Transcripts For BLOOMBERG Bloomberg Markets Americas 20240713

Reporting this week for the s p 500. It might provide some we can do some glimpse into how companies are thinking about the future. Of those companies is united airlines, already saying it is going to have a 2. 1 billion loss, and that is just the beginning of the pain. It is cutting 90 of its capacity in may, and similarly will do Something Like that in june as well. It will get about 5 billion for the u. S. Payment program. And we have the 10 year yield at 63 basis points. We get more Economic Data this week, including initial jobless claims, but also pmis, new home sales, and so on. Those are all going to show dire readings and are not going to be really reflective of how the economy moves forward, except to suggest that we are definitely in a very thick recession. Guy lets take a look at what is happening here in europe. Meansis down, but by no down as much as it is in the United States. Pricing inntract not such difficult times, but nevertheless, do you want to take physical delivery right now . The answer is probably no. The italian spread is wider. Value right now. Cable is on offer as well as brexit talks are set to resume. The Prime Minister talks about his fears about a second wave, which probably means the lockdown is going to continue for longer, which means we see more economic damage. Vonnie lets talk a little more about those crude prices now. Wti is trading at its lowest level in two decades, the may contract dropping as much as 40 . Lets bring in bloombergs annmarie hordern. Why are we suddenly getting this 40 drop today . These problems have been around for weeks now. Annmarie it is a good point. I was just talking to a trader who said this has been the situation in the physical market for some time. You are just seeing it on your screen today. Basically, what the market is showing with this front month crude falling into bti, we are than down to just more than 11 a barrel, if you are buying crew today, you probably have another Storage Facility or youre going to put it on ship, but you have to close out your position or you move over to the june contract and you have to pay up. Really, what the market is showing is this exacerbating what we have been seeing in the physical market. Areexas, some oil streams coming for as little as two dollars a barrel. That is crew that is not for gasoline. This raises the possibility that this may even go negative. Theres no limit to the downside and prices when inventories in pipelines are full. Negative prices are possible. Guy when are we going to see those pipelines and storage tanks being for . Being full . What are we hearing in terms of where we are now . Annmarie one thing about cushion, the numbers have jumped 48 to almost 55 Million Barrels. They have a working capacity of 76 Million Barrels a day. It is pretty much nearly full. What we are waiting for, and you can see this if you look down the curve and see the Prices Higher because we are indeed contango, which means the earliest option to buy a barrel of oil is going to be your cheapest, we are just waiting for demand to pick up. The situation is going to be quite dire until these opec cuts come into play. For april, they were pumping they hadch what been doing. Really, this is all about the demand destruction. Until we start seeing people driving again, flying again, it is going to be very bleak for the oil market. Vonnie the Canadian Market is weaker by about 0. 5 as well. Obviously, russia, saudi, iran, iraq, they are all going to be affected as well. Annmarie all of the major producers. These numbers are horrifying, to say the least. This is definitely more geared towards the United States and the Storage Facility situation there, less so than it is on brent, which is trading at a discount today, but still much higher than your seeing these prices in wti. But this is the whole reason why these countries have finally had to put the price were behind them and come back to the table. Whether or not they were going to strike a deal, they were going to have to start ratcheting back production. The demand wasnt there, and many were having places to distort. To just store it. Guy in terms of what we now know about the situation with opec, as you say, we had to deal, but it was only a few days back. Do we know how much oil is on the water that is yet to either go into storage or end up in a refinery . I am just wondering what the legs on this look like. Annmarie we are able to track it, and you can see some of the vessels on the bloomberg terminal if you look at the map. One area that is interesting is the north sea. You never really see vessels sit there for more than a day or two, and they have been for days. The idea is that these are not even vessels to just carry and transport them, but where are you going to transport them . Refineries arent taking on more crude. You do have just idle storage. The tankers are the ones doing so well in this kind of environment. Rates are going up. People want to get their hands on ships not to transport crude, but to store it. But it is definitely harder to track because the ships are all over the world. People, especially if they are tapped out on land, they are going to move oil onto the ships. Vonnie the producers like halliburton, for example, slashing spending and not producing. What are the other producers in texas doing . Two dollars a barrel is not