Check, the fed is announcing some coordinated central bank swap line enhancements. We saw them a couple of days ago increase it for a variety of Central Banks. Now those swap lines will have further detail and enhanced swap lines. Absolutely. This is missioncritical right now, figuring out how we get dollars to everybody that needs them is the most important thing, it seems, at the moment, when it comes to financial markets. That is going to certainly help. My question today, does a weaker dollar indicate that the funding stress and design for dollars is beginning to ease off a little bit . We will get an announcement from the chancellery of the exchequer on further measures to help out the u. K. Economy. Similar move when it comes to the 10 year. In terms of stocks, we are seeing a bid finally returning to stocks, and finally enough, i think it is worth paying attention to the fact that we are getting some of the cyclicals in particular catching a bid today. You can see the travel and leisure sector in europe up by 9. 3 . It is the dollar funding story that is absolutely front and center. Alix 100 . For more on breaking news from the fed, we are joined by michael mckee, Bloomberg International economics and policy correspondent. What do Something Like that mean, that they will enhance the Central Bank Swap Lines . Michael they have been doing swap line extensions weekly. Now they are going to have operations every day for the five major Central Banks who have permanent swap lines with the fed, which includes the bank of japan, the bank, the European Central bank, and the Swiss National bank, and also the bank of canada. That is basically it, but there is suggesting that there is very Strong Demand for dollars out there. We have seen a little but of movements in the market that may asked that may suggest some pressure easing, but it is hard to say. Alix with the dollar index still at 102, it doesnt feel like we are off the top in a substantial way. What do we have to see for everyone to breathe a sigh of relief . Michael i need to i think you need to see it go back down for several days, maybe to the mid90s level it was at before. Im not sure where it settles out because we go beyond the demand for dollars to the outlook for the economies, and that will be influenced not just by what the fed is doing, but what congress ultimately does, what other stimulus measures come from European Central bank and the chancellor the exchequer later today. One of the questions i think a lot of people are trying to understand is when do some of these programs kick in. Clearly, the dollar funding story is right now, but some of the other programs have yet to kick in. Isnt it just a matter of waiting now for some of these other things Central Banks are doing around the world to start to gain traction . We need some of these programs to kick in now. My question is, how long is it going to take . Michael it takes a while to kick in. Put in thethe fed commercial paper program, it took about three weeks to get it up and running. Its only been into its only been in place for a couple of days. It is going to take it while until they can start buying. Same with some of the other programs. The dollar swap lines are immediate. Thatcan start swapping immediately. But then you have policy efforts on the qe side from the bank of england and the fed. Every day this week, the fed has bought more and more. That is a sign that what they are doing isnt working, and they need to ramp up the amount of purchases to try to unclog the plumbing in the treasury market. I would imagine you would see the same thing from the other Central Banks. It is going to take a while to figure out just how much they need to do on a daily basis to get things going. Guy we are going to leave it there. Michael mckee, appreciate it. Some fantastic coverage. Lets talk about the scramble for dollars we are seeing at the moment. We are joined by luis costa, citigroup head of fx and rates strategy. Lets start with the scramble we are seeing at the moment. Dollar, like aer bloomberg dollar index on the day, is that indication that the funding stresses are starting to ease . Can i relate the two things together . Luis absolutely. Basis,n barometer is the which is the premium base for dollar funding. You can actually track this very or the in japanese yen euro currency. Hat is one important aspect am looking for dollar funding, i am going to go to the fx swap markets. That tends to filter through the swap markets as we have seen in previous crisis. We had swap lines in place. It is very interesting to that as the swap lines are first offered to world Central Banks, and all of a sudden, they realized that actually, in order to improve the dollar funding, we have to include emergingmarket Central Banks in the fx swap. That is what happened this week. We are seeing the fx swap korea. To go to thats very important. It will take time for this to be 100 felt in the markets. Guy ok. How long is it going to take before the squeeze on dollars starts to come down . How long does this process last . Clearly, a lot of funds are worried about redemptions. People are worried about the fact that they are going to have to kick money out the door without hoarding that cash and requiring that cash. How long is it going to take for that pressure to die down . Luis i have to say, it