And p 500, however mark said asset prices havent seen the worst of it yet. In a slump in hong kong after scrapping dividends amid pmi data for asia showing contraction across the region. Welcome to bloomberg daybreak europe. A trifecta of investors saying the worst is yet to come. U. S. And european futures also declining after the worst quarter for Global Equity since the financial crisis. The 10year gilts slipping, seeing a little bit of dollar strength. We saw that lifeline from the fed to help ease some of the liquidity strains. Oil fluctuating a little bit with talks about this discussions with saudi arabia and russia. Manus can you imagine what a deal with them might looks might look like. This talk about donald trump, his call for a 2 trillion Infrastructure Spending bill, saying that low rates would make it easy to finance. It is unclear whether his proposal would be part of another package being considered by congress and the white house. Bloomberg sources also say it would delay certain terror of payments by three months. Most favored nation duties will come in the form of an executive order as soon as this week. Nejra investors one there is worse to come as stocks attempt to recover from the biggest quarterly loss since the Global Financial crisis. Jim rogers says hes expecting the worst bear market in his lifetime because of a triple way me of economic damage caused by the coronavirus, high debt levels, and Interest Rates which will hurt when they arrive. Similar sentiments were shared by howard marks. Joining us now is Noel Ohalloran, great to have you with us on the show. It really does seem that the assumption and if you look at equity markets up until now has been for this vshaped recovery, but we get this trifecta of warnings from several. Are you on the side of those big investors today who are saying the worst is yet to come . Can you hear us . It looks like we dont have noel. [indiscernible] manus lets just pick up on that. You asked, you got gundlach, and howard the real moneye versus jp morgan, blackrock, morgan stanley, all calling for a bottom. Railing against these very big warnings coming from stalwart veterans of risk involved. Nejra absolutely. If you think about it, it is perhaps extraordinary that until now the assumption seems a bit and markets at the second half of the year is going to see a recovery in a big bounceback, especially when you think about the fact that there are so much uncertainty around how the virus is going to evolve. What if we have more than one lockdown, what if we have several lockdowns . What if we have a doubledip recession or even a depression. That something the market doesnt seem to have woken up to yet. Manus gun lock is saying stocks will fall beyond the lows we are seeing in march. I think its critically important. The technicals are the most ortant thing, you can gundlach says were already in a depression now. Imbalances inmany the Global Economy going into this, showing its going to be a very different world when we come out. Lets get to the first word news , top officials in u. K. Now say they come a country hasnt done enough to test for coronavirus. Experts are struggling to agree on what to do next. Meanwhile u. K. Health Department Said in italy, the new coronavirus cases levels are facing a twoweek low and Officials Say the nation has reached a plateau. Assign it may be finally coming under control, but spain suffered its deadliest day yet as well as a Record Number of deaths in france and the u. K. The u. S. Plans to meet with saudi arabia and russia. If it happens, it will be the first meeting since the collapse of the opec plus coalition in early march. Since then, both countries have vowed to flood the market with millions of barrels of oil in a battle over market share. Stocks of started to fall below their march lows, according to investor jeffrey gundlach. Saying the s p 500 wont match recent highs for long time for a long time and projections for a quick recovery or to optimistic. He predicts a panic will return to markets in april. 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. Manus if they havent seen panning already, its certain going to come to us again, according to mr. Gundlach. Jeff curry over Goldman Sachs told bloomberg tv that russia is extremely vulnerable to oil Storage Infrastructure ititations globally because has to acquire thousands of miles of pipeline to get to buyers. The noise suggests there could be a potential cut between opec, pressure, and the u. S. Beyond 10 Million Barrels per day. Before we talk about what this would do, i want to go back and just really talk about the magnitude of the demand stock we are talking about. Currently, 96 percent of the worlds gdp is currently, has some type of social distancing measure in place. Greaterct in oil is far in the economic impact. Why . Because oil is the cornerstone of social interaction and globalization. The bottom that we knew comes to 26 Million Barrels a day as of yesterday morning. Its probably bigger. Japan has relapse, brazil crackdown harder. The number could be as highs 30 Million Barrels a day. In terms of looking at that, that magnitude of surplus is going to overwhelm the infrastructure. Were reaching Storage Capacity, crude production is already been shut in. 7 Million Barrels a day has already been shut in, and this is due to the fact that its reaching Storage Capacity constraints. Regardless if we get the announcement of a Production Cut , they will coincide almost at the same time. Lets go to the other point about the politics of it. Look at saudi, yesterday they announced the increase in exports to 10. 