francine: president trump declares he has total authority to reopen states amid the pandemic, setting the stage for a clash with governors. more than 10,000 are dead from the virus in new york alone. global stocks rise even as goldman sachs warns of a 35% gdp -- a 45% gdp slump for advanced economies. jp morgan reports earnings this morning. and global coronavirus cases approach the 2 million mark. france and india extend lockdowns. the u.k. is expected to follow suit. well, good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance." i am reunited with tom keene. lacqua in london, tom is in new york as always. the earnings season is unprecedented. and then as i am back on my feet come you give me a good laugh last week because even my father-in-law was testing me saying i hope you are enjoying your holiday. it was not a holiday.

but i'm good and i'm back. tom: we are thrilled that you are back, and this illness is something, whether it is the flu or covid or whatever. betsy grace at morgan stanley yesterday, and she said she is focused on the original moment we had in earnings yesterday. we will see that with j.p. morgan and wells fargo. as you mention in your opening, the major thrust here, country to country come is on lockdown, and if and when anybody can really wish -- country to country, is on lockdown, and if anybody can relinquish the quarantine on society. francine: we will have a full round down -- rundown on the possibility of a vaccination, but we are nowhere near that yet. we also have to look at antibody testing. let's get to the bloomberg first word news in new york city with viviana hurtado. viviana: president donald trump

hopes to reopen the u.s. ahead of schedule. the president saying within days the administration will issue guidance for governors who want to relax social distancing practices. the president says the guidelines will give americans the confidence they need to return to a normal life. now two big differences between republicans and democrats on capitol hill. this as the u.s. congress is under pressure to provide an of the stimulus package. publicans want to add $250 billion to the small business relief program. add $250icans want to billion to the small business relief program. emma kratz want to add more for state and local governments. -- democrats want to add more for state and local governments. the coronavirus leading to business shutdowns around the world. chinese exports and imports following less than economists forecast. we end with u.k. lightly to announce this week it is extending the nationwide lockdown there.

the government deciding by thursday if it will review the three-week shutdown period. british scientists are warning in the coming days coronavirus deaths will accelerate. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. francine? tom? tom: francine, thank you so much. equities, bonds, currencies, commodities. a soggy day yesterday, and worldwide, gold working off world highs. people talking about 1800, and now thanks to dennis gartman yesterday for reaffirming gold is attractive forward. i would also note euro-yen getting to show a strong yen. we are not through this yen strength versus euro, but euro-yen, francine, gets my attention this morning. francine: tom, euro-yen is one

that is probably better than yen-dollar. i am also looking at u.s. futures and you are saying they are up. u.k. futures also up. a couple of technical issues earlier this morning, but looking at gold rising to a fresh seven-your high. guye oil, this was the seven-year high. crude oil, this was down -- crude oil, this was down. to kitt's go straight strategist tofx look at what is happening next not only in these markets but also in the economy. we are expecting the world outlook from the imf. we have a number of projections toward the euro zone, what happens with the eurozone in terms of gdp. but when will we have a number

that looks close to reality? are you worried that lockdowns will ease and then we go back in lockdown, making the second half of the year even more difficult? it: i think we have all gotten used to these economic data points that fall off the edge of a cliff. we see them with the jobless claims numbers, we got another from the business confidence data out of australia this morning. they are all the worst number ever by some distance. of --uggle to really sort this is a lockdown, economic activity is largely stopped. q2 is -- q1 is almost q2. what matters is how fast you can come out of the lockdown, and do you have to have a series of re-lockdowns if we see infections pick up again, which

is obviously our biggest concern here. i think we are going to be uncertain about all of that, at least until the beginning of the autumn really. i cannot see how i am going to feel comfortable about the risk of reinfection rate until i get that in the autumn. china a template? we have some better than expected china trade numbers, and this is even as the virus continues to spread. do they can't -- do they tell us something, or are they a red herring? is it not something that we should be looking at? pink herring.be a they are slightly flatter because march last year was particularly poor. q1 over q1 -- i put a chart up on my bloomberg terminal this morning, taking of saying something about it, looking at gdp again, the year-over-year three-month average of that

