The safe haven bid comes off. The selling in the bond market is not as fierce as the buying and the equity market, something to keep note, as the 10 year yield rises 19 basis points. Crude getting back may be half of the losses from yesterday, up by about 10 . We will see. If that can hold. Time now for globe we will see if that can hold. Time now for global exchange. Our bloomberg voices are on the ground with this mornings top stories. We begin with the markets. Stocks stabilizing globally following the deepest equity route since the financial crisis. Joining me now with more is bloombergs dani burger. s p futures hitting their upper band limit, 5 . Here in europe, we see equities gaining about 4 . Yields gaining back. But given the scale of yesterdays losses, this is no ordinary day. Is this a dead cat bounce . Volume has been a touch light. Back. Not coming yields not coming back is fiercely, as you pointed out. Overnight, it looked like u. S. Futures were heading there to lower than 20 declines after the highs, but those quickly reversed after trump said he would give details of some possible stimulus. Traders seeing the near bear market as an opportunity. We are in a regime of higher volatility. Volatility tends to cluster as a lot of Asset Managers dont want to take as big positions. Extreme days. The question remains whether we will see those, and if these gains are going to be sustained. We will have to see what action comes out of governments and Central Banks. Alix thank you very much. Now we turn to oil, with russia and saudi arabias price feud. Crude is gaining back some of its losses from yesterday. Russia and saudi arabia announcing a large supply boost. What did we learn . Annmarie the saudis are going all in. Aramco announced they are going to lift production to 12. 3 Million Barrels a day. In february, they were at 9. 7. It is 3000 barrels a day more than aramco can really even sustain. Basically, they are going to be tapping their Strategic Reserves around the world. This is a way the saudis can quickly get crude to the market. Following that, we heard from alexander novak, saying russia could increase by 500,000 barrels a day. That would bring russian production to another record, 11. 8 Million Barrels a day. For the saudis, it seems like the strategy is shortterm war with russia, hoping to get them back to the table. Bobbitt nally says look bob mcnally says welcome to the free market. Alix thank you very much. Japanso to asia, where Prime Minister shinzo abe and ounces a fiscal support package to support the economy from any virus fallout. Joining me from hong kong is in the current is enda curran. Enda we had two steps taken by the japanese government today. They have put in place a system that will allow them to declare a state of emergency if things get worse. The virus has been pushing the economy into recession, and at the same time, that is why we had some new fiscal measures announced. It is not new money, but they are allocating extra spending, about ¥480 billion, for the medical sector. That brings the total package to about. It is important to note that it is not new money, but it is a sign of the government moving towards fiscal stimulus. Alix chinese president xi jinping visited wuhan for the First Time Since the virus emerged. Global case is now surpassing 113,000, the dustbowl exceeding 3900. Joining me with the death toll exceeding 3900. Joining me with Maurice Stephen engle. With more is stephen engle. Stephen we saw new cases announced by the Chinese Government in the epicenter of , and none today elsewhere in hubei province, the larger epicenter. There are encouraging signs that perhaps the containment efforts are working. Those numbers we got today are far below the averages we saw throughout much of february. That is encouraging. Therefore, president xi jinping made his first visit to wuhan. He visited one of those two large quarantine hospitals put up to house these patients. It was intended really to get a message to the people of china that the communist Party Efforts to contain this virus are working. Still, xi jinping has lots of work to do to regain some trust. Theres been lots of criticism of the way theyve handled this, especially after the deaths of one of the whistleblowing doctors. This visit came 32 days after the death of dr. Li. Company isrent deutsche post, saying he is getting encouraging signs from people on the ground in china that demand is starting to pick up. Such as other airlines air france, as well as qantas, like many other airlines who have Large International presence in this part of the world, are cutting capacity. Qantas cutting about 1 4 of international flights. They are grounding all of their large a380 planes. Air france says those words will be suspended for at least a month. Alix now we want to go to italy, where the country has gone into nationwide lockdown, affecting more than 60 million people. 20 me from milan is bloombergs western europe reporter. Take us through what you know so far and how this is being handled. Reporter hello, yes. The country is incomplete lockdown. Prime minister Giuseppe Conte has announced a push to stay at home rather than allow for more cases at a higher rate of virus victims in the country, which is already behind only china by the amount of cases with the coronavirus. The death cases are rising dramatically, and this is a big for the government and the population of the country. More question for you before you go, how successful has the government been so far . Maria people understood that this is the way to tackle the issue. Home, thedy stays at virus spread can be contained, and the sooner it will be over. Companies are encouraging everybody to work from home throughout the country, until at least april 3. Alix thank you very much for joining us. Finally, the confirmed number of coronavirus cases in the u. S. Is on the rise. President trump promising dramatic action to support the economy. He says a big payroll tax cut may be in the cards. Pres. Trump we are going to be asking tomorrow, we are seeing the senate, meeting with house republicans, Mitch Mcconnell, everybody, discussing a possible ,ayroll tax cut or relief substantial relief, very substantial relief. Its a big number. Alix joining me from washington is Emily Wilkins. What can we really expect today . Emily bloomberg has learned a little more about this package that is coming. It does include the payroll tax cut. It is also expected to include some really for hourly workers such as sick relief. However, it is not expected to include the travel industry in this particular aid package. That might be coming later, but it doesnt sound like this initial one trump is going to preview will include the travel industry. Democrats are also coming out with their own plan, which they previewed yesterday and on sunday. That is going to include things like expanded sick relief, extended unemployment insurance. About 1 4 of private American Workers do not have any sick leave. Of American Workers do not have insurance through their employer. Congress is on a time crunch right now. They are not supposed to be in next week. They are supposed to be back home in their districts. Any bill that needs to pass either has to pass this week, or congress may end up being in session next week to get this measure through. Alix thank you very much, Emily Wilkins of bloomberg government. As all this plays out in the market, i want to take a look at volatility. The vix hit levels we havent seen since 2008, but it could get a lot worse. The vix is at the mid50s, but this is a look at the implied volatility is the realized volatility. Implied volatility, those swings are still lower in the past two sessions. Persist, price swings current buyers of volatility that be adequately protected. As the real volatility comes in a lot stronger than the implied, one thing that may be a little more stable is the extent to which stocks are expected to move in the same direction. That blue line shows the onemonth correlation has actually fallen in the last two sessions. Thats the realized correlation. The white line is the implied correlation, coming down. That might help ease volatility as well and calm the markets attach. Coming up, more of your morning trade and analysis on the markets in todays first take. This is bloomberg. Alix time for bloomberg first take. 20 me from our inhouse team of wall street veterans and insiders joining me from our inhouse team of wall street veterans and insiders, Damian Sassower, and with us, dean curnutt, Macro Risk Advisors ceo. Yes . [laughter] damian i have to talk about credit spreads. I g spreads are something unlike weve ever seen. Illiquid asset class, 15 to 20 basis points in one session is kind of unprecedented. You would think that would create buying