mcconnell-schumer put. action by a deeply divided senate. .ompromise is in the air optimism is prescribed. advance,tabilize and the dollar weaker against pound and em currencies. again, optimism in the air. guess who is not coming to the minute-- one hour, 48 trump briefing? from frost.st intrigue is in the air. this is bloomberg "surveillance," lockdown in new york and london. tom keene and francine lacqua with a great team helping us pieced together what we usually do effortlessly. many of us remote, including our

technical people captaining the ship. better markets, futures up five. the german headline that we just saw really shows a continued stimulus in the air. francine: it is. first of all, well done to our superteam doing a great job. germany, we had that headline minutes ago which is why i was looking down, the stimulus package to boost the post virus economy. and number of initiatives in europe, and a couple of governments saying not only minimum wage but no company big or small will be left to fail. in france, they made a lot of workers take their holidays last week so if they can reopen they will do so in july and august. the european union was looking

at suspending the budget deficit rules which would be helpful for companies to spend as much as they can. tom: lots going on. we will talk with kevin cirilli about that press conference yesterday and dr. fauci not in attendance. right now with the news in new york city, viviana hurtado. viviana: republicans and democrats are trying to reach a compromise on the stimulus package that could be worth as much as $2 trillion, senate democrats blocking the measure twice. nancy pelosi unveiling her own proposal. donald trump says the u.s. is not dealt to be shut down over the coronavirus and the american economy cannot remain slowed for too long. he said "we are not going to let the cure be worse than the problem," winding out that as

some parts fight outbreaks, others may resume economic out -- activity. the u.k. is in lockdown and a national emergency to stop people from leaving their homes. esther johnson approving a radical band on all unnecessary -- mr. johnson approving a radical ban on all unnecessary travel. pastes rising around 5%, $24 a barrel. mr. trump said to remain an oneance with the saudis is idea under consideration. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. tom: thank you so much. , want to start the data check the equity markets with vix in

six big figures. sticking out like a sore thumb today, you look at all the stimulus and inflation thrust, to 1636$63, a 4% move an ounce. dollar strength, and the distinction in the dollar -- excuse me, dollar week among the dxyr nation indexes like but the bloomberg market index -- bloomberg dollar index showing weakness as well. francine? francine: i cannot really match up what the economy is telling me with what the market is telling me, but the eurozone is sinking into the greatest crisis into history. top some deaths 16,500. market futures, u.s. equities

getting some 4.4%. dollar is dropping against developed and emerging currencies, basically the reduced stress sign after the dollar steepened depreciation during the global crisis. bonds are falling. tom: lots going on here this morning. interestings and what is most interesting as somebody says something that is so out front and intelligent that it sticks out like a sore thumb among all people. this year it was savita subramanian of bank of america. she combines acute understanding in equitiesith esg and derivatives, and we are thrilled she would brief us this morning. good morning.

should i be acquiring equities? savita: this is a great environment for stocks. everything we are looking at suggests the selloff over the last few weeks has been very indiscriminate. what is interesting is the correlation amongst stocks have reached all-time highs, so that means the stocks are not acting like stocks on the way down. everything gets correlated on the way down, but we have a great opportunity to separate the weak, and companies that have been down for no reason besides the good dating portfolios and moving into cash, and looking for the companies that will rise from the ashes. this will probably be the lowest prices we can buy these companies at. what has been interesting is how uniform, how summarily all

stocks have been punished. investors have pulled everything. i call it low-quality, gold being pulled up. this has been a risk off market. a lot of interesting opportunities. what is so important is it is a sophisticated quantitative phrase, throwing the baby out with the sink and all that. what is important is that is great, but i have got to be more discerning on the way back up. , take you go about that your derivatives knowledge and sector choices and figure out what to buy awaiting a rebound? we have got some technical difficulties here, but to me, that is really the key question

today, no question about it. maybe it is a left today, maybe it is down. the economics in the markets not really dovetailing with his huge fiscal impulse. that is great, but what will you buy on the way back up is a huge choice. is atne: the main concern the moment we have policymakers, central banks, governments throwing money at the problem which has helped, but you do not have a recovery plan. you do not know when the industries and factories will go back up. savita is back with us. savita and aack to second. where you need to look at is where economists are predicting. banks around the world, economists predict a big slump

in the first half of the year and the second quarter look quite ugly. banks have different estimates. on, we have a lot going huge variation in estimates, all of this coming up to the united states jobless claims number. i am seeing 3 million statistics, maybe not in one week, but the idea of jumping tom 100,000, 200,000, 700,000, and exploding to 3 million would be extraordinary. we are not -- we are going to fold this economics into the markets. you can see the chairman powell action yesterday. we will do that with frances donald. from london and new york, this is bloomberg. ♪

