>> good morning from london. i'm nejra cehic with manus cranny live from dubai. this is "bloomberg daybreak: europe." china sentro suggest airline passengers to spread coronavirus. reports say there will be no new orders from huawei amid restrictions. fed chair jay powell says economic recovery could take until late 2021.

the boe says it is examining negative rates. emirates is considering slashing around 30,000 jobs, and bloomberg exclusive. we speak with ryanair ceo as he wraps up a legal battle with rivals. welcome to "bloomberg daybreak: europe." we've got those comments from jay powell. japan is in recession, goldman says india could experience its deepest recession ever and we have rising u.s.-china trade tensions. we continue to get breaking news through, lines coming through from ryanair which i'm looking for now to bring you. it sees a loss of over 200 million euros in the first quarter. a smaller loss in the second quarter. that's the red headline. it cannot provide full-year 2021 guidance at this time. in terms of what else we are looking at, it is average weekly cash burn is at 60 million

euros, down from about 200 euros. that looks to be an improvement. ryan are expected to be at least october for the next 200 delivery, and expects to carry less than 80 million passengers in full-year 2021. those are the headlines coming to her from ryanair. it sees a loss of over 200 million euros in the quarter. we will be having a conversation with ryanair later in the show. to the markets. we saw a weekly loss for equities last week but we are seeing green on the screen today in terms of asia. futures, bothean higher by 1%. in terms of the 10 year yield, that is dead steady, sitting around a 64 handle. a touch of dollar weakness and it is commodity currencies that are outperforming, particularly the aussie dollar off of what is happening in oil. we've got the wti june fund track expiring tomorrow but

above $30 a barrel on output cuts. we've seen a recovery. how much longer can that continue? a little bit of a drawdown in tockpiles has given a lift crude. semiconductor has stopped taking orders from huawei after the trump administration tightened rules. donald trump's team has stepped up its pandemic finger-pointing campaign. airlinevarro suggested passengers were sent to spread covid-19 worldwide. >> behind the world of the shield of the world health organization, hid the virus and sent hundreds of thousands of chinese around the world to seed that. nejra: tom mackenzie joins us now. great to have you with us.

talk to us about navarro's claims about china seating the virus. ding the virus, and we have an update on the restrictions of huawei. is a tradevarro advisor to the trump administration, a man who has built his career on bashing china. uber the number hock -- hawk in the administration. this is a pretty incendiary accusation for him, the china "seeded" the virus. there is evidence that in the early stages of the outbreak, china covered up the disease. what we don't have publicly is any evidence that this is correct, the china did seed this virus, as peter navarro said. contextd be seen in the of this daily drumbeat against china ahead of the number --

november election, and peter navarro himself said the election would be a referendum on china. nejra: speaking of pressure come how much international pressure is china likely to come under when the who's governing body meets today? are expecting the eu and australia to push china for an investigation. they want china to agree to an investigation into the origins of the virus. the u.s., meanwhile, will push for taiwan to attend the meeting as an observer, a demand that has riled china, which sees it as a separate province. that is a politically sensitive issue. in terms of whether china will agree to the investigation, we've heard the state media, "the global times," saying they might, but it would have to be led by the who and have to be "fair and scientific." we expect china to push back pretty hard

on the demands from australia, the eu, and the u.s. they certainly have the financial muscle to pressure a large number of attendees today but we will see how much pressure they will come under. nejra: and tom, let's go back to huawei for a second in terms of how consequential it is. we certainly have been talking a lot about the impact on tsmc. is that what we should focus on? tom: it is the whole space. it is the whole chip space we can be looking at in the supply chain, the major manufacturers like taiwan tsmc. rights to focus on that company but it is all about the geopolitics between beijing and washington, as well. there are a number of dynamics at play. us is a major body blow for huawei. we were speaking to a beijing-based group that said huawei could lose 90% of revenues as a result of this because what the commerce department is saying they will

