Vonnie the nasdaq its office lows. Is off its the s p 500 down 2. 5 . The worst performer right now is pvh, performing pretty poorly, down about 15 . Many of the Energy Companies are lower, as well. Y runhas been such a whipp for them. Netflix is the best performer today, holding onto games of 4 plus. After the dismal Economic Data which we were anticipating, but still a sticker shock, the 10 year yield is at 65 basis points. I want to point out, ray dalio said a moment to on Bloomberg Television you would be crazy to own bonds. Go back and have a look at that interview if you want to hear more. The vix a little more elevated once again today. Guy lets get some more insight into what is happening on these markets. We are joined on the phone by graham secker, Morgan Stanley equities strategist. Equity markets a little whippy, as vonnie said. How do you see the riskreward right now . Graham good afternoon. From a european standpoint, we dont really like the riskreward here. We thought it was a lot better three or four weeks ago. Valuations back then were really low. Juste got down to a pe north of 10 times. Is near 14 times. I am trying to ascertain the profile for european earnings over the next couple of years. They are going to be down a lot this year, up quite a bit next year and a growth perspective, but overall, earnings are going to be down by a fair amount. I am just struggling to get any upside unless i shoot some very punchy valuation assumptions. I think markets have probably moved a bit too far over the past few weeks. I look for the market to go lower again because we need to price in some of the reality that Economic News flow is going to stay tougher sometime. Stay tough for some time. Guy one thing you are trying to figure out right now is that dividends are either going to be very much under pressure, guidance is going to be reduced when it comes to Dividend Payments going forward. Abouts your best estimate what the dividend yield is going to look like more broadly in europe, and how much dividends are going to be cut . Graham i think we are on track for potential he the worst ever year for dividend payment. 2008. Evious record was that. 5 to 30 would be your dividend payment, basically coming from , butdities and financials also pressure on the regulators and the like on payouts, i think we will get very close to that down 30 . The hope is that this will be a one year transitory sort of. Eduction in payouts as you go into 2021, i doubt Many Companies will take that payout back to the same level it was in 2019. I think we should probably assume that dividends are down by Something Like 1 3. As investors, we are used to dealing with earnings uncertainty. This is almost a new phenomenon up trying to value stocks in the market when you have uncertainty about the earnings, and also uncertainty around the Dividend Payments. I think it reflects the challenge of trying to be constructive in the current market backdrop. Vonnie typically, we see maybe a slight france between the various indices across europe, but for the most part, they are pretty correlated. Do we start seeing something we havent seen in a long time now, and some countries doing ok, other come based other countries doing pretty poorly . Graham a lot of this is effectively futures driven. Even when you look at a sector level, other than the standard defenses do better, quality does that are, value does worse, and you can see that when you look at the likes of switzerland and things like that in the european context, but overall at the moment, one of the things we get im notto clients is sure theres a huge amount of differentiation going on. Think people are tweaking their stock leos, but i dont think we are seeing significant their stock portfolios, but i dont think we are seeing significant reallocation. It is all going down together or it is all going up together, with the exception of the traditional characteristics. So the defenses will go down less on a day like today, and the cyclical areas are going up by more. Obviously, going forward, we will start to see more dispersion, but i think it is a little bit early for that. I think you can fume more comfortable over the mediumterm about the risk reward of the market. Vonnie at what point do you think the ecb will feel the need to do more . We see Massive Action on the part of the Federal Reserve and the u. S. Are economists at Morgan Stanley ultimately think european policymakers will have to step up to the plate and do some more. Our best guess is that this isnt necessarily imminent, but at some point over the coming few months, we think there will be the requirement both monetarily and fiscally to put more money into systems and try to stabilize the situation. I think a lot of what we are seeing in terms of the markets, you were talking a few moments ago about btp spreads and the like. I think what a bit of that is just traditional risk off sentiment, but if that really starts to feed on itself, that could be something that gets btps to react. But at this time, we dont see anything down the line. We think it could be a few months away before we end up with more firepower being thrown at this. Just in terms of what is happening in the Banking Sector, i am curious to get your take on the financials. ,he u. S. Banks are coming out provisioning very heavily for credit losses. What do you think the story is going to look like in europe when it comes to the big banks . How bad is it going to get . Do they have the Balance Sheets to be able to provision in the same way . What do you think they will ultimately end up looking like . Graham its a good question. Our scheme in europe, generally they have been arguing that the Balance Sheets are in better shape than