You see it in the markets where for the first time in ages, we have sort of got spaces across equities, bonds, currencies, commodities. The focus is on europe. It really pulled back toward the tendency of disinflation and deflation. The urgency of stimulus in europe is really front and center today. It certainly is and we will see if leaders agree on something. Lets get straight to the bloomberg first word news in new york city with Viviana Hurtado. Viviana President Donald Trump signed an executive order to curve immigration. Green cards are currently on hold. They allow foreigners to become permanent residents the president says that will limit competition for jobs. An exception is being made for medical professionals and researchers. The u. S. House is expected to approve today the 484 billion rescue plan. The bill adds more money to aid Small Businesses plus money for hospitals and coronavirus testing. U. S. House Speaker Nancy Pelosi says her next priority, a major aid package for state and local governments. That sets up a conflict with Senate Majority leader mitch mcconnell. He wants to slow the doling out of federal money. Europe is inching its way toward a two point 2 trillion coronavirus recovery plan. It may never happen. Leadersuropean participate in a conference call. Germany and the netherlands dont want to be stuck with a bill. Oil extending its recovery from the record plunge earlier this week. New york oiled jumping after swinging between gains and losses earlier. The market shrugging off data. It showed u. S. Stockpiles have risen to a threeyear high. Global news, 24 hours a day on air and at quick pick by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. You. Thank greatly appreciate that. Currencies. Nds, there is a huge narrowness to this market. With that, so items of interest. Yen. Ger turkish lira really supported by the turkish government right now. They intervened at the seven level, a huge emotional level for turkey. Yields are low. Im watching the 30 year u. S. Bond. It is not newsmaking today, but nevertheless, this element of everflation and deflation more so in europe. Francine european stocks are fluctuating. Crude oil rising to about 15 a barrel in new york. I think a lot of economist or taken by surprise by those ugly numbers when it comes to services pmi that were much worse than even forecasts for the euro area but also for the u. K. We also look at unemployment figures due today in the u. S. That will give us an indication of world growth. Crude fluctuated a little bit. Trumpvanced when donald ordered the sinking of any and boats that harass u. S. Ships. Joining us now is jeanette henry, global chief economist at hsbc. Thank you for joining us. What are you looking at to give us an indication of what kind of our session we will get . Haveat how Many Companies access to government loans or is it just when the lockdown eases . Janet really, its both. The sons of the skill of our session, you can look at it the sense of the scale of recession. By anyones estimate, the level of activity is down by about a third on just about anything you measure, but particularly on services versus manufacturing. Depending on the peso puts the lockdown measures are eased on a sector by sector basis, different countries, you can then gauge the scale by which it effectively lessons. Beyond that, the recovery absolutely depends on the scale of stimulus and lifesupport that is being provided by these cases, grantsome to ensure that workers are in place to start spending again and working again and companies are able to get back to operations. Even during the recovery phase, you are going to get ongoing encrypt season for a lot of people, there wont be jobs to bankruptcy ongoing for a lot of people, there wont be jobs to go back to. Francine i dont know whether the negative territory for the wti may contract is an indication of what we will see im sorry, april contract. It is much uglier than we thought it would be. Janet that is true, but you have to remember with pmi, they are diffusion industries. It is hard to imagine that anyone thinks they got better over the course of the last month. The contraction in q2 is going to be huge. Things are down about 30 or more in april. Quarterly gdp is going to be down depending on the lockdown measures. Anything between 15 and 30 . We have even had comments like that from the oer in the u. K. And the french government. Numbers for the u. S. And europe, the gdp contracts by 6. 5 . Some eurozone countries, it is more like a percent or 9 00. At some 8 or 9 . Tom janet, good morning. I just wanted to say that no other house has captured the moment over the last year even two years like hsbc. Bloomsination of david foreignexchange dollar resiliency and steve majors working bonds has just been a miracle. When you look at the framework of their work and dovetail it into your economics, is just a simple, large institutional misjudgment about the ability to recover to any sense of normal real or nominal Interest Rates . Think we knew before the pandemic that we were already in a very low, hostile world. The chances are, if we come out of this pandemic, we are going to be in an even lower hostile world in terms of lower for longer view. Brought er really bought into a strong revival in the euro because some of the structural challenges. Globally, we have low Interest Rates, but in europe, you have a divergence of Interest Rates where you have a lot of debt and very low growth. Some countries within europe, you have actually got quite high Interest Rates on a relative basis. Structural challenges facing europe will still keep favoring the dollar. Thisis quite important to and i think the pricing element is important and we saw