worth them getting up in the morning, is it . Annmarie halliburton was the latest, but weve seen this across the entire industry. The industry is in crisis, bracing for the worst oil bust in history. Everyone is doing this. Conocophillips signaled deeper cuts coming. Schlumberger reduced its dividends for the first time in more than 40 years. They say as much as 60 of u. S. Fracking demand will fall off the map by july 1. What does this mean for the industry in texas . Youre going to have shutins, likely a lot of layoffs. This is the whole reason why the president was willing to get behind the opec deal. Its the first time in more than 30 years that a u. S. President was pushing for higher oil prices. Its because the situation of america has changed. We are no longer just consumers that want lower oil prices. Now there is an industry with millions of jobs connected to it. So it is seismic here in the United States. One thing you are looking out for this week, potential he would get the boat from the Texas Railroad commission. Potentially we could see them pro ration. This is something that a lot of people say is not going to happen. The u. S. Is a free market, and we have thousands of producers. But they had hearings for days. Some on one side dont let that to happen, a lot of the big oil companies. Then you have some smaller drillers who say we should pro ration because regardless, we are going to have to ratchet back reduction ratchet back production. The fact that i am following it like an opec meeting means that the times have really changed. Vonnie absolutely. Bloombergs annmarie hordern, thank you for joining us this morning. Coming up, we are hearing from National Economic Council Director there he kudlow as the president looks to reopen the director larry kudlow as the president looks to reopen the economy. That is coming up on bloomberg television. Jonathan from new york city for our audience worldwide, on bloomberg tv and bloomberg radio, from the white house, we are joined by larry kudlow, National Economic Council Director. Fantastic to catch up with you. Secretary mnuchin making some progress is with democrats. We are all hopeful we can top off that Small Business Lending Program quickly. From the administrations perspective, can you help me outstandingny obstacles, hurdles we need to get over . Mr. Kudlow the talks are progressing nicely. They are bipartisan, as has been reported in general terms. Power,roll purchasing Small Business Lending Program, loan guarantees, forgivable loan guarantees, probably over 300 billion assistance program. Theyve also tacked on 75 billion for hospital assistance. A lot of that is going to be rural hospitals. Ive got 50 billion in idle 10r loans, 1015 billion or 15 billion in testing. They are good ballpark numbers, and i think Good Progress is being made. Jonathan this is good news. Ive said repeatedly as you and i have gone forward on this that perfection is the end of the is the enemy of the good. When you move quickly, things will slip through the cracks. Companies get access to the money that was for Small Businesses, we have a problem. Thankfully, the likes of shake shack were embarrassed enough to give the money back. Do you think we can make changes to the rules to make sure the money goes exactly where we needed to go . Mr. Kudlow well, look. I dont think the rules were bad to begin with. There might have been some glitches here or there. Secretary mnuchin has done a terrific job working with sba. I guess nothing is perfect in life, but on the whole, judging by how bad that original 350 billion how fast that original 350 billion went out the door, it is a very good program. Mind you, we are stepping up into the mediumsized area, but that is being done Prince Police through the Federal Reserve lending facilities and socalled main Street Lending facilities, and of course, there will be some assistance to large, Important Companies that have hardships. Obviously the airlines are one of them. I think its a pretty solid program. There are always tweaks here or there. But the fact that it works so quickly i think is a testament to its efficiency. Jonathan i have read on one of those points. It has acted much quicker than i thought it would. I thought there would be issues getting money out the door. I was certainly wrong about that. Company canbillion get access to the money for small companies, theres a bit of a problem. Is that part of the agreement, that we tweak things up a little bit so that the likes of shake shack, a 1 billion company in the United States, doesnt get access to funds for Small Businesses . Look, i havent really followed the shake shack story. Apparently there were some issues there. They may be able to seek financing through the Federal Reserve loan facilities. I dont want to go there. There will always be tweaks. We are trying to do this as expeditiously as we can. The whole point, and we talked about this, and i will just repeat it, we just want to stabilize, put enough liquidity into the economy to get us through the next couple of weeks. That is the whole purpose of this. Small businesses and those who work for Small Businesses. As you know, the unemployment numbers are very bad, although theres some evidence that perhaps they might be slightly less bad. If we can get through the next couple of weeks, and as you know, the Administration Health scientists have given the governors a very good