the hit to crude spreads to brent, preferring for negative prices as the white house debates ways to help oil companies. up --urope, you are now and europe, you are now up. eu leaders prepare for their thursday summit and the ecb considers junk debt as collateral. bank of america sees a huge pop in gold prices over the next 18 months as federal deficits and bank balance sheets balloon. we will speak to francisco blanch, the man behind that call. welcome to "bloomberg daybreak: this wednesday, april 22. a flurry of news coming out. we are off the highs of the session within the s&p. euro getting a little bit of strength. oil still the commodity of favor, by far -- the commodity out of favor, by far.

it's not difficult to be crabby when you are basically living hand to mouth with government stimulus. i thought that encompassed the markets perfectly for a day like today. a lot of earnings coming out. delta looking at a 50% cut in daily cash burn by the end of june. in terms of their first quarter loss, they had about a $.51 loss , and revenue was down 18% year on year. as we expected, pretty brutal when it comes to delta. baker hughes, oil services company, saying the outlook for oil and gas is certain. no kidding. the revenue down by about 4% year on year. $0.11, acoming in at little bit light. let's get you some of the headlines here. all of today's market moving news from new york, as will is washington. brent crude getting sucked into

the lowest level since 1999. bloomberg's part two thought to be role -- bloomberg spoke to thought he be role -- spoke to fatih birol. >> some of the countries are cutting their production earlier than announced. others joined them. if others do not follow the steps of u.s., australia and others of putting oil in reserves, we might see further downward pressure on the prices. alix: joining me now with more is bloomberg's annmarie hordern. we are still waiting for any kind of official move from the white house. and also axactly, move from houston as well. the texas railroad commission, the regulator for the oil industry in texas, they are now

on whether orote not they should pro mandate these cuts to may 5. what's going on in the market is not just a situation in wti. it is moving on to brent, and citi said if storage continues to worsen around the world, brent will follow. going linked to what is on in cushing, oklahoma, with that storage filling up fast. the first week of may, we could see that potentially filled. india is the world's third biggest consumer. their refineries are 95% fall right now. if you want to look at a how muchaccess to crude is out there floating in the world, go to your imap on the bloomberg terminal. off the coast of california, dozens of ships from long beach to san francisco bay carrying 20% of global consumption.

they are sitting there for days. incredible. you can see how much blood there is in the world of oil. lockdowns remain. it is likely to take months to clear the oversupply, and i a famed oil trader. he says large shut-ins are needed to rebalance, and if the situation can d news could still see -- the situation continues, we could still see negative prices. alix: appreciate it. now to washington, where the senate passed a 484 billion dollar a package of new really funds -- of new relief funds. joining me with maurice kevin cirilli. give us -- with more is kevin cirilli. give us the details. kevin: this is a development that is long overdue, and republicans and democrats alike breathing a sigh of relief that they were able to get to that agreement yesterday.

from here moving forward, the house of representatives, democratic-controlled, will vote on that on thursday. look out for david westin's interview with house speaker nancy pelosi on bloomberg television later this afternoon. two other things on my radar this morning. now talk turns to the next round of economic stimulus. look for republicans and democrats to push for some kind of assistance program in the next round of funding for the energy sector. i am anticipating that vote, which will likely be more politically volatile, and the first week of may. just within the last five minutes, president trump tweeting out that he will be signing end is acute of order today -- signing an executive order today with regards to immigration. we will have to wait for the details of that order to see if it includes some exceptions for certain sectors, like agriculture, and if this is going to play itself out. busy morning in washington.

alix: no kidding. thanks so much. bloomberg because david westin will have an exclusive interview with u.s. house speaker nancy pelosi coming up at noon here new york time. let's get to some earnings out moments ago. delta shares up just a touch after the company reported first-quarter revenue that fell by about 18%, but the company does say it's cash burn could decline by 50% in the current quarter. afterhughes also lower restructuring and impairment charges worth about $1.5 billion. they say the outlook for the industry remains pretty uncertain. and oil services company, lots of exposure to liquefied natural gas. -- also announced a quarterly dividend that you don't see that often. also looking at facebook after the really big solid transaction

in india, taking a big stake in the telecom industry, its biggest since it bought whatsapp. later today, we will also have an interview with the ceo of the nasdaq. that is coming up at 10:00 a.m. in new york. coming up now, we have more on your morning news, trade and analysis on the markets in today's first take. this is bloomberg. ♪

alix: time now for bloomberg first take. joining me from our in-house team of wall street veterans and insiders, bloomberg's michael mckee and damian sassower. i just want to start with oil. i know, big shocker. we spoke yesterday about how emerging markets are going cute full force -- going qe full force, and then we have this oil selloff, putting pressure on china, nigeria, for example. what is the trickle-down effect from negative oil prices? damian: i think we are going in reverse here. mexico had to shut down its wells just a week after refusing those opec cuts. clearly, the decline in oil prices is weighing on sentiment across the whole of emerging-market oil producers. alix: is that going to -- how does that matter materially for them? on the one hand, you still have a global reach for yield, but on the other hand, doesn't make these countries even more or longer-term uninvestable? damian: that is the question.

there's no guarantee that some of these weaker hands in emerging markets are actually going to receive funding. that is the real question here. it is not business as usual. commercial seeing paper markets coming into play, but the increase in money supply specifically due to quant easing or central bank intervention has not led to an increase in the money multiplier specifically in the u.s. here.s the real quandary we are doing all we can to stimulate, but it doesn't mean banks are going to lend to those who need it most. alix: that leads me to normally, if you wind up seeing all of qe from emerging markets, we are talking about inflation coming down. that is nowhere near the conversation. now is it a deflation conversation with oil prices? oilael: not just with prices, but with prices in general. there was a debate when this

started about whether it would be a demand or supply shock. with demand evaporating around the world, we may get there, but the problem is nobody wants anything, so stuff is piling up. that brings the cost of it all down. you will see oil prices depressed for some time. the interesting thing is going to be and how we measure this because the consumer price index is generally a market basket eights each commodity by the amount gets used. how often do they update that? we could see an overstatement of the impulse going forward. with oil prices down the way they are, don't expect numbers to go up. for 10 years right now, we are expecting only about 0.5%

inflation, or at least wall street is, and that is not going to worry anybody in terms of inflation. when we get back to work, if we get back to work any time soon, we could start talking about the world and whether that is going to be inflationary. alix: i'm coming back to work. you can't keep me broadcasting from home forever. it does lead me to central banks and any kind of government stimulus. all of this low inflation makes these large fed purchases of treasury debt sustainable, and there's this indirect monetization. but it's ok, but because it would not be inflation that we are worried about. michael: that's been a big break for the central banks and for the world, that we didn't come into this with inflation. you will have all these loans out there that the federal reserve and other central banks priced at zero, so it is going to be very hard for them to raise interest rates any in the

near future because all of the people with these loans will have a hard time paying the back. expect this kind of thing forever. walks like a duck and >> like a duck, quality platypus. like a duck, call it a platypus. they don't want to spend too much money, so did can use the ecb program and put all those on.s from italy in the long run, that is essentially what you're doing. alix: i love it. and to tie the two worlds together for you, i wonder if the ecb is discussing buying junk bonds today. if that actually happens, how much does that push out to e.m.

