Holding fire today after two emergency cuts, futures point lower. The economic cost. Larry kudlow says the jobless claims figures today will show a very big increase. Bonusese, wall street could be cut by 40 this year. Just under an hour away from the start of cash equity trading in europe, lets take a look at futures. After two days of backtoback , we did have a record jump on a lot of indexes the day before yesterday. That was bolstered by another gain. Futures are down by 2. 5 . Take a look at futures in the u. S. This morning, we had a mixed picture. Now it is turning red across the board. Futures globally turning lower as we get closer and closer to the european open. The u. S. Senate has passed a record 2 trillion Coronavirus Relief package. The approval comes after both parties moved past a lastminute dispute over Unemployment Benefits for lowwage workers. The onus is now in the democratic led house to pass the bill quickly and send it to President Trump for his signature. Joining us from new york is Annmarie Hordern. How is the delay over Unemployment Insurance resolved . Annmarie there was a group of gop senators who were saying that the 600 per week, they thought that would give an incentive to employers to lay off workers and for those that were out of work to stay out of work. They said it should be to the most recent salary of the worker. We got over that hump, this was one of the biggest holdups before passing the legislation. It needs ton said be 600 flat. Directere needs to be money injected into the system. Able to get over that hurdle and then we saw yesterday, late evening, they were able to pass this bill. As it was passing, the death in america topped 1000 people. According to johns hopkins. Now the United States with the sixth highest death toll among nations around the world. Matt yes, youve got to think about the human cost here. Who will be the winners and losers of the stimulus package, getting back to the money . I would say there is something in this for everyone, except the energy sector. President trump wanted to fill the strategic reserve. You would have to say this was a grain of salt. There are no Strings Attached to almost everything. 500 billion dollars going to corporations is not just Free Cash Flow of money. No buybacks, a lot of limitations on executive pay, as well as stipulations in protecting workers. Small businesses are bleeding cash. They need this. 350 billion worth of loans, but the Small Businesses were looking for more cash injection. It is not completely everything everyone wanted, but there is something in there for everyone. As well as checks directly to americans. 1200. There was still at a lot of complaint about this bill. Many are saying they are going to need to do another phase. Cuomo,k governor andrew he said the state aid they are getting from the stimulus package, he calls it a drop in the bucket. Thanks very much. Annmarie hordern talking about the stimulus weve got and the stimulus that may be to come. Lets get into the markets with laura cooper, our mliv macro strategist. What do you think . How have markets taken the stimulus . Was it already priced in . I think it is the case that it was already priced in. Markets are looking through it. What they are focusing on now is the containment. Ford it be enough governments to flatten the infection carved within the u. S. There is also the question about the effective and timely deployment of this fiscal stimulus. Times could take around three weeks. We look at the cash injections directly to households. The precedent we have is looking back toward the economic stimulus looking back to 2008. That bill was passed in february of that year. That is quite a time lapse. I dont think at this stage we have the luxury of that length of time. Absolutely. Time is of the essence. Take onut the market stimulus to come . Yesterday, i spoke with the german finance minister. Germany may need more targeted stimulus and the u. S. Is also already talking about more trillion from 2 the state and trillions more from the fed. Is the market expecting anything more there . I think it was quite interesting what you asked yesterday about the 50 billion package, was that something they typically had in the past . I think at this stage, markets are just not yet there yet. Markets, it is about the clear need for timely injections. I think crucially today, we are going to get initial jobless claims that will be ever record with a wide range of estimates. That will really be the first indication of the depth of the economic crisis facing the u. S. Right now. Will beside to risk instead of the longer horizon at this stage. What are you expecting for initial jobless claims . Next week, we get the nonfarm payrolls numbers. How bad is that going to be . Laura i think if you look at consensus estimates today, they are about 1. 6 million, which is a record high, but there are wide a wide range of estimates. Think the risks are really asymmetrically skewed. Likely to see yields come under repricing the a insight on the gross perspective. I dont think at this stage, we did not see a lot of layoff. That is unlikely to feedthrough just quite yet in terms of a massive drop of nonfarm payrolls. I would expect that that number is going to be substantially higher when we look at the volume after that. Matt all right, very scary numbers indeed. Thanks for joining us. Laura cooper of bloomberg mliv macro strategist. You can join the debate on the question of the day. Will aid plans put a floor under stocks . And the mlivus team on your bloomberg. Always check out the mliv blog, it is the first thing i hit in the morning. Mliv on your bloomberg terminal. Coming up, spike and jobless claims. The white house chief economic a very largets increase in claims. We will talk more about that as the pandemic hits the economy hard. This