Lagarde,at, christine madame gore gave a of the International Monetary fund, and your conversation with Andrew Bailey. Francine if you distill what we are trying to do, there are three main questions what kind of recovery and recession will be get, the inflationary versus deflationary debate, and the economic scarring. We will try to do that with the bank of england and the imf, touching on what countries may need support in the future. Christine lagarde also extremely interesting because it will be the first time we hear from her since the German Court Decision so we will hear from her about the legality or not about what they did. Tom the complexities of this German Court Decision, George Saravelos out with a blistering note, wondering even if the ecb will respond to the german court. We respond to our first word news. U. S. And china trade negotiators will speak as soon as next week to try to make progress in implementing a phase one deal, President Trump threatening to terminate the deal if beijing was not sticking to the terms. The deal was in germany before the coronavirus hammered the economy. Considering a new mission to academic tripan to find the animal origins of the coronavirus. The trump says that likely escaped from a laboratory in wuhan. The u. K. Could start using its lockdown on monday. Boris johnson is under pressure to get the british economy moving again without another surge of deaths. Havethan 30,000 people died from the coronavirus. Delivered a grim outlook for corporate america, forecasting mass bankruptcy and 25 . Porate tax as high as 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 ritika gupta. This is bloomberg. Tom very good, thank you. I want to go over the data and i do this like once a week, not twice a week because francine goes not. Nuts. The coolest thing is the bloomberg terminal on your iphone. Something i am glued to with the vix. Vix. Ntinues 31. 72 on the on yields, i did it for and im going to do it again, the two year yield is stagnant, and the 10 and 30 are moving up, so the yield curve steepening for the far out yield curve. Want totrength, and i point out some inconsistencies in em with is the, difficult day, and the turkish lira moves , a difficultrazil day, and the turkish lira moves out. Francine we heard from Andrew Bailey hinting at stimulus ahead. Needsund, we understand more than just comforting words. I am looking at the saudi headline, slashing oil price discounts to impact the market. 25. 52, so there is a lot going on in the markets, and we have Corporate News in the u. K. And virgin media combine create a heavyweight. Tom i am not going to mens words. The one thing minutes words mince words. The one thing history tells us is you see combinations, just as we see in telecom within the united kingdom. You wonder where america will be. Terrific news flow on this thursday into friday. We will come back with conversation on economics, finance, and investment. This is bloomberg. Francine bloomberg surveillance, tom and francine from london and new york. Norges bank livered an Interest Rate delivered an interest cut 20. Zero byare thrilled to be joined the norges bank governor. How worried are you in this juncture about the weakening krona . Oystein the background for Central Banks is this, for norges bank, to act as the as amy has fallen sharp we result of the corona epidemic. Amplified byit is very low oil prices. That was the background for clearly in to act, march. We have the policy rate at 1. 5 which was reduced in march 2 1. 25, and at this juncture we took another step to reduce the policy rate to zero. It is a policy reaction in our case where we had room to maneuver in Monetary Policy, in the Interest Rate policy, and we have utilized we have utilized that room to maneuver. You utilize the fx market . Oystein the answer is yes. March, where we were all hit by the virus and the downturn, we act did acted to reduce the policy rate and introduced liquidity measures. Market with significant region krona and if you go for 20 years norwegian krone, and if you go for 20 years, we are ready to be in the currency market to continue to have the market functioning. We have done that to a limited extent, and you can find the numbers in the report we published today. Tom thank you so much for joining us today. Lead theou conversation is wonderful. You discovered oil in the north sea in 1969. The interdependencies of your Central Bank Effort at the Sovereign Wealth Fund and oil production, it is original and extraordinary. In this pandemic, is that delicate balance at risk . Is there a risk that norway upsets the prosperity that has been generated since 1969 . Oystein my short answer is i dont think so, but for continuing, looking forward, of course it is a challenge for the economy if Oil Prices Remain at the present low levels, but you , weack to 1969 and forward have actually exploited these opportunities and we have spent somewhat of the money, but we have saved a lot. We have a huge Sovereign Wealth Fund and we benefit from that room to maneuver in fiscal policy these days that room days. That room to maneuver remains. It is a positive feature of our society that we have this room to maneuver unlike other countries. And ihe Norwegian Bank dont know how many of you know this but the Norwegian Central Bank led central banking in clarity of statistics decades fromand governor, you came the statistical division. Can you give us the most efficacious oil price for norway . Do you have in your head the best price for