Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Lockdown in that country, and Risk Appetite builds. Asian stocks had for their best day since 2008. Equity futures point to a positive open in europe, as well, after an incredibly positive day yesterday. Just under an hour away from the start of cash equity trading on that continent in europe and over in the u. K. Lets look at futures after yesterday, the dow put up a up ad game the dax put record gain, almost 1000 points yesterday. It is pretty astonishing that we well. Tures up today, as i should say, the dow yesterday in the u. S. Put up a record gain of sorts, the biggest gain in the Dow Jones Industrial index average since 1933 and yet, you see futures on the s p and dow jones positive, nasdaq futures down a little bit, but they also saw a big gain in tech stocks yesterday, the nasdaq jumping yesterday about 10 . A lot of indexes yesterday in the u. S. , jumping 10 . The nasdaq, really just joining the bunch. Our top story is the stimulus packages across europe and in the u. S. What is going on on in washington. The white house and democrats have reached an agreement over a 2 trillion stimulus plan. Full details havent been released, but Majority Leader Mitch Mcconnell says it is historic and will deliver relief to americans. At last, we have a deal. After days of intense discussions, the senate has reached a bipartisan agreement on a historic relief package for this pandemic. It will rush new resources onto the front lines of our Nations Health care fight and it will inject trillions of dollars of cash into the economy as fast as americanto help workers, families, Small Businesses, and industries make it through this disruption. Matt for more on this story, lets get to Annmarie Hordern out of new york city. How close are we hear and what does this package look like . Annmarie we are very close. They said they will vote on it this morning. Mitch mcconnell and the senate the Senate Democrat leader Chuck Schumer address the floor and are eager to vote on it tomorrow. Ive been seeing tweets of reports saying Steve Mnuchin is happy with it and the president will sign this deal. It is light on the details, but people close to the matters speaking to our d. C. Bureau is that it is worth more than 2 trillion. 250 billion will go to one employment, 800 30 for hospitals, and approximately 50 billion for Airlines Part of the 500 billion chunk for corporate finally, the direct checks to americans, 1200 to most americans is said to be included. We will get more information in morning. Matt we are basicallymatt seeing some bailout funds, as well as aid workers who dont have jobs. A 2 trillion total. Will we see restrictions on companies that get this money . Will they be able to take money from the government and still lay off workers . Thearie this is one of most contentious issues with the gop and the democrats about this bill. The 500 billion that would go to operations that need it like restaurants and hotels, and airlines, the democrat said it was a slush fund. It haddnt think significant oversight. It seems they won that battle. Itt know the details, but might be similar to what tarp was in 2008. The democrats said the airlines have been on a buyback bonanza. Off want them to not lay workers or those who are furloughed, continued to pay them, but we dont know the exact details but considering the democrats have signed off on this come you can imagine there will be significant oversight on that government aid. Matt looking forward to the tliv today covering this. With get to the markets Mark Cranfield from our bloomberg mliv blog out of singapore. Kind ofrst off, what impetus is a deal out of the u. S. Going to give in terms of global stocks . Bit. Quite a that isei up 8 , and the second day of huge gains in japan, most of asia is up by large margins. The msci asia up more than 5 , one of the biggest days it has had so very impressive performance across asia. Idea thatto enjoy the the United States will receive this package. For the s p 500 futures, it has been a more choppy day. Earlier, it was struggling to gain ground, because there was another report saying the u. S. Would lift tariffs but only for 90 days and traders were hoping all the tariffs would be taken off in one go. We also have the governor of california, who was saying it looks as though california will for quite alockdown bit longer than other parts of the country. Istainly the rest of asia very happy that the United States is getting together on a deal. Looks like have what a pretty risk on day today. Gold is down again today. Im not sure what kind of risk indicator that has been of late, also looking weaker against the dollar. You can buy more than ¥111 to the dollar. That has been a great risk indicator. What is the story with the japanese currency . Emissions we got still troubleve still got with the basis trades, a funding issue. For u. S. High demand dollar. The bank of japan is supplying dollars to japanese banks, but obviously not quite enough. They are still needing to go into the market to buy more dollars and that is pushing up the Dollar Yen Exchange rate. It is having quite a strange effect on the japanese bond market. People wont give up their jgbs, even though the bank of japan is trying to buy them. They want to use jgbs as collateral to raise u. S. Dollars. In thef dislocations Japanese Funding market, partly being shown in the dollar yen movements and in the bond well. , as it will be a few weeks before that clears up, then we may get a fair picture of where the yen stands. Matt is there a shortage of dollars globally . Is this a problem in this crisis . Tracy alloway writes a little about it, and i wonder if that is the financial crisis we face this time around. Shes written a very good page on the mliv today. Well worth reading. That seems to be the common denominator. People using dollars as leverage to going to risk assets. It was a good period toward the end of last year. People seemed confident that risk assets have further to go, a lot of leverage in the system and the dollar was the main currency being used and now, we are seeing a dramatic pullback in that. People are trying to raise cash. Most of it needs to be done through the dollar, so we are seeing these funding situations go through extreme levels against the euro, the yen, the british pounds. Weve evenworld, seen implied shortterm rates in singapore go below zero, which is very unusual. Everywhere, there are indications people are straining to get dollars in time and the fact we are coming to the end of the First Quarter is just making it worse. We are making it through this period with the help of Central Banks, but there are major issues in the plumbing of the money markets and whether or not people can get the money they need. It will be a while yet before this is sorted out, but people will probably remember this crisis about being a shortage of dollars compared to the credit crisis we had in 20082009. Matt lets get back to the plainvanilla stock story. Your question of the day on the mliv blog today focuses on the rally we saw yesterday. I think it was the strongest rally in the Dow Jones Industrial average since 1933. It was the biggest rally ever germany. Ax in question of the day, was tuesday a bear rally or end of route . What are you hearing . Going to pass that to mr. Mark cudmore, who has written at length about it today on the blog and says no. He says you get a lot of very severe bear rallies in the major market downturn. This will just be one of them. This is not the end of the weakness for american stocks. There will be more to come, and if you look back at 2008, 2009, it took several weeks before we saw a real bottoming in american markets, in particular. We had lots of rallies, market going back down again. To digest all of what has happened in the last month is going to take a very long time. There is still a lot of economic information how is the economy really doing in the United States . How high will unemployment go . Will it hits 30 as some have suggested . How Many Airlines will need to