4 Million Barrels a day for may, i have no idea where that crude is going. ,he question is whether or not why would you folder cards at this point right now when youre starting to see your market share increase due to the shut ins beginning to happen globally. Its important to think about who will have to shut in. Its all about logistics and where you sit in the major pipelines around the world. Are the most vulnerable. Is not necessarily the highest cost producers that will have to shut income its where your assets are physically that will tell you whether or not you have to shut down production. Absolutely. This is why you look at a country like russia, it is extremely vulnerable to the current environment. Bread,oint out, you take brent is 500 meters from the water. You look at the beauty i, its 500 miles from the water. Will bedlocked crudes the ones that have difficulty. All right, nigeria, resealed come these are all offshore platforms and they will be able to keep producing. In contrast, you take russia, russian production is behind 2000 miles up pipeline. Canada, 3000 miles. As a result, those are where we will see the pressure points. Anada, five dollars a barrel wyoming has negative prices. Low and ai is trading chance for w ti to collapse down to five dollars a barrel is extremely likely in the current climate. The waterborne crudes will be safe. Heres the irony of all this. If you are social planner and youre one to shut down the worlds reduction, what would you shut down . All the offshore and all the middle east production. They are very large reservoirs. You only billed 30 million lat forms. A large reservoir can be shut down, its good for them to be shut down and then they come back even stronger. However, saudi arabia, is going to be russia, u. S. , canada, and parts of latin america where you see the real damage. To russia, are you hearing that u. S. And russian envoys are going to meet and talk, and does that mean we will see russia agreeing to pare back in relation to u. S. Sanctions being lifted, for example . The rosneftince trading are moved out of venezuela . Jeff im not going to speculate, but i will make the following observation. If your pressure, your point of the most exposed here. You have all those old im a soviet deals sitting behind thousands of miles of pipelines. The field has 11,000 wells operating. They are a 101 ratio of water oil. They are mature, with low pressure, and the key point is they have extremely tight reservoirs. You shut those things down, they are done. You shut those old soviet fields down, they are not coming back. Im just going to take that observation, i dont have any inside information, but i definitely think that will come into play with any decisions here. Manus more pressure to come on that oil market. Jeff curry, global head of commodities of Goldman Sachs. Intog up, we will dig china pmis, rising into expansionary territory while the rest of rest of asia goes toward a steep decline. Manus this is bloomberg daybreak europe. I manus cranny into by. Nejra cehic is in london covering the morning show. We have asian stocks giving a little bit that, asian pmis were again in expansionary territory but its about a belief in recovery in china. You have to get the Global Health crisis under control before these markets recover. Another route is potentially imminent. Dividend annihilation, hsbc and Standard Charter and a concern about dividends across the european trading day you take a look at the tenure Government Bond yield prevent will there be a deal done between russia, saudi arabia, and the United States of america . Lets get to our guest host, Noel Ohalloran. Great to have you back. Jim rogers saying the worst air market will come in the next couple of years. Theres a risk of another imminent route. Do you agree . Noel i certainly agree its too early to declare a victory in terms of the bear market being over. Typically in bear markets like this there are three or four phases so we really just gone through two of those. ,irstly the pandemic itself just three weeks ago, i was in new york, and life was pretty normal. Three weeks later we have the markets down 25 or so. They may have the authorities reacting in a very swift way. I think the next phases will be, first we need to see the medical outcome and we are certainly not there yet. Europe and u. S. Or six weeks behind china. Next we need to see economic and earnings evidence before we declare victory. The base case seems to be for a vshaped recovery where we see some kind of recovery in the second