opportunities. Obviously, financials and Consumer Discretionary getting hit. I think youre going to see some guys stoking in. Alix dead cat bouncing, or are we going to test the bottom . I like when they use the word orderly or wellbehaved. I dont think yesterday is one you could argue that the markets were wellbehaved. I think looking at financials is quite valuable. All assets have a beta to the s p 500. But they are down for a couple of other reasons. The second is lower rates. Thats not good for financials. Thats more of a forwardlooking Economic Activity metric. I think the fourth one which should be on our radar is this disruption from the notion that contagion starts to become part of the narrative. I dont think its there yet. We are not anywhere near 2008. We are not even in the 2011 european sovereign crisis risk for banks. But it is something we are supposed to be watching as well. I think you start to see the narrative around panic and exposure to energy, the loan , again, its early, but these become more complicated as the prices fall. Mike i think thats the key thing. You have to go back to crude oil because it is a bear market. That played a risk is there. Crude oil is almost a perfect storm for lower prices. We should expect it to do what natural gas did. Alix i said it on air. [laughter] mike its sold out. Its too short. Crude oil has to get there, and its not there yet. What you are supposed to see in. Ear markets is 20 look for it to trade lower. One thing i also look at, the stock market, is this the bottom . It seems too easy. Damian im going to bring this back to fundamentals and spreads again. We are approaching that spring back where markets are twisted like a pretzel, and everything is cyclical. We have a lot of shale producers who cannot possibly maintain any sort of profitability with wti at 31 right now. Alix let me pushback on the little bit because it is very different in terms of 2016. Maturity is pushed out a bit, so that is going to help some of the companies. I also have to wonder how much risk the banks have taken on. I dont know if they are as exposed as they would have been three years or four years ago to this kind of thing. Damian some do have a better cushion than others, but California Resources ultra, there are a lot of Energy Credits out there already trading at distress levels. From fundamental respectives, i dont know how many of them will make it through this. Alix i guess my question is, so banks wind up getting the assets . It is not like they are running a bad subprime mortgage loan. What is the real effect for banks . Dean ultimately, everyone is short the risk of Economic Activity. Thats what we are in the midst of trying to evaluate. Are we in the early stages of a panic where risk premiums are overpriced in the sense of the vix being north of 40 or 50 . That is typically the playbook, that the fear takes over markets for a time, and then at some point, it becomes as difficult as it is to step in and take the other side, thats really what youre supposed to do. Its very difficult to advise anyone to do that right now because we are dealing with a risk factor that literally weve never encountered before. Weve seen a lot of other kinds of risks and contagion. This economic sudden stop due to a virus is not something we have any experience dealing with. I think to your point on the economic bottom, this is impossible to know because we could be in the early stages of the self quarantine and cancellation trend that can be gathering steam. Mike i think thats the key thing also. This was happening before the virus. Legitimate catalyst for not maybe a global recession, but significant decline. The vttom we had in 2018, bottom, that shouldnt be that easy. Anything . The fed do forook at the fed cuts march, looking at 75 basis points at the march meeting. Banks are saying other cut throughout the year. This is zero bound, no doubt. Damian whether or not they do this time remains to be seen. Alix but that is not going to lead to a risk rally, is it . Andan our payroll tax cuts paid sick leave going to stimulate the economy . I dont know if that is the answer either. Some extreme, unprecedented measures need to be taken. The verdict is still outcome of what i think you need to see a lot of those measures because thats what we saw in 2008. Thats what got us into that velocity stage where we were able to escape the morass. Dean when you look at the president , hes got to do the extreme action or he is going to risks the election on this event. Hes got to have payroll cuts. I look at that is a commodity event. More deficit, lower yields. It all looks pretty good to me. Dean dean i think the president s reelection hinges quite a bit on this. I think he knows it. If you look at the betting odds of trump winning and overlay the s p 500, you actually see a nice correlation where they are both falling at the same time. There does seem to be an explicit tie between how the economy does and trumps prospects for reelection. That could be a double whim a because you could argue that joe biden is less liberal than Bernie Sanders. He also is absolutely determined to raise the Corporate Tax rate. Thats bad for profits. You kind of have a couple of things going on here. The bond market, the 10 year part of the curve, the 30 year eased more than the fed could have imagined. In some sense, the optimistic side would be if we come out of this, you will let had a chance to buy assets very cheap, sells vol extremely high levels, and incredibly low prices for oil. Goodies awaiting you on the other side. It is very difficult to evaluate, but there are some things on the other side of this potentially. Alix thank you so much. Macrournutt of Risk Advisors will be staying with me. Any charts we use, go to gtv on the terminal 2 breast the features. Check it out terminal to browse the features. Check it out, gtv. This is bloomberg. This is bloomberg. Viviana you are watching bloomberg daybreak. We begin with in sydney a with insignias a point had billiondollar takeover. The u. S. Says it has no National ConsortiumNational Security concerns about the deal. Shares of cyprus are soaring. Air france plans to cancel 3600 flights from the Coronavirus Impact on the airline industry. France already suspended all flights to and from china. Blackstone group reportedly is on the verge of making one of its biggest bets ever on china. Reuters reporting the firm will take Property Developer soho china private. The price, 4 billion, almost twice what soho chinas market value was. Alix thanks so much. One other story im watching, the new reality for american shale producers. Almost all wells right now drilling in the u. S. Lose money. Heres the deal. At current prices, it is unprofitable to drill in shale fields. Only five companies in two area in two areas have lower breakevens when you factor in all of the production issues. Even with the permian, you need oil prices over 40 a barrel. Lets pretend like you are able to drill for 30 a barrel and you have really great productivity. You also have to keep the cash flowing to reinvest in the wells and keep them pumping, and that means more money. You also have to pay dividend, may be shareholder buybacks. That is going to wind up costing even more money, coming out of this severe cash flow this cash flow that is now it severe risk. , energyp, amrita sen aspects chief oil analyst, who called the fact that there wouldnt be a deal before it happened. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] alix this is bloomberg daybreak. Im alix steel. We got through monday, so heres your dead cat bounce tuesday, maybe. Dow jones futures up 4 . We did hit limit up. You cant go above that level, but you can trade below it if you want. In europe, banks getting much needed relief after getting hammered yesterday. The cheapest we have seen since the financial crisis. You can see the why behind that. 10year german bund yields are up, but still looking at 70 basis points. Youre seeing a bear steepening here in the u. S. , twostens at 22 basis points. You had buying in the long end. Now you have more selling in the long and today. Really retraced the damage we have seen in the oil market over the last few days. The move today is really about that bounce inequities. Lets stay on oil, rebounding from the steepest incline a nearly three decades, even as saudi arabia escalates its price war with russia. Saudi aramco is putting supply of of its maximum sustainable capacity. Joining me on the phone from houston it was from houston is amrita sen my Energy Aspects chief oil analyst, who called the fact that there wouldnt be a deal before it fell apart. Can they sustain it . Amrita no, i dont think so but all. Even the 12 point three will have to involve a lot of destocking from their tanks. It is a headline number to scare russia, to kind of send a signal. We dont think production is going to be much more than 11, maybe 11. 