Will mean then. A lot of earnings out there. Without question the ecb meeting is front and center today. A change after what chairman powell said yesterday. Absolutely stunning the difference between the u. S. Central bank in the European Central banks. Its could be a radically different press conference from lagarde today than what we saw from powell. Francine many people say its a different economy and cycle. Im excited to be talking about that. First lets get straight to new york city. Trumpbegin with president blaming chinas Coronavirus Response on politics. He says beijing would do anything to see him lose the election. The president did not provide any evidence china would liberally mishandle the outbreak. He says he is considering various ways to punish the chinese government. Chinas response, it has no interest in interfering in u. S. Internal affairs. Chairmanderal reserve jerome powell, he worries about the longterm economic damage of the coronavirus. If the economy starts to recover in the third quarter, its far from over. To the European Central bank it will decide today if 1. 1 trillion stimulus is enough. It will include asset purchases, ecb president Christine Lagarde is said to reiterate her pledge to do everything necessary. We had with the worst quarter on record. 5. 8 , thatng at shows the dramatic impact, a similar story and spain. Following an annual rate of 5. 2 . Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Equities, bonds, currencies, commodities. Lift, i really a want to point out how the twoyear u. S. Yield has come in, but it speaks volumes about the Economic Data we are seeing worldwide. Dollars with a 24 handle on brent. Francine there is a modest melt up. Some of the corporates out there. Overall if you look at european stocks are down to 0. 3 , pretty terrible figures in terms of gdp. , im alsonking 7. 0521. At one of the interviews within looking forward to, he is Deutsche Bank chief economist. Thanks for joining us. The reason we always love speaking to you as you have a different perspective from a lot of economists out there. Has Christine Lagarde done enough . Does she need to focus on stimulus once the recovery starts to take hold . Obviously the ecb discussion today will be hopefully heavily , this isd and so far q1, nothing about q2 yet. Its just phenomenally bad. Much worse than anyone had expected. To have that all go down between five and seven and a half going down is something thats quite remarkable. Christine lagarde made the statement that she thought the euro zone growth yearoveryear would be close to 15 , so that undoubtedly will set the stage for the discussion. Dosense is the best they can in terms of headline numbers is from 750se the program two may be one at quarter. The rest one and a quarter. The rest will be small things and perhaps talk about the possibility of suspending the p and making a lot of general noises about being prepared to do a lot more if necessary and having the firepower to do more if necessary. Thats where its going to be. Its a very different central bank. , thatsery unified body not true the ecb governing council. There is a german lawsuit going on again questioning the expansion of its mandate. That uncertainty hangs over the institution. Do we need some kind of euro . Onds to get out of this my views on this. I have very strong views. Its a question of postponing the problem. Italy is the problem child in europe. If italy had taken and reforms from the earlier bailout, we wouldnt be where we are today. Postponement of the forms and is just pushing the problem. Thatsnt think necessary, but having said that or later onhases through the omt is effectively socialization, so we have a fair amount of socialization going on. So to say that there is no socialization is there is a huge amount going on. I would not want to regularize that. One thing might happen, the commission itself might issue some debt to finance the program and that might be increased in size and so that again is a form of socialization. Maynard keynes is happening right now starting with the statistic. Speak tomadame lagarde fiscal authorities at a press Conference Today . Chairman powell talked yesterday about an american great fiscal power. How does lagarde lecture the fiscal authorities today . I think youve put your finger on it. Its the most astonishing thing of powells press conference. ,he statement was this message this comes after we talked about that u. S. Debt to gdp ratios creeping up raid creeping up. Theas astonishing to have chairman of the Federal Reserve say it so bluntly. That is very hard to do in europe because you have such a diverse of countries. , the biggestany economic power in europe. On the other extreme you have italy who has a debt of 160, probably 170, debt to gdp ratio. Achieve 3. 5 omehow growth rate, that is not sustainable. In, youuages creeping can see that the heavy reliance on the ecb essentially monetizing italian issues. Its a wide spectrum americans dont have. That mixer critical for lagarde to make a general statement about that makes it critical for lagarde to make a general statement. Lot, a totaldone a commitment of 1. 4 trillion, talking about gdp. But the room is much louder than it is in the u. S. Tom i want to go back to the reached focus landau josh focus landau research landau research. What you watching for in terms of big money moving that will adjust the dialogue in europe . We are quite sanguine about the term. We believe there is a wall of money created by Central Banks there isl authorities, no chance of a solvent sovereign crisis blowing up between now and christmas or any of the banking crisis. They have been smothered with money. More if in 2021, economies still dont perform and the needs to be more fiscal support and then there is a question about in the ecb council, can they keep buying italian debt and that creates doubt in the investors minds having to worry about things like that. You could see quite a dramatic capping of flow which would be in our case a seriously worrisome risk event. Outflow from the