Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240713

Putting pressure on oil markets as well. And marie hoarder me for more. Walk us Annmarie Hordern joins me for more. Walk us through the veracity of the selloff, and does it last . Annmarie the next 24 hours is going to be quite bumpy for this may contract. Basically, it is Financial Derivatives meeting the physical oil market and what we are seeing on the storage side. If you are not out of this position financially and you are a futures trader, you have to accept the physical oil. The problem is, theres really nowhere else to put it. Look at cushing. That storage is quickly filling up, and that is the main hub in the United States, where you have pipelines to canada, the midlands, or the gulf. The may contract now trading at , which3, plus contango means if you look at the june contract, trading at about 23 a barrel, it is about a nine dollar differential, the most on record. If you look down the table of what you see for june, july, august, the prices are certainly higher on the futures come but that is just a bet the demand is going to pick up. We are in the same position months from now, there will be serious pressure on demand and we could see this again on the june contract. Alix it is going to get really ugly. Ive heard rumors now that some oil is selling for two dollars a barrel. Thank you very much. And the white house are reportedly close to an agreement for as much as 500 billion for a loan program to help Small Businesses. It would also provide funds for hospitals and coronavirus testing. Treasury secretary Steven Mnuchin told cnn he is hopeful a deal can be passed. Reachm hopeful we can an agreement that the senate can pass tomorrow and the house can take up on tuesday, and wednesday we would be back up and running. Cirilli, bloombergs chief washington correspondent, joins me for more. What does really close actually mean . Kevin well, lawmakers are going to be meeting in a pro forma session procedurally today. However, it could have a vote happen and pass on thursday for the 400 billion worth in loan assistance for the Small Business administration. I am told by sources over the weekend that really, the backandforth is actually laying the foundation for the next round of economic stimulus. Dev got there i on about 500 billion, and this is something we mentioned a couple of weeks ago. Democrats would like to see anywhere from 500 billion at least to go to state and local government municipalities. They feel that hospitals, as well as government workers at the state and federal level, were left out of the last round of economic stimulus. We should note that president trump, Vice President pence, and even deborah birx ratcheting up the rhetoric against china further mishandling of the virus. In fact, they have called on china to be more transparent. China has denied this. Either way, the administration taking a more aggressive tone against china further handling of this. Alix no doubt. Thanks so much, kevin cirilli. Speaking of aid for Small Businesses, burger chain shake shack is going to return its entire 10 million loan from the u. S. Government. Its all sales of about 595 million last year. More than a dozen publicly with funds over 100 million received loans, while smaller momandpop shops were left out. 70 of those loans now offer less than 150,000. Just want to get you up on some earnings numbers. On one side, you have dupont up almost 3. 5 , suspending its fullyear forecast. It does secure about 3 billion of financing. It is a different story when it comes to Oil Services Company halliburton. That stock down by about 5 in premarket. That company winds up slashing spending to brace for sharp demand decline. They are already dealing with furloughs for their workers. Conoco cutting their capex. It does not bode well for halliburton. They say they could see further decline as well. Coming up, much more of your morning trade, news and analysis on the markets in todays first take. Happy monday. This is bloomberg. Alix time now for bloomberg first take. Joining me from our in house team of wall street veterans and insiders, michael mckee, Bloomberg International economics and policy correspondent, and damian sassower, Bloomberg Intelligence chief emergingmarket credit strategist. It feels like we are going to have a busy week. I want to get a sense of what is on your radar. What is the most important thing you are reading about this morning . Michael theres a couple of different things. Everyone is keeping an eye on oil prices. How much do we recover tomorrow and Going Forward . Are people really going to believe that the storage problems are going to be solved, and that demand is going to come back . The other thing i want to watch is the eu leaders meeting coming up on thursday. They got to find a way to break the deadlock over aiding the periphery countries. Youre starting to see cds for italy, spain, portugal rise significantly. Yields are up significantly in those countries. This could be a real problem for the European Union if they dont find a way to solve the problem or kick the can down the road. Definitelyou would know that. You were in greece years ago when that restructuring was happening as well, so intimate knowledge of that. I want to ask if you i want to ask you about the report from the ft about offloading the bad loans from banks that are struggling. I feel like weve been hearing this for years. Is that really going to happen . Michael it is hard to say it is going to happen. Weve tried to use it incorporate situations in the United States. It doesnt always come to fruition. It is hard to isolate some of them. Essentially, they ended up doing that with lehman brothers. But how far can you go and how many banks are going to participate . You end up with a stigma problem as well. Theres a long way between thinking about it and actually putting it in place. I think about a lot of things, and they dont get put into place. Damian, what are you watching this morning . Not to it is tough ignore the moving wti. 13 is something, isnt it . But my goodness, the offset to 10 year breakeven inflations in the u. S. We saw 100 basis points just since tuesday. That is a massive move, and i am talking Inflation Expectations in the u. S. Due to falling oil prices. Just look at china. Even though it is ahead of the u. S. In recovery, traffic is not coming back. You see commuting during the high hours kind of returning to prepandemic, but any ancillary traffic in terms of tourism and movement inside of china has not come back. I think that is something we really need to take hold of. Production is going to freeze now. This is not good. The fact that brent, the spread between brent crude in london and wti in the u. S. Has blown out to alltime highs, expect to see brent prices get hit at some point, and that is going to be bad for emerging markets more broadly speaking. Alix some of the rhetoric for emerging markets is this is good because they are importers, but the demand is not there, so it doesnt really matter. If you are buying to fill up strategic reserves, thats great, but it will not have a difference in prices at the pump because people are not moving. Is there a deeper knock on effect to the downside . Does the volatility in oil translate to fx or em credit . Emfx, in terms of the some are looking at the bond purchase programs we are seeing across emerging markets. During the financial crisis, you saw a rate cuts in emerging markets, but you did not see emergingmarket Central Banks start to aggressively buy bonds, and we are seeing that across the board now. I think that will continue until further notice, but you are seeing levels get very cheap. I think Morgan Stanley over the weekend is looking to get tactically bullish on emfx. Certainly too early to put on steepeners. I think the low yield ors are a safer bet the low yielders are a safer bet. Alix what i also noticed over the weekend when it comes to em is that a group of bond traders rejected argentina to try to restructure their debt. That has literally nothing to do with what we are actually going through with covid19, so that is an extra hurdle, as well as brazil having issues with their health minister, etc. On the economic level, did we learn anything last week from the imf and world bank that is going to help . Michael well, yes. The imf and the g20 is going to go along. They are going to put in a debt atorium on allowed countries, allowing to postpone their debt. They will