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00:00FRANCINE: $2 TRILLION OF STIMULUS. THE SENATE PASSES A HISTORIC STIMULUS PLAN. THE HUMAN TRAGEDY, GLOBAL FIDELITY, TOPPED 21,000, CASES SURGE IN THE U.S. AND SPAIN. LARRY KUDLOW WARNS INVESTORS TO EXPECT A LARGE INCREASE IN JOBLESS CLAIMS. CRISIS ECONOMICS. THE ECB UNLEASHING ITS MOST POWERFUL BOND BUYING TOOL AS IT CRAFT LIMITS ON ASSET PURCHASES. GOOD MORNING, GOOD AFTERNOON, GOOD EVENING, EVERYONE. THIS IS "BLOOMBERG SURVEILLANCE. I AM FRANCINE LACQUA AND LONDON. TOM KEENE IS IN NEW YORK. A DIFFERENT DAY IF YOU LOOK AT THE MARKETS, DEFINITELY TRYING TO FOCUS ON THE NUMBER OF DEATHS AND INFECTIONS AS OPPOSED TO THE EXTRA STIMULUS EARED WE ARE IN UNCHARTED TERRITORY. TOM: ALSO IN WAITING MODE, FRANCINE, AND THIS IS FROM NOW TWO HOURS, MAKE IT 3.5 HOURS FROM NOW, WITHOUT QUESTION THE MOST ANTICIPATED JOBS NUMBER IN THE HISTORY OF THE NATION. THIS IS THE WEEKLY JOBLESS CLAIMS. IT IS EXPECTED TO SURGE OUT. I PUT A CHART OUT ON TWITTER AND LINKED -- AND LINKEDIN. IT IS JUST ORDINARY WHAT WE COULD SEE. DAVID FOLKERTS-LANDAU COMING UP. IN A MOMENT. LET ME GO TO THE TAPE RIGHT NOW, EQUITIES, BONDS, CURRENCIES, COMMODITIES. NOT ALL THAT MUCH GOING ON. A BIT OF A PULLBACK, THE DOW TWO DAYS IN A ROW ELEVATED OFF WHERE WE WERE IN THE GRIMNESS OF FRIDAY, OF MONDAY AS WELL. ALSO OIL WITH A LITTLE BIT OF A LIFT OFF ABOUT IT, FRANCINE. FRANCINE: EUROPEAN STOCKS RETREATING WITH EQUITIES, GOVERNMENT BONDS ADVANCING. I AM LOOKING OVERALL AT EUROPEAN SOVEREIGN DEBT. WE ARE SEEING A LITTLE BIT OF A MOVE AFTER THE ECB SCRAPS LIMITS ON BOND PURCHASES , A LANDMARK DECISION THAT GIVES AN ALMOST UNLIMITED FIREPOWER TO FIGHT THE ECONOMIC FALLOUT FROM THE PANDEMIC. YOU CAN SEE EURO STRENGTHENING, TOM. TOM: IT IS AN EXTRAORDINARY TIME. FRANCINE AND I ARE TRYING TO BRING YOU VOICES FROM THE CONTINENT, FROM AMERICA AS WELL, TO FRAME OUT FOR YOU THIS CRISIS. THERE IS NONE MORE QUALIFIED THAN DAVID FOLKERTS-LANDAU OF DEUTSCHE BANK. HE IS IN CHARGE OF THEIR RESEARCH OPERATION, BUT FAR MORE, HIS WORLD RESEARCH WITH MICHAEL DOOLEY AND PETER GARBER. WE ARE THRILLED THAT UNCLE FOLKERTS-LANDAU -- THAT DAVID'S FOLKERTS-LANDAU CAN JOIN US. ANGELA MERKEL IS UNDER THE WEATHER IT HOW IS THE NATION DOING RELATIVE TO THE VERY DIFFICULT CIRCUMSTANCES WE SEE IN ITALY AND IN SPAIN? DAVID : GOOD MORNING, TOM AND FRANCINE. TO YOUR QUESTION, TOM, GERMANY IS PROBABLY BEST OFF AMONG ALL THE LARGER EUROPEAN COUNTRIES. IT HAS A VERY GENEROUS , LARGER HOSPITAL BED CAPACITY WITH ISOLATED AND -- WITH VENTILATORS AND I SEE YOU'S -- AND I SEE CU'S, UNLIKE ITALY FOR INSTANCE. ALL OF THAT HAS -- NUMBER OF INFECTED IS NOT RISING AS FAST. IT IS IN A GOOD POSITION. THE ECONOMIC RESPONSE HAS BEEN OVERWHELMING. FISCALLY, FOR A VERY CONSERVATIVE COUNTRY, AND YESTERDAY THE BUNDESBANK PASSED A VERY GENEROUS PACKAGE WITH ALL KINDS OF FAC SPECIAL FEATURES. IN ADDITION TO THAT, THERE ARE LOAN GUARANTEES EXTENDED BY THE DEVELOPMENT BANK, WHICH GETS US TO THE BANKING SYSTEM, AND THE BANKS ARE INSTRUMENTAL AT THIS TIME, BEING PART OF THE SOLUTION RATHER THAN PART OF THE PROBLEM. TO GET THE CREDIT TO SMALL AND MEDIUM ENTERPRISES, YOU NEED THE TECHNOLOGY BEHIND IT TO REACH 300,000 TO 400,000 SMALL COMPANIES, AND THAT IS WORKING REALLY WELL. IF THERE IS AN ISSUE, IT IS THAT THE LOCKDOWN HAS BEEN TAKEN SO SERIOUSLY, AND PEOPLE ARE GETTING ANTSY, GETTING CABIN FEVER, AND MY SENSE IS THAT THIS LOCKDOWN HERE WILL NOT BE ABLE TO BE MAINTAINED. I THINK THERE WILL BE BREACHES. YOUNG PEOPLE WILL GO BACK ON THE STREET. SO WHATEVER YOU HAVE TO DO, YOU HAD BETTER GET DONE IN TERMS OF PREPARING FOR THE NEXT WAVE. FRANCINE: DAVID, YESTERDAY THERE WAS MARIO DRAGHI WRITING, THE FIRST TIME WE HAVE HEARD FROM HIM SINCE HE STEPPED DOWN AS ECB PRESIDENT, SAYING BANKS NEED TO DO MUCH MORE, THE ECB CAN DO MUCH MORE AND THEY NEED TO DO IT NOW. GIVEN WHAT WE HEARD YESTERDAY, HAS THE ECB DONE ENOUGH? DAVID CO : I STRONGLY DISAGREE WITH MARIO DRAGHI ON THAT, AND ON HIS TONE. TALKING ABOUT CATASTROPHES ON BIBLICAL PROPORTION JUST DOESN'T HELP. IF THERE IS ONE THING TO PRAY IN THIS CRISIS, IT IS THE CENTRAL BANK RESPONSE. BOTH THE ECB AND THE FED. YOU HAVE KNOWN ME AS BEING A FREQUENT CRITIC OF THE ECB, BUT I THINK THEY HAVE DONE AN EXTRA ORDINARY JOB, QUITE APART FROM THE INITIAL COMMUNICATIONS ISSUE, WHICH DOESN'T REALLY MATTER. IN TERMS OF THE TRO'S, IN TERMS OF GETTING RID OF THE CAPITAL KEY OF POTENTIALLY A QE, GETTING RID OF ISSUE LIMITS, IT SHOWS THE LEVEL OF FLEXIBILITY AND ENGAGEMENT. I HAVE NO CONCERN THAT ALL THE ISSUES THAT THE ECB CAN ADDRESS -- AND THERE ARE MANY -- THEY WILL ADDRESS PROPERLY AND WELL. I THINK THERE IS NOTHING BUT PRAISE FOR THE BANKING SECTOR AND THE ECB. THE GLOBAL DOLLAR SWAP LINES HAVE BEEN WELL MENTIONED TO DEAL WITH DOLLAR FUNDING ISSUES. THE FED STEPS IN WITH THIS TYPE OF THING -- LIQUIDITY, OR THE ORDERLY FUNCTION OF MARKETS HAS NOT BEEN THE ISSUE. AS FAR AS THE FISCAL SIDE IS CONCERNED, COMING UP AGAINST NATIONAL CONSTRAINTS -- EVEN IF YOU TAKE OFF THE TOP LIMITS OF WHAT YOU EXPECT AND HOW MUCH DEBT YOU CAN TAKE ONTO YOUR BOOKS, YOU STILL HAVE TO GET IT TO THE RIGHT PLACES. THERE IS POLITICS INVOLVED. WHY DO WE NEED 25 MILLION TO SUPPORT THE KENNEDY CENTER, RIGHT? BUT THOSE THINGS REFLECT POLITICAL PREFERENCES OF THE OFFICES. THE NUMBERS ON THE FISCAL SIDE ARE JUST OVERWHELMING. EYE-POPPING. SO YOU CANNOT FORCE THIS TIME AROUND THE PUBLIC POLICY RESPONSE. THERE MIGHT BE ISSUES YOU WANT TO QUIBBLE WITH, BUT BY AND LARGE THEIR HEARTS ARE IN THE RIGHT PLACE, AND IT IS VERY GRATIFYING TO SEE THAT. TOM: WE WILL CONTINUE WITH DAVID FOLKERTS-LANDAU OF DEUTSCHE BANK. MUCH MORE TO COME ACROSS ALL OF "SURVEILLANCE," INTO OUR EARLY MORNING AND MID MORNING IN NEW YORK CITY AS WELL. WE WILL TALK OF COURSE ABOUT THE PANDEMIC IN THE UNITED STATES. ALSO WE WILL LOOK AT GLOBAL BANKING, KNOWING BETTER TO TALK TO THEN SERGIO ARMANI -- SERGIO ERMOTTI. VIVIANA: THIS IS BLOOMBERG SURVEILLANCE. LET'S GET TO BLOOMBERG FIRST WORD NEWS. WE BEGIN WITH THE LARGEST ECONOMIC RESCUE IN U.S. HISTORY, THE SENATE APPROVING A $2 TRILLION PACKAGE AIMED AT STOPPING THE FINANCIAL DAMAGE CAUSED BY THE CORONAVIRUS OUTBREAK. DEVOTE 96-0. MORE THAN 150 MILLION AMERICAN HOUSEHOLDS WILL RECEIVE -- THE VOTE 96-0. MORE THAN 100 50 MILLION AMERICAN HOUSEHOLDS WILL RECEIVE CHECKS. JEROME POWELL WILL SIT DOWN THIS MORNING FOR A RARE LIVE TV INTERVIEW. MR. POWELL WILL BE INTERVIEWED ON NBC'S TODAY SHOW AT 7:05 A.M. NEW YORK TIME. THE FED IS IN THE PROCESS OF DEPLOYING UNPRECEDENTED TOOLS TO PREVENT THE HEALTH CRISIS FROM BECOMING A FINANCIAL ONE. TO THESE WORDS -- WHO TO LET DIE FIRST? SPANISH DOCTORS ARE BEING FORCED TO CHOOSE BECAUSE OF CORONAVIRUS. A DOCTOR AND ONE OF THE LARGEST HOSPITALS SAYING INTENSIVE CARE WARDS ARE OVERFLOWING. NEW RULES SAY THAT OLDER PEOPLE ARE MISSING OUT TO YOUNGER PEOPLE WHO HAVE A BETTER CHANCE OF SURVIVAL. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND AT QUICKTAKE BY BLOOMBERG, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES, I'M VIVIANA HURTADO. THIS IS BLOOMBERG. FRANCINE? TOM? FRANCINE: THANK YOU SO MUCH. COMING UP NEXT, MANUS CRANNY WILL BE TALKING WITH SERGIO ERMOTTI. HIS TAKE ON WHAT BANKS CAN DO AND WHAT HIS CLIENTS ARE DOING. COMING UP LATER THIS HOUR, A CONVERSATION ALSO WITH SCOTT THEO, LIKE ROCK INTERNATIONAL CHIEF INCOME STRATEGIST. THAT IS COMING UP IN ABOUT 20 MINUTES FROM NOW, 5:30 A.M. IN FRANCINE: WELL, GOOD MORNING, GOOD AFTERNOON, GOOD EVENING, DEPENDING ON WHERE YOU ARE IN THE WORLD. THIS IS "BLOOMBERG SURVEILLANCE ," TOM KEENE AND FRANCINE LOCK WHILE FROM NEW YORK AND LONDON -- FRANCINE LACQUA FROM LONDON AND NEW YORK. MANUS CRANNY COME OVER TO YOU. MANUS: THANK YOU VERY MUCH. LET'S GET STRAIGHT TO SERGIO ERMOTTI. I SUPPOSE IN THE FIRST INSTANCE WE SEE THE SCALE ON WHAT THE CENTRAL BANKS HAVE DONE FROM THE FED, THE BOJ, THE ECB. MY QUESTION TO YOU IS, IS THIS ENOUGH TO DRAW A HALT TO THE LIQUIDITY ISSUE, THE DOLLAR LIQUIDITY ISSUES AROUND THE WORLD AT THE MOMENT, FROM WHAT YOU'RE SEEING AT YOUR END? SERGIO: YES, MANUS, I THINK THE ACTIONS THAT WERE TAKEN ARE UNPRECEDENTED, AND THEY HAVE BEEN QUITE EFFECTIVE IN COUNTING DOWN THE FUNDING MARKETS, PARTICULARLY ON THE DOLLAR SIDE. AND I DO THINK THAT MAYBE THERE ARE SOME TECHNICALITIES THAT NEED TO BE ADDRESSED, BUT I THINK CENTRAL BANKS AND THE GOVERNMENTS HAVE BEEN ACTING VERY EFFICIENTLY AT THIS STAGE. OF COURSE, YOU KNOW, THERE IS LITTLE ANYBODY CAN DO ABOUT FEAR , AND FEAR IS PROBABLY ONE OF THE MOST DANGEROUS SENTIMENTS THAT YOU CAN HAVE IN THIS ENVIRONMENT. IT IS NOT FEAR ABOUT MARKETS, IT IS FEAR ABOUT HEALTH AND THEIR LIVES, AND THEREFORE THERE IS ONLY SO MUCH THAT THE CENTRAL BANKS AND THE GOVERNMENTS CAN DO TO ALLEVIATE THIS ISSUE. MANUS: THAT FEAR HAS GIVEN RISE TO A HUGE IMPLOSION IN RISK ASSETS AND HAVEN ASSETS. AS YOU LOOK AT THE MARKETS RECOVERING IN THE PAST COUPLE OF DAYS -- I EMPHASIZE THE PAST COUPLE DAYS BECAUSE WE HAVE SEEN THESE REPRIEVES BEFORE PREVIOUS CRISES -- ARE WE MOVING FROM FEAR AND IRRATIONALITY TO PERHAPS SLIGHTLY MORE RATIONAL MOVES? WHAT IS YOUR INTERPRETATION OF THIS RECOVERY? SERGIO: IT IS DIFFICULT TO CALL RATIONAL MOVES, 10% UPS AND DOWNS ON THE S & P EVERY DAY, SO I WOULD SAY RS INVESTMENTS -- OUR ASSESSMENTS IN THE MARKETS ARE STABILIZING AND AFTER A MAJOR CORRECTION WE ARE ALMOST DOWN 30% WORLDWIDE, AND ACROSS ALL THE ASSET CLASSES MOVING SO RAPIDLY THAT IT IS VERY NORMAL FOR THE MARKET TO TRY TO FIND A NEW LEVEL. BUT IT IS WAY TOO EARLY TO PREDICT WHICH DIRECTION WE ARE GOING TO GO NEXT. MANUS: MARIO DRAGHI WROTE AN OP-ED THIS MORNING, WHICH I KNOW THAT YOU HAVE HAD A CHANCE TO GLANCE AT. BANKS NEED TO LEND FUNDS AS ZERO COST -- THIS IS A WAY OF BECOMING A PUBLIC POLICY VEHICLE. THE REGULATION OR COLLATERAL RUSE COULD STAND IN A WAY OF CREATING ALL THE SPACE THAT IS NEEDED AND THAT THE GUARANTEE IS SHOULD NOT BE BASED ON CREDIT RISK OF A COMPANY. SERGIO, AS THE CEO OF A MAJOR BANK DOING MAJOR LENDING IN THE WORLD, WOULD YOU SIGN ONTO THIS PRESCRIPTION THIS MORNING? WILL THIS GATHER MOMENTUM? SERGIO: IN PRINCIPLE, YES, BUT THE DEVIL IS IN THE DETAILS. I DO THINK THAT BANKS AT THIS TIME ARE NOT PART OF THE PROBLEMS. ARE DEFINITELY NOW PART OF THE SOLUTION. WE WANT TO BE PART OF THE SOLUTION. WE ARE ACTIVELY WORKING WITH ALL GOVERNMENTS AND AGENCIES THAT ARE INVOLVED WORLDWIDE AS A GLOBAL BANKS, PARTICULARLY IN SWITZERLAND WE ARE SUPPORTING WHAT THE SWISS GOVERNMENT HAS IMPLEMENTED. FOR US IT IS VERY CLEAR THAT OUT OF THIS PROGRAM WE WILL MAKE NO PROFIT. WE DO NOT WANT TO MAKE A SINGLE CENT OF PROFIT, AND THEREFORE WE ARE THERE TO FUNCTION AS A MECHANISM FOR POLICYMAKER TO TRANSMIT THE LIQUIDITY THAT IS NECESSARY AT THIS STAGE TO ACT. WHAT WE HAVE TO PAY ATTENTION IS TO EXACTLY MAKING SURE THAT WHILE BANKS ARE STRONG, COMING IN STRONG TO THIS CYCLE, THAT WE DO NOT INFECT THE BANKING SYSTEM WITH PROBLEMATIC PROBLEMS THAT WILL NEED TO BE RESOLVED IN THE FUTURE. WE TAKE VERY SERIOUSLY OUR ROLE, AND WE ARE WELL PREPARED FOR THAT. AND ESCO IS THAT ABOUT BURDEN SHARING BETWEEN BANKS -- MANUS: IS THAT ABOUT BURDEN SHARING BETWEEN BANKS AND CENTRAL GOVERNMENTS? SERGIO: WE ARE MAKING OUR PART. WE ARE VERY FLEXIBLE. ALL OF OUR EMPLOYEES, OUR PEOPLE ARE WORKING EXTREMELY HARD TO SERVE CLIENTS, TO STAY CLOSE TO CLIENTS, AND PUTTING A LOT OF PRESSURE, EXISTING PRESSURE ON ALL OF US, MANY PART OF SOCIETY. WE ARE MAKING OUR PART, AND AS I SAID BEFORE, WE WANT TO BE PART OF THE SOLUTION, AND DEFINITELY I AM GLAD THAT FOR ONCE BANKS AT THIS STAGE ARE AT LEAST NOT PART OF THE PROBLEM. MANUS: CAN I ASK YOU ABOUT THE CLIENTS? WE ARE SEEING GLOBAL BORDERS CLOSED, SHUT DOWN AROUND THE WORLD. CAN YOU DESCRIBE THE KIND OF SHIFT ON WORDS THAT YOU ARE SEEING FROM CLIENTS? DELEVERAGING, DAILY RISKING -- DE-RISKING? GIVE ME A DESCRIPTIVE ABOUT THEIR MOVEMENTS, WHAT THEY ARE DOING, AND THEIR CASH HOLDINGS. SERGIO: THE CASH HOLDINGS -- YOU REMEMBER WE SPOKE IN THE PAST THAT CASH HOLDINGS WERE VERY HIGH, AND FOR GOOD REASON BECAUSE PEOPLE WERE VERY PRUDENT AND UNCONVINCED ABOUT THE QUALITY OF THE MARKETS DEVELOPMENTS, AND IN THAT SENSE, I THINK A LARGE POOL OF CASH AVAILABLE WITH A MAJOR CORRECTION HAVE HELPED INVESTORS TO MANAGE THE SITUATION IN AN EFFECTIVE WAY. WE DO SEE PEOPLE TAKING ADVANTAGE OF NEW OPPORTUNITIES FOR EXAMPLE, THIS IS TIME IN OUR POINT OF VIEW TO MOVE INTO CREDITS. IF YOU LOOK HISTORICALLY FROM A RISK-REWARDS POINT OF VIEW, THERE IS NOT MANY TIMES IN HISTORY WHERE CREDIT HAS BEEN PRICED SO ATTRACTIVELY, AND THEREFORE WE SEE PEOPLE TAKING ADVANTAGE OF THAT. BUT ALSO, I HAVE TO SAY THAT MANY CLIENTS HAVE BEEN VERY DISCIPLINED IN SPEAKING TO THEIR LONG-TERM ASSET ALLOCATION. OF COURSE, ONCE THE DUST SETTLES, THEY WILL REEVALUATE HOW TO DO THAT, AND IN THAT SENSE OF COURSE WE ARE PREPARING TO EXPLOIT OPPORTUNITIES THERE. MAYBE THERE WITH STOCKS OR SITUATIONS OR SECTORS THAT HAVE BEEN PARTICULARLY IMPACTED. SO CLIENTS ARE TAKING OPPORTUNITIES IN STEP AND BUY INTO SOME OPPORTUNITIES. MANUS: SERGIO, WE ARE ALSO TRYING TO UNDERSTAND WHERE WE ARE WITH THE BANK AND THE BANK SYSTEM. JUMP YOUR MISTY A IS SAYING HE IS TAKING -- TAKING BANKS SCRAPPING DIVIDENDS AROUND EUROPE. IS THAT THE NARRATIVE, SERGIO, THAT MAKES SENSE ON YOUR ASSESSMENT, WHEN YOU LOOK AT HIS LETTER THAT HE HAS SENT. SERGIO: I HAVE NOT SEEN THE LETTER, SO IT IS DIFFICULT FOR ME TO COMMENT. IT IS LEGITIMATE AND UNDERSTANDABLE TO HAVE SUCH A DEBATE AT THIS POINT IN TIME, BUT OF COURSE ON THE OTHER END, ONE HAS TO LOOK AT THE IDIOSYNCRATIC SITUATION OF EACH SINGLE COUNTRY AND EACH SINGLE BANK IN ORDER TO MAKE SUCH AN INVESTMENT. OF COURSE, YOU KNOW, AT THIS TIME, IT IS VERY DIFFICULT TO MANAGE THIS PROCESS BECAUSE OF THE STIGMA THAT YOU MAY OR MAY NOT CREATE AROUND ANY ACTIONS YOU TAKE AROUND THIS TOPIC. I AM GLAD TO SEE THAT WE ARE EXTREMELY WELL-POSITIONED AND WE ARE ENTERING THE CRISIS WITH A VERY STRONG CAPITAL BASE. WE ARE ABLE TO BOTH FULFILL OUR CAPITAL RETURN AND COMMITMENT ON POLICY, BUT ALSO TO SUPPORT THE ECONOMY. BUT I UNDERSTAND IT IS A VERY DEDICATED CASE, AND I THINK EVERY BANK HAS TO LOOK FOR WHAT IS BEST. MANUS: CAN I ASK YOU SPECIFICALLY ABOUT CHINA? THE EPICENTER FOR THIS PANDEMIC. I WANT TO GET A SENSE -- WE HAVE DATA SAYING CHINA IS GETTING BACK TO 80%, 85% OF ITS PRODUCTION CAPACITY. OTHER PEOPLE SAY 40%. ARE THERE OPPORTUNITIES COMING OUT OF THIS CRISIS IN CHINA? SERGIO: CHINA WAS THE FIRST ONE TO START AND BEING EXTREMELY TOUGH AND DISCIPLINED IN THE WAY THEY TOOK MEASURES TO CONTAIN THE VIRUS. IN THAT SENSE, IT IS GOOD TO SEE THAT SITUATION STABILIZING AND NORMALIZING, AND THERE IS RENEWED ACTIVITY. WE ALSO SEE SOME MORE OPTIMISTIC FEEDBACK FROM CLIENTS ABOUT THE SITUATION YOU'RE IN TERMS OF OPPORTUNITIES, IT IS WAY TOO EARLY BECAUSE AT THE END OF THE DAY, THIS IS THE GLOBAL SITUATION RIGHT NOW. IT IS WAY TOO EARLY TO SEE -- MANUS: WE HAVE GONE TO SERO-RATES -- ZERO RATES FROM THE FEDERAL RESERVE, BUT IN YOUR MIND IS THERE ANY RISK OR CASE POTENTIALLY FOR NEGATIVE RATES IN THE UNITED STATES OF AMERICA? WE HAVE TOUCHED ON IT A COUPLE OF TIMES. WHAT IS THE RISK OF NEGATIVE RATES IN THE U.S.? SERGIO: FIRST OF ALL, I THINK, I HOPE THAT WE