Worst performance in the hamburg election since 2002. Unicredit ceo rules himself out of the running for hsbcs top job. To leavey is expected barclays at the end of next year. The european open sent to be dominated by talk of what is happening in italy. Lets get to the futures. The extremes of selling we are expected to see. We did see negativity during fridays session in europe and the u. S. The change in case numbers in italy. The measures being taken by the authorities to try and stamp out this outbreak. We will keep an eye on that and bring you all the latest headlines. Lets have a look at what we see on be aware that the ftse futures in italy looking really negative. Lets have a look at what is going on on u. S. Futures. This is set to go increasingly global, it would seem. It looks as if the negativity will carry through europe and into the u. S. Session. Ets look at the gmm we had a lot of negativity before we got news out of asia. The malaysian Prime Minister has resigned. Another reason to sell in malaysia. The malaysian stocks, currencies, and bond markets. Even aside from that, heavy volume coming through even on a day where china is out of action. A lot of that focus is on south korea and italy. Australia and the currency markets, Australian Dollar near an 11 year low. Because the japanese markets are getting close, treasury markets open up right around now. This is what we see in sovereign bonds. Reaction to the malaysian story. Also worth mentioning what is going on with kobani markets. The bdi crude down by 2. 2 . By 2. 2 . Ude down cudmore from mark singapore. I am looking at where the u. S. 10 years opening. Is ouras closed, so this first look, if you like, for this week. Gold,going into havens, bond markets. I wonder how low these treasury yields can go . Will the record for 2016 be in target for traders. A structural bias tends to be little bit more bullish than many in the macro community. I think this move makes sense. Yields shouldy rise substantially at any point given that there is no sign of inflation for a long time. Now that we know we will have a being hit to Economic Growth this year, this is a period where it makes sense for bonds to do well. That may not last as long but i think even when the risk aversion is over, it is likely that yields backup significantly. Looking at what is happening with the alltime lows, touching on the 30 year. The yield very much in focus. Let me go to the european picture. 3. 6,tse future down by 3. 7 this morning. Where you are, the focus has been on south korea. Exercise thene an where exactly we see an intensification of this virus geographically, and selling the risk assets in that country. That was the case in south korea and seems to be happening in italy as well. Mark i think it is important to emphasize that japan was closed today so we may see japan back at the forefront tomorrow. Japan is people are worried about the situation in japan given the spike at the end of last week, especially in the context of the terrible gdp. And negative february pmi print as well. There is a great risk of recession in japan. On the virus front, japan will be back there with korea. Chinese markets may be able to perform here. Hase is an idea that china gone through the worst of this virus. Spike hasews flow gone through the dramatic. It is also because the Chinese Government is made particularly clear over the weekend that they will escalate stimulus. Chinese markets have always traded more often chinese stimulus than Economic Growth. We know the economy will be hit in china. Stimulus will support the stock market. Korea and japan are the forefront in asia. Italy obviously in focus. Aboutwe have been talking treasury markets reacting. 10 year yields dropped the lowest 2016. The a lot of questions being asked. About what fiscal actors canoe. Can fiscal stimulus impact. We talk a lot about what monetary authorities expect to do. Exalted a lot about how perhaps monetary how exhausted perhaps Monetary Policy is. This has obviously been a longrunning debate, particularly in europe where people have been looking to put pressure on germany for some time. Are there signs that it is being delivered . In some countries, it is. There are certain countries that are always proactive, they are being proactive. Tovincing other countries open the purse brings the pursestrings, it is not clear yet. Will this be enough to repair damage . Thursday economic damage and the market damage. It may be easier to repair the market damage than the economic damage. It often seeps directly into markets and may bypass the real economy, or at least the impact on the real economy may be more subdued. The counterargument, fiscal stimulus more than Monetary Policy should feed the real economy more. Much of the damage to the coronavirus is in the services sector. Cutou dont get your hair because of the coronavirus, you dont get it cut 20 is often oftenhe cut twice as when the virus ends. Anna that is really interesting, something we will look to the start of european trading for what that means in an italian context. Italian futures down 3. 7 this morning. We have course solidly taking action to cancel a number of events over the weekend, bday sporting or cultural. Her member, you can join our debate, get involved in our question of the day. Can fiscal stimulus cancel out virus impact . The service sector, it is maybe a little bit immune to that kind of stimulus. Up next, we will get your stocks to watch. Overarching theme will be coronavirus. Luxury stocks, airlines, anything italy focused on the clampdown. Few stockso get you a specifics included a spanish company. This is bloomberg. Welcome back to the european open. We are still some 45 minutes away from the equity trading day but we already know something of what it will look like it will be negative, especially in the italian market. A be rise of the number of cases of virus in italy. A big focus on the clampdown measures, the extent to which it will weigh on the Italian Company the italian economy. Impact theey do to economy . The focus in asia has been on the korean market for similar reasons. We see gold prices going higher, Energy Markets once again. Oil prices down by 2. 5 . Treasuries, selling and equity prices, no surprise we are seeing money find its way into some of the safe havens of the treasury market. 30 year in focus after record lows friday. 10 year yields dropping to their bidst since 2016 as haven continue to be the main theme. It will be a market all about the big picture. In jewel stock stories to focus on stock stories to focus on. From samsung. Tory asml is part of the supply chain. Revenue of asmls coming from samsung. South Korean Companies being hit hard today. Samsung being one of them, especially this weekend when an employee tested positive and they had to shut down a plant. Eye one will keep an that one. We will certainly keep an eye on the tech sector and anything else deeply embedded in the globalization story. , a spanish stock. Almirall is guiding for da, below thet consensus of about hundred 6 6 millionuros. 