Space. Oil getting a bit of a reprieve. The concern is you have even more oil flow if the opec deal comes to an end. We want to get you todays market moving news from new york as well as washington. We want to start with the latest pmi data. Factories around the world suffering one of their grimmest months on record in march. Fbloombergs Michael Mckee joins me for more. Theres a lot to dig into. Give me some of your takeaways here. Michael mr. Rogers word of the day is contraction. Across the developed world, they are pretty bleak at this point. Some of them not as bad as thought because of a quirk in the data, but lets go through the data right now. Anybodye hardest hit of i the virus, and now the hardest hit in terms of the pmi number. Eurozoneance, germany, u. K. Are also in the 40s, which marks contraction. New orders of production crashed, but there is a quirk in the data where supplier delivery times are linked. However, in this case, there are no supplies to deliver, so it makes the numbers artificially higher. ,hina adding that on the bottom which is more mediumsized companies. They are up to 50, but this index compares how youre doing this month with last month, so by definition, they are doing better. It doesnt mean there is a major recovery going on in china. I dont know if we have the chart because of the difficulties everybody is having these days, but i want to show you, if weve got it, an interesting chart from germany. Retail sales last month exploded not because the economy is doing really well, but look at that line on the right. Everybody was stocking up ahead of the virus and ahead of being pinned in their homes. That is what we are going to see in a couple of weeks when we report retail sales for the month. We will see especially in the grocery section that kind of number. German chancellor Angela Merkel is beginning to talk about a joint financing plan with the rest of europe. This is a major breakthrough if she goes ahead with it. Issuing eurobonds to try to help all of the countries there. They have been strongly against that. Also signaling that she is considering getting rid of the institutional provision that prevents them from unlimited borrowing, which would allow them to sell a lot of bonds and try to put money into their economy. One other note from europe, french Prime Minister bruno le seee saying they nationalized companies to take control of. We get the ism out this morning, expected to dip into the 40s. We get that adp employment number, which could be interesting because they measured the whole month, rather than just the beginning of the month what the payrolls report on friday. Still, only about 150 thousand jobs lost is the forecast for those numbers, not catching up to where we are right now. Alix super appreciate it. Great analysis and lay of the land for today. Marketso turn to here, starting on oil. Saudi output is going to climb as the opec deal comes online, but russia may not be pumping more. In reordering is here with more. Annmarie Annmarie Hordern is here with more. That Historic Deal is shelved and they can pump as will pump at will. Saudi doing that, but russia may not. As ella vendor novak, the in the g minister, says as alexander novak, the energy minister, says they could do so. They are joining a number of companies adjusting to this new normal. They cut by 25 and made no mention of a dividend. Out the first quarter, the worst one since 2008. The s p 500 closed down yesterday exactly 20 . Futures this morning looking at a serious downdraft at the open. S p futures down more than 3 . The stoxx 600 is down more than 3 . All major indices are in the red. Hsbc andm und a number of banks under pressure. Than 8 . K is down more treasuries up this morning, with the yield ticking up zero point 0. 06 . Picking up if you were looking for some optimism come i dont see any yet. Alix thank you very much. I want to continue on the theme annmarie just picked up on. Shares of british banks tumbling, and lenders scrapping dividends and buybacks. They are also halting major bonuses for some key staff at the urging of all regulators. To pivot off of that, barclays now protecting that european earnings and dividend should fall by about 40 this year. The bank says the Economic Impact from the coronavirus will be as severe as the great recession. They do still say it wont last long, but we will have to recalibrate a world where dividends arent as present. We will break that down over the next couple of hours. Coming up on this program, more of your morning news and top trades and analysis on the markets 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 and Michael Mckee. Here, aprilhe day 1, the start of the Second Quarter. What do you think is the overwhelming theme here . Damian i am looking at lumber prices. Lumber prices are the lowest since 2016. Paper is cheap. Im just getting. But really im just kidding. But really, the market is not reacting positively because theres red all over the screen. Foreign Central Banks that can post treasuries for dollars, it may address shortterm liquidity stress, but there are some risks. It seems to be prohibitively expensive at current levels. Alix does that mean that what the fed did yesterday is not working, or does it just mean that now the liquidity issues are taking a backseat to other problems . Michael it just takes time for all of this to work its way into the markets. The announcement yesterday that they are going to do repos really gives a lifeline to some of the emergingmarket countries because it makes them eligible to get dollars from the fed in ways that they are not included in the swap lines. They are really shortterm, and that money has to be repaid, and there is a penalty rate, so it isnt the easiest thing in the world, but is there if they need it. We will see if theres a lot of take up on it going forward. There has been significant takeup in terms of the swap lines, so money is getting out there in the bigger developed economies. The one market where youre still seeing some stress is commercial paper. The fed announced its program, but hasnt put it into effect yet. It could take another week or so , so we are going to see some stress is there. In general, stress is down in the markets, but still in pockets. If we were ton, see these extended repos really work, what would be the rate we have to see . What do we emerging markets need right now . Seeing isat we are about 0. 35 percentage points, which is what Central Banks offshore would have to pay for borrowing off of their u. S. Treasury collateral. But i think for me, all of that aside, it is really going to be a function of if you just look at the knock on impact to the front ends of a lot of these curves, to use china for one example, forward points after the fivemonth tenor and china have turned negative, which means you get paid to hedge against dollar upside. That should never happen. When you look at dollaryen, it has been negative forever. It turned positive overnight. To mikes point, obviously a lot of liquidity stress, we are doing anything we can to address these. The commercial paper issue is to a problem. But for me, these create dislocations in the market they need to be taken advantage of. You should not be paid for the privilege of hedging against dollar upside. When the market gives you that, youve got to take advantage of it. Alix how . Damian well, you basically hedge against eller upside and dollaryuan. You get paid to basically protect against dollar upside while carrying in positively yielding china government bonds. That is one way to extract the yield over treasuries. These are the kind of opportunities if you are looking for yield pickup. These are the tools that you can take advantage of. Alix at the same time, said yesterday, the u. S. Is likely to follow emerging market economies that have not seen a high in there markets for more than a decade. Is that going to be the stagnation conversation among economists as we come out of this . Forget a letter recovery. Michael a lot of people are beginning to feel that way. When they look at the trajectory of all of this, they are saying ,hat we see is a very fast drop a big drop in global output in the month of april and the first and Second Quarters, but how fast we get back is