House passes and aid package and some corporate bailouts may come at the price of corporate equity stakes. And gilead shares crash as reports suggest its potential covid19 drug flopped in trial. Good morning, everybody. Program. O the we see a sluggish pace reflected in european futures. Much weaker. Features down, plenty of reasons to be gloomy if youre looking for them in terms of u. S. Jobs data, eurozone pmi data. We saw that certainly have an impact. Lets have a look at u. S. Futures. We do see some negativity and u. S. Futures in u. S. Futures. But not to the same extent. As we continue to watch the earnings stories coming in, lets get a bloomberg first word news update for you. The u. S. House overwhelmingly passed a nearly 500 billion. Oronavirus aid plan the white house says President Trump will sign the legislation today New Washington time. Treasury secretary Steven Mnuchin once equity stake in exchange for a share of 17 billion in aid. He says Public Companies critical to National Security that want a rescue deal will have to offer shares to the government. Some private Companies May accept debt. The requirements are similar to those for airlines. German chancellor Angela Merkel pledged to back a huge stimulus plan. Was it enough to pull through a deal . President s the eu warns the bloc of the risk of doing too little too late. In the u. K. , the Health Secretary is bowing to dramatically ramp up testing and roll out a Contact Tracing program after weeks of criticism the government is falling behind. Hancock says test appointments will be available to all key workers and their families and the telegraph is reporting Prime MinisterBoris Johnson plans to return to downing street as early as monday. We said innces, as our headline, tumbling after the summary of a chinese trial of its covid19 drug appears to show it was a failure, but the company and the scientists working on the trial say it does not fairly represent the actual results. The World Health Organization says it accidentally posted the results online, but they were quickly removed. Global news 24 hours a day on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts and more than 120 countries. Asian stocks slipping, as we said, as investors weigh signs of progress in the fight against the coronavirus. Mounting data showing the problems, the severity of the impact in terms of the economy. In china, there was limited reaction to partial rollover of maturing mediumterm funding, another sign of some kind of easing of the cost of money in the chinese economy. Lets get to the conversation with mark cudmore from our Bloomberg Markets live team. If youre looking for reasons to be gloomy, you dont have to look far. Fee data adding up to something datasluggish friday the. Mark absolutely. Generally, this week has been a little bit of a riskaverse tone, and overall, we are removing some of the optimism we have seen in recent weeks. I think there is an increasing bit of worry that maybe the stimulus we had seen so far was extraordinary. Maybe it will not be enough to get us through the low from the crisis because we are becoming less confident that the containment measures will be lifted so quickly, given that President Trump has changed the tone a little bit, and there are the reports of the iliad Sciences Drug not doing as well and the tests and china. I think that has made the market a little bit more nervous, but its nothing dramatic. It needs to be put in context. Weve seen a couple of weeks of stellar gains up until this week. The news out of brussels and the meeting that took place between eu leaders, some progress, some money being agreed to, but little progress on the big issue which was burden sharing, debt sharing . There seems to be a real Sticking Point as to if grants should be offered or loans for countries that are doing worse. How does this add into the overall market narrative . Mark absolutely it is important. I think, though, the eu and ecu both have a long track record over the last 50 years of often disappointing on initial promise. The classic symptom of the euro not crisis, they kept on doing anything until it was too late and then taking emergency measures. I think this time, expectations were lower as a result. People were not overly surprised they failed to reach an agreement, but it is a negative anything that negativity is slightly distracting for the fact that individual countries in europe have done much more than might have been anticipated a month or so ago. With germany and italy in terms of their guarantees, more than 40 of gdp and germany, it has gotten through to its companies very quickly. In many ways, germany has been one of the best countries in terms of supporting its economy, and i think that is possibly being missed amidst the fact that the eu as an overall unit is failing to provide broader support for the group. Anna the ecb still there, of course, an increasing expectation that they will do more. Let me ask you about our question of the day. The crosshairs, s p giving their verdict on. Taly how much do these ratings really matter . When you have the ecb saying they will accept junk for other parts of the euro zone as well . Mark i think the question is valid because im curious to the answer myself. Y do still have an ability to shock and i think because when countries fall out of invest out of investmentgrade, they do so in large funds, so i think this will be an issue, but maybe the initial move or signaling power has gone for the ratings agencies because the amount of stimulus liquidity in the symptom might have overwhelmed that. Theres real impact when you get bonds downgraded from investment to junk. That is the critical level. Before we would not have cared because the signal. Now that wont really matter. Its all about if you are investmentgrade or junk. That will still matter over the next year or so. That certainlyr got some headlines. Let me ask you about where we have been on oil because thats gotten a lot of headlines this week. An incredible week, negative oil prices. In hindsight, we know a lot about ets now and there role in being the tail that wags the dog in the oil market. Do we prepare ourselves for something similar on the june contract when that comes to roll over, or do we take it month by month . Mark i think there will be Something Like i hesitate to use the word similar. I think we will have a kind of dynamic well, you see the pressure on the contract. I do not in i did not envision it being anywhere near as extreme. Some of the shortterm technical issues that messed with the may contracts have been slightly removed for the june contract because many of the etf structures have blown up already or rolled exposure farther up the curve. I do not anticipate june being anywhere near the extreme of may, but i think the overall theme this week apart from the shortterm dramatic volatility in turmoil is that the whole curve is moving lower. I expect that to last just a couple of months because demand continue to stay subdued much more than was thought only a few weeks ago, but wells will be shut and will not be reopened. This means that at some point when we get beyond the crisis, oil prices can rise again and the curve does reflect that, but i think the next few months are still dominated by pressure and we will still see extra shortterm pressure when contracts are expiring. Anna , thank you very much mark, thank you our bloomberg life team markets managing editor there in singapore. If you want to get involved in our question of the day, the one we have been asking this morning is around italy in terms of its rating settlement, but how much do these ratings really matter . Mark trying to get his head around the question and would welcome any thoughts you would have, as would we here at bloomberg tv. Coming up, we will talk about what is going on stateside. Treasury secretary Steven Mnuchin ways a Lending Program for u. S. Companies. What price will he put on that Lending Program . About that next. This is bloomberg. Anna welcome back to the European Market open. Start5 minutes to go the of the european trading day. Gloomy news from gilead. We will get to that shortly, and gloomy news coming in for the data in the u. S. And eurozone. It seems this friday, markets taking a step back and asia and expected to in europe as well. Poised to cut output of its 787 dreamliner by about half. Sources are saying it also plans to cut jobs when it reports earnings next week. Boeings chief is hinting serious measures will be needed. Fair warning the market of a new reality with a much smaller jetline market. The Worlds Largest chipmakers warning of Economic Uncertainty caused by the coronavirus pandemic. Given optimistic secondquarter sales target, but profit outlook fail fell short of estimates. The risk of running low on cash within weeks, the German Airline says they have deepened its distress. Talk now for a multistate bailout. Europes largest carrier is looking at aid from its home country of germany as well as austria, belgium, and switzerland. That is your Bloomberg Business flash. Lets get to some of the top stories we are covering stateside. The u. S. House of representatives has passed a 484 billion package which will replenish funding for Small Businesses and virus testing. The white house said trump would sign the legislation at noon on friday. This is the fourth coronavirus spending measure since early march, totaling almost 3 trillion or 15 of gdp. As he wrote at the slowest pace in three weeks. Good to get the context. This is number three and a long series im sorry, number four in a large long series of coronavirus funding measures coming through from the u. S. Administration. What is the latest coming through on the price that will be extracted for government help . Thats a really good point. The treasury late last night putting out guidelines about if you are a Public Company deemed critical to u. S. National security, you might need to offer up a stake in your company. Similar guidelines from airlines. Steven mnuchin in an interview talked about the fact that his pot of money was designed to consider the needs of defense contractors and those important to the department of defense and also carry critical classified information. One Obvious Company many would think of is boeing. They have said they will need government assistance, but they are out with earnings next week and people close to the matter say they will be cutting the production of the 787 dreamliner almost in half and also potentially workforce reduction. The other thing Steven Mnuchin talked about was a Lending Facility they might draw up for Oil Companies. Someone fill you with the matter said it would be right out of the Federal Reserve and they would consider as well in exchange for some of these loans and it also might the potentially asking firms to cut production. Well that he knows what the situation is with shale. Already production is coming down in the United States. Anna what about the news out of testing going on around remdesivir . Certainly, the early findings, reportedly anyway, seem to be disappointing. Bring us up to date. You saw gilead actually began halting because of this. The Financial Times published its report, but it was by accident the World Health Organization even had this report in the first place to publish online. Basically, it said what you mentioned, so many people were hoping that this would be used as an antiviral drug to help with coronavirus in a Clinical Trial. It has not. Theres a broader array of news on wall street. Some say this really is the end of it while others say potentially this could come back. It was one Clinical Trial, so we should hold off before jumping to conclusion. Gilead said the study was terminated early due to low enrollment. Obviously, we are going to closely watch this antiviral drug. There is a lot of hope for it, but that has certainly weighed on gilead shares. Anna yeah, well those tests come back . Joining us from new york for the latest on what is going on in the u. S. And the fight against coronavirus. Coming up on the program, opportunity and alternative finance. Seeree, pimco, and others record stress tests to capitalize on the crisis. We will be back with the ubs head of turn it of capital. This is bloomberg. Anna welcome back to the European Market open. Less than 35 minutes to go until the start of the European Equity trading day. In fact, just a little bit more than that. Markets are suggesting we will be weaker by 2 or so on euro stocks. As a result, gloomy data, disappointing headlines around gilead as we discussed in the last part of the program. Lets get to our next conversation. This time around, alternative finance. Attended a finance finding opportunity amid the coronavirus pandemic, and there is a race to raise money. Pimco yesterday said it was looking for 3 billion for a new fund, but that amount is dwarfed. Oaktree capital is seeking 15 billion to invest in distressed credit, the largest fund of its kind ever. The cohead of alternative capital at ubs joins us on the phone. Really good to speak to you. Thanks for joining us on the European Market open. Opportunities in distressed debt do you see a lot of opportunities at the moment because of dislocations in the market . They are still present, i guess. Yes, the distressed debt market has reached astonishing numbers in the past couple of weeks. Talking about one trillion dollars, which is extraordinary. Insee a lot of opportunity some say sectors, and this is a onceinalifetime is why aty, and that lot of money, i think, will be directed to this asset class over the next couple of months. Meanwhile, have we seen the private equity side of things slowing down, the deal activity . Give us a sense of how nonexistent deal activity is or how much slower deal activity is behindthescenes. We started with q1 this year,. Hich has been a record year i think q2 is going to be very slow and the next couple of months are going to be very slow. We have been in a waitandsee moment where i think companies are figuring out if they can ride the crisis based on capital income funding or if they need a little bit more, but i expect in the second part of the year, we will play a critical part in terms of providing capital liquidity to the system. Next deals now, the more types,are private investment in Public Companies. We will see at on acquisitions for portfolio companies, and then we might see minority investment as well. Anna you think private equity could be part of the solution, part of the way businesses sure up Balance Sheets and get out of the crisis . Are we seeing private equity businesses willing to fund almost rescue money for the companies they already have interest in, or do you just anticipate new deals being done in the second quarter, Third Quarter onward . It is a combination of both. I think of the last six weeks, the business has focused on their portfolio and trying to protect the value of what they have. Structure,capital cash reserve has been at the forefront of the agenda for everybody. Then i think when this is over, activity will pick up. Be a greater should whereage, to invest money there is real need for capital means that if they ride the downturn, they are going to make a lot of money. Credibleose you need a business plan, though, if you are going to convince private equity businesses to put money into your company. Private equity certainly in the u. K. Has quite a history of investing in casual dining and some of the services have been really hit by the coronavirus pandemic. Do you see that money coming back . I think some will be impacted differently from others. I think the ones which will manage to survive will be the ones that have a stronger those withdel than more cautious conservative capital structures. I believe we will have some casualties. So much foryou joining us, cohead of capital ubs. Up next, eu leaders edge closer to a compromise recovery deal, but