Bear market. You consider the fact of the last 13 days, nine of them we have seen a move greater than 3 . Today you have a move of close to 5 . 6 at one point. This after the move yesterday. This is clearly not normal and it does feel like we are trading in a bear market whether or not youve actually surpassed that. Certainly not normal. We havent had two backtoback gains in this market going back to february abigail taking a look at whats been happening in the markets right now, she is standing by to give us an update. Truly a brutal day for stock risk assets around the world but especially in the u. S. Coronavirus fears, what that impact could be on the Global Economy and growth estimates. Here in the u. S. We see the declines are greater than they are around the world. The dow down 5. 9 in a bear market. The s p 500 is you were talking about flirting with a bear market. It does feel like a bear market whether we are technically there or not with the relentless selling day after day or every other day as with that rebound rally yesterday. Take a look at the off world index outperform in a relative basis down 3. 7 . Europe not finishing down all that much. At one point europe had been higher. Perhaps because some european officials are talking about stimulus. Christine lagarde talking about doing whatever it takes in terms of coordinated efforts. These averages moving down this way beyond the uncertainty and unknown of the coronavirus and what the impact will be. The Growth Outlook right now is declining. These are the growth estimates for a number of countries in the world. The yellow looking at china. In italy, down three tents of 1 . In blue looking at the eu down 1 10 of 1 . U. S. Right nowe are flat. Everybody wants to know what is President Trump going to say about stimulus. He is saying he will offer a statement tonight after in terms of some of the details are thought around what he might offer for a stimulus package, we are working out the details right now. A little bit longer than markets are comfortable with even with the declines weve had on the day. Pushing for a payroll tax holiday perhaps. Assistance for unpaid sick leave for those who do have coronavirus can stay home and not spread it. Trying to find support sme and proposing everyone will be tuned in tonight to see with the details are. Often you hear the devil is in the details. In this case we dont even know the true nature because of the lack of testing. So much uncertainty out there. Thats weighing another risk assets. Take a look at their spray oil going back down 48 in a very short period of time. Oil is a risk assets into growth asset. China is the largest user of natural resources. Oil is really prominent. Maintaining very hard to cease documenting their current levels. Rounding it out across the capital structure, high yield cdx. We go back to the uber terminal. High yield cdx spreads. That is insurance against the possibility of default. When the price goes high it tells you its risk off and investors are nervous companies could be 2015, a level well above slightly above 2015 but nonetheless also about 2012. Anyway you slice and dice it, todays very risk off on coronavirus fears. Great recap. Still with us, sarah and amy. Deskou going to be at her at 8 00 tonight watching the futures trade from this announcement . I wont be at my desk because we are in Business Continuity planning, technically working remotely but i will be looking closely at the data. So you are looking at that data. What do see here . What does it even traded this stage if you for some reason feel compelled. ,s there arbitrage opportunity what do you do . Honestly i remember being at 2008 feeling07 and fullfledged panic. With having one under my belt i think this is the time when there is the most opportunity, right now. You dont really feel panic and yet there is a selloff here. No one is talking to a companies and banks going under just yet. We are sort of talking about more Broad Strokes and what is still relatively can be an economic slowdown, may be a recession but we are not talking about anything. Its interesting you say that because of the good kind of depends on where youre sitting. From where i said there are days where does feel like panic from a trading setting and so for derivative people, there is a little bit of that because this is an actual tail, its an unknown unknown that happens. Was we had christ that at a decade low and now we are above decade averages prayed we had that opportunity. I want to talk to you more about this panic question because the action if you just look at lines on the chart looks panicky but then you read these things about a longterm investors, fidelity or vanguard came out saying we are not really seeing a whole lot of action. Is there this cult of diversification, buyandhold that is just unshakably not moved or is it only a matter of time before even they start to panic . I will say that today felt different. Boeinge likes of hilton, drawing on their credit lines in the of blackstone coming out saying they are encouraging their clients to tap out their credit line. Today did feel different and as we just saw with abigail, we did see high yield spreads on the cdx widening out above those 2015 levels. Days wee past two started to see cracks within the crack credit market forming, today it actually felt a little more real and i would say from the people i did speak with from the notes and emails i was getting all day long, the entire week of this week of the past couple weeks it did feel more panicky. Where you want to be hiding out . Where do you want to be hiding out . Where do you want to be hiding out in equities or commodities . If we are going to get any reprieve tonight, owning longer datafile agility