Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Damage assessment economists expected payroll reports to show 22 million job losses, taking unemployment levels to their highest since the 1940s. Neel kashkari says the impact will be devastating. And customer orders slump. We speak to the ceo. Lots still ahead in the trading day. We will talk about siemens numbers and the lack of visibility. We also get plenty of analysis for the jobs report which we expect to see later today. With that in mind, lets take a look at futures. It seems we have found plenty of reason to be cheerful this friday. We will not have any trading in london because it is a Public Holiday, but we have plenty of positive trading coming in from the Asian Session and indeed, in the futures, we see that reflected. Futures point higher by around 1. 3 while european futures, where we see moves to the upside. Euro stocks futures up by a similar amount. Of focus on reopening, which seems to be taking place or being planned for in various parts of europe and in some cases in the United States as well, and a lot of focus on the trade story out of the u. S. As chinas trade relationship with u. S. Lets get into that conversation now. Talk trade negotiators pledge they will create favorable conditions for the limitation of a bilateral trade deal and cooperate on the autonomy and public health. According to a statement from Chinas Ministry of commerce, chinas vice premier spoke on the phone to u. S. Trade representative Robert Lighthizer and trade secretary steven mnuchin. Fromng us with the latest new york is Annmarie Hordern. Good to speak with you. This positive movement between the u. S. And china very important, given the fallout have seen around coronavirus and its origin, and also talks around implementation of the trade deal. This sets the stage for something positive, i guess. Yeah, definitely a positive dialogue, and also it comes ahead before they were even supposed to speak to. They are talking and talking earlier. I think the crucial part of the statement was when they said both countries fully expect to their obligations in a timely manner in spite of the pandemic. I think that is important for two reasons. The deal is calling for china to buy an additional 200 billion dollars worth of u. S. Goods and services over two years compared to 2017, but because of the pandemic, those purchases so far have been behind the pace that they need to reach, so it was a positive that they said in spite of the pandemic, they are going to do what they can to meet the requirements of a deal. You look at where the rhetoric has been the last few weeks, considering what the pandemic has done to the relationship, quite deteriorating the trumpet ministry blaming china for misleading the world about the scale of the epidemic and from survivor himself was threatening more tariffs as punishment, and the market is certainly looking at this is definitely a positive relationship a positive direction for that relationship. That yeah, you wonder how relationship progresses as we head closer to november and regardless of who ins up in the white house, no doubt anybody concerned wanting to look tough on china at this point, or certainly that is the message we have been getting from the trump administration, and many people say joe biden would be the same. House has blocked cdc guidance over the reopening of the economy. As we watch the interplay between the white house, the state, and the cdc putting in howr thoughts about prepared businesses and various facilities need to be. And mary yeah, and i just read part of the 17page document the Associated Press had posted. It is a version of this guidance. It details everything childcare programs, summer camps. Even in the summer camp section, it was how you should be placing beds and how you should be watching certain things children would share. This is what the cdc was putting out, and according to trump officials, the concern was that the recommendations were just too prescriptive ended not account for businesses or camp or place of worship and a hardhit part of the country like new york over one like montana that is not suffering from the pandemic and a much severe place, but this is definitely potentially going to be controversial because this is the cdcs job, to protect americans from these kind of health bets, and it has been sidelined during the virus response. As you said, weve seen a lot of mixed messages, and the cdc has declined to comment on this, but we are seeing businesses the trumpet menaced ration really pushing for businesses to reopen, but at the same time, the United States is adding more than 20,000 new cases a day. I sit here in new york and neighboring new jersey, and they appear to be on the downslope, but Governor Cuomo said yesterday be the the decline of the spread is not a steep is the incline. New york state alone has suffered more than 26,000 deaths. That is more than spain as an entire country had, so these numbers are agonizing, but these numbers will certainly be controversial, given that they are potentially blocking this cdc guidance. Europe, we are looking at places a little ahead of the u. K. Opening up in the u. K. A little behind, opening up on the lockdown conversation. Yesterday, we woke up to newspapersrom u. K. Saying lockdown would begin on monday and there has been a lot of backpedaling from the u. K. Government around exactly what is going to change, if anything, by monday. Speed with what we know. And mary it is interesting. You will know this more because you are in london, but newspapers talking about you could potentially go back out to the pub. I think maybe they were getting ahead of themselves and too optimistic about what the government plans to announce, but it is clear the government is going for a more cautious approach. Top scientists are warning the hastrys infection rate quested upwards. Borisnson and the johnson telling the cabinet they want to proceed with maximum caution. Sunday will be interesting. This is where they are going to map out their version of phase ii, but people familiar say the rules may not change much until june when small shops may be allowed to reopen, so potentially newspapers are just reopening, talking about what you can do. It sounds like they do not plan to lift too much in terms of the lockdown. Anna british media getting ahead of itself perhaps a little bit there. Thank you very much, reporting on the global virus story. Coming up, bracing for the jobs report. We will look ahead to Employment Data out of the United States after initial jobless claims came in above 3 million for a seventh straight week. Andill get that analysis what that means for the fed. This is bloomberg. Anna welcome back to the European Market open. A few minutes to go until the start of the equity trading day, and futures do point to a positive start to that trading day. Word newsto the first update. China and the u. S. Have agreed to cooperate and work toward and limiting their phase one trade deal. In a readout from recent talks, the u. S. Said both countries early expect to meet their obligations under the deal. The most unprecedented economic crisis in peace time that is what we are living through according to the European Central Bank President , Christine Lagarde. She says policymakers will do whatever it takes to help the economy weather the shop. She spoke on a webinar organized by bloomberg. They have to go beyond the normal including the normal and conventional tools to use things that are of an exceptional nature, and that has to be designed, calibrated with the appropriate level of deviation and with room to maneuver in order to actually deliver on that mandate. The in the u. K. , government is playing down expectations the lockdown will assignificantly rolled back the countrysn infection rates could edge back up in the next few days. Prime minister Boris Johnson plans to address the nation this sunday with plans for a way forward. Sources tell us the rules may not change significantly until june. Global news 24 hours a day on quicktake by 2700 bloomberg analysts and more than 120 countries. Futures pointing higher despite directly to, so lets get to that