they remain quiet on the question of the funds should take the shape of loans or grants. So we have that north south divide coming through amongst eu 27 leaders. We will get all the details next live from brussels. This is bloomberg. Nowadays you do more from home than ever before. The xfinity my account app puts you in control with Digital Tools to give you the help you need when you need it. Get fast and easy answers with personalized help 24 hours a day, 7 days a week. Change your wifi password to a phrase thats easy to remember. Even troubleshoot your services on your own. Were working to make things a little easier for everyone. Download the xfinity my account app today. Are going toings apparently change. It has clearly accelerated bankinge use of online and digitalization. There is more of a willingness to take risks, to engage. We are pretty convinced we are going to have to reduce population density in our offices, so we think there will be on any given day fewer people back in the offices. Companies will have much more a tendency to go to virtual offices, even in, i would say, production environments are production Manufacturing Type of Companies Like ourselves. What we see is now the importance of diagnostics. We will continue to invest in that. I think recent events have shown how important that is. I think if you asked executives at some of the companies that had to make the transition three months ago if they thought they could switch to work from home inside of a week, they would have said impossible. Anna just some of the executive voices weve been speaking to about the coronavirus and the longlasting impact, heavy pandemic has forced them to change how they operate and what it could mean for business in the future. Lets talk about what european politicians will be doing to help with that future. Toleaders have inched closer a deal after Angela Merkel pledge to back a huge stimulus deal. Austria arends and among those insisting assistance should take the form of loans. Christine lagarde has warned of doing too little too late. The central bank is increasingly expected to step up support for the economy. One in four economists surveyed by bloomberg now says the ecb could boost emergency bond buying as early as next week. For more, lets bring into the conversation maria who joins us from brussels. Your thoughts on the eu 27 inching closer and the sense that yes, something was signed, but the Big Decisions around just how much debt neutralization there should be or burden sharing around the bloc once again kicked down the road. Exactly. The reality is we did not really get anything on paper yesterday. Toy did not really commit anything. There are still questions on how big the economic stimulus should be and what shape it should take. Made s progress Angela Merkel conceded i think this is probably a first in which she said the economic response will have to be huge. Most crucially, the italians had a very constructive tone yesterday. Saidtalian Prime Minister he is seeing good progress. The data he pointed out is contingent on if it should be done in longterm credit. Usually, there is some conditionality to hold countries to what is going to be done with the money, but the countries that are weaker at this point like italy and spain, they want to see the situation stay stable. But they want to see traction. They dont want to come out of this situation with a huge debt pile. North south divide over loans versus grants continues. What about the role of the ecb . We see them doing a lot in terms of increasing the rate of banks and indeed a lot of other measures to support the euro zone economy through this after making some early stumbles. Now an expectation that maybe there is more bond buying to come. Yes. You are seeing the European Central quicker but also more aggressive action. Yesterday, eu leaders were told that if they did not take quick action, we could see a big contraction of 15 . It is really that ecb has taken all the big action and shielded theirperhaps from gatherings. There is buying in the market, to the treasury is going have to issue a lot of new debt and a short amount of time and that may trigger costs to increase that program, and that is what the market is betting on , that the market will have no choice but to increase that total sum. Anna thanks very much for joining us with the latest from brussels. A busy evening for anyone following european politics, even with a remote video call taking place rather than actually being in brussels overnight. Lets get an update on first word news and top stories recovery we are covering today at bloomberg. The u. S. House overwhelmingly passing the 500 nearly 500 billion coronavirus aid plan. The white house says President Trump will sign legislation today noon washington time. Gilead sciences tumbling yesterday after the summary of a chinese trial of its covid19 drug appeared to show it was a failure, but the company and the scientists working on the trial say it does not fairly represent of the worldsult Health Organization said it accidentally posted the results online, but they were quickly removed. Trump the fire is casting doubt on reports that kim jongun was in Critical Condition following surgery. He says the report of the north Korean Leader was incorrect but did not give any more details. Monday, u. S. Officials said he had been critical after cardiovascular surgery. South korea says he is conducting normal activities. Global news 24 hours a day on air and quicktake on bloomberg powered by more than 2700 analysts and journalists and more than 120 countries. Up next, the crude market in disarray. We explain the role of etfs next. Anna welcome back to the European Market open. Just under 20 minutes to go until the start of the european trading session, and it could be one way down by concerns about the impact of a global shutdown, not to mention disappointing news out of gilead. More on that a little bit later on in the program. Lets talk about what has been going on with oil because it has been a big week for oil. The crude market has been in disarray. The Worlds Largest oil fund may have helped contribute. Funds forced into a frantic reshuffling of holdings. Here with the details is bloombergs dani burger. Good morning. Is there still a risk that these oil etfs and other etfs in general may have an outsized effect on the markets they track . Dani it really has gotten just too big for the pool it swims in, which is why it could represent a potential danger to markets. It continues to grow, and one of the things the fun has started to do to avoid liquidating, to is said iting down come by any contract it wants, so it rolls over to different contracts. Because it has so much money, it can directly impact the underline. It also means it can vary widely from what it told investors it would attract. Something wesue in see in other etfs as well. Earlier this year when rates went haywire, we followed etfs that track this suddenly become much more cheap than the assets they were tracking. This continues to be an issue, and it is a matter of investors needing to be careful of what they are buying. Its not always a straightforward one to one. Anna yeah, you might want to be careful about what you are buying. Then if the etf decides it wants to change its mandate or change what it is set up to do whilst you own it, and that is tricky, as many have pointed out. What are the types of etfs, with this in mind, that investors should be wary of in this environment . I think investors really need to be careful of etfs that track derivatives. Is tracking oil futures or tracking credit or likely to haveis issues when it is time to follow something that is relatively illiquid and has a hard time dipping back into the market and buying or selling. The danger is also very apparent in leveraged etfs, the etfs that try to amplify their returns. That can be very problematic if you are tracking leverage. Oil, for example. See this manyt etfs close in