U. S. And european stocks are hit by the worst rout since 1987, as the panic takes hold of markets. The today session offer brief relief . 5 trillion, the u. S. Central bank offers a huge liquidity, at least nominally, injection into the treasury market after the ecb stimulus measures fall short of combing investors. And delaying the worst. The u. K. Abandons its containment strategy as efforts to push back the peak of the virus takes precedence. New york city declares a state of emergency. We are just under an hour away from the start of cash trading across europe after we saw yesterday, the biggest drop for the stoxx 600 of all time, doubledigit losses yesterday in terms of the dax, more than 12 . The ftse mid was down 17 . Now we see a mixed picture in terms of futures. Dax futures are still down. Investors are still waiting for some kind of comment out of berlin. In terms of the fiscal help that Christine Lagarde, shirley wants, the market wants to hear about it to, and Angela Merkel has been relatively mum on that situation. Ftse futures are gaining, although it should be noting the pound is down a little bit, or was down a little bit, right now unchanged. Gmm afteru see on the yesterdays market crash . Anna absolutely. Lets reflect on what weve seen and think about where we are in asia, the worst selloff since 1987. We were barely teenagers, uni, last you and i, the last time we saw this. The nasdaq down, ftse down more than 10 , the cac and dax down more than 10 . Do see pushed out in asia . We did initially. We saw Trading Halted all over the place, Circuit Breakers trigger. Now we see something that looks, as u. S. Futures have been ticking upward, but even calm is down by 2. 25 . Certainly there is a feel of getting out of anything that looks risky. Is it all going to be about relative returns . That was what we heard the last hour of programming. The fed doing its bit with its repo operations. The ecb doing part of its bit, with no rate cuts, but increase qe and cheap loans to banks. We see shortselling bands in europe, certainly italy. We wait and watch and see whether we get further downside in this european surgeon. European session. U. S. Futures prior. The rest of europe looks undecided. Lets get a laura cooper, our markets live strategist in london. Good to see you. I like the question of the daytoday. Our markets pricing and Central Banks impotence . Because we saw such big moves from the fed, big numbers from the fed, at least, and we saw a sweep of policies from the ecb, maybe not the one we said wouldnt have much effect anyway, but we still saw markets moving lower. In . His what were pricing laura i think thats the case. I think the fear is based on policy makers will be ineffective in terms of staving off a global recession. Right now we are seeing markets grasping for where an anchor could be, and thats likely could be fiscal stimulus, which we have yet to see. Germany alluded to the potential for abandoning its deficit rule, but were yet to sing action coming through, and markets need action. Matt are we going to get that . Bloomberg news had a story yesterday that Angela Merkel is prepared to do away with the black zero. Shes ready to start spending. When do we get from berlin, the kind of fiscal stimulus that Emmanuel Macron and Christine Lagarde so badly want . Laura i think its likely driven by markets. If we see the equity route take hold in europe, and then we continue to see the spread of the virus, i would expect were going to have to see the government capitulate. Were going to have to see some kind of measures come through, because ultimately this is pointing to germany entering into a deep recession. Were going tos need to see the government react to this soon, and theres a narrow window of opportunity there. I would expect within the coming days before the real risk emerge and markets look beyond that. Anna is it Wishful Thinking because im sitting here in london, or is there some truth to a difference in futures this morning . Does that tell us something . The ftse 100 futures, following the u. S. Are be going their own way, but just shy of 2 , cac and dax futures look muted. Is that because we had clarity from the u. S. Government about its plan . We have a fiscal plan in place. And we also have a time horizon, 1040 weeks until we reach peak. At a different strategy in the u. K. Is the Investment Community jumping on that . Or is that some sort of court im not aware of . Laura at this stage, its too soon for markets to have this by the dip action were seeing a reprieve. If we look at bear markets in the past, we tend to see short and sharp rallies. Delete Lehman Brothers collapsed, the s p 500 bounced. Its too soon. Its also a case of shorts of liquidity in the market. Mix that with volatility, we tend to see the self reinforcing loop, really a doom loop at this stage. Sharp and swift market move our aggravated by the liquidity. We could be seeing some of that, as well. Matt thanks very much, laura cooper, our mliv strategist in london. Highly recommend you go to the blog during times like this to keep track of the fast and furious moves in market. Just type mliv on your uber terminal. On your bloomberg terminal. Global cases that we know of past 133,000. A tackle coronavirus, several countries closing schools and other measures. But it doesnt seem like we have enough tests. We dig into the details next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open, 51 minutes away from the market open after an unprecedented crash in european stocks yesterday. The stoxx 600 index fell its biggest drop of all time. The coronavirus cases