Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

Markets could hit that Circuit Breaker limit. It is incredible when we think about the volatility. It doesnt seem like the Federal Reserves jay powell has calms kets by any has combed has calmed markets by any means. Francine lets get straight to the bloomberg first word news in new york city with viviana hurtado. Viviana we begin with the most extreme effort yet to slow the march of the coronavirus in the United States. The cdc recommending events of 50 people or more not be held for two months sports, weddings, parades, concerts. All of these are on a twoavoid list. The economic slump in china is worse than analysts feared be the coronavirus leading to factories, shops, restaurants enclosed across the nation. Industrial outlets plunging 2. 5 . Retail sales were down more than 20 . Now the first oneonone debate between president ial hopefuls joe biden and Bernie Sanders. They sparred on ideological lines over how the government should respond to the coronaVirus Outbreak. Mr. Sanders says it has been made worse by a lack of the singlepayer health care system. Mr. Biden says government needs to respond like it is at war. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. This is bloomberg. Taylor . Francine . Francine this is what youre markets are doing. It is clear the while that while the other central bankers are trying to stabilize liquidity, investors are reacting to the Global Economic outlook. Over the weekend we had nike and apple announcing mass store closures. It is a very clear risk off move, taylor. The european stoxx 600 down 7 . The u. S. 10year yield at 0. 79 . 106. 08. I want to look at gold, 1535 is where we are. There you go. That is what i wanted to show you, taylor. You look at pound, at 1. 2338. The italian 10yuri yelled at 2. 0 the italian 10year yield at 2. 03. Taylor there is more fallout into Market Reaction from the Federal Reserve, jay powell there. Take a look at the futures market. We know that 5 is the down limit on that. You are getting some euro strength crude barely holding in, about 30 a barrel. You are getting the vix that is elevated, off the highs of 75 last week. Anything above 40 frankly gets my attention. The bloomberg dollar index, i cannot wait to get some Expert Opinion on this. Curious to see if it will be , given a safes haven. Francine the Federal Reserve swept into action sunday, cutting the benchmark interest pointy a full percentage to near zero. Response to this challenge will come from our Health Care Providers and policy experts. Economic policymakers must do what we can to ease hardship caused by the disruptions to the economy, and to support a swift return to normal. Is thee joining us now actionrg economic correspondent. Has the fed acted too strongly and too soon . Are people panicking because they have done so much . I dont think people are panicking because they have done so much. The list of things that you were just talking about is why the markets are panicking. Italy is shutdown, france, germany, spain joining them, and the u. S. Is starting to shut its economy as well. Although all the bars and restaurants in new york city will be closing tomorrow. There is reason to be concerned because if you are discounting future Revenue Streams, you have no idea what those Revenue Streams are going to start to resumed when those Revenue Streams are going to start to resume. Jay powell said last night he is not doing this to help the average person in the street because they cannot reach them at this point. The fed stimulus will help once all this is over. Their goal is simply to keep the markets functioning. That is going to be an interesting thing to watch. It is not clear, from the analysts i spoke to, that prices are flocking anything near reality. Last week we started to see some friction in the market start to develop, and the fed is addressing that. Going back to the 2008 playbook, saying we know what happens when markets freeze up, but we dont want that this time. Francine michael, have we avoided worse . With what the fed has kept on saying, the markets kept on saying, is that the crisis does not turn into a financial crisis. If you put a floor under risk assets and try to support recovery, can we avoid a financial crisis . Michael we dont really know because there is a completely new playbook. As jay powell said, it will depend on the epidemiology, the progress of the disease. But at this point, they have done just about everything they can do to keep markets functioning. They can ramp up mom purchases, do more if that is necessary, and they may put in place some special lending programs, particularly through the commercial paper market. But at this point, they are turning everything like a fire hose onto the markets to try to keep them functioning. They cannot prop them up, but they will at least try to keep them functioning. Taylor are we finally calling this qe . Michael jay powell said last night that we do not care what you call it. It is hard to separate this out from the moment from Everything Else they did, but over the period of time they are doing it, it will help hold out, particularly longer maturity. Taylor are negative rates in evitable at this point . Michael you get into a debate about that. In terms of market rates is where you might see, especially in the short and, negative rates in the United States. Since i left here last night and came back this morning, rates have gone up a little bit from where they settled after the fed action. But negative rates are probably not going to happen in the United States. The fed does not want to do that. They do not think it is particularly well even in europe, and they do not think it will work in the United States because of the money market system. We have so many money market funds that will not be able to open if the fed went to negative rates. Mckee, on topael of anything that Central Banks are doing. Lets get straight to the berenberg senior economist, and jane foley, rabobank. Lets kick off with you. Just said i amn baffled and upset with what the fed announced and what it did not announce, baffled because measures were targeted and actual potential market failures are more effective at this stage. Is that why the market is disappointed . Jane i think in terms of what the fed does, it is what it did not do that is beginning to worry people. If we look at the coordinated intervention that we saw from the fed, we saw that coordination, the g7 Central Banks the bank of canada, the bank of japan, etc. Ecb. But you are not looking at swaths me of the the swaps lines to other parts of the world. What about china, emerging markets, the dollars that they need . Clearly since the Global Financial crisis, there has been a Significant Growth in emerging markets. Significant increase in dollars needed or dollars demanded. Dollars remaining theme the only transactional currency, a huge amount of dollardenominated debts in emerging market spirit some of these countries are likely to be struggling, some of the corporates in these countries could potentially be struggling to get their hold on dollars. If we go back to the Global Financial crisis, the fed has commercial paper funding facility. That was announced in 2008. I thinkon to 2010, and that enabled liquidity of dollar throughout the world. They have not yet done anything like that. That does not mean to say that they will not, but it is reassuring to think Something Like that in the announcement yesterday. Francine do you agree with that . If it were more targeted, they be less of shock and horror, would it have helped to the markets . Callu at the moment we are learning how significant the economic and Financial Market is with the financial with the coronavirus. I am not sure that they impressed markets with anything it could have done. Fundamental difference now versus a decade ago, there was a great crunch spilling over into the economy with cash flow problems. This time the problem is in reverse. You have cash flow problems linked to the containment measures to stem the virus, which could have a fundamental problem in credit markets and it could cause a credit crunch. From Central Banks, i think what they are trying to do now is get us through the week in the Financial Market. What we need to see is on the fiscal