be bailed out . There are some of the questions about the real economy we dont really know yet. So much is guesswork. As the information comes through, even the size of the stimulus might not be enough to cover all of the risks in the american economy. There are a lot of questions unanswered and for that reason, it is very early to say this is the end of the bear market in the United States. Matt all right, definitely seems like it would be a little early to me, as well, but we are getting a lot of interesting news across the ticker in terms of stimulus from the u. S. To germany and really, around the world. Mark cranfield out of singapore, thank you for your time this morning. Next, speaking of news, norways Biggest Oil Producer says it will cut Capital Expenditure by 1 5, 20 percent. Our interview with the cfo on ecuador is next. This is bloomberg. Matt welcome back to bloomberg market the european open. The open minutes from of cash trading and seeing futures up once again, even after the historic rally that we saw yesterday. The question of the day on the mliv blog, was that a bear market rally or is everything fixed now . Overwhelmingly, the answers are so far, looks like it was a huge bear market rally. Its capitallashing expenditure. Norways biggest crude producer will cut by about 20 and lower exploration activity to about 1 billion in response to a plunging oil prices amid the coronavirus outbreak. Joining us from oslo is the cfo of equinor. Lars, thanks for your time. Let me first ask you how this is affecting your workers at equinor. How many people are not coming to work . Are you going to be laying people off . Of all, good morning and thank you for having me. This action plan takes place today to strengthen our financials and is in the interest of all employees. As part of this plan. A lot of our workers are working from home as a response to the coronavirus situation, and we are following the recommendations from norwegian authorities. Matt how about the investors . Should they still be expecting payouts Going Forward . For example, loki want to scrap dividends as you tighten your belt here wont you want to scrap dividends as you tighten your belt here . To takeis initiative forceful measures to address the drop in the commodity prices, especially oil prices over the last couple of weeks, and we are also announcing today that we will be cash flow neutral the rest of the year, which is a very strong number and there is no news really to the dividend duringthat we announced the weekend we are postponing until further notice the Share Buyback program as a response to the current situation. Is your expectation for the oil price to come back soon . Do you expect a vshaped recovery in the economy that will bring the oil price back with it or are we looking at 20s and 30s as far as brent crude for the rest of 2020 . I think this is the billion dollar question for many of us. I think it is actually too early to say how this is going to unfold. The main reason is, how this coronavirus situation is going to unfold. Im very happy to see governments are addressing this health issue and that the same time are addressing the packages to support their industries in their different countries. One thing we can do as a company and that isilient more than ever important to be resilient in a situation like this. Matt have you ever seen anything like this before . Youve got simultaneously a drop pandemic, as to a well as a price war between two of the biggest players in the market. How long do you think it will last . Lars this is an unprecedented situation and it is very liquid, and not easy to interpret how this will unfold. Thats why the only way can do is a company is to follow recommendations from Health Authorities to help out in that to the level that we can and what we are doing today with the action plan. Matt Lars Christian bacher, thanks so much for joining us after tightening your belt, cutting expenses, cutting by 1 5 to deal with the to stop the put spread of the coronavirus as well as the price war, a double whammy for the oil industry. Also a difficult time for politicians having to work through the night in some cases. They wont be able to do that in parliament as of wednesday night. The u. K. Is Closing Parliament on wednesday night, and for the time being ahead of that, as well. It could bee reopened in april according to a person familiar, but for now, it looks Like Parliament will not longer be meeting at westminster. Coming up, edging closer to a bailout. The eus finance ministers in agreement to pass a package helping the countrys hit hardest by the coronavirus, but not there yet. We will discuss. This is bloomberg. Matt welcome back to bloomberg market the european open. Were about 40 minutes, a little less from the start of trading and it looks like it could be another risk on day after the bear market fireworks we saw yesterday. , theop story in the u. S. White house and democrats have reached an agreement on a more than 2 trillion stimulus package. Details havent been released, but negotiators were working on a package that includes billions to companies, as well as billions to states, billions in aides to Small Businesses and checks for most americans of more than 1000 apiece. Joining us, chief equity strategist at morgan stanley. Now that we have the u. S. Package almost in place and so much stimulus coming out of european governments, at least germany and the u. K. , does it in riske the slump assets is over, or was what we saw yesterday really just a bear market rally . We do think theyve made an awful lot of progress. The adage is when policymakers start to panic, as an investor, you can stop panicking. We think we are forming some sort of floor. Be furtherprobably tricky days ahead, but ultimately what weve been has beens the policy so large and brought across the are working to reduce volatility, stabilize markets, and it puts quite a decent floor. Our message to clients is if you have anything other than a i. E. Over the next three to six months, acid markets or risk markets will go higher and the policy response has been a necessary part of that. Cant fix the economic issues, but it can fix some of the tail risks and downward spirals within equity markets which seem to have stopped. Matt what about that . You have a lot of experience in these markets. He worked through the financial crisis coming you worked european equities through the sovereign debt crisis. It turned into a financial problem . Are you seeing liquidities that dont look like they are being addressed . Does the dollar shortage were you . Worry you . Did, iti think it worried the markets the last couple of weeks. Weve had the largest onemonth decline in Global Equities, the largest ever spike in volatility. There was an awful lot of risk out there. I think that was the catalyst for the policymakers to move so to try and so strongly and draw a line in the sand, and i think they have been able to do that. If we look at u. S. Fixedincome markets over the last two to three days since the upsize qe and included Corporate Bonds in their package, i think for us, whereas a critical moment the policymakers got from behind the curve to perhaps ahead of the curve. That is what investors were looking for. Put that together with the packages, the u. S. Fiscal package coming down the line, that is an awful lot of ammunition. I think there is liquidity. Perhaps too much leverage and not enough liquidity has been resolved. What this doesnt do is give us virus andear on the economic earnings numbers. There is a lot of bad news in the price we were at 24 hours ago. Matt is there a problem im looking at a lot of companies here that were not junk last month and are junk now. Even as governments and Central Banks extending liquidity lifelines, is it going to help companies that have been downgraded to junk . Graham not necessarily. Well, not directly. The trick is ultimately, for the last few weeks, the portfolio rebalancing effect has not worked. Historically, authorities will come in and buy the least risky arets so high yield bonds not included in the feds Corporate Bonds Purchase Program that if you can stabilize and turn invest in and turn investor sentiment, the fed buying treasuries, some of that money will start to move into the highyield space and if we can get a sustained turn in Investor Confidence with highyield in double digits, that starts to help. Matt thanks so much for your time. Graham secker, chief European Equity strategist at morgan stanley. Coming up, we will speak exclusively to the ceo of btb. 