hard to tell because we dont know how long this disease will go on. At the same time, what are people going to want to buy . Do they want to go out immediately to restaurants, or are they still going to be. Ervous if that demand isnt there, it is certainly going to help a lot of companies. Macys, whichof furloughed all of its employees this week. Are people going to go out and buy a lot of clothes, do a lot of shopping immediately, or will it take a long time for them to see any is this recovery . This could lead to a lot of restructuring in Different Industries like retail. I want to point out, we were talking about the stimulus programs and how they are working in various areas. Please let macys arent going to be able to get loans from the federal reserve. Maybe the treasury secretary will make an exception for them. Anyone who has junk graded paper isnt eligible right now. You could see Big Companies in big trouble who cannot get the emergency loans others are. Alix it is a good point. Weve also seen lots of other issues, with reads for example. Mortgage bankers worried about certain dislocations in the market as well. Any creditng reductions because they dont want to sell corporate loans in this market. What is the thinking about all of that . Are obviously watching for what is going to happen and whether they can intervene or not. Theres a debate about how far you go down the credit latter to help people. Ill dudley suggesting you dont want to ask bill dudley suggesting you dont really want to get involved bill dudley suggesting you dont really want to get involved. Now there risk is blowing up, and that is what happens in markets. They shouldnt be bailed out because the government is taking on enormous credit risk. That is going to be a debate going forward. I think the fed legally has to be on the side of not doing it, and probably wont be going to congress to ask for an exception at this point. Alix fairpoint. Damian, we did get a slew of data in china. Italy terrible come of the worst since 2009. What did you learn through those numbers . Damian i have to say, i really havent even put any emphasis on the Economic Data because it is going to be bad. It is going to be worse. It is going to get worse. Really, the data isnt, for me, driving the market pricing. For me, it is about the quantity of money. Look at the fed Balance Sheet. The amount of stimulus and the size of the fed Balance Sheet and the speed at which it is expanding, it is really just overwhelming any sort of fund mental data input that you might hope to lean on in this time. In. E seen spreads come u. S. Highyield spreads have fallen. We are now back down to 207 into bips. 272 some of these moves, the volatility you are seeing is a little bit of liquidity turning to these in illiquid credit markets. At the end of the day, emerging market spreads have really not come off the way their counterparts in the u. S. Have come which points to the stresses we are seeing offshore. That is where my focus is. Alix you just killed mike mckee, not looking at the ecoreport. Is this conversation when all of this is said and done, the dollar not being the only World Reserve currency because of what this crisis showed us . Damian thats a very difficult call to make. I know a lot of emergingmarket investors located offshore. They struggle to get their hands on dollars. They have been conditioned to denominate in dollars. The role of the dollar is not changing tomorrow. That goes without saying that we could see hyperinflation or a spike of some of these measures, which could certainly devalue it. For me, i could see dollar being structurally to the global emerging market, and it is not going to change anytime soon. Alix really appreciate your time today. That is bloombergs Michael Mckee and Damian Sassower. Always good to catch up with you. Any charts we are using throughout the show, go to gtv on your terminal. You can browse all the features there and check it out. This is bloomberg. Ut. This is bloomberg. Im Viviana Hurtado with your latest Bloomberg Business flash. Xerox dropped its hostile takeover bid for hp. The photocopier and Printer Company blaming uncertainty stemming from the coronavirus pandemic. Electric,eral finalizing the 21. 4 billion sale of its i o pharma business. That brings in of its biofarma business. The unit to denna here. On monday, Blackrock Ishares gold trust attracting 332 million, its biggest inflow since 2011. Taking in the fund almost 2. 9 billion. That is the most since 2009. That is your Bloomberg Business flash. Alix thanks so much. Joining me now is sylvia oflonski, managing director direxion investments at referee asset management. Give me some insight as to how we are set up for the Second Quarter. Sylvia good morning. There are definitely some corona economics and the markets. I think when we take a step back and look at the markets, we see valuations globally looking fairly attractive. You cant call the bottom, but if you have a longterm time horizon, there are some bright spots out there. Some of the flows we have seen recently have been in places etfs that care, track Health Care Companies and biotech companies, which could come up with potentially a cure or something that will abate the coronavirus. They are flush with cash. There are some challenges in the near future, but there could be some bright spots as we see what comes out from that sector as it relates to the virus. Some other areas we have seen interest in have been Consumer Staples and Consumer Discretionary. If you look at the recent shakeup of the select sector indices, if you look at staples, some of the top names are things like procter gamble, costco, some of these big bracket stores that sell things like toilet paper. What are people buying . They are going out and buying a whole bunch of things like toilet paper, tissues, cocacola. All of those names remain strong. On the others of Consumer Discretionary is amazon. Consumer discretionary is something you want more than something you need, in theory, but if you look at the names in the index on amazon being the top name, you got everything from livestreaming, people sitting at home watching tv, youve got the Consumer Staples in there. A lot of people are buying toilet paper and paper towels from amazon, too. They keep saying they are hiring hundreds of thousands of workers, so obviously the demand is there. The market has seen a lot of flow into goldrelated etfs. We have seen the same on our side, so gold miners and flight to safety type of plays like flow into utilities, bonds, and gold related etfs. I think investors, particularly with shorter horizons, are looking for tactical opportunities that are moving the market, and longerterm, they are looking for low valuations and entry points across also to sectors that continue to do well into the future. Alix with about a minute left, can you tell me about the leveraged guys . Which ones are right doubt . Which ones are wiped out . Sylvia we dont have etfs wiped out, but the ones that brought us up in the s p 500 are the names that have been hit the most. I will start with oil and energy because those have been those have definitely seen a downturn, with 2020 being the worst year for oil since, and decades basically. It has fallen 70 . Also tech in the short term because all of the stores are closed. They are high beta names. Look to those low valuations for potential recoveries when we get past this. Alix sylvia, hang tight. We will talk more about oil. Coming up, President Trump says the u. S. Would meet with russia and saudi arabia to discuss the oil markets. More with Francisco Blanch of bank of america. 