President trump says social distancing will hold until at least april 30. Lives in claims italy and spain over the weekend. Warnings against loosening lockdowns. To Matt Bloomberg daybreak europe. Best week since 1938, 8 dead cat bounce or the start of something bigger . A great piece looking forward thats as while it is difficult to call, there are two potential mistakes. A premature exposure to risk assets or being overly cautious. At the moment, he would err on the side of being overly cautious. Is whether youte have seen the beginning of the next wave of lockdown come close down extension of the distancing in the u. S. , the talk of potentially 200,000 deaths. Advises institutions to dip their towing to the equity market. Time to buyg it is credit. Jpmorgans note saying the wildcard is the infection rate, but they are confident the stability is coming into these markets and you may want some of the risk assets like equities and bonds, so the calls are mounting. It did poorly depends on if you believe larry fink or sergio ermotti. Seeing red on the screen in asia, but u. S. Futures in positive territory along with european futures. A different picture from last months limits down. We got portfolio rebalancing happening. Will that mean money out of bonds and into treasuries . The 10 year yield is slipping, but the dollar, the dxy had its worst week for bloomberg dollar index since 2005. The dollar on firmer ground today. We get the easing measures from the pboc and see a weaker yuan off of that. Oil at a 17year low. We briefly saw wti drop below 20 a barrel. Extendednald trump has the National Warning to yourselvesdistance from one another, at least until april 30. He previously suggested early as april. He said he expects from the u. S. Outbreak to peaking two weeks. The decision to abandon his ambitious return to normal by april 12 comes after the disease expert Anthony Fauci said u. S. Deaths could top 200,000 in the worstcase scenario. I would say between 100000 and 200,000 cases, but i am dont want to be held to that i dont want to be held to that. We are going to have millions of cases and i dont think we need to make a projection when it is such a moving target that you could so easily be wrong and misleading people. Manus joining us from new york is Annmarie Hordern. Shes been tracking the story throughout. So, there is a huge amount of credence put in dr. Faucis appearance every day at the lectern. Ofterms of the importance his intervention, it is directly correlated to the change in policy . Completely. President trump is saying he is listening to his top medical advisors, dr. Anthony fauci, as well as dr. Deborah birx. Both say infections could rise in the millions. That was dr. Anthony fauci yesterday morning. I was watching the interview on cnn where he said the deaths could reach as much as 200,000. From the medical advisors to the Trump Administration is they need to mitigate that kind of scenario, flatten the curve. Means continuing social distancing, continuing a number of cities on lockdown so president trumps ambition of reopening america by easter is falling flat, which means now, Everyone Needs to remain in this new normal of social distancing by april 30. Seeing the infections rise in new york after dr. Anthony fauci in the interview was talking about more than half the cases coming from new york. Once new york is taken care of, they are seeing infections tick higher in other cities like new orleans, detroit, as well as in los angeles, so it is going to be, looks like, a longer battle that at least the Trump Administration was expecting. Last week, we were talking about how new york had become the epicenter of the virus in the u. S. What are we likely to see in terms of a continued lockdown across the country, in terms of disparity between different states . Annmarie i think you will see a lot more of what new york is doing. One of the big stories over the weekend was we have this absolute quarantine, locked down in new york city where no one can enter or exit. That is not happening. Local Officials Say it would be illegal, but there is a lot of you are an unless essential worker, you cant go to work. If you are going to work, you have to carry a document. You will probably see more like that and in new york, we have the javits center, that is being converted into a hospital. It opened up today. Noncovid patients at the hospital, they could focus on covid patients. A hospital not far from where i am is converting their lobby into a makeshift i see you, as well as incu, central park, we are seeing tents pop up. This is just in new york city. He will likely see this expand to the entire United States. , thankAnnmarie Hordern you so much. Joining us for the hour, senior multiasset strategist at state street. Great to have you on the show. Thanks for joining us. The decision to extend social distancing until at least april 30 in the u. S. , is the market going to read this positively as a precursor to perhaps a stabilization of cases and infections in the u. S. . Good morning. I actually am in the camp of markets need to see some sort of inflection and stabilization