30 euros. The reason they give, one of facing a lotugs is of pressure from the generic market. They have their own authorized generic to be launched soon. The net income line just about beat expectations for last year. They are looking at doing a. Haps some other m they paid around half a billion euros for some technology. They could be looking to do some a soon. The headline will be on a miss for the ebitda. But they do expect that to be a oneoff impact for this year only. Anna thank you. You can focus on all of the stories via our equities team. Lets get to the banking sector. Some really interesting movement or lack of movement. Confirmed the ceo is not in the running to take the helmet hsbc. Thirdender embarks on its of overall in a decade. Sticking with u. K. Banking, barclays cto says he expects to leave the bank by the end of 2021. Instability at the top of u. K. Banking, perhaps. Joining us with all the details, bloombergs European Finance at esther, wolf larson. Editor, wolf larson. Where does this leave hsbc and unicredit . Its is better news for unicredit. He has really been the person to turnaround the banks. That may be one italian stock in the positive territory. Markssbc, question continue. Ustierve to wonder, if m withdraws, where does that leave ceo. Quinn, the the question marks continue. Anna in terms of the hsbc surge, are there really external candidate still in the running, this iesco ls noels to lose . Was that it was a two horse race. They say they may be searching until august for a candidate but if it is true that they only looked at two and one has dropped out, you have to wonder about what will you do with no quinn . Anna thanks very much for the update, European Finance editor ross larson. Coming up, the rotavirus dominates the g20 meeting in react in riyadh. The events in italy and the reaction will be the focus of equity trading today. Futures, i think we will see a little bit of a move to the downside. Futures down by 3. 8 . Ftse futures down by 1. 7 . Elsewhere, questions being asked. This also be reflected in treasury markets, into safe havens. Treasury yields on the 10 year, the lowest since 2016. This is bloomberg. to theelcome back european open. 21 minutes past 7 00 in london. European futures suggested negative moves at the start of trade. Futures as we wait to see how investors assess the latest rampup coronavirus breakout in italy. Dominatedic fallout the g20 meeting this weekend in riyadh. Market has basically the view that glass is halffull. The world will pass that stress test. One quarterorary impact on gdp and trade, and we will rebound. That is also in our projections. But it is the optimistic scenario. There are much larger downside risks. Crannyloombergs manus joins us now. Take. As axel webers but with everyones glass halffull at the g20 meeting. Manus i think there is a certain amount of sort of stoicism. All ready for the next evolution. A crisis is never a crisis until you can see it, touch it, feel it, smell it. That draft of the Coronavirus Crisis and its impact economically is moving towards europe. Could landed, and it travel more aggressively north, south, and to the west or to the east to the west, i should say. Remains over at period of time, the equity markets you could say are playing catchup. The bondekly close on market from last week. The other conversation, at the oecd, he talked about a lot of topics but he was a strong proponent of the surplus countries need to spend. He did not name names. It was a great interview. Welcome back. It was very wet in london last week. Anna i was elsewhere in the u. K. Where it was very wet, if not wetter than london. Butmuch rain in saudi certainly a lot to talk about with comes to the Global Economy. Lets talk with janet, globally economist. Weber, hearing from axel saying the markets class is halffull. He said that at the weekend. Things are a lot more dramatic. Ftse futures down 3. 7 . Orchidshink the stock the stockmarkets are going to maintain this glass halffull approach as we see the Coronavirus Spread into europe . We think that the equity markets are kind of complacent about the current situation. Many are expecting the virus to be contained by china or globally by the end of february. It is now spreading the rest of the world. Concerning,more because china, they have the power to quarantine the whole region. If you are talking about cases like in italy, you are talking people in movement of the european union. There is a real risks to the already fragile european economy. We saw the high, it was complacent. The natural reaction to what is happening. Assessmentuch of an can you make about the chinese economy . What kind of impact does that have . Janet i think it is a bit too early to say. Q2, you rebound because of demand and investment. Tment has definitely slumped. We have seen recovery in the highfrequency data. It is a modest recovery at this stage. Over 50 of factories are actually restarting actually, the capacity is still low compared to where they should be. The risk is more towards the downside, especially with global uncertain. I think china will need to restrict travel. I just think the situation is getting a bit worse than people have been anticipating. Takes axt, cdu battering. Angela merkels party. We bring you the latest. This is bloomberg. Good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. Anna welcome back to the european open. 30 minutes from the start of cash equity trading. I am anna edwards. This is the picture for equity futures. There was an Asian Session down by 1. 3 percent. The move in the kospi could be moved to italy because the focus in asia. Let us have a quick look at what is going on in the bond market. The slide into the havens continues. The italian story is different. , thes on u. S. Treasuries tenure the lowest since 2016. European yields also going lower. Money is going into fixed income in the bonds market. But the italian yields are up. Let us stick with europe and talk about what is going on in germany where Angela Merkels party has plunged to a historic low in hamburg. Leader for the cdu has come under fire for trying to steer the Succession Process. The party will gather in berlin in an attempt to seek a way out from the political crisis. Daniel schafer joins us now. Great to have you with us. What do the hamburg results mean for the cdu . Daniel it is quite the opposite of a positive experience. ,t has been a historic defeat 11 point 2 , the lowest since world war ii for the cdu in hamburg. In parts the end result of what happened in another german state a few weeks ago where the cdu threw in its lot with a Rightwing Party to elect a premier in this region. And that cost a huge controversy theultimately the fall of and also impacted the hamburg elections. Anna what about the Succession Process then . How will that play out in the cdu . Daniel the Outgoing Party leader is struggling to get the struggled to get the process going. A number of Senior Party Officials who said this is taking too long. The whole Succession Plan and process, before it even started, was already on a bad footing. Today, she is planning to meet the cdu leadership and she is also going to talk to the press at 1 30 p. M. Today to unveil her new plan for the