Transcripts For BLOOMBERG Bloomberg Markets 20240713

To back the bell and set to publish their own support program. Force johnson orders the u. K. Into a three weeks lockdown, sweeping new laws to breakup gatherings and fine any dissenters. Taylor meantime, i want to bring you some breaking news coming out of china. Their companies are having the worst quarter on record, according to china. The headline as it catches my eye, the economy has not gotten better as much as we thought they would be returning to work. It looks for the first three months of this year, a Quarterly Survey of all the firms, it looks like every individual sector was reporting worse results than originally thought. Saleswas a widespread in amid the harder hit retail sectors. The collapse in revenue and profit. Again, Economic Activity collapsed in february. This is as we knew that there was the massive virus spread that was going on. I think the key headline is Chinese Companies continuing to have the worst quarter on record. Every individual sector reporting worst results for the first three months of the year. Haidi. Haidi there is a sense we are looking at the data for the past couple of months and looking ever redundant. We have to look forward. To that end, i suppose the leading indicators may be more useful. We have to see the australia pmi, Manufacturing Services and composite pmis coming for the month of march. Services pmi falling to the lowest on record, 39. 8. Falling from already a territory of 49 in the month of february. We know it has not just been the Coronavirus Impact. Weve had a couple of months of some of the worst bushfires australia has ever seen and that has affected businesses. Manufacturing Still Holding its head above water in terms of not quite falling below 50. 50. 1, slipping from 50 points in the previous month. That composite number coming in at 40. 7. Taylor i want to talk about Something Else in contractionary territory and that is the u. S. Markets today, just continuing to struggle. Down 2 , 3 or so and all the major averages. Things potentially look like they are turning around. Even though we did not get fiscal stimulus, massive monetary stimulus and that means futures in the s p are pointing higher after a 3 drop that we saw on monday session. But at least futures starting to open higher by 1 or so. We have oil now up 3 or so. That is a different tone we have been getting in the market because you have yields falling, as well as Dollar Strength and gold straight. There is this mismatch. If everyone has gone to cash, where do we allocate all of those resources . Crude about 3 up or so. We will have more on the outlook for oil when we hear from the u. S. Energy secretary. Hes going to be on a little bit later in the show. I want to see how things are shaping up for asian markets. Rough day on monday. Futures in the u. S. Looking better. What does that mean for your asian markets . Sophie we could be seeing a bit of a breather for asian markets as we have set the latest developments around the virus. Japan raising the tribal advisory for germany at level 3. Futures are looking mixed. Kiwi stocks extending losses by marginally so. Monday,hat miserable losses across asian equities as lockdown measures were imposed on thailand to india. The meltdown we saw in asian stocks have been so rapid, that i have gone from expensive to cheap within two months. Even at these levels, it may take more than even cheaper valuations across the region. Sharp globalan, a recession back to their baseline. Strategistw reviving earnings even lower for asia. Given the ongoing funding squeeze, were Companies Facing the risk of bankruptcy and debt default which could push policymakers deeper into uncharted territory. The central bank could broaden its two program have required. Lookight, we saw the fed to relieve credit stress in the u. S. And that sparked a jump in etfs that will benefit the fed buying Corporate Bonds and etfs. Jumpedgest of them all the most since september 2008 as we see some smoothing in the etf market on the feds dramatic move. Elsewhere, we are expecting other governments to take on more measures with sovereign entering distress territory given the stronger greenbacks. We are seeing 50 nations of more and 100 billion in bonds average 1000 basis points over treasury. Taylor . Haidi i will take it from there. We will get more on e. M. From a man who knows all about it, mobius cap hital partner, mark joins us. What would you need to see at this point to suggest to give becomem. Space might closer to a bottom . Is these only problem countries and the emerging market are following the lead of what has happened in europe and the u. S. In locking down dramatically. Here in south africa, the president Just Announced a very intense lockdown. That means a lot of businesses are going to suffer, probably losing two quarters of earnings as we deal with this lockdown. The cure is worse than the sickness, in the sense it will create of a lot of economic hardship. Haidi i just want to jump in. We have breaking news coming out of japan. Japan is planning for a delay for the 2020 Tokyo Olympics of less than one year. We know there has been so much contention and controversy in terms of saying cancellation is not an option. Weave in the last days heard talk about a delay in that report saying there could be a delay of the olympics of less than a year. We will bring you more confirmation as it gets to us. Just a week or two ago, you are saying in your view, the coronavirus pandemic is not as bad as what we saw with sars and mers, at least not in terms of fatalities. Has your view shifted in the last few days . Mark not really. We have not seen the evidence of the real numbers. I think it has frightened a lot of governments around the world particularly in the u. S. And europe. Projections that were made about how many people could die from such a pandemic. Im not saying this is not going to happen, but i think we have to watch the numbers very carefully because of the end of the day, in lockdown, we may see at least temporarily a drop in the number of deaths. Will be hasain it that as we have seen in the past. Taylor mark, with the massive Dollar Strength we have seen, it has meant liquidity and funding for a lot of the e. M. Fx, e. M. D ebt has dried up. Has any of those pressures eas ed . Mark not yet. You have seen some announcements by governments to provide more liquidity. Urging banks to lighten up on their loan collections, etc. But that is not in effect yet. It will come probably in a month or two. That kind of easy will come probably a month or two. Stage, there is a general panic which creates uncertainty in the markets. Taylor can you just assume further Dollar Strength . And what does that mean for some of these e. M. Countries . U. S. Dollar it is a big problem. Many of those countries that are in that position will have a very difficult going. As we sawews is that, what happened, many of these countries were leery about taking u. S. Dollar debt. In the private sector, it is a different story. You have private sector in u. S. Dollars and public sector, there is u. S. Dollar debt, but not as much as the total is what we saw. We are going to try to call you back and improve your audio because we always appreciate your time and insight. Mark mobius will be staying with us. Meantime, we want to continue to bring some of the headlines we are getting around those liquidity pressures. This time, it is coming from honeywell. Said to discuss a new 5 Million Term Loan with banks. The company saying the loan is a proactive step to help strength and resilience. Dozens of highgrade companies are trying to seek extra liquidity at this time. In this case, it is honeywell, looking at raising a new 5 billion term loan as a proactive measure to strengthen resilience. I do want to get an update on what is going on in the rest of the world and that is with ritika. Ritika the United Kingdom is being ordered into lockdown monday night amid sweeping new measures to keep people at home, at the Coronavirus Spreads across the country. Prime minister Boris Johnson approved the banning of all necessary movement of people for three weeks. Police will have the power to breakup gatherings and fine individuals refuse to accept the new law. Lockdown in india triggered the biggest talk crash on record. The rupee slumped to an alltime low, threatening Prime Minister modis hopes of reviving the economy. Flights will be suspended midnight tuesday, couple of ending the rail shutdown and state curfews. Indias infection numbers are low, but Health Experts say it could be the next virus hotspot. The coronavirus continues to infect people around the world, but there are faint signs of hope. In northern italy, a report of a slowing of cases, posting a decline for the second day. The latest virus tally from John Hopkins University puts cases at 272,000, with more than 16,000 people that. Asian nations have asked the imf or emergency financing. Win, we need to attack the virus with aggressive and targeted tactics. Case,g every suspected isolating and caring for every confirmed case, and tracing and quarantining every close contact. Ritika the Federal Reserve has announced sweeping additional measures to support the economy from the fallout of the coronavirus, saying it will buy unlimited amounts of Treasury Bonds and mortgagebacked securities. The news came ahead of a Second Senate vote on a republican stimulus package worth 2 trillion. Democrats declined to advance the bill despite dire predictions of a recession. Global news 24 hours a day on air and on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Taylor . Haidi i will take it from here. We are going straight to President Trump who is speaking at the moment. Lets listen in. Pres. Trump at the appropriate time. We also have a large team working on what the next steps will be once the medical Community Gives the ok. Meaning the ok to get going, to get back. Our country was not built to be shut down. This is not a country that was built for this. It was not built to be shut down. Toadministration continues work with democrats and republicans to reach an agreement on an urgent relief bill for the millions of American Workers and Small Businesses and Large Businesses that were badly affected by the medical difficulty that weve had. If youve had a viable business in january, we are committed to ensuring the same is true in the coming weeks. In fact, we want to make it better than it was before. We are doing things to help in that regard. America will again and soon be open for business. Very soon. A lot sooner than three or four months that somebody was suggesting. A lot sooner. We cannot let the cure be worse than the problem itself. We are not going to let the cure be worse than the problem. At the end of the 15 day period, we will make a decision as to which way we want to go, the timing, and essentially we are referring to the timing of the opening. Essentially, the opening of our country. Because we have it pretty well shut down in order to get rid of this invisible enemy. Two weeks ago, we moved at record speed to pass paid sick leave and paid family medical leave and approved 8 billion, including money for the development of treatments and vaccines. We are doing tremendous work on both fronts. The vaccines are coming along very quickly. Now, Congress Must demonstrate the same bipartisanship to pass the senate bill as written and avoid playing anymore partisan games. They have to get together and stop with the partisan politics. And, i think thats happening. I got a call a little while ago, i guess they are getting closer to go quickly. It must go quickly. It is not really a choice. Make a deal. This should not be a time for political agendas, but rather one for focusing solely and squarely on the needs of the American People. Save americano workers and we are going to save them quickly. And, we are going to save our Great American companies, both small and large. This was a medical problem. We are not going to let it turn into a longlasting financial problem. It started out as a purely medical problem and its not going to go beyond that. We are not going to allow that to happen. Our country was at its strongest financial point. Weve never had an economy like we had just a few weeks ago and then it got hit with something no one could have ever thought possible. And, we are fixing it. We are fixing it quickly. I want to thank the American People for what they have been through and what they are doing. Our country will be stronger than ever before. We fully anticipate that and it will not be that long. Let me provide you with an update on critical supplies. Fema is this riveting 8 million distributing 8 million n95 respirator masks and respirator masks. Focusing on the areas with the greatest need. We have shipped 73 pallets of personal protective equipment to new york city and 36 pallets to the state of washington. Hashe past 96 hours, fema received donations of approximately 6. 