tv Bloomberg Daybreak Australia Bloomberg April 2, 2020 6:00pm-7:00pm EDT
>> good evening. we are counting down to asia's major market open. i am taylor -- taylor riggs in new york. stroud-watts in sydney. let's get you the top stories for the coronavirus pandemic unwanted milestone. one million people have been infected and 50,000 have died. u.s. jobless claims at a record. payroll numbers may not show the full extent of the damage but
could break 113 straight months of gains. oil leads on both sides of the atlantic after president trump says he has a key to resolving the standoff between saudi arabia and russia. taylor: i want to check on how the markets closed thursday. today'seeing gains on trading session, reversing some of the losses we had previously. there is optimism. you had horrible initial jobless claims, 6 million which is double last week's 3 million. million the total to 10 . the market is getting some certainty where they can start to quantify the magnitude and speed of the damage. the markets hate uncertainty. at least this data is starting to give us an indication of the economy. the market is using that as a point to rally off of. within the futures market some of that is turning around.
futures markets have opened up in the last few minutes. we are talking a lot about oil in the introduction. we had an incredible tweet from the president which put oil up 22% and then today we opened up, erasing some of the gains, president donald trump tweeted he has been speaking with saudi arabia who had spoken with president putin. he said they will be cutting back 15 million barrels. we were not sure if that was per day. the oil market pricing for volatility. some of the tweets and news flow coming out of opec and the president here in the united states. that sort of hope rising with the pricing of oil and both sides potentially watering down expectations of any the taunt.
etente. we have the cpi numbers for australian services, taking a look at the pmi for the composite number as well. we have some technical glitches but both of them are in attraction or he territory -- contractionary territory. really now extended nationally as a result. trying to contain the controller virus -- really now extended nationally as a result because of the coronavirus threat. from the bushfires we are seeing continued contractions on the pmi. let's look at this friday's session, a mixed picture. japanese futures trading in chicago. with australia we are looking at a bump up after we had optimism
on the wall street session. the s&p gaining for the first time in three sessions, driven by gains in oil. we are watching oil as a key sector for treating on the asx and retail names -- trading on the asx and some retail names. new zealand, the early part of the trading session, the aussie and the kiwi dollars seeing strength, taylor. we had been is not just a justdent trump -- not president trump having an oil resolution but that beijing is adding its oil reserves from the stockpiles. taylor: back to the u.s., the white house press conference on the virus outbreak is happening now. president trump says the ppeheck protection program, , will start tomorrow. described small business loans are being raised 1% after lenders contained --
lenders complaint. here is shery anh. explain the paycheck protection, because it does not follow a lot of the -- does not solve a lot of the cash flow issues. it doesn't because the company -- companies have no incoming revenue. shery: that has been a big issue. you have all of your business is shut and with small and medium sized businesses, cash flow becomes very limited very soon. this is in order to help them keep their workers and retain their workers. there are many issues that need to be resolved. the guidelines are for $350 billion virus relief program for small firms. the loans are guaranteed by the federal government. they don't require collateral. you can go to the government, ask for this and it will be
forgiven if you are using this money for payroll costs, mortgage interest, rent, utility payments for two months and if the businesses retain and rehire employees. this is supposed to be alone with an interest rate of .5%. -- a loan with an interest rate of .5%. lenders complained about the terms of these measures. the money is allocated by community banks and other small business administration lenders on the first come, first serve basis and starts tomorrow. the program for independent contractors, secretary mnuchin says it is coming next week. aid bill do a phase iv when the administration is ready. cash flows in terms of paychecks for individual households, those checks, direct deposit, will be coming within two weeks.