further evidence of that in the pmis just in terms of nearterm impacts on inflation. Inlower we going to be for longer of smooth curves and of a quiet within low real Interest Rates and even negative real Interest Rates, or do you sense a large volatility as you link economics to finance . I think there could certainly be a degree of volatility. It depends on the discussion about not just the pace of the recovery and whether it is a kind of linear recovery or much more staggered because we have to start shutting down parts of the economy again. We already saw evidence of that coming through in asia. Also uncertainty in inflation. Oil has been extremely low. That could reverse because there are could be there could be huge cutbacks as we get some reforms in the normality of demands. The market could easily fear that inflation picking up, oil prices are going to rise sharply. Food is rising sharply. This policy stimulus is huge, but a lot of that probably proves quite temporary. I think there will be a degree of volatility around it. We know there are huge declines globally and policymakers are desperately trying to gauge the speed at which the supply and the economy is going to come back versus what delivering will due to the demand side. I am clear on the structural view, it is still financial refresher where if they get a bit of reflation, they will try to erode the debt, but the broad, structural story, low inflation, low Interest Rates, we think still holds. Tom it is a rare interview. At thrilled to tell you that 1030 this morning, i will speak with David Malpass of the world bank. I really want to learn the world banks response to pandemic, how he would project their resources worldwide. Stay with us from london. From new york, this is bloomberg. Tom good morning, everyone. On theerg surveillance thursday. Jobless claims, we do that at 8 30 this morning. That will be interesting. Janet henry with us right now. Francine lacqua in london. I want to talk about the Shanghai Banking Corporation and your view on the veracity of the chinese data we are getting. How does hsbc, with all your resources on the pacific rim, how do you adjust the chinese data . Janet like everyone, we look at the reported data and i think everyone uses sector data from their Company Analysts and such like. Have asure others do, we back to work kind of indices. I think the difficulty that china faces in the Second Quarter is they have started to get back to work. The kind of back to work measure we look out for china, certainly for march, we were seeing lots of improvement in the data. It was almost a kind of 90 economy particularly for a lot of the larger manufacturers. Now, what china itself is facing, obviously, is the weakness of demand elsewhere in the world. There is already anecdotal evidence that large manufacturers on the coast are now seeing some other export orders grind to a halt. I think this is critical because you are also seeing it in some of the other asia data. Isnt quite as back to normal as has been hoped. We may well see that increasingly in the coming weeks in terms of the china policy response that comes through. I think what we are seeing in the china data as much as everywhere is a degree to which you can get your own domestic economy back on stream, but if the Global Economy is still in trouble because of the pandemic because that hannah mike has not been contained at the global thel there will because pandemic has not been contained at the global level, there will still be feedback coming through. To see someng stabilization in q2 from the. Ind of march levels because china and asia seem to be ahead of the curve in terms of having dealt with the problem and slowly reopening the economies, will they have an economic advantage in six or seven months from now . Is there a pivot . T it is actually a bit variable. In china, we are talking about everywhere in the world we have seen a better and faster monetary stimulus than ever before, i bigger and faster fiscal stimulus than ever before. That indicates for most of the world, that hasnt been the case for china. China has erred on the side of caution, taken a longer term receive thented to sum of the potential misjudgment in the past where they ended up in too much debt. Now, they may do a little bit more, and the rest of the world would benefit because in europe, we are talking about reconstruction. In china, it should already be that they spend more on investment spending down the rest of the world and the rest of the world could potentially benefit. Some countries have done an excellent job of containing the virus. We see that in the korea data, the taiwan data. But we have obviously seen what because ofd in japan the late stage of the lockdown. Also a bit of a picked up in the number of cases coming through in the case of singapore. Some parts would revive, but other parts of asia are actually good experiments for what might happen in europe or the u. S. Should we decide to end the shutdown or lockdowns at an earlier stage. Europe, there is quite a lot of hope i dont know if there is not much hope. Some leaders say they may come up with extra stimulus that would put europe back on its feet. Others are much more pessimistic given the lack of solidarity in the first couple of weeks when italy was hit by the virus. What can i do to show that europe is back in business . Janet i think that we are getting a lot of stimulus out of europe, but a lot that we are getting is mainly more of a life support measure. It is not about the recovery. A lot of the hope today is on this recovery or reconstruction fund. That is what you keep hearing about, whether it is 1 trillion, 2 trillion. In many ways, this is what the market wants to