guidance and roadmap for reopening in may may beges, then a transition month and to a much better economy into the summer, where hopefully the contraction will give way to some economic growth. We are just trying to set the stage for that and keep folks direct treasury checks, with the deferral of the payroll tax, the deferral of Student Loans and income taxes, and on and on. That is what we are trying to do. I think in a short period fo time short period of time, the operating agency has done a good job. Weeks. N you mentioned we have to get through the next couple of weeks. Dont we have to thing about months . Mr. Kudlow i dont mind thinking of months. But first of all, the president has an aspirational goal of getting the economy reopened by may 1. That is subject to a number of data driven conditions, as you know from the guidelines we published late last week, friday and saturday. Our doctors have said you need a downward trajectory within 14 days for new cases. If you get that, then you begin to move into phase one, where businesses will slowly start to practices,d by best various surveillance, testing surveillance, may be taking temperatures, having Hospital Capacity nearby, having diagnostic capacity nearby. People will have to continue the. Hysical social distancing but i do think in the next couple of weeks, we will see a lot of progress at the state level, and that is why i think in may, it will be a pretty good transitional month. That may be more prayer than hope, you know me, but i think it is there. This is data driven for everybodys safety, health and safety. The numbers are improving. Let us hope that they continue to improve. Jonathan we all hope the numbers continue to improve. When i listen to you carefully, though, i hear the words be careful, move slowly. Clearly, you acknowledge the bigger risk that if we open prematurely, we get another wave of infection. The administration doesnt want that. How do you reconcile that approach with the language the president is using, liberate virginia, liberate michigan, liberate minnesota . Mr. Kudlow some of these states appear to be ready to go. I am not an expert on every state, but i think the president , in his heart and again, as aspirational leadership, as i call it he wants to see america reopening, provided it is safe, provided we have the Necessary Health conditions. States lookthese like they may be ready to enter phase one, and i think the president is saying go on ahead. Dont to be onerous in your local regulations. Thats all he is saying. Jonathan but larry, do you appreciate that you are simultaneously saying it is the ision, but the same time encouraging people to protest . Can you see that is the problem . Mr. Kudlow jonathan, im not going to go there because my judgment is right now, you are entering the political zone. I want to stay out of the political zone. I think that we are making our positions as clear as we can, and the public approval of the president s handling of this crisis is pretty darn good. Very high. All im saying is we have done our part. We have issued for guidelines, worked with the governors, and for that matter, the mayors. We are working with them. These are guidelines. The states and localities will implement them. Weve made it very clear what kind of declining trajectory numbers we need to see, and there cant be a rebound. If there is a rebound, and we said this in the phase one, two and three guidelines, means youve got to pull back in reopening. On the other hand, people will be able to go back to work, albeit cautiously. They will have to observe social distancing. They will have to have a certain amount of surveillance testing and temperature taking in the usual good practices for sanitation. They will be able to go into the Office Buildings in the factories. Opening schools, that is going to come in phase two. Opening ofme restaurants and athletic sports venue, that will be part of phase one with strict physical distancing, and it will let up in phase two. Some states are going to be much faster. Other states will be slower. We get that. Jonathan we will see which states think they are ready to reopen. Theres a first for everything, but i think thats the first time ive heard anyone from any administration tell me they dont want to talk politics. Lets move on to tariffs and trade. The latest announcement overnight will be deferring some payments of tariffs on some goods. Can you give us some clarity on what the purpose of that latest movies . You and i have talked about this back and forth for several months. Why are you doing it . Mr. Kudlow on the socalled mfn, most favored nations, where there are hardships, we will suspend. Tariffs for i think three months we are not rolling back we will suspend tariffs for i think three months. We are not rolling back chair in a tariffs or other trade deals rolling back china tariffs or other trade deals. But the customs duties will be lifted if there are hardship cases. In particular, there was a lot retailers andut related supply chains getting into the United States. It is a significant action. We want to help folks. It is a way of helping out certain industries. It is not an enormous action and it doesnt change the president s trade policies, but yes, we are suspending and deferring, as we have with things like income taxes and payroll taxes and elsewhere in our recovery plan. Jonathan who pays for tariffs . Mr. Kudlow