half of the year. If that base case in the market changes, more to look like an expectation of a doubledip recession or even worse, a prolonged oppression, how would you prepare the portfolio for that in the next few weeks . Noel certainly a vshaped recovery base case isnt clearly in line with the depression, so in terms of depression, thats clearly what the authorities are looking to avoid here. We have seen the greatest and swiftest and most coordinated response by global monetary and on authorities since the assumption that we avoid depression because the pandemic itself comes under control. I think we didnt get back to the base case question of is it a vshaped recovery, and i struggle with a vshaped recovery. I think there will be ingerlasting effect and dont think the world just bounceback we need to look at what is happening in china and pmi over the last couple of days. They have bounced, but not in a vshaped manner. I think thats probably a good blueprint for what we might expect to see and the rest of the world. For me, it we a slower recovery. The most important thing is that we do get a recovery and not a depression as you suggest. Noel, can i ask you about the buybacks . Were seeing hsbc and Standard Charter take the pain on the asian front this morning. Goldman sachs says 190 billion u. S. Have been suspended in the s p 500, about 25 of last years by that. Do you think that is the end of that story, or where does that money go . Potentially in the back part of the year, or does it elderly sit offered capital because we are in so much shock . Noel im guide you mentioned buyback. Dividends have almost been the lightning rod for attention and really the attention is about all sources of cash. Companies are absolutely about survival right now, they are about solvency. Therefore all sources of cash are being focused on. Capital expenditure, capital Bank Facilities and buybacks. I think buybacks, we know for the last couple of years the markets have been propelled by buybacks rather than earnings. We would absolutely expect to see buybacks being less a part of the story Going Forward and probably significantly so. I dont think buybacks will be a feature for probably another 1218 months. I think we need to get through this crisis, and thats companies with a voluntary basis to do buybacks, and then clearly there are sectors that have been receiving government aid or will receive government aid, they will not be in any position to do buybacks security by law. Thisybacks as a feature perfume met prevents going to next the picture for the 1218 months. Nejra when previously people have talked up the case of equities in terms of the dividend ratio and we see suspension of dividends and buybacks, does that change the way in which you view equities . . Versus bonds would you want to shift allocation out of equities and into bonds . Noel an interesting question. Boutique equity only manager and a large portion of our equities would be globally focused equities. Investors, the fact that we lose the dividend for a quarter or two quarters in terms of the longterm intrinsic value, i dont think it makes a major difference. Short term, if im a trader, it probably does make a difference. For me, is not looking at the next quarter but its looking at what is the average dividend that i might expect over the next 25 years. I think that story has not been clear. I compare that dividend yield, depending on the market at 3, 4, 5 , against Interest Rates that are at alltime lows. That yield is absolutely compelling. Compelling yield story from equities, despite the lightning rod of low dividends for the next two or three quarters. I think the longterm story. Till remains very much intact. Manus Noel Ohalloran stays with us. Lets get to your business flash this wednesday morning. Is flouting its takeover bid for hp, banking on uncertainty from the global bar coronavirus pandemic. It believes the underlying logic still remains. Airlines will go through as much a 61 billion in the second quarter, according to one industry group. For cashg governments refunds for canceled trips. Equity markets took a biggest dive since the 2008 financial crisis. With 21. 5 capital yeartodate. With achallenging time 34 slump three years later. That is your round up on the business flash headlines this wednesday morning. Nejra coming up, a painful two weeks as the coronavirus spreads in the u. S. More on that next. This is bloomberg. Nejra this is bloomberg daybreak europe. Manus cranny is in dubai. President donald trump warned of a tough two weeks ahead. The present warning comes after u. S. Health officials estimate. P to 240,000 americans die a less optimistic president address the nation as he appeared rattled by the death and suffering. Of people have thought about it, just ride it out, dont do anything, and think of it as the flu. But its not the flu. It is vicious. Annmarie joins us from new york. Its looking bleak in the United States. What is the latest on the virus . It certainly is, devastating numbers, especially coming from where i sit in new york city. The death