hear. Investors want assurance from eu leaders that effectively they are going to come up with some kind of measure that is going to lower or bond yield, particularly in the more highly indebted countries within the euro zone. Obviously, there has been a lot of discussion about common debt issuance, particularly over the longerterm. I think it has become very clear that anything we get and i think it is still very hard to come up with something concrete today but anything we get will probably be quite temporary. Obviously, Angela Merkel has made comments about using the eu budget. Has even been talk about leveraging up the eu budget. We know that the lasting solution is going to take a lot longer, but something shorter i come through. You so much. Nk it janet henry there, global economist at hsbc. Coming up, we hear more from the Credit Suisse executive. This is bloomberg. I didnt expect that when i took the role on the 14th of february, but within less than a month, a lot of things have changed. Significantssume a reduction in gdp in the Second Quarter of roughly 20 in the u. S. And in the high Single Digits in europe and switzerland. For the full year, we expect recessions not only in the u. S. , but also in europe, and to a lesser extent, and switzerland. Francine that was our conversation with thomas oftstein, the new executive Credit Suisse after they set aside more than 1 million. Billion. 1 they try to figure out whether that changed anything. He said that didnt. That was the little but unlucky. We talked also about global market. What is very clear is that 1 billion is one of the first european banks to try to do what the u. S. Banks to to try to take charge of provisions upfront. In what a change, a change body language as well from the arch foreigner to the gentleman from the university of zurich. What did you note in the body language . Francine it was over the phone, so it was quite difficult to give you any insight into body language. The joys of working from home, tom. Ball, butve a crystal certainly, he was a good sport about it. He said he took over february 14 and was definitely not expecting to be hit by the virus. He is a Credit Suisse veteran and so he knows the bank inside out, but as we said, baptism by fire. A couple of weeks into the japanese have to deal with this. Tom it will be interesting. It is a huge change for that bank and we will see as we get beyond this terrible pandemic. We are going to get an update on the American Perspective from london Leslie Vinjamuri will join us from Chatham House. An extraordinary day yesterday in washington. Stay with us. This is bloomberg. W . W . Uhiono in order to protect our great anrican workers, i signed executive order temporarily suspending immigration into the United States. This will ensure unemployed americans of all backgrounds will be first in line for jobs as our economy reopens. Tom the president of the United States on this thursday, it is a perfect time. The news flow has ebbed a little bit. It is remarkably quiet, wonderful time to catch up with Leslie Vinjamuri from Chatham House as she observes the u. S. Ballet. Every single move, pandemic or no pandemic, is colored by politics, and yet Vice President biden has been essentially invisible. Are you surprised . Leslie it is not easy to be visible if you are not on the task force, you are not the president , you are not a governor giving briefings, so this is a challenge. The last thing any candidate needs, least of all Vice President biden who cares so much about the health and economy, is to take this and make it a political moment. We are in the middle of a primary campaign. Clearly that has been decided and the campaign is struggling to figure out how to work forward in this virtual growth environment. Tom there is a unique american politics so different from europe. Explain to our audience the rocky an individual first tone that you study out of washington. There is a couple of things leslie there is a couple of things. Idea is a rejection of the that the government comes in and takes control of the economy, the healthcare crisis, and your personal liberty, ability to move. Europe,not lacking in but that sense of the welfare state is much more embedded and culturally accepted in the u. K. And more so on the continent. We are seeing that played out and it is driven. Americans respond to their leadership certainly in a crisis of this scale, and the politics that are driving choices by state, that read Blue Division red Blue Division is very clear, when to open up different state, that is where so much of the focus is now. We are seeing so much debate. The statement you just played out by the president of the United States on immigration sends chills down my spine, which is a big thing to say after three and a half years of this administration. That is an extraordinary statement and we know it has days, thereback, 60 are a lot of exceptions, but is there a health case to be made for shutting down green cards 60 days . It is not obvious. Francine leslie, good morning from washington. How is President Trumps popularity now . Leslie there was an initial spike. Highght not have been as as it would have, but that has tempered. The Approval Ratings we had seen earlier are not as high as they were, but it is very hard to read off of the current ratings of the president , where that will how that will unfold and where that will lay out. Play out. The key things to look at is how does the Health Crisis develop, how Many Americans die or are sick . The economy, how many will keep their jobs . Thirdly is the media. This president for better or for worse, will be speaking and claiming that media space every single day for a long time. To go back to toms