Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

In the last 24 hours, combining virus dynamics with oil dynamics. That is a distinction of this crisis. Francine and i am looking two to european lets get to first word news in new york city with viviana hurtado. Viviana we begin with a uturn from President Trump on the need for an economic stimulus he now says he will seek a payroll tax cut and belief are Industries Hit i the new coronavirus. Today the president is promising to unveil what he calls very dramatic action to support the economy. Bloomberg has learned for now the package will not include help for airlines and others in the travel industry. Now to italy it will become the first country in the world to attempt a nationwide lockdown. It is trying to stop the spread of coronavirus in europe. Almost 500 people in italy have died from it. A prime ministry imposing a travel ban. He has told italians, stayathome. Some of the worlds biggest banks predicting the European Central bank will cut Interest Rates thursday. J. P. Morgan and deutsche joining hsbc in forecasting reductions. This would be the first policy put in place by the new ecb president , Christine Lagarde. Days holding primary, mr. Biden leading Bernie Sanders by double digits there there are concerns he could be hurt by low overt or. 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, viviana hurtado. This is bloomberg. Tom thanks so much. Lets do a data check. I am going to do two boards, but they really show the stabilization out there. Futures in the last hour up 1. 05. Dow futures up 8. 93 off the 2000 point debacle yesterday. Curve steepening, the oil comes back a little bit. The 30year bond well out over the 1 history made yesterday. The german twoyear was a negative 1. 0 and comes back as well. In ahigher yield structure full facing credit. Francine i am looking at european stocks. Stocks overall are stabilizing, oil also stabilizing after the deepest equity route since the financial crisis. Bonds, havens, currencies, gaining back exceptional gains from yesterday. 104. 40 two. The swiss franc, one of the things that we were yen 104. 42. One of the things we were seeing yesterday, it is difficult to things are stabilizing, yen sliding along with swiss franc. The 10year treasury yield, i know you mentioned it, that could be roughly half of yesterdays tumble. Tom we will see where the news flow takes us as well. Where are we in the market . I have showed it many times over the year, real simple, the correction in bear market charts down 10 , down 8 down 18 . Paul sweeney is down here at 20 . Long ago and far away, francine, the dow 29,000. We go down, the biden rally out of super tuesday, down once, down twice, and we plunge yesterday. There is where we are right now, sitting just above that 18 level. Francine yeah, this is my chart, a simple chart. It is a very powerful chart, and thank you to Hillary Clark for making it. Gold is the that must test for what is going on in the market. We brought it back to 2012 yesterday. 1006s 1700, back around hundred. So a good way of looking at risk. 1600. Und mr. Hildebrand, thank you for joining us. Talking about what Central Banks should do if you put yesterday into context, what was the fear generated by, and how does it impact liquidity in the future . A veryt of all, it was big event. It had echoes of 2008, although i think it is a different story and we will get to that. Ithink what it really is, depicts the uncertainty that is associated with the virus. We also see that the market is coming to terms with this, that there will be a sharp and potentially deep impact on global growth. So the recession dynamics coming into play, and i think all of this kind of created this moment of great anxiety in the marketplace and we will continue to see volatility going forward. Francine is the recession avoidable . Times in life are that policy can make a significant difference. I am convinced this is such a time. Much of it will be a function of what policymakers can do at this stage, hopefully in a coordinated and aggressive way. This is a time that policymakers have to step up and do what is required. So much will depend on what happens in the policy space. Tom wonderful to have you with us today, and certainly is for former head of the Swiss National bank, this is a sensitive time. The market gyrations at black rock, you have a spectacular team, the mathematics of someone like jeff rosenberg, the politics in england of others as well. You have every base covered. What have you heard from your Blackrock Team about how we find stabilization in these markets . Morning. Good i would say a piece of good news is that the market worked reasonably well, even though we had historic moves we can see this also in the etf market. That is an important signal that the etf market function, market integrity was preserved despite the extreme move. I think the focus will be on policy. That is acrosstheboard, whether i speak to my former colleagues, market participants, Portfolio Managers, ceos, that is now what is required. Conservative, aggressive, bold, and a preemptive move by policymakers to make sure that we do not get into a selffulfilling downward spiral related to income not being paid anymore, people defaulting, Small Businesses defaulting. One of the important things to remember is a lot of people do not have a lot of reserves. A lot of smes have tight margins. If they do not have customers for a couple weeks it becomes very hard to service their debt, it becomes hard to pay the rent. Wheres a classic case basically it is a Natural Disaster case where customers have to step in and provide governments have to step in and provide support. Tom we will rip up the script with dr. Hildebrand because he also has Stanley Fischer working with him at blackrock. The question is, who does larry fink not have at blackrock . Thatu have any indication governments are willing to do surgical, specified fiscal stimulus, or is it because of the austerity clause out there, just a lipservice of fiscal stimulus . Philipp look, i am confident that governments will step up. What they need to realize, this is really a Natural Disaster type of event rather than a replay of 2008. If they can step up appropriately, we would kill we can avoid the type of dynamics we saw in 2008. The problem we have is the classic tool of Monetary Policy is basically not going to be very effective for two reasons. Toes are at, below, or close zero already. Secondly, this is not really a problem that you can solve with Monetary Policy. That shifts the emphasis to fiscal, and importantly, to the extent Monetary Policy plays a supporting role to liquidity issues, this has to be coordinated. We have to get to a world where Central Banks and fiscal authorities coordinate in this response that is the way you are going to put a halt to this. Francine yesterday a lot of the parallels where between what we were looking at in the markets and 2008. You say the economy is much stronger. Talk to us about that, and does it mean that blackrock is remaining invested in equities . 2008 if it felt like you are a Portfolio Manager yesterday, but it was not. I was there in 2008, and the difference of course is the Financial System essentially seized up, which is not what happened, at least so far. This is not at the core of the Financial System, this is a natural event, a Natural Disaster that is basically hitting us, and it is hitting us increasingly globally, so it is very serious. As a result, we need to keep 2008 in mind in terms of what to avoid, but we need to think differently in terms of what is required. What is required is quickly, financial support, fiscal support, potentially with a coordinated monetary piece that can accompany all this in order for us not to get into ultimately a place where the system gets impaired, the core of the Financial System gets impaired the way it was in 2008. Francine moments ago, saudi arabia escalated the price war with russia, with a massive hike to oil supply, saudi aramco saying they will provide 12. 