is a lot of here, im afraid. Funds are under pressure. His got margin calls, redemptions taking place, record redemptions, depending on the asset forecast. But a couple of weeks, especially going through the end of this quarter, especially when it comes to japanese Institutional Investor flows, to go through the quarter, that can be an interesting threshold to go through here. Make sure that they Central Banks are monitoring and acting on a daily basis if other disruptions happen. Is alsow much of it going to do with how the virus develops in the u. S. . California shut down. If the virus continues to spread, does that put additional pressure on the dollar irrespective of what Central Banks are doing . Luis of course. Talking to our clients now, we try to approach the Current Situation at different angles. We are having a load of monetary connected byrs several Central Banks, donnelly Central Banks, not only the fed and the ecb. But of course, we know that the outlookl side and the side is still very much affected by the numbers we have seen ,very day, especially in europe hina, and in the u. S. , a course. You are having a little bit of a tugofwar in this story. [indiscernible] it needs time. Action by the Central Banks, fiscal action to remove the disruption in the economic cycle. Hopefully, they have numbers coming out of the virus patients in the europe and the u. S. Guy how low does the pound go . We have a situation where we are seeing a significant lowering of cable over the last few days. Today we are higher. We are seeing bond markets in waiting for the chancellor of the exchequer. Does it stay here, or does it bounce back . Luis i do believe that when it has been very proactive in terms of putting sizable fiscal expansion in the system. That the european economy is still feeling the pressure. Dealing with the crisis, dealing with the disruption in the economic cycle. , i can seeestions the downside for sterling and the current environment. Guy one final big picture question. Equity we start to see markets and bond markets moving in Different Directions . If i have a classic 6040 portfolio, my bonds go down, equities go up. I havent seen that happening. Luis when we see that in full swing, i will be so happy because that probably means that we are starting to develop some naturalation in the relations among asset classes. We do not have any now. We have seen outflows from everywhere. Returns is also negative everywhere. It doesnt matter if you bought u. S. Treasuries or International Equities or em that is telling you or em. That is telling you that the markets are still in the low growth environment. Shows the correlation comes back, it probably means that the market is making significant strides into further. Ormalization it will depend on action by the Central Banks, so it is very good news that Central Banks are putting all of their weight into returning the currency funding to the markets. Citigroups luis costa, thank you for your time. Lets get a first word news update. Here with the details, ritika gupta. Ritika italy is preparing to extend the near total lockdown on the country after the country reached the grim milestone of being the country with the most coronavirus deaths. Italian officials are considering extending the ban on nonessential activities until at least may. An italian newspaper also says the government may call in the army to help enforce restrictions. More than 3400 italians have died from the virus. In iran, leaders marks the persian new year by vowing to overcome the coronavirus pandemic and build up the economy. The upbeat tone came despite the announcement that 149 more people died from the virus overnight. The countrys death toll is now more than 1400. Nearly 20,000 in iran have contracted the virus. President Hassan Rouhani has defended his governments response to the outbreak in the face of widespread criticism that officials acted too slowly and may have covered up initial cases before infection rapidly spread across the country. California residents are waking up today to a statewide lockdown. Governor gavin newsom is asking californians to stay home indefinitely and venture outside only for a jobs, errands, and some exercise. He says he doesnt expect the police will be needed to enforce his stayathome order, saying social pressure has already affected social distancing across the state. Vladimir putin says the criminal to give into what they see as like mail from saudi arabia as blackmail from saudi arabia. The opec allies threaten to push the price of a barrel below 20. It iserg has learned confident it can hold out longer than riyadh. 