Be playing into sentiment. All of the sub indices in the s p 500 are lower now. A real pause in earnings reports from the Oil Companies to amazon, down 7 after saying it would likely spend all of its operating profits on covid related preparations to protect employees and customers. Also saying that revenue increased, which was a positive sign out of amazon, but again, investors selling that stock today. Barrelil was above 20 a , so i bit of a recovery, if you want to put it that way. It certainly doesnt feel that way. Then we had the ism manufacturing data earlier which really cast a pall over the earnings outlook. Ecb president Christine Lagarde is forecasting euro area Economic Growth to shriek as much is 12 this year. This is the central bank announced a series of further that effectively amount to do an Interest Rate cut. Thanks on the front line of the economic recovery puts banks on the front line of the economic recovery, but does it go far enough . Ofh us now is Marilyn Watson blackrock financial. Is the ecb behind the curve . What does that mean in terms of the way you are thinking about . Nvesting marilyn certainly when you look at the announcement yesterday, i think it is clear that the u. S. Federal reserve is far ahead in terms of the curve and the amount of Monetary Policy stimulus and liquidity it has introduced, and it has already introduced a wider range of policy measures. Markets of the ecb, the was a little disappointed yesterday in terms of the announcement. The most positive news that we got in terms of tweaks were in the more generous rates on the tltro and the introduction of a new pandemic emergency longterm refining thing longterm refinancing operation to assist the sector. Think it is somewhat subsidizing bank lending and the system. But overall, i think the market was disappointed. I think the ecb made it Crystal Clear that they are going to be focusing on the Pandemic Emergency ProgramGoing Forward, and we would love to see that expanded, perhaps in june or later this year. At the moment, it has a size of 750 billion euros, but we expect that to increase. Has a mandate to defend other central banks, and really, Christine Lagarde really emphasized that they want to ensure that those fragmentations within the system, that they dont want to see any unwarranted tightening of financial conditions, and they want to support all of the economies within the euro zone. Guy do you think btps go wider versus bunds from here, or do they tighten up . Is there risk surrounding italy here . Marilyn there are some risks around italy. What we see in terms of fiscal stimulus and fiscal aid for the Italian Economy in the euro zone i think will play a key part in the trajectory for the Italian EconomyGoing Forward. What the culmination is in terms of whether you get loans or grants i think will be very key btpsms of determining and the trajectory for the Italian Economy. That being said, i think the announcements we have heard from the ecb, the fact that it is prepared and said it will be expand thed will program, it is using the tltro ltro to support the sector as well, so i think you could see further compression between italy and germany from here. You could also see some compression as well in spreads banks and germany as well. In terms of spreads in italy, which are still pretty wide, you could see some compression at least in the short term. Vonnie are you surprised that yields in hilly it in italy our entire . This is a country on the verge in italy arent higher . This is a country on the verge of junk, making huge use of the ecb facilities, and you can buy instead for 1. 75 . Marilyn the downgrade wasnt completely unexpected, but clearly what you see in terms of the political negotiations between the Different Countries within the euro zone in terms of providing further fiscal support , and also just the measures that ecb has announced, i think really are acting at least for the time being as a backstop. When you look, as you say, at the spread between italy and othery opposed to peripheral economies, i think that particularly, Christine Lagarde suggests that they will expand the pepp program and do everything they can to support all of the different economies, and i think, given the Market Reaction from the previous ecb meeting, where it reacted , iatively to some comments think the message this time around was almost the opposite. Ecb wanted to state that they really wanted to ensure that there was a financial tightening of conditions and they will support every single economy. So i think the market really did take that message way, and they are really expecting the ecb to step up and continue to buy the btps and support the financial conditions in italy. Btps ande these other peripheral countries, not just italy, but also spain, portugal, are they at levels that you would be interested in buying them here . Marilyn yes they are. Ouretained positions in unconstrained global bonds fund, for example. We retained position in spain and italy. We continue to think they are attractive, given the ecb announcement yesterday and he further policy announcement for potentially june we also expect to have further announcements to the euro zone and the European Commission in terms of packages to support the european economies. We do think we will continue to see some storm of spread compression between spain, italy and germany. We will everhink see mutualization of debt . How significantly would that change the characteristics of some of that peripheral debt . Happen, if that were to i think you would see some significant changes in the performance of that debt. I think mutualization is still a long way off, when you look at the negotiations going on, when you look at the headlines, you look at the balance is being taken by individual politicians within each country, as well as the overall european negotiation. I think it is still probably a long way off, but we