haidi: a very good morning. i am haidi stroud-watts in sydney. we are counting you down to asia's major market opens. shery: welcome to "daybreak asia ." china rebuffs the latest u.s. criticism of its virus response, saying washington is shirking its responsibilities. optimism over a vaccine may be draining away. global cases approach 5 million with 320,000 deaths. brazil is the worst pandemic

hotspot while infections in india rise at the fastest pace in asia. zealand'snks -- new post-virus recovery. we are joined this hour by the rbnz governor, adrian or. -- orr. haidi: let's take a quick look at markets. we saw that exuberance over the moderna vaccine progress really dissipate quickly. we saw the late session swing when it comes to trading in the u.s. as it has concerns over the efficacy data from moderna causing some concern. take a look at the futures in asia. we are seeing downside when it comes to futures trading in japan, australia, and hong kong, although we are looking at a little bit more of a positive open when it comes to trading on the mainland, and just also keeping an eye when it comes to energy markets as well given that we are starting to see backwardation between that june

and july contract for the wti, suggesting some of the storage issues have started to ease. let's take a deeper look at the markets. investors are increasingly debating whether the broader stock market has become disconnected from the fundamentals. if we look closer, the sectors can tell a different story but the view from the president of pence wealth management joins us now on the line. great to happy with us. we continue to see the volatility in the markets, especially when it comes to any sort of headlines related to a vaccine or a drug for the coronavirus pandemic. we are seeing this rally in the markets but also very narrow rally. what is that telling us about who investors are rewarding during this very challenging economic time? investors are rewarding companies in areas that did not do well when this covid is over, and they are starting -- any

good news. news withhat moderna powell's testimony on 50 minutes on the market just took off. right now, we are at the foundation stage. shery: when it comes to different regions around the world, as we continue to see china really start to stabilize and coming out of this pandemic first, is this where investors should look for opportunities as we continue to see uncertainty in other parts of the world? laila: absolutely. we think china is definitely a head of the united states. they are 45 days ahead of us and there's a lot more opportunities opening up. apple opened their stores. nike is opening. shanghai -- china shanghai, disney, opening

slowly. it is ahead of the united states and the world and there's a lot of opportunities there. you talk about some of those names like disney that are starting to see a reopening even at its resorts in the u.s., slowly but surely, the return to normal, so is that really an indication that we should start looking at the value opportunities within these big travel and leisure names that do have the solid balance sheets that may take a year or two to recover? laila: absolutely, especially disney. they are really learning a lesson to open up. they are learning that in china. it is a great model to reopening ,lorida and potentially france and certainly, here in california. .t is a great model for them they have always been able to really learn quickly and adapt quickly.

is whatve that happened here as well. they have 54 million disney plus subscribers, and that is four years ahead of what they are estimating so they have a lot going for them, and it is a bargain at 25% below the high. in terms of the lockdown darlings, if you will, the work from home related stocks, tech, gaming, netflix, for example, how many of these or do you think are still looking like good values once you get to the other side of this? a lot of these were really good values before. you really have to look at, you know, are they going to continue to -- are people going to continue to want to watch netflix? that is a phenomenon that will continue because of their programming.

you have to be looking company by company to see which ones will have sustained demand, and those are the ones that you want to continue on and they have a long ways to go. , thank youa pence very much for your time today. that was the president of pence wealth management. we have an alert on the bloomberg. we are getting the fourth-quarter results for lenovo. their revenue for the fourth quarter came in at 10.58 billion dollars. fourth-quarter gross margins, 17.6% of their full-year final dividend per share. 21.50 hong kong cents. the first quarter revenue was slightly higher than what was expected. the expectation was for the low $9 billion, their revenue coming in on top and $10 billion, lenovo shares. your today, they have been under a little bit of pressure, as you can see, down 16%.

let's get to karina mitchell with the first word headlines. karina: global confirmed coronavirus cases are approaching 5 million with fatalities now above 320,000. brazil is the world's pandemic hotspot, accounting for 13% of new cases in the past week while infections in india are rising at the fastest pace in asia. deaths linked to covid-19 surpassed 40,000, making it the first country in europe to reach that threshold. and while, jerome powell -- efforts to make him take sides on virus aid, maintaining a neutral stance in the debate over whether congress should add to its record stimulus package. testified mnuchin remotely to the banking committee. powell reaffirms that more fiscal help me be needed but he stopped short of a full endorsement. the bank of japan will meet an emergency session on friday as it works to firm up funding for business and the wider economy during the coronavirus. the talks are not expected to

deliver any earth shattering policy moves but will flesh out a lending program alluded to at the banks previous meeting. the boj aims to show a proactive stance for business and it follows unscheduled meetings at the fed and the ecb. china has taken another swipe at australia over calls for an investigation into the origins of the coronavirus pandemic, having put duties on barley and beef imports. beijing is threatening to target wine and dairy. china is said to have drawn up a list of seafood, oatmeal, and fruits that could face punitive measures and there are fears the state media may call for a consumer boycott. 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. haidi. still ahead, we have our big interview with adrian or. that is coming up in less than half an hour's time. dismisses that, china

president trump's latest accusations against the world health organization as "futile." we will get the latest from d.c., next. this is bloomberg. ♪ ♪

>> china has made a lot of mistakes, and regarding this virus. is in a badident space about it. i cannot blame him. the president feels it could have been curtailed or restrained or may stopped earlier, and that has become more important than the trade deal. was larry kudlow saying the trade deal between washington and beijing remains intact even as president trump continues his blame game rhetoric against china and the who. that's bring out emily wilkins for more, and emily, we are

these renewed threats by president trump to withdraw altogether the u.s. from the who. emily: absolutely. we have been seeing the tightening of tensions between the u.s. and china. we have seen them in regards to the world health organization, in regards to trade. at this point, we really have not seen any concrete action from the u.s. to get out of the trade negotiations with china. reinforcets today that the u.s. and china -- shery: we have seen already the response from china. they are not happy, saying president trump's letter is full of insinuations. china definitely spoke out against trump's letter and china also told the world health organization that they were planning on donating $2 billion, planning on helping foreign countries. i think this is just another