toll yesterday topping 1000, and new york state infections are now exceeding those exceeding the province in china where the virus began. President trump is talking about the fact that its going to be a painful two weeks. He said our strength and endurance will be tested. People have been quite critical of him for being too casual. He took a different tone last night, quite dark, after the numbers you mention. Dr. Deborah birx reiterated what dr. Fauci said on sunday, as many as 200 thousand americans are projected to die. At one point in the briefing, there was a slide shown in which one production being as high as 240,000 deaths. So obviously the scope is quite rattling. Thank you so much. Thatgn of letup and health crisis. U. S. And european futures in the red. Coming up, key governs planning to maintain rigid lockdowns. We will get the latest. This is bloomberg. Manus good morning slump from bloombergs release headquarters in dubai. This is bloomberg daybreak europe. Your top stories today. Local stocks drop as investors get set for the u. S. Coronavirus figures. Thing 200,000 americans are and told to die brace for the pain ahead. As we start the second quarter, jim rogers says another round is imminent. Jeffrey gundlach sees new lows for the s p 500 and howard marks says asset prices havent seen the worst yet. Hsbc and Standard Charter slump in hong kong after scrapping dividends. The pmi data for asia shows contraction across the region. Europes biggest economies brace for manufacturing pmi today. To the markets, the reality of the Global Health crisis has yet to bring its full might to bear across the markets. Marks, followed by jim rogers, all saying another rout is possible with a triple whammy of debt hitting the market. Gundlach says will break the march lows and howard marks says the worst is yet to come. Equities are lower as the reality of the Global Health sis in america step set steps up. Worst quarter ever. Unlikely to counter attack, the implosion of demand, 95 of the world is socially distancing now. And to the dollar index, as the concern rises over the ratcheting higher a potential death in the United States of america, the reality comes to bear and the haven of choice rallies again this morning as we start the second quarter. A 2ld trump call for trillion dollar Infrastructure Spending bill to boost u. S. Jobs. He said low rates would make it easy to finance. Its unclear whether his proposal will be part of another package being considered by congress at the white house. Bloomberg sources also say the president will delay certain tariff payments for three months. For as after calls deferral on socalled most favored nation duties that will common the form of an executive order as soon as this week. Europe asning to well, since u. K. Prime minister Boris Johnson tested positive for the coronavirus last week, havere calling for gotten louder. Europe could be reaching its virus peak, as italy tyndale be reported a slowing infection rate, but neighboring states suffered its deadliest day. European governments doubling down efforts to maintain rigid lockdowns alongside the battle for public health. Airlines, they will burn through as much as 61 billion dollars worldwide in the second quarter, threatening the survival of carriers and what is expected to be the roughest stretch of the crisis. What hector general sees for support now. We estimate that the airlines will run out of cash into months, two or three months. It means that in two to three months, if nothing is done, we could see bankruptcies for half of our airlines. They have puthat together a very significant financial stimulus package, so if the money is on the table and we urge government to put the money on the table and to injected in the Balance Sheet of the airlines, we could overcome this very difficult period. Otherwise it will remain difficult for many of us. You are saying the money needs to be put on the table. Are you suggesting the government is putting out fine words at the moment but the actions are not backing them up and we need to see it coming through a little more quickly . First of all, we are very grateful for the government. They have done a very good job in putting together a very significant package, but now that the announcements are made that the efforts have been done, we urgently need money. When we publish a figure about thebillion u. S. Of for second quarter, it means we desperately need cash, and urgently. We say to the government, please, now implement the fantastic policies you have announced. How this iss of going to work its way through the system, we clearly have an urgent need for cash right now for the United States and here in europe here in europe and globally. There is danger that in the worst case scenario, we see the current actions being taken by government to contain the virus working, we didnt see a return to normal life, but we didnt see return of the virus later on, potentially in this year. At that point, the airlines will have had their aid, they will have gone back to normal working conditions, and then we get hit