conversation. Applications for u. S. Unemployment benefits topped 3 million for a seventh straight week as the economy remained under lockdown in the u. S. That takes the total during the coronavirus pandemic more than 33 million jobless claims. This ahead of the jobs report that later on today is expect it to show a record shattering loss of jobs equivalent to the last nine u. S. Recessions combined. Joining us now is the founder and chief economist at pantheon macroeconomics. Great to have you with us. With the numbers. This might be important in terms of the markets positioning around this number. We got initial jobless claims to work. Just how many jobs will have been lost in the month of april . We are taking a fairly different approach to normal because usually, about half the people who make a jobless claims do not given month follow up because they find another job within the given month. This time it is quite different because it seems the vast majority of people who lost their jobs between march and april did not find another job. I think most of those people will fall off the number, and in theans 22 millionish headline. There is some scope for deviation either way because there was them hiring, but there also have been some people who lost their jobs but did not make a claim, maybe because they thought they were ineligible or perhaps our undocumented workers. That it could be even more hideous than the 22 million most people are looking for, and it would not surprise me if it were 25, which is also unimaginable. Unfortunately, there will be another big hit in may as well before we start to turn the corner in june. Anna give us the historical context. These numbers are worse than we have seen since records began, i understand, on this particular measure. When do you expect to see the bottom . Will it be next month . I think it will be next month. Were going to take out all the gains from previous cycles and probably lose another 10 million or 12 million, and then i think we will see the beginnings of an upturn. Euro states are opening up. It has been patchy, and so far the evidence is people have not flopped back to the businesses that have been patchy. They have seen a little bit of an uptick in activity in the restaurant sector. Hotels and travel have risen a little bit. Numbers are still absurdly low by any previous standards, but they have moved a little bit. Some people will be needed to be pulled back into their previous jobs in order to do that work, so im hoping the gym number will be up a little bit, but we are not going to see really big increases until we see the big states california, new york, new jersey, massachusetts opening fully. I dont see that happening until june, which probably means the july payroll number will be the first big one. Even allowing for that, we are not going to recover these jobs any time soon because even businesses that are reopening are not opening at full capacity. They will not need as much staff as before and that means the Unemployment Rate will be elevated unfortunately for quite a long time. Anna i read a couple of pieces of analysis that talk about the strange goingson in the average Hourly Earnings number that we might see today, and this is highly reflective the sad fact that haveof the jobs been lost are in businesses that were paid. Are literallybers that, the average. They have not made any adjustments, and normally it does not make much difference, but for this number today and april, we will probably see a lot of lowpaying jobs in retail and leisure, hospitality, restaurants, and bars. When you take that out of the sample, youre left with remaining people who on average earn a lot more. Effectively, there will be a break in the series. I do not know what they will do then. They might make an adjustment, they might make an announcement, but if they stick to their usual method, monthtomonth Hourly Earnings will be Something Like plus 6 not 0. 6 , 6 . That will be completely absurd and will tell you nothing about the economy but tell you about the break the covid virus has caused. They might print something more normal, but they will not see in an they will not say in advance what they are going to do. Anna maybe we will get two numbers, the adjusted and unadjusted. Fromve heard many times various fed officials that negative Interest Rates, they do not see any reason to go down that road. They have not seen anything in the european experiment that has impressed them in particular, but it seems this may be part of the fed funds futures market. We see for the first time negative Interest Rates being priced in for 2021 in the u. S. Do you think that is at all likely . I dont think it is very likely. I will not say it is impossible, but i dont think it is likely. They have made the argument many times, several officials, that they can control the yield curve with much more confidence than markets perhaps believe, and them to showed they need a more sustainably yield producing policy. Doinguld argue they are it de facto anyway by saying they will do whatever it takes to keep the market liquid and functioning normally. Why would you then need to apply negative Interest Rates . With the danger it would panic people and scare businesses and cause untold chaos in the banking system, it is completely unnecessary. The fed fund future, looking out at 2021, it is pretty illiquid. Theres not a lot of trading going on. It does not take many transactions to move it in quite a long way. I dont think those moves yesterday are genuinely indicative of what most people in the markets think, and im sticking to my view that i would be pretty astonished if they went negative. Anna ok. Thank you very much. Chief economist at pantheon macroeconomics. He stays with us on the program. Coming up, reaction to the u. S. Jobs report. Will be talking to the talking to larry kudlow at 2 00 p. M. Coming up, the ecb president says she has no choice but to go beyond conventional policies. You will hear from her next. This is bloomberg. Anna welcome back to the European Market open, live in london. Futures suggest in europe we will see a positive session as we have through asia and in the u. S. Futures upside pointing to the upside as well. Hasstine lagarde says she no thoughts of going beyond conventional policies to combat the coronavirus crisis. This comes after german courts ruled the institutions Bond Buying Program may be illegal. The guard said current circumstances are exceptional. Take all possible measures and policies to help with maintaining the situation, sustaining it for as long as necessary to weather this horrible shop. The message has to be to everybody the best we can do in a situation like this is to learn together, cooperate as dont letssible, and our stronger do more so that our weaker can ride on measures taken elsewhere. The more we can control this as a pandemic, the healthier our economies will be and the healthier our economies are, the healthier we will be. Ndividually and as communities anna some of the voices yesterday from that panel. Executive of pantheon macroeconomics is still with us. When you look at what the german court said this week, the impact on the ecb, you encounter a direct line between with the court said and what they are doing to fight the pandemic, but there are links. Has the german courts movement threaten does it the ecbs independence, do you think . Ultimately, i think it probably doesnt because ultimately, the decision will end up in the European Court of justice, and my guess is that eventually ultimately, the ecb will not be prevented from doing this, but it has injected a temporary note of uncertainty. I think i would be willing to go that far. Im sure people in the German Constitutional Court knew that what they were doing was effectively create cratering thethrowing a bomb into mechanism the ecb has introduced, but i very much doubt if they genuinely believe they will stop or substantially change what is happening, and listening to ecb leadership over the last couple of days, i dont think that they are panicking over that they will be unable to do what they think they need to be able to do to prevent the economy from falling into an even