be 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 our teams to make all of this remote

stuff happen here in the lockdown of new york and london. that does not mean the conversations will stop. great conversations lined up today. thank you so much for watching our last hour with rupert harrison. we move forward with michael a moment.ning us in my observation is that every nation for itself right now. how was prime minister johnson's weekend? francine: i do not think they are competing with each other. there is a lack of coordination, but when you look at the u.k., that is coronation between treasury and bank of england. so it is domestic coordination that got it right. if you look at the global efforts, maybe coordination could help in terms of medicine of swaps -- medicinal sops information. boris johnson has told people to self-isolate or at least distance themselves. if you look at pictures across london, many people, far too

many people, are just not heeding the advice of what the government is saying, which is why we hear that the government is thinking about a lock down that you have in new york. variousn you look at banks and what they say about recession or the second quarter in the u.k., the numbers are ugly. we need to look at the number of inflection -- infections. if you flatten the curve of infections, that could have an impact on the economy. tom: we will see. there are real nuances in the data. right now, with our news, in new york city, here is viviana hurtado. viviana: we begin on capitol hill. senate democrats blocked the giant coronavirus economic rescue package, disagreeing on how to spend almost $2 trillion. mitch mcconnell is calling for a minutes after markets open in the u.s. if there will be a change of heart then.

democrats are worried about not enough oversight. morgan stanley is predicting u.s. gdp will plunge 30% in the second quarter. this is a warning that coronavirus will be a lot worse than expected for the u.s. economy. morgan stanley economists seeing 12.8 percent unemployment average. and chancellor angela merkel has quarantined herself at home today. the public face of germany's fight against the coronavirus behind closed doors after she came into contact with a doctor who later tested positive with the disease. prime minister shinzo abe of japan is indicating that postponing the summer olympics may be inevitable. the international olympic committee says it will reach a decision in a four weeks. but canada says it will not send athletes to the games -- it wants the games delayed until the pandemic is controlled.

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. tom: thanks so much pay let's get to the data. we are seeing the market open with a little bit weaker and yields lower, from their two-year space out to the 30 year bond, with curve flattening. those worries about massive economic slowdown. i want to point out the bloomberg dollar index, which is much more of an emerging market index.en the vanilla dxy a stronger bloomberg dollar index. that bears watching, with the mexican peso and the turkish lira weaker. just two examples are the other thing i point out is the bloomberg financials conditions index through the asia morning, through the european morning, and now into the new york morning. it has deteriorated, almost out to seven standard deviations.

the bloomberg financial conditions index shows maximum stress within the system. stock is dropping globally. we are seeing it here in europe. you were talking equity futures. this is what we are seeing in europe. down to 3%. this is after a weekend surge in death toll because of corona tires and a failure by u.s. congress to agree on the stimulus package. the dollar pretty much steady. brent crude extending losses. i think i have a second board looking at the bond, the italian bond yield at 1.65. germany, it seems that ecb action so far has helped a touch. we continue looking at these cross asset checks almost every 10 minutes. tom: we will be looking up that across equities, bonds, currencies, and commodities. very important to bring in

michael darda of mkm partners. he does a terrific job of synthesizing the bid and ask of the various markets. what is so important is the market psychology now, which is we are down big, so, at some point, you enter into the market. is there an urgency here to wise buy s -- by stocks -- stocks, or can you be patient and wait? michael: hi, thanks for having me on. there needs to be patience the part of retail investors, if they just recently noticed that their portfolios have fallen a lot, and they feel like they want to panic and sell everything. probably a very bad idea on a multiyear horizon. tothe other hand, our advice

institutional investors or even retail clients that may be listening out there is that you probably do want to lean into this market declined in equities gradually over time, but only with a multiyear horizon. i have no idea if we are within a few basis points of the low or if equity markets are going to continue to fall and make new lows by a wider proportion. what i do know historically is that down 30% plus is in your run-of-the-mill bear market. no one will be able to time this thing. is to be to do gradually leaning against the wind for longer-term investors and not to panic and sell everything at the bottom, which is what happened in 2008. neverof retail investors really began to cover -- to recover from that until just recently, unfortunately. to say here,nt

