I have to mention the volume is very, very substantial. Some of the peripheral markets in italy trading down very, very sharply today. 5. 5 . Y tenyear is catching a bit with 48. Daxie, let me show you the over here. A lot of people were short long. We are getting a squeeze when it comes to the b stocks. 73 74 move of stocks. A huge gap higher. Vonnie . Vonnie coronavirus concerns battling Global Markets at this hour. Italy is at the epicenter in europe, reporting a seventh death at 219 are now confirmed positive for coronavirus. Infections spiking in south korea and iran. Cases reported in afghanistan, kuwait and the total number of cases in china now up over 80,000 and the death toll topping 2600. Markets are adjusting. We are joined by Tracie Mcmillion from wells fargo. Joining us from charlotte, north carolina. What do you do in this environment were all major off in s p 500, off in s p and and stocks a lower. Do you do this is a buying opportunity . Good morning, bonnie doheny thank you for having me. We would and vice good morning, vonnie, and thank you for having me. We would advise investors to hold tight. In a market like this, what you want to do is not overreact, and continue to have your diversified portfolio that is going to balance your risk and stability through equities and a bond allocation. So, it is making sure your purple leo was allocated appropriately, and on a day like not veryere it is volatile, not making any sudden, sharp moves in the portfolio. Vonnie thats put this into context. Down 2. 5 on the s p 500. 44 , can thisof stay orderly if we continue to see more countries unlocked down countries on lockdown, and more countries reporting the spread of the coronavirus . Tracie sure. We will see a calibration here by investors. Investors have been expecting a v. Y sharp they have been looking for an improvement the second half of this year, and now, we have to consider the possibility that this virus could spread beyond the countries we even see it spreading to today. And this could be a wider v, or a ushaped recovery. But markets are resilient over long periods of time, whether that is an epidemic, a military crisis, or an economic event, over younger periods of time, markets are resilient, and they do move higher over time. Guy good morning. We have a u. S. 10 year with a 1. 3 haggling backwards. This has signaled secular stagnation. What signal are you taking way from the bond market right now . Good morning, guy. The signal we are taking away from the bond market right now arehat Bond Investors increasing their holding, so investors are moving to those safe haven assets, and that is what is pushing those yields down prey we do not know exactly how this virus is going to develop. Todont know develop. We dont know exactly biggest dent of it, or the magnitude, so until we have more answers, we are going to likely continue to see this volatility persists. Corporates after corporate signaling there will be a bottomline effect on the coronavirus. Earnings expectations are still very, very hi. How much do you think they will come down buy . Our expectations were earnings this year is 175 pershare and we have not made an adjustment to that yet. We will be watching the developments closely, as i am sure everyone will, and we do expect more announcements in the coming weeks from corporations, signifying what the impact of the coronavirus will be on their earnings going forward. And wells fargo werent is a pending a volatile february anyway. Is this because of trade concerns . Stocks appreciating. How does that change the dynamics regarding trade . Tracie yes. So, we were anticipating a volatile year. Whether it be trade, or whether it be the election. Those were kind of the known risks going into the year, and weterms of a trade impact, were looking at a positive impact from the phase one trade deal, but now, we see the impacts of the virus on supply chains, and that could negatively effect trade, so it is counterbalancing at this point, and it is really going to depend on how quickly we can get those supply chains moving back through the global system again. Vonnie right now, money markets are pricing in a fed cut by june. Are you still sticking with your call on the Federal Reserve and what it will do regarding the path of Interest Rates . They are changing it because of because of the protracted own messes. Protracted illnesses. Tracie of the time being, we are sticking with the call that there will not be any further however, as 2020, our other targets are under evaluation depending on how the weeks to come play out. Guy quick question. The triple v segments of the markets. There has long been a fear that an event such as this could cause a whole series of downgrades. Simply because we will see a slowdown in Global Economic growth. Is that a risk you think is real . Tracie it is a risk. And there and it is a risk because so much of the credit is and that triple v spot. Should we start to see downgrades at this point, that could be a negative for the bond market, so we have been underweight, high yield bonds for that very reason, and we had been overweighting Higher Quality bonds. So, if there is one thing we have been suggesting to investors throughout this entire year, to go up in quality, whether in the bond market, or whether that is in the equity market, moved quality. Tracy Tracy Mcmillan from wells fargo, we will hear more from her in a few moments, and will be hearing from the ceo of philips morris. Do stay with us for that interview. Let us check in on the bloomberg first word news. We begin a President Donald Trump who began a 36 hour trip to india, with talk of billions of dollars of weapons deals. In estimated crowd of about hundred thousand people hearing the president speak along with the prime minister. President trump says the u. S. Will find military