Aviation. He said the coronavirus has changed the Airline Industry forever. We are getting breaking news across the bloomberg. We have westpac earnings and details with regard to the dividend policy. The first half including special, 2. 2 billion australian, net margin with regard to that decision on the interim dividend, differing a decision to be made deferr ing a decision to be made, looking at the impact of the coronavirus slowdown and the credit loss provisions as well. They will move smaller scale businesses into divisions so it looks like restructuring effort. The cash profit, 933 million. The decision to defer the policy. Looking at u. S. Futures dropping in the asian trade. Shery adding to declines we saw friday, on the back of abysmal economic data, not to mention profits earnings from u. S. Companies. Futures are falling more than 1 . Sincet saw the best month 1987. When it came to world stocks, it was a rally of 10 for the month of april. Oil declines, probably more than 3 falling more than 3 . This after the first weekly gain in about a month. We had started to see production cuts lifting physical markets. Oil Companies Like chevron, exxon talking about major closures, not to mention opecs pledge to cut 10 Million Barrels a day has gone into effect. Lets take a look at our top story, the Trump Administration ramping up rhetoric against china. Mike pompeo has been mentioned again linking the outbreak to a lab in wuhan. The Intelligence Community should do its work and verify so we are certain. There is significant amount of evidence this came from that laboratory in wuhan. Haidi ros krasny is in washington. Endpoint weogical can see with regard to the antagonism pompeo and the others towards china . We see retaliation from beijing as well. Down anothereading rabbit hole of possible retaliation similar to the trade war we only ended a couple of months ago. It is interesting how this theory about wuhan labs has moved from the fringes of republican circles to the centerright with the president and pompeo. I dont know what the endpoint is. We have seen trump in the past week escalate efforts to pin the blame on china. I think as the u. S. Death toll rises, that will ramp up. There were rumors or talks about what trump might do including ,topping u. S. Mutual funds government mutual funds from investing in chinese stocks, very serious things. It is really unclear. I think it is going to be a line of rhetoric for weeks to come. Shery we know the reopening is well underway, President Trump will be speaking tonight. What are we expecting . Ros tonight is a big extravaganza of patriotic extravaganza, a adriatic event patriotic event. Will be trump, mike pence, the treasury secretary, they will be on featuring hard states that are reopening, the extent of the economy they hope to get back, so expect a raucous Campaign Rally type event. Drip, continue to get the drip, drip from other states, which are opening very slowly there there are some states that have tried to open quickly, then started to backtrack because the number of states are seeing rising coronavirus cases. There is no clear path on a national basis. That is one element. One thing we saw today is conservative groups will start monitoring and grading governors on how well or how quickly they open economies. It is a tactic they have used for tax cuts and guns legislation, so opening the economy is the next litmus test. Haidi is new york area pointing the way for the rest of the country . There is even, from andrew cuomo, the idea people will be lulled into a false sense of security. Ros exactly. In new york there have been more people on the streets, coming out to see the thunderbirds fly over and taking in the weather. That is an issue. I national basis, new york and the tristate statistics have a big sort of overcompensating impact. Illinois, michigan, North Carolina are still seeing cases and hospitalizations rise. That is something that the founder of the fda said. He said the u. S. Could be entering a new normal where there is 20,000 to 30,000 cases a day. New york and new jersey might be on the downslope, but other states are moving up. Shery Senior News Editor ros krasny in washington. We will have more on the pandemic when we are joined by peter doherty. Lets get a look at first word headlines. Japan will announce plans to restart the economy while extending the state of emergency until the end of the month. Prefectures can shut businesses and ask people to stay at home it was to end on wednesday. India is extending its lockdown, but some places can remove regain activity. Europeon rates in continue to decline with the worst affected countries reporting fewer casualties. France will extend until july 24, saying any premature relaxation could trigger a second wave of cases. Italy reported the fewest virus deaths since the lockdown started two months ago. Fatalities in spain for the lowest in six weeks and in germany since the end of march. The virus could trigger hong kongs worst economic slump even as the government prepares to ease health measures. The secretary reported repeated his view of 7 contraction, the worst since records began in the 1960s. There is a expected decline of 6. 