Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240713

Bring a malaria drug to u. S. Patients. Global equities make gains amidst tentative signs of Risk Appetite. Surges as President Trump says he may intervene in the price war. Welcome to a daybreak europe. We have seen 30 Central Banks cutting rates this week. 1. 5 trillion dollars of fiscal stimulus pledged worldwide. We have started to see stability in the market. Asian equities, excluding japan. Yesterday, we did not see limit up, limit down circuit breakers. In fact, we saw a little green on the screen, futures are dead flat. We have not yet broken the christmas low. European futures are firmly in the green and darl are dollar weakness is the focus. The fed starts dollar swap lines with nine more Central Banks and concerns around the lockdown pushed the dollar lower. Most beaten up currencies are catching a little bit of a bid. Oil record search yesterday as President Trump says he may intervene. Gold is higher and catching a bid, heading for its first backtoback weekly loss since september largely on dollar strength. Italy has surpassed china with the most carina coronavirus deaths. With europe the oedipus center epicenter of the outbreak they have thousands of cases of the virus joining us is maria tadeo from brussels. Give us a sense of where we stand now. The numbers out of italy are very dramatic and surpassing china. Whats interesting here is the Italian Government has already conceded that the lockdown will have to be extended. The italian premier is thinking that will have to be extended and he has given a date for that. It means we could be in for a long time of lockdown. Insisting thisis really is the best way to contain the virus, but the numbers are interesting for two reasons. One is the fact that italy is running ahead of everyone else, so the market is thinking that when italy peaks, the rest of europe will peak, but we are not there yet. When we look at france and spain, they are all seeing the outbreaks increase. Emmanuel macron said he would not rule out lockdowns throughout 2020, which goes back to the point we talked about your about. You are seeing stimulus and banks step in, but europe has completely shut down for business. Nejra thank you so much. Lets turn to california, where gavin newsom has ordered the state to stay isolated at home. It marks the most stringent effort to stop the spread of the virus. Talk us through the steps states are taking. We are seeing stringent steps from coasttocoast. California is putting pressure on the u. S. Dollar. Millions of residents under a state in place order. Andrew cuomo is saying nonessential staff need to stay home and 75 of businesses to be working from home. We know a lot are staying at the american state department, and the most unprecedented move i have seen ever, level four for travel advisories. It means do not travel. Usuallyel four is reserved for countries in a state of war. That is what the government is telling all of its citizens. Do not travel abroad. A very stringent effort out of the u. S. Today. Nejra lets talk about oil as well. A record jump as President Trump hinted at a role in the price war, what exactly what would he do . Annmarie pretty astonishing what we are seeing. When President Trump gives these daily briefings, he was asked about oil and said he has a lot of power over the situation, and critically, said he will intervene at the appropriate time. But what is the appropriate time . I think he is trying to keep these prices at maximum capacity, saudi arabia is an ally of the government. He is potentially giving them leeway to swamp the market and put pressure on russia. This can be interpreted as a win reat rw iyadh and moscow. Texas is considering curbing their own production, which would be huge for them. Nejra thank you so much. Global coronavirus deaths have crossed 10,000 according to john hopkins data. Is the us for the hour managing director of jenison associates. What a week it has been. We are starting to see a little calm come back today. Are investors and markets perhaps underestimating the length of the impact of the coronavirus . Do you get the sense people are assuming this will still be a fourmonth affair . No. The wild ride we have seen this week at last week suggests that the market is struggling to price how long this lockdown will be, and indeed, what kind of return to work there would be on the others. Other side. People are going back to work in parts, it is many just 25 or 50 . I think the market is trying to work out what things will look like on the others, as well as the duration of these lockdowns and potentially what Lasting Impact these lockdowns can have. The point i am making though, is it too early to look to the other side . I have seen commentary that things might not get back to normal for three or four months. We have seen a slide in bond yields and no treasuries right now are giving us the signal with japan closed. But our markets underestimating the risk this could a depression . I would be surprised if any major participants in the markets are underestimating that risk. What they are seeing in Many Industries and countries is not a recession. Would be two quarters of back to back, 1 growth. What we are seeing now is a hiatus in activities. In certain cities around the world, we are seeing volumes dropping by 1890 19 . In some cases, the activity is