example of the u.s. and china sort of playing politics with the coronavirus and an international response to it. we are also seeing the president and the republican congressional leaders really counting on the lockdowns being lifted in particular states and sort of expectations of more stimulus. are we going to glean any more details of what future stimulus packages might look like in the era of a partial reopening? emily: honestly, it might be a while until we get a good sense on what that stimulus will look like. last week, democrats passed their $3 trillion spending bill. today, we are hearing from republicans that they are not in any sort of rush at this point to start another one. republicans want to see the economy start up again and some of them are worried that state governors are going to keep the shutdowns going if they know the federal government is going to continue giving stimulus. at this point, republicans want

to wait and see how do states open up, does the economy start getting back on track? to knowublicans want there is stimulus coming for small businesses so we are expecting another stimulus package. i would not expect one in the next week. shery: emily wilkins. here at the u.s. federal reserve, plenty when it comes to stimulating the economy. the boston fed president defending the risky loans being handed out on the central bank's street lending program. eric rosengrant told us the aim is to save jobs in a weak labor market with the reopening of the u.s. economy, set to be a slow process. >> wonderful news that we are getting to the place where we can start talking about reopening but i would highlight that that is only the first step that we need to take. consumers have to be comfortable actually going to businesses and going to stores, restaurants.

employees have to feel comfortable going on the subway, the train, or a bus. with community spread still continuing in massachusetts, i think we are a little ways away from that point. as important as it is to take the first steps to open up businesses or allow businesses to open up, i think we should be cognizant of the fact that many people, particularly older americans, are going to be very leery of going into restaurants, going onto mass transit, or going onto planes, until the public health problem is more results. >> what are ceo's of companies in your district and even people who run mom-and-pop stores, telling you about their expectations of business, for the economy, as you reopen? >> there are -- they are very much hoping there will be a pickup in the second half of the year. in gdp terms, there will be a pick up. i also think that, unfortunately, the labor markets are still going to be pretty weak, so in the talk i gave

today, highlighted that by the end of the year, i expected unemployment rates would be in double digits so it will probably be significantly down from where we are right now. he unemployment rate was 14.7%. and any americans that took that survey said they were employed but were not working the week of the survey so the numbers are probably a little closer to 20% and we will see in the next couple months if it still goes up a little bit more. but i think by the end of the year, we are probably talking in the low double digits. that is still a very high unemployment rate. what that reflects is the fact that i do not think that many employees are going to go into the cities still having significant problems. i think consumers are still waiting to feel more comfortable before they go into stores and restaurants. >> one of the other programs that has come into some criticism is the secondary market in lending program

because they are propping up zombie companies that really cannot continue to survive unless they continue to borrow and at some point, we will have a lot more defaults and bankruptcies. do you see that happening in your district? eric: with the main street program, we are definitely doing somewhat risky lending and that the borrowers are providing financing for borrowers that were in good shape at the end of the year and are now facing difficulties as a result of the pandemic. currently by design, these are going to be problem loans. we are trying to get the right outcome for employment and if all these businesses end up failing, that would be a significant impact on employment. we want to avoid that outcome. that means we are taking a little bit more risk than we normally take in order to try to make sure there is sufficient financing. during the financial crisis and in new england during the 1990

crisis, where it was a credit crunch crisis, one of the problems was borrowers and households could not find financing. we are trying to make sure the lack of financing does not become a problem right now and make sure that what is hopefully temporary spells of unemployment actually stay temporary and people are able to be reemployed but the longer that people are unemployed, the longer businesses have to finance themselves, the more risky it becomes for the economy overall. >> many companies have discovered the joys of working from home and maybe the savings of working from home. do you anticipate any problems in the commercial market? eric: commercial real estate is going to go through a major shift as a result of the pandemic. office space is one area. there are more warehouses than we needed before. and i do think that some multifamily housing in downtown areas may be more challenged as people rethink whether they want

to be downtown or in suburbs. we are in a period where real estate will be going through some pretty dramatic changes. that was the boston fed president, eric rosenkranz. do not miss our interview with the rbnz governor, if you nor -- adrian orr. it is at 9:30 a.m. if you are watching in sydney. this is bloomberg. ♪

shery: brazil has solidified its unwelcome status as the world's new coronavirus hotspot with another record day for infection and death. the government's disjointed response is fueling concerns that the worst is yet to come. let's cross to sao paulo and the office chief. brazil does not have a health minister at this point. how bad is the situation getting there? >> we have not held a health

minister for the past few days. we have lost two of them doing the pandemic. the last one being on friday. left after some disagreements with the president, especially over the use of -- as a medication to treat coronavirus. we are seeing the numbers just worse.se and as you said today, we had a record both for new deaths and new confirmed infections over the past 24 hours. we have overtaken the u.k. and we are now way behind russia and the u.s. in terms of cases. in terms of the economic impact as well, does the government even have the deep coffers to be able to provide aid, particularly to those that need it the most? as we understand it, there's 15 million people that live in spaces where things like social distancing is simply not possible. julia: that's right.

the pandemic caught brazil -- the economy was starting to pick back up, but the government, by no means, has a lot of money to just do large stimulus packages for companies and for the poor. there is an emergency aid of up to600 -- which comes 100 something dollars, $200, being given to the poor. but it is not enough to make up for the fact that people are losing their jobs and industrial production is crashing, and all the numbers we have seen out of the economy so far are pretty bad, and that has been one of the big concerns for the government and for a president bolsonaro, his push to get everyone back to work and reopen the economy is rooted in that concern about the size of the crisis that is ahead.