ARE NEVER GOING TO A NEGATIVE RATES ENVIRONMENT BECAUSE IT IS A VERY DIFFICULT PLACE TO GET OUT FROM. IN A SENSE, I THINK THE PUMPING OF LIQUIDITY AND THE FISCAL POLICY WE ARE TAKING SO FAR ARE THE EXACT MEASURES TO BE TAKEN. TAKING DOWN RATES IS NOT GOING TO HELP. PEOPLE ARE BEING LESS FEARFUL ABOUT THEIR LIFE AND THEIR HELP. I DON'T THINK IN THAT SENSE THAT MONETARY POLICY IS AN EFFICIENT TOOL. WHEN THE SITUATION RECOVERS, WHEN WE SAY BETTER SIGNS, OF COURSE -- WHEN WE SEE BETTER SIGNS COME OF COURSE LOWER RATES ARE GOING TO STIMULATE ECONOMICS. I DON'T THINK NEGATIVE RATES ARE -- FOR THE U.S., OR FOR ANY COUNTRY. IN THAT SENSE I HOPE I AM NOT GOING TO SEE THAT ENVIRONMENT. MANUS: THE UNFORTUNATE REALITY IS GOING TO COME HOME TODAY, ISN'T IT. WE WILL GET THE JOBLESS NUMBERS. WE ARE EXPECTING ANYWHERE FROM -- THE NUMBERS ARE JUST UNBELIEVABLE. FROM CITIGROUP AT 4 MILLION, THE REAL REALITY WILL COME TO BEAR AS THE START OF THAT DATA WILL COME TO FLOW TODAY. CAN WE BEGIN TO COMPREHEND 30% UNEMPLOYMENT RATE IN THE UNITED STATES OF AMERICA? WHAT COULD BE THE CONSEQUENCES OF THAT? THE RISK IS THAT THESE WEEKLY JOBLESS NUMBERS PERPETUATE ON A LONGER-TERM BASIS. IS THAT MY BIGGEST SINGLE RISK? SERGIO: IT IS DIFFICULT TO SAY IF 30% IS THE RIGHT NUMBER, BUT WE HAVE TO EXPECT A SHORT-TERM SPIKE ON UNEMPLOYMENT. BUT WE ARE CONVINCED THAT IF YOU LOOK AT BEYOND Q2, THE SITUATION WILL START TO SLOWLY NORMALIZE -- NOT NORMALIZE FULLY, BUT DEFINITELY NORMALIZE -- AND THOSE UNEMPLOYMENT RATES WILL COME DOWN OVER TIME. I DON'T BELIEVE THAT, IF YOU LOOK AT THE MOST LIKELY SCENARIOS, THAT WE WILL HAVE A SPIKE IN THE VIRUS, AND THEN AS THE SITUATION NORMALIZES, THEN PEOPLE TAKE TIME. MANUS: THANK YOU FOR THE TIME SCHEDULE TODAY, SERGIO ERMOTTI, THE CEO OF UBS. I DID NOT GET TO THE ETF QUESTION. THE CAPACITY OF CLIENTS TO CONSIDER WHAT TO DO, IT IS HARD TO CALL UPON THEM IN THESE MARKETS, AND HIS SUBSCRIPTION, NO DESIRE TO SEE THE MARKETS GO TO NEGATIVE RATES IN THE UNITED STATES OF AMERICA. GOOD -- TOM: GOOD MORNING, AND THANK YOU SO MUCH. YOU SEE THAT IN THE DATA, IT IS NUANCED AND SPEAKS TO WHAT MANUS WAS TALKING ABOUT WITHIN THE BOND AND CURRENCY MARKETS, WHAT ARE THE SIGNALS OF BOTTOM? WHAT I WOULD FOCUS ON, WE HAVE THE TRADITIONAL DATA WHERE THE DOW CLOSED AND THE VIX ELEVATED ABOVE 60. THE TWO YEAR YIELD IN THE UNITED STATES LOWERED TODAY, SIGNALING EVEN WITH THE OTHER DYNAMICS WITHIN THE CREDIT MARKER -- MARKET, THE TWO YEAR YIELD SIGNALING THE FED TO SETTLE DOWN TO LOWER RATES FOREVER. THE BLOOMBERG FINANCIAL CONDITIONS INDEX, A SOUP OF GOOD CREDIT MEASUREMENTS, STILL VERY MUCH EXTENDED WELL OVER SIX STANDARD DEVIATIONS. IS THAT LEHMAN CATASTROPHE BAD? NO, BUT IT IS A TERRIBLE STATISTIC. FRANCINE: IT CERTAINLY IS. EUROPEAN STOCKS ARE DOWN, U.S. EQUITY FUTURES DOWN. I AM FOCUSED ON TRYING TO FIGURE OUT WHY ONE DAY THE MARKET IS LOOKING AT STIMULUS AND THE NEXT DAY LOOKING PAST THE STIMULUS PACKAGES TO THE OUTBREAK. THE YEN IS ADVANCING. EUROPEAN BONDS ARE RISING AFTER THE ECB ANNOUNCED IT WILL SCRAP LIMITS ON BOND PURCHASES FOR ITS EMERGENCY PROGRAM. THAT IS A LANDMARK DECISION THAT GIVES IT ALMOST UNLIMITED FIREPOWER. EURO STRENGTHENING, AS THE GAUGE OF THE DOLLAR HEADING FOR A THIRD DAY FOLLOWING. THAT'S GET BACK TO DAVID FOLKERTS-LANDAU. WE TALKED ABOUT EUROPE AND CENTRAL BANK. WHAT CAN THE U.S. DO MORE? DO YOU SEE NEGATIVE RATES IN THE U.S.? DAVID: START WITH THAT ONE FIRST, NO, I DO NOT. WITHIN THE FED RESEARCH DEPARTMENTS IN THE VARIOUS CONVERSATIONS WE HAVE HAD WITH THEM, AND THE RESULTS IN EUROPE, I WOULD BE ASTONISHED IF THAT WAS EVEN CONSIDERED. THE DETRIMENTAL IMPACT ON THE MONEY MARKET AND BANKS AS A MIRROR OF CREDIT IS STILL NEGATIVE AND THERE ARE MANY OTHER THINGS YOU CAN DO BEFORE YOU GET THERE. FRANCINE: WHAT ARE THE MANY OTHER THINGS YOU CAN DO BEFORE YOU GET THERE? DAVID: PRINCIPALLY, ON THE CENTRAL BANKING SIDE AND EVEN ON THE FISCAL SIDE, MUCH THAT SHOULD BE DONE HAS BEEN DONE. THE NEXT THING IS ON THE MEDICAL SIDE, ONE HAS TO GET MORE CERTAINTY, BETTER DATA ON SUPPLIES, A BETTER SUPPLY OF VENTILATORS AND SHARING OF SUPPLIES ACROSS THE U.S. FISCAL AND MONETARY HAVE DONE WHAT YOU WOULD EXPECT THEM TO DO BUT THAT HAS NOT BEEN MATCHED BY A CORRESPONDING QUALITY OF ACTIVITIES ON THE HEALTH CARE SIDE. ONCE WE GET GOOD INFORMATION, THINGS WILL PICK UP. WE TALKED ABOUT RATES, I THINK YOU ARE RIGHT. THE OUTLOOK FOR THE ECONOMIES OVER THE NEXT TWO YEARS IS PESSIMISTIC DESPITE THIS PICKING UP, WHERE CONSUMPTION FELL SHORT. WE HAVE TO FUND AN ADDITIONAL 3 TRILLION, 4 TRILLION, 5 TRILLION WORTH OF DEBT AND LEVERAGE HAS GONE WAY UP. WHILE AFTER THE BIG DECLINE IN Q2 YOU SEE AN INCREASE IN Q1, THAT IS FISCAL EXPENDITURE AND THAT WILL NOT BE MAINTAINED IN 2021. WE ARE OPTIMISTIC AS FAR AS THE OUTLOOK FOR 2021. THE STIMULUS WILL HELP. THAT IS WHAT IS COMING THROUGH WITH INVESTORS. TOM: I HAVE AN IMPORTANT QUESTION THAT GOES BACK TO A DEUTSCHE BANK CONFERENCE IN WASHINGTON YEARS AGO. JOHN TAYLOR OF STANFORD SPOKE. IN EMERGING MARKETS, WHEN THINGS HAPPEN, THEY HAPPEN SUDDENLY. IS THAT ONE OF THE LITTLE THINGS THAT IS OUT THERE IN THIS CRISIS THAT WE CAN SEE IN E.M. UNRAVELING AS WE DID IN THE 1990'S? DAVID: YES, YOU COULD, AND IT IS DIFFERENT IN THE SENSE THAT WE SEE A SIGNIFICANT -- OF FUNDS COME UP MUCH MORE THAN THE CRISIS IN 2008. THAT IS ATTRIBUTED TO THE UNCERTAINTY OF WHAT THE VIRUS WILL DO IN COUNTRIES LIKE INDONESIA AND INDONESIA -- INDIA. WE HAVE TO SEE OVER THE NEXT MONTH OR TWO HOW WELL E.M. COUNTRIES DEAL WITH THE VIRUS. IT IS A PRECAUTIONARY MOVE TO SEE THIS CAPITAL COMING OUT NOW. THERE IS THE POTENTIAL FOR, NOT JUST BECAUSE OF FRAGILITY'S, DOMESTIC ECONOMIC PERFORMANCE IS A REAL RISK OF MORE SIGNIFICANT DECLINE COMING FROM THE EM SECTOR, MUCH MORE THAN FROM THE OTHER COUNTRIES. TOM: DAVID FOLKERTS-LANDAU WITH US. RIGHT NOW WITH A BUSY SCHEDULE, SCOTT THIEL OF PIMCO RUNNING THEIR FIXED INCOME SHOP WORLDWIDE, THANKS SO MUCH FOR HAVING TIME WITH US. THE ECONOMIC DATA CAN BE PREDICTED BUT IT IS AMAZING HOW YOU CAN SEE MARKETS REACT ON NEWS. WE WILL SEE THE MOST HISTORIC NUMBER IN AMERICAN LABOR MARKET HISTORY, A HUGE JUMP IN JOBLESS CLAIMS WIDELY PRESUMED. HOW WILL THE FIXED INCOME REACT TO THAT STATISTIC? SCOTT: THE DOWNDRAFT IN ECONOMIC ACTIVITY, BECAUSE THE WORLD HAS BEEN AT A STANDSTILL, WILL BE REMARKABLE. INVESTORS HAVE BEGUN TO PROCESS THAT AND THE REACTION TO THE FISCAL STIMULUS THAT THE U.S. IS DELIVERING, WHICH IN MANY RESPECTS GETS TO THE UNPRECEDENTED LABOR MARKET SUPPORT IN TERMS OF BENEFITS, IN TERMS OF COVERAGE, INCLUDING THE GIG ECONOMY, THE NUMBERS WE SEE NOW ARE EXPECTED TO BE VERY NEGATIVE. WE ARE EXPECTING POTENTIALLY YEAR ON YEAR NUMBERS TO BE 20% TO 25% ACROSS THE U.S. AS WE GO INTO THE NEXT QUARTER. FOR INVESTORS, THE SIGNPOST IS NOT ABOUT THE INFORMATION THAT IS COMING, BECAUSE CLEARLY THE SHOT TO THE ECONOMY IS GIGANTIC. IT IS ABOUT THE DURATION OF THE SLOW DOWN, THE SHUTDOWN. THAT IS THE ECONOMIC SIGNPOST THAT INVESTORS ARE LOOKING FOR, THE DURATION OF THE SLOWDOWN. THE FISCAL STIMULUS IS OBVIOUSLY GIGANTIC, BUT IF THE SHUTDOWN WERE TO BE MULTIPLE QUARTERS, CLEARLY MORE WILL BE NEEDED. FRANCINE: HOW DO YOU TRY AND FIGURE OUT HOW LONG THE SHUTDOWN IS? I AM NOT SURE HOW YOU MODEL IT. DO YOU GO TO THE CHINESE MODEL AND ASSUME YOU CAN START TESTING PEOPLE AND SEEING IF THEY CAN GO BACK TO WORK IF THEY HAVE HAD IT AND ARE IMMUNE? SCOTT: IT IS A DIFFICULT THING BECAUSE IT IS UNPRECEDENTED AND SHOCKING. ONE THING THAT DOESN'T WORK IS THE ECONOMIC MODELS THAT DEALT WITH NORMAL FISCAL -- CYCLICAL PROCESSES. THIS IS A GIANT SHOCK TO THE