again. Hereis the longterm plan if we do see a return of this virus, if we do see problems reasserting themselves later on this year . How much patience do you think governments are going to have . Is this a oneshot for the carriers to put themselves back into a stable position, and if they dont, is there danger that we see it returning later this year . I think its a matter of patience. Its a matter of being able to overcome the crisis in one way, last only for a few months and thats all. As for a second wave, nobody can be held responsible for that. We hope governments will come packages orditional cash injections. That anyone would be comfortable with that. We have to fight against the coronavirus and overcome in different ways. If there is a second again, we will last for help. We think that governments will understand that. Its not the fault of anybody. Now lets get to the first word news. President donald trump is warning of pain ahead after the u. S. Faces a very tough two weeks. Public Health Officials have revealed an estimate that as many as 240,000 americans will die from coronavirus. Confirm cases in new york state overtook the province in china where the outbreak took place. Some saying the country hasnt done enough to test for coronavirus, claiming a shortage of chemical components. Meanwhile the u. K. Health u. K. Bankss have agreed to scrap dividends and buybacks this year, following similar announcements by european peers. U. K. Regulator wrote to the saying it expects banks not to pay any cash bonuses to staff. Stocks have further to fall below their march lows. The chief saying the s p 500 wont match high for a long time and projections of a quick recover are too optimistic, predicting a ceiling returning to markets in april. 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. Manus big warnings from some of the veterans of the markets. It could on the show, get worse with current output cuts. This is bloomberg. Nejra welcome to bloomberg daybreak europe. We are seeing red on the screen, the asiapacific index down 1. 4 . This is bloomberg daybreak europe. Manus crannys in dubai. Asian equities in the red. U. S. Futures hitting such lows, down 2. 6 on s p 500. The 10 year yield dipping as well, a clarion call from three big investors. Jeffrey gundlach, howard marks and veteran investor jim rogers all saying the worst is not over for equities. The expectation in the market up until now seems to have been for a ushaped recovery. Will that come into question in the next few weeks . Dollar strength in todays session is what were seeing as well. Willie t some liquidity issues,nd oil has been fluctuating the worst on record. That move by the fed yesterday, quite a big move. Is that going to prevent further sale of u. S. Treasury bonds . That quitemoves apace. Heres what you need to know to set you up for the days ahead. A historic plunge in oil prices, the commodity had its worst quarter ever, with the double whammy of virus restrictions, has battered the oil markets. And opec members and nonopec members would be free to pump at the output deal comes to an end. Our guests joins us, great to have you with us this morning. I listen to jeff curry last night and he said it doesnt matter if you do a deal between russia and the u. S. And saudi arabia, because demand is so utterly collapsed, down by 26 Million Barrels a day. Sideshow of a deal between those three players. What do you make of that . We just have such a drop in demand that it almost doesnt matter at this stage what they try to do. At this stage, the focus on rising production from the key opec members, the big question that we should probably be asking is who is going to buy that oil . I think the way forward potentially could be the fact going to berabia is pumping much less oil at a lower price and that option is not good economics. Producerse high cost are getting hurt pretty significantly, so we will see production taper off from these voluntary cuts in the coming weeks. Nejra the to speak to you today. In terms of where we sit now on w ti around 20 a barrel, if we look at what some have called unparalleled demand structures that will transform the industry this year to come, is 20 a barrel quite resilient right now . Ole it has been so far. , weve had aeing lot of calls from clients in the past week warning to get more because itl market is cheap. At the same time, we had to send out a certain warning that if youre trying to get involved in the oil market, you potentially could get killed because it is so steep right now. Quite a lot of moneys going into the futures market from a longerterm perspective. Thats probably keeping a handle on the market, just looking at the physical market, its trading below the futures price. Theres just no demand out there, so the risk is that we will continue to see it lower. ,his on the brent this morning yesterday redollars lower and dropping three dollars a barrel over the next day or two. Manus i had a conversation with bank of america a little bit earlier. Saying were going to run into storage around the world, going to be full