And bank ofs, citi, america all reporting today after j. P. Morgan and wells fargo yesterday. The pboc cuts mediumterm borrowing costs again amid expectations of further easing, after the imf warns this years downturn could match that of the Great Depression. We are just under an hour away from the start of cash equity trading across europe. Lets take a look at how futures are trading. We had gains in the cash trade yesterday in europe, with the exception of the ftse, and big gains in the u. S. To close the session last night. Mixed trade in asia as the earnings season began to kind of way on some investors sentiment. As a result, we see european futures down this morning. Nasdaq, u. S. Futures down as well, about two thirds of 1 . Lets get you the bloomberg first word news from the terminal. President trump says he is suspending u. S. Funding for the World Health Organization while his administration reviews its response to the coronavirus. He says the who was slow to share information about the outbreak, leading to thousands of deaths and economic damage. It is not clear when any such halt would take effect, nor is it clear of the president has authority, as payments are authorized by congress. With coronavirus related deaths in europe now passed the 50,000 mark, but with stabilization in some countries, italy and spain are among those poised to ease some restrictions. Certain local shops are to reopen in italy as long as they maintain a social distancing rules. Madrid, meanwhile, is under fire for letting construction work resume. Primary schools in denmark reopened today, one of the First Nations to make that move in europe. The imf warns of a socalled rate lockdown recession being the deepest in almost a century. It says the global contraction and subsequent recovery will be worse than forecast if the coronavirus is halted. Outlookt World Economic since the worldwide freeze, the fund predicts little gdp will shrink 3 this year, the deepest fall since the depression of the 1930s. In the second half continued the way they are now, then we are looking at severe downside scenario. Global growth could fall to 6 in 2020, and that could be a time when financial conditions will be much tighter than what we are seeing now. Matt thats your first word news. Asian stocks have fluctuated. U. S. And european futures are down as investors scour Earnings Reports for evidence of the impact of the coronavirus outbreak. Goldman sachs group is up next to report today. Morgan, johnson, j. P. And wells fargo provided a mixed picture yesterday. Lets look at the markets with simon flynt, emergingmarket editor in singapore. Simon, what does the earnings picture look like to you . Simon highly uncertain. The most important element of it is going to be forward guidance. Of analysts and investors are rushing off 2020. They Want Companies to tell us that they have some visibility in 2021, and if they dont, do they have coherent plans to deal with this new world that we are living in . Matt how does the em picture look . I notice Mohammed Al Arian out yesterday with comments on the i have report, saying the em countries have been met on the imf report, saying the em countries have been met much harder. Em p. M. Has a lot of has a lot of unusual problems in this respect. Local food prices are going up relative to other goods prices, effect disinflationary is not apparent in many em countries. Secondly, it is much harder for many ems to introduce conference of lockdown measures. Population density is higher. Health systems are much less well prepared. Hit tend to be much worse by the coronavirus than the developed world. Thirdly and finally, we have not yet seen this decisive policy intervention by the chinese. Ago, there was a really forceful chinese stimulus which helped emerging markets, and we have not seen that yet. Matt we did see a little bit, china adding liquidity training rates ahead of gdp data, right . Simon thats true. That was not too surprising. We had talked about this over the last week, maybe, and that kind of its planes the reaction you saw in the markets. Having said that, i wont deny that overall, the direction of chinese policies are kind of if youging, particularly view it in the context of this really smashing money supply data we saw over the weekend, than did show a greater expected willingness to ease by the chinese authorities, at least in my opinion. Rob a bling out enough yet, but maybe there will be probably not enough yet, but maybe that will be more to come if we have a very poor q1 gdp number. Matt thank you for joining us, simon flynt from the mliv blog, talking to us about what to expect from the earnings season as well as what could help drive the emerging developing markets out of this crisis. Coming up, jp morgan and wells fargo set aside a Staggering Amount for bad loans. We learned that in the Earnings Report yesterday. We will hear from the cfo of wells fargo next. This is bloomberg. Matt welcome back. This is the european union. We are about 50 minutes away from the start of cash trading, with futures pointing slightly lower. As u. S. Lenders grapple with an economic standstill, they have set aside a Staggering Amount of capital for bad loans. Jp morgan and wells fargo posted their highest loanloss provisions in a decade, setting billion tothan 12 cover possible defaults. We spoke to John Shrewsberry, wells fargos cfo, about the loanloss provisions. John as it relates to loan losses, thats right, there is a new accounting standard that came in in this quarter. Our provision is not terribly different as a result for this quarter. T is a life of loan estimation but we analyzed our allowance under the old gap and the new gap and came with two similar outcomes. To get to the heart of your question, you are estimating via assumptions about the passive gdp growth, positive or negative, and the path of things like unemployment, home