Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

Drug failed in trials. Good afternoon afternoon and good evening, good morning. This is viviana , this is bloomberg surveillance. First thing is first, this is what your markets are doing. A lot of the focuses on earnings. A lot of the focus yesterday was the fact that we saw this blunder through w. H. O. Leaking. We understand gilead and the impact we saw on the markets because the trial was not as successful as a lot of people were hoping it would be. Overall, your markets are also focusing on oil. Touch today, west texas actually extending the recovery, treasuries climbing with the dollar, and a lot of the focuses what is going on with italy, the Italian Government bond fell after the europeans felt signed off on this plan, immediate follow from the pandemic, and we also look at Corporate News and some of the earnings. Ifo german Business Confidence falling, but it was expected. Of the 79. 7 figure. Again, that is the lowest ever, and in about 30 minutes, we will speak to the head of the Ifo Institute, clemens fuest. Now to Viviana Hurtado in new york city. Viviana u. S. Treasuries want equity stakes in exchange for a share of 70 billion in aid. Public companies are critical about security that want a rescue deal, they will have to offer shares to the government. For private companies, he may assess debt. It is similar to those for airlines seeking payroll assistance. In the u. K. , Health Secretary matt hancock valley to dramatically ramp up testing and rollout a Contact Tracing program after weeks of criticism the government is falling behind your secretary hancock says testing will be available to all healthcare care workers and their families. This as Prime Minister johnson is expected to be down the street as early as monday. And gilead, as francine mentioned, tumbling after a summary of its covid19 drug appears to show it is a failure. The company and scientists working on it say it is not fairly represent the actual result. Posted theally results online, but they were quickly removed. In italy, the number of coronavirus recoveries has overtaken new infections for the first time, and it is a sign that social distancing measures are slowing the spread of the disease. The news coming around seven weeks into a nationwide lockdown. It has crippled the economy. Prime minister Giuseppe Conte has planned d containment measures for may 4. Nestle is back to sales growth in almost five years as customers loaded up on frozen food during the lockdown. Nestle is working on an improvement in sales growth this year, but there is a big caveat it says it is too early to assess the whole impact of global lot of the global virus. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Francine . Viviana, thank you so much. We have a number of stimulus packages both in the u. S. And in europe. First the u. S. , and congress has approved almost 3 trillion in coronavirus spending since early much early march. To 484 billion measure as Small Business loans. Do not agree on something more shortterm. Joining us now is on your allowed chief Investment Officer at legal general. Sonja, thank you for joining us. Are you confident that at least we have a package for the shortterm, or are you disappointed that eu leaders did not do more . Sonja good morning, francine, and thanks for having me. I think this is good that we have seen a flurry of announcements, and it is very clear that the size of most of these measures is quite unprecedented, obviously a term we have used on so many occasions and throughout the crisis now. I think for europe in particular, there was an exultation that the eurozone leaders would go one step further this time. You remember during the global 2009,ial crisis, 2008, and subsequent eurozone debt crisis, there has always been debtpush for further utilization. It is very clear that the experience of covid19 is very uneven. Italy in particular has been hit very hard. The size of the measure that governments put in place will probably be different as well, and it is very clear with italy and some of the steps of sustainability, what we are focusing on on these gross financing means. You are looking really at what is the starting position of the government and the deficit and maturing debt and what is the extra stimulus that the country needs to provide . It is very clear that the starting position is very different, and hence the attempts yesterday, and im sure we have not seen the last of it. How can we make it where it will benefit from the eurozone as a whole . I think the reaction today, i am sure we will see a lot more. I thought it was encouraging. As we know, the devil is in the detail, and to come to a full agreement probably was too optimistic for the first real conference yesterday. Francine do you worry that if we do not do more solidarity, this will actually lead to much more extreme politicians, and actually we will see a breakout of the euro . I know we talk about this. Crossroadsns are at a lot, almost every summit. It is obviously, again, i would be careful in saying this will be it might be the final piece of the jigsaw, although, again, i try and hope that we will get to the next level, although, as i know, it is a very laborious process when it comes to the eurozone. I think the tendency to want more populist government or populace politicians, to put it this way, had been on the way even before covid19, you know, came about, and as such, we might see the friction reappear that never, lets be really honest, never feels close to the Global Financial crisis, and just now comes back to the forefront even more so. And i think there will be an additional, you know, level right now because of the human the human tragedy not only for those who have suffered and those who have survived, but you have a double impact here that governments need to wrestle with and coming to its far and fair measures to help these people is a, you know, gigantic task, and i think it is why it comes back to the point, you know, we need to see more solidarity, and it is clear that people want to see more solidarity, and this is what we are facing currently and what we need to see politicians pick up. Francine sonja, what does it mean for your markets . What are you buying right now . Sonja in terms of markets, it is very interesting. Again, i think that only the speed with which markets discounted the complete standstill in economies but also how quickly they are starting to look through what will be inevitably a miserable Second Quarter and earnings season and starting to look through to q3 and q4. I think there is a sense for pause right now, because we are entering the earnings season. You mentioned nestle already. It will be an uneven picture appeared we have netflix with early picture. We have netflix with early extra suppl subscribers in the quarter, and elsewhere, it will be a disaster. I think it is time to reassess and take stock, because we othirdsy came back tw of the initial selloff, and i think for investors really it is now about to assess what will remain a viable business model, because what we are trying currently to focus on is the longerterm indication, what we refer to as economic salary. What will be the implication on consumer behavior, on our confidence . We learned now over the past week that social distancing measures will be in place for a lot longer than i guess originally anticipated, and this will shape the way we consume, we go intoand how our understanding of each individual company. Overall, isnja, this deflationary, or is this disinflationary . Sonja that is a very good question and a very important one, because if you think about the demand shock and the size of the demand shock, then inevitably, you know, alongside the decline in the oil price, this has to be deflationary. But on the flipside, i think we just heard yesterday or the day before, the first indication on what money growth has been, and i think the money was plus 40 , so theres obviously opposing forces at play, and i believe this is more of a timing factor initially. But right now, the first impact will be deflationary because of the demandside shock we are seeing in the system. Francine welcome back. This is bloomberg surveillance. I am Francine Lacqua in london. Many think this pandemic will change not only the way consumers shop it also the way businesses will change. Here are our numbers now. Things are going to permanently change. It has clearly accelerated the whole use of Online Banking and digitalization. There is more of a willingness to take risks, to engage. We are convinced we are going to have to reduce population density in our offices, so we think there will be come on any given day, fewer people back in the offices. Companies will have more of a tendency to go to virtual offices, even then, i would say, production environments or production Manufacturing Type of Companies Like ourselves. It is definitely going to increase dramatically, and this may be something good for banks. What we see is now the importance of diagnostics, be they continue to invest in diagnostics, i think recent events have shown how important it is. I think if you ask some of the companies that have had to make a transition three months ago whether they thought they could switch to home inside of a week, they would have said, impossible. Francine a number of chief executives that we were speaking to in the past couple of days about how the business will change in the pandemic. Laud,get back to sonja chief Investment Officer at legal general. Where usetalked about of value and what you were worried about. A lot of companies are getting to huge debt now. Is there a point where markets turn on debt and only focus on the debt, and will it completely reopen, or will it consume us . Sonja that is a really good question, and i think for debt and credit markets alike, it is very interesting, the Immediate Reaction to the lockdown measures, and so similar to equity, we have seen the mechanisms working very clearly. What we obviously have seen since then is unprecedented support measures from the Central Banks, and i think the fed in particular has rolled out an incredibly comprehensive list measures to support debt and credit markets, and i think that is very important. If you try to assess the attractiveness of these asset classes, then it is very clear we have two opposing forces that will work out over time, and one we just highlighted is just a question, and for governments in particular, it is that sustainability and attractiveness of their government bonds, and on the credit side, likewise, what we talked earlier about the, you know, viability of Business Models and whether the credit you are buying into is safe, but the support from Central Banks really provides instability that otherwise probably would have created a lot more volatility across these two segments. We still have to be very careful. I have highlighted these as an indicator that we are looking at, because it gives you an indication on where the journey is heading towards it, and particular, assessing what the starting position is from a countrys point of view, because that will give you a good indication on the health and effectiveness of the underlying bond. This is not an easy