good morning, everyone. it is the worst british economy since 1706, and the war of the spanish succession. governor bailey and the bank of england will provide a total commitment, the united kingdom government will offer 41 year gilt. anotherolonies, thursday of 3 million additional jobless claims. the president considers depression era unemployment. higher.lloff, yields after the pandemic, there will be on inflation. this is bloomberg "surveillance," from london and new york. bloomberg news tries to advance the dialogue this morning. we will do that in washington. mary daly of the san francisco fed later in the morning, but

lagarde,at, christine madame gore gave a of the international monetary fund, and your conversation with andrew bailey. francine: if you distill what we are trying to do, there are three main questions -- what kind of recovery and recession will be get, the inflationary versus deflationary debate, and the economic scarring. we will try to do that with the bank of england and the imf, touching on what countries may need support in the future. christine lagarde also extremely interesting because it will be the first time we hear from her since the german court decision so we will hear from her about the legality or not about what they did. tom: the complexities of this german court decision, george saravelos out with a blistering

note, wondering even if the ecb will respond to the german court. we respond to our first word news. u.s. and china trade negotiators will speak as soon as next week to try to make progress in implementing a phase one deal, president trump threatening to terminate the deal if beijing was not sticking to the terms. the deal was in germany before the coronavirus hammered the economy. considering a new mission to academic tripan to find the animal origins of the coronavirus. the trump says that likely escaped from a laboratory in wuhan. the u.k. could start using its lockdown on monday.

boris johnson is under pressure to get the british economy moving again without another surge of deaths. havethan 30,000 people died from the coronavirus. delivered a grim outlook for corporate america, forecasting mass bankruptcy and 25%.porate tax as high as 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 ritika gupta. this is bloomberg. tom: very good, thank you. i want to go over the data and i do this like once a week, not twice a week because francine goes not. -- nuts. the coolest thing is the bloomberg terminal on your iphone.

something i am glued to with the vix. vix.ntinues 31.72 on the on yields, i did it for and i'm going to do it again, the two year yield is stagnant, and the 10 and 30 are moving up, so the yield curve steepening for the far out yield curve. want totrength, and i point out some inconsistencies in em with is the, difficult day, and the turkish lira moves , a difficultrazil day, and the turkish lira moves out. francine: we heard from andrew bailey hinting at stimulus ahead. needsund, we understand

more than just comforting words. i am looking at the saudi headline, slashing oil price discounts to impact the market. 25.52, so there is a lot going on in the markets, and we have corporate news in the u.k. and virgin media combine create a heavyweight. tom: i am not going to men's words. the one thing -- minutes words -- mince words. the one thing history tells us is you see combinations, just as we see in telecom within the united kingdom. you wonder where america will be. terrific news flow on this thursday into friday. we will come back with conversation on economics,

finance, and investment. this is bloomberg. ♪

francine: bloomberg "surveillance," tom and francine from london and new york. norges bank livered an interest rate -- delivered an interest cut 20. zero -- byare thrilled to be joined

the norges bank governor. how worried are you in this juncture about the weakening krona? oystein: the background for central banks is this, for norges bank, to act as the as amy has fallen sharp we result of the corona epidemic. amplified byit is very low oil prices. that was the background for clearly in to act, march. we have the policy rate at 1.5 which was reduced in march 2 1.25, and at this juncture we took another step to reduce the policy rate to zero.

it is a policy reaction in our case where we had room to maneuver in monetary policy, in the interest rate policy, and we have -- utilized -- we have utilized that room to maneuver. you utilize the fx market? oystein: the answer is yes. march, where we were all hit by the virus and the downturn, we act did -- acted to reduce the policy rate and introduced liquidity measures. market with significant region krona and if you go for 20 years -- norwegian krone, and if you go for 20

years, we are ready to be in the currency market to continue to have the market functioning. we have done that to a limited extent, and you can find the numbers in the report we published today. tom: thank you so much for joining us today. lead theou conversation is wonderful. you discovered oil in the north sea in 1969. the interdependencies of your central bank effort at the sovereign wealth fund and oil production, it is original and extraordinary. in this pandemic, is that delicate balance at risk? is there a risk that norway upsets the prosperity that has been generated since 1969? oystein: my short answer is i don't think so, but for

