francine: president trump halts funding to the w.h.o. he says the organization took china's coronavirus claims at face value. bank earnings season ramps up with goldman sachs, citigroup, and bank of america all reporting. provisions due to the pandemic will be watched after j.p. morgan set aside the most cash in a decade. and u.s. airlines come to an agreement with the treasury department to access billions of dollars in aid. it is a temporary lifeline as the industry waits for customers to travel again. well, good morning, good afternoon, good evening, everyone. depending on where you are in francine, as always, from london, tom in new york. first, the iea come on the back of the headlines from the iea, the price of brent wti phil to the lowest since 2002 -- fell to the lowest in's two and they expected to fall much farther.

i think they injected some $14 billion of -- over the last 24 hours. don: of -- tom: china without question are acting. i agree with you, oil is critical. really pricing. i took saudi light in the now,nal price we are at 19.79 -- 1979 is are you go back to to get under $20 a barrel. i have said this last four or five days. the decline in the last -- in the u.s. to year yield screams lower for longer. francine: we will have a look at that, quite extensively. we will also talk about emerging markets. let's get to first word news in new york city with viviana hurtado. viviana: we begin with a report on the impact of the coronavirus on the oil market. global demand for oil will plunge this year by a record 9%, according to the international energy agency. the slump will thwart efforts by

the opec-plus coalition to contain the glut of crude. april will be the hardest hit month. fuel use will shrink by almost a third. now to president donald trump. he is temporarily halting payments to the world health organization. he blames the w.h.o. for taking china's claims about coronavirus at face value. plus he says they claim -- the united nations weighing in, saying now is not the time to reduce the agency resources. a temporary lifeline for the u.s. airlines as francine hit upon at the open, reaching for luminary deals with the u.s. treasury department to get billions of dollars of aid. it gives them room to limp along while they wait for travel restrictions to ease. the government is requiring airlines to pay some of this at -- the treasury can take stock warrants in the companies. germany, the cases

for six days in a row following. that is the lowest increase still. germany is likely to extend untilown measures may 3. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, i'm viviana hurtado. this is bloomberg. francine, tom? tom: let me do a data check right now, equities, bonds, currencies, commodities. it is quite subtle and it indicates global contraction. you see it with a lower yield ,urve, a flatter yield curve rather. you see it with a giveback after the big day in stocks yesterday first up -- yesterday. oil just flat out giving way from the opec-plus meetings, and it confirms again, with short-term interest rates coming in with a vengeance, the two-year yield really back down to near the low seen in 2011.

francine: i'm looking at that, and i know we will spend a lot of time on oil slumping, and i know we will try to figure out will dowhat the u.s. with his opec-plus agreement. i actually put pound because there is an interesting call, an interesting bloomberg column about this saying that europe is trying to get the act together not only because of the pandemic with the lockdown, whether they are ready to ease them, it is sterling that could be the winner longer-term. brexit, a little bit at the back end of our thoughts right now, and maybe that is a good respite for pound traders. i don't know if we have the airlines, but i will show them. premarket airlines are jumping quite significantly between 6% and 7%. let's get to the markets with blackrock official institutions

group equity had. good to speak with you this morning. when you look at what the markets are pricing, is there a worry that actually economies relax their lockdowns, only to put us back in lockdown, and the markets kind of will deal with that even worse than they are now? >> good morning, francine and tom. that is exactly the right question. i think it is important to keep havend that stock prices retraced, are up 30% from their lows. number one, we have seen some very massive policy reaction from not only developed markets but increasingly also from emerging markets. number two, the lockdown seems to be working in terms of containing the spread of the epidemic in advanced countries. i think this is the good news as

priced in. the problem is the outlook beyond that is very murky. and a lot of attention right now is focused on china, which is dealing with a second wave, but in doing so without having to go back into a full lockdown. if we can see that the chinese economy can continue to reopen while dealing with the second wave, etc., i think there is some reassurance that the scenario in the imf yesterday of a gradual reopening of the economy in the second half of the year can pan out. but right now we don't know for sure, and i think that is why we are not seeing much, even more in the markets. china actually added liquidity ahead of what we think will be a poor gdp number. with a have to do more?

