. relationship is on thin ice and what a 180 from january.

visas are an issue. cyberspace. journalists being expelled. the status of taiwan. all of these issues yang resurrect dead and get ready, this is going to be the theme from now until november. it is not just president trump blaming china for the virus but we are also hearing from joe biden who is also making noise about china. going into november, china and covid will dominate the election. nejra: thank you so much, annmarie hordern. let us get to the first word news. wti prices surge to the highest in five weeks. according to petra logistics, the cartel cut exports i nearly $6 million -- 6 million barrels a day. the latest jobless claims numbers for the u.s. were

error.d by a clerical 300,000 filings were incorrectly reported. that error likely distorted the national figure pushing the eight week total to over 36 million. boughteral reserve board etf's on its first day of intervention in the corporate debt market. it also showed total assets rose to a new record of $6.93 trillion. france is set to unveil aid packages for the auto and aeronautics industries. 18 billion euros has been promised for the tour iism sector. and klm as well as air france have obtained billions of euros. 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. coming up, the coronavirus outbreak could cost the global economy nearly $9 trillion according to the asian development bank. we discuss the fallout of the pandemic next. this is bloomberg. ♪

nejra: this is bloomberg daybreak europe, i am nejra cehic in london. risk radar. green on the screen for asia. u.s. futures edging into the green after a rally at the end of the session yesterday mainly led by banks. the 10 year yield is steady. dollar heading for a weekly gain and oil heading for a third weekly gain as well.

overall, a painfully -- a pay -- a painful week for global equities. the asian development bank adds that it depends on how long the pandemic will last. a shorter containment period coupled with strong policy measures could impact -- could limit the impact. the latest jobless claims report from the u.s. has been marred by inaccuracy. connecticut incorrectly recorded unemployment claims, 10 times higher than the correct number bringing significant distortion to the latest report that is take on elevated importance as the pandemic upends the labor market. the gdp -- republicans say the fed chairman jerome powell backs further action to prop up the ailing u.s. economy. more is needed immediately.

for the hour is georgina taylor from invesco asset management. thank you for joining. i want to talk about the fact that we saw quite a big recovery in bank stocks yesterday which led the s&p 500 higher. thanks along with energy companies have been the most enough industries during the crisis while tech has been outperforming. what does that disparity between tech and banks tell you about the recovery of u.s. equities right now? georgina: good morning and thank you for having me. i think the disparity has been so extreme for such a long period of time, i think investors have been searching for quality and how you is a big that challenge in the current currency market. the recent performance of thanks stocks, and energy is almost a positioning affect where u.s.

had a lot of people hiding in the technology stocks with some visibility on cash flows but environment, it does feel as though technology is an area you can take a fundamental veto. where it is interesting if we think about bank stocks in particular is during two of the previous crises, banks were at the epicenter of that and now there is a huge crisis in the current environment. perhaps though it is a reminder that banks are not the epicenter this time around. what has been dominating markets long before this crisis hit -- maybe there are signs that can try to reverse or become less extreme going forward. nejra: interesting. so come it has obviously been a

tumultuous time for all of us. as you say here now in may and we have seen a significant recovery in global equities from the march 23 low and how tilted toward risk is your portfolio? to be honest, we are fairly neutral on risk. we have the flexibility to invest in all asset types so we are lucky in one aspect that we are not reliant on equity markets at the moment. that there have been a big recovery in risk assets and i think it is because initially we all wanted to put the coronavirus risk on a very limited timescale. q2s was about end of q1 into and it would be a short-term shock to economic growth. of the commentary this week has alluded to and from policymakers as well, it

may go longer than we expect. when we do our valuation work on equity markets, we feel there is another potential downturn to calm, to equity market -- to come, to equity markets in particular. what has not been priced in is how slow the recovery could be and what that means for equity markets is it will take quite a long time to get back to the earnings levels of 20. and the complication of that is the valuation model has longer input and that will dominate and it will bee think harder to find what the valuation is if you think the recovery will be quite complicated. nejra: if it is hard to find where the value is, what are you doing around u.s. equities versus u.s. credit right now? georgina: i think within the space, there are some

