tom: this morning, in this pandemic, in fighting the virus, it is about breathing and simply not getting pneumonia. in prime minister rests intensive care and is "in good spirits." dominic raab thanks the nhs. good spirits among epidemiologists. they offer hope of less deaths. japan and saudi arabia begin the fight. the shorts three days in a row are crushed. equities repriced higher and em currencies find a fragile bid. "surveillance," from new york and london. i am tom keene from the edge of central park by mount sinai, the ,irens nonstop 24 hours a day

but the leadership of mount sinai, new york presbyterian, new york confronts 599 deaths yesterday. us thatis just telling spain actually showing increasing deaths moments ago. i think you are going to see a little bit of dispersion in the data day-to-day. the u.k. has had a couple of days when the death toll has come down, but i think there will be some degree of variance, particularly as it shifts its epicenter in terms of the regions it is affecting. in the u.k., the epicenter is moving to birmingham. they are looking to get another hospital up. which, we are may be going to see spikes and troughs when it comes to the data. the story of the data is

dominating -- dominated by what is happening over the river where the prime minister is still conscious but receiving oxygen. dominic raab, first secretary of state, and the foreign secretary taking over the role of boris johnson. he will have to maintain consensus in cabinet, a difficult time for the u.k. there is in creating -- increasing chatter of a unity government. we have leadership from the labour party and it will be interesting how the opposition and the government work together. tom: we have a headline on the collapse of small business, the nfb survey of small to medium-size businesses showing a massive decline, no surprise on

this tuesday and thursday, new jobless claim numbers. jp morgan considering 7 million is a statistic for the thursday weekly data. right now, here is viviana hurtado. u.k., then the dramatic turn in the coronavirus outbreak, boris johnson is in intensive care. mr. johnson is receiving oxygen but is not on a ventilator. raabgn secretary dominic will step in for the prime minister and told reporters government business will continue. he is taking over at a crucial time. u.k., thein the coronavirus pandemic is expected to peak. nancy pelosi wants the next round of stimulus to be at least $1 trillion, telling

congressional democrats the package should include more direct payments to people and small business loans. donald trump says of fourth stimulus it's can scatter -- under serious concession -- under serious consideration. oil produces -- producers are an end to the price war. 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. this is bloomberg. row risk on three days in a , and looking at the bloomberg terminal off of my cell phone, dow futures up 814, s&p futures up 85. dow to 23,309.

the vix comes in under 44. i cannot believe i'm saying that is a good number. curve steepening this morning and dollar dynamics are interesting. dxy weaker but above 100. down buttility coming still a long way from the days when it was sub 20 and in the low teens. 20% -- is up more than or was earlier. stocks rallying a bit. up today.is actually i don't think it is much to do with what is happening with the dynamics in the u.k. and the data about boris johnson, because broadly there is a dollar off around the world. negativend markets

.36. 2.78%catching a bid by for session highs as we wait to hear what will come out of the opec-plus or perhaps opec-plus plus meeting. to dr. kingalked earlier with hsbc, it is time to shift to the equity markets with lazard asset management, ronald temple. good morning. you will say we have never seen a shock like this, but do we see a recovery in equity prices that is similar to before? the three days up, fine. what i want to know is where we are a year from now or three years from now. ronald: a year or three years from now we are likely to be higher, but between now and then you will see volatility.

we are seeing a bit of bounce off of oversold conditions, but there is a lot more news to come. it is too early to think we have visibility in terms of how this crisis might end and the damage. i look at the markets right financialsook at the getting a big bounce. you have always been very articulate about the valuations of financials. how do they look now? ronald: if i look at u.s. financials, when i think about the income statement, there are challenges facing these companies. banks have two primary revenue generators, lending spreads and fees. the volume is going up as corporate straw the credit line so you have seen an increase in industrial living at the banks,

but the margin they can earn or the spread between what they borrow at and what they landed at is compressing. you are receiving extra loans and theirower margin, fee revenue is going down. people are not spending money on debit and credit cards, lower transaction volume. the big question mark is how high the credit losses will go and that goes to how successful we are with the fiscal and monetary policy stimulus keeping liquidity flowing through the economy. there is no question credit losses will be higher. we have higher-quality banks trading below tangible book value at this point, which usually is a good signal there is a buying or valuation opportunity. you have had the market selloff so much, you have to ask

yourself over the next three years, where do i want to put my money in the market? if i believe the fed is likely to keep the interest rates low, the net interest margin pressure will not go away. the credit interest spike will fade over time but it is unclear what kind of capital you will get from the banks. you can argue there are some .etter quality us fromald temple with lazard asset management, a timely conversation on the state of private equity and merchant banking, and perspective on his good friend donald trump, stephen schwarzman. we will speak to him in the 7:00 hour. worldwide, this is bloomberg. good morning. ♪