or calls further out with buckets have is a good trade. We want to turn to washington with the president is speaking. Financialtrump centers and having a good discussion. We are discussing the economy, discussing how it relates to jobs and all of the things that are happening now with the virus and we have become so familiar with. I will be making some decisions, ive already made some decisions today but i will be making some other ones and i thought i would let the press hear some of the wisdom from the folks in the room and maybe i will start with you. Mann is the chairman, the at bank of america, highly respected. Everyone in this room is the highly highest level. Thank you mr. President at thank you for bringing us together. Hereeos of large banks want you to know because of all the work done on capital liquidity and all the things as we look forward to uncertainty due to the virus and oil price changes, we are very strong, we are in a great position in terms of liquidity and capital strength. Most important to be are doing what we do best which is helping our teammates importantly but also our clients and Small Business customers continue to have access to credit. All of us providing relief to any customer who has an issue of being out of work for the virus for the things weve done in every Natural Disaster that occurred. Until the last couple of weeks weve been very strong and were even still strong. We still people still spend. Small Business Loans continue to grow. Auto loans are growing prayed Mortgage Loans are up very strong. The real key is wellcapitalized come we are here to alps small and mediumsize businesses and help our consumer clients build whether the storm. Thank you very much. I think its important to build enough obrien said, this is not a financial crisis. The banks and Financial System are in sound shape and we are here to help. I think second is when we look at what is going on, in many ways we are going it several challenges at the same time, we woke up or went through sunday with the drop in oil prices come we need to deal with that when the market opened up. Clearly corona is front of mind for everybody, not just in the u. S. I think the market is going through a period of trying to get prices going. Also trying to figure out what is the intermediate longerterm health of the economy. What we saw as we saw some fears on the back of those and some talk about potential recession on the back of those and i think the market is going to discover really trying figure out what earnings are going to look like and what valuations should be. The good news is the markets have performed in an orderly way. The infrastructure supports the markets. I think its held up through some pretty its been strained along the way. I think it is held up well and has been orderly. From the banking perspective we are providing liquidity, we want to provide for Small Businesses, be supporting of consumers. Thank you very much. Coronavirus it was just all go in the numbers were fantastic. We dont even know where the numbers are now, we will have to see. The numbers from a week ago were Great Company now we are hitting a patch and we will have to do something with respect to getting this getting rid of this virus as quickly as possible and as safely as possible. Our number one priority is the health of people of our country and we will be making most likely a statement, i will make a statement later on tonight as to what ive decided to do and what our country will be doing. Will first reiterate we are all here to help. That is what are institutions do. We are all in a position to do it and i think we are being very thoughtful about how we do that for both consumers, Small Businesses and companies that we deal with. I think we are all encouraging any of our customers or clients of any issues that make sure they talk to us, we are all developing programs to ensure as they and the employees and their customers go through the situation that we are there to be a source of strength come whether its to help them through issues with their fees and payments or to be there to lend. Im glad youre saying that, thats good. David. Glad to be here. My colleagues who on these other institutions. Most of what i would say would echo what has been said. The virus obviously poses unique challenges both for policymakers and businesses large and small operating across the country. All businesses are focused on their people, taking care of their people and is part of the banking system, businesses large and small, individuals making the same steps that these other institutions have spoken about. We will get through this. It is going to require some navigation on the part of all of us. We are going to do our part. We will be doing a lot of additional work with Small Business as you know. Dollarsany billions of and making lots of Small Business loans. As the banks are. We will be first would like to thank you for being so aggressive and very specific about protecting the health and safety and they are encouraged by their leaders in this industry that are thinking along the same lines. Out thatike to point sba has the ability currently with 18 billion to provide loans with the support of all the lenders and they also have the opportunity to extend some of the Payment Terms up to six months. We are looking forward to looking just working with everyone of them to leave no money on the table to provide support for Small Businesses. Yesterday we met with the insurance companies, the top companies, the top people like yourselves and they were very generous and you know what they did with copays and every thing else going all out. So we appreciate that very much. The Financial System of the u. S. Is in great shape. I think one of