Today, the blue line is the 20 day moving average. Joe so much action. Plunge, the. 4 worst decline since august 2011, a sixth straight day of losses, and we are in correction mode. Lets talk with all of our reporters. Abigail. I would like to put today in context. It is brutally ugly. It is brutally ugly. Headed to its worst week since 2008, the nasdaq down 12 . Is down 14 . Ex 500 is the only one to go below its 200day moving average. Chart ahead of the selling of the bearish divergence was so stunning and so striking, the question was not when or if the music stops, but was. The new york faang index is we could seeended a decline of greater than 15 , supported by the bearish rsi, not even close to oversold. Ahead fore selling stock indexes in the u. S. Thank you. ,m looking at highyield debt a 2020 gains. Spreads on junk bonds are now the widest since august. The rally and can be seen by the fact that 2020 returns have almost evaporated. 500 is downhe s p more than 6 with an increasingly grim outlook. It looks like credit markets are now on the same page as stocks. Thanks im looking at commodities, its fourth straight day lower, trading at multiyear lows. Coronavirus worries continue. Investors are sorting through makes messages from u. S. Officials about the threat of the virus. Demand for rawn. Aterials will decline markets are in a strong repricing mode as well. Joe thank you. Our across asset reporter and the president and global cio of wells fargo Global Asset Management is with us. The view seems to be a above people that the fed cannot do a lot. They cant not do something. Do you expect them to act in march 2 cut rates . Interest rate cuts are not a vaccine. We need a vaccine for the virus. We expect the fed to cut. Im not sure it will have much impact other than psychological, but im not sure its going to do too much at these levels. There is a lot of liquidity in the system. The Central Banks were very accommodative coming into this, and that will continue. But imll be rate cuts, will have that much of an will have that much of an impact per se. Scarlet are people saying anything about ecb rate cuts. Christine lagarde said they are not ready to do anything about it yet. Scenes, one person said Christine Lagarde might be for pushing germany and other countries to open their wallets. That could be another reason is up today. Ro most of the pressure has been on the fed. The markets are thinking this will force the feds hand. Move, butt want to especially now that the virus is in the u. S. Scarlet we do have some earnings. Beyond meet gave a full year net revenue forecast in fourthquarter numbers that beat estimates. 20 20 revenue will be 400 90 million to 510 million. Analysts were looking for 485. 7 yearon, so the full forecast beating the average estimate. 98 Million Dollars was the reported topline. Nostalgia for beyond meet . Very different vibe. Joe im curious. As this market continues to be volatile, people have their shopping list, asset classes, indices that attract them. Is there anything you are watching that will rebound the fastest when this market does settle down . Nearterm, stocks with the dividend yields cushioning you on the way down. Once this resolves, i think the market will snap back quickly. Not beterm, i would surprised if growth comes back towards the end of the year in the market could snap back. Like the bond market, i think there is a potential for a bifurcated outcome. I cant call the bottom, but you want to own those stocks you want to own at the end of the year and look through this, so a lot of good buying opportunities. Scarlet when do you expect people to start putting the money to work . We were talking about the preemptive selling before the preemptive selling on friday before the weekend. Professional traders market, so i would be careful. 100 to spend, i 33, then wait, you cant call the bottom. I believe longerterm there are great buys, and what you want to do is segue in. Joe what will you be watching for . The chinese markets. They feel like this quite haven, especially in this last week. They did start from a much lower starting point. Starting point. They are in recovery mode, the s p 500 is falling from record highs. What can a central bank do to fight a virus . Been aggressive getting out the stimulus, even if it will not find a cure. That has helped to give traders confidence in that market. The National Team out in force helping to support prices. Was one of the first to feel the impact and get hit, when we get the recovery, they will be one of the first to recover as well . Or as the worlds factory, that . S not possible emerging markets are cheap. I think that income will cushion you, but emerging market Equity Income with that 3 to 4 dividend yield with potential upside is a good opportunity. People have been saying emerging markets are cheap for a while now. In 2019 thinkst this would be the year of sustained emergingmarket outperformance. In my mind, the dollar has to come down to earth. Us this wouldht be the year of em. That has