Drillers to leave oil in the ground. Good morning, this is bloomberg surveillance. I am Francine Lacqua. Lets check in on the markets. We have a lot of news, but we are used to it. Terms of european stocks, u. S. Futures, and everything in between, the big story is oil. We had the iaea report yesterday, production cuts on sunday did not seem to be enough. Stocks rising, u. S. Futures rising. Investors are trying to gauge the damage caused by coronavirus, and awaiting the next corporate earnings. The dollar also extending gains. Lets get the first word news from new york city. Milestone, with a global infections topping 2 million. In the u. K. They will extend the nationwide lockdown as Officials Say there are signs britain may be passed the worst of the pandemic. In theh korea, and election, the Democratic Party in the 300places seat national assembly, that is the largest elementary victory in more than 30 years. The result as a show of support handling of the coronavirus outbreak. Five European Countries extending their ban until may 18, and it is a bid for france, spain, belgium, austria to calm markets during the pandemic. Hedge funds in the primary exchange are among those who oppose the ban. Ray dalio says investors would be crazy to hold government bonds right now. The founder of the Worlds LargestHedge Fund Says he has no choice but to spend trillions of dollars, but with so much money printing by Central Banks, he questions it. He found himself on the wrong side of plunging markets after he said cash is trash. In israel, rival leaders failed to reach a deal, that means a fourth election in little over a year. And dansetanyahu decided not to ask for more time. 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. This is bloomberg. Thank you so much. President trump will unveil guidelines to reopen america. He made those comments in a press conference yesterday. The data suggests nationwide we are past the peak on new cases. Hopefully that will continue, and we will continue to make great progress. These encouraging developments have put us in a strong position to finalize guidelines for states on reopening the country, which will be announced, we will talk about that tomorrow and the announcing guidelines, and we will talk about various dates. It is very exciting. It is a horrible time to see such death and destruction. Now, thankoining us you for joining us. A lot of focus is on the economy, always thinking about the families hit by this tragedy. If you look at the economy, is it more dangerous to reopen too soon and face a second lockdown, than to wait out . Mistake, andt is a in this context could be costly. What we control from other experiences in asia and europe, some countries are ahead of the curve, austria for instance. We need to be cautious in reopening the economy. France is another example where the reopen order and lockdown 11,ures will start from may and from that perspective the u. S. Projection might be optimistic, maybe even predator. He opening should be gradual the economy will remain negative until we get a clearer picture for all the sectors. Francine you are one of the smartest voices when it comes to Monetary Policy. It is quite early, and you make that point, saying it is almost tommy in early to see the impact on gdp. Is there anything policymakers or Central Banks can do more now . Step whichhe first was fast and successful on both sides, the fed and ecb was to really provide backdrop for the Financial System in the economy, reaching out to companies, banks and governments. The emergency problem can be increased if necessary. I do not think about the numbers, it needs to be targeted them of the transmission of Monetary Policy needs to be improving. They are not here to close the spreads int cap the my opinion. We see more action in the gdp, beyond that, it is the job of the governments, head of stakes head of states to find more ambitious monetary response. That is also what the market is telling us. Francine should markets focus longterm on all of this debt generated . There are talks about Debt Forgiveness, i do not know how that works. It longerterm, and when do markets latch on to that . Frederik in europe and the euro we know how difficult it can be, so we can draw lessons from this experience. To think about all the options in terms of financial repression, this has to be gradual. Rates will remain low. The spreads for what is sustainable for the italian economy. Over the longer term if we see public debt as the imf sees rising to 55 of gdp in italy for instance, it needs to be something more. With corona bonds, Financial Engineering that the euro area can come up with, it makes a difference. It would break a taboo that we about more and think options in the future. First things first, we need a Recovery Plan and longterm vision for how much that can the gdp neutralize across the euro area. It needs to be politically acceptable, of course. This is the challenge facing the heads of states. Moreine we will talk , exoticose options options for the eurozone. What happens to the dollar over the next six months, and how does that impact the fed if at all . Frederik it is difficult to think about the dollar at the moment. Even though what the fed and Central Banks have put in place, and thinking about that fx swap to provide dollar liquidity, essentially has gone a long way mitigating, and the longterm cycles with the u. S. Dollar, it could weaken from here. Short term, there are many factors, it is difficult to say and can fed is doing have a big influence on the currency. We will be cautious over the and look for depreciation in the u. S. Dollar