Cheerleading forward as we expect politicians to do. The underlying math on the thursday past was outright graham. Outright graham. Whether it was germany or russia. Increasedew york city 9. 8 yesterday. That is a huge fall back from the end of may story we have been getting. Francine if you look at the pattern, if it is anything like we saw in france, gets better and then gets worse and then get better. Bear with us and good luck to everyone. Lets get to the bloomberg first word news in new york city. There china hasnt had an economic report like this in decades. The coronavirus pushing the countrys economy into a contraction in the First Quarter. Gdp shrinking to 6. 8 from a year ago, the worst performance since at least 1992. Recovery will not be easy. Coronavirus has hammered business around the world. China will have to demand will have to rely on fragile domestic demand. It is a threephase process. The president says some phases could begin literally tomorrow. The guidelines mark a retreat from the president s earlier claims he said he had total authority to reorder states reopen. Crude headed for its second weekly loss in a row. Saudi arabia and russia say it is necessary. They are willing to make further cuts in production. 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. Im viviana hurtado. Tom francine sorry, tom. Tom let me get into this data right now. Equities higher today in west texas intermediate is absolutely 9 11. Able, back to after we are back to december of 2001 into january 2002. It is 19 a barrel and now in 18 handle. It is extraordinary. Francine. Francine i am looking at stocks. U. S. Equity futures. The focuses is on the roads largest economy. U. S. Helping investors understand how it will reopen. Us. , thank you for joining the market is taking risk by the fact we are slowly thinking about the plans to reopen the economy. What happens the market is we open, and then we have to shut back down. If you look at the number of deaths and infections, they are not under control. Thank you so much. An hour base case, we do think we start to get the restrictions lifted but there will be setbacks, as we progress through the year. That is why the earnings that people are looking forward to are probably not going to make before 2021. End i think some of that of what you are describing. Happens where is au look at when it right time to go back into the market . Does have to be a 100 end of the lockdown . Mark a lot of that depends on which market. Having followed coverage very closely and the great job that you all have been doing, i do want to point out, theres a little bit of a difference between what we hear from professional Investment Managers and what we see him our private clients, from our investors and we see both sides. We had an investor orders order trillions in capital and we also see what clients are doing. I think that often, you talk to managers who are focused on one asset class. When you look at private clients who have had a diversified portfolio, they are doing pretty well, partly because they were balanced and diversified, but also the speed of the selloff and speed of the recovery. Them did hold through. On a lot of them are focused post crisis and the most number of questions that we get now is kind of about not what levels should i go all in or all out, but what are the most attractive Asset Classes. We like credit because it tends to lead out of an incident like this. What does the world look like . Overtimeld i get into because we know the crisis will end at some point . Point, how does a more responsible longterm investor reset on this friday . They cannot buy that much more amazon or netflix. If you cannot be in the ones that are leading the way, wheres the value in the markets given the massive reset of the last two weeks . Mark i think it is important to ,oint out that we do see barring some of the potential Game Changers like some of the news around antivirals. Maybe the broader indices are range bound and therefore, we do want to look for some other beats. , a focus onger term health tax or genetics therapy or oncology or on the health side. You mentioned the digital trends. It is true a lot of people have done very well. If you think about Internet Penetration and usage, it is likely to continue higher from here. I know you had some interviews where very large corporations are talking about doing much more outside of the office and that means more digital trends. I also think looking beyond to other Asset Classes, because one of the questions we get is around, what about this death situation and how do i change my portfolio, maybe add gold or other Asset Classes, so that i am prepared if we have a little bit higher inflation coming out in different tax policies . He, ubs has al heritage like china this goes back to the wonderful jonathan anderson. What is your view on the stability in china right now and the ability of china to rebound . Mark i think that everything is a little bit one crisis at a time. The numbers this morning certainly, the rebound for china is not going to be a vshaped recovery but we saw some of the markets do relatively well. In part because the Industrial Production is coming back, in part because we have seen that the ability we are monitoring things like traffic flows. They are improving rapidly. A lot of the second wave infections that we are seeing in china