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 ritika gupta. This is bloomberg. Alix breaking news you, treasury secretary Steven Mnuchin says the irs is moving tax day from april posting from april 15 to july 15. They previously delayed payments, but now they are actually delaying when you are going to file. I have to tell you, very stressful here in the u. S. To get all that done, so this is a big relief for individuals, as well as small businesses. Guy i think a lot of people in the u. K. Are quite delighted that our tax return story is already behind us. You do have to wonder what it is going to look like next year. What have we got coming up for you . More on that oil story that ritika was just mentioning. Crude giving up gains of it today. Its more to come. Much more to come. This is bloomberg. Alix from new york, im alix steel, with guy johnson in london. This is bloomberg markets. Switzerland announcing 32 billion frank economic support package to combat the virus. Continues the story of governments trying to come to the rescue. Crude now reversing to the downside today. Had the biggest oneday gain yesterday. Russian president Vladimir Putin says he refuses to submit to what the crimmins sees as like mail from saudi arabia, and a President Trump says he may intervene. Here with more is annmarie hordern. Can you walk us through how Vladimir Putin is going to handle Something Like this . Annmarie an amazing scoop by our team in moscow. The first line is that he will not blink first. Hes really calling russia out. That relationship is clearly souring quite quickly. But also, hes saying that these his press ticket terry saying that these dramatic times at his press secretary saying that these dramatic times are open to interpretation. That kind of goes to the are of president putin the aura of president putin as the strongman. Hes not the person that is going to give end first. We seen this with erdogan, with sanctions on crimea. Even if it means economic pain, he is not going to given. Alix i found it drifting that the second biggest producer in russia said that russias exit from opec less is a blow to the from opec is a blow to the economy. That seems to push back on we dont want these low prices, help us. Annmarie this is politically very complicated in russia. Tw fewterviewed him at times him a few times, the head of lukoil. He was very much on board and backed alexander novak. The other side of the story is rosneft. We will hear a little bit about what yes to think tomorrow, and that is published overnight in moscow. He is the one who really should put in let go of the deal really pressured putin to let go of the deal. Guy what about the saudis and the americans working together . A hint from trump, and the texas regulator potentially cutting. Could we have a new opec . Annmarie a debate on twitter, what would you call this . Trumpec. Omeone said even floating this idea is historic, that they would potentially be willing to curb production. These are all very preliminary discussions. On top of that, they would only do it if riyadh or moscow would join in. I think the idea that texas is even floating this seems like a win for moscow and riyadh. Amazing, isnt it, the shifting story around what is happening with crude . Certainly technomic plates on the move right now. Thank you very much, indeed. If you have a bloomberg terminal, check out tv. Clickn watch us online, on all the fantastic charts and graphics, and you can interact with us directly. Give it a go. Tv on your bloomberg terminal. This is bloomberg. Alix welcome to bloomberg markets. Etf volumes continue to surge on the back of this market environment. Coming to us over the phone is at the not Hill Sarah Vegas psarofagis of bloomberg intelligence. Are we seeing these massive outflows from everyone worried about a crisis . Athanasios you would think it would maybe be equity driven, of it is putting a lot pressure on some of these fixed income etfs. There were a couple of wonky dislocations, more specifically in short duration of some products yesterday. A lot of that was just in the mechanics of how redemptions are handles. They decided they werent going to take cash redemptions, which was very common. They switched over in kind. The market was not prepared for that, so you saw dislocations in short Term Duration etfs. You see outflows in short duration now because i think what is happening, you have a lot of people selling to meet margin calls, and selling the most liquid stuff they have come about you are also seeing that the fed is back in money market funds. I think we are seeing etf flows moving over into those money markets. Alix have we seen etfs have to fold because of all the volatility . Athanasios some leveraged products have closed, but one thing i will highlight, that is not necessarily indicative of the strategy. If something goes down 50 and is at three times levered eps, it is more of a byproduct of what the strategy is as opposed to just a defect. Alix fairpoint, and important to make when we are trying to figure out how the market is actually functioning. Thank you very much. Check here. T, quick s p up by about 0. 8 . In terms of the different sectors moving here, you have on the upside energy, which is odd because oil prices are taking another led lower. We will see how that discrepancy resolves itself. Consumer discretionary entech are also lead discretionary and tech are also leading the way as volatility is coming down. This is bloomberg. Auf wiedersehen. The germans are going to spend a little more money. Germany is planning a little more extra budget that will include an additional 100 billion euros in extra spending. Germany is also indicating it is going to plan a rescue fund for corporates that will be valued at around 500 billion. It is going to be interesting to see how that fits back into the story when it comes to the black zero, the balanced budget that germany has legislated for. Key thing that is now happening with corporates is yes, there could be bailout money available , but what strings are going to be