have drugged jumped to more than 130,000 globally, that we know about. That sparked panic and markets, especially markets concerned that we dont know the full extent since we dont have enough tests. Yesterdays rout brought back memories of 1987s black monday. That was the last time u. S. Stocks had fallen that much. Here you can see the hotspots around the world. Where are the most cases . Clearly in china. But the concern is growth in italy, growth in germany, growth in the u. S. Cannot be properly measured without the proper equipment. We could see a little bit of a bounce in some equity indexes today. Futures are showing a bounce in the ftse is likely, as well as the s p 500 and the u. S. , although the bluechip, european stock index futures, are down. Your stocks futures 50 are down. Lets talk euro 50 stocks futures are down. Lets talk with a Global Market strategist at j. P. Morgan. Vincent, where do you think about yesterdays unprecedented selloff in european stocks . Sparkedparked was it , was it made worse by the ecb . Vincent clearly, the ecb failed to reassure the market that it was able to take measure to stabilize them. Im probably a bit more are with a stick optimistic what the ecb has done. The expectation for rate cuts were, in my mind, not necessarily. They could have proved counterproductive. Weve seen in europe, the Banking Sector suffered heavy losses the last couple of weeks. We will see how much more negative rate wouldnt have helped. Im not sure at this stage there to put ratesd further in negative territory, to depress the level of europe, since were in a world with a huge shock. Having that currency is not an urgency. It was a targeted measure in the corporate world and supporting bank, their ability to lend supporting liquidity, and to me, this is what the ecb clearly delivered yesterday, acknowledging at the same time that the ecb, that in easing Monetary Policy is a necessary condition to bring your neck to growth to cushion back to growth to cushion the impact of covid19. Contrary to what we have in the u. S. , the Interest Rate environment in europe is already very attractive, meaning most Member States in europe have the means to really deploy fiscal stimulus with very little cost. The Cost Services and Debt Services ratio is sometimes two Percentage Points of gdp lower than they were five years ago. So, thats, timmy, richard to me, reassured. You alluded to black monday. We have in europe black thursday, which will be remembered as such in history. I see a lot of irrational behavior, not only in markets, but also in the economy. I guess as an investor, with absurdity in the situation, will try to keep cool, keep the focus on the middle longterm, and not panic setting like we have seen yesterday. It was indiscriminate. The goodquality stock will farewell in the coming months. Tomust be vigilant not through the baby away with the bathwater, so to speak. Kontaveit haved both been critical of Christine Lagarde of not doing more, and yet she wants through the baton to the fiscal side, doesnt she . Part of the explanation of not cutting rates might be because she wants to push physical access into some action. Where do you expect to see some fictional physical action in any meaningful sense . Vincent for those who know how europe works, from that perspective, is different than the u. S. Or that jurisdiction. The mechanisms which exist at any time, a stimulator. Traditionally, we face such an economic challenge in europe, it would be automatically activated. We have an efficient social system. We have unemployment benefit. We have the ability to activate partial, temporary unemployment, and additional measures have been taken in several Member States to help provide shortterm funding to company requiring. So, the clear urgency is to avoid a wave of default of bankruptcy due to liquidity needs, which are unfulfilled. France, for instance, through its investment arms, have accepted or decided to warranty up to 70 of shortterm loans to sme. Be ap of that, there could european coordination. They unveiled the possibility to activate the front with around 25 billion euro to really support these Economic Experts to shepherds in europe. Efforts in europe. But the ability to leverage on temporary an appointment, partial unemployment, facilities for their shortterm fundings, airlines leisure, are the most important. Its not something you can make big headlines with, but these are the measures which i see in belgium implemented these days. Again, the the ecb ecb did exactly what was necessary. Its avoiding, also adding the averting the crisis, that we face liquidity pressure in the economy, and thats what they delivered yesterday. Matt yes, but of course they should be paying attention to italian spreads. Vincent juvyns is going to stay with us. I want to get bloomberg first word news with leighann gerrans. Leanne . Leighann has bigger nancy pelosi says an agreement is close House Speaker nancy pelosi says an agreement is close. President trump dismissed the original democratic plan, saying it was filled with ideological goodies. Pelosi told House Democrats the plan would include free coronavirus testing, paid sick leave, and enhanced Unemployment Benefits and food aid. Now the coronavirus has brought new york to a standstill. Mayor de blasio declared a state of emergency, saying the city would work with the state to enforce its ban on gatherings of more than 500 people. Meanwhile in france, president Emmanuel Macron announced a full closure, calling the coronavirus the epidemic of the century. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Anna thank you very much, leighann gerrans in london. Coming up later on bloomberg, surveillance. Seems toer the ecb disappoint high Market Expectations for rate cut, they brought their other measures to the market. We all know happened next. Thats a 10 45 london time. This is bloomberg. The spread of the coronavirus as a new and substantial source of Downside Risk to the global growth. It will have a Significant Impact on economic activity. In particular, it will slow down productions as it a result of disrupted supply chains and produce domestic and foreign demand. We decided on a comprehensive package of Monetary Policy measures. We will make use of all the flexibilities that are embedded in the framework of the asset purchase program. I dont have a claim to history for being whatever it takes, number two. I really would like all of us to join forces. And ambitious and coordinated fiscal policy response, ambitious and corrugated fiscal policy response, is required to support businesses and workers at risk. Anna that was the ecb president Christine Lagarde speaking at a press conference after answering the ecb policy decision and themis measures in response to the virus outbreaks. She also said it wasnt her job to care what was happening and spreads. Well talk more about that. Investors fear the packages wont be enough to stave off a recession. That showed in europe and the u. S. Sessions. European stocks saw their worst day ever. Austria had its worst week since 1987, which was black market black monday. Black monday. I found a for standing a fascinating piece i wanted to put to you. There have been 13 bear markets. Of the 13, only twice have we seen the u. S. Not contract in the next 12 months. The fact we are in a bear market in stocks right now does suggest perhaps we end up in some sort of u. S. Recession, although i will point out one of the two times that didnt happen was 1987. Weret yeah, i would say talking about the u. S. Recession for many years. At the moment, Global Leader u. S. Is probably still one of the most religion economies in the world, this as the intensity of the crisis were facing, as Christine Lagarde alluded to, lead to some contraction for a quarter. Asia in the first quarter, europe and the u. S. , probably more concentrating the second and the third quarter. It will depend obviously on the time it would take to get to the spread of the pandemic. I was a big concern over gogo that probably the developed market wasnt taking measures to contain the spread. But today i see a credible measure and i can testify from my own country, where schools have been closed of next monday, so globally were finally taking the right measure to slow the pandemic and the recent recession as a consequence. Matt its precisely these measures. I mean, the fact that italy has closed all stores other than groceries and pharmacies, and frankly, a lot of those probably wont be open either. You know, in new york, youre not allowed to gather more than 500 people in one place. Europeans cant even travel in one place, and the u. S. Doesnt expect a peak for 14 weeks. Isnt that the kind of situation that absolutely cripples a Global Economy . Are we headed for a financial crisis here . Already look, we have had a loss in financial markets. Financial markets anticipate a lot on intensity, the severity of the economic crisis we may face in these environments. I still think at this stage, up to a week ago, and i can testify for europe, and i guess you can testify for the situation in london, until a week ago from a pure economic perspective, it was pretty much business as usual and most european economies. It would be intense. The ecb addressed it yesterday. At the same time, we are at implementing unanticipated measure. What italy did earlier on, what europe is considering, what america is answering. At the same time, there is enough reason to worry at the moment and acknowledge they are valid. But look at the situation in asia, which in my mind, shoot for some glimmer of hope. China managed to curb the pandemic. The infection rate is decreasing. We are seeing after two months, the activity is recovering fastly and they can testify the prediction that it is back at 8090 level, at which time we may get back to some sort of business as usual situation. Anna we shut down early positive. I just want to get your thoughts and something else. U. K. Strategy different from the rest of europe. Well see how that plays out. South korea is betting shortselling for six months. Italy is also stopping shortselling, and germany is considering doing something similar. Does a ban on shortselling make a difference here . Sorry, i must say that the connection wasnt so great. But the situation in europe is august the, we start to be confront is obviously, we start to be confronted. The figure looks awful in terms of contamination and number of deaths in italy. We should also mention italy is, in their perspective, is different in many other economies, by far one of the oldest population we have globally, just after japan, the italian population is over matt ive got to wrap you up there, unfortunately. We are running into a break. Vincent, thank you very much. Matt welcome back to bloomberg markets. This is the european open on a day after an historic crash in Global Equity indexes. Youre looking at features. As far as today futures. As far as today is concerned, we may see a bounce. 3. 