Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240713

Equities not totally convinced. They were higher, then rolled over. Part of that is the u. S. U. S. Futures were a little higher three hours ago. Now weve rolled over yet again. Intocalvasina sees a dip 1700 possible for the s p. Part of the reason we are seeing this is a spike in the dollar index. Causing a lot of pain across the board, whether in the commodity market, emerging markets, europe. The eurodollar having an unbelievable slide. The cable rate at its lowest level at one point since 1988. Time now for global exchange. We are going to bring you todays market moving news from around the world. From brussels to london to lawson can to washington, our bloomberg voices are on the ground with todays top stories. The ecb announced it would do whatever it takes and an emergency Bond Buying Program. Joining us is maria tadeo. Walk us through what we know about the program. Maria first of all, it was unexpected. It took a lot of people by surprise. You have to take a look at the amount of 750 billion euros. What investors really like here is the fact that the ecb is hinting it can be very flexible Going Forward when it comes to what it would be allowed to buy. It is also hinting that it is ready to go into markets that until now have been restricted. You mentioned the great bonds. The yields plummeted this morning. The greek bonds. Yields plummeted this morning. It was across the european periphery, and italy in particular. I would also note and stressed that this was a total uturn from Christine Lagarde just a few days ago. She said my job is not to narrow bond spreads. Today she is saying these are extra ordinary times. There are no limits as to what the European Central bank can do Going Forward. Alix maria tadeo, thank you very much. Italian, german, and french bonds serving on the ecb stimulus plan. We are joined by dani burger from london. This int me put perspective. The move lower in btps by more than 70 basis points is the biggest decline in those yields since the european sovereign debt crisis. These are definitely a big day of superlatives. Greek bonds, a remarkable move in the fiveyear. At one point, more than 200 basis points lower. The ecb able to step in and by greek bonds once again. Many have questioned, has the ecb run out of stimulus in order p and stabilize the Financial System . Here is a big vote of confidence, but can it have a continued effect on the market . We especially need action from governments, is what analysts are arguing. Income, the fixed desire for cash and havens continues. Really apparent in tbills, short dated government bonds. The u. S. Government borrowing more and issuing more debt. We are seeing investors flock into the market. These short dated bonds are ones that are seen as more liquid, easier to buy and sell. Because of that, we see the yields turned negative on one month and three months government tbills, now trading at a record low in terms of the yields. At one point, six months tbills also turned negative for the first time ever, so it is clear that investors want cash, and they are willing to pay any price for it. Alix we have the 10 year tips auction coming up in the u. S. At 1 00. Thanks so much. Now we go to washington, where the Senate Passed the second major bill in response to defendant. Larry kudlow said the u. S. Government could take equity positions in exchange for aid. He was very much against the bailouts we saw in 2008 and 2009. That would be in exchange for help from Certain Industries. Joining me now is kevin cirilli. That was a headline. Kevin precisely. They are essentially saying there are going to be Strings Attached to these bailouts, particularly for large industries. President trump rather, Senate Majority leader Mitch Mcconnell advancing the first part of that economic stimulus bill. 1. 3all eyes turn to the trillion dollars stimulus bill. Lawmakers told to be ready to vote on this and to stay near capitol hill. It also comes when two house members, i democrat and a republican, have tested positive for coronavirus. They are quarantining. New measures are being called, proposals by mentors of congress, saying they are potential he considering to vote remotely. That is something that speaker of the house navy pelosi and Senate Majority leader Mitch Mcconnell have not publicly entertained as of now. But clearly, everything is an option at this point as lawmakers continue to grapple with the economic and procedural fallout of the pandemic. Alix thank you very much. As the coronavirus continues to put the economy at a near standstill, the fed made a Late Wednesday announcement on new actions it will take, including emergency aid to Money Market Mutual Funds. Joining us is michael mckee, Bloomberg International economics and policy correspondent. What did they do, and why was this so important . Michael putting out an announcement around min date around midnight is any indication of how worried the fed is about market reaction. The Money Market Mutual Fund liquidity facility will lend money to banks that buy commercial paper, treasuries, and also agencies from Money Market Funds that are trying to raise cash. Many of them have been trying to sell these securities to raise cash over the last week as investors try to get their money out, redemptions. But with demand for cash rising, they are finding it difficult to get buyers, so the fed is stepping in. As for the commercial paper facility, the Treasury Department is going to backstop this with a 10 billion line of credit. Analysts say the best measure of how this will work will be in the commercial paper market because even though the fed announced earlier this week it was going to put up funds in place for that, it hasnt really had a huge effect yet. Meanwhile, 8 30 this morning, we get a horror movie trailer release. It is jobless claims. We call it a trailer because next week, we are going to see massive jobless claims. Take a look at some of the numbers coming in from the states just for this week. We are seeing about half the number of claims we normally get in just three states. In shepherdson of pantheon macroeconomics said he thinks next weeks numbers will be over 2 million. This weeks numbers just include last weeks filings, so while it will be up, it wont be as bad. Thats why i am calling it a trailer. Thanks ahael mckee, lot. Crude rebounding after plunging to the lowest level in about 18 years. Futures rising as much as 22 . Joining me is bloombergs annmarie hordern. It seems like the conversation is less about saudi arabia and russia and just take out the lowercost producers fast. It is still a bit of a wipeout. Crude was down some 25 yesterday. Today we are up just to dollars. We are seeing epically low prices. Citi now saying we could see 17 on oil. People in the market say they see Single Digits insight, at least for wti. This is all due to demand destruction at the same time the worlds two biggest producers are ramping up production. Pecis so bad that a former no cosponsor is calling on President Trump to ban imports from saudi, russia, and other opec countries, and we have an emergency stimulus measure from Central Banks around the world, and one analyst made the point that this is making centralbank positions so much harder because low oil prices are creating a deflationary spiral. This is making the situation much worse, and at these prices, it is just panic level. Alix thank you very much. It is a develop into a dependent we have been watching. New evidence from the u. S. And europe suggest younger adults arent as impervious to the coronavirus as originally thought. Initial data from china show that the elderly and those with other Health Conditions were the most vulnerable, but in the u. S. , 705 of the first 2500 cases ranged in age from 20 to 44, and the latest numbers show even more hospitalizations by 54. Age between 45 and the most at risk are those with lments that havent yet been diagnosed. Obviously, the death rate is much higher when it comes to those 85 and older, yet the infection rate is jumping for those considered younger. They are not impervious as we ought. Coming up, more of your morning news, tradand analysis of the markets in todays first take. This is oomberg. Alix time for bloomberg first take. Going to make from our inhouse team of wall street veterans and insiders, michael mckee, Bloomberg International economics and policy for, and Damian Sassower, and mike mcglone. We wereyesterday talking about Money Market Funds and how the fed needs to step in and provide liquidity, etc. Is that enough from where you are sitting . Damian thats a very good start for me from where im sitting. The strength of the dollar is the story this morning. Down on theanc is dollar. If you look on a cross currency basis, yet again, they blew back out again. We are back up to tuesdays alltime highs. Obviously, the broad. For dollars is alix so what do you do . Do you just have to wait this out . Mike theres a few markets that finally found a base. Look at crude oil. Yesterday it