francine: europe struggles to get ahead of the endemic. angela merkel self-isolate's. market turmoil. down,tock futures congress failing to agree on this to millis package. agree to theo stimulus package. a lot more coming your way. global virus cases top 330,000. china rebalance in the second quarter as hong kong clamps down on travel. the tokyo olympics are set to be postponed. good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance ," a little different today, but still from london and new york. i am francine with tom keene. what a week we had last week, and what a day and probably the week ahead. we are expecting the stimulus from the u.s.. there is a lot of concern of what behind the doors is going on. and we look at the numbers, infections in the u.s. and

europe and why debts keep rising so much in spain and in italy and what can be done. tom: we have an important interview in the next hour on the virus. we will go to mount sinai for that. i am next to the outside i manhattan hospital in new york. i will tell you, it is an extra ordinary monday. i know you see in in london, we see it in new york, with quiet streets and politicians really needing to adapt. my major message in this hour is the complete readjustment and struggle that global wall street is having trying to gauge this contraction. i love what bruce kasman said at jp morgan. he looks back and harkens back to the contractions that we saw before world war ii. francine: i think we had an update on friday from goldman sachs, j.p. morgan on the second quarter gbp just gdp in the u.s., and the numbers are nothing like we have ever seen

before. so i know we have a full round of update just on the lockdown, different in new york than it is in london. boris johnson saying that people need to stay home, but thinking about it lockdown because people do not listen enough. let's get to the bloomberg first word news in new york city with viviana hurtado. viviana: we begin on capitol hill, that is where senate democrats have blocked the giant coronavirus economic rescue package. readers in both chambers disagreeing on how to spend almost 2 -- leaders in both chambers disagreeing on how to spend almost $2 trillion. he will see if there is a change of heart. chuck schumer called the bill a large corporate bailout with not enough oversight. now to morgan stanley. it is warning the coronavirus will be a lot worse for the u.s. economy than previously expected. the bank predicting gdp will plunge 30% in the second

quarter. morgan stanley economists see unemployment averaging 12.8%. there is doubt if angela merkel can remain the public face of germany's fight against coronavirus this money. the chancellor quarantined herself at home after she came into contact with a doctor who later tested positive for the disease. in japan, prime minister shinzo abe indicating the december liv-ex postponement may be up inevitable. the international olympic committee is saying it will reach a decision in four weeks. candida says it will not send the athletes to the tokyo games. -- canada says it will not send the athletes to the tokyo games. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. francine? tom? . tom: viviana, we appreciate it. i want to reframe where we are in the markets, and of course we

look back the last week, and even the view from jamaica last week, which every day was historic, this morning it is different. this morning we went to look at equity markets down, the standard & poor's, sp why etf is down about 3.4% or so. and we have the usual bond market moves. but if we go out to the second screen, and i want to talk about this right now -- we have the fix coming in, a little better markets then we had tuesday, wednesday of last week, and then it really gets interesting all in all. the number one thing i would look at right now is yields coming in lower with curve steepening. that means the two-year, the five-year, the 10-year yields coming in, the 30 year bond a little bit of a higher yield, and that really indicates the readjustment to global contraction. oil struggling here. we did not make a run to $19 a

barrel in west texas, but we are watching brent and west texas. finally what i would do is really focus on, all in all in all, the dollar index. the dollar index is the blended major trading index. the bloomberg index is frankly a little more sophisticated. the dollar index, that is the number one thing i am watching. we see what i would call dollar resilience here this morning. maybe it is not dollar strength. we will see what we do with the politicians in washington. but dxy is the number one thing to watch, and that is the strong dollar. carl weinberg at high frequency economics publishing and saying it is simple, stronger dollar means a greater struggle for u.s. exports once we get through this pandemic. what do you see in the data this morning? francine: let me talk to you about the story. the data is similar to what we are seeing. the democrats blocked the rescue package, with a discriminant on

how to spend nearly $2 trillion -- with a disagreement on how to spend nearly $2 trillion. if you look at what the markets are looking at, you can see european stocks down from 4%. what else they are looking at is the length of contagion and the economic policy response. we had enough states on friday, the monetary fund chief economist saying that the world has not seen a synchronized interruption in economic output in decades. ahave oxford economics seeing 12% drop in gdp like bank of america goldman sachs, 24% slump. that is the one thing we need to watch out for. let's get straight to our guest host for today. she is the chief investment officer at legal general. she joins us from london. great to have you on the program as always. what needs to happen for these markets to find a floor he?