side governments start to do pretty much whatever it takes to convince Financial Markets that firms that run into cash flow problems will be able to enjoy the financial backstop from the government. If the markets can be convinced that the cash flow problems will not emerge in a severe way, i think that is the thing that will put confidence back into markets and put a floor under the selloff. Fundamentally we will stop the severe dislocations and credit markets. Taylor we just heard Michael Mckee, who said jay powell does not want to do negative Interest Rates. I wonder at this point, is that almost inevitable . Jane i dont think negative Interest Rates are inevitable at all. In the last few years, another thing learned by negative Interest Rates, if we look at the experience of japan, at the experience of sweden, there has been a lot of criticism about the knockon effects. One of the Academic Studies suggest that negative Interest Rates might work as a short treatment, but they could there could be byproducts. In sweden, they are concerned about the impact it had on asset Price Inflation and the impact it had on households. Households, property prices are higher. There is a lot of debt as a potential of exposed blue income. Look at the banks. In japan, they have been operating for the last few years at negative Interest Rates were a cute qe policy with real curve control with a cute qe policy policy, with a policy to encourage banks to lend. Curve is flat, we try to steepen the back end. So that they negative and should rates, or the low Interest Rates can be pushed on into the real economy. It is a lot of problems with negative Interest Rates. Australia did a study, that really the bottom for them would not be 0. 25 . That is similar to the u. K. Of difficulty with the u. K. Turning profit. Possibly the fed, it is the same analysis that is true. For many Central Banks, they would rather use that quantitative easing programs when rates get to a certain point. For now, we can probably conclude that that is the way the fed would go p reviews the Balance Sheet is a big monetary tool. That is what we are seeing now or that is probably what we will see with the fed. Taylor i want to pick up on what you are talking about earlier, expanding on the fiscal stimulus that you would like to see as monetary authorities are what would you like to see in the u. S. On the fiscal side . Kallum they are running out of ammunition. If they are willing to accept dollars and still the euros and centralbank create the question is what kind are we facing and do Central Banks have the right the reason the rates are not the appropriate tool, you do not want to penalize banks who do not want to lend to the markets. Understandable that the banks would not want to lend in this environment. That is nothem going to work. What banks need is confidence that if the issue credit they will get paid. So when it comes to fiscal policy, this is where things can become much more effective. You can guarantee, for instance, loans of small and mediumsize grants. You can make sure that households get tax breaks, get direct handouts of cash if they need it. You can introduce like they have and germany, which is essentially employment protection insurance, which makes sure that those that through the downturn, those will give the institutions the confidence that if they need loans they will need they will have it. This is ensuring that they will get paid. Here is the absolutely key point it is a question of confidence. The longercan the Credit Institutions have the confidence that governments will provide the financial backstop, they will give them the incentive to hold down labor and they will prevent defaults, and essentially the taxpayer covers that over a fiveyear or 10year period. Authorities much more scope to focus on the real problem, which is the fundamental Health Crisis at hand. Kallum pickering and jane foley both stay with us. Coming up on daybreak americas, a former Federal Reserve bank president. We will have an interview with him on negative rates. This is bloomberg. Laura you are watching viviana youre watching bloomberg surveillance. British airways is cutting capacity the next two months by at least 75 . I ag is also looking to cut operating expenses per the company says coronaVirus Outbreak is happening at increasingly negative impact on demand. 28 giant u. S. Banks during the coronavirus pandemic, they will focus on supporting clients and the nation. Jp morgan is one of the banks. America,e bank of morgan stanley, bank of new york mellon, and state street. Aramco is cutting gets Capital Spending target by as much as 24 . It is the first sign that the price war and coronavirus are aiding home in saudi arabia. In 2019, profits falling 21 . That is the Bloomberg Business flash. Matt Horton Annmarie how dohocking that they keep oil at 30 . Annmarie this is why they cut their capex. Those are the two biggest headlines. They obviously want to keep that dividend rolling, switch we will see a lot of oil majors not able to do, especially when you see where oil is trading at. Today i think they will face a lot of questions because aramco is the tool for the kingdom, and the kingdom and the government decided they want to bring up maximal sustainable capacity. To do that it will cost tens of billions of dollars per the Energy Minister said in 2018 if you want to go from 12 to 13 you will have to spend 20 million to 30 billion. How do you do that when youre holding back on your capex spending . They have a call at noon london time. Islor the capex reductions, that a secondquarter issue or a 2021 or a 20202021 issue . A 2020 issue in general, but there are so many questions about bringing production up to 20 Million Barrels a day. All of it is under review, which says to me this could be an issue for the years to come. Long will the oil price rage on . If you look at timing, how long can the saudis continue to flood the market . At some point, does it become too painful . Annmarie that is a really good question, francine. Analysts are saying that saudi arabia is going all in on this. Part of the strategy might be that they flooded so badly that russia at some point has to say to them, we want to come back to the table. But when you look at every major producer in the world, cheapest barrel of oil will come from saudi aramco. They are the ones that will be able to sustain a Lower Oil Price in terms of aramco, but the budget is going to start taylor what are we trading on brent . Annmarie nearly 30 a barrel. They will start to fear the pain to feel the pain. Francine coming up later this money, the bp chief financial officer. He will be on daybreak americas peer can dont miss that interview. Bloomberg. Omberg pete francine this is bloomberg surveillance. Taylor riggs is in new york. U. S. Equity futures tumbling, european indices also down. The fed and other Central Banks have dramatically stepped up efforts to save Capital Markets and liquidity. Investors trying to does to digest his ceaseless bad news from companies . The stoxx 600 is down 0. 