finally found a good base. It is probably good support for now. On deals a couple of weeks ago at 1 , now you expect them to retrace to 2 . As quited yields back attractive. With the dollar strength, at least now with the volatility readjusting, and the key protruding name i am worried about that hasnt found a base yet means the stock market. Hopefully we will find a base like we did in crude oil. Alix fair enough. Are we going to have conversations on the plaza accord, etc. . Michael probably not. Other Central Banks, especially in emerging markets, but at this point, the dollar is every bit of the old line about its our dollar, but your problem. It is everyone elses problem the dollar has gotten so strong. It is having an effect on all markets. But i think the most important thing to keep in mind, as the gentleman we were just talking about, there are bottoms forming. The Central Banks have been trying to keep the plumbing working, and its starting to look but they are able to do that. Then the stock market and all of these markets become sideshows. The real question is what happens over the next couple of weeks with fiscal policy in all of these countries. Do they Keep Companies operating . This recession is going to be very deep very quickly, but how fast it comes back depends on whether there are any Companies Come back to. Alix it is such a good point, but i think thats where you have the dollar and the fx market meeting the fiscal. It is really difficult when you on the dollar index and cable rate at a low. Damian potentially a lot of asset are finding bases, and emerging markets currencies certainly arent. Look at the real, the peso, the ruble. The rand is already at 1730. They may weaken it. If you look at the price action, it is very clear to me that markets arent operating, they are not functioning properly. See margin calls. The Hedge Fund Index had its worst oneday loss on record yesterday, down 6 . That tells you all you need to know about the biggest hedge tsnds, the big multistra further weighing on Market Pricing here. Alix fair, which mike mcglone teased that maybe we have found a bottom here. Gold, if you are below 1500 an ounce, that totally speaks to margin calls, and even saudi arabia selling to make up for the fact they are losing so much money on the oil price. This point, i think theres pressure on gold because we know theres a war, and we know what does well in wars, gold. Right now it is the dollar pressuring gold. Even bitcoin, if we look ahead, we will see massive debt to gdp increases. I see that quasicurrency gold, this is a dip in the trend. We saw the same thing into thousand eight. Michael let me throw a question to both of you guys. Gdp these massive debt to numbers, which is not just the united states, how is that how does that affect the markets longerterm . Are we setting ourselves up for an Interest Rate problem . Damian i have to say, some of the biggest risk takers in the world are sovereign wealth funds out of the middle east. What do they own . What do they invest in . They invest in credit, treasuries, mortgagebacked had funds mortgagebacked hedge funds. Steal money from those reserves theyve built over time. Who do you think is going to . It is going to be u. S. Markets and u. S. Asset managers. That may be where we see some of these redemptions coming from. Just a comment on that, and i started trading in the 1990s, everybody says im happy. Chinese yields are lower, and i think we are heading a little blip because theres a massive increase in debt, but overall, theres no inflation. Just look at the breakevens. The bigger risk is deflation. The prudent thing for governments to do is what they are doing, but right now, i think this blip should go back to the trend of lower bond yields. Alix but your point, no one is going to care about that until they care about it, right . Michael it is a longerterm problem. Another longterm problem that came up last night, i saw an analyst note that said we are all thing about the problems we are having in the developed markets, but what happens when this disease hits africa, where they dont have Central Banks who can step in and prop things up . Where they dont have the medical systems to keep up with the disease . Damian a great point. Ive spent the better part of my career operating across the continent. If you look at nigeria, for example, nigeria and ebola, this is nothing new to them. You know, aids. A lot of the crises that have africa, they have a bit of a plan to handle this kind of thing. In many respects, they might be not better off, but certainly equipped to handle such stress. Mike, i have a question for you. Some of the highfrequency data in the u. S. That ive seen out of places like illinois, connecticut, ohio are absolutely horrific. I wonder if you have any thoughts because for me, if you look at the Global Financial crisis, it took 18 months for unemployment to surge, to double to 10 . I am wondering what you think about todays print. Mike claims is lagging. Stock market prices have been pricking this for a while. To me come of key things was yield. It is going to get bad. Michael im wondering how the markets react next week. This week, we are looking at claims that were filed last week before things really got bad. You are looking at number seven filed this week, and Ian Shepherdson from pantheon said this morning he six we could see claims of 2 million next week. He thinks we could see claims of 2 million next week. Remember, and the financial crisis it was a lot of people in new york losing their jobs, but for the rest of the country, it was a slowmotion crash. This is a fast motion, highspeed crash. We will see a lot of people out of work very quickly. I know that the market knows that, but the question is, when they see that number, does it still give people on trading desks a bit of a heart attack . Alix just to wrap that up, the issue now is going to be in the services industry. In the financial crisis, it was the whitecollar jobs, and then it rolled over. This is a whole different thing. Consumers add trillions of dollars to the economy. Michael its gotten worse than that because now we are seeing auto companies, the entire Auto Industry around the world is shutting down, including all of the plants in the united states. We are going to see it in manufacturing as well, and of course, oil fields are shutting down. This is going to have a massive impact across the country, and away we have never seen before. Buy to wrap this up, you any currencies today . Damian ive had a lot of conversations over the better part of this week. At this point, with the lack of trader safety in the market and the value of risks shock we are seeing on the heels of that, i wouldnt be surprised if people start taking seriously the idea of setting this market down. Theres no price discovery. Its just not real. Concerned that it is going to spiral downward. Im not calling for the markets to be shut, but it definitely think we need something to reset sediment here resets intimate here. Alix youre not alone with that reset sentiment here. Alix youre not alone in that. Thanks a lot. Any chart we use throughout the show, go to gtv on your terminal. You can browse them and check them out, save them. This is bloomberg. Viviana you are watching bloomberg daybreak. Kkr has pulled off one of the biggest deals since the market turmoil began. It has agreed to buy pennant groupa Waste Management arm pennant groups Waste Management arm for 4. 9 billion. It is a sign that businesses are still willing to deploy capital unstable assets with printable cash loads. The pandemic taking a growing toll on u. K. Fashion brands. Burberry saying sales have fallen by as much as half since late january. About 40 of its Stores Worldwide are closed. We end with an offer reminiscent of detroit contributions in world war ii. Tesla has joined General Motors in offering to make hospital ventilators. This as auto factories closed by the coronavirus outbreak. Theres expect to be a shortage of the devices. White house Economic Advisor larry kudlow saying g. M. Ceo mary barra floated the idea that the automaker could pitch in. Alix thanks so much. Incredible story there. Staying on what companies are doing to help hardship such as the virus, netflix wants you to be able to have a movie night with your friends while social distancing is happening. The socalled Netflix Party is an extension of Google Chrome that allows friends to watch together. Over the weekend, streaming time rose more than 20 worldwide according to world, a comedy that delivers video and advertising connected tvs. Spain and austria increased more than 40 , but as a working parent whose husband is also working and home with our fiveyearold daughter, it is going to be much higher this week as all parents struggle to deal with that. Thank goodness for my little pony. Coming up, we break down the reaction to central bike stimulus. What more can governments do . This is bloomberg. 