been postponed. In thefed does cut dollar stabilizes or starts coming down in the Global Supply chains normalize, that will be the time to get in. I think you could have good upside. You are right. Emergingent rally in markets has been postponed. Scarlet thank you. That does it for the closing bell. Whatd you miss . Is next. Schools closing nationwide in million kids will stay home. This is bloomberg. Is bloomberg. Scarlet i am scarlet fu. Joe i am joe weisenthal. Scarlet its ugly. Lots of red. Session lows. , six days of4 losses. How many more superlatives can i add . Joe not many left. Whatd you miss . ,carlet Global Equities plunge sovereign bond yields sank on virus fears. Monitoring 8400 people for signs of exposure to the coronavirus. The worst in his career. We hear from one veteran money manager on why he is sounding the alarm on the impact from the virus. About theld you plunge in stocks, a sixth straight day of losses. It is continuing. This is the futures market. Im going to circle this line here. That is what is happening after hours. Thought the closing bell would offer some respite, and not so much, futures continue to move lower after hours, not massive, but no let up. Scarlet this is what happened. The nasdaq off by 4. 4 . Microsoft not helping. It revised lower. 39. Vix now tlt higher. Pressure close for 10 year and 30 year yields. The euro getting a boost, carry trade unwinding. Joe going back to that long in. I noted a different feel, although the market had its worst day of the selloff, it was not the biggest update from longhand. People have been so bullish on s. Nghand bond flight tod have a treasuries, just a 1 gain, doesnt do much to balance out the risk side of your portfolio. Scarlet it looks a little unbalanced, doesnt it . Treasuries had been surging. Joe and they never really sold off in the last bull market to this week. There have been quite a few buyers. We will talk about that on the show. We will talk about how the rally and bonds continued. That seems so long ago now. Coronavirusbout the and the impact on supply chains. Joining us now is the director of the m. I. T. Center for transportation. Thank you for speaking with us. We know early on in the outbreak that there were a lot of comparisons to sars. Now people are changing the frame of reference in looking at orhaps the financial crisis other shock events. How would you think about it when it comes to supply chain disruptions. Is there a comparison to be made to any prior event . Me. Hank you for having i would like to ask you next time when you invite me to speak , i would like to speak with an introduction it is a little bit more upbeat. Scarlet fair. When we talk about supply chains in general, first of all, i was writing a month ago it should be compared to 2008, because we dont only have supply disruption, factories closing, but we have a demand problem. People are not buying. It started in china, now all over europe, starting in the united states. It is going to get worse before it gets better. About which companies will be most endangered. Of the things a lot of people have been discussing is the complexity of modern supply chains, justintime manufacturing. Companies without a lot of spare inventory, concentration risks, how much of the supply chain is in china specifically. We know this disruption is happening. How hard do these things make it to recover . All, the complexity of the supply chain is not a problem. , there is a lot of inventory. Chinese factories have closed for six weeks and we still dont have any shortages in the marketplace. It will come. It will come, but there is a lot of inventory in china, a lot of ships at sea that still have so towardsn them, the end of march i expect to see shortages. Lets talk about a phenomenon that will focus the mind on which companies should be helped we talk about the socalled bullwhip in the supply chain. The Company Systems tell if there is less demand coming in. Cut its orders from the wholesaler. The wholesaler will do the same thing, and so it goes on from supply to supply. The most Vulnerable People are the small suppliers. By the way, the Chinese Government totally understands. They now ask all the state takes to loan money to the small suppliers at the end of the supply chain and even cut their taxes. They are starting to do it. In the same way, companies should look at their suppliers and who is vulnerable, who should be helped. In 2008, companies extended credit and invested in their critical suppliers. Go ahead. A great pointake illustrating the knock on effects of how a cutback in demand affects the supplier and their supplier as well. What happens when that the man picks up . People are talking about a vshaped recovery, but there will be a pickup in demand. How quickly does that system turnaround . Be theshaped. Many of the suppliers will be out of business. What happens is the following, others have lower capacities and cannot supply all the orders now, so what companies are doing is they start do phantom orders, ordering more than