such a short time, but by far the ones that thatthe majority are those borrowed on return and they see losses so staggering they are forced to close because it becomes so much more difficult to run the etf and if they were to just completely shut it down. As a retail investor, you dont want to be in a product that shuts down, and unwinding assets can affect the bottom line as well. Its about looking at the safety of etfs. If you are holding in leveraged etf, you need to be careful for how long youre holding it. Anna thank you very much. Dani burger with the latest on etfs and their role in the oil market and far beyond. Pandemic. About the it has forced a large part of the workforce to work from home, including me, as you can see. The ceo of Slack Technology spoke with bloomberg tv a little earlier. Take a listen. I would say starting to feel the effects of the longterm, you know, after the adrenaline wears off. It is obviously a challenging time for many people, and some of us are fortunate enough to have fewer responsibilities. Others of us are going a little stir crazy being locked in apartment by themselves. At the other end, you have people impacted with a great deal more childcare than they are used to. A lot of people are enjoying spending more time with their families, getting back into cooking, but there is an undeniable feeling, and lack of normalcy and desire for more certainty, and we are a ways off from not being real. In the meantime, i think for us as a company, from the conversations i have with customers and just what im seeing out there, there is more of a willingness to take risks, to engage. I think if you ask the executives at some of the companies that have had to make this transition three months ago if they thought they could switch to work from home inside of a week, they would have said impossible. Certainly, when you have to do it what seemed impossible becomes possible. Collect meantime, we are hearing about more and more layoffs. Google slowing hiring to the end of the year. We talked about these jobless claims thus far, but even just being here on the ground and hearing what companies are dealing with, we know that more are coming. How concerned are you about how badly this will hit the tech economy . You went through the financial dotcomand also the bust. This seems like it could be worse than both. Yeah, definitely the front end, it is already significantly worse. How long the recovery takes i think is really the big question. We are in a fortunate position where we are healthy, and a great cash position. We want to be opportunistic. We are still hiring, but even if you are hiring, theres additional challenges. A lot of employees are reluctant to consider leaving their have one. B if they also this challenges around onboarding employees in an entirely remote way. This challenges around feedback and recognition, promotions, how you organize teams, how you keep them motivated. Theres been seven kind of classes of new employees who have not been able to come to the office and meet their new coworkers. For now, that is fine. We are not set up for that that we have to really alter the way we are operating in order to take advantage, but, yeah, i can see contractions just Holding Steady and sustaining and a little bit more of a defensive mode. The president this week halted immigration into the country. I know you were raised in canada. A lot of your employees are based in vancouver. What is your reaction to this, and will this impact your business . I mean, yeah, it will. It will make it harder. We have people who have green cards in process, and in our u. S. Offices, we have people from all over the world, and im obviously not going to be supportive of this. I think it is a bad thing for us, its that protect companies, but i also think it is bad for the country. Obviously the problems we face today are not because there is this influx of Foreign Workers taking american jobs. Its there is a pandemic. We are on lockdown. I hope this is a shortlived. Ove as someone who has benefited from the hard work of immigrants from across the country, both ceos of big companies, but also just people who do regular jobs of ourr the place, many nurses, many people in agriculture, doctors, lawyers, my hope is that this is temporary and we get back to being a more welcoming country. And a color that was the ceo of Slack Technologies speaking to my colleague at bloomberg tv. Really interesting on the communication front. Another sector very much in focus was pharmaceuticals, and we had gilead possible news about gilead coming through yesterday which led to a tumble in the gilead share price. The drugmaker hit after leaked data claims the potential coronavirus treatment from was blocked in a chinese trial, but what is going on behind the scenes . We will bring you that next. This is bloomberg. Anna welcome back to European Market open. 10 minutes to go until the start of the european trading day. Eye on keep a close trades. One of the big problems is weakness in the stock market. In the meantime, lets get a Bloomberg Business flash for you. Our top corporate stories for you boeing is poised to come cut output of its 787 dreamliner by about half. Sources tell us it also is poised to cut jobs when it opens next week. Boeings chief pinching painful measures may be needed. Last week, he warned employees they face a new reality with a much smaller jetline market. The Worlds Largest chipmaker is citing significant uncertainty caused by the coronavirus pandemic. Thirdquarter revenue jumped First Quarter revenue jumped and wiley gave an optimistic secondquarter sales target, intel profit outlook fell short of estimates. Blackstones credit arm reported its worst performance in a decade from distressed debt. Jso says losses were driven in part by energy, which remains a deeply troubled sector. The loss of about 30 compares with a 3. 1 gain in the same quarter last year. Thats your Bloomberg Business flash. Now onto another business and farm a story and Public Health story, really. One of the most closely watched attempts to have failed. A leaked summary of a chinese trial suggested the drug from gilead was not associated with patients Getting Better more quickly. The company and as scientists working on the trial said it did not really represent the actual results. Meanwhile, the u. K. Regulator has approved Oxford Universitys request to test an experimental vaccine in about seven working days. The Senior Pharmaceuticals analyst at bloomberg joins us now. What does all this mean for the chances of finding a suitable drug treatment for covid19 . Remdesivir was not designed for the purpose, but they were hopeful it would be useful in this fight. Obviously, im really excited by the fact that the whole world is interested in Drug Development, suddenly, which, of course, is important because we need to find a way to get out of this pandemic other than just having people in lockdown. What it means is that Drug Development is complex and you are going to get some trials that test patients with some parts of the disease and it does not work. We see this during the development of a product over the year that it goes through various stages of development. Of dont just stop any hope a product working because of one trial failing, but it also does not mean that the drug is going to work. We just have to wait for the large trials that are being conducted by the company that are controlled, meaning theres a group of patients not getting the drug, and testing both severe patients and testing patients early on in the disease. Once the data is out, the company and industry can decide if the drug is working or not. Anna gilead certainly suggesting this is the end of the road for remdesivir in this fight, but we will see what comes out from other types of tests. What about vaccines . We know of a number of vaccines being worked on. The race is on to develop a vaccine that works. What are the risks . What i find really