require any chipmaker around the world that uses u.s. technology, most do, to get a license before they can sell any of their .roducts to huawei last year, the u.s. imposed restrictions on u.s. company selling some of their kits to huawei, but they managed to continue supplying some of that technology to the chinese company. this latest move definitely impacts tsmc, because wally is very reliable --huawei is reliant on that company and tsmc gets a big chunk of revenue from .uawei there is concern about what this does to the supply chain in semiconductors and that china might retaliate. this is one to watch. nejra: great to have you with us. bloomberg markets coanchor tom mackenzie. let's get to the first word news and the u.s. economic recovery could drag on until the end of next year according to fed chairman jerome powell. he made the comments in an interview with cbs saying the recovery hinged on the arrival of a vaccine but added the

central bank hasn't exhausted options for supporting the economy. above $30 a barrel for the first time in two months as producers continue to cut out, helping rebalance the market. the number of u.s. drilling rigs fell for a night week. come on top ofts almost $10 million a day of curbs from opec and allies. astrazeneca is aiming to make 30 million doses of coronavirus vaccine by september and has committed to lit delivering 100 million doses this year. the u.k. will be the first to get access to the medicine if it is successful. the vaccine is being developed at oxford and the business secretary says it is getting over 65 million pounds of funding. japan's economy sank last quarter, falling into a recession that is likely to deepen as the house limit spending and companies cut hiring. 3.4%hrink an annualized and analysts seen over 20% contraction for the second quarter. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in

over 120 countries. coming up, dragging on. of else is a full recovery the u.s. economy could stretch to the end of 2021. more on that next. this is bloomberg. ♪

manus: it is "bloomberg daybreak: europe." i'm manus cranny in dubai. someone may have put a dollar in the slot. they let me come on. let's look at markets because the fed is warning friday night followed by a 60 minutes interview by paulo reinvigorates the message don't fight the fed.

we've got more ammunition. we will not do negative interest rates. asian stocks higher, japan thinking about opening with china and korea. s&p futures up 1.1%. look at the bond market, because we've got jpmorgan versus barclays debate. barclays says we are in for a huge shock and breakevens will be at zero and yield at negative. they will go to the bund equivalent of 5.4. it is all about the rig count, the lowest since 2009. we are way ahead in terms of u.s. shale being taken out of the system. nejra, did you put the dollar in the slot? nejra: of course i did, i needed you back and let's get back to jerome powell who says don't bet against the american economy. he says the u.s. economy will recover from the coronavirus pandemic but it could take longer than expected and depends on the delivery of the vaccine.

>> this economy will recover. it may take a while. it may take a period of time and stretch through the end of next year. we really don't know. gold rose to a seven-year high off the back of the fed's warning that stocks and asset prices could suffer significant hits from the coronavirus. the commodity has surged 16% on the spread of the virus, curbing economic growth, roiling markets. joining us now is the head of ishares at blackrock. friday night, we were warned by the fed in terms of asset prices may face challenges, the "60 minutes" interview, don't fight the fed. but his mike's take until 2021 to recover. which message is more pressing to you? >> good morning.

in terms of messages from the fed, it has been quite consistent in that they will come to the rescue if needed. if you think about the market turnaround that started since late march, march 23 to be precise, it was very much catalyzed by central banks coming to the rescue and if you think about how investors have responded to central-bank's message, in particular from the fed, it has been don't fight the fed. of course the fed will flag the risk of economic damage, the risk of permanent, long damage like jerome powell said last week, but those are caveats against which they get the message across, which is that they will be ready if needed. that has been the source of market taking comfort.

interests in areas that the fed ig, for example, getting record inflows off the back of their messages. definitely, it is sticking. nejra: great to speak with you this morning. q also talk about investors preparing for reentry with u.s. equities. some are cautious, but last month, you upgraded u.s. equities to overweight. what approach are you taking because it is certainly not a gung ho one? wei: we want to be more selective in where we want to invest, even in areas where we have overweight, such as u.s. are seeing greater dislocation between fundamentals on the one hand in response to containment measures, and markets being quite resilient on the other hand. you can understand the dislocation because of central-bank support but you

have to be selective in pockets of the economy, which parts can benefit more. you talk about overweight u.s. for the sizable response to the outbreak, but specifically we have a quality and ono favor quality the sector front, we like technology, communication services, as well as health care. we have seen earnings doing very well in the latest quarter. manus: many guests come and join us and they give us the list of wants to bey exposed to, balance, strength and cash flow. you talk about lower date exposed -- lower debt exposure.