not be able to pay back at the beginning of the year, given the way this outbreak is going, so they got to find a way to extend that. Then the question of debt relief comes in. That gets a lot more complicated. It is something that is talked about all the time, even outside of crises. Whether or not they moved to that, but at least they will probably be under pressure to extend the moratorium, and that should help a little bit, but it still doesnt get cash to help fight the virus and maintain their government spending. But it is one step along the way. The next thing is how much is the imf going to be able to give. They said 100 billion. That is way short of what is necessary. So were coming up at the imf over funding. Alix right. It is the debt relief question which i feel like we are circling back to. That was a really hard sell. How do you thing about it . Damian i can tell you right now, it does not sit well with foreign creditors of emergingmarket debt, dollardenominated or local currency. If you are pressing a 30 recovery on bonds, which negotiation kind of presented to foreign creditors, you need to provide a sweetener of sorts. Just to have a moratorium in place is not going to sit well with foreign creditors. My concern is that the medium to longterm impact is just going to shut down em dollar debt issuance. They will not be able to tap creditors if they dont seem reliable that they are going to pay back their debts. They could be blocked out forever. So that is a concern to me. Just putting a moratorium in place is not good. Alix and ironically, it is sort of the same thing in the conversation we are having about peripheral countries in europe. Obviously, the budget and debt profile is very different, but the idea that you need some kind of Debt Forgiveness, the italian Prime Minister gave an interview, and yet again basically said lets get a eurobond going. You see the yield up by 16 basis points now. Michael we are not really talking about Debt Forgiveness in europe. What we are talking about is ways to pay for it. Other southernd periphery countries, now joined by france, want mutualization. They want to do with the United States does. We as a country have treasury bonds, and the people in alabama pay the people in oregon as part of the taxes they pay to float these things. In europe, it is country by country. Italy does have a massive debt. Its Credit Rating is lower. The germans dont want to take that on. The dutch dont want to take that on and say we want to pay more because of your profligacy. But they say if you want us in the euro zone and the European Union, you are going to have to help us out because we cant afford this anymore. It is kind of the fundamental issue of the political union. Can you make it a Financial Union as well . The virus is forcing a decision on them. Nothey cant, they are talking about leaving the eurozone in italy, but we are talking about the possibility of further downgrades and may be problems with the bonds. Have we are going to italys debt profile up for review this week. Erik nielsen pretty much spoke on that exact point, of you. Within the boundaries of realpolitik, will they resume a more constructive stance or potentially bring disaster who european project bring disaster to the european project . The problem is, how do you grow if you cant even stabilize . Michael thats part of the problem. To get stabilized, they need financing, let alone to grow. So what do you do . One of the proposals is that some of the countries could band together and issue bonds. The french not totally unsympathetic to that idea, so that is something we could see. But it is hard to see exactly how they can come up with a plan to make all of this work because even if you decide to issue eurobonds, the process of setting up a mechanism to do that is going to take some time. The virus has as everybody under a very tight time schedule. Alix yes it does. Speaking of that idea of how you pay for all of this, you have the fed paring back some of its treasury buying. You have issuance coming in the tbill market that so far seems pretty good demand. Im sorry,es say Jp Morgan Says they see a potential curve steepen or curve steepener. What will to be the effect on emerging markets . Td had it right. And iints going in a week have ago, that was a very difficult call to make. Over the weekend, when i was doing was just looking at where spreads are in highyield u. S. If you reverse engineer what that is implying, it is implying 12 to 14 defaults this year, twice the historical average of 6 . You are assuming a recovery rate. After all i am seeing here, i think the recovery rates one can expect are going to be much lower postpandemic. I think that is a real risk. Moodys said recovery for loans was going to be 14 going into this. Now it is going to be much lower relative to its average. I think recoveries are going to be a real issue Going Forward, for sure. Alix it is a great article now on bloomberg that talks about clos, how leverage loans are going to come under more pressure, and theyre going to have to stop paying their investors. , forward in the market, there bonds are being marketed at 11 . The demand is there. You just got to pay for it. Michael that is the case. It doesnt help these companies in the long run because they will have to have these high interest payments. In theory, they can reissue. They can roll these over if Interest Rates come down significantly in the secondary market as the demand profile improves. That has a little bit to do with the fed. They made this possible by creating a buyer of last resort. But you can get financing. That is the amazing thing about the u. S. Treasury market and u. S. Fixed income market. Deep, thatquid, so no matter what, people are pretty much able to float. If you can pay, you can get a loan from the markets. So far that has us very good status, especially with treasury getting ready to ramp up debt issuance so much. The expectation is we will be able to sell it to people and wont have to raise Interest Rates. Crazyit is really kind of when you put it in that sense. Emian, i know you are an credit guy, but i want to ask you about earnings in the u. S. S p closes above the 50 Day Moving Average on friday. You have a vshaped recovery within the s p. The data is nowhere near pricing in the bottom of av. As a market to spent for decades, how do you rationalize Something Like that . Damian it is even harder because the Short Interest has built to an alltime record. Youre absolutely right, theres risk in shorting this market. Coke, netflix. Saferd probably think the of the evils is to get highgrade u. S. Credit over equities just because, but that is my gut. Thats kind of the extent of it. I am, by default, a riskaverse guy being in emerging markets for 30 years. Alix thats pretty much how you can look at the market. Guys, thanks a lot. Really appreciate it. Great to see you this morning. Stay with bloomberg for an exclusive interview today with larry kudlow, u. S. Economic council director, on how to get americans back to work. Any charts we use throughout the program, go to gtv on your terminal. You can browse the features. Check it out, gtv. This is bloomberg. Viviana you are watching bloomberg daybreak. Novartis will run a u. S. Study of the malaria drug hydroxychloroquine. The medicine has been hyped as a potential treatment for coronavirus. Novartis will test the drug alone and in combination with an antibiotic. Another blow for boeings grounded 737 max jet. A canceled order for 29 of the planes, the list price at least 2. 9 billion. A growing list of customers has scaled back plans for buying the 737 max. Alibaba boosting its bet on cloud computing. Over the next three years, the chinese ecommerce giant will invest 28 billion on cloud infrastructure, a major effort to extend one of its Fastest Growing businesses to more countries. That is your Bloomberg Business flash. Alix thanks so much, viviana. Heres a Bloomberg Opinion column that caught my eye over the weekend. Julian lee says you get a great idea of the impact of the shutdown in the u. S. If you look at what is going on on the road. Urban Traffic Congestion plunged in the first half of march. The additional time spent in the car during peak hours has also fallen by 90 from a year ago. Stayathome policies have had dramatic impact on the use of gasoline in the u. S. The fourweek average demand has 1 3 in two less than the month, the lowest since 1991. Perfect segue into earnings recap, which is halliburton. That Company Coming out with earnings. It is slashing spending. It already furloughed workers. They are going to cut Capital Spending by 56 . This is their first sub one billiondollar budget since 2016. Schlumberger cut their dividend by 75 . A different story when it comes to dupont. That stock up in premarket by about 3 . They also got an upgrade this morning over at j. P. Morgan. In the broader market, it is definitely a risk off tone. That has to do with the oil price in some ways. We have 13 a barrel, a staggering decline, a 21 year low. Do we even make it to august to find that 30 a barrel, or do we get worse from here . More on how to look for signs of Market Recovery and how to play it. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Alix welcome to bloomberg daybreak. Risk off as we head into this monday. S p futures around the lows of the session. European stocks without any theme they might have had earlier in the session. Ecb isports that potentially looking at a vehicle to offload some of the bad loans at the bank. You have oil down about 31 , now at 12. 12 54 since a barrel for wti. Better in june, july and august, but still really terrible for Companies Looking at this kind of volatility. Treasury yields in the u. S. Pretty much go nowhere, but in europe, i one to highlight what is happening to btps. Barring cost by about 15, 16 basis points. The Prime Minister trying to get a eurobond going for the country as they plead for help from european officials, giving an interview to a german newspaper. Adding to all of this, we are also getting into the thick of earnings season. Six of the seven Largest Companies on the s p will be out with earnings this week. Joining me is paul richards, Medley Global Advisors president. I want to start with your case on earnings. J. P. Morgan had a note out overnight that said if you miss, youre going to get really hurt because stocks are nowhere near oversold as we head into earnings season. How do you look at what we are going to hear in the next couple of days . Paul i am really struggling with this whole argument abound earnings and economic productions. I did 20 years of pretty Major International conservative banking. We looked at risk in a conservative manner. I seen all manner of stress testing and never seen a pandemic stress tested. Likewise, ive never seen a Global Economy completely shut down. I think the problem is youve got traditional wall street analysts looking at valuations on companies, looking at economic data, and frankly, i think they are applying a methodology that they know, but we need to move forward from that. When you look at earnings, when you look at data, absolutely listen to the comments of ceos. When you look at the data, i am struggling to take it seriously. What i am more interested in his forward guidance. What is it look like between memorial day and labor day as we slowly start to come out of this and reemerge into society . Thereafter, i think postlabor day, i think the market is going to be really interested to see what ceos think their if there isnt a vaccination on the horizon. In other words, i am really dispelling valuations. I dont think they are a proven metric markets can rely on. Alix how do you explain the fact that we have seen this vshaped recovery within the s p , closing above a 50 Day Moving Average on friday . But as you point out, theres no visibility. The data hasnt begun to bottom. The markets are looking forward to something we dont even know. Is it technical . How do you deal with that . Guy. Im an old currency the way i always used to look at this, when a market drops the way we saw with the stock market down 30 to 35 , typically you look for policy action to find a bottom, and we got that. Largely 80 in terms of what the fed did, and secondly in terms of what congress did. Thats why in my opinion, the market found a bottom. Critically, a week ago, we found a 50 retrace of the downdraft. What i think happens now is we do a lot of work around here, while at the same time getting back to what the core issue is, and that is resolving what is the medical outlook. This isnt a debt problem. This is not a terrorism problem. This is a medical issue. So i think markets, having retraced 50 , now see volatility. Now you see more focus on oil. You have seen the focus this week on the euro summit. The other big one i think the market needs to put into the equation is the risk of second outbreak. Look at what is happening in china, and singapore. That should be a sign of what potentially the world is going to have to deal with as well. To me, it has been technical on the 50 bounce. The next 20 is going to be a medically induced recovery or selloff. Alix so if the pain trade isnt going to be higher, what do you do . Paul i think what you do in this environment, dont panic. Society is coming out of this for now, the first stage. We need testing, treatment, and ultimately a vaccination. If you respect the price action, you dont get upset on days like today where the market could go up or down two or 3 . My personal view of the market is going to drift very slowly higher on hopes for a vaccination, and likely saw thursday evening, hopes for a treatment in the shortterm. That probably propels the market 5 to 7 higher in the next six to seven weeks, so i think the risk is more on the upside. I am not reading too much to the oil selloff because i think it is contract driven, although it is a demand issue. I think the economic distraction numbers are coming through right now, but if Society Comes back in some form in the next four to six weeks, i think the numbers will be better and optimism will kick in. That is why i see a little more upside in the market in the next weeks. Seven , do you thinkt volatility is correctly priced in Asset Classes . Paul i think the vix around 35 to 40 is commits are is commits or it is commensurate with what we see. At the end of the day, i think the bulk of the bad news is in the market right now. I would really like to see economies in regions other than the u. S. Kick in. For example, i would really like to see the euro summit deliver something. Its been 10 years since they failed on grief. I think it is time euro proved, certainly euro skeptics, that they can actually do something. I think the debt mutualization discussion on the 23rd is absolutely key. Alix what do you think is really going to come out of it . Position wise, you have positions coming into go along euro, but eurodollar still cant catch a bid. It really feels like the market is saying we are just not going to get anything done here. Same old, same old. Paul and why with the market expect something to be done . I think theyve been dragging their feet a little bit to date on this crisis. Arguably, i think it is time they delivered. I think the level of seriousness they are dealing with, they know if they dont deliver something thursday, this is not like greece. You cant keep pushing this thing down the road. I think the market could get a pleasant surprise thursday or friday and see something come out of this that is more constructive, as opposed to the usual talk. I am quietly more bullish on this than other people are. Alix does that mean you feel confident enough to buy peripheral debt . Are you willing to take that ailing that feeling . Paul at the end of the day, it is your own money, and it is going to be very volatile out there. But i think anything related to ,urope going into thursday theres more commensurate upside than downside given my view. Certainly from the spread basis, i would expect some spread tightening within europe if i am right on thursday. Alix do you buy this whole ecb looking at a bad Bank Facility . Paul a little early in my opinion. Good to talk about. I think the market focuses more on the actual summit. Bad banks obviously worked in some shape or form back in 2008. I think this is a different crisis. It is broader and still a medical issue. This is not a debt issue. At the end of the day, when bad banks were set up in 2000 eight, at least you understood with the core issue was. This is wholly different. Of thet a great fan bad bank idea just yet. I think it is probably a bit premature. Alix paul, really good to catch up with you on this important week. Paul richards of Medley Global Advisors, thank you very much. Now we want to get headlines outside the business world. For Fiona Hurtado is here with first word news Viviana Hurtado is here with first word news. Viviana the Trump Administration will allow manufacturers to delay notff payments, but it does affect ongoing punitive tariffs as a result of trade policy. Now to a deal on the next coronavirus aid. President trump joining democratic members and some in his administration on a new package that would provide up to 500 billion. More money would go to the loan program for Small Businesses, plus funding for hospitals and testing. In the united kingdom, british Prime Minister Boris Johnson is resisting pressure to ease the coronavirus lockdown. The Prime Minister fears a second wave of the pandemic could hit the u. K. Mr. Johnson hasnt returned to work after being struck himself by the virus. 