It is an earnings trade today. We will get into that in a moment. 8he 10year yield at 50 i basis point. Not really moving around that much. Bid, pushinginy the 10 year to 58 basis points. Story today is facebook and twitter. Down 5 , a quarter of advertising revenue for twitter, even as an added subscribers. Lets get a deeper dive. Taylor riggs is standing by. Taylor mostly risk off, but tech is not as bad, given earnings are coming in a little bit better than expected. There has been a recent shift in the conversation that tech is being thought of as defensive here, holding up better than people thought. Take a look inside the terminal. A lot of the negative price action that we are seeing stems from that Consumer Spending report we got, the worst ever dip in Consumer Spending. Income and spending was weaker than expected, which means some analysts think that firstquarter gdp data will need to be revised lower as well. I want to look at what happened overnight within the s p 500. A lot of news related to china. U. S. Government is looking at taking some steps against china on how they have handled the virus. As transparent as they could have been about early cases. Some of the things they are looking at could include canceling debt obligations to china. Finally, crude continues to be a big story here. Higher now by 40 in the last two days. Norway is cutting their output to help with the oversupply issues that we are facing. Higher now by 40 in the last two days. Cutting their dividend for the First Time Since 1945. Exxon mobil raising their dividend for the first time in 13 years. Vonnie thank you for that, taylor riggs. Data shows Global Hedge Fund assets dropped below 3 trillion for the First Time Since 2014, hit by client withdrawals and investment losses. Joining us now is Robert Christian of k2 advisors. K2 is one of the Largest Hedge Fund advisers, owned by franklin templeton. We are at the end of april but we are further into this coronavirus pandemic and Market Impact and response from all the Central Banks. Talk about dislocations and how hedge funds have fared now that we are at the end of april. Robert good afternoon. Great to talk to you. In march, we saw a tremendous amount of derisking, forced selling by participants in the market. Liquidity quickly left the market. That caused many dislocations across all asset classes. We gradually saw Central Banks react over time, put in programs. Certainly behind the markets in terms of providing liquidity. We have seen some of those lows dislocations come back, but there is still a lot of dislocation across equity, fixed income, commodities. The markets are trying to digest not so much the nearterm Economic Data or nearterm corporate earnings, but really trying to price nine to 12 months out, and there is a lot of uncertainty about how the world will look. Volatility should be good for hedge funds, certainly has been good for the banks in the quarter. Why hasnt volatility been good across the board of the Hedge Fund Industry . Are correct, historically, volatility has been good for active management, particularly long short investing by hedge funds. Majore saw in march was a breach. Most people did not foresee the virus having this type of impact , certainly in february. Most Hedge Fund Managers were positioned for growth, it was a question of how fast rates go higher. Very quickly, the market began to hold onto, and the virus had a much bigger impact. Most investors, managers were not positioned for that. Risking a tremendous de an increase of volatility. Instead, managers have adjusted. Going forward, the opportunity set is very rich Going Forward. We expect volatility to remain relatively high. Terms, anywhere from 30 to 30, which is not normal 50, which is not normal historically, but it is both a demand and supply shock, and it makes sense that volatility remains high. We have been saying that for a while. The other thing we keep a close eye is the shape of the volatility curve. Nearterm volatility is much which than further out, tells us the market is still in a risk off mode. Vonnie one of the interesting stories that emerged was renaissance was retooling its strategies. They had the worst mark ever for themselves. Quants in general may be did not do so well. Where else do we see hedge funds performing poorly, and do you anticipate a lot of retooling going on . Times of difficult performance always make managers be introspective and reevaluate what they are doing. Unds thate some quant find did quite well, but i would say it is a time frame issue. If you have a longer timeframe based on historical data, this shock is something completely new. Nts that didnt better had a shorter timeframe. Apply that could same analogy to the equity long short world. Haveers in that space bifurcated their timeframe, that is what we see from a lot of our Hedge Fund Managers. Veryean by that shortterm focused. The market seems to be pricing on liquidity and flows, nearterm price market action, but then there are tremendous opportunities more in the credit space, where if you can lock up capital for two or three years, there are some interesting trades with a lot of asymmetry that overtime should pay off. You need to have the capital and timeframe. We see managers bifurcating their time frames. The very short and also very long. Vonnie briefly, how flexible is money that was withdrawn . Can it be put back to work quickly in the