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 daybreak. Im alix steel. It looks like a really ugly session developing now. Dow futures off by 720 points. If you thought we were out of the woods, thing again. Whether it is the news flow from President Trump warning more direly about the death toll in the u. S. , all of that contributing to negativity. Ulcer want to point out what is happening with the ftse. , lloyds, rbs all saying they will not pay out dividends, suspending for this year. If you switch of the board, you can see where investors are putting their money. That is definitely treasuries. Yield down by about six basis near that record low we sought the beginning of march. Also seeing a bit of selling in europe. Really, it is germany and the gilt sticking the safe haven in europe. The dollar continues to stay strong in the currency market as. Il fluctuates you have saudi arabia maybe not pumping more. Ab that will be some kind of support. Lots of ifs when it comes to the markets. Sylvia jablonski is still with me. We were talking about how energy and oil were shunned by investors. Can you give us more insight into how, and how investors are positioned, if we are really stretched at this point . Sylvia specific to oil, energy and gas related etfs, we have seen investors flowing into the short side of the product. They are expressing a view that they believe the various indices out there that benchmark to oil and gas will go down, and holding the bear fund gives them the opportunity to generate from that trade. 2020 has just been one of the worst years for oil since its peak in early january. Crude fell 70 to around 20, all about russia and the saudi s flooding the world with crude and driving prices down for a sustained time, so it remains to be seen how we come out of this. There may be some companies that are ok and have additional liquidity and manageable debt. Got Companies Like chevron, other companies that have to cut spending the just amount they are on drilling, it doesnt add up to be a bright spot for oil and gas producers. Until we get some kind of accord with saudi and russia, i think the oversupply coupled with reduced demand for people staying home with coronavirus, there could be some bankruptcies looming in the sector. Alix sylvia, hang tight. Heres what president donald say yesterday his press conference. Pres. Trump we are going to see what we can do because you dont want to lose an industry. Youre going to lose thousands and thousands of jobs. Theres oil all over the oceans right now. The boats are all filled. Ships that were dying, that werent doing well. And now thats where they are storing them. They are sent out to see and they sit there for long periods of time. In some cases, its probably less valuable than water. In some parts of the world, water is much more valuable. Weve never seen anything like it. Alix joining me now is head ofo blanch, Commodities Research over at bank of america. Trump seemsresident to key in on the idea now that for lesss isnt a boon of a tax on americans, and more of a pain for industry. Do you think they will doing with russia and saudi arabia to try to get some kind of deal done . Fransisco i think it is difficult for u. S. To join the discussions sibley because the industry is so fragmented. I am not sure how the government would manage that and what kind of authority he would have at the different state and federal levels. Thatnk it is clear President Trump is trying to bring russia and saudi back to the table, and i think the best chance to do this is to give them both an opportunity to save face after the failed meeting a few weeks ago in vienna, and encourage both sides to sit down and negotiate. I dont think the u. S. Is going to actively cut production as part of an agreement. Ado think the u. S. Would see point of production because the economics are horrible right now. Alix thats exactly right. So i guess my question is, what is best . Is it best to just let the market play out and get the production shut in because oil is so low, or is it better to try to help support supply . Francisco i think it is better to stem the tide a little bit. The danger if we let a lot of these companies go bankrupt, would demand comes back, we are going to snap back to the other side in a pretty sharp way, and i think that wont be good for u. S. Or for the world. So i think ultimately, it would be better if we can actually reduce the number of Companies Filing for bankruptcy here, but i do think it is inevitable that we will see a high degree of consolidation at this point. Theres way too many players and way too many weak Balance Sheets right now in the industry. Alix fair, but no matter what they do, it has nothing to do with the amount of demand we are losing in the demand shock. Can you give me a since of your models and what kind of supply we would need to see to even help the market by five or 10 . Francisco thats a great question. We talk a lot about supply, but the real issue here is demand. We think demand in april will be down by 17 Million Barrels a day. Weve never seen anything like, and frankly, the inventory picture is going to look pretty horrible within a few months. We havent seen the build bounce when you look at data yet, but the amounts start increasing quickly over the next two months, i think. This, the only way to do sentence across canada, parts of the u. S. [indiscernible] under two dollars a barrel. Not to gas prices, the oil prices. Hard for aing to be lot of the companies to keep operating this way. You get whenat you have a surplus in a commodity that is hard to store like oil, or like natural gas. We saw negative prices in gas last year. I dont think we will see them in oil for the main benchmarks, but certainly a lot of retail markets, thats where the price is. It is a signal for producers to make that decision, to make that cap for now. And thats what they need to do. The numbers are astronomical here. It is the biggest swing down we have ever seen. Alix true. It also means your job gets harder when you look at 2021 and 2022 and you have to come up with an Oil Price Forecast because we have no idea how Strong Demand is going to be. Our people going to be going traveling what they did before . What is going to happen to jet fuel . What happens to those questions when you have to push a model out over the next two years . Francisco thats right. In terms of the demand picture, i am thinking of three main scenarios. I think theres a scenario where demand comes out something similar to what we used to have in 2019, and that is our best case scenario. I think theres actually another innario where we see a shift Consumer Preferences because we dont realize that we are risks,y taking too many and Society Changes in the u. S. And around the world, and we dont really fly as much. Travelk of the risk from is too high. Ab we find out that working from home is not so bad. Theres a third scenario that scares me even more, which is essentially,where we start to provide some relief under lockdown come a start to open up the economy, and then we had a relapse and people get sick again, and we have to shut down. Thats been happening in some parts of asia. That scenario worries me the most because the rolling lockdown scenario is one where we get some demand destruction for an extended period, and that will be really hard to manage for an industry. So how do you look at a range for this year, as well as for next year when it comes to the oil price and a benchmark . Arecisco this year, we looking at a demand contraction of 4. 5 Million Barrels a day. Supplyalso looking at rolling down pretty quickly in the u. S. , down by 1. 5 to 3 , similararrels a day to other sequential declines. We are looking on 47 a barrel sorry, on 37 a barrel for brent on average for the year. Weve averaged 51 so far. This means we spend most of the year around 30 a barrel, and then a pickup in year end. Next year we have 45 because we think ultimately, the baseline scenario of a normal recovery plays out, we will have destroyed a lot of supply. I dont want to get too pessimistic because i think people ultimately will want to travel again, but i do think theres those risks that may be even truly next year, we dont get back to a 2019 normal. We just have a postcorona normal. That is where we stand today. But again, we have 45 a barrel on brent next year because we also see extensive supply destruction at these price levels. That is the other part that is really going to help balance the equation. Alix francisco, really good to catch up with you. Take you so much. Still with me on the phone is Sylvia Jablonski of direxion. We talked about oil, and i want to pivot to see, and that is buybacks and dividends being scrapped first by european banks, then u. K. Banks. I wonder if the u. S. Is going to be next, and how we recalculate price to earnings multiples when buybacks are out the