>> good morning from london. manusjra cehic with cranny live from dubai. washington ramps up tensions with beijing. passes a bill that could see chinese companies he listed in the u.s. the fed acknowledges the virus poses a severe threat to the u.s. economy. the bank of england says the time is right to review how low

rates can go. deal toor merkel says a bailout lufthansa is edging closer. warns of ad airline multibillion-dollar rescue. 7, 8. i found the roadmap. one thing we have touched on. it is about demand. it is not about which camera. it is about demand. you have mark cuban of the dallas mavericks obviously supporting, talking about .usinesses that can't survive jp morgan, citigroup, goldman sachs. this is the issue. -synchronized, un

dislocated reopening which is know when you're 100%, which pulls into question that the veracity of the argument goes from 20% -- that unemployment goes from 20% to 10%. the road is dislocated. nejra: you got a sense of that in the fed minutes. gloomy prognoses. what might be considered more is yield curve controls from here rather than negative rate. they were apparently not discussed as much to. that was kind of the take away from the fed. yieldted discussion of curve control. they also said some banks should limit payouts to shareholders then you have the u.s.-china tensions that seem to be weighing on risk sentiments. not a lot going on in the headline level. both benchmarks yesterday.

the dollar on the front foot for the first time this week. oil heading for a sixth daily advance. kind of the outlier here in terms of risk sentiment. that seems to have come off the drop. let of aptitude -- added to the optimism. the tensions could potentially be weighing on risk sentiment, president donald trump escalating his tensions against china. xiintimated that president is behind a disinformation campaign against the united states. the senate has approved legislation that could bar some chinese companies from listed on u.s. stop exchanges. joining us live is annmarie hordern. great to have you with us. take us through the details first of all of this senate bill

and what it actually means for chinese companies. annmarie: good morning. from the senate chamber to the white house, china really in the crosshairs of the u.s. government yesterday. three big things went in yesterday. let's start in the senate chambers. lawmakers voted for this legislation that would mean that companies have to certify that they are not under the control of a foreign government. chinane is talking about because it means that baidu or alibaba could be barred from listing on u.s. stock exchanges. want to chinathey to play by the rules. ramping up escalation, showing president donald trump's tweets, normally you would see him take a very tough stance on beijing, but sometimes would reach his hand out to xi, sometimes speaking glowingly about president xi. yesterday.do that

that expressed that president xi is behind the disinformation campaign. lastly, that tweet came after the white house issued a report to congress that comes from the national security agency's and was obtained by bloomberg news and it outlines familiar criticism of beijing. intellectual property theft, economic protectionism, and human rights abuses. that came yesterday, that document. following that was a real bombshell. manus: we are in absolutely ramp up mode on the political side. get ready for more of this rhetoric. the bank, i mentioned it. i mentioned the new paradigm shift. on a whole desk. we are talking about a

fundamental change in banking and how it is conducted. give me the numbers. annmarie: exactly. this is what banks are doing. they are basically mapping out plans for a new normal. jp morgan saying they want to give their offices half-full. , maximum 20% of staff. team.re dividing the citigroup, looking at leasing. new jersey or westchester or long island. one of the biggest problems is going to be the mass transit. whether you are a banker in london or in wall street, what you are talking about there, where you sit, how close you are to your other employee, if there is a cafeteria, how does that food operate?

all of this is being questioned. manus: just go to my twitter account, shameless plug. i'm turning into tom keene, getting older. [laughter] it's her mom at her gun. that is life in dubai. be well. annmarie hordern in new york. let's get you up to speed with the agenda. nancy pelosi is going to join us, and exclusive interview. let me get you up to speed. nancy pelosi on the show a little bit later. is forming between britain's chief negotiator and counterpart. undermine how little the two have achieved. it is certain to expose key

divisions. spanish parliament has voted to extend it state of emergency by two weeks. pedro sanchez back to down of his earlier plan of a one-month extension as he didn't have the backing to back the measure. 230,000 cases. chancellor angela merkel says a deal to fail. it provides host for a quick rescue package. ongoingays talks are and that the european commission are underway, which would need to approve the deal. merkel has declined to give the details, saying wait for the talks to end. 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. nejra? nejra: coming up, severe

threats. fed soinutes show the the virus causing a serious problem. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." no sign of u.s.-china tensions going away means perhaps that is why we have risk off sentiments coming through markets today. u.s. and european futures quite firmly in the red. you are seeing dollar strength for the first time this week, but dollar-yen fluctuates a little bit. oil, the outlier, out on the front foot.