5, nowhere close to the numbers they are talking about. Alix on the flipside, russia says they can ramp up 200,000 barrels a day. Is that sustainable . Amrita that is more realistic. The 500,000 will take months. It will probably be a year from now. Alix is the Market Pricing fair for what we are seeing with supply . Amrita there is still a little bit of skepticism in terms of how much can these countries actually increase in a month, i know weve bounced back a little bit today, we are going to continue to head lower. You are adding 3 million, 4 Million Barrels. [indiscernible] alix literally, there will be oil floating on the water if the contango continues to deepen. When you take a look at the endgame here, you had the feeling that the opec wasnt going to mike a deal did. Is this going to bring anyone closer at all . Amrita i think thats the worry , that saudi arabia is misjudging or underestimating the other side. This is very much a strategy to get russia back on board, but russia doesnt respond well to threats, and russia can take Lower Oil Prices then saudi arabia. It is not clear what the endgame is. Alix lets say saudi arabia says we cant take it anymore. We need to get the saudi aramco ipo price up, etc. What would they do . What would be your best guess on how that transmits into oil markets . Amrita i think there is a possibility we get a deal before the june meeting. I know today, theres a headline saying theres no point in meeting, but again, this is all game theory. It might wind up being in opec only deal, and we just dont get opec . Alix you are in houston right now. 33 oil is really disastrous for some companies. What are you hearing . Amrita the pain is unbelievable. It was already extremely difficult to get growth because low,tural gas prices so and producers were in a lot of pain. Right now, already a couple of companies have said they will not complete a lot of wells. Our production numbers could easily be have to could easily be halved. We think u. S. Production could fall by one Million Barrels a day. Alix and is that going to be production that is done, as in these companies go bankrupt . Or is it set on the side that can pick back up . Amrita i think because there is very little lending going on, probably that will just be allowed to let go. I think thats the difference between 2014 or 2016 come up because i think the difference is there was a lot of money interest in the sector. Right now, instead. Alix thank you very much for the update. I really appreciate it. In re to send, Energy Aspects amrita sen, Energy Aspects. Still with me on set, dean curnutt of Macro Risk Advisors. How do you look at oil . Dean its incredibly volatile. I think i agree with you that there wasin 2016, this capital waiting to be deployed. It came off the sidelines very quickly. Perhaps it was kind of inspired by continued monetary support, but it doesnt seem like that is the case at this point. Maybe this is a good thing. Theres not as much interest, there wasnt as much interest in the Energy Sector coming into this. When i try to translate the risk of the knock on effects, it was a small sector to begin with. In terms of the contagion transmission to other sectors, to banks, theres some of that because there will be bankruptcy, but it is not a gigantic sector to begin with. Im not an expert on the dynamics. It does feel like theres not a lot of interest in coming back in because the story for reflation isnt easy to tell. Alix it makes up less than 3 of the s p versus over 10 at the last crash. If we take a look at a broader macro perspective here, where do you still by volatility still buy volatility . Dean look at the last 25 years. For us, we study all of them. This is a top three or four vol event. I would but the euro zone sovereign crisis up there. I would put this in the top four. Over 10ealizing 65 vol days in the s p. It never ends well. Can the s p start to exhibit smaller declines . I look at a 4 or 5 update, and thats not even a good sign. The biggest up days are during well. Periods, as buying volatility is very difficult to stomach. Nominal prices are very high in anything you look at. It doesnt mean you are not supposed to seriously look at hedging right now. Weve been spending a lot of time with clients, educating them on what to do. When you look at prices right now in terms of hedges, one of the things we would say, if youre going to hedge, youve got to find a way to defray the costs. Even put spreads are very expensive. What i would advocate for, and this is not without risk, is maybe to sell a vol spread to ead. A put spr in trying to put a hedge together that is nominally less expensive, i do think theres an opportunity to take some of the volatility in the market. Youre going to get paid a lot for the call spread to buy a put spread. Alix nonetheless, treasuries in fx havent seen the same type of vol is equities. Does that tell you anything, and does that change . Dean it to bens on where you look. Euro implied it depends on where your look. Vol, for instance. The dollar has gotten crushed against the euro, but if you look at more of the haven currencies versus the em x,rrencies, one stat is yenme the cross between the yen and the mexican peso, had a 7. 5 move on monday. That is a 12 standard deviation move. Alix i didnt even know it went that far. Dean and it just happened on monday. Alix and that is a perfect storm. Dean exactly. It just kind of speaks to the violence of the dislocation and the potential for knock on effect. Alix if you own Long Duration right now, you need to hedge that right now . Do you need to hedge a treasury position with Something Else . Dean we talked to a lot of hedge funds and Asset Managers that have had duration as a core part of their portfolio. These folks know everything about the asset class. Yieldingsuries were 1. 50 , they would say we are not letting this thing go. Now it rallies 50 basis points, and they are barely having the conversation about letting it go. Alix really . Dean when you get to 50 basis points from 1. 5 in this period of time, it means the profit potential of going from 50 to zero basis points on the 10 year is live. It is sort of what do you it is sort of like the vix. Thats how the asymmetry of markets works. It works on the duration side, it works on the vol side. Its been so good to people as a hedge. Its been a powerful offset to the losses on the portfolio that it is a difficult thing to let go of. Alix talking about the big events in the world and other financial crises, we spoke to blackrocks chairman philipp hildebrand. Heres what he had to say on that. It felt like 2008 if you are a portfolio manager, but it actually wasnt. I was there in 2008. The difference is the Financial System seized up, which is not what happened, at least not so far. This is not at the core of the Financial System. This is a Natural Disaster that is basically hitting us. Alix that leads me to my other question, which is liquidity and dollar funding. The credit stress was all about 2008. What do you see there . Dean that dollar funding issue really reached its apex in 2008, and again with european banks in 2011 and 2012. I think banks have done a good job of reducing their reliance on that. I think hes right in saying this is not become a full blown breakdown in markets. That said, looking at screens yesterday and looking at bid offers, dramatically wider. If you look at options in things like the hyg, the junkbond etf, the bond makers didnt show up for work, and i mean literally. There was no one in the market posting for something that is one of the more liquid hedges to use. I think that becomes a part of the story. What you cant transact, you have to derisk. It tends to feed on itself. So what is your top recommendation right now, if we are seeing that sort of environment see been a little bit environment seep in a little bit . Dean i think youve got to see some government response that inspires confidence. Hildebrand was also speaking about the lack of confidence in the response. It is pretty complicated stuff. We havent been here before. I think the fed easing 50 basis points, i put that low in terms of an adequate response. Theres got to be something that confidence that the testing and that whole process is in the hands of people that are competent and have the wherewithal to get this done. The second thing is from a fiscal response, i dont know if it is putting money in peoples pockets. The conversation around payroll taxes, those of the types of things that can help, but again, we havent been here before. Alix dean, thank you so much. Are you doing the elbow thing or the hand thing . Dean about. Alix thats mike elbow. Alix thats my first elbow. Thing [laughter] Viviana Hurtado is here with first word news. Viviana President Trump says he will seek a payroll tax cut and relief for Industries Hit by the new coronavirus. The president is promising to unveil what he called very dramatic action to support the economy. Bloomberg has learned for now, the aid package will not include help for airlines and others in the travel industry. Italy will become the first country in the world to attempt a nationwide lockdown. It is trying to stop the spread of the coronavirus in europes fourthlargest economy. Almost 500 people in italy have died from the virus. Prime minister Giuseppe Conte imposing a travel ban. We end with u. S. Politics. Joe biden hopes to extend his lead in the race for the democratic president ial nomination. Six States Holding primaries today. Sandersn leads senator in michigan. There are concerns he could be hurt by low voter turnout. 