Deflationary europe feels than america. Francine this is also because the pandemic hit italy first, so in terms of curves, you are a couple of weeks ahead in europe. It is a different set of numbers. The packages and loans that european governments are giving is different from what the u. S. Is doing, largely because you are at different stages in europe compared to the u. S. We are looking for that leaders summit, more stimulus coming from the commission and probably to give a strong voice to the commission that europe is united and in solidarity with country most affected by the virus. Tom a lot of different opinions. We will talk to Dennis Gartman about how to fold in a weaker euro call with gold. Here is viviana hurtado. Viviana donald trump signed an executive order to curb immigration. Green cards are currently on hold. They allow foreigners to become permanent residents. The governor the president says that will limit competition for jobs. Expected tose is approve today the 484 billion rescue plan. The Senate Passed it. The bill adds more money for small businesses, hospitals, and coronavirus testing. Nancy pelosi says her next priority is a major aid package for state and local government, at conflict with Mitch Mcconnell who wants to slow the doling out federal money. Europe is inching its way towards a 2. 2 trillion coronavirus Recovery Plan that may never happen. European leaders participating in another Conference Call but there is a Sticking Point how to allocate the money. Italy and spain want joint debt issuance to spread the physical pain but germany and the netherlands do not want to be stuck with that bill. Oil extending its recovery from the record plunge this week. The market shrugging off data that shows u. S. Oil stockpiles have risen to a threeyear high. 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. Tom thank you so much. Equities, bonds, currencies, commodities, gold with a leg up, not to record highs. The rest of the market, for the first time in ages, is exceptionally stable. That is what i see across equities and bonds and within the litmus paper of the global system in currencies. Showing some yen strength, a symbol symptom of the weaker euro. Emergingmarket currencies are ever so fragile. We spoke to Jeffrey Currie about a weaker brazilian real. The turkish government pointing to the istanbul operation, really front and center intervening to hold the line at seven lira per dollar. Francine . Francine crude oil surging above 15 a barrel in new york. Looking at what european stocks are doing because they drifted as private sector activity plunged more than economists anticipated. Flipping and taking a 1 billion right down for provisions on bad loans after the pandemic. Markets are trying to figure out exactly what Coronavirus Impact on the Global Economy will be. I stand corrected, the european stocks were up, down, down, and now they are up again. Tom we are thrilled to bring you Dennis Gartman. He is on a golf course somewhere in the south. He is supposedly retired but i dont believe it. He continues to follow the market daily and sends out messages to fancy people. Like the disinflation and some of the great house calls from global wall street, mr. Gartman has nailed the call on gold. He says own gold but against a weaker yen, particularly against the euro. How can i have confidence to hold gold at 1700 an ounce . How do i effect that in euros and where is that heading on a percent change basis . Guntram owning it in euros is the only way to own it. Nonusin u. S. Dollar terms because the dollar the global currency. The dollar will continue to rise relative to the euro and one wants to own gold with a currency that is deflating, not inflating. Turnship of gold in euro terms is a far better trade and has reduced volatility of intraday and intraday moves of day and intraday moves of gold. The easiest thing is to hold gold etfs and be short of the euro on the cme. Futures are short versus the euro on the interbank market, or you could use an etf that is short euro transactions. It is complicated but it works. Tom i noticed yesterday out of our istanbul shop they had a fabulous chart showing the Global Reserves of the central bank. They are up to their eyeballs in gold. Why do Central Banks want to own gold . Guntram they doubt the value dennis they doubt the value of their own currency. The Russian Central Bank has been a major buyer, the central bank of turkey has been a major buyer. They doubt the validity of their own currency and want to hold something that has historical longterm value. I am not a gold bug and there are times one should be short on gold and times one should bill should be should be long. Banks are buying it, not selling it. Francine what is your expectation for inflation or disinflation or deflation . Dennis i think we are starting to see the incipient signs of inflationary pressures. Look at the grain markets. They have stopped making new lows and have turned higher. Commodity markets have showed signs of turning up. The only problem for deflationary pressure has been the collapse of oil prices. Here we are moving june, we have june wti trading at 15. 62 and everybody is talking about the but weat is up sharply, were 37 for may. Can we get to 20 a barrel for futures over the course of the next several weeks . As a bounce, yes. If someone told you three weeks 20,rude was trading someone would have scoffed and laughed. 