♪ >> good evening from bloomberg's world headquarters. we're counting down to asia's major market open. i'm in new york. >> and i'm in sydney. welcome to day break australia. these are your top stories this hour. u.s. stocks hit a 10-week high as the u.s. economy reopened. however, the fed acknowledges the severity of the coronavirus impact when it met last month. oil's at a one-week climb with signs that the market is finally rebalancing, despite the fragile economic outlook. futures closed higher in new

york as u.s. inventories declined. and coffee slumped on its return to trade. unease there. >> let's get you started with a quick check of the markets trading at the moment. we are seeing u.s. futures opening slightly higher. this of course after the regular session saw the sapp 500 climb to a 10-week high. we have optimism over reopening of different economies. not so much in key retail earnings showing signs of resiliency, so we have those and target reporting sales that top the estimates. the sapp 500 really erasing all of tuesday's losses. and really the gains being pretty broad. we're talking about financials, industrials and energy leading all 11 sectors higher. the sapp 500 more than -- up more than 30% since its march low. the nasdaq composite at the highest level in more than 12 weeks. oil, we saw another day of gains for w.t.i., gaining ground for a fifth consecutive

session. right now under a little bit of pressure but still at around the highest level in almost 10 weeks as we continue to see signs that the market is rebalancing. here in the u.s., we saw data showing that crude oil inventories declined for the second week in a row. not to mention the biggest drawdown when it comes to cushing oklahoma stockpiles. >> we have a check of how markets in asia are setting up. >> asian futures are largely pointing higher. we could resume gains in the region where value wrigses -- valuations are edging closer to pre-crisis levels. japan, china and australia have already bounced back on that metric with the asx 200 eyeing february's record and still looking pricey amid the earnings uncertainty. flipping the board, with the dollar turning weaker after the fed minutes and the e.c.b. dolling out funds under its new liquidity program, the yen looking steady, ahead of trade figures in japan. the offshore yuan holding a

three-day gain. the kiwi-dollar trading at $61.46 after apple forming on the -- [indiscernible] -- suggesting the market may be getting ahead of itself, pricing in a negative cash rate next year. but subzero rates very much remain a live topic. the b.o.e.'s andrew bayley did not rule it out after the u.k. sold its first negative yielding bond. and the pound easing its overnight gain, that was sparked by bets on lower rates. the central bankers worldwide will consider unconventional policies, concerning are rising over monetary financing perhaps ecoming a reality. >> we're going to stay on that theme. the fed, the bank may not be looking at negative rates to combat the pandemic any time soon. over the past few days has been steadily kind of given the narrative of crushing that ex protecttation but in the april minutes, the fed members saw a severe threat to the economy and even financial stability in

the u.s. let's discuss more now with the former advisor to the president of the dallas fed and currently quill intelligence c.e.o. and their chief strategist. always a pleasure to have you on with us. is it an inevitability given that rates are just barely managing to keep above zero and you have action over the e.c.b., the b.o.e., obviously new zealand is talking about it as well. in this environment is an inevitability that we'll get to negative rates in the u.s.? >> i don't think that it is an inevitability for every other country with the exception of the united states. i think negative rates are more practicable in other countries because they take the risk-free rate associated with the u.s. treasury. and kind of plug them into their financial models. i think that doing that with the world's reserve currency carries with it a lot of risks that chairman powell has tried

to spell out in recent appearances and in his recent congressional testimony as well. to say nothing of what it would do to the banking system. and i would add there that there has been a unified front among fed policymakers. there were several -- bob cap land was on today on bloomberg, reiterating that negative rates are not a path that the fed is going to be pursuing. so i think other countries can go there, i don't think the united states can. >> is -- [indiscernible] -- the next probable or sensible step for the fed? short ink that we give solicit to brain ard. she laid out a exrehebsive plan and we've seen that play out ast year with the not q.e. buying treasury buildout to two months. her blueprint, if you will, does entail the next step being