5 million masks. We are having millions and millions of masks made as we speak. And other personal protective equipment which we will be to distribute into medical hotspots. We are focused on some of the hotspots. Across the nation, we are seeing an outpouring of creativity and innovative ideas widely shared between the federal health leaders, governors and mayors. The Scientific Community and members of the private sector, really working together. Everybodys working together. Im pleased to report that Clinical Trials in new york will begin existing taylor you have been listening to President Trump in what now is a Daily White House virus task force briefing. I do want to bring it joe on the line from washington. I think the Biggest Issue that is going on today in d. C. Is we do not have a stimulus bill and the markets wanted it yesterday, two days ago. Where is this . Joe they are still in negotiations between Democrats Senate and the house, with the administration and republicans. There are apparently some broad agreements on major parts of the bill. Right now, they are down to the details. This is a fairly big and complex bill. There are lots of parts to it. And, both sides are looking to that theyems in there feel are priorities. From the democrat side, they are wanting to have some guardrails on the distribution of loans and other funds to businesses. Republicans are seeking to stave off some attempts, for instance, on waiver rules that democrats want. Theres a question of money for hospitals and other health care facilities. It is apparently down to the details, but we could still be here for a couple more days. Haidi President Trump has been saying the last few minutes, really saying that america will be open for business sooner than three to four months. He will let the virus turn into a longlasting financial problem. Tell me, how much tension is therebetween with the president wants, the economic side of things it is understandable, he does not want the shutdown we have seen across most of the world turn into, as it has, an increasing committed terry and crisis and joblessness situation. How much tension is therebetween what he wants and what Public Health authorities in the usa needs to happen . Joe theres quite a bit of recommendation from the Health Experts that this could go on for some extended time. 10 weeks, perhaps, even longer in order to flatten the curve of the infection. The other point of tension is most of this right now is being done at the state and local level. We are seeing states across the country, particularly several big and economically important states like california, new york, illinois and a few others, that have taken the most aggressive steps to limit contact outside of homes and shutting down businesses that are not considered essential. So, as much as the president may wish to open, that may have some effect on people, but the states themselves are really major actors here. Haidi thank you so much for that. Joe sobczyk in d. C. We will continue to monitor as President Trump is speaking there at the white house. Lets get more investor reaction and bring back mark mobius who joins us from south africa. Thank you for hanging on for us. I am wondering i saw a great headline on the bluebird earlier jeff saying just because theres a market does not mean you have to trade. Where are you at in positions and where are the opportunities . Mark we are getting rid of those stocks that we were not very excited about for one reason or another over the last year. And buying more of what we like. In other words, we are not reducing our holdings. Toare not we are trying find those bargains. We know we might not be at the absolute bottom, no question about that. Because the average decline over the years since 1987 is about 50 . That is the normal bear market decline. We are not near that in many of these countries, so we have to buy very cautiously. I think it is a good time to be picking up some of the bargains and getting rid of those things that you were not too excited about. The idea is not to increase cash dramatically. Haidi we are getting some breaking news on softbank. It is said to be planning 14 billion of sale of its alibaba shares. We are just getting details on that at the minute. Lots of news affecting softbank, even the shifting valuations we have seen across equity markets. Softbank set to be selling 14 billion in shares of alibaba as part of this effort to raise 41 billion to shore up its business by the pandemic, according to people familiar with the matter talking to bloomberg. Softbank considering raising the remainder of the money by selling a stake in softbank mobile as well. We will get more details on that story later. I want to get to your prediction when it comes to indian markets. Given the record selloff we saw on the previous session, i still convinced this is a good time to add indian positions . Because thosely, companies that have strong Balance Sheets are going to be paying dividends. Many of these companies around the world, not only in india, are not going to be harmed that much by what is happening now. For example, Broadcasting Companies are increasing their business because they will have many more viewers, many more listeners, that sort of thing. We have to look at each company individually. Our excitement about india has not diminished at all. We think it is a great time to be picking up bargains in these markets. Taylor generally speaking, the trade of the year was u. S. Versus rest of the world. You take a look at this year, are you positive on u. S. Equities or do you really prefer rest of the world . Equitiesike the u. S. That have a global footprint. Particularly those Global Companies that have a footprint in emerging markets because if they have a good strong Balance Sheet as many of them do, they will be in a terrific position to pick up market share in emerging markets as a result of the problems some of the local companies are having. Tohink it is a good idea look at these multinationals in the u. S. Taylor are you able to give us a few names of those multinationals of the u. S. With big footprints overseas . Mark by the way, talking about alibaba, it is probably a good idea to look at alibaba at this stage particularly if softbank is selling because the price may get weaker. A good example of a company that is becoming very global. U. S. , and the Chinese Market is not gone down very much. Companies, number of multinationals that are in the consumer business that are quite interesting that we should be looking at. Mentioned, as you china hasnt really lost very much at all. The equity market as well as the currency almost acting as something of a haven in this part of the world. Do you expect that kind of anger will to continue . With companiese that good fundamentals can stave out the other end of this still impacted . The Chinese Market will continue to outperform other markets because the Chinese Government has taken measures to really prop up the industries and the companies. I would say that companies that are in the Technology Area might be really interesting in china right now. High,ced that on the foxconn has about 300,000 workers back to work, out of 600,000. That is a very good sign. I think the latest plan is to get 500,000 back to work. That means these companies are coming back again. And trying to maintain their market shares. Haidi what about Southeast Asia . What opportunities are you seeing in vietnam, indonesia . You can take your pick when it comes to valuations. You have so many markets trading at distress levels. His attempt into you at this point or do you really need more of his ability to what happens at the end of this crisis . Mark no, it is very tempting. The way to look at it is this way you have to assume we are going to have two quarters of no earnings or losses. Once you plug those numbers into these companies and look forward comes, when the recovery we can see even with those losses, the numbers look pretty attractive. So, that is the way we would look at it. You can find these opportunities in indonesia and vietnam, malaysia, singapore, thailand you name it, they are all over the place. Taylor i want to go across asset with you. What is the further Downside Risk of oil now that we are on the 24 handle . Is there further Downside Risk . Mark yeah, i think there is further Downside Risk. Although, we have gotten pretty low at this stage of the game. By the way, the fact these oil prices have gone where they are going to help many of these countries, including india. Particularly india even more than china. This is another plus factor for many of these countries that are oil importers. Indonesia is in that category as well. Go downthe Oil Prices Lower than where we are now, it is going to be very good for these countries. Taylor finally, your calls on gold. The rally has looked eerily similar to 2008 when you saw a bottoming out as everyone wanted cash. Now were stunned to see a little bit of buying in gold as people have returned to see that is a traditional safe haven. Your thoughts on gold strength . Mark i think gold will continue to be strong. Of course, what surprised me was the downturn in gold prices. You saw markets and gold go down at the same time and oil at the same time. I think that was pure panic. Everyone was in a bit of a crisis mode and panic situation. They were selling everything. I think people should have gold and it may be a good time to increase holding in gold. Im thinking of that myself. Taylor ok, thinking of buying gold. Always a pleasure with your smart comments. That was mark mobius on all things across asset. We want to switch over to the u. K. They are in full lockout after Prime Minister Boris Johnson orders sweeping measures to end all unnecessary movement of people. Our bloomberg executive editor for International Government joins us now from london. What do we know about the latest details of this lockdown in london . What we are seeing is the u. K. Coming to live with germany and italy and what other parts of europe have been doing. Recently, he was saying herd immunity was needed to be developed by people being exposed gradually to the virus. Now he has approved a radical ban on all necessary movement unnecessary movement of people for three weeks. That means people will be allowed of their homes with one form of exercise today, travel to work if they have to go to work or medical care or so on. Otherwise, people in the u. K. Are no longer allowed to leave their homes. Says it is giving more Financial Support or backing, to italy. The european nation which has become the epicenter of the epidemic. What do we know about that and what is the situation in italy . Maybe we are starting to hit some sort of peak. Seeing a we are slightly encouraging slowdown in the numbers of italy for the second day. High, 601, but suggesting a slight downward trend. If this goes on, italy is being dragged into recession and has been pressing the rest of europe to help members economically. What we are hearing now is that german officials are prepared to support an emergency loan to italy from the euro area. That will be in enhanced credit line from the european stability mechanism. Angela merkel has said she is happy to discuss italys request. But an official has told us germany is not really ready to move forward with that idea. Theyre worried about broader structural problems in the economy that is showing up before the virus. What they might agree to is very targeted help prettily through this emergency loan program. Taylor i dont think it this a surprise that the imf this morning comes out and says the Global Economic contraction they see in 2020 and a recovery in 2021. Manyurprising given economists are saying we already in a contraction but i think the devil is in the details. How bad of a contraction are we potentially looking at . Rosalind that is right. We have seen individuals coming out and talk about severe contraction. Uninformed rising as high in some places as 30 . But it is really how hot that last. But we are seeing the imf and other entities forecast is a hard vshaped. A big bounce quickly on the other side. These lockdowns dont last particular law and that companies are able to reach that production because once they shut their factories, they dont magically start again the next day. Getting economies to resume activity takes some time even after they are allowed to start doing that. It really depends how much longer these shutdowns in places like italy where manufacturing is exactly. Continue for. As to the extent of that vshaped recovery. How long you get the slowdown for before you get the quick bounce the other end. Haidi thank you so much for that. Rosalind mathieson with us out of london. The fed has unveiled a series of unprecedented measures. We heard about these measures aimed at stemming the economic fallout from the pandemic and so far they can be effective. The package includes unlimited purchases of Treasury Bonds as well as mortgagebacked securities. Also i set up programs to ensure credit flows to businesses and local governments. Our senior u. S. Economist joins us now. What do we know in terms of what potentially is left in the feds ammunition . And what are some of the other measures floated around . We heard from jim bullard, issuing a threemonth work break being declared. All options on the table at this point. Indeed, all options are on the table, but thats look at what the fed has already done. Fed wants toork conduct operations, approximately 75 billion of treasury securities and approximately 50 billion each business day this week. That far exceeds what we saw back during the financial crisis. , they were buying 75 million per month. We are talking about per day here. They increased the amount of purchases considerably. That is just one way the fed is trying to make sure that the Financial System continues to operate. They also introduced a lot of different programs using their Federal Reserve section, which means they can act under emergency circumstances. They introduced all kinds of different programs to support the corporate market, the Municipal Market and commercial markets. This morning, they really expanded this set of different measures beyond what the introduced back in 2008. There is more coming. Taylor there is more coming and i thought i would never see the day when we would wake up and see the Federal Reserve buying Corporate Bonds and some etfs. Explain to us the level of panic where we are now seeing purchases of Corporate Bonds, some etfs. What does that look like . Yelena the thing is that the fed could not have waited for a fiscal package to really help those failing institutions. They had to do something. Indeed even though the stoppedreserve actually of like helping individual Companies Like they theyear stearns and aig, actually help the broader market. Establishing those facilities under section 13. 