haidi: president trump issuing the defense production act, aimed at getting production of extra ventilators. is it likely to help a shortage we are seeing? shery: yes, president trump is expecting more orders under the defense production act to be issued. he has evoked this -- invoked this against 3m. ventilators have been a big issue. some parts of the country saying we could be running out of the breathing machines very soon. new york is only six days away from exhausting their stockpiles of ventilators. president trump saying he spoke a peter navarro -- taylor: what do we know about the latest u.s. cases and deaths? we hit the one million milestone
today. shery: johns hopkins saying the virus case numbers globally have topped one million, the deficit exceeding51 -- deaths 51,000. cases, the team seems optimistic we are seeing testing up. take a listen to what mike pence has to say. over 100,000ting americans a day. we are tracking every single day the number of cases coming out, where they are coming out. shery: the mayor bill de blasio changing some of the guidelines. encouraging workers to cover their face whenever they venture
out. it seems to be a preview of a nationwide advisory. the united states so far has held back from telling people to wear masks as this could take away supply from critical health care workers. sort of that mixed messaging when it comes to personal protective gear. some breaking news when it comes to disney, the company along with so many others in the tourism sector has been badly affected by the pandemic shut, disney announcing it will be undertaking for low -- furloughing employees whose jobs are not necessary now. aprilrocess will begin 19. they did not say hey melanie -- how many.
for weeks now, all disney parks around the world have been shut as a result of the various adamic -- various pandemic shutdowns. it has got more bearish over the past month, seeing the company as vulnerable. there are new warnings in terms of these headlines. we will get you up to date. there are new warnings the u.s. is entering a sharper session with economists saying gdp is heading for the worst decline in quarterly records. restrictions on movement have .orced the economy to stall all of them expecting gdp falls in the second quarter. the forecast will see a rebound in the last six months of the year. spain has 950 new victims, taking the number of deaths above 10,000. thursday was the deadliest day and health services stretched to
breaking point and the army facing its biggest ever peacetime operation. -- germany expects is numbers to -- the economy shrinking at least 5%. recognize thats they should not repeat the mistake made at the beginning of the crisis. we should deliver -- develop criteria, a roadmap out to proceed in the exit strategy. there will be different timelines for different regions. haidi: china is rejecting u.s. claims it downplayed the coronavirus, accusing washington of seeking to shift the blame for its own handling. beijing said it was open and transparent, denying any attempts to underreport total cases and deaths. the foreign ministry asks what the u.s. has actually done besides touring arrival from
>> quite likely by the end of this quarter we will see an unemployment rate that is probably north of 10%. >> this has been a world of hurt for workers. america's unemployment rate is skyrocketing. >> we have had the highest spike in unemployment claims within some time. >> the unemployment rate peak in the low to mid teens that we would expect that would quickly decline. >> we are expecting the
unemployment rate to spike some of the let's all that pandemic relief. >> we want people -- let's call that pandemic relief. >> we want people to stay home for their own good. >> our next move is towards recovery and go forth. taylor: some of our guests commenting on the virus' impact. joining us for jobs numbers, michael jones. walk me through why the market rallied today. markets don't like uncertainty. despite the fact the jobless claims were 6 million this week after 3 million last week which brings us to almost 2 million in , is it happy for the markets they are getting clarity over real numbers and can quantify the economic damage? michael: i think the market got reassurance on two points today. as you noted, the jobless things
numbers were two times what investors were expecting. we should note tragically covid-19 infections were worse investors are expecting but the market was $2400 onold support at the s&p 500. two weeks ago we got news that was less onerous and we punched through that level. the fact we were able to hold it today to the combination of the $2 trillion stimulus plan, the president's more somber and realistic tone on the seriousness of this pandemic, investors are feeling more confident about the future output and a -- and are willing to look through. taylor: is an mentee here -- is mnt here no matter if we are
ready for it? michael: this is the other thing investors are recognizing, it is a new era in the u.s. economy. the $2 trillion stimulus package can only be financed by the fed cranking up its balance sheet and putting in another $2 trillion in the next few months. whether they say it or not, the president, congress and fed chairman powell have joined aoc embracingmpatriots by modern monetary theory, that any stimulus spending can be financed by printing the money provided that the inflation rate stays low. what that does is it gives an unlimited checkbook to congress and the president to the -- president to stimulate the economy. they will do whatever it takes to get the economy back on its feet. the fed has made it clear they will print whatever it takes to finance that spending and you are foolish to bet against them.
