Matt the coronavirus spreads stateside. New cases across the u. S. Including in new york city. President trump meets with pharma executive today as the global death toll passes 3000. The fed is in play. Policymakers stand ready to cut rates but doubted they can fully offset the virus in fact. Goldman sachs sees a 50 basis point reduction this month. Berlin reports its first case of the coronavirus. Italy seeks a wider deficit to pay for emergency economic measures as cases soar. We are under an hour away from cash trading in europe. You are getting 1 to 2 gains in futures, the ftse futures up. This is after the biggest route we have seen, we saw last week since 2008 for the broader stoxx 600 european index. Getting gains in the preachers in the u. S. Are not as sharp but we are 7. 5 hours away from the start of trading there. The nasdaq, down, many contracts rising this morning. What are you seeing . Money going into risk assets. That is the theme through the Asian Session and markets expect a lot from Central Banks. Whether they can do a lot on their own is debatable. What can the fiscal side do, what is the Global Leadership going to do . We will hear from the g7, if they will give reassurance and how much can be believed in the containment measures through dort this is what things look like better than friday, better than last week. Really interesting to see the Chinese Market bouncing to the extent it is. That is a slightly separate story from the other bounces which are driven by what can Central Banks do. On thes a focus infection rate coming down and recent data which is reassuring. That is what we are seeing on equity markets globally. There could be something at the margin to suit things here soothe things here. Indonesian week, assets in focus as we look at the indonesian government announcing its first case. Indonesia was a feature, but also new zealand and the United States. New zealand is interesting because there is a case as we know over the weekend and we have an expectation of action from the central bank in new zealand, movement in the u. S. Tenure illustrating how we are 10 year illustrating how we are seeing adjustment from the flows away from risk assets and enter the safety of sovereign bonds last week. Into the safety of sovereign bonds last week. Iron ore is up in singapore. Lets go to our managing editor. Grilli good to have you on the program really good to have you on the program. How much do you believe in the rally . You made the point even in bear markets we see squeezes higher and equity markets, easing out what we are seeing today. Are we back to selling later on . Mark i think we are maybe not for a couple of days but in the weeks ahead we have lower rises to trade. Overall this story will evolve into one of Economic Impact. Recession risks will be a global thing to ponder. Only get these riskaverse , risk aversions, it is a genuine a versions, it is a genuine one. Monetary policy will make us not going to the worst Case Scenario and then panic takes over and we have brief times of shifting the price lower. Now we have the shift over last week. We will be going drop to optimism. It might only last 24 hours or a week. We will have to pricing in the massive disruption into the supply chain we have seen because of the chinese economy shutting down. It is not just the bear market. We see the most powerful shortterm moves higher. 4 move 24 0 move into days. It is because it is in the bear market when is short it is most portable to the squeezes. You dont see such rallies in a market that is when you see as it was volatility. In the next couple of months if we will see lower prices you will also see plenty of very shortterm to present squeeze higher in the index as well. Higher in the index as well. Matt i have this on my chart. , have got it for the euro area which is, you can check it out for asia, the u. S. , the euro and click into this chart and see how much financial conditions have tightened. It is clear the fed has some room but the ecb seems to have no bullets left. What can be done for the euro loosen financial conditions . Mark it is not just the euro area. Many countries in the world are near zero rate or below. Therefore it is hard to know what they can do. Many countries have applied serious qe. Will more liquidity change this . Cheaper rates, cheaper ability or money to cure people doesnt cure people. People not going out and factories closing down isnt being helped. That is why traders are nervous. Academic problem and risk which would really be solved by monetary policy. Of course it eases some of the concern and the immediate pressure of Companies Going bankrupt but it doesnt solve the underlying problem. Even though there is a big expectation Central Banks will respond globally in the weeks ahead and that is why we have a lot of volatility, we are going to get powerful rallies, overall for the next couple of months we will see equities trade lower as people realize there is going to be this severe economic slowdown that will feed through in the next few months. Anna lets focus on the data we have had thepeople realize last. Some of that comes from china. The pmi taking the market by recep by surprise. We need to be mindful will we see the pmi from various countries, mindful of the time horizon, during which the fieldwork was done, the collection of the data. It has been a recent phenomenon expectations of a more severe Global Impact have come through. That relates to Business Expectations as well. Mark that is right. The pmi is the most important one today because we are getting the full release. The services on wednesday and they are seen as a highfrequency, quite a forwardlooking indicator. But the coronavirus threat was mainly perceived as a china problem until about a week ago. In all of the pmi numbers, output will be affected by the threat of coronavirus. They knew it was a problem in china after the supply chains. There was a problem for demand out of china but they didnt know of the domestic threat. When the surveys were done a credit virus was not seen as a big problem in europe or the u. S. , not even the rest of asia, i think those pmis will be very misleading in terms of not as low as people think. People knew of the china problem. Now you have got other data which will come through later this week and again most of the data is looking back to january or february with coronavirus impacting massively. It has been a recent story. Think of the country data which could fuel the shortterm positivity. We could get a scenario where the next couple of weeks is about Central Banks providing stimulus, cutting rates, getting data that doesnt look bad and everyone saying this is a false threat. And then we start realizing how bad the economic blow this will be. Matt thank you for joining us. He is the bloomberg mliv managing editor coming to us out of singapore. We will take a look at your stocks to watch including toto, bp and shell as the coronavirus hits demand for oil hard. Remember Bloomberg Radio is live on your mobile device or dab Digital Radio in the london area. Tune in. This is bloomberg. Anna welcome back to the european open. 48 minutes to go until the start equity trading day. Based on expectations of what Central Banks can do here at the margin perhaps, that is set to continue equity trading day. Through the european session. We see European Equity markets called higher at the start of the monday trading day. Lets get to bloomberg first word news. Reporter the number of coronavirus deaths around the world has risen above 3000. The total number of infections over 80,000. New york city has reported its first case. A woman is isolated in her manhattan apartment after contracting it in iran. The governor said it was a matter of when. Organizers have canceled the first two races of the motor gp season. This comes as the coronavirus has led to travel restrictions across the globe. The opening race was set to take place on the outskirts of doha next sunday. Oils freefall has been halted by opec. Pluripotent said mark russia is rooted to support the World Oil Market even though it is comfortable with karen prices. Prices. Nt Oil Consumption may not slow at all in 2020 some say. The southden has won carolina primary. It moves him closer to Bernie Sanders. Great Buttigieg Pete buttigieg has pulled out. , super tuesday, 13 delegates hundreds of up for grabs. South korea says the north has launched two unidentified missiles off of these coast. This is on the anniversary of the failed hanoi summit. The north Korean Leader said he was no longer bound by selfimposed weapons tests. 