The various heroic people working at mount sinai hospital, i am tom keene, Francine Lacqua in london. Cavendish,d to baron it is an interesting mix in the United Kingdom of the politics of the government and the fairly grim pandemic statistics. Seenine we also havent from Boris Johnson and a while, so the daily briefings are led by various cabinet ministers, and yesterday we had the further three weeks of lockdown expansion extended. As baroness cavendish was saying, maybe we need more testing. What the markets are looking at, they are looking through the number of cases that are slowly increasing in europe and still increasing in the u. S. , they are looking through the deaths and infected cases, and chinese gdp was horrific, the first contraction in a decade, and they are focusing on the positive. We could have a drug that is working, from gilead, and President Trump has given a timeline and thought on how the economy could reopen. Tom i really want to emphasize, every politician in every country is trying to spin the message and we understand that is what politicians do. Do notlast 24 hours, i want to oversell it as grim but very difficult pandemic statistics. We saw that in mr. Putins russia as he moves his holiday back from may 9, and the u. S. , a difficult case build up in this new york city. The nation china, has not had an economic report like this in decades, the coronavirus pushing the economy into a contraction for the First Quarter. Gdp shrinking 6. 8 from a year ago, the worst performance since 1992. The coronavirus is hammering business around the world so china will have to rely on fragile domestic demand. In the United States, donald trump insisting he has the absolute power to reopen the countrys economy but now has turned it over to governors and businesses. It will be up to them to relax stayathome orders. They are aimed at controlling the coronavirus. The order is based on the downward trajectory in cases. In spain, the government reports more than 5200 cases of covid19, the most in a week. Spain has the second most extensive outbreak. The country has already passed the peak and are focusing on how to relax restrictions. Oil hovering today around 20 a barrel, crude heading for its second daily loss and arroyo. In a row. Saudi arabia and russia are saying they are willing to make further cuts in production. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Hurtado. Ana this is bloomberg. Data. Uick bonds, commodities. Risk on feel. Foreign and dollars stronger. Turkish lira out near seven lire per dollar. Oil is its own story. Francine . ,rancine oil is its own story wti below 19. The focus is on demand, may be worse than expected coming from china. Climbing,europe are u. S. Futures are climbing. Intensive steps toward restarting the u. S. Economy, helping u. S. Investors look past curbs from the coronavirus and the dismal data from china. Tom in a normal europe it would be important to talk to tony dwyer about the taxes and the view forward. A lot of people on the weekend after tax day recalibrating. This year is different and we are thrilled the strategist, he has been a wonderful and persistent bull in the great bull market, tony dwyer joins us. Are we reaffirming the bull market you have been so correct on . Know, back in january on january 20, we downgraded our view on the market thinking the enthusiasm, the valuation, the chase of stocks higher had become a bit excessive. Then you went into the panic that we had and once you got as panicked as you are, it is rare that you get into that extreme and oversold condition and a crash. It has been extraordinary historically to see this kind of 34 drop in a month and a 25 gain in a few weeks. Front of your ingenuity that we will see monday morning, how are you reallocating in the sectors in the market . We went backery into a study. It is very weird. We went back into a study. To your point earlier, the economic backdrop is not good. It is not getting better. Forbearance for mortgages, real estate nonpayments, underpinnings of levered credit are not working real well. What your question exactly addresses, typically enable market when it starts, in the last two cycles coming march 2003 or march 2009, you had financials, consumer discretionary, materials, and industrials outperforming it was outperforming. Today, it is health care, utilities. You are not getting the leadership from the offensive areas so even though you get a massive stock rally, it is not happening in the sectors we would hope it would happen to if you are going to get Economic Vitality coming out of this pandemic. Outcine how do you figure if we get Economic Vitality . Is it too soon to call it . Whateople waiting to see happens and what the leadership of companies does . Francine that is a great question and that is where i may not be in the consensus view that we are good to go. Time with thehard current, maintaining the current level of rally in the market without some kind of economic underpinning. You dont want to be bearish. The guys who print the money have indulged and want to buy everything except stocks, so you do not want to bet against the market. What they did last thursday was a game changer. Buy said they are going to highyield debt and municipal debt on top of the decisions they have made, so betting against the guys printing the money makes no sense. Do i chase the 25 rally without an Economic Outlook that i can fundamentally say with any predictive power, i cant. I am wanting to see how credit and other things act as the market pulls back a little bit. We have oil making a new low. Highyield, one of the top quartile, relatively unknown highyield manager last night. What are you buying . Oil,es, i cant buy retail, or travel. What can you buy . He said health care and some tech, and those are the sectors that have driven the bonds back in the market, but they are not fundamentally economic positive factors. Francine what do you do with bonds . Is there any value in bonds anywhere around the world . Tony which bonds . Is it Corporate Bonds, high yield bonds . Government bonds . I would not be a buyer. We are 0. 