don't fight the fed. when the fed is willing to finance and list stimulus spending, -- finance endless stimulus spending, it will recover. the markets will have to deal with the extra $3 trillion floating in the system. that is my next point, with this day rolling ball of money, we are setting up for the mother of all asset bubbles? michael: let's remember bubbles are fun to ride on the way up. , the president, congress and fair chairman -- the fed chairman are drawing on, everyone expected bubbles 12 years ago during the financial crisis when the fed printed a lot of money. it did not happen, so they are reassured it will never happen. 12 years ago as much as the fed was printing, the shadow bank
system was collapsing. it was on printing -- it was unprinting what the fed was putting into the economy. we are forgetting -- we are forbidding foreclosures. the whole $3 trillion the fed will print will wind up in financial markets. that creates a real prospect for too much money chasing too few assets. that will be fun as the bubble inflates. you need an exit strategy. haidi: do you see support for the s&p around 2100? what do you do as an investor? people are sidelining themselves, holding cash. just because there is a market, doesn't mean you have to invest in it. can the market
breakthrough 2400? absolutely. we are going to get so much bad news over two to four weeks, 2400 is the first support, but we have already broken that. we could break it again. critical support. that was resistance all through 2015 and 2016. we could not get through it all the way up. it will be very powerful support on the way down. i would be shocked with all the money and stimulus being thrown at the economy if we broke 2100. i think what investors ought to be thinking about and what i am doing is i am thinking about what is happening 12, 24 months out. with all of the stimulus money, $3 trillion that is going to be pushed into the economy, that is a lot of money that is going to be looking for a home. if you can take that longer view
, there is a lot of support for equity prices once we get through what will undoubtedly be bad news. look at your alternatives. bonds, yields next to nothing. everythingke when else looks ridiculously expensive, then stocks must be relatively cheap, and i think they are. in a world of modern monetary theory, to want assets where their cash flows and earnings can scale with the amount of money being injected into the economy, and that means equities. taylor: i want to fold over into the smart money and bond. investors put in a record $7 billion of inflows in the u.s. high-grade bond funds, high-yield bond funds, this week. does that tell you the worst is over? michael: normally credit spreads
start white -- start tightening before equities allow. i agree. the credit spreads, particularly on high yields, we should recognize there is going to be a default cycle in high-yield. i would say if you look at the amount -- typically there is a to 10 years between big default cycles, because we clean out the weak companies and then overland to them over eight or 10 years and there -- over lend to them over eight to 10 years. then there is more to clean out. defaults will probably hit 10% over 12 to 18 months. that is well priced in given what historical recovery rates have been. smart money is starting to sniff a bargain. high-yield turns, investment you arequities turn,
right what that signals for the future. taylor: michael jones. downgraded high-yield exxon mobil has lost its aaa status and has been cut down to a aa1. very strong, very much in the investment-grade category but notable it has lost its aaa rating, now cut to aa1 and the outlook remains negative. we will have net -- more coming up next. this is bloomberg. ♪ ♪
effect, president trump saying he has the answer and then both sides watering down expectations. is the political solution really anymore likely today than it was yesterday? [indiscernible] taylor: we always look your analysis here. we are having some audio issues. we'll try to reconnect with you on the oil headlines. if you want to get a quick check of the other business flash headlines, starting with tesla, first quarter delayed -- deliveries have beaten estimates. sending shares soaring as much as 20%. tesla handed over 88,400 vehicles worldwide.
