♪ shery: good evening from bloomberg's world headquarters. i'm shery ahn in new york. haidi: find haidi stroud-watts in sydney. welcome to daybreak: australia. is accused ofp ignoring the evidence of virus spiking across the world. u.s. authorities are reassessing plans to open up. global cases approach 10 million with almost 500,000 people dead. worldwide trade has been slashed

with any recovery increasingly week. and the senate backs a bill to punish china for tightening its grip on hong kong. u.s. banks may be hit if they continue to do business with beijing. shery: u.s. futures flat at the open, after we saw u.s. stocks jumping in late trade. major indices all gaining at least one present in the regular session, after fluctuating through most of the session. we saw some moves to buy the dip . we have the pandemic in the u.s. raging. the s&p 500 rising the most in a week. only banks were solidly in the green after regulators eased the volcker rule that will free up capital. we also had mixed data in the u.s. jobless claims higher than forecast for a second straight week. take a look at what oil is doing. we are seeing upside pressure, up 1%, around 1%, above $39 a barrel for wti.

we saw whale under pressure earlier this week, but russia slashed exports of its crude to the lowest in at least 10 years. that gave crude prices a boost, haidi. haidi: as you mentioned, the pandemic continues to surge across parts of the u.s. texas is now halting the reopening of its economy, with elective surgeries halted. new modeling predicts covid-19 will kill at least 180 thousand americans by october, as the cdc warned more than 20 million may have already been infected. greg sullivan joins us from washington. what have we been hearing from president trump as we continue to see rises in infections? are we seeing a reality check in the white house? >> one thing we have not been hearing are new steps to curb

the outbreak. even as we see infections jumping across the country, particularly in places like sunbelt states, we see signs of increasing cases in places like arizona and houston. we have not heard from the coronavirus task force in quite a bit. vice president pence says the task force continues to work, but when we hear the administration, particularly president trump talking about the virus, he is usually talking about how his rise in cases is due to testing. just about an hour ago, trump was in wisconsin and said the u.s. rise in cases is because of this increase in testing, and he said without that testing, there would not actually be these cases. shyave seen president trump about changes in behavior or the need to open up, and officials are downplaying this resurgence, pointing to stabilization or even declining rates in other states. trump even today said the death

rate remains low and that deaths have not begun to climb, again pointing to testing as the main reason for the same reason cases -- for this increase in cases. all of his focus were means on reopening, and that does not seem to be changing -- remains on reopening, and that does not seem to be changing. shery: even his top officials said the u.s. will not shut down again. we even had larry kudlow saying this. but states are already pausing there reopening's. reopenings. haidi: that is correct. we have heard from top white the spreadials that will slow. but that decision might not rest with the white house or the administration. we saw that even the decisions to reopen arrested with state or local officials, and we are already seeing that. as you mentioned today, texas

said they would pause reopening. we are seeing stricter reopening measures even in republican states, which were quick to reopen their economies. they are now starting to implement new measures to try and stop the spread. that is largely in reaction to the areas where this virus is spreading, the sunbelt states, arizona, texas, florida. this decision might ultimately rest with the states and trump will not get his wish with reopening. haidi: it is interesting how the construct on this virus has shifted from being this liberal-only problem right now, affecting these republican states. what are we hearing from other officials within the white house, and what has been a reaction amongst the american public? seen we have definitely trump out there, and his white isse has been behind him and accepting business as usual.

he was touring a shipyard today and giving some remarks. he met with his first foreign visit since the pandemic began. when trump does hold these meetings, he does not wear a mask, and neither do many officials in the white house. it is interesting, we have heard some criticism, especially from democrats over how trump is acting. his opponent in the presidential election, joe biden, had been critical of some of these stops. to bergely, it remains seen what the american public will think. we do know that biden has recently been taking elite in the polls, and i could very much be a reaction to the virus. shery: greg, great having you with us. here are first word headlines. the federal reserve is telling u.s. banks they can't resume

buybacks in the coming weeks, over growing uncertainty over the coronavirus pandemic. the fed's latest stress test shows the lending sector has performed well, but the latest review of the virus effect has uncovered potential effects. banks must be predict and conserve capital, it is said. russia has begun voting on constitutional changes that would let president putin retain power until 2036. the measures were originally scheduled for a vote in april but were put back by the coronavirus. putin has -- has effectively run russia for two decades. all potential changes have already been approved by parliament. india is said to be planning quality control measures and tariffs on imports from china as the two sides maintain a military standoff in the himalayas. we are told officials are finalizing rules for tons of products, including electronics