is bloomberg. Matt 47 minutes away from the start of cash trading in europe. We do have futures down after backtoback gains in the last two sessions. Even after german lawmakers approved an historic spending plan to cushion the blow of the coronavirus pandemic. In an exclusive interview, bloomberg spoke to, i myself in fact, spoke with the finance minister about the stimulus package. This will be enough for the next months because we will just have to make it feasible that the economy survives and you should always understand that there is a very successful system of social welfare state, which is working as an automatic stabilizer. The robust social welfare system of germany is one of the most effective systems of the world to deal with a crisis without making feasible that the people dont lose their income and gives them confidence in a very difficult situation. Is question of stimulus coming when we are through the situation. Then i think it is absolutely necessary that we just wait for the economy to run again. Matt on the other set of this crisis, after we have the spread of the coronavirus in check, then germany is going to have to think about you are already working on another stimulus package. This is something we could do and we are thinking about the. Ossibility in what thee sense economists tell us that is it needs to be timely. What kind of size are you thinking . Germany has a love for the 50 billion number. We saw that. The last environmental package was about 50 million 50 billion. We will do the necessary things and we are able to do the necessary things. This will very much depend on the situation which we will have after the situation. We are more important that we need to do that. N the situation right now tourism is booming. At the same time when we stop tourism. So it is not the right way. Matt of course, but you bring up an interesting point. Germany has given itself the ability to do this kind of stimulus. You have brought your debt down to 60 of gdp. A lot of countries have had difficulty with that. How much firepower does that give you . I much space do you have now . I think we have all the power firepower we need. This is the message we give to anyone. Behindalways the idea our fiscal strategies. About the question of why it might make sense to reduce the public debt. Argument saying it is because there might be a crisis. Then we need to do the necessary things. It came to mankind all of a sudden then away. But now we have the strength. And we will use it. Matt that was a part of my exclusive interview with the german finance minister and we will be playing more of that through the day. Joining us now is the chief economist at bnp paribas. What do you think about all message about that germany has all the firepower it needs and that it stands ready to use it . The message is of course comforting from a german and broadly speaking european perspective. They are putting a lot of money at work. The German Government using its Balance Sheet as a state to support companies and, if necessary, to make sure that the succeed. What im less happy about is the way he dodges the question about what we are going to do in helping other countries by a topic that is very tricky, very touchy. Issuance so joint important to all of the countries . It seems that is important to all the countries that need money and those that have the money dont want to do it. Is that unfair . Yeah, well, you have countries that have a lot of fiscal policy. Germany or the netherlands. Havenk it is important to the sequencing rights. When you consider that at some policythe ways of fiscal will be matched with higher yields in the markets, then you first should issue corona bonds to address the health care issue. Secondly, you leave it to the countries to go to the market. What is happening here is that the countries go to the market, but it is not really going in the right direction. I was struck on your program yesterday when the Spanish Foreign minister was being interviewed as even he did not go into the detail. It shows you they cannot agree on this. It shows the moral hazard, certainly. Matt what is, what would have to be done in order to ensure that the italians remain fiscally responsible when you enter into such a situation . Or should that be less important to those countries that historically have been more fiscally responsible . , if you are in a Health Care Crisis which is global and what you have not seen in decades and then the first thing that springs to mind his moral hazard, im slightly disappointed, to put it mildly. The Health Care Crisis needs to be addressed and it needs a lot of money and it needs to be addressed in terms of its immediate economic consequences. That and by definition the finite maturity, the problem will solve itself. Need to be repaid. That would have benefited subsequently have a fiscal policy that would not be disciplined enough, it have to pay them back by issuing new debt at a high yield. That would then be in the country to pay for that. What we are doing now is we are completely doing it in a different order. Matt but of course, if you end up in a situation where the peripheral European Countries do have to pay new debt at a high yield and then they end up in a debt crisis, surely, you understand the germans are going to have to bail them out again. Right . Post health crisis. It depends on how the economy goes and whatever. Thatnk the key point is this is a textbook example where you need publicsector risksharing across the euro zone. If you are not able to come up with that, in this situation, then i wonder whether we will ever get there. It is clearly the responsibility of individual countries to conduct a fiscal policy when things will have gotten back to normal, which allows them to satisfactorys at a and affordable condition. Clearly. At some