somewhere? damian: it is going to be really challenging. the emerging market has its work cut out for it. if you look at some of the comments from the sec chairman, he is kind of lambasting china for not maintaining adequate standards of investor protection. this kind of build on all of the accusations that covid emanated from china and they are covering it up, all that kind of stuff. from an investor sentiment standpoint, it doesn't bode well for emerging markets. companies have raised billions of dollars was on the equity in the credit side. coffyou see the chinese ee chain posting an accounting scandal just after one on the nasdaq, it builds on the fear that investors might have about plunging into emerging markets, despite the selloff. alix: i just want to clarify, i

mentioned ecb buying junk. the conversation today is whether or not they put up junk bonds as collateral. is that actually make any material difference in europe, especially as eu leaders head into the summit tomorrow? michael: this all falls into the -- when they put in that pet program, they agreed to take greek bonds as collateral. the question is, do you expand that to italy if italy gets downgraded? they are one level above junk in many of the rating agencies, so if they downgrade italy, the ecb has to decide, is this going to be a policy that we continue to take dunk going forward, even if the economy starts to improve? they have a decision to make, but the bedding is if they need to, they will do what it takes. where i heard that before? alix: exactly.

what is the thing you are looking at today, the next 24 hours? allan: my concern is that these facilities by central banks do not replace lost earnings. they are going to lower yields, but it doesn't guarantee that the credit markets will be open to these issuers when they need to refinance debt. that is why you are seeing all of these bifurcations between spreads, and those that see policy support and those that do not. , mike, appreciate it. any charts we use for the next two hours, go to gtv on your terminal and you can check them out. coming up on the program, netflix tells investors we've got explosive growth, but don't get too excited. we will speak to matthew harrigan, an analyst over at benchmark. this is bloomberg. ♪ . ♪

viviana: you are watching "bloomberg daybreak." at&t joined a list of companies that have withdrawn their forecast for the year. at&t revenue coming up short. profit was in line with expectations. united airlines is stepping up efforts to survive a collapse in demand. united has raised $1 billion by selling new shares. the price was at the high-end of the marketed range. the government stepping in with $50 billion in grants and loads for the airline industry, but carriers are still trying to raise more cash. netflix is warning investors not to get too excited. the largest online paid tv

network posting the strongest financial result in its history. it added a record 15.8 million subscribers. netflix benefited from the coronavirus pandemic. millions stuck at home signing up. netflix expects the surge to e at the expense of future growth. alix: for more on earnings, matthew harrigan, benchmark analyst points us now. because when everyone was upgrading netflix and everyone super into net during this pandemic, you actually have a sell rating. walk me through why here. matthew: you have to differentiate between a great company and a stock that was very extended. it is perceived as a covid-19 safe haven.

there's an element of truth in that, but it might be a little overhyped. targetls on this price with this type of risk envelope that is not a thrill or upside when the stock is in the low to mid for hundreds already, we did think that the subscriber number would come in great for the quarter. i thought there was a chance there would be 12 or 13. i hope the stock might coming off that. instead it was almost 15.8. some of the gross in the second half and probably even pulls forward. there's also a big gross component -- a big growth component. of course, those subs are of lower value than the u.s. or european subs. i don't think that got as much attention as it should have on

the call, but that was another contributor to the absolute blowout in the subscriber number. but there wasn't that much of a beat on the financials or on financial guidance, so we did bump our price target to 340, but we still have a sell rating. a remarkable company, but that is a more fully discounted stock price at this level. on theo you have a read subscribers they did book in the first quarter? are they going to go off and get another service instead, or do they stick here? impossible tos ascertain. the company was forthright in saying that some of the guidance is a guesstimate. they are hyper sophisticated on the modeling side and consumer behavioral side, but my gut , and certainly the

company intimation is that you will have some customers rolloff on the second half because people do get bored. i think beyond the competition in streaming services coming from hbo max and peacock in may, as well as disney plus and , netflix does have a lot of content. they mostly are in postproduction for almost all of the 2020 content, so we will see how the lockdown proceeds, but i think we have probably seen the lows for a while at least. alix: you mentioned content, so i am interested to see what you think of margins. you mentioned they make less where they have more room to grow in emerging markets, but at some point they will have no money to spend because they can't go into production because of the virus. what does this do for them on the short-term? matthew: they are doing select

things on the production side, a lot more in the animation and reality show side. trying to something -- trying to "the witcher"ike for 21 a1 is more difficult. if you do get a freeze from covid-19 that affects everybody, i think they are in a better position than some of their scary and it is something that everybody has to try to adjust for this environment. alix: totally right. i can't imagine love is blind 2 animated. matthew harrigan, benchmark senior analyst, thanks a lot. it was a call i had to read

three times yesterday in my inbox, $3000 gold. francisco blanch, bank of america head of global commodities research, will be joining us next. also taking a look at some of the airlines that have trickled out today. baker hughes taking a hit on its earnings, cutting. capex.ing delta looking at cutting about $50 billion -- actually up by 2% in the premarket, almost 3%. this is bloomberg. ♪

♪ alix: welcome to "bloomberg daybreak." i'm alix steel. s&p futures are up by about 34 points. in europe, still seeing a rally

as well. i also wanted to check in on italian equities. they are also higher. yields continue to pop here. the 30 year is now over 3%. the 10 year pumping another 10 basis points. we have the eu summit meeting tomorrow. the ecb discussing whether they can use junk debt as collateral to help offload some of the pressure from the individual countries, like in italy. still more questions than answers. in the u.s., you're are still right around record closing rose for the 10 year. higher.w slightly it is not that big of a jump, but nonetheless, a reverberation in the oil market if you try to get any kind of bid here. i want to highlight some news here. the eu commission may seek to raise about 320 billion euros to finance the recovery, a draft proposal on a new eu budget.

always, the question is who and how are you going to get to pay for that. spain floating a perpetual bond to pay for all of the recovery efforts in the euro zone, which kind of leads me directed to bank of america's call of gold at $3000. a route yesterday in a note, -- they wrote yesterday in a note that investors would be pushed into gold, looking at $3000 over the next 18 months. francisco blanch, b of a securities head of global commodities research, joins me now. i couldn't believe you actually made a call for $3000. walk me through your thesis about why you made it. core is really that central bank balance sheets are going to double, fiscal deficits are going to double, and we are going to find debtlves with a lot of being effectively socialized.

