Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240713

All of that leading to a stronger dollar and weaker commodities like oil. Under armour out with earnings as well. Lets get right to it. Their adjusted loss coming in 0. 34 a share, almost double what we had been expected. Net revenue for the First Quarter coming in at 930 million. That also came in light. They see a significant decline in revenue since midmarch, so no surprise there. Marriott coming out with their numbers as well. As you can tell, it is going to be bad. Marriott international looks at first court or revenue coming in of 4. 68 billion, a decline 6. 6 year on year. A really ugly number. They say they had liquidity about 4. 3 billion as of may 8, so obviously sustainability and solvency these kind of companies , especially hospitality, as well as airlines, really front and center. All of this really winds up depending on when the world can reopen. Lets get to all of our market movie news from new york. In london, u. K. Promised her Boris Johnson announced the first careful steps to easing lockdown rules. Hes expected to publish details and a 50 page document today. Pm johnson it is not time to simply ease lockdown. We cannot allow a second spike. Alix dani burger has more. Good morning. Dani one of the things Boris Johnson did yesterday was change the core of the u. K. Messaging from stay home to stay alert. There was media backlash once that happened. Some leaders concerned it would confuse the message. But otherwise, johnson unveiling a traditional plan to reopen society when he addressed the nation yesterday. This first step of a few allows people in england to spend more times outdoors. That means if you want to play golf, play tennis, drive to a beach or park, you are allowed to do so. People who couldnt work from home are being encouraged to return to the work lays, people like construction workers, but said people should avoid public transit. In the months to come, we get the next phases in june. He says students will return to school. Hospitality businesses, he said as soon as they could possibly reopen is july. That is one story. Another huge story is europe is still the shock ruling from germanys constitutional judges last week, saying that the ecb may have to step outside its remit with its qe program. Commission president ursula von der leyen said the final word is always spoken in luxembourg, the eus highest tribunal. She is really hoping to avoid opening a real can of worms, considering that the german decision challenges the supremacy of European Union judges. Another risk is that other nations challenge the authority, and that could go on to threaten the future of the common currency. The mental but in the middle of all of that, Christine Lagarde says her institution is undeterred, and the ecb will do whatever it needs to do to carry the euro zone the crisis. Alix thanks so much. Lets now turn to central Bank Reaction to the crisis. They are continuing to fight the economic downturn. The most recent is chinas pboc, which said it will resort to more powerful policies. Michael, Bloomberg International economics and policy correspondent, joins us now. Michael and credit provision over always growing. China again teasing, not giving us a lot of details. The pboc says it is going to work to offset the virus impact with more powerful policies, paying more attention to economic growth, but they are not telling us exactly what they are going to do. In the quarterly report, they confirmed they lowered Interest Rates on their emergency funding facility, the socalled standing lending facility, and mentioned their targeted relenting program from very similar to what the central bank is doing in the bank of england two what the European Central bank in the bank of england are doing. No comment on reserve ratio cuts or on Interest Rates, its main funding tool, which is what people have been. Waiting for. The credit impulse stronger in april than people had expected. Aggregate financing increased by a little more than three children you on more than 3 trillion yuan, helping Keep Companies alive, but not really stimulating the economy at this point. More expected after the Chinese National Peoples Congress in about 10 days. We do get Industrial Production and retail sales reports for the much of mark from chinese on to the month of march from the chinese on thursday. The European Central bank is still expected to do some kind of extra stimulus, perhaps the next time they meet. The fed has done so much, people arent expecting much out of the u. S. Centralbank at this point. They are watching and waiting to see what is happening with the economy. We get reports on retail sales later this week. Also, a lot of these companies doing price reports, and the retail sales report expect it to be about as bad as we have ever had in this country. We will find out what the fed thinks about that on wednesday. Jay powell is giving a speech, and no doubt the world will be tuned into that. Alix no doubt indeed. Bloombergs Michael Mckee, thank you very much. I do want to touch on earnings that broke at the top of the hour. Under armour adjusted loss a little wider than estimated, coming in at 0. 34 a share. Theysee negative impact say negative impact on results cannot be estimated. A very different story, obviously, for marriott. They had 4. 34 billion liquidity , bute beginning of may total debt of 2. 13 million, and cannot say the impact of the virus. Nevertheless, they are seeing significant issues. They do say they have significant resources to manage, but those numbers are pretty ugly. Revenue is down by 6. 16 year on year. Lets stay with earnings for a second because as we head into the final stretch here in the u. S. , i am watching the equity rally the experts insist was probably doomed. It is now starting to look like it could prove more permanent. U. S. Companies had been reporting numbers the worst since the financial crisis, and during that time, the s p jumped ticks. 6 . ,ince march, the index is up and gains have fallen only twice. Maybe we can have an economic world where the equity market and the economy can diverge. Coming up, more of your morning news, trade and analysis of the markets in todays first take. Happy monday, guys. This is bloomberg. Alix time now for bloomberg first take. We give you the news. You get the trade and and ill set the markets and analysis of the markets. Joining me as Michael Mckee and Damian Sassower, Bloomberg Intelligence chief emergingmarket credit strategist. Mike, you give us a nice set up of what we are watching this week. I want to talk about morgan stanley. A note out at the end of last week talking about inflation, basically saying, for the first time in a decade, we are finally getting coordinated fiscal and monetary easing, a dynamic we viewed as essential to get out of the low growth, low inflation loop. Read between the lines, inflation could be coming. Michael it could be coming, and a lot of people think it may be, but very slowly. Obviously saying this is not going to happen for a year or two. We are in the midst of a disinflationary impulse right now. The question is, do we go below zero at some point . That is what Central Banks are really worried about for the time being. Are really worried about for the time being. Does this impulse start to fade and inflation not rise . That is what happened a decade ago. We havent seen this in a decade, but we never got inflation out of that. So nobody is really sure whether this is going to create inflation. The textbooks say it should, but we havent seen it in a while, so do we . That is an open question at this point. It is not just here in the u. S. It is also emerging markets. One of the things that really stood out to me overnight was it is not just here in the u. S. It is also emerging markets. One of the things that really stood out to me overnight was india. They are set to widen their budget deficit to 5. 