4 . New pictures of kim jongun did little to halt fears. There was pictures of him at a fertilizer factory, but made no comment on the fact he has been out of the public for three weeks. The images showed him accommodate accompanied by his sister who has been remote it to his inner circle. Promoted to his inner circle. Haidi the former australian ambassador to china said relations have followed to the lowest point in 46 years amid the virus pandemic. He joins us later this hour. Should investors sell in may and go away . The Market Outlook as the new month gets off to a bumpy start. This is bloomberg. Shery u. S. Equities futures are pointing lower after spending the first trading day of may in the red. People are concerned about what lies ahead, a second wave of infections, fresh tensions between the u. S. And china. Michael jones is ceo and chairman of terrible concepts. Aravel concepts. Will you be trying to do more in may or ride it through . We will ride it through, but investors need to fasten their seatbelts and realize after an awesome april, we need to prepare for a volatile may. When i was on bloomberg month ago, i was confident with the billion ining 3. 5 liquidity, financial prices were going higher. I am confident with washingtons determination to spend what it takes and the feds determination to print what it takes to get the economy on its feet, we will be ok in the long run. We will recover from covid19. My concern is the market has priced in that optimism before we have confronted the worst of the bad news on the economy and on industries and earnings. There is challenges and setbacks that are going to be hitting us in the face for the next four weeks. We are not priced cheaply enough to look past all of that. That suggests we will have pullbacks, more volatility and we will have to have more result than was resolve. Shery it seems there is a group of stocks that continues to be resilient. We are talking about the tech giants. What we saw from earnings last week, the Big Companies seem to be getting bigger. In a post pandemic world, are these the stocks you want to focus on, especially after the results from alphabet, amazon and facebook . It is a consensus trade, but i have to agree in this instance. The only sector of the market is technology. He only major index is nasdaq everyone can say with good confidence has had their earnings prospects improved by the whole covid19 crisis. You cant say that about any other sector of the economy. These stocks are still trading below february prices. If we can agree the earnings prospects have actually improved because of the transition that will happen in the Global Economy because of covid19 and prospect of future pandemics and prices are lower, common sense says that is a good place to put your money. Worry big tech, do you about valuations, or are you more concerned if you are a longerterm investor to be looking at safety . Nasdaq the overall index, depending on your earnings estimates, it is 20 times earnings. In a world of zero Interest Rates and with the kind of Earnings Growth we are already seeing these companies able to produce in this kind of environment, i think that is not a bad valuation given the growth prospects. And they happen to also combine the good Earnings Growth with the best earnings visibility in the marketplace. Expensive inrly that environment. Haidi we may have seen it recovery withor a oil and the Energy Sector with the curbs taking place friday and watching the recovery in china and the rest of the world, as we start to reopen. Is that a good time to sell out and close out your positions when it comes to Anything Energy related . Michael i believe energy was the best performing sector in the marketplace in the month of april. I dont see a rationale for that frankly. Sawlieve that even if we Energy Prices and oil prices return back to 40 a barrel, im not sure that will save the Energy Sector longterm. I will explain why. Elon musk taught us over the last five years electric car ownership we got to experience and we liked it. What covid19 and the quarantine has showed us is what the world would be like about the smog and pollution caused by internal combustion automobiles. We like that. From tokyo you can see fuji for the first time in how long . You can see the hills in beverly hills. The dramaticeing impact the daily commute and internal combustion automobile has met to quality of life. This is a complete production on my part. Prediction in my part. Notably starting in california, there will be increasing restrictions on interval internal combustion automobiles. Preservell fight to what they have seen in terms of the Environmental Impact of not having internal