Nice pop after yesterdays disastrous performance, but still, you cant call any kind of victory within the crude market. Time now for todays top market moving news from our washington and new york bureaus. Congressional republicans and democrats are preparing for a fourth round of stimulus. Joining me is kevin cirilli. The ink hasnt even dried on third stimulus package. What are we talking about for phase four . Kevin kevin i was speaking with sources on both sides of the aisle, and the conversations are starting first and foremost on where the holes are left as a result of the latest round of economic stimulus. They want to see how quickly they are able to get liquidity to businesses, as well as to americans as they are expecting these paychecks in their account. The second part of this is likely going to be in the Financial Services sector, as well as other industries that have been pummeled as a result of this. I wouldnts bait that now, lawmakers arent going to begin talking about this i would anticipate that now, lawmakers arent going to begin talking about this until at least a month out. But there is no question that additional help is only way. They just havent set the parameters for the vehicle as of now. Much. Thanks so where we are seeing some very big stimulus, record stimulus, in fact, is in japan. Overnight come of the ruling party unleashes a proposal for stimulus worth 554 billion. Michael mckee joins us with more. Michael this is round for a stimulus this is round four of stimulus in japan, and this is a record level of stimulus. Billion yen. 0 more than 10 trillion would be handed out to workers and companies who have been hurt by the virus, laidoff, and some money goes to the companies as well to try to keep people on payroll. Across the south china sea, you mentioned it earlier, for investors this morning, what to make of that chinese pmi data . Up to 52 for manufacturing. Last month was a record low of 35. 7. The services pmi in china is at 52. 3. The issue is this only asks people how are things compared to last month. They are obviously better than last month, but is it really a vshaped recovery, or just a relative recovery . Thats the question. We get our pmi data in the United States, europe gets theirs tomorrow. The coronavirus affecting activity there. Ppi comes in for the euro zone at just 0. 7 . It was 1. 2 last month. German unemployment, only 1000 more people on the unemployment rolls. The reason . They did this only on database through march 12, and the interesting thing about that is that is the date on which our payrolls report on friday is based. Dont expect a whole lot there. Ou mentioned Goldman Sachs 34 decline in the Second Quarter in gdp. They also see on them limit rising to 15 . We did show just a second ago a graphic that showed a new indicator from the new york fed. We are all dying to track the economy in real time, and all the data we get so badly lagged. Thatis a realtime index combines consumer sentiment, fuel production, fuel sales, and electricity consumption. You can see what has happened, but it is something i am sure a lot of people will be following on the bloomberg as weeks go on because it gives us a realtime look at the economy. One quick thing, chinese stimulus in one province in china, they are giving people a to goay off every week shopping. They want people to shop. Maybe youd like that. [laughter] alix i would love that. My husband . Not so much. Mike mckee, thanks so much. Global equities are facing down their worst quarter since 2008. Annmarie hordern is with us with all of the dirty details. Theres so many superlatives. It is hard to know which one you went to talk about. Domarie as you say, where you begin with the superlatives . It was a volatile one. Anywhere you look, the coronavirus basically took over the last quarter and became a global pandemic, and basically brought the entire Global Economy to a halt. Lets start out with star performers, the havens. Treasuries and gold. For treasuries, the best quarter since 2008. Then the risky assets, thats where things get a little bit iffy. Equities, metals, and oil all plunged. U. S. Equities had their worst quarter since 2008. On the s p 500, every sector was down double digits. Financials and energy where the worst performers, 31 percent and 52 respectively. Disaster, thes a worst quarter on record. Wti down more than 60 . Last month we were not only introduced with this price war between two of the biggest producers, which is claiming u. S. Shale as a victim, but now we are dealing with a serious demand crisis. We are losing 25 on the demand side, and prices are going to go even lower. Alix appreciate that. One other thing we are all keeping our eye on today is a warning from the European Central bank ecb said it can toually force companies suspend Dividend Payments if they dont do it voluntarily during the pandemic. Bloomberg spoke with the ecbs top financial watchdog. We are taking response ability. I think that is also an important step for showing corporate responsibility. Decide not to comply with recommendations, we will decide whether taking other measures. Alix the ecb wants the dividends halted until at least october. Citi came out with a warning that said the pandemic could cause Dividend Payments by all European Companies to decline by 50 in 2020. Coming up on the program, much more of your morning trade, news and analysis in todays first take. This is bloomberg. Alix time now for bloomberg first take. Joining me from our inhouse team of wall street veterans and insiders, Damian Sassower, mike mcglone, and mike mckee. Start withwant to you. We made it out of the First Quarter. Now what . Mike im sensing blood in the streets in crude oil, so you want to start their. It just doesnt get much worse. I think we will see more bounces than declines. Just look at crude oil from 20. Going up to 30 means nothing, is extreme. Im sensing way too much optimism for complete reversal in recovery from the trade war back then, and now the coronavirus. I fear is you look at the s p 500, it is nearing the upper end of the range, i think. If you 50 correction from the bottom, it is around 2800, and i am still looking at 2000 as a key level. Theres way too much optimism that we are going to come out of this and tell our kids it was not a big deal. But crude oil from a commodity standpoint, that is pretty much oversold. Alix fair point on the shortterm level. Equities, someone at Credit Suisse had a note out that said any upbeat optimism was because people were actually rehedging. They are taking on more puts, covering and repositioning for another downdraft. What do you think . Damian quarter end risk parity guy,s, im not an equity but i would like to build on what mike was saying with regards to oil. We all know oem has a much higher beta. E. M. Talking we all know has a much higher beta. We seem downgrades now from the big three for countries like mbia, mexico, kuwait, oman, and oil is a big part of it. Alix i think the problem is if e. M. Is in trouble, what are we going to talk about in three weeks in terms of how to help them, how the dollar plays out . Michael it is going to be really tough. The imf is working on some kind of bailout plan to raise additional funds from countries around the world to help out. The question is, how bad does it get . Iving every indication that it is going to be terrible because we are seeing the chinese go back to work, but there are no customers. They have moved production to some other orchids. Some have been routed through emerging markets. A lot of them are suppliers to the chinese. So it is going to be a problem for them because they are not going to have any business, even if the coronavirus doesnt hit them as badly as it has hit some other countries. We have to keep an eye on this. It isnt clear what is going to happen to the dollar. Was very clear in saying no idea, and i join him. , itadly as we may