does it signal there is more easing coming, and what does that signal about central bankers around the world? data fromthe trade china yesterday, it was somewhat better than expected, and we could have a positive supply with the gdp prompt as well. obviously we are going to see a contraction, but it could end up being not as bad as expected. having said that, almost certainly china is going to have to do more, and in terms of not just central banks, but i would say fiscal authorities, regulatory authorities everywhere else in the world, i think it is expected they will have to do more. some will have the room to do that, and others less so. that is where we are going to start seeing much more differentiation in terms of their ability to deal with his huge shock. for example, the u.s. -- with

this huge shock. for example, the u.s. has unlimited scope to do more. china has unlimited scope to do more. europe in many cases, there are more? 's. questione are more marks. francine: i'd -- how a don't understand financial system operates with nominal rates operable within the two year space, where real rates are, and other indicators like oil and implode. how does the financial system move forward given these market indicators? isabelle: i think the financial sector is the positive side of the story, if you compare this crisis to 2008. market functioning is not impaired, financial intermediaries, and particular banks have very strong balance

sheets coming into this, meaning we should not expect them to amplify the macro shock. quite the opposite, they should be in a good position to buffer it. and interest rates on safe assets, as you mentioned, are extremely low. and that is appropriate because this huge amount of debt in the system, and we are in the process of adding tons more, both on the corporate side and so we are going to need ,xtremely low interest rates frankly, for the foreseeable future. i see the financial system is something helpful in the current context. tom: howard ward was with us the other day, and he was exceptionally optimistic on equities, based on the view of their cash flows and on their dividends. is still dividend growth an alternative to the low, low yields that blackrock sees?

isabelle: in principle, yes. toyou are going to have search for yield even more aggressively in some ways then you had to before this shock hit. -- in some ways than you had to before this shock hit. adding said that right now, we prefer -- having said that right now, we prefer to take our risk in credit because there is so much support from central banks and credit markets right now. and a little less downside come appreciably less downside than on the equities side. but otherwise, yes, that is an absolutely valid strategy. enormous frankly, focus on the quality of balance sheets. francine: what do you do with all the debt that is accumulated, isabelle? are we going to have a problem? a number of scholars have

basically said we should phase out the debt because of the pandemic, navy forgive it. but if we have debt forgiveness across the world that maybe forgive it, but if we have debt forgiveness across -- but if we have debt forgiveness across the world, how do we pay for it? isabelle: somebody has to bear the cost. of theciple, regardless country. it is the sovereign balance sheet at the end of the day that are stronger, that have the greatest ability to bear the costs, and i suspect this is what we will witness in most parts of the world, and indeed a lot of the fiscal measures that have been disclosed are in the form of guarantees of corporate debts, which almost certainly will migrate onto balance sheets. you will end up with debt to gdp ratio increases on the order of 20%, 30% across developed markets. it is going to want to buy it? well, if you have your own

central banks willing to buy it without limit, like the federal reserve or the bank of japan or the bank of england, then you are in good shape. if you are a nonmember, there are already more question marks. if you are in an emerging market, there are even more question marks. that is why we are likely to see differentiation in terms of yields once this is over. in windows where you have central banks who can buy the graft versus -- the debt choreographed over those who cannot. francine: isabelle stays with us. conversation with a co-chief investment officer. you do not want to miss that interview, online and on tv at 10:00 a.m. in new york. that is 3:00 p.m. in london. this is bloomberg.

♪

good morning, everyone.

tom keene in new york, francine lacqua in london. in the middle of the week, challenges in the market. we see that in lower yield and lower oil prices. opec-plus, a major giveback. us, isabelle -- isabelle mateos y lago with us. from blackrock. one of the great things i see right now is a complete mystery of the x axis. we are trying to figure out lockdowns through may, people are whispering june, and there is the faintest whisper of getting to the summer. the arch underpinning of all of that discussion is there is money in the piggy bank. there is a different nation,ion, different access reserve, is there enough money there to get off the x axis? isabelle: there is a lot to your

question, tom. first of all, in terms of the speed of the case from lockdown, i don't think we should think of tch.s an on/off swi it is clear from countries that start to execute this, it will be gradual, industry before services, and all types of activities where you can practice social distancing before others like travel or sports and cultural events where it is much more challenging. it is going to be gradual. in the euro zone, they have estimated that every week of gdpdown costs 1.5 points of . some countries do not have enough in the piggy bank to pay for extending shutdown, and that is why the meetings starting today, virtually the imf meetings, are very important to