GLOBAL ECONOMY. ONE THING WE WOULD SAY IS THE MORE SEVERE THE SHUTDOWN, THE MORE LIKELY THE SHORTER IT IS, AND THUS THE RECOVERY IS LARGER. THE IDEA THAT YOU SHUT IT DOWN ENTIRELY AND THEN RECOVER, THE CHINA MODEL BEING A VERY APPLICABLE EXAMPLE, WOULD OBVIOUSLY BE THE MOST BENEFICIAL FROM AN ECONOMIC PERSPECTIVE. FRANCINE: WHERE DO YOU SEE TREASURIES AT THE END OF THE YEAR? SCOTT: I THINK IT IS DIFFICULT. IT IS UNLIKELY THEY ARE MATERIALLY HIGHER THAN WHERE WE ARE TODAY, IN THE SENSE THAT I DO BELIEVE THAT PART OF THE FISCAL -- PART OF THE WHOLE POLICY RESPONSE HERE IS GOING TO BE THAT RATES HAVE TO STAY IN A RELATIVELY CONTROLLED RANGE. IF TREASURY RATES WERE TO INCREASE AS A RESULT OF THE FISCAL SPENDING, THAT WOULD IMPACT THE NEGATIVE FEEDBACK LOOP AND FINANCIAL CONDITIONS THAT OFFSET SOME OF THE WORK WE ARE DOING. I CANNOT SEE THEM INTERIORLY HIGHER BECAUSE IN SOME RESPECTS IMPLICIT OR EXPLICIT, THE FED WILL BE EXERCISING CONTROL HERE. THAT IS CLEARLY PART OF WHAT IS HAPPENING. THAT WILL DEPEND ON ECONOMICS AND THE VIRUS BUT MATERIALLY HIGHER, I DON'T SEE IT. TOM: YOU NEED A MASSIVE VICTORY LAP, NO ONE SAW THIS PANDEMIC COMING BUT YOU REALLY CALLED FOR A MORE CAUTIOUS 2020 AND 2021. WHAT HAS CHANGED IS A CERTAIN BODY OF PEOPLE ARE ACTUALLY WORRIED ABOUT INFLATION DUE TO ALL THIS FISCAL STIMULUS, AND THAT LEADS TO THE PIMCO CONCEPT OF MR. GROSS' FINANCIAL REPRESSION. HOW REPRESSED WILL WE BE IF AND WHEN WE GET HIGHER INFLATION? SCOTT: I THINK WE HAVE TO KEEP IN MIND, THE PACKAGES ARE DESIGNED TO ADDRESS THE SHORTFALL IN THE ECONOMY. LET'S PUT THE NUMBERS INTO PERSPECTIVE. WE WOULD ESTIMATE GIVEN A BASELINE SCENARIO, A MEDIUM FORECAST FOR ECONOMIC DOWNTURN AND REEMERGENCE TOWARD THE MIDDLE OR THE END OF THE YEAR, THE INCOME SHORTFALL WILL BE ROUGHLY IN THE U.S. ECONOMY, $1.1 TRILLION. SO THE STIMULUS IS OBVIOUSLY GOING TO ADDRESS -- IT HAS TO BE MORE THAN THE SHORTFALL TO ADDRESS THE LONGER-TERM IMPLICATIONS. AND SO CONCERNS ABOUT INFLATION IS SOMETHING THAT I THINK FOR FARTHER INTO THE FUTURE. WE ARE TRYING TO GET THE ECONOMY REEMERGING AFTER BEING EFFECTIVELY SHUT DOWN. I UNDERSTAND YOU LOOK AT FISCAL SPENDING AND SAY THE COSTS HAVE TO GO UP, THE CURVE HAS TO STEEPEN, RATES HAVE TO GO HIGHER. PART OF THAT WILL BE MANAGED BY THE CENTRAL BANK BY KEEPING RATES AT A LEVEL CONSISTENT WITH THE FINANCIAL CONDITIONS THEY WANT TO SEE PRESENT. INFLATION I THINK IS SOMETHING WE SHOULD THINK ABOUT BUT NOT IN THE FORESEEABLE FUTURE. WE ARE TRYING TO REIGNITE THE ECONOMY BUT NOT TRYING TO OVER INFLATE IT. TOM: SCOTT THIEL, THANK. THE JOBLESS -- THANK YOU, HEAD OF FIXED INCOME AT PIMCO. THE JOBLESS CLAIMS -- WE THANK -- EXCUSE ME, BLACKROCK. WE DRIVE FORWARD THE CONVERSATION WITH THAT IMPORTANT JOBLESS CLAIMS NUMBER WITH ELLEN ZENTNER OF MORGAN STANLEY. SHE AND HER TEAM HAVE BEEN QUITE CAUTIOUS OF THE LINKAGE OF GDP GROWTH INTO THE LABOR ECONOMY. PLEASE STAY WITH US. THIS IS BLUE. > > THE LONGER THE VIRUS STAYS, THE MORE EXPENSIVE IT WILL BE. > > THE LONGER WE STAY OUTCOME, THE HARDER IT IS. > > WE HAVE ALL THE FIREPOWER WE NEED AND WILL USE IT. > > THAT WILL CREATE 4 TRILLION DOLLARS IF NEEDED TO SUPPORT AMERICAN BUSINESS AND WORKERS. > > PROVIDE $2000 A MONTH FOR THE NEXT FOUR MONTHS FOR WORKERS WHO LOSE THEIR INCOME. > > INSTRUMENTS WILL BE MADE AVAILABLE IF NEEDED. > > EVERYONE GETS A BACK SEAT AND ALL HANDS ARE ON DECK IN DEALING WITH COVID-19. > > OUR MAIN CONCERN NOW IS HOW LONG THE AGENCIES -- BUT THE SURVIVAL OF OUR PEOPLE. TOM: SOME OF THE VOICES WE HAVE SEEN ACROSS THE BLOOMBERG WORLD THE LAST COUPLE OF DAYS. FRANCINE LACQUA IN LONDON, I AM TOM KEENE IN NEW YORK, AND WITH US IS DAVID FOLKERTS-LANDAU, HEAD OF RESEARCH AND ECONOMIST WITH DEUTSCHE BANK. I HAVE GOT MY SUPPORT FOR THE ITALIAN ECONOMY, WHICH IS THE ADVANTAGE OF BEING HOME. THIS IS FRESH BREWED OUT OF ITALY. IT IS WAY BETTER. FRANCINE: WAY BETTER THAN YOUR FLOOR MANAGER AND MINE. YOU GET FRESH COFFEE AND I GET A THERMOS. TOM: DAVID FOLKERTS-LANDAU WITH US. GIVE US AN ANECDOTE OF THE 100, 400, 1000 PEOPLE UNDER YOUR UMBRELLA AT DEUTSCHE BANK. HOW IS THE CITY, THE GERMAN, THE NEW YORK WALL STREET DEUTSCHE BANK DOING WORKING OUT OF YOUR HOME? DAVID: ALL OF OUR 400 PEOPLE WITH THE EXCEPTION OF 10 OR SO ARE WORKING FROM HOME. IT WORKS VERY WELL. THE CONNECTIVITY AMONG THE PEOPLE IS EXCELLENT. THE INFORMATION FLOW, THE GLOBAL CONNECTEDNESS, AND THE CONNECTEDNESS TO OUR CLIENTS, WE HAVE HEARD NOTHING BUT -- AND THE WAY IT IS WORKING OUT. WE HAVE HEARD OF NO CASES FROM ANY OF OUR PEOPLE SO LET'S HOPE IT STAYS THAT WAY. THIS INCREASED OUR PRODUCTIVITY BECAUSE WE HAVE MORE TIME TO FOCUS, AND AS I SAID, VERY CLOSE TO CLIENTS AND GOOD FEEDBACK. TOM: DEUTSCHE BANK HAS HAD WORLD-CLASS OIL COVERAGE FOR YEARS. ADAMSON MINSKY YEARS AGO. GIVE US HOW THE RUSSIA-SAUDI ARABIA TENSION, HOW THAT FULL COLLAPSE IN GLOBAL GDP'S. DAVID: IT MAKES IT MORE DIFFICULT. THEY CANNOT HAVE EXPECTED THERE WOULD BE SUCH A TREMENDOUS DROP IN GLOBAL DEMAND FOR THEIR PHYSICAL PRODUCT AND IT SHOWS UP IN THE VALUATION OF ARAMCO. THIS IS VERY BAD TIMING AND A BAD COINCIDENCE FOR THEM. I DO NOT BELIEVE THAT WILL MAKE THEM CHANGE THEIR STRATEGIC OUTLOOK AND NEGOTIATIONS FOR THE RUSSIANS TO ARRIVE AT A REASONABLE OUTCOME, THAT WILL NOT HAPPEN ANYTIME SOON. FRANCINE: YOU KNOW WHAT I WANT TO ASK YOU ABOUT WAS THE PRICE OF OIL, IN PART BECAUSE OF THE DEMAND AND PART BECAUSE OF THE CORONAVIRUS. THIS IS ABOUT THE FIGHT BETWEEN THE SAUDIS AND RUSSIANS AND MARKET SHARE AND MARKET SUPPLY. I DON'T KNOW AT THE MARGINS HOW A LOW OIL PRICE ADDS TO THE SHOCK IN THE WORLD ECONOMY OR COULD BENEFIT IT. DAVID: IT AFFECTS COUNTRIES DIFFERENTIALLY. MY SENSE IS THAT BY AND LARGE OVER THE MEDIUM-TERM FOR THE INDUSTRIAL COUNTRIES, THE DEVELOPED WORLD, IT IS A GOOD THING, BUT THERE ARE SERIOUS ISSUES WITH AN EMERGENCY -- EMERGING MARKETS, COMPOUNDING PROBLEMS WE TALKED ABOUT EARLIER . DIFFERENTIATED OUTLOOK DEPENDING ON WHETHER YOU ARE A BIG IMPORTER OR EXPORTER. FRANCINE: DAVID, THANK YOU SO MUCH, AS ALWAYS FOR YOUR TIME, DAVID FOLKERTS-LANDAU OF DEUTSCHE BANK. THIS IS WHAT WE ARE LOOKING AT IN YOUR MARKETS. A LOT OF THE MARKET PARTICIPANTS FOCUSING ON THE EPIDEMIC, THE PANDEMIC, AND THE NUMBER OF INFECTED WORLDWIDE, DESPITE EXTRA STIMULUS PUT IN BY WORLD -- PUT IN BY CENTRAL BANKS. IF YOU ARE A BLOOMBERG USER, YOU CAN GO IN TO TV < GO > AND FOLLOW TOM AND I AND OUR OTHER ANCHORS AND NEWSMAKERS, AND IF YOU HAVE A QUESTION FOR A GUEST, JUST TYPE DIRECTLY UNDER THE VIDEO SCREEN, ASK A QUESTION TO THE GUEST AND WE WILL ASK IT ON YOUR BEHALF. ♪ VIVIANA: THIS IS BLOOMBERG "SURVEILLANCE." JP MORGAN'S EQUITY DERIVATIVE TRADERS ARE MAKING A HALL IN THOSE VIOLENT PRICE SWINGS. THEY GENERATED $1.5 BILLION IN REVENUE, ALMOST WHAT THEY REPORTED FROM ALL EQUITY MARKET BUSINESSES IN LAST YEAR'S FIRST Q. THE CORONAVIRUS IS SHIFTING FORTUNES ON WALL STREET. FORD BECOMING THE LARGEST SO-CALLED FALLEN ANGEL, S & P CUTTING FORWARD TO JUNK AT A TIME WHEN THE CORONAVIRUS IS ROCKING THE AUTO INDUSTRY. IT MAY CUT FURTHER. FORD SHUTTING ITS FACTORIES AROUND THE WORLD. THE S & P SAYS THAT IS PUTTING THE AUTOMAKER UNDER IMMENSE PRESSURE. THAT IS YOUR BLOOMBERG BUSINESS FLASH. TOM: THANK YOU SO MUCH, AND THAT FORD ITEM IS A HUGE DEAL, JUST AN AMERICAN SYMBOL TO SEE FORD MOTOR COMPANY CUT TO A JUNK RATING. THE DATA NOW IS SIMPLE, IT IS A LITTLE SOGGY AND EURO DOES BETTER THAN YEN. WHAT YOU NEED TO KNOW IS THE DATA IS WRAPPED AROUND 8:30 THIS MORNING AND A JOBLESS CLAIMS NUMBER THAT THE SURVEY HAS 1.5 MILLION TO 1.6 MILLION. MAYBE THAT IS WHY WE SEE A TWO YEAR YIELD COMING IN A LITTLE