A doctor returns to the hospital. Good morning, everyone. Tom keene in new york, guy johnson in for Francine Lacqua and london. We say good morning to all of you. It has been an extraordinary come historic we can. The queens speech, the Prime Minister hospitalized as well. Tell us about london. Tell us about the mood monday morning in london. Guy lets talk first of all about what is happening with the Prime Minister. Under u. K. Rules, there is no Vice President , there is no vice Prime Minister. So what is happening here is heominic raab has been will chair todays cobra meeting, the emergency cobra meeting, and he is effectively in charge of the government. Boris johnson is still in charge of the government, but with him hospitalized, there are growing calls that the Prime Minister needs to take a step back. The understanding is that he has been put into hospital for precautionary reasons, but we will wait to see the exact details. There is no new information be on the news that he has been hospitalized, tom. Tom all of surveillance today will be looking at the markets, about various Economic Issues that are out there. Japan front and center as they consider some fortis form of state of emergency. With first word news is viviana hurtado. Viviana we begin with the Trump Administration saying there are signs the u. S. Coronavirus outbreak is starting to stabilize. President trump and Vice President pence pointing to a day by day reduction in deaths in new york state. The Surgeon Generals warning americans to brace themselves for tragedy. He said this week will be the hardest and saddest of most americans lives. Hit hardestntries by coronavirus all reporting the pace of deaths declined, and that suggests the lockdowns that are keeping millions people away from work and each other is hoping to flatten the diseases curve. Now to the u. K. Prime minister Boris Johnson was in the hospital for the coronavirus. Illness was originally described as mild and there is no sign it is getting worse. His doctors suggested he be in hospital because the symptoms have not cleared up. Negotiators are trying to stem the historic christ rice crash. The historic price crash. One obstacle is that russia and u. S. I arabia want the to join, but donald trump has shown little willingness to do so. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, im viviana hurtado. This is bloomberg. Guy . Tom . Viviana, thank you so much. Let me get to the data. We are having some audio issues this morning, folks. We will try to get those straightened out. Equities, bonds, currencies, churn toes a nice the market. After the surge we saw on friday, it continues today. Mostly i would suggest off a better picture of the rate of growth of deaths in new york. No question about that. And also maybe a little bit about europe, including germany, with some better news as well. Churn isnd market, a what i am going to call it, the curve steepening a little bit. Writing about a resilient for a strongerl dollar. We see that now particularly against the mexican peso. Guy johnson . Guy it is interesting, the feds actions do seem to be working. Lily working with a little bit of a lag as we have seen the pound actually a little higher against the dollar. It was none earlier on the back of what is happening with Boris Johnson. But i think youre right, there is this belief in the market that once you start to see maybe the peak of cases coming insight, that is the time may be to step back in and buy equities. Up two point 5 . We are up 2. 5 . Seet, we are waiting to what happens with opec, opecplus global effort to stabilize the oil market. Ds off by two basis points with some movement in the market. We are seeing the periphery widening out a little bit. Lets continue the conversation. Joining us now is john normand to give us his take. John, there is kind of a growing belief that once you start to see the peak in the number of cases, it may be starting to come into view. That is the time to step in and buy the equity market. What is your thought on that . John equities are not the first thing i would buy because infection rates are slowing down the around the world. The first thing i would buy are the spread credit because there is a backstop over the next few weeks while we wait for curves to flatten out completely. Markets in europe have that backstop right now. I feel like that is the safer way back into these markets. Eight for ds going to be on the equities that someone with if it is going to be only equities that someone wants to buy, you can do that in two to three months time, but the path will be much more erratic. Guy just in terms of how that will work there, either you start at the top, with the credit, and then you work your way back down, effectively the credit hierarchy. I wonder where equities fit in in that structure. You are currently safer in terms of what happens with higher grade credit. Once you start to get to the height to the ig highyield situation, im curious as to where equities fall in. John to me, equities are firsttier. The our second tier. High quality credits. The second tier is equities because they gotten cheap with the crisis and they do not have these direct centralbank support. Identify whateven the backstop is for those economies unless they receive funding over the next couple of months. There are three categories and equities are in the middle. Tom let me be honest here, the first one i am asking today, about the immediacy forget about esm in europe about the immediacy of helping emerging markets. I looked at the 10 year yields, even some of the shorter yields, some of the really distressed frontier economists economies and em economies. The gauge monday morning is, how close are we to a real crisis sense involving world bank and imf action . Do you have any idea on that . This is really a countryspecific call, not an emwide call. The vulnerability is that a number of countries have large financing burdens and they do not have the means to address