industry, will it . Robert it is very interesting. All of the events happened in march. Some investors did not get time to act on capital flows. Nine tot over the next 12 months a rotation of capital. Some of it by choice, some of it by demand from investors, if they need to rebalance their portfolios to other asset classes. Some corporations are drawing on cash, such as health care, companies that did not expect it to run this long. Without cash, International Companies are experiencing some fx losses as foreignexchange markets move. We do expect to see a rotation of capital. Vonnie we will have you back to tell us how that goes. Rob christian, head of management at k2 advisors. Lets get a check on the first word news with Mark Crumpton. Merkel says it is too soon to ease travel restrictions and most other curbs on public life. She met today with the heads of germanys 16 states. Figure steps to ease the countrys locked on will be evaluated at a gathering on march 6. The u. S. Agriculture secretary sonny perdue says he expects me plants in the u. S. To reopen in days, not weeks. He told bloomberg slaughterhouse workers should begin receiving more protective gear and access to coronavirus testing right away. He says the meat production shortfall in which he says is about 20 to 30 , will narrow to 10 to 15 within a week to 10 days. The usda has been tapped to take the lead in ensuring processing facility stay open under the executive order issued by President Trump on tuesday. The federal agents who interviewed Michael Flynn during the early days of the russian they mighton knew catch about his contacts with the russian ambassador, according to newly unsealed documents. They also mused about getting him fired. On twitter, President Trump slams the agency conducted the interview, calling them dirty cops at the white house earlier today. Earlier today, the president called flynn a hero. Global news 24 hours a day, onair, and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. The coronavirus pandemic continues to trigger slumps in the oil industry. Matt miller earlier exclusively to the head of shell about historic cut to its dividend. Of course, it is a difficult day. On the other hand, it is also an inevitable moment. Facing twocally problems. One is the poor macroeconomic environment, which is getting worse, but the other problem which is bigger, we have the crisis of uncertainty. Uncertainty about demand, prices. Thee even uncertainty about viability of some of our assets, given the logistical issues we have. We have taken some strong and early countermeasures to protect the Financial Resilience of our company. You have seen before we have taken a reduction in capital 9ts, operating costs, billion, but these countermeasures are not enough to deal with the unprecedented uncertainty we are seeing. The board decided that it was prudent to also reduce the dividend. Early this morning, we decided to reset the dividend to . 16 Going Forward, which is still a meaningful dividend, and an affordable dividend. Let me ask about your debt. A lot of companies and countries are having to deal with higher gearing. You were already at your Comfort Level before this crisis, but changes will have to be made to our Comfort Levels. How high do you expect your gearing to go, and when do you want to turn it back around . Talk about Financial Resilience, which is the key thing to protect with such an uncertain outlook, it is both about the debt levels that we feel are appropriate but also the liquidity we have. Debt levels are outside of the range we would consider to be normal over the cycle. We end up with a gearing slightly less than 29 . You would like to be below 25 . In the next quarters and years, depending on how this plays out, we will do everything to get our gearing back in the range we need to have. Liquidity is fine, we dont have to worry about that. We have more than 30 billion of liquid funds we have access to. Protectt is, we have to these levels of Financial Resilience. That is why we had to take these drastic countermeasures, and we had to take them early and decisively. At this point in time, i would expect our gearing to stay elevated, but not at the level that we should be concerned. A few minutes into the start of the european trading day. Shell fallen 3. 5 out of the gates after the cuts. Is that to be expected, do you understand that some investors maybeeel disappointed, even feel that they did not expect this to happen today . I understand this will be a difficult day for our investors. It is going to be a particularly difficult day for investors that are in our stock for income reasons. Particularly also retail investors, they will feel it. Believe me, i feel with them the pain that this causes. I hope it does not come as a surprise that measures like this need to be taken in order to ensure the viability of the future value of our company. , as the quarter wears on, and as people see the extent of the further uncertainty play out, and with the destruction of demand, acid viability, etc. , it will be seen as the only prudent and even responsible step to take. The board was very clear, it would consider it irresponsible to borrow, pay a dividend that is fundamentally under the current circumstances not sustainable. That cannot be in the interest of any shareholder either. Vonnie still ahead, hardhit restaurants squaring off against Insurance Companies to cover