♪ you are watching bloomberg "surveillance." samsung posting better than expected profit in the quarter that ended during the pandemic. soaring thereness

is hope internet usage from people staying at home will keep rising, dropping off the demand for smartphones and consumer electronics. billionaire investor bill ackman considered liquidating his portfolio. instead, he opted to bet on a credit hedge. when the market plunged it earned about $2.6 billion in profits. airbnb raising $1 billion in debt and equity. outbreakavirus hammering airbnb and the disease has made a possible ipo this year uncertain. that is your bloomberg business flash. ,uy: if you have a bloomberg check out this function, tv . you can watch all the interviews

we have been doing on bloomberg and some great guests are lined up. live events. you can interact with tom and i directly as well. tv . this is bloomberg. ♪

♪ guy: i am guy johnson in london, tom keene in new york by the park in manhattan. ours get back to conversation with ron temple of

lazard asset let's talk about what is happening in the markets. the equity markets have been particular and there seems to be the temp tatian of seeing any flattening of the contagion -- temp tatian of seeing any -- ion of seeing any flattening of the contagion -- and a sense of where we are and how we should relate the virus as it relates to decision-making? ronald: with the market having traded down as much as 35%, on a two to three year basis that represented a buying opportunity but it is important to investors , be careful about staging their way into the market. i think we will be whipsawed and have more news. it is early making prize notch the occasions -- making

prognostications that this is over. oforry about the success some of the antimalarial jogs -- drugs. it seems like there is an increasing amount of downside risk or being disappointed as we get clinical trial results. the good news is we got the fiscal stimulus that we needed. inhink we will get part four the u.s., but the health care side is the key missing component, and we are not there yet. guy: if i were looking to reenter the market, if i were looking for freak -- fresh cash to work, does the upper end of the credit market look like a plumpingt rather than for equity? i think the upper end of

the credit spectrum is more attractive than six to 12 months ago because the spreads have widened, but when i look at risk-reward come on a two to three year basis you will be better off with equities relative to debt. where your question leads is you don't want to be at the low-end of the quality spectrum in either market. we have so much uncertainty about the depth of the downturn and the risks of defaults that you want to be at the top end of the credit spectrum if you are in credit and in equity, focus on quality of balance sheet and access to liquidity and make sure you own companies that can increase their market share during this period of stress. yesterday, preaching the gospel of the idea of buying quality and staying with quality.

does that assume a massive roll up of small and mid-cap? will we see a consolidation out of this pandemic? ronald: that is one possibility. it is still early to see that. before you see merger activity you need to see confidence levels go up and you need access to currency. you could see some element of large well-capitalized companies swooping in to buy assets they find attractive. this is a great time to be a large-cap company with a great pile of cash because you are looking at opportunities to pick up some great technology. see some of the best acquisitions occur for those companies in an advantaged position. that is a reasonable hypothesis, although it seems a little early to expect the m&a activity, a

distressed purchase to happen. tom: one more question before i let you go on and start your day. there is a massive shift in share buybacks. everybody is showing that. fearis overplayed, this that share buybacks is a dominant factor in a great bull , iset, that it drifts away it overplayed? ronald: i think share buybacks contributed to the rise in the markets. there was the tina trade, there is no alternative. with global interest rates even lower for even longer, i think once we get through this crisis, and it is too early to call when , but once we get through this there will be meaningful upside in equities with or without share buybacks. we will see how deep the earnings trough is, but once we

see earnings increase we will see good upside even as companies are not buying stock. tom: ron temple, greatly appreciate for you to be with us today. one of the great fortunes of bloomberg television and radio as we have people that decide they want to specialize. guy johnson has been doing that for years. i use to make jokes that he would do anything to get to any given air show, but he has developed extraordinary expertise and depth of knowledge over the aircraft. we will speak to guy johnson on what he has observed. how does this change boeing and airbus? challenges for both oems. the challenge is trying to calibrate how many aircraft they are producing at the moment.

