Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Plummet as donald trump suspends most travel from europe for the next 30 days. The dow becomes the first u. S. Index to enter a bear market. The who declares the coronavirus a pandemic. Treasuries and the yen surge. The pressure rises on the ecb to make a move today after emergency cuts from the fed and the bank of england. What does she have left in the toolbox . An hour away from the european open and we are looking at substantial drops. Dax futures down more than 6 . Down ae got ftse futures little less, 5 . 5. 25 . Ures down u. S. Futures even after the big drop yesterday are posting three or 4 drops, it is set to be a risk off open. Anna a very risk off open, the route continues. Rout continues. Some weakness coming through, dark red boxes. Markets this is slipping them around daily. We see money going into the yen, stronger by 0. 8 against the dollar. You can see bond markets, a lot , yields coming down once more as markets were what president by was and was not saying. Mark on equity markets. We will keep a close eye on travel stocks and european airlines, beaten up already. You wonder how far there is to fall. Yesterday u. S. Markets down by 4. 5 for the major indexes. Indexes would probably fall anyway and now there is added negativity around targeted measures against many european countries, not the u. K. Interestingly. Speaking hastrump suspended travel for 30 days. He promised to boost market liquidity by 200 billion. To approvengress immediate payroll tax relief. The travel ban excludes the u. K. Trump is also extending tax filing deadlines. Cases fromnew entering our shores we will be suspending all travel from europe to the United States for the next 30 days. The new rules will go into effect friday at midnight. Matt joining us now from hong kong is our Senior International editor jodi schneider. He stumbled on a 200 billion figure which seems optimistic and depends on a lot of things happening the right way. Jodi that is right, there is not a big headline measure. It is viewed as smaller things. Would give sick leave paid sick leave to hourly workers who do not have it. 40 of u. S. Service workers do leave. E sick it would extend tax filing deadlines. The Small Business administration would give some businesses. Rgeted the president is asking congress to consider the payroll tax holiday. We will not see that right away. The house of representatives came up with a draft that included paid sick leave and not a payroll tax. Holiday. The big headline out of the was thats speech travel ban to europe. He started by saying it was a full travel ban, and did not mention exemptions. He mistakenly said that it involved cargo as well, then later corrected that in a tweet. The Homeland Security secretary was able to say what the exemptions were. American citizens traveling in europe are exempted. They have to go through airports where they will have health checks. And their immediate family members and permanent residents of the u. S. Are exempted, but they have to show they are healthy. His wording also was what made to thees, and what led Market Reaction. He calls it a foreign virus and says the u. S. Will protect its borders. The trumpthing out of playbook, and the inaccuracies in his address adding to get uncertainty. Lets get to the market conversation. Laura cooper is here in london with us. What is it that we heard about spooked you think has the markets . Is it the inaccuracies, the lack of depth to the plan . Marketsll of the above, were high for some fiscal boost. We did see the european travel restrictions spooked markets. But it was the lack of domestic contained in measures, and the focus on it as a foreign problem that markets are thinking this has further to run in the u. S. The fiscal measures we did see around Small Business assistance and tax deferment are relatively small in scope given what markets are looking for, and that significant fiscal package. We see piecemeal approaches. Markets are waiting for coordinated action. Metaphor, these are small bore solutions, which is to say you are using a. P. Shooter when the market you are using a peashooter when the market wants you to use a bazooka. We are not getting much in terms of fiscal help from the u. S. No, and that is exactly the case. We saw the bank of england do a significant stimulus package. Expectations are high for the cut is theasis point least they can do at this stage to signal they will take forceful action. We could see other measures but we need the fiscal side to step up in this environment. Anna meanwhile investors run for havens, running for the yen and treasuries. If there was going to the egov eyes asian into action of a fiscal play globally, that has not happened. Laura what was interesting yesterday was we saw yields rise pointing tothis is the shortage of liquidity in the markets. Investors are looking to liquid assets and safe havens. Anna in the same way they had to sell gold. Laura today i would expect the focus will shift back to markets seeking protection. We will see movement but the trajectory for bonds is down. Matt how long can the bear market last . What responses are you getting . Back at beare look markets in the u. S. , there has been about eight since 1960 and they lost about 12 months on average and declined by 34 . We are at about 20 for the s p to furtheroes point downside. Markets are looking at exceptional bad news coming in, and the fact we have to digest earnings season have to be significantly lower than what markets are expecting. Earnings are in positive territory for 2020. That will have to come down significantly and could lead to default and downgrades and pressure on the credit markets. It is too soon to say we are out of the woods. Anna earnings season will be the least of peoples concerns as the virus spreads across the globe. We will continue to have these interesting conversations. Thank you very much for joining us, laura cooper. Declared. Andemic we will digest Market Reaction, and President Trumps travel restrictions. Bloomberg radio is live on your mobile device or dab Digital Radio in the london area. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Right now we are about 40 cashes from the start of trading, and looking at substantial drops in equity Index Futures. 6 . Futures down more than dax futures down almost as much. Ftse futures 5 hit as well. It will be a risk off open. As you can see from yields, we we are atg closer about the record low on 10 year bunds, down almost 80 basis points. The french 10 year yield down to 0. 