3 a dayls 12. 3 barrels in april. Can opec try and stabilize . Yesterday there was fear that this is another problem that the world didnt really need. Philipp very hard to tell. Significant mistakes were made here, and the problem is where this will hurt most, in terms of shale gas in the u. S. The geopolitics of the Economic Impact can be significant. I do not know how you roll back to this. If i think back to the old days, the president of the United States would have dispatched probably the national and immediately to fly to riyadh or russia to deal with this. This is an important piece. Whether we have the u. S. Leadership that we had in 2008 to sort this out, that is a big question. This is one of the concerns that sits in an overarching way over the whole system right now where is the u. S. Leadership . One of the defining features in the crisis in 2008. We had a very present, strong, focused Leadership Team in the u. S. That really coordinated this event both from the government side as well as from the central bank. Tom i am sure we will have comments from the white house today. , there isldebrand a some form of stabilization today. His blackrock worried about another leg down . Philipp of course we have to be worried, and we will focus on seeing what the governments can come up with. Hopefully at least in some coordinated way globally, the u. S. Needing to step up to this is absolutely critical. I cannot over emphasize the need leadership in. S. This position. Andink in principle, tom, again, this is not at the core Financial System at this point in principle, it will pass at some point. The economic effect is going to be inevitably sharp and potentially deep. But in principle it is something that can pass provided we get the government response, the coordinated fiscal and monetary response that is required. Tom bruce kasman at jp morgan overnight writing a note that really alludes to a new bout of global disinflation. Given the Natural Disaster characteristics here of a virus, should we consider a disinflation that is and bedded in the system, or is it a oneoff disinflation that could dissipate rapidly . Philipp the market is telling us if you look at five, even longer forward, you can see that the expectation in the marketplace is that we are going to have disinflation for a very long time. I think the key here is, what can be done to break that psychology . You have to remember markets are pricing in what they are seeing right now. Right now, the answer is clear. The market is expecting disinflation to continue to be a predominant theme for a long time to come, measuring in years. I come back to the principal challenge here, namely to break the psychology by coming in with a forceful and aggressive response on the fiscal side of it, tom, this is too early to strike an optimistic note, but it is also an opportunity. If governments can come together in a coordinated way between monetary and fiscal and act aggressively, this may also be an opportunity where we look back, hopefully five years from now, and can say that was the moment that kind of got ofs got us out of this secular larrytion track, what summers calls escape velocity. Whether that happens, who knows, but that is where the market will focus come on Government Action, in the months to come. Tom we have seen folks, david westins wall street, speaking to this often. How we address themes of austerity that we have seen since 2008. We will continue with dr. Hildebrand of blackrock. Right now, with a business flash in new york city, viviana hurtado. Viviana air france plans to cancel 3600 flights, another sign of the impact of the coronavirus on the airline industry. Air france is reducing capacity. Y 13 on its long haul air france has suspended all flights to and from china. Takeover of smi conductors. The u. S. Says it has no National Security concerns about the deal. China still has to to give the ok. Today shares of cyprus are soaring. Ian with blackstone group, reportedly on the verge of making of one of its biggest bets ever on china. Produces soho china will be taken private, the price, 4 billion, twice what the market value was in january. That is the Bloomberg Business flash. Francine italy has gone into a nationwide lockdown, the first country in the world to attempt a complete shutdown affecting more than 68 Million People per joining us via skype is the bureau chief. Morningus sunday there was a dramatic press i dont know if he can hear me. I speak italian. He is telling his family not to come in while he is live on tv. I dont think he can hear us now. We are back with Philipp Hildebrand of blackrock. We are talking a little bit before about the need to give support to small and Medium Enterprises that would run out of cash. Is there anyway that could save the consumer at this point . Happeningell, what is here basically, if you think about i am not a medical expert, but if you look at the statistics, most countries have something between two and 10 hospital beds per 1000 people. What is clear is the priority has to be on not overburdening the Health Systems in these countries. So therefore, the price we pay for that is, we travel less, we interact less, the economy comes to a halt. That means for no fault of anybody, basically businesses are going to grind to a halt. Traffic is going to grind to a halt, growth is not going to be there anymore. We need to come in and support, provide financial assistance, liquidity support, fiscal support in order to keep basically two kind of bridge over this period until hopefully at some point with the right policies in place, the right containment policies in place, the virus starts to abate. That is the dynamic here. Francine lets go back on the containment measures, with our bureau chief who is working from home. Sunday morning, 2 00 a. M. , we have red zones and lockdowns. Two days afterwards, the country is on hold. Yes, for two main reasons. The first one is that the enforcement of the lockdown has not been very strict at all. In fact, a lot of people went from the north to the south, probably taking the virus with them. People were moving freely, and only during the day of monday, yesterday, did we see more. Olice starting to check people whether they had a legitimate reason to be moving down to the second one is the pace of the virus, the pace of the contingent of the contagion is not slowing down. This is something that the andth system cannot take there is a severe shortage of hospitals in the north, and self where the economy and the services and economy are weaker, it is going to get even more complicated. Francine what numbers are we looking at in terms of how much the government can spend to alleviate the concern . Given the number so we have had so far, do you need to multiply that by 10 to make it have some kind of effect . Well, yes. For know what has been announced, a 7. 