Two hours, make it 3. 5 hours from now, without question the most anticipated jobs number in the history of the nation. This is the weekly jobless claims. It is expected to surge out. I put a chart out on twitter and linked and linkedin. It is just ordinary what we could see. David folkertslandau coming up. In a moment. Let me go to the tape right now, equities, bonds, currencies, commodities. Not all that much going on. A bit of a pullback, the dow two days in a row elevated off where we were in the grimness of friday, of monday as well. Also oil with a little bit of a lift off about it, francine. European stocks retreating with equities, government bonds advancing. I am looking overall at european sovereign debt. We are seeing a little bit of a move after the ecb scraps limits , a landmarkhases decision that gives an almost unlimited firepower to fight the economic fallout from the pandemic. You can see euro strengthening, tom. Tom it is an extraordinary time. Francine and i are trying to bring you voices from the continent, from america as well, to frame out for you this crisis. There is none more qualified than david folkertslandau of Deutsche Bank. He is in charge of their research operation, but far research withd Michael Dooley and peter garber. We are thrilled that uncle folkertslandau that davids folkertslandau can join us. Angela merkel is under the weather it how is the nation doing relative to the very difficult circumstances we see in italy and in spain . good morning, tom and francine. To your question, tom, germany is probably best off among all the larger european countries. , larger very generous hospital bed capacity with with ventilators and i see yous and i se cus, unlike italy for instance. Number ofas infected is not rising as fast. It is in a good position. The economic response has been overwhelming. A veryy, for conservative country, and bundesbank passed a very generous package with all features. A special in addition to that, there are loan guarantees extended by the development bank, which gets us to the Banking System, and the banks are instrumental at this time, being part of the solution rather than part of the problem. To get the credit to small and medium enterprises, you need the Technology Behind it to reach 300,000 to 400,000 small companies, and that is working really well. Thatere is an issue, it is the lockdown has been taken so seriously, and people are getting antsy, getting cabin fever, and my sense is that this lockdown here will not be able to be maintained. I think there will be breaches. Young people will go back on the street. So whatever you have to do, you had better get done in terms of preparing for the next wave. Francine david, yesterday there was mario draghi writing, the first time we have heard from him since he stepped down as ecb president , saying banks need to do much more, the ecb can do much more and they need to do it now. Given what we heard yesterday, has the ecb done enough . i strongly disagree with mario draghi on that, and on his tone. About catastrophes on biblical proportion just doesnt help. Thing to pray in this crisis, it is the central bank response. Fed. The ecb and the you have known me as being a frequent critic of the ecb, but i think they have done an extra ordinary job, quite apart from the initial communications issue, which doesnt really matter. In terms of the tros, in terms of getting rid of the capital , gettingtentially a qe rid of issue limits, it shows the level of flexibility and engagement. I have no concern that all the issues that the ecb can address and there are many they will address properly and well. I think there is nothing but for the Banking Sector and the ecb. Dollar swap lines dealbeen well mentioned to with dollar funding issues. In with this type , or the liquidity orderly function of markets has not been the issue. As the fiscal side is concerned, coming up against national constraints even if you take off the top limits of what you expect and how much debt you can take onto your books, you still have to get it to the right places. There is politics involved. Why do we need 25 million to support the kennedy center, right . Reflecte things political preferences of the offices. Fiscal sideon the are just overwhelming. Eyepopping. Force this time around the Public Policy response. There might be issues you want to quibble with, but by and large their hearts are in the right place, and it is very gratifying to see that. Davide will continue with folkertslandau of Deutsche Bank. Much more to come across all of surveillance, into our Early Morning and mid morning in new york city as well. Course about the pandemic in the United States. Also we will look at global banking, knowing better to talk to then Sergio Armani sergio ermotti. This important thursday for Economic Data. This is bloomberg. Viviana this is bloomberg surveillance. Lets get to bloomberg first word news. We begin with the largest economic rescue in u. S. History, the senate approving a 2 trillion package aimed at stopping the financial damage caused by the coronavirus outbreak. Devote 960. More than 150 million american households will receive the vote 960. More than 100 50 million american households will receive checks. Jerome powell will sit down this morning for a rare live tv interview. Mr. Powell will be interviewed on nbcs today show at 7 05 a. M. New york time. The fed is in the process of deploying unprecedented tools to prevent the Health Crisis from becoming a financial one. To let dierds who first . Spanish doctors are being forced to choose because of coronavirus. A doctor and one of the largest hospitals saying intensive care wards are overflowing. New rules say that older people are missing out to younger people who have a better chance of survival. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, viviana hurtado. This is bloomberg. Francine . Tom . Much. Ne thank you so coming up next, manus cranny will be talking with sergio ermotti. His take on what banks can do and what his clients are doing. Coming up later this hour, a conversation also with scott theo, like Rock International chief income strategist. That is coming up in about 20 minutes from now, 5 30 a. M. In new york, and this is bloomberg. Francine well, good morning, good afternoon, good evening, depending on where you are in the world. This is bloomberg surveillance , tom keene and francine lock while from new york and london Francine Lacqua from london and new york. Manus cranny come over to you. Manus thank you very much. Lets get straight to sergio ermotti. I suppose in the first instance we see the scale on what the Central Banks have done from the fed, the boj, the ecb. My question to you is, is this thegh to draw a halt to liquidity issue, the dollar liquidity issues around the world at the moment, from what youre seeing at your end . Manus, i think the actions that were taken are unprecedented, and they have been quite effective in counting down the funding markets, particularly on the dollar side. And i do think that maybe there are some technicalities that need to be addressed, but i think Central Banks and the governments have been acting very efficiently at this stage. Of course, you know, there is little anybody can do about fear , and fear is probably one of the most dangerous sentiments that you can have in this environment. It is not fear about markets, it is fear about health and their ises, and therefore there only so much that the Central Banks and the governments can do to alleviate this issue. Manus that fear has given rise to a huge implosion in risk assets and haven assets. As you look at the markets recovering in the past couple of days i emphasize the past couple days because we have seen these reprieves before previous crises are we moving from fear and irrationality to perhaps slightly more rational moves . What is your interpretation of this recovery . It is difficult to call rational moves, 10 ups and downs on the s p every day, so i would say Rs Investments our assessments in the markets are stabilizing and after a major correction we are almost down across allde, and the Asset Classes moving so rapidly that it is very normal for the market to try to find a new level. But it is way too early to predict which direction we are going to go next. Mario draghi wrote an oped this morning, which i know that you have had a chance to glance at. Banks need to lend funds as zero this is a way of becoming a Public Policy vehicle. The regulation or collateral ruse could stand in a way of creating all the space that is needed and that the guarantee is should not be based on credit risk of a company. Sergio, as the ceo of a major bank doing Major Lending in the world, would you sign onto this prescription this morning . Will this gather momentum . Principle, yes, but the devil is in the details. I do think that banks at this time are not part of the problems. Are definitely now part of the solution. We want to be part of the solution. We are actively working with all governments and agencies that are involved worldwide as a global banks, particularly in switzerland we are supporting what the swiss government has implemented. For us it is very clear that out of this program we will make no profit. We do not want to make a single cent of profit, and therefore we function as a mechanism for policymaker to transmit the liquidity that is necessary at this stage to act. What we have to Pay Attention is to exactly making sure that while banks are strong, coming that weg to this cycle, do not infect the Banking System with problematic problems that will need to be resolved in the future. We take very seriously our role, and we are well prepared for that. Is that about burden sharing between banks manus is that about burden sharing between banks and central governments . Sergio we are making our part. We are very flexible. All of our employees, our people are working extremely hard to serve clients, to stay close to clients, and putting a lot of pressure, existing pressure on all of us, many part of society. We are making our part, and as i said before, we want to be part of the solution, and definitely i am glad that for once banks at this stage are at least not part of the problem. About the i ask you clients . We are seeing global borders closed, shut down around the world. Can you describe the kind of shift on words that you are seeing from clients . Deleveraging, daily risking derisking . Give me a descriptive about their movements, what they are doing, and their Cash Holdings. Holdings you remember we spoke in the past that Cash Holdings were very high, and for good reason because people were very prudent and unconvinced about the quality of the markets developments, and in that sense, i think a large pool of cash available with a major correction have helped investors in anage the situation effective way. We do see people taking advantage of new opportunities for example, this is time in our point of view to move into credits. If you look historically from a riskrewards point of view, there is not many times in history where credit has been priced so attractively, and therefore we see people taking advantage of that. But also, i have to say that many clients have been very disciplined in speaking to their longterm asset allocation. Of course, once the dust settles, they will reevaluate how to do that, and in that sense of course we are preparing to exploit opportunities there. With stocks or situations or sectors that have been particularly impacted. So clients are taking opportunities in step and buy into some opportunities. Sergio, we are also trying to understand where we are with the bank and the bank system. Jump your misty a is saying he is taking banks