do the facebook send alphabets, -- facebook's and alphabets, do they qualify in your lower debt exposure as your number one basis, and how much more is there in health care? wei: great question. mega names inut the u.s. and what is really remarkable in this rally is the narrow leadership in the rally. if you look at the outperformance of u.s. equities so far, it can't be traded on this mega cap tech stocks and the five companies with the largest market value in the s&p 500 account for over 20% of the overall market cap, which is the highest since the tech bubble. you are justified in raising questions, but what we are seeing is market leaders with businesses in e-commerce and

online, are really well positioned for better earnings because they are flush with cash. from that perspective, less sensitive to cyclicality and also potentially debt repayment, which is not likely a problem at this point in the cycle. have amention, they business model that benefits from covid. specifically around technology and when it comes to health care, we are seeing very much overlooking election uncertainty and very much going into health care because of the structural nature. .pril was a record month manus pointed out a really great comment from barclays, from the firm's chief which -- when to

turn the lights on because emergency stimulus is not getting out fast enough to keep many of them afloat and what he is saying is wants the prospect of a sustained downturn factors into the markets thinking, the 10 year treasury rate could plummet toward or below zero. jerome powell is still pushing back on negative rates, but you talk about inflows into credit that were quite powerful. is've seen the action, but the sentiment among investors still quite fragile in terms of the recovery? wei: that is a great question. we round an, investor survey weekly as part of our outlook call and within the sentiment survey, we ask investors how close are you to pulling the trigger. we try to calculate that as a percentage and gauge how positive sentiment is from week to week. what we are seeing is the higher the market goes, this leg of the rally late march, the higher the

market goes, the more sobering investor sentiment is. are taking outrs the dislocation between fundamentals and market price action, are very much feeding through in terms of the risk appetite. now you've got a good question in terms of how long this crisis can last. the small and medium enterprises, maybe they are to come back on when the crisis is over. on that front, it is important signpostsr about the that we are looking out for. we are tracking the implication of the virus, specifically in our view, there are three. the first, the economic impact driven by the interplay of public opinion, virus dynamics, the effect of the lockdown restrictions -- manus: hold on to some of those

thoughts. wei, we will talk more about policy responses from the chinese any moment. we will expand on that theme. ae're going to take i pause. the nationals people congress starts in beijing friday after a two-month delay and we take a look at how the ongoing pandemic has upended china's most important political event of the year. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic with i'm manus cranny. wei li from blackrock is with us.

the national people's congress starts this friday after a two-month delay. some investors say buying chinese tech and health care stocks, others say by high-yield. what is your priority? wei: currently, we have a constructive view on both chinese equities as well as china bonds, both for diversification as well as the fact that china is further along in its attempt to restart the economy. you spoke to the national people's congress starting later the legislative body is signaling. for if they are going to emphasize growth and potentially even announce a growth target, and we are also looking for their stimulus package, fiscal target and

fiscal policy direction. loosening and very supportive policy in china announced. it is one of the few countries where there is a lot of policy signaling and policies coming through. china,s of the growth of what we are starting to see, even from the latest data released last week, consumers are now feeling comfortable resuming their activities. this is a long journey, so this is not going to be a smooth there arerward and geopolitics concerns with the u.s. going into the election cycle. what does that mean in terms of trade? what we are starting to see is very clear direction that the economy is more domestic focused

and we like that in terms of its impact on chinese equities. manus: you specifically like the china. a-shares in can i ask about the china bashing narrative? "the unfavorable view in the u.s. of china stands at 66%." willf americans believe xi not do the right thing. china's power is a major threat to the united states of america. with that backdrop, this bashing will continue. more weakness will come on the yuan, they are saying. you buy the dollar on the back of this theme that is rising. wei: i think in terms of the currency, we would be looking

at times like this. you talk about u.s. china relations, it is definitely set for a rocky period as the presidential election looms. both candidates, the trump administration and democratic nominee joe biden will likely compete on being tough on chin'' that is a given and the few things we are paying attention to, the question is will the u.s. move away from a phase one trade deal as china likes its commitment to increase and bilateral tensions also look not only to increase going into formber but beyond november supply chain -- manus: we will have to see how that plays out, but for the moment, the yuan is stronger on the back of opening up. wei li with more discussions on