window. Sylvia it is a great point. I think it will be something that certainly impacts the s p and the market in general going into 2020. But one of the big concerns is that we went into this year saying that we need to see whether or not companies can hold up their earnings number. We can see at expansion was really sustainable, and if the containable market was sustainable. Now weve got some pessimism back into the market because we essentially have a mandated recession, at least in the short term, by the coronavirus. Sufferink buybacks will and that the economics will continue to suffer. The jobs numbers that came in was a staggering number. We were at full employment as of a few weeks ago. People are ready to get back to work. They cant get back to work. I think what will make a difference is potentially the fed. The fed has an enormous Balance Sheet, and theyve acted very quickly. They did a term in this job to provide stability to the fixed income market. They took two to three weeks to do it during the financial crisis. Student loans, money markets, etf purchasing, bond purchasing, supporting credit markets. I think that is the bright spot here. If we can get the economy reopened in a couple of months, pending most important thing, the health of u. S. Citizens, but if the economy reopens, hopefully the amount of stimulus , the size of the Balance Sheet, and the speed at which the fed is moving will help support the markets and help get the markets back on the path of growth, but it remains to be seen. Really, the virus in the aftermath of that, and how long things are shut down is the key here. Sylvia, good to catch up with you. Sylvia jablonski of direxion. We want to give you an update on what is making headlines outside the business world. Viviana or hato Viviana Hurtado is here was first were nude. Is here with first word news. Ritika President Trump is largely viviana President Trump is largely giving up his optimistic tone, saying coronavirus could kill 200,000 americans. An Aircraft Carrier struck by the coronavirus. The commander of the uss Theodore Roosevelt pulling for moving all but a Skeleton CrewTheodore Roosevelt calling for removing all but a Skeleton Crew. In spain, its deadliest day yet. There were another 864 fatalities from the coronavirus. Total deaths they are past 9000. The number of confirmed cases in spain is now above 102,000. 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. Im Viviana Hurtado. This is bloomberg. Alix thanks so much. Coming up, youve got some deals on the back burner, and that is leaving some banks with hung loans. Even deals that go through are having the same issue. That is coming up in todays wall street beat. If you have a bloomberg terminal, check out tv. Anything you missed, check it out. Click on the graphics, click on the charts. Tv. This is bloomberg. Viviana this is bloomberg daybreak. Coming up in the next hour, marc cooper, pj solomon ceo. Alix winning me now is chris white, bondclick ceo. You have a real sense of the innerworkings of how the Corporate Bond market is. We talk a lot about how the fed is going to come in and save the ig market, etc. You have some concerns about transparency and how it is going to work. Can you walk me through it . Chris sure. Thanks for having me on. These are Interesting Times for all markets, but in particular the Corporate Bond market. We had relatively prolonged tranquility thanks to central bank intervention. Has really brought volatility to the Corporate Bond market, really testing the overall Market Structure for Corporate Bonds, which is a 10 trillion market, so it is quite significant. Why is that a problem . Chris sure. Binge reallya debt encouraged by central bank policy. We have a lot of borrowing and leverage in the system that is really the result of the actions taken not only by the u. S. Central bank, but Central Banks around the world. I would say for your viewers, the way to understand this is if you were around the 2008 credit crisis, the issue that is now rearing its ugly head in the Current Crisis is loose credit for large corporations. See a market thats grown significantly, and a lot of the borrowing has been in the lowest rung of Investment Grade debt. It is a problem because as , gettingre backing up access to Debt Capital Markets is going to be harder and harder for companies. Therefore, refinancing a lot of debt is going to be issued, and youre going to see Companies Already due to the slowdown Economic Cycle being downgraded from the lowest rung of Investment Grade into junk. The most recent large issuer was ford. Alix so why is that necessarily bad for the fed . That is what they are supposed to do, right . A lot of companies will try to maintain that ratings of the that rating so that they can buy from the fed. Chris i dont think theres anything necessarily bad with what the fed is doing, but in the stimulus package is an unprecedented action for the fed, or at least the ability to take unprecedented action, which is to start a direct Corporate Bond buying program to support the market. This is not unlike the direct residential mortgagebacked program that was started with tarp in 2008. Heres where there are some areas of concern. Unlike modernized markets for equities in u. S. Treasuries, both the Corporate Bond market and mortgagebacked Securities Market do not have reliable transparency on current indicative market prices. Therefore, secondary trading of Corporate Bonds is done without public pricing information, which creates an opportunity for market manipulation. We saw market manipulation during the tarp liquidity bailout, where there are a couple of highprofile cases where trades that were done with the taxpayerfunded liquidity facility were done at off market prices. The fed program right now is pretty loose around how execution is going to be handled, and the concern here is this is a Vital Program to hold these markets up. It is going to change the conversation, i believe, around Price Transparency and the Corporate Bond market, and i think it is about time. Post covid19 is a lot of handwringing concerns around the calculation of what is called Net Asset Values for both bonds and etfs. Is ofhat asset value these bonds in these portfolio, what are they worth collectively . Look thetake a individual prices for the stoxx, and that is what makes up your portfolio value in a very raw sense. But when the pricing information on the bonds themselves that make up a bond portfolio are hard to come by, or the pricing information is inaccurate. Coming up with a reliable end of days Net Asset Value compilation is difficult. Where we are having that challenge, it is quite concerning that now we are going out of a taxpayerfunded stimulus package that really doesnt have additional pricing information to guide it. Alix chris, really good to get your perspective. We will definitely have you back. Whats more in the credit market to discuss. , thankhite of bondclick you very much. Coming up, the expanding central Balance Sheet swap lines. We are going to break that down in todays traders take. This is bloomberg. Alix in the market, we are looking to develop a pretty ugly day overall. S p still down by the lows of the session. Really keeping an eye on the bank stocks, as well as big oil stocks, as oil tries to recover. Youre still seeing some big capex cuts. Bp the latest. We are going to have lots more coverage for you as money still goes into the dollar and the bond market. One of the underlying issues we are going to have to tackle in the Second Quarter. Running me within the next hour will be Michael Feroli of jp morgan and Christopher Wolfe of First Republic private wealth management. This is bloomberg. Because you cant get to the theater, were bringing the theater home to you with xfinity movie premiere. Such news. I know what this is. This is a real thing. Our Brand New Service that lets you watch movies at home, while theyre still in the theater. Oh, mister elton. Ahh he has figured out a way to be invisible. They picked the wrong woman. Just say xfinity movie premiere into your voice remote to bring the theater to you. Alix welcome to bloomberg on this americas wednesday, april 1. Im alix steel. Lets take it from the top. Pres. Trump we will start seeing the light at the end of the tunnel, but this is going to be a very painful two weeks. Exceed. S. Infections those in hubei, where the outbreak began. Experts talk about the potential return of the virus. That could actually happen because of the degree of transmissibility. The deaths and the intensive care and the hospitalization always lag behind the early indications that there are less new cases, the way we saw in italy, and the way we are likely seeing, i dont want to jump the gun on it, but we are seeing increments of this in new york. Alix San Francisco now saying it may lose as much as 1. 