By qe treaties, but that they are giving three months to the ecb to fix it. So after an initial wobble in markets, they seem to have been taking this in their stride, possibly even a little bit of good news. , 1. 0846. Ar less go to viviana hurtado. Viviana we begin with the white house backing away from a projection, it shows the coronavirus getting much worse in the u. S. The report says by june there could be 200 thousand new cases and 2500 deaths per day. The white house says that is a cdc document and it has not been presented yet to the president s task force. Neither allies nor opponents are happy with Boris Johnsons plans. Lawmakers from his conservative already want him to ease the nationwide lockdown. Politicians and demand proper protection for employees. 3 trillionhe wanted to do easing program, from the top court in germany to the European Central bank. Judges ruling some parts of the program are not asked by aropean Union Treaties u lawsuit claims the bank overstepped its bounds. And oil is on its longest winning streak in nine months. For the fifth day in a row, new york crude up. Supplyns that the global glut might be over. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, that the on hurtado. This is bloomberg. Francine . You so much. Nk we have plenty more of course on your markets. We want to try to understand what comes next, where you see value, and what we should be staying away from. One of the smartest guys that puts out daily notes is john normand, a jp morgan. Great to have you on the program. If you look at exactly what we are seeing, do you worry about the recovery phase more than the crisis phase . There are questions about inflation versus deflation, and there are questions about what Central Banks can do to support the economies when recovery finally takes hold. John the issue i am most concerned about right now is the shape of the recovery, how vigorous it is going to be. There is a lot of anticipation about what data is going to look like because there is a presumption that the economy is going to operate unshackled. There is significant constraint and activity, and you have some markets that are better priced. That this was all just a natural disaster, so as soon as the disaster clears, growth goes back to the level that it was, and that is an expression of how we are optimistic in the Financial Markets right now. Is the missed understanding, the fact that people will be afraid to go shopping . Is it certain sectors that will be hit, or will the whole economy be upended . John i think there is a tendency to fall back to previous templates, and a previous template tells us that when there is a recession, there is a lot of pent up demand, and t if you give people people will go and spend. What is different this time, there are actual outright restrictions on the extent to which businesses can open, and there will be a phobia around households, that they should engage in spending and there arounds obia there is a different restarting process. This is what could lead the upturn to be a bit disappointing initially, and this is what could really keep Financial Markets from extending their gains over the next couple of months. Francine how do you see the economy play out . Vs, ls, ws. How do you see it planning out . Are the next three months critical in making sure we do not reopen the economies and having to lock them down again . John yeah, i dont think there is any single letter that willie e that will encapsulate the path. There is a different path for different economies. China is most likely to see something resembling a that are ve because they are able to wasthe economy with emily a v because they are able to reopen the economy with surveillance mechanisms. Unfettered by individuals or corporates, and that is why i think you get an initial one that looks like a v. I think probably that initial burst is going to be for the first couple of months, and then we will have to see whether or not infection rates go up again and restrictions are tightened. Maybe there is more confidence for the next couple of months because people will not extend from what they did before. With the wildcard around a reinfection rate or wave, i think that makes it very difficult to have a lot of visibility further out into the second half of the year. How have you changed assets you like, john . I dont think you have actually changed your main cross asset strategy. What have you been adding to it . End of march, we have been positive over assets much more on the credit side than the equity side. Inkets have gotten cheap february, march, they have creditcheaper with support for Central Banks. That was the essay class with reduced visibility, every month for the next several months. The seconds sort of bullish preference. The only thing changing over the last couple of weeks is sort of the recognition that with the cuts in oil supply starting to kick in in may, first u. S. Shale but also from the national Oil Producers in opecplus russia, the move in oil prices puts a floor under all commodities, and it also puts a bit of the ceiling on the dollar versus a lot of em currencies. I think negative on the commodity complex is negative on the em currencies, simply because you are finally getting a supply adjustment in oil, which is having a positive spillover to other related asset classes. Francine we had this these german judges giving the e. U. Three months to fix the qe program. I dont know if this was illegal and whether the ecb can fix it in three months. I have to say it was a hard judgment to understand at first, so we do not know exactly the technicalities of what needs to be changed. But overall would you take it as a positive . John i feel like the biggest positive around all of this is not about a discussion about a program which is not the focus. Programout the asset which