63 in the u. S. We in the u. S. And we are one of the higher ones. When the government is telling you they will protect your Corporate Bonds, you could potentially look for those and they might buy. It is a dicey environment, you guys know, i am not scared to make an aggressive fundamental call. Making ang a hard time good fundamental aggressive call when the government has got to buy Corporate Bonds because the market was acting poorly. Tom lets continue, tony dwyer with us, thank you so much. Here with a reframing of where we are. Futures up big right now. Coming up later, it has been a series of wonderful interviews, Michael Mckee with Loretta Mester. Look for that later this morning. From london, from new york, this is bloomberg. Francine this is bloomberg surveillance, tom and francine from london and new york. We talked about china and the markets. We are back with tony dwyer. If you look at the chinese example as a template or something that will be replicated across the western countries, this is not a problem that will be solved quickly. It will probably be a long time before the world as a whole resumes life like it was before the pandemic. We were talk about talking about your calls in the market. What do you do with gold . Tony it is funny, i literally just pulled up the chart of it because i was looking at how it was down. Of a run because you printed so much money and there is a perception that the currencies will be in trouble or inflation will ramp. Similar to the market, i dont know that i would chase it given its strength, and wait for pullback to get back into it. Francine how quickly what the economy actually work out . What lessons can we learn from china . Tony i am having the hardest time in the world trying to base data off of china because i never believed their numbers and i dont think anything that has transpired over the last six months gives me more confidence to trust their numbers. People on the ground, clearly they opened up quickly. We dont have data about what happens to the economy or the virus once you reopen quickly, but i understand everything that is reopened, you may be have 30 of normal movement, from what i hear. I do not want to pretend to be a china expert, but it is too early to make a fundamental call off of what china is doing if you believe there calls. U. S. Businesses and the economy and Global Economy remain shut down. I dont know when it will reopen and theres consequences i cannot understand, so my issue is not there is times where you want to be aggressive and there is times where you want to be patient. We are in an epic battle between two historic forces. You have the monetary and fiscal stimulus and you cannot bet against the guys printing the currency. He primary you have the economic reality that is so undefined, i cannot look through the next two quarters because i do not know that the Third Quarter after that will do well. That in a provided quarter after you have a 15 drop quarter, what your upside is, because it is pretty rare, and we have exceeded the number of cases in just two weeks. Tom it is a wonderful time to be very blue chippy. With the death of small caps, can you predict a lot of mergers , a lot of combinations . Tony certainly, i think that will be the case. There is a lot of money in private equity and cash that is available. M a typically happens from leverage. You get debt in the market or banks or private equity, and credit has tightened up. But when you get values that drop to the degree they have, historically there is good m a coming out of the cycle. When you look at smallcap, you bottom the relative performance you get into once the market. That is different than what is happening over the last couple of cycles. Tom tony dwyer, thank you so much. To someood to speak subtle neutrality from mr. Dwyer. Much to talk about, listen to, and watch, at tv. It is on the terminal. It is not only the livestream of what we do, but many good previous conversations. This is bloomberg. You are watching bloombergs surveillance. Shares of boeing are surging. The beleaguered aircraft maker week in jet making next seattle, washington. About 27,000 workers will return to their job. Europe, car sales dropping the most on record. New car registrations plunging 52 . Andshow rooms closed production was shut down across the continent. Shareholders are breaking with wall street, cutting hundreds of employees. The reductions are the deepest in the industry since the coronavirus began. Year to pledged this hold off on dismissals. That is your Bloomberg Business flash. Francine thank you so much. Stocks are being pushed higher in the u. S. , u. S. Equities futures higher, and also in europe. Investors are trying to look through the bad news, the china data and the fact that the number of cases are rising in many countries, and focusing on the fact that the u. S. May be restarting in the next couple of weeks, or we have plans, and gilead. Eurodollar, 1. 