In 2007 and 2008. There are significant signs up. Ting to show european stocks pushing down towards session lows, 2. 1 . Seem to be a lack of belief, the policymakers at this the rightputting tools to work. Whether that changes today or tomorrow. Well wait and see. Is building. Alix steve, well get to the in a second. T uninvestable . Its hard to if you thinking about trading them for the next three weeks, thats probably not a good idea. Are very volt volatile now. Easily go lower. What were right to remind get 30 when you downdrafts in markets, which is where we are now, it never been sell. Ime to its been good if youre brave. The liquidityave to do that and you dont have the temperament to handle possibly another decline on threeyear view, its going to be a very good place to be. Its just not a good time to my best advice for people now is hold on. Were in a rocky time here. When the vix index get this this really once back in 2008 and 2009. Rampant, the thing is government has the ability to change the rules and do what they need to do to keep in tact. M eventually they get there. T. A. R. P. , you recall was very difficult. When peopleig drops thought the politicians werent going in the right direction. Market has a way of spanking policy into action. I think were starting to see that. The fed is all in. Sure. Have more to do, im even the president yesterday starts to change his tone about are. We i think thats a positive. Expert, wereth terrified is probably good. Slowed the contagion rate. If well see that today. The latest report that the fed is going get into the commercial paper market. We know what were looking at here . Mike not yet. Lorettad comments from mester who said they will support it. Theres no question that the fed real do this if this is seize up in the markets. It appears to be, you can see how the rates, the spread between the rate for commercial and the risk free ois rate and higher. Her commercial paper is so important for the economy. The way it works, what they did purposeset up a special vehicle that purchase commercial paper from companies that needed to sell it. They would have to sell it to a dealer. Would sell it to this special Purpose Vehicle which was funded by the fed. On to thewould hold commercial paper. Can you explain why this up . Sure is showing why its so important . It appears that people are the not wanting to buy paper of companies that might not be able to repay it. You reallyike this, have issues with cash flow. The cash concerns that flow drying up. Lot of these Companies Use commercial paper to fund shortterm payroll or expenses. If they cant sell it, they leave the economy to seize up. We saw that back in 2008, 2009. Directly tod lend companies that having trouble like general electric. Do that anymore. Special Purpose Vehicle, this funding operation is the best they can do. Money market funds big purchases commercial paper. What are the implications for them . The issue for them is, they dont want to spend lot of cash at this point. They may need it for redemption. Hurdlesne of the commercial paper market is facing. If the fed does start this lot ofy, that would take pressure off the money markets as well as the company who are sell. To alix in terms of them, what else they can do. Reporteading jeffreys about how, if we see the lack of etfidity in the underlying and if this continues, may be inll have the bank can go there and lose Capital Requirements and the banks can get the funds. Is that part of the conversation . Part of the conversation for the fed and the banks. We did see the announcement that will go to the discount window. Whether they need the cash right not. R its little bit like what diamond did with t. A. R. P. The first one to take the money. He said j. P. Morgan didnt need it. The idea is that, the fed has loosened their Capital Requirements. Buffers as it were to try to not the specific one, we dont use that. Countries do. Saying, you can use up and of your capital here you can go to spend the money to buy things. You can go to the discount to 90 and get a loan up days. Let me come back to you. Is clear the fed need to make sure that the financial plumbing works. Step is going to be a much more significant fiscal push. Fiscal push that need to be . Look at it, way we guys, the u. S. Economy is 20 trillion economy. Assume maybe a fourth of it is sort of on freeze now. Evenf its still going on though we dont see it. Whats visible to us is shutting down in some parts of the country, in the hot spots. Nevertheless, you say a quarter thats 2. 