happens for people returning home. I am not saying china is all back to normal but it is setting a standard, that it is going to be hard for west to live up to in terms of contact tracing, in terms of social distancing, some of the things you describe, the way the west may restart may not be as successful as what we have seen come out of china and asia. The moment, the market is focusing on getting away from the pandemic, saving lives and reopening the economy. When do they start focusing on the incredible amount of debt that governments will have . Mark some of our clients are already there. Have plans on how they want to play the nearterm. We are thinking more about this. We see it like after world war ii, where there is financial regression. We have in place the Federal Reserve managing the yield curve. One of the places we may be out of consensus is the view that inflation is unlikely to spike up from here, despite the stimulus in the economy, despite the debt load. Because so much spending is indexed to inflation, it is not like inflation is an easy way out of the debts that have been incurred. Tom mark, thank you so much. Really appreciate your time. We got much more coming up. The markets and particularly the stock market that people look at. Anthony dwyer is scheduled to be with us. Next, we will look at and most interesting united kingdom. The u. K. Response to this virus. Futures up. Stay with us. This is bloomberg. Francine this is bloomberg surveillance. Tom and francine from london and new york. Lets reflect on what has been happening in the u. K. Boris johnson the only Prime Minister that we know of that had contracted covid. Yesterday we heard there will be lockdown extension for another three weeks. He also made it clear they will be no delays in brexit. ,ith our morning mustread saying the british economy faces an additional challenge after three years of uncertainty over brexit. In the spirit of the moment, mr. Johnson will urge europe to collaborate rather than compete in fighting this virus if necessary postpone the trade talks. Byare delighted to be joined lady camilla cavendish. We look at the response of the nhs in the government to pandemic. It has been different for the u. S. And many countries in europe. How would you rate this . Camilla this is a question we dont really answer to. If you look across europe, it is russia seems to be doing worse than countries like germany. We are more like italy and other countries which have struggling. Emptied about a third of hospital beds in the past month. We have built field hospitals overnight like the one you have in central park in new york. We have 25,000 retired doctors and nurses coming back to work. We do have the Critical Care capacity which was a big worry for the politicians. You are right. We have done things differently. The government stop quarantining quite early on. Thought that the parliament wouldnt agree to the isolation. As a result, we declined on testing. Widespread testing is going to be the only way we can come out of it. We need to learn whos got it and who doesnt. Britain is behind on that. Francine what does this mean for brexit . The government keeps saying that there will be no delayed transition period. Is this a negotiation tactic . Do you think they just want out . Camilla they really just want out. I was rather surprised because i thought it wouldve been logical to take more time if youre trying to get a good trade deal when everybody is contracting. There is plenty of view in the government that we would be freer to solve these problems and adopt rules if we are outside of the eu. A lot of people in brussels would say that is not quite right. Business as usual is pretty much suspended everywhere. Reversenk there is no gear on this one. The government is going to take its chances. Tom good morning from new york. The government instability as well. Tell our audience the vacuum that exists with the recovering Prime Minister johnson . How urgent is it for the Prime Minister to get back to the desk . Camilla this is an interesting question because we dont have a president ial system. It is probably not a big vacuum as you would have if youre president went into hospital. Essentially, britain is run by cabinet system. It is a collective response ability of all ministers and policies are made in cabinet. Hospital, johnson to wasad been agreed what more of a question of execution then making new policy. It is true to say that the longer it takes to recover, the bigger the danger is that there will be of taking the big decision. I dont think any individual minister wants to step up to make the really Big Decisions and the really Big Decisions is going to be when we come out of lockdown and how. We are going to have another three weeks of lockdown. They have not been much clearer than that about which groups. Drift. S a bit of it is nothing like in a president ial system. Tom in america, republicans are trying to learn how to act like physical democrats, how to spend billions of dollars. How are the conservatives doing at at acting more like labor . Camilla they have been surprisingly quick to grasp that metal. Before a new chance he had to make enormous decisions. They have furloughed workers. Weve got a huge emergency lending scheme. The conservatives have moved almost effortlessly to become big spenders. Theirconsistent with manifesto in the last