The actions. Not just high yield indexment many of these outliar assets are showing a little bit of relief i suppose you could say. What does that say to you at ubsf Financial Services . Lisa i think its very important that the fed did what they did. Obviously after easing tremendous amount of of keep Interest Rates low, financial conditions continue to tighten f you dont have access to crede at this time creates a problem. To prevent unnecessary insolvency we think is very important Going Forward. We think the fed action is positive overall, but we dont think this is going to be just a straight shop upward. We do anticipate continued volatility for the less of the year. Lisa if thats the case vonnie if thats the case would you hold your fire or start looking for places to put some of the dry powder to work . Lisa we had come in to this recent fed policy and fiscal stimulus long high heeled. Markets had gotten to the point where they became so bad it quickly, spread quickly and widened. For an investor you are really compensated. In that scenario right now we wouldnt sell high yield even though thursday we saw one of the biggest moves in a decade with high yield returning over 3 . With the spread coming in about 150 basis points. We are holding the position. If the market continues as volatility comes around and we go back to the near spreads the high yield index at about 1100, we would look to add. This is not a leapin scenario. You have to go across average. More importantly your Holding Period has to be longer because there is too much uncertainty. Vonnie what is that in terms of length . Your holding trade. Lisa vonnie the pandemic will get better or rebound, right . Lisa i think thats great point. Financial markets have a measure of return. This is extremely difficult time. A huge range of uncertainty. We dont know when this will end or exactly when the economy will stay open. When that happens which we anticipate in mid may it will be a process not an event. The Holding Period has to be a little longer. Maybe 12 months. Again to your point, we just dont know. Vonnie earlier on we were speaking, the federal reserve, he thinks we are going to avoid inflation for the time being but we very likely wont avoid disinflation. How dangerous would that be for the assets . Lisa i think the market was actually if you look at the inflation rate, you had two shocks. One from the shutdown and another from the price war. If you look what the market was pricing in, at one point it was pricing in over the declationary scenario. Our outlook is one of the reasons the fed is able to move as quickly and largely it has is because inflation hasnt been a concern. Going Going Forward, because to your point, we all own treasury inflation securities. Thats not because we believe it will be grown to the demand side, could you have supply side shocks which is a tax to the consumer. A tomorrow, six orrow, month, overtime we think inflation may move higher. We dont think it will be a large concern in the next six to eight months. Vonnie what are you liking now at u. B. S. . Overall we would have the credit side over the equity side. We kept your point fairly conservative. We are neutral fixed income. Neutral equity. We dont think this is a time you lean in. But we like asset class that is offer fairly good field if you are compensated for that given the Market Sentiment had shifted poorly so quickly such as high yield. On the equity side, we do have a tendency, we are neutral on the equity side in terms of our asset allocation, but we like Consumer Services over technology. We do think that this will be a gradual rise higher, but the questions not how poorly the qui will be in 2020, but really if in fact it does recover in 2021. Vonnie you talk about credit. Do you think the fed will need to extend crede snit it talks about credit being available. And that it will get involved if necessary. What do you think will be the necessity of this . The idea that it will has caused conditions to ease a little bit. Lisa it has. The markets got in front of itself a bit. The markets pricing on fed action. And there is still more they could do. They have the money to do so. I do think the market relies on the fed to continue to put policy in place, to unfreeze the credit market, loosen financial conditions. Thats what i think they are looking for the market to do. I dont believe, again, this will be something that will be a linear from now until the next six, eight months given there are unknowns. The market is relying on the fed and the coordination of the global Central Banks to continue to loosen financial conditions. Vonnie what will be the next action that comes from congress . Quheas needed now whats needed now . Lisa thats a great question. I think you might move in terms of we have we have a lot of fiscal stimulus. I do believe at some point in time mortgages, Mortgage Services industry is going to have to take a look at t obviously as we know the Mortgage Service industry has been under a bit of a liquidity constraint geffen the forbearance, they have shortterm cash flow uncertainty. I do think that will be part of what we see in terms of Going Forward is look at the Mortgage Market and consumer. Vonnie we have been talkingle ole it multifamily homes, if looks like rents are being deferred or not paid by people in residential buildings, but when it comes to commercial rents we are seeing those hold up quite a bit. Does that give you sense for what the economy might look like when we do reopen . Will we see broad changes to this kind of an economy . Or will we go back to what we knew . Lisa fortunately both the residential and commercial market we are in very strong hands coming into 2020 and before the fires hit. We had great depth. Equity in the commercial market. Low cap rates, faults. Same with the residential market. Household Balance Sheets were strong. These are all very good signs to see. However, again, given the magnitude of the shutdown, give the magnitude how much this may affect real estate, thats one investigator to see in the multifamily. But i dont believe that this is going to be something thats going to be that all going to be well in the world. I think there will be a lot of volatility. You wont know until the economy opens up. Fortunately we are in very strong hands coming in. Vonnie thank you so much for your time. Leslie falconio. Time to check markets. A deep dive. I want to take a look at across that board earlier as you were noting the s p 500 more than 2 . Sort of deteriorating as the market open continues. They are selling 10year yields. Yields getting left here by about two basis points. There is a little of buy back into the vicks. 