i don't know whether they are looking at contagion or if it is -- to find a floor? they arenow whether looking at contagion or if it is looking at more job loss in the next weeks or months. >> the most important thing here is the timing. for us to have an understanding when covid-19 is under control, i think the most important factor to watch -- this is why looking at the sars experience and other epidemic experiences is the idea of when new cases would finally start to fall. near yet, and as such, all these draconian measures, literally implementing -- literally with people at home means the economic impact we can assess now if it is the second quarter event. but the longer this takes, it is clear all these numbers that we are discussing might look very different once we get to this point.

downturn ine duration will be determined by economics. is there a limit to what governments and central banks can do? sonja: i think what we have seen clearly is a flurry of measures from central banks and from politicians over the past weeks. it is very interesting to see that for the first time we have a real response from policymakers, and i have heard over the weekend, the nice quote that it seems much easier to get these packages agreed in parliament, simply because there is no one to blame, because it is an external shock hitting economies that requires immediate action. but what you see is obviously, in the reaction markets, the economy, we are doing this in a much, much shorter time period. we are going to see an employment cycle literally within a few months which normally takes at least 12 to 18

months. so everything is literally shortened in terms of its impact. early tod, it is too judge whether the measures that have been announced so far will be sufficient to stabilize the situation. policymakers again will obviously assess their measures as more information becomes available, and crucially again, when information becomes available around the containment measures and how successful they are. i think only than will we be able to understand whether the fiscal measures, the central bank policy measures, will be sufficient to literally help the economy to restart. and again, most importantly, when can we think about a restarting? because literally for the time being, we are shutting down economies to an extent that we have not seen outside warp to -- outside war taupe.

tom: it is said that this is not equivalent to a war, talking about that equivalency -- that in a war you have a spurring of demand and everybody is behind it, and this is more of a medical condition as well. what it comes down to, particularly with a long-term approach of legal and general is, what do we do with our retirement assets? speak to someone who has an account with legal and general, or someone waking up in america going, what do i do with the 401(k)? what is the action plan for someone with long-term money this morning? the time being, we are not recommending to take any urgent action right now because if you have entered this crisis right now, with a specific kind of risk allocation and risk budget, to us the idea really is to get a better understanding,

what the economic impact is. to us, very importantly as well, what is the implication of this dramatic shift toward more fiscal support, and what do we have to read into long-term return assumptions for various asset classes? unfortunately, there is no kind of general advice we can give because it really depends on where you are in your lifecycle, and hence the needs you have with regard to your retirement assets. what we will look at clearly is when can we start seeing a stabilization in markets, and i think we have to be very realistic, this will be a bottoming process. this is not going to be a one-day switch the bottom and it is a risk on. it will be a bottoming process with a drawn out affair in terms of understanding when we might have seen the success of the containment period literally bringing the new infection rate down, and secondly, quickly we can then think about -- and this

is a big if -- to restart the economy. but there is implications obviously in the context of the attractiveness of various asset classes, and you could argue that for some, it appears to be a lot more attractive already. but what we would say is that there is no rush to go out today because we need a lot more information first in order to see what is going to happen. again, the market has compressed , uncertainty in a very short to of time. it has been the worst in terms of the overall drawdown. so you can see that the market is already taking into stride and into the discounting mechanism of what is going to unfold. but unless we have greater clarity on when the economy might the able to think about restarting, it is difficult to call a bottom. but from here, we have to consider that volatility is one of the main features, and we have seen obviously up four on friday, down four today. it is big movements simply

reflecting the uncertainty that we have in markets. tom: one final question, if i could. 1.16 sterling and the challenges of week -- of weak pound sterling? what is the challenge for the city of london? sonja: i think the city of london first of all must try to get their head around how to deal with the containment measures and how we can literally operate the functioning financial market, while keeping everybody at home and while keeping our own staff safe. so that i think is the most important consideration, and then obviously it is interesting to see how we see now, the bank of england reacting. but at the end of the day, i don't think it is necessarily sterling. everybody is buying dollars, and the reaction function on euros and sterling has been quite dramatic. it will be interesting to see because we are obviously approaching month's end, and there have been quite a lot of

