Europe and why debts keep rising so much in spain and in italy and what can be done. Tom we have an important interview in the next hour on the virus. We will go to mount sinai for that. I am next to the outside i manhattan hospital in new york. I will tell you, it is an extra ordinary monday. I know you see in in london, we see it in new york, with quiet streets and politicians really needing to adapt. My major message in this hour is the complete readjustment and struggle that global wall street is having trying to gauge this contraction. I love what bruce kasman said at jp morgan. He looks back and harkens back to the contractions that we saw before world war ii. Francine i think we had an update on friday from goldman sachs, j. P. Morgan on the Second Quarter gbp just gdp in the u. S. , and the numbers are nothing like we have ever seen before. So i know we have a full round of update just on the lockdown, different in new york than it is in london. Boris johnson saying that people need to stay home, but thinking about it lockdown because people do not listen enough. Lets get to the bloomberg first word news in new york city with viviana hurtado. Viviana we begin on capitol hill, that is where Senate Democrats have blocked the giant coronavirus economic rescue package. Readers in both chambers disagreeing on how to spend almost 2 leaders in both chambers disagreeing on how to spend almost 2 trillion. He will see if there is a change of heart. Chuck schumer called the bill a large Corporate Bailout with not enough oversight. Now to morgan stanley. It is warning the coronavirus will be a lot worse for the u. S. Economy than previously expected. The bank predicting gdp will plunge 30 in the Second Quarter. Morgan stanley economists see unemployment averaging 12. 8 . There is doubt if Angela Merkel can remain the public face of germanys fight against coronavirus this money. The chancellor quarantined herself at home after she came into contact with a doctor who later tested positive for the disease. In japan, Prime Minister shinzo abe indicating the december livex postponement may be up inevitable. The International Olympic committee is saying it will reach a decision in four weeks. Candida says it will not send the athletes to the tokyo games. Canada says it will not send the athletes to the tokyo games. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, viviana hurtado. This is bloomberg. Francine . Tom . Tom viviana, we appreciate it. I want to reframe where we are in the markets, and of course we look back the last week, and even the view from jamaica last week, which every day was historic, this morning it is different. This morning we went to look at equity markets down, the Standard Poors, sp why etf is down about 3. 4 or so. And we have the usual bond market moves. But if we go out to the second screen, and i want to talk about this right now we have the fix coming in, a little better markets then we had tuesday, wednesday of last week, and then it really gets interesting all in all. The number one thing i would look at right now is yields coming in lower with curve steepening. That means the twoyear, the fiveyear, the 10year yields coming in, the 30 year bond a little bit of a higher yield, and that really indicates the readjustment to global contraction. Oil struggling here. We did not make a run to 19 a barrel in west texas, but we are watching brent and west texas. Finally what i would do is really focus on, all in all in all, the dollar index. The dollar index is the blended Major Trading index. The Bloomberg Index is frankly a little more sophisticated. The dollar index, that is the number one thing i am watching. We see what i would call dollar resilience here this morning. Maybe it is not dollar strength. We will see what we do with the politicians in washington. But dxy is the number one thing to watch, and that is the strong dollar. Carl weinberg at High Frequency economics publishing and saying it is simple, stronger dollar means a greater struggle for u. S. Exports once we get through this pandemic. What do you see in the data this morning . Francine let me talk to you about the story. The data is similar to what we are seeing. The democrats blocked the rescue package, with a discriminant on how to spend nearly 2 trillion with a disagreement on how to spend nearly 2 trillion. If you look at what the markets are looking at, you can see european stocks down from 4 . What else they are looking at is the length of contagion and the Economic Policy response. We had enough states on friday, the Monetary Fund chief economist saying that the world has not seen a synchronized interruption in economic output in decades. Ahave Oxford Economics seeing 12 drop in gdp like bank of America Goldman sachs, 24 slump. That is the one thing we need to watch out for. Lets get straight to our guest host for today. She is the chief Investment Officer at Legal General. She joins us from london. Great to have you on the program as always. What needs to happen for these markets to find a floor he . I dont know whether they are looking at contagion or if it is to find a floor . They arenow whether looking at contagion or if it is looking at more job loss in the next weeks or months. The most important thing here is the timing. For us to have an understanding when covid19 is under control, i think the most important factor to watch this is why looking at the sars experience and other epidemic experiences is the idea of when new cases would finally start to fall. Near yet, and as such, all these draconian measures, literally implementing literally with people at home means the Economic Impact we can assess now if it is the Second Quarter event. But the longer this takes, it is clear all these numbers that we are