32. Lets get into the market discussion with Philipp Lisibach , head of Global Equity strategy, Credit Suisse. He joins us from zurich. A lot of what set this off was the severity of President Trumps travel restrictions combined with the lack of any real fiscal stimulus for the situation in the u. S. How bad is it . Philipp certainly the market has been caught by surprise with the announcement last night, announced travel ban. It is an extension of what we have seen recently. Italy has taken a different approach and put a lock down on the whole nation. The first for a democratic nation since the second world war. Trump is taking a different approach. Business activity will be disrupted. There will be more announcements. We have to assume there will be more disruption to economic activity. Output growth will be put back a month. Anna several months. What visibility do you have on a bear market . I do not think anyone is predicting a quick pick up. How many months do you think it will be before we see some substantial move out of bear market territory . What is your expectation . We can onlyhink speculate, but we can look at asia and how long it took them to contain the virus. That is an important part to stop the virus. We have to see how banks and governments will respond in terms of putting a floor under the market. We assume this is a shock and a temporary nature. If we can make sure this does not lead to a significant , andase in unemployment Monetary Policy to respond. If we have to have a forceful response, we can probably argue corporate profitability will take a meaningful hit. If we see it as more temporary, investors may look through that. They may be looking to 2021 earnings and assume this is transitory. I assume by the end of the year we could be on the path. Matt what is the forceful response you think would make markets happy . Philipp [laughter] make markets happy. On one hand, Monetary Policy, we need to make sure financial conditions do not tighten. That they create a feedback loop stress on the economy. Adding liquidity to the system to make sure in europe there is not too much of a concern. See the european union, we them responding two at the end spreads, they have widened. We probably need to make sure a paymentis is crisis, can turn into a payment crisis. Cash flow will be disrupted. We need the proper response from governments and through tax relief and tax holiday, deferred tax. If you have these responses, we can expect a floor under the market. Matt we are looking for it. Markets mean to make happy, but to be satisfied. You cannot be happy if you are long in these 20 drops we have witnessed. Philipp lisibach, head of Global Equity strategy, Credit Suisse is going to stay with us on this risk off day. I want to get the bloomberg first word news. Is expected to announce it is moving away from trying to contain the virus and focusing on slowing its spread. Possible options include closing schools, stopping largescale gatherings. The aim is to push back the peak of the outbreak to summer months lessthe Health Service is stressed. Italy has put normal life on hold, shutting down all nonessential services. The Prime Minister ordered all shops to close except for Grocery Stores and pharmacies. The number of cases in the country has topped 12,000. The World Health Organization says the coronavirus outbreak is now a pandemic. The u. K. Has a crisis plan for premier League Matches to be held behind closed doors. Will not be shown in pubs. Fans have to support their teams from home. The basketball season has been suspended after an nba player tested positive for coronavirus. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thank you very much. Lagardep, christine will decide whether to fire one of the few monetary bullets she has left to stave off the Economic Impact of the coronavirus. Special coverage right here on bloomberg. This is bloomberg. Anna welcome back to Bloomberg Markets european open. European equity markets set for a difficult start to the session, we are expecting heavy losses. Futures down more than 5 at the start of trade. A lot of disappointment in europe with regards to what trump has done on travel policy. Frustrated futures by the lack of containment measures. Gives its latest policy decision today with europe gripped by the coronavirus. What options does Christine Lagarde have . She precommitted to action yesterday on a rate cut of at least 5 , but the ecb may need enough. Re creative bold Philipp Lisibach, head of Global Equity strategy, Credit Suisse is still with us. , just a ratesures cut, that would constitute a disappointment for european investors, wouldnt it . Philipp i agree. It would not be enough to calm markets. There need to be longterm and it is particularly important to increase the amount they buy on a monthly basis. This is incredibly important. We go beyond that. There will most likely be more to come in april. We expect more rate cuts down the road. Matt they do need to provide the right amount of Asset Purchase Program growth and the right amount of targeted lending moves today in order to stop the market from shedding another 6 or 7 , dont they . Philipp i agree, yes. There needs to be a bold announcement. Ifs is what we expect, and they want to surprise the market, they would have to come out with something beyond that. A Diverse Group that makes decisions. They will be challenged in that sense, but they have to provide some deep measures to calm markets. Of whatat the you make is going on in bond markets within the eurozone . I have been looking at the italian spread over german bunds, and we did see that rise as travel restrictions were put in place. Maybe there is uncertainty about what germany will do to stop the spread as well. What risks lie in this italygerman spread at the moment . Philipp i think it is a reflection of the concern about particularly if they do not come up with a unified answer in response to the situation. Fortunately, italy has put out plans. Comesld hope germany also to grips and announces something forceful. This is exactly the role of the ecb is incredibly important. Ishave heard Monetary Policy not as important anymore, we can has ane that it incredibly Important Role to make sure financial conditions do stabilize. Do notvereign spreads rise so there will be a negative feedback loop. Matt we are getting headlines that the airport is mulling the andure of terminal three, with the travel ban, a lot of airlines will scrap flights to the u. S. How bad will this travel restriction hit market . This is goingnk to be pretty significant. It is somewhat tangible, it hurts a lot of individuals. This is something you can relate to. The First Airline has ceased operations. This is something the market can relate to, and there is obviously a lot of consequences. This will send the signal through markets that this is real. When i look at positioning, the market has not responded as much yet. Anna thank you very much. Philipp lisibach, head of Global Equity strategy, Credit Suisse, thank you for joining us. This is bloomberg. Tv just keeps getting better. How you watch it does too. This is xfinity x1. Featuring the Emmy Awardwinning voice remote. Streaming Services Without changing passwords and input. Live sports with realtime stats and scores. Access to the most 4k content. And your movies and shows to go. The best tv experience is the best tv value. Xfinity x1. Simple. Easy. Awesome. Xfinity. The future of awesome. Matt welcome back to Bloomberg Markets european open. 30 minutes away from the start of what looks like it will be a very bad day for those long equities. 