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 Viviana Hurtado. This is bloomberg. Alix thanks so much. Coming up, talking more about that liquidity squeeze, more on the angst facing investors coming up in todays wall street beat. If you have a terminal and what to check out tv , you can watch us online, interact with us directly. Just scroll through. This is bloomberg. Viviana this is bloomberg daybreak. ,oming up in the next hour Scott Sheffield, Pioneer Natural Resources ceo. Viviana this is bloomberg daybreak. Im Viviana Hurtado with the Bloomberg Business flash. 802 mike employee in frankfurt testing positive for the coronavirus a Deutsche Bank employee in frank for testing positive for the coronavirus. Other employees may be asked to work from home. An employee at kkr in london also has been diagnosed with the coronavirus. Closing it is temporary both offices in the city to sanitize them. Staff will work from home. That theee points out firm has had employees work from home in its manhattan office. Will give firms more flex ability as it advises employees to work remotely. If they need more time to respond to inquiries, filing deadlines, or investigations, firms can also seek extensions. Im Viviana Hurtado. That is your Bloomberg Business flash. Alix thanks so much. We turn to wall street beat. First up, searching for liquidity. Investors having a hard time handling the record market moves as they face collapse of liquidity. And then robin hoods second outage. The free stock trading app went down again yesterday. And from record m a to Companies Looking for new transaction credit, some are doing better than ever despite the coronavirus outbreak. Joining me is salon a bostick is sonali basak. What are you hearing . Sonali the Market Makers didnt show up. Bloomberg has cited issues in italian, portuguese, indonesian, mexican markets. Issues inalking about the junkbond etf. Did people see the same types of issues when it came to equity markets and Commodity Markets is the thing i wonder as well. I think post2008, we are coming to a point where banks are constrained to a very significant degree, so who steps in and who steps out when it came to marketmaking . People are going to keep an eye on Market Structure in the coming weeks. Alix interesting point. Where you didnt get any liquidity was robin hood. I couldnt believe it. It was down again . How can they not have fixed it . Sonali it is kind of amazing because they said last time, the volatility put strain on the system. A company like robin hood has not seen their way through this kind of market stress. It is postcrisis. The idea was really great. It changed the industry. But the big players now, where fidelity and schwab in the last were upvolatility, they and running. Finra. D discussions with is this going to have an impact on a Company Whose valuation last year was pushed past 70 billion . Alix i would have to say yeah. The last story is what this all means for banks. There were actual deals getting done, and then theres the distressed sectors. Are they going to banks, like, please lend to me . Sonali it was one of the biggest merger malaise of the year despite all the stress merger mondays of the year despite all the stress. Alix it is amazing that happened. Sonali they were definitely still hustling, and trying to find products that their clients are more willing to buy. A lot of these bankers were allowed through the last crisis and have seen many periods of volatility, so they are getting ready to sell things people will buy. Alix i know someone who has a vicks portfolio at bank of portfolio atvix bank of america. Hes, like, 25. Up every day before work because its so stressful. Yeah, because in 2008 you were 14. Again, thereber are very low Interest Rates. We dont really know how this extreme volatility ultimately impacts. The banks volumes were up impacts the banks. Volumes were up, but it could cause a lot to delever. Alix thank you very much. In todays off the beaten street, elon musk created spacex with one goal in mind. Now hes a bit skeptical that he will be around to enjoy it. I would just like to not be dead by the time we go to mars. Thats my aspiration here. Is 18 years just to get ready to get the first people to orbit, we better improve our rate of innovation, or based on past trends, i am definitely going to be dead before mars. Alix he looks so sad. Spacex has been working on starship, the next generation launch vehicle musk plans to use to transport humans to mars. Coming up, we will break down what is driving the 10 year yield into grace yield in todays traders take. If you are heading out, tune into Bloomberg Radio on sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix time now for traders take. Joining me is Damian Sassower of bloomberg intelligence. 10 year breakevens fell below 10 . You are taking a look at that. Damian its all about inflation. The inflation expedition component of the 10year treasury yeild. The real interesting thing israel yields, which turned negative back in january, but on the rally we are seeing this morning, we saw both real yields and breakevens contributing to the move in rates. Im looking at the screen now, and real yields have literally just plummeted. Growth expectations are again coming off. Price to climb is not as big as we think. Alix thats what i have to wonder, how much of that is rewriting for a mobile is rerating for a global deflationary environment . Damian all of the talk has been disinflation, but i think what is really interesting, we at one point had gone below 40 basis points in the u. S. Treasury 10 year. All of that was really driven by inflation breakevens. You didnt see real yields moving all that much. Now we are seeing growth coming off, Inflation Expectations getting a little more reasonable and fighting a little bit of a base at 68. Alix thank you very much. Coming up, mike ryan, ubs Global Wealth management americas cio will be joining us. What do you do when the 10 year yield is around zero point percent . Around 0. 6 . This is bloomberg. Alix welcome to bloomberg daybreak on this tuesday, march 10. Lets take it from the top. That are tailored to particular sectors that are very badly hit. Alix countries play catch up now, saying they stand ready with fiscal stimulus if needed. Japan sets of the Legal Framework to let Prime Minister shinzo abe declare a state of emergency as they put together a ¥430 billion fiscal support package. Enda they have been criticized for a slow response to the virus. They have put in place a system that will allow them to declare a state of emergency if things get worse. Alix in europe, a similar story, as french finance armster issues a call to and italy goes into lockdown. Is better toay it stay home now rather to allow for more cases and higher rate of virus victims. Alix in the u. S. , President Trump says he will unveil plans for fiscal relief. Pres. Trump very substantial relief. Its a big number. Itit made on include may not include aid for airlines. It is not expected to include the travel industry in this particular aid package. That might be coming later, but it doesnt sound like this initial one trump is going to preview to Senate Republicans today will include the travel industry. Democrats are also coming out with a run plan. Alix states canceling large events as cases top 250. To be a russian roulette that has grave consequences. Alix russia and saudi arabia dig in for a long price war. Saudi aramco says it will hit the market with 12. 