shery: he has been pretty dismissive about this pandemic and the impact of the virus. is he changing his tone now when it comes to the severity of this disease? and what are we seeing in terms of his political capital? even today, he was out and about, saying that his government has the majority in congress. julia: yes. he was just saying that on a live feed. in terms ofhanged saying -- it has been a while since he has called it a flu. and he has been wearing masks in public more often, but he does not acknowledge the size of the pandemic. mexican leaders and governments elsewhere just backtrack on how bad the disease is. he has focused more on the economic impact and, you know, the crisis that will follow and

people losing their jobs and not having money to eat. haidi: are investors getting spooked as well? julia: yes. we have seen markets perform -- underperformed by quite a bit. it is not a great year for emerging markets. down 30%he currency is this year, by far the worst currency stock, in dollar terms, terms,%, and in ai's down 30%. it is a mix of the economic crisis, this political turmoil with bolsonaro always creating these controversies. we have lost two health minister's plus the justice minister during a pandemic, and just the numbers that we are seeing out of brazil in terms of the virus, we had a couple

people calling it a burning house, saying it is out of control. it is certainly not looking great for investors. shery: a very grim situation. julia, thank you so much for joining us. let's get a quick check of the latest business flash headlines. sony plans to take his lucrative finance unit private for 3.7 billion dollars to inject more stability into electronics and entertainment. it is also warning profit could fall by as much as 30% as the coronavirus bites into consumption. financials have been hit with sales staff unable to pitch customers directly during the pandemic. apple is said to be shifting the production of its air pod studio headphones to vietnam as it looks to lesson reliance on china. apple has already chosen manufacturers and hopes to have the first batch ready for shipment by july, which means --

it says mass production will begin at around the same time. qantas says putting extra space between passengers could lead to airfares soaring. the ceo says social distancing on a plane is not practical and 128 seat jet plane with just 20 people on board. that means tickets would be eight or nine times more than before the pandemic. qantas is flying at 5% capacity domestically and just 1% internationally. u.s. airlines stocks reacted weakly to signs that demand for travel may be picking up. southwest says bookings are starting to outpace cancellations and reservations for june while united is reducing cancellation rates and sees moderate -- delta says it has seen a slight bounce in so-called leisure bookings. coming up next, our interview with the rbnz editor, adrian orr.

find out what they are working on to deal with the covid-19 shock. this is bloomberg. ♪

shery: let's take a look at how markets are trading at the moment. we are seeing u.s. futures rebounding from earlier losses, up .2%. this of course, as we had u.s. stocks fall after a week. this as we saw optimism over moderna's vaccine starting to fade. we had chairman jerome powell also saying the fed is ready to use all the weapons in his arsenal to help the u.s. economy. the nikkei futures up .1% as japanese yen is now around the weakest in four weeks. down 1.5%.ures

we do get australia's westpac leading index. as investors iqs from central banks, let's bring in bloomberg's global economics and policy editor, kathleen hays. kathleen. shery, thank you so very much. a warm welcome to our bloomberg radio listeners joining us for this interview. let's set the stage. the central bank has left the policy door wide open for more aggressive measures to fight the pandemic's damage to the economy. to tell us more of what is driving the central bank, of what may come next, we warmly welcome the reserve bank of new zealand editor, adrian orr. great to see you. adrian: glad to hear you are well. kathleen: it is a tough time i think for so many people in the world, but certainly from the point of view of a central banker. forecast, setting

your plan to fight off the damage from the coronavirus in new zealand, your view of the economy right now has four scenarios per the gdp number coming in at minus four or minus 37%. how do you set policy? how do you manage when there's so much uncertainty about where we are, where you are, and where we are all going. adrian: great questions. i certainly do not feel we need sympathy. being a central bank governors not only challenging but very exciting. we will still remain employed for the time being. i feel privileged. in terms of setting the policy, while the challenge is probably in terms of -- in terms of what we need to do is probably the easiest ever. the shock is global.

it is significant. it will persist. fiscal policy is the first rank, and you know, monetary policy is part.g a significant bit you know, so for us, the obvious is, as much as we can do, as soon as we can do, with regard to easing policy and keeping interest rates low and the yield curve flat and stable, to pretend we can do that with accuracy, it would be wrong. perfection.sense of is very clear, quantitative easing, significant, and keep an eye on low and flat yield curve. kathleen: speaking of keeping the yield curve flat, watching fiscal policy, certainly, the budget released by the government last week, i think, before it came out, even after

people were wondering what it means for your target, for bond purchases this year, of course, your assistant governor spoke to tracy withers earlier today, saying that did not change much. to get back to the bigger picture question, are you really only basing your sense of how many bonds you will have to buy or want to buy, how you are going to keep the yield curve flat, how you are going to keep your yields low based on how many the government is issuing? are there other factors that are equally important to that? adrian: i think there are other factors that are actually the driver. we have chosen to use quantitative easing and large-scale asset purchases as our preferred instrument given the official cash rate is so low. we do not want to go negative at this point. we are prepared to if we have to, but not until a lot later. obviousnt bonds, the

asset we can be purchasing. the good news is there's more of them coming on the market. when we were talking about alternative monetary policy tools this time last year, one of the concerns for new zealand, given the fiscal debt position is we did not have a lot of government bonds to actually buy . that problem is being resolved for us now. the way in which we think about it to retain operational independence is we think about the cap in terms of dollar billions of assets we want to buy. we do not think about it as a percent of total assets on offer. indemnifiede get from the government by buying these bonds for market positions. indemnification -- total bonds on offer. that is not about our policy. that is about enabling, not what we have to do. we focus on inflation, unemployment, and we are targeting, you know, a low and

flat yield curve through the purchases of bonds. mentionedso you also the global outlook, one aspect of the global outlook for new zealand, and what the economy will do, and that all over the map forecast is what is happening in australia, china, you're too biggest export markets. economyou see china's performing right now and what will that mean for demand for new zealand's exports, which is a large part of your economy? adrian: that's right. we are in a reasonably fortuitous position. if you wanted to confront a start, you would want to from where new zealand started so we had pretty good terms of trade. debt, veryent net forceabor participation. all of these are good starting points, but without doubt, most

of new zealand and australia are trading nations. we need people to buy our goods and services. for us, for new zealand, now, our particular goods still remain well sought after because they are food, timber, fishing, things that really remain in demand in china and they are largely consumed. they are not part of a global supply chain that ends up getting held up somewhere else. demand is china. australia is a little bit different. a lot of those commodities are intermediate or primary inputs for ongoing for their prices. the biggest part impacting the new zealand economy from the chinese slowdown and global slowdown is the fact that we cannot travel, and tourism, and education. they are a significant component of both our countries gdp. china in particular, for the