combustion engines. That is a huge source of energy demand. This is a huge trend. This is something that will have almost no impact on demand for oil. When investors see the writing on the wall, they run for the exits. After a 30 rally, i would hit this. Trump what about the administration seems determined to back oil . How much support will all of those measures really supply this industry . Michael the fed can prevent the default cycle you would otherwise see in the energy patch. President trump has got to get any kind of bailout for the Energy Sector through the house of representatives. The Democratic Party has not proven to be friendly to the energy space. Theres going to be particularly on the blue coasts, east and west coast, they are seeing what life without a daily commute would be like, and they like it. There will be a tremendous fight to oppose any kind of may kind of massive bailout of the energy space. Im worried about volatility in the coming month. The Energy Sector is important to american any fracturing. Any contraction in that sector will hurt. It is going to hurt economic prospects and there will be no replacement. Shery what about volatility going into november . We have seen President Trump up the ante against china. Are we going to see more of those measures and factors that could be at play during the election cycle . Perhaps we could see antitrust measures in place . Risks arehe political high. China is doing itself no favors. They are refilling their strategic portfolio reserves with saudi arabia and oil arabian oil and russian oil. They are not filling the deal the trump not fulfilling deal with trump. There will be willingness to take them on and make them the poster child for covid19. Ultimately these kind of Political Risks, the market can get through them but they are another reason for the market to be volatile over the next five, six weeks than it was in the past. A Political Risk and environmental risk is states are going to be open up opening up in different times. They could be disappointed at the response they see from the public. Americans will be reluctant to leave their homes. There needs to be confidence some people will go back to bars and restaurants, and that is not in place. There is a couple of elements of risk that can keep volatility high for the foreseeable future. Haidi great to have you and thank you for joining us. Chairman and ceo of caravel concepts. Airlineuffett bails on stocks and tells his owners and stockholders to bet on america. This is bloomberg. You a quick check get you a quick check of flash headlines. A Board Meeting in seoul to discuss the worth of the cashstrapped carrier will consider asset sales to navigate away from the virus that collapse of air travel. The government is prepared to offer help if the carrier restrictors its business in light of the virus. Lufthansa expects to finalize talks with the government soon, which would mean it is unlikely it would need court protection. It is having a Constructive Exchange with religion and hopes to berlin and hopes to resume flights. The tonsil is in multistate talks lufthansa is in multistate talks with germany and belgium. K wrote that shares our elon musk wrote that the shares are overvalued. Ansent a stream of tweets in hour, reminiscent of the messages he posted two years ago that saw him sued by regulators. It will be extended by another week. Shery some of Warren Buffetts biggest deals were started by swooping in while others panicked. He is more cautious this time around with reversing course on u. S. Airlines. Lets get more from catherine. In 2008, Warren Buffett was a lender of last resort. What did he do this time around . Really has not done that much. That has drawn a lot of questions from shareholders as we geared up for the annual meeting yesterday. He was like we have not done anything because we have not seen anything that attractive. In the first few months through april, berkshire was a net seller of stock split exited airline, but they were kind of wrapping up stocks while the prices were depressed. That speak speaks to the fact buffett is careful. He wants to make sure that the deal he is willing to put berkshires money on the line for is a good one for the Company Overall and he is not finding those. Haidi in the meantime he has had decades long relationships with dynamic aviation. He has had a tumultuous time with the Airline Industry. He made the bet on u. S. Air, and it was troubled investment. Four years ago he filed back in, taking stakes in the four major u. S. Airlines. But then he was out again yesterday. He thinks the future is more uncertain. He said if anything it is a hard time to be an airline ceo, but he is not sticking around to figure out how it ends. Haidi [laughter] Bloomberg Finance reporter Katherine Chiglinsky with the results of that virtual annual meeting for berkshire hathaway. Kim jongun is back in the public eye, but speculation about