Lets get to some of todays news from our washington and new york teams. I want to return to trade tensions between the u. S. And trump president responding to questions on implementing the phase one trade deal amid the coronavirus pandemic. We signed the deal. I heard that too, they wanted to reopen the talks to get a better deal. China has been taking advantage of the United States for many decades because we have people in this position, sitting in the oval office that allowed that to happen. I am not interested. Alix Kevin Cirilli joins me now. Walk me through. Kevin good morning. This comes as the president has increasingly attacked china politically speaking, and raised questions about chinas response to covid19, including Senior Administration officials. From an economic standpoint, the president saying not so fast as it relates to u. S. China trade tensions. Democrats with the newest round of economic stimulus, i spoke to the undersecretary of Economic Affairs who said the United States is trying to develop International Standards to work with europe on issues pertaining to 5g, the energy sector, and Financial Services to better diversify the supply chain away from china. Of aappears to be part longerterm strategy for the United States and the president saying he is not interested in any shortterm deal with china as the covid19 response continues. ,lix we also learned overnight the Trump Administration is trying to block investments in chinese stocks by government savings funds. Can you walk us through what we have learned . Kevin this would have gone into effect this year, and now the administration saying this would be the first step in disentangling United States investments from china. Meanwhile, the senate will likely take up legislation potentially this week that would allow for there to be sanctions of chinese investors pertaining to the issue in china. Finally, the United States as i previously mentioned is trying to work with europe to get them to disentangle from china on 5g over the longterm. A lot of new policy, International Policy from the Financial Sector elevating itself into the discourse as this continues, and again i would continue that to continue for quite some time. What we dont know is whether or not republicans and democrats will pass broader legislation, not necessarily on a stimulus front but on a geopolitical front. Look for the senate to take the leadership on that. Alix thank you so much, Kevin Cirilli. Saudi arabia is state owned oil giant saudi aramco keeping its massive dividend despite a 25 drop in the First Quarter. It braces for deeper damage. I did not feel like we learned a ton from this release, but how is saudi arabia set up . Annmarie the biggest thing to take away from this report is they are keeping that dividend, paying out more than 18 billion, on track for the 75 billion they are expected to pay for the year. This was the mass appeal for their ipo, and is critical for the government that owns 98 of aramco. We saw yesterday they are into iron need they are in dire need. Your question about the Second Quarter is a good question. Is the money there for the dividend for the second order or will they potentially have to tap the debt markets to keep that dividend, or potentially cut the dividend as we saw shall do,that is a good shell that is a good question, but likely the dividend is sustained. That is an appeal. They did talk about in their report that the pandemic away on future profit. This quarter, they came in at dickstein billion dollars. It is still 16 billion. It is still the most Profitable Company but it is down from last year. Alix this is my desert indicator, America Small Business owners report. They said owners have not been this desperate to look at their revenueout looks the was the lowest since 1986. 29 of Small Business owners think the economy will be better in six months, the most since october 2018, a shortterm versus mediumterm outlook. Coming up, more of your morning trades, media, and analysis in this mornings first take. This is bloomberg. Alix time now for bloombergs take bloomberg first take. Inhouse team our of wall street veterans and insiders, Michael Mckee and Damian Sassower. Ok, you came with charts. This is all about the fed finally by corporate debt etfs. I assume that is what you are watching today. Michael that is definitely what i am watching, plus some fed speak. This is the most important thing that has happened to the markets this year, the fed announcing it would buy Corporate Bonds, especially in the secondary market. The market has been rallying ever since, so it really had a major effect. Today they are going to go to market. We dont know exactly how much they are going to buy. They also released to their agreement with blackrock. There are going to be three different stages of the feds buying. The stabilization phase, which we may have already been through , the ongoing monitoring phase, and then the reduction in support phase. See, this is how they will decide what to buy. Particularly if they start buying etfs right away, they say they will buy Investment Grade and a little bit of high yield. Everybody once to see if that happens today and how far the fed is going to wade into the junk waters. Alix mike, when we are looking at the market today, is there a way to tell what etfs are actually buying etfs they are actually buying . Are we going to know the specifics . Michael people have been watching to see if they are buying. It will really depend on how much they buy, like any other major investor. If they buy a lot, you will see a movement in the share price during the day. If not, we will be waiting to see when they disclose, which would probably be about once a week. Will react to that. Youre right, people have been trying to front run these etfs just in case. Alix damian, how does that feed into your world . Damian i think that is a good point, focusing on exactly which etfs the fed is going to be focusing in on. To be some of the targeted maturity etfs . You have short and long dated credit, so theres a semblance of yield control to it as well. How does it affect emerging markets . It really doesnt because there is no backstop to emerging markets. It doesnt necessarily impact my world. I am more focused on some of the things going on in latin america. Argentina extended his deadline extended its deadline for creditors to come back. Remco is willing to aramco is willing to retain its dividend. Royal dutch shell cutting for the First Time Since world war ii. It speaks to the cushion that saudi arabia has amid unprecedented fiscal deterioration. Alix i am glad you brought up saudi arabia. Part of the issue we saw when the cut production so much is because they have to spend so much money to uphold all of their social programs. I wonder at what point we are talking about the currency peg. Not enough fx reserves to deal with that. Do you have any read on that yet . Damian we have been watching out for a while. The markets have definitely been wondering out loud whether the , but weoing to break had 25 billion dollars of reserve depletion in march. That is the highest monthly drawdown in 20 years. That is exact a way are talking about, the fact they had to lean on their reserves to support domestic policy. For me, you are absolutely right. I believe the Lower Oil Prices in the stimulus measures all hit at once. The budget deficit is expected to run eyes is expected to rise in saudi arabia. For me, the confidence in the peg remains strong you look 12. Onths forward i dont think the peg is really at risk. This is kind of widely expected, tripling of the back tax, because they really have no other choice than to adjust fiscal policy given where they are today. Alix and mike, to thisabias answer has been issuing more debt. Is there still a path to that . We still have record low rates in the u. S. Will it push money for investors elsewhere or not . Demand in the u. S. Continues to be superstrong. Michael take up in the u. S. Will continue to be superstrong. It is the deepest market in the world, and people will want to invest in the haven trade. Whether you want to buy saudi debt depends on your tolerance for risk and how much yield you have to have. Just financialan risk for saudi arabia. This is political risk. Has stakedhip there its legitimacy almost on its relationship with the United States, which is now all of a sudden not going very