the coronavirus pandemic posing a severe threat to the economy at its meeting in april. dallas fed president robert kaplan says more virus testing and further stimulus is likely needed to revive consumer confidence. with businesses reopening, i think you can see a good, slow, steady recovery in the third and fourth quarters. he may say governor for the guidelines are, there are certain behaviors that consumers are going to be reluctant to engage in, whether it is shopping or going to entertainment or arts or anything where people are gathered. thatis an example for me what the feds have done on our lending programs has helped stabilize markets. the fiscal policy is key.

the health care policies are central. ubiquitous testing. contact tracing. good procedures. i'm one that is a little concerned, we are doing more testing in texas, but i would love to see in national initiative manhattan project to really emphasize testing and quick testing in front of stores, restaurants, other facilities, so people have more ,onfidence that when they go in they are not walking into a situation where they could be at risk. i think until we have that, my concern is there will be limits to how fast we can recover. without certain types of activities, it will limit our gdp growth and will mean the

unemployment rate will be more elevated than it would be otherwise. without't let you go asking you about oil. you might as will be the central bank of oil, as far as most people are concerned. how any companies might go bankrupt if oil stays under $40? the kansas city fed said when it was under $30, they acted 40% bankruptcy rate. is that realistic? >> it might be. what is happening is happening as we are seeing in texas and we are seeing it globally, but we are seeing in texas lots of drillers shutting in. meaning it is not economic to drill and they are just shutting down. we think total u.s. production will go from say the fourth quarter of last year, 12.8 million barrels per day, it will end close to 10.8 million barrels per day. the permian basin may shrink by

as much as one million barrels per day. you will see bankruptcies restructuring and failures, not only in drillers, but also those who service them. having said all that, it is our own view that as demand returns, people begin to drive, activity resumes, which it must, we will work off the excess inventory as early as sometime in the second half of 2021 or early 2022 depending on the rate of growth. so we actually think and it is not surprising you are seeing a firming in the price of oil, but in the meantime this year, you are going to see lots of pain and restructuring and bankruptcies and challenges. >> if that continues, how quickly to those people turn the wells back on? >> it depends what the price goes too. by the way, a lot of folks in

the industry have explained to me once you shot in a well, it takes some time to un-shut it in. my guess is the magic price probably starts to be in the $30's or in of high the $40's. even with that reduction of u.s. production by 2 million barrels per day, the actual daily production that is going on right now is much less than that. we have even further reduction. some of the shut ins will come back by the fourth quarter. that is our view. we think the shut ins may be at their peak right now. that, a lot off that, will come back. so, why will u.s. production decline? because of the decline curve. even if you start drilling again, even without a lot of new

, you will have a lot more new wells to replace the rapid decline curve. a lot of those shut ins will come back by the end of the year. manus: lots to digest from the dallas fed president. listening and, our guest host. focusing in on on his comments about the consumer. testing and confidence. he focuses on that. the dallas mavericks owner cuban talked about businesses opening being stymied. 50% opening can't survive. this is the reality. reopening is unsynchronized. that is the challenge. >> i think he is saying two things here.

here will be from determined by the course the disease takes. fundamentally, it really fundamentally depends on whether we can get this under control. can get theen if we disease under control, the members of the fomc are more concerned about the demand side of the economy than the supply side of the economy. they reckon it will be relatively straightforward to open up the shops and that sort of thing. pretty clear from what he said. it really did seem to come through clearly that the possibility of business and household insolvencies could amount to the point of threatening financial stability.

what did not come through strongly was any sort of discussion on negative rates. fed is so the concerned about financial stability, what do you think will be the next steps between qe and yield curve control? the minutes reflect their state of mind about a month ago. ago, to which essentially the fed and other central banks responded very well. what we saw was a massive, unprecedented spike in the demand for dollars and cash and what the fed said is we will provide those dollars. that essentially calm to the markets down and that is where we are at the moment. the fed is not sitting on its laurels.