against estimates of around 78,000. the new plant near shanghai is reporting record production and has reopened after the coronavirus shutdown in china. general electric is set to lay off thousands of jet engine workers, expanding efforts to save money as the coronavirus ravages the aviation industry. they say engine assembly will be reduced temporarily along with some component manufacturing. the decision comes less than two weeks after the company announced plans to cut 10% of its u.s. workforce. the fallout from the pandemic has forced walmart to possible sale of its majority stake in a u.k. pressure in order to focus on -- grocer in order to focus on its -- there is no timeline for resumption. virus fears has lifted grocery
mike pence has told bloomberg 100,000 americans are being tested daily for coronavirus. the government tries to ramp up its liking response to the outbreak. -- lagging response to the outbreak. >> what i can tell you, because of the public-private partnership we forged with these vast martial labs that your listeners -- commercial labs that your listeners know well, we are testing over 100,000 americans a day. but a very significant breakthrough happened this weekend.
moving with record speed the fda approved avid laboratories point of care test. it is a 15 minute test people can have administered at their local doctor's office. we are in the process of identifying the thousands of habit laboratory machines that are around the country. we aremaking sure distributing those not just to areas that are seeing an impact today but we want to distribute those as abbott laboratories is making about 15,000 tests a day. we want to distribute those two areas you implied is the kind of surveillance testing that would allow states that currently don't have a significant outbreak to be for weren't -- forewarned and do the tracing that would limit the exposure and spread.
but the other part, we are theking every single day number of cases that are coming out, where they are coming out. i have received a briefing county i county, state by's -- by county, state by state. that is informing us not only with the strategic national stockpile but with the health care distributors around the country about where we are sourcing and focusing everything from personal protective equipment to all of the supplies that our health care workers need. we are focusing at where the outbreaks are, but we are working closely with governors to support their requests for field hospitals or equipment. we will continue to do that around the clock. personaltalk about the protective equipment and the ventilators. you are coordinating and monitoring, encouraging.
is there a serious consideration being given to centralize the location of these? states are bidding against each other for ventilators. is there something that you could decide where the ventilators and n95 masks go? when the president signed the declaration a few weeks ago, he stood up fema as the lead coordinator of our nation's response. fema has been very closely working through all of its regional administrators, working with governors to process requests not just from the national stockpile but working with distributors around the country. we are directing them where we need that personal protective equipment to go. we established what the president has called an air
bridge. it will be 51 flights from all over the world bringing in supplies for health care workers pre-we were wheels down -- workers. miamie landing in jfk and . those will continue to come in around the clock. what we are doing is we are taking 90% of the resources and deploying them through distributors to go to the point of need where hospital workers are working for and requesting personal protective equipment. can use thewe strength of the market sector's distribution and the logistics tina fema. -- team at fema. as we track the initial outbreak, seattle area in washington state, california, now the epicenter is but a
greater new york city area. we are working to bring supplies in, increase production at home and then directing them to where they are needed most. haidi: that was the vice president mike pence speaking. in the next hour will be speaking to natasha who will be talking to us about this argument china leapt at the chance to shake the virus. let's get to oil which has lower -- which is lower in new york after soaring on wednesday. let's get more from our commodities strategist for bloomberg intelligence. great to have you with us. i wanted to ask you before, we had the ups and downs in the market after president trump said he has cut the answer to this. are we closer to a political resolution that yesterday? -- than we were yesterday?