well, look, that depends on your analysis. Certain companies have to pay the tariffs. On the other hand, exporters in economic terms pay tariffs, too, or at least a shoulder the cost of some of the tariffs, so it goes both ways. All we are trying to do is mitigate some of the economic consequences of the virus. Look, youve got companies all over the country. Our whole plan is to try to help folks because this Coronavirus Crisis was not of their own making. This is not a macroeconomic history event. This is just a direct consequence of the mitigation effects to try to get rid of this virus. So we will help where we can. Weve suspended a bunch of areas. Weve had forbearance and a bunch of areas, and weve added massive cash and liquidity to 175 million americans. I think that is a good beginning. Jonathan youve done a lot, but you will understand that in moments like this, sometimes these conversations can get a little bit silly. This isnt a got you moment. Ive got a very sophisticated audience. I think im lucky to have the most sophisticated audience on the planet. You have been around for decades. We both know that u. S. Companies pay the tariffs. The president keeps saying that china is paying the tariffs. Now yes, of course there is some economic fallout, but the end of the day, by definition, the u. S. Importing company pays the tariffs. Thats why you are deferring these payments. Why do we do these silly things . Cant we just move on from this . Cant be president just start saying who is actually paying the tariffs . It is u. S. Importers. Mr. Kudlow well, look, thats a long conversation. Jonathan i understand you dont want a fallout with the president , but you must take it from my perspective. I know you know. We know everyone watching this knows. Mr. Kudlow i have, from the very beginning, said there would be some impact on the u. S. Economy, albeit minimal. I dont think that was a big issue ever. The economy was booming in january and february. Lets not forget that. I would say this. Yes, tariffs are paid by the companys importing, the u. S. Companies, with a minimum impact on consumers, as evidenced by the strong economy. However, and i said this very inly in the game, i will say economic terms, with respect to china, if you are talking about china, a couple of things. They got hurt. They had to cut prices. They had to lower their currency. They had to take shrinking profit margins. There are was damaged enormously. And at the end of the day, president trumps policies on tariffs and trade with china produce a very good phase one trade agreement. Lets not forget about that. It was just a couple of months ago. To me, the benefit youre getting in that trade agreement will far outweigh any economic cost, which frankly, i will say it again, you go back to january and february this past year, gdp was growing at better than 3 . But lets not fight that. Jonathan larry, ive got to jump and im afraid. Larry, always great to catch up with you. From the white house, this is bloomberg. Mr. Kudlow guy from london, im guy johnson. This is bloomberg markets. Lets get more insight on what is happening in the economy. We are joined by mona mahajan, allianz investment strategist. Ive got an oil price cratering and a bond market telling me that any recovery is going to be very bumpy. Equity markets continue, until this morning at least, to do very well. What are you reading into the relationship between markets and the economy right now . Thanks for having me. Its been an amazing run in the s p. We are now off of that 28 from the march 23 low, but at this point, we would say the risk reward isnt seen as favorable. We think about a reopening of the economy, there is uncertainty that looms. What does a reopening look like now that unemployment has spiked close to 18 . What will the u. S. Consumer looked like as they are more cautious as they reemerge . Keep in mind, the economy prior to the crisis had a 3 unemployment rate, and u. S. Consumption makes up about 7 of the economy. About 70 of the economy. That in manysumer cases works at the Small Business, and we know that story as well. Now that we have reached the 2800 level, to us, we dont think we necessarily r 2200. The lows of told we get back to 2400 2600 . Absolutely, but we think that bottoming process is an opportunity for investors to position themselves for a postcovid world. Guy how do we know what that world look likes . We are starting in earnest the reporting season this week. S p thatut 1 of the has withdrawn guidance. A bunch of other companies that are not going to give us guidance that is not that reliable. Companies do not know look with world is going to look like. The politicians dont really know either because reopening the economy is going to a very difficult. We dont have the testing in place yet. How do we know to make pragmatic calls about the levels you are talking about without that information . Mona mona from an earnings perspective, the estimates of actually come in line more so with reality than they had in the past. We are now looking at earnings declines in q2 of about 27 , and year on year down about 15 . To us, that riff lets a little more reality than the flat that reflects a little more than the flat to positive numbers. We could get close on how to invest within the technology space. Clearly, we are going to see more demand for wifi or 5g services. Companies are clearly going to need cloud and