be hit augurs well for a stronger dollar rather than a significantly weaker dollar. Way and onmian, igh in ono damian, we that. Damian it is a Fertile Ground for bond market performance. Has been a bastion of stability, a safe haven of sorts for most emergingmarket investors, and i am talking local Chinese Government bonds. It is one of only two emergingmarket constituents that are up on the year. It is relative stability that the policy officials, really that beijing has had over keeping the dollaryou on stable. Uan rate mike if by default, we have to go back to the preexisting trends, the dollar was strong before this event happened. It was a Major Pressure in commodities. Despite that still going up, to me, i am doing my monthly outlooks for april and have to just assume more dollar strength. I dont see what it is going to take for dollar weakness. It is also a signal from the fed to keep priming the pump until it says to stop. Alix so why isnt this good for developed economies . If you have a look at goldmans forecast, Second Quarter, terrible. But the third quarter, they see a 19 rebound. They are clearly still looking at some kind of v, and you have the huge stimulus coming from japan, some stabilization of the data in china. Why arent we talking about it from that lens . Michael we are in a sense. We are talking about the possible rebounds, but we dont know about the psychology of consumers when this is over. If consumers pull back and are reluctant to start spending again because they are afraid of a second round, then this is going to be a u. But that chinese data was based on comparison to the previous month. In peoples minds, they are going to look at what happened and be saying, maybe i dont want to spend right away. Abi want to wait a while. At 19 maybe i want to wait a while. Doesnt put you anywhere back to normal. Most economists say we could be 1 trillion to 2 trillion lower in gdp by the end of this year then we otherwise would be. The economy is definitely going to slow, and it may not come back as fast as a lot of people want. You will go back to work, but are you going to go back to spending the way you did before the crisis put you out of a job for a while . Alix right. Totally fair point. That brings us full circle back to emerging markets. If they become the next epicenter of the economic fallout from the virus, even if they are not hit as hard from the virus, does this play out like the 1980s . Is this a differently book . Damian it is a completely different playbook. The modern number of emerging markets is completely different. But just looking back to some of that china data, the fact of the orders downw export from december 2009, december 2008 levels, right around the Global Financial crisis, so it is bad. Chinas economy relies on trade, it relies on demand from abroad, and that is not picking up anytime soon. Alix also, i keep reading articles about supply chain disruption, in that you will see hoarding of grains or parts, and we will see countries not trade with each other. Is that coming into your fear at all . Michael michael this is going to be a very disruptive period. Youre going to see pressure certainly in the united, and i would imagine in other developed countries, to bring certain supply chains back, to make sure we are making thermometers and in thetors and n95 masks United States in sufficient quantity so we dont have to go searching for them around the world. Other companies have to decide, do i want to rely so much on the possibility that a supply chain could be interrupted . There was a feeling that with the chinese trade war, maybe you just outweighed President Trump and things will get a little bit more back to normal. But this is something nobody has any control over, the virus. This could come back again in another form. So weve got to rethink, where do i really want my supply chains . How much is it going to matter that i can do something a few pennies cheaper when people pay more for security . Alix its a good point we will be dealing with for months to come. Mcglone, now when you get up in the morning, what is the data point you are looking at as we have seen a little but of calm down with equity volatility, and some calm in the markets as well . Marketefinitely equity is shortterm fluctuating, but the key thing to note is this is a major switch flipped for consumer sentiment. Going forward in the future, people are going to hoard cash, which means they are going to be lightening up the stock market. Alix which is exactly what the problem is with china. They may be opening up, but nobody is spending. Forget about their trade partners. What is the number one thing you are chasing right now . Damian you are chasing shortterm dislocation. About rate differentials and all that good stuff, but what i think this is setting up for is yield curve compression globally. As the gravity of zero pulls yields globally to zero, and its not the fed, its the treasury which becomes the Printing Press for the worlds economies, what is the only game left in town . It is going to be u. S. Equities. Maybe not tomorrow, next month or next year, but it is setting up for a mediumterm bull run in u. S. Equities for the best of the worst. Alix best of the worst, thats not a really good indicator. Having some headlines here from china, all about the state Council Meeting chaired by liu. Eli they will add a discounting quota by about one trillion yuan, and are helping smaller banks. It feels like this is continual targeted stimulus, but not like the 2008 we have seen. Youve got to deliver to help the Global Economy now. Damian absolutely, and china has got an economy where they can get away with that. They dont need the big bank stimulus, at least not yet. We are seeings targeted measures, using specialpurpose funds, using everything at their disposal to try to get everything back to normal. I think we can learn something from that. Alix and that basically means it is on us now, no more china. Michael it is on us, but china does come into play because the chinese are huge consumers for the United States. Stuff, andlot of our they are our biggest trading partner, so we do need them. We cant switch off that quickly. It is going to be a question of who buys and when they start buying when the Chinese People start buying again soon. With all of this, it kind of comes down to you can lead a horse to a retail store, that can you make them buy . Alix thats an analogy for you. Guys, really appreciate it this morning. Much more coming up. This is bloomberg. Viviana this is bloomberg daybreak. A group of 16 banks are on the hook for 23 billion in loans. Tmobile needs them to close its takeover of sprint. The money is due tomorrow. The banks hope to sell the debt to thirdparty investors come but that has been disrupted by the coronavirus outbreak. Saudi aramco is considering sale of a stake in its pipeline unit to raise cash. The Worlds Largest oil producer hopes to raise more than 10 billion. Aramco is dealing with a historic rout in oil prices. Plus, and has a long list of spending obligations. U. S. Airlines, if they want to share coronavirus aid, they will have to give something up in return. Airlines will have to propose upfront how the federal government could retain financial stakes in their companies. That is according to new u. S. Treasury department guidelines. That is your Bloomberg Business flash. Alix thanks so much. One other story that caught my eye come of the Worlds LargestSovereign Wealth Fund is about to make some history. Norways 950 billion fund is preparing to liquidate assets to cover government withdrawals. Set toernment looks withdraw 25 billion. That was a week ago. Norway is facing its worst economic shock and half a century. If thats bad for norway, and mind what it is like for saudi arabia and their Sovereign Wealth Fund, as the epicenter of what happens when oil prices crash. That causes a lot of havoc