fed at the lira bound. -- the zero bound. the stock rout could drag the s&p down to 2000. and markets limit down. u.s. futures hit their maximum downside. yields plummet in european stocks hit their lowest level in seven years as countries and cities lockdown. welcome to "bloomberg daybreak" on this monday, march 16. i'm alix steel. it is hard to quantify the pain in the markets as we open. over in europe, you are down as much as 8%, 7%, depending on the indices. in the s&p premarket, we are also down tremendously. dollar-yen off as the yen has that safe haven bid, as well as the swissie. obviously, a huge run into u.s. treasuries. we are at 77 basis points on the

10 year. crude now below 30. and not emphasize enough how much pain that will be causing to producers. to get a sense of where we are in the market, if you switch of the board, you can see some of the heavy hitters within the market, like apple and microsoft, down 10%, 11%. also seeing bank of america off by 16%. the index which tracks the s&p is down by almost 10%. again, a world of hurt within the next two and half hours. we have some breaking news. the boe is pledging further prompt action when needed. no specifics on that, but they are pledging action as needed. we will bring you anything, any information as they come out. they said the dollar move to combat -- is there. this is governor bailey.

time now for global exchange, where we bring you today's market moving news from all around the world. from new york to washington, brussels and beijing come our bloomberg voices are on the ground with all of this morning's top stories. the federal reserve swept into action yesterday, cutting its benchmark interest rate to near zero, promising to reduce its bond holding -- to boost its bond holding and cutting reserve requirements for banks. chair powell: the primary response to the challenge will come from health care providers. officials must do what we can to support a swift return to normal. alix: here with us is bloomberg's michael mckee. walk us through what the reaction is. michael: businesses across the country in the world are cutting back or shutting down, and that is going to create massive cash flow problems. when that happens, it is a

catastrophe for the economy and for the markets. the fed is throwing the kitchen sink at the problem. they are cutting interest rates. they are cutting their main rate. they are cutting the discount rate. they are restarting qe, opening swat lines -- opening swat lines. suggestingy powell there may be more to come, perhaps for the money markets. they are not trying to prop up markets to make stocks rise. given all the headlines, stocks should be down at this point. nobody knows when there will be earnings again, let alone what they will be. when that does happen, then the rate cut program the fed has put in place will switch from being a market aid to an economic tailwind, and whatever but he hopes will be a rapid v-shaped recovery. some say the fed should be targeting lending to certain sectors of the economy, with particular cash flow problems, like the airlines.

the problem is congress change the law, and the fed can't do it alone. they need the administration to sign off on that, and probably also need congress to provide loan guarantees, a congressional backstop. jay powell made it clear last night they need help from the fiscal authorities, that the fed is doing what it can to keep the system operating, but they can't do anything for the average person who is stuck in all of this, who may not be working and may not be getting paid. they don't have the tools. that is up to congress and the administration. alix: thank you very much. we now want to go to washington, where the senate is under pressure to sin president trump a bill passed by the house to help americans -- to send president trump a bill passed by the house to help americans affected by the virus. >> later in the year, obviously economic activity will pick up as we confront this virus. alix: joining me on the phone from washington is kevin cirilli

, bloomberg's chief washington correspondent. a lot changes in 24 hours. walk us through what to expect out of d.c. kevin: first and foremost, the administration is giving later this morning another coronavirus task force update, was likely resections on businesses like restaurants. the second point is that secretary mnuchin said over the weekend that we are only in the second inning of a nine inning baseball game, to use a sports metaphor as he did, in terms of economic stimulus. the administration and the government, including speaker pelosi come of the house of representatives, are going to be responding virtually in real time as things develop. the third point i would make is you alluded to the senate. they are all but assuredly going to pass that legislation that speaker pelosi and the democratic-controlled house worked on with treasury

secretary steven mnuchin and and president trump virtually around-the-clock that would guarantee free testing, paid sick leave for up to two weeks, and a host of different economic measures. again, when you look at the small business administration trying to free up liquidity, they've guaranteed about $50 billion worth in terms of freed up funds with fema and other resources. again, just to reiterate the final point here, secretary mnuchin saying this is only the beginning. this is only the first step. they have to first work with the administration to flatten the curve, and then continue to provide guidance on the economy. alix: thank you very much. where head to europe, virus cases across the continent are reportedly surging. a few g7 leaders will hold an emergency conference tomorrow to tackle the threat. joining us is maria tadeo. what can we expect? is clear isia: what

that european leaders are taking more measures with the idea that europe is now the focus point for coronavirus. we are seeing some very ugly numbers come out of italy. we were hoping perhaps that we were moving closer to a peak. that is not what the numbers are suggesting. now we are seeing more than 1000 deaths in just that one country. spain, also putting the country in a lockdown. emmanuel macron, the french president, will speak before the country. the thought is that he is about to put france in a shut similar to that of italy, where people are not allowed to leave their homes. i do have to say at this point, what we are seeing in france is mild restrictions. people have been told to keep a distance and take precautions, but this is not an italian scenario. if france were to go that way, you would likely see the second,

third, and fourth biggest economies in the european union go into a shutdown. that would have huge repercussions for europe. ,fficials here and now thinking and probably admitting that this country is likely to fall into recession if this continues. alix: thank you very much. now we go to asia, where the bank of japan strengthened stimulus, but didn't stop short of cutting negative interest rates further. joining me from beijing is tom mackenzie. walk me through what the boj did , other central banks in the area, and ending up with china's data. tom: the chinese data really illustrates the cost that china has had to pay to contain this virus, with these very tough measures. many would say they have been successful up to this point to try to keep this virus in check. what you saw in terms of industrial production falling 13.5%, well below the estimates. the estimates have been for

contraction of 3%. retail sales plummeted more than 20%, and investment was very badly hit. that fell almost 15%. one key data point that really stands out as the unemployment data. 6.2% is the unemployment number now for china, a rise of 1% from the previous month come the highest on record for china. what it means for growth for the first quarter, you are likely to see a contraction for the first time since 1989 year on year. nz bank said the recovery that some had been hoping for is now out the window. it is going to be a slow and gradual recovery. the focus is shifting to the pboc. the bank did pump in additional in mediumtoday financing, but it didn't lower

the rate. match the fed. traders are betting now on up to 20 basis points of cuts for the loan prime rate, the benchmark, which will come out on march 20. that is where the focus is now going. and data from january february really indicating the pain china was under and the need for restrictive measures to contain the virus. alix: finally, it is set to be another volatile week. u.s. equity futures hitting their limit. here --es surging treasuries surging. here in new york with maurice taylor riggs. -- with more is taylor riggs. taylor: i want to point you to the spy etf. that is a better picture on where we are going to open into an a half hours on wall street. mohamed el-erian on twitter saying if the equity sale right

or before the fed fed. goldman cut its gdp forecast. a handful of companies are shutting their doors. we are seeing this have a material impact on financials. across equities, we are seeing treasuries surge. that's what they did out of the gate overnight in asia trading. but they are paring back some gains. we'll this morning having a brutal day, 100 basis point cut, doing nothing to help oil. wti trades $29 a barrel, brent barely not -- brent barely holding onto 30. we are seeing some money flow into the yen safe haven asset. if you look into industries ahead of the market opening, airlines are going to be a huge focus. they are struggling. i think that is an understatement. look at these numbers. you are seeing double digits.