cybersecurity solutions. Within health care, the rise of ,elemedicine, ondemand testing pharmaceuticals that will be important in vaccination and therapy development, and of course, in Online Retail. We have already seen decline in the brickandmortar space, but this convergence to the amazons of the world, to Online Retail and online grocery, clearly some winners emerging there as well. There are stayathome themes we think have secular legs in this environment. The other part of the complex we are looking at is those companies that were priced at distressed levels and emerge after this is all over. Think airlines, for example. At some point, we need to travel again. That could be an area that could emerge is interesting. We are still advocating what we call a barbell approach. What i just mentioned probably falls on the risk spectrum of that barbell. Then you have your defense of spectrum, which includes areas like treasuries, which have been a flight to safety, gold, and really high quality Investment Grade bonds, which are being backed by the Federal Reserve. Some things to think about as we move forward. Vonnie how much is the stockmarket indicative of the real economy and its performance into the future here . Is a great question. The market tends to be forwardlooking, but in this case, we think we might have come too far, too fast. The sector breakdown, if you look one level deeper in the s p , does reflect a little bit more reality. The leadership that has emerged, and we talked about health care and technology, now the Top Performing within the s p, Consumer Staples at number three, and that includes areas costco, and, amazon. At the bottom of the list is really your energy and financials and industrial complex. I think when you did one layer deeper, you do get a reflection of actually what is happening in the economy. I will also say this could be an active or stock pickers market here. You may not want to own an index or passive instrument that can expose you to the underperformers or even the defaulters in this kind of market. You really want to make some active bets on how to position through the crisis and as you reemerge. Vonnie where does this energy story play out for the producers and the e p companies, the servicers . Like weve been talking about, the oil complex has been hit dramatically. Issuet only have a supply , you have a demand destruction in many ways. Opec and theen g20 last week to reduce capacity iv 9. 7 Million Barrels per day was a good start, but our Analysis Shows that the demand disruption is closer to about 30 Million Barrels per day, so nowhere near the amount of reduction in supply to match the amount of demand destruction, which is why we are seeing Oil Prices Continue to crater here, wti close to the 12 range. As we stabilize and emerge, we think there will be companies that have to shut down and go out of business with oil at these levels. Ultimately, oil is an industry that we will need, and there will be either a supply consolidation, or some of the governments will have to step in and support some of their businesses and markets in the energy complex, but in the near term, we expect oil prices to remain soft until we really get stabilization either on the supply side or the demand side. Guy can i circle back to what you were saying on tech . I am really curious about the leadership we are seeing in tech and how sustainable it ultimately is. I appreciate that some of these companies have sizable balance sheets. Balance sheets are clearly not an issue. Yet, clearly amazon is going to end up having to pay more as a result of what is happening. That pressure is going to be absolutely immense. I look at facebook and google, and they make a ton of money off of advertising. Im struggling to see where those ad dollars are going to come from if the rest of the economy is looking at the stress it is right now. Are people really going to want to pay up for advertising or spend as much as they were before . Mona absolutely fair point. Within the tech complex, you have to be pretty constructive as well. I think the amazon trend is here to stay, and despite the fact that they may be incurring larger labor costs, that story has secular legs not only in 2020, but really for the next five to 10 years. That is a longterm secular theme. To your point about the advertising complex, the revenue drivers for facebook or google type models, that is going to be a little more cyclical, so you have to thick about where we are in that cycle, and right now we are towards recessionary levels. I think you have to be cautious as you navigate technology itself. It is interesting within the three tech subsectors, if software is now positive yeartodate, semis and hardwares are still negative, it is something to thing about. You may want to wait a little bit until we get better valuations across the board here. But i do think at some point, it is important to get involved as we move forward and reemerge from this crisis. Vonnie mona, thank you for your time today. Allianzmona mahajan, Global Investors u. S. Investment strategist. We want to get a check on headlines. We go to viviana hurtado. Viviana in germany, the first wave of openings today. Small shops, that is. Schools may resume soon. Still, chancellor Angela Merkel is warning of a delicate balance between easing restrictions and preventing a flareup of covid19. That is also the concern in the u. K. Spain