3, they can do treasurysh the approval actually. So, they really needed to help the failing Corporate Bond market. Todays actions are helping. Taylor unbelievable times. Thank you to our blumer economic senior yelena for all of her fed and economic analysis. I want to give an update on what is happening outside the rest of the world and we do that with ritika. Ritika the latest survey of the chinese economy Shows Company suffering their worst quarter on individual each sector reporting worse results through march. While widespread decline in sales and retail and the simultaneous collapse in profit. Activity plummeted in february as china was put on lockdown to tackle the coronavirus. Financed even central bankers have held an emergency Conference Call on how to handle the fallout from the coronavirus. The agenda included the likely damage to the Global Economy and how to work on a coordinated response. The impact on supply chains and consumer demand is excited to put the work into a recession in which the imf fears would be worse than after the financial crisis. The virus has caused a postponement of the Worlds Largest trade exposition. The start date of the fair is being delayed from april 15 as organizers assess the fallout from the infection. The fair began in 1957 and is held twice a year, attracting about 25,000 exhibitors and 200,000 delegates. Last year, the events off 186,000 buyers from abroad. President trump signed an executive order banning the hoarding of goods and price gouging during the virus. The u. S. Is running low on hand sanitizer, meat and canned food and some people try to resell goods at inflated prices. Thewhite house released water and the president signed it in private. Global news 24 hours a day on air and on quick take, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thank you. Coming up, an exclusive interview with the u. S. Energy secretary about the impact of the coronavirus on the oil and gas industry, and how producers intend to stabilize prices. This is bloomberg. Haidi the u. S. Energy secretary Dan Brouillette says the possibility of an oil alliance with saudi arabia is what idea they are considering to stabilize oil prices after the worst crash in the generation. He spoke with Kevin Cirilli who started by asking about plans to buy big on the dip. Sec. Brouillette the plan as we see it, with the president announced is the purchase approximately 75 million to 77 Million Barrels of oil to philip the Strategic Petroleum reserve. We are finding with that effort. We dont know exactly where they stand because obviously that big not passed the bill. We will be working with congress throughout the day to ensure funding that particular project. Kevin youve announced a Publicprivate Partnership with Different Companies including ibm. A highperformance computing consortium. What would that do . Sec. Brouillette we are making available the resources the department of energy to the Corona Task Force as well as scientist throughout the country to help provide a solution to this coronavirus pandemic that we are experiencing. United States Department of energy owns the two fastest supercomputers in the world. We have several other computers we have also made available. We are working with concert with Companies Like ibm and others amazon and google to make these Resources Available to researchers all throughout the country. Kevin while all of this is going on with the coronavirus, there is clearly developments in the middle east. Do you support some kind of oil dumping investigation being taken against the saudis and russians . Senators have called for that. Sec. Brouillette ive seen the comments and calls for that. I am not privy to exactly what they would like to see done. I believe that to my colleagues at the department of justice. Dumping cases are something that are going to make its way through the court system either in the Domestic Court system or the International Court system, but i believe that to my colleagues at the u. S. Department of justice to sort out. Kevin two more questions as relates to that. There has been reports that some Energy Department officials want saudi arabia to quit opec and Fortune Alliance with the united states. They argue that would stabilize oil prices. Is that something you would like to see happen . Sec. Brouillette there are many ideas that are floating around the policy space. That is one of them. I dont know that is going to be presented in any formal way. As part of the Public Policy process, our interagency partners often get together and talk about a number of different items. But weve made no decisions on this. I work closely with secretary of state pompeo and others. At some point, we will engage in a diplomatic effort down the road. No decisions have been made on anything of that nature. Kevin one final question for you. As it relates to the saudis and russians, have you talked to your counterpart and what have you been doing to navigate this dispute between the saudis and russians . Sec. Brouillette weve had conversations as we normally do. I have not had a conversation with the prince about any conversations he may have had with the russians. It is not appropriate for us to do that. I will leave that to our state but weent colleagues will continue the routine conversations that we have from time to time. Kevin i want to bring it back to capitol hill because all around the country, people who work in refineries are anxious as it relates to the Economic Impacts and economic inaction coming from policymakers. Just to reiterate, if you are working in a refinery or work in the energy sector, what is your message to those workers that are having to stay at home today try tore at the news and figure out if they are going to be able to economically be viable in three months . Sec. Brouillette first and foremost, i will tell the workers in any refinery to follow the cdc guidelines. Follow your corporate guidelines as well. Make sure the health and where phone of the workers is first and foremost. We have to work very aggressively to slow the spread of this coronavirus. That is first and foremost. Beyond that, i think it is important for congress to get together today and find some agreement. Some bipartisan agreement on this important package to provide liquidity, not only to ministries that are Service Related but the industries that are providing the energy which depends on so much of the economy and will underpin so much of economic recovery. Taylor that was u. S. Energy secretary Dan Brouillette speaking to Kevin Cirilli. Meantime, we are getting other International Relationship news. The u. S. Is set to cut aid of about 1 billion to afghanistan after the Company Country failed to form a unified government. This coming from Vice President secretary of state Michael Pompeo who traveled abroad for the first time to help heal a rift within the Afghan Government to resolve peace talks between the u. S. And taliban, given they have failed to form a unity government. The u. S. Is saying that will cut about 1 billion in aid to afghanistan and an additional one billing dollars could be at risk Going Forward in 2021. We will bring you all of these latest News Headlines as we get them. I do want to transition to back to oil because we want to get some more insight with crude, 24 a barrel. Joining us from washington is sam Hill Strategy cofounder, katie baize. We just got off the phone with mark mobius. I asked him how much further Downside Risk with oil already at a very low 24. How much Downside Risk is there for you with crude at 24 . Numbers and lot of i am not sure what he said. I have heard very low numbers earlier. This morning, there was talk about crude going negative. His crew the new natural gas where it is a waste product and you are having to pay customers to take the product. That is probably pretty extreme. I do think the test for crude is going to be first of all how quickly does the Global Economy sort of bounceback from the coronavirus epidemic, meaning what does that really get under control. And then what does the balance of the market look like. Which crude are we having to shut off in order to stabilize the supply side of the market . We have seen a lot of cuts in the u. S. , but we have not seen a resolution between saudi and russia as everyone is aware. We have yet to see a meaningful reduction in supply from the u. S. With that means is the virus epidemic will be getting worse as the crude is going lower. Theres not a lot of argument you could make with Something Like that. Taylor im curious between the two dynamics oversupply and lack of supply. Which one of those two worries you most . Katie great question. I think on the demand side, the worry is so nearterm, it is really about you are going to have major demand dislocation. I have been hearing the word demand destruction a lot. That is not really the right word because i would gladly be traveling i am sure you would all be gladly traveling right now except for the fact we are all stuck at home. That is not demand destruction. The demand o side will bounceback hopefully later this year when people begin returning to the regular activities. It is really the supply side of the equation that has been the biggest problem for the industry for years. Within that framework, maybe whats happening right now is not such a bad thing. I say that with all the empathy in the world for our Oil Producers all around the world especially in the u. S. Who are taking the brunt of the downturn. Marketlity is that the and the supply side and the producer side that has a lot of deadweight from contracts to kind of zombie operators that are still operating without producing much money these are businesses that really have to consolidate or restructure and i think that is what we are going to see with crude prices in the 20s. Haidi how many wills wont survive . Katie youve got probably 300 small and midsized operators in the u. S. Frankly, you are looking at half of those being at significant risk. You are seeing downgrades for credit for even large credit worthy producers in the u. S. Has the risk is significant now. Thinking about secretary br ouillette, that is a pretty negative Public Policy outcome to see policy operators unable to access capital. There are a lot of smaller, nonfree cash flow producing companies that are at risk. In the rather nearterm, to my knowledge, we have not seen any public emps begin restructuring yet so that trend is yet to take off. Haidi as you say, it is not as though the demand will return. The problem though is we dont know if this is six months, 12 months. A lot of people are talking about a depression versus just recessionary conditions. Theres a good chance that even when demand returns, it will be diminished. Katie absolutely. I would note we have had recessions in the past with High Energy Prices and high energy demand. I dont necessarily correlate a negative economic environment with low energy demand. I would caveat with that. The suppressed Economic Activity we are seeing right now is certainly an extreme outcome. The question on everyones mind is when Economic Activity bounces back, will it bounce back to the level that it was prior to the threat of the virus , which is the concept of the vshaped recovery, or do we have more sustained damage being done to the economy because of, specifically the publicpolicy reaction to the virus . I think we watch the things that are happening in d. C. We see deadlock in congress. The inability to get to a deal that is designed to help workers maintain some kind of financial stability. Those things are serious risks for the vshaped recovery. Without stability, you are talking about folks having to dig themselves out of a desperate hole. Haidi always appreciate your time and insight. Katie bays on the oil story. A couple of bits of breaking news on the pandemic front. Italy saying he does not need targeted support measures according to an italian officials speaking to us on the condition of anonymity. Euro area finance ministers are not discussing specific support measures for italy as these talks are ongoing within the euro group. They are holding this debate about potentially innovative measures can be used to manage that crisis. We heard german official standing ready to provide assistance to bitterly. We are also getting lines from japan. A report suggesting japan will give citizens vouchers, not cash in terms of the stimulus response. The government and ruling party are considering providing cash payments, vouchers or other support to shore of households as part of the economic measures responding to the pandemic. Lots more to come. This is bloomberg. Taylor i want to get a quick check on some of the latest business flash headlines. Twitter falling in late trading after pulling revenue and operating income guidance for the First Quarter due to the coronavirus. It is withdrawing the full year outlook for headcount and capex. Twitter expects year on year revenue for the quarter to be slightly down. The apple watch is one exemption from u. S. Tariffs on chinese imports. The move was approved by the u. S. Trade representative and follows apple arguing that the watch is not part of beijings strategic made in china 2025 plan. President trump imposed a 50 tariff on goods including the watch, but cut them in half as part of the phase i trade deal signed in january. Softbank is said to be selling 14 billion of its holdings in alibaba amid a water move to offload 41 billion of assets. Sonder and ceo masayoshi says he will use the money to buy back stock. Shares in softbank are down 40 from their peak earlier this year. Haidi . Haidi we are watching out for softbank and the associated companies. Baba falling after the announcement after the company goes on a fire sale of major tech holdings. Lets take a look at what we are watching going into the start of trading in australia. Looking positive with that market trading at its lowest since december 2012. New zealand clawing back from yesterdays loss, ending up moderately higher as the rbnz says it has plenty of ammunition and could extend its bond buying and qe purchases. Much more to come. This is bloomberg. Haidi good morning. Im haidi stroudwatts in sydney. Taylor japan and south korea open in one