44 is still relatively nume relative to where we have been in recent weeks. That means everyone is selling, going into the bloomberg dollars you can see up marginally here of almost. 1 . We know the story today is about crude. It is up 1 . As you can see erasing some earlier gains we were seeing. I think you and all your guests have argue 10 Million Barrels a day does not cut it when you have seen demand destruction of 50 to 70 or so. At the board again look at fun flows. This is interesting. You have four straight weeks of inflows into l. Q. D. The second largest inflow of any e. T. F. We have seen last week. And a lot of Investment Grade demand you have been seeing by what the fed is buying the last week had the last week since march 27. Thats when it was up 9 . March 27. That week l. Q. D. Was up 15 for the best week ever. You are seeing some strength here within l. Q. D. I will look at the board and take a look at some of the individual stocks that we are following. Caterpillar is one that i will mention. They are getting cut here as you are seeing a lot of exposure to energy now means that banc of america, merrill lynch, turning bearish. Vonnie taylor, ending on a note. Vonnie bloomberg markets. Joining me on the phone is the saudi energy minister. His royal highness. Following that Historic Deal in terms of thee cuts, its the most ever. On top of that it ends the price war. Your royal highness, thank you for joining me. We had this Historic Deal, yet the market seems to be shrugging it off. We are seen nymx crude around 23. Brent north of 31. Do you think it wasnt enough . [no audio] im sorry. We might have lost you there. If you can hear me im sorry. Put it my mistake. I wanted to ask you about the market situation. It seems that they are shrugging off. It was historic, largest ever in terms of cuts to end the price war. But we are seeing the market relatively flat. This is only talking about what we are doing which is 12. 5 Million Barrels when you take the 9. 7, plus the addition we put from today our production and output. And another million from d. O. E. And another 500,000 from kuwait. Ou will have a less of a total 12. 5 million. Members, 0 we, many including including the invited to pull out approximately seven million. It would be 19 something. 19 1 2. Will make an e. A. Announcement of some wednesday. Half of which would be part of it would be production. And part of it would be two Months Program to enhance the s. B. F. Maybe the fact is also that last week you had quite a marketable improvement in prices. He good old you buy into the umors and challenge to the acts or the news, is here. Im quite sure that its the other producers come through with their theirs, will you have an incredible number which i dont think anybody ever thought the whole world would cooperate. Market seems uncertain and quite fragile when you look at the demand side. Do you think you are going to have to potentially wait off on tapering and cut deeper in june . We are keeping all options open. Think the new spirit and new arrangements, including cooperation with the other producers mindful of their National Circumstances including the new spirit within opec and trust what else to demonstrate, then this is a way to show the whole world that we are here, up and running, and acting responsibly. With that in mind, it doesnt take a hero to predict that this be it rrangement genetically created as a result of this extraordinary situation would not also be attentive to any further we are still hoping the situation can be mitigated within the next couple or hs or less uncertainty will prevail as opposed to more certainty. I hope that once we turn that rve away from the descending curve, things will be a lot better and things in terms i believe i can speak of saudi arabia that as long as all of are rtners outside of us ready to do anything necessary. We would be the first to commit and last to abandon our commitment. Just five weeks ago you and russia were headed towards quite nasty divorce. Where does this leave the relationship now when all is said and done in two years, could we see another price war come back . I will carry on with your method. I wouldnt call it a nasty divorce. Like any family they go through differences. But usually families they keep it to their inner circles and indoors. It all depends on the family. Is ond of this family strong. And like any time, they go through reservations. It actually improved the resilience of any family once they go through some troubling time and sort it out. m happy to say that we are up and running as a family we are more resilient and much more strong. Whether any potential crisis emerge in the future. Is the United States now part of this family . Disappoint. We dont need any divorce stories. I want to know who is the most important people in the deal . We have seen President Trump tweet a lot about it. Are you surprised that an american president is pushing for Higher Oil Prices . Job to defend the president. I will have to be fair to him and speak up with the truth. It this week, at which is creating jobs and communities, creating growth, creating income, creating rosperity big contributor to g. D. P. , creating Service Sectors its e