weekly european sovereigns within the ecb border. Otherwise uncertainty about whether the ecb can keep doing that directly also monetizing sovereign issues. Heel of thechilles european system in the world as far as financial instabilitys might come. Francine we also have full coverage of the European Central bank decision. We will be hearing from Christine Lagarde a little bit later. Starts atl program 7 45 in new york. This is bloomberg. Tom good morning everyone. I cannot convey how things have changed since 2 00 p. M. Yesterday. The daunting reality of u. S. Gdp yesterday and the reports we are beginning to see worldwide that the facts are changing. Francine lacqua and tom keene on this day. We are thrilled to bring you landau. Lkerts the fiveyear breakevens of london. The fiveyear five year breakevens of the United States show a dramatically different story and then theres the long and winding path of european disinflation. How close is europe to the fears of inflation 60 or 70 years ago. Theo now particularly unemployment numbers in the Growth Numbers that have come out. I believe any kind of conversation the worries about inflation because of the ballooning of tempora Balance Sheets is misplaced. And even moreints , changes in behavior. People are not going to just rush out in the next few months. Downwarde will see pressure on inflation, particularly in europe as well. This could be a study not only of your work, but others as well. The politicians feel like they are driving the bus, but where i sit and i believe you allude to it, the consumer, the people are going to drive the boss and they will pull in, save more and do less. How long will that last and how deep will that affect . David Consumption Expenditure and gdp is depending on the country. A pulling back in a substantial measure in the next three to six months, that is going to be very serious downdraft and that will have to be met with increased fiscal expenditure and that takes us back to francines questions earlier. Mainly what will that do to the risk issues and will the ecb have enough firepower to keep supplying . If you look far enough ahead, yes you can see there are some huge constraints on the policy of support. If you look at what kind of recovery we will see, how patchy will it be . Numbers in of these the comments earlier, this deep v shaped recovery is pieinthesky. We are now much more faced with shape with the longbottom. If we thinkccur there will be a vaccine coming and the social distancing of a less intrusive sort will allow us to get back to crank up economies again to full capacity. But if that doesnt happen, if we dont get a vaccine or we dont get medications or we distancing social travel and entertainment and manufacturing output stays well below capacity, then we could be in for the long term meaning two or three years of governmental support with growth skimming along at the bottom between zero and 1 and then you have your classic l shaped recovery. That is the thing worry about. The thing to worry about. We have heard about this not turning into credit crunch or a financial crisis. Had 2008ink because we in 2009 we are better prepared for a Health Crisis doesnt turn into some thing ugly with finance. In the 2008 crisis there was something wrong inside the Banking System and that was a problem more than anything else. Now the Banking System is healthy enough, it might even be over capitalized. Its healthy enough that it is not the problem. That does not mean that if it goes on for two years and you see a very significant run up across the world, that may be some Banking Systems are going to need support. I dont believe that would come through a capital injection, much more to the ecb stepping in and picking up bank debt and supporting bank bond issues. Those the weaker peripheral Banking Systems will that will pose a real problem and will have to be met. Thank you so much david. He stays with us. Coming up, a great conversation about consumer demand and how trends are changing. We will that conversation at 10 00 a. M. In new york. This is bloomberg. You are watching bloomberg surveillance. Al the shell ceo inevitable. Cut likely to be a shock to investors. Higher, firstbook quarter revenue reporting and 18 jump. Says the first weeks of april, business was steady. Thanks so much. This is the data, a little bit of a list of the market. Whats important is shortterm yields in germany and the two year yield. , look for that reporting today. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 12 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Are watching bloomberg surveillance. Says he isp considering ways to punish chinas government. Theiresident blaming response to the coronavirus outbreak and said they would do anything to see him lose the election. China says it has no interest in interfering in u. S. Affairs. Has become they next industry to get a bailout. Plan,n as today, a rescue Oil Companies may apply for loans but may have to give stakes to the government. , according to gilead. For need the green light emergency use in the u. S. Emergency chief anthony pyeongchang says the trial met its overall Anthony Faucher g fauci says the trial met its overall goal. Outdoor businesses could be able to reopen and students could restart classes. 