The white house and the house of representatives seem to be in negotiation with the senate, a Republican Senate really stepping aside, and mr. Kudlow moving that forward. The oil story is absolutely remarkable, and perch yearly the confusion of the end of may futures, and over into the june futures as well. We are about ready on the spot market to get a 13 handle on west texas intermediate. Francine you are right, because of the change in futures contract, we could see heightened volatility in the next couple of days, starting from today. Lets get to first word news in new york city with viviana hurtado. Viviana the white house and Democratic Leaders are close to agreeing on the next coronavirus eight. This measure would be up to 500 this next coronavirus aid bill. Formeasure would be hospitals and testing. Trying to free up cash for businesses, it will allow importers and manufacturers to delay payment for 90 days, this on many overseas products. But the move does not stop ongoing punitive tariffs that are the centerpiece of the current u. S. Trade policy. Now to the worst mass shooting in canadas history. Authorities in nova scotia saying a man dressed as a Police Officer went on a rampage, shooting people in their homes. 16 people were killed. The gunman also is dead. We end with the price of oil falling to its lowest in 21 years. Plunginge funding 16 . There is concern that the world is running out of places to store oil. The output has not been enough to cope with plunging demand. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in and than 120 countries, viviana hurtado. This is bloomberg. Francine . Tom . Francine let tom lets get to the data equities, bonds, oil, oil, oil. There has been a churn there as well. There is no russian yields coming, that there is no question the yields come in. We are not there yet, but i would watch the twoyear yield very much so. 13. 99 print ona spot, west texas intermediate. The june future has plunged from a 24 handle down to a 23 handle. I really do this because it is complex. I really dont like to talk about the futures market, but the june future is what the watch today is on oil. The west texas will make the headlines, but the june futures is critical, and it shows the huge capacity out there right going 25, 24, 23 a barrel. For west texas intermediate in june. Francine . 1 we have a headline francine we have a headline from the bank of spain, with the economy shrinking by 8 . It is significant and it could move euro dollars, shaking 12. 4 in 2020. We had a stimulating conversation with the chairman e. Societe general u. S. Equity futures down. Asian stocks were down. Here in europe, but they are fluctuated. Investors are trying to figure out the latest evidence of coronavirus slowing and preparing for earnings season to wrap up, treasuries rising with the dollar, oil plunging. With the change of the futures contract, he could have more volatility heading this way. Im looking at of uti, and at some point it was below i am looking at wti, and at some point it was below 15 a barrel. Thank you so much for joining us, eric, for economic insight. A million questions here to talk about, which is the changing role of government, with the legacy of this crisis will be. But maybe lets start off with european debt. How detrimental and how difficult will the european debt be unless we have either a splitting of Government Debt or Debt Forgiveness . Eric, i dont know if we do have eric. Erik nielsen all right, dont have erik nielsen, so we will get back to erik nielsen in a second. But if you look at some of the main debates in europe, it is very clear certainly for European Countries i dont know if it is different in the u. S. , that the government will take on more of a role, whether that extends to much more of a safety net, and then we have european leaders this week to try to figure out what the best response is to speak with a common voice. A lot of people in your, and i am looking forward to speaking to the a lot of people in europe, and im looking forward to speaking with one guest a lot if european leaders stake tom i have read a fair amount of that this over the weekend. I dont see a a brussels approach with the pandemic. It almost seems like every nation for itself. Onet is fascinating is how al sweden is, and over the weekend there was an abrupt shift in the zeitgeist of sweden saying they could see a more comingled society and less social distancing. They got some respect yesterday with statistics that said may be the swedish model theres study for they be the swedish model bears study. It is a contentious debate of sweden taking this alone. A contentious debate, but if you look at the mortality rate and the way that various countries have dealt with it, it is incredible how the responses have been different. Even in cases where the response has been the same, dealing with it because of i see you and a number of nurses available has really changed widely. It is really interesting. But we will do here as we set you up for monday is begin a discussion here of policy. Have fiscal policy and mr. Kudlow will join us later today, advocating for the white house, kevin mccarthy, the minority leader in the house, really