deeper hole. Would be hugely surprised if the ecb was forced to go away and rethink and support mechanisms. The reaction in the market for that does not really bear thinking about. I cannot believe it was the constitutional courts intention, and ultimately, i suspect it will blow over. Anna what kind of trajectory of recovery do you see for the eurozone economy . Dire pmi data with singledigit readings in some cases. What kind of path out of this recession do you see for europe . What is the shape of it . I think europe has a couple of advantages, over the u. S. , for example. Policy coordination across europe sometimes look fractious, but in fact, i think theyre going to do reasonably well, but also the european governments, germany in particular, and also many other countries in east europe have been very good at fighting the virus with aggressive Testing Programs and really controlling it much more quickly and effectively than they have in the u. S. If that continues, the opening of europe will probably be smoother and less patchy than it is in the u. S. Where things are kind of going the wrong way. Huge differences, so im reasonably helpful that actually once we get through the worst of it anna sorry but we are out of time and the conversation. Thank you very much for joining us from pantheon macroeconomics. We will talk about siemens numbers coming up next on bloomberg. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Anna welcome back to the European Market open. 30 minutes until the start of the european trading day. Not in london where i end because it is a holiday, but elsewhere in europe. We have heard from german industrial giant siemens this morning. It scrapped its fullyear sales and earnings forecast after europes largest Engineering Company saw profits sink in all of its divisions. Amortization from industrial businesses fell 18 . The company says it sees a downturn caused by the coronavirus taking place in the third quarter. Oliver, good to speak to you. We will get to the trajectory recovery in a moment, but siemens is interesting because in the crisis, during the crisis, at the height of it in germany and elsewhere, they managed to keep their production facilities going. Tell us the backstory there. Morning. Its really interesting. For most of this crisis, we have heard, especially from the german automotive industry, production was shut down, factories were closed, and that is the reason germany has seen such a stark economic impact. Are not making cars, and that does not, really apply. They can keep making the turbines made before because these are longterm orders. They implemented social distancing. Their employees are wearing masks. They are careful about shift changes, but, really, their work is continuing mostly is normal. Anna what about the path to recovery for this business . They have withdrawn their profit guidance. They do have visibility, it seems, around revenues, but not profit. What is the shape of the recovery that they paint for us . I was speaking with the siemens ceo, and he said that they are going to see the bottoming continue for a bit and that they do not really have visibility on the shape of the recovery. He said neither he nor his customers know how fast things are going to pick up, but they are assuming it is going to take a while, particularly in the businesses that are short cycle, so all of their Digital Industries and things like that. The upside is that automation business is doing well because factories are trying to distance their employees, and automated machines makes a lot more sense. Anna yeah, that is interesting. The parts of the business that have benefited. On the one hand, this is such a diverse business, you have parts helped, so as you suggest, there has been a boost to that digital working, more digital working, more remote working, but on the other hand, you have exposure to oil and gas and they wanted to spin off some of that. This is a business that is made up a very contrasting divisions, i suppose, at this point. Absolutely, and you hit on a very important point. The oil price is important. They has they have a Huge Division that supplies to the oil and gas industry that were directly impacted by the crash we saw last month. We know they had a net loss this quarter, but because it is being spun off this year, we did not break those numbers in, and as you said, on the upside, automation is big, and we spoke to executives today who said this might actually be a longterm trend. They think Companies Might see end of automation. It brings a more robust supply chain and helps Keep Companies running in situations like this pandemic. Much, joining us with the latest on siemens. Ofare speaking to the ceo siemens later on in the program, so do not miss that conversation just after the start of European Equity market trading this morning. Here are your top corporate stories this morning ing has seen profits dropped to the lowest since 2014 as the dutch bank is setting aside 651 Million Euros. Net income fell 24 . Provisions have varied widely across europe. Deutsche bank set aside 500 Million Euros while hsbc earmarks 3 billion. Just nine jet orders in april. Thats is airlines are dealing with adjusting to a crisis that could last for years. Slashed its output by about one third. The company says it may have to revise output again as the market evolves. Cooper posted his first ever declining quarterly bookings possess says the worst is now over uber posted its first ever declining quarterly worst isand says the now over. Thechief executive says cost cutting that will eliminate more than 1 billion is expected. Still to come on the program, all the job losses in every recession dating back to the Second Administration of dwight into oner concentrated single month that is an incredible assessment. The scale and magnitude of what forecasters expect in todays jobs report from the United States. More on that next. This is bloomberg. Anna welcome back to the European Market open. Weve got 20 minutes to go until the start of the European Equity trading day, and european futures will be without london today. It is a Public Holiday here in london. Elsewhere, the futures markets open and we do see some upside expected. Buoyant session through the Asian Session. U. S. Futures moving to the upside by about. 5 . Qualcomms ceo says tensions between beijing and washington will not hit the companys bottom line. In an interview with david rubenstein, Stephen Mullen coughs says he still sees a tremendous amount of stability. If you looked over the last 10 years, a lot of the infrastructure providers that would classically have been part of the western ecosystem really consolidated into a small number. Many of them sold or merged into each other, so now youre really just have ericsson and nokia. There will be a change in the market when things go virtualized, which essentially means the i. T. Technology you chief information officer, that ecosystem of will change as well, but it will take a little time. It has to do with some of the moves that happened over the last 10 years. The u. S. China relationship is always complicated. Any time in the history of the world when you have two economies, they always spar a bit. We thought we had dissolved a lot of that with our trade agreement, but now some people are blaming china for covid19 around the world and the United States. Do you expect that will arise in the Political Campaign the problems that will arise in the Political Campaign will affect you . We do not see that being a problem so far. If you look at our history with china and we have a lot of history with china essentially what has happened is although there is a lot of rhetoric, onitical the ground, you see a lot of in the Technology Ecosystem that we play in. Chinese partners, a lot of big chinese partners, handset vendors, they have International Businesses that we were helpful in establishing. We along with while way, even though there is a lot of , to make surewest i g happens. Underneath all the rhetoric, there is still a tremendous amount of cooperation and stability in business. You said at one point you thought there would be 200 million 5g telephones sold in the