well. If they cant continue to pay off the very large saudi royal family, theyve got some political problems. It is interesting to watch on a much broader basis than just the dollar peg. This is a key risk for the saudis. Alix huge, and potentially destabilizing in the gulf nations as well. Front, as mike was talking about, how do you look at the saudis versus another emergingmarket . Damian i dont think it is nearly as vulnerable as others. Of 2arabia has assets trillion as a cushion for when revenues drop, and we expect revenue to drop quite considerably, as you can imagine. Theres a few options available. You adjust fiscal policies, you issue more debt, which they have done. They could liquidate reserves, which they have done, or they could devalue the currency. The problem is they would have such a large, devaluation, that the social, political, and Economic Risks are so great that it is really not an option. So i think the peg is going to remain strong. Saudi 12 month forwards are up on the year. I just dont see any risk of the peg breaking in the nearterm. Alix lets get to one of the other top stories here on the bloomberg, eighth it off of saudi aramco the bloomberg, a , and off of saudi aramco this is norway. Massive selling from Sovereign Wealth Funds didnt really materialize, and now we are seeing it. Can you walk me through the impact of that . Damian it is interesting. What are they going to have to sell . What are they going to have to liquidate to meet the governments demands . It is fairly obvious to me, they are going to have to sell bond funds. Rebalance their rebalance their weight ing. I think that makes sense with yields in the u. S. Touching the zero bound, and globally, this negative or lower for longer environment we are in. Alix that leads me back to the this atd the risk of the same time when treasury is ramping up supply, when the fed is still trying to pare back their daily liquidity and backchecking daily liquidity injection. Michael certainly of sovereign ,ealth funds are pulling back theres one less buyer out there, but that doesnt seem to be a concern in terms of overall marketability to absorb what is coming. At the same time, we are seeing bond issues, the Sovereign Wealth Fund in norway has to increase stock purchases as it brings down bonds in order to try and balance its portfolio. So theres going to be a lot of movement within various indexes, but it doesnt seem to be something that is going to cause any hardship, especially since most of this money is in funds anyway. Alix i was still struck when we had the three year have pretty solid demand. We had 32 billion worth of 10 year notes, a record issuance as well. At the same time, the u. K. Had its firstever 10 year syndicated bond offering. Had a huge amount of demand. I just dont see how this doesnt result in monetizing the debt. If there is the demand to keep the issuance, there you go. Michael in effect, that is what is happening. It is not what Central Banks want to call it because that gets into the political realm. If it kept going for a very long time, it could lead to problems. Right now, everyone is just closing their eyes and pretending the quack they are hearing is not a duck, but Central Banks are trying at this point to keep yields lower and keep the markets open. Totheir tool of choice is buy bonds because they dont want to use other methods such as negative rates. So you are going to see this go on, but as you saw in the three year yesterday, still solid demand. At some point the market will faded, but no one has any idea what that point is. Alix one more question for you, mike. U. S. Companies still issuing debt at a record pace. If you had a read on how much of tied to thel being etf primary buying fund the fed is going to launch . Is it still a recovery, vshaped hope thing . Michael it is all tied together. Companies are issuing debt. Some Companies Need it because they need to restructure given the falloff in business and the hit to their bottom line from the hole shut down. Other Companies Like apple just taking advantage of incredibly low Interest Rates. Might as well at this point. That ties back to the fed and the fact that they went into the markets to keep the markets open , and have pushed down Interest Rates to make them cheaper. If you are carnival, youre still paying 11 . You are not getting it cheap, but you are still able to do it. That goes to the feds credit at this point. Alix unless you are united, and then maybe not so much. To add onto the recovery shape, i feel like the data out of china where you saw inflation in factory prices and the cpi slowing a little bit, it kind of takes the vshaped conversation off the table. Is that accurate, from where you sit . Damian external demand remains really weak. Prices came in a little lower than expected. On the cpi, it is really all about demand. Stepping up soybean purchases from the u. S. , that is something we expected, but really it is debt to gdp. China debt to gdp will rise Something Like 3. 5 this year. Chinas is going to be building, and it needs something, anything , to get gdp moving in the right direction. Alix guys, things a lot. Lots of stories to talk about this morning. Also ofee, and bloomberg intelligence, Damian Sassower. Go to gtv on your terminal. Browse the charts, save the features. Gtv. This is bloomberg. Ritika this is bloomberg daybreak. The ceo of boeing predicts that a major u. S. Airline will likely go out of business this year. He spoke in an interview with bloomberg news. Happen something will when september comes, when the aid governments pay to the airlines ends. Automaker biggest pretty ecstatic could take a year for sales to return to previrus level. Toyota is caught up in the pandemic. Servicesinancial cashing out of one of the industrys most lucrative bets ever. It is selling a 17 billion stake in blackrock. 22 of the shares of the Worlds Largest asset managers. That is your Bloomberg Business flash. Alix thanks so much. Heres the story that you know we are all watching, and that is elon musk. After lashing out at some local california officials, the tesla ceo is now bearing authorities to arrest him. Musk has restarted production at teslas only u. S. Car plant. Health officials in alameda county, california ordered the plant remain closed. Musk tweeted he would be on the Assembly Line everyone else. He asked that he be the only one arrested. Musk also threatened to move headquarters to texas or nevada. Youve got to love the tweets. Coming up, be bullish, but be patient. That is the latest word from jeff currie, global head of commodities research. This is bloomberg. Alix this is bloomberg daybreak. Im alix steel. Checking the markets, its just not a lot of conviction. The fed is going to buy Corporate Bond etfs. Fed chair jay powell will be speaking tomorrow. A lot of fed speak today. There was pushback on the negative rate story yesterday. On the Economic Data front, look at the 10 year. We have another record supply coming online, 32 billion. You did have disinflation in china, so that was on the downside, taking off the table maybe some of that vshaped recovery in the market. Reallyll catching a bid, supported from yesterday with saudi arabia, kuwait, and the uae cutting more production for june. Lets talk more about oil and what it means for markets. Joining me is jeff currie, Goldman Sachs local head of commodities research. What did you make of what saudi did yesterday . Aff we had the market in deficit by june in any case. But i think the bigger news out of saudi arabia was the some of thosef fiscal policies over the weekend, which indicates theres a lot of stress going on in saudi arabia now, and anything they can do to get the price up and get their income up will help the situation. But in terms of oil market fundamentals, right now we think demand is down about 70 Million Barrels per day globally. Call that a 100 million barrel a day blot musser down 17 . Aboutt so far was worth 10 Million Barrels per day. This starts to close that gap. Our base case between recovery gets this market into a deficit by june. Where this really matters is when we start to draw the inventories in the third and Fourth Quarter because it will speed up that pace. Alix do you have a read yet on if the cut will draw any of that forward, like the demand, the lack of stock builds, maybe even stock draws . Or does it just create a kind of floor here . Theres a ceiling on prices now, as opposed to a floor. The reason for that is if you listen to u. S. Producers, they have high 20s, low 30s on the wti basis that they are back to producing again. If you get up to 30, 32 on brent, the 20s range on wti, and stay there for a while, you could start to create incentive for producers to come back. Our base case is 30 a barrel brent through third quarter. Barrels, andillion then we can inch up to a 40 point, we drawch another 100 Million Barrels. Your kind of working up that supply curve of inventory. But youve got to keep that production out of the market, and the only way is to keep prices relatively stable where they are. Out asve will flatten you draw those inventories. Those announcements yesterday will speed up that process is we 4q. O the three and inwill speed up the process which you get the market out from underneath the inventory build. About 1. 