scrapping dividends around europe. Is that the narrative, sergio, that makes sense on your assessment, when you look at his letter that he has sent. Sergio i have not seen the letter, so it is difficult for me to comment. It is legitimate and understandable to have such a debate at this point in time, but of course on the other end, look at the idiosyncratic situation of each single country and each single bank in order to make such an investment. Of course, you know, at this time, it is very difficult to manage this process because of the stigma that you may or may not create around any actions you take around this topic. We aread to see that extremely wellpositioned and we are entering the crisis with a very Strong Capital base. We are able to both fulfill our return and commitment on policy, but also to support the economy. But i understand it is a very dedicated case, and i think every bank has to look for what is best. Can i ask you specifically about china . Pandemic. Ter for this i want to get a sense we have data saying china is getting back to 80 , 85 of its production capacity. Other people say 40 . Are there opportunities coming out of this crisis in china . Sergio china was the first one to start and being extremely tough and disciplined in the way they took measures to contain the virus. Seehat sense, it is good to that situation stabilizing and normalizing, and there is renewed activity. Optimistic some more feedback from clients about the situation youre in terms of opportunities, it is way too early because at the end of the day, this is the Global Situation right now. It is way too early to see manus we have gone to serorates zero rates from the federal reserve, but in your mind is there any risk or case potentially for negative rates in the United States of america . We have touched on it a couple of times. What is the risk of negative rates in the u. S. . All, i think, i are never going to a negative rates environment because it is a very difficult place to get out from. The pumpingi think of liquidity and the fiscal policy we are taking so far are the exact measures to be taken. Taking down rates is not going to help. People are being less fearful about their life and their help. I dont think in that sense that Monetary Policy is an efficient tool. When the situation recovers, when we say better signs, of course when we see better signs come of course lower rates are going to stimulate economics. I dont think negative rates are for the u. S. , or for any country. In that sense i hope i am not going to see that environment. Manus the unfortunate reality is going to come home today, isnt it. We will get the jobless numbers. We are expecting anywhere from the numbers are just unbelievable. From citigroup at 4 million, the real reality will come to bear as the start of that data will come to flow today. 30 we begin to comprehend Unemployment Rate in the United States of america . What could be the consequences of that . The risk is that these weekly jobless numbers perpetuate on a longerterm basis. Is that my biggest single risk . It is difficult to say if 30 is the right number, but we have to expect a shortterm spike on unemployment. But we are convinced that if you look at beyond q2, the situation will start to slowly normalize not normalize fully, but definitely normalize and those Unemployment Rates will come down over time. Yount believe that, if look at the most likely scenarios, that we will have a spike in the virus, and then as thenituation normalizes, people take time. For the timeyou schedule today, sergio ermotti, the ceo of ubs. I did not get to the etf question. The capacity of clients to consider what to do, it is hard to call upon them in these markets, and his subscription, no desire to see the markets go to negative rates in the United States of america. Tom good morning, and thank you so much. You see that in the data, it is nuanced and speaks to what manus was talking about within the bond and currency markets, what are the signals of bottom . What i would focus on, we have the traditional data where the dow closed and the vix elevated above 60. The two year yield in the United States lowered today, signaling even with the other dynamics within the credit marker market, the two year yield signaling the fed to settle down to lower rates forever. The Bloomberg Financial conditions index, a soup of good credit measurements, still very much extended well over six standard deviations. Is that lehman catastrophe bad . No, but it is a terrible statistic. Francine it certainly is. European stocks are down, u. S. Equity futures down. I am focused on trying to figure out why one day the market is looking at stimulus and the next day looking past the stimulus packages to the outbreak. The yen is advancing. European bonds are rising after the ecb announced it will scrap limits on bond purchases for its emergency program. Thatis a landmark decision gives it almost unlimited firepower. As the gaugeening, of the dollar heading for a third day following. Thats get back to david folkertslandau. We talked about europe and central bank. What can the u. S. Do more . Do you see negative rates in the u. S. . David start with that one first, no, i do not. Within the fed Research Departments in the various conversations we have had with them, and the results in europe, i would be astonished if that was even considered. The detrimental impact on the money market and banks as a mirror of credit is still negative and there are many other things you can do before you get there. Francine what are the many other things you can do before you get there . Principally, on the central banking side and even on the fiscal side, much that should be done has been done. The medicalng is on side, one has to get more certainty, better data on supplies, a better supply of ventilators and sharing of supplies across the