continuing, looking forward, of course it is a challenge for the economy if oil prices remain at the present low levels, but you , weack to 1969 and forward have actually exploited these opportunities and we have spent somewhat of the money, but we have saved a lot. we have a huge sovereign wealth fund and we benefit from that room to maneuver in fiscal policy these days that room -- days. that room to maneuver remains. it is a positive feature of our society that we have this room to maneuver unlike other countries. and ihe norwegian bank -- don't know how many of you know this -- but the norwegian central bank led central banking in clarity of statistics decades

fromand governor, you came the statistical division. can you give us the most efficacious oil price for norway? do you have in your head the best price for brent that advantages norway in the microeconomics of oil? oil whichhe price of would damas or which we could whiche -- what damage or we could survive with? tom: which price of oil is best? oystein: that is a difficult question. we benefit from reasonably high costs,ces exceeding risk including capital costs. if we have oil prices in the range of $50 to $60, my rearview of the cost level -- my clear view of the cost level and the

prospects on the shelves is that is fine. isolated, higher oil prices could be fine, but we have to take into account the effect of very high oil prices on markets and demand. we have the climate challenge and it is a complicated issue. remainthe possibility to prices coming oil to around $50 or $60. toncine: are there limits what i monetary policy could achieve in a crisis like this and can you describe the fiscal response in your country? oystein: the fiscal response has been strong. to maneuver room through this huge sovereign wealth fund. estimates over the

usage of oil money is in the range exceeding 4% of the fund capital. that is higher than the fiscal rule, but we expect going restrict fiscal .olicy in the future back, ifronavirus goes there is a rebound in the economy as it may seem now. drama, and the response is we have this room to maneuver. the government's withdrawal from the sovereign wealth fund will exceed its own

cash flow, forcing it to sell assets. how challenging is this for the sovereign wealth fund? oystein: there is no special circumstances. it is part of the system that if you go back, there has been an inflow to the fund if needed. and inould be an outflow this very special situation where we have a dramatic fall in activity, the worst downturn since the second world war, it the -- that in such times you could spend more. there is practical challenges in the market. muchgovernor, thank you so for joining us, with norges bank, oystein olsen.

further discussion in this historic moment, stunning economic contraction and labor statistics, we must speak with andrew bailey of the bank of england. francine will speak with governor bailey at 7:00 a.m. new york time. with equities elevated, this is bloomberg. ♪

"surveillance," good morning, everyone. tom keene and francine lacqua. we have important conversations coming up, mayor lee daily -- mary daly later today and andrew bailey of the bank of england with francine, look for that in a bit. right now to bring all the thinking together, david page joins. what is so important right now about the linkage of economics into investment into finance is the issuance of bonds. what does this gross issuance of bonds mean for our viewers and listeners? ,avid: it reflects two things the extraordinary nature of the government reactions we have seen across the globe and that in turn reflects the stark shock

to the economy. it suggests a material transformation in the way government bonds have to operate and we are seeing that for central banks to come in, to provide some easing. we all know that central banks are very keen in not taking part in monetary financing, but they are absorbing this huge increase in government issuance in the u.k. next three over the months and in the u.s., 3 trillion in the next quarter, but the central bank balance sheet is allowing that absorption. and davidy explained, page, it sounds like a free lunch. there is no such thing as a free ranch. what are the ramifications of central banks taking all that stuff onto their balance sheets? david: the risk is who pays for

it and when? the central banks are providing scope for markets to absorb this at the moment, but ultimately and when we think about the operation of the central banks in the u.s. and u.k., there are excess reserves. this is not a free lunch. at some point interest rates will rise and the massive balance sheets will have to pay interest on the excess reserves, so you will see a massive fiscal transfer from taxpayers to commercial banks via the central banks and that will be desperately unpopular, but that is paying down the debt. we are changing the pinch point when we start to pay for this and pushing it into the future. that is what monetary policy does, pushes it into the future, but it is out there and at some