his whereabouts has not gone away. This is bloomberg. W . W . Uhiono shery the Trump Administration is stepping up its attack on china, saying there is enormous evidence it emerged from a lab in wuhan but beijing covered it up. Mike pompeo said this is not the first time the world has been exposed to a virus as the result of failures in chinese research. Communityelligence should continue to do its work and verify we are certain. There is evidence this came from that laboratory in wuhan. Shery singapore wants people to work remotely as it prepares to ease its lockdown on june 1. The government said manufacturing and other sector should prepare for the gradual reopening but measures must ensure no flareups. The philippines have halted flights in and out of the country saying quarantine facilities are overwhelmed. The coronavirus is adding to the pressure on saudi arabia, struggling with the collapse in oil prices. Of 7 sundaylump after the painful measures after after the government said painful measures were needed. Potential deep spending cuts across the economy. House is to restart open auctions and Property Inspections next week as the government uses front of the eases coronavirus restrictions. Volumes have collapsed and social distancing measures forced the suspension of selling practices. Australia has seen a dozen new cases each day of coronavirus for the past week. Leader kimh korean jongun has resurfaced after three weeks of being absent. The mystery of his disappearance and state of his health remains. Wasd Stephen Engle tracking this very we saw the pictures at the fertilizer this. We saw the pictures of the fertilizer factory. Stephen his reappearance atbat factory to commemorate at that factory to commemorate mayday there are questions, but he appears to be alive. It didnt solve the mystery why he is out on the public eye for three weeks. Did he have Cardiovascular Surgery . Did it go wrong . Was he isolating because of coronavirus . We have heard reports and speculation. But one group is reporting he did not go through surgery and they identified the blue house officials that is the president ial office in south korea. The official did not elaborate other than to say that can also kim is unlikely to have gone through a simple operation. All we have are the photos released by the propaganda house in north korea. There is the appearance of kim, didnt show who civil weight loss. Officials are saying if he had undergone major surgery or was loseave health, he might some weight. He appeared to be the same robust selfie had prior to self she had prior to the going hading robust self he prior to going missing. His sister was among the pictures, and such proximity is used by north korean propaganda agents to indicate kims favor. One of the photos showed one official wearing a face mask. That has led to some speculation theaps covid19 or coronavirus has made its way to north korea. There was a south korean report one of kims bodyguard tested positive for that lends credence to the speculation tested positive. That lends credence to the speculation he was selfisolating. Shery we have not seen that in years. What should we read into this . Stephen there is more mistry surrounding this. Mystery surrounding this. Mike pompeo, his estimation is it was accidental. In the past when there has been these kinds of shots fired across the border, usually the northwood indicate the north would indicate to the south such an incident was accidental. The have a military agreement signed in 2018 during the sunshine engagement that involved moon jaein meeting kim jongun to suspend hostile actions. The south korean officials according to yonhap and others saying there is no indication that it was intentional. Other officials and those of the south korean army say it was likely a calculated move to dilute speculation on kims health. The same thing in 2014 when he went missing for six weeks and showed up with a limp. There were shot fired across the border as a diversion perhaps. We will have to speculate. North korea fired several shots sunday morning 7 41. It was met with retaliatory gunshots by the south koreans and a verbal warning. Casualties were reported. Things are still unstable. Asia our chief correspondent. Take a look at how futures are trading at the moment. We are seeing sydney futures down. 1 under pressure, continuing to extend declines we saw friday after the asx 200 fell. Kiwi stocks under pressure, down. 9 . We are seeing pressure from the aussie dollar and the kiwi dollar. These currencies have been supported against the u. S. Dollar given that china is stabilizing and there is economic recovery in place. 1. 3 , thiss down after the best april since 1987. Wti losing more than 5 . Plenty more to come. This is bloomberg. Adam haidi initially the coronavirus was a health and economic story. Economic slowdown, lockdown story, increasingly becoming a geopolitical one. Australia has called for an International Inquiry to the pandemic, fraying relations with beijing. We are seeing that play out when it comes to the chinese currencies. Looking at offshore trading, it is pretty stable, 7. 