later this year. Francine thank you so much, frederik ducrozet, global strategist, picted wealth management. He stays with us. A conversation on wall street that you do not want to miss, a conversation with the Morgan Stanley chief. This is bloomberg. It depends quite a lot on how long this will take. The first wave of measures was liquidity, enormous amounts of liquidity made available. It may be so that later recapitalization may be needed, and we can do something on a common european framework if that is needed to make sure if Member States would want to recapitalize businesses, that it is done in the same way, we maintain a level Playing Field and limit the distortion of competition. We have had a positive response to that with Member States, but it will take some days before we are ready to launch it. Ago you advocated for states taking stakes in companies to keep china from taking over those companies. Is that how you feel still . Important it is very that we are vigilant because we have come into this Health Crisis in different points in time, we are suffering from it to a different degree in every point of time. Things develop. Some countries open, some countries are deep in the crisis and people are suffering. In the economic recovery, some will be stronger before others have recovered. That businesses may be vulnerable for a hostile takeover. It is important not to be naive because in a number of sectors, they are needed, and it is important for businesses to know that the states can step in if they want to and need be, but also for the potential people who want to do a hostile takeover, that we will use the tools we have available. You haveg up on that, in place at the moment a temporary framework allowing greater flexibility when it comes to the rules to protect businesses affected by the virus and who could be subject to such a takeover. How long do you see that temporary framework being in place . When the temporary element ends, and if you needed changes for the longerterm framework when it comes to competition within europe . We have and foremost changed the temporary framework toe to enable more aid Coronavirus Research production, to make sure businesses who change production that they can get a loan guarantee. To enablenging it recapitalization, but the entire framework is set to be in place until the end of the year. We will evaluate when we get to the other side of summer if it needed to be prolonged. At the same time we are in the process looking into our rules and guidelines in order to make still an economy where optimization and technology is changing our business models. It is important competition fits that purpose, and that will be as relevant on the other side of the corona crisis as it was before. Francine that was the we are back with frederik ducrozet, global strategist, picted wealth management. We will pick up on the conversation about europe and the ecb, you were talking about what leaders need to decide now in dealing with this Health Crisis, and the exotic options they would be left with down the road. Have they been late to the game . The sense is there is not much solidarity in europe. Frederik that is true and you can understand the position of the dutch government. You can understand why the Italian Government is reluctant to extend the credit line. Useless in the context of the program. You can understand the french position finally, and the german position in the middle tried to forge a consensus. , the comingcro data , there will be a stronger recoverymore ambitious. The most interesting part so far one that, but the needs clarification. We do not know how much money could be put in, and this could make a huge difference for markets and sovereign bonds. See any valueou in sovereign bond deals anywhere . Or will they require a bailout after this is all over . Frederik it is almost binary, you either come up with a solution that is part of new spending, and removed from the italian balance sheet. The ecb will hold more than 20 , quite an amount already. This is a different scenario for markets. Clear they areit. Uying tons of debt even if we do so and extend the program until next year, at some point the market is pricing it in in the longerterm. I would not talk about debt restructuring or bailouts, but this will have to be reflected in prices today. What kind of investments does europe need after this . Who can afford it . Frederik many countries can afford it according to the commission and the macro imbalance procedures. It has not been put in practice, obviously, about germany, the netherlands, and those countries have started to use it to be fair. Crisis, also improving the green economy, there is a lot more they can do with the investment banks using in ecb as indirect financing some cases. There is much more they can do. And probably in terms of this something that is efficient in terms of coordination with the public and private sector, this can be improved in the future and build up on the idea of the juncker plan. Francine thank you so much for joining us, frederik ducrozet, global strategist, picted wealth management. World bankthe imf meeting, they were set to start today in washington. It has become a virtual meeting. Imfr on we speak with the managing director, that is coming up later this afternoon. This is bloomberg. Francine good morning, and thank you for spending your morning with us. This is bloomberg surveillance. A couple of updates on the markets, this is what we know so far about the virus. A number of countries, we heard yesterday from germany, parts could be reopened on may 1. It is fascinating to see