making a push on friday, and over the weekend. And be we get an announcement today for a vote on wednesday of another 450 billion of stimulus. It is fiscal authorities catching up with monetary authorities, and of course that is identified by chairman powell, by the president s, and by the governors. Michael mckee with Loretta Mester of the cleveland fed. Loretta we are in a real unprecedented, incredibly deep, deep shock to the economy. I think it behooves us at the fed to use our tools as best we can to get us through this pandemic shutdown period, mitigating the negative impact on the economy so that the recovery can be as best as it can be when we get to that point. S, we are moving into unprecedented territory, yes, we are moving into unprecedented territory, but a member that we are trying to lend to firms that through no fault of their own were impacted by the virus. We are going into, for example, corporate debt programs, which we have not done before. We are going to include some fallen angels that had an Investment Grade rating before the virus. You are right that we are doing things we had not done before, but at this point i dont think we can be that concerned about those kind of moral hazards. I think we really have to look at, this is a hugely impactful and negatively impactful shock. And we have to do all we can to make sure that we are not doing permanent damage to the underlying fundamentals of the economy so that when the time comes and activity can pick up, we can get a decent recovery out of this. Jonathan a lot of what you just said will make sense of this. That will make sense to a lot of people. Will make sense to a lot of people. s thating highyield etf have triple c credit in them, expose that were not on firm footing before this doesnt make sense. So part of what we are doing, and all of the things we are doing are twofold. One, we are trying to make sure that the markets stay functioning. So some of the efforts that the fed has done are really geared at markets functioning, and some are geared to make sure that we mitigate the negative effects on households and businesses by making sure we have credit flowing to those businesses. So i look at the etf part of that as a market functioning issue, and we are continuing to look for gaps to make sure that our markets are functioning, and some of the efforts that we have taken already have improved functioning in the markets. So there are two things going on. One is making sure that and this is the feds responsibility to make sure that the markets are wellfunctioning so that credit can flow, and can do what it can to help shore up the economy to prepare it for the recovery. So, you know, we can disagree on kind of what the right way to do that is, but part of what were doing is to try to make sure that we have functioning financial markets, precisely because those are an essential ingredient for the economy, for any other policies, so that they can flow through so that there is a transmission to the households and businesses that need those funds. Michael i know at this point the fed is all in, doing everything it can to support the economy. When we get to the Third Quarter maybe reopening and it is time to stimulate the economy, is there more you think you need to do or can do, and what would that be . Loretta i think we are going to have to see what it looks like when we get there. I dont think we are up against any kind of constraint as to what we can do. I think we acted appropriately, rapidly, in an unprecedented rapidly way really because of the recognition of how deep this shock was. And engineered because the investments we are making and public health, right . So when we get to that point, we are going to look at our tools, do what we can, again, to support some of the programs that the federal government is doing, and terms of the ppp, the paycheck protection program, etc. , and be prepared to use our tool as appropriate, to make and twot it functions of that we can support the economy so that we can get back to a normal, Sustainable Growth with full employment and price stability. So that is where our goal is going to be, that is what our goals always are. We have the tools to do that and we have forward guidance, our Interest Rate tools, and right move thosegoing to things around as appropriate. To make sure that the economy can recover and get back to a Sustainable Growth path. Francine that was cleveland fed president Loretta Mester speaking with Jonathan Ferro and michael mckee. In the last couple of minutes we had those pretty ugly numbers in terms of a possible recession coming up later at 3 00 p. M. London time, our conversation with larry kudlow about how to get americans back to work. This is bloomberg. Tom there have been any number of mondays in this pandemic, and we welcome all of you again. Tom keene from near 5th avenue above mount sinai here in new york. It has been an extraordinary weekend in new york, a little bit activity, finally springlike weather on a sunday. An Francine Lacqua in london as well, london with their own challenges, including, as francine mentioned earlier, the sunday times really going after the Prime Minister for february and march actions. Right