question about biden lack of visibility. Ratings are coming down, but there is a big question of what the president will claim as success and what people will attribute to him as failures. If the unemployment continues to go up and the economy does not get rebooted, do they blame the governors or the president . These are complicated questions, difficult to have a clear read on. Francine another difficult question is, come november 3, you are casting that vote. Do you judge the president on the response to the Health Crisis or do you judge him on whether you still have a job or not . Become i think this will very individualized some people will feel the impact of the Health Crisis most prompt prominently. They will worry about preparation for their next the next pandemic. Others will feel it in their pocketbook. There is a question of demographics. If we see online voting, that is one thing. If there is a question, Older Americans will be reticent to come out and vote on the street when there is not a vaccine. Young people might be more power to vote. We see the unemployment, joblessness hitting under 45yearolds more intensely than the Health Crisis, so the Economic Impact will drive the under 45 population. Leslie vinjamuri with Chatham House, thank you so much, her view from london on what we see in america. With our first word news, here is Viviana Hurtado. Viviana donald trump shifting his tone on georgia and the governor. He disagrees with governor camps decision to reopen the state. Parlors, movie theaters, and nail salons can start reopening but the president says it is too soon. Europes economy suffered a massive blow this month. Private sector activity falling by more than a half. The drop was far bigger than economist anticipated. Coronavirus led European Companies struggling to stay afloat. The British Government is starting a mass study to track the spread of the coronavirus. They will survey 20,000 understandto help rates of infection and how many have abandoned how many have antibodies. Six coronavirus vaccines are in the human virus human trial campaigns. Three are in china. 80 vaccines are in some stage of development. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Much,ne thank you so Viviana Hurtado in new york. Coming up, a great conversation we have been looking forward to all day on commodities, what happens with oil and oil prices. That is with jeffrey currie, Goldman Sachs head of commodities. This is bloomberg. Francine good morning, everyone. This is bloomberg surveillance, tom and francine working from our respective homes. Lets talk about commodities, the incredible rise oil has had since monday. Touch sinceng a President Trump made some comments about what the u. S. Navy or air force could do when it comes to iranians on ships. Joining us is jeff currie. I dont know first what your reaction was when you saw that wti contract going negative. Is this something we have to get use to and will be recurring . Jeffrey i think it is important to distinguish between the fundamental story here. We will see it likely reoccurring, versus the positioning story that made this one exceptionally extreme. The fundamental story, this is a well flagged event we saw negative prices in the midcontinent u. S. Before this. Brent is a waterborne crude. We dont think it can happen in a waterborne crude because you can get ships in and out. In a landlocked crude like wti versus france which is 500 readers from the water, is susceptible to the situation that is likely to breach storage capacity. Once it reaches that capacity, you cannot move anymore and as a result, if you can get an environment where producers are willing to take their oil away, that is where a negative price what a negative price means. The positioning story, because we had seen this in 2009, if you go into expiration and the front end of the curve collapses and etf products have to get out of there long division, which means they have to find somebody to take them out of that position. Some of the other funds like u. S. Oil fund had done it earlier. The u. S. Oil fund has traded its options to be able to roll back further contracts to avoid this happening. If they had waited to the day before expiration in a market with no physical strength, there was no way you would be able to deliver that oil, and a market that does not have much liquidity, it is not a surprise they had to get into this positioning at 55. The key point is that is unlikely to repeat itself. Where are we in terms of actual storage that is exhausted . Is it a global phenomenon or is there storage somewhere . Jeff the local phenomena is playing out, thinking about a rolling base. It happens in one place and another place. The global story we think will occur in three to four weeks. This is like a tsunami of surplus moving through the Global Distribution system, and the production cuts, it is like building a diked a mile outside outsideilding a dike a mile outside of the water. In the next three to four weeks, when you hit that point, supply must equal demand because you cannot put another barrel of oil surplus into the system. You have to have some buy down. Jeff, a delicate question, and i know your general counsel will not like it. Speak right now to global the cfos, ceos, line item officers of these companies that will probably go bankrupt. What is their best practice right now . How do they prepare for the midland, texas of the 1980s that we know is coming particularly in the Permian Basin . Jeff advice i have been giving buying anst weeks is ironclad Offtake Agreement with the counterparty you can trust, that has a very strong way to dispose of that oil and is very strong from a credit perspective. Other than that, you are very