the issues is that people are tested more and more, they will be in better there will be a better handle on what we are dealing with. Just because there will be some economic effect as this goes on. We also we all hope it is short, it will need support of the ability and if we can do that, this is a natural ending which most people lose sight of. The vaccine is developed, that will take therell be other things meanwhile. Mobilization. S a youre making very good progress. Different places dealing with the problem. Its really tremendous. We will be announcing that also. Anybody else have any thing to say . Anybody. I think youve done a fantastic job with the fast action on china travel. I think the focus on fiscal stimulus is really important. How do we help American Families that live too often paychecktopaycheck get through this difficult time where they lose their job or otherwise face circumstances so i think your leadership on fiscal stimulus is really thoughtful and appreciated. Theof us in this room know Interest Rates changes weve has in the bond markets created unprecedented opportunity for americans to refinance mortgages and dramatically lower rate which is really good for america and households. Giving the opportunity to buy a first house or a new house for the growing families. Markets work as we hope they would tell provide stimulus to the entire economy. How is jamie doing . Doing well. Is making great progress prethank you very much for asking. The bank has very rigorous resiliency plans, all of those are underway right now. Designed tolans are protect and help our people. And protect consumers and Small Businesses with their plans and to waive fees for consumers and Small Businesses were under stress. I think a fair question is are we still lending and over the course of the last 40 days at jp morgan, weve extended 26 billion worth of loans to consumers and Small Businesses. Bit at the ttle at seattle, which has been a center of the virus and Economic Growth is still continuing. We see it slowed down significantly, but people are still going to restaurants, people are buying food to be delivered by the delivery services. In the data we also see the about thes much more older generation than it is from the millennial generation. The millennial generation seems to be holding up very well. I think there will be a pentup demand, everything may be stamped down people are now leaving their homes, i think lc tremendous pentup demand. We are not waiting for them to call the banks, we are reaching out to the customer and Small Businesses, waiving fees, making sure to refinance. 79 versus last year and refi. It was so take a while to figure out how much. Thank you very much. Anybody else . I represent the Community Banks across the country. Strong forady and the communities. Theherby Small Businesses, agate communities. I would echo the sentiments you just heard and thank you for convening the group. I would also add something rebecca said, we are also helping not just active banks but the 5100 banks across the United States to put a continuity and Resiliency Program to support our customers and clients who are in many cases facing a time of need. Thats what banks do, they stick by their customers in good times and challenging times. Very focused on finding credit for Small Businesses. Getting the credit to them rapidly and also being lenient. Thank you very much. Thank you all. For those listening, the country is strong. Job withne a fantastic adding jobs. In terms of our health management, this is a longterm lesson to learn. Today the United States americas very strong and we need to remind ourselves part of getting through zoning like this is about confidence and supporting each other. And having hope for the future. I believe our best days are ahead. And working together we will make that happen. Thank you very much. I will be making a statement tonight probably at 8 00 and we will be starting some additional solutions, we had a great andsion on china and asia they are healing at a good rate. Im happy about that and we start to think about getting back involved in that part of the world, as you know in another part of the world in very tough shape, europe. Having a tough time of the virus. We will be making various decisions, you will be hearing about them at approximately 8 00 tonight. Ill be letting you know later. Will you be declaring a National Test we will be talking about that later. You your estimation of the airlines, the Hotel Industry too big to fail . I think it will be great. Folks around the table are the ones that finance it. And they understand, they are great companies. Problemaving to fix a the four weeks ago nobody ever thought would be a problem. He read about them from 1917 and from lots of other times and nobody thought we would be seeing it. We were just discussing it. This came out of nowhere. It actually came out of china which is the way it works, but we are going to get the Problem Solved and the country is so strong in the institutions are so strong. Institutions,rful theyre built up and ready to go and i know they will be helping their customers during this. We think it will be a shortterm period. Stimulus package or measures might its a good question. Youve been hearing about the various forms first stimulus, very different forms of stimulus. What would you say would be good , appropriate under the circumstances . The first thing is fiscal stimulus in a time of stress is the right answer. I think anything he gets out the most people and so keeping people who become unemployed due to this, unemployment and other types of programs we think the key thing to keep the American People to buy goods in the economy will be strong and they will have people should take