on things like the treasury market, that have nothing to do with the overall macro environment or what the fed is doing. Crumb as to what other Sovereign Wealth Funds are doing as well. We will talk to Scott Sheffield of pioneer natural resources, and his radical suggestion that may be texas, as well as russia and saudi arabia, should get together and cut output. Jeff currie of Goldman Sachs also joins me. This is bloomberg. Theres no place like home. Especially when xfinity has you covered with fast, reliable internet. With advanced security to help keep you secure online. And with the most tv shows, movies and streaming apps all in one place. With simple Digital Tools you can get the help you need or even trouble shoot your services on your own. Download the xfinity my account app or just say help into your xfinity voice remote. We are working to make things a little easier on everyone. Download the xfinity my account app today. Alix welcome to bloomberg daybreak. Im alix steel. We finally ended that horrible First Quarter. Today we are on the front foot just a bit. I want to highlight european banks. The ecb says it could actually force banks to stop paying a dividend to preserve liquidity. What does that mean for other Asset Classes . One, buy treasuries. Two, buy the dollar. ,he vix a little bit calmer relatively. 19 is where we are for the longterm average, so will above those levels. Oil is bouncing back after a disastrous day yesterday. Lets get more. Scott sheffield and Matt Gallagher are the ceos of independent are two of the ceos event of up and Oil Companies that send a letter yesterday saying that they think a cut in production would be most helpful for the industry, and went all u. S. Shale producers to cut by 10 . Going me is Scott Sheffield of pioneer natural resources. Always great to catch up with you. Sounds great, but even if you cut printed if you cut when he percent, russia cuts 20 , and saudi arabia cuts 20 , that nowhere begins to dent the cut in demand we are seeing. Scott great to see you. We thought there would be a supply demand loss of about 20 Million Barrels a day. Some analysts say it is has high as 25. We agree with you, but we need to get away from six dollar oil. As you know, the oil in the delaware from all of the new wells is getting six dollars a barrel. In the midland basin, it is 12 a barrel. Something has to happen. There are estimates that will probably shut in 12 Million Barrels a day in the world. Oil is being shut in around the world. But we are doing is asking about fairness. The fairness question in the some of texas is that producers will not be able to sell their oil at all. The majors will be able to sell to refineries, export our crude oil, but we want the Texas Rail Commission to treat everybody fair with a similar cut in production. Alix i guess the counter to that is why. Many analysts say the shale industry should have been shaken out in 2014, 2015, but the Capital Markets were still open, and you guys do need consolidation. Why prolong that . You look at the seven up or independents in my state recently. Theres only about you look 17 independents in my state recently. Theres only going to be about 10 left. Whats important is Energy Security and energy independence. I dont want to get back since ive been in the industry for over 40 years. I dont want to get back to importing 60 of our oil from the middle east and being highly dependent upon russia, saudi arabia, and venezuela for supplying our gasoline needs. And sayts play it out the Commission Says ok, saudi says ok, russia says ok. Does that mean prices are going to rise to what . Scott i think if there is some type of uniform cut and alberta is looking at it from canada also, we are talking with north dakota looking at stopping all clearing. We are talking to the state of oklahoma. They have the right to prorate. It could raise the price back away from 20 maybe backup to 30. We saw a 20 price problem from the time that saudi and russia lou of the meeting in vienna. We see about a 20 drop. 10 ofd to get at least that back. Thats my best guess if there is some type of coordinated cut. Alix what is the appetite among your peers for that, among all the different players . Obviously, you and Matt Gallagher are in really good positions, but what about the other guys you are talking to . What they be willing to do Something Like this just to get it back to 30 . Wett before last friday, probably had many producers that did not want to prorate because they want a free market. There hasnt been a free market in oil. The Texas Commission prorated from 1969 to 1973 from 1959 to 1973. Happened friday night is when producers all over texas said you will have to reduce thinkction, i theres a groundswell happening that something has to be done, and it has to be done fairly. If it is not come of the small and medium producers will not be able to sell oil for several weeks to months until this virus ends. Earlier thentioned six dollar price, and we have seen negative pricing probably in some areas. At this rate, how quickly will we see production naturally shut in regardless of any kind of quota . Scott theres about 900,000 barrels a day of what we call marginal wells in the u. S. The average operating cost is probably about 25 a barrel. I predict most of those will be shut in anyway, so we will probably lose about 900,000 barrels a day of our 13 Million Barrels a day through marginal wells. As we get the average operating cost of a horizontal well is anywhere between five dollars and 10. You have to look at a companys Balance Sheet, and the new look at their operating cost. That number is around 10 a barrel for most companies. They really should be shutting and a lot of their wells because they are going to have negative cash flow. This year, a lot of producers are protected on hedges, but those hedges rolloff. Companies very few are hedged. So the disaster really happens going into 2021. Alix if producers say i am not going to do this with you because i need to get any i possibly can, would you go to would you go it alone . Would you cut when he percent of your output . . Cut 20 of your output scott i think we are going to have to already. What we dont know is what that number will be. Some will have to cut 10 , some l have to cut the percent have to cut 30 . Types inoing to be all fairness and unfairness among the producers in the state of want to regulate that process. Alix so is that a know that you ift cut if you get others dont agree to step in with you . Scott no, we are going to have to cut because purchasers will not be able to take our oil. I cant give you a specific because the purchasers right now, theres about 25 purchasers of crude oil from the permian basin. Storage is full, so they dont even know the number yet. Thats why the commission has to come in and do something, so i cant give you a specific number. Alix we will get you back when you can. Really good to get your perspective. Thanks for coming on. Scott sheffield of plantar natural resources. For more on oil, i am joined from london by jeff currie, head of Commodities Research at Goldman Sachs. The rhetoric is that there was a trump call putin yesterday, and that envoys will potentially talk about oil curbs , etc. What are you hearing about that . Jeff the noise suggests there could be a potential cut between u. S. I, russia, and the of about 10 Million Barrels per day. I want to go back and really talk about the magnitude of the demand shock we are talking about. Currently, 96 of the worlds gdp has some type of social distancing measure in place. In oil is far greater than the economic impact. Why . Ecause oil is the cornerstone we bottoms up approach that do comes to a number of roughly 26 Million Barrels per day as of yesterday morning. That is probably bigger. Japan has relapse. Brazil has cracks down harder. Surplus isude of a going to overwhelm the infrastructure. We heard from scott just now that you are at region Storage Capacity already. Made cuts. Dy this is due to the fact that it is breaching Storage Capacity. Theyre going to coincide almost the same time. But lets get to another point on the politics of it. You look at saudi yesterday, they announced that they were reducing exports to 10. 