brent that advantages norway in the microeconomics of oil . Oil whichhe price of would damas or which we could whiche what damage or we could survive with . Tom which price of oil is best . Oystein that is a difficult question. We benefit from reasonably high costs,ces exceeding risk including capital costs. If we have oil prices in the range of 50 to 60, my rearview of the cost level my clear view of the cost level and the prospects on the shelves is that is fine. Isolated, Higher Oil Prices could be fine, but we have to take into account the effect of very High Oil Prices on markets and demand. We have the climate challenge and it is a complicated issue. Remainthe possibility to prices coming oil to around 50 or 60. Toncine are there limits what i Monetary Policy could achieve in a crisis like this and can you describe the fiscal response in your country . Oystein the fiscal response has been strong. To maneuver room through this huge Sovereign Wealth Fund. Estimates over the usage of oil money is in the range exceeding 4 of the fund capital. That is higher than the fiscal rule, but we expect going restrict fiscal. Olicy in the future back, ifronavirus goes there is a rebound in the economy as it may seem now. Drama, and the response is we have this room to maneuver. The governments withdrawal from the Sovereign Wealth Fund will exceed its own cash flow, forcing it to sell assets. How challenging is this for the Sovereign Wealth Fund . Oystein there is no special circumstances. It is part of the system that if you go back, there has been an inflow to the fund if needed. And inould be an outflow this very special situation where we have a dramatic fall in activity, the worst downturn since the second world war, it the that in such times you could spend more. There is practical challenges in the market. Muchgovernor, thank you so for joining us, with norges bank, oystein olsen. Further discussion in this historic moment, stunning Economic Contraction and labor statistics, we must speak with Andrew Bailey of the bank of england. Francine will speak with governor bailey at 7 00 a. M. New york time. With equities elevated, this is bloomberg. Surveillance, good morning, everyone. Tom keene and francine lacqua. We have important conversations coming up, mayor lee daily mary daly later today and Andrew Bailey of the bank of england with francine, look for that in a bit. Right now to bring all the thinking together, david page joins. What is so important right now about the linkage of economics into investment into finance is the issuance of bonds. What does this gross issuance of bonds mean for our viewers and listeners . ,avid it reflects two things the extraordinary nature of the government reactions we have seen across the globe and that in turn reflects the stark shock to the economy. It suggests a material transformation in the way government bonds have to operate and we are seeing that for Central Banks to come in, to provide some easing. We all know that Central Banks are very keen in not taking part in monetary financing, but they are absorbing this huge increase in government issuance in the u. K. Next three over the months and in the u. S. , 3 trillion in the next quarter, but the Central Bank Balance sheet is allowing that absorption. And davidy explained, page, it sounds like a free lunch. There is no such thing as a free ranch. What are the ramifications of Central Banks taking all that stuff onto their Balance Sheets . David the risk is who pays for it and when . The Central Banks are providing scope for markets to absorb this at the moment, but ultimately and when we think about the operation of the Central Banks in the u. S. And u. K. , there are excess reserves. This is not a free lunch. At some point Interest Rates will rise and the massive Balance Sheets will have to pay interest on the excess reserves, so you will see a massive fiscal transfer from taxpayers to commercial banks via the Central Banks and that will be desperately unpopular, but that is paying down the debt. We are changing the pinch point when we start to pay for this and pushing it into the future. That is what Monetary Policy does, pushes it into the future, but it is out there and at some point we will have to consider how to pay this down. That is not something we are likely to consider over the next six to nine month. It is not something we will likely have to think about over the next few years, but in the decade, it is something we will have to think about and the markets, in the medium to longterm we will see the debt rate keeping rates lower for longer. Francine when you look at the unintended consequence of this, do markets get nervous when we start to unwind this extra stimulus . David i am sorry, unwind . Extrane all of this stimulus, everything put in place. David if we unwind all of this, markets, yes, would get nervous, but we are looking at a very long playlist of how this goes through. If we think about the bank of japan, they have expanded their Balance Sheet passively. Massively. Government debt continues to rise. The Federal Reserve did run up its Balance Sheet and started to unwind it so we would expected it to come off at some point, but the broad stretch threat from stimulus, the broad unloading of debt will be with us for a long time and markets do not need to be with us for that unwind. Hopefully as the economies reopen and the labor markets start to improve significantly, then the support the government provides to the economy can be scaled back and therefore