Transcripts For BLOOMBERG Bloomberg Markets European Open 20

Over two days, as the biggest oil etf dumps short dated contracts once again. We will speak about this and earnings with the bpce l, Bernard Looney, coming up shortly bp ceo, Bernard Looney, coming up shortly. Aboutl speak to the ceo the impact of coronavirus and the business shortly. Get to some numbers coming through this morning. We have got numbers coming through from bp this morning. They are talking about how the industry has been hit by supply and demand shock. They remain committed to delivering their net zero ambition. We heard about that back in february or so from the company, from Bernard Looney, the relatively new ceo at the helm of dp. First quarter dividends bp. Dividends, so maintenance of that dividend at least at the same number. Bp saying it had around 32 billion of liquidity available at the end of the quarter. The bp ceo, we are taking Decisive Action to strengthen finances. We have heard about how they will not be taking government money, they want to get through this under their own steam. They will not be doing any layoffs in the next few months. Interesting to get those details on how they will take Decisive Action on the cost front, on the Capital Expenditure front. What does that mean for the balance sheet, asset sales, of course, how are those going . And the role of these big etfs in oil prices. All of that very topical when we speak to the ceo. Gearing to remain above 20 30 target range into 2021. We will be speaking to Bernard Looney at 7 30 a. M. U. K. Time. Lots to discuss with him. Lets get a bloomberg firstorder news update, some of the top stories we are covering. Much of europe is moving to loosen coronavirus restrictions. Spain and france are testing out plans to ease their lockdowns. They will follow germany, austria, and the netherlands in relaxing containment was. After more than 100 rules. After more than 100,000 deaths on the continent, they are wary. The u. K. Urging britain to stick with a lockdown for now, as scientists are drumming up options for easing movement restrictions. They are considering how to gradually unwind for businesses. The coming months are fraught with uncertainty. The coronavirus is here to stay unlikely to become seasonal. That is the conclusion of chinas top scientist at a briefing in beijing. They say it will likely come back in waves. The new virus is different from sars, they say. The high number of asymptomatic cases makes a harder for it to be contained makes it harder for it to be contained. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. We have got the earnings season coming thick and fast the season this morning. Stocks mixed in asia on tuesday. U. S. Futures dipping after a modest rally overnight. Crude oil extending sharp losses from monday. The west Texas Oil Futures in new york slumped amid a glut of crude and selling. Held mondayss gains and the dollar edged up. Lets get into the markets with mark cudmore, who joins us now from singapore. It seems the overall sense in markets, we are not seeing a great deal of risk aversion to that oil story. The oil story clearly still a big part of what is going on here. It doesnt seem as if we have reached the end, with this big etf still having the power to trash oil prices in the United States. I think thats an absolutely correct way to put. It is a big story. It is not really a driver. What i mean by that is that the fact that oil prices are still having these crazy swings. It shows how broken the overall market is at the moment, how things are changing, how distorted certain markets are becoming due to the changes in regulation, changes in consumer behavior. We have now gotten use these kind of swings. There was once a time when a 10 move would have been the biggest story of the day. Now, we barely even notice. That shows we are in a fragile market, which to me is a sign that we are not yet ready for a sustained recovery. I understand the other bill may skew in a more positive sense. Anna in terms of that sustained recovery, as we look at European Countries increasingly talking about how they are going to break the lockdown conditions, how we are going to get back to some sense of normalcy, even a very changed normal, in europe. How is that being reflected in markets . We have seen a big rally since march, havent we . We seem to be on hold this morning when it comes to equity markets. We are very much on hold at the moment. There is a slight wonder about whether the actual beginning of reopening in europe is almost buy the rumor, sell the fact event. People are very nervous about how this reopening will go. Will it see infections, a second wave, come back . Newsd have some other good during the weekend. Generally, the narrative around the letters. One reader point the virus. One reader pointed out that buying high street stocks outperformed yesterday versus the big tech names. Virus optimism is definitely the theme at the start of the week. Whether it sustains, we will have to see. Anna we have heard a lot from the earnings season so far. A fascinating set of earnings reports coming through from oil, very topical. We also get big banks reporting. We have heard from ubs, hsbc, Deutsche Bank also. The level of bad debt that banks are going to be taken to buy this crisis, clearly something that is going to capture the imagination of investors, beyond those just exposed to the Banking Sector, im assuming . Yes. Banks are such a critical sector of the economy. The fact that they are still with whatsre happening generally in wealth disruption, balance, bad loans. The numbers have already got so large, so shocking, that the marginal impact of the changing numbers now is beginning to lose its shock. What can the european banks come out with today that is going to change the narrative of what the u. S. Said last week . If they produce a very low loan provisions, people will write it off. If they boost very dramatic ones, its going to be like, well, we knew this last week. Oil volatility, stimulus programs, moves in the stock market, it is in a whole world it is a whole new world of parameters. It is harder to shock and harder to know with the marginal bit of information. Anna thanks very much. Mark cudmore joining us from singapore. If you want to get in touch with the markets live team or tv team , tv is the function to use. Sticking to the script. Novartis keeps its 2020 forecast intact despite the coronavirus pandemic. We will speak to the drugmakers ceo, vasant narasimhan, next on bloomberg. Anna welcome back to Bloomberg Markets european open. 50 minutes to go until the start of the european session. Expecting a fairly flat session for European Equity markets. Cominget to the number out of novartis and a really important conversation. Novartis keeping its 2020 t, as theintac drugmaker thinks key treatments will help into whe help it to weather the coronavirus impact. With us is the ceo, vas narasimhan. You report your numbers this morning. When we are looking at how well you had done the last quarter, do we need to consider any stockpiling that might have occurred on some of your products . Prescriptions being made a little longer in the current climate . Is there some sense that some of the future sales might have been brought forward into this quarter you are reporting today . As first, thanks for having me on the broadcast. We had a strong First Quarter. In those numbers, we did have approximately 400 million in sales of socalled forward purchasing, primarily in europe, across a range of products. Even when you strip that out of our performance, you still saw performance of 9 sales growth and 22 core operating Income Growth with healthy margin expansions in Innovative Medicine driven by our for range rangewth drivers full of growth drivers. Operationally, we are performing well. Assumingike Healthcare Systems come back to normal in q2, we can maintain fullyear guidance. Anna thats an interesting assumption. What about other conditions away from covid19 . Are you sensing that patients are not coming forward, that other conditions are not being treated in the same way that they would normally be . Is that a threat to your business . First, from a Public Health standpoint, it is very concerning that right now there is a great deal of a deferral of important care happening across the health care system. We see that across Health Care Systems around the world, depending on the therapeutic area, upwards of 50 or 60 of physician visits not happening as normal. We are hoping now, as restrictions start to get eased, that physicians start to have more capacity and we will see patients come back in. It is critical for their own health and critical for them to get the medicines that they need. What has been mitigating that for us right now and allowing us to have some buffers is the fact that Health Care Systems have enabled patients to have longer script lens longer prescriptions, as well as higher compliance levels we are seeing around the world. I think all of those things have mitigated the topic thus far. It is important for Health Care Systems and our business to return to normal soon. Anna you said in your released today that you have had some trouble recruiting for some new trials, recruiting patients. Can you give us any examples of this . Which drugs in particular may be slowed down by this . Vas you know, when you look across our Clinical Trials portfolio, we are actually seeing very good performance. Submissions are on track. In the coming year, we feel like all of rt milestones will happen on time. The real issue our key milestones will happen on time. Andl issue has been continuing enrollment of studies that are ongoing. We are doing our best to mitigate that. We have been able to shift studies to china and asia, where there is the ability to continue to enroll at a more normal pace. We are using technology to manage patient flows and keep our trials going. Ournotable example is, with orion study, we have had to pause in the u. K. , as we wait for the system to stabilize. We expect these to be shortterm effects. Longer term, we expect our trials to stay on track. Anna on the subject of covid19, you are testing some of the drugs that you have to see whether