we are entering a new world when it comes to demand for aircraft and that will be interesting to see exactly how airbus calibrates their process, how much do they slow the lines down , how quickly can they ramp them up where the demand to return. we should not lose sight of the fact that in the medium-term, the airlines will remain under pressure to operate the most fuel-efficient and environmentally sustainable aircraft they can. that pressure will not dissipate pressure onbe put the air framers and manufacturers to make that work. for boeing, it is all about liquidity. take my business forward to a place where i have the max back in the air and have put most of my staff back on the line and am producing airlines

-- airplanes? it is somewhat easier for airbus. boeing entered it with the max crisis. tom: i could go all day with guy johnson, his expertise on particularly the national carriers of alitalia and air france and lufthansa as well. and continueck forward the discussion to get you ready for tuesday, and we go on to thursday and the american jobless claims report, which has become the real barometer of the angst in small business, the angst in individuals across the nation. market, on feel in the a lot of the punditry calling this a short, where there were message bets going down, and when you cover that, it provides an impulse up.

now,is what we are seeing friday, monday, and tuesday with equities higher. we had a 43 handle on the vix at one point. the dollar fragile. coming up, this is incredibly important. this is who the governors and presidents lean into on the history of monetary policy, william white, the great canadian, formally with the oecd and bank of international settlement. william white absolutely definitive on these financial times. this is bloomberg. ♪

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they picked the wrong woman. just say "xfinity movie premiere" into your voice remote to bring the theater to you. ♪ it is a europewide crisis and it requires a europewide solution. build commonw to

tools of physical response, not only leaving them to member states. >> germany will work for solidarity within the european union and we understand it is necessary to fight together. >> let's spend some time thinking about the possibility of introducing euro bonds, corona bonds within the eurozone. >> no to esm. we say yes to eurobonds. >> corona bonds are one form of europe. -- in >> if anyone would agree on that, it never would be in place at the right time to fight the crisis so i consider it an apathetic debate. >> in spain, we think this is a good idea to demonstrate solidity of the fiscal response. tothere are possibilities

issue bonds over certain institutions, like esm, if you call that corona bonds, why not? bonds? call them corona repeated, the esm is an instrument that is completely inadequate. andbonds are a sufficient adequate response to the emergency we are facing today. >> we have all the firepower we will need and we will use it. morning, everyone, bloomberg "surveillance," some of the interesting voices on monetary theory over the reach of this pandemic, and so much coming back to federal reserve policy. the secret is when william white writes, everyone reads every word of it. the chairman reads it, the vice

chairman, the governors, and the presidents read william white because of his reach of history and economic theory. it is second to none. formally with the oecd and bank of international settlements, we are thrilled william white could be with us. au changed economics with sprawling history of economic theory for the dallas fed -- "ultra easy monetary policy and the law of unintended consequences." even you could not see a pandemic coming. let me ask the money question. we are in the all-time ultra easy time of easy money. can we get back to what we once knew? william: i think the world will change in a fundamental way. it is thatd why people do what they do during

crises. it is the old john wayne line that he never said, a man has got to do what a man has got to do. the problem is, each time you do it it makes it more difficult to deal with the next time there is a problem. i have been saying for at least 20 years we have been on a bad path in terms of debt accumulation and should get off it, but every time a problem emerges, it is the same answer. i am pleased to say in a way that up until now it has worked and has brought the economy back to something close to normal, albeit with these side effects like more debt and markets that do not work as well as they used to. whether it will pull it out this time, particularly at the speed the fed has and the others in reestablishing something close to normalcy in the markets, whether they can keep it up is another issue. tom: the ambiguities that you

write about, particularly in your two classic monetary history papers for the dallas fed are filled with ambiguities and one is how wrong the inflation thesis have been. aere was always a worry of return to higher rates. should we fear higher inflation given the shock? william: i think going down the line, it is reasonable to assume this would be part of the endgame. when you look at what has been going on, how did we get into the disinflationary period? in a large part, because of the demographics, the baby boomers coming through, all of these new supply lines from asia, all of that is going in reverse.