they need because they know they will only get a percentage of this. Suppliers cannot supply. What you should be having is the bullwhip in the opposite direction. Now it starts affecting customers and their customers and their customers. Nobody can get enough. It will not be ashaped recovery. We did not have it in 2008 because of the same phenomenon, so i dont expect to have a vshaped. We talked about Companies Looking at the supplier from a they should also look at the customer. Beht now company should deciding what if we dont have enough parts to build all the products . Many parts go to multiple products. Which customers are we going to save . Who is coming first. . What are the priorities . You want to set up some rules right now when you still have some time to breathe. We can also talk about government. Joe do you think there is still time . All these things you talk about, ideally companies would have had this contingency planning. Nonetheless, we are here and presumably some companies are better prepared than others. Is there still time for companies to make adjustments and think about these things, or once they are prepared they will be in better shape . For some things there is no time. Suppliers, alternate there is no time. It is too late. If you didnt have context, quality insurance, is not going to happen. However, preparing for priority of customers, this can be done now. Decisionmaking, rules about what happens and who makes decisions on what. Companies can still do all these things because they dont take a lot of time. They should also start thinking , who are the crucial workers, how do we think about continuing. The last thing they should think to manage cash. Cash is king. Companies are changing their supply chains because of the trade war. We did get the phase one trade deal signed, but that doesnt change the scope of the problems over all. Do you think the trade war change the processes the company had in place with their suppliers and customers and that that is still in flux and perhaps it is holding off or changing the way that they would make these contingency plans . To make theserted contingency plans and move to other places like vietnam, malaysia, and indonesia. Where would you move now . South korea doesnt look like a safe place. Japan doesnt look like a safe place. So it is not clear where to move. You want to move to mexico . I dont know why mute mexico would be immune to all of this. The move has nothing to do with the coronavirus. Companies will spread and have some redundancy in suppliers and more than one country. That is something companies have not doing, but it certainly the way at this point. Joe great to get your perspective. The centeressor of for transportation. This is bloomberg. This is bloomberg. Scarlet u. S. Stocks down more than 4 . These are u. S. Futures. Look at this. Lower after the close. Joe no respite for the selling. There is still time. How many headlines will we get over . Scarlet the National Team in China Support stocks there. Joe this is bloomberg. 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. Scarlet stockmarkets in the red , treasuries rally. That has been the trend all around. Our chief bring in economist. Talk us through what you are seeing. Howe is more talk about economies are slowing down to the point of contraction. Thats right. Ist we have tried to do think about the various possible outcomes. The data we are using are mostly weekly numbers of china. We did some data starting tomorrow. Pmi. Reports his official that will be the first reliable toptier data, then we can we find. We are estimating based on the fact that half of chinese lending,n is still supply chains that been interrupted, then extrapolating from there. Today,t yellen said certainly a recession cant be ruled out, but it is not a certainty either. Joe is this market looking data at all or for the time being headlinesminated by of new coronavirus outbreaks in europe and the u. S. . That is a terrific point. This afternoon was protracted , a completebids breakdown of liquidity in side as, and on the bond lot of it is reactive, adjusting hedges, getting out of the way, and so on. It is extraordinary difficult to do a cogent analysis. Can come best work we than 24 hours a whole new set of information to work with. That doesnt mean the market is meanevery day, but it does the uncertainty remains and it will be difficult to draw conclusions about where the economy is in six months to a year. Scarlet what will force the feds hand . What is the catalyst . It is a combination of those things and the economic impact. Aboute been hearing a lot how fed policy can fix a supply but ifand that is true, you have an economic engine not firing on all cylinders, the response is to provide extra fuel to the other cylinders and theythe engine going until get that missing one firing again. That was the approach last year to the trade war, and the same logic applies now. Fed hasf that, the been, even before all of this, laser focused on inflation. Thistion is very