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Chinas economy contracts for the First Time Since at least 1992 after the coronavirus lockdown but industrial output numbers offer signs of encouragement. Stocks push higher as President Trump outlines steps to reopen the economy despite data showing 5 million more americans filed for unemployment. Plus hedge funds suffer a volatile march. And the worst ever losses posted. We will see this morning what u. K. Asset manager things. Breaking headlines on european car sales plunging 52 in march. European car sales more than getting cut in half in march yearoveryear. The biggest drop on record. We will be sure to talk a lot about cars today. Hsbc upgraded bmw shares to a buy. Anna a lot to talk about in terms of the car story an interesting to see the plans are around reopening car production. Let us talk about man group. The World Largest publicly traded hedge fund. Net inflows for the First Quarter, 5 million. Standing at 104 billion u. S. Dollars. These numbers are coming through. They are talking about negative fxects and other negative and other movements. Final dividend, Share Buyback program proceeding as planned which is interesting. Are callingsses into question buyback plans and share programs. On the market volatility around the virus. Dani burger pointed out the pressures. Coming a week or so after they had to close two hedge funds because clients were pulling out money and there was not patient money in there. Matt do not miss our interview with luke ellis from man group shortly after 9 00 a. M. U. K. Time. Let us get to the bloomberg first word news. Top stories from the terminal. Chinas economy contracted for the first time in decades in the First Quarter as a coronavirus outbreak shut down large parts of the economy. Gdp shrank six point 8 from a year ago, the worst performance since at least 1992 when quarterly data started. That missed forecast for just a 6 drop. 16 over theopped same. President trump has outlined plans to restart the u. S. Economy with some employers being encouraged to abandon restrictions in the next four weeks. The white house has been eager to let the country return to work after a total of 22 Million People file for unemployment aid in the last week. The u. S. Currently has over 150,000 Coronavirus Infections. Our approach outlined three phases to restore our economic life. We are not reopening all at once but one careful step at a time. Increased Coronavirus Infections suggest no let up as european leaders weigh in on lockdown measures here. New cases of the virus climbed in spain, italy, france, and germany. The u. K. Announced it is extending its lockdown by a further three weeks as its confirmed cases topped 100,000. In china, the official death toll has been increased by 40 . The extra numbers from wuhan were due to late reporting at the height of the outbreak. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna . Anna let us get into the market conversation and bring our colleague into the conversation. Asian stocks climbing. Up 2 or 3 . Come tentative steps to restart the American Economy. Theased approach president giving governors the ability to see that. Traders looking past a lot of chinese data. Let us get into that conversation with mark cudmore joining us now from singapore. Interesting to see markets have dataquickly put the china come of the weakest in decades in terms of gdp into the Historical Data box and decided we do not need to trade around that now. We sit here in europe with information such as the car sales plummeting more than 50 . Will there be the same resilience or ability to say we knew this was coming . Mark for the chinese data, it is not that u. S. Equity futures have gained, it is just that there has been very little impact and that goes to what you are talking about everyone is saying we know that unemployment is surging, that is not where the debate of the market is between bulls and bears. Shorttermows the shock is violent. The debate is how long the shop well last and what will the secondary impacts be of those shocks to consumption and unemployment. And retail sales massively missed next rotations expectations. That is the general theme we are seeing. Areherrings factories reopening. It does not help if you do not have the consumer there. Boostnot that great of a getting extra supply if we dont have the demand to match. The data is negative. Car sales in europe not surprising. I think it will slightly erode sentiment. Last year was the first year in nine years that global car markets in march was not the record month. Clearly, march will not be a record month this year but it is also slightly deceptive. We did have this delay. Usually march is positive. This year they will not be buying because of the coronavirus but there may be a surge in cars afterwards because people will prefer private transport as opposed to public transport. Cars may make a strong recovery in the second half of this year. Matt i was talking to a friend on wall street yesterday, admittedly a person that does well in banking that he said look, i am refinancing my mortgage and looking to purchase a car. Interest rates will be rock for a while now and these are the times to do this kind of thing now. Will consumers have this feeling more broadly . In germany, we reopened Car Dealerships on monday. Mark it is a hard argument to judge. Where we may be slightly worried a perfect example of how traders being slightly disconnected to what is happening on main street and away from Financial Centers there are people not getting stimulus checks promised, there are people struggling to feed themselves, there are people that will not have jobs to go back to once stimulus runs out which will be a problem. Unless all the jobs come back in the next few months which is unlikely. The financial industry, the journalism industry are good examples of exceptionally fortunate industries that can work remotely and they are not seeing that much damage. The risk that analysts in that sector are having is that they are underestimating the impact. I think the lingering impact on the consumers will be bigger than what some are seeing. Reopened buty have factory workers are not dining out at lunchtime. Lunchboxes andng this is a reopened economy. Consumer behavior has still changed. Will it be permanent . We dont know but the limbering lingering impact will be around for quite a while. Anna and even more so when you think about the reliance on Service Industries we are in western societies. Let us take a quick look at the numbers. Funds under management dropping by 11 quarter on quarter. The economy being resilient in unprecedented circumstances. It is worth noting ahead of the open but also because we will be interviewing nick ellis from that man group. Stay with us for that interview around 9 00 u. K. Time. Up next on the program, we will talk about what is happening with the fed and central banks. The Federal Reserve has offered a pessimistic view for the outlook of the u. S. Economy cautioning that a recovery will be strong will be slow to take hold. Our exclusive interview with the dallas fed president. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are a little over 45 minutes away from the open of cash trading in europe and the u. K. Todays top corporate stories from the bloomberg terminal. Jobs andd is cutting breaking with wall street. Sources tell us the private Financial Services firm will terminate hundreds of roles across the division. This would herald the deep cuts among Financial Companies since the crisis began. Cantor fitzgerald says it is being prudent in an uncertain environment. Climbingiences shares after reports of coronavirus patients being treated having rapid recovery. A trial in chicago was given to patients. The most patients were discharged from the hospital. Gilead had 4000 patients in the trial. That is your Bloomberg Business flash. Anna let us talk about the measures being taken stateside. President trump has unveiled guidelines on reopening gradually the u. S. Economy. The socalled opening up america timeline could allow companies to abandon their social distancing measures. Putting the onus on governors. The recommendations lay out a threephase process. Allowing for reimposing measures if infections start to flare up again. Let us get a market perspective on the latest developments in the fight against coronavirus. Good to see you once again. You have been suggesting recently that we continue to think there is positioning for a strong dollar being sensible. What does that look like now . Measures being taken to open up the economy. What would it take to change that dollar positive view . We see the dollar responding the most to this crisis and to risk sentiment. Recently, the dollar has weakened following the very aggressive policy response by the lockdown in many countries. A reason toever remain defensive. There is still on step there is still substantial uncertainty. Worsecession will be much than the 2009 crisis. And we do not have clarity on when we will be able to be released from this lockdown. Even when we will, it will not be a move back to normal. It is more likely to be [indiscernible] a very deep recession with a very weak recovery. As long as the uncertainty continues, we will remain risk of verse and we will be positioned defensively. Matt why do you think the recession or the recovery, i should say, will be so weak . You have so much for you have so much activity from the fed and the u. S. Government springing into action like never before and a president that really does not like having a strong dollar. The white house will try to fight against that, surely. A number of free zones. Look at the boundaries. And the exit plans. And itll be very gradual is not really a move back to normal. Or as there is a cure vaccine and the threat remains from the virus, we are not going back to the same situation. From lockdown, there will be some economic recovery but we are not going back to what it used to be. Second, the high uncertainty Means Investment will remain depressed which will have longterm implications. Investment growth will remain low. Alivel keep the economy during this time but it will not be a enough to really change the behavior of people as long as they are afraid of the coronavirus. From this point of view, it is unlikely that we will see the strong recovery we usually get after a natural disaster, for example. And the longer we are in this situation, the more we will have permanent damage in some parts of the economy. Permanentking of the damage, how do you expect europe to fair . To fare . Given the strong dollar, do you expect the euro to underperform . If not burden sharing, we could see some flare up in spread. What does that mean for the euro . We are more concerned about the eurozone. No matter the crisis, there will be a huge debt for the public and private sectors. In the case of the u. S. , we can think of a different scenario. , wehe case of the eurozone do not expect the ecb to keep buying bonds forever. And countries on the periphery theyitaly and spain will have years of austerity ahead of them. The plans in the eurozone so far i amress liquidity fully in agreement personally with president macron. Only [indiscernible] unless we move in that direction , fx at bankead of g10 of america, merrill lynch. Thank you for joining us. Boeing shares soared yesterday plans torm announced resume production in seattle. We will hear from our own interview with the ceo competitor from airbus on the challenges ahead for the company and the industry. This is bloomberg. Same view is basically the it was two weeks ago. I think we will have a substantial contraction in the second quarter. We have said publicly, annualized as much as 30 . And multiplied i four by four. We think we will grow in the thirdquarter and continue to grow in the fourth quarter. I would probably say today that peak unemployment may be closer to the mid to high teens come higher than i said before. And we still believe we will end the year with an and with an Unemployment Rate like 8 10 . In that range. The challenge going into 2021 will be to work that Unemployment Rate down. Ofthere seems to be a range views among the board and fed president s. Mary daly saying this could dragged into next year and another president saying this could be a sharp v where do you put yourself on this spectrum . Challenge, going into this situation, we had sluggish manufacturing and sluggish fixed investment. A lot of that had to do with weak global trade but we had a strong u. S. Consumer. A low Unemployment Rate. Household Balance Sheets were in reasonably good shape. That was 70 of the economy. The challenge is as we come out of this later this year and if the Unemployment Rate really is a percent10 , you will have a weakened consumer who will save , morebe more careful reluctant to spend and that will be a headwind for the economy and it may take a while and i mean into 2021 for the consumer to get his or her footing back. And i think that will be dependent on how weekly we can run down this Unemployment Rate to lower levels. Do i think it is going to be a v . I think the consumer situation makes me think we will have a recovery and it will be a solid recovery in the second half of the year from the levels where we are at. We will still have a 4 or 5 contraction but the question will be the pace of growth and what is the state of the u. S. Consumer . Those are the questions and those are the issues i am most worried about. The psychology of the u. S. Consumer is not simply to be more conservative but to be concerned about their personal safety. How willing will people be to go back out to restaurants and to go to spend will there be some concern because of safety . There are three levels of issues. Personal safety. That is why ubiquity of testing is so critical. If you had widespread taste , iespread testing at scale think that would do a lot to give consumers confidence to go into the workplace, to go into restaurants and other public gatherings. That is dependent on how available is rapid testing. Jobother issues our insecurity. I saw a survey from the new york fed saying Something Like 70 of all workers are worried about their jobs. Losing their jobs. There is that insecurity. The last issue is what has happened to the consumer financially and particularly that segment of the population, which is sizable, which does not have much savings and lives paycheck to paycheck. This will make it so they are even more cautious. Those are the three big issues that affect the consumer. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Anna welcome back to bloomberg. Rkets european open just under 30 minutes to go onto the start of European Equity trading. We will at least start looking generally pretty positive. Lets talk about what is to come on the agenda, whats on the radar for today. U. K. s handling of the coronavirus pandemic comes into focus with moodys set to announce its outlook on the countrys rating debt rating. The debt built in various economies. At 10 00 a. M. London time, we will get the euro areas inflation readings for march. We will also discuss u. S. Measures to irrigate mitigate the virus impact on the economy. Dont miss our exclusive conversation with the cleveland fed president. What does she make of the latest announcements . That interview after 2 00 p. M. Matt . Matt we have been talking about the airline industry. Clearly, it has been slammed by the coronavirus pandemic. Aircraft manufacturers are one of the first to bear the brunt. Boeing announced it will resume. Production of. Commercial airplanes. The airbus ceo spoke to us earlier to outline the challenges his companies facing. Here he is. We have to face a very unprecedented situation and we are facing that now. The situation of the airlines, our customers is a very difficult one. Most of them have their planes, to a large extent, on the ground. That is unprecedented on the global scale. Therefore, we have to adapt. We have changes on the supply chain. We are combining all of our debt to move forward. What we have done last week was to define a new production rate, a new production planning ane to be able to give the right production the right numbers information to our partners. We have to adapt to the new situation. What are you hearing from customers . So united in the United States a little bit earlier on saying that demand for travelers essentially zero demand for travel is essentially zero. What are you hearing . There is a large diversity of situation around the world. The situation is not the same country by country, airline by airline. What we have done to speak proactively to customers individually to find solutions one by one to their concerns. Actually, the situation is today what it is, you mentioned the situation of united. We have a similar situation with other airlines. It is a very complex situation. It is a lot of work for all of us to adapt and find the right way forward. There is still a lot of uncertainty on when airlines will be back to service, when we will be back to normal and what will be the shape of the recovery. That is what we are working on at the moment. What do you think of the state data being given to certain carriers . I think the priority is on rescuing the airlines. They are the first hit by this pandemic. Obviously, no passengers or very little passengers flying. The priority, my perspective is to support the airlines going through this very difficult situation. Supporting the airline is also the best way to support the world supply chain. We are looking very much on our customers, the airlines, as well as the rest of the supply chain to keep it alive in a very challengesed time of so we can move forward and recovery when times will be better. Looks like boeing is going to ask washington for some sort of state aid. Do you have similar plans . Do you expect air plus to have to ask the european government to havestance airbus to ask the european government for assistance . , we are asking for support but not in capital funded good to hear. In terms of how you see the story developing, how much visibility do you actually have at the moment . I would imagine very little. Oweninvestment bank c was out with a report that it sees aircraft deliveries down 40 50 over the next four to five years. Is that what the future looks like to you . Do you think the shock will be shorter and sharper . I dont have a crystal ball. We are all trying to assess the depth and duration of the crisis. We think there will be a large difference between the wider bodies and the narrow bodies. The leader will probably recover much faster later will probably recover much faster. What we see for this year is Something Like 30 , 40 in terms of aircraft delivery. It is still very dynamic. Ofsee the recovery in terms passengers flying behind the scenes, china already sought china is very interesting. It is a place where we can try to assess what we have for the rest of the world. Nextnk 40 50 over the 45 years in my view looks quite pessimistic. Anna that wasnt the ceo of airbus speaking to us, speaking to guy johnson about the dyers great talking about the dire straits the industry is an. China recording its first contraction in decades. Point gdp shrink by six 8 from the First Quarter a year ago as the coronavirus outbreak shutdown large parts of the country, large parts of the chinese economy. It is the worst performance since 1992 at least. Joining us now with analysis is freya beamish, chief asia economist at pantheon macroeconomics. I wonder what stood out to you in the release. Buthows bad data on growth it seems to be the retail sales, the weakness there, the persistent weakness in retail sales that has raised the warning flag, if you like. It might be easier to switch back on industrial parts of the economy then it is the more consumer based parts of the economy. Freya absolutely. I think what we are seeing from this data is a very uneven recovery. Out whatficult to work actually did happen in march. We dont really for sure know just how about february was. Therefore, we dont know what the base was and therefore, we dont know how much of the economy how much of economy will rebound in march. If you try to work out just how bad february was by looking at those year to date numbers, the retail Sales Numbers that we had for march, no matter which way you cut it, look very poor. Thats despite the fact that a lot of local governments, local provinces have actually given out vouchers to literally get people to go out and spend. The Services Sector overall is still very much struggling with as consorted be expected in the chinese economy, when manufacturers as could sort of be expected in the chinese economy, when manufacturers get back to work, they will be getting back to work as quickly as possible. That Industrial Production number was surprising in terms of how strong it was relative to the rest of the data that came out. In the context of the pmi, yes, we did see a jump in march to around 54. That just tells us that we were a little bit better than what happened in february, which we all know was pretty dire. So to see that Industrial Production number bouncing back like that, still in contraction, but bouncing back, was quite impressive. It does still leave activity around 95 of the december levels, though. We are still not fully up and running, even in the manufacturing sector. That speaks to a bit of a precursor to what we are looking for in q2. We know now that the rest of the world is now facing Something Like what was happening in china. Who is going to front chinese production in q2 . Matt i wonder, you know, the idea when the government completely shut down the economy , economists say what they need to do is somehow keep people employed, keep businesses solvent, build a bridge basically from the beginning of the shutdown until the reopening. Economy, as a command was china and a better position to do this then say the u. S. And europe . Do you think they have done a good job of building that bridge . Freya in the sense that they out thereeople to go and spend money, or they can tell the banks they are going to go out there and lend money to the state owned enterprises, they are in a better position certainly. The money data and the credit data is looking a lot better in march, having been from very tight monetary conditions. We are still entitled monetary conditions we are still in tight monetary conditions. The lending schemes appear to be working, to