yield curve control and thed a mans that jay powell has spoken with of late, that the fed has in no way exhausted its liquidity ammunition, also suggests to me that if there was to be a pullback in the stock market, which nobody could foresee on days like yesterday and today, but if there was to be a pullback in the stock market, i think the fed would take this step of buying e.t.f.'s as the bank of japan has done, of buying stocks before even considering negative interest rates. yes, yield curve control, potential to buy u.s. stocks as well. >> let's talk about that unprecedented support that we have seen from the fed. of course not only throwing in the kitchen sink but really much more. this is what robert kaplan had to say today. take a listen first at what would happen even if the fed comes with all of these measures, because potentially we could see a fundamental change in the economy. >> with businesses reopening, i

think you can see a good, slow, steady recovery in the third and fourth quarters. fiscal policy will help, the fed programs will help. but ultimately money is not going to get consumers to engage in behavior they're not comfortable with k -- and i think we could spend a fraction of what we're spending on testing.on >> what will the economylike like post-pandemic? >> president cap land knows what -- kaplan knows what he's speaking about. we're both here in dallas, texas. restaurants here are opened up at 25% capacity as of friday. bars will be open, restaurants will increase to 50% capacity. but again, you cannot force consumers into that comfort level and i think a lot of businesses have been surprised at the reopening efforts they've made and the consumer

has not shown up. the reason we're talking about the third quarter and the fourth quarter and the fed actually going so far as to say that it may place an end date, it may place a promise end date on when -- at which rates will stay at the zero, has to do with the fact that there's so much uncertainty about when the u.s. consumer's going to feel that confidence. we see cases coming down on a nationwide-based. but if you net out new york and new jersey, the other 48 states, we definitely have not begun to flatten that curve. >> how important will it be that in this recovery, small businesses take the lead? because yesterday when we heard chair powell's testimony in congress, with, we had heard these questions about small businesses falling through the cracks, they were too large for the p.p.p., too small for these fed lending facilities. >> well, and that's going to be an increasing problem and i ink that that is the command

fed policy cannot press. you cannot print payrolls and jobs. the fact that so many small businesses have quickly fallen through the cracks, because of a lack of cash flow, because the p.p.p. was not able to give them relief, because of the way their businesses were structured, or the way their employees were classified, this is what is going to cause, i think, a protracted slowdown and a protracted stagnation in the recovery. you cannot bring back these jobs quickly once these companies have gone out of business, faced with -- bloomberg had a great interview a few days ago. facebook surveys 86,000 companies. 1/3 of them are not planning on reopening once the economy, where they are, does reopen. that's a big number. >> we heard that the senate approved new legislation that potentially prevents some chinese companies from lifting

in the u.s. --ist i -- listing in the u.s. are we setting up for another round of the trade war before the phase one deal was even fulfilled? and is this going to be the case going into the election and how much does that potentially derail not just the u.s. recovery, but a global recovery? >> well, i think it does throw a big wrench into the global recovery. people forget that in 2019 world trade was negative on a year over year basis. that would typically have indicated that the global economy was already in recession. this is the last thing we need and of course more than 116 nations, i think, at last count are backing australia in its moves for an independent inquiry into the origins of the coronavirus. and that means that we could not just have trade tensions between the united states and china, but rather china actually begin to impose tariffs on other countries and that would be extremely problematic. especially if it was under the auspices of garnering political

favor here in the united states, because it is an election year. >> thanks for that. always great having you with us. former advisor to the president of the dallas fed and quill intelligence c.e.o. and chief strategist. still ahead, muddy waters says a substantial number of u.s.-listed chinese firms are committing fraud. our interview is come pping you. plus the u.n. says the pandemic may push 130 million people to extreme poverty. assistant secretary general and chief economist joins us at the bottom of the hour. bleg bloomberg -- this is bloomberg. ♪ ♪