next to mount sinai, it is great next toa cup of coffee one of our great cancer hospitals in new york. i look at the theory out there of the idea of stimulus as well. modern all become a avoid any- will you talk of keynesian theory? michael: i do not even think we need to use mmt. i think you will like this. i.s.l.m. analysis. a pretty much describes perfectly the shocks hitting credit in goods markets now. you may have noticed that, from march 6 until thursday of last week, real interest rates were soaring, inflation expectations were collapsing.

that would be consistent with a big leftward lurch in the l.m. curve. liquidity shock, a huge rush into money and dollar liquidity. the fed has been trying, but has simply been overwhelmed by that huge spike in demand for liquidity that is consistent with wider credit spreads and lower equity prices. a tiny bit of good news for both of you. we just started to see, friday -- and it looks like it may continue today -- the fed and other central banks potentially getting a little bit of traction against this huge liquidity shock. real rates plunged 50 basis points in the tips market friday. inflation expectations rose 20 plus basis points. it is a start. we are nowhere near recovered. these are the credit markets are under tremendous stress, similar to 2008. but it is a start, so let's go

with that. is the market -- as an economist, what data do you look at to base your forecast? if you look at the big banks at the moment, it is anything -24% second to quarter. what do you look at? i do not know how you model it. and because it is a phase of how long infections last, i do not know how much time frame need to give yourself to forecast accurately. michael: good point. the dispersion in consensus forecast thousand no one has any idea -- tells us no one has any idea. we had james buller tell us that gdb could fall 50% in the coming quarter, which is certainly -- you cannot rule it out. i try to look at historical

parallels and tried to use a proper framework for thinking about the macroeconomy. unfortunately, with this pandemic, globally, the closest parallel we have is 1918, 1919. we had world war i going on around that time. there is really no perfect parallel. we had a nine-month inflationary recession in 1918, 1919, what you would expect with a simple adverse supply shock, which is what a pandemic should be, at its core. unfortunately in a modern financial system, we are given in enormous demand shock from a huge spike in demand for liquidity. then we have to try to model that. do is relate their previous fallen in risk-free rates to the velocity of money and try to back into a nominal gdp forecast from there. it looks ugly. down 6% to 20% year-over-year.

that is a disaster if it is not reversed by policymakers. this is where i think anna terry and fiscal policy need to be focused on level path targeting think fiscaly i policy needs to be focused on level path targeting. policymakers need to stop thinking about targeted and timely. 2008 was a from failure. we need to be super focused in bringing output in the price level back to the trend growth paths we were seeing before the pandemic hit, as rapidly as possible. we cannot have another lost or capitalism will not survive. francine: coming up, a full medical analysis of coronavirus

with peter shearer, chief medical officer at mount sinai brooklyn. aboutl talk to us isolation, lockdown, and number of cases. this is bloomberg. ♪

tom: good morning. "bloomberg surveillance" from the new york, a lockdown in new york, and a less locked down london, francine lacqua in london. they bloomberg dollar index stronger this morning. interesting deteriorations based on a lot of economic work showing sharp economic slowdown. right now, we shift to the moment at hand, the verily

thete -- virology, microbiology, and how it confronts hospitals. with thens and ends emergency room. peter tchir is with mount sinai brooklyn, where he is definitive in the care of emergency rooms, not only in his teaching excellence, the building out of their acclaimed residency program, but dealing in the absolute trenches of emergency medicine in this time of crisis. thank you so much for joining us today. at mount sinai brooklyn, what is your number one challenge in the emergency room now? dr. shearer: good morning. thank you for this opportunity. it is in the emergency room and it is in the hospital. we are seeing a real surge in cases, which is obvious in the numbers you see from around the area, both to the emergency room into thegh inpatient

