francine: race to the bottom. crude hits the lowest price of the century as the demand crush hits the benchmark and opec with calls to commitment but no new action. the senate passes pandemic relief funds posing nearly $500 billion. the house is set to vote on the measure tomorrow. and roche sees a profit bond as they work on developing tests for covid-19. the chief executive tells us they have antibody tests the start of may. good morning and good evening, everyone, this is "bloomberg surveillance." tom and francine from london and new york. i know we'll spend a lot of time figuring out what the senate bill means for smaller companies in the u.s. but we'll also spend a lot of time figuring out what happens to brent crude. we saw the devastation when it came to w.t.i. first that may contract and now the june contract and we really focus on exactly what it means for brent and i'm looking forward to speaking to the head of the i.a. later on.

tom: it will be interesting to talk to fatih. we have the price actions and dynamics and future this is and futures that. what are they going to do about it? derth, a absolutely complete mystery out there right now over what the next step is. there was opec plus, there was all the meeting of the world leaders and that. and what i hear on a wednesday is just absolute thundering silence. francine: yeah, absolutely, tom. we were speaking to the former n.e. chief executive and they were saying they would need to cut something like 33 million barrels for make a difference. it seems difficult for this group alone to do something. we'll discuss that and also have to look at the world e.t.f.'s place on this but straight to bloomberg first ord news with viviana hurtado.

viviana: the senate passing a relief package including money for the tapped out program to aid small businesses. there's also money for coronavirus testing and hospitals swamped by patients. the house could take up the measure as early as tomorrow. now to immigration. president donald trump announced he would halt for two months the issuance of green cards for permanent legal residencey. the president stopping short of a ban on temporary foreign workers, though, but he hinted at the possibility of additional restrictions. that could complicate planning for companies looking to rebound from the coronavirus outbreak. and now to the u.k. that's where finance minister said there are encouraging signs the coronavirus outbreak is slowing. yesterday's death toll was the lowest in two weeks. members of parliament are preparing to scrutinize how the government is handling the pandemic. after a two-week break they return to a stripped down house

of commons. government ministers will be questioned using zoom in a sign of the times. global news 24 hours a day on air and by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine and tom? tom: viviana, thanks very much. we look at currency bonds and oil. there's a better risk on feel today. the bond market a little bit higher yields, a little bit steeper yield curve. and of course futures bounce off the grimness we saw yesterday. none of that matter. recalibrating oil to early march or april of 1986, the first collapse that we saw in opec i've got on the bloomberg terminal here. this is really cool, folks, a terminal on a cell phone. wicked powerful. really good charting capabilities, $10, west texas intermediate.

francine, really shocked yesterday brent crude under 20, how about a 17 handle right now? francine: yeah, a lot of 9 focus will be of course on brent from now on. i did want to mention something, tom. because spain has followed italy with the record setting bond demand at the sale that came out 20 minutes ago, something that would be seen as a positive overall. stocks here in europe are actually gaining as are u.s. futures. i think a lot of the folks have these oil prices that just cannot find a floor at the moment. the focus is also on treasuries and if you look at the u.s. 10-year, lls a -- always a good benchmark at .58. let's get back to the price of oil and look at what our top guests had to say about where they see it going next. >> pierre: witnessing what happens, now we're running out of the pipelines of food and

waiting for the next move. >> storage is an acute source throughout the industry. >> 30 million barrel as day the world is oversupplied right now. >> too much crude oil getting stuffed in storage at a very fast rate. it's a global problem. a lot more crude oil is on the way. >> should be very careful what to buy, oil futures or oil through e.t.f. in all it can be wiped out. it's a dangerous market to trade in right now. >> in about three weeks you'll have the same situation with june crude oil. everybody knows that. that's the way it's developing. >> i wouldn't get excited about a price recovery soon. >> the price will be sluggish for a long time. >> they can pop up equities and central banks can prop up equities and bonds but if it tried to prop up oil it would make it worse and we'll go to negative prices. tom: some of the voices on petroleum. there are any number of ways of

looking at this huge global issue and one of them, of course, is to look at the dynamics of supply and the dynamics of demand coming back on. julian lee writes for bloomberg on oil. he's a terrific strategist with a huge mathematical foundation. julian, thank you so much for joining us again. let me frame this to get out in ront of fatih. as you perceive the industry and the prize, what's the to-do list for the oil powers? how do they react? how do they apeck chew wait a -- effectuate a program to sustain and move oil higher? >> i think they face a huge problem. in of your guests enunciated that, some of them. we're facing a situation where