they can be useful in this fight, as many Drug Companies are, of course. Quine, a very old malaria drug. Do you have a sense of whether this will be useful in the battle . Vas when you look across the sector, it is kind of astonishing when i think about. We have over 500 international Clinical Trials happen, over 170 drugs in some stage of preclinical or clinical evaluation. In the near term, what we will be able to find out is on clinical drug repurchasing repurhasing posing. The important thing is that we need randomized, controlled data, which is adequately powered to really identify if these drugs are having the effect. That takes time. Those studies take time. I expect us to have a significant number of welldesigned Clinical Trial readouts engine, july readouts in june, july timeframe. There has not been a properly powered, randomized, controlled study to really determine if the medicine is having the expected benefit. We are running a steady, a largescale study supported by the u. S. Fda and the u. S. We are supporting about 13 investigator initiated trials, which are much larger, to look at the medicine in a variety of different settings. We are doing other studies on other medicines, as well as a range of other drugs through investigators. We have to wait for the properly controlled, randomized, largescale studies to read out before we know if these drugs are having a positive effect are not. Anna ok, so we need to wait for the results on those. In terms of the vaccine, and i know nobody has a quick on that, we spoke to some Health Offices who say that expectations for the vaccine this year is too much to expect. Do you think it can come this year . Vas you know, i think it would feat if weishing were able to get a vaccine already out this year. Given my own experience spending decades working on vaccines, it does take many years to get a safe, highly effective vaccine. What gives me hope right now is groups working on vaccines are leveraging safe technologies, the u. K. Oxford group, others trying to leverage safe technologies to accelerate the ability to use some of these vaccines. Could we have vaccine use in a controlled setting in Clinical Trials . Certainly. I think broad scale use, we have to wait for the data to determine if we have a safe, efficacious vaccine. That typically, even in an accelerated timeline, would take 1824 months. Anna are you concerned that some countries in the west are relaxing their lockdown measures too quickly . Clearly, Different Countries are doing things very differently. We are seeing a move towards relaxation of some of the lockdown rules. Are we risking a second peak, essentially, in europe . Vas i have been impressed by Public Health systems now that they have the data. I think they are being very datadriven in how they are approaching relaxation of restrictions. I feel good that countries are looking at the data, monitoring the situation, hopefully ramping up Testing Capacity and tracing any cases that they find, and then making datadriven decisions. We have to accept that we are entering a phase which is really exciting, which is exponential knowledge growth, exponential knowledge growth into Public Health, epidemiology, with the Clinical Trials i mentioned. As we have that knowledge growth increase, i think governments and Public Health agencies can make a informed decisions make very informed decisions. I feel good that we are making the right datadriven decisions today. We have to be willing to make the next datadriven decision if that involves, again, taking Public Health actions to limit an outbreak in the future. Yet, and it may be too early, do you see any longterm changes to the way your business operates are the types of businesses you are involved in . Will this pandemic leave a long term on your company . Longterm mark on your company . Vas this pandemic has opened our eyes to the possibility of socalled distributed work and how we can deploy Digital Technologies and data signs at scale. Most companies have used these technologies as an opportunistic approach. This has pushed us. There is a nice framework some Digital Companies talk about. Has pushed us into a world where we take the work we normally do in the office and try to do it a distributed way at home. What we aspire to now at novartis is, how can we redesign how we were completely given the fact that we know now we can put onto virtuale working effectively and have our supply chains run. We are asking ourselves, how can we redesign elements of how novartis works in the future to efficient,h more faster . Can we become a level three or level four digital distributed working company . That is certainly something now in our sights. Anna thanks very much for talking to us. We appreciate your time. That was the ceo of novartis joining us to talk about the results and the broader fight against covid19. Coming up, an etf selloff triggers big volatility. 11 per barrel. We will break down the details for you next. This is bloomberg. Welcome back to Bloomberg Markets european open. 35 minutes to go until the start of the European Equity trading day. Could see a sluggish session here for europe. Wti crude trading at 11 per barrel this morning, down nearly 35 since monday morning. It comes after the biggest oil etf in the world dumped its holdings in the june contract yesterday. They did that with the may contract. Joining us is Annmarie Hordern, who is in new york. Take us through the latest moves from this u. S. Out etf etf causing so many difficulties in oil markets. It has caused a lot of volatility. They are selling every single contract they have and moving them alongside starting in july 2020 and as far out as june of 2021. They are citing Market Conditions and regulatory requirements, but also, they dont likely want to be on the front month contract again. We are seeing other Financial Instruments to that as well. Brent trading below 20 per barrel. That contract expires on thursday. Different correlation on physical oil when you take on a brent contract to wti but it still could come under pressure this week. Anna talk to me about storage as well. The storage problems have been one of the underlying drivers of the price weakness. Storage is running out. A quick around the world look. What we are seeing on the coast of singapore and the west coast of the United States, these idling storage tanks, dozens of them floating with unused oil. We know the story with cushing, nearly full. Trump has been wanting to give some sort of lifeline to the industry. In south korea, their onshore storage is at capacity. The biggest facility in the Southern Hemisphere off the coast of south africa, earlier this month, it was full. We are really testing storage capacity. Anna Annmarie Hordern joining us with the latest in new york on the oil price. Next, we will speak with the oil theme. A new Credit Facility for bp. We will talk to the ceo, Bernard Looney<\/a>, coming up shortly bp ceo, Bernard Looney<\/a>, coming up shortly. Aboutl speak to the ceo the impact of coronavirus and the business shortly. Get to some numbers coming through this morning. We have got numbers coming through from bp this morning. They are talking about how the industry has been hit by supply and demand shock. They remain committed to delivering their net zero ambition. We heard about that back in february or so from the company, from Bernard Looney<\/a>, the relatively new ceo at the helm of dp. First quarter dividends bp. Dividends, so maintenance of that dividend at least at the same number. Bp saying it had around 32 billion of liquidity available at the end of the quarter. The bp ceo, we are taking Decisive Action<\/a> to strengthen finances. We have heard about how they will not be taking government money, they want to get through this under their own steam. They will not be doing any layoffs in the next few months. Interesting to get those details on how they will take Decisive Action<\/a> on the cost front, on the Capital Expenditure<\/a> front. What does that mean for the balance sheet, asset sales, of course, how are those going . And the role of these big etfs in oil prices. All of that very topical when we speak to the ceo. Gearing to remain above 20 30 target range into 2021. We will be speaking to Bernard Looney<\/a> at 7 30 a. M. U. K. Time. Lots to discuss with him. Lets get a bloomberg firstorder news update, some of the top stories we are covering. Much of europe is moving to loosen coronavirus restrictions. Spain and france are testing out plans to ease their lockdowns. They will follow germany, austria, and the netherlands in relaxing containment was. After more than 100 rules. After more than 100,000 deaths on the continent, they are wary. The u. K. Urging britain to stick with a lockdown for now, as scientists are drumming up options for easing movement restrictions. They are considering how to gradually unwind for businesses. The coming months are fraught with uncertainty. The coronavirus is here to stay unlikely to become seasonal. That is the conclusion of chinas top scientist at a briefing in beijing. They say it will likely come back in waves. The new virus is different from sars, they say. The high number of asymptomatic cases makes a harder for it to be contained makes it harder for it to be contained. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. We have got the earnings season coming thick and fast the season this morning. Stocks mixed in asia on tuesday. U. S. Futures dipping after a modest rally overnight. Crude oil extending sharp losses from monday. The west Texas Oil Futures<\/a> in new york slumped amid a glut of crude and selling. Held mondayss gains and the dollar edged up. Lets get into the markets with mark cudmore, who joins us now from singapore. It seems the overall sense in markets, we are not seeing a great deal of risk aversion to that oil story. The oil story clearly still a big part of what is going on here. It doesnt seem as if we have reached the end, with this big etf still having the power to trash oil prices in the United States<\/a>. I think thats an absolutely correct way to put. It is a big story. It is not really a driver. What i mean by that is that the fact that oil prices are still having these crazy swings. It shows how broken the overall market is at the moment, how things are changing, how distorted certain markets are becoming due to the changes in regulation, changes in consumer behavior. We have now gotten use these kind of swings. There was once a time when a 10 move would have been the biggest story of the day. Now, we barely even notice. That shows we are in a fragile market, which to me is a sign that we are not yet ready for a sustained recovery. I understand the other bill may skew in a more positive sense. Anna in terms of that sustained recovery, as we look at European Countries<\/a> increasingly talking about how they are going to break the lockdown conditions, how we are going to get back to some sense of normalcy, even a very changed normal, in europe. How is that being reflected in markets . We have seen a big rally since march, havent we . We seem to be on hold this morning when it comes to equity markets. We are very much on hold at the moment. There is a slight wonder about whether the actual beginning of reopening in europe is almost buy the rumor, sell the fact event. People are very nervous about how this reopening will go. Will it see infections, a second wave, come back . Newsd have some other good during the weekend. Generally, the narrative around the letters. One reader point the virus. One reader pointed out that buying high street stocks outperformed yesterday versus the big tech names. Virus optimism is definitely the theme at the start of the week. Whether it sustains, we will have to see. Anna we have heard a lot from the earnings season so far. A fascinating set of earnings reports coming through from oil, very topical. We also get big banks reporting. We have heard from ubs, hsbc, Deutsche Bank<\/a> also. The level of bad debt that banks are going to be taken to buy this crisis, clearly something that is going to capture the imagination of investors, beyond those just exposed to the Banking Sector<\/a>, im assuming . Yes. Banks are such a critical sector of the economy. The fact that they are still with whatsre happening generally in wealth disruption, balance, bad loans. The numbers have already got so large, so shocking, that the marginal impact of the changing numbers now is beginning to lose its shock. What can the european banks come out with today that is going to change the narrative of what the u. S. Said last week . If they produce a very low loan provisions, people will write it off. If they boost very dramatic ones, its going to be like, well, we knew this last week. Oil volatility, stimulus programs, moves in the stock market, it is in a whole world it is a whole new world of parameters. It is harder to shock and harder to know with the marginal bit of information. Anna thanks very much. Mark cudmore joining us from singapore. If you want to get in touch with the markets live team or tv team , tv is the function to use. Sticking to the script. Novartis keeps its 2020 forecast intact despite the coronavirus pandemic. We will speak to the drugmakers ceo, vasant narasimhan, next on bloomberg. Anna welcome back to Bloomberg Markets<\/a> european open. 50 minutes to go until the start of the european session. Expecting a fairly flat session for European Equity<\/a> markets. Cominget to the number out of novartis and a really important conversation. Novartis keeping its 2020 t, as theintac drugmaker thinks key treatments will help into whe help it to weather the coronavirus impact. With us is the ceo, vas narasimhan. You report your numbers this morning. When we are looking at how well you had done the last quarter, do we need to consider any stockpiling that might have occurred on some of your products . Prescriptions being made a little longer in the current climate . Is there some sense that some of the future sales might have been brought forward into this quarter you are reporting today . As first, thanks for having me on the broadcast. We had a strong First Quarter<\/a>. In those numbers, we did have approximately 400 million in sales of socalled forward purchasing, primarily in europe, across a range of products. Even when you strip that out of our performance, you still saw performance of 9 sales growth and 22 core operating Income Growth<\/a> with healthy margin expansions in Innovative Medicine<\/a> driven by our for range rangewth drivers full of growth drivers. Operationally, we are performing well. Assumingike Healthcare Systems<\/a> come back to normal in q2, we can maintain fullyear guidance. Anna thats an interesting assumption. What about other conditions away from covid19 . Are you sensing that patients are not coming forward, that other conditions are not being treated in the same way that they would normally be . Is that a threat to your business . First, from a Public Health<\/a> standpoint, it is very concerning that right now there is a great deal of a deferral of important care happening across the health care system. We see that across Health Care Systems<\/a> around the world, depending on the therapeutic area, upwards of 50 or 60 of physician visits not happening as normal. We are hoping now, as restrictions start to get eased, that physicians start to have more capacity and we will see patients come back in. It is critical for their own health and critical for them to get the medicines that they need. What has been mitigating that for us right now and allowing us to have some buffers is the fact that Health Care Systems<\/a> have enabled patients to have longer script lens longer prescriptions, as well as higher compliance levels we are seeing around the world. I think all of those things have mitigated the topic thus far. It is important for Health Care Systems<\/a> and our business to return to normal soon. Anna you said in your released today that you have had some trouble recruiting for some new trials, recruiting patients. Can you give us any examples of this . Which drugs in particular may be slowed down by this . Vas you know, when you look across our Clinical Trials<\/a> portfolio, we are actually seeing very good performance. Submissions are on track. In the coming year, we feel like all of rt milestones will happen on time. The real issue our key milestones will happen on time. Andl issue has been continuing enrollment of studies that are ongoing. We are doing our best to mitigate that. We have been able to shift studies to china and asia, where there is the ability to continue to enroll at a more normal pace. We are using technology to manage patient flows and keep our trials going. Ournotable example is, with orion study, we have had to pause in the u. K. , as we wait for the system to stabilize. We expect these to be shortterm effects. Longer term, we expect our trials to stay on track. Anna on the subject of covid19, you are testing some of the drugs that you have to see whether they can be useful in this fight, as many Drug Companies<\/a> are, of course. Quine, a very old malaria drug. Do you have a sense of whether this will be useful in the battle . Vas when you look across the sector, it is kind of astonishing when i think about. We have over 500 international Clinical Trials<\/a> happen, over 170 drugs in some stage of preclinical or clinical evaluation. In the near term, what we will be able to find out is on clinical drug repurchasing repurhasing posing. The important thing is that we need randomized, controlled data, which is adequately powered to really identify if these drugs are having the effect. That takes time. Those studies take time. I expect us to have a significant number of welldesigned Clinical Trial<\/a> readouts engine, july readouts in june, july timeframe. There has not been a properly powered, randomized, controlled study to really determine if the medicine is having the expected benefit. We are running a steady, a largescale study supported by the u. S. Fda and the u. S. We are supporting about 13 investigator initiated trials, which are much larger, to look at the medicine in a variety of different settings. We are doing other studies on other medicines, as well as a range of other drugs through investigators. We have to wait for the properly controlled, randomized, largescale studies to read out before we know if these drugs are having a positive effect are not. Anna ok, so we need to wait for the results on those. In terms of the vaccine, and i know nobody has a quick on that, we spoke to some Health Offices<\/a> who say that expectations for the vaccine this year is too much to expect. Do you think it can come this year . Vas you know, i think it would feat if weishing were able to get a vaccine already out this year. Given my own experience spending decades working on vaccines, it does take many years to get a safe, highly effective vaccine. What gives me hope right now is groups working on vaccines are leveraging safe technologies, the u. K. Oxford group, others trying to leverage safe technologies to accelerate the ability to use some of these vaccines. Could we have vaccine use in a controlled setting in Clinical Trials<\/a> . Certainly. I think broad scale use, we have to wait for the data to determine if we have a safe, efficacious vaccine. That typically, even in an accelerated timeline, would take 1824 months. Anna are you concerned that some countries in the west are relaxing their lockdown measures too quickly . Clearly, Different Countries<\/a> are doing things very differently. We are seeing a move towards relaxation of some of the lockdown rules. Are we risking a second peak, essentially, in europe . Vas i have been impressed by Public Health<\/a> systems now that they have the data. I think they are being very datadriven in how they are approaching relaxation of restrictions. I feel good that countries are looking at the data, monitoring the situation, hopefully ramping up Testing Capacity<\/a> and tracing any cases that they find, and then making datadriven decisions. We have to accept that we are entering a phase which is really exciting, which is exponential knowledge growth, exponential knowledge growth into Public Health<\/a>, epidemiology, with the Clinical Trials<\/a> i mentioned. As we have that knowledge growth increase, i think governments and Public Health<\/a> agencies can make a informed decisions make very informed