3 built billion barrels during that price war. Alix we had an article out on the bloomberg that said Energy Transfers pipe network is starting to see more oil come through. There was about 8 of oil volumes shot, and they see about. 5 of that already turned back on. They see about 25 of that already turned back on. Is it possible to do that fast . Jeff i think it is congestion in the system starting to be allowing [indiscernible] when you get into a traffic jam, you sit there for a while, and then start moving again. As you go to the first part of this month, you had a tidal wave of surplus moving through the global Oil Transportation system, creating bottlenecks everywhere. Because of the improvement in demand, because of the production cuts that have , it likely flowed. You look at the data in mid april, running a 20 million barrel a day surplus globally. That is on its way to zero right now. Of course, in traffic, you are going to start being able to move more barrel through the transportation system. I think the bigger question is what happens to the different segments within the u. S. Shale players. You can see it in the bond prices. You look at fallen angel high yields. They have actually performed well because the probability of them knowing bankrupt allows them to go low. But if you look at the legacy highyield, they have struggled much more so because of the indication the market sees a real serious problem in that segment. Alix do you think that saudi action as they try to save themselves will save some of se distressed shale gusys distressed shale guys . Its more of an attrition game over time that anything else jeff its more of an attrition game over time that anything else. Time inelp speed up the which you get to higher prices . Yes. But when we look at many of those players, they dont have the liquidity to survive until 1q, 2q of next year. Up 15 , 25 for the oils on average. Theres not only a lack of borrowing, but also low prices. It is that ability to survive this which is really not there right now. To move forward the demand picture, you touched on this earlier, but did you see the saudi arabia cut was may a commentary on opec noncompliance . Was it a nonrecovery story . Or did you really see it as the saudis meeting to improve their fiscal situation . Jeff i think it came off the back of those fiscal austerity measures, within one day, half a days separation between the two. I would view it more as a response to those austerity measures than anything else. Those were significant. Alix and they have to keep their population happy at the same time. So if you are looking at the whole commodities space, as we are still uncertain about the demand recovery and trying to deal with storage issues for oil , do you have a favorite commodity trade . Jeff at this point, we still really like gold. Theres a lot of reasons to own gold. I think the foremost is that you still see all of the stimulus going down not only in a u. S. Dollarbased economy, but also. Ore broadly you can see it in the data everywhere. Construction and manufacturing are leading the way. Why . These are activities that cannot be done from home. We have seen many of these people put back to work around the globe. What we witnessed in china was that you saw infrastructure construction, manufacturing leading can services leading, Consumer Services and goods sliding. A lot of that played out when you look at iron ore trading. But we think theres other markets you are seeing that play out. My one caveat is you still havent priced in the weakness in china in terms of exports going to china. I think that is the one issue at risk to the commodities to the capex commodities. Manufacturers back into their workplace, which means more capital goods for the workplace. Alix always good to catch up with you, jeff currie of Goldman Sachs. Heres how the pandemic is heading another corner of the market. Bloomberg found some new coronavirus hotspots. The disease has spread at more than twice the National Rate in counties with major meatpacking plants. In the week of april 20, confirmed cases rose 40 in countries with big before pork slaughterhouses, compared with a 19 rise nationally, one week after President Trump issued an executive order directing that the meatpacking plants reopen, something definitely to watch. We do want to give you an update now on headlines outside the business world. Heres ritika gupta with first word news. Ritika a stern warning from dr. Anthony fauci. The u. S. Infectious disease chief will tell the senate today the country risks need the suffering and death risks needless death and suffering if the economy reopens too soon. All 11 million, residents will be tested for coronavirus. The city where the pendant began has reported new infections for the First Time Since its lockdown was lifted. Six locally transmitted cases were found in people already under quarantine. The Federal Reserve launching a longawaited backstop for companies today. Buying etfs beginning in corporate debt. 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. Coming up, bright spot in real estate. We are going to speak to a key player in commercial real estate , al rabil. Plus, check out tv if you miss any interviews throughout the show. You can even ask me a question. Tv on your terminal. This is bloomberg. Ritika this is bloomberg daybreak. Has cast doubt on its ability to continue. It says it may not have enough cash on hand. Hertz has been hampered by the travel shut down and missed payments on some of its cars last week. Saudi aramco is staying on track to pay out dividends this year despite reporting a 25 drop in firstquarter profit. The dividend is crucial for saudi arabias government come foraudi r. I. M. Bees saudi arabias government. That is your Bloomberg Business flash. Alix thanks so much. The pandemic has put real estate in wait and see mode as some investors are seeing opportunities. Joining me is one of them, al rabil, Kayne Anderson real partner. O and managing raised over 1. 3 billion in just two weeks for distressed Real Estate Credit and raised 3 billion since the coronavirus happened. Those are some serious numbers, al. It is good to be back with you. I want to drill down into each of the different spaces. Lets start with Senior Housing. The rhetoric around Senior Housing right now is terrible, not just nursing homes, but everywhere. How do you get involved when the headlines keep getting more difficult . Al thanks for having me on. I think the Headline News and what is actually going on on the ground are two very different things. We own and operate very highend Senior Housing, independent living and assisted ving. Just to get some quick statistics from our portfolio, only 27 of 82 properties, under 33 , have confirmed covid19 cases. That is 298 residents out of over 8000 total residents. One of the things we have been doing is testing. We have tested over 12 of our resident population. Most of the cases have been a that have beenso a symptom attic that have been tomatic. Been asymp just to clarify, we dont own a mayor sing homes own any nursing homes. But Senior Housing as a whole is a very strong sector. I think it is going to emerge stronger than it was precrisis, primarily because youre going to have limitations on future supply, and many of the occupants and their families realize that their loved ones have received unmatched care and attention during this terrible pandemic. Do you see yourself as transforming into something else, that you are