>> you're watching day break australia. first word headlines. global coronavirus cases are approaching five million with reported deaths now near 325,000. there are signs that the pandemic is changing, complicating efforts to restrain its spread. president trump says america's

ground ball reopening means he may reschedule the upcoming g-7 meeting to a face to face event at camp david rather than a virtual discussion. he says the u.s. is on a transition to greatness. japan is to lift the state of emergency in osaka and some other areas. although the restrictions will remain forced in tokyo. the government is to announce the move after a cabinet meeting on thursday. the coronavirus has devastated many parts of the economy, with visitor numbers plummeting. april arrivals total less than 3,000, a slump of 99.9% from a year earlier. and the last governor of hong kong has added his support to democracy demonstrators saying that they should stand up for their beliefs. chris pattin was addressing the foreign correspondents club remotely on the city's future saying he has no problem with china but criticized the communist party. hong kong's economy has collapsed amid months of street protests and the fallout from the virus.

>> when will the chy -- where will the chinese communist party be in 2027? i don't know. jinping is going to live forever, i doubt whether it will be the same today as -- then as it is today. and i don't myself believe that you can kill or lock up an idea. >> and chinese companies listed in the u.s. fell on warnings they now face tougher scrutiny about their finances. alibaba and other stocks slumped after reports the senate has passed legislation banning chinese firms from lifting or raising money from u.s. investors. the bill accuses the communist party of cheating stock exchanges and said the u.s. cannot let foreign threats take root. >> a company that invents 30% of its revenue is considered real. because if you're taking other people's money in china, i

mean, there's an expectation that there's some level of fraud. >> global news 24 hours a day on air an on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ >> let's get more on the senate bill which could lead to the delisting of chinese companies like alibaba. our congressional government reporter joins us from washington. so this was really overwhelmingly passed in the senate, another sign of rising bipartisan support against beijing. >> absolutely. this is not the first bill that we've seen in the last month, that senators have been using to send a message to china. remember, there was one a couple weeks ago about uber rights. another interesting thing to remember is the bill has passed the senate but it's not officially law. it would need to pass the house and at this point we haven't

seen a bill introduced into the house that would allow that to happen. doesn't mean ones a not going to happen but that's sort of where we are right now. -- one's not going it happen, but that's sort of where we are right now. >> we're also hearing about this 20-page report that really kind of issues a broad scale attack on what it sees and what the white house sees as beijing's predatory economic policies and military buildup in the south china sea. propaganda campaigns. what more do we know about this report and does it potentially signal a change in u.s. foreign policy towards china? >> i think with this report, it's just one of so many things that we've been seeing and hearing about in recent weeks. in regards to the u.s. and china's relationship and how it's being impacted by coronavirus. both countries have been notching up tensions on each other. you saw secretary pompeo today breaking previous tradition to congratulate taiwan's president on her re-election. that is not something that has

precedent in the past. you've seen back and forth on the world health organization, you've seen back and forth on trade. so you haven't seen a lot of clear and concrete steps taking yet that would fundamentally change the relationship. but you are seeing this continual back and forth tension over multiple issues. >> we continue to see this pushback in the back and forth between china and the u.s. what does this all mean for the phase one trade deal that washington and beijing struck? of course we had already heard that perhaps beijing was really lagging on their -- on actually committing on their commitments when it comes to agricultural purchases. >> yes. that was something that was sort of mentioned. i think even at the beginning of the bill it was pointed out sort of how much they would have to buy and there were some questions over whether or not that would be doable. but the other day we did hear a white house advisor come out and say that the chinese deal is still on, that the trade

deal is still going forward. so at this point we haven't seen any sort of official secretary ofering of the ties or any official saying it's not going to happen -- severing of the ties or any official saying it's not going to happen. we haven't seen anything oncrete at this point. >> emily wilkins, our congressional reporter there with the latest in this trade and diplomatic war that's brewing. you can get more on the intensifying tensions between beijing and washington in today's edition of day break. bloomberg subscribers, go on your terminals and it's on the mobile in the bloomberg anywhere app. coming up, wall street's own reopening plans are starting to take shape. everything from staffing limits to shift to suburban outposts are on the table for the post-lockdown era. we'll get the details next. this is bloomberg. ♪

