For jobs that coming up friday, it is stunning deliver depression across the developed countries. The labor depression across the developed countries. Francine there is this raging debate we have been trying to focus on bloomberg surveillance for two weeks, inflation or deflation. I think the one thing we need to try and figure out is when does job creation comeback . Will we ever come back to the to what we had even 12 months ago or will a lot of the jobs be lost and therefore you need some kind of schemes to retrain people, to put them in other jobs . How and what the legacy of this covid19 illness will be for how the economy changes is critical in trying to make sure people get back to work. Tom you really saw the tension over the weekend. Prime minister johnson dealing with the United Kingdom and that idea of a locked, certainly, we are that last night from the president at the lincoln memorial. Here is viviana hurtado. Viviana we begin with president donald trump, is many as 100,000 americans could die from the coronavirus. This increase coming from president trump. At the beginning of april, the president said he hoped deaths would total less than 60,000 but so far more than 67,000 have died. Donald trump is accusing china trying to cover up the coronavirus outbreak was not he is promising the u. S. Government would release concludes report on the pandemic of chinese origin. He says imposing tariffs on chinese imports would be the ultimate punishment. Chinareport saying covered of the extent of the outbreak so it could stock up on medical supplies. Roche, the companys latest to get emergency u. S. Approval for a coronavirus antibody test. This swiss drug maker saying they will scale up and quickly. The test is designed to identify people already exposed to the virus. We end and italy where the Prime Minister is facing a growing revolt by business and political rivals. Starting today, the nationwide lockdown is being eased. Pressure to speed up the reopening is likely to increase new deaths and infections attributed to the virus that have fallen to the lowest level in almost two months. 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. Tom thank you so much. Positive u. S. Two year yield, the number one thing i am watching. The different grind in europe with german to year yield really coming down even though the 10 year and the longer yields in germany stay elevated. A lot of strange dynamics, particularly versus italy in europe. Futures negative today. The vix goes out near 40. That gets my attention. Gold is up as well. I would point to the fact u. S. Secretary of state pompeo said enormous evidence shown that Novel Coronavirus had began in a laboratory in wuhan, china. To look at some of the tensions in trade. I think it makes investors nervous, which is why were sick a lot of stocks we are seeing a lot of stocks on the downside. Overall, investors weighing fears of a second wave of infection but also steady stream of Economic Data against efforts by many countries to try and restart or at least starting to ease lockdown restrictions. This week we have earnings from walt disney, bmw, air france, amongst others and it will give a good indication on what they see as forecast. Tom very good. One of the great things of wall street are the three notes of highfrequency economics. U. S. Note, china note, and the most which is Carl Weinbergs global note. It is founded on Interest Rate charts. Joining us now in the two year yield and this new concept of yield curve control is someone who has studied the history of world war ii. Carl, wonderful to have you back with us. What does the lower two year yield signal . That linear grind in the United States a more aggressive drop in the two year yield to have a in germany . There is a shortage of bonds, a shortage of places for people to put money that is one thing going on. We have a decline in inflation. That is going on as well. With Central Banks buying bonds. We have three really positive factors for bonds across the yield curve. We have seen some targeting of yield curves around the two year, three year mark stop the aussie started it with their target on the three year. People are suspected we may see more Central Banks moved to this kind of targeted quantitative easing simply because it gives them an exit strategy, reason to taper, irrational rational reason anyone can understand. Hit your target and you stop by. That is a possibility. For the moment, things really look positive for the bond market in this rather terrible economy. I look at this new concept of yield curve control. What is it . The japanese were the ones who coined the phrase. They said, we are going to nail the short end, which is what Central Banks have been forever, setting overnight moderate or official policy rates that affect the money market. They can do that easily. Using quantitative easing, the idea is then to buy or sell bonds at specific maturities, hit certain specific levels. The japanese started with a target of zero at their short in or slightly below and zero or slightly below at the 10 year point. The problem they had was they could not achieve both that and the other target that they set for themselves, which was to buy a certain amount of bonds. To do this successfully, you have to do with the australians