25 , even if we were to see that, would only be a small bounce from what we saw yesterday. You see green arrows here, but investors wont forget probably traders involved in a lifetime, the drops that we had. The dax fell more than 12 . The ftse mid fell more than 23 . The dow jones posted its biggest 1987,ince black monday in a year before i guess any of our producers were born. Here, you can see safe havens, gold right now trading up a bit, but gold is under 16 an ounce. This and will never forget from the financial crisis. I had grown up thinking of gold as the ultimate safe haven. And when Lehman Brothers failed and the whole world was shutting down, gold all of a sudden sold off. And i thought why is that . Someone told me because when margin calls when margins are called in, investors need to get any liquidity they can, and they let things like gold in order to pay their borrowings. So thats why you see gold having fallen down before 1600 an ounce. We were at 1700 just of couple sessions ago. Anna you almost take comfort of gold going higher because at the height of nervousness, at the height of risk of, weve actually seen gold falling. Interesting to see we see selling of treasuries today. I dont think the market will take that with much comfort perhaps y because of what youre saying, selling was liquid rather than selling what you want to sell. Lets look at breaking news coming through from norway. And along the theme of what Central Banks can and cant do to fix this crisis, norway putting in place heavy restrictions, schools closing and the light. Reducing the buffer, banks are cutting their policy rate, providing liquidity, reducing policy rate to 1 and saying they are able to take for the rate cut measures. Here again, were seeing measures coming through from a central bank. Will they be necessary but not sufficient, as the case in many other parts of the world, we have seen Central Banks taking action . Lets get essential bloomberg first word news update with leighann gerrans. Leighann House Speaker nancy pelosi says an agreement is announced as soon as today. President trump dismissed the original democratic plan, saying it was filled with ideological goodies. Pelosi told House Democrats the plan will include free coronavirus testing, paid sick leave, increased funds for medicaid, and enhanced Unemployment Benefits and food aid. Now the coronavirus has brought new york to a standstill. Mayor bill de blasio declared a state of emergency, saying the city would work with the state to enforce its ban on gatherings of more than 500 people. Meanwhile, in france, president Emmanuel Macron announced a full a school closure, calling the coronavirus the epidemic of the century. As of monday, and until further notice, and gardens, schools, secondary schools, and has close will be closed for a simple reason. Our children, and the angus once again, are those who it seems, propagate the virus the quickest, even if children sometimes dont have any symptoms. Likely, at the moment, dont seem to suffer luckily, at the moment, dont seem to suffer the acute measures of the disease. Leighann the rba added 5. 5 billion u. S. Dollars, the most since 2018, while the boj offered to buy 4. 8 billion of japanese government debt. That comes after the government planned to provide a camilla of total of 5 trillion, signaling to cap a shortterm rate. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. A moment totake reflect on yesterday. Emergency monetary packages will be enough to stave off recession, and that showed in europe and the u. S. Sessions. European stocks saw their worst day ever. Wall street had their worst week since 1987, black monday, of course. Some of the numbers that went along with that, the cac and the dax down more than 10 . The nasdaq down more than 9 . We do see a bounce this morning and we do see u. S. Futures suggesting a gain of more than 4 , but that does not erase the losses of yesterday. Coming up, how is the Worlds Largest carmaker dealing with demands and supply shocks . We will talk about the coronavirus and how that is impacting realworld business with the ceo of volkswagen. Great, exclusive interview coming up next. This is bloomberg. Matt welcome back to markets. Minutes away from the cash equity trading, futures looking pretty looking up. That put it into perspective weve never seen the broader european and ask further in monday than it did yesterday. In terms of wall street, we saw the biggest drop since 1987. Right now, we have an exclusive interview. I want to get to the Worlds Largest carmaker, most exposed to the coronavirus outbreak in china according to s p. Effects on supplychain growth, how is volkswagen preparing . During us more is herbert deese, the ceo of volkswagen. Let me ask, first of all, how youre prepared in terms your people. You have i think more than 300,000 workers here in germany, 600,000 around the world. How difficult is that to prepare for this kind of disease . Herbert actually, i think its very difficult to prepare. We put in place all the measures. We reduced our meetings, traveling. We do a lot of videoconferencing, meanwhile. But mostly, we have to adopt to local activities. That say restrictions, cover which governments are implementing. So far, we had very few cases. Luckily, recently in mexico, and we tried to contain them. Logisticst problem is currently, because we have a lot of sourcing in italy, and there logistics becomes more complicated. So far we are fine. We could manage supplies from china very well. We didnt lose one person for. But it stretched. It stretched. It needs a lot of attention. China, likely, his recovery luckily, is recovering. Its our biggest market. Im confident china can overcome the crisis soon. Its managed disciplinary measures put in place. Most of our plans, nearly our all plans are running now. Nearly