Are right about the Economic Data. This is the point where it is beginning to click in nation to nation, and we are seeing some grim data. I look at the eto screen for the United States later this week, and those are numbers. We l points that where that we have never seen before. Two year yield continues to grind this morning. Francine we also look at renminbi, given what President Trump said about chinese tariffs yesterday. Lets get to first word news with viviana hurtado. Viviana as many as 100,000 americans could die from the new coronavirus, this death toll update coming from donald trump. He said he hopes deaths would total less than 60,000. So far more than 67,000 americans have died. President trump accuses china of trying to cover up the coronavirus outbreak. He promises the u. S. Government would release a conclusive report on the pandemics chinese origins. He also says imposing tariffs on chinese imports would the ultimate punishment and an explosive Associated Press report says try to has covered up the extent of the outbreak so it could stock up on medical surprise. The latest company to get u. S. Approval for a coronavirus antibody test. It will scale up and quickly. Findest is designed to people already exposed to the virus. And the Prime Minister of italy is expressed is facing a growing revolt. Starting today, the nationwide lockdown is being eased. To reopening pressure continue the reopening is likely to increase. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, viviana hurtado. This is bloomberg. Francine . Tom . Francine lets look at the tom lets look at the data right now. Equities, bonds, currencies, commodities i want to focus on the two year yield in the u. S. But in germany as well. The twoyear yield in the u. S. Controlled, grinding lower. It has a linear Straight Line versus what youre seeing in germany with the big negative yield. In germany you see some to axity and acceleration lower twoyear yield. It shows the economic dynamics in the United States versus europe. Francine . Francine if you look at stocks, they are down. Stocks are falling and most of the world. They are trying to figure out is climbingdollar and a lot of markets are trying to figure out the lockdown, if the lockdown being lifted can be sustained or whether they will go back to some kind of lockdown. We are also looking at some of the u. S. Airlines. We saw major american equity indices falling because of what Warren Buffett was saying in the premarket completely exiting stakes in the major four u. S. Airlines, saying businesses have changed in a very major way. We will have plenty more on markets, 20 more on market participants. Cclaget to james bevan, Investment Management officer. When you look at what markets are looking at, is it all about inflation, or do they still rely on earnings . James i think there is a considerable reliance on earnings. Shifte are seeing is a come expecting a vshaped aift, where we were expecting vshaped recovery to now a u shaped recovery. I expect 120 of earnings. The s p 500 in the current year, and 150 at the end of 2021. Inspecting 140 for this year and 170 for next year. If it is correct we will only see 150 in 2021 earnings, i struggle to anticipate that we will see the u. S. S p 500 sustaining levels much above 2900 points in the current calendar year. And hence getting back to money now looks entirely appropriate. Francine what are you looking at that the market isnt he . Do you worry about a second lockdown . Do you worry about come in hes going bust, or do you worry about Something Else . About Companies Going bust, or do you worry about Something Else . Ensco there is a material lockdown in demand, and this james i think that the street is being slow to recognize it because so Many Companies withhold guidance, and if you are dependent on hearing what 60 anies have got to say, of s p 500s are still providing guidance. James, good morning. Tom keene in new york. We are thrilled to have you here with the longterm perspective on cell in may and go away. All of that is great, but what do you do if you have a portfolio with some form of longterm investment . I assume you hold it. Youre not going to tell me to go to cash. But what do you actually do with your portfolio given the caution that is out there . Look through the Current Crisis if you are a longterm investor. The risk premium of being in equities on the forward looking basis is as high is it will ever be. A goodquality company that is able to generate sustainable Free Cash Flow and deliver secular grade justifies a high multiple come just as you and i would remember from the nifty 50s. Stick with if you think about where we are on the treasury atlation securities yield minus two, i think 20 times or higher is justified for the right companies. Tohough i would not want track an index in this market, i think Quality Growth Companies will do well. Tom well said, james, and i hate that you gave me to the nifty 50s. That was a few years ago, francine. I look at david