Really just the tip of the iceberg with probably millions of layoffs still to come. On monday the first big wave hit the Retail Sector with macys, kohls and gaps announcing they would furlough tens of thousands of mows. The closure of stores to prevent the spread to have virus has taken a heavy toll on its business. And President Trump had to give up on his hope expressed just a week ago that the u. S. Could be opened up by easter. Hes now saying the company will have to keep practicing social distancing for the entire month of april, and he add added that we should prepare for a very painful two weeks ahead. Meantime, his top medical advisers warn that up to 240,000 americans could die from this disease even with current Safety Measures in place. On wall street stocks ended their worst First Quarter ever. The dow lost 23 , thats the biggest quarterly decline since the quarter of the black monday market crash of 1987. And the New York Stock Exchange floor remained eerily quiet, temporarily closeed because of the virus. Overseas theres concern about what will happen to countries that are struggling, their economies are struggling when theyve been hard hit by covid19 such as italy and spain. Central bankers in europe along with those here in the United States are taking extraordinary steps to try to prevent a major financial meltdown. So what can we say about Economic Conditions at this point in the crisis . Is there any light at the end of the tunnel . And how will the coronavirus and its effects change the way the United States works and, indeed, the way much of the World Economy works . What will the longterm impact be . With me to discuss is the chief global strategist and head of emerging markets at morgan standly, and he joins me by skype from india. Rashir, thank you for joining us. Its good to be with you. Although i cant be in new york with you, this is the best we can make out of it. Gerri well, good luck. Stay healthy and isolated. Weve seen already these job numbers released on friday, we saw unemployment claims, the u. S. Has already lost 10 million jobs at least in the last couple of weeks. How much worse is this going to get . Well, i think what do we know so far . We know that of seven global recessions over the last century, and if this one is likely to be worse now, it seems, than the 2008 and 2009 Global Financial crisis compared to the magnitude of the decline we are unlikely to see economic output. This is a dramatic change. Remember, until a month ago there was not a single Economic Forecast that was calling for an end to this long economic expansion that weve had in the United States. So the most dramatic change in Economic Outlook possibly in the history of economics. So this is a fast evolving situation still. We know that the first half of this year the likely contraction in Economic Activity in the United States is going to be the worst since the end of the Second World War. So there is no sort of getting around that, that we are already baked in, so to speak, that this is going to be the worst global recession in postworld war ii history. Gerry and yet, ruchir, theres still a reasonable amount of optimism that as deep as this is going to be and it is exactly as youve described, deeper than anything weve seen since the Second World War were not necessarily talking about a depression in the sense of a to longed 1930sstyle prolonged period of suppressed output, very high unemployment. I dont know if you share that optimism, there is still a sense that this will be shortlived and well bounce back. Yeah, i think that is what the consensus is, but what the consensus expects, that the lockdown is beginning to ease from next month onwards in the most important economy in the world. And by early summer, Economic Activity begins to rebound and get to some sort of normalcy. Over the next two weeks, the rate of infection globally starts to slow down significantly. That is what is the expectation. The lockdown that we have in some of the Major Economies in the world, if it extends into may or june, then were looking for something that is much worse than what is directly baked in. So the optimism is really the fact that we are seeing in some pretty critical hot spots such as italy, even spain, germany, the rate of new infections slow down. Just like the entire world is focused on that one data point gerry havent seen that in the u. S. Yet. Weve got the largest number of cases. Yes. But the personal hope is that the u. S. A is at the tail end of the wave. So the u. S. Is the last place where we see the curve begin to flatten. But if it is following a sequential pattern where first its china, then its korea, then in the critical hot spots of europe such as italy, we begin to see the flattening of the curve in a sequential way, then the hope is that even the United States we start to see that, and some sort of easing of the lockdowns begins in may. That is what is in the forecast. Gerry sorry, go ahead. The problem is this, the Great Depression is [inaudible] that is a great headline, and on i sort of use it, this could with the greatest economic decline between this and the Great Depression, but theres such a huge gap between then. Because there you had the massive decline in Global Economic output and a 25 [inaudible] but theres one big critical difference that we have now is and also the amount of capital being up leashed in Central Banks around the world. The stimulus is already twice the size of what was put into effect during the entire Global Financial crisis of 20082009. So this is a huge counterresponse thats going on, and this is even in the United States it seems the ideological lines between the left and the right in terms of how much the government should do and what the intervens is to be, weve seen quite a significant blurring of it, and that is something we should talk about the longterm implications of that. Gerry im going to take a break, but just very quickly, one quick question, markets. The market the u. S. Energy market down about 30 , one of the steepest declines. Markets are supposed to be good predicters of whats coming town the road. We saw a bit of aization this week. Does stabilization this week. Does that make you optimistic . No, for two reasons. Wall street was completely blinded by this, youre completely correct. A lot of work on this, and the work we have done basically shows