BIT. THE LOWER YIELD IS KEY FOR ME. FRANCINE: I AM INTERESTED IN THE JOBLESS DATA. YOU WONDER HOW MANY PEOPLE WILL HAVE BEEN IMPACTED BY THE CORONAVIRUS GIVEN THAT IT IS ONLY TWO TO THREE WEEKS THAT WE FELT IT. IT IS SOMETHING THAT MAYBE WILL ACCELERATE IN IMPORTANCE IN THE COMING WEEKS AND MONTHS. EUROPEAN STOCKS DECLINING AT THE STIMULUS PACKAGE AND LOOKING AT THE HUMAN IMPACT OF THE CORONAVIRUS OUTBREAK, WE HAD SOME DIFFICULT NUMBERS OUT OF EUROPE YESTERDAY. EUROPEAN SOVEREIGN DEBT ROSE AFTER THE ECB ANNOUNCED IT WILL SCRAP LIMITS. TOM: WE HAVE A CONVERSATION WITH A GENTLEMAN FROM JP MORGAN ON THE ALLOCATION FORWARD, DAVID ♪ TOM: THIS MORNING, IT IS A SINGLE NUMBER, A STATISTIC UNIMAGINABLE. AT 8:30, THE SINGLE WORST REPORT ON JOB LOSS IN THE HISTORY OF AMERICA. THE PANDEMIC, THE GLOBAL RECESSION, AND THE RESPONSE OF OUR LEADERS, DAVID KELLY JOINS US. WASHINGTON, WE HAVE A PROBLEM. HOW FAST CAN SENATE GET THE MONEY TO THE BARTENDERS AND UBER DRIVERS? IN NEW YORK, KEN LANN GONE. QUEENS AS HIT HARDEST. AS YOU ARE IN TOWN THE NEXT SUNNI -- IS YOU ARE TOWN THE NEXT NEW YORK CITY? THIS IS BLOOMBERG "SURVEILLANCE." WE WILL GET TO THE ECONOMICS, FINANCE, AND INVESTMENT. WHAT IS SO STUNNING WITH THE WINDOWS CRACKED OPEN ON THE ISLAND OF MANHATTAN, THE SOFT DRONE OF SIRENS EACH AND EVERY MOMENT OF EACH DAY. FRANCINE: IT IS TERRIBLE. A LOT OF US HAVE LOOKED AT CHINA WITH OUR COLLEAGUES, AND WE ARE PARTNERS FOR MANY MONTHS, AND ITALY. THE PATTERN, WE HAVE BEEN LOOKING AT CURVES AND WE ARE TRYING TO FLATTEN THE CURVE BY MAKING PEOPLE ISOLATE, BUT THE CURVE IS SIMILAR FROM COUNTRY TO COUNTRY WITH A LAGGARD OF ONE TO TWO WEEKS. YOU CAN LOOK BACK AT THE SIRENS AND MORE RESOURCES NEEDED FOR THE HEROES AND NURSES AND DOCTORS. TOM: WE HAVE SEEN A LOT HERE, AND BLOOMBERG GRAPHICS WITH A GREAT CHART OUT ON THE NUMBER OF BEDS IN THE FIVE BOROUGHS OF NEW YORK CITY. I LEARNED A LOT FROM THAT CHART , AND FROM THE NEW YORK TIMES, GREAT LOG CHARTS SHOWING THE PANDEMIC. ALL YOU NEED TO KNOW IS NEW YORK IS A STATE -- AS A STATE, NOT AS A CITY, IS ON THE WRONG SIDE OF THESE DIFFERENT GEOGRAPHIES AFFECTED BY THIS PANDEMIC. THERE WERE NEWS IN NEW YORK CITY, HERE IS VIVIANA HURTADO. VIVIANA: THE LARGEST ECONOMIC RESCUE IN U.S. HISTORY, THE SENATE APPROVING A $2 TRILLION PACKAGE AIMED AT STOPPING THE DAMAGE FROM THE CORONAVIRUS OUTBREAK. MORE THAN 150 MILLION AMERICAN HOUSEHOLDS WILL RECEIVE CHECKS AND GIANT LOANS WERE SET UP TO HELP BUSINESSES. JEROME POWELL WILL SIT DOWN THIS MORNING FOR A RARE LIVE TV INTERVIEW, INTERVIEWED ON "THE TODAY SHOW" AT 9:00 A.M. THE FED IS DEPLOYING UNPRECEDENTED TOOLS TO PREVENT THE HEALTH CRISIS FROM BECOMING A FINANCIAL ONE. A TRAGEDY AND WHO TO LET DIE FIRST, SPANISH DOCTORS ARE BEING FORCED TO CHOOSE. INTENSIVE CARE WARDS ARE OVERFLOWING AND RULES DICTATE OLD PEOPLE MISS OUT TO YOUNG PEOPLE WHO HAVE A BETTER CHANCE OF SURVIVAL. THE NUMBER OF DEATHS RISING IN SPAIN FASTER THAN ITALY. JOE BIDEN SIGNALING HE THINKS THE RACE FOR THE DEMOCRATIC PRIMARY IS OVER, REJECTING A DEBATE NEXT MONTH WITH BERNIE SANDERS. SANDERS WANTS A DEBATE TO FOCUS ON THE CORONAVIRUS. 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 VIVIANA HURTADO. THIS IS BLOOMBERG. TOM: THANKS SO MUCH. THE MARKET UP BIG A FEW DAYS AGO AND YESTERDAY, AND THE SENATOR FROM VERMONT PULLED IT BACK A LITTLE BIT. FUTURES NEGATIVE, THE DOLLAR WEAKER. INTERESTING NUANCES. WE WILL GET TO DAVID KELLY ON THE ECONOMICS. I REMIND EVERYONE THAT THE VIX IS WELL ABOVE 60. FRANCINE: LOOKING AT EUROPEAN STOCKS, THEY ARE FOLLOWING THE PATTERN IN U.S. FUTURES, LOOKING AT THE NUMBER OF DEBTS AND I WANT TO SHOW EUROPEAN SOVEREIGN DEBT RISING AFTER THE ECB ANNOUNCED IT WILL SCRAP LIMITS ON BOND PURCHASES. LIKE MANY DECISIONS FROM CENTRAL BANKS AND AUTHORITIES, IT IS A LANDMARK DECISION THAT GIVES IT ALMOST UNLIMITED FIREPOWER TO FIGHT THE ECONOMIC FALLOUT FROM THE VIRUS. PEOPLE ARE WORRIED ABOUT THE AMOUNT OF TIME YOU SUSPEND THE ECONOMY, THE AMOUNT OF TIME OF LOCKED DOWN WHEN PEOPLE CANNOT GO TO WORK. EURO STRENGTHENING IN THE DOLLAR HEADING FOR A THIRD DAY OF DOWNWARD. TOM: JOINING US NOW, A GENTLEMAN WHO STANDS A STRATEGIC VIEW OF INVESTMENT AND FINANCE AND ALSO FIRST-RATE ECONOMICS, DAVID KELLY OF JP MORGAN. I REALLY WANT TO FOCUS NOW ON THIS NUMBER AT 8:30. AS THE NUMBER ONE POINTS -- IS THE NUMBER 1.6 MILLION? I DON'T KNOW WHERE THE TEAM AT JP MORGAN IS, BUT IS THAT NUMBER INDICATIVE OF SELECTED GEOGRAPHIES IN AMERICA, OR IS THAT A NATIONWIDE STATISTIC? DAVID: IT IS A NATIONWIDE STATISTIC. IT IS INDICATIVE OF WHAT IS GOING ON IN A PART OF AMERICAN BUSINESS, JOBS IN RETAIL, LEISURE, RESTAURANTS, HOTEL, AND TRAVELING, THESE BUSINESSES WILL SEE MASSIVE LAYOFFS. THEY HAVE SEEN MASSIVE LAYOFFS. A LOT OF THESE WORKERS MAKE WELL BELOW AVERAGE WAGES BUT THEY CANNOT APPLY FOR UNEMPLOYMENT BENEFITS. -- THEY CAN APPLY FOR UNEMPLOYMENT BENEFITS. THEY HAVE NO MODEL THAT WILL ESTIMATE THESE NUMBERS. WE ARE LOOKING FROM INDIVIDUAL STATES ABOUT IT BUT IT LOOKS LIKE 2 MILLION AND WE WILL GET A FEW MORE WEEKS OF THIS BECAUSE MANY PEOPLE SIMPLY CANNOT FILE. THE SYSTEMS ARE BREAKING DOWN IN STATES THAT IT WILL TAKE A WHILE. THE NEXT FEW WEEKS WILL BE GRIM ON UNEMPLOYMENT. TOM: YOUR TEAM PUBLISHED IN THE LAST SIX OR EIGHT HOURS THE FIRST GOOD WALK-THROUGH OF THIS STIMULUS I HAVE SEEN, AND MY MAJOR TAKE AWAY IS IT ONLY GETS US OUT WEEKS, AT THE MOST MONTHS. DO YOU AND YOUR TEAM ASSUME THERE WILL BE A WHOLE ANOTHER ROUND OF WASHINGTON ASSISTANCE? DAVID: I THINK THERE PROBABLY WILL BE. THIS IS SORT OF NYQUIL FOR THE SOCIAL DISTANCING RECESSION BECAUSE IT WILL NOT FIX THE RECESSION, IT WILL DAMPEN DOWN THE SYSTEMS. YOU WILL HAVE HUGE UNEMPLOYMENT THAT COULD GO ABOVE 10% BUT A LOT OF THE HARDSHIP ASSOCIATED WITH THAT WILL NOT OCCUR. A LOT OF COMPANIES ESSENTIALLY HAVE NO REVENUE AND MANAGED TO AVOID BANKRUPTCY. THIS IS DESIGNED, THE CASH PAYMENTS, THE UNEMPLOYMENT BENEFITS GET YOU A FEW MONTHS, BUT IF WE HAVE A VACCINE THEY WILL HAVE TO COME BACK AGAIN WITH SOME MORE. FRANCINE: I LIKE THE WAY YOU SAY THIS IS BASICALLY SUSPENDED ANIMATION. HOW LONG CAN WE SUSPEND THE ECONOMY WITHOUT HAVING REALLY LONG-TERM CONSEQUENCES, THREE MONTHS OR SIX? DAVID: IT COULD BE LONGER. WE ARE ADAPTABLE, INVENTIVE PEOPLE AND WE WILL GET BY THIS , INCREDIBLY BORING FOR MOST PEOPLE TO NOT BE ABLE TO WORK AND DO WHAT THEY NORMALLY DO. ONCE WE HAVE A VACCINE AND CAN GO TO CVS OR WALGREENS AND GET THE VACCINE, I'M GOING TO GO AND PARTY IN THE WHOLE COUNTRY IS. AS SOON AS YOU GET A VACCINE, YOU WILL GET A SURGE IN ACTIVITY . TO CHARACTERIZE THIS RECESSION, A FULL STALL AND A SURGE. I THINK WE WILL GET BACK TO BUSINESS PRETTY FAST. FRANCINE: BUT IF YOU LOOK AT SECTORS, AIRLINES, HOSPITALITY, THEY CANNOT JUST LIVE IN SUSPENSION FOR THREE TO SIX MONTHS. THERE ARE A NUMBER OF COMPANIES THAT COUNTRIES MAY HAVE TO TAKE OVER, NATIONALIZED TO KEEP ALIVE. DAVID: IF YOU LOOK AT A LOT OF WHAT IS IN THIS BILL, THEY ARE SMALL BUSINESS GRANTS BECAUSE YOU DON'T HAVE TO PAY BACK RENT, UTILITY, AND PAYROLL, AND THERE WILL BE A FAIR AMOUNT OF GRANTS TO THE AIRLINES. THE GOVERNMENT SHOULD STAY OUT OF THE BUSINESS OF TAKING EQUITY STAKES BECAUSE THE GOVERNMENT DOES NOT KNOW HOW TO RUN THESE COMPANIES ANYWAY. HOW CAN YOU FAIRLY DOLE THE MONEY OUT TO WHAT BUSINESSES WOULD BE DOING HAD THIS NOT OCCURRED? THAT IS A DIFFICULT AND SLOPPY BUSINESS AND THEY WILL MAKE SOME MISTAKES AND I HOPE THE GOVERNMENT WILL STAY OUT OF IT, BUT I DISAGREE WITH YOU. THE HOTEL WILL NOT DISAPPEAR. THEY PROBABLY WANT A STAFF TO KEEP IT CLEAN AND MAKE SURE IT IS IN ORDER, YOU WILL DO THINGS LIKE THAT, BUT