7 ures are down 6 to almost in paris as we get headlines that Charles De Gaulle may shut down terminal 3. Those travel restrictions affecting many people. I was supposed to fly home to ohio saturday. I will not be doing that. Who is going to pay for the financial loss . Anna one paris airport considering that. That is part of the story. Restriction on travel coming through from the president overnight in the United States on transatlantic travel for europeans, not the u. K. But other parts of europe. Inconsistencies and inaccuracies and a lack of domestic control measures that has spooked markets. Catching up with losses yesterday in the United States, to come. Drops u. S. Equity markets suggesting we will be weaker. In the lasteakening halfhour, equity markets down. U. S. Equity markets down by more than 4 . Commodities a victim of what is going on in markets. And we know what happened when the russians fell out controlling the supply of the oil market. 42 weaker on brent crude prices. 42 down in 15 days. It started with the coronavirus that led to an altercation between russia and the saudis. The opec plus grouping collapses. Twitter has escalated its response to the coronavirus. It is mandating all employees must work from home. Previously just hong kong, japan and south korea had to work at home. Carlisle ared telling Portfolio Companies to do whatever it takes to stave off the credit crunch. Businesses controlled are joining a wave of companies on lines of credit. Of the oilre signs price low. Ceo broke his twitter sentenced to express concerns over the coronavirus. He proposed one million home tests for the coronavirus. There were concerns the Japanese Health care system would be influx ofd by an people with mild symptoms. Boeing will change some wiring on it 737 max after regulators notified the plane maker that modifications would be required. It expects the repairs to take about a week for each job. The company does not expect that to delay its return to air. That is your Bloomberg Business flash. Anna thank you very much. The u. K. Is preparing to step up its response to the coronavirus. Boris johnson is expected to announce the move will go from containment to slow the spread of the disease. That could mean School Closures. Joining us now is nicky morgan, conservative peer, house of u. K. Cultureformer secretary. Good to have you with us. Lets start with the possibility of School Closures or the disruption of daily life. How soon will that come . Scotland,f schools in what is your thought . Committee that gets all the relevant bodies together will talk about potential measures. The Health Secretary made clear that all measures that were advised would be considered. The impact of School Closures would be enormous, not least nhs workers and those in social care. We are expecting will be able to help everybody else, particularly the elderly to stay out of harms way. It is a big step to close schools. We will wait to see what measures are suggested. Variouse interplay, measures being considered. Success look like in terms of controlling the outbreak . Is there a danger there is a mismatch of the government giving calming words and cushioning the economy, and the reality of what will be a the death tolld, from this, and the disruption to daily life . Nicky it is slightly alarming for all of us. We have not seen anything like this before. It is not totally unprecedented, but it is in our recent memories. We have not experienced anything like this before. Most people are trying to be sensible and carry on with their daily life. They are focused on parliament and what is given by medical authorities. An additional 12 billion pounds , a temporary stoppage in our economy, it is unprecedented. It is recognized the u. K. Government and bank of england response is to get out there early so people know their personal income will be helped. Gatt we are saying seein huge measures in places like italy where they closed all shops except Grocery Stores and pharmacies. We saw in china draconian measures. In the u. S. Banning travel from europe. Has the government considered using a big hammer and closing all schools, shutting down the pubs, really locking down for one month to whether this . Weather this . Philipp i am not nicky i am not in the government anymore but everything is being considered. There is a danger that politicians seem to be acting and do those measures make a difference . We had a wellprepared testing regime with the nhs. We have laboratories capable of testing for the virus for weeks. I remember talking about that in january. Those measures are in place. Everything will be considered. The issue is doing it at the right moment. You do not want to put in place draconian measures that people run out of patience for. Anna a lot assigns from the community about the timing, to get it right with these measures. What confidence can you give us that the ambitions set out will meet the capacity in the workings of government to make sure this is really delivered to where it really matters quickly . Interface with customers, hr departments around the u. K. , all these parts need to quickly get up to speed about what is offered by the government to make sure it is effective. Nicky they do, and preparations for brexit have shown our civil banks can behe brought together to act swiftly. Seeing. What we are this is the governments number one focus. The Prime Minister will chair a meeting today. The chancellorat outlined yesterday have given a boost and confidence. We are worried about cash flow. It relies on customers coming in, and if they stopped coming, then it does not matter what you do. If there is a suggestion people work at home, how likely is the house of lords able to do that from home . Nicky parliament will continue to sit and we have be guided by the evidence. Parliamentarians can scrutinize. There will be members who will decide for their own health and the health of others to stay away, and that is right to do. Matt thank you so much, nicky morgan, conservative peer, house of lords. Your time. Te up next, a pandemic has finally been declared. We will continue to digest the Market Reaction, and President Trumps travel restrictions. We will give you what you should look out for today. , other than the clearly risk off open. We will give you data out of europe through the day. Boe cut, all and eyes are on the ecb. We will have ecb president Christine Lagardes News Conference on Bloomberg Television at 1 30 p. M. London time. This is bloomberg. Matt welcome back to Bloomberg Markets european open. 17 minutes from the cash trade and it will be difficult today for those who are long stocks. Equity Index Futures are down almost 7 in germany, and more than 7 in paris. Thats get the bloomberg first word news. Tothe u. K. Is expected announce it is moving away from trying to contain the virus, instead focusing on slowing the spread. Include closing schools and stopping largescale gatherings. The aim is to push back the peak of the outbreak to summer months. Russian Oil Producers may be best placed for cheap crude coming from saudi arabia, according to a string of analysts including bank of america. The lender says russia can keep pumping until Oil Prices Hit 15 per barrel due to low production costs and a flexible tax system. Sparking a repeat of the financial crisis. Will reveal its policy response to protect the regions economy. Christine lagarde has promised action, telling european leaders the economic shock if they do not act urgently. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thank you very much. Donald trump suspended travel from europe for the next 30 days. The president promised to boost market liquidity by 200 billion and asked congress to approve tax relief. The ban excludes the u. K. Trump also extended tax filing deadlines. To keep new cases entering our shores we will suspend all travel from europe to the United States for the next 30 days. The new rules will go into effect friday at midnight. Anna joining us now is our Asia Economic correspondent. Mixed messages from the president , and the markets reacted in one direction, risk off. Take us through Market Reaction we have seen. , businesses, and consumers are sensitive to travel restriction news. That was a shock to the markets when he came through with those lines for europe. The initial shock was about the blanket reaction to that ban, but then came the confusion around a couple of lines the president delivered on what that would involve, people and trade, signaling everything would be halted from europe. Later he clarified he did not mean all trade. In the markets and businesses everywhere. It was always a high bar for him to come into the oval office which is a signal of an important address to the nation, and he had the challenge of marrying two different messages, that he wanted to calm the American People and say this is that medical emergency some people have made it out to be. He was trying to downplay the effects of the virus and the severity, but at the same time he needs to respond to what consumers are calling for, additional measures to address what has been broad economic pain across services and manufacturing industries. A high bar. Markets say he did not deliver that, and we are seeing the andct where consumers businesses are questioning where do we go from here on the u. S. Policy side. We do see congress is set to vote on a number of measures inside a package set to address worker relief and business relief. Certainly coming from a point of confusion right now. Matt the congressional package would also be paying for the coronavirus tests, which currently are difficult to afford, certainly if you do not have insurance. It does not look like the u. S. Has enough tests where they cannot test everyone who needs to be tested. On the global response, what should we be watching out for in the days ahead . We had been tracking the monetary and fiscal policies spread. 150 billione than pledged around the world to coronavirus response. But this is unlike the financial crisis. This is hitting all channels, services, it is hitting confidence. It is not like where it was contained in the financial actor and we respond in targeted way. This is across consumer and businesses and manufacturing and services, making it complicated with the underlying solution to be to contain the outbreak which is uncertain at this point. Matt thank you very much. Up ecb decision is coming later today with europe gripped by the coronavirus like everyone else. What options does christine therde have to stave off Economic Impact . A rate cut of 10 basis points is unlikely to satisfy expectations. The ecb might focus on pumping money into the economy as markets are calling for. We are joined from frankfurt. The last time a decision was needed, the council was deeply divided, and this is the risk. The markets seem to be asking for a big hammer from Christine Lagarde, but it is difficult with this council. Last time was different. Across the region have become aware in the past days that this is a crisis at hand. While they might agree the central bank cannot on its own solve the problem, they do see a , if for the central bank you look at the Federal Reserve and the bank of england, they pastcut rates in the couple of days. Christine lagarde will try hard to come up with a meaningful package today that might or ,ight not include a rate cut targeted liquidity measures to make sure companies in the region will get the loans and credit they need in this difficult time, potentially even an increase in affect purchases. Many options are on the table and she will work hard to come up with a unanimous decision. Anna is it possible to come up with estimates for how big the economic hit will be to the eurozone . The ecb will be trying to work out how big of an impact, china provided something of a template, but it is early days. Is very difficult at this data because basically the is not there. Every data report you see is backward looking. Parts of theres industry. Veryforecasts are uncertain at the moment because you do not know what shock you were dealing with. Some of the most of your estimates for the eurozone were for a recession in the first half, down about 0. 5 in the first quarter, closer to 1 in the second quarter. That is a significant hit. Matt thank you very much, our economy editor. We will all be watching the ecb for sure. Coming up, not everyone is singing a marriage tune, one alices calling for a yearend rally. One analyst is calling for a yearend rally. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Six minutes until the start of a negative session. Futures down 7. 4 . S p 500 yearend calls are theg slashed, dani a Little Silver lining in a down day. Socgen analyst says we will and with a 20 gain, so that is a raise from 3000. It is not over yet, in the shortterm hedge. The range bound market had a high of 2900 through the spring, but after the spring she says buybacks and a bounce back means we will get a rally in the s p 500 to end the year. Matt that is an amazing call. Called thenalyst who downturn, and now through this black swan event thinks we will 700ce act to the tune of points. Coming up, the market open. Each are pointing down across the board. Big red arrows. In euro stoxx futures. Dax futures down 6. 5 . 7. 25 . Ures down we will see a risk off open, a volatile day for stocks again today. Most of these markets are already down 20 from their highs. This is bloomberg. Anna one minute to go until the. Tart of cash equity trading stocks drop as a trump travel from europe. The first index to enter a bear market. Who officially declares the coronavirus outbreak a pandemic. Pressure rises on the ecb to make a move today after emergency cuts from the fed and bank of england. What does she have left in the toolbox . Matt a very important ecb decision is going to play a huge role in todays trading. Right now, it looks like equities are going to open deep in the red. You can see that futures are off by more than 5 on the major indexes. See at 1 45 p. M. Exactly what the ecb has to offer. Debates about what the ecb can do as we wait for the equity markets to get into their stride. Futures are suggesting we will be down on major markets. Earlier on, we were 8 weaker on some of the features market for european equities. This, we sometimes take a while to get the full suite of markets open. It seems difficult for traders to execute some of the trades. Downwards,s pointing but not to the same degree. There is some disappointment about the measures and the confusion about what President Trump announced. That has messed up markets in the global story, but in europe, its the focus on travel restrictions that does seem to be taking its toll. We will lookmind, at whats happening in the aviation sector. The spanish market is down by 5. 