Twoyear is now trading, but that doesnt seem to matter. The majority of debt in europe all undergoing this powerful rally, despite the fact that we are going to see horrific unemployment number in about an hour and a half. Lets get you out of the market moving news from our new york team. We want to start with the much awaited u. S. Jobs data out of april for the next hour. Economists now estimating 22 million jobs wiped out in the past month. Joining me now is carl riccadonna, bloomberg chief economist. It is hard to put these into perspective. Help me out. Morning. D these numbers point to immense disruption in the u. S. Economy, on a scale we really have not whichn recorded history, goes back to either world war ii or the great depression. ,o put some context around this this is far more than all of the job losses we saw during the Great Recession concentrated into a single month. If we take the job losses of the last nine recessions, lump them all together going back to the late 1950s, it would concentrate all of that job loss into a single month. That is what we are seeing in the april jobs report. By a is easy to get lost large number. This is telling us there is no vshaped recovery for the u. S. Economy. Support fromd for monetary and fiscal authorities. This just speaks to the difficulty of reopening the economy and getting it back online. The healthcare crisis aside, just having this much of the economy shut down will be very difficult to reawaken. That why the fed funds futures curve went negative yesterday . Is that what we are reflecting, that need for more . Carl i think yesterday was a bit of a technical move, but the fed has made it abundantly clear that negative rates are not coming to the u. S. , not on the yield curve and not on the overnight rate that the fed determines. They dont view that as a viable policy tool, so that was more is a technical reaction coming apart in response to some unexpected surprises in the quarterly refunding announcement from the treasury on wednesday, but which signaled more issuance at the longer end of the curve, some people were unwinding bets. As long as jay powell and most of the folks at the fed continue to call the shots, we are not heading toward negative Interest Rate policy. Alix that sets the backdrop for when we get the numbers, and like you said come the numbers are going to be terrible. What does the market needs to parse through . Carl the focus is going to be on the payroll change, things like the Unemployment Rate distorted by participation issues. Maybe you lost your job, but werent looking while the economy was shut down and shelterinplace measures were being enforced, so you technically arent considered unemployed if you arent looking for a job. The Unemployment Rate might not reflect the full extent. Of things. Things like average hourly ,arnings tend to get disrupted so whats the payrolls number. Team is looking at a little bit more than the consensus when that data hits at 8 30. Alix carl, i really appreciate that perspective. Lets go to the markets. U. S. Equity futures up this morning. Investors weighing economies tradeing, plus developments, despite all of the gloomy Economic Data. Annmarie hordern has more. Ive labeled it the by everything rally the buy everything rally. Annmarie u. S. Equity futures are decidedly green ahead of the open. Part of this is because of the softening of the tone, what we saw between beijing and washington. Robert lighthizer had a call with the chinese vice premier liu he. On that call, they talked about the progress being made to set up this infrastructure to implement the deal. Crucially, part of the deal is in spitethat they said of the health emergency, both expect to meet their obligations under a timely manner. I think that is part of the reason we are seeing this risk on rally, because there has been a big question mark about whether china is going to be able to meet their part of the deal. The agreement calls for china to buy an additional 200 billion of goods and services in 2020 and 2021, compared to 2017 levels. Because of the pandemic, we have seen a lot of those imports dropped. At the moment, they are really behind the pace they would need. Of course, in general we have seen a deteriorated rhetoric between beijing and washington. President really blaming china, saying they did not properly warn the rest of the world about the scale of it and even threatening more tariffs as a punishment. So this call certainly eased some of those tensions, and it was a positive dialogue for the markets. Alix thanks so much. Continue to keep track of earnings season as well here in the u. S. The s p 500 is looking at 80 of companies have now listed results. Based on guidance and lowered expectations, there seems to be very little hope over the nearterm outlook, which continues to question why we see the equity rally. Earnings estimates declined 20 in 2020. Fallts expected to 41 in the second quarter. The biggest losses, you looking at capital one, wynn resorts, and boeing, a breadth of sectors getting hit. Coming up, more of your morning news, trade and analysis of the markets in todays first take. This is bloomberg. Happy friday, guys. Alix time now for bloomberg first take. Joining me from our inhouse team of wall street veterans and insiders is Michael Mckee, Bloomberg International economics and policy correspondent, and Damian Sassower, Bloomberg Intelligence chief emergingmarket credit strategist. I am interested in what part of the market you are looking at most closely today. Damian i heard you discuss it with carl. We are talking about negative fed yield going out to the funds rate. If you need deals in an environment where money market yields are down to 20 bips, you really only have three options. , move out and quality move out in quality. Move down along the curve is two. Seeing some really badly hit emergingmarket currencies rallying here. We are now coming through some levels that give you a little bit of confidence that perhaps this might be the beginning of