4 Million Barrels a day for may. I have no idea where that crude is going, but if theyve already gave into it, the question is why would you fold your cards at this point when you are actually starting to see your market share increase. One thing it is important to think about, it is all dictated by logistics and where you sit in the major pipelines around the world. Crews are the most vulnerable. Which is a really interesting point you made in your note, that it is not necessarily the highest cost producers that will have to shut in. It is where your assets are physically that will tell you whether or not you have to shut her production. Er you have to shutt production. Jeff thats right. I like to point out, we take bri wee take is 500 milesit from the water. 500 miles from the shore. These offshore platforms are the ones that are going to be able to keep producing. In contrast, you take russia. Russian production is behind 2000 miles of pipeline. Canada has 3000. Those are where we are going to see the pressure points. Prices in canada, five dollars a barrel. I didnt see it this morning. He could already be negative. Midland wti is trading in the low teens. Theres a chance to collapse barrel. Zero dollars a its extremely likely in the current environment. But water broke but waterborne crude is going to be safe. If you are a social planner, wanting to shut down the worlds production to deal with this problem, what would you shut down . All of the offshore end of the middle east production. There are very large. Bars large reservoirs can be shut down. It is good for them to come back even stronger. However, it is going to be russia, the u. S. , canada, and parts of latin america where you will see the real damage. Alix round to get out back to russia, are you hearing that u. S. And russian envoys are going to meet and talk . Does that mean we will see russia agreeing to pervak production an agreement to u. S. Sanctions being listed, especially now that rosneft has moved out of venezuela . Jeff i am not going to speculate here, but i will meet the following observation. If you are russia, you are one of the most exposed here. If you are rosneft, you have all of those old soviet fields behind thousands of miles of pipeline. The field has 11,000 wells operating. They are typically heavier crudes, a 10 to one ratio of water to oil. They are mature, but low pressure. The key point if they have extremely tight reservoirs. Shut those things down, they are done. If you are russia, you want the rest of the world trying to shut you are not going to come back. Definitely think that is going to come to play in any decision here. Alix real quick, oil prices. What are we going to test . Landlocked crude, five, zero, Something Like that. What about brent . It will have cash costs around 20 a barrel. Historically, we have never filled the tanker capacity around the world. That means youre going to have a whole oil economy right next to the water that is probably functioning fairly well depending on how long this goes on. But when we look at the other , they are having problems. Alix really appreciate you with that good note yesterday, jeff currie of Goldman Sachs. Coming up, ford joining other muchnies to address medical equipment. The company also delaying its restart of plants in the u. S. If you have a bloomberg terminal, check out tv. Can check on charts and graphics, and look at anything youve missed. This is bloomberg. Alix this has viviana this is bloomberg daybreak. Coming up in the next hour, ubs deputy cio. Alix ford is joining with other companies reproducing their production facilities to manufacture muchneeded ventilators. They will partner with ge to make 50,000 ventilators. Joining us is the man in charge of overseeing this effort, jim enterpriseord vp of product line management. Really important work you are doing. How quickly do those 50,000 ventilators come to market . Jim we are starting work with our partners at ge, leveraging our experience to boost the output of their existing devices today. Able to booste that up to 40 increase in production to get more of these machines into the right hands. In addition, we are bringing online a second ventilator we think we can scale at much higher volumes. That will become an online in higher volumes at the end of april, very heavy into may, with the goal of getting 50,000 of those in the next 100 days. How do youake them, know where to send them . What is the supply Chain Logistics like that you have seen so far . Jim theres an incredible need out there. We are working with the administration, fema, and a whole host of consortiums to make sure we are getting them to the hotspots in the areas of greatest need. Alix can you give me some insight into how the partnership with ge and supporting . Your facilities are for cars, not for ventilators. How do Something Like this work . How do you retool your workforce . Jim weve got an incredible workforce. Employees have been coming forward to volunteer to help. We are really focused on how we leverage what weve got available to us in our toilities, working with ge take the design and scale it for higher volume production. We got incredible efforts laying out the process line because we make these at a much higher rate than we would usually see in the medical supply industry. Alix Governor Cuomo in new york was talking about different states bidding up the prices of stuff that people need. Are you noticing anything like that with ventilators when you are working with the administration to know where to distribute them . Zero discussion around cost. We are very clear on the mission to get these into peoples hands. We will talk about cost later. What is more important is getting the devices in for patients to be able to weather the storm of the virus, and doing the same thing with 3m to get more personal protective braveent to get these two men and women on the front line the war against the virus. Alix are you having any worker shortage, or do you have enough people . Jim we have tons of volunteers. One of my Biggest Challenges is figuring out how to harness the full power of everybody stepping forward within the company, but also our incredible supply partners. They are just a huge push for everybody to figure out how they can help in anyway. Ford has always been there in a time of need. It is part of our dna, and we want to help any way we can. Alix there is a headline earlier this morning that ford is going to delay its planned restart of plants in mexico, not setting a date for a restart. Can you give us an idea why . All of the actions we are taking in terms of restarting production or to make sure we are taking care of the health and safety of our workers and employees. We are taking all of the appropriate precautions and personal protection measures, and we want to make sure it is right for our employees first and foremost, for our dealers and all of our customers as we upre pup as we ramp production. So we typically use all kinds of opportunities and technology to ensure that safety is at the highest level. Alix i really appreciate your time today. Good luck on getting those ventilators out. Ford vp ofk, enterprise product line management. Coming up, what you need to know for your trading day ahead. This is bloomberg. Alix time now for traders take. Joining me as Damian Sassower of bloomberg intelligence. You are looking at em currency debt. Damian thats right, and specifically china government emerginge of just two markets globally that are positive on the year. Outflows have been a problem for china in the past. Portfolio flows have