you see markets around the world , and -- said the pandemic may bankrupt most airlines worldwide by may. alix: unbelievable statistic there. ann marie, thanks for wrapping that up for us. goldman sachs warns you might not have seen anything yet when it comes to the outbreak in equities. they say the s&p might not bottom until it hits 2000. friday, it closed over 2700. we are around 2500 now. i have seen so many downgrades, and the strategists at goldman have dented a few times in the last few weeks. in addition, the bank is forecasting the u.s. economy will shrink 5% in the second quarter. goldman does predict a short downturn will officially be regarded as a recession. the last recession was more than thisade ago, but all of

takes out potentially a v-shaped recovery. coming up, more on your morning news, trade and analysis in today's first take. this is bloomberg. ♪

alix: time for bloomberg first take. here to discuss, damian sassower, bloomberg intelligence chief emerging-market credit strategist, mike mcglone, bloomberg commodity strategist, and with us as well, ben mandel, j.p. morgan multi-asset strategist, with us by phone. damian: looking emerging

markets. a lot of people rolled out of the carry trade and currencies rallied out of the back of that. for me, the numbers i really have to look at our unemployment. i think it is going to be about planes numbers in the u.s. china was 6.2%. those are huge numbers. i think that is the huge risk for the economy going forward. mike: that make a lot of sense. to become of the key nail the market hasn't hit yet is the stock market. down.p 500 is realistically, it could be 20% to 30%. signalally was a bad when gold got hammered, that is just positions. fundamentally, if the fed is cutting, that is bullish for

gold, but it is just a little bit long. alix: gold down by 3.5%. ben, what do you think? how rough could it get? ben: the fed is clearly following its crisis playbook, but there are two things going on. one is that the gravity of the economic shock, things are looking pretty grave. the news flow is going to get fairly ugly before things find a floor here. the second thing is it might have been a tactical error to delineate the limits of policy at the press conference, or at the conference call yesterday. this is a very open-ended economic shock, which calls for an open-ended policy response. i think it was almost the kitchen sink, but not quite, and terms of the fed's response. we are also seeing familiar patterns that were underscored last week. one is that the fed was really

out in front of everyone in terms of u.s. monetary policy versus u.s. fiscal policy come about also, u.s. monetary policy versus the rest of the world policy playbook. i think where you want to get eventually and where you find a floor is when there is a better balance of fiscal and monetary and between the fed and the rest of the world. damian: i completely agree. last week, we saw a real money investors funding quotes on 30 year treasury swaps. you head off the run treasuries trading at four bips wide. it's not about stimulating. this is about lubricating the economy. to me, you have to look at what some central banks are doing overnight. i am talking korea, hong kong. it has just been a massive influx of liquidity come but how they are going to address the plumbing of central bank markets , you've heard about these fed swap lines with the five a banks.

how does that work for some of these economies that needed most? i'm very concerned about some of the things going on in the market right now. mike: we should be. the fed is just catching up to the rest of the world. to me, that is the problem for people looking for a v bottom. the virus is going to pass. we know that. but the market needs to catch up. going to zero and staying there for a long time, this is kind of been in place for a while. gold made an all-time new high against crude oil. that trend was well in place before this. i am concerned about is these are fundamental trends that just got a great catalyst to accelerate them. i am seeing the pattern recognition. crude oil was already going down. damian: look at 2008. the u.s. was leading, the first ones to take the pain and the first ones to emerge from it. i think china is playing that role now, and that's why chinese assets have acted as

safe haven. we need to see coordinated action from the federal government to contain this virus, in order for the u.s. to emerge from this. if they allow it to happen in piecemeal, we will be like the european union still searching for godot. alix: the yen, the cable rate, the euro-dollar, why haven't we seen some relief from what the fed and other coordinated central bank did to offer cheaper funding? damian: cross currency basis swaps, the differential between a fully hedged yield and rate differentials, you make a great point. the one-month spread between japanese yen and u.s. compressed to 30 basis points. you can basically get 3% by carrying and japan. that's because the hedge cost, the lack of dollars made that up so much.cy go the cost to hedge has gone up

that you need the fed to address , and that's what some of the measures are you have seen overnight. alix: some have come out and said you may want to start adding a little bit of risk, may want to be selling the dollar. today, that feels very early. what do you think? ben: i think you're getting a lot more information about the what and where versus the wind to start buying. as was just being mentioned, there's a lot of dysfunction in markets, and certain markets, that you are getting as a result of the volatility and potential spillovers into credit from the economic shock. the depth of the stock itself is somewhat unclear. the news flow is going to get ugly even if things do start to improve. i think we are concentrating more on the what and where. we have been taking risk down in credit and duration in our multi-asset portfolios relative

to equities, so i think where you are seeing a lot of vulnerability in liquidity and other similar types of issues is in credit. duration is a function of the monetary policy response. when things do get better, i think it is equities leading the way and not bond yields surging, and that is because it will be underwritten by the fed's promise to stay lower for longer. i agree with the comments earlier that we have kind of gotten stuck in the zero rate quicksand, and we might be mired here for a while. in terms of the where, we still maintain preference for the u.s. it is a defensive market, and in an environment like this, it is really your higher beta market to the news. it is your higher the coded he market, -- higher liquidity market, which has been adding a lot to the volatility of both treasuries and u.s. equities. think when things do get better,

u.s. equities are levered to that improvement. mike: that's one issue with the u.s. equity market compared to the last few times we had this issue. it is so high. it's gone up for 10 years in a row. every prudent, responsible money manager knew this was going to come. so how do you manage it? you sell rallies like we had friday. we might get lucky to get near 3000 at some point, but you've got to expect 2000 on the s&p 500. damian: one thing you have to look at here, with yields falling, the negative fielding debt must be going up. let me tell you, it didn't last week. actually went down. the reason why is because of credit spreads. spreads are blowing out, so despite yields touching the zero lower border, you might not see a lot of negative fielding debt. it might not be a bad thing for those who need to carry out. alix: damian sassower and mike

mcglone, things a lot. then mandel of jp morgan s -- been mandel of jp morgan asset management, thank you as well. this is bloomberg. ♪

alix: let's take a check on markets. it looks like the open is going to be really ugly. the spy, the etf that tracks the s&p, is down around 10%. some of the key sectors within that down 13%. energy, a smaller portion, still down nonetheless. coming up, the fed cutting by a full percentage point to shield the u.s. economy from the virus impact. michael feroli will be joining us. ♪ when you move homes, you move more than just yourself.