hour. Im taylor riggs. Here are the top stories we are following. The fed launching unlimited bond buying amid dire warnings about the virus. The imf says the likely upcoming recession could be worse than the financial crisis. Stocks slumping as the 2 trillion stimulus plan fails again in the senate. Democrats declined a second time. They are set to publish their own support program. Haidi and a shakeup at softbank. Masayoshi son aims to offload 40 billion of assets to support his empire. The sale will include part of his stake in alibaba. Australian markets have just open. Thats go over to Sophie Kamaruddin. Plenty of reasons for the market to continue selling off. What are we seeing at the start of trading . Sophie it looks like we have a break from the selloff because after we saw thrilling stocks close at a low, the government imposed stricter social distancing, we are seeing gains for the asx 200 with more fiscal stimulus in the mix as the economy risks falling into recession and unemployment woes deepen. Jp morgan estimating that Unemployment Rate will raise to 11 in australia. Now elsewhere, we are seeing nikkei futures gain ground. Market studying as policymakers are pushing the envelope. The fed going all in, including measures to directly finance companies amid the credit squeeze and shortterm corporate debt surged in the u. S. And south korea. We are waiting measures to be announced today to stabilize markets. The boj is to provide liquidity to brokers today amid cause to act preemptively and boldly. Haidi Sophie Kamaruddin in hong kong. Mark was in singapore. We saw another massive wave of action from the fed. Does this go anyway to kind of make up for the lack of action or the lack of the ability of congress and the senate to be able to get this stimulus bill through . Mark it certainly does help. Particularly from the point of view that the fed has now taken off all limits in their intervention by financial market. By widening the scope of the instruments they are going to be buying, plus saying it will be unlimited capacity, these things are certainly positive for Financial Markets and they really need it if you look at the asian credit markets for example, they are so badly in need of something to help them because weve got on the bloomberg highyield index, it is now implied yields of more than 12 . It was only a few weeks ago that we were looking at yields of 4 to 5 . More doubling of yields in a very short time. That is a very serious impact for companies in asia. What it is telling us is investors are very nervous about the ability of some companies to refinance themselves in the months ahead. It really needs a very strong intervention from major Central Banks around the world to calm those conditions down. Otherwise, economies were really grind to a halt if companies cannot get the credit they need to do their day to day business. By the fed saying unlimited purchases, it really is a very significant move. We may hear even some asian Central Banks doing similar things in their own markets to really calm down this very nervous situation people are going through. Taylor i think the story of the month for me was massive Dollar Strength as everyone sold everything just to get their hands on the king dollar. How much further strengthening in the dollar can you assume from here . Mark we probably have to get through the end of the march quarter to start. Part of the reason for this grab for dollars is so people can close their books by the end of march. There is a number of things going on. Overseas liquidity squeeze. People need dollars to make up for the leverage positions they have been running. They also need to get through this period. At least for this week, we may well see the continuing demand of the u. S. Dollar. Possibly once we get into april, things could calm down a bit. The japanese financial. What happened by that and maybe with all these measures that the global Central Banks have swapped lines with each other to provide more dollars, very aggressive action by the Federal Reserve and ecb. These things will gradually feed into the markets once we get beyond the march quarter. At least for the shortterm, it is hard to see the u. S. Dollar losing much ground while people still need to reduce their liquidity withng the biggest currency in the world, and get through this period where the market valuations by the end of march are going to be awful for some is the duchennes. They just need to show they have cash on hand and cast means they have u. S. Dollars. Taylor that was mark cranfield, thank you. You can follow more on this story and the daytrading on the market live blog on the bloomberg. I want to fold into dollar analysis into bond yield analysis. Bond investors have two forces to contend with the feds unlimited bond buying and on the other hand, the potential 2 trillion stimulus bill that would be funded by longer dated securities, putting upward pressure on yields. To discuss, how to negotiate the two, i want to bring in john hill. That square with me pressure, that dynamic that i just mentioned. The massive bond buying and yet what could be a lot of supply coming online to fund these deficits. How do you then determine what is fair value on the 10 year . John absolutely. In terms of figuring out what is fair value, one of the places i always start is what is the expected average fed policy rate over the next decade . If you really think about it, we are at zero and we are going to be had zero for a long period. From there, they have done massive quantitative easing. Just to give some perspective on how they are doing with the qe purchases before, the largest single one month purchase was 120 billion. They are now doing 75 billion per day. If they keep this pace up, it will be over 1. 5 trillion per month. You have this huge amount of demand from the fed coming it, and simultaneously, the flight to liquidity. It is temping to say, well, treasury needs to issue 1 trillion, to truly dollars, whatever the number is that should increase and steepen the curve. There is an element of truth to issuebut where treasury to fund the debt will be incredibly important. Although we do think that 10 and 30 year auction size will increase, that will not be the majority of the issue. Rather, it will be in the front end. It will begin bills, Cash Management bills, and in the shorter tenor. Twos or threes. What this in effect will do is while you simultaneously have this huge flight to liquidity, increase in assets under issuesent, treasuries into that increased demand. You see this offsetting pickup. That should relatively the market. As for where 10 six, at the end of the year, we would like to see something north of 150. But, it is going to take everything calling down. At the end of the day, treasuries are still an insurance product. And if and when things get worse from here and economic social, can still offer semblance of balance for an overall portfolio. People like to ration. The fact that the fed will continue stepping on the kiwi gas on a strong backstop of support, even issuing increases on the margins. Taylor i am trying to get to the point. I was joking with an economist at muse. He says when the 10 years under 1 , i am no longer going to be writing notes because when you are under 1 on the 10 year, frankly, it is hard for us to wrap our heads around this. So what are you writing . What are you telling clients . How do you think about the 10 year when we are under 1 . Jon i think what it really reflects is a couple things. I make the argument this deviates from traditional thought traditionally, we have a positive term premium. You get paid extra yield for five longer duration products in treasuries. Twos and fives are filled. I would make the argument we might be in a structural negative premium world. The reason for that has to do with the distribution of inflation. It is no longer massively to the upside. It is for deflation. But it also how treasury is sitting in the portfolio. At the end of the day, treasuries go up and down when bad things happen. This is a desired product. Who are willing to get into that asset process when bad things occur. Even when you think the academic sense of where fair value may be is a little higher, who are willing to pay more than that level in order to get exposure buthat, not only riskfree, desirable macro risk correlation. The final thing i would say with think about this is at the end of the day, the major game in town when it comes to major Financial Markets is the Federal Reserve. The fed has told us we have structurally lowered the longer interest rates. The idea that 10 should be at 4 , 5 reflects a prior time, a prior economy with different potential growth. Instead, we are sitting in a world in the best of times, you could get 2. 4 . That is with a terminal repeat. Instead, we are back at zero very fast. The expectation is we are going to be here for a very long. The possibility of tens having some ballpark fair value returns somewhere between 1 , 2 is not actually all that crazy. We just have to remember that these are valued on a forwardlooking basis. If you think about the world back when it was in the 1970s, 19 80s and even 1990s, that perception and your baseboard value actually should be. Want to jump in and give breaking news on neiman marcus, just one of a plethora of really distressed u. S. Retailers coming under yet more stress with the shutdowns across much of the nation as well as the supply Chain Disruption out of china, all of the back of the coronavirus pandemic. Neiman marcus is said to be considering bankruptcy to ease its debt load. We will get more details on that as it comes to us, but certainly that is one space as we have seen Corporate America continuing to suffer from downward pressure. Jon, let me get back to you. We have repeatedly and pretty consistently heard from Central Banks around the world, including the fact, that there is plenty of ammunition. There are plenty of tools that have at their disposal. The rbnz saying theres lots of opportunities as well for it to broaden its qe. How much ammunition is there . If they talk about it like that, why not kind of put in the kitchen sink approach . Why do we get a dripping affect that realistically is not having much of an impact in terms of propping up sentiment . Jon i would say that risk is all a matter of relative perception. It is still march and the first emergency cut was in march. The followup was in march. The most aggressive quantitative easing the fed launched has been in march. We are still in month one of this. While it has not happened in one day, one week, i would argue they have been relatively aggressive in doing what they do. I do agree that the fed is running out of ammunition but they are not done yet. At the end of the day, the recession playbook with fort guidance at zero. And then Quantitative Easing Program. Check, check, check. With they have done instead is moved to their crisis playbook where you get all the acronyms all the newnd things they are introducing. These are really kind of liquidity injection things in order to stabilize Financial Markets. Where we go from here is going to be a combination of the two. A couple of things im looking forward to that the fed may or may not announce, almost imminently, would be either the inclusion of some missable bets for quantitative easing purchases. They have already tiptoed with some liquidity purchases. You have been a civil bet in terms of expanding the asset purchases. The other option could be yield curve control. This is something the governor has talked about where the fed comes in and says anything up to two years we will buy if it is cheaper than. 25 . That would be a win for the fed to force the curve even lower for even longer. They have not gone that direction. They have not fully expanded their asset purchases so they are not out of ammunition yet, but they certainly have fired a majority of the bullets. At the end of the day, this is not a monetary shock. This is a health crisis, a social crisis and a massive hit to aggregate demand. The fed can try to offset some of this economic calamity but they are only going to be able lossesge amount of job and a recession. The big question is how deep and how long . Haidi specific to the commercial paper market, how much do you think these new facilities are likely to alleviate the pressure given that we keep seeing commercial hitting record high after record high . Jon i think the commercial paper facility will be very valuable. There are a couple of reasons for this. Designed if you look at the pricing of the facility, it is not designed to force rates down to zero. Instead, this is supposed to be a last resort style product which makes it different from some of their other facilities where they are trying to control the actual rates they are doing. The other thing i point is although they have announced the commercial paper facilities, they have not actually started executing on it. They are still trying to get the paperwork involved. They still need the legal side in place. This process, when it completes, then you will start to see that flood of cash go into the system. I do think it will be immensely valuable. However, we have not seen the full brunt of it yet. Unfortunately in crisis scenarios, rely things happen immediately. This will be one of the things that will have a beneficial impact, it might be a little more lagged. Situation,his crisis it really does feel like more than ever time is of the essence. Appreciate your time. Jon hill of bmo capital markets. Lets get you some breaking news onuber which is yet another company that has come under extraordinary pressure as a result of diminished demand or demand obstruction from the coronavirus. Uber announcing the suspension of its pool service around the world. Not a surprise as it is clearly a problem when it comes to social distancing. Still ahead, forecasting the likelihood of bankruptcy in this virus challenged times. We speak to the creator of the ultman fed. The u. K. In lockdown as President Trump