has seen a leveling off of new cases and deaths as the Strict Lockdown continues. This year, spains economy could contract by more than 12 in a worstcase scenario, according to the iberian nations central bank. Infectionse, daily soaring, topping 1000. In malaysia, cases are slowing. In the u. S. , the country weighing phases in which the country can be restarted region by region, but many proposals for business and society depend on widespread testing and contact tracing. That might not be available until september. Meantime, therapies are being tested, as is a race for a vaccine ongoing right now. Trials in humans and approval could be months away. This is really focusing attention on antibody treatments like regeneron s drug cocktail like regenerons drug cocktail. This could be tested in humans in the summer and be given to patients in the fall. It is just one of the therapies being called hope in a drug cocktail. This is bloomberg. Guy coming up on balance of power today, we are speaking to the ups ceo david abney. This is bloomberg. Vonnie live from new york, im vonnie quinn, along with guy johnson in london. This is bloomberg markets. It is time for our stock of the hour with dave wilson. Dave im here to talk about dupont. This is a company about two weeks away from reporting firstquarter results. They gave some preliminary numbers that suggest they beat analyst estimates. That is all about cash as opposed to earnings, given whats happened as a result of the coronavirus. Here is thatory they wind up 3 billion in financing for the next year, 1 billion in the form of revolving thatt, and 2 billion would cover the cost of debt maturing in november. Talking about the possibility of maybe that piece getting replaced by bond sales down the line, nonetheless, they are putting themselves in a position to basically get through the next year because they have 7. 3 billion in cash coming from the sale of their Nutrition Business to internationa flavors and fragrances. You are talking about a 26 billion deal in total that they expect to complete in the First Quarter of next year. You have to be able to get through the next 12 months and have enough cash on hand, and actually, the revolving credit was due to expire in june, only 750 million. They managed to renew that and increase it, so that is a plus. Now they are doing other things as well, withdrawing their fullyear forecast like a lot of other companies at this point, delaying some capital spending, idling some plants that serve the Auto Industry because that has been a particular area of weakness for the business. Put it all together, and there is so much focus on cash at this point that the idea that dupont is buying up some more financing puts themselves in a better position when it comes to cash, pushing the shares higher on a day when most stocks are down. Guy interesting stuff. Thanks very much, indeed. Dave wilson with our stock of the hour. Instagram cofounder kevin cisco left facebook in late 2018 after clashing with ceo mark zuckerberg. As now onto his next app, website that gives live statebystate updates on the spread of covid19. Bloombergs emily chang spoke to him exclusively about this new website. The whole idea here is that there is this number called the effective reproduction rate. It basically means how many people get infected her person currently infected. If that number is less than one, than the infection is under control. If it is over one, it is growing out of control. So we are trying to take what is a complex topic and boil it down to a simple number that anyone can view from their home just by visiting. That is our hope, to make it simple for everyone. Wasy instagrams growth the epitome of viral in the online sense. What are you applying here that you learned from instagram . Obviously you have some unique insights into how we all socialize. How does that apply to the model effect we are seeing . First, i want to say this website is simply the productionization, if i can call it that, of a notebook i published and a model that i published. The idea was just that you could access it without having to press refresh every day on the model. Separately, the viral growth that i saw it instagram i think compares to the science of viral growth in general. There are vast differences between an actual virus and the growth of a company, but they use similar math. By using that similar math on this actual virus, you can come to some really interesting conclusions, including estimating this number that we are talking about that explains how fast the virus is growing. , how muchlain to us worse is this going to get, and how much worse will get before it gets better . Heres the really interesting part about that question. You cant answer that question in general. Often, you will find people get a very broad summary at the highest level across the world, across a region or a country, but it turns out that this virus is very local. Louisiana may be doing far better than massachusetts, might be doing far better than maine. You have to ask what is happening locally, and here at live, we are rt. Breaking it down so you can see what is happening around you. I cant answer specifically when this gets better, but what i can do is effectively give you radar into seeing how it is going currently where you live. Emily you do get really granular statebystate muscle lets take new york, and maybe california because we are