hope? equities give up gains after a monster rally. stimulus speed. the house set to pass a $2 trillion rescue package today. just how quickly it can get into the economy keeper investor. and global leaders and central banks take drastic action to contain the virus fallout. our exclusive interviews with dallas fed president robert kaplan and atlanta fed president raphael bostic. welcome to "bloomberg daybreak" on this friday, march 27. i'm alix steel. happy friday, everybody. that mean something very different to us all now that we are working from home. we are not able to sustain the rally we had yesterday. the dow went to an -- the dow went into a bull market. asia was able to rally, but new york gave up those gains. it doesn't feel at they are able to come up with a concrete

stimulus plan to really help countries in the eu. you do wind up having larry fink say if you are a long-term investor, you want to buy risk. you have the dollar seeing its worst week since 2009. may be some of the liquidity funding pressure is taking a backseat. today we are going to take a look at the market moving news from around the world, focusing on washington, as well as new york. the house is expected to approve that $2 trillion rescue package. house speaker nancy pelosi told bloomberg tv they will move quickly to get that. rep. pelosi: will have a strong bipartisan vote that, hopefully by noon will be finished. that depends on how we have to come into small numbers to vote -- have we have to come in to the chambers in small nubbers to vote. -- in small numbers to vote. now is kevin

cirilli. what comes after that? kevin: all of the house members will vote on this to trillion dollar stimulus package. from there, the president will sign it virtually immediately into law. after that comes a very significant push, i'm told by sources in the small business administration educate the public on how to utilize the benefits in this to trillion dollar package. looking ahead in the next two months, several lawmakers have told me that phase four of economic stimulus will then be what everyone is going to be talking about. that comes at a time in which many financial institutions are wondering how they are going to be able to get the liquidity that they need to keep everything afloat. much, chiefyou so washington correspondent, bloomberg's kevin cirilli. eu leaders are struggling to agree on any concrete strategy

to contain the coronavirus. btp's are seeing selling now. michael mckee joins me now. what is the hold up? michael: it is europe, alix. the leaders have gotten together and kicked the can down the road. does that sound familiar? the coronavirus shutting down many economies there, and that's created problems particularly for those on the periphery. italy the poster child, at an eu summit conducted by teleconference, other countries pushing for the issues of corona bonds, joint debt issuance. european central bank president christine lagarde, in isolation herself, pushed also for the request, but germany says nein. worry issuing debt to countries that are lower rated would push borrowing costs higher. they prefer a pot of money for financial crises that comes with

strings attached, so the italians and others don't want that. the solution is to put the issue back to your finance ministers and come back in two weeks with another plan. that is what is happening in europe that is bad news. the good news is this slight moving btp's. european bond yields in general following because of that yields in general following because of yields in general following because of the ecb buying program. countries tap the fed s -- tap the fed's 4x swap lines. u.s., the fedthe lending programs have only made treasuries more attractive. talk about yields going down. we have negative rates in the united states, t-bills out to six months trading with negative rates.

we haven't had that in just about forever. for the fed, it is knows to the grindstone time, running all of its lending programs now, assuming that stimulus still passes the house, having to lend more to companies with credit main street the lending program. how is all that going to work? we aren't really sure, but we are going to find out today. a couple of interviews coming up. alix: looking forward to that. robert kaplan and raphael bostic. mike is a little punchy on friday. fair enough. next, european stocks unable to hold onto that rally that the u.s. had yesterday. it was the first three-day rally in global shares since mid february. is bloomberg'sre annmarie hordern. take us through how aggressive some of this buying was. annmarie: it was astonishing, as you said. the rally may be short-lived.

is this just a bear market bounce? we are going into a weekend. is there a lot of fear about the news on what happens on the other side of this weekend? investors are maybe taking some profit now. this pearl of it us -- the spur lives for what would have -- the superlatives for what would have been are just astonishing. there's definitely some fear and uncertainty in the market, especially if you look at what happened overnight, with the u.s. taking china as the place with the most confirmed cases of coronavirus. a lot of investors continuously we we cannot move on until get the health crisis addressed, and then look under the hood. the sheer speed of what is going on on the benchmark, look what happened in these three days. energy, industrials, and financials out of a bear market. up for see where we end

the final on the day. alix: no kidding. at least we have 48 hours to digest what happens at the end of the day. blackrock ceo larry fink is actually bullish on stocks, the head of the world's largest asset manager. he tells clients, "now is the time to get back into equities. i believe now is the time to start adding risk, mainly for long-term investors. the coronavirus pandemic will likely change how americans live work." something we will try to break down over the next few weeks as we try to digest the long-term effects of the pandemic. coming up, more on your morning news, trade and analysis on the markets in today's first take. happy friday, everybody. this is bloomberg. ♪

♪ time now for bloomberg first take. we give you the news, you get the trade and analysis of the markets. going us is mike mckee, bloomberg international economics and policy correspondent, damian sassower, and mike mcglone. amazingly,up, which equities actually up, the dollar the worst week since 2009, what are we looking at for the weekend? damian: spreads have come in pretty significantly over the past several days. you're seeing a lot of inflow now into credit etf's. obviously following equities on the lay-up, less liquid asset classes are going to last come about for me, it has got to be the lack of stimulus out of china, and broadly out of all emerging markets, some plea

because their hands are tied in -- current environment markets, simply because their hands are tied in the current debarment. --t's what we need to see the current environment. that's what we need to see. alix: we did see india with a stimulus package. damian: with oil prices now plummeting, it is definitely not the right recipe for success. a little bit out of india, but you've got south africa. everyone's hands are tied due to the rating agencies. i think you will see downgrades coming for em. alix: what are you looking at, mike mcglone? mike: i think one thing to note is crude oil versus gold. crude oil has been in bear market since the crisis of 2008. then.pped around $30 now we are back at that level again. so crude oil looks like it is stuck here for quite a while, which is a good indication of the lack of demand pull on the

economy, just like yields. yields have been declining since then. i think that is one thing to look at. one thing that is a sustainable bull market since that period is gold. that ratio of crude oil to gold is the highest ever. you expected to peak and go down, and if it does, that is a sign of a bottom in the stock market, so i don't see it. we all knew we needed a correction. i think people underestimating we are in a bear market. they are forgetting that because we have recession coming. the since i had at the beginning of the year that there is too much optimism for the trade thing to recover and everything is the same thing again. we are in a bear market. it is recession. you're supposed to sell rallies. it is just a question of how long it goes. it's a nice retracement, but overall, i look at the stock market is likely going to do what crude oil did. it just went back down to the mean it knows best, $20. for the s&p 500, that is about 2000. alix: it's a fair point,

especially when you saw the s&p and the nasdaq bottoming a bit, but not the same as the dow did. i want to pick up on the stimulus for emerging markets, but particularly when it comes to the u.s.. it feels like the rhetoric is, great, you're going to pass that stimulus, but how fast does it actually get into the hands of people and businesses?now my daughter wants to share with us. [laughter] michael: that's the problem, and good morning to dylan. 2009 when theyd were passing stimulus programs, it took weeks, if not months, to get that money out. much of that stimulus package passed by barack obama's administration in the first months of 2009 wasn't even out the door by the time you were getting to truly 10 -- getting to 2010. it will go faster this time. we have much better electronic banking system.