care of, no question. All the companies, anybody is getting paid for as long as it takes arnie but he is the virus we are taking care of. Id focus first on that level and in the second major thing is taking care. Between testing and building up the hospitals so they can thatve and do great work the medical community and Hospital Community can do is critical. Other than the broad of people in hospitals, this is another thing we will get through this. Rid of the problem quickly, everything solves itself. Are talking about various forms of stimulus. What would you think . The support of Small Business is critical. Andlook at the employment across our economy, right now Small Business is suffering from both sides. One is the fed disruption in their supply chain in terms of receiving their goods that they need and the second, the other side is there is uncertainty from the demand side in terms of what that future holds. I think working with the banks in this room and well beyond the sba to be able to put programs in place to be able to potentially up the limits in think wegrams and i can do it again. I think all of us in this room are in a fortunate position to take care of our workforce. I know large Corporate America is there 100 for their employees. The weak spot of the smaller businesses that dont have the Financial Flexibility and in particular our workers, how do we think about the necessary direct fiscal support to the individuals in our economy who are least secure in their employment. Work for Goldman Sachs lights can be fine and if you are parttime repaid worker, this is a moment of real trial prayed this is where fiscal accommodation is quite powerful. I would say stimulus is appropriate. You mentioned in terms of some form for payroll tax, a holiday. It is a regressive tax and its something that could help in the short run a longterm and the longterm and the bride more support, needing help in terms of more savings. Doing some that help the short run in the long term. Democrats are not in favor of it. It would be summing that would be very good for the citizens, for the people and and in longerterm for the country. Been talking about either cutting or getting rid of it entirely. Its great to always have the bankers and tremendous visibility into the economy and whats going on. Interested in hearing that feedback specially small and midsize businesses. All of his executive authorities which are quite significant so there will be various proposals will roll out quickly on that front and we are working with congress on a bipartisan basis to immediately help small and mediumsize businesses as well. What you say to americans concerned were not taking it seriously that your statements dont match what theyre saying. That is cnn, fake news. Go ahead. We are done, we are finished. We are done, lets go. Lets go. Thank you. Scarlet that was president from meeting with wall street bank executives, most significant of is comments that we heard the president saying he will make his statement tonight at around probably 8 00 p. M. , saying he will make decisions on europe, he is also said there will be pentup demand when the situation is over, presumably all of this will be included in the statement he makes at 8 00 p. M. Tonight but we also heard in the past he said he would give more details on some kind of government response and that was not forthcoming at least not from him yesterday. You could argue that todays big decline was essentially a reaction to the lack of details. We saw that play out last night when the market was essentially waiting to hear from him last night but did not. Im sure a lot of folks will be waiting to hear what he has to say. At the root of all of this is the coronavirus outbreak. In the u. S. Is going to get worse. From the National Institute of allergy and Infectious Diseases, dr. Anthony fauci. We will see more cases and things will get worse than they are right now. It is 10 times more lethal than the seasonal flu. The flu has a mortality of 0. 1 , this has a mortality of 10 times that. Scarlet guest joinednext us in january when he said he did not expect the coronavirus to be major. Things have really turned here in the World Health Organization this a pandemic. Who also saide countries can still change the course of these pandemic through testing, through treating, tracing and mobilizing. Is that possible . Amesh it is not going to be something we can contain. It is a virus that is not containable in the beginning. In january we talked about this being a human to animal thing animal to human thing, but that was wrong. It spreads from humans to humans. When that happened, all that dropped. Is not containable in that sense. Joe is it too late in the u. S. To avoid his situation like we are seeing in the middle east in italy . Amesh it is mysterious to many of us. We are hearing lots of cases, bless of severe cases, lots of severe cavers cases. In south korea we have the most testing has been done and they dont have that response. We need to get data from italy. That is the worst Case Scenario is what is happening in italy. When do we start Getting Better data and testing here and when we get that data what becomes a reaction . Amesh testing has been a bad problem for the u. S. Government. We are starting to finally have some capacity but it is still very can trained and bureaucratic. We willget testing up, have a better understanding of how it is spreading. We hear about hotspots in new york and washington state, but there are probably many other hotspots that are not diagnosed. It is mixed into cold and flu season. But we will have a better idea of the ratio. 