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tv   Bloomberg Markets European Open  Bloomberg  April 2, 2020 2:00am-4:00am EDT

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>> good morning. welcome to bloomberg markets, the european open. i'm anna edwards live from our european headquarters here in london alongside matt miller in berlin. matt: good morning. today, the markets say is anyone watching the data? futures gain as u.s. jobless claims post and even bigger number than last week. cash trades an hour away.
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the overall death toll the coronavirus nears 50,000 globally. [indiscernible] 100,000 military body bags for civilian use. u.s. officials say china concealed the extent of its outbreak, but futures rise in europe and in the u.s. after the worst drop for the s&p 500 in two weeks. and president trump voices optimism that russia and saudi arabia will end their oil spat soon. brent and wti each jumped 5% or more. you can see here a 20% jump over the past three days. we are just under an hour away from the start of cash equity trading in europe. we will take a look at where futures are trading now. we have, in terms of european -- slighterder
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gains then we had in the u.s. if you look at the dow jones and s&p 500, they are each up about 1.5% in terms of futures, so bigger gains in the u.s. picture , though further away from the open of cash equity trading. what does it look like on the gmm right now? just had numbers come through on the u.k.. house prices, i will come to that first. house prices rise by 3% on the year, but the yearly number is not what anybody is interested in. it is the rise month on month, and even that might be a little early to see the full impact of what goes on with coronavirus. u.k. government asking people to not move house and pursue these transactions in the near sense, but wait for these numbers in the future. that gives us a little bit of early indication as to what is going on in house prices. perhaps it may be too soon.
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a business that supplies energy to homes. whilst utilities you might think of as being quite sheltered from some of the troubles we've seen , itcertainly retail canceled its final dividend payment. they are also pausing their spirit and if you -- spirit energy divestments. let me get to the gmm then and tell you what has been going on overnight. we have a mixed picture coming through on asian markets right now. asia paring losses. u.s. futures actually pointing a little higher this morning. in fact, up to more than 1%. italy and germany, as we said in our headlines, extending their lockdown. new york talking about taking not until the end of april. we are also seeing florida
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taking tougher measures, but on medicines of the death rate coming in from italy. a bit of a sinus to what we are bracing ourselves for, what is still to come a little bit later on. let's get a bloomberg first word news update. here are today's top stories. pentagon sending as many as 100,000 military body bags for civilian use as the u.s. expect debts to sort in the coming weeks. china has concealed the extent of the coronavirus outbreak. that is the conclusion of the u.s. intelligence community in a classified report. said the finding was that china's numbers were fake. president trump describes china
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's data as on the light side. eu nations are setting out competing visions of how to deal with the consequences of the coronavirus pandemic. governments are still at odds over how to cushion the economy. one of the key disagreements is over the idea of neutralizing debt. corona bonds are popular in some of the hardest hit countries like italy and spain, but germany and the netherlands are pushing back. the federal reserve has wall street take on more leverage so they can absorb a severe lack of liquidity and treasuries. banksd is making it clear should expand their balance sheets as appropriate, not so lenders can increase capital distribution. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 20 600 journalists and analysts in more than 120 countries -- powered by more than 2600
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journalists and analysts in more than 120 countries. matt: we can see u.s. equity futures are rising right now as investors show tentative signs of entering back into riskier assets. the market continues to assess the economic impact of efforts to contain the coronavirus, let's get into the story with laura cooper, a bloomberg markets live macro strategist. you have a story out today that . thought was fascinating it shares some interesting bullet points. one is that more than three quarters of households across 75 countries are in worse shape today than they were in 2008. they have more debt -- 35% .igher debt load where is concentrated? were these countries, for example, that did not learn their lesson after the 2008 financial crisis? >> when we look at that number
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specifically, it does tend to lean more toward emerging market we looks, but even when to g10 currencies, when we look at the financial distress households are under and then we overlay this with an unprecedented shock coming likely from the labor market, that points to the fact that we really need to see this timely injection of fiscal policy to have cash in hand for households because ultimately, when we look at the recession the global economy is in, the recovery is crucially dependent on the consumer, the consumer ability to spend to come out of that. if they are already cash-strapped and debt laden, it will be more challenging this time around than previous recessions. nejra -- anna: looking at what is going on in fixed income markets and what is going on and treasuries in particular, i know you have been asking on the markets live blog if treasury yields can go to zero. what has been happening behind the scenes in this market? as a still performing
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haven? some weeks ago, there was heavy selling even of treasuries at times of crisis because people were selling anything and now people are talking about a lack of liquidity and treasuries. what is the story? >> what is going on in the treasury market now is the fed is doing all it can to indirectly keep yields low. yes, it is doing outright treasury purchases, and we are still seeing that haven demand because the path of least resistance right now for equity markets appears to be lower. these new fed facilities are coming through helping create function in the market, preventing the dysfunction we saw earlier. overnight, we did see, for example, the u.s. frees about 2% of capital under temporary changes to leverage rules for u.s. banks because ultimately, we have these sensibilities that will bring about a surge in demand for small businesses, but it is banks taking on that credit risk, so banks have to
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have the ability to freely close out the funds into the economy, so that is another measure the fed is taking. at this stage, what we see in the treasury market is it is really all about the fed continuing to pump in liquidity to ensure that you don't have to see this forced selling of treasuries by central banks and other reserve managers in order to ensure that we can still have this function within the market. still see a forced selling of everything small and medium-sized businesses can get to the market, though. they seem to be running out of liquidity and the federal reserve bank of boston said the rollout of the new lending program for these would -- which surely would be the hardest hit businesses, is still another couple of weeks away. how many bankruptcies are we going to see? >> i think that is the crucial challenge because right now, we are seeing these cash-strapped businesses. the stimulus measures are meant to prevent this liquidity crisis
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from becoming an insolvency crisis. once these businesses go under, they are no longer able to employ workers, no longer able to contribute to the economy. crucially at this stage, we need to get that cash injection. the facility you're referring to, the fact that it will take weeks is quite a concern. we have not seen anything like this before, so congress is leaning towards the fed to use discretion in terms of determining how this will be allocated to businesses. there's a number of hurdles still ahead in order to get cash in hand, and i think that is likely going to continue to weigh on risk segments, given that we do not know the duration of the economic lockdown and if we will actually see the stimulus reach the much-needed businesses before they come under pressure and potentially collapse. matt: thanks very much for joining us. from the bloomberg mliv team.