u. S. Donel and monetary have what you would expect them to do but that has not been matched by a corresponding quality of activities on the health care side. Once we get good information, things will pick up. We talked about rates, i think you are right. The outlook for the economies over the next two years is pessimistic despite this picking up, where consumption fell short. Additional 3nd an trillion, 4 trillion, 5 trillion worth of debt and leverage has gone way up. While after the big decline in q1,ou see an increase in that is fiscal expenditure and that will not be maintained in 2021. As far as thetic outlook for 2021. The stimulus will help. That is what is coming through with investors. Tom i have an important question that goes back to a Deutsche Bank conference in washington years ago. John taylor of stanford spoke. In emerging markets, when things happen, they happen suddenly. Is that one of the Little Things that is out there in this crisis that we can see in e. M. Unraveling as we did in the 1990s . David yes, you could, and it is different in the sense that we fundssignificant of come up much more than the crisis in 2008. That is attributed to the uncertainty of what the virus will do in countries like indonesia and indonesia india. We have to see over the next month or two how well e. M. Countries deal with the virus. It is a precautionary move to see this capital coming out now. There is the potential for, not just because of fragilitys, domestic Economic Performance is a real risk of more significant decline coming from the em from theuch more than other countries. Folkertslandau with us. Right now with a busy schedule, scott thiel of pimco running their fixed income shop worldwide, thanks so much for having time with us. The Economic Data can be predicted but it is amazing how you can see markets react on news. We will see the most historic number in American Labor market history, a huge jump in jobless claims widely presumed. How will the fixed income react to that statistic . The downdraft in economic activity, because the world has been at a standstill, will be remarkable. Investors have begun to process that and the reaction to the fiscal stimulus that the u. S. Is delivering, which in many respects gets to the unprecedented labor market support in terms of benefits, in terms of coverage, including the gig economy, the numbers we see now are expected to be very negative. We are expecting potentially year on year numbers to be 20 to 25 across the u. S. As we go into the next quarter. For investors, the signpost is not about the information that is coming, because clearly the shot to the economy is gigantic. It is about the duration of the slow down, the shutdown. That is the economic signpost that investors are looking for, the duration of the slowdown. The fiscal stimulus is obviously the shutdown if were to be multiple quarters, clearly more will be needed. You try andw do figure out how long the shutdown is . I am not sure how you model it. Do you go to the chinese model and assume you can Start Testing people and seeing if they can go back to work if they have had it and are immune . Scott it is a difficult thing because it is unprecedented and shocking. One thing that doesnt work is models that dealt with normal fiscal cyclical processes. This is a giant shock to the global economy. One thing we would say is the more severe the shutdown, the more likely the shorter it is, and thus the recovery is larger. The idea that you shut it down entirely and then recover, the china model being a very applicable example, would obviously be the most beneficial from an economic perspective. Do you seehere treasuries at the end of the year . Scott i think it is difficult. It is unlikely they are materially higher than where we are today, in the sense that i do believe that part of the fiscal part of the whole policy response here is going to be that rates have to stay in a relatively controlled range. If treasury rates were to increase as a result of the fiscal spending, that would impact the negative feedback loop and financial conditions that offset some of the work we are doing. I cannot see them interiorly higher because in some respects implicit or explicit, the fed will be exercising control here. That is clearly part of what is happening. That will depend on economics and the virus but materially higher, i dont see it. Tom you need a massive victory lap, no one saw this pandemic coming but you really called for a more cautious 2020 and 2021. What has changed is a certain body of people are actually worried about inflation due to all this fiscal stimulus, and that leads to the pimco concept of mr. Gross financial repression. How repressed will we be if and when we get higher inflation . Scott i think we have to keep in mind, the packages are designed to address the shortfall in the economy. Lets put the numbers into perspective. We would estimate given a baseline scenario, a medium forecast for economic downturn and reemergence toward the middle or the end of the year, the income shortfall will be roughly in the u. S. Economy, 1. 