succession at the top of the cdu and therefor also how to find the successor for Angela Merkel as german chancellor. Anna daniel, thank you so much. Daniel schafer from frankfurt with what is going on in hanover. Janet mui the global economist from cazenove capital is still with us. A colleague showed a graphic from germany and it shows there is an expectation in the markets that will fall but we will not see them go into a budgetary deficit. Is that your expectation as well . A little bit of a giveaway but nothing as extreme as the italians have been calling for or other parts of your. Janet our consensus is that for germany, they are quite fiscally conservative so they always have a budget surplus. For them to employ the surplus meaningfully to boost the fiscal easing is quite difficult. It is not their mentality. They are savers. Agingre facing demographics problems which they will have to deal with at some point and having that surplus fiscally conservative and responsible for the country going forward. Especially now with the party and political turmoil and the question of succession. I think it will be even harder for germany to unite and implement any necessary easing. Anna do you think germany needs to ease fiscally . Is it what is the reasoning for germany to do more fiscally . I with think they need to stimulate the economy a bit more because they are already flirting with a recession. Fiscal stimulus, if it comes much later, it will be too late they signal a recession. Germany sinks into a recession, it is likely that surrounding economies will suffer. By that point, it is usually too late. The risk of the corona virus spreading in europe could be a potential reason why they would do it as well as the interruption to the supply chain. Currently the data is still ok. There is still knows ingestion that there is a negative hit. If the German Government rings last year, the worst it is unlikely that they will do more as the data begins to recover unless the coronavirus gets much worse. It is interesting that the italians are not asking for any suspension of the shenzhen rules. Schengen roles. Can fiscal stimulus do anything to affect the coronavirus . Servicesot support the for the economy that much. Is there a sense that fiscal policy cannot do enough in this situation . Janet i think people are going to be more concerned about their health and safety at the foremost. Pushiscal stimulus could some things if the companies are really struggling. The government can help them which should help with sustaining the Employment Situation which is crucial to the services center. Services sector. There is a limit to what the fiscal stimulus can do. Be hits to confidence will too severe for people to spend comfortably. Anna we are already seeing that. Janet, thank you so much for your thoughts so far. Janet mui from casimir capital will stay with us. Italy is the epicenter of the coronavirus in europe causing the cancellation of several events including carnival. We are live in rome up next. European futures are points lower. There is a particular focus in italy. In ftse nets futures. This is bloomberg. Anna welcome back to the european open. 7 40 in london. In rome, the epicenter of the for the focus coronavirus is right now. The caseload is climbing. And as a result, we expect investors to focus on the italian market when they open. Expects to leave at the end of last next year according to the financial times. He is currently under an investigation. Barclaysistraction for as it faces challenges to meet its profit goal. Warren buffett has been a record 2. 2 billion in buyback shares and he is looking to repurchase even more. Thelso spent a portion of Shareholder Meeting on the future of the company. He says the company is 100 prepared for the departure of or in but the and his partner. Pulled out of the running for the hsbc ceo job. Mustier has decided to remain at unicredit. Hsbc has said it could take until july two name a new leader. Jp morgan is planning to enter the u. K. Consumer banking market according to society you. Sky reports the wall street bank is in talks with city regulators are about a obtaining the necessary approvals. Back to the coronavirus and italy has become the outbreaks european epicenter. It is reporting 140 cases. The government is locking down an area of 50,000 people near milan. Authorities have also canceled the carnival. The Prime Minister has been attacked for not defending the borders as conti chairs a marathon meeting in rome. To restart the ailing economy that has stalled. Bureau chief for bloomberg joins us now. Alexander, great to speak to you. Why is this happening in italy . Has there been a focus on establishing why the outbreak has gotten big so quickly . Alexander it is unclear how and why the virus has arrived in italy. An individual was in the withtal and not diagnosed the coronavirus which has contributed to it spreading. Italy has stopped all flights to thehich surprisingly cases could not betrays from china. Anna i heard the who making that point. The focus will be on containment. International attention on the measures being taken in italy and how they can work in the european context. We are focused on the Economic Impact. What do we know about that so far . Alexander italy was probably already heading to the session before this latest shock. The Global Economy is struggling. Now, malans stock market is opening low this morning. The government is laying out emergency measures to prop up the economy. Of aboutt is the sense how italians are responding to the measures being taken by the government including the quarantine being placed around a large area with a substantial population . Havehinese authorities worked in wuhan on a much grander scale. Regions inthe lockdown are the economic heart of italy. This is going to be difficult. So far, italians seem to be taking this in stride and ready to help. The government is weak. We are also probably in for more political turbulence ahead. Anna thank you so much to alexander, the Bloomberg Bureau chief in rome. Janet mui is still with us. Interesting to see this story. We are expecting to see an epicenter of selling to be in italy. On the bond markets, bond yields are rising in italy unlike the rest of europe. How do you explain that italian divergence on the bond market . Epicenter ofis the the coronaVirus Outbreak in europe and investors will have justify italy being a safe haven. I think it will be more in gold coming u. S. Treasuries, or the german bond yields. The italian political situation is in question because people have lost confidence on how the italian authorities are dealing with the situation. Putting more political pressure which is not great for bond yields generally. Anna and we have already been looking at any sector attached to globalization. They are under pressure including toryism and aviation. When you think about it late you also think about the luxury sector which has already been a focus. Now, we see that coming to the fore in the italian context. Which sector should we be looking at . Janet la grippe will be taking a hit as you mentioned. They were already hit with the hong kong protest last year. Think the sectors are going to be affected as a whole including aviation. Has been onmpact china but now, we are talking about intraeuropean flights. Those sectors will be particularly heads. Anna what about what you are seeing in the chinese economy . I have a chart showing chinas air quality. 