and pharma goods. this comes with india facing a sharp economic contraction, its first in more than four decades. lawmakers in washington have approved a bill that would penalize banks for doing business with china over beijing's national security legislation for hong kong. the measure in the senate also has support in the house of representatives. it needs to pass there before reaching president trump. it condemns china for breaking obligations under the deal that returns hong kong to mainland rule. still ahead, we will get -- haidi: still ahead on daybreak australia, we will be getting -- will be heading live to beijing. plus, we get the market outlook from sandy villere. this is bloomberg. ♪

breaking news crossing the bloomberg when it comes to the fate of virgin australia. we are now hearing that bain capital was set to become virgin australia's new owner, after the rival bidder withdrew from the bid. as contention between two u.s. private equity firms has been going for weeks. back virgino strip australia, australia's second major carrier after qantas, rather than going ahead in competition with qantas. we are hearing bain capital is the new owner of virgin australia after cyrus dropped out of the bidding, but we are waiting for confirmation and more details on that. in the meantime, let's get back to one of our top stories. the senate has approved a bipartisan bill that would penalize banks doing business with chinese officials involved in hong kong's new national security law. tom mackenzie joins us from

beijing. what do we know about this? tom: this was a bipartisan measure approved by the senate, -- by ad by republican republican and a democrat. pat toomey the republican, chris van hollen democrat. it would compel the state department in the u.s. to come to congress every year and report on officials in china and whether they are undermining hong kong's autonomy and the one country, two systems plan being put in place, and they would president to do things like sanction certain officials, sees their assets, but also, the crucial part, it would allow the president to sanction financial institutions from doing business with those chinese officials. it has to be passed by the house, but it is expected to get bipartisan support and then would need to be signed into law

by president himself. it follows other measures by congress in terms of challenging china. we have the hong kong human rights act that has been passed and the weaker rights act most recently. it does need to be signed off on by president trump, but it is another signal congress is not letting off in terms of its pressure on china. shery: any more clarity on when the security law will be enacted? tom: the national people's congress congressional committee will be meeting in a few days. it is not on the agenda, but it is suspected it will end up on the agenda, in which case it could be signed off as early as tuesday of next week. this is a security bill that overrides hong kong's law. it would allow chinese law enforcement officers to base themselves in hong kong.

it would allow carrie lam, the chief executive, to pick judges. concern fromt of pro-democracy activists in the city about the applications of this bill. it could be as early as tuesday of next week. china has said it would retaliate against any u.s. sanctions imposed as a result of this security law. it would take appropriate countermeasures. i am quoting chinese officials there. shery: tom mackenzie in beijing. companyp, villareal and partner sandy hillary -- sandy hillary joins us -- sandy villere joins us next. ♪

a billionaire investor says it will be a long time before the u.s. regains equilibrium. with the pandemic intensifying damage that was already done to traditional retail by amazon. he spoke to bloomberg as part of our front row series. >> retail -- i think physical retail will stay around. when you are looking at a retail location, if you are an , what fewyou know tenants there are have all the leverage. if you are buying their rent at 10 times cash flow, you are now bankrupt. so your assets are worth half of what you thought it was worth.

it is very hard to underwrite retail today. the best retail assets -- but say it was on fifth avenue in new york city or on bleecker street in the village. if you have been there, there are a lot of empty stores. aty were allotted rent $10,000 a foot, and out tenants today say, $3000 a foot. so it stays vacant until you hope somebody shows up at $10,000 a foot. rents don't move like that on fifth avenue. they soared through the ceiling. same with the village and soho. the internet brands, the strong brands on the internet, they find -- and i know it is true because i am on the board of estee lauder for 15 years or the physical helps the digital and they work together, the e-commerce platforms and the physical locations. they reinforce each other. digital only companies often do not get the scale of retail,

whether it is bonobos, warby parker. warby parker now has 120 stores, and their stores are very successful. the tenants will be super picky where they go. and the ball is kind of an outdated concept, to some extent. we own some, it has been really hard. our tenants keep going bankrupt, even if we have a good pier 1 or a good forever 21. j.c. penney just announced a round of store closings, as did macy's, none in our malls. our malls are safe, not the worst of the malls. but it is really hard. apple decided they are the biggest draw at the mall, which they are, and so they say, you should pay us to be in your mall. but that's not what you modeled. it is hard to value these assets, and it will be a long landscape that

reaches equilibrium. >> how much of that is pandemic and how much is amazon? ok?he pandemic is amazon, amazon was a pandemic to retail. that business, where they price the delivery of -- i mean, i ordered a bike to come to my house in florida and they delivered it that afternoon, basically free. it was a $22 bike pump. there is no mom-and-pop sharp on earth that can match that. amazon practices what to me amounts to predatory pricing. they were selling products below the total cost of its goods. in industrial chemicals or steel, you can't do that. it's called predatory pricing. amazon built their whole company on predatory pricing, supported by their cloud business. i feel bad for mom and dad. i had a big argument the other day, what's great about being low cost to your customer?

