Terrible composite pmis from the region. Oil continuing that recordbreaking rally yesterday. Some delegates a little bit more optimistic about getting deals done. Now i want to update you on our top stories from our new york team. We want to begin with europe. Thentioned the economies in slump of unprecedented scale, pointing to a contraction of about 10 . Bloombergs Michael Mckee joins us with more. Good morning, mike. Michael we are getting to the point where Economic Data are almost irrelevant to investors. Yeah, it is terrible. We know that. Weve traded it. Thats why you are not seeing a huge reaction in equity markets in europe because it was largely expected. It is sort of exactly what you think wouldve happened. Services pmis and composite pmis just falling off a cliff. The story in spain and italy there, but also france and germany. Those economies have basically shut down. Economists try to put a number on what that means, and that is where you get that 10 contraction figure, but we have never had numbers this low, so there are no established correlations. Everyone is just kind of guessing. It goes back to the idea that this is terrible, we know it. We traded on it. Once the stayathome orders are lifted, you will see a snapback. We will get that v like we saw in the chinese data, but it will just mean things are better this month,han they are last and that wont necessarily mean a big start up rebound in the economy. The peoples bank today lowering the reserve ratio for small banks, cutting the interest on excess reserves, which could augur further cuts ahead. I did have an investor say to me today in the u. S. , this is the least important jobs report ever. Or at least in his lifetime. Hes probably not wrong. It is old news. We will capture the depths of despair and destruction in the job market, and as is the case with the other data, its not like we havent traded it already. Jobless claims numbers the past two weeks really give us a much better picture. They were so large that when you look at the figures for what is forecast today, the Unemployment Rate basically is kind of a sick joke at this point. Weve already gotten over 10 , if you calculate the numbers. One data point, if we get that forecast 100,000 job loss today, that would be the first loss since september 2010. If you want to get nerdy in the data, look at the birthdeath ratio. That usually falls off rapidly. Will the Labor Department have changed at this month . That may affect the figures. They may be waiting for additional data. If there is anything this months data is going to be useful for, maybe as a baseline. This is where we were. This is where we would like to get back to someday. Alix exactly, someday. Morgan stanley says they now see that day pushed to the end of 2021. Thanks very much. I want to go to oil. Seeing its biggest oneday rally on record following President Trumps deal to cut oil supply. Pres. Trump it should be an easy one. It may be 10 and it may be more than that. I was told it may be 10, as i told somebody before, it may be 10, and it may be more than that. Maybe its 15. Be it goes up to 15. Could be as high as 15. Alix opec will hold a Virtual Meeting monday to discuss the cut. Annmarie hordern joins us with more. Is it opec , or is it opec plus . A little brazil, canada, the u. S. . Annmarie basically, they will call for this urgent meeting opec andt it is others that are invited. The latest is that they want to global output cut. That includes opec , plus other producers. The United States being one, especially if President Trump is touting the steel on twitter,ut also look to norway, brazil mexico. Yes,ther big question is, donald trump is also meeting with executives today from the oil industry. I dont think theres a single executive from the oil industry in the United States that wont say these prices have been hard on them, but what is the strategy Going Forward . They are not going to all agree that they want to cut production. That is something the u. S. Has stayed away from. We had politicians last year nopec antitrust law. Even if there was to be a cut of 10 Million Barrels a day, or as President Trump was saying, potentially as high as 15 Million Barrels a day, what does that do to demand . Analysts say it is too little, too late. Alix 6000 shale drillers in the u. S. Getting them all to agree would be something. Thank you. One thing we are taking a look at for now is dependent fallout. American companies are expected to cut dividends at the fastest rate since the financial crisis. So far, 21 companies in the s p are likely to reduce payouts in the second quarter. Among them, Consumer Discretionary stocks are expected to eject the biggest hit. The reason why that is so important is that many look at things like the dividend yield on the s p outpacing the 10 year , meaning the matter how you look at it, u. S. Equities are still cheap relative to treasuries. If that yield starts to come down, what does that when deb doing to how you value equities, especially when a lot of these companies are slashing their Buyback Program . This raises a lot more questions than it does answers. Coming up, deal or no deal . We will break down more on what to expect from the opec Virtual Meeting monday, as well as the meeting at the white house with u. S. Producers. Willrgans Christyan Malek join me next. This is bloomberg. Viviana this is bloomberg daybreak. Another blow to boeings troubled 737 max program. Tilling firm came a leasing firm canceling an order for 75 of the jets. The 73 maxan a year, has been grounded because of two fatal crashes. President trumps Family Business has asked Deutsche Bank about delaying loan payments. Bloomberg has learned formal discussions are taking place. The Trump Organization the german