picture, and i think that is very important to understand. Not even in the developed world, and let alone in the emerging markets. We require really a casebycase analysis, because otherwise you will risk just, you know, buying into the story without understanding the fundamentals. Francine yeah, i, you know, love the nuance, and it is something that, of course, investors worldwide need to remember, so what does it mean for emerging markets, sonja . How do you distinguish between, you know, emerging markets that can still be ok during the pandemic intimate a difference between and to make a difference between the oilrich countries and those that are not . Sonja you highlight a very important point, because, again, it is very clear that the experience will be very uneven and will be a difference between the starting point where you are. First and foremost, there are quite a few emerging markets that are still on an upward trajectory when it comes to the virus development. And so we have to acknowledge as well that the starting point for most emerging markets, in terms of health system, the feasibility of implement a lockdown measures, and then, the systemsecondary, support are very, very different and even very different across emerging markets, hence trying to use the blueprint we have seen emerging from all of the developing world is probably wrong, so we have long debated internally how to make sense of this. What is clear is that support measures are very low in emerging markets. I am sure we will see more of it, but it is very clear as well oft the headwind for a lot the emerging markets is not as generous then what we might find in the developed world. As i said, to us, as well as the understanding, how emerging markets, if you take a country like india to inform lockdown measures, it is a very different situation than if you look at the u. K. Or germany, and it is that understanding that will help us understand how this might develop and, Going Forward, likewise what we should not forget is enforcing lockdown in a country where a large part of the population still needs to earn daily money to buy food is a very different situation to think about when it comes to lockdown than, again, in the developed world. This does not mean emerging markets are not an unattractive way to invest. I think we have to friendship between the virus and development and then economic consequences. It is important for investors to understand. Emerging markets actually have seen quite a dramatic rally from the initial end selloff, so again, what i said for everything else, i think it is a good time to pause, to reassess, because we now have a lot more information that allows us to understand the Economic Impacts and the longerterm implications. Francine sonja, thank you so much. Sonja laud, chief Investment Officer at legal general. Up more on gilead. This is bloomberg. Up next, more on gilead. This is bloomberg. Oomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Lets talk a little bit about gilead. We had the leak summary with chinese trials. The company and the scientists working on a trial say this was not fairly representative of the actual trial. Pharmaceuticale analyst at bloomberg intelligence, sam sweeney. Sam, what does this mean in the virus . Drug for sam it is an unpublished trial, it is a very new disease that is not understood, and doctors and companies are trying various trials. This is an antiviral that is aimed to kill the virus, so you would expect it to work better if given earlier in the disease process. Advancede quite sick patients, so if the data is correct, i am not surprised, perhaps, that it did not work, so it is really very difficult to judge. Obviously, everyone would have loved to have judge, but it will be wait and see how the bigger control trials report. About . E so what are we what about vaccines . The chances of a drug treatment are higher. If one of them shows some benefit, again, lets be careful, not people should run away thinking there will be a magic Silver Bullet somewhere, some benefit, that would be a good thing in terms of managing to reduce the risk of deaths. Theres lots being developed, lots of science out there, and i am very hopeful someone will be able to develop something soon, but we really have to stop giving timelines, because theres a possibility it could take several years rather than 12 months. Francine sam, thank you so much, sam fazeli there on gilead. Francine this is bloomberg surveillance. I am Francine Lacqua here in london. Markets, politics, economics. First with your bloomberg word news, here is Viviana Hurtado in new york. Hi, viviana. Viviana the bipartisan approval coming at lawmakers who wore masks. They also entered the chamber following Strict Health precautions. The white house as today at noon, washington time, President Donald Trump will sign the legislation. Now to eu talks, they ended yesterday with no agreement on a recovery package. German chancellor Angela Merkel pledged to back the stimulus plan. Well, it was not enough to force through a deal, and it comes as ecb president Christine Lagarde warns of a block being too little, too late. The central bank thanks the euro shrink this could year as much as 15 . President donald trump casting doubts on reports kim jongun was in Critical Condition following injury, but he did not give any more corrected on monday, Officials Say the leader of north korea was in Critical Condition after cardiovascular surgery. South korea says kim is conducting, quote, normal activities. Citing, quote, significant economic uncertainty, caused by the coronavirus pandemic. Optimistic Quarter Sales targets, but intels outlook fell below estimates. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Francine . Francine viviana, thank you so much. Now lets focus on the German Economy, and we had that Ifo Institute at the top. If you look at pmis for the month of april, they actually plunged to 17. 1, way below economists forecast and one of the lowest readings ever. They are continuing to plummet. The institute calls the plunge catastrophic. Joining us is clemens fuest, president at the Ifo Institute for economic research. Germany expects the economy to contract by about 5 this year. Is it too optimistic . Dr. Fuest i think that the uncertainty is enormous at the moment. It is very hard to predict what is going to happen, but the forecast, 1 . Forecasts at other certainly, on the optimistic side, the imf has forecast 7 , but it is very hard to make any productions at the moment, because the pandemic is really very large. Francine ok, but what do you think is the biggest risk for the German Economy right now . Dr. Fuest the risk is certainly that this recovery everybody is expecting, maybe in the third quarter, may not be coming or may be very slow. This, theyle realize will adjust their plans. We cannot exclude that the crisis was spread to an area of the economy, to the Financial Sector, so there may be knockon effects of this first very strong impact of the crisis, which can make the recession a lot worse. Francine so actually you think the implications, i guess, of the German Economy having to, again, go into full lockdown because of new infections would have a big impact . Dr. Fuest i think this is just one risk among others, so a second wave was be very bad. Facempanies open up, they a large cost of doing so, if they get things running again, and then they shut down again, if there is a second wave, it is catastrophic for them. That is something that needs to be avoided. I dont think we should take it for granted that a second wave comes, but there are other risks. We see this with a surgeon uncertainty, companies are consumersting down, cutting down their purchases, and if we consider that germany is so export oriented, our export market is collapsing, so all of this put together generates a very grim picture for this year and maybe also for the next. Fuest, whenemens you look at the Government Program of 1. 2 billion euros, how difficult is it to quantify it . Can you give us a sense of how you model it out . Dr. Fuest it is very difficult to model out, because the absence of any help, we would very quickly see a collapse of the financial system, catastrophic depression. So what the economy well, what the government is doing here with this aid package is really preventing the worst. What it cannot change is the fact that we are shutting down parts of the economy, that countries are shutting down, and therefore, you know, Economic Activity declines by a lot. I think the scenario, without any help of the economy, is a scenario we did not want to imagine, but it is certainly the case that we are not in a situation where a Stimulus Program has the usual effective normal recessions, where we can expect, you know, an increase in growth, a stimulation of Economic Activity. That is not what is going on. It is just about preventing the worst at this moment when we have listed the lockdown restrictions. We can talk about this moment. When we have lifted the lockdown restrictions, we can talk more about it. Currently, it is about lockdown survival. Do youe mr. Fuest, suspect this economic crisis will spill over into a Financial One . Dr. Fuest the risk is certainly there. The bundesbank has pointed to it. At the moment, governments are intervening and trying to provide liquidity to companies. In germany and other countries, we have a guaranteed loan program where credit sums are guaranteed up to 100 , which is unusual. I think this just demonstrates there is a huge concern that the crisis may spill over to the Financial Sector. It is very important that it is prevented. Inevitably, there will be losses in the banking sector. There will be some kind of a credit crunch, but the objective is to keep that under control. Francine do you feel like the authorities are, you know, taking a long, hard look at it, have the tools at their disposal, and also understand may be better what kind of concerns we are facing compared to avoiding the financial crisis . Dr. Fuest i think certainly the german governments but also other governments in europe are acting decisively and swiftly, yes, they are. They have understood the severity of the situation. The increase in Government Debt in germany and other countries will be fantastic. The increase in debt and deficits, and that is the right answer to the current crisis. As i said, they cannot predict for than the shut down no amount of money can do that but they can rein in these programs, can rein in some of effects, and i think authorities have done what they can. Of course they also face authorities, so they will have to readjust as we move into this crisis, but i think the response so far is all right. Francine and if the corona crisis in the u. S. Drags on and gets much worse, what impact will that have on germany and the eurozone . Would say a double impact, one on the exports in the u. S. Very important, export to markets in europe, and there will be an effect on sentiments. If the comic situation in the u. S. Gets worse, which are probably welcome if the situational Financial Markets get worse currently, they are propped up by massive liquidity injections, but how long will this last . This will have another, you know, blow to sentiment and expectations, and