5 million euro package. Resources are saying it will come up to 10 billion euros, and yesterday, for example, the Operation Leader said it was not , that it was 70 billion euros that was needed, and that probably this number was random. Just an indication of how do seriously drop in the Italian Economy is going to be. Tom we welcome all of you with a lot less commercials in this hour and on in surveillance this morning peered after the market turmoil yesterday, a nice rebound today with things readjusting. The german twoyear yield, that huge 1 reading yesterday, back above a 1 as well. We are in good conversation with filled with Philipp Hildebrand, the blackrock chairman in the firm or governor of the Swiss National bank. I want to talk about switzerland right now. Deutscheravelos of bank stop the Research World a few days ago by not looking at the swiss and the challenges, but about the idea of what to do when there is so much money flowing into a nation and into the Financial System, like what we see in switzerland. Is there an efficacy to switzerland taking their Balance Sheet and pulling it off into some form of Sovereign Wealth Fund . Well, this is a complicated story, but i would just say the following. When people make that argument, they forget there is a liability side to the Balance Sheet. This is not money that comes from oil coming out of the ground and being sold. You have a Balance Sheet with assets on the one hand and liabilities on the other hand. So unless somebody can explain how you are going to deal with the liability side of the Balance Sheet, i think the Sovereign Wealth Fund analogy, unfortunately in a way, doesnt work. I would like to see hard Sovereign Wealth Fund for my country, but it does not work through the channel of the central bank, at least not in the traditional way. Tom is europe a liability to switzerland right now . Madame lagarde is in an ecb meeting on thursday. What is the best outcome to relieve the pressure on a number of parties, including the swiss . Reality forope is a switzerland, not a liability. At times it works in switzerlands favor, at times it does not. At the moment it is a challenging environment and i suspect we are going to see certainly some liquidity measures, rightly so, from the European Central bank, and potentially further adjustments, minimal adjustments on Interest Rates. So that will create a challenge. It will represent a challenge for Thomas Jordan and his colleagues. This is not new to them. They have an arsenal of potential interventions. Theyve got low Interest Rates. They have the Balance Sheet to work with, so they can respond to it. But it certainly represents a challenge. One of the things we should , t out today or tomorrow today or tomorrow is mark carney s last day as the governor of the bank of england. This is an important point because the experience of 2008 is important. Principal takeaway is you have to act wholly and quickly when things go bad. Luckily, christine was there, not as the governor, but she was very much part of the crisis team at the time in the finance ministry. So that is Something Else we have to contend with. The people that have the experience from 2008 are no longer there, with the last crisis governor leaving the building imminently. Should Christine Lagarde do on thursday . We are talking about buying equities or going more into even more Corporate Bonds, or does she need to wait for coordinated action . Philipp first and foremost, she will know what to do. Say i would expect all central bankers now to really appeal to governments to step up on the fiscal side. This is a classic case where fiscal policy is warranted, fiscal support is warranted. To what extent Central Bank Policy can kind of coordinate fiscal policy will be country specific or region specific. In the case of europe, certainly i could see an argument for ltro extension. You can imagine providing direct support again to smess and then on the asset purchase side, that can become part of the coordinated effort between fiscal and monetary. Much will depend on how the yield curve reacts and whether there is any need to step up on that. Margin, the at the incremental effect of Monetary Policy will be very limited in and of itself. That is why the fiscal piece is so critical. Francine do you see any appetite from the germans, the only ones left with fiscal space, to step up . Philipp this is the question i get more probably than any other question. I remain optimistic that under pressure, the germans will come to their senses. This is not a question of moral hazard, this is not about anybodys fault. Nobody has made a mistake and gets bailed out. This is about essentially a National Disaster where you step in. I was looking at the debt rake legislation that you have. In some cases it is in the constitution. All these debt breaks or debt amendments basically have a derogation clause in it for a Natural Disaster. This is it. So, you know, there is no reason not to use the fiscal tools. And in fact, some early signs that give me some hope is the work relief in germany. They have lowered it from i think 50 of all workers affected to 10 before you can claim work relief. Clearly even germany is now responding, and that would be a very positive signal in this context. Tom lets look at switzerland. I want to look at the negative debt chart. This is an acclaimed chart from bloomberg. We do this with a healing bond market today, the explosion that we have seen in debt, and just in the last week or so, that little new leg up near record high negative debt. We have a yield recovery this morning, with higher yields and lower price. We have seen that across all the different durations. We have much more coming up. I really want to point out, coming up, steven major of hsbc nailed low rates. This is bloomberg. Good morning. Good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. Up down to thousand and 1000, dow futures up 1000. London, tom in new york. Lets catch up on the news. Viviana we begin with donald very dramaticg action to support the economy and says he will seek a payroll tax cut for those hurt by the coronavirus and will ask for substantial relief for businesses. Lockdown a nationwide is in place. Cutting due to the virus. The chief of staff of the white house putting himself involuntary quarantine. He tested negative for the disease and is staying home until tomorrow when the 14 day period expires. Voters are nots looking for the revolution Bernie Sanders promises. Six States Holding primaries, the biggest, michigan. Sayey weinsteins lawyers he should get the minimum five years in. Forrrow, he is sentenced Sexual Assault and rape convictions. Prosecutors asking for a stiff prison sentence but did not say how long. 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. Tom we have been advantaged by putng teams that have together terrific sets of conversation across this interesting 2020 and we do it again this hour with Philip Hildebrand and steven major. What i want to do is show a chart which is something i have used over the years with bill gross and should use it with steven major. 1950s up to the the moment of paul volcker and the great disinflation. Way so true along the and Credit Suisse always had the best idea rates will go up. Rates will go up. Rates will go up. You get the theme. We are down at an imaginable low Interest Rate, something steven major has nailed like no other strategist. We are thrilled he could join us. The cry is out, rates will go up. Why arent they . Steven we cant afford them to go up and parts of the explanation for low yields over the years is the excessive debt. It is a question of servicing costs. The public and private sector combined cannot afford to have higher rates. In the form ofk accelerated and inevitable shift toward andening economy deceleration. Rates are stuck to zero bound in the u. S. And negative elsewhere. We are looking for the Central Banks responding or reacting. The Interest Rates are an outcome from what has come before. Tom within that will be the new disinflation. People are writing about the supply and demand shock and aggregate disinflation. Will we see negative Interest Rates drive ever lower . Will we see negative rates in the u. K. . Steven negative rates have been real. In 2019 was the outlier which looks like a massive policy mistake. Nominal has had deep low rates. Denmark, and denmark, 75. The fed will not be hiking rates. Francine we will look at that and the real nields real yields negative on the 10 year. Will it go negative this year . U. S. , it looks like there is a strong resistance to negative policy rates and negative yields. In the u. K. Yesterday, the market traded negative but we are a long way from negative policy rates. The resistance to negative rates is strong and there is a banking lobby and the existence of cash that for now is a big barrier to the negative, but never say never with regard to the next cycle. Francine