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. Matt welcome back to the european open, 30 minutes from the start of cash equity trading on what can be another up day after the incredible rally we saw yesterday. Lets get to new york city, because bloombergs Annmarie Hordern is standing by with an exclusive interview. Annmarie im pleased to be joined by the btb ceo and former ambassador to the australia and the united kingdom, so he can speak to the policy front. Take you so much for joining us today. You are prepared. I want to start with this Global Pandemic of the coronavirus, everyone says it is pushing the entire world into a global recession. On top of that, we have this Oil Supply Shock demand. Ant is worse for russia, economy that is so reliant on this commodity . What is going to be a bigger deal for the russian economy . Coronavirus or the Oil Price War . The Oil Price War, and the major problem that we know how to deal with the economic crisis, but we dont know how to deal with the virus crisis very much. That is the main problem. Cant predict, none of the economic financial analysts can tell you how long the virus will the economicuch, crisis depends on this. If the crisis ends in two or three months, that is one thing. If it continues until next year, that is another problem. Another problem is the reaction of the government. Esther trump said he would like theinish or essentially is thelations ease regulations were of the quarantine, but most are isolating people and stopping the production. That will substantially affect the economy. For example, europe and china, now most damaged by the virus, 60 of the Russian Foreign trade. The situation in europe and china is extremely important for us. As far as the oil prices, there is a difference there are different people speaking different things. For one, the oil market is the only market in the world which is regulated through the cartel agreements. Whether the cartel agreement is good for the world are not is a big question because the market should regulate the price. From this point of view, there is nothing natural about the opec it is naturally opec plus agreement collapsed. We believe if not the coronavirus epidemic, the prices could go back to about 45, maybe 50 per barrel, which is quite sufficient for the russian economy. Annmarie weve seen cities around the world take these measures and the moscow mayor told president putin that the numbers do not reflect the full picture. As moscow preparing to have lockdown similar to london, similar to milan, similar to new york . Andrey not at the moment. I havent heard about this idea. Of course, in moscow, the government closed the cinemas but, forc events, example, shops and restaurants are still open. We dont expect this to happen immediately, but if the virus develops and it is multiplying every day, then that will be the case. The big problem, and the most my bank, we have 10 cases of suspicion of coronavirus. Beenof them have confirmed, but when we have suspicion, we close the offices. From theeople away offices for a couple of days, so if we have enough tests where we can test people immediately and get the results, it will change the situation. I dont think we should close the factories. I dont think we should close activity. Life should go on. Needrie well will vtb Oil Prices Remain at this current level or if the coronavirus pushes russia into recession . Andrey no, not at the moment. Andrey at the moment, 12 is quite profitable and Central Banks took two important measures to ease the regulations and two is, for example, the ruble whichhe dropped 20 at the start of the year. The russian stock market lost 20 of its value. Today is 200 that profit last year and our price today is 420. It is amazing, ridiculous. Expect the market will return, like yesterday you saw in america, the news about the possibility of reaching agreement between the white house and congress led to a rally in the market. I dont think that is the last time we will see the market going down, but definitely we more measures are implemented by the government, we will managed to stabilize the market. President putin will announce support ands about others. The government will start to support. Have, theroblems we government will spend more money and the russian economy, the russian budget has about 150 billion capacity additional, money saved from the crisis. At 25 orprice of oil 30, i will the budget will be ok for six to 10 years. Have security which we have been accumulating for years. Annmarie one final and quick one, weve seen company after forecasts,sh withhold dividends, stock buybacks. Are you considering doing that for you 2019 for profit . Andrey not at the moment. He will have to see. Is meeting of shareholders in june, so we will have to see what the situation is with the virus, but at the moment, no. We havent made any decisions with this measure. Annmarie your office, social distancing . You have some working from home . Andrey we have 1000 in the office, but top management is working in the main building. Annmarie that was the ceo ofannmarie vtb, andrey kostin. He saying the coronavirus is a bigger implication for russia and the World Economy than the oil price we have seen takeout 60 of the Oil Price Since the beginning of the year. Matt fascinating stuff. Annmarie hordern with andrey kostin. Lets get the Bloomberg Business flash. Todays top corporate stories, starting with apple. It may start to reopen some stores in the first half of april. It has also extended Remote Working for many employees or at least april 5. The details were disclosed in an internal memo obtained by bloomberg. All 458 of apples Retail Stores outside of Greater China were closed this month. Crib is cutting 1000 more jobs than previously announced as part of an overhaul for its troubled field unit. The industrial giant reached a deal with labor representatives to cut about 3000 jobs by 2026. They also agreed on measures to senkrupp counter the fallout of coronavirus. Facebook says advertising is taking a hit in parts of the world despite an uptick in usage for many services. Messaging has jumped more than 50 , voice calls have more than doubled. Despite that, Facebook Says the coronavirus is adversely affecting its business like so many others. That is your Bloomberg Business flash. Spain records its worst ever day in the coronavirus outbreak. Next, we speak with the fan Spanish Foreign minister. This is bloomberg. Matt welcome back to bloomberg market the european open. Minutes away18 from the open of cash trading and looking at gains that are increasing in terms of futures in london, paris, and in frankfurt. Country hase recorded its worst day of the coronavirus outbreak with more than 500 deaths in one day. According to Johns Hopkins university figures, the total number of deaths in the country and the number of confirmed cases of the coronavirus, covid19, is over 40,000. Spain has been under strict lasting since march 14, until mid april. People arent allowed to go outside and less a have a dog. The Prime Minister warned over the weekend that the worst was yet to come. Lets go to daybreak europe anchor manus cranny in dubai with the Spanish Foreign minister in madrid. Manus a very good day to you. Weve got Arancha Gonzalez laya joining me now, spains foreign minister. Minister gonzales, good day to you. You may promised spain well be able to reopen by april 11. Are you really confident that dateis still a respected for you to reopen spain . Minister gonzalez what we have said is we need the current state of alarm to last a few more weeks. 