give upe, which is to on buying a specific amount every month and simply to say, were going to buy into our until our target is achieved. The idea at the end of the day, the central bank can control where the yield curve goes precisely and affect both longterm and shortterm Interest Rates at the same time. The challenge is to give up on the idea of quantitative targets a buying so many bonds. That is a delicate matter. Carl, we talk often japanthe javin ification. Every time i hear that word, i always the hair on the back of my neck stands up because japan has specific problems theyre dealing with badly. That the rest of the world is not have yet. That is the problem of a shrinking population. Their strategy has been these fiscal and Monetary Policy to offset the impact of having fewer and fewer people each year. And that is just a losing battle. Japan does not need more quantitative easing. It does not need more fiscal stimulus, it is for people. The japanification is what he try to use policies that policies possibly cant do. In europe, we have a situation that topically looks the same. The government the central bank is buying a lot of bonds and the government is stepping on the fiscal accelerator. But lets remember first of all, the physical component of this, other than in europe, other than a few specific instances like italy in particular, greece as well, has been pretty much under control. We do have a population that is at least steady in most of europe thanks to immigration, which japan does not tolerate. On the Monetary Policy side, we see the central bank pushing to the limits right now but against the specific and extraordinary shot. I dont think we should fuel our feature has been the same as japans view our future as been the same as japans. We do have an exit strategy from his coronavirus shop, it will just take a while to get there. Again, policymakers have to make wise decisions, particularly on the fiscal side. You so much. Nk we will get back to Carl Weinberg shortly. Coming up, a conversation with guggenheim cities cochairman. Dont miss that at 8 30. This is bloomberg. Tom they made a horrible mistake pres. Trump they made a horrible mistake. They did not want to admit it. I think it will be very conclusive. It could have been stopped on the spy. They chose not to do it or something happen. Either there was incompetence they did not do it for some reason. Doesnt it change your relationship with president xi . Pres. Trump i had a very good relationship. This virus should not have spread all over the world. They should have let as and other people in other countries go and put it out. Are you considering new tariffs on china as one of the punishment for their handling of the virus . Pres. Trump it is the ultimate punishment, i will tell you that. President very assertive last night over at fox at the lincoln memorial, really quite something. And all of it devolving back to a Global Reaction to china. There is no one better to talk to than Carl Weinberg with this china report and someone who has watched emerging markets and lived emerging markets for decades. Emrl, what is the dynamic with china right now . What is the interdependencies financially or in markets or economics of a struggling china with an even more struggling em . Tom. Od morning, i hope this connection is a little stronger than the last one. Tom much better. China has a lot at stake right now and it is more than just from the United States. I know the president is concerned about china covering up. He is running for reelection. It is always someone elses fault. But china has an agenda of its own. There are a lot of emerging markets to begin with that are hurting. Emerging markets that produce commodities are hurting, whether it is oil where theyre hurting a lot or aluminum or copper or iron or coal or nickel all of these industrials are depressed because of the depression in the output. And that is an opportunity for china to step in with aid to those countries to support their economies, support their balance of payments because china is dollarson trillions of of foreignexchange reserves. It has the wherewithal to help out. The expense being to their benefit. Number two, china has an aggressive role that it can play with regard to the advanced economies will stop because in all of these economic setbacks that we are seeing in the g7 countries, theyre going to be a lot of businesses that fail. With that, there will be a lot of opportunities for china to come in and to acquire their assets at fire sell prices, liquidation prices things Like Airlines to potentially be up for grabs to the highest bidder. China has a lot to gain from being able to buy assets at . 10, . 20, . 