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, matt. Matt thank you. Laura wright in hong in london. Your stocks from around the newsroom, Annmarie Hordern is looking at nokia. Our Equities Team is covering oil stocks. What is the leadership story at the mobilephone maker . Reporter the see sweet is isnging in c suite bringing in someone new after they failed to bring gain traction. They are falling behind ericsson and huawei. What nokia says this person brings to the table, consistently delivered on shareholder returns am a Strong Player in the Global Energy sector very whether or not he can bring the same kind of momentum into nokia, we will see what the market thinks of it. Storyreally interesting given the focus on the big picture moves around coronavirus. This is where the virus comes in once again. Interesting trade on oil dropping at the start of monday session in asia but now on the rise along with other risk assets into the european session. Reporter what we are looking for today after the carnage of last weeks pockets where you are going to see last weeks pockets where you are going to see recovery. Oil will be one of them. It is quite a way up. Futures in europe or higher. The oil stocks are going to be higher. It will be a busy week. There will be an opec plus meeting later in the week. There are concerns about how much of the virus was hit demand. There is a lot of moving parts. Anna thank you to sam and annemarie. You can get all of the stocks stories our team is covering. Go to the bloomberg or through the mobile app. The fed is in play. Policymakers open the door to a rate cut to cushion the blow of the coronavirus. How low will they go . We will ask the questions that matter. Tune into Bloomberg Radio live on your mobile device or dab Digital Radio in london. This is bloomberg. Manus welcome back. This is the european open. We are 41 minutes away from the start of cash trading across europe after the big drop that we saw last week. We are seeing a bounce in futures this morning. Lets get to the Bloomberg Business flash. We go to laura wright. Reporter Elliott Management has taken a stake in twitter. The activist investor is pushing for changes including replacing jack dorsey. Nolearned the sale comment from either side. We could not determine the size of elliotts stake. Deutsche bank facing scrutiny. The Financial Times as it has to give money updates on and take money money antimoney laundering. Concerns stemmed from an incident in which the bank mistakenly sent data related to the transaction of 500 clients to a corporate customer. He was regulars told boeing pilots may need additional training. U. S. Regulators told boeing pilots may need additional training. It includes replicating the mistakes of the two fatal crashes. It is the latest application for efforts to bring the max back into service has been grounded for more than a year. Grounding flights and planes. The german carrier is casting as much of efforts to bring the max back into a quarter of its t and medium haul flights. The first annual decline in present passenger demand in over a decade. That is your business flash. Thank you. The worldwide death toll from the coronavirus has gone past 3000 with the operate now reaching more than 65 nations. That is as chinas economy could be heading for a worse than expected firstquarter contraction after activity reported at a record low in february. We are joined by our reporter Sophie Kamaruddin with us from hong kong. Spring is up to speed on the global spread before we dive into what has been going on on the chinese data. Sophie we are seeing a pickup in cases through europe, north africa and the u. S. With cases in california, Washington State ad new york citys seeing positive case. In italy we have seen a jump of about 50 in the attempts to seek a widening of the budget deficit in order to get relief measures. In china we are seeing continued to climb topping 80,000 on the mainland. This as we are exciting more stimulus from policy makers to offset the impact of the virus. Slowdown you seeing a in the growth rates . Sophie when it comes to the cases in china we are seeing a bit desperate of a slowdown in Hubei Province seeing a bit of a slowdown in Hubei Province, not as negative given the containment efforts but it doesnt mean authorities are not on high alert which is still seen as several countries maintain travel restrictions to an from the mainland. We are seeing a pickup in fatalities elsewhere. Iran is a growing worry. The who is sending a team to investigate. Here onhave got a chart the bloomberg terminal, 3801 if anyone wants to check out the rate of increasing the rate of infections in china. It is slower. The markets attention has gone global. We have pmi numbers out over the weekend from china and i wonder what they tell the overall number is disappointing but what do the numbers really tell us about the impact the virus and containment activities have on an economy such as chinas . There is weakness in the supply chain, exports likely to take a hit. We got a private gauge of chinese pmi out reinforcing the outlook and so the chinese economy is expected to contract in the First Quarter and for 2020, anz and barclays among those seeing growth for the chinese economy. This outlook, policymakers looking to provide support. On sunday the pboc and financial regulators financing chinese lenders will be able to delay, recognizing bad loans from until the end of june. A reprieve for borrowers but it means bad loans will pile up on the mainland as the economy slows. Matt Sophie Kamaruddin reporting on the virus for us. Joining us to talk more is the cio at a bp invests. Warned of this kind of Market Reaction you had warned of this kind of Market Correction when you were on surveillance. Do you think it is done . Have we passed the worst . It was not warning against the impact of coronavirus. I was not expecting such a move. It was mostly ahead of the super tuesdayi thought the markets wet really taking in proper Political Risk in terms of what the price is good come from that. That was because of the valuations within the s p. The markets were overvalued, expensive and whatever triggered the direction would have had the impact. This is the trigger rather than the cause for the s p. Anna you saw the market was ripe for this. I wonder what we can learn from the way the chinese equity market has responded because china is ahead in dealing with this. Csi, wemazingly on the seem to be back to where we were before the market was really focused on this in china. Does it tell us about something out when the city authorities taking really Decisive Action . There is pentup demand. So the vshaped recovery will certainly take place with a stimulus especially if it is between u. S. , china and europe. That is out of the equation. We will work ethically in terms of the recovery. D demands some misse like conferences and events which have taken place. I was going to be with matt today but the event which was going to take place was canceled. Rescheduled for may. Another event was also canceled. Other events in other cities have been canceled. So there are elements where a vshaped recovery will take place and others where it will not. The stimulus will be sufficient from the various policymakers but in terms of recovering as we had, not necessarily. Anna you have been looking at the car sector events. To go toas supposed geneva today for the auto show and i was going to go to delhi to watch the first round of the moto gp. Both of those have been canceled so we are all going to stay where we are. You are going to stay where you are. From him. Chinas factory activity registers its worst month ever 30 we will discuss the Economic Impact of the coronavirus. This is bloomberg. Were down 1,000 points on it matt welcome back to the european open. 30 minutes away from the start of cash trading on this monday morning after a disastrous week for anyone long stocks. Last week the worst for the stoxx 600 since 2008. Im matt miller here in berlin with anna edwards at our European Headquarters in london. Anna . Anna now, the coronavirus is spreading state side and u. K. C. New cases have been reported across the United States including in new york. President trump is meeting with its pharmaceutical executives today as americans grapple with the prospect of a widening epidemic. Lets get back to Thanos Papasavvas. C. I. O. At a. P. B. Invest. We heard from the fed on friday talking about the evolving risks and being ready to act. We understand that the g Central Banks are going to be talking today. And yeah. Going foff a teleconference not today but a tell conference this week. What difference can Central Banks make here . Thanos well, i think thats a very key question. Two things, one is the three things. Number one is where theyre going to be acting. And so in itself providing some sort of sense that we are aware of the problem. And were willing to take action. Secondly, actually mentioning that in writing to the markets that were ready to react. And the third is the actual action that they take. So they can do it gradually in three steps. I dont think theres any reason to move straightaway to the action until the previous have been done in order to see how the market react and whether the virus spreads in the u. S. I think thats the core right now. Weve seen the spread the virus spread in europe. Arks being taking place in china seems to be contained. What is the impact going to be in the u. S. . Anna ok. Matt we have headlines coming out from vilaroy saying g7 central bankers will have a teleconference this week. How unusual is that, thanos, how likely is it that they do indeed act together and what kind of impact would that have on the markets . Thanos i think i think what we need to see is the volatility of the markets until then. If there is a sense of stability, there is no reason for them to pull the trigger before the normal meeting takes place. The fed is meeting later on this month. Middle of the month and also the b. O. J. A little bit after. So unless there is a continuing panic in the markets, i dont see a reason for them to use that. Dry powder, but certainly it does show to the market that we are there. Were aware and willing to take action if need be and certainly in a concerted action. Anna yes. So really interesting the g7 talking in this way coming together and i wonder if others on the more fiscal side, hear from the g20 or any fiscal coordination there. This chart with u. S. Financial conditions, matt was talking earlier about financial conditions in europe and what can be done. This docility the impact that this must already be having on the u. S. Market. And financial conditions have reacted in such a dramatic fashion, there is something for the fed to act on. Already. Should they choose to do so. Thanos yes. Certainly. In terms of the impact this has had. It is real. And there is room for them to act. The question is should they wait and see after the panic of last week what the impact is . In my view, reason why we had such a sharp correction last week was because of the structure of the market. We had significantly more passive funds in play. More Systematic Trading systems. Which tend to accentuate the momentum and the negative momentum. So let us wait and see what is the impact. And if they need to take action, clearly theyve got the data to support that. Matt so you think that the more passive