5 of gdp. They are raising their annual borrowing by 54 . These numbers are really intense, and we see the impact. Yields starting to rise, etc. Damian its the same thing we are going to see in the u. S. At some point, markets are going to focus their attention on the deteriorating fiscal situation across all of these economies that have been stimulating or just trying to inject liquidity to try and defend their markets, at least over the near term. I think we get a little bit of clarity this week in the u. S. , with testifying in front of the Senate Banking committee, but i doubt we will hear all that much when it comes to will the fed allow rates to go below zero. The question is, at what point does inflation get to where we had it . We finally saw semiconductors start to roll over. We havent seen that yet, but i believe that will be a key indicator for me Going Forward as to whether or not we see a doubledip here. I think theres another slate of consolidation ahead. Alix meaning youre going to watch for the semis in terms of fun in terms of underlying demand . Correct. Following the Global Financial crisis, we saw small caps rise something on the order of 60 . We are not seeing them participate here. It is all mega caps, all technology. If we see something in semiconductors start to give way, i think that can definitely hit equities and sentiment over the nearterm. Alix but this goes back what youre talking about about china. Do we care, when we have so much money coming in from the Central Banks . Michael sure. It is like the old saying about throw you in the deep end. How long can you tread water . We can tread water for the while with the fed and other Central Banks putting its lower underneath the economy, but at some point, you need to have a self reinforcing recovery. That is the question. How quickly will that happen . Will people go out and spend . The idea of feeling you can go out without getting the disease. Part of that is are you scarred by this, the fact that you lost money, and may be defaulted on some bills, so you want to save more on spending. ,hese are things we dont know and all of those semiconductors are not end products. Those are things that go into other things we buy, so if we dont buy, theres a question about whether or not they are going to do well. Thewe going to out and buy next iphone . Really open questions at this point. Alix i already got a new iphone. Im just saying. It only took me seven years. , wrap it all together for me. If we wind up seeing government spending, there seems to be strong divergence in em versus dm. If we look at india, their yields jumped 22 basis points on the 10 year, but in the u. S. , we have 96 billion of supply coming down the pipeline, and you are not seeing much of a steepener this morning. Vincent all of these fed damian all of these fed purchases are causing market to lose it signaling power in terms of forward expeditions on inflation and on growth. I think youre absolutely right to focus on options in the u. S. This week but has theres going to be some indigestion and some point. How much of this debt can the fed really take down, and where is it going to implement its yield curve control in the front end . What does that mean for term premia at the backend . We heard a lot of talk about curve steepeners, but we are seeing the delete when fees come through. We are seeing the fundamental deterioration across all sectors. We talked about some of the airlines overnight and over the retail, neiman marcus, it is really starting to give way here. For me, i think is going to be in focus over the better part of the second and Third Quarter of this year. These rising delinquencies are coming. Alix damian says hes an optimist. I am just really not feeling at this morning, ive got to say. Damian i had a bad weekend, alix. [laughter] alix sorry to hear that. Does point out the question of what ends up happening with that takedown and demand. But if you look on a hedge basis if you are a japanese investor, you can actually now make more on a 30 year basis here in the u. S. Then new canon japan. We havent seen that and a couple of years daniel canon japan. We havent seen 30 year basis here in the u. S. Than you can in japan. We havent seen that in years. Michael the u. S. Has a higher return than other countries, the people are playing that carry. There is the possibility out there, especially if the fed goes back into buying a lot of bonds. With the supply coming to market, setting it off at this point, that should push rates up a little bit. All of this is should, and should get more opportunity here in the united states. But we will see how all of this plays out. We are starting the reopening process and a number of states. Some Department Stores like macys starting to reopen. Apple says it is going to start reopening a few stores this weekend. Next week, the automakers go back to work. They are already starting this week in South Carolina and alabama with the german carmakers. Lets see how that plays out, whether or not, if people get sick again, we are going to see the markets rollover. If they dont and we are able to start reopening, even if it is not a big game to the economy, it will give people more confidence and you will see a little higher rates in the united states, and people start to think that things will be a little bit better. Alix which is puzzling to me in some ways, why we arent seeing the risk off this warning. We were risk on earlier, despite the fact that south korea had more cases, for example, and exports for the first days of may were not great. But we rolled over despite the fact that we have gotten some big steps from Central Banks. What do you make of that . It feels like the pain trade is higher, but we cant seem to catch a bid this morning. You make a great point. With the fed purchases really losing signaling power, what is left to look at . What is really going to give you a sign of what sentiment is, where markets are . That is going to be currencies. The dollar is the most important signal that capital will be flowing again and the Global Economy is improving. Until we see some real dollar weakness showing that fundamentals are important, we are going to see u. S. Debt to gdp rise, but it remains the worlds preferred safe haven asset. That is why you are seeing a look the technicals, gold testing resistance, and all that is going on in dxy. One would think that is front and center for anyone trying to think about where we are going next. Alix which brings me to powell on wednesday. I just have to ask mike, how do you think powell addresses what we saw last week, pricing and negative rates . How do you think that is the conversation on wednesday . Michael if it does come up, i think you will say that the fed is not interested in that. They dont think it works. They worry about the impact on the money markets. So he will say it is probably not in the feds best interest to do that, if he talks about it at all. I suspect he may say we have tools that will work, and talk about qe and Forward Guidance and not talk about negative Interest Rates. We have seen a backing off on the negative Interest Rate front here. We saw december pricing in the fed funds futures market. We saw that move out to april. It does appear that there is hedging going on. Weve got to remember, these are not very deep markets, so it doesnt really seem to reflect will love investors think is actually going to happen. In there is pressure markets, and the question is do we see that carried out. But i think damian is right, we are not getting the in the markets, and the question is do we see that carried same sort of signaling we used to get. Alix and what is the number one thing you are watching this week . Damian ive got to be looking at latin america, given all of the deterioration we are seeing in these currencies. The bank of mexico is probably going to slash by another 50 basis points. I am going to be focused on those countries, but obviously, the news out of argentina that they are going to extend that distress exchange for creditors out to the 22nd of this month is a little more time for creditors , butrk out something there i am not optimistic on that front. Latin america is going to be my focus this week, for sure. Alix hes going to work on that optimistic attitude, i think. Maybe tomorrow. Michael mckee and Damian Sassower of Bloomberg Intelligence, think select. A reminder, any charts Bloomberg Intelligence, thanks a lot. A reminder, any charts we use throughout the next two hours, gtv on your terminal. Browse the features, check it out. This is bloomberg. Berg. Ritika this is bloomberg daybreak. Of owner of hundreds Discount Stores has filed for bankruptcy. They will look for buyers for outlets that include goodies, peoples, and goodmans. At the same time, within 500 stores will open friday to conduct liquidation sales. Story. Familiar is stepping up efforts to bring buyers back to the showroom. They will also improve leasing and financing terms. Buyers can also get payment protection insurance in case they lose their jobs. Shanghai disneyland has reopened after an almost five month coronavirus shut down. Visitors have to wear masks and have their temperatures scanned, app show a smart phone testing and tracing. Alix lets get to companies resuming operations. Elon musk is the loudest voice right now in Corporate America advocating for the economy to reopen. Move now threatening to his tesla plant to california after local officials blocked it from reopening. In a tweet, musk called the move absurd and irrational, and warned, im not messing around. Despite that threat, an analyst at rep. Baird said that picking up and leaving really isnt an option for tesla right now. Hi. Thats my daughter. Coming up, we are going to speak to ben mandel, j. P. Morgan asset strategist come on why he is overweight on risk. Happy monday, guys. A little risk off into the open. This is bloomberg. Alix happy monday, guys. This is bloomberg daybreak. The s p futures now are on the lows of the session. 