>> the latest after the bell earnings reports underscore how brutal the pandemic has been for retailers. and how beneficial it's been for those selling stay-at-home-related products. we're joined now with a wrap of what we're seeing. we're also witnessing these changes at the big banks but let's start off with the after-hour action. >> yeah. a real mix of reports. first from travel online booker x feed peadia. .n line with -- expedia came in with a loss of $1.83 a share versus the estimate of a loss of $1.45. the company said it saw unprecedented cancellations due to covid-19. in fact, gross bookings fell as much as 90% in the second half of may. notice limited l.b., which is the owner of victoria's secret,

also taking a hit. take two interactive is an online -- what they are is a video gamer that saw its sale surge. its shares falling after hours but it reported across the board increases. taking a closer look at, again, the parent company of victoria's secret and bath and body works, they saw a sharp decline in sales that is typical of what we're seeing with a lot of the big box retailers. much bigger than expected losses. and take-two interception -- take-two interactive saw its use of video games soar pretty much across the board and they have some very big franchises like grand theft auto and red dead three and they say the pipeline is even stronger and so that company enjoying much better than expected sales because the stay-at-home orders really encouraged the use of their products.

>> big banks making some big changes. relocating staffs outside the city. this seems to be a trend that we have seen even before the pandemic. >> yeah. there had been some talk of that. when you consider the huge real estate price of these skyscrapers in manhattan, where the big banks are located. nd now the question of how they're going to be using the elevators, if they have to have people pushing the buttons. now we hear citigroup is looking at relocating staff to various suburban offices. jpmorgan already clearing away personal belongings and talking about perhaps only having about half of its staff come back. and morgan stanley had been one of the first companies in the financial business to talk about how they saw a completely different use of desks and office space in the city, when the lockdown orders were lifted.

again, this is both a real estate and cost decision as well as a concern about how their staffs that work in tight quarters, often on trading floors, within the banks and close desks are going to feel in terms of comfort and safety, as this covid threat continues. so big changes in the bank, what they're calling the post-lockdown era for finance. >> su keenan with the latest on earnings. thank you. let's get the check of the latest headlines. china's starbucks rival plunged on returning trade to new york after being told it's being delisted amid a scandal about fake sales. lucky coffee has been suspended since early last month when it fell 80% that new senior executives had fabricated sales numbers. it's being disappointed at the elisting notice.

half its revenue came from outside its mainland chinese markets for the fourth time. income climbed 11% to $324 million in the three months while sales jumped 14% on overseas demand. combmbings iaomi managed to grow global smartphone shipments by 6%, even as total worldwide sales volume fell. the success of chinese video app tiktok has boosted its' parent valuation to more than $100 billion on optimism it will continue pulling in advertisers. stock has been changing hands at a level that suggests its value has risen more than 1/3 since the funding round two years ago. ources say some trade values ytedance up to $140 billion. >> all right.

we are seeing continuation of positivity when it comes to the side of trading here in asia. of course u.s. stocks hitting 10-week highs, the sapp's now up over 30% from its march lows. really brushing aside these political concerns between china and the u.s. and that new senate bill potentially banning some chinese companies from listing in the u.s. also brushing aside these fed concerns over growth. we are seeing the yen hold steady ahead of trade data as well as p.m.i. numbers out in the next couple of hours. and we are watching really a sea of green when it comes to asian futures set to start trading today. we're also watching some positivity in the oil market as that expiration of the latest contract went off without a hitch. and we are hearing reports that u.s. and canadian oil that would usually be headed for the u.s. are now actually headed to china because of a recovery of oil demand there. a little bit later on, we'll be opening the doors to take a look at what's happening in china's luxury retail space.