the demographics are turning around, the supply lines are being cut, and in addition because we have this extra expansion of the monetary phase that may or may not be totally controllable. looking down the line, after a period of perhaps the economy moving to a deflationary phase, it would not be impossible to see this thing turn around and wind up with higher inflation. guy: do you think one of the ways we will get there as we will end up having to see debt forgiveness because some of the debt will have to be written off? we may see monetization. how do we deal with the debt in the long term? it will be incredibly hard to pay back. william: it is that old line of herb stein, if something is unsustainable it will stop. if the accumulation of debt is

unsustainable, a lot of it will have to be written off. i am just reading something written a few days ago. he is making the exact same point. writing stuff for the last three to four years asking the question, are we ready for the next downturn? my bottom line is that much of the macro stuff is being used to a point where it is not likely to be helpful in the future. we will not be able to grow our way out of the debt burden, so we should be spending more time about do we have the judicial and administrative procedures to write off debt, whether it is private, nonfinancial, too big to fail, and perhaps government debt, do we have the procedures to do that in an orderly way? has been done by

g 30mf, the oecd, the published something about a year ago. the basic message is we are not prepared and we should be prepared for this is a kind of natural outcome ian periods -- in periods where debt has been allowed to accumulate at a rapid rate. guy: let me argue a more short-term question, because this is something a lot of people are trying to debate. in your view, how do you restart an economy from the stasis we have seen -- we see now? how do you go back to a more normal environment from a lockdown situation? how would you manage the mechanics? the thing that strikes me at the moment, as tom said, i

always thought the economy, the global economy was the kind of accident waiting to happen, and now the virus is the trigger that has done it. i did not in dissipate that. i know -- did not anticipate that. i know bill gates and others have done so. the problem with respect to the lockdown, i remind you the lockdown is only partially a private sector decision. in large part, the government has basically said we need the lockdown to stop the dispersion of the virus, so it is policy determined. then the question becomes, how do you get -- knowing the costs of the lockdown, what are the benefits, and what can you do as it were to change that balance?

me the real problem with the moment -- at the moment with this virus is it is out of the bag to such a degree that you are going to have to heard immunity. this is not a target, this is just what is going to happen. the only advantage you have got is basically flattening the curve, you flatten the curve to buy time for the hospitals to gear up to give people the treatment they need. that is the big event in lockdown. hospitals, as everybody, some more desperate that others, managed to get the hospitals up to a point where they can handle the flow, then you can allow the flow, gradually wind down the social

distancing, increase the flow of the people that are seriously that the hospitals can handle it. that is the gradual way in which things have to be done. and one final question, this is something everyone in economics wants to know. all the rage is dr. kelton's modern monetary theory, mmt. even with a unique physical impulse and fiscal effort, it is not surgical. it is more of a broader impulse in the system. what are your criticisms of mmt? william: in terms of what they are recommending, it is more or less basically what we have been time,for a long period of which is you run a larger fiscal

deficit and the central bank balance sheet expands. whether it is explicitly coordinated or not, we think doing this for a long period of time with mixed results. my problem looking forward is twofold, and monetary monetary -- monitored monetary policy does not -- it has all these side effects, especially in the financial market, the search for yields, the reduction of capacity for financial institutions to make money, these side effects are serious and have been building up. modern monetary theory does not recognize them. the second thing they do not recognize as the system can be highly nonlinear, which means you can go along for a long time doing what they recommend which we have been doing, without much inflationary response.

if you look around the world and highlyhistory, in a nonlinear and often unexpected way, often inflation emerges and is difficult to control, and they do not take that aspect into consideration either. i think you should think in a certain sense the virus and everything else has taught us, the system is complex and the system has adapted and the system has got nonlinear responses. if you don't take that into account -- and also prepare for them -- then you are missing a good thing. tom: william white, thank you so much for joining bloomberg --rveillance," formally formerly with the oecd. ♪