that may, indeed, make things worse for now. Francine what is the one thing that you worry about in the eurozone . Italy, spain, france are hit pretty hard. Yesterday, we had this agreement for a short term for dealing with the pandemic. Do we need something bigger, to make sure there is enough solidarity in europe . Dr. Fuest i think for the time being, it is very important to prevent panic and financial confidencellapse in number for instance, Italian Government bonds. Those are enough to ensure that what we cannot change is the fact that some countries will come out of this crisis with unsustainable debt levels, and that is something that will need to be addressed later. I think it is a very positive sign that the u. S. Decided to set up a common fund, but this will be a fund that is available to all countries, and we need to take into account that all countries will be hit massively by this crisis. The imf predicts 7 for german, 8 for france, and 9 for italy, so there is not going to be a lot of money flowing from the north to the south. No country can expect to get a lot of help from the outside, unless the Economic Impact is a lot worse in that country than in other countries. We should not forget that. Fund does not allow us to get away from the crux of this crisis. We need to face them, and as i said, there is a big concern that public debt will be unsustainable in countries like italy and maybe also in spain. Much,ne thank you so clemens fuest, of the info institute, with greater insight into what happens with the German Economy. Up next, we talk the price of hydrogen and what this means for gas companies. We will be joined by the chief executive of snam of italy, marco alvera. He is coming up next, and this is bloomberg. And this is bloomberg. Francine good morning, everyone. This is bloomberg surveillance. I am Francine Lacqua here in london. We talk about the price of oil, an, friday feels like attorney since the wti went into negative territory. That was a shock. Lets talk about oil prices and the impact it has on gas prices and also what it means for renewables, what it means for hydrogen in the future. I am delighted to be joined by marco alvera, the chief executive of snam. He has also been in italy to help with the covid19 situation. Marco alvera, thank you for joining us right here on bloomberg surveillance. First of all, i do not know how you link this huge and pretty incredible drop in the price of oil and what that means for snam. Marco so snam is involved in natural gas, not oil, but foreign demand, that is what led to the oil price collapse, has also led to the decline in gas prices on we see gas par with the price in the u. S. , whereas there used to be a huge spread between the two. What we see on demand is the demand is a lot quicker to move than supply is, so this helps put downward pressure on prices, and this is true for many commodities but very true for oil and gas. Recovers, then there may be supplies that we may see a faster than expected rebound as soon as possible start traveling again. Francine what does it mean for gas prices in three months, in six months . Can they be stable, and is this what we use in a kind of economic recovery . Marco so we should always remember that we were looking at very weak gas prices also before covid struck. So there was in excess of supply. We should always remember the world moved, in 2006, the world had about 30 years of gas preserves left. Now we have over 400 years of gas reserves left. There has been a lot added to the market in terms of discovered resources, so we were already in a situation where some of the gas prices around the world where below full production costs, then covid compounded that with collapse in demand, and this course as the winter ends, we also have the seasonality factor, so we are now in a situation where storages are being filled out, and prices are way below production costs for many of them, so prices are unsustainably low. Of course this helps consumers a little bit, because utility bills have fallen quite dramatically as well. Gascine marco, could prices ever go in negative territory, like we saw wti on monday . Marco it is very difficult. The gas market has much more stability in its logistics. Gas is always connected to a pipeline, so there is no such thing as a bottleneck in the global crisis. Global prices. The prices are based either at the henry hub in the u. S. Or another traded hubs. Veryil prices based at specific trading spots, the brent in the north sea or the wti around crushing. They are more spread out, more similar to gold, in that respect. Francine where do you see it going for renewables . If we have a very cheap oil price and it stays at these people levels, are we going to see renewables actually being pushed away, because it does not make that much sense . Marco well, there is a lot of discussion now as to whether we have peaked oil. The base for the analyst is looking at 2021, 2022. Will we maybe stop at 98, 97 . That is the range of discussion. There is no question that as that demand builds up again, prices will undoubtedly go higher. Lets remember what happened in 2008. To 40 went from 150 down in a few months, and then bounced back to 100 one and a half years later. Lets say that we are very convinced that hydrogen will be part of the future renewable solution. Hydrogen is the cheapest and the best way to transport and to store renewable over long distances. We think that hydrogen will reach 50 oil parity in five years, so the question is if oil is above 50, hydrogen will be incredibly competitive, and with hydrogen, of course, solar and wind, which is the way that we make green hydrogen. If oil stays around 20, it will be very challenging for hydrogen to compete. This is true in the u. S. In europe, i think there will be a very Strong Political push toward a green deal. We spoke to the European Commission last week in a conference call. At the highest level, they plan to use the green deal as a sort of a Marshall Plan to get the economies going again. So i think a 50 oil parity for hydrogen is a very attractive pricing point for renewables. Francine marco, thank you so much. Too short on time, but we will get you back very soon. Marco alvera from snam. Coming up, we will have plenty more on the economic recovery in the u. S. We spoke with gary cohen. We will see what he has to say about easing the lockdown. This is bloomberg. Francine well, good morning, everyone. This is bloomberg surveillance. Lets focus on how you reopen an economy as big as the u. S. Yesterday, we had an exclusive conversation with gary cohen. Here he is. Gary i think it is a ushaped recovery for it i am trying to think about a ushaped th recovery knowing that this event will not come back a aat urecovery for ushaped recovery for a period of time. Do i think basketball might play without fans in a stadium in a controlled atmosphere . Yes, i do, and i think we would probably all enjoy having that entertainment, but that is a different type of environment where you have 20,000 or 50 to aneople going event. Former nba, the commissioner, has a plan that relies heavily on logistics and on compliance. Do you think what scott outlined is a viable approach . Gary i do. I talked to scott quite a bit during this. I think scott has been very practical. He has tried to be reasonable in what he has suggested, and i think he is trying to lay out a way that we can try to give back get back into a more normalized economy. I think when he laid out is quite reasonable. Erik what are the biggest obstacles . You talk about your trepidation and gut instincts to temper your optimism with realism. What do you think those challenges are . Gary there are a large amount of people in this country right now who are getting government benefits. They may be in excess of what they will earn when they go back to work. Look, that is a whole other conversation that we probably need to have in this country at some point, but if you are at home doing nothing, earning more money than you would if you went back to work, it is harder to get those people back to work. I know of and i have heard of many sort of fast food restaurants right now who are doing Curbside Pickup that are trying to hire people. I have seen help wanted signs and a lot of the local retail establishments who are doing Curbside Pickup, and they cannot get people to reengage in the economy. So one, we need to get people to reengage and want to go back to work and not rely upon a government handout. That is number one for me. Number two is we are going to need announce no feedback loop through testing. Everyone does talk about testing, and we are going to need to know if we have a sudden outbreak of the virus and the virus reappears, we are going to need to slow down the economy in certain areas. It will not appear everywhere at once. Have,re granular data we the easier it is going to be to open the economy in certain places and reclose in other places while allowing the places where we are not seeing the virus reappears to stay open and continue on their gradual increase of Economic Activity. Erik gary, lets turn our attention from omens to Financial Markets, your previous career, if you will. What do you think are the most important lessons to be taken from the panic selling, massive deleveraging, and, you know, seed at which prices collapsed during the month of march . Gary these are not normal environments. The Financial Markets around the world have actually held up quite well. We have had relatively good liquidity, very good price discovery. I think everyone who has wanted to get in and out of Financial Markets has been able to do that. One of the sort of unintended consequences that we are seeing, and i think when you write about this period of time economically, we will talk a lot about this, is, yes, the banks have been in very good position, but the Central Banks around the world have had to provide substantially more liquidity through this crisis than any other crisis in the past. Inncine gary cohn there conversation with erik schatzker. This is what youre markets are doing. It is a funny day, because yesterday, certainly on monday, we had a huge cycling when it comes to oil, negative territory. That sent shockwaves across all asset classes. Now if you look at what we are seeing, there is a little to support for wti. The focus of closures on gilead and some of the trials were not a vaccine but a drug to deal with coronavirus, that apparently has failed. European stocks dropping. Again, leaders in europe struggle to finalize longterm plans to cushion the economic blow from coronavirus. They failed to come up with a longterm rebuilding program. Next, tom keene joins us from new york. This is bloomberg. Ork. This is bloomberg. A 500ne the eu agrees to 40 billion euro economic stimulus but fails to make a compromise on a longerterm stimulus. We will discuss with the president of germanys he phone institute. Of course the focus is on the longerterm plan. In the u. S. , we heard when Everyone Wants to know about, which is how do you get economy is working again. We have a full round up of your economic stimulus packaging in the u. S. But also in europe. Finding gilead. A lot focuses on what gilead has and has not been done. Reportsares