62 billion in tax revenue over the next two years. The city is already facing a deficit of as much as 287 million. Head says fiscal stimulus will be funded through bond issuance as countries continue to backstop their economies. Manufacturing activity from south korea to europe is pummeled by the virus. Michael the purchasing Managers Index is a first look at economies around the world for a month and across the developed world, they are pretty bleak at this point. Some of them not as bad as thought because of a quirk in the data. Alix even china is still trying to help its economy. Moreconomy calls for by local authorities. Pres. Trump oil has dropped to a point where it is the greatest tax cut we have ever given, if you look at it that way. Says heesident trump will discuss the Oil Price Crash and will join the conversation at the appropriate time. It is an already oversupplied market. Inthe opec deal they struck 2016 is now shelved and they can pump at will. Saudi seems to be doing that, but russia says they wont just yet. Alix meanwhile, the market kicks off the quarter with a thud. Jeff gundlach and howard marks rn of more pain ahead. In the markets, it is looking to be a pretty ugly day as we open up here on the Second Quarter. S p futures are right by the lows of the session, down over 3 . Banks, oil continued to get hit pretty hard. Youre seeing a move into safe havens like the dollar. In the treasury market, we are a bips away from record lows on the tenure. Oil trying to find some stability. Still, 2022, you cant feel still, 20 22 cents, you cant feel happy about that if you are an investor. Us,stopher wolfe is joining First Republic cio. How are you positioned . Good morning. I think we are positioned in a relatively good way. I would say somewhat conservatively versus where we are normally. That means a little bit of extra cash on the short duration. I think to big things we have done in the last 18 months, but have really started to help, is the focus more on the u. S. , the stayathome strategy. Have seen the export driven markets that have meant that returns on capital will mean less. The returns on capital that we didnt know our forecast have made things a lot worse. , this idearspective of being a bit more conservative in terms of positioning, market sell have been indiscriminate both in equities and in fixed income, we think is the way to be positioning through this. I think there will be something that looks a lot better, may be to normal, as get through the next year or two years. That is really what this is about, positioning for a longerterm outcome. Shortterm, earnings usually provide some kind of visibility, and i cant see that happening this year. First quarter earning provisions have been coming down like a rock. Third quarter is now getting revised lower. What will lead to safer companies when you dont know what the outlook is going to be . Chris i think it comes down to how much more Debt Companies are carrying in this time. In the simplest form, debt is a contract. Youve got to repay it. See a lot of to volatility in your revenues, and it is very hard to manage debt once you have it. What we are thinking about from here is the idea that the simple issue of how much leverage a company has is going to determine a lot of how much within about the relative quality for the company. There are other things around the Business Models that we look at, but we really look at the leverage function. The backdrop for that is important because we are putting lots of debt out there in the public sector, and countries will have to use some debt in some cases to get through the next several months. We are trying to start from a place where companies are positioned to make it through that time, rather than starting with a lot of debt and working to refinance that because i think we will see a lot of bumps with respect to both liquidity, the number of programs, and ultimately the disposition of some of these companies. Companieso you view either suspending their buybacks and or dividends as a good thing . Christopher on the earnings front, i think 20 20 is going to be a very difficult year. The original earnings estimates rangee s p 500 in the 170 are going to be down 25 or more. I dont think looking at one year of earnings is going to be the best answer. We need to look at the next two, 3, 4 years. To 2021, iook ahead think if we are looking at the next week or month, it is likely to be pretty challenging. The opportunities that all of the downswings and the vacillation between fear and greed are going to create are really around that upgrading function. He said the idea that buybacks may be less is a good thing. Its been a huge support for markets in terms of raising earningspershare numbers as we reduce the number of shares. That is going to be a headwind going forward. If we revert back to the organic Growth Numbers in earnings, it is in the mid to low single digit numbers. That is not a bad thing. Keep in mind, we are going to come off a pretty challenging earnings picture for 2020. Companies that resume organic growth later this year, maybe as early as the Fourth Quarter and in 2021, i think that is going to start to show through. Right now, i think we are faced with lots of downgrades, and companies throwing in the kitchen sink because it is going to be very challenging. Alix i wonder if you look at company and sector perspective when they do that, if that is considered good. We saw something really odd when you had companies downgrading their forecast earlier in the year. It seems like investors are rewarding them for it because it is more like reality. How do you look at that . Christopher thats not a bad way for longterm investors to look at it. For our clients, the idea is that this isnt just a one quarter event. A downgrade for one quarter is a good start. In the likely to be third or Fourth Quarters as well. To the extent that companies are resetting expectations at lower levels, historically that has been a good thing. I think for companies that have some line of sight around their business, particularly staples or other areas, i would expect those forecasts to be maybe not as difficult as some other areas like Consumer Discretionary. I think the bottom line is i dont think we would look at earnings forecasts and the realism is the only metric for looking at companies. Thatthink you will see distribute to volatility in the market. Couple of weeks in earnings forecasts overall are going to have some pretty stark outlooks ahead. Alix it is going to be a really interesting couple of weeks on that front. Christopher wolfe, really appreciate it. One other thing we are watching today, double line chief Investment OfficerJeffrey Gundlach said we havent seen the worst yet. He says the market will eventually bounce back, but there wont be a vshaped rally like others are forecasting. He also sees unemployment rising to about 10 and says we are already probably in a recession. Meanwhile, howard marks isnt anymore optimistic. He says asset prices could fall further, and the range of negative outcomes from the end, it is much wider than that from recession, but keep an eye out for when opportunities arise. Outlookp, slashing the for gdp. More with Michael Feroli, jp morgan chief u. S. Economist. This is bloomberg. Away just a few minutes from the latest read on unemployment at 8 15. Last week, we saw 3. 