attached to that . We are seeing greater pressure coming when it comes to the Airline Sector, and the big question now is what does that come with in terms of strings . We saw what happened with the banks in terms of buybacks and executive bonuses. Lets take a quick look at the markets. We are starting to see an impact when it comes to the dollar funding story. You can see that writ large across many of the currency cross rates we are watching. In terms of what we are seeing with the pound, it is up reasonably strongly. We are also getting a fairly substantial move when it comes to what is happening with gilt market. We are getting a reaction in the thirtyyear section of a lot of markets today, both in the United States and here in europe. , weerms of equity markets are now starting to see a little bit of movement on the upside. What is really interesting out of europe today, some of the cyclicals are catching a bid. Alix same thing here in the u. S. , decembergy discretionary leading the way higher in the s p, but many say it is still too early to say the worst is over in the bottom is in. A lot more things need to come together to do that. Sentiment is still very negative. How many funds have been hurt, and how much more do they have to delever . You are still unwinding, and that is going to put a lot of pressure on the market overall. Lets turn now to airlines. Tom mackenzie texas inside what it is like Tom Mackenzie texas inside what it is like Tom Mackenzie takes us inside what it is like right now arriving at the airport. Centerm at a convention in beijing from hundreds of passengers in china, where we are being screened. [speaking foreign language] tom it is very busy here. Abroad,nese residents and the whole process has been very long. Alix for more on other stories, go to your terminal. Senate Majority Leader Mitch Mcconnell said he wants the onate to pass virus stimulus monday. Nancy pelosi come of the house speaker, as well as treasury secretary mnuchin, looking at 1 trillion and 1. 2 trillion. The senate should be passing that monday, as Mitch Mcconnell would like. Guy lets talk about Central Banks a little, and then what is happening with these markets. Markets feel pretty broken right now. To question a lot of people are asking, have Central Banks done enough to fix them, or will more be required . Then theres the longerterm question. What are the longterm implications of whats happening right now . Joining us as a man who should be able to answer some of those questions, xavier rolet, former ceo of the london stock of lehmanand formerly during the crisis. What do you see in markets right now . There has been considerable stress this week. Do you see any sign that is beginning to ease . Me on thanks for having your show. Obviously, we are in uncharted territory. , bymassive measures taken what looks so far as not so coordinated global response, but nonetheless taken in parallel, clearly bodes well for the mediumterm in terms of recovery , providing liquidity. It is clear that the credit market in particular is under huge stress. Purchases of securities, bbbs, bbs by Central Banks could help. But theres another leg to that uncertainty by which a global coordinated response needs to happen, and answers need to be provided to Market Participants , and it is the response to the Health Care Situation itself. Marketstinues to spook is the sheer mathematics of the weveination, with what read in the press recently and what we heard in korea and china , that the rate of contagion doubles every two or three days. You can imagine what that means in the period of a month. I think signs, and they are growing, that western countries in europe and north america are starting to take steps to increase testing, we have seen, for example, and south korea, more than 5000 patients out of one million were tested against italy, for example, where the testing rates were only a hit todred were only 800 one million. Testing is critical. The good news, i think, is the private sector is starting to provide answers. It was reported this one by the World Nano Foundation that they have no licensed a 15 minute test in the eu which will start being distributed. So we know that testing has a huge impact on essentially controlling the contamination rates. Of course, social distancing is something that is also very critical, and there are a range of other measures. It looks like the response in the west is starting to improve. Guy given what youve just said, do you think it is possible to make any predictions about what we see in the second half of this year . There seems to be some people out there, some economists making predictions that we see a bounce back in the second half of this year. Is it way too early to make such a prediction . Xavier i think it depends not so much on the effective control of this contamination, but on the rate of change. If markets sense that health care measures we talked about, more hospital beds, more testing kits in america, north america, as well as europe are starting to take effect, then i think that the markets will seek to anticipate that we could see an investment led recovery before we effectively see a consumer led recovery, which is one of the reasons why i think it is extremely important to keep listed markets operating. That theyde a vital take. It is really more a matter of