16. This follows on the biggest drop for offshore yuan in a month on the tariffs and investment ban talks and concern. We will be talking about this. Over the weekend we heard from mike pompeo, the defense secretary in the u. S. , and other policy officials there talking about this virus did emanate from a lab, even if the u. S. Intelligence report suggested it was not been made. Shery will be discussing that later. Lets get you a check of the business flash headlines. Product sales in south korea, taiwan and china all rose. The Company Expects to have fall and winter collections in store july or august after restarting production at its italian factories late last month. Sales remain slow in hong kong and macau. Southbank international has eliminated 10 of its staff. This affects two dozen employees in california and florida, aimed at lowering costs for portfolio companies. The 5aging partners at billion Latin American Fund have also left southbank. Aner faces uber faces antitrust lawsuit saying it drove someone out a competitor out of business. The ruling by a federal court in San Francisco hands the ride hailer a rare defeat. Its car claims uber used war chest to subsidize the driver pay to undercut rivals. This is bloomberg. G. Are fallingstocks 1 , the lowest level since april 14. We have seen losses for the kiwi dollar against the u. S. Dollar after seeing surges last week. There has been more optimism given the chinese economy seems to be recovering. Looking at sydney futures under pressure, down. 1 . We will get the rba policy meeting. Expecting a much to change, u. S. Futures also down 1. 5 . Chevronhe energy giant opposes bailout for Oil Companies that have not prepared themselves for the crash in prices. This led to an unprecedented shutdown in u. S. Shale. The ceo of chevron spoke to us earlier. Flexible short cycle activities, including unconventionals here in the u. S. And elsewhere. We can slow down activity and focus on Critical Path and reduced spin on things not on the Critical Path. The reductions across our portfolio, but the primary area would be in the army and basin. The permian basin. Talk about what it does to your underlying Production Base . We began the year with 17 rigs running in the permian. We are down to five now. Lag. Oduction tends to we are seeing reduction reflects wells that came on in the last half of 2019. The First Quarter of this year. These wells have strong, early productions. Our production is disconnected from the rig decline. Production at this point is on an upward trend. But we have indicated this year, we would expect to exit at the level we entered a very we will see production higher than that through the middle part of the year and we will end the year about flat with how we entered and on a downward slope with this level of activity. Can we expect lower permian production 2021 . You will feel the effects of this cut . Capex cut . You could. The other thing, there will be other reductions in production, slowing production, so not just impacts of capital changes, but we have offered in country subject to the opec agreements, there will be production curtailments there. Curtailments there. And in other parts of the portfolio we are likely to curtail production. We will see production in the month of may down probably 200,000 200,000 barrels equivalent per day and june similar, maybe greater. Sense of howe a you are going to allocate your capex cuts, with what you are talking about . They are driven by our own views on where opportunities are very we have short cycle in the budget. That is one of our advantages. We are different. We came in with the strongest balance sheet, very breakeven and flexible Capital Budget through we are in control through the market signal is not calling for nearterm productions. That is why it makes sense to reduce capital in the short cycle part of our portfolio. We are in control of that. The opec actions reflect reflect flowing barrels. We will reduce that primarily in the short cycle activity. Productionflowing and the short cycle, how quickly can that come back, or is any of it permanent . It can come back quickly. These are things we do for maintenance purposes prove we bring wells down and facilities for first terms down storms, hurricanes. We are good at bringing it down safely and ramping up. We will come back in a matter of weeks and was he the market signals suggest it. This can be done in a way that is careful and doesnt cause damage to wells or reservoirs. Ceo speakingevron with us. Allpac has announced a 70 as loanloss emily joins us now. Lender, butralian much extent expected given everything we have heard. Today interesting thing is there are not really any huge surprises in the numbers. Westpac had really high bad loan loss provisions, similar to other banks, warned it would take charge of potential supplements of the outstanding Money Laundering allegations against it. 70 drop in profits is what people were expecting. Shery what are we seeing in terms of loan provisions . Taking 5. 