not just a commercial real estate guy . That when you have to take into account disinfecting and keeping the staff safe, that you become a manager versus just the owner . How do you see it . Al for sure, part of the dynamic of our platform, which is medical, Senior Housing, and student housing, is that those are highly operationally intensive businesses. One of the things we have maintained over the years is that to outperform consistently in these sectors, you have to have operating capability. Got vertically integrated teams. Internally, we also have the exclusive joint venture partners. Close to they asset, while there is an added level of care with covid19. The operator dynamic is not something that is new to us, and positions us very well to be equipped for crisis such as the one we are going through right now. Alix lets get to student housing, too. If kids arent going back to college to go to classes, how are you making money . [laughter] al thats a good question. We have been a net seller for the last seven years, primarily because we saw it as an overbought sector. Too much money chasing too few transactions. Interestingly, now we see it as a very opportunistic time to potentially delve into student housing. I think the 2021 school year will be very challenged for many reasons, most of them intuitively obvious, but 2021, 2022, you will see an incredible rebound in student housing. Obviously you will have not just incoming freshmen from the 2021, 2020 two school year, but many will have deferred. So i longerterm basis, i actually see very strong demand. I would just point out that for us, the focus is on the top 70 to 100 public universities with typically 40,000 or more students. So we are actually looking at a relatively small slice of the overall site, and just to frame that, the u. S. Has 5500 universities. To the point of your question, some of those universities will not survive this pandemic. It is not clear to me that the u. S. Needs 5500 new universities, but i think that will be more in secondary and tertiary market. Alix that is a good point, when we talk about colleges not making it. Theres a lot of them out there. Al im sorry, can you repeat the question . Alix it was more a comment. I will move on to the third one, which is office space, another area you like investing in. We are all doing telemedicine right now. Particularly when it comes to hospitals, they are going to have so much of a hard time raising money because of all the surgeries they have had to cancel. How does this space evolve . Guy a medical office will al a medical office will come out of this as a shining star. We focus on the top highest margin sectors within medical office, so orthopedics, oncology, neurology, cardiology, diagnostics, to name a few. The reality is that supply is going to have a very difficult time keeping up with demand on a Going Forward basis. Telemedicine is something we dont view as a threat. We actually view it as a necessity in order to keep up with the increasing health care demands of an aging u. S. Population. Just as an example, with aging people, we are expecting 100 million more doctor visits per annum seven years from now than today. Some of that is going to need to be satisfied with telemedicine simply to serve the Health Care Needs of americans. I will tell you within the sector, we had we dont have demand diminished. We only have demand deferral. Their waiting to see oncologist, optometrist, dermatologist come those demands are still there. They just havent been met. So god help us all when we are looking to get appointments post covid19. But the demand is still there. The sector is incredibly strong. I would say that just from an opportunity set perspective, this is the best buying opportunity in real estate since 2008, 2009. I said this on our previous segment, if you can just close your eyes and wake up a year from now, you are going to see a very, very different picture. So it is very difficult to do that when youre in the midst of a crisis, but i say i am old enough to have lived through 1998, 2008, and now 2020. While those crises differ, the one defining factor is the movie always ends the same way, and that is a strong rebound. Alix good to catch up with you. In like 20 seconds, before i let you go, is it a debt or equity story for you, or is it all of the above . Al it is both. 60 of funds weve raised have been on the debt side, 40 on the equity side, but there are opportunities on both sides of the equation. Alix al, thanks a lot. Always good to catch up with you. Coming up, we are looking more into oils collapse into oil collapse and the impact on the saudi rial. This is bloomberg. Alix time now for traders take. Joining me as Damian Sassower of bloomberg intelligence. We are taking a look at the impact of the saudi rial. Youre taking a deeper look here, damian. Prices lower oil have slashed state revenue at the same time saudi is trying to implement the stimulus measures we discussed. What we have here is the dollarriyal 12 month forward implied yield. Forward spiked, and forward spiked, andion that that fueled speculation that the peg was going to break. This time around, youre not seeing nearly as much of a spike, which means the peg early isnt at risk in the eyes of investors. The government has a number of options available to it. It can adjust fiscal policy. It can liquidate reserves. We suck 25 billion of reserve depletion in march we saw 25 billion of reserve depletion in march. Its got 15 billion of dollar debt. Or it can devalue the currency. I think devaluing currency is probably the last on his list. Alix fair, but i feel like they are ticking off the rest of the boxes, so we will see how much is in the toolbox. Thank, Damian Sassower of bloomberg intelligence. Coming up on the program, Christopher Zook, kaz investments cio. More on the diverting take on trade more on the diverging take on trade. This is bloomberg. These days staying connected is more important than ever. So were working 24 7 to maintain a reliable network, to meet your growing internet needs. Were helping customers who are experiencing Financial Difficulties stay connected. Were increasing internet speeds for low income families in our internet essentials program. And delivering selfinstall kits to your door. Nos comprometemos a mantenerte conectado. Were committed to keeping you connected. For more information on how you can stay connected, visit xfinity. Com prepare. Staying connected your way youre just a tap away from personalized support on xfinity. Com. Get faster internet speeds with a click. Order xfi pods to your home in a snap. Or change your Xfinity Services with just a touch. All in one place. Youre only seconds away from all of that on xfinity. Com. Faster than a call. Easy as a tap. Now thats simple, easy, awesome. Alix welcome to bloomberg daybreak on this tuesday, may 12. Im alix steel. Lets take it right from the top. Saudi arabia tries to stabilize the oil market with more production cuts, while saudi aramco profit plunges 25 in the First Quarter. They did talk about the fact that in the earnings report, the pandemic is going to weigh on the future profits. Already for this quarter, they came in at 16 billion. It is a lot of money. This is still the worlds most Profitable Company. Alix the company will pay a dividend for the First Quarter that would leave it on track to meet its first year goal of 75 billion. Pm johnson you should now think about going to work provided your workplace is covid secure. Alix boris waters down his plan after many. Economy said work places are not ready for workers to return. This come as governments struggle with reopening, more debt issuance, and stimulus. In the u. S. , nancy pelosi onking with the u. S. House more aid. Republicans are pushing for a pause. Kevin as were publicans say why should we be having to pay for minds,r, in their fiscally earth possible states . Fiscally irresponsible states . Is this something you would be interested in doing . Pres. Trump not even a little bit, no. Alix President Trump stands firm on china living up to their promise in the phase i trade deal. He also said he was very unhappy with china over covid19. Meanwhile, the fed will start buying Corporate Bond etf today. Michael it was announced on march 23. March 23 was the low of the stock market. After that announcement, the market has been rallying ever since, so it really had a major