now, to help us adjust and recalibrate, erik nielsen of your credit of euro credit. What about the forecast . Is it for castable right now, have you adjusted anything, or have you given up until you have more information . I wish you could give up because it is basically on able. Cast n we think the economy will sink by about 6 this year in europe, for the euro zone, by about 12 to 13 come and the u. S. Percent 12 to 13 , and the u. S. On average. Rebound . T a consumer what is the differential there grimm . Y toward a nielsen erik primarily two things. Is itial shock we think the consumption for america, just the last two weeks of march, really, that took the march number down dramatically, and the numbers in france and now spain, i think actually lend support to our more bearish view on the initial slowdown. The imf thinks the bottom is going to be a bit shorter than we think, and they may be more right, certainly opening up the economy here and there, but i would like to see how much activity will actually recover until we get a clearer picture on vaccines and general sort of contagion containment of this disease. I am happy with our forecast, but it is, as you said, unforecastable. Francine we saw the spanish economy sinking between 6. 8 and 12. 4 in 2020. Are those the nevers we are looking at for a lot of European Countries . And then at the end, we go back to the greek scenario of needing a bailout . Erik on the first question, francine, yes, i think that is what we are looking at. Our forecast for spain this year is 15, and about the same for italy. This is sort of the story of countries in Southern Europe, which have varied opinions. Not only do we get the biggest hit in europe, and Southern Europe that we have seen, but even if you open up the economies, we think it is unlikely people will go on vacation this summer to the mediterranean, so we have a bigger hit there, and the northern europeans will be more in the 8 to 10 range there about. But it is a guess more than anything else. Likelys to me to be more on that order of magnitude. Rebound, ase, a good comparatively strong rebound, getting back to the imf that tom asked about. We have a deeper hit and a deeper hit any better rebound than the imf. On the debt number, it all depends on the policies, and my view is that people are overestimating the damage that we get from public debt. And the reason is that the ecb is buying it. As long as the ecb buys it and holds it, it is cost free, and therefore, it is ultimately the Debt Service Payments that cause trouble, not the debt stock numbers. I think people are overly concerned about the big increases of 10 , ponte Percentage Points in ddp during this of 10, 20 Percentage Points in gdp. Francine there has been a lot of apologies, blunders, unhappiness about how the block as a whole have dealt with. Will we have something substantial to make europe stronger by the end of the week . Have first ae summit, obviously. Said fort is basically a number of things on the agenda, including basically a pool of what the euro group decided on the three components, the 200 billion dollars in guarantees for the eib, the credit line for the esm, and then the unemployment scheme with 100 billion from the commission. I think that is ok. I wish they would do something much more dramatic, and i wrote about this in my notes yesterday. I think there should be an agreement to finance yourself through this crisis because it takes too long to make it mutual or some other construction, but then there should be a pledge that if the ecb wants staff to unload their papers into the market, you mutualize that debt. Bigwe will not get a dramatic move from the european side. Unicreditnielsen of with us. Worldwide on this monday, this is bloomberg. Francine happy monday from all of us at bloomberg. This is bloomberg surveillance , and this is what the markets are doing. We saw a selloff with asian stocks. Here in europe, and a lot of the focus is actually on corporate earnings. A lot of the focus is on the number of debt stabilizing across many countries, including spain, italy, and the u. K. Rising with the dollar, oil plunging. Tom was saying because of a change in the futures contract in oil, we could have a lot more volatility. For the moment i am looking at wti tumbling before low tumbling below 15 a barrel for the first time in 21 years. Coming up, we will be talking with the euro intelligence director about talk about the european debt. This is bloomberg. Lets start with your first word news. The coronavirus pandemic is showing signs of easing we begin with a deal that is on the a deal. President trump joining democratic leader and sub and his Administration Working on a new package that would provide up to 500 billion. More money would go to the loan program for Small Businesses plus hospitals and testing. Now to china, the nation is adding stimulus after the economy shrank for the first time in decades. Banks cutting borrowing costs. The government promising to sell another 101 billion in bonds for infrastructure spending. Vice president mike pence will discuss today testing shortages with governors. President donald trump says some governors are relying strictly on state laboratories. He said they should also turn to large commercial and academic labs. Governors about parties are calling for more widespread testing. They say without it, they cannot start to reopen the u. S. Economy. In germany, the last 24 hours the number of coronavirus cases rising this month by the least. Since april 1, the number of fatalities was lowest. This week, germany will begin allowing smaller shops to resume regular business. Schools will gradually reopen. 