7 , gold is up. Taylor i want to take a look at where the u. S. Markets are. The futures,own on sp y down more than 9 . If we open at these levels, we will hit the third Circuit Breaker limit for the third time in just the last week. We know the story with the fed, coming in you have 30 yield 30 having your yields down 30 basis points. Today on later bloomberg television, the nasdaq ceo, going back to my world of tech. This is bloomberg. Markets reeling despite action from the fed and other Central Banks yesterday. Lets get to jane foley. Callum, i know you cant see the chart but we can see us. It basically shows the probability of a u. S. Recession is about 50 . Earlier, we were talking about with the fed did and could have done. Are not at work right now, so what are the tools the fed can use to try and make this economy better . Can they suspend mortgage payments and loan repayments for three months and pick up where we left off . Those of the kind of policies which can help. I think it is inevitable now that at least a major policy advance we will see a recession in the first half of the year. Best tocies to the contain the spread of coronavirus, the limits to daytoday life are a huge and Unprecedented Demand and supply shock. We will likely see a recession in europe, the u. S. , other major parts of the world. It is likely that unemployment will rise a little. What we are facing is a fundamental cash flow problem which could have spillover effects into credit markets. This is where the fed and policymakers,. The fed needs to guarantee loans where it can. Governments need to give household breaks on mortgage payments, tax payments. Anything that can raise free disposable income so that we can meet daytoday payments will help. You have already seen in the Corporate Bond market, the price of insuring against default has gone up. One of those bonds is losing value. The bondsoncern that adjustment to investment rates could be rerated. This is what central bank should be focused on, targeted policies to make sure that credit risks to the economy do not emerge as we go through the next three months. I think we are only at the start of where we could see in terms of policy response. We might face a situation where the disruptions may be more severe than during the financial crisis. Governments and Central Banks prop economies up until we can contain the virus. We are probably getting there. About yen. Me yen is a rising after japan boosted stimulus, but did not cut Interest Rates. At what point are we going to see are we going to see a point where countries try to defend their currencies . Most to be honest, for countries, a weak currency is good if you dont have inflation. Got,emand shock we have im guessing anyone is going to be worried about inflation. I dont think currencies or Central Banks are going to be worried in this sort of environment. Environments,rmal volatility is not a good thing. I honestly dont think this is the call for Central Banks right now. This is about funding. This is about making sure there are mainly enough dollars to meet demand. In the middle of last week in the money markets, a sense of emergency in the funding markets. The first protocol for Central Banks, particularly the fed, is to make sure there are enough dollars out there for people that want them, so companies that need them. In terms of the currency market, it is likely the end will remain firm the yen will remain firm. It is considered to be a real historical safe haven. The dollar is the practical safe haven. That is the one linked to transactional demand. That is the currency people will need. To work out tong what degree of crisis we have, i dont think you need to look at the dollar against the yen, you need to look at it against the euro. You need to look at the dollar and see how it is performing against the whole world base of currencies. Days, theast five dollar has outperformed. This is a sign of crisis in the markets and people panicking in case they cant get dollars further down the line. , folding overum into the credit markets, take a look at the chart here. We heard this from guggenheims scott miner. He is looking at triple d spreads over treasuries. Thate double be high euro highyield markets, how why do spreads need to go before you get potentially a bottoming out . Jane it is kallum it is hard to say. Andamentally, this is completely new environment in the sense that we are likely to see a recession, we are likely to see pockets of acute stress in the Financial Market. The origin of the problem is neither economic or financial. This is a medical crisis which is spilling over into the Financial Markets. Just as markets seem unanchored, i do not see where the anchoring is for credit markets unless governments provide it. This is the key point. This is about confidence. So long as lenders believe that they will get any credit that they issue back and that repayments will be made, they will be happy to reassure those payments. Inwe had one small problem the u. S. Oil market where Shell Companies took on too much debt and had a blowout, i would not be worried. Think exposure is fairly low and orders of magnitude lower than say the exposure to the Housing Market a decade ago. This is at the risk of contagion because of the unusual circumstances. I think spreads have gone far enough for governments to justify sending out a big message that the cash flow problems will not be allowed to morph into credit dislocation. It is a matter of time before we get bigger policy response including the likes of the Loan Guarantee the German Government announced. That should be enough to calm credit markets. An economic event becoming a financial crisis. Francine jane, final question. Easing slowly to weaken the dollar. The u. S. Sunroom do you downe that is slowing strengthening by two standard deviations . Jane i do not think the fed nor in treasury have a hope trying to begin the dollar. I would avoid looking at the dollar as a gauge, i would look at how the dollar has been performing against Everything Else and it has been strong. It goes without saying, this is about the Central Banks avoiding a Funding Crisis. What were the Funding Crisis be if people feel they would not get enough dollars . People areging worried in case they cant get hold of those dollars they need for transactional purposes. In that situation, the dollar is going to remain strong. From that point of view, it is going to be difficult for the treasury or the fed to try and weaken the dollar, at least until normal circumstances resilient resume. I dont think we are going to see a significantly weaker dollar until people are buying emergent markets again. That clearly is not on the radar for the foreseeable future. Pickering andum jane foley, thank you. We want to check in on bloomberg news, viviana. We begin with the u. S. Slowly shutting down to prevent coronavirus. American and United Airlines cutting more flights in the midst of a travel clampdown. And l. A. Putting limits on restaurants and bars, they could now only provide takeout and delivery. In italy, deaths soaring. Authorities reporting 368 fatalities. To joe biden and Bernie Sanders using corona outbreak to define their vision for the country. Facingght, the hopefuls off in their first oneonone debate. As biden portraying himself the steady hand of experience. Mr. Sanders calling for an overhaul of the countrys economic and health care systems. Issident trump says he strongly considering granting a pardon to michael flynn. Mr. Flynn pleading guilty to lying to the fbi. He has since asked a judge to withdraw the plea. 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. Francine thank you. And check us out. You can watch all of our interviews, live events, interact with us directly. This is bloomberg. Francine good morning. Good afternoon, good evening, depending on where you are. Bars, restaurants, resorts and several retail chains are closing shop. As thehe great shut down American Economy enters suspended animation to combat the spread of coronavirus. Ins follows similar measures europe where governments across the continent curtail public life. Lets get straight to who is in brussels. Look at what the European Central bank has doing, how much fiscal spending can they actually do in a short amount of time to counter all of this downturn . Of course of that is a big question today. We know there is a g7 meeting scheduled to go ahead today. This is a meeting happening at the request of Emmanuel Macron. Last week, he said this is probably the most serious Health Crisis we have had in 100 years, we should do whatever it costs to prevent it from escalating. Out, moret to point countries going the way of spain which is implementing a full shutdown. Candid,e minister there saying there will be economic pain ahead. Officials are worried we are looking at a recession happening this year. Spending, thescal euro group is meeting today. The hope is we are going to see a coordinated response. There is nothing on paper yet, but the mood has changed. Germany saying they are ready to throw unlimited cash at German Companies to ensure there is liquidity. We know that at a g7 level there is divergence when it comes to response. To dos. Fed cut, but room that here in europe is limited. Euroine what can the group actually do today when it meets . Maria two thinks the market is watching out for. Ence of fiscal coordinate signs of fiscal coordination, europe putting money on the table. Italy has said they are willing to spend 12 5 billion euros. French media saying