Transcripts For BLOOMBERG Bloomberg Daybreak Americas 20240713

Out from under it. It is time now for global exchange. We are going to bring you todays market moving news from all around the world. Our bloomberg voices are on the ground with this mornings top stories. We are going to focus heavily on the markets. We begin in the u. S. , where the 10 year yield fell more than 1 this year. Here was more is annmarie hordern. Annmarie we are seeing a massive flight to safety. I can show you some of these numbers. Gold trading just under 1700 an ounce. This is the asset to own and this kind of market. Then you have the swiss franc. Deutsche bank said in the recent note we could see parity. We havent seen that since the s p lifted the cap the snb lifted the cap. B 30 year yield went through 1. 5 . Right now, 1. 39 . Three standard deviations. Thats how much we moved to the downside. We have not seen this since 2011. People on wall street say this might be a recession. Alix thank you very much. All of that leading to massive volatility within the equity market. Futures are pointing to another day of 2 losses. Volatility the highest since 2011. Joining me with Maurice Taylor riggs. Taylor the biggest 10 day moving volatility since 2011. At that point, the u. S. Downgraded the s p downgraded the u. S. Credit rating. Low volatility stocks are actually not performing like we thought they would. They are actually having more volatility than the s p 500. Pepsi, walmart, costco all seeing heightened volatility. If we take a look at the next chart, we are looking at the Food Retailers are performing hotels and cruise lines. Royal caribbean up 17 yesterday. Marriott vacations caribbean off 17 yesterday. Marriott vacations off. Alix investors now with strong most cash from u. S. Funds. We saw the biggest weekly total in a decade. For more, we want to bring in bloomberg Credit Report claire boston. Walk us through what we have seen. Reporter we have seen a total outflow in the highyield, highgrade loan markets of more than 12 billion. That is telling us that right now, investors are fleeing to safety. They want to be in the least risky assets. Not Corporate Credits. The hardest hit things are probably what you would expect. Energy companies and highyield. We are also seeing a lot of travel and Leisure Companies really struggling right now. That makes sense when youre looking at the global coronavirus outbreak. Right now, credit spreads across the board in boast in in both investment and highyield are widening. We are seeing a much wider day headed into friday, and i think that is a sign of more crunch to come. Alix thank you very much. Now we want to turn to oil, where prices are also falling. Oil off between 4 and 5 . Russia resisting pressure from opec to make deeper production cuts, sending prices to the lowest level since 2007. Joining us is manus cranny. The rhetoric yesterday was that saudi arabia really boxed russia into a corner. What about now . Procrastination, that is what is at play. The russians have not come on board. What should have been a bazooka in a message to the market of 1. 5 Million Barrels a day cut is now turning into a fairly low bar of disparate, dysfunctional, and lack of cohesive action by opec and opec in the building behind me. To 2014 was the last time there was a failure to do a deal. Prices tumbled by 10 . The, ronnies say there will be the, brady the emiratis say there will be a deal. If the russians do not come on it,d, be very clear about the risk from the analysts ive spoken to in vienna this morning is that you are looking at a six dollar down and policy paralysis. 30 on the risk that this great marriage collapses. Be quite , that would a change if russia actually walked away. Thank you very much. We want to end in asia. We have global coronavirus case is now nearing 100,000, with more infections reported in the u. S. , south korea and germany. Joining me from hong kong is yvonne man. Give us the latest. Now warningapore this could be a global pandemic, while chinese cases have actually slowed down. We are seeing fresh cases out of the u. S. , germany, france. Iran shall another spike in cases, and south korea still one of the trouble spots in asia. We saw first cases in the likes ,f cameroon and the netherlands never reporting its first fatality in that country. The fallout continues, with samsung now saying it will transfer some of its smartphone production out of one of its plants and south korea to vietnam. Local media reported six of the workers in that plant tested positive for this coronavirus. Saying heard from ubs, three employees in switzerland also contracted the disease. Telling 1200 staff in london to work from home, after and hsbc employee had the virus visited the company. Now you hear the likes of the ecb warning banks to prepare for a jump in Cyber Attacks as part of a fallout from this coronavirus outbreak. Now the Central Bank Warning of and Collateral Damage criminals taking advantage of the chaos from this outbreak. Alix thank you very much, bloombergs yvonne man. The final story we are watching this morning is that j. P. Morgan says Ceo Jamie Dimon is alert and recovering well after emergency heart surgery yesterday. A potentially fatal condition involving a tear in a blood vessel. He went into the hospital, and the j. P. Morgan copresident s are now in charge in his absence. Dimon has run j. P. Morgan for almost 15 years, the only leader left who steered a major banks through the financial crisis, all of this bringing succession plans into the forefront. ,oming up, more on your news trade, and analysis of the markets in todays first take. This is bloomberg. Alix time now for bloomberg first take. Joining me from our inhouse team of wall street veterans and , alsors, Damian Sassower Constance Hunter, kpmg chief economist. This is a really painful week. What do you do . ,amian my colleague in london derivatives strategist, points to swaps in grid. Similar to the vix, you would expect short tenor options on u. S. Yields to spike in the front. But if you look at intermediate expertise on u. S. Treasury yields, they are at multiyear lows. What that means is the market is pricing in lower yields for longer. More importantly, if you look at the zero bound on eurodollar futures, it is basically showing positive skew, which means they dont believe the fed is going to go into negative territory. The take away from that is that lower for longer, and we are not going for the zero bound on u. S. Treasuries. Alix how does it choose where . Damian we could still go lower in the near term, but basically, mechanically there is a lower probability of outcomes as you get to the zero bound. You would expect as yields go vol would continue falling, but that is not the case. All of a sudden, you see yields fall. You have to read the deck. It is really quite interesting, and makes insightful calls as to where you should be pushing in the market today. Alix really interesting. I was also talking to be gone the street saying, so far, this has still been relatively orderly when it comes to equities. You have seen a lot of high turnover, but not the wholesale fear yet. The bad stocks are going down the most. Everything is working as it should. Damian if you look at the spread, youre blowing out to alltime wide spirit people are looking for safety. People are looking for defenses. If you look at twoyear option swap spreads in times of distress, it has basically spiked. All of these kind of safe haven assets are all rallying today because no one knows what to make of it. As we approach the zero bound in u. S. Treasuries, windows that behavior really kick in . Imagine a world where rates are vol isown further, yet picking up. So constance come away in here. Constance, way in should the 10 year be at 0. 7 . Constance well, the 10 year is reflecting the mood of the market, the mood of market participants, and the fear. In times of extreme unknown, which is i think what we could say we are in, we dont know how long this virus is on. We dont know how it mutates. Theres a lot of confusion about what the actual mortality rate is. We know it affects older people more than younger people. But theres a lot of unknown. In terms of people running to safety or saying i am going to increase my bond allocation, this is what we are seeing. The market reflects that, and i think reflects that accurately. The big unknown is how much more safety does the market need. Alix i wonder when it just begets itself. That you start selling all the things that are working and running into cash, or money markets, and waited out. Wonder how we people are sitting in that now. Damian i think a lot of people are looking at this as an opportunity, but not just yet. They are looking at distressed prices, but there are other things going on in periphery markets that no one is really paying attention to because there is a hyperfocus on the u. S. Take a look at brazil. Brazil has gone through the rails and plummeting. The economic minister came on and said if it goes through five, ive messed up my job. Guess what . 