situation for the at least the last 10 years, were central bank balance sheets is a share of gdp have been 21%tively stable between and 28% of gdp, which has also been a stable period for both prices. now we see this ballooning of central bank balance sheets and deficits, and gold is the only part of the central bank balance that is nobody else's liability, essentially. everything else they hold is someone else's liability. it is your mortgage or a piece of somebody else's security, or a piece of pension fund liability. it asially, we still view a core part of the monetary base , and that is why we think it will go up in value here. alix: does that mean you see

monetization basically of all of the debt, just central banks buying this debt from government around the world? is it that simplistic were not? francisco: if you think of monetization as rates being at zero or close to zero for a very long time on a nominal basis, and inflation being at 2%, 3% for a very long time on a nominal basis, effectively you are saying that real rates are going to be negative for a very and you can call it that, but essentially what we are saying is that real interest be inare just going to negative territory for many .ears to come that's what is going to drive the gold price higher.

but negative real rates essentially look bad if you have your money in a bank deposit or in cash. you will lose money over the next five years. alix: based on that, how do you wrap in inflation versus deflation? nowe saw oil go negative, the conversation seems to be a deflationary one as breakevens get dragged down. how does gold perform in that kind of environment? francisco: gold tends to get dragged down, and if you look at what happened in march, and march it was a deflationary conversation. we had the russia-saudi arabia price war which led prices down pretty quickly. then we had covid-19 leading to lockdowns, which led to a collapse in demand of maybe 25% this quarter, which is really what has ultimately led to a massive increase in the and oil prices to go negative at the beginning of the

week. that has ultimately dragged down those breakevens you were referring to. the fed has also been exceptionally fast at responding to this market environment. the fed has never really been this fast before. within 18 days, they did more work on their balance sheet and trying to support asset values and consumer prices than they did in six. they have all the tools ready, and they just hold the trigger. that is why we have seen s&p.ies at 2800 on the that is ultimately the reason what is major economic carnage, we are seeing normal values on the screen and we are seeing support to both

investment-grade and even high-yield bonds, as well as equity values. because of what the fed is doing. but the fed cannot buy oil and cannot print gold, so as a result, we had negative oil prices, and we think gold is going to shoot up. that is the bottom line. alix: that would be something. the -- thatave would be something, to have the fed go in and buy oil contract. ,ow do you rewrite your models your risk models, your supply and demand models, when we now know that oil can go negative? how do you deal with that? francisco: there's two elements to this. it is a very complicated question. you think about the flat price itself. if you are long oil at $10, and

now oil is -$10, you basically lost $20. from a flat price standpoint, it is pretty straightforward. it gets more complicated in volatility terms because obviously, when prices move by a dollar at $10, that is a 10% move. when prices move between plus two and minus two, there are different ways in which you can make an estimate on the percentage move in the volatility of that contract. i think the volatility space is more complicated, but flat price , so we haveorward some examples. remember, rates have gone negative, so people that were writing options contracts on rates a few years ago before they went negative, they also have to figure this out. i thing a lot of traders in the

commodity space and in oil are starting to look at those rates and figure out how to start options andicular oil by hands in commodity -- oil buy-ins in commodity markets. alix: is there anything the u.s. , regulators, or capital markets can do to fix this in the short term? francisco: it is hard. we have seen president trump try strategic for the petroleum reserve. we have seen opec+ obviously getting together and taking down barrels on a global scale, trying to balance the front market. we have seen the regulatory commissions in texas and other state regulators trying to come cutsher and force monetary

across the states. but in reality, negative prices are just a signal. and the signal is if you haven't shut down your well, you have to do it now because otherwise, you're going to have to pay somebody to lift your oil. there is stronger signal then negative price in a commodity. and like rates, maybe prices will not last. we have seen the men rates for a long time because of financial repression that we have going on on aged antics scale -- on a gigantic scale, but we will not see negative prices and commodities for a long time because no producer of any doing so as a is core activity rather than as a byproduct would withstand negative prices for more than a few days. so don't expect negative pricing to last long in commodity markets. alix: last question, and

quickly, do you have a new range for oil? what is your downside target now? what is your upside target? francisco: we haven't really changed our numbers much. we still expect brent to trade around $25 a barrel this quarter . this has been our forecast for the last few weeks. then we expect wti to trade at an average of $20 a barrel this quarter. our targets were $19 and $15 a barrel for brent and wti. obviously, wti, we've gone well past that $15 number. but i still think that producers will react quickly to this negative pricing. you can't get a stronger signal than that. i think everyone has got the memo now. you have to keep the oil in the ground because we are not driving and we are not flying. i'm sure you are also hoping to drive. i am hoping to drive.

we are all working our jobs from a distance. but ultimately, it is up to covid-19, finding a cure or , and once thatne happens, we will see some sense of normalcy. i think the big risk to oil is that we don't do this fast enough. if we start to go back to work sometime mid to late may, i think oil prices will start to recover relatively swiftly. if the situation persists into june and july, i think the con tracts -- thick june contracts for wti -- the june contracts for wti and the july contract for brent are going to look different. look at,hat we will how different parts of the united states and other countries start to bring the

workforce back to drive oil over the course of the next month. alix: all right, francisco. really great to chat with you. francisco blanch of bank of america merrill lynch, thank you very much. there's fear that all of that unwanted oil will overwhelm capacity. we will get the latest read on that from the eia later today. tracking oil reserves all around the country, this is a really interesting chart that shows storage volume going back to 2017. that pink line shoots almost straight up. in terms of where capacity is, they say that chinese storage levels are up something like 20 million barrels in the last 30 days. opec inventory is up 21 million barrels. we never really get to 100%, so still some clarity needed on how much space there is.

now some breaking news from kimberly-clark. that company withdrawing its outlook, suspending its share buyback program. first-quarter earnings coming in at about $2.13, and net sales $5 billion. both of those up year on year, that stuck up by about 0.4%. coming up, we will stay with oil in a race to save small businesses. we will speak with the ceo of the largest and dependent back in texas. bank isen of frost coming up. if you this anything, you can watch us online as needed, tv . this is bloomberg. ♪

viviana: a warning from

heineken. sayingch brewers weaker currencies may add to the problems of lower beer consumption. the coronavirus pandemic is ravaging the industry. heineken says in march come up march, beer% -- in volume fell 14%. facebook has made its biggest deal in six years. puttingal network is $5.6 billion in a social network in india. raise reportedly wants to as much as $5 billion in debt so it can write out the coronavirus outbreak. according to cnbc, the department store chain would use inventory and real estate for collateral. people familiar with the matter telling that work at this time, ony's isn't focusing

bankruptcy. i'm viviana hurtado. that is your bloomberg business flash. alix: thanks so much. small businesses are all hoping to secure some new loans to keep their doors open as the pandemic keeps customers indoors. we want to talk to someone on the front line, phil green, frost bank ceo. frost bank is the largest independent bank in texas. phil, it is really good to talk to you. i want to start on oil. how much demand are you seeing from oil companies or oil company derivatives as you are trying to help texans here? phil: thanks for having me today. we are really not seeing lots of demand right now. there's not a lot of activity going on. you're seeing people being down riggs. crews are being laid off. not a lot of activity going on right now. not a lot in the industry today.