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manus: good morning from bloomberg's middle east headquarters in dubai. i'm manus cranny. it is daybreak: europe. your top stories for today. peter navarro suggests china sent airline passengers to spread coronavirus. tsmc won't take new orders from huawei amid u.s. restrictions. global stocks rise amid gradual reopening's. jay powell says economic

recovery could take until 2021. the bank of england says it is examining negative rates. emirates is considering slashing around 30,000 jobs. that's a bloomberg exclusive. later today, we speak to ryanair ceo as he ramps up a legal battle with rivals. nejra: welcome to "bloomberg daybreak: europe." you wonder what might be driving risk sentiment as we saw weekly loss for equities last week. it is not like we've had a slew of good news over the weekend. u.s.-china tensions, japan in recession, goldman talking about the worst recession ever potentially for india and then you add in the comments from paolo about how slow the recovery could be. -- powell about how slow the recovery could be. manus: i think it is selective hearing. the 60 minutes interview where he talks about this could take until 2021, but don't bet against it.

we've got more ammunition. we are not traveling the road to negative rates. that's reflected across the equity markets. the s&p 500, the april commodity futures for fed funds futures are still kicking around the 100 level. oil bounces by 4.7% so you are seeing this quite strong narrative coming into play. yes, asset prices may be vulnerable. wti above $30 for the first time in two months. 19% last week. goldman sachs said $40 by the end of the year. $60 by 2020 one. look at the aussie play because you are just seeing the australian dollar ignore the china bashing narrative and focus on the oil being above $30. sayingone common idea you want to buy the dollar, sell the yuan.

they are saying they are looking at policies with greater immediacy. what does that mean in terms of orp?risk of ni we've got a trending story that has gripped the emirates. emirates group is considering slashing 30,000 jobs. this would be the deepest cut yet of any global airline in the industry. the has been forced by hibernation of coronavirus. we are joined on the phone. rate to have you with us, leanne. 30,000 jobs. put that in context. what does that mean globally? >> yes. 30% of the entire emirates group workforce and these cuts could be the deepest

in the sector but airlines around the growth -- globe are cutting jobs after the pandemic destroyed travel. they are planning on making 12,000 jobs redundant out of 100,000 jobs and also 100,000 workers at the four largest u.s. carriers have taken unpaid leave. ryanair is discussing with their employees, cutting thousands of jobs and qatar said it plans to , 46,000of its workforce employees, approximately 9000 jobs. airline said job cuts are unavoidable. governments are starting to plan to open borders and to ease travel restrictions, but without a vaccine, there is not a chance

travelers would get back on a plane and that infections won't surge again. executives in the airline industry expect demand to recover into the three years -- in two to three years. nejra: 70% of global capacity idled at the moment. what does all this mean for airbus and the a380? layan: the long-distance aircraft could be the last to recover from the pandemic. emirates had to ground its entire a380 fleet, which is comprised of approximately more than 40% of emirates' aircraft. large wide-body jet. the airline is looking into theing on boeing during recovery and accelerating

consignment of some a380. the early retirement means for airbus a could see the endgame for the aircraft. as we know, airbus has pulled the plug on the a380 program last year only after emirates -- after it failed to reach an agreement with emirates. jet is an engine that propelled dubai into a global hub. since airbus -- airbus had dropped this aircraft from its long-term plans last year. nejra: thank you so much. it issue reporter layan odeh joining us. she mentioned ryanair. we will speak to ryanair's ceo michael o'leary at 7:00 london time this morning. we got numbers from this -- them this morning seeing a loss of 200 million euros in the first quarter. a small loss in the second quarter. let's go for speed.