point we will have to consider how to pay this down. that is not something we are likely to consider over the next six to nine month. it is not something we will likely have to think about over the next few years, but in the decade, it is something we will have to think about and the markets, in the medium to long-term we will see the debt rate keeping rates lower for longer. francine: when you look at the unintended consequence of this, do markets get nervous when we start to unwind this extra stimulus? david: i am sorry, unwind? extrane: all of this stimulus, everything put in place. david: if we unwind all of this, markets, yes, would get nervous, but we are looking at a very long playlist of how this goes through. if we think about the bank of

japan, they have expanded their balance sheet passively. -- massively. government debt continues to rise. the federal reserve did run up its balance sheet and started to unwind it so we would expected it to come off at some point, but the broad stretch -- threat from stimulus, the broad unloading of debt will be with us for a long time and markets do not need to be with us for that unwind. hopefully as the economies reopen and the labor markets start to improve significantly, then the support the government provides to the economy can be scaled back and therefore that is not something the markets will worry about much. francine: thank you very much, david page. do not miss our conversation

with the bank of england governor andrew bailey at 7:00 a.m. new york. we discussed a pledge of support. the next time the bank of england meets is in june with governor bailey hinting at stimulus. two of the bank of england's nine policymakers wanted to immediately increase bond purchases and we will figure out why they decided to hold off and not do it today. this is bloomberg. ♪

francine: this is bloomberg "surveillance," tom and francine from new york and london. talking about the bank of england and the inflation

forecast, let's get back to david page. when you look at the timeline, the bank of england seems more optimistic about a recovery in 2021 than other counterparts including the ecb. is it ugly 2021 and then a recovery or could this be a decade of misery? david: it could be either, and the bank of england would suggest -- would stress they are forecast theya are providing the flaws of the scenario. 2020ly we will get ugly followed by a sharp contraction in economic activity in the second quarter, and the question is how much of a rebound do we get from there starting in the second half of the year? the unknown is what path the virus will take and that is where the assumptions come from, but we have economic

assumptions, how do labor markets and businesses react, and what ongoing policies are there likely to be? those will shape the speed of the recovery. to our minds, we are more cautious and the plausible scenario the bank of england puts into place, we think more is likely to come true. it takes a little bit longer to recover the ground. call given be a bold the uncertainty over the next couple of quarters and the next couple of years, looking into the future. francine: with the price of oil and the fact we had negative wti meant that half of the economy said this is a huge deal because it is either something really wrong with the economy and could

point to a financial crisis. that saudi changing their pricing for asia give you confidence that it is not a worse case scenario? oil isin broad terms, part of the global supply glut and the fall in demand. the pace and demand to sell back so aggressively, even thinking of airlines and transport, the pace and drop -- the pace of the drop in demand could sell us out read in the wti context, we ran out of storage. looking at future contracts, that problem looks quite acute. we don't think it points to the complete financial collapse that

perhaps negative oil pricing would otherwise suggest. arebroader context is we seeing oil prices that we have not think for decade and it is clearly the massive demand shocks we see coming through. lines ine between any a chart is an into graham -- intagram and it falls into how much judy support -- gdp support does any nation need? how is the u.s. doing? is it enough? david: we think it falls intergramhort of that type study. gdp andeeing 12.5% of

it is difficult to calculate the equivalent for monetary policy because the fed has an open-ended policy and it could go on for some time. we see a fiscal impulse coming from the monetary policy side on the order of magnitude of two percentage points of gdp in 2021 and one in 2022. we would suggest what we have at the moment is just short of seeing that come through. if we do that forecast, when we get to the end of 2021 we see the u.s. economy 1% to 2% below where it would have been had you extrapolated the end of 2019 going forward. ande is more space to come i suspect we will see more fiscal stimulus come through, but it becomes increasingly difficult because the metrics will look different and the