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. Alix this is bloomberg daybreak. A check in on your markets, maybe things felt like they were going to be better today, with the ecb coming in and basically buying a bazooka worth of bonds, but we werent able to hold onto any equity rally. European stocks are rolling over , as well as s p futures. They really tried to squeak out again this morning. Other Asset Classes may help to explain this. We have seen tremendous moves in the bond market. Yields down 69 basis points in italy, 200 basis points lower over in greece. Huge moves, but the big problem now in the market has to do with the dollar. The dollar spot index at 102, the highest level since march 2017. That is going to hurt most economies as it winds up pummeling emergingmarket currencies, as well as g10 currencies, particularly cable rate, as well as the euro. The spread a little bit flatter, but still 63 basis points in the twostens spread. Crews trying to recover after yesterday. Have we actually hit a bottom in the market . I am seeing because now for 10 oil. The damage that would inflict would be tremendous. For more on the market action, joining me now are liz young, bny mellon Investment Management director of market strategy, and Subadra Rajappa, socgen head of u. S. Rates strategy. I want to start with the move we have seen in the bond market. Do you need to be selling these risks . Selling bonds . No. I think that longerterm, bond yields are going to gradually move lower, especially with the bazooka we are getting from global Central Banks on a qe front. I think we are seeing a lot of volatility in the market. High yields have risen in a very short time, but broadly speaking, while risk sentiment improves, treasury yields have to gradually grind lower. Alix does that mean when you take a look at the markets, that the liquidity issue has not yet been solved by the fed stepping in for money markets, for the primary dealers, for the commercial paper market . Liz i think it means the market is still concerned that there is a remaining liquidity issue out there, and we probably only have bad news to come for a while. Both in the equity market and the bond market, theres going to continue to be a fear trade. As long as investors are afraid, they are going to buy things that are safer that we need liquidity for, whether that means raising cash, which is what makes yields spike, or hearing that Central Banks are going to come support us, but we know we are still in the middle of a crisis. Then we buy shortterm instruments and yield rally. The outlook has certainly changed over the last five days. I think investors are still pretty concerned with the amount of capital that is going to be able to flow through the economy and the markets, and how long this is going to last. Alix all of this also relates to what is behind it, which is margin calls. Youve got to sell anything thats working. Subadra, one conversation percolating in the market is that if you have a downdraft in oil, you are going to have the likes of saudi arabia sovereign wealth funds selling what they can to make up the loss, which means selling treasuries, selling gold. Can that part b the narrative for why we are seeing this volatility in bond yields . Subadra absolutely. I think any time you see gold, thatll as bonds, selloff, is typically an indication that there is probably pressure to liquidate assets and hold cash. You are seeing this manifest itself in a variety of markets. It is the bond market, with real yields going negative, in the cross currency basis, despite having swap lines with five different countries. I would argue that over time, they are going to have to extend these swap lines to a bunch of other countries. But broadly speaking, i think it is demand for cash that is ultimately going to lead to this volatility over the near term. But over time, if the facilities deployed by the fed work, and if there is better functioning of money markets and availability of cash, some of these issues should go away. Alix which bonds still represent safety . It is hard to think of some of them as safe. Of the the front end treasury market is where people are going to park their cash. I would assume that is still your safe haven asset. Gold as well over time, but i it is going to continue to benefit from quality flows. Alix what about in the stock market . Lori calvasina had another update on her earnings estimates. She said, our new forecast anticipates a 16 drop in earnings and 15 drop in price for the whole year, but not ruling out sincerely a potential 17. 25. To 25. O 17 what do you model out . Liz the market has given up on a vshaped recovery, and we are pricing in something that is, at best, ushaped. However, it hasnt yet reacted to what that hit to earnings is. It could be somewhere between 10 and 15, close to 20 . Wont know that until we start to get information from companies after the First Quarter has ended, and keep in mind we start to get earnings reports from companies in the First Quarter, half of this quarter looks relatively unaffected by the virus. Firstquarter numbers arent going to be as meaningful as the guidance we hear Going Forward. But it does look like at this point, even with the selloff weve had, theres still more downside in the market, and that is what we are cautioning markets about. We are probably going to bounce around in this range for a while until we have some positive news and the market can make a decisive upward move. Alix do you think that positive sticky news has to come either in the rate of cases worldwide slows, or is it going to be able to be delivered by fiscal stimulus . Liz i think the first wave of the sticky news will be a fiscal stimulus package. Weve already gotten a couple of small ones. We obviously need a whopper of a with theo pair Monetary Policy we have gotten so far. It will be a bit of a bandaid, and it will reassure companies and workers that there is going to be somewhat of a backstop, and that hopefully, they will have a job when this is all over to go back to. What is really worrisome, and we dont know this yet, is when will those cases start to slow . Reno we know right now the containment efforts are what is hurting the economy. So if we have to hold out these containment measures longer than we expected, maybe through the summer, and another worst case scenario, that is a different story. Then we have to talk about what the recovery looks like if and when it starts to happen this year. Alix that leads me to the idea of helicopter money. We are at the point where we are thinking about cutting checks to people, and that is as a first stop. What is the most effective fiscal stimulus you have heard the short and more of and longterm, location . Subadra i think the most effective fiscal stimulus is going to be targeted measures towards helping both small, as well as large companies. I think the idea of 1000 checks to Everybody Needs to be, in my opinion, a needs to improve in strategy. If you are not able to go out and spend the 1000 you are getting, i am not sure how effective that is going to be, but it could tide you threw in the near term if you are unemployed. So perhaps there, even targeted measures probably make the most sense from a fiscal point of view. On the fed side, i think theres a lot that the fed can do, and addition to what theyve already done. There are funding for lending schemes that the bank of england has, limited. They are doing a lot on the Money Market Fund side to provide liquidity. But theres also a lot more they can do, perhaps on the asset purchase side. For instance, again, taking the example from the ecb, they do buy Corporate Bonds, so if things do get worse, the fed might also consider it. Alix what about the idea that we need to go in and save Certain Industries . You can see that kind of stress in the Corporate Credit market. How do you look at that . How do you look at the potential default and the repercussions there . Liz first and foremost, if we do go through a recession, the nature of recession is that not every company survives. There will be somewhat of a shakeout if that is the case. However, if we look at it from an Airline Perspective or some of those industries that are really influential, particularly in the industrial sector, which is what we look at is a bellwether of Economic Activity overall, they probably will need some help. I think it is ok for us to give them that help. We are in a place right now where this is a sudden stop in the economy that nobody saw coming, and we really need to throw the kitchen sink at it to try to minimize the pain not only immediately, but then create the right environment for companies to be able to come out of this healthy on the other side. Whatever that means from an industry perspective, i do think we will have to help Certain Industries out of this. Melloniz young of bny Investment Management, Subadra Rajappa of socgen, i appreciate the conversation. We want to give you an update on headlines outside the business world. Viviana hurtado is here with first word news. Viviana the u. S. Senate passing the second major Coronavirus Relief bill. President trump signed a get into law. It provides paid sick leave and financial help for testing. Now lawmakers are rushing to come up with phase three, a comprehensive rescue plan that could cost 1. 