trade data and it did not make me terribly comfortable. athink what it tells you, good number is better than a bad number in anything. two, we should note that the goods sector is much less affected by this virus in general than the service sector. data,e seen in the pmi the manufacturing pmi is down, but the service pmi's is annihilated. the trade data will not be as bad as the service data numbers. if you go with chinese tourist data, that would be deeply scary. tom: kit juckes, good morning. ken rogoff wrote a piercing essay this morning in project syndicate, and they talk about a debt moratorium for so many nations of the imf and world bank's fear. what would their currencies do

if beleaguered nations got a debt moratorium? kit: they would band for sure in terms of -- the biggest concern we have is, it is fine for the fed to grow its balance sheet and really go after solving this problem, and what the fed's balance sheet has done in the last couple of weeks is just truly extraordinary. the ecb can do the same, the bank of japan can do the same, the bank of england can do the same. but across all emerging markets, they do not have that auction -- that option. that is why they have to borrow in foreign currencies so much. that is where -- take that away, or take much of it away, and they could get back to growth much more quickly, and the global investor would do what he does best, which is turn around and say i am going to invest in these high-yielding -- and probably see this as a

once-in-a-lifetime debt moratorium and move on and don't worry about past investors and what they have suffered. is, the key question here do you see a restructuring, and what it does to currency? i understand they get a one-year or two-year debt moratorium or what it is. rogoff and reinhardt imply that with that comes a restructuring of debt. do you see that, or can they do it discreetly, separately from restructuring? kit: i think you have to find a way to allow these countries to get access to ongoing capital so that they can get their economies to function. so from where we are today, i would say that anything is better than just shutting the door to fresh capital, to refinance or to maintain a bunch of economies that could easily default from here, right? ofeone is going to take some

the hit. if i was sitting on a portfolio of emerging market debt right now and someone told me there is a moratorium that is going to mean that they do not have to pay any more interest, how do you feel about that, i have someone looking for coupons who would be worried. strategies -- strategist looking at currency, i would say this is going to help them for now. ,ow you arrange the repayment or what you do with the existing debt after a moratorium ends, that is almost for another day. but it means that global communities are getting behind them. there is a problem that capital is going to get destroyed in all of this, and there are bondholders that are going to get hurt and there are lenders who will suffer. someone, either the borrower or the lender, is going to take a hit. i still think with all of that, this short-term lockdown of the

global economy, what it needs is in a sense, that we shut down some of the money payments and avoid catastrophe in the short-term. we could pick it up and sort it out later. i think that is better than just letting the thing implode. michael mckee and tom keene had this really important conversation with the vice chairman of the fed yesterday, richard clarida, and he said that we can escape deflation. can we agree -- do you agree? thatyes, in the sense there is no reason -- again, it depends how much access workers we -- excess workers we stick into the system, that are looking for jobs and driving down wage growth. you escape inflation by not creating an environment where wage growth is nonexistent.

people are in a world where they feel like they have to save everything they earn and do not spend it, and companies do not feel they can invest. the majority of what the united states has done to date is going to help avoid that risk. in the short term, as we factor in low oil prices and as we factor in higher unemployment to whatever that means for wage growth in the next few months, we will get some low cpi. if there is enough physical response and enough demand coming through, enough animal spirits in the u.s. economy to get demand and investment, i don't think it has to be a world where deflation is written in stone. tom: some of the things we are talking about today, folks, earnings out here in about two hours. kit juckes with us from socgen. we will continue through the

hour. our jon ferro, in conversation with the head of economic research for the international is anry fund, this exceptionally important conversation during the virtual imf week. in the 9:00 hour. stay with us. this is bloomberg. ♪

tom: good morning, everyone. bloomberg surveillance from london and new york. a most interesting day within this pandemic. on the east side of manhattan, certainly sirens yesterday, and a raging debate about the path forward in america from april into may, and of course worldwide, it is under debate with india, france extending lockdowns. the united kingdom may even today. right now on foreign exchange, kit juckes with us from socgen as we look at different strategies. i want to go the bigger, the greater, and that is euro-yen right now, which shows stronger yen and weaker euro. is it about a weaker euro? is it about the great surprise forward, which may be a strong yen? kit: i think it is about a euro that is not rebounding with everything else against a weaker dollar. and the lagging behind.