United States this year. Do you still believe that will be possible with the covid19 crisis . We do. In fact, we reaffirmed that on our earnings recently. Ok. Lets suppose apple apple is producing, i believe, a 5g phone. You must have technology in it. It is supposed to cost i dont know, 1000 or maybe more. Do you think after covid19 with the economy going down a bit, people will spend more than 1000 for a new 5g smartphone . What you tend to see is really two things. At the beginning of a rampup of Technology Like we saw this with 4g and we will see it again with 5g you see at the beginning fairly big uptick at the higher prices, which tend to be a little bit less price sensitive. You tend to see subsidies from carriers to make sure they can deploy it because there is an advantage for them to deploy it, but probably more importantly, you are seeing a big i would say growth in the scale of the handsets worldwide with 5g, even more so than you saw with 4g. For example, the first year of 4g, you did not see as many phones launch, and you did not see them launch across so many price spheres. It always happens and its happening quickly. We are happy to be part of it. Assume since you have your technology and everybodys smartphones, you have to carry around lots of different smartphones so you can show you like all of your customers . How do you tell people which one you use . I do do that, and i oftentimes get in trouble for being in the wrong place at the wrong time with the wrong phone. With respect to apples 5g phone, is that not yet available . It is not yet available, and i will be honest, i never talk about a customers product plans, even if i knew about them. Anna really interesting conversation, the challenges of managing a number of devices. Qualcomms ceo speaking with bloombergs david rubenstein. Todays u. S. Jobs report is forecast to show employers cut about 22 million jobs in the month of april alone. That would mean nearly a decade of job gains have been wiped out. N just one single month dani burger joins us now to discuss. We have spoken about this with many guests, but we cannot say enough just how historic, i suppose, these numbers are going to be. We already saw the devastating jobs numbers yesterday and the highfrequency data, the initial jobless claims. What sort of full or picture are we likely to get . Dani we are likely to get a confirmation of what you said, the devastation we have seen in the jobless claims. The data set is certainly more comprehensive, so when we look through the details, we will likely get a picture of just how long the economic and unemployment devastation is likely to last and what the postcoronavirus workforce is likely to look at look like. We will get a better idea of what the industry looks like. We already have a slight idea not just the industry but the type of jobs and that might show us the wage gap is opening even more. I really figures are likely to confirm that those that are lowest paid are the ones that have been laid off. The number of temporary layoffs or furloughs is likely to be very interesting as well. Last month, we saw a record search that represented about 77 of unemployment. Im looking at that as a positive sign because it means once the economy tap gets turned back on, those jobs can more easily come back into the market and those workers can get back to work. Jobver, if a lot of those losses are becoming permanent, that means the extent of this crisis is likely to play out for longer. , the underemployment number is one to look out for. How many workers have decided to stop looking altogether for jobs. If that number has surged, it captures the despair hitting the american workers. Anna indeed. Expectations seem to be grim, and a lot of people talking about how dire this number is going to be the, but that said, emotion very different being expressed in risk assets right at this moment, dont we . Disconnect, as might be entirely appropriate between what we are seeing in markets right now and what the data is telling us for the month of april. Dani yeah, certainly. Part of that is the question is no longer if numbers are going to be worse than expectations because expectations are so grim, but its if they are priced in. You can look at the argument of Mohamed Elerian who says that it actually is just a legacy of what happened during the great financial crisis where wall street gets supported. Seeing traders start to price and negative subzero rates in the u. S. Really for the first time ever. That might be a sign that investors are saying the fed is going to have to react even more with these jobless figures, or it could just be a technical blick, or traders could be saying they are really grim payroll numbers, so we need to start hedging against his. Disinflation. Anna thank you very much. Details toricate watch out for in this number, to get any clues as to just how sustained this joblessness is going to be. Much of it will not be, of course, but therell be an element of that. Thanks very much. Lets get to bloombergs first word news update. In the u. K. , the government playing down axman tensions that the lockdown will be significantly rolled back. That is as scientists worn the countrys infection rate has crept back up in recent days. Prime minister Boris Johnson plans to address the nation on sunday with a plan for a way forward. Sources tell us the rules may not change significantly until june. France will start rolling back its lockdown measures. It is joining germany, italy, and the netherlands and easing restrictions. Strict controls will remain on public transport in paris where infection rates are still high. Looser restrictions on businesses and stores will start coming into effect on monday. The u. S. Justice department has taken the unusual step of dropping its case against michael flynn. President trump has put pressure on officials to stop the prosecution of his First National security advisor flynnslynn despite pleading guilty to fbi agents. The decision spared the president the decision of having to pardon flynn or not. Minutes away from the start of the equity trade. 12 minutes, in fact. We will bring you some of the stocks to watch this morning including ing. The dutch lender sees profits dropped to the lowest since 2014 as it sets aside money to cover potential coronavirusrelated losses in the banking sector. This is bloomberg. Anna welcome back to the European Market open. We seem to have found reason to be cheerful. U. S. Futures also pointing to the upside. We do see major averages over and the United States pointing to gains of around 1 for the start of the trading day. We are minutes away from the european open, though. Watchget to the stocks to with Annmarie Hordern who joins us once again from new york. Lets talk about airbus. Normally when we talk about aircraft orders, we dont talk in single digits, but that seems to be what we are dealing with here. Annmarie exactly. They logged nine new orders for april. It puts airbus in a delicate position. They need to be flexible with airlines and airlines are doing everything they can to hold onto cash, and they need it desperately, the flexibility, but at the same time, they need to look out for their own revenue. The ceo said last week they may have to revise output targets yet again. Theyve already cut output this year. 1 3 certainly these are numbers we do not normally see for airbus. Anna yeah, we will see how all pervasive that risk on mood is. Figures have been deemed to historical ready as we are now in the month of may. Siemens has scrapped their 2020 guidance, at least from a profit ofspective, but some areas the business are probably more robust than others. Annmaire yes, annmarie yes, some parts of siemens are more stable than others, but they did see slower orders and have profits sink. The big take away is that abandoning the 2020 guidance you have to ask yourself, can any company at this moment actually provide that guidance given the unprecedented amount of uncertainty. I think one interesting thing siemens did say as well, they see the bottom of the downturn taking place right now in the third quarter. In the current quarter. Ing. We got numbers out of we heard from