22 that most. Francine is it symptomatic of a much worse economy . Is there anything more Central Banks can do . Do you expect them to do more because of wti . Dennis the Central Banks have no choice but to remain manifestly inspection expansionary. Ppp as weoduct of call it in the u. S. Will be expanded again and again and the Central Banks have no choice but to remain manifestly expansionary. In the United States and europe and around the world, it is egregiously week, depressionera circumstances. With some help, i hope we get which willaccine change the markets dramatically, but until we do, the propensity of people to step up and buy and businesses for Capital Expenditures is greatly reduced. Tom a rookie investor out of florida yesterday by the name of out a paper int 1987 about john templeton. He said just look at history. Speak to the people watching and listening to this who are scared stiff like we were in october of 1987. What does history tell Dennis Gartman . Ofnis first of all, october 1987 was a oneoff circumstance from black friday to black monday and black tuesday and after one month, we were out of that problem. I remember how violent the moves were to the downside and how quickly they reversed. History tells me take a look 1929at 1972 to 1974, and to 1933. The rally in stocks, a bounce predicated on the models everywhere will soon run its course, and if we look at history, markets tend to bounce from their lows and then go back and test those lows again and again, and then get quiet before we see sustained strength. My fear is that we will see the lows in march, i am afraid we will see them again. Tom dennis, congratulations on your call of gold and yen, without question the trade of the year. Mr. Gartman is very nonretired. We will come back with a very nonretireds evita Savita Subramanian. Bloomberg. This is good morning, everyone, bloomberg surveillance. It has been an extraordinary day. Our team is spread out across the United States and united kingdom, and to go from Jeffrey Currie to Dennis Gartman, now to Savita Subramanian is just what this is all about. Subramaniy and is an is here to drive the equities conversation. I have never seen the concentration in a select group of stocks within the s p 500 and i have never seen so many people saying same thing, buy quality, you know the drill, etc. , etc. Radaroes the subramanian say that we are focused on seven stocks . Savita it is an interesting point. There is a herd like mentality in the market that is pseudobullish but only on quality. I think that we are in the beginnings of what could be a Recovery Process for the essence the 500, but it is a little bit early to call for the s p 500, but it is a little bit early to call it soft valuations soft. On a pe basis are back to february highs, which is disconcerting given we are about to enter the worst postrecession war ever. U. S. Largecap stocks look expensive to everything except two asset classes, bonds and gold. Only bonds and gold look more expensive. This suggests market persists up ands participants are betting on deflation which benefits bonds or inflation which benefits gold, but nothing in between. In that environment, maybe stocks do relatively well. Are you on the inflation debate . Thisuch deflationary will be, especially if you see wti at these levels . Savita there are pockets of inflation we are starting to see, but our economist are forecasting a 6 gdp. That means a lot of Business Activity is wiped out, lots of capacity and excess capacity. Deflationary,term but longterm if you think of the forces at play, it looks like the world is shifting from a global to a more localized economy. Thehe u. S. , we are in process of bringing supply chains back to the u. S. Some morelizing supply chains, so closing borders and a more closed economy could pose longterm inflationary threat, not to mention that the fed and other banks have been printing money at what feels like the fastest pace we have ever seen. There are longerterm inflationary risks, but for the short term there is excess capacity that needs to be realized over the course of this recession. When do you have more visibility on the government loans and whether they are working . Savita government loans, that is the stopgap solution. Period ofs that this inactivity lasts longer than expected, so most companies have enough capital, at least on the s p 500, to get through a couple of quarters of completely stalled activity but beyond that it is problematic. Similar story for Government Spending. If we continue to see Government Spending at this rate, we have to wonder how much this really does. Where we are now is a point at which policy and fed spending have gotten us through problematic patches, but this is one where i think early depends on the length of the down really depends on the length of the downturn. Another reason to be concerned about equity returns is the fact that corporations have basically stopped providing a floor on the market. If you look at the last 10 years , we have seen buybacks contribute materially to pershare Earnings Growth and today, that story has vaporized. That presents a risk as well. , onejust because of time more quick question. You are definitive in putting together a 20 page Cogent Research paces Research Piece on esg. How are we doing on esg . Has the fed pushed aside . Savita esg has actually been a better strategy in this bear market that we have lived through than it has