>> it seems unlikely the we have heard this a lot in commodity markets. a couple of months ago we were supposed to be buying $30 billion of u.s. agricultural products. markets really sold out around 20. it got good0, support. it is forming a base, not going to get much above 30. here we are and the main issue is the demand is unprecedented. there is going to be supply reduction but it will come from lower prices. politics help but most people natural natural want -- a more natural supply. they have to stop pumping because there is no place to put the oil. taylor: if there is true demand destruction, let's say the barrels go through, that reduces only 10% or so of the demand we
had before the coronavirus. if that market -- number is true, would that even help? >> it will help a little bit. it is a substantial statement because 10 million barrels a day for saudi arabia and russia, that is almost 50% of the total production which also means they will be losing a great amount of revenue and that is their major source of revenue. he would help, but -- and it will depend on how quickly this demand can come back on. lower prices would help that. we saw these commodities related currencies like the aussie and the kiwi jump on the news china will add to its oil reserves. is this a game changer? if we get a sustained and continued recovery in the chinese recovery, it would help
-- chinese economy, it would help. >> not much. fact unknown k -- a known everyone will be filling up. it is really not and it should be, it is prudent to fill up and create as much storage as possible. i hear based on supply at the moment, global storage is going to be sold basically by the end of may. taylor: mike mcglone. getting a quick check on the markets, futures reversing a little bit of the gains we had seen thursday. you can see going to call it unchanged for the most part. you have japan futures opening forjust a technical liberal meh.-- level four term,
futures are opening higher in sydney, getting optimism that we had in the new york session thursday. new zealand is up .6%, certainly getting extra bullishness. talking about exxon mobil which lost its aaa status now chevron being reaffirmed as aa by moody's. still a lot of movement in the broader market. more next. this is bloomberg. ♪
johns hopkins says the was has the most reported cases at 230,000. china is rejecting u.s. claims it deliberately downplayed the coronavirus, accusing washington of taking -- seeking to shift the blame for its own handling. using insists it has been open and transparent in its response, denying any attempt to underreport total cases and deaths. the foreign ministry ask what the u.s. has actually done apart from barring arrivals from china in february second. trillion as81 policymakers continue making purchases of treasuries and mortgage-backed securities grew total assets worth 500 billion the -- $550 billion with the scale already working in the wake of the financial crisis a decade ago. -- captain of americans
america's top worship has been removed. the virus swept through his ship. letsked his superiors to infected patients be quarantined immediately. he has been sacked with the criticized -- pentagon criticizing his actions. in terms of the stocks we are watching, tesla shares are up, the carmaker reported more deliveries in the first quarter than analysts had expected. --'s bring in: rush with us colin rush. people said i don't know how they did it. was a shock elon musk was able to pull off these numbers? >> not at all. there is a sense that this company has a lot of bandwidth and was getting their production
to a level that could deliver these sorts of numbers and in previous quarters they had delivered this level. what is different here is the weak.quarter is we are not shocked. we are not surprised to see this level of activity. the real questions going forward are about production levels in china which fell through which it appears to be going well for them. -- and that is something that is difficult to speculate on now. you point out given these numbers on the capacity they have at the shanghai factory, there is the potential for more upside. do you expect them to be able to deliver on the 500,000 unit
target for the year? factoriesh the u.s. shut down. we will see what happens and when production gets up and running. there is some major questions with consumer behavior looks like coming out of the coronavirus shutdown. our expectation is since customers are more solvent than the broader auto industry, and tesla has outperformed his peers, but if this lasts for a long time, it will put all of the production into -- and inventory numbers at risk. with running at full capacity in china, it appears there are opportunities for expanding the capacity. it could be a big bright spot for them this year. it is running at higher levels and we are able to get back to more normalized production in
the u.s. in a reasonable timeframe. one man yesterday said thank god tesla tapped the markets when they did. are you comfortable with the cash they have on hand going forward? >> without question. if you look at everything they have done, the fourth quarter valuable billion in a -- in available cash, adding $2.3 billion and another $3 billion, we are expecting them to have been cash flow positive in the first quarter based on production and delivery numbers. i suspect they saw what was going on in china was disruptive. they thought it would be prudent to have additional cash on hand. you have got working capital online, which is something on
the order of $1.5 billion. the overhead, and then you have gross margins after that. at worste are looking case scenario on early basis when you get the working capital online to the company, having to burn $400 million a quarter. they are in a strong position. taylor: i am trying to understand the wheeldon amex. with oil at -- the oil dynamics. with oil at $20 a barrel, do you think tesla is a company where you let tesla do what it represents, not necessarily ev vehicle andn you are worried about the environment? >> there is a mix of everything. buyers get more price sensitive
price tond gas consumers can be meaningful in terms of monthly economics. is target customer for tesla a premium customer who is buying on a couple of metrics. performance, electric vehicles at acceleration and many characteristics that are telling consumers the ease of driving or the noise aspects of this. and then trying to do the right thing for the environment. that is an ideological purchase for them. there are people interested in this product that are not receptive at this point. [indiscernible] stops at that in the near term.