low, and Global Demand crunch is a further threat. Joe thank you. Earnings from baidu, q1 billion yuan, a bit on the low side. , that is a bit of a beat. Scarlet the cdc says it will widen coronavirus testing to more people. So presumably we will get more. Umbers we are looking at futures. It had been declining, like a Straight Line down the way the market had been trading in the final 10 minutes, but we have a little bottom here, but still points to an ugly open. One of the hallmarks of this market has been extreme moves after hours, basically no way to know whats going to happen. Monday night we had gains that didnt hold. There are so many headlines. They can pop out of nowhere. The cdc said they will test more people, leading to more incidents, leading to more selling. Like a mirror image of when we were melting up. More im going to talk the Research Director at jerome levy forecasting center. Wrote a report about the relentless bid in treasuries before the buying related to the coronavirus. We never saw a meaningful rise in rates. Longtermlook at the is an on treasuries, it it better and better hedge for stocks. When stocks are down, that has become better and better over time. They are serving as a better hedge. Absolutely. To buye to have money when they are low. Scarlet why . Isthe conventional wisdom targeting. Has i show in this note it been volatility was treasuries have done well. The Balance Sheet is bloated. Fear we willys a get into it deflationary crash. Important part. You talk about big Balance Sheet economics. We have so many Financial Assets in the world that even slight periods of volatility create real risks to the economy, forcing the fed to act. Thats right. Lookhe main reason the coronavirus. There to think might be some inflation, but are they showing worry about inflation here . Clearly not. That is not the concern. People are more worried about demand. I go back to what our guests said, if globalization slowed down inflation, then the trade war we had last year and now the outbreak of the virus would lead to deglobalization, so wouldnt it follow that the virus would be inflationary . Temporarily. If are going to bring back the apply chains, there will be one time increase in prices because the cost structure will go up. As sustained increase inflation, Balance Sheets collapse, which is deflationary. Could we see a sustained increase in inflation if we were to get the mythical monetary to fiscal handoff in which governments stop relying on Central Banks and started pushing much more aggressively was spending to boost the economy . That is possible. It depends on the position of the policy. There is policy that really creates demand. It is possible. Fiscal what kind of policy creates demand . If you are giving tax cuts to very wealthy people, that doesnt get into the demand immediately. If you give money to people, like they did during the people,n, the lower in most of that gets into spending, but the best possibly is outright Infrastructure Spending and things like that. You have been skeptical about emerging markets, pessimistic about china for a long time. Do you expect them to change their economic lay book at all in response to this. Could this lead to some strategic, structural shift, or the same fundamental situation . Even to make a fundamental know, that is very hard to what the political economy is. Look at emerging markets. Here is a problem. When they started growing, there was great for him because it was developing export markets. You have to use the opportunity to build a domestic Consumer Base, which means you need much more even distribution. Say . Do we always domesticto build Consumer Base with income broadbased and more people can afford appliances and things like that. They have not done that. The Income Distribution has become acute in places like china, so you have not developed a Consumer Base and now globalization has peaked and youre left with nothing. Thank you for your perspective. , investors assessing the coronavirus spreading across europe, now appearing in latin america. We will check in on emerging markets with our guest. This is bloomberg. Scarlet investors on edge, risk assets falling, including emerging market stocks, pushing the key index to a level where stocks are oversold. Cofounder now is the and ceo of one of the worlds only womenled activist firms. Great to see you. Thank you. Scarlet we kept hearing about how emerging markets was going to outperform the u. S. And it was time to catch up and it would be the market everyone should be in, then the coronavirus hit. Is that thesis dead now . I think it has changed. Saw at the beginning of the year was valuations that were attracted and em. Ammunitionf policy left in developed markets, but ammunition left in the emerging markets. It was poised to do well. China is the engine that a lot of the emerging markets trade. Expect china to do aggressive stimulus on the , a type or fiscal side that would fill into demand for other emerging markets . China is extending more loans to the smes to pay salaries. Grants, loans,re probably loans, but they are thatg to a big debt burden they will have to pay the piper for in the next quarter. It will be interesting because they have been very disciplined about not overstimulating through credit, but their first move is through credit. Right now there is no hard data. Policymakers dont have the data yet to formulate what they will do. Thelet im looking at bloomberg terminal, clearly a lot of red today. There are some spots of green. The hang seng is set up, the csi 300 up. The csi is only down 0. 