in infection rates, so however drastic in terms of restricting the spread of the virus should be ultimately seen as a positive for the market. Manus good morning. If you take that as the starting plan for this morning, futures dropped on some of this news flow, but i look at jpmorgan. They are saying their step of market stabilization has been met, the conditions for stabilization have been met, recession like pricing has been factored in and the reversal of investor positioning and extraordinary stimulus. If you take the extension of preventative measures and this take from mr. Norman, would you concur stabilization is something that you can see . Stabilization for and revival are largely being met . Marija yes, i would have to say in the mediumterm, we are fairly optimistic on the performance of risk assets. As you said, we had a lot of policies for fighting the virus. One of my colleagues described policies from Central Banks as unlimited and forever qe. It is everywhere, and we control in the fiscal mix. In terms of economic policy, a lot has been done and we expect more to be done. What we absolutely need to see is some clarity of where we can look from the medical point of view. Measures like prevention of spread are absolutely paramount from our point of view. , do you get the sense from investors that they think the deeper the recession in the u. S. And the deeper the drop in u. S. Equities, the more powerful the bounceback both in the economy and in u. S. Equities, and that is something they dont want to miss . Marija that definitely has been treated historically. True historically. Conversations about it. What is important that everyone track everyone is discussing with us is we yet a mediumterm positive case for stock buyers, but it is difficult to pick the bottom. We increasingly are seeing people being less negative. Weve yet to see this kind of buying into risk assets yet. I think people have stopped being that negative. Most of the negativity, the chance for stabilization is there, but we havent seen a reversal. That could potentially happen. Balance lot of target, manus that can be very lent in terms of virulent in the month. It is hard for you to get a vision of this come in announcing credit. The bounce in credit. Given you said the view of qe might literally forever. Weve had two days where credit around the u. S. Seemed to bounce. Sergio ermotti said thursday the blowout in credit spreads is an opportunity, a lifetime opportunity. What holds me back is the concept of recession risk, downgrade, and defaults, which potentially can blowout in the back part of the year. How do you look at credit . A splendid opportunity given the qe infinity scenario you outline . Add we have qe infinity and a lot of backstop from the government. Like thet smell government guaranteeing backstops of a lot of industries. In the u k, we have a massive package support from the government. In the u. S. , europe, germany weak the so however economic scenario is, we dont expect in normas amount of corporate bankruptcies given the monetary and fiscal support for the government. I actually agree with your host that credit is a very strong buying opportunity. I want to go back to the point about the two potential mistakes that could be made from is favorable. To the investors you speak to favor making the error of excessive caution over buying risk assets too early . Marija that is actually a very good point. At this point, two sided. Another leg down in the market, but equal stocks can rally very aggressively. Market a measure of fragility for the Systemic Risk index and it measures the probability of disproportionate calls. So youxceptionally high, can see markets moving disproportionately either high or down. That is something we are monitoring very closely. , our view on the mediumterm is positive. I would probably caution against very large positions either way, bullish or bearish. Instead, what we are doing with our clients is talking about relative value trades. Try to take the market direction out and position with growth stocks. That is our favorite way of taking about markets. Right now, the direction of markets is very difficult to make. Nejra makes sense, with the vix above 60. Marija veitmane from state street, staying with us for the hour. Get to the st. Louis Federal Reserve president james bullard, joining bloomberg tv to discuss the impact of coronavirus and the 2 trillion stimulus package. You dont want to miss that at 1 30 p. M. London time. China has rejoined the wave of global monetary easing, cutting the Interest Rate the biggest amount since 2015. The reversal repo rate is being set at 2. 2 , down from 2. 4 as the peoples bank of china injects around 7 billion into the banking system. Oil has slumped to a 17 year low with Global Demand eroding. A price war between saudi arabia and russia continues. The kingdoms as it hasnt had any contact with moscow about cuts. Russia said while 20 a barrel is unpleasant, it isnt a catastrophe. Lockdown in the u k could last for months according to the deputy chief medical officer. She said the death toll will probably get worse in the coming weeks and it will take time to see any impact the current measures are having in the data toe increasing attempts increase spending. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Manus coming up on the show, and over spite from the lockdown no respite from the lockdown. Debts and italy in italy and spain past 3000 over the weekend. More on the story next. Nejra this is bloomberg daybreak europe. Im nejra cehic in london. Manus im back with you. In dubai. Cranny downgrades on south africa, singapore going for easing, the pboc doing four times the normal amount of easing. How is that transferring to markets . Social distancing will extend in the United States, lockdowns in the u could run another six months. Asian stocks, down. We opened the u. S. , it down by 3 last night so we have clawed back some of that. Our guest host says take heart from these additional measures being moved along by the United States of america. Euro stocks futures, to divert and calls between bankamerica and goldman sachs. The bonds and dollaryen, yields and treasuries just moving ever so slightly. Last week, we moved 22 basis points. The previous four weeks, 44 basis points. A little dollar rolling Dollar Strength this morning yen strength this morning as we are seeing the dollar give back a little bit. Crude, down 4 . Some of the moves in markets might be to do with this. Quarter and strains and in the skittishness of a volatile market. Tweaks to money manager trillions may add 20 the stock markets. Here with the details is dani burger. Dani the quarter and means we will see some rebalancing and windowdressing. Pension funds and other Money Managers have specific targets of Asset Allocation being hit and because of this massive selloff, we now see these managers hold near record lows of risk assets. That means they will have to add back into equities in order to restore those mandates. Take norways sovereign wealth fund. Because of the selloff, the ceo managing 70 allocations to equity has fallen to 65 so they will start buying stocks. Just how much this adds across the board, the estimates do very depending on the ask. Worthn says 200 billion of equities being added and at the highend, Saxo Bank Says 1 trillion. Throughout history, we see a positive impact to equities your quarter and month and, end, but it is usually minimal. This time, liquidity is so scant in markets that the monthend rebalancing might add more than it typically does, so we will keep a lookout for that over these next two days. Deutsche bank says it could at 3 and also be a tailwind for the greenback as investors move into dollardenominated risk assets. Burger, thank you. Keep an eye on the aussie market because regulators are moving fast from the monetary side to the fiscal side to the macro prudential side. The afx, up over 7 , the most on record. One of the lines coming through, australia, deferring its scheduled implementation of reforms by up to one year. This could be part of the narrative along with stimulus from singapore and from the pboc. Lets turn to europe. Italy and spain and spain reporting more than 3000 deaths over the weekend alone. European officials have warned. Gainst loosening the lockdown meanwhile on the policy front, the ecb is pushing banks to hold off on paying dividends until at least october. Marija veitmane is with state street and is with us. Tie this together. We got the macro prudential regulator in australia possibly delaying the implementation, and then the ecb encouraging banks to hold off paying out dividends. This is the narrative that is building significantly. What do you make of this narrative . First of all, it is going to be altogether to try to collapse, to stop the in the Financial Markets spreading into the real economy and banks have a vital role to play. We want banks to be in a position to support the economy. Secondly, that links to banks themselves. Banksbeen cautious about for a long time and we see the Current Crisis as not something to go back into banks. Banks will continue to struggle with low Interest Rates. Toy are getting support continue to be there to help the economy, to help the companies, to help the credit flowing, but it is by no means to go back and banks. S buy nejra does the european versus the u. S. Policy response making more or less inclined to want exposure to european versus u. S. Equities . Ofija weve been big fans u. S. Stocks for a long time. The problem with europe was there was not enough policy support. Now, europeans are rising to the challenge and spending money. I dont know how many interviews weve had talking about germany opening the purse strings. It is finally happening, but the reason we like u. S. Stocks relative to europe is a lot stronger profitability, higher margins. That is not changing. We would continue to prefer u. S. Stocks to europe, but we are very impressed by the amount of money being spent around the world to support to fight the crisis. Means disappointed with your, but we prefer the u. S. Nejra Marija Veitmane from state street stays with us. We will talk about oil at a 17year low. This is bloomberg. Manus this