10 of all call options against the real have a five strike. If you look at ukraine, zelinsky has nixed his entire cabinet. Funds fromt getting the imf yet. They are not meeting the conditions. They are trapped there. Theres a lot of pockets in the periphery where it is causing a lot of pain for investors. Constance that is going to bleed over into economic pain. It is going to be harder for those countries to repay denominated debt. To fundrder for them themselves. Theres all sorts of knock on effects for this. It bleeds into itself and becomes a cause as well as a result. Alix but the conversation couple days ago of a stronger dollar, that has not reversed. The dollar is sitting below 96. That should help with support, right . Damian i think it is the yuan. Come additions0 and has seemingly not come down as much as you thought it would. The one has remained relatively stable the yuan has remained relatively stable. Obviously theres some government pkos, they call it. Price keeping operations. Damian right, the invisible hand. When we talk about where you put your money, what i also want to bring up is something that happened yesterday. Exceedsdividend yield by the most since 2009. You see real yields in negative territory, record low for the 30 year. I wonder when that winds up providing a floor under stocks because you have to own something. You want to own that versus treasuries. Thats the argument. What do you think . Constance i think it depends on your time horizon. If you are a longterm investor, following your Asset Allocation is what you should be doing. If you had an Asset Allocation that said 60 bonds, 40 stocks, now your Asset Allocation is out of whack. Then what your allocation would probably tell you is by a few more stocks, get back to that 60 allocation. Asset follow discipline allocation, boring as it sounds, time after time, what it shows is that you outperform. Damian this a lot of cash on the sideline for sure. I couldnt agree more. Lending to some of this weakness is troubling to move here. What do you do as a traitor . As a trader . Where do you like the s p . I dont know. It does depend on your time horizon. Is through a difference will and flash and a disciplined fashion. Boostanks got an initial of reserves and things as a lot of the trade commodities come off. It gives a little boost to that in the near term, but a flat yield curve . That is not good for net interest margins. Alix 70 basis points. Damian and with us approaching zero bound in treasuries, what does that mean for Trading Operations . Theres a lower probably of outcomes. Wheres the volatility going to be . Inres a very good year 2019. In developed markets economies, this can be a vshaped event if we have the proper physical response, the proper infrastructure response in terms of health care, and while you cant get the same haircut twice, so if you didnt go out and get your hair cut in february because you were concerned about coronavirus, you are not going to get two in march, there is some forgone consumption is my point. But effectively, we do think it will be somewhat of a vshaped with downdraft in the first and Second Quarter and a rebound in the second and third. Damian with stimulus we have seen from governments across the world to date, most of it has occurred in asia, so we are seeing a bit of that already. Hong kong tackled 15 billion. Europe . Ee is where is outside italy announcing they what to stimulate, wheres germany . Wheres france . Where is the fiscal stimulus. Where is europe amidst all of this . Alix to your point with the vshaped, strategists are all over the map. We know that. But i also feel like part of the question is, where repricing and ,o risk at all in the markets and now we are pricing in moderate risk versus the worst case scenario. Constance i think you bring up a really good point. Markets were pretty well priced to perfection before this, now they are saying there were some more risk here than we anticipated, which could also partly explained this extreme move in treasuries. If markets were priced to perfection and there was a shock and a surprise about the extent of this virus and the extent of the economic impact, that move into treasuries just makes sense. Damian the fact that the oil curve has moved back near 4 contango, historically that is awful for credit spreads. Theres a very strong correlation to your brent crude calendar. If we see some oil shock on top of all of this we are seeing from the virus, things can get really painful in a hurry. Alix especially when you have a lot of hedging that is going to be stopped. When you sell out of those positions, it can get really ugly fast. Appreciate it. Constance hunter of kpmg is going to stick with me. Any charts we use throughout the next two hours, go to gtv on your terminal. Browse the features, check it out. This is bloomberg. Viviana youre watching bloomberg daybreak. We begin with u. S. National security officials. They want President Donald Trump to block obsidians proposed eover of semiconductor of cypress semiconductor. Now to the u. S. Federal aviation administration. It expects to test fly the redesigned boeing 737 max in a few weeks, more than a year after two crashes in the plane was grounded. E end with this fear that there could be a credit crisis. Since the last crisis, nonbank companies have drastically increased their leverage. Corporate treasurers are taking advantage of historically low rates. If a credit crisis did occur, it might not matter how quickly the irises contained. There could still be lasting economic damage. That is your Bloomberg Business flash. Alix thanks so much. For more on credit, Constance Hunter of kpmg is still with me. How do using the credit market funding market is working right now . Constance certainly in the issuance market, we had people return to the market after the fed rate cut, which is overall a good thing. Havent actually seen as much stress in spreads as we were anticipating, so we keep looking at the spreads and expect in them to be wider than they are. So my fear is that might be coming, that we are on the precipice of some wider spreads, and certainly wider highyield. And lets say that happens we get wider credit spreads. We get some fallen angels. Then what . Is that going to be the credit crisis we are thinking it is going to be, or just sort of an orderly rotation. Say. Ance tough to i think what really depends is how bad that actually impacts the economy because the issue is all of those bbb rated bonds that could dip into highyield if they arent able to make payments, we are not there yet, but in certain sectors, if you see certain sectors see enough pressure from lack of demand, or even lack of supply, so they cant sell and they cant make their cash flow, then youre going to start to see an issue. I dont think we are there yet just from a market reaction. I think youre going to need to see the fundamentals underneath change in order to get to that really scary place you are talking about. To that 2008to get scenario we are talking about. Appreciate you being with us this morning. Didnt even talk jobs, and it is jobs friday. Upstance trade is coming today, and that could give us some clues as to what is going to happen. Alix totally right. Coming up, and exclusive interview with jim bullard, st. Louis that president. Lots to talk about, from the market to the credit market to the funding market. All the topics on the table. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Alix this is bloomberg daybreak. Im alix steel. It is really brutal outside. S p futures down by another to present. We have seen a 2 by another 2 . We have seen a 2 or more swing every day this week. Banks are off 4 in europe, at financial crisis lows. Eurodollar a little bit higher. It is all about a weaker dollar story and a move into the bond market, particularly in the treasury market. You have a flatter yield curve now. The 10 year is dominating all of the headlines, as you had a huge move today, over 12 basis points in the market. Brent crude, watch these levels. 