fullscale. We are not really affected because in the will henan province, we are not really in the will henan province wuhan province, we are not really affected. Matt we had a drop of 80 . A lot of people already saw chinese sales on a decline. What you think for 2020 . Herbert china is our biggest market, so it is very relevant for us. China is wellmanaged, and the government is focused on finding the right balance between containing the virus, but pushing for economic growth. And doing it in a very balanced way. Rest, theect over the potential to recover. We have scenarios between minus three, 15, or worst case nervous for the market. But we still think china could be a decent year. It could be a decent year in china. Matt what do you learn in china in terms of prevention or dealing with the virus, that you can use in other countries . Company youa big have your own city here in germany, your own medical services herbert dont overestimate it. We are a part of the society. Normally, we make use of all the services you have. We are very much prone to what the society is doing and deciding when it comes to set interior measures and medical measures. We do nothing special. But we adopt, and china is helping us. What is working well in china. You have to do the normal set entry measures. We to keep meetings small. You have to reduce traveling. Thats basically what we are doing worldwide. Adopt, ande have to some countries, we have, lets say, schools close. And in italy, we reduce our activities. We have plans in upper italy. In bologna for instance. But we tried to measure. Anna good morning to you. Based on that, what you said about what you learn from china, herbert, what do you now assume in terms of sales and europe for this year, given what weve seen in china . Herbert its very difficult to say. I would say china is more predictable than probably europe, because it was really a very focused, contention measures. And the chinese government, also i would say, not compromising on anything. In europe, you see a different approach. So far, it seems anybody wants to prolong the time until its really spread out. Growth, we are seeing faster growth. So, its very difficult to predict in europe. Different sales, so the machine is still running. So what would happen if, lets say, quarters will be closed . Its very difficult to predict. The biggest fear i have so far is that we have a lot of sorting in italy, for instance. Italy is a very infected area. And our biggest concern is a logistics change from your two italy europe to italy. Germany, this is a big concern for us. If there would be a disruption, and a short while, we would have to shut down some plants. Anna you must know what this is doing to the demand story in italy. If that is a month ahead two weeks ahead, can you tell us any more about what that does for your demand story . Herbert yeah, we are closely watching, you can imagine. But it is not too dramatic so far. I think it is also, you cannot judge this crisis on shortterm s, because the impact will probably be more on general growth, economic activity, and that well only feel after a certain period of time. Matt what about the effect of the market, the drops in risk assets . Volkswagen shares, automaker 40 . Sinceave fallen january 10 since january 10. How does that affect business . Herbert so far, we are now watching liquidity figures, know how we do liquidity planning for the rest of the year. We are more concerned, more cautious about things we plan so far. Will see some delete, delays, some strategic decisions, but im confident we will recover and overcome this crisis. Matt i dont think people are concerned about volkswagen, with such a strong balance sheet, their suppliers, i think of cup but your suppliers, i think of companies, do you have to reach out and help any of these companies, in terms of sustainability . Herbert we are closely watching the supply industry in a Transition Area phase. Some clients are weak and need further consolidation, but what weve learned here from the government, and its europewide, there is governments rcep are prepared to support in case of liquidity. Labor actions will be supported in germany. The message is we are receiving. Matt you dont have any financing actions . Herbert we always have because we have a few thousand suppliers. We have a dedicated team to watch closely. Used to because its happening all the time, but we didnt see it in the short increases. Anna how do you respond to what we saw from the ecb yesterday . In no cut in Interest Rates, but do you think the businesses will be likely to seek support from the ecb, from governments, in terms of loans, if they should need it . Herbert i think so because there will be sectors which are really affected instantaneous, will runy, and they into financing problems. And im glad to hear governmental support, because this is not a failure of companies. The failure of the system. And the failures which are exposed, they will require help, and its good to hear governments are prepared to help. Matt what do you think of global deliveries are volkswagen . Recently, you gave a robust forecast. Do you think you will be on the same level of last year, which i think was an alltime record . Is it still achievable . Would you get visibility of a worsening situation . Herbert when we made our forecast, china was already on the way, and we were quite confident we would overcome china. Was going to happen and europe is still very antler. I would say its very difficult and too early to say what is going to happen. Probably interviewees time in a few weeks time, then we will be in