♪ guy: welcome back. you are watching "surveillance," tom keene in new york, guy johnson in london. "trump and pelosi agree another massive aid bill is coming." joining us on the phone is kevin cirilli. is that right? will we see another massive aid bill, and when? asin: yes, and it will come we have been talking about over the last couple of weeks, as early as april 20. negotiations have begun in earnest, according to sources i have been talking to, because that is a moving goal post. that is when lawmakers are set to come back to washington, but there is a lot of question marks

about whether that april 20, congress will be ready to go to have lawmakers return. speaker pelosi also wants the additional funds more for government workers in cities and states that were left out of the first economic stimulus -- the third rather, and the administration wants to see some plan-- type of economic for reopening in the next month and a half. government,look at nothing more than getting to the next election, how will we get to the first tuesday of november? i guess you are not going to any conventions, are you? kevin: i want to. downsizedings will be from a practical matter, but the issue of mail in voting is something that will likely catch fire, so to speak, over the next

couple of weeks, once cities start to flatten the curve and it returns to way more nirmal -- normal political atmosphere. honestly, and conversations from the left and right, both sides are re-strategizing how to replay this thing. former vice president joe biden did speak with president yesterday on the telephone and president trump described it as a positive interaction. somewhat still on pause as cities continue to work to flatten the curve. cirilli, our chief washington correspondent. baltimore, a bit of a distance from washington and that means johns hopkins university, we will consider their effort on public health and their effort on this pandemic, and the

economics of the nation. we will do that next. this is bloomberg. ♪

♪ tom: good morning, everyone,

bloomberg "surveillance." i am tom keene from new york, extraordinary day for this pandemic. there is some good data out and in spain, we have seen more difficult data as well. guy johnson in london and the united kingdom riveted on the condition of a hospitalized prime minister johnson. one thing we are considering is at johns hopkins university and the dovetail of their public health program with everything they do in engineering and economics. alessandro rebucci is with their , with aing department tour of duty with the international monetary fund. how close are we within this exact in a shock, to an em

acrossas we have seen the 1990's and 2000's? alessandro: we are very close. emerging markets have been hit very hard by the initial phase of the crisis and we have seen a massive outflow of capital in most emerging markets. is just picking up in emerging markets. as we know, it lasts for about four months and the peak is about two months, and emerging markets are much less capable to absorb the crisis. we expect to see unprecedented declines in economic activity and possibly widespread financial damages. tom: professor, you are a world authority in real estate. diffused outbe

there that we cannot touch, how is the leverage in the global real estate system? are they exposed as other asset classes were exposed in 1998? level,dro: at the global leverage in real estate is not that diffuse and deep in the united states. markets, in emerging emergencies take place on a cash basis so from that perspective, leverage in real estate is not the most important problem, howevershows -- andarch shows individual communities affected by a pandemic will be negatively affected. emerging markets may be particularly damaged by the health dimension of the crisis itself. can i talk a little bit

about what is happening in europe? italy finds itself in a difficult situation, its economy burdened with huge debt and it is likely to take on more. what is your perception of the economic trajectory of italy and whether or not it's debt is sustainable? alessandro: italy is a particularly difficult situation because it was already experiencing difficulty to recover from the global financial crisis. effectively, italy never recovered and growth was permanently hit by that shock. this new catastrophe will be help isy damaging, and desperately needed from the fromean community, ideally the rest of the international community. there is talk about options for

financial rescue. i think it is the time to consider emergency help for financial institutions and the international monetary fund, which helps other european economies during the monetary crisis. tom: thank you so much for joining us, alessandro rebucci joining us, with johns hopkins university. we will continue floored -- forward. london, whatee in captures your attention? guy: what captures my attention is what is happening to the prime minister. that is the focus of intention -- attention. boris johnson is receiving oxygen but he is conscious. on trading floors,

virtual trading floors, the u.k. could be headed for some kind of -- government. maybe not of people as well-known as prime minister johnson really struggling through this pandemic, and the doctors and nurses truly exposed. we will have much more for you through the morning, including conversations on global wall street. no one better to lead that off then stephen schwarzman. please stay with us. rising equities today. futures are up. this is bloomberg. ♪

♪

alix: markets risk on for a second day as the virus spread slows and china reports no new coronavirus deaths from first time. you crunch time. european finance ministers meet on joint backstops and liquidity lifelines for companies. and private equity in crisis time. we speak to steve schwarzman, ceo of blackstone, who just donated to new york, to get his take on the recovery. welcome to "bloomberg daybreak: americas." i'm alix steel. we have a two day rally underway. who would've thought? overall, you are looking at the two day rally for the s&p, looking at a dollar finally rolling over. you still see the bear steepener happening in the treasury market. more of a selling coming back on the long end. ud