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 on the program, wall street post pandemic. We are going to speak to Shannon Murphy of jeffries on what trading will be like once we emerge from the crisis in todays wall street beat. If you have a bloomberg terminal, head to tv. You can watch us online, rewatch anything you may have missed. This is bloomberg. Alix we turn now to wall street beat. Today we look at investing during the coronavirus pandemic. Joining us now, bloombergs sonali basak, and shannon ies primeeffer brokerage managing director. Thanks crusted in trading last quarter. Is that sustainable . What is the word on the street . Shannon trading was up substantially. There were times when we saw more than 17 billion shares a day, and this is happening in a new, pretty distributed world. Clients and trading desks are operating in a lot of different environments. They are doing pretty well given the circumstances. I think we have already seen both volumes and volatility decline a little bit off of the march highs. I think what remains to be seen around the elevated trading levels we have seen previously is ongoing uncertainty. When we keep hearing unprecedented, unknown, uncertain, and those environments, sometimes you have weeks like those in march that are really recordsetting, and sometimes that uncertainty can really mute investor appetite for getting involved. I think a lot of investors are heavily focused on the Health Indicators and outcomes, and theres just too many unknowns around testing, tracing and treating to be able to determine whether the levels we saw in march are really going to be sustainable Going Forward. We are kind of writing this story day by day, but i think there are a lot of different factors that might not be in full view right now that could retreatrompt investor in the coming months. Sonali according to some of your more recent research, you think a vshaped recovery at this point is unlikely. How are most of your clients trading that market view of a recovery . Shannon i think theres a pretty wide variety of views. There seems to be no letter of the law yet for this recovery. Too many unknowns, and a lot of investors understand there is an opportunity shaping up, but theres somewhat of a question around the right entry point. If you have seen some money go back and to the market, opportunistically taking certaine of mispricings, but a lot of money is still on the sidelines. Recently itone said is pretty rare to have a bear market without a bear market at thef you look employment numbers and think, how can 20 million unemployed, which is putting the populations of new york, l. A. , boston, and san fran on the sidelines, with uncertainties Going Forward around protocols for this testing, tracing and treating, and find it hard to be confident being fully invested at this point . Sonali you deal with a lot of hedge funds. We seen some of the industry, ray dalio, suffer some of their worst monthly losses theyve ever seen. That is across different strategies. When you look at what the hedge friend industry the Hedge Fund Industry looks like coming out of this crisis, who will win and who will lose . Creates a think this new generation of winners and losers, and this is a really different scenario than 10 years ago. During the Global Financial crisis, we had consecutive quarters into thousand eight and 2009 where we saw 10 of industry assets get redeemed two quarters in a row, and those were massive moves. This time, while there are certain funds that may have had a stumble in q1, Financial Service isnt the trigger of this crisis. The hedge industry overall is really reasserting its value by underperforming broader markets, and we are on stronger footing, so theres no indication at this point that we will be seeing the same indiscriminate redemptions, at least for this quarter in the near term. With any industry, there are going to be certain winners and losers that will come out of this. From a structural perspective, much like on the company side, winners on the hedge fund side are going to have strong asset bases, durable relationships lps, and very conviction in their strategies, their portfolio, their positioning. We will see some household name shattering, but i think that happens in every crisis. Theres a little bit of a shakeout. On the strategy front, we think you are likely to see some macro troubleat have had navigating these unprecedented markets. We are seeing interest in private credit from a variety of different types of allocators. I think on the equity longshort side, you are going to see sector specialists shine. These guys really know their sector and their space and are putting knowledge to bear really on every industry and the Global Economy. The loser side alix sorry, shannon, go ahead. Shannon i was just going to say on the loser side, it is a challenging performance heading into this. They will be the most vulnerable for their lps to go to redemptions. Alix we do have to leave it they are, but really great to catch up with you. Thanks a lot. You will have to come back as we get into this. Coming up, oil falling 30 falling 37 . We will speak to the founder of the energy board. We will break down what he think about it. This is bloomberg. Alix oil i cant get a handle on this morning. 11. 30 is where we are trading this morning, the biggest intraday drop since 1982. Joining me is dan dicker, founder of the energy word. Tell me your take on a day like today. Dan people who have contracts have to get out one way or the buyersand there are no in the front months right now. Ethylene consumption went down close to 50 in the United States over the last couple of weeks alone. Theres no storage. Its filling up fast. You can do a carry trade if you can find some storage with the contango close to 20 for the next five months. That is a nice piece of change to pick up. But no one has storage right now, and the people who are long crude, anybody who is long crude, they cant get stuck with it, so we are at an expiration squeeze, basically. Alix typically, how long does this kind of squeeze last . Weve not seen this ever. This is a record we have seen in terms of dislocation. But tomorrow, are we up by seven or eight bucks, or is this a different story . Dan into thousand eight, demand went way down in the front months and collapsed, and that pattern really continues along until you get some steadiness in the oil market, which right now doesnt look like it is going to happen anytime soon. Weve got 30 Million Barrels surplus that still comes into the market despite a 10 million barrel cut that opec and the United States kicked in. It really doesnt help the supply situation right now. This is something that is going to be around for a while, and even as the economy restarts, whatever that means, whether demand for oil will really increase all that much Going Forward remains to be seen, but i have my doubts. You mentioned a potential carry trade if you can find it. Is there any months more attractive to short . Do you want to get in right now at this point with 11 oil . Dan weve seen this happen before. Wee and natural gas gas. T in natural there were no pipelines last summer, and we saw negative prices and natural gas. I told my subscribers a couple weeks ago that it was possible we could actually see that in global oil, which would of course be a first. So is there a reason to go short the next month out . Yeah, i think unless we get a huge secondary kick from opec of a drop in production or if the u. S. Producers throw in more , and demand doesnt pick up when the Global Economy starts to reopen again, you could see prices again go down to these levels and even lower. Oil or natural gas stock investable right now . Take is that everything you buy today is probably going to be cheaper a month from now. That being said, there are those that, if they get back down to the lows, most of the majors have solid Balance Sheets. Oil is not going to go anywhere. We are going to get past this. It may be a year before we get past it. I dont know, but they will be around. They will be making money making oil, and win oil rebounds, they are going to be very good b very good buys. A lot of these guys are going to go broke through this, but the majors, i could see buying exxon down in the low 30s. You bet i could. Alix so good to catch up with you. Thank you so much, dan dicker, founder of the energy word. The first guy who taught me there was more than one type of oil out there, like 15 years ago. Coming up on the program, seema shah will be joining us with her strategy when it comes to oil and volatility in the market. Also take a look in the markets. We want to highlight again what is happening with the crude price here. With the technical rollover for contracts, we are at 11. 