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her work really critical during really volatile times like this. we will continue talking about the problem that i just highlighted. up next, we will hear what the boston fed president had to say about when we can expect the fed's coronavirus lending plan for small and medium-sized businesses to roll out. a lot of these businesses are cash-strap. they operate with no cash reserves month-to-month, and they have been absolutely shut down for weeks. how much time do they have left? this is bloomberg. ♪
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anna: welcome back to the european open. 7:13 here in london.
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willean futures suggest we see a little bounce at the start of trade, not all that solid perhaps. a couple of bits of breaking news to bring you. temporary proposing financial really for customers impacted by coronavirus and part of that is freezing some credit card payments. they say this is a stopgap to quickly support users of certain credit products who are facing difficulty because of the exceptional circumstances of the coronavirus. the other piece of breaking news i want to bring you to do with oil prices. we are listening for clues as to when producers will cooperate globally to support oil prices. brent crude has been securing gains to rise 13% in london. percentage change versus yesterday still valid, so we are seeing substantial moves to the
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upside. i brought you the move a moment ago. just now, it is up by 11.5%, as you can see on the screen. the boston fed president says a new lending program for small and medium-size businesses is still a couple of weeks away. he spoke to blumberg tv's mike mckee in an exclusive interview. >> with rate cuts we did at the emergency meetings earlier in march, we reduced federal funds rate by 150 basis points. normally we would expect that to flow through to other financial markets ready seamlessly, and you would see borrowers, both individuals and firms, seeing lower costs as they try to borrow funds. inortunately, the plumbing the financial system was overwhelmed by the number of people trying to sell whatever assets they had and get into cash, so some of the interest rate reductions that we did, which were primarily at the short end of the market, i'm not
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perfectly gone through to the rest of the market. these facilities that we are setting up our intended to in effect get the plumbing better. the new york fed has been buying mortgages and treasury securities. i would say the treasury securities market is operating reasonably well. the mortgage market is operating much better than it operated a week or two ago, but still is not by any means all the way back. paperf the commercial markets, some of the shorter term markets are seeing margins come in, which is a very good sign. it means lower interest rates are starting to be passed on to firms and households, but i think it's going to take some time. the primary goal of what the federal reserve is doing is trying to reduce the amount of spillovers that occur, so there's not much we can do about that wash crisis
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created by covid-19, but there are things we can do to limit the amount of spillover to financial markets, and i think the fact that we quickly got our facilities up and there's still more facilities coming has helped in reducing the amount of financial spillover, but not completely eliminated it. anna: that was the boston fed president speaking to bloomberg. of fxg us now is the head at saxo bank. good to see you. we are seeing different responses from different fiscal authorities. is the market distinguishing between them in terms of if the market likes the policies, then the assets of that country are treated differently to others, or is that too granular, we are not there yet? >> that is a great question. i think perhaps it is a little bit too granular so far. one of the big differences you have to look at in the u.s. much of thersus
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rest of the market is the scale and speed of job losses is a lot , so people going out of work very quickly. and talking about markets functioning normally and the pressure liquidity measures, but about solvency? liquidity versus solvency i think is the big question going forward. the more we risked insolvency, the less potent the fed medicine is. matt: are we going to see much more insolvency's in the u.s.? it seems they are taking longer to get there lending program going. americans famously have much more credit card debt than europeans and operate businesses, i would say, with much tighter cash reserves. huge risk that is the here. the more the focus is on lending
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versus outright cash drops, the bigger the risk we do see the widespread insolvencies, and the labor markets, the joblessness spiking to levels that are unprecedented. it will be far beyond the record on the plummet level since the great depression, as well as the generosity of jobless benefits program, on top of what they are getting means they could be slow to return to the markets, so it is just a really difficult situation for the authorities to get ahead of. we are trying to keep the economy in some sort of suspended animation, but in the meantime, there's this solvency and joblessness risk. anna: we listen to abby joseph cohen talk about how the state is going to be week in april. if we look from a european
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perspective, the data could be week in march and also in april. i would closer to getting a handle on that timescale as to when we see some sort of bounce toouropean data, or is it soon to say? >> that is the ultimate question. we can all talk about we are seeing the numbers doing this on in terms of virus, talking here, talking they're in terms of the quarantine, but you can tell us what the numbers look like in terms of the recovery in the shape of the timescale of that recovery, and i think it is a difficult question. it's clear we will not see av-shaped recovery. what does the right side of that recovery look like? it isrse, the concern is something in between, and it takes a couple quarters to return to something was emily normalcy and, of course, consumer behavior could be far more cautious. it is just such an and or mislead difficult forecast -- such an enormously difficult
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forecast to make. matt: we are going to keep you with us. john hardy sticks with us for the time being. coming up, extending lockdowns. germany and italy say the shutdowns will last until easter at least. that is as governments caution against lifting restrictions too early. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. right now, about 36 minutes away from the start of cash trading across the continent and in the u.k. germany and italy have extended lockdown measures until after easter. spain reported its deadliest day
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yet with 864 fatalities and confirmed cases topping 102 thousand. extending the shutdown until april 19, german chancellor angela merkel said infection rates had eased slightly but earlyned that it is too to relax strict rules on public interactions. this comes as european leaders struggle to agree on a joint response to counter the economic impact of the virus. competing visions have been set out by france and the netherlands as well as others, but officials are going to find it hard, of course, to get all 27 countries on the same page. john hardy, head of fx at saxo bank, is still with us. let me first ask your take on corona bonds. #coronabonds. what do you think about this sort of very popular issue to discuss? in germany, they are against it. in the countries that need the money, they are for it. >> i think it is an existential