♪ this is bloomberg "surveillance," tom and francine from new york and london. we are back with savita subramanian. we have a viewer questions, especially those working from home, you can send us questions that we will ask our guests. if you look at the recent selloff, isn't this selloff above all a value selloff? savita: to some extent it has been a selloff in cyclical companies with economic

exposure. energy,ld be financials, industrials, etc. what is been so interesting about the selloff is it has not necessarily been punitive to one group versus another but we have seen different parts of the market selloff inexplicably. a lot of this is about , takinging, de-risking down exposure to equities. we have seen etf outflows which has punished wads of stocks rather than distinguishing between mars cyclical versus defensive companies. -- more cyclical versus defensive companies. we have this battleground of brutally beaten down supply could where companies potentially benefit from the stay at home social distancing. for example, the consumer

staples sector, there are that the stockpiling has been cheaper than in years. even some of the cyclical companies that do not have exposure to china, supply chains that will snap back as soon as we get to the other side of covid. there are opportunities here. the market overall looks like it is in the bottom. we ran some numbers around what typically has to happen before the market bottoms and a lot of these things have happened. we have seen the fed these aggressively. we have seen the other industrial barometers sink. credit conditions have started to ease. the one barometer that will matter the most, starting to show signs of encouragement, the

number of new cases. if you track that -- and i know on bloomberg you can track that -- watch for a deceleration in the number of new cases. potentially italy is a good barometer for what is happening in the u.s. where italy is starting to contain the measures later but has aggressively addressed the problem. there are different barometers to use in this process. this is definitely been an interesting time. with usita subramanian of bank of america this morning with a much better equity market. frances donald to join us as well. we want to tell you about our digital products and on the terminal, tv . used hugelyjust -- by global wall street. it will give you all the different conversations. markets better.

this is bloomberg. stay with us. ♪

♪ morning, everyone, bloomberg "surveillance." thank you for all the responses on social as we try to piece together the show, a great team worldwide. getting the hong kong feel of about a month ago. the market up. savita subramanian with us of bank of america.

move.p over $30, a huge why? "theiscal stimulus, and new york times" saying compromise is in the air, but more with the action of the federal bank -- central bank, coming in with qe2. the fed has acted. mmt orhis mmt, a part of does the fed act on traditional federal reserve theory? program,to this particularly targeting corporate debt, we have never done that --ore, and this if entity this infinity part of qe, do we off of thisever get stimulus train? everything suggests we are on

the way to mmt and i'm not sure how we get off the stimulus package in the next five to seven years. tom: that is very important, and alan ruskin is an example at deutsche bank who wrote an essay on duration. about five you say, or six years to diminish the response to this natural disaster. his five or six years of fiscal management -- is five or six years of fiscal management good or bad for the market? frances: it should be good if we can limit the decline and result in a faster pickup, the stock market can move through. this is not about april or may data. are we on track by the end of the year? we have to make sure job losses are minimal and rehiring is

swift. if we cannot do that with a fiscal package, this stock market will not see a rebound. we have plug the hole in but i struggle to see how this market becomes risk on again if we are not back in q4. francine: the stimulus package, five to six years, are we looking at phases? how does your workforce get out of the pandemic and go back to work? i think it is crucial in trying to figure out how to shield the economy, and it is unclear who has an exact plan. frances: it is unclear. of wage custody, making sure firings and layoffs do not happen. the second is to encourage swift rehiring activity, but here's the challenge.