that markets and economic recession about seven months in advance, and the average decline in the stock market during a recession is about 30 or so. But that happens over a 15month period. Look whats happened this time. This time weve gone from expecting a pretty good year of Economic Growth to now expecting the greatest contraction in postworld war ii history, and the Financial Markets down 30 which is the average decline of a bear market, but the difference is this the 30 took place over 18 trading days. Gerry yeah. Historically, that would take 15 months. This is the fastest fall the markets have had since 1929. Gerry we have to take a quick break, im sorry. When we come back, well talk about the markets and look at how this Global Pandemic is going to change thehehehehe my agerelated Macular Degeneration could lead to vision loss. So today i made a plan with my doctor, which includes preservision. Because he said a multi vitamin alone may not be enough. And its my vision, my morning walk, my sunday drive, my grandsons beautiful face. 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What changes need to be made now, i encourage parents to let children know this will not last forever. I urge you to stay connected to family and loved ones, stay safe and remember while many of us are apart, we are all in this together. Please be sure to follow cdc guidelines which can be found at coronavirus. Gov along with other information and resources. Gerry my guest is Morgan Stanley chief global separate just, ruchir sharma. The markets do seem very volatile, of course. Do seem to have bounced off their bottom in the last week or so. Does that make you optimistic . Do you think weve reached the bottom, or could there be worse to come . Well, i think if you look back in terms of whats happened here, that this is the fastest decline weve had in the stock market since 1929. Typically in a bear market, the u. S. Stock market is falling back out 20 over a 15 month period. This time u. S. Stocks fell by 30 over 18 days. This is unprecedented. The last time this happened really was 1929. And even after such a big decline then, the u. S. Stock market stabilized before a secondaway of selling a second wave of selling began. So i would not take any comfort in terms of the current environment, but i think this is contingent on two things which is all about the coronavirus. One, that you see we can deal with infections very quickly, and two, that there is not a second wave which comes out of china. Because a second wave when the people were returning to work, is if that comes about, that will really spook people and think this is an endless process, not something which was going to pass quickly. So i think the markets are queuing off whats happening on the virus, and weve seen some exhaustion which is natural after rapid decline. But the future is so dependent on the path of the virus. Gerry one of the concerns that youve had and other people have had even before this crisis came along concerns the level of debt in the economy, the u. S. Economy, the Global Economy, marley corporate debt. And we are seeing, obviously, you know, its happened with Interest Rates, weve seen a lot of volatility there. But obviously with no revenue coming n a lot of companies that were already struggling perhaps with these debt loads are facing ap even larger debt challenge. An even larger debt challenge. How much of a problem is that for the economy as it grapples with this crisis . I think it is a big problem. This is not the classic credit crisis. What you have is if the cash flows dont come back very quickly. So the vulnerability of the economy has been exposed by what has happened here. No one could foresee the shock, but the volatility was always there. Global levels are so high and you have so Many Companies in the world that i call zombie companies, companies that are not able to even earn enough to pay the interest with on a regular basis and so theyre constant libor rowing. The fact that the constantly borrowing. That gives you the vulnerability that you have in the Global Economy out here. Now, it has taken all sorts of measures including the unprecedented measure of buying corporate debt directly, Corporate Bonds and investment rate bonds, taking those kind of measures to try and which possibly would work. But the problem is this, that theres a limit to how long you can keep on doing that. So, again, theyre all hoping that the underlying assumption that the global virus infections will peak pretty quickly is going to hold true. Regardless, i think the longterm consequences of this is that we are likely to enter a period of debtphobia, is what i call it. One of the largal solutions we should speak about. What do i mean gerry yeah, explain what you mean, but very briefly because weve got to take another break, also what effect that will have on the economy. So i think the 20082009 crisis, that, the epicenter of that crisis was basically u. S. Consumers in terms of mortgages that they held along with the u. S. Banks and the financial sector. After the crisis got over, u. S. Households and the financial sector, the banks were very reluctant to take on new debt. Instead, the people who took on new debt was the corporate sector and the government. I think whats going the happen after this crisis, the corporate sector now is going to be very reluctant to take on new debt as was consumers and banks. So so i think people are going to be very averse in the private sector to take on new debt, and the debt supercycle that we have had since 1980 when Interest Rates started to fall, i think that debt supercycle has come to an end because it was slowing down after the 20082009 crisis, but i think after a shock like this, that supercycle comes to an end ebb, and youre youre going to have people much more averse because of the shock they received with the sudden stop. Gerry one more break, and then i want to take a look at the longterm impacts of the coronavirus on the u. S. And Global Economy. [ one more time by daft punk ] woo [ laughing ] woo play pop music no way dude, play rock music yeah woah no matter what music you like, stream it now on pandora with xfinity. And dont forget to catch trolls world tour. Lets party people one more time gerry ruchur sharma is with me. Very briefly, i want to look at the longer term tim applications of this. Crises, wars, things