oil demand is down something like 30%. that's in broad terms, it's 30 million barrels a day, down from where it was this time last year. even the output cuts that opec plus has agreed of 10 million barrels a day will only deal with a 1/3 of that. and then you stop for another two weeks and so until then, we've got this massive additional oil still in the market. to cut 30 million barrels a day, if opec would do that on its own, every member would have to stop producing, full stop. nothing from saudi arabia, nothing from any of them. though it's quite clear they're not in a position to do that on their own. part of the problem is the cuts are just coming too slowly, oth in opec and outside.

tom: what is so important to under is the movement of barrels of oil in production is nonlinear. the first barrel is different than the 10 millionth barely and different than the 30 millionth bear pell. ow nonlinear are these weaks functions, are they going to effect them and get a message immediately or are they so nonlinear they have to work at it to get out to a profound price effect. julian: certainly on the physical oil market, there are huge lags in the system which drives these their tiffs you're talking about. if you produce a barrel of oil now in saudi arabia and you export it to china or the united states or even to europe, it's not going to get there for a month and a half. so if you stop producing now, you don't cut off the arrival

of oil in those markets until the beginning of june. and that period we're going to continue to see oil looking for storage space that potentially doesn't exist. we've outdemand picking up -- and i agree with your sort of previous guests who say the pickup could be relatively slow. the market is telling us and negative oil prices are telling producers everywhere, stop pumping now. and if governments and oil ministers can't make that decision, the market is going to make it for them. francine: julian, can opec plus decide to stop pumping? how much less oil do they need to pump to deal with the situation? julian: if we're looking for

opec plus to do it all on its own, they produce collectively somewhere about 50 million barrel as day if we need to take out 30, they need to cut their production by 60%. that's impossible. these are economies that whatever the price of oil rely on oil for the bulk of their income. there is no way, i think, that they can cut the production by 60% and governments continue to survive. this is like the pandemic, this is a global problem and it needs a global solution. needs every producer to cut production and if they don't do it voluntarily, the market will force them to do it in a haphazard manner with those least able to access storage capacity. the first ones to suffer the fallout.

francine: julian, who are you talking about, who needs to cut? so if it's not only up to opec plus who has the capacity to cut, are you talking shale producers in the u.s. or is there the another big player? julian: it's everybody, it's shale producers in the u.s., it's companies operating in the gulf of mexico, it's brazil, it's norway, it's the united kingdom. it's canada. it's every oil producer everywhere on the planet. and you know, the market is starting to force them to do that, whether they're willing or not. ou know, negative oil prices is the oil market's way of saying there is nowhere to put this oil. and if you've got nowhere to put it, you can't take it out of the ground. you know, it's going to become as simple as that, if we really run out of available storage space, producers will have to stop producing because they

simply can't find anywhere to put the oil once they take it out of the ground. francine: julian, thank so you much. coming up, more conversation on oil, some locations out there. we'll have to talk treasuries and debt. all that coming on with patrick armstrong, chief investment officer. this is bloomberg. ♪

francine: good morning, everyone. tom and francine from london and new york. tom, we had a good conversation with julian lee about oil. let's look for other dislocations in the market. now joined by patrick armstrong, chief investment

officer. first of all, the small business fund being passed by the senate in the u.s. and brent ever lower and don't know how you find a floor and the third one is a pretty good appetite from the new bonds from spain and italy. out of those three, what do you focus on the most? david: oil i've been fascinated with over the last three days. it's never thought of something like negative $30 a barrel. when i covered oil and gas companies back in 2000 it hit $11 briefly a barrel and that's when my basically canadien arm of deutsche bank closed down the shop because there was no future in oil and gas. to me it's fascinating from a personal perspective and really symptomatic what is happening in the economy that there's a real slowdown in demand everywhere. aggregate demand has fallen off the cliff and oil is ready to see that most marketedly where supply hasn't change and not fallen off the cliff but demand

