The june contract plunging as well. Down 35 on the session. The carnage we have seen for oil is not over. We have a rally for bonds on this as investors are seeking safety. The biggest question is it seems crude oil is pricing in some sort of a deep recession, maybe something worse, where stocks on the year are down just 10 , perhaps still pricing in the vshaped recovery, which side is right . It is unclear. Perhaps the truth is somewhere in the middle. David thank you so much to for that market check. It is clear President Trump has inherited a major crisis in the white house. We bring in somebody who is familiar with dealing with prices, the white house chief of staff and secretary of defense as well as other major positions. He also leon panetta he is leon panetta. Thank you for being with us. Give us your view from 40,000 feet. You have dealt with crises inside government. How is the Trump Administration doing as they look at this balance between Public Safety and bring the economy back on the other . A difficult problem for anyone. Panetta no question it is a crisis of immense proportions that the white house is having to deal with. It is a kind of moment in time where the president of the have to have does the best advisors around him familiar with what the challenges are, both in health care as well as with our economy. More importantly, i think the need to unify the leadership on capitol hill, and for that matter unify the country. To the a crisis similar kind of crisis we faced 75 years ago as we came out of world war ii. It does demand the kind of fullscale National Mobilization and leadership that is critical to being able to solve this problem. Im not sure having 50 different states, 50 different governors dealing in their own way with this crisis will be the ultimate answer to dealing with the coronavirus. David is an interesting point. We do have 50 different states, and at the same time we may be seeing a competition with the state of georgia saying lets get back right away, other state thing that is way too fast. Can the federal government direct the states about when they can open up their economy . President of the the United States, in providing the guidance that has been provided at the federal level about the steps that need to be taken in order to deal with the coronavirus, has taken a very important step. Obviously the Health Care Advisors have made it what needs to be done in order to try to protect the safety of the American People as we china reopen our economy. , as thethe president commander in chief of this country, has to make clear that everybody has to follow the same standards in terms of arriving at the point where they will open their economy. I do not think we ought to allow people to shocked on this thing. I think the president of the United States has to be clear that he is going to protect the entire country. The coronavirus is very much something that does not recognize borders, whether they are state borders or national borders. This is something that has affected the entire world. As a result of that, it is important to have National Leadership provide National Standards as to how we will address it. Essential in making any of these difficult publichealth decisions is accurate information. Right now it appears we do not have the testing information we need. We are told there is capacity coming online, but many people think it is way short of what we need. As the federal government doing all they can do . From your experience are there other things it can be doing to make sure it is all the testing we need . It is tens of millions of test, apparently. Sec. Panetta no matter who you talk to or what you read in terms of how do we ultimately get out of this crisis, the answer still comes down to the tracing, andsting, treatment. Testing is going to be absolutely essential to our ability to begin to open up our economy with some sense of confidence about what is happening. You cannot roll dice. You have to be able to get an informationbased as to how many people have the virus, how many people have had the virus, how many people are healthy, so that we know for a fact that when people come together, we know what their history is. That will be the reality. That is what happened in south korea, that is what has happened elsewhere, their ability to get an Information Base that allows when youre going to put people together, whether or not they have the virus or they do not have the virus. We need that information. We cannot gamble that somehow we do not need to know that information. For that reason, testing is essential for that capability. David even as we in the United States and countries around the world deal with the coronavirus, their major issues of national security. I want to draw your attention and draw from your experience as secretary of defense what is and is not going on in north korea. We did not see kim jongun six days ago for the big holiday, and now there are unconfirmed reports he may be ill or worse. How do you assess it . To. Panetta i think we have be very careful about reports coming out of north korea. The reality is it is a hard target in terms of getting credible