how Different Countries have dealt with it differently. Global cases are talking 2 million. That is a grim milestone. Like japan is thinking about declaring a national emergency. Stocks are up today. Great interviews coming up on bloomberg. We continue to have a lot today. We will be speaking to the Morgan Stanley ceo at 3 00 p. M. U. K. Time. At 4 00 p. M. We will speak to the manager of imf, and then the chief executive of airbus. This is bloomberg. Francine good morning, everyone. This is bloomberg surveillance. London. Cine lacqua in a lot going on in the markets in the virus update, but first lets get to first word news in new york city with viviana hurtado. Viviana we begin with a grim coronavirus milestone, global infections topping 2 million. In the u. K. , ministers are expected to extend the nationwide lockdown. There are signs britain may be peak soon. Epidemic President Trump will unveil guidelines today about when to open the country. He cites signs that the coronavirus outbreak is plateauing. It is not clear if u. S. States will follow federal guidance. To south korea that is where a big election win for the coalition, theg Democratic Party and a Satellite Group taking 180 places in the 300seat national assembly. That is the largest parliamentary election in 24 years. Seen as a result of president moons handling of the coronavirus outbreak. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, im viviana hurtado. This is bloomberg. Francine . Francine thank you so much. Ray dalio of Edgewater Associates says the hit to the u. S. And global economies will be staggering. He spoke with Erik Schatzker during the bloomberg invest event. Here he is. Estimate somewhere in andvicinity of 5 trillion, the skin in the World Economy is somewhere in the vicinity of 20 trillion. Who hasparticularly at what holes and how they will be filled. , the real economy, which is goods, services, production and all of that, in the world, over the next year, will probably have a fall of 5 , which is a bigger fall. This is a bigger event than the 2008 financial crisis. It is most comparable to the 1930 to 1945 period of time in terms of the size of the whole unemployment rates we will adapt. One of the great things about the greatest course inhumanity and the greatest course in productivity is the compact the greatest course in humanity and the greatest course in productivity is the ability to adapt and change their way of doing things, and they are doing that right now. I am pretty confident that the inventiveness, the adaptation will bring us to a new way of operating. And lets say if you take that a peak tohat will be trough decline of somewhere in that magnitude. We will get past that, but it will be a total new world order. The world will not resemble the world that we are used to. It is going to change in various ways. It is a big hole, it is not an unsustainable hole because the capacity for producing money and credit is unlimited. It means that we have to look at what is the value of money and credit, ok, that new world. What is the value of money and credit . What is a store hold of wealth . You just cant produce it without it having an effect on its value. While we talk about production, we will adapt and get past it, but how wealth will change will be very, very big and different. Erik im going to come back to that in just a moment, and i keep saying im going to come back to the things you are mentioning, but i promise i will, ray. In your opinion, is what we have seen thus far, in the way of fiscal stimulus, the federal government, and monica and of theh of those organs federal government doing what they should be doing . And if they are not doing quite enough yet, what else should they be doing . Ray yes, in my reaction, there is no choice. In the 2008 financial crisis, you are faced with a choice. Do you want those banks to exist in the future, or do you want to get rid of those banks . They may have gone broke and they may not have had enough savings and they may have done things that they should bear the consequences of, but you want to save the banks. This is a crisis that is similar , except it goes way beyond the banks. So when you start to think who do you want to save, you have to think about, do you provide them with income and how much do you deal with their balance sheet, and if you do not do that, the consequences are enormous. The reaction needed to be of the sort, we have to think about the consequences, though, of producing all that money and credit. Where does it come from and what does it mean . We will turn to that in a minute. It is just like the great depression. Do that and you will need to do more, and we will argue over what you should do and who gets what, and that will be our big discussion. But, yes, there has to be more money and credit, and you have to operate in a way where if you where you save important things and you only impose a certain amount of suffering on people that they can bear, otherwise you will have a revolution and you will not have productivity. To talk more about the markets and some of the things ray dalio was saying, we are now joined by our guest, managing partner at amber capital. Thank you for joining us on surveillance. When you look at what the markets have done, we had a couple of weeks of deep volatility, and a lot of concern, and last week things seemed to calm down and get better. Is it too soon to call the worst over . Good morning, francine. I think it is too soon. It is not clear, it is a biggie a bit of a tugofwar with what the main authorities are. Rying to do to stem the crisis on the other hand, the health