protective and wellbeing looked after. I hate to see any president of any country who would not do that job. I want to ask you finally about mexico. Thursday evening we know the mexican oil minister, she walked off and left. Tough negotiations. They ended up having a bit of a diplomatic victory, only cutting 100,000 barrels a day. Are you worried what kind of precedent this would set for some of these smaller producing countries . No. He didnt walk out in the with the meeting. She had other things to do. But the next day she was with us at the g20. And last night she attended the meeting. In fact she was gracious enough to ask me as being the host of the event whether if i can agree to the terms and conditions of told her i t, and i will go with the consensus. One of our oversights in doing these is we did not look at the agnitude of the situation. The cut that we asked mexico to o. What we have agreed with them now is not the end of the story. We agreed for the two months to develop. We are still going to be talking with them on certain ways and means of enhancing their commitment and obligation. Wever, they have their own issues they are mindful of. I must confess there was a bit of a reverse side from us in that area. But i have no doubt i would not question the commitment, i would not question the they can do whatever they can do if it is within the ability of the government to do according to their constitution and their government structure and relationship between the government and the others. Thank you so much for your time. I know you have a really busy last few days. That was his royal highness, the saudi minister. Crew trading ad 31. 62. Bloomberg, back in two minutes. From vonnie live from new york im vonnie quinn. This is bloomberg markets. Only very, very few stocks are higher today. Amazon being one of them. It is a down day for u. S. Equities. 2 apiece for the Dow Jones Industrial average and the s p 500. The nasdaq, its down from us. 9 percent. Elsewhere we have treasury still in their range. The 10year around 74, 75 basis points. The dollar index at 99. 53. Vicks slightly elevated but still around 44. 15. And crude oil up 20 cents. You heard the Saudi Oil Minister talk about the agreements. Stocks tried to railly on the agreements but didnt make it through the morning. We are starting the week off on a negative note. Stocks in europe are not trading, its a public holiday. More next. This is bloomberg. These days you need faster internet that does all you expect and way more. Thats xfinity xfi. Get powerful wifi coverage that leaves no room behind with xfi pods. And now xfi advanced security is free with the xfi gateway, giving you an added layer of network protection, so every device thats connected is protected. Thats a 72 a year value. No one else offers this. Faster speed, coverage, and free advanced security at an unbeatable value with xfinity xfi. Can your internet do that . Welcome back to bloomberg markets. I am alix steel. You heard the saudi arabia side of the oil deal, now lets hear the u. S. Side. Scott, good to catch up with you. Your thoughts on the deal. Alix. Thanks, i want to thank the president for getting involved with putin and Mohammed Bin Salman and bringing a Historic Deal to bear , a nine. 7 barrel a day cut. The sad thing is it is probably not enough. I was surprised how the press releases to amount of the g20 with regard to the u. S. , canada, and brazil, it was a week 3. 7 Million Barrels a day. No cuts. 5 million from the g20. No cuts. That should have been the finishing touch if they wouldve put that part of the deal together, it wouldve been a homerun. Oil prices are up a few pennies. We needed something more than 10 Million Barrels a day. Alix how much will you cut in relation to this deal, voluntary or involuntary, it will you cut extra . Scott we are testifying tomorrow to the Texas Railroad commission and are asking for a 20 cut. We probably faze it back like opec has. It is one month at a time. We are still asking the commission tomorrow for a 20 cut for the first month. As you know, may and june are the worst month. It is a high storage. All of the cuts you are hearing about from eia and the u. S. And canada, it will take a long time to see those cuts. We need immediate cuts over the next 60 to 90 days. Ell be asking for 20 cut ,lix the last time we talked you and parsley had put this delight, asking all texas players to cut 20 . I asked how you felt and you do not seem totally optimistic. Now you have the president behind the cuts and the global oil community, what is your read on what could happen . Scott it could go either way. We have the same amount of pros vs. Cons. It was about 5050. We feel bad for the medium and small producers. They will be totally disadvantaged when storage does get hit. A lot of the companies will not get the crude oil the gulf coast. Most of them will be shut in. We are doing it because of waste. Today you see the 23 for wti. We are getting six dollars last. It is called the storage effect. We are getting 17 for midland and 11 to 12 for delaware. Selling oil at that price is a waste and that is what the commission started in 1929, preventing waste is why they made their decision in 1932. Isx does this deal as prices . Singledigit oil scott i think it still could. I think the 9. 7 Million Barrels will not be enough. It is late. Sat we had to go through the last six to eight weeks since the meeting in vienna. We lost 10 to 15, and we need to take the next step. The g20 needs to come through on true cuts, in my opinion. Can you give us insight into how quickly you can turn on and off production. Tamari testify the texas road commission, everyone cuts 20 . When does that come off the market . Scott we are looking to start may 1. I would also tie it to the health it is important to tie to brazil, tied to canada, asked further g20 health. I would hate to see texas do it by itself. Tie it to the g20. Lets get a bigger cut, lets