wti opens the week by thinking to its lowest level since 1999 as the demand picture remains grim. some signs of home, new york she's a drop in daily deaths and u.s. leaders say an agreement on additional aid is close. transcend the u.k. report the lowest fatalities in weeks. germany reopens the economy on a limited basis today. good morning, afternoon, and evening, everyone. happy monday, a new week to look at the markets and figure out

what exactly comes next for the coronavirus, how governments will deal with it and if there are any faults. let's check on your markets. today, we have a market that seems focused on the number of affected and deaths falling. that is the good news. many deaths, but it has fallen from three or four days ago. equity futures are down. european stocks are holding gains. they fluctuated quite a lot. it is a big week for corporate earnings. they are trying to a tentative signs that the infection rates are decelerating. treasuries, pretty much unchanged. plunging below $15 a barrel to the lowest level in 21 years. let's get to the bloomberg first word news in new york city with viviana hurtado. viviana: we begin this new is a news morning in the u.s., the nation temporarily postponing

head of client investment strategy -- tariff payments to free up cash for businesses hit by the pandemic. it is limited in spoke -- scope so it will be on steel or aluminum or enforcement actions, including taken a big -- against airbus. says china may be "knowingly responsible" for the coronavirus outbreak, a major change from january and february when the president cheney -- praised china's leadership and handling of the crisis and echoes comments by vice president michael pence, who told fox news sunday "china was not as forthcoming as they should have been." to the u.k. where the government is defending its handling of the coronavirus crisis. it comes after a sunday times that boris johnson failed to take the outbreak seriously in its early stages. the government, issuing a rebuttal saying the article contains "a series of falsehoods."

sticking with the pandemic, it is showing signs of easing in europe. italy, spain, and france reporting a fall in increases in fatalities for weeks but the path to return isn't a normal life -- is into a normal life. france will unveil plans in two weeks. the current lockdown could see the economy contracted by 10% in 2020. 15 are dead in the deadliest shooting in canadian history. a gunman in nova scotia described himself -- disguised himself as a police officer, shooting people in their homes and setting fires. thecials, confirming perpetrator is dead. the province's premier says "it is one of the most senseless acts of violence in our history." 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'm viviana hurtado. this is bloomberg. francine: thank you so much. let's get straight to the head

of research at generali investments. always great to speak to you. when you look at the recession, how deep will it be and what will be its lasting legacy? how is this different from 2008-2009? >> thank you very much for having me. i think the benchmark now that outlookhas its economic is -3% for global gdp growth this year. the risks are very heavily skewed to the downside. it will take about three points off gdp growth in major economies and the extension of the lockdown that we are seeing now implies that growth will be very weak indeed. unfortunately, we are not going to see a v-shaped recovery. the scars of the damage has been

too large. in the u.s., it will rise to 20%. hopefully, some people will get back to their jobs, but not everyone and that will take a long time. the financial positions of corporations will be weaker out of this crisis. sheetebt in the balance and that means that capex is going to be soft. unfortunately, we are looking for a slow path back to previous gdp levels. when you talk about long-term scars, how would it change forever? ere we going to becom global? three she states that are becoming more interventionist. what does that mean longer-term -- we see states that are becoming more interventionists. what does that mean longer-term? vincent: the global supply it will facilitate the

region organization of the germination of the global chain but you need to invest and to invest, you need capital. it is not going to be quite easy, and i'm afraid the condition will be quite slow. what is more immediate his government intervention. the governments are now stepping in to save the corporate sectors and clearly the focus has been on making sure the liquidity crisis doesn't morph. in that sense, the government is going to intervene more. dividends it with but i'mbuybacks, concerned long-term, this will

provide low potential growth. the globalization move we had was very positive for growth globally. the intervention of the government is going to imply a lower potential growth and for us, that means lower rate for longer, unfortunately. francine: what does it mean for portfolios? i know you wanted a cautious some portfolios, but is there anything you see as attractive at the moment? is there anything we should be looking at the by? t --o buy? preference is investment-grade credit. we are a long-term investor and traditionally, the default in that space is extremely low. governancelicy from and central banks has been for the sector. we like investment-grade credit.