12, andes us to april we are evaluating the situation on a day by day. What we know is the current situation, 47 million spaniards in their homes to avoid physical contact and through that, to avoid the spread of the virus is our top objective. It is the top objective of 140 million spaniards. On april 12, we will see where we are. The most important thing is our conviction and our unity in addressing the health of this pandemic. A reachhen you look at for masks and gloves and downs around the world, do you see a responseurope in its on the health front, minister, or do we need a unified health care defense protection act for europe . What we havealez in europe is basically health andems, decentralizing within the Member States, decentralized to the regions. This is the case in spain. What we have seen is lots of tension in the per chairman market, the markets for sanitary materials, health materials. This is why the European Commission has made an effort of acquiring materials that would be for the benefit of all european Member States, and each member state is stepping up national production, and what we have made sure also within europe is that there are no national restrictions, that no on itsnation will sit own production, that trade would be able to flow within the European Union Member States in order to ensure that the equipment that is basic to fight the pandemic today is available in each and every European Union member state. So far, so good. Where we still got a little work to do is on the economic front to provide a united response also that is strong, robust enough to convince markets and reduce volatility. Manus thats where i wanted to talk to you next, minister, which is, you see the United States delivering 2. 5 trillion worth of support. I look at the european stability mechanism, the rhetoric being used of broad support, allowing a nation to apply for 2 of gdp. Will spain apply for 2 of gdp help, first of all . Minister gonzalez no. For now, what we have seen is each european member state adopting a stimulus package robust enough to confront the standstill of the economies across the world. This is a systemic shock. This is not just one nation. This is all nations suffering exactly the same standstill in our economies. At the national level, hefty package adopted by every european member state. At the European Central Bank Response inong terms of credit, liquidity, and in terms of interest rates. What we are still crafting together is the fiscal response that the European Union needs to it is the fiscal response in question today, mostly because there is a lack of priority about how deep and how long this systemic crisis will be and therefore, a need to calibrate the fiscal response to that. The United States doesnt know that information, either, so is europe talking about one trillion . Is it talking about 1. 5 trillion . What are the numbers being considered as a European Response on the fiscal side, first of all . First of all, the fiscal numbers, minister gonzales. What is the real number . It is notonzalez only the number that convinces markets. Is aonvinces markets solid, comprehensive response. A response on the fiscal side, a response on the credit side, a response on the liquidity side, a response on the vulnerability side, on the packages that each member state including spain have taken to address the most vulnerable in the economies. Notets are looking at is just one number. It is looking at the package, the comprehensiveness of the response, and i would say that if i compare europe to the United States, the packages that each member has taken, the response by the European Central bank, and where weve still got a little bit of work to do side. Ant on the fiscal manus well, lets talk about corona bonds. Madame lagarde said she strongly backed corona bonds on the euro group call. What is the major Sticking Point to corona bonds . Do you think they will come, and if so, what is the Sticking Point to get us there, minister . , inster gonzalez well spain, we certainly think this is a good idea to demonstrate the solidity of the fiscal response of the european side, but there are diverted views within the European Union about how to express the solidity of the European Response on the fiscal side. Is a goodve the bond idea in the case of spain, france, italy. Some believe the response should not be in the form of bonds, they should be more in the esm,ic package like the which is probably what the netherlands think or germany thanks. This is a discussion that is what we hope on the spanish side is whatever the response is, is robust enough and a response that is a European Response. It is not for this or that member state. It is a European Response. That is what will convince markets. Manus Arancha Gonzalezlaya, spains foreign Minister Foreign Affairs minister. There you go, we need a comprehensive response mechanism from europe. Is not just one number. Matt thanks very much for that. Manus cranny with that interview. In its from the open, next, a physical attraction. Asislocation opens up investors clamor for gold but cant get their hands on the actual metal. That is next. This is bloomberg. Matt welcome back to bloomberg market the european open. Right now, seven minutes from the start of cash trading. It could be another of the day rip acrossfter the Global Equities yesterday with gains of double digits, in a lot of cases, historic gains. The gold market is facing an historic squeeze as investors flee to the metal as a haven, few people can get their hands on actual physical gold. Here with the details is dani burger. Dani i think this is one of the most fascinating dislocations to have opened up during the market turmoil. And you look at the price of gold futures in new york, they are the most expensive to actual the 1980s. On since what is going on is you have investors rushing into gold, they are buying up these futures contracts, but there is a shortage of the physical metal. When you think about what is happening in europe, countrywide shutdowns because of the coronavirus, that means that refineries that house the gold are shut down. There is no one to deliver this product. Even the ones who can get employees in that are open, new york, you have a promissory note for the gold, how are you supposed to get it . Airlines are all grounding their flights. That means for the transportation, the arbiter able to get to investors who hold futures contract to have the promissory notes, it is to get thexpensive physical product. As a history lesson, the last time the spreads were this wide was the 1980s. The Hunt Brothers were trying to corner the silver market and gold and silver prices ballooned. That is the level of dislocation we are dealing with now, matt. Matt fascinating stuff. Would love to hear the Hunt Brothers brought into any story, cornering the silver market takes a lot. The first word bloomberg news, on u. S. Has reached a deal 2 trillion of stimulus, more than that after the white house draft in an agreement with Senate Democrats several days of tense negotiations behind this. Specific details werent released, but negotiators have been working on a package that includes assistance to companies and checks, direct checks to most americans. The senate could vote on the plan today. Resident donald trump says he hopes to lift Stringent Health measures and reopen the economy by easter, but that vision appears out of step with the Nations Capital leaders who are shutting down entire cities and states. The who has warned the u. S. Epicenterming the of the global outbreak, and that is your bloomberg first word news. Next, futures are pointing higher after the big rallies we saw yesterday. Here in germany, the strongest gain on the dax of all time. Lets see if we can do it again. This is bloomberg. Anna a minute to go until the start of cash equity trading. We have a deal, u. S. Lawmakers work on a 2 trillion stimulus land to fight the coronavirus. It goes to a vote later today. In europe, less progress. Europe finance ministers take a small step towards a rescue package. And Risk