but remember, the trump eye ministration is vastly understaffed -- the trump administration is vastly understaffed, so it will not be easy to get out the door. we will talk with robert kaplan and raphael bostic a little later this morning about how they will get these lending programs. in terms of keeping be plummeted the market system going, the fed has been very responsive, and they are not out of tools. i mentioned the t-bill rates go negative. there is so much demand for them, so much fed liquidity in the system that right now, we are also seeing reverse repos, the fed taking money out of the system almost as much as repos. people are parking money back with the fed, which is encouraging the system is functioning. alix: fair enough. i should also point out there was another record flow into u.s. money market funds, to that point. some breaking news for you.

this is according to cctv. the politburo says that china is set to raise their fiscal ratio. you were talking about stimulus from emerging markets. is this what you are talking about, what china is thinking about doing? ratio. damian: i could use dylan over here because my teenager is not going to get up until noon. to read through all of the central but moves on the stimulus we are seeing, i think you make a good point. we need to see more stimulus out of china. i expect more stimulus, i think bps.er 150 to 200 more to mike mckee, the u.s. addressed the fact that the em can't stimulate itself. what is the u.s. going to do? debthave a lot of dollar if they stop paying their bills. are they going to run into some sort of brady plan? i think we have to start taking

along these lines because if em doesn't come back, with the fed increasing its balance sheet to $9 billion, $10 billion, that is really going to weaken the dollar, and that is not necessarily the worst thing. alix: basically, you're going to have forgiving that. breaking news for you guys from the bbc. apparently, u.k. prime minister boris johnson is testing positive for coronavirus. mike, this also dovetails with what you were saying before in terms of how do we even get governments functioning when you can have the prime minister, who is supposedly going to be in charge of the government, no getting sick. michael: it is a problem, obviously. the prime minister now going to have to isolate himself or 14 days. we will have to see how that plays out in the united kingdom and with all of the various rates attached to that country. the fed is going to be running a huge balance sheet. we went over $5 trillion this week on the fed balance sheet, unprecedented. remember when they were trying

to let paint dry and bring down the balance sheet? it is just going to go ever higher. that in theory should be inflationary, and that should affect the dollar, but theory has gone out the window these past few years, so i am not even sure. right now, there is no talk that as an emerging markets program in the work at all. --be if they get to face for get to phase four or phase five of the process. alix: it's a fair point. mike mcglone, i'm sure this is also why you are looking at more negativity in the stock market, especially if you have to wind up forgiving all of these debts down the road. mike: that's the key thing. every time i hear the money printing in the stimulus come of the first thing is you should be buying dips in gold. they are doing it for a reason. you are supposed to be selling stocks on rallies. this narrative about boris johnson and the u.s. cases increasing versus china, one

thing about a commodities guy coming you never really believe what the chinese say. you watch what they do. most people don't really believe there's fewer cases in china. this is a country that banned winnie the pooh and the nba. say,n: i was just going to everybody is talking about negative t-bill yields in the u.s. in a world like we talked about, where the gravity of negative and zero yields are pulling, we have seen negative yielding debt to $10 trillion globally again. it is all about carry. where are you going to find your carry in this environment? you've got to look to emerging markets. you've got to look to indonesia come over you get 7.5% yields on five-year paper. carryam i going to get my in an environment where t-bills are negative? michael: one of the issues for both of you guys, who is actually trying to get any carry? what i am hearing is that trading volumes, particularly

from asia, are really like. -- are really light. they are nothing like before the crisis began, and they are not picking up. we are seeing a lot of moves abie helped by the fact that trading is light. there aren't many people in the markets these days. mike: there's a problem with the physical market, and they are going to the futures for hedging partially because there's more buyers. i remember being on the trading side. you look at futures when you can't get the cash you need. people are going to liquidity in the futures. damian: china government bond volumes, which you are right, have followed off a cliff come up or merely because no one was working in china, have come all the way back. that may be a lot of what you are seeing across asia. volume came up due to the virus come of it poised to bounce back sharply once people get back working again. alix: that brings me to the whole situation of where the you see a v-shaped, u-shaped, or

l-shaped recovery. hi, honey. yep. in a second. i'm on tv. [laughter] alix: do these things went up diverging? michael: it's hard to know, alix. we have to wait to see how fast money gets into the whole system. on the monetary side, it is working in terms of the u.s. and the ecb, but how fast is the fiscal side pickup? do we see people actually spending money, or do people just hunker down? obviously, the president's efforts to get everybody back working are not going to take place as fast as he wants, but does the psychology change? really, and i think this is probably true, a lot of what is going on is in physical damage so much as psychology because nobody knows what is going to happen. you don't want to take bold the prisoners

dilemma game. game, prisoners dilemma what is the other guy going to do? mike: this is going to change psychology for a generation. there are 70 people losing jobs. -- there are so many people losing jobs. alix: damian? damian: again, the one thing i am going to be hyper focused on our inflation expectations because with real yields now negative, it is really going to be about inflation breakevens and whether or not they start to rise from current levels. that is definitely one thing you're going to be watching, with all of this stimulus being plugged into the market. it is going to be something that should, in theory, be inflationary. it's got to be some thing on your radar. -- sorry,eah, it's alix.

i was just going to say we don't know what is a normal level of inflation breakeven at this point because they dropped so significantly when they come off. when do you even start to worry? it is hard to know right now. alix: we've got to leave it there, but i really appreciate the patience, the roundtable conversation, and all of the technicals as we work all of this out. any charts you see throughout the program that you want to check out, go right to gtv on your terminal and check it. gtv . this is bloomberg. ♪

♪ is "bloomberg daybreak." set to get $12es billion from the federal government rescue package. the ceo telling employees he doesn't expect the terms of the

bailout to be onerous. for april, american canceling 60% of its flights, 80% for may. hurts is in talks with banks -- barclays, talks with the -- tryingher to whether the slowdown and travel. general motors moving to cut costs. it is freezing work on new vehicle programs, deferring paper white collar staff, plus, gm senior management are going to take pay cuts. the coronavirus pen, has closed many gm factories. that is your bloomberg business flash. alix: let's say on automakers for a second area full swag and has an unprecedented shutdown that is costing them $2.2 million a week. they say sales out of china have effectively come to a sam still -- a standstill. the ceo says they can withstand

the factory shut down for months, but not indefinitely. in a solidwas position, but definitely some thing to key into. coming up, we are going to talk to mike pyle, blackrock goebel chief investment strategist. rumors are that china is going to pump more liquidity into market. plus, u.k. prime minister boris johnson is confirmed with the coronavirus. he says he will be managing the government remotely, as we saw on the lamarck doing the same thing as she has been in isolation, even though she has not tested positive. the cable rate has now moved positive on the day. this is bloomberg. ♪ these days you need faster internet that does all you

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faster speed, coverage, and free advanced security at an unbeatable value with xfinity xfi. can your internet do that? ♪ alix: welcome back to "bloomberg daybreak." i'm alix steel. s&p futures are rolling over on the lows of the session. you had a rally in asia.