alix: do you think at some point, you are going to see it? would you expect borrowers to pay back any of the loans they've already taken out in terms of the oil patch? phil: yes, we do expect them to pay it back. i think one of the things hoping the industry today is the amount of hedges put in place as it relates two portfolios. we've got a significant amount of hedges in place on our current portfolio, particularly for 2021.but also we are going to have to see the global situation improve. there are three things weighing on us. we've got to see visibility on improvement. one, we've got to see a solution to the medical problem. we've got to start burning some of this excess fuel that we are storing today. another problem that we've got, to use that fuel, you've got to

do something about the covid-19 issue from a medical standpoint. also from a capital standpoint, the industry is really under stress because there's no equity available, no high-yield available today, and even bank debt is going to be constrained because we determinations are going to bring those down. the third thing i think we have to keep in mind is that if this goes too long, you are to see production declines, particularly in the permian basin, and you could see oil prices spike in the next one or two years. that brings the worry of possibly an old-fashioned recession due to high oil prices. alix: let's talk about regular bank loans to oil companies. i have been talking to some sources talking about big banks starting to cobble together some kind of oil team because they think they are going to be left with some oil assets they are not going to get paid back fully. are you not preparing for that at all? expectations are that

we are going to have good performance, although there will be issues. there are issues today. i'm not sure what large banks are doing with regards to putting together oil teams. expectation would be we don't have to own any properties. alix: how do you calculate risk and your future barring basis now that oil prices -- future borrowing basis now that oil prices can go negative? phil: i think the negative price you sob recently is more a factor of the current contract anomalies with the expiration of the contracts. we will see what happens in june as well. i think it gets down to what are you going to see with opening back the economy, what are the prospects for utilization of this excess. we will see how this goes. saw at think the -$37 we couple of days ago is really indicative of what we are going

to see over the last part of this year. that is going to be the important thing, how long it stays down in those low areas. alix: the last question two broadened and out to the small ,usiness administration loans what kind of demand are you seeing? it to get money out the door to your clients? phil: we are still seeing good demand. he saw a nice demand at the end when the money ran out. we are funding 90% of the dollars approved for us because we are going to be ahead of the 10 day window that the sba requires. we are ready to take on additional applications and help process ones that were after over from the previous time, so we are really waiting for the funding to free up. alix: great. really appreciate it. good perspective for you. phil green of frost bank, thanks a lot. still more on aiding small

mom-and-pop businesses, jp morgan took care of its commercial banking customers, but smaller customers were apparently entirely shut out. ofe than 300,000 customers jp morgan's unit that serves smaller firms applied for the loans. about 18,000 were actually funded, just a 6% success rate. meanwhile, about 5500 of jp morgan's bigger customers applied and got nearly all of those loans. the banks as it tries to get the loans to as many businesses as possible. coming up on the program, china's reawakening economy. we will discuss what onshore demand for the dollars is actually signaling. this is bloomberg. ♪

alix: time now for trader's take. joining me is damian sassower of bloomberg intelligence.

you are watching china's economy. damian: falling demand for oil in china and collapse in in and traveld -- and outbound -- in china. after plunging on the un-person into dropping u.s. rates during march, they started to back up as funding conditions normalized. by normal, i mean paying a premium to hedge the dollar condition, which was effectively removed when forward points turned deeply negative. while this increases the risk of a funding stress in china, i have to note that capital controls are very tight there. there's diminished fdi. so the risk of a 2016 type selloff remains low in my opinion. alix: what are the things you wind up looking for to make sure that doesn't happen? damian: exactly.

current normally looks like is positively sloping. people should pay privilege for the right to hedge their delay exposure. i expect a lot more demand for dollars as the economy comes back online, but that is going to be competing with the u.s. as the u.s. comes online, and eu in the months ahead. whether there are enough dollars on hand remains to be seen, but currently, funding pressures in china remain relatively low. alix: don't spook it. damian sassower, thank select. really appreciate it. coming up on the program, david kostin, goldman sachs chief u.s. equity strategist, will be joining us. this is bloomberg. ♪

♪ alix: welcome to "bloomberg

on this: americas" wednesday, april 22. i'm alix steel. let's take it from the top. intercontinentalexchange prepares contracts for negative trading. >> off the coast of california, dozens of ships from long beach to san francisco bay carrying 20% of global consumption. they are just sitting there for days. alix: online storage keeps filling up, with the latest read on cushing on deck. offof demand now sits california's coast with nowhere to go. >> we are taking aggressive but appropriate steps to help the industry and help this economy. alix: the white house looks at multiple ways to support domestic oil companies, from loans to royalty exemptions to pressure on china to help by u.s. oil. if the other consuming

countries do not follow the footsteps of australia, u.s., and others to put oil in reserves, we may see further downward pressure on the prices. alix: distressed debt in the u.s. energy sector jumping up more than $11 billion in more than a week -- in just a week. >> it is another $300 billion of ofns, just over $600 billion loans into small businesses, which are the backbone of our economy. alix: lawmakers strike a deal for the new relief fund, with funds for the tapped out small business relief program. kevin: now talk turns to the next round of economic stimulus. look for republicans and democrats to be pushing for some type of assistance program in the next round of funding for the energy sector. alix: treasury secretary steve mnuchin says it is premature to comment on the cost of the next

stimulus, and that infrastructure could be a big investment. the focus now turns to europe with a virtual summit on thursday. alix: take a look at where we are in the market. still relatively risk on, despite a bunch of earnings this morning. euro-dollar pretty much going nowhere. broadly speaking, a weaker dollar than the g10 space. you are seeing selling across the bond market. up byope, btp's yields about 60 basis points. you had really strong demand for spanish bonds, yield ticking higher there. they can sell it. it is just what price. delta cut 50% in its daily cash burn by june. complete clark, at&t withdrawing their -- kimberly-clark, at&t withdrawing their forecast. lots of new slow coming out right now. for more on earnings in the

markets, joining me now is david kostin, goldman sachs chief u.s. equity strategist. always good to catch up with you. how do you look at earnings when these numbers come out? how do you disseminate information? david: it is a good question. the first quarter results are really not very meaningful. all of the conversations with portfolio managers have basically looked beyond the first quarter results, really focusing on the tap for the rest of this year and 2020 one in particular. specifically, the first quarter result, the first part of the first quarter was generally ok for many companies. the second half obviously deteriorating rapidly. in the second quarter we are in right now is going to be the worst quarter of economic activity for the year, and probably also for the earnings. earnings in the second quarter will get lost.