much exposed to the current environment. We are likely to see smaller players do not have Firm Transportation or ironclad offtake. This applies on a global basis. As we go through the next three to four weeks, demand could be down as much as 18 Million Barrels per day in the middle of may. The peak demand losses are probably to behind us. Lets take demand down to 18 Million Barrels a day in may. Supply will have to be the same until the market rebounds. The key point is not a financial one, it is a physical logistical one, and those left out have a difficult time in the coming month. Months. Francine jeff currie stays with us. Coming up later today, a conversation with the World Bank President , 3 30 p. M. In london, 10 30 a. M. In new york. This is bloomberg. Viviana you are watching bloomberg surveillance. Credit insse is joining u. S. Banks taking an upfront hit from the aronavirus, taking more than billion dollars in writedowns and provisions for bad loans, and saying it may have to make further allowances. ,he parent of mercedesbenz daimler, rejecting a significantly higher predicting a significantly higher profit but saying it is hard to tell how much earnings will fall. That is your Bloomberg Business flash. Tom with us is jeff currie of Goldman Sachs. I have been watching the collapse of ethanol and hydrocarbons, but far more interesting is sugar indra bill in brazil buttressed up against the challenges of politics and the riau real. Give us the Goldman Sachs call that links into a diminishing brazilian real. Jeff the entire commodity complex is facing a similar story. The supply is sticky to the downside. The demand has collapsed in the current environment. Now,ook at the plantings they are likely to suggest a normal harvest in the Northern Hemisphere across the complex if you look at ethanol complex. If you look at ethanol, demand has collapsed. It is not just the demand of demand. Is the food sugar is not big enough to offset that, so the key is some of the agriculture commodities, particularly corn, you are looking up historical carry outs which argues more downside. One exception in the commodity complex talking about food and agriculture really is the livestock market. There, you have enough supply that the risks will be more symmetric. Tom i am so glad you brought it up i want to point out to our folks that Goldman Sachs did legendary work on the sequence of livestock and the food we take for granted. We have processing plants shutting down, particularly in the pork complex. How does that filter into market price . Jeff it will take time. The Retail Prices are more sticky. That isl have wholesale able to be presented. Medium to longer term, your key point, all of this, the oil story, the agriculture and livestock story, the oil and livestock in particular start to become very bullish on a medium to longterm basis, because once we see demand recover, the damage we have done to supply is substantial. I think agriculture, you are further down that line. Oil would be second, given the damage in the Permian Basin. If we start to look out six to 12 months, this becomes inflationary. Oil, how going back Many Companies will go bust going back oil, how many going back to oil, how Many Companies will go bust . Jeff assets dont go bankrupt. Management and Balance Sheets go bankrupt. The assets will be there. There will ultimately be new management and a new Balance Sheet operating these asset, but it will take time to see that transition. The new owners of those assets will be operating at a lower cost basis because they do not have all that debt that is likely to take place debt. That is likely to take place over the next six to 12 months. It has just become that much more important. Can it be a systemic problem . Toasked the same question fatih birol yesterday. Are they Crucial Companies to the way the system works . 2016 there 2015 and was a chance at could have been systemic and that is why oil prices were driving asset values , but even then it was not as big as the mortgage crisis in terms of banks exposure to the sector and the exposure of the highyield market. This is banks, high yield, all of it had shrank tremendously. If you look at the share of energy in the s p, i will quote somebody else but i heard it is 2. 5 now. That it isling you marginalized itself to be almost irrelevant to the rest of the economy because of damage, poor returns. I dont think there is a systemic issue, just given the size of these market. They are much smaller than they were in 2015 and 2016. Francine thank you so much, jeff currie of Goldman Sachs with good insight into what could happen next. We will have plenty more on your markets. Wti,ok at the picture of rising to about 15 a barrel after President Trump warned iran on their ships. European stocks fluctuating, investors weighing on the lockdowns when they start to reopen and what happens. We had some horrific numbers in terms of european pmi figures, much lower than economists expected. A conversation with the World Bank President , David Malpass. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Tom this morning, it is eight days until may and from germany to georgia we try to figure out how to restart, reopen, resuscitate our collective economies amid a clear and present danger. China reports zero deaths. Korea report prepares for a second wave of deaths. Pence says in june the pandemic will be largely in the past. Millions claiming they have no job. We see the report at 8 30. Team a new shin and team powell fight off Deflation Team mnichin and team powell fight off deflation. I need to go to europe where there is an amazing urgency in stimulus and you see it in the inflationdisinflation indicators. It is remarkable how