running me now is damian sassower of bloomberg intelligence -- joining me now is damian sassower of bloomberg let'set's --damian: remember that requirements at dodd-frank really helped facilitate liquidity in the secondary market. what you're seeing here is a comparison of em dollar debt high-yield and investment-grade 2008thousand eight -- in and march of last month. what you see is that bid offer spreads jumped. they nearly doubled for high-yield. they have yet to come down. what we need to see is that are price discovery in the secondary market for em risktakers to return. alix: is that even feasible? [laughter] damian: we may consolidate at higher ranges, but you are right. is it feasible? i don't know. we are seeing primary activity recover. we are seeing that ad nausea him. but we really need to see the heredary market normalize for marginal risktakers to return to the market to really show their true hand, and i think for speculators to really feel comfortable putting positions to work and long-term capital to work. that is what we are focused on. this is a market driven by technicals,

joining me is bloomberg intelligence's damian sassower. at liquidity for emerging markets. damian: we all know franklin templeton is a big fan of emerging markets, going back to the days of mark mobius. franklin templeton had to freeze redemptions last night on em debt funds, totaling $4.1 billion in assets under management. that is 1.4% of the entire indian mutual fund industry. these were pretty good performers. if you look at the indian credit risk fund, we are talking -- annualized return for the past five years. you're seeing in this chart the india three-year corporate bond spread blowing out. it is obviously following the weakness in the dollar rupee- rate. this speaks to the weakness in emerging markets, and we could see more of this going forward if things don't improve. alix: my daughter was really excited about that. i don't know if you heard her cheering in the background, but she's really excited about talking about liquidity. where is going to be the next freeze? damian: i'm not going to even go there. but what i will say is

joining me is damian sassower. damian: we are looking at the differentials between em and u.s.. we saw saw in bbb, basically u.s. high-yield bbb spreads tighten. a lot of this is due to the iconic blue-chip issuers that are in the bbb tranche, but in bb land, we are talking about ford, kraft, other iconic names. makeup -- petrobras of the bbb, so my call is he will see those spreads widen just as you have seen in the bb space. that may be mitigated by brazil and some other things. large, we should cem u.s. spreads widen from here in the bb tranche. alix: we will see if the imf and world bank can do anything later on this week. always good to catch up with you. thank you very much, damian sassower of bloomberg intelligence. coming up in the next hour, we tackle many themes, including what it winds up meaning for through we muddle the coronavirus response, and what the visibility is for 21. estimize founder and ceo, will join us. this is bloomberg. ♪ because you can't get to the theater, we're bringing the theater home to you, with xfinity movie premiere. there's a world full of

damian sassower michael mckee a bloomberg. . charts we use throughout the program, gtv on your terminal. check it out. credit suisse putting aside $1 billion in loans. this is bloomberg. ♪ viviana: you are watching "bloomberg daybreak." the top u.s. aluminum producer is cutting cost and output. alcoa will suspend production at one of its plants. aluminum has been among the worst performing commodities during the pandemic. credit suisse's new ceo agrees it was a baptism of fire. thomas gottstein's first earning report seeing the bank take more than $1 billion in write-downs and provisions for bad loans, saying things are likely to get worse. >> we clearly assumed a significant reduction in gdp the second quarter of roughly 20% in the u.s., and in the high single digits in europe and switzerland , and for the full year, we expect recessions not only in the u.s., but also in europe, and to a lesser extent in switzerland, but also for switzerland. viviana: there is a bright spot for credit suisse. trading business to better tha

thank you very much to damian sassower and michael mckee.charts we use throughout the two hours, go to gtv on your terminal. browse the features, check it out. gtv . this is bloomberg. ♪ viviana: this is "bloomberg daybreak." the big question now is if they are will settle, and for how much -- if bayer will settle, and for how much. bleeding cash, the warning from the ceo of airbus. telling employees the company needs to quickly cut costs to adapt to a radically shrinking industry. airbus customers are fighting to survive. airbus rival boeing is preparing to slash production and jobs. a historic loss in oil prices claiming another victim. diamond offshore filing for chapter 11 bankruptcy. the company is controlled by lowe's corporation. among the most expensive to produce. that is your bloomberg business flash. alix: thanks so much. here is something else we are all watching today. more loans for small businesses now. democratic presidential candidate joe biden now telling politico that corporate america is "greedy as hell." he want

damian sassower, thanks a lot. my, key, thank you as well. charts we use throughout the show, no to gtv on your terminal. this is bloomberg. ♪ viviana: this is "bloomberg daybreak." boeing just announced moments ago voluntary buyouts to its 161,000 employees. no word on how money workers a company hopes to cut. boeing facing a sharp contraction in demand because of the coronavirus pandemic. about 44% of its global fleet are parked. the federal trade commission is suing cigarette maker altria. regulators want altria to unwind a $12.8 billion in vaping company juul. the ftc says the two companies are competitors who shouldn't be in business together. altria is vowing to defend the deal. still, it has already written down the value of the stake by roughly 2/3. softbank is scrapping the $3 billion deal to buy wework stock. last week, the stock repurchase was part of softbank's rescue package for wework, but softbank notified to the shareholders conditions for the deal hadn't been met. that is your bloomberg business flash. alix: thanks so mu