it realizes that financial stability is contingent not just on their policy, but where the economy goes from here. --hink all the communication i think they are being deliberately slightly vague about policy. they are talking first about qe. they are hinting at yield curve control. i think negative rates are way down on their shopping list. ok, can we pursue the line of thinking that the biggest concern is the bank and financial stability. as i look at the proportion of downgrades, we are having to record downgrades. it seems as if the fed are worried about the morphing. where are we in terms of moving toward a more prominent solvency crisis in the u.s.? >> ok, i don't want to sound

complacent at all, but i think the measures at the fed and other central banks have stabilized things for now. i'm not saying that things have gone back to where they were before the crisis, but certainly , thered to where they were have come back quite significantly. they are not at precrisis levels. have a nastyses habit of translating into solvency crises. that is why i think they are keeping a very close eye on the health of the financial sector. absolutely right to point out the focus on insolvency. at the moment, i don't think we are there. i think with the fed and other banks have done is enough.

we are keeping a very close eye on it. our guest host stays with us for the hour. a of words. u.s.-china tensions flare up again. we will get all the details next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak europe." president trump has escalated his rhetoric on china. jinping isd that xi behind a propaganda attack on the united states and europe. it could bar chinese companies are being listed on stock exchanges. we have the rhetoric had over the past few days

revive the worst case u.s.-china trade war for you? short the answer has to be yes. that the nature of the relationship between the u.s. and china was likely to change quite significantly, even as the dust settled. i think we are seeing the early skirmish in that changing relationship. the u.s. will be trying to hold china to account over this. china will be pushing back on that. not just in the economics. a great deal has been written about what we can expect

from the mpc abandoning the growth target. bloomberg has upgraded their growth target from 1.4 to 1.2%. is there a case for making a ?arget yes, i can understand the unwillingness or the reluctance to publish growth targets. clearly, the outlook for china and the rest of the world is incredibly uncertain. of course, there is a slightly worrying resurgence in cases in the north of china. that is something to keep an eye out for. guess is that they will go for the vague option. why focus on it?

, they have been publishing growth targets and my guess is that the rest will continue like that. what do youbriefly, expect in terms of stimulus? i expect it to be pretty big. 10% of gdp or thereabouts. gdpine with the kind of covering fiscal stimuli we have seen. i think the composition is all-important. i'm guessing that it is the kind of standard investment projects that we have been ready for in crisis situations. manus: we will pick up the

scalability shortly. our guest host. stays with us. ♪

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manus: good morning from bloomberg's middle east headquarters, i'm manus cranny. nejra cehic alongside with me as ever. washington ramps up the tensions with beijing. over point fingers at xi the virus. the senate passes a bill that could see chinese companies de-listed in the u.s.. the fed acknowledges the virus poses a severe threat to the u.s. economy. we hear from the dallas fed president.

time to of england says review how low rates can go. chancellor merkel says a deal to bailout lufthansa is edging closer as the troubled airline warns a multibillion euro rescue was urgent. "daybreak:ome to europe." u.s.-china tensions not going away, but also trump's tweets on xi jinping. what has caught our attention is the negative rate debate. andrew bailey says negative rates aren't ruled out. in the fed minutes, they were the one thing quite absent from the discussion. yield curve controls did come up in some form. manus: governor bailey is going to learn that the only thing that markets listen to is the

narrative that suits them. you don't rule him out. the market will push and push and push and prod and push and poke. the rba made the point. negative rates are not for us at the moment. two the markets. i think there is a bifurcation. the fed warned about the severity in the u.s., down goes the dollar. we wake up, up goes the dollar. the extraordinary amount of uncertainty damaged the dollar and up she went on the back of china-u.s. relations. there was a fragility to the chinese-u.s. relations. there you go. oil romping away. 10-week i. -- high. cable down.

left-hand side of the argument. aussie dollar down. s&p futures down 0.4%. our guest host is from bny mellon investors. shamik,oing to go to this is one of these moments that are we going to shamik? we are. negative interest rate debate. the rba kicking back against it. the fed saying we are open. andrew bailey saying it is something we haven't ruled out. defines the rest of this year and next year for you? you put your finger on it. it is the nuance that really matters. at the end of the day, the fed is pretty set against moving toward negative rates. the bank of england, i think the

nuance is everything here, as you say. it is pretty clear that governor bailey has looked at what has happened in japan, what has happened in the euro area, particularly to banks. , i think the more academic members are probably opposed toectually negative interest rates. the may be some kind of a debate going on. that debate is going on worldwide. guess is that those countries not rely less on banks can get negative interest rates. japan and europe of struggled because banks are so important

to them. nejra: barclays put out a note saying that cutting rates below zero is the last policy option that boe would choose. risky assets are likely to be the first choice and yield curve control is in there, as well. can we go back to talking about your outlook for the recovery post-coronavirus? you mentioned alphabet soup in your notes. you also did say you are leaning more toward a v. it feels like consensus is kind of moving away from that now. why are you still holding onto that scenario? the firsts, look, thing to say is that is incredibly uncertain. is to don i say that with some of the news we have had in the past couple weeks in particular about the virus. three things i would point out.