drop as of their new coronavirus drug failed in a trial. Good morning, everyone. Bloomberg surveillance. Lacqua in london and tom keene in europe. Leaders did not come up with a comprehensive plan that is much longerterm, so we have to look at that, and we have to look at some of the trials, for example, the gilead trials. We understand that has been disputed by the company, this did not go as planned. Friday,s is a most odd francine. Across all of surveillance this morning is to try to regroup and get to monday. You are right, europe was a huge this employment, and you see it with disinflationary tendencies, but, francine, what i would really focus on today is the exhaustion of a shutdown, global ofnomy, really dawning getting into may and then a recalibration of how we restart into may and even into june. Now, folks, lets look at our first word news in new york city. Here is Viviana Hurtado. Viviana tom, we begin with donald trump. He will sign today at washington the latest coronavirus aid package. The house passed a 484 billion measure that adds money to the loan program for Small Businesses. It also provides money for testing in hospitals. Lawmakers are already at odds, though, over the next round of rescue legislation. Chief u. S. Treasury secretary Steven Mnuchin offered a deal for virusrelated aid. There is a hook, though, to the share, Public Companies do not have to give in equities stake to the government. The companies that qualify for that aid are deemed critical to national security. And to the u. K. , that is where british Prime Minister Boris Johnson reportedly will return to work as early as monday, according to the telegraph newspaper. Prime minister johnson is recovering from the coronavirus. At one point, you remember, he was in intensive care. Now he is under pressure to ease the lockdown. We end with oil rising for a fourth day in a row after that dramatic fall. West texas intermediate is trading at seven dollars a barrel. Producers are looking at output cuts. U. S. Operators are shutting oil wells, reducing production earlier than required under the opecplus agreement. Global news, 24 hours a day, on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Francine . Tom . Tom viviana, thank you so much. Lets look at equities, bonds, currencies, commodities, really dont know what to say about it other than we are turning, turning on a friday. I do want to point out the summary of this across the Global Market is a stronger yen, and many, as francine alluded to earlier, guess that is really about a weaker euro. I am watching your of really quickly youre very carefully. This is really important. I am watching europe really carefully. This is really important, francine, really fragile on any number of accounts, including the collapse in oil, but you really saw it was a brutal day yesterday for the brazilian, loss of 4. 55, the way it got there was really distressing. Francine it was distressing, tom. A couple of things here. European central bank, including two according to a Bloomberg Survey of economists, will include emergency bond buying in the coming months, that president lagarde sees it shrinking by as much as 15 this year. This is something we have to keep an eye on. This also comes on the back of, you know, european leaders struggling to finalize this longterm plan for questioning the Economic Growth of coronavirus, and that is hurting some of the government bonds, especially ones that are actually down. Of the positive, i guess, oil futures are higher were higher, but now they are turning lower. I also put go there. 30ways good to get gold, 17 there. We are joined by jeremy stretch, cibc head of fx strategy. Jeremy good morning, francine. Francine what are euro participants worried about . Jeremy well, i think they will be clearly worried about the slowmoving response of the eu leaders and regards to the pandemic process. It is interesting there was a degree of skepticism as to whether eu leaders would come up with a very aggressive and coordinated response, videoconference. Clearly the outcome of yesterdays meeting was going to be a symmetric, if we have a deal, the euro would have appreciated dramatically. And in fact, the process, the funds from the rescue package seems to be the fact that we have another couple of weeks away for some degree of resolution for that, the longerterm budget remains unclear. Theust keeps the euro on contrast with the measures we have seen in the u. S. , with that house package being passed last night, do suggest that for now, urodynamics remain challenging, and in the shortterm, at the very least, it would not be surprising to see it, those april lows really being tested, particularly if italy were to be downgraded by s p tonight. Francine what happens if italy is downgraded . Well, in a sense, one of the important factors is that the ecb has adjusted the Investment Grade ratings, so if italy were to be downgraded too much to take italy to those criteria, then the ecb has preempted some of the technical risks of that, so i think that is the good news. Clearly we are already seeing a little bit of uncertainty and terms of italian bond markets already, to an extent, and so i think if we were to see that downgraded, it would just underline the fragility that we continue to see in certain european markets, and i think that is alongside this sort of perception of a slowmoving eu response does keep at least in the very shortterm euro on the defensive. But i think eventually, we will get some degree of resolution in the eurozone. They will, as is often the case, get there, but it will just take a rather prolonged period to get to those tough decisions. Tom jeremy, you have been a euro watcher for decades. I did a careful study this morning of the flow of the logarithm of the fiveyear, fiveyear breakevens in europe, and, boy, is it an ugly slope. That gets to a tension point. How close are we to where the disinflationary tendency of that indicator breaks and something substantial happens . Or do we just glide our way into a european deflation . Jeremy that is a very good point, that obviously come in a sense, we are in an environment where Inflationary Pressures or the lack of Inflationary Pressures have been almost sidelined, because they are generating activity not necessarily generate Inflationary Pressure and get back to target. I do think it is something that markets have taken their eye off of. We have seen the fiveyear continuing pressure. We are off of the lows, but not by a great deal, and trading substantially below 1 keeps it away from the ecb target thresholds. I think the important point for europe and Inflation Expectations in general is its presumption of trying to see how the future will pan out and whether we can actually stop to see some slightly more optimistic Global Demand expectations, whether it be in the second half of this year or, increasingly, it seems to be the case, and 2021. That is the subtext. For now, the weakness on the inflation side or the disinflationary fears are not necessarily proving to be the driving factor in terms of euro performance. Tom things happened on friday, mr. Stretch, as we know, we are all home already. Lets go to friday afternoon. You alluded to a rate cut for italy. Run that for us. What should i look forward to for friday, saturday, or even asia on monday morning about rate cuts on italy . Say thewell, i have to ratings urgency, things are going to be a increasingly closely watched in terms of the debt revisions, so not only is italy under review from the s p today, we also have u. K. So it is essentially the case that we could well see downgrades in many jurisdictions both today and Going Forward. As i say, the ecb has tried to preempt that in terms of italy, but nevertheless, if we are going to see the Sovereign Rating being trimmed, then that is just going to make their, you know, the Pressure Point and terms of spreads look a little more significant. In a sense, in that vein, it would not be as surprising in the context of the ecb meeting coming up next week, the at the ecb may well consider increasing bond purchases still further to alleviate and preclude another bout of significant spread widening. So it may be the case, by the time of the asian open, that we see a substantial italian downgrade, we see the euro coming under a little pressure, then i suspect the markets will start to consider more qe from the ecb, trying to alleviate any spread widening. But it is something put forward under the euro. ,rancine jeremy, do you see like, madame lagarde is said to have told eu leaders a 15 for the you euro area . Jeremy when you are trying to do macro forecasts currently, it is remarkably difficult to put in certainly assumptions, because clearly you have to sort of try and understand the duration of the lockdown, but also, most importantly, not only the duration of the lockdown but the speed at which the economy may start to rebound in the context of a postlockdown environment. We are looking at china as a microcosm is interesting, because if you look at the traffic data, it is fined during the week but does not necessarily collate for the weekend. I think we are going to start to see, we are going to have an inherent degree of uncertainty, forecasts. Hese macro and anything sort of like a double digit growth production is unprecedented in any modern confines and under knives the need underlines the need for an aggressive response. Madame lagarde, in order to facilitate a response, has not in fact that such pmis were truly hideous yesterday, and we have seen the ifo expectations component plunge this morning to it i am not sure how much more eu leaders will require, but i think as they stand on the precipice, they will start to realize that you need extreme action. Tom confidence is a six out of confidence statistics out of germany were jawdropping we will continue with mr. Stretch of cibc. Our david westin in a conversation with rock creek and particularly with the former secretary of treasury, lawrence summers, look at that on wall p. M. T week, 6 00 new york time. Stay with us. It is friday. This is bloomberg. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance. Francine lacqua and london, tom keene in new york. Jeremy stretch is with us of cibc. Any number of things for economic a bunch of other things as well. Jeremy, when i would like to do is talk about brazil, just for a moment. We see a sharp depreciation in brazil. Cant stop moving from five, to 5. 4 zero, after 5. 