i was ordering a pair of sneakers yesterday and it was six dollars more on amazon then it was from the website of the company. i am here on the island of nantucket, and i walked down main street, 10 stores are empty, because of amazon. not because there is not demand. the average person does not know what they are doing. they go out and order everything they can on amazon and it shows up in a box and it is convenient, but they have just killed the likelihood of a mom-and-pop store -- the livelihood of a mom-and-pop store in downtown nantucket. i'm not a fan. haidi: in the last hour of u.s. trading, -- shery: in the last hour of u.s. trading, investors shrugged off the infection in a tug-of-war between virus and stimulus. co.y villere of villere & joins us live from new orleans. was today a good day to buy the dip in early trade before we saw ?hat served quest -- that surge

sal: -- sandy: i guess it will, but they are going to be a few more gifts to come. they care about the pandemic and -- the markets care about the pandemic and the pandemic only. we see cases spiking in states like texas and florida and california, and you saw things like walt disney world delaying their reopening and apple wasn't stores -- closing stores. that is going to move the needle. i am surprised it rallied off the list today, actually. shery: you are more of a bottom-up investor. when you look at the economy and where the infection cases are going and the reopenings that have been halted in some parts of the u.s., where do you invest in this environment? have, in general, buying more mid-cap securities and say we can really have a good sense of what those businesses are,

how they react in the current covid environment, and in many cases we feel pretty comfortable. good balance sheets and things of that nature. we've got that. we are just waiting for, perhaps, the number of cases to spike up a little bit more and get a little bit of a dip. amounto believe with the the fed is going to do in terms of buying back mortgage-backed securities and buying corporate bonds, etc., i think they are going to support this market one way or the other. it feels like this long wait of rotation into value is a bit of a head fake at the moment. do you see that happening, and what drives that? sandy: i think at the end of the day, people are going to look for value. maybe they are going to wait for one more dip, where things get a

, ande bit worrisome again certainly these fears are all there, but if we can buy good quality stocks at reasonable prices, that is going to work out well for investors over the long run. so you would be buying any dip we see in the next few weeks, even if we see a prolonged shutdown across some states, or even a delayed reopening because of that jump in cases? sandy: yeah. i am so bottom-up oriented that i can look at individual companies. one i like a lot is a company called ehealth. they are trying to make it easy for seniors to buy medicare insurance or a plane ticket or something on expedia or travelocity. they've got incredible demographics, 10,500 people turning 65 every day. i think of people are at home or on the internet, this is going to drive more business into

their platform. i think there are a lot of businesses that you can invest in right now that can actually do quite well in this environment. clearly you do not want to be in something like retail or something like that that may struggle or be more susceptible to the lack of demand from consumers that might not be on the streets. shery: if you also like el dorado resorts. is a casino company much different than retail? the key question everybody is asking is whether post covid we will see a fundamental change in consumer behavior, given we don't have a vaccine, we don't have treatment. sandy: yeah, this is a new normal. people will not act the same, i think, for a long time. the simple shake of a hand is something that is going to go away for short to intermediate term. el dorado is interesting because

it is one of our most interesting companies. it is tied towards reopening and there is a bit of a rubber band impact should things get back to .here they are but there are company specific things going on. they are closing in on the acquisition of caesars entertainment by the end of this month. they are looking at cost savings , synergy worth $500 million, and that they are talking about $850 million. while it is a new normal, these guys can do quite well even in a 40% or 50% occupancy environment. they were able to close 52 phase . not many people want to eat at a buffet at this particular environment. that will save them. they are going to be things like that that are actually cost savings to them in this new normal. i think together, the combined company is going to be a lot stronger than it was, and they

will have the ability to sell off assets and move forward. haidi: sandy, i appreciate your time. sandy villere, partner and portfolio manager at villere & co. surging coronavirus numbers mean that apple was preparing to reclose more stores in the u.s. with at least 14 outlets set to shut their stores in florida. spikes inso seen north carolina, oklahoma, california, texas, and arizona. local authorities are reassessing plans to reopen state economies amid pressure to reboot from the white house. macy's is cutting thousands of back-office jobs, admitting that retail will not recover to pre-virus levels anytime soon. most 4000lemonade all corporate and management positions with the aim of cutting costs by 306 to $5 million this year. , bank stopsxt

subside in after-hours trade. of that stress test next. this is bloomberg. ♪ you doing okay?