that. It is really something that applies to the frontier markets, the block smaller emerging markets, turkey and south africa as well. It does not really apply to asia. I think it is wrong to really say that this is i think it is for a handful of countries and some of those are fairly large. But for those countries that do not have access to external financing from the private sector, the investors will need some sort of imf credit line. With us, john normand of jp morgan. We are thrilled that all of you are with us today and we will drive forward the conversation with john normand. Many guess will join us later, terrific work on analyzing many guests will join us later, terrific work on analyzing the virus. And we will speak with the finance minister of austria. Look for that. It is an important conversation, particularly considering europe and esm is a more generalized crisis. Stay with us. Guy johnson and tom keene. This is bloomberg. Everyone,morning, bloomberg surveillance in new york and london. Another week of these great challenges refinance, investment, and societies around the world. Tomjohnson in london, i am keene in new york. Francine lacqua is fine, off today with a muchdeserved they all. Guy johnson helping out bloomberg surveillance. We greatly appreciate that. John normand publishing a wide array this morning. This week and we spoke with joyce chang this week, head of economic research. Don, dovetail in the Economic Forecasting that john, dovetail in the Economic Forecasting that jp morgan is doing with how blind you are flying in analyzing markets. You feel like you have a confidence in observing markets, or are you making it up as you go . Have a moderate amount of confidence about analyzing markets, both what we can observe in hard data and realtime data. It is the greatest economic collapse since the Global Financial crisis. We have seen that has had impact on Financial Markets that are taking them to levels of almost extreme of almost as extreme as they reached in the gse. Even though the crises are not equivalent, the size of the market move, the economic move, that is why you can apply a few patterns and identify some things that are quite cheap, like credit. I think we have also witnessed, through a range of crises and recessions, that centralbank actions matter if they are big enough, if they are without limit, and if they are also very specific to certain asset classes. Because a lot of those pieces are converging around supporting things on spread markets, i think you can have some confidence in how that is going to play out over the next couple of months. Once you move into markets that do not have that backstop, i think it is harder. Going tore going to be the austrian finance minister here in a bit, and basically it seems like it is the netherlands, germany, and against somely form of paneuropean bond issuance versus a more traditional, already funded esm theory. Of course mr. Eggeling and all we have talked to him many different times as well. Can they affect an esm strategy right now . Esm could start operating today if the country wanted to tap it. Although i do think this whole debate is beside the point in the sense that you have had every country in europe announced a meaningful fiscal support package in the past couple of weeks. You have had the ecb commit more buying power to this through the pet programs. There was already the sense that the ecb was going to finance whatever governments want to put on the market. You do not need to have a corona bond to finance this. I feel like this is a bit of a red herring in terms of getting through the crisis, but it would be the opportunity to prove that europe is willing to make some step toward debt mutual is asian. They should use this crisis mutualization. Ual is asia the esm is not sufficient for in terms of capacity for that. Guy john, do you think that comes with conditionality . Do you think that if a country enters the esm at this point, the stigma attached to that is great . How do you get around that . How do you protect countries ultimately from kind of what Market Reaction would likely be if it were if a country were to enter the program . John i dont think there is stigma at this stage, i think because the europeans for the past few years have shown so much leniency in the way they the fiscal side, they could reach any throwaway of goals when it comes to fiscal stability, but i dont think you would have a Market Reaction like that. I think the main point is that now countries have a range of financing canisms that would come through the ash financing mechanisms that would come through the pet program. Between those two, you would contain bond yields and spreads, even as the fiscal position is deteriorating. John, stick with us. Thank you for your time. We greatly appreciate it. John normand is going to stay with us. Tv is the function on your bloomberg. This is bloomberg. Guy guy johnson in london, tom keene in new york. This is surveillance. Lets get back to our conversation with john morgan of that john normand of jp Morgan John Normand of jp morgan. We are wondering what type of shape we will be in in terms of coronavirus and have and the impact it will have on the economy. Will it be a that are you or v . My best guess is a sharp incline out. Give me what you are using to model what kind of recovery we are likely to see here. John the historical precedent but that the economy, response to a markets do, meaning six out of the last seven recessions, the recovery has been as sharp as the move down into recession. But looking how equities, credit, commodities, currencies, bonds paved after that, there is so much variance that i dont think you can use as a starting point. What will the economy do and therefore what will the markets do . You have to keep taking these on its own merit. We know that pretty much every country except china is going to go for a very gradualist approach in terms of the opening economy. That is why you are going