francis looking at a 30 billion euro package. The question there is whether we are going to see their economy go into a full shutdown. Course, the question is what is germany willing to do . How much is germany willing to act as a lender of last resort . At this point, there is nothing on paper coming out of the euro group. At thetrators not even meeting due to health restrictions. Francine italy is bearing the brunt of economic pressure. Who is next in line to get a recession . Taylor of maria for the italian economy, this has been painful. Italy is running ahead of everyone else. When you look at the weekend numbers, they are not good. Theyre not pointing to a peak. If anything, you are seeing pieces climb by the day. At an economyg that could potentially fall into a big slowdown. The Prime Minister was a very candid about this saturday when they announced those lockdown measures, saying they are drastic and will have big repercussions. Other country in line would be france. We know cases have been increased. Is Emmanuel Macron willing to take the Nuclear Option which says the economy goes into a full shutdown by imposing the same restrictions italy has done . Francine thank you to maria in brussels. I want to take this back to the markets. We are potentially going to be hitting this Circuit Breaker limit for the third time in a week. Cash open, opening up at these levels. The market Circuit Breaker is 7 . Using the spi to track that, we would be potentially hitting that. Waiting for that cash open in just about 34 hours time. Markets continuing to sell off at about 9 indication open for the s p 500. This is bloomberg. This is bloomberg surveillance. We have a lot going on in the markets. Theave a lot going on with possible Circuit Breakers that taylor was talking about. Last week, it happened twice. Lasts usually 515 minutes to give traders relief. Look at what happens over there. Lets get back to your currencies. Jane foley, we talked about yen, we talked about the dollar, if you look at pressure points in currencies, what is liquidity like . Did last week go to plan in currency trading . Jane liquidity is quite poor. Plan, wef it goes to are seeing more volatility and currencies as well which is a big change from last year. If you look at currencies such as cable, that is a shock to see the lows there. If you leave outside the dollaryen, you are seeing values printed in currency which is unusual. That gives you a taste of what the dollar is doing. Wes comes back to the signs had last week that these are emergency levels. There is a little bit of a crisis here in terms of dollar funding. That is why people are disappointed in the fed. They perhaps could have done more, particularly for countries outside the g7. Francine i do not know i know it is difficult, but i dont know the longer this last scum of the kind of impact if thisorld gdp lasts for 56 months, or the china model where they reopened, what is better . Jane i would say for the economic prospect, close it quickly and get people back in the shops further down the line. This is the big contrast to the Global Financial system. It is all about demand relief. This is a shock to the real economy, not a shock yet to the financial system. From that point of view, if people are not going out to traveling, getting business lights, shopping for four or five months, you can imagine a lot of Small Companies devastated by that. Significant companies, airlines, really devastated as well. The longer this goes on, the longer the threat the global growth. Francine back to global growth. Our china correspondent tom mackenzie. Of, take a look at where all the economic pain has been felt. Numbers across the board do not look good. How quickly could we expect a rebound . Are we there yet . Chinese officials from the National Bureau of statistics came out and said 2020 Economic Growth will be stable. They do expect to see a rebound in terms of demand. Pent up demand is how they described it. Points we got today really shows the price china has paid to contain this virus. Many would say successfully. The rigid restrictions they put in place have exacted a heavy toll. Industrial production following 13. 5 . Retail sales following following 20 . Following 20 . Up Unemployment Rate moving to 6. 2 , the highest on record since they started publishing that data in 2016. ,s far as First Quarter growth it will certainly be a contraction. For the First Time Since about 1989. What does that mean more broadly . You are not going to get that v shaped recovery. Particularly as the virus continues to spread. Woke up this morning to the u. S. Audience and we see the Federal Reserve cut Interest Rates by an additional 1 . Pboc, whatrld of the additional measures are they willing to take . Saw them inject an additional 14. 3 billion u. S. Dollars. By the one year median term lending, but they did not reduce the rates, they kept it at 3. 15 . At this to suggest the pboc is still determined to take a targeted approach in terms of measures. You do have traders betting youre going to get cuts potentially 20 basis points for the bench low prime rate. That is published on march 20. We are looking forward to that. Do of course the focus of course from officials, not just the central bank but on fiscal measures as well in terms of tax cuts. We are hoping that combination is going to prove effective. There is a debate on how much more work the pboc has to do. Francine they could so much. Tom mackenzie in beijing. Jane, in the time we have left, what happened jane if we get continued world status in japan, the nimby is such to weaken. The currency for to weaken particularly against the dollar. It may not be weakening against Everything Else, but against the dollar, the dollar is going to remain firm because people need dollars. Francine thank you so much. Jane foley who sat with us for the hour. Looking at airlines, cutting flights. A consultant warned that many could go bankrupt in the next couple weeks. We have a full round up of the airlines, what they are doing and what they will do. Many of them not flying. Reserve slashing rates near zero. The bank of japan strengthening stimulus. Also warning that europe is reporting more new cases each day than china did at its peak. Countries all over the continent and lockdown. Bloomberg. Emergency action. The fed slashes rates to near zero in an attempt to save the economy from coronavirus fallout. An historic slump, the Economic Impact the virus has laid bare by the latest data from china. Industrials and input plunge. Europe now the epicenter of the pandemic. Down, bars,ig shut restaurants and schools close. E restrictions on public to fight the pandemic. Good morning. This is bloomberg surveillance. Taylor riggs stepping in for don king tom keene. A lot of things we need to watch out for, especially looking at bond yields. Treasuries on the move. Look at the italian 10 year, a level we have not seen. Taylor some of the volatility we have seen, we have spilled over from bonds into equities. We could be hitting what could be the third Circuit Breaker limit down if we open below 7 . Markets will shut down for 15 minutes. According to indications of where it could open, down 9 . Markets not happy with powells announcement. Francine we will have more on that. Lets get to bloomberg first rolled news. The mostwe begin with extreme effort yet to slow the march of coronavirus. Of cdc recommending events 250 people or more not be held for two months. Weddings, parades, concerts. Not to china, it is worse than analysts feared. Factories be enclosed across the nation. Industrial output plunging 13. 5 . Retail sales down more than 20 . We end with the first oneonone debate between joe biden and Bernie Sanders. They sparred on ideological lines over how the government should respond to coronavirus. Mr. Sanders said it has been made worse by the lack of a singlepayer health care system. Mr. Biden says the government needs to respond like it is at war. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado, this is bloomberg. Francine thank you so much. This is what we are doing on the markets. Taylor riggs has a full rundown. Stocks under pressure, down 8 . This is despite would be had from the fed. Dramatically banks stepping up efforts to stabilize liquidity. Clearly struggling to boost sentiment here this is mainly Economic Outlook under such pressure. Gold stabilizing somewhat. Yen, 105. 