europe couldn't sustain it. headlines we are getting, u.k. prime minister boris johnson now confirmed coronavirus. that is leading a leg lower in the cable rate, and the dollar pushing a teeny bit higher. in the dollar, still seeing a move into hayes and assets -- still seeing a move into haven assets. in italy, we had an enormous move lower in yields yesterday. european leaders can't seem to get it together when it comes to how they will support economies in the crisis. oil continues to struggle as contango rains supreme -- contango reins supreme. larry fink says he believes that now is the time to start adding risk. joining me on this bullish view is mike pyle, blackrock global chief investment strategist. it is kind of an unfair question, but do you agree? good i think larry made a

point. with the extreme arcing moves we have seen, benchmark portfolios targeted to strategic locations, this is a time to actively rebalance activist benchmarks, which means purchasing equities to get back to those allocations. secondly, if you look over long horizons, if you are a long-term investor, we think there has been value created and reflecting that in portfolios for long-term investors makes a lot of sense. alix: also something we have heard, cctv is reporting that china could be more flexible in their debt ceiling and issuance, and sort of getting out there to support the market, raising their fiscal deficit ratio. how do you look at headlines like this, as emerging markets and developed markets try to fight the virus? mike: we look at those

favorably. one of the views that we have is that ultimately, the way back for the global economy, for u.s. and the chinese economy after this, is going to be decisive coordinated policy action. we have seen that in the u.s. this week. headlines like that indicate that the chinese authorities are there as well. one of the views we have is that over the next 12 months, we expect u.s. equities, chinese equities to outperform some of their other counterparts globally, whether it is japan, europe, or other pockets of emerging markets, precisely because they have more policy space and appear to be committed to using it but that headline suggests. alix: i think the question i am going to try to tackle is just how fast the stimulus out of d.c. is going to make it into the real economy. how do you judge that? how do you think about that as an investor? mike: that is a great question. first, i would say that we are

very encouraged by the quick passage of the bill overall. a $2 trillion stimulus package with the ability of the fed to lend quite a bit more beyond that is historically unprecedented, and acknowledges a historically unprecedented situation the country faces. in the sense of getting money out the door, there are going to be those real areas of success. i suspect unemployment provisions are going to be very fast acting in labor markets, the vast number of people seeking unemployment. it is important to recognize that in this world of working from home, government officials are working from home, too, so getting those pipes working around the irs to get payment out the door, getting the pipes these areth the sba, going to be challenges, and we are going to be closely monitoring that to make sure it is getting out in an effective way and a way that is actually

delivering support to businesses and officials who need it. alix: how do you then judge when it is time to buy? said, one, on a longer-term basis, we think that already over three to five-year horizons, there's value in the market, and investors should be indeedg in if they are long-term investors of that kind. a shorter horizon of six to 12 months, we think the picture is more challenged or balanced right now, which is why we are advising clients over those horizons to be closer to benchmarks. on one hand, i think we see very positive news flow around policy action, policy support from u.s. officials, from officials elsewhere in the world. on the flipside, the dynamics around the outbreak itself continue to be very concerning

in europe and the united states. it looks like we have some distance to go before the opec is under control. i think keeping an ion the asian economies deeper into this -- keeping an eye on the asian economies deeper into this will give us a sense of how long the shock will be. alix: we saw a solid rally within value. also, we learned that tech continues to hold up. i talked to somebody yesterday who intimated that may be tech is a consumer stable now. you had nice flow into the nasdaq 100. where are those opportunities for the longer-term investor? mike: i think you are exactly right. one of the things we have been the high-quality names in the u.s. extremely strong cash flow dynamics, extremely strong balance sheet positions.

those are names that are oftentimes concentrated in tech and the tech oriented parts o fe long term, so that is one of the reasons why we have really emphasized quality as an exposure that makes sense in trying times for u.s. investors. , what aboutp it up corporate credit, when we have seen spreads really come in? is that a time that you want to buy? and if so, where? mike: corporate credit overall, we remain neutral. one thing i would say is we continue to think that the investment-grade parts of the market are going to face some headwinds as the fed gets its programs stood up and gets market functioning back and running there. , we would saym that as the fed steps then, as

market functioning returns, those are going to be places where looking for quality exposures is going to make sense. one last thing i would say is when we look about cross asset, looking to things like dividend equities versus investment-grade credit, i think we see indications that there are more opportunities on the dividend equities side, particularly looking at the handful of sectors like financials and health care that have dislocated a lot versus their credit counterparts, as well as some quality equity exposures. alix: mike, really appreciate you hanging out with us today and giving your perspective. mike pyle of blackrock, thank you very much. we want to give you an update on headlines outside the business world. viviana hurtado is here with first word news. viviana: british prime minister boris johnson testing positive for coronavirus. mr. johnson was tested yesterday after experiencing mild symptoms.

he is now self-isolating. now to a major change in tone overnight between the u.s. and china. president trump and xi jinping pledging in a phone call to cooperate in the fight against the coronavirus. that comes after weeks of rising tensions. president trump tweeting, "we are working closely together." said relations -- mr. xi said relations are at a critical moment. today, lawmakers will move swiftly to give final approval to the historic $2 trillion rescue plan. speaker pelosi telling bloomberg tv that afterwards, the house will consider additional steps to help the economy. she says the next round should include more aid to the states. 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 to the hurtado. -- i'm viviana hurtado. this is bloomberg. alix: thanks so much. coming up, breaking down what is

happening with the oil market. of a demanding crunch. if you have a bloomberg terminal, check out tv . you can watch us online, click on charts and graphics. anything you missed, check it out. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." coming up in the next hour, exclusive interviews with fed presidents raphael bostic and robert kaplan. ♪ viviana: this is "bloomberg daybreak."

nevada gigafactory in slashing its on-site staff by 75% to prevent the spread of the coronavirus. the factory produces battery packs and electric motors with tesla partner panasonic. on --nk's mustier she's --tbank's monthly of she son softbank's masayoshi son has todged 40% of stake investors. more than 2 billion people are on virus lockdown, from india to california. that has energy demands plunging. under the weight of an unprecedented glut, prices have collapsed because pumping crude makes no economic sense. producers are shutting down wells. that is your bloomberg business

flash. alix:alix: thank you so much. the iea director saying oil demand could drop as much as 20 million barrels a day, egging it harder to find places to store oil. joining us is ben luckock, trafigura beheer cohead of oil trading. good to chat with you on this. now?ad is oil demand right how bad could it get? ben: it is bad. march is something between 16 and 18 million barrels a day reduction in demand. that number keeps rising as we cockily numbers each day. demand destruction is -- asedented, which is a we calculate numbers each day. demand destruction is unprecedented, which is a word i hear on your show a lot these days. alix: when do we have to have the conversation about tank

tops? ben: we are having the conversation today. an imperfect science determining how any barrels we can take in onshore tanks. at best, it is going to be 700 to 800 million. that is a complicated thing to do. it is not so easy to do to fill all of these tanks in every location in the world. the conversation is moving out to floating storage, using crude oil tankers as floating tanks. this is a conversation that has begun already. alix: part of that is you have to have prices that are cheap enough now and expensive later on to make floating storage viable. what is that spread, and how low do prices go? ben: that is contango. we are in a contango market. you are looking at wti at the very front at about three dollars per month per barrel. brent is about $2.50. it is borderline for vessels at

the moment. probably needs to go deeper. freight breaks have been rallying on the back of this. the owners of these vessels are aware they are going to be needed for storage, and they are probably going to be one of the winners of this. freight rates are going up, but i think they're doing pretty well at the moment. alix: when do you think production gets shut in now? ben: it is not immediate. i think you are seeing it creep around the edges at this price level. we have brent around $26, wti lower. it is not so easy to turn these wells off. people always want to talk about the permian as the first ones to go. it is your high cost producer, so that will be the first to go. some south american countries, canada, and yes, the permian. it is a slow process. prices are bubbly need to go lower to look after this demand shock we have -- prices probably need to go lower after this demand shock we have.