education, and also recently, china for tourism. it has come up into the middle income group during the global financial crisis chinese tourism was not a big issue. now, it is. challenge. biggest not necessarily goods, but more services and the high-end, labor-intensive one. kathleen: one of the biggest things driving anybody's economy right now is what is happening with the virus, what is happening with the number of deaths, what is happening with the production of a vaccine. some -- the u.s. is starting to reopen in some areas. there's some pushback internally. other nations trying to reopen as well. where do you see the world? start with new zealand and how it affects you in terms of reopening, something that will reinforce stock markets. it is still in a very difficult place where it is too early to

think like that. think it is too early. i think it is important we think about recovery and renormalization. think about the future. that is what keeps us as humans healthy, happy, and engaged instead of worrying about what could happen. are based exactly in what you are saying. it is based on the different types of possibilities around the health situation. at 1, zealand, we have it 2, 3, 4. four being total lockdown based on the virus being in new zealand and being spread through the communities. we have managed to contain the virus. there is no human to human contact that we cannot trace, and we have -- we are effectively -- new zealand is

open for business within new zealand. subject to some constraints as to how many people per building and social distancing. that will only take new zealand so far. new zealand has to be open for the rest of the world, and so, this is our challenge. the benefit of being far away is that we have been able to contain, manage the benefit of not having state governments but the central government and local governments for being good citizens. our big challenge will be at what point our nat international borders will open to people and this is a real concern for new zealand. our goods can still be traded. unless we can get feet on the ground here. it is very hard. to ask you want about negative rates because it is certainly a hot topic among central banks around the world and i want to put this in context, too. newreserve bank of

zealand was the first central bank to move to an inflation target so, in a sense, the rbnz has been a leader, a bellwether. the fact that you endorsed negative rates for new zealand, i think it makes your position all the more important. probably not until early next year, you say. why do you embrace negative rates at this critical time, when jerome powell at the fed, no,all his key mates, say, it is not an effective tool for us. why do you think it will be effective for new zealand? adrian: no pressure there, kathleen. [laughter] embrace and endorse are too strong of words paid we want to maintain optionality. why remove options from your table if they can be of use?

with monetary policy, there are always winners and losers, unders and overs. it is a blunt tool. young, assets owners versus non-asset owners. all of those challenges exist paid with negative interest rates, that will remain the same, just as it does with quantitative easing, just as it does with foreign exchange intervention. all of these different tools have positives and negatives, and what we are saying is let's keep the optionality. the optionality is about a negative wholesale interest rate if we deem that necessary and at that point, the most effective tool that we can deploy. it has got to jump the hurdles. it has got to be seen to be necessary. it has got to be seen to be effective, efficient, and operationally capable. in fact, at the moment, it is

the operational capability that was our biggest concern, and some banks systems cannot handle a negative number. i cannot talk for the other countries could i will not. but it comes down to a lot around thinking about what is the limit to a negative interest rate, and what does it do, and what doesn't it do to retail banks, balance sheets itself, so that's the work we are doing, and i would never say never. we need to keep the options on the table. kathleen: saying something is an option seems to put a lot more doubt over it. i guess that will be determined -- let me ask you. is it going to be a question of just how bad of shape new zealand's economy is down the road in a few months? we have to do something, bond purchases have not worked, you know, the impact is deeper and longer. so now, it is the last thing on the list. is that the kind of optionality?

adrian: that is the type of thinking but it is certainly not the last option, and we would not be doing it even if we did not think it would be effective, so you are right. the first thing is down the road, what further stimulus, if any, do we need? our current tool still working? have we still got headwinds? atre the markets functioning? there are sensible questions we can ask, at which point, we still know that a negative ocr is an option, so i just do not really see any downside to it. to keep that optionality available, probably if you talk to a retail banker, they might talk differently, but that is the price of making the profits made. kathleen: speaking of retail bankers, you mentioned a couple of times in the press conference

after your policy meeting last week that you noted that even though the ocr cash rates came down, retail rates have not, and you said you were pretty sure that, you know, banks are going to realize that if they want to make the bond purchase program effective, they need to lower those retail rates, too. down toshing the rate negative put a little more pressure -- the ocr rate -- put more pressure on those bankers to say i guess you better do this? adrian: absolutely, it would. the most significant pressure we have is called competition. i get frustrated when people say there is not enough competition so we do not have to move. i am not sure why people would say that publicly. the competition. but i can rationalize why the retail interest-rate margins have remained where they are, if not higher as the wholesale rates have come down.

in part because funding has deposits so it can keep the deposit base there. it is done through international influence. volatility out there. demand for credit picks up. competition should come back to the four and that retail -- fore and that retail pressure will come on banks to be competitive. we will keep shining a light on it to say, you know, what are you doing? we are not lowering rates for you to increase profitability. we are doing it to get to the endpoint. negative ocr, they are saying you are done. certainly,ing to -- that impacts the funding opportunities quite directly. i am very confident that the and thewill reduce

feedthrough will be full. i am looking at a global question, inflation versus deflation. many more central bankers seem to say i am much more concerned about deflation and that is why i am creating special programs and bond purchases, etc., etc.. there are some significant voices saying maybe not today, maybe next week. there is so much stimulus traded by the rbnz and others that this is definitely going to push up prices and we are going to have an inflation problem. what is your view? that wei really do hope are confronted with some of those risks in the future because that means we have been successful. upregate demand has picked above supply, and we a more business and situation. with the business as usual situation, it means we would have to taper our bond

purchasing and continue as normal. is so moment, the impact large, the fear of inflation is very small relative to the fear of disorder, dysfunction, unemployment, and possibly even deflation. think that is pretty obvious but there is no free lunch. we would have to be acting down the path of the future. it is the same for governments, issuing debt. at some point, the price of that debt will rise and people will be saying it is going to hit my taxes or are you going to start paying things back? it is getting through these periods. kathleen: you ran new zealand's fund quite successfully, so you have worn that hat, being an investor, having to choose a securities, see where is a good place to put money, make money, or not. if you were looking at the world right now, if you are looking

at, you know, your bond purchases, possibility of negative rates, all kinds of things, how would this affect your view of where you would put money to at least keep it safe? adrian: you know, probably always stick with the big picture. the first is that will really be what you are about. the second one is how can you remain liquid through these periods? investor, a long-term opportunities will increase over the next few years into new markets and current markets. you would want to be liquid. he would retain the confidence of your investors, and be able to identify when the price is well below the long-term value of those assets, and that will be the make of a fantastic long-term investment manager.