30 on the dollar. Tom carl, what is the relative position of china with ample reserves versus other em were going to them week by week . I noticed turkey breaking through on lira and the turkish piggy bank about empty. But what is that relative nature of the chinese piggy bank versus everybody elses piggy bank . This is their advantage, tom. I think this something that all the western governments are wary of. China is now in the same position with regard to the rest of the world the United States was in at the end of the second world war. We used our cash come our resources, our savings to go out and acquire resources in the rest of the world. This is a very plausible strategy for china. A lot of governments are right now taking measures to try to protect National Assets using nonmarket measures to ensure that china does not get a firmer hold over their economy. It is not clear those measures can succeed. When you look at globalization, will this test globalization even more than the trade war last year . Absolutely, francine. That is another thing we should be looking out for. I think one thing we learned in the early stages of this was that a lot of countries had specialized the supply chain, focused entirely on resources within china for the obvious reason that in the shortterm, it was cheaper to make things in china than anyplace else in the world. But the fault with that strategy was revealed when china went under for a month to shut down its supply chains for a month, thats shutting down supply chains in the United States and europe and elsewhere in the world. I think theres a lot of good investment to be done by companies to diversify their supply chains, to move their source into many countries rather than just 1 even though in the short run it be more expensive massively to protect against unforeseeable risks like this. This is a big investment project. It is a good use of money. It is a good way to grow out of this depression that we are falling into coming to reorganize the supply chains. I expect a lot of multinationals will be pursuing that strategy. Thank you sol, much, Carl Weinberg. Global stocks begin the week declining. This is the third day they are down. First, u. S. China discord again flaring up. Investor waving worried about fears we left plenty more on that. We will less i plenty more on your markets. What are you seeing . The i look at the way yields are coming in. We mentioned it numerous times this morning. Real indicator now, the tension that is out there. Gold is up nicely this morning. I need to go back to the equity markets where an hour ago it was really, really struggling. Frankly, now it is doing little bit better. Please stay with us. This is bloomberg. Good morning, everyone. What you need to know about the vaccine. The politicians talking it up. It would be nice to talk to an expert. Is a nobelty laureate in medicine and physiology on t cell receptors and on immunology of these terrible viruses. He is an expert. Manus cranny talked to the nobel laureate. Have in normas amount of resources. Enormous amount of resources. It is not impossible we will have a vaccine by the end of the year. Vaccine fromave a the oxford group. Think about it. When you have got a test, and antibody vaccine in human population work of our skills people, yet to do some safety testing to see the vaccine is youd makes criminal have to do some safety testing to see the vaccine is safe. Once youve done that, then start to put it into very small numbers of people to see if theres any safety issue. Then you escalate the numbers of people. Now, basically, the only way you can test whether there is any risk when people are infected with the virus and have been given the vaccine, is perhaps larger numbers of people vaccinated and watch what happens when they get infected or if they get infected. So that process could probably go very, very quickly depending on what level of risk people are prepared to take. I dont think it is unrealistic to think we could have a vaccine later this year. The big issue will be making enormous amounts of it if it looks to be successful. Mass production, not to mention effect they do need to reach the poor, developing economies, right . If you take all of that into account, how long would it take for there to be Free Movement of . If youround the world get the vaccine into these developed economies, but they dont reach these emerging economies, it puts everybody at risk again. Yes. I think Free Movement around the world is an issue. The people who move around the world are not poor people in developing economies, usually, in large numbers. You make sure if the vaccine works, if it is effective, then you make sure that anyone who is getting on an International Flight has a vaccination and that, basically, it would even be better if they have been tested to see what level their antibodies they have. That would be a strategic and policy decision. But theres no reason once you had a vaccine that if you did not protect people, no reason why those people should not start to travel if you did protect people, no reason why those people should not start traveling again. Viviana lets get your bloomberg first word news. President donald trump an estimate, smelly as 100,000 americans could die from the new corona as many as 100,000 americans could die from the coronavirus. A month ago the president said he hoped the death toll would be less than 60,000. So far, more than 67,000 americans have died from this disease. Sticking with president donald trump, he 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 that even republican lawmakers have not embraced. To the u. K. , it wont be back to normal soon. Transport minister saying the country will take a gradual path out of its lockdown. Still, the government will publish guidelines on how to return to work soon. A poll showing two thirds of britains oppose lifting the