election when Boris Johnson was pledging and norma spending on infrastructure. Pledging enormous spending on infrastructure. It is rather like the financial crisis of 2008. The big debate in the conservative party is how long. Leviathanee a bigger on a permanent basis. They will want to get back to a more freemarket solution. Cavendish, thank you for joining us on bloomberg surveillance today. Weve got much more to talk about. I want to direct you to tv. You have the bloomberg terminal, whether it is the terminal you got it on a cell phone, i find it is incredibly useful. , not only do you get the widescreen and what we are doing within bloomberg television, but you get our many important conversations including the conversation yesterday with james gorman of morgan stanley. Please stay with us. This is bloomberg. Viviana lets get your Bloomberg Business flash. Gilead today rising. A report in a medical publication saying the companys coronavirus drug is working. A trial is being conducted at the university of chicago. A researcher says most patients using the drug have been discharged. Only two died. With its wall street rival on job cuts. The Financial Services firm will cut hundreds of employees since the coronavirus outbreak began, productions are the deepest in the industry. Morgan stanley citigroup and hsbc have pledged this year to hold off. That is the Bloomberg Business flash. Francine . Tom . Tom greatly appreciate it this morning. We got much more coming up. A list of the equity markets, gilead news yesterday helping out but just a general left. Barrel. A west texas intermediate. Stay with us. J. P. Morgan Asset Management joins us next. This is bloomberg. Good morning, everyone, bloomberg surveillance. Our usual set up from manhattan, on the edge of central park right by mount sinai hospital where great people are working with is exceptionally challenging friday in medicine in manhattan. Francine lacqua in less west london. Right now, the markets. John bilton from j. P. Morgan Asset Management, we saw your Foreign Exchange department make a new call on euro, looking for a weaker euro to 1. 06. 1. 0600, weaker euro. As you know, a multiasset strategy is so much based all flows. What will the flows be in the coming weeks and months . John hey, tom. First and foremost, i think that what is important is from an Asset Management perspective, one thing we care about is the flows. You are thinking where things are going. It has been interesting watching how markets are responding. In recent days, there has been little focus on where at credit and equity markets have gone. And flows into both Asset Classes, but what is interesting is look at the overall volume involved. The surge in both those Asset Classes has been on less volume then we saw going through into the downswing then we had during march, so that means for us perhaps a little bit nervous but it looks like a bear market rally. Volumes flows incredibly important in terms of looking at where markets might be finding a base. Still a little bit nervous about this market and equities and viruss discounting the and not picking up the economic impact. This is a really important question, particularly over the Research Weekend into monday, how is j. P. Morgan framing Sector Analysis into equities . It is radically different than trotting out a convenient barbell strategy. What is your sector position moving forward . John that is something we have got to follow some of the information coming through from higher frequency data, and this will be something that will develop over time. What do we know is performing relatively well . Tech is going relatively well, has held up well. It has seen reasonable demand ng through in asia data asian data. If we look at the data flow and the Industrial Production flow data out of the u. S. , autos were down 28 and tech barely moved. Tech held red tivoli well relatively well. That might give some defensive characteristics. Some other sectors giving are inve positioning area to look at. We are going through a period where we are in a recession. You are looking at defensive sectors and where you are able to get earnings through. With bond yields coming down continue to be around the financials. Flatter curves will be a challenge for that sector in general. Francine do we go back to normal . Do we go back to what was happening in january in the World Economy when the lockdown eases . How has the pandemic changed markets and the economy forever . John that is the 64,000 question. Lets be clear. Level of bullishness or bearishness does not have to do with whether the economy has gone through a shock. It is the recovery trajectory. We would see the level of Economic Activity and earnings that we saw precrisis in 2021. That is a significant recovery. Markets will move to discount that early. You have to be particularly bullish to see a recovery back to that level of Economic Activity by the beginning of next year. It really does come down to the shape of the recovery coming through. Without wanting to sound too bearish, i am a believer that this is an economy that will bounceback in some time. The gains inemost, productivity from seeing how we have been able to bring to bear new tools very quickly, for , etc. ,e for networking those will have productivity benefits over time. Aboutne has forgotten 2019 which saw a significant manufacturing slowdown, so we