zero. Im not sure even using the terminology recession works in this environment. Where using old terms to describe something very new. This is not a recession, this is a complete hiatus in activity. But i dont think investors are underestimating that. We are still in a situation of complete lockdown, then we have got many other problems. But assuming this is a regular virus cycle, if it follows that normal trajectory, then surely some time in the months to come, we will be returning to work. The question becomes, what will things look like on the others other side . Nejra what position should investors be taking . We are fundamental Equity Investors and the way we are is theg about this recovery from what we are going through, i struggle to use the word recession, that the recovery will not be even and of the winners going into this downturn be the winners coming out as well. Beenu consider what has going on over the last few years and what is happening on the theturn, companies in streaming sector, Companies Helping other Companies Move to the cloud, remote work, unified communications, there are a lot of sectors doing really well in the downturn. There clearly may be some slowdown. Anyway, but onh the way out, we would argue these trends accelerate. Winners, the dollar has been a clear one. We are seeing softness in todays session. The fed is extending to nine more Central Banks and news around the california lockdown is putting pressure on the dollar. How concerned are you about the funding squeeze we see . A i think the dollar is greater barometer of stresses and strains in crossborder finance. That was the case with the original credit crisis in the u. S. We actually saw the dollar strengthened when the crisis happened. We wont know for several weeks who is really being squeezed, but that spike in the dollar we saw is a clear tell that there are great strains on that system. I think the new lines that have been put in place, the injections of liquidity, things seem to have calmed down, but i would regard the dollar as a barometer of, is the Financial System functioning smoothly, and are the wheels continuing to move as the authorities would want . His is not a financial it is an unusual, extraordinary biological threat. Of Central Banks and the Financial System is to at least continue to function smoothly so it can continue to provide liquidity to the real economy. Garage raj stays with us for the hour. Has overtaken china at the country with the highest death toll since the virus, topping 3004 hundred fatalities as the lockdown continues europe remains the epicenter with france reporting a rise in deaths. The coronavirus has struck at the heart of postbrexit trade tops with both sides negotiators in isolation. Thursday, his counterpart announced on twitter he had tested positively for the disease. Ordered all ofs the States Residents to go into isolation, the most stringent measure in the u. S. So far. It allows people to leave their homes for groceries and medicine but otherwise requires limited social interaction. Businesses deemed unessential are to be shut. President trump has waited into the oil price war, saying he could intervene. This is as he faces calls from lawmakers. Yesterday saw the biggest spike in oil on record, following the lowest estimate prices in 18 years. Says he isandy hall happy to be out of the business, describing the business as broken. Global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Coming up, smashing records as the Global Market rout intensifies. Investors fled highgrade debt at a rignet pace breakneck pace. We have your chart that matters next. This is bloomberg. Nejra this is bloomberg daybreak europe. We are seeing a touch of Risk Appetite coming back into markets today. Green on the screen in asia, futures are positive. We have not yet closed below the christmas low in the u. S. Cash treasuries close in japan and dollar weakness is the story of the day after an 8 rally. To gain after a record rebound yesterday. Central banks globally have cut. The bank of england cut to a record low of 0. 1 . It also expanded its qe program. Raj from jenison associates is still with us. You said earlier that terms like recession dont apply what we are seeing now, because what we are seeing is so unprecedented. 30 Central Banks cutting this week, the boe one of the latest. Have these been at right policy moves . If im honest, im in the camp does not entirely believe Interest Rate cuts make much difference in this environment. This is not a credit crisis this is not the result of the crisis. Essentially, the Financial System is trying to ensure functioning to support the economy as much as possible. The provision of liquidity, the buying of papers, the latest announcements over the last day or so, this is helpful because it provides a bid into parts of the market moving interestrate liquidation trade. Thats important for central inks, because their role this is to ensure the smooth functioning of markets as they continue price discovery, but not necessarily supporting price levels. It is not necessarily the central function of Central Banks. Far,e risk of going too thats ok, because you can always take rate cuts back. But provisions of liquidity has been the most important thing. Nejra thats in term of providing smooth functioning of the markets. But when we look at the real economy, a lot of the thinking is