investors in the market, the more were going to see these huge swings to the downside even maybe to the upside as well . Thats exactly right. Both to the downside and the upside. Theres an elevated volatility. And whether the volatility raises the fear, it triggers systematic positions being unwound. And as a result, accentuate being the moves. And we can also see that in terms of the greed. The rallies we saw in february, the continuation of that with low volatility is also partly to do with a systematic and passive investment. Anna passive and Systematic Trading may be in play and Risk Management perhaps and interesting to see what was going on with gold last week. And it started off displaying the the characteristics you would expect. A haven and toward the end of the week sell off and risk managers maybe getting involved and look, you got to sell stuff thats thats sellable. Thats got some volume to it. So lets get rid of this. You dont you very interesting moves in those havens, for example. And not the way that we would maybe anticipate. Has that made sense to you, thanos, through this . Thanos it has because of the liquidity aspect. In times of severe corrections, you want to make sure you have the liquidity in order to balance or protect your p. N. L. What is important in that case is to make sure you dont sell the liquid and hold on to the illiquid. This is what happened with the crisis. So very important to make sure that you reduce the overall risk of the portfolio and you do it where you can. In both liquid and illiquid assets. Matt where do you see the best place to hide here . Where do you see the best safe haven trades . Better still Still Available at a decent valuation . Thanos well, its always about that diversification. In my view the best way is to be diversified across the asset classes. Both in public and private markets. Which do provide some haven in these times of uncertainty. And volatility. And to sort of be aware of the diversification between growth and value. But in my view, we should not be panicked here. I think it was overvalued. We have seen a correction. As long as the virus is contained in the u. S. , i do not see this spiraling out into sort after global recession. I think policymakers will be there to take the appropriate action. Anna containment. Well make some yeah. Well keep our fingers crossed. Thanos, thank you. Thanos papasavvas, c. I. O. Of a. B. P. Invest. Coming up, chinas factory activity registers its worst month ever. Up next, we discuss the Economic Impact of the coronavirus. This is bloomberg. Bloomberg. Anna welcome back to european open. 22 minutes to go until the start of the equity trading day. The aschaap session marked by a change in tone. Much more risk on. How long will that last . Just a temporary a short squeeze of in some sense . We have the msci up by. 8 . The chie Cheese Market bouncing and the expectation europe will bounce as well. There are hopes that Central Banks might take some coordinated action here and that could that could support the markets a little bit. Lets get a bloomberg first news update. Heres laura wright in london. Laura thanks, anna. The number of coronavirus deaths have risen above 3,000. The total number of infections over 88,000. New york city has reported its first case. A woman is isolated in her manhattan apartment after contracting the virus in iran. Governor andrew cuomo said it was a matter of when, not if, the virus made its way to new york. Organizers have canceled the first two races of the moto g. P. Season including qatar and thailand. The move comes as the coronavirus has led to travel restrictions across the globe. The opening race was set to take place on the outskirts of doha next sunday. Oils freefall has been halted by expectations that opec and its allies will deepen output cuts. Vladimir putin says russia is ready to support the worlds Oil Market Even though it is comfortable with the current price. A growing minority are thinking only for the fourth time in about 40 years Oil Consumption may not grow at all in 2020. In the u. S. , former Vice President joe biden has won the South Carolina primary. Bernie sanders maybe having peaked and Billionaire Tom Steyer with buttigieg suspended campaigns. And up next super tuesday, 13 states and hundreds of delegates up for grabs. Global news 24 hours a day on air and a quick take by bloomberg powered by more than 2, 00 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt. Matt all right. Laura, thanks very much. Laura wright there in london with your first word news. Now, over in china, the first Credible Data on the coronavirus Economic Impact showed the worlds factory slamming to a halt. The Manufacturing Sector dropped to a record low. And the response so far has been the biggest stock rally in months. Investors are banking on beijing loosening the Purse Strings and providing more fiscal stimulus. Indeed, thanos, we saw china order banks to let small and medium sized businesses slide. When it comes to missing debt. I think until june, which is a pretty decent a pretty decent vacation from payments. What do you think of the worlds factory as people refer to china, the state its in and how quickly it can bounce back . Thanos well, i trust the chinese policy marings. Policymakers. They will do whatever is necessary to contain the economic crisis. Partly because they need to ensure social cohesion. We have not been hearing about the hong kong developments. That has been very much on the sidelines. But the Chinese Communist party and the chinese policymakers are very much attuned to the potential impact that may have. And an economic slowdown within china. So its number one priority to ensure the economy maintains its momentum. And i do believe that they will do whatever is necessary to ensure that. Anna so you have faith in policymakers and correcting something we were saying earlier, we were quoting the French Central Bank saying that Central Banks were going to talk this week about the g7 that will teleconference this week. So our colleagues removing reference to Central Banks there. Well see what comes from that g7 teleconference. Matt an important difference a. Huge clarification. Anna it is a huge difference. The markets rally on the expectation of coordinated Central Bank Action and this is not Central Banks talking that has some relevance. But what will these other actors do and maybe it should be the fiscal side giving some giving some comment rather than others . Well see how that develops. I wanted to put this which is interesting. The top one just tells the story of the deterioration in chinese data. And thats to be expected. Thats chinese p. M. I. On the top line. The bottom is the subset within the chinese p. M. I. On new orders. And, you know, maybe i can be accused of trying to find too many Silver Linings here but many people trying to find when it is that china turns the corner. We talked about the chinese stock market already turning a corner perhaps. And this may be some reason to be cheerful about the Global Economy . Thanos ive been more cheerful on china than the broad markets. Because if you remember, when the first sort of when the correction took place, and the g. D. P. Data came out for 2020, surprising people, saying oh, 29year lows in china. Thats not really strictly true. It is the slowest rate of growth. But the chinese economy is 14 times larenl than what it was which was nine years ago. I am positive on china. And im positive that the stock market, and i do agree with you that in terms of the China Economy it will rebound and have a vshaped recovery and the rest of the world that im more concerned with. Matt all right. Thanos, thanks so much for joining us today. Really appreciate your time. Thanos Thanos Papasavvas is c. I. O. At a. P. B. Invest coming in to talk to us about the market, the effects and actually, not the coronavirus. You think super tuesday if come back to you briefly you think super tuesday is still a really important event for markets. Thanos thats right. Thats correct. In fact, it was the super tuesday which was the trigger for me to say, well, the stock market is very overvalued and the s p overvalued and the markets were not pricing that correctly. So im still maintaining my caution until we see what happens tomorrow. I think the probability is still in my case, central case that President Trump gets reelected. However, there is a small but albeit Significant Impact should Bernie Sanders get into that position. And i think still the market is not not priced that in. Matt come full circle. Thank you so much for joining us. Thanos papasavvas. C. I. O. Of a. P. B. Invest. Coming up, forcing the feds hand. As the coronavirus continues to spread, economists at Goldman Sachs expect action from the u. S. Central bank. Thats your morning call. Next. This is bloomberg. Anna welcome back to the european open. 15 minutes to go until the start of cash equity trading for another week. If youre long of the market still you hope it wont be at all this is what the futures tell us. And we are expecting to see a little bit of a bounce at the start of the trading day. More than a little bit. Reflecting optimism, of perhaps what Central Banks can do here, and what other actors can do here as we hear the g7 will have a teleconference this week. Lets go to laura wright in london. Laura thanks, ann jafment u. S. Regulators have told boeing pilots may need additional training. Thats after airline crew failed to perform proper procedures in a 737 max stimulator test. Nd that includes a simulated crash. And to bring the max back into service it has been grounded for a year. Luff tansa is cutting flights and grounding more plapse. The german flag carrier is cutting as much as a quarter of its short and medium flights as the coronavirus hits demand all around the world. The Airline Industry is expecting the first annual decline in passenger demand in over a decade. Nokias boss is stepping down after just over half a decade at the company. Hes leaving having