information about what is going on in north korea. For that reason, i think we have to be very careful to make sure we have the best and most credible information possible and trying to look at that situation. That kim jongun ill it coulds very have a Significant Impact in terms of what happens with north korea. It becomes a dangerous moment because the kim family has been the sole regime in north korea for 60 years. If the kim family is not around, it could well be a play for power in north korea. We do not know what the direction would be. The first thing is to try to get the best information possible about what is going on in north korea. As far as we know, it is difficult to know what is going on, is kim jongun in charge or does the military run the country . Sec. Panetta there is no question kim jongun Hester Mendez power in north korea has tremendous power in north korea by the virtue of who he is. It has also always been true that the military is the primary arm that kim jongun requires in order to maintain control of north korea. Powerful, but at the same time, the military has always been very subservient to kimand wanting to make sure is ultimately the person who will protect the regime and protect their power. It is a nasty balance that has been maintained in north korea for a long time. If anything should happen to kim, it will raise serious issues that north korea has never had to deal with in the past. For that reason, it becomes a Security Threat for us. Mr. Secretary, thank you so very much for being with us. That is leon panetta, former secretary of defense and former white house chief of staff. Great to have you with us. Coming up next, robert to mel ummel ish with us. This is balance of power on Bloomberg Television and radio. David this is balance of power on Bloomberg Television and radio. The oil markets are in total chaos. Yesterday we saw the Historic Development of wti futures going to the negative. , wehey spread into brent are delighted to welcome robert thummel. Give us your read of where the oil market is today. It has been moving quite a bit. Robert thanks for having me on. The oil market continues to be pressured off of concerns about shortterm available inventory around the globe reaching that full capacity. Yesterday was very chaotic. I have been investing energy for two dictates and have never seen anything like it. An example of a scenario where in the oil market you have physical buyers and financial buyers and yesterday it became clear that financial buyers do not want to become physical buyers and have the title to that oil. There was a massive amount of selling by those financial buyers yesterday and no buyers to buy those contracts. That caused the decline in oil prices yesterday, and obviously today we are seeing a bounceback , but in the forward curve we are starting to see pressure as investors become concerned about us increasing inventories to a level where we no longer have more available capacity. David one of the questions most of us have is how much of this technical, as opposed to the calling something longerterm troubling about where the economy is going . It is largely a demand issue, how much of the economy will be there globally to pick up the oil. Rob that is a good point and it is important for everyone to understand. The shortterm price decline yesterday was very technical. It was because of things you highlight the need to get rid of those contracts. When you look at the economy, the economydoubt and demand for oil will be lower for a little while, that is why oil prices are lower. Also keep in mind on the other side of the break wage and that we have an oversupply of the market today in an Oversupply Oil market for a little while. Eventually we will have an undersupplied oil market. The reason i say that is because of the opecplus Production Cut agreements in place for an extended period of time, not just for a few months, for a few years. Keep supply down as demand returns and that will be a positive for oil prices and bring them back to levels that are more beneficial for both consumers as well as producers. David today President Trump tweeted out that we cannot let the oil industry go under. He has instructed his secretary of the treasury and secretary of torgy to come up with a plan support the Energy Business in this country. What can they be thinking about . What should they be thinking about . Of rage for this inventory capacity we need a bridge for this inventory capacity and what is hopefully shortterm scenario in which we have Oversupply Oil market and what you do with that excess oil . That is the challenge around the world. Everyone is trying to figure out finding store that oil, additional locations or places like a Strategic Petroleum reserve to store that excess oil is being produced today. It will help balance things. Producers are making adjustments in the u. S. Already. Producers announced last week that they were curtailing or shoving in production. That means they will not produce or reduce their production by 20 to 30 . Actions like that from a producer level will help balance this market. Time, buta volatile the market is responding and looking