were coming off a relatively low base. When we do recover, Capital Spending should get a disproportionately large pickup which will help the economy. It begins with selling. Continue this discussion with john bilton of j. P. Morgan Asset Management. Here is viviana hurtado. Newana Donald Trumps guidelines could have states reopening and a month. Reopening will be based on a downward trajectory in coronavirus. Phase. Ill be a President Trump saying some states could start the process literally tomorrow. Critics have been skepticals of chinas official coronavirus death toll. Beijing revising the death toll upwards. Deathsid at the time the were not recorded in official data. For the second day. He coronavirus increased the u. S. Treasury department may accept unusual collateral from airlines hoping for rescue loans. The frequent Flyer Program could be in play. Airlines can make money by selling miles to banks which use the miles to reward credit card use. Last year delta made 4. 2 billion selling miles. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Much. Ne thank you so we will have plenty more on euro gold,s, dollar dynamics, and john bilton coming up. Time, ap. M. London conversation with loretta mester. This is bloomberg. The coronavirus has hit our industry like a meteoroid impact. The government has clearly learned from the 2008 and 2009 crisis and has worked with us to set up a program that prohibits these cyclical behaviors from continuing and it is a very important measure the government has taken. Francine a number of voices talking about the pandemic and how it will play out in terms of the government trying to deal with it. Lets continue our conversation on the markets. Tom was bringing my attention to the fact that west texas intermediate, the u. S. Oil is below 19 a barrel. Lets get straight to john bilton of j. P. Morgan Asset Management. How do you look at the price of oil . We have the historic agreement of opecplus and demand is falling off a cliff so unless they do more production cuts, and it is unclear whether governments will cheat, could we see the price of oil at 10 a barrel . John some commentators are calling for it to head to those levels, but what is important is to recognize we have seen a massive slump in global oil demand, down by around one third. The notion that we have seen this 10 Million Barrels per day production cut, that is a step in the right direction and helps sentiment in the oil market but does not affect the supply demand dynamic. The problem you have got is twofold. Number one, you have this ongoing risk to demand because even after this crisis episode is over, it will take some time i think for personal muscle memory to allow individuals to be willing to sit on airplanes or spend as much time on transportation perhaps as cree precrisis. Add into the fact that the economy is in recession, oil demand should go down. The other side of it as well is Storage Capacity and that will be something that comes onto the has the potentially ability to push the spot price of oil down meaningfully, which means the money coming in we would be looking to buy oil more as a speculative asset, we would be looking at the role carry down the curve. These things are pushing oil in the wrong direction but the cuts are good from a sentiment opecective and certainly in the oil market. Francine what is the main word for inflation . What is the main risk of the downwardng towards deflationary spiral . John there is a couple of things to bear in mind. First and foremost, during a recession you would expect to have a disinflationary episode. Period, itrough this is unlikely to see Inflation Spot metrics pickup. Thes worth bearing in mind sheer scale of fiscal stimulus being brought to bear, and fiscal stimulus can stimulate the demand side of the economy. What we learned from the last expansion is that once a policy , it is out of the bottle does not go back in that easily. It is likely that we see ongoing fiscal support, much bigger Government Debt loads. That potentially in a low Interest Rate environment will allow reflationary pressure to build through time. This is not something we need to concern ourselves with in the near term, but as we see how much damage is being done to the supply side, plus the stimulus and low policy rates, over the next three to five years, more of the reflationary pressure, those ingredients are being put into place now. Bilton, as we see fx of j. P. Morgan go to a weaker euro call, john bilton, j. P. Morgan Asset Management. Equity markets up today. 18. 03, a good time to speak to mr. Mcveigh of tkr kkr. Henry mcvey. This is bloomberg. You are watching bloomberg surveillance. Shares of boeing are surging as the beleaguered aircraft maker is making plans to restart jet making in seattle, ending a shutdown last month from the coronavirus pandemic. Over 30,000 workers will return. Alarmom is sounding the on disruption, telling customers they need to place orders for parts at least six months ahead of time. That is a surprisingly long leadtime. End with billionaire sheldon suspending for the Las Vegas Sands all the industry is shut down. Almostar, he collected half of the 4. 