3 trillion. It includes direct payments to americans and aid for struggling industries. The u. S. Federal reserve taking a dramatic latenight step to help Money Market Mutual Funds. The central bank agreeing to help the funds meet redemptions by household and other investors. The funds have been under pressure because people are rushing into cash. A surprise move from the European Central bank. It is launching an emergency 800 20 billion euro bond buying an emergency 820 billion Bond Buying Program. The rules of the program will allow the ecb to focus its purchases on italy and other struggling governments. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. Alix thanks so much. Some breaking news for you coming from a presser with u. K. Health officials, saying that the u. K. Will not restrict travel into or out of london. London has been a case where theres a lot of spreading happening. Schools have shut, and theres a conversation as to whether the tube is going to be shutting down, but as of now, theres no plan to shut down the transport network or restrict travel into and out of london. Coming up on the program, looking to invest in em debt . You might want to go with dollar denominated bonds over local currency. We will break that down for you in todays traders take. If you have a terminal, check out tv. You can check out the charts and graphics, interact with us directly, and look at anything youve missed as well. This is bloomberg. Is bloomberg daybreak. Coming up in the next hour, jerome griffith, lands end ceo. Viviana this is bloomberg daybreak. Harley davidson is suspending most of its u. S. Production through march. The motorcycle maker saying an employee tested positive for coronavirus at one of the factories in wisconsin. Most of its production workers will be temporarily laid off with medical benefits. Moodys downgrading Occidental Petroleum to junk. Produceran basin shale is struggling to deal with the huge debt load from the 37 billion dollar acquisition of anadarko petroleum. Oil prices have collapsed. The ceo slashing the dividend for the first time in 30 years. Shes also cutting Capital Expenditures by 1 3. The Trump Administration may ask for an equity stake in companies that want coronavirus aid for taxpayers. That coming from white house Economic Advisor larry kudlow. He pointed out the 2008 bailout of General Motors turned out to be a good deal for the government. But then, mr. Kudlow blasted the bailout as an attack on freemarket capitalism. Im viviana hurtado. That is your Bloomberg Business flash. Alix thanks so much. Time for traders take. Joining me is bloomberg intelligence. When it comes to em debt joining me as Damian Sassower of bloomberg intelligence. When it comes to em debt, what do you do . Damian one thing you cant do right now is buy. When the dust settles, if you are indeed looking to invest in emerging markets, the chart you have in front of you is a like for like comparison of em dollardenominated versus local currency to him and i hated local currency denominated sovereign debt. You can look at the different maturity profiles, and you find you get an additional 53 basis points per year by staying in em dollar debt as opposed to its local currency equivalent. With all of the embedded fx risk among on in emerging markets today, where is my compensation for investing offshore . The answer, obviously, is none. Alix is there any way to effectively hedge that . Damian i think it is not a matter of hedging. You can hedge your currency risk. It is just going to be exorbitantly expensive. We talked about that earlier with the cross currency basis, but for me, when you are able to dip your toe back into the water, it is going to be in dollardenominated debt. I wish i could put some Silver Lining on the moves in em currencies, but i do not believe that low yields are going to do any justice for it, to be frank. Alix what does that mean for the e. M. Guys . We talked a bit about africa, but brazil looking at rates below where the real rate is, how do they deal with it . Damian ive long been a proponent of investing in em local government bonds on a hedge basis. The problem here is what the cost of hedging currencies relative to the dollar having gone up so much, it has become prohibitive. We need to see those hedge costs come down before you can really move back and take advantage of those high animal yields you are finding those high nominal yields you are finding in places like russia and mexico. You need to look for better levels. Alix the game is delayed, i guess is your point. Interested to see if you are still trading this market today if you were still trading this market today, what would you do . Damian if youre looking for safe havens, the thai baht and the is really chuckle the ckel might be one place to wait out the storm, but everyone is sitting back, waiting for the dust to settle, and taking advantage of high nominal yields might find across emerging markets. With the Central Bank Rate cuts we have seen over the past 12 to 24 hours, indonesia, philippines, taiwan, etc. , i think you will get a duration gain on it as well. Alix always good to get that perspective. Appreciate it. More breaking news for you. Germany potentially may authorize emergency debt as soon week. We heard and alum urkel coming out and speaking we heard Angela Merkel coming out and market, whiche she hasnt done in, like, 14 years. Very big deal. So they are going to issue more in order to help spend. More updates as they come. We will bring that to you. Coming up, we are also going to speak to dr. Kevin ban, walgreens chief medical officer. If you are heading into your car, tune into Bloomberg Radio on sirius xm jenna 119 and on the Bloomberg Business app sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix confirmed cases of coronavirus are now 211,000 worldwide. And america are rising, and this raises the alarm for access to better testing. Last week, walgreens pledged to aid the trumpet ministration in providing access to testing for the coronavirus. Joining us is the man behind that initiative, dr. Kevin ban, walgreens chief medical officer. Rate to chat with you. How quickly are you able to ramp up the scam ramp up the scale scope of testing echo and scope of testing . Dr. Ban we are partnering with the federal government on this. They will be responsible for the logistics on this. We are supporting the effort. Weve got 9200 Stores Across the country. We will start with a few of them, and then ramp that up. As soon as we know that, we are going to communicate with the public. Alix what is the number one thing you need to make that happen quickly and efficiently . , we are quite honestly poised to do this quickly and efficiently. Weve got the sites across the country. It is a matter of choosing which ones are the right ones, and making sure the federal government partners with us to be able to get the sites up as quickly as possible. Alix what is the hold up on the federal government side . Any insight you could give us their . Dr. Ban no, i think everything is moving along as we expected. We are putting all the pieces together. You can imagine, it is very complex. But we are moving along as planned, and as i said, we will be the first to communicate all that information once we have it. Alix in terms of workers, we are getting initial jobless claims and about half an hour. Lots of angst about how many workers have been laid off. Has walgreens had to layoff or for low any workers . Or furlough any workers . Dr. Ban no, we are committed to supporting our employees throughout all of this. We feel like that is our fundamental role. We are connected across the entire country. We have more than 80,000 pharmacy members embedded in 9200 communities. We feel like we can play a strong role here. We need all hands on deck. I will tell you what we can do. We can inform people about what they should be doing. We can be absolutely sure that people have the medications and the products that they need. We do that through home free delivery. Lastly, we want to make sure people have access to care. We do that through 1800 walgreens. We have an app where you can contact a pharmacist 24 7 and chat. And lastly, you can come into our stores. We are here to help educate. Alix part of that is putting your staff and the line of fire as well, especially if they are working in the testing areas. Does that mean your employees can get paid time off for sick time, they are not required to come into work if they are ill . Can you talk to me about the policies in place on that respect . Dr. Ban we have been pulling policies in place so that Older Americans and people who are immunocompromised can have pathways to be at home. We have many strategies for that , things like using vacation time. We are trying to do everything we can to protect our employees. That runs across the whole