3 Million Barrels. They are tapping Strategic Reserves around the world. This is a way the saudis can quickly and swiftly get crude to the market. Alix u. S. Shale Companies Cutting capex and retrenching as oil stays around 30 a barrel. We missed that bear market yesterday by a hair. Now youre seeing a rally underway. What everyone sold the most is now being bought the most. S p futures hit the circuit breaker. They are now trading up by 4 . Dollaryen up by 2 . You reverse some of those falls in yield from yesterday. Crude now up by 11 . Joining me for the hour is romaine bostick, coanchor of miss . Rgs what you this is probably going to swing back too optimistic, and somewhere in the middle you will find equilibrium. You did get the start of a policy response that the market wanted. You just did not have that over the previous two days. Thats why you had the s p down because there wasnt satisfaction that there was a response. Got that yesterday, and i think you are seeing that reflected in the markets. Alix is it like a dead cat, no glasses day . [laughter] romaine this is my rally on day. Thanks for noticing. [laughter] alix i think you very seriously all the time. For more on the selloff, joining us on the phone is mike ryan, ubs Global Wealth management americas cio. 2. 6 trillionved dollars in invested assets. We want to get some perspective as to what you are telling your clients right now. What is your biggest recommendation . Mike something romaine talked about, i think one of the things we are focusing on right now is what the policy response will look like. Theres three things we have talked about repeatedly that are going to be critical for the market defined stabilization. First, we need to see evidence that the virus is reaching containment. While we are seeing it in china, we are not really seeing it elsewhere. Second, we need some clarity on what the fallout will be. Thirdly, we need to see policy action. We also need to see it on a concerted basis, not just idiosyncratic policy moves. We also have to have validation of that. We certainly dont want to overreact to yesterdays selloff because we thought that was exaggerated to the downside. We also want to be careful because we want to see validation before we get some sign that the market is stabilizing on a more sustained basis. Right now we are telling our clients to stay put, not to make any extreme portfolio decisions right now, and also asking people to look at, if there are some dislocations in the market, perhaps some sectors that are unfairly beaten up, we want to be able to look over the course of next week or so and see if there is some bargainhunting we can do. Areine obviously, people excited about some sort of policy response beyond just the fed cutting rates, but what is the policy prescription here . What is the policy prescription that the markets want . We still dont have the actual details of how this is going to be carried out. Mike i would say it falls into three camps. Lets not forget we still need a Public Health response, so Public Health policy needs to be theres moneyo being dedicated towards the critical aspects of the onus. Secondly, there is still a role to be played by Monetary Policy. We cant be totally dismissive of what Central Banks can do. But the most important part is a meaningful fiscal response. You heard the president talking about payroll tax relief. That could be one element of it. I think we need to see something a little broader than that because what we are looking at is that the economic and petitions for the Second Quarter are going to warrant some concerted action not just by the u. S. , but obviously in europe and part of asia as well. Romaine does that set us up for a buy everything rally, or should investors be a little more specific in picking out the sectors and specific stocks that could potentially benefit from whatever supportive stimulus we get . Mike to the extent the selloff has been discriminate and cyclicals are hurt more than others, i dont want to buying to be indiscriminate. There are some areas where we are going to see the recovery will be slower. Want to pick in those areas where we think the damage was unwarranted in terms of the economic and earnings potential, so that is where we want to focus our attention first. Alix how are you recommending your clients to stay in treasuries . Do they own treasuries here . Mike what i tell people is there are things i own because i want to own them, and things i on because i have to on them. While there hasnt been a lot of love for treasuries, there is still a critical element to the portfolio because even though they dont provide the income they have in the past, they still provide a buffer and a hedge to market dislocation. We still need to own them as a core holding in our portfolio. That said, we need to find other ways of replacing lost income, and that is why we are focusing on multiple sources of income rather than exclusively the fixed income side of our per folios. Alix mike, thanks very much. I really appreciate that perspective. Joining us from seattle is Tony Scherrer, Smead Capital ManagementResearch Director and portfolio manager. What are you sharpening your pencils to buy . Give me some names here. Wey in terms of sectors, continue to love the homebuilders. Think there is great opportunity and a secular type of way. Lennar and are lyons we own lennar. We have been focusing lately on wells fargo because it is one of the more controversial banks that is one of the cheapest in the group, and we think there is a lot of upside there. Its very easy to write scathing, negative articles about wells fargo right now, and you see them everywhere, so that is your first indication that it is in the camp of contentious and very cheap. Discover indications also offers great upside here. Romaine talk a little bit more about the banks. You talk about those oversold conditions. We are seeing the majority of the financials, the majority of the s p 500 financials, the Kbw Bank Index trading below book value. Of why you would get back in the financials now, when the rate picture is still a bit unclear. Romaine you just gave me a great lead in. This is not the great financial crisis. They are trading as cheap or cheaper now, as you just said, then 2008, 2009. Of 86 million millennials still in very early innings of getting going with their lives and doing household formation activities, the banks have not had thw i have not backs inind to their terms of things that drive earnings. So risktaking and Risk Appetite have not shown up yet, but the banks have continued to do very well. What has been sold here in the last couple of weeks is anything economically sensitive, so banks have gone down, baby out with the bathwater scenario. For all those reasons, they are incredibly cheap, their Balance Sheets are incredibly strong. Arguably, they have too much capital on their Balance Sheet, but even so, they are generating midteens return on equity type of numbers. There are very attractive to us here. Romaine so you broaden that out and talk a little bit more about the market in general, this idea it may actually be in some sort of recession or another. When you look at this particular economic downturn, how long is it . Do you want to be exposed to equities in the interim as we try to work through it all . Tony i think what surprised the street and most people is how quickly the market has forwardly discounted the probability of that. The stock market has basically 100 probability on what you just said to be absolutely true. In other words, we are 100 chance going to recess. That is what the stock market is currently pricing in. It may end up being true, but it is priced in at this point. His is one of our things valuation matters dearly to us. When things are fully discounted and appeared to be putting certainty on a certain thing is when you can take some safety and buying those things. This may be true, and certainly covidt certainly and oil are going to have an impact, but the worst Case Scenario or close to it, we are not seeing today is the bottom, but it appears to be very close. The capitulate story the period seems to be in there, but the margin of safety is back for some stocks that have discounted too far. Alix thanks a lot. Tony scherrer of Smead Capital Management will be staying with us. We will speak to one of the pure permian players in Scott Sheffield, Pioneer Natural Resources ceo come on what hes doing now. This is bloomberg. Alix some breaking news, delta withdrawing its 20 21st quarter guidance on the virus. 2020 first its quarter guidance on the virus. They see a lot of disruption. We will get more headlines throughout the morning. Oil rebounding from its steepest decline in nearly three decades as saudi arabia escalates its price war with russia. For a read on how that impacts u. S. Shale companies is Scott Sheffield, Pioneer Natural Resources ceo. Pioneer is one of the biggest producers in the permian base and holds abuy buy rating on the stock. Now . Are you doing right are you cutting capex, and where . Scott like most companies, i think most will probably go into what are called maintenance mode. They will probably get to flat production. Probably, most companies will drop 1 3 to 50 of their rigs. It is all about getting by. 30, 35,is running 40 oil price tags. Are we going to see oil into the 20s . Alix do you think we will . Scott saudi has made some pretty strong statement. I guess we will see april 1. Incomplete 21, very few producers are hedged in 2021, very few producers are hedged. I am guessing that most companies will not make it. We could easily lose 2. 