companies will lose money. really the question about solvency and liquidity are the two issues. rather than focus on the acrid looking results for the first quarter -- the backward looking results for the first quarter, the sec guidance was very clear that companies were supposed to focus not on the historical first quarter results, which of course are required to address, but more importantly, they needed to address the current financial and operational as if nothing company, and i think managers areund trying to understand where things are going. -- go on,ers are question? alix: go ahead, finish up. david: fund managers are looking into next year, and the big debate is exactly features exactlyof a recovery --

the trajectory of a recovery or a rebalance into this year and 2021. so our baseline forecast is that earnings will be down by around year, and that is also going to match the cash spending, also coming down by about 1/3. i think the most interesting take away from the first quarter earnings is how money companies are withdrawing their buyback plans or suspending the guidance, and also the adjustments in dividends. companies are suspending or cutting the dividend. more than 20 companies have already done so since the start of the year. i think that is reflective of the companies' desire to maintain liquidity and solvency. as a portfolio manager, the absolute most dramatic gap in terms of outperformance and underperformance relates to balance sheet strength. the companies with the strongest outperformeds have

dramatically, down around 6% year to date, but the weakest sectorssheets are in down by almost 30%. alix: i guess the question becomes what do you care about solvencyure profit or or central banks? jp morgan had a note out basically saying the suppression of the risk-free rate in credit spreads by the fed likely is going to have a bigger impact on equity valuations, despite the temporary earnings loss. is that something you subscribe to? look at ituld differently. we look at a distribution of outcomes. in any investment process. the extraordinary measures of the federal reserve and by off the left cut tail, if you want to use that nomenclature. they have lowered the likelihood

goingecond depression or into the abyss. the federal reserve has done a number of very important steps in terms of backing the backstop in the commercial paper program, supporting the ig bond market, investment grade market into the municipal market. there have been a lot of things in congress with the revenue replacement on extended unemployment benefits. all of those are critically important in reducing the left tail outcome. that is important, but it doesn't address necessarily the right tail. i am not suggesting that is a requirement or obligation of the policymakers. i am just saying as an investor, looking at the potential outcomes, it lowers the downside, but doesn't necessarily speak to the upside. is really apath function of corporate restarting also business, and

individual willingness and behavioral changes. the upside is relatively more limited. you look at perhaps 10% upside in the s&p 500 towards 3000 up the end of the year. but technically, it probably goes lower on the near-term on the back of uncertainty and what happens in the path going forward. that is pretty and clear. it would suggest that valuations are still likely to go lower, although by the end of the year, probably the market will be higher. alix: so i am curious to see how you look at companies' capital allocation because the companies that do survive are going to have to rejigger their businesses in terms of how they deal with the virus going forward. buybacks feel like they are nonexisting. dividends getting cut. where do companies allocate, and what do investors want them to do? david: it's an excellent question.

the first and most important thing is for companies to remain in business. the reason for companies to cut ,iscretionary investment ideas they will maintain their maintenance capex and much of their research and develop meant . we into space that to be taking place. but the discretionary decisions on buybacks and some of the dividends are more suspect. it really depends on the business model of some of the companies, the businesses in which they engage. some are much more stable, and those have reiterated or increased their dividend. look at johnson & johnson, procter & gamble, last week announcing raising dividends at both of those companies. so investors are appropriately embracing that, and we would be advocates of companies that are

to -- and be willing to continue doing so, which is different for a company. companies are suspending buybacks. part of it is retaining that flux and liquidity. that is why the record amount of corporate bond issuance, companies are trying to shore up their liquidity. want,ea of what investors they want them to remain in business, number one. and then where can they deploy capital? we are expecting a big drop in cash m&a, a drop in buybacks, a drop in dividends, and capex will come down as well, particularly on growth initiatives that can be deferred into the future. alix: so helpful to catch up with you. really great way to help us decipher earnings in the outlook as we get them. david kostin of goldman sachs

joining us there. numbing up, the u.s. energy department inventory report coming out later this morning woke of us further clues on the pressure on storage. what should the actual policy response be in the u.s.? we will talk to jamie webster of bcg center for energy impacts. this is bloomberg. ♪

♪ >> i think it may be a good idea that those countries who made announcements that they are well to cut production may reduce production as soon as forible, without waiting may 1, and they may even consider further cuts to what

they have announced. that was fatih birol speaking to bloomberg earlier this morning. joining me for more is jamie webster, bcg center for energy impacts senior director. we will start with opec-plus. let's pretend we see a deeper, faster cut from opec+. does any of that actually help? jamie: as long as we get it really fast, we needed immediately. obviously the cut, as indicated by the market, is not sufficient. our view is you probably need to double that, given that demand is still down around 20 million barrels a day. that is what the number was for april. there's no indication that it is going to improve once we get to may. you don't see any countries quickie looking to come back to a normal economic stance. understand why

politically, saudi arabia and russia might not want to cut right away, but u.s. companies, there has to be some serious pain happening at the wellhead. why are we not seeing the flips switch off factor here in the u.s.? that oncere's a view you get beyond operating costs, these companies will immediately shut down. there's concern about damaging the fields, the fact that their op-ed cost is lower than that. they are a little more reticent to do this, which is why you've got demand that is not going to adjust no matter how low the price gets, a supply response that is insufficient, and now the last gasp of being able to balance this market is shutting in production. there's a reason -- there's a reason it is the last place, but it really does look like this is where the market is going to

ration. you are going to see some significant cuts, voluntarily or involuntarily, over the next month. alix: with your years of experience, what do you think the government would do and can do to alleviate pressure on u.s. oil companies? there are many different things out there, tariffs on saudi imports, pressure on china to buy u.s. oil, companies accessing the small business loans. think? you jamie: obviously you are going -- you are going to see cuts in employment in the oil and gas companies. in these countries, you are going to need rationalization. the shale industry has been getting by for years with pretty

easy money and a pretty supportive environment. longer-term, we are going to need to move to fewer companies that are able to operate at a much lower cost rate, being able to produce at still quite substantial levels, but also a slower growth rate then we have seen over the last several years. anx: goldman sachs had interesting note touching on this, that we haven't seen this kind of consolidation that we've seen in, say, deepwater or bigger oil companies over the last few years because of the technicalities of shale. wells can be closer together, so you need land that is united together to be able to work. i just wonder if this going to delay consolidation, and that is just going to prolong this whole thing. jamie: the consolidation of the industry was really expected to