10 times worse than the seasonal flu, you heard. We want specificity on that number. Scarlet we make a lot of assumptions about how the coronavirus is similar or dissimilar to the seasonal flu, one being in my taper off once the warmer weather comes around. Is there any evidence to believe that. Other there are four coronavirus is that spread every year, and they have seasonality. The decrease transmission during the summer. That is in temperate climates. s office of the Southern Hemisphere will have the opposite. So we may see some tapering off. It looks like we have not really had a major sustained outbreak yet. We seek cases in singapore for example, but nowhere near what we are seeing in korea or italy. Amesh i think some of that might have to do with the weather but it is hard to know. We do not know who is testing what, and where. Romaine when we talked about mitigating the effects, the idea that we are past containment. Is there an example can draw from in the u. S. As to how that plays out . Amesh since the 2009 h1n1 pandemic, we did not try to contain that. So we quickly moved to preparing hospitals, preparing a vaccine, getting new antiviral emergency use authorization. We scaled up diagnostic testing. There were some places that closed schools and stopped Mass Gatherings. That is the best example. Travelas not emphasis on bands and quarantines and self isolation. Scarlet we are being a lot more proactive this time, to the point where in washington, democrats are calling for President Trump to declare a National Emergency. What does that mean in practical terms to declare that when it comes to treating this . Healthwe had a public emergency declared a couple weeks ago. A National Emergency would declare this to a higher level. It has never been done for Infectious Disease before. It would be more for like a hurricane or Natural Disaster, which would give the federal government more leeway and move bureaucracy to try and respond as quickly as possible. Triggered the stafford act, which allows reimbursements. We have never seen implied applied to an Infectious Disease before. Scarlet does that mean anything if there is no federal leadership . Amesh we want to have a coordinated, seamless federal and state cooperation. We have had differences. I do not know how that would change. Hopefully with the Vice President in charge would have better coordination and a lot more federal oversight of what is going on. Joe incredible headline just now. The ncaa basketball tournament to be played without fans. Scarlet sobering. Joe incredibly sobering and surreal images. Obviously steps like this are needed to contain the virus, everyone agrees. The degreen china, brought to bear on this in terms of travel restrictions, checking peoples temperature every time they walked down the street, is on a completely different level. In thistem it country, even if we are not willing to go as far as the Chinese Government has . Amesh i do not think that is the best way to approach that. We do not need to lock down cities and violate peoples rights. We can be more nuanced. Each community will be different. I do not think that type of things it can make it paradoxically worse. It can lead to cascading disaster. If you have a stroke you cannot get treated and some of those chinese hospitals anymore. Romaine when you talk about social distancing, joe mentioned march madness being played without fans. Are those types of measures where we need to say lets not have large gatherings. Lets cancel st. Patricks day parades. Are those the types of measures that can be a mitigating effect . Amesh it is effective if you do it early enough and you do it with a lot of proactivity, and you think about where it fits in the context of disease transmission. If you dont have that much transition yet, you may be able to flatten the curve, where you have less intense spike of cases. More gradual over time, which allows hospitals to deal with patients in a more reasonable basis. Scarlet that makes sense but we are flying blind in a number of cases. We do not know how infected certain communities are at all. I mean, it seems like the number of cases is relatively low compared to italy, but that is because most people have not been tested. And if you do want to tested to be tested, you have to have been to one of these other countries. Amesh we do not know how well social distancing will work because we do not know how much is in the committee. There may the community. There may be cases we do not know about. Our social distancing would be optimized if we knew what the prevalence was in many different cities, but we do not know that. But for now, especially for highrisk individuals, they should not be going to Mass Gatherings. We need to think more about what Mass Gatherings we want to have. Romaine you talked about flattening the curve, i have heard a lot of medical professionals talk about this. If we do start to see a spike in cases, once we Start Testing them for real, do we have the capacity to handle these cases . Amesh hospitals can get creative in using their space. Lot, but there is a limit. We have a low per capita hospital bed rate compared to other countries. We are going to get into trouble, just like we have during bad flu seasons. That is the most pressing thing, to get our hospitals ready for this flux of patients. Romaine amesh, thank you. President trump is scheduled to make an announcement later tonight. Going to update us on the administrations plans for dealing with the coronavirus. Abigail doolittle has a look at what is at stake. Abigail what is at stake perhaps is reelection, because President Trump early on aligned himself with stocks, perhaps incorrectly. It was shocking at first when he was always taken credit for the s p 500. He may not want to do that because when stocks go down, he also has to take credit for that. What we