to seelmost impossible not getting a weaker dollar in general, with the speed in which the fed is growing its balance sheet. the euro would be doing much better if the european finance ministers had come out with a bazooka at the end of last week and really done something significantly bigger than a false set of gdp package. the europeans are doing something that is good to not nearly as enough -- not nearly enough, but really not pushing off because there are going to be ongoing doubts from every economist you talk with about how strong the recovery in the european economy is going to be. by contrast, the yen was sold currency market fell apart, and the short-term

funding and the liquidity markets got stressed on the 19th of march, and the fed starts its it's cpfl program, program gets into action today. i think that opens up the way for the end to benefit from lower rates. tom: just because of time, i want to focus on the great european debate. prichard talking with adam twos in the telegraph, and they are really simple. mutualization doesn't get it done. jason kierkegaard goes the other way, saying there is some value here. as you see it and as such and it, doesat, -- sees europe need a mutualize solution? kit: it does not need a mutualized solution as much as it needs a big solution. sends aized solution bad message to the global market about the ability to get

i --her and be unified and in a once in several generations event. is it still the same debate? i am more concerned about the absolute total -- if each country came out with 5% plus gdp fiscal boost immediately, with the equivalent of a really ig u.s. or u.k. program, would be fine with that. on one level it is good. bazooka toiscal reignite the european economy. what we don't need our finance ministers bickering about a 4% package, and there is more being done and at the individual country level, but i think in of creating optics -- the optics are creating the debate. the message it sends allows that

debate to happen in the press, and that will not help. between the spread government bonds and buns, that is an opportunity, why do that yourself? overall, is this a make or break moment for the you? is it about money or is it more existential? there is no coordinated response to the health crisis. i know there are different stages for different countries, but are we talking about corona test, thehe litmus fight between north and south again, or have they not gotten together to actually deal with health problems? kit: i would think most of the -- once you have shut borders between countries and you have stopped the free movement of people, it is up to every individual and the health

system to hunker down and go with his individual crisis. i may even go as far as to say how california deals with it, and new york city deals with it, that has to be done with some degree of people on the ground solving it. as bad as it is, i think from an economic perspective, it was an opportunity to show that on a temporary basis that europe could put everything else aside and say we are going to make sure that when we come out of this, we get back on our feet and get strong fast. and i think that is just an opportunity -- that does not mean that the european union or the europe project falls apart. it just is literally an opportunity missed to do the right thing. right, thank you so much for your time. , chief effect strategy.

if you have bloomberg terminal, check out tv so you can check out all of our programs from there. you can also ask questions of our guests, and tom and i will ask those questions on your behalf. you can also watch back all of our interviews and live events. lick on charts to use them and interact with us directly. -- click on charts to use them and interact with us directly. that is tv . ♪

viviana: you are watching bloomberg surveillance. les get your bloomberg business

flash. we you begin with anheuser-busch, cutting proposed dividends in half. that will save $1.1 billion, the coronavirus outbreak leading to a drop in beer consumption and brewery shutdowns. anheuser-busch has been struggling to reduce its $96 billion debt. rising 19%f iphones in march 2 two point 5 million units at a time when china's broader smartphone market track 22%. in february, iphone sales were hammered. that is your bloomberg business flash. francine? tom? tom: thank you so much. greatly appreciate it as well. quick data markets, gold lifting near record highs, no question about that. up --, coming ♪

good morning, everyone. "bloomberg surveillance." we are thrilled you are with us. so much going on.

no doubt the pandemic, a lot of market work. later on, we will look at earnings. jp morgan leading off with too big to fail banks. right now too big to fail is opec. it was an extraordinary weekend for opec. sing the new president of the cartel donald trump is his great assistant. the president helping out in those negotiations. now there is the, now what? here we have harry tchilinguirian. harry, the one thing you taught me is all is not -- whale is not one barrel. they're all different. the permian basin oil is different from the shale of western canada is different than the easy stuff in the gulf of mexico. western canada oil fell under four dollars a barrel yesterday. three dollars a barrel, folks. what does that signal?

