a three-month ultimatum to fix qe. judges say parts of the program are not backed by treaties. a gradualtinues easing while the number furloughed tops 40 million. shares rising. we talk earnings and wall street with peter orsak. this is bloomberg "surveillance," a lot going on in your markets. there was marble in europe and bonds when we had the decision from the constitutional courts in germany about qe. if you look at oil, it is rising for the third day in three. if you look at some of the other things out there, there does seem to be buoyancy on the markets that we are seeing, many

economies trying to rio, maybe not -- reopen, maybe not straightaway, but starting with france in phase two and starting phase two on may 11. there is hope we have bottomed out when it comes to the economic crisis. i am seeing euro movement. here is viviana hurtado. viviana: the white house is backing away from a projection that shows the coronavirus out rate getting much worse in the u.s. and says by june there could be 200,000 new cases and 2500 deaths per day. the white house says that is a cdc document that has not and presented to the president. neither allies nor opponents are happy with boris johnson's coronavirus plans. lawmakers from his party want him to ease the nationwide lockdowns. propernions demand

protection for employees. three months to fix it $3 trillion wanted tate of easing program -- quantitative easing program, this from the german constitutional court to the ecb. claim the bank overstepped its bounds. oil on its longest winning streak and nine months. for the fifth day in a rout, new york crude up -- in a row, new , oklahoma up cushing is the delivery point for west texas immediate oil -- intermediate oil. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: thank you so much. this is what european stocks are doing.

u.s. equity futures falling, european stocks higher. oil gaining for a fifth day, its highest winning streak in nine months. we are expecting earnings to cross the bloomberg terminal. dupont coming out. it gives us more of an idea about what the sector as a whole will do, and this is dupont's adjusted earnings-per-share, in line with what what is expected -- with what was expected. david rosenberg joins us now on your market. what is the one question you wish we could answer now? worries about inflation taking hold and hurting the market or what kind of crisis we will see and what kind of recovery, w, v, or l? david: it is all of the above. there are two overriding question, what will the post

recession recovery look like? you are quite right, what letter will we use? what does the recovery look like and i'm questions about how do we end up paying for this fiscal largesse? that is something down the road, but the near-term question on what happens post second order to the economy and how this fiscal ramping up and up looking down the line. -- ends up looking down the line. francine: what do we do with that debt? it will move fixed income markets. do we think about that forgiveness for certain regions and debt splitting for others? david: you are probably 100% correct that debt monetization is definitely going to be in our future. the leading indicator was the bank of england which three weeks ago came out and said, we

are going to be engaged in debt monetization and apply the debt directly from the treasury. i think they will see more central banks doing that. there is no other way out then central banks basically monetizing these debts in grand form. we will probably find every country will do this in unison, there will be a call it 100 year pandemic bond on simple bank balance sheets, and money will be printed to allow the governments to fund all the spending that is necessary to fight this pandemic i think -- pandemic. i think that will happen. we have a template for it. this is aoad, controversial view especially for me, i think we are getting toward the end game on that

theme because once demand stabilizes, there is no question on the supply side and inflation will be in our future. francine: how soon can that happen? david: it will take a few years. you can accuse me of thinking about dessert as we are still serving the appetizers. demand is up more quickly to this detonation in spending -- -- detonation and spending. -- in spending. what will happen is once demand stabilizes, and it will stabilize, albeit at a local -- lower-level, but no one is factoring in the pernicious impacts on the global economy, what will happen in the future

in terms of localizing globalized supply chains that will be cost -- chains. on -- we be costlier will be talking about a certain form of stagflation, not the extreme form from the 1970's, but that is a world we will return to, lower growth rates and levels of activity then we would've had. the hit to supply, as you are seeing on the food side, will be cost push inflationary. you have to weigh in money supply growth, that that will transcend this crisis and i don't think that even for people like me you have been deflation is and bullish on treasuries will assume the velocity of money will contract the way it has over the last 11 years.