joining me is damian sassower of bloomberg intelligence. you are watching china's economy. g 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

here to discuss, michael, plus damian sassower -- michael mckee, plus damian sassower.ike, there's so much economic information coming out, whether it's france, whether it's germany, whether it's the u.s. here. what is the most important thing on your radar? michael: at this point, we are still looking at jobless claims in the united states because it still has the potential to shock. when we get that, the question turns to where unemployment is going to be when we get the payrolls report because it will give us an idea of the depths of the recession to come because it happened so fast. 10 million people so far applying for unemployment. there are forecasts for 7 million more tomorrow. if you get that, you're looking at unemployment north of 15%. we only got 10% during the financial crisis. predictionsl these from the think tanks in germany, from the difference -- from the bank of france. us an idea of what we have to do on capitol hill. n, what are you watching? damian: for me, it is this shift of fundamentals that should take place. if you look at the whole of develop

joining me is damian sassower of bloomberg intelligence. what have you got for me today? ning. 19 of 20 major emerging market central banks have slashed rates by a cumulative 145 basis points. what this means is it is driving short-term local currency interest rates closer to the zero lower bound, and alongside meansve real yields, it em central banks will need to broaden their arsenal when attending to inject liquidity into local markets. i have seen eight of those 20 central banks have actually launched quant easing programs. the one major catch to this is quant easing fundamentally means that markets are increasing their monetary base and lowering the cost of money. are absently paramount to attracting overseas investors, and this is what we are focused on this morning. alix: good stuff. thanks a lot, bloomberg intelligence's damian sassower. coming up, mark connors, credit suisse global head of risk advisory. this is bloomberg. ♪ ♪ alix: welcome to "bloomberg daybreak" on this tuesday, april 21. i'm alix steel. let's take it right from the top. pres. trump: if we can b

joining me from our in-house team of wall street veterans and insiders, damian sassower and michael mckeehere, aprilhe day 1, the start of the second quarter. what do you think is the overwhelming theme here? damian: i am looking at lumber prices. lumber prices are the lowest since 2016. paper is cheap. i'm just getting. but really -- i'm just kidding. but really, the market is not reacting positively because there's red all over the screen. foreign central banks that can post treasuries for dollars, it may address short-term liquidity stress, but there are some risks. it seems to be prohibitively expensive at current levels. alix: does that mean that what the fed did yesterday is not working, or does it just mean that now the liquidity issues are taking a backseat to other problems? michael: it just takes time for all of this to work its way into the markets. the announcement yesterday that they are going to do repos really gives a lifeline to some of the emerging-market countries because it makes them eligible to get dollars from the fed in ways that they are not included in the swap li

what if you got today -- joining me is damian sassower of bloomberg intelligence. got today? em implieddamian: currency volatility is not declining at the same place we are seeing for g7 nations. central banks across em are cutting rates aggressively, turning real rates into negative territory, and this is keeping fx implied vol elevated. alix: so how do you trade something like that? damian: what you do is basically say, we are not going to trade it because the uncertainty is too high. you must remember, the jp morgan em currency index is down 13% year to date. that is 30% over the last five years, and average per animal return of -6.5%. you must see volatility levels normalize to be able to convert dollars into local emerging-market currencies. but at this stage, it seems a bit premature. alix: absolutely. plus, real yields on local currencies are basically in negative territory. to your point, you need that much more incentive. always good to catch up with you. thanks very much. coming up on the program, more on morgan stanley results and the bank earnings with

. ♪ ♪ alix: time now for bloomberg first take. ,ith us today, damian sassower emerging-market credit tegist. they're going to put you on the spot yet again to tell you what all the news is here. what are you looking at today? damian: we've seen this rally in equities, and a lot of people are pointing to that this may be technical in nature. we seen shorts on spx futures down 20% since april 3, on the dow down 11%, so on and so forth. fundamentals have yet to fall into play, but i am positioning for when that does occur. for me, if you just look at where em is today relative to august of 2018, they seem to be in a much better place, at least from a liquidity perspective. by and large, i am hoping that we see a bit of a transition to fundamentals where we can begin to start picking away at some of these dislocations. what did you make of imf repairing short loan dollars to countries that don't like to treasuries -- from countries that lack the treasuries to be able to benefit from these swap lines? damian: i think every dollar counts for emerging markets. the imf is doing everything the

and insiders, michael mckee, bloomberg international economics and policy correspondent, and damian sassower, bloomberg intelligence chief emerging market credit strategist. imian, i do want to ask, when read the headlines, oil rolling ,ut of bed, $11 a barrel earnings continue to come in suspending dividends, halting buybacks, and yet stocks are rallying. is a market person, how do you understand that? [laughter] alix.: that's a mouthful, i think the first order of business is to look at volatility. what we are seeing is normalization across most asset classes. i think a lot of the short strategies have been flushed out of the market and we will probably see them regained popularity in the near term. for me, it is identifying where vol has risen the most and that what points you can take advantage of that. side, and this kind of speaks to commodities and where you live and breathe, you look at the steep vol surface in gold, that is something that is unusual. as markets normalize, i probably can see markets see that steep vol curve flattening in the near-term. i think that is one area of foc