a number of european banks in recent weeks. The focus from many of them has been on provisioning of bad debt around coronavirus and the degree of visibility these banks have or do not have at this point about how many of their clients will be able to pay back their debt is really interesting. Exactly. Its why theyre having to put aside hundreds of millions of dollars to be able to make up for that, depending on what their clients need. For ing, they saw the profit dropped to the lowest since 2014 this quarter, so that was a net income fall of about 24 . As you mentioned, we are seeing these provisions, and they put more money aside for these potential coronavirus losses. Similar tone to what we are seeing with the entire banking sector, really, around the world. Anna thank you very much. Annmarie hordern joining us with a look at some of the stocks we are watching. Looking at some research from jeffreys saying First Quarter numbers look solid for ing, good quality even though the cfo told nejra cehic earlier on they have no provisions guiding for the year. That is a problem many of the banks face, not being able to on a normal level. Lets take a look at where we start the european trading day. Five minutes ago until we get to the start of the european trading session. Ftse movementny today because we do not have longterm market trading. It is a Public Holiday here in the u. K. Marking ve day. Futures also. 1 higher at the start of trade. This is bloomberg. Staying connected your way is easier than ever. Youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. One minute ago until the start of cash equities trading. Lets get to your headlines. Playing ball. China and the u. S. Plan to cooperate on a trade deal, despite the blame game over the coronavirus. Rise with u. K. Markets closed today. Damage assessment. Economist expect todays payroll report to show 22 million job losses, ticking unemployment levels to their highest since the 1940s. At the minneapolis fed president says the impact will be devastating. Profit sinks at siemens. The engineering giant scraps its 2020 guidance as customer orders slump. We will speak to the ceo shortly. Just counting you down to the start of the European Equity trading day. The futures were suggesting we would see some positivity at the start of the european trading day. A lot to do with the positive mood music on trade between china and u. S. , some positive words between the trade delegations. That is a change from the market perspective from the allegations around coronavirus we have seen coming from the white house of late. As a result, we saw a risk on moves in the Asian Session, and we see that into the european session as well. Euro stoxx around 0. 4 up. We see some moves coming through on other European Equity markets. Attention to london. It is a Public Holiday in london. We see euro stoxx up by 0. 7 , as we wait for markets to open up. We have many of the European Equity markets looking to make modest gains. We have u. S. Futures pointing. Picture, looking at where the , auto parts,ng travel and leisure, some of the more volatile sectors, some of them being hit hardest by the coronavirus, moving to the upside this morning. Open. An markets are we will get the u. S. April jobs report today. It is expected to show 22 million jobs were lost in the United States. That is almost a whole decades worth of job growth wiped out in a few months. Joining us as the chief Economic Advisor at accreditors. I want to talk more with you about europe and the Central Banks response to the crisis. Starting with the u. S. , weve got this jobs report coming out today. Expectations are obviously dire. You have seen the initial jobless numbers climbing. How would you caution us to view these numbers . How much attention should we give them, given markets seem fairly able to shrug off this dire data at this point . [no audio] if we might beas having a problem with his line, so i will break in for a moment why we try to reestablish some connection with the chief Economic Advisor at accreditors. We have been talking about the story and what we will hear. We will focus more on the jobs report and listen to what we have heard from various fed officials running up to the jobs report. We will try to reestablish our connection, because i want to hear what he has to say. In the meantime, the San Francisco Federal Reserve Bank President spoke to Michael Mckee in an exclusive interview. She addressed the recovery. Take a listen. [no audio] if we areoes seem as having troubles with the tape as well. In that case, we take a short break here on bloomberg tv. We are trying to put the right communication tools in the right place. Lots to discuss. Jobs day here on bloomberg. [laughter] welcome back to the European Market open. We were trying to have a conversation with morris kramer, chief Economic Advisor at accreditors. We were getting your thoughts on how we should view the jobs report, which we know is going to be devastating. What will it tell us about the shape of the recovery for the u. S. Economy . Hi, anna. The number you said, will be helpful, and we knew numbersause we had the over 30 million. I dont think it tells us much. I think the claim accounts are slowly declining, but there are still huge numbers every week. A lot of it will really depend on the economic normalization, the tentative signs of opening the economy. Servicedis a very based economy, especially where you need personal interaction. It is much more impacted than manufacturing. Research of a surge in infection numbers would tamp down on that. That would be truly catastrophic. These numbers are bad enough as they are, but a second wave of unemployment as well, i think this would be truly and i hate to use this word but unprecedented in modern history. Yes. I was listening to a couple fed officials. Kashkari,tic and neel both acknowledging how awful these numbers will be, but both suggesting a depression scenario would be averted. Even what you just said, it is perhaps whether we end up with a second wave of the virus, therefore a second wave impact on the global economy. That might dictate whether this ends up in recession. Guest i think that is right. But i think we also learned something from the Great Depression that will make us react differently. I think the u. S. Could actually take a few hints from us over here in europe, where the increase in unemployment is also pretty bad, but much more subdued because there are more labor market schemes that absorb the shock. Schemes and, work more Flexible Working arrangements. I think it can cushion that blow, but you need policy right now in the u. S. That doesnt exist. I think the lesson that was learned from history, the lessons we can learn from each other, even from a downside scenario with a second wave, we would prevent a Great Depression scenario. That is beyond the realm of my imagination right now. But it doesnt have to be similar to the 1930s and all that came after it to be truly corrosive for the social fabric future govern the ability of our countries. I am not saying it would be anarchy, but it will be much harder to create consensus about future policies. It is not particularly easy in the u. S. Right now. This is a concern right now. Concern, is a big and i will get to the ecb in a moment and some of the fiscal policies. But on the fed, we see markets starting to think about, starting to test the idea of negative Interest Rates in the u. S. The fed futures curve is pricing 2021, even though many fed Officials Say they do not see anything in the european experiments around negative Interest Rates that makes them want to go down that road. How likely is the fed to introduce negative Interest Rates . Guest i think it is a good chance it will happen. We heard fed officials talk about how negative Interest Rates have not worked the way intended elsewhere reminds me of the way ecb officials talked about negative Interest Rates in sweden and denmark or other places before they did it themselves. In the end, i would agree that negative Interest Rates have been disappointing in europe. But i think they could be much more powerful in the u. S. , partly because the u. S. Has much ife