that's why xfinity has made taking your internet and tv with you a breeze. really? yup. you can transfer your service online in about a minute. you can do that? yeah. and with two-hour service appointment windows, it's all on your schedule. awesome. so while moving may still come with its share of headaches... no kidding. we're doing all we can to make moving simple, easy, awesome. go to xfinity.com/moving to get started. alix: this is "bloomberg daybreak." it's going to be a brutal monday. let's get you caught up. in europe, european equities

down by 8%. down 9%.n 10%, italy those governments going into complete shutdown mode. you are seeing selling in the periphery bond market. yields jumping on the 10 year in italy. at one point, we were above the 10% -- the 2% level. if you switch of the board, it is a safe haven run here. dollar-yen down by 1.5%. money continues to flow into the bond market in the u.s. the five-year is outperforming all of the rest of the duration, with yields down 23 basis points. will the fed be able to stabilize those spreads and avoid these double-digit basis point moves? the vix at 57. odd that it was a little bit lower. nonetheless, reverberations are still in the market. crude getting hammered, beat up. at $29.down 7%, now we have a two handle for the vt

i, and print not far behind. wti -- for wti, and brent not far behind. putting me now is christyan malek, j.p. morgan securities ea oil and gas. can you hear me? it looks like we will get him back. -- we will try to get him back. it looks like there was a phone call issue. u.s. crude versus overseas crude is narrowing quite a bit, now at about one dollar and change. we used to be 6, 7, eight dollars. it means that the u.s. exports are not as economic and no one is necessarily going to want to buy because you are not getting a big price differential, and that is going to hurt even more the oil companies in the u.s., from big oil to the smaller guys

as well. overall, a big risk off day in the market. at one point, 10 year yield dropped as much is 34 basis points. we will see if the fed can actually get in on that. let's get an update now on what is making headlines outside of the business world. viviana hurtado is here with first word news. viviana: we begin with the mr. medic move by the federal reserve since the -- the most dramatic move by the federal reserve since the financial crisis to protect the country from the fallout of the coronavirus. sayingn jerome powell second-quarter growth probably will be weak. he says fiscal policy can help those businesses and workers that are affected. the u.s. is under pressure to send -- the u.s. senate is under pressure to send president trump a relief passed by the house. the measure providing free virus testing and paid sick leave for

many workers. we end with the first one-on-one debate between democratic presidential hopeful joe biden and bernie sanders. they sparred on ideological minds over how the government should respond to the coronavirus outbreak. mr. sanders saying it has been made work by lack of a civil pay or health care system. mr. biden says the government needs to respond like it is at war. 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'm viviana hurtado. this is bloomberg. alix: thanks so much. now we have christyan malek of jp morgan joining us on the phone to talk about oil. how long can we stay with wti at $30? handle and brent at christyan: obviously we are trying to maximize

customers with demand as it is. what that means is they are going to basically transfer all a their inventories into flash sale. you may see a sick boy should -- you may see a situation of super contango. you could see the front end of the curve bleed heavily down to somewhere in the teens in terms of the oil price, so we expect he worst case somewhere between to $20.luent to -- $15 the pre-dividend breakeven is around $15. so if you are looking for maximum pain threshold, that would be the point to start with in terms of where oil could trade. alix: i'm glad you brought that up. the saudi central bank cut rates as well, which brings us to the question of how much pain saudi and russia can take in the middle of a complete demand to lapse -- demand collapse?

who can last the longest? christyan: this war between , we undertook a deep dive last year. that -- that is unsustainable after the knock on effect. this makes the oil market decide to have spare capacity. that is a major lesson for not just russia, but opec. with this in mind, i thing about this as the maximum pain and flitted not just in russia, but the entire cost curve. with that in mind, the duration wants to see a capitulation of capex and volumes over the next two to three months. i think that is a critical path

to getting saudi back to the table. we expect saudi to regroup opec potentially without russia in a sort of resolution deal that follows maximum pain not just on russia, but across opec. alix: how do you distinguish between those companies that want to be buying, or at least on the shopping list, when we wind out at some point acing? which companies are taken out altogether that cannot deal with their dividend or reinvestment? christyan: if we take a based case, this is a sort of pain threshold. it is unlikely we see any heir dividends. t the most defensive zillions would be total and chevron -- defensive would be total and chevron in the u.s.

there's a potential scenario where you could see smaller companies being taken out. resiliente most in the most oil volumes to be able to sustain growth even if they go to a bare-bones capex, which i expect all of them to do, would be to -- would be totale and chevron. again, you need to see this drawdown beyond six months. the reason i don't think that is going to happen is because the saudi pain threshold, even within their budget breakeven, means they won't be able to sustain this past six months. the gulf region's are really in trouble, so past six months, you could have countries go bankrupt on the back of this. to the point where sally says we have suffered enough pain, let's get back to the table -- were saudi says we have suffered enough pain, let's get back to the table. alix: thank you for being with

me. stay tuned for the next hour. i will be speaking to the bp cfo about what they need to do. now moving to the fed, cutting its benchmark rate to near zero to shield the u.s. economy from the impact of the coronavirus. franc owell: the primary response to this -- the chimeric response to the challenge will come from health-care workers, thewe must do -- primary response will come from health care workers. j.p. joining me now is morgan securities chief u.s. economies. to point out this reaction, "don't bring a demand policy to a credit site." basically saying the credit -- the fed is not doing the right thing. what do you think? >> we are in the early days of

this situation, but i think we will see this turn out to be a pretty big demand stock. i would agree with those who say it is not going to be adequate, but it is certainly at least in the right direction of what we need, which is going to be a lot more aggregate demand coming in the next weeks and months. alix: one of the bigger criticisms is that they didn't really touch commercial papers. do you think we will see a commercial paper funding facility? michael: we shouldn't rule anything out. powell mentioned that section 13.3 that enabled the commercial paper funding facility was part of the playbook. i think something like that could be coming. but i do think in these cases, it is also helpful to have the treasury be involved as well because the federal reserve should not be taking losses so often. we saw the9,

treasury take the first loss whenever the fed had to engage in risky lending. alix: fairpoint. the other criticism comes from the discount window, that if you rely so much on the discount window, banks are reticent to go and borrow because of the stigma to get thatit, stigma away from the big banks. what do you think about that? michael: i think that's a fair point. i think what they did on the discount window yesterday may encourage some more activity given how much the rate has come down. but it's possible we could see another 2007 facility that was a way around that stigma associated with the discount window. but i think what they did last night was a first step. it can't hurt, but i would agree