Appetite builds, asian stocks post their best day since 2008. Point to ares positive open. I am anna edwards, welcome to Bloomberg Markets european open. Just seconds into the start of the trading day and it looks like we will go higher for european stocks. We saw strong bounces yesterday, can we continue that . Upures suggesting we will be by more than 3 . The markets themselves out of the gate, the u. S. Agreeing in principle to the 2 trillion dollar stimulus package. They will vote on it later. Itspe edging closer to plan, but yet to see the full details. In the asian session, the best day since 2008. Yesterday was the best day for the dow since 1933. Two days for upside is the challenge at the moment. Get thee if we can first backtoback games for global stocks since the middle of february. That is what we will achieve if we stay in positive territory today. The dollar seems a little weaker, down for the second day. Swap lines seem to be working taking tension away. We do see upside at the start for the european trading day in equity markets. U. S. Futures point higher, will we get two days to that bounce . Lets go to lena komileva, managing partner chief economist, g plus economics. We have had one day of real strength. If we get another day, that tells us something material about the way our thinking is evolving on risk assets. Is it time to buy or is it too soon . Lena i think it is an environment of extremely high volatility to the downside and upside. That tells us something about the markets ability to function at this point. Clearly we are not dealing with a normal shock event. This is not a cyclical recession. It is clear we are dealing with something more systemic. I would be cautious about brushing away all the problems that have come to the service in recent weeks. To the surface in recent weeks. We see a few days of increases which will help morale, it is whether a number of sectors feeling the brunt of this pandemic shock, and we will feel it for long after. Orther they will survive have a long testing, what we are a longtermis transformation in the publicprivate sector which will change the way Capital Markets function until we get our heads around this. I would caution against playing the market. Anna you think this is more than a temporary downturn from which we balance back and carry on as before. Using structural transformation will be underway. We have no idea which way that transformation will take, but a bigger role for the state, is that a given . Lena i think it is definitely a given. The bigger picture, the perspective of the starting point of analysis from the start of financial risk and the efficacy of the policy response we have seen internationally, both are a diagnosis of the crisis we are in. It is the starting block of longterm investment. What has become clear is this is a black dynamic swan event, it is Extraordinary Events that have opened several systemicgloba tarifl urgency. It can trigger a global recession, and the demand shocks currently in play. Also measures of virus theainment and interrupting supply chains, closing borders, disrupting capital flows. What is happening is something bigger than the pandemic, the government closures is which isg the dollar being plugged in by the fed which is why we are living in a strong day yesterday and positivity this morning. In a major way this is challenging investors. The post Global Financial crisis what this has done is undermined the function in the financial system. Stoked the fires of a price war. The oldxacerbated was visible in Global Manufacturing pmi for the last two years. What we are looking at is a level of risk, this is no longer a bell shaped shock but a longterm structural change. Anna you say qe forever was the condition we have fallen into before, but qe forever or qe2 infinity seems to be part of the solution along with the fiscal measures. Is that a cause for worry . Lena i think at times of crisis, it is no question intral banks have to come and take over the core function of Capital Markets. The only way to do that, it is the fact this unusual crisis does not fit neatly into the supply shock or financial crisis. It started with a sudden major collapse of valuations that mark the end of the growth cycle and unprecedented 11 years of bull markets since 2009. It did not come with a global consensus of recession. We are clearly in one. Risk,e with the universal basically the higher risk leverage in the nonbank financial system. Level has fed through to Capital Markets, highyield. Redit, Corporate Credit it will eventually become a systemic risk. There is a lot of debt that will become serviceable and sustainable in a different growth environment, and that centraln other words bank cash is no longer a hedge against a fault. We will see restructuring and whole sectors. Anna thank you very much, lena komileva, managing partner chief economist, g plus economics. She stays with us and we will get her thoughts on what is happening stateside. The u. S. Which is an agreement on a 2 trillion package as European Finance ministers layout their fiscal response. This is bloomberg. Anna welcome back to Bloomberg Markets european open. \ 10 minutes into the trading day that shows a decent bounce following the strong bounce from yesterday, the best day since 2008 for asian equities. A strong rebound in Global Equity markets. Will we managed to make it two days in a row . Top stories, stimulus packages from europe and the u. S. The white house and democrats have reached an agreement over a 2 trillion stimulus package. Details have not been disclosed but Mitch Mcconnell says it is an historic plan that will deliver relief to americans and businesses. At last we have a deal. After days of intense discussions, the senate has reached a bipartisan agreement on a historic relief package for this pandemic. Rush new resources onto the front lines of our Nations Health care fight and inject trillions of dollars of cash into the economy as fast as possible to help american workers, families, Small Businesses and industries make it through this disruption. Anna for more on this, lets bring in Annmarie Hordern. Details, heve the said they will be released soon and the vote takes place later today. What do we know about the size and scope of the u. S. Fiscal response . Sources talking to our colleagues in washington say it is more than 2 trillion. This is a massive relief bill for American People and corporations. Part of that will be 1200 direct checks to most americans. Debate who itof a should go to. 250 billion for unemployment aid, 130 million 130 billion to hospitals. And airlines hardhit, grounding flights, and doing anything to hold on the cash. The democrats won in terms of oversight with money given to minas of holidays and corporations. There is some significant oversight. We should get more details later this morning. The wayat about President Trump has been characterizing this . He has been trying to talk about avoiding shutting down the economy for too long, saying it was not designed to be shut down. He is talking about bringing the taking back, who is he notes from . Annmarie we are seeing the administration wanting to open the economy as soon as possible, different from what we are hearing from state and local leaders. Over the past few days he is talking to managers, hedge funds, private equity funds, steve schwarzman, he is talking thet if they should open up u. S. Economy. We should stress this is a different sign we are hearing from governors. The governor of california said that is misleading. The West Virginia governor who is a trump supporter said the president is seen different information from him. Here in new york which is the epicenter of the crisis in the United States, andrew cuomo growing increasingly frustrated with the federal government, saying, we need 30,000 ventilators and they sent us 400. It is a different tone from the white house. President trump wants the economy up and running and he envisions packing churches at Easter Sunday which is not far away. ,nna thank you very much Annmarie Hordern with the