kostin research at Goldman Sachs over the weekend, and he has been absolutely brilliant about partitioning this moment from the nifty five or six or seven in everyone else, and he has cautioned a measured approach. His analysts are raising their or eightgets on seven glory stocks. What does that signal to you . There is a considerable optimism that companies with high return on equity will be able to sustain margins, and be able to grow revenues into the longterm to justify these share prices and also the bond yields will remain low. Providing valuation support. The problem i have with this thesis is that i do not believe that many of these companies abstain from government detention induced course that in due course. They will say you guys will have to pay part of the bill in reorganizing, and i think we will have very low Wage Inflation in the near term because we have such high rising unemployment. I do think that labor will take a larger slice of the revenue cake. The evaluations of these very high multiple stocks will be questioned. James, what do you see as the legacy of the crisis . Are we going to travel differently, or are there sectors that will not be able to get back on their feet . James i think the Global Airline industry is uninvestable currently because of the capital , slowlyt they carry incompatible with the cash flow they are likely to secure. Can i think that those issues are very important, and of course, there are segments of the services segment, which are never going to recover their lost business. Against that, i would say that there is going to be a widespread repudiation of successive investment. The buyback has been a major support for quite a lot of u. S. Companies in particular, coming into question. What do you do with gold right now . I would say that if you join where the gold price could had to in the context of economic indicators, the bull 2002 hundredund dollars an ounce. That is an extraordinary 2200 an ounce. That is a short mary. Gold has that is extraordinary. To the people off who correctly call gold. Although i believe it is more alchemy than science. James bevan will continue to look to sell in may, and including mike wilson of m morgan stanley, remaining optimistic. The rigor the greater global strategy analyst from morgan stanley, an interesting cross current as we go through may. This is bloomberg. Tom good morning, everyone. Bloomberg surveillance, from our homes in new york and london as the lockdown put much continues, particularly in london and new york. We hope all of you are informed from your homes. Global wall street working from their homes, and we thank you for watching and listening to us. 40ures 35, the vix back to gets my attention this morning. With us, james bevan of ccla, as we consider a more quiet investment in money hopefully leading to longterm gain. James, i have got to ask you a sensitive issue of the gentleman who is 89 years old, is to buffett mr. Buffett making a splash this weekend, and the bottom line is, berkshire over 10 years, over 20 years, is underperformed the s p 500. He is supposed to be the oracle of. What happened . He is supposed to be the oracle of omaha. What happened . To backom, he was able his best ideas and get that money to work efficiently. I would argue that the illiquidity presented by markets today means he cannot put that money to work efficiently, and therefore he moves prices in and out as he trades, and there is a very good regression analysis that can be constructed between the size of Berkshire Hathaway and a percentage of the s p 500, and its performance relative to the s p 500, and assures eggs to bigs, and the bigger it has gotten, the more difficult it becomes. Important insight, and of course i knew you would go there, james. I knew the james benefit the james bevan answer, i knew what it would be. The gold cover and the simple type, and it was just a much smaller, simpler company. Does mr. Buffetts track record suggest we should have the majority of our assets in index funds . Say exactly the opposite. I would say an index fund requires investors to want to be overweight the most overpriced stocks and underweight on the most underpriced. It requires you to take those bets. In contrast, i would say that in the current environment, and for the foreseeable future, investors that are focused on real quality for companies that have investor advantages, who can price their products, who have some control over price exposingoverpricing, secular Growth Trends look well played. They have been well played for the last decade, and i see no advantage, weat will wait and see for the next few years. Francine what do you do with Technology Stocks in this kind of world . Amazon. Hope for when do they start making money . James i think there is a very significant with Technology Stocks between those that are waiting on hopes and prayers that are making no money and burning their investors capital, and those companies are being very disruptive to the property of all companies, and