we had encouraging news about vaccines. had progress on treatments. finally, ther eis some suggestion that the infection, death rates a been falling more st pure lockdown can explain. i don't know. you swing with every little bit of news coming to be honest. but it seems to me we have had some positive news for the first time in quite some time. we do get progress against the virus, i think of the becomes more likely -- a v becomes more likely. nejra: you point out that we should look at gdp levels, not

growth rates. thank you very much for joining us, shamik dhar from bny mellon investment. highchina tensions remain with the pandemic and economy and focus. spoke abouter concerns with corporate governance and possible fraudulent accounting and some chinese firms listed on u.s. exchanges. take a listen. >> i believe that a substantial call a missed antral geordie are committing some level of fraud. it is very is and hard to explain this to people who have not been ensconced in china and especially the china stock listing world, but the reality is that in china, a that invents 30% of its revenue is considered real. are taking other people's money in china, there is an

expectation that there is some level of graft and fraud. 30% stake is real in china. north of 50% is where they start to say, yes, that is fraud. 30%-50% is kind of a gray zone. is really thes gold standard in china. companywere a u.s. listed in the u.s. that was inventing 30% of its revenue, we would not tolerate that, but that is china, that is the game. erik: at one point and i know you are aware of this, the market cap exceeded $12 billion. what does that tell us about the conventional wisdom that big chinese companies are ok, it is the small ones that you need to worry about? anybody't know why

would say the big chinese companies are ok. one of the thought exercises in fond of doing with people when we have little debates about china and chinese companies is to talk about alibaba. , itre alibaba went public had a subsidiary called alip enny. -- alipay. ink ma literally took alipay 2011. several months after he took it by transferring legal ownership to himself, the other shareholders discovered it and at that point he went to the board and said, i don't think it was legal for you guys to have a share, so that is why i did it, which is a total lie. if that were the case, there would have been discussions ahead of time. this he took it, he said,

is how much i will give you for it. jack ma is not an aboveboard operator. everybody wants to forget about ist and pretend like alibaba a company that reports financials the same way that a u.s. company would or that we would like a u.s. company two. but that is not the case. block,that was carson muddy waters' ceo. the bank of england governor said he is not ruling out joining the negative rate club. our exclusive interview is next with andrew sentance. this is bloomberg. ♪

plead is "bloomberg daybreak: europe." geopolitical risk between china and the united states of america. get ready for more volatility. have a look at yield. a little bit higher. nymex crude, resplendent. that you the stories want to check through the day. latest rate decision. expected to cut rates for the ninth consecutive time. day. a big hit the tape.

powell iserome scheduled to speak at a virtual fed event on how covid-19 is the economy. every nuance of powell will be dissected. good morning. nejra: absolutely. the nuances in the u.k. the bank of england governor said he is not ruling out joining the negative rate club. joining us now for an exclusive interview is the senior advisor at cambridge econometrics and the former bank of england policy maker. great to have you with us again. privy to these discussions behind the scenes in the past.

we havee communications had from policymakers in the think that negative rates are likely in the u.k.? andrew: i'm not so sure. think he is known for shooting the breeze with some of his comments and speculating in public on novel ideas, but the banks policy when i was on the end easy during the financial isis was to set a floor. they have moved that down to 0.1%. question, ifsk the negative interest rates are the solution, what is the problem? the problem is not just a weakness in demand, it is also a big supply shock to the economy. the monetary policy can't really do much about that. it is probably something that

fiscal policy can help more with. the twoou talk about sides of the equation. we are talking about the demand, pump up the demand, get the demand back. i want to understand your thinking about negative interest rates. i look at what happened in germany. we went to negative rates in europe, the savings rate for a variety of reasons ramp tire. is the risk that if we eventually go in the united kingdom, do we fundamentally damage the psyche of the consumer end of the demand side and that we run for the hills of savings? andrew: you make a very good point. much aboutally know variations at these low levels.