decisions. I feel good that we are making the right datadriven decisions today. We have to be willing to make the next datadriven decision if that involves, again, taking Public Health<\/a> actions to limit an outbreak in the future. Yet, and it may be too early, do you see any longterm changes to the way your business operates are the types of businesses you are involved in . Will this pandemic leave a long term on your company . Longterm mark on your company . Vas this pandemic has opened our eyes to the possibility of socalled distributed work and how we can deploy Digital Technologies<\/a> and data signs at scale. Most companies have used these technologies as an opportunistic approach. This has pushed us. There is a nice framework some Digital Companies<\/a> talk about. Has pushed us into a world where we take the work we normally do in the office and try to do it a distributed way at home. What we aspire to now at novartis is, how can we redesign how we were completely given the fact that we know now we can put onto virtuale working effectively and have our supply chains run. We are asking ourselves, how can we redesign elements of how novartis works in the future to efficient,h more faster . Can we become a level three or level four digital distributed working company . That is certainly something now in our sights. Anna thanks very much for talking to us. We appreciate your time. That was the ceo of novartis joining us to talk about the results and the broader fight against covid19. Coming up, an etf selloff triggers big volatility. 11 per barrel. We will break down the details for you next. This is bloomberg. Welcome back to Bloomberg Markets<\/a> european open. 35 minutes to go until the start of the European Equity<\/a> trading day. Could see a sluggish session here for europe. Wti crude trading at 11 per barrel this morning, down nearly 35 since monday morning. It comes after the biggest oil etf in the world dumped its holdings in the june contract yesterday. They did that with the may contract. Joining us is Annmarie Hordern<\/a>, who is in new york. Take us through the latest moves from this u. S. Out etf etf causing so many difficulties in oil markets. It has caused a lot of volatility. They are selling every single contract they have and moving them alongside starting in july 2020 and as far out as june of 2021. They are citing Market Conditions<\/a> and regulatory requirements, but also, they dont likely want to be on the front month contract again. We are seeing other Financial Instruments<\/a> to that as well. Brent trading below 20 per barrel. That contract expires on thursday. Different correlation on physical oil when you take on a brent contract to wti but it still could come under pressure this week. Anna talk to me about storage as well. The storage problems have been one of the underlying drivers of the price weakness. Storage is running out. A quick around the world look. What we are seeing on the coast of singapore and the west coast of the United States<\/a>, these idling storage tanks, dozens of them floating with unused oil. We know the story with cushing, nearly full. Trump has been wanting to give some sort of lifeline to the industry. In south korea, their onshore storage is at capacity. The biggest facility in the Southern Hemisphere<\/a> off the coast of south africa, earlier this month, it was full. We are really testing storage capacity. Anna Annmarie Hordern<\/a> joining us with the latest in new york on the oil price. Next, we will speak with the oil theme. A new Credit Facility<\/a> for bp. We will talk to the ceo, Bernard Looney<\/a>. That is next. 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<\/a> 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. Anna welcome back to Bloomberg Markets<\/a> european open. Half an hour to go until the start of the European Equity<\/a> trading today. Lots of corporates reporting this morning, from the pharmaceutical sector, banks. Bp reporting adjusted net profits for the First Quarter<\/a>, beating estimates. The oil company moved to strengthen finances, including a new revolving Credit Facility<\/a>. Lets speak to the bp ceo, Bernard Looney<\/a>, who joins us. These are seemingly unprecedented times. You have said you will not tap the government money to help you get through this. Was that an easy, obvious decision for bp . Bernard good morning and thanks for having us. We are very focused on the moment at three main things. The first is protecting the health of our staff, particularly those on the front line who are providing the services that keep energy flowing and providing retail services, fuels, and products people need. Secondly, supporting the communities where we work. It is a very difficult time for the world. We are very focused, as a large company, on helping. Our people want to help and we want to help. Thirdly, we are focused on strengthening our finances and controlling the things that we control, capital cost, making sure we are shoring up our liquidity, strengthening that balance sheet. Anna with that in mind, was it an easy decision to decide not to tap any government sources of funding . What has driven that . Why decide not to take any of the help that is available . Bernard i think if we think about in terms of the actions, like the government here in the u. K. Has taken, to strengthen and protect the jobs, which was a quick, decisive move. Tohave taken a decision here not make any staff redundant for covid purposes for three months. We have taken the decision that we will, for example, not furlough workers. We believe that a scheme like that is not intended for a company like bp. There are other companies who are in a much more better off situation then we are worse off situation than we are. We are very focused on taking care of ourselves, our own finances. There are many lovers we have in our hands believers in our hands. Levers in our we are taking 2. 5 billion out of our cost base by next year. A believe we can get to breakeven of less than 35 per barrel next year. It is about controlling what we can control. You can get to a breakeven of less than 35. What will be the crucial lever you want to pull to get you down to those prices . Bernard great question. Abouteakeven in 2019 was 56 so going to 35 by next year i think is the right thing to do and will drive it lower. The Economic Uncertainty<\/a> here is immense. There very focused on basics of the business. Capital is obviously a huge lever for us. 15 billion, we will take that down to about 11. 5 billion. We will defer some expiration and appraisals, defer some retail growth projects, things we can control. On our cost base, we are big believers in the digital agenda, have been for quite some time. We have invested heavily. We will invest further. We believe we can take more out of automation and digitization. On agile, in terms of how we work as a team, we want to become much more integrated, much more agile, focused. We announced on february 12 that we would reinvent bp. Thats what this is about. We think we can take, as a minimum, two point 5 billion out of our cost base by the end billion out 2. 5 of our cost base by the end of next year. Anna we sit here with oil prices having just turned negative last week. I know you like to focus on the things you can control as a management team. Thats completely understandable. With oil prices as volatile as they are, does something need to be done to look at the structures in markets, the role of etf, for example, to give a little more predictability . Is that something you are not thinking about at this point . Bernard i think we have all given up trying to predict the price of oil. I think we learned that early in our careers. Weve got gas prices as well and refining margins. Whats happening in the market, there is a lot of commentary about some of the things you have talked about. What is happening in the market is a basic supplydemand issue. We are in a world where we expected demand in the second demand in theect Second Quarter<\/a> to be down around the world. That is five times the previous record for demand destruction. That is the type of destruction that we are seeing. That was in 20082009 in the financial crisis. At the same time, we have supply coming into the market with the opecplus agreement not coming into effect really until the beginning of may. We have a situation where we have excess supply, inventories and storage are filling up. Cushing is 70 full. People think we will reach completely full sometime in may. We are very fortunate to have a very large Trading Organization<\/a>. I have been able to find a physical home for accrued but not everyone for our crude but not everyone is that fortunate. It is a simple case of supply and demand. The market will not find a stability until that comes back into balance. Anna with that focus on storage, you say you are managing with that for your own crude. Will you have to shot in any anyuction shut in production . Have you been approached by any opec countries to cut back reduction . Production . Vas we are bernard we are seeing the very early stages of the opec countries beginning to meet their quotas. We are seeing that in the middle east, angola. We see some countries curtail their domestic gas requirements. We are beginning to see the impact of the decisions of the opecplus for sure. Anna in terms of the things you can control, dividends is clearly one of them. You have made an announcement around the dividends today. If Oil Prices Stay<\/a> around where they are or in the low tens, what visibility do you have on dividends . What ability to maintain the dividends, bernard . Bernard the board of bp makes the decision around the dividend every quarter. As we look at the decision we have just taken around the First Quarter<\/a> decision, the board has been meeting weekly since the start of this pandemic. And it has at the end of every at the end of every quarter, it reviewed the dividend decision and made a decision to pay the dividend on the basis of the underlying performance of the business and the actions that we are taking. The actions that we are taking around shoring up our the ,uiddity, our liquidity driving that breakeven doubt. Down. We will make the decisions quarter