struggled to make headway in the allimportant 5g market. He will be replaced by the utgoing chief executive. And nokia exploring Strategic Options including asset sales or mergers. And thats the Bloomberg Business flash. Matt and anna. Matt laura, thank you very much. Laura wright in london. As the coronavirus continues to spread around the world, keeping markets on edge, economists at Goldman Sachs see it forcing the feds hand. For more on your morning call, anne marie joins us from new york. Good morning, matt. Yeah. Goldman sachs is one of the most aggressive on the street about this call from the fed. Theyre saying this month, we could see a 50 basis point cut on the key Interest Rate. They say overall, the first half of this year, they could see 100 basis points cut from the fed. Now, this comes, Goldman Sachs revised their fed forecast for a second time in three days. And this comes after jay powell spoke on friday and theyre saying that what he said in that statement signals that global central bankers are intensely focused on the Downside Risk from the virus. Now, theyre also saying potentially see a global coordinated response about this from central bankers which matt and anna we havent seen since the Global Financial crisis. That would be interesting to see, wouldnt it . The level of coordination there. What Central Banks can do even if it doesnt make you go out and get that haircut that you were putting off. Perhaps it shores up the hair dresser. Thats missing your business. Annmarie, thank you very much. In new york there for us. Now, turkey says it wont stand in the way of refugees that want to head to europe and igniting fears another wave of migration could derail a delicate recovery for the entire region which is already grappling with the spread of the coronavirus. Bloomberg joined from istanbul. Good morning to you. What do we know about the situation of refugees heading to the border . Because it does seem as if we heard a lot of rhetoric on both sides, a lot of heated words from president erdogan and also the greeks talking in fairly heated terms about what this will do and some clashes on the border. Yes. The turkish side is saying that up to 100,000 refugees has actually left the country. But its unknown whether theyve actually managed to enter the border with greece and bulgaria. Or whether theyre stuck in no mans land. Bloomberg was at the borders. And it says that even though theres a high number of Syrian Refugees trying to pass into europe, theres also an extremely high number of both afghani and iranian young men as well. Now, as you said, president erdogan for months now has been threatening europe with opening its borders. Saying that it can no longer look after such a high number of refugees. Of course, turkey is already home to 3. 6 million refugees. And more is coming across the border. Due to the conflict in the idlib province. This is creating a nightmare scenario for european leaders who are remembering what happened five years ago during the refugee crisis. And where not only borders were physically under threat, but also there was a high antiimmigration sentiment which was putting pressure on europe. Matt rising tension with russia is part of the story as well. Ell us about that. So president erdogan and his russian counterpart, vladimir putin, have been for years trying to Work Together to put an end to the civil war in syria. However, from the start, theyve been supporting opposing ends. Putin has been supporting the syrian regime. And president alassad and president erdogan wants him to go and hes been backing the rebels. And now over the past few months, between erdogan and putin, there have been theyve been butting heads over the situation in idlib. And also trying to still Work Together, the two leaders are set to meet later this week in moscow. Matt thank you very much. Joining us there from istanbul. Now, british and European Union officials will start hashing out a postbrexit trade deal today. The start of the talks come with fears that they could break down within a matter of weeks. As negotiations on the future e. U. , u. K. , partnership, formerly open in brussels, bloomberg sources raise concerns that red lines on both sides could put the chance an agreement to danger already by early april. Joining us now from our brussels studio is reporter maria, and what have you learned . Well, the talks are finally starting. We know there has been a lot of back and forth and the two sides were doing the media rounds over the weekend and the red lines are very well documented. No one surprised to hear that the Prime Minister says he cant get a canadian style deal by the end of the year. That he doesnt see a full need for convergence. When you look at the european rules and june is what he says will be the deadline. And hes preferred to walk away without a trade deal if that is what it takes. Now, the europeans have repeatedly say they see this as a full package and nothing will be agreed until everything is agreed. What is new now and perhaps change in tone weve heard before that a, diplomats expect them to get a lot of the meeting today. They still believe its too early in the negotiation. And a lot of the talking is still very much done for the domestic audience. But whats interesting now is that were hearing april could be the real deadline. And that is because Boris Johnson can make good on that threat that he could walk away in june. If there is no deal on the table. When you look at april, the reality is were just a few weeks away from what could be a crunch moment. Anna our reporter maria tadeo in breakthroughs ulis. Some of the stocks you might want to keep an eye on at the start of the trading day. Matt, we need to keep an eye on nokia. Weve seen a change at the top there. The c. E. O. Stepping down. Seemingly unable to make real progress. In the light of the of the 5g crisis around huawei and you might have thought nokia made more progress on its rivals. And it seems the c. E. O. Is stepping down. And Pekka Lundmark of fordham previously stepping into the breach. And the big focus is going to be on how risk assets performed today. Oil prices as we were talking with our colleague earlier today, oil prices dropped in the asia session and a continuation of the nervousness and brent is up 3. 5 at 51. 41 and back safely over the 50 a barrel mark. Matt watch car makers as well. Even though the Geneva Motor Show has been canceled, for the First Time Since world war ii by the way, there is still going to be a lot of car news coming out over the next few days. The c. E. O. s who were scheduled to do interviews with us, for example, will still do them. Rather instead of geneva were going to go im flying to munich this afternoon to talk to the c. E. O. Of b. M. W. And then we can swing by stuttgart to talk to daimler, etc. , and so forth. So youre going to get a lot of car news out of the industry over the next couple of days. Obviously a lot of that is going to be product stuff. But there will be questions of course on the coronavirus and the effect thats had on production as well. The market open is next. Futures are pointing up, well up after the big drop that we had last week. This is bloomberg. Tv just keeps getting better. How you watch it does too. This is xfinity x1. Featuring the Emmy Awardwinning voice remote. Streaming Services Without changing passwords and input. Live sports with realtime stats and scores. Access to the most 4k content. And your movies and shows to go. The best tv experience is the best tv value. Xfinity x1. Simple. Easy. Awesome. Xfinity. The future of awesome. Anna a minute to go until the start of the equity trading session here in europe. Coronavirus spreads state side. New cases are reported across the u. S. Including now in new york. President trump meets with pharma executives as the death toll globally passes 3,000. The fed in play. Policymakers are ready to cut rates but doubt they could affect the virus impact. And berlin reports its first case of coronavirus. As the numbers climb, broadly in germany. Meanwhile, italy seeks a wider deficit to pay for emergency economic measures. Matt. Matt all right. Take a look at european futures here. After last week, we saw the biggest drop that weve seen since 2008 for the whole week on the stoxx 600. Were starting to see a bounce in futures. That that has increased over the last hour. We are looking at 1 to 2 gains and now looking at 3 and change gains on the major equity indexes. Anna, the markets get out of the gate what are you seeing . Anna interesting to see we are getting a bounce at the start of the trading day. We were expecting that. Over in asia this expectation, the expectation building, the Central Banks can do something. Even if it isnt the whole story. But they can do something to shore up maybe corporate finances. As businesses around the globe struggle to deal with both supply Chain Disruption and also demand destruction as a result of the coronavirus. So thats what the market is focusing in on. The bounce this morning, and it is quite substantial. And Energy Stocks will be in focus in the u. K. And the ftse 100 up by 1. 9 with that in mind. The spain ibex up 2 and these markets in denmark and the netherlands up by just over 2 . And im interested in whats going on in fixed income. I can see on the far side some interesting trends at the short end and the longer end. It seems that money still money may be coming out of some of those longer end products but still going in at the shorter end in terms of sovereign bond products. So thats an Interesting Development that were seeing. Its not as if were entirely risk on and money is wholesale coming out of fixed income. That doesnt seem to be the picture. A little bit more nuanced across the curve in the u. S. Lets focus in on the stock markets. 