Highs, off 1. 6 . You can thank the autos and oil companies. Several companies in the permian cutting back on production even then there was no vote on quotas today. Index ofhe energy 2. 3 . Some companies are not faring so well. Norwegian cruise line among them, down 21 . Norwegian cruise lines looking for money desperately to keep going. It raised 400 million and is looking to go to market as well. Yuan offshore is trading off of its weakness. It looks like the Trump Administration for the moment, is going easier on china. Kailey leinz has a deeper dive into the market action. Kailey it has been steady buying today, and really for the past four days, when it comes to the equity markets. Futures,ok at s p 500 we saw a steady decline, and then a steady upward trajectory. Things are pretty orderly, and volatility is relatively subdued. The vix at 831 handle. On pace for its best nineng streak in months, back to 23 a barrel, as that supply and demand picture looks better. Higher by. 6 today. Some money coming out of the safe haven treasury market. To, theree alluding are companies out there that are desperate for cash. Norwegian is down 20 . Off of its lows in the premarket, still down 16 . It wasruptcy filing, as able to reach an agreement with creditors. Still, that company is in dire straits. One company succeeding raising ,ash, marriott, is in the green after reworking some of its agreements with card partners. That has the stock higher by nearly 3 . Vonnie thank you. He is one of wall streets smartest minds, and he is getting more convinced that this recession is not as protracted as it might have been. Marko kolanovic joins me now on the phone for an exclusive interview. You called the peak of the pandemic a couple weeks ago and the beginning of the reopening, which we are about to see. What makes you so sure that we will not see second and third waves . Marko thank you. We will certainly see more cases. The question is whether it will break down the Hospital System or cripple the economy, and we think not. We think the first wave was worse, and certainly now we are better prepared, and we are doing a number of measures to contain the spread, and hopefully, we are working on treatments and eventually a vaccine. I think you will certainly see this issue longer, but it will be something that is manageable, rather than something that completely shuts down the economy. Forie you had called another record but not until the first half of next year. Do you have any more precise dates i dont mean an exact date but beginning of the year, middle of the year . Marko we are thinking the first half of the year. There is still a lot of uncertainty, variables. The virus is certainly one of them. Political developments are another one. Even if we believe come in many areas, where there are conditions to opening, it is also influenced politics. We also have elections in november, so that can speed up the schedule for our projected recovery, or delay. One of your colleagues mentioned this geopolitical tension that we are monitoring closely. Some of them are related to the virus, but it may be a continuation between the rivalry between the u. S. And china. These are things that can influence the pace of Global Economic recovery, including global trade, travel. It downrd to nail precisely, but we are seeing the first half of next year. Basically, we see the economy recovering by the end of this year, market should be looking six months ahead of that, and we will also be looking at these unprecedented monetary and fiscal measures that we think will mitigate the damage, at least a large part of the damage. Vonnie so markets should point to us getting out of this in advance. What will be get to, how long in advance of the economic recovery will that be . Marko we think about six months, which could be anywhere from three months to nine months. If you look at the recovery toward the end of next year, near full economic recovery, our best guess would be the First Quarter of the next year for the markets to recover. When i say recover, alltime highs, basically getting to the levels in february this year. For the s p, about 3400. Give us an update on liquidity, are we back to healthy levels all over, are there still pain points . Marko liquidity is still relatively poor. It is useful to look at the vix. It is not a coincidence. It is the measure that a lot of electronic market makers, algos, are taking as an input to gauge how much liquidity to put into markets. Level ofeach the vix 80, near alltime highs, liquidity dropped to alltime lows, below what we would expect from some of these models. Has retraced about more than half of that, so liquidity has improved. Ideally, you do not want to see the vix in the 20s before you see a more meaningful return in liquidity. There are a lot of feedback loops between liquidity, price action, the level of the vix, and one will feed into another. We see this as a positive, the vix has broken this high fever from extraordinary levels, and that will be attractive on the margins. You have a feedback loop. The market recovers a little bit. Vix declines. That brings more liquidity. We are forecasting, hoping that this feedback loop will work itself, especially over the summer months, we see under the leg lower on the vix, and then another step toward market recovery. Again, still very low, but they quickly way to look at it is to look at the vix in historical terms. That will give you a good idea of where liquidity is. Vonnie i want to talk about hedge funds, for example. Weird you see them positioned right now . Marko hedge funds is a Diverse Group of investors. ,ou have systematic investors equity long short hedge funds, market hedge funds. Hedge funds,gate their exposure is relatively low. In historical times. So