to balance the market in the best way it can. Time, energy same stocks have not been heard as badly as some might have. As badlyot been hurt as some might have thought. General, ifstors in you look at the forward curve for oil, and energy is more than oil. There are other opportunities and natural gas that could benefit from more oral production. Lets talk about the impact on oil and why oil prices are down. The forward curve for oil prices is substantially higher. You highlight the june contract at 13, the may contract at five dollars. The contract six months from now is at 30. Fairly steady plus or minus. Energy investors understand oil prices at the current level of five dollars cannot work for anybody around the world. Placee the adjustments in to take this oversupplied market causing these higher inventories and lower prices and having the adjustment made to reduce the been tory over a longer period of time, which will result in higher oil prices. David really appreciate it. That is robert thummel. Later in the program we will talk with the u. S. Secretary of energy, one of the people President Trump told to help figure this out. That is coming up on balance of power on Bloomberg Television and radio. David the north Korean Leader kim jongun has raised eyebrows when he did not show up for the biggest holiday of the year in north korea, that is the birthday of his grandfather. There were rumors over the weekend that perhaps kim jongun is ill or even worse than that. It has raised questions about what is the future of north korea. We turn to an expert, a policy analyst at the Rand Corporation who specializes in north korea and south korea as well as Southeast Asia and other parts of the region. What do we know and what dont we know about what is going on with kim jongun . Say with a moderate level of certainty that there is something amiss with north korea conclude his health is to the point of destabilization. Based on the reporting, nobody knows exactly what is going on. Hadhe past, once the Regime Health issues with the leader, under kim jongun they would try to deny or prove the leader is alive and well and fully functioning. Going on site visits to assure the domestic audience and assure the world we are stable. It has been over a week since we have seen kim jongun make his public appearance. The regime has not made this clarification as to whether or not his health is in a good position or a poor position. At this point, one thing we have to keep in mind is we still have no way to confirm whether or not as graveh is in situation as the u. S. Media and some south korean media have pointed out. David if there is a regime change, and we do not know there will be, do we have any idea of where it will go . Eir . He have an h he has a relatively young man. Soo that is a good question. A lot of people have been speculating what would happen. There is no designated heir apparent because kim himself is relatively young leader. I understand he has possibly several Young Children but they are too young to be considered to be groomed or designated as a possible successor to their fathers throwone. There is speculation his sister could be up for the position, but this is all speculation by the western observers. We do not know for sure. Whoever gets to assume the leadership is an important question. The heart of the matter is when there is a tradition, whether it will be a smooth one or one where it is destabilized and there is no leader in place and that leads to destabilization, the fact of the matter is there will be many repercussions. The covid situation demonstrates that. Lets say the pandemic spreads and it changes a lot of things in the dynamic, not just from people to people within one country, but the way we handle the humanitarian situation with north korea if there is a collapse, if we see an outflow of refugees from north korea. There are so many different points that from a perceptual angle we talk about it a lot but i do not know whether we are fully ready to tackle it. As an international community. David how could we get ready . Wheres the expertise . Is it in china . South korea . Our own state department . Soo given that north korea, the nuclear weapons, the missiles, the illicit activities, humanitarian issue, human rights islations, no single country able to take control of the north korean crisis, the north korean puzzle and solve it by itself. It does require a regional and a multilateral approach because there are some of parts. At the same time, i think Even North Korea and south korea share a border, the u. S. Is involved in a potential piece stocks, there is going to be certain countries that are going at the forefront and others that would play more supporting role. David thank you very much. That is soo kim from the Rand Corporation. Coming up, senator chuck astley from iowa on a plan to get Chuck Grassley from iowa on the plan to support a new spending bill in the senate. Ons is balance of power Bloomberg Television and radio. David this is balance of power on Bloomberg Television and radio. Or bloomberg first word news, we go to mark crumpton. Mark americans will soon be able to test themselves