irresponsible and perhaps it is not their fault, is that scientists and doctors getting on the tv and radio and giving ideas about timelines. Perhaps they dont realize that the entire world is watching them, and this is not something that they can just go afterward and say that as a normal part of science and it did not work out. This situation proves that this gilead situation proves that. Vaccines are complex products. Im very hopeful and continue to hope that one of these companies oxford university, pfizer onee, of them will come up with you have to prove that it causes an immune response and that response is sufficient to stop people actually catching the disease. It does not mean the disease you have to manufacture it all and on top of weall, you have to remember will be giving these two millions of healthy people. You have to keep your fingers crossed that there no kind of side effect that comes out. We know enough about vaccines so we know what to look for and to watch. Anna thank you. European market open is next. This is bloomberg. One minute to go until the start of cash equities trading. Lets get to your headlines. Aging closer, the eu agrees shortterm deal on rebuilding the economy, but fails to make progress on longterm plans. Leaders clash on it. 484 billionses a dollar aid package, and Steven Mnuchin and says some calls for bailouts may come at the price of government equity stakes. In pharma cuticles in a drugeuticals news, slumps in trials. Just 20 seconds to go until the start of cash equity trading today. The futures still point downward. That suggests we will be weaker at the start of trades by about 1. 7 . U. S. Futures, as we look further into the future today, look negative to flat. A little bit of a pause coming into the u. S. Equity story. Back to europe and the markets opening as i speak. European equity markets expected to drop at the start of trade. It seems we have movement coming through on the ftse 100. It seems to be giving us a negative reading, down by 0. 6 . Other markets a little more delayed in opening. Down around 0. 5 on the stoxx 600, down 1. 1 on the ftse 100. We are seeing the screen gradually filling up with red, stocks in negative territory. We have the numbers out from snappy, suggesting that the stockpiling of other medication was something causing an uptick. Downex in the netherlands quite considerably, down 1. 8 , and we still wait for an opening price on the dax. The European Equity markets opening lower as investors consider signs of progress in the fight against coronavirus versus the mounting data showing the impact on the economy is as we know really severe. The u. S. House of representatives has passed the 484 billion aid package. The legislation will replenish funding for hospitals and virus testing. The white house said that President Trump would sign the legislation at noon on friday. This is the fourth coronavirus related spending measures since early march, taking supports almost 3 trillion, or 15 of gdp. This comes as of the u. S. Caseload rises at the slowest pace in three weeks. Joining us from new york is annmarie hordern, who has been tracking the story for us stateside. The treasury is now projecting that one of the prices Companies Might pay for some form of government assistance will be that the government wants a stake in the business. But this is particular to a sector. Tomarie this is specific Public Companies that are critical or deemed critical to National Security. The treasury just posted these guidelines for the loans on the website very late last night. For me, my morning. Is similar toined what we saw with the airlines. If you wanted loans and money for payroll support, this is what it would come down to. Steven mnuchin talked to Bloomberg News and said this pot of money is for the companies with the department of defense. One obvious one will be boeing. They have not said they are going to ask the government yet, but people close to the matter say they are under serious pressure. They will have to halt the dreamliner output by half. Also the potential disruptions in the workforce. Those earnings next week will be closely watched. Another stake the government might be looking for is oil and gas companies. Steve mnuchin said they are looking for a Loan Facility program for oil and gas companies, which are in dire wed for cash, given what have seen in the collapse of the oil price and the supply and demand issue. People close to the matter says this could be run out of the Federal Reserve, and attentively for the loans the u. S. Government might want equity stakes. These are things we are watching for some of these companies that might need the funding. What will it take to get it from the government . As we arepean stocks, just three or so minutes into the trading day, european stocks trading weaker. That has a lot to do with what you saw stateside at the end of your trading day yesterday. The news not out of gilead, but the who accidentally put something on their website. The upshot was negative news surrounding gilead, the share price dropping. Remind us of what the story was. Stock market seemed to move on this story. Annmarie really interesting given this report was accidental from the World Health Organization. Publishedhis report, accidentally from the who, that gileads first Clinical Trial for remdesivir, which people hoped would help for coronavirus, had flopped. We saw gilead sink in trading and was halted at the end of the day. There are an array of views on wall street about this. Some are saying that is the end for this drug, others saying we should be more cautious. There is still hope in here. But gileads responses what i want to bring you. They say the study was terminated early due to low enrollment and they are saying the results are inconclusive. There is a lot of hope in this one antiviral drug, and you can see that played out in the markets yesterday. Anna certainly there is a lot of focus on other testing around that drug, but also other drugs being used to alleviate the symptoms, even if not finding a cure. Annmarie hordern joining us with the latest on u. S. News. Coming up, we will talk about what is going on closer here in europe. Eu talks end with no agreement on a recovery package. Ecb president Christine Lagarde warns the bloc against doing too little too late. This is bloomberg. It has accelerated the use of online banking. Was it more of a willingness to take risk, to engage . We are convinced we will have to reduce population density in our offices, so we think on any given day fewer people will be back in the offices. Companies will have much more of a tendency to go to virtual offices, even in our safe production environments or manufacturing companies. It is going to increased are medically, and this may be something that is good for banks. What we see is the importance of diagnostics. We will continue to invest into that. I think the recent events have shown how important it is. If you ask executives at some of the companies who have had to make this transition three month ago whether they thought they could switch to work from home within a week, they would have said, impossible. Anna those are some of the executive voices we have been hearing from here at bloomberg tv. Talking about how the pandemic has forced them to change how they operate and what it could mean for business in the future. Lets talk about what is going on in the United States. Public Companies Key to National Security may be required to offer an equity stake to the u. S. Government in exchange for the virus related relief. 17 billion has been made available as part of a 2. 