it has gone 6:36 with your first word news. recovery could drag until the end year according to jerome powell. he made the comments on an interview with cbs saying the recovery hinged on the arrival of a vaccine. haven't central banks exhausted options for supporting the economy. in the u.k., prime minister johnson is warning of a long battle against coronavirus. it comes as the government is trying to persuade people to return to work and school. get the economy back on its feet. "the sun" on sunday said johnson told conservative lawmakers he wants a return to new normal by july. meeting of the first the world health organization's governing body since the start of the coronavirus pandemic. china is set to be challenged on its handling of the outbreak. europe and australia are likely

to push for a probe into the origins of the virus. that's on top of the criticism from the u.s. the white house repeatedly break -- blamed beijing for the pandemic. huawei he's accusing the u.s. of using cybersecurity rules to safeguard its own dominance of the tech industry. it comes as the white house tightens rules to prevent chipmakers from supplying huawei . the move may threaten the global supply chain, and if the semiconductor has stopped accepting orders from the tech giant. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. nejra: coming up, cautiously optimistic. opec's secretary general feels the worst of the oil crisis is over. the uti is about 30 dollars a

barrel for the first time in two months. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london with manus cranny in dubai. risk on after a decline for equities last week. u.s. and european futures up strongly higher. the 10 year yield steady, the end retreats against the dollar commodities outperforming because wti is above $30 a barrel for the first in two months. that is have an effect in the fx space. you mentioned the oil

market and it is above $30 for the first time in two months. according to producers in the u.s., it is all about the activity. quitencing the market, literally thrown into disarray by the coronavirus lockdown. opec and allies are rapidly cutting their production and seeing signs that demand for oil is recovering. we spoke exclusively to the opec secretary-general on friday. so far, we announced forecast on the timely implementation of the 9.7 that was signed off by participating countries, but also importantly to note is that some of our countries like the kingdom of saudi arabia, kuwait, and the united arab emirates have come forward with additional voluntary supply

adjustments in the region of about 1.2 million barrels a day. and this is also on top of the baseline, effective baseline that they were coming down from in april, which come in total, just these three countries, they had effectively reduced production by about 2.70 4 million barrels a day -- 2.7 4 million barrels a day. 5 million barrels a day for opec-plus. if you take into account the involuntary shut things as well as the voluntary shut-ins, the number is evolving. at the moment, our number is sure that there is an effective shut-in of 3.6 million barrels a

day globally, including in the united states. bring in the global total -- bringing the global total to about 17.2 4 million barrels a day. so far, so good. we are closely monitoring this development and the conference will look at all of this data and all of the depending on going out the second half of the year and the recovery plans of the global community as we navigate ourselves out of this horrific pandemic. >> so as you look around the world at the shut-ins and the demand picture, is it your contention that perhaps the worst of the demand distraction has passed or are we still going to see more demand destruction? at thee is no question

moment, although at opec, we remain cautiously optimistic that the worst is behind us. april wasw in extraordinary and you saw countries with our allies in the declaration of cooperation rose thehe challenge, and leadership of the kingdom of saudi arabia and the federation, and all other countries to confront this double whammy of the demand shock of unprecedented proportions as well as the supply shock in the midst of a pandemic when more than half of the global population is in one form of bringingor another, the entire global economy to a standstill. case rightyour base

now, though, given what you can see visibility wise for the second half in terms of those costs? will you be able to taper? will opec-plus countries begin to ramp up production ever so slightly or taper off cuts? sec. barkindo: it is a growing consensus that the global economy will begin to rebound in the second half. of thehe form and shape recovery that is in contention, but be that as it may, we will look at all options when we meet in june. dependent on the impact of this virus, as well as the impact of the recovery plans, as well as the outlook for demand going into the second half of the year . was the opec

secretary-general, friend of bloomberg, speaking to us exclusively. wei li, i love the title of your oil reflective called "all's well that ends well." we can all go off to the land of nod because the u.s. has ripped out the heart of shale, the lowest rate count since 2009. for me, this is perhaps the biggest shock of all. opec-plus getting their act together, but it is the u.s. narrative that really shocks me. was emboldens the oil story? wei: given oil price volatility this year, it is almost inevitable we will see production cuts across the board and the u.s., obviously coming to the game has helped sentiment in that regard.