you can reopen the starbucks, but if people are afraid it does not matter how many people are rehired. how fast it comes online will not be do we flick a switch, it will be a confidence component. outpeople feel good going to spend -- do people feel good going out to spend? it will take some time. francine: how much time? frances: these are unprecedented moments. the u.s., the developing world is following the path of italy and if we start to see a decrease in case counts, that could improve confidence. it is optimistic to say we are back online by q3. going back to these monetary tools, we will come back to a shaky ground, a new world with a

lower potential gdp. the fed will not be able to tighten for many years. tom: this is really an important discussion. i love how frances donald is taking us out to a longer-term discussion. potentialonger is the long-term gdp? of au look at at tenths percentage point lower or one fugue or -- figure lower? frances: we could shave off a significant component of gdp and it comes back to deglobalization of supply chains. this is the second big shock, the first was tariffs, and now the idea that borders are being closed because we can see a global pandemic. if you are a business operating in this environment, you are

thinking twice about globalization and hiring costs. -- we are likely to see a lot of people move out of the cities, adr been is asian environment. nization environment. to attack will have these problems in a different way. tom: frances donald, thank you so much. i love that discussion of moving from the parlor game to next quarter out to a larger discussion. futures limit up. the vix at six figures as well. i want to point out the elevation of gold. the equity markets, the standard & poor's etf, i have it on my bloomberg terminal, up 5.2%.

a nice equity move up. launchpaddown with my , a paid commercial for bloomberg this morning, renminbi 7.06. gold 1639 announce. --an ounce. golds gartman looking at and hydrocarbons as well. please stay with us. from london and new york, this is bloomberg. ♪

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download the my account app to manage your appointments making today's xfinity customer service simple, easy, awesome. i'll pass. ♪ francine: this is bloomberg "surveillance," tom and francine from london and new york.

let's get back to savita subramanian, and thank you to all the viewers at work and at home. this person writes in -- will the selloff and when they hear faang- heroes tech and are taken down? frances: tech and faang could do -- --r the savita: savita: tech and faang could do ok over the recovery. recession,are in a and income, because interest rates have come down to the lowest rates arguably ever. , --, it think of banks has growth, cyclical growth and it could do ok as we come back

from this and potentially do not see the economy return to full run rate. i don't think that is the barometer i would watch. the barometer i would watch has to do with the seismic containment, management of new cases in developed markets, and not necessarily about fiscal policy but getting through this and seeing what it is like on the other side. tech could benefit from all of this. beingld see some of these down sectors continuing to ale. energy, we are working from home. we figured out you can do this successfully so we have accelerated that phenomenon which could put downward pressure on traditional commodities because people do not need transportation is much,

and use technology to do our work. what this has done is accelerated that adoption of technology, and tech could benefit on the others of this. world, butrd, wild the way i simplified it is there are if you scarcities -- growth, those are safety, and the attributes i would be doubling down on in my portfolio now. francine: you are absolutely right. we are working from home, i am not sure how successfully, but many thanks to the shadow teams making it work. many companies have taken away their guidance. when will we have a better idea of when guidance will be back? savita: if we have seen this before. 2009 at the2008, worst point, 70% of s&p

companies stopped telling you what they were going to do. what that means is we will see the transparency premium for companies go away. what is interesting to look at is that coming out of the potentiallyisis, some of the more dire consequences when they stopped issuing guidance, so transparency will be rewarded more. basicallynaged -- we took down our earnings forecast for 2020, applying some broader macro strokes to sectors. if you look at energy earnings, we have them going to zero this year, financial earnings cut in half based on macro trends that

have mattered in sectors. we are seeing the same trends 2009ning as in 2008 and means we have to be more creative in how we come up with our earnings forecast, a more backdrop rather than macro. tom: tell us what you think about the major financials now. this is different in 2008. this time around, there is no roadmap. overweight the big financials quest -- own or overweight the big financials? savita: what is interesting about the sector is it has been penalized for the nag like all -- negative -- it is too cyclical, too credit, will be the by oil write-downs, but