24. Theres a Straight Arrow down, off by about 39 . This is bloomberg. Nowadays you do more from home than ever before. The xfinity my account app puts you in control with Digital Tools to give you the help you need when you need it. Get fast and easy answers with personalized help 24 hours a day, 7 days a week. Change your wifi password to a phrase thats easy to remember. Even troubleshoot your services on your own. Were working to make things a little easier for everyone. Download the xfinity my account app today. Alix oil plunging 37 . Cratering demand, storage increasing, and contract rollover putting severe pressure on front month oil. White house and democrats inched towards a deal expending the payroll protection program. And thenk hopes bad bank hopes. The ideas discussing of a bad bank to offload loans. Welcome to bloomberg daybreak on this monday, april 20. The only thing you need to know at this moment is that oil is trading at 11 and change. That is going to have some distortions. Oil is trading better when you get to august and september, but nonetheless, brutal number. Some conversation about potentially going into negative territory for certain grades. All of that leading u. S. Equities to the lows of their session. The futures market of their session in the futures market, and a mixed bid for the dollar. Joining us is seema shah comfortable Global Advisors chief strategist. I guess the oil selloff is technically driven, but it is not like we will go back up tomorrow. What does 11 oil mean for the market . Seema i think the interesting thing here is reminding the equities is signaling something completely different to what may be reality is. This is a demand story. Of course, there are supply issues. But the reason it is so low is because theres no demand for oil at the moment, given Economic Activity is so low. With the recovery looking very prolonged and very slow, it means you will not see a sharp recovery in oil prices anytime soon. Been trying to address this over the last couple of days. If you look over the last six months, it is almost a pure vshaped recovery in equity markets. How do you trade Something Like that . Seema exactly. You always have to drill into what is going on sector by sector. Theres health care, and theres big tech. Those are the two really driving those gains. Comparative european benchmark indices. Im not seeing a very different story to the s p 500. Alix so what do you do about that . Do you just go buy health care amtek, despite health care and tech, despite the fact that earnings are going to fallout and only two sectors are really going to be good . Seema i think the pain trade is that the market is going to keep going higher. If you are underweight equities, it is going to be a very tough time. Theres also a number of technicals in play at the moment. It makes sense to have exposure to u. S. Equities. We prefer credit at this stage because valuation wise, that looks a lot more attractive than equities. Alix where in the credit market . Seema follow the fed. Where the fed goes, you have to go. Investment grade is clearly. Oing well you have to be careful of the rest of high yield because the looking atme now is high quality. Generally, trying to pinpoint those companies who have the Balance Sheets to withstand this kind of event, and looking to invest for the future on the other side so they are able to do well. Alix so when you see someone like ford getting able to market an issue at 10 yield versus 11 , where they are initially marketed, is that a good thing for you . A sign of a credit we want to begin . We want to be in . Seema with those kind of things, you have to look at the Balance Sheet and know what ive a planning to do. There are technicals involved that i think it makes sense to follow, but it is a question of when you think this trade has run out, and the outlook for the Global Economy is still pretty weak. A lot of the fed programs are helping from a strong technical side, but it doesnt will take out the idea that bankruptcies are still going to be rising, and at some point, the market is guaranteed to rumor that. To remember that. Alix when it comes to fangs, for example, they are nearing overbought levels. We get numbers coming out this week. How are we going to understand potentially overbought tech into earnings, where they are the is not like but it they will see tremendous growth either. Theres also a structural story at play which is likely to be sustained even beyond the current period. Shifting to working from home, the greater reliance for Household Technology means that those who are likely to outperform over the long term, maybe you will see validly what you will see volatility playing out in the market. ,ooking at a longerterm story this area may do well over a longterm basis. Alix which puts europe in a bad spot because they dont have the Tech Companies that the u. S. Does. They are more bank and energy driven. What do you expect into thursdays eu summit in terms of this is what you want to see, this is what we will see . Seema i think we will see something. I think the european policymakers are very aware that they will see a horrible Market Reaction thursday, friday and beyond. Someased funds should help of those peripheral economies. I think it is a stepbystep process. At some point, i think we will get to full debt mutualization, but the things that come about it is a sort of a multiyear process sometimes. Alix when you hear things like ,he ecb looking for bad banks do we care . Does it make them investable . How do you translate that into a thesis . Seema i think you do have to care because it does change the story. And somefinancials, ways, it makes sense given these problems in europe. It is a story we have known about for decades. We have been talking about the european banking system. I think it is something you need to be aware of, but again, keep in mind that there are a lot of factors which can be weighing on european Banking Sector Going Forward. I wonder how much the ecb can really help given the magnitude of the problem we are looking at. Alix totally right. In terms of currencies, i was reading that you have a long position in eurodollar building, but eurodollar can not catch a bit. Where is the next direction for the dollar you see . Seema i think it is going to be stable at a very strong level. I guess i am slightly more pessimistic about the Global Growth outlook than the s p 500 is suggesting. As long as you have weakness from the coronavirus, that is still going to play well for the u. S. Dollar. Given these levels, you wonder how much further it can really go. Alix always great to catch up with you. Really appreciate your time, seema shah, printable global investors. Coming up on the program, a deeper drop and a slower climb. Stanleyhow morgan describes what it calls the great covid19 recession. Out, United Airlines coming with total First Quarter revenue down about 17 . They do say they have Cash Equivalents of about 2 billion n a revolving credit facility. They also say they can borrow about 4. 5 billion from the u. S. Treasury department, which came out with billions of dollars for all the airlines. We dont know which airlines agreed and what the terms were, but now we know that united is looking at the potential to borrow 4. 5 billion. This is bloomberg. Alix Morgan Stanley sees secondquarter gdp dropping by 38 and the Unemployment Rate rising to 15. 