like this change the way economies and societies work. Give me, if you would, do you think the role of government is going to change . Were very dependent on government to save the economy. Is that going to lead to a longterm change in the way people see the role government says . I think so. I think thats going to be a result of this crisis which is that you can see the lack of a proper government response that got it to this current stage. But it really seems to me that what were going to be living with as a longterm consequence of this is much more state control. I think were feeling the effects already which is we already are feeling the gap between monetary and fiscal policy disappear, that the socalled monetary independence, banks divorced from the fiscal [inaudible] buy much more in terms of government bonds. And in general, more state surveillance and a greater role of the states because of the amount that will be required here, again, to save the private sector from this emergency just means were going to be living with much more government control. So i think these are some of the longterm consequences of this postpandemic world that were going to have to live with. I spoke about the phobia, more Government Intervention and the other point which ive written a lot about, as you know, is global sawtion. Globalization. That was already underway, and i see that trend accelerating after this crisis even subsides. Gerry and finally, ruchir, what does it do for americas role in the world . You read a very interesting article recently which was about the comeback nation, about the great comeback of america, comeback nation, Foreign Affairs just in the latest issue, in which you wrote mostly before the virus hit how the u. S. Had come back from the Great Recession and despite all the talk of decline, were still the dominant nation in the world. Does this change your view on that, or does america emerge from this somehow Even Stronger . Does china emerge from it what does it do to role of america in the world . Very quickly, because weve just got a minute or so. I would not sort of an example of american decline. For one, the piece i wrote about spoke how as an economic and financial superpower, merck is extremely powerful, as possibly as america is extremely powerful. The u. S. Dollar has been very strong through this crisis. People have been rushing to the u. S. Dollar. And this crisis is hitting all economies. In fact, the emerging economies that we havent spoken about have been hit even harder in economic terms by this crisis. So, yes, it looks very grim today in america and in new york in pleasuring but if you look and new york in particular, but america is Still Standing out as a bit of a safe haven because of the u. S. Dollar. So you would not use this crisis as another example of american declinism which i think has been proven to be pretty wrong over the last few decades anyway. Gerry that was fascinating. Thank you very much for your insights. Thank you for joining us from new delhi. Look toward to speaking to you again. And just ahead, ill explain why it makes no sense right now to be playing the blame game over needles. Essential for the sea urchin, but maybe not for people with rheumatoid arthritis. Because there are options. Like an unjection™. Xeljanz xr, a oncedaily pill for adults with moderate to severe ra for whom methotrexate did not work well enough. Xeljanz xr can reduce pain, swelling and further joint damage, even without methotrexate. Xeljanz can lower your ability to fight infections like tb; dont start xeljanz if you have an infection. Taking a higher than recommended dose of xeljanz for ra can increase risk of death. Serious, sometimes fatal infections, cancers including lymphoma, and blood clots have happened. As have tears in the stomach or intestines, serious allergic reactions, and changes in lab results. Tell your doctor if youve been somewhere fungal infections are common, or if youve had tb, hepatitis b or c, or are prone to infections. Needles. Fine for some. But for you, one pill a day may provide symptom relief. Ask your doctor about xeljanz xr. An unjection™. Gerry as a number of those who have died as a result of the coronavirus and the scale of the epidemic becomes shockingly clear, theres also the inevitable fingerpointing. Armchair experts, particularly in the media, say we should have acted faster and sooner to shut down the country and save lives. Its an understandable reaction, perhaps, but its at odds, in fact, with everything that we know about the way we respond to threats. Just a month ago we had experienced only a handful of deaths in this country. The word from the experts is we would probably get by without the risk of a complete catastrophe. Imagine at that point government had ordered a more or less complete shutdown of the nations schools, restaurants, shops, factories and all kinds of Economic Activity. Would it have been possible . I doubt it. Few of us would be prepared to tolerate such disruption, and indeed, the economic calamity that would result in the face of such an uncertain threat, history has shown us again and again that its a tragic feature, perhapsif, of the human mind that we only respond when its upon us. The key is to do everything we can now to limit the human and Economic Loss as we go forward. Blaming each other, especially those in the media or politicians and others, for what we should but probably could never actually have done is simply futile. Well, thats it for us this week with. Be sure to follow me on twitter, facebook and instagram. Join me next week when with ill talk with jon meacham on his new book. Thats right here on the wall street journal at large. Thank you for joining us. Stay healthy, stay safe, and well see you next week. Barrons round table, sponsored by jackie welcome to barrons round table where we get behind the headlines to prepare you for the week ahead. Im jack otter. We begin with what we think are the three most important things investors should be thinking about right now. It was another volatile week, actually a tale of two markets. Some companies were hit hard while others were resill e cent. What we can expect going forward. The pandemic exposing and exacerbating deep troubles in retail. Which companies are best positioned to weather the storm. And big investors pressuring companies to take care of their