the extent that they can be expected to work in these circumstances with the Banking Sector still facing quite a lot of on the supply side. That does not mean that china just can get off scott free. Constraint, the main they are facing is that they after thedy, financial crisis, done that kind of command economy think of goosing the economy, boosting the property sector of racking and nowe amount of debt left with that burden, which constrains their ability to react to this crisis. I think what we will see this time around is if you look at chinese gdp kind of next year looking back next year, looking back to this year, it is a massive dip we have confirmed in q1 and then a bit of a recovery in q2, which obviously is constrained by the lack of demand and the rest of the world and the ability of china to finance just inventory in the meantime. Chinese gdp wont make it back to where the previous trajectory was so thats a huge change from that command economy, great financial Crisis Reaction we saw in 20082009. Because of the massive stimulus they were able to unleash at that stage, gdp made it back about previous trends where it was before the financial crisis. This time around, its completely different. Matt it will be fascinating to compare and contrast of those two recovery pushes. Thanks so much for joining us. Freya beamish is the chief asia economist at pantheon macroeconomics. Appreciate your time this morning. Up next, is france failing its poorest students . Online learning is exposing the gaps in the countrys school system. We will speak to the Education Minister next. This is bloomberg. To bloombergback markets european open. The french president , emmanuel macron, announced this week that schools will gradually start reopening from around the middle of next month. The coronavirus has presented challenges for educating poor children. Despite efforts by many teachers to contact classes, the system has lost track of about 8 of people since a lockdown started. France trying to not lose track of poor students in its system. The france Education Minister, jeanmichel blanquer, joins us now on the phone. Thank you very much for joining us. How many children do you fear of falling through the gaps . It is still is it still 8 of the population that you cant reach . Whats the statistic . Jeanmichel is no longer 8 . We think it is lower than 5 but 5 is still a lot. 5 is more than 200,000 people so we think its a lot. It is an average, so that it means so it means that in most places you dont have children, but in other places, you have a lot. For example, vocational training, and some suburbs it can be 30 40 . We are very aware of that because we dont want this situation to lead to stronger inequalities. Are very motivated to go back to school. So you want to bring these kids back to school and i guess you will continue with the social distancing rules. How you wouldtand keep a Grade School Children two meters apart from each other, or especially how you can keep to continue love social distancing measures. How is that possibly going to work . Jeanmichel we cant do anything against her love against love. We will be organized for that. It will not be a normal comeback. We wont have school as usual. For example, in most of the cases, you wont have all of the children at the same time. It depends on the size of the school. Youural areas, sometimes have only 1215 people and it is not a problem. In other places, you can have 1000 people and they wont come at the same time. Its a new organization. It will be a mix between Distance Learning approach and the presence of the children. So we are right now working hard with all with everybody to organize schools in a very be able toway to have this approach. So innovation is the secret here, minister. What about resistance from teaching unions . Are teachers broadly happy with what you are planning or are they concerned . Particular, older teachers . Jeanmichel i am right now building the new organization with them, so every day, i have conferences with the trade organizationshe representing the parents, with local authorities, with all the actors of school to build together the new solution. And the new solution has nothing to do with older things we have done in the past. We are going to still have a lot of learning distance approach, but at the same time, there is a progressive comeback of everybody. Of course, we pay a lot of attention to the material conditions. We pay also a lot of attention to all the exemptions. Is ample, if someone has health problems. Of course, he will stayathome. The new organization will be built o fulfill built to tofill the Health Conditions be safe in the new organization. Matt can i ask about your baccalaureate . It was introduced by napoleon 2 12 years ago. It has never been canceled. This year, seniors will not have to take it, graduating seniors. Will that be a problem for them going into the workforce, going into university . Jeanmichel i dont think so. You are right, it is the first in our history that there is no classical way to pass the baccalaureate. It is another way to in our hise is organize the certification, because it will be through the marks during all the year. They will have recognition of their work. You have a special jury to analyze the case of each student, so i dont think it than the less value past baccalaureate. At the same time it, we have a reform in france to reform the baccalaureate. In this reform next year, 40 of the mark of the baccalaureate is for the marks that you get during the year. So its not such an important gap between the classical baccalaureate in their situation. Anna thank you very much, minister, for joining us. Jeanmichel blanquer, the french Education Minister. Thanks for bringing us that conversation around how you reopen schools, a question that many countries are facing across europe. Minutes away from the european open now. Futures still point higher. Eight minutes to go onto the start of equity trading. How are hedge funds positioned in the Global Economy and an unprecedented downturn . We will ask the chief executive of the worlds biggest publicly traded hedge fund. We will be speaking to him shortly after 9 00 a. M. U. K. Time. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Futures point much higher for a risk on friday morning. Some of the hedge fund industrys biggest names made history in march for going the other direction. Bridgewater, some of the most wellknown Money Managers suffered some of their worst ever losses last month. To discuss his dani burger. I want to start with man group. Great. D not it really depends on what strategy you look at with them, because there is a wide aum dropped by about 11 billion. They are blaming the volatile markets. Surprising, their equity strategy did the worst as Global Equities had their worst quarter since the financial crisis. Their numeric global only fund fell nearly 23 . The best performing funds were in their quantitative businesses. In general, hedge funds not doing well. Anna thank you very much. That was dani burger joining us with the latest from the hedge fund industry. We have got that conversation with the man Group Management team later on. Suggest we will be higher. European futures up by 2. 6 on euro stoxx 50, 2. 3 and the u. K. U. K. ,tures 2. 