7 . Joining me now is the one behind the call, ellens and their ner, Morgan Stanley chief economist. How do you model right now, and how do you know you are not going to have to downgrade again because no one knows where this is going . You, anycan tell downgrades to the data will not be surprising at this point. With data released, the words record decline seems to proceed the numbers. We think we have captured it accurately and the Second Quarter, which would be the sharpest drop in recession on record. Have we gotten properly negative enough . Will it be 50 . It absolutely could be. We know how bad spending was going into the Second Quarter because we got those march retail sales numbers. Weknow that market than know that more than 20 Million People have lost their jobs. We think it will climb to 25 million or so. The statesgot all participating in the nonessential business closures, so the idea is can it get worse. I think that is more of the important point to make here, that we are moving through the absolute worst of it now. It doesnt mean the return to growth is going to be very exciting, but we are moving through the worst of it now. Alix i am glad you brought that up because you were the first economist to look at 2020 as not all sunshine and roses, the first one to really Start Talking about something that didnt look like a vshaped recovery. What is the quality of growth in 2021 . What does it look like . Spot not is a strange just for economists, but everyone to be in. Typically, typical cyclical factors would drive expectations for how the economy grows out of a downturn, but this is really dictated by the virus. We have relied heavily on our biotechnology analyst and the work he does with analysts at Johns Hopkins and his own team, formulating how the virus may play out. Youve got rolling arrangements across the country of different states ellen back on social states pulling back on social distancing measures, nonessential business closures. It can look very different from the coast to the middle of the country, and then they work at home arrangements. That will be dictated not just by the governors, but by the businesses. We spend a lot less when we work from home. It will take time for everyone to come back physically into the office, and some of those work from home arrangements may be durable. So i think we have to temper our expectations for what growth looks like beyond just the quarter after we start to lift some of these restrictions. Right away, growth will look explosive. Why is that . If you are living in a whole and poke your head out, that is expose of growth. But it is difficult to see the economy at full capacity again until a vaccine, which might not come until june next year. Alix right much of next year. I know you are right, june next year. I know you are a bubble equity strategist, but i keep trying to understand why the market has global priced in a a equity strategist, but i keep trying to understand why the market has priced in a v versus the actual data, which is unclear. Ellen i think it is interesting. We were just on a call for an hour this morning. When we were in the office, we would sit right next to each other. It is interesting because the economy often behaves very differently than markets. Have companies been be up enough been beat up enough . Have investors already factored in that things can get worse, so it is easy to see a turn in the fundamentals that any kind of return to growth is posi tive. That would affect the stock market differently than the economy. I think certainly, investors would be disappointed if we were into that situation where we just cant seem to get much off the ground come all the way into june next year when there is a vaccine. I think that is more of the work from home arrangements come off, especially if we get therapeutic help from drugs that can at least treat covid19, i think that will make a difference in removing some of this crisis of confidence among households we have on the others of this, and get them out there moving and shaking again. In that case, the cyclical view from a stockmarket standpoint will be perfectly justified. Alix to your point, there was an article in the ft saying the u. S. Is going to enter an era of austerity. No one is going to want to spend at the end of the day. What can the government do about it at this point . If we get more for the payroll protection program, if we get stimulus package number four, is any of that actually going to be stimulative . Ellen it is interesting. What i would call them is a package of support. Government supporting solvency, the fed addressing liquidity. These are packages of support. There are elements of it, though, that can act stimulative later on. So once we are able to move around more freely right now we are getting the rebate checks to households, supporting Small Businesses, extending Unemployment Benefits and getting that 600 weekly check in addition. We are going to see explosive savings because theres not a lot you can do with that besides put food on the table and be sure you can still pay your bills. What that means is that later on , as confidence returns, that is there as a cautionary savings that can be drawn upon should households needed. You said something interesting, will people ever spend again or will the savings rate remain high. After 2008, we were saying households will never spend again. The Savings Rates will never come back down. And it did not come back down to buts before the crisis, Household Consumption patterns went right back to normal. So i hesitate to say there will be a permanent shift. Certainly, some trends will be accelerated. More people are going to deliver food to home then before. But i hesitate to take too many liberties in saying nevermore will we ever be the same. Alix so great to catch up with you. And love to catch up in a couple weeks to highlight all the data coming out. Er, Morgan Stanley chief u. S. Economist, thank you. We will speak to larry kudlow head of the day, the the white House Counsel on economics. This is bloomberg. The Trump Administration is trying to free up cash for businesses hit hard by the coronavirus. Towill allow manufacturers delay tariffs on many overseas products, but the move does not stop ongoing punitive tariffs that are the centerpiece of the current u. S. Trade policy. A deal is close on the next coronavirus aid deal. President trump has joined Democratic Leaders and some in his administration, working with the white house on a new package that would provide up to 500 billion. More money would go to the loan program for Small Businesses, plus funding for hospitals and testing. We end with british Prime Minister Boris Johnson resisting pressure to ease the coronavirus lockdown. Mr. Johnson fears a second wave of the pandemic could hit the u. K. The Prime Minister hasnt returned to work after being struck by the virus. 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. If you are a Market Participant and looking at the oil price, it is down 35 today. We are off of the lows of the session by 2 , but still the worst intraday loss since 1982. Annmarie hordern joins us with more. Will be up tomorrow, but it is not like it is all sunshine and roses. Annmarie you have a lot of money moving to the june contract, but i think this may contract that expires tomorrow, now trading at 11. 80, a historic plunge. Weve never seen anything like this. That is really reflecting the physical market. If you are in this market and you are a futures trader, you have to accept that physical , and there is no room left to store it. This shows the absolute glut we are seeing in the market in the Storage Capacity that isnt there. Alix and we will shine a light on wednesdays report in terms of how much storage in the u. S. Is left. Annmarie the cushing storage is rapidly filling up. Thats what we know. That is the hub for the United States, a pipeline to canada, texas, the gulf. And the pipeline is already filling up. This is what the futures are showing. There are some parts of texas trying to get rid of crude for two dollars per barrel. Gasolineot a gallon of you put in your car. That is for a barrel of crude oil. So the demand picture, this just shows absolute demand destruction. Of course, we have the opec cuts, but they dont take effect until may 1. For april, it looked like they were still pumping similar amounts. War may be over, but they are still going for market share. , iyou look at the contracts am looking at june 20 two dollars a barrel, for july, 27 a barrel. But we could be in the same situation x month if we still have lockdown. 