both here. If you look at those two states, which have had vastly different kinds of outbreaks in different responses, what do you see . What is super interesting is, number one, they have gone through a transformation and a lockdown, so you can actually see our use to be Something Like two or three, meaning that for every person that would get sick, they would make two or three other people sick. That is why a lockdown is so important. After the lockdown, you see the effective r number come down as we all begin to social distance, as we stop going to schools, to the workplace, stop shaking hands and start wearing masks. The r number comes down. But what is super interesting is as we begin to become a little as we openx, certain sectors of the economy back up, the question is going to be what happens to that number. Does it go back above one . I think that is why this dashboard is important. It gives you a live insight into the effects of the choices we all make. I dont know exactly what is going to happen, but i will be watching the dashboard just as closely as you will. Emily you correctly predict that the u. S. Would have 10,000 cases by march 19. Meantime, you also point out you are not an epidemiologist. You have said you are showing this to policy makers. Who have you showed this to . How have they responded . Has anyone from the white house reached out . Kudlow i have stash kevin i have sent it out broadly. Im one person, and the math that i run is specific on the data that i am using, and theres a bunch of different sources. But the idea that we can manage our country or a state on this idea of an effective reproduction number, that is the thing i want people to understand. If you watched governor cuomos address yesterday, he got deep into the idea of this effective r number, and the idea that we can watch as we start to make changes and as new york starts to open up again, and it can be that gauge that allows us to decide what to do. Vonnie that was instagram cofounder kevin systrom. This is bloomberg. Guy from london, im johnson. Vonnie quinn over in new york. This is bloomberg markets. Its time for futures in focus. Now toddning us colvin is joining us now. Ive got oil down. What is the downside here . Todd good question. Theres a lot of change. When we talk about Oil Prices Going negative, you are adding the production and storage costs together. We are already seeing that in very hard to visualize, having an oil producer pay you to hold their oil, but that is kind of the level we are at now. Theres some small downside, but big upside. The upside is very into your because big upside doesnt come until the global and domestic economies open up again, and right now, we are talking about rolling out very slowly, and oil prices dont want slow growth. They want immediate satisfaction. Right now they are not getting that. Clearly, one of the factors here is there simply isnt the storage to be able to take some of the crude coming through. At what point do those tanks really get full . At what point do those pipes get completely full . Is there a crunch point coming . Are there is, but we already seeing producers pull back. We had the opec meeting that we are going to back off somewhere millionnine to 10 barrels a day. Now you will start to see even greater pullbacks in production because, like you said, theres just no to put it. At this point, the u. S. Is probably going to try to buy as much as they cannot these levels for storage. Why wouldnt you . You can create storage. This is the opportunity, is there a interestrate environment for oil. So why wouldnt you, as a sovereign, be buying as much as you can and finding a place to put it for future use . There might be some buyers out there at these levels. It is just a matter of finding a place to put it. Guy how much of the shale patch do you think goes out of business as a result of this . How much forced capacity outage is going to result . D well, weve already down below 30. I think you are really playing even stephen on production versus profit when you get below 30, maybe even a little higher than that. Youre going to see significant slow down. They are ready to go and things come back, but even if you look out of the Forward Guidance of futures prices in oil, we are talking 35 a barrel. We are not up to 50 or 60 anytime in the near future. That is where they need to become us it is going to be a significant time before the shale producers are back online the way they were. Guy as weve been speaking, oil falling to its lowest level since april 1986 in new york. Of amber sena sinohers of ambro brothers, thank you. Vonnie coming up, we will be speaking about how low we can go. This is bloomberg. Guy live from london, im guy johnson. Vonnie quinn is over new york. You are watching the countdown to the european close here on bloomberg markets. Equity markets around the world under a bit of pressure. Here in europe, relative to other markets, its not actually that bad. In terms of the picture looking at crude on the screen at the moment, that is probably the dominating factor at the moment. Weve got brent crude down by 5 . New york crude trading down by 40 . But in terms of equity markets, we are seeing a flatter story. We are seeing a more defensive bias. The stoxx 600 now in positive territory. The pound is under a little bit of pressure as we watch Boris Johnson talk about his fears surrounding a second wave. A