1 , overff the most, i in europe. The dollar story putting pressure on the euro. I also what to take a look at what the rupee is doing. You are seeing a huge budget deficit increase in india. The bond market did not like that. Youre seeing that reflected in the currency market as well. I wanted to highlight the steepener, as well as the 30 year. Wednesday we get billions worth of 30 year of three year get billions worth of 30 year bonds. We will be watching that throughout the week. Rally seems disconnected from earnings season, as well as the underlying Economic Data. The index has now jumped about 6 since Companies Began reporting results this season. Began reporting results this season. The second biggest jump since 2009. Lets get to the why. 20 me now is ben mandel, j. P. Morgan Asset Management me now is ben mandel, j. P. Morgan Asset Management multiasset strategist. Is the pain trade higher . Ben i think we expect a fairly wide trading range from here. We are sitting about overall neutral in terms of risk in our portfolios, me now but with a bo be adding. So what separates today from three weeks ago is that there is a certain buy the dip mentality sitting in. That seems appropriate in what seems like a very wide range of what you might expect. Obviously the things that determines that range is the outlook, so as we get growth recovery from here, you get a sharp ounce off a very low level of activity, but not sharp enough to get you back to the preshock levels very soon, and the nature of risk around that is essentially that that bounce in growth can deposit you in the economy in a very wide array of potential levels by the end of the year. It could be lower than expected easily if we are reopening slow. I think that is what we are seeing, a bit of worry around that, just in the highfrequency market moves. But it is also important to recognize that there is upside risk here, and clearly some pentup demand in the system that can get you a slightly more bullish outlook in a years time. Alix david coston of Goldman Sachs had a note out addressing some similar issues, calling into question the efficacy of the rally we have seen, saying that investors are missing, including one under 3 billion in expected bank loan losses in the next three quarters. Youve got lack of buybacks, dividend cuts, domestic and Global Political uncertainty. If you ask any investor, they are all citing the same for reasons for why the market is rally in, and that could be a dangerous reason as well. Where does the downside catalyst come from . What is the Downside Potential . Not i think it is really about the magnitude of losses. This is a recession, and policymakers are actively leaning against that to try to fill that hole and demand. It is really about the distribution of those losses ise, where the incident going to fall in part on business owners, but also on the government, and part on the banking system, and in part on landlords and other capital owners. I think the catalyst is if those losses are perceived as being thatn in some way, triggers a more systemic type of weakness. I think what that all suggests is that you should be a little bit more diversified. Everyone says that, but even more than usual, and the sense ,hat if you are adding risk equity markets and credit markets are hedged in some sense versus each other, and terms of the nature of the shock and the incidence of those losses in the economy. So if you are adding incrementally, we are splitting it more or less evenly across equity and credit. Alix interesting point. It also begs the question of when we get extra government stimulus. I spoke to Neel Kashkari over the weekend, the minneapolis fed president. Here is part of what he had to say. The worst is yet to come on the job front, unfortunately. Then it really is going to be, as states start to reopen and businesses start to reopen, we need them to reopen safely, and we need to look for signs of things flaring back up again. We may be in an environment of gradual relaxing and having to clamp back down again around the country as the virus continues to spread. To solve the economy, we must solve the virus. More stock you put into reopening successfully, or more stimulus from the government . Ben are those mutually exclusive . I think theres plenty of dry powder with respect to policy here, both on the fiscal and monetary front. Fiscal measures in the u. S. Have been over 10 of gdp already. We expect it to get up close to 15 in 2020, all told. That is additional aid to state and local governments, extending unlimited benefits beyond july, some tweaks to the Small Business bailout plans. And on the monetary side, i would say the fed is about 2 3 of the way through what it wants to do. You have measures that are relatively successful. The Credit Facilities are just getting online right now. The third part, which we have yet to even see, is the Forward Guidance that will essentially pin rates at a low level for a long time. All of that provides offset to the demand here. Alix i guess i meant they were mutually exclusive because i could see the deficit hawks getting a lot louder in congress, which brings me to the issuance we are going to get. 96 billion just this week. Would you be buying . Ben buying what . Buying bonds . Alix treasuries on that . Ben i think that is a fair point, which is up until now, the treasury market has been your insurance policy against Downside Risks because of the negative correlation with equities. I think it is fair to say that the payout on that insurance policy is not as high as it has been in the past, as a result of those issuance trends and as a result of pushing bond yields a little higher from here. I think treasuries are still a hedge in your portfolio in terms of equity and credit risk. They are just not as strong a hedge as they used to be. Alix where would be the easiest hedge . Do you want to take on duration risk, or the twoyear yielding 16 basis points . [laughter] ben i think you want something that has a very similar contour to the risk asset you are trying to hedge. Youre thinking about how to hedge my equity exposure, i think a logical candidate is the dollar. We usually think about the dollar driven by relative growth differences in policy differences across countries. All of those are relatively minimal now because growth is in freefall everywhere, and starting to trough, and policy is easy everywhere. So what is driving the dollar is just risk sentiment. It is the same underlying factor as is driving equities. If you are looking for a hedge for your equities, it is probably the dollar and another currency risk. Alix thanks so much. Really good to catch up with you, ben mandel of j. P. Morgan Asset Management. We want to give you an update of headlines outside the business world. Heres ritika gupta. Ritika mike pence has been selfisolating from the white house. Wasriday, his press aide diagnosed with coronavirus. He is married to one of the president s closest advisers. Prime minister Boris Johnson will announce his plans for releasing the lockdown. Last night, johnson announced what he called the first careful steps. He told people who cannot work at home, like those in manufacturing and construction, to return to work, but that is facing resistance from labor unions and politicians. Provide a clue to the future of u. S. China relations. He spent the weekend threatening to move his plant out of california because they refuse to reopen their. His factory near shanghai is a giant bet on their economy. American companies are still investing in china. 