good shape to give a new announcement. Anna yes, and i guess the same would apply to dividends. Herbert the dividends for last year, we already agreed. So there will be no change. For next year, its too early to say. Matt i wonder about markets in the economy earlier this week, like in engine, that did not have an of oil. Summers of the irony is oil is what we have enough of right now. How does this lower will Price Effective . Because it strikes me that affect you . Because it strikes me that i can philip for much cheaper. I hope greta is not listening. Does that make your business easier . Herbert i wouldnt say so because oil price, until it really reflects in fuel sales, i think the elasticity is not to be course a. I think it will shift core demand to bigger calls in some countries, but as we are very tight targets for co2 emissions here in europe, it wouldnt affect our sales. Matt and you expect to meet those targets . Herbert we are fighting hard. It will be tight. But we shall have a chance to meet them. Matt i wonder if there will be any product disruptions. Risa on scheduled to release everything, the id3, for example, in turn . Herbert we checked our plans yesterday, and they are in good shape. Crows are looking great and driving ashley. And i think we will have cars are looking great and driving nicely. Matt my mothers credit stream has been to have a volkswagen van. Its difficult in the u. S. To get to california, right . But she has been saving and working towards this dream. In the last week, she has seen her retirement account hit very hard. Is that a concern for you, when you see market crashes like this, that people who have always wanted a volkswagen van or bugatti karen maybe wont be able to afford one . Herbert first of all, we would be able to of deliver a vein, very nice card van, very nice car, and she should be very happy. I am very happy confident the markets will be covered. You think we are going to see recovery . Herbert yes. Matt relatively short recovery . Herbert it depends. China shows the demand can be managed. Its tough, but it can be managed. Matt ill take that as the main message. Thank you for joining us. Herbert diess, ceo of the Worlds Largest carmaker. We are minutes away from the open of trading here in europe. And we could see other bit of a bounce today. But we have lost physically all of the gains weve had in equity indexes since the end of 2018. Last year, thats one strategist expensive for 2020, as well. Your morning call is next. This is bloomberg. Anna welcome back, six minutes until the start of trading. The Exchange Says it has no plans to ban shortselling. Germany is considering it. We heard about a ban in italy and south korea. It is talked about widely. Futures point widely this does highly this morning. Matt Rbc Capital Markets has taken its first step at account its first stocks. Cap loriat lori kasatkina says, its a flat and last year. Atyre expecting it to end 2. 79. Gloom. Doom and she does it say shes watching for capitulation, a necessary though not sufficient bottom. Are we there yet . Matt Annmarie Hordern with your morning call. Coming up, your market open. Futures pointing higher after the biggest wall street drop since 1987, after Global Markets tumbled into a bear market. Were seeing a little bit of what must be described as a dead cat bounce in futures, putting to again, ftse almost 5 . Anna with her decease above the skins and market, with other ftse down more than 10 , the cac and that dax more than 12 . We are seeing selling Interest Rates at this point. It is that a comfort or not . We will talk more about that in the next hour. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] anna here are your headlines. Stocks are hit by the worst rout since 1987 as panic takes hold of the markets. Bank offers aal huge liquidity injection to the treasury markets after stimulus measures fell short. And delaying the worst. The u. K. Moves on from its containment strategy as the virus takes precedent. New york city eclairs a state of emergency declares a state of emergency. It looks as if we will stronger at the start of the session. Ftse and dax futures moving to the upside. Highertures also move after the recordbreaking losses we saw in yesterdays session. Dramatic scenes yesterday. 10 , and thes down ftse, by 12 . Heavy selling across europe. We might make up some of that ground today. Will it be longlasting, meaningful, or backed up by any kind of meaningful news flow . We are seeing bounces at the start of the trading day and various exchanges deciding whether or not to implement any ban on short selling. I remember this being the conversation we had at the market was divided. We are seeing the germans considering shortselling. And inss say they want norway, they have introduced a market rule that changes the way they match trade. Because the cycle cannot keep up with the fast pace of the market. Its interesting to see how the different trades are responding here. The spanish market is up in the ftse 100 is up just shy. Shy of 3 . We are not seeing much discrimination in terms of sectors that might be to be expected. U. S. Futures point higher. With that is the backdrop, we see markets in every sector in positive territory. In terms of individual stopovers, there was only one stock positive territory by the closed yesterday. Close yesterday. Today, we have a different picture. We have big names to the upside. Lvmh, asml holdings. Change, acentage whole host of steps stocks are moving higher by substantial numbers. We have got big gains on some spanish stocks. Ban in the u. K. Uncertain stocks and perhaps