point, we will go back to the normal assessment of fiscal policy, which now has been put on hold by the european now, we take time off on that. I think by giving countries the issuey to tap into the and without having to go back again to the ecb as we always is a very i think it important element that should not be forgotten. This is really a kind of stress test for that way that we conduct Economic Policy jointly within the euro zone. It means there is an externality attached. If you are able to issue these bonds. In terms of the credibility that it brings. If you are not able to do that, it will be in reverse. Excellent conversation. We will continue the conversation with you. To talkstays with us ,ore about this incredibly incredibly fascinating issue, that a lot of people, including nine heads of state have been pushing hard over the last couple days. We will also talk a little off about soup coming up. As europes potential rescue measures build up. We will talk business of bailout. This is bloomberg. G. This is bloomberg markets, you are watching the european open. Im matt miller. 7 24 over in the u. K. Right now. Futures pointing down. They have moved lower through the morning. European and u. S. Futures indicating we are going to see a little bit of a risk obsession this morning. The white house chief Economic Advisor larry kudlow says todays jobless claims will show a surgeon americans filing for benefits because they have lost jobs. Larry kudlow did not specify a number, a median estimate by economists surveyed by bloomberg show jobless claims rising to a record 1. 6 million. Some predictions run as high as 4,000,000. William is still with us. This is, william, i think once you move past the health issues, this is the most terrifying economic aspect of the effort to stop this pandemic. How many people do you expect will lose their livelihoods . William we dont know. We certainly dont know. I think there is a big difference between different countries. European Social Security versus american Social Security. There is also an important countries or companies, sorry, organize labor force in europe and in germany in particular. In 2008, there was a big recourse. In the u. S. , that has been not the case. Or far less. Is also generating different dynamics with respect to the labor market. There was such a bottleneck before. This is a shortterm shock. It remains to be seen. Are already concerned about the jump in unemployment in the United States. Consumer spending and the financial situation. Entails for their own situation. The ramifications seemed tremendous. Malnutrition, this is the kind of thing that i would expect hurts and economy and keeps it down. Kind ofould hinder the vshaped recovery wall street wants to see. William, thank you for your time. Excellent conversation with you this morning. Up next, the bank of england gives the policy decision today with rates at a record low. 0. 1 . Welcome back to bloomberg markets, this is the european open, im matt miller in berlin. We are 30 minutes away from the start of cash equity trading and it looks like we could have a riskoff day. U. S. Futures are all falling as well. The bank of england gives a Rate Decision today. This meeting could be more about assessment then action. The coronavirus outbreak has already prompted officials to cut Interest Rates to a record low 0. 1 and kickstart a new round of bond buying. Joining us to discuss further is that of u. K. And european rate strategy at ubs. What do you expect from the boe today . I think you are right. I think they will be assessing what they have done in response to the unfolding crisis and how the crisis is developing. It is also too early to see how policy changes they have made are playing out. , they look at markets will give themselves an opportunity to try to see how the landscape is looking. Is the poundortant to the boe right now . John i dont think they will be watching any levels that closely. How things have stabilized over recent days is a reassurance. Markets are viewing their policy decisions. It was always going to fall heavily against the big reserve currencies as it became clear how serious the crisis was likely to become. But in the bigger scheme of things, it wont be an issue for them. For example, what it does to inflation will overwhelmed by the impact on domestic activity and domestically generated activity in the bigger moves in global prices, the oil price in particular, which will bring inflation down. Matt they have been able to watch closely the negative rate experiment at their neighbor central bank. Do you think the boe has considered that . We have always thought that their insistence, which is quite longstanding, that if rates would fall, they would not go below zero. Also for very good reason. There are all sorts of things the bank of england is doing. I think once you go into negative territory, you more than offset any beneficial consequences by the fact that you are squeezing lenders margins severely at that point. I think that is probably the right assessment. Of statee, some form contingent guidance and more aggressive funding and lending facilities for companies in the u. K. Are likely to be more impactful than just cutting rates and you were down at this ultra low level. For us, the markets are not pricing and any further cuts from here. Matt you do expect more and faster qe. You expect record bond buying. Are obviously already doing record bond buying. The pace at which they have started is just under 10 billion a week of fresh qe. At that rate, they will finish the 200 billion they have announced around mid to late august. None of us know how this will go. If at that point we are still in this economic decrease, they will absolutely do more at a similar pace. What is key is that will far outstrip what they will be selling, even when you