there is rating risk. we will see more companies going thatbbb to high-yield and is a risk we want to manage and we have put a lot of focus, a lot of effort on research. this is where we like right now. are morees, we cautious with a preference on dissent -- defensive sectors. given we have seen a strong recovery. there has been positive impact from the slowdown in the coronavirus contagion, positive impact to the very strong policy response, but now that the drawdown in u.s. equities has ed, we arethan halv taking a cautious stance with a preference for defender -- defensive sectors in the equity space. fromine: vincent chaigneau

generali investments stays with us. in 15 minutes, we speak to the societe generale chairman. that interview, coming up at 9:30 a.m. london time. this is bloomberg. ♪

francine: could morning, everyone. this is "bloomberg: surveillance ." i'm francine lacqua, working from home in west london. extra dose of unpredictability the next couple of days because the future contract has been expiring. we did see record lows today, certainly record lows since 1999

as we saw the extra volatility in the market that is already grappling with a glut and evaporating demand. wti, extending its line, falling to the lowest in more than two decades as the world runs out of places to store the crude. some headlines from the german chancellor saying there are no current plans for new easing measures and angela merkel is criticizing the german debates about further lockdown easing. we are looking at oil, but i had those headlines on angela merkel. from generalieau investments. if you look at your portfolio investment, the possibility recover the of the economy, how important is they calibrate this? open and shut down again, do they have to be careful about when people go back to work? does that make a difference to your investment strategy? vincent: yes, it does. there was an interesting paper from the new york fed to the spanish flu and saying the

cities that imposed the most severe social distancing and managed to get the group behind them quicker eventually did better. it is the same here. i know the lockdown has a heavy economic costs, but you do not want to fall back into a second wave. i think the case we are seeing for his we are seeing the second wave and we are seeing the highest number of cases -- new cases in singapore. i think you want to avoid that. any return to normalcy will be very slow. -- --nvestment strategy foreign investment strategy -- sorry. i'm saying that you want to make sure that you put the virus behind us so we can move on.

most important is to avoid a second wave. francine: how do we look at oil right now? the price of oil is ever lower. how does that impact banking funding? how does that impact your world? if you look at previous recessions, they were almost always started with a collapse in the price of oil. i know this time is different, but how much worse does it make the situation? historically, lower oil prices used to be good, good for the consumer, in particular. today is much less clear. it is very bad for, in particular in the u.s. the financialen position of corporations globally is going to be weaker, the fact we have that extra drag on capex, for me, is very fiscal -- int the saudi arabia, for example is

below $80 a barrel. how are they going to cope with that situation? that could create quite some stress, so overall, i see that in any case, the lower price is not going to support demand for long because of the social distancing, the need for oil is lower. very clearly, this is a negative right now. you look at the proposals out there, policy makers have already done a lot. we are talking about the fn mechanism and what more we can do through that. there is also talk about the ecb and a bad bank. how important of a step would that be? vincent: well, i think that that be a very good signal

we are putting some of the bad loans together, that would send the signal of a joint effort. idea thatss, it is an has been put on the table before and has not progressed. i'm more concerned reviving those talks in the middle of the crisis maybe is not the best time. we haven't done all the work we have to do over the past eight years and putting this out now is going to be quite complicated. there is this idea of the bad banks and there is the argument and theean risk fund, european council will happen on thursday. i think it will be very important for the future of europe. we need to see a time of three sharing, which so far, we haven't really seen. francine: thank you so much.

vincent chaigneau from generali investments where he is head of research. coming up, and interview at 3:00 p.m. london time, an exclusive conversation with larry kudlow about how to get americans back to work. that is later at 3:00 p.m. and this is bloomberg. ♪

francine: the cleveland fed

president loretta mester says it will take time for the u.s. economy to reopen. she added the central bank is really too busy limiting damage to the u.s. and markets to be concerned about excessive risk-taking. she spoke exclusively to bloomberg. pres. mester: we are in an incredibly deep shock to the it behooves us at the fed to use our tools as best we can to get us through this pandemic period, mitigating the negative impact on the economy so that the recovery can be as best as it can be when we get to that point. yes, we are moving into unprecedented territory, but we lend firms turku who no fault of their own were impacted by the virus. we are going into corporate debt finance which we have not done

before, and we will include some fallen angels that had an investment grade rating before the virus hit. so you are right that we are doing things that we hadn't done before, but at this point, i don't think we can be back concerned about those kind of moral hazards. look at thisve to is a hugely impactful and negatively impact. shock.ctful we have to do all we can to not do permanent damage to the underlying fundamentals to the economy so when the time comes and economy can pick up, we get a decent recovery out of this. jonathan: a lot of what you said will make sense to a lot of people. where people struggle, buying bb credits that were bbb before this might make sense, but to a riskys exposed