was launched years ago. News is that it is about the past, not about the current program. Think it is a bit of a warning sign that there could be a Court Challenge to come around the current program. So trying to see the situation in the future of the pet program because it is going to require a Court Challenge, and it is really about the Court Challenge rather than the German Constitutional Court, i dont look at this as a reason to really be betting on a much wider spread in europe. I think it is going to take a longer time to challenge the current program. Francine thank you so much. We will be back with john normand of j. P. Morgan asset management. Coming up, peter orszag, Financial Advisor of lazard chief executive officer. We will talk with him about some of the m a and how he sees the market playing out. That is six a clock a. M. In new york and 11 00 a. M. In london. This is bloomberg. Francine this is bloomberg surveillance. Frances biggest bank has warned that fullyear earnings will take a pounding from the coronavirus outbreak. Contributing to more than 1 billion in charges and writedowns, the bnp paribas Office Setting money to one side. Officer ofinancial bnp paribas spoke with guy johnson. The first one is the cost of risk. The cost of risk, by 500 million. The second effect is related to accounting in our insurance where we have portfolios, investment portfolios which are going to the piano which are linked to what the markets took. They went down. This is a negative effect which would normally taper back up when the market returns. And the third impact of the covid19 is when it comes to the decisions that have been taken by authorities to strongly recommend that dividends would be paid. So those are the impacts that weighed a bit on the insults. Guy do you think we will have to further provision i know we are getting into microeconomic territory here. Can you get a sense of what the trajectory of the nonperforming loan curve is going to look like . It, the you look at confinement that is happening is what is weighing. The question is, how will we get out of this thing . Thisrance, for example, starts next week, so a lot will depend on how the confinement will work. It will be tapering up, back to what is normal by the end of the year, so it will all depend on how this one goes. A tad too early to say what the effect will be. It depends on the speed at which this recovery happens, and if there is not a next phase or a next step in the crisis related to that or others. It is too early to say. Guy nevertheless, it looks like any reopening is going to be slow and gradual and is likely to have lasting effects. We are starting to see governments around europe publishing guidelines for corporations. Those bring workers back into their facilities. Given that, it is likely that economies will be operating at the low potential, and particularly, Smaller Companies will find it harder to deal with those types of requirements. Do you expect therefore some of the smes to suffer more as we go through this loan loss provisioning against this, or will they have to rise even further . Lars the way we look at it, the parties in february, if they grew, we continue to see how they grew into this period where the covid is active. There are guarantees from the state that should normally get them to their. Then the question is, how will they sail through the period thereafter . Will they pick up back to normal . Will they pick up les, will they pick up more . That is the uncertainty that you have to see. Normalization in the economy will be happening at best buy the end of the year, and therefore a return in gdp to 2022. Will not be before guy madame lagarde is making a lot a very cheap money available. What are your expectations about how that is going to work, how you are going to access it, and who will play a role in the mechanism which the ecb is so keen to make sure works at this point . Lars indeed, what you see, there are a lot of steps being taken by the supervisors to ensure that banks can play their role. Because back into the crisis of 2008, banks were at the heart of the crisis. Whereas now banks are at the heart of the solution. That means banks should not be suffocated. They should be able to transmit the money, and basically be able to play their role. That is what you see taking place. There are some changes in the requirements so that banks can play their role. And they are being taken so that banks can really pass on the money into the economy. So you see that all those are being taken for banks to play that supporting role to get out of this pandemic. Francine thank you. That was guy johnson, with the cfo of bnp paribas, lars machenil. Coming up, we will ask about oil, and about the values out there, and of course what it means for market valuation. This is bloomberg. Francine this is bloomberg. Rveillance i am Francine Lacqua in london. Lets get back to john normand of jp morgan, where he is head of cross asset fund mental strategy. I know we spoke about the legality or not legality in terms of the ecb and the qe program. I want to get your thoughts on how damaging this could be. Does it show that german courts are not, you know, and solidarity . Could this be the start of the end of the euro project if countries feel they do not have enough support . Does it rain in what the ecb can do . John i think it is the beginning of the potential Court Challenge against the program because there has been a number of ways the ecb has constructed its programs to try to essentially allow debt monetization, which otherwise is prohibited by the lisbon treaty, and what happens with the newest incarnation of that, it was the subject of the German Constitutional Court ruling today, but the fact that the German Constitutional Court is at odds with the European Court of justice over the previous