discuss the amount of support that the international community can make available to emerging markets. essentially no limits to how much government can borrow to finance the shutdown. but in emerging markets, some of them may run out of fx reserves and other cash resources, and that is why it is really important that they know they can count on some support from the international community. tom: i look, isabelle, at the challenges forward here, and so much of it to me is simply a new financial repression. do you see a permanence to the financial repression, whether inflation-adjusted or nominal? isabelle: i don't know about permanence, but certainly it is going to be with us for some time. classic work on debt, there are only three ways of dealing with the kinds of

debt burden that we are going to end up with. inflation, financial depression. most likely we are going to see a combination of all three. francine: will italy need a bailout after all this? we spend a lot of time on emerging markets, so there is also initiative to forgive the debt -- for example come some african nations -- longer-term, but how does europe deal with it, isabelle? isabelle: europe in theory should be really easy. if you look at the eurozone as a whole, debt burden is lower than in the west. even if you add -- it is around 90%, so even if you add 20% or 30% of gdp, you end up in a is not at is frankly comfortable and that the ecb could conceivably buy for as long as needed. the problem is that this is not the way that markets or the ecb

looks at it. we have national debt burden, and, yes, we have some of the euro zone countries, that start from an already very high level, and there are specific question marks around the sustainability of their debt. the closer we get to the end of program that are going to be uncomfortable. frankly, it is no accident that the spread over german debt is up -- these questions are going to arise, and that is where there is strong reluctance among european policymakers to contemplate some form of mutualization. these questions are going to get more and more intense. tom: isabelle, thank you so much. isabelle mateos y lago is with blackrock. thank you for joining us today.

there have been a lot of questions about this, people working on their houses. if you have the terminal, tv is an efficacious way to hear what we do. tv will give you not only the livestream, but a lot of previous conversations as well, to the efforts of bloomberg radio and of course bloomberg news worldwide. stay with us. from london, from new york, futures lower. this is bloomberg. ♪

viviana: this is bloomberg surveillance. we begin in china. that is where the central bank injected medium-term funding into the financial system. as expected, the people's bank of china also cut the cost of the funds. both measures are aimed at countering the economic fallout from the coronavirus pandemic. now to airbnb. for the second week in a row, it lined up a billion dollars in debt. that boosts the financial cushion for the home sharing leader. the coronavirus pandemic has crushed demand for travel. it heads -- it is also reducing the chances airbnb will go public soon. we end with wells fargo, the bank promising to catch up. it fell behind his rivals. that is because of a delay in processing applications. many of wells fargo customers are worried they could miss out on the loan. that is your bloomberg business flash. francine? tom? much,iviana, thank you so

greatly, greatly appreciate it this money. right now a little bit of data for you. what you need to know as a giveback on the good news you saw yesterday on equities, you're decidedly lower. focusing on a two year yield indicating what jon ferro heard, which is global retraction. francine? francine: yeah, dollar and treasurer actually gained, and we are also focusing on pound, the big winner from the pandemic heading central europe. coming up, we speak with john hardy, the head of fx strategy. we will talk dollar and pound. this is bloomberg. ♪ w?w?uhió'ñó

♪ >> we were looking at some of

the pairings in the market. the kiwi dollar leading the decline as there is a risk aversion because of what oil is doing and the lockdowns that seem to be ramping up even in germany. hardy, whoed by john is saxobank head of strategy to talk about currencies. what about the dollar right now? ben: the dollar seems to trading fairly consistently. we saw this incredible move yesterday where the big tech names in the u.s. -- the risk appetite is strong. we saw the dollar putting in what appears in hindsight a temporary pause. interested in a come back here. thelows yesterday in dollar.

have last thursday there been additional measures by the fed, two point $3 trillion in additional measures has been a key driver in providing dollar liquidity. we are seeing that coming back. above all it is so complicated what is going on, but above all sentiment test around these levels we saw yesterday. john, we have an interesting story on the terminal, sterling regaining strength versus the euro. is pound turning into the unlikely winner because of virus troubles in europe? staged a significant come back but there is a lot between what happened with the covid-19 outbreak and where we are at present level. if you look at the eurosterling charge, around the 86 level -- chart, run the 86 level is when the euro started breaking up.