begin in 2014 and 2015, and what we saw was that that was not the case at all. it's because when you're doing some sort of consolidation, we are effectively making a bet on the future oil price. when that price is really uncertain, you don't see the consolidation that needs to happen. youe we have looked at when get close to the sorts of periods, where you would expect lots of deals to happen, it doesn't happen. what happens is a couple of transformative deals, and we haven't seen those yet. i would expect those in the next 12 months or so, but these smaller sort of deals you would expect that can consolidate the market do not happen, and i think it is even worse this time because these are moving from distressed assets to destroy assets. alix: right, and who is going to want to take on that kind of debt? we have a question from a viewer asking about oil prices. they have been trending lower

for years as supply continues to come online. at any point, do we see a comeback in oil prices, do we just not really get there? jamie: for now, i think there always that possibility we discussed in the last downturn come about the potential lack of investment would actually create missing barrels, and that would bring the price quite high. -- a year and a half or so ago, we had prices in the 80's. but you have really low demand that may not come back to the ,ullest levels previous to this and you still got the ability to bring on production at quite low volumes, and we are going to have storage at levels that would take at least three years to rolloff. if you see higher prices, it is very far down the track, and it is possible that we are not actually going to move back to

those sort of prices ever. it is going to be much more difficult longer-term to do that . alix: so you think it is going to take three years to work off the storage we have built up during this crisis? jamie: it took two and a half years to work off the overhang of 2014 after opec finally decided to step back in. stocks a bigger chunk of that are out there, so this is going to take three years plus to rolloff, and that assumes that demand actually comes back to the levels it was in, say, december of last year. the likelihood is that we are going to move down to levels we had in 2012, and there's potential that our long-term demand growth which, for the last 20 years, has averaged around 22 million barrels a day, might be at a lower level

because some may choose to work from home, others will choose to take airlines. there's a potential for demand shift longer-term. that is a potential that is out there. leave an oilat 40ce in the world of 30 to rather than $40 to $60? jamie: you might still pop up here and there, but i think $40 and lower is likely, at least where you are looking right now, where you're going to need to be able to operate. jamie, really good to talk to you. some really fascinating insights. thank you very much. much more to come. this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." baker hughes says in the first quarter, equipment orders were down 36%. the oilfield services provider: the outlook uncertain. last week, the company pre-announcing a write down for two of its biggest units. at&t joins the list of companies that have withdrawn their forecast for the full year. the telecom giant also saying in the first quarter, it had an impact of about $600 million from the coronavirus. -- at&t revenue coming up short. profit was in lines with expectations. netflix is warning investors not to get too excited, posting the strongest financial results and its history. it added a record 15.8 million subscribers in the first q. netflix benefited from the coronavirus pandemic.

millions stuck at home signed up. netflix expects the surge to come at the expense of future growth. that is your bloomberg business flash. alix: thanks so much. getting a booth from this pandemic, the u.s. government has handed out $7 billion in contracts to fight the virus, and there are some well-known companies on that list, but also some surprising ones. oderna, tom is m develop and test a vaccine. on top of the list is dutch company royal phillips, getting about $661 million. most of that is for ventilators. coming up, different assets don't agree on growth in the market. we will speak to stuart kaiser of ubs. in the market, you're looking at a moderately risk on rally in u.s. equity futures. maybe part of that is finally

having stabilization within the oil market. the brent contract is now up about 2%, and the futures contracts like july, august, september flipping into positive territory. in the bond market, a selloff in the peripherals in europe. btp's seeing a jump of about eight basis points. questions as to how we will deal with the peripheral issue when it comes to the virus, how you pay for it, in the eu summit coming up tomorrow. this is bloomberg. ♪ awesome internet.

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can your internet do that? xfinity xfi can because it's... ...simple, easy, awesome. [ barking ] alix: welcome to bloomberg day break. in the markets,le some relief as crude prices stabilize. markets able to take on a little bit of risk.

u.s. futures up on the day, as well as european equities. i wanted to highlight he has happening in italy. if you switch up the board you can see the yields are posking higher by eight basis points. 15 or 16 higher when it comes to spanish or portuguese debt. spain was able to sell a lot of debt, there was a lot of demand, but yet they still have to wind up paying to do that. that's putting a lot of pressure on e.u. leaders as they meet tomorrow in a virtual summit to decide on how progress. the e.c.b. also meeting today to discuss using the debt as collateral. moodies will be talking about italy's sovereign debt rating later in the week. for more on the markets, joining me now is stewart keizer, u.b.s. investment -- stewart kaiser, u.b.s. investment. i guess my question is, and i've been talking about this all week, you take a look at the s&p v-shape recovery, the data nowhere even near a bottom. is risk appropriately priced? >> i think that's obviously the

million dollar question. our view is that volatility is probably peaked but we're a little less certain on whether equity markets have bottomed. i think ultimately what's going to have to happen is earnings uncertainty has to decline substantially. those are either at or above the levels we saw back in 2009. so i think investors are still grappling with what sort of profitability should i expect and given the degree of uncertainty around that profitability, how confident can i be buying equities at these levels? alix: and you really echo what bank of america had a note out just on this saying volatility markets are underpricing other risk of a secondary market shock and we're looking at something that resembles 2018 and that bear -- 2008 and that bear market rally. is that what you see? >> it's hard to say exactly where spot pricing is going to

go. in terms of volume tit, i don't know that equity volatility is really -- i don't know if i'd say the underpricing things at this point. if you look where implied volatility is out six or eight months, it's still at about 30% for the s&p 500, for instance. those are exceptionally high levels of volatility to maintain over a six-month period. so i think our view here is that policymakers have done a really good job of anchoreograph down the volatility and safe haven assets and that started to kind of flow its way through to risk assets. and that's kind of bringing the vix down and bringing the vix curve down a little bit. but the market is still pricing i would say a fair amount of uncertainty for what's going to happen over the next call it six-plus months. whether it's fair, obviously, that will ultimately be determined by where the market goes. i think the biggest risk probably to the markets here is you mentioned this idea of a v-shape recovery. i think if this recovery is not

a v and mobility restrictions are extended and the economy is operating well below capacity for extended period of time, i think that's really the risk that the market probably hasn't fully priced in yet. alix: so obviously one risk that we didn't price in five days ago was negative oil prices. can you talk to me about oil volatility, just in itself, and then also how it spreads or not to the rest of the market. >> oil volatility is basically off the charts. the oil vix i think was at 400 yesterday. put things in perspective. alix: wow. >> how that's flown through to other assets from our perspective is i think it's kept small-cap volatility at a premium. i think you're seeing a bit of a premium there. obviously oil, the energy sector has very, very high implied volatility. brazil, an emerging market, that's highly levered to that, also has high implied

volatility. you're definitely seeing assets that are more exposed to the price of oil carrying a volatility premium. that's probably been the case for the past month. the last week it's gotten a little bit whacky. but generally speaking the market -- i don't know if the market's appropriately priced that because it's hard to price something that's realizing 200% volatility. but things that are closer to the epicenter of the oil issue are carrying large risk premiums whereas things that are closer to the epicenter of policymaker buying have seen their volatility really, really get squeezed. so i think what you're seeing is an accordion effect where you have some things with high volatility and other places where the volatility you could argue is being artificially dampened by policymakers. alix: nonetheless, you still have to structure how to manage risk and now that we can go negative, whether or not we stay there, like you have to reframe your risk models for that. how do you do that? >> yeah. i think i've seen headlines