deals will sign military deals. Now to bernie sanders. His coalition to look more like the party as a whole. Making it harder for moderates to block his path. Won in nevada. To iran and a very big victory for hardliners. A semi official news agency parliamentarynt elections. Iran has been battered by u. S. Economic sanctions. The instability empowering conservatives. We end your first war in germany , where Angela Merkels party is wrapping up the process of finding a new leader. The christian democrat will hold a conference in april. Forr and banded ambitions succeeding merkel as chancellor. Global news 24 hours a day on air and at quick takes by bloomberg, powered by more than 27 journalists and analysts and more than 120 countries. Guy thank you. Lets look at where the bond market is. Big, big, big, except for italy. Italy off today. Yearu can see, the u. S. 10 , 137. Northern italy is shut down, and locked down now, raising fears of a recession. Money is flowing as you can save par the german tenyear catching a bit with five basis points. More coverage will continue. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy im guy johnson. This is bloomberg markets. In stoxxa lot of red and a lot of green in bonds. Lets go to abigail doolittle. Abigail to your point, risk assets showing risk assets selling off. Lets look at the major averages. Huge decline, the worst day since last summer for both the s p 500 and the nasdaq since august. The dow is having its worst day since july. That index slicing to all of the moving averages. That is the degree to which the buyers are surprised by the bearish action we have seen. This is the third down day for stocks in a row, so the selloff we are seeing appears the coronavirus could impact Global Economic growth, taking a toll. That is true in europe, along with the asian session. Lets look at the stoxx 600. Down near 40 . The worst day since 2016 during their brexit selloff. Investors moving out of stocks. In the asian session, we had an index down sharply. Down 3. 9 percent, the worst day since 2018. Dayown 3. 9 , the worst since 2018. The 10 year yield down nine basis points, at its lows, down 11, telling you there is a big rally for bonds. Dollaryene the falling as the yen rallies. Golden valley and the vix is spiking gold is rallying in the vix is spiking. This chart started to break down when the 10 year yield went below that dotted line, but on todays rally for bonds, the 10 year yield is now confirmed for 1 , suggesting this risk off base we have entered may just be the beginning. Vonnie as you say, abigail, mark is looking to be preparing for the worst as the coronavirus spreads. Market participants snapping up u. S. Treasuries, and sending yields to records. We are back with Tracy Mcmillan from wells fargo. She is with us from north carolina. Mike regan. Is let me begin with you, mike. Abigail is saying 1 looks to be in the range of the senior u. S. Yield. We are very much off the record low priced became kind of close to it, but we did not go through it. Ofthis money coming out stocks for the moment . Mike it was already heading into bonds. Wasmber, the 30 year yield at one point 1. 95 , getting very close to its own record low. So, the stock market and bond markets have taken divergence opinions on the coronavirus. The bond market seemed to be concerned on global macro events. U. S. Stock market was complacent, leading up until last friday, i think was when we really saw a detraction in confidence. The services pmi was below 50, signaling the Service Industries in this country were in contraction early this month because of the coronavirus, which i think caught people by surprise. People thought we were due for a little weakness. But to see that service industry, according to the market, in contraction, i think the quickness with which we saw the weakness caught people by surprise on friday, and then, the the weekend, we see stock market had been sort of competent this was largely contained to china with a little spillover into karina into korea. That was blown up over the we can with italian outbreak and more and more cases in korea. The equity market was too complacent about the virus. It is easy to say that in hindsight, and we are seeing a real sharp repricing. Vonnie how much is the coronavirus narrative interfering with the data that would give us a real sense of where the u. S. Economy is, how much of a soft patch it is, or is it a turning point . Tracie you know, we have not seen a lot of the impact of the coronavirus in any of the u. S. Economic data yet. As mike pointed out, the market pmi on friday was one of the first indications of the flowthrough effect of the coronavirus on u. S. Data. In the coming weeks and coming months, we do expect the data to be a bit messy as we do go through a period of time where the coronavirus will be impacting u. S. Data. Tracie, how much cash is on the sidelines right now . It appears that number has been going down and down and down recently. How much opportunity would there be to buy the dip there would be . Tracie yeah, so, we think there is enough cash on the sidelines where marcus got to the point where investors felt there was an opportunity there would be cash moving back in, but it could also move out of bonds back into equities, we could see a quicker resolution here. Relative, andg is we have seen chinese asset being absolutely hammered during the last month or so. Understandably, it was the epicenter of the story. If this becomes a global phenomenon, do those markets that have been most beaten up present an opportunity for outperformance . China situation stabilizes, do i want to over allocate towards china . Is ae yes, so, it possibility that we could see assets low back into areas where maybe the virus appears to be under better control, but we dont know that yet. The numbers are