effect. Alix another facility to buy debt directly from issuers will launch in the near future. Lets get a quick check on the markets. If you came in a few hours ago, we were actually down. Not a lot of conviction either way. Now we are getting a little more steam to the upside. That is buying from the fed, but it is hard to get conviction. We do know we will see 32 billion of 10year note socks and off today. Yesterday was pretty strong considering the issuance we have seen. Last night, china data potentially throwing cold water on a vshaped recovery as factory deflation continues and Consumer Prices seem to roll over. None of that i could win in the markets. Now lets get more on the markets. With me now is Christopher Zook, caz investments founder and cio. I want to start with the rhetoric of weaker ppi data overnight, that we will not have a vshaped recovery globally. What r uses scribing to the what letter are you subscribing to the recovery . Christopher i would actually go away from the letters and more become aoosh that has commonplace term. I think we will see a recovery that feels a little vshaped at the beginning, but then it is going to flatten out. The longterm implications of are pretty significant, so it is going to take more after that initial first wave, thus the swoosh. Alix is that enough to make you want to buy equities at this point that looks very much like a vshaped . Our yearer we started at a one on the kaz scale. It is where risk reward is. We upgraded our rating from a march, and only march 22 from a one to a two in early march, and on march 22 moved ahead to a three. We have since moved back to a two. Things are going to get better. But the risk on the s p 500 is a heck of a lot higher than it was at 2300. What we have to be sure people there is sos that much already baked into the recovery in the stock price is right now. It is going to be tougher the economy to deliver on those expectations. Alix so how do you distinguish them between small caps, which should benefit in a recovery, will benefit from the fed buying Corporate Bond etfs as it pushes investors back into buying highyield, versus detach look versus the tech large caps that continue to hold up the equity market . Christopher theres a really interesting dynamic because of the strength of the market is on that which they can really count on and feel visible. The largecap tech is right at the front because they are much less impacted by whether or not stores reopen or they dont in any direct way. Obviously the small caps have been the biggest beneficiaries, but they are also the ones that got hit the hardest. The ramp up that we have seen from the lows have been really dramatic and the smallcap world. Your point, they have been the biggest beneficiary of governmental intervention, and ,hat is going to begin to taper but just the benefit those stocks are going to receive is going to taper. We are going to have to see the consumer become strong again. We are going to see businesses be able to function at 100 capacity for an extended time. We have probably got as much headwind now as tailwind from the levels they are today, so i think we are going to have a tough time to make really good. Eturns in the smallcap range the other issue we have to contend with is u. S. china trade battles. Overnight, we learned that there is now a form of request for a state run pension fund to not by Chinese Investment vehicles. You had Robert Wright heisler you had Robert Lighthizer overnight in an oped, saying, the era of reflexive off shoring is over, and with it, the overzealous emphasis on efficiency and the concomitant lack of concern for the jobs that were lost. After we have defeated this disease and reopened our economy, we cannot forget the hard Lessons Learned from this misguided experiment. Christopher i think that is going to be the biggest impact longterm from this, is on shoring, whatever term we want to use. People are going to realize that a heavy dependence on one country, any country, is really dangerous to the overall supply and aof an economy business specifically. Whether or not they completely leave china, that is a very different discussion, but i think it is going to be there as a backup plan and a backup plan of the backup plan as a result andealizing how travel basically overall economies can be shut down and almost a blink of an eye because of Something Like this. Do youased on that, how then value and equity . If they are international and they get cheap labor from china, this is much more of a catalyst in some ways than the u. S. china trade war. How do you value . Christopher it is really hard. The answer is i think Profit Margins in the u. S. , and for any of the global companies, they may have seen their peak for a very long time, if not permanently. That is a bold statement. What i do not know how Profit Margins are going to continue to march higher. Peakwere already at levels prior to the virus. So if people are going to have to diversify their supply chain, if they are going to have to go into countries that dont have as favorable labor costs, it is going to impact their structure. So as a result, it is really hard to value equities right now for a vast majority of businesses, but thats another reason why you see money flowing into those that become a little more predicable, i. E. Software companies that dont have that same kind of elasticity to their cost structure that you have any Manufacturing Company or import company. Alix that is a really good point. We throw one of the wrinkle into the whole thing, and that is elections in november. We are starting to see a lot of hedging in terms of volatility picking up around the elections. I am assuming part of that is around trade, but the other is a rise in Corporate Taxes. Theres also a big pushback against buybacks, dividends being cut. What is your base case on what i company is going to look like on that front, say in december of 2020 . Is christopher it something where if you take government money, you are going to take government impact, not control, but certainly influence on your business practices. Any industry that has accepted aid is going to be subject, similar to the banks, to rules and regulations from the government. So the buyback is going to change. Dividend practices are going to change. Corporate tax rates are really tough to say because the last thing that i would hope either party would want to do is to derail an economic recovery by an all of a sudden increase in rates in such a way that affects our growth come about at the same time, it is no secret. Everybody knows we have got to pay this money back somehow. Corporate tax rates are likely to be under pressure to go higher regardless of who wins the white house, but it is going to hopefully be a 2022 conversation, not a 2021 conversation, where we can at least get exit velocity out of this recession. Stick with me, christophers oak of caz investments. Coming up with me, christophers oak with me, christophers w with me, Christopher Zook of caz investments. This is bloomberg. Saudi aramco keeps its massive dividend despite a 25 plunge in profits. We want to get more now with bloombergs annmarie hordern. What is the importance of the dividend here . Annmarie they had north of 16 billion for their profit. It sounds like a lot of money, and it is, but still lower than this time last year. This comes as the industry deals with this twin stock of the price war and demand destruction due to the pandemic and the world. The dividend, this is really the big draw for saudi aramco to get people to want to buy into the ipo in december. It is huge for the kingdom because they own 90 of the company. The dividend for the First Quarter means they are paying on the 75 remain on billion payout for the year. What is interesting about Free Cash Flow for the First Quarter was 15 billion. The dividend was north of 18 billion, so are ready you can see money starting to dry up. For the Second Quarter, the big question is when we have a lot of profits are going to come under pressure for the entire industry, april is really when the market imploded. The question becomes, do they borrow to keep that dividend, or will they have to cut it . They will likely be able to tap payingkets to remain that dividend intact. Alix why is the dividend so important . It obviously is for big oil in general. Nor seen shell, equal shell, equinor make changes to the dividend. Why isramco in particular so important . Ipo pretty much became a to mastech listing. This was attractive pretty much became a domestic listing. This was attractive. All of the royalties on those dividends go to the kingdom. We have already seen a lot of financial pressure on the ingdom due to the collapse the oil price. What we saw from riyadh was really astonishing. They had a slew of austerity measures. That is going to be controversial for everyday saudis. They were just getting used to the 5 b. A. T. From 2015. On top of that, they are also cutting bureaucrats spending, what the government workers get spent. On top of that yesterday, we heard from the ministry that they are cutting deeper as well and it comes to production, taking their production below 7. 