says he wants the u. S. Reopened soon. All of the latest from the coronavirus pandemic. This is bloomberg. Taylor governors and mayors across the u. S. Have issued orders to shutdown normal human contact and Business Activity even as the Trump Administration debate easing some of those restrictions. Our Congress Editor joe is on the line from washington. What was your key take away from the virus update that we just got in the last few hours . Joe the president made pretty clear he is eager to see the shutdown end sooner rather than later. It remains to be seen whether in the next week or so he decides that some of the measures that have been taken at the federal level need to be eased up or recommendations for people to be allowed to gather be lifted. However, he does not have actually full control it has been left up to the governors and states, especially the biggest and economically important states in the u. S. Like california, new york and illinois where they have taken much stronger actions. Requiring people to essentially haveerinplace and nonessential businesses close down. So, theres going to be some tension there is this goes forward. The Health Authorities continue to recommend this sort of situation and trump month go ahead and lift it. There is going to be some conflict in what is done in the states. Updatewe also had an when it comes to the testing situation, the infection situation. What is the latest in terms of the actual frontline of the virus and are things improving when it comes to availability of testing as well as medical supplies for Health Care Professionals . Joe well, there has been some uptick in the amount of testing that has been available now for the general public. We are still not matching a lot of the need out there. There is still they are continuing to recommend anyone who is not exhibiting symptoms, they are recommend they not be tested. This creates a situation as we had in the senate, with a member of the senate, rand paul, coming down with it only after discovering it through a test. Some of the equipment is starting to get out. There will continue to be shortages elsewhere. Taylor joe, thank you as always for joining us. Were continuing to see the fallout of this pandemic head over to the corporate outlook. This coming from ab inbev. They are withdrawing the 2020 outlook given the uncertainty over the Coronavirus Impact. This is not new. We continue to see a lot of companies. Twitter, for example, today pulling back First Quarter, Second Quarter, even fullyear guidance given how uncertain all of this is. The latest, ab inbev, withdrawing the 2020 outlook. Haidi absolutely extraordinary. You also get why they are doing it. Why is the point when we have so little visibility on what the Economic Conditions are going to be in the coming weeks and months . Lets get to the european situation. The u. K. Is in a full lockdown after the Prime Minister Boris Johnson ordered sweeping measures to limit movement of people. We are joined now from london. Ros, it seems like the u. K. Is doing its own thing. It wanted to create herd mentality. There was a great deal of confusion of how that works. That experiment did not last very long. Rosalind now we are seeing Boris Johnson reverse, approving a radical ban on all unnecessary movement, saying you must now stay at home. Only under certain conditions can people go out and the police can fine people that are flouting the new rules. Until now, he relied on people to stop socializing. He has been accused of failing to act fast enough to get a grip on the virus which is now killed more than 335 people in the u. K. Taylor germany has indicated that it could be open to giving some Financial Support to italy, which as we know has been one of the worst hit by the virus pandemic. What do we know about any potential support for italy . Rosalind that is right. We understand german officials are prepared to support an emergency loan to italy under the european stability mechanism. Angela merkel is not so keen. She is looking at very positive support for italy. Italy saying it does not need support measures. Some pride kicking it because italy has been one of the most vocal asking for help from the euro zone as a whole. It is saying it does not need specific support itself but the whole region needs something from brussels in terms of economic stimulus across the whole region. We are seeing the euro Group Leading tuesday in europe and expected to discuss specific support measures, including for italy. Taylor thank you to bloombergs International Executive editor. I want to get a quick check on the latest business flash headlines. Honeywell is said to be in talks with banks to raise a new 5 billion loan which would have a maturity of about two years. Several Investment Companies are attaching credit loans and asking for liquidity while the coronavirus strangles demand. Honeywell telling bloomberg it has access to its commercial market and tension is over funding. Activist investor bill ackman has made what he calls a recovery bet on the u. S. Economy, spending 2. 5 billion in about 10 days. Acquisitions are spread across the portfolio includes boosting stakes in starbucks and other companies. Ackman says he removed all the hedges and had use the proceeds to go along. He adds it is the most bullish thing he has ever done. Disruption from the virus is slumping demand and forcing the idling of all auto plants in the united states. The closures affect more than 160,000 workers that includes 42 of 44 factories across the country. The auto sector has asked the government to delay the june want implementation of the supply chain rules in the usmca trade deal to ease the fallout from the virus. Car rental companies have also begun laying off staff as the virus cripples air travel. Hertz and avis try to reduce costs during the crisis and are pressing lawmakers to add them to any federal aid program. Hertz started furloughs over the weekend, while avis announced its own cutbacks on monday as part of a 400 million spending reduction. Haidi . Talking about pretty mixed signals at the start of trading in asia. Over the past few weeks despite all the volatility, a bit of a pattern has emerged. A selloff on monday followed by a bit of a steady recession on tuesday. A bit of what we are seeing on tuesday. Ozzie stocks up about 1. 4 coming off the lows of november 2012. New zealand staging a recovery after the rbnz governors offering plenty of ammunition left and could look to expand Quantitative Easing Program to include other types of debt, including local Government Debt and commercial debt. Nikkei futures pointing into positive territory, as is cospi futures. We are keeping an eye on commodities after Oil Continues to fluctuate. Seeing some gains, about 4. 5 when it comes to trading new york crude after plunging 30 last week. The u. S. Still looking at the possible joint u. S. Saudi alliance. Next, china showing companies suffering their worst quarter on record. We get the details from the latest survey. This is bloomberg. Haidi this is Bloomberg Markets asia. The United Kingdom being ordered into lockdown from monday night amid new measures to keep people at home as the Coronavirus Spreads across the country. Prime minister Boris Johnson approved the banning of all and necessary movement for at least three weeks. Police will have the power to break up gatherings and fine individuals who refuse to accept the new laws. The coronavirus continues to infect people around the world, but there are hopes. Slowing ofrdered a new cases, a decline for the second day running. University puts global cases at 372,000 with more than 16,000 people dead. To win, we need to attack the virus with aggressive and targeted tactics. ,esting every suspected case isolating and caring for every confirmed case, and tracing and quarantining every close contact. The virus has caused postponement of training. 15, expectingpril fallout from the infection. It began in 1967 and is held twice a year, attracting 25,000 visitors. Thousands ofsaw buyers from abroad. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Taylor, haidi . Haidi markets have been trading for half an hour. What are you watching . How the asx 200 is faring. We saw them call back some of mondays losses. Trading nearstill 2012 lows. Check out the aussie dollar, edging higher after faltering with the flash pmi reading we got which contracted further in february. We are hearing now from Central Banks and australia, piling on more fiscal stimulus. We are seeing aussie bonds continue to catch a bid with the yield falling further. Lets check in on how nikkei futures are faring in singapore, we have seen them tick higher while the dollaryen this morning, we are seeing it move we are seeing it hold steady this morning, and seeing the king dollar reign. Taylor Sophie Kamaruddin, thank you. Commercial Mortgage Market on the brink of collapse. Predicting a domino effect, catastrophic economic consequences of banks in the government do not take prompt action to keep borrowers from defaulting. Earlier he told bloomberg he is confident policymakers will be able to handle the crisis. Havee good news is, we veterans at the home. Secretary mnuchin has been this through this two times. You have jerome powell, they have all been through this process and it is a matter of bringing together this regulatory complexity which is a difficulty. Involvedsome agencies in every aspect of commercial paperwork and Bank Regulatory confines, which is to lift market to market. It is in every into instance. Whatst to be clear, tom, you are talking about now, a wave or market requirements, things you propose like a suspension of loan modification rules, that is not at all contemplated and what the fed announced. That needs to come from the regulatory bodies and some of the money you are looking for needs to come from congress, is that right . Exactly. The fed say they will do it without congressional action. I understand congress is doing the best they can. They are afraid of crony capitalism, but that is not what is happening. To keep them employed you have to support the employers and their biggest cost is rent. If they cannot pay rent or interest on debt, banks and intermarry aries intermediaries cannot pay, it collapses. Give us an idea based on what you understand, your experience, if the banks do not take action, if congress and regulators do not take action, what happens . You have default across the ofrd on whatever percentage 16 trillion, for mortgages. Just in the commercial Mortgage Market you have 4. 5 trillion. That money keeps to needs to keep recycling so they can hire employees. If that stops, margin calls at the banks to intermediates. We talked about the nonbank banks and the shadow banks that after doddfrank were instituted to create more liquidity in the system for mortgages. When that stops, everything stops because when margin calls start, which is what is happening now, which is what happened in 2000 eight, which is what happened in 1997, which is what happened to longterm credit, it is a momentary timeout. Everybody needs just a timeout. 60 to 90 days, let it all come back together, tack on accrued interest to the end, and you solve the problem. If we do not solve the problem days, we have a different set of problems. Haidi that was tom barrack. The latest survey of the chinese economy Shows Companies suffering their worst quarter on record. The chinese beige book said there was a decline in sales and a collapse in revenues and profits when the coronavirus was at its worst in china. Selina wang has the story. What were the takeaways from the survey . Chinese beige book called this an eyepopping First Quarter. In a decade it found its metrics had sunk to contractionary territory. A survey of more than 3300 firms. Property, retails, manufacturing, all falling to the lowest on record. Much a surprise given the Economic Data the first of the year fell to the record lowest level, but the survey underscores how bad it was for Chinese Companies. Saidf those we surveyed their earnings fell because of the coronavirus in more than 80 said sales had fallen by 5 compared to a. Quarter earlier the third said sales had fallen more than 10 . As expected, even worse for the Services Sector were almost half the company saw on more than 10 fall in the First Quarter of sales volume. The slow down crushed every part of the economy as data shows, but the Central Region or hubei province, is stark. They had the highest closure rate, steepest fall in output. Even in the first half of march these shutdown rates were still elevated compared to the other parts of the country. Taylor as always it is about forward guidance. What do we know about what is to come next, to downturn any major consequences Going Forward from this . Selina the beige book says there are serious implications for what this downturn means. First of all, local markets are not prepared for the full extent of this First Quarter drop. They are predicting a 10 to 11 drop. Investors are overestimating the extent of chinas recovery and how much you concussion this global downturn. They say a few weeks ago a vshaped recovery was not outlandish. Now the coronavirus is rapidly spreading. A return to normalcy in china is getting more unlikely by the day. Even if china is restarting, its partners and Global Customers are remaining shut down for weeks or months. We are emphasizing chinas recovery is no longer a story of domestic resilience, but factors beyond chinas control. In recent days we heard chinas authority tout optimism for a fast recovery. The beige book is expecting more dismal numbers in the Second Quarter. Concern, chinas workforce and how that will bounceback. If it does not have a significant bounceback in the Second Quarter, chinas government will have to come in with aggressive intervention. Wang. That was selina and, brace for bankruptcy. We speak to nyu Professor Emeritus Edward Altman, predicting if a company will go bust. This is bloomberg. Guest expectst bankruptcy sometime soon due to the coronavirus, nyu