YOU CAN KEEP IT IN SUSPENDED ANIMATION FOR A WHILE. IT IS THE EQUIVALENT OF A HURRICANE ON A NATIONAL BASIS. IT WILL BE BACK UP AND RUNNING. TOM: DAVID KELLY WITH US OF JP MORGAN, I CANNOT CONVEY ENOUGH SOME OF THE INFORMATION WE ARE SEEING AT 8:30 ABOUT HOW THIS PANDEMIC IS AFFECTING THE AMERICAN ECONOMY. LATER ON, ON THE IT CAN -- EQUITY MARKETS, THIS IS ♪ TOM: GOOD MORNING, EVERYONE, BLOOMBERG'S "SURVEILLANCE," FROM THE EDGE OF CENTRAL PARK AND WEST LONDON. A GLOBAL CRISIS AND YET IN AMERICA, INTERESTING NUANCES IN THE LAST 24 HOURS, NOT ONLY THE FOCUS ON NEW YORK CITY BUT OTHER CHALLENGING GEOGRAPHIES ACROSS THE NATION, AND ALL OF IT DOVETAILED INTO THE MARKETS AND WHAT GLOBAL WALL STREET SEAS AND THE KEY ECONOMIC DATA AT 8:30. EMILY WILKINS WAS NOT SLEEPING, ANOTHER NIGHT OF POLITICS AND SENATE IN AGREEMENT. WHEN DO OUR VIEWERS AND LISTENERS, WHEN DO LOWER PAID PEOPLE IN AMERICA GET RELIEF, THE CHECK IN THE MAIL? EMILY: NOT QUITE YET. THE SENATE DID PASS THE 2.2. -- $2.2 MILLION STIMULUS WHICH INCLUDES CHECKS FOR AMERICANS, HELP FOR SMALL BUSINESSES AND HOSPITALS, AND NOW IT WILL GO TO THE HOUSE WHERE THEY WILL VOTE ON FRIDAY TO GIVE MEMBERS WHO WANT TO COME AND DEBATE ON THE BILL TIME TO GET BACK TO WASHINGTON, D.C. THE HOUSE IS NOT HERE. THEY HAVE BEEN HOME A COUPLE OF WEEKS, AND HOUSE LEADERS, SPEAKER PELOSI WAS TRYING TO FIGURE OUT A WAY TO MAKE SURE THEY CAN HOLD A VOTE. SOME MEMBERS ARE CURRENTLY IN QUARANTINE BECAUSE THEY HAVE TESTED POSITIVE FOR THE CORONAVIRUS, NOT TO COME BACK TO THE CHAMBER. TOM: LET ME GIVE YOU A SIMPLISTIC QUESTION, AND FOR AMERICANS AND OUR GLOBAL AUDIENCE IT IS GERMANE. IS THIS NOTHING MORE THAN THE DEMOCRATIC PARTY IS PROLABOR, PRO-WORKING-CLASS, AND THE REPUBLICANS ARE NOT? EMILY: THE BILL THAT WAS FINALLY PASSED, THERE WERE A LOT OF NEGOTIATIONS. WE CAN EXPECT TO SEE THE BILL THAT CAME OUT ON SUNDAY NIGHT THAT DID NOT HAPPEN, BUT THIS PAST 96-0 AND IT WOULD NOT HAVE BEEN -- IT WOULD HAVE BEEN 100-0 IF THERE HAD NOT BEEN SENATORS WHO COULD NOT COME TO THE FLOOR. THIS IS A BIPARTISAN PACKAGE. YES, DEMOCRATS ARE USUALLY THE PARTY OF UNIONS AND LABOR, REPUBLICANS TRADITIONALLY THE PARTY FOR BUSINESS AND CORPORATIONS, BUT IN THE CENTER IS A BIPARTISAN MEASURE. FRANCINE: THANK YOU SO MUCH, EMILY WILKINS OF BLOOMBERG GOVERNMENT. WE ARE HEARING FROM THE WORLD HEALTH ORGANIZATION SAYING IT IS TOO SOON TO CALL IT A PEAK IN ITALY EVEN THOUGH THE NUMBER OF DEATHS HAVE GONE DOWN. WE GET A DAILY UPDATE ON THE NUMBER AFFECTED TEST INFECTED AND DEATHS -- INFECTED AND DEATHS. THE ECB STARTED AN EMERGENCY BOND BUYING PROGRAM TODAY AND BOND SALES TOPPED 15 BILLION EUROS. IT IS THE BUSIEST WEEK SINCE JANUARY. LET'S GET BACK TO DAVID KELLY. WHEN YOU LOOK AT SOME THINGS THE ECB HAS PUT IN PLACE, IT SEEMS TO BE LIMITLESS. THIS IS UNCHARTED TERRITORY. ARE YOU CONCERNED ABOUT WHAT HAPPENS AFTERWARDS OR JUST FOCUSED ON GETTING THROUGH THE CRISIS? DAVID: WE HAVE TO THINK ABOUT WHAT HAPPENS AFTER THE CRISIS, AS INVESTORS AND COLUMNISTS. THE FIRST THING I WOULD SAY BOTH IN REGARD TO EUROPE AND THE UNITED STATES, WHAT BUSINESSES AND WORKERS NEED OUR GRANTS AND LOANS, AND THE CENTRAL BANK -- THE CENTRAL GOVERNMENT IS THE GRANT DEPARTMENT. THAT IS WHY WE FOCUS ON WHAT THE GOVERNMENT CAN DO FOR FISCAL STIMULUS. WHEN WE DO HAVE AN EFFECTIVE VACCINE, LET'S SAY IT IS A YEAR FROM NOW, ONCE WE HAVE THAT, WE WILL SEE A SIGNIFICANT UPTICK IN ACTIVITY AROUND THE WORLD. THERE IS THE DANGER THAT IF AT THAT POINT WE DON'T PULL BACK THE STIMULUS, WE ARE NOT CAREFUL ABOUT HAVING TOO MUCH LIQUIDITY, WE COULD END UP WITH INFLATION. GOVERNMENTS AROUND THE WORLD CONTINUE TO EXPAND THEIR DEBT, AS IN THE UNITED STATES. WE EXPECT THE BUDGET TO GO OVER 15% OF THE GDP FOR THE YEAR. YOU COULD HAVE HIGHER INTEREST RATES AND INFLATION AND PEOPLE WONDER, WILL THE GOVERNMENT BE ABLE TO PAY THIS BACK? WE HAVE TO BE CAREFUL AND DISCIPLINED WHEN WE CAME -- COME OUT OF IT, BUT RIGHT NOW BEING AS GENEROUS AS POSSIBLE IS THE RIGHT THING TO DO. FRANCINE: WHEN WILL MARKETS START THINKING ABOUT WHAT YOU JUST LAID OUT CLEARLY? DAVID: MARKETS ALREADY HAVE RECOGNIZED THE BENEFITS OF THIS FISCAL STIMULUS. I CAN SEE THAT IN THE U.S. EQUITY MARKET, BUT WE ARE NOT NECESSARILY PASSED THE WORST IN TERMS OF MARKET SHOPS. MARKETS GRAPPLE WITH THE EXPONENTIAL MASS OF THE VIRUS AND IF WE ARE TALKING ABOUT CASES WHICH WORLDWIDE GO INTO THE TENS AND HUNDREDS OF MILLIONS COME THAT COULD SHOCK MARKETS. MARKETS COULD BE SHOCKED BY THE UNEMPLOYMENT RATE JUMPING OVER 10%, SO IT IS QUITE POSSIBLE, AND WE OFTEN SEE IN THIS KIND OF FINANCIAL EVENT, YOU THINK IT IS BOTTOMED AND MONTHS LATER YOU ARE LOWER, BUT THE LONG-TERM INVESTOR NEEDS TO LOOK PAST THIS CRISIS AND SAY, LET'S NOT THINK OF WHERE WE ARE IN 2020. IT IS A WRITE OFF FROM AN ECONOMIC AND FINANCIAL PERSPECTIVE. 2021, 2022, ALONG THE RECOVERY. WHAT DOES IT LOOK LIKE AFTER WE GET PAST THIS? THERE MAY WELL BE RISK ASSETS WHICH HAVE BEEN SO OVERSOLD IN THEIR WILL BE SOME OPPORTUNITY -- AND THERE WILL BE SOME OPPORTUNITIES. TOM: WHAT OF THE STRATEGY SIDE? IT DOVETAILS NICELY IN WITH YOUR WORK, STEPHEN WHITING AS WELL BEING SO QUALIFIED AT CITIGROUP. IS THERE AN ELASTICITY TO WHAT CORPORATIONS CAN DO ON INCOME STATEMENTS WITH DIMINISHED NOMINAL GDP? HOW ELASTIC ARE THEY TOO WOULD JUST TO A REVENUE SHORTFALL -- ADJUST TO A REVENUE SHORTFALL? DAVID: THE KEY THING IS WHAT DO THEY DO WITH PAYROLL? YOU HAVE GOT PAYROLL, RENT, UTILITIES, COSTS OF GOODS SOLD. IN TERMS OF PAYROLL, DO THEY KEEP PEOPLE ON THE PAYROLL AND EXCEPT GOVERNMENT GRANTS? THE AIRLINE INDUSTRY IS HAVING ITS ARM TWISTED TO DO THAT. THAT IS ONE WAY TO GO SO LONG AS THE GOVERNMENT COVERS YOUR COST. IF NOT, YOU CAN RAMP DOWN THE COSTS. BUSINESSES THAT ARE EXTREMELY PROFITABLE, LOSS OF CORPORATE EQUITY EMBEDDED IN BALANCE SHEETS, THEY SHOULD HAVE SOME ABILITY TO RIDE OUT THE STORM AT A LOW LEVEL. IT IS LIKE ECONOMY SEDATION BUT IF YOU DO IT RIGHT YOU DO NOT HAVE THAT MUCH CASH FLOW YOU WILL BURN THROUGH IF YOU ARE NOT PAYING PAYROLL OR COST OF GOODS SOLD. IT IS PAYING A DIMINISHED LIGHTING BILL AND THE RENT. TOM: I LIKE THE LABOR FOCUS AND THAT DOVETAILS NICELY INTO WHAT WE WILL SEE AT 8:30 THIS MORNING. DAVID KELLY WITH JB MORGAN -- JP MORGAN. ON BLOOMBERG RADIO AND ON TELEVISION, TV < GO > , IF YOU HAVE A TERMINAL IT IS A CONVENIENT WAY TO SEE WHAT WE DO, INCLUDING MANUS CRANNY'S CONVERSATION WITH SERGIO ERMOTTI. PLEASE STAY WITH US FROM LONDON AND NEW YORK, "SURVEILLANCE" AS ♪ VIVIANA: YOU ARE WATCHING BLOOMBERG "SURVEILLANCE." THE BIG JAPANESE AUTOMAKERS ARE TAKING HITS AND THEIR CREDIT RATINGS, MOODY'S DOWNGRADING TOYOTA AND -- AFTER S & P CUT FORD TO JUNK. THE LOCKDOWN OF COUNTRIES ACROSS THE WORLD CAUSING AN UNPRECEDENTED COLLAPSE IN OIL DEMAND. GOLDMAN SAYS ANY AGREEMENT WILL BE TOO LITTLE, TOO LATE. THAT IS YOUR BLOOMBERG BUSINESS FLASH. TOM: THANK YOU SO MUCH, GREATLY APPRECIATED. EQUITIES, BONDS, CURRENCIES, COMMODITIES. COMMODITIES SOGGY TODAY, BUT I WANT TO FRAME IT INTO THIS JOBS NUMBER. EQUITIES ARE WEAKER AND EVEN WITH THE GYRATIONS OF CREDIT, THE TWO YEAR YIELD IS LOWER. VICKS STILL ABOVE 60 AND THE BLOOMBERG FINANCIAL CONDITIONS INDEX IS SIX STANDARD DEVIATIONS OUT. FRANCINE? FRANCINE: EUROPEAN. GOVERNMENT BONDS AND -- EUROPEAN STOCKS DECLINING. GOVERNMENT BONDS AND YEN ADVANCING. WE HAVE A BOE DECISION TODAY. GOVERNOR BAILEY HAS BEEN IN CHARGE FOR A WEEK AND BOE WATCHERS HAVE GIVEN SOME ANNOUNCEMENTS ALREADY. ♪ ♪ TOM: GOOD MORNING, EVERYONE. BLOOMBERG "SURVEILLANCE." WE WELCOME YOU WORLDWIDE. OUR TEAM IS DOING A FANTASTIC JOB PIECING THIS TOGETHER. I CANNOT TELL YOU WHAT