continuing to go up in china. Asbe they are not going up rapidly, but they are still going up, and it still represents a threat to the chinese. Say thanks tol Tracy Mcmillan. Unfortunately, we got cut off. That was Tracie Mcmillion of wells fargo investment institute. Mike, we want to ask you about this rationalization. Vshaped recovery of markets on the back of some kind of, you know, virus selloff, which is what we are seeing . Mike it would be surprising for me to see it. We may have a sharp rebound this week. I think we really need further confidence that this thing is contained. President trump speculated that it may be the warm weather suppressing viruses. But no one is sure about this one. It is so different. I dont think people can be confident that the warm weather will snuff this thing out until we see evidence of it, so i think this is not a oneday event. We could see a rebound. I think there is some cash. There are investors who would like to buy this dip, but i dont think this will go over quickly. I think we will continue to see upanddown, and more likely down for the next few days. Guy mike, it is amazing that people have not taken opportunity to load up. Upanddown, and more likely down for the next few days. Is that mentality, do you think, being called into question . It will pay off over the next couple of days. Do you think the market mindset around protection will change . Mike god, it is funny because it was so much guy, it is funny because it was so much more profitable to sell bonds. If you look at the vicks curve right now, it is very elevated in the near term, so people are buying safer for the next few months. Then it dips back down in the summer, but then it shoots back up towards the u. S. Election, so it is a very strange shape. It is almost like a u shape. Are piling into volume in the short term. It does look like theyre competent this will settle down it does look like they are confident this will settle down in the summer. There is uncertainty when the u. S. Election comes. It is so weird, barbell shape dont see often. Vonnie mike regan, thank you for joining us. Next, tech getting pummeled. S is bloomberg carried this is bloomberg. Stocks down sharply on coronavirus fears spreading around the world. Tech on the correction today, but it is not the only sector under pressure. Energy is down more. But given the strong run that tech has had recently, you wouldve thought that any major selloff, some of the stocks would have come down even more than the market. Maybe 4 . Down facebook iss down at a similar amount, but it is the chip sector where the pressure is. Vonnie Tracy Mcmillan was saying it is this a chain effect, but it is interesting that tech is not the worst performer out of the gate. Parts, energy, and energy and airlines have taken a hit. Micron were showing a hit, down 8 to 6 , that kind of range. Guy the airlines on both sides of the atlantic are down. Really aggressively here in your. But europe feels more like the epicenter of the story. America down over 8 today. The airlines are having a tough day despite that lower oil price. Here is a look at some other assets. Will be back with more we will be back with more next. This is bloomberg. Welcome to bloomberg. Bloomberg daybreak, bloomberg markets. S. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet 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. Oh no, here comes gthe 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. Vonnie from new york, im vonnie quinn. Guy from london, im guy johnson. This is bloomberg markets. Lets get a first word update. To be in panics mode over the coronavirus. There are now 219 people confirmed,cases rather, at least five people have died. The veniceng days of carnival have been canceled. Staying with the virus, china risking a renewed spread of the virus. It is trying to get people to go back to work. Governments are loosening the criteria for factories and rather other operations. The president said they will spare no effort to contain the outbreak. Like millions of tourists who and to india, the president his wife melania visited the taj mahal, the president calling the mazda helium mazza lamb truly incredible. Liam oleum truly incredible. The election is now more than away, buths again the Vice President s laying ,egan drop groundwork steadily expanding his travel as a surrogate for the president his focus is the rust belt states of michigan, wisconsin and pennsylvania. Global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Nie can turn saying currencies continuing to slide, and the pboc is considering new measures to counter the outbreak. Chief economist in washington for us. Damien, let me begin with you. The pboc is pledging basically whatever it takes. Number, basically the numbers are rising so china is certainly pulling out all of the stops and will resort to just about anything to get the economy act on track. To me, this represents 70 of total Business Revenue in china and 80 of employment. Maybe third have the ability to cover one month of cash expenses and two thirds have only two months of cash on hand to cover wages and whatnot. Those are striking numbers. Vonnie on that point, china , because restrictions essentially it was too early to let people go back to work and move around freely. Power, thehave the fiscal power to counter this given we do not know how long it will go on . I think that is the key question. Clearly there are a lot of stresses in the economy there, and damien just pinpointed one of them, which is the week Balance Sheet position of a lot of businesses that do a lot of the hiring there. We saw another one with the hna case, the airline which is taken on so much debt and then got slammed when travel stopped. Now there are reports that the government might have to come in and take them into administration. Clearly there