3 million americans filing for unemployment. That was just two weeks ago. We are going to bring that to you. Joining us now, Michael Feroli, jp morgan u. S. Economist. Also with us is bloombergs Michael Mckee. Give me the lay of your land the lay of the land when it comes to your forecast. Do look for a very large decline in output. I would say what we are also looking for declines in output in the first quarter. I think gauging the numbers here is difficult, but if you points seem pretty clear. One is that we should have output decline in the first quarter. The second is that the Second Quarter will be a record decline in output. I think the real question comes when we get to the second half. The biggest question we are looking at the second half outlook, even if one makes assumptions about that, i think theres still a lot of uncertainty about how the economy rights itself after probably the largest stock in our lifetime to economic activity. Alix thats a good point see deepere kind of we go, the more we rebound later. That is not what you guys forecast in your latest model, though. Michael f right. We have a strong second half, but not Strong Enough to get an employment back down to levels that we like to see the map by the end of the year. We do see some lasting damage to activity in terms of damage to financial Balance Sheets. We see damage to the labor market, which will probably take time to undo. Weiously stimulus helps, but think probably more is warranted. But as i say, you should have some bounce inactivity simply from if the virus runs the course by the end of the Second Quarter, some of those consumer. Ervices start to reopen obviously theres a lot that underpins that assumption, but even with a benign assumption of the virus, theres reason to believe that the economic damage is going to be lasting. Alix and we are going to get adp right now. 27,000 comey just of the employment change for march. The expectation was for 150,000. It is still negative, you are still looking at sequentially a substantial loss, but nonetheless, just 27,000. Mckee is still with me. Im a little puzzled by the numbers. What do you think . Michael m payrolls report on friday based on the first weeks of the month. Before things really got bad, they include the payroll of the week of the 12th. So we should expect the next month to be a whole lot worse. Im looking at the breakdown. Small businesses lost 90,000 jobs. That is kind of what we expected in terms of the breakdown because every restaurant and bar is closed. But Large Businesses were still hiring 56,000, according to adp, at that point. We lost 9000 jobs in the goods producing industries, but most of that was in construction, which was probably whether based. The many factoring sector gained 6000 jobs. This is the kind of report that you look at and go, hm, and then throw away because it is not reflect in reality on the ground right now. Fair point. S a good way to put it. I want to get your take when we go into the job numbers. We are getting so many workers furloughed, particularly in the retail sector. Is it a good or bad thing . They are keeping their jobs, they have health insurance, but do they still get unemployment . Michael m they can still collect unemployment in most cases. We will see a massive spike in claims. We are seeing some Companies Like macys laying people off this week. At will continue into next week. We are still going to see very elevated claims for another week or two. Then the question is, well those jobs be there when they come back, when the economy starts to come back . I think in retail in particular, you will maybe see a shakeout. A lot of stores may not reopen because it is going to be a while before americans go rushing up to spend. Are of these Companies Already in financial difficulty. Can they keep the same size company, or do they need to slim down . Alix thats a great point, which brings us more of a structural shift in the labor market versus cyclical because of this. Michael feroli, what do you think . Michael f that is obviously a huge concern right now. When you let somebody go, firing someone is a lot quicker than hiring someone. When things normalize, it may take quite a while to rematch workers with vacancies. In addition, i think probably the longer this goes on, the more concern you have that, much like after the great financial recession, great that they shortterm damage to labor markets could lead to longterm damage in terms of participation rates and peoples overall attachment in the labor markets. That does put the emphasis on making sure that the policy response is aggressive and early to keep people engaged in labor market activity when this all ends. Tomorrow, for initial jobless claims, i saw Morgan Stanley at 4. 3 million. Where are you at . Michael f we are at 3. 5 million, similar to what we saw last week, and that would be about 2 potentially on the Unemployment Rate. Its another really disastrous number, but i think when we were trying to make this estimate, anything between 2 million and 5 million, i wouldnt be case strong argument. I think weve just kind of got to sit back and watch the number. But it is almost certainly going to be a terrible one. We were talking about this yesterday, the dallas fed Service Sector fell to the lowest ever. We havent even really seen the effective what the Oil Price Crash is going to do to the economy as well. Michael m you go back to 2015 and 2016 when we saw oil prices that was a major hit to the manufacturing economy that then spread into the service economy. You are starting to see that again. Last week, robert kaplan, the dallas fed president , made a point of saying his district is going to be hurt atlee by this. That could spread throughout the economy in some ways as well because when the manufacturing investment dries up, it has a Ripple Effect. That seems to be what is happening. At dallas fed number went down to 70. This almost three times as much as we saw back in 2015, 2016. So the oil industry is going to be in bad shape. You would look at it and go, is there an offset . That is going to depend on how quickly the economy ramps up again, how much energy is going to be demanded. Are people really going to start driving a lot to go shopping, or is this just a cautious recovery, and the oil demand doesnt recover as fast as itself . Alix yes, i would say that makes sense. Next, guys. Really appreciate it. Feroli mckee and michael of jp morgan, appreciate it. This is bloomberg. Viviana this is bloomberg daybreak. Shares of british banks today are lower. At the urging of regulators, the banks scrapped dividends and buybacks, trying to bolster their capital levels as the fallout from the coronavirus deepens. New york oil holding near 20 a barrel. Saudi arabia stepping up production, now pumping more than 12 Million Barrels a day. Russia says it will not boost its own output. President trump says he has spoken to both the russians and the saudis about ending their price war. That is your Bloomberg Business flash. Alix thanks so much. One thing on the terminal we wanted to break into was what is happening with supercharged debt. The fear was that all of the moves from banks to other areas of wall street, they were really leveled up when it comes to companies. Sonali basak joins us now. Can you walk us through the risk we are actually finding within wall street right now . Sonali this is a really thorough take by my colleagues. We are dealing with leverage in summary types of investment funds, including ones that deal with leverage loans, clos, mortgages, and municipal debt. Weve written about the leverage we have seen in the hedge fund industry. Sometimes we have seen investors take on 50 turns, sometimes 100 turns of leverage when it comes to what used to be simple bets taken against treasury arbitrages. So things in good times seem safe that really were amplified in the leverage markets, but now it is really hard to tell how much leverage these funds have taken on now that its moved outside of the banking system. Alix are they going to find any sympathy in d. C. On this . Sonali d. C. Has been taking some look at this for a while when it comes to leverage loans. They said they would look at the risks and the banking system, for example. But who knows . These are many different types of funds, and most of them are not regulated. For d. C. To start taking a serious look at this stuff, they need to have stricter regulations that also allow them to do so. Right now, it is a little far from their own reach. Alix does that mean we can kiss the era of big bank bonuses goodbye . Sonali this year, if people walk away with bigger bonuses, i think politically, it would be a tough blow. With that said, there are some parts of the banks doing really well, and those traders are going to want to be compensated for their work. Theres largely a lower bonus pool for these bankers, considering that all of the other areas are stripped away. M a is virtually dead right now. Debt markets are just coming back. The banks might not have a lot to give at the end of the day when it comes to bonuses. Good point. A thank you so much. Investment banking revenue maybe revenueading may be ok, but Investment Banking might not. Right after a look the break. This is bloomberg. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Alix this is bloomberg daybreak. I am alix steel. Numbereeply employment not as bad as expected. That not helping the equity market. Around the lows of the session. European banks offer big oil. Bp cutting cap again bp cutting again by 25 . Possibly freezing salaries as well. In other asset classes, it will be a safe haven story. Still coming into the bond market, about seven bps away. Crude trying to find some stability. The traditional m a market is seeing a slowdown due to economic uncertainty. We are even seeing deals being pulled. Joining me is mark cooper. Advised has highprofile Retail Companies on mergers and acquisitions as well as restructuring. Sonali basak is still with me in new york as well. It is good to chat with you. It is a tough environment right now. What are you noticing in m a . M a is pretty much close down for the time being. Quarter ofthe first the 2020 year it was down over 2019. Two weeks ago, once the shutdown came in, the curtain came down on m a and is all but closed. There are some transactions happening, but by and large m a has been put on hold. Sonali bankers now having to talk to a lot of their clients about the liquidity issues. How deep to these liquidity issues run . . Marc the key focus of the last it has goneeks as through this transformative moment in our economy is shoring up Balance Sheets, shoring up liquidity. It is all about how you get from here to there. ,he difference with this crisis and people call it the black swan event, the different with this crisis and others is it is driven by a medical emergency. It is not a function of an economy in bad shape, it is a function of being shut down because of medical crisis. It is all about when we get back to work and how much capital we need to bridge to get back to work. Beyond that, what do we think the new normal will be as we come out of this hiatus . It is unclear. Key. Dity is the everyone is focused on liquidity. In 2008,news is unlike the banks are strong, the banks and have cooperative been pushing back on many of the companies who have gone down their lines. In some cases they have extended beyond the lines to support their clients. We keep using the word dry powder. There is plenty in the private markets, all of which are looking to deploy that in some form or fashion. Back in 2008, folks who put money to work in interesting largely Healthy Companies were handsomely repaid. All of that is in play. Sonali some of that private credit youre talking about, we are waiting for that dry powder to step in. Our company is going to be subjected to onerous terms when it comes to are Companies Going to be subjected to onerous terms when it comes to private Credit Investors . Problem we have with the private credit folks is they have wide mandates. They can invest in the Public Markets as well as the private markets. Right now when you are looking at the highyield market dropping as it did, it presents to putting alternatives money in a liquid marketplace. That, that will actualize. They will be available. It will be expensive. The other form of capital is preferred. Expensive, bute when you think about it, when au think about the health of great company, lets take whole foods in 2008, does anybody regret that a private equity billionested half 1 and diluted the company down, does anyone regret the fact that when they sold it to amazon for a fantastic multiple . Sonali that was a healthy market. I am wondering what is your Restructuring Team preparing for . Financing andue pipes we are seeing down the line . Marc it is all about bridging to the healthy market. The healthy market, will it be six months, 12 months, 24 months, it will be there. Now is about living through this time, getting back to some form of normality. The normality could be lower. It could be different, but getting back to that normality. That is the calculus companies are going through. The last thing they will do is play it too close. The ones who played it to close last time around do not have to go through structuring spirit having said that to go through structurings. There will beat, plenty of restructurings. There will be companies that have weaker Business Models or are too over levered to Access Capital that will have to go through a bankruptcy process. I think he will start seeing that over the next number of months, because this will be a staged process. The first stage is recognizing where we are. The second stage is exploring liquidity options, and the third to thes capitulation extent they do not have these options and need the courts to support them. Youre outlining what is currently happening to the oil industry. I wonder where you see the sectors that will be the most hit now and over the next few months . Marc oil for sure. Hit. S getting the double are getting demand destruction, supply destruction, price reduction, everything. The interesting thing about bankruptcy is what you do in bankruptcy . What is the plan when youre talking about 20 a barrel oil . Sanchez oil which was in bankruptcy for a while tried to accomplish a 360 sale and could not get done. It is an interesting dilemma. Of theeless, many sectors that have been affected by the shutdown, oil being the retail, thisbunch, ld be that seminal moment the final reduction in our over stored economy where the weaker hands that have hung on will no longer be able to. You will see it and a lot of site based businesses like movie theaters and others. You will see it across a Broad Spectrum of all of those who supply those industries and many others who are being affected. Widespreadng to be a swath of pain that will go through the economy, certainly some areas doing well. Business is out of control, it is up to hundred percent in some cases yearoveryear. Have such ae you big retail practice and we already see pain in that industry, and Goldman Sachs seeing a 15 Unemployment Rate eventually, if people will have a hard time spending, what is the Ripple Effect in that industry . Spiritt will be a norma it will be enormous. A lot of demand destruction. Those big numbers are very temporary. I think you will see very big numbers on the Positive Side once we go back to work, and all of those furloughed employees go back to work. Having said that, i think there is going to be negative memory of folks saying i will not spend discretionary items and i think there will be a fair amount of demand destruction. I think the Retail Industry will have to figure out how it gets shutdowng, because the affects a large ecosystem. Alix ive been so good about not shopping, i have to be honest. Last question. What can we expect in terms of the deals that have been announced but not closed . Do you expect them to go through. What do you think . Transactions most that are not in contract are either going to be renegotiated unless they fit into transactions that have little impact on what is going on in the market now. Transactions we are working on are put on hold. That does not mean they will not come back if they make economic sense. Many transactions will be traditional defensive mergers. And prosper in this new economy . That will mean some consolidation. As it relates to companies who are under contract, there are few contracts that actually have provisions that give you outs for a pandemic. One that has been noted is the e trade transaction at Morgan Stanley. Beyond that, companies do not have outs. Have we heard cases where companies are trying to take advantage of this to say we are getting out and force majeure and all of that . The answer is yes you will see that. There will be some litigation. Alix interesting stuff. We will get you back to talk about more. Mark coomer marc cooper, thank you. Sonali basak, thanks you as well. Now Viviana Hurtado is here with first word news. Viviana President Donald Trump is largely giving up his optimistic tone and warning the u. S. To brace for one of the toughest stretches ever. His experts say the coronavirus could kill as many as 240,000 americans. Now to spain, the nation reporting its deadliest date yet. There were another 854 fatalities from the coronavirus. The total deaths now rising past 9000. The number of confirmed cases in spain is now above 102,000. , who isith joe biden skeptical the Democratic National convention will go on as planned this summer. The parties front runner telling msnbc it is hard to envision that. He is saying the party should look to scientists about whether the coronavirus will be contained. For july 13set through 16th in milwaukee. 