5 trillion. Looking at of quarterly cash flows if this is the shutdown for some part of the quarter, im sizing that. A number like like 1 trillion to 2 trillion. Is different than 2008 and 2009 where it was selfinduced if you will. When people got too greedy and over leverages. Then went down. This is really a hurricane the way to think about it. I wouldnt think about it stimulus. Economy is fine or was fine. All were trying to do is bridge until we get all back to work again. Bridge. D of a giant the government is the one entity that can borrow from the future save a future. Basically. Incredibly low Interest Rates now. Have to do. They theyre going to just borrow a and use it toheap preserve the system. All oft point, i think us have a tendency have good ideas. Fromber, when i learned experiences, theres a lot of very short policymakers in the the right time. The president god some very good people around him. World dealinge with the same problem. They got some really good people. Get there. Hey will just got to believe that. Alternative is something thats conceivable. You talk about the shortterm. How shortterm is it likely to be . It two more quarters . The u. S. Seem to be backend of this. Gone from asia to europe and u. S. Logically would have next. Ed to be how many more courses do you will be felt . Ct wil its hard to discount that. None of us are healthcare experts. Were watching japan and china carefully. Went into this first. Bottomingeeing things out there in terms of new rates. On thats comforting. Every country is a little bit different. Extremely heavily infected. Got lot of old people in a densely population. Lets see what they can do with their shut down. Its hard to say. For sure, were beking at q2 that will negative. Negative gdp. Thats pretty obvious, at this point. The question is how you shape be and quicklyll it will be. Very sharp. Again, its really a matter of theiding a bridge loan in meantime to get through that right now. Alix Bloomberg Mike mckee for joining us. Not really lot of confidence in the market when it comes to yields. D we do want to check in on word news. Irst we begin with u. S. Treasury secretary Steve Mnuchin. Congress for a phase three stimulus package of or more. Ion bloomberg has learned that he told republicans the measure is liquidity to the market. The senate is expected to pass inond phase of stimulus response to the coronavirus. Thatsth collection of economic measures approved by house. President donald trump doing 180 on the coronavirus. So bad, it mays drive the economy into recession. President spending weeks minimizing the outbreak. Leaders state and local to take the initiative. French people, we are at war. The french president making the case for shared sacrifice. In the fight against coronavirus. Mr. Macron reforms included controversial pension on hold. The government will ensure no allowed to fail. Escalating price war with russia. Saudis will start exporting more 10 Million Barrels a day. The fight has send prices down below 30 a barrel. If forced Energy Companies spending cuts. Is bloomberg. Thank you very much. You want to bring it all together. You working from home. In the office. You can watch us using a multitude of functions. Them is the live function tv go. You get live tv stream. You get all the data that sits do. Gside what we only. Loomberg subscribers this is bloomberg. Alix this is bloomberg markets. Fed is doing 500 billion overnight repo operation. Morning the up tick was and 187 billion in the repo market. The huge number. The fed trying to support all shortterm funding. Guy lets carry on talking whats happening with the markets. There are two different stories happening. Fed tryingsay, the to get the plumbing working, making sure the Financial Markets do not have any bottlenecks or strains that we dont need. Other one is Bigger Picture not well see significant fiscal activity. We are seeing some in the u. K. Today. Well see some over in the United States as well. Lets carry on our conversation authith Stephen International equities cio joining us from napels florida. Some of the key indicators are indicating that we are oversold. There are smart people including suggesting it may be time for caution now. Nevertheless, what signals we be looking for . Tot metrics are you using gauge whether these markets are reaching their bottom. When they get there, what do you buying . Ople should be guy, first of all, the metrics we will be using is the fear gauge up at these levels stocks down 30 . If you take a slightly longer term view, lot of Big Companies very solvent, are trading down at least that or more. Are longterm view, stocks by year. Difficulty is making sure you in thiso time a bottom kind of market. My experience, unfortunately marketsced lot of bear over 40 years of doing this, bottom. Y hard to pick a usually the bottom comes on low volume and its very hard to buy the newsoint because is max bed. The youre looking for is Second Derivative to start to things get less worse thats a big deal on the markets when that turns. Thes probably ways away in u. S. You can see whats going on overseas. I think that can help people. Helped people last night seeing the china data go negative. On the policy response ade, that can also cause pretty big recovery because the price in g to last week was foreselling. Pricingy was probably in a recession with poor selling funds. E as more and more sellers get out is very the market sensitive to big gaps