47 for brent. If you dont get an opec deal, the bottom is going to fallout. That could shake out a lot of positions as well. Many questions as we head into the weekend. We want to welcome now our bloomberg tv and radio listeners. Michael mckee, Bloomberg International economic it and policy correspondent joins us now, with jim bullard, st. Louis fed president. Thanks for being here. The market has done a lot since the 50 basis point cut. We are looking at the s p down 2 , a 40 basis point plus moving the 10 year. Anything change for you since four days ago . Mr. Bullard obviously theres a lot of volatility in markets. Not surprising, everyone is trying to get a handle on how to price trillions of dollars of stuff all around the world. I think we are all struggling to try and understand what the effects of the coronavirus are, so im not surprised by volatility in markets in that kind of situation. Michael if you are, as jay restoreaid, cut to confidence, not to be rude, but it looks like you failed. Is there anything the central bank can do to save things out there . Mr. Bullard i think we correctly positions the policy rate given what we knew as of the monday, tuesday timeframe. Everything is on the table. We are willing to do more, but we are monitoring the situation. We can meet entity time and move at any time in this kind of situation. So i feel like we are playing this exactly as we should. Heres Downside Risk to growth we will see how it plays out. Kind of seems like the market is ,ricing in the very worst case but we will take that on board and go forward and monitor this day by day. Michael have you ever had less visibility on an economic outcome then you do right now . Mr. Bullard i think there are times of uncertainty. Of uncertainty you can point you in the past that are similar to this. We have had viruses in the past. H1n1, sars, ebola. There are precedents, and i would purchased it to those for this case and not make the jump over to other types of crises we have gone through in the past. Alix we had the beige book this week that started to show signs of supply chain issues. Mr. Bullard i think the beige book mentioned coronavirus 48 times or something. Michael and it hadnt even hit yet. Alix next month will be worse. Since that survey was taken, have you heard more from your constituents about what they are seeing and hearing . Mr. Bullard yes, i have. I hear every day. I would say most businesses are more savvy than what is being portrayed. Plansf them have business that can handle disruption. Those to them have ideas about what they would do if a lot of employees got sick and things like that. They are kind of cautiously optimistic. Everyone is nervous all around the world, but its not like they havent thought about this. They have. Most businesses have thought about it. Damian is there going to be a michael is there going to be a funding problem out there . I have a chart that shows half of Corporate Bonds in the United States are bbbs. If they start falling, weve got a problem. Mr. Bullard we are monitoring this kind of effect. We are not really seeing anything so far, but we will keep a close eye on this and whats this going forward. Again, even those that are borrowing at those kind of are stress testing their businesses and thinking about how they are going to survive a temporary slowdown. You have to think that this can be temporary. [laughter] alix do you . Is it temporary with a u, an v . H a u, an l, or a mr. Bullard i think thats fair, but the situation in china looks like it is stabilizing. The chinese also put stimulus in place, and he will come roaring back in the Second Quarter. I dont think they are quite there yet. They are not quite around the corner. Is a template for how all the other countries will go through a temporary slowdown, and then be able to rebound and come back. I also think the Health Care Response in the u. S. Is probably better than what is being pretrade. You cant just talk about what is being portrayed. You cant just talk about one thing is the response. Theres statelevel response, local response, individuals taking action. As a whole web of things that are a response to the crisis. It is not quite as visible as somebody waving a wand or taking one particular step somewhere. I was encouraged also to see that hong kong, i dont know if you saw this article, but hong kongs ordinary flu season ended early because they had taken so many steps to combat coronavirus that the other types of work disruptions that would come from more normal infections went away. So theres a little bit of a Silver Lining in an environment where youve got everybody thinking health, everybody washing their hands all the time, everybody concerned about this spread of this disease. Does your view still hold that march 18 is not a done deal for another cut because this may burn itself out, and it is not as big a problem as you think . Wantullard i just dont people to focus so heavily on that particular day because the fomc has already shown we can move between meetings. We can assess the information, and we are assessing the information every day. If we get to the march meeting and we dont want to move on that particular day, i think that is perfectly fine. But then you could get 10 days beyond that, things have deteriorated, maybe you decide to make a move then. I think we have a lot more flexibility than what is being discussed in markets. Does this whole situation suggest that the coronavirus is a nail, and you are a wrench . Thate have suggested turning to you is a mistake. Mr. Bullard the Public Health response is a key thing. You want to get things under control, and the sooner we can do that, the better. That is what is key here. Nevertheless, we have to take on board the idea that the Global Economy for sure is going to in the months ahead. In talking to businesses, what would they need to be ok from the government . It cant just be they need one more cut from you guys, and then they can survive. Mr. Bullard this is a Public Health issue. Alix but do they need a check to be able to pay off the debt . Do they need a demand response . Mr. Bullard i could see some of that occurring. Obviously Congress Passed their response to this, so these kinds of things will happen. You think you can know, it is targeted, i guess i would say, to a particular place or particular industries. Michael lets get back to whether Monetary Policy really has a role here. Weve got real rates negative across the curve. Does that suggest that the Monetary Policy setting is not an issue at the moment . Mr. Bullard rates have already come down anyway, regardless of because markets are looking, and i think they are pricing in a more severe case of what might happen here. Rates will lower help. One of the things i found out just recently, i guess you guys refi is moving. You actually have to hire people to handle all of that, which is. Xactly what you would think alix if i told you a few years ago you would see 70 basis points in the 10year market, what would you have said . Did you ever think we would get here . Mr. Bullard people are beating. P on banks we just came up of seven years of near zero policy rate, and we had a very low rate structure during that time, and the banks i think adjusted their Business Models and were able to survive and thrive, so im not sure that meanseejerk reaction things are lower. President louis fed will be sticking with mike and i. Riggs. Taylor taylor all the gains for the week off about 1. 5 in the past 44days, closing below a barrel. The lowest on that price basis since december 2018. You mentioned the bond markets. I want to take a look at a five day chart of where we have been on the twoyear. You are down about 44 basis points this week, 13 basis points just this morning. Tuesdayal action came after the fed emergency rate cut. Yields are now falling for a 12th straight day. Finally, cross asset here, wanted to take a look at the equities and currencies. From china and europe, china was closing lower, and europe now off about 3 . The dollar we getting across the board, off by about 0. 3 as the yen strengthens relative to the dollar. Swissie stronger by about 1 as well. Alix thanks so much for that update. We want to get another update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Viviana we begin with the coronavirus. Almost 100,000 cases have been diagnosed globally. 80 of those in china. Thats where the epidemic began. Beijing reporting the number of new cases are still falling. The u. S. Outbreak is getting larger. There have been more than 130 es reported in at least 11 reported and at least 11 deaths. Oil prices have been falling. Russia resisting pressure from opec to make deeper production cuts. Moscow wants to maintain supply production at current levels until june. Oil producers trying to offset the impact of the coronavirus hammering demand. Another cease fire taking effect between turkey and russian backed syrian forces, the latest to contain the fighting in syrias it limp syrias idlib region. President erdogan hope for a new zone to resettle millions of refugees. 