certainly not at negative levels. possible that consumers take the signal that if the bank has gone to negative interest rates, things must be really bad and start raining in their spending. i think the main challenge we face in the u.k. is to get the economy going again from the supply side. there are many activities that are locked out at the moment. that depends on the health situation improving so that we can open up more of the economy. if we do get into some set of recovery, i think there is more scope of fiscal policy to provide some degree of stimulus to consumers for other selective incentives to get consumers out and spending again. nejra: you recently wrote a

piece about that. as well as the vat cut you mentioned, what else is needed and would it be enough to boost demand when lockdowns eventually ease? are threethink there things that the government can do in terms of trying to support consumer spending. the first is something that has already been done, which is to for peoplesupport who are not able to work and to provide income support to people whose income from work has been badly affected. the second thing can be some set of generalized incentive. short-term, six months or so. the third could be selective incentive, perhaps in areas

which will help with long-term benefits to the economy, perhaps with the climate change agenda in mind. leversre some quite big that the government could call -- pull, but we need to release the lock sectors of the economy before it makes sense to really activate those leaders. we don't know how that reopening is going to go, do we? reflective ofs what the challenge is ahead. we talk about capital expenditure. investment. consumers spend nearly seven points. is this where fiscal policy needs to lean in next year? in regard to industry?

reengineering the u.k. economy? we don't yet know exactly what the long-term effects are of the virus. including the public transport system, including restaurants, bars, even when they open up, etc. they won't necessarily be operating on the same basis because it is social distancing. seeink we need to wait and how that situation unfolds. i don't think monetary policy is the lever we need to pull to incentivize consumers. if we going to negative interest rates, that could do more damage to the economy come to the supply side of the economy, than it could do good. i don't think there is a lot of

evidence around the world were negative interest rates have been applied in europe and japan and they really have been effective in supporting growth. do you agree with the boe scenario for a v-shaped recovery? what will recover quicker if you do? supply or demand? andrew: i think the v-shaped recovery is the most optimistic scenario. the bank described it as a scenario. similarly, the office of budget responsibility described it as a scenario. these official bodies are slightly hedging their bets and they are hinting that this is the best possible outcome. i think the more realistic outcome is a much slower recovery. partly because it is going to take time to unlock certain sectors of the economy, but also because it is going to take time

to build back consumer confidence and consumer spending. so, i think when people talk about a v-shaped recovery, this out of second leg of the v may be a lot shallower than the first leg where we were going down. manus: yes, as you said, some of the suppositions, one good scenario is a 15% recovery in 2021. a lot has got to go right. greatly appreciate it. the former bank of england policy maker himself. coming up, speaking with the former bank of england governor. this is bloomberg. ♪

manus: "bloomberg daybreak:

europe." let's get you up to speed with your first word news. votedanish parliament has to extend its the state of emergency by two weeks. the prime minister backed down from his earlier plans of a one-month extension. he did not have the backing. most has suffered europe's -- second-most extensive outbreak. almost 20,000 deaths. officials agreed the pandemic is causing an extraordinary amount of uncertainty. the banks could come under greater stress. it reinforces a gloomy outlook. chancellor angela merkel says a bailout of lufthansa is close. it says that the airlines

management, berlin says the talks are ongoing. approve.ld need to they are saying, wait for those talks to end. dayal news 24 hours per powered by 2700 journalists and analysts in 122 countries. two of the biggest emerging market central banks have interest-rate decisions today. while the former was aggressively loosening policy before the covid pandemic shut down the global economy, south africa's easing turn market a shocking turnaround for the traditionally very conservative central bank. it is interesting because what we are expecting from turkey is the ninth straight interest-rate cut. they have been taking measures to prop up the lira as we question whether easing by prompt, markets could

it is interesting, you turn for south africa, we could see a cut for the fourth time in a row. ♪

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anna: good morning. welcome to "bloomberg markets: european open," i'm anna edwards alongside matt miller in berlin. matt: good morning. keep an eye on the pmi. european futures point lower. the cap trade is just an hour -- cash trade is just an hour away in most markets. here in germany, it is the ascension day holiday. let's get the top headlines off