do you agree . Philipp never say never. From a macro perspective, something has to change for rates to change. Rates are not low because Central Banks put them there but because of macro phenomena. Demographics will not change. Productivity could change. We dont understand why it has been so low so at some point we could see a jump, or we could see a major shift in policy but something has to change for the rate outlook to change. If you look at the inflation forecast measured in years, the market does not expect that. Said,hat steven major this is what we always hear from a guy like steven major and Philip Hildebrand is the banking lobby. Who is the banking lobby dictating what policy should be to institutional policyholders . Do they call you up . Is there a special phone . There is not a special phone but i went through some bruising engagements with ceos. Thene likes when environment makes the job difficult so i have some sympathy for bankers but again as steve said, this is not a low Interest Rate environment. Result, a consequence of demographics, of savings. These are global phenomena which is why we have low Interest Rates throughout the world which brush up onneed to their back row. They have observed negative Interest Rates and the angloamerican world is saying, no, we do not want to do that. Are our mechanisms better than negative Interest Rates . Steven i work for a bank and the concern i have is that the Central Banks do not set the makey rate so banks can money and pay bonuses. They set policy rates for the real economy so that is why there is that tension. Obviously, negative rates and flat curves are not good for banks. Everyone knows that. The alternatives are interesting and that is why the market has moved on about yield curve control as we have seen in japan. We have caps in place in the u. S. People are thinking along these lines. Qe is not an obvious next step either because the more Central Banks do qe the more pressure they put on banks. That needs toxt be a little bit more creative and not is why over the years they start to talk about these alternative policies and helicopter money has been suggested, etc. Francine what would it take for the fed to use helicopter money, or any other central bank . Steven back in 2016 we wrote papers about this. It was what we called the elephant in the room and it was wrong. We got completely wrong sided and there is a danger that people like me could get too gloomy. I am worried and 2020 we could be on the verge of a paradigm shift so more of a secular shift. That is a big worry because you do not know it has happened until afterwards. Helicopter money in various guises has been shown around the world. In hong kong it was tried recently although it was funded out of reserves. It was not the purest form. I think we will see them try it. Tom i love this conversation, steven major and Philipp Hildebrand. Let me go to japanification. How close are we to exporting japanification and importing it into europe and america . Is it a paradigm shift where we become like japan . Philipp we are about to see the projections,heir economic projections. Some of them as they work through them will imply or go back tot we will a recessionary environment. The escape out of this low Interest Rate environment, out of zero rates has not happened. There was some hope earlier in the year we could be set up for andbut with the sharp potentially deep impact of the coronavirus, that story is over. We need to reassess and so do Central Banks. I dont think you can throw up your hands and say, that is the way it will be. We need to think about creative ways to respond, and an aggressive and coordinated response. Steve was right to point out some of the flaws of helicopter money. That is not where we want to go, but we need a way for fiscal policy to work directly for consumers and households. That is the key in this Natural Disaster paradigm, because if you dont have that, i hope it works for the Financial System will not work. Rentes cannot pay the because they have no customers, there is no place for them to go in the capital markets. The only way a Good Business can survive if customers are suddenly gone is if they get direct financial support. When you talk about francine when you talk about direct policy action, are you talking in the next few weeks . Philipp it has to begin immediately. Most of the studies i read suggest this will be with us for some time, in months not weeks. Time,ned support for some and if we do that, this will prove to be temporary. That is the key. One thing i learned during the crisis, dont ever assume when you have a problem that everything stays the same. This is where Government Action makes a difference, so if we want this to be temporary, which by nature it should be, then we need aggressive involved direct support through the fiscal cannel and Monetary Policy be a piece of a coordinated approach, but a limited piece because akon it is exhausted b, nots exhausted and the way to deal with a Natural Disaster. Rancine both stay with us lets get straight to the Bloomberg Business flash. , iphone in china shipments plunging last month more than 60 , blaming the coronavirus outbreak for a doomsday decline in sales. The disease hitting apple supply and demand. Volkswagens first u. S. Jury trial, both sides claiming victory on the cheating scandal. Five lost and five others will share 6 million in damages. They were among those that did not sign off on the settlement. Wall street brokerages getting a break from will give more flexibility for supervisors working remotely. Why . The coronavirus. If they need extra time, firms can seek extensions. That is your Bloomberg Business flash. Francine chinese president xi jinping visited wuhan for the First Time Since the disease emerged. The trip was to project confidence. Lets get to Stephen Engle joining us from hong kong. It is the first time the chinese president visited the epicenter. What does it tell us and what do you tell us about the number of infections and deaths . Stephen the state media apparatus is confident or displaying confidence that the Chinese Government has gotten the situation under control. Keep in mind, the number of new cases totaled 17, the number they reported today or 19. 17 in the epicenter of wuhan and hubayer cases in province. The government obviously displaying confidence that they have this fairly under control, while we have seen infections rise around the world. There is still criticism of president xi jinping. It has been 32 days since the death of the highly revered doctor and 50 days since the outbreak hit its stride, 69 days since the beginning of the year. He wore a mask and talked to patients by video and spoke to medical professionals outside of one of those two hospitals they set up to quarantine patients. Tom i dont want to pin you down to tell me what gdp will be in the next six months or year, but what you see anecdotally and what you hear across china, is there the sense of an economic recovery . Stephen factories are starting to get back up and factory utilization getting up to 70 , 80 , probably a generous estimation because there is the quarantine and travel restrictions, which are starting to ease. The government is giving out green codes for those citizens in wuhan who have been cleared of the virus. They can travel a little bit better, but travel restrictions are still in place and there is a lot of fear about going back to the workplace and getting up the supply chain will be difficult. I cannot tell you how long this will impact gdp or how badly it will, but one of the top epidemiologists in china who is a lead medical advisor to the government said yesterday this virus is not necessarily going away and could be with us until june. Francine thank you so much, Stephen Engle from hong kong. We are back with Philipp Hildebrand and steven major. About the price of oil, if we start having 20 a barrel for some time, this changes