losses from the coronavirus crisis. We will have the insurer perspective next with David Sampson with the propertycasualty insurers association. This is bloomberg. Vonnie this is bloomberg markets. Im vonnie quinn. The Restaurant Industry has been knocked out by the coronavirus. We spoke to shop and restaurant ud last week. Bolo this is many restaurants discover they are not covered, setting up a major legal fight. Joining us now from the insurance perspective is David Sampson, ceo of the Property Casualty insurance association. Why shouldnt insurers cover this kind of black swan event for restauranteurs and other small and Medium Enterprises . Of all, americas insurers stand by our policy contracts. We have always and will continue to pay all valid claims. When we talk about Business Interruption insurance, we are talking about property insurance policies that cover physical damage from disasters like hurricanes, wild fires, and they generally do not cover viruses, pandemics in the Standard Insurance policy. The real important words there are it is a property Insurance Coverage that covers physical damage. Restaurants and other businesses what theshut down Small Business community is facing is very devastating, but they are not shut down because their businesses have been damaged. They are shut down because of fear of human to human transmission of a highly communicable disease. It is just fundamental that property insurance is not designed to handle that kind of catastrophic event. Vonnie sure, but you could also argue that they are not directly shut down because of that, but because the states have mandated that they shut down. David when you are referring to is the Civil Authority provision. But again, that is a specifically defined, legal concept. , Civil Authority provision these property Business Interruption policies, or when governments shut down a business because there is a physical damage that prevents or makes it dangerous to get into a property because of, again, Property Damage to the underlying business. As disruptive as this is, it is simply not covered under Business Interruption. As a matter of fact, since the sars outbreak in 2003, most Standard Insurance policies sold in america have specific exclusions for virus or pandemics. That is why the National Association of Insurance Commissioners stated very early that thes crisis Business Interruption policies do not generally cover pandemic events. Vonnie we are talking about contract law. Lawyers on both sides are gearing up for a major fight, concern about setting precedents here, but after other occasions such as 9 11, there were one of the examples that were made, substitutions. Couldnt that be the case here again, given the Restaurant Industry argues they support 50 million jobs, trillions in gdp for the economy . Why not just organize between yourselves and make this a oneoff example. It is not like the Insurance Industry will be out. The federal government will make them whole presumably. David you cannot presume that at all. The issue is much broader than just americas restaurant tours. Closure losses for Small Businesses with 100 or fewer employees in the united between 255ling billion and 431 billion per month. That is why the paycheck Protection Plan ran out of money in his first two weeks after congress appropriated 350 billion for that. They have subsequently top that off with another 250 billion. That program is expected to run out within 10 days. For all u. S. ,plus home, auto, and business insurers combined to pay for all future losses is only about 850 billion. It Business Continuity losses are running at 431 billion a month, if we were to do what you, what some of the plaintiffs attorneys are suggesting, it would bankrupt the industry within a matter of a couple of months. There would be a solvency issue. Vonnie we had to you back for an update. It will be a debate for the foreseeable future. There are times when our need to connect really matters. To keep customers and employees in the know. To keep business moving. Comcast business is prepared for times like these. Powered by the nations largest gigspeed network. To help give you the speed, reliability, and security you need. Tools to manage your business from any device, anywhere. And a team of experts here for you 24 7. Weve always believed in the power of working together. Thats why, when every connection counts. You can count on us. Mark im Mark Crumpton with bloomberg first word news. To shore of state and local governments are coronavirus costs. The speaker says the money would prevent layoffs. And in between News Conference today, she said the best way of americans can support local nurses, bus drivers, and other Frontline Community workers is to make sure they dont lose their jobs to budget cuts. Approvedhas already nearly 3 trillion to salvage the economy and confront the health care crisis. British Prime MinisterBoris Johnson says the worst of the coronavirus outbreak is over for the u. K. Speaking from downing street could, the Prime Minister said we are past the peak and we are on a downward slope. Johnson returned to work today after recovering from the virus. The u. K. Likely will not meet its key target of testing or the people a day coronavirus. The European Central bank has stepped up its response to the coronavirus crisis. It is cutting the cost of funding for banks in the euro area. Ecb president Christine Lagarde wa