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. Francine thank you. Get straight to wolfgang munchau. We have been following your various comments on a lot of the press, europe, and the u. K. When you look at what maury does what eu leaders must do to show solidarity, is there something that you think well make them act together as one voice or are we going to see this kind of Monetary Policy policymakers here Standing Firm with a much more chaotic kids from leaders . I would assume the leaders will agree at something. They always agree at something. The joke is they are good at dealmaking. The question is, will it be enough . There is a talk about recovery five. The french have proposed it. There are discussions at the moment. Whether they is will raise enough money for it. Some people the french what went one trillion euros. Im utilized effort. That is being resisted by the germans had the dutch. That resistance has not gone away. The only solution unless somebody gives in, the only solution is some kind of a stretch with it is not entirely shared or a scheme where the eu leverages some credit or governments raise money themselves, which would obviously defeat the purpose because the whole idea is to make sure whatever money is spent does not make does not had a physical burden to italy. What does that mean for the recovery phase . A lot of countries need bailout programs like we saw in greece. Absolutely. A country like italy and spain is not sufficient that they themselves can organize the bailout. We are already seeing, if you compare the physical response of the industrialized nation that italy and spain have the weakest physical response. Ineeds to happen or order to prevent a serious economic downturn not in italy and spain, is to allow recovery to have there will be something. It wont be nothing. But one has to look very carefully at the credit. It is actual money . Is it just a promise . Or is it something that will happen . They will not spend the money on the immediate crisis. This is money for the reconstruction of the economy after the crisis. This is about investment. This is a Multiannual Program of investment but it would help enormously if these countries the moneyve themselves but if there was a new program that would do that. Wolfgang, in an institutional basis, how do you see this in a year or two with with all of the history from world war ii, where is europe a year from now . Two years from now . That is a possibility the eu would weaken. I dont think the eu would would , but if thest leaders failed to measure up to the moment, this historic moment, they have to measure up if they fail to do it, it is quite possible that italy might decide that china is a more Strategic Partner in the eu. You may find italy will restructure its debt. Not only on the issue right now, but if it comes out with weaker growth and higher debt i have done some math on the scenario stop it could easily increase ratio and people ay well conclude this is not sustainable provision. If the ecb at that point fails to organize a bailout, then we may at this point in years time talk about a restructuring of debt, which could jeopardize yes, there are big issues ahead for us. Tom wolfgang, what does the euro signal to you . The euro for germany is different that the euro for italy or the euro from spain. How is the euro in the market that makes euro how should they respond to all of this . Are pointing toward the absolute important issue. The euro in germany was something the germans agreed to reluctantly and only under contractual conditions that no one would ever require a bailout and no debt would ever be neutralized. Politicala project of integration, which was never for germany. That is basically the issue we are grappling with. The originales eurozone, basically. The euro has the way it has developed and the way the crisis have developed, basically, we have come to a position where either the eurozone takes the next steps of integration and developed systems that make it robust, or the eurozone will disintegrate and there are various ways it can disintegrate. It does not have to break up formally. It can break up or we can in different ways. Shadow distance. There is a grave danger right now. Tom these are very, very important conversations. Wolfgang munchau with us, gideon rose will join us in the next hour. We have much more to talk about. We are watching oil without 13. 