they have been for quite some time, so we dont at this stage think theres going to be a huge amount of capital that needs to be raised across the system. Given the current deterioration in the Economic Data, we see the npl cycle is going to get very as stocks get drastically depressed. Point, ifack to this ,e have variable earnings finding a case among these earnings is difficult at the moment. I dont have any forecasting where they go this time, im afraid. Vonnie we have to leave it there, unfortunately. Thank you for joining us. Graham secker is Morgan Stanley equities strategist. Lets check Global Markets now. Heres abigail doolittle. Abigail it certainly is a bearish day in the u. S. , also in europe and the u. K. The s p 500 near session lows, down numbers 3 . This as we had a slew of dismal Economic Data for the month of march. The coronavirus really hitting. The stoxx 600 down more than 3 , same for the ftse 100 in the u. K. Take a look at the euro against the dollar, down 0. 7 . There is a haven bid for the dollar on that horrible Economic Data in the u. S. Investors seeking the safety of the dollar. That is pushing down the euro. The big move we are seeing today is not the exception. Hop into my bloomberg terminal and we will take a look at this chart. Back in january and february, the s p 500, as it climbed to record highs, picking steps up in a record move. Had 23 movesas over 3 . Right now, close to that marker to the downside. Not quite there, but lots of volatility. Volatility tends to breed volatility, so there could be more ahead. Us are some of the sector breakdown, we have the s p 500 bank sector down nearly 6 , down for a third day in a row after we have more negative earnings from the big banks, and commentary for the bank of america cfo saying that a recession could last well into 2021. The airlines, despite the bailout, down 3. 5 . Some analysts saying it is enough to keep them simply moving along limping along, i should say. The Energy Sector down in sympathy with the volatility of oil. One of the batches of Economic Data you have been talking about today was the u. S. Retail sales for the month of march, plunging a record 8. 7 . Pvh corp. , the worst performer for the s p 500. Ck theyilfiger, own, hilfiger, ck. Capital one down 3. 6 down 6. 3 . If americans are not out shopping, that is very likely to hit that credit card business. We see that with capital one falling on the day. Certainly a risk obsession. Guy certainly a risk off session. Guy certainly seems that way. Have anp next, we exclusive interview with margrethe vestager, European CommissionVice President on what the eu is doing to help businesses during a pandemic. This is bloomberg. Vonnie live from new york along with guy johnson in london. This is bloomberg markets. Lets get the first word news with ritika gupta. Ritika a rolling wave of shutdowns due to the coronavirus outbreak crippled the manufacturing sector. In march. Slumped a report out today on the impact of the coronavirus on the oil market. They say Global Oil Demand will plunge by a record 9 , according to the International Energy agency. By slump will for efforts opec to cut production for crude. Republicans are ramping up efforts to paint china as the villain in the coronavirus pandemic. The Trump Campaign sent out a fundraising email that accused china of lying about the outbreak. Senator josh hawley has introduced a bill that could make china liable for civil claims regarding the virus. President trump cuts off the funding for the who, saying the agency to chinas claims about the outbreak at face value. It Elizabeth Warren endorsed joe biden today. Major was the final democratic hopeful to back the nominee. She says biden is willing to be persuaded to adopt new ideas. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Much, indeed. Ry lets turn our focus now to how the virus pandemic is affecting businesses in europe, and with europe in commission is doing to try to counter the economic damage being done. Joining us on the phone for an exclusive interview is margrethe vestager, the European Commission executive Vice President and the competition commissioner. Thank you for spending time with us here on bloomberg today. Ms. Vestager thank you very much for having me. Guy it is good to hear your voice. Communication at this point is fantastic, even if it is on the phone. Commissioner, the big news when it comes to state aid today is in the United States, washington , 10 ofnted u. S. Airlines them, 25 billion worth of aid. We are also wondering what is going to happen here in europe, and whether or not we can expect a similar thing, and how it will work to keep a level Playing Field between various nations. Ms. Vestager well, as you will have noticed, we have quite a number of airline positions as well, for exactly the same reasons. When an airline is grounded, obviously they make money. They make no money. In tosee airlines coming have the needed and necessary liquidity, and also to be there when we can start flying again. Guy do you think it should be done at the moment it is being done on a national basis. Individual countries making decisions based on individual carriers. If the u. S. Is going to be done on a federal level, i am wondering if we need something more clearly defined in europe, as to whether one airline gets this aid and another airline gets that aid. For instance, the difference between france and air france klm, and germany and lufthansa. Ms. Vestager what we do when we take a state a decision is to make sure that when a member state wants to set up an aide measure, it is to make sure that they are in line. Of course, these a edgers are different because these are different airlines. They have a different