8 00 if london and that is what thats what the most recent signals are in the stock market. So thats a picture overall. Things from a technical perspective, matt, not a day maybe for sector distinction and discrimination. This rising tide lifting all of these sector boats. We have consumer discretionary, health care, staples and moving to the upside. Energy perhaps getting a boost from oil prices which as we discussed earlier dropped at the start of the Asian Session but rebounding quite strongly. Not recroupping in any sense all of the losses of last week for commodities but were seeing a little bit of upside sthfment a shortterm, short squeeze on some of these assets . Or is there something more substantial . And if it is based on central bank expectation, are investors right to expect so much from Central Banks . Matt a lot of important questions. Lets take a look at the individual movers here on the m. Porks v. Screen. We have m. O. V. Screen. 462 gainers and only 20 down. So certainly rising tide lifts all boats. This is not at all about individual companies or market fundamentals. It really looks like as we heard from thanos earlier, that there are bigger exaggerated moves as more people play in passive or index tracker funds. You can see all the gains are more than 3 . These top movers. So in terms of percentage movers, we see everybody jumping substantially. If you look at if you look at the losers here, you can see that we have very few of them. But some of them, s. E. S. Down 6. 5 . And the rest of them are down sub 3 . So the winners are not only more plentiful. But also moving in in a much bigger degree in terms of the size of the move. Anna . Anna lets get up to date on the latest facts surrounding the coronavirus. The worldwide death toll from the virus has surged past 3,000. With the outbreak now reaching more than 65 nations. Thats as chinas economy could be heading for a worsethanexpected First Quarter contraction. After the countrys Manufacturing Sector reported activity at a record low in february. Lets get up to date there, on the global story, bloombergs reporter Sophie Kamaruddin joins us from hong kong. Sophie, chinese stocks rallying today. All of asia rallying. But china is interesting. Interesting to see that rally. What drove the surge in chinese banking shares . And i suppose this sounds like only part of the story, quite nichee but it is interesting to see the way that chinese stocks have rebounded since the markets worst fears about what this would do to china. Sophie yes. A reflection of the optimism around stimulus from chinese policymakers. Focusing on chinese banks. And the surge we saw monday in those shares. This as the pboc and financial regulator on sunday announced that lenders in china would be allowed to delay recognizing bad loans from s. M. E. s until at least the end of june. This as the economy been contracting in the First Quarter. And we saw a gauge reinforcing the factory activity plunge that we saw in the official numbers on saturday with components indicating that the situation that may be even more orse than the headline numbers demonstrate. So bets the fiscal stimulus will be forthcoming. Matt weve heard from the e. C. B. s that the g7 will be on conference call. And we just had the g20 finance ministers get together in real life. What kind of what kind of policy reaction is expected here in europe where we see cases soaring in italy and italians bringing it to the rest of the continent and the u. K. . Sophie yeah. The numbers there, italys death toll rising to 41. Breakthroughsless and berlin reporting their first cases and in germany the number is about 130. So concerted efforts will be key here when it comes to european authorities response to containing the outbreak. And money markets, theyre pricing in about a 60 chance of a 10 basis point rate cut by the e. C. B. And next weeks meeting with a full rate cut in april instead of in june. Matt all right. Sophie, thank you so much. Sophie kamaruddin there. Bloomberg reporter on the coronavirus for us. Out of hong kong. Joining us now in london is bob parker, Investment Committee. Mber at quill vest the market moves weve seen and the incredible drop that we saw and the correction that we saw last week, now the bounce isnt surprising. But what do you expect to appen from here . Bob a few comments from what happened last week. Obviously if we go back to mid february, early february, markets were very overvalued. They were technically very overbought. Investors had moved into risk on assets in january and early february. So the extent of the correction, i think was not surprising. It vuffles was compounded obviously was compounded by selling people having to meet margin calls. So i think that rationalizes the extent of the correction we had last week. Now were in a situation where investors last week moved from complacency to panic. And its not surprising that given the oversold condition of the markets that were seeing this bounce at the moment. Also, supported by expectations as youve been discussing in the program, that the fed will cut in march. If you look at the futures markets, theyre currently discounting a 95 probability of a fed cut in march. Anna and not just the fed the market is expecting things from now. We see a headline across the bloomberg just now, saying that the bank of england is saying it will take all needed steps to protect the stability. We talked with thanos about how there are a few things Central Banks can do. The first on their list is just talking. Talking about shoring up stability, and acting if necessary. And i suppose these reassuring words, they matter in the first instance. Bob i would emphasize in the first instance. Anna yeah. Bob they obviously have to be backed up by action. Because otherwise the credibility of the Central Banks is suffers. Now, i do think youre probably going to see a rate cut from the fed. I think an interesting question which not many people have talked about is whether you see an increase in in quantitative easing from the e. C. B. And if we get as i expect weaker data out of the euro zone for february data coming out in the very near future. March and april data i think will be weak as well. Because of the impact of the virus. I think its entirely possible that the e. E. C. B. Will be looking very seriously not at rate cuts and their policy action is exhausted. And further q. E. Likewise, for the bank of england assistance for companies which have seen supply Chain Disruption. And which are suffering from also the fall in demand. Anna as the chinese have done. Matt. Matt well, it seems like the chinese can do a lot more than anybody else, right . Because they have a command economy. The fed has more room to cut. The b. O. E. , has more ammunition. But the e. C. B. , we heard francois vilaroy a few moments ago saying and ill quote directly. If we needed to do more and we had the belief it is effective we could do it. We could do it, he repeats. But we are not there yet. It doesnt seem like he at least is anywhere near there. Bob i think thats probably true. And coming back to what i just said. I think the e. C. B. Is probably its policy actions are very limited on the Interest Rate front. What it can do, via its Quantitative Easing Program is provide temporary assistance to companies and organizations which have seen supply Chain Disruptions. So it comes back to what i was saying earlier, which is that currently, q. E. From the e. C. B. Is 20 billion a month. I wouldnt be at all surprised if we see increasing talk over the coming weeks of them expanding the q. E. Program. Anna ok. Well look for that then. Bob, and any other kind of measures that the central bank decide to come. With and the chinese helping the banking sector, telling them they dont need to recognize bad loans. Bob correct. Absolutely. Anna an interesting move and another red headline talking about Central Banks and emerging markets in asia very focused on indonesia. The central bank to cut reserve rates. And this is reserve ratios. Not Interest Rates. To boost liquidity. So we keep our focus on whats going on on Central Banks. Talking to Central Banks, we heard from the bank of england moments ago that they would do what they needed to. The words come from the b. O. E. Will take all needed steps to protect stability. Thats what they said this morning. And weve seen the pound has moved as a result of that. Without a 127. 94 market suspecting there could be some rate activity then bob parker stays with us on the program. Coming up the fed in play. Policymakers open the door to a rate cut to cushion blow of the coronavirus. Well continue to talk about the coronavirus and what impact that will have on the Global Economy. This is bloomberg. Anna welcome back to the european open. 13 minutes into the trading day and European Equity markets looking a lot more positive than they did last week. Thats for sure. How long will this bounce last . Lets discuss that with bob parker from quilvest Wealth Management who is still with us here on set. Bob, tell us what you think about the longevity of this bounce, and muhammad alarian asking which countries are going to go into recession and as a result of this. And even if we see markets reassured by Central Banks in the short term, theres still a lot of negativity to come in the data. Isnt there . Bob i think three things. First theme is we will see as we were discussing earlier central bank easing. And that will be across the g7 Central Banks. And probably some emerging market Central Banks as weve seen recently from countries like indonesia and turkey. Second theme is that where they have the firepower, we will see increased fiscal expenditure to help companies and sectors which are under pressure. Having said all of that, we are seeing initial evidence, and i think that evidence is going to become firmer, as we progress through march and april, of weaker economic data. And you saw that very clearly with the p. M. I. Data out of china. I think that recently, Service Sector p. M. I. s which have been strong in december and january, and now starting to weaken. So i think a downturn in the Global Economy, not just for the First Quarter, but for the first half of 2020, is highly likely. In