definitely has. francine: patrick, what does it mean for how we find a floor, how does this end? should mething that give us a wake-up call and the economy is worse than expected but is it specific to the oil market? patrick: it's the whole world but the oil market, you have to have bankruptcies that small shale producers have to go bankrupt and stop producing, even a month ago i thought it was peculiar when heavy oil went down to zero and now we had headline wti going through oil a couple days ago as well. that's the way you get supply off the market. you're not going to have people voluntarily cut 50% of their production or 30% of their production, it's going to come costs panies that cash are $15 a barrel and i can't pay cash costs anymore and that's where production is

going to end. and i hope there is a bailout for the industry because that stops at supply. tom: and we should point out, folks, the president of the united states mentioned that earlier and is my script for the 6:00 opening and we'll see what actions we get from president trump today and into this week. patrick, this is a fascinating conversation. let's bring it over to other investment classes and i want uses, a word jean-claude "if he fuse." does that defuse to inflation and deflation beyond the obvious victims? patrick: definitely deflationary trends are overwhelming with commodity prices directly linked to inflation swaps and the price of goods for things. in the long run it's the beginning of a new regime we end this inflationary period with a deflationary period

we're experiencing now. but the aggregate amount of debt and deficits being built up, i don't see how we address those without mom tiization of that -- monnettization of that debt and it's a shocking time for the markets and it might just be the point we go from a disinflationary trend to deflation and the only way out of it is to generate artificial inflation. tom: this is the question of the day, we're thrilled to have julian lee with us and patrick armstrong and we'll move forward and be joined later, without my question my conversation of the day and our guest on the institutional response to the collapse of oil. please stay with us from london. from new york, this is bloomberg. ♪ dd

>> next year we'll probably have 4% or 5%. there's a bigger event than the 2008 financial crisis and the whole is probably $20 trillion. tom: "bloomberg surveillance" from london and from new york. tomorrow jobless claims in america, widely assumed to come in a bit from the agony we've soon the past couple weeks but nevertheless is the key if not the most important american economic statistic of the week. right now patrick armstrong with us. we've been talking oil, oil, oil. i want to bring it to the

inflationary and deflationary trends you're talking about and how does it value actual growth in the equity market if certain selected stocks and sectors can actually grow, what kind of valuation do you put on their growth? patrick: yeah, that's a very good question, and you get to the point when you have zero discount rate, you almost get an infinite multiple for things that are going. that's where i feel safest, i'm in expensive companies which isn't natural, i like the financial and health care sector and companies that aren't immune from what's happening on the cyclical backdrop but where you see models work in what is happening and aren't chief but like the growth ste stimulate and the earnings and cash flows they can generate. and they've grown in a point probably in the next few months you want to make the rotation into the cyclical companies but for me until earnings analyst

estimates get to something realistic, that's probably about the time i want to make that switch. and you've seen u.s. profit estimates fall 18% this year. but that was coming in from a start of your estimate of plus 11%. the only forecasting 10% fall in earnings this year and more likely going to be 30% in the best case and 50% in the worst case in terms of earnings. until i see those earnings revisions really get to something realistic is when maybe we'll start to look at something more cyclical and traditionally cheap. francine: patrick, do you see more value in asia than in europe or the u.s. simply because their economy has gone through this quicker and lockdowns are eased now? patrick: asia i think is looking pretty attractive. our biggest overweight is japan and it's not coming from the fact what's happening with the virus and how it is handling it, that was a region that was cheaper. we like the video gamemakers

and those benefiting from stay at home usage. i like companies in safe haven currencies and switzerland where i have a dividend yield and dot get a safe haven by paying negative interest rates. we have japan and alibaba at 10 cents and the consumer demand for technology sectors is going to remain strong and they're ahead of the curve versus the rest of the world as well. francine: patrick, thanks so much. we're speaking to the head of research and we'll have plenty more analysis on your markets and look at brent, brent currently actually in a freefall. if you look what we had from opec plus we had a good conversation with julian lee, oil ministers from opec plus held a unscheduled conference call yesterday to discuss crude

prices but at the end they didn't settle on policy measures. the world is looking at who can prop up the price of oil or at least stop it from sliding and julian lee said one it thing we need to look at is producers across the world try to stop pumping the stuff out of the ground. also, italy with a record setting bond demand. we'll have plenty more on that. the price seemed right but actually spain receiving some 66 billion euros of orders for the sale of 10-year notes. this is bloomberg. ♪

viviana: you are watching bloomberg "surveillance." the democrats got what they wanted, the $484 billion relief bill

passed by the senate. it includes money for the tapped program, business loan for coronavirus testing, and hospitals. staying in washington, donald is not immigration ban as wide-ranging as many thought. sitacked away from plans to -- suspend guestworker programs. groups exploded in anger at that land but the president hinted there could be more changes. know how kimes not jong-un is doing. he told reporters he may reach out to the north korean leader. was inre told kim critical condition after cardiovascular surgery last week.