been stable. The second thing is this is targeted, not big bang stimulus. Credit spreads remain stable. Decline rate was Something Like 20 bips back in the third quarter. Reserves remain well above the 3 trillion mark. It still has a current account surplus. So in a sluggish growth world, china rates are outperforming here. Alix good stuff. Really appreciate that. Good way to set up the market for the Second Quarter. Coming up on the program, Solita Marcelli, ubs Global Wealth americas cioputy on her longterm call. In the markets, you are seeing futures kind of go nowhere. S p is now down by about 10 after it looks like it will close out its worst quarter since 2008. The dollar still trending higher. This is bloomberg. To help you stay informed of the latest news just say coronavirus into your xfinity voice remote to access Important Information and special reports from around the world. And to keep your kids learning at home, say education to discover learning collections for all ages from our partners at common sense media, curiosity stream, history vault, reading corner and many others. For more information on how you can stay connected, visit xfinity. Com prepare. Alix welcome to bloomberg on this americas tuesday, march 31. Im alix steel. Lets take it right from the top. Industries faced tremendous difficulties, and we will be responding suitably. Alix Hong Kong Retail sales plummet in february. Retail sales also hit hard in capu. S. , with macys and halting pay for much of their workforce while preserving some benefits. That brings the total number of major u. S. Chains to more than 5000. Now u. S. Leaders are talking about their next round of stimulus. Kevin the conversations are really starting on first and foremost, where the holes are left as it results from the latest round of stimulus. They want to see how quickly they are able to get that liquidity in two businesses. Alix President Trump now says a national stayathome order is likely. Alix japan proposes its biggest ever stimulus package, worth 554 billion. China pmis skyrocket to 52 in march from a record low, but worn that this doesnt mean the economy is running at normal levels. Michael it is obviously better than last month, but is it really a vshaped recovery or just a relative recovery . Thats the question. Alix Goldman Sachs now downgrading u. S. Secondquarter growth, this, 34 contraction. [bell ringing] alix it is the end of the quarter, with equities on track for their worst quarter since 2008. Extremely volatile everywhere you look. Coronavirus took over last quarter and basically brought the entire Global Economy to a halt. Issuance trickling into the highyield market after the worst quarter in at least a decade. Now we just got to fastforward to the Second Quarter into the third so we can all take a big sigh of relief. Equity markets may be a touch softer, but not a ton of movement happening within the equity market. In other Asset Classes, still seeing a bit into the u. S. Bond market. The dollar is one of the stronger performers in the g10 space, although off the highs of the session. Crude getting a bounce from yesterday, but perhaps that is just a dead cat bounce there. Today marks the end of the quarter. Dani burger is going to break it down for us. Dani first, lets start with the raw numbers of how much wealth was destroyed in just the equity markets alone. Global equities, nearly 20 trillion in value was wiped off the markets this past three months. That is staggering. In many regards, it is really tempting to compare the markets had theircause these worst quarter and monthly runs since 2008. Treasuries come of the most demand since 2008, and u. S. Junk bonds so southernmost destruction. But in a lot of regards, this is completely different this kind of around. The ceo has been saying over the past couple of weeks we can be using historical comparisons because this price is so different and so led by fear. Look no further than the vix. It spiked to its highest level on record about midmarch, and since then we have seen the biggest game in the main volatility gauge on record. That in itself might be ponsible for all of the retained. That in itself created a volatility loop of forced selling and increased realized an implied volatility. Want to get an idea of how complicated and instructive past quarter is, look no further than crude. Crude clocking its worst quarter on record, both wti and brent. Its not just the demand issue with containing it. It was also dealing with supply, with russia and saudi arabia engaging in a price war. The havens behaved were markedly during this quarter as well. The only short thing was king dollar. Everyone was trying to meet calls meet margin calls. The dollar seeing its best quarter since 2016. At the same time, that means a lot of other assets performed poorly as investors liquidated, so things like munis, mortgage bonds, and even other haven assets like gold and treasuries went through periods where they sold off because investors wanted that cash. I mean, look at gold. It had its best month since january. Clearly a lot of very interesting market dynamics. With those superlatives, what is going to happen next . Are we going to have another record quarter . There, the strategists cant even agree. Alix remember when we all worried about the flattening yield curve . Those were the days. Joining us now is Solita Marcelli, ubs Global WealthManagement Deputy americas cio. Great to see you and chat with you. Bs has an Investor Watch pole that came out for march 21 through 24. Ubs has an Investor Watch for march 21e out through 24. What are you seeing . To keep watch on this survey, and we conducted one very recently. What we have seen is that , but amongoptimism these clients who mostly on their businesses, even if shortterm optimism took a hit, and the long run, i think a significant majority of our clients are still optimistic about the economy, about the market, and this is important because once we have the worst of the virus behind and stimulus starts kicking in, we are hopeful that we can get over the economics fairly quickly. In fact, we get a lot of questions from clients whether we should be adding risk here. We mostly direct them towards the credit markets right now rather than the equity markets for that increment of dollar they want to put into the market. Alix that is interesting because i would have thought that maybe there would be questioning about portfolio reallocation or perhaps the shift into safe havens. Do you get any questions on that now . It feels like one day in this market could be considered a year. Look at the we takeaways from the survey, also in our daily conversations, actually staying the course. We are not seeing, for the most part, a panic. Earlier in march, there were definitely a lot of questions. How do i hedge without liquidity in my portfolio . We were talking about treasuries, talking about gold. But in the letter part of march, we saw bigger volatility and selloff in the market, and the conversation turned more around. Where is the bottom, and wares at risk . And where are we at risk . A lot of our clients who built portfolios with radical diversification have had their that they can add to their portfolio, having had a buffer with this liquidity strategy is certainly a big part of that. But again, our conversations for the incremental dollar that needs to be added, it is really focused on credit. This is a good place to be in, whether it is in the highyield market or emergingmarket dollardenominated sovereign debt, or selected investment tode is where we are looking add that risk. Alix woman sachs had their note out the talked about now 34 declines Goldman Sachs had their note out the talked about now 34 decline in gdp for the Second Quarter. Your clients rely on a sharp vshaped recovery, or a ushaped . Shapeappens if it is an i or j shape . Expect this around may, towards the end of may. We expect