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. Hurtado. Ana this is bloomberg. Francine thank you so much. Lets get back to david folkertslandau. ,e are hearing from viviana Different Countries do it differently with the lockdown and the slow reopening of the economy. Should it be up to economists outvirologists to figure the best combination, and why do we have such different approaches . How do you model this . David it is hard to model because we dont know. Effectively what we see now is a good experiment in the sense that in europe, there is a differential speed in some countries so some will go faster, some will go slowly. The same with u. S. States. We have to see in a couple of months from now who does well. There is a real risk in keeping the lockdown on because you are destroying the economy and that you are severing relationships with employees and employers, and Human Capital may not be easy to build up. On the economy in future years. But if you open to bang too quickly, you end up with more infections, so it is a finely balanced exercise and there is no good answer. We have to do it by experiment. Austria and east European Countries are doing well but it has to do with having started andr with the lock down having gone stronger than most. We will have to see, work our way through it casebycase. Francine how should i look at emerging market . Markets . David potentially a serious issue, more on the human side than the economic side because the reporting is so bad that the numbers we are seeing could be understated and probably are understated by as much as factor isecause social distancing soracterized by gatherings, there isin society more in indonesia than in the u. S. It is a huge country. The same in europe. Ability of people to get it done through a School System and things that are much available than in developed countries. The economic issue for us is thattravel, innocence lets say in a sense that lets say take a country like germany that has it completely under control by the end of may, does that mean germany will reopen the border to travelers coming from indonesia . Or will everyone coming from andnesia, china, the u. S. , u. K. Have to stay in quarantine . If crossborder travel is ended in that fashion, we will have a serious Economic Impact and globalization, supply chains and direct investment, we will get hurt by that. View, thepoint of speed from em to developed countries is a problem. Tom you mentioned histories and that travels to Lawrence Summers blanchard, who has spoken about an aggressive need to reflate. Carl riccadonna published last night that our vision should be 2023. 2022 and is the great unknown unknown that we are going to have to move our vision out two and three and four years, rather than a game of looking out six months or so . David normally, we are quite courageous and venturing into future territory and making forecasts. In this instance, we have two scenarios. One is the fat bottom you which would see us approaching ofential in 2021, the middle 2021, and the other is essentially an lshaped recovery , a long time before we get back to where we were simply because social distancing is so harmful to production and to the service instanceat travel, for , it will take a long time to get back up. Game to looks a ahead two years. Fine. Xt six months are it is what comes after that and to the extent that it is reflected in prices, carl has david right tom folkertslandau, thank you for joining bloomberg surveillance today. Lagarde will speak with the ecb later in the morning. We have much more coming up on the virus, and this is for global wall street. ,ttention for brazil california, and other geographies where the glide path of this pandemic is not down. Steven riley will join us. He is expert on the urban to rural transfer of viruses. This is bloomberg surveillance. Francine good morning, everyone. This is bloomberg surveillance. Lets talk about the pandemic and possible medication or vaccinations. Last week news disappointed the markets on gilead and yesterday we had better news. Nearly 3. 2s are million, deaths 227,000. The world is entering the new stage of the crisis as governments are trying to figure out if it is the right time to ease restrictions. We are thrilled to be joined by steven riley. A number of issues, how do you reopen . When you reopen do you keep social distancing . Where are you on the trials . Where should the priority be, focusing on medicine or going more slowly in reopening the economy . Steven the vaccine is incredibly important but i dont think that is a priority now. Different countries and populations have Different Levels of infection and Everybody Needs to decide how low they are going to try to get their levels of infection before they start to ease the restrictions that are in place. People are in different places and need to look carefully at where they are and make the best decisions to figure out how to ease the restrictions. Francine how do you make sure there is not a second wave of infection coming . , ween there are two things have to transition carefully out of the lock down and we need good monitoring in place. It is time for people to think about exactly how soon they will detect potential increases in transmission. That is important. Of dr. Riley, you are one the definitive experts in the world on the urban to rural transfer of viruses. I want to talk about brazil, which is an absolute total viral train wreck. Explain the viral transfer we will see out of the major urban areas of brazil, and with all that rural territory, the amazon basin, all of it, do we have risks of ebola like events or worse virulent events because of how unique brazil is . Steven i think brazil is unique, when you look at the amount of air travel per capita. You see the distances and vast spaces between the area, so each urban area will have an epidemic and it will be complicating things from there, but it will be difficult in this stage to get good data and good surveillance on that. I think we have to wait and see what develops. Tom fair. Is there any history that the urban toutate moving rural . Do they change in character . Steven they are changing all getting sod we are many samples of this virus we will be able to track it using those small changes, but we do not expect it to change the properties, the loss of mutual changes that will allow us to ,rack it but not necessarily very rarely change the way it affects people who are infected. Backine will this come every year, the coronavirus . You coulds to suggest see covid19 develop like the flu where it mutates and comes back. If it comes back, will it be with the same violence . Steven it is going away because we are changing our behavior and we are trying to find a way to function with increased Economic Activity and less virus. If we carry on in a successful way, it