55. What is the emergent condition of brazil right now . Well, i guess we have got some technical difficulties. Francine, r. I. M looking at brazil, and this one part politics, but it is also in the way each country is dealing with the virus. I will be honest, francine, i have been very impressed with how the United Kingdom media has been so transparent about really going across the United Kingdom, looking at every story out there, and the statistical veracity of the moment in the United Kingdom. Tom, i have to say the u. K. Media is probably one of the fiercest in the world. I have heard a lot of comments from people in france and italy saying they are offering data with such investigative, kind of, take no prisoners in what the government into to the lead up to the pandemic. Tom, a couple of points that i think were important for europe and the rest of the world. I know in the u. S. , we have seen a lot of jobless numbers that were pretty horrific. A lot of reports of course on that stimulus package. First of all, we had a record low. I had a pretty long conversation with clemens fuest, the president of the evo institute institute, and he said the numbers are ugly. A 5 attraction but could actually be much worse, and the second is this massive disappointment after a lack of solidarity from eu leaders, that yesterday, again, eu leaders found a package that shorterterm, but longerterm, it does not seem to be much more that they are willing to do at the moment. Tom no question, it is very fluid right now, and we saw that with important comments of Christine Lagarde yesterday. I believe we are rewired up, francine. Why dont you try to bring in jeremy stretch of cibc . Jeremy stretch, thank you so much for staying on the line for us. When you look at swiss francs, when you look at yen, what do you do with these currencies . Jeremy well, i think in the context of the swiss bank, it is very interesting, because the positive data did reveal a substantial reduction in terms of the accumulation, so the question is did that apply that the s p had or are looking to tolerate a slightly stronger swiss franc . But we are getting very close to that 105 threshold command i think if i does give way, we can easily see a very substantial move lower, so i am prepared to see a longer swiss franc in the current environment in terms of the underlying risk dynamics. In terms of the yen, theres some discussion about the boj considering bond buying yesterday, which did cause a little bit of excitement, but i think in view of the scale of the bondholders, the boj already, would be a little bit wary of trading that particular story. I think the choice, if we are going to see a gradual or an ongoing risk uncertainty, than i think that does make dollaryen susceptible to a move to the downside. When you look at the most recent japanese ny flow data for the last few weeks or the first three weeks of the new financial year, domestic investors have continued to be sellers of foreign bonds, so there is no evidence as of yet of a significant uptick in terms of exportation of capital in terms of foreign bonds. I think the case is very much the swiss dollaryen. I think the choice will remain to be supported, but the swiss is the one that i think a slightly more interesting, particularly if the market starts to price in the prospect of additional easing from the s p come the next quarterly meeting, that does look, i believe the dollar swiss looking particularly vulnerable at current levels. Youcine jeremy, where are on inflation in the u. S. But also worldwide . Is this this inflationary or actually deflationary . Jeremy i think in the context of the aggressive downturns that we are pricing and for all activity levels and all Global Markets and the relative weakness in labor markets and the lack of wage pressure, then it does look like we are certainly in a period, in an episode of disinflation. The question of whether we are moving into a deflation market is whether investors can start to look through this crisis again and start to see some degree of upswing and benefit from the mitigation measures, perhaps more so now than in 2021. It seems absurd that here we are in april, we are already trying to look for an optimistic story in 2021, but in a sense, i think that is the dynamics that we are looking at. So i think if we can and still see some degree of rebound potential in the medium to longer run, that i think we are still in a shortterm this inflationary rather than a deflationary environment. But of course when you have got oil prices under such stress, then it is very difficult to be overtly bullish on inflation, lets say, but then of course at the same time you continue to have gold depreciate, so it is a very conflicting picture as we sit here now in late april. Am it is conflicting on friday. Jeremy stretch, thank you so much, with th cibc. To move forward the conversation, private equity, important conversation, carl icahn, probably out in central park walking his dog, he will take time at 3 00 p. M. To speak to bloomberg about this moment that we are all in. It is the end of april. We begin to look toward may. Stay with us. Yen stronger this morning. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. Tom, a lot of the focus is on the fact that eu leaders may pave the way for something more comprehensive longerterm, but there is a bit of disappointment that they did not do more on the eu leaders summit. Stocks are down 0. 6 , looking at gold, 1729. Coming up, we speak to the intel chief, 4 30 p. M. London time. Welcome back. Tom was talking about the brazilian real so lets talk about what emerging markets can and cant do, whether they can increase that to fight the pandemic. Marketsabout emerging we are delighted to be joined by murat ulgen. There are emerging markets that are dependent on oil, those that arent, those that have Better Health systems. How do you break it down . Investors talk about emerging markets as a whole but the system is more extensive and nuanced. Murat it absolutely is, and actually the other interesting fx ands usually when Financial Markets come under pressure you see from emergency this timearket they are following the same script, focusing on growth. Maybe that is the common denominator. Aggressive rate cuts, liquidity, and a huge fiscal stimulus, so it is a wide universe but the common denominator exactly the same. Francine they start from a different base. Are you bullish on some countries more than other . Murat this is what we have been talking about this week, we call it the great em policy experiment in the sense that you may see side effects and unintended consequences. The risk premium is coming down as nominal real yields are falling. Selloff fx. S the andic debt is rising ,nflation risk with weaker fx so we do differentiate in terms of our strategy. We do the distinction between the low yield and high yield. Low yield others are more like emerging rockets. Markets. They show em characteristics. Asia, higher saving and International Reserves so we recommend low yield ors like like and korea yielders china and korea. Tom i want to go to brazil. Axios has a summary of the pandemic in ecuador, north of brazil, and greater brazil as well. Morethe toolkit accurately, what are the constraints on his degrees of freedom . Does he have a debt dynamic to work with . Does he have to call the imf . Brazil,hen it comes to there are positives and negatives. The negatives that you mentioned, the public debt dynamics are at a high level to start with and a high deficit inrgingmarket countries terms of their requirements, it is pretty large in brazil. Part of the story is it still has a significant amount of reserves, nearly 20 of gdp, one of the largest in the em universe. When we look at emerging markets, the distinction between high and low yield, we look for for theok at fx remaining of the year and divide them by International Reserves. Fx sovereign debt over the years and switching it debt, one has to balance the positives and negatives. Do wene final question see pressure with action today . I cannot imagine the choice that the kremlin has given the week in oil. What is the Russian Central Bank to do . Murat russia is an interesting case is im going to refer to the positives and negatives and within the highyield, russia is a country we are generally comfortable with despite the collapse of oil price and its impact on the economy. Russia has a low public debt, 15 of gdp, and has been undergoing leveraging many years. A position of strength in this covid shock with surpluses, fiscal reserve. Russia is kind of where we try to balance the positives and negatives. Francine thank you so much. More onget back with emerging markets throughout the day. Hsbc. S murat ulgen with we will have a full conversation with John Sfakianakis about saudi arabia and countries very exposed to oil. This is bloomberg. Good morning, everyone, bloomberg surveillance. Friday morning, a rainy, last three morning but really an extraordinary blustery morning but really an extraordinary friday there was no ambiguity over the conflicting emotions in the United Kingdom, with the Prime Minister returning from a grievous illness, all celebrate a healthy Boris Johnson. He comes right back on a monday into a maelstrom of agony over the look back on the pandemic in the United Kingdom and more importantly, the look forward. Francine absolutely. We had a scathing report about 10 days ago, asking what is the plan Going Forward . If you look at the modeling, the u. S. Modeling, european modeling, and u. K. Modeling has a bigger number of deaths in the u. K. Compared to everyone else so this is something we need to keep an eye on. There are other scathing press reports saying nurses and doctors do not have enough personal protection equipment, so when he comes back to work, he will field some difficult questions. Tom i cannot say enough about the raging battle in the United Kingdom versus new york city where we hear from mayor de blasio and Governor Cuomo how we are trying to keep the hospitals here wells lied. There it hospitals well supplied. There is an emergent need for food, particularly meat supplies. In new york city, our first word news. Viviana u. S. Congress approved almost 3 trillion in coronavirus spending since march. The u. S. House voting in favor of the latest round, a 480 4 billion measure that adds money to the Small Business funding and hospitals. Banko the European Central , it is likely to boost its response to help and economy in freefall, coding to it according to a Bloomberg Survey. They expect to increase emergency bond buying and it may depend on what european leaders are prepared to spend. , for the in Germany First time in a week the number of new coronavirus cases and deaths rising. Warningor Angela Merkel the country is far from being safe. Where retail u. K. Sales fell by the most ins records began. Month,alling 5. 1 last the coronavirus forcing all but essential stores to close. And was up more than 10 alcohol sales soaring by 31 . Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Tom news you can use from Viviana Hurtado, i am absolutely thunderstruck that we see alcohol sales up 31 . , talked to my local store still open, essential business on madison avenue. Says salesan there are at historic levels. Some of that Bloomberg Research you can use. It was a great privilege yesterday to speak to David Malpass, who was selected by President Trump to take charge of the world bank. He has had a busy time of it with remittances, a major worry for the world bank, but i spoke to mr. Malpass yesterday about world the world bank is now and how they will assist during this pandemic. David the first order was to set up Health Care Programs for the emergent the and we have emergency and we have a managed to get hundred countries personal protective equipment into their hospitals. The next step is to help the countrys get ready for a recovery when it happens. We are specifically working from a focus that they need to have more transparency in their tots, deaths, they need work on fuel subsidies. Critical to have the government keep on subsidizing gasoline, and then social protection, safety net. What we are trying to do is get cash to people, actual cash to people rather than funneling it only to the government entities. Tom the medical professionals we have spoken to at bloomberg make very clear that third world countries, the World Bank Countries are really fragile, and particularly fragile in their medical infrastructure. The world bank has to provide leadership there. What is your action plan to improve their ability to respond to this virus . Challenge. E is a big. T is a deep recession with the advanced countries shut down, the poor countries do not have markets or remittances, which is important. They are use to people sending money back home. What we are trying to do is strengthen the Health Care Systems themselves. That is different in each country. Some countries need more hospital bed, some need more equipment. That is exactly what we are trying to do. Month isams in just a a very impressive, and people worked very hard over the last theoth in Countries World Bank had offices in countries and had to connect via videoconferences with governments to get the list of things that were needed, so that is all going on, and we are trying to do bulk purchasing or Group Purchasing to help groups of countries at the same time. Tom i mentioned at the beginning, we have two president s of the world bank, backtoback scientists. We have a president of the United States who some would say is antiscience and has recently gone after the world health organization. Thent you to speak of institutional integrity of the World Bank Like the who, and speak to americans who would suggest the integrity of the world bank is not there to distribute the money, to distribute the funds. Money,l you spend the the millions and billions of dollars over the coming months . David that is a hard question. It is valid to ask of world bank to defend that. The government structures are pretty strong. As countries ask for a loan for a given area, or a grant, the World Bank Makes loans and grants, then we can look at the system that the country is proposing to use to monitor that. My sense is there is very good integrity of the flow of money from the world bank. It gets hard. There are so Many International organizations around the world, it is hard to generalize into those. Tom David Malpass from the world bank, a spirited conversation. I cannot say enough about going to the World Bank Website and seeing the granularity of he and his bureaucracy moving country to country trying to provide assistance to nations that really need support of their medical infrastructure. It was extraordinary. We have much more coming up for the morning on bloomberg surveillance. The pwc global chairman will join us on what pwc sees across this pandemic. This is bloomberg. Good morning. Viviana you are watching bloomberg surveillance. Lufthansa is running out of cash. Aeir survival depends on multibillion dollar bailout from four countries. A rescue is discussing package of up to 11 billion. Negotiators are taking part in talks but are hung up on what would be involved. Jcpenney started preparing for a potential bankruptcy falling. They are discussing a loan that would keep it operating during a chapter 11 restructuring. The coronavirus forcing it to close its doors. Apple is rejecting claims by a cybersecurity forum, finding no evidence hackers exported ,xploited a flaw in the mac iphone, and ipad. That is your Bloomberg Business flash. Much nk you so francine thank you so much. Lets talk about gilead and the trials for a drug that fights covid19 and maybe vaccines longerterm. We are thrilled to be joined by sam cavalli. Always great to have an update. There was so much hope gilead had a drug that could fight covid19 and there was a leak saying the trial in china did not go to plan. Is this a setback or does it mean it does not work . Sam any trial is a set back, but you have a whole variety of trials that get conducted, especially in a setting like covid19 where the disease is not that well understood. It is only a few months old, so it takes time and the drug has to be tested at different stages of the evolution of the disease. We can still remain hope all it can work in the earlier stage of disease, after you have been infection. Ith an even that, we have to wait and see. [simultaneous speaking] francine sorry, go ahead. Tom i want you to talk with all of your decades of experience following science about the nonscience white house. Yesterday afternoon, we had a guy with a bachelors degree in Logistics Systems try to explain to us that bleach in our lungs would be good science. How do we get back to the scientists giving advice in america . Tom, you have some very respected people in the white aboutbriefings who speak the pure science aspect of things. Them. Uci being one of at the end of the day, there are always bits of news that come out. This has become such a big situation for the world that everyone hangs their hat on the smallest bit of hope they can get. Some thingsometimes dont make scientific sense at all and that is probably what happened yesterday. Francine when you look at some of the other trials for this drug, where are we at . Who else is promising . Gilead, they have a large trial being conducted that will report in the early stages in june. Ion, that depends on how early patients are recruited. Dealing with an antiviral, you need to hit the disease in the early stages of infection. That clearly is what we hope to see how this drug does that trial. There are several already approved products on the market ranging from drugs from eli lilly, roche, pfizer, that are being tested with good scientific reason. We just have to see if it works out in a clinic, how much of a help they are. I think we should not hope for a Silver Bullet. ,om thank you to sam fazeli who really, truly, decades of biotechnology study with bloomberg intelligence. We have much more to talk about. It is a friday and it is an odd friday in new york city. We are seeing some better pandemic data, but amid that, there are still some challenges. Follow california, very problematic, india problematic at well, and overnight, discussions of real hardship across latin american nations as well. We will drive forward this conversation, economics, finance investment, and the politics of the moment. Providing us with great perspective is alan ruskin of Deutsche Bank. We will talk to alan ruskin about the significant Economic Contraction we are seeing, the reactions fiscal and monetary, and bring it back to what we see in various markets. Please stay with us. Another hour of bloomberg surveillance. Good morning. 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. Tom this morning, it is seven days until may. And for somene into july. School is out forever. The sirens of manhattan continue. The pandemic greatest deaths disdained. Angress delivers near half trillion dollars in stimulus while mr. Trump says i know a lot about economists and they have no idea. It is a gorgeous day in april. Take a socially distanced walk. You could be quarantined in london with young boys watching home alone for the 14th time. I am tom keene in new york, Francine Lacqua in london. We make light of it, but how is the quarantine going . Francine the quarantine is doing great. I have completely lost control of my household. The boys just dump anything they want in this room, but their homework is done. Homeschooling is getting a plus and that is all i care about. Tom the highlight today is a geometry exam that was studied eight weeks ago. The teacher is a saint. We have much more for you this hour. It is a strange day. What we are going to do is the shock of may is upon us. We talk conversation on the duration of this pandemic and what it means for our economy and markets. Alan ruskin will join us in a moment. Right now with our news, here is Viviana Hurtado. Viviana quarantine, donald trump will sign the latest coronavirus package, a four hundred 84 billion measure that adds money for Small Businesses, testing, and hospitals. Lawmakers at odds over the next round of rescue authorization. Boris johnson will return to work as monday. He had been covering recovering from the coronavirus. Now that the economy is struggling, the Prime Minister is under pressure to ease the lockdown. Treasury secretary Steven Mnuchin and offering when duchenne offering they will have to give an equity stake to the government. Companies that qualify for that aid are deemed critical to national security. Oil rising for a fourth day in a row after the dramatic fall of west texas intermediate, trading at 17 a barrel. They are looking at production cuts. Alreadynd algeria reducing production earlier than required under the opecplus agreement. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Tom thanks so much. Equities, bonds, currencies, commodities, a lift to the market with the vix churning throughout the week, a 40 handle. I want to focus on the compression in yields in the 10 and 30 year space. It is very important, this whole sluggishness of deflationary tendency will be an important theme. In em, i want to focus on the yen strength versus the euro and the brazilian real, just a gruesome day yesterday for the brazilian real. Francine . Francine we need to spend time on emerging markets. We are expecting something from the bank of russia. Focusm looking at is the on the e. U. Leaders yesterday that did not come up with a longterm comprehensive plan, something to watch out for. Pound, 1. 