price appreciation, commercial real estate valuations, the s p, a variety of things. You are estimating the impact of loans you have in your books. Frontend loading what the laws content might be if those scenarios play out. Because it is so early in the process, the facts changed on the ground in march and even the latter half of march as banks were closing their books. But folks are doing their best who estimate great scenarios, running that through models, and set aside the right amount. Thats a big piece of it. Separately, because there are also some industries that are directly impacted, very visibly, from the march and april change in economic activity, so transportation, airlines, and other transportation, retailers, restaurants, leisure, auto sales, a handful of Industries Like that, and lastly, things like entertainment, recreation, etc. Reserve up an estimated , also thinking about our exposures in those industries. And you cant forget oil and gas because of what has been going on with the slowdown in aggregate demand. These things have a tendency to slightly overestimate. Its not necessarily true here because we dont know how long the economy is going to be locked down. But thats whats going on here. About thehen we talk idea of all of us getting back to work and hopefully back to earningsdo see in your as well as the jp morgan earnings that sort of decline in credit card volume growth. When you take a look at that metric and consumer activity, how did those two lineup for you looking into the future . John i can tell you that in thingsngs have changed drastically in the last two weeks of march as it relates to Consumer Spending. We have seen overall spending down 35 , 36 percent from april onward, and thats week over week versus the prior year. Grocery stores and major online retailers tend to be doing better in this environment, in the neighborhood of 40 , but restaurants, clothing stores, gas stations, and a whole range of other places that people burrs wereing their money spending their money are down double digits to get to this average of down 40 . Thats for the last day by day, day earlier. He it seems to have stabilized a bit. How does that turn back on . People are not going to make up for missed Restaurant Visits, but there are some delayed purchases that folks will act on when the time presents itself. Which industries do better or worse . Which sales turned back on that cause employment to pick back up really matters. Was wells fargo cfo John Shrewsberry talking to us yesterday. Joining us is the head of u. K. And european rate strategy at ubs. John, what are we learning from the first few banks coming out and reporting about the economy . Good morning. I think what we are learning is that they are making the best of a very difficult situation at the moment. Clearly, as we have just been hearing, we have plunged into this unprecedented crisis without a great deal of warning. There is the initial need to deal with that impact. And we are going through it with the great deal of fog around. It is unclear whether we will be coming out of this in anything like the shape we went to do it the shape with which we went into it. I dont think we have enough clarity to have a view on the longerterm outlook for any of these companies, but we are trying to form those judgments over time as the situation slowly becomes clearer. Matt what do you think about the idea that now is the time to go in and buy, at least to easier way in, dollar cost average, however you want to look at it, as we have had such devaluations, or did, certainly, into the end of march . John that plays to the same question. And indeed the same assessment, which is we just dont know where we are heading. There is a range of scenarios we have been looking at in some detail. Theou believe that some of less negative scenarios might start to play out, or indeed that this is just a rising probability that they do, then clearly there was going to say that some of these assets are undervalued, because they are pricing in a weighted average of all those possible scenarios. I thing the bottom line is for anybody trying to feel conviction around these issues, and simply too early certainly listening to the signs and politics of the situation, the extent of lockdowns, how long they go on for, how they are lifted, there are just too many question marks around. To have any sort of view other than playing it safe i think is risky at this point. Matt we had a great piece yesterday with a lot of Financial Experts responding to the imf forecasts. Some of those, like muhammad ali arian, thought the forecast was a little too optimistic. The lions in fact, share of those who chipped in look,heir review, said weve got Central Banks and governments doing everything they can to bail us out of this, certainly in the u. S. Do you think that is cause for optimism . John yes, i think i do. You can argue all day long about the extent to which the economic damage that is being suffered at the moment is selfinflicted, because it has come about the direct result of action taken by governments and Central Banks. Is,i think the bottom line at least for most governments, they have done everything they can to respond as best they can. Without knowing how long these economies are going to be in a, the important thing is so when resuscitation happens and economies start to get back on their feet and move forward, they are in the best underlying health. Is that certain economies, the u. S. , the u. K. , and some european economies, would be the authorities both for scilly and monetarily are doing a good job in very demanding fiscally and monetarily are doing a good job in very demanding circumstances. Matt we are going to talk more about this next, but the effect should be or what it does look like on sovereign curves. John wraith stays with us. Coming up, is a 3 contraction this year a sunny view . We will discuss the slowdown and sovereigns. Matt welcome back. This is the european open. Weve got futures moving lower as we get closer to cash trade. We are now looking at drops of 6 10 for 7 10 of 1 . Lets get to Bloomberg Business flash news. Here are todays top corporate stories. U. S. Airlines have agreed april a merry deal with the Treasury Department to access 25 billion in aid. The deal covers all major carriers. American airlines will get 5. 