latest stateside. And the euro area finance ministers are taking a small step toward a rescue package. Lets get the latest on this with maria tadeo. What kind of progress have we made . Maria if you were hoping to get anything close to a corona bond, you will be disappointed. It was very underwhelming what we heard from finance ministers yesterday. What is becoming clear is this will have to be dealt with through credit through the corona fund, not as a bond or a fresh tool for the euro area. There is no majority over a corona bond. When you look at the esm and bailout fund, and who can tap into that to kickstart their economy, there are issues. One has to do with the final amount. Countries could be allowed to talk to percent of their national gdp in terms of borrowing but it is not clear yet. This is the most contentious point, the conditions attached to it. Anything with the credit line has conditions, but countries like italy that are badly hit seesaying we do not want to any conditions. This is not a problem we created. It could have happened to any country and nobody could have predicted it. That because of the political stigma it carries. Anna thank you very much. Lena komileva, managing partner chief economist, g plus economics is still with us. Let me ask you about what is going on in the United States. Are you seeing the Building Blocks of the Emergency Response we need to see or is anything missing . Lena it is a start. It is absolutely essential because they are finally finding the policy response is catching up to the risk cycle we are long into. Questions,wo major not just what will be agreed that how quickly it can be rolled out and if it is enough. The health problem, the pandemic, the economic thertainty and ultimately policy fallout. On the pandemic front, the key question for investors is whether the government containment measures will ensure the u. S. Pandemic can and sooner rather than later, which will start the countdown to a peak of economic effect. Until we see that, we clearly cannot talk about an endgame for the economy. The risk is a slow incoherent response regionally in the u. S. Can create multiple epicenters. Interconnected u. S. Economy and Global Economy for that matter may not look vshape. Hing near a that would clearly undermine a longterm response. Longterm the key issue, the concern is cyclical measures are critical for Investment Business and expectations for what the u. S. Congress is passing now. The concern is basically we have an economy levered to a growth cycle and degree of universal centralbank support over the past decade. Willber of Business Models not be viable after this is over. Capital injections believe investors choosing. Anna you talk about lingering from a Health Perspective and economic perspective. From an economic perspective, is it better to take a sharp closure of an economy and stamp out the virus then reopen, or better to limp on over a longer period with lester kania measures on the economy . What would economists say . Lena clearly a short and sharp response would be better. We have to understand how we got so quickly into a degree of global Capital Markets and valuation destruction over the past month that exceeds the size of the u. S. Economy. ,he vortex is out of markets the Risk Management for portfolio liquidation, and i would expect corporate downgrades. On a wholesale scale, every affected industry which in a sense in a rational capacity for investors to model a forecast of the decline of this corporate value, and earnings and dividends which any fair value against the current market valuations and longterm dates for investment decisions. We need some certainty and some clarity. What we are getting is the beginning of an extraordinary longterm shift in terms of the way Capital Markets will function, Central Banks are becoming bigger than Capital Markets. The fiscal response will expand budget deficits on both sides of gdpatlantic of about 4 of to up to 20 of gdp over the course of the next year, which is the highest since the wars. About t even talking we are talking about policy life support for the real economy. We are nowhere near the end of this yet. Anna thank you very much, lena komileva, managing partner chief economist, g plus economics, she stays with the program. Up next we bring you stocks to watch. Estimates. Big focus on asian sales. Bloomberg. Anna welcome back to Bloomberg Markets european open. 23 minutes into the trading day and european markets starting strongly across the continent, we are up by 2. 9 . A second day of gains, can we sustain that . If we get two days back to back of gains it will be the First Time Since the middle of february for global stocks. Lets get the stock story. Annmarie a lot of green are on the screen. In leading that is financials. These fiscal policy relief coming from both sides of the atlantic. Up 10. 5 , and nike up in afterhours trading, beating the highest analyst estimates. Travel and leisure having a relief day. One of the hardest hit sectors. Still down 73 year to date. Anna thank you very much Annmarie Hordern. Lena komileva, managing partner chief economist, g plus economics is still with us. Looking at a headline that says European Bank lobby is getting approach ona joint dividends. Returning cash to shareholders will look different through the crisis on the other side. Lena i think so, and this is significant of the investor psychology change we are seeing at the moment. We talked about the policy response that is unfolding in the u. S. , and it will continue to unfold in europe. It is quite clear at this point the governments and Central Banks are trying to get ahead of the risk curve. We are talking about life support and not cyclical recovery. Evenackdrop for that multiple expansion of budget deficits, this is the next big issue for europe. The debt fallout we will see palingis crisis will comparison with the level of risk in the real economy. Centralbank Balance Sheets, the ecb Balance Sheet and fed Balance Sheet expansion will not improve the highly levered private capital and private equity Balance Sheets that were behind the recent years of economic expansion. The backstops will not compensate for the loss of income, banks will suffer. That is a realization banks and investors will have to learn based on economic fundamentals rather than expectations of centralbank money printing. The approach of discovering which Balance Sheets will make a through, and that requires conservative different kind to of management than we are seeing. Anna thank you for joining us, lena komileva, managing partner chief economist, g plus economics. We will talk to the ceo that is next, this is bloomberg. Anna welcome back to the european. To the european open. 600, in fact, making modestly higher gains as we go through the session. U. S. Futures not quite as strong, a point higher, between 1. 5 and 2. 5 broadly. The dow had its best day yesterday since 1933, context of the heavy selling we have seen of late. If we see another day of gains, it will be the first back to back haynes we have seen for Global Equity markets since the back to back gains we have seen for Global Equity markets. Lets have a quick look at where we are for the various sectors across the European Equity space. All of them in positive territory. Chemicals is the worst performer appeared that is up i one point 5 . Financial services doing very well im a 7. 1 . By one. 5 . Financial services doing very well at 7. 