Suddenly very risk off, with the s p 500 and dow down. The nasdaq is down one point 25 for the worst performance. , dow jones news reporting it is facing criminal and civil scrutiny into years of 77 max Quality Control lapses. Once again, reporting that boeing is facing criminal and civil scrutiny into years of 737 max Quality Control lapses. As we know, boeing plays a part in many of these indices, so it is definitely weighing on those in the last few minutes, erasing most, if not all of its gains. In numbers tomorrow, which is worth bearing in mind. Inopean banks are firmly focus. Loan loss provisions a big part of what we are seeing here today. , one of which is results out today. What thee a listen to banking ceos we have been talking have had to say about the economy. Greatres obviously a degree of uncertainty around that range. We saw 3 billion of expected credit losses in the first quarter, up fourfold on the charge from q4 of last year. 7 billion to 11 billion range is an estimate of what we dependent on the duration and impact of the coronavirus during the remainder of the year. We are relatively optimistic about the extent of how credit losses will impact our future. The situation is evolving quickly, so it is really difficult to pick outcomes. Whenis particularly true assessing impacts across multiple markets. Sergiosnder ermotti, and from hsbc. Whatbly in the shadows of we are seeing in the United States. Hafeez,iz bilal macro hive ceo, joining us now. The banks are the key transmission mechanism here in europe. They have a lot of visibility on what it happened what is happening. The data are really bad coming out of europe, yet the provisioning doesnt seem that great, certainly relative to the United States. Are you surprised by that . The u. S. Banks had very aggressive provisioning. One issue is that we have had some guidance from european regulators to european banks to tell them not to necessarily provision is aggressively around the pandemic and instead look at longerterm by abilities of the credit that they are exposed to. Theres more guidance from the regulator to these banks to also take into account the various guarantees and federal programs, so maybeecb programs someone flew in with lower provisioning. Theres a general more of a culture in u. S. Corporate, particularly when there is an event, to aggressively through the kitchen sink for very negative provisions, and then later roll back some of those. Rovisions ok. I think that probably is a fair comparison, but you do wonder therefore whether or not once again, we find ourselves in a situation where the u. S. Banks recovered very strongly from the Global Financial crisis and played a critical part in the way the u. S. Economy recovered as well. They were there to lend. They had a handle on what was going on. The european banks never really recovered. I am concerned that history is once again repeating itself. Bilal that is absolutely a fair point. You would also have to remember the european economy did also face the european sovereign crisis, which the u. S. Didnt. So you had to Global Financial crisis, which led to a massive hit on european banks, and then the european sovereign crisis, which was a massive knock on european banks. Later, you had the ecb cutting rates to negative, which again doesnt necessarily help european banks. To some extent, european banks have been battered. They are probably reluctant to any news that could put them in a negative light once again. It could make the move in a slower fashion. Thathe one counterpoint to is that this time around, the source of the crisis is not necessarily a banking crisis, unlike the Global Financial crisis. European banks to have stronger Balance Sheets. They are much more heavily regulated than before. That said, they may not necessarily be in as bad a state as they were a few years ago. Be ae is there going to huge round of layoffs coming . Bilal i think eventually there will be. At the moment, Many Companies are reluctant to announce layoffs in this current environment, but i do think that in the end, with the net Interest Rate margin falling, plus large critic provisioning and very uncertain Economic Outlook, there will be an acceleration of moves to upgrade technology platforms. You got people working from home now, and that will make it easier for banks and other theiries to understand true labor requirement. So i do imagine further down the line, we could start to see much larger layoffs. Vonnie and not even just the Banking Sector. An earlier guest was talking about corporate america, even if it is profitable, because it is going to be a time to control expenses and so on. What about all of the fiscal on monetary help economies are getting . When do you see an exit beginning . Bilal that is a good question. To some extent, that depends on how much the economy reopens because this is kind of a strange time where we have the fiscal programs, but many fiscal and centralbank programs are not necessarily stimulus, per se. Instead, they are in effect bridge financing while companies are closed. So once they reopened, presumably that policy support should be scaled back as Companies Come back online. So there will be natural reduction of some of these programs as the economy comes back online. The timingge is that of these programs being rolled back, obviously there will be a big push by companies to continue to get that support from governments and from thesel banks beyond programs, but what large fence are also trying to contend with is how much will the world look different what large banks are also trying to contend with is how much will the world look different. We are still operating on there will be some kind of transition to reopening, but