Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Mondays losses on the dow eclipse the first day of the wall street crash in the great depression, as the ceo of nasdaq says it is critically important to keep markets open. Macron callsuel for unity in the battle against the coronavirus. The e. U. Closes its borders, as im a trump admits the u. S. Could enter a recession. Unknown, volkswagen says the economic fallout from the pandemic is impossible to predict, as car plants across europe are shut down. Anna good morning everybody. A grizzly monday on wall street following a 100 basis point cut from the fed after an emergency meeting, the dow fell almost 13 , the biggest plunge since 1987. Oil hit its lowest level in over four years. President trump says the coronavirus may cause economic disruption against the summer and it could send the u. S. Economy into recession. Pointing, u. S. Futures up and european features also pointing to gains. The s p has fallen or risen by 4 last six days, an incredible record of volatility. And, lets look at the gmm look where we are treating now. U. S. Futures upwards. The yen moving to the downside. Volatility is certainly the name of the game. Asia swings to gains from losses overnight. And despite what all of the Central Banks have been doing, what the imf has said about mobilizing 1 trillion worth of lending capacity, we still see such volatility on the equity markets. Matt . The volatility, lets get to the latest developments in the markets and how the governments are responding. Joining us is david inglis in hong kong and maria tadeo in brussels. Maria, lets start with you and the french measures. What did them on a macrononomics . Maria what did Emmanuel Macron announced . Powerful speech. He said the country is at war. Interesting that he would use that language, given the pictures and images that we saw over the weekend. People going about their normal lives in paris just 24 hours ago. The change is a shift and tone is very dramatic. When you look at the economic measures, he announced a huge credit line for companies, more than 300 billion euros that would be backed up by the state. Secondly, he is saying that this is a time for national unity. Anything that is not related to the coronavirus will be put aside, including the very controversial pension reform. He also said the state could take charge if utility bills of utility bills. The goal is that no Single Company in france goes bankrupt, a very hefty premise. The market is keeping a close eye on those stimulus measures. In germany, the music has really changed. The mood music. We are still waiting to see measures as specific as those macron yesterday. Anna david, how have markets in asia been reacting . Volatility has once again been the name. The lack ofly, consistency. No one day is the same. Australia is having forget the statistics, one of the best days in decades, but that is following a 10 drop on monday. Fortunately when you look at todays session, and this might just be the case today, you are getting more equity markets up. You are seeing an inverse correlation with bonds. That could all change tomorrow. We are getting a little more weakness coming through with equities perhaps reflecting and easing bias more and more here in the region. So for today, things are they. E, but matt could change within the next 10 minutes the asx 200 is posting a gain of 5. 8 , the largest gain since october of 1997. Leastbig gain to say the in australian terms. In terms of economics taps, steps, maria,mic in terms of actual action to help these quickly failing businesses, what rbc . Maria as i mentioned, and one itmicron threw everything at yesterday, but we have not heard anything from germany. Italy is saying they want to put 25 billion euros on the table. Doing. Y are with big corporate problems i should point out on italia. They are dealing with big corporate problems we had i. Hould point out alitalia the point is we are going to see perhaps a very deep recession. That is what we hear from business lobbies in italy. You look at spain, the curve of coronavirus cases has really taken off the last few days. We have not heard a single economic measure. We had the meeting yesterday that went on for hours, but the statement was disappointing. You did see finance ministers say they would do whatever it takes to protect the european economy, but there were no specific steps, not what the market was hoping for. Anna yeah, and how much do we read into those words these days, maria. He conversation at least in mnuchin, about cash handouts could start being something that we see. Certainly a phenomenal response. Given the relative stability we are seeing in the asian session, are we nearing a bottom, but is that difficult to make right now . David for the bigger markets at least today, you are starting to see signs of stability. Though when you look at the smaller markets in asia for example, southeast asia, the likes of malaysia, thailand, the Philippines Closed by the way, today you are still getting reaction to every headline on the coronavirus. In other words, people are still reacting to this. We know that the fundamentals buy. Aying, suisse, we were talking to them, the cio of asiapacific. He is saying, he probably can say at this point that the worst of the drawdown is behind us. David,hat is the story, with the philippines . It is pretty rare to see a market shut without warning. We have seen of course in various stressful times, for example, 9 11, even the New York Stock Exchange closed for 4 days. What is the story with manila . David so i was about to go to sleep yesterday and i got a text from one of my contacts at the Stock Exchange and they basically said, we are shutting the markets down. You had a couple of headlines coming through, the bonds and currency markets were to close. We talked to the philippians Stock Exchange president today. What they are saying is that they are aiming to reopen things thursday. And the shotdown at least in many luck, was pertaining to the overall lockdown that the government put in place. They are now appealing to the government. It was not their choice for the it was not their choic. They are appealing for the markets to reopen. There is a reputational aspect for this. If you will be stuck with losses, you cannot unilaterally lows you markets. Something to watch. Anna really fascinating to see whether they will open. David inglis, thank you so much s,r david ingle thank you so much. Up next, stocks on sale. One analyst sees bargains after yesterdays historic rout. He is from Morgan Stanley. We will speak to the londonbased head of cross asset strategy later in the program, 7 30 gmt. This is bloomberg. It is critically important that the markets stay open at this time as opposed to trying to take breaks in the middle. The stock market, i am a little more concerned about. I have us in a real bear scenario. The steep decline in demand were seeing, with a double whammy in Oil Prices Falling is really unprecedented. What you see on the screen is story. Fraction of the this market has more or less seized up according to participants in the space. We have to act fast. But is scaring the market right now, the bankruptcy risk. It is no longer potentially a transient chart, but it could be a permanent chart. Matt those are some of the bloomberg televisions gusts reacting to yesterdays incredible stock rout. As we said, the drop on the doll was bigger than the crash in 1929 in percentage terms the drop on the dow in points terms and certainly in percentage terms, bigger than the crash in 1929. You are seeing a stronger rebound in futures. Wereutures at one point up, but i guess that is how they move these days. Either limit up or limit down. You pick the day. U. S. 10 year yield at 78 basis points, coming back a little bit. Brent crude at 30. 