in london to the lowest level in 21 years. brent futures for june plunging to about $15 a barrel before rebounding. the coronavirus has crushed global demand and there are fears unwanted oil will overwhelm storage capacity. 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. hurtado.ana this is bloomberg. francine: thank you so much. let's get more on your markets and some of the research and what we can expect, how soon or how late we can expect a recovery. joining us as monica defend. you have a great piece of research laying out the difference between what we see wouldd what many thought

be the scenario for 2020 and the end of 2019. how quickly can we recover from this? monica: good morning. fast wey depends on how longin the virus, how production will be down, and the policy we work out. contraction. recovery later in 2021, and eventually in three cyclewe might be a late or inflation should the central banks continue with their

-- the financial regimes that would be pervading in the market. fragile ourw emerging markets right now? now?e emerging markets monica: emerging markets have been starting from some fragility, when you look at the vulnerability. has been acting as a drag on some countries and producers. these are the three layer's we screen amongder to across energy markets. rake -- outbreak and

pandemic has been an exacerbation in these countries that we are showing, with more and monetary expansion on the other front. we looke the elements into, fiscal vulnerability, external vulnerability, and oil price exposure in order to discriminate and allow us to detect the less vulnerable on that front. are two very different five-year five year breakevens in europe and america. europe shows a disinflation tendency versus a less disinflationary tenant the in america -- tendency in america.

does that skew you towards ownership of american shares versus european shares? monica: for the time being, as we are living in a contractionary phase, we are quite light on the risk asset exposure. actually how that data collects will take place in a sequence and this will be alevant in order to implement regional place in our portfolio. u.s. to bet the , so we clearly shed some light on how the pandemic has been affecting the economy.

hadhis report, we our corporateause is not providing guidance for 2020. the way the lock down will be prosecuted -- lockdown will be impact on the the economy will be one factor that will allow this piece and the reversal on the economic front by vps and the markets -- eps and markets. u.s.e negative on both the and european fronts, and american markets. up to kickome feed

in by 2021. the emerging market will be one critical factor to look at. tom: monica defend, thank you so much. and exceptionally important conversation with the speaker of the house, the ,entlelady of san francisco nancy pelosi will join us after an important sign off by the senate on a new fiscal stimulus for america. please stay with us, with brent crude lower. this is bloomberg. ♪

♪

a warning from heineken. the weaker emerging-market currencies may add to the problems of lower beer consumption. the coronavirus pandemic is ravaging the industry. beer volume fell 14% in the first quarter. heineken expects the second quarter to be worse. facebook has made its against deal in six years. -- it's biggest deal in six years. 10% ofk is buying about geo platform. that is your bloomberg business flash. francine: thank you so much. let's talk more about netflix and some of these subscription services that have been doing rather well during the lock down during the pandemic -- lockdown

during the pandemic. the company saying the numbers may not be as good as they are in the long-term. we are joined by dexter thillien. i don't know what was more important, the fact that they had this insane growth in numbers of people subscribing, but they reassured everyone they will have enough film and tv shows not to run out during the pandemic, but how does a company like netflix capitalize from this? natural if you are locked down you subscribe to this. dexter: this quarter is one-off. recordsctually march,ay, especially in because in january and february the growth was normal. in march there was strong growth

across the board. the key going forward is retaining the customers. has reduced competitively this quarter so they want to make sure once the free trial is done that people stay with netflix. very important is content so netflix has ensured investors 2020 is ready. it has been delayed because of but it is a matter of making sure they have the right amount of content. , espnin success this year on basketball, also strong growth over the last week or so, they are making sure they have that content ready. almostt they are having

16 million additions and a quarter and they have 50 million customers, shows that people are watching content. tom: you are expert at the rollout of telecommunications, the next drawn's -- the next tranche associated with 5g. we know there will be delays in the rollout, whether it is 5g, the the european end arctic 5g. what is the so what? in ais the cost of a delay new technology rollout? who loses? dexter: my view on 5g is that the main developments will happen in the longer term so there will be a delay but not necessarily a bad thing.