for covid19 at home. The fda has approved the first home testing kit. Officials say it is just as accurate as the one you get at the hospital or doctors office. Patients will take samples and send them to labcorp for testing. President trump will meet at the white house today with new yorks governor andrew cuomo. The two halves are in recent weeks and will talk about ways to step up virus testing. Governor cuomo says testing is a key to lifting restrictions and reopening his states economy. The governor and other state leaders want 500 billion in aid to help with outbreak related revenue shortfalls. Britains Parliament Went back to work today and the authorities had a message for lawmakers. Stay away. Lawmakers and parliamentary staff were sent home in march as part of the nationwide lockdown to slow the spread of the coronavirus. The house of Commons Speaker resided over and almost empty chamber with space made for a maximum of 50 members of the u. K. Parliament. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im mark crumpton. This is bloomberg. Mark. Thanks, today is a big day in the United States senate. It is scheduled to have a vote at 4 00 on a new spending package reportedly including 350 billion in additional funds and 75l business billion for hospitals, 25 billion for testing. That is supposed to happen but Chuck Schumer said they had a deal. A number two on the democrat side said they are close to a deal but are not there yet. At the same time, there is a great deal of urgency with this. The money that went out the door previously ran out, and now they are trying to appropriate another 350 billion. At the same time, they had to think about what happens in the states, a different issue, the fourth round on this. That is what were waiting for out of the u. S. Senate. We will be talking with Chuck Grassley about this shortly. This is balance of power on Bloomberg Television and radio. I am told that we have the senator. I can hear you. Go ahead. Saying, the just senate is scheduled to vote on a spending package today at 4 00. You will be an important part of that as part of the leadership on the republican side. Do you expect a vote this afternoon, is it unanimous consent . Sen. Grassley it better be. Without senators in washington making a quorum, this is the only way to get it done, and done quickly. It should have been done 10 days ago but democrat opposition kept it from passing at that particular time. Just for your public who to know how we can do something with one senator on the floor, senator schumer called all 47 democrats, senator mcconnell calls all 53 republicans, and it is called the whip line. If nobody objects, a bill can go through by unanimous consent. We have had telephone conversations with my condo. Mcconnell. I am sure schumer has done the same thing. The 350 billion for Small Business is very important. Money to agree to more for hospitals, which would eventually be needed, but [indiscernible] in addition, another 25 billion for testing. Andt is those three things not anything else [indiscernible] 4 00 this afternoon. Thed give us some sense of first money disbursed. Will this under 350 billion take care of the problem . First of all, let me explain, when we put the first 350 billion up, the cares act, we thought [indiscernible] days, it ran out. [indiscernible] david senator grassley, im sorry to interrupt you. This telephone connection is really breaking up. We are going to try to fix that. This is balance of power on Bloomberg Television and radio. David this is balance of power on Bloomberg Television and radio. Nobody has ever seen what is going on today in the oil market. We went to negative numbers in the futures market yesterday. Sat down with the former head of bp to get his views on whats happening in the oil market. Production will come down certainly in the states as new production is not added to the future. Demand, very sluggish indeed, will take a long time to recover. It is down heavily at the moment, around 30 . Slowly asme back people will be very reluctant to consume at the rate they had of the changeult in the virus. Surprised if you look at oil prices being much lower for longer. Some based on that, the Texas Railroad commission is having a meeting where they are considering prorating cuts for texas. Does that have been based on this scenario you laid out . John it could happen. When i first joined the industry, the Texas Railroad industry was very active in managing production. They may do that. Even that, combined with the cuts promised by opecplus, that 10 or so of oil whereas we are producing 30 to much at the moment. All of that will help, and none of that has started yet, and that will help to underpin the price a bit, but it will be sluggish for a very long time. Plus,you brought up opec conversation that they may move their cuts forward, take it deeper. Day, saudi barrels a arabia does not want to go below that but it could happen. Anything else that could help support price even more . Dent i think you have to production a lot to support the price, but that is not sustainable. This is what we saw in 1986. Sustainable, not people opened up the tabs, and crisis state low for about 17 years thereafter. It depends on the rate of growth in demand. Demand i cannot see this growing very steeply for a very long time. All of these are temporary things. Could you help me understand the roadmap to stronger demand . Do gasoline inventories need to come down, then we soak up the oil in the market . When we talked mantoman recovery, what is the actual process of that . John it is just that, underlying demand for economic activity. The rate of growth of gdp returns the growth in the rate of oil slowly. We are getting more efficient in using oil every year. We use 1. 