yousef: good morning from dubai. this is bloomberg daybreak: europe. and awe -- the u.s. looks to inject over $1 trillion into the economy do not read the effects of coronavirus. japan mulls a cash handout of its own. futures down.k the 10-year treasury yield around the 1% mark. oil at its lowest level in 17 years. and united front. in the eu. travel

angela merkel does not rule out joint eu debt issuance. nejra: another emergency move from the fed sent stocks and yields soaring, but we are reversing some of those gains today. the 10-year yield, we saw the biggest route in 10 and 30-year treasury's 1982. we talked seven basis points on that 10-year yield today. asia.n the screen in the moves we saw yesterday in , also theisk on prospect of that stimulus to the tune of more than $1 trillion, but the question for markets is

how can risk on continue until we see any kind of inflection rate in global coronavirus cases? yousef: this emergency lending program that has come out to try to support primary dealers is front and center in the monetary policy side. you mentioned some of the we got on the fiscal side. we are firmly downward, 3.7% 2000.than also look out for major moves in the commodities and epic space. for the bloomberg -- in the commodities and

these days. if you do have this continued depreciation, then a lot of these measures aren't going to do too much for global breakthroughs. it's important to get dollars out there. it is important to do this by offering swap lines and broadly

by giving central-bank access. . you can also do it by simply printing more dollars getting in >> we have got three year highs. g tv for our clients. s&p 500howing what the is doing. the contrast is nothing short of sounding. the fed has been cutting liquidity and that usually makes currencies weaker. everyone isem is undertaking aggressive and pistols. schools -- fiscals. they are doing what they can to prevent good businesses from going fast. -- bust.

as you get a broader response, that may steady yields in those countries and enable some inflows. one of the most encouraging thing from leaders yesterday was they were prepared to counter the idea of bonds. there are two things that need to happen. it could make the european system a lot more stable. by dismissing any argument the union is in trouble through these kinds of measures. fed givingan see the dollars into the system. whether it is by expanding the byet in a more rapid pace or these swap lines and increasing the supply of dollars. until you see the market flood with dollars, you are going to continue to see this cash call.

oil producers needed dollars. flood the system with dollars in order to have a more sustained risk on rally. nick from marion global investors stays with us. coming up, the federal reserve offers fresh measures to counter liquidity strains. we have your chart that matters next. this is convert -- this is bloomberg. ♪

like a wartime government and do whatever it takes to support our economy. >> for those of you thinking of going overseas in the school holidays, don't. >> this is the calm before the storm, before the surge. >> those were a few of the world leaders commenting on the coronavirus outbreak. down, lookingimit to see a down day in european equities as well today.

the 10-year yield hovering around 1%. yen is big. the fed announced it will restart a crisis era program to help counter the liquidity trade building in the last few days. that cash crunch certainly you can seetress clearly in this chart still he -- still exists in the market. the euro-dollar swap at one point hit a 2011 low. this is really a good proxy for how expensive it is to acquire the greenback. you can see since the fed announced it has slightly eased, but again, it is still stressed in the market. you can see it in all of these swaps. one of the things the fed did sunday was enhance the swap line. even still, it is getting

difficult for companies and investors alike to acquire the greenback. the libor three-month rate for example also saw its biggest jump since the financial crisis, since 2008, so we are in a scenario that yes, the fed is stepping in, helping give the markets liquidity, but we are seeing this cash string that is also rippling across to the spot right -- to the spot market with the greenback jumping to its highest level in about three years. according to ubs, with the central banks have done is not necessarily give a handout, but it's just a backstop. yousef: thank you very much. look at other measures being taken on the fiscal side, the monetary side, bringing in an aircraft carrier to a coffee brunch as it were. what else do they have up their sleeve?