see your point that the stigma is still there, and up they will have to contend with in coming weeks. alix: it looks like economists are really coming out of the box with what will help. one saying we need a new form of social insurgents. if the government fully replaces the demand and evaporates each -- i.e., if i sell $10 worth of stuff, the government is going to wind up paying $10. do you think it is stuff like that we have to see to stabilize growth? michael: i think, without getting into particular eddies of each proposal -- o getting into particularities of each proposal, we need to be thinking in terms of big numbers, but realistically, the tools have to be something the congress and white house have to get together and work on and appropriate

funds. so radical measures i think are called for, but i think the fed is doing all they can within the limits of their legally assigned response abilities. we are going to have to think outside the box. it is time to start singing about pretty big numbers. alix: what is your second quarter growth forecast? have you revised it lower? goldman says there could be a 5% decline in growth. michael: we have first quarter contracting nine point 2% annualized, and second quarter at a 3% annualized rate. so we do have back to back negative growth quarters in the first half. i think we should be thinking seriously about the risks here, which is to say if you really shut down activity in some of these sectors, when we look at gdp numbers, they could be pretty shockingly negative. and in some ways, we saw that

overnight with some of the chinese numbers, which suggests perhaps double digit annualized decline in first-quarter growth. i think we do need to steel ourselves to what could be some pretty scary numbers coming up. alix: michael feroli of jp morgan, thank you so much for chatting with us today. coming up, jp morgan wealth clients get overwhelmed during the market rout. more on how banks are dealing with the virus in the fallout. if you have a bloomberg terminal, check out tv . you can watch us online, interact with us directly. go to tv under terminal. you can scroll through and check out anything you may have missed. this is bloomberg. ♪

viviana: this is "bloomberg daybreak."

coming up in the next hour, cfo. gilvary, bp ♪ viviana: you are watching "bloomberg daybreak." todayin with the airlines feeling even more pain in the midst of a travel clamp down and falling demand. ryanair announcing it is grounding most of its fleet in europe, and postponing share buybacks. american and united cutting more flights. the parent of british airways cutting capacity the next two months by at least 75%. iag also looking to cut operating expenses. australia's qantas planning a fourth set of capacity cuts. over to france, where regulators hit apple with a big fine, more than $1.2 billion. they accuse the iphone maker of

breaking antitrust rules in distribution. and giant u.s. banks agreed to stop buying back their own cares the second -- buying back their own shares in the second quarter due to coronavirus. jp morgan is one of the banks. others include bank of america, goldmanrgo, sachs, and others. that is your bloomberg business flash. alix: thank you so much. we turn now to wall street beach. first up, how banks are dealing with the crisis. banks base for more impact as the outbreak continues to spread. titans to find more liquidity. pure alpha fund plummets 20% this year, as much as 13% wiped out this month alone. --ning us is shree natarajan

joining us is sri natarajan. .his is crazy it's not just robin hood. now it's this other platform. you imagine, in the middle of a historic rout, a day when the dow was plunging platform trading basically suffered some sort of an outage. they had issues. clients couldn't get their trades right away. bankven at jp morgan, the that has spent more on technology than pretty much any other bank in the world, if you can have issues there, you have to think that when the system is that otherhelmed, banks but also be getting pretty nervous. alix: pretty fair, but also,

what do you do with your wealth if you are worried about that? how to these banks deal with companies that have a lot of debt that is leveraged? we hear story after story about drawing down these credit lines. sridhar: that is going to be a huge pressure point over the next few months. you have one after the other global economy shut down. that means all of these businesses that have immediate cash and immediate liquidity needs, they need to pay down their workers, and also making theythey are borrowing, all need cash on hand, so they are all going to draw down their credit line. banks which provide all of these credit lines, these are not lines that the bank thinks the companies will turn to immediately. these are rainy day backup funds. you do not expect companies to draw down their credit lines. but we have a situation where companies don't know what is in front of them.

we are talking about airline, cruises, lodging. these are racing to shore up their liquidity, but that is kind of problematic. the cost of providing capital to these companies is also capital-intensive for banks. it does not provide great returns, so you can be rest assured that the banks are not psyched about the idea that companies are rushing down the credit lines. alix: i don't doubt. i wonder if the discount window is enough to make them feel better. let's rounded out with some of the hedge funds we are getting, the early reads on who's winning, whose losing. sridhar: ray dalio is pretty much the biggest in the hedge fund world. no one else runs a firm figure than that, and his flagship fund is down 20% from the start of the year. over the weekend, he came out with some comments that were

pretty honest. he said we do not know how to navigate the coronavirus challenge, so we stayed in our positions. they were betting on equities going up, treasuries going down, and everyone looking at markets the last few weeks knows that is not how it has played out. they have somed stock index options that have cushioned a lot, and you can imagine that after cushioning your loss, you are down 20%, it is a world of pain out there. you can be rest assured that it is not just ray dalio's fund that is having to suffer through this crisis. we will see a lot more of these come through. the next few weeks or months, you will see more names that have really had to take the hit this month. alix: no doubt. thank you very much. in today's off the beaten street, we are going to take a look at a snapshot of how the virus outbreak is affecting people at both ends of the

income spectrum. the elite new yorkers heading to the happens have requests to keep the virus from getting down to them. we are talking large orders for food and wine, and lots and lots of cash. one new yorker apparently visited chase bank and his request for $30,000 was refused. the withdrawal limit very much a problem for that top 1%. the lowestan 10% of have a lower likelihood of getting the virus. coming up, we are going to take a closer look at the balance sheets of the four big central banks. that's coming up next in today's trader's take. if you are jumping into the car, turn into -- into the car, tune into bloomberg radio on sirius

xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

alix: time for trader's take. joining me is damian sassower of bloomberg intelligence. what are you looking most closely at? thean: i am look at combined big four central bank balance sheets. $25 trillion balance sheet. stimulus, as long as it is in dollars, is a good thing. but if you see other central banks rally in, every bit of stimulus they inject is worth less in dollar terms, so you need to see the dollar weakened. what we saw last night was the feds attempt to try to we can that dollar -- was the fed's attempt to try to weaken that dollar so that every move by the other central banks has more weight. alix: does that mean global

central bank stimulus means much less? damian: it means it is fighting an uphill battle, and they are the only ones fighting the battle. if the dollar is appreciating come of the stimulus from abroad doesn't have as much weight. i think with the fed needs to see to have coordinated effort is dollar weakness, and i think that is what we are looking at here. alix: how do we get it? exactly. i don't think anyone knows that. damian sassower, thanks very much. coming up on the program, i will be speaking to brian gilvary, bp's cfo. looking at big downgrades to oil companies as many are worried about dividends and wondering if they would need to be cut in this market. this is bloomberg. ♪

alix: welcome to "bloomberg daybreak."