i think probably $10 lower. you need lower prices to stop people bringing a commodity out of the ground that the world does not need at the moment. we have a demand shock in excess of 20 million barrels. we cannot store all of this. you need to incentivize people to store. contango will probably go deeper. we need lower prices. you can hold onto something for longer or drop your prices, and that is the situation for the crude oil market at the moment. alix: are we going to see negative prices in some areas in some types of crude? ben: maybe. we are talking about it. it is complicated because the benchmarks everyone looks at is just one part of it. there are differentials for different types of crude, of which there are hundreds around the world. once you factor in that discount, there's the potential that the numbers may go to flat, low single digits, and in some cases negative. alix: what areas have the most

likelihood of that happening? ben: i think it's the slowest to react. the biggest discounts at the moment are on grades that aren't finding homes. on the water, midland, the biggest u.s. grade, is trading about $12 under brent at the moment. this is the discount you need to do to find a buyer. the situation continues this way and we run out of storage homes, choices.wo stop producing it or sell it for almost nothing. that is the reality of the oil market at the moment. alix: it doesn't feel like we are there yet on the stock production part. when you think we hit peak oversupply? it sounds like we are not really there yet. ben: it is a matter of weeks, i think i could see a scenario. very difficult to forecast what is going to happen. one of your presenters said there's 2.5 billion people at some poor in lockdown at the moment.

-- 2.5 billion people in some form of lockdown at the moment. moving.ren't they are not consuming. therefore, i think we've got a craft point coming probably at the beginning of may. alix: what is it like for you guys at the trading arm to get financing right now? can you walk us through what that environment is like? strong,is still actually. we are supported by 135 banks. we closed a couple of new rcf's yesterday. one in europe, a private placement in the u.s., and several bonds in the last few days at low pricing. so access to capital is not an issue for us, fortunately. in fact, it is low commodity prices, so our use of capital is low, and low interest rates of well, so we are functioning fine, thank you. alix: you're welcome. is there a point where the loss of demand and loss of volume offsets the ability to finance?

when do you see that? ben: it will be sometime from now. i've painted a pretty blank picture for the front end of this market. we are still bullish. there will be a recovery. i know the equities are keen to price that recovery. oil will we a bit behind that, but i think we see a resurgence at the back end of this year. we are hoping like everyone else that this covid issue is short-lived, and everybody can get back to their normal lives, and the oil industry is no different. leaves when get tea looking at china and how fast they come back, just because they are going back to work doesn't mean that all of a sudden their energy is going to spike. do we have any insight as to how that market is turning, and how we can apply that to the west? ben: 25% of our turnover is done in china. we have some business there, so we have decent insight. they are back to work, and doing a pretty good job of it. they close their borders

yesterday. i think the problem china has, they may be ready to work, but the rest of the world isn't. that is the problem. they can't fully recover until everybody else recovers. trying to determine when we recover is the same question about when everybody gets out of lockdown. i don't know when we are all going to get out of lockdown. when we do, we can all start to work again, consume again, and the economy will go. china has done a good job and recovered quickly, but they need all of us to recover as well. alix: the last point i want to get to before we go, a lot of analysts are talking about this, the deeper we go now, the higher the supply shock is going to be later once demand actually picks up, and the higher prices could be. when i say higher prices, what does that mean? is that $60, $40, high $30? ben: if you think we are going to put a billion barrels down, that is not going to be used quickly. unfortunately, i think we probably do have higher prices,

some sort of spike over the next 12 months incredibly unlikely. we are putting so much stock down that we need to go through at the moment. can we get back into the 40's? sure we can. 60's and 70's are off the table for the foreseeable future. alix: really appreciate it. always enjoyed catching up with you on the real-time news of the oil market. hopefully we can catch up soon. in today's off the beaten street, e-sports comes to wall street. the events company wall street bets host the world's first live e-sports style stock trading competition. it is set for october 28 through 30 and pit a dozen top stocks traders against each other. they will be playing with real money, livestreaming on pay-per-view. not going to lie, i kind of want to see that. in a world of negative yields all about positive carry, we

will take a look at that in today's trader's take. if you are jumping into your car, tune into bloomberg radio on sirius xm channel 119 and on the bloomberg business at. this is bloomberg. ♪

♪ 'lix: time now for traders take. joining me is damian sassower. -- we are are look looking at one of the best-performing assets through the crisis. if you look at yen, you are poised to make 70 points of pickup. in a world where negative yielding that has risen above $10 trillion in assets, i think there's going to be a heightened focus on positive carry, and this is one way to achieve it.

alix: how does the dollar play into that? you mentioned hedging to u.s. dollar. how low does the dollar have to stay or contain for this to all make sense? it really comes down to cross currency basis, and the volatility between the two, and interest rate differentials. but it comes down to our interest rate differentials and the cost to hedge. assuming those remain relatively stable, which they have my japanese yen has been a safe haven asset, you tend to see this type of pickup. i am a believer that there are still going to be sometimes ahead of us that call for a little bit of a prudence and safety, and this is one way to achieve that. alix: real quick before i let you go, taking a look at libor ois, this keeps climbing. do you see that as idiosyncratic, or is there something else going on dollar funding wise? great point.s a

libor ois definitely remains elevated. it is all reflective of credit spreads, and as we know, the worst is not behind us in spread land. i think with a lot more downgrades coming forward in u.s. and abroad. in em, we already saw mexico getting downgraded to bbb. again, you are going to be looking for positive yields, looking to e.m. for that. there are places like mexico, brazil, and russia which give you access to five your paper. alix: really appreciate it. happy weekend. see you on monday. coming up on the program, exclusive interview with robert kaplan, dallas fed president. stick with us. this is bloomberg. ♪