3 in the cac futures up by more than 3 . They were having problems with some of the clearing activities taking place at euronext. Realtime clearing delayed. We will be back with the start of european trading next. This is bloomberg. Until thenute to go start of the cash equity trading for this friday morning. Chinas economy contracts for the First Time Since at least 1992 after the coronavirus lockdown. Higher ascks push President Trump outlines the steps to reopen the u. S. Economy. This despite data showing 5 million more americans filed for unemployment. Plus, hedge funds suffered in a ball a title march in a volatile march. Funds posting their worst ever losses. We will speak this morning with the u. K. Fund manager matt . Matt take a look at european futures. They are up acrosstheboard, indicating we could have a risk on at least start to the session. Markets have been very volatile throughout the session. European stocks were down and then closed higher. Looks like today we are going to see gains that stick at the risk of making a forecast, just because of the size. You see them coming out of the gate way up. Spain, the ibex coming out of the gay up 2. 5 . Up ftse out of the gate 2. 5 . The ftse gaining 1. 4 at the start of trading. You are going to see most european indexes up about 2 , as the london index continues to climb into the open. Anna we have got European Equity markets opening broadly to the upside. Perhaps a little bit of here we go come up around two. 5 on the ftse 100 here we go, up around 2. 5 on the ftse 100. We have some strength coming through to close out the week perhaps if we managed to maintain it throughout the session. Interesting that the markets not dwelling too much on some of the gloomy news out of china. Focusing on the positives. Lets talk about whats going on in europe. Tentative steps to restart the American Economy of course. All of that very much in the minds of traders as we see european markets opening higher this morning. Looking past the chinese data showing the economy contracted for the first time in decades, going back as far as the data goes back essentially. Joining us now is salman ahmed, chief investment strategist at Lombard Odier investment management. Let me ask you about the chinese data and its relevance, its role, how informative it can be. It is quite backward looking. We know some parts of china have improved since. It offers some interesting insights into how quickly various parts of the economy come back, Industrial Production versus retail, for example. Salman i totally agree. Are waythe components more useful than the headline itself. We know that china was in lockdown most of february and part of january. We knew that this was going to be a significantly negative quarter. I think the difference in retail sales and investment versus the supply side of the economy is important. I think this will set up our template for the rest of the world, as these lockdowns are eased. One thing which i noticed is that the consumer is taking its time to come back online, which is quite different from the manufacturing side. I think this is the psyche effect we have to be careful about once these lockdowns are starting to be eased. Matt absolutely. , theoked at tomtom data navigational system data and saw that during the week, the chinese are going back to business as usual. On the weekends, it is like they are giving themselves a selfimposed a lockdown. Is that a concern for the possibility of europeans and americans doing the same when they get out . I think so, matt. There are a few services which we watch coming out of both the u. S. And being done in different european countries. They do highlight a focus on, you know, caution and Preventative Health care and self to restrictions and self restrictions as a credible solution to the wider crisis. That has significant implications on the spending package going forward. Even if a typical household in the u. S. Gets 2000 plus in their bank account, the question is, will they spend this money in coming months . That will be very important will we go out of lockdown. Anna interesting. We see the japanese giving out cash as well, some 920 or so dollars to individuals. ,hat being widely passed out passed through the community in japan by the government. Let me ask you about what we are seeing in earnings season. We heard from the luxury sector today. Lvmh shares up around 6 out of the gate this morning. They are different to each other, of course, these luxury goods companies. Some of them much more china exposed than others. For those that are china exposed, can they start to think that may be the worst is behind them or would that be too bold a statement . Salman i think as time passes through, the lockdown ended more than a month ago in china, so at least on the officially stated numbers, we do not see any strong sign of infection. Higher frequency numbers show there is some healing going on in the economy. I can understand the optimism, given the damage we saw in some of these names when the china lockdown happened. Now, we are seeing some damage going out on the ends more exposed to europe and the u. S. I think there is some final optimism but at the same time, i think the consumer psyche will be an important factor. I think volatility will remain high. The earning outlook will remain very clouded still going forward. Matt are you confident that we will make back everything we lost, at least in equity markets, by 2021 . Do you think we will get back to new highs next year or the following year . Think there is a strong possibility of that. The reason being not just the economic fundamentals but the fact that the policy environment is much more easier and significantly more easier than precrisis. We know what the fed has done, what the ecb has done, we know what the fiscal response is fiscal policy response is. There is some healing of Consumer Sentiment which comes through once the lockdown is over. Issuek the key, longterm , once that happens, who is going to pay for these policy responses . Definitelyil then, i see that this will show up in higher financial asset prices. Anna there is a possibility of higher financial asset prices. Does it depend, i suppose, on the tail this lockdown has . There has been a lockdown in many parts of the western economy, of course, in the u. S. And europe. We will see some of that lifted very gradually in many places. I suppose the longer that lasts, the more we risk, what, another dip for risk assets . Salman i totally understand. There is this rolling lockdown issue coming through but i do think it is a shortterm issue for equity markets. The reason why think financial asset Price Inflation can happen is when i look at credit. ,ince the fed intervention frankly speaking, nobody is looking at fundamentals anymore to the same extent they were precovid crisis. Lastyou have a buyer of resort, you have to think about what they are doing. Those are new dynamics starting to take hold. Once this uncertainty about earnings do drop, and i definitely take your point that there is this rolling lockdown issue still hanging over us, i think this liquidity will show up somewhere. This is not going to sit around in real yielding or negative yielding cash. It will start to hunt for excess returns as things stabilize. Matt thanks very much for joining us today. We really appreciate your time. Salman ahmed is the chief investment strategist at Lombard Odier investment managers. He is going to continue this conversation with me on Bloomberg Radio and just about one hour. Tune in if you are in the city on london dab digital to Bloomberg Radio and 9 00 a. M. Loreal see sales plunge in the First Quarter, of course, as the government shuts down all businesses. Green shoots are appearing in the biggest market for luxury goods. We will discuss more about those businesses in china next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 11 minutes into the session right now and you can see that we are looking at gains across the board of more than 2 on European Equity indexes. The dax climbed 2. 