up. Trying to chase that is very hard. We always advise people hold on, average in are the two best ways market. A bear alix steve to that point, where that . Do last started doing it week. We put a couple of points in. Is what wereck doing is continuously upgrading days whereios on theres massive liquidations. Changes, some companies that weve always wanted to own that way too or suddenly coming on sale. Your morell some of defensive stocks and rotate into those. I think thats for professionals. Very hard for retail to do well. Nd do it my best advice what were doing, were upgrading the quality of our portfolios whenever with get business mass liquidations and sale at thes on same time. Thats always a good time for an active manager to add value. Been doing that. Guy we just had a problem with the line. Napels, florida. Auth, federated equity cio. Running on the terminal its available through bloomberg subscribers. It. , you will get it is absolutely fantastic some there analysis thats absolutely world class. This is bloomberg. Guy im guy johnson. Alix this is bloomberg markets. Time now for Bloomberg Business flash. At some of the biggest business stories in the news. Banks plan to tap the window. Reserve discount the window is meant to provide emergency liquidity to banks. Have reluctance to use that facility because the reaction provoke among investors. Saying tesla auto plant in fremont, california open. Tay musk said hell be there. Largest American Theater chains will close in their u. S. Locations starting today. Thats following pressure from government officials to limit public gathering. Shut said theaters will be indefinitely. Thats your business flash. Quick check in here on the markets if you looking at the equity market here in the u. S. Whippy. Eally at 81. Ity still elevated guy few headlines from amazon. Theetty big example of how world is changing. Changing very rapidly and reaction to the coronavirus. Headlines were getting. Prioritize essential medical supplies over everything else. A temporaryhis on basis. It will prioritize these products within its fulfillment centers. These adjustments are now in april 5th. Ugh hugeusly, this is a Logistics Company which will completely shift and reorient prioritizes what we are delivered. Lot of people are now relying on services such as amazon, given that they are locked up in their homes or that is likely to be part of life. Alix just we heard overnight, hire 100,000 new workers and pay them more to keep up delivery. I dont know if you gone on amazon, things are out of stock for weeks. Couldnt get a workbook for my kid on spelling for about week half out. Guy parents with kids being aroundt their schools the world, were all about to find out. Home schooling is going to be major challenge. Alix luckily its my husbands problem actually. Bring home the barbie dolls and say hi mom is home. Stocks up over 4 . Medical supplies as well as house holds and hiring new workers. Also i want to point out, boeing sticking to the lowest level since 2013. 22 . Thats one for you. Bailout andd a stock 2013 low. Guy bailout is another kind of what is very desperate story in terms of managing the for boeing it proceeded what was happening making itoronavirus even more difficult for the boeing management team. Press conference here. Alix live from new york im steel. Guy im guy johnson. This is bloomberg markets. Details. The we begin with u. S. Retail sales they fell last month by year. St in a they were down onehalf one percent. Spending began to slow before the coronavirus hit the economy. This month numbers likely to deeper decline top now to iran the nation is stepping up the pressure on citizens to take home and avoid unnecessary travel. Iranian state tv warning millions can die. The warning coming hours after shiites push the their the courtyard. Iran has had more than 16,000 ases of coronavirus nearly thousand people have died. Back here in the United States, inmary voting under way florida, illinois and arizona. Officials saying some polling in florida have been unable to open. Workers staying home over and in ohio,ear Health Officials postponing the scheduled election. Senator Bernie Sanders and former Vice President joe biden are vying for 664 delegates. End with american pro bradyll an and tom bay di leaving the new england patriots. He tweeted his football journey will take place elsewhere. 