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. Im ritika gupta. This is bloomberg. Alix thanks so much. Global economies beginning to ease lockdown restrictions. What does that actually mean on a Company Level . Kevin sneader, mckinsey co. Global managing partner, will be joining me next for his perspective. On yourt tv terminal. This is bloomberg. Ritika this is bloomberg daybreak. Sales of the iphone plunged 77 in april according to data from Keybanc Capital markets. Roseank says online sales on a monthtomonth basis, but that was unable to offset the closure of apple stores around the globe. Apple will start reopening u. S. Stores this week, beginning in idaho, South Carolina, alabama, and alaska. Vern Virgin Atlantic Airways Begins pitching to potential investors today. This comes at a time when air travel is effectively grounded. Plus, the British Government is reluctant to provide virgin with emergency funding. The f35 fighter jet is starting to outlive its reputation as a 400 when he 5 billion bundle of problems. And areartin believed to have removed flaws critical to convincing lawmakers and allies that buying the f35 is what the price tag. Im ritika gupta. That is your Bloomberg Business flash. Alix thank you so much. Companies beginning to ease those lockdown rules this week. Many wondering now what the postpandemic world is going to look like and what comes next. Going to me joining me is kevin sneader, mckinsey co. Global managing partner. There is so much to talk about. I just want to start with multinationals. There was a great article in aboutt talking rethinking supply chains and protectionism as we come out of this. What are your clients telling you . Kevin they are absolutely doing all of the above. The reality is we are not going back to the future we had. Therefore, companies are having to rethink the balance between resilience and efficiency. That is the observation that is had. We have now learned a hard lesson around the impact of stretched inventories, stretched supply chains. As we learned that lesson, theres a need to rethink the supply chain, where things are supplied and made. I dont think everything will be sent back on shore, the whole notion of reshore in things of reshoring things, but i think people will look hard at building resilience into the supply chain. Mean a going to difference in where and how they are made. Alix how do you thing this all evolves . We were on track before the trade wars, and we are not even close to phase two. How quickly does it evolve, and where . Kevin everything is moving faster. True for businesses around the world. As a result, as businesses are coming back online as you sit at segment,f the people are moving very fast to figure out how to reconfigure even as they think about the challenges of reopening. They are trying to reopen with a different configuration. That is what makes it difficult because in truth, it is going to be much harder to reopen that it was to shut down. I think we are already seeing that in the way in which in doing so at a pace that far exceeds anything we have seen before. Alix what are the things that Companies Need to restart . Im sure it varies sector by sector, company by company, whether you are ecommerce or a restaurant. Those things are different. On broad strokes, what do some of these Companies Need . With every ceo i speak thinks first about the health and safety of their workers, and of course of their customers, depending on the nature of the business. That is a. Was it. Can you put in place enough procedures and checks to make you confident that your business and its employees are going to be safe . What you do not want to do is to bring the business back and then shut down shortly thereafter. You need to think through the package of measures. It is not any measure. It is about the package of measures you need to put in place in order to be confident about the safety of the workforce. That is the prerequisite. After that, theres a whole siege of steps associated with making sure you have the components to manufacturer. If you are very if you are a services business, that you can actually provide the service in a way that the customer feels safe. So it really does hinge on the nature of the business and where in the country you are. Is ensuring the safety. Alix you had a really great report out detailing the things that companies are looking at. I did want to highlight one we can talk through here, the method for rapid recovery in terms of revenue, and a detailed structural shift in terms of shortterm mood, and how fast and slow the recovery actually is. Can you detail for me what this graphic once a telling you in terms of sales restructuring versus ecommerce analytics versus, say, demand planning . All of that ranging different options. Kevin the reality is youre going to call many levers. You are going to pull many levers. One is the notion of thinking through what are the revenue levers available to you in this very different world. As you look at that, you start to think about the digital levers weve got. As you said, that is a big part of that. Of what thes customers have and how you can serve them. And you are also looking into your salesforce in a very different way than you have in the past. So the way you in your you interact with your customers is going to be different. The same way business is in the early days of this were very focused on cash, and understandably so, now they are focused on how quickly i can bring back revenue, which customers will matter, which customers can i serve, and with what. That is going to be the initial focus. Alix and how does that change in terms of how Companies Think about their own workforce, and say, a work from home on a more permanent basis . Kevin work from home only applies to a minority. 70 of workers in this country have to go to the workplace. Can work from home. Of the 70 , you have to think about the configuration of that workplace. On a small level, that is why demand for plex a glass has soared. I know in our own firm, one of the things we see is germany becoming a Major Customer of plexiglas to make sure people are safe and sound. That is true in manufacturing in the services sector. You also have to think about the way people go to work, literally, the way they get there. Once you have done all of that, you are also thinking about different groups of workers. The shifts come the number of at any given plant moment, or in an office, is going to be very different. Businesses have operated have to change rapidly. That is the second part of reconfiguring the operation. I would also add that the way the Organization Works is going to change. Organizations have now experienced an unprecedented move to be more agile than i think any of us thought they could be. When example, i have been partnering with a Large Company think about Curbside Pickup for years. Now we have seen the whole of the Retail Sector moved to do that almost seamlessly, as we have all experienced. That is something that had been thought about for 18 months, but not realized, and in the two months have been put into action. It is very different than it was before this virus it. And my last question has to do with the political environment. I am going to focus just on the u. S. We have heard more calls in conversation about higher corporate taxes. Two companies fear that . Are they starting to plan for it . What is the base case . Companies are planning for a range of scenarios, and that means taxation will be different. They have to take that into account. Any also have to take into account a very different customer set of demands beyond taxation. Think a Great American philosopher is right in this when he says, the future aint what it used to be. Companies are working on a range of scenarios. There are many things that Business Leaders right now have to plan for, and that is why i think this really has been and will be the ultimate leadership test for ceos around the country and beyond. Alix kevin, it was really great to catch up with you. Id love to get you back and drill down on more specific sectors as well. Thank you so very much. Coming up, we will be focusing on china and its steepening yield curve. It is now at its widest since 2010. Why investors are not rushing in. That is