50. It is a little bit noisy at a basically points to three areas in china and the extent of the pollution there. Radars a beneath the signal on the chinese economy. Been trying to take action to reduce pollution anyway. In mostn is coming down recent weeks. What are the indicators that youre looking at . Janet these are interesting indicators. Trafficooking at indicators of the various regions. There was significant fall in traffic. Congestion index. Some of the higher frequency daily, thereacked has been a slump of activity. We monitorption that daily as well. Telling the same story where activity had collapsed what is starting to recover. There is a number of highfrequency data that we can track. Slump instory is a activity with a gradual recovery. Nowhere near full capacity. Casimir mui from has a nova capital joining us. Minutes away from the open. Will stick with that team why chinese equities will outrun their hong kong peers according to one house. Your morning call is next. To speak trump is due and india shortly. We will bring you that speech as it happens. Quite a substantial crowd there. Crowdsl those large paper over any differences in trade, the friction between these fairly nationalistic leaders. We will focus in on that conversation next. This is bloomberg. Anna welcome back to the european open. Eight minutes to go until the start of cash equity trading. The focus on italy. Ftse futures down. We expectin europe, to see heavy selling as well. Here is leighann gerrans in london. Leighann this weekend, the g20 gathering in saudi arabia could mark the start of relief. The Global Economy has started to stabilize. And then came the coronavirus. The imf is looking at even more post dyer scenarios. Post dire scenarios. The minister says it is hitting the supply chain. We can no longer depend on the supply chain from china. I believe in fair trade. Im only i believe in reciprocity. I believe we need to have our homes made safe. Leighann taking on President Trump. The setting him up to do well in texas and california on super tuesday. Mostet this week economists expect the Rating Agency to downgrade the country to jump this year and many think it will happen in the first six months. For theade it harder nation to take control of its debt. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna leighann gerrans here in london. Chinese equities will likely outperform their hong kong peers. That is the view of citigroup. Annmarie hordern is here with what we can expect. Nnemarie we see onshore equities are more sensitive when it comes to policy easing and they are made up of more of a retail basis of all those in hong kong are skewed towards the fundamentals and the base is heavily institutional investors. There wediversion could see and what they are suggesting is the chinese stocks are likely to continue. Hordern with your morning call. Where have a think about we are going to go at the start of the european trading day. Five minutes to go until we get there. Futures look incredibly negative. U. S. Futures also pointing downward. Nasdaq futures are down by 2 . 4 . Taly, down by focusing on luxury and aviation and travel stocks in focus as well as carmakers and miners. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Wthats why xfinity hasu made taking your internetself. And tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Anna good morning, everyone. Here are your headlines. Coronavirus hits italy. Cases in the country surge causing authorities to lock down an area with 50,000 people causing the cancellation of events. Cdu taking a battering. Surge doubling their share of the vote. And the hunt continues. Mustier is out of the running for the hsbc job. European equity market expecting to fully reflect the extent of the pace of the rising cases we are seeing of the coronavirus in italy. Italy will be the focus of the markets attention. The futures looking worse and much of that is coming through from italy in much of the last hour. Expectations of a drop of around 4 for italian equity markets. Focusing on oil stocks, car cks, luxury, mining anything that has a bearing on Global Growth or anything that can be construed as a risk asset. Keeping an eye on what is happening in italy. You have a red box around the spanish ibex. We do not see that scale of move coming through very often. The ftse 100, relatively speaking, not doing as bad. 2. 6french market down by percent. A great deal of focus on what is happening with the spread outside china of coronavirus even as we are seeing the number of daily cases in china perhaps coming under a bit of control. It is now the spread outside of china that is heading International Investors attention. Let us have a look at what is happening by a sector perspective. The italian market just opening, down by 3. 4 . Look at things from the sector perspective. Health care, in the red. As well as telecoms and utilities. Might havethat you thought of as safe havens are showing negativity and weakness. These European Equity markets are very much on the back foot. Stoxx 600, down 1. 6 . Of the individual movers, as i say, it is not necessarily a day where the movers will matter that much. Onlys to the upside watch out on the stoxx 600. Some have still to open but generally speaking, the movement is to the downside. Look at the stocks performing the worst. There is a sense that this has to do with travel because air france is the biggest fall or, down by 7. 8 . Just over 8 . France thatn stock is down by 6. 6 . The tech sector is down as well. Chrysler considerably weaker. Of going out to purchase a car if you are in lockdown. The italian market reeling. Travel and leisure stocks also reeling. As italy becomes the epicenter of the coronaVirus Outbreak in europe canceling cultural events as well as sporting events as cases surge. John, this has been a busy weekend. Everyone in italy trying to get their head around how this has happened so weekly and seemingly without enough controls in place. What is the latest on how this has spread so fast . Weekend, wege this are at more than 150 cases and there are still unanswered restaurants on how this all began. There was an assumption that one patient was responsible for the spread in a certain location but that patient has tested negative. Authorities say that without finding out who patient zero was , there is a possibility that the spread could widen. They have blocked an area near milan. A total of 50,000 People Living in three towns. People cannot go in or out. A patient was at the hospital though it was not identified early enough that he had the coronavirus and he infected many people including patients and health staff. Anna what about what the government is doing at that level . We have heard a lot about the political fallout this has triggered. What are you hearing . The Prime Minister is weakened by