after this agreement, there's a lot of expectation for market-driven declines in production in such countries as canada, brazil, and the united states. the difficulty is what producers are going to be forced into curtailing production and possibly shutting it down completely. in canada, when you look at the heavy canadian oil shutting down operations could cost you in the billions. in the u.s., we are likely to see much more rapid response. aat economist would call contestable market. you get in and get out at relatively low cost. it is not as much as canadian oil were off shore. we are were thinking it is better for certain operations to continue producing, even at five dollars a barrel. it does generate cash flow for making that very difficult decision to shut production. those areas that you can get in

and out faster like u.s. shale, that is where we see the production out on a market-driven basis decline faster, the release of the drilling and productivity report isws production in shale coming down already. knowharry, when will you if any of the 16 or even 20 players -- when will you know if they are cheating? >> [laughter] i guess the best indications are going to come in early june, really. effective mayare 1. servicesalad tracking and those -- satellite tracking services and those will help give a bigger picture but the first real never start emerging toward the end of may, early june for may production. that is where we will see

whether or not countries have followed through on the pledges. harry, how much do we know -- francine: harry, how much do we know of how much will be eroded because of the coronavirus lockdown? >> the demand question is very difficult. there is a wide range of estimates out there in terms of impact and people saying in april as much as 20 million barrels a day year on year have been lost to covid-19. some put that number even higher at 35 million barrels per day. it is going to be difficult to get a good grasp of that amount until probably the end of the quarter or even into the third quarter. but if we go with that kind of range in terms of demand loss, what we're looking at is opec voluntary cuts and potential declines elsewhere only proving to be a partial offset. from a market point of view, historical decision at best, at

least for bnp paribas, is the floor under the market. and with concerns alleviated that prices will go down into the teens. it is really at the end of the year when we have a lifting of all those confinement measures, the demand is reinstated, and that is where opec was cuts will be most effectual in cutting prices. gc more production cuts coming in the shorter term? say you look at the may-june contract, i think it has moved deeper which basically means there is an expanding physical glut despite the cuts we have seen. >> yes, absolutely, in the sense that the reduction and output need one to be fully implemented . second, fully implemented in a timely manner. this is why you're sitting there curbing -- curving because you have to pay for moving that oil. as we saturate storage, the cost rises and the tangle has to

deepen. the offset that opec is providing is not a full offset. therefore, the shape of the curve is reflecting that. harry, can you forecast where a barrel is going to be in six days or in six months? forecastwe do have a in a crystal ball at bnp paribas, as you know. our view is that we were looking at oil prices finding a floor is the result of this historic record, so at least, in our view, we think on average inq2, $25 toce should be run $30. by year-end to expecting oil prices, at least on brent, to average closer to $50. francine: harry, when you look at the new opec plus, and this

was something like we have never really seen before, is the was not really an opec-plus member? >> we have to concede that donald trump had a very strong hand in bringing about this open bus meeting. stand recall, we had a between saudi arabia and russia until such time the president tweeted this potential deal. and very quickly after that, an opec-plus emergency meeting was organized. i would not go as far send it is another commentator the u.s. is now part of opec plus, but the very intense diplomatic traffic between washington, riyadh, and moscow certainly help to bring about this historic record. tom: harry, thank you so much for joining us today. harry tchilinguirian with bnp paribas. in new york city with our nose come here is viviana. viviana: got its released soon,

they're going to give americans the confidence they need to start returning to a normal life. this from president trump. it is for governors who what to begin relaxing social distancing practices. they were designed to curb the coronavirus outbreak. now u.s. treasury secretary steven mnuchin, he is hoping -- holding firm on the airline rescue plan. he wants bigger airlines to repay 30% of the eight. how? through low-interest loans will stop plus the carriers would have to give the government stop warrants equal to 10% of the loans. airlines want easier terms. france, that is where the extended lockdown push the economy deeper into recession for the second time in a week. the government was forced to revise its economic and financial forecast. this year, france's economy is expected to contract 8% in the budget deficit will reach 9% of gdp. we had with goldman sachs warning this quarter from the previous three months, advanced economies will shrink about 35%