♪ alix: welcome to "bloomberg

thiseak: americas" on friday, march 27. i'm alix steel. let's take it right from the top. pres. trump: we are working with friends around the world to fight this virus and coordinate our efforts. alix: chinese president xi jinping reportedly offering to , as the country leads now with most reported cases of the virus. >> we are trying to protect the health of our citizens and keep our economy afloat. alix: g7 leaders inject into the global economy and pledge to do whatever it takes is the death toll surpasses 24,000. >> there's definitely fear and uncertainty in the market, especially if you look at what happened overnight, with the u.s. overtaking china as the place with the most confirmed cases of coronavirus. alix: treasury secretary steven mnuchin now forming a task force of financial regulators to deal with the liquidity fort -- the

liquidity shortfall as homeowners stop making monthly payments. eu annual budget is ending this year, so there is not too much money left in the eu budget. alix: european leaders struggled to agree on a concrete strategy to tackle the virus fallout. michael: there's an economic crisis in europe, and the leaders have gotten together and kicked the can down the road. does that sound familiar? the coronavirus shutting down many economies there, and the has created problems, particularly for those on the periphery. boosting thele, economy and stimulus. pelosi: we will look at how we can support good paying jobs and the infrastructure of america. alix: the house prepares to pass

a $2 trillion stimulus package. comes at a time in which many financial institutions are wondering how they are going to be able to get the liquidity they need to keep everything afloat. alix: american airlines says it is in line to receive $12 billion in aid oil other companies quantify the effects on their business. in the markets, it looks like a real risk off day is now developing within equities. s&p futures now around the lows of the session. asia able to hold onto the rally that europe could not. now that is spreading to the u.s. we also learned u.k. prime minister boris johnson has the coronavirus. the cable rate took a leg lower because of that, which pushed the dollar higher. you're seeing a move across the board into any bonds come up with the exception of italy, btp's actually selling off. the boe is planning to increase

the daily pace of bond buying that comes next week. it is going to buy about 13.5 billion pounds under that qe plan next week, so stepping it up a little bit there. also where you are seeing risk off is the crude market, rolling over yet again. technical areas where you do need to watch is the s&p. the 50 day average moves below the 200 day average, which for analysts is quite important. we could see a rollover that accelerates into the close, particularly if we are looking at the end of the quarter in the month. i want to turn out to an expose of interview. berg -- bloomberg's michael mckee is joining us with robert kaplan, dallas fed president. looking forward to it. mike? michael: we would like to welcome robert kaplan to bloomberg television and radio worldwide. thank you for joining us. mr. kaplan: good to be here. michael: the house to pass the

financial stimulus bill this morning, and i guess you will be in business, but what business is that going to be? the treasury could give you as much as $454 billion from this bill, which could leverage up to $4.5 trillion. even for an old goldman sachs guy like you, that seems like a lot of money? -- that seems like a lot of money. mr. kaplan: the key to the proposal from the fed point of view is there is a number of special purpose vehicles being created to implement these programs to buy assets from commercial paper to asset-backed securities to corporate bonds to municipal commercial paper. so each of these special purpose vehicles requires approximately $10 billion to seed. so the money from the bill will be used these various programs we have already announced. bill also announced

two new lending programs, for companies and for the main street lending program that you guys talked about. what is the difference between the two? what is the main street program? mr. kaplan: the details are still being worked out, but the long and the short of it is that would help lend to small businesses, but we would do it most likely through commercial banks, but we will provide credit support to those banks so that they can step forward and ,ake loans that are appropriate but they can do it with confidence that they have credit support. that program is still being developed, and we are still working on the details of that. mr. kaplan: the need michael: -- the need is immediate. how soon do you think you can start getting cash to companies? mr. kaplan: i would think very quickly. i avoid setting an exact timetable, but you can be sure we are working furiously here at

-- to have the teams in place and work out the details, and get those programs ready, and you can have confidence that we will do that. michael: you are also going to have the ability to lend to states and cities. give me an idea of how that would work. mr. kaplan: primarily, we have already announced that we will anotherg, through special purpose vehicle, the commercial paper of cities and states, municipalities. that program is already well underway in terms of being formed, and it is going to be primarily through the purchase of commercial paper that is issued. michael: some of this lending seems to put monetary policy squarely in the fiscal camp. how do you feel about that? mr. kaplan: in this environment, it is necessary. numbert is unusual and a of these authorities are

unprecedented, i think it is critical that we adapt to the reality on the ground and the challenge, and that is what we are doing. in this situation, it is quite appropriate. michael: can you get out of this when it is all over? mr. kaplan: yes. we will obviously have to work on how to do that in an appropriate way, but yes, i believe that we will. this is annderstands unusual time, and the reason we are recommending these programs is either municipalities or businesses or other entities don't have cash flow because we have asked them to shut down. once they are up and running again and they have their own cash flow, we will be able to, i would think, withdraw from some of these programs, but in the void, we want to make sure that these small businesses, larger

businesses, medium-sized businesses and municipalities continue to function, and i think that is critical as we do the things we need to do to social distance and quarantine in some cases in order to defeat this virus. michael: $1 trillion here, $1 trillion there, and you talk about real money. mr. kaplan: they might have said $1 billion at the time, but yes. michael: when you look at that type of money in the economy, do you worry about inflation? mr. kaplan: right now, i would call what we are doing in the category of "relief," meaning , all ofs is intended the bills, including the fiscal bills qamar to keep individuals functioning and being able to pay their bills, small functioning, municipalities functioning, larger businesses functioning,

so that when the virus is defeated, we can walk, then run, then sprint out of this. howhat regard, i don't know inflationary it will be because it is more relief than stimulus. i think a lot of the forces, unfortunately, on the other end might impact be deflationary, and that we are likely to have a spike in the unemployment rate. we will work that down. we'll have more excess capacity. i think a number of those forces will be deflationary. michael: we are speaking with robert kaplan, the dallas fed president, on bloomberg radio and television. one of your colleagues says we could see 30% to 50% decline in gdp in the second quarter. what kind of numbers do you see? mr. kaplan: our forecast at the dallas fed is not on that scale. we think you will see a substantial contraction in the second quarter. our own estimates is that it won't be that big, but it will

view, and20's on our just to point out, on an annualized basis. we can have some decline also, at least in the first part of a third quarter, and our own internal forecast at the dallas fed is you could see done implement rate peak in the low to mid teens -- you could see unemployment rate peak in the low to mid teens. we would have to spend 2021 working that unemployment rate down. but we will have an elevated level of unemployment for sure as we come out of this. michael: do you see a v-shaped recovery, a u? could this be a very long, slow recovery? mr. kaplan: everything we are doing, and addition to fiscal response, is all with the intention that once this virus

is defeated, we will move forward as expeditiously, quickly and strongly as possible. the thing that i don't know, and we will have to see as we go, is what will be the effect on small businesses. i've talked to lots of small businesses, as well as larger businesses. a lot of small businesses may come out of this smaller. some small businesses may conclude that they don't want to continue to operate out of this. there businesses were not as strong even going into this. big or businesses are going to have to assess how much demand do they have, what is the size of their business, and rescale and reconfigure what they are doing, so then the consumer to have, we are going to learn what consumer behavior is on the other side of this. i would think that consumers are liable to be more cautious.