all of this. He is projecting an image of constant, marathon meetings with Health Officials and he is saying that the baseline is maximum precaution. Is trouble is that there truth in that he contacted political leaders. The skirmish dogging italian buttics has been softened there continues to be skirmishing between conti and the league calling for the suspension of the treaty of schengen. Conti has said for the moment that it is too early to do that though he is leaving the door open. With yourpoke earlier colleague about how italians have been reacting to this. What is your sense of about how italians are reacting . The extent of the clank of the clampdown on an extensive area. Ly are itsg italians complying with this . Hiff ofe is a w panic. Gone up. Ve Grocery Stores are being emptied. ,enerally speaking though people are respecting the ruling. A Chinese Community has gone into self isolation. Anna thank you very much for the update. John from rome. The analystow is from blackrock international, scott thiel. Reflecting on what we are seeing at the start of this equity session. Only two stocks in europe in positive territory. Travel and leisure and autos are being sold off. What we have seen so far is Treasury Bonds and risk assets have done well. In the battle for the recovery from the virus, investors have sought safe haven assets. We are really seeing that in the u. S. Treasury market. Rates, 40 basis points. Italy is an interesting topic because of the virus. Assets have done particularly well especially bonds. It will be interesting to see how the markets react not only overall but also specifically around italy. Anna you are right to point out the link with the treasuries. A negative correlation. Goingan yield story in a different direction from the rest of europe. Yields are going up in italy. Does that make sense for the market to look at italy differently . Scott investors are concerned about italy for whatever reason whether it is a virus or the Economic Impact of the lockdown in the northern part of the they would move away from italian assets as a reaction. Whether that proves to be right or not, we will see. To quality. Ht investors react in a way to effectively make their portfolio more resilient. If you are long italian bonds as a trade come it would make sense to take some profits live in how well they have done. Anna let me ask you about the broader picture for government debt. This is the 10 year treasury yields falling to september lows. 2016 in havence bids this morning. We do see an appetite for fixed income continue. Scott look at fed Monetary Policy. 50 basis points of easing. Given everything we have seen so far from the fed and u. S. Seemsic policy come it unlikely Monetary Policy will shift. That being said, that is not what markets are focused on. This, they aree focused on protecting the portfolio. It is hard to say how much further yields could go. 50 basis points of easing priced for 2020 seems relatively excessive. Marketthe italian continues to move or if the cases spread further in europe, it is hard to say how much lower they could go but that is an important concept. Attack investors seeking a safe haven. Anna what do you make of the data coming out of china where the chinese growth story is going . To get those early signs as to how this clampdown affects growth. Scott the problem we will have with china data is it will be lagging. The number one issue with the virus is the chinese policy response. We spoke at the beginning of the program at the italian policy response. The responseing, from the government will be an important factor. Much of the news will be backward looking. We look at things like traffic reports, small reports but even that is somewhat backward looking. Anna were looking at pictures indiame minister modi in welcoming President Trump to the rally. Managing to gather huge crowds there. To what extent can they make progress on the trade frictions we will see. Purpose oflot of the this meeting is to cement the relationship between these two strongmen leaders. President trump has spoken positively about Prime Minister modi in the past. The citizenship law is something impacting Prime Minister modi. Impacting muslims. We are focusing on those pictures now and when we hear from President Trump, we will bring those comments to you. Scott, back to our conversation. Focusing on some of that high data coming out of china. What about italy . Day one of the market getting a handle on the damage to the european economy. I guess it is too early to get a reading. Scott the key is the extent to of thehe duration lockdown and the fall in activity. You just spoke about President Trump it is interesting in some respects we have had a period where some markets would election, we u. S. Wouldve had a very positive environment for Economic Growth but now the virus has introduced uncertainty and then we have the u. S. Election in november. The markets reaction this morning is both the markets reaction this morning is both the u. S. Election and the virus. Anna that is interesting. The sound of the u. S. National anthem playing in the background. We will continue to focus on the u. S. Scott thiel from blackrock will stay with us. From the latest on the coronavirus. We will keep you uptodate on the events in india and on what President Trump has to say about the trade relationship with india. And other statements he will have to make. We will bring you his thoughts shortly. This is bloomberg. [cheering] you can imagine, he has come directly hear from america. As soon as he landed in india anna welcome back. We are watching live pictures and listening to Prime Minister modi speaking on the education of President Trumps visit to india. Welcome to all of you, to the worlds biggest democracy. But theathered here enthusiasm to welcome you is shared by all of india. Enthusiasm, these loud cheers that the skies resound with, this whole atmosphere from the airport to the stadium anna Prime Minister modi of india speaking and while coming the president of the United States and the first lady to india for this visit. We will be thinking about what is happening in u. S. Politics and markets. Bernie sanders breaking away from his democratic rivals with a decisive win in nevada. Let us get back to scott thiel, chief fixed income and a list of from blackrock. From a market perspective, a lot of new information on coronavirus over the weekend. You think the market is also focused on the democratic race. The president ial election has always been a risk factor for the end of the year. We are nine months away. It is still early days in the democratic process. Coming up andis other significant state elections but Bernie Sandersascension initially to the democratic nomination ads a layer of uncertainty around the political process. Given our past experience in u. S. Politics, you have to widen the uncertainty and that will have an impact on markets. It is getting lost in the headlines which are more related to the Virus Outbreak in italy but i do think investors are reflecting on that. Anna and we are awaiting President Trumps remarks in india. How will the market be pricing in the election . Are we looking at the dollar as the main leader here . Scott the treasury market continues to be big and that is the right response as we get more safe haven and concerns about volatility. Wellstocks have done particularly in the opening part of this year even with the coronavirus. We have flagged the u. S. Election as a risk around performance. And the u. S. Dollar which has been a powerful trade so far this year. Linked to quality and safety been. The u. S. Has been a bit more isolated from coronavirus. Going into the election, one might reflect that that is an area where we could see some pullback. Anna how strong is the underlying u. S. Economy . The pmi data coming in last week lower than 50. This damage the market does this damage the market . Does the weakness we are seeing in some areas of the u. S. Economy damage that view . Scott look at what the fed thinks about the u. S. Economy. They are citing that it has yet to see any Significant Impact from the virus. And the data looks relatively positive. The fed chair himself said last week that the economy continues to look positive. With the Unemployment Rate where it is hard to say that this has had a Significant Impact so far on the u. S. Economy and there for the fed will look at the data they have. Anna and you said you think the arecuts from the fed excessive. Scott for there to be something between zero and 25 basis points. I would caution about using a fundamental macro lens to look at Monetary Policy in a period where risk off is a big part of market performance. Anna scott, stay with us. We are getting some further lines coming through on both italy and the European Response to the coronavirus and also from china. Let us start with china as we continue to listen to what President Trump is listening to. We are hearing that china is postponing its annual legislative meetings due to the virus. New date foro those legislative meetings. The latest response from china. It said earlier that the curfew wuhan lujan remains remains in place. Europeancus on the response as well. Italy may suspend mortgage payments in virus hit areas and arey stimulus measures being stated in a draft degree in a draft decree. Looks like they are trying to get ahead of any Economic Impact. This is the response we are seeing in European Equity markets due to the intensification of the coronavirus in europe and an increase number in cases in italy. In italy, stocks down 4. 4 . On the stoxx 600. Few positive stories. For the stock stories, we go to Annmarie Hordern. Annmarie a similar sentiment to what we are seeing across markets. Start with airlines. Getting hit of the hardest. Getting hit the hardest. Easyjet down by more than 10 . Fears picking up again. Biggest sore the points as we have a lockdown of about 50,000 people in an area around the lawn. The Film Festival had to stop early as well as fashion week. Look at some of these italian names getting hit hard. Across the sector. A tv broadcaster is down. An Insurance Financial company is also down. You can see the diversity of the companies. Or is not a single Italian Company in the green. Anna Annmarie Hordern with some thehe movers today and toll. The death toll and number of infections on the rise in china. We keep an eye on the human tragedy happening in italy and with that in mind, we are looking at the markets. Let us get back to scott thiel from blackrock. Reflect a little more as we see life coming through on the european commissioner for Crisis Management talking about the italian response. What is it you are looking for in terms of the virus hit to get a handle . Policy response. The italian governments response and china government response how quick is it going to be . The second is Liquidity Provision the Companies Impacted by the virus. In china, companies related to or or other impact others impacted by the virus. And third is the supply chain disruption. A trade war issue as well. Given the outbreak of the virus, they will have to move the supply chains somewhere else which is expensive and timeconsuming and inefficient. That is the third issue. From theheard comments g20 over the weekend talking about globalization coming under pressure. Populist might make some hay on this thought but also some interesting concerns around supply chains. Is getting ready to speak in india. Let us take a listen. President trump i would like to express my profound gratitude to an exceptional leader, a great champion of india. A man that works like an day for his country and a man that i am proud to call my true friend, Prime Minister modi. The first lady and i have just traveled 8000 miles around the globe to deliver a message to every citizen across this nation america loves india. America respects india. And america will always be a faithful and loyal friend to the indian people. Ago, the United States welcomed your great Prime Minister at a giant football stadium in texas and today, india welcomes us at the World Largest cricket stadium right here. Profound honor to be the it is a profound honor to be here with you at this beautiful and new stadium joined by so many distinguished guests from across your nation and across the world. The hundreds of thousands of everyday citizens that come out lining the streets in a stunning display of Indian Culture and kindness. And to the 125 thousand people and this great stadium today, thank you for this spectacular welcome to your magnificent country. You have done a great honor to the american people. Melania and my family we will always remember this remarkable hospitality. We will remember it forever. From this day on, india will always hold a special place in our hearts. The life of Prime Minister modi underscores the limitless promise of this great nation. He started out by his fathers. Ide as a tea seller when he was a young man, he worked at a cafeteria in this city. Chanting] loves him but i will tell you this, he is very tough. [laughter] today, Prime Minister modi is the tremendously successful leader of this vast indian republic. Last year, more than 600 Million People went to the polls and gave him a landslide victory like no other in the largest democratic election ever held anywhere on the face of the earth. Prime minister modi, you are not just the pride of here, you are living proof that with hard work and devotion, indians can accomplish anything, anything at all, anything they want. The Prime Minister has a moving story of an incredible rise and so does this entire nation. Your nation is doing so well. We are very, very proud of india. The story of the Indian Nation is a tale of astounding progress , a miracle of democracy, extraordinary diversity, and above all, a strong and noble people. India gives hope to all of humanity. In just 70 years, india has become an economic giant, the largest democracy ever to exist and one of the most amazing nations anywhere in the world. Since the turn of the century come indias economy has grown more than six times its size. In a single decade, india has 200 70 millionn people out of poverty. Under Prime Minister modi, for the first time in history come every village in india now has access to electricity. People, more