you are building in the risk that inflation will surprise to the upside over the next 2, 3, 5 years. this is what happened in the great depression. inflation started to rise and at one point hit 5% and that caused the fed to tighten prematurely in 1937, 1938. you cannot look at the demand side and say we are getting global deflation. for anyone who likes to look at the forest past the trees, cost plus supply-side inflation will be the future coming out of this. francine: this is very valuable. does it mean you expect globalization to stay as it is? some people see it as the economy will change forever because we are so globalized and the supply chain is so much more domestic which could lead to

deflationary pressures for longer. david: it will be the reverse. the globalization was a key tenant behind the global deflationary development over the past number of decades because of the implications on global business costs. localizing supply chains means higher costs. financing inventories, businesses will realize that they do not have enough inventory on hand. we will have to finance those. everything coming out of this means lower productivity and that is cost less inflationary. -- plus inflationary. it implies business costs will be higher than otherwise they would have been. that is when people talk about the stock market and say, i will becausef 2020 and 2021 this has no impact on normalized

earnings. that is a joke because earnings the next five to 10 years will at the margin be impaired from what will be happening because the global corporate cost curve will be higher than before, and not all of that will be passed through to the consumer. you have to tack on how does this get paid for? it will not all be on the central bank balance sheet. taxes will go up, taxes on capital. main street does not paying for this. capital gains taxes will be going up and i would say dividend taxes will go up. you can kiss the corporate tax whatfrom trump goodbye does that do to the future earning stream? it will be lower. that is how you lead to multi-slower growth and

inflation that will be more prominent on the supply-side and on the demand side. that is what we had in the 1970's. we had three recessions but deflation was high we will have a much -- hi. -- high. we will have -- francine: thank you, david rosenberg. coming up shortly, an exclusive conversation with peter orszag, chief executive officer of advisory. this is bloomberg. ♪

♪ good morning, everyone. york, i am and new francine lacqua. let's go to an exclusive conversation. sonali basek joins us now. sonali: thank you for joining us. lazard is one of the biggest merger and structure advisors and you have a number of mandates. using your former hat given that used to oversee the budget, $3

trillion is a lot of money for the u.s. to borrow, and i wonder when you look at how the money is being used, is it being used efficiently? peter: it is a lot of money but it is something we have to do. my concern is the backlash of how it is being used -- whenever you do something this big, there will be concerned over who gets access to the funding and who doesn't. my concern is the backlash will be building. you see the front and building already -- end building already and it will be reaching its peak when we get another round of governor assistant -- government assistance, so it will get challenging. additionale to enter rounds of intermittent social distancing and will need additional support from the government, and the problem is the cares act backlash will be beaking -- peeking around that time. sonali: if you look at the

stimulus at that time and the current stimulus, because we are hashing it all out, what can be done differently in the next wave as some of that backlash is coming into the summer? peter: the big missing piece is relief for state and local governments and additional pieces beyond that. a big part of any next round of stimulus will inevitably have to be big relief for state and local governments. relief,n't provide that they will be making a problem that will be significant, much worse. there are many elements that have to be done but i put that front and center. sonali: we were talking to jim milstein at guggenheim and he said when you look at the backstops to credit markets, the worry is the investor class is being saved first and the

investor class will have to pay for it moving forward. what is your reaction to that? peter: we are running tons of experiments and they will always be messy. we need to do that, given the size and scale of the economic shock. the federal reserve will be much more involved in many aspects of the u.s. economy than it has been historically. it is a reasonable estimate that between 5% and 50% of corporate debt and a larger share of investment grade corporate debt will be owned by the fed as a result of various facilities being created. that is a large involvement of the federal reserve government and corporate debt markets that have traditionally not seen that intervention. what are the ramifications to that intervention? there are worries about moral hazard seeking into the market,

how corporations are using the debt and will it keep unemployment lower? will they use it to retain employees? how are you looking at how the money is being used? peter: one of the biggest consequences is that this will debateively end the between the business roundtable and milton friedman over stakeholders versus shareholders. ,ny time you have the economy the stakeholder perspective will win out. you see that in restrictions outside of the federal reserve, some of the federal reserve facilities, in the restrictions the government is proposing on recipients of funding, and more broadly anytime the government becomes this involved in the economy -- and again, out of necessity given how deep and severe the economic downturn is -- but when that happens, the

shift from what i will call the econ 101 perspective of only share your serve holders versus a broader stakeholder perspective will be accelerated. sonali: one part of that stakeholder theory is employees and some of the companies receiving aid, the big airlines where the aid goes until a certain point, we are still seeing a lot of layoffs and the unemployment rate surging. employees seedo relief? peter: there is no perfect fix. these are band-aids and attempts to mitigate the pain. the real fix comes when we solve the underlying health problem and that is where we should be focused in terms of what happens the summer. we are on the road to attempting to pretend we can declare mission accomplished or declare