lender about 340 million the Trump Organization owed the german lender about 340 million. Opec has organized a meeting organize an try and output cut. It is open to all producers, not just opec and its allies. One delegate telling bloomberg a cut of 10 Million Barrels a day is realistic. That is your Bloomberg Business flash. Alix thanks so much. For more on oil, we are joined now by Christyan Malek, jp morgan head of the maa head of em ea oil and gas research. Christyan i think the entire opec group underestimated the impact on demand, but lets be clear, the saudis are looking for market share. They are looking for capitulation across the cost curve. So whatever this deal is, it will fall short of the point where everyone can come back. We are still looking for entrenchment of volume and capex by u. S. Shale in the majors. Whatever this deal is, it will still ensure the base case market share plan is intact. Alix the saudis have been very strict in terms of we will not cut unless others are with us. Does that others now extend to the u. S. . Christyan i think we may see some sort of u. S. Concession, but the way we are thinking about that is two tracks between the u. S. And saudi. One track is strategic. It could potentially be removed fdis from the u. S. , maybe other sort of agreements in place between the saudis in the u. S. The other truck is looking for restructuring of the industry and the majors. The reason i mention that is if you think about that first track being concessions, saudi may not request or push for u. S. To cut. They may push for Something Else in regard to those concessions. In the same question for russia. What does russia get . No doubt, the talk has been around sanctions, right . Christyan absolutely. With demand so week in russia, theyve got oil that nobody wants. Rosneft, they are looking to increase production, but that demand hasnt responded. We could see russia potentially present up to one Million Barrels a day of reversal in production cuts, but then again, russia would have to agree with saudi, and saudi would have to do the lions share of the cuts. I dont see how we get anywhere close to 10 Million Barrels, even if saudi and russia were to collaborate on this. We do see everybody else across , but wed provide cuts think its very unlikely. Alix in your models, what kind of cuts are going to need to see , toot have wti go to 20 stabilize at 30 . Christyan we would need at least 15 Million Barrels of cuts to the end of the year. If we see production cuts of six to 7 Million Barrels, which would be a saudi plus u. S. Plus russia, that would see oil at around 30. Weve lost between 30 and 50 Million Barrels of demand this year. Theres no way that can be recouped in terms of production cuts at this point, which you could argue is a miscalculation of opec in the context of not agreeing to a deal. They didnt see how bad demand will be, and now it is too little, too late. Base caseaudis strategy still remains market share, even if they are in a sort of compromised deal in the interim. Thing it could do is actually lower freight rates. You have saudi fighting for market share like you said. Seesare using a lot of vlc a lot of vlccs to transport crude. That is not going to ship to asia necessarily if freight rates climb too high. Will we have a valve in the u. S. To export . Isistyan i think that probably the positive corollary from this. You put a deal in place, even if it is a soft deal, and that does mean that freight rates come down. A also means you can find home for some of the storage. So theres a bit of relief or than the system. Even in the process of trying to put a deal through, we have the risk that it falls apart or we see lack of compliance. This could be a one step forward, two steps back situation. Not to mention, the clearing price for oil as we have seen for the next four to six weeks could see Oil Prices Fall to as low as 10 to 15 as a function of that clearing price. I do think this is worse than the oil embargo of the 1970s. To bek what is trying defined by President Trump, the reality is that the netnet be a lot worse in two to three months based on the clearing price of oil and the deal collapsing. Consensusare out of for the longerterm oil price, and that you think the destruction we are seeing in the oil market is going to lead to higher prices later because we are going to have a real supply fieldsaning that the oil now are not getting the capex they need, the maintenance to be able to get going, so we will see a supply gap. What does this do to that thesis now . Christyan someone this morning we looked at was looking at roughly 15 billion being cut. I would argue canceled, given it is unlikely to come back in the near future for this year. Thats only four weeks since the opec deal. Interpolate the u. S. , we are talking one Million Barrels of production being deferred from 2020 to 2021. I dont think that production comes back because that is slightly because that capex is likely redirected elsewhere. With that production now being deferred, we are pulling forward that peak into the second half of next year. So i do think there is a level where the oil price that is unsustainable. Investors are asking about sustainability over the mediumterm. What it does mean is that theres clear volumes being taken off the market, which you can then marry with where current production is for the oil market, and that generates this sort of line of sight that we just dont have enough oil to sustain production beyond the middle of next year onwards, which clearly creates a super which,so the thesis interestingly, looking at how european equities are trading, looks more and more like a positive decoupling to oil in the nearterm, and a more rico into the forward curve because that is more