42. Y is he played 20 seasons for the pats. Global news, 24 hours a day, powered by more than 2700 analyst. T and this is bloomberg. Treasury secretary Steve Mnuchin expected seek third round of coronavirus from today. S well get the latest from Bloomberg GovernmentEmily Wilkins in washington. On the table . On the table mnuchin will be pitching 850 billion stimulus package. About whating detail hes going to be proposing to be in this package. Senate aren the coming up with their own package. Getl see exactly what they to. Very important now, it happened now Majority Leader Mitch Mcconnell saying the senate not adjourn until they pass more expensive bill that the house sent. They planning to vote on the house bill. They want to do measures beyond it as well. Guy is it really hard for government to get their arms size of billind of this is required . U. K. Government finding itself in the same position. A bunch last week. Its already out of date. Flexibility is being built into some of these bills . Open ended at some point . At this point, remember, we passed phase two yet. Thats the one that the house pass and the senate needs to vote on. About phase three. This is how things are moving. This is how rapidly its going. The house members are not in washington today but has been hoursd they can get 24 notice any time to return. They have a sense of urgency going on with lawmakers now. At the same time, lawmakers, politicians. They have various things they want to get done. Ideas,ve conflicting they have various opinions. Well be watching this all play sense of this growing urgency and very quickly changing the fed is getting ready to reopen its commercial paper. The fed president has in the last hour suggested she would support such a move. This comess companies struggling to raise vital funding. It might be necessary for the feds to step in and buy. Dobson. Us now paul walk us why this is so significant. Kind of why its necessary to plumbing working andy to get the working quickly . I think to that demand for market, thatthe pushed up the borrowing rate for commercial paper which is charged overnight rate. Companies torm by pay for their wages, their rent and stuff like that. Them over from daytoday. There isnt enough dollars system forn the everybody to have now. Its been pushing up. In the commercial paper markets, that causing other parts of the funding be added to this stress and demand for dollars from the rest of the world. To see the fede buy commercial paper, how does that work . Then whatt and happens . They cant really be on the loss if the company cant repay right . No, thats right. They take it off the balance sheet. That frees up room for the dealers to do more lending of market. Elsewhere in the the fed looks after it. It should get back in full most of the time. Its very low risk. Borrowing. Hortterm sureed will charge to make its not exposed in my particular way. Lending by the company so they can push with the market. Guy what is the fed going to be about the dollar squeeze . Theres a definite demand for dollar around the world. How is this going to get sorted out . Doesnt seem to be working yet. This will be in this process to help things out. Thoseow well see some of activated. K well get the first operation with the euro and the pound tomorrow. Little bit more money into the market as well. Fed is also gigantic amount of dollars in the u. S. Market. There. S cash its question ensuring it gets to the right places. Thats the problem that we will seeing and all sort parts of the market. Need cash to tie them over and they need the bank to guarantee them that. To get togine trying your bank and everybody is doing the same thing and everybody home, makes it efficient way to getting the the system. Raises the three prongs of this. One is the individual small businesses. Next is the plumbing and the is really the Big Industries and how we kind of manage that. Ints the conversation like terms of bailing out Industries Like airlines . Got your trump said we back. Its not your fault. What does that actually mean . Well, depends on where you are. The french talking about a nationalizations, taking control again of those mostnies that are indebted. There are other options available to policymakers. Bailout, some kind of some kind of loans with very low Interest Rates funding in order to help the companies through this. This isnt the companys fault. Isnt the governments fault either. The problem is we need the companies to ensure the functioning of the Global Economy carries on. They need to find whatever fits and work in order to help out. Theneed to put it aside all concerns about that. Its so crucial and its so and its nobodys fault. Guy thank you very much indeed. Bloomberg paul dobson coming out government. Were getting briefings out of the u. K. U. K. Coronavirus cases 1950 from 1543 a day before. All thesest as with things, theres a caveat without and u. K. Wrapping this up now, the number of it is difficult to do. What i think that gives you is the pace,e scale of delta were seeing in terms of the acceleration of the number of cases. Global Aviation Industry could need 200 million in aid. They see major consolidation on a dramatic with contraction. Joining us now is George Ferguson of bloomberg intelligence. Think government will step. And deliver anything like the kind of money that the aviation requires . Good morning guys. I think weve already seen the about 50 billion to 60 billion for airlines. Like its getting traction in capitol hill. I would say its very likely well get to that 200. I expect the european governments as well to support their airlines. Keyink airlines