energy sector that wasn't on from footing before this doesn't make matter -- make sense. pres. mester: part of what we are doing and all the things we are doing are twofold. one, we are trying to make sure the markets stay functioning. some of the efforts of the market geared at functioning and some are geared to make sure we mitigate the negative effects on households and businesses by making sure we have credit flowing to those businesses. i look at the etf part of that as market functioning issue. we are continuing to look for our markets sure are functioning and i would say some of the efforts we have taken already have improved functioning in the markets. there are two things going on. one is making sure -- and this was the fed's responsibility -- is to make sure we have markets that are well functioning, so that credit can flow and do what it can to help shore up the

economy to prepare it for the recovery. on know, we can disagree what the right way to do that is, but part of what we are doing is to make sure we have functioning financial markets precisely because those are an essential ingredient for the economy so that any other policies we can do can flow through so there is a transition to the households and businesses that need that funding. >> i know at this point, the fed is all in, doing everything it can to support the economy. when we get to the third quarter may be reopening and in time to stimulate the economy, is there more you think you need to do or can do, and what would that be? pres. mester: i think we are going to have to see what it looks like when we get there. againstthink we were up any kind of restraint on what we can do. -- constraint on what we can do. i think we acted appropriately

in an unprecedented rapid way because of recognition of how and this shock was, engineered because the investment we are making them public health, right? wen we get to that point, will look at our tools, do what we can to support some of the the federalt government is doing in terms of the ppe, paycheck protection be prepared to use our tools as appropriate to make sure markets function and we are supporting the economy as we always do so that we can get back to a normal, sustainable growth with full employment and price stability, so that's what our goal is going to be. that is what our goals always are, and we have tools to do that. we have forward guidance, our interest rate tools we are doing, right now at zero, and we will move those things around as

appropriate to make sure the economy can recover and get back to a sustainable growth path. that was loretta mester, speaking to jonathan ferro and michael mckee about some operations the fed has put in place to safeguard some markets. she is cleveland fed president. coming up, an exclusive conversation with the chair of , and we willale ask him about europe and the ecb doing possibly a bad bank. what that means for the economy, and after we saw the apology from the commission president, we will talk business. this is bloomberg. ♪

francine: well, good morning, everyone. 9:30 in london, 4:30 a.m. in new

york. i'm francine lacqua in london. we have looked at the markets, we have look at some of the things the ecb can still do. they round up of first word news -- let's get to new york city and viviana hurtado. viviana: we begin with president donald trump. he says china may be open book knowingly responsible" for the coronavirus outbreak, a major change from january and february when he praised china's leadership and their handling of the crisis. it also echoes comments by mike pence saying that china was not as forthcoming as they should have been. and sticking with china, it is pledging more stimulus, this after the central bank lowered its one-year loan prime rate to 3.85%. beijing promising another one , aftern yuan in bonds the economy's first contraction in decades due to coronavirus. china's leaders say the nation is facing unprecedented economic

difficulties. we and with the pandemic -- it highlighting weaknesses around the world. according to g20 health minister's after a teleconference hosted by saudi arabia. healthtioned, the world organization. , donald trump said he was halting funding. 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? thank you so much. let's focus on what policymakers have been doing across the world, but specifically in europe when italy was at the epicenter. let's also talk about what has been circulating in the media, which is the european central bank possibly doing this bad bank. the paper basically is reporting this is according to the eft, that it could take on billions of euros off lenders' balance sheets, including nonperforming

loans left over from the 2008 financial crisis. i am delighted to have a conversation on the economy but also on what policymakers think -- on what policymakers can do, with lorenzo bini smaghi. thank you for joining bloomberg this morning. there is this report about creating a bad bank, which is something that other countries had done in 2008. how useful would this be right now, to shore up markets and to shore up some of the mass debt that we are accumulating? remind: well, we have to that most banks have adjusted their npl share quite the crisis.y before we have gone back to levels which were considered normal. proposal i think affects

only a small portion of european banking system that has still whatr ratios compared to is to be considered normal, so only in certain banks and certain countries, so i will not systemicthis as a hi package because most banks have enough capital to address the new wave of npl, which may arise from this crisis. is there anything more at this moment that the ecb or other policymakers in europe should do? i know there was a fight between italy and the number of countries, and we heard an apology from the commission president. longer-term, willie countries like italy or other countries need some kind of bailout? well, i will say if we look at monetary policy and if we compare it to the previous

crisis, certainly the ecb has done a lot and very quickly, aside from some communication that really qe has been waiversd immediately, and the collateral framework, the direct lending to the bank. i really think there is a dramatic change from the previous crisis. now coming to fiscal policy, the reaction has been quite relevant , but it has taken place at the country level, country by country. is a european package as a whole, and that is what is going to be discussed this week, on the 23rd. there are some elements of this package which are being put together, and the negotiations are going to -- i think the