and that is four times as much as the record set in 2008 during the financial crisis. goldman economist is saying an open question is, how fast will those countries rebound? that is because no one knows how quickly people can get back to work. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. you so much.nk plenty more on today's top stories and euro markets. ights and the banking market. york, a at 4:30 in new new show. it will take viewers inside the working from home antics of chief executives. the series begins with david's

exclusive interview with the marriott chief executive. this is "bloomberg." ♪

>> i'm somewhat confident that midsummer we are back to some normal. not rock concerts, but we will be going to work and kids will be going to just they will be going to school because it will be summer, but we will be going to bars. restaurants. somewhat normal. francine: good morning or good

afternoon, everyone. this is "bloomberg surveillance." we are working from our homes. today is the start of the earnings season where we have heavyweights from j.p. morgan and wells fargo. a lot of the focus will be on , forecast, foreseeability. lot of focus will be on trade and how much they can lend to small and medium-size enterprises. that will give us clues on how quickly or late we can recover from the coronavirus pandemic. joining us now is marija veitmane. great to have you on the program. this is in earnings season unlike any other that we have seen in the past. what we focus on? is it six or seven months or earnings and how much they have been hit in the medium-term? >> good morning. possiblyy to disappoint a lot of equity journalists.

-- we know earnings are going to be horrific. how horrific is probably relevant. the worst numbers are, the more indication we have that the economy has stopped and we are likely to see quicker rebound. but the number i am focused on is the version of analyst forecast. are.nd certain analysts of theentire history consensus estimate, it is the highest we have seen. with that, it is very, very hard for companies to exceed expectations [indiscernible] equally, it is very hard for companies here to give us from they are asing -- human as everyone else.

they probably have very little clarity on when we will be rid of the virus and when companies can restart working. i suspect what we hear in the bet few weeks will probably difficult bad news and lots of very weak statements. francine: so what does it mean that you look at, marija,? is itsoon control -- central banks? is it packages? when they're expecting to reopen factories? for their employees to start going back to work and possibly spending? the key is looking at kind of health care, infection rate, active cases. and once we get any clarity on that -- and i would emphasize we absolutely need to see a decline in cases and it would be

fantastic on a human level. but from the market point of view, i think we need clarity. how longo understand the economy as an lockdown. there with can start look at the economic disruption relative to the size of the packages we are seeing right now. until we have any clarity on that it is next to impossible. there is no model to predict anything. trying to play the epidemic meteorologist and watch the curve and health care front. i expect there would need to see some kind of positivity and that we're getting some idea -- it is incredibly encouraging. tom: marija veitmane with state street bank. appreciate it. looking at asset allocation

today. we have a lot to set up this morning. let's do that right now. francine, i want to go to the great pandemic moment today. do you expect to see -- do you francine,see today, do you expect to see today the lockdown in the united kingdom extended? well, tom, we decided to extended in france and india. when you look at the u.k., there were talking about possibly reopening parts of the economy. the u.k. is in a very different position. first, we had a prime minister, the only g-7 leader that had a coronavirus and spent a number of days in hospital, now not going back to work but is -- so there are questions. although the briefing and the person the prime minister deputized two is a foreign minister, there is a question on exactly how much leadership there is in a country right now. there are a number of rumors

that the lockdown will continue, but i have to say if you look at all countries in the western hemisphere, it is probably the u.k. with the situation is most fluid, especially three or four weeks ago when they were talking about then the prime minister quickly backed off on. tom: right. i would suggest herd immunity, which i'm not a fan of that phrase, has disappeared in the last 24 hours. i would suggest folks you wake up in america, france and india extender lockdown. it is a raging debate in america. this afternoon, the cfo of wells fargo. stay with us. this is "bloomberg." ♪ >> we bring you special coverage of all the price action and implications here on bloomberg television.

heavy on a coat let's get your -- company thatate a can better compete with global investment banks. duemberg has learned diligence. they're looking at how to structure the deal. now to tesla, it has risen for six straight sessions, capping a