is bloomberg daybreak europe. Im manus cranny in dubai. Nejra cehic is in london. The implosion in the oil market, 17 year low this morning and physical oil is trading at 10 in parts of the world. The world is so awash with oil that it is actually a struggle to store it properly. The world normally uses 100 Million Barrels per day but forecast say as much of a quarter has disappeared in a few weeks. Toand destruction is how describe what, is going on in up, wekets and coming will get back to the markets. Oil at a 17 year low, u. S. Futures on the front foot after the best week on the dow since 1938. This is bloomberg. Manus good morning from dubai. Im manus cranny. Nejra cehic is in london. These are your top stories. A down day for asian stocks and the coronavirus. The pb sickdespite pboc easing and oil plummets to a 17 year low. Top 720,000. Medical leaders say u. S. Deaths could reach 200,000. President trump says social distancing will hold until at least april 30. The outbreak claims more than 3000 lives in italy and spain over the weekend. European officials warned against loosening the lockdowns. Good to see you this morning. It is interesting to see, our says host Marija Veitmane the new news about social distancing in the United States should probably be taken in a good way. Yes, Anthony Fauci talking about potentially 200,000 deaths in the United States in the u. S. In the worstcase scenario, but jpmorgan says the markets are or muhammad ali and alarian . Nejra the dow had its best week since 1938 last week. He said it is a difficult call to make but if he had to choose between getting into risk assets to early or taking excessive caution, he would go for the latter but perhaps some of the lift in s p futures has to do with the move on the social distancing over the weekend. To those s p futures, the yuan and oil, these markets are in context. Gave 3 back into the close. The news flow can be incredibly dexterity. There was talk of 200,000 deaths in the United States. Advising institutions to buy equities. Our guest host, rate cuts in the ,orm of the pboc coming through the sevenday repo up by 20 bips. Normally at five. What comes next . The yuan gives a little back this morning, and look at oil. 17 year low for oil. Essentially a world drowning in crude that nobody needs. That is the line from black and the team. The storage bins have been filling up. To the tops get back story with President Donald Trump extending a National Warning for americans to distance themselves from one another until april 30. He previously suggested they could he relaxed as early as easter in mid april. Trump has said the white house expects u. S. Deaths to peak in about two weeks. The decision to return American Life to normal by april 12 sayses as Anthony Fauci u. S. Deaths could top 200,000 in a worstcase scenario. I would say between 100000 and 2000 cases, but i dont want to be held to that. Excuse me, deaths. We are going to have millions of cases, but i dont think we need to make a projection when it is such a moving target that you could so easily be wrong and mislead people. Nejra in europe, italy and spain reported more than 3000 deaths over the weekend as Health Care Systems are increasingly stretched beyond capacity. European officials have warned against loosening lockdown. For more, we go to bloombergs korea taddeo in brussels. Brussels. Adeo in tell us what we can expect this week from authorities. Maria we know italy is still the epicenter of the pandemic and hospitals are running at full capacity and if you look at the numbers we had a good weekend, 756 people died in the space of 24 hours on sunday. These are still very big numbers, but if you look at italy on a bigger picture, a bigger timeline, you see the number of cases and deaths has declined now for two days straight. Are we close to the peak . It is too early to say, but those numbers have been declining over the weekend. And you look at the situation in spain, who saw the number of cases rocket past. It was a record day for deaths come up if you break down the data, you feel a glimmer of hope in madrid, the epicenter of the outbreak in spain. The number of deaths were down a touch and the government today announced there will be more restrictions in the state of travel, the amount of places people can go and work to contain the spread of the virus starting today. Manus thank you very much. Onia tadeo with the latest the death tolls around the european capitals. Singapore central bank, which uses Exchange Rates as its main tool rather than benchmark Interest Rates is taking unprecedented action to ease policy, the latest effort as the country continues to fight the looming recession from the coronavirus outbreak. China also ramped up its stimulus efforts. Pboc reduced its Interest Rates and injected 7. 