hedges that need to roll, so that will be very much in the center of attention for this week, and clearly then again, it has been a very fast movement, as everything has happened in financial markets and currencies are no exception to a similar reaction function that we have seen in equity markets and in bonds. for thank you so much joining us today, with legal and general, sonia loud with us as well. thisll do a lot more in hour with guests, including a important position -- physician on the epidemiology of this virus. we are thrilled that you are with us worldwide this morning. the futures marks down sharply. coming up later today, later this morning on bloomberg television, a conversation on america's in oil on energy policy, a conversation with the united states secretary of energy. please stay with us. this is bloomberg. ♪

>> we are moving much faster than we moved into thousand eight. we are being more aggressive. is there more we can do? yes. we are being very aggressive. thecine: that was minneapolis -- president. neel kashkari. at the packages put in place right now, i don't know if there is a template for how you do it right. i don't know if the u.k. was at the forefront because first we saw coordinated action between boe and treasury. it is really trying to help -- to tell people that not only do

not default, but if you are unemployed, you will get benefits. sonja: i think you are already raising the right word. coordination is the one that we are most looking after, because it is very different. it is not about bailing out big banks, it is not about allocating money to big corporations. we are now facing a crisis for sme's and individuals. with countries going into lockdown, it is how can we get the money to those in need? that is very different, as you can imagine, a lot more complicated. this is what we are really looking into, how well-equipped our governments and central banks to make sure that the money is reaching those in need? this is very different with the playbook of 2008, 2 thousand nine because it was first and 2009, because08, it was first and foremost about

providing liquidity to the big banks. it is very abrupt because you are shutting shops literally overnight, and people will run out of cash very quickly. coordination means between central banks and governments, but what we would be looking for as well is more international cooperation this is a global pandemic, a global crisis, an external shock that will hit most countries to the same extent because if you bring the economy to a halt, it is literally how you can help the individual companies and individuals that will lose their jobs to survive and get through this. francine: earlier you were saying it was too soon to go back into the markets, in terms of bonds are equities, but is there a difference that with the domestic -- or it is global international, than it does not make a difference? anja: obviously it does make difference, and you are seeing that some countries have mechanisms in place that might dampen the blow a little bit,

but again, the overall size of the package will most likely be reassessed in the context of the timing and the time of the overall shutdown, and then the depths of the economic recession. so i think that size does matter, the coordination between the central bank and governments matters, but i think global coordination would help a lot in terms of the understanding we have talked a lot about the missing dollar liquidity, seeing what the fed has done to establish those lines. but am sure there is more that in terms of understanding, best practices on what is working, to make sure that we can literally provide help to everyone in need. in terms of what it means for financial markets, again, i think there might be regional differences, but i think markets and investors overall, right now, are predominantly focused on liquidity and the functioning

of financial markets before we then can move on to say if we have reached those first two points, let's start assessing on when we think markets might not amount in the context of -- might not amount in terms of the crisis of covid-19 and economic impact that will follow. that is the sequencing we are looking at, keeping our staff safe, getting our heads around the remote working practices, and then the liquidity and the functioning of the financial market to make sure we can help regulators, policy makers do that. laud, thank you very much. great the appreciate -- greatly appreciate legal general this morning. park,ere all central francine in london as well. we are doing it with a great team, all wired up. this is the bloomberg terminal on a cell phone. this is one of the things i do. i live all of this thing all day long. i lived all of thing in jamaica.

-- i lived off this thing in jamaica. how about tv ? things.is any number of not only is it tv in the terminal, but it is your ability to hear blumer television and bloomberg radio across all our different properties. tv . stay with us. this is bloomberg. good morning. ♪

viviana: you are watching bloomberg surveillance. we begin with airbus withdrawing

its proposed dividend payout. this as a sign that the coronavirus pandemic is ripping through the aviation industry. airbus' actions are a measure to increase liquidity. the largest long-haul carrier ever is suspending passenger flights to most destinations. this as a pain deepens for the world's biggest airlines, singapore headlines cutting through april 26 -- through april, 96% of its capacity. that is the bloomberg business flash. francine: thanks -- tom: thanks so much. we are looking at the standard & poor's 500 per the etf down 3.5% as well. coming up, our conversation on the british response. rupert harrison. this is bloomberg. ♪

i noticed that people are using the word "recession." this is not the right vocabulary for discussing where we are.