hospital. patients are coming into the emergency department, getting admitted into the hospital, and they are not moving forward. most hospitals work on models where you admit a certain number of patients a day and would normally discharge a certain number of patients a day. what we are seeing with these patients, the ones sick enough ofrequire admission because the inflammatory response, these patients are not improving and are not being discharged. so my hospital, all of the hospitals in that system, are starting to back up. tom: is there a way for anyone to delineate between this terrible virus and any other normal flu or bacterial infection? is there a way to nuance it before they call someone like you at your hospital? dr. shearer: there is. it mostly can be done over the visits. telehealth

i encourage people, if you go to any of the major hospital systems in new york city, their websites, they all have telehealth options available to you. within a few clicks, you can register and be seen by a physician on that site. symptomsy, if you have of fever, cough, body aches, you are almost definitely a covid-19 patient. there is no testing that needs to be done. testing can delineate, but at this point, it does not need to be done. we know what the epidemiology is in our area. essentially, it is the virus is rampant. if you have symptoms, you are positive. the vast majority of patients do not need to be hospitalized, and you can manage all the information you need through a telehalth -- telehealth visit.

francine: what do we know about the number of cases that are mild compared to those critical or severe? there is a chinese study suggesting 81% of confirmed cases are mild, 14% severe, a .7% critical. does that sound right or is it too soon to tell? dr. shearer: that sounds perfectly correct. about 80% of patients who have covid-19 who would be tested positive are mild and can be managed in the outpatient setting. then you look at the other 20% that needs to be hospitalized. a good number of those need to be hospitalized in a medical unit to receive supplemental oxygen, for example. 3%maller percentage between to 5% will need to be admitted into intensive care units. but we are seeing, in my hospital and across the system, these patients are sick, so

there are supportive therapy, but they are not improving. they are not improving to a point after seven days, where you would normally expect patients to be fit for home care either to a service or to nursing facilities. they are not improving in the way we would normally expect patients to, leading to a real back up in the system. francine: could people catch it more than once? dr. shearer: the medical science is still indeterminate on that. develop anpeople antibody response after they have recovered, so that should be protective. but we have heard stories of people getting reinfected. but i think the vast majority of people will have developed some degree of immunity. one glimmer of light, i would

say, for a lot of us. tom: peter tchir at mount sinai brooklyn. and brooklyn is really affected here in the greater new york area. there has been a bunch of data about this coming out in the last 24 hours. think so much for joining "bloomberg surveillance" this morning -- thank you so much for joining "bloomberg surveillance" this morning. these are unusual times. i am coming to you overlooking central park, francine lacqua coming from london as well. what i would like you to know is there are a lot of different ways to look at bloomberg radio and bloomberg television. do that across all of our digital products and on the libor terminal -- tv is a good way to approach this. tv will give you all of the important conversations throughout the day. this is bloomberg. ♪

viviana: you are watching "bloomberg surveillance." i'm with jan hurtado. airbus is withdrawing its earnings guidance and its proposed dividend payouts. the as the latest sign coronavirus pandemic is ripping through the airline industry. it is a reaction to reducing liquidity. and passenger flights are suspended to most as nations as

largest deepens for the air corporation in the world. that is your bloomberg business flash. tom: thank you. ofas looking at the data off my wonderful bloomberg terminal. what you see is a stronger dollar. this is really important with more e.m. angst this morning. the mages are doing better than what we are seeing in the emerging markets. a lot more to come. this is bloomberg. ♪ 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...