that its not going to do anything to stop a recession or depression. The thinking is that when we get out the other side, maybe the recovery will be quicker. . O you buy into that argument absolutely. The fiscal packages have been described as stimulus packages. I think that vocabulary is somewhat out of date, because we have never had to deal with a situation like this. I would call it a mitigation package. The question facing policymakers is, how can we best mitigate the impact of the virus and is lockdown on the supply capacity of the real economy. The simple fact is that we just cannot tell if, when we come through this, will people travel less as a matter of course . Portionre always be a of the workforce working from home . Given how technology has improved and firms are adapting, will behavior and work patterns change fundamentally . We just cant tell at the moment. Is what policymakers can do ensure that good firms and potentially serious trouble through no fault of their own are offered some degree of assistance to help them bridge that gap to the other side. Raj from jenison associates stays with us. Euro stoxx are hitting a record high and the china gauge is extending its gains the most since february. Coming up, uber shares have surged you because estimates. Our interview with the ceo next. Nejra this is bloomberg daybreak europe. Uber Ceo Dara Khosrowshahi spoke to bloomberg companys ability to withstand losses posed by the coronavirus. Dara the education scenario that we outlined assumes that the world will be down 80 for the rest of the year. What we are seeing with hong kong is there was a big hit. But once the Health Authorities get control of the situation, life does return. In hong kong, we have had people , using ourto Work Services as they always have. That thef we assume Health Authorities, the cities, the governors all over the world are making the hard decisions and necessary moves to control the virus, that life will come back. , theyce life comes back will start using uber. In hong kong, a trough and a slow recovery. Theres no reason we want see that, even in a circumstance where you are down. We are still going to have 4 billion in clash cash. We think its highly unlikely, that we want to make sure our investors know that we are planning for the worstcase and operationalizing to make sure we are ready for everything. We obtained a memo you sent earlier this week, which said yes it is scary, that what it is not is a full financial meltdown. Variable and you can manage your business day by day in a way unlike any other company in the world. That said, the virus is new in the lot is not understood. Based on what you have seen, is ridesharing and food delivery safe . That, assuming the right steps are being taken, absolutely. Model, andsetlight we are seeing ridesharing come back. , thenple get back to work ridesharing is absolutely safe and the variable cost nature of it that we have makes our business quite resilient. Food, we are, on seeing food, especially in many countries where restaurants are not shut down, food is holding in there is strong. In very strong. We have this network taking People Places or bringing things to their homes, and more than ever, it will be important to bring foods in etc. To peoples homes, so we actually think the food business is a great stream diversifier. Safe,nk they are especially because we have the best Balance Sheet in the business. Customerst about the who are scared to get in the car or get the virus . Would you put your kids in an uber . Dara these are deeply personal decisions and it depends on the circumstance. You cant have a global answer for that. I live in san francisco, and today i would not put my kids in an uber. The governor has physically asked for us to lockdown. App,u look at the uber when you open it in san francisco, we actually put right there asked the person, is this a trick that you really need to take trip you really need to take . Not many would say, are you really sure . Responsibilities we think the First Response billy is for everybody to step up and we are doing the same. Nejra good morning from london. This is bloomberg daybreak europe, and these are todays top stories. Italy has surpassed china as the country with the most coronavirus debts. In california, the states governor orders all residents to go into home isolation. Cases near 200,000,005,000 worldwide. President trump says 235,000 worldwide. Gains. Ocks make as thets a record, president says he may intervene in the price war. Lets get to the markets, off to a wild week across asset with lots of correlations. Limit up, limit down in futures. The are seeing a tiny bit of stability. We see Risk Appetite futures, gains for the first time in eight days in asia overnight as well. Dollar weakness, the fed extending its swap line to nine Central Banks, but also the news of the locked down in california putting downward pressure on the dollar. The aussie and the pound leading the gains in g10. We are also seeing Oil Extending Gains after a record 24 jump yesterday with President Trump saying he might intervene in the market. Gold heading for its third actor back weekly loss since september. China kept its benchmark rights steady. Says most china of the country is considered low risk, and he is calling for a return to normal. Joining us from beijing is bloombergs china correspondent Tom Mackenzie. Great to have you with us. This came as a surprise as a decision to keep the lpr on hold. What are the implications, and what might happen next . And as a signal from the peoples bank of china that they are not going to follow the signal of other Central Banks around the world, including the fed, in its aggressive rate cutting move. The pboc taking a more targeted approach. Monday, they disappointed the markets because they pumped in about 14 billion u. S. Using this medium term lending facility, but they did not lower the rates. They kept them at 3. 