yeah. this moving thing never gets any easier. well, xfinity makes moving super easy. i can transfer my internet and tv service in about a minute. wow, that is easy. almost as easy as having those guys help you move. we are those guys. that's you? the truck adds 10 pounds. in the arms. -okay...

transfer your service online in a few easy steps. now that's simple, easy, awesome. transfer your service in minutes, making moving with xfinity a breeze. visit xfinity.com/moving today. haidi: you're watching they very australia -- daybreak australia. lockdowns are increasing. new research says shipments this year have fallen by 70%. the wto says that a plunge of 30% could be avoided. she pandemic continues to search across parts of the u.s. texas is halting the reopening of its economy. infection reports are rising rapidly in arizona, florida, and

california. covid-19 could kill 180,000 americans by october. virus infections continue to search in southeast asia. topping 50,000. more than 1100 cases were reported on thursday. deaths of more than 200. 80% of migrant worker dormitories are expected to be clear covid-19 i the end of next month. the u.s. banks performed well in stress tests. but uncertainty over the pandemic left regulators to cap dividends and buybacks. how worried is the fed about what could happen to banks? that fed in its annual stress

test has two goals in mind. they want to take a look at the basic question of the economy. if it turns sour or if there is any kind of financial stress. can banks take it? this year there is an extra element. it is the pandemic. that is what the fed is trying to work into. this is why they took a stricter step than they might have otherwise. they are saying no share buybacks. here is what they are requiring. you cannot do it in the third quarter. they are hoping there will be a rebound. dividend payments will be cap. if you are a bank like wells fargo and your profits slumped 89% in the first quarter, you

are at risk for cutting them back sharply. there may be additional stress analysis later this year. he wants banks to remain resilient among the uncertainty caused by covid-19. he said banking systems remain well-capitalized, even at the harshest scenario. and they are pretty harsh. he talked about something that is new in this pandemic. it is sensitivity analysis to capture how financial firms are positioned to take financial pressure caused by the virus. there are no individual detail showing how the 34 banks tested. fromwe see is a decline terms% to 7.7 percent in

of capital ratios. most firms remain well-capitalized. but several would approach minimum capital levels under the worst scenario. a federal reserve board governor opposed this decision. he said i do not support giving the green light to support capital. they went ahead with it any day. shery: they were really celebrating these changes. >> of course banks will like an

easier volcker rule. there will be some easing here. aboutill save them $40,000. the federal reserve and the office of the comptroller, all of the top banker regulators approved this rule. they are allowing investments in venture capital funds. this is the part that could supposedly save them about 40 million bucks. voelker to point out is the next

at -- step. regulators have taken the first step. it is interesting that the chair theye fda seaboard, opposed it. weeksaid it weekends and -- risks repeating the mistakes of the 2008 crisis. haidi: our global economics editor. we speak to los angeles --

australia's largest vc firm. rave -- seeing a new wave of innovation. this is bloomberg. ♪

haidi: square peg is australia's largest venture capital fund. they have hope the sector may come back fighting. past two months

alone we have seen a decade's worth of change. great to have you. we continue to talk about post pandemic changes. we have seen changes in consumer trends. in international travel. the workplace. which of these changes will be sticking? we are a few months into these trends. whether it is an education or ,ealth care or work from home the future does not look like him -- what it was pre-pandemic.

in terms of taking the best. it is a pretty amazing experiment. shery: you have completed another successful funding around. will you be targeting that cash at? what companies do you see as being beneficiaries of the big changes that we are talking about? we have other markets where we have operations.

we just closed investment. for telehealth in southeast asia. been important for us. areas wheree to be this will be an important time or innovation. shery: how does this crisis compare to past.com busts or the global financial crisis? >> every crisis is different. we try to learn from past experience. we know these are different.

these health implications are impacting everyone around the world. the.com crash was about the internet. we are really accelerating the shift of doing things. the right thing has been everything moving to the internet. they took two months. we have seen these major online

trends. shery: is the way uss these companies, is your criteria also changing along the way? thing about the crisis of the last two months as it has seen us the opportunity to how they respond in a crisis. resilience is incredibly important. we found agility. most things are more important. evaluations at this point are on paper. what is the timeframe you're looking at?