victory prematurely, and unfortunately the virus does not care whether we are confident or not, and fake it till you make it does not work. -- until you make it does not work. anything the government does to ease the pain is inevitably going to be imperfect. what we really need to do -- and nonetheless, there should be those attempts. i am not denigrating that. the fundamental issue is how are we addressing the on domain that underlying health crisis because the economic effects will follow. sonali: that is an interesting point and someone would ask you about this from your vantage point in the government, but i want to ask you this as an advisor -- how are they rushing to address this panic? being the debate is framed as we either have to suffer massive economic losses or tolerate a lot of public

immunityrm and herd and we should tough it through. there net -- there is another path that involves a much more aggressive approach, building up testing, waiting until we have more effective antivirals and therapeutics before opening up, that may involve different social distancing. there is a team of economists that have estimated -- sorry, i'm getting feedback -- a team of economists that suggest if we isolatedted -- if we social distancing to particular segments of the population you can cut the harm in half and the death rate in half. there are different approaches to social distancing. that path is where we need to focus. pathi: that intermediate

good main prolonged closures and there is the sense that the economy, people think it will open up and open up in full or partially, but others think there will be rolling closures. what is your expectation of that and how will that impact economic growth is to mark how -- economic growth? how well small businesses weather that? peter: i don't think we will flip a switch and turn things back on. different areas of the country will approach this differently because until we have some things we were just discussing, people will not be thrilled about going back onto a subway or crowded restaurant or movie theater. i am in new york city? -- your city. what do we -- i am in new york city. int do we do with elevators office buildings and how do

people get to work if the subway is not a good idea? we grope our way to a solution. this will not be one and done and boom, we are out of the woods. sonali: i want to address because a lot of companies did a bloodbath,te people trying to make it. how bad is it getting? peter: if unemployment remains elevated friend extended time and if there are not additional rounds -- elevated for an extended time and if there are not additional rounds of government stimulus, we are at risk of casting bankruptcies, and that can do a lot of damage to the economy. again, there is another round of economic stimulus that

would mitigate those harms and especially that we approach the return to economic activity in a sensible way that balances the economics and the public health measures. but there is no doubt we are seeing a very significant increase in restructurings. sonali: thank you so much for joining us. we will be hoping to talk soon as the situation progresses. peter or soggy of -- peter orszag of lazard. francine: an exclusive conversation with the ibm chief executive is coming up at 7:30 a.m. in new york, a lot to talk about, especially the new ways of communication and as we work from home, what that means for ibm. this is bloomberg. ♪

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calling him people and a liar. evidenceys there is the coronavirus came from a lab out of the city of wuhan. china stayed away from direct attacks on president trump. downirst state shut because of the coronavirus will begin reopening. the county will be able to relax further stay at home policies. hong kong will soon ease social distancing azure's. they have -- measures. the have largely contained coronavirus. gatherings of eight people will be allowed in the u.k., auto sales plunged 97% last month. dealers only sold about 4000 1946,es, the lowest since

the government closing down dealerships and other businesses as part of their nationwide lockdown. 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 a washington update our chief washington correspondent kevin cirilli. we have a lot to talk about, the popularity of the president, the election, and his new slogan. make america great again, this is the new slogan of president trump, if you think about how he is trying to refocus his -- the on economy, how will he do this? kevin: it will largely be a

variation of reopened the economy, close the borders. ,e are seeing this twofold first and foremost how the this duration has been -- the administration has been more critical against xi jinping and the communist party of china. a couple of weeks ago, the president rod up immigration once again -- brought up immigration once again, taking a hard-line approach. from joe biden's position, they are going to make this about the united states' standing in the world and trying to forge a better relationship with european allies, but they will have this robust debate about how teaching -- handle china. -- how to handle china. francine: how will they handle china? president trump said tariffs

work and he is considering putting them back president trump -- putting them back. president trump is losing ground because of how he managed the outbreak. it is crippling the economy. how does he get the popularity back? kevin: in terms of tariffs, this understanding, and if you think about pre-covid how beijing retaliated. should the president push through tariffs, he opens tariffs in the heartland and the retaliation of the heartland, so that is on the back burner. , with makingl say the case that president trump has moved the needle in the wrong direction with regards to european relations, they will