1 . On the other side of this virus or through this virus period we will see how that impact on financial stocks and their performance. That does include the Banking Sector around the middle of that table. Lets get a first word news update. Here are your top stories the u. S. Has reached a deal on 2 trillion of stimulus after the white house struck an agreement with Senate Democrats after several days of tense negotiations. Details were not released, but negotiators have been working on a package that includes assistance to companies and checks to most americans. The senate could vote on the plan as soon today. The u. K. Government is planning to close parliament from tonight, the latest attempt to slow the spread of coronavirus. We have been told lawmakers will vote on the move today and will likely reconvene in april. The u. K. Remains on lockdown. People are restricted from leaving their homes and public gatherings are banned. Italy has reported its second deadliest day of the coronavirus outbreak after two days of declines. Confirmed cases in the country but one bit of0, positive news active cases rose the least in nearly a week. It is a possible indicator that severe restrictions are slowing the spread of the virus. That is your bloomberg first whered news that is your bloomberg first word news update. How is the pandemic hitting food chains . For londoners, around three quarters of its 550 branches in the capital even before the lockdown, sales fell in the u. K. By 21 . And now it has closed all of its stores, and closed it eat brand. Christie, now is anna the ceo. Panel christie, the ceo. Great to speak you today. You have closed a lot of your stores. What are the managers what are the measures you are taking to ride this out to the other side . What does your business now look like . We took the decision late last week to close all of our inres in the u. K. , and essence probably a couple weeks beforehand we had already introduced extra measures, hand i think sanitizing, and from saturday evening onwards, we closed all of the stores. In essence, it was mainly down to trying to do our part in protecting our staff and our customers. And i think you spoke about italy earlier and the complete lockdown. From our perspective, it was taking a call more for the safety of the people. Anna what do you make of what the government has offered to your industry and many others that are going to be so affected by this . They have offered to pay wages. Will that help maintain staff . Absolutely. It is welcome news coming from the british government. Even before the government came package,ith the relief we said we would do our utmost to retain all of our staff. We have not lost anyone at all in the u. K. Everyone is continuing to stay on the payroll. As long as the government continues to do that, that would be a great relief. And i think the government has come forward with some pretty strong initiatives to support business, whether it be the release of Business Rates on the tax front and the more recent news in regards to landlords. In all honesty, within the business community, payment is a little slow, but it is better late than never. Anna we have seen some innovative things in the food industry, very quickly on the fly reinventing Business Models to go direct to customers, for example, rather than in a restaurant sending restaurant setting. What on that front are you and others in the sector doing . Pano as soon as we closed the doors, we had 2 Million Pounds worth of food within our supply chain, so the focus once closing was how to reinsure we do not waste the food, and teams have been working night and day delivering food to homeless , 750,000and to the nhs products in the last couple of days. We are continuing to do that, and i think there are some good examples with what john vincent is doing, trying to set up on was like a Convenience Store instead of the pricing model. And we are continuing to have conversations. We are down the street to see how we can help support, as we have a supply chain, and i think we are all very keen to keep that over even with the shops closed. Anna nobody could have told me in january that we were not talking about brexit at this point. Have seen the brexit day, and go, but we are supposed to have been seeing lots of negotiations around future trade arrangements, perhaps access to staff across borders. We are not having those conversations because we are talking about coronavirus. But what are the concerns as we get to the end of the year about getting the staff that you need in your stores . Within london in particular, it has been a melting pot of cultures. But the way i have looked at it, it will bring a different dynamic to how we find staff, but it is not an employer that we are not a minimum pay her employer as well, so we have a strong package for teams, a great career progression as well. It will bring a different dynamics to how we look to bring staff in, but i think from my challenge tot is a see how we continue to do that. Set of ourer focus today, i think brexit is something very much in the minds at the moment, and i think the focus for us all at the moment is how we can ensure the safety of our teams, and at the same time you spoke earlier about how businesses are looking to pivot. Those are the discussions we are having. Anna thanks for joining us, the christou, joining us on effects of coronavirus. Up next, total lockdown. In day that india imposes a lockdown after three weeks of the worlds biggest isolation effort yet. More on what we can inspect to see there. That is coming up next. This is bloomberg. Anna welcome back to the european open. 8 14 in london. You might be pleased to see another gains set of gains for the equity market. The stoxx 600. U. S. Futures also higher. Lets get to Annmarie Hordern. Annmarie as the oil market has been dealt a twin shock on the supply side and the demand side, i am happy to be joined by the man who leads the worlds are just independent oil trader. Russell, think you for joining us and good morning. I want to start with the last time we spoke. Brent was trading at 58 per you see it here at 27 and change, about half its value. Many people in the market including you thought we would get this opec deal to stabilize prices. What do you think the market misread here . Change, in terms of the the change is pretty tumultuous. We have had a market that was expecting supply cuts, and instead we have supply increases and a dramatic change in demand. Thatarket is reacting to abrupt change, and the prices come off demand today we think is down significantly, 15 million to 20 Million Barrels at its peak over the next few weeks. Which is going to contribute to an approximate 5 million barrel a day decline for the year, when we annualize that out. So it is huge in terms of anything we have had to deal with before. Annmarie 15 million to 20 million sounds like a lot more, even from some people who thought it would be 10 Million Barrels loss on the demand side. It seems like the supply story is being sidestepped now. With that demand weakness, where do you see prices going from here . The numbers have adjusted slightly because the news keeps flowing and india is a massive economy. They contributed this week to a lockdown, which means substantial loss of demand in india as well. Where do we think things go from here . There is a lot of oil in the market, and there is a lot of stocks we are going to have to build because it will not get consumed. Right now, product inventories are building in the u. S. And in europe and in india, and refineries are going to have to refiners so we think have cut 7 Million Barrels a day so far, but they are going to have to go further to bring products back into balance. There is a bit more storage in the world for crude than for products. So it is a little bit easier to deal with in the crude market. At the crude market storage is going to fill up pretty quickly as well, which again we think will ultimately lead to more pressure on price and structure. Annmarie do you have a number where you would think you would see brent or wti . Russell i think we do have to drift lower from here. The problem, they demand halt that we have seen is really only hitting the markets now, so people are beginning to deal with it, and it is unusual circumstances because a lot of Companies Working from home, it is difficult to coordinate such a dramatic change. So i think decisions are naturally happening a little bit slower than they would happen if everybody was selling the office. I think decisions are coming this week and next week, and we we will see what people are worrying about in the next couple of months with both demand and where the