0 818. Tom and i wanted to look at wti. Gold down. Reports claiming gileads coronavirus drug is speeding recovery provided a boost for investors, but many analysts are cautiously optimistic as they wait for real clinical data. On the back of it, Gilead Sciences gaining some 11. 7 percent in premarket trade. Right,at is exactly gilead was the good news coming out and hours later a chest just challenging investment by south side analysts. Intermediate off of massive Storage Units issues in the middle of the United States really coming down. A nice bounce up and the last couple of minutes, up near 18. 60 a barrel. , emergingtalk briefly markets have been absolutely extraordinary and there is some idiosyncratic work. Argentina overnight with some looking andissues, negotiating about how to work out their debt. Turkish lira with a life of its own, getting out near that emotional benchmark of seven layer upper dollar. Lire pert seven dollar. Resiliency. Withloomberg dollar index emerging markets showing a greater relative strength. Please stay with us through the morning, including our interview with Loretta Mester from the cleveland fed. Francine this is bloomberg surveillance, tom and francine from london and new york. We have an overall picture of the wall street banks, how they have been faring, what more they can do, the kinds of loans, and how healthy or not healthy the u. S. Consumer is. Yesterday we spoke to the Morgan Stanley chief executive mr. Gorman and he addressed his illness. I am doing great, thank you. I am completely recovered. I had the virus but i was one of the lucky ones. I was not hospitalized. My lungs did not get infected which was a blessing and while it is unpleasant, it is manageable. My heart goes out to the folks who were not that fortunate or who had Underlying Health issues , and the elderly who struggled and passed away. It is a curse and i wish everybody well who gets it, and wish them to stay hydrated and rested and wish them the best. Yesterdayio told me that this is much worse than the 2008 financial crisis. What kinds of base Case Assumptions are you making at this point for the recession and the recovery . James i am trying to think. I am not sure i agree with that. The economic impact, gdp decline is much worse but it is so specific and built around the virus, what kind of world will we have when we have immunity from it, the right testing . There are so many unknowns whereas in 2008 it was the fundamental collapse of the Financial System and had it not been for the system being rescued, who knows what kind of damage multidecade would have been done to the economy. These are truly tragic situations. Perspective, number one, we have millions of clients trading trillions of dollars all over the world. Our plan has to work. We have to facilitate clients doing that to manage their businesses. They have to have the ability to manage their own liquidity and funding and capital needs, and we play a large role, one of the largest Wealth Management is managers in the world. With 90 of our employees at home, we have had almost no issues from our plant and that is a remarkable testament to our tech and ops team. Cut back on our buyback to zero. We thought it was best to preserve our capital to support clients in need. We are doing it with organizations like ours that are large and should be doing it. The third thing is that teams are coordinated given the remote isolation we are going through, and we spend an enormous time speaking to them, talking about bringing them back to work and thinking of what the future looks like. It clearly will not be as bad for Morgan Stanley and the Banking Industry as the 2008 crisis was. What about the broader economy . 5 Million People filed for unemployment last week, 22 Million People. The dislocation that will produce . James shock to the Economic System is not something we have seen since the Great Depression and it is more dramatic than what occurred in the financial crisis. In addition, we have this Massive Health crisis which is working its way around the world with devastating consequences. You cannot model this. Preserve your capital, make sure you are wellpositioned, understand the risk you are taking on, and manage that in a way where the whole team is working together. We have daily operating committee calls, Risk Committee calls. The team is organized around making sure we are doing our job for our clients and Morgan Stanley staying strong during a period of dislocation. 