15 . Traders expected a move lower by about five basis points, but we did not get that. They kept it 4. 05 . It underscores this approach from the central bank in china of targeted measures and more emphasis from policymakers on the fiscal side. There is also consideration about the pressure of the Banking Sector is under in china already. They have been leaned on by the Central Banks to give some of the loans to corporate. Playingpart of what is into the equation for the pboc. There are implications for the growth in china. We had the terrible data out over the weekend, and now a survey i bloomberg suggests economists see 4 growth for china, the weakest since 1976. That was the last year of the cultural revolution. The implications are significant. If they change tact data continues to be very weak and we have the supply Chain Disruption in other parts of the world. For the moment, the pboc is taking a more conservative approach. Nejra the state of u. S. China trade relations seems to be the last thing on anyones mind at the moment, but one thing a lot of people have noticed is stability in the yuan throughout all this, particularly with the rampant strength in the dollar. What is the state of play in that situation . More broadly, the currency was part of the phase one deal. That is consensus here in china that they would try to ensure the currency road remained relatively stable, that they would not interfere in the wake of the trade war. That feels like a long time ago, that phase one deal. Ise significantly, this about a competence move by officials here in china. They want to ensure there is not more pressure on the Financial Systems. They want to keep the currency broadly stable. In terms of relations between these countries, they continue to corrode and weaken, the ties between the u. S. And china. You have President Trump recently, yesterday, blaming china, saying they could have kept this disease under control, nipped it in the bud in the early stages of the outbreak. There is evidence to suggest that china did cover up covid19 in december, that they could have done more. Equally, there is a strong argument to suggest that the u. S. Has been flatfooted in their response. We have both leaders resorting to nationalism. Both leaders have their backs against the wall and they are lashing out against each other. The ties between countries are getting even worse. Nejra bloombergs china correspondent Tom Mackenzie in beijing. Associates ison still with us. We have had a lot of people this week say that china is out ahead of other economies in dealing with the virus, and that is something to be positive about. How concerned are you that while things looked to be improving now, we could see new waves of coronavirus through china and further cycles of the problem that we have seen since january . Raj absolutely. , andis a new phenomenon even epidemiologists dont know for sure whether we will see recurring waves of this virus coming back in slightly mutated forms. I believe from some of the companies that analysts have been speaking to at jenison, many of the corporates are going back to work, but not treating it as business as usual. There are portions of the workforce going into factories and offices, others working remotely or staying at home. A fairlyms to be gradual return to work, very wary of the risk. The data at the moment suggests that china is through the worst of it and not reporting any new cases at the moment. From that point of view, the rest of the world should be focusing on china and looking to see what could events look like, what could the situation look like in a few months time in europe, in the u. S. , as we get through the locked down period. If investors start to expect a peak in cases in europe and the u. S. And elsewhere in the western world, will that be enough to bring powerful Risk Appetite to the markets . Raj it is very hard to say. I do believe that seeing the rate of change of new cases and new deaths from the virus will be a signal that we can then start to address that question you and i were talking about a few minutes ago, about how long this lockdown period could be. That is one of the biggest uncertainties that investors are fretting about at the moment. Would it be a strong recovery of Risk Appetite . Very hard to say. What with the recovery look like . Vshaped,e ushaped, or other letters that we are not thinking about . It is very hard for investors to predict. I doubt we will see a return to andal spirits, exuberance leveraged speculation. Maybe that is not such a bad thing. Nejra there is a column out that says looking out for number one is no way to beat the virus. He is also talking about investors. We are seeing a lot of herd behavior this week. Do you expect that to change at all in the coming weeks . Raj i think the point and i have not seen the pace