debt at variable rates, you think about mortgages, for example. The impact of purchasing power and domestic demand could be much more effective in the u. S. Than it has been in the eu, where you dont have this large debt, comparatively speaking, in terms of variable rates. It is a tosset, if of a coin and we bet our odds, i think it will go that way. I think it is the pressure to throw the whole kitchen sink and everything you have at the program at the problem, and everything will be so strong that i cannot see that they draw an artificial line at zero. Anna you mention some of the ways in which europe is in a better position with the existing unemployment furlough or furlough schemes in place. Unfortunately, in times of crisis like this, we see questions around the euros existence being asked. Does that existential threat around the euro, does it rise up to counter any of the positives byt are being achieved having quite robust furlough schemes in place . On europeanigh assets . Guest i dont think it does. Especially if you look at the fixed income markets. As a bellwether, you always want to look at the 10 year Italian Government bonds, which is currently showing a yield of around 2 , which is much higher , thegermany and others northern or central core of european countries. Remember in the financial crisis, this number went up to 77 . I dont think there is a sign of panic, and i dont think it is likely at all. I think there is broad on this side of the populist divide that the implications of an unraveling would be probably putting everything into the current economic crisis we are seeing. There is great reluctance to even contemplate that. Still be more worried about the fact that there is too much probably trust put into the belief that the central bank can fix everything for everyone. And the ecb has been too corrective. I think they have been doing a good job so far, but they cannot resolve the situation, the lack of growth, they cannot solve issues of insolvency, paying for liquidity issues, it sarah there is too much trust. We have been in a situation ande the Central Bank Independence is questionable. I see it difficult for how they could go towards normalization without risking a whichf and a debt crisis, would create deflationary pressure, forcing the ecb to ease again. How can they get out of it . I think there are fewer options longerterm. Anna fewer options, and yet the ecb makes the point Christine Lagarde makes the point that she needs all kinds of tools right now. I thet being challenged German Constitutional Courts ruling this week . In troublependence because of that ruling . Guest i think it is a very important ruling. I dont think there has been enough appreciation of the meaning of it. I think the toolbox have been rated by the just have been raided by the justices. The bundesbank would be prevented from participating in the qe program. That would be pretty because this is the largest economy, and the bundesbank would have a loss of voice and influence on the government counsel. There has never been a bit of love between germany and the ecb and the bundesbank. Shrill,ould become more especially in a year where germany goes to the elections. I was surprised by the ecbs reaction to the ruling, which seemed to be pretty blase. Ruledurt of justice has this constitutional. I think this goes much deeper than is going to be appreciated. Anna thank you so much for joining us, and thank you for sticking with us through the slight technical glitches. Michala marcussen, always moritz kraemer, always good to speak with you. Siemens scraps its forecast as they saw profits sink at all divisions. We will speak to the ceo next. This is bloomberg. Anna welcome back to the european open. 18 minutes into the trading session. Remember, london is closed today. Elsewhere in europe, we see plenty of trading. Euro stoxx up by 0. 9 at this hour. Lets talk about what is going on at siemens. The company has scrapped its earnings forecast after the largest Engineering Company saw profits sink as all divisions secondquarter adjusted from industrial businesses fell by 18 . Lets talk to the siemens ceo, who is waiting patiently for us right now. Good to speak with you on the program. It seems that your share prices responded positively to your forecast for a moderate fouryear revenue drop. You seem to be quite resilient, or the market sees u. S. Quite resilient, given that forecast. Is that true . Morning, and thank you for the time. I am happy to see that the market is responding well to what we have been saying. Inmens has been early restructuring, be it healthcare, automation, and the actions we have taken on the energy side. We are right on plan with our spinoff of the Siemens Energy business. By that time, we will have a well focused portfolio, so that is what we are looking at. Times are turbulent and complicated, and they are very hard to deal with because there is so much uncertainty from other partners and areas. But the fact of the matter is there will be a time after corona, and that is the time to look at to get prepared for the upswing and how we can benefit from that in the proper way. I always say to my people, the night is darkest before the dawn. Hink about the future anna comforting words, i am sure. Andess the Balance Sheet how you prepare the Balance Sheet. You recently secured another 3 billion euros in credit lines. Do you have concerns around liquidity . Guest no, we dont. We really dont. Cash is not endless, obviously, so we are mindful about our cash position, too. We have a very experienced and strong ceo. We have had our atm in early february where we paid out the 90 euro a share. E are done without one b by the end of september, we will bring the energy asset to the market as a spinoff. That means this is a dividend kind of material size. That means there will be shareholder value associated with that for fiscal 2020. On the liquidity side, we did secure a 3 billion euro loan, but that loan is supposed to transfer to the Siemens Energy assets so they are wellfinanced and in a good position for a successful start into their Public Company environment by the end of september. That you areting sticking with that timetable for september for Siemens Energy. Why stick with september when we have seen such devastation in oil prices . Guest Siemens Energy is the most complete product that you can imagine in the energy field. We do have conventional power generation, like gas turbines and steam turbines. We do have the grit. We do have oil and gas as one of the four areas, but we also do have the siemens new energy, which is among the Worlds Largest of new energy companies. We have a complete area of energy. That basically means we are second to none to design the future after the corona crisis. And there will be a future of energy. Ipo of a spinoff, not an a traditional nature. That means what we do is we will wellpreparedd, Company Going to the market on its own. Deconsolidate the Energy Business from siemens ag. That means the new siemens ag will be a highly integrated industry, infrastructure, technology company, with a significant share on software, highly focused. Are risking a rewriting of the share going forward. Anna you have managed to keep a lot of your factories open. You have kept your plants open through this, and you have employed social distancing. As other businesses get ready to go back to work, what advice can you give them on that social distancing, and how you have prepared the business . Guest yeah. We are not going back to work. We have been working. Many people have been working from home in a very efficient way. That also brings me to the point that once we are through the worst and have more certainty about what the future will look like and when, then we need to also rethink the way we work in our company. We have seen that digitalization is not just something that we sell to our customers in industrial areas. We can also apply that, and we have made very good experiences on how to effectively work from home remotely, decentralized in our company. We think about what that will mean for productivity and efficiency. Having said that, we had basically all our factories open except the ones we needed to close due to regulatory matters, which was about 30 factories still closed as we speak. We have been very mindful about our people. I always said, priority number one, and that is not negotiable, is the safety and health of our people, our employees, as well as the people of our partners when we visit their sites for service and the like. We have good experience on how to manage factories. We have been rebuilding a flow in the factory from a highly tense environment to a two meter distancing environment. We have been giving out masks. Arease been closing out where been closing out. So we are well prepared, we know what we are doing. However, i have to say that there is a lot of uncertainty out there in the supply chain. Anna yes, joe, absolutely. A nice place to leave the conversation. The siemens ceo reporting results. We will talk about the first ever quarterly decline in rides at uber. This is bloomberg. 