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. Im the vr hurtado. Im viviana hurtado. This is bloomberg. Viviana this is bloomberg daybreak. Coming up in the next hour, Irina Novoselsky, careerbuilder ceo. Alix it is 45 minutes into the program, and we havent talked about jobs. It is jobs day, but part of that is it hasnt had the effect of the coronavirus. Is still is jim bullard, st. Louis fed president , and bloombergs Michael Mckee. What do you think the impact is going to be on jobs . Mr. Bullard for this jobs report . Alix more like for march. Constance i think markets mr. Bullard i think markets are discount get, no matter what it clearcause it is not so with the impact will be on jobs. This events are moving so quickly that i dont think 30 days is eternity. We will have to wait and see. Hearingi am not Companies Saying we ditched a bunch of employees because of this. Im not hearing that. Michael the general feeling among people is the general feeling among people youre talking to that this is going to burn out, so why get rid of people you may need . Mr. Bullard the general idea would be the job market is really tight, and if i can, i am going to hold onto all these people because it is really hard to replace them, and then i will wait for this to recover. Michael we were talking during the break. If a company does get into doddfrank, you could do some lending. What can the fed do now . Doddfrank, before the line was we could lend to whoever we wanted to in an i believe that got circumscribed during doddfrank. Im not sure that was wise, but there are provisions about being to set up facilities and get approval from treasury and do it that way, but it is a more cumbersome process than it was. Any if thee airlines really struggle, for example, or retailers with supply chains, is there anything you can do to help . Mr. Bullard that is congress role, and if Congress Wants to weigh in and do Something Like that like they did for autos, they can do that. I dont have a sense of what might or might not be good in that. Michael the 10 year right now, 74 basis points. This is not necessarily good for Monetary Policymaking going out, when not just your rate is near the zero lower bound, but all rates. Overullard we talk a lot the last decade or more about what to do if we got back to the effective lower bound. We do have Forward Guidance. We have quantitative easing. Michael well, 74 basis points, you dont have much quantitative easing. Mr. Bullard there are issues about how you think that has an impact on the economy, or whether it feeds back through Forward Guidance sort of channel. This has been discussed a lot, and maybe that playbook will be have to be brought up. Alix what about using your Balance Sheet in different ways you havent before . Buying Mortgage Backed securities rather than investment rolloff . Mr. Bullard everything is on the table here. We are willing to do what it takes to get through this. It isnt my base case at this point. My base case is this is a Public Health issue. The Public Health response aroundy is pretty good the world, and some of that is individuals knowing about the disease and trying to avoid getting it, and part of it is getting good diagnosis of people and getting treatment to them when we can. Are the things that will help us get through this and get to the other side so we can ramp up production again. Michael suppose by may 1, things are looking better, the number of cases going down or whatever. Is there any chance you take back the rate cuts, or are we now permanently in the regime of 1 rates or possibly lower . And 2018,d in 2017 the economy perked up. We had faster growth rates. At one point, we had growth rates over 3 on a yearoveryear basis. During that period, we were able to raise rates. I think it was appropriate. Longerterm rates moved up. At one point, we were around 3 . I think that could happen, but it would be good news because it have fastecause you growth rates and a very strong labor market. Alix we have a comment from a user saying that the plan to put the money into the pocket of homeowners through refinancing mr. Bullard there are no plans at this point, but we are willing to do whatever it takes. Everything is on the table. Michael you are known as the dove on the market committee. 1 , is that acceptable to you . You once said whatever using the rate is for the economy, this isnt it, but when rates are higher. Is this it . Is 1 and except a bull rare is 1 an acceptable rate . Mr. Bullard i think, taking everything into account, taking everything on board, earlier this week the Committee Said we are going to have to get lower in order to keep the right level of accommodation in the economy. We are still hoping to get inflation back to 2 , but i think we have to get to the other side of the coronavirus before we can get focus on that again. I think it is really hard to assess are you being accommodative or are you being too tight in a market that is so volatile and so much is happening, but we will do our best and make a judgment about where the appropriate level is. Michael the market is pricing things for worst case scenario, which would in syria be a recession. What are your odds on a recession which would in theory the a recession. What are your odds on a recession . Mr. Bullard i think any Recession Risk or recession probability model, those have up, so they are high. But it is still not the base case. The base case would be slow down in the u. S. Up, so they are ecor comes back and picks up. I do take heart from the chinese situation. They are going to have a slow growth in the First Quarter. Some are saying zero, but i dont know what you guys think. It will be slower in the First Quarter, but then it will probably come back in the second and third quarter. They were in the heart of the virus. The other countries should have something similar happening. Keep if the bond bulls dominating the market and rates go lower, and the curve cant really steepen tomorrow you cant cut again really steepen, arent you forced to cut again . The more the market has a tantrum, the more you have to cut. Mr. Bullard the market looks at the same things we look at. The market cares about future profitability of firms, the future growth rate of the economy. They care about how policy is going to impact that in the future. The difference we are looking at all the same things and trying to make all the same judgments, but the difference between markets and the fed is the fed only makes changes on certain occasions. It certainly looks like we are following the market, but i dont think that is the right interpretation. I think the right interpretation is that both markets and the fed are looking ahead to try and recess to try and assess what is happening. Michael what are you looking at from your perch in st. Louis . What do you want to know . Mr. Bullard what am i hearing . Michael and what numbers are you looking at . What is going to help you make a decision and figure out what is going on with everything . Alix what is your Desert Island indicator, the one Economic Indicator you want to be with on a Desert Island. [laughter] mr. Bullard i prefer to have a bloomberg terminal. Alix which we appreciate. [laughter] guess some of the areas that are most severely impacted in the eighth district are probably logistics and logistics services. Youve got intermodal, for instance, or trucking, see you watch things like that. We have a big retailer in the district. This narrative that everyone is going to stay home and the economy is going to totally shut down, you kind of want Realtime Data to see if that is really happening. I think that is really what you would want to know here, whether that is really happening. And how much of that is really affecting consumption, or is it just shifting consumption and shifting habits from what they would otherwise be . I might not go to the store. I might order the same stuff. So people take a lot of precautions so they dont get the same time, they go ahead and purchase something. Alix especially purell, so there you go. Really appreciate you being generous with your time, st. Louis fed president jim bullard. And michael, thank you for being here as well. In the markets, we are about half an hour away from the jobs number. It is really brutal out there. You have 10 year yields continuing to slide lower as the bid continues into the bond market. The dollar weaker on the day as well. Crude off by almost 5 . Coming up, jobs take average continues. Investments, fs Irina Novoselsky, and Subadra Rajappa. This is bloomberg. Alix welcome to bloomberg on this americas friday, march 6. Lets take it from the top. Pres. Trump its going to work out. Everybody has to be calm. Singapore now warning that this could be a global pandemic, while chinese cases have actually slowed down. We are seeing fresh cases out of the u. S. , germany, france. Iran posting a new spike in cases, and south korea still one of the trouble spots in asia. Alix Central Banks continue to try to instill confidence in the economy. Grounds,rgency countries can draw this money if they needed right away. Theres no cohesion around what tools will work and how. I do know that the u. S. Economy is strong, and we will get to the other side of this. Everything is on the table. We are willing to do more. Alix Robert Kaplan stays calm about the selloff. It may last a quarter. It may last a quarter and a half. Alix while the boe promises more fiscal and Monetary Policy. We are coordinating with her majestys treasury to ensure that any initiatives winter take a couple of entry, and that they collectively have maximum impact. Not worries that these are sufficient enough for investors. Low volatility stocks are not performing like we thought they would. They are actually having more volatility than the s p 500. Etfshuge outflows from as treasury yields continue their outflow into the unknown. We have seen an outflow of more than 12 billion. That is telling us that investors are fleeing to safety. Alix markets look through Economic Data on jobs friday. I think the markets are discounting it no matter what the number is, obviously, because they think it was before this hit. Alix numbers will reflect the impact from policy. In the markets, it is into the unknown. It is a very scary morning out there. S p futures down by 3 . We have seen a 2 plus move in the s p every this week. It is a weaker dollar story. Eurodollar gaining 0. 