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question for europe and the monetary union. i think they need to happen, and if they don't happen, we are path towardsricing aggravated existential concerns. the ecb needs to keep orderly .nd sovereign bond markets we need to see solidarity. we need to see that mutual is asian over the long-term. otherwise, the monetary union ceases to exist as currently comprised. anna: will we see some sort of corona fudge here? we are going to get more details around a program called sure by the end of the week, 100 billion euros of money to mend the state. the eu will raise the money on international markets, backed by
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member states. this sounds a little bit like debt neutralization. will we get something like corona bonds, but of course, they will not be called that? >> i think we have to. we are not seeing much talk about existential concerns. the market really not expressing much of that. i think the consensus now -- and i largely agree with that -- is we have to fudge the margin to in up on a path toward mutual is asian, but it is something we really need to be attuned to, especially the political tone from the top as we go into the of talks.s it is just an issue that is really upfront on our radar. anna: it is. thanks very much, john hardy talking about the existential crisis that europe could find itself in. up next, staying in the office, we speak to the ceo of a fintech
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defending keeping staff during the outbreak. we have european stock futures pointing higher right now. your -- u.s. futures also pointing up. this is bloomberg. ♪
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back to thee european open. 30 minutes until the start of the cash equity trading day. you can see futures are positive in some cases, but actually fairly mixed. u.s. futures, i should point .ut, up by more than 1% the fed's intervention in the repo market was so effective that it had never been cheaper to access dollars outside the united states, but individual exchanges also stressed the importance that they stay open and keep critical staff in the office to ensure liquidity is fair.
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an exchange-rate based in london says the uncertain times caused by the coronavirus are forcing companies to adapt. to you.ood to speak give us a sense of the extent to which day-to-day business, the presence of all your staff physically with you -- how much has that been disrupted or not by coronavirus? >> good morning. thanks for having me. look, we live in disorderly have, but overall, markets been orderly. we have around 5% of our normal working staff in offices. in london, for example, no one is allowed to use public transport. as a leading fintech company, we are probably better set up than most of the open market. all our staff are working remotely, and all their jobs are safe, which is probably the most
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important thing for them. matt: have you found it at all difficult to get dollars? >> certainly, there's been short squeezes. rates for overnight dollar swaps have gone up a bit. it's coming down. i think the stimulus announced a couple of weeks ago has certainly helped those dollars to filter through. i would say now the markets are back to near normal or as near-normal as we will see for the for seeable. anna: maybe a new normal. let's hope not. let me ask about the proper functioning of markets. you talked about the small number of people who actually need to have presence in your offices. if london was completely locked down, would we see proper functioning of fx markets, given london's role in fx? are you concerned about the proper functioning of the market
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that you watch? not for now, to be honest. i think everyone is well set up. the banks and leading proprietary trading firms have good business continuity practices set up. outset.ifficult at the you certainly had a risk off environment, people making less aggressive prices when the lockdown first happened, but i think now, everyone is beginning to operate well, and the markets, as i say, are very orderly at this rate. as centraletically, banks start to print money ad nauseam and just flood the world with cash, you would think inflation concerns would be front and center. people might buy things like bitcoin or gold, but we see gold still below $1600 an ounce.
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thingsproblem that these just are not transactionally valuable? quick they are two different things. certainly, taking the latter one first, i think the performance of bitcoin has been remarkable. againsty, it sold off dollars like virtually everything else in q1, but it keeps bouncing back, and yet, there's no government to intervene. there's no floor. there's no regulation, really, around it, so the fact it keeps bouncing back is, as i say, remarkable. gold is slightly more of a difficult issue in that certainly there has been a flight to quality. it is one of the few assets that appreciated against the dollar in q1. every other currency sold off against the dollar. dollar was up a few percentage points. the problem there is actually getting physical gold to settle
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against etf's or futures. that is currently the gridlock we are seeing in gold. it has been pretty static for the last week, but as always, i think gold will be the flight to quality. anna: how much have you been managing to take advantage of higher volumes? clearly, anybody trading around risk on/risk off could have been hurt very badly in march, but if volumes are what matter, how much is that making a difference to your business? quick look, we all wish -- >> look, we all wish the world was a better place and we were living in better times, but there's no doubt exchanges like ours do well in a volatile environment. obviously, we've had a record ofrter and a record month march. we traded over $500 billion in
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march and record trading days up around 35 billion to 40 billion, thet is important that essential market infrastructure continues to operate. and, sure, volumes should be good while the volatility is there, but we would all rather the world for store them to a more normal place going forward. matt: business is going great, but you would rather be able to walk around in the park and play a little football. david mercer, thanks for joining times,hese unprecedented trading fx. coming up, a french utility .ithdraws its 2020 guidance we speak with the cfo, judith hartman, exclusively. this is bloomberg. ♪
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anna: welcome back to the european open. about 20 minutes to go until the start of equity trading here in europe. withdrewility engie its 2020 guidance and scrapped as dividend to preserve cash coronavirus threatens to plunge the world into a recession. e joins us.engi everybody can understand why guidance is withdrawn. pressure from the
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government to not pay dividends? course, aof shareholder to you. or is it an entirely company-based decision? >> good morning. indeed, it was a very difficult decision for the board to take. this is a crisis that is completely unprecedented that we don't know the length nor the depth of the crisis. we have looked at the view of many stakeholders, of course, and the french state is certainly one of them, very important shareholder, also very important stakeholder for us. we do know that this is a major effort we are asking from the shareholders, of course, but when you put it all together, it does maximize our flexibility as we go through the crisis. that: what are you able to do with that money that you otherwise would have had to forgo would you have paid
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dividends? >> it is certainly not a reason of liquidity. you heard what we announced a few weeks ago. we were able to issue a bond for $2.5 billion. we have $16.5 billion of liquidity. frankly, our first effort when the crisis started to hit in europe was about making sure that financially we were safe and our balance sheets remain very strong. really, it is more a question of again, we don't know the length know the depth of this crisis. the complete uncertainty we are surrounded by spread the decision. i would say our businesses are very diverse.