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our health care. the american people expect us to act tomorrow, and i want everybody to fully understand, if we are not able to act tomorrow, it will be because of our colleagues on the others bicker when the country expect us to come together and address this problem. >> the legislation has many problems. at the top of the list, it includes a large corporate bailout, with no protections for workers and virtually no oversight. also very troubling in the bill are significant shortfalls of money that our hospitals, city, state workers desperately need. this is a public health crisis. it is inexplicable to skimp on funding to address the pandemic. tom: as we talk about the markets and the virology of this moment, we need to talk about

the politics. for our global audience, front and center in the american newspapers -- this battle. not a surprise, many polarized battles in washington. but this battle is truly front and center. president will have another press conference today. maybe he will have good news to stimulus.rd right now, our good news is greg brownstein. thank you so much for being with us. i know it is not much of a surprise that, in the senate, there is a battle. can you explain how they could not get to a decision over the weekend versus getting to a decision that they have to get to monday or tuesday? what is the why of this moment? greg: good morning morning. this might be described as one

of those legislative matters that is too important to fail, so i have to think that, at some point, probably today, the senate will reach an agreement. as you know, congress passed what we called a phase one bill, about eight $.3 billion for prevention and treatment primarily. a phase ii two bill was also passed, approximately $100 billion, the so-called family first bill, intended to provide immediate relief to individuals and businesses. it is a phase three bill now stuck in the senate. that is another approximately $1 trillion. it is business focused. as your introduction suggested, that is a bit of a disagreement between democrats and the senate, who think it is too business friendly without enough checks and balances, without enough oversight. republicans, emphasizing the fact that there are industries and businesses that employ thousands and thousands of

americans and, unless they are supported and -- in a way that allows them to stay open and continue employing those americans, it will be a problem, not just for those corporations but for individual american workers. tom: and of course you understand this with nevada, with your heritage of nevada as well, that entire western mythology that libertarian streak in the west. the rest of the country is saying this is just the big cities, this is just about new york city. balance int washington between a rural mythology and the urban mythology and realities that we are seeing. greg: just from the perspective of a live out in -- nevadan, someone who grew up in las vegas and is watching las vegas essentially shut down now, i will tell you there is no skepticism about the need for

this bailout bill, if you will, from the perspective of nevada, las vegas, and the hotel gaming industry. the city has essentially been shut down. the industry has been shut down because of this. i do not think anybody, at least in my home state of nevada, is looking at congress and saying we do not need a bailout from washington now. it is desperately needed just to keep americans working, primarily. francine: but what kind of money do we need going where? here in the u.k., there have been a couple of initiatives, which is basically giving money to the unemployed. is that the first line of defense? if we are touching 20%, 30% of unemployed, they still get money in their pocket. greg: i think that is the first thing congress should and has, to some extent, done. help individuals, individual citizens, workers, taxpayers. beyond that, and this is the piece being debated now,

businesses, large and small, need to be supported so as to be able to keep the doors open, to have cash flow, to keep employees employed. that will be a key part of this. francine: can the u.s. afford it? well, fortunately, unlike state governments, which cannot borrow money to do things like this, the federal government can borrow money. as some would say have already borrowed too much money. but in a time of a crisis like this, fortunately, the u.s. government can borrow enough money to spend enough money to fix the problem, or at least ameliorate the problem, particularly in the short term, when it is so important that individual citizens be able to pay their bills and hopefully keep their jobs. francine: thank you so much. greg brower, former fbi

assistant director. now let's cross over to new york city with your bloomberg first word news with viviana hurtado. viviana: the u.s. national guard ramping up its role in containing the topic. the president ordering new activations to help the state of california, new york, and washington with the coronavirus outbreaks there. over the weekend, the coronavirus was blamed for more than 2000 deaths in italy and spain. rome has now ordered a halt on almost all domestic travel in spain. and british prime minister boris johnson warning airflow -- a full lockdown could be next if people continue to ignore calls to isolate. >> people are not making it easy for us, because they are congregating in a way that is

likely to spread the disease. so we have to be very careful about how we take steps to correct that. viviana: mr. johnson's government will ask her limit to -- powers. 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. tom: thank you so much. greatly appreciate that. with us is michael darda of mkm partners. i want to talk to about one of the great realities -- when the facts change, politicians do not change. one of the facts that have changed, not from wars or natural disasters but the sprawl of the american economy, is, by one measure, the service sector

is 89% of the american economy. explain the dynamics right now, given that it is service sector america? michael: this is anna norma --ck -- enormous shock this is an enormous shock. any page, and you will tourism, part of the service sector. millions of people will lose their jobs and incomes. it requires politicians to put aside petty differences and step up to the plate. this is sort of like going to war. we are going to war against an epidemic. we are also going to war against a seven collapse in the economy. we simply cannot afford to dither and drop the ball, like we did after 2008.