we'll look at travel and hospitality as well. this is bloomberg. ♪ ♪

>> you're watching "day break australia." checking in on the headlines this hour. the u.s. senate has passed legislation to could see chinese companies barred from listing in america. as relations fell further between washington and beijing. the bill requires companies to certify that they're not controlled by a foreign government and sponsor john kennedy says he simply wants china to, quote, play by the rules. lawmakers have been increasingly critical of beijing amid the coronavirus outbreak. minutes from the fed's april meeting show policymakers agree the coronavirus poses a severe threat to the u.s. economy. including to the stability of the financial system. officials say the economic fallout from the pandemic is

creating, quote, an extraordinary amount of certainty and -- uncertainty, i should say, and considerable risks to medium term activity. the fed says banks could come under increasing stress. >> with businesses reopening, i think you can see a good, slow, steady recovery in the third and the fourth quarters. fiscal policy will help, the fed programs will help. but matly, money is not going to get -- but ultimately, money is not going to get consumers to engage in behavior they're not comfortable with and i think we could spend a fraction of what we're spending on stimulus on testing. >> the bank of england governor says the time is right to examine how low rates can go as economies struggle with the fallout from the coronavirus. andrew bayley told law makers in london that the bank is actively discussing rates and won't exclude the idea of going negative. his comments come amid a growing debate about rates with a report showing u.k. inflation falling to its lowest in four

years. cyclone has made landfall on india's eastern coast forcing millions of people to seek shelter. it hit the coast with winds up to 200 kilometers an hour late afternoon and is making its way as a tropical depression. it has disrupted local business, creating india's biggest fertilizer plant. police in the u.s. have arrested two men who were charged with in japan for aiding the escape of a man. they've been detained in massachusetts and face possible extradition. the two men will appear before a federal court by video link on wednesday. ghosn denies any wrongdoing. >> as the coronavirus continues to wreak havoc on global economies, the united nations has released a new report with

some bleak findings. in their midyear economic analysis, they projected the world economy to shrink by 3.2% in 2020, erasing nearly four years of output gains. joining us now is united nations assistant secretary general for economic development and chief economist in the u.n. department of economic and social affairs, elliott harris. great to have you back. of course we know that governments and central banks around the world have really tried to stimulate their economies and yet about 2/3 of the world's population in developing economies don't really have the fiscal or the monetary capacity to help their own economies. so how big will this gap be between the richest and poorest countries and how will that affect the recovery? >> i think that is indeed one of the biggest challenges that we face. is that this is a universal crisis, but it doesn't affect us all equally. that's the reason we've been calling from the outset for a consolidated and coordinated international response to help

those countries that are not in a position to make the matters of stimulus and support packages out of their own resources. but they can respond and prevent their economies from declining even farther. this is endeed one of the biggest challenges as we look past the immediate crisis to the recovery, is that in many countries, there is just a simple lack of resources to recover quickly and that the investments that are needed to support country economies that will help the recovery will simply not be available without this kind of international support. >> will the pandemic make inequality that's already been rampant, not only in developing economies, but even in advanced economies, just become worse? >> it certainly will. because as i said, it doesn't effect us all the same. this crisis has disproportionately hurt people who are in low-skilled and low-wage jobs. those who have occupations that they cannot do from home, but are supposed to be out there in

close proximity to others, they have found their sources of likely -- livelihood closed down under their feet, they have no way of earning a income and they're falling farther behind. it's the same thing with some cres as well. we have countries heavily dependent on economies, demand for exports has fallen back so their export revenues and fiscal revenues have been desperately shrunk and thor now in an even worse position. many of them are facing a possible debt crisis for lack of resources to service the debt or to support the economy. so it really is a tremendous problem from the inequality perspective and if the crisis continues for very much longer, we will certainly find that more and more people will fall back into extreme poffer. - poverty. >> the tragic irony is that in that way, that's why a lot of economists are expecting the developing nations, eamericanning markets are going to recover quicker because -- emerging markets are going to recover quicker, because people