along those lines that risk managers have had to change their assumptions of what a stress scenario might look like. from an equity perspective, i think it's a little bit less of an issue because most companies hedge and focus on kind of longer data futures as opposed to what's going on in the front months. so a lot of oil companies are going to hedge 12 to 24 months out on the futures curve. and that part of the curve is obviously behaved a little more normally. the front end of the curve is showing a clear dislocation between supply, demand and storage and you've had some real sort of technical issues going on there. i think we've talked in the past that the energy sector and oil in general has been a really, really tough investment for years. because of structural supply demand issues. and i think this really just kind of brings that to light. but luckily i think at least on the equity side, the energy sector's only about 3% of the s&p 500 right now. i think active managers have generally not been as aggressively involved in that space. so the equity guys have -- i

don't want to say remained insulated but at least an arm's length, a social distancing kind of length distance from the oil stuff. but if you're a cross-asset investor or investing in energy directly, i think you have to ask yourself for the time being, is this an investable space? alix: can we still see equities rally when you have oil rollover in that, it winds up affecting credit market, breaks even inflation expectations, can we do that? >> i think you can. i think equities can perform ok with what's going on in the oil space. typically low oil prices that read through to equities is you have a supply-demand imbalance. particularly demand shacks are what you're worried about. that would suggest the growth outlook that effects equities as well is kind of under pressure. that growth element is what the markets are really struggling with pricing in general right now. in the oil space, you have sort of a demand shock that's now

being reinforced or multiplied by technical supply, demand and storage issues. the growth piece, which i think is common to both assets, is going to be a challenge for equity markets. but i think by and large that's the line of demarcation right now. i think equity markets and cross-asset markets in general are struggling with how do we price growth and credit risks, how long might they persist and how deep might they be? i think that is a common challenge for both party -- for both marts -- markets. can equities rally? i think they can. but the rally we've gotten thus far has been a pretty safe rally. the markets rallied a lot but it's been buying of high-quality, safe growth kind of stocks. i think what we've heard from a lot of investors is, we need to see that rally evolve into something that suggests investors are moving up the risk spectrum for us to have more confidence in that. we haven't seen that yet. things you mentioned, credit market dislocations, oil market

dislocations, are just going to make investors much, much, much more cautious about taking that sort of next step up the risk spectrum. alix: stuart, great to catch up with you. thank you so very much. stuart kaiser of u.b.s. investment bank. we want to give you an update now on what's making headlines outside the business world. viviana: we begin with breaking news this morning from the white house. president donald trump telling the navy, destroy any iranian gunboats harassing u.s. ships at sea. he issued the warning in a tweet. recently there have been a number of incidents in the persian gulf. now to the u.s. house. it could vote on the pandemic measure as early as tomorrow. the u.s. senate passing a $484 billion relief package. it includes money for the test out program to aid small businesses. there's also money for coronavirus testing and hospitals. they're swamped with covid-19 patients. we end on immigration and president donald trump announcing he would halt for two months the issuance of green

cards for permanent legal residency. president stopping short on a ban of temporary foreign workers. he is hinting at the possibility of additional restrictions. and that could complicate planning for companies liking to rebound from the coronavirus -- looking to rebound from the coronavirus. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ alix: thanks so much. we've seen those protests in some parts of the u.s. calling for reopening of the economy. the senate looked at the grim economic tradeoff. on the one hand you have younger workers starting to get paid again. but if everyone goes back back to work sooner, older americans are more likely to die from spreading the infection. the u.s. has more coronavirus deaths than any other country and researchers estimate there could have been 172,000 more if the u.s. had ended a shutdown in early april. meanwhile, the st. louis fed

says the closures may put u.s. unemployment above 30% in the second quarter. that's about seven times the average rate. over the past five years. coming up, sustainable investing in today's environment. we're going to discuss how the pandemic may have changed strategies with a senior and product sustainability special ifflet. and remember, bloomberg users, check out any charts we used throughout the show. go to gtvgo on your terminal. this is bloomberg. ♪

alix: this is bloomberg day break. viviana: i have your business business flash. we begin with delta airplanes -- airlines.

it's vowing to cut its daily cash burn in half by the end of june. they hope to be going through $50 million a day. this when the second quarter ends because of the collapse of travel demand. delta cutting flying capacity 85% plus it's parked 650 jets. more than 1/3 of delta's work force is taking short-term leave without pay. to united airlines. it's stepping up efforts to survive the collapse in travel demand. united has raised $1 billion by selling new shares. the price was at the high end of the marketed range. the government stepping in with $50 billion in grants and loans for the airline industry. but carriers are still trying to raise more cash. and we end with a warning from heineken. the dutch brewer saying the weak or emerging market currencies may add to the problems of lower beer consumption. the coronavirus pandemic ravaging the industry, heineken says in march beer volume fell 14% in the first quarter. it dropped 2.1%. and heineken expects the second

quarter to be worse. that's yourberg business flash. alix: thank you. time for bottom line. we'll look at the sectors and companies worth watching this morning. it's earth day today. so we're going to focus on e.s.g. investing. joining me now is christian mccormick, senior product and sustainability specialist. christian, it's great to be able to chat with you because the trends a few months ago was all about toward e.s.g. has that changed at all over the last eight weeks as the virus has really taken hold and wrecked a lot of investors' portfolios? >> good morning. interestingly, if we take a look prior to the pandemic, as you mentioned, sustainable investing was already growing and i think some of the more important factors beyond just performance was that we were seeing positive net inflows into sustainability related funds and these are truly sustainable funds, not just a fund that has a simple exclusion of tobacco stocks or

one of the other industries. but into strategies that truly incorporate a large number of e.s.g. ratings into how they implement their investment process. so in 2019 it had about $20 billion in positive inflows and that was versus about $42 billion of outflows that we saw in traditional equity funds. this continued into the first quarter. we've seen an annualized rate of $44 billion of net inflows to sustainable related strategies. versus $82 billion of nut netanyahu outflows. tradition alec which the funds. performance has been very strong. as the performance numbers have started to come in for the first quarter, both with our own experience and our flagship strategies, some of the passive proxies that do incorporate e.s.g. and of course a lot of our active manager peers in the sustainable space, from a medium perspective or average manager perspective, we're seeing fairly strong outperformance across the board. so it's been a good environment for sustainable investing overall. alix: i was going to say, do you expect these kind of retail

slows or interest to continue which would lead me to performance. what strategies have done well, if it's not as simple as excluding say tobacco stocks and coal stocks? >> really two fairly interesting themes. a big positive coming out of the pandemic, if there is a positive, is that companies on average are doing right by their employees. and they seem to really be attempting to balance, kind of employee welfare, employee health, with just running the business. something that we're trying to be very cautious of as a sustainable manager and i think other asset managers are doing the same is not trying to micromanage an executive board or management team when they're looking at very realistic probability that maybe they don't exist in six months. right? they have significant liquidity issues and significant ongoing concern issues. business operations issues. and so we certainly don't want to be micromanaging them on, ok, what are your environmental policies? what is your exact corporate governance structure?