lockdown right now. We had with oil, lower today after a threeday gain. Theyork crude falling for 18 barrel mark. Investors are still concerned by massive glut on the market. A Bloomberg Survey showing last month open output grew by the most in almost 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. Thank you so much. With thats khmer interview of the day of the bigger, broader picture as you try to rediscover 2021, matthew were. Bout Matt Hornbach ts andsting team of ca yesterday try to herd them to come up with a bigger, broader opinion. Lets start with mike wilson who is done in about face who is reaffirming over the weekend, do not sell in may and go away. How do you dovetail your macro strategy into mike wilsons equity optimism . Tom, we ultimately work as a there is a discussion. At mikese way i look view of the world is how does it influence peoples view toward risk . Obviously, equities been the longduration asset and coming with it quite a bit of risk. If equities are going to be going up, suggests people are comfortable taking on more risk in their portfolios. The western turns to me, which is to say the question turns to me, which is to say what do they do with her Interest Rate exposure, their foreignexchange books . I have to incorporate that. Tom how do you incorporate it in the bond market right now . I have been talking for a week now about this new compression in two year yield. Our bonds priced to perfection . The bond market is essentially telling you that while there might be a lot of supply heading our way, there is quite a bit of demand for that supply coming both from Central Banks as well as from the private sector who need a place to park their cash while the economy is getting back into a normal state of affairs over the coming years. The bond market saying, hey, look, we understand theres going to be a lot of cash on the sidelines. It is going to have to find a place to hide. Even though 60 basis point 10 year yield does not look attractive historically, the reality is that there are not too many other sovereign bond markets out there with the type of risk characteristics that the treasury market, for example, offers. And saying, hey, people are satisfied with 60 basis points. Francine matthew, what do you do with highyield . I think you take across just a cautious approach. Anytime we into the Corporate Bond market come over the past seven years, we have taken a very up and quality approach to it. Now that we have a bit of a backstop with the federal do, thatffering to does put us out a bit. The point is the fed wants to backstop the riskiest markets out there, and theyre trying to encourage stability in the riskless markets to get investors to feel more comfortable. Putting money to work in those riskier assets. Over the course of the past couple of months, we have gradually been extending out our view on risktaking, along with mike wilson in the equity markets, and so we are getting more optimistic on some of these riskier assets like highyield. Matt, i dont know how you view inflation, but this is kind of the question that is gripping the markets. What if there is an overshoot inflation it takes everyone by surprise . Visit deflationary pressures and then the risk of is it deflationary pressures and then could come sooner . The first thing that will arrive is the deflationary impulse from the demand shock that the world is witnessing today. Reflectedlready been probably more so that it needs to be in the price of breakeven inflation rates. At themple, when we look tips market in the u. S. , what we find is that the market implied probability of a deflationary episode over the next couple of years is quite high. If you go back to the great financial crisis, what you will know is we really did not see very much deflation at all over any period of time were talking about. Markets the inflation in the u. S. , for example, are offering investors a pretty Good Opportunity because we just think they are price for too much pessimism, even a we do believe deflation not deflation, but we believe softer inflation will come. Tom matt, i am fascinated by your almost holistic thought on this phrase yield curve control. It harkens back to world war ii and coming out of world war ii, but forget about it. It seems to be another rationalization, match, for not clearing markets and for the fed to come to the rescue. Is that all it is . Yield curve control in my view offers a couple of benefits, but the issue with the benefits is that they are not exclusive to yield curve control. In other words, they are benefit that the fed could achieve through a different approach. Yield the benefits to curve control is it solidifies your Forward Guidance at the central bank. You can more confidently tell people youre going to be on hold for the next three years with your conventional policy rate if you are not going to let Government Bond yields go above a certain level, you know, for the next three years. The issue there is that the fed can achieve that type of Forward Guidance effect, if you will, by just being explicit about the length of time within which it will not raise Interest Rates. Yield curve control to me is something that the fed can achieve through other means, and less risky means, i should say. Tom we have got to go, but we have to cap back. What Matt Hornbach is that we need to reaffirm usage of the dots. I promise i wont ask him about the future of the dot chart of the Federal Reserve. Mak in may. Ter, sell, this is bloomberg. Bloombergets get the business flash. We begin with the potential this deal this week that could create u. K. s Biggest Telecom operator. Negotiations hinge on their being equal control. This after a merger of two companies u. K. Units. Retailer j. Crew filing for bankruptcy. The chain has been unable to revive sales of its preppy clothing line, plus debt from a longago leveraged buyout has crushed it most of j. Crew will convert almost 1. 