99 print on present was texas intermediate. They may feature i believe ending on wednesday. Coming up today in the 10 00 hour, an important conversation for those of you that link the economy to the markets, and that is edward hyman of ever core. Stay with us. This is bloomberg. Francine this is bloomberg surveillance. Bit we are talking a little about that pretty damming article from sunday times and the times over what the Prime MinisterBoris Johnson, together with his governments, have done or failed to do from february to march, talking about them actually sleepwalking into the disaster. This morning, at issue, pretty serious rebuttal saying a lot of the article is not founded. Earlier on, we spoke to the former Prime Minister tony blair about the governments response to the virus so far. Here he is. You have two phases. Yet the suppression phase, which is where we are now, and the controlled revival of the economy. The collapse or damage economic , it is ay the way force dilma between lives and livelihoods. The economic and Health Damage is so great, that you need to be considering now what exactly are the measures that can allow us to get out of the lockdown and return to what by the way, a new normal. It will not be the experience before the virus took hold. Really, it is a question for me not so much looking back on what the government has done, but looking forward to what it is got to do now. But the preparations in place in order to make sure we can ease that lockdown as significantly as possible, while not losing control of the disease. It is that balance in order to stimulate a debate. Now is the right time to have that debate. So what should peoples expectations be . If you are in government, what would you be saying right now to prepare people for the life that wont be normal, as you say, for how long into the future . Two things we are saying. The first is you have got to reposition the whole of government in order to make sure even though you may say with hindsight that we were somewhat behind the curve in respect of the suppression phase, we have to get well ahead of the curve in terms of the revival of the economy. What we suggest in this paper is you identify absolutely core tasks around this. Things like mass testing, making sure there is adequate and Business Consultation sector by sector, make sure you have the tracing in place which is going to require not just technology, but also manual oncing and that is in normas amount of work. How do you get International Travel started again . We suggest you take each of these areas and youve got to put a proper command and control structure in place with each of these with a senior person who may well be from outside government or bureaucracy. Are morehe skills appropriate in the business sector, logistics, procurement, and so on. One thing we say is yet to reposition government to be able to do this effectively with the different structure within government. The second thing we say is you have got to really take people the you in explaining normal will be new. For example, i think there will be widespread use of masks and we may have to insist upon that. When youre doing the tracing, if you look at the countries like south korea were tracing has been successful through the application of technology, it is been pretty evasive. We have to prepare people for that. We have to make sure we are accumulating all the knowledge of what therapies globally that have been working or not working in order to make sure that people get a proper sense the severity of the disease, but also recognize you have got to where onlysituation a small population is at risk. At the moment, everything has had to be shut down in order to protect the population at large. Was tony blair. Lets get back to wolfgang munchau, director of euro intelligence. When you look at the model and this seems pretty impossible, but if you look at the model, when you reopen the economy compared to whether you are taking a risk of losing more life . Is there an optimum way to reopen an economy . Is it slowly or what do you do . Way. Ere is no optimal it will have to be based on some form of trial and error. Some models are useful in all models are wrong. And all models are wrong. They need to get some grip on zero infection rate. If they have a this rate has fallen below 1, that distorted the threshold, then they can gradually start to reopen and keep control and be ready to revert that measure if it turns out to be a mistake. That is the best we can do. There is no model about reopening the economy. Ultimately, it is a trial and error procedure. Most countries in the eu the u. K. Will be lucky in one respect, in the sense they can see the reaction of European Countries. The u. K. Maybe one or two weeks behind italy and spain and it will see what happens in those countries. Nevern sweden, which locked down. This is ultimately a gut instinct decision. The mistake the u. K. Made was not to start this process early enough, not to take it seriously. It is interesting how johnson and the government were very strategic about brexit from the beginning to the end, but they were not strategic at all about the virus. They let angst slide and then had to panic they let things slide and then had to panic. What is the strategy over brexit . Restartings are today. They keep on saying the u. K. Government, they dont want to extend the extension. Are we going to have a Nodeal Brexit at the end of this . That is a possibility. I dont see at the moment the two sides will come to gather. To