that.typically and best this will be six or seven or eight years. an incredible in company. they have decreased in the last few years. they may make a comeback in the next few years. a lot of the growth has already occurred.

shery: do you see the policy environment staying at a certain level that is supported for innovation in australia? we feel we are moving in the right direction. the formation of really amazing companies. this is probably at a rate of three art -- three or four times faster. we think government can play a role in facilitating this. we do not want to overstate the role.

we know that is not likely. i understand you were not involved in that. why not? >> we were really lucky to invest in that company. in the first two rounds. and really privileged to have the opportunity. we have not participated in the last couple of rounds. to go prettyinuing well. this is a big success story. we are excited to watch it grow. they have supported china and blackbird. shery: great having you with us. we will have plenty more.

this is bloomberg. ♪

haidi: let's check in on your markets. looking pretty positive. we are back in volatile trading. and just the last half-hour we have seen u.s. stocks climbing the most in a week.

that has led to a pretty positive set up. we saw the dollar up. looking like we will see a bit of upside when we start the friday session. after that institutional placement. sticking with aviation, bain capital looks at it. the airline collapsed back in april. we are joined for the details. ishear a lack of engagement why they called it out. >> it almost seems like a form of ghosting. --y have not recalled returned emails or meaningfully engaged.

both bidders were aiming for a smaller brand. had planned to bring their headquarters to queensland. we will have to wait and see. they are in deep, deep trouble. they had lost money for seven consecutive years. they collapsed and the government refused to help. haidi: paul allen in sydney with the latest. let's get a quick look at headlines. the latest figures show u.s. airlines are still struggling to get back in the air. the number was just under half a

million. that is better than the previous week. u.s. carriers are currently operating at 40% capacity. nike revenue fell 38%. than a estimates by more billion dollars. nike says it has devised an online strategy. but booming e sales were not enough to make for lost revenue. of nike's biggest endorsers, lebron james, is on the cover of this week's bloomberg business alongside his business partner maverick carter. the nba start discussed the black lives matter's movement

and the changes he wants to see on and off the court. to say i don't want was anticipating it. we have always been in this position. we have always strived and had the plan for this moment. i have alwaysg had a passion for. having people understand how important we are. the powers and the creativity and the language. the struggles we have had for so long. you look at the death of kobe bryant that we had to deal with. our prayers are still with vanessa and her two daughters. we dealt with that as an organization and as the city of los angeles. that was a tragic moment for us.

we all had to wait around. the healthnderstand of every individual is so much more important. then chasing a ring or chasing a championship. no one had an answer to it. seeing how many people were hurt not only in minnesota and minneapolis, especially in the black community. we have seen this over and over and over. police brutality. things that go on in the inner city. being racially profiled. there has been a lot going on in

2020. we continue to be powerful and be heard. we are using our opportunity for the betterment of change. you can be heard. activism and activists have always been around. but people have a closed ear and a closed mind. and did not what to recognize or or be knowledgeable about what they were seeing. where they were coming from. the passion they were speaking with. now it is being heard. people can be heard. black americans, african-americans can be heard. both men and women can be heard. help.lling for we are tired. activism has always been around.

in the case of george floyd and so many other innocent lives being taken away, they put up a stand. now, we are being heard. everyone is being heard. not only from what muhammad ali was saying in so many people who came after him. even the people in the community. ones who are walking the streets and being racially profiled and being judged every day they walk around. those of the ones who are hurting right now. you can catch that special conversation with lebron james and maverick carter this weekend. here is how markets are trading at the mark -- moment. indices have fluctuated through most of the u.s. section -- session.

indices all gaining at least 1%. the pandemic raging here in the u.s.. it is being felt across markets. the dollar index is also flat for the moment. maintaining a bit of again after jumping to the highest level in four weeks. we had some slightly negative data. we have the reopening being hindered by the pandemic. wti was under pressure. it is rising after russia slashed exports. coming up in the next hour we will have more market analysis. these volatile markets. of course we have a lot more to break -- come.

this final trading session of the week here in asia. this is bloomberg. ♪

>> good morning. we are counting it down to asia's major market opening. our top stories, the u.s. senate back to build punish china for tightening the grip on hong kong. american banks may be hit if they continue doing business officials there. virus cases globally approached 10 million with almost 500,000 dead.