5 Million Barrels a day. Just a few months ago, you and i were both talking about saudi pumping 12. 3 Million Barrels a day. You can really see the strain that is on the kingdom right now. Alix totally. It is a staggering jump in just a few months. Thanks so much. Still with me, Christopher Zook of caz investments. Do you like anything related to oil right now . Christopher we do. Theres the old joke which is the cure for low oil prices is low oil prices. We have probably seen the bottom, i would guess. Obviously in pricing, it is always hard to predict the front month. But when you look at the backend , it is really unlikely that we are going to see demand destruction like we have seen, and also this price war with a significant increase in supply. Back to saudi aramco, my view is they will cut production dramatically to drive prices significantly higher before they cut that dividend. It is too important to them. I think that is true in so many other areas of energy, that they are going to do what it takes to get prices to stabilize. When you look at that, there are multiple pockets of energy that we do like. We particularly liked infrastructure. We also like some of the things happening in the e p world. Companies that have the ability to acquire assets from those that are not going to survive this. Between 20 and 40 will go bankrupt during this cycle, and if that is the case, the strong will definitely survive, and survive strong on the other side. Alix is now the right time to buy . Christopher that is always the hardest question to answer. The answer is yes, but make sure you have some other powder available because of the fact that this is a very volatile set. If you have another a very volatile sector. If you have another significant drop in demand, these prices will go lower. They have recovered are medically are ready, and some recovered dramatically already. I would strongly encourage people that have the capability to trade options to be able to ofl puts and take advantage the massive premiums that are available there. If you want to own a company, that is great. But sell some puts against it in able to sell some puts against it to be able to buy more if it goes lower and be very wellpositioned. Alix in this thesis, is a dividend important to you . And big oil, that is all you want to own them for. I just wonder how you look at that for the energy space. Christopher i think in the integrateds, it has certainly got to be part of your overall [no audio] christopher dividend or it comes to you in the form of earnings growth. In the vast majority of the rest of energy, when you accept the things designed for income strain, when you look at the rest of oil and gas, the dividend is much less important. Right now, what matters the most, by far, without exception, is the strength of the Balance Sheet. If they have a great Balance Sheet and no dividend, it may be the best thing to own. Balance sheet is where people should be paying the most attention because they are the ones that are going to be able to buy really good assets at very good prices. Alix that brings me to a broader dividend question. We talked about structurally lower margins in the previous segment. It is hard to know what cash flow will be for companies the next 18 months. [no audio] alix your Investment Strategy . Christopher it does. You have to become much more reliant on multiples, which is e hard to figure out what the is going to be, so you have to pay based on an unknown e. You really have to be confident in a valuation and what the cash flows of those businesses will be because most likely, dividends are not going to be a major source of return. They had been a reasonable resource of return for the last decade, but most of it has been multiples expansion. Almost all of 2019 was multiples expansion. If we are not going to get growth of earnings and we are not going to get good dividends, you have to really believe, which is really hard, that the multiple is going to continue to grow and grow. That is just not a great bet come o. A. T. Is why now, we think bet, but right now, we think there are some really good ways to do that. But you should not expect that the 21 forward multiple we have now on the s p is going to grow back to 30. It is just not going to happen with this kind of uncertainty. So anticipate what the cash flows are going to be by the companies where you can model it well. Comfortable inl the growth of the business, not on the multiple in that business. Alix thanks very much, christopher. Appreciate it. Newng up on the program, yorkers starting to take the subway again. We will talk about why that is important, coming up. This is bloomberg. Ritika this is bloomberg daybreak. The ceo of boeing predicts a major u. S. Airline will most likely go out of business this most likely go out of business this year. He spoke in an interview with nbc news. Air travel has been all but shut down busy coronavirus pandemic. He says something will happen when september comes, when the u. S. Governments payroll aid to the air industry ends. Cashing out of one of the industrys most lucrative bets ever, selling its stake in like rock. Blackrock. In pnc owns 20 of stock in the asset manager. And japans biggest automaker predicted it could take another year before global car sales return to previrus levels. Toyota is caught up in the pandemic that has forced automakers to shut down factories and showrooms. That is your Bloomberg Business flash. Alix thanks so much. Staying on automakers, they may be taking a hit now, but in new york city, it wasnt really an issue to begin with. But there appears to be some signs of hope now underground. Ridership on the subway and commuter trains has actually started to rise. The increase is not much. The total number of daily riders is still daily is still just more than 100,000, but it is a promising signal for many. I think i would still be a little too scared to take the subway just yet. Give me a couple of weeks. Coming up, the latest read on u. S. Inflation. We will see just how far Consumer Prices have fallen with sch with mike umacher. This is bloomberg. Alix welcome to bloomberg daybreak americas. We are just a few seconds away from the latest read on inflation in the u. S. For cpi. It still feels like a cautious rally. Not a lot of conviction in the market, but you are seeing positive screens for equity indices for europe as well as the u. S. Switch up the board and it is a weaker dollar story. That has been reversing last few hours. Used of the bond market going nowhere despite the fact that you and a lot of issuance in the 10year today. The latest read is out for april Consumer Price index on a monthtomonth basis. It is down. 4 . If you back out food and energy. If you do not, you are down. 8 . That was as expected. On a year on year basis, backing out food and energy, youre looking at 1. 4 . Also missing estimates. The feels like it echoes data we saw out of china where you saw continued deflation in the factory sector but also Consumer Prices up but less up than they were before. All speaking to that lower inflationary world. ,oining me is Michael Mckee bloombergs International Economics and policy correspondent. Is this worse than we thought . What is your read . Wehael not only worse than thought in terms of the core read, this is the lowest core read in the history of the cpi data which goes back to 1957 when they created that core rate. A huge drop. Decline. The gasoline indexs largest contributor to the headline drop. That will go away as oil prices have firmed. We are seeing the impact of the shutdown of the economy because the complete lack in demand has prices falling tremendously. Apparel down 4. 