geopolitics of american shale. What does it mean for the World Economy . There you probably know is the impact on disposable income which is possible for u. S. Consumers. That has to be factored in. There is a disinflationary bias for the fed and the negative impact on the shale oil and gas industry in the u. S. The Energy Sector globally, we thatfrom past experience spreads can blowout in highyield credit led by the u. S. We have a clear picture of what is unfolding here. Netnet, it is not good. The concerned that some economists have is oil prices will not get people traveling again. Philipp i think steve is right. Netnet, it is not good. It will accelerate capital reallocation into Sustainable Investment products because it is now pretty clear, and this latest move will accentuate this, that having less exposure to fossil fuel will alter performance. We are seeing the shift into sustainable etfs has been extraordinary. The growth rate the first couple of months has been beyond expectations and i would expect this will further accelerate its repositioning and the capital reallocation story into sustainable assets i think will be a very big story the next couple of years. Tom right now, we are up 1000 points in the dow, futures up 27, and the 30 year bond to 1. 18 as well. We see a much better lived in the market right now. I wanttime we have left, to talk about foreignexchange. Steven major, this comes off of david blooms work. Dr. Hildebrand, we are thrilled to have you on. This is the most important chart , it jp morgan emergingmarket collapse in currency, lagging down to new weakness. It has been a persistent sinceation of em currency 2007 and more particularly 2011. Is this the ultimate solution for these challenges we face that will be expressed in foreignexchange by basically an countriesuation of and nations . Philipp i am not aware of too extrememples where devaluations are a solution for anything. And large, if you look at yesterdays move, one thing that was quite notable, the fx market was relatively stable. My own view is that extreme devaluations are rarely a recipe for anything positive in a sustained way. Tom it may be the cart or the horse, i will let you decide seth it is, but we have a of ideas which may be idiosyncratic or not. Is that the ultimate price that we export our challenges to an arch depreciation of these currencies . Steven a couple of things i would say. There arent that many emerging markets where the bonds have performed well enough for the currency. Markets have held pretty well but the bonds have fallen. Another point on this tension between bond market the bond market and fx. The dollar has been going up with bondyearolds falling. Bond yields falling. David bloom and i are aligned. Francine talk about corporate debt. Possibleoking at a credit market meltdown . Steven every Quarterly Financial stability report, whether it comes from a central or otherhe bis supernatural bodies says there too much debt. Combine that with the private youor and Public Sector focus on the corporate, inside the corporate some loans will roll. There are dollar denominated bonds in emerging markets, loans to smes, all kinds of debt. Central banks are very focused on the role of this. It. He role of this as debtdea that you can add to a huge stock of debt has to be thought carefully. Fiscals no free hits on policy and needs to be targeted to the right places. Francine do you think the ecb needs to expand its purchase of Corporate Bonds . Has more flexpp in it. It is subject to what is happening in the primary markets because there is no supply of paper and nothing much to buy, but they have potential. The thing that is different between the ecb and the fed is the fed cannot buy corporates. Cspp from the ecb is a kind of umbrella that mitigates the other negative factors. Whatdr. Hildebrand, i love you say about framing this as a Natural Disaster versus what we saw in 2008. I feel strongly this is not 2008. If we were to clear the virus, which viruses have a way of doing, if russia and saudi arabia get back together on pricing of opec, can we move on to where we were before or is there a permanent change from where we were the middle of february . Philipp very good question. Certainly if we get to that point, and policy will be critical to get us there, to bridge this Natural Disaster period, we will certainly see a lot of relief. , we think that longerterm will see real questioning around Global Supply chains. One thing i observed when we world, ceos around the every single audit and Risk Committee is basically taking, asking hard questions to senior management, how are you dealing ,ith the exposure to china exposure to global problems . I think we will see sustained rearrangement in the sense, reorganization of Global Supply chains. It is hard to tell what effect it will have. My guess at the margin, it will be slightly inflationary. Coulde probably subdue growth a bit for the longerterm. It is going to be very interesting. This is one area where europe has a great opportunity because somee could rearrange supply chains within the diversified european economy and suchuffer less from rearrangements. My sense is it will not be over when it is over. Francine up next, we look at stocks advancing after the biggest rout. Tom this morning, a tentative stabilization in the market, the dow up 1000 points off of 2000 points yesterday. The 30 year yield well above 1 . To theuld lagarde react crash of 2020 . What should the president do . Fiscal stimulus not enough. Americas response to supply and demand shocks. , so too in lockdown much of america. Michigan and five other states will vote. This is bloom are Bloomberg Bloomberg surveillance. Explain a nationwide walk lock. Lock down in italy. Francine the planes and trains are still running so they hope people stay at home after a Dramatic Press Conference at 2 00 a. M. Where the Prime Minister had put red zone. It seems it is not under control so he saw the need to step it up. Insignificant that the market is making it out to be, saudi arabia escalated this price war with a huge oil output hike, 12 Million Barrels from saudi aramco is not insignificant. Tom extraordinary what we have seen with brent crude. Right now in new york city, your first word news. Viviana we begin with a uturn from President Trump on the need for an economic stimulus. He says he will seek a payroll tax cut. The president is promising to unveil what he calls very dramatic action to support the economy. Bloomberg learned now the package will not include help for airlines and others in the travel industry. Hisbiden hopes to extend lead in the race for the democratic president ial nomination. Six States Holding primaries, mr. Biden leads Bernie Sanders. Bere is concern he could hurt by low voter turnout. 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. Hurtado. Ana this is bloomberg. Tom this is the data before we get to steven major and Daniel Alpert. Futures down. We have made it 40 back from the carnage of an ugly close yesterday. Oil, 33. 