organization. We are trying to be supportive in this time. I also want to point out that we are essential personnel. I am 25 years in health care, and that is fundamentally what we do. No matter what happens Going Forward, you can be sure that walgreens will be open, we will be supporting americans and partnering with the government to make sure we have the best outcomes possible. Alix you also worked in italy to develop emergency medicine back in the day after you became a doctor. At what they did, can you give some insight into what we can do differently to flatten the curve and deal with any reinfection rate we may be looking at . I think the fundamental message is social distancing. The most important thing we do is that we have to be deliberately but politely antisocial. That is so against who we are. We are people that like to be together. We like to shake hands, we like to hug, and we like to be near one another. In this particular time, it is fundamentally important to understand that you must keep your distance. You may also think of a handshake or a hug as an offense. You need to think i need to keep the distance so i can protect myself on the people around me. That is the main message. When we do that, and couple it with good handwashing, we are going to flatten this curve in such a way that the Health Care System can keep up with it and we can drive to best outcomes. Alix i appreciate the insight. Good luck to you. Coming up on the program, while a topcuoglo on the program, lale topcuoglo, johcm senior fund manager, and megan greene, harvard senior fellow. This is bloomberg. Alix welcome to bloomberg daybreak on this thursday, march 19. Heres everything you need to know at this hour. Lets take it from the top. Pres. Trump we are looking at a lot of different things. It will shortly be determined, and everybody once to go big. Alix the Senate Passes a multibilliondollar house bill, while Economic Advisor larry kudlow says the government could take equity positions in exchange for aid. There are going to be Strings Attached to these bailouts, particularly for large industries. Senate Majority Leader Mitch Mcconnell advancing the first part of that economic stimulus. Now all attention turns to the 1. 3 trillion stimulus bill, and lawmakers being told to be ready to vote on this. Alix congress now starts work on the next stimulus package, which could potentially be 1. 3 trillion. We can debate whether that is too little or too much. It depends on how long the virus will be here, but it is something that is targeted directly at trying to call markets down. Alix the ecb commits to whatever it takes, launching an emergency Bond Buying Program. What investors really like here is the fact that the ecb is hinting it can be very possible Going Forward when it comes to what it is or would be allowed to buy, and also hinting it is ready to go into markets that until now had been restricted. Alix the reserve bank of australia throws its own kitchen sink at the project. Market circulates as a whole different question. Alix the next big problem for governments. And well barely recovers from its crash. Move lower in btps of more than 70 basis points, this is the biggest decline in those yields since the european sovereign debt crisis. These are definitely a big day of superlatives. Alix Economic Data points show more pain to come. Business confidence plunges the most since 1991. In the markets, it looked like we might get some kind a positive outcome after the ecb had their emergency meeting, as well as the fed introduced the Lending Facility for Money Market Funds. European stocks now rolling over, around the lows of the session, partly because the dollar is jamming higher. At 102. Ar index these are huge moves. At one point, a 200 basis point move in greece. In italy, as much as 80 basis points. A strong dollar. Bond yields coming down in the u. S. , but the curve overall in the last week has been steeper. Crews trying to find a base, but it is still very weak. The rhetoric is you may have sovereign wealth funds that have to deal with Falling Crude prices, and that is why we cant seem to find a base, particularly when it comes to the equity market. Sovereign bonds surging in europe after the ecb announced an emergency Bond Buying Program worth 820 billion. Linning me now is lale top willow joining me now is lale hambro senioro fund manager, and megan greene, Harvard Kennedy School Senior fellow. Has the fed done enough . Move wasthink the ecb pretty significant last night, not only in increasing how much they can buy, but also making the p more flex people. I wish they would scrap it altogether and just do yield control, but i dont think that is going to happen. Has the fed done enough, that is a different question. I dont think so, unfortunately. I think there are still signs of stress in funding markets. You sigh massive selloff in equities, but also yields, 10 year treasuries fell. That suggests something is still broken in the treasury market, which is the base mark for a lot of other rates. I think the fed is going to have to step in and do more. It has a few more tricks in its pocket. The d reinvigorate program, or the fed may have to do openended qe. I wouldnt be shocked. Alix lale, what do you think . Says thatouryearold teamwork makes the dream work. One is the Monetary Policy. The fed is doing everything they can to basically make sure the funding markets work. Weve said it multiple times. It is not the sexiest thing to learn, but it doesnt matter. Theres also two other parts to this. One part is it is a Global Health crisis. Government needs to coordinate, and there needs to be a government response so that it columns the nerves. , peopleeing scared taking shelterinplace. These are psychologically impactful Events People impactful events. Nerves, whichlm then has of the consequences. Sure thatd to be things are under control. The second is the fiscal peace. The economic policies. That is obviously going to take time, but all of these three have to work. I feel like the Central Banks are doing everything they can because they are looking at the 2008 playbook. This is vastly different. Alix do you agree or disagree that the fed could do some that they buying, have more wiggle room here . Lale they can come out with different rules, but it is not a Balance Sheet problem. We are not pricing credit risk because of an economic shut down. That is not going to get solved by attacking the Balance Sheet. It is the income piece that needs to get solved, which is where the fiscal peace and the health peace comes into play. The fiscal piece and the health piece comes into play. That is why i think you are seeing these responses in the market. I think they will solve the dollar shortage. That is clear. Whether fed locks it or not, they are the world central bank. They need to address it. But after that, we have to deal with the credit risk and the economic risk. Alix we will get to the credit risk, absolutely. Megan, last thursday you said basically that the government needs to start cutting checks to people now. I said that seems so drastic, and now that doesnt seem drastic at all. Are we too late now . I thinknfortunately, the fiscal response is too slow. Even if the numbers have, up significantly, i think it is going to be too small as well. The response has evolved since we last talked, and now they are looking at cutting people checks. They are also looking at several hundred billion to support smes. That is all positive. Now we have a bailout of Big Industries added on top of that. Here i think the government needs to be pretty careful because in 2008, people really felt like we bailed out wall street, and main street footed the bill and didnt get much help. I do think it is tricky talking about bailing out industries. The Airline Industry legitimately is systemically important. It supports economic stability and provides a lot of jobs. Cruisee some of the industry i think we could probably live without, and some of that money needs to be redeployed. Instead of bailing out some of these us important industries, i think we should go ahead and pay industries. In all one example is the shared working program. You could put your workers on halftime, they can go and collect Unemployment Insurance for the other 20 hours a week, and that reduces Companies Payroll burden so they can stay open, but also keeps people employed. What we are looking at is a temporary shock. It is important to make sure we get bridge loans out to help Companies Stay open and avoid laying off people so that when we do eventually contain the virus, companies are ready to ramp back up and we can have a recovery. If we dont provide that, companies have to shutter. People get laid off, and when the virus is contained in we have to start from ground zero, that takes a longer time. I am more impressed by the fiscal plan now than i was about a week ago, so they are certainly going in the right direction, but it is going to be followed by at least one, probably several more. Alix that is a pretty grim assessment. At