something bigger. Alix mike, can you pivot off of that . We know jay powell has said no negative rates, but the fed has consistently followed the markets. Michael this is a little bit different situation. First of all, the fed doesnt that negative rates work. And this is negative rates. This isnt just lowering the fed funds rate by a certain amount. It has severe policy implications, and it hasnt occasions for the money markets, which at this point are barely hanging on. Some of the money market funds waving their management fees, and they are working very hard to try to make enough money to keep their net values positive. , thaty were to freeze up would be a real problem for the overall economy. It is not a big deal in japan and europe because they dont really rely on money markets. They dont have the same sort of structure we do. Alix that is an interesting point. Theres a huge knock on effect for that. It would be a repercussion for that . Michael if the money markets arent trading, if they are not seeing big inflows that they have to manage, then you are going to see the money markets, commercial paper, repos, then let that dry up because they drive a lot of that. That will make it harder for companies to fund themselves, and you have severe problems there. Alix we have already seen some money market funds shut down funds for new investors because they cant get return either. You alluded to the fact that that pushes you out the risk curve. India sold bonds today at really low yields, huge demand, but they are the epicenter of the worst part of the crisis on an economic level, and they are also still expanding their cases of covid. Damian it needs a little bit of a different animal india is a little bit of a different animal. It is one of the few economies in the world where inflation is set to rise. That is not by much, and totainly you are also going get Industrial Production on but it speaksia, to the broader emergingmarket landscape and how you are seeing these massive rate cuts. We are probably going to see mexico cut rates another 50 bips thursday next week. Italy will probably resist. A lot of Central Banks in emerging markets and markets outside the u. S. Are really limited to the extent they can stimulate via quant easing, so they go to rate cuts. Alix lets just pretend we still see this trading continuing to happen on the fed funds futures curve, and we are flirting with negative rates. At what point does that give you a shift in how you view where emergingmarket assets are headed . Damian the most important thing youve got to look at is the dollar. What is interesting is the bluebird dollar index the bloomberg dollar index is forming a bullish formation. Investors are snapping up dollars on these down tics. You could have a sharp move to the upside just given where the technical patterns are. You can make the case that people might begin to look abroad to get a higher carry, a higher yield, but i think it is just the dollar thats just the elephant in the room. If we see another sharp move to the upside, all bets are off. Alix we had an options call on bloomberg talking about that we didnt see any reflection in the dollar. Mike, the elephant in the room, the jobs data. Catherine man over at citi had a note out talking about how the stock market rally remains puzzling. However, given that markets cannot be propped up indefinitely, risk ask it risk assets could be fragile once the cold, hard economic reality hits again. What is that cold, hard economic reality . Michael this could be the worst report for any Economic Data in United States history. We may have had worse times, but it wasnt captured in data that didnt exist then. It is going to be absolutely terrible. It has been predicted to be terrible for a long time, and markets have processed that. They are starting to look forward in a different way. The equity markets seem to be looking forward to a recovery. The oil markets reacting obviously to supply and the idea of a recovery, and the bond market seems to be looking the other direction, that things are going to be terrible. Maybe well have a second wave because the futures markets barely turned negative yesterday. Today they are decidedly negative. That is pulling the whole curve down, and we are seeing big drops in treasuries. It is going to be interesting to see how this all sorts out. Thats the yield curve. Forcan see below zero there many months, starting in december. It is going to be different aday because we had will have hugely bad number that everyone is already priced in, so we do get so do we get a real reaction or not . It is just going to be evidence of what we know already happened. You will have to look deeper into the numbers and may be divine something about the futures, but it seems markets have already made up their minds and our trading like the number is already out there. Alix damian, what you thing about that . What do you think about that . Damian the fed seems very willing to lend on a secured basis, but when it comes to unsecured loans, the price seems to be relatively prohibitive for a lot of borrowers. What you are seeing in the u. S. With regards to below Investment Grade debt sales, very challenging environment. You saw United Airlines yesterday. It is going to need to sweeten its offer. Lenders required to place their loans, along with tighter covenants and lower leverage triggers. It is a really challenging environment, and this all speaks to the fact that while theres a lot of liquidity being thrown at the issue, banks are still unwilling to lend when they dont think they can pay them back. I think that a starting to manifest in the yield curve ended the numbers. Alix gm, for example, selling that. They are still Investment Grade, yet they still look like highyield, to your point, which is a great segue from the jobs data to the overall equity market. Luke kawa had a good piece out talking about how the broad markets are pricing in where company survive, not thrive. That could be why you are seeing the improvement of