look at what the government has already announced and maybe has announced over the coming days. Issuance is not going to pick up to an equivalent rate, which is the pace of guilt purchases we are now seeing from the bank of england. They have done it very deliberately to push down the yield to compress yields and make sure that lending rates in the riskfree curve are kept in the low, ultralow, and making sure that it falls out into the wider economy and pushes Corporate Bond costs down and thereby finding that the companies have access to extremely cheap honey to try to keep afloat while the economy is frozen. Matt john, thanks very much for spending some time with us. European ratend strategy at ubs talking to us ahead of the bank of england meeting later today. I want to quickly break some headlines for you that we see crossing in the airline sector. Asia off, malaysias air is said to explore options for its air asia x. It is weighing introducing a new investor, weighing getting help , bond issuance, integration are among the options. Keep your eye on that in terms of airlines. , the regulatory body or industry group, the ceo is reiterating the airlines expect are expected to take globally a 252 billion hit. They said some airlines will disappear, consolidation will come. Government aid is needed fast so airlines can rebound or maybe even just survive, as they say globally they expected ticket 252 billion hit. Lets get the Bloomberg Business flash. For that, we go to leighann gerrans in london. Thanks, matt. Partue is sliding at a key of the Trading Division at jp morgan. The equity derivatives have soared to 1. 5 billion dollars of revenue this year. That is almost what the wall street giant reported from all equity market business in last years third quarter. And at least twice with a derivatives desk usually earns. Apple is weighing a delay to the release of its 5g iphone, that is according to nick i. Hascoronavirus pandemic sapped demand and disrupted supply chains. Apple may not know an exact timetable for the launch until californias shelterinplace law has been lifted. Ford has been cut to junk by s p ratings as the coronavirus pandemic delivered a shock to the global auto industry. Its rating is one notch lower. The s p says it may fall even further. Yesterday, moodys cut the rating for the auto company for the second time in just six months. That is your Bloomberg Business flash. Map . Matt thanks very much. Leighann gerrans in london with your flash. Coming up, germany unleashes an historic stimulus package to support the economy during the coronavirus pandemic. More from my exclusive interview from the finance minister. This is bloomberg. Matt welcome back to the european open on bloomberg markets. We do see futures falling further as we get closer and closer to the start of the session. Ready yourself for a riskoff day. I want to get the bloomberg first word news from leighann gerrans in london. Leighann thanks, matt. The senate in the u. S. Has passed a 2 trillion virus rescue package after a series of intense negotiations. The package includes an unprecedented injection of loans , tax breaks, and direct payments into the economy. The u. S. Now has more than 69,000 confirmed cases of coronavirus. The World Health Organization has issued a rare public scolding. It says governments need to stop wasting the time needed to fight the coronavirus. They said we have squandered the first window of opportunity to stop the outbreak. But we do have a second chance. As 150 countries across the world have fewer than 100 reported cases. There is still now time to prepare. The European Central bank may decide to activate its most powerful bond buying tool. They have the broad support from the governing council for outright monetary transactions. The measures will allow the ecb to buy nearly unlimited quantities of nascent sovereign debt, pushing down bond yields to help make fiscal stimulus more affordable. The bank of england is set for an unprecedented third meeting this month. The scheduled session may be a less dramatic affair. 0. 1 . The new governor is not in support of pulling the benchmark even lower. A further exaction of quantitative easing. Powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt . Matt thanks very much. Leighann gerrans with your first word news. Private equity funds maybe see the value of their assets cut in half, according to a report from investec. Lets go to dani burger. Bold call saying that private equity funds, the value of their assets may fall and 20 asetween 50 the effects of the economic freeze really start to hit these Portfolio Companies. The good news for private equity is that they tend to hold onto these companies for a decade or longer, which means that also funds are not going to see mass redemption. We have the luxury of time to somewhat wait this out. In the meantime, they say their number one priority is going to be liquidity. How to their Portfolio Companies get access to the funding they need . We have learned that they are encouraging portfolios to pull down on their lines of credit, so you can tell how concentrated these funds are on that issue, which also means that the flow could be put on the back burner here. Private equity before this crash had about 1. 