oil is going to go. Russell you mentioned annmarie you mention storage. It feels like people want to hoard crude at these prices. When do you think we will seek capacity on storage . , andll if you do the math if we have lost 20 Million Barrels of demand, that is 600 Million Barrels of oil that has to go into storage. There isnt really that much storage available. I think our estimates are 300, 400 million of capacity in the world that will fill up very quickly, very quickly on products, and soon after that, crude. Then the market hits a wall. Then producers have to make decisions about whether they want to carry on pushing oil into the marketplace when there is not really the demand to take it. What we do not know is when this situation is going to improve from a demand perspective. Is it a month, two months, three months . I think obviously is take i think obviously everybody is a pessimistic or inserted view of down that demand will be for a significant period of time. Annmarie what about floating storage . Russell people have taken to ships for storage for different reasons, and i think that will continue. Partly because if you are loading oil in april, it is really not that easy to place it right now because everybody is dealing with their own supply chain problem and reducing refinery runs. Annmarie i wanted to ask you how it is weathering this price crash. How haspast month the past month been . Russell we had a good and strong 2019, so we came into 2020 with good leverage and a strong Balance Sheet. The first thing was to get from home anding organized, and we have done that. The next thing is to deal with all the little problems that exist around the world port quarantines, ships needing to wait to go into customers because of 14day quarantines, things like that. And then the next phase really is adjusting the business for the situation that we are in. But we are in very good shape, littlei said, very leverage, which in the longer term gives us some hope that we can look for some of the opportunities out there once we have got through the next two or three months. Annmarie russell hardy, thank you for joining us from london. The biggest independent oil trader is seeing demand down 15 million, 20 Million Barrels a day. Clearly the market is focusing on the demand picture. Anna thanks very much, Annmarie Hordern. Will suffer more demand loss with india and shut down. So lets head there next to get an update. Modi has placed his 1. 3 billion people in a threeweek nationwide lockdown. Undertaken the most farreaching measures of any government to stop the spread of covid19, as it struggles to maintain the economic to contain the economic and Health Fallout from the outbreak. Withhave 500 people infection, and it has killed 10. How is the lockdown working on the ground . Paint a picture . Minister modi, almost after he started speaking last night stopped speaking last were in qs around stores. People are very concerned. There are certainly shortages already across the country. Governmentis the doing to shield the economy from the impact of this lockdown . Ruth the finance minister sheed today that premised more measures to help much morey, but Economic Relief was expected from her announcement and the Prime Ministers speech. Indias growth forecast for 2020 was slashed to 3 . We have not seen a number that low even during the worst of the Global Financial crisis. But businesses and investors have good reason to be concerned about this. In particular because the government says essential services are going to be allowed to operate, but on the ground it is a different reality. Anna ruth pollard, thanks very much, ill south asia editor joining us from new daily from our south asia editor joining us from new delhi. Coming up, we speak with olaf economy considers a stimulus package. Matt miller will be conducting that interview at three p. M. U. K. Time, 4 30 if you are in germany. This is bloomberg. Anna welcome back to the european open. Dayinutes into the trading in europe. Futures point higher by 1. 5 and 2. 9 . The 16 trillion dollar u. S. Mortgage market is experiencing its worst turmoil in more than a decade. The upheaval is setting off alarms, alarm bells throughout the investment world. With details, dani burger. I thought this was something the fed had in its sights. Dani the fed definitely has stepped in and tried to provide liquidity, but there are restraints in just the kinds of mortgage bonds and how much they can actually buy. We are still seeing this dysfunction in the market, where the price of mortgage bonds is cratering. It is not necessarily that these bonds are risky, it is because the coronavirus is less likely, or there is fear that people will not be able to pay these, so the bonds are dropping. We are seeing margin calls because it leverages too high and the value is too low, and increasingly we are hearing that more of these rates cannot meet the margin calls, and it is prompting a fire sale in the market. A lot of turmoil happening in the mortgage bond market. Betweene difference liquidity and solvency is really important. Dani burger, thank you. Lets talk about what is going on in other risk assets right now. Our strategist joins us now. We could see europe drumroll, the first backtoback gains in global stocks since the middle of february. That would be in and of itself something of an achievement. Will that be justified but what we are hearing by what were hearing and fiscal stimulus in particular . Doubled hope two days of equity gate equity gains would be welcome, but this is based on hope that we are going to see this fiscal stimulus deployed in a relatively effective and timely manner, and that remains to be seen, so, yes, we have the e. U. Finance ministers meeting today, and as well we had the potential passage today, but crucially, it is all about deploying that stimulus to cash constrained businesses, and the timeline for that remains to be seen at this stage. Anna it is about having the infrastructure on the ground can have these in place quickly. What about what we are seeing in Central Banks with access to dollars . The dollar gained rapidly. We saw things put in place to allow Central Banks to access them and get them spread around. It is a little calmer on that front. Is that reason for cheers . Laura i think at this stage it does show exceptional measures that have come through from the fed are in part helping to shore up the strain in liquidity that we saw. There are still pockets of when we look against the japanese yen, there is pressure there, and more broadly, looking at the credit markets, there is still stress. So this really at this stage i think is getting too enthusiastic about the equity market rally. It is too soon to tell at this stage. Anna laura cooper joining us from our Bloomberg Markets life team. At whatust take a look is going on in the markets. 9 50 six inon, paris or berlin. Almost an hour into the trading day. The equity market is up by than 4. 6 in the stock it in the equities market now. U. S. Futures a point higher, between 1. 9 and 3. 2 , dow futures up by more than 3 now. The desk the best day on the doubt since 1933 in todays session. Stay tuned for all of scholz. 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 ] francine striking the deal, the u. S. Agrees on a 2 trillion symbols package. Brussels nears a bailout. Finance ministers inched closer to unleashing aid for the countries hardest hit hardest hit by the pandemic. Deaths in italy spike again. Cases worst to come as top 400,000 . President trump wants to reopen the economy by easter. But there are warnings of a longer shutdown. Good morning, good afternoon, good evening, everyone. This is bloomberg surveillance, live from london. It has been an incredible 24 hours to redo it could have a bigger deal in terms of stimulus or support for each other for the nations of europe. But then you wonder what this lockdown means for how long, and interesting to see the two perspectives between what the residence as an what the governors say in the u. S. , and a lockdown in india with 1. 3 bi