program, the app, means you could see a Court Challenge in the future. I dont think it will constrain with the ecb is going to do over the next several months. Therefore, i dont think it is a reason to be expecting wider spreads or a much weaker euro or lower european equities, but it monitor if risk to challenges are leveled against the program and the ecj rules against that, then obviously that is a major issue how european sovereigns are going to be funded. They will take a long time. It is not an issue for right now. The biggestat is issue facing europe right now . Do you worry about all the debt accumulated by certain countries . Will they need a bailout or is it too soon to worry about that . John i think there is a very nearterm issue around to what extent lockdowns cause a big bounce in growth or a small bounce in growth, but that is a concern that is shared across the economy. It is not uniquely european. I think the european specific issue is whether or not the way europe has responded to the covid crisis is going to lead to some flareup in Political Risk at some point in the future in those countries that feel like europe is not showing solidarity. This is the italian issue specifically. You do always have to wonder if s faily that the european to deliver transfers inside the country is going to become an issue at the ballot box at some point. Again, not an issue for right now, but it should be in peoples minds that the Political Risk in europe only gets amplified by the way the covid crisis is handled. What kind of recovery do you see . I know we talked about it a little bit before, but what kind of recovery do you see in the u. S. , and is the u. S. The biggest concern given the numbers that are coming out of it, in terms of number of infections and the number of deaths . John i think the initial move up in growth is going to be pretty big, simply because if your starting point is less than no activity in the month of april, loosening restrictions somewhat is going to give you a bounce, and a big we saw this with some of the chinese numbers rolled out in march. But also learning, as you get a month into the restrictions easing, the private sector is not responding as you might have hoped, because it is a more difficult operating environment with newer restrictions and regulations, and their is certainly caution on the part of consumers. My concern is that even though you see a big lift in the second half of may and initially in june, but following that is really an open question. It could be a bounce to kind of a flatline level of growth rather than something that kind of builds on itself and becomes self reinforcing over time. My concern in the u. S. Is essentially the lack of federal and state coordination, meaning it is probably not the most thoughtful approach to the openings. Ause these are big states you know, there are no political controls in the u. S. Opening one state causes a broader problem with a second wave of protection in the u. S. , and i think that is only going to be proven over the next couple of months when that fear is grounded or not, but that is certainly something to keep in mind. This is not a coordinated process at all at the federal and state levels, meaning you could have a negative situation from one state to another. Francine john, thank you so much. John normand of jp morgan. Stocks are climbing with u. S. Futures as a lot of countries in europe are not only started to think about a lockdown but starting to implement a bit of easing in the lockdowns we have seen so far. Looking at oil gaining for a fifth day, the longest winning streak in nine months. And of course we try and figure out what the German Court Ruling actually means. The ecb Central Bank Quantitative easing program looks set to fight another day, even after german judges issued a threemonth ultimatum to fix it. This is bloomberg. Viviana you are watching bloomberg surveillance. A torrent of abuse against mike pompeo unleashed by Chinese State run media. They call him evil and a liar. Secretary pompeo saying there is evidence the coronavirus came from a lab in wuhan, china. The chinese reports stayed away from direct attacks on president trump. Ates on shutting down states shut down will begin modest reopening. Will beal counties allowed to relax further stayathome policies. Hong kong will soon ease social distancing measures. They have largely contained the spread of the coronavirus and have limited the number of people in a gathering to eight. It will take a long time for trade to get dr. Ware was before the coronavirus outbreak, according to the bloomberg trade tracker. Looking at how bleak angst could readings could get that the Business Expectations in germany is the most abysmal. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Thank you so much francine thank you so much. More on your markets and what kind of recovery will take ways, and more on this crisis, i am thrilled to be joined by frederique carrier. There are a million questions we have and one is what kind of recovery we will will take place. When will Central Banks need to . O more frederique let me start with your first question, and thank you for this opportunity. It is going to be bumpy. We dont expected to be back to its precovid level before february 2022 and not until its potential before the end of 2022. We expect demand to recover. Social distancing rules will be in place until a vaccine is not only available but distributed widely, and there is a lot of testing and tracking in place. Riskpect there will be a aversion from consumers after this tragic event, and a lot of our consumption is social in nature when we go to restaurants , shopping, and the like. The Service Sector has been disproportionately impacted in this recession, so i would expect less pentup demand than otherwise would the case. For instance, when