we are toward the bottom of net exposure. Ctas, some of these more systematic investors are lower, closer to zero. Some of the fundamental hedge funds are a little higher. Certainly a lot of dispersion between hedge funds. Some are quite bearish. The majority of them still are. We see that in our daily , in the way the market trades around positive news, after hours. Certainly, some hedge funds have taken more positively, but on aggregate, hedge funds, we still see them around 15 , which is low, and that is different with what we see from our competitors. Vonnie it is interesting how the views are different across the shops. In your view, why is this a case, have hedge funds been shunning the s p 500 since late march . Marko hedge funds were very smart to quickly derisk going into the ben 10 make into the pandemic. Largestd of avoided the drill down we had in early march. That said, when the market started recovering, there was a little buying recovery story. We had our own reasons why we thought the market should go higher. Some of the systematic flow, some of the things around the virus, monitoring action of central banks. As the market moved quickly, it also moved quickly up. Itge funds were a lot of slow and many of them are waiting for the market to come thererea if you recall, was a consensus that we need to have a retesting of previous lows. The market is now around 2900. Higher,market drifts investors are waiting for the pullback, and they never got it. That is the reason why investors and that on equities, is why some of them were short. Initially very good reaction but then we have to recognize the dynamics around the virus and central banks. Vonnie talk about those tensions. They rebalance frequently. What have you seen hedge funds during the past few weeks . Marko they have been an important player, driver in the recovery of the initial shock and february, march. Tension Funds Pension funds betweenkeep a mix equities, bonds, and alternatives. Once the market collapsed in march, Pension Funds were underweight equities. Our first call in the bounceback was technically driven, will come on the back of the rebound of Pension Funds at the corner and quarter end. Some substantial buying came through in march. We stabilized and drove the market higher in the first leg. We were estimating almost one trillion of equities needed to be bought over the course of the year as the market bottomed. Wasainly, a big part of it already purchased to stabilize the market. In april, we saw a little bit of a correction the other way. March, rebounds in quarter end rebalance, they were perhaps overweight in equities. , right now, these investors are fairly balanced, close to their target. If anything, we think there could still be some buying over the rest of the year. Investorson funds and rebalance monthly, quarterly, some on a trigger level. For others, it is a wait and see strategic decision. Where somehe things need to add equities. Simply, we are down from where we were last year. Vonnie thank you so much for your time today. Congratulations on your forecast. That is marko kolanovic, of macros head quantitative strategy. Lets get a check on the first word news with Mark Crumpton. Mark covid19 may have been spreading earlier than experts originally thought. A World Health Organization spokesperson said the potential case in france dates back to december, one month before the first reported case. The official also said more early cases may also be found as countries retest samples. In france, president Emmanuel Macron is facing pushback over his plans to gradually reopen schools next week. More than 300 mayors in the capital region, including the paris mayor, urged him in an delayetter today to the reopening of primary schools scheduled for next week. They call the timetable untenable and unrealistic. After a delay caused by the pandemic, british and american negotiators have opened up negotiations on a trade agreement. The u. K. Government is hoping the deal will bring a postbrexit and diplomatic boost to the country. Officials held a Video Conference call today at the start of the negotiations. 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 vonnie this is Bloomberg Markets. Im vonnie quinn. Time for the latest Bloomberg Business flash. Her to got an 11th hour reprieve from potential bankruptcy. They missed a debt payment but they were given time to work out a rescue plan. They have until may 20 22, with a financing strategy. Petroleum took a 12. 4 billion charge in the First Quarter to reflect the reduced ability of the business. Marathon says it will suspend share buybacks but will also cut spending by 30 . Some of the biggest u. S. Stock traders have gotten approval to open their own exchange. They got the goahead from the sec, backed by heavyweights including Morgan Stanley and citadel securities. Members Exchange Plans to start trading in the third quarter. That is your latest Bloomberg Business flash. U. S. Services contracted in april for the first time in a decade as the coronavirus disrupts Economic Activity nationwide. At outlook on fed policy and credit markets with tony headguez, nuveen assets of fixed income strategy. This is bloomberg. Is bloomberg. Vonnie this is Bloomberg Markets. Im vonnie quinn. Collapsed inector april, according to data this morning. For a view on how it impacting credit markets, we have tony rodriguez, head of fixedincome strategy at new being. Nuveen. , itfed has so many programs is hard to keep track of them. What hasnt been for you as a fixed income strategist, what do you say to your managers . Tony good to see you. We think that has certainly done a good job the highyield market in the 10 to 13 range. Right now we are at 5 for the overall market. We do think the preponderance