say we need european allies to take on china economically. possibly we are about a month to six weeks out from that bait intensifying between biden and president trump -- debate intensive a dutch intensifying between biden and president trump, but they have not formulated a strategy of how to take it on. understand from the biden camp maybe they will try and push economic rescue skills. is he visible enough? i try and follow as much as i can and it seems that joe biden is just not there is much as president trump. kevin: it is such a great point, such an important point. biden has struggled with how to break through from a media and

campaigning perspective. everything is been upended. fundraisers have been replaced by zoom. they are charging people to go on zoom to have a one-on-one conversation with biden. he has not been able to hit the campaign trail. he has picked up endorsements from president obama and hillary clinton, but it has definitely upended the race. the president just being in the drive has the ability to the narrative and be on the news every single day. the president has left the white house to some extent and has the ability to do so. with conservative states reopening before progressive states, that puts the president at an advantage according to strategists because he will be not have a make

american great that america great again political raveling america be -- a make great again political rally but he will be able to travel in the media. it is a concern among joe biden how to manage that that is why --manage that that is why manage that. that is why you see the democrats pushing for the expansion of voting by mail. that is something they want , as wed because cities have seen at least now, cities have been more susceptible to the impacts of the health concerns of the virus than rural america has. francine: how important is the running mate joe biden?

-- running mate of joe biden? can that changes fortunes? sonali: in this such a -- kevin: in this situation where the biden campaign has not been able to break through and get as much attention as perhaps they would like, it is incredibly important. stacey abrams is a name that comes up, amy klobuchar comes up. biden has said he will pick a female to be the second person on the ticket, but they are very different politicians. stacey abrams ran for governor and lost and senator amy klobuchar is someone who is much more of a centrist leaning democrat the senate. -- democrat in the senate. she is from a hard-line stennett with bothnd has ties

sides in the senate she understands -- senate. she understands how congress works and she is a mainstay of politics. if she were to do that, similarly to mike pence who also had an understanding of the way politics works, biden would cup an ally to negotiate -- pick up an ally to negotiate and manage capitol hill in the way that has. has -- pence he was able to provide a conservative steady hand to ease the ideological base of the republican party. amy klobuchar brings an ability to usher in a new era of democratic politics. there are other names on the shortlist, warren and others but

the rumblings are klobuchar and abrams. francine: thank you, kevin cirilli. withve a conversation michael zezas about what kind of recovery we will see. this is bloomberg. ♪

♪ viviana: you are watching bloomberg "surveillance." neumann is suing the biggest investor, claiming softbank largely relied on pretexts to scrap the deal. the deal would have allowed newman to sell to softbank as much as $970 million in stock

the japanese firm calls the stock merit list. hearst is preparing to file -- hurts is preparing to -- hertz is preparing to file for bankruptcy. a chapter 11 bankruptcy would allow them to stay in business while working out a payment plan. they have not been able to access any government allowed programs. neiman marcus is close to a bailout deal with pimco. sh the debt load by half and pimco would take over the company. sales of trucks beating cars for the first time ever in the u.s., pickups out selling cars. offers boosted truck sales and shut downs

slowed sales in urban areas where cars are popular. francine: we have plenty more on your markets and a full round of what we heard from the german constitutional court. joining us is michael zezas. great to have you on surveillance we like to dig into the minutia you look at day in and day out read when you look at the u.s. economy and what funding, will the we struggle? michael: we are worried about the potential of drag on local and state governments. of abouta revenue hole $180 billion and potentially as big as $375 billion.

clients are asking us a lot about what happens in the next cares act and how much money needs to be appropriated to state and local governments to eliminate the drag. there probably needs to be at least $180 billion. it is not as nest -- necessarily as bad as the global financial crisis, but it is a sizable enough amount of money you would expect to see austerity, and 75% of the state and local gdp is employees sue layoffs with drag on the economy -- so layoffs would drag on the economy. francine: you mentioned $180 billion which is the best case scenario and the worst case scenario is $375 billion. does not depend on the length of the locked down something else? michael: it is dependent on the