tom: the demand shock we are living now, there is a faith that we will rekindle, recoup the demand of february or january. is that feasible? michael: it is feasible, but that is a best case scenario. we know what the best case scenario is. that the pandemic fizzles out, maybe because of herd immunity, maybe because the weather becomes warmer. there isdown the road, a vaccine and animal spirits come back and there is a v- shaped recovery. the real risk is that policymakers failed to do enough . then, we face the prospect of another long period of dysfunction and underutilization in the labor market. we need to avoid that at all costs.

the risk is doing too little, not too much. policymakers were very worried in 2008 about doing too much. the dollar --e totally wrong across the board. credit markets tell us we are facing a similar shock to the demand side. a huge plunge in the velocity of money. a huge leftward lurch in the l.m. curve. whatever you want to use to analyze this shock. it is an aggregate demand shock. and it is go time for policymakers. francine: this is just so strange. this is not a financial crisis, not a problem with the banks. this is, effectively, policymakers halting the economy, literally hanging a "closed" sign until it picks back up. go bust companies will

despite permit help? -- despite government help? michael: the source is different from 2008. the source was a housing sector. this time, it is a global pandemic. but the effect of a sudden, huge spike in the demand for real money balances, huge collapse in the velocity of money -- you can see that in inflation expectations collapsing, in credit risk spreads soaring. nominal gdp and nominal income are going off a cliff. what happens then is the resources to pay back that collapse. that can cause a debt crisis. that is what we need to avoid. policymakers will not be able to stop this shock in real time. what they can do and should do is commit to making up the loss growth more rapidly -- loss growth more rapidly than we did in 2008. the economy was not overheating

before the shock hit. you are actually running below the fed inflation target, so we should take that as the starting point and estimate what the trend level of growth would be, the growth path for inflation and output, and commit to getting us back there. andhe u.s. and in europe other countries in the span of no more than a year, a year and a half. you avoid the lost decade. for example, the french president was out the forefront in those saying no business, big or small, will be allowed to fail. is that feasible? michael: i do not know if that is feasible. i wrote in a note that we may have to consider something that looks more like universal basic u.b.i., because we have an enormous shock, and people are getting unemployed,

through no fault of their own, and we will be massive but ongoing support, sending people one time checks or mandating companies cannot fire people -- i just do not know about feasibility. but we can get a program going that is a sustainable. if central banks can implicitly finance it as long as we face the prospect of deflation, that is how you break out of a liquid to be trapped, how you offset a velocity shock. we did not do it after 2008. we need to do it now. tom: michael darda with mkm partners, thank you so much. special guest on "bloomberg surveillance," rarely seen -- we vetbill is joining us. coming up, a lot more people to join us. from london and new york, this

is a bill. ♪

we are moving much faster than we moved in 2008. we are being more aggressive. is there more we can do? yes. is there marley at -- more we may end up doing? yes. but we are being more aggressive. minneapolisurley of -- neel kashkari of many hapless. we are joined now by damian sassower. there is a huge demarcation between an ok take for big countries, and i do not see a

good take for emerging markets. why is that? --ian: emerging-market $20ou get closer to that per barrel price, you are seeing producers getting hit much worse than their peers. it is the e.m. low yield as i've been sort of a safe haven, but even they have declined relative to the dollar. it is all about king dollar. tom: one final question before i jump over to bloomberg radio, and that is simply you mentioned the low yield there's. havern europe -- do they enough strength to withstand this medical crisis? damian: not at all. they are tracking the euro. bulgaria, some of them do not trade as actively. though,is pretty big,