-- i think there are itrs in italy, that some of would require conditionality that we need a new austerity in italy. --ersonally think there is these fears are not well tounded because they reform the experience -- they refer to weak experience after the crisis. the whole reason for austerity , i ames in the near term quite comforted -- confident that they can find a gauge but also a recovery -- that they can find a package but also a recovery program, that we need europe out of the crisis to medium-term to higher growth potential. what exactly is this

outbreak? is it much of a shock politically as it is economical? is this really a crossroad for europe, do we need to run a bonds, for is the esm enough? it is unclear if this is emotional because people want solidarity at any cost or whether they really need it economically. : i think it is very difficult at this stage to assess the effect of the crisis in italy compared to other countries. estimates indicate that countries are affected in the same way, some more than others. lookgal agrees that if we at the development of the pandemic, if we look at countries like belgium, spain, i think we are all in the same boat. the point is that the situation is different. there is a higher debt to gdp ratio from andy lower growth

rate, so it may need stronger support. i think the political issue is more relevant right now and the economic issue. in the sense that there is an issue of trust between leaders and the european level and there is an issue of the legitimacy of the political leaders with respect to the public opinion. they, a large part of public opinion has lost some trust, vis-a-vis the european institutions, for reasons related to immigration but also to describe this, and they want more. wishes,in the skill of some would like also to go to issue federal system would , but thisitalian debt

politically is i guess too early and cannot happen without the andr change in the treaties the major transfer of sovereignty from the national level to european level. so this may be for the medium-term rather than for this week. francine: should be really also think about splitting government ?ebt forgiveness thenzo: when we look at sustainability throughout the world, i think we tend to underestimate two issues. one is that interest rates are going to be low for very long. they were already low before the crisis. they are going to be lower for longer because there will be an extend of savings at the lower level. so low interest rate. will be in last part the balance sheet of the central

bank. throughout the world including europe, which means basic that when countries have to refinance , part of the refinancing is taking care of by the central bank. so the pressure on interest rates is going to be lower, and i think the dentist sustainability -- the debt to sustainability will be improved by the central bank in europe. held atwas basically 30% of the debt of the member states, which means that even if italy has a debt to gdp ratio of 160% or more, 30% of that will be in defense of the ecb, which the debt in the market will be around 110% of gdp. so i think we have to rethink a little bit this concept of sustainability, which is going to be better than what we may this basis.on

francine: we continue our exclusive conversation with the head of societe generale shortly. up, a conversation with larry kudlow at 3:00 p.m. london time about how to get americans back to work. this is bloomberg. ♪

15 cap this is bloomberg's -- francine: this is bloomberg surveillance. i'm francine lacqua and london.

in a couple of minutes, we go back to lorenzo bini smaghi, talking about the financing needs of the big oil company's. first, with the bloomberg/in new york city is viviana hurtado. francine: we begin with the microscope -- them -- viviana: we begin with deutsche bank. they are under a microscope, the downturn raising questions about deutsche's and how much government guarantees will keep lending. credit suisse is compensating managers and employees with additional shares after the price dropped sharply during the coronavirus pandemic. more than halve from february highs. signaling to swiss tv to show solidarity amid the crisis. they lending -- the lender may curb pay for 2020. trustdonald of northern

thinks this round of reporting will not offer much for investors. what is more important, understanding how the economy will get back on his feet when the lockdown ends. for that, he says, look to your. it is the bloomberg business flash -- look to europe for clues. that is the bloomberg business flash. francine: let's continue our conversation with lorenzo bini smaghi, the chairman of society jenna ralph. when you look at some of the concern -- of societe generali. when you look at some of the concerns, how will the crisis change governments forever? how much more present will there be? how much more of a safety net socially will i citizens want from this? abouto: well, if we think the guarantees, for instance, that governments have made available to the banking system, to the banking system, to