5 for every increase in gdp. Gdp has to come up, inventories have to be consumed, and people oil. Y want to consume aviation, transportation, a variety of things like that. I do think, however, there is a today, and overlay is peoples great concern about climate and the use of hydrocarbons which entering both methane and Carbon Dioxide into the is peoples great concern about climate atmosphere, and ie Global Climate change. I believe this is something that will carry on. In terms of behavior, i think people are beginning to reflect on viruses creating health problems, creating line problems , on the one hand. Phenomena, natural like viruses coming to do things which are far more powerful than president or prime ministers can do to human beings. Climate change will be one of those things. So it would not surprise me that over this period we are talking about now, the mediumterm, that Climate Change will remain an important anchor on the consumption of crude oil. David that was former bp had lord john browne. We have the connection reestablished with Chuck Grassley of ohio. Thank you for your patience. Was we were talking about how things are going in iowa, specifically with Small Businesses, specifically Small Businesses and farmers. What is your situation right now . Sen. Grassley first of all, 3 billion came to how many thousands of Small Businesses . Im not sure i can tell you. There is still a lot of demand for it in iowa. Probably more than metropolitan areas, Small Businesses is the backbone of our economy. Is really soft spots in iowa agriculture. Commodity prices globally are way down. Greens grains are historically low when you consider an inflation factor. We have some viruses in our meatpacking plants and they are not operating at 100 efficiency. There is a very sophisticated, e that you go through ig being born, five months later, slaughtering and what do you do when you have thousands of pigs that cannot be slaughtered because the packing plants are not operating at capacity. It is beginning to be a problem. We hope that we dont have to euthanize some of our livestock, but what do you do . You dont turn a 250pound pig into a 500pound pig and expect it,et quality meat out of and you dont have room for new pigs being born. It is the most immediate problem we have, caused by the pandemic, with a large share of the workers at the packing plants getting the virus. David there is 19 billion which is sormers, critical in iowa. How far will the remedy the problems you are seeing right now in the Food Processing sector . Sen. Grassley it could end up ocean forit in the what is needed. But that is what we are dealing with. We have to get it out to the than it looks like the federal government has to do it. When i talk to the secretary of agriculture, they talk about software problems, getting through the red tape in washington, d. C. I think the secretary of agriculture is very sincere about getting this money out and is frustrated about not being able to get it out faster. Quite frankly, it needs to be out here faster. Not well into may, which has been indicated to me. Time tohis is not the worry about it, but sooner or later, we will have to worry about how to pay for all this money going out. Is it inevitable that we will have to raise taxes to pay for what we are doing for good and sufficient reason right now . Sen. Grassley well, what you have to look at is, first of all, we are not spending the money because we love to spend money. This is the first time in the 240year history of our country that the government has shut down the economy. We had to it back up and running. If we did not get back up and running, we would be in worse shape than the question you are asking me. The question you are asking me is a legitimate one. Will it require increases in taxes . I think the answer to that question is directly related to the ability of the economy to handle the debt. Our country has always had some debt. For 50 years, it was about 30 of Gross National product. It will be 100 ready soon. Last time that happened was world war ii. Rates are interest below the Economic Growth of the country, i dont think we have a problem and i dont think we have to increase taxes. Would inverse itself, we would have to think about raising taxes. David i appreciate you being with us and your patience, or our technical abilities. Coming up, we will talk with the Energy Secretary, Dan Brouillette, about plans to save the u. S. Energy industry. This is balance of power on Bloomberg Television and radio. David this is balance of power on Bloomberg