88. The other thing i want to show you is actually the 10 year italian yield below 2 . Taylor you fold over into the smart money were the bonds are. Look at the 30 year yield in the u. S. , following 12 basis points. Lower, but vix over 40 catches my attention. We just heard from jane foley at profit a bank who said there is dollar weakness this morning. She does continue to see dollar strength. And then you see the futures market. I want to flip up the board and take a look at where we are. Futures markets will hit a limit down 5 . We go over into the etf, a better tracker for the market would be indicated to be open. At these levels, if we fall 7 we would hit a Circuit Breaker, which means we would shut down for 15 minutes. The next limit would be 13 . Same thing happens. The limit below that is 20 . If that happens, we would close for the day. This were true to happen if this were to happen in three and half hours time, we would close temporarily. This market has been so volatile. Francine in the last couple of saying it willr ground most of its fleet in europe. We had one analyst say a lot of the pressure is on these airlines, and whether who wonder whether they can survive the next weeks. If flights do not resume, the situation gets worse. It will be critical a lot funding for airlines. Charge, Hillary Clark still making the best charts around. Looking at the u. S. Recession probability. We brought it back to 2000. Ais is the probability of u. S. Recession within 12 months, and you can see we are nowhere where we were before 2007 happen, but still quite elevated. The probability above 50 . Foror what that is doing safe haven assets, take a look at the chart here. Often we talk about dollaryen. This is a little bit better of a trade or so. Strengthening took four standard deviations. My producer shaking his head. Nobody talks about four standard deviations. The last time was this happened was the massive volatility selloff in 2018. Back to brexit, in march or june of 2016. To get these kinds of moves in these safe havens, yen. Francine this is our top story. The fed. We have been talking about it all morning, it cut its Interest Rate by one full percent to near zero. Promising to boost Bond Holdings by 730 billion. The primary response will come from Health Care Providers and policy experts. Economic policy makers most of what we can to ease hardship caused by the disruptions to the economy and to support a swift return to normal. Now,ine joining us Michael Mckee and. That is much going around the fed is doing the wrong things because they are not being targeted. What more can the fed do . There is not a whole lot more they can do. Negative rates is always a possibility, but they say that would be a bad idea. Is notey are doing trying to address the economic fallout of the crisis at this point. It doesnt matter. You can give me the lowest Interest Rate in the world and i am not going to buy a car or house right now. I am being told to stay in. I dont need low Interest Rates to buy groceries. What the fed wants to do is keep the markets working. Not make them go up, but keep them working. Market,t go to frans then fran is not going to get my money, and she is not going to ay taylor, and you have cascading failure that takes us back to 2008. They want to make sure that the cashes in the system, and hope the banks can get its to them, and hope that the fiscal authorities can get cash to those who needed. Francine we heard from jane foley and kallum pickering, both of them said that the fed has more tools in their toolbox. Besides negative Interest Rates, there is more they can do. What could that be . Michael they could do special lending operations the way they did in 20082009. Of the Federal Reserve act. Things like a commercial paper facility, perhaps lending into the money markets if necessary. That is still a possibility. Jay powell said they are not ready to announce anything yet, so i suspect they have things in the works. Because congress changed the law, they need the administration to sign off on these things. Do not know where that is, whether the Trump Administration would actually sign off on emergency lending because it might look bad. We know the president is concerned about that. Francine think so much. Michael mckee looking at everything. Anding us now david bailin gregory two. Greg, when you look at what is going on, what can Central Banks do . Cutting rates doesnt really deal with the problem. Do they just need to say, you dont need to pay your mortgage . Gregory from a Central Bank Perspective in general, what banks should be doing is ensuring a smooth functioning of markets. That was powells message. He wants to ensure the treasury market, the most important, arguably, continues to function smoothly. Providing the measure stated, they are trying to do that. Ensure sure that via quantitative easing, they are ensuring a smooth function of the market. The rate cut is a measure to preserve a further tightening of conditions, but as michael said it is not going to change the game in terms of spending. It will ensure the rebound will be as solid as possible and from a confidence perspective we are not falling through the gaps. The measures the fed put in place, the whatever it takes, has is aimed at helping ensure markets function smoothly. As we look into the rebound post virus, there is smooth credit flow into the economy, allowing businesses and households to spend. Francine what would actually comfort the market right now, if anything . David the most comforting things are not coming from the fed at this point. It is going to be about fiscal policy at the fed, and coordinated policy around the world. If you think about the impact, the biggest impacts have not been addressed. People who are going to be temporarily unemployed. Thatnock on impact of associated with their ability to pay bills and how that can affect the marketplace. That is what is to come over the next several weeks as fiscal is fiscal policy response. It is going to have to be large, targeted, and address impacts to specific industries as well as individuals as they have to fight through a difficult 24 month period. If that fiscal stimulus comes, what are the odds of that . Is that soon enough . Come too soon on the one hand. On the other hand, the news is moving more quickly than legislators and politicians can. That has been the story of this extraordinarily quick crisis. What we would need to see is targeted fiscal stimulus initially to support unemployment and the possibility that people may not be able to pay mortgages or credit card bills. We would also need to see specific industries targeted that are essential to the economy. When people talk about airlines going bankrupt, the fact of the matter is there are only five major ones in the United States. They need to stay alive for the economy to rebound and for us to move freight across the world. When we talk about grocery stores, we need to make sure they are stocked, but we need to have employees working, delivering goods answer is essential once to keep the economy going well. They are fundamental, highly targeted and eventually can grow larger. Until we hear that, people are going to be as concerned as they are today about near turn Economic Impact. Curious about your new Economic Projections given the rapid pace of news we have seen. Gregory we do not know. We do not know how deep the recession is going to be. We know the u. S. Is in recession, the Global Economy is in recession, but these phenomenonnd of of lockdowns will lead to a global recession. How deep it will be will depend on how much there is a constraint in terms of privatesector activity. Looking at preliminary numbers coming out of china, trying to infer what that means for the looking at ad be secondquarter contraction of 5 . These numbers could become larger, as we are seeing in china. A sudden stop in Economic Activity has consequences we are not accustomed to. In terms of economic momentum, we are looking to see fairly sharp contraction in activity. The paradox is that if that contraction in activity is sharp or, the sharper it is the more likely will be able to contain this virus spreading, and the less length this