directly the piece directly. This is our first real pandemic in this hyper connected globalized system. Trying to treat parts of the system independently of the rest is not a very good strategy. I think we can all agree with that. The interdependencies between the u. S. And china are there for all to see. Of the countries have started to take shots at each other. It does not help address the fundamental issues of controlling and containing the virus. Getting back to a sustainable recovery. Returning mutations of this virus in months and years ahead, how do we prepare to deal with that . How wellequipped are we collectively as a global system to deal with that . It really has to be global, as we have seen the last few months. Country is entirely isolated in this hyper connected Global Economic system. Nejra raj shant stays with us. Lets get to the first word news. Italy has overtaken china as the country with the highest recorded death from the coronavirus. The number of italian fatalities has topped thre 3400 as the lockdown continues. Europe remains the epicenter of the disease, with a 41 rise in deaths. The coronavirus has struck at the heart of postbrexit trade talks between britain and the eu, with both sides top negotiators in isolation. David frost is isolating himself after showing symptoms of the virus. This is according to a british official. Counterpart announced he tested positive for the disease. Californias governor kevin newsom has ordered all of the states residence to go into home isolation. The move is the most stringent in the u. S. To curb the virus. It allows people to leave homes for groceries or medicine, but otherwise require they limit social interactions. President donald trump has waded into the oil price war. The u. S. President said he could intervene. Callss he faces from lawmakers to help the domestic oil industry. Meanwhile, oil trading legend says he is thankful to be out of the business. He describes the market as broken. 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. Coming up, conflicting messages. Trump touts a malaria drug for treating covid19 patients, but the fda says no such approval has been given. Thats next. This is bloomberg. Nejra this is bloomberg daybreak europe. Lets get to the risk radar. It is the first time this week that we can talk about any meaningful risk on. Green on the screen in asia. Japan is closed. Futures on the front for in the front foot in europe and the u. S. We have not broken through the loafer equities. Yesterday. Hted futures indicated we might see the same area dollar weakness after an 8 surge. To climb after a record jump yesterday. Sticking with the. Top story, the coronavirus. U. S. President donald trump has urged the food and Drug Administration to use a decadesold malaria drug as an experimental treatment for patients with covid19. Normally, the fda would take a long time to approve Something Like that, and it was approved very quickly and is now approved. By prescription. Individual states will handle it. They can handle it. Doctors will handle it. Great. It is going to be however, in a conflicting statement, the fda says the drug has not been approved for coronavirus treatment, but u. S. Doctors can prescribe any drug at their discretion. The israeli maker of the drug is planning to donate 6 million tablets to help u. S. Hospitals meet a possible surge in demand. Our reporter joins us from berlin. Great to have you with us. Where are we in the search for a drug to treat coronavirus . Untangle the conflicting messages we got yesterday. Reporter we are almost at the beginning. Not quite at the beginning. Uniqueens when you see a pathogen like this. It is common that drugmakers will look to see what medicines we have already that might be helpful. The antimalarial drug, Numerous Companies make it. There was a review in march that found there was little proof about whether or not it would work. It needs to be looked at and reviewed before it can be prescribed on labels for patients. Numerous other studies going on of potential therapies. There are more than 100 Clinical Trials that have already started in china of potential medicines. And a separate search for a vaccine going on as well. Howa on the vaccine, potentially far away are we from a vaccine actually being found . Reporter i have heard reports from companies that next year would be realistic. Probably another while yet. Naomi bloombergs kresge, thank you for joining us. Raj shant is still with us. Many people have had to become Health Experts through this crisis rather than investment experts. What kind of steps can investors take on that front to actually get ahead right now . Say that the most productive thing to do right now , if you are not a Health Expert or not able to predict exactly how long the current epidemic or pandemic will take, is to focus on the longerterm and think about longterm structural winners in the economy. They are generally the winners coming into this environment, and we expect they will recover the best and share the best longterm growth over the next several years. If one can afford to take that longerterm view, there has been a very indiscriminate selloff with a vast amount of the market up sharply. That does throw opportunities for the longerterm. Back fromo step the intensity. There are a lot of issues they are facing. They can focus on the three years out, five years