were not taken into lockdown, they were still going to work. they didn't have the luctsry of being able to work from -- luxury of being able to work from home or have economic activity stop. is that what you expect to see in the top line data in terms of how the economic recovery played out in developing nations versus developed ones? >> actually, no. i think we will find that most of the developing economies depend so heavily on-demand that comes from the developed economy, that until the developed economies really start the recovery, the developing countries will have very little prospect of doing much better. i think of countries that are heavily dependent on tourism, for example, as a sort of g.d.p. and income. until tourists start reappearing on their shores, there's just really very little they can do. the same thing with the commodity-dependent economies as i mentioned earlier. until production picks back up in the bigger economies, the middle income countries and the high income countries, the demand for their exports will simply remain weak and there's nothing that they can do about that in the short term. so no, i do think that we snee

this crisis the close interlinkages of all of the countries of the world's economy and we will stand together, we fall together, and we will recover together. this is why we think that this coordinated international response is in everybody's interest. >> how much of that does that go to china? because these interlinkages between small and emerging nations and beijing's debt aid and the number of other initiatives that have taken place through beijing's economic and self-diplomacy are immense. how much is that recovery tied to a robust recovery of china and its ability to be able to uphold the debt and financial aid promises that it's made? >> i think for any of the larger economies, the chinese economy is the second largest in the world. the american economy as well. we need not overlook the

european economy. until demand and production in these economies really is resuscitated, global economic performance is going to be subpar. there is no doubt about that. china happens to be a critical cog in the co-machine of international trade and global supply chains, it is a very important player there. and its recovery will be a part of the recovery of these supply chains with local trade. i think it is not only a question of china. china was perhaps the first country that was deeply affected by the crisis and first one to shut down. it is also one of the earliest to start the reopening process. but again, i do not think that reopening the economy is going to be quite as straightforward as shutting it down was. so it's going to require that markets around the world are gradually reopened and the demand picks back up and all of the major economies will have a role to play in bringing economic performance to anything like the level we had before the crisis.

>> to your point, given that we are really risking second wave infections, that we've already seen play out in countries like china or south korea, do your numbers, your new u.n. report that says that we are going to see the global economy shrinking more than 3%, that that's -- does that factor in potentially morin fections down the line? -- more infections down the line? >> unfortunately no. this is what we would call a baseline assumption. we are hoping, as i think we all are, that we are able to reopen the economies around the world in the course of the second quarter of the year, so through june and into july. and that by the third quarter, economic activity's starting to pick back up. now, of course, if we have a second wave of infections and governments feel obliged to shut things back down, that is a very optimistic projection and we're likely to confront a significantly worse outcome for this year. we have to hope it doesn't come to that. we have to do everything we can to minimize the risk of further flare-ups in the infection

rates. and certainly we have to all cross our fingers and hope that we get a vaccine as soon as possible because i think that will be critical in the ability of countries to reopen. that sense of confidence among consumers, that can really only be established when they're relatively sure they're not putting their lives at risk. >> exactly. that was going to be my next point. how do you see the recovery actually pleaing out? because there's a lack -- playing out? because there's a lack of confidence. there's no vaccine. even if we see demand come back in what shape? will it be pent-up demand and people going out and shopping and bringing back economic activity? or will it be really cautious and muted? >> i think it's going to be cautious from the public health perspective. people are going to be trying it -- to avoid crowded spaces to the extent possible. but let us not forget this crisis has caused a tremendous hit to people's income. we are projecting we will have lost globally, by the end of next year, some $8.5 trillion

in global output. that cannot remain without impact on people's consumption. people will be focusing first on the essential things. they won't be running back out, i think, at this stage to catch up on the type of consumption that they missed out on because the stores were closed down. they'll be buying the things they need first and foremost the and gradually i think they'll pick back up. again, a key point here is confidence. they have to be relatively sure that it's ok to spend now because there's little likelihood of them sort of losing income again in the near future. until we have a relatively clear sense that we've got the public health crisis under control, that anythingling doubt will always be there. it will impede people's participation. >> let me ask about the labor force post-pandemic. because we have seen this outbreak really disproportionately affect the elderly, who have been a crucial part ofle part time job market as well.