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to dayan i ask about day operations and the day today challenges of operating under a lockdown? how are you having to change the way you do business to reflect that? ofa: of course, at a lot changes in this crisis going from one country to another. consignment is a very important topic. people working in home offices. one of our businesses -- many of our businesses are related to critical infrastructure. that was incredibly important, so anything to do with energy ofrastructure, generation electricity, and we had no issues whatsoever. the area where we are seeing the
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is [indiscernible] matt: which of your businesses, which of your operations is most affected by the coronavirus or the effect of trying to curtail this spread? >> operationally, we have put the same kind of rigor in place in all our businesses. business continuity, what we're
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looking for. like i said, we are servicing a lot of the critical .nfrastructure then, really, what we now need to work on is the number of employees that are defined because of the measures that were put in place by many other governments. how do we get them back to work? i think this is important for all of the companies because the impact this is also having on economic activity. we work day by day to make sure makepport our clients, work around their respective businesses and get most people back to work. anna: let me ask about your renewables project. you have a target of
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commissioning three gigawatts of renewable projects this year and next. how much will it be reduced because of the coronavirus delaying your efforts in renewables? >> this is one of the topics we just talked about a few weeks ago where we were just heading into the crisis. some select, i would say, delays, but this is not at this stage the biggest of our worries. of course there will be delays. supply chains are at least under temporary pressure. i think there will be some temporary moves, but, quite frankly, when i look at the bigger scheme of things, it does not look like it is going to be the biggest impact on our business and the financial impact of this crisis, but i will say, of course, the strategy remains as relevant and
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will remain relevant after the crisis as it was before. all the efforts around climate change, we are also working with governments on measures to relaunch service sector economies to really think about that aspect because that is an important goal for all of us. matt: thanks very much for your time this morning. engie,hartmann, cfo of talking about business during the coronavirus crisis. more on that bank of america chairman and ceo who told david westin he expects the u.s. economy to bounce back fairly quickly once the coronavirus health crisis is resolved. let's listen in. >> we saw with our consumer spending money that much faster rate, double-digit rate versus
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2019, so the economy is probably going to grow faster than people projected, would have been my guest. as he looked at the margin, you saw the situation, even when the impact happened in march, we will still see consumer spending in the aggregate in march. this has cost $3 trillion in a year, so it is not a small sample. up highdate, it will be single digits. it is faster than last year versus the year before, so the economy is on this path. just as you watch march play out, it has changed for medically. what the federal reserve did is start a lot of liquidity programs to stabilize the markets. what congress passed with the stimulus bill is an effort to keep people employed. many employers have told people, so to the extent we can keep people employed, cash in the household, that would be terrific, keep the baseline of the economy growing. the other question is how do you help small businesses to that?
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that is the other program they announced that they will implement beginning friday. the other part is how do we get that money quickly? on behalf of congress and the president and the administration, you know, they develop a set of regulations. they are coming out and they are out of process and they are starting to publish them. we just ask customers to be patient. my advice to customers, go back to their banking who they already have a lending relationship with because the kind of documentation you work with those banks will have millions of customers come to us, and we will put them through if they desire into the program and it will be very good because they can pay their employees. that is what the money is geared to do, and it will also cover some overhead, both of which are good things to help small businesses during this time. we are setting up shop and activating thousands of people to be able to take the applications, it is a huge digital presence, and if everybody can just do it in an orderly fashion, it could be very good for the u.s. economy. >> all of us in our own ways are
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trying to live day-to-day, week to week to get through this crisis. some economists are talking about demand destruction being a consummate disruption in consumption. as you look at it, how large a risk is it? >> at the end of the day, one of the things that is great is if you think about the throughput the amountomy, with of stimulus, the amount of fiscal support coming in, the amount of monetary support, if you look at economists, where they are 25% down and the second quarter and working the way, the sheer amount of dollars is overwhelmed by the amount of support coming to markets. there was no structural issues in the economy. it was a health-care crisis, and if we mitigate that health care crisis, you will see on the other cited this a rebound, and that is what economists say. as people adjust their second berter down more, there will
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a deeper downdraft, but most economists that i see, and our eternal -- our internal economists believe it gets back to the same size sometime next year that it was prior to this, which is a pretty fast turnaround. you are not changing anything fundamentally about the business cycle, about what is going on. you are saying if you get by this virus, it works. if you look at china right now, you are seeing the data get stronger, and because of the fact they are on the other cited this situation, and when i talk to commercial clients, the factories they work with, we are seeing goods and shipment coming out of china and you are seeing factories startup even in some of the places that were most affected, people are going out and shopping, so the question will be when the consumer feels