joining us is bloomberg's michael mckee and damian sassower.et's set up the stage for the fed today. michael: the fed is the second item on the agenda today. the opening act, gdp for the united states. the consensus is for 4% annualized drop. we will see if it is worse than that. but wall street will kind of shrug that off, looking more at the components to see how fast the decline was in various areas to get an idea of how bad it is going to be in the current quarter. then we go to the fed. they will decide what they are going to do, eight's probably nothing because they have done so much already, but look for some discussion from jay powell in the virtual press conference this afternoon on where the fed thinks we go from here. do they think we need to add more stimulus to the economy? do they think we are going to be doing this for a year, two years? a lot of the programs they set up are supposed to expire september 30. do they think they will have to go longer than that? some questions about where to invest in the future, but not a whole lot

joining way from our in-house team of wall street veterans and insiders, michael mckee and damian sassower to start with you. there is a lot coming out overnight, particularly in china. a lot coming out in the u.s.. give me the big sweep of what we need to know. michael: in china, they lowered a lending rate to banks by 20 basis points, medium-term one year. it matches a cut they made to the seven-day rate last week. those two kind of move together. it is not seen as a huge deal, although it puts more cash into banks that they could then, in theory, lend out, but it is perhaps a precursor to a cut in the prime lending rate, their main rate that the people's bank of china may do sometime in the near future. they have sort of moved past a whole coronavirus lockdown, so as to get back to work, they are now trying to stimulate their economy. this is seen as a sign that they are getting ready to cut their main interest rate. in the united states, it is going to be about retail sales, 2/3 of theomy -- economy. bloomberg economic folks are looking for a 15% cut. this could be a horrific number. w

and insiders, michael mckee, bloomberg international economics and policy correspondent, and damian sassowerbloomberg intelligence chief emerging market credit strategist. walk us through what we should know. michael: at 8:30 this morning, we get the world economic outlook from the imf. that is probably the most interesting, if not the most important for traders. we already have a range of predictions for major economies like the united states. goldman sachs out with new numbers today. but the key thing is what is the rest of the world going to do. those are the countries that are going to influence us, some of them behind us in terms of the virus impact. are we going to see trade start to pick up? we will be looking for those numbers. there was interesting develop -- overnight in the imf interesting developments overnight. the international community is beginning to stir and help some of the smaller countries in the world. that leads you perfectly to damian. what is most on your radar today? damian: i think redemptions are going to be in focus for the imf. that is going to be the primary dr

and insiders, michael mckee, bloomberg international economics and policy correspondent, and damian sassowerbloomberg intelligence chief emerging-market credit strategist. it feels like we are going to have a busy week. i want to get a sense of what is on your radar. what is the most important thing you are reading about this morning? michael: there's a couple of different things. everyone is keeping an eye on oil prices. how much do we recover tomorrow and going forward? are people really going to believe that the storage problems are going to be solved, and that demand is going to come back? the other thing i want to watch is the eu leaders meeting coming up on thursday. they got to find a way to break the deadlock over aiding the periphery countries. you're starting to see cds for italy, spain, portugal rise significantly. yields are up significantly in those countries. this could be a real problem for the european union if they don't find a way to solve the problem or kick the can down the road. definitelyou would know that. you were in greece years ago when that restructuring was happen

isning me for our discussion damian sassower and michael mckee. happy friday.hat is the most important thing you are looking at today? at thejust looking potential for a serious deleveraging cycle. coming into the crises, world debt was at two 42% of world gdp. if you look at some of the recovery rates, they had been calling for 14% pre-pandemic versus the historical average of as much as 60% per you can expect that to be way lower. it could be twice the historical average of 6% so i think there's a lot more pain ahead in the credit markets and that makes sense given where we are now. week on the flipside, this u.s. high-yield funds about $7.66 billion, maybe the fed --l not have things the market is already doing it for them. the fed probably does not have to buy anything at this point because they have accomplish their goal of a secondary market for high-yield yield. the problem they face a couple of weeks ago, people were not buying, and in the secondary that she want to getu involved in that? probably, no, that would be bad for companies that cannot borrow

and insiders, michael mckee, bloomberg international economics and policy correspondent, plus damian sassowerief emerging-market credit strategist. happy end of april. that came out of nowhere. data,eady broke down euro so i want to start with the fed. what was your biggest take away from yesterday? michael: the way the markets should be looking at it, the idea that the fed is looking at a one to two your problem for the u.s. economy. phrase medium-term could describe the damage to the economy, and that is code for a year or two in fed speak. jay powell underscored that, saying we are not going to get out of this very easily. we need to do more probably from the fed, and the fiscal authorities need to do a lot more. --ot of pledges of future not a lot of pledges of future but the idea that we are not coming out in a v shape is the thing i think people really need to focus on. focused on that, the market didn't really seem to reflect that. em currencies were up pretty big yesterday into today. i think mike is spot on. the biggest risk to markets coming into this week is a policy error by the f