the economy goes up we will have one haircut , we will not have three haircuts we wouldve had during the duration of the lock down. Back innd turn them terms of supply, there will be demand in terms of supply, there will be damage to the supply chain because countries and regions will open at different stages, and that will make things difficult. It seems like a long time to remember thater after the great financial crisis it took two and a half years for the economy to recover. H respect to Central Banks yes . Francine i also wanted to get your lots on the german cool dust your thoughts on the german cool your thoughts on the German Court Ruling. They asked that the plan be proportionate. Is this a positive for the ecb or will it hurt it . Frederique it seems to ask on the first view of things, and the news is fresh, the demands the court is making doesnt seem to be insurmountable. We think we will be able to work out a solution. What the court wants to ensure is that the ecb is not asking the taxpayers to take on too much risk, so we will need our classification but it does not seem to be a game changer at the moment. Francine what is the one thing that when you look at regions, what region gives you the most hope . Asia will we think come out of this structurally stronger than other regions. Overalle been able to do a better job than most of the countries at controlling the opening up faster than in other regions. Dont have the support resources to support the country. We are hopeful for this region. However, we have an underweight overall in global equities. Is took the market optimistic about earnings and the shape of the recovery, and we see better opportunities elsewhere. Francine what do you do with emerging markets . Do you worry about high or bankruptcies . Frederique we do worry about worriedt i have to stay about it like the markets are. The markets are discounting default rates in the order of high single digits. We think it will be much lower than that, to the level of 2 to 5 . We expect some rescheduling, but over the last decade we have seen the corporate sector really live in an era of austerity. Balance sheets have been up a cycled overall we think we think the cycle will not get severe as the market is indicating. We would see asia as the structural winner and other regions such as sahara, africa as a loser. Francine thank you so much. Frederique carrier. Coming up next, we talk about the trust barometer. We talk about we talk with adelmanelman richard edelman. This is bloomberg. Francine good morning, everyone. This is bloomberg surveillance. Lets focus on qantas, cutting more flights and the coming weeks and months as it hopes to restore trust and some services as virus restrictions ease. We spoke with the chief executive officer alan joyce. Case which wet think is extremely unlike the is these Market Conditions continue where we have 5 of our domestic operation lying today if that were to continue operation flying today. If that were to continue, we could fly until the end of 2021 with the current financing we have raised. Billion onther 7 aircraft, so if those conditions were to continue and we have had to borrow money against aircraft it could last well into 2022. We see positive signs the domestic market is going well and that is best market, the most profitable market, the most cash generating market, so we are confident we will have the liquidity to last for a long time. If it was to continue in current conditions, we would have no work for 24,000 boys, employees, but when domestic comes back we will reactivate those employees. You mentioned you mentioned the domestic market with potentially the collapse of virgin. To takeantas position advantage of the gap . Alan there are a number of interested parties in taking virgin out of administration. We will still have strong competent agent competition in the domestic market. With qantas and jet star, the lowcost carrier is wellpositioned. Domesticas the business comes back we will be so weng business for cash will be cash positive back in the air and that will lead to attractive airfares in the domestic market, stimulate the industry. We think there is a pentup demand as people have been locked down for some time. They want to visit their families and go on a holiday. We think there will be a pentup demand and we are wellpositioned to take advantage. This opportunity for qantas given that strength, we are the strongest airline in the world with the best level of liquidity , the lowest level of cash burn, and we can take shares domestically and internationally. When would you expect consolidation in the sector and would you lay a role . Alan we are key on consolidation when there is a chance. Asiapacificn the where the governments on the airline, but qantas is wellpositioned to take advantage and we will keep an eye out for those opportunities. What does qantas look like after this when we get through coronavirus, what does the airline ultimately end up looking like . 