by quarter, as they always have. Consideration any of a script dividend Scrip Dividend<\/a> . Is that on the table . Scrip dividend is one of the many tools in the toolbox. Not one that we choose to use at the moment. That me just finally ask you about that Energy Transition<\/a> let me finally ask you about the Energy Transition<\/a>. You. May be your early years in charge of bp might have been dominated by that. Instead, we are dealing with covid19. Is the Energy Transition<\/a> project at bp on hold because of covid19 or can it push forward . Bernard it is certainly not on hold. We remain as committed and i think i have said recently, even more committed, to the Energy Transition<\/a>. I say that for three very simple reasons. Number one, i think the pandemic only adds to the challenge for oil in the future. We are all living differently, working differently, virtually, not traveling. There is a real possibility that some of those work and Life Patterns<\/a> will change for good. Therefore, the question of, will consumers consume less . I think that is the first thing around pandemic and the effect in the medium to longer term oil markets. The second is, i think the pandemic has reminded us of the frailty of the ecosystem that we live in. I think people are much more conscious of how exposed we are, how our life can change overnight really in this circumstance. Obviously, looking around at clean skies and clean air. I think that desire will continue around climate as we go into the future. Finally, you know, as you talked about, wti negative prices in texas and u. S. Last week. At the same time that was happening, light source bp, where we own 50 of, was building 400 megawatt of solar contracts in the United States<\/a> in that same timeframe. It speaks to the resilience and attractiveness of that sector. Those are some of the reasons why i think it is really important that we stick with our purpose of Reimagining Energy<\/a> and our plan to reinvent bp. Anna thank you very much. Thanks for your time, as always. Bernard looney, the ceo of bp. We will hear from our interview with the hsbc cfo, as the lenders credit losses swell to 3 billion. We will get up to date on the banking story. This is bloomberg. A great is obviously degree of uncertainty around that range. We saw 3 billion of expected credit losses in the First Quarter<\/a>. Fold fromp fourfold fourfold from last year. On the duration and Economic Impact<\/a> of the coronavirus during the remainder of the. To avoid the worst case remainder of the year. To avoid the worst Case Scenario<\/a>, what needs to go right for yourself to avoid the worst Case Scenario<\/a> . To see is theneed start well, we are already seeing it in china and hong kong the start of a recovery from the coronavirus in terms of the harsher Economic Impact<\/a>s. We still think europe and the u. S. Will go through a very difficult Second Quarter<\/a>. It will depend very much on the degree of recovery that we see later this year. We also understand that the credit losses included a significant charge in singapore, where hsbc has been on the hook for a 600 million loan to a failed oil trader. Can you give us more of an update on that in terms of recovery or how much more that could impact loan credit losses . We have taken a very substantial charge into the q1 results, provisions as a result of single name exposure we have in the sector in singapore. We are not going to go into detail on individual customers and provisions we have taken. Is it that your costcutting program is delayed . Regret the fact that we had to cut the q4 dividend. We have also suspended dividends for the first three quarters of this year. We want to get back to a position of being able to pay dividends as soon as we can. We will have a call on any decisions on dividends until we get a clear idea of the impact of covid19 on businesses. Are dividends on the agenda for 2020 . N we will make that decision at the back end of this year. People come on the show and say 70 , 80 recovery in the economy, back to normal. Is lending going up . How can you define and qualify the recovery in china and hong kong . Factoriescan see reopening, people getting back to work. Things improving in Mainland China<\/a> and to a lesser extent, hong kong. I think they are progressively coming out of lockdown in both countries. The demandside, particularly given what is likely to be a fairly significant event in europe and the u. S. In the Second Quarter<\/a>. Certainly, in Mainland China<\/a> and hong kong, we are in the early signs of a recovery. Hsbc,that was the cfo of you and stevenson ewen venson. We will speak to the ceo of santander, Jose Antonio Garcia<\/a> cantera. Theme of the earnings reporting season, it would seem. We will discuss that with him next. This is bloomberg. Anna welcome back to Bloomberg Markets<\/a> european open. Santander has reported the highest provisions by a bank on europe soent of far as it tries to estimate the loan losses it will have to dure. En joining us now is jose antonio ofcia cantera, the cfo banco santander. How difficult is it to come up with the provisioning given the unprecedented situation we are in right now . Jose good morning and thank you for having me again. The situation is evolving quickly so its difficult to predict outcomes. We are operating in 10 Different Countries<\/a>. The crisis will hit these countries probably with different deaths. Its difficult to predict. Will show its benefits this time around. Anna indeed. Diversification helps. What about exposure to small and mediumsize businesses . What are you seeing in your books at the moment for the survival rates of smes . What assumptions do you make about smes in spain and across europe . Jose this is early days. We have increased lending to smes in april. In spain, we have lent around 10 billion in april. April, 10 billion using the Spanish Government<\/a> program. Another 10 billion outside the Spanish Government<\/a> program. The Spanish Government<\/a> program guarantees 80 of development. Obviously, we are lending either our traditional strict criteria. It is very early days. There is some deterioration in quality. Because of these programs, we dont expect to see significant levels of nonperforming loans probably in any anna ok. Interesting. In terms of the loan loss provisions, how do they break down . What areas of the business are you having to put more provisions in place for . Consumer finance, subprime auto space in the u. S. . Billion represents our best assessment at the end of this quarter of the losses that will emerge from the crisis. Clearly, we are still in uncharted territory. Down thet broken provision at the end of march. It was very early days so it has not been broken down. Again, we need a bit more time to really have a clear idea of what the crisis, how the crisis will go. Based ont, by country Government Program<\/a>s, different guarantee levels will mean different behaviors. We need to wait and see how this unfolds. Anna i know that you operate in obviously. Untries, sticking with the spanish or looking at the spanish story and the loan process you are going through, are you asking for extra guarantees from those who want money . More guarantees than you would normally . Is the process different . Jose no, no. The Government Program<\/a> is a very clear has very clear conditions. The 10 billion that we have lent fully follows the rules of the Spanish Government<\/a>. For the rest of the business, we are just operating normally. Obviously, the macroeconomic environment is becoming we expect unemployment rates to move up in spain and elsewhere. Obviously, we are adjusting our models to this new macroeconomic and burn. As we would have done in environment, as we would have done in any other case. Anna do you think the Spanish Government<\/a> will have to lend a biggery to put pot at your disposal . It seems to be less than germany, italy, france. Is the spanish response lagging a little . Jose before we think about adding more, i think what we need to do is put in the 100 billion to work. Thear, only 40 billion of 100 billion announced has been dispersed. In two packets of 20 billion each. We need to make sure that we liberate, free up another at least 20 billion. Because there is sufficient demand for additional funds. We need to make sure we make good use of the 100 billion the has been announced. Anna we understand that the European Commission<\/a> is looking at another round of capital relief. Is that welcome . Jose well, i think capital definitely helps, but in our very resilient capital base. In all of our stress tests that have been conducted, santander always shows the lowest capital depletion among the largest european banks. I think this time around, we will show that our capital is much more resilient than many other european banks. Anna ok. Jose, thank you so much for your time. Jose Antonio Garcia<\/a> cantera, the cfo of banco santander. The European Market<\/a> open is up next. We look for a flat to positive start for european equities this morning. This is bloomberg. Anna a minute until the start of the cash equity session in europe. Lets get here headlines. Bad loans dominate breakevens bank earnings. Ubs says its credit foreclosure will shielded. Santanders are the largest in europe. Wti extends losses to 35 as the biggest oil etf dumbs short dated contracts. Bernard looney tells us we begin to see the impact of opec preparing to cut back. Novartis keeps its 2020 forecast intact, bucking the earnings season trend, but says a vaccine for covid19 this year would be an astonishing feat. Welcome back to the European Market<\/a> open. 15 seconds until the start of equities trading. Futures for europe throughout the Asian Session<\/a> suggested a slight bounce but nothing spectacular and always mindful of the fact that u. S. Futures have been negative through much of the Asian Session<\/a>. Result, we expect something fairly flat at the start of the european trading day, for flattening as we get closer to the u. S. Session when we see expectation of a slight pullback. Use with the underlying andctions and death toll evaluate the earnings season and the ability for businesses to withstand what is coming toward them at this point. Ands get in equity markets where we are on the equity market story. European equities opening to the upside, on the ftse 100, for example. 