indians are right now connect did to the internet. Connected tonow the internet. The pace of highway construction has more than doubled. And more than 70 million more households have access to cooking fuel and 600 more people have access to basic sanitation and incredibly, 12 indian citizens are lifted out of extreme poverty every single minute of every single day. India will soon be the home of the biggest middleclass anywhere in the world and within less than 10 years, extreme poverty in your country is projected to completely disappear. The potential for india is absolutely incredible. Indias rise as a prosperous and independent nation is an example to every nation around the world and one of the most outstanding achievements of our century. It is all the more inspiring because you have done it as a democratic country. You have done it as a peaceful country. Youll have done it as a tolerant country. And you have done it as a great, free country. There is all the difference in the world between a nation that seeks power through intimidation and aggression and a nation that rises by setting its people free and unleashing them to chase their dreams and that is india. Why indias accomplishment over the last 70 years is completely unrivaled, no matter where you go. In theour faith and strength of a free society, your confidence in your own people come your trust in your own citizens and your respect for the dignity of every person that ands the United States india such a natural, beautiful, enduring friendship. While our nations have many differences, they are both defined and propelled by a fundamental truth. The truth that all of us are blessed with a divine light and every person is in doubt with a secret soul. As the great religious leader once said, the moment i stand in reference before every human in reverence before every human being and see god in him, that moment i am free. Knowerica and in india, we that we are all born for a higher purpose. Brave Indian Nation. Your unity is an inspiration to the world. And in america, we have come to know the splendor of Indian Culture. Through the 4 million americans through the 4 million indians living in the United States as friends, neighbors, and colleagues. Indian americans enrich every aspect of our national life. They are titans of business. Pioneers of science. Masters of the arts and innovators of Technology Like few people have been able to see no matter where you go anywhere in this universe. Nearly one in four Indian Americans place there roots here. Their roots a special place. Of the entire american people, thank you and thank you, all for the contributions your cultures and bash your culture and traditions have given to my beloved country. Americans are eager to strengthen these beautiful ties between our two people. This is truly an exciting time in the United States. Our economy is booming like never before. Our people are prospering and spirits are soaring. There is tremendous love, tremendous like we like and we love everybody. Unemployment has hit his story lows and Small Business confidence has hit an alltime record high in the history of our country. Our military has been completely rebuilt. It is now stronger than ever before and we are quickly revitalizing our alliances and friendships all around the world. 2. 5 trillion dollars on rebuilding our military. It is the most powerful military anywhere in the world by far. That is why i have come here to india in this spirit of fondness and goodwill to expand our cherished partnership of incredible power and potential. The first lady and i have just had a pleasure of visiting hram aa gandhis as few miles from here where he launched the famous salt march. And tomorrow in delhi we will lay a wreath, plant a tree in honor of this leader who is revered all around the world. And the first lady and i look forward to visiting one of your countrys most iconic landmarks we are later today going to see the majestic taj mahal. The Prime Minister and i will also continue our important discussions about how to deepen the relationship between our two great countries. Both of us understand that when leaders put the interests of their own citizens first, we can forge strong and fair partnerships to build a safer and more prosperous world. Just months ago, this Critical Partnership took a major step forward when the u. S. Military and your brave Indian Armed Forces conducted the first ever air, land, and see military exercises between our two countries. It was something to behold. We called it tiger trials. As we continue to build our defense cooperation, we look buildd to helping india the most equipment ever. We make the best in this now includes india. And i am pleased to announce that tomorrow, our representatives will sign deals to sell over 3 billion in the absolute finest stateoftheart military helicopters and other equipment to the Indian Armed Forces. That the United States should be indias premier defense partner and that is the way it is working out. Together, we will defend our sovereignty and security and defend the indo pacific region. The United States and india are also firmly united in our ironclad result to defend our citizens from the threat of radical islamic terrorism. Both of our countries have been hurt by the pain and turmoil of terrorism and that terrorism brings. Under my administration, we unleashed the full power of the American Military on blood thirst the bloodthirsty killers. Today, the isis territorial 100 hate has been destroyed and the monster known as albaghdadi, the founder and leader of isis, is dead. In the United States, we have also made clear that while our country will always welcome newcomers who share our values and love our people, our borders will always be closed to terrorists, terrorism, and any form of extremism. That is why we have taken his storks steps to improve screening and vetting of applications and were working to ensure that anyone who threatens the security of our citizens is denied admission and will pay a very big, costly price. Every nation has the right to secure and control borders. The United States and india are committed to working together to stop terrorists and to fight their ideology. For this reason, since taking office, my administration is working in a very positive way with pakistan to crack down on the terrorist organizations and militants that operate on the pakistani border. Our relationship with pakistan is a very good one and thanks to these efforts, we are seeing signs of big progress with pakistan and we are hopeful the reduced tensions and greater stability among all of the nations of south asia. India has an important leadership role to play in shaping a Better Future as you take on greater responsibility for solving problems and throughout this incredible region. Over the course of my visit, Prime Minister modi and i will also discuss our efforts to expand the economic ties between our two countries. Major, be making very among the biggest ever made, trade deals. We are in the early stages of discussion for an incredible trade agreement to reduce barriers of investment between the United States and india and i