the market is not responding, the patient is on life support. >> the markets are not responding because, i mean, the markets are desperate for cash at the moment. valuations not really being considered too much. people just want to stay in business. what else can they do? the fiscal stimulus packages coming through are helpful and will help replace some of that demand, but these measures do have to be paid for as well. what you've seen in markets is as these fiscal measures are announced, you see real yields at very high levels, and real yields are way too high given the state of the economy and where the economy is heading to. what you really need to see is the continued coordination between fiscal authorities and central banks to bring those real yields lower. they start to buy more treasuries and get that yield curve lower and reduce the cost of funding for the government,

or you could even go down the the governor said in her speech a few months ago big fiscalere's a response, you could hold down the front end of the yield curve and by controlling the cost of , that could help bring real yields lower and help to weaken the dollar as well. nejra: i spoke to someone yesterday who said we will see one of the biggest rallies in the dollar in recent history. given what you just said, is that why you are putting on steepeners across all markets? >> yeah, i think the bond market is going to reflect the fact aat there's going to be massive shift, so there is going to be a lot more issuance.

i know issuance has not really matter to government debt markets for a while, but the size of this is quite different. i think bond markets have been repricing to reflect that. they also have repriced to beenct the fact that have sold to raise liquidity as well. we think there will be continued pressure on bond yields, but authorities will continue to cut rates at the front end. maybe there is not much room in some markets, but it will continue to hold those lower. as well, you might see from the rba quite shortly that they might flatten the whole yield curve down, but i think that is probably a safe area of the bond markets, sovereign bond market investments to be in and no longer will become a difference in the premium you will get through extended issuance. >> what do you make of giving money to people who are struggling to get by? we have not seen anything that

would cover the size of the united states, and even though it has been taken in stride, it is a historically unprecedented step. how much of an amount would make a difference? $1000, is that really going to do anything? >> it would make a huge difference to some people. think with the response a lot of governments have undertaken in hong kong who suffered early from the coronavirus have gone down this route as well, i think , from a markets point of view and quality point of view, the amount is not huge, but i think it opens the floodgates and set a precedent for how they might respond to this crisis, to plug the gap in demands we will see across the develop of market economy. the key theme that authorities are trying to do is credit easing to keep good companies from going bust and during this period of isolation in order to

prevent them from laying people when people do get laid off like we are starting to see, to make sure that they have some kind of financial cushion. i think they amount is not huge, but the precedent it sets is pretty big, and it's a massive change. cliques are we heading for a worse financial crisis in are we -- then -- >> heading for a worse financial crisis than 2008-2000 nine? >> i think one of the key differences between what we are seeing here and what we saw in 2008-2009 is the kind of moral hazard. 2008 having 2009, you could argue that they took on way too much risk and there was not a huge bit of sympathy for them, where is this is a shock that is hitting the whole world. i think you are seeing the

response from the monetary and fiscal authorities has been much quicker and more aggressive, and they saw the playbook they are stop from 2008 to 2009 to bond markets and credit markets from seizing up. i think it will be short and and the gdp hit will be big, but the measures that have been undertaken, the speed and size of the response hopefully will prevent this from being a longer-lasting crisis and taken lot longer to heal from. like we talked about before, it's a lot less than it was an balance sheets don't it is long. >> here are some important stories we are watching for you. softbank threatening to unravel. the told shareholders it could withdraw from the agreement in a

document seen by bloomberg, the japanese company cited numerous government inquiries into we work. the deal was part of a rescue after itsr we work failed listing last year. defaults are likely to accelerate in parts of the high-yield debt market as the economy faces up to low oil prices and the coronavirus line cio the double says downgrades could be coming fast and furious. fedex is suspending its financial forecasts as the coronavirus pandemic blurs the outlook for demand. fedex seeing a rebound in china. last week, the courier made about as many flights to and from the country as normal. that is as about 95% of large manufacturers have returned to regular operations. were your business flash stories. hsbc named the interim ceo as

its permanent chief, ending a seven-month search. we will discuss that next and the applications. this is bloomberg. ♪

this is bloomberg europe. acting ceo has named asquinn as its -- noel quinn its permanent chief. to have you with us. what was behind this choice? was it just a lack of any other people wanting to come forward and take the job? >> i think they looked far and .ide