1 trillion. So the stimulus is obviously going to address it has to be more than the shortfall to address the longerterm implications. Inflationcerns about is something that i think for farther into the future. We are trying to get the economy reemerging after being effectively shut down. I understand you look at fiscal spending and say the costs have to go up, the curve has to steepen, rates have to go higher. Part of that will be managed by the central bank by keeping rates at a level consistent with the financial conditions they want to see present. Somethingi think is we should think about but not in the foreseeable future. We are trying to reignite the economy but not trying to over inflate it. Thank. Ott thiel, you, heads thank of fixed income at pimco. We thankclaims excuse me, blackrock. We drive forward the conversation with that important jobless claims number with Ellen Zentner of morgan stanley. She and her team have been quite cautious of the linkage of gdp growth into the labor economy. Please stay with us. This is blue. This is bloomberg. The longer the virus stays, the more expensive it will be. The longer we stay outcome, the harder it is. We have all the firepower we need and will use it. That will create 4 trillion dollars if needed to support American Business and workers. Provide 2000 a month for the next four months for workers who lose their income. Instruments will be made available if needed. Everyone gets a back seat and all hands are on deck in dealing with covid19. Our main concern now is how but theencies survival of our people. Tom some of the voices we have seen across the bloomberg world the last couple of days. London, i amua in tom keene in new york, and with us is david folkertslandau, head of research and economist with Deutsche Bank. I have got my support for the italian economy, which is the advantage of being home. This is fresh brewed out of italy. It is way better. Francine way better than your floor manager and mine. Coffee and i get a thermos. Tom david folkertslandau with us. The 100,n anecdote of 400, 1000 people under your umbrella at Deutsche Bank. German, theity, the new york wall street Deutsche Bank doing working out of your home . Peopleall of our 400 with the exception of 10 or so are working from home. It works very well. The connectivity among the people is excellent. The information flow, the global connectedness, and the connectedness to our clients, we have heard nothing but and the way it is working out. We have heard of no cases from any of our people so lets hope it stays that way. Productivityd our because we have more time to said, very close to clients and good feedback. Had Deutsche Bank has worldclass oil coverage for years. Ago. On minsky years give us how the Russiasaudi Arabia tension, how that full collapse in global gdps. David it makes it more difficult. They cannot have expected there would be such a tremendous drop in Global Demand for their physical product and it shows up in the valuation of aramco. Timing and abad bad coincidence for them. I do not believe that will make them change their strategic negotiations for the russians to arrive at a reasonable outcome, that will not happen anytime soon. You know what i want to ask you about was the price of oil, in part because of the demand and part because of the coronavirus. This is about the fight between the saudis and russians and market share and market supply. I dont know at the margins how a low oil price adds to the shock in the World Economy or could benefit it. David it affects countries differentially. My sense is that by and large over the mediumterm for the industrial countries, the developed world, it is a good thing, but there are serious issues with an emergency emerging markets, compounding problems we talked about earlier. Differentiated outlook depending on whether you are a big importer or exporter. David, thank you so much, as always for your time, david folkertslandau of Deutsche Bank. This is what we are looking at in your markets. A lot of the Market Participants focusing on the epidemic, the pandemic, and the number of infected worldwide, despite extra stimulus put in by world Central Banks. If you are a bloomberg user, you can go in to tv and follow tom and i and our other anchors and newsmakers, and if you have a question for a guest, just type directly under the video screen, ask a question to the guest and we will ask it on your behalf. This is bloomberg. This is bloomberg surveillance. Morgans equity derivative traders are making a hall in those violent price swings. They generated 1. 5 billion in revenue, almost what they reported from all equity market businesses in last years first q. The coronavirus is shifting fortunes on wall street. Ford becoming the largest socalled fallen angel, s p cutting forward to junk at a time when the coronavirus is rocking the auto industry. It may cut further. Ford shutting its factories around the world. The s p says that is putting the automaker under immense pressure. That is your Bloomberg Business flash. Tom thank you so much, and that ford item is a huge deal, just an american symbol to see Ford Motor Company cut to a junk rating. The data now is simple, it is a little soggy and euro does better than yen. What you need to know is the data is wrapped around 8 30 this morning and a jobless claims number that the survey has 1. 5 million to 1. 6 million. Maybe that is why we see a two year yield coming in a little bit. The lower yield is key for me. Francine i am interested in the jobless data. You wonder how many people will have been impacted by the coronavirus given that it is only two to three weeks that we felt it. It is something that maybe will accelerate in importance in the coming weeks and months. At then stocks declining stimulus package and looking at the human impact of the coronavirus outbreak, we had some difficult numbers out of europe yesterday. European sovereign debt rose after the ecb announced it will scrap limits. Tom we have a conversation with a gentleman from jp morgan on the allocation forward, david kelly joining us. This is bloomberg. Tom this morning, it is a single number, a statistic unimaginable. Worst reportsingle on job loss in the history of america. The pandemic, the global recession, and the response of our leaders, david kelly joins us. Washington, we have a problem. How fast can senate get the money to the bartenders and uber drivers . Gone. W york, ken lan queens as hit hardest. As you are in town the next sunni is you are town the next new york city . This is bloomberg surveillance. We will get to the economics, finance, and investment. What is so