Professor Emeritus of finance, Edward Altman, known for pioneering work and rejecting the likelihood a company will go bankrupt. Great to have you with us. What is your formula telling us about what the next three to six months will look like in Corporate America but also globally . Edward we have been looking very carefully at the highyield bond market. In addition, there is a very ratednumber of bonds just above highyield or bbbs. We ran a test on the bbb population before a virus as ofic situation started the end of 2019. We found there were already more than 30 of that population, that population is more than 3 wereion u. S. Dollars, that looking, they did not deserve to bb or b. But we expect a fairly large proportion of them to be downgraded at least by the market if not i the rating agencies if not by the rating agencies. There is almost 100 likelihood of a recession Going Forward. This will have a profound impact on the highyield junk bond market because many of the players in that market, many of the firms, which are marginal at best to start with, will be crowded out by new entries, socalled fallen angels from bbb s. That is one thing that was concerning me even before the beginning of this pandemic problem. I am looking at your notes and as you point out, compared to the last three major financial crises, the proportion or ratio of nonfinancial corporate debt to gdp is at its highest and at the same time, we are seeing low levels of defaults as of the end of last year. Everyone is saying we will see recessionary conditions, but now we are getting people dropping the word depression as well. How bad can this get . Edward you picked a very important indicator to look at, nonfinancial corporate data as a percentage of gdp. Let me give you a little perspective on that. The last three peaks, in 20082009, when the debt level peaked, it was followed within 12 months by record numbers of defaults. The default rate was at record levels. Level of this nonfinancial corporate debt as a percentage of gdp is now higher than it has ever been, including those three. Every time there has been an increase in default following that high level, we have been in a recession in the united states. And so i said about a year ago that there would not be any problem if we went into a recession and the default rate would remain either at historic averages or below, which it did at the end of 2019. Now with the almost certainty there will be a recession, probably by the Second Quarter this year or third, all bets are off. We expect just this year to be about 150 billion of defaults from highyield bank bankruptcies and other types of defaults. That will probably be lower than unless be in 2021, efforts by the government, particularly the Federal Reserve, bear fruition, which is doubtful. But they are trying hard, i must give them a lot of credit for that. Taylor professor, it is great to have you on because your z score gave me nightmares that all three levels of my cfa levels. It was fun. What a great chance to get your knowledge on this. We have seen a lot of cracks show up. I am looking at the highyield. Is that what you need, the highlevel cbx spreads, that we are taking out protection against those fallen angels as you alluded to . Edward the highyield spread is over 1000 basis points. More than 10 above the government riskfree rate. It can go higher. Or 21 at the height in december 2008. In other words, it could double. It ishat high level, saying the market is getting risk adverse and means high rates of return. However, it is not even that that is the main problem. The main problem is the liquidity in this market. There is very little liquidity there. It is interesting the Federal Reserve has stepped in today and announced they would be supporting the Corporate Bond market by purchasing Corporate Bonds, but only at the investment rate. They are very attuned i am sure, because i have known many of phenomenonbb to this we are experiencing at a high level. Becoming somewhat of a market maker, at least on the buy side, trying to keep prices from falling too much. However, the 10 spread as you said, blowout of the yields, is indicating likely default rate coincidently, over the next 12 months. The Rating Agency states perhaps higher. The highest it has been was 12. 2 , if you measure it in dollars, in 2002. We have some ways to go in terms of defaults, but we are already at a crisis level which i define as a default rate of two standard deviations above the mean, a little above 10 at this point. Asking,tion everyone is how long will these high levels of distress and default last . That is the 64 million question. Or billion dollar question now. I think it will last quite some time because many of these firms were zombies anyway, being kept alive artificially by low and the rates, relatively good performance in the economy. Now of course the economy is no longer at that support level. Taylor when you look at default what relative to 2008, insight does that give you to recovery rates, pennies on the dollar, now versus 2008 . Edward that is a great question, very important for the investor to be concerned not only with whether or not the bonds and loans they are holding will default, but if they do, what can they sell it for in the marketplace, the socalled recovery rate at time of default . Theredels have shown when was a blowout in terms of large amounts of defaults, supply and demand conditions kick in and the recovery rate, what you can sell the bonds for after default, drops dramatically. Rateuld expect if default reaches 10 this year, the recovery rate will probably drop below 30 to Corporate Bonds and below 60 for corporate loans. Maybe even down to the 25 level. The lowest it has been was in the low 20 level in 2002. To . 25 onto drop the dollar if not lower, in say the next six to nine months. Particularly in one industry, which everyone is focusing on gas the energy, oil and industry, in the united states, where there is probably close to 20 of the highyield market occupying that industry. Professor, what do you see the survival rate when it comes to energy . This is the one sector we are watching particularly closely when it comes to levels of distress. Already we are hearing a lot of assumptions that in the next month we will see a great deal of restructuring and some of these u. S. Shale names will not survive. Edward yes, there will be attempts to restructure these companies into what is called a distressed exchange. Tender offers on the to pay backcompany a certain amount of the bondholders, if not all of them, Something Like . 60 on the dollar with new securities. If bondholders except that, we call it a default. That adds to the default rate anyway. It is wellestablished now, these techniques, these outofcourt settlements, to try to avoid bankruptcy. My studiesd on this, have shown that 40 of these outofcourt settlements and up in court anyway in a subsequent bankruptcy within two to three years. Attempt,l be this particularly in the oil and gas industry, but across many sectors, to do this. The lawyers and turnaround specialists are quite adept now at this procedure. I expect they will try even harder in these troubled times. Especially in the forbearance period giving companies a longer pay back time to loans and bonds. Iss forbearance period important now in this climate when everyone is hoping the pandemic will calm down by the end of the summer, if not sooner. But certainly within four to five months. Taylor with the famous altman z score, that is famous professor Edward Altman from nyu. This is bloomberg. This is bloomberg. Taylor we will be watching softbank at the top of the next hour when tokyo comes online. Bloomberg has learned it is planning to sell 14 billion in alibaba. Joining us on the phone from tokyo, pavel. , lot of money to put together 14 billion dollars. What does this mean for softbank and alibaba . Pavel 14 billion sounds like quite a bit, but they are expecting to get to 41 billion, the maximum announced yesterday. Billion about 250 worth of assets but only three that are liquid. Alibaba, roughly 120 billion. About 40worth billion. And sprint worth about 20 billion. A lot of them come with a caveat. There is collateral for loans. Sprint is going to emerge with tmobile, with a lockout period and engineering to unlock the value. This gives you a perspective of his a war chest he has at disposal to deliver on that promise. Haidi the company also buying back over 20 billion of its own shares. It is almost exactly what elliot management had been pressing for earlier in the year when it sold its stake. Is this shutting off the critics or activists . Pavel [laughter] that is the 20 billion question. We have seen earlier an announcement of 500 billion yen buyback, but also market cratering. Measure happens to markets needed more. Im sure elliott is pretty happy about what has happened. This is bloomberg. Ned. This is bloomberg. The markets have just opened for trade. Good evening from bloombergs Global Headquarters in new york, im taylor riggs. Here are the top stories were following. U. S. Futures rise on speculation that congress will pass a stimulus bill and the feds bond buying can contain the virus fallout. A likely recession may be worse than the financial crisis. And persian square makes a recovery bet on the post infection economy. Well hear from founder bill ackman. Haidi and the olympics are to be postponed. Athletes have been calling for a delay as the virus threatens competitive and fans. Lots of breaking news. Lets start with indonesia. A panel has recommended emergency law on income tax recommending a budget deficit capped at 5 of g. D. P. This is part of the emergency law for the deficit cap. Were getting some more details, this as the government has been talking about allowing that 2020 budget deficit to widen beyond its current forecast which previous to this was 2. 5 of g. D. P. There were talks about relaxing that to keep it at 3 . This panel is recommending an emergency budget deficit cut by as much as 5 . This requires a revision of indonesian law and clearly a downside and the impact of the pandemic. We are getting breaking news on china on its latest coronavirus numbers. 74 out of 78 new cases on march 23 reported. Certainly a jump up there when it comes to new cases and 74 out of those have been imported, which is a trend weve seen coming out of china. Hube has one additional coronavirus case on march 23rd reporting 78 additional coronavirus cases on march 23rd. Lots of breaking news at the top of the hour. Markets open. Relief for asian stocks. The any kay at nearly 2 while the yen is firmer as the dollar is slipping. P. M. I. Reading due at the bottom of the hour which comes with speculation that the japanese government will lower its Economic Assessment as well as t seeks to raise cash, 14 billion of alibaba share. Kospi opening more than 3 higher. We are seeing it gain ground. And korean policymakers on alert and the borrowing costs continue to climb. I want to show those yields which jumped on monday to cap the longest rising streaks since 2017 this after worries that the corporate debt due exceeds fine has the government plans to allocate to calm bond markets. According to korean media, that bond Stablization Fund they will buy commercial paper unlike the ond fund that was created. Taylor i want to go over to. G. Asia, market strategist, a. G. Pond. We see fiscal monetarily coordinated policy. How much more constructive are you on the equity markets given all the coordinated action . Good morning, taylor, thanks for having me today. I think we assume quite a bit of efforts that have been put across. Remains a health risk and even though we have some very early measures being put into place, i think ultimately, its going to take one of the changing sentiments for prices to recover. I think, you know, more downside that we could be seeing, the market and therefore rendering quite a bit of cautiousness. How much of the equity market do you need to see until you start dipping your toes back . Taylor, i think the decline as been quite some extent 30 . At i think its also a bit of timing issue. What were seeing quite a bit recovery here in asia and china and the stablization of the s, in comparison whether its where the worries lie and youll see some of the early march numbers and potentially these could be numbers to suggestion that were seeing a weakness in demand. So even though i expect not perhaps too much down size from here, but i think in terms of expecting things to go up, i think its still a little bit too early at this point. How much on the fly depends on the Public Health response . Because at a certain point when essentially when you have everyone and every economy under a lockdown most places are either in that situation or heading into that situation. Theres not a lot more in terms of the containment and the mitigation that governments can do other than to keep treating, keep testing and keep people indoors. At that point do you think the market mite see a flaw if we start to see a leveling off of these infection numbers . Well, so haidi, im not a bit o a Health Expert here. But what we have seen from the numbers from china is the expected, while containment efforts have brought some of the more extreme lockdowns and otherwise all together, and the stretch over time really helps to stop the spread in that sense, we could be seeing that theres a bit of function of time in the sense that overall the numbers will be taken down. I would say flatten in terms of the Coronavirus Spread itself. I think thats going to be quite a bit of a key in terms of the of months ext couple to see if this is going to take effect. If thats going to be the case, perhaps youll see the market really getting to pick up things a little bit. And there thats also what we typically see from the u. S. Market after prices and there after to the bear market situation. Its about tracking the coronavirus numbers and baring any sudden downturn. And i do think we could be seeing the markets really picking up a little