7 billion of debt into equity. The company has also secured 400 million of new money. We end with Warren Buffett, treading carefully this financial crisis. Berkshire hathaways virtual annual meeting. Investors wanted to know why mr. Buffett had not made any big deals. Mr. Buffett said berkshires started to get calls from Companies Seeking investments but then the Federal Reserve beat them to the punch. How . With emergency measures. Companies got findings cheaply. Funding cheaply. That is your Bloomberg Business flash. Time . Francine lets get back to Matt Hornbach. Little bitking the before about inflationary pressures. We talked about the credit markets and how you see a developing. What do you make of the emerging markets . How much pressure will they be under because of debt . We had been cautious on the emergingmarket complex for some the almosthen we saw highquality risk markets evolve through a bottoming process. The view from us was that the highest Quality Markets would move first to this bottoming process, and then eventually we would see the lower quality end to playpectrum begin catchup. We think we are starting to see that in certain emerging markets. Clearly, nobody is out of the woods at this point in time. We are being selective and we are being selected with a lot of our recommendations at this point in time. It is not possible for us to group everything into the same bucket. We are trying to be very selective with our emergingmarket pix. Pics. That goes with our currency picks as well. On the currency side, we do believe the dollar is evolving through a topping process, which ultimately should help emergingmarket economies. But it is not going to happen across all currency pairs. We are being very selective with our dollaroff views. Francine selective, what do you like right now . At this point, we have been thehing the ruble, indonesia, india. That would be sort of hungary would be a selection of currencies that we think can stand to do well against the dollar in the coming weeks. Matt, i would ask a question. I look at the ezio screen of the bluebird today and i could look at any country. I just happen to look at the United States. Are we ready for doubledigit unemployment, a character in nature . Have we factored in the markets, h world, have we factored in the societal confidence change of 15 , 60 , or 20 unemployment 16 , or 20 unemployment . I think what we have all come to realize because we are all working from home is that this period of time is unique, certainly, in our lives, in the course of history. I think it is tough to say whether or not markets have fully come to grips with it because of the reaction of both Central Banks and governments around the world. Last week we had three Major Central Bank meetings the bank of japan, the fed, the ecb. What we heard certainly from the fed and the ecb was that they stand ready to ease policies further. When youre talking about markets and human psychology, you have got very strong support. So even though this is an unprecedented time, the Central Banks and governments are offering unprecedented support. So in that sense, i think the markets have come to grips with this idea that we will come out of this and we will be supported by the institutions that were set up to do just that. Tom very good. Matt hornbach with a nice, nice overview. The whole idea here, what are you going to do forward after the volatility that we saw in march and april. He is working from home. That is extraordinary. Perchance in the 11 00 hour, maybe bloomberg will get a ukulele recital from ukulele player of salesforce. Ukulele. Think of it. This is bloomberg. Good morning, everyone, bloomberg surveillance. What we try to do each and every day is stick to experts on this pandemic, particular focus on the Johns Hopkins university. Joshua sharfstein has been extremely help to us in focusing here on what is immediate in the virus and what will be forward. Josh, without question over the weekend, the Interesting Research i saw was, yeah, the curve is being bent but there is a split between a better new york and a better selected urban areas and the beginning of an expansion of the virus in rural areas. Is that what you observe at Johns Hopkins . Yes, well, overall it is a plateau in the united ace. It is not really going down particularly quickly. There are certainly places like new york where it is declining but theyre also quite a few places, even some smaller cities, where it is increasing. Is increasing as well. Could they use the same methods from new york . I mean, what is the difference in medical treatment in baltimore or new york versus the remoteness of some