49. 50 daddy, i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies, even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Anna welcome back to the European Market open. 30 minutes into your european trading day. No trading in london because markets are closed for a Public Holiday, ve day. We are trading up and trading in other parts of europe. Let me tell you what is going on. We have euro stoxx up by 0. 8 . The dax making gains, up by just over 1 . Some decent gains coming through there. U. S. Futures throughout the Asian Session have been pointing to the upside. They are losing a little momentum as we go through the session. Lets have a look at where we are from a sector perspective. I have pulled up the grr function on the stoxx 600, and it tells me construction is the biggest gaining sector. Industrial goods and services up 1. 4 percent. Ziemanns doing well off the back of the guidance we got. It seems some of the were beaten up sectors doing well. To the downside, retail, health care, and utilities. A textbook risk on day for stocks, it would seem. Lets get to your first word news stories this morning, some of the big stories we are covering across the bloomberg terminal. China and the u. S. Have agreed to cooperate and work toward implement in their phase one trade deal. The chinese vice premier talked with the u. S. Trade chief and treasury secretary. In a readout from the call, the u. S. Said both countries fully expect to meet their obligations under the deal. The most unprecedented economic crisis in peacetime. That is what we are living through, according to the ecbs president Christine Lagarde. She says policymakers will do whatever it takes to help the economy, to whether the shock. She spoke on a webinar organized by bloomberg. Thee have to go beyond normal and conventional tools to use things that are of an exceptional nature. And that has to be designed, calibrated, with the appropriate level of deviation and room to maneuver in order to deliver on that mandate. The number of americans fighting for Unemployment Benefits has topped 3 million for the seventh straight week. It is a sign there is little relief in sight for an economy reeling from the pandemic. It brings the total to over 33 million. It also points to unprecedented job losses in the payrolls report due out later on today. 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. Lets focus in on some more corporate news. The worst is seemingly over for uber. It saw booking numbers drop for the first time ever, but the ridehailing business says it is starting to recover from the effects of the coronavirus and expects to report its first adjusted quarterly profit next year. Joining us is alex webb. Your take on what we heard from uber, and the fact that they seem to be through the worst . Highlights the advantages of the strategy they have been pushing under the ceo of diversifying to food delivery. Food delivery really offset the decline in rides. Situatione current means you are not having to do quite as much discounting, marketing. Those costs are not as extreme as they have been. The question is whether that trajectory is sustainable. Think about this business, we think about it ofrwhelmingly as a passage transport business, but it is the food Delivery Business that has made it more defensive against these current threats. What does the balance between those two look like for a businesslike uber into the future . Alex at the moment, the food in the mostut recent quarter, it was almost 5 billion, and rides just short of 11 billion. About 45 ish of the total. That is something they are trying to increase, the significantly greater for several quarters down rides. They try to expand to more adjacent spaces, like freight. Than 200 million. On thestion remains profit profile, the margin profile of those businesses. You would think they lose money on every sickle delivery still on every single delivery still. On food delivery, there are more people taking a slice out of the pie. There is the driver, and uber itself. There is a question of whether it can turn into a longterm profitable business, particularly when it is so competitive. You have grubhub and takeaway. Com. These are companies that are fighting over a very slim size slice of margin. Anna please tell me we will all go out for dinner again at some point. I am clinging to that idea. Let me ask you about Something Else uber is busy doing, and that is a shakeup in the electric scooters business. What is ubers involvement here . We know about their bike sharing business, but what is going on with the lime electric scooters . Alex lime and bird are the two big Global Players in the electric scooters space. In london, we have lime electric bikes, because electric scooters are not allowed. , whichs invested in that looks as if it will tie lime over. The bike sharing business jump into line. Been a huge multiplication of futures sharing in recent years, and i am inclined to think there is consensus growing that lime might be the winner in this space. Tore is probably only going be one company that emerges as the winner. We have google and uber consolidating around lime. The big chunk of cash they are pumping in is around 70 million to tide them through the crisis. That suggests those Companies Think lime is going to be the winner. Anna thanks very much for joining us. Bloomberg opinion columnist alex webb talking about all things tech, especially those numbers around uber. Coming up, we returned to industrials. Assets slumped in the First Quarter as the Company Faces the fallout from the coronavirus pandemic and the route in oil markets. We speak to the ceo next. This is bloomberg. Welcome back to the European Market open. We are 40 minutes into a trading day that looks broadly positive for European Equity markets. Depleted volumes because london is out of the fray. Lets get a Bloomberg Business flash for you, some of the top corporate stories we are following you. Siemens is abandoning its fouryear forecast. European giant was able to keep factories open at a time when many plants were forced to severelyt restrictions affected their profits. The stock trades higher on revenue expectations. Drop to the profits lowest since 2014 as the bank sets aside provisions. Net income also fell about 24 . Provisions have varied wildly across europe. Has been at 3 million. Worstas posted its profits, but they say the worst is over. It expects to hit the milestone next year. That isf executive says thanks to costcutting that will eliminate 1 billion in expenses. That is your Bloomberg Business flash. Back to your jobs conversation and the fed outlooks. San francisco Federal Reserve Bank President mary daly spoke to mike mckee in an exclusive interview. She addressed the shape of the recovery and why investors are pricing in a negative fed funds rate. Lets take a listen. Like every other company in the United States and even globally, they are feeling a lot of pain right now because we have had to shelterinplace for public health, and they know that. They want to do the right thing, but they are definitely feeling the pain. When thinking about getting past this, they are doing everything in their power to get there finances in order, get the Funds Available to ensure they can