5 Million Barrels a day by the end of 2021. Alix walk me through the intricacy of going into maintenance versus what that winds up doing to your existing wells and the decline rate. If you are not investing, what happens to those wells . How do you keep your field active in that environment . Scott a company will run a price like 30 wti. They will see what the cash flow is at that level and invest enough to keep their production flat. That is called maintenance mode. Within that calculation, they will make sure they can pay the dividend, so it is best to preserve the Balance Sheet. Nobody wants to increase the Balance Sheet in this environment. Its the worst thing to do. We were there in 1998, 2009, 2014. The best thing is to cut capex as biggest possible, and get to a point where you are not borrowing any more money. Alix when you mentioned that some would go bankrupt, as we see bankruptcies, you need to be looking at that to buy . Scott the could be great opportunities in the next two years. I think the Stronger Companies the biggerr, companies, theres a good article in the Financial Times that modeled all of the companies around the world. Pioneer has the best Balance Sheet of any company in the industry, including the majors. There could be some great opportunities. Alix what happens to your cash flow . At what point does it get dangerous for you . Scott it really doesnt for pioneer. We restructured, as you know, about 12 months ago. We have one of the best margins, one of the lowest overhead counts in the industry. What you want to do is preserve the Balance Sheet. All of these locations in the permian are still going to be there in two years. So when the industry comes back, the companies that go bankrupt come of these locations are going to be owned by creditors or other companies. So the russians are not going to put the locations under. They will put companies under come up at the locations will evolve into other companies and be drilled because we need the permian for a long time. Alix does that mean we are just going to be in this world of intermittent price wars . No doubt if we take 2 Million Barrels of shale oil off the market, that is going to create some kind of supply gap, especially if projects get shut down because of the price action. Can you walk that out for me a little bit . Scott we could easily have a super cycle where prices get too high. So. Shale cant come back, even if we see 60, 80 oil in 2022, which we could now in this environment, it is going to be hard to ramp up production anywhere in the world. We could have a two or threeyear super cycle at that time. Alix are you going to have to furlough anybody at this time . Scott no we are not. We restructured, so we have no plans at all at this time. Alix what are you telling employees and investors right now . Scott we are telling them that we will come out with a press release sometime over the next few days. There was a couple yesterday by a couple of our peers. I think you will see press releases over the next seven to 10 days. Most likely, pioneers will be sometime next week. At that time, we will have an all employees meeting talking about the market. We will tell our employees that we have been here before. On the plus side, we had a five dollar stock in 1998, a 12 stock in 2009. Today we have a 65, 75 stock, so we are better off than in any down cycle. Alix is there any scenario you can imagine where you would have to increase leverage or Buyback Program . What is the scenario that keeps Scott Sheffield up at night . Alix i never affect if we have low oil prices for two years, the world will balance supply and demand, and we will easily be back up to 50, 60, 70 oil at that time. Alix scott, really appreciate catching up with you. Scott sheffield, Pioneer Natural Resources ceo. Romaine still with us is Tony Scherrer of smedes. Thanks for standing by of smead capital. Thanks for standing by. What is the correlation here in your mind between where prices are now and what impact that could have on global gdp growth . , looking at the stock , the entireinstance Energy Sector right now is right around 2. 5 of the s p 500. It is far more important, gdp basis i guess is what im saying capitalization or investor basis, which could be more attractive for energy Going Forward because it is so disenfranchised from what goes on in the market cap stuff today. On a gdp basis, it is far more important. On the positive side, it is a good natural economic shock absorber that helps consumers. That an Interest Rates pave the way for a positive gdp story once the stuff gets absorbed, but the immediate stock we saw massive globally, especially for various other countries outside the u. S. , where it is a more important export and Economic Resource for them. So it is a very big deal, and it was a big shock yesterday. Alix Tony Scherrer of smedes capital, thank you very much. We will talk more about what you do in this environment if you are an airline or transport. This is bloomberg. Alix Airline Stocks just gotten hammered. Delta Airlines Just removing its guidance for 2020. Airlines . Ou buy scott having a strong balance a strongony having Balance Sheet is paramount for that industry. This is shock and awe to that industry. It is not good. Southwest airlines ceo talked about it a couple days back, that he thinks there is a good parallel to what they felt back in 9 11 viviana back in 9 11. This is similar in that way, so the better Balance Sheets will make it through. Romaine but for the travel industry, and the psychology for people like you and me, whether we are willing to get on a plane or cruise ship or go to a theme park, do you see that psychology rebounding a little bit may be as we get more clarity as to where we stand with regards to the Health Response . Tony you know, im not a covid expert, so i dont know what the trajectory of this will look like, but i would encourage everyone sitting to go out and became flight right now. Romaine alix is way ahead of you, tony. [laughter] tony its a time to go enjoy the low prices. Alix great point. Tony scherrer of smead capital. Coming up, markets pricing and easing from the fed. Will proceed in. Tv just keeps getting better. How you watch it does too. This is xfinity x1. Featuring the Emmy Awardwinning voice remote. Streaming Services Without changing passwords and input. Live sports with realtime stats and scores. Access to the most 4k content. And your movies and shows to go. The best tv experience is the best tv value. Xfinity x1. Simple. Easy. Awesome. Xfinity. The future of awesome. Alix this is bloomberg daybreak. I am alix steel. Yesterday we had that terrible day. Today everything that was bad yesterday is bouncing today. S p futures hit the 5 up limit. Off the highs of the session now. European banks are performers after getting whipsawed. Yesterday. Up 10 german bund yields basis points. You see the bear steepening rather than a bull steepening happening today. Some of the big rally we saw in the back end of the curve and crude up 1 . Not reversing where we saw yesterday. President trump promising to take dramatic action to support the economy. He said a payroll tax cut may be in the cards. President trump we will be asking tomorrow, well be seeing the senate and meeting with house republicans, Mitch Mcconnell and everybody and discussing a possible payroll tax cut or relief, substantial relief. It is a big number. Alix barclays has recommended just that, a tax cut for consumers. The author of the note, michael gapen, barclays chief u. S. Golhar,t, and shawn head of Public Policy research joins us now. What do we need to see from the government and then the fed to create a bottom and help sentiment in the market . From the government side we need the administration to talk with congress to find out what will be the largest fiscal response. These members of Congress Talking about paid leave, unemployment insurance, food production, things like snap and school lunch programs. What you will see is this is getting more serious as Economic Conditions deteriorate. Congress comes together on a unified package. We would need to see a greater level of communication to finalize that deal. Romaine we are still in a phase where we are throwing spaghetti at the wall to find out what happens. What is the potential for an error, that we make an error and how we address this crisis and that has a more damaging effect