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comfortable going out to shop, going to a restaurant, going to shop at a store and do things like that. that will come when this health care crisis is solved. tremendousthere's a number of people and a great health care system, the best in the world, working on that. when that happens, it is just a matter of time before we are back, and it is just a question of how quickly we can get there. matt: bank of america ceo brian moynihan talking with our own david westin. we are just a few minutes away from the market open. nine to be exact. secret u.s.he intelligence report that claims china could have concealed the extent of the outbreak. we will be bringing you the latest. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open right now. we are about six minutes away from the start of cash trading and futures are pointing slightly higher. today's top corporate stories from the terminal. china is considering cutting electric car subsidies, despite committing to extend the costly program for another two years. rebates on qualifying models may be reduced to 10%. china's automobile industry has been hit particularly hard by the coronavirus pandemic. at one point, weekly car sails fell 96%. softbank is scrapping an agreement to buy $3 billion of weworked stock. shares.eed to purchase the founder and former ceo and other shareholders last year as
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part of a bailout package for the struggling co-working firm, noted thenk conditions of the deal have not been met. the debate over hsbc's domicile is returning. according to "the financial times," some board members were angered by the bank of england's onion, putting pressure companies to cancel dividends. one director said, "we should not be in the u.k." and hsbc spokesperson said there were no discussions to review headquarters. the royal bank of scotland is pressing ahead with infrastructure plans and cutting jobs. that is as many of its peers halt layoffs amid the coronavirus pandemic. we learned rbs let go of the team handling rbs securities and collateralized loan obligations. we are the cuts were announced
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to the team on a zoom call, in a sign of times. that is your bloomberg news flash. anna: five minutes until the top of the hour. european equity markets set to the upside. oil prices substantially higher. ♪
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anna: we are a minute from cash equity trading, the overall death toll of the coronavirus -- across the atlantic they will provide -- u.s. officials say -- china says it acted in an open and transparent manner. president trump voices optimism russia and saudi arabia will and their oil spat.
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we have a few more seconds to go until european markets open. futures are higher. 1% on ftsere than 100 futures, you can see a little risk on day after yesterday's losses. markets european equity we have the stoxx 600, we are waiting for many to open. the ftse 100 in london up by 0.2%. we see that reflected in the stoxx 600, up by a similar margin. stocks in asia and it down around 0.5%. u.s. futures point higher. nasdaq futures up 1.5%. dow futures up 1.7%.
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up by 0.4%. cac up by 0.7%. on the downside of things, the italian and germany extends the lockdown. new york talking about the end of april being the peak. florida implementing tougher measures. some of the figures around italy at the margin looking a fraction better. that is something the market will focus on. the dividend story and buyback --ry, when itfocusing on comes to these individual stocks. it is a broad focus on the coronavirus that is ever present. european markets opening slightly higher.
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more companies are cutting the guidance and dividend payments as a result of the coronavirus. joining us now is dean turner, u.k. economist, ubs private banking. do we see a bounce and equities this morning by a small amount in european stocks? do you have any better handle on the timing of what we are dealing with? a very weak march and april, then things start looking better slowly? what is the picture for recovery? dean: our base case, we are expecting weakness in the global economy will persist for a few weeks. thes unlikely we will see peak in the rates of infections in europe until the middle of this month. governments will need that before they can left social
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distancing restrictions we have seen put in place. in our mind, we are thinking we can start to see the economy shows signs of normalization sometime in may. we are in for what is likely to for the globalod economy as we go through the current month. talk about bridging the economy post shutdown in order to keep firms solvent and people in their jobs. is it possible for a government to do that? especially when you have small and medium-size businesses that have no cash reserves and no way to pay rent. people have no way to pay credit card bills. dean: you touched on the key point. makeup the overwhelming
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ande in most economies, most are large employers. a loss of policies we have seen have good intentions. certainly the short work schemes we have seen implemented across europe, and a number of schemes haveted in ensuring sme's access to the liquidity are well-intentioned. i think the jury is out on these policies. i do not question that governments have enough firepower to support the economy for up to three months if that were the case. the question is the effectiveness of delivering the policies. we have seen in the u.k. there has been some disappointment on what has been an unprecedented support level by the chancellor. it is likely we will hear more
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on that sometime soon. this focus on sme's and delivering is what is crucial. anna: we were told yesterday by a cabinet minister that the chancellor would speak this week about further support. i want to bring you a red headline, spanish jobless claims raised by over 300,000 in march, the most on record. no surprise we see that happening, stunning numbers in jobless claims in the united states. this is something we will need to get used to. i guess the extent to which governments can provide assistance is key. dean: yes, absolutely. are very sad numbers we are seeing in spain.
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we are saying in the u.s., and in the u.k., some news yesterday that universal credit toims could touched close one million. not all of that is unemployment. one has to worry that the vast fiscal support packages we have seen are not having the desired effect in terms of encouraging firms to hold onto workers rather than lay them off. as you correctly pointed out, if this is unsuccessful, the focus will shift a little bit to supporting those workers who have been unfortunate enough to lose their jobs. i think we are seeing enough moves in the right direction, and we should not forget in stabilizersutomatic with the social safety net will kick in, but perhaps more effort will be needed to ensure when the coronavirus shock passes,
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the economic rebound can happen. matt: we are going to keep you with us, dean turner, u.k. economist, ubs private banking. i want to quickly take a look seven minutes into the session at individual movers. and how far each is moving the market. you can see we have 422 winners. you will see when we bring up the move screen, and 183 losers. the biggest gainers by points or royal dutch shell, totale, bp, all oil companies helping to boost the index. on the downside, novo nordisk, hsbc, and asml. coming up, we will speak to bcc general director adam marshall. we will get his take on the effects of the locked down the economy.