7 . Some say that is the unwind of the carry trade. When you reverse that, you have to buy back these euro. The story of the week end of the morning is what is happening to 10 year. Were talking about breaking 1 , and no we are at 74 basis points , down 17 basis points today as the buying will not stop and the curve continues to flatten. No surprise, banks are getting really washed out here. European banks are at the lowest valuation since the financial fallingand crude also as opec cant get it together either. We spoke to saint louis fed president jim bullard, and he said that market volatility is not surprising. Obviously, theres a lot of volatility in markets. Everyone is trying to get a handle on how to price billions of dollars around the world, and i think we are all struggling to understand what the effects of the coronavirus are, and im not surprised by volatility in markets in that situation. Alix joining me now is lara rhame, Fs Investments chief u. S. Economy, and Subadra Rajappa, socgen head of u. S. Rates strategy. What you buy today . No indications that we will get any stability over the near term, and that is why we are seeing this massive rush into buying bonds and selling everything that is risky. Oddly enough, i would argue that the selloff in equities hasnt kept up with the rally and bonds, and partly would argue because the market is pricing in a very accommodative Monetary Policy stance from the fed. That, i think, is broadly supporting assets. Obviouslyties have come under significant downward pressure, but we are also getting days with significant lifts as well. I think if traders are latching onto a direction, that is the one that is clear. Again, the move in the 10 year has so outpaced lower Interest Rates and other sovereign bond markets. It is just a runaway Freight Train at this point. Alix people on the street this morning were saying that the selloff in the equity market is still relatively orderly. You are selling more what was bad than the stuff that is good. It is not total panic or fear. I am just wondering how long that stays. Do we know . Lara i think those are really important points. One is that valuations were arguably very high going into all of this. The fact that the equity market shrugged off the initial news of the coronavirus when bonds didnt kind of says that in some way, it was just out on a limb waiting for that to be cut off. I think the fact that we are not seeing totally indiscriminate selling, we are seeing a sector that we would expect to come under pressure coming under the most pressure indicates that there is still some strategy behind all of this, even if the pace has been very unnerving. Subadra indy credit markets, i would say it is a little more disorderly. Youre seeing widening of spreads especially in the vulnerable sectors, so that to me is a concern because that is ultimately where things unravel, where you start seeing potential defaults were not there yet, but that is where we will be watching, especially as oil prices come down. The last few days we saw some support from oil prices come about with volatility, oil , ites closer to 2016 lows gets a little bit more unstable. Alix lets talk about the funding market. This is a busy chart, but it is a good chart. This is the three month libor ois. The point is, when it goes up, it means a higher funding market. More demand for dollars. When you look at this, are we at stressful levels . Are we ok . What do you see . Lara clearly more stressful now than earlier in the week. Again, we are not seeing the. Roadbased panic i think what the fed to me, when i saw the fed rate cut, and i understand that longterm, the have to look at economy, but with every thing going on, we dont want there to be some liquidity driven financial dislocation that we arent responsible for. I think they are just trying to get ahead of the curve. I think theyre going to do whatever they can to not add to themncertainty and support as best they can. It is not go to get to the magnitude we saw back in 2008 because banks are a lot more wellcapitalized. Is a lot more liquidity in banks. Youre not going to see the same magnitude of widening amid mass panic. But youre going to start seeing, as you look at the cross currency basis, for instance, you are seeing demand for dollars because that is a safe haven asset. Aspeople are trying to grab many dollars as they can, youre going to continue to see that. That is what translates ultimately into wider credit spreads across all of the other front end spreads. Alix at what point, if you are looking at it, does it get very dangerous . Nowdra well, i think right it is still pretty benign. I am not really concerned. But it is something we are watching. I think that there are other metrics we should be tracking the other metrics we use to track any past to see if things are getting worse. Alix like what . Subadra did decline in the treasury yield, as well as the sharp decline in inflation breakevens, and real yields getting to historic lows and beyond. To me, really talks about a broadbased demand destruction, the market expectation that growth is really going to take a beating. Ais could really be signaling potential for a global recession. Any senseraders have of where this is coming from . U. S. , international, everyone . Subadra in this environment, you see the grab for u. S. Based assets, one, because theres a lot more of it. Theres 20 billion of treasuries you can buy. Bond yields and other countries are at historic lows. We dont want to buy periphery bonds in europe because of concerns of coronavirus in places like italy. You are really left with a very small subset of assets that you can source in large amounts, and that is why you are seeing the sort of flight to quality and to treasuries. Alix what is on sale in Corporate Credit . Subadra well, i am not a Corporate Bonds specialist, but i would really be careful about the sectors you pick. You have seen that in the flows, the people are a lot more cautious on sectors they are dabbling with because it is just a very volatile environment. You could stay away from highyield or well related sectors because that is going to have the most potential for widening. Alix no kidding. Lara rhame, Subadra Rajappa, you are sticking with me. Brent is now off 5 . Opec struggling to reach a consensus on production cuts. Russia reportedly saying they are ready for lower oil prices, and deeper cuts arent a solution. This is a big surprise to the market is normally, russia plays hardball on thursday, and by friday they tend to go along with the cuts. This is a different kind of narrative. That is why you are seeing crude really rollover. And unbelievable shift within the market. Coming up, we are about half an hour away from the february jobs report. Ziprecruiter economist, and Irina Novoselsky of careerbuilder will join us next. This is bloomberg. Alix the u. S. February jobs report out in about 15 minutes. Consensus looking for 75,000 jobs added. Joining us is julia pollak, ziprecruiter economist. Also with us still, lara rhame of Fs Investments. Walk me through the ripple effects of the coronavirus. We wont get the numbers today, but we well in the future in terms of the work from home policies, etc. Julia we expect the effect of coronavirus on the february report to be fairly minimal, but over the following months, the effects could be quite large. We expect to see the retail apocalypse become even worse. The manufacturing recession could also get deeper. Huge job gains that we saw and hospitality and travel could also be wiped out somewhat. Fortunately for the u. S. , we conduct a census every 10 years, and that is happening now. The government will add 500,000 workers to payrolls between march and july, exactly the period when we expect private sector hiring to take a hit from the coronavirus. Lara i am interested in how money workers are being furloughed right now. I think we sink about some of the disruption, and there is still to me critical uncertainty on whether these will be very temporary, or whether they are going to be longerterm. Theres very different implications for what employers do when they are thinking about hiring where their work policies. How do any sort of furloughs work their way into your numbers . Julia job posting volumes are Still Holding strong on ziprecruiter. We also got initial jobless claims data yesterday, and that showed that initial jobless claims fell rather than rising in the last week of february. So far, the effects on hiring seem to be minimal. The is busy conducting a survey, and the vast majority of surveys said that coronavirus was not affecting their hiring plans. 