congress will worry about the huge levels of debt in 2020. as the economy seems to rebound, the argument for more fiscal stimulus will be part of it. page, greatly appreciated this morning. we have important conversations as we see a double-digit l town of economic growth -- double-digit melt down of economic growth, beginning with francine's conversation with governor andrew bailey. worldwide, this is bloomberg. ♪

ritika: this is bloomberg

"surveillance." more signs that europe is starting to reopen, the u.k. is set to ease part of its lockdown on monday. there will be more freedom for people to leave their homes but no changes are expected for businesses. in germany, shops will be allowed to reopened and the netherlands will begin a phased reopening. automakers in the u.s. want access to federal loans to begin making cars again. democrats and republicans are urging house leaders to help. automakers shut down their factories in march because of the coronavirus out rake. -- outbreak. india is looking to lure american companies out of china including food processing units and auto parts makers. --y have been blaming china

the u.s. has been blaming china for their role in the coronavirus. ruth bader ginsburg has been released from the hospital. she is 87, the oldest justice on the court and took part yesterday in telephone arguments from the hospital. 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 ritika gupta. this is bloomberg. much if youou so get lucky -- much. if you get lucky out of college, you get one of the most interesting jobs in the world, working for the cars are as we as we have tried to save the car industry. she has moved on to be congresswoman of what has always been a republican district and

51/49%on the cusp of the divide. congresswoman, what a fascinating time to be in except there is a lot of pain and suffering in your michigan. what do you need from speaker pelosi and the u.s. senate? rep. stevens: thank you for the kind words and the accurate description of my region. economically and medically, it is a double whammy in michigan. livonia, michigan is the highest per capita fatality rate in the country. this is a community of about 100,000 people and home to a lot of automotive suppliers, connected into this detroit ecosystem for automotive that we have.

is other side of this coin an economic crisis, it is double-digit unemployment. our auto industry has been halted. the big three went into hibernation and with all that, suppliers stalled -- saw their production orders fall 20. to zero. legislation,avirus we needed to be focused on -- and i'm certainly not the only one saying this -- but we need to be focused on what any fracturing needs with a recognition for complexity. tom: just because of time, i want to get to this and i know general motors sold a lot of pickup trucks and that is great.

i want to know how vice towardnt biden shifts conor lamb and haley stevens, how does vice president biden bring the liberal part of the democratic party to people like you who are going to lose if he is too liberal? , here is the look situation in michigan, is that automotive isn't anything other than our economic reality. when you champion manufacturing like joe biden has done, that resonates. haley stevens did in 2018 campaigning. we are talking about the middle class and when we are talking about growing the middle class, we are talking about lifting people out of poverty, policy ideas that provide the on ramp to opportunity.

we are looking at these inequities that exist, health care in equities, racial careities -- health inequities, racial inequities, those are on people's minds. how do we make sure we have an economic agenda? republicanear a super majority government shutdown and utter dysfunction. what have we done? past a budget in record time, put forward economic policies for the people and by the people that do not speak to corporate interests. passed, that adds to the deficit. tom: let me go to my colleague. coursee: we try and of always keep in mind the human

aspect, and this is concerning when you are in charge of she can trying to figure out what happened -- michigan trying to figure out what happens next. will this covid-19 change what people expect from their representatives? rep. stevens: that is a fair question. there is certainly no playbook. i am is science and fact the subcommittee chair of the house science committee. we have to be vigilant. the other side is i have told my constituents since this pandemic was announced, i will not let you fail economically or medically. when you look at the packages we put into place, standing up for the american worker, protecting their wages, securing the critical industrial assets of this nation, you have got to

make planes and cars and have a supply chain. we have got to protect small businesses. start to define small businesses as operations with 250 employees or less. downtowns ofsmall small proprietors, those were hardest hit in the financial recession and we will be darned for that to happen again. we have got to say to everybody, you are not allowed to fail, and the policies we are putting into place are securing the economic success of our middle-class and hard-working people. i come from a family of small business owners. francine: how much does that phase on the phases, on 2, 3, and four, and the lasting

this economic of crisis? rep. stevens: everyone is looking into their crystal ball on that matter. we have got to pay attention to our manufacturing sector. this is the thing in detroit, our auto industry has dealt with a different crisis before. it has some similarities to today's and a lot of differences . lots of innovation, commitment to move forward, the whole world is watching us in terms of autonomous vehicles, energy efficient vehicles and all that, and that will continue to go forward. ,here is another side of this which employs a quarter of the jobs or more is the service sector errors and retail sectors, childcare.