turn, that means the downturn in corporate profits and corporate profits expectations. So therefore any equity market rally, i think is going to be fairly shortlived. Anna ok. Matt isnt it bob, when you look at the complexity of the Global Supply chain, and the fact that you know, were in march already. And it still hasnt really gotten started back up again. Isnt it optimistic to think this is only going to affect the economy in the First Quarter . Bob i think its completely optimistic. I think obviously we got extreme uncertainty as to when this virus will be curtailed. And when its going to peak, yes, theres some evidence that it is currently peaking in china. Matt just hitting new york. Bob well, quite. And you know, i think whats changed over the last week, which is why we had such a serious Market Reaction last week is that investors have now woken up to the fact that this is not a contained chinese problem. Its a global problem. And, you know, were now seeing it i think at the last count. And close to 60 countries. So this global problem is obviously going to be more challenging. I think its very naive to assume this is just going to be a First Quarter problem. Yes, we may get a recovery in the Global Economy. But later in the year, and at least for the first half of this year, assume weak data from economies and in turn that has a knockon effect on corporate earnings. Anna and bob, what shape the recovery is going to take. Bob yes. Anna and what you said about it not sensible to assume just a q1 phenomenon. When we look at what happened in the chinese equity market and theyre ahead of us on this and this looks pretty vshaped for now. Bob for now. Anna whats your expectation . Bob the Chinese Market if you look at data over the last month, the c. S. I. 300 and the shanghai composite are actually the Top Performing equity markets. But over the last month. And against a background obviously of of weakness in january. Now, there is a very clear reason for that. Which is investors are assuming that weve seen the peak in the virus in china. That assumption may or may not be valid. There may be a second round. But also it is in response through the very robust action taken by pboc. And also on the fiscal front in china. So already seeing that very strong action. Thats translated into at least markets forming a base. Now, are we going to see that vshaped recovery in chinese equity markets . I would be very surprised. I think there is a risk. Lets say 2 to 3 higher from where we are today. Then were going to see a round of investors be more cautious. Matt are there im looking at headlines here that from dow jones that say lufthansa is going to reduce frequencies on various routes to italy. Duh. In march. I wonder what you think about sectors here, bob . There are sectors Like Airlines that are being affected certainly disproportionately. Are there sectors where you think investors would be would be best advised to go and hide . Bob i think one has to look at sectors which are exposed to supply Chain Disruption. And obviously one key sector there is the is the auto industry. You got to look at sentors which are badly affected because of a fall in demand. That is the transport sector. You mentioned the airlines. It is also the leisure sentor. Its quite interesting if you look at the data, recent data on chinese tourism. I. E. Chinese tourists in new york or the states. That is down very sharply indeed. I come back to the comments that we made about a month ago on bloomberg which is i do think its now time to focus on domestic defensive valuebased and sectors and companies where youre fairly confident of high dividends being maintained. Because obviously one theme at the moment is the dividend yields are exceptionally high relative to bond yields. Anna yes. Bob, ive been talking to you about markets for i think at least 15 years. Bob plus. Anna youve been watching markets for a very, very long time. The events of last week, did they meet crisis play books . Do you see parallels in the financial crisis . Is this an entirely different animal without comparison . Bob i think comparisons which a lot of people have done with what happened at the time of sars, i think we were in the very a very different market and economic environment. So i think the comparison with sars or other virus outbreaks like mers and ebola, this is fairly unique. Now, i think the key question is compare whats happening today with what happened in 2007 and what happened in 1999, early 2000, when we started a major trend bear market. And if we look at msci world, in 2007 and 2008 that fell by over 50 . Likewise, the bear market that we saw in 2000 and 2001. A similar quantum move. I think this is a saw 10 to 20 correction. This is not the start of a bear market. And other than that, the difference between this and previous corrections like, for example, february 2018 and december 18, is i actually think the extent of the recovery and the bounce is going to be very muted. Anna ok. Bob so no vshape. Anna very interesting thought. And good to get your perspective. Bob parker, Investment Committee member at quilvest Wealth Management. Joining us here in london on set. Great to get his thoughts. Up next well bring the stocks on the move this morning. Including the travel company is among those rebounding on this mornings market amid optimism about what Central Banks can do. This is bloomberg. Our planes arent as full as what they would have been coming out of china. And thats something we have the flexibility to move planes in and out. A lesson to learn for business is lack of redundancy from the supply chains. Does help when something goes a bit wrong. And i think when we finish with the crisis we will be contained. Matt welcome back to the european open. We are currently 24 minutes into the trading day and looking at some big green arrows. You would be positively impressed if you werent around for last week. I mean, the ftse is up 2. 75 but last week, we saw corrections for all of the major european indexes and the biggest drop since 2008. The fastest decline from highs on record. So its a little bit of a bounce here compared to the correction, the crash as some were calling it that we saw over the last week. The bank of england is pledging to take, quote, all necessary steps to protect economic stability in the u. K. As the coronavirus spreads. If the the latest comment from a Major Central Bank amid hopes of a coordinated global response. Joining us now is seema shah, principal Global Investor chief strategist. Seema, weve heard, you know, i think pretty dovish comments from the fed, and now the bank of england as well. The e. C. B. On the other hand, i dont know if its just because they dont have theres not really much they can do, seems to be hesitating. E heard from christine laggard lagarde too early. And last week, i was talking with the at the bundesbank. And said theyre going to think about this over the next months. So they dont really seem like theyre there quite yet. Are they the lone holdout . Seema they may well be. Theres not much that they can do at this stage in terms of how much faith they have. But im also very skeptical about what Central Banks can do anyway for this kind of shock. You can boost demand but if the supply isnt there to meet that demand or feed that demand then its almost pointless. Its great for propping up the sentiment and maybe limiting or muting some of those drops. But ultimately its really going to gepped on what the depend on what the governments do. Will they put in quarantines and closing schools. And the problem lies. Falk a suite of measures from Central Banks. Rate cuts may be part of it but south koreans were taking action to support companies that had credit issues. And the pboc doing more Creative Things as well. And thats part of the story. And the rate cut themselves. Seema exactly. Thats the stuff that can be more effective. Really the important thing here is they start to protect the the ones that are going to be struggling with the cash flows and avoid default. Especially from the small firms. Because when the small firms default, that spreads to the larger firms and when you have the real economic problems come from. Matt so do you see do you see them doing that right now . Effectively, seema . Seema well, i think weve seen in asia and from china, it seems like its helped somewhat. I was i would think that Central Banks are trying to think outside of the box. Again and thinking about what they can realistically improve. We could see some kind of measures. And i think really its again, its more of a role for the governments to come in and for fiscal authorities. Thats where were going to see some emphasis. Anna the g7 will be teleconferencing sometime this week so well look to see what they decide to say. Seema shah, chief strategist at principal Global Investors. She stays with us on the program and more from her next. More on the virus and the global death toll passing 3,000. Well reflect on that next. This is bloomberg. Anna welcome back to the european open. Im anna edwards in our European Headquarters here in london. And alongside matt miller in berlin. Matt i am in berlin today. Anna, lets take a look at the stories so far in terms of the equity markets right now. The stoxx 600 has bounced back after its biggest drop in the biggest drop since 2008. Over the last week. Here you can see were up right now 1. 