are infrastructure. When the economy working well, they really provide the connections between businesses, they provide and i think government integral to the economies and step up. Alix whats the most effective way . Ofit going to be some kind multibillion dollar bailout or nationalization, we saw in some bigstakes industries and businesses. Which is the best way . Free market guy. I think that the best way probably cash injection or some way to get the airlines resources. Know governor do great airlines. G in some countries you could see some nationalizations. In the u. S. Youll see cash. Have to remember that some of the actions were taking to prevent the spread of the been put on theyve by the government try to protect health. The airlines have been hammered as the fearell contracting on the airplane. You can see where the government thed want to bail out airlines out. Seen that ine have the United States. Number of carriers coming down to just the big four or five. This going to accelerate that process here in europe . Consolidators looking and air france. How quickly do you think this could happen . How much shorter in that consolidation time frame could look like . I think capacity needs to come out the marketplace. The smaller european carries coming out. Cost carriers like ryan air have pretty good here. E sheets they could be well positioned to survive. See the big three doing low cost balance. See an orion air to deliver airplane seats. Good to catch up with you. Thank you so much George Ferguson with bloomberg intelligence. The difference between wti shrinks. To very significant change in the oil market and winds up changing the oil flow around the world. Well break that down as call oil below continue to percolate. This is bloomberg. Youre watching bloomberg markets. Former femah administrator about the coronavirus crises. This is bloomberg. Headlines getting from the fed. Alix the fed will establish the facility. Per funding it will be established the byhority backstopped treasury. Provide 10 billion of credit protection. Essencea market in waiting for to jump in and help support the plumbing. Guy absolutely. Market functioning again, allow companies to be in shortterm basis and shortterm debt. Got gummedhing that up in result of what has happened. Some of the money market funds in. Willing to step look like the fed will step up. Alix theyll create special vehicle march 17th companies. Le that should smooth in funding over. Markets, they were looking at oil prices continuing to head lower. Of stress for Energy Companies. Also. Ld get worse saudi arabia planning to boost oil exports further from april may, reaching record day. Llion barrels a what have we learned today from saudi arabia . We knew they would produce going up toion 12. 3 Million Barrels a day. The export number which is a record. 10 Million Barrels a day. Thats huge. You look what theyve been under seven. S just they are ready to drown the market and bring prices lower. Some of the gas and oil fields and put more exports. This is having direct impact on the price. Theave wtibrent both in 20s. Guy how much higher can they go in terms of export production . Already 10 Million Barrels a day, well see prices fall. Even if theyow is, were to go higher, where does this oil go . We have towns quarantined, flights grounded, demand picture is serious destruction. Were seeing some 8 Million Barrels a day lost on side. Mand where does this go . Theres going to be nowhere to put it. Reserves filled to the max. I think now, 10 Million Barrels is enough. Xport we do know theyre bringing that huge production number up and on of that, aramco is boosting their maximum state of capacity to 13 Million Barrels a day. Its really staggering these numbers. Completelyst swamping the market with crude and they are really saying to serious aboutre this oil price war. The saudis are in the best the pain. O inflict the question is, whether or not theyre in best position for the prices. Alix brent hurt the most. Narrowing that spread between wti and brent. The lower it goes evens u. S. Exports is economic. Which means we cant export. You know shale in and out. The shalerrible for industry. This is exactly what the russians wanted to do. Want tothe pain they inflict. You can see Companies Like , will vickie keep our job after this . Debt. Ook load of lot of these shale producers what well see bankruptcies potential consolidation. Changing thely market. We saw this morning when i woke up, i saw this letter to saudi market. Please calm the can you believe republicans are asking the saudis to bring back cartel, bring back the prices higher. This is huge. A huge debate on twitter now. Guy i suspect well see lot betweenthe conversation riyadh and washington. Worlds what started the market turbulence. Lets turn to what is happening in chicago right now. In ted. Ing which market youre focused on now. The oilyou see in space. We got a huge debate running now about whether or not saudi asked to pull back from the price of