1 billion into the economy. Chinas top leaders. Pledged to widen the fiscal deficit, sell sovereign debt. Set is set for larger scale stimulus to counter the fallout. Marija veitmane is from state street. Lets get straight to the republican rulebook. Rep up the rulebook. The fiscalw is about largesse of other nations. What are you expecting in terms of deficit funding that could really change the narrative and helped china when it comes out the other side of this demand and supply destruction . Us, it is still about fighting crisis. The focus is absolutely for the howrnments, Central Banks, much money is needed to throw out the crisis . At the moment, the more spending the better. We need to get the virus under control and we will deal with the fallout. The moreaccommodative, jobs and businesses that will survive the crisis, the better. We see extra spending as something very positive. Create point, it will inflation, so we are trying to watch what is happening with prices. We have a daily measure of prices. Right now, the world is pretty much going down and we see impact from oil collapse dominating. They are not collapsing as we but partg the crisis, of this is oil price decline. Another measure of the lack of demand. That is a real problem and that is the probably first thing, then we will start worrying about the deficit and budget and things like that. Right now, it is all about pricing the crisis. Nejra absolutely, and given the scale and nature of the crisis we are facing, there seems to be a consensus building that all the spending by governments and the action by Central Banks is not so much stimulus as simply damage control. If you look at the action by policy makers as damage control rather than stimulus, how you might behave as an investor. That is a great point to make. It is about damage control, making sure his misses survive the crisis, making sure people have jobs to go back to after the crisis. The way we think about markets last week was the prime example when we had the jobless rates in europe at record highs. A Record Number of people applying for unemployment. Numbers, itonomic as investors, as human beings, we want to restartingection, the virus so when people come back to work early and we have a second wave. , thetronger the lockdown stronger the sudden stop in the economy, the better for investment. It almost gives us some confidence we are not going to have a second wave and second leg down in risk assets. We only asi ask you, humans have reference points of crisis as we go back in time. Ours is 2008, before that, the 2000 dotcom bubble. The european debt crisis. We only have a reference within our framework. Do we need a much bigger global, coordinated lockdown, close down, Health Response when what we have at the moment is price gouging and people literally, metaphorically punching one another for Health Solutions . Do we need something much bigger than we are even capable of understanding at this juncture . It is hard to get your head around the lockdown, restrictions people are facing in everyday life. Peopleat is increasingly understand they have to stay home, they have to find other solutions and the economy will stop. It is very important to have some sort of fiscal and monetary that ensures we will have something to go back to in 3, 4, 6 months, and at the same time, the medical response needs to be very strong. Theres been lots of corporations from pharmaceutical companies, Engineering Companies in terms of producing health care equipment. It is happening and will probably happen on a bigger scale. Gives a mediumterm outlook. How are investors choosing to ride the extreme volatility we are seeing at the above 60ith the vix versus the century average around 20. To try to avoid basing on markets going up and down. Market fragility, being high. It is difficult to make a directional call. What makes more sense for us is to make relative value calls. Find what is likely to perform better than others. We try to hide in things like quality, things like growth stocks. To me, what is interesting right now is to look at the performance of various in equity, we noticed momentum has performed better than others and outperformed broader indices. Investors have not capitulated. They have not called the winners for last year. They continue to stick to those stocks. What else is performing his growth, quality. That is where investors are hiding from the crisis. A fairly constructive backdrop where you are not just dumping everything, but choosing to stick with better assets and it is anfidence somewhat orderly selloff. Manus Marija Veitmane stays with us from state street. More to come on the markets. The reality of coronavirus. Jeffries, the ceo says the to has died linked coronavirus, marking one of the first reported deaths among senior wall street figures. We discussed the Pandemic Impact next. This is bloomberg. Nejra this is bloomberg daybreak europe. Im nejra cehic with manus cranny in dubai. U. S. And european futures, firmly in the green after a better week for the dow since 1938. Global equities, heading for the worst quarter since 2000 and the 10 year yield a steady. Some firmness in the dollar after its worst week since 1985, but weaker against the yen and oil at a 17 year low. For today come at jefferies says the cfo if its main subsidiary has died from complications linked to the coronavirus, marking one of the first reported deaths among wall street figures. The