china we are hearing news could potentially cut the electric vehicle subsidies by 10% later this year. how much does that curb enthusiasm for tesla demand? >> we are hearing mixed reports out of china, to cut midyear. reports thatearing could raise the floor on the range for vehicles. what was seen in other industries is china has tried to stimulate demand by using cuts and subsidies as a driver for short-term demand. we have also seen stimulate industries early in the trajectory of growth. players we'd out your weaker players. there is a little bit of price
pressure near-term with the subsidies. but we have seen so for is not a great deal of sensitivity in the china market. there is a lack of supply available in the market. -- no not seeing issues doubt tesla planned for study theongoing cuts out of market and is prepared to deal with [indiscernible] taylor: always smart on tesla, senior analyst at oppenheimer, thank you. we want to bring you some headlines on oil, trump is speaking during the coronavirus briefing. they are saying saudi arabia and russia may cut oil by more than 10 million barrels a day. we got some of those reports earlier. he is saying russia and saudis are likely to make a deal. they both want to make a deal, saying the saudis and russia may
on some of the business flash headlines. the bid -- world's biggest sovereign wealth fund lost a record $113 billion as the coronavirus triggered a selloff. this comes as a historic moment as it may have to liquidate assets for the first time ever to cover emergency spending measures to cover the pandemic. the quarterly slump is worse than the 10% they lost at the height of the financial crisis. has sold sold -- baidu some, becoming one of the few in asia to do so in recent weeks. the chinese tech giant issued $1 billion of debt in five and 10 year bonds pre-proceeds will be used to pay down loans. firstby do -- baidu's offshore sale in years. china plunged as much as 86% after the company announced directors are investigating senior executives and other employees for a list fabricated
-- alleged fabricated sales. this is aimed at the coo and other employees who report to him. the transactions in question occurred last year. around $310 million. but go to us -- let's go to australia. we could actually see a modest uptick as they predate the arrival of the coronavirus. the temptation is to kind of just skip through to the numbers that are going to be reflective of the new reality we have seen, but are we expecting upside, given the previous month was poor because of the bushfires? >> we are. but the temptation is a -- is to turn a blind eye because they represent the eye of the storm
with the coronavirus and the bushfires. we are expecting to see a rebound with half of 1% after the contraction we had in january, .3%. likely to be short-lived coming in that market between the bushfires and the virus outbreak. it is really margin that will be the critical read. we are likely to see a big price for supermarkets with declines in cafes, restaurants and department stores. not corrected to this but on the subject of sectors, we had a note from citigroup about the big banks in australia, was pink and others, -- west bank and others likely to cut dividend payouts between 10% and 18%. this is a note from citigroup. this is from his you want there having to stop dividend payments altogether. taylor: the government is announcing another stimulus
measure, free childcare for all. paul: for all essential workers and scott morrison to find anone with a job as essential worker, so this is a $1.6 billion measure and will keep 13,000 childcare centers open. families that have parents and jobs causes is 1.3 million families with an average use of childcare centers, 25 hours a week, five hours a day, having to send their kids to childcare and it won't cost them anything. any parent -- he doesn't want to have any parent having to choose between feeding kids are having kids looked after. this keeps those centers open. they don't have to worry about losing their pace -- their place. this gets bogged back with the crisis is over. crisis isack when the over. and there will be dead somewhere around $1.3 trillion. -- debt somewhere around $1.3
♪ haidi: a very good morning. i'm haidi stroud-watts in sydney, where markets have come online. taylor: i'm taylor riggs in new york. welcome to "daybreak asia"." hits aonavirus epidemic grim milestone, one million people infected worldwide, 50,000 people have died. europe remains in the eye of the storm. spain's
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