7 on the month. Motor vehicle insurance, airline fares down big because nobody is flying at this point. Used cars and trucks were down. 4 on the month. Number the markets will ignore. The question is how far do we go into deflation . Right now we are at. 3 yearoveryear rate. We have not been below zero since 2015 when we had the many recession brought on by the oil industry contraction. It looks like we are heading in that direction. We could get there next month if we do not see a rebound in gasoline prices. The fed will look through it because they know anything below zero will be temporary. It is a question of how far and how fast does it rise back towards 2 . If you look the numbers we have, you do not think that will happen anytime soon. Alix i have to wonder, you mentioned it is the lack of demand. If demand winds up coming back and there is a snapback and we get to normal prices, or do we have to Start Talking about inflation . I know you always say not yet, but this data says to me when . Orhael it will be a year two before you have that issue. Oil prices will have to rise significantly to affect the headline. You will have to work on a lot of inventories for a while. If demand were to be vshaped, you would see prices rise at a more rapid rate. They were rising close to 2 anyway. We were still under it. Runway has a lot of before they have to worry about anything. People point out that the book says you should see inflation with this much stimulus in the economy, but it will be down the road. It will not be a story for 2020 and probably not 2021. Alix a good point about the inventory. It looks like the market cares little bit. We now only have equity futures on the s p up. 2 . I want to bring in Mike Schumacher. Wells fargo head of strategy. We saw a worse decline for core as well as overall cpi. What is your take . Mike i agree with mike. The fed would be thrilled if inflation became a problem. Is that going to happen today . Later this year . Doubtful. That is not the issue for the federal policymakers in general. Alix does this give the fed more copper to do more stuff because they do not have to worry about any big inflationary risk . Mike they probably were not too concerned to begin with. It corroborates their view inflation will be subdued for some time. It is one more data point. Michael ive have a question for Mike Schumacher good we are looking at housing prices, real estate coming to a halt. Housing is a big part of this index. Do we see it start to come back . Do we see prices firm or are you forecasting we will see prices for housing weak Going Forward . Mike it is a tough call. You have countervailing forces. Unemployment is usually in a norm is negative for housing, at the same time mortgages are supercheap. We suspect over time it will get some stability i would not call for huge move either way. Alix i will pivot off of that. When would you get a recovery . Which letter do you expect . A better question is in what areas do you expect what a letter of a recovery . You will have a different scenario in hospitality then you might and manufacturing, which will also dictate where prices go. Mike letters are getting interesting. W, v, all kinds of weird things. Our take is that our Economics Team expected a pretty dramatic vshaped. Now it is likely to be more elongated. The damage on the business side is becoming more clear. You had a number of bankruptcy filings the last week or two. If that continues, it makes the recovery seems lower. The market implication is the fed keeps policy rates low for a long time. If you look the bloomberg wirp screen it is flat for most major economies, and we think it does take a while today gap. Michael it does take a while to dig out. Michael i want to point out one thing. Because so Many Companies are closed, the bureau of labor statistics says the numbers are not necessarily going to be as accurate as they ordinarily would be because they do not have the same sample size. I have not run across any yet, but they do say a small number of indexes normally published will not be because they cannot collect enough data. They do think it is statistically reliable but you will have a much wider error band around the prices if youre looking at anything in particular. That is a good point, and we have to remember that when we break the data Going Forward. Lets move to what the fed is buyingoday, that is Corporate Bond etf for the first time. Two questions. How much will the fed by now considering they have done so much by saying they will be buying, and how long and how much do they wind up buying over the next few months . Mike too many mikes. I played on a Softball Team called lotta mikes. We can probably invoke that. Alix it happens to me all the time. Mike the fed Corporate Activities work out perfectly. You heard years ago they talked about a bazooka. If you mentioned you would do this, you do not have to follow through. That is what worked out for the Corporate Bond so far. We do not have a firm forecast for this week or two weeks out, but i suspect as long as the fit is in at a steady rate, the market will except that is good faith evidence and followthrough. The Corporate Program seems like it is working like a champ for the fed. Alix do you expect they need to get in there if you have already seen investors front run them . Corporate borrowing costs have not fallen but they have open. You can access the market if you are paying a higher yield. Mike let me be clear. We think the fed needs to be in it. We thought the fed was coming sooner than it has. Waiting until may 12 is late but at least the fed is getting in. If they waited a few more weeks, the market would have started to smell something funny and would be concerned if the fed would follow through. It is important for the fed to be in. The exact size is what is critical. One last question. We were just discussing this hordernra with annmarie , who is reporting on oil. What will the impact be when we come back of oil on the economy and prices. Therell be a question about what demand is going to be. At the same time, you have an area where there is a noncovid supply overhang. Oil story has been incredible, and it has so many facets. War ate the saudi oil the same time as the covid induced economic slow down and it has been tough to read on that standpoint. We have seen damage on the equity side, obviously a lot of concentration of energy for the broader markets. I would say that if oil is somewhat stable, plus or minus five dollars of wti, you probably do not see a massive impact on the bond market do it if people get the sense oil is gapping down or may be up, that has a big impact on treasuries and equities. At this point, i would liken it to your point about Economic Data. People think theyre there is a lot of noise in the data. They can tolerate some of that, but outside of that band there is nervousness. Alix last question for you, Mike Schumacher, the supply coming online of 10 year notes. A Good Opportunity to buy . Mike we think it is not. Islds are going up and it tough to make an appealing case treasury10 year yielding 73 basis points. That does not feel like a phenomenal investment. A lot of investors have to buy, whether people from overseas or institutional investors. Our view on yields is they go up dramatically between now and year end. We have the 10 year treasury well above 1 at the end of the year, for instance. Alix Mike Schumacher of wells fargo and bloombergs Michael Mckee, thank you very much. Cpi on a year on year basis is 1. 4 . Sequentially down a lot and missing estimates. We want to make it we want to give you update with first word news. Ritika a stern warning from dr. Fauci. He will tell the senate the country risks needless suffering and death if the economy reopens too soon. That is according to the new york times. Dr. Fauci eight says there a chance of more outbreaks of States Reopen without following white house guidelines. In china, all 11 million residents will be testing for coronavirus. The city where the pandemic began has reported new infections for the First Time Since lockdown began. The Federal Reserve is launching a longawaited backstop for companies. It will begin by etf investment in corporate debt. The program was announced in march and is playing an Important Role in keeping Financial Markets relatively calm. 