15 of Companies Said that it was, but that the effects were minimal. Alix do you have a read on people who want to switch jobs . The narrative was that you could switch jobs to gain you some wage power. Is that still the narrative . Julia yes, this is definitely a time when people are evaluating their options. There are so many exciting opportunities out there, especially in areas Like Health Care and education, where workers are relatively scarce. We are seeing workers move up into better and better jobs, and that is increasing their wages. Lara and what about any sense of regional impact . Obviously, i think this is something that could move community by community. Have you seen any change in particular out of seattle, for example, or the Pacific Northwest . Julia we are definitely seeing effects there with some school closures. Those affect workers and their wages and hours worked. The one indicator we will definitely be looking at today in the jobs report is hours worked. Hours worked were trending down in manufacturing and retail, and of course, that could get even worse in todays report, and especially next month. Alix do you get a read from companies if they are able to willing to offer paid sick leave, and do they hire temp workers to fill those spots . Julia about half of workers said they had access to paid sick leave. 8 of workers said they were working from home now already to avoid coronavirus. About 16 of Companies Say that they are encouraging their workers to work from home where possible. Many workers in america just dont have the opportunity to work from home. If you are a schoolteacher or restaurant worker or construction worker, it is not offered to you. Of the u. S. Hares workforce work on an hourly basis or as contractors, and they do not have access to sick leave. Alix thank you very much for spending time with us. Leah pollock of ziprecruiter. Joining us from chicago is Irina Novoselsky, careerbuilders ceo. Have you noticed in terms of recent hiring trends, recent work from home policies, etc. . Hit it onhink lara the head with her question. While we are not seeing it in the actual jobs numbers yet, we are continuing to see doubledigit growth for the 36th straight month on the consumer side. It continues to be a candidate market. Of companies are saying that their employees are stranded from work in some way, which is going to have Material Impact on productivity. The other aspect we are seeing that is really going to get hit that is just starting to come into focus now is really the hourly worker segment, where they dont have an alternative work from home option. The interesting thing is we are getting a lot more inbound from clients that are willing to use our visit io interviewing tools our video interviewing tools and wanting to access our Remote Technology to keep the candidate hiring moving. Lara i think that is something that is going to be a really fascinating shift as this all plays out in the quarters ahead. We are seeing things like telemedicine exploding come of the way that people are doing conferences growing so much. Do you see other areas that you expect to benefit during this clearly uncertain time . The other things we are seeing a big spike in is within our social referral products. Clients are reaching out, wanting to use referral as another tool to circumvent the coronavirus and the threat of it, where if somebody knows a person really closely, the pretension of that employee becomes doubled then just a cold employee coming to your comedy. In addition to your video, they are also looking at limiting having to do multiple interviews and getting a much warmer lead, they are getting creative from a productivity perspective when you have such an hr strapped organization and so many more of your employees are either working from home or having productivity issues. Youre really starting to use technology in a different way to get more of the inbound to meet your hiring needs. Alix really interesting. Subadra, because this number we are going to get today doesnt take into account the coronavirus, what are you going to look at for that he leaves next month . Subadra it all comes down to initial jobless claims. If theres any rise, that is a very important indicator. In todays number, i will be looking to see, as irina and other guests pointed out, i think we will be looking towards basically how many hours people have worked in any given week. The wage numbers, a lot of this is backward looking, so it is difficult to take a lot of information out of what we are going to get in todays number. Gaugek the one important that stood out to me in the last couple of weeks is the sharp job openingse number. That decline closely tracks gdp, and what you notice is that looks at what you saw during the financial crisis. We will have to look at that into jobless claims and other leading indicators as well. Lara and i think last month was the second month of the downside surprise in wage growth. I think something that we had been thinking was maybe making the households comfortable supporting them, i think it is household confidence that is dependent on what is there sort of backyard. They have jobs . Are the jobs paying better . Claims is also very high on my list for what you are watching. It is just a great canary in the coal mine for how the overall labor market is going, and as a shortterm indicator, we dont have to wait months for that data to come out. I think theres still going to be some interesting features of this job report today, just looking at broader trends in the labor market. Alix irina, what are you going to be focusing on today . We have eight or nine minutes before the next number. Irina very similar to whatever would el said, but what of the things we are focused on additionally is seeing pockets of growth. We have seen a lot of growth in the south states and cities, especially around wage growth and job growth. So the regional movements are really interesting for our ai because that is how we direct some of the supply and demand matching that we really focus on. So seeing pockets of there is growth. Also some of the gender stats we are starting to see come up. We are seeing the wage gap start to really continue to shrink for women, and especially in the last few decades, we have seen that come down to about . 87 on the dollar. Still more work to do, but starting to see more pockets of opportunity, and even when you look at the top 10 Fastest Growing occupations, we are seeing that women are actually growing across all of those occupations at a faster rate than men, except in one specific occupation, which is software developers, where they really only make up about 20 . That is also where there is the most wage growth. We are continuing to watch some of those dynamics as well. Alix stick with me, Irina Novoselsky of careerbuilder, lara rhame of Fs Investments, and Subadra Rajappa of socgen. Coming up, russia has yet to sign onto the deal from opec, and well is dropping about 4 . This is bloomberg. Alix brent sinking by 5 this morning. Consensus nowhere to be found as opec convenes in vienna. Russia reportedly says it is ready to lower oil prices, and that production cuts arent the solution. Joining me is annmarie hordern. Yesterday, we thought they were going to cave. What happened . Annmarie we had the open meeting yesterday. They had 1. 5, but russia says they are not willing to come on, and opec now saying they will not cut without russia. The problem is, russia could deal with lower oil prices. I spoke to a trader this morning, and he thinks that russia just wants to put out the low cost producers like shale. Weve heard russia say this throughout the past month. Russia has been the one to say we want to wait for more data, and we are happy with just a straight rollover. Alix thanks for updating us on that. Coming up, we are moments away from that february payrolls report. Those numbers next on a really tough day for the market. S p down by about 3 . This is bloomberg. Alix this is bloomberg daybreak. I am alix steel. Just about 30 seconds away from the next jobs report. S p futures down 3 . 