>> i think it will probably be a recession. >> it is a technical recession of -- definition of a recession. >> we are in a recession. that is certainly the situation we are in. >> it is a near certainty and will be one of the worst recessions in peacetime. >> i fear we are underestimating the depth of this recession that will hit the economy. andhe idea business organized, partial shutdown of the u.s. economy during q2. i think it is inappropriate to call it a recession. tom: the voices of thursday, the voices of friday, they are a little different this monday morning. we welcome all of you, whether it is your evening or afternoon. certainly early morning in america. behind the essential part and a new york city that is forever changed. no question about that. we hope you are safe in your

social distancing as well. francine lacqua in london. i am tom keene in new york. eva davis will come up in a moment. a david davis will come up in moment. he goes back to the sterling crisis. rupert harrison will join us with a new review of things. what does the prime minister need to do today? what is the action plan of 10 downing street? rupert: i think we are moving towards the situation a lot of european countries are in. there has been some dismay in the center of government that the response from the population has not been quite as aggressive in terms of social distancing and isolation as they wanted, so we will see further statements. by the u.k. is getting there. but the u.k. is

getting there. it will take a little longer. they are behind the curve with infection rates, so the betweennt is struggling economic impact and what is the right thing to do in controlling the outbreak. tom: a number of research pieces really making clear this is not a war equivalent. as we learned in many different wars, in a war, there is a stimulus in the economy to fund the war. this is different. this is massive demand destruction. what is your historical template that you use when you see a demand destruction like this? rupert: we do not have one. this is closest to a natural disaster. we have to think of it as a natural disaster. the policy response needs to be equivalent to a natural disaster. we are seeing that, the equivalent of universal disaster insurance being provided by the government. that is necessary to prevent

disruption turning into permanent damage. policy response, on the economic side, we are starting to see something substantial. good, especially compared to other european countries and with this announcement around wage support for businesses. we have a lot of concerns around large-scale layoffs prior to that, and the fact that the government now says it will pay up to 25,000 pounds a year, 80% of layoffs, it has put the layoffs on hold. the open-ended nature of that commitment is right. this is a large-scale, open-ended insurance from the government. francine: let's also bring in david davis, former brexit secretary. almost automatically postpone negotiations with the e.u.? isst of all, michel barnier

self isolating because he has contracted covid-19 p of the timeline seems difficult to achieve now. david: not necessarily. a lot of people who hate brexit and say this is the time to stop it -- no. on ant no quota limits reasonable basis. if we do that, that is the best way to preserve what there is of the economy through the end of the year. the biggest impact on our economy, before this, has been the deferral of brexit, the increase in uncertainty. so this will continue. yesterday.chel he is getting better. they will do these negotiations by video, like i suspect, through the rest of the year. that will not slow it down.

in these negotiations are documented, and that will continue. francine: what i am struggling to understand is how can the negotiations happen in a scheduled time frame almost every minute is spent trying to save an economy that is hit really hard by the coronavirus? because of the different people doing it, because the timeframe for negotiations -- to be blunt, this is an arrival in's -- irrevelance today. negotiations will always heat up in the last days, hours, minutes, and sometimes they do what they call stop the clock and overrun. what is going on now will not setback a few months. be trying to will get back to business as usual, everybody, government and

private sector included. thrilled tois, speak with you from new york this morning. what i see from research over the weekend is the mystery of however we come out of this natural disaster or medical crisis, if we pile on a lot of fiscal debt, if we pile on a lot of monetary accommodation, there has got to be a year's glide path to come out of that, as that is out of any war. do you just presume that, if the johnson government lays on a lot of that, it will take years to bring things back to normal? think, in national debt terms, that is right. emergency, not a war. it is harder than a war. 235% of gdp debt --