of these new places in america . Youre putting your finger on an important issue, which is that the Hospital System is not nearly as robust in many places. Many of the hospitals have closed inrural areas. Those that are open are very small and financially unstable. S has created in a normas enormous challenge. It creates this dynamic where people may feel like, oh, were never going to a problem like new york. But it doesnt take a problem like new york to tip that entire Health Care System over. Tom there are all sorts of issues here about getting out of lockdown. All of the images over the weekend and all that. What have you learned in the last 24 hours about getting out of lockdown . Well, i think that people have to look past just the overall government decision. I think what is really going to matter is whether all of us, all the businesses are following Good Public Health guidance to stay away from each other, to continue to physically distance from each other. Oft is as important as some the specific policies that are put into place. If people just go out and define what is being done, it is going what isry hard defy being done, it is going to be very hard. Some people take it as a green light to do whatever they want to do. It is going to be a problem. There is Nothing Holding this disease back except our ability to stay with from each other right now. Francine when we going to be able to understand this disease better . There are numbers that hes studies to try to understand why some countries, the mortality rate is much higher than others, although the lockdowns were very similar. What are some of the questions that you want answered to understand it better and how soon can is answers come . I think are some very important questions, including some continued questions about how the disease is transmitted and the role, particularly children, play in transmitting the disease. I think that will be very important as we think about whether and how to open up. There are basic issues about the illness. Why people with certain conditions are so much at higher risk of dying and is there any way to predict early in the course of the disease who is going to have a more severe illness . I am very intrigued by the report that perhaps earlier medical treatment of certain kinds really helps. If that can be established, that can be very, very important. If it turns out that earlier some other type of intervention matters, that might change the Way Medical Services are organizing to keep the number of people out of the hospital. I do think we have gotten a lot of scientific information, and we are going to see every week more and more insight. I think the frustration is that science doesnt necessarily operate by one big headline and everyone agrees. It is going to be these little incremental steps, a couple steps back, couple steps forward. It is the kind of things when you look backward you see how far we have come in our understanding. Francine what can you tell us about the gilead therapy . There was a setback and now it seems to be on better track. Can we find out by this summer if this is one of the biggest hopes for the world . Therapy irticular think is going to be potentially of some benefit, but most likely not as a major comic you know, tremendous benefit. Major, you know, trumans benefit. We are going up to see the ongoing studies, which are using that drug as different stages of the illness. So at oneight work so stage or not it all at a different stage. It is going to be a bunch of little studies that will add up to much greater understanding most of them went as we learn more about a particular medication, we will learn more about the disease. If it turns out trying to block viral replication really makes a lot of the difference if it is given early, the drug is given early, that might help us target other therapies. I am hopeful we will learn more from these other studies that will round out the picture of remdisiver. Much, dr. Thank you so sharfstein. We will have plenty more on covid19 and some of the treatment is available, how far we are in those trials, and also look at your markets. It is a big day. The bank of england decides to hursday. This is what your markets are telling us. Watch out for the airlines after over the week and Warren Buffett said he will actually do vest himself of four of the airlines divest himself of four the airlines he was holding. President trump saying big evidence showing the coronavirus outbreak began in the lab in wuhan, but he could possibly impose certain tariffs on china. A little moredes of an uncertainty about a. Airlines being sold off, down some 10 . Stocks overall are also down. This is bloomberg. Crushing pain. China new orders and exports all fall to record lows. Game s blame and the virus blame game. Emerge fromes lockdown. Italy faces germanys constitutional court. The u. S. Waits for the latest read on unemployment. Welcome to bloomberg daybreak america on this monday, may 4. Im alix steel. Happy monday, everybody. Lets get a quick check on the markets. We had a monster rally in april. We gained a lot back on friday. Now we are continuing the downturn as well. Futures off the lows of the session, but nonetheless down multiple points. In other asset classes, it is a rush to the safe haven overall