2 trillion aid package. The Treasury Department says Steve Mnuchin may access debt instruments for companies. Lets talk about investing through this pandemic and specifics with the ceo of Suisse Capital management, who i am happy to say has stayed up late to join us from the United States. Great to speak with you. Let me start with your take on this latest news on what the government is expecting in exchange for support. It seems that in some sectors, Companies Might be obliged to hand over and equities stake or debt to the treasury in exchange for support. What impact does that have on your thinking around investments as you see the government play such a big role in the economy at this point . It looks a lot more like what we did when we recapitalized the banks in 2008. I am often speaking to people about the fact that the United States government was willing to buy banks at a point in time when virtually nobody else was. Had inssive selloff we such a swift time period and the seemingly dire unemployment establishing to flatten the curve and to make our Health Care System able to it seems likerus, the same kind of severity. Reading in your notes ahead of our conversation. You were talking about investing for the next three to five years, ignoring some of the shortterm volatility. Are you seeing enough opportunities with that time on the horizon to get excited about . Guest yes. There is both a Historical Context to this, as well as a sensibility to it. In past extreme situations, there is a tendancy on the part of investors to really want to own companies that are the few bright spots in a miserable circumstance. Mostntly in the u. S. , the popular stocks are the ones we call the misery stocks. That would be netflix and amazon, which seem to be profiteering from the incredible difficulty we are in. But the history of major change 1981 with 11 inflation, like 1999 with the dotcom bubble, like 2008 when we had to recapitalize the banks, at those points in time, there was a major virus. Inflation was a virus, and the virus andbble was a the poisoning of the Banking System was a virus. What you actually wanted to do was to buy the things that require Economic Optimism at the bottom in 2009, or at the bottom in 1982 of the stock market. We are in one of those junctures where that which was cheap has gotten a lot cheaper, and that which was popular, stocks like netflix and amazon, have gotten more popular. That evennteresting if things are different this time, maybe his string rhyming a little with the past maybe history rhyming a little bit with the past. Are you suggesting that companies that it is unseemly or inappropriate for companies to make money at a time like this . Believe in the history of antitrust legislation in the United States, you will remember that in the early 1900s, there was a company by the name of standard oil and they owned most of the oilproducing property, refineries, gas stations, virtually every aspect of produce oil in 1900 to oil and gas in the United States of america. The president came along by the name of Teddy Roosevelt and said, it would not be good for the democratic capitalist system to have too much power in the hands of just a single company, and the wealth in the United States to be so heavily concentrated in the hands of very few people. The reason at the time they did that, it did not look that important. In the United States, we sold 4000 automobiles in 1900. But in 1925, we sold 3. 5 million automobiles. The fact that there were nine Oil Companies instead of one ended up being very important to the development of us as an industrial power. Iswhat has happened here now out of necessity people have turned to amazon even more heavily than we had before. Torefore, it is going exposed to a lot of people that did not understand how powerful they are to how powerful they really are. Anna food for thought. Interesting perspective. With smead ceo capital management. We will get his thoughts on individual stocks he is looking at through this crisis and beyond. We will be speaking later with marco alvera. This is bloomberg. Welcome back to the European Market open. 22 minutes into your trading day. European stocks in european equities under pressure, down by one point 5 on the stoxx 50 right now. 1. 6 on the dax. Lets get an update on the business stories we are following at bloomberg. Boeing is poised to cut output of its dreamliner by about half. Sources telling us it plans to cut jobs when it reports earnings next week. The boeing chief is saying the painful measures will be needed. Last month, he warned employees of a new reality and a much smaller jet line impact. Significanting Economic Uncertainty caused by the coronavirus pandemic. Jumped 23ter revenue percent. While it gave an optimistic secondquarter target, output fell short of estimates. Lufthansa risks running low on cash in weeks. The global oil route is a threat. They now depend on talks of a multistate daylight. For aidr is looking from germany as well as austria, belgium, and switzerland. That is a Bloomberg Business flash. Go back to bill snead, who is up late for us in the United States. Let me ask you, we talked about oil this week, you will understand, with Oil Prices Going negative. When i look at your recent portfolio additions, you mention sixed chevron. You mentioned chevron. Tell me your thesis. Is it that chevron will survive where others fail . What will be the thing that stands out to you . Guest yes. They have a superior balance sheet. Moree looking to make investments in the oil business, but within the confines of our discipline, which is to do so among companies with strong Balance Sheets. In the u. S. , that is very hard to do. The thesis is very simple. Caradvent of the electric is going to be slow enough that the fact that millennials, which are about 90 million adults in the United States ages 23 to 39, are going to get involved in the automobile so much more in the next five to 10 years as they get married and have children and form households. Move fromf them to concentrated spots in expensive coastal cities to someplace else in the United States. There demand for gasoline their demand for gasoline will double in the next 10 years. About 240we have million in the United States. It is highly likely we will need more gasoline. Whereok at the world, most of the population growth is going to be in the world, it is not the places right now where you can pull up to an electric charging station in nairobi, outside nairobi, kenya, or wherever. Are in a total and complete collapse of any optimism about an area that was already extremely depressed, worst performing of the s p 500 last 10 years, in a complete and total collapse of optimism in it. The financially Strongest Company in the United States, a beneficiary waiting to pick up attractive oilproducing properties from weak Sister Companies that cannot handle is onlye period, it going to make chevron a much more profitable company. You and is it also for about picking winners in other distressed sectors . For example, in commercial real estate, particularly connected to retail outlets. They must be going through terrible times. Yet you have a Property Group on your portfolio list. Survey aboutwas a six weeks ago right at the beginning of all the greatest consternation about the virus among 14 to 24yearolds. They were asked where they like to shop for clothing, and 81 said in a store. The irony was the answer to why is they said they could get away from social media for a while. Well, now they have got another reason, and that is that 15 to 25yearolds, when we do get to the other side of this virus, they are going to want to go back to places where they know large numbers of people 15 to 25 of the opposite sacks are going to be of the opposite sex are going to be. When i was 15 or 16, i was always excited to go to school because my Public School in a small town in washington, they had a vote by state law, all the cutest females in my town had to show up at that school. So i was glad to go there because i did not have to gather them. Right . Matt anna [laughter] i am sure there are a lot of children missing school. I take your point about retail and how it lives on. Let me ask you briefly, if you could. Your thoughts on the longterm changes of consumer behavior, apart from young people who want to go shopping again. The longterm changes this virus will bring about, briefly. Peoplei would say that are over extrapolating the changes in longterm behavior. That is what i would argue. That people are over strap billing over extrapolating because they are so fearful themselves. And most of the experts and most of the media in the United States is located in the part of the country that far and away is being hit hardest by this, and therefore i dont think people quite have enough respect as they will once months and maybe a year has gone by. Anna thank you very much. Thank you for staying up late to talk to us from the United States. Bill smead, ceo of smead capital management. Eu talks ends with no agreement on a package as Christine Lagarde warns about doing too little too late. We will talk about what happened late into the night in brussels via video conference. This is bloomberg. Anna welcome back to the European Market open. European stocks 30 minutes into the trading day are under pressure. Down by 1. 