highyield in some cases, and in the credit market versus the equity market small caps, for example. Do you feel like the data has reflected that, the survive not thrive situation . Michael i dont think so, not yet. This is the beginning of that. We will see how broad the job losses are, what categories of jobs, which will give us an idea of how hard it will be for some companies to recover. You see some themes in the markets that are kind of obvious. The tech leadership, the nasdaq, we are thinking that yes, tech is going to lead the way out. Everyone is working from home. You can look at companies in the smallcap space, which is where tech starts and bubbles up, and start to look at Companies Working on things that would be useful in the future. Same with health care, obviously. Everyone is looking for the drug company that is going to produce something that works against this virus. So it makes sense in a broad sort of sense, but the idea of which companies are going to recover the fastest is a little hard to divine at this point because we dont know how long this is going to last, and how quickly we are going to get people back to work. Alix you spoke to mary daly yesterday. I was struck by the fact that she was like, look, no one is expecting a vshape. We are looking at maybe trying to recover in 20. 1. Did that feel more pessimistic in 2021. Did that feel more pessimistic than we wouldve heard weeks ago . Michael shes been pessimistic all along. She said we will see contraction for most of 2020 if you weeks ago. I asked her if she still feels that way, and she said yes. It is kind of interesting because she has the largest geographical district, so when she says she is hearing and seeing from Corporate Leaders stretches a very wide geographic range. So you get a feeling that in the west, which is the home of tech, people are still not optimistic. That doesnt match up with what the markets are doing. Alix totally right. That is such a great point. Hatan, put your traders back on. What do you do . Damian i would just play off the back of what you just said on tech. Weve got some big earnings coming through next week, including tencent on wednesday. We are also going to see interesting earnings from aramco and petrobras. Admittedly, we have gold testing resistance, oil heading for the first back weekly gains since february this week, and as i mentioned previously, this bullish formation in the dollar. These are all really critical levels that are going to tell us where sentiment is headed as we move into next week. Weve got 13f filings, earnings, a lot of things coming through, and certainly todays payroll are front and center. Alix really appreciate it, guys. Bloombergs Michael Mckee, things a lot, and Damian Sassower of Bloomberg Intelligence as well. Any charts we use throughout the show, go to gtv on your terminals. Browse the features, check it out. Gtv. This is bloomberg. Ritika this is bloomberg daybreak. Intel is being accused of comfort rising worker safety with its order to keep making computer chips. People who work at an intel plant ins nsa staff was not isolated from teammates who were tested positive the virus say staff was not isolated from teammates who were testing positive from the virus. Neiman marcus says it expects customers to return after its bankruptcy restructuring. The company has filed for chapter 11 and planes to emerge from the process in the fall with debt up legations of about 5. 5 billion dollars, cut by about 4 billion. That is you Bloomberg Business flash. Alix thanks so much. That Neiman Marcus bankruptcy is likely to be just one of many. We already heard from wellknown names like j. Crew. Jcpenney is signaling it may not be far from it. It just missed another Interest Payment of about 7 million yesterday, the second missed payment in just the past month. For Many Companies, the letdown just made preexisting problems even worse. The amount of debt the u. S. Testified as distressed rose almost 61 in the last two months. Washington is still tossing out life preservers to select industries. Still, corporate bankruptcies are on track to match the 2009 level. Coming up, we will dig deeper into the key data points you need to watching todays jobs report with Constance Hunter, kpmg chief economist. To highlight some of the big movers of the morning, i did want to highlight uber. They have terrible earnings, but they see the business starting to recover. They see their first decline ever in rides, but say maybe we have passed the trough and we are getting a little bit better here. Some of the other movers we are seeing, we have carnival up by about 3 . Some of the beatendown names trying to rebound as we head into that jobs number. Microsoft also higher. It is all about those Big Tech Companies still leading the way. Apple moderately higher as well. This is bloomberg. Alix welcome to bloomberg daybreak. Im alix steel. If i told you we were headed for unprecedented loss in jobs in the next hour, you would not see it in the markets. We are building on gains today as well. The u. K. Is closed for a holiday, but european equities still seeing some upside. Switch of the board, and it is about the bond market switch up the board, and it is about the bond market. We are continuing to build on record lows today. Take a look at the twoyear, down by about one basis point yet again. Well, continuing to i little bit of a bull steepener, but it is a dicey situation. Also, youre still seeing a rally in things like oil, as well as gold. The only thing weaker is the yen and the dollar in the g10 space. Joining me for more on the markets and a look ahead to that jobs report, bloombergs Michael Mckee still with me, and Constance Hunter, kpmg chief economist, joins us now. I want to set it up. Weve already talked about what to expect in a broad sense, but on a really detailed basis, what are the nuances we have to look out for . Michael im glad you asked because there are a lot of nuances in this report that will make it a little bit harder to read because the accurac