out. What are going to be the structure winners . What are going to be the secular winners in the markets in the economy . That is a productive way to look set ones, and can thinking on a more profitable longterm mindset. Nejra raj shant staying with us. Coming up, oil on the move, extending its gains after a record jump yesterday, 24 . President putin will discuss. This is bloomberg. Nejra this is bloomberg daybreak europe. Looks set to war continue. Russian president Vladimir Putin will refuse to submit to with the kremlin sees as oil black male from saudi arabia. That is according to bloomberg sources. Annmarie hordern is in new york with the latest. How low could oil go . Some traders are seeing the price going below 25 a barrel. Yesterday, we had a record jump after comments from President Trump. Annmarie as you mention, it can go significantly lower than what the street is saying. F ge is saying 12 a barrel. We could see single digits. What youre hearing is this price war is not abating. Moscow is saying everyone is waiting for riydh or russia to blink riyadh or russia to blink, and it wont be moscow. Some are saying he has a strong man. This is a cultivated image putin has. He will not back down to anyone. He has been at the helm for two decades. He has been through crises like this, and they have built russian reserves for this moment. They did not expect a be in this work, but now they are in it, they expect they can last the longest. Their budget is for just above 40 a barrel. Already, it is starting to hit them. We can see the ruble is weaker. They will have to draw on their reserves to maintain the economy. It will push them likely into recession. Are themurray markets not convinced that President Trump will be able to support the price . Annmarie texas is the third biggest producer in the world. If anything, supporting the price could be what they could be considering. Amassed massive production, the third biggest producer after russia, after saudi. That could up the price. President trump weighing in. If anything, he could be the one to potentially strike a deal between riyadh, because that is a strong ally of the u. S. Government. The most critical thing President Trump said yesterday is he said he has a lot of power in this situation and he will intervene at the appropriate time. When is that appropriate time . We will have to wait and see. He may be giving saudis more room to put pressure on riyadh. If everyone is saying we are headed into recession, lower gas prices could help consumers. Nejra annmarie hordern, thank you. Raj shant from Jennison Associates is still with us. I have heard conflicting things about how the oil price plays into the rest of the market here, particularly some people saying even if we have a lower oil price, they may not give the support to consumers like it has in the past. What is your thinking on the correlation between oil and the rest of the markets . Lower oilthink a price is a transfer of wealth from Oil Producers to oil consumers. And to the extent that helps mitigate some of the harmful impact of the lockdowns, of the pandemic, i think that is useful. But clearly, that is not going to make people travel to work when they are in a city in lockdown. There is a very limited benefit to the oil consuming countries and sectors. More fundamentally, the oil stocks and Commodity Companies in general, which have suffered badly in this downturn, this hiatus in Economic Activity around the world, there is a question in my mind whether these companies are offering undifferentiated products, essential commodities that are the same as their rivals, are really the way for investors to generate longterm wealth accumulation. Where businesses have differentiated, whether they are doing something forwardlooking, innovative, that is where investors ought to be spending more of their time and energy, rather than the more backwards looking commodity type sectors where if you look back over the last 20, 30 years, once we have had these wild swings, those companies have been unable to generate strong longterm returns for their investors. We getraj, if and when through this and look at the other side and start to look at opportunities, where do you think the most powerful repricing will be across asset classes, if risk comes back . So i willld say when, be more optimistic then you. When we do recover from this, i think there is some really great Global Growth companies out there that are generally in the more innovative spaces of the economy. Whether it is cloud facilities, mobile commerce, ecommerce, these companies are generally winning shares from other competitors already. Gain recover, that share will accelerate. If you look at the selloff, it has been such a blanket selloff. They have come down as much as everything else. Nejra thank you so much for joining us. Raj shant, managing director of Jennison Associates. That is it per bloomberg daybreak europe. The open is next. It looks like we could open in the green. U. S. Futures on the front foot. The dollar weakens. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Matt welcome to bloomberg markets. This is the european open. I am matt miller live from berlin. Today, the markets stay relaxed. Stocks see some respite of his global at as global assets game. The cash is less than an hour away. Matt lets get your top headlines for you on the bloomberg terminal