we've stepped back from that. one of the two interesting things this -- themes that are emerging or two is that companies that performed well and were rated better on more of an aggregate e.s.g. basis as opposed to a specific e.s.g. measure such as just doing well by the environment or just having a good corporate governance structure, these are the companies that have done well during this pandemic period. during this down draft in the equity markets. so that's given some credence to this notion that, look, if the companies are well positioned if the first place, when these tail risk events happen, they're going to be much better positioned and we've seen that come through in performance. i think the second reason, and this is a more interesting one, is that the pandemic is a tail risk type event. and perhaps there are lessons we can apply postmortem, once things settle down, from a molding and assessing tail risk perspective. given this is earth day, two very interesting things we're looking at is the significant drop we've seen in oil demand. it's been over the very short term and it's really not related to sustainable investing per se,

but one aspect of climate change is the negative demand effect shifting to a carbon-neutral type comble is going to have on stranded -- stranded assets. so looking at the effect of this drop in demand over a short time period, are there modeling lessons we can apply to stranded assets over a very long time period in assessing the negative effect that will have on their valuation? then the second one is the disruption of supply chains. everyone's supply chain has been disrupted by the pandemic and it's related to the pandemic. but are there lessons we can learn for specific companies, or specific industries that maybe relate to, ok, if the frequency and magnitude of extreme weather events is increasing, and that's going to disrupt a supply chain, what lessons can we learn of how maybe better a company can manage going forward its supply chain, that's related to that, given how it did during this pandemic period. alix: that's an interesting point. this also brings up sort of shareholders versus stakeholders.

meaning that if you're a company saying, i'm not going to lay off anybody, i'm providing all this health care and sick care to workers because of the virus, here are all the steps i'm taking, but that may come at the expense of buybacks or dividends or stronger earnings. do people want that? or do they just say they want that but in actuality they still want the earnings and the buybacks and the dividends? >> it's an excellent question. and i think one aspect of it that doesn't get discussed enough is this notion of time frame. so, without question the way that we manage our strategies, and i think that most sustainable investment strategy asset managers would have the same priche, is this is more of a medium or a long-term value proposition. so companies just in general, if we take a step back, they've shifted to having i think a greater amount of intangible type of assets, components, intellectual capital components, there's greater reputational risk because of social media. and so when you look at that, the cybersecurity, of course,

and data protection, e.s.g. factors are better equipped to evaluate those things. but what e.s.g. is not, it's not some sort of short term fraud detector, it's not really a good tool for assessing if i invest today, e.s.g. will tell me what the good stock is going to be over the next six months. so if you keep that medium to long-term value proposition, then what you see is a better sustainability practices, and overall incorporation of e.s.g. factors by company management lead to greater brand loyalty, lower employee turnover, much better alignment of interest throughout, both with customers and employees and even the supply chain. productivity's improved. and because of that, we think that it's not -- we think it's a false choice between shareholder versus stakeholder. stakeholder is an aggregate or winning over the long term. that means shareholders are probably going to win over the medium term or long term. if you take away something like share buybacks, that could be more of a short-term tool that, a, you're increasing demand in

your stock and it allows you to manipulate the e.p.s. number a little bit more. and so over the short term, maybe the stock rises because of an increase in buybacks. but we think, again, it's a medium and long-term proposition. if you keep the in mind, the interests are perfectly aligned between the stakeholders and the shareholders. alix: really interesting. it was such a pleasure to talk with you on it. a topic i've been thinking about quite a lot. christian mccormick. thank you very much. i do want to announce that netflix now is proposing a $1 billion offering of note so get in the debt market, raising money after earnings came out. they had killer subscriber goals in first quarter but the stock is up 2% as the expectations now for the second quarter in terms of subscriber growth aren't really as awesome as the stock was pricing. in looking to raise about $1 billion of senior notes. coming up on the program, plunging oil is part of a deflationary receding tide that we're also now seeing in bond yields. that's going to be our chat in

today's technically speaking. this is bloomberg. ♪

alix: time for technically speaking. joining semia bloomberg intelligence commodity strategist. good to talk with you. what are you watching today? >> hello. i think we should focus on the macroeconomic picture of demand destruction. so what i'm showing on the first chart is w.t.i. crude oil weekly chart. it filters out some of the negativity. brent crude catching up to w.t.i. around 20. and bond yields. if you hear about all this supply and demand issues in crude oil, it's really part of -- it's a tree in the forest of deflationary trends.

they're all heading lower. it's a good indication we're probably going to be lower for longer at a lower plateau for a while. alix: i wonder who the beneficiary is. this must have been a fun ber view for you to hear -- fun interview for you to hear. bank of america sees a $3,000 goal within 18 months, monetize all the federal deficits and what the central bank is doing. what does that mean then for the equity market? >> exactly. he's a good friend. good to hear him coming onboard on gold. he's been bullish for a while. same thing. it's not so good for equities. my next chart, this is the one-year change in the main investor e.t.f. we have g.l.d. up 32%, that makes sense. s.p.y. down 7%. u.s.o., which is the number one traded crude oil down. it's down just as much as the spot price, despite the fact it has to roll. this is just what's happening. stock markets more likely to fall with crude oil and

diverging with gold. alix: really interesting. great to catch up with you. mike mcglone of bloomberg intelligence. that does it for me here. coming up on the open with john, welcome pimco global economic advisor will be joining him. in the market you're still looking at a relatively risk-on day within the equity market. futures are still up by about 48 points. crude finding some kind of stability here, yet yield getting a boost as all bonds come under pressure. particularly those in countries like spain and portugal over in europe. this is bloomberg. ♪ . happy wednesday, guys. happy wednesday, guys. ♪

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our audience worldwide, good morning, good morning. the countdown to the open starting right now. 30 minutes away from the opening bell in new york city. your price action set up as follows. after the biggest daily loss in three weeks on the s&p 500, little bit of a bounce. the s&p positive 1.8%. a mild risk on morning with the bond market lower and treasury yields higher. yields positive three basis points to 0.6%, and in the commodity market where the attention has been for most of 7% toear, brent crude up $20.70 and wti back to 13 $.43. let's get to the top story. we are ready to pass another $484 billion of aid. a ton of fiscal stimulus.