situation, the sanitary situation and a lot of countries. Ande we have seen the peak a lot of European Countries in terms of the academic of the epidemic. However, we are not sure how the u. K. And the u. S. Are going to come out. And more importantly, we are not sure how we come out of this crisis. So there is still a lot of uncertainty around the situation. The good news, obviously, is that the government and the Central Banks are doing something very relevant. Do you worry that markets are a little bit too shortterm, that they are looking at what happens in the next two months, three months, maybe six months . The kind of credit and loans that are offered to businesses of smaller size and may be medium once . Joseph i think markets are forwardlooking. They are looking past this crisis, and they are wondering whether this is going to be a ushapedcoverage or a of recovery, or if it is going to be an l. It is not completely clear. They have kind of opted for the not that, you know, we are going to go into a depression. We will have a recession, but i 2021 things will get better but by 2021 things will get better. Earnings are coming down, and the markets rally 25 from its lows. So clearly there is some sort of confidence in the market that things will be all right, it is pricing in shortterm recession, but eventually things will get back to normal. However, the time path is not neutral. If we come out of confinement and we have a doubledip, if we dont control completely the health situation, then, you know, your v shape looks more like a u or looks problematic, and you could have markets relapse. Do you see any value in european bonds at the moment . I know there there was there was this big fight between italy and spain about corunna bonds. I dont know if theres anything about Debt Forgiveness about corunnaonds about bonds. I dont know if there is anything about Debt Forgiveness. Where are things going in 7, 8, 9 months . Value those markets are in the hands of the k. Ntral bank forceo bonds that are yielding 2 in the face of very significant risks. However, i do think that the e. U. Is at a bit of a turning point. Particularly the Monetary Union is at a turning point. The e. U. Will move with the Monetary Union in this case. And really the conundrum is this. Some form of federal budget. Some people call it corunna bonds. The northern countries corona bonds. The northern countries want to use sme. The e. U. Is advocating for increasing the size of its budget, the commission from the layin. I dont know what form it will take, but we have reached a point, the existential moment in the Monetary Union where we are going to have to face the hard reality, and the hard reality is Monetary Union without fiscal financials asian does not work. We saw the mess the without tion doesntcializa work. The good news is a lot of governments have learned their lessons from the 2011, 2012 crisis. And i do not think they will make the same mistakes, and i think that something good will come out of it, as it usually does with european construction. We need to go through these terrible moments of crisis to to better the european construction. I am an optimist. However, it is not going to be a clear path. It is not going to be a smooth ride. This is europe. We like to pick fights with one another, and we are constantly bickering. But, you know, i think there is some kind of leadership that everyone talks about with a lack of leadership. There is leadership. More in southern europe, ironically. More with mr. Macron, mr. Thehez, and surprising, italian prime minister, than in northern europe. But i think that things will come out. I am optimistic that things will come out for the better. Francine joseph, thank you. Oughourlian. The response to coronavirus and what they can do economically to try to sustain it that is later on. 10 00 a. M. , we get euro area Industrial Production data from federation. That from february. This should be the calm before the storm, the last period before the lockdown. Later on, Morgan Stanley with a rough week for the bank. Investors will be looking to Loan Loss Provisions as the bank looks at deep cuts across the american economy. More on that next. This is bloomberg. Francine this is bloomberg surveillance. We have a number of stories we need to talk about. One has been what as what has been happening in the market. That pretty horrific figure of 2 million infected worldwide. Our thoughts are constantly with the families that are either losing people or actually with members, family members in hospitals right now. Lets get back to your markets to figure out what this means for jobs, what it means for unemployment, what it means for productivity. Ogaraback with joseph leon with joseph oh if you look at the worldview, who has been getting it right, in terms of liquidity and they cut Interest Rates yesterday. What do you worry about the most in emerging markets . China the yeah, problem is there has been a lot of question marks on some of the statistics that have come out of china. So it looks like the crisis is under control, but it might be that things were much worse in wuhan then we were told initially, and probably in december or january. Having said that, the fact that is a regime that is less, that plays less toward the enjoy visual freedom the individual freedom has helped to them in this case in terms of containing infections, whereas in europe and the rest of the world we are more reluctant to take. Im not sure i think emerging markets are the net losers in this crisis. Markets,n emerging there are different types of economies and markets. But by and large, they are net