50 852. Ction ac but not by much. We saw more strength in yesterdays equity market. We have a little bit of modest upside coming through on these European Market<\/a>s, but be mindful of the fact that u. S. Futures still point to the downside. S p futures down. 2 . European markets opening slightly higher following a modest rally on wall street. Lets get to our conversation with the chief economist at lombard. Have you learned anything new from earning season . We all knew things were going to be difficult, in particular sectors and some being more resilient. What has stood out to you so far . I think earnings have a little bit backward looking, so it is not new information. We were expecting earnings to be and this the lockdown unique economic environment, but what we seem to be seeing is the acceleration and ask asser bashan of strength from financials and energy plays suffering more than health care and technology, so in our view, that is telling us where the world is going and we probably want to continue to side with the sectors that will tell better fare better after the covid shock rather than the ones that will continue to suffer in an environment that is not us as supportive of their activities. Anna what do you look at now to work out how much risk you are prepared to take on in terms of strategy at Lombard Odier<\/a>. We look at the disconnect between the stock market had reality, what is going on in oil prices and the volatility, and it is difficult to tie Financial Markets<\/a> to the real world. What clues are you looking at . Samy a narrative has shifted. A couple of weeks ago, we were focused on the pandemic and controlling the first wave. All aboutive today is the reopening process and trying to do that without being struck by a second wave. There has been a massive improvement in the narrative and nowm the pandemic, being able to focus on the healing process and recovery. It is a huge improvement to be able to focus on the recovery, although we know it is going to be a very uncertain process and do havedo for that, we a leading indicator, basically what is going on with asia. We have a couple of weeks in advance, so it is interesting to see the Recovery Process<\/a> unfolding asia, how they are dealing with the second wave. Wave,y avoid a second that is probably a good indication of what might happen to the u. S. And europe in the weeks to come. Theyve done all those things, you say, but theyve also had to put up with a very changed way of life, and with a very changed way of life must economy. Duced how long will it take for europe to get back to the size of the economy we had before . Samy sure, and obviously this is a big shock, but the duration of that shock is contained in time, we will be able to recover much more than what we can think now. On asia come on the supplysider i agree demand takes more time to recover, but on the in china, it is quicker than what we could have assumed a couple of weeks ago. On many of the indicators we track, real estate activity, chinese firms, the things you contract pretty easily, you do see a drawback to 85 of the potential. The demand side will take more time, but after a few weeks in asia on some of the key supplyside indicators, you are back at 85 of capacity. It is quite an achievement, so hopefully in europe, if we with containing the second wave, by the end of the year, we are close to 80 of capacity where we were the covid precovid. That would be an achievement considering the 20 remaining would catch up somewhere in 2021. Anna really interesting to get the timescale you are assuming. Does that mean the dollar weve seen Dollar Strength<\/a> be a feature of the risk aversion surrounding covid19. Have we seen that . Is that all behind us, the Dollar Strength<\/a> and we see some weakening now . Samy i would imagine at some point, the dollar has picked. A softer dollar is part of the solution. It would be very surprising to see and quite an underwhelming sign to see the dollar continuing to strengthen mostvely, but as you know, of the economic actors around the globe have leverage in dollars so as the dollar pressure onou put at a time where you want to relieve Economic Agents<\/a> from undue financial pressure. A softer dollar is part of the solution. A lot is being done to try to curb the dollar cap the dollar. There are repo operations, trying to cut the dollar so hopefully we have seen most of the Dollar Strength<\/a>. It doesnt mean the dollar will crash from here. Increaseexpect it to and probably to stabilize. Anna thanks very much. Samy chaar, joining us there from Lombard Odier<\/a>, for he is the chief economist. We will get his thoughts on the subject of banking stocks and what we have heard from them. Confident on credit exposure while warning on income pressure. We will bring you our interview with the ubs ceo after the Bank Reported<\/a> earnings. This is bloomberg. Anna welcome back to the European Market<\/a> open. We are minutes into the european minutes orsion, 10 so and European Equity<\/a> markets show a little, up by a fraction across markets. Weve heard a lot from banks today. Ubs has said it can withstand a surge in bad loans. This was bank is warning the pandemic will put pressure on key streams of income. Sergio ermotti spoke to daybreak europes manus cranny earlier this morning and he started by asking how high loanloss provisions could rise this year. Sergio first of all, let me point out our credit losses during the last quarter it are the outcome of strategy and a clear risk reward, priorities put in place on how we manage the Financial Resources<\/a> of the ank and it is also reflecting way for us to manage risk on a shortterm basis and last but not least, it is reflecting the fact our Business Models<\/a> hes of concentration season high degree of concentration in switzerland and in general to asset based lending, where we have a high degree of underlying guarantees, therefore, we can be relatively optimistic about the extent at which credit losses will impact our future. We will also of course be affected by that. Manus in the announcement, you talked about recurring fee income, net interest income, and transactionbased income all under pressure. Is that going to come to their on the numbers bear in the numbers and the rest of the year . Sergio on currency, we are very dependent on acid levels asset levels, particularly equity markets. The starting point for q2 is lower. We expect a contraction of around 250 million on the net recurring fees. Was stable, but it will be challenging and because lower rates will front, onn the nii the other end, the fact we are expanding more loans is helping us mitigate that part of that. Moree other end, normalized environment in terms of transaction volumes and we feel that the combination of all these factors, positive and thetive, in addition to fact that we are continuing to execute on our strategy helps us to mitigate the negative effects. Our focus is all about whileuing to perform staying relevant to our clients and keeping our employees safe and healthy so that they can continue to do a great job, because eventually, when you look at the First Quarter<\/a>, you saw ubs at its best and is being able to perform across many dimensions. Lets talk about the word you used twice now. He said we are doing more lending, more loans. Where are you seeing the most uplift on lending . With credit to institutions or on the Wealth Management<\/a> side and the geography . We we saw lending expanded lending by 15 billion across the board geographically, which is in addition to what we are doing in switzerland where we extended to 1. 5 billion in the government backed programs and we also made a commitment in the u. S. For another 2 billion. 15 billions of extra lending across every geography, across all businesses. Expanded 6and, we french through companies, one billion in mortgages in Wealth Management<\/a>. We had an expansion of lending coming up4 billion, to the end of the quarter, but it is interesting to see that in asia, in march, we saw some deleveraging. The net number is all about the fact that some clients went risk butnd off during the order, across the board, we see Lending Demand<\/a> and exactly what we are supposed to and want to do at this time to help clients go through these difficult times, but at the same time, keeping our capital strength, our discipline in how we manage risk so we can protect the other side of the balance sheet, our depositors. Was the ceo of ubs, Sergio Ermotti<\/a> speaking to manus cranny earlier. Samy chaar of Lombard Odier<\/a> still with us. What are your affections on the role banks can play through this, because the role banks keepbeen given here to lending to businesses they may be wouldnt normally wish to lend to and for companies to keep borrowing through a crisis. Might not come instinctively to either party, but how do you think that strategy will see us through this difficult time . Once it is fantastic to see the banks being part of the solution rather than the problem, so it does mean they will be shorted and closely watched in their ability to support the system. The schemes put in place. When it comes to financial, a revenue issue from low rates, the crisis, the lockdowns, the low activity. There is no solvency issue. They are well capitalized, were not part of the problem. Have anassuring we issue we will deal with, the shock will remain in time be dealt with in time, but we havent had already this shock with addition to the solvency issue and that is a reassuring factor. Anna no solvency issue at this point. What about if we see those bad loans stacking up . We see banks taking big provisions in some cases, the highest in a decade against those bad loans. What if we see those start to crystallize . They are just guesses at the moment, arent they . Start towe see them crystallize, are you concerned to some of this could get some banks into trouble or is that complicate contemplate . Samy they are part of the solution so they will be held by authorities to make sure they can continue to be the transmission mechanism of the government