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this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: european open." right now 10 minutes into the
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trading day, and we are still looking at gains on the stoxx 600. i am looking at the movers screen and it has come down substantially but a slight , 0.3%. goldman sachs has warned the worst is yet to come for junk debt, saying defaults are looming on the horizon. the note comes after a quarter when companies raised over $700 billion through debt sales as they look to build up cash buffers. carnival cruises cash stan selling $4 billion a bond yesterday, paying out interest on 11.5%. demand was said to be frenzied with orders topping 17 billion. that is a relatively robust target. dean turner, u.k. economist, ubs private banking is still with us. the main problem i see is there are so many fallen or falling angels, companies that could or
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should be rated junk but are not that will have difficulty accessing credit lines if that happens. how do you see it? dean: yes, when we are looking at the markets, whether credit or even more safe haven fixed income asset classes, at this point we have to sit back and reassess what is in the price. in our view credit markets are much closer to pricing what we consider downside scenarios for the global economy. probably more is upside risk in asset classes as u.s. investment grade and u.s. high-yield than elsewhere at the moment. as things stand, within a portfolio context, we are more constructive on credit than equities. toa: is it a good strategy
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buy was central banks are buying? dean: i think that is a valid point. hardmple terms, it is very to be negative on an asset class. seeing central banks looking at investment-grade credit. in our view taking a three to six month view on that basis together with where we are saying the level of spreads now. we think we can see positive returns from this asset class. matt: i wonder what you think about the possibility of bankruptcies helping to boost a rate? for carnival cruises. are you going to see those kinds of coupons across markets? dean: it is not really my position to comment on the
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coupons for that individual company. as an economist i am looking at things from a top-down perspective, and from an asset class perspective. and we are looking at the market looking at if we are the spreads we are seeing -- and of course especially when we are looking at investment-grade -- it is not default price, it is downgrade risk. downgrade risk seems more than it has done for some time. one of the things that gives us encouragement as well, the of companies in order to shift their focus to ensure and protect cash flows to maintain their investment grade credit ratings, to be optimistic. we know if the company's
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unfortunate enough to lose that investment grade rating, it can have knock on effects on the business. it is encouraging there seems to be a focus on this now. it should be another factor to support this asset class. are in economist working in these markets for 20 years, you take your macroeconomic expertise and translate that into strategies for the market. i want to ask you a question about china. would it surprise you to learn they were not being completely honest and transparent with the data from their coronavirus outbreak? or would it surprise you more had they shared everything with everybody in real time? is ani think that extremely difficult question to answer.
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pandemic of the likes we have never seen, certainly in my career and the careers of many others. it is a new virus, and testing around this virus is going to be difficult for everyone. i do not have a lot of confidence the numbers we are seeing reported across the world are a full and true reflection of the situation. we will only find this out in the years to come. it is not appropriate at this time to be assigning blame to one particular region or another. everyone is learning and on a steep learning curve. anna: thank you very much,, u.k. economist, ubs private banking. on the program. brian moynihan told david westin he expects the u.s. economy to bounce back quickly once the coronavirus health crisis is over. take a listen. did,at the federal reserve
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a lot of liquidity programs to stabilize the markets. congress passed a stimulus bill to keep people employed. we have told our teammates we have a job to support, and many employers are told that to keep people employed. keep a baseline economy growing. how doer question is, you help small businesses do that? that is a program they will implement friday. the key is how do we get that money and how quickly on behalf of congress and the president, ,nd they set up regulations they are starting to publish them. patient,stomers to be go back to your bank and who you have the money relationship with for documentation, they will have millions of customers come to us and we will put them into
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the program. money ishat the secured to do, and to cover overhead to help small businesses. we are setting up shop and activating thousands to take applications, a huge digital presence. if everybody can do it in an orderly fashion, that will be good for the u.s. economy. looking forward a little bit, some economists are talking reduction innent consumption because of the crisis. is there a risk of that, and how large is that? >> one thing that is great, if you think about the u.s. economy, with the amount of stimulus and fiscal support coming, the monetary support, if you look at economists twice 5% down in the second quarter, the sheer amount of dollars, five
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trillionollars -- $5 is geared to getting out the other side. if we mitigate the health care crisis, you will see on the other side a rebound. as people have adjusted the second quarter, the new claims last week, people are seeing what will happen this week, there will be a deeper downdraft. most economists believe on the other side is a reversion back to where the economy gets almost back to the same size in the next year, which is a fast turnaround. from theittle comfort bank of america ceo, brian moynihan. up next, china denies lying is u.s. intelligence says beijing hid the truth death toll of the coronavirus. this is bloomberg. ♪
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anna: welcome back to "bloomberg markets: european open." 22 minutes into the trading day that is positive for equities. modest gains by recent standards. u.s. futures point higher
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substantially up to 2%. dow futures up by 2%. market is finding it within themselves to go higher this morning. let's talk about individual stocks in focus. stocks on the energy sector doing very well. that is partly because we have an oil price surging. session,by 10% in one not all that much. we are right now with brent. about whether we will see further cooperation forthcoming from producers within the oil sector. let's move on to the car sector, chrysler in focus today. jeep brand had a tough quarter
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in u.s. sales down 14%. the bright side is the gladiator pick up. founderin focus, the escalating the row with a challenge to the board, calling to oust alders certain director. denies lying about its coronavirus figures. the counterclaim comes after u.s. sources told bloomberg the country had intentionally been underreporting the total cases and deaths it suffered from the disease. the outbreak began in china's hubei province late last year, but the country has reported 82,000 cases and 3300 deaths according to data compiled by
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johns hopkins university. that is half as much as those in the u.s. already which has the largest outbreak in the world, a third of thean population. joining us from new york is annmarie hordern. what does the u.s. reports say? annmarie: [indiscernible] officials saw the classified report. reporting total cases and deaths, officials say these numbers are fake. there is a lot of skepticism toward china inside and outside the country about these numbers. one figure the government revised, for weeks they were not counting people who had the virus who are asymptomatic.