in prior years of a bull market. What is coming to the fore our social ideas with like employees with better satisfaction, outperforming those with weak satisfaction by about 5 there are signs investors are paying attention to esg. Tom Savita Subramanian with bank of america. Please stay with us. Morning, my conversation with David Malpass of the world bank, not only on the world bank effort within this pandemic, but his view of their institutional thrust forward. Please stay with us. This is bloomberg. Are watching bloomberg surveillance. The top u. S. Aluminum producer cutting costs and output. Alcoa will suspend production, suspendingex and pension contributions. Royal caribbean is in talks for ainancing, trying to package may include up to 600 million of bonds. Royal caribbean has considered selling convertible bonds and equity. That is your Bloomberg Business flash. Francine thank you so much. We have plenty more of our interview with the Credit Suisse chief executive that took one billion in terms of charges for loan provisions due to coronavirus. If you look at the virus up date and the impact on the markets, we have some pretty difficult economic figures out of the euro area, u. S. Futures fluctuating with europe stocks. Include crude fluctuating around 15 a barrel. 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 ] good morning, everyone, bloomberg surveillance. At eight 30 this morning, jobless claims will be painful to look at the ramifications of millions of claim numbers on the american economy, what it means for washington politicians and chairman powell. On the equity markets, Savita Subramanian is with us, from bank of america, with a quantitative bent as well. In the equity market, the value dacian valuations of largecap stocks seem to be based on a belief in Revenue Growth. How should we approach our study of future Revenue Growth . Savita it is a great question. I think longerterm Revenue Growth is likely to remain for some ofecially the new economy stocks, but i ourk are the next 12 month models and estimates are sitting at something close to flat Revenue Growth, where you have some recurring revenue stocks, but you have a massive downturn in oil and energy, which is a big offset. Through a will ride flat year of revenue and will see that start to pick up. Topline growth is a serious resource and we have seen it concentrated in just a handful of stocks, leaving the market very oligopolistic. Stocks are big cap taking share and everything is thinning out and falling to the wayside. I expect that is a similar environment that we will be in over the course of the next few years as well. Francine given the price of oil drop, does it change everything for renewable and Sustainable Strategies . Savita i think it does and doesnt. If you look at the implications of oil, it is reflecting a very weak economic environment, but longerterm i dont think this [indiscernible] one thing we have written about his Climate Change recording, the emphasis on companies to become club Carbon Neutral over the next several years, and that does not know away because of a recession. This is a cyclical shock, where the shift from traditional to clean energy is more of a trend that remains in place. Tom thank you so much, Savita Subramanian with bank of america. We have much more coming up, too much to talk about. A conversation with the new leadership of Credit Suisse. Here is viviana hurtado. Viviana donald trump has put immigration on hold, signing an executive order to curb the issuance of green cards for would be permanent resident. His reasoning, it will protect american jobs, but the order is less inclusive then what he announced. Economy, ites suffered a massive low. Blow. Activity falling by more than half. Government restrictions to contain the coronavirus leave European Companies struggling to survive. Six coronavirus vaccines are in the human testing stage. China. Those are in all are in some stage of development. 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. Tom thanks so much. Coming up, william lee will join us from the Milken Institute on the asia watch, the International Monetary fund, and struggling em economies. Mexico and turkey make emergency in the last few days. Lets talk about european financials. We spoke to the new chief executive of Credit Suisse, setting aside one trillion 1 billion in loan assistance. Here is thomas got stein. Thomas it was baptism by fire, as you said. Id not expect that role that when i took the role on the 14th of february. Everything changed. I am pleased with our results. Billion, return on tangible equity and im pleased with the fact that we managed to incorporate the reserve build of of billion, which consists 400 600 million of credit provisions and 400 of unrealized market losses. Reporter, onecap of the few european banks, and that included a meaningful portion of our credit provisions , just shy of 400 million of related writedowns, which are not single name writedowns, but much more writedowns for entire lending book. With respect to assumptions, we assume a significant resumption of gdp in the Second Quarter of roughly 20 in the u. S. And the high Single Digits in europe and switzerland, for the full year europect recessions in and to the less extent, switzerland. Francine is it the assumption reflecting the current implications of the lock downs being eased and government functionings work amy working by may or june, or a bi