discussing might look very different once we get to this point. Downturn ine duration will be determined by economics. Is there a limit to what governments and Central Banks can do . Sonja i think what we have seen clearly is a flurry of measures from Central Banks and from politicians over the past weeks. It is very interesting to see that for the first time we have a real response from policymakers, and i have heard over the weekend, the nice quote that it seems much easier to get these packages agreed in parliament, simply because there is no one to blame, because it is an external shock hitting economies that requires immediate action. But what you see is obviously, in the reaction markets, the economy, we are doing this in a much, much shorter time period. We are going to see an employment cycle literally within a few months which normally takes at least 12 to 18 months. So everything is literally shortened in terms of its impact. Early tod, it is too judge whether the measures that have been announced so far will be sufficient to stabilize the situation. Policymakers again will obviously assess their measures as more information becomes available, and crucially again, when information becomes available around the containment measures and how successful they are. I think only than will we be able to understand whether the fiscal measures, the Central Bank Policy measures, will be sufficient to literally help the economy to restart. And again, most importantly, when can we think about a restarting . Because literally for the time being, we are shutting down economies to an extent that we have not seen outside warp to outside war taupe. Tom it is said that this is not equivalent to a war, talking about that equivalency that in a war you have a spurring of demand and everybody is behind it, and this is more of a medical condition as well. What it comes down to, particularly with a longterm approach of legal and general is, what do we do with our Retirement Assets . Speak to someone who has an account with legal and general, or someone waking up in america going, what do i do with the 401 k . What is the action plan for someone with longterm money this morning . The time being, we are not recommending to take any urgent action right now because if you have entered this crisis right now, with a specific kind of risk allocation and risk budget, to us the idea really is to get a better understanding, what the Economic Impact is. To us, very importantly as well, what is the implication of this dramatic shift toward more fiscal support, and what do we have to read into longterm return assumptions for various Asset Classes . Unfortunately, there is no kind of general advice we can give because it really depends on where you are in your lifecycle, and hence the needs you have with regard to your Retirement Assets. What we will look at clearly is when can we start seeing a stabilization in markets, and i think we have to be very realistic, this will be a bottoming process. This is not going to be a oneday switch the bottom and it is a risk on. It will be a bottoming process with a drawn out affair in terms of understanding when we might have seen the success of the containment period literally bringing the new infection rate down, and secondly, quickly we can then think about and this is a big if to restart the economy. But there is implications obviously in the context of the attractiveness of various Asset Classes, and you could argue that for some, it appears to be a lot more attractive already. But what we would say is that there is no rush to go out today because we need a lot more information first in order to see what is going to happen. Again, the market has compressed , uncertainty in a very short to of time. It has been the worst in terms of the overall drawdown. So you can see that the market is already taking into stride and into the discounting mechanism of what is going to unfold. But unless we have greater clarity on when the economy might the able to think about restarting, it is difficult to call a bottom. But from here, we have to consider that volatility is one of the main features, and we have seen obviously up four on friday, down four today. It is big movements simply reflecting the uncertainty that we have in markets. Tom one final question, if i could. 1. 16 sterling and the challenges of week of weak pound sterling . What is the challenge for the city of london . Sonja i think the city of london first of all must try to get their head around how to deal with the containment measures and how we can literally operate the functioning Financial Market, while keeping everybody at home and while keeping our own staff safe. So that i think is the most important consideration, and then obviously it is interesting to see how we see now, the bank of england reacting. But at the end of the day, i dont think it is necessarily sterling. Everybody is buying dollars, and the reaction function on euros and sterling has been quite dramatic. It will be interesting to see because we are obviously approaching months end, and there have been quite a lot of hedges that need to roll, so that will be very much in the center of attention for this week, and clearly then again, it has been a very fast movement, as everything has happened in Financial Markets and currencies are no exception to a similar reaction function that we have seen in equity markets and in bonds. For thank you so much joining us today, with legal and general, sonia loud with us as well. Thisll do a lot more in hour with guests, including a important position physician on the epidemiology of this virus. We are thrilled that you are with us worldwide this morning. The futures marks down sharply. Coming up later today, later this morning on bloomberg