to get a much shallower move back to normal growth than what you have seen in the past. When you look at what that will mean for markets, i think equities are going to trace a u, meaning they will go up, but a slower pace than they went down. Credit will likely trace at a b because Central Banks are buying that and companies are reducing buybacks and dividends, all the kinds of things that can give you more momentum in the credit market then you will have in the equity markets. And bonds i think are going to trace a l, meaning the yields will go down and stay down because Central Banks are implicitly saying they want to cap, make it much easier for companies for countries to like buyingngs government bonds. The shape will vary a lot across markets going forward. Guy john, stick with us. Thank you very much indeed for your time this morning. We really do appreciate it. Of normand, jp morgan, head cross asset strategies. I want to turn our attention to what is happening in austria. The austrian finance minister joins us now online. Mornings been news this that austria is looking to maybe reopen its economy. The date as to when we will start to see the Retail Sector coming up. Austria planning to reopen small stores, shops from april 14 and other shops by early may. How do you have the ability right now to be able to do that . The planningll, case, the infection rate keeps dropping down as it appears to be in the last days. If this is the case, that we have established a plan. Can stepbystep reopen the certain go back to a extent to normal life, but always under the condition that the virus is reducing. Clearly one of the factors that is going to reduce the virus is people staying at home, and getting that balance right is going to be incredibly difficult. Italy has certainly learned that the hard way in the way that it rolls out its restrictions. Can i take a step forward now . We are going to see a year of takinginisters group place tomorrow. There is expectation that the currencies that the focus will be put on the currencies with respect to esm. Do you think that access to the esm will come with some degree of conditionality . Gernot first of all, let me say that in this difficult time for the whole of europe, we have to keep up solidarity, especially with the countries that have fiscal problems and that have high debt ratios compared to the gdp, and we have to take measures that those countries are still able to finance themselves on the capital market, because otherwise it will be a disaster for the whole euro area. Within the European Union, we have different instruments, different measures that we can take to enable those countries to keep up with Capital Markets. One of them is the european stability mechanism, and within enhancedyou have Credit Condition lines, and those are a possibility for small or lets say more flexible conditions to be able to help with those countries. Coming along with may be the possibility of the ecb with maybe the possibility of the ecb to use they are able to buy more bonds from countries that are in trouble. Mr. Finance minister, please, please stay with us. He is the austrian finance industry, there are no blue mall. We are thrilled that he is with us today. Let me look at the data right now. I really want to look at the resilient daughter dollar but againstat euro a decidedly weaker japanese yen. Please stay with us. This is bloomberg surveillance. Good morning. Good morning. I am tom keene. All sorts ofg out stories including Prime Minister johnson in st. Thomas hospital in london. He is resting there. This is one of the ancient hospitals of london, timed back to the 12th century. In the 21st century, the Prime Minister rest there this morning. We continue with the austrian finance minister. We are thrilled he could join us. There is major tension over using already versus thepaper issuance of an allencompassing european bond. This is a heated debate. Minister, i guess it is germany, the netherlands and austria against everyone else, but that is too simplistic. Give us the divide you perceive versus those that want to use the esm and those who want an issuance of a new fixed income instruments. Goal is to uphold the euro system to help each other if needed. This can be achieved by the instruments and measures we have already in place. Therefore, i consider europe bonds lets say not so serious. Everyone knows he would have to change the fundamentals. This is not easily done, it takes a long time. Never be in place at the right time to fight the crisis. Considered a debate. What we are in favor of doing is to help countries that are in problems in troubles on the Capital Markets because of the high debt ratios. We have to help them to stabilize the euro. By using different mechanisms we already have established after the financial crisis years ago. One of them is the european stability mechanism, but there are other ones like the European Investment bank and other measures. Behave enough measures to able to help each other if needed. Esm bew quickly can the utilized to provide relief . Estimate overnight. Credit,ake an enhanced it would be possible to decide lets say in the evening. The next day, you can draft the mou and it would be able to have this credit line in place. Tom to come back to what you , id in the previous answer assume therefore that you do not believe that the french proposal for joint insurance joint issuance of recover any debts recovery bonds. Lets call them krona bonds, you dont think that would work . It depends what you mean by those bonds. Bonds,alk about europe it is from a technical perspective the mutual is asian of debt this is not allowed within the european framework right now. Possibilities to issue bonds over a certain institution, for example the esm. Coronawould call that bonds, why not. Why not call them krona bonds. Also other possibilities. You have to differentiate what you mean by corona bonds. Tom anything that includes joint issuance but it does not Agenc