relevant a more oupling to the forward curve because that is more relevant. Alix what kind of Global Recovery do we need to see after this virus to make that thesis pan out . Christyan its a great point. The thesis is predicated on recovery from 21. We may not go back to 95 to 100 Million Barrels. It is likely we are in the mid90s in terms of demand. There will be some structural impairment demand. We are still not sure what is going to be permanent damage versus cyclical. Having said that, given we have lost about one Million Barrels of production already through we areuts, given that not seeing supply sustained, through 2022 when we do see demand recovery, it is the high 90s as a base case. That is where we can see demand effectively catch supply out by virtue of their not being enough. The key assumption here is that saudi moves ultimately back towards a cut rather than market share beyond next year. We do think they will ultimately come back to a more strict framework around quotas. If that is the case and opec behaves, and will be likely that they ensure that supply gets neutralized through whatever new demand emerges in 2021. Mosthe thing i think investors are considering, even in this bare rout, is whatever ut, is whatever we see, theres not enough demand out there. Demand recovers, there just wont be enough supply to meet that demand. Alix based on that, i know you have a buy rating on a couple of the european majors, like bp. When is it good for a longer Term Investor to start investing, and which ones . Christyan we are recommending right now. Lower throughmuch the clearing price. We see there is this correlation towards the mid to back end, and leerefore stocks like tota which have got loads of super cycle leverage, but a lot of oil volume still coming online, plenty of oil under their bonnet, so to speak, but also the resilience through Balance Sheets that can absorb the dividend even if this is a prolonged downturn of 12 to 18 months. It really is who has the barbell of resilience and super cycle leverage. The flipside are companies that are more exposed to dividends at ell. , sh those will find a lot more occult to find a lot more difficult to find the dividend. Alix really great to catch up with you. Christyan malek of jp morgan, thank you. Coming up, it is jobs day in the u. S. , and the scope of the iris just barely going to scratch the surface scope of the virus just barely going to scratch the surface. We will break it down with dean economist ef point72 chief economist. Alix we are just about an hour away from the u. S. Jobs report for march, expecting a loss of about 100,000 jobs. Maki, point72 chief economist, joining me. For ao we do prepare terrible april number . Dean this will give us information on some timing on when the downturn started. Is, that will just be a bit of information. But this report will be one of the least informative that we get because we know the april report is just going to be awful. Alix how bad is it going to get . Morgan stanley had a shocking note out overnight, looking for 38 secondquarter contraction for gdp, and the Unemployment Rate deking at 15. 7 . What is your call . Dean those numbers, while they sound shockingly weak, are somewhat realistic. I dont think anyone knows the exact numbers at this point. We know that a very large decline in gdp is coming. We know of the surge in the Unemployment Rate already happening. I think those numbers, while shocking, are not out of reality. What also struck me is that many economists wind up seeing some kind of vshaped, or some kind of letter, but they say we will not get back to previrus economic levels until 2020 one. What kind of recovery are you now modeling . Dean it is a little deceptive to try to put letters on it because you can get some very strong growth rates off the bottom, but because you are so far down in terms of the level of gdp, you can have very strong growth rates, but still not get up to the previous level for a long time. You could call that a v because the growth rate numbers are so strong, but in level terms, you dont get back to the prior level for a long time. I do think this is going to take quite a bit of time to get the economy back to where it was. I think we should be prepared for a long and slow recovery in level terms. Me. dean, hang tight with coming up on the program, a glimmer of a recovery within chinas businesses. What does that mean for Global Companies . We are going to talk to rich lesser, Boston Consulting Group ceo, next. That will give us some range on how the recovery looks. In the markets, still looking at a risk off friday within the s p. Little europe, we have a but of weakness. Spain trying to get into positive territory, but the dax still off by about 0. 5 . This is bloomberg. Alix welcome to bloomberg daybreak. We are entering todays session an hour away from jobs day. Some things to note, you had the pboc cutting the amount of cash that small banks have to hold to put aside reserves, pumping money into the system. European data for composite pmis just terrible, whether in the u. K. Or over in europe. Not a lot of movement within the treasury market. Theerday, the two yield twoyear yield hit a 2013 low. Oil trying to hold onto yesterdays record move. European pmis coming out terrible. They contracted about 29. 7 in march. You are looking at 10 contraction for the overall economy. Point72 is still with me. Italian Prime MinisterGiuseppe Conte says we need more firepower. Do you agree . The casetypically is that europe is a little slower to roll massive stimulus measures than the u. S. I think that is the case in this period as well. I wouldnt describe what the u. S. Is doing really as stimulus. It is more trying to fill holes. A lot of people are losing income and trying t