leverage ratio for financials is almost 1/6 of where it was during the crisis. these companies are paying out a much lower earning of dividends and i would argue the big banks, especially the regulated ones, have quality and defensible yields. these companies pay out a quarter of their earnings of the dividends. this compares favorably to energy and industrial companies paying out 80% to 100% of there's earnings in dividends which will get cut. looking more like regulated utilities which sell at two times the multiple. time weimes -- at some will realize the bear market is

not the topic -- toxic sector they are not just an interest rate play. full we need to see the downturn to appreciate the fact that financials will still be standing and seeing a dividend. this will not be the 2008 financial sector. francine: we are just hearing from a low-cost european airline, ryanair, they do not expect to top rate flights in april and may. one of the conversations we hear over and over again is how much of a stake will governments hold in critical companies. not thinking about ryanair, but there were questions about air france and allie talia. will we see something in the u.s.? savita: the travel sector is a

big question mark, because even after we see some containment, the question is, how likely are we to get back on planes? how does this change our travel schedule? we are telecommuting right now. maybe we don't need to travel is much. that is a sector where i would haircut run rate capacity significantly. cruises arels, areas of the market that could be continued trouble. in terms of the continued trajectory of the airline industry, it is probably at the maximum point of pain. this is the financials of 2008, 2009. fortunately it is a smaller part of the market, but this is a sector where you want to think carefully about what run rate

capacity will look like assuming we get to the other side of this, this year. so much, savita subramanian with us with bank of america. isd of derivatives strategy kevin cirilli. when do we get a bill out of the senate, as early as this afternoon? kevin: precisely. within the next 24 hours you will see some more developments. everyone i spoke with on both sides of the aisle where incredibly frustrated at the lack of timeline being offered from democrats and republicans in leadership. nancy pelosi unveiling a two plus trillion dollar plan of her own. what is in that, 1400 pages, forgive students of $10,000 worth of debts. if you are a public housing

resident you get a pass on paying rent. there are other incentives in the democratic plan. tom: there is different plans, and i'm confused by it all, but to your interview with senator warren with jonathan ferro, there seems to be a bipartisan fury about the mystery of your capitol hill. that thisrprised raging debate is occurring? kevin: no. standpoint, you are seeing some cohesiveness beginning to triangulate between the administration, democrats, and republicans, but the process .as been a colossal nightmare many lawmakers are still back in their districts. they were not in session last week, and senators are virtually trying to figure out

rank-and-file who they should negotiate with, so the process has been a nightmare. francine: we are getting breaking news out of spain. this is the number of deaths. it is pretty terrible because we are told by individual country, spain reported 514 coronavirus deaths. i am sure the white house is looking at this pattern and you are one or two weeks behind. when president trump says parts of the economy will be functioning again, what is he saying? this is a juggle of saving lives without letting the economy go to waste? kevin: the president, for his part saying the cure cannot be hase than the disease, that ignited a public and private debate about how policymakers in d.c. should handle the outbreak

and economic impact. they continuously point to the economic stimulus they want to pass on capitol hill. now you have seen some open disagreement within the administration, within the coronavirus task force within dr. fauci and president trump saying he does not agree with the rhetorical approach of the president. so: kevin cirilli, thank you much, chief washington correspondent. on is hean all agree is a legend within the airline business. robert crandall changed the way we fly with american airlines of another time and place. he is vitally engaged in the debate over his industry as they look for balance, air france with the decision on nationalization, and francine

and ryanair. this is bloomberg. ♪

♪ good morning, everyone, bloomberg "surveillance." we welcome all of you worldwide and ,articularly dallas, fort worth aviation is up. robert crandall out of rhode island, if you go to jfk in terminal five there is a beautifully redone twa hotel

with an airplane out front. robert crandall remembers when the airplane was in the air. always controversial and vitally watches his industry, we are thrilled mr. crandall could join us. should your industry be bailed out by the taxpayer? robert: i don't think it should be bailed out, but it needs to be supported only because of the fact that the airline industry is certainly a multiplier. you have got to have a basic capability and the airline industry is what we have in the united states. consequently, you cannot let these companies go away. "bailout" is wrong, number one and number two, we shouldn't do it. someone needs to recognize there

have to be some controls put in place. the airline business is effectively a utility and probably needs to be administered in some respects like a transportation utility. tom: that is where i wanted to go, the idea of regulation. what i hear interview after interview is what the passenger cares about is price and you invented price discrimination. do we need to regulate a new price discrimination so the base rate to fly in economy? robert: i don't think we need to do that, but we need to recognize if the public is going to put money into the airline industry, the airline industry will have to recognize it cannot use other resources in different ways. in the last six years, the industry spent more than its total free cash flow buying back stock.