honest, things have changed dramatically for lending in the last couple of someone who isg very familiar with the company, who's gone through the ranks and provide continuity is exactly what the bank needs right now given the challenges it is facing. what about the feedback from investors? analysts are quite irish on the stock, but it has outperform some of its peers in the industry. bearish on are quite the stock, but it has outperformed some of its peers in the industry. >> you have companies around the world at the moment dealing with the operation and challenge. they are the biggest global --

financial global trade house, and they will be dealing with demand from companies for credit coming all at the same time. i think it will provide some relief and i think we are seeing that this morning. worse willmuch coronavirus make matters for hsbc? >> at this point, it is anyone's guess, how deep the recession is going to be and how prolonged. we have some bullish comments from some european banking .eaders yesterday the company says it expects just a 5% dip in earnings in 2020, provided it is a bee-shaped recovery, but of course, none of , and the more we know about the virus, the more thatn get used to the fact

we may be -- [inaudible] nejra: great to have you with us. thank you so much. coming up, the u.k. releases wartime funding to save the economy. we will discuss. this is bloomberg. ♪

>> good morning from dubai. these are today's top stories. >> shock and awe. the u.s. looks to inject a trillion dollars into the economy. mulls a cash handout of its own. stateside stock futures slide after yesterday's rally. the 10-year treasury yeild it's around 1%. lowest level in 17 years. to restrictrs agree all travel into the continent. spain joins germany and france.

nejra: the moves we saw yesterday triggered by emergency also the the fed, but prospect of stimulus from the fed reversing. read on the screen in asia. s&p futures down after a jump yesterday. euro stoxx 50 futures on the back foot. the big move in treasuries was stunning. yesterday we saw the biggest severence 1982, a repricing in real yields as well. quite a few things to point out. brent is on the move. key $30 perthe

barrel mark. potentially some $20 in the second quarter. considering negative prices as storage tanks continue to weather up. we are down 0.1%. the bloomberg dollar index falls to three year highs. nejra: boris johnson's government announced a massive rescue package in a desperate attempt to stop the pandemic wrecking the economy. like a wartime government and do whatever it takes to support our economy. joining us for more is our news editor. great to have you with us. what is in this rescue package? >> it is very targeted. they are saying the issue is not money in people's pockets, though it may come to that. it is about business. particularly the hospitality industry. everything is very empty.

i think that is the case across the country. focusing on making sure business can stay open while they have no customers. they are also working with the bank of england to provide lending. it is really about providing the financial means to stay open. with the expectation that in a few months things will start getting back to normal and may start getting back to normal, businesses can stay open. if businesses shut down because there are no customers, there's not going to be much economy left a rescue. yousef: this is arguably a bold package. does it leave the room to do anything further if the situation deteriorates even more domestically and globally? >> they have a couple of options. the size of this package is extraordinary. 15% of gdp. further?go

absolutely. the u.k. spent many many years in austerity budgets getting the deficit down and trying to control spending. that gives them more room than other countries. isdamentally, the question going to have to be, what is needed to make the situation better? they have taken the view small and medium-size businesses are at a critical point. in a few months we may see problems with individuals. a lot of people are probably going to lose their jobs. a lot of people are not going to be able to get work because they are in quarantine. we may have to consider something along the lines of what trump announced, a check to each individual citizen. we are not yet there. thank you so much for joining us. seen to today we have fixed data decline in the pound as investors have criticized the

u.k. for lagging measures elsewhere in europe. are there opportunities to be taken in u.k. markets versus other countries? >> sterling is starting to look more attractive. sterling was priced a little bit -- how the health crisis was going to be handled. i think the biggest thing about the u.k. response is there has been the central bank and they are focusing on the areas that are going to be most deeply affected by the crisis. the assurance given to companies, if you have problems,