are seeing baby steps towards seeing further integration within the banking sector, further baby steps in terms of the ecb providing more support, and further help between the countries within the euro zone in terms of fiscal support. But i think mutualization of debt overall come of the economy is still some way off. Vonnie for the fed, at what point do we get zero or start exiting some of these numerous programs . Really hase fed pulled out all the stops, far more than any other central bank. They really have done a huge amount to support the u. S. Economy, support financial conditions, to provide extra liquidity. When it will start to exit some of these programs i think at the moment is too hard to tell. We have seen the sharp negative contraction in q1 gdp. We expect q2 to be even worse. We will look at the unemployment data next week, which we expect to see pretty grim. Really too early to tell what the impact will be in terms of the economy on the length and duration of the contraction, and how long it will take the economy to really start to climb out of this. Love that obviously has to do with how the virus progresses from here, whether we exit this and there is a second wave. At the moment it is too early to tell, but what is clear is the fed will potentially do more in terms of providing more credit liquidity, and i do think the fed said very clearly they are going to keep rates low for a very long time. Vonnie marilyn, thank you for that. That is Marilyn Watson, head of global fundamental fixed income strategy at blackrock. Lets get a check on global markets. Heres taylor riggs. Taylor you are seeing some pretty broadbased weakness with tech. This is a reversal of what we saw yesterday with big tech. That being a big outperformer yesterday. Crude is up and Energy Stocks are the worst performers. Chevron and ask on just a few of those, showing how bad things are for Energy Companies at the moment. Flipping of the board, youre getting Canadian Dollar weakness. This as a broader risk off tone sets in today. Flipping up the board again, we are talking a lot about crude prices. It is actually relatively calm. Copper lower, risk off after that ism manufacturing data clearly showing we are in a recession. Gold futures just a little higher. Unitednt to talk about airlines, plunging today after saying they are planning for zero revenue in 2020, and a chance of zero revenue into 22 anyone. And nordstroms price target cut wedbush, saying they see no profits for the first half of 2020. Vonnie thank you. Coming up next, how relations with china are being affected by the coronavirus pandemic, and but it could mean for investors. Our crest is our guest is greg valliere, chief u. S. Policy strategist at agf investments. This is bloomberg. Guy welcome back. A bit of news coming through for tesla. Elon musk tweeting that tesla stock price is too high. In terms of the reaction we are , we arein the markets seeing a little bit of a reaction. Clearly, weve got gm coming up. It will be fascinating to see what teslas. Story is from here. You think about what teslas story is from here. You think about the evolution at the moment. The market has a wide range of opinions on the outcome. Lets check the bloomberg first word news. Heres ritika gupta. Ritika the coronavirus pandemic is likely to last as long as two years, according to a new report from Infectious Disease experts at the university of minnesota. The report also predicts the outbreak wont be under control until about 2 3 of the World Population is immune. The experts say people may be at their most contagious before they have symptoms. Encouraging signs out of germany. The number of new corrode and are new coronavirus cases dipped for a seventh straight day. They began relaxing measures this week, but will maintain travel restrictions and curbs on public life. President trump will travel to camp david today, his first time leaving the white house compound in over a month. The president is scheduled to travel more week. He will head to arizona, a crucial swing state. He plans to visit the honeywell plant, making medical supplies to fight the coronavirus pandemic. 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. President trump has revived his tariff threats against china as he ratchets up pressure on the country over its handling of the coronavirus pandemic. Pushing higher. Lets bring in greg valliere, u. S. Policy strategist at agf investments. What is the strategy here . Who is the president speaking to when he makes these comments about china . Greg first is the chinese themselves, to let them know how displeased he is. Importantly, more is the u. S. Electorate. I think as we head into the fall campaign, china as a villain will be one of the very major themes. Vonnie theres a lot of disagreement on how helpful china was, how much china worked with the who and so on. Fort a rich vein to go down the president , to be blaming china for the coronavirus pen to make . Sog yes, because there were many other sources of real discontent or anger towards china. You see it among democrats. Chuck schumer, elizabeth warren. Obviously among republicans. You see it in western europe, where people feel china has been disingenuous with the aid they have provided. Now you even see it in australia, where the australians went to investigate the virus lab in wuhan. China said no. So it is not just donald trump. Theres a lot of feeling around the world that china did not act honorably. How does the president harness that global discontent with beijing . Do you think this could be something that could bring the europeans and the americans together . Tension seems to be growing before the virus struck. Maybe this is an area were we could find some commonality. Greg a rare area where you could see some agreement. In terms of remedies in retaliation, the idea of suing china, no one is going to get a nickel from china in a lawsuit. To denyhorrible