we are not at that level, but we are harder than now. for nottake a long time just us but the rest of the world. onwill have to agree manufacturing worldwide, bigger than bretton woods. moment -- rupert is right about insurance. but it is still not complete. ensure not yet acted to like where the micro business is , a sign part of the u.k. economy. we have not done anything about that yet. we will. expensive,incredibly but we have to manage our way out of it. francine: the u.k. government

has set out these emergency powers to tackle the spread of the coronavirus with the publication of a bill. i believe you think this is overstepping the mark. why? firstly, you will notice, in the last few days, a number of things the government has s,ne, shutting pubs, bar restaurants, and other restrictions. this is being done under existing legislation, passed in 1984, ironically. it was designed for pandemics. there is already one piece of legislation there. another one, this is contingencies act, designed about 2004 -- it passed very carefully. if they need these things in a hurry, they should use that. however, given where we are,

they have written a 300 page law in0-something page five days. we will pass it through our house of commons in one day. you can guarantee there will be mistakes. two, we will not find those mistakes in one day. what the government should do is have this for a year, in about six months to nine months time, when we understand a bit more about the science, when we have some drip on the economics. and we have some idea of the social impact, which no one is calculating at the moment. then we will be in a better position to write the laws for a second year, if they need them. we have a problem in this country of passing dramatic and draconian legislation and forgetting to get rid of it afterwards. not a good thing for a free

democracy. tom: thank you so much. david davis, the former brexit secretary. we continue our conversation with rupert harrison of blackrock, coming up. ♪

good morning. thrilled you are with us today. from new york and london, special coverage. well, in lock down as francine lacqua and i at home. we thank all of the "bloomberg surveillance" and bloomberg media team for making this happen. the amount of press echo -- pr osecco i whether to get these lights and cameras was extraordinary -- and it was

good, western italian we were doing to support the italian economy. we want to dive into this with rupert harrison and talk about the research that blackrock did over the weekend and the research from other houses as well, so you understand better the depth we are going down. what is the distinctive thing you heard from all of the financial types at blackrock about how we are declining? what is the one thing that sticks out about the drop in decline? rupert: we have got this real-time information, but we have also got to make some judgments about how long this is going to bp the length of time is the biggest uncertainty. but if you add together the segments of demand that are being turned off across developed economies, you easily get to these very big numbers in the next quarter or two. the bigger uncertainty is how that will turn into a more traditional recessionary dynamic

over the quarters i had the initial demand shock -- you can add up -- we have a 6% fall in this sector, a 30% fall in that sector. what is harder to model is the knock on impact on confidence, the multiplier impact on things like capex, although that's all of the traditional dynamics in a recession. the big uncertainty in stemming those impasses the policy response. that is why any forecast beyond a quarter or two is entirely dependent on the policy response. what is in courage and -- encouraging is that the scale will be in 10% of gdp bigger across the world. with hiscarl weinberg, decades at lehman brothers, abandoned, for the first time in the 32 years, any forecasting.

applied --will be maybe it is a modern monetary theory being applied as well. what is efficacy you saw in it british government of a check in the mail? what is the research you glean of the idea of x number of thousand dollars showing up at the door? rupert: i think that is a decent start. the interesting thing is if you compare the u.s. to a lot of european economies, the u.s. needs to run faster just to stand still. a lot of european economies have bigger automatic stabilizers in place. you have a bigger welfare system in place for people to fall back on if they need it. a lot of that does not exist in the u.s. you need discretionary measures from congress just to put in their support that already exists in european economies. the major focus in the u.k., and what should be in the u.s., is corporate cash flows. that will be the most important

thing that makes a difference between a temporary shock and a permanently damaged economy. you need to keep these businesses alive, particularly the smaller and medium-sized businesses that just cannot -- that cannot just rely on debt. you need cash interventions. that is why the most important interventions, starting with the u.k., is this support for wages. you have seen the government will pay up to 80% of wage costs, up 25,000 pounds a year, salary equivalents, or businesses seeing disruption in the u.k. ofrecedented but the kind interjection we need to prevent massive corporate bankruptcies. it is those corporate bankruptcies that are the big longer-term risk that we do permanent damage to the economy. francine: the markets do not seem to really be differentiating from the policy response. they are attached, but i guess