on the economy . Michael i think that is low. Argue isn and i would it is hard to stop the first round of fed. The virus will do what it will do and if we quarantine it mitigate there will be first round of facts. What policy can do is prevent second round effects. We do not need credit clenches credit crunches, we do not lead liquidity to stop flowing. The fed is more cushioned to stop that than a coordinated Monetary Policy response that prevents second round effects is where we need to be. Alix we get that anywhere except japan and the u. K. . Michael i think we will get there, but it feels like we are taking longer to get there. The fed will do its part. I do not think the fed is the only game in town and we need assistance from fiscal. Romaine this is been the drum that has been beaten across the globe. Is this the moment where we do have the come to jesus moment and we get the government to finally step up and say fiscal policy will now drive this and we will not just rely on the fed . Shawn those that were discounting this last week are all waking up to this. Italy in full quarantine. Reactions and europe more serious. You will see Congress Come together. They have been talking about this and you see the house and senate discussing different policy options, but we have not seen a coordinated response. Romaine you think the bluecollar environment is there . We know have you think the political environment is there . We will not just get into and in the mud conversation about deficit spending or debt . Shawn some of these emergency spending bills do not count toward budget caps so i do not think the deficit concerns will be there to the extent they would be otherwise. You get emergency spending go through. The White House Administration asked for 2. 5, congress decided to go higher. Romaine but if youre only talking about statutory caps, doesnt that limit policy tools . There is the idea that anything they can implement will only be temporary, it cannot be permanent. Shawn there will be policy creep. You will see folks thinking about longterm insurance plans in place. We will see the debate,. Now you have Congress Come together and find a more robust physical solution on the stimulus. They will talk about solutions. Last couple days everybody is getting more serious. Alix what should the fed do aside from cutting 50 basis points in the next two meetings . Michael the fed should be carefully monitoring liquidity conditions, market functioning for any signs of credit markets are breaking down. Most people look at the environment and say the Banking System looks fine, wellcapitalized. It is not the problem this time around. The potential problem is that for john corporate sector Balance Sheets, as some of your previous guests have been pointing to. From their point of view they have credit and liquidity facilities they used last time around that could be repurposed in the event conditions deteriorate. Conditions insecure and unsecured funding markets look ok. There is no immediate need. That is where i would cast my vision where i to be on the committee. Romaine what about some of the nonbank companies that maybe need that liquidity and right now are not necessarily covered by the current role . Michael the fed cannot kick liquidity everywhere and they are limited. Many of the cases they would have to act incoordination with treasury. You can do something maybe there is a funding for lending scheme where it could be repurposed against corporate issued debt to get liquidity out there. My point is they are wellpositioned to help cushion against the second round effects and that is where they should be focused. Alix it seems like this is the perfect time to discuss modern monetary theory in a realtime way. You can borrow for 30 years at under 1 and you have a need because of stimulus. Is that going to be part of the conversation now . Shawn i am sure folks will be talking about this. We have seen policy folks have this idea that we should have some signage some percentage of gdp toward infrastructure and social safety net programs. We will see increased discussion on mmt as the election gets closer. Shawn if we do get another romaine if we do get another rate cut, doesnt that pushes into something similar to mmt where the government has to find us in a way they were not used to funding before . Michael certainly the level of treasury yields gives you a lot of Additional Debt carrying capacity. You do not have to go all the way to the fed monetizing deficit and mmt to say there is cal space ands there are longterm Spending Plans that would be helpful. Romaine do you think the demand for treasuries will still be there . Michael yes. Alix when you take a look at the curve and what happened with long end yield, does that tell you we are in disinflation, rerating for Slower Growth forever, or do you see that as this is where the safety trade is, it is less reflective of Growth Potential . Michael i think it is more the latter. There is a premium for liquidity and a flight to quality taking place. I am not sure a 50 to 75 basis. 10 year yield is where we should be when we are looking at the five to 10 year horizon. Maybe it does not need to be substantially above that, but just a few months ago we were around 1. 75, which seems more reasonable. That is still primed for a inflation outlook. Im not sure if it basis points is reflective of that as much as it is a preference for liquidity. Romaine what about when you look at the statement we had yesterday when we had a coordinated statement from the board of governors and the other big financial regulators, this idea that you could get some sort of regulatory relief or little bit of loosening of the strings. Is that a policy tool they should pursue more aggressively . Shawn absolutely. What would be great to see is Congress Speaking with the administration in concert with regulators and the central bank than others so we feel, and the markets have this feeling, that the federal government is coordinating its response. Romaine we need coronation between the u. S. And other governments for this to work . Shawn it would be helpful. I did it a few weeks ago with barclays and london and one of the concerns was a lack of coronation between the u. S. Public Health Officials and foreign Public Health officials. That was something she expressed major concern for. We are seeing that play out not just on the Public Health side, but also the economic side. Alix i also want to vacation for a month in hawaii. That is the kind that does not happen. If we just get this targeted stimulus from the administration , how quickly does that feed through the economy and make it different . Shawn congress can get this done fast. They are on recess. If the emergency is there and there is a crisis, congress can pass the spending bill to get funds for state and local governments. First responders can come back and think about social safety net protections. The question is how quickly will this feedthrough into the economy . Michael payroll tax cut could feedthrough quite quickly. If we are doing a lot of social distancing and not traveling and we are quarantining, it is not clear that either monetary or fiscal is particularly wellsuited in helping demand now. On the others of the story, it could be quite helpful. I think there is a time delay, mainly on the effect that this is a Public Health crisis, not necessarily a normal drop off in demand. Romaine walk that out alix walk that out. That trickles through the economy. Does the fed take back the 150 basis point cuts . Michael slower. I do not think they would go out right away. We think they are shifting toward a world where makeup strategy might be more appropriate. You would expect them to pull some of it back. This is a story where you have wanted to two quarters of weakness and activity followed by a rebound. That is not an outright recession. Lets assume second round effects are limited. I would not expect they will commit to a zero funds rate for an extended period of time. I would look for some of those rate cuts to come back, but a more gradual pace. Alix will call you shape. Michael gapen and shawn golhar from barclays. We want to give you an update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Viviana a uturn from President Donald Trump on the need for economic stimulus. He now says he will seek a payroll tax cut and relief or Industries Hit by the coronavirus. Today the pit today the president is promising to unveil what he calls dramatic action to support the economy. Bloomberg has learned that for now the aid package will not include help for airlines and others in the travel industry. Italy will become the first country in the world to attempt a nationwide lockdown. It is trying to stop the spread of the coronavirus in europes fourthlargest economy. Almost 500 people have died. The Prime Minister is imposing travel bands. He is telling italians to stay home. We end in the u. S. With politics. Joe biden hoping to extend his lead in the race for the democratic president ial nomination. Six States Holding primaries. Mr. Biden leading Bernie Sanders by double digits. There are concerns he could be hurt by low voter turnout. 