8rs are billion in loans, something huge increase from previously impacth 1. 6 billion in since covid19, and impact of quickly early signs of stress among the mortgage holders. This is the countrys secondbiggest bank and has an overweight exposure. Reportingis not delinquencys or anything like that. In terms of consumer stress, there is a huge amount of ,upport going into the economy payment holidays and stuff. Real when those packages start to run out, assuming they are not renewed. Are we starting to see signs of restructuring, in terms of moving these unscalable assets around . Will we see asset sales . The person appointed permanent ceo the last month, he has created this new division. Bag has a bit of a grab that west bank westpac believes it can no longer scale at. Auto finance. Slower than the other australian banks to start selling. It is a story we have been talking about with anz group for a number of years. They have very clearly gone into this division and will do Strategic Review which includes hedging sales, the assets. There is a similar strategy emerging across the big australian banks, and that is to be surplus. All things toing all people and running multiple businesses are well and truly john gone. This was the first set of results since peter king became ceo a month ago. What are you expecting in terms of strategy Going Forward . You normally have a new ceo, you devote pages and pages of ink to strategy. The strategy for every executive is to get through covid19. Expense controls, sorting out legacy problems, they will all go on, but the main thing is we have to get through this. Cutting 3000r is jobs and says it will carry less than 1 of its normal passenger volume. The ceo said bailouts for the flagship carriers are on flair unfair. France,ansa, air alitalia has been nationalized again. We are the Largest Airline in history, but now we have to compete with alitalia that has the might of the italian state behind it. We were goal as we will have a distorted market for competition and that means we will have to fewer capital groups. Basis in thelosing economies like spain, italy and elsewhere, where it could take a year or two for that traffic to return. Withe in discussions airbus, boeing with orders. We need to write size the company which will be right size the company is coming years. How many employees are you going to have left, and what will you do if flying comes back . 18,000 people. We are announcing cuts of 15 , we will have two lose. That is because we have to lose. We are carrying less than 100 million passengers. We will be down one third in traffic. We have almost no traffic in the june quarter. We will lose that in the june quarter. We have never lost money in the quarter before. So it is grim. We expect to be allowed by the european government to go back to limited flying from july. July we expect to operate maybe 60 of our normal program and then we will be on schedule. I think what we are facing now is a historic decline in air traffic in europe for the next 12, 18 months. I expect traffic will be strong. The airlines, the tourist facilities, they will be discounting hugely to get people to move during what remains the tourist season. We think it is inevitable now. Our business will be one third smaller this year, take up 15 of our staff because nothing else we can do. The remaining staff, looking at pay cuts of 20 . That is because the environment is changed. ,he strong airlines, ryan air easyjet and others. We expect to emerge stronger. The people who went into it the weakest, the Legacy Airlines, lufthansa, they have been nationalized, receiving extraordinary volumes. The group is applying for 12 billion euros in state aid. On top of payroll support schemes. These have been they will hugely distorted the Playing Field for aviation for the next three to five years. We will now be competing with Legacy Airlines who before could not make money but now have so much state aid they can afford to lose money for the next three to five years and will do significant damage to lion air ryanair. These people will now emerge the weakest unless we take the radical action. Shery the ceo of ryanair. Inking ahead to a big week economics for asia, australia and the u. S. Peter doherty, recognized for his work in immunology, joins us to discuss the challenge of treating covid19. This is bloomberg. Haidi good morning, i am haidi stroudwatts in sydney alongside shery anh great we are counting you down to the market open in south korea. Lets get you top stories. Investor sentiment remains weak with u. S. Futures down in early trading, the aussie dollar falling. Oil is under renewed pressure. The global virus infections g