and limit up by the middle of may. That will take us below 20. Storage, dors of you think that is fully discounted as yet in the price . You talking about 20 holding, but are you assuming full storage . No full storage, theres waiver going to sit around 20. See pricestinue to until we get down that involuntary cut that is required to bring some balance to the market. Of 26 Million Barrels is what is currently not being consumed, that obviously is a major cut that will be seen from produces around the world. Ofwill require some kind concerted effort. I think we will see that eventually. Russia is suffering at this these levels. The weak ruble is a cushion. Saudi arabia can sell the girls that a much lower price so what is the point . We will see some counter actions but probably not be not before we see some additional pain being inflicted into the market. Nejra in terms of the level of scale, it might sound extraordinary, but a lot of extorting things are happening in markets. There have been negative prices in some parts of the market. Could you see the benchmark of wti and brent get into negative territory . Is that at all a realistic prospect . That, i thinkee the more landlocked crews that sub 10 and some even some five dollars, that we are already seeing that close to negative unfolding. Let me put it this way, if that , the whole oil industry is in disarray and i dont think its going to be allowed to get that far. Manus its gotten pretty extreme so far. Call me the grinch. Can i ask you, we have been debating this with our guests this morning. Were talking about jim rogers, the worst bear market is yet to come. Oaktree saying theres a possibility that we havent discounted the worsening of news. Where is the contra commodity trade, if those three huge calls that i would say are people i would pay some attention to. Gold has been drifting lower last couple of days. News had some slightly bad in the physical world. Chinas demand has not yet picked up, russia has stopped buying, they could potentially turn sellers in order to cover some of their rising budget deficit later in the year. At least in the short term that is adding some pressure. , it isinflation story key here because gold is a correlation to other markets. Thats the way inflation will come in. Over the last three months compared to some of the other asset classes, is starting to do well and i think it will continue to do so. [indiscernible] indicates that longerterm investors are continuing to get into the market. The funds are more price driven so they are easing off somewhat recently. The worldhe outlook is staring into right now is gold right now. Much forank you so joining us. Show, three the market titans have warnings that the worst is yet to come. This is bloomberg. Nejra this is bloomberg daybreak europe. 3 wall st titans are bunkering down, expecting markets to get worse. Howard marks said asset prices will extend their decline. Will nott rebound account for how bad the virus fallout can be. And talking about the worst bear market in our lifetime in the next couple of years. Jeffrey gundlach says the s p 500 is likely to reach new lows in april. The vshaped recovery is perhaps too hopeful. Knoll ohalloran is still with us. Earlier you were saying that we could see worsening in equities. Whatat kind of market, would you define as longer reach . Noel looking out beyond the horizon at this stage on the assumption that there could be some further downside, but maybe not too much downside. Put some ofeed to it into context. In termsen highlighted of denial and then reality. Inhad denial that weve seen asia, weve had that in europe the last number of weeks. And the decisions in the u. S. At present. The u. S. Is absolutely important, i think what we have is a lets remember this medical emergency first and foremost. We have seen evidence, early evidence in europe that measures are beginning to work. And in a number of weeks time it will be have seen to be working in the u. S. Shut firsthas been and asking questions later. So what stocks have been overly rewarded and overly punished . Thats where we will put our emphasis in terms of looking to reposition on the others of the crisis. And we will get on the others to the crisis. Thats what the Portfolio Managers are doing at the moment. Particularghlight in growth as a style that has led the bull market in the last number of years. It has further extended over the last couple of weeks, so thats where we will see vulnerability. On the others of that, we see value stocks that have than absolutely pummeled and punished. Manus we will have to draw a line under it there. Futures are dipping, Noel Ohalloran our guest. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Anna good morning. Welcome to Bloomberg Markets european open. I am anna edwards here in the city of london, alongside matt miller in berlin. Matt good morning. Today, the markets say keep an eye on the pmi. Manufacturing data likely to show a weakening across europe as futures follow across the board. The cash trade is just an hour away. Lets get your top headlines