5 trillion of dry powder, so they do have the funds to jump in and sign deals and find value. Returns,antime, bloomberg has learned that the fund value fell between 15 and low 20 percentage points. Certainly, pain for the private equity managers. These are the defining months for private equity, matt. Matt thanks very much. Fascinating story. Dani burger talking about the effects of the pandemic in private equity. Lets get to the European Union. It has warned the economic slump could leave Key Industries vulnerable to hospital hostile takeovers. Industry guidelines is aiming to prevent Foreign Direct Investment from national security. Italy is considering expanding its own buffers. The Prime Minister says he is ready to defend the industrial and business assets of the country. Joining us now from brussels is maria tadeo. What kind of protectionism do you expect here . Maria this is actually a very interesting question for a number of reasons. Europeans know that the coronavirus will have an impact on the economy. They also know they are very aware that you are going to see european stocks and European Companies on the front line. They are going to find liquidity, they are going to find and make sure they are going to be last resort. Because they are in a position of weakness, you could become a target for a Chinese Company to buy you. Ofcould be a third member the eu coming into sweep the market or Key Industries. So, where the fed is, we dont want that. Part of the european sovereignty. The ultimate weapon would be to nationalize the company. The french are very open to this. Or you could also buy a stake in a company. You could also say temporarily we are going to nationalize. Not forever, but just a limited amount of time. Or the commission, we are not going to approve m a if we dont think it is appropriate. This is really interesting, but it does show the europeans are making a link between the sovereignty of the eu and the industry it is able to protect. Moment tome take a ask about the human toll of the virus. The death toll in spain rose now to hire in china. It has become one of the hardest hit countries in the world. Measures are the spanish taking in order to try to stop this thing . Maria right. This is a real tragedy. You look at the numbers. The numbers are very big. Die in almost 700 people the space of 24 hours. If you look at the weight of the , the speed of this, i would not rule out that we are going to be in the 60s by the end of the week. The tone you have from the government is not pointing to anything much better. Mostis going to be the difficult week yet. Everybody has to be almost mentally ready for the impact that this is going to have in the psyche of the country. In terms of the measures, the government has sent we are going to do everything we can. Doctors have to make very difficult decisions and frankly, the country was not ready for this because no one could have expected we would see the amount of people we are seeing now needing special care in hospitals. I would say very quickly that the number of deaths we are seeing also does show that the government or explain the reason why the government has taken such a tough line. The government is saying that national stimulus is not enough. Expect to see european solidarity. Right, maria, thank you very much for joining us out of brussels. Up next, bargain hunt. Investors search for underpriced assets. As equities gain for a second day. Is it time for value stocks to shine . This is bloomberg. Welcome back to bloomberg markets, this is the european open, nine minutes away from the start of cash equity trading. Starts down almost 3 to this thursday. German lawmakers approved yesterday and historic 750 billion euros spending plan to cushion the blow of the coronavirus pandemic. In an exclusive interview, i spoke with the finance minister about the package. This will be enough for the next months. We will just have to make it feasible that the economy survives. You should always understand that there is a very successful system of social welfare state, which works as an automatic stabilizer. The robust social welfare system of germany is one of the most effective systems of the world to make people not feel like theyre giving up their incomes. Is question of stimulus coming when we are through the situation. Then i think it is absolutely necessary that we just wait for the economy to run again. Of this the other side crisis, after you have the spread of the coronavirus and check, then germany is going to have to think about already working on another stimulus package. This is something we could do then and we are thinking about possibilities to meet. Thinking there is some sense in what the economies tell us, that it must be timely and targeted. Nstruments like this matt what kind of size are you thinking . For the 50a love billion number 50 billion euros number. The 2008 crisis package. Are we talking about more than that now . Could we break out of that number . We will do the necessary things and we are able to do the necessary things and this will very much depend on the situation that we will have after the situation we are now in, we are in now. The more important question is that we get through this situation to be able to do things like that. In the situation right now, it would be ridiculous to do some activity. Way ot the right matt of course, but you bring up an interesting point. Germany has given itself the ability to do this kind of stimulus. You have brought your debt down to 60 of gdp. A lot of countries have had difficulty with that. How much firepower does that give you . How much space do you think you have now . I think we have all the firepower we need and we will use it. This is the message we give to anyone. It was always the idea behind our fiscal strategies. Question,cussed the about the question why it might make sense to reduce the public debt, it was also it was always my argument saying, it is because there might be a crisis and we need strength to do the necessary things. Now, we are in the crisis we have not expected because it is something that came to mankind all of a sudden in a way. But now we have the strength and we will use it. The germanwas finance minister. We will play more from that interview through the day. Coming up, it is the market open. We do have futures pointing lower across the board. I want to give you quickly some breaking news out of singapore. 