i'm alix steel. here is everything you need to know at this hour. >> economic policymakers must do what we can to ease hardship caused by disruptions to the economy. alix: warning of a weak second-quarter and boosting bond holdings by $700 billion. >> it was clear last night that they need help from the fiscal authorities. the fed is doing what it can to keep the system operating. they cannot do anything for the average person who is stuck in all of this. alix: the fat resists buying commercial paper and touts fiscal policy to support small business. china's economy crawls to a standstill in the first two months of the year as everything is hit hard from the virus. a recovery still expected. >> the impact of the coronavirus on the chinese economy will be gradually reduced in the second

quarter. alix: a potential recovery now could be hurt by europe. spain shuts down. france limits the mystic travel. austria nbans all public gatherings. >> european leaders are trying to contain the virus. focus pointw the for coronavirus. alix: u.s. companies like nike and apple could offer paid time off, and walmart limits store hours. >> i think americans should be prepared that they will have to hunker down significantly more than we are doing. alix: the government promised support after the house back to economic relief plan. says hey steven mnuchin does not expect a recession. >> later in the year, the economic activity will pick up. alix: all of this does little to support the global equity markets. is givinginistration

another coronavirus task force update with likely new restrictions for small businesses and restaurants and more guidance. alix: new york city has closed schools, clubs, and movie theaters while limiting bars and restaurants to take out food only. to imf says it is ready mobilize $1 trillion of loan capacity to fight the virus. the need for synchronized fiscal stimulus grows by the hour, calling for global monetary, fiscal, and regulatory support to fight the virus. we will update you. in the markets, it is said to be an unbelievably brutal day. s&p futures are now halted. taking a look at the sky, we are down 10%. over in europe, it is ugly. we are down 8% to 10% depending

on the index. dollar-yen down about 1.6%. there is a bid in the bond market. primarily in the u.s. treasuries with yields down about 19 basis points. it is opening up pretty ugly. the other story is what is happening in the commodity market. you see oil getting taken out. forre down at a two handle wti. hit, and airlines getting american airlines the worst of that bunch, down 18%. for the oil market, it is particularly difficult. brent is about $30 of their own, trading right around 30. bpning me is brian gilvary, cfo. this has been a horrible few weeks for everybody, particularly for the oil companies. what is your post dividend

breakeven? how much pain can you take? dividend which is progressive. the plans that we laid out that we talked about before had our breakeven next year targeted at $40 a barrel brent. that is clearly above where we are today. what we will look to do for managing the volatility for the next 12 months is to shave our capital program. aroundital last year was $15.3 billion. we can shave off 20% from that this year. that will help us get back into balance. can this go on before you have to make a different kind of announcement? >> let's see what happens in the market. trading.t is we are in a unique position that we have not seen before.

we have gone through a circuitous route where we could see covid-19 developing six weeks ago. the market assumed saudi and opec would step in with the opec plus agreement to stabilize markets. there was a believe they would prefer prices around $60 a barrel or higher to balance budgets around opec. you know what happened. they cannot come to an agreement. now we have an excess of supply coming onto the market, coupling see a man curve, we could flat demand this year or even negative based on what we have seen and services. we are in a unique position. oil prices could go lower from where we are today. the key for a company of our size and scale is to make sure we have the flexibility to manage that volatility. we had $30of 4q,

billion of liquidity available in cash on hand. it would premature to think of any other announcements that could come right now. right now our progressive dividend is the policy. alix: you can sustain your dividend, which is 12.5%, by cutting by 20%? comfortable -- the analogy for this is 2014. at the end of 2014, prices were $100 a barrel. they came down to $28 a barrel. it took us three years to balance the books and get things back into balance. since then we have taken out something like $12 billion of costs, $12 billion of capital. we start from a much stronger financial position. to 25 is not as

painful. don't let me underestimate that. we will have to cut our capital program, but we have flexibility up to the range of 20% of the budget. alix: is there any risk for the completion of your announced major asset divestment? deal will notthe close or they will close at different sites? ofin total, we have a plan $15 billion. it was originally 10 plus five through the middle of next year. we are still in the process of closing some of those. we have a further five to do. some of those are price-sensitive. some are not. we have pipeline investments beyond that that can cover up or make the difference if it turns out that we have a failed transaction. we will work our way through each of them. we are confident we will get the $15 billion done next year as we

laid out. alix: is there anything you are buyers wanting to get out of these deals? >> no. it is the exact opposite. people have been firm that they want to complete for strategic reasons why they were to complete on those assets. the main thing for the team is we have all the dry gas assets, they were all done last year. the balance of the proceeds will be received this year. we have no issues around those. alix: we talked about the flexibility around that 20%. flexibility right now where you will be cutting that 20%? >> the obvious places will be onshore, so the lower 48 position we have. the beauty of that position was the ability to ramp up when prices were high and optimize down when prices were low. you will see a lot of activity

in the lower 48 ramped down. we will look to shave the capital budget. we will look across all of our projects and look to optimize. from mypoint perspective is our team has been through the number of these scenarios over the last decade. if you go back to deepwater horizon all the way through the 2014,ice correction of 2015, 2016, and 2017. the team is focused on what they are doing. alix: can you give us insight on what you are doing with your refining business? you have low oil prices as an input. >> you will be familiar with this. as extra oil supply comes on market, the first thing we are seeing is oil on water. you are going to start to see oil come into storage. you have a second issue, which is not unique to bp, and bp has

a low turnaround season this year. the second issue for the united states is a high turnaround quarter. you are going to have refineries out, oil building, and that will weigh on product margins. it is going to be difficult over the next few quarters as we work our way through that. we have a relatively low refinery turnaround season because we had a high one last year. they will not be as impacted as some. we are in for a tough couple of quarters. alix: talking more about the, does this delay -- about the buyingdoes this delay bp alternative energy assets? >> in some respects, what is happening now is a reinforcement of the strategy bernard laid out on the 12th of february to

diversify our portfolio further, recognizing oil and gas would be front and center of that transition. it accelerates the work we are doing around how we are looking to move our barrels to the high-margin zones and how we know that portfolio over the next decade. on commitment we made february 12 is more reinforced now. alix: my last question for you cap can you give me some insight into how you are thinking of the scripts dividend? this is what investors are most concerned about if you have to take drastic steps. we effectively said that from 2017, whicharter of was 11 quarters it took us to get into balance the last time, we have now repurchased all of that script that was issued. if the board chooses to issue script, but we were clear at the

last quarter results it was unlikely we would do so. it is still safe in the armory of the board. it is not one we are talking about right now. alix: i appreciate your candor. i know everybody is in a tough spot right now. brian gilvary, bp cfo. coming up, the fed cutting by a full percentage point to shield the us economy from the coronavirus impact. this is bloomberg. ♪ erg. ♪