are looking at here in white is the real clear President Trump Approval Rating. In blue we are looking at the s p 500 over the last year. You can see they are roughly correlated. His Approval Rating has been climbing with the s p 500. Wel, on stock market plunge, see his Approval Rating is declining. So, americans and investors alike want to know details about how his administration will respond to this Coronavirus Crisis and tragedy. So of course he will be making a statement tonight at 8 00 p. M. The line we have been hearing so far, working out the details. He will be pushing for a payroll holiday that will help the average american meet ends in this likely difficult time. Unpaid sick leave for those who will need to stay home for the coronavirus and not spread it further. Smeto find ways to support s and sectors Like Airlines and energy. It will be interesting of course to see what his statement at 8 00 p. M. Does include. To ane now its turn roundtable discussion here. Former Federal Reserve vice chairman alan blinder over at Princeton University is joining us. Also joining us, former new york fed president bill dudley is joining us. I want to thank you both. Thank you for being here. A pretty remarkable day here. We are all waiting to hear from President Trump, to hear what the policy perception will be to blunt the economic effects from the coronavirus. Mr. Blinder, can you start us off and give us some sense about what you think the most appropriate prescription would be . Alan i wrote in the wall street journal today, i dont think this is what trump will talk about, but i think the most support thing we can do is get millions of americans tested as quickly as possible to reduce, gonnad were never end, but reduce the uncertainty hoever next tow you is carrying the virus. Nobody knows that now. We do not even know if we are carrying the virus. I certainly dont think i hamm. I dont have any symptoms. But we know that many are people are Walking Around with no symptoms. Isi think this is it posing a clear and present Health Danger for sure, but i think it is also posing a clear and present economic danger, as people get afraid to go shopping, and go to restaurants, and go to movies, and go to sporting events and so on. Expectll, the markets dramatic further rate cuts from the Federal Reserve. But are there other things that the banks could be doing the fed could be doing not strict leon the rating side to keep credit he and liquidity going to companies that need it . Bill so far this is mostly an economic event, not a Financial Market event in the sense of strains in the banking system. Very different than the financial crisis. It is important not to just pull 2009 playbook and assume that is appropriate for current circumstances. That said, the fed can definitely provide liquidity if there are strains. One area where there is strain is the new york pricing market. That has to do with the positioning of hedge funds that a relative value and have leverage books of business going back into the treasury markets. That is something that the fed should probably be looking at. Scarlet i want to bring us more to a global point of view, because we heard europe acting with a lot of resolve this morning. We saw mark carney, angela merkel, Christine Lagarde all come out and talk the need to Work Together and address the concerns that face the Global Economy. How much of this is going to be coordinated with the United States . How effective can their measures be if it is not coordinate it . If its not coordinated . Bill first of all, it is better in terms of market psychology if you make it coordinated. But i would not want to exaggerate that and i certainly would not want to be thought of as recommending in any sense that the United States, or any other country, holds back if others will not go along. Said, Monetary Policy as we normally think of it, is a pretty weak read to lean on in this sort of crisis. This is not a case where people and businesses are starved for credit, or credit is expensive, and we need to alleviate that. The fed knows exactly how to do that. But that is not todays problem. So, i think the coordination on healthrelated issues is probably much more important than coordination on Monetary Policy right now. Joe bill, i want to go back to you. Because today we got something sort of novel out of the u. K. , where there appears to be an emerging fiscal monetary coordination. It is something people have called for for a while, that the idea that maybe independence is a little overrated, or in times of certain crisis they need to Work Together, handinhand. Do you see any merit in that, and perhaps the best way to get money into the hands of people who need it fast so we do not see it collapse is something more specifically coordinated between the treasury and the Federal Reserve . Bill i dont think you necessarily have to have. Oordinated but it is helpful to have a coherent set of economic policies. The key is two things. Testing. You also want to encourage people to not do things in large crowds to spread slow down the spread of the virus. The u. S. Health care system is overwhelmed with people getting sick, and that would be very unfortunate. The virus maybe cannot be contained, but if we can slow down the spread the Health Care System can handle it much better, and the consequences for americans is less. On the fiscal policy side there is a lot you can do. I think paid sick leave, extending Unemployment Compensation benefits. Payroll tax cuts, possible. State and local governments as they do not lay off workers is something worth contemplating. All of these things we are talking about here, these are things that have been discussed openly, but we have not seen any formal proposals. I