coming up in todays traders take. This is bloomberg. Alix time now for traders take. Joining me now is Damian Sassower. You are focused on china. Damian i am looking at the shape of the china Government Bond curve. The three year10 year is the widest since 2010. What is driving this is really all of the issuance going on domestically. New china1 billion of Government Bonds issued this month, and that is really what is driving this. Going into april, china is the best performing bond market pretty much on the planet. In may, we are one of the worst. Certainly the worst in asia after indonesia. Overnight we saw data weighing on conditions. We could see more pain ahead in terms of rates moving higher here in china. Alix is it just a china specific story, or is this something we are seeing in maine emergingmarket economies as well . Across we are seeing it many emerging market economies. We have seen steepening, but not in china. It is relatively well behaved a state haven wellbehaved as a safe haven amid the morass of em. An easing of economic pressure, we have not seen that yet. That is a key point. Instead, it has chosen to expand its Monetary Base to basically inject liquidity, and i think that is what the markets are starting to digest here. I think may could see a lot of rate cuts ahead for china. Alix really great insight. Morass come also a very poetic word for you. Thanks a lot, Damian Sassower of Bloomberg Intelligence. Giving him a hard time this morning. Coming up, joyce chang, j. P. Morgan chair of Global Research will be joining us. This is bloomberg. Alix welcome to bloomberg daybreak on this monday, may 11th. Im alix steel. Lets take it right from the top. Pm johnson we are taking the first careful steps to modify our measures. Alix u. K. Prime minister Boris Johnson announces steps to reopen the economy. Welcome to bloomberg daybreakthe new slogan, stay a. Johnson wants people to work from home if they can, while construction and manufacturing can go back to work this week. There was immediate backlash once that happened. Some leaders were concerned it would confuse the message. Nicola sturgeon saying i dont know whats tailored means. Alix at the same time, President Trump must convince the country it is safe to get back to work while he fights the virus in the white house. Vice president mike pence will selfquarantine after an aide tested positive. The peoples bank of china will resort to more powerful policies. Money supplyrils grew at the fastest pace since late when he 16. Late 2016. Michael that is according to economists, helping Keep Companies alive, but not really stimulating the economy at this point. More expected after the Chinese National Peoples Congress in about 10 days. Alix Central Banks continue to. Ramp up support for economies india set to continue to ramp up support for economies. India set to widen the deficit. Fed chair jay powell will speak as investors try to digest 3, 10, and 30 year bonds this week. Minneapolis fed president Neel Kashkari warns on jobs, as Trump Administration officials warned that the jobless rate could climb beyond 20 . Mr. Kudlow i would expect the numbers for may will be difficult. I suspect that. Alix meanwhile, both sides of the political aisle are debating the next round of stimulus, how much and when. President trump says he is in no rush to pursue more stimulus measures, while House Democrats are working on their own program which would include 750 billion in aid to state and local governments and another round of checks. We have some breaking news also for you. Want to start with oil. Saudi arabia will be cutting output unilaterally by an extra one Million Barrels of oil per day in june. Other nations are cutting about 7. 9 billion barrels per day. Now saudi arabia will be cutting an extra one Million Barrels of oil per day. Wti spiking into positive territory, but couldnt hold onto that. Overnight, we heard saudi arabia was introducing some austerity measures, tripling their back tax, also cutting state allowances. Really needing and wanting that Higher Oil Price to sustain the budget. Also want to take a look at general mills. Here is something you dont see or hear this earnings season. The company is raising its 2020 organic sales outlook. It sees fourthquarter organic net sales up by double digits. They see a lot of at food demand in march and april. They say the trends will moderate in may. That stock up by over 1 in premarket. Lets get to the overall market. Is still a basically cell basically sell everything rally, with the exception of the u. S. Dollar. The s p off the lows of the session. You see selling across the bond market here, as well as in europe. We have nine 6 billion with a supply coming on 3, 10, and 30 notes we have 96 billion worth of supply coming on 3, 10, and 30 notes this week. Commodities taking a hit. We will watch oil to see if it can regain any kind of bid here. By 0. 27. For more on the markets, joining me now is joyce chang, jp morgan chair of Global Research. Theres a lot to unpack today, but i want to start with an overall framework of, if you are talking to clients, what do you tell them about their return profile in the next six to 12 months . That we are telling them the Second Quarter is actually going to be the worst quarter, with respect to growth and the unemployment numbers, and you should see improvement in the second half of the year. But it is not some that we would call vshaped. It is more ushaped or a fishhook. We think you are going to have some real permanent, cumulative income loss from these unemployment numbers that we are that are hitting postgreat depression highs. We think the numbers that were released last week bubbly understate the unemployment because this a lot of workers classified as employed, but they are not at work due to other reasons. So i think youve still got more pain coming in this quarter, but looking into the second half of the year, will we have hit the bottom in this quarter of the year of the year, we will have hit this bottom in this quarter of the year. Alix is that why s p has outperformed, despite the fact that earnings are terrible . Except general mills, apparently. In the Economic Data is terrible. Just how forwardlooking can equities be right now . Joyce i think the markets are focusing on some of the day today news about reopening of the economy. They are saying we know that april is the worst month in the worst growth quarter on record, but we are seeing reopening in china, and some of the States Reopening as well. All of that said, we still see a hit to corporate profits on the order of 70 . By the end of next year, youre still going to have a loss of almost 3 4 of profits next year. So this is a crisis that is going to linger well beyond what is happening in this quarter, and we are seeing that in the steps that are still being taken. In a massive announcement last week. Alix how does that affect Asset Allocation . It make me think you want to buy gold and treasuries, but you just pointed out the massive issuance we have coming online as well. What is the correct barometer of risk, and how do you find safety . Go with still think you the assets that the Central Banks are purchasing. That is what has worked so far. U. S. Highgrade bonds are very well supported. We continue to see that tightening and retracement, even as the macro news has printed very poorly. I think a more defensive assets of the place to be. I think there has to be expectation that some of the gains are going to moderate as we see the Earnings Releases reflect the amount of economic decline that is in place. But we are looking now at a u. S. Budget deficit that is going to get 4 trillion this year, and probably a package in the order of at least 500 billion, going through the congress and the coming weeks. Alix it is really staggering. On one hand, when do we care about the deficit in the u. S. . On the other hand, if that passes, all the economic stimulus coming down is going to be good for economic recovery. How do you battle that . Joyce i think youve got to look at what this means for growth implications Going Forward. Debt atfiscal deficits, 15 to 20 higher over the longer term. The markets focus very much on the incremental moves they see coming out. They see we are past the peak and covid19. They are seeing reopenings around the globe, and in some parts of the states. They are hearing that the Second Quarter is the bottom. They are looking through all of this