i expect ultimately in contrast, there are companies which i would regard as worldclass, including names like amazon and alphabet. That i do believe will make their investors a huge amount of money in the decades ahead. Is there a concern that people do not want to go back to work . So when you start reopening the economy in the u. S. And the u. K. , we will start to see the effects of people either not spending for much longer than we think or not wanting to go back to the office or the factories . James i think that is a huge risk, absolutely, and that i think underscores the reasonableness of being cautious in terms of corporate earnings. Of may, ionth want to see a reasonable rate of basis,on a riskadjusted and the s p 500, so at the end of the year ideally with 2700 points, will be 18 times 150, which will be my end 2021 earnings target. Look, james, at so much of the market moment we are in, and it all comes as you do the ratios in the measurements, down to use of cash. What is Dividend Growth going to do . Is there an outcome here that american dividends become more european like . James i think dividends are going to be under immense pressure. Is underngly, the u. S. Less dividend pressure than most markets because it is it has recycled so much cash in buybacks rather than dividends in any case. But i would look through dividends at Free Cash Flows and i would ask investors to consider, how sustainable are the businesses in which they are investing . Simply because a board says sorry, this year we need to hang onto the cash, doesnt mean that it suddenly becomes a bad company. A wise move for the company can be a good sign of share price appreciation. Tom i cannot think of a better guest than james bevan, a beautiful overlay, folks, particularly for those of you with a perspective out longer than three days. James bevan with ccla. An extra ordinary jobs day on friday, will be absolutely stunning in the United States. Another 3 million claims made on thursday. Jp morgan, 15 , 16 , dare i say 20 unappointed rate . On friday . We will see. In the meantime, we have much, much more to look at here. Just so much one thing i mentioned is of course the continuing pandemic. Joining us, a doctor from Johns Hopkins university in the next hour. Stay with us. This is bloomberg. Viviana you are watching bloomberg surveillance. We begin with a potential deal this week that could create the u. K. s Biggest Telecom operator. And spaindouble telefonica are in talks, and bloomberg has launched has learned that it hinges on talks. 02 and virgin media. Now to j. Crew, filing for backups a. The chain has been unable to revise sales of its preppy clothing line, plus debt from a longago leveraged buyout has crushed it. J. Crew will convert almost 1. 7 billion of debt into equity. The company has secured 400 million of new money. We end with Warren Buffett, trading more carefully this financial crisis. At Berkshire Hathaway. At Berkshire Hathaways annual meeting, bircher started to get companies from investors. In public markets, Companies Got funding cheaply. That is your Bloomberg Business flash. Francine . Tom . Tom i really want to focus here on the deteriorating take with the vix forwarding we have gone what, 32, 30 three, back up to 40 . So some real length to the market. Dell futures 364, and what i really would point out is a shift right now in the twoyear yield, coming in lower yield. But in the u. S. , joined now by the 10year and the 30year yield. So is serious curve compression going on. So a serious curve compression going on. Francine . Francine yeah, i am looking at the same yield control that you are looking at. I am looking at global stocks beginning the week by declining through a Third Straight session. A streak not seen in almost two months. People are worrying about is the also assessing efforts from country starting to ease the lockdown, such as italy. Coming up next, we speak to the president of commerce in china. This is bloomberg. W . W . Uhiono this is bloomberg surveillance. Yesterday we heard from President Trump in a Fox Town Hall saying he believes that china medical rep of the coronavirus. He said he believes china should have involved more countries quicker. He said he will get to the bottom of that and he also said it opposing tariffs on chinese imports would be the ultimate punishment. Here he is. Pres. Trump horrible mistake and they did not want to admit it. A strong report as to what we think happened and i think it will be conclusive. It could have been stopped on these spot. They chose not to do it or there was either incompetent or they did not do it for some reason. Cooks can you tell us how you feel about president xi . Tos. Trump im not going say anything. This virus should not have spread all over the world. They should have put it out. They should have let as and other countries go and put it out. Are you considering new tariffs on china for their punishment of handling of the virus . Pres. Trump it is the ultimate punishment, i