relative value opportunities potentially. we may not want to add a huge amount of equity risk but favoring the larger cap stocks in the u.s. relative to the small-cap is something we think takes a lot of sense. and in a way, the small-cap stocks are still quite expensive to us and also there is quite a lot of credit risk embedded in capital arena from the balance sheet perspective. as this carries on, that may become more of a focus. even though we do not want to add a lot of equity exposure to the portfolio, favoring large caps over small caps make sense. in terms of credit space, we do want some exposure. maybe more so outside of the u.s. from a policy perspective. i think having some investment grade exposure makes a little bit of sense for the portfolio

space.t our global nejra: i have heard that from quite a few people. interesting. regina taylor from invesco asset management stays with us. in taiwan, a semiconductor plans to spend $12 billion building a chip plant in arizona. tsmc plans to complete construction of the factory by 2024. it makes semiconductors for names like huawei and apple. any shift in european production will be part of broader discussion between the two companies. may come when nissan unveils its three-year plan on may 28. renault has also promised to share cost cuts this month. a vaccine from santa fe.

the seduction from the pharmaceutical companies chief executive has sparked outrage and france. the french president plans to meet with company officials next week. that is your bloomberg business flash. google's former chairman eric schmidt says china should have alerted people more quickly about the spread of the virus. he spoke with david rubenstein on leadership live about that and how the text or is hoping to limit fallout. >> you have to solve both problems. the health care problem. and the health care workers in our country have done a fantastic job. as weer, this all started worried that hospitals would be overwhelmed. we have managed to abide that through extraordinary work from state, federal, and local levels as well as a hospitals. you also have to come up with an

economic solution. the level of unemployment that we now have is on the order of and approaching that of the depression. we need that perio to be as short as possible and the treasury has generally done a good job of getting money into the system. i worry that a bankruptcy problem. eventually come you can float the businesses long enough but if there is no demand, they cannot be in business and those are permanent job losses. when i look at the actions of people, my primary cynicism is this bead with which action occurred. if you think about it, much of the deaths could have been avoided now had we acted on months earlier in every decision. and that is a lesson from the pandemic. david: you are a major philanthropist. how have you changed your philanthropy as a result of this crisis? >> we decided to work on this. was it became clear this

not a one or two months scenario, we formed a special task force to look at things that could act quickly. we have now given tens of millions of dollars in that number with that number increasing over time. the initial focus was on things that could happen quickly. ventilator training was the most interesting. we thought we would need an infinite number of ventilators and nobody knew how to operate them. we funded a number of projects to train people on ventilators. david: you have also been a venture investor. you stepped up venture investing at google. what are you saying to someone that might be a venture investor who might want to follow eric schmidt? >> venture investing is a long game and it is based on key entrepreneurs. venture can be understood as find the entrepreneur and give

them some money and hope and pray and help them. i don't think that is any different now than it was 30 or 40 years ago when i was in a small startup. what i would say today is that and i always believed that biology would be an enormous issue. pandemic has emphasized the incredible scale of businesses that can be built now. the most obvious ones are in telehealth. in two months, you have changed the economics of health care. in two months you have reimbursements for telehealth which allows you to think about connected devices. wearing a smart watch that is helping monitor your health. it calls you and says, it you need to have a video conference with a doctor. why is the system not triaging patients in?

do an analysis again with my pin the -- permission and say, he looks pretty good in them we will decide what health care he needs to be routed to -- whether it is urgent or not. that would make my time more efficient as well. lived much ofe your career in the silicon valley area. how has selleck changed as a result of this -- how has silicon valley changed as a result of this? >> during my career, silicon valley has changed dramatically. tech companies have institutions of governance and they have embedded competitors. opponents of political strategies. i don't think that is going to change. they are clearly going to be bigger. and the simple answer there is because they are doing more fundamental work. google's former

chairman and ceo eric schmidt. coming up, china's industrial output increases for the first but since the outbreak retail sales remain weak as the country tries to recover from the economic impact of the pandemic. we will discuss this next. this is bloomberg. ♪

nejra: this is bloomberg daybreak europe. here is what you should be watching today. the third round of brexit talks between the u.k. and the eu are due to come to a close today. euro group finance ministers are meeting to review the progress on the safety nets. we will get a read on how hedge funds are navigating markets

during the pandemic when we get filings later. and we will be keeping an eye out for u.s. retail sales and industrial production data. china's industrial output rose in april for the first time since the outbreak but economists cautioned it would the slow. -- it would be slow. 7.5% more thanll the projected drop of 6%. georgina taylor from invesco asset management is still with us. we don't want to necessarily focus on one data point but does this suggest to you that the recovery in china is much more supply then demand led and if so, what are the implications of that? georgina: the difference between the retail side and the industrial side is interesting. discussions of the mathematical affect of switching