48 billionto draw singapore dollars in a second fiver stimulus package. Reserveson from past to fund stimulus. This boosts the virus package to 11 of gdp. The singapore second stimulus packages coming out. 40 at billion dollars singapore dollars, about 33 billion u. S. Dollars. I will talk in a currency that most everyone understands. That means the total stimulus that singapore is unleashing us about 11 of its gdp. We are seeing these kind of numbers now around the world after the 2 trillion that the u. S. Voted through yesterday, through the senate. They hope that passes through the house very soon, so that the president can sign off on it. We just talked about the 750 billion euros from germany. Got of course 400 pounds 400 billion pounds good morning, everybody. Here are your headlines. The global death toll from the coronavirus topped 27,000. The pandemic deep engines the wus more than 1,000 dead. The u. S. Senate passes a 2 trillion rescue package in response to the coronavirus plus the bank of england is seen holding fire today after two emergency cuts. Futures went lower. Larry cud low says todays jobless figures will show a big increase and wall street bonus could be slashed 40 this year. The death toll on the minds of many in the market. Expected to price in more weakness at the start of trait trade. Having an impact on Financial Markets and once again we expect to go weaker despite all of the best efforts from policy make rs. Well hear from the Central Banks later. Two governors. How are European Equity markets responding here . European stocks as we said in the look at the futures were expected to open lower. That is what they did. Stoxx 600 down. The ftse down 2. 7 . The cac down 2. 25 . You saw some of the Technology Stocks yesterday doing quite nicely. As we looked at the initial response there. We have managed to achieve two days of backtoback games of global stocks for first time in six weeks. That is what we have so far achieved. The focus is what the senate has done, passing a package, loaning money and tax good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. Anna welcome back to the repeat open. 30 minutes into a trading day. Once again trading along the market, on the european stocks this morning, down shy of 1. 9 on the stoxx 600. More than that, 2. 8 on the cac and the dax, both down by 2 changed. We have been up and then up two consecutive days. That is positive if you are long on the markets, taking a little breather perhaps on the trend. All of these sectors were negative territory, now all negative. Pricing,etreat in oil 26. 39 is where we trade, down 3. 6 . Lets get a first word news update. In the u. S. , Senate Passed a 2 trillion virus rescue plan. The public then democrats reach the agreement after a series of intense negotiations. The package includes an unprecedented tax breaks and direct payments into the economy. The u. S. Has 69,000 confirmed cases of coronavirus. The World Health Organization has featured a rare public to stop wasting the kind needed to stop coronavirus. The International Agency chief says the first window of opportunity to stop the outbreak. But we now have a chance, fewer than 100 reported cases. There is still time to prepare. In the u. K. , pressure is building on Prime Minister Boris Johnson over virus testing. The top medical advisor says the National Health service may be overwhelmed by the pandemic. Is beingical officer modeled by Global Supply taking over companies the European Union has more on the economic slump of the coronavirus may may may make Key Industries vulnerable. Global news 24 hours a day on air and at quick take on bloomberg, powered by 2700 this is bloomberg. Are creditrs that couldas they pave a way to the ecb to launch its own methods fight almost unlimited amounts on the monetary transaction. More on how european governments should respond to this. , esm, the more likely ability mechanism fund. A response from a number of it is a little bit smaller than that. Is you mentioned coronavirus will certainly be useful. Something to compensate, an uptake uptick for some progress. Maybe that will help get something in place. Could be something quite substantial if the ecb start monetaryd transactions that were accreted if the esn is capped, if the credit lines to countries are put in place, then that gives the green light for the ecb to then buy sovereign debt. The use of that owen see . I think it would be. And the european debt crisis. Many other countries could be the beneficiary of it, for some countries, it could isate an opportunity, but it having stimulus with Economic Policy in place. Therefore, the debt levels you around 400 billion anna what is your assessment of when the worst of the economic. Ain may be lagging see do you think you will relief in the eurozone . How quickly to get infection rates down. It is affecting economic activity. Needing more, being shut down. Various methods that we could see within a much longer getting the infection rate down. For yournk you thoughts this morning. Just discussing the difficulty of working out the Economic Impact and when it hits the euro zone. The timing of that exactly. As we were speaking, the japanese government put out its most recent economic report, saying it no longer sees the economy in recovery. The economy is extreme he depressed by the virus, cutting on consumption. , aital expenditure reassessment coming through for the japanese government, as you might well expect. It is 8 37 in london. Coming up, we speak with ian mccafferty. That as the central bank is due to announce a policy decision later today. They have done a lot of the siding already so far in march. Dont miss that interview coming up next. This is bloomberg. This is bloomberg. Anna welcome back to european open, 41 minutes into a negative trading day for European Equity markets. Lets get our top stock stories now refer that, we get Annmarie Hordern in new york. Annmarie i want to start with one of the biggest on the stock 600 sectors, oil and gas alongside miners they are deep in the red today. 