recession may have. Francine david, i have a question for you. Viewers, keep sending questions and. I know a lot of you are at home bored or lonely. You can always write into bloomberg. Asking s we were is this viewer is asking, should u. S. Take advantage of rates now and refinance . David it would be very prudent. I was joking the other day that in europe you can borrow more and more and take the amount of outstanding paper down. That would be a prudent thing to do. The u. S. Debt is actually being refinanced. One can imagine the benefits of doing that now. I am not sure that is exactly what people are focused on, but lowering the cost and burden associated with the growing u. S. Debt would probably be a good policy. Francine thank you so much. David bailin, citibank, and greg daco. Coming up, the conversation you dont want to mess on the fed and treasuries. The former Federal Reserve bank of indianapolis joins us later today. This is bloomberg. Taylor good morning. I am with Francine Lacqua in london. Great charts i want to show our guests. Team. S from our b. I. I want to post this to david bailin, First Quarter earnings for shared growth year after year now looking at 2 . A year ago it was 1 . How are you folding in this Economic Uncertainty into innings growth in q1, q2 2020 . David it is particularly hard to do that analysis. We continue to refine it, and clearly we are going to see a decline in activity and earnings in march. The largest impact for the u. S. Is to come in the second quarter, when Business Activity is going to be curtailed and we are going to see a cascading effect across all industries. Some industries are far less impacted. Those could have a small decline in earnings. Others could have a large decline. We looked at each of the industry segments. It is possible to have earnings a quarter that could be 1520 15 or 20 . It depends on the degree of constraints that are placed on individuals in terms of behaviors and actions. When we look back at what took place in china, and asia more broadly, we saw credit card receipts of individuals were down 10 12 . You would expect it to be more than that. Supply chain disruptions are going to have a global impact. But we would expect is a negative cycle. Recovery in china wont be as robust as a result of lack of demand in the west and europe. As a result, you will have total eps go down, not just in the u. S. We are expecting a period of time between 36 months when the deepest impact will be. Taylor credit spreads are blowing out, triple be at 267, double be at 521, by some analysis, those could blowout 2750. What is the level of panic that makesit spreads you think we will be hearing about them . A bottom . I think it is very hard to predict a bottom. What we are seeing on the corporate front is corporate Balance Sheets that are most exposed to this environment are going to suffer the most. A company by company basis within sectors, you are going to see companies that see a shortfall in revenue and that have poor Balance Sheets suffer the most. With regards to how long and how an openit is question. Some policies that had put in place yesterday are aimed at trying to lessen the blow in terms of credit availability, especially encouraging access to the discount window for banks and encouraging banks to lend to the private sector. Overall, it is a casebycase basis in terms of how corporations are faring and how much stress they are seeing, which is highly unusual. Taylor thank you both. David bailin of city private bank, greg daco of oxford economics. You can check us out on tv. If you are stuck at home and still want to be part of our conversation. You can look at live events, charts, also you can send us questions you want us to ask our guests. Just underneath the video screen to the left, there will be this is bloomberg. This is bloomberg surveillance. This is what your markets are doing. I know taylor has charts looking still at what u. S. Stocks will do at the open. We are talking Circuit Breakers. This is what europe is doing. European stocks are down. The ftse bonds a little more mixed. Stress. E of market i wanted to show you some italian bonds. This is what we are seeing for the 10 year yield at 0. 76 . If you look at the italian bond, just below 2 . Taylor francine, take a look at my board. You can take the Federal Reserve for pushing 30 year yields down 13 basins basis points. Anything above 40 catches my attention. Youre looking at a weaker dollar, but longterm it is all about dollar strength. We know within the future, circuit number down 5 . We go to cash open, the circuit limit breaker is down 7 . We are indicated to open down almost 10 which means we would hit a limit. More still have a a few hours to get off that. This is bloomberg. 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. Sen. Sanders this is a time to move aggressively, dealing with the coronavirus crisis, to deal with jack on, but also a time to rethink america and create a country where we care about each other. Rather than a nation of greed and corruption commode is what is taking place among the corporate elite. Taylor joining us now on the phone to discuss all of that and politics is matt bennett, third way cofounder and democrats strategist. Still with us is oxfords economic chief u. S. Economist. Your takeaways from last night. What you heard come the thing that defined the debate come up other than bidens promise to name a woman to the ticket, was his line when he said people want results, not a revolution. That is exactly the difference between those guys last night. Bernie sanders did is what he always did. He is kind of a johnny one note. Hes been saying the same thing since he arrived in congress in 1990 about how we need a revolution against the corporate elite. Biden was saying we are in the middle of a crisis. We need somebody who is steady and practical and that is going to deliver results for people needing them right now. Taylor given a potential u. S. Recession, how much at risk is in as reelection potential joe biden candidacy now . Matt i think the coronavirus and the Recession Risk together make trumps reelection far less likely than it was even a month ago. Bidensdd to that almost certain nomination, i think trump is now probably the underdog, where he may have been the favorite going into this year, with the economy booming as it was, at least for some people. Sanders,er of bernie people like me were very worried about losing, and now i think we are a lot more confident. Francine but why is it not very close . Because using the president is mishandling coronavirus . At the same time come on the democratic side, it means that the political machine may grind to a halt. Matt it may, and no one has the think this idea how an election is going to go forward in the age of coronavirus. Everybody has stopped campaigning. We dont know what that is going to mean in terms of how people feel about these candidates. But i think the president has badly mishandled the coronavirus in almost every respect. Hes done almost everything wrong. There has been no steadiness, no leadership coming from the white house, and people are very rattled by that. In a moment of crisis, the thing voters want most is reliability coming out of the white house, and they are just not getting it. Francine but is it not too soon to write that off . \ do you need to see what happens write that off . Do you need to see what write that off . Do you need to see what happens next couple of months . Matt of course. The president could provide more stable leadership, but he never has, so theres no evidence that he can or will. If you look at how other officials in government are reacting, it could get much better in terms of white house leadership. They are reacting to his neediness, his demand for loyalty and praise at all times above telling the truth, and i think you see that from Vice President pence. You see at even from some of the officials on the front lines of this. That is causing not only the markets gyrate wildly, as weve seen, but also causing a lot of voters to feel that no one is in charge. Governors are stepping up and mayors are, but they dont fill it they are getting it from the white house. Taylor fold in some of your economic pretty send this political spectrum as well. Does a joe biden or