what will the labor force look like after this pandemic is over? >> i think we will see a shift. there will be a shift in the nature of jobs. because one of the things that have become clear through the reaction to the pandemic is that there's a lot of economic activity that actually can be conducted online. we see people working from home where possible. we see a lot more retail being handled through the internet. with delivery services really exploding. and the online retailing as well doing extremely well. now, we have also heard and i saw on your previous segment that we were talking about changes in the way firms think about how they do their business in the future. that they may need much less office space because so much of their activity can be done online from their workers working from home. and we may very well find that there will be a lot more automation, a lot more use of technology and digital tech nothing in -- technology in particular because people realize this is something that

allows them to maintain a certain business continuity and it provides them with a buffer, if you will, against any further outbreak of disease. but also against the sorts of uncertainty, if you will, that might plague the recovery going forward. so i think he will -- i think we will see a shift in the nature of work, an acceleration of an already ongoing transformation, but we will also see some changes in the way in which we put the work together and where we carry it out. hopefully this will not be too disruptive. but it is a transition that i think is not going to be stopped any time soon. >> really wonderful to have you with us. elliott harris, united nations assistant to secretary general for economic development. and the chief economist in the u.n. department of economic and social affairs with us. coming up next, luckin stock is worth less than a cup of

coffee. carson block said it's nothing new with chinese companies and warning that a large number of u.s.-listed firms are also committing fraud. our conversation with him is next. this is bloomberg. ♪

>> muddy waters says u.s. regulators and exchanges should be willing to drop chinese

company listings. its c.e.o. has questioned the transparency of mainland foreign trading in the state for years. carson block gave his assessment of how many chinese companies are committing fraud. >> i believe that a substantial number, i mean, more than -- let's call it a substantial majority are committing at least some level of fraud. the reality is and it's very hard to explain this to people who haven't been ensconced in china and especially the china stock listing world, but the reality is that in china, a company that invents 30% of its revenue is considered real. i mean, that's, you know, because if you're taking other people's money in china, i mean, there's an expectation that there's some level of fraud. so 30% fake is real in china. north of 50% is where they

start to say, yeah, that's a fraud. 30% to 50% is kind of a gray zone. faking profits without really faking a lot of revenue is the gold standard in china. so -- but the thing is, if this were a u.s. company or u.s.-centric company listed in the u.s., that was inventing 30% of its revenue, i mean, we would not tolerate that. but that's china. that's the game. >> at one point, and i know you're aware of this, luckin's market cap exceeded 12ds billion. what does that tell us -- $12 billion. what does that tell us about the conventional wisdom that big chinese companies are ok, it's the small ones that you need to worry about, they're the dodgy ones? >> i don't know why anybody would -- yeah. say the big chinese companies are ok. i mean, one of my -- one of the thought exercises i'm fond of doing with people, when we have little debates about china, and

chinese companies, is the talk about alibaba. before alibaba went public, it had a subsidiary called alipay. and jack mau literally just took alipay without telling any of the outside shareholders or directors. this was in 2011. several months after he just took it by transferring legal the other o himself, shareholders discovered it and he went to the board and said, well, yeah, but i don't think it was legal for you guys to have a share of alipay, that's why did i it. which is a total lie. if that were the case, there would have obviously been discussions ahead of time. and so then at the end of the -- after he took it, he said, well, this is how much i'll give you for it. jack mau is not an above-board prater. that was theft and everybody wants to forget about that and pretend like alibaba is this --

is a company that operates -- that reports financials the same way that a u.s. company would. or that we'd like a u.s. company to. but that's just not the case. >> and that was muddy waters' c.e.o. carson block speaking earlier. as we've been reporting, since that conversation, the senate has passed a bill that aims to delist some chinese companies from u.s. exchanges. that bill would require companies to certify that they're not under the control of a foreign government and it goes to the house next. one of the companies, of course, mentioned in that interview and has been in hot water lately, luckin coffee, seeing a renewed selloff when it resumed trading in new york. it comes after the nasdaq said it plans to delist the chinese coffee chain, which at one point was really seen as a rival to starbucks in the country. let's get more from our deals reporter. luckin has been there for more than a month now. the move we saw in the stock,