IT TAKES GETTING SERGIO ERMOTTI TEST SERGIO ERMOTTI AND MANUS CRANNY -- SERGIO ERMOTTI AND MANUS CRANNY. TOM KEENE AND FRANCINE LACQUA, EVERYONE FOCUSED ON 8:30 AND A HISTORIC JOBS NUMBER. WITH US, DAVID KELLY OF JP MORGAN. HOW WILL THE FINANCIALS DO? ONE OF THE GREAT DEBATES IS PEOPLE SAYING, -- I DON'T WANT YOU TO TALK TO JP MORGAN OTHER THAN MR. DIMON HAS GOOD HEALTH -- BUT HOW SHOULD THE FINANCIALS DO? DAVID: THEY WILL BE WELL-POSITIONED. THIS WILL BE ATTEMPTS BY GOVERNMENTS TO GIVE GRANTS TO BUSINESSES AS OPPOSED TO STRONG-ARMING BANKS INTO LENDING THEM, THAT SHOULD HELP THE BANKS. THE BANKS ARE WELL-CAPITALIZED AND HAVE SUSPENDED BUYBACKS. IF YOU LOOK AT DIVIDEND PAYMENTS , DIVIDEND PAYOUT RATIOS ARE LOW SO THEY CAN KEEP PAYING DIVIDENDS FOR LONG TIME EVEN IN A DOWN MARKET. WE HAVE A LITTLE BIT OF A SLOPE IN THE YIELD CURVE, NOT MUCH AT EIGHT BASIS POINTS. I THINK THAT WILL STEEPEN UP. I THINK THE FINANCIAL SECTOR ALONG WITH THE HEALTH CARE SECTOR AND UTILITY SECTOR SHOULD DO WELL IN THIS IN RELATIVE TERMS. IT IS NOT THE EPICENTER LIKE IT WAS THE LAST TIME AROUND. FRANCINE: THERE WERE CONCERNS ABOUT ILL LIQUIDITY IN THE MARKET. ARE THOSE CONCERNS NOW GONE? BECAUSE OF THE CENTRAL-BANK ACTION, WHAT IF ALL THE LOANS AND GUARANTEES COULD NOT BE REPAID? DAVID: CENTRAL-BANK ACTION IS IMPORTANT BECAUSE THERE IS AN ISSUE OF THE CREDIT WORTHINESS OF VARIOUS LOANS. WHEN YOU TALK ABOUT LIQUIDITY VERSUS SOLVENCY, ON SOLVENCY, FEDERAL AID WILL HELP AVOID GENUINE DEFAULTS OF A LOT OF THESE BUSINESSES. WE HAVE NEVER SEEN CENTRAL BANKS BE SO AGGRESSIVE. SHORT OF HIRING HELICOPTERS AND DROPPING DOLLAR BILLS, I CANNOT THINK WHAT ELSE THE FEDERAL RESERVE COULD HAVE DONE. IT IS A VIRTUAL ALPHABET SOUP OF PROGRAMS WORKING. THE FEDERAL RESERVE SAID THEY WILL DO WHATEVER THEY CAN TO ENSURE LIQUIDITY. DO YOU PAY AN INFLATION PRICE DOWN THE ROAD FOR THAT? FRANCINE: DAVID KELLY OF JP MORGAN ASSET MANAGEMENT. LET'S GET TO NEW YORK CITY. VIVIANA: HISTORY BEING MADE WITH A UNANIMOUS VOTE, LAWMAKERS APPROVING A $2 TRILLION RESCUE PLAN TO KEEP FAMILIES AND COMPANIES AFLOAT. THE PRESSURE IS ON THE DEMOCRATIC-CONTROLLED HOUSE SET TO VOTE ON THE BILL TOMORROW. THE STIMULUS PACKAGE COULD RESULT IN THE FED HAVING AS MUCH IS $4.5 TRILLION TO KEEP CREDIT FLOWING. THE MONEY COULD BE USED FOR DIRECT LOANS TO AMERICAN BUSINESSES. THE BILL INCLUDES 450 $4 BILLION FOR THE TREASURY TO BACKSTOP EMERGENCY ACTIONS. THE NUMBER OF DEATHS IN THE U.S. FROM THE CORONAVIRUS HAVE SURPASSED 1000, THE WORLD HEALTH ORGANIZATION WARNING THE U.S. COULD BE THE NEXT EPICENTER OF THE GLOBAL OUTBREAK. ITALY SUFFERING THE HIGHEST DEATH TOLL, MORE THAN 7500 PEOPLE DYING. INDIA UNVEILING A STIMULUS PACKAGE INCLUDING FOOD SECURITY. MIGRANT WORKERS WILL RECEIVE HELP. INDIA IS ON A TOTAL LOCKDOWN FOR THREE WEEKS. 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 VIVIANA HURTADO. THIS IS BLOOMBERG. TOM: THANK YOU SO MUCH. THE MATHEMATICS OF THE MOMENT IS EXTRAORDINARY, AND WE WILL GET TO ELLEN ZENTNER. OUT OF SPAIN, ONE OF THOSE LITTLE TEA LEAVES, THOSE DYNAMICS OF MAY A BENDING OF THE CURVE, SPAIN SAYING -- MAYBE A BENDING OF THE CURVE, SPAIN SAYING THERE WERE LESS DEATHS. JUST APPALLING ON THE STATE OF NURSING HOMES WITHIN SPAIN, NOT SPEAKING ON ALL OF THE NURSING HOMES, BUT WE ARE GRASPING AT STRAWS TRYING TO FIND GOOD MATHEMATICS. FRANCINE: I HAVE TO SAY, ESPECIALLY WHEN WE LOOK AT THE ITALIAN CASE, I HAVE BEEN TRYING TO READ BUT I AM NOT AN EXPERT. ONE THING THAT CAUGHT MY EYE IS IN ITALY, THE INFECTION POINTS WERE REALLY THE HOSPITALS SO YOU HAD OVERWORKED STAFF THAT DID NOT HAVE THE RIGHT EQUIPMENT, AND THESE MEDICAL -- THIS MEDICAL JOURNAL IS ARGUING IT HAS TO BE TREATED MORE LIKE A HUMANITARIAN CRISIS AND TO TREAT PEOPLE AT HOME SO YOU DON'T GO TO HOSPITAL NOT SICK AND BECOME SICK. SOMETHING TO KEEP IN MIND, BUT A NUMBER OF PEOPLE COMING OUT WITH DIFFERENT THINGS TO LOOK AT. TOM: THE ACCLAIM OF ELLEN ZENTNER HAPPENED YEARS AGO, HER CAREFUL ANALYSIS OF THE CONSUMER IN AMERICA, AND PART OF HER JOB IS THE CONSUMER NEEDS A JOB AND A PAYCHECK TO CONSUME. ELLEN ZENTNER OF MORGAN STANLEY JOINS US NOW. I WANT YOU TO FRAME THE AGNI -- AGONY, THE BEHAVIORAL ECONOMICS OF 1.6 MILLION OR MORE JOBLESS CLAIMS. TRANSLATE THAT INTO ZENTNE R ECONOMICS. ELLEN: WE HAVE IT AROUND 3.4 MILLION LATER THIS MORNING, AND IN THE MILLIONS SHOULD NOT SURPRISE ANYONE. IT IS JUST ALARMING. IT IS NOT JUST A KNOWN FACTOR FOR THOSE WHO LOST THEIR JOBS LAST WEEK. WE ARE LOOKING AT WHO GOT LAID OFF LAST WEEK AND IT CONTINUED INTO THIS WEEK BUT WE DO NOT HAVE THOSE NUMBERS YET. IT IS ALARMING FOR ANYONE TO HEAR THAT THAT MANY PEOPLE HAVE BEEN LOSING THEIR JOBS. YES, WE HAVE GOTTEN THE LEGISLATION THAT HELPS SHORE UP THE HOLE IN INCOME THAT CREATES. THEY STILL HAVE TO WAIT WEEKS TO GET THOSE FUNDS, AND FOR MANY, IT MIGHT MEAN THE DIFFERENCE BETWEEN BEING ABLE TO PUT FOOD ON THE TABLE OR NOT. IT ADDS TO THE UNCERTAINTY BEHIND THIS ALREADY UNCERTAIN TIME OF HOW TO DEAL WITH THE VIRUS. TOM: WHAT IS SO IMPORTANT, AND I LOVE WHAT VIVIANA HURTADO SAID, THEY ARE CALLING IT A RESCUE PACKAGE, THIS IS PITCHED AS STIMULUS. WHAT I AM HEARING FROM MORGAN STANLEY AND JP MORGAN ANOTHER'S IS THIS IS NOTHING MORE DUTCH AND OTHERS IS THIS IS NOTHING MORE THAN AN INCOME PLACEMENT BILL. IT IS NOT REALLY STIMULUS, IS IT? ELLEN: IT IS NOT. IT IS PATCHWORK NOW THAT LAYS THE FRAMEWORK FOR LATER. THERE WILL BE SOME THAT GET THIS REPLACEMENT INCOME TO PUT FOOD ON THE TABLE. SOME WILL BE GETTING DIRECT CHECKS FROM THE GOVERNMENT AND SOME BENEFITS THAT THEY SIMPLY CANNOT SPEND ALL OF IT BECAUSE WE CANNOT GO OUT AND DO ANYTHING , SO THE SAVINGS RATE WILL JUMP HIGHER ON THIS, AND THE SAVINGS RATE WILL BE THERE FOR WHEN WE ARE ALLOWED TO START PULLING BACK ON SOME OF THE SOCIAL DISTANCING AND GOING BACK TO WHAT A NEW NORMAL LOOKS LIKE AND HAVE THE FUNDS AVAILABLE. THAT IS THE FIRST TIME IT COULD LOOK LIKE STIMULUS, AND THAT IS HOW WE HAVE OURSELVES CLIMBING OUT OF THIS HOLE GRADUALLY. AS WE GO INTO 2021, WE HAVE ZERO INTEREST RATES BEHIND US, FISCAL STIMULUS BEHIND US, MONETARY HELP BEHIND US, AND IT LAYS THE FOUNDATION FOR THE STRONGER GROWTH WE EXPECT IN 2021. FRANCINE: HOW QUICKLY DO THOSE CASH HANDOUTS IN THE U.S. HAVE TO ARRIVE? ELLEN: IT LOOKS LIKE IT WILL BE A FEW WEEKS BEFORE THOSE CHECKS GET INTO THE HANDS OF FOLKS THAT NOT ONLY LOST THEIR JOBS BUT ALSO ARE STILL GETTING DIRECT PAYMENTS, THROUGH THE UNEMPLOYMENT SYSTEM AND DIRECT PAYMENTS COMING FROM THE GOVERNMENT. THE SYSTEM WAS OVERWHELMED LAST WEEK, STATE AFTER STATE REPORTING HOW MANY PEOPLE HAD FLOODED THE SYSTEM FILING FOR UNEMPLOYMENT BENEFITS THAT SOME STATES HAD TO GO BACK TO PEN AND PAPER. HOW ANCIENT. IF THAT MEANS SOME OF THOSE CLAIMS HAD TO BE PUSHED INTO THIS WEEK TO BE PROCESSED. LET'S CALL IT A MONTH TO BE SAFE , TO ASSUME THAT PEOPLE GET THEIR CHECKS TO REPLACE THAT INCOME, AND I DON'T HAVE TO TELL YOU HOW MUCH SAVINGS THE AVERAGE FAMILY HAS IN THE U.S. IT IS ALMOST A SUBSISTENCE LIVING IF YOU COMPARE IT TO OTHER COUNTRIES. FRANCINE: WHAT IS THE RANGE OF UNEMPLOYMENT THAT WE WILL SEE IN COMING WEEKS AND MONTHS? ELLEN: IN OUR FORECAST, WE HAVE A STEEP DROP IN THE ECONOMY AS WE ARE ENTERING THE SECOND QUARTER, 30% DOWN IN GDP. WE HAVE AN UNEMPLOYMENT RATE THAT IS THE STEEPEST 1 -- DROP ON RECORD. THE RECORDS DATE BACK TO THE 1940'S. IT IS INCREDIBLE. WE HIT A WALL, SO THE NUMBERS SHOULD NOT SURPRISE ANYONE. IT IS HOW DO WE GET THAT UNEMPLOYMENT RATE TO COME DOWN AFTER THAT? THIS IS WHAT WE ARE LAYING THE FOUNDATION FOR, TO HELP BUSINESSES COME BACK UP. TOM: YOU HAVE HAD INDUSTRY-LEADING RESEARCH