data, so i think the risks are that we have a second round and a second wave. We are seeing that in a number of countries. We are also seeing that the peak has to be moved out for a number of countries as well. As we look at the data, we really do see that in some of the states where they have increased the mobility before you see definitive improvements, that is actually negatively impacting the statistics. We have seen a risk of the infection rate rising. So i think, is this beyond just the Second Quarter that we are looking at more as a wave, where you are going to have more downside than what is being anticipated at this stage in the second half of the year. Gox alix i cant let you without talking about emerging markets, and the headline overnight from the pboc that they are going to look at more powerful policies area the expectation is they are going to really start cutting rates. They also saw expansion in credit moving higher in april. How do you view where china deals with this . It seems like they are just going to say, forget about the debt, we are going to support the economy. But that is not going to work for very long. Joyce if you take a look at chinas rebound in the Second Quarter of the year, we see about 44 quarter on quarter. In contrast, the rest of the developing advanced economies are going to contract by about 42 . If you take china out, youve got global gdp on track to contract an unprecedented 23 annual rate this quarter. So china is ahead. It was first in. It is first out. They are taking a number of extraordinaire measures. Think that is one recovery that does look more vshaped, but it is coming at an extreme cost. Of gdp,is almost 15 more than they experienced the ring the financial crisis. Really ones that cannot be replicated in other parts of the world in the same way, given the biometrics they are using, the face recognition, all of the surveillance tactics. Does have a china quarter that looks a lot better than the rest of the world, but they also understand that this is something that still requires further stimulus to keep it going. I think the rest of the world is going to see that as well as we continue to soldier through this crisis. Alix which we have seen for many emerging markets for the first time and sometimes in countries ever come over you have Central Banks easing, a lot of stimulus, and downright monetization. India overnight doubling their budget deficit to 5. 5 of gdp. Does that mean inflation is coming . Joyce youve got to get through the deflationary before you talk about reflation and inflation, so i dont think that is the nearterm risk right now. Taking a look at india right now, there are estimates that unemployment numbers are at 122 million. So you have many countries in emerging markets really early on in this crisis right now. In latin america, we are not really seeing meaningful signs of flattening of the curve yet. What i do see is that Central Banks in emerging markets are going to take a cue from what the developed country Central Banks have done. Byre going to see more qe em Central Banks because they dont have the scope to take all of the fiscal stimulus measures we have seen in developed countries. This is why it really does look like a wave, even though you have china coming out. You have other emerging markets that have not been able to flatten the curve yet. You are not at the bottom of where their economies could be. So we continue to take the emergingmarket forecast down, isnt as we see forecast down, even as we see china stabilizing here. Alix great to catch up with you. Joyce chang of jp morgan, thank you very much. Coming up, we did see painful april jobs numbers last week. Some employers are still out there with help wanted ads, but the divide between blue and whitecollar workers continues to widen. We will talk about that with Irina Novoselsky, careerbuilders ceo, next. This is bloomberg. Bloomberg daybreak this is bloomberg. Onthe worst is yet to come the job front, unfortunately. Then it really is going to be, as these States Reopen and businesses start to reopen, obviously we need to reopen safely, and we need to monitor and look for signs of things flaring back up again. We may be in an environment of gradual relaxing, and having to plant back down again around the country as the virus continues to spread. To solve the economy, we must solve the virus. Alix that was minneapolis fed president Neel Kashkari on the jobs outlook. For more gradual steps needed for economies to reopen in the jobs market, Irina Novoselsky is careerbuilders ceo. She joins me now. From your perspective, where is the job market right now . Who is still hiring . Who is laying off . Irina at a high level, we have bigbox retailers, logistics companies, and anything having to do with grocery store, delivery, produce, and tertiarys that are still hiring. What is happening in the market and what we are starting to see as states are starting to ease and open up, we are seeing some really interesting dynamics, and concerning dynamics but start to come available. One is because of the positive measures the government has put in place around unemployment, we are actually seeing that the frontline covid related industries such as restaurants, Retail Stores are having a lot of trouble hiring people to come back into the work area, mostly because unemployment is paying the same or more than what they would be making going back to work and putting their lives potential he at risk. Imply entireat wages, then . Irina it could, but it is depending right now on your state and passed on employment history, between state and federal unemployment, making about 25 an hour where the front line workers typically 10 making anywhere between to 20. It is a pretty big differential that we need to get made up, that is actually happening in different demos stepping in. For example, teenagers, kids that are coming right out of college that are looking to get really anything on their resume. We are seeing a big pop in the demo above 65, which is concerning on many different levels, considering they are the most at risk on covid. But we are seeing the biggest growth among those 65 and higher taking those jobs. Alix wow, that is really fascinating. Does that continue . At what point do you think we go back to oldschool . Tona it really goes back the comments you into road ed then with you intro section with. Its people feel more convertible coming back in, that will ease. It is a big Musical Chairs situation in that once things start open backup, you dont want to lose your job. So people are going to be jumping back, but everyone is waiting for that Inflection Point and trying to time it thing. Is a hard alix alix to do as we take a look at the which is a hard thing to do. Alix one of the things we see as we look at the Hourly Earnings is whitecollar jobs. How long can whitecollar jobs stay strong in this environment . Irina theres definitely an advantage to those jobs that have the ability to work from home. The rightned on differential. We are seeing the unplay mid rate, when you look at white men, the unlimit rate is about 13 , versus hispanic Unemployment Rate at almost 20 , which is a material difference, even though as an economy, in april alone we gave back all of the job growth we got in the decade. We are actually seeing some advancement we have made for women and minorities just in metrics,the diversity really pullback because we were over indexed to minorities and women in a lot of these covid facing industries. Alix it was really staggering when we saw that number come out. In theee any cracks whitecollar job market so far, or no . Irina we havent yet. We have seen some positives, when you look at the u. S. And the u. S. In aggregate, compared to countries like france or the u. K. Or new zealand even, that everyone has been talking about. Last week had been our smallest decline that we have seen since we havented, so seen the cracks, but we are slowly starting to see stabilization. It is the first positive momentum we have seen, with some positive for the first time, like california, illinois, kentucky. It is progress. Alix and we did see some of that reflected in the job report windows on tipperary layoff. That was responsible primarily for the huge increase that we saw in lost jobs. On the seen any cracks temporary layoff crew . You bring back here workers, and you only need one worker now. Is that going to be a shift, where the temporary layoff