that is having an impact. Also seeing big gains in commerzbank. The Banking Sector heavily sold of yesterday. Off yesterday. , no surprise to see a Cruise Company in their as part of a suite of measures was to urge elder people not to go increases. On cruises. Itning us now is sylvia, see senior economist at Hermes Investment management and mliv strategist laura cooper. Sylvia, let me come to you. Your response today in terms of this uptick . We see stocks gaining. Does that give you any comfort . At this stage, i am in the latter camp. Bounce. Is as a dead cat movementot seen this as the situation has evolved and i think we see more of that going forward. I am bracing for more sharp moves in both directions. There are also overreactions in both directions, and as long as there is no clarity about how the epidemic will evolve, i think we will see more. Matt anna laura, your on the swiss saying they will not than shortselling, the italians danny shortselling banning shortselling. In 2000 eight, people said it was important to get people to calm down, others said it just delayed the inevitable. Markets are looking for something to grasp onto. Equities tend to be quite liquid so thats why investors go there to short them. It provides temporary reprieve. Markets more need this coordinated fiscal policy that in this risktivity sentiment of fear. Yet how this know will be contained. Anna this is a global equities, fear and greed indicators surpassing lows of the 2008 financial crisis. Terms of the in ban on shortselling . Is that something that can make a material difference . It is not a game changer. I agree that we need a serious policy response. So far, we have seen some withrdinated efforts Monetary Policy at the forefront. Its why we need Something Different and more creative. We need coordination across policymakers and policies. Measures toct more have uncertainty about the disease and more policies to be at the forefront. Of course policy should be just and addition an addition. Said this is often forged in crisis. There is an opportunity for leaders in europe to make their mark by coming together to promise something substantial. Do you sense that that will come . Obviously, that is what i hope. We have been used Monetary Policy being a response to all problems for like 12 years or more. Governments and markets are still in that mindset. But its clear it is no longer working, Monetary Policy cannot respond to this kind of shock. Eventually, this will move policymakers globally. Toa a colleague said that get Central Banks to fix this is a calling an electrician to fix your cap. Tap. You have been pricing in this idea you have been discussing this idea of markets pricing in impotence from the Central Banks. What about that idea . We just had at the nor just Bank Announces uncut norges cut because ita in limiting the impact. Crucially the fed still plays a critical role. This is within the treasury markets, so we are still seeing yields climb. Latest move is likely to extend even further because we essentially need those channels functioning. In addition, we need stimulus. Anna necessary but not sufficient seems to be the way Central Banks could be summed up. Both stay with us. Sylvia dangelo at Hermes Investment management we delve into the broader recession conversation and mliv strategist laura cooper stays with us. Coming up, and occlusive interview with the bank of italy governor. ,nd after the ecb disappointed we were hoping for a rate cut. This is bloomberg. I think given the violence and dislocation in the market, i would think tech in the s p 500 could easily be another 10 down. You could make the argument this could be a decent floor. Backoss asset investing is in a state where there are opportunities and significant risk. What is rational for every fund manager becomes a rational for the market as a whole. It is going to get worse before it gets better. Some of our guests reacting to the historic route we had in markets. Here is the route they were discussing. Wall street had its worst week since 1987. , 8 trillion has been wiped off global stock markets. Sylvia dangelo, senior economist at Hermes Management is still with us. There are limits to what Central Banks can do and yet im still drawn to argue about the fed from here. There are high expectations. I read a piece this morning saying the fed should cut to zero. Is that something we need right now or something that would prove so dangerous . At this stage, cutting 50 basis points does not make much of a difference really. A shortterm rate market expects a 50 basis point rate cut from the fed next week and the fed is likely to deliver because we are in this feedback loop where try to obtain but they can from Central Banks. But i dont think Monetary Policy is necessarily the right instrument and you need a more coordinated policy response. How much comfort do you take from the fact that old prices are moving higher . Investors facing margin calls dont sell the things they want to, they sell what they can. And yet gold goes higher today. Significant equity route yesterday and so we are seeing markets paring back losses. I think it is too soon to tell whether that can sustain. We still dont have a risk sentiment taking over. Opens we see. S. Further downward pressures, we would expect that shortage of liquidity would prompt gold selling once again. Anna where is the bottom . One of my colleagues was writing about momentum in gold prices as a key indicator. Are there any key assets you would focus on . Sylvia Commodity Prices in particular. Copper is a usual indicator of recession and possible recovery. The other thing i am looking at is what is happening in china at the moment. In china, to be is back to normal them 70 of capacity. I would expect the pattern to hold across other countries outside of china in the next couple of months or so. We dont know much about the virus, but thats one reason why i expect something in the second half. I also expect more forceful intervention by policymakers. In terms of china, we are pretty upbeat on the positive on the recovery in china but calling the u. S. Unpredictable. Thisre looking at what bear market tells us about going into a recession. 