2021 2022 will be different. The International Market will take time for recovery. We have the ability to take share and lock market i market on what by market on what recovery looks like we have not made like. We have not made any calls on it. Flexibility. Ining backuld bring them all 12 depends on how the United States and u. K. Cope with covid19. Withther market stuff opportunities for australians to go overseas, and the asian markets we have had and how they respond we are keeping things like stability open, keeping everything on the table. We have made the decision to delay some products or fleet we were thinking about ordering that allow us to fly nonstop from australia to london and america but under the circumstances we dont think it is the right thing to do. Francine that was the qantas chief executive speaking to us earlier. I was looking down because im trying to figure out this court ruling and the market reaction. This is the power of the bloomberg terminal. You can have it at your fingertips. Coming up next, we will speak to richard edelman, trying to figure out what spring 2020 is ringing us. There bringing us. I think there is a high trust in government and we will see what that means for the pandemic. Bloomberg surveillance. Good morning, good afternoon, good evening. This is bloomberg surveillance. One of our most listened to interviews was with Richard Adelman edelman about the trust barometer in davos. Time to get a trust Barometer Spring update. Richard, great to have you on the program because if you look at what happened since january, the world has completely changed and the trust barometer shows there is more trust now in government. What are people disappointed in and why do they trust the government so much, because we are in the middle of a pandemic . Richard we are in a moment that is equivalent to world war ii. We did not see such a bump in trust in government after 9 11 or after the 2008 recession. This is unprecedented in my lifetime, so government has stormed into the lead among institutions. It is the Record Number ever for government interest. There are some Warning Signals for business which is in a certain way drafted behind government and let government lead. We should probably talk about those. Specifically i think francine government is trying to get go ahead, richard. Richard what people like about government is lockdowns have somehowective, that National Health services have been magnificent, and it seems as if there is a real priority to people aid through who are disadvantaged or who are now out of work. The key point is that business now has to step up, particularly as we return to work. There has to be a plan put forward by each ceo about his or her business that makes it clear it is a priority for safety of customers and employees, but also can make money. Francine if you look at what the people want from the government, it is clearly laid out in your report, to provide economic relief, to get the country back to normal, to contain covid19, and to inform the public. That is done. What do Public Companies do . Are they not overly reliant on the moves government takes . Richard people want business to competent as well as have ethics and integrity. We are going to be looked at over time as to whether we are getting the right products particularly for people who are now unemployed or have less money. Prices correct. Are we reformatting the way our offices look to protect people, plastic shields maybe in between or a and b shifts so there is less density on the floors, being more flexible with employees so they can come in earlier or later and not be a rush hour to mark we have to be rush hour . We have to be clear that priority the priority is health three out of one say do not go back too early. We do not want another outbreak. Now in to show well three months this is our moment, this is the moment of reckoning. Francine do you think it will be difficult to get people to go back to work . We have this concern with chinese employers saying there will be two to three months where it will be difficult to encourage people going back to the office. Will it be different in the u. S. . Do you see cultural issues . Richard we have to show a new look for the office, a new approach to dealing with employees, and start the communication now with the employees and say, this is what we are going to bring you back to. We will be more flexible. To, if be more oriented you dont feel well, dont come to work. It is probably smart to have masks in the beginning, may be gloves as well. We need to show a different look to the office and make sure that people feel they are in control as opposed to a harsh boss who says, you are not coming to work and therefore you are a slacker. We should not have that mentality. We should over a period of time make people comfortable and make them feel safe. I think people want to come back to work. Conference calls from positive get old, but what does not get old is i have to take care of my kids and family. Everyone in business has to pay real attention to it. That is our first job. Francine when you look at media reliability and confidence people have went up. Is it only business that need to and telling people what they are doing like you were saying . Richard Mainstream Media such as bloomberg has done an outstanding job and it is recognized and the trust levels have never seen for the 60s the high 60s. Ngos have rising trust levels but questions on execution. Business, ngos have to actually partner with government, with business, and make sure deliveries of food, medicine, etc. Are happening. Francine richard, thank you so much for joining us today, richard edelman. Coming up, and exclusive conversation with peter orsak, chief of Financial Advisory. We did start the program off with the german constitutional hearing on the legality of qe. German stocks rising along with u. S. Equity feeling futures. Buoyed. T is boyd i am looking at euro falling after him esters tried to gear out investors try to figure out the verdict from top judges over the legality of the ecb stimulus. This is bloomberg. Francine germany gives the ecb a threemonth ultimatum to fix qe. Judges say parts of the program are not backed by treaties. A gradualtinues easing while the number furloughed tops 40 million. Shares rising. We talk earnings and wall street with peter orsak. This is bloomberg surveillance, a lot going on in your markets. There was marble in europe and bonds when we had the decision from the constitutional courts in germany about qe. If you look at oil, it is rising for the third day in three. If you look at some of the other things out there, there does seem to be buoyancy on the markets that we are