4. 8 onoil trading down contracts. Yesterday the ceo telling us as much as 20 Million Barrels is being lost on the demand side. , spendingnd down 2 their dividend at the moment. Future earnings are currently in line with what is expected, but there is material uncertainty. I dont think any company could rightfully forecast what is ahead. Getting hello fresh getting a boost today. We have seen a rush with Food Services as people are forced to remain at home. Anna thanks very much, Annmarie Hordern the bank of england gives a Rate Decision today, but this meeting could be more about assessments than action. The coronavirus outbreak has already prompted officials in the u. K. To Interest Rates to record lows, 0. 1 per in and kickstart a new round of bond other policies beyond. Lets speak with ian for cafferty, former member of the bank of england Monetary Policy committee. Ray to speak to you this morning. Do you think today will be about action or about taking stock of all the actions we have already seen in march . Ian i think it is probably more likely to be the latter, given the number of announcements that the bank has made over the course of the past couple of weeks. Essentially they reentered their own meeting today with the announcement of the two rate cuts and with all of the actions taken in terms of restarting the qe program, and all of the measures on liquidity. Though i suspect for now it is assessing what is going on, and really assessing whether those measures are having the effect they would hope they would have in terms of maintaining liquidity in markets and ensuring that credit can continue to flow. Anna will the bank of england need to do more . What is your assessment . Ian i dont think we can tell at the moment. The bank of england at all the fiscal measures are of course unprecedented in terms of peace economic activity. We will not know for some time yet whether the measures so far announced are sufficient or whether further will be necessary. Until we know more about the medical side of the disease and how long the different lockdowns and disruptions to getting to work will have to last, we have no idea how long these emergency programs will need to continue. So from that point of view, it may well be that they will be extended. That would clearly be more costly eared we are still waiting in the u. K. , for example for further announcement on what might happen to help support the selfemployed as well as those who are employees. So i think there will be other things filling in the gaps, as it were, across the piece. As we go forward, in terms of the major programs, i think we have seen much of the major work, it may well be that they will have to be extended, depending on the medical side of things. Anna andrew bailey, the new governor, has said he is reluctant to cut rates below zero. Will the bank of england stick to that philosophy, or will that be something that can be reviewed, perhaps with protection from for the banks tilt in . What is your assessment of going below zero . Ian i think they would be reluctant to go below zero. I would not rule it out completely given the depth and the length of the crisis, but i think they willfully reluctant to do so. I will also say i dont think at this stage moves in Interest Rates, particularly given that we start from a low position, the most important part of the package that have been announced over the course of the last couple of weeks. The restarting of the qe program, what that does to the cost of government finances, helping the government financed a very low rate at very low rates, and all of the measures of liquidity, reducing the Capital Buffers for banks such that credit can be maintained, i think those are the mower the more important part of the package we have seen so far. Anna it has been wideranging. What is your assessment of how the u. K. Economy will perform this year in a couple of quarters ahead . We have seen the early pmi data, looking pretty dreadful, but it is in good comedy because everybodys pmi data looks pretty dreadful right now for understood reasons. It is in good company because everybodys pmi data looks pretty dreadful right now for the understood reasons. we do know from previous crises to shortterm survey indicators do pick up an element of sentiment as well as changes in activity, and therefore are not necessarily quite as good an indicator as they would be normally. That is not to say that i dont think the downturn as we go into the Second Quarter is going to be severe, and probably significantly more severe than we saw in the early stages of the financial crisis in 2008 eared what i do think is that as long as the medical improvements and investments that we are and weg to see continue, are still in the early days, but that then means that the lockdown should not necessarily be overextended. That should mean that all of our economies would be able to restart sometime later in the year, and we should expect to see a reasonably good and relatively rapid bounceback as we go through 2021. Anna we have seen a lot from the u. K. Government. Some of the measures already announced. There any limit, conceptually, to what the government can do fiscally here if the bank of england is able to buy up debt. Is there a limit to what the government can spend . Ian conceptually there would be very little limit, and you would simply be financing government debt. That leads legacies into the longterm, and i think clearly we would need to worry about those when the time comes. But for the time being, if you move to full monetary financing, the government would be able to finance