the economy to show a ushaped recovery in the Fourth Quarter of this year. When we look at the equity market, it is already pricing in given thease scenario value we have seen last week and yesterday. That is why, as i mentioned earlier, our hope was a bit more on the credit because we think pricing and the credit has been much worse, and in many areas, it is pricing in our downside case. Alix Solita Marcelli of ubs Global Wealth management, really great to get that perspective as we consider that Second Quarter. Coming up, it is a First Quarter winners and losers. Eric schoenstein of Jensen Investment Management will join us. And a headline from germany. They saw about 470,000 state wage support notifications in march, a record high number of notifications for state wage labor support. That is all sorts of that as all sorts of virus restrictions were introduced. European stocks erased all their gains. A were up 2 earlier. The euro still around the lows of the session. This is bloomberg. Firstat the end of the quarter, there are significant winners and losers in the market. Cruise liners and energy names, as well as airlines, are getting hit on a huge demand snap. Joining us for his top picks is Eric Schoenstein of Jensen Investment Management. He manages the quality growth fund. Where do you find quality growth now headed into q2 . Eric despite the fact that there has been some calm in the past few days, theres probably a lot more volatility to come. We dont have much in terms of data for companies for the First Quarter yet. Theres going to be a lot of unknowns that are yet to be determined. I think from that perspective, when we think about investing in companies, you hopefully have already builtin a foundation of quality into these portfolios, trying to make those kinds of franklyright now being difficult. Certainly a lot of Free Cash Flow they can produce without having to go to the markets to raise cash, and you end up in asinesses that have more of lasting demand to their business so they are in good shape despite the volatility taking place. Certainly there are very good businesses that are continuing to produce and thrive within some of these more challenging times we are facing. Alix can you give me some of your top picks . Eric a couple of names towards the top of our portfolio have been benefiting, or at least able to be good stewards in this , you think about the needles and syringes parts of health care. They recently came out with a collaboration to hopefully be able to produce more covid19 tests, run them through their own diane desta platforms. Their own diagnostic platforms. With think this is a business that will be fine and will continue to thrive. Another good name in the workspace, as we all know move mote from home business, is microsoft. Their cloud usage is up nearly 800 . The number of workers they have working through Microsoft Teams is somewhere north of 40 million now. They are positioned to do well when things like this happen. Those positions havent really changed. They are the same kind of positions they would have had for the pandemic, but this allows them to dupree well regardless of what is happening. We think those are the kind of companies that weve had those positions for a while now. They can do what they do best, which is to continue to produce cash flow and higher returns. Alix i am glad you brought that up. Did you buy anything new after the virus broke out, or did these happen to be things you already had . If you are adding new positions, where would you be doing that now . Eric weve added a couple of names, but nothing that i would say is substantially different from the way the portfolio has been built before. What we are trying to focus on is trying to be technical any trying to be technical on any market, particularly the bull market we have had. It is difficult to make too many tactical changes when you about investing from a longterm perspective, which is what we ultimately do. Our profile is that we want to build returns that can do well in that market, but also hopefully protect investors better. We have seen some of that. We seeing confidence from some of our clients giving us more capital to try to deploy. We continue to emphasize those same ideas. Competitive advantages are going to matter. More businesses are going to struggle for the foreseeable future. We dont know when this recovery is actually going to take place. It could take some time. Theres going to be more ups and downs. So if you emphasize companies that have these characteristics of quality, competitive advantage, and cash flow, you have less likelihood of going through some of those roller coaster days weve always weve experienced over the last couple of weeks. Alix youve had downward revisions for the First Quarter really setting a record. Looking at the Second Quarter starting to come down, too. How do you look at these earnings . Eric the key is to see some level of potential transparency for businesses. As you mentioned, a lot of Earnings Guidance coming down. Some of it is being pulled entirely. That is reflective of the fact companiesof these dont know exactly when this is going to take place. It could be a quarter or two, it could be more into the Fourth Quarter, maybe even into 2021. We just dont know how this will ultimately turn out. So we are looking for trends to see what has happened in asia as asia has started to reboot. That may give us some signal as to how things may translate elsewhere. The data is probably not going to give us too much in these early days as we move into the First Quarter earnings season. It is really more about the sentiment, the plans, and frankly, making sure that the plans are in place, the liquidity is in place to make sure these companies can continue to do the right things for their customers. Alix when it comes to dividend buybacks, it feels like the wind buybacks, forget about in europe in particular, dividends might be suspended. How are you looking at the reality of the buyback and dividend story within u. S. Equities . Eric thats one of the things we look at is a strength. When these companies have the kind of Free Cash Flow available to them, theyve been consistently investing in organic opportunities to shore up and strengthen their competitive advantage this competitive advantages. They are able to do all of those things somewhat flexibly. As we think about liquidity issues that may be heading some letteres right now, one would be shared. We will probably see some dividend freezes, hopefully not a lot of dividend cuts within these Higher Quality businesses, although that certainly could happen. The other thing that they have is because they generate all of this Free Cash Flow organically, they dont necessarily need to go to the markets for liquidity. If they are doing that, if we are seeing borrowing all is a dry powder situation where they are able to bring in that cash now and protect those dividends. I think that is going to be one interesting thing as we move translatesw that into company strain. Eric steen of jensen staying with us Eric Schoenstein of jensen staying with us. This is bloomberg. Viviana this is bloomberg daybreak. Saudi aramco is considering the stale of a stake in its pipeline unit to raise cash. The Worlds Largest oil producer hopes to raise more than 10 billion. Aramco is dealing with an ,istoric rout in oil prices plus a long list of spending obligations. 