8 . Gotten theave not whole complement of stocks open yet. There hardly seems much point on a day like today, because we have got every sector in europe in negative territory. Interesting to talk to laura cooper earlier today. What did this tell us about the markets that you had investors assets not just risk being forced to sell some of their havens . Absolutely. Take a look at why you would be going into your havens for why you would need that cash is really the point. We have all of the stocks on the stoxx 600 that are trading down. Now. 330 are trading right no gainers whatsoever. When you have bigger drops like this and are looking at 14 drops, when you are holding airlines or cruise lines, there are going to be a lot of margin calls to the there . See sales you could in assets like old gold. You could see investors getting out of safe haven trades because they needed to meet margin calls and stocks that are already in stocks that are already down 20 . Certainly be focused on what Christine Lagarde has to say. We saw the bank of england push against the comparisons to 2008. European markets are opening lower after donald trump suspended travel from europe. Focused on east 80 on european countries, but the details are hazy. The impact is clear this morning. Lets get into the conversation with our guest and mark cudmore in london. Good morning to you. I was going to ask about the bear market and how long we stay , but that seems like a question for another day. Does the extent of the selling we are seeing seem sensible to you . Surprising and it is consistent with how markets behaved historically. What happens when you have a crisis, and this is a crisis, if you get a collapse in time horizons. Hardwired tot think about things being temporary or to look forward. Most people are very preoccupied about what will happen in the next 68 weeks and markets reflect that. I think that is broadly what you are now seeing. About whatme is Central Banks do and Christine Lagarde will do. I think theres a huge amount the ecb can do and economists need to start being a little more enlightened at the moment. I think the feds response has been disappointing but theres an awful lot they can do. Matt i keep thinking of an engine seizing up without oil. When i hear about Grocery Stores closing in the president saying europeans are no longer allowed to fly to new york, that has to be unprecedented. What about the oil this engine needs . Can the ecb provide that lubricant . With this kind of shut down, is there nowhere else to go but down . Clear, oil itself is the one thing we are getting easily and that is one positive. Importantly is the fact that the credit lending needs to be not just opening these taps. They have to get that money directly to those countries that really need them. This isnt just a european problem. It was a very dramatic package, but they have to make sure that money gets to those companies. This is a problem we have seen in china. You get it when the transition and trust is broken . Is not just announcing these dramatic packages, but how did the people who need the money most get access . Anna lets linger on the central bank conversation. I spoke to jim oneill of the u. K. Treasury. He was quite dismissive of rate cuts, saying this is fighting the financial crisis. This is a Health Crisis, and we need a different set of policies. He was accepting that the other measures were useful, but rate cuts less so. I say that is a blindingly obvious and has been the case for a long time. Anybody focusing on Interest Rates is missing the point, that has been true for several years. Interest rates have been ineffective for a time and that has given most plenty of time to think of alternatives. One critical thing they can do is use will Interest Rate. This was partly copied by the bank of england. The base rate move is not that important. What is more important is the tsf scheme. Cheap loans to banks. Cheap loans to banks contingent on the banks making new loans. If you notice in the budget, the government is going to provide guarantees for smes. Loan, you areew going to get a guarantee. The bank of england will provide you with preferential funding contingent on those loans. I think they should have cut the Interest Rate on the tfs. Forget about money market rates. Here is providing funds to the real economy. Small and medium economies will say, what i need right now is more debt. Will they come and ask . Let me explain how you do it. There are three things the ecb needs to be doing. We need negative rates on the tltros. If i can go to a bank and get , it is cash one flow positive. What enterprise today wont do it . Loancould say a 12 month at 2 Interest Rate. You need a Fiscal Authority to guarantee the risk. That would absolutely be supportive of small enterprises. The other thing they need to do is provide cover for the fiscal authorities. They should be capping bond yields, particularly in the eurozone. They should be looking across the world of the examples we have. The japanese have successfully cap yields, because what would concern me here is italian Interest Rates rising as they engage in fiscal stimulus. The ecb should cap yields and put a ceiling on btps and lucent of fiscal rules. Government. He in cut mark, jump cudmore, jump in. Absolutely correct. There are longterm implications of funding loans at 2 , but i agree it is the right policy to get us through the crisis. The right thing for the crisis. Whether it is delivered, i think it is far too ambitious. But it is correct, and ultimately we need to get these enterprises to survive this crisis. Its the same as 2008. Sometimes, certain measures should be taken which are not necessarily sensible but are and lettingng panic the market function as well as it can, and hopefully you dont prolong those errors. Thats why i would not worry. Spot on for what we need, i dont believe we will get it. Anna thank, mark cudmore. Thank, mark cudmore. Eric onore to come from what banks and fiscal authorities can do. The first crisis of Christine Lagardes tenure. This is a crisis many did not see coming. Will have todent decide whether to fire one of the few Monetary Policy bullets she has left. She will have to dig around to find other measures, of course. More on the plenty News Conference right here. This is bloomberg. Anna welcome back to the european open. 15 minutes into a very negative session. The ftse 100 is down by more than 5 . It took a while to get many markets open this morning. Lets get a check with dani burger. Dani its one of those days you want to try and remain calm. This is a 20 low for the stoxx 600. Its clear investors are expecting a lot in the bar is high for policy action to change. It was the announcement from trump on the travel bands that sent these stocks lower and hurt s p futures. The hits keep coming for the crude market. Some of the biggest decliners in europe are travel and leisure, trading at a low. A lot of airlines and companies that depend on airlines are really hurt in this index. Gold not up as much as you would expect. But we are seeing any liquid asset is getting a little selling action. Need that cash, which means you might be selling gold, treasuries, and we are seeing a bit in the markets yielding lower. Stocks and bonds combined yesterday had one of their worst returns on record. Volatility, this is a reading for