30. Above 1 , crisis over. Negative. Year havenne bonds and currencies trimmed their gains. Equities rose in europe and asia. Futures gaining 5 after literally crashing yesterday. Tom we got a lift in oil may be off of the saudi news. Daniel alpert with us with one of the most extraordinary books about 2008. Hsbc. S as steven major of brilliant in the last hour with Philip Hildebrand Philipp Hildebrand. You have a call for low Interest Rates. How low is lower for longer . Good few years. The debate can japanification route lasted 30 years so if we have 10 years of the lower for longer backdrop, we are in the earlier stages. I suspect we have one more decade at least in terms of timeframe. Tom we are going to rip up the script, that is such an outrageous statement. Explain to me what one more decade of financial repression does. Decade wee last called the decade of denial because the beginning of every year, someone would tell us rate red going up, the economy tell us rates were going up, the economy and the Central Banks have been complicit. There is too much debt. We have huge wealth inequality. We cannot afford higher rates and frankly, a lot of the pie in the sky that i hear or read about is to do with his magic potion coming from somewhere like fiscal policy is this magic potion coming from somewhere like fiscal policy. The issue that you can just push a button. What is reflected in the market is we have over consumed and many Investment Opportunities unlessen used up, so something invents something new we have missed, i failed to see how we get out of this low rate environment anytime soon. What is the Tipping Point francine what is the Tipping Point . You expect lower for longer until what happens . Is there a catalyst . As an low for longer outcome of what went before. That is a very important point to reflect upon. A huge amount has built up to take us to where we are. The Central Banks are seeking policy in line with what they have been given, so that is how we can forecast low for a long time, and the idea that rates will go up and mean revert, what is that based on . I need to understand the argument. Steven major from london, thank you so much for being here. Danielow on set is alpert and you physically jumped when he said lower for longer could be a decade. You wrote a book in 2008 on where we are now. It is shockingly prescient. Can you extend out like mr. Major and run out another 10 years . Daniel i dont have any argument about what he said, but i have an issue that fiscal policy has no role to play. Here is what has happened. Put aside coronavirus. At the end of the day, i think he would agree we are heading this way. We have a massive oversupply. What happened is nothing short of an ethical shift. Thebloom is off the rose on ability of Monetary Policy to fix this situation. You have incredible limits on what the Federal Reserve can do. Are down tothat, we rates that are so low that the tolity of Central Banks effectively transmit Monetary Policy to the real economy is limited. We are not in a position to be face thatve any Monetary Policy is going to pull us out of where we are right now. Is the recession coming . Daniel you have the folks that are speaking supply shock, the folks worried about demand shock. Everybody is worried about a shock. The virus will eventually dissipate, but whether or not this was the sort of shove that will push the economy that some people were worried about was overheated and headed for recession anyway into one, i cannot comment. The big issue right now is how are we going to move from where we are, which is a position that is not good, into a better position . Tom we were thrilled to have lastpp hildebrand with us hour, and i would go to chapter book. Of Daniel Alperts as well, Meredith Sumpter coming on, a thrilled to have her on, particularly with an update on china. Daniel alpert and Meredith Sumpter, does not get better than that. Upures up 123, dow futures 1000 points. Tom bloomberg surveillance, Francine Lacqua in london, tom keene in new york. The close yesterday was ugly, a nice bounce this morning, almost 1100 points on the dow. You see that across all asset classes. Because of the news flow, the extraordinary moment we are in, Bloomberg Government on states, on government, on what mr. Sanders and mr. Biden will do today. We will go to the importance of the response of the virus in washington. How will he address his Senate Republicans today . Emily President Trump wants to come in with the message republicansublic , that he has a response going against the narrative that the administration isnt prepared. The administration well announced a substantial package ay including pay cuts francine what will be the response . It was surprising for people in europe to see President Trump saying this is nothing more than a fluke and this was yesterday on twitter. Has he changed his tune . Emily i think President Trump is continually receiving briefings. Congress is coming up with a bill. Democratssenate previewed a bill that would expand sick leave, expand unemployment insurance, and that is something they will be working on as well. I think you need to watch what the white house and congress do, to figure out what kind of package they will put together and what action we will see from the white house. Tom emily wilkins, thank you so much. Daniel alpert with Westwood Capital has very sharp eyes and Meredith Sumpter of eurasia group, truly expert on what we see from china. Lets focus on china. President xi goes to wuhan for a photo moment. What did you learn about china and their ability to contain the virus in the last week . Anddith president xi leadership are championing chinas ability to get ahead of the virus one other when others are struggling. To capitalize on this moment and the news out of china that there rate of new infections continues to decrease , but china is not out of the who sees we see xi this as a test of the communist partys leadership, governance ability, he is taking no chances. We think the clash of coronavirus and xis political priorities is set to have china underperform its targets this year. Consequences are huge. Some experts are saying china would be lucky to hit 4 growth this year. Our view is that china will likely aim for a bottomline target of 5 growth and that orake stimulus monetary easing, rather, to get there. Be cautious not to overshoot fiscal stimulus. Tom gauge the support of president xi and china right now. What is the support . Just the elites, commonest party . How have people rallied around communist party . How have the people rallied around the leader . Emily i want to give you a smattering of the headlines. Example in fighting crisis, heroism by chinese medical workers returning to work after infection, chinas consumer Production Index up 2 year on year, dow closes over 2000 points, fragile e. U. Amid covid19is crisis. This is a leadership trying to turn around the narrative for the country where the virus came from, to keep on top of further spread, and to look and feel that chinas global standing could take a hit from a representational reputational standpoint. Francine do we believe them when they say that . Do we look at cases of infection . Is there a turning point . Think here they are looking at what happens as more chinese return to work. This will be a fragile start. Wuhan,focus remains on as people return to work across the country, what that will look like in terms of new outbreaks. China aside, we should be focused on the United States because political risks in china are real but they are also incredibly real in the United States where we expect we are at the beginning stages of the spread of this virus across this country and will have a more Material Impact on consumption, voter sensibilities. Weore the crisis broke out, had a 60 probability that President Trump would be reelected in november. This is according to our view of swing state polls. It longer this goes on, could cost President Trump his reelection and the white house is newly attuned to these realities. Francine when you look at the economy, and i dont know if it suppression, and maybe the supply chains will go further away from china given the virus. Is that a Fair Assessment . I dont know if it is a removal but less of a dependence on china going forward. Emily we see those building pressures. The supply chains were being shifted out of china because of the trade confrontation between the u. S. And china, but with the hit of the coronavirus, the longer this virus continues to disrupt Global Supply, we think it will cause more of our Global Companies to reassess not just the efficiencies of their Global Supply chains, but to take a look at how robust their supply chains are. C . They have a plan b or this could result in regional or local supply chains with more robust centers than had been the case before, and this will