7 on the dax. Some of the worst is coming to her the spanish ibex, down by 2 . If you are looking for reasons to be gloomy, the data out of the euro zone yesterday, the u. S. Jobless claim numbers, and the gilead news overnight, that sent stocks on wall street dumping, and now on european stocks. U. S. Futures look a little more resilient, but failed to the downside. Lets get an update on the bloomberg first word news, some of the top stories we are tracking this morning. The u. S. House overwhelmingly passed a nearly 500 million aid plan. The approval coming as lawmakers left the chamber under health precautions. The white house says the president will sign it today at noon washington time. Aiming tock is dramatically ramp up testing and rollout it cant Contact Tracing program. He says deployments will be available for all key workers and their families. Return toson plans to downing street as early as monday. Gilead isists tumbling after chinese trials of a potential covid19 drug appeared to show as a failure. The scientists working on the trial says it does not fairly represent the actual results. The World Health Organization says it accidentally posted the results online, but they were quickly removed. 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. Here in europe, eu leaders have inched closer to a compromise deal on a Recovery Plan during a conference after german chancellor Angela Merkel pledged the back a huge stimulus pledged to back a huge stimulus package. Christine lagarde warns against doing too little too late as the economy may shrink as much as . 15 per year. Our reporter joins us from brussels. She has been watching that video conference. Big divisions still remain. We have some agreements on some of the measures, but still no Big Decisions on the big Sticking Points, around that debt neutralization, sharing the cost of this pandemic. Maria when you look at the price action today, it is really not enough. We when you look at what have, there is not much. Tone,there is a change in Angela Merkel did say it would supply a huge economic response. They said it was headed into a political meltdown. They said the tone had improved and he is seeing progress. The question here is while everyone agrees there has got to be financial help to these countries but have been hit by the coronavirus, should it be a loan or a grant . For countries that will have to issue a lot of debt like spain wanttaly, you can see they to do it in a grant. They do not want to see the gdp ratio go to high. This is very much an open debate. To make it clear, it is going to take weeks. This is a situation that will spread into june. The market is hoping for an eminent package, and that we are not going to get. Anna what about the role of the ecb here . Kickng as eu leaders this thing down the road, there is increasing reliance on the role of the ecb from a markets from ao type markets to tie things together . Maria they are taking much quicker action than the politicians themselves. What you are going to see now is pressure and regulation. They have no choice but to actually increase the program, program,mic protection to help in countries like italy. Weather we w see this next week or in the summertime, there is some question. She is likely going to have to send a clear signal that the central bank will step in when politicians are not able to. The criticism is the central s decisions will come down to policymakers, not just the central bank. Anna maria tadeo with the latest for us. Touts theorgan fund big windfall and emergingmarket stocks. Why it says the asset class has never looked so promising. This is bloomberg. Anna welcome back to the european open. 35 minutes into the trading session. Equity markets disappointing with a lack of progress on the brussels conference, and also mindful of drug trials taking place and the news surrounding gilead. Let me tell you what we have been hearing from the world bank. The World Bank President says the institution is focused on helping nations prepare for recovery in the post virus world. He told bloomberg about the steps the bank is taking to address the crisis. The first order was to set up Health Care Programs for the emergency. We managed to get 100 countries that have arrangements with the world bank that provide things like personal protective equipment into their hospitals. That has been good. The next step is to help the countries get ready for a recovery when it happens. We are specifically thinking or working from a focus that they need to have more transparency in their debt. They need to focus on the fuel subsidies. With oil prices down, it is a lot less critical to the people of the country to have the government keep subsidizing gasoline, so that is something that they can work on. Then social protection. That means a safety net for the poor. What we are trying to do is get gas to people actual cash to people, rather than funneling it to the government entities. Reporter the medical professionals we have spoken to at bloomberg make very clear that the third world countries, the world bank countries, are really fragile, and particularly fragile in their medical infrastructure. The world bank has to provide leadership there. What is your action plan to improve their ability to respond to this virus . This is a big challenge. , and withep recession the countries shut down, the poor countries do not have remittances. That is very important. They have been used getting money, people sending money back home. What we are trying to do is strengthen the Health Care Systems themselves. That is different in each country. Some countries need more hospital beds. Some countries need more equipment. That is exactly what we are trying to do. As i said, 100 programs in just impressive ery is very impressive, and people worked very hard. The world bank has offices in a lot of the countries. They have to connect often with videoconferences to get the list of things that were needed in the country. That is all going on, and we are trying to do Group Purchasing and advanced purchasing in order to help groups of countries at the same time. Reporter i mentioned at the beginning, we have two president s in the world bank, back to back scientists with dr. In si physics. Rk we have a president who somewhat say is antiscience. Has recently gone off t gone after the World Health Organization. I want you to speak about the integrity of the world bank, like the who, yet i want you to speak to americans who would to suggest thed world bank is not there to distribute the funds. How would you spend the money that billions of dollars how would you spend the money, that billions of dollars, over the months . Guest that is a hard question. It is valid to ask the world bank to defend that. The government structures are pretty strong. Loan fories ask for a a given area or a grant, the World Bank Makes both loans and grants, we can look at the system the country is proposing to use to