9 , the strongest again o the majorsr. Gaine of the european 52 drop in a car sales, the biggest drop on record, we have strong gains in carmakers. You can see bmw up european car 5 . It also got an upgrade before the market opened from hsbc to a buy. We see gains in volkswagen and daimler. Despite european car sales dropping the most on record, car shares are up. Also gainingres after production and capex update that made the market more optimistic. You can see investors buying those shares and boosting them more than 4 . Man group facing redemption after 10. 7 billion of losses. Looks like that bow is rising with the tide. Dont forget, we will interview the ceo of man group after 9 00 a. M. U. K. Times to stick with us for that. Anna . Anna talking about things on vmh move, looking at the l and loreal the biggest gainers on the index right now. Both reported numbers and said the recovery could start soon. The optimism sent to both stocks climbing this morning, as we see in the first 15 minutes of trade. That is despite the coronavirus causing sales to plunge in the First Quarter. The pandemic shutdown luxury boutiques across the world. While much of europe and the United States remains in lockdown, shops have been opening up in china. Joining us now with more from new york is annmarie hordern, who is often following this sector. Good morning. There seem to be signs of recovery. Walk us through the numbers for the First Quarter. How bad were they . Pretty bad. I have to say very much so expected. Both of these companies gave the guidance that this will be a recorder. Lvmh cfo saying their situation has been violent and will impact their business. Their sales came in a drop of 17 . It was expected. For loreal, their sales were down 4. 8 . One thing that lvmh picked up is that they had some online sales. That was able to offset the fact that so many of the stores around the world how to shop for business has to shut for business had to shut for business. People are possibly putting pause on bigticket luxury items, they will need some of those necessities that loreal has. Lvmh cutting dividends by 30 . Loreal says in due course, they will decide. Matt it is always good for your brand as well to to be philanthropic, give money and help out. What our Luxury Companies doing virus . T against the we have seen a number of Luxury Companies want to give their efforts and relief to this pandemic, matt. They are selling face masks sewing face masks. Lvmh opening up perfume factories to make sanitizer. Something interesting i have been reading about. In new york, i have not been able to go into a store without wearing a face covering. They take necessity and turn it into matt you can go into a store . , duane reade, Grocery Store etc. But i cannot enter unless i have a face mask. What we are seeing some of these smaller designers do, theyre turning this necessity into something creative. What potentially we could see here in the future is that may saint gucci and yves the world start to make face masks. We see some of them start to make creative face masks. Matt most importantly, when will you be able to get shoes and handbags again . When is that conundrum going to be solved for new yorkers . Right now, new york is extending what the governor calls new york on pause until may 15. Unless you are an essential business operating in the area, you have to remain shut. I dont think anyone is really rushing to purchase massive, bigticket items like an expensive handbag or shoes. Everybody is working from home, stuck at home. It is really about the essentials right now. Matt all right, annemarie, thanks for joining us. Annmarie hordern, luxury reporter who is taming down her consumer urges at the moment. Coming up, we will speak to the ceo of loreal at 9 30 a. M. U. K. Time. An interview you dont want to mess. This is bloomberg. Welcome back to Bloomberg Markets european open. We are 20 minutes into the session right looking at 3 gains on the major european indexes. You can see the ftse up 171 points, the dax gaining 335 and the cac 141 right now. Lets get the Bloomberg Business flash. Is cuttinggerald jobs, breaking with wall streets general pledge not to lay off staff during the coronavirus pandemic. Nickirm, run by howard let , will terminate hundreds of roles across divisions. The move would herald the deepest cuts among Financial Companies since the crisis began. Cantor says [audio drop] chicago with patients who have severe symptoms was reported to have seen the most discharged or most of those patients in the trial discharge from the hospital. A couple of them did die from the virus. Iliad aiming to enroll a total of 4000 people in the trials. As theshares jumped, company unveiled plans to restart jetline manufacturing in the seattle area next week. Billion a after a 25 package from the u. S. Treasury Department Help to boost the playmakers confidence in makersng plane confidence in reopening the center. That is your business flash. Anna . Anna matt, the imf still does not have full consensus on how to out ok its special drawing rights. It is looking at moving existing rights from developing economies to advanced once. The managing director spoke to bloomberg about how to help the worlds poorest nations. Take a listen. We are doubling our emergency financing. We are taking very decisive actions on expanding what we have, like the creation of shortterm liquidity lines. In addition to that, we are mobilizing concessional financing for low income members. And what impressed me tremendously today is that we are making a call for 17 billion to increase concession of financing. I made this call yesterday. Today, we got 70 of this funding secured. The,en it comes to consensus is not there. We heard from the membership and encouragement again in the spirit of do what you can now is to look more closely into sting advanced economies have them, do not need them. Developing economies need them. The question is how to create a bridge so we can move resources, more liquidity support to emerging markets. As we step up our work, we need to recognize that the problem is gigantic. The resources we have to deploy are significant and we need to move with what we have very rapidly. So far, looks like you will have held 50 countries but more than 100 have asked for assistance. There is a hierarchy. What do you need from private creditors, for example, in order to do more for those countries you have not yet been able to help . What we achieved during this week is quite incredible. We got official bilateral creditors to agree on a standstill in the context of g20. So we have the paris club, but also the gulf countries, china, india all coming together to space to our poorest members. We also turned to the private creditors and we are and inthem to step up the terms of the official bilateral creditors, to also ease the debt burden on lower income countries. Now, we need to recognize that this is a highly uncertain environment. We need to carefully watch how the crisis evolves. Projections are dye your dire. Epidemiologists telling us it may get worse. As we look at this picture, we need to bring everybody in board, make sure we are