13 times the s p has gone into bear market. Only twice we did not get a recession straight afterwards. One of those was 1987 and there are a lot of parallels, it seems. But what are your thoughts on u. S. Recession . Right the difference is now we have a real shock to the economy and we are now seeing the early impact on the u. S. Economy. Many events have been canceled and there is now a contagion within the u. S. Impression is that the situation will worsen within the next few weeks. Therefore, we see a hit on demand the likelihood of recession is quite elevated. Time,thank you for your sylvia, and thanks to laura cooper. Coming up, we talked u. K. Supermarkets with justin king, terra firma vice chairman and the former cfo of sainsbury. A great voice to have on the program. This is bloomberg. Anna welcome back to the european open. 20 minutes into a session that shows a balance. Lets are member, the losses of lets remember the losses of yesterday. The crisis has spread as consumers poured groceries and hygiene products, but supermarkets may face a greater challenge of preparing with a possible labor shortage. Joining us is justin king of terra firma and sainsbury. Are we going to see more rationing . I know some supermarkets have already put limits on certain products. Justin i wouldnt call it rationing. Purchasests limiting is a fairly tried and tested practice. Markets have done it on promotions for years when some customers want to clear the shelves. We have seen it in many occasions before. Its a way of reminding customers of the social duty of sharing. I dont think its rationing, because rationing implies theres not enough to go around. There is, it just requires a sensible approach from supermarkets and a small number of customers who perhaps do not behave as responsibly. What conversations are happening to see what role supermarkets can play in this time of difficulty but cooperation . Justin im not a ce out today, so im not party to those conversations, but whats normal is the government finds supermarkets are step or two ahead of the. Them. Drink, no punnd intended to supermarkets. Holidays, the beast from the east which check our system down, these are the challenges supermarkets are set up to deal with. Meetings andular calls which is relatively recent , but the traffic will be supermarkets reassuring government they are already ahead of the curve. Like . What will it look limits in the store were more deliveries to the home . Justin the first is actually a advise us onion to what we should do on slowing the advance of the pandemic. But as far as supermarkets are concerned, it is very difficult to fundamentally change that last mile. Home deliveries happen. Even if supermarkets could increase capacity, you are still only talking 10 of the market. The reality is people will continue to shop in stores. If they are isolating, the most likely thing they will do will be family friends, and neighbors shopping on their behalf. Anna are there Things Companies can do to guard against the staff shortage . Supermarkets and supply chains already have welldeveloped protocols for illness. And workedsickness at a food factory can you would not be allowed to work. Theirupermarkets and suppliers would cope with absent levels. The government indicated could be high as 20 , and that could affect capacities. If you are talking sandwiches, i imagine what would happen is a slightly slower selling or sandwiches stop getting made. You will concentrate on the big volume lines. I dont think you will see Food Shortages even in that scenario. Make ofat did you taking pressures off of retailers . Justin i was delighted by that. For a number of years, ive been saying the single biggest challenge the government could help with our Business Rates aired they are and unfair tax only paid by one channel in retail, so it demonstrates government recognizes the burden that Interest Rates are. I hope this leads to a wider conversation about if the measure should continue much longer. Anna thank you very much. Justin king, former ceo of sainsburys. Henry horton has a breakdown of your movers this morning. Annmarie we are the morning after the selloff yesterday one of the worst for european equities. I want to start with spains ibex arid. Up more than 4 as they ban shortselling. Italy is considering it, switzerland says no thank you. The stoxx 600 fell the most on record yesterday as liquidity became a central concern. Travel and leisure is having another relief. Air france is up 2. 5 . Re is still steeping keeping some of those transatlantic flights. Anna thats it for the European Market open. We will bring you the special selloff episode in this weeks etf iq europe coming up next. The stoxx 600 is up 2. 4 in europe. Francine welcome to bloomberg etf iq europe. I am francine lacqua. Everything you need to know about the funds. [no audio] we will ask what it means for investors and discuss implications for the future of the ef etf market. Lets kick off the analysis. Dani burger has been looking at the numbers. Wheth