we will guarantee your loan, as well as the cash handout. when they are making the decision as to whether they can ride out a few months or so to make -- is made easier by cash handouts. response. is a good it is going to be joined up with the bank of england. be hopefuleasons to about the u.k. economy. areef: currency traders betting against the laissez-faire approach. that is something we will put aside for a moment. if i'm looking for a bargain, i have capital to deploy. are there good deals to be made in the u.k. at the moment? brave,ou are feeling there are. i think there are people -- there are companies across the

world. i do think the measures are shift from a massive private to the public sector. there are companies out there balance have strong sheets and can survive the next three months or so, helped by credit union measures governments and central banks have undertaken. nejra: on the point of the measures central banks and governments have taken around the world, a column by robert burgess says until a real solution to the crisis is in sight or until we see an inflection point in global cases, central bank moves, government stimulus are going to be viewed by markets as little more than triage. what trade are you standing to take when we see an inflection point?

>> i could not agree with his point more. what central banks and governments are trying to do is make sure when that inflection point does come, the economy can rebound sharply. i don't mind dipping my toes into peripheral government bonds in europe. i think it will be politically a -- i thinkllow the despite the spread widening that happened after the ecb meeting, i think comments last night about eurobonds just show there is commitment to the european union project. i think central banks will need to hold down the curve. whether that is through bond purchases or yield curve control .

we will have the banking system hopefully in the medium term. we have currencies like the euro and the yen on the expectation the fed needs to try to bring the dollar down. the question whether it can keep credit flowing around the world, not just the u.s.. let us get to markets coverage from around the world. joining us to discuss the bloomberg's juliette saly and annmarie hordern. what are we seeing? underh australian assets pressure after an unprecedented travel ban from the prime minister urging all australians to avoid overseas travel indefinitely. the asx 200 down. the aussie dollar below 60.

expectation we could see qe from the rba. at aussie bond curve its steepest since 2018. low.kospi at a 10 year hong kong may implement a travel ban. the hang seng down 3.24%. well.untry could be doing online gaming is rising. looking at the price of oil and gasoline, never far away. >> the price war is not abating. saudi arabia double down saying exports are going to be 10 million barrels a day, a record. look at gasoline in the united states. the lowest levels we have seen since the financial crisis, but

people were driving during the financial crisis. now we have people working at home. the picture for gasoline could get worse and the price war in the oil numbers we are seeing, the lowest level on wti since 2003, goldman sachs cutting their second-quarter target for oil saying it's going to go $20, not $30. we have to talk about the dollar. scotia bank saying markets are driven by liquidity and credit. liquidity problems persist. we are going to continue seeing dollar strength. . our guest sees dollar weakness. the dollar strength is taking a pause today, but nothing to undo the massive gains we have seen. part of what is happening here is the yield curve. you can see how closely it seems to have been linked.

massive stimulus being proposed in the u.s.. when does the dollar finally lose? if the financial crisis is any indication it's going to be a few weeks. not hitar peak did until march 2009. look for dollar strength to continue for a while longer. >> thank you so much. great work all. let us get the first word news now. steven mnuchin believes u.s. unemployment could rise to 20% without government action. he is weighing the possibility with republican senators amid concerns over coronavirus. he said fallout could be worse than the 2008 financial crisis. biden vice president joe swept the democratic primary. it gives him a commanding lead

over bernie sanders. biden now has more than half the delegates needed to secure the nomination. theident trump has secured republican nomination. u.s. journalists expelled from china. china says reporters from the new york times, wall street journal, and washington post have to head back their media cars. beijing says it is in response to u.s. caps on chinese media. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. jeffrey gundlach says en masse to false are likely -- defaults are likely. ♪

nejra: this is "bloomberg daybreak: europe." yousef: here is what you need to know to stay.