idea china Interest Payments on u. S. Debt they hold, that would send a chilling message to every fixed Income Investor in the world. But there are two other options that i think would be on the table. One would be tariffs. Trump famously says i am a tariff guy. To doher would be something to curb the supply chain between china and the u. S. I think there could be legislation penalizing u. S. Firms that rely still on chinese medical products, pharmaceuticals, and there could be legislation to get companies to many facture here in the u. S. Think that has some promise. Vonnie the dynamics are so interesting. Joe biden isnt exactly easy on china either, so will it be a moreto see who can be strict with china . Both sides are really going to go after each other on this. Already, biden has an ad saying trump was too obsequious with chairman xi, but i think trump is going to make a big deal of biden and his sonsbusiness dealing and his sons business dealings with beijing. Who has more antipathy towards china will be a big issue as we get to the fall. Guy just in terms of how you see this actually happening, we were talking about phase two. Youve indicated it is likely to be difficult. How high could tariffs potentially go here . Whats on the table . ,ust in terms of the policies youve discounted a bunch of them. What potentially could still be left in terms of policy options that the president could pull . Greg i think that phase one of the trade deal, which we allegedly have finished, is still very much up in the air. Im not sure that either side fully complied with phase one. Phase two i think is off the table. Dont think there is any chance of progress on that this year. I do think trumps default mechanism is to go for tariffs, and i do think that is back on the table. There is some indication as well that potentially, there will be a financial angle to this as well. So the strength of American Financial markets will be brought to bear more here, and maybe money wont flow out of the United States into china. If you are sitting on wall street now, do you think we will see chinese owned ipos coming to the states . How far do you think he potentially could go here . Greg it is a really good question. I think this anger towards china is so deep and sincere in most of the western world that it could be difficult for china to get any deals done. Think chinas Manufacturing Sector could suffer, and with them now going after hong kong, thinking that no one is paying attention, i think there could be more sanctions coming. Vonnie u. S. Steel said yesterday it is going to be getting rid of 2700 jobs. This is the industry the president said was going to see jobs come back to. He was going to bring them back. How can he continue to advocate for the tariffs on this kind of industry when it is dying in the u. S. Anyway . Good point. I think that money is no object. I think we are going to throw money at everything right now. The skies the limit. I think there will be Industries Next in line that will get made. I dont even left the oil industry getting something. I think we will just throw money at things. Some republicans arent happy about the deficit of locations, but for donald trump, i think throwing money at things, he feels it is a prescription for. Etting reelected there re goingguy guy we are going to leave it there. Greg valliere, chief u. S. Policy strategist at agf investments. Keep an eye on tesla. The elon musk tweets are absolutely amazing. Coming up, how the coronavirus is sparking changes in the Education Sector. Fallonst coming up, john , ceo of pearson. This is bloomberg. Guy we are awaiting the end of trading in europe, but there is only one real main market on focusing on. It has it is may the first so most european indices are closed. The ftse 100 has a different calendar to the rest of the continent. Today we have trading. Selling may down kind of story. View, percentage point of it is carnival, shell, and prudential seeing weakness. The point story very similar. The pound is lower and so is crude. The closes next. This is bloomberg. Guy 30 seconds to go until the end of regular trading. The ftse 100 and 280, and the u. K. Markets. The u. K. Markets are open and all the others close. It has not been a positive close. We are seeing a ftse 100 that is negative and i am assuming that the other european markets will not have a positive start either to the session because the ftse 100 is down by two. 5 . On the week, it is just less. 1 . We are up at this point as we go into the auction. Plus 0. 08 . It has been a tough week for the ftse 100. Today is taking off some of the gains we saw at the beginning of the week. In terms of what we are seeing in europe, let us show you what we have got. Showing someiners weakness on the china comments and weakness coming through from the oil sector as well. Shell down 6. 99 after dropping that bombshell regarding its dividends. Some of the more defensive names as well, gsk showing weakness. There are some positive sides. The Health Building sector is trading higher. Some expectations of next week we start to get some signals from the u. K. That the economy will reopen, and as a result, the big Building Sites that barratt will reopen and they can get people through the doors and selling houses as well. They are up by 2. 08 . It is short and sweet and that is the european close. Vonnie the s p 500 is down 2 all session. We are a couple of hours into the trading session. They will be signals taken from the session for the rest of the month. As you can see, 28. 42 is where we are at. It is a good level. Year to date, we have reaped some gains after that awful loss we saw. Oil companies are doing particularly badly and we have amazon not doing well after earnings. At 713 andan trading weaker by. 7 after the president ratcheted up tensions with china. Food is at 1923. I want to spend a minute on tesla, which is down 7 . We had some interes