President Trump make you much less nervous about markets, about economics, then what we saw a month ago that there could be a Bernie Sanders presidency . Greg i think from a broad perspective, if you look at expected Economic Conditions by the end of the year, this would tend to favor the democratic candidate, whoever he is. In terms of the voter turnout, which is now become the most important element in terms of elections, theres a big question mark as to how the turnout will be this fall. This typenow how deep of crisis will be, how prolonged it will be, and it is very possible that by the election time, we will still be in an environment where there are quarantines imposed across the country, and where voter term could beter turnout quite low. I would tend to agree that so far, the administrations response is been a little too slow given the current conditions, and i would add that we also need to see more action from congress because the fed doing whatever it takes is good. It will likely prevent a financial meltdown. But what it doesnt redo his provide support to the people that needed the most right now. Greg, where do you look at for data to get a sense of whether the u. S. Will be in recession, and if it is, how bad it will be . Gregory one is to look at International Data in places where the coronavirus has already had a large impact on Economic Activity. The data this morning from china was quite concerning, with sharp plunges in industrial activity and retail spending. If these are any indication of what is going to happen in the u. S. , we are going to get a deep shock in terms of app and im activity. In terms of Economic Activity. Thers are data like opentable data that shows a sharp dropoff in restaurant spending across the nation, with major drawbacks in regions like seattle, where the virus was initially spread. There are a lot of data we can use to infer the Economic Impact on consumer spending, and we close attention to Discretionary Spending in particular. Francine thank you both for joining us, matt bennett, third way cofounder, and gregory daco. Lets get the first word news with viviana hurtado. Viviana new york city putting restaurants and bars. In italy, the number of deaths soaring. Just yesterday, authorities reporting 368 fidelitys 368 fatalities. Ryanair announcing earlier this morning it is grounding most of its fleet in europe and postponing share buybacks. American and United Airlines cutting more flights. The parent of British Airways cutting capacity the next two months by at least 75 . Iag also looking to cut operating expenses. Australias qantas is planning a fourth set of capacity cuts. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im viviana hurtado. This is bloomberg. Francine thank you so much. Joining us on the phone is john strickland, jls consulting aviation analyst. Always great to speak to you. We spoke a couple of weeks ago, and you are giving your thoughts on how you thought the coronavirus what impact airlines. Are we going to see airlines going out of business if this continues for another three weeks . John theres no doubt thats going to happen, given what your colleague was just explaining capacitieswaths of being cut by airlines around the world. Planes on the ground are not generating any revenues and are covering substantial amount of costs. Ryanair and iag have substantial piles of cash, but unfortunately are not typical of the sector of a whole. Many airlines have little or no cash, as weve seen. We were commenting about the help for deep need quickly, or they will be out of reserves very quickly indeed, and would in fact fail. Francine i know it is still early days, but if you look at , i donthe largest know how you know who is about to go bust or not. Is it tour operators, smaller National Carriers . Where do you draw the line . John it is fairly vague. You are right to make that point. Carriers that are not really operating on a commercial footing, we have quite a number of those around europe and in some other parts of the world that have been touched significantly by the virus. Airlines that have been run more for a National Prestige reason that anything else. Smaller commercially based nichees perhaps in business segments, perhaps in the regional flying sector, where we saw a failure in the u. K. Only two weeks ago of flybe. They are not robust even at the best of times, and certainly not now. We have seen all cons of traffic seening away, and we have leisure operators with trips already booked, but when these , we are notut down seeing any bookings coming in either. It is a complete loss of the lifeblood of airlines of all colors and creed. Taylor how does this crisis compare back to 9 11, when you started to see a lot of bailouts for some of these airlines . Do you think thats coming . John i think it has to come because aviation is such a key part of our 21st century world economically, not only in terms of passenger carriage, but freight, too, the direct employment of aviation, not only in airlines and airports, but in manufacturers, all of the supplying companies. On effect. Sive knock compared to post9 11, looking at this really cataclysmic crisis we are facing right now, ive never seen anything like it in my career. Trying to draw comparisons in recent weeks to events like 9 11 or the volcanic eruption in iceland or the financial crisis incredibly pale in significance compared to this. So there really has to be support to get those airlines back on their feet and running, and to be able to run as a business because with grounded aircraft, theres still the need to keep up a structure of the airline. Pilots have to fly on a very. Egular basis airlines are going to have to keep the Technical Resources and crews working so that they can come back when the market permits. That does require backup from governments, whether it is specific funding or relief on the costs which would ordinarily be levied on the sector. For example, various aviation taxes. Taylor are thank you you to john strickland, the jls consulting aviation analyst. And we go back into the oil market because coming up later this morning, it is brian onbert read, bp cfo, daybreak americas. This is bloomberg. Francine this is bloomberg surveillance. Just an update on that eu leaders summit, or at least the emergency call we have been reporting, we understand the emergency call on the Virus Outbreak will be tomorrow, march 17, and not today as initially reported. There are a number of initiatives after what we saw from the fed and other Central Banks in coordination. Joining us from brussels is the chief scientist at the European Center for disease prevention and control. Thank you so much for joining us. If you look at various curves, liking up flattening the number of infected curves, looking at flattening the number of infected and deaths, they all differ, and theres no consensus in europe about how to deal with the crisis. What is the best course of action right now . Guest thank you for that question. It is a very complex situation. I am actually based in stockholm. It is a complex situation. It is clearly that different countries, the epidemic seems to be moving at different rates. We saw italy worst affected very early on. A number of other countries now, we are seeing increasing cases. Reallyropriate response depends on which phase in the evolving epidemic countries are in. The fact that there are different approaches to a large extent reflects the fact that countries are going through different stages. At an early stage where you see relatively limited cases, the most appropriate approach is one of containment, where you actually try to prevent the disease spreading to others at all. Point whereto a simply containment no longer becomes feasible, and then we move into process of delay in , think about preventing mass gathering events, some restrictions on movements that become more appropriate. Its fair to say that there is some variation, but to some extent, that reflects the fact that the epidemic is moving at a different pace in different countries. Francine but we also hear in the u. K. That if you put people in lock down soon, they actually wont selfisolate. They will still be going out. How much does psychology and science have to come together. Is there really an optimum time to close