will tell you that. Tom the president last night with fiery words about china. This is quite something for our global audience to see the speaking and the Fact Checking clicking within minutes of him speaking. Last night speaking from the floor of the Lincoln Memorial beneath the historic statue of our 16th president. , germany. It barely describes his commitment to china. He has been massively out front on the scale of decades of chinesegerman experience, for that matter, china and the west. He is with the eu chamber of commerce. Mr. Joerg wuttke, we are honored to have you with us. What is the zeitgeist missing in this collapse of u. S. China relations . Well, the suggestion of the rather we came from two years of trade war and now venturing into tech war. And now the coronavirus is knocking down the last pieces of any reconciliation possible. Where these two massive economies are heading. But what can we do . European business is trying to position itself independently from that. Tom as you well know, and you have seen it certainly, there is always a vacuum to fill. Which vacuum will china fill in our political discourse right now . Where will they go to fit the solution . Minister who has represented europe already made it very clear he sees a battle of narratives heading our way, meaning that china is trend overcome the fact that they have been very sloppy in the beginning and did not communicate well to the world, by not protecting themselves as the savior. This is not possibly going to go down well with many places. But you shall not forget china is a victim first and foremost. China is not going to roll back and is going to dominate the world, definitely not. We have to see how that settles. We are just in the midst of all this. So to draw conclusions would be wrong. See . Ine how do you changing will they how do you see supply chains changing . Is it because of covid19 or did it start with u. S. Trina u. S. China trade war . We are struggling to understand where were going to be next week, let alone that we can prepare for next year or the years to come. My guess is, yes, we will look into other opportunities. Multinationals, primarily. At the same time, we do not really leave china. In many areas, 50 , 60 of global growth. I do not see european companies, for example, the data from surveys, of course you will look into new projects differently. China will not be the only story in town. But diversification will take a while. Has the money now francine do you see permanent ofage to trade as a result coronavirus . Of course. As chancellor merkel put it, the worst since world war ii. The manufacturing that we might bounce back faster. The Service Sector is really going to take a hit. The airlines might not recuperate for 10 years. This is unprecedented and guessing what were going to witness over the next years to come. Actually but does that signal a shift in globalization or will we get some kind of normal eventually . Things. There are two one is the awareness that you might not want to put all eggs in one basket. Section. The political the pharmaceutical. Of course, besides the covid19, isdonald trump that who unleashing a tech war with china, trying to hold back hightech for the chinese industry. And that definitely is going to have an impact on us. We dont know to what extent, but we all have to work with the scenarios these days. Tom tell me, particularly within china and the european dialogue, when i look at trade, i look at unilateral, look at some form of bilateral, and i finally look at a multilateral system. His china benefited is china benefited by richard to multilateralism is china benefited by a return to multilateralism . China managed to benefit mightily in 2001 and now they every billion euro sales day were we have 500 million a day into china. Of course, chinasoft philosophy is chinas philosophy engaged in much of the role but the whole thing is still trying to be bilateral because size matters. Tom thank you so much for joining us. We look forward to speaking to you again, given decades of experience on china. Joerg wuttke is with the eu chamber of commerce on china. We have much more to talk about ford here. Fors an important week Economic Data. As you well know, much of it coming in grim most of right now, monday update. Your first word news. Viviana we begin with President Donald Trump estimating as many as 100,000 americans could die from the new coronavirus. Last night on fox news come he released a new projection. A month ago the president said he hopes the death toll would be less than 60,000. So far, more than 67,000 americans have died from this disease. Donald trump is promising more federal help for jobless americans, but there is a catch. He says the next round of stimulus must include a payroll tax cut and that is an idea even republican lawmakers have not embraced. The u. K. Will not be back to normal soon. Transport minister saying the country would take a gradual path out of its lockdown. Though, the government will soon publish guidelines on how to return to work. A poll showing two thirds of britains oppose lifting the lockdown now. We end with oil, lower today after a threeday gain. New york crude falling for the 18 a barrel mark. Investors are still concerned by massive glut on the market. A Bloomberg Survey showing last month opecs output grew by the most and i was 30 years. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you so much. Coming up next, we talk about the economy, the reopening of the economy under covid19. We will be joined by sarah hewin where she is chief economist for the u. S. And europe. This is bloomberg. Francine good morning, everyone. This is bloomberg surveillance. Navigatep you try to covid19, what it means for the economy and look at le pens and potential reopening of economies around the world, this is what you need to know for what is happening this week. Tomorrow we will get a policy decision from the reserve bank of australia. We will watch operating updates they have on the economic outlook. On thursday, Boris Johnsons government is to to review lockdown measures what the bank of england makes a policy decision. We will end the week with the was able jobs report. It is expected to reveal this the sharpest deterioration since record started in 1939. Nonfarm payrolls are forecast to fromfallen over 21 million march. That is what we are expecting for this week. Lets get a round about things that you need to watch for, especially that debate of inflationary risk compared to inflationary risk. We are joined by sarah hewin. Great to have you on the program. When you look at exactly where the inflation is, i think it is one of the most lively debates out there, how quickly will we have more tools to figure out whether this extra stimulus will really generate inflation . To be honest, we are looking for deflation first. If you look at what is happened to Energy Prices in recent weeks and months, that suggests we will see inflation close to zero in negative year on year. We get into the second half of the year we start assee something of a pickup the stimulus affects and as the supplyside constraints kick in. I think the big unknown is what is happening to food prices. We know supply is going to be constrained and there that could be where we start to see inflation earlier. Francine what makes you worried predictingconomists the recovery . Is the recovery going to be much more patchy . And i we ever going to go to what we saw mid2019 or is this t willnomy worldwide tha be changed forever . I think are significant changes. Some industries in particular that will take quite a while to get back to what we might class as anything near normal. A lot rests on the point of which actually a vaccine can be rolled out in scale, and that seems unlikely ahead of the middle of next year. In the interim, then we are looking at changes and i think there are some fundamental changes as well in the way individuals will work, and that will have positive for some industries and negative for others. The other issue as well is globalization, what we are seeing is that asia seems to be pulling out of this crisis than europebetter and the u. S. The europe and u. S. Are still going to the worst of the downturn in this current quarter. The question is when we get into the second half of this year, early next year, will indeed it be asia boosted by domestic fiscal stimulus that does better than europe and the u. S. , which is still going to be grappling with some of the after effects of covid . Tom look at the twoyear yields and they are very different trajectories, not that you can take along with them on the german twoyear yields, but you basically have a linear function in the united date and you have decided convexity and acceleration characteristics of the germany to year yield. Would you suggest that would signal disinflation and outright deflation in the Service Sector of europe . And what does that mean for the wage dynamic . Are we going back to the 1930s, and outright wage decline . Singthink were certainly a lot of deflationary pressures here. Where we get inflation, it is from supply shortage, supply constraint, interruption to the supply chain which we do need to be very wary of. On the services side, i think the deflationary pressures are pretty clear. In Given Services are by far the most important part of an economy, that would suggest you have those pressures really dominating others. Tom i was thunderstruck over the weekend. I want to focus on europe and london. The lack of analysis of the portend for wages. What do you suggest the wage dynamic will be over the next 12 or 24 months . Lets look at what is happening to unemployment in the u. S. And across europe. To levels we just have not seen since the great depression. Down. Employment will come once lockdown is over, we will see a decline in and implement. It is highly likely that the and implement rates stay very high for some time. Unemployment rates stay high for some time. Wage growth across