of the bankruptcies are still ahead of us. That is why you need to be more cautious. Find good,if you can solid companies that are happy to be overleveraged that have a good market position, you can find one of opportunities. In terms of a broad brush, you need to be cautious looking at those covid19 areas of the market. The indicators you look at first thing in the morning . One is we are looking at company earnings. There we are getting a little bit of a read, although it is not giving us april and forwardlooking. Company earnings and commentary. Number two is what is happening with the consumer. Whether that is spending or jobs, jobless claims, the upcoming friday report. Those will be critical for the health of the consumer and broader economy. Vonnie thank you for your time today, tony rodriguez. Coming up, u. S. Stocks following european equities higher today. Withd on the markets Kristina Hooper. This is bloomberg. Mark im Mark Crumpton with bloomberg first word news. President trump says dr. Anthony fauci was blocked from testifying before congress on the coronavirus this week because the chamber is controlled by democrats. Speaking to reporters as he left the white house, the president said the house is a setup, the house is a bunch of trumphaters. The white house said it would be counterproductive for medical professionals to testify before congress while they are working to combat the outbreak. India had discovered two viable clusters since it looked a lot town on monday, contributing to the largest single day spike in cases and deaths in 24 hours. A vegetable and fruit market in Southern India has been linked to more than 300 cases. Many of those who had beer working in those in the market had returned to their villages during the lockdown. Officials are now trying to retrace their steps. In greece, the Prime Minister says he believes restaurants will be able to open june 1, if the coronavirus outbreaks keeps slowing. Usinggan unlocking its lockdown measures on thursday. The country has had about 2600 infections and 146 deaths. Greece reported just six new infections on monday. 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. Amanda welcome to Bloomberg Markets. Im amanda lang in toronto. Shery from bloomberg World Headquarters in new york, im shery ahn. We are joined by our bloomberg and Bnn Bloomberg audiences. Here are the top stories we are following from around the world. U. S. Equities surging, on track for a second day of gains with the s p 500 climbed back much of its losses from last week. Health care and Energy Leading the way as brent crude tops 30 a barrel for the First Time Since mid april. This as california and new york outlined plans to reopen their economies in the wake of the coronavirus. New York Governor Andrew Cuomo warning against ending lockdowns too early, citing new data that the number of expected deaths from the virus in the u. S. Has doubled to more than 130,000. What it all means for the markets. We will speak to Kristina Hooper of invesco. That conversation is coming up next. Aanda speaking of markets, little bit of confidence in the stock markets today, across the board. Health care and energy are two places showing leadership in the u. S. Markets. We have some enthusiasm about reopening plans, albeit they are different everywhere you look. We are just learning about qatar s Sovereign Wealth Fund looking for a 7 billion euro loan, the terms not finalized. That would be back by equities. In canada, the government announcing another quarter billion of aid or the agricultural sector. We are still seeing signs that assistance is needed. Companies are reporting, disney after the bell today. They joined 15 of Companies Reporting this week. Still a lot to chew on for these markets, and we still have the tech stocks faring slightly better than the rest. There were leadership in the market continues. Invesco isoper at with us now by telephone. So many crosscurrents for investors to absorb. It does feel like we have a determined optimism on the part of investors to look past what is happening now and into the future. Can the future come soon enough . Christina investors dont need to look that far into the future. Seeing in terms of that decoupling of the stock market from the economy is a functioning of the kind of dramatic extremely accommodative Monetary Policy we have seen. Yes, investors are looking beyond earnings, for example, looking beyond bad economic data, but it is really because of the support they are getting from the fed. We saw this before during the Global Financial crisis. It is really a paid from that same playbook. Shery an important part of looking beyond this pandemic is getting some guidance. We are halfway into earnings. Are you that guidance is continuing to disappear . Kristina im not surprised at all. This is unprecedented and there are so many unknowns. It is very difficult for companies to provide guidance. They are just essentially trying to get by day by day. I dont think that we should expect to see guidance from companies, and we should just assume that the focus needs to be on what comes next in terms of fiscal support, what comes next in terms of additional Monetary Policy support globally. In terms of what you have seen on the earnings front, i know this was expected to be pivotal. So much uncertainty in the outlook. Pricing in what you are seeing from the s p 500 companies . Companies, p 500 those that have given us any operatingidance, are with a variety of different scenarios in mind, trying to give us some kind of a range of possible outcomes, but it is very hard to price anything in. That is why i think so much of what we are seeing in terms of stock market moves really relates to the kind of Monetary Policy support thats been provided by the fed