from government, they will lose out. in countries when you bundle up commerce -- competition things are delayed 5g is a long-term thing. it is not a race. against thes gone idea of the race for 5g. i do not see it as a race. i do not see it so much as a consumer tech knology -- technology. need 5g? i am not sold that everybody watching this program worldwide needs 5g. do we need 5g? dexter: probably not, i would

say. 4g, we started 10 years ago and the beginning did not really do much but then we have seen developments. what happened with 4g, the main applications that were enabled by 4g, taking pictures and ,utting them on social network you could not really do that with 3g, and uber in terms of geolocation being able to order a cab. these are still very early days. streaming,se is watching more videos quicker, but we will see changes coming. it is not the applications we are seeing. the standards will be developing. reality, gaming, those

technologies will be moving forward. range of devices. the iphone is a big player. you might see more of a bigger ecosystem. have 5g but my't internet connection is so bad in west london, but when you look at the streaming services, my family like many family probably has 10 subscriptions in the last 30 days. how do you describe who is winning or losing if you have disney plus and all of these? content, one, but when we go back to normal life how do you decide who decides to cut? one,r: it is content, price will be second. the idea that people will

subscribe more to one service, it is not just subscribing to disney plus. i think people will subscribe to two to three services and it will depend on the price. it is also about the content, what do you want to watch. if you want to watch all of the content, that is why it is important and you are pushing forward. 80% of the company's push forward, then you will subscribe to them. tom: this has been hugely helpful, dexter thillien with fitch, on 5g and netflix. please stay with us as we watch

world-class worldwide. this is bloomberg. ♪

♪ welcome back to

bloomberg "surveillance," tom and francine from london and new york. we have been figuring out what happened to wti that made the contract go into negative territory. brent, the steepest decline in the last 20 years. yesterday we spoke to one of the longest standing bowls in the market -- bowls in the market -- bulls in the market. here he is. volumes, 6.6 high million barrels have traded below negative prices. it shows that prices can turn negative and shows that the prices have been staying a bit too high for too long. they have been propped up by ,romises of cuts by opec-plus

by going into an etf, and maybe the fed is buying as well. buy in the if people future and keep them artificially high, it will get worse and we will run out of storage capacity because the market does not get the signal fast enough. that is the difference between equities and bonds, and oil. you can prop up equities, central banks can prop up equities and bonds but if they try to prop up oil it will make matters worse and eventually we will go to negative prices. we cannot ask opec-plus to do and a month or two

it is not enough. annmarie: everyone is talking about the demand picture. where do you see demand? how off our reek? downe: demand is probably 20 million to 30 million barrels a day. year on year, it is simpler. demand is down -- let's say demand is down 25 million barrels a day. oft is 900 million barrels inventory being built over one month and that is why they are running out of space. eventually there will be a recovery in demand. demand will go up, we do not know how fast, because the market is focused on a v-shaped recovery but i do not think we will have a v-shaped recovery until we have a vaccine. as soon people start coming out,

the number will come up. bit andbe to come out a i do not believe in the v-shaped recovery. it will be tricky. supply will go down but the question is, can supply go down fast enough and demand go up fast enough to avoid seeing negative prices again? i would not bet against seeing negative prices again. it is not necessarily a one-off. people should be very careful about what they buy through etf's. it can be completely wiped out. it is a dangerous market to trade in. annmarie: u.s. etf's had to halt that and for the sec to approve the shares, you said the cme

should close out these etf's. what does that do to the price? happensbasically what work well when it is $50 oil. --[etf can buy oil futures indiscernible] and everything. will be at margin $15. y 100 etfs cannot bu million dollars worth of futures. they need more cash so it means they cannot replicate the moves of the wti futures. i think that is why there is a

high probability they will have to close because they cannot do what they say they can do. the solution would be to eventually be closed and at some point for etf's to open and be contracts,fferent because by then the market should be functioning. anything that invests in the a [t two months for wti is indiscernible] investor. ♪

♪ tom: this morning, at least in

the short term, and epic last. -- an epic bust. houston has a problem. the shale revolution is dead. singapore to manhattan, the president with a plan that goes long into the future. get your hand off the pause button, mr. mcconnell talks about. mr. mnuchin to the rescue who draws republicans to a consensus for more aid in a shattered economy. out there somewhere, deflation. this is bloomberg "surveillance." we are working homebound, although a little bit of a feel of the pandemic.