the market participating. If you asked me a question, i can only give you a personal opinion. It is probably not worth very much. But in my expectation, we will. Tart seeing a turnaround i thing americas response, for example, is starting to get really serious. We have seen the same thing in europe. We will start to see a turnaround in the Health Care Situation in the next two or recoveryths, so a which could be vshaped may be in order. Notve heard that feedback just from Institutional Investors, but also from private clients, Wealth Management institutions, where theres a lot of wealth still in this world that a lot of investors are waiting for the right time. You can never time it correctly. You are always going to be either too early or too late. I think the second half could see a recovery, and perhaps a short one. Alix you mentioned why it is so important for markets to stay open. What do we look at in the market to make sure everything is functioning properly and we can keep exchanges open . Xavier of course, the response country, byvary by exchange. Those exchanges and financial Infrastructure Companies that have already provided for strong infrastructure, including Remote Access by members, whether they are banks, brokerage firms, Asset Management firms, those who are ready today, in my opinion, have all acknowledged the need to continue to operate. So the rates of participation we will probably see exchanges in jurisdictions that are not quite there that. Ake the decision i think the fcc very widely made the decision and recommendation to keep markets open. 55 of accounts for Global Financial asset ownership. It is critical that at least the listed markets remain open. Today that it looks almost like an upside down pyramid. At the top, the largest asset classes, interestrate swaps, credit default swaps, credit default swaps, foreign exchange. Then as you go down, you look at corporate debt, government debt. At the bottom is less than 5 of financial assets, equities. But they basically underpin, support the entire pyramid. So equity markets in particular is, and my view, very critical that they continue to operate, to provide messaging. It also gives the opportunity to people to invest at some point. Yes . Quickust one final question. Banks are no longer able to warehouse risk because of what happened in 2007 and 2008. Do you think we need to rethink regulation so that banks can act as Market Makers . That does seem to be a major issue right now, that they are taking risk on and laying it off on an elongated timeframe. Do we need to rethink regulation . Xavier this has been flagged for some time, that the lib that the inability of certain banks to make markets is hampering the recovery. ,hat needs to be looked at particularly because banks today are facing regulations that limit their ability to leverage the balance sheet, particularly with occ derivatives. So theyve effectively got greater capacity today to engage ,r reengage in Market Making particularly of listed securities. But i think there are other players as well. The world has changed area banks, i dont think, will ever play the role they used to play. Market makers, some of them are under a lot of pressure go into margin calls. I think the Asset Management industry in general could play a greater role, to attempt to lead rather than follow, but we also need to look at other areas. Private initiatives. Weve talked a lot about the Industrial Supply chain. Yes . My time is up, it sums like. Guy we are going to have to wrap it up there. Thank you very much for your time today. We greatly appreciate it. What have we got coming up for you . U. S. Airlines could burst through 40 billion in cash by yearend if revenues continue to plunge. Cathay pacific slashing Passenger Capacity by 96 in april and may. Bailout . Irlines due a what strings will come attached to those bailouts . We will talk about that next. This is bloomberg. Renita this is bloomberg markets. In the next hour, senator mike braun of indiana. This is bloomberg. Guy live from london, im guy johnson, with alix steel in new york. Lets talk a little bit about what is happening in the Airline Sector. As you can see up on the screen here, we are looking at some news coming through. Air france and airbus set to be poised to receive loans from the french state. The Airline Sector is calling more broadly for bailouts to help it survive the collapse in demand it is witnessing. The question is, will the industry be prepared to stomach the strings that are likely to be attached to this . When banks were bailed out, had longterm caps on their bonuses and salaries, buybacks were limited. Joining us on the phone, george ferguson, Airline Analyst for bloomberg intelligence. That is the question i guess this industry is grappling with right now. If it gets bailouts, what will be the cost . What are you hearing . George what we are hearing is that governments may want to get some equity stakes in some of these companies perhaps, or that up support of loans might be governmentbacked that the airlines would have to pay back. I think we find it pretty interesting. It is a little bit different than the financial bailout, where the ceos and the banks had run their banks without sufficient capital buffers. I think in this case, the airlines had been better capitalized than in decades, and really