bit then. In terms of currencies, clearly the Dollar Strength im wonder houg this goes to a little bit of the pullback in the dollar on an hour by hour headline by headline basis. We see risk aversion moving around. But what asian alternatives are you liking behind the green back . Its really quite a lot of moving parts. Its about tracking whats happening daytoday at this point. The u. S. Dollar strength is going to go on for a little bit longer at least until we see the situation improving. And really its just about a month ago and weve hit the first 100,000 around the world. And that in that sense the u. S. Dollar is going to be the superior safe haven. And a little bit more skyrocketing. But i think you know, there are still once again weve got to watch for other things. Among the asian currency, theres quite a bit of moving parts. Evidently we have seen tracking about one months and the current dollar perhaps surviving a little bit better competitive rests of our counterparts. We do see that the case is taking less of the part that are looking a little bit more to the i. T. Sector maybe not just expected. A lot is it is sending a lot from the u. S. Dollar itself. Haidi thank you for joining us. Asian market strategy, jigyi pan. Well be joined by sylvia dombrowski. And Debbie Morgan as well. Taylor but first and coming up next, the olympics appears to be facing the first postponement since the modern games began. Well have the latest from tokyo. This is bloomberg. Youre watching bloomberg. Sweeping new measures to keep people at home as the Coronavirus Spreads across the country. Prime minister Boris Johnson approved the banning of all unnecessary movement of people for at least three weeks. Police will have the power to break up gatherings and fine individual who is refuse to accept the new laws. The coronavirus continues the infect people around the world but there are faint signs of hope. Around milan no northern italy has reported a slowing of new cases posting a decline for the second day running. The latest running tally puts local case at 375,000 with more than 16,000 dead. Nearly 80 nations have asked the financing. Mergency the agenda includes the agenda the likely damage to the Global Economy and how to work on a coordinated response. The impact is expected to push the world into a recession which the i. M. F. Fears could be worse than after the financial crisis. The chinese economy Shows Company suffering their worst quarter on record with each individual sector reporting worst results through march. The China Based Company says there was decline and the simultaneous collapse in revenue and profit. China was put in a lockdown to ackle the coronavirus. The news powers by 2700 journalists and analysts. His is is bloomberg. Taylor, haidi . Haidi the Tokyo Olympics panel speaking out. Lets get to our correspondent. The pressure is mounting with some countries saying they wont be sending their teams. Has there come to a point where they are going to have to make a dediscussion and whats the latest . Looks like a decision is coming fairly soon. We heard from abe saying postponement is a possible possibility if they cannot insure the safety of the athletes and the i. O. C. Committee member dick pound telling usa today, the one thing he is for sure that the july 24th opening of the Olympic Games in tokyo of this summer will not take place. He was pretty definitive in that. The i. O. C. Over the weekend, in a meeting actually decided that some sort of decision had to be made within four weeks. Im guaranteeing im not guaranteeing, but im betting a decision will be made much sooner because yesterday we got a chorus of countries saying they are not planning to send athletes to the 2020 tokyo game. Australia said we are planning for 2021. That looks like the momentum is gaining if a possible delay of about a year. The newspaper in tokyo is saying that japan is seeking assurances that the games could be held within one year. Were hearing from n. H. K. And meets that shinzo abe will with the Olympic Committee today. Im betting some sort of decision could be passed on this week at the soonest. Stephen, any early indication what is this means for tokyo economy . We know that the cost of putting on the games exceeds the revenue brought in by tourists. What now for that . They were in technical recession in the First Quarter already. Weve seen a number of stimulus packages come from japan. The government increaseed the purchase program. Their trying to prop up a government that is very reliant on the Global Economy. And they have put out three scenarios. One would be, you know, recovery not until the third quarter. This is a game that cost 26 billion and thats probably a conservative figure. The cost could be quite great. If its delayed until next year, its delayed into next year. Taylor steve engel. Where the Federal Reserve has been previously reluctant agreeing to lend to companies and leave nothing tools unused help latest attempt to out with the fall o. T. Kathleen, i never thought i would see the day where corporate bonleds and e. T. F. s re getting bought. But a las, here we are. They predicted the worse recession on record since records started being set. You can understand the fed losing its reluctance to move forward. Previously they said congress would have to approve and congress is stalling. Heres what the fed is doing. On the liment purchase of u. S. Treasuries, theres no 500 billion or 700 billion, no, whatever it takes. They are going to as taylor just mentioned intervene in the Corporate Bond market. Theyre going to be doing buying new Corporate Bonds, thats not so much whats surprising. Its in the secondary market Corporate Bonds that has been actually prohibited without special permission from congress which they do not have yet. Theyre going to be buying Mortgage Backed securities but commercial Mortgage Backed securities. That is new ground for them. Expanding the commercial Paper Funding Facility and the main treet lending program. But they are really going on serious ground. Thats why a former fed official wrote an oped saying the fed should not do this lend to banks. Dont be lending directly to coorningses. A new debate has started at the eds. Haidi we listen in to earlier President Trump expanded on comments he made early about getting the economy, getting people and services and retailers back open sooner rather than later and saying that its not going to back three or fourmonth thing. Thats right. Haidi he doesnt want to have the virus be such an economic thing. But theres such a gap from what Public Health officials are saying. There are people who are very much at risk from the coronavirus. They tend to be older people. Many of them with debilitating conditions. Beyond that, you cant turn off the entire economy. This economy was not built to be shut down. You cant just close the plants. And then have them start up again. This is mainly a services scommi. He says the coronavirus cure cant be worse than the problem expanding on comments hes been making that the Vice President made even earlier on monday. Lets listen to one of the things trump said at the prers. Were going to be opening up our country. And were going to be watching certain areas. And were going to be practicing everything that deborah is referring to right here. Were going to be watching this very closely. You cant keep it closed for the next, you know, for years, ok . This is going away. Were going to win the battle. But we values you know, you have tremendous responsibility. A very es, haidi, it is big question. Weve never gone through the coronavirus before. We made a distinction between california. New york city, the em center now. Going the midwest, hardly any coronavirus. It will catch up in the midwest . We dont know. The definite is definitely stiring the pot. I think it will be interesting to see how narcotics take this. Do they see this as a positive . If you lose your job, if youre first to close your Small Business this is very bad for your health and causes longterm damage as well. This up. Dent opens we have more corporate reaction. Well be joined by black Sheep Restaurant cofounder in about 10 minutes. And alan zeman in a little bit after that. And up next, first activist investor big ackman explains why hes making a big bet on the u. S. Economy and which sthrocks be longterm gainers from the ongoing crisis. This is bloomberg. Oog. G. Ackman is making a serious bet on the u. S. Economy investing 2. 5 million in a little over a week. He spoke to bloomberg a little earlier. Take a listen. Weve got an eight or nine position in starbucks. We bought more stock we couldnt find chipotle trading at crazy prices. Some companies are going to back longterm beneficiaries. Its not just zoom technologies. Goingou know, chipotle is to be a longterm beneficiary. They have an amazing digital app. Theyve got great delivery. Great food. And you can almost feed an tire family with a couple of burritos. The revenues today are obviously of than they were a couple months ago. People are going to get tired of their moms food. They will want to order in. Companies like lowes. We bought a lot more stock in lowes. Theyre a critical retail structure of the company. They need to keep them open in order to keep society functioning. So theyll do fine during this period. And again, everyone does better in the event this period in shorter rather than longer. And the key is you have to set an end date. You cant say were going into furlough and well see you in nine months. That kills the business. Almost every hotels stock has down 90 . Ut hilton is one of the most capitalized hotels in the business. They can ramp up very, very quickly. So were making a huge recovery bet. 2. 5 until 10, 12 days of investing maybe less than that in terms of Business Days in the market. Thats about the most bullish thing weve done going to a very a short in the credit markets. We took the rest off early in the morning. We are all long. No shorts. Betting on the country. Taylor we have some breaking news. House democrats have introduced a 2. 5 trillion stimulus fwoil help combat the impact of the coronavirus on the u. S. Economy. This is after the u. S. Senate failed to get enough votes on sunday. House democrats coming one their version of a 2. 5 trillion stimulus fwoil help support the economy during this time, haidi. Aidi they put aside their partisan differences to reach some sort of deal. Completed etting a different package from the democrats. Demand has forced the idling of all auto plants in the united states. It affects more than 1 of 0,000 workers including out of the 42 ompanies in the country. Hertz and avis are trying to reduce costs and pressing lawmakers to add them to any federal aid program. Avis announced their own cutbacks on monday. We are getting some breaking news on japan. P. M. I. Numbers. We do have the march composite p. M. I. Coming in at a 35. 8. The services p. M. I. Number coming in at 32. 7. The composite p. M. I. Well below february and the services p. M. I. Of a 32. 7 well below that. A 46. 8 in february. Not surprising here. We continue to see some deterioration in these global markets. I do want to get time for a market check here with sophie. Sophie . Sophie i want to talk about the shares which are surging in tokyo making the largest gain on record to raise cash by selling a portion of the alibabas shares. This in an effort to shore up battered businesses and soft backes portfolio. I move on to the global macro movers panel. You have japanese stocks leading the charge of the nick kay 225 rising as high as 5 . And gharning ground with the policymakers into uncharted territory. You have j. G. B. Yield continuing to fall. And selling another 800 billion rebirth. s and the government is beefing up increasing nemployment. Thank you. Lets get you to ritica. The United Kingdom is being ordered into lockdown amid sweeping new measures to keep people at home as the Coronavirus Spreads across the country, Prime Minister Boris Johnson approved the banning of all unnecessary movement of people for at least three weeks. Police will have the power to break up gatherings and fine individual who is refuse to accept the new laws. The lockdown in yained triggered the biggest stock crash on record. It slumped to and alltime low threatening the Prime Ministers hopes of reviving the economy. Domestic flights will be suspended from midnight tuesday compliments the world shutdown and shate curfew. Indias infection numbers are low but it could be the next virus hot spot. The virus has caused the postponement of the Worlds Largest trade exhibition. The start date of the fair is being delayed from april 15th as organizers assess the fallout from the infection. The fair began in 1957 sand held twice a year attracting about 25,000 exhibitors. Last year the event 486,000 buyers from abroad. Global news 24 hours a day on bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. Taylor . Taylor hong kong will prevent bars from serving alcohol. This is as the c. D. C. s second wave of imported coronavirus cases. For more on tim packet of the restaurant scene in the city, ere joined by black sheeps cofounder. Great to have you here. You mentioned that youve shut down at least now two temporarily shut down two restaurants here in the city. Quantify the magnitude of the losses that youre experiencing at this moment. Good morning, guys. Look, things have been very difficult for us since the social unrest of last summer. The last few weeks especially as the demand is lower. So we in the industry now are operating of 50 of where revenues need be. Taylor so given that youve had the protests, you were coming off that. Now, you have the hit from the coronavirus, i frankly have to ask, how much longer are you available to keep operating . How much doosh you have on hand to make sure that you and your restaurants can be open when this all blows over . So look, ill put this in very simple terms. Last summer there were 15,000 restaurants in hong kong. I anticipate that by this summer there will