note to nontemporary layoff . Irina we are watching that slowly starting because some states only eased restrictions in the past five days, so this is going to be backward looking. We dont really have a great furlough metric, but we are watching as some of these frontline covid affected are looking back, but it is still early to tell. Alix really great catching up with you. We missed you on jobs day, so great to talk to you now. Thank you very much. We will have more coming up on the easing lockdown rules and what it means for companies. This is bloomberg. Ritika this is bloomberg daybreak. Marriott saw the Hotel Business collapsed last month. Rates for available rooms plunged 90 . Marriott has been closing hotels and furloughing workers. It has also been raising money through bond issues and royalty point sales. Macys has attracted a czech billionaire. His Investment Vehicle has taken a 5 stake, making him one of macys top shareholders. Now it wants to engage in constructive discussions with the struggling retailers management. Many of its brickandmortar stores are still closed because of the pandemic. Shanghai disneyland has reopened after an almost four months coronavirus shut down. Visitors have to wear masks. They also have to have their temperatures scanned and show their Health Status using a Smartphone App for tracking infected persons. It is disneys first theme park to reopen. That is your Bloomberg Business flash. Alix . Alix thanks so much. Lets stay on the lockdown easing scenario we are seeing. One indicators that cars are getting back on the road, driving has emerged as a socially existenc as a socially distant transportation mode of choice. It is recovering more quickly than mass transit, up from about 80 in april. The use of public transport is down 87 from the month before. Gasoline consumption in the u. S. Is bouncing back from record lows. Cities in florida have seen fuel sales rebound to 30 below normal levels, able our statement to have to say normal levels, a bizarre statement to have to say. You also have a little pop in crude this morning, up by about 1 , as saudi Arabia Deepens its Production Cut for june by one Million Barrels a day. Coming up, we will break down more of what it means for the auto industry. Autonation says its recovery is underway. We will speak to ceo mike jackson, coming up next. In the market, we want to check in on tesla, down about 3 before the bell after elon musk is threatening to pull the Company Headquarters out of california after a reopening dispute. Marriott is down more than 3 . They saw a revenue fall 6. 6 in the First Quarter. Really terrible numbers. Under armour sinking 5 . It lost a larger than expected amount in the First Quarter. It does ceasing of declines in revenue since midmarch. Any, kkr giving investment outweighing a really rough third fiscal quarter for the beauty company. This is bloomberg. Monday. Alix welcome to bloomberg daybreak. I am alix steel. S p futures around the lows of the session. Interesting what is happening with the dollar. It is still the safe haven of choice. Safe havenr as the money starts to come into the market despite the fact that we have 96 billion coming on for treasury issuance over the next three days. One exception is the 30 year, yields pushing higher by one basis points. Crude getting the nice bit, up 1 as you have saudi arabia cutting an extra one Million Barrels a day in june to try to stabilize the market after unveiling more severe austerity measures overnight. Letsck war we wait check more with reopening. We want to focus on autonation. First quarter earnings did Beat Estimates despite the coronavirus pandemic. Here to help me break it down is mike jackson, autonation chairman and ceo. We love catching up with your company. It is a good realtime indicator of economic activity. What can you tell us about the activity in the auto market. Mike it is quite a story. I will get right to the point. January and february were extraordinarily strong and then we had shelterinplace starting in midmarch. The markets we operate have stayathome shelterinplace. The strength of the quarter performance is january and february. Business was cut in half for shelterinplace, sales down 50 . We had to take action to protect the company to see us through the crisis. We had to furlough 70,000 associates, almost 30 of the company. We were deemed essential operated, and ifrated, and you think about it, we are. All of the doctors and nurses, firemen, policemen, if they have difficulty with their vehicle it had to be fixed. I thank all of the autonation employees for that. And then a drumbeat started with customers. They want a safe environment within which to do business and we have extensive protocols for that. More so, they want personal space and mobility. They want their own personal car where they decide who is in it when and they control the safety of that environment. We see an automotive recovery that is underway. Sales have developed from 50 down to 20 down by the end of april going into may. There is pentup demand. Expectations from the customers for personal safety. Financing is available and cheap, contrary to the Great Recession, and we need the plans to restart. We will need more inventory than we have at the moment. I fully support the reopening of the plant. Even elon musk should be allowed to reopen the tesla plant in San Francisco. I do not understand how you can fly a plane packed like sardines from new york to San Francisco but cannot open a plant. Plants need to reopen. The automotive recovery is underway. Based onthat alix that, and im glad you brought up inventory. As the economic recovery restarts, where are your holes . Mike on the new vehicle side, no question in pickup trucks, in particular the General Motors silverado and gmc. They had the strike, which reduced availability, and then got hit with the corona shut down. That is the vehicle which has seen the most demand relative to the supply we have. Pick up chuck pickup trucks perform the best, only down 10 . If they can restart the pickup , i will bes first standing in line saying send me all you can get. The point is that America Needs , safely, reopen and resume economic activity. I am glad you mentioned you will be the first one in line. How does that shortfall in supply inventory affect pricing . The customers is thetion for safety number one priority. If we do not have it new we will offer them something preowned. At the moment they are very flexible and willing to change. The availability overall is very good. You cannot leave the plants closed when you have automotive recovery that is underway. There will be twists and turns, with exactly how it all develops. Certainly by 2021 should be a good year for automotives. Alix talk to me about how much you are selling your cars. How much is being done online versus on a showroom floor. How do you do it . How have you tried to rejigger your business . Mike we are already making a strategic investment in digital capabilities and the customer is embracing it. Say 35 of all of our Sales Activity originated digitally. That as accelerated to 45 . I think that is an Inflection Point from which there is no turning back. Companies in the future that want to succeed are going to need the combination of digital capability and a safe environment, whether you are interacting with the customer at home or the customer chooses to come in to your store. We have all kinds of protocols around safety, we have our employees wearing masks. Providing a new mask every day. Penwe give them a brandnew that is sealed. We have thought of every protocol to make sure our customers are safe. Alix how does that change your workforce Going Forward . Are you going to have to rent less space to sell cars . Do you change the type of workforce you have . Walk me out eight to 12 months . I really do not have an answer for that today. I think that as the recovery gets underway, that is the key question that has to be studied and determined if there is a different way to meet the needs of the customers with a different approach in a different plan. Quite frankly, that is not something i can answer today. Youre absolutely on point. Alix and i appreciate your candor. It is something everyone in the market is trying to figure out, especially in light of the jobs numbers on friday. There are 18 Million People temporarily off of work that are furloughed, and we are trying to get a read on how quickly they can come back