6 in terms of the broader European Market. In terms of the industry groups, all of them are gaining this morning. So 30 minutes into this session, were being led higher by oil and gas stocks. As well as basic resources. Food and beverage stocks. Financial services. But everything is rising. Banks. Tomakers and laura wright in london. First word news. Laura thanks, matt. In the u. S. , former Vice President joe biden has won the South Carolina primary. And closer to frontrunner bern he sanders and Pete Buttigieg has pulled out of the race despite an early win in iowa and joins billion ire tom steyer who suspended his campaign. Up next, super tuesday, 13 states and hundreds of delegates up for grabs. Greece has declared a state of emergency. And turkey has opened its border to migrants wanting to travel to europe. And ankara said it will not stand in their way if they want to leave and clashes with Greek Security forces along the border but report suggests the situation isnt as dramatic as turkey and greece are making it out. Suth korea says the north has launched two unidentified projectiles off the east coast. The move coming after the First Anniversary of the failed hanoi summit with the u. S. The first provocation since the north Korean Leader said he was no longer bound by a selfimposed freeze on weapons tests. Global news 24 hours a day on air and on quick take by bloomberg. Powered by more than 2, 00 journalists and in more than 120 countries. This is bloomberg. Anna suspect matt. Anna thanks very much. Laura wright in london. Lets get to our top stock movers. A breakdown for you. This monday morning, that selloff hitting a pause and youre seeing every sector on the stoxx 600 rise and 10 biggest movers are all rising above 5 . Basic resources up 2. 3 . They were hit brutal last week, rio tinto one of those having one of the best days theyve had gaining wise in four years. Oil and gas, energy companies, and up 2. 6 and w. T. I. And brent both pushing higher today. A little bit of a rebound also could be getting some optimism from moscow with president putin saying he is ready to cooperate with opec as we head into the opec meeting in vienna this week and tui up 3. 7 . Travel and leisure last week the worst sector by far. It was hit down more than 11 . Tui is very diversified and what they offer in terms of travel. Cruises, holiday packages, flights, we are seeing a little bit of dip dying this morning. Anna and matt . Matt annmarie, thank you very much. The global death toll from the coronavirus outbreak has surged past 3,000 now. New cases were reported across europe as brussels and berlin reported their first infections. Just hearing as well from Deutsche Telekom that a cybersecurity tech summit in bo nn has been canceled. Sophie kamaruddin from hong kong. Sophie, what measures are expected now of your european policymakers as cases rise on the continent . Sophie matt, the u. K. Just side of europe focusing on that firm. And jumped 36 and the b. O. E. Saying it is collaborating with u. K. Treasury and International Partners to take all steps necessary to protect financial and monetary stability. And somewhat similar pledge what was made by the b. O. J. Which calmed Financial Markets and followed through the b. O. J. With a liquidity injection on monday into the j. G. P. Market. In europe, in germany, tighter border checks are being put in place. The finest finance ministry is exploring ways to adjust its budget deficit limits. Perhaps by as much as 1 which would allow for about 35 billion euros in additional spending amid concerns that the virus will affect german economies recovery. Such a tweak to the constitutional debt limits that will likely face resistance from the christian democrats and the c. S. U. And quickly on italy, guys, the deputy finance minister in an interview this monday, said a 2. 4 deficit, that is expected as the government in italy seeks to widen the budget gap to provide for more emergency measures. Anna sophie, thank you very much. Sophie kamaruddin in bloomberg with an update on the global spread now of coronavirus and what what fiscal actors might be doing in the face of it. Seema shah. Chief strategist at principal Global Investors still with us. Seema, how much do you expect the fiscal side of things to make a difference . We heard about the italians there. We heard about germany and the debt break and maybe changing the thinking in europe a little . Seema i think it changes the thinking in the short term. But the long term will be do the numbers continue to rise . And are governments led to put in new measures to limit that spread . And thats when a lot of these policies from the monetary and fiscal side become less effective and in the meantime yes it helps. Stuff like cash handouts and delaying all very helpful tools. And at least it enables business to continue operating in the face of maybe some new demands. But i think its still about the number of cases. Matt where do you see where do you see the Inflection Point or where do you see enough happening here, seema, that we get real action . I mean, with waiting over the next few months with vilaroy saying they could do something. But not theyre not there yet. Here is there yet . Seema with the e. C. B. , clearly rereluctance and maybe for good reason. And the bank of england, l. B. A. , bank of canada and Central Banks acting, going to be very difficult for the e. C. B. To be the only one to continue standing back. So i think if we talk about coordinated responses, you know, at least on semi level of coordination, then i think this week, we should expect to see some kind of conversation and maybe even action. Anna to what extent do financial conditions make a difference here . Looking at a chart of u. S. Financial conditions. Really tightening. I mean, back to levels that we saw at the end of 2018 but really tightening and evident. This is having an impact on the ground in the United States right now. Even if it isnt in the data and you wait for is quite backward looking. There was a platform on which the fed can act already perhaps. Seema yeah. Absolutely. And i think what we also are seeing is now that markets expect the fed to act, they have no choice almost to act. And weve seen the last 18 months the fed held hostage by markets to deliver what theyre asking for. But they do need to come in as you said to stop those liquidity conditions from continuing to tighten. Especially at this stage where they almost have some time to play with to at least limit some of those drops. So i think it is important. But im just except tal of how much it will really skeptical of how much it will really help. Matt what kind of mofers moves should investors be making this week, seema . Seema i think i know were seeing a bit of a rise today. But i think theres still some bad news to come. And so i think negativity creeping back into the market within a few days so i wouldnt say this is the time to buy. I still think theres room to be protecting yourself. So gold is still your best hedge. But i would say that were hearing from clients who are asking, is this the right time, when will it be the right time to get back into the market . So there are people who are desperate to put that money back to work. Anna there is an urge to buy this dip somehow but well see when the right time is. Seema shah. Chief strategist at principal Global Investors. Joining us here on set in london. 8 38 in london. Up next, well tarbg about the impact well talk about the impact of the coronavirus on the auto market. This is bloomberg. Matt welcome back to bloomberg markets. Thrs the european open on a monday this is the european open on a monday that sees a bounce. After the big drops we saw last week, we have a little bit of a reprieve today. You can see the ftse right now up 2. 7 . The cac up 2. 2. Moodys has published an update to its outlook for auto manufacturing. It says it expects a slump in car sales as the coronavirus outbreak continues to impact the sector. Joining us now from frankfurt is falk frey, senior Vice President of moodys germany. Falk, thank you for joining us this morning. Let me just ask you first, even before the coronavirus, do you think weve already seen peak auto . Were we already going to see the declines in annual sales out of china, out of the u. S. And out of europe . Falk yeah. Good morning. Thats a good point, i think. So we already anticipated that the u. S. Market as well as the European Market has reached its peak. We are anticipating that they remain at two levels with a slight erosion in unit sales on an annual basis. But except for the Chinese Market, none of those markets has yet turned into a real cyclical demand. So when comparing with peaks in 2017 or 2016 for u. S. And for europe, respectively, we are just around between 3 suspect 4 down. So markets are Still Holding up pretty well except for china which was also the reason where we had revised our forecast for the current year. And given the impact of the coronavirus, where the market is already in decline. Anna good morning to you. What worries you most for the sector . Is it supply Chain Disruption or demand destruction in the countries that are affected . And theres an increasing list of countries, of course. Falk youre right. It factors in both things. It begins with the supply Chain Disruption but goes along then with people not being able to go to work, not exercising their jobs, and the might not transport the goods and things like that. So just very related, those two issues. On the supply side, there currently it looks like we dont see any negative impact yet outside china. Except for one small plant in italy, from Fiat Chrysler where there have been some parts missing and production had to be stopped. But otherwise, things are running relatively smoothly currently. You also and take into consideration certainly that we have a certain amount of stocks stock because when you ship parts from china or europe to the u. S. It takes a couple of weeks. So maybe the worst is or the critical test is coming up in the next couple of days. Matt if theres a demand problem, falk, this is the kind of thing that Central Bank Policy can at least theoretically help with, right . I mean, for example, and im not saying this is going to happen. But if the fed cuts rates by 50 basis points, that makes it theoretically cheaper to borrow money to buy a car. If you can get the loan. And then more people will pick up a new product. Isnt that right . Falk theoretically thats correct but we are already at such low Interest Rate levels that i dont think marginal Interest Rate variations make a difference here