they will save more. you could understand why. their spending habits may be a little bit different than they were. then you will have a higher unemployment rate. i think these are all things that it is a little too soon to gauge, but we are going to climb out of this. it is just a question of how fast we go from walking to running to sprinting. we are still trying to come to grips with that question. michael: what are you seeing in the dallas district? what are companies telling you about the prospects? mr. kaplan: you are hearing a lot of things i think that we are hearing around the country. small businesses are worried about survival. that is probably true of even small and medium-sized businesses, where they have mapped a lot of scenarios, but never mapped a scenario where literally, they were asked to shut down and revenue just stopped. ,here's a lot of great concern

particularly among small businesses, about whether they can make it to the other side, even with the loan assistance we are talking about. for even bigger businesses, depending on what industry they are in, we are also having the same discussion. they are just trying to assess how to manage their people, how to protect people, but also how to manage their business during eriod where revenue is dramatically declined. the big other issue we deal with in texas that most states are not is energy. we had, in addition to the coronavirus, and unprecedented energy shock that happened about two or three weeks ago with saudi and russia. from the coronavirus, we were going to be globally oversupplied on energy to begin with, and the russia-saudi dispute and desire to pump even

more makes this oversupply even worse. so we have a traumatic global oversupply issue for oil, which is dramatically hurt the price of oil. so you're going to see lots of restructuring, some failures, and lots of challenges in the permian basin. we think the permian will actually shrink this year. before this happened, we thought it would grow more slowly. now we think the production from the permian basin is likely to shrink. the only reason you won't see its ranking faster is that some of these firms have forward demand. you will see shrinkage across the industry. michael: as everybody looks to the federal reserve to pull it out of this, what is your message to people who may be sought chairman powell yesterday say we are probably in recession now? messagean: well, the

is we knew we were going to be in recession. it is a self mandated recession. it is a different kind of recession. normally, recessions things we avoid at all cost. this is a recession that we have induced. we needed to do this in order to fight this virus. having said that, we were strong before we went into this, and a chance tohave come out of this very strong, but the message is everything the federal reserve is doing, and in addition, all of the fiscal response as you are seeing, are with the intention that as we defeat the virus and climb out of this situation, we do it as strong as possible and -- wese the probability will have a new normal as we come out of this, but we will come out of this strong and get stronger as we end this year and go into next year. michael: dallas fed president

robert kaplan, thank you so much for joining us this morning. stay safe down there in texas. back to you. alix: a very important interview from michael mckee, with robert kaplan. some of the highlights, talking about the un-limit rate, saying that could peak in the low to mid teens, but then decline to 7% or 8% by the end of 2020. also some predictions about what is happening to the oil market, that permian raise in production is likely to shrink. we can watch that as we go. overall, keep saying that the fed is going to provide credit support through banks. they are going to come out of this strong and continued to pump as much liquidity as needed. i do want to check in the markets because the risk off tone really developing now as we head into the open. dow futures off by over 700 points. s&p futures around the lows of the session. haven't hit limit down or

anything like that. also what you can expect as you see money moving to the bond market, as well as into the dollar, if you look at the dollar index, you have been working at -- you have been looking at the worst week since 2009. now we are inching higher. part of that is the cable rate, which rolled over because boris johnson as the coronavirus. he will have to work from home like the rest of us. i want to point out yields in europe. you have some solid buying pretty much everywhere, continuing on that relic from yesterday. the one area where you don't is btp's. yields down there by about seven or eight basis points as you have some selling. there's a lot of confusion over what european leaders will agree to or not. no surprise you have the peripherals wanting a coronavirus tight bond, whereas countries like germany do not. that is what they are checking here on the markets. i did want to highlight what is happening also with the vix. it is moving higher, as well as

equities moving lower. we are now at 68 for the vix. watch that. remember, we only have a few more days left to get into the end of the quarter and the end of the month, see are going to wind up seeing a lot of rebalancing in the market as well. some say a big move into equities, some say a big move in treasuries because of the selloff. we will be looking at all about her up next few days. much more coming up. this is bloomberg. ♪

alix: we had dallas fed chair robert kaplan talking about how they are providing real stimulus, but in d.c., it is

about the $2 trillion that is going to be deployed to workers, small businesses, and regular corporations. how quickly is that going to filter into the real economy? joining us now is guggenheim cochairman, who oversaw investment and banks during the financial crisis and was the architect of aig's bailout. also joining me in new york is sonali basak. you have extensive experience with something like this, the crisis format in the government supporting companies. what can they learn from what you guys did with tarp in 2008? >> i think the most important thing right now is getting the various different programs up and getting the money out. i think the extended unemployment insurance and increased benefits are going to from thecause we saw unemployment report we are going to have a rapid increase in unemployment.

that will cushion the blow of losses for the people losing their jobs. the small business lending program, or loan to forgiveness program, i losses for the peoplg their think that is important, but i worry that it is going to take come about the time they stated up, many of these businesses will have gone out of business. learnedthe thing we during the financial crisis. the administration started a mortgage modification program. it really didn't move the needle puttingar in terms of many mortgages modified. a program that is intended to reach 30 million small businesses, that is going to be a huge execution challenge for this administration. sonali: i am glad you touched on mortgages because we have been talking a lot about the margin

calls the sector is facing. we have mnuchin now forcing a task force to address liquidity in that sector. how much pain re: seeing in the mortgage market? --re does it go from here how much pain are we seeing in the mortgage market? where does it go from here? jim: you've had tremendous volatility in credit markets, and in mortgage assets. as margin calls on people who are levered with short-term debt are at high risk of survival in this market. other intermediaries will step in. the fed is surely stepping in and a large way to make sure that mortgage credit is widely available at affordable prices, and in this very difficult market. sonali: you mentioned earlier that even with the aid packages, there may not be enough for all of the businesses to survive.

we've been hearing about a wave of restructuring coming up. how fast are we going to see that, and where? jim: it really depends. the big corporate restructuring really depends on the success of the fiscal and monetary policies on the one hand, and i think way more importantly, the success on getting this virus under control . at this point, we've shut down that isthe economy, and going to have contagion effects to the rest of the economy. if people are stuck in their homes, they are not going to be in their showroom. if people are unemployed, they are not going to be buying cars. the sooner we get the virus under control, the greater the likelihood that this economy given just howut far behind the curve we are on the virus, we are going to see a

wave of restructuring. clearly, mr. kaplan noted the energy sector is going through the third round of restructuring it has experienced since the financial crisis as a result of the price war between the saudi's and the russians. industry, and leisure if this goes on much longer, is going to go through a wave of restructuring. ofhink you've got a series consumer durable and industrial businesses that depend on demand. if we really are going to have 15% to 20% unemployment, we have got to have some serious restructuring going on. member, the corporate sector came into -- remember, the corporate sector came into 2020 more levered than at any time in american history.

with gdp shrinking, that leverage as a ratio matter is just increasing. whether corporations, highly levered corporations can withstand a decline in the resume, and therefore in their cash flows, i think is the big question. we will see. sonali: speaking of corporate credit, we are seeing some relief in the market right now. what are you still concerned about in the credit markets right now, given so much of it is so over levered? jim: well, listen, leverage is not a cure to negative free debt flow. adding more leverage onto an already levered balance sheet is generally not a cure for a decline in revenues. that is my concern. the fed is doing -- look, there is an export near program being stood up through the treasury

department. they have never done this in their history before, to lend director to the corporate sector. and hasl bring down brought down rates in the investment-grade sector. in theember, investment-grade sector is at the lowest grade, so we have already seen a string of downgrades from investment to noninvestment grade. areowngrades occur, you creating a series of corporations that will not have access to the fed facility, which could be enormous. this could be a $2 trillion to three children dollar -- to $3 trillion lending facility by the time they are done. fed has the firepower to bring down lending rates in the investment-grade market, but i think in these economic times, you're going to