scheme. Clearly the government will make sure they have the Banking Sector<\/a> on their side and the Banking Sector<\/a> doesnt suffer from bad loans or solvency stress. Then i would say there are a lot of provisions. Loans, we will see that, but the damage on that when youmuch smaller seeing how hard hit the in the short and run, normally the correlation on aults, losses, institute is institutionally more considerable. Thanks to what has been done by Central Banks<\/a> and governors, he had limited damages, which should help it has limited damages, which should help banks. Anna thanks very much. Samy chaar, chief economist at Lombard Odier<\/a>. Coming up on the program, and etf selloff. Big volatility in oil once again as subzero june contract become a real possibility. We will break down the details in oil prices. They are falling once again. This is bloomberg. Anna welcome back to the european open. Lets talk about what is going on on the equity markets. Entirelyicture, almost flat as we see u. S. Futures flat, as well. The European Equity<\/a> fund it, the ftse 100 under pressure a little. ,lus500 theplus500 the cac 2 . Tradingil markets, wti at 11 a barrel this morning, just under. Nearlya 10 handle, down 30 5 since monday morning after the biggest oil etf in the world dumped holdings in june contract yesterday. Investors worry we could see a return to subzero level in oil, hit for the first time last week. Samy chaar, chief economist at Lombard Odier<\/a> is with us. Do you need a root and branch review of the way Commodity Trading<\/a> happens, the role of these large etfs because we seem to be in a situation where gettail wag the dog as we to the point where demand is on the floor and storage is hard to oil prices seem able to fall into negative territory because of what etfs are doing. Do we need a review of how the market works . Samy you can always improve the way they operate, but it doesnt change the story that you have a big shifting paradigm in Energy Production<\/a> and whatever technicality you change, it will change the theme we are in for a very low energy price, oil price for a very long run. You have demand impacted by the lockdown, but even if demand , the ability of the big producers to cooperate seriously in the context where you dont have a lot of storage capacity. Oil for longer does mean that you have very low inflationary pressures down the road. It means you want to favor the consumers over the producers in the long run. That is the key theme around the energy environment. Do we see consolidation taking place in the Energy Sector<\/a> . Will that show up on your radar . I ask because despite all the challenges facing the sector, stockpicking guests have said they favor one or another oil company because they think there will be a winner or number of winners in this battle. Is that how this plays out . Consolidation in bigger Oil Businesses<\/a> . To avoid an idea that everyone loses, to of wouldbe too much of a loser, you need to consolidate. It is a transformation in the industry, pressure, especially on the u. S. Side. Prevent andl that will not allow for a restructuring of the energy environment, of the projection production, demand, a significant transformation going through the sector, also the fact we want to get closer to electric vehicles and it is a longterm trend that will be difficult to assess, so i imagine the consolidation we see is a defensive action rather ambitioushing very that allows you to prosper in the very complicated field in the decades to come. Anna thanks for joining us and giving us your thoughts on a host of topics. Samy chaar, chief economist at Lombard Odier<\/a>. He will continue his conversation with us on Bloomberg Radio<\/a> at 9 00 a. M. U. K. Time. Oil,eck in on the price of we are down another 16. 8 at 10. 63 the price of wti. Brent, falling below 20 a barrel, 4. 5 percent to the downside with a 19 handle. Next, france and spain are set to announce measures to ease their virus curbs. Can they avoid a second wave of infections . That crucial question next. This is bloomberg. Anna welcome back to the European Market<\/a> open. 30 minutes into a sluggish equities, waiting for information from the riksbank in sweden. Conditions for sale of riksbank certificates were not a headline in relation to what is going on in the Interest Rates<\/a> they leave their key rate unchanged at 0 , the Monetary Policy<\/a> april 2020 just coming through for us now, prepared to continue to use tools. We were expecting to hear from them about their forecast. 11 , last forecast rate, obviously prelockdown. The consensus is for no change in Interest Rate<\/a> today and they had left their key Interest Rate<\/a> unchanged at 0 . They are giving various forecasts for the swedish economy. They have gotten to the lofty heights of 0 and there will be closure on future bond buying from the central bank. They dont rule out a cut in Interest Rates<\/a>. I think that means at a later date. Casey 2020 gdp at 6. 9 . The february estimate was an increase of 1. 3 . Thats what we got on the riksbank and we will be speaking to the riksbank governor later on today, so that will be interesting to watch. Lets get a first word news update. The white house has issued a new strategy to expand as retailers announced they would open hundreds of new sites to provide test. President trump has drawn criticism over the pace of ramping up testing. He says he is confident the u. S. Has enough to begin the reopening process. Scientists are drawing up options for easing restrictions. They are considering how to unwind the closure of businesses. Monthswarned the coming are fraught with uncertainty. The coronavirus is here to stay and likely to be seasonal. That is the conclusion of chinas top scientist at a briefing in beijing. They say it will likely come back in waves and in the summer, it will not necessarily lead to fewer cases but the new virus is different than sars. According to these researchers, as the high number of asymptomatic cases makes it hard to fully contain. Hsbc is taking its biggest charge for nine bad debt in almost nine years. The banks profit missed estimates. Part of itsying restructuring program, including cutting around 35,000 jobs and merging units. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Lets talk about what is going on in europe. Easing its coronavirus lockdown measures. Spain and france set to announce easing measures. Joining us now, maria tadeo. Different countries are doing things differently. That might be entirely appropriate. Ive seen some starting with schools, and others attending schools in terms of lifting lockdown measures, but we are starting to get a sense of the various timelines. Run us through the latest. Really the we see is country running ahead of everyone else. If you look at guidance from the at highend government, come june and early june, there would restaurants opening, people would be allowed to go out on the streets. There would be a going back to work for most people, and if you apply that to the rest of europe, that would give you an idea that in july, there would be some normality back to european economies. Having said that, when you look untry, thatcific co are things done differently and you get divergence. There has been talk as to whether there should be the use of masks made compulsory. If you look at every health applying medical gear. There are questions as to whether in a weeks time we will be able to see those gloves and masks available cheaply to people. Today we hear from the french and greek governments. There is a big debate as to whether or not we should open schools and that may not necessarily be related to the economy, but debated in terms of how quickly could you see a round two of the virus . Is that a source of contagion or not . Anna and crucial to the economy in that it might enable people to go back to work it schools are open. What about various industries that will need extra help because in some countries, we dont see industries or weinesses to the fore, just see policy set out to those who need them. I imagine there will be individual industries that will need extra support. You arexactly, and seeing it everywhere in europe. The french have said they want to help air france to help the company. Story to is an ongoing make sure the airline is able to continue going forward, even if business is reduced. In spain, there are reports today saying the Spanish Government<\/a> is prepared to put champion the old airlines to make sure it works there have been drastic cuts as result of coronavirus. You are also seeing Leisure Companies<\/a> under pressure because people have been told to stay at home, but also tourism. This is a sector that is key for countries like greece. What we see now is ministers in saying it is not just about goods, but allowing people to travel freely. We will need more guidance in terms of what is allowed. People are not sure whether they can book a holiday or will be able to travel abroad. That is also becoming a focal point for the europeans, for many countries. Tourism is equally as important as any other industry. Maria tadeo with the latest on what is going on across europe and what she was talking about in mind, we will be speaking to the greek tourism today for aner exclusive interview on bloomberg tv, shortly after 9 30 a. M. U. K. Time. Next, bp moves to strengthen its finances including a new 10 billion Credit Facility<\/a>. We will bring you our interview with the ceo. Bloomberg market the european open ceo. This is bloomberg. Anna welcome back to the European Market<\/a> open. 40 minutes into the trading day and things looking brighter, a little green on the screen right now. The ftse 100 up. 3 , the dax up. 4 . Lifted inwn measures, various parts of europe and with that in mind, lets reflect on the oil sector. Bp expects a Material Impact<\/a> on refining in the Second Quarter<\/a> and announced a new 10 billion record revolving Credit Facility<\/a> to strengthen its finances. I spoke to the ceo and asked him why bp decided not to tap government money. Actions in terms of the like the government in the u. K. Has taken to strengthen and protect jobs, which was an early move, quick and decisive that will have a huge impact in a positive way. We have taken the decision here to not make any staff redundant for covid purposes for three months, and also the decision that we will, for example, not furlough workers. That isve a scheme like not intended for a company like bp. There are four more companies who are in a much worse off situation and we are. Ofare focused on taking care our own finances. There are many levers we have in our hand. Down 25 ake capital this year, maybe another one to 2 billion you. Year. T we think we can get to a so it is next year about controlling the things we can control and leaving some facilities for the people who need the more. Anna you can get to a breakeven of less than 35. What will be the crucial lever coupled to get you to those breakeven prices . 