itish government had plan had been to check in june whether there was enough Common Ground that there was worthwhile having negotiations. What is happening now is just talking, exchanging information, trying to understand each others position. That is in june they can have a basis for a decision. That process is ultimately not greatly impeded by covid. At that moment, everybody has been studying each others documents. My reading is u. K. s position is still not in favor of extension, but this is ultimately the decision for Boris Johnson he will decide that was not he will decide that. In the end, they may make a new positioning with what they come up with. I think he has a case to extended. The case would be the virus. And also the possibility the virus there might be a second phase of the virus in the winter. This is not a good time for a hard brexit. I would probably do it in the spring or summer and not on december 31 when you actually have another virus issue. These are considerations that was speak in favor. On the other hand, the big iteration that fix in favor of december 31 is the fact all the economic hit has already happened. Youre not going to get this brexit crisis because you already have the disruption of supply chain. You might as well then use this you know, and just get on with it. Ist is an argument that being made in government, and it weighs heavy. Francine tom wolfgang come over that week and i saw countless articles that basically said ala the heart of 9 11 and recovery from september 11 were never going to be the same again. That was a real preponderant scene in zeitgeist this weekend. Do you buy it into years, three years, five years from now we are actually going to change our societal behaviors . That is a very good question. Possibly theis first that might make a change. We have seen previous guidance. Stock market crashes, 1987, 2008, etc. All of this was supposed to be big but in the they were big, but they did not change the way we operate. Some of the social distancing may stay for good. Businesses many businesses will go bankrupt in this crisis. Many new businesses will be created. I think this could be the first a Creative Destruction type crisis since the second world war. About theately upbeat longterm economic consequences but the obviously, the destruction there will be a hit. He could be quite painful. Tom wolfgang, thank you. Wolfgang munchau with us. We will drive for this discussion on International Relations within a pandemic. Gideon rose with us for a monthly visit on the new Foreign Affairs magazine. The essays theyve been doing the last weeks, including one from richard haass, have been absolutely extraordinary. Gideon rose in our next hour. This is bloomberg. Lets get your Bloomberg Business flash. U. S. Study of the malaria drug hydroxychloroquine, the medicine has been hyped as a potential treatment for coronavirus. Test will trip ash tested alone and with another drug. A growing list of customers have scaled back plans for lung the 737 max. We end with alibaba, boosting its bet on cloud computing. Over the next three years come the chinese ecommerce will invest 20 billion on cloud infrastructure. It is a major effort to extend one of its Fastest Growing businesses to more countries. And that is your Bloomberg Business flash. Tom thank you so much. Oil futures really taking it on the chin. Dow futures down 234 points. The vix act above 40. The bond market comes in, watching the two year yield. What i want to really point out is the collapse in oil. Opecplus has failed. There is no other way to put it. We see it with the present future was to the spot price of the west texas intermediate down, down, getting near the physical barrel. , the betjune future out to june, the june future comes in substantially at about 23 a barrel with west texas at about 14 on the edge of 13 a barrel. Was that confusing enough . Confusing. T was it wasnt come actually. Of extra volatility because the contract change. This is what im looking at in europe. We are holding barely to our 0. 1 . Getting some one of the focus is on the latest evidence about the spread of the coronavirus but also markets are trying to prepare for the earnings season. Looking at euro higher, pound and you and weakening. Weakening. D yen tom coming up, jim caron with morgan stanley. This is exceptionally well timed. We will talk about all that washington is doing and what it means for fixed income. Stay with us. This is bloomberg. Tom this morning, more than a glimmer, less on the proverbial light at the end of the tunnel. Assembled medical experts and political nonexperts consider how to get back to normal. It will become a welcome every hospital it looks like every nation for itself. April oil just craters. We will give you no update on that. As they ever lower guesstimate when oil demand will return. You know what works, supply follows demand. At least, that is what the textbooks say. Mr. Mnuchin and pelosi, they craft a new deal for Small Business and hospitals. Seven republicans. Senate republicans. Where in washington are the Senate Republicans . I am tom keene with Francine Lacqua. We thank our technical staff for trying to make this work day after day