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 Viviana Hurtado. This is bloomberg. Stopscoming up, energy hurting. We will speak to an Energy Investor on where the opportunities are. Rob thummel coming up in todays bottom line. Bloomberg users, any charts you want, just go to gtv on your terminal and check them out. Gtv. Viviana this is bloomberg daybreak. Pimco up the next hour, Global Economic advisor. Viviana youre watching bloomberg daybreak. Im Viviana Hurtado with your Bloomberg Business flash. We begin with Blackstone Group reportedly on the verge of making one of its biggest bets ever on china. Reuters reporting the firm will take Property Developer soho china private. The price . 4 billion. That is almost twice what sohos market value was in january. Five others will share 100 in damages. They were among 350 car owners who did not sign on to vws 14 billion settlement. We end with wall street brokerages getting a break from federal regulators. Firms will get more flexibility in supervising employers working remotely. Why . The coronavirus. If they need more time to respond, filing deadlines. The firm can also seek extensions. Alix time for bottom line. We look at Companies Worth watching this morning. I am taking a look at airlines. Deltek, american, withdrawing their 2020 financial forecast and they will cut back on flying. The latest and the trauma for airlines. Romaine until we get more clarity, none of these airlines able to get the clarity, you will continue to see pressure. They have been through these downturns before end of managed to work through them. They have backing in oil prices. Ropping lower jet fuel costs, and a lot of people are looking to the government. What is the government do . Alix what do you got . Romaine disney. Seeing another downgrade for disney at bernstein, putting the price target been saying their theme parks are at risk of slow down in traffic as well as a potential shutdown. A lot of people, when you think of disney you think of the movies and all of that. Theme parks are only 10 of revenue but they make up a huge chunk of the most recent profits. That has been a big driver profitability over the past four or five quarters and you have to be a little bit concerned. Alix i think about the parks. One of our producers has an obsession with disney. The third thing we are watching his energy companies, the biggest plunge since 1991. Rob thummel joins us. He had 20 billion dollars of assets under management and specializes in energy investment. What are you buying on sale right now . Infrastructure the market has tried to knock these companies out. 2008, global recession. They got back up. Markets try to knock them down with commodity price in 2015. Try to knock them down again in 2020. They will get back up. These companies are resilient. They generate a lot of cash flow. We stuck to all of the teams yesterday. The stories are intact. The growth will be there. Theyve extremely high dividend yields today. Companies like kinder morgan, magellan partners, these companies are essential, they do not have commodity price exposure. We think they are compelling opportunities. Romaine a couple of those names, i can see the case he would be making. What about the Service Companies . Rob that is the opposite side. Oil prices are low. What happens when oil prices are low . The Oil Producers go back to the Service Companies like halliburton and schlumberger and say we need you to lower your costs. Our revenue is down, we need to lower our costs. That hurts Companies Like schlumberger and halliburton. Those companies will be much more challenged in this low oil price market. Romaine you look at those baskets of companies. What is in the middle . If you want to stay exposed and stay overweight to the Energy Sector, where is the safe play . Rob another place that increased in value yesterday were natural gas stocks. Qt went up in a horrendous market yesterday. The reason why is because if the u. S. Lowers Oil Production in the permian, there will be less natural gas associated with that Oil Production. Rose, naturalices gas was a lot more compelling to investors and likely will continue to be if the u. S. Continues to lower its production over the next several months or maybe even next several years. s or are there any emp even integrated you are holding onto right now or buying . Rob from any gated from an integrated perspective we have a fund that focuses mainly on the Energy Evolution process. The Energy Evolution is occurring in utilities, but also oil and gas. Totaly shall, to tell are doing Amazing Things focusing on oil and Gas Production and also expanding into renewables. Integratedhe primary oil and Gas Companies we are focused on. Romaine when you talk about the punch the market has taken. The Energy Sector is sort of resilient. It has had these plunges before. He look at what is playing out with opec plus. Do you view that as a temporary russia andomehow saudi arabia or work this all out . You do not see any structural changes in the market . Rob we think this is important. Currently it appears the Global Oil Market will be oversupplied. If the Global Oil Market is significant, it is huge, it is 100 Million Barrels a day oil market. Possibly we could be oversupplied does go to 3 Million Barrels a day. That is 2 to 3 of the total market. That is obviously a shortterm challenge, but it is temporary. That can be rectified. Those dynamics can quickly change. They will. No one can afford low oil prices. Saudi arabia, russia, and the u. S. Are the top three Oil Producers in the world. None of these countries can afford these current oil prices. That is why we think this Oil Price Scenario is temporary and we will see higher prices in the near term. Alix great to get your perspective. Rob thummel of tortoise. Romaine, thank you for joining me for the hour. Romaine another great hour together. We go shopping for airlines . Alix i am leaving at 9 00 and i will just breathe on by. Coming up, futures selling off after the most real selloff since the financial crisis. We will have the levels to watch and technically speaking. If youre heading in your car, tune into Bloomberg Radio heard on sirius xm channel 119 and the Bloomberg Business app. This is bloomberg. Alix germany weighing Bank Capital Relief to counter the virus damage, continuing the pirate continuing the coming toof fiscal fight the virus. Bill maloney joints me now. Listen to bill at squa. We did get a pop on the german news. What do you see in terms of levels . Bill futures were limit up. Now they are off the highs. S p futures currently up around 75 points. The levels you want to look at in cash, the first resistance is the february 20 low. Above that, yesterdays high was 2864, and the third resistance is 2090, which is a retracement level. The first level is 2856 and the s p cash. Alix as we see a rebound from yesterday selling, it is simpler for the treasury market as you see selling comeback. What do you see . Down yields went straight yesterday, hit a historic low point. Bounced today. Currently at. 64 . Your first resistance will be. 76 , youe that retracement level. Your first resistance level is. 74 . Alix that is incredible. Lets wrap it up with italy, the first country to go on complete lockdown. Btp is taking a hit. Bill it went down 11 yesterday. Is trading off of the session highs. Was up as much as 3. 8 . That is not the action you want to see. Yesterdays range, resistant 18 920. Those are your levels in italy today. Alix thanks very much. Bill maloney setting you up for the traits of the day. Coming up on the open with jonathan ferro, welcome fells joachim fels will be joining him. This is bloomberg. Happy tuesday. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, from limit down to limit up, stocks dancing back. Investors waiting for President Trump to deliver support. 30 year treasury yields back through 1 . 30 minutes until the opening bell. Good morning. Heres your Tuesday Morning price action. Yesterday you could turn yesterday upside down and get a decent picture of where we at. Fading 80 points on the s p 500. In the bond market, yields up nine basis points to 0. 63 . The dollar making a comeback. Thats begin with the big issue. Investors looking for the circuit breaker. We will need stimulus. Fiscal stimulus. The rates market is screaming for policy action. A concern of a conservative and preemptive mood by policymakers. A whole of gove