shouldnt come back, and hopefully we get to the stage of a good vaccine in high volumes. That is what we are hoping is the best path forward. And kind ofed it allowed it to circulate, then it flu orecome more like other seasonal coronavirus is, but Public Health stresses they are not around that level. Chart, aw a wonderful per capita chart, a population way to chart of everything you are looking at everyday, with Johns Hopkins university having data and imperial and ucl in london, and the others. How are european audiences and United Kingdom audiences, what should they expect in the next 30 and 60 days in terms of the geographic transfer of this virus . Now in i think right evidencehere is good of decreasing rates of infection. We are seeing evidence in the u. K. And germany of quite low levels, so in europe we should expect continuing decreases. Driven bys are being local infections. Patterns in the u. S. Are less clear. Sustained decrease across different geographical units in the u. S. Is not as clear to me from my reading of the data, so it may be sustained over that period of time. Obviously, there is a lot of uncertainty driven by how people are behaving and complying with the advice. Francine thank you so much for joining us, steven riley from imperial college, london professor of Infectious Disease dynamics. We hear from the former finance minister of greece at 1 00 p. M. London time, 8 00 a. M. In new york. It will be great to get his thoughts on a possible bailout of the ecb. This is bloomberg. This is bloomberg surveillance, tom and francine from london and new york. We spoke to a number of chief executives about their earnings. The ceo of to Societe Generale. They posted a loss due to some of the equity trading bets they took and that is because of the volatility. Precisely ane is underlying cost of risk, then effectively the impact of the covid crisis, a mix of provisions in some direct impact and some one offs which are mix but it is a better the bulk is related to the covid crisis. Guidance for the whole year, we have a lot of prudence and we give it the points ineen 70 basis abase scenario, for example 6. 8 minus drop in gdp in europe drop for gdp in the euro zone. We think we should be within this range. Set aside 320e Million Euros for bad loans in the first quarter. Can you put any kind of number four millions or billions for 2020 in terms of Loan Loss Provisions . Frederic we have the prudence of all the uncertainty, but also the benefit of the governments, what is specific in this crisis, and i would say france is probably the most agile, and quickly guaranteeing these facilities which will reduce the default, and makes the forecast difficult. We have a base case 70 basis points. Forasis points at resident 500 present for 500 Million Euros of service. 3. 5 billion euros base case scenario. Pointsted with 65 basis so it is more or less this kind of level. Dropve 6. 8 overall gdp in the euro zone if we were at 100 basis points, you can make the calculation. It is a more extreme scenario of activity. The french gdp numbers we expected to contract 56 and contract by 6 and they contracted 4 . They talked about a draw down. Have you seen peak drawdown and are the countries in the process of repaying . Frederic there is some existing facilities we are drawing and it increases the risk, but it is overall not that significant. It happened at the beginning of the crisis. A lot of competitors have gone to the market successfully raising funds without issues. We at the same time, very specific to france, we have received close to 80 billion euros of guaranteed facilities by the government, and in two weeks time the money will be in the accounts of the companies. Already a lot has been credited, so we see that, but it has minimal impact on our capital because 90 is guaranteed by the government. A lot of money is put on the table by the government to help the companys, and the good news and the guidance we get, different options on facilities, downgrading of credit, we will keep a good buffer on capital for the full year of 250 basis points. I think the action of the central bank and the governments should help to limit the damage of the drop in gdp. Be socgen, it will fascinating to see where socgen and bnp paribas are in one years time. Let me look at the data, one data point. It is real simple. Yields are in, in the short term space off of powell and the idea of lower for longer. As Carl Riccadonna said, start framing 2022, 2023. The german twoyear not down to record negative yields but forever rolling over into the Lagarde Press conference. Francine a lot of focus is on Christine Lagarde, after we heard from jay powell. European stocks are on the downside. Earnings were mixed, some were better than expected. Some said they would not touch dividends Societe Generale posted a loss. European gdp is really, really pretty bad. ,f you look at spanish gdp french gdp is down 5 that stunning number, much like in the u. S. , 66 of u. K. Businesses wages sor help for that gives an indication of the stress out there. Tom there is some gdp differentials and how they calculated in america, in europe, and those statistics are grim. We heard that from david folkertslandau. Landau go from folkerts to nouriel roubini, framing out this Economic Contraction and even speaking of a path from recession to depression. Must watch and listen for global wall street, we do that next. This is bloomberg. 49. 50 daddy, i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies, even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Tom this morning, chairman powell says america must use its great fiscal power. President lagarde has none. Europe and the ecb must act fast. France decelerates as not seen since 1949. Europe confronts outright deflation. Nouriel roubini this our. Millions of new jobless claims this our, pushing the timeline to 2023. Good news at warp speed, dr. Fauci says a drug shows proof of concept. Facebook shows proof of concept in tech stocks, up. Good morning. Dynamicsng to see the and frankly, francine, this is