europe has not been bad over the last couple of years. Job creation has been very substantial, wages have been rising. But the prospects for wages to grow in real terms look relatively low. If were expecting inflation to be close to zero in the near term, that suggests wages are going to be flat to falling. Tom very good. With the Standard Chartered bank. This is a good way to set up mayday. And 9 00, Peter Oppenheimer will join from Goldman Sachs, the equity view forward. Stay with us. This is bloomberg. Viviana software aimed at helping companies to safely reopen their offices that will help orchestrate shifts for when employees can work on site. Cells forcing the software also will manage Emergency Response procedures selfworth saying the software also will manage Emergency Response procedures. Indiasg in geoplatforms days after facebook agreed to invest in the business. Geo is from lance industries. It is controlled by asias richest man. He has been trying to reduce debt. Flash. Sure business that is your Bloomberg Business flash. Thank you. Where were you the first week in january . What were you thinking . What would you think in the first week of january but the classic phrase sell in may and go away for all of us, things have changed. It is a good time to speak with marcus ashworth. Now. Ins us right marcus, in all the years youve been doing this, what does the silly phrase mean to you . What does it actually mean . Confess, i never really paid a vast amount of attention to it. In the context, it seemed to be like an equity market sort of trust, which really did not always work very well. I noticed in the last for years, it does seem to work quite well, and at times, extremely well. It might be this time around with this amazing bear market rally, if that is what it is, we had the largest ever month so balance on equities, which is on a down note into may. The Economic Data is terrible. We really have to keep on having good news, more good news, ever better news just as the fed is actually taking the punch bowl away. It is not doing anything like it was doing on a daily basis. April, in average and in april, there were putting in 250 billion a week. Last year, only 82 billion. Now only 8 million a day. Will that affect stocks . Lets see. Tom theres going to be a complex reset. How do you use the other Asset Classes to gauge equity performance . Can you say sell in may and go away in oil or the dollar or in bonds . I certainly think the dollar is one to keep a very close eye on. The demand globally for the dollar is what has driven this crisis so far. I look at things like the twoyear rate in the u. S. Which is bumping along on the very bottom, not even 20 basis points , and it is flatlining now. That is showing they kept monetary liquidity right there. And if that flips up, i think youll see the fed come back in post of the reason why the fed is not putting in so much qe is because it doesnt need to. Inerley, it is not bought Corporate Bonds because it is not needed to. The dollar is something we have to keep a close eye on. With all of this liquidity, either the dollar transfer being overly strong you could argue to be all of the sudden on a week downward trajectory. That will change the ballgame altogether, and we have to keep a close eye on it in the euro as well. Eye on it and the euro as well. Strong dollar is francine go ahead. I was just saying a simple rule of thumb with the dollar is you have a weak dollar, and is great for emerging markets. Ralph or make an export. You have a strong dollar, and some say that is great for europe and great for japan. That is the rule of thumb. Dollar sometimes good for europe but a weak dollar and a strong euro, could be very bad for europe as far as the exportlet economies go. Ashworth, thank you so much from bloomberg opinion. This is what im looking at. Theres been a little bit of movement on dollar. Theres been a little bit of movement on renminbi. This is significant because we are from President Trump saying yesterday that chinese tariffs tariffs against the chinese economy would work. Stocks are falling. We had Warren Buffett saying over the weekend that Berkshire Hathaway exited stakes in the four top airlines, tom. Tom very good, francine. Thank you so much. Much more coming up. Carl weinberg will join us. I want to talk about this new concept, yield, curved, control. Maybe it is not that new. Please day with us. This is bloomberg. Tom this morning, sell in may and regret it in september or september of next year, for that matter, the year 2525. Mr. Buffett unloads the airlines. Gloom prevails. Morgan stanley says go along. Goldman is long but cautious. Analyste, microsoft raisesmicrosofts price target 14 . Im confused. Are you confused . In may Central Banks migrate toward yield curve control. Due. Ent is millions of americans simply ask for time. Good morning, this is bloomberg surveillance. I am tom in our homes, keene with francine lacqua. Francine, it is absolutely extraordinary to look at the ezio s