that is not something the markets will worry about much. Francine thank you very much, david page. Do not miss our conversation with the bank of england governor Andrew Bailey at 7 00 a. M. New york. We discussed a pledge of support. The next time the bank of england meets is in june with governor bailey hinting at stimulus. Two of the bank of englands nine policymakers wanted to immediately increase bond purchases and we will figure out why they decided to hold off and not do it today. This is bloomberg. Francine this is bloomberg surveillance, tom and francine from new york and london. Talking about the bank of england and the inflation forecast, lets get back to david page. When you look at the timeline, the bank of england seems more optimistic about a recovery in 2021 than other counterparts including the ecb. Is it ugly 2021 and then a recovery or could this be a decade of misery . David it could be either, and the bank of england would suggest would stress they are forecast theya are providing the flaws of the scenario. 2020ly we will get ugly followed by a sharp contraction in Economic Activity in the second quarter, and the question is how much of a rebound do we get from there starting in the second half of the year . The unknown is what path the virus will take and that is where the assumptions come from, but we have economic assumptions, how do labor markets and businesses react, and what ongoing policies are there likely to be . Those will shape the speed of the recovery. To our minds, we are more cautious and the plausible scenario the bank of england puts into place, we think more is likely to come true. It takes a little bit longer to recover the ground. Call given be a bold the uncertainty over the next couple of quarters and the next couple of years, looking into the future. Francine with the price of oil and the fact we had negative wti meant that half of the economy said this is a huge deal because it is either something really wrong with the economy and could point to a financial crisis. That saudi changing their pricing for asia give you confidence that it is not a worse Case Scenario . Oil isin broad terms, part of the Global Supply glut and the fall in demand. The pace and demand to sell back so aggressively, even thinking of airlines and transport, the pace and drop the pace of the drop in demand could sell us out read in the wti context, we ran out of storage. Looking at future contracts, that problem looks quite acute. We dont think it points to the complete financial collapse that perhaps negative oil pricing would otherwise suggest. Arebroader context is we seeing oil prices that we have not think for decade and it is clearly the massive demand shocks we see coming through. Lines ine between any a chart is an into graham intagram and it falls into how much judy support gdp support does any nation need . How is the u. S. Doing . Is it enough . David we think it falls intergramhort of that type study. Gdp andeeing 12. 5 of it is difficult to calculate the equivalent for Monetary Policy because the fed has an openended policy and it could go on for some time. We see a fiscal impulse coming from the Monetary Policy side on the order of magnitude of two Percentage Points of gdp in 2021 and one in 2022. We would suggest what we have at the moment is just short of seeing that come through. If we do that forecast, when we get to the end of 2021 we see the u. S. Economy 1 to 2 below where it would have been had you extrapolated the end of 2019 going forward. Ande is more space to come i suspect we will see more fiscal stimulus come through, but it becomes increasingly difficult because the metrics will look different and the congress will worry about the huge levels of debt in 2020. As the economy seems to rebound, the argument for more fiscal stimulus will be part of it. Page, greatly appreciated this morning. We have important conversations as we see a doubledigit l town of Economic Growth doubledigit melt down of Economic Growth, beginning with francines conversation with governor Andrew Bailey. Worldwide, this is bloomberg. Ritika this is bloomberg surveillance. More signs that europe is starting to reopen, the u. K. Is set to ease part of its lockdown on monday. There will be more freedom for people to leave their homes but no changes are expected for businesses. In germany, shops will be allowed to reopened and the netherlands will begin a phased reopening. Automakers in the u. S. Want access to federal loans to begin making cars again. Democrats and republicans are urging house leaders to help. Automakers shut down their factories in march because of the coronavirus out rake. Outbreak. India is looking to lure American Companies out of china including Food Processing units and auto parts makers. Y have been blaming china the u. S. Has been blaming china for their role in the coronavirus. Ruth Bader Ginsburg has been released from the hospital. She is 87, the oldest justice on the court and took part yesterday in telephone arguments from the hospital. 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 ritika gupta. This is bloomberg. Much if youou so get lucky much. If you get lucky out of college, you get one of the most interesting jobs in the world, working for the cars are as we as we have tried to save the car industry. She has moved on to be congresswoman of what has always been a republican district and 51 49 on the cusp of the divide. Congresswoman, what a fascinating time to be in except there is a lot of pain and suffering i