they are looking at the length of the contagion and the economic party response. when do we start markets behaving differently? rupert: we are already seeing some improvement in market functioning. but we had a lot of for selling in the market and a lot of dysfunctionality in the markets. we are seeing big bazookas from central banks in terms of restoring liquidity. we are already seeing reassuring signs. government bond markets are functioning a bit better, particularly. and for multi-asset investors, it is reassuring to see bond falling during a risk off day. we are seeing some better functioning of markets for that is separate from markets trying to find a a bottom in terms of earnings expectations and default expectations and the credit market. that will be more about expectations around the duration of this crisis. the is now on the part of

judgment that is the hardest one to make. rockets are pricing something that is effectively going to be better and dealt with by the end arehe year -- markets pricing something that is effectively going to be better and debt with by the end of the year. the problem is this is unlikely to be a one and done intervention in terms of restricting activity. we are likely to get rolling resurgence on activity for a year or more. the big question is can governments find a way of doing that that is less disruptive blanket shutdowns we are getting at the moment. francine: thank you for the insight. rupert harrison of blackrock there. coming up, deutsche bank's global head of economic research coming about 7:00 a.m. in new york, 11:00 a.m. in london on bloomberg radio. this is bloomberg.

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francine: this is "bloomberg surveillance" from london and

new york. let's focus on fintech. a challenger high street land around new york told investors that it is pulling out of the u.k. bigger issues facing the economy is coronavirus and what is the berlin bank leading to do to grow the business? joining us is the n26 co-founder. i know it is very uncertain times. what does coronavirus mean for funding in fintech? will you struggle in the next round of funding? >> yes. we are seeing that the environment is getting more challenging so far. for us right now, keeping our employees safe is our top priority. francine: when you look at

people only banks, staying at home is a positive in terms of business revenue because you cannot go to a branch. is it a negative because of the accounts you have to pay for? >> yes. i think there is definitely a shift in user behavior. spend for traveling, restaurants. we see more expand for a relative share of commerce increasing, but generally, the effect is limited, but there is definitely not a positive effect in any category. is to shiftrtant away from physical money at contactless interactions.

francine: what does it mean for possible ipo? bloomberg was speaking to you, and this is something you are looking at, i think you were saying. is this off the table given the yes.t turbulence actually, i think the private markets are liquid, used to be liquid, and there is no immediate change in our long-term plans due to coronavirus. right now, it is about helping not to spread the virus, keeping customers safe, providing services scaled to our customers, like keeping customer service running. i think that is our main priorities. weare not out of the market have not changed our long-term plans. the i've been looking at bloomberg dollar index, one of the key indicators in this

monday morning early in the u.s. points seen other data that are somewhat quiescent. the bowe bergdahl is stronger than friday, and that bears watching. country doing, with chancellor merkel, her illness is reported in the last 24 hours -- how is germany doing in affecting historic stimulation? is it working? maximilian: what is most the number ofhat severely affected people is still very low in germany, especially compared to other european countries. right now, people, on the economic side, people need to figure out things. obviously, they will see a massive decline in economy, like in the month of march. but it depends on how long the crisis is ongoing. germany and the german economy for crisis, but the

longer it takes, it will affect production, affect the service industry and a lot of different ways. most people and most companies have shifted to work from home. that is a tremendous challenge. for our industry, for example, start ups, it is easier. everything is around cloud computing. most of our people are working from laptops anyway. -- imagine and industry there will be massive effects. tom: thank you. maximilian tayenthal of n26. this is bloomberg. ♪ omberg. ♪

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only the second global contraction since world war ii. american job loss will be immediate with echoes to the depression. --s is not 2008, then a what you should do and what should politicians do. senate republicans and democrats fiddle while doctors, nurses, and virus responders burn with anger. can washington deliver trillions of dollars of aid fast? the markets -- how about a surveillance pro tip. andh dollar, watch credit, watch the american banking system. good morning. special edition of "bloomberg surveillance." somehow, i think we will be doing these very much into the future. from new york across central park, i am tom keene. in london, francine lacqua as well. extraordinary efforts by o