the same time, you have the dollar spot index on the terminal at 102. Are we looking at some kind of potential intervention in terms of getting the dollar down . There has to be real pain for some of these companies, particularly emerging markets and u. S. Megan i think this is a pretty underreported story, what is going to happen to e. M. From such a incredibly strong dollar. Pretty much every other currency was looking like an e. M. Currency. The fed is going to have to do something about this dollar shortage. It is unclear exactly what it can do. It can open up more swap lines. It had more swap lines open after the 2008 crisis, so we can reignite some of those. It can also offer repo to countries that have u. S. Treasuries. They might not want to do that, but it is the same idea, essentially. Countries with treasuries can park them at the fed to get cash, and that could alleviate some of the stress in the dollar shortage. But the fed is going to have to do something about that because it is really going to rip through emerging markets. Weig in on that. H while i come away in on in on that. , weigh lale i think the fed can fix that. The dollar is the last leg. After that, i think it goes back to what i said, which is the government, the fiscal, and the health crisis, and the market has to figure out the credit risk, which we can. As we put out these fires, hopefully it columns. That doesnt mean the market rips roaring back. That tail risks are taken off the table. Alix but we still have the potential Systemic Risk of the credit crunch. We are going to dig into that in just a sec. Lale topcuoglo and megan greene are sticking with me. Coming up, Standard Chartered sees unprecedented fall in oil demand. Itwill speak about what winds up meeting in the high Investment Grade environment. This is bloomberg. Alix oil prices bouncing back from record lows yesterday. Despite the rebound, Standard Chartered says mobility restrictions have significantly magnified the demand shock. ,oining us is Paul Horsnell Standard Chartered bank head of commodities research. Also, megan greene and lale top aloof lale a topcuoglo. Paul, how low do we go . Paul i think we have to goal oh enough to start chatting and some production. We think services are going to be so large over the next few be enoughere wont people to put it into storage fast enough. Alix even a couple of weeks ago, it was about russia ands arabia fighting for market share. And saudi arabia fighting for market share. Now it just feels like we want to put lower share producers out of business. Paul i think it is two plots. The latter plot is precisely that. That is still going to be there when the virus affects work through. But in the short term, and really through the next four months, we have this extreme shortterm demand shock, which i think raises another agenda and another series of priorities for the industry beyond the price for. Alix the price war started before this really took stronghold in the u. S. And the americas, as well as central europe. Do you think the demand shock is going to be enough to bring back opec to the table . Paul i think probably not yet. The price war only started less than two weeks ago, so it is no real permanent change to the supply change so far to the supply chains so far. That no producer could really stand in the way off. I think where that comes back into is ordering the q3 and q4 story, but in the short term, it increases the impact of what was already a large supply shock, to then have the largest demand shock and history simultaneously does generate the need for the market to push down to very low prices to get some producers to shut down in the short term. Question,s a twofold your base case and Downside Risk for oil demand, as well as for prices and the Downside Risk. Sees theirase case worst months for Global Demand is april, with the year on year decline about 10. 4 Million Barrels a day. Hanging onto fairly heavy declines through may and june, still above 7 Million Barrels a day in june. That generates an overall surplus of about 12. 9 across q2. Going forward, we still see demand effects relatively weak into the start of q3, but nothing as bad as this immediate shock. In terms of prices, we changed our price outlooks at the start of last week. We are looking for brent to wti 21, andn q2, not recovering much into q2. However, giving the fast moving picture, we have now signaled Downside Risk to all of those numbers, leading rises to average a little bit lower to really get producers to take material off. It is those averages that are going to matter, the things that Impact Company decisions, not necessarily so much the daytoday highs and lows. Alix does that mean we have to go to extraction costs for these producers . How quickly do they shut down production and just go home in order to go bankrupt . Paul generally, it is pretty slowly. When prices swing below extraction costs, you want to hang on because there are costs of shutdown. You can dan it you can damage the reservoir. Sometimes you dont get it back at all. So producers do try to stay on as long as possible and hope someone else does the shut ins. I think that is why the price response is getting to be so extreme, to get producers finding that they are losing money with every barrel they produce. If you are a central planner and you were shutting down things in a demerit order, you would probably go for heavy oil in mexico and venezuela, then get in some deep aut water oil and t working your way through u. S. Title. Companies tend to hang on until the absolute bitter end for they shut down, which is why i think the market is going to have to work very hard with prices to get them to start shutting things down. Alix paul, appreciate the update on that. Paul horsnell of Standard Chartered. Moodys is downgrading occidental to junk as the shale producer struggles with the high debt load amid the worst slump in oil prices. They say the company is going to take steps to combat the crash, but it did not help the companys rating. Was the fallen angel fear, that all of these bbbs are going to get downgraded to junk and wreak havoc. Is that what is happening . Lale no. I know it gets quoted a lot, but the bbb universe is not homogenous. I think energy is obviously at the epicenter of it. Where they canes capex and dividends, they will do that. Occidental, theyve had these issues, right . They target m a at the wrong time. We did this in 2008. It is just unfortunate timing, and in their case, it is unfortunate timing. I really caution people against thinking that this whole half of the ig universe is bbb and they will all migrate to high yield, that is not accurate. Alix megan, you have also been warning of the for companies. How do you see it . Megan im a little bit less constructive, id say. I think if credit spreads are going to blowout across the highyield universe, then even if there are firms who arent in the energy patch, they could be affected by that. I do think that the risk of fallen angels is pretty significant, but theres contagion within the highyield market. As you point out, half of highyield companies are bbb. I do think we are going to get a flooding of companies who are downgraded to jump bonds to jump bonds, and that requires automatic selling. I think the potential for contagion is pretty high. Alix we are looking here at the start of the spreads for high yields over ig, which shows the difference between the two and how that is blown out. Lale, can you respond . Lale highyield, you have to factor in impairment and credit risk because they are lesser quality. They dont then write they dont generate much free cash flow. Covenants is based on adjusted ebita, which is fictitious. Will suffer. Highyield does not do well in low growth environments or no growth environments. That is a different story. But i think highyield energy is less than 10 of the index, where it was 16 about a year ago. But the issue with highyield is now, it is spreading into other industries. Leisure, retail. Index ise highyield under duress due to economic shutdown. That, by definition, makes you realize there may be credited impairment. With no covenant, there will be more secured debt ahead of you. You will probably get even more impaired even though the company may not default. That is the other nuance in the market. That is very different than Investment Grade. Alix does that mean the fed should buy Corporate Bonds . I know they cant, but could they petition and get the fix in congress to buy Corporate Bonds . Megan it seems like that is on the table, and i think that would be smart. Its not like other Central Banks havent tried this. I think it would help. The ecb did this years ago. The bank of japan is buying up Corporate Bonds. The feds hands are completely tied right now, but if congress were to agree to letting the buy Corporate Bonds, that would be great. It is just not clear that congress would sign up to that. I am not particularly optimistic, but i do think it would be a good idea. Alix as you look through the nuances, and bb