structure. They have different ports of call. In that respect, our system allows for tailormade assistant to but the airlines need, while at the same time keeping on track to having a Single Market that is less fragmented and what we would otherwise have had. Vonnie is liquidity assistance better than direct state aid . I am not just talking airlines now. I am broadening this out words all sectors, but the only tourism and entertainment. Sectors, particularly tourism and entertainment. Ms. Vestager it depends on how long this will take area the first wave of measures was enormous amounts of liquidity have been made available. It may be so that later, recapitalization may be needed. Here we are Just Consulting oncoming european framework, if that is needed, in order to assure that, if Member States would want to recapitalize businesses, that it is done in the same way, that we maintain a level Playing Field, that we try to limit the distortion of competition, and while weve had quite positive response to that with Member States, it will take still some days before were are ready to launch it. Vonnie you did turn some heads and advocating for states taking stakes in companies in order to keep china from taking over some of those companies area is that how you feel still, two days later . Ms. Vestager i think it is very important that we are vigilant area we have come into this Health Crisis in different points in time. We are suffering from it to a different degree because things develop. Some countries open. Some countries are still deep in the crisis. That also means that in the willmic recovery, some recover before others. That means they will be more vulnerable for hostile takeover. It is important not to be naive in these days because a number of sectors are strategic. A number of sectors are indeed needed. I think it is important to know that the states can step in if they want to end if need be, but potential people who want to do a hostile takeover, that we are vigilant, and that we will use the tools we have available. That, young up on have in place at the moment a framework allowing greater flicks ability when it comes to the state aid rules to protect businesses being affected by the virus. I am wondering how long you see that temporary framework being in race, and when the temporary element ends, whether or not you see needed changes to the longerterm framework when it comes to competition within your within europe. Ms. Vestager first and foremost, we have already changed the temporary framework aid to enable more Coronavirus Research production to mick sure the businesses to make sure the businesses who need production, for instance, for protective gear, get that guaranteed. We need to enable recapitalization in a way that ensures competition. But the entire framework set to be in place until the end of the year, but of course, we will evaluate when we get to the other side of summer if it is needed to be prolonged. At the same time, we are in the process of looking into all our rules and guidelines in order to make sure they fit the purpose because it is still an economy where itemization where automation and technology are changing not only how we models. But business that will be as relevant on the others out of the crisis as it was but as it was before. Guy can i ask you a slightly Bigger Picture question . Theres a lot of concern around the world at the moment within Financial Markets that the euro zone, the eu is not getting attacked together is not getting its act together in dealing with a common way in dealing with this crisis. The peripheral economies are not being given the assistance they require. The debt mutual is a is now necessary the debt mutual is is the debt mutualization now necessary. Do you think europe needs to have more solidarity now than is currently being demonstrated . Ms. Vestager i think it is very important to see how he does change over the last weeks. It was quite disheartening to see the first spots because every number state turned inwards. That has changed a lot. If you take what comes from the ecb, the result of the eurogroup eating last week eurogroup meeting last week, the results theshortterm im shortterm employment scheme, you see that it is sort of a solitary that is emerging, and everyone realizes that this is a very different crisis from the financial crisis. You do not have the moral hazard as you had. This is something that couldve happened to anyone, north, south, east, west,. We really need to come together to whether this crisis and come out the other side with a , and making economy the best use of digital technology. I think we got off to a very slow start, but definitely still much better than what saw in the first weeks and months after the financial crisis. Guy on that note, we are going to leave it. Thank you very much for your time. We greatly appreciate hearing your voice here at bloomberg. Margrethe vestager, European Commission executive Vice President. Thank you. Lets take a look at how European Equity markets are trading. We are heading towards the close in a very negative session, as you can see when it comes to the dax, down over 4 . Oil and gas in the banks under pressure. The close is next. This is bloomberg. Guy 30 seconds until the end of regular trading this wednesday for european equities. We have been falling from the getgo. European stocks moving lower and we are barely off our session lows. It will be interesting to see what happens during the auction. In terms of the story driving that, to a certain extent you have seen a recent rally, probably the biggest factor in all of this. The news coming out of u. S. Banks does not help either. Lets look at how it breaks down from an individual market by market b