eventually, businesses and the economy looked the same as what it looked before covid, and that is what we dont know. If consumers change their behavior in a way where they dont spend as much money and become more riskaverse, that kind of structural change, businesses who reengineer their businesses, they may need to introduce more redundancy into their operating procedures. We dont know the impact on supply chains. All of these things could have a caseive impact, in which these have to remain in play for much longer. Happen . Not actually there is a danger that we end up with a second wave, maybe in the fall, and all of the bullets have been shot by Central Banks and by the fiscal authorities. It is going to be interesting to see what the fed says tomorrow and what the ecb says on thursday. But at the moment, they are stabilizing Financial Markets because they provide a huge amount of liquidity. The fundamentals really dont have much visibility on the moment. What happens come september, october if we have to start shutting down different parts of the economy once again . Bilal i think then we have a big problem. For policy and the business sector at large. Central banks and policymakers, there are further things they can do. Equities. Uld buy that is something most people have been speculating on. Japan already does. Japan already buys real estate as well. The fed could also do that. There are other assets they could buy. On the fiscal side, we had some version of universal basic income already, and the sense that there are checks being paid , but that could become more formalized as a way to support the economy. Something thats been on the outer edges of thinking in recent years could suddenly end up in the mainstream if the government says we are going to send everybody 5,000 every year to keep everything going. So there are other measures policymakers can still take. If we were to see another downturn later on in the year. Vonnie vonnie we will have to leave it there. Thank you for joining us. Bilal hafeez is macro hives ceo. Representative steny hoyer has said virus cases are still d. C. , sose in i the u. S. House has decided not to return to work next week. Lets check Global Markets now. Heres kailey leinz. Kailey it started as a risk on day, but now equity markets in the u. S. Have rolled over. You have economies getting ready perhaps to make plans to reopen, but you also have Consumer Confidence data that was the worst since 2014. The s p 500 now just fractionally lower. You are seeing and outperformance still in europe. The stoxx 600 higher by about 1. 5 . That is being led by the bank stocks. 4 . Group higher by about ubs, hsbc, santander earnings out today. Provision for loan losses is a big story, but ubs says it with ken says it can withstand a surge within bad loans. I want to go back to the s p 500. Take a look at why we may be taking a bit of a breather here. The index has rallied about 30 in just the past month. That is despite the fact that company after company is withdrawing its 2020 guidance, suspending buybacks and dividends. The fact that the Economic Outlook isnt looking great. And it from Goldman Sachs this morning says investors may continue to look through bad news as long as they think things are going to improve in the coming quarters, but maybe today, Market Participants arent willing to bet on that recovery right now. I do want to look at a group of stocks seeing somewhat of a recovery today, and that is actually retail stores. Locations across the country remain shut down, but you are seeing chicos up by 12 , bed, bath beyond up by 7 , ross up 4 . It was upgraded at da davidson today, saying investors should take advantage of the mother of all buying opportunities. He sees these stores as beneficiaries from any tort of post covid recovery. What is it going to take to reopen . Perhaps more testing, more treatment for the coronavirus itself. Take a look at two other stocks. Quest diagnostics was raised at Morgan Stanley today as being a beneficiary of the increased testing. That stock has now rolled over by about 1. 3 , despite the fact that consumers can now actually purchase antibody tests online. Sentna up after it said it a new drug application to the fda, a possible vaccine for the coronavirus. Stocks rolling over with the broader equity market. Vonnie in fact, this is what caused the nasdaq to overturn, health care, and massive pharma in europe reporting today in europe as well. Coming up next, we hear from the riksbank governor on why he thinks negative rates are a bridge too far. This is bloomberg. Guy welcome back. You are watching the european close on bloomberg markets. Lets catch up now on the news that you need to know about. Heres ritika gupta. Ritika the white house has come out with a new strategy to expand coronavirus testing. States were given new guidance on how to build capacity. Plus, walmart and cvs say they will open hundreds of new test sites. The goal is to speed up testing so states can reopen their economies. France unveiling a plan to reopen public life beginning on may 11. The government has canceled a large Public Events until at least september. Spain is announcing its own measures today. European banks are getting a big break on leverage. The eu will let banks hold less capital, and at making it easier to make loans during the pandemic. They will also be allowed to save on capital when they invest on software and infrastructure in certain businesses. Oil plunged again today, going well below 11 a barrel at some point. 