challenges are that there will be new things and all things. kathleen: we have run out of time here. would you buy new zealand right now? adrian: yes, i do. well.en: o adrian: i am buying them. quite a few, actually. kathleen: thank you so much. governor of the reserve bank. we thank him and i already audience paid i will send it back to heidy. haidi. haidi: we will be hearing from the hong kong secretary plus an exclusive interview with singapore's minister for trade and industry. lots more to come. this is bloomberg. ♪

shery:shery: you are watching "daybreak asia." breaking news out of japan. we are getting the core machine orders month on month falling for the first time in three months. it is down 0.4% year on year. a fourth consecutive session of declines for core machine orders for the month of march. still, when it comes to the number itself, it is really a more benign fall than what was

expected. the expectation was for a month on month follow more than 6% and we are seeing a contraction of 0.4%. number, a muchr smaller contraction from what was expected, contracting 0.7%. also, a smaller contraction than the previous month of february, when it contracted more than 2%. we do have that uncertainty over the locked down, the slowdown in the u.s. and europe, but at the same time, perhaps this increased remote working conditions being a positive for capex in communications and information services. now, the pandemic of course hitting hard retailers. the latest earnings reports, at least here in the u.s., showing that online sales soared as customers stockpiled merchandise. su keenan joins us with the latest. walmart, one example of a retailer that benefited.

saw walmart sales with consumer stockpiling. it's results reinforce how americans really shifted their priority and spending because of the pandemic. check out the stock chart. you can see a lot of the retailers down because the market force ended lower but walmart has been up as much as 3%, closed down 2%. home depot, by the way, also saw stocks higher, but it failed to lift profitability. it increased sales that were off cut by the covid-19 measures and that put pressure on the stock. at one point, it was down 10%. but it's online sales were up 60% in april, and we have a chart of online sales versus in-store sales and for walmart, you can see that their shift to really beef up their online

operations truly paid off. online sales, in which is really unusual. in fact, if you look at the for the walmart report, the cfo at walmart said this was really an unprecedented quarter. he talked about the roller coaster ride in every and then march, where you saw all the stockpiling. a decrease in online sales but a difficult corner in terms of profits. see the number retailers pushed towards bankruptcy continuing to grow, so tell us about some of these companies that are joining this on list. su: we already know about j.c. penney, j. crew, neiman marcus, the latest two to join in the u.s. imports,k about pier 1 closing off 550 stores.

i should say 540 stores, after 58 years in business. it has asked the court for an orderly wind down of its retail operations. it will selloff inventory and shut stores. canadian retailer reitman's, which many analysts said had already been suffering weakness said the pandemic knocked the heck out of us, and they are also seeking bankruptcy protection. back to you. su keenan with us. do not miss our big guests in the next hour. the hong kong secretary of labor and welfare will be with us on this show, so lots more to come. this is bloomberg. ♪

♪ >> good evening from bloomberg's global headquarters. i am shery ahn. what'si am howdy strides -- i am haidi stroud-watts. come to daybreak asia. ischina says the u.s. shirking its responsibilities. india will become the new covid-19 hotspot.

the governor says negative remakes remain a possibility in the post-levitz world but that may only happen a lot later. for hong kongsis amid the pandemic. there are warnings that one in four of the cities retail outlets may close their doors for good. marketet straight to the action with sophie kamaruddin in hong kong. sophie: u.s. futures have swung higher in the sessions. conviction is lacking as exhibited by the latest fund manager survey with only 10% of those polls expecting a v-shaped recovery. they are moving to the downside after closing at a two month high. the nikkei is attempting a fourth day of gains. still a ways to go before breaching the 200 day moving average. investors are weighing potentially, your recovery. 900 billion to be sold. jgb's are likely to find support about .1%. is losing

this was the first drop in three months. the yen is back below 1.08. thefutures are ahead of boj's friday meeting. in south korea, high school seniors will be the first to return to schools as they are reopening in stages in the country. they are set to staff a three-day gain and the korean yuan -- korean won is holding steady there. we heard from the finance minister that a 10,000,000,000,001 special purpose vehicle will be used. isy are to lend -- the be ok to lend a trillion one. yearg lower after a 10

high. notearrie in a recent positing that the worst may be over as long as a second wave of infections can be avoided. kiwi stocks are under pressure. the kiwi dollar ticking higher. earlier, they spoke of negative rates being just one option for the central bank that it is prepared for but not to be adopted at this point. shery: let's dive deeper into the markets and bring in mark in singapore. here in the u.s., we saw the valleys and the selloffs elated to that moderna vaccine. it was a similar picture to what we saw a few weeks ago with the experiment of drug. are we seeing the same sharp reaction into the markets when ,t comes to asian equities viruses and virus related headlines? used twol have to get

training virus headlines. it is not just one company that is chasing a vaccine. there are several companies around the world. even in singapore we have a company that is looking at finding the antibodies. that is to help protect people as well. there are various ways we will see virus headlines feeding into markets. setback was pretty modest considering the strength of the rally we have seen since march. some people are saying that it has been going sideways for the past couple of weeks. there is a certain amount of truth in that but we are well above the levels we saw in march and january. we risk -- we seem to respond better to good news than bad news. the upside for the s&p rally does seem to be intact. that would be good news for asia as well. they will probably need something very significant in terms of people saying that a virus at -- virus vaccine is not

obtainable in the next 18 months. people are expecting that it will take time to receive the vaccine. with some any companies doing it, it could come earlier than expected. it would take somebody saying there is no chance of a vaccine being seen this year. happens, with all the stimulus from central banks and all the fiscal support going on, certainly the risk assets seem to be enjoying the fact that there is so much behind them to keep some kind of rally going. this week would be pretty hard to make a big dent in people's confidence right now. shery: there is increasing concern that beijing might expand the scope of the services targeted in this latest diplomatic that. we know that the aussie reacts in a pick and choose kind of way. could this derail the rally that we have seen? mark: there is a risk anytime we