am optimistic that working together, the Prime Minister and i can reach a fantastic deal that is good and even great for both of our countries. Except that he is a very tough negotiator. Since my inauguration, commerce between our two nations has increased by more than 40 . India is now a major market for american exports and the United States is indias largest export market. A booming america is a great thing for india and it is great for the world and that is why we are so happy to announce that we have had the greatest economy ever in the history of the United States. In america, we have proven that the best way to attract jobs and opportunity is to reduce burdens on business, not down barriers to new investment, and eliminate unnecessary bureaucracy, red tape, regulation, and texas. Has alreadyer modi made significant reforms in your country as you very well know. The world looks forward to even more Rapid Improvement to indias Business Climate under his leadership. He wants to do it and is doing it at a record pace. Two years ago, Prime Minister modi welcomed my daughter ivanka and she is back with us today. Ivanka, thank you, thank you for being here. We are delighted to be joined as l by dozens of women indian Women Entrepreneurs who are helping to build the future of india. They are great and natural entrepreneurs and i just say to the men, be very careful, they are really good. The United States and india are also working closely together on the future of space exploration. You are making impressive lunars with your exciting program. Along rapidly, far ahead of schedule and america looks forward to expanding our asce cooperation with india you push further. You are pushing the limits and that is a great thing including of humanalm spaceflight. The United States and india will be friends and partners on our. Oyage into space it is truly extraordinary what this nation has achieved in the span of just one lifetime and what they have done under the leadership of Prime Minister modi. It is absolutely incredible. Mr. Prime minister, congratulations. But it isome so far nothing compared to how far india will go into the future and the Prime Minister is laying the foundations for a future like few other countries can even think of. This nation is blessed with many treasures from the sacred banks of the ganges to the golden temple. It is the home of some of the most cherished Cultural Heritage anywhere on earth. It is also the land of stunning vistas and other astounding natural wonders from the rugged peaks of the himalayas to the shores of. And india has always been a wellspring of deep wisdom and trade ideas to the modern india nation. Standing before all of you the truth of that india is not found in its textbooks or landscapes. The true strength of india is heartsn 125,000 beating in this stadium and the millions and millions of people that have seen and witnessed our great friendship and admiration today. It is all found in the soul and spirit of the indian people. Your courage has secured this nations independence. Thisdevotion has built great and enduring democracy. And it is your dream that will power this country to even greater progress, prosperity, a quality, and opportunity for every citizen across your land. So today i say to every indian north and south, hindu and muslim, jewish and christian, rich and poor, young and old take pride in the glories of your past. Unite for a brighter future. Always our two nations stand together as powerful defenders of peace and liberty and the hope of a better world for all of humanity. Thank you again, Prime Minister modi for your hospitality and thank you, india for this phenomenal welcome. Leave by saying god bless india. God bless the United States of america. We love you. We love you, india, very much. Thank you. Thank you. Anna that was President Trump speaking in india as part of a state visit. Trump said the u. S. 3 billionill sign worth of military sales deals tomorrow. He also said that the u. S. Is working with pakistan on the border and see in progress. He also said that americans are eager to strengthen ties between india and the u. S. And that america will always be a faithful and loyal friend to india. He said there is a chance for india to be incredible. Clearly a big fan of in contrast toit some other regimes in the world. Let us take a step back from what is going on on the ground there to the coronavirus. China has said it will postpone its annual legislative meeting due to the virus. We witness another day of selling on asian equity markets. Thea gives no new date for legislative meetings. With that in mind, we go to europe where we are seeing extensive selling on European Equity markets. 600 down the stoxx by more than 6 . May suspend mortgage payments in areas hit by the virus. In a draft decree seen by bloomberg which may be approved in the coming hours. This is the impact we are seeing on european markets. I mentioned the selling on the European Equity markets. The ftse in italy down by over 4 . You can see the impacts on those equity markets. And before that, you sell the impact on some fixed income markets. A flight into safe haven. Investors taking other havens in europe. Let us bring in scott thiel who has been patiently waiting. Chief fixed income analyst from blackrock. The market is still reacting to the coronavirus news. While President Trump was speaking, we were listening to some comments from the from an eu commissioner. Rolesg about how schengen allow for temporary border roles. One of the interesting things about the chinese policy response has been to lockdown regions affected by the virus. The implications allows the virus to spread extensively within the locked down area that it also has a social cost in keeping people from moving around freely. That is something the Chinese Government is reflecting on and how long it can last. It is interesting that the italians are talking about things similar to china. The policy response and the comment about mortgages and giving some relief to people. There is that liquidity the second concerned we were talking about. Addressing the liquidity concern. Anna and if it takes any further footing, the focus will be on personal safety. Out it will point be about liquidity and about policy. Have a military policy response. A Government Spending response. When we talk about fiscal thising, it is not in scope. Governments will do what they have to do but the policy response in china is the number one thing we are looking at. And italy may be following the same playbook. Thank youhiel for your time this morning from blackrock. You will be joining me on bloomberg radio. Another word on the markets. Point 9 . Down by two as we continue to focus on President Trump and Prime Minister modi in india. This is bloomberg. Francine equity markets plunge has risk assets are roiled and havens jump on virus concerns. China postponed its meeting. Cases of coronavirus in italy top 120. Stimulus measures. The u. S. President meets modi on a state visit to india. In the u. S. , Bernie Sanders takes a closer step two frontrunner status in the democratic primary race. Welcome to bloomberg surveillance