2330. Gold, 1729. Tom thank you so much. The Deutsche Bank Research Platform has been extraordinary. It has been a verys very strong not only in the United States but internationally. Driving forward that strategy is alan ruskin with decades of experience in the ebsbs and flos we see. I would normally begin with a more american analysis but your George Saravelos is telling me there is tangible euro fragility. Does the leadership of europe understand the immediacy of their challenges . Might, but that is not changing the speed of reaction. What you saw yesterday in terms of the debate and the recovery, the expectation is we might have forait three or four weeks the European Commission to come up with details. That is extraordinary. Three or four weeks in this market can be a lifetime. There might be an understanding of what they need to do and that speed is of the essence, but their reaction function is still very slow. Tom i was out walking in central park yesterday and looking on the bloomberg terminal on my phone. The european fiveyear fiveyear forward break even, it screams disinflation. Does europe have to worry about a general deflation . Alan i have always differentiated between goods deflation and goods inflation and what you have on the asset price side. In the Central Banks, it has improved and they are good at creating asset inflation and not good at creating goods inflation. Over, i dont think this only relates to europe but the world over will suffer from demand related deflation which is a natural outcome from the sharp declines in gdp around the world. There are going to be some supply kinks and elements where the supply side will add a little to inflation, but that is not on an ongoing basis. The europeans like the rest of the world will face considerable disinflation and Central Banks will have a hard time hitting inflation targets. They might as well toss them out altogether. Francine we are expecting a lot of centralbank action next week. How much more can Central Banks do something constructively that supports either markets or the economy . Proven think they have they are definitely able to think laterally. I would not focus too much on centralbank meetings, particularly from the Federal Reserve. They are more prone to react in a responsive way when you dont have a meeting and have emergency action. I wouldnt dissipate they are inclined i would anticipate they are inclined to keep something up their sleeve. Volatility is reduced and risky areare prison performing better. Most Central Banks are now in the realms of heading across money being the main feature are performing better. That they can come up with, the main element that would really growth ife life into need be. That requires ongoing coordination of fiscal and monetary policy. The fed and u. S. Treasury have shown they can ordinate. Coordinate. We have been seeing less from the europeans, and the japanese have been trying for years. Francine do you worry about this crisis economically becoming something much worse financially . Can this turn into a financial crisis . Talking mr. Weidman about it and also the European Central bank. Alan that is exactly what the Central Banks are trying to preempt. We have a little bit of advisement in 2008. The causality was the Financial Sector onto the real economy. This time it is the real economy to the Financial Sector and why i say we are in a more unfortunate situation, in 2008 we went from one institution, systemic Important Institution to another of failing and never got a break. This time we have the risk taking a break. Timeve a brief moment in moment in time for the Financial Sector. Inevitableor less that the Financial Sector will be impaired. Tom i believe in the textbooks that we looked at, the rumor is currency compensates given all of these exogenous shocks. What is your call on dollar, your call on yen, the big major currencies . What is your call out one year . Alan you are right in pointing to the flexibility of Exchange Rates as letting out some of the air and steam. Where it is letting out there and steam is in emerging markets letting out air and steam is in the emerging markets. The previous high yield ors ran to brazil and mexico yielders ran to brazil and mexico. When you look at the major currencies, i dont think you will see huge moves. Right now we are still in the it isof crisis where actually beneficial for the dollar. Importante status is and the Central Banks have done a good job in easing liquidity constraints and have driven the dollar higher. In. Libor is relatively high g10 and is relatively high yield yielder. I think we will test recent lows. 1. 36 was the low. It is inching down on a trend basis but it is not really going anywhere. Tom lets come back, alan ruskin with us from doing too. From Deutsche Bank. David westin on wall street summers, toawrence get an update on the government policy. Ook for wall street week tonight at 6 00 p. M. Stay with us with alan ruskin. This is bloomberg. Good morning, everyone. This is bloomberg surveillance. Lets go straight back to alan ruskin. We were having a great conversation on the risks to inflation and concerned in the euro zone, alan ruskin of Deutsche Bank still with us. What do people misunderstand . We were talking about Central Banks and market functioning, but what if this lockdown lasts longer than we think because of the second wave . What kind of an economy would we have . Alan that is a major indication for markets. That is ultimately the risk. If you look at economic forecasts, you do not see gdp returning to its peak levels. This is the consensus, at least. It does not suggest we will hit peak levels again until the end of 2021, so economists realize this will be a protracted, drawnout episode. Earlierd the question in terms of will there be spillover into the Financial Sector and it will be a slow, protracted economy and is almost certain you will get spillover into the Financial Sector. The Federal Reserve in particular has shown a willingness to patch things up. Wherever there is fire, they will bring a hose and water and try to put it out, that is obvious. There is the backing of the central bank, but this could be a big fire potentially if you have restrained growth over a protracted period of time. That is what we should think about most actively, that will be the scenario that barring some sort of medical miracle, we will have a long period of slow growth where the gdp Growth Numbers might look ok after the disasters of the Second Quarter. The levels basis, the level of poor. Ll look unemployment will look elevated. This economy is far from normal. When do we start focusing on the debt we are generating . When do the markets i dont know if they freak out about it, but repriced . Alan it depends where you are and what you can get away with. The places where it is going to is probably in the emergingmarket world. We have seen them resort to quantitative easing before they hit zero rates, so it looks more like deficit and debt financing. That is likely to be the first head we see it rear its may be we are already seeing it. The market is betwixt and between rewarding fiscal easing. For example, south africa recently. A lot of the currencies i mentioned, south africa and brazil and indonesia may be where the financial story is a particular issue. If you are thinking about the United States, we will probably be last on the list. The debt to gdp numbers look awful. I think you are looking at on a worstCase Scenario, protracted pandemic scenario, you have general Government Debt going above 150 of gdp. One element people feel more comfortable with is that the japanese have navigated the situation. It fits again with the helicopter type scenarios we were talking about, so the financing side will have to come from some degree, from the central bank. There is more belief in that from the g3. Shock as wexogenous have seen, does the Traditional Movement of reciprocals and Equity Analysis work . Can you look at the bond market where Interest Rates are an rollout to way higher price to earnings multiple ore price to cash flow multiple . Does that work with such a shock as we have seen . Alan not really, not in a scientific way. We used to be able to say a , a higherson yield reciprocal. Now we are down zero with an infinity type g. Thee is no science in Federal Reserve is playing around with it, as you lower Interest Rates it bolsters and other assets bolster p e ratios for things like the s p and the like, so it is created when people ask why is the s p defying gravity . It is precisely this reason, it is driving you toward very low Interest Rates across the curve and driving you toward risky assets. That is what Central Banks contend. Tom alan ruskin, thank you for joining us today. We will look at the broader span on the consulting business and what the future will be for larger corporations. So much focus on Small Business. Robert morris will join us. London, from new york, this is bloomberg. Are watching nestlerg surveillance. Posted first Quarter Sales that were better than expected. Worldwide lockdowns were good for business. Consumers loaded up on frozen foods, boosting brands that have recently fallen. More cutbacks on the way at boeing. Productiont to slash of the 787 by half and will announce job cuts next week when they announced firstquarter earnings. Out rake the coronavirus outbreak is crushing demand for new jets. The Worlds Largest Semi Conductor company withdrew its fullyear forecast amid concern over the coronavirus outbreak. 23 andting a fell short. Tom thank you so much. So much more to talk about, some interesting guests for friday and all of the reading to stagger into next week. Jobs day may 1, no. Jobs day will be may 8. Have, aty lift we vacillation in the vix between a 39 and 47 level. We have the vix back down showing stockmarket complacency toward a 40 handle. Bonds are mixed, but the 10 and 30 year yield have come in. Curve flattening. I focus on yen strength and euro weakness. You just heard alan ruskin tell us about that. Coming up, as we look at the business state of america, the chief executive officer of intel. Stay with us. This is bloomberg. Good morning, everyone, this is bloomberg surveillance. Tom and francine still working from home. Way leaders are paving the for a comprehensive package but they did not do that yesterday. The markets were disappointed as they were expecting more solidarity. Disappointment filtering through over the trial of the gilead drug for coronavirus seeming to fail. I am looking at eurodollar, pound. Bank mayean central act a lot more in terms of what they can buy and do to sustain the economy. The ecb president was saying a contraction can be about 15 . We are awaiting the Russia Central Bank decision that should come out shortly. Given the disinflationary impact of the impending recession, the central bank, a lot of people are expecting it to cut and they cut the rate to 5. 5 . This is pretty much as expected. If they had done anything less than 50 basis points, it would have made no sense given the tollenges and midterm risk inflation and overall Financial Stability of the country. Tom we have seen mexican and turkish Interest Rate cuts, which were a bit of a surprise, and now russian. I am going to go to italy where one of our guests earlier looked for a rating adjustment in italy. The stresses of course are different from russia then italy. Italy was the epicenter and is locked down by rules put on by the commission, but in russia if you have to have a think about how they are balancing the books , one thing supporting the ruble is sales of foreign currency, but they had a huge impact by the negative oil we saw on monday. The russian situation is much more complex so the decision moments ago saying it is a halfpoint cut, that is exactly what the markets are expecting after the central bank briefing. Tom we need to look at the larger corporation dynamics. He is a contributor to the World Economic forum in davos. Robert moritz is global chairman of pwc, brings an accounting inkground and was skilled his undergraduate years by the 18 feet of snow in new york at oswego. In, tanya emails and says, i am looking for a job change. Will those younger be able to go back to work sooner . This is in the pwc wheelhouse. Are we going to have our youth go back to work sooner . , every organization we are interacting has learned to work remotely, any time, anyplace, anywhere. Those with the right Digital Skills and digital iq will be more employable Going Forward. Whicha skill set issue organizations and countries will be focused on once we get through this crisis, and the Education System is one people will be focused on for the skill sell skill set enhancement. Tom tell us the dovetail between the audit experience of pwc and the consulting pwcrience of the wc as as you address clients with the mother of alassad and a shocks mother of all eggs are jeanette shocks exogenous