is a huge amount of stress. Problem,s a shortterm problem or even a q1 and q2 problem, the policymakers will have the space and the determination to keep it under control, to keep unemployment from rising, businesses from suffering defaults that hit the banks. Where i would be concerned would be on the disease front, if this outbreak does not come under control, if it goes global and china does not just have to worry about its own problems but also a kind of spell back elsewhere, that is when i think we will see the capacity to manage these stresses really tested. , is do we have any idea this demand referred or destroyed . Sarsr experiences from the outbreak is that the part of the economy which its clobbered is the services sector. People do not travel, dont shop, dont go to restaurants. And for that reason i think a lot of the demand here is just going to disappear. Yes, invest it investment projects that are delayed will get back on track. Supply chains which grind to a halt will work double time. It will not all be lost but there is an important piece of this which i do not think will come back. Guy damien, turning to the currency story. Volatility is picking up and that carry trade works when volunteer at the volatility is low. What does that do . A paper this out morning talking about this, and on fridays close, you are getting a lot more carry per unit of currency volatility. That has completely changed here on monday. You are right, you are just not getting as much carry per unit of volatility. That means your buffer against losses has been reduced significantly. It is very poor for local currency, emergency Market Equities to make a right to point, so expect more pressure ahead just from the technical perspective. To us about the types of defaults we might see and whether officials in china will be open i guess it is speculation, but might they tried to hide a first wave . A lot of money is coming due. It meansking it out, it is a property sector issue. Those who have week cash coverage ratios, most at risk. If you are investing in china, it will be the property sector that will bear the brunt of it at least initially. Keeping a will be close eye on that. Thank you to our guests. Veryg up, gold is getting close to 1700 an ounce, how much upside is left. Interview from florida. This is bloomberg. Next hour,p in the we had the ceo of Philip Morris international, his take on the coronavirus and more. This is more. Vonnie from new york, im vonnie quinn. Guy from london, im guy johnson. This is bloomberg markets. It is time for our stock of the hour. Here is abigail doolittle. Abigail this is a gateway to the big sector under pressure today and that is tech more specifically the chip sector. Worst three day since december of 2018, up about 150 last year as fears that the virus could really have a serious impact on the economy. As for the chips more broadly, seriousrt shows how today is on a relative basis. 4 , headeddown about to its worst date since august of last year, supersensitive to the coronavirus that is dominantly getting asia because that sector is deeply embedded there plus from an outright revenue standpoint. Some of these companies are heavily dependent on that region. Sellout is not just limited to the chip. Sellout is not just limited to the chip. We will look at some of the megacap names, apple, microsoft, alphabet, one concern is the huge weighting of these names to the major indexes in the u. S. With the selloff demonstrating that concern. The bigger picture, the action today has done damage to the equity indexes. Now down on the year, perhaps this is an Early Warning that this years top sector may be vulnerable to similar decline if it seems the coronavirus will put a dent into the Global Economy. Vonnie thank you. Todays surging to a high as demands climb for safe havens. Now to this conference in hollywood, florida. I am joined by tom palmer, chief executive of newmont, the Largest Gold Company in the world. Obviously that will be extending withholds hitting the news highs as we have seen. Starting with the coronavirus, giving a nice thai wound tailwinds to gold prices. Yet. Are not seeing it the places that we operate are pretty protected from the virus at this stage. U. S. , australia, we are not seeing any impact operationally. Good we operate in africa, protocol in place around ebola a few years ago that allowed them to put in place some good systems to manage the virus they are. So from the virus impacting operations, we do not see it as significant risk. We are monitoring it. They are not seeing any yet in terms of supply of materials. We are watching it but not seeing anything concerning to us yet. Toif the situation continues deteriorate, do you think youll see the impacts first on the Operations Side . Is it more of a supply concern . Toof the risks were percent, i would say the supply side. That may impact us, though i do not see any impact in terms of Health Issues around the operations. I spoke to my guest today he was speaking about if the number of cases keeps rising, coupled with the fear, we could see gold prices going up. What do you think . Just watching what gold has been doing over the last 24 hours, we could potentially see it go up. Sick possibly could see it go up to those levels. We are sent lee focused on with theur business discipline. If it sparks up, terrific, but it does not impact how we run our business. Stable overut is the next five years, and it is the highest by a lot. Have you ever thought about adding more copper into the mix . Just in the presentation this morning, we provided a 10 year all the wayrofile through 2020, and we have some organic growth that will support the production level well into the next level and then decade along with that. , twocomes along with that in chile, so just by developing this pipeline, we will