trading the treasury market and making sizable moves. Market liquidity is now at its lowest since 2008. Morgan, it isp the long and that has the most stress. There, thenxiety is selling is fast and furious. Index is down more them 20 from its high. Seen the European Equity indexes hit that and then some. And leisure isel getting hit the hardest. Biggest dropm, its today since 2002. Its the same for the operator of the frankfurt airport. Sinceith is down the most 2006. Eric is still with us. What do you expect as far as people trying to buy some of these heavily discounted stocks . Are we going to see people try and liquidate gold and Treasury Holdings . What do you think about buying the incredible dip . Think what the sensible not to beere is making decisions in the heat of the moment. I think it is difficult to understand what is going on. None of us have experience of a phenomenon of this nature. When you get these levels of volatility, it is difficult to take a considered judgment. Seent think anything we and Market Pricing is particularly surprising. Its typical of what you get in a crisis or a recession. You get these levels of volatility. People shouldnt be panicking. Says youffett always should be able to withstand a 50 decline. Thats just typical in a recession this is clearly set of circumstances we are not used to , so my advice would be not to make too many decisions in light of this price action. We need to stand by and wait and see what happens. Critical is going to be the policy response. Your point is that this is a Health Crisis seeming to turn into some kind of market crisis and we dont want it to be fully blown out and that something the ecb needs to get a handle on. Absolutely. There are three things the ecb should be doing so there are lots of things to do. One of the roles of Central Banks is to give cover to fiscal policy. I think the ecb could absolutely help in that if it looked to targeting yields. Theres nothing illegal about that. I think it would make an awful lot of sense for them to target peripheral yields. Italy should be engaging in a huge fiscal stimulus and there is big advantage in that kind of action. The eurozone needs to show solidarity here. Yieldsuld cap italian and btps. They could do a large tltro at negative Interest Rates low market rates. That is very sellable for europe. The is purely contingent on banks making those loans. The other thing the ecb should is perpetual tltros for households. Soy should set up a system they can make cast distributions across the eurozone contingent on a decline in the inflation rate. Anna helicopter money . Full on helicopter money. Analysis supported by lots of sensible people. He ecb has got to deliver would be a huge boost to confidence. Matt helicopter money looks unlikely. I dont get the sense they are down with that. Merkel berlin, angela said 6070 of germans could be infected with the coronavirus. Her comments were taken widely out of context, she was saying if there was no vaccine found , so itswas over years an outlier number she was citing idea the germans would back helicopter money seems a little bit tough. Tough to buy. Im not going to try and predict how various markets will will feel onhey this. One has to stand back and look here. Two things in our favor. This has created a huge amount of fiscal and monetary space with which to respond. The idea of doing perpetual tltros, its unhelpful to call it helicopter money. The existential Bank Governor has already said this is the policy they would look at. Are sensible, necessary innovations and its very obvious that further Interest Rates cuts are counterproductive. It provides space for fiscal authorities to respond and i think they should have contingency plans, even if they never have to utilize them. Importantly, this is a critical moment for the eurozone to exercise solidarity. With 2008 was the issue of moral hazard. Thes had made errors with Balance Sheet and that there had been negligent. Negligence. Crisis clearly a human where europe has to reestablish a sense of identity. Anna they needed to give themselves a way out some of some of these policies. All of a sudden, this crisis starts to look different. This is easy to reverse. None of these policies can absolutely medicate their consequence quickly. We have got inflation rates below are targets, we should not allow this to morph into a prolonged economic problem. If economies are already recovering and the virus starts decline, we could raise Corporate Tax rates. Anna thank you so much for your time, eric. Eric will continue his conversation with Bloomberg Radio just before 9 00. Lets get our top stock stories. Dani i can count on one hand stocks that are up today. The biggest decline is in travel and leisure as trump has had ban foror 30 days 30 days. Droppinge klm is 12. 5 , on track for its worst day since 2002. A spokeswoman told bloomberg they are looking at options for travel. Cineworld is down 23 , saying they could see a loss of three months of revenue. Thats an area means their covenants might come under pressure. Matt very much netflix and chill right now. Burger, we are in the midst of the first crisis first Christine Lagarde. We are going to preview her decision. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Welcome back to Bloomberg Markets. 30 minutes into the trading day and looking at some big red arrows across today. European equity indexes further into bear market territory. Into the broader European Index alone. 6 stoxx 600 is down another in the first half hour of trading. Anna edwards alongside me in london. Absolutely. , a sectorwn breakdown, all sectors and negative territory so a very few places to hide in the stock market today. Anything that pays a dividend yield or has sold historically might be more resilient in a downturn those of the stocks people perhaps are relatively more positive on but even though sectors down by more than four to half percent. To the downside, travel and leisure is down by more than 9 . Aviation stocks under pressure. By 9. 9ot lufthansa down 9. 6 but its not just aviation. Other companies affected by coronavirus. Retail and other travel companies in the u. K. This morning with some citations of coronavirus risk. Lets get the bloomberg first word news update. The u. S. Is restricting travel from europe for the next 30 days, its the most farreaching measure and President Trumps plan to combat the spread of coronavirus. The restrict will go into effect on friday at midnight. They want applies the u. K. The president also misspoke saying he was curtailing trade. Officials clarified the restrictions only applied to people and not goods. The u. K. Is expected to announce is moving away from trying to contain the virus instead focusing on slowing its spread. Possible options include closing schools and largescale gatherings per the aim is to push back the peak of the outbreak to the summer months when the service is less stretched. Italy has put normal life on hold shutting down all nonessential services to tackle the coronavirus outbreak. The Prime Minister has ordered all shops in the country to close except Grocery Stores and pharmacies. The number of cases in the nation has top 12,000. The World Health Organization said coronavirus outbreak is now a pandemic. In over 11veiled billion package to tackle the coronavirus outbreak. The Program Includes cash to take on money for lower income households. There also checking support small and mediumsized firms during the expected downturn. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. The ecb gives its legs policy decision in frankfurt later today via video. With your approved by the coronavirus, what options does Christine Lagarde have to stave off the Economic Impact. Joining us on the phone is gertrude, a former ecb executive board member, thanks for joining us. We were talking with a guest , ilier about the possibility hesitate to use the term helicopter money because it has such a pejorative slant, but what do you think about really drastic measures coming out of the bank today . We are seeing this demand and expectations of the priority must be to calm people and markets because what we have seen now is the contagion from one sector. Therefore its important to take decisive countermeasures and this is done also by governments and ecb, they are all in this fight against the crisis. What they can do and i think theres priority should be to pick up the flow of liquidity and credit because the more the real economy comes under pressure the more important it is that you keep credit flowing. In terms of keeping that credit flowing, how do you encourage businesses that are going to come under pressure and have their cash flows challenged . How do you make sure they come to the ecb our bank to get cheap loans or take advantage of that kind of package of measures because some businesses might be reluctant to do that during troubled economic times. Inof course it is important order to make some rules desk easing on rules. Liquidity is the most important in this moment and also avoiding that spreads are going up too much between Different Countries and regions. Wille you concerned spread spreads will blow out due to travel restrictions . How difficult is it to operate in a climate when europeans cant fly to the u. S. And when maybe even shipping goods inside europe is difficult. I would hesitate for example to open a package immediately the comes from italy. Is de i think this for the moment, they are flowing. People are traveling last but goods are flowing. What we see is a reduction of demand because it is a shock also to consumers. When they travel less and consume less and stay home, it a reduction in growth and this is what we are facing now. Growth has basically come to a halt now. Is there supplied issue as well . Youve stores except groceries and pharmacies in italy shut down. Surely that has to be something that spreads to other national economies. This measure has not been , ien another countries yet would say italy is an exception. In my country for instance, schools closed but not shops. I can ask about the timing of the measures from the ecb. Should they focus now on cash flow measures for businesses and later on consumer demand or will measures on consumer demand be effective at this point . I would say this goes handinhand, you cannot separate the consumers from the business. We have to take care of Small Businesses and we have so many Small Businesses and they are extremely under pressure. Small shops can go out of business very quickly. Think of italy or other countries. Supportportant to get also from governments. Are beginning see support from berlin . They dont seem to be terribly forthcoming, or we can get support from frankfurt from the bundesbank, do you thing theyre going to lend their support right now to Christine Lagarde . I hope so. Berlin decided on a package last week. Said there taking different measures for Different Countries according to the different priorities. They see thee seriousness of the situation. Gertrude, thank you very much. Finish with the most important. Is stabilizetant expectations of the moment. What is the one policy that will do that . Importantt one policy for people to see that authorities are taking coordinated measures. Gertrude, thank you for your time. Have special coverage of the ecb policy decision and News Conference right here on bloomberg tv starting at 1 30 p. M. U. K. Time. Up next, pandemic declared. We will digest the Market Reaction to the coronavirus and President Trump travel restrictions. Trump travel restrictions. Welcome back. 41 minutes into a session. The stoxx 600 down by 6. 5 . All down by more than 6 . The ftse may down slightly last but not as much as noted. We see heavy selling across European Equity markets. , there is a focused focus on travel stocks because of what President Trump announced with regards to banning european although being in the european zone from traveling to the u. S. The next 30 days. That affected the markets but it is pretty indiscriminate, the selling we are seeing. After the fed and bank of england cut rates, all eyes on ecb policy decision. Joining us to discuss is Richard Jones in berlin. Weve heard some pretty High Expectations with regard to the ecb should be doing here. To think there is any way they can step in and calm the markets . I think they have to try. Wei look at whats price now have about 10 and 15 basis points priced today. About the same again by the end of the year. Its also an expectation the ecb will be able to do Something Like the bank of england did with a more broad ranging package. Maybe additional qe, perhaps looking at the issue versus one of the things that in these and be them doing more. Also the targeted lending and liquidity programs for businesses in the euro area. There is an expectation they will do something quite broad and perhaps imaginative today and i think they definitely will follow through on this because the template is there for the bank yesterday. Weve seen the fed act aggressively and expected to act even more aggressive in the next coming days in the avenue they have to be part of that. Which assets you think we will see move today the most . The euro has been under the radar, do you expect the eurodollar to get hit as much as boones for exit bunds for example . I think the equity reaction is a difficult one to gain gauge because a lot of whats going on is central banker in panic mode and just see that aggressively today, perhaps it will send that same message. Euros interesting is the is i think interestingly priced right now. I think we can get eurodollar, other euro crosses trading lower if ecb comes out and exceeds expectations today. If they meet expectations we might not get that but i think if they really do go for it today. I was excited about the euro levels because i was planning on flying home to the great state of ohio on saturday and i was going to do so much shopping and by so much american stuff. Not gonna happen now. Ban, howthis travel hard is that for the economy vittles was met with big stimulus measures . , theeing a lot of this airlines and other associated industries starting to suffer. If we get a broad shutdown like we do in europe like we did in italy and then at the travel ban on top, it perhaps exacerbates was already difficult situation. Governments will have to step in with a lot of fiscal measures to offset that. In germany in the u. S. Without a lot of talk but not a lot of action so gives me pause for thought and concern. I could go back to