things back on and i do wonder with the industrial production data if we are seeing the effect of factories coming back on stream, production beginning again which is clearly a positive. but the demand side may take a little bit longer. that feeds into earlier comments about how complicated and slightly disrupted the economic recovery may be because it is going to be hard to get all of this all aligned and for everything to recover at the same pace. it also feeds into the policy response that is required from here and that we are not done yet on that. nejra: all right. you do have an idea in your portfolio to deal with the dollar versus the renminbi. we observed yesterday how steady the yuan had been. i think what is interesting for currencies is

cross emerging markets, there seems to be a renewed not enthusiasm but acceptance that perhaps a weaker currency has to be part of the solution. our view on the chinese currency innot one that expects a cap the currency but a steady depreciation -- appreciation of the currency can be helpful as part of the policy toolkit and is part of the economic recovery ahead. i think for us it is really taking the longer-term view of where we believe the fair value, the level of the renminbi will be on a longer-term basis. and it would be helpful from a policy perspective in terms of the global recovery. interesting. georgina taylor from invesco asset management stays with us. we have much more to discuss including global bankers pushing back on negative rates.

this is bloomberg. ♪

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good morning from london. this is bloomberg daybreak -- europe. global coronavirus deaths top 300,000. the cdc publishes guidelines for u.s. businesses. the asian development bank says the global cost of the pandemic could top --. sales in china shrink further amid political tension

president trump says he does not want to talk to the chinese president. italy reports the most daily fatalities in a week as a government prepares to ease the locked down further. we have the gdp from germany. welcome to daybreak gear. it has been a rough week for stocks heading for a weekly loss. looks like we could have some risk on coming through this friday. u.s. future is not giving us a lot of direction after we saw a rally late in the session yesterday led by banks. starts taking an initial hedge. european futures firmly in the green though we look ahead to what could be the worst reported gdp data from germany since 2009. the 10 year yield is fairly steady though it has dropped some eight basis points this week. it also speaks to the risk off tone this week. on the front, oil

foot and heading for a third weekly gain. a lot to digest. the data out of china raises the question as to whether the recovery is more supply then demand led and what that means for global assets. let us kick off at the latest developments. exceedingth toll 300,000. south korea and china's northeast are back on the radar as rising cases fuel alarm among officials for a second wave in asia. states have been issued in the u.s. official guidance on how to reopen restaurants and workplaces. jerome powell latest dismissal of negative interest rates. more dragged into the policy a midst of the crisis. bothw bailey and kuroda weighed in on thursday saying they were focused on bond purchases and on lending programs to keep credit flowing.

the comments are something of a warning to investors who continue to wager the fed will cut below zero by next year. andrew bailey spoke at the global boardroom digital conference on thursday and here is what he had to say about rates. not to ruleays wise anything out forever. of other central banks are in the same place. it is not something we are currently planning for or contemplating. nejra: georgina taylor from invesco asset management is ill with us. do you have a realistic expectation we could see negative rates in the u.s. or perhaps in the u.k. in 2021? georgina: i think it should not be taken off the table. it is interesting that even though polysemy there's -- policymakers are issuing

against that,ngs they are leaving the door open and that is because we live in unprecedented times and we are still being tested for the policy measures we need to stimulate the economy. i think that lower bound has been removed to a certain extent and so we certainly would not rule it out. you would not rule it out but at the same time a lot of people say -- a more straightforward strategy is to focus on the fact that most central banks are preferring qe to the prospect of negative rates. you shift your strategy around that and perhaps buy. is that the strategy you are taking in the u.s.? talk to me about your treasury exposure? i know you take a selective of approach to credit but what about treasury? sideina: on the treasury's

, -- on the treasury's side, there was not a consensus for the continued purchase of bonds. the curve has steepened in the u.s.. things remain anchored around policy discussion. short-term futures rates remaining low. even though we have had a move still thinks, we there is further to go. curve is part of the solution as well. we are very happy still buying treasury further out along the curve. 10, 20 year point. but also relative to elsewhere saying the convergence trade across a fixed income market is something that can carry on. the u.s. versus places like europe, quite interesting.