rules are being rewritten under the pressure of a deadly pandemic. Manus joining us now is Annmarie Hordern with the latest on this. This is the reality on wall street, a tragic story. Annmarie incredibly tragic and devastating. The finance world is mourning the death of the jefferies ceo, who died from ties to the virus. Hes been the cfo since 2007 and the news marks one of the first stats among senior wall street executives from the pandemic and highlights the risk for firms. Rewritten,ety being have beenives sickened by the virus and professionals who Health Companies ensure leadership continuity say the Coronavirus Crisis added new urgency to their work. Questioningents are whether to isolate key executives, and some are scattering top lieutenants across the globe as added precautions. One is even saying they are poised to hire a new ceo by him video interviews. They are really changing the landscape. They worked to keep leadership intact with planning. They are also under immense pressure to keep employees safe and adapting home and businesses to this new normal. Nejra Annmarie Hordern, thank you so much. Lets get back to oil, slumping to a 17 year low as slowing demand across the World Largest economy continues. London, falling as much as 7. 6 while new york below 20 a seeing barrel. The Global Market is overwhelmed by ballooning crude and many producers are struggling to stall fuel. Marija veitmane, how much worse could it get for oil . Marija i suspect it could get worse. What we have seen, talking about oil markets oversupply, now we have a massive demand disruption. It is very hard to say we have seen the worst yet. Manus im looking at the stock side of this story. Doubledigit dividends for the likes of shell and exxon. The dividends are going to have to go here. Is that factored in . What would be your interpretation of that . Is exactly it. Energy companies are always seen as a reliable dividend payer. Now, the story is retold and we are unlikely to see dividends in an Energy Company for a long time now. We are very negative on the sector. We dont expect we see fundamentals being weak. We struggle to see payments to shareholders in the foreseeable future. Even before the collapse in oil price, we heard ceos talking about finding it difficult to fulfill and pay dividends. Forit is very difficult energy companies. Interesting manus give us the interesting stat. Marija interesting stat for energy companies, the s p 500, for 16 to 18 of market cap, now it is around 2 . Stat of the day. Im glad we came back for that. More work to do. Marija veitmane of state street stays with us. Coming up, the dollars historic rally isnt over yet, according to goldman sachs. Could u. S. Currency intervention be next . This is bloomberg. Nejra this is bloomberg daybreak europe. Im nejra cehic in london with manus cranny into body. The dollar is advancing for the first time in fours essence. It had its worst weeks since 1985 last week and followed cuts and a surge finger rotavirus kit in coronavirus cases. Dani the gains in the dollar certainly have been disorderly, but goldman sachs, the aretegists say the gains not over yet. As equities continue to fall, the dollar should rally about 3 to 5 from its most recent peak. That would match the peak we saw in the last bull market around 2002. One of the interesting things about the call is they see the move higher in the dollar could spark interventions from the u. S. Rare, buthis is policymakers have been cautious about pushing for a vshaped recovery. In terms of other fx calls, they say move into havens like the greenback, the yen, and swiss franc, and be careful with emergingmarket currencies. Valuations may be low, but the economic hit isnt done yet. Manus great morning call, dani burger. Marija veitmane is our guest host from state street. There is the goldmans call. James foley said last week. Subsided, we drop 4. 5 , the biggest since 1985. The dollar is falling over or will it research again . The recent strength in dollar has come from demand for that definitely supports the dollar higher. The demand for dollar has abated somewhat given all the support it has in terms of credit lines, supporting money markets. The urgency to buy dollar is gone. On the other hand, you have Interest Rates differentials between the u. S. And other markets gone away. Right now, emergency cuts. We think Dollar Strength is probably and if we get renewed a Dollar Strength, will that mean another led lower in equities . Marija veitmane, senior multiasset strategist at state street. The european open is next. U. S. And european futures on the front foot. A lot of green on the screen. 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 ] nejra good morning. Welcome to bloomberg daybreak europe. We are live from our European Headquarters in the city of london. I am anna edwards alongside matt miller in berlin. Matt good morning. Today, the markets say what is the next catalyst . European stock features point higher after losses in asia as attention turns to the u. S. As the next center of the pandemic. The cash trade is one hour away. U. S. And european futures