whatever it takes. Thank you for joining formery, ian mccafferty, bank of england Monetary Policy committee member. They have already had a couple of emergency meetings through march. This is the third time the mpc meeting this month for coming up, we speak exclusively to the cbo the ceo of ubs. Do not miss that top interview right here on bloomberg tv, 9 00 a. M. U. K. Time. This is bloomberg. Anna welcome back to the european open. 50 minutes into the trading day, European Equity markets under pressure of diluted desk at two days two days of backtoback gains. We were lower than this earlier in the session. Joining us now is Kristine Aquino. Good to speak to you. So we are not seeing a third day of gains for global stocks, but we do see two backtoback gains. Relative to what we seen over the last six weeks, that is something of an achievement. I guess a lot of what we saw on capitol hill with the senate agreeing to that bailout package for the u. S. Economy has been wary of alex very well expected, hasnt it . Kristine we get more traction in terms of equity reaction to all these packages because markets have been expecting this. It is expecting governments to do something out of the crisis. And now really timing is going to be key because markets are now looking for a quick now bet we know that would what would next propel markets to give investors seeing governments within quickly to deploy all these measures. Anna i guess the important numbers that markets are going to be watching for is around the death toll tragically turning what is already a dreadful human tragedy on its head and trying to get a handle on that, trying to stem the losses in that sense, and that is what every investor globally is going to be looking for. Kristine unfortunately, that is going to be what the numbers that will guide investors in the as previous guests on this show have said and what we are hearing on the street as well, economic forecasts are really not to be trusted at the moment just because it is hard to quantify the magnitude and length of impact of the virus. So investors are turning into traditional measures with more granular details. There are other less traditional measures that we have seen. ,ncluding data on activities human activity around people trying to gauge whether that will be the next site of the virus hotspot. So these are less traditional things that investors are starting to look at because economic forecasts are hard to pin down at the moment. Anna new highfrequency data very popular. Kristine aquino in europe, with a lively debate about how governors governments are supporting their policies. On fromto have moved debt pooling, promoting risksharing in that sense and using theisms that are already fit such as the esm. Kristine absolutely, and i think you do get a sense in europe that it is all hands on deck and all options open on the table in terms of what could be done to combat this crisis. We are noting as well, mario draghi saying that this is a war. Against the coronavirus and all options must be considered. I think you very much get that sense as well from officials whether the ecb or the heads of government in various european nations at this point it does in whaty are limited they will be deploying to combat the crisis. Anna do you see less tension in key markets . It seems that high yield ends of the corporate debt markets show tension, and in particularly the energy side of things. What about dollar funding markets, some of the things we have seen if things calm down given the alphabet soup of policies, the fed and other Central Banks have thrown at this he echo kristine certainly we have seen easing in terms of the dollar funding crunch eared some of the measures we are ,ooking at come currency basis are off the worst levels we have saw in the last couple of weeks, indicating a little bit of easing. As you say, the alphabet soup that is the fed certainly helps that. It doesnt indicate we are out of the woods, but this is a upper trending situation and it will indicate to Central Banks what more they can do to unfold issues as they come. Anna jobless claims, key point later on today, and there is a limit to how much we will care about some of the data. Some will be back or backward looking, but this could be really revealing about just how quickly jobs are being lost in the United States. Kristine absolutely, i think that will be the number to watch in terms of Economic Data this week. We are already seeing the median estimate in the bloomberg survey, 1. 4 million, but even the range of the estimates themselves tell you that is how much there is around the number. How much people are pricing to the downside. So we are expecting how data this month is couched because the market already expects that. That isn is that what we are debating now in markets life. Certainly data such as jobless claims for this week. Thanks very much for joining us, Kristine Aquino who leads our markets life team in europe. 2. 2 ,se 100 down by similar gains coming through on the cats as well. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] francine 2 trillion of stimulus. The Senate Passes a historic stimulus plan. Globalan tragedy, fidelity, topped 21,000, cases surge in the u. S. And spain. Larry kudlow warns investors to expect a large increase in jobless claims. Crisis economics. The ecb unleashing its most powerful bond buying tool as it craft limits on asset purchases. Afternoon,g, good good evening, everyone. This is bloomberg surveillance. I am Francine Lacqua and london. Tom keene is in new york. A different day if you look at the markets, definitely trying to focus on the number of deaths and infections as opposed to the extra stimulus eared we are in uncharted territory. Tom also in waiting mode, francine, and this is from
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