we are still 2% above that level. neutralized the disorderly move on the downside. the market was in a liquidity panic. it has not staged a full come back. you could argue the u.k. has a more coherent physical response and can deal with the crisis that the eu is struggling with. we are concerned about the eu existential situation. i am not sure you can make that argument across the board here that the pound is better. tom: [indiscernible] what do you see at saxobank in flows? i am fascinated by the flow of big money given the implosion in the oil, low yields in the case.term

how is the money flowing? focus -- a lot of the flows we see our retail flows. the small investor out there is interested in seeing this as a speculative opportunity. we have been trying to maintain a cautious message across the board. especially in oil because oil is difficult to trade when you have a market like that. though the price only slowly crawls up, long positions can get burned on the shape of the forward curve. to be verying is cautious, we don't know what the post covid-19 recovery looks like. a v-shaped camp notwithstanding the market action, we are taking a cautious stance and seeing maybe a little bit too much enthusiasm out greatestterms of the

buying opportunities in a long time. tom: can you state strong dollar? resilient dollar, but given the caution can you actually place strong dollar bets? wen: if my thesis is that may not have seen the bottom of risk appetite we may not have seen the ultimate top of the dollar, i think those things are related. there is a massive short dollar position out there where dollar use goes to reserve currency. they are doing everything they can to preserve dollar liquidity. if we had not seen them preserve profit markets we may see a retest of highs for the dollar. it may be key to get over the strong dollar as a component of getting over the crisis and i think we get there. you see -- doe do you see any value action in emerging-market currencies? john: that is the same question

really. i think emerging-market currencies are at risk over another wave of selling and potentially receiving some of the lower actors like the south african rand or the turkish lira . we will reach a new trough and try to find a recovery. inm not sure if the time although valuations are better than they were coming into this. very good, thank you so much, john hardy with us. in new york city with our first word news here is viviana. upiana: republicans ramping efforts to paint china as the villain in this epidemic. the trump campaign sending out an email accusing china of lying about the outbreak.

senator josh hawley introducing a braille that -- bill that could make china liable for claims. the whoopped funding to claiming they took information from china at face value. u.s. airlines need travel restrictions to end and passengers to come back. reaching up a luminary deal to access billions of dollars in government aid -- preliminary deal to access billions of dollars in government aid. pres. trump: preserve the vital role airlines play in our economy and protect taxpayers. viviana: they will have to repay some of that with interest. if shares rebound that would give them an upside. -- the imfng is warning against ratcheting back budget deficits when the pandemic fades. that is when countries should

ramp-up up fiscal stimulus. responding they are to claims that elderly have been neglected in the coronavirus crisis. they will test residents of care homes and caretakers. many of the british elderly are cared for in small privately run homes. mobile news, 24 hours a day and on quick take by bloomberg powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. tom: thank you, so much. greatly appreciated this morning. much more coming up. a reversal from what we saw yesterday in the markets. real caution. in the 10:00 hour joseph , he is here. join this is bloomberg. ♪

♪ welcome back. tom and francine from london and new york. imf's latest outlook has dire readings. if you look at what they said to policymakers to avoid mistakes of the great depression and to avoid the great lockdown recession. jonathan ferro got more answers. that theseline is besis, the epidemic, will concentrated in the second

, thenr for most countries there will be a gradual removal after that. we will start to see initial signs of recovery in the second half, that is what is in our baseline. >> let's talk about where you see that more pronounced. are you seeing that being led by countries like china and the united states? is it a first in an first-out situation? epicenter of the pandemic and was hit severely in the first quarter. we have a very deep contraction with china in the first quarter. we have seen signs of recovery but it is not back to business as usual. what matters is what is happening in the rest of the world. containment measures have gone up in china but there are severe lockdowns in many parts of the world that have been extended and emerging markets are at the beginning of this whole pandemic. for the global economy as a whole it matters what is

happening in the world. thatr baseline is right, more will concentrate in the first half, then we will start to see stronger recovery in the second half of the year. jonathan: in on environment like this, many economists are struggling with this, how difficult is it to draw a noecast when you have precedent for establishing a reopening? gita: this is unprecedented. we usually rely on historical analysis for projections but we don't have the data for a pandemic. it is huge when you have a shock, it is like the housing crisis or a financial bubble. that is something we know about. here we have to rely on epidemiologists and public health officials to tell us how the virus will evolve and what kind of vaccines may come about. this is very difficult. we know that as long as these containment measures are in place some sectors are more

severely hit than others. you are a country that relies heavily on these sectors for your growth it could go very badly. financial crises and a commodity collapse. for emerging markets this is magnified with big reversals in capital flows. this is a complex set of crises. jonathan: the last point i want to pick up on, i don't think we have understood the shop to em -- shock to em, when do you expect to see that in emerging markets? gita: the downside to our baseline is that things could get worse in emerging markets. we are feeling in our baseline that emerging markets will have more severe shock crises than what we are seeing now, but not