get a nice exposure to copper as the world goes through this transition. You are feeling pretty comfortable about what we have in our portfolio now. One about going out and adding more diversification . Our strategies are focused on being the worlds latest gold company. Our owners tell us clearly, do ,ot make a decision for them but let them make them for themselves. Staying incused on gold, with some exposure to copper, but they will make the decisions. Our focus is on the worlds gold company. Ing i spoke to your predecessor, and at the time you were warding off a hostile bid. You have had a year working together, and there was an agreement put in place. If they were to make another run at you in a year, would you be more inclined to that . Perspective, this is something that shouldve been done years ago. I think there were too many egos that prevented those two assets coming together. Realized that has been has value for both shareholders and for the communities around northern nevada. Theocus that i deliver value to our shareholders. Aboutnever people talk this, a sense of an avid dell that he inevitability because this idea has been around so far. What do you think of the concept . I think all of the talk over the couple of decades was around the synergies that existed in nevada. I was part of the iron or venture, at the start of the last decade. There are many places where there are sent in yours synergies that are needing to be realized. All of that talk was relies through the joint enter in focus, and now we need to on delivering the synergies out of nevada. Your cfo said you are looking at friendly options for friendly options forhe investors to shelve the wealth. She said the dividends are being looked at. How much headroom is there to take this further especially with the gold prices . At 1200 gold we generate enough cash to fund our exploration of advanced projects and pay down debt when it is scheduled and to pay a one dollar dividend. As we are now sitting in a situation where every 100 increase in gold price, we generate free cash flow, we are looking at what we might do at that cash. We need to look at our Balance Sheet and strengthen that. The next step is where can we return cash to shareholders. Thank you for your time. Interesting conversation. Ahead, we will take you to that cme with a sense of what is happening. Treasuries are on the move and gold is jumping. This is what the havens look like right now. Gold is trading with a 1600 handle. Got this crucial metric for the ecb heading towards 105. Bitcoin at around 7000, now trading here. Today, this is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is bloomberg markets. It is time now for futures in focus. No doubt today is a fascinating day at the cme, all sorts of products on the move. Have us a sense of what it is like down there. Oil is down four and a half percent. Are all over the place. Yes. Crude is reversing the uptrend that was realized and now definitely putting the low end of the rates back into play. A new lowis could be for the cycle. This is a price point i am watching. When you look at the bond markets, a lot of action down here today. Theng pressure across entire yield curve. If you look at the 30 yield year yields, historical lows. Guy what does that tell you . Point of view,c yields of these kind of levels, the u. S. Economy and the Global Economy is in real trouble, but it does not feel like that. Right. That is a great point. It feels like a risk off type of environment this morning. Kind of a continuation from last week, but when you look at the three month 10 year, definitely heavily inverted. If you look at the twoyear tenure and i think that is more of a metric that we Pay Attention to as far as determining what the impact will be looking out over the next 18 months. We are still seeing that at a premium basically. Again, short term there is a lot of concern that we could see a slow down here, but when you look at the term structure overall, i think it is still indicating that the market expects the economy to move ahead. You will start seeing a high probability of a cut in april. I want to play you richardg from the ceo atkinson giving a sense of how much terror there is out there. Over intod spill parts of our maintenance programs. I spoke with the ceo of inerpillar and his plants china are operating, but everybody is on edge and taking this seriously and the uncertainty around it. Was Richard Atkinson talking about how you focus and how Corporate Leaders do not know how long this will go on. What about the volatility products . Is that where the action should be . There is certainly a lot of action there. Up aroundeing the vix 24 the last i checked. There is no question that continues to be a space that is heavily traded right now. A lot of activity there. You are seeing risk off across the board. Guy always a pleasure. Wewe are counting down to the european close. We are near session lows here in europe. As you can see we are down reasonably heavy across the board. Headline herein is that we backed off the lows on the 10 year, also with equities we just backed off the lows now, s p off 2. 6 . This is bloomberg. Day. Stocks down on the the corona virus spreads around the world and northern italy has been locked down as the government struggles to contain an outbreak that affected over 200. We are live with that story. The corporate warnings continue, we will hear from the ceo from Phillip Morris about the effect the virus is having on their business. From london, im guy johnson. We are now counting down to the european close here. Vonnie today treasury yields, a 10 year of 137 right now. We got within five basis point that of the alltime low which was 13180. That is a major shift from just last yields, a 10 year of 137 right now. We got week. You can see that vix is also pretty elevated