add to the Balance Sheet pressures for our Corporate Leaders in a year where they are dealing with downward consumer sentiment, as well as what we expect will be increasing regulations by nationalist governments and policies. And danielth sumpter alpert with us. Want to get into the fiscal all i hear is fiscal generalizations. It is a land of austerity, theme of austerity, and it is all generalized fiscal response from politicians. We need specificity. Daniel i wrote a piece over the weekend that says take the money. Money is being thrown at governments. People are seeking riskfree returns and this is an extension of what has been going on. The money is available to do what any government that prints its currency wants to do, including rebuilding infrastructure and all the things which would give government a greater role in the economy, but at the end of the day that is how to resolve the imbalance. Francine thank you both, Meredith Sumpter, Daniel Alpert. Later we speak with fabrizio pagani, the former check former finance that coming up at 6 30 a. M. In new york, 10 30 a. M. In london. This is bloomberg. In america last night and a nice rebound across asia and better over the last hour. Dow futures up 984 points. The yield curve steepening and yields higher has been an important story. Francine looking at european stocks, there is a clear reversal compared to yesterday. It was great to have Philipp Hildebrand going through what he was saying. Stocks are rallying and recovering some ground lost yesterday. Yesterday was the deepest lawsons the great financial since the losses great financial crisis. Brent was one of our focuses yesterday and is still a focus, 5 . T clinging to gains of saudi arabia saying they will add 33 Million Barrels of oil a day from april. Yens white sliding along. Coming up, Standard Life sayseens chief executive yesterdays selloff was due to panic. That is coming up shortly. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Bloomberg surveillance, good morning, everyone. Futures up 1000 points. Viviana president donald promising today very dramatic actions to support the economy, saying he will seek a payroll tax cut for those hurt i the coronavirus and will ask for substantial relief for businesses. In italy, a nationwide lockdown in an attempt to spread avoid spread of the virus. Airlines are cutting flight schedules due to the outbreak. Incomings chief of staff putting himself in quarantine after coming teen into contacts with someone with the coronavirus. He tested negative but is staying home until tomorrow when the risk period is ended. Some predicting the central bank will cut Interest Rates. This will be the first big policy decision for the ecbs new president Christine Lagarde. 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. With us inth sumpter washington with eurasia group. Usht now, Daniel Alpert with with Westwood Capital. His job quality index shows the agony of america, income inequality, and his Public Service of 2008, 2009, the age of oversupply, and the gentleman who studied Public Policy makes it clear it is about fiscal policy. Givente makes it clear book, crisis his why policymakers cannot fix the economy, what is that to do list . Daniel spend money. Right now we need to acknowledge the fact that over the last decade, the private sector in has been unable to make the investment necessary to promote highquality job formation in the u. S. And in europe. A lot of that is due to a perfect storm of ideological conflict. Austerity coming together with an oversupply of eggs jeanette is to global exogenous ess tom it is almost immoral to spend money under crisis with deficits we cannot measure. Isiel the bottom line it impossible for some people to acknowledge that trickledown does not work, somehow that if you put money in the hands of the wealthy they will increase the level of their investment in society and in job creation. Tom you dont have any evidence . Daniel there is no evidence, it is quite clear. We have been making this argument for decades. What it does now in this last set of tax cuts is racking up enormous deficits for no reason. Francine lets talk about Central Banks and how they deal with the virus, the down economy and the low oil prices. If you look at what policy tools e at hand, daniel this is an epic shift. Not only do people outside of Central Banks believe that monetary moves are not going to shift things very much, people inside Central Banks are not believing that, and that is a big difference. I was at a dinner last night and everyone was asked to raise their hand as to whether there were Monetary Solutions to the crisis and no one raise their hand. Thats raised their hand. The fed will have to do whatever they need to do two does align things need to do to align things. There is no transmission mechanism to get Monetary Policy moves into the economy in a way that is sufficient to turn the tide. Francine when you look at coordination and you keep on talking about coordination, is there enough appetite for the worlds bankers to come together like they did in 2008 . Daniel there will be enormous coordination between banks in developed worlds. Whether this squirrels with chinas squares with chinas goals or the pboc, i doubt it. In terms of everybody getting together and deciding collectively we have a real problem, sure, and they will coordinate their policy responses. My bottom line is very little. Lbj and surgical targeted tax credits . Research ine off of america cannot make it monthtomonth or week to week. We have a supply shock, demand shock and fancy People Like Us see it in the markets. How can we get surgical in our fiscal policy to assist Small Businesses, the gig economy, or are we going to get surgical to help fortune 100 companies . Has been lot of talk running about increasing the minimum wage. The Bernie Sanders argument, push things up from below. There isargument only so much i can do. We need to pull up from above. We need more jobs doing things that are worth paying for, creation of goods, public or private. What we need to do is create suction as it were, from above, to pull up wages. That will force people in lowwage jobs up the ladder. Law, thisis cornell job quality index is the coolest thing i have seen. What does the math say and how do you adjust it given a virus and oil shock . Daniel job quality takes the average weekly range, figures out how many people are above and below, and it is a ratio. 100 would be an even split. Recoveryeeing some from 2012 to 2016. That has reversed itself. We are almost down to our 2012 low. On these dependent lowwage, low hour jobs which are in the most vulnerable sectors of the economy, hospitality, retail, temp workers, and the only one that is perhaps not as vulnerable is health care but that has been the biggest growing sector and it does not pay so well. Francine if you look at what the markets have been doing and how they reacted, how do you look at the markets now . Daniel everybody wants to run from if everybody wants to run from the gates at the same time, there will not be a lot of liquidity. Some companies have been paying healthy dividends that are doing fairly well. There is some risk they might have problems. Some of the dividend rich common stocks will attract people back in at these values. Happening insee the long or mediumterm is a recovery to the levels that were what i would regard as desperation levels for investors looking for returns where they would not be found. Tom what is the president going to do today . They will walk the walk, talk the talk on fiscal policy, but will any fiscal policy be generated today given the demand and supply shocks . Meredith we are at the very stock of the u. S. Responsys to what the virus response to what the virus on the economy will be. Investors will be looking closely to see if there continues to be space between how the president is messaging about the Public Health crisis, and how cdc officials are