ON THIS IN THE LAST TWO WEEKS. WE HAVE GONE THROUGH THIS POLITICAL PROCESS. WHEN ARE WE TOWARDS A BOND OFFERING OF FIFTY-YEAR YEAR OR PERPETUITY PANDEMIC PAPER TO PUSH 15 OR 20% OF NOMINAL GDP INTO THE ECONOMY, UNDERSTANDING THAT AT SOME POINT A VIRUS ENDS? ELLEN: THE LONG DATED BONDS ARE WHAT THE TREASURY HAS FLOATED BEFORE. YOU MIGHT SEE THIS POP UP AGAIN. THE FED HAS FOUND ITSELF AT THE LOWER BOUND, ZERO INTEREST RATES . THIS PACKAGE, WE MIGHT BE THINKING OF IT AS A GOOD START. WE DON'T KNOW HOW LONG THINGS WILL BE SHUT DOWN. WE DON'T KNOW IF WE PULL BACK ON SOCIAL DISTANCING AND HAVE TO PUT IT BACK INTO PLACE AGAIN, WHICH HAS HAPPENED IN OTHER COUNTRIES. WE MAY LOOK BACK ON THIS AND SAY, THE $2 TRILLION FISCAL PACKAGE WAS A START AND THERE ARE MORE TO COME. I HAVE NO DOUBT THERE IS MORE STIMULUS TO COME. I DON'T KNOW IT WILL BE THE SIZE OF $2 TRILLION. WILL IT BE TRILLIONS? PROBABLY. TOM: ELLEN ZENTNER OF MORGAN STANLEY WILL APPEAR WITH US ON BLOOMBERG "SURVEILLANCE" AFTER WE LOOK AT THE DATA AT 8:30. PART OF IT IS SMALL BUSINESS, HOW DO YOU GET CHECKS TO THE PEOPLE IN SMALL BUSINESS IN NEW YORK AND LONDON AND WORLDWIDE? KAREN MILLS WILL JOIN US AND A MOMENT. FROM LONDON AND NEW YORK, THIS ♪ TOM: GOOD MORNING, EVERYONE, BLOOMBERG "SURVEILLANCE." THIS IS A GREAT JOY, THE GENTLELADY FROM MASSACHUSETTS SERVING FOR PRESIDENT OBAMA AND THE SMALL BUSINESS ADMINISTRATION AREA, AND HER GREAT AFFILIATION WITH HER FAMILY WITH BOWDOIN COLLEGE IN MAINE, KAREN MILLS. THRILLED TO HAVE YOU WITH US. THERE ARE THE LITTLE HARBOR INLETS OF MAIN THAT WINTER IS ALWAYS DIFFERENT -- MAINE THAT WINTER IS ALWAYS DIFFERENT, KITTERY ON NORTH MARCH AND INTO JUNE THEY DESPERATELY WAIT FOR THE SUMMER. IT WILL BE DIFFICULT FOR THE SMALL BUSINESSES OF MAINE. KAREN: EVERYONE IN THE LAND OF SMALL BUSINESS IS SUFFERING NOW. THIS IS THE STUFF -- TOUGHEST MOMENT I HAVE SEEN INCLUDING 2009, FOR SMALL BUSINESS OWNERS, BECAUSE THEY CANNOT DO BUSINESS. HALF THE PEOPLE WHO WORK IN THIS COUNTRY OWN OR WORK A SMALL BUSINESS SO THAT IS HALF THE JOBS. TOM: SENATOR SCHUMER IS FOCUSED ON HIS NEW YORK. IT IS A CRISIS AS IT IS IN MANY PARTS OF THE WORLD. HOW DO YOU GAUGE THE UNDERSTANDING OF REPUBLICANS AND DEMOCRATS, THE POLITICIANS TO UNDERSTAND THE IMMEDIACY OF THIS CRISIS? KAREN: I WAS UP IN THE MIDDLE OF THE NIGHT READING THE BILL, AND I NEVER THOUGHT I WOULD SEE THE WORDS "349 BILLION" IN THE SAME PARAGRAPH AS SBA. THIS BILL HAS PUT HUGE RESOURCES AGAINST SMALL BUSINESS AND IT IS THE FIRST ITEM WHEN YOU READ THE BILL. SMALL BUSINESSES HAVE SUCH LITTLE CASH BUFFERS. WE WERE TALKING ABOUT INDIVIDUALS NOT HAVING MUCH, BUT A SMALL BUSINESS HAS ON AVERAGE 26 DAYS OF CASH IN THE HOPPER AND WHEN THE SPIGOT GETS TURNED OFF, IF THEY ARE GOING TO PAY THEIR PEOPLE, THEY HAVE TWO TO THREE WEEKS AND THEY ARE OUT OF BUSINESS. IF YOU RUN OUT OF CASH AND A SMALL BUSINESS, YOU ARE DEAD. TOM: YOU HAVE LIVED IN THE TRENCHES ON THIS. THIS IS REALLY IMPORTANT. NOT SIMPLISTICALLY, WHEN DO THEY GET THE MONEY, BUT WHY IS IT TAKING SO LONG? YOU HAVE A WELL OILED MACHINE IN A BUREAUCRACY OF THE SMALL BUSINESS ADMINISTRATION. WHAT IS THE DIFFICULTY GETTING THE MONEY OUT BY NEXT WEDNESDAY? KAREN: I AM WORRIED ABOUT GETTING THE MONEY OUT. NOW THAT IT IS AUTHORIZED, BANKS HAVE TO GET IT OUT AND WE SAW THAT BANKS WERE SLOW TO ACT IN 2009. IN THIS BILL, THE BANKS ARE NOT AT RISK. IT IS 100% GUARANTEED AND SMALL BUSINESSES WILL GET REPAID, IT WILL NOT BE A LOAN BUT IT WILL BE A GRANT AS LONG AS THEY KEEP THEIR EMPLOYEES AND RENT PAID FOR AUTHORIZED ACTIVITIES. IT IS A PRETTY GOOD BILL BUT WE HAVE TO GET IT OUT FAST, AND I AM WORRIED ABOUT THAT. WE TALKED ABOUT FINTECH AND SQUARE AND IT IS NOT CLEAR THAT OTHER COMPANIES WILL GET TO DEPLOY THIS, SO WE HAVE TO HAVE THIS OUT -- NGUYEN SAID THERE WILL BE THIS FAST PROCESS -- MINUTIA AND -- MNUCHIN SAID THIS WILL BE A FAST PROCESS BUT WE HAVE YET TO SEE THE BANKS GET IT OUT. FRANCINE: WE HAVE SIMILAR THINGS IN THE U.K.. ONCE THIS IS OUT THERE, IS YOU'RE CONCERNED THAT PEOPLE DO NOT KNOW HOW TO APPLY FOR THEM? I AM A SMALL BUSINESS, I HAVE WHATEVER I DO A INE OR ELSEWHERE, ARE YOU WORRIED THEY DO NOT KNOW WHO TO ASK? KAREN: I AM WORRIED. THE BILL HAS MILLIONS AND EDUCATION CENTERS TO SEND THEM THERE BUT THE PIPE CAN GET CLOGGED UP. THE U.K. ASK QUITE A BIT FASTER THAN THE U.S. TO DEPLOY MONEY -- ACTS QUITE A BIT FASTER THAN THE U.S. TO DEPLOY MONEY. I WOULD LIKE TO SEE BANKS GET A WELL OILED MACHINE, FIGURE OUT HOW TO GET THIS ON A CREDIT CARD EVEN, AND THEN SQUARE AND PAYPAL AND OTHERS REACH THE SMALL BUSINESSES THEY HAVE PIPED INTO. THIS ALL NEEDS TO HAPPEN IN A WEEK, BECAUSE ONCE YOU LOSE THE SMALL BUSINESSES THIS WILL BE A DRAG ON THE ECONOMY. YOU CANNOT JUST TURN THEM BACK ON, SO WE NEED TO ACT NOW. THE PLUMBING IS NOT THAT WELL LAID OUT FOR THIS VOLUME OF LOANS TO GET OUT THAT QUICKLY. FRANCINE: IS THERE ANYTHING AT THE LOCAL LEVEL AUTHORITIES CAN DO? ARE PEOPLE DRAWING UP LISTS OF WHAT THEY NEED? IS IT UP TO THE BANKS? KAREN: I HAVE BEEN ON THE PHONE ALL WEEK LONG WITH SMALL BUSINESS ADVOCATES, AND THEY HAVE COME TOGETHER AND STARTED TO WORK OUT DIFFERENT MECHANISMS. I FEEL LIKE LET 1000 FLOWERS BLOOM. EVERYONE WORK ON THIS, THERE WILL BE DIFFERENT PIPING. WE WILL GET THE PIPING LAID AND HOOK UP THE HOSE TO THE MONEY, AND DIFFERENT BUSINESSES WILL HAVE DIFFERENT CONDUITS. SOME SHOULD HAVE A LOCAL BANK. GO THERE FIRST. IF NOT, GO TO ONE OF THE BIG BANKS BECAUSE THEY SHOULD GET THIS UP QUICKLY, AND GO TO YOUR SBA OFFICE BECAUSE THEY KNOW HOW TO GET THE PIPES LAID. FRANCINE: THAT IS WONDERFUL PRACTICAL ADVICE, KAREN MILLS, FORMER HEAD OF THE SMALL BUSINESS YOU IS IN -- SMALL BUSINESS ADMINISTRATION. > > ON THE MAJOR CORRECTION, HAVE HELPED INVESTORS TO MANAGE THE SITUATION IN AN EFFECTIVE WAY. WE SEE PEOPLE TAKING ADVANTAGE OF NEW OPPORTUNITIES. THIS IS TIME IN OUR POINT OF VIEW TO MOVE INTO CREDITS. HISTORICALLY FROM A RISK POINT OF VIEW, THERE ARE NOT MANY TIMES IN HISTORY WHEN CREDIT HAS BEEN PRICED SO ATTRACTIVELY AND WE SEE PEOPLE TAKING ADVANTAGE OF THAT. I HAVE TO SAY THAT MANY CLIENTS HAVE BEEN VERY DISCIPLINED IN THEIR ASSET -- IN THEIR LONG-TERM ASSET ALLOCATION. THEY REEVALUATE HOW TO DO THAT AND IT DOES TAKE SUPPORT. WE ARE PREPARING TO EXPLOIT OPPORTUNITIES WITH STOCKS OR SITUATIONS OR SECTORS THAT HAVE BEEN PARTICULARLY IMPACTED. I SEE CLIENTS STARTING TO TAKE OPPORTUNITIES AND BUY INTO SOME . FRANCINE: THAT WAS SERGIO ERMOTTI, THE UBS CEO SPEAKING TO MANUS CRANNY EARLIER ON. HERE ARE YOUR MARKETS. WE ARE WAITING FOR THE JOBS REPORT AND THE BOE COMING OUT WITH THEIR INTEREST RATE DECISION LATER TODAY. U.S. EQUITY FUTURES DOWN. EUROPEAN FUTURES DOWN. INVESTORS ARE STARTING TO LOOK PAST THE STIMULUS PACKAGES FROM THE ECB AND LOOKING AT THE MOUNTING HUMAN IMPACT OF THE OUTBREAK. GOVERNMENT BONDS AND THE YEN AND BOUNCING -- ADVANCING. THE ECB WILL SCRAPP ♪ BOND -- SCRAP BOND PURCHASE LIMITS. THIS IS BLOOMBERG.

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'Bloomberg Surveillance' Full Show (03/26/2020)

Live every morning from New York to London. Tom Keene and Francine Lacqua deliver insight on the markets with leaders in global finance and economics. David Folkerts-Landau, chief economist at Deutsche Bank, says the Fed and ECB deserve "nothing but praise." UBS CEO Sergio Ermotti says investors and clients are starting to invest in market opportunities. Ellen Zentner, chief U.S. economist at Morgan Stanley, sees the U.S. tallying 3.4 million jobless claims due to the coronavirus pandemic. (Source: Bloomberg)

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