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. Vonnie thank you for that. Riksbank governor Stefan Ingves is downplaying the need to return to negative rates. Billionthe record 30 bond program will work rather than Interest Rate cuts to counter the covid19 crisis. He spoke with bloomberg early today. We are already at zero, and that is a very low rate. The Main Objective presently is to ensure that the supply is working in the economy, and that rates dont go up. In order to avoid rates going up, we are buying mortgage doing allurities, and sorts of other things. That is more important than just dealing with the policy rate. At the same time you are forecasting a gdp drop of almost 10 this year, and unemployment above 10 . How far are we from a situation where the rate cut is essential . That is hard to tell. That is not the primary objective presently because we really want to ensure that the Financial Sector keeps working. That is why we are massively using our Balance Sheet, and without doing so, we run the risk of having all sorts of problems regardless of what we do with the policy. That is why our choice is presently do not use the policy money,ut to print more lending and buying assets. From our perspective at the present juncture, having said policy rate ate zero presently, which is not the case for some other Central Banks. Why are you holding off on expanding qe . It depends on what you mean when youre talking about qe because our Balance Sheet is expanding and has the potential to expand very rapidly. Qe, meansng the words buying more government debt, we have already bought roughly half of the outstanding amount of government debt. In our judgment, it has been much more important presently to actually buy mortgagebacked securities, and to lend to the banks. Essentially, what happens is that we are changing the proportions when it comes to the assets because when this started, it was mainly Holding Government debt in one form or another. Think that they have been in the structure debt market for quite a while. Any buying of investmentgrade Corporate Bonds . We are looking into that. Time will tell what will happen on that. It is certainly something on our agenda. But you are doing enough for the parts of the markets that have suffered the most . These things sort of change by the day. When i talked about our measures, talking about roughly period, almost on a daily basis we have done new things, or changed or tweaked the systems a bit, based on decisions we had made the week before. So everything is on the table when it comes to dealing with these issues. Our primary objective is to ensure that markets function properly and that credit does not dry up in the swedish economy. You say everything is on the table. Does that include buying not Investment Grade . I dont have an answer to that. Time will tell what we will have to do in the future. Are buying into the primary market . That is similarly an issue. There are some legal issues with buying into the primary market, but we are certainly looking into it, and some other Central Banks are already acting in the primary markets. So we are in the process of thinking about it. Guy it was the riksbank governor Stefan Ingves a little earlier on today. This is bloomberg. Vonnie checking u. S. Markets, we are lower. The s p 500 has given up all of its gains, down about 0. 1 . Stocks that were higher are holding onto the gains, like harleydavidson, best buy, and d. R. Horton. Stocks dragging on things, as well as boeing. The s p 500 is now just down 0. 1 . The nasdaq is down 0. 9 . In terms of the vix, we have seen that pop a little but higher. We started the day around 31, which would indicate some calm. We are up around 36 now. Guy here in europe as we head towards the close, european equities still reasonably positive. We are up by around 1. 5 . The dax underperforming a little bit today. Wirecard is one of the reasons behind that. It will review all of the data in the company audit. Atve got the cac 40 trading 4559. The Banking Sector in particular is driving europe to the upside. I will give you the details when we do the european close. That is coming up next. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, youll only have to pay for the data you need starting at just 12 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. Its the most reliable wireless network. And it could save you hundreds. Xfinity mobile. Guy 30 seconds until the end of European Equity trading. We are relative to the United States in fairly good shape, european banks the prime reason. A number of names higher. We have also had banks reporting numbers. The combination of the numbers that have been reported in the fact that we are seeing some of the leverage ratios being used. The European Commission out with news earlier on in the session. Still off our highs but up 1. 5 in terms of the individual markets around europe. We are getting peripheral markets outperforming, which is worth paying attention to. You are seeing the ftse mip doing a little bit better, or it certainly was. Pacetse 100 picking up the as we approach the end of play. Up 1. 8 . Mip the banks are driving a lot of this. Lets show you what is happening from the sector point of view. What we are looking at is a Banking Sector up by 4. 3 . The insurance sector and oil and gas sector is giving back some of the ground in the health care sector. I want to show you what is happening from the point of view of some of the individual names worth focusing on. Wirecard is a longrunning story about an audit, and then with not fully able to sign off on the data. Still taking a big knock. Ubs with numbers earlier on, trading up strongly. You can see santander having a strong session. Big provision points from santander relative to its european peer group. The French Economy suffering as a result of covid19. Ubs trading up. Session thusropean far as we head through the closing process. I wi