messaging about the seriousness of the ongoing spread. Congress is focused on doing more. There is talk about onward fiscal packages shaped by the politics of the u. S. Being in an Election Year. We think there will be more fiscal stimulus. Late, andlittle, too will it have the transmission effect on the economy and consumers and households at a consumervirus hits and sentiment goes way down . Daniel she nailed it. Fiscal stimulus takes a long time to take effect so therefore it is not politically attractive. If you have an Election Year and want to make something happen before november tom stop, rip up the script. I am all wound up x number of days of this malarkey. President umpter, the will come out today and eliminate expert of these tariffs he has put on. He would get a knighthood, wouldnt he . Meredith not quite, because in part, the tariffs have had a downward pressure on the economy in the u. S. And elsewhere that has built up. This market crisis is not due to one factor, it is a compilation virus,ors, tariffs, the oil, and washington looks back footed in handling the coronavirus. This is all happening in an Election Year. The president is not in an enviable position and i think it will be a tough road ahead for him until the United States is able to have a united front, not just how you address the Public Health crisis, not just the monetary but a fiscal response as well. ,om you guys are killing it Meredith Sumpter and Daniel Alpert. You moved the 30 year bond from a 1. 18 to 1. 25 . Prices over. We crisis over. Coming up today, lawrence summers, u. S. Treasury secretary and not in acquaintance with harvard. This is bloomberg. Francine this is bloomberg goneeillance. Italy has into a nationwide lockdown, the first country having a complete shutdown affecting more than 60 Million People. Joining us fabrizio pagani. He was the former chief of staff to the italian treasury. With us in new york is Daniel Alpert. Thank you for joining us. This is a huge time for italy. Andhe lockdown working, what kind of Economic Relief does the italy does italy need . Fabrizio the measures which are think will be extended to the whole country and their implementation. More freedom of movement in the country, the freedom of movement is not fully guaranteed because you need to have a good reason to move, but at least there are no issues within the country. Measures with the have to do with the closure of shops, restaurants, and bars. Thee are draconian measures government has taken not lightheartedly, but they are going in the right direction. We need to maintain the contagion and the spread of the virus. Francine what can banks and more importantly Central Banks do . What are you expecting from the ecb thursday . Fabrizio on the economic damage, they will be important. I would distinguish between what is happening right now and the more mediumch are and longterm issues. Immediately, there are liquidity issues coming up. The liquidity has to do with two types of payments, by companies, shops, and individuals. One are tax payments due at the middle of the month, the end of on, and thend so end of the first quarter. The second type of payments are low loan repayments, capital interest. We have to join the interest in two ways. The government can do up to a point a suspension of the tax and payments. These have been adopted for limited areas, one which has been struck by earthquakes and hurricanes in the past. Now they have to be taken at the National Level and can be massive. Finance will have to bear the cost of that and this is not easy. On the loan side it is different because these are the contractual relationships between the lender and who is at stake in credits. Banks have a moratorium for certain types of payments and the possibility of lengthening the length of loan repayment up to 100 of the outstanding amount. Case, the banks can do something, but they need the regulators helping them through further efforts because the banks otherwise francine do we need to get rid of the deficit rules from brussels and how much do they need . We have some 7. 8 billion euros pledged. Will it be 10 times that . Fabrizio this is a point which may come up in the next weeks and months. It is not so urgent. Right now, we need an intervention on the monetary side and the regulatory side. We always talk about monetary and fiscal. We need regulation and we need andlation for banks exposures and nonperforming exposures. This is the most vital thing for italian banks at this moment. The second one is on the monetary side, we need the ecb andg more on tros consumption. Tom Fabrizio Ghani with us. Fabrizio pagani with us. Limit down was yesterday, limit up today. Spx up 120 points. Nowdow up 1100 points right and also virus news from iran where it has been difficult, 881 new cases of the virus. Daniel alpert with us. In 1987 when we needed to go limit up and limit down, what did they symbolize . Daniel massive volatility. The notion that people are reacting as opposed to thinking. Tom how do you think if somebody has longterm how do you, 401k, think forward . Daniel if you are going to be in equities at all, the pot, 401k, you need to be in it from a longterm perspective. The idea that you will suddenly see one quarter or 20 of your portfolio vanish is disturbing, but one thing they should not do is run for the doors. Tom we are out of time, Daniel Alpert. Coming up Michael Wilson of morgan stanley, chief equity strategist. This is bloomberg. Francine this is bloomberg surveillance. Standard Life Aberdeen has seen its asset drop less than expected. We spoke with the chief executive. Yesterday was driven by pure panic. We have stock prices and bond prices at the moment that are effectively discounting a global recession. Period ofy some deflation. Whether it turns out like that or not will depend on the Economic Impact of these supply shops. Indo you see a recession 2020, and is this like 2008 . Is that the scale of it . Isth the panic in the scale similar. We are not yet looking out a Financial System which is under threat. We are looking at two supply shocks, one from the virus and the other from the issue with the price war. If the virus is wellcontrolled that was the Standard Life aberdeen chief executive. Stocks today rallying with u. S. Futures indicating a recovery, recovering ground after the deepest equity rout since the financial crisis, bonds and currencies trimming their gains, the dollar strengthening. The yen sliding alongside the swiss franc. Yields treasury retracing half of yesterdays drop. Lets take a breath to recap what we have done over the last 24 to 48 hours. Earlier in the session, investors were trying to figure out what the s p 500 indicates. This was one of the wildest days in the market, people pushing back between yesterday and the parallel between 2008. 20 in the last few months, signaling a bear market. Steven mnuchin rejecting comparisons with the financial crisis. Addingdding nationwide travel restrictions. We have 60 Million People under seenown and that is being on the ftse over in ed lee. The European Central bank meets on thursday. Theu. K. Chancellor of exchequer tomorrow unveils the 2020 budget. We will have plenty more data checks throughout the day. Bloomberg surveillance continues on radio. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] alix firepower. Unveil. Prepares to spending package. The equity selloff and bond rally as investors look to governments for answers. And russia says it can survive a leaves, and saudi aramco u. S. Shale producers at risk. We speak to one of the pure permian players in the lineup. Welcome to bloomberg daybreak on this tuesday, march 10. Im alix steel. Thank god its not monday. Basically, whatever sold the hardest yesterday is rallying the most this morning. It cant go any higher than this, but it can trade lower and trade around that band. Anything that was down is now up. Dollaryen taking a big boost up. The safe haven bid comes off