15 banks are on the hook for 22 billion in loans. Tmobile needs them to close its takeover of sprint. The money is due tomorrow. The banks hope to sell the debt to thirdparty investors, but that has been disrupted by the coronavirus outbreak. Oil futures in new york rising today for the first time in four sessions. Still, crude is wrapping up its worst quarter on record. Since the end of december, oil is down 65 . President trump says he is concerned. He spoke to Russias Vladimir Putin about the market share battle with saudi arabia. That is your Bloomberg Business flash. Alix thank you so much. All of that contribute into Energy Equities getting wiped out in the quarter. Eric schoenstein of Jensen Investment Management is still with me. Do you own Anything Energy . Past would in the have been capitalizing on energy air Separation Companies that produce Industrial Gases used in refining and whatnot. Weve owned ecolab, which is in cleaning and solvents, with relation to fracking and some novel technologies. Theres concerns there as far as environmental impact, so their services have been quite useful. One of the things about energy that has always been a struggle for us is that as you watch oil prices, and what you were just talking about, go to the levels that they are right now, one of the things that is a hallmark of a more highquality business for us is that the business return is going to be above its cost of capital. That becomes a Value Creation engine for the company. ,hen oil prices go to the low it is very difficult to continue to see profitable ppe spending or capital spending. It means some of these projects that have been so lucrative for Many Companies in the u. S. Are now much more challenged. That makes the ride for the investor as they go through that much more volatile, which has meant energy has been a little less consistent has a profile, and therefore hasnt been something that we have chosen to pursue. Alix right. Much. Thank you very really appreciate the perspective as we are heading into the Second Quarter. Eric schoenstein of Jensen Investment Management, thank you. Coming up, the coronavirus death threat. Who is most at risk . We will be speaking to Carmen Reinhart of the Harvard Kennedy school. We will break that down. This is bloomberg. Guy 30 seconds to go until the end of regular trading in dow futures off 200 points, s p futures off. Wages from the state in germany hit a record in march. We are also seeing european banks as the ecb looks to force banks to spend their dividends. As to how may bonuses are next, we will see. If you switch up the board, is a classic risk off field. The dollar around the highs of the session in terms of treasuries. Seeing selling in europe. Crude bucking the trend after a disastrous selloff yesterday, recouping half of its losses today. Still at 21 hours for wti. All of the uncertainty around the pandemic has made Central Banks responding with stimulus to prevent a recession. What about all the debt on the Balance Sheet . Carmen reinhart is a harvard professor of international wrote al systems and paper about 200 billion dollars of chinese ever seen sloan is hidden from public chinese overseas loans is hidden from public view. She joins us now. I was happy you had time to chat. Can you walk me through what you and your colleagues found about the china debt burden that could be disruptive . Carmen current seas are collapsing, so any dollardenominated debt to china is collapsing. Layer of middle to low Income Countries that over and beyond the debt we know are the debt to 50 ofwhich are about them do not show up in the official statistics. Bank, imf database. Risk that we have a lot more debt crisis, especially in the low Income Countries, whether you call that systemic or not remains to be seen. Certainly those countries will be hurting. Alix the big question is going to be is this like the 1980s . Are we going to see that kind of financial crisis. Can you help us distinguish what will play out versus what we would expect . Carmen the parallel i have been is moreithout melodrama akin to the 1930s. Let me briefly explain why. 20082009 was called the Global Financial crisis but it mostly affected 11 advanced economies, high Income Countries. Not the emerging markets, which after a rough late 2008 rebounded nicely because china was also growing in double digits, Commodity Prices were high. The 1980s was an emerging market crisis but the advanced economies were doing ok. It is hard to find anyone at the moment that is doing ok. In that context, it is more akin to the 1930s. Alix are we going to be sitting here in six weeks talking about how this is turning into emerging market crisis less due to the virus and more because they do not have the fiscal ability to stimulate, they cannot combat a higher dollar . Crisis is notalth going to go away in six weeks. I doubt very much we would be talking about the debt problems without talking about coronavirus. I think we will be talking about both because the longer the lockdown, the global lockdown at this stage persists, the longer Commodity Prices slump. There is no tourism activity, global trade is at a paralysis. It is hard to see how in that environment the Credit Ratings of these countries will continue to head south and the debt difficulties of many of them will increase. Alix we have already seen things like the mexico sovereign Credit Rating downgraded. Are we going to see default . What will be the result of that when you see continued downgrades . Marketsemerging comprise a very large class of countries with a huge array of different vulnerabilities. I would not start expecting mexico to default. However, as i have written and been interviewed on that regard, you can start looking at ecuador, an oil producer that a spread of roughly 60 it has oil prices that are about half of what they need for the budget to square. You can start in that context. You can start seeing countries like ecuador, like angola, which are both oil producers. Angola is the largest borrower from china in africa. See those, which are in junkbond status in terms of the ratings. Spreads into countries that are not adjunct status dependsnk how long the global paralysis uncertaintyis a big also for the u. S. Economy and everyone else. Alix two prompt question. Can the imf fix it . Imf fix thethe problem . Look. Fix it, they can help. Is having aart restoration of something that resembles normality. That is beyond the scope at this imf and the unfortunately most governments because this financial crisis has a Health Crisis at its center. Runofthemill economic friday exclusively. Be and has been actively promoting countries to approach them for liquidity needs. If we were to see this persist , theontinue and spread resources are not going to be up to that scale. Reason that i wrote a piece yesterday on the wall street journal basically propitious is a moment for a debt moratorium. These countries do not have export earnings, whether they tourists primarily rely on a taurus industry or whether there rely on manufacturers or a primary commodities, export earnings, hard currency, dollar earnings are way off. , i amability generalizing. This is not a blanket every emerging market falls into this category. There are many degrees. It is in that direction. Moratorium isdebt ok. Economic activity has been suspended by the global pandemic. Put debtmporarily payments on hold so these countries with scarce resources can devote their available fisc al measures torts containing the virus. Towards containing the virus. This is not in lieu of of the imf, this is in addition to. Alix what is systemic for that . Carmen basically, if you ask yourself the measures we have seen in the United States by the , by thereserve administration on both monetary and on fiscal on the scale we have seen it, and by the way, some of the fiscal measures have elements of debt relief such as Student Loans and so on. Would you have believed it six weeks ago . Not think the issue of a unfeasible. Ium is x you can finish. Carmen i think is the plight from emerging markets, apart from china, the locus of the pandemic has been in europe and the u. S. As it moves more into the emerging markets, i think we much morehese issues emphatically. Out i was going to round by asking about the fed because you brought up what actions the u. S. Is taking. The fed started a repo facility for foreign Central Banks not in the g7. Does