96 was it yesterday, about of passengers down for airlines. Wewe continuously see that could been the same scenario if we continuously see we could be in the same scenario if we continuously see the same demand destruction. Alix then we have earnings from halliburton, very much exposed to the lower 48 onshore drilling, cutting to a fouryear low, and that stock is still down. So no matter what you do, you could still get worse if you are an oil company. Annmarie i think one thing to watch now is i am interested to see what the Texas Railroad commission. Texas Railroad Commission does. A lot of people dont think it is going to happen, but you are seeing numbers like this. Are they potentially going to do ationing so producers would have to ratchet back . Whether or not they do, all of these companies having to cut spending, cut drilling, it will be interesting to see if texas actually makes that move. Alix good point. Or they are just going to say they are. Thanks so much, Annmarie Hordern. Coming up, esg investing in the face of the coronavirus outbreak. It was all the talk about three months ago. Becoming and the g more critical . This is bloomberg. Alix welcome to bloomberg daybreak. Happy monday unless you are long crude, that it is bad monday. S p futures off 2 . Turning out to be a risk off day in the u. S. At 11. 68. That is a contract rollover issue. It is a record spread between this month and the next one, all reflective of the lack of demand and oversupply in the market. That is a fundamental thing and will not go away tomorrow. All of that lead to a stronger dollar. Youre also seeing a selloff in europe with the exception of u. S. Treasuries still getting some of that safe haven buying as money flows into the dollar and treasury market. The Chicago Fed National activity index falls 4. 19. Worse than estimated. We know it will be bad, but how bad continues to be the question for the market. Where you want to go for any kind of safety . Esg etfs are outperforming the s p. Blackrock found a few bright spots in their First Quarter. One of them was longterm net outflows. Esg funds saw 10 million in inflows. Joining me is carol laible. Assets 718 million in under management. S pfund has outpaced the through april 16. You also have decades of experience within the impact space. Good to catch up with you. Esg was all the talk as of december. How much do people still care about that . Carol good morning and thanks for having me. Out, we have seen a ofmpede into the field investor level interest but also from the conventional Asset Managers side, mutual funds, etf, etc. If you look at some of the statistics according to the forum for sustainable and assetsible investing, esg grew 8. 7 trillion at the start of 2016 to 12 trillion at the start of 2018. There we were seeing an increase , at8 , which represented four dollarsne in of professionally managed funds in the u. S. We saw momentum underway already, and i think with these crisis we face today we will continue to see that interest. We were pleased to see positive inflows into our funds in the First Quarter of this year. Year,at the end of last the conversation was more around esg, how companies are cutting their carbon emissions, steps they are taking. Now the feeling to meet is it is more about the s and the g. What kind of ceos and Board Members are taking pay cuts. Are they laying off workers . How are they treating workers . Can you give me perspective . Carol sure. I think historically we see investors are very interested in the environmental side. Will see aink we change with that, although there is a lot of focus right now on response, the social aspect of this crisis. We also think there will be big environmental lessons to be taken away from this. If you think about the disease itself, like most emerging arosees, this likely possibly as a result of deforestation. The risk of these novel viruses are one example of the huge risks presented by the continued pattern of environmental degradation and biodiversity lost. Protecting those natural ecosystems will be vital to all of this and going beyond but ining deforestation, fact restoring and protecting them. The other important thing we will take away from this is their are a lot of parallels to climate change. There is a new term that has familiared, we are all with now there is a new term called gray rhinos. We have seen what is coming at us and the severe affects we are likely to experience. Situatione are in a and are choosing to ignore those. This, having lived through this crisis, we can learn the cost of dealing with a systemic breakdown is much higher than preparing for it in advance. That is not to say there is a lot of response on the social side in response to the virus as well. Both in terms of the types of companies we invest in, but also using our voiced to create that positive change we need. Before was iftion we see all of these inflows into esg products, how they perform in a downturn . Can you give me some perspective on that. What areas of esg performed better than others and what is a good benchmark to use . Carol sure. I impact fund has held up quite well through the crisis relative to the overall market. Still negative, but save some ability to of that capital and be less negative than the overall market is an important thing. We find that in the short term, since the crisis began to unfold after the market peak february 19 through today, but also over the past year. Some of the things that have you pointed out our Environmental Concerns as well as our social we have restricted investments in the energy sectors. If you have a day like today where you see oil prices that is good for the performance of our funds. That datingfrom back to late 2018. The financial risks, but also the moral risks related to climate change. The other things that help is we do tend to be focused on products that add value, not only to the planet but also to people. Our equity funds are focused on providing essential products and services such as diagnostics or health care equipment, certainly Telehealth Services has been one of our strongest performers in this downturn. Pharmaiotech and Companies Working to develop vaccines and potential treatments for the coronavirus. Isther thing to point out there other sectors that can be helpful. If you think about responsible Financial Institutions working to ensure Small Businesses have access to the capital they need to get through this economic downturn. The other point that is ortant in that esg space not just what is in your portfolio, but how you behave with those companies. Using our voice as investors is important. We have drafted a statement calling on Business Community to take urgent action to mitigate the outcome, the worst outcomes of this crisis, and there we collaborated with other investors, we work closely with the Interfaith Center on corporate responsibility. We have more than 300 investors thatsenting 8 trillion are signed on to statements in the Business Community, with five recommendations that we believe we can help mitigate some of the worst of the crisis. We will approach each of the companies and work with them to strategically engage on how they need help to adjust some of those recommendations. Alix carol, we will have to leave it there, but i appreciate the perspective. Laible. Belle carol stores shut their doors due to the pandemic. I will speak with the ceo of the Parent Company of calvin klein and Tommy Hilfiger brands. Plus, if you have a bloomberg terminal, look at gtv. Check out all of the charts we are using throughout the program. Gtv. This is bloomberg. Viviana this is bloomberg daybreak. Youre looking at the principal room. Coming up, evercore isi chairman. Viviana youre watching bloomberg daybreak. Im Viviana Hurtado with your Bloomberg Business flash. We begin with United Airlines. It says it expects to get 5 billion from the government payroll support plan and could use help. United saying he will cut 90 of its capacity in may and is expecting a similar cut back in may. Shake shack will return its entire 10 million loan from the u. S. Government. The loans are designed for Small Businesses hurt by the coronavirus. Last year, shake shack had sales of 595 million. Bloomberg has learned more than a dozen publicly traded companies with revenue topping 100 million received the loans. Withith can see no casino operator wynn resort calling for parts of novato been in may, saying the Las Vegas Strip Las