in this together. Because liquidity problems turning into solvency problems is a much bigger problem. We have to prevent that from happening. What, if you could wave a magic wand, what would you wish for in terms of the fdrs right now . Do you need to expand demand and money that you have at your disposal . If so, who can you count on for that . Let me say that i have full confidence that for the next month when we are striving to emergingmarket developing economies hit by this crisis, we do have financial strength that is sufficient to do our job. Let me remind everybody that before the Global Financial crisis, the imf had 250 billion lending capacity. Now we have four times more. I am also convinced that the membership would come through should the conditions be more diverse. Adverse. We have seen that we can find solutions to common problems effectively. We did it in the past. We have done some of it today, raising concessional financing. If the need is there, we will do it again. Matt that was the imf managing director. Coming up, we will speak with lori lco John Paul Aegon loreal ceo john paulagon. Dont miss that one, especially after loreals sales forecast. Equities trading higher in terms of european stocks across the board. On the cac. Paris we also see u. S. Futures pointing to a stronger open on wall street. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 30 minutes into the session and pretty decent gains in terms of the equity indexes today, on optimism about plans globally to bring an end to the lockdown. It certainly in the western world, and to bring business back. 3 , all ofn index up the groups are gaining right now, the industrial groups gaining. Travel and leisure, a big bounce back from the poor performance yesterday. Industrial goods and services, also good. All the automakers rising higher iner auto sales dropped 52 the last month. Lets get the bloomberg first word news, here are your top stories. Chinas economy contracted for the first time in decades as the coronavirus outbreak shut down large parts of the economy. Gdp shrunk 6 , the worst performance since 1992. That missed the consensus forecast. Investments plunged 16 . President trump outlined lands to restart the u. S. Economy with some states encouraged to abandon restrictions in the next four weeks. The white house is eager to return to the country to work. Has overcurrently 600,000 infections from the coronavirus. This suggests new cases of the virus climbed in spain, france, and germany. The u. K. Will extend the lockdown another three weeks. China having increased its death toll by 40 . Exit numbers from will him were due to late reporting at the height of the outbreak. We heard from authorities in uhana that the latest wil data will stand the test of history. Matt thank you, i want to get to the broader picture. President trump unveiled a plan to open america. European countries extended their lockdown to some extent. The u. K. Announced it is extending the lockdown by a further three weeks as cases top 100,000. Here in germany we will start Opening Stores monday. Our next guest says mismanagement of the pandemic in europe has led to governments taking costly measures that could cause a Lasting Impact to jobs, personal health, and the economy. Joining us now is Daniel Lacalle fernandez, cio chief economist, tressis svsa. Think ofk you what you the optimism in todays market. We have seen a risk asset rally over the last few weeks. It seems investors feel this is it, we are past the first wave and will get back to business as usual. Think it is right, considering 2020 as a lost year, and starting to innk about what will deliver terms of Economic Growth and earnings for 2021. At the same time the news about a possible vaccine and beginning of a gradual recovery of most economies is making people more optimistic. In any case we need to be extremely cautious. Had excessive optimism in january when things in china were starting to unravel. And it seems these rallies in equity markets could be used to sell some of them are cyclical exposure, and exposed to the goodies, but less so in , the assets are more exposed to inflation. Let me ask you what we are , and then in europe role of the banks, many people say banks are part of the problem. Maybe they can be part of the solution here. Are we expecting too much of the Banking Sector to continue to flow credit . Daniel you are absolutely right, we are expecting too much from banks. Banks a stronger now than in 2008, and they have done an admirable job strengthening the Balance Sheet in an environment of low rates and pull returns. However, what most governments in the eurozone are doing is relying entirely on the Balance Sheet of banks and in the private sector to leverage and get more credit in order to pass the period of lockdown and achieve the recovery. I think that is extremely aggressive and very optimistic, but more importantly is that banks are certainly going to be able to address the right thing on loans in their portfolio and asset prices, i am sure they will be able to do that. But thanks cannot just double or triple their exposure to risk at much lower rates, which is what some governments in europe are demanding of them. That could generate further down the line a financial crisis that could be even more problematic than what we are dealing with today. Matt what is your main concern . Are you see the possibility that ,e have a cascade of bankruptcy a waterfall of bankruptcies that leads back to the banks and takes them out of business . And are only european banks at risk . Is the u. S. Making the same mistakes in your opinion . Daniel i think it is different, in the u. S. You have a real economy that is less dependent on the Banking Sector than in the eurozone. In the United States the real economy is financed by the banking system, by less than 50 of the real economy. However, in the eurozone it is about 80 , therefore any deliver ono banks to the mechanism of transmission of Monetary Policy generates ripple effects in the economy. Business is fading because of zero sales and working capital build, those are going to be added quickly into nonperforming Loan Portfolio that was already in any case high despite the recovery. Risk ofcerned about the adding further risk in the banks Balance Sheets just to offset the effects of the pandemic, and the effects of the lockdown in particular. I am particularly concerned about the level of optimism from governments about the impact of this period of lockdown in the overall economy. Most governments, typically the southern economies are relying on a vshaped recovery that is extremely difficult because last year the eurozone economy was very weak and held by the travel and leisure sector, which accounted for almost 35 of the overall gdp growth in the eurozone. You cannot expect to wants the lockdown is over, that the sector will go back to let the level go back to the level it was in january. There are numerous levels of challenges. Additionally, Many Companies have done a good job reducing leverage in the last five years simply because they will find with what might be double what they were publishing in december. The problem is larger than what governments are looking at. Governments think locking the economy for a few months will have virtually no impact and then it goes back to normal. That is impossible and difficult in the eurozone in which the ability to attract new investment once things start to work and function adequately is much poorer than in china or the United States. Anna thank you very much for your thoughts. Daniel lacalle, cio chief economist, tressis. , cutting down on workplace real estate. We will hear from the ceo of Morgan Stanley about how the pandemic and dealing with the crisis might change the way we work in the future. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 45 minutes into the session, we are looking at 2. 5 to 3 gains across the major equity indexes in europe. Positive u. S. Futures as well. In the u. S. James gorman is predicting how Morgan Stanley will emerge from the pandemic. He knows the bank will not need much real estate. Speaking yesterday he discussed the economic fallout from the pandemic, his own battle with the virus, and the future of finance. I am doing great, thank you. I am completely recovered. To be perfectly clear, i had the virus but i was one of the lucky ones who was not hospitalized. My lungs did not get infected, which was a blessing. While it is unpleasant, in those conditions it is manageable. My heart goes out to the folks who were not as fortunate or who had Underlying Health issues and who have struggled and tragically passed away. It is a curse. I wish everybody well who gets it. Stay hydrated, stay rested, and i wish them the best. Radio low told me yesterday alo told me what base Case Assumptions are you making at this point for the recession and the recovery . I am not sure i agree with that. The economic impact, the gdb decline is worse, but it is so specific and built around the virus. What world do we have when we have immunity from it and the right testing . There are so many unknowns where ack in 2008 it was fundamental collapse of the whole financial system, and had the system not been rescued, who knows what longterm damage multidecade had been done to the economy . These are both truly tragic situations. From our perspective running the company, there are a few things to focus on. We have millions of clients trading trillions of dollars around the world, our plan has to work. We have to facilitate clients doing that so they can manage their businesses. They have to have the ability to manage their liquidity and capital needs, and we play a Critical Role in that. We are one of the largest Wealth Managers in the world. The plan has to work, and with 90 of our employees at home, we have had almost no issues, and that is a remarkable testament to the team. Second, we voluntarily cut back on our buyback to zero. We thought it was best to preserve our capital to support clients in need. We are doing everything to our communities. Third is to make sure our teams are properly coordinating given the remote isolation everyone is going through. We spend an enormous time communicating with them, setting up plans of what it will be like to bring people back to work and what the future might look like. It is not as bad for Morgan Stanley and the Banking Industry as the 2008 financial crisis. What about the broader economy western mark 5 Million People filed for unemployment for the first time this past week, 22 million since this began. How do you fathom or model the dislocation . The shock to the Global Economic system is something we have not seen since the great depression. It is far more dramatic than the financial crisis. In addition we have this Massive Health crisis which is working its way around the world with devastating consequences. You cannot model this. What you have to do is preserve capital, make sure you are will positioned to deal with the risks, understand the risks, and manage your way through that with the whole team working together. We have daily committee calls, the whole team is organized around how do we ensure we are doing our job for our clients, and that Morgan Stanley remain stable during incredible dislocation. Stanleysmorgan 80,000 employees are working from home, a staggering figure, one we have seen repeated across the industry and many industries. It is amazing it has come with no major loss of capability. What i would like to know is how does that change the way you think about the way this firm operates in the future . Can i see a future where part of every week, part of every month, a of employees will be at home . Absolutely. We will have less of a footprint, that is highly likely. We will improve on what we can operate effectively with no footprint. Anna really interesting, that was james gorman, Morgan Stanley ceo. Up next, how investors are taking advantage of changing Consumer Behavior amidst coronavirus. Opportunities in particular at the telecoms and technology spaces. That is coming up, next. Matt welcome back to the european open, we are looking at equity indexes that are rallying in europe. Futures up as well. We are seeing another big drop in crude oil. Wti trading down 18 and change right now, the lowest since 2002. 9 for a barrel of oil. The coronavirus will have a Lasting Impact on Consumer Behavior, one of the reasons for the drop in the oil price. Our investors taking advantage of those changes. Joining us now is a partner who companies works with in the u k and greece, as well as Telecom Companies for whose Services People have strong demand. Thank you for joining us. , consumer first demand, you are seeing in your portfolio, you have a restaurant chain, dental services, you are seeing a mixed consumer demand picture. Talk to us about it. We are indeed. Pandemic hass this sinister than people wouldve expected. It has affected a lot of , and we are laser focused on the portfolio for the past two months since the virus started hitting us. Generally out portfolio is in good shape, due to our strategy focusing on growth businesses. 80 of our equity has been deployed in sectors like telecoms, media, health care, Business Services which have demonstrated trading resilience. There are inevitably businesses such as those in the restaurant sector that have been severely impacted. Ensuring these have sufficient liquidity is key for us. Anna you talk about telecoms and media that makes me wonder which companies are having a good crisis. Where are you seeing more resilience . That is exactly right. Generally the telecom and media sector is doing well, and we see that despite the Challenging Market performances. This is unsurprising. Who would cancel broadband or netflix when they are isolating at home. But it is indicative of a ready for the downturn like we are experiencing. They are subscriptionbased businesses, they have revenues, these are characteristics investors like, like ourselves. They consider these to be highly attractive in times like these. Matt we have 20 seconds left, is this a time for private equity to be buying . You have so much dry powder, is this a time to make purchases . Nikos it is difficult to tell, it is a balancing act. A lot of our focus is protecting assets that we already own. And our job is do not predict if we hit the bottom, but finding the right entry point. I think we will see more bad news over the coming weeks, and volatility will stay there. Pricing risk in todays conditions can be challenging. Matt thank you very much, nikos stathopoulos, partner, bc partners. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] francine global stocks push higher as trump outlines success to reopen the economy. 5 million more americans file for unemployment. Frenchter gdp consumer says recovery could start soon after the pandemic causes sales to plunge in the First Quarter. We will talk to the chief executive. Good

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