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there are thousands of earnings in the hubei province. china refuting it, saying they acted in an open and transparent manner. they do not want to get into an .rgument they call it moral slander and feel compelled to clarify this. anna: thank you very much. we will no doubt continue to cover this story. be time for questions about who said what and when. up next, are we approaching a crunch point? bcc expects 50% of staff in the next week -- we will ask about the preparedness of the small and medium-sized businesses, how much cash on
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hand do they have, and how optimistic are they to take advantage of the u.k. plan, or are they having difficulty accessing that? this is bloomberg. ♪
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anna: welcome back to "bloomberg markets: european open." 30 minutes into the trading day. 0.2%.600 up by u.s. futures pointing higher. the ibex flat, but elsewhere in europe modest gains. oil and gas to the upside by more than 5%. the whaling gas sector has reversed half of its losses since the bering 19. losses were substantial. interesting to see that rebound. travel and leisure at the bottom. still concern about the travel
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sector. we saw weakness in that sector yesterday in london because of concerns around dividends and the ability to run credit conferences might be weighing on that. matt: i want to get to the first word news. today's top stories off of the bloomberg terminal. transparentlycted and in the open when it comes to the coronavirus after a classified u.s. intelligence report said beijing concealed the extent of the outbreak. two sources said the findings in china's numbers were fake, underreporting total cases and deaths. the pentagon is looking to provide as many as 100,000 military style bags for potential civilian use as the u.s. warns deaths could soar in the coming weeks.
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they will send the bags to the federal emergency management agency. in the u.k. almost one million people have claimed universal credit welfare cases in the past 100,000., up from the benefits are designed to help people on low income. the surge coincides to when the u.k. imposed dramatic restrictions on public movement. the federal reserve is letting wall street banks take on more leverage so they can absorb liquidity and treasuries and the surge in customer deposits. the fed is making it clear the move is to expand their balance sheets as appropriate, not so capitalcan increase this abuse in my dividends. 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.
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anna: the next week could be a crunch point for british businesses and their staff. half the companies will lay off 50% of their employees, according to the british chamber of commerce. joining us now on the phone is adam marshall, director general, british chambers of commerce. tough time to speak to you, but good to speak to you today. i see from your research that the majority of u.k. firms have oree months cash in reserve less. the big difference between three months and lasts at this point, how precariously positioned are your members in terms of their cash positions? speed of thele and economic contraction that we are seeing is laid bare by some of these results.
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firms have less than a month of cash at their disposal, and the vast majority have less than three months. it is hugely important to get the support promised by the u.k. government to the frontline as quickly as possible. there have been big announcements from the government in recent weeks, but the support has to get through if it will make a difference in time. matt: how many bankruptcies do you see? what is great britain looking at in terms of failed businesses because of this? adam: we are already seeing from earlier results some 18% of businesses have closed their premises temporarily. i hasten to add those are not permanent closures, but if you have one in five closing their doors and in a difficult cash position, you can infer it will be a significant number of closures or business failures.
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that is why we have to get bankingthrough the u.k. system. companies have to be able to furlough their staff as quickly as possible. what the government has to focus on is delivery. that will help us save hundreds, thousands or tens of thousands of firms. anna: is it a problem with businesses accessing help available to them? they cannot get through on the phone lines or a response online, is that problematic, or too restrictive and too many businesses fall outside the scope of assistance? is a mixture of ,elivery to the front lines they are being asked to do extraordinary different things
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very quickly they have to get the support through to the frontline. there are businesses falling between the cracks. mid-cap firms, many employ significant numbers of people, they fall between two different programs. and small companies with a are seeingr-director as well. there are gaps that need to be filled. what is the answer, especially for consumers, very small businesses, sme's, when it comes to providing support for them that is not too easy to game? that does not cause too much moral hazard? adam: i think the key is ensuring any application process that exists for support are clear, easy tot,
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use. we would not want to see a small number of businesses looking to use government support for financial gain rather than survival. equally, we need to get cash out the door as quickly as possible, given some of the numbers are tracker is showing. the urgency of doing that is very real, otherwise we will see significant business failures in the weeks ahead. anna: i see from your survey that more than a quarter of firms were not due to use any of the schemes available in the next week. should that be seen as comforting western mark are they waiting until they really need it? or do they not qualify? part it ishe most the businesses able to remain open who are not going to be using schemes in the near future. i do not preclude some of them having to do so in the weeks and months ahead, this is a
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fast-moving situation. there could be other bumps in the road we have not seen as we move through the. toward recovery. with 26% of firms saying i am not going to furlough anyone, that is a reminder that companies need to operate at full tilt and are essential to keep the economy going and making sure we have the capacity to fight the coronavirus operate. matt: thank you for joining us, adam marshall, director general, british chambers of commerce, talking about the businesses that are surviving this and those having a tough time. i want to lookt, at european equities. the gains were short-lived. we have seen major european indexes turned lower including the stoxx 600. the dax down 0.25%. the cac we have a concentration of carmakers, and those
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carmakers, especially those in germany were talking to angela merkel about how to reopen their factories, exploring ways to get production back online, even though the main problem is that no one is going into showrooms to buy those cars. this is bloomberg. ♪
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anna: welcome back to "bloomberg markets: european open." things did not last long for the upside for european stocks, on the stoxx 600. the spanish ibex weighing in particular. we also see u.s. futures pointing higher but not as much as earlier. governments and health officials worldwide are racing to monitor and slow the spread of the coronavirus outbreak. 1 wall st veteran might have a way to track the outbreak.