Vegas Strip should be open in the middle or end of the month. I am Viviana Hurtado. That is your Bloomberg Business flash. Alix time for bottom line. We will look at sectors and Companies Worth watching. Today our focus is on retail, retail sales seeing a painful collapse in march, it will only get worse. Chirco, pbhs manny chairman and ceo. Klein andes calvin heritage brands. I want to get perspective from you on how you manage businesses when we have no clarity right now . Manny right now there are two issues. Both center on liquidity. One is managing expenses as best as you possibly can during the situation. We have put a number of initiatives together around discretionary spending, payroll, and Salary Reductions for our executive teams. The other area inns the Balance Sheet, particularly inventory. That is tricky at this point in time because you have to anticipate when the stores will reopen, how much time you will have left in the spring and ,ummer season to sell apparel depending on when we reopen both here in north america and in europe, and finally trying to figure out what to buy for the holiday with concerns around a reoccurrence of the virus. It is a tricky time right now and it is putting a lot of pressure on all retail, particularly apparel and accessories. Alix no kidding. Youre looking at macys looking at rescue financing. Some reports say nordstrom could be close to bankruptcy. You just raised money and agreed to a 275 Million Dollars revolving credit line. Can you tie all of this in, executive endboards being cut, how much liquidity do you have . Manny we are fortunate, given our Balance Sheet and how we have structured. Over 1. 5 billion in available cash with a strong Balance Sheet. The addons we have done and some we are considering is addons to existing borrowing bases. The Balance Sheet is unsecured at this point. We have a great deal of flexibility and we have more than enough cash to get us through this crisis. We are in the minority when you get down to it and start thinking about where other retailers are, and they have had to take assets and pledge them, use them for security, and you also to be in a situation where they have to go out and raise equity exd prices. Equity at steep prices. Alix what you think plays out in the industry . What you see in the markets . Retail, especially apparel and excessively retail, was going and accessory retail was going through a consolidation to begin with. From 20 see anywhere to 30 of stores in the United States close over a period of time. If you look at the riaz if you look at the u. S. Retail market, we are over stored compared to every other region. As the online component has become a greater piece of the business, that is putting pressure. This virus pandemic has accelerated that. Over the next two to three years we will see store closures, we will see m a where weaker retailers with strong real estate will be acquired. Finally, unfortunately, we will see bankruptcies and restructurings as we go forward. Alix and then you mentioned looking inventories. To that point, when you think about reopening stores, how do you think about that . Not from a demand perspective, but how you protect the workers, due structure how may people will coming into the stores . What do you think about . Manny there is some investment in stores to protect the workers. Putting up,le are plexiglas to protect the workers between themselves and the consumer, especially at the cash wrap. A number of issues around more cleaning that will go on constantly as we go forward. Our stores are not Big Box Retail stores, 50 to 60,000 squarefoot stores. Half of our business is retail and our average store is about 8000 square feet. Store youspecialty would see in high street or a mallbased retailer. It does require a significant amount of investment. Cleaning, protecting the workers with masks and protective gear. We are also looking at will be a gear that little bit more fashionable than throwing on some kind of hospital gown. We are working on all of those things as we go forward, but in order to protect our employees and protect the consumers shopping in our stores. It is a brave new world when it comes to all of that. Alix no kidding. I wonder if you can give me perspective into your margins. Youll have to shell out money to do that for your stores, at the same time managing inventory. I cannot imagine how you do that and what you do with the inventory left in your stores now and how much you have discounted to get it out the store. Can you give me a feel for how you are looking at it . Manny we are planning very conservatively on the margin lines. We are anticipating that when stores do reopen, it will not be a vshaped recovery. That is not what we are seeing in asia. Recoveryeing a gradual throughout our business in asia and china. Business week on week keeps getting better, but we are still running slightly negative to where we were this time last year. It is not like it comes back and takes off. I think the consumer has to get comfortable about going back out again, has to get comfortable about shopping again, and that takes a little bit of time as that works forward. As you said, there will be plenty of inventory. If you think about the spring and summer season, if you want to call it a 26 week season, we are in the process in north america of losing anywhere from eight to 12 weeks of sales. That would be somewhat optimistic, assuming we will open up in may and early june. We have lost eight to 12 weeks of some of the bestselling when you think about the easter day, whichhers clearly we will miss a big part of that, and then even as we going to fathers day we will miss a big part of that as well. It will be a situation where there is plenty of inventory and people will be looking to turn that into cash. It will becipating very promotional with significant discounts. The key is to clean the inventory out and move forward. When you look at fiscal 2020, it is not about earnings, it is about liquidity and cash flow. Alix liquidity and cash flow. When does it become about earnings . Is that a 2021 even 2022 story at this point . Manny a lot of that is out of our control. Is the depend therapeutic response to the virus where if you get it in the third or Fourth Quarter, there will be drugs that will make everyone get better. That would be a game changer as we move forward. Obviously a vaccine in 2021. We are looking at Fourth Quarter as the first time, the Fourth Quarter of 2020, the first time to doe an opportunity something closer to a normal selling season. As we get into october or november, we would hope we would start to see some recovery, and that margins could be something to be closer to normal as we move forward. Alix thanks a for your candor. I appreciate it. Irico foof pvh. For inclusive interview with marriott ceo at 3 00 in new york. Coming up, what you do with oil at 11 a barrel . We will break it down in todays technically speaking. This is bloomberg. Alix time for technically speaking. Mike mcglone joints me now. All eyes on oil, trying to catch the low. What do you see . Mike the first thing is the big picture. Oil is at the lowest level ever 10. 63ures that was in 1986. It is going down with bond yields. In the shorterterm, we can go to the next chart that shows it is a contango issue with the expiring contract that stops trading tomorrow. Alix tomorrow we will not go back up to 25, so how do we have to think about it . Is all around 11 at the moment. As of tomorrow, when that goes off the board, it will go to june. June is 22, almost double the price. That is what will go in that is what we showing next chart. Alix we have to leave it there. Jonathan from new york city for our audience worldwide, good morning, good morning. The countdown to the open starts right now. 30 minutes away from the opening bell and following the first back to back weekly gains going back to the middle of february. We start this monday morning negative. On equity futures on the s p 500, down 54 points. A snoozer in the bond market good yields unchanged through most of the morning. The focus on the commodity markets. What you will see on a lot of boards is the may contract. At aggressively lower 11. 33. Five or six time the volume is going through the june contract. That will be more instructive for the week ahead. And stillel on june aggressively lower on the session. We will get to that later in the program. I want to start with good news. Away from the markets, and focus on policy