see headlines between the u.s., china, australia and china with countries picking on each other because of attentional trade issues and trade flows between australia and china are so big that we would expect some reaction in the market. if you look at what we have heard from china, none of it has been concern yet. it seems to be quite surgical. china seems to be picking on areas that are not the major trading issues between the two countries. it would hurt china if they shut off big trade to deal with commodities between themselves and australia. that would be as damaging to china as it is to australia. that is probably something that is a very last resort type of scenario. it is probably more noise than real damage australia. that point of view, it is unlikely that it will have a really serious effect on australian markets unless somehow, china is pushed into a situation where it feels very threatened and it has to bring

out a really big stick. for now, people can take it as being a diversion. it is not something that is going to market -- upset markets for some time yet. that was mark in singapore. on all ofllow more today's action that is on the bloomberg. you can get a market run down in just one click. there is commentary and analysis from bloomberg's expert editors so you can find out what is affecting your investments at any different point in the trading day. still ahead on daybreak asia, covid-19 cases in india surpassing 100,000, just as they relaxed the lockdown restrictions. we will get the latest on the virus in asia. coming up next, the outlook when it comes to the economies and central-bank firepower. this is bloomberg. ♪

>> you're watching daybreak asia. i am karina mitchell with the first word headlines. pushing 5s cases are million with fatalities above 320,000. 30% of new cases in the past week while infections in india are rising at the fastest pace in asia. deathsn the covid-19 -- of covid-19 in the u.k. have -- 30,000.000 brazil reported more than 17,000 new infections on tuesday and nearly 1200 deaths. brazil has surpassed the u.k. as the country with the third-highest numbers between -- behind the u.s. and russia. china says president trump's threat to quit the world health

organization is an attempt to fork responsibility controlling the coronavirus outbreak. the president attacked the organization as a chinese buffet. beijing says it is an attempt to slander china and it will not work. in bank of japan will meet an emergency session on friday as it looks to firm up funding in the wider economy during the virus. they will not flush out lending programs. the boj aims to shore up proactive businesses that follows unscheduled meetings at the fed and the ecb. global news, 24 hours a day on quicktake and on bloomberg, powered by 2700 journalists and analysts in 120 countries. i am karina mitchell, this is bloomberg. negative cash rate

remains one stimulus action but it won't be happening until a lot later.

>> the the challenge will probay be the hardest. it is significant, it will persist and fiscal policy.

course that is our preferred instrument. the official cash rate is so low. we don't want to go negative at this point. we are prepared to if we have to but not until a lot later. the government bond, the obvious as that we can be purchasing, the good news is there is more of them coming on the market. we are talking about alternative monetary policy. we did not have a lot of government bonds to actually buy. it, we think about about the cap in terms of delhi billions of assets.

what we get from the government for buying these bonds around the market positions -- this is a percent of the total points on offer. that is not about our policy. that is about enabling, not what we have to do. we focus on inflation, unemployment. we are targeting a low and flat yield curve through the purchases of bonds. mentioned the global outlook. one aspect of the global outlook for new zealand and with the economy will be doing and that all over the map forecast is what is happening in australia and china. how do you see china's economy performing right now? what will that mean for demand from new zealand exports?

>> we are in a fortuitous position. if you wanted to confront a , yet to start from where new zealand started. we have good high commodity prices. we had low government debt, very high labor force participation and inflation above the midpoint of the band -- ban. all of these are good starting points. .e need people to buy for us still remainods well sought after. fishing,food, timber, things that have remained in demand in china. >> that was adrian orr speaking to kathleen hays there.

asia's rates are set to remain in focus here. indonesia expectedly leaving its rate unchanged. economistss predict that the tail end will cut its benchmark your letter. isning us now from hong kong the asia-pacific economist, alicia. the other thing we heard from adrian is that there is no such thing as a free lunch. with every policy measure we have seen from central banks, there is a reaction somewhere. there is a trade-off. clearly, for indonesia, it was a pleasure that was coming down on its karma say. is there great depression when it comes to asian central banks russian mark many that were set to have more ammunition than others? >> thank you for the invite. fors very important times

central banks in emerging asia. we have an emergency meeting as well. -- fors that nobody can the bank of thailand, i think they might cut. the actions are outside of the central bank balance sheet. you have to realize that the bank of thailand, it has not allowed directives by private debt. for that, they are using is 400te bonds, there billion at the back of thailand's disposal to basically keep that credit in the sector mostmoke hit -- sectors hit by covid-19. at the end of the day, it would be all sectors. there is -- it is not the

quantitative easing we just heard in the bank of new zealand. credit, whatabout --se emerging economists this is indonesia. seeing steepening of credit risks that are earning equity and the trade markets. stop that.o they need to start a wave of defaults. rates are important in as far as liquidity may be hoarded. even if you cut it and cut it, it still might be hoarded. you need to ensure a level in the credit market and the quiddity market. that liquidity, you have to put that the two used -- put that to good use.

shery: there is a really interesting point that one of the pieces we have on bloomberg, developing nations may see a quicker economic rebound then developed nations. social distancing is harder to enforce. people -- more people are forced to go back to economic activity and labor market activity quicker because they don't have a choice. do you think that was an interesting point? is an interesting point. thered agree with that, is nothing comparable to southern europe. nobody, not even china has gone to the point of stopping every type of mobility. i would have to twist that , they might say

that this is only true if you get enough finance externally. for some, thailand is not a very good example. this is not an issue. it will be massively reduced. still, this is a low domestic funding type economy. indonesia is very different. not only indonesia. if you go to latin america, there are collapsing markets, extremely important. no matter the mobility, if you don't have access to external funding or it is very expensive, neednk -- my point is we to divide them into big groups. exporters,y especially those with the -- even if they are not

, especiallyporters not oil, that is the most affected. basically, two groups. the second group, i don't think we can just say because there is mobility, they will do fine. willollar is key and we suffer from that. shery: we are expecting the national people's congress to launch in china. what does that mean for the debt levels in the country question mark we have seen the deleveraging efforts in that economy but at the same time, we are effecting tons more in terms of fiscal stimulus to come out of china. very good question. injust published report