2 billion payout. The sands is looking to buy existing resorts from others. That is your Bloomberg Business flash. Francine earlier on i spoke to luke ellis, the chief executive officer of the Largest Hedge Fund and we spoke about flows and how many clients wanted to redeem just because they had problems in terms of cash flows. That thereld imagine will be a lot of churn in portfolios over the rest of the year, so you are likely to see heightened new subscriptions. It is not a oneway thing. As clients try to adjust to the new state of affairs, how long will it take us to figure out what is going on in the economy . That is hard to judge. We have two enormous forces pushing against each other, the serious economic shutdown going on, and enormous spending from Central Banks and governments on the others. The market is trying to find a balance between two forces and i think you will see a lot of changes in total over the course of the rest of the year and maybe beyond. Francine can you quantify churn . I know it is difficult, but is it a 15 difference in flows, could it be bigger, or do we not know . Ine most businesses came with a lot of leverage. The corporate world has been increasing leverage whether it is through buybacks, through pushing to lighter balance peets, whether it is through taking over things on corporate Balance Sheets that has led to a process where companies do not have that much runway in the loss of industries, so they are henceing significantly, we see 20 Million People unemployed in the u. S. And no sense about stopping. We have to look at what the real economic consequences are to understand the consequences for individual stocks and individual strategies. Inould not want to guess terms of actual flows in the industry. What we were trying to get at is we think market volatility is going to be at heightened levels compared to where we have seen the last two years. Market volatility the last two years was at low levels. Ian heightened volatility, you will tend in heightened volatility, you will tend to get more change in client portfolios. Francine one of your main portfolios lost money. Are you confident they can handle volatility better Going Forward . Luke what is important the quant models have all the information human discretionary people have and all the experience out of history and markets that people have. Sometimes you get it right, sometimes you get it wrong, but the good thing on the quant model is it is never emotional so they were able to trade in a very clean way all the way through, while a lot of our good Portfolio Managers were able to stay calm through the discretionary portfolios. Behaviorseen a lot of that has led to mispricing. Quant keeps plugging along and doing what they are supposed to do. Francine have you developed a model to predict the spread or the end of the pandemic and basically generating trade signals from it . Terms. O, in simple we are not experts in pandemic modeling. We have off of the government assistance in the u. K. Where they are looking to get some help from quant, you can help them with their modeling because they are dealing with a new set of circumstances. We had some of our people help them with that and some people have experience in that, but what we are trying to do is let market prices and data tell us what is going on, and manage our portfolios using that. While the cores of this market environment because of this market and while the cause of this market environment is unique, it is a replay of things we have seen in previous times and the question is how that plays out Going Forward. You can let market prices tell you what is going on in that. Mr. Alice and francine mr. Ellis and francine on that question of black boxes. The data today is real simple, and extraordinary lift in equity markets continues. The vix well under 40. Dare i say we get nicely above 20,000. That is what the pace says on the dow. As you mentioned with john bilton, oil is extraordinary. Dynamics, less geopolitics, with a massive differential between brent crude and west texas made to test intermediate west texas intermediate, 18 and three cents 18. 03 a barrel the last time i looked. Francine brent is little changed and wti seems to be falling more than brent. Chinas economy suffered a historic slump in the First Quarter with the coronavirus outbreak, but if you are an opecplus member it is difficult to know what to do. These countries have to balance their books and it will be tough for countries exporting oil. There is not enough demand for it. Tom absolutely fascinating. This will be the conversation of on day, tony dwyer joins us the bull market you do not believe in. Stay with us. This is bloomberg. Nowadays you do more from home than ever before. The xfinity my account app puts you in control with Digital Tools to give you the help you need when you need it. Get fast and easy answers with personalized help 24 hours a day, 7 days a week. Change your wifi password to a phrase thats easy to remember. Even troubleshoot your services on your own. Were working to make things a little easier for everyone. Download the xfinity my account app today. Tom this morning, the four decade economic boom that is china has ended. America loses nine years of job growth in one month. 300 49 billion evaporates for small businesses. They scream, washington, do something now. From total authority to call your own shots, the president capitulates. To of new york city adjusts an explosion in new cases, up nearly 10 in one day. Too. N has a boom, netflix modest risk on. Plunges near 17 a barrel in america. Surveillancerg a