shocks. Robert the investor needs to know, where do i have bad investments or companies versus an issue that might lead to timely reporting . How do i get people to work to do the books and report accordingly . What assets do these organizations have and how should they be valued . We still have the challenge of 2007 and 2008, so getting the audit right is a role for the management, board, and the audit to make sure the boards are appropriately getting the information needed. On the consulting side, it is what is needed today, how do you have the relative does relevant skills . We have seen focus on debt restructuring and process improvement to hopefully hoard cash. Everyone is and looking for Cost Containment programs. That will be more efficient. It is not what can i do to change dramatically but how do i rethink the customer spirit to find revenue, how do i manage my costs better and how do i deal with longterm sustainability . Francine good morning from london. How are these clients focusing on their supply chains . If you look at the fashion world and christmas, we are looking at six and seven months ahead. How soon will they be able to decide on that . Robert the reality is they need to decide today. Ceos are struggling with immediate decisions around the crisis, do i deal with people and layoffs versus taking Government Support . The other decisions will be impactful to the Holiday Spending season and they have to do a scenario plan, because nobody has the playbook in terms of what needs to be done. People are looking at consumer demand and trying to figure out, where am i in the cycle . What are my multiple chains of supplied to go after . Some countries might be limited. There are countries prior to me getting on, logistics and transportation issues are problematic so to think about how much do i need and where will i get it to look at variable options. Atncine should they look worst Case Scenario . We had a couple scenarios in europe where gdp could be contracting by 15 . If you are a company, do you assume the worst so you are not left over with too much stock . Robert everyone has to prepare for the worst and hope for the best. Decisions by ceos and management teams, they have had to return to work and get things running. Play out the worst Case Scenario , do we have a resurgence or problem later on . We have to focus on the option or potential where it might be pretty ugly so they have to go to learn a ground. What challenge does it take to survive today and what to survive in the next round of thinking . We need to think about what needs to be done by management in restructuring debt and actions of capital. Tom you have been doing this in the trenches of pwc. I am sure you have never seen business as screwed up as we have done in the United States. How do we fix that so we get checks to the guy running the coffee shop in oswego where you stayed up all night reading . Robert tom, that is a great question. The reality is this particular health issue which has moved to an economic issue, is usually impactful to small and mediumsized businesses. I think we underestimated that and the longevity. The administration and every country around the world doing this has to be diligent and operationally efficient. You cannot search for perfection. It will be the cause for the inability to liberate against these things. We cannot be relying on old technologies. Going back to your first question, there are people who could put together quick fixes with the right skill set. There is a lot of innovation and the question is how to leverage it. The second challenge is a year or two from now, second guessing as to who got what money, how did they use it, was there inappropriate behavior . The public will be looking back a year or two from now and we hope that will be passed the crisis of the health issue. We saw that in 2008 and 2009 with the amount of support provided and who were the winners and losers . That is one thing ceos are talking about, do i take cash in terms of support, or deal with the ramifications a year or two reputation . H the decisions they are making today, the smart ones are thinking about today as well as tomorrow. Francine how Many Companies are Zombie Companies, companies that whatnots arrive on their own even it would not survive on their own even if it were not for covid19 that the government has to prop up, and how dangerous is that . Robert it is a great it is dangerous. We had a slowing economy before and a bunch of Zombie Companies that were technically bankrupt, but because of lower negative Interest Rates were still surviving. Thehave that today and virus has accentuated every trend we had before the crisis. Zombie companies and the amount of debt these companies are , theg on for survival investor needs to know which of the companies have the future stake versus those in survival mode or loading up that for survival purposes versus longterm sustainability. Moritz, pwc global chairman. Chairman, mr. Icahn will join. We will talk about carl icahn with opportunities. With carl icahn about opportunities. You are watching bloomberg surveillance. U. S. Congress approving almost 3 trillion in coronavirus spending since early march. The house overwhelmingly voted in favor of the latest round, a 480 4 billion measure that adds money to the Small Business loan testing, andy for funding for hospitals. Likely to boost its response to help and economy in freefall. In the coming months, economists expect the ecb to increase emergency bond buying and a lot may depend on what european leaders agreed to spend. They failed agree on a longterm program. For the a setback, first time in a week the number of coronavirus deaths are rising. Is farmerkel the country from being out of the woods yet. Trump raised eyebrows with this suggestion at his news conference. Disinfectant that knocks it out in a minute, one minute. Is there a way we can do Something Like that by injection inside or almost a cleaning . It gets in the lungs and does a tremendous job. It will be interesting to check that. Viviana the maker of lysol saying under no circumstances should its product be injected into the body. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Francine thank you so much. Coming up, plenty more on the inus and the failed trial china of the anticovid19 drug, and where we on are with the virus. This is bloomberg. Morning, everyone, bloomberg surveillance. The most important interview of the day, after we saw yesterday a real state estate developer and a gentleman from the colorado tech goal university in Logistics Systems try to play dr. At the president s press conference where there was discussion of ultraviolet light and bleach. Sodium hypochlorite can be very dangerous in a nondiluted set. Joining us is andrew picos, one ,f the late Andrew Pekosz one of the leading variola jests. Virologists. 3 yesterday was extraordinary. Ofld you explain the shades ethel and isopropyl alcohol and what they can do in assisting these fears of virus . Andrew there is such an important distinction to make between things that are used as disinfectants that can work on , things to kill viruses that work topically, which you can put on your skin, versus things that you take as a drug intern away in internally in terms of what can limit the virus. All these things can be toxic to people. It is the amount that we use, the dose, the dilution that brings it down to a level where us andess harmful for harmful to the virus or any pathogen. Tom theal of medical officials spoke of their displeasure and it relates back to albert cameo camus. Tell us how far out there is the solution to this virus . Andrew there are a number of Clinical Trials going on now, and while that is not the popular thing to say, we will need time to test these treatments to make sure they are not causing extra harm and truly are effective. The other thing to Pay Attention this is a Broad Spectrum of disease. The drugs may be effective against the mild forms of the disease but not the severe forms. These things need to be investigated with Clinical Trials to make sure the treatments being proposed are safe for patient populations. Francine how many drugs do we know of that could work . Yesterday there was hope and a setback when this gilead drug did not go as planned when it came to the chinese trials. How many more drugs will fail like this one . Andrew it was a great trial. , but itails are lacking was targeting severe cases of covid19. Targeting severe cases is very difficult because people suffering from severe cases have a combination of the virus causing damage and they are system causing damage. Justy be that relying on an antiviral drug for severe disease is not completely the right strategy. We may need to find ways to tempered the immune response induced by the virus. The drug may be able to work in more mild situations or early infection. Francine how far away to finding a vaccine are we . , we are inaccine phase one Clinical Trials for a number of different vaccine platforms. We would expect to hear something in the next month or two about the initial safety work going on with those vaccines. The trials that will be putting it into patients to look for efficacy are being lined up under the assumption these vaccines will be safe. We are still about a year away from anything in terms of a practical rollout of a vaccine, if everything goes well. Tom doctor, thank you so much. Andrew pekosz is with the Johns Hopkins school of medicine. School, i should point out mr. Bloomberg, a great philanthropist, his Johns Hopkins university and founder of Bloomberg Radio and television. How many times this weekend will you watch home alone . Francine too many. We will find something else. Did you know there were four . The kids definitely have more tv four withhere were very Different Actors and standard of acting. Thatgoing to look at oil, is how i will spend most of my weekend. Surveillance movie alone andatch home homeome alone to. Alone two. We hope all of you have a productive weekend. Program note a week from now is not jobs day. It is very confusing. It is the first friday of the month but it is not may 1 this time, it is may 8. Jobs day is extended out and that should be a pretty grim report. We have to say thanks to our technical staff for the incredible job they have done over the last week. It has been just incredible linking these guests up from their remote locations. Futures up, the vix back down to the 40 level. We are watching em currencies. Maybe we will see something on italy. Stay with us. This is bloomberg. W . W . Uhiono alix more aid, less clarity. An aidn leaders agree on package and disagree on how to spread the pain. Small business come a big problem. The house passes the next aid package. We will break it down with neil barofsky, former inspector general. An draftkings will start trading today after their reverse merger. We will speak to the ceo. Welcome to bloomberg daybreak americas. We made in another week of work from home. Im alix steel. We have a stronger u. S. Equity market and a weaker european market. The euro now slipping into positive territory. You did have a selloff in the peripheral bond market in europe. Now you are seeing a rally, so bonds continue to move lower. Oil still trying to