be less than 10,000 restaurants. We and others are looking at three successful quarters of financial losses now. So we squarely are between a rock and a hard place. For us specifically, i feel like weve done good work in hong kong. Weve created a lot of good will over the last eight years. So in some way, shape, or form we will still be here when the dust settles. By my priority is the health, safety and wellbeing of people within our community. Thats number one. Number two, and number three on my list. I just want to jump in and bring you some breaking news. Washington state is to close all businesses within 48 hours. The governor of Washington State has banned all gatherings. It doesnt say gatherings of a certain number of people. It just says gatherings. Washington state essential businesses, grocery stores, pharmacies will remain open. So the fate of washington and the u. S. Going under essentially a complete lockdown with the exception of essential services. All gatherings have been band. We know that schools have been closed for a couple of weeks there as whelm let me get back to your expectations. Your expectations of when things begin to get back to normal . I anticipate that the entire year will be a difficult year. Hong kong is a good city. But there are going to be no visitors for the next two to three quarters in the city. I anticipate demand to stay that level 40 to 60 below below means. So, you know, going back to what you were talking about, if the government in hong kong mandates a shutdown of restaurants and bars, we will get bind that if the government feels that thats the best way to tackle the pandemic, well do what needs be done. Weve been in this weve been in this agile state for the last three or four quarters. So recalibrating, readjusting will not be difficult. Typically when it comes to commercial landlords, theres been a reluctance to give any reduction, a number of landlords reduce her cut than rent. Do you think that will change in terms of what were finally seeing its been one thing after another. The Coronavirus Impact is coming on top of almost what a year of these protests . Look, we have over 30e commercial properties in hong kong 30 commercial properties in hong kong. So we work with all sorts of landlords, and independent landlords. So far our landlord partners have been very supportive. But that also is because as i said earlier, weve done good work in hong kong over the last eight years. So we have we have a good reputation. But for the most part to answer your questions, weve had a lot of support. And we continue to get more headlines, of course, around some of the gatherings, some of the airport restrictions that time. It is from the void of vietnam, National Broadcaster seaing that the airport will be suspending vietnamese overseas arrivals. More lockdown here in saigon. Have you thought about diverse fighting gee graphically whereas youre so concentrated in hong kong and youre seeing a slowdown from the protests, from now the coronavirus, is there any indication that diverse fighting in a different region could help offset the slowdown that youre seeing in hong kong . Look, you know, thats you know, that diversification will not happen for us over the next two years. So the cards that have been dealt to us is that we are a Restaurant Team of over 25 establishments in hong kong. So i understand the case for the diversification, but it doesnt its not applicable to all business for the next two years. Thats something that we will consider when the it starts playing out. But for us right now, its about survival. Has there been any Silver Lining that while they ban instore dining, takeout or to go or delivery orders, are there has any of that been a Silver Lining for you . Look, i i strongly feel that the takeout story, the delivery story is overstated. Its for us operated, its a drop in the bucket. And the other part is that the ther ones have taken a massive cut. Were fortunate where we have our own Delivery System but folks that do not have their own Delivery System and have to work with Third Party Vendors are often selling food and drink at a loss. Were seeing growth in that sector in terms of revenue, but ts not bringing its not a possibility. Thats black sheep cofounder, syed hughes sane. Well have the latest of the restrictions in hong kong. What they need to do to survive. Well be joined later with the chair alex zemne will be with us at 10 00 a. M. Chong time. Youre watching in sidney. Coming up next, it the for at he challenges. Well take a look what that means just ahead. This is bloomberg. We are just getting some breaking news when it comes to the uncertainty of japan. The tokyo 2020 olympic. The minister saying that a new date should be optimal for athletes in terms of this delay of potentially less than year. The olympic minister saying that containing the virus is a priority. After much talk, it looks like the Tokyo Olympics are heading towards the first postponement since the modern games began. As teams are threat tong pullout. They acknowledgeed that a delay may be unavoidable. Well wait to hear more details that the olympic minister is saying this new date would be optimal for athletes. Lets take a look that tit for tat restrictions being put on journalists particularly when it to o u. S. And the china and the u. S. Washington put a cap on the number of the number of chinese journalists are allowed. Ets get more from our guest from northwestern university. Great to have you. Has this ratcheting up of tensions with respect, you know, for the tit for tat explosion of journalists comes as a surprise to you given that we know the handling of the coronaVirus Outbreak is incredibly sensitive . No, absolutely. Its not a surprise, not just to me, i spent 15 years at the university of hong kong. A t it does represent, it is risk on the part of china to control the global narrative with the foreign media and what others can say or convey about what china is doing not just in covid19. But a lot of other sensitive ssues as well. Haidi and this is front and center in terms of the weve seen a very rapid move in the Chinese Media now. You have to move towards, you know, the Great Success of how china has handled the coronaVirus Outbreak no with standing the criticism. But i am wondering, you know, this kind of idea that the americans think the news contributed to a lot of the social unrest that youve seen in china as a response. How powerful is that rhetoric . And if so, does that then mean demand hould say other journalists should be restricted as well . I dont think its not so much if you talk to the wall street journal or the New York Times they feel take that doir accurate report on the ground and its very important for the rest of the world to see whats happening, and not just from official sources but from foreign media as well. But the situation has been dee tier yating for some time. So this is not new. Any time theyve been reporting about sensitive issues. Now, its covid19. But remember for months when we had the prodemocracy protest in hong kong. There was a lot of concern about how foreign media was covering that. And whether the nba was saying anything in support of that. And also with the coverage of the mass detention of the Muslim Minority and others in mass detention camps in northwest china. Theres a concern it looks at a whole variety of issues and not just the current one thats on the plate right now. Haidi you mentioned that china wants to control the global narrative. What can we do to help solve that problem . Well, i think theres more support for journalists and certainly it would help if more foreign leaders spoke about it. So there was a different situation in 2012 and 2013 when again, weapons the weaponization of a visa. You need a visa to operate in china. Usually its a oneyear one. Shorter term visas, six months, one month, even. And so this idea that theres content or an yid that youre downing that could not be accept thabble you could be expelled. The last eight to 10 years there would be nine journalist who is and been expel and expel so on. Vice President Biden that time went to china. Spoke both publicly and privately through chinese officials including then brandnew president xi xi ping and expressed great doubts about how journalists were being treated there. And a couple of weeks after that particular talk in visit to beijing, the visas were made available for the New York Times journalist and bloomberg journalists as well. What is the shortterm and conclusions . China has hinted that a number of journalist have the shorter term visas. Journalists that were expelled their visas were shorter. And whats going to be happening in hong kong . And something that china did was not only were they to be expelled out of beijing and china, but they were not allowed to work in hong kong or macau within the special administrative regions. And thats a first. Oftentimes in the past when they were expelled, they would go to hong kong. And now the Foreign Correspondent club in hong kong demanding some clarification from the chief executive. Whats the deal . Is this a further erosion of one country two systems that has experienced in congress l hong kong. The longterm effects, i think youll have to kind of see where it escalates. You just talked about the olympics until japan that are coming to see. Beijing has the 2022 winter olympics. Will things get better by then . We certainly saw in the 2008 summer olympics that beijing had in the period leading up to that, things got much better for foreign journalists. But maybe the situation has changed so much that there ovente be that kind of leeway. Thank you so much for joining us. Weisenhaus. And well speak about the economic blow from the pandemic. This is bloomberg. Bloomberg. We are seeing the aussie now extending gains to trade at 58. 99. This is the currency that has shown so much taken so much damage from the ricks aversion in the markets in particular exposure to commodities and demand out of china. We are seeing just a bit of a rebound along with regional stocks. The aussie has been trading at about a 17year low against greenback. Lets take a look at some of the measures taken in Southeast Asia to tack the coronavirus. Our economic reports Michelle Joining us from singapore. Some of the economies in china that have been dealing with the Virus Outbreak have been combating it for quite some time wrsm do we stand in terms of the stimulus count in terms of where Central Banks are and how much ammunition is left . Yeah, thats right. Good morning, by the way. Southeast asia in particular has been dealing with the Virus Outbreaks for several weeks now. Many are in their second and even third stimulus packages. I want to highlight too though that are pretty timely, singapore is set to unveil their second stimulus package. Singapore was about the first to unveil the 4. 5 million package last month. It was more than a month ago now. Theyre being more targeted as they look at how to further help business especially from hotels to be able to pay their workers and not lay off the 40,000 workers that are in the industry here. Thats one focus out of Southeast Asia this week. Singapore has moved up in the g. D. P. Report early than expected. Thats early than expected as well. The philippines meanwhile is also looking at a stimulus package. Theyve been less reliant on trade and tourism. Dont want to say theyre immune, but less than others in the region. Theyll be mowing on how to do that in congress as they also kind of weve their way through this lockdown weave their way through this lockdown. They are looking how to support the businesses who are in a lock down. Who are the companys that ont have the ability in the stimulus time . Indonesia, were about 60 year to date. Thats by far the worst. So theyre continuously dealing with the concerns, fairly or not from investors about the corona count deficit. Theres a big debate on indonesia. How do they increase perhaps the 3 of g. D. P. Mandated target for the corona count, while pouring out the spending that they need to support the economy and support these businesses an consumers right now. This morning we did get some news on that with the Budget Committee out of Indonesia Parliament calling for an increase to 5 of g. D. P. , that deficit target. So well see if that goes through. The president has said that spending or trimming spending is still a priority. He wants to look at other places to deal with cuts and spending why they unveil this mess of stimulus. Its clear from policymakers there that they do take this very seriously. The finance minister saying that the growth pace being cut pretty much in half from a 5 pace its the same over many years to 5 1 2 many years lower. Certainly complicated for indonesia in particular. Michelle, thank you for joining us. I do want to bring you some other headlines. Speaking to cnn, Steve Mnuchin is trying to close the stimulus deal. This after they introduced their 2. 5 trillion senate bill after they failed to get their bill through. Trying to close it tonight. Were hoping that this thing comes sooner rather than later. Of course, all of this comes on more coronavirus cases. This time we migrate on over to africa with uganda is has eight new cases of the coronavirus. Again, the global spread, haidi, continues. I dough want to go to hong kong to check in on asian markets open. What are you saying . Take a look at the boomplt we are seeing green first. Any kay 22. 5 leading the charge. Rising 10 anjest with animal testing on a coronavirus vaccine. Theyre jumping from a record on ts asset and plans to sell buy backes. Theyre pushing um g10 currencies. 8. 98. 99. Dollar back at thats the up date. This is this is bloomberg. O it is 9 00 a. M. In singapore, beijing and shanghai. We are counting down to the open in the chinese mainland and hong kong. I am haslinda amin. Yvonne and i am yvonne man. Congress will pass a stimulus bill and the dashcam the fed contained the fallout . A potential followup may be worse than after the financial crisis. Haslinda