to one of the largest childcare providers. they have shuttered. tell me how we come back online without daycare providers. liquidity andolve revenue issues. i cannot -- tom: congresswoman, i have got time for one more question and i cannot talk michigan state hockey or the state of the detroit tigers. is the democratic party going to move to the stevens hubert humphreys middle or will your party still be shown as a liberal dominant urban party that has trouble speaking to northwest detroit? rep. stevens: i tell you, i am

focused on a democratic party in the 21st century that is building and moving the agenda of the worker, the middle class, the suburban mom, and that is focused on not only what we are just a few short ways -- years centurye quarter 21st and then the big 21st century. you look at the post 9/11 economic narrative, proliferating the gig economy, very much tied to autos. streaming at aa high rate through vehicles. all of the internet of things technology has propagated and proliferated over the last 20 years, transforming over and over again. we have got to build that economic vision.

tom: congresswoman, we have got to go because i have got to go out and buy a gm pickup truck. haley stevens from detroit, thank you for being with us. this is bloomberg. good morning. ♪

everyone,morning, bloomberg "surveillance," from new york and london. coming up, francine's conversation with the governor of the bank of england, our conversation of the day. we speak with dr. farley of the johns hopkins university school of nursing and we do this in the ,eek of nursing, a nursing week a nursing celebration within this horrific pandemic. i saw the boston red sox mowing yesterday the lawn of fenway park in tribute to nurses, and we saw the president in the oval office in tribute to the nurses. forget about the tribute. reality at jhu for

nurses. jason: we are seeing glimmers of hope where inpatient bed capacity is stable. we have a wonderful field hospital started by our governor -- for those who need to convalesce in a controlled ventilator, and our supplies are holding steady so those are all glimmers of hope. francine: do genetics play a big role in who dies from covid-19? jason: i think that is an important question, and we are currently investigating a variety of different genetic analyses. there is important differences in viral genetics so are there differences in strains? we have heard of strains from

china and europe, so it is understood -- under investigation, those viral genetics. we as humans and how does our immune system respond, we are seeing evidence of some people who may have a form of weekend immunity may have less of a storm, meaning the immune system does not respond as risk and they may become ill so they are somewhat protected and moving forward for the need from mechanical ventilation. ,hen it does not act as briskly you are not as overwhelmed as its response -- overwhelmed to its response. francine: are there disparities because of gender and race, and if there are, how can we protect

the people most at risk? think about from a gender perspective, men are at greater risk of about outcome. -- a bad outcome. ande are cardiovascular respiratory diseases that are more highly prevalent in men than women. to do with access to care, poverty, disparities. if you live in a community across the world in which your community hospital is a low resource hospital, more of a district nonacademic hospital, you may have less intensive care bed, ventilator capacity, and less opportunity accessing primary care provider.

there are many things in that question that need to be unpacked in terms of things that may influence in terms of gender and racial disparities we are seeing with this virus. francine: thank you so much, jason farley of johns hopkins university. be sure to check out your bloomberg terminal for the latest information, with our exclusive conversation with johns hopkins experts. coming up, our interview with andrew bailey after the bank of england described what could be the deepest recession in the world. this is bloomberg. ♪ save hundreds on your wireless bill

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the bank of england says it stands to do whatever is needed as it sees a slump in growth this year. trade negotiators will monitor progress as president trump threatens to terminate the deal. and blackrock's larry fink is the latest to predict higher taxes for companies to pay for the covid efforts. we will speak to the ceo of papa john's, rob lynch. we have a rally underway here. s&p futures catapulting higher, around the highs of the session. negative, now was trying to turn its way stronger. the norwegian currency is really outperforming as we had a surprise rate cut, but it is more of a one and done story. appetite.elping risk the big story