monitor that. There is very good integrity of the flow of money from the world bank. There are so Many International organizations around the world. It is hard to generalize. Anna that was World Bank PresidentDavid Malpass speaking to tom keene. They were talking a lot about emerging markets. One investor who is consistently on top of stocks is the developing world as assets have never looked so promising. Said the firm ecasts in 18 managers optimism is buoyed by earnings growth, dividends, and currency performance. That is the story when it comes to emerging market equities. Where does that leave us in terms of opportunities on the credit side . Lets talk to dominic armstrong. Ceo of a capital company, and he joins us on the phone. Great to speak with you. How do you go about finding opportunities in emergingmarket credits at the moment, given the headwinds they face . Guest good morning to you. Youre absolutely right. It is fascinating what has changed in the last six looking for 40 great ideas through the course of the year to having a knife between our teeth. It is hand to hand combat every single day with those headwinds because there has been extraordinary activity. The market itself is largely an illusion of the market. It is very difficult to buy good and interesting things, and extremely difficult to offload situations where things have turned sour because the markets for these companies have evaporated. But the advantage to all of that hand in that hand to combat that you describe, do you still find credits . Guest we do, and it is a long and difficult process. As markets for the goods evaporate, all these factors are still a core group. Geographic specific, but there are areas such as the telecom and data sectors, food sectors where there are solid businesses with solid production. There is also the deeply discounted longterm branded having at will be difficult time at this stage, but coming through. Like mcdonalds in latin america, the ability to pick that up at a 20 discount for a very attractive yield. In the philippines, they are struggling, but people will not stop drinking beer. People are able to buy these things that great discounts. It is a great opportunity. You needre, i suppose confidence that while the business might have evaporated overnight not the ones you cite there, they are challenged but you need to be confident they have got longterm potential and they will be able to come back. What kind of assumptions do you make about the downtime, the length of these lockdowns . Guest one of the greatest challenges of all of this, and it feels like being confronted by hannibal on elephants. You have never seen elephants before. It seems like the whole world has changed. In fact, it is just another battle. It is another component of the battle. Think there are sectors that will be very difficult for the longerterm. Anything related to physical assets are going to be very challenging. Our view is this is probably a long more, a long war, and the thing we have to keep a wary eye on is inflation. Briefly, do you see that coming despite oil . Guest i think despite the deflation running for the next 12 months or so, indeed the situation with oil itself at these levels is probably politically unsustainable. Ironically, there are probably opportunities within oil right now in that it is probably not in their interest to emerge with emergingmarkets. They need friends, and that is some form of confession concession that is likely. It is something we need to plan for, definitely. Anna thank you for talking to us. Dominic armstrong, thank you for your time. Up next, something we all need, friends. Something else we need, sleep. To promote allars relaxation and bedtime story app for kids. We hear from the man behind that. This is bloomberg. Ill come back to the European Market open welcome back to the European Market open. U. S. Futures look a little more solid. Perhaps it will make progress to the flatline. Coming up to an hour into the session, we are under pressure, equity markets down by 1. 5 , the dax down by about that much. Mind candy has raised 12 million and is putting its business up for sale to focus on promoting a relaxation and bedtime story app for kids. The app counts big names like star trek and Patrick Stewart actor Patrick Stewart. Lets speak to the ceo. At a time like this when so many businesses are all about cash in keeping themselves going through the tough times, you persuaded partners, latitude ventures, to put more money into the business. Was that all precorona . How have you managed to persuade them to keep the money flowing . Thank you for having me. This is financing we have been working on for some time. Our investors have confidence in our ability to continue to deliver on our plan through 2020. And thathrough 2019, growth has continued into 2020 and is continuing now. Moshifor the uninitiated, monsters was a fairly big u. K. Start up, then it seemed to drift into the background, and now it is coming back in a different form. Briefly sketch out where you are now and where you are heading. I have got two young kids and i am familiar that when the lights go out, trying to get out of the room without stepping on the wrong floorboard. We wanted to come up with a solution that could help families with poor sleepers. That is a health issue and affects the family. If the kids cannot sleep, the whole household suffers. Sleep deprivation leads to impaired learning, decreased school performance, and other Health Issues as well. We wanted to create something that could help promote the health and happiness of families. These are stories which are 25 to 30 minutes long. We work with sleep experts around the world, and they are audio only to help kids drift off into dreamland. Anna you are using the money you raised to hire additional talent and staff. Even before coronavirus, there seemed to be a trend toward mindfulness, relaxation, getting away from technology for kids. You can maybe tap into that even more so with coronavirus. There is a wellbeing trend youre trying to buy into. Guest we have seen in the adult markets the growth of wellness products, and that is now flowing into other parts of the family. We have found incredibly heartwarming that we are helping in some small way through the current crisis. To be honest, i am more concerned about the world getting together and reading this virus and protecting beating this virus and protecting our way of life. We grew well through 2019 into 2020 and we are expecting to continue that into next year as well. Anna thanks very much. Thank you for joining us, ian chambers, the ceo of mind candy joining us after the news about the cash raising. Let me tell you what is going on in European Equity markets. We have world equity markets under pressure. Plenty of bad news out there in terms of the data, but we knew the data would be bad. We are getting confirmation of that. Confirmation of just how bad. We have the euro zone, pmis coming through yesterday, u. S. Jobless claims coming through yesterday, all of that adding up to a gloomy picture for the Global Economy right now. Christine lagarde at the meeting of eu leaders yesterday warning we could see growth dropping by as much as 50 in the euro zone. All of that in the front and center of the mind for investors as they look at that gloomy economic picture and weigh that up with the news out of gilead with the seeming failure of one of its products, remdesivir, to make a difference in the treatment of coronavirus. There have been hopes it would make a difference, and it did not seem to in that test. With all that in mind, the European Equity picture down by 1. 4 on european stocks. U. S. Futures look a little more healthy. S p futures down by just a fraction, so we are expecting to see something more resilient as we had into the u. S. Trading day. That is it for the European Market open. Up next is surveillance. This is bloomberg. 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