80,000 employees working from home, a staggering figure, one we have seen repeated across many industries. It is amazing, with no major loss of capability. How does that change the way you think about the way this firm operates in the future . James can i see a future where part of every week, certainly part of every month where a lot of our employees will be at home, definitely. That is highly likely. We have proven we can operate with effectively no footprint. Tom mr. Gorman with our erik schatzker, james gorman of Morgan Stanley, and you look at the bank tightened, each bank has a different past, and mr. Gorman has huge accolade for what he has done with Wealth Management. Look at the Earnings Report with Gerard Cassidy from rbc market capital. I am going to cut to the chase. There is a portrait in the president s office of andrew jackson. This goes back to the United States fear of consolidation. Out of this pandemic, will we see a rollup of the Gerard Cassidy world . Gerard thank you for having me on the show, and yes, i think that is going to be one of the inclusions or consequences of this unfortunate time we are living in, that in 2021 when things have settled down for the banking sector, i believe you will see more large banks, more large regional banks probably merge together as they realize the economy will drive efficiencies in higher probability. This is a difficult time for the industries and some of them will realize they will be better off merging with a large partner, and that will probably take place early to middle next year. Excelou have an spreadsheet of book value. How cheap is cheap for the american banks . Give us a level of cheapness. Gerard it is a really good question, because it is hard to have real confidence in investments in these times, like we saw in 2008 and 2009, looking measure. Alue is a good when you turn back the clock and look at 1990, difficult downturn for the banks. The banks turned to about 60 of book value. Crisis they2009 traded on average 46 of book. Today they are trading on average 75 of book, so they are inexpensive relative to the other two downturns. They are not as cheap. Reachnot think it will the 2008 2009 lows unless the problems we are having now extend into the year and into 2021. Then we can approach those lows. Francine how much worse will earnings be for the big wall street giants Going Forward . The timeline, this is just the beginning. It is really interest because this quarter, the wellng debts did extremely , whether it was Morgan Stanley as you just toured about heard about or other large firms currency,and ficc, commodities, those numbers were strong. Had the number of january benefit of january in february in banking businesses. Equity Capital Markets numbers were strong. March saw a record level of debt Capital Markets which has continued into april. The advisory business has fallen off, so now the question is the volumes have started to slow down, trading volumes. Volatility has come in so you will not get the kick you had in the First Quarter unless bonds and volatility pickup. In the second quarter, if things quiet down, earnings could come under pressure for those companies deep into the summer. Francine Going Forward, how important is china for these wall street banks . A story caught my attention saying china is looking at possibly merging their own Brokerage Companies to make sure toy have their own banks deal with everything in china, and shutting off or pushing back how much wall street can do in china. How complicated would this be for wall street once we recover from the pandemic . China in particular offers longterm growth prospects, a lot of the investment banks are all focused in growing in that part of the world, however it is not the biggest amount of business today. It is small relative to the United States as well as europe, the middle east, and africa. Longer term for growth is important. Thehe immediate horizon, numbers come out of north america. Greatlyard cassidy, appreciate your efforts with us over the past 48 hours, mr. Cassidy with rbc Capital Markets. We will drive forward the conversation amid this truly historic moment for the United States and worldwide, against difficult pandemic news across the last 24 hours. You need to reframe over the weekend. Helping will be henry mcvey. Look for that on bloomberg daybreak. This is bloomberg. Viviana you are watching bloomberg surveillance. President Donald Trumps new guidelines could have some states reopening in a month, based on a downward trajectory in coronavirus cases. There would be a threephase process to return to near normal and near work and social life. States could start the process literally tomorrow. Critics have been skeptical about the china, ans total in upward revision of 40 . The deaths were not recorded in official data. In germany, for the second day in a row coronavirus to cases increasing the most. All of this as germany gets ready for restrictions on public life next week. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Francine thank you so much. Coming up, expert analysis on covid19, the response, and whether nurses across the country and the world have enough personal protection agreement equipment. Our daily conversation as we bring you a conversation with the leading authority on covid. , johns, Andrew PekoszHopkins UniversityBloomberg School of Public Health professor and variola just. Virologist. Tom bloomberg surveillance, good morning, everyone. It is time for a dose of nonhysteria. What we have seen over the last week is extraordinary encouragement and politics and nonprofessionals in the hardcore science of virology. Back and forth between two doctors, one of whom had to immediately recant what he said on air. We can do better with andrew the Bloomberg School