>> economic policymakers must do what we can to ease hardship caused by disruptions to the economy and support a swift

return to normal. alix: that was fed chair jay powell speaking after the last rate point cut. joining me on the phone is narayana kocherlakota , former minneapolis fed president. if you are on the fomc yesterday, what would you have recommended that is different from what the fed laid out? >> first of all, i think the fed did the right thing in ruling out the tools they had. i would have preferred to see stronger forward guidance. i think the fed spoke in its statement of getting the economy back on track towards maximum employment and price stability, we are likely to see once the dust settles and the economy weathers this storm, we are likely to see conditions in place for a rapid recovery. i think the fed should be clear

that it is going to do whatever it takes to facilitate that rapid recovery. i think in the wake of the financial crisis, some of the fed did make was moving too quickly to choke off the recovery. i think it should be clear that when we get those conditions pledged for a fast recovery, the fed will be there for you. alix: how else can they see that? through action or what they say? stage, you areis likely seeing mainly words. you can say things about how you would be willing to tolerate inflation above 2%, possibly well above 2% for a time. we are going to see conditions in place for a very rapid recovery in output that might

push up against some supply constraints because i think there is going to be a lot of pent-up demand on the other side of this horrible episode. once we have that pent-up demand, there are going to be conditions in place for a very fast recovery that may lead to inflation. the fed should say that is not going to bother us. i think clear communication along those lines would be helpful. alix: at the end of the day, the fed just needs a weaker dollar for all of this to work. what else can they do aside from verbally saying lower for longer until we had over 2% inflation? narayana: monetary policy is absolutely a limited instrument as chair powell said yesterday, but i think the way to make it as effective as you can is all about expectations when you are at the zero lower bound.

i think the expectations the fed could be building up is we are hopefully going to get through this six months, nine months, however many months it is, we are going to be there to facilitate a lot of output, a lot of consumption, very good times. i think those are the kinds of things that the fed could be talking more about. alix: what about the commercial paper market and how they wind up helping that? i think the big issue is going to be the leverage and the small businesses. is there anything in the fed toolkit or do they need approval from congress to get into that market? narayana: we will see. i was a big fan of the fed's broad-based interventions in the last financial crisis, and i think there might be room for some of that, commercial paper

facility, you could make an argument for that. i would be leery of the fed getting back in the business of ,aking loans -- more than loans giving interventions to specific companies. i think it was good that congress took the power away from the fed. if congress wants to give that back, that is a political decision. i don't think the fed should be in that business. alix: when this is said and done, there is going to be some kind of move higher. how quickly do you think the fed needs to give back these rate cuts to prevent overheating? how do you look at that? narayana: i would be very slow to raise rates on the other side. one thing you can say as we get , the rateepisode

increases the fed did from 2015 to 2020 left the economy in a weaker position to take on this hit than we could have otherwise been. we could have had higher growth and perhaps more inflation, but that would have left the economy in a stronger place to take on this shop. it would have still been a shock, but we would've had higher output and higher consumption to absorb the tape. that is something the fed has to learn about being at the zero lower bound, patients. alix: so great to get your perspective. narayana kocherlakota former minneapolis fed president. joining me is mark

mccormack. let me start with you. when do you want to take on risk? it is time to start adding equity risk. how long, how much, how do you look at it? >> the context we have been putting out there, which is a little different from others, we think this particular correction, which has been historic, is part of the same correction that began two years ago, and this is the finishing moves. this is how their markets end. they end with a recession. it is clear we are going to have a recession now. we have the candidates now with the virus and the oil price shock, which is just as important to this moment. now we need to figure out at what point is that discounted? no one is smart enough to call it to the exact day. if we look out 12 months, our valuation metrics and what we

think the economy will be looking like suggests there are pretty good value levels. i feel that is the right idea. that does not mean we are at the bottom exactly at those levels. investing is taking a view beyond two weeks. as a short-term trader, that may not be good advice, but as an investor, i think that is the right approach. alix: you think it is possible we would see 2000 for the trough? is that selloff still possible in your mind? >> anything is possible when you have markets dislocated. that is not our view. our view is we are not going to go that low. we have already discounted the majority of the economic impact. we do not know the ultimate speed of the recovery. there will be a recovery on the other side of this. k, weigh in.

goldman sachs says gdp could be down 5%. expect a contraction q3. we are expecting this to extend a little longer than people are thinking. i think the critical factor is a lot of this is going to boil down to the rate of change in the growth on the coronavirus. a tremendous amount of uncertainty where this is going to go over the next four to six weeks. it is likely that we are going to have to have more economic pain to contain the virus and contain the spread of this, which will have dramatic market impact. when you think of risk assets, it leads to a four to six week perspective. there is a ton of downside for risk assets, which reinforces the bid we have on safe havens. alix: have you talked to people on the street?

they say until you find a bottom and rates, there is no way you are going to find a bottom in equities. >> the whole thing is going to come down to the spread of the virus. what is critical is if you look at the understanding the rate of change, we are seeing cases double every three to four days in the u.s. things can get a lot worse before they get better. we run a global macro stress game that looks across asset stress. if you look at the scale and rate of change and growth of the coronavirus on that metric, this is a causal relationship that we are seeing the more it spreads outside of china, we are seeing more across asset stress. what we are looking to see is the jolt, the rate of change of the rate of change in europe and the u.s. as long as we are seeing the rate of change double every

three to four days, that is not going to happen for another four to six weeks, which will keep risk markets under pressure. alix: fair enough. what would be on your recession playbook/shopping list? >> as you know, we have been extraordinarily defensively positioned for the last two years. one thing we have been watching is treasury yields. i think it is very interesting low treasury yields made a last monday, and they did not make new lows later in the week as equity markets did, nor are they now. they are selling off -- rates are selling off as we get concerned about this final move lower. indicatorreally good that the most liquid market in the world that has probably been the best guiding light with

respect to what the economy has actually been doing for the last five to 10 years is telling me that maybe we have already priced a lot of that in in the rates market. if that is true, we need to the looking at the early cyclical areas that have been underperforming for three years. consumer discretionary areas, some of the financials, some of the industrial space, metals and mining, areas that have been thrown away. that has been happening for years. these stocks have been underperforming for two or three years because the market has known all along that we were heading towards a recession, and we never knew when it was good to happen. now we have the event. alix: hang tight with me. we are going to a quick break. this is bloomberg. ♪ this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. from theutes away empire manufacturing data for march. a quick check in on how ugly it looks in the markets. european stocks down 9%.