2019rd our breakeven in was around 56, so going to 35 by next year is the right thing to do and will drive it lower. The Economic Uncertainty<\/a> is immense, how this recovery will play out over the coming months, but we are very focused on the basics of the business and capital is obviously huge for us. 15 billion, we will take that down to 11. 5, we will take to differ official appraisal spend. And on our cost base, we are big believers in the digital agenda, have been for some time so weve invested heavily. We will invest further, but we believe we can take more out of optimization automation. In terms of how we work as a teen, we want to be more integrated, more agile, more focused. We announced february 12 we would reinvent bp and that is what this is about. Therefore we can take at a minimum 2. 5 million out of our cost base by next year. There are the types of things we have in mind. Anna with oil prices turning negative last week, i know you like to focus on things you can control is a management team, and maybe the oil price is not one of those, but with oil prices as volatile as they are, the something need to be done to look at the structure of the market, the role for etfs, to try to give more predictability . Or is that something you are not thinking about at this point . Bernard i think weve all given up trying to predict the price of oil. We learned that early in our careers and we certainly dont control it. Weve got gas prices and refining margins, but what is happening in the market, there is a lot of commentary about the things you have talked about. What is happening is a basic supply and demand issue. We expect world where demand in the Second Quarter<\/a> to be down in the world around 16 Million Barrels<\/a> a day. Thats five times the previous record for demand destruction. Thats the type of destruction inare seeing, and that was 20082009 in the financial crisis. At the same time, we have supply coming into the market with the opecplus agreement not going ,nto effect until early may so we have a situation where we have excess supply, inventories filling up, pushing 70 full. People think we will reach completely full sometime in may and we are very fortunate to have a large Trading Organization<\/a> and have been able to find a home for our crude, a physical home for our crude, but not everyone is that fortunate so what is happening is a simple case of supply and demand, and the market really isnt going to find some stability until that goes back into balance. Of bpthat was the ceo Bernard Looney<\/a> speaking to me earlier today. Another sector we have heard from today is banking. Haveber of european banks reported firstquarter earnings this morning and all have made significant loanloss provisions as the coronavirus pandemic has hit economies. Santander reported the highest provisions by a bank in Continental Europe<\/a> this quarter, setting aside a record 4. 2 billion. It is holding back 1. 7 billion specifically for virus linked 3ns and hsbc set aside billion, the most in almost nine years, while also warning credit losses could swell to as much as 11 billion by the end of the year. Ubs provision to just 268 million for bad loans during the quarter, a fraction of its competitors. It is still the highest for the bank in a decade. This was lender is confident in its ability to withstand the spike in credit losses as it has a high quality portfolio. That the details with our senior banks analyst joining us on the phone. Youve been pouring over the details. Give us your big takeaway on these huge credit losses. I wonder how much uncertainty is attached to the provisioning. Was it difficult to make a realistic assessment . Jonathan that is the biggest issue. Banks are telling us this is the kind of range, but we cant provide you with any more visibility and we think a 4 billion range from one years provision is a big range. This is theld us provision, but if we look at the underlying deterioration, we think it is consensus rather miss. Ss as the talking banks have been about is you got government guarantees, so they were saying because of the way to world is going, obviously we have to change the risk for these loans. That doesnt mean it would have been like previous cycles, where we have to pay for losses because the government is supporting this. Not only do you have this big unknown, but the mechanism whereby a loan goes bad and who has to pay for it has changed, so the picture has gotten pretty complicated and the banks themselves cant really help you. Yet. Anna the banking model itself, being reshaped it seems by what we are going through here. What about hsbc . A bit more detail on what we have learned from the , because big bank, because there were questions on the dividend, particularly Hong Kongbased<\/a> shareholders were that becomes an issue. Their newthey gave targets at the beginning of the year, the fullyear 2019 numbers and what they have done today is say it is too early to decide whether our 2020 targets are appropriate or need to be changed. In terms of when we revisit dividend repayment starting again, it wont be until the Fourth Quarter<\/a> certainly. They dont have the visibility so the positives are they have plenty of capital. They have a nice capital buffer so they can afford to take these sensible provisions, but because they dont have the visibility and it is unfortunate for retail investors, but dividends in banks dont go well together. They havent given any indication on when they can pay and restart payments until the end of the year and i suspect this is a writeoff. Anna societies expecting a lot, governments are expecting a lot from banks and as a result, perhaps the dividends dont get paid. What about capital relief at the european level. The commission might for a fourth time relax rules around capital for european banks. Is this going to make a difference in the amount they are able to land . Jonathan if you look at the u. K. And europe, it has been wellpublicized there is not a guarantee by the government. He numbers are small in europe, a similar situation and bear in mind, 90 of the economies, they need this money. The government has to make sure they get that. They are going to have to do Something Else<\/a> to incentivize these guys because the fact is, a lot of the loans he will be making at the moment, a lot of them will go bad and what was your biggest problem in 2011 through 2013 . 500 million of bad debt. Italy and greece have only just begun to address these issues to satisfy the rest of the markets and here we are asking them to take on another load of debt that will turn into bad debt in a lot of cases. We do need more from the ecb, more coordinated Government Support<\/a> for the banks to want to lend. Thanks very much for the analysis. Jonathan tyce, senior banks analyst for bloomberg intelligence. Coming up, how could debt monetization affect assets . We will put that question to laura cooper, our mliv question of the day. This is bloomberg. Anna welcome back to the European Market<\/a> open. A little upside prickly markets, up. 4 on the ftse,. 7 to the upside on the dax. Is a macror strategist. I know youve been throwing around the question of debt monetization and how that will affect assets. Central banks buying sovereign debt directly from governments, something that is a growing trend maybe. Getting closer in asia. Laura we are seeing that from and al banks coming in lot of bond issuance we are seeing on the back of governments having to in order to finance a lot of this exceptional fiscal stimulus. At this stage, most Central Banks<\/a> are buying in the secondary market. That is likely continue and the question at this stage is these elevated levels of public debt, how do we unwind it . It is a stage Central Banks<\/a> are not yet focusing on. They are keeping focus him in your term containment of the Current Crisis<\/a> through. We see weakness in oil prices, down nearly 18 on the bti. It is amazing wti. Handle. Own to the 10 that big etf in the united having an impact on the underlying. What impact are you seeing from this in the market . Laura what is interesting is that we are seeing this downward pressure on the frontend contract. Overall, when we look across the curve, the longer dated contracts remain resilient and we are seeing risk assets bid today on the back of other issues in the reopening of the economy and less about concerns in the oil market spilling over, because this points to overall markets anticipate that Global Demand<\/a> is still going to be holding firm on the longer end and it is about structural issues for the near term oil trade. We are seeing liquidity squeeze because we are seeing restrictions. Anna laura, thank you very much. Laura cooper from our markets live team. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 12 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Francine as spain and france gets her to ease coronavirus measures, has europe done enough to tackle the cost of the crisis. The bad loans dominate bankruptcies as hsbc takes its biggest charge of the year. We speak to the chief executive. Oil plummets again","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia802901.us.archive.org\/14\/items\/BLOOMBERG_20200428_060000_Bloomberg_Markets_European_Open\/BLOOMBERG_20200428_060000_Bloomberg_Markets_European_Open.thumbs\/BLOOMBERG_20200428_060000_Bloomberg_Markets_European_Open_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240716T12:35:10+00:00"}