of Public Health at johns hopkins, definitive on virus. Thank you so much for joining us. I want you to clear up right now the very lengths of very of covid. Virulence what are relearning . Andrew this virus is truly interesting in the sense that it causes this Broad Spectrum of diseases. The vast majority of people will suffer mild to moderate diseases , maybe even no symptoms at all. When you look at the vulnerable portions of the population, the elderly, people with secondary medical conditions such as diabetes, heart disease, and lung disease, and even relatively healthy individuals, there are a significant part the population that have the disease that require admission into the hospital. It is a huge spectrum in terms of how it presents after infection. Tom i dont want to talk enzymes on a friday and do not want to talk rna transcriptase other stuff of doing a test, but i would suggest that america from the topdown does not understand the for cyst the sophisticated chemistry and biochemistry of tests. Test andis it to do a millions of tests for this virus . Andrew we know a lot about the virus, and you can do good testing. A requires a good test and Good Laboratory that is validated, that knows how to do testing, knows how to do the controls and knows how to show that they can reproducible he performed the tests well. That is where it is important to focus on Public Health agencies and medical institutions that know how to do these tests. Francine talk to us about reinfection and immunity. Are people who have had the virus really getting infected twice . Andrew right now, it is still a little bit unclear. This goes back to the testing issue. Often times i have seen as people who are testing positive by the test which tells you are infected, that does not necessarily mean you have been reinfected. It may mean there are small amounts of the virus in your system from the infection you controlled a few days or a week ago. Right now, there is no good evidence to suggest you are getting reinfected after your first exposure. It may be that the virus is hanging around and you see vestiges after you have controlled the initial infection, but it is something to understand as we think about some ofback and leaving our Public Health interventions. Francine do we have a credible test to test immunity . It seems like we have more questions than answers on the virus right now, so testing positive is not the same thing as testing and being able to transmit the virus to someone else, but when do you find out whether people have immunity and can go back to work . Andrew there will be a twopart phase to that. Many of the tests will tell you if you have had an infection and if you have antibodies. That will tell us how many people were infected the first time the virus moves through the population, but those tests do not tell you if you are protected from reinfection. That will take a second set of tests done in Laboratory Settings that take a while to develop, for people that have antibodies versus people who have antibodies that we think will protect you from infection. We think they are closely related but we have to do the experiments to be sure the rapid test are telling you you are protected from reinfection. Talk typeually do not one, type two constructs on friday. Help me with reject the true or except the falls of this testing. How at risk of america is america of type one or type two malfunction in our testing . Andrew that gets back to the laboratories doing the testing and making sure the tests are being performed in rigorous, controlled environments. You could have two types of errors. You could have a false positive meaning you test positive when you are not infected. Error is you test negative when you are positive, and the latter group is you are telling people who are infected they can go into the population and not take extra precautions. Laboratories that know how to perform these tests do something called validation, so they go through and test with known ,amples, both times of error and report back exactly what they expect those errors to be. Other laboratories that are flybynight might not be reporting that rigorously and that is where the danger comes in. Tom what you just heard is the single most important analysis i have seen on this national and frankly global uproar on testing , something to move forward with in your reading, something dr. Andrew pass off andrew ause dr. Andrew picos mr. Bloomberg has been a philanthropist to the Engineering School and all of johns hopkins, and is the founder of bloomberg lp radio and tv operations. Stocks up again, the vix well under 40. Stay with us, a most interesting day ahead. This is bloomberg. Good morning. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Growth crashing in the First Quarter, and markets taking this all in stride and the reopening roadmap, unveiling the guidelines for states to potentially open up, and a possible treatment from gilead gives investors a reason to buy risk. Saudi arabia and russia try their version of what it takes to prop up oil prices. It falls flat. Ryan lance on his plan. Bloomberg daybreak. We made it, another week from working at home on these unusual times for it we do not see selling into the weekend. We do see a fairly strong rally that could lead us to gains for the s p. The verging from