spinner stocks, italian stocks all down. yields jumping 14 basis points. all moving it safe havens. spy is is down -- the down .9%. the five years down 20 basis points. empire manufacturing is out. it is the first to show a severe contraction. it is down 21.5. it plunges 34 points in total. that is the largest point drop we have seen on record. dropped -9.3 from 22.1. a read on what the impact of the virus is and it is ugly. the factory shipments at the lowest since two any 16. mike wilson of morgan stanley and mark mccormick are still with me. ,hen you hear numbers like this how much worse will it be until

it gets better? do you by the yen? do you sit in cash? what is it? of theou have to think nature of the safe havens. the dollar has been driven as a safe haven trade since the trade war. ,o alternative to u.s. assets u.s. credit markets. the dollar benefited from that trade. where we are now, the dollar is not a pure safe haven bid. if you think about where we have the most exposure on positioning and valuation, you think about which currency should benefit, the markets have to be a little bit forward-looking. who has the most undervalued currency? who has the ability to see the rotation start to bring some of that capital home? the nature is the dollar has a value that will be paramount, but the euro and the yen, the

swiss franc, and also sterling will be strong alternatives. is goingst beneficiary to be gold. if you're thinking through the environment, the yen is the safe play, especially because we have a lot of runway to 100 in dollar-yen. alix: mike, summer question to you. or can you hold on to safety? been theasuries have best hedged by far. long-duration treasuries is the only aaa rate market that still has a positive yield. that has been the best place to be if you want to hunker down. why think -- while i think the dollar will ultimately weaken, that is part of the recovery story. it will take time. u.s. treasuries, and within your equity portfolio, stay towards high-quality and some of these more defensive areas where we

have been. i am starting to think maybe that has gone too far. we are into that period where you need to be alert. it is fast-moving markets. we will have a rate of change at some point. it will happen when people are not expecting it. markets will digest that quickly. i do not think this is time to be all in on the safe havens. that has something to do -- that was something to do a while ago. alix: mark mccormick, thank you. mike wilson will be sticking with me. the virus outbreak touching the world financial plumbing. the schatzker is here with nasdaq president and ceo. she is the president of nasdaq. did you ever think you would see this? and emergency rate cut of 100 more points on a sunday,

quantitative easing, coordinated central bank action and stocks in a freefall worldwide on monday morning? idnina: i think it is important the fed has taken decisive action to provide companies and individuals with ultra low interest rounds -- interest loans and the ability to get those through the rate cut. i think it is important the fed is taking that kind of decisive action. at the end of the day investors will have to process that and the context of all of the other news that is out and how they would want to reflect that in .he market themselves erik: cutting rates almost zero this point of time was the right thing to do? adena: i cannot comment on specific decisions, other than to, they would use the tools available to them to ensure individuals and companies can access the markets the way they

need to and liquidity is available. you remember what happened after 9/11, the nasdaq closed, the new york stock exchange close to prevent a meltdown. is it time to close the market? the markets closed because new york city was impacted. nasdaq was able to operate but the participants had a lot of challenges becoming operational on the back of this disaster that occurred in new york. since then it has been almost 20 years. all of the market participants and the market infrastructure providers have done a lot of work to make sure they can manage the markets remotely, they have become fully .lectronic markets this time is different and it is a different environment for us to keep the markets on an open and available. our view is it is important to keep the markets available to

investors, but also recognizing the markets are used to raise capital, whether it is a health-care company or other companies who need ready access to capital. it is critically important the market stay open, as opposed to trying to take breaks in the middle. that will push off the situation a little bit but could create other issues. our view is it is much better to keep them open. the fcc chairman agrees with you, but let me play devils advocate. why keep the markets open now when confidence is so fragile and these repeated selloffs can destroy confidence, not just lung the investors but among consumers as well? adena: our economy is based on open access to markets, open access to capital, price transparency and the ability for investors to express themselves and manage their wealth in an open environment. therefore i think managing the markets while we are managing

through the situation is critically important. we have to make sure we can do it successfully. we have to make sure the market participants can easily participate in the market and manage the liquidity as they are managing through the situation. the fact of the matter is it is a testament to our economy to demonstrate we can manage the markets and allow investors to express their sentiment while we are going through the situation. stop trading volumes have been hitting records on nasdaq. has it been orderly or have you encountered any technical issues? adena: so far we've been able to manage everything successfully. it is a time when we've been adding capacity to our system. we have been making sure we can manage to the surges in volume. we have seen 60 plus billion messages coming through our system in a day, and that is double the last peak we saw in december 2018. we are managing through that successfully.

it is definitely an area we are in high alert around and we have the teams managing them successfully. erik: the volume suggests there is liquidity in the market. some investors, as you are probably aware, complaint liquidity is not the same as market depth. do you see enough depth or is that an issue? adena: it depends on the moment in time. i think we have a very diverse set of investors and market participants. while there may be episodic situations where the depth may not be as rich as it needs to be , a lot of times you will see investors and market participants filling into to make sure they manage through that to create the market and liquidity we need. i also think the equities markets and the options markets are very transparent. every trade is reported in real time so if you are able to manage through the situation in a much more liquid and transparent way than equities and options, where there may be

more liquidity issues joint erik: as i am sure you have seen, the chinese economy cratered in the first quarter. retailial production, sales, fixed asset investment, all down by double-digit. do you expect the u.s. economy to dip into a recession? adena: i am not an expert in that field. i would say it is the most important for us to manage the safety and health of the people, and that is the most important role we can have right now. as part of that, nasdaq announced yesterday we are closing the fill explore floorow -- the phil ex tomorrow. we have also been in a situation where we have had rotating teams and we have been encouraging your employees to work from home so we can manage through the situation while also keeping them safe and healthy. that has to be the most important thing we can focus on as a society. then we can manage through the economic impact and the recovery

and hopefully make it a lot faster by the actions we are taking right now. --k: you are on the visit you are on the business roundtable coronavirus task force. what are you and your fellow ceos decided or recommended? adena: i know josh bolton has been working to make sure we have a very specific role to play in providing the administration with key advice as we manage through the crisis, as well as making sure we start to think about how do we get ourselves to the other side of this? how do we make sure we are able to turn the economic engines back on as we manage through the other end of the situation. i think josh and his team will be coming out with more specific ideas on how to manage the corporate america through the situation and giving proper advice to the administration. from your point -- erik: from your point of view as the ceo of a company that employs 44 hundred p -- employs 4400

people, 27 office around the world, you think the trump administration has done enough to combat the coronavirus? adena: this is an unprecedented situation. all of the governments are trying to figure out this fast-moving situation. the best thing we can do is listen to the advice of the administration. make sure we are managing social distancing paradigm and also playing a role in the communities to make sure we keep people as safe as possible. we are all managing through this in real time and we are doing the best we can to play our role in the community. erik: we started to hear about steps the administration will take. congress has passed a stimulus bill. what else would you like to see? adena: i think we still have to look at all of the pockets of liquidity in the market, not only in the u.s. equities market and options market, but also in fixed income and the commercial paper market, as well as in repo

and other mortgage backed securities. the fed has been taking good decisive action in providing liquidity in certain areas, but we need to look at other elements where things like commercial paper, where that is ready access to working capital needs of companies all over the country and making sure those parts of the system continue to operate successfully. this is an evolving situation. there will continue to be actions the administration and the fed do to manage through it. erik: the business roundtable is due to meet in washington tomorrow and wednesday. is that meeting still on. are you planning to attend? adena: it has been turned into a teleconference. we will all be participating by phone. erik: that seems like a wise choice. one last question. as you are well aware, president trump himself and members of his cabinet, even the federal reserve, i'm not sure i can lump