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we spoke to the risk officer for j.p. morgan. we asked about what he learned. peter hancock had a bright idea. he saw this letter that the leading specialists published. explaining how prevalent this on symptom was with the coronavirus. it was a loss of sense of smell. it is dramatic. you wake up one day and cannot smell and onion. they say they are seeing it in a shocking number of cases. they have done work with other doctors, working on a paper they are about to publish trying to figure out what percentage of these people who got coronavirus lose their sense of smell, it is
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between 30% and 60%, and the estimate 80% who lose their sense of smell probably have the virus. two things, you can use this as a crude diagnostic tool. if that happens to you, isolate. it is a leading symptom and one that occurs with no other systems -- symptoms. the second thing, we can harvest this as data if we get enough people self reporting that they lost their sense of smell, it might give us a map where the viruses. we cannot get that now because we do not have testing kits. me soing that impressed much, i talked to him to write this piece i published today, he onto british doctors on the day they published their letter
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six days ago, and he has built this organization with data scientists and a website and celebrities who will encourage people to report their sense of smell. i think it offers -- it is crude -- but better than anything we got, a sense of where this is. you cannot fight it unless you know where it is. i want to get your thoughts on the government response to the company 19 crisis in the united states -- the covid-19 crisis in the united states. this idea the black swan event was not as black as some people thought, this idea we underestimated the likelihood of what was out there and what we saw coming. when you look at the government .esponse
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what lesson might we be able to draw from this. a bunch of them, leadership matters. if we had a response and a playbook that was on the shelf the obama ago because administration had a scare and the trump administration prewitt in the garbage can. e trump administration through it -- threw it in the garbage can. the obama people figured out you need some person in the white house who coordinates the response early. you have various agencies trying to do various things and making various claims. they would have caught the cdc
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test that did not work early. the big thing, we are paying a huge price for the demonization of the federal government that has gone on for decades. we have the unhappy accident of someone who is president who had little respect for it when he took charge, and is the principal tool to deal with this event. that is michael lewis, a , andberg opinion columnist a best-selling author. merkel isrlin angela working with german auto officials to find a way to restart assembly lines. there are concerns cash-strapped suppliers may not survive the damage from this pandemic which would spell disaster for the supply chain if or when it comes to restarting operations. this comes ahead of u.s. auto
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sales that will probably be bleak. joining us on the phone is bloomberg's managing editor for global business. say tod the chancellor these guys, it does not seem like the time to be restarting production lines. the time to start production. this is early days. withthey are looking at the supply chain, small companies that might make one component that goes into these cars, that are crucial to getting the engines and the car is assembled. if you miss one part, that means you cannot build the car, and that makes the supply chain collapse. suppliers like continental or robert bosch are hurting but not to a point where they might face bankruptcy.
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the small suppliers have a couple of days before they run out of money. that is the business the chancellor and executives are looking at to cure that flank of the car market. anna: let me ask about the u.s. in the car sector. data out for the month of march is described as every bit the catastrophe we have expected. it was very bad. you have numbers from gm and fiat, and you have the first quarter results. that is a black-and-white picture because the first couple of months look good. there was optimism we would see in a strong year, and that is reflected in that. fell off a cliff. at gm, a decline of 7%.
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that is for the quarter. if you look at it in isolation it is far more pronounced, north of 40%, 50%. we will get more data today from ford and others. the picture is bleak. cars, are not buying showrooms are not open, production lines are not open. across the line, a total shutdown of the business. as one analyst said, the whole world is turned upside down and out of is the case in the car industry. anna: thank you very much. let me tell you what is up next, will treasury 10 year yields go to zero? havens toe to seek read kristine aquino joins us next.
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matt: welcome back to "bloomberg markets: european open." 53 minutes into the trading day. we see the dax trading lower end nd other indexes trading
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higher. the stoxx 600 unchanged. let's talk about the u.s. labor market. later today the number of americans filing for unappointed benefits is expected to set a record for the second week in a row. investors are waiting key u.s. an initial jobless claims data to see how shutdowns are world's largest economy. joining us now is kristine aquino. chinan europe and in there was a more jacobian shutdown of businesses. in the u.s. you can get on a commercial airliner and fly around. it seems like they are firing more people. >> it seems like that. in the u.s.impact
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is probably hurting a little more than other countries. that is why the jobless claims is becoming an indicator for investors for strategists in any market participant to be watching. this will be one of those high frequency data points to give us a clear read of how the consumer is doing in real time. meanwhile stocks in europe are kind of flat. u.s. futures point higher. what will we be watching as the day develops? today and every day focusing on the grim death toll. is a lot tos, it focus on, virus development's we have beent focusing on the wheel moves
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today. certainly important for commodity markets, but as well as other asset classes related to that. what we have seen in markets this week is a little diversions absent any bigger new .evelopments on the virus front this might be one of those weeks a bunch of smaller divergent themes going on. 9%.: brent prices are up by wti up 8%. brent at $27 a barrel. it for the european open. stay with bloomberg tv. "surveillance" will be up next.
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stocks here in europe are pretty flat. u.s. futures point higher between 1.6% and 1.8%. this is bloomberg. ♪ awesome internet.
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it's more than just fast. it keeps all your devices running smoothly. with built-in security that protects your kids... matter what they're up to. it protects your info... ...and gives you 24/7 peace of mind... ...that if it's connected, it's protected. even that that pet-camera thingy. [ whines ] can your internet do that? xfinity xfi can because it's... ...simple, easy, awesome. [ barking ] francine: the death toll of
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coronavirus -- [indiscernible] american officials say china -- beijing denies the claims saying it acted in a transparent manner. we will be speaking to the chief executive in an exclusive conversation and 9:30 a.m. london time. good


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