8 billion in payroll support, while southwest will get 3 billion. The industry is projected to burn through 10 billion to 12 billion a month, according to a trade group, airlines for america. Meanwhile, airbnb has raised another 1 billion in debt with the global coronavirus pandemic crushing demand for travel and diminishing the prospect of an ipo of the home sharing company. It has been shoring up its finances. Bloomberg understands airbnb sourced the debt from investors including silverlake and blackrock. Office sharing startup we work is to cut more staff by the end of may. It wont say how many people will go. Theceo told employees plan at a meeting, alongside the chief operating officer. The biggest shareholder, softbank, pulled out of the deal two weeks ago. Wework cut 200 positions last year and terminated another 250 jobs last month. Thats your Bloomberg Business flash. With us. Th is still we were talking about the well,that the fed and other Central Banks have been putting into place. But the Federal Reserve especially has been putting in massive measures to keep u. S. Dollar funding markets functioning. It may have now capped treasury yields to ensure shortterm rates dont become unruly, according to credit suisse. What do you think about the fed starting some kind of yield curve control . I thing we briefly touched before on what governments and Central Banks are doing in the and talkeds crisis fairly approvingly about that. In terms of yield curve control, or control of borrowing costs generally, the fed and most other Central Banks are doing a good job around that as well. Clearly while this is ongoing, there is a need to protect as much as possible companies and Economic Agents that were in a sort of relatively healthy state coming into this crisis. That is hard to do when their underlying businesses are being so badly damaged. One of the key things is keeping those borrowing costs under control and extremely low so healthypefully, those companies are able to survive longer, and i think the fed is doing a good and determined job. Matt on the other hand, do you think the back of the bank of england may need to consider slowing the pace of its purchases . John this is a slightly different issue. Got its of england action in very early in the process. One of the things it brought in was an aggressive regional qe. They have not said directly what they are trying to do in terms of gilt yields, but they have clearly helped push them to very low levels across the curve. They are buying significantly faster than the dmo is selling, even with the big step up in issuance that is ongoing in the u. K. And everywhere else. The problem is there is a limited free flow of guilt out there, and the longer the bank of england goes into that, the bigger a risk it runs into resistances of its purchases. Even though we have not seen any severe signs of distress yet,here have been buybacks operations where they have had to pay up to an extent they would be uncomfortable with, were it to become exacerbated. So now they have carried on with that pace. Measure. Ich on every they are deliberately but effectively distorting the level of yield. They need to buy at a sufficient pace to keep that control, but not so fast that they make the market trade in a disorderly way. Arguably, they are getting close to a Tipping Point in that regard. Matt john, thanks very much for your time. Hn wraith, head of european rate strategy at ubs. Get backans on how to to work after subduing the coronavirus. Can leaders avoid a resurgence of the disease . This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Matt welcome back. This is the european open, 30 minutes from the start of cash trading. Lets help you get a look at what you need to watch today as you try and aggravate the coronavirus news cycle. We will tell you whats coming up. One of the first countries in europe to shatter its economy in regards to covid19, denmark, will return from virus lockdown after an early response. The country will open its kindergartens and primary schools for the first time in a month today. At 9 00 a. M. U. K. Time, watch for the iaea monthly oil report. We will continue to track the impact of the pandemic on bank earnings, following releases from bank of america, Goldman Sachs, and citi. And nato defense ministers hold a press conference at 2 00 p. M. U. K. Time, focusing on the alliances response to the virus. 7 00 p. M. U. K. Time, we will get the Federal Reserve beige book. That comes out at 2 00 in the afternoon in washington. European leaders are Planning Strategies for lifting the lockdown in general. Angela merkel is due to discuss plans today to ease research ands, and the European Commission has drafted proposals to court make moves across the tinent to court nate coordinate moves across the continent. Marselle, let me first get your take on whether or not it is time. Do we need to be reopening these economies as soon as we possibly can . From an economic point of view, of course. Everyone wants to go back to work, and for many companies, its getting critical in terms of their financing. If they dont have customers, they get into serious difficulty. The sooner the economies can open, the better, but clearly there is a flipside, that we there will bether a second wave of infections, whether this could be too early. The worse that could worst that could happen to an economy is you start up your business and in 3, 4, six weeks