got hit by a very hard storm, where they had to cut so much of their capacity in the name of public good. I think it is a little bit different here, but i do believe governments will start by trying to attach strings to some of this support. Ways, you would have thought that the state, if it was providing the bailouts, wantingld would be wanting the stakes. Is that something we could expect. George i think it is pretty clear that governments are considering some sort of strings. I guess it goes to the palatability to the electorate to be bailing out big companies. The optics dont always look good, even if it isnt the companies fault. Some of the experience during the financial crisis as well, where in the u. S. , you saw the u. S. Government support gm and ford, and isaac they even made money back on some of those positions. The government budgets are going to be in rough shape after all of the assistance they put out over coronavirus. So i think some of the governments are going to find a way to bring money back in. Guy just in terms of the size and scale of this bailouts request, is it possible to get your arms around how much money the Airline Sector is going to need, given that we still dont understand how long this Health Crisis is going to be lasting for . George i think it is definitely an unknown right now. I hear all kinds of reports that coronavirus conveyed by summer because temperature coronavirus can fade by summer because to burger goes up. To theports about summer because temperatures go up. I hear reports about the end of the year. Under schedule, that is when airlines burn the most cash, and that becomes a real challenge. But you are asking them to a public good because even when you lower blick interaction, you still need some connections. If they shut down all service, i think they could actually conserve more cash, but governments wont necessarily one that because there are parts of the economy that still have to go on. To george, we are going leave it there. Thank you very much, indeed. George ferguson joining us on the latest on the Airline Sector. Air france and airbus looking like they are going to get some sort of loan from the french state. It is going to be interesting to see whether or not there is a level Playing Field when it comes to the loans ultimately issued. We will manage what is happening with these markets. It is interesting to see airbus up over 20 today. This is bloomberg. Alix time for futures in focus. Joining us on the phone from chicago is Bobby A Chino is bob iaccino of path trading partners. Have we found a bottom . I dont know if we have quite seen it yet. Bob no, i dont think we have. It was inside range from a technical perspective, which generally means a continuation lower. I know a lot of people who dont normally focus on technicals are looking at those now, so i would expect us to move a little bit lower. This economic weakness isnt going to round itself out for crude anytime soon. Do you still want to be a buyer of gold . Bob i dont. I think one of the main selling points of gold from a perspective of those selling eroded inions really these last few weeks. When youre looking at the way aseacted as a cash raz thesh raiser, it takes away notion that gold is a safe haven. I think the shine is off, no pun intended. Alix fair enough. Thanks a lot. Staying with commodities for a second, we take a look at equities and where they are trading, energy, consumer discretionary, and tech leading the way. The nasdaq up 2. 5 . The vix continues to come down. The dollar lower, though off the lows of the session. Crude still not able to find a base. Whats of questions as to the viability of how we can find support in these markets. If you look at the treasury market overall, the 10 year yield down by another 15 basis points. Definitely a safe haven bid coming into the bond market here and in europe as well. Guy . Guy absolutely. You are seeing a bid in the bond market today. Also seeing a very strong bid when it comes to the british pound. The british pound on the cable rate up by 3. 41 . At five a clock p. M. Today london time, we are going to see an announcement from the chancellor of the exchequer to further help the british economy, for british businesses. The aussie dollar catching a bid, the Canadian Dollar catching a bid. Maybe we are starting to see some signs of the dollar squeeze easing. Up next, balance of power with david westin. From alix and me, this is bloomberg. David from bloomberg world head to audiences worldwide, welcome to balance of power, where the world of politics meets the world of business. The markets are swinging around today, but solidly higher at the moment. Joining me is taylor riggs. Taylor we havent seen back to back games like this in more than a month. Typically, when youve gotten a rebound, weve fallen the next day. It is sometimes around these Tumultuous Times that we can try to make light of an otherwise very difficult situation. A trader note was laughing this morning, saying they were shocked that the futures were higher. We did hold onto the 2018 december lows. That was a very key technical point for the s p 500. More importantly, those small cap domestic stocks, the russell 2000 had been hit much more than the major averages. They dont have perhaps the Financial Flexibility that some of the multinational corporations