the federal reserve into the group that has been accused of being dismissive or overly optimistic about the threat to coronavirus poses. do you think the administration should've acted sooner and if so what do you think that delay is going to cost? adena: i think the administration is currently taking the situation seriously. they are taking significant actions with congress to make sure we help all the small businesses in the country and all the individuals in the country manage through an unprecedented situation. i think the announcements they made on friday, the announcements made over the weekend are demonstrating they are taking this seriously. erik: thank you so very much. great color it from somebody who runs a company as large and a born is yours at the center financial markets. adena: thank you. bloombergs erik schatzker, appreciate you bringing us that interview. the u.s. health and human

services department was apparently hit by a cyber attack its computer system last night. the attack coming during the nation's response to the coronavirus pandemic. the people said it appears to been intended to slow the agencies system down but it did not do so in any meaningful way. coming up, oil and freefall. crude slipping to its lowest level since 2016. in today'sllen wald bottom line. bloomberg users, interact with anything on the program on gtv . browse any charts we use. gtv . this is bloomberg. ♪

viviana: coming up later today,

.ms managing director ♪ viviana: you're watching "bloomberg daybreak." i'm viviana hurtado with your bloomberg business flash. we begin with breaking news. the u.s. health and human services department suffering a cyberattack on its computer system last night. this during the nation's response to the coronavirus pandemic. this according to three people familiar with the matter. the attack appears to been intended to slow the agency systems down. it does not appear the hackers took any data from the system. now to mgm resorts wynn resorts. they are shutting their casinos in las vegas. mgm has eight casinos on the las vegas strip. they are closed until further notice. several employees at mgm mirage have come down with the coronavirus. we end with eight giant u.s. banks agreeing to stop buying back their own shares through

the second quarter. instead during the coronavirus pandemic, they say they will focus on supporting clients and the nation. jp morgan is one of the banks. america,clude bank of wells fargo, goldman sachs, morgan stanley, bank of new york mellon, and state street. i'm viviana hurtado and that is your bloomberg business flash. the etfst to point out that tracks the s&p is down almost 11%. we broke through the 10% mark. you have commodities rolling over as well. crude off a percent in the u.s.. pretty brutal. joining me is ellen wald, atlantic council of global energy center senior and nonresident fellow. also with me is mike wilson of morgan stanley. we are going to talk about saudi aramco but it is really about how much pain can all of these companies take? .llen: this is the big question

even though aramco is going through its 2019 financials come everyone is focused on what will happen in 2020, particularly with oil prices extremely low. brent is down near $30 a barrel. even with saudi arabia trying to sell so much oil, there is a limit to how much money they can bring in. that will bring hard questions for the company and the country during 2020. alix: part is the supply issue, the other is the demand issue. what kind of demand do you expect when we see europe shutting down in certain areas in the u.s. shutting down? ellen: if we take china as the case for this, their demand was down about 30% at some point. considering the united states is an even oil it -- is an even bigger oil consumer than china, we're probably looking at more than that. some people have estimated 10%. that is entirely possible. alix: mike, you were mentioning

earlier that you want to look at some of the beaten-down names. how do you look at the energy sector? mike: energy is a special situation because the oil price shock now creates significant credit risk. that is different. if you're going to start looking at beaten-down areas, i would that havetocks balance sheets that can survive what is going to be a recession. there are now many companies in the energy world that will probably default. that is a different situation. you have to be extra careful because of the leverage. that, what is the readthrough for industrials? if you do not drill, you do not need a rig, there is a trickle down for that as well. mike: we have been seeing a

deterioration and machinery orders and industrial production for several years. once again, what is going on is that final capitulation of we are going into recession and we will deal with it. it is going to be messy. it will be choppy. it will be uncomfortable. i think ultimately high-quality companies in these areas will end up surviving and they will he end up being good opportunities over the next month. that is what we are considering. alix: talking about survival brings a back to your bread and butter. --n you look at sally, what when you look at saudi, what is the end game? visit to bring russia back to the table or get out as fast as they can and recalibrate? ellen: that seems to be the approach saudi arabia is taking. they announced they will be producing 12 million barrels a day of oil in april and selling another 300 their owns and barrels -- another 300,000 barrels from storage.

that is an incredible amount of work. that is a massive increase in a short amount of time. in february they were producing 9.7 million barrels a day. this is a huge increase and is going to make it difficult for people to say i want to buy non-saudi oil. saudi oil is going to flood the market. you. final word to what is your trajectory for how the saudis handle all of this? ellen: this is a big question because even though they will be flooding the market with oil, they will not be making that much money. aramco, the prophets are already down. they will be lower in 2020. the saudi government still needs most of their money in their budget from aramco. they will have to make tough choices. are they going to prioritize value for the public shareholders and pay that dividend and keep the company strong, or are they going to take more money from the company's free cash flow and use

that for their budget? alix: thanks a lot. ellen wald and mike wilson, great to catch up with both of you. coming up, s&p futures are limit down. we will look at the levels to watch today technically speaking. if you're heading out and jumping into your car, tune into bloomberg radio across the u.s. on sirius xm gentle 119 and on the bloomberg business -- channel 119 in the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. turning me is mike mcglone. you are looking at the s&p. look at the levels. mike: 2000. in an environment like this you have to look at a mean that matters. the mean, median, mode for the rally. where trump was elected is around 2000. you have to get through that loafer december 2018. a level to go back to them bounced from, that is the level. alix: let's get to the other

chart. taking a look at oil and natural gas. a few years ago it would've been a bigger part of the s&p index. it still looks ugly. mike: it is following natural gas, which made a new low. and bond yields. it's macro economic brother and. i think oil around 29 for wti is still too high. it should take up 20. lower prices. alix: mike mcglone setting you up with the grim view of the s&p and oil. that does it for me at "bloomberg daybreak: americas." coming up, peter tchir, academy securities ahead of macro strategy. happy monday. it will be a tough day. this is bloomberg. ♪

jonathan: from new york city, for audience worldwide. a lot will change in the coming weeks. this show will be a little different.

our guests will still be with us, they will just not be directly around the table. for markets, equally important are the things that will not change. the demands of consumers and businesses will still be there, the bills will still be due. for that reason, monetary policy has limited role to play. the fed has thrown the kitchen sink at this. the adverse price action of this morning reinforcing the argument that the demand on policy are firmly elsewhere. as you've seen over the last month or so, i will continue to leave the medical issues to the public health professionals. we should all continue to do just that. for the economy, the groundwork for a better recovery needs to begin right now. in fiscal entities will step to build a bridge over troubled waters in the months to come. to be sure that a temporary economic shock does not become a financial one that takes longer to recover from. as we tackle these issues, we will do our best to be with you. "the countdown to the