length of the lockdown and shape of the recovery. billion would be consistent with a relatively short economic decline, but if we have another fall,n virus cases in the that number kicks up to $375 billion. the states can understand -- , draw on gap measures reserves and flatten out spending, but even if they did that you would still need roughly $230 billion to keep them from undertaking more severe austerity and dragging on the economy further. francine: our states going to manage through this -- are states going to manage through this? what does it mean for credit ratings? michael: i think states will manage through this. , reserves,ools

flattening spending, and nor bowl -- normal austerity. program made about 200 billion dollars of cash flow available so even if the government were not able to cover the hole, they can use the out. facility to turn it difference if you are an investor in state and local government bonds, you should not be afraid of jumps to default risks and inflation is not likely to be pressured over time. francine: what does it mean in terms of sectors under pressure? you see this as possibly being an opportunity for gaming. michael: the equity sector there is under pressure, machinery,

construction, 70% of nonresidential construction comes from the state and government level so one way you will spend -- fill this whole is the government does fill this spending.vernments online gaming and the taxing of online gaming is an online revenue source. it is not a cure-all but it helps georgia -- helps. georgia has been flirting with this idea and this could be a tipping point to get that adoption going broadly across the u.s. thank you so much for all of the insight, michael zezas asked. s. michael zeza some of the hope in questions of onid -- hope and questions covid-19 and what it means in

terms of testing. this is bloomberg. ♪

♪ good morning.

as we continue to track covid-19, focus on some of the -- we focus on some of the efforts around the world to figure out what it means for vaccinations, the virus, and nursing. johns hopkins has been at the forefront on the virus and every day we bring in insight into what johns hopkins is doing and some analysis and information it has. we are thrilled to be joined by michelle patch thank you for joining us. -- michelle patch. thank you for joining us. what do we know about blood clots? how long do we need to study covid-19 before we figure out what form it can take in some patients? michelle: good morning from baltimore. a little background on what is

clotting? an human body, we have incredible ability to heal ourselves. when you have an injury to a blood vessel, say you are cutting tomatoes and you slip and cut your finger. the blood vessels around that try to contract and stop losing blood, and you have several proteins that spawned to that area -- respond to that area and turn the liquid blood into solid. usually this would be helpful and protective. variousare seeing in types of severe illness, including some of our patient with covid-19, there is the potential for this system to focus in an overdrive setting. needed, more study is

and this is complex and we are learning more every day, but it is possible the body's immune storm,e and the cytokine in trying to heal maybe associated with increased clotting when you -- clotting. when you think about individuals that are in mobile in a hospital bed, on a ventilator, and not able to move, you can get cooling of the blood that can bloodp -- pooling of the that can develop clots which have the risk of breaking off and moving to places like the lungs. unfortunately in some cases we are seeing clots to the brain, leading to stroke. francine: michelle, when you

look at the virus, how is it changing nursing and the way that nursing is organized, the command centers and first responders? michelle: i think if you had asked a few months ago, we may not have said we anticipate as nurses, being as ubiquitous as we are in all the efforts for have but for instance, we many of our nurses who are functioning within infinite command centers across hopkins and hopkins affiliates in order to coordinate and facilitate our combined efforts. logistics,und the the operations, how do we get the supplies we need and get them to the front line as quickly as possible and to the

right areas, as well as nurses decision-makers and helping the greater team to decide when should we actually negativertain types of unitsre units of bio mode that contain the virus and provide the best care for all of our patients, covid and non-covid alike. it has been a unique experience for many of us, but one i think to be very prepared working so closely with our colleagues to help fight. francine: michelle, thank you so much, michelle patch, johns hopkins school of nursing. european stocks are on the up. we are trying to figure out more

on the implications of this german court ruling that quantitative easing was judged illegal and they have given the ecb three months to put that in place. oil in the longest winning weeks.in seven ruled that some bundesbanken by the to participate in quantitative easing were unconstitutional. this is bloomberg. ♪

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deadline. germany's top judges say the central bank has just months to fix its bond buying program. it's price initiative is unscathed. united slashing management jobs. we speak to xpo logistics' --irman and ceo red jacobs ceo brad jacobs. countries putting in a bottom for economic activity. welcome to "bloomberg daybreak: americas" on this tuesday, may fifth. i'm alix steel. we are paring some of the earlier gains that we have seen. s&p futures still up. european equities, think kind of story. you are seeing a selloff in the european bond market. yields in italy pushing higher, up 16 basis points after that ruling by the german top court. we will discuss that