know this is a financial crisis, but during the financial crisis we had the fed and other bankers almost run point on the response. Obviously it was a financial crisis and that is why they ran point. But who is running point on this . We did not hear from Steven Mnuchin today. Some of the other financial readers leaders in our government have also been relatively absent. So my question is who should be running point . Is this something for the treasury department, the fed . Who . Alan i think actually it is something for the president. Leader, whichl unfortunately we do not have right now, and as a political leader. But i would like to see, euphemistically, because we do not actually want them to hold hands, is nancy pelosi, donald trump, and Mitch Mcconnell hold hands again, euphemistically, agreeing on a set of fiscal measures, emergency fiscal measures that would correspond to a number of things that are on the list that bill gave you. It might be different from that, might have other things. The one thing i would add, i am sure bill does not disagree with this, he alluded to the problems of state and local governments. Something to match that the federal government gives to medicaid, to the states, is crucial. And as their Health Expenditures merge, the last thing we want either from a fiscal perspective or a health perspective, is states to cut back on that. Scarlet fair enough. Bill i agree with that. Alan get out in front of the television cameras, figuratively, not literally, hug each other, and announce these things. Scarlet we can always hope. In the meantime President Trump is set to be addressing the nation from 9 00 p. M. Tonight. Earlier he said it would be 8 00 p. M. And he had promised more details on what the federal government would take. Bill, in terms of the emergency fiscal measures that professor blinder was talking about, that nancy pelosi, President Trump and Mitch Mcconnell could come together on, if there was one immediate step they could take, what should that be . Bill certainly paid sick thing would be a good place to start. Sick leave would be a good place to start. Second if i can make one final point, we are comparing this to be financial crisis. This is moving a lot faster than that. The financial crisis started in august of 2007, and it did not really hit the peak until november of 2009. This is moving much faster. We could be in a very different place. Joe i know you havent really focusing have been really focusing on republicans response. Focusing on the public response. About the think effect that the Financial Markets themselves bleed into economic activity, that the wealth effect, volatility, concerns of people looking at their per folios itself slows 21212123ples 1 there is any good news in this, it is that those wealth consumeretarding spending comes with lag. They are not instantaneous. Who owns the stock is upper income people who did not react do not react immediately by not buying things. The middle income and poor people that are living hand to mouth are not owning stocks. Public, ie broad think it is possible that the biggest immediate effect, not the longest effect, but the biggest immediate effect is a psychology. I do not need to criticize bloomberg or any of your competitive networks, but they see this on the Television Screens and it is kind of frightening. That does not mean you should not report it, of course you should report it, because it is happening. But i do not think the big worry now is that the median, the average American Consumer is looking at his or her stock portfolio and because of that, spending less. There will be some of that in time, but that is not what is going on today and tomorrow. Romaine obviously people look at their screen, they panic a little bit, but professor blinder, you provide a lot of calm advice and perspective. Fedthanks to you, former vice chairman alan blinder. We also want to thank bill dudley, also giving us some great perspective out of the 100plus years of Financial Experience between the two of them. Blinder very instrumental during the financial crisis in 2008, and Dudley Randy Newark fed at the new york fed at the end of it. Scarlet what stood out to me is this is moving much faster than the financial crisis. In context it is hard to get your mind around that. Given all that, we know the market has been hitting assets across the board. Credit is no exception. Lets check in with taylor riggs at a look at bonds. Taylor what stood out to me is you are not seeing the typical treasury reaction but you are seeing a big reaction with in the bond market. In the triple b space, scott minor earlier on monday said you could see this widen out to 400 basis points. 2. 15 or so. An additional 200 basis points of widening within the double b space. Look for it to widen two 750 basis points. Right now we are only at 435 basis points within the double b space. Dont get me started on the single b space. 