poland as well. there are few places you can find to hide from the dollar. even the china yuan has started to roll over. this is with cross currency basis swaps narrowing today. really unusual price action. francine: good morning. it is francine from london. what do you see in terms of uncertainty the next couple of days? what i've really been focused on all weekend is the horrific fund performance. a lot of these large headphones, they are the liquidity providers. they take the other side into a lot of these dealer desks. they are off 9%. it is wiping out all of last year's gains. there is only, what, six trading days left in the month. you would like to see them come back, but i am not holding my breath, not even pricings for

the month of march. that is how you price swaps in have -- all of the banks killed their outlooks. it is really that is function -- dysfunction and the structure of the market that i am focused on. francine: but has the dysfunction been placated by some things done by policymakers to make sure there is enough liquidity, or is there still concern? damian: possibly. the central bank swap lines was a good opportunity, but if you look at the short-term funding spreads in the u.s., we are now above 100 basis points. if you look at commercial paper to u.s. treasuries, we are coming to new highs there as well. these new funding spreads have yet to come back in. we need evidence of that for credit markets -- it is not just like with spreads. high-yield spreads now over one

thousand basis points, you cannot just wish it away. you need to re-paper everything. it will take a long time. thank you so much. damian sassower, bloomberg intelligence chief emerging markets credit strategist. coming up, a conversation you do not want to miss with ian bremmer, eurasia group president at 11:00 a.m. in new york, 3:00 p.m. in london. a conversation on coronavirus and what markets and the economy will do. this is bloomberg. ♪

this is "bloomberg surveillance." i'm francine lacqua here in london. economists warning that the world is already in recession, the first since 2009, but just how bad is the contraction? with your morning call is dani burger. dani: it is remarkable. we are seeing economists and strategists having to update

forecasts on a weekly basis pier 1 of the most dire calls comes from morgan stanley here that says -- weekly basis. one of the most are caused comes from morgan stanley. less than a week ago, they saw a 4% drop. the biggest quarterly drop in profit came from 1958. it is almost three times worse than what we saw then. morgan stanley's argument is we are already seeing economic activity rind to a heart -- gr ind to a halt in march. it will only get worse. there will be more restrictions on social distancing, which will really cramp economic activity. unemployment rises to .8%, they say. daisy consumption following 31%. overall, that means the full year for u.s. growth is 0.3%. a quick affairs into what other firms are seeing -- jpmorgan

says it will be a 14% plunge. goldman sachs says 24%. none of that is as bad as james bullard from the st. louis fed saying we could possibly see a 50% lunch -- plunged. -- plunge. ♪ froms. futures coming back being limit down paid elsewhere, european markets dropping. u.s. government bonds coming off a bit of a bid. francine: thank you so much. stocks dropping. i make an equity futures, after a weekend where we saw the death to coronavirus surging in a failure by u.s. congress to agree on a $2 trillion stimulus plan. government bonds rising. are just, monday morning, a

lot of focus on volatility, on government bonds. a lot of the focus will also be on government policymakers and central banks to do more to theld these economies from impact of coronavirus. italy beginning shutting most of its industrial production, having a big impact on government bonds. a full round up of some of your cross asset necessities, for example of the italian 10 year bond yield. treasuries gaining. brent crude extending losses after its 20% decline last week. we will look at whether opec+ can resume. no real signs of that. we are looking at political parties in the u.s. coming together, if they can. this is bloomberg. ♪ g. ♪ good morning!

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democrats walk out over disagreement on how to help corporations. sees a 30%lard un-implement rate in the second quarter, while morgan stanley sees a 30% drop in u.s. gdp. world lockdown. new zealand tells everyone to self-isolate, while the u.k. considers broader lockdown. welcome to "bloomberg daybreak" on this monday, march 23. i'm alix steel. we made it to the open. here's where we are stacking up. we had another limit down on s&p futures. as mike mckee and i were talking on set, but it maybe could have been worse. you are seeing in the sec declines within the market. seeing india see steep declines within the market. the 10 year yield still getting a safe haven bid within the bond market.