4 for banks in europe. A level we have not seen since the great financial crisis. What youre seeing in the bond market as well as the currency market, weaker dollar and a bull flatten her. Lets go to the Labor Department with bloombergs Kevin Cirilli. Jobs in the month of february, beating expectations. Unemployment rates little changed at 3. 5 . No Significant Impact on the data from the coronavirus. One of the earliest sectors that could have seen an impact, the leisure and hospitality sector added 51,000 jobs in february. U. S. Makes up 11 of total nonfarm employment. The government workers at the local, state, and federal levels increased by 45,000 jobs, that is 7000 jobs related to the 2020 u. S. Census temporary hires. To 28. 52,nings rose that is up 3 . Rateabor participation remains at 63. 4 and there were revisions. In december, that was revised up 37,000 from 147,000 184,000. January also revised up. Is an increase from 225,000 to 273,000. 83,000 moreat is jobs than previously reported. Other sectors that showed significant gains health care and social assistance added 7000 jobs. Construction, 42,000 jobs added. No impact in the data related to the coronavirus. A slight impact from the 2020 census workers. 7000 there. Probably not a huge reaction in the market. S p still around the lows. The dollar index around the lows. ,oining us is Michael Mckee Subadra Rajappa, laura lame lara rhame, and Irina Novoselsky. Mike, your take . Michael imagine what the market would be if not for the coronavirus. 273,000 jobs created in an Unemployment Rate of 3. 5 . Still not pushing up wages. Report andrough this it is basically all good other than the wage component, which could be higher. Hard to find anything to argue with. We have seen manufacturing employment, which everyone thought would go down because manufacturing had been struggling, we have seen issues in the pmi. That is up 15,000. Construction is probably the weather story, because the weather has been good. You can add people. Finduilders will have to workers because Mortgage Rates are going down the tubes. Retail is the only one that continues to take it because they lose jobs again. Eight of the last nine months retailers have been hit. Everything is pretty good. Here is something interesting. You look at hours of work. Hours go up a tent and manufacturing towers go up. 2 . Not only are we hiring a lot of people but they are working longer hours. It just shows the labor market is redhot. Or was, until now. Well see what happens. Piece of goodtant news is that while we face these extraordinary uncertainties, and i think that will continue throughout most of 2020, our economy coming into this was more resilient than germany or japan. Alix or italy. Lara wanted to be great if it were still february . That is not the world we are in. At the same time, that should be something to give us a little bit of cold comfort. Alix yes, we still seeable flattening. Now we are at 28 basis points on the 210. Subadra it seems like we did see a little bit higher in yields after the number, brought broadly speaking the trajectory for the bond market will be about nearterm risks, or near to medium term risks, and what you are seeing manifesting in the decline in yields. I do not know if this data point is going to move the needle until we get clarity on the coronavirus. Does this impact the fed in march . I think the markets are already pricing and another 50 basis points from the fed. Michael i have use the analogy in other situations, the way they train astronauts. They put them up and airplanes in the airplane dives and their waitlist for 30 seconds. That is where the fed is. They are hanging in space. They do not know what is going to happen with the coronavirus. An interesting problem we are going to have is starting tomorrow, we going to the blackout period. The if the fed decides underlying economy is in good enough shape we do not need to cut on march 18, they cannot steer the markets. They are in a position where they have 10 days they cannot fight back against the market and try to steer the conversation. Market is taking yields to the zero lower bound, and what we have seen with the price action on the curve is the bull flattening of the curve. It is down by 20 basis points. That is basically the bond Market Pricing in the japan if nccasion the japanificatio of the u. S. Curve. We will not see that change until something fundamentally changes. Alix a quick recap on the market great we had a big jobs number for february. 273,000 jobs. Manufacturing jobs solid, wages 3 . Irena, way in. What were some of the standouts . Irina we saw similar dynamics on career builder. Com where there were a lot of growth in service, business professional service, hospitality. Something else mike said his construction jobs have added a lot more over the last few months than expected due to weather and some of the climate happening. Given the Mortgage Rates you talked about, one of the things we are seeing is that Construction Companies are having the hardest time recruiting workers. There are about 80 of the Construction Companies we surveyed sitting at a real gap in the deficit or bringing workers on for work they have already contracted to go. That will be an area where we see wage growth and see people shifting from one area of the economy into construction, given the gap that is existing between supply and demand. Lara have you seen any change in the manufacturing client you have . How much demand is there . Are they furloughing people because of supply disruption . Irina they are changing the type of person they are looking to hire, which is driving the dynamics we are seeing. About 70 of the roles they are looking to fill have technology components, which goes back to the skill gap we have been talking about over the past year. If a lot of the lower paid workers are not finding an ability to get jobs and reskilled, they will not be able to fulfill some of the roles manufacturing is putting on. Seeing a lot of shifting with the manufacturing companies. Michael we want to go into the weekend long anything . It looks like it is another day of throw all of the toys out the window. How do you position yourself for the weekend . When you look at the last couple of weekends, fridays, the bond market has gone into the weekend moving up. I am wondering if you do that again at some point, are you taking a risk . Subadra i think you are taking a risk. Bonds are trading very rich to what we think are fundamentals. Lara pointed out, the u. S. Economy is in a strong position entering into the coronavirus issue. When there is a rebound, i think the risk is yields could easily move back up in a short time. For that to happen, we need to see risk sentiment improved. Alix you brought up japanification as a bull flattening indicative of what investors think. This is not a japanification economy is it . Subadra most of the move is technical. Youre looking at global bond yields at historical lows. The dollar is starting to widen. Treasuries look attractive for the u. S. As well as foreign investment. When youre holding dollars and you want to put it to work, the bond market seems to be the logical place. Lara this has been such an exceptional move. It has blown out every short as it has gone. Everybody is getting out of its way. Say,unds likable thing to but i think there is still a lot of room from where we are now and zero. Im not saying we will not get there, especially if this news continues, even at some level, over the next several quarters. I think we could see some stabilization in bonds, at least nearterm. Alix mike, you and i talked to jim bullard about what he was hearing from companies about coronavirus. Did anything he said surprise you . He seemed pretty calm about it. Michael he suggested companies were taking it in strides and making contingency plans. It is not like they have not had time to do that. Some have emergency plans in place. The biggest question will be im not going to repeat the mike tyson line about everybody having a plan until they get punched in the face. When cash flows that are up did, how good is your plan, how good is your financing, and how good is your relationship with the bank . The fed cannot do anything and the fiscal authorities do not seem to want to do anything. That is the part we do not know. Governments will be forced to do something on the fiscal side that is more targeted. You hear that from the bank of england and other jurisdiction. They are trying to find support for areas that need support. Alix for you when you talk to companies, if they get cashstrapped, what do they need most . Do they want to check from the government . What will help them . Irina i do not think a company will say no to a check from the government. One of the things, we have been spending a lot of time on corporate, but one of the things we have seen the most growth, especially in this jobs number, is in companies with workers 50 and higher. Those are the Small Businesses that will be affected most because they are the ones that cannot wait or delay hiring. That will affect their cash flow. We are watching that as well. It is a huge part of our community at career builder. The space is most likely to get impacted by corona. Alix a great conversation. I hate to leave it. Subadra rajappa, Irina Novoselsky, and bloombergs Michael Mckee, thanks a lot. Lara rhame will be sticking with me. Bloombergs taylor riggs is monitoring all of the action. Taylor right after the positive jobs number it looked like we were getting a lift in yields off of the bottom of their lows, but that story has changed. We have now rolled back over. Points. F 24 basis that is exactly where we were before the jobs number announcement. The same with the bloomberg dollar index. Weaker. 