in the medium to long-term, it oil, theo be positive cyclical story because of the demandd picture of both as well as supply that is uncertain and the long-term structural tenet -- trend about potentially moving to sustainable energy sources. while in the near-term we could see investors wanting to embrace this technical rebound and we saw that happening, last month was a record month into oil, etp flow. we see investors trying to find the bottom and get in this technically, but longer-term, it is harder. is hard to be outright positive on oil and you are an investor who wants exposure to high yield, perhaps because you are "shadowing the

fed." i read that from someone this morning, how do you get exposure to high yield while limiting the risk to oil? yield, part of the u.s. has been 10% exposure to energy producers. we currently stay overweight avoid --d, but we it we avoid energy because in the medium to long-term, the lower for longer oil price should challenge the ability of issuers to refinance near-term maturities. we do like high-yield, but are more selective into which buckets of high-yield we want to own. manus: where do you stand on gold?

you talk about the flow of money into gold, over $9 billion in april. barclays note,e which is that we are in for a yield shock, breakevens will plummet to zero, and the treasuries will go to -.54, maybe even -.90. rabidt scenario, disinflation takes hold, what does that do to the gold narrative? source prefer gold as a of diversification in a diversified portfolio and the correlation between gold and , as a long-term diversifier, we think that makes sense and the lower real rate for longer is also supportive of gold. lastly in terms of the supply and demand dynamics, the

near-term picture may be supportive. if you look at total gold supply, up 4% in the first because of the disruption of mining operations. total gold supply shrinking 2019 for the first time since 2008, so we think the supply and demand picture as well as diversification picture supports having gold in your portfolio. nejra: i want to ask about india, and oil importer. of the story,part but goldman sees india experiencing its deepest recession ever. what is your take on india right now? are you positive or negative? wei: we are currently cautious on india. aspect shoulder be supportive given lower oil price, but it goes beyond that.

forward-looking earning expectation remains elevated in our view. there is small room to fall and furthermore, the path for india out of this covid-19 crisis is rather uncertain, and growth is clearly being challenged, and it is not very clear how the government can finance its growing fiscal burden. all of that points to india being a country that we are rather cautious on. you talked about emerging-market countries and this is a big theme coming through in terms of our view as well as investor allocation plans. notstors are increasingly using a broad brush when it comes to emerging market investing and are being selective because of countries perceived to be further ahead in seeing inflows and countries that are less behind, less so. oil exporters and importers seeing different inflows, as

well. nejra: interesting. wei li from blackrock stays with us and coming up, not so fast. traders pricing negative u.s. rates next year, jpmorgan says they are getting ahead of themselves. we will discuss. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic with manus cranny in dubai. jpmorgan says traders are getting ahead of themselves pricing negative u.s. rates next year. they say for now, the fed is more focused on the balance sheet rather than negative rates. wei li from blackrock is still with us. what they also see at jpmorgan is that with a looming global

recession, there will be demand, if you see the 10-year treasury yield get anywhere near 1%, that is a buying opportunity. do you agree? wei: we like u.s. treasuries. we think low rates reduce -- even though low rates reduce the ability to cushion against a selloff, we see greater room for long-term yields come along end u.s. overasury in the other developed markets. we like it more than jim and burns -- german bunds, for example. in that sense, yes. , there you go. very clear. you prefer treasuries over bunds. barclays, warning there is another world in negative rates. there is one man with a voice on airlines, michael o'leary, joining the market open team.

matt miller and anna edwards. buckle up. it is going to be a bumpy 30 minutes. ♪

♪ nejra: good morning and welcome to bloomberg --anna: good morning and welcome to bloomberg markets. i'm anna edwards. matt miller in berlin. matt: good morning. foldout hope for the recovery. risk assets gain -- hold out hope for the recovery. risk assets gain after finishing last week in the red. the cash trade is just an hour away. let's get your top headlines of the bloomberg terminal.