in the consumers willingness to buy a car. I think its more on the one point we just discussed is the supply chain. That cars will not be in the showroom. But the second point is that the consumers dont want to go to the showroom or on a unable to go to the showroom because the showroom is closed. I think its not so much about their willingness to buy a car but the situation that scares them. And the fact that it might not be able to shop. Anna falk, are you concerned about with that as a back story then, concerns around supply disruption and indeed demand, are there companies with more stretched cash positions than others that you would be increasingly concerned about . Falk well, among the key european auto manufacturers, were not concerned yet about their cash position. Liquidity is pretty strong. They have piled up quite some cash over the last couple of years. With good earnings and good cash generation, they have backup lines. So and thats the reason why you have not seen negative rating actions just because of the coronavirus. Were to take rating actions, negative rating actions over the last six to 12 months, but this was mainly driven by the erosion in profitability by the challenge and the transitioning toward electricification, the huge amount of investment necessary there. So i think the effects of the coronavirus on the companys ratings has not been has not been there yet. And we do not anticipate that as long as we see that as a temporary issue. And as i just said, liquidity is should bridge that time. Matt falk, thank you very much for joining us. Hope to get you back in the studio. Falk frey, senior Vice President at moodys germany talking to us about the auto sector. Anna . Anna yeah, a little bit of breaking news to go through here. Across the bloomberg we see this red headline that tells us that european debt risk has fallen the most on policy support and talked about money going back into risk assets. As a result of expectations of policy support and talking of policy support the bank of japan has brought a record total of 101. 4 billion yen e. T. S. On march 2 so that is today. This coming just hours after governor harry kuroda pledged to provide ample liquidity through its asset purchases. So again, i guess underlining what comments by Central Banks can do, and also underlining how there are a range of options available to some of these global Central Banks is not all about cutting Interest Rates. Matt . Matt all right. Oming up, can rate cuts rescue equities . The equities bull market that looks like it got a pretty stern correction last week . Well put that question to Richard Jones next. This is bloomberg. Bloomberg. Matt welcome back to bloomberg markets. This is the european open. Right now we are 50 opinions into the trading minutes into the trading day and seeing a bounce on the European Equity indexes with the exception of the ftse mib which has fallen into negative territory and you can see the ftse is up 170 points. Now, greece declared a state of emergency as turkey opened its border to migrants wanting to travel to europe. The e. U. Has so far maintained a guarded approach wary of a repeat of the migration crisis five years ago that tested its physical frontiers and stoked antiimmigration populism from italy to germany. Ets get to maria tadeo in brussels. And maria, is it on the same scale as the 2015 migration crisis . Look, matt, that is a question here in brussels. And this is really a story thats making big headlines here in the e. U. Now, the answer to that question at this point when weve seen to officials it is not. The 2015 crisis of course though a huge influx of migration, it was a huge political crisis. Put Angela Merkel under so much pressure and you saw big pushback from countries like italy. Now, at this point, officials in europe will tell you this is more of a power play by erdogan. Erdogan suffered a big military loss last week in syria. He was hoping the nato and the e. U. Would come out and offer their support. And the e. U. Was very timid and in their response. So they do believe this is more of a power play. And secondly, when you look at the data and the numbers, the e. U. Is skeptical about the numbers that erdogan has put out and saying hundreds of thousands of people have crossed already the border into greece. And the greek authorities will tell you he is flat out lying and those numbers are not true. And secondly, this is an empty threat because the greeks are determined to keep that border shut. Now, going forward, however, the big question is whether erdogan is willing to actually open the borders and whether he would be willing to take that step. The europeans doubt that could happen. They feel that they have put a lot of money on the table since 2016 where they signed an agreement with turkey. And this is more of a power play at this stage. But of course the time of it is very tricky because there is already a debate because of the coronavirus as to whether or not europe should shut some of the borders or actually do controls differently. So no doubt the time of this is not easy for the e. U. Anna yeah. Interesting stuff. And interesting perhaps president erdogan sensing a little bit of weakness in the german political space right now. And an opportunity. Maria, thank you very much. Maria tadeo in brussels with the latest on that story. Lets take a look at whats moving markets. Our rate strategist is with in us berlin. Richard, whats your radar telling you with regard to risk on and risk off at the moment . Because today clearly the picture in equity markets is very much that the support expected now from Central Banks has shored up the markets in the short term. At least. The picture in bond markets, though, looks a little different perhaps. And what is your assessment . Yeah. Good morning, ann jafment i think youre right. I think that equity markets are reacting to the fact that Central Banks are going to be riding to the rescue here. And if i look at whats priced into the various curves, its really been a sharp move in a very short space of time. This time last week we had virtually nothing. Less than the 10 chance of a 25 basis point rate cut by the fed this month. Now we have 50 basis points, nailed on by the market as an expectation. Thats a huge move in one week. But even if i look at the u. K. The bank of england a full 25 basis point rate cut priced for their meeting this month. And that was really the probability is that was really low this time last week. Been a big move in a very short space of time. Investors expect the bank of england and expect the bank the fed, they expect other Central Banks to act in a very short space of time to inject monetary stimulus. And that is what i think is driving the equity rally this morning. Matt what about the e. C. B. . They seem so chilled out. Like they have so much time, and its not you know, its not needed yet. Theyre not there yet. These are from comments, you know, from from Christine Lagarde to francois vilaroy. They just dont seem either in a hurry or to have many options. I think the last point you make there, matt, might be most important. They do not have as much room on the policy side to act immediately. Thats not to say that the market isnt expecting it. I think we have about 75 to 80 chance of a rate cut this month from the e. C. B. So its not as if expectations arent there. Its just that they dont have the room to move as the fed certainly does. And as the bank of england does. Thats why were not seeing as sharp of repricing for the e. C. B. There is some repricing there already. Anna and what about f. X. Markets then . Clearly an expectation that the fed is going to do something here, then that changes, changes things on the dollar perhaps and we see the dollar is considerably weaker today. Down by. 4 on the dollar index. When you get a big move on the Interest Rate side as weve seen in a very short space of time those Interest Rate differentials narrow. Up until very recently, that hasnt mattered too much. Even if the u. S. Was expected to cut rates, the dollar was still benefiting from having haven flows. And a better economic backdrop behind it. But now with those Interest Rate differentials moving as quickly as they have, it started to catch up to the dollar. Im still not convinced that this is something that will play out longer term. The Economic Impact if you look at whats going to happen here in europe, probably weighs on the shared currency. But i think for the near term, the dollar probably continues to suffer a little bit. Because those Interest Rate differentials have moved against it so much. Matt 1. 06 for the euro. You can still buy more than 108 yen. And i realize its moved down. And it sort of broke out for a minute to 112 and then came right back down to back to the range where its been for months. Do you think were going to see further further gains for the yen . Well, i think that weve had a situation over the past week or so where it was less of a haven than it previously had been. I think concerns that the coronavirus really is right now still first and foremost an asian problem. But i think you write off the yen at your peril in terms of it being a haven. I think weve probably still see it trading choply. I think 107, 112 is the range. But that downside probably gets revisited as the flight to havens continues. Matt richard, thank you very much. Richard jones there, mlive f. X. Rate strategist in berlin. Gorgeous tie by the way. Thats it for the european open. Stay with bloomberg television. Up next on surveillance the c. E. O. Of Standard Life aberdeen. Francine the selloff stopped for now. Global markets rise as bankers. Re ready to cut we speak with Standard Life aberdeen chief ceeo keith skeoch. The first confirmed case of coronavirus in new york. The death toll passes 8000. And joe biden wins in the South Carolina primary, with Pete Buttigieg dropping out. Super tuesday contest starts tomorrow. Welcome to bloomberg surveillance
comparemela.com © 2020. All Rights Reserved.