Television and radio. Im david westin. Coming back from break, breaking news on the bloomberg. The interim stimulus deal is done according to Trump Administration officials, something that we were just talking about with Chuck Grassley. That deal is done, they are supposed to vote in the senate this afternoon. The other big story is what has gonethat deal is done, they are supposed to on in the oil markee last few days. Earlier today, President Trump commissioned his Energy Secretary Dan Brouillette, as well as steven mnuchin, to figure out how to help the oil industry. Energy secretary Dan Brouillette joining us now. Give us a sense of where you start in having to deal with a situation we have never seen before in oil. Thank you. Great to be back with you. It is an extraordinary place we are in the market. No one in my lifetime has seen anything like that. We are taking very aggressive but appropriate steps to help industry, help this economy, if you will, get through this pandemic. One of the steps we took initially was to open up the pitcher jake reserve, industry,e storage available to the industry. That is what drove some of the pricing yesterday. You noticed folks closing out those futures contracts could not take possession of the oil because they had no place to put it. Storage is an acute concern across industry. We have taken 23 Million Barrels of oil, put that into the strategic reserve. To also saw the president s eat. Ill be working with secretary mnuchin to see what we can do to look at the laws and facilities congress has directed us to create, main Street Lending programs, other facilities as well, to ensure those are available to the energy industry. We are working closely to ensure all of the folks in the producing community have access to those types of loans, that liquidity. That is another acute concern we have. Approach is very difficult question, how do you strike the balance between, on the one hand, the president has said it, you want to maintain a Free Enterprise system. On the other hand, you have to say, how can you preserve the private sector at the same time that you save it . Dan it is a difficult balance we are trying to strike. The market is ruthlessly efficient and weeding out highcost producers. In america, we honor the free market system, it is what has brought us to where we are today as a country, a free and independent nation. We want to continue that moving forward. That being said, there are market anomalies that happen from time to time and no one could of predicted this impact of covid19. As we talked about in the past, the demand curve has moved so quickly in a downward fashion, production is simply not able to keep up. It is not able to ramp down as quickly as the demand curve has. As a result, we are dealing with is oversupply of oil. Our intent is to look at things we can do, things like storage, but also with regard to some of the things that congress has generallys generously provided this industry. Perhaps deducting losses incurred in this year against the last five years of profits. Those are important liquidity tools that we will help the industry take advantage of. David what about curtailing supply . The for example, banning imports of oil, particularly from saudi arabia. That is something being mentioned in the press. The president has not taken any of those options off the table, he will continue to evaluate the situation and at the time appropriate will make those decisions. He has stated, he will avail himself to any option open to him to help this important industry make it through this pandemic. With regard to the import of oil, certain refineries in the u. S. Are designed to taken specific types of oil. There is a difference between being dependent on the import of oil, as we were, and simply trading oil, which is what we see in the market today. Many refiners choose to import heavy sour crude because that is, for them, the most economical way to maintain a profitable status for their businesses. But that is trade. That is not dependent on imports. Really appreciate you being with us. You have a lot on your platter trying to figure out what to do with the oil sector. That is Dan Brouillette, secretary of energy. The second hour of balance of power will be on bloomberg radio. We are speaking with bill richardson, who knows north korea well, having traveled there often. That is coming up in the second hour. Im david westin. In new york,s 1 00 6 00 in london, 1 00 a. M. In hong kong. Welcome to bloomberg markets. Here are the top stories we are following from around the world. U. S. Stocks are down the most in three weeks with stocks plunging more than 3 at their lows. Investors shrugging off optimism. This as the historic collapse in the oil market shows few signs of letting up. Opec ministers organizing a Conference Call to address the situation. Promisingtrump is funds to support the industry. Main Energy Regulator is holding a meeting but says it plans to delay the decision over quotas. We will speak to the head of that group coming up. Lets get a quick check on the markets. The s p down 3 , off of it slows but
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