get past this and be ready to reopen, but do it safely. No one i talk to is looking at a vshaped recovery. They think this will be gradual and will take time to build confidence backup for workers and consumers as they reengage in economic activity. But they are more optimistic than you might think. They are ready to reopen and reengage. Reporter i know you want the paycheck Protection Plan to help, but is there evidence it is doing that . Are Companies Hiring back workers now . Guest the Paycheck Protection Program is about keeping workers they have. When the economy reopens, we expect those workers to come back and perform work. Right now, most of the country remains shelterinplace. Assistance tong employees with Unemployment Insurance to get through this. Reporter the main Street Program not up and running. Is there a chance that will get started too late to be of real help . Guest one of the things with all the feds facilities is there have been these announcement effects. When we say we will have a facility, the markets function better. We are seeing that across the board in all the areas where there were dislocations. I dont think it will be too late to be effective. I think it is helping markets do the lending that is so important for american businesses and households. Reporter i dont want to get into the alphabet business of vs and ws, but you were negative about the idea of any kind of growth this year. You did not see a couple weeks ago any kind of expansion until 2021. Is that still your view . Guest my view is 2020 as a whole lets move out of the quarterly math and look at annual data. 2020 as a whole is going to be a negative year, then we will see a positive year in 2021. I think that is as good as forecasting can get. Forecasting is always a tough business, but it has become very tough because it is dependent on the evolution of the virus and what actions we have to take to constrain it. Reporter the markets are seeing things a little bit differently. I wonder what you think of that, and the idea that a short while ago the fed funds futures market priced in negative Interest Rates starting in january. I know that is not a policy procedure that you guys are really interested in, but what do you think about the Way Investors are looking at it . Guest i think investors are looking at it as essentially the coronavirus is with us until we get a vaccine or some nice way to control it. They see that as distant, and they price that in. That is what we are all dealing with. Basedam an evidenced optimist. We came in with one of the strongest economies in our lifetime. Businesses are fundamentally entrepreneurial. We are already seeing them start to think about, how do we reengage while we live with the coronavirus until we do get a vaccine or some other Remediation Program . I have a little more optimism there. Reporter municipal finances in tatters around the country. What are you hearing from cities and states in your district . Guest cities and states in my district are really in trouble. They are struggling, and they are trying to do the thing we are all trying to do, which is figure out where can we cut costs when revenues go down . They are facing tremendous declines in revenues, and they are figuring out where we can keep essential services and what cuts we can make. It is hard, and we are working actively with all of our states and localities to think about what these choices so we can all get to the other side of the coronavirus and be wellpositioned to go forward. That was the feds mary daly speaking with mike mckee. We are seeing a positive session for the European Equity markets here in europe. Remember, the london market is closed, but elsewhere we see equities moving higher. U. S. Futures also pointing higher. We will be back with more next. This is bloomberg. Anna welcome back to the European Market open. We are just coming up to 50 minutes in the trading day in europe. Such as it is, london out for a Public Holiday, so no trading in london, but elsewhere we see gains made in European Equity markets. Aker sans net assets in the First Quarter faulted just under 24 billion norwegian krone, down from the previous quarter. That is as the pandemic and oil market clouded the outlook for the company. We are joined by oyvind eriksen, the ceo of aker. Good to speak to you. Let me ask you about the oil sector, your exposure to it. What are you expecting in terms of oil prices . What assumptions are you making about when we get a meaningful increase in oil prices . This year, the markets have been extraordinary in all aspects. Expect it will take some years before the oil market is back in balance. Petrolre preparing our companies for high volatility and low oil price for the next couple of years. Our strategy and ambition to produce oil and gas at the lowest cost possible because that is the best way to prepare the companies for volatility and low oil prices. Anna are we going to see a structural shift to a Lower Oil Price environment, even beyond the next two years . There are limits to how much we can foresee the future, but when we see weak prices in the shortterm, even as the medium and longterm long term, are we looking at Lower Oil Prices . I am reluctant to speculate in the longerterm in because experience tells that it is very hard to predict. It is also risk that we are about to accumulate longerterm in balance because Oil Companies have stopped listing in a new capacity. Y come back, it could be a challenge longerterm to produce the oil and gas. But we are not making a bet on that. We are assuming for the purpose of strategy and planning that there will be a structural shift run a should be able to operation and good also with low Oil Price Scenarios longterm, and the importance of cutting costs and enhancing efficiency. You have a sizable stake, 40 , in aker bp. We saw the dividends being cut. Do you think there is a chance the dividend will have to be cut further at aker bp . Will the board at aker bp consider the Dividend Payment quarterly. We reduced dividends for the Second Quarter by two thirds, and management guided to the effect that the nominal level paid in the Second Quarter will be the point of departure for the boards assessment in the quarters to come. But the board will obviously take into account market volatility and the market outlook. The guiding is, as i said, to pay one third of the original cost. You have saidat about the future of oil prices and the uncertainty there, i know that in the last oil downturn, your business used the opportunity to build up aker bp, to do some mergers and acquisitions. Do you see similar opportunities right now, assets that look attractively cheap . Guest i think it is too early. Also, the mma markets has more. I think it is wait and see models. Most organizations for the time being, but going forward, our expectation is consolidations both in the Production Industries and in the oil service industry. Core business to experience transactional activities to turn this crisis into an opportunity. Briefly, can i ask you about your lobbying of the norwegian government . They want to make changes to the petroleum tax. Are they listening to the industry . I know you and others in the industry have been calling for change. And a sign the government is listening to you . Guest yes, definitely. Contacthad a lot of with the norwegian government and also the opposition in parliament. Most Political Parties in norway acknowledged the need for initiatives to stimulate new activity and in the Norwegian Oil and gas industry. Aboutscussion is more the taxd of changes to regime in norway will be most to stimulateorder new investments and more activity. Hopeful that we will be stimulusonclude a package do in the course of may order tohis year in facilitate more activity. You very much for joining us. Oyvind eriksen the aker ceo. That is it for the European Market open. The European Markets are open to the upside, up by around 0. 5 in france. It is jobs day in the United States, so look out for those numbers. This is bloomberg. Damage assessment. Economists expect todays payroll report to show 22 million job losses, taking unemployment levels to the highest since 1940