,uarantee loans by companies and if things do not go as expected, probably the governments will turn out to be a major lender to companies, and possibly even shareholders of companies. as you landscape, mentioned, will be quite different once the crisis is over. bethe other hand, there will savings around and at some point, some privatizations will have to happen, but somebody will take losses. and we will see who will be able losses, whether it will be the public sector or whether shareholders will have to bear the cost. societaly, some questions will have to be addressed. in a way that may not be fully expected right now because right

now, i think the governments have to stand and help businesses survive this crisis. francine: how problematic is the falling oil price for banks? reluctant banks to lend to corporations that need financing, when you look at the oil price falling every day, evermore? lorenzo: right, and most of these e-minis are financed directly as the markets and banks -- right, and most of these companies are financed directly as the markets and banks, as it is distributed in the market. the exposure by banks to less, ands is much this may last for some time, but once we it to pick up

have clear indications about the end of the crisis. e even anv overreaction and personal ability might increase after the crisis, the risks that come on posing to assistance security and safety of individuals. it may be paradoxical to have a strong rebound on the commodity side at the end of the crisis. francine: what do you think will change your business permanently? in your business, what will change permanently because of corona? lorenzo: well, i mean, we are looking at that, actually. we are not only equipping ourselves with the fact that it is a crisis, we are looking at what will change. if i see -- the behavioral , digitalization

is going to increase traumatically, and this may be something good for banks. as they are all investing technology,igital and sometimes they are ahead of the curve. countriesropean customers are a bit slow to move to the technology, this crisis certainly has pushed them to move much more quickly to digital. this is one issue, and then there are other factors that will affect our business models f. certainly this crisis is different from what it was, and we will all have to adapt to that, and to contribute to the recovery. the good thing is that so far during this crisis, the banking system has been part of the solution, rather than part of playroblem, and we went to

this role in helping our companies, and households, to get the liquidity that is needed to make sure that they can go back to normal as soon as this is possible without suffering too much. francine: the question that everybody is trying to figure out across the world, really, is there an optimum end of lockdown or easing of lockdown that balances saving lives whilst also safeguarding the economy? how difficult and impossible is ?his to model the ech well, it is actually a key issue because it involves health issues, economic issues, and in the end, ethical issues. as ae are not prepared

society to tackle these issues openly. change -- if we have to start assigning the optimal speed limit, knowing that the higher the speed limit, the more deaths we might have on the hand, but on the other be less efficient it would -- here we have to define some parameters in terms of contagion, in terms of hospital -- hospitalization and critical situations. it would be a benchmark for reopening or not. i think in the end, they cannot just delegate, they have to take advice by doctors, by economists, by sociologists, and

in the end they have to make a choice. we know that we will not live in a world with zero contagion until the vaccine will be ready. there will be some tolerance that will have to be accepted, and politicians will have to take responsibility for that. and that is not easy, and we are not prepared for that. but in the end, unless they do be there will not necessarily a better solution. lorenzo bini smaghi, thank you so much for your time today, the chairman of societe jenna ralph. you can catch more of this -- of societe jenna ralph -- of societe generale. you can catch more of this conversation. we will ask our next guest about tourism and when the right time is to open the economy. this is bloomberg. ♪

francine: good morning, good

afternoon, good evening, everyone. this is "bloomberg surveillance." let's have a look at markets because actually futures over in the u.s. are down a bit. here in europe they are fluctuating, but they are holding onto gains. one of the things we are watching out for is the price of gold. always interesting to see the risk appetite on the market. the other thing is the price of oil. we had a great conversation with lorenzo bini smaghi, also about the world financing of some of these countries and the impact longer-term this could have on the banking industry. we are just getting breaking news out of the u.k. the u.k. government, after a piece in "the sunday times" and "the times" over the weekend got lambasted about boris johnson not having done enough to do with the crisis early on. they say he sleep walked into this disaster. the u.k. confirming there is billionillion -- 1.1 5

-- 1.20 5 billion pounds. we did see a breakdown depending on whether you are a freelancer, a big company or small and medium-size enterprises. countries,y european you can access. we will have more on the u.k. and the ecb with this talk about the european central bank possibly creating a bad bank. coming up, we will have plenty more. "surveillance" continues. i will be joined by tom keene and we will be looking at the top stories. also a conversation with larry kudlow, 3 p.m. london time, about americans getting back to work and the intercontinental chief executive. this is bloomberg. ♪

francine: wti opens the week by sinking to its lowest level since 1999 as the demand picture remains pretty grim. some signs of hope -- new york sees a drop in daily debts as --. leaders say additional germany reopens its economy on a limited basis. good morning, good afternoon, good evening, everyone. as always, it is time inventing from london and new york. we have a pretty interesting week ahead of us. i'm looking forward to the conversation with larry kudlow later on and how he wants americans to go back to work. and we look at germany and seeing some of the efforts in the day. i have to say there are two stories i am watching out for -- one's oil and the story that the ecb could be looking at a bad bank like some other regions did in 2008 and 2009. tom: there is a lot going on today. there is no question that mr. kudlow will be a key interview.