as the same level -- not at the same level as the u.s. may be in containment measures. that could be different. it's not just a health crisis, you have a big collapse an external demand and a big reversal in capital flows coming into the come on -- the economy. starting out with fragile health systems, very high death levels. these can compound the problem. i think that is one area where the downside risks are still here and why it is important for the international community to pay close attention to emerging markets and low income countries. jonathan ferro in conversation with the economic counselor of the imf. many people looking for this. it took a couple of days, oil decisively under $20 a barrel. barreldown to $19.20 a

an hour and a half ago. a conversation with a man that moved to the market. have a cautious outlook on matching demand to supply. this is bloomberg. ♪

♪ viviana: we begin with the u.s. government wanting to increase use of avid laboratory coronavirus tests. they will double the amount they pay medical facilities to use bott machines. hospitals have not hired enough technicians to run them. filing for chapter 11 bankruptcy, one of the biggest telecom organizations in almost two decades. the company plans to cut more than $10 million in debt after years of losses in wireless telecom. tv,tier provides internet, and phone services in 29 states. take advantage of poor selling in the debt market. in the past six weeks the firm

invested $2.5 billion in credit strategies. kkr capitalizing on deeply discounted prices and wide spreads. that is your bloomberg business flash. francine: thank you so much. let's look at the price of oil, it has risen to 2002 levels. expects the oil bust to overwhelm oil capacity. joining us to talk about the is thethat moved markets executive director of the international energy agency. given what you say about storage -- demand >> in the last few days there

were -- one from the opec-plus countries and the second was the g20 meeting organized by the chair of saudi arabia. they brought some good news to the markets. badly,is falling down so if they could only limit the damage. global oilhis year demand will decline by 9 million barrels a day and in the month of april -- --s is a huge a few minutes ago you showed the imf --

that we areean erase the race -- 2019 economic growth. in terms of oil demand we are raising in the entire decade, the last 10 years of oil demand flow. we are erasing that with one year. there was a disproportionate effect on the oil sector. does it meanwhat for further production cuts? i know you are involved in negotiations at the g20 level where we heard that g20 members would help with production cuts. are these actual production cuts or the fact that they are not pumping because the price of oil is too low? differentre are approaches from different countries. as a result of some countries seeing market conditions pushing them and in

some countries there are logistical bottom next -- bottlenecks. the u.s., canada, brazil, and norway did participate in these formeetings on expectations production declines in those countries by 3.5 million barrels a day. if these efforts from opec-plus and that g20 did not happen, if we were not able to see those efforts from those countries we would have seen a higher stock. fatih, good morning. thank you for joining us. i want to go back to what i am sure you studied at the vienna

university of technology a long time ago which is how people cheat within the cartels and now the new addition, how they cheat outside the cart so. when do we begin to see people cheat on recent promises? fatih: thank you very much. it is one of the things i remember from my studies in vienna. numbers arethat our compliance on those targets. those producers -- s such compliance is very and i underlined that

it is important that the world understands how serious this issue is. we have a very unstable global economy and the oil industry, the developments in that may provide additional volatility and also on stability -- instability to the global economy. here, we areckly seeing the price of oil, down. what are the ramifications to the iea system if we see oil $16 to $18, what does that signal? fatih: a few implications. would be a wave of unemployment in the oil industry. it is the workers and the oilfield engineers. all the people bringing oil up

in the pump stations. we will lose millions of peoples . vulnerable oily producing countries, nigeria, ecuador, they are going to face a double challenge of the economic meltdown and fighting against coronavirus in the absence of having economic means. companies will face major challenges to invest in oil and gas business. there will be sweeping implications from unemployment to the economic and social situation. oil countriesal and major oil companies on earth -- in 20 seconds, what is the correlation if we keep a lockdown economy for one extra month, how much does that shave off demand?

do you have that figure? fatih: yes. backieve that if you look three years from now, i would say that it was the worst year in the history of global oil markets. during this year in the second quarter we are in may be the and if you look at the quarter april may have been -- tom: thank you so much. we are going to have to let you go. this is bloomberg. ♪

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who do they think they are? the president cuts funding to the world health organization so much on about " death caused by their mistakes." markets mobilized, the stock market going higher yesterday. and the two-year yield comes in. , you heard that from fatih of iea. we look at the immediacy of 20% levels of employment. -- of unemployment. i am tom keene. ih likenever heard fat that