that count . Does that help . Is anything other Central Banks can do . Carmen it helps enormously because there is a global shortage of dollars. The dollar when we hear about the vix skyrocketing, risk aversion on the rise, there are variations of the same statement. They all end up meeting the same thing. There is a flight to dollar. Facility helps alleviate that global dollar shortage, and this involves corporate trying to pay their dollar debt and all manner of financial contracts that are dollardenominated. However, it is still a selective there are awhich handful of major Central Banks have this. Role given the dollars and given the global scope of think it is i certainly very helpful but its global reach is more limited than what is required at the moment. Alix carmen, i appreciate your perspective. Invaluable talking to you. Thank you so very, very much. Harvardeinhart of the candied school. Here is Viviana Hurtado with your first word news. The deadliest day yet in the coronavirus outbreak. In the last 24 hours, spain reporting 849 fatalities. That brings the death toll almost 8200. Spain has more than 94,000 confirmed cases. Where the white house, Congressional Democrats are preparing for a fourth round of economic stimulus. The proposals include aid for the travel industry and the mortgage markets. Nancy pelosi singh state and local governments saying state and local governments will need more help. Says a national stayathome order is unlikely. He told reporters some parts of the country are not in trouble at all. Yesterday, the governors of maryland and virginia issued stayathome orders. So did the mayor of washington, d. C. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Alix thanks so much. All of these lockdowns are unleashing a disturbing trend. Media reports from various cities in china show divorce filings are now on the rise as the country emerges from quarantine. Shanghai divorce lawyer says his caseload has increased 25 in midmarch and government officials report long backlogs of divorce filings. Maybe too much togetherness, living in 1100 foot square part squarefoot apartment you get that point. Show shall distancing may mean social distancing may mean you not want to see your doctor. We will be talking about the role of telemedicine during this pandemic in todays bottom line. Bloomberg users, interact with the charts we use on the show on gtv on your terminal. This is bloomberg. Viviana this is bloomberg daybreak. Coming up later today on balance of power, republican senator bill cassidy of louisiana. Alix now it is time for todays bottom line. We look at Companies Worth watching this morning. Today we will focus on telemedicine. At a time of social distancing, visiting a doctor that may not be open is not an option. Specializes in Remote HealthCare Services throughout the u. S. Joining us is the ceo, zach reitano. Walk us through how works. Zach absolutely. A free built is coronavirus telehealth assessment to help a patient assess the risk of covid. A patient comes on and enters their symptoms, their travel history, their medical history, any medications thereon. If there on immuno suppressants there might be increase risk. Our Software Platform is analyzing that information, flagging risk factors and presenting that information to a doctor or Nurse Practitioner and putting them in touch and the physician or Nurse Practitioner will follow up via message or video and recommend the best next steps for the patient, whether that is selfquarantine, whether that requires a visit to a Health Care Facility in person. That Services Live in all 50 states including washington, d. C. For free. Alix what difference between that versus going to my regular doctor and having a zoom session with him . Is this quicker . Is it for those that do not have insurance . Zach is entirely free. It is for those with and without insurance and is structured specifically for covid. We built with Infectious Disease effort experts taking into account cdc guidelines and are constantly updating it in realtime based on new presentations of the virus. If there are new symptoms, the frequency with which the symptoms are presenting themselves, and weakens continuously implemented into that protocol and flak those pieces of information which might be more difficult for a foror, a more difficult your primary care provider to keep uptodate on all of these new pieces of information. Alix such a good point. What has demand been like . Zach fortunately over last two facilitated over 4 million patientphysician interactions. We have seen an increase in demand that we have been able to account for it given the Physician Network and the platforms capability for performance. Alix what about now . Can you give us insight on where you are seeing the most demand from the u. S. . Zach we cannot release exact numbers, but i can share we have helped triage a patient in every single state across the country. If you were to rank the u. S. Population by state, we see pretty evenly distributed across the country. Youll see the most populated states account for the most is evenlybut it distributed across the country. Alix you mentioned this is just for covid. What will you do after this once there is some sort of vaccine or something along those lines . Broadly, has a national Physician Network which can connect patients with doctors across the country. We also have a network that can mail patients their medication on an ongoing basis. We recently released a pharmacy where only 500 generic medications are just five dollars a month. These are some of the most common chronic conditions and we are making sure they have enough medication on hand through this. In addition to that, if there is an accepted treatment for the coronavirus, we would be able to use that national Physician Network and that National Pharmacy network to be able to facilitate treatment seamlessly and across the entire country. Alix how do you make any money to do all this . Zach right now the service is entirely free. During this time of public Health Crisis, we are not the only Company Lending a hand using its unique skill set and unique technology and infrastructure. You have new balance doing masks. We have companies doing free fruit free food deliveries. When our services are needed by the country we felt the responsibility to lend a hand. I appreciate your time. It is a great story and an important story. Thank you very much. Ro Health Carehe ceo. This quarters equity decline seems to be a blip, but oil is making history. That is next in technically speaking. This is bloomberg. Alix time for technically speaking. Youre looking at oil as we round out the quarter. Mike the crude oil chart is looking bad, but the good news is it is as bad as it can get. Crude oil is down 65 . 12 month basis, 65 . That is the most ever. 20 is a good support. Maybe it bounces to near 50 but it is unlikely to get down to 10. Alix walked me through what you see for the s p. Mike almost the exact opposite. On a 12 month basis it is down 7 . Historically that is nothing. The last two corrections were between 30 and 50 . It is right on the 50 month moving average which has been the trend line support. I think you will see more responsive sellers as the market turns over and starts going down , as this virus is probably worthy of a global recession which means the market has no were nearly corrected as it does in a recession. Alix oil is basically telling it right versus equities . I think mike i think oil has it right and equities are too optimistic. Alix super appreciate it, always great to catch up with you especially on the last day of the First Quarter. Mike mcglone of bloomberg intelligence. That wraps it up for me. Coming up on the open with willhan ferro, diana amoa be joining him. In the equity market we are still rolling over. Off for dow 180 futures. Yields modestly lower. On a currency basis it is still the dollar story