there will be some kind of fed backstop, what opportunities are you seeing with the baby being thrown out with the bathwater . Alix first of all, i disagree. I dont think the fed should buy Corporate Bonds. The massive selloff we have seen in credit, people are searching for liquidity. As the fed provides the liquidity, the credit risk will be part of the equation to deal with. I dont think that fed mandate bills the market out because they made loans to bad companies. Where the opportunities are, i think the market is really freaked out that this is a repeat of 2008 because they are seeing these programs put in 2008 come back in line, and financials, bank stocks are under massive pressure because their earnings are going to get hit, but the retail preferred market has been decimated. I actually found some opportunities there. Alix next time you guys are coming on set, we are going to have lots of fun debate. Greene,cuoglo, megan you guys are sticking with me. This is bloomberg. Alix want to check on some of the big movers of the morning. Darden restaurants suspending its dividends, something we have seen from a lot of other companies as well. Marriott also down 10 , withdrawing its outlook and assumptions for 2020 as it winds up battling with the impact of the coronavirus. The wholesale train has also started to the hotel chain has also started to furlough some staff. Boeing fell to its lowest since 2013 yesterday. Finally, crews stocks also pressured amidst the. Travel downturn carnival falling 5 in premarket trading. It is brutal out there after yesterday. Also, some bricking news for you. The white house is mulling 50 year and 25 year bonds to finance the 1. 3 trillion stimulus. They are trying to figure out how to do this, and it looks like they are considering the long bond yet again. Plus, initial jobless claims coming out at 8 30, the first real highfrequency indicator of what is happening. This is bloomberg. 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 ] the0 seconds away from latest read on jobless claims. The equity market not getting a. Reak, futures off by 3 european stocks rolling over. It is an enormous rally within the bond market although we are off a little bit, seeing some selling in germany. The u. K. Yield up by 18 basis points, but still seeing a double basis point move for italy as well as the u. S. Yields down by one basis point. Notial jobless claims, surprise, but worse than expected. Filed initial jobless claims and no doubt that will get worse particularly next week. Ichael mckee joins us if it is a 281, what does that mean for next week and the week after . Look at a graph of what is going on. You can see jobless claims spiked tremendously last week and we have not even started the major layouts. Look at the white line this week, up by 70,000 from last week. 70,000major spike, but is less than what the state of ohio reported from the last two days of this week and the next week will be awful, somewhere around 2 million and we have not ever seen a change this fast in jobless claims numbers. One other chart i want to show you, this is the jobless claims numbers over the past basically a little more than a decade. You can see how slowly they rose during the recession. The circle lines are the hurricanes we saw and the japanese tsunami and they rise quickly, but fall back down. Now we have a combination and next week we see the numbers go straight up like they did in the recession, but they will not come down immediately. Alix it is not just manufacturing and services, it will be a broad hit on both, especially as auto factories are shutting down. Michael we are seeing manufacturing shutting down. We knew Restaurant Industry workers would be laid off and other stores, but it spread from service to manufacturing. The question is does it overwhelm the jobless claims systems . Alix i have friends who cannot get online to file their unemployment claim because the website is packed. The philly fed survey outlook down 12. 7 and it is the new orders index. 15. 5. Rom 33. 6 to a realtime indicator of how brutal this might get. Megan, weigh in on the initial jobless claims. Biggest increase in jobless claims during the Global Financial crisis was 14 and this far outstrips that. I agree with mike this is just a preview and from next week on, things will continue to get worse. Alix the unfair question in the market is we know this is coming, so how much will be priced in and can we take the bad news . Expected it is going to get worse before it gets better, but i think this goes back to what i said earlier. There are many, many people in checkountry that are one or maybe two away from not meeting a debt obligation. This is serious and it needs to be addressed quickly. On top of it, i think you have to calm nerves about how you are responding to the health crisis, these go handinhand, this is not just a monetary problem. Michael we are looking to the federal government, but it took two months to get checks out in 2008. Is there anything that can be done in the meantime for people . Indication its could be quicker this time because you dont actually have to mail checks in the same way you did. Technology might speed that up a little bit, but it is probably a question of months rather than weeks in terms of getting money in peoples hands. You can offer rebates as well, income tax rebates. They there are distribution of issues because then you are rebating wealthy people more single mom working for 25,000 a year and so it would be fast, but there are distributional problems, it is regressive. I think the best option is to mail checks. I think that is the fastest thing we have got. It is not targeted, but that is ok. Speed is of the essence and we can get to targeted solutions afterwards. There was a headline 10 minutes ago that said the government does not know how to fund the program. What do you think about that . It doesnt matter, the fed will buy it. The Central Banks are there to support the federal government at times of crisis and this is a time of crisis and you will see it around the world. Isnt that where you just fund the government . I dont even want to label it. I think this is a critical emergency time, we can label it down the road. It needs to be done. We get too worked up between the investors and the politics and how to do it. The speed and efficiency is important. We have to get going. If you cannot stop this, the shape and depth of the will be brutal. Michael i dont think we have to worry about the fed buying up long paper right now. It will take a while for treasury to initiate sales. They talked about it sometime ago and found there was not enough interest. It may be the treasury wants to sell. Rates are so low right now and you do not have to pay it back immediately, but whether it happens or not, it will take a qe isand then we hope the done by then. Alix megan . Megan having once worked for an insurance firm, Insurance Firms and Pension Funds will buy longterm funds all day every day, so there is one group of players in the market who will gobble that up and it will be constructive for them. Alix for them and the fed. There is a question from a viewer that said how much does the fed have to buy in order to clear dealer Balance Sheets. Can you weigh in on that question . Megan i can give you a number, it is more than what we are seeing now. I think the fed will have to ultimately go in, there is a degree of sentiment. Having the fed come in and say we are going to buy as much as we can might be what it takes to do that. . We are constantly acquiring new information. Basically what draghi used to say, whatever it takes. Alix i want to get your investment thesis. You have clearly thought a lot about how you look at the market and what needs to happen. How do you take advantage of locations. What do you do with that . Is protectings. He capital impairments way we have been aggressively reducing bond positions and if you look at the upside, downside scenario, we think this is temporary. What we dont know is the. Uration we think as soon as we get some stabilization, equities will have a better ability to look it through it whereas for us on the margin, we have been trying to allocate capital to equities. We are going at the speed of a turtle. Alix the fed will boost treasury purchases to 75 billion on thursday and friday. I am having a tough time keeping track of how much the fed keeps spoofing buying. Michael they are trying to buy more earlier and they said they would buy 500 million in treasuries. We are getting very close to that and they are trying to move it up to unclog the markets and it gets to your earlier question of how much do they need to buy. We dont know because we do not what is we do not know what is coming into dealer market sheets. Dealers are struggling to get them onto their Balance Sheets to be able to take them. Until we see that slow down, you will have a problem and the fed is trying to respond as quickly as possible. Alix why havent we had a press conference where jay powell says we will buy every bond we need