was it any surprise? >> definitely not a surprise. they have been suspended for a month and before the suspension, they lost almost 75% of the value. today we've seen that it went down for another 35%. i mean, just looking at comparing the price right now, they're trading at $2.8. but then when the i.p. opt, this is a $4 billion company, and the i.p.o. is at $17. so this company really has lost most of its value since it went public. just a little bit over a year ago. so there is a little bit of merritt toward this senate bill trying to screen the chinese companies that are listing in the u.s. >> what does it mean then for other chinese companies? because of course the senate bill has not been introduced in the house but we know it was overwhelmingly passed so there seems to be a very solid, bipartisan pushback against

china right now. >> that's right. i mean, there's a lot of talks about alibaba just in that interview. i'm not sure this bill is targeting the alibaba of the world, but it definitely have an impact on upcoming chinese companies that want to list in the u.s. that may encourage them to either list in hong kong or list in london and we've already seen that. ali about -- alibaba did a second listing in hong kong, raising a substantial amount of money and they have a trading platform outside of the u.s. in case anything happens. o we already see that shift in where the money goes. but then it kind of also means that the companies that want to list in the u.s. need to step up their game, especially in the accounting. we've seen, the companies that the u.s. watch doing cannot see them work, 95% of them come from china.

with the nasdaq propose and this bill, that would screen out a lot of the companies that with are under or substandard. >> thank you very much for that. don't forget, if you're away from a screen, you can always find in depth analysis and the day's big news makers on bloomberg radio now broadcasting live from our studio in hong kong. this and the bloomberg radio app or bloomberg radio plus. this is bloomberg. ♪

>> a quick check of the latest business headlines this hour. goldman sachs is opening eight offices in europe, including paris, frankfort and madrid as it re-emerges from the coronavirus crisis. staff in frankford have -- frankfort have been invited to return but only if they agree, while the paris office will reopen next week. a number of strict measures will be put in place, including health surveys, masks and social distancing. visitors and client meetings will not be allowed. staff at jpmorgan will see a different workplace when they return after the coronavirus. personal items have been sealed in boxes to prepare desks for common use and strict cleaning protocols will be put in place as the bank looks to cut office capacity by half. a global memo says many people will be working at different desks and on different floors with strict measures in place to prevent contagion.

mcdonald's says tens of millions of dollars will be needed to help u.s. franchises amid the coronavirus. adding that some may need to downsize or sell up. the company has earmarked around $40 million in aid. mostly in rent and service fee deferentials on a case by case basis. the restaurants in malls and airports have been hardest hit. mcdonald's has 14,000 outlets in the u.s. which 95% of those are franchised. >> let's turn to hong kong for a check of what to watch in trading in asia. >> asian futures are pointing higher with flash p.m.i. from australia and japan along preliminary trade figures from south korea and s&p this morning fluctuating while the dollar hovering near an april 30 low after being weighed by the fed minutes and the aussie yen class this morning holding a three-day trade. trading around a two-month high. risk is the only real driver for markets while fundamentals

for other currencies seem to be blurred. j.g.b.'s futures drew strong demand with the highest bid to cover ratio since last july which pushed yields lower on the super long end of the curve and this ahead of next woke's 40-year sale which could attract decent demand as well. particularly from japanese ensurers while banks on the -- insurers while banks on the other hand have been net sellers of super long j.g.b.'s and are focusing on the 10-year. >> all right. stay tuned for some big guests later on, including s&p and global ratings chief economist will be with us. with also be chatting andrew keith and winnie chiu. plenty more ahead on "daybreak

asia." this is bloomberg. ♪ .

>> we are counting down to asia's major market opens. welcome to "daybreak asia." our top stories this hour. washington ramps up tensions with china, passing a bill that could see mainland companies de- listed in the u.s.. lawmakers say beijing must play by the rules. global virus cases approach .5 million with 325,000 fatalities. brazil sets and on --