2019. we are talking about shadow banking, i fully agree that there has been one. in the terms of total debt to gdp, there has not been any. in the first quarter of 2020, we 10e seen estimates between and 13%. it is not only public debt, a a lot isblic debt, household. it is important. we yearlydenominator had negativee we pricing indexes. actual real growth rate would be very low. effect on thatan ratio to the gdp this year. that is going to be a real wake-up call for china.

it is public debt. let alone its total debt with a very different. it would look very similar, increasingly to europe. we won't be able to say that it has a lot of room. the number is going to look very different. we are seeing this in the markets. of these are coming up, that is the reality. has public debt, not corporate debt. public debt is high. it will be high in 2020, that ratio. shery: thank you for joining us. that was the chief asia-pacific economist. we have breaking news. we are hearing from facebook. bloomberg has learned that the company is atlanta staff globally about how to proceed when it comes to returning to

their offices. they will limit their offices to 25% occupancy. people will be staggered in different, multiple shifts and require temperature checks. they will also be required to wear masks. pointy more to come on daybreak asia. this is bloomberg. ♪

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we are waiting for some breaking news across the thatberg, leading into index for the month of april. we saw that contraction of about 8/10 of 1% in the previous months. we are expecting further weakness when we get that rating. let's get a check on the markets with sophie kamaruddin in hong kong. sophie: we are seeing little conviction with treasuries and gold holding gains.

orr said this regarding the rates this morning. this is led lower by australia with the asx retreating from a 10 week high. tuesday'sk some of gain as iron ore prices stalled midweek. shares are fluctuating with the nikkei 225 adding about 2.5%. the antiviral drug at again is not effective. jumping on sony's plans to take the unit private for up to $3.7 billion. as with that, japan exchange group is surging in tokyo. will -- jp xng gpx will overtake them.

this is one of the biggest laggard on the benchmark, sharp is under pressure after posting an operating loss for the fourth quarter. to ¥18.se dividends getting the latest numbers when it comes to coronavirus cases. we are seeing china report five additional coronavirus cases for may 19. we are still watching those ace sin to medicaid numbers as well as some of the specific numbers we have seen recently. more than 100 million people in china's northeast remain under renewed lockdown because of coronavirus cases. our next guest expects the strained u.s. and china relationship to jerry further with the looming economic downturn.

great to have you with us, susan. we are getting more numbers out local viruscluding infections, all here in the province. we are seeing second wave of factors across the country. now, more pressure on the who to do more. we have seen president trump and president xi jinping on that show down with president trump now threatening to withdraw funding from the who permanently . saying that the who is very supportive of china. it is not an independent body. tensionsee these escalate as we continue to try to control and rein in the pandemic? it is also the fears around here in the united states, especially in washington about china coming on top of when it comes to the world after the pandemic. >> great to be with you. thank you for having me.

i think that everybody sees worldwide with this pandemic, trying to stem the tide on cases, worrying about relapse for reappearance of cases once it is under control. we see a couple of countries struggling with that. facingome countries are what is going on with the virus. other countries are looking at the economic downturn and trying to figure out how to deal with that. as an economic crisis whereas the u.s. seems to be dealing with china. i think this came up for force this week with xi jinping giving that speech at the world health assembly yesterday, pledging to billion dollars to who efforts from china. facing off against that, the usa that is going -- saying that it is going to defund the who during this pandemic. it flies in the face of a lot of

calls for international cooperation. we are running into the u.s. election season right now. it is liable to get a little bit more testy as it goes forward. >> it is not only the tension with united states, china is in a diplomatic spat with australia. for thepean union origins of this virus. will beijing come out stronger or weaker from this pandemic? >> i think that is a good question. they were the first to be affected by the pandemic. they were the first to get it under control. they were the first to reopen their economy. it is possible that beijing could do better economically coming out of this crisis and some other countries. economic outlook depends very much on what happens in the rest of the world. i think we are going to see a very big hit to the economy both in china and the u.s. and

europe. i think that it is very early to say that beijing is going to come out of the crisis stronger. their diplomacy has not been very adept and very well received around the world so far. >> the addresses to the who this saidhad hints of what he in davos. is trying to be more of a globalist than the trumpet ministry -- troubled admin attrition is? >> we heard a lot of these things that you pointed out but the proof will be in the pudding. $2 billion pledged to the who is not nothing. it is much more than china has been paying into that organization. it would be significant. we will see if the we will have

to see -- we will have to see if it arrives. china will be involved in strengthening and reforming international institutions. there has been a lot of cases with china where they set up parallel institutions and workarounds to institutions. a lot of this is worse than before. we will have to see whether they come to fruition or not. >> dear expect much from the mpc other than the fact that it is symbolically important for to go well after being delayed? is it political pageantry that we have come to expect? simples definitely more -- simple than substance. this year, they do all the prep work for this mpc. outfall where they plan what they're going to do in the

spring. it is the convening of the delegates around the country to spread the messages. last fall, when they prepped this meeting, they talked about having a 6% growth target. obviously, with covid-19, that has gone by the wayside. that is the big question to see what growth target they come up with. that will tell you something about how much stimulus the government will have to pour into the economy before the end of the year to bring us up to that growth rate with what was otherwise truly a negative growth rate given all of the hits to consumption and production, etc.. thank you very much for your time. assistant deputy secretary for east asia and pacific affairs. let's get the first word headlines now. we are seeing china take another swipe at australia for an investigation into the origins of the coronavirus pandemic. they are banning some beef

imports. they are threatening to target one and dairy. have is set -- said to drawn up a list of needs. dodged senatehas efforts to make an take sides on coronavirus aid, maintaining a neutral stance in the debate over whether congress should act with record stimulus. steven mnuchin testified mostly to the banking -- remotely to the banking community. more fiscal health may be needed but he stopped short of a full endorsement. retailhong kong association has a plea forecast for the city. saying one in four stores could undergo a street -- undergo complete foreclosure. areon pop outlets suffering.