it likewise took on a mountain of new debt. now we are saying to the public, of free- used a lot cash flow to buy back stock desk in andustry industry like the airline, i argue you should never do. they need support which is likely to be ongoing for some time. it will take a long time for people to get sufficiently confident to gather in groups again as on airplanes and start traveling. i don't know how much money is involved, but the industry should accept some limitations, among those, you cannot keep making the public unhappy. you have to add support to the airports because that is part of the basic utility. you cannot use free cash flow to

buy back stock. aese are limitations on business that fundamentally is a utility and has to be maintained i the public because we have to have it. crandall, we all have our memory of our first time on a boeing 747, and i have a great affinity for british airways because they still fly the 747, is boeing a national asset? are they in such a unique position that it is a true salvation by washington? boeing hase again, been the largest u.s. exporter for many years. i do not think we will lose our leadership in aviation. what boeing needs to do, whatever needs to be done for boeing as an ongoing

enterprise. does it need to go through the bankruptcy process? i don't know but i would hope not. if it is not, boeing probably again,ublic support and when you put public support into corporations, the public has a recover,say once you part of the rewards of the recovery becomes in very much the same way, the people that and 2009 payn 2008 those debts back. in the meantime, the corporation has got to give up some of the things it might otherwise do unrestricted. francine: good morning from london. are we underestimating the changes that this will do to the way we travel when things get better? when we get back to normal, will

we go back to the normal way new, or will people -- the normal we knew, or will people travel less? robert: there may become less business travel in the future than in the past. on the other hand, all of the research we have done, people want to travel more. as a consequence, i don't think it is in the very long term. if you look five years from now, i think travel will be as robust as it ever was. how long it will take to get back there in the composition of the public, may be somewhat different. you may have somewhat less a robusttravel but travel universe once we get over this.

we are probably underestimating the near-term impact and as a consequence, as we decide we are going to support the airports and airlines, we need to recognize it will probably be going on for longer than we would like. when you talk about support, are we talking nationalization like we are about certain airlines, or partial nationalization of the banks of 2008?he robert: nationalization is a stronger word than i would use. we need to make a substantial investment in the airline industry and that me -- that may be of some years' duration. one of our conditions we want to impose on the industry, we will make a substantial investment, what will go on until such time they pay us back.

no, you cannot buy any more stock back by the time you pay as back we expect you to raise money on your own. if you have a city which may not be as profitable as you would like, you cannot just walk away if that means they would lose access to commercial aviation's. those are some of the kinds of controls or constraints i think the industry needs to reconcile itself to. the public as a whole needs to benefit from the availability of thatatively ubiquitous goes everywhere public transportation system. that is the airlines. francine: thank you so much. robert crandall. this is what your markets are looking at, companies coming out with guidance or no guidance. capexn cutting their

plans for 2020 suspending share buybacks. this is bloomberg. ♪

♪ good morning, good

afternoon, good evening. this is what i'm looking at in the markets. u.s. futures are rallying with u.s. stocks. u.s. futures were limit up. a lot of thet things in asia, they were also up. probably the most telling when it comes to stress is the dollar slumping, treasuries also slipping, and oil is rising. plenty more coming up on "surveillance." ♪

♪

alix: fed's relief rally. stocks bounce as the fed goes all in, buying everything from domestic grade bonds to etf's. pmi's crater. japan, france and germany see deep contraction in activity, and it is about to get worse. and fiscal falls again. congress is unable to pass a fiscal stimulus bill, while house democrats released their 1400 page version. :elcome to "bloomberg daybreak america's" -- welcome to "bloomberg daybreak: americas" on this tuesday, march 24. we are seeing limit up for s&p futures. yields moving higher on the backend. is the worst over, though? morgan stanley says 3.4 million jobless claims could be