therey gundlach is putting chance of recession in the next year at as high as 90%. he said the u.s. national debt will likely grow to $30 trillion in two or three years. if oil stayshat below $30, you're going to have defaults in the high-yield bond market. he argues downgrade should be coming fast and furious. nejra: japan's government and ruling coalition are considering a cash handout as part of a coronavirus stimulus package. bank of japan governor kuroda said the central bank will support the economy toward a v-shaped recovery. to, i want to circle back what we have heard from jeffrey gundlach in terms of default in

the high-yield bond market. you are starting to initiate names in the energy sector. >> we are looking at names here in asia. corrections, there is definitely opportunity. it purely from a valuation perspective and looking specifically for some high day-to-day is at the moment. have a lotcould further to go in terms of downside. evaporate.eld could extreme circumstances require extreme measures. how do you mitigate that risk? are trying to focus right now on really, stocks which are trading well. we look at the hang seng index right now. it is below book. around nine times more earnings.

china, look at places in the energy sector looks attractive. the auto sector is looking very attractive. 2019,had a very difficult but in 2020, the first couple months there has been nothing. now we are seeing some pickup in auto sales. that is a potential opportunity in a closed domestic market like china. what sectors would you be avoiding right now? >> we would still have to be careful i would say with health sectors. utility names,t we are concerned. when we look at dividend place, there has been quite a bit of change in yield amongst utility stocks in china for the past few years. they are still looking very

expensive. careful whene more it comes to utility sectors, especially throughout asia. yousef: what about functionality of markets? what are you seeing in terms of liquidity? have you hit any rough spots at all? newor us, all things are normal. put to see cash we can use, we are putting that to use. more activity. redeploying cash into the stocks 50%, to 100% upside over the next few years. things jeffreyhe gundlach talked about is the liquidity problem making buybacks all but impossible, meaning one of the pillars of the stock market is disappearing.

about theen talking huge demand for dollars worldwide. how is the current liquidity problem, the demand for dollars, affecting your strategy? >> it has not. share buybacks is really a key focus amongst u.s. stocks, but ,hen you look at asian stocks hong kong, china, or japan, the share buybacks are smaller. the corporate's have stronger free cash flow. they are not having to issue shares. having issues with share buybacks, not really a big issue. right now there's a lot of concern, a lot of overselling in the marketplace. opportunities, especially being a bottom up, medium, longer-term investor. we appreciate that, some

bargain-hunting for you. g at east spring investment. a recession on the way and likely to be worse than 2001. this is bloomberg. ♪

yousef: this is "bloomberg daybreak: europe." nejra: we are about to talk about calls we have seen around recession risk globally. if a global recession is imminent and inevitable, how will you be preparing in a portfolio? i do think a lot of prices in

credit spreads and markets reflect that already. like i said before, this is a really nok that is one's fault. i don't think governments and central banks, if they can help it, are going to let companies go bankrupt which would lead to massive unemployment. we are looking to pick up decent companies. yesterday we saw a fair amount of issuance. .e saw a aaa company issuing we like to dip our toes there expecting this credit easing response from government. we also like selling sovereign debt.

we think the ownership is going to be shifting toward public sector balance sheets. yields should reflect that. we like to sell those rallies. yousef: gold and silver are screaming a recession could be inbound. the ratio has jumped to the highest level since the 1970's. how much of these do you add to your portfolios? be more fixed income. i would expect for gold to do well. is they obvious reason will sell what is liquid and what they can get. gold has come down a lot. yields in the u.s. are still way too high. are positive. they need to come down by 50, 60, 70 basis points to try to

stimulate more recovery. what has happened so far is despite the governments trying to loosen financial conditions, on the flipside, you have seen real yields higher. really you need central banks to cover, get yields lower. was morgan stanley and goldman sachs that yesterday declared that global recession underway saying the slump is likely to be worse than 2001, not as steep as steepest 2009. if we get recession, do we get a spike in inflation? think too many people are worried about inflation. someight see inflation in countries if their currencies we can on the back of this recession. -- weaken on the back of this recession. defense --ey

difference from previous times. nejra: thank you so much for joining us. nick wall. futures turning lower in europe. this is bloomberg. ♪ ♪

anna: good morning, welcome to "bloomberg markets: europe." we are live in london. i am anna edwards. ♪ the u.s. looks to inject over $1 trillion into the economy to counter the coronavirus. britain announces billions in loans and tax cuts while japan considers a cash handout. s&p futures