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. I am ritika gupta. This is bloomberg. Alix thanks so much. Coming up, keeping main street afloat. Well take a look at Community Banks lending to momandpop companies with frank sorrentino, connect one bank ceo. Bloomberg users, interact with our charts at gtv on your terminal. All the charts we used throughout the two hours. This is bloomberg. Alix time for bottom line. We focus on companies or sectors worth watching good today we will focus on Community Banks. In the latest data, the sales expectations for the next six months plummeted 30 points in april, all the way to 42. That is the lowest in the groups monthly data back to 1986. A big need for some of these businesses to get loans. Lets talk to someone behind a lot of those loans. Joining me is frank sorrentino, connect one bank ceo. Great to have you on the program. Give me some perspective on how much you loaned out under the payroll Protection Plan from the government. Frank good morning, great to be back. One was aconnect major player in the ppp program for the benefit of our clients and also for our community. In round one we lent 400 million to approximately 1300 businesses in our local communities. Now what is demand like versus a few weeks ago . Give me a perspective of the type of businesses and the trajectory. There was a large runup in the beginning with the first phase of the program good were businesses of all sizes from everywhere trying to get through the door. There was a constant fear of dollars would run out. We saw a lot of large dollar volume loans as well as smaller ones. As weve moved into phase two, we are now seeing it is mostly smaller dollar loans to very Small Businesses in our communities. The volume of that has slowed down dramatically. Majority whenast out in phase one and phase two is definitely slowed. Criticisms are because of the fact you can only put the majority towards payrolls, some Small Businesses are not accessing it because they need it because they needed for things like other overhead. There seems to be a lot of confusion of Small Businesses if they would be eligible. Are you hearing any of that on the ground as an explanation for why demand is slow . Frank we are definitely hearing it. The vast majority of the larger borrowers, many of them are repaying their loans. We are seeing that. Theres a lot of confusion relative to various programs out there. You have competition between the ppp program, whether or not companies are able to reopen their doors, the Unemployment Benefits that employees are getting that is competing with whether or not company should pay their employees. I think all of this needs to be settled. There are number of bills moving their way through congress to modify the program to allow for Small Businesses to change that percentage you mentioned, the 75 25 percentage, as well as to allow companies to utilize the funds for a longer time. It is unfortunate that eight week line in the sand was drawn when the program was first initiated. It is hard to spend the dollar you are getting from the program when your business is being mandated to be closed. I do not think that is what the intention of the program was. Alix as to how democrats are working towards the next meal is package, and a lot of that will be for states and local governments. More was another money for the Small Business program, what we need to be in it . What would you want to see to help you facilitate faster, better loans to your customers . Frank i do not think is a question of faster or better. The program was announced on april 3 and by the second week of april money was going out the door. Connect one was one of the first banks to make those loans. I do not think it is speed that is the issue. I am not sure it is the volume of what is out there. The second phase of the program, which had 310 billion allocated is on the up to about 180 billion as we sit here today after two weeks. I do not think either of those issues are what is the problem. I think business reads to reopen so they can utilize the funds. That is what they should be focused on. Lets not focus on what else does business need other than to thepen in order to utilize benefits provided. Alix in the First Quarter you laid out the Loan Loss Provisions you are looking at. Going forward, what is the area that is most risky for you that you are most concerned about . Difficultis very sitting here to make determinations about the future and what part of the portfolio is mostly at risk. There are the obvious candidates , the businesses that are completely closed. Restaurants, hotels, casinos, bars, salons. Those things present a high level of risk and we outlined in had veryrch that we low exposure to a lot of those industries. Looking forward at the general economy, until we know a date when businesses will be back on and how much is done and how consumers will change how they do business in the future, it will be difficult for banks to assess the actual risk they have in their portfolios. And howi think most banks took e conservative approach in this First Quarter. Alix i feel like will be a similar answer to this next question. How are you thinking about retooling your workforce, your branches, spending more intact, lessen your physical footprint. How are you looking at reshaping your business because of this . Frank we are looking at it the way we look at it even before the covid virus. We were looking to provide Digital Channels for our clients to be able to access and a better and more efficient way. We are one of the most efficient banks in the country, with one of the lowest efficiency ratios. A lot of that comes from our utilization of technology. Businesses across the country are going to have to adapt to different ways of doing business, and i think all the covid virus did was reinforce that these things were coming anyway, and that businesses were changing anyway. We saw that in the taxi business, the hotel business. We even saw it in the food business with fast casual and other types of opportunities. I think this has been an acceleration of trends already in play prior to this. Weve been on the forefront of that. Alix does that mean youre not anticipating any sort of layoffs or rehiring in the tech field, or you will continue . Hires in were making those areas and we had one of the smallest branch footprints of any Committee Bank in the nation. I think what we were doing before continue in the future. We may be doing more of it. Our clients have now become more accustomed to interfacing with the bank in a more digital fashion, and so we will put more effort behind that as well. Alix last question. This is a conversation percolating within the political sphere. The amount of debt and stimulus we are seeing in the market will have to be paid for by higher taxes on the wealthy and corporations. Are you thinking about a higher Corporate Tax rate in 2021 . Frank it is hard to assess today whether or not, and what the slope of our growth curve will be because the two ways you pay this back one is higher growth and twos higher taxes. Higher taxes today would only enhance the depressive effects in the economy. I do not think that is something we will be dealing with the next year two. Certainly as we look out further, some of that incentive will have to be paid. Alix frank, thanks a lot. Frank sorrentino, connect one bank ceo. This is bloomberg. Alix that does it for me at bloomberg daybreak americas. Open, meganthe greene will be joining jonathan ferro. Community price for april coming in lower than estimated, the deflationary scenario continues to take hold. This is bloomberg. From new york city for our audience worldwide, good morning. The countdown to the open starts right now. 30 minutes away from the opening bow. Your Tuesday Morning price action shaping up as follows, equities positive. Your s p 500 looking like this. We advanced 12 points, up. 4 . In the bond market, inflation coming in soft pew would yields not doing much yields coming in soft. A quick snapshot of foreign exchange. Eurodollar advancing. 4 . From new york city, good morning. Lets start with our top story. The president of the United States looking to get this economy back open. To ournt trump do citizens and our aggressive strategy hundreds of lives have been j that have been saved. In every generate hundreds of thousands of lives have been saved. We have