3 for the year. What is going on . Shenzhen is up almost 10 this year. The chinake away is markets have nothing to do with financials. Joe i thought you work in tell good news, green shoots. The best performing stock index is the shenzhen. Isna traditionally completely divorced from fundamentals. We know that stock Market Performance is not related to gdp performance. We are talking about this quarter having probably 2 growth, Something Like that. Scarlet what will it be for the year . 5 , down from the 6 to 6. 5 they are predicting. This is a huge supply and demand shock that will take time to recover. Know if the virus will recur. There are many things we dont know. It is just crazy you have the best performing stock market in shenzhen. Joe i would not have guessed that. Obviously investors are betting we will see some respite. Now . Ate cuts from the fed with that benefit emerging markets or is that the same because it is still so much risk pullback that rate cuts can have that effect . , would be a little skeptical. Policy isll, monetary a very powerful tool for the u. S. At this point. The other thing is the only other thing that could be positive would be the dollar might not continue its relentless rise. As emergingmarket investors that invest with dollars, we would like to see existing. Nvestments rising we might see currencies rise if there are rate cuts in the u. S. Joe thank you. , the virus being called possibly the worst event in history. We will have more. This is bloomberg. Scarlet one chief Investment Officer voicing his concerns. We asked if he thinks a bear market is inevitable. I dont think it is inevitable. I have had the opinion that s p should be between 3000 and 3100. We need to take a breather and get some perspective. In, asdata keeps coming i have said to some people, an epidemic is when your neighbor has the illness, a pandemic is when you have the illness. Turns into an epidemic in the united states, we have a lot more downside. To be two seems things that make this different than anything we have seen lately, one is the extreme level of uncertainty. It is hard to model Something Like this. Second of all, we have had volatility, which can usually be , somesed via a rate cut stimulus, rebalancing. A rate cut may in theory help, but it is not a monetary phenomenon. Not at all. Fairly impotent at this point. Is noe have there demand shock. It is a supply shock. Come on. Hotels in new york are empty. People are not traveling. It is a demand shock also. Lowering Interest Rates will not encourage somebody to take the risk of getting the virus. One thing i have not said to anybody else in public, this is possibly the worst thing ive seen in my career. I have been through a lot. Ive been to the stock market crash in 1987, the financial crisis. This has the potential to turn into something extremely serious. Scarlet at what point did you have that realization . This morning. Scarlet what happened this morning . When you look at the data that came in today, not yesterday, but what we picked up overnight for increases in cases inkorea, increases in cases italy, and now spain is becoming big. It is very hard to imagine a scenario where you can actually that is the, and so thing that is to be very frightening. Scarlet how likely is a global recession. How do you quantify global recession. What kind of numbers . We have to make sure the chinese arent lying about their numbers. I went on record and i said i thought the gdp on an annualized basis in the First Quarter for china would contract by 6 . Isi is now saying 14 . I dont think the Chinese Government will print that kind of number. If that is the substantive number, we are in a global recession. Scarlet right now . Yes, at this point. I think europe would easily lose. 5 to 1 of output, putting most European Countries into recession. For the u. S. , it is said little different. I think for the moment where we are we should expect about. 5 drag on gdp, other experts say 1 . That is not a u. S. Recession, but it has the potential to cascade into that. Up, footlocker reports fourthquarter earnings. For u. S. Personal spending january out at 8 30 a. M. Scarlet Bloomberg Markets is next. Joe have a great evening. This is bloomberg. Bloomberg markets. Coming up, spanning the globe, no continent except antarctica is free from the virus. California is monitoring 880 400 people. Guggenheim says the coronavirus may be the worst event of his career, stocks enter correction territory