to buy . Fed doesnt actually want to have to do that. The fed does not want to make decisions about asset allocation. That is not their job. That is not what we should have as a secondbest option unless we can get fiscal authorities to step in and do their job and there i think is the question of timing. Our fiscal response has been in the making for a couple weeks now and we have very little in terms of the actual numbers. The fed would like to hold off because it is not their job, but we may end up having to get there anyway. Ichael i appreciate alix appreciate that. Just to recap some of the data that came out, on the one hand, you had initial jobless claims seeing a jump to 281,000. Philly fedeadline, outlook plunges. It was what we said saw on the new orders. You are seeing the markets continue to roll over. A much stronger bid and the dollar index continues to pummel its way higher, up by one percentage point. We want to give you an update. Viviana hurtado is here. Viviana the British Government confirms it is planning to confine londoners to their homes. Boris johnson did threaten to impose restrictions to contain the spread. On capitol hill, the u. S. Senate passing the second major Coronavirus Relief bill. President donald trump signed it into law. A provides basic leave and financial help for testing and lawmakers are rushing to come out with phase 3. It includes direct payments to americans and aid for struggling industries. A surprise move from the European Central bank. It is launching 820 billion Bond Buying Program to protect an economy battered by the coronavirus outbreak. The rules will allow the ecb to focus purchases on italy and other struggling governments. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Am viviana hurtado. This is bloomberg. The we have all gone emails, Retail Stores after retail store telling customers they will close for a couple weeks and we will look at the challenges faced by Retail Companies with jerome griffith. Charts tot with the browse any features we are checking out. This is bloomberg. Viviana coming up later, nadia calvino. Viviana you are watching bloomberg daybreak. We begin with moodys downgrading petroleum to junk. The producer struggling to deal with a high debt load from the 37 billion acquisition of anadarko. The ceo slashing the dividend for the first time in 30 years and cutting Capital Expenditures by a third. Now to the Trump Administration, it may ask for an equity stake in companies that want coronavirus aid from taxpayers coming from larry kudlow. He pointed out the 2008 bailout turned out to be a good deal for the government. Back then, he blasted the bailout as an attack on free market capitalism. Taking a toll on fashion brands. Sales Stores Worldwide are closed. That is your Bloomberg Business flash. Alix retailers across the country temporarily Closing Stores due to the affected and among those affected, lands end. Joining me is to jerome griffith. As you close the stores, what are you doing with workers . Jerome everybody is at home and we are paying them. From an office standpoint, we have done staggered shifts and we have people working at home and some working in the office, social distancing is happening in the offices. Some offices around the world we have closed. In new york, we had a small office that is closed and everyone is working from home. Alix how long can you pay workers with Stores Closed . Jerome we dont really have a big store base. We only started Opening Stores a few years ago, so we only have 26 stores. 95 of business is online. Michael what have you noticed alix what have you noticed in terms of your Online Presence . Jerome going into 2020, we had seen huge demand increases. In the last 10 days, it has been extremely choppy. Some days down 10 and some days down higher. We are not sure what to make of it. We think consumer demand is off because people are concentrating on more important things for themselves and we are waiting to see what happens over the long run. Alix how do you kind of know what to do as a ceo in terms of how long you can sustain employees and model your growth . I understand if you dont have guidance, but you have to put money to work to think about strategy. One of the great things about being order older is you manage different crises. What are the nonessentials . We have a lot of variable expenses based upon the size of our business, pay for click is one, how many people we hire to ship goods is another and you look to reduce expenses to what you need to manage the business and conserve your cash. Every business, particularly ones in our sector are doing the same things and looking at what expenses do you have, what projects, what things should you pull off and you want to look at your worstcase scenario and if it is better than that, that is great, but you need to look at what you think is the worst case possible. Alix what is the worst case you are modeling now . Jerome we are in the process of going through it, to be honest with you. We are looking at our Global Business and what we are seeing is our business in asia is starting to come back already. We had issues where we had the Office Closed or on staggered work shifts. That has come back. Right now, europe is looking difficult for us and the u. S. About supply talk chains . What kind of gaps or vulnerabilities you notice . Jerome we tried not to have one country over 25 of our total and a few years ago, china was over 40 and we worked that down to 20. The early days, what we saw what we were concerned about was we would have disruption in the supply chain. We are in pretty good shape there and we have an office in hong kong which deals with asian suppliers and they are starting to come back to work as things improve there. Alix there are Certain Industries asking the government for an ale out or aid. What are your thoughts on that . If you needed to, would you want it . Or an equity stake in relation to getting aid . Jerome i think the biggest thing right now is cash is king. Managing your cash and making sure you are liquid is extremely important. If it did get there, things would be more dire than what they are now. Michael do you think you will do anything different with your business and how you think about structuring it, whether it is supply chains or cash you are going to hold . Jerome it will be interesting to see how people change their habits about working from home. We have a large part of our workforce working from home using microsoft teams, face time and quite honestly, it is working. It will be interesting to see what comes out on the other side. We are only about 10 or 15 days into this. We are not sure this will last. One of the biggest things is for people to keep a positive attitude Going Forward. Isany crisis, there opportunity and people should be looking for the opportunity. Alix it is great to get your perspective. Thank you for being honest with us. Jerome griffith, lands end ceo. Ist was once support was now resistance. If you are jumping into your car, bloom tune into Bloomberg Radio. This is bloomberg. Berg. For technically speaking. Joining me is mike mcglone. You are taking a look at the 30 year where we are looking at resistance. Tell me what you see. Talk aboutme i can long bonds, i do. What you are looking at, this is a long bond yield. It got down to around 1 and popped up to 2 . That is significant resistance. When we get out of this, we will look back and say we have a downward trend. Funds. Ua line is fed i think we will be lucky if we forfed funds stay at zero less than 10 years. Alix that is a staggering forecast. The other thing is crude and what it is telling you in terms of support level. Viviana mike it has returned to a good base around 20. They areary deflationary brethren. It needed to be hammered by the market and now that we have analysts calling, expect it to stay there for a while and range 30 for aund 15 and while. Alix how long does it have to bounce around before we can feel confident the bottom will be in . Mike i think we will be trading for a while. Andntially, alltime lows bond yields, we will have massive supply. Even before the virus, the trends worked toward deflation. Michael really great alix really great to get your perspective. That wraps up for me today. Coming up on the open, jon ferro, Marilyn Watson will be joining him as equities continue to rollover. Strong buying in europe as well as more buying in the u. S. After initial terrible jobless claims. This is bloomberg. Ferro. Am jonathan the countdown to the open starts right now. With 30 minutes until the opening bell, good morning. Here is your thursday morning price action. For once, it is mild. S p 500 futures down 35. Yields come in eight basis points and a big move in Foreign Exchange for a second straight day. The dollar stronger. With Fiscal Relief packages from around the world roughly 2 trillion with the u. S. Government seeking equity stakes. Military efforts accelerating with Central Banks stepping up efforts. The ecb stepping up with a 750 aftern euro program presidenrd