43% gain. the rally was triggered by the electric carmakers first deliver report that came out earlier this month. wedbush says china reduction and demand for tesla pure poised for significant rebound. that is your bloomberg business flash. francine: thank you so much. now we have an exclusive with the chairman of royal bank of scotland. the bank is amongst u.k. lenders helping businesses through the coronavirus. so for the government in terms of how much it has paid out is one million pounds to small businesses. they have to ensure how it gets to the people it is needed. the companies, are they getting what they need and in good time? that was the conversation sir howard davies of rbs. here he is. >> it is very important because they do create a huge amount of employment in the country. for many of them, there is been a complete stop on their business. the most obvious ones being restaurants and hotels.

a lot more, too, in the supply chain for the tourism industry or manufacturing industry, which is largely closed down. it is crucial. the key thing is we need to ensure there is productive capacity in the economy for when the opening up and the upturn eventually comes. because if we have lost production capacity because firms have just given up during the crisis, then we will have a constrained upturn. it is both important on the downside, but also very important to position the economy better for the upturn. >> how difficult is it going to be for these businesses -- i mean, you mentioned restaurants or merchants, service businesses that are collecting zero revenue right now but getting loaded up with that, some of it with very high interest rates relatively high interest rates. how hard is it going to be for them on the other side when they come out of this pandemic loaded

up with that? >> i am not sure about that in all cases at all because, first of all, the furloughs from the government means they can recover most of their employment costs if they're eligible for that, and many, many are. the corona business interruption loan scheme does not have an interest rate in it for the first year. most people whose businesses clearly haven't interrupted and were eligible for this scheme, will be taking on additional debt but it will not be at an interest cost. at least for the first year. of course, the question is whether in the long run those will be viable with a larger amount of debt on their balance sheet, and i suppose the honest answer is some will be and someone to be, which is why think the government is now looking at whether in some cases there is a need for an equity instrument at the end of all of this. whereby some government backed entity perhaps come in equity

stake in businesses, where they can't survive without huge amount of debt. that is a problem in a way we hope we will have because that is more problem of the reopening than of the close down. but at the moment, the loans available are at zero interest for the first year under the government scheme. >> do you expect some kind of debt forgiveness? there has been a lot of talk about a jubilee. as a banker, i'm not sure if that rubs you the wrong way. is that a possibility on the other side of this, howard? >> i guess it is a possibility. it is not something which would be at all easy for the banks themselves to do because our money is all somebody else's money. if i am forgiving a debt to a borrower, i am also spending your deposit, which is not something i guess you would appreciate. if that is going to happen, there's going to have to be some public sector involved in it at

some point. i don't think the banks would be sensibly advised to do that. something else, if a bank rates a big hole in its balance sheet, then credit is going to be constrained when we eventually do reopen the economy. and that is absolutely what we don't need. in the last financial crisis, the problem was why the recovery was so weak for so long. the banks have big holes in the balance sheet could not extend credit on the skill they had before. this is not the same crisis at all. this is a real economy, health crisis, not a financial crisis was not what we must avoid doing is turning it into a financial crisis and getting into a situation where the economy cannot turn not because of a credit crunch. that is the calculation i think the government have to think very hard about. sir howard davies on the royal bank of scotland talking about the challenges of domestic and king. they are doing it differently, folks, in the united kingdom.

a huge battle here to get money into small business and individuals hands. my data check right now is very simple. equities higher, gold out near record highs. i watching euro-yen. francine? francine: tom, i'm looking at a similar data check yours. that gold toward a fresh seven-year high. we need to look at oil because of the opec-plus agreement over the weekend. u.s. indices actually up as our european stocks. equity markets, you must stay with us. howard ward. this is "bloomberg." ♪

tom: this morning, how long the

lockdown? every nation force-out. each and every state force-out. posted trump of america once" total authority." jump iny, a lower 3.3% cases in new york. 90% jump in south dakota -- 19% jump in south dakota. j.p. morgan and wells fargo earnings. radio silence on capitol hill. democrats and republicans in political lockdown. good morning, "bloomberg surveillance." from new york and london, francine lacqua back in the saddle and i am tom keene in new york. francine, you look of good health, to say the least. tell us about the prime minister. i believe he is out at checkers. is.cine: he he was brought into hospital