your home if i were only from the great white north. Richard jones, our strategist here in berlin. Dont miss our special coverage of the ecb policy decision and News Conference right here on Bloomberg Television. Richard will Pay Attention to what Christine Lagarde and 2 as will markets, to what Christine Lagarde has to say. Officially declared the coronavirus operated pandemic. Donald trump band travel from europe to the United States for the next 30 days, that does not include the u. K. They also added american should reconsider all travel abroad. The u. S. Ban follows italy going into lockdown mode. Our milan bureau chief joins us now. Not spending so much time in the bureau. What are the new measures in italy all about, gradually we are seeing the regime of control toughening up. Had the thirdwe unscheduled press conference in the last few days and now we are essentially in a full lockdown of the country not just here in milan but all over italy. Becauseking from home the degree of movement is stay home, dont go outside. All the shops are closed including the bars and restaurants, essentially just the groceries and pharmacies are open and a few others. There is gradually improved lockdown which would have huge economic consequences because keep oner of cases increases keeps on increasing every day. One of the points we are really learning is cigarettes is something maybe you shouldnt be buying certainly in the grips of the coronavirus. Will the economic measures, the fiscal stimulus be enough to help the economy with all these stores shuttered . The economic measure yesterday morning when italy was still in lockdown, shops are still open and then last night the new measure which essentially halted the country for the next two weeks, those will be applied to march 25. For now, factories can keep havecing if and when they adequate measures for their workers. Clearly italy is facing a severe recession, they approved for up to 25 billion euros, but for now its very difficult to see how italy can and will react. For sure there shortterm relief packages for people who stay at , but still the longterm will be huge probably. , our milanery much bureaus bureau chief. The effect on another country right now the coronavirus in focus. Iran is asking the imf or 5 billion assistance with coronavirus efforts. Citing the governor in a statement. A know the imf and put up large amount of money previously. Theyve called on countries to put up their own large targeted policy to counter the virus. Up next here on the program, the u. K. Chancellor promises huge fiscal stimulus in his budget. We will get the Opposition Labor Party next. This is bloomberg. Welcome back to the european open. Really negative trading session for European Equity markets. Session lows being touched moments ago on European Equity markets. Just shy of 7 , the dax by similar amount as well. Lets look at u. S. Futures as well. He was futures point lower. Not expected to be quite a severely hit as European Equity markets, clearly there is not much in it. This is a global selloff risk assets. Lets get to the stock stories that illustrate the biggest picture. I like this first one because its all about Balance Sheet risk which is usually market we are seeing come on the biggest decline is when it comes to airlines dropping 19 . Already people are worried about norwegian that they wouldnt be able to meet their bond covenants or they would civilly run out of cash as passenger rates have been falling. Now its seeking taking even bigger hit because the european travel ban in place by trump for 30 days. Wh smith, travel coming in. Wh smith warning about a hit, reducing your outlook. They operate and a lot of airports and convenience stores. We are seeing travel not just down airport traffic not just down in asia, but now its writing to europe. Very significantly 15 drop in their travel business. , u. K. Labour party shadow chancellor deliver that budget yesterday in the house of commons. Very good to speak to you. Your response to what the government is doing on coronavirus. Would you be bringing more cecconi and measures . Draconian measures . No, we are supporting the government. Theres no partisan behavior. You do the right thing in terms need, nhs expenditure we the national Health Service, whatever they need, they will get. Thats what we need. We are raising the issue of social care for the elderly because thats in crisis so we need more funding there. We are saying to them support workers and businesses they are doing the right thing but not comprehensive enough cover, lots of workers were not covered in the levels of support or not high enough. We work with the government to enable this to happen and make it effective. This whole range of issues that have to be addressed, we have said we will Work Together on this and we will beat it. Obviously there has been tragedies already in our own country and we need to take this seriously. Very positive to hear, reaching across the aisle in this time of need. What more do you need do you think needs to be done if you could convince the tories to do more, what would you ask . Going intomore money social care as i mentioned, our social care system in this country is in crisis already because of an aging population and lack of investments. We need to make sure that we put more money to the care of our elderly and we need to do that, its the elderly who are the most Vulnerable Group in our society. I think we will be able to persuade the government on that. With workers the problem is lowpaid workers, if they dont get access to proper compensation when the have to take time off, they will be in a situation where they have to choose between either their health or hardship and that will put a lot of pressure on people. We are saying make sure theres comprehensive support for workers overall and make sure that level of support is high enough. Other countries are doing that and i think we will be able to persuade the government here to do that as well. We will work cooperatively together and the good thing about all of this as well, the government is doing exactly as we advised them, follow the scientific advice. Hearing to adhering what are chief medical officer say and chief scientific officer, we can come to the successfully. Interesting thoughts. John mcdonnell. Thats it for the european open. Debit withinarkets 6 of the stoxx 600. Disappointment globally about what President Trump had to say about the white house response. In the travel ban heavy in europe. This is Bloomberg Markets on edge. Investnt trump restrict travelers from europe. The dow enters a bear market. Italy closes all but essential services to avoid topal coronavirus cases 125,000. The policy response as european stocks hit 2006 hit lows. If you will have enough ammunition to cushion the economy. And morning, good afternoon good evening, this is bloomberg surveillance, tom keene in new york. A lot of focus on the markets. European indices we are seeing on most everything down 6 . We look at the travel restrictions between europe and the u. S. Tom a dramatic change and its a change of liquidity. This is where the financial people really start looking at the books and overnight they look at the very short trust market began to shift yesterday afternoon about