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 thank you, so much. Demand for Health Care Professionals and keeping them safe. Down the ceo that of a software staffing company. This is bloomberg. Viviana i am Viviana Hurtado and youre looking at the principal room. Coming up in the next hour, former new york fed president bill dudley. Alix time for bottom line. We look at Companies Worth watching this morning rate today we will tackle the Health Care Sector yet again. The coronavirus putting a strain on the medical world, not just on supply but on manpower. Joining us is susan salka, Amn Healthcare Services ceo. Can you tell us about the demand supply dynamic within the health care force right now . Susan good morning. Thanks so much for having me on and for focusing on the importance of our Health Care Heroes of today. Theyre the ones on the front lines. Demandcan imagine, the for nurses but also respiratory care and many kinds of advanced professionals are at alltime highs. In my 30 years within this business ive never seen anything like it in terms of the rapid increase in demand, but also the desperation and the urgency. As you can imagine, amn is working hard 24 7 to deploy resources, add resources, and make sure we can be getting the clinicians where they are needed the most. It has been an interesting time for our country, but for Health Care Workers in particular it has been unprecedented. There . Re the workers susan can you repeat that . Alix are the workers there . You have enough of a workforce . Susan no. The country does not have enough if we were to see the pandemic spike at the levels currently being predicted across the country. They can move throughout the country to take their skills across state lines and i think that is what many are hoping for , by flattening the curve we have the ability to not only have the facility capacity and ppe, but also have the Health Care Workforce that can actually take care of patients. It has been inspiring to see Health Care Workers raise their hands, in some cases folks that have been retired or working parttime and taking other jobs and they want to jump back in and do whatever they can to help. In the last two weeks, we put out a call to action from Health Care Workers that had not been practicing or were able to leave their current environment, and we have had almost 25,000 hand whors hand raisers called to ask where they can go and offer their services immediately. It is a time when many people are hunkering down and trying to keep themselves out of the line of fire of this virus. Healthcare workers went into their professions because they care about helping others. They are at the frontline risking their lives for all of us. Susan, there has been a lot of criticism of the hospitals in new york city and outspoken nurses as well as doctors. Thereve also been reports they are trying to be squashed in terms of talking to the press. Do you think we will see a shift after this in terms of the Hospital Workforce if they do not feel protected by their employer . Susan what we will see as longlasting changes that are probably overdue. One would be around licensing. Not quite the question you are asking, but a very important one. Share hasly license been controlled at a state level. It has been difficult for Health Care Workers to move around the country to pursue their professional and personal goals. Out of this, we will start to see some greater mobility. What we need is a National License or. I believe you will see changes in the way clinicians have a voice at the table in the administration of hospitals. It has been changing over the last couple of decades. I think this will magnify the importance of nurses and other Health Care Workers having a seat at the table across the decisions that are made in the Health Care System today. Do you think we will see less people want to be Health Care Workers because there were not the right kind of precautions taken . Susan i think we will see people come to medicine because they want to help others and make an impact. There has not been a lack of interest in going into medicine over the last decade. There has been a bottleneck in the Education System and residency programs. I hope what will happen is that we will see changes made to increase the capacity of residency programs. That is what has been restricting the number of new positions coming into practice the number of new positions coming into practice. In Nursing Schools we need more faculty and funding to make sure we can train those new clinicians. This will be a wakeup call. We were already in one of the worst shortages this country has ever seen for nurses and other kinds of missions. It was expected other kinds of clinicians. It was expected to get increasingly worse. I hope it will be a wakeup call for the funding and resources needed. Alix appreciate you taking the time today. It is an important topic nine glad we got to address it. Susan salka, amn health care ceo. Coming up, it is all about demand destruction. We will look at copper and bonds and the nasdaq coming up in todays technically speaking. This is bloomberg. Alix time for technically speaking. We will set you up for trades of the day. Joining me is michael mcglone. What are you looking at first . Youre taking a look at copper and bonds . For thee significance year is a great amount of demand destruction. If you look at copper from april fools a year ago, it is down 20 . Bond yields are down 180 basis points. There is a good sign of demand destruction. To me that is a sign of the type a sign of the tide lowering, that leads us to the next subject, the nasdaq. Alix what does that mean for the nasdaq if you take a longer term at demand destruction and chinese equities . Mike there is the key issue. They should be the main focus of this month and this quarter. Can the nasdaq to be relatively unscathed . The indications are if the tide is that much lower, it is unlikely. April to april, the nasdaq is unchanged. It would be wonderful if we could sustain that. The amount of demand destruction would indicate that if this is a global recession, that index should decline. Hopefully that will not happen, but the next month, this quarter should determine that protruding nail is the one likely to get hit if these other indications are good. Alix appreciate that set up for us. Michael mcglone of bloomberg intelligence. That wraps it up for me. Formerup on the open, new york fed president bill dudley be joining jonathan ferro. This is bloomberg. Jonathan from new york city for our audience worldwide, good morning, good morning. The countdown to the open starts right now. Equity futures much lower. ,own 3. 5 on the s p 500 leaving behind an ugly q1, down 20 on the s p 500, the biggest quarterly loss all the way back to q4 2008. In the bond market, treasury yields lower by five basis points on the 10 year. Your 10 year 0. 6 . In foreign exchange, the story of dollar strength. The euro coming down almost 1 against the u. S. Dollar. We begin q2 and we close out march. I have said this many times in the past. The year begins when march ends. We always start every year with big consensus calls. Maybe the dollar will be weaker, yields will be higher. After three months we put them in the trash and start again. This is no different, with one exception