looking further afield in australia where it looks like a good opportunity in fixed income. we are happy to have that exposure in our portfolio. nejra: i find that interesting that you are expecting a flatter you as yield curve because it has become quite a consensus trade on wall street to talk about the steepening of the u.s. curve. the front end the yen and kurt prospect of all of that issuance at the longer and means a lot of people are expecting a steeper curve. if you expected to be flat or is it because you expect the fed to implement yield curve control? maybe not outright. but also looking at where capital will be parked if you like and also the treasury market still looks fairly unattractive from both a yield an dollar perspective. i think it is a whole combination of what we see on

the policy front, where we see theher intervention and behavior of the investors still see opportunity relative to other areas around the world. i think for us, it is a combination. but also, it is the inflation versus deflation debate. has come with inflation pressure coming through coupled with issuance. at the moment, we think it is the demand side of the story. the policy stance will dominate further down the line. nejra: interesting stuff. regina taylor from invesco asset management stays with us. president.th a fed currently an economics professor at the university of

rochester. let us listen. powell's assessment of the economy is exactly right, unfortunately. we know the numbers from april. we know the labor report when we get it from may will likely look even grimmer. we know the numbers. we know there are risks to the downside as we move forward about how fast the recovery will be. i agree with the chairman's assessment. -- where my call was pointed that was ok, we have these situations where even the mobile outlook looks bad and the downside outlook looks worse. why not roll out you have available right now? and that would look like trying to flatten the yield curve down close to zero or even and i have pushed for this and a harvard

also, try to explore ways to push interest rates along the curve further below zero. is there aious -- general perception in the market that to a certain extent the fed is already doing that? the idea of going to zero whether you actually do that including taking measures that the fed has already put out there, the effect seems it could be the same. what i am saying is does it matter if we go to zero on a nominal basis or if we just continue doing what the fed has been doing so far? i thinknk the fed -- this is why some of us have been calling for the fed exploring negative rates. if you treat zero as the lower boundary, there is not room to do more. the game plan with balance sheet

policy is to pull -- push down on yields. there is not a lot of room there unless you take seriously going negative with yields. again, the situation is -- i the federal reserve is a policy maker in 2009 and i thought the situation was dire then. this is much worse. i think it calls for the fed to be doing what it can with the tools it has now and saying openly, we are exploring ways to make those tools more powerful by being willing to push interest rates negative and maybe even deeply negative. >> an unprecedented crisis calls for an unprecedented response. explain how lower or negative rates can help the central bank that more people back to work?

k. the challenge is what is happening in japan is shallow negative rates. they have gone a little below zero. i think the situation in europe and japan is better than it would've been in the absence of them doing that. but it really means you have to be thinking about ways to go even more deeply negative. trying to decouple the interest banks are earning on reserves. why is this helpful? interest in paying banks, that means they're willing to bid down the yields of security in the market place like mortgage-backed securities

for example. that means they would be willing othere loans on cars and kinds of secured lending at lower interest rates. this will stimulate spending. that was the former minneapolis fed president. let us get some numbers from richemont. a red headline. the full-year operating profit year comingyear on in at 1.52 billion euros. it is also is also seeking brave new economic consequences -- 12-36 months seeking an 800 million euro impact on full-year sales. a 450 million euro impact on ebit. the subdued consumer sentiment is to weigh on results but it is impossible to make a meaningful

prediction at this time. italy sees an increase in new coronavirus cases as the government prepares to further ease a nationwide lock down. we will discuss that next. this is bloomberg. ♪

nejra: this is bloomberg daybreak europe. at us take a look at the risk radar. green on the screen in asia. we saw a rally toward the end of the session on wall street yesterday. future is not giving us a lot of direction. futures are positioned positively.

the 10 year yield is fairly steady. look at the bloomberg dollar index, a weekly gain speaking to the risk off sentiment on the week with global equities heading for a loss. oil heading for a third weekly gain, green on the screen. first word news. the pandemic is reviving the worst case scenario for the u.s.-china relationship as president trump says he does not want to speak to his counterpart saying the u.s. would save $500 billion if it cut off ties with china. in the u.s., new guidance from the centers for disease control and prevention on how to reopen bars, restaurants, and work laces including social drive-through and delivery. an earlier version of the guidance was held back by the white house. surge to the highest in five weeks as opec scales