losers for two reasons. One is, what comes out of this crisis is probably more restrictions on trade, and more economic nationalism. That is not good news for emerging markets, which have greatly benefited from this sort of longterm trend of globalization. That is certainly not good news for china, at first sight. The other thing i would say about emerging markets is it is a whole host of emerging markets outside of china, that are linked to the prices of commodities think russia, think brazil and those markets very quickly, because we are running out of time, and i also want to mention you are an activist investor and you have been increasing your position and wanting to oust the board. What will happen with the latest report . Joseph i think we are very encouraged by the report. They have pushed the need for change, and we think this crisis makes the need for change even more urgent. Even more urgent than ever. The poor governments that the poor governance, the terrible management the poor governance, the terrible we think how will they handle this crisis . They need to take very strong measures with the poor governance they have got. There is no chance of that happening. Urgent, and at iss we hope they will vote for us on may 5. We have put forward some resolutions which you can find on our website. And we hope that we can get the vote to go our way. We will bef course, reaching out for some comment. Joseph, we will get you back onto look at maybe some other positions that you want to take. They can so much. Joseph oughourlian. Up next, we will look at travel and tourism. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Always a good time to talk about travel and leisure. Joining us now is the director for Citigroup Global markets. For leisure first global markets. Tourism has grounded to a halt. Are there any winners . Are there any pockets in the Delivery Services or anything like that, that could actually come out ok . Yeah. Thank you for your question. It is a very, very difficult time for all the travel companies. The latest trading data we see from hotels shows practically no occupancy across hotels through much of europe. In the u. S. Coverage,nk about my obviously travel is very badly impacted and nobody is really doing very well there. But as you mentioned, the food delivery offers bright spots. In particular, what we have seen deliveries asugh countries go into lockdown, and that is starting to calculate into more website visits than users from active app of the platform. There are some bright spots there. Francine how do you see it recovering . So lets say the lockdown and lets be very cautious and say it ends in july or even august. Will people travel more domestically . How does the pattern of how we travel actually change because of this . A very it is interesting question, particularly because when you think about a lot of the big local hotel operators, a lot of their customers are also business travelers rather than just leisure. So when i think about the leisure traveler, i think you are quite right to suggest that there will be some rebound at first,n Domestic Travel as lockdownss end, and as restrictions start to ease and customers become confident to travel again, you should start to see some rebound in International Travel. I guess the best example we have got so far is china. Haschinese hotel base gotten down to very, very low, almost nonexistent levels with occupancy, and now we are at about 30 . You have an increase in Domestic Travel. But it could well take many months before International Travel starts to come back in any material volume. Francine monique, thank you so much for joining us. That was monique pollard, director of Citigroup Global markets. Bloomberg surveillance continues. We have two hours to go to look at markets. We will look at the calls that Cap Investors have. Tom keene will join me out of new york. A lot of the focus is on oil, on dollar dynamics, and what eurodollar is doing right now. A lot of focuses on the fact that stock seems to have seem to have been gaining out of the volatility we saw two weeks ago. We spoke with Joseph Oughourlian about possible certain deals in currencies. This is bloomberg. These days you need faster internet that does all you expect and way more. Thats xfinity xfi. Get powerful wifi coverage that leaves no room behind with xfi pods. And now xfi advanced security is free with the xfi gateway, giving you an added layer of network protection, so every device thats connected is protected. Thats a 72 a year value. No one else offers this. Faster speed, coverage, and free advanced security at an unbeatable value with xfinity xfi. Can your internet do that . Francine back to work President Trump is set to unveil guidelines to relax stayathome rules. He says recent data suggests the u. S. Has passed the peak on new cases. In europe, germany will allow some smaller shops to reopen, schools to restart in early may. Italy sees its lowest tally of new cases in four and a half weeks. Plus, wti crude sits near an 18year low amid a record collapse in u. S. Fuel demand. Bloomberg learns that washington is considering paying drillers to leave oil on the ground. Well, good morning, good afternoon, good evening, everyone. This is bloomberg surveillance. As always, tom and francine from manhattan and west london. A lot of the focus is on markets. A lot of the focus is on the number of new cases. We have Morgan Stanley figures out a little bit later. That will give us a more clear picture of what global wall street is doing and thinking, and i am looking, of course, at the group of echo finn ministers looking to get