war that its starting. Walk me through whats happening. Starting with oil, i agree, yes, we could maybe now at this point, really want to come to say, really politely and lets not increase exports by 10 million a day. All the demand destruction created by this coronavirus panic. Demand dramatic drop from airlines, dramatic drop transportation. Lot more people would start driving rather than taking airlines. Nsit or the roads around here are completely empty. Big demand drop. We could see u. S. Production decline. The bignot offsetting loss in demand and increase saudi exports. Continues to be under significant amount of pressure. We are trying to hold on here of by the skin of our teeth and hold on to the lows we had here. Trading below that of 29 2985 next is 24evel of support and 2001 and 2002 lows. A touchy situation with crude. The good news, if youre a have at like me, we do big damp on the capture above us. Good news, that will be a likely target. That gap closure bring to 41 degrees. Whats that spark going to be, whats going to get us to do that . Ing like as far as agricultural markets, weve been under significant amount of pressure there. Of losing Global Demand due to coronavirus, we know that happen in theo short run. The question is it going to happen in the long run . The chinesewith rate deal, we really wanted to see china come in aggressively buying u. S. Agricultural products. So far that hasnt happened. The market really just feel thes like its not going to happen. Coronavirus will be excuse for that. Turmoil. Panic you have concern. You have this is the sort of in theseu can get sorts of situations. Continuing pressure on the equities market that doesnt commodities. What might bode well is the short drop in the u. S. Dollar not what were now. Ing on alix ted thank you very much. Commercialtablish Paper Funding Facility. Theyre setting up special Purpose Vehicle theyll buy about 10 billion from treasury mckee here with us. What do we know . Theres no surprise here. Expected by the markets. Its very similar what they did setting up the commercial Paper Funding Facility then. What they are doing creating this special Purpose Vehicle be funded through the new york fed. Commercial paper from the companies that are issuing it as long as it is a1p1. They will hold it to maturity to get the money back at the end. Here, maybe this was why the delay in setting this up is rules. S changed the this is being set up under the section. It allows them to take action under circumstances. Congress put in a requirement that they get the treasurys do it. Ion to also, they want treasury backstop. Be 10 billion backstop from the treasury for the first line of risk for the fed. The fed is in theory, legally not allowed to lose money on these things. Take the firstll risk. Theyll begin buying commercial paper. Theyll do it for a year unless they extend it. That should, they hope relieve the strains in the Credit Funding markets. Guy any indication that we are seeing the fed being given the freedom to go out with qe program buy private paper as well . Theyre not allowed to do that . No. To get permission to buy something other than what is of agencies sponsored by the federal government which means agenciess and housing and munys, the fed would have to have the mend amend the Federal Reserve act. Inre doesnt seem to be move that area. They dont feel like they need that. Guy things are moving pretty around here. Mike mckee, thank you very. Uch indeed euros to fight the coronavirus. In terms of the size and scale getting. We are going to continue to get that front. Alix yes. We will. We have a Chuck Schumer looking at 10,000 Unemployment Benefits over six months. Saying the democratic proposal theyre looking at in Congress Wont include payroll tax cut. Theres been a lot of debate if that was the silver bullet. Details toet some get bipartisan phase one, two and three fiscal stimulus out of the u. S. Guy yes. We are going to hear more from as well. Seeing more aid issued to small and Medium Size Companies particularly yesterdays announcement in terms of the restrictions that are applied in the u. K. Terms what coming up, we are expecting the latest from the white house. Looking for the Coronavirus Task force and the that. Is will come with it will come in the next hour in balance of how well get the fema administrator, brock long coming on to give us his take on what is happening in washington. Thats next. This is bloomberg. We begin again today with the andets between gains losses. Just trying to come to grips uncertainty. Weve been at it 5 00 a. M. You up right after 12 . Its asking lot of strategist, seem to be struggling to find a floor, to get that discovery. Most of said no. Let theates more panic, market work things out for themselves. You got some volatility and some up and down. I normally, i might regret this decision, i hate talking about the dow in terms of points. When you get 2000 price swings in either direction, we do need to talk the dow in points as you saw