back crude shipments. up byrtel cut exports nearly 6 million barrels per day for the first two weeks of may. the international energy agency says outlook is improving. -- output is improving. eight is set to unveil packages to the auto and the airline industry. france is moving to release its lockdown. renault and air france as well as klm have already obtained guarantees. 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. let us turn to europe. italy registered an increase of new coronavirus cases and the most daily fatalities in seven days yesterday as a government or paris to further ease a nationwide lock down with shops and restaurants set to reopen on a regional basis. the bundesbank is talking to

german authorities amid a standoff over a controversial court ruling. according to the executive board member. the standard has given the strongest signal that the ecb does not plan to engage with the german court. georgina taylor from invesco asset management is still with us. when i look through your portfolio, i see that you do have a short on european equities. what is the reasoning behind that? have recently did you put that on? georgina: from the valuation perspective and the conversation of earnings recovery means europe still looks pretty expensive. that coupled with the policy paralysis, a lot of easing of policies happened before this crisis -- what can happen next? including some legal aspects. it still looks quite vulnerable. and from the growth perspective,

we think that will be quite muted in europe as some of the policy stimulus fails to push through. one part that could be helpful is we believe the euro will remain weak. europelective areas in -- that could be useful. on balance though, it still looks expensive. nejra: interesting. on the euro, i would like to get your take on how much weaker you do see the euro from here because i was thinking -- i was speaking with david bloom from hsbc and from their perspective, they believe investors do not seem to be pricing in the risk of a euro breakup, for example. it is not so much euro breakup. the resolve is as strong as ever which means it could dampen

growth in the longer term as they navigate bringing the region together given the disparity from the coronavirus linked cases versus economic recovery. breakupit is not purely but it is ahead and that is a risk for the region. we still think the dollar could weaken quite a bit further. and also within europe, things the poland versus europe or japanese yen versus the euro -- all of those could have at least another 10% plus fall from here. nejra: and i notice as well that you prefer the yen to the dollar because you believe the japanese economy is in a position to cope with the stronger yen versus the increasing deficit of the u.s. dollar. you are short equities. you think the euro could weaken

from here. what about in the fixed income space, are there good opportunities there? harder given the moves we have had a inflation expectations will continue to fall in europe. european fixed income space becomes an anchor for relative value opportunities within fixed income. versus europe would be something we could focus on just because of how far the moves in european rates has already gone -- have already gone. less opportunity there in the fixed income market. really great to have you with us today. georgina taylor, invesco asset management. germany's economy could see its 2009.drop in gdp since we look ahead to today's data next, this is bloomberg. ♪

>> the times are turbulent and they are complicated. >> everyone wants to know how quick the recovery well,. >> there is still a lot of uncertainty so we remain cautious. too early to is call an end to the globalized world. >> we see a u-shaped scenario. the yearon euros until and. -- year end. >> we do not know exactly how the restart and the unraveling

of the current lockdowns of across the world are going to work. people,lways say to my the night is darkest before dawn so think about the future about what needs to be done now. nejra: that was a number of german company executives speaking to bloomberg about their outlook. german gdp and matt miller is in berlin. great to have you with us. what should we be focused on beyond that headline? >> think we should be focusing on where the drops are coming from. a substantialad shortfall in tax revenue in the first quarter according to finance minister olaf schulz yesterday. the government expects a drop of about 100 billion euros in tax revenue for the full year. a little less than 100 billion

euros come a little more than $100 billion but the bottom line is germany will have to start are weighing a lot more than it may feel comfortable with. bloomberg intelligence things that will be possible and no problem. germany will have to borrow about 250 billion euros this year but overall come it is mobilizing with loan guarantees. 1.2 trillion to get through the crisis. bloomberg intelligence thanks that will work just fine. drope looking for a job -- in gdp of 2.9% for the first order but then a rebound that should help germany get its debt to gdp ratio from 60% up to 70% and back down to 60% in the next couple of years. matt miller from berlin, thank you and we will see you in a moment on european open. and that is it for bloomberg

daybreak europe. gdp futures up 1.2%. u.s. futures flat after yesterday's rally. this is bloomberg. ♪ these days staying connected is more important than ever.

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anna: morning, and welcome to "bloomberg markets," the european open. i'm anna edwards alongside matt miller. anna: happy friday. today, the markets say take it slow. stocks in crude boosts even as global data continues to be downbeat. german gdp do in a couple of hours. the cash trade is in 60 minutes. here are yourin