1100 or so. One thing you can count on is the cost against default and is highyield market certainly has been rising. Highyield companies has risen. Take a look at the index level, that has gone from log to vertical. The highest since the beginning of 2016 and end of 2015. They are starting to get some concerns about credit. A lot of companies drawing down their loans. That has shifted to wondering how long perhaps some of these highyield credits can hang in there. Scarlet fantastic perspective. Taylor riggs, thank you so much. Conte, theseppe italian Prime Minister speaking to his nation. His comment is italy has ordered the closure of all shops except groceries and pharmacies. He said factories can continue working with precautions, but italy will close all bars and restaurants. They will close all shops except groceries and pharmacies. He adds that there is no need for runs on supermarkets and food deliveries still be allowed. That brings it to a new level. Joe and of course we had news this morning, Christine Lagarde telling european leaders, this could be another 2008style financial crisis. An ecb decision tomorrow. Italy essentially announcing the complete shutdown of the economy, except for absolute necessities. The ecb tomorrow will be fascinating to watch. Scarlet i totally agree. Lets bring in jason joining us by phone. You just heard us talk about the extreme measure italy is taking and what Christine Lagarde has promised as well. Is that what we might expect in the future from the u. S. . Jason it seems hard not to expect that. Maybe we get a little bit lucky because we had a little bit of a head start, perhaps, in dealing with this. But at this point we have to be realistic and expect such events to happen here. Joe jason, what are you looking is from trump tonight, and there anything that he could say that you think could change the complexion of this market . Jason i think he could say a lot tonight and the one thing i would not want to see is anything in the order of platitudes or half measures. In my opinion, there should be a massive response to this, in the realm of whatever it takes. Keynesian, but there are times where that can be helpful. This might be one of those times. Policy,hink monetary setting fed reserves too high, there are other structural things that could be done. Be long onnk he will specifics in terms of what the administration is willing to do. Romaine so far what we have seen out of the government, im including the fed and jay powell, and we know the fed will meet again next week for that regularly scheduled meeting. I am wondering what we have gotten out of the fed, particularly on the short end of the curve, bowstring liquidity, do you at least take some comfort that once we get through the worst of whatever it is we are going through now, that there will be a stimulus or a base for some sort of recovery . Jason i do. The good news is that the u. S. , unlike a lot of other economies globally, i think went into this in pretty good shape, at least from a consumer perspective. Wages,e good employment, high savings rate, household net worth, all those things are good. Prices, youhat oil have a good base to work from. But the one thing i would not worry about is inflation. That opinion, if unfortunate circumstance should happen, we should be thrilled. 11 years with Monetary Policy. I am more worried about under reacting than overreacting at this point. A symmetricre is an risk to not taking this seriously enough. Seriously, it too you can scale it back later on. Romaine as we were talking and headline moving across determine ill the terminal, carlisle drawing down credit lines. We heard a similar comment earlier from blackstone. We have also heard from italys three individual largecap also s that is scarlet what is the weakest part of the Financial Markets . Following on that headline about carlisle. We have an overleveraged corporate sector. Is that the weakest part of the Financial Markets that could bring us down another leg . Jason i have to say, i am particularly worried about the down banking sector. I saw the press conference with major banks. Of course they are probably overcapitalized right now, which is wonderful. But you have this massive expansion of nonbanking sectors. Private equity and the like. I am not sure that has been stress tested. In some ways, it is a function of financial suppression and keeping rates artificially low. Such a largeng nonbanking sector, it is never really been stress tested. So to me, that is what concerns me the most. It is the biggest unknown, i will put it that way. Joe in terms of the systemic risk, one of the things that is characterized that has characterized the postcrisis landscape is a lot of the leverage and so forth has been moved away from the banks as we know them, to other areas of the system, whether it is private equity, etc. Does that make us in your view is fragile in some way, because it is not at the banks . Or is it too soon to know . Jason i am very skeptical that it will make us more robust over a long period of time, personally. Because i think liquidity and transparency over long periods of time makes you more robust, because you do not hide problems, or problems get solved more quickly and you can deal with them. Just because you are not measuring volatility or risk appropriately, does not mean it does not exist. Say i amurse i have to a Public Markets person. So i maybe have my own bias there, but i am of the view that liquidity and transparency, while uncomfortable, are good. That has been one of the great things about the u. S. Banking system, is to deal with our problems more quickly. Scarlet jason, thank you so much for your perspective. Jason talking about how he is worried about the nonbank lending sector of the economy, private equities, a beneficiary of low Interest Rates, perhaps we have built up excise excesses in that space. Romaine maybe we should get the head of blackstone and carlyle group. Scarlet this is bloomberg. We are going to hand things over to emily chang. Emily welcome to an extended hour of markets coverage. Many thresholds crossed today, and none of the good kind. The s p closing a whopping 19 from its closing high just last month, shy of entering a bear market. Dow sinking into a bear market and ending the longest bull run in the history of u. S. Stocks. Oil also dropping. Treasuries advancing as advanced investors flock to safe havens. The w. H. O. Is officially called the coronavirus outbreak a pandemic. The number of cases and the
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