schools, cafes, and restaurants . Mike there is a lot of discussion, a lot of talk between those of us working in the epidemiology, the disease monitoring field, and those working in behavioral sciences. It is clear that it is a major part of the way that we deal with infectious diseases, to figure about what motivates people, what doesnt motivate people. Just as when we are looking at issues around improving competence in vaccines, it is really important to understand these issues. With this particular situation, whether wee to say are seeing this virus spreading rapidly through many countries. Attempt to encourage people will need a lot of solidarity within the population to encourage people particularly to selfisolate, to an void to avoid unnecessary travel, and think twice about how they work. We are asking companies and others to think about moving more towards teleworking. I think all of these measures are appropriate as we move into widespread mitigation. If you dont do it early, it is just too late. Taylor theres a lot of concerns about the mortality rate, that it might be too high because of the denominator, and that calculation might be too low. When do we start to get better estimates of mortality rates . Mike thats a very fair comment. Of course, in the early days of any emerging infection, where the capacity to diagnose is limited, we tend to see only the more severe cases. Of course, it is the most severe cases where you see the highest mortality rates. What we are doing is working with all of our partners across europe, the National Public health institutes, to look at how we can get a better and truer picture of the full range of clinical infections we see, and to identify those with mild or possibly asymptomatic it needs toso include all of those. Just to build on that, what we are looking to do is every winter season, we monitor the influenza. One of the things we do is look at primary care or hospital services, the patients with influenzalike illness, and then those tested for influenza, and that gives us the tendency of the infection throughout a population. That is what we need for covid19. We just need to make sure we have the Testing Capacity to do that. , chief Mike Catchpole scientist from the European Center for disease invention and control, joining us. You can see that futures in the market are indicated to open off 10 the spy. Youre getting a drop town in 30 year yield. See the market is set to open what could be 10 lower, which means we could hit that Circuit Breaker limit. I want to fold into the markets and go back into the ties to economic. Do not joining us now is , professor ater the university of Chicago Booth School of business. You talk about how the fed was worried about a japan style situation. Are we firmly in a japan style disinflationary scenario. I think we have moved far beyond that. Theres an enormous supply shock and demand shock. Taylor talk to us about how you are revising your Economic Projections given the uncertainty and the rapid speed of the coronavirus. How does that impact economics . Lets take both the supply and demand sides. With thecome up coronavirus is an enormous supply shock. So on the supply side, breaking down supply chains, breaking down people coming in to work, to produce things, that is something Central Banks really cant do anything directly about. Hey can reattach supply chains they cant solve the supply problem. On the demand side, they can do a little more by providing credit to the system, by helping people make sure they can get the credit they need to continue to buy things, to continue to be able to pay workers. Of weve got this 12 punch supply and demand which is going to be really difficult to deal with. Francine good morning from london. What should Central Banks actually be thinking about now . It is it if it is dental market failures, should be fed have done more targeted things . Dr. Kroszner i think theyve done a lot of targeted things. They tried to provide a lot more liquidity to the market. I think that is extremely important for them to do. They started that at the end of last week, and they are doing more this week. I think theres still a number of arrows in their quiver. When i was at the fed in 2008 and 2000 nine, we did some things related to the commercial paper market, the shortterm funding market to make sure that funding could continue. There was other support using the Emergency Powers the fed has to be able to provide credit to a variety of institutions beyond traditional commercial banks. My guess is they are singing about those right now. Those certainly need to be coordinated with the actions the authorities are taking. Francine until we have that coordinated action on fiscal and maybe even on dealing with the pandemic, will markets continue going lower . Dr. Kroszner i dont know exactly how the markets will move, but they are going to be very volatile. That is something that is extremely clear because the markets are digesting how to process this. This is something we havent really seen before, not seen for a century. How is policy going to evolve . How is the impact of the virus going to evolve . It is highly uncertain, and that is going to make the markets store nearly volatile. Taylor weve heard from about three or four experts in the past hour or two continues to say that negative rates do not work. Our european counterparts would probably say that experiment does not work. Please tell me the fed is not looking at negative rates. Dr. Kroszner i dont know what the fed is looking at. My guess is all things are on the table, but i think the fed would be extraordinarily reluctant to do that. I think that is why they were proactive and reduced rates down very rapidly to zero, even before the scheduled meeting, to try to provide an enormous amount of quantitative easing, which can go up even further. Set ofo buy a wider assets. They are buying Mortgage Backed securities again. They could look at other assets to purchase. Think those are the sorts of things that are on the table. Are some of those other assets . Etfs, Corporate Bonds . Dr. Kroszner i think they will probably provide Something Like the commercial paper programs like in 2008, 2009. They could consider buying longterm debt of companies. I think there would be deep reluctance and perhaps prohibition on buying equities, so dont think it would go to etfs, but i think there would be a lot of other assets the Federal Reserve could purchase. Francine why did the markets react so badly or not at all to what we saw from the fed yesterday . This was meant to be shock and awe. Are they looking at closures of companies . What is the mismatch going on . Dr. Kroszner of course, we have to take about what is the real alternative. If the fed hadnt done anything, would things be worse . Most likely, yes. The marketsd, what are working through is that the Central Banks by themselves cant directly address this. Ack in 2008, 2009, there was scramble for u. S. Dollar liquidity, and that was what the fed could provide. That wasnt the only thing necessary. You also had to provide more capital to the system, which was done. This now is not just that. That is one of the things necessary to provide support to make sure the markets can continue to function, but the supply side issues, the health issues, are ones that are going to need different kinds of actions, and theres nothing that Central Banks can do to satisfy that. It is going to be the Health Officials and fiscal officials who will have to address that. Francine thank you so much. Ner, former fedsz governor and perhaps her of economics at the university of Chicago School of business. Vonnie said at the zero bound fed at the lira bound. The zero bound. The stock rout could drag the s p down to 2000. And markets limit down. U. S. Futures hit their maximum downside. Yields plummet in european stocks hit their lowest level in seven years as countries and cities lockdown. Welcome to bloomberg daybreak on this monday, march 16. Im alix steel. It is hard to quantify the pain in the markets as we open. Over in europe, you are down as much as 8 , 7 , depending on the indices. In the s p premarket, we are also down tremendously. Dollaryen off as the yen has that safe haven bid, as well as the swissie. Obviously, a huge run into u. S. Treasuries. We are at 7