or if they wind up coming back at all. Mike that is the question. There are fewer people employed in America Today than there were at the bottom of the Great Recession in 2008 to 2009. We have evaporated more jobs than it took 10 years to rebuild and we are the worst point now. Uncertainty as far as what happens next over the next few months that i cannot predict with any degree of certainty and i think it is incumbent upon business to examine it every day and figure it out. I promise you you will. When we do, i will be happy to discuss it with you. I think that is what the second half of 2020 will be all about and im quite optimistic about 2021. Alix then clearly you will have to come back and tell me when you know. In the meantime, as you are sifting through the data, what you look at . If you will try to make these decisions are for the next six to eight months, what is the data you are looking at to help you make that decision . As a there is one thing we company have no shortage of great it is data. E have reams of it we have people that are mostly examining it. Business needs to be open minded to rethink everything. I already told you, the holy grail is you need digital capability, you need to provide a safe environment for your customers, and then you have to think about how do i structure my business to efficiently and effectively meet those first two needs. Alix theres been a lot of talks on the a lot of talk on the politics front about higher corporate taxes on doing the tax cut we got from President Trump to compensate for all of the stimulus is. Are you incorporating that into your planning in any way . Mike i have to give the government very high marks for meeting the challenge of this pandemic. The work the treasury and the Federal Reserve has done, and the remarkable relationship between Steve Mnuchin and jay powell, and the momentous decision they have made under tremendous pressure in a short period of time is markable, and there is no question the Financial System in america will be safe and healthy, which was not the case in 2008 or 2009. I feel very good about the Financial System. Mark isthe big question what happens on the employment side. Like you do not know about corporate taxes. Mike corporate taxes . Well, in the grand scheme of things i think it is a 4 trillion deficit this year. Something like that. Probably more on the way. Taxes isure corporate going to be the answer on that at all. That is definitely in the we will see. We pay our fair share. My final question to you i appreciate you joining us for today joint Cheryl Miller took a leave of absence for health reasons. You took over. Youve been with the Company Since 1999. How long do you feel like you will be continuing in this particular role and you have other plans ahead for yourself . Goo. I would say this we are on a different place than we thought we would be two months ago. Leaveasked for medical and asked for privacy. The company has granted the medical leave and i respect her privacy. Alix is good to see you at the helm. We wish her well and we wish you well. Keep us updated on how it goes from here. Thank you very much to mike jackson of autonation. Good to see you. We want to give an update on what is making headline outside the business world. Here is ritika gupta. Ritika mike pence has been selfisolating from the white house. His eight katie miller was diagnosed with the coronavirus. Boris johnson will flesh out his the first careful steps. He told people who cannot work at home like those in manufacturing and construction. O return to work that is facing resistance from labor unions and politicians. The European Central commission threatened twice to sue germany. The issue the challenge the ecb monetary authority. The European Commission says the final word will come from luxembourg, where the eus top court is headquartered. 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. Am ritika gupta this is bloomberg. Alix . Alix thanks so much. Chesapeake withdrawing its guidance. Outlook for the industry remains cloudy. Continental curtailing its oil output in may. Matt hagerty, Senior Energy analyst on what is next for todays data for the Natural Gas Industry on todays bottom line. Any charts we use, go to gtv to check them out. This is bloomberg. Ritika this is bloomberg daybreak. Sales of fell 77 in april. The bank says online sales rose on a monthtomonth basis, but that was unable to offset the closure of apple stores a clause the globe. Apple will start reopening u. S. Stores beginning in idaho, South Carolina, alabama, and alaska. Chesapeake Energy Shares are falling after the company withdrew its 2020 financial guidance. The natural gas producer said it has engaged advisors to evaluate Strategic Alternatives that may include restructuring. The company has been suffering amid low Natural Gas Prices. I am ritika gupta and that is your Bloomberg Business flash. Alix thank you so much. We focus on sectors and Companies Worth watching. Today we will focus on oil and natural gas. Hagerty,e is matt Senior Energy analyst. He joins me now. We just heard the information from chesapeake. What is the story for natural gas Going Forward . Matt the story for natural gas has shifted or is in the process of shifting now. We are looking at natural gas into 20 20 came fairly oversupplied on the natural gas side. Below twoing pricing dollars. When we are seeing how movements on the oil price either impacting the industry combined with the loss of the oil side, low pricing leading to low thattment, combined with low pricing on the natural gas side, which for natural Gas Producers is leading to production decline through 2020. It sets up 2021 to be undersupplied from a natural gas perspective. If we bring up quick numbers , itnd where we are modeling is nearly five bcf a day than where we entered into 2020. Alix if we see oil price stabilization. Parsley seems to imply they on 30 they may start rates up again. You have saudi arabia saying they will cut an extra one Million Barrels in june, does that change the narrative you feel is evolving . Us, especially in the immediate concern when we think about storage, it does not. For u. S. Producers to change pace and return to growth on the move. De, that is a quick we need to see moves on the oil side to incentivize that. Alix on a Company Level, who are the winners and losers . Chesapeake is cutting 13 of its workforce, cutting 50 of oil in may, 15 in june. These are staggering numbers. Who wins and who loses . Matt you raise a good point. When you look at the companies and you think about higher pricing, the common phrase is a rising tide lifts all boats. In this case, that is not necessarily true. , a natural Gas Producers higher price does not necessarily translate to more production for those companies. When we look at some of the companies Gas Producers are unique because there are quite a few of them hedged out far into the future. For some companies that are not, all021, cap, comstock have less than 50 of their expected 2021 projection hedged. At least some upside for those companies should Natural Gas Prices respond. However, we are looking natural 2021, thenow for natural gaza strip is averaging 2. 70. Those saying we need prices to jump up for 2021 to incentivize producers to return to growth. Alix what about drawdowns. Appalachia, there is more dry gas . Where does it leave that area . Matt in the northeast, there will be a focus on that. Leadinging currently is to production declines. We have companies out of the northeast coming out and giving guidance saying there 2020 production will be flat to 2019 average levels. They exited 2019 on a much higher clip. It declines from where we entered into this year through the end of this year. Thiswe think about undersupplied mentioned earlier in 2021, the northeast is limited to a certain degree by downstream infrastructure. We think about where the growing natural gas demand is. It is all in the gulf coast. Getting the northeast gas all the way down to the gulf coast to serve some of that demand is either constrained from a capacity standpoint or cost prohibited in some cases. Alix good to catch up with you. Thanks so much. Matt hagerty of btu analytics. Chesapeake is looking for alternatives, including a reorganization under chapter 11. Many analysts say it is about time. They are going to be in compliance with their covenants and they are looking though Strategic Alternatives. This is bloomberg. Alix