3 . You are still seeing dollar weakness relative to safe haven strength. The equity market look like it was starting to recover before the jobs report. , theave the s p 500 off 3 nasdaq off 3. 5 . In the s p that has not changed. The nasdaq trying to recover. Only off 3. 3 in the futures market. The story has not changed. Lower for longer. Alix taylor riggs, thank you very much. We want to get update on what is making headlines outside the business world. Viviana hurtado is here. Viviana more than 100 thousand coronavirus cases have been diagnosed globally. 80 of those in china. That is where the epidemic began. Beijing reporting the number of new cases and deaths falling. The u. S. Outbreak is getting larger. There been more than 100 more than 130 cases reported an 11 deaths. Now to opec and its high state gamble push to the brink of failure. That has oil prices falling. Pressure resisting pressure to make production cuts. Oil producers are trying to offset the impact of the coronavirus hammering demand. We end with another ceasefire between turkey and russian backed syrian forces. It is the latest in more than two years of efforts to contain the fighting in the syrian idlib region. Turkeys president erdogan did not get everything he wanted he hoped for a new zone of control to settle millions of refugees. 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. I am viviana hurtado. This is bloomberg. Alix . Alix lets recap the jobs number. Kind of a blowout number. February,bs in january higher. Also average Hourly Earnings at 3 . In line with estimates. One data point we got was the trade balance. It narrowed to 45 billion. Maybe we are importing last. Volatility as stocks sink for a second day. We will have more with julian emanuel. Bloomberg users, interact with all of the charts on gtv on the terminal. Browse the charts, check them out. This is bloomberg. Viviana this is bloomberg daybreak. Next hour,in the larry kudlow, National Economic council director. Alix we continue to follow the risk off meltdown in the market and a russian to bonds. Joining in his julian emanuel, btig chief derivative strategist. Also lara rhame is still with me on set. What you do on a day like today . Julian you try to keep your emotions in check. Obviously we are dealing with the unknown unknowns. People isuld say to you have to step back and look at a couple of things. Number one, although the Employment Data is meaningless in the moment, it is actually significant because if you think about it, we have to deal with the situation at hand, but it is a positive that we are coming into the situation at essentially the point of maximum economic strength. Back of people, if you go to the trade war in 2018, were surprised the trade war did not cause a sharp economic downturn because that was the kind of situation that could have been. The reason is because the underlying strength of the economy was as it was. The second thing is for us, the tenor of the trading is different than it was last week. Last week we saw indiscriminate selling. This week we are seeing a lot more degrossing. Taking shorts down along with longs, which was similar to the kind of activity we saw in december of 2018, towards the end of that market meltdown. Really, for us, the other thing we are looking at is any change in the weekly jobless claims and the credit markets. We see signs of stress in the credit markets. We do not see the kinds of stress we saw in the First Quarter of 2018. That is how we take temperature cured the most important thing is to retainor control over what would normally be an emotional situation. Lara. Julian, this is i hear what you are saying. For all of us we would look at the screens it is read, it is is onethe is red, it of the hardest things to do when youre seeing a week like this. We see volatility continued to spike. We have the vix higher today than it has been. Where does that top out . Julian if you look at it over the course of history, you are at levels that youve seen only on a number of occasions. You saw that in early 2018. You saw it during the china fx crisis in august of 2015. Both of which were shortterm events. The only other comparable periods are the depths of the financial crisis, where volatility was much higher, and the crash of 1987. You have to step back and ask yourself are those events likely to occur . We would say the answer is likely no, because factually the Banking System is in a much better shape in general. The fed has clearly pledged its ,ommitment to provide liquidity essentially a whatever it takes type of situation, and we do not see the evaluation excesses we saw in 1987. At the end of the day, assuming and this is the rational assumption you will get through the virus in two or perhaps three quarters, what you are left with our yields below 1 on the 10 year and record money market balances and money going into bond funds over 1 trillion over the last five years, all sources of liquidity with a consumer that has remained buoyant despite stresses over the years. Alix julian, i appreciate you jumping on the phone with us. Lara rhame, it was great to see you for the hour on this day. Really exciting, lots of stuff coming up. Thank you for joining me. Lara absolutely. Alix everything moving in todays session. We look at key support levels in technically speaking. If youre jumping in your car, tune into Bloomberg Radio here it on sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix it is time for technically speaking. Bill maloney, chartered market technician and voice of bloomberg equities god joins me now. Listen to bill on the bloomberg if you type in squa. Bill futures currently down around 96 points. 3000rt in the cash around 392083. First support around the march 2 blow. Below that figure 2900. Below that you are looking get the figure 28 low, 2856. 2945 is the first level in the s p cash. Alix lets take a look at the 10 year. Yields down 17 or 18 basis points. Bill they continue to plunge. Down around. 74 , it fell right through the. 86 level you talked about earlier in the week. Support point 69 . Below that,. 58 . Alix lets get to gold, wrapping it up with a safe haven bid. You see the move into treasuries. In terms of gold, that is having a safe haven bid. 18 , lookedas up like it was going to fade when the 8 30 data came out. Fading frome it is the 1689 level today. Alix thank you very much. Going to be an interesting trading day today. President trump is signing a 7. 8 billion dollar emergency virus spending bill passed by the house on wednesday, yesterday by the senate. He is now signing it. 7. 8 billion in emergency funding. About three times as much as he had asked for. That wraps it up for me at bloomberg daybreak americas. Coming up on the open with jonathan ferro, the white house reaction to the jobs report with larry kudlow. Happy friday. S p futures still down about 3 . This is bloomberg. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan treasury yields heading deeper into uncharted territory. Investors left reeling from a week of brutal equity volatility after a monster payrolls report does little to reset expectations. 30 minutes until the opening bell. Good morning. Heres the brutal friday morning price action. Down 87 on the s p 500. The dollar getting battered against g10. Eurodollar with eight 1. 13 handle. Does anyone remembers the payrolls report . It has done nothing. On the session, 0. 74 percent is your yield on the 10 year maturity your main event, the payrolls report. Joining us is Kevin Cirilli at the Labor Department in d. C. Walk us through the headlines. Toin 270 3000 jobs added the u. S. Economy in february, beating expectations. The Unemployment Rate