will huge move that migrate from investment grade to not investment grade, and unfortunately, that is an environment the fed cannot reach. alix: that's actually a great point. is the money we have seen so far enough? enough?2 trillion is $75 billion for airlines enough? how much of this whole thing going to wind up -- how much is this whole thing going to wind up the cost? on thethink this is foam runway, as tim geithner o used to sa -- as tim geithner used to say. we are providing a cushion for individuals, hopefully for small businesses if they can stand that program up quickly, and obviously for a variety of targeted industries under the fiscal plan. tidehis is just going to

them through a really rough patch. in terms of actually stimulating the economy, i think now that the republicans have embraced modern monetary theory and are prepared to run massive deficits , i think it really is time for washington to address itself to our aging infrastructure. that would be stimulative. if you really have 15% to 20% unemployment, if it all goes right, we would be down to 7% or 8% unemployment. that is still right around the level we entered 2009 with. we are talking about a deep recession, and what we are doing right now is providing a soft landing for a lot of people who are adversely impacted by this. but if we actually want to stimulate the economy, the federal government is going to have to start making public jim, i appreciate your perspective. a super valuable voice. jim millstein, guggenheim

security cochairman and bloombergs ali bostic, thank you -- sent ali bostic -- sonali basek, thank you for bringing the interview to us. this friday zapping the three days of gains after the doubt went to doable market after just two weeks of being in a bear market. the data we want to focus on his personal income as well as spending. atsonal income coming in .6%. a quick check on the inflationary read. if you look at pce, which is what the fed winds up looking at, a court deflator on the year your basis, 1.4%. bang in line, inflation going nowhere. if you take the deflationary world out of the equation, may be, even though you have oil at 22. a deeper check of the markets.

a selloff in europe as well as here in the u.s.. i want to draw your attention to the bond market. you're seeing moves into the market in the u.s. as well as europe, the exception of italy, bdp jumping 10%. there was a huge rally in btp yesterday but that does point out the lack of ability of the euro to come together to support all of the regional developments. there is still a divide between those who want more unified action and those that do not. also taking a look at the dollar. we were taking a look at the worst week for the dollar since 2009. you see the dollar moving a little bit higher and yen as well. where money is going, you are seeing relief with the investment markets. those breads coming in tighter over the last week even though you saw huge move of outflows in the corporate bond market. money market funds in the u.s. hitting another record. trillion in money market

funds. that is very close to the fed balance sheet of $5 trillion. hitting that level for the first time ever this week. we want to turn to michael mckee for an exclusive interview with raphael bostic. michael: we would like to welcome the atlanta fed bank president raphael bostic to blumer television and radio worldwide. thank you for joining us. expected to pack the fiscal stimulus bill and then you get lots of money from the treasury. what is the plan? the main street lending program you talked about, what will that be? raphael: good morning. it is good to be on with you and good morning to everyone. context, coming out of this crisis -- or coming into the crisis, what we saw was a lot of financial markets starting to break down in terms

of their funding. we announced a number of facilities that are going to be designed to help those markets function more smoothly. a lot of the funding and the bill is oriented toward providing a backstop so we can do that in an appropriate way that meets with our authorities. street program is another one of these that has been designed to help small businesses. many small businesses do not have an extended buffer to whether weeks of not having revenues. they are under a lot of stress. the way the program is conceived conceptually is to provide them with a bridge that allows them to stay in business, keep their employees on board, and get to the other side of the program. the other side of the crisis. this is not fully been worked out. i have been on calls

continuously for the last two days trying to work through all of the little details. there is a lot. this is quite unprecedented for the federal reserve to be trying to do this. we want to make sure we do this right in a way that does not lead to problems down the road but also in a way that gets the money out as quickly as possible. michael: how do you do that? do people line up outside the atlanta fed with loan applications? how will this work? raphael: the fed does not typically do direct lending. my expectation is this will work through the banking institutions that already have relationships with many of the businesses that will be needing support. we are already working with small businesses, with other banks to address some of the small business constraints. we are encouraging them to think about modifying loan terms, differing requirements for interest on those loans,

extending those terms, all with the idea of trying to reduce the current time pressure they are facing. we will do more with the bank, and i look forward to being able to announce this as soon as possible. michael: how soon do you think that is? the need is immediate. you walk down the street and you see store after store shutter. there's been a lot of focus on small businesses laying off a lot of their workers. we are doing a lot of surveys in the southeast. one thing that has been heartening is many of these businesses have been saying we will hold on as long as we can. we are not going to make any permanent decisions about our staff or our operations until we see the full range of support that has happened. i think the bill going through congress right now is a good first step to do that. we will work with his lending program to make sure we get this

out in time. we fully understand time is of the essence and we will do all we can to make sure we are not late with this support. michael: you will also have the ability to lend more to states and cities. how does that work? is this just the program you announced or can you expand that? raphael: one thing i would say is we will wait and see. we will watch how the markets operate and see whether there are segments of the market that are not still working close to where they were under more normal times. if we determine those segments are not working well, we will look to set up other facilities to support them. for now what we are seeing, the facilities we set up, many of the tensions and stresses rocking the market a couple weeks ago seem to be moving in the other direction, which is quite positive. we will remain diligent to make

passes, ifs time things do start to deteriorate, we will be ready to step in and provide whatever support we can. michael: you mentioned some of the businesses in your district are relatively optimistic or want to try to be about staying around. i wonder about cities and states. you have a couple of the poorer states in your district and there has been concern about shrinking revenues because they are not collecting any taxes at this point. how bad is that situation? raphael: we don't know for sure. i would say two things. ae, i think we will see coming together in the public sector to make sure every jurisdiction at the state and city level is able to get through this crisis and still be functioning at the end. the second, which is another important thing is that this is a public health crisis.

it is quite different than some of the economic disruptions we have seen in the past. as a consequence, i think there is the possibility that once the public health crisis is under control and we do not have that issue anymore, the economy may rebound quite robustly. the chair said yesterday on the news that the economy started in a good place. i think that is exactly right and something we should all keep in mind. the goal for almost all of these projects and programs is to try to make sure when we get on the others of this, the economy is as close to that place as recovery andhen a health is not a major concern, the economy can start kicking back on all cylinders and running quite strongly. hope is that if we do the

responsible things and take care of our public health problems, then the economy can rebound and some of the shortfalls you are talking hope about wind up not g as deep as they could be. michael: how bad you think the shortfall could get? int is the atlanta fed see terms of unemployment and gdp going forward? raphael: it is interesting. i have talked to my macro forecasters and what they tell me is that in this environment, where we have had to basically ,n induced contraction forecasts are difficult to do. we are definitely expecting gdp for the second quarter to be the firstero -- for quarter close to zero. the second quarter negative. the third quarter is an open westion as to how quickly get the public health crisis and the coronavirus bread under control. among my forecasters, there is debate about whether we will

start to see that early in the third quarter, middle of the third quarter, or the fourth quarter. i think it can be tough for the next month or so, but then a lot of the trajectory will depend on how we deal with the public health issues. michael: you have a background in housing. there is no money in the stimulus bill for mortgage forgiveness delays or things like that. how do you think housing plays out? raphael: it will depend. i would say that what we have seen through congress is a series of bills trying to address various aspects of the crisis. the housing market is one where we are continuing to have conversations. i have gotten contact from many in the property markets, and they are telling me about their challenges. we are working to try to understand those better and make

sure there is not collateral damage in housing markets. either a bunch of companies go out of business or two a lot of people use -- lose their homes. we want to make sure that the housing sector is not a repeat of what happened in the great recession. michael: in the stimulus bill, you are getting a lot more money , a lot more power from congress and also putting restrictions on what you do in terms of the corporate loan program and what companies are allowed to do. does it bother you the line between fiscal and monetary is getting blurred? raphael: it does not bother me. the thing to remember is all of these facilities are being stood up under emergency authorities. the important context is we are in an emergency.