>> we will be getting more analysis when it comes to the outlook for hong kong later on. we will be speaking to the secretary for labor and welfare. this is as the jobless rate has -- hits its lowest in more than a decade. this is bloomberg. ♪

>> the jobless rate in hong kong goes to the highest in more than a decade. also, the prospect of renewed political invest. joining us now for more about the outlook is the hong kong secretary for labor and welfare. he joins us from hong kong. right to have you, secretary. -- great to have you, sec.. i am wondering if you see this as the worst in terms of the labor market instruction that we have seen. >> it is very difficult. we are now gradually relaxing some of the measures for slowing down the epidemic here in hong kong.

we recall back to 2003 when hong kong sauced highest level -- saw its highest level. are you hopeful fall -- hopeful for a rebound time? you're dealing with social unrest in the street protests. that wasn't a factor back then. >> i think it is. it is too early to say. whether it is a v, u or l shaped. the outgoing discussion between can be the consumption of economic activities in the china region. there should be good sons in the coming weeks that we may be able to see.

we should be cautiously optimistic. cautiously optimistic but we are getting scenarios put out there that could see one in four retail stores closing within 15,000 jobs in hong kong. not really surviving this pandemic lockdown. even as we start to see restrictions being lifted in hong kong. is there any sense that we could see more action from the government? rent reduction measures are helping but clearly not enough. global policy measures need to --taken to help one of these some of these particularly small businesses survive. >> monday, we will be rolling this 1st avenue.

we hope to be in tune for the july. we hope this particular measure, according to do measures we have adopted, we hope that the amount that we budget for, that is the amount close to 8% of the gdp, it should help a lot. seen supply chain dislocation. and one of the effects of the pandemic lockdown around the world. we are also starting to see some apple leaning away from china, looking more to vietnam and other countries and their supply chain needs. how does that impact hong kong and the businesses that do rely on being a gateway to china?

there will be restructuring of different types of industries . tourism rebounds very quickly. it may be slowly but definitely, there will be some constructing in the economy that could be painful, it takes time. >> when it comes to the wealth gap, hong kong has always been one of the worst in the world if you look at the jenae coefficient. this will be about the ongoing pain that started with the social unrest. what more can we expect from the government in terms of supporting the people and the sectors of hong kong society that will be suffering the most? we don't have the safety net.

because of the enhanced security system, that would be able to help those are financially in to the level of living that is required here in hong kong. functioningly pretty well. this is all increasing very rapidly. >> is the government considering further rounds of cash handouts given that they may needed given the levels of unemployment and underemployment that we are seeing? in the current budget, we --e

this will be in a couple of weeks time. some of the money will start going to departments as soon as late june and early july. what kind of diversification will there be in hong kong that relies on tourism and travel and the services industry? particularly when it comes to the links in china. what more can they do to ensure their survival given that you have to assume that at least in some part, some of these travel and behavioral changes that we are seeing will be semipermanent? time forl take some to economy to restructure the changes in our economy. particularly in terms of the suspension reduction in tourism. also because of the slowing down in the international traveling

so far. we are just talking about the tourists at a different point in time. as i said, it requires some disruption in our economy we expect that 16 or 17 million travelers will be coming back into hong kong in a year or two. it will take some catching up. >> great to have you. the hong kong secretary for labor and welfare, we appreciate your time. >> we have another big guest coming up. we will speak -- we will be

speaking to the singapore minister for trade. asia, up next on daybreak india is preparing to evacuate millions of people ahead of what will be the biggest storm it has experienced in about two decades. all while battling the coronavirus which is spreading at the fastest pace in asia. this is bloomberg. ♪

>> let's get you a quick check

of the latest business flash headlines. trading on theng nasdaq later on on wednesday. shares have been suspended since early april after an investigation into sales numbers. before that, the scandal sent the stock down more than 75% in a single trading session. the nasdaq is also worried about exposed material information. johnson & johnson is halting sales and production of its iconic baby powder products in the u.s. and canada after more than 130 years. ship them -- a shipment of the talcum powder will cease immediately. this follows thousands of lawsuits in north america alleging contamination. j&j says it is

completely commercial. is warning that profits could fall by as much as 30% in the fiscal year as the coronavirus has it into consumption and production. sale step has been unable to pitch to customers directly during the pandemic. coronavirus cases in india are not escalating at the fastest pace in asia. new infections crossing the 100,000 mark. is relaxing the nationwide lockdown. yvonne man has the latest. what needs to be the focus now the reg -- now that we are seeing the infection rates continuing to climb in india? the worstis is one of hit countries. india saw a record daily increase in cases. ringing that total to more than 101,000 cases.

pakistanre that to which has early 44,000. you see that india is in worse shape. expert focus should be prioritized in a low income areas and when it comes to containment measures, they need to be done district by district in order to flatten the curve. another challenge to the economy is the movement of millions of private workers. that is going to be an obstacle. yesterday would further ease restrictions, reopen public worst affectedhe areas, there is still that been on interstate and international air travel, that has been extended until may 31 now. out asingapore has laid plan to gradually reopen the economy, get more economic activity back online. what do we know about this path forward? >> >> it will be a careful and

graduate process -- gradual process according to the government. the first phase is basically to reopen three corners of the economy. ofthis is and manufacturing production. chipmakers and engineers will be able to get back to work. those in finance, insurance, wholesale as well. a third of the workers globally will get back on site. others will still have to work from home. consumer services as well. motor vehicle service and, if you want to go to your hairdresser, i a book for school, those are now all open. people will also be able to visit their parents and grandparents at their home. take 4-6 is likely to weeks. when we get to the second phase, when you see retail outlets, restaurants and gems, that could take months. until you get to that final stage, that is basically allowing social and business gatherings to resume with

limited crowd sizes. thereill not happen until is a vaccine found. singapore has had a better handle on the virus that has infected nearly 29,000 people. officials say that the situation -- we had that recent spike in cases among minor workers. that has stabilized. there are new community cases as well. there are some signs of progress here. the government will set out is forth to mills package next tuesday. fourth stimulus package next tuesday. > before we handed over to bloomberg markets, let's look at our markets in asia. trading is better than expected given the late session swing. we had some pretty much gains when it came to training in japan. australia is down by .7%.

lots more to come, this is bloomberg. ♪ staying connected your way is easier than ever.

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and singapore, welcome to "bloomberg markets: china open." i am selina wang with rishaad salamat in hong kong. china says the u.s. is shirking its responsibility. india and brazil become the new covid-19 hotspots. central banks make headlines. negative rates are a long-term possibility while jay powell