television, a conversation on americas in oil on energy policy, a conversation with the United States secretary of energy. Please stay with us. This is bloomberg. We are moving much faster than we moved into thousand eight. We are being more aggressive. Is there more we can do . Yes. We are being very aggressive. Thecine that was minneapolis president. Neel kashkari. At the packages put in place right now, i dont know if there is a template for how you do it right. I dont know if the u. K. Was at the forefront because first we saw coordinated action between boe and treasury. It is really trying to help to tell people that not only do not default, but if you are unemployed, you will get benefits. Sonja i think you are already raising the right word. Coordination is the one that we are most looking after, because it is very different. It is not about bailing out big banks, it is not about allocating money to big corporations. We are now facing a crisis for smes and individuals. With countries going into lockdown, it is how can we get the money to those in need . That is very different, as you can imagine, a lot more complicated. This is what we are really looking into, how wellequipped our governments and Central Banks to make sure that the money is reaching those in need . This is very different with the playbook of 2008, 2 thousand nine because it was first and 2009, because08, it was first and foremost about providing liquidity to the big banks. It is very abrupt because you are shutting shops literally overnight, and people will run out of cash very quickly. Coordination means between Central Banks and governments, but what we would be looking for as well is more International Cooperation this is a global pandemic, a global crisis, an external shock that will hit most countries to the same extent because if you bring the economy to a halt, it is literally how you can help the individual companies and individuals that will lose their jobs to survive and get through this. Francine earlier you were saying it was too soon to go back into the markets, in terms of bonds are equities, but is there a difference that with the domestic or it is global international, than it does not make a difference . Anja obviously it does make difference, and you are seeing that some countries have mechanisms in place that might dampen the blow a little bit, but again, the overall size of the package will most likely be reassessed in the context of the timing and the time of the overall shutdown, and then the depths of the economic recession. So i think that size does matter, the coordination between the central bank and governments matters, but i think global coordination would help a lot in terms of the understanding we have talked a lot about the missing dollar liquidity, seeing what the fed has done to establish those lines. But am sure there is more that in terms of understanding, best practices on what is working, to make sure that we can literally provide help to everyone in need. In terms of what it means for Financial Markets, again, i think there might be regional differences, but i think markets and investors overall, right now, are predominantly focused on liquidity and the functioning of Financial Markets before we then can move on to say if we have reached those first two points, lets start assessing on when we think markets might not amount in the context of might not amount in terms of the crisis of covid19 and Economic Impact that will follow. That is the sequencing we are looking at, keeping our staff safe, getting our heads around the Remote Working practices, and then the liquidity and the functioning of the Financial Market to make sure we can help regulators, policy makers do that. Laud, thank you very much. Great the appreciate greatly appreciate Legal General this morning. Park,ere all central francine in london as well. We are doing it with a great team, all wired up. This is the bloomberg terminal on a cell phone. This is one of the things i do. I live all of this thing all day long. I lived all of thing in jamaica. I lived off this thing in jamaica. How about tv . Things. Is any number of not only is it tv in the terminal, but it is your ability to hear blumer television and Bloomberg Radio across all our different properties. Tv. Stay with us. This is bloomberg. Good morning. Viviana you are watching bloomberg surveillance. We begin with airbus withdrawing its proposed dividend payout. This as a sign that the coronavirus pandemic is ripping through the aviation industry. Airbus actions are a measure to increase liquidity. The largest longhaul carrier ever is suspending passenger flights to most destinations. This as a pain deepens for the worlds biggest airlines, singapore headlines cutting through april 26 through april, 96 of its capacity. That is the Bloomberg Business flash. Francine thanks tom thanks so much. We are looking at the Standard Poors 500 per the etf down 3. 5 as well. Coming up, our conversation on the british response. Rupert harrison. This is bloomberg. I noticed that people are using the word recession. This is not the right vocabulary for discussing where we are. I think it will probably be a recession. It is a technical recession of definition of a recession. We are in a recession. That is certainly the situation we are in. It is a near certainty and will be one of the worst recessions in peacetime. I fear we are underestimating the depth of this recession that will hit the economy. Andhe idea business organized, partial shutdown of the u. S. Economy during q2. I think it is inappropriate to call it a recession. Tom the voices of thursday, the voices of friday, they are a little different this monday morning. We welcome all of you, whether it is your evening or afternoon. Certainly