when we are in an emergency one of the lessons we learned coming out of the great recession was act strong, active minute of the , protect those parts of the market that are weak to try to limit how deep or how negative things get good it does not trouble me about this. we have these authorities, the congress has given them to us. i have every confidence we will apply them in a responsible way. michael: last question. as you stand up all of these authorities and get deeper into this, what unintended consequences you foresee? what are you worried about down the road when we come out on the others? raphael: in the short run, i am worried about my staff. we are working incredibly hard across the entire federal reserve system.

doing to make sure we are this. i am using a lot of my time trying to keep an eye on people and make sure their mind is positive. on the backside, i think one thing i will be looking for is a measure and a gauge of consumer confidence to see how consumers and households are thinking and feeling about the u.s. economy and their prospects after this. that will play a very important role in shaping people's willingness to consume and spend and invest in themselves and their businesses. andll keep an eye on that hopefully all of the things we are doing today will give people confidence and that will carry through into the recovery. michael: we can hope. thank you very much.

atlanta fed president raphael bostic on bloomberg radio and television worldwide. back to you. so much.nk you, i appreciate that. ,oining me is ira jersery bloomberg intelligence chief u.s. rate strategist. interviews.stellar of your biggest takeaways over the last half-hour? ira: what raphael said late in the last interview, just the fact that one of the big lessons of your biggest takeaways over the last the fed learned from 2007 to 2008 was go early and go big in terms of crisis response. that is one of the reasons you saw the fed, at least initially take everything they had available off-the-shelf, everything they could easily implement quickly, and they did that. now they are filling in the gaps that need to be addressed for different things that are unique to this particular situation like the small and medium-sized

businesses, that main street fedram, that the atlanta president mentioned early in the discussion. bosticou did see raphael sideswipe -- sidestep the modern monetary theory idea. he said it is an emergency and we can take it back as needed. do you buy that? ira: in some cases i do. it is not unprecedented. we have to keep in mind that when you go back to another time that was not dissimilar -- i've been describing as having a bunker mentality. that is why you have hoarding of goods, particularly we think about toilet paper and things like that. the other time you had something similar to this was during world war ii, when you had massive wascits, the deficit to gdp

astronomical. debt outstanding went to several hundred times that of gdp. the federal reserve was buying every single bond when it reached near 2%. it was something called yield curve control that the fed was doing in order to keep borrowing costs low. that was a form of modern monetary theory as we discussed it today. yet we were able to unwind that after the crisis was over. in terms of the ability to unwind this, i think it is possible. is it going to be an easy process? i think it will be more difficult than it was back then. we have different issues. we do not have the same demographic push you had in the 1950's that created a huge rate and allow participants in the economy in order to buy all of the government debt instead of the fed. it might look a little bit different, but it is not unprecedented.

we know it is possible. it is more a matter of will and ability. nevertheless,ix: what kind of issuance do you think we will get from treasury and the demand to magic? ira: it will be huge. we know that. you cannot have a $2 trillion program without issuing $2 trillion worth of debt. it will be more than that because our estimate is we will have a reduction in federal revenues, tax revenue will go down between 300 billion dollars and $500 billion. that might be optimistic. that also does assume things get back to normal in the crisis ends and the third quarter of this year. i think initially there'll be a lot of issuance. up $25issuance went billion. next week it will go up more. now that we have this bill in place, you will see the treasury department start to issue

significantly more debt in coupons. that will start in may in earnest. really appreciate it. really good analysis from bloomberg intelligence. we want to give you an update on what is making headlines outside the business world. viviana hurtado is here with first word news. viviana: british prime minister boris johnson has the coronavirus. he experienced mild symptoms and a test yesterday confirmed he has the illness. the government says he has self-isolating in his downing street offices. now to major change in tone overnight between the u.s. and china. president donald trump and xi jinping pledging to cooperate in the fight against the coronavirus. that comes after weeks of rising tensions. "we aret trump tweeted working closely together." president xi said relations between the sides are at a critical moment. we end with nancy pelosi and the u.s. house of representatives. the house speaker predicting

today representatives will move swiftly to give final approval to the $2 trillion rescue plan. the house will continue additional steps to help the u.s. economy. the next round should include more aid to the states. 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 am viviana hurtado. this is bloomberg. alix: thank you so much. coming up, we will get more on your trades in terms of crude and cold in today's technically speaking. check out gtv on your terminal. any charts we see throughout the show we see throughout the show weekend check out and play around with. gtv . this is bloomberg. ♪

viviana: coming up later today

on wall street week, former treasury secretary larry summers at 6:00 p.m. here in new york. ♪ alix: time for technically speaking. joining me is mike mcglone. you're looking at gold and crude indicating lower for longer. you keep bumming me out. mike: i am an optimist but i have to be a realist. what you see in our first chart is the ratio of gold divided by crude oil. it is at 75. it is the highest ever since the beginning of futures trading in 1983. if this can peek, it is the -- if this can peak it is a sign of bottoming in yields.

it looks to me like it has sustainability. crude oil will settle around 20 and gold looks like it is marching to new highs. your second chart we are taking a look at gold crude ratio in stocks. mike: the same thing. the aqua chart is a measure of the s&p 500 divided by its 50 week average to show you the velocity of the change. the biggest spike was into thousand eight or 2009. you see the spike in gold versus crude and the bottom of the stock market. this time we have seen that, but it looks like the problem is the sustainability of the gold versus crude trade like it is much more. alix: a fair point. futures rolling over now. thanks so much mike mcglone of bloomberg intelligence. if you're jumping into your car, tune into bloomberg radio heard across the u.s. on sirius xm channel 119 and the bloomberg

business app. this is bloomberg. ♪

alix: that wraps it up for me "bloomberg daybreak: americas." hope you have a good friday. in the market it does not look great great s&p futures rolling over about 3%. we were looking for the worst week for the dollar index since 2009. will we see that? the index inching towards 100. the bid for bonds continuing as crude rolls over yet again. that wraps it up for me. stay with us for jon ferro on "the open" with mohamed el-erian. happy friday. see you monday. this is bloomberg. ♪

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jonathan: from new york city per audience worldwide. good morning, good morning. this is "the countdown to the open." what a week it has been. the biggest three day on the s&p 500 going back to the 1930's. the biggest weekly gain since the mid-1970's. on the s&p 500, equity futures lower, session lows more than 3%. .n your bond market, a bid treasury yields down two basis points. in foreign exchange, dollar weakness the last couple of days , but as the session grows older, the dollar growing stronger. what a month we have had for policymakers worldwide. we started the month of march with the policy rate of the federal reserve at 1.75%. we are ending the month of march with a policy rate close to zero. the fed coming out with unlimited qe. the