86. You can still buy ¥106 for your dollar. Joining us is martin moeller, atead of Global Equities Union Bancaire privee. What do you make of the intense volatility . It is either limit up or limit down. But dropset gains, the size of which we have seen in historic market crashes. Indeed, that is what we are seeing. It makes it very difficult either way to say that he should get out, because things will get much worse you should say, it is already time to get out. Looking at volatility, i think it is safer to just hold on for the time being. Market is trying to take we started in february with the china number of cases that moved on to the e. U. , massively growing cases. Now it has moved on from looking at number of cases to the number of events. The measures we are getting from downnments, looking regions, it is having a negative impact on demand. You areupplyside too, seeing the chinese data coming through. Very negative data. You have the fiscal stimulus, central bank and imf programs, a couple of things that are positive. So not surprised. A lot of uncertainty. But is where we are seeing these large swings. Anna do you take any comfort on the retail infections may be improving, certainly in china . We believe the data may be in some cases more than others, but we have perhaps a sense that things are Getting Better in italy, may be in iran. Is that something the market will jump on as a significant new piece of information . Martin i think that could indeed be very helpful. In february, that was leading market to making new highs. For a day, butp long orly in a sustainable fashion, because we have to move on from just counting the cases to actually looking at the event. Ofse government measures putting in curfews, not closing down restaurants and entertainment and gathering sports activities, things like about, which all have significant negative impact on economic activity. Matt what the you expect in terms of the economic results . We are hearing bars and restaurants that have workers. Ho rely on tips are shut those people are not going to be a way to make rent. You have Virgin Airlines saying it wants to or actually, doing it, laying off people eight weeks without pay. They will have difficulty making rent. All these things are certainly going to add up. Difficult sudden stops for the economy. How bad will it get . Martin i would agree with you. You pointed to a couple of negative examples. You could also see a couple of positive examples. I have heard about a proposal of some unpaid holidays, also paid holidays for their employees. To catch up with work later. , inhave the european germany, shortterm work, where the government will help the companies to pay the salaries. You have programs that were talked about to help with a Capital Requirement for companies. T is a significant event you will have negative examples like the one you are mentioning. It will be difficult during this time. On the other hand, you have some efforts here like governments local governments proposing helping with the capital situation, proposing help with dampen thehat could negative impact. But of course, it will be a we have never really had that before, where you stop all air travel, but you stop all activity. Let people are not even allowed that people are not even allowed to go on the street unless they have something important to do like go to a pharmacy or get some Grocery Shopping done. Anna what my colleagues writing that you need not just fiscal stimulus, you also need the organizational ability of napoleon to deliver this to the people and businesses who need it. Martin moeller of ubp stays with us. Lets get to the first word stories. Whatever it takes from the g7 in the face of the growing coronavirus outbreak, leaders are pledging a coordinated response to the pandemic and its economic fallout. In a joint statement, they said they would marshall the full power of their governments in the effort. In italy, the government has approved a 25 billion euro package to support its Health System and also businesses and families struggling amid the coronavirus outbreak. The country is suspending tax payments and mortgage relief. It said it will leverage 340 financing. Os in amazon is hiring 100,000 people to help meet demand due to the coronavirus. It is also giving u. S. Workers a two dollar an hour raise. The company has already warned some orders were backlogged, as the economic giant struggled to cope with economic demand. Many people are now heading online for Household Essentials rather than going to crowded stores. That is your update. Ours,coming up, as restaurants and cinemas around the world closer doors, could Financial Markets be next . We will discuss the possibility of a shut down on trading floors. When you are traveling to work, tune in, or if you are working from home, you can tune in as well to a Bloomberg Radio, live on your mobile device or on dab Digital Radio in the london area. This is bloomberg. This is bloomberg. Anna welcome back to the european open at 7 22 here in london, 40 minutes to go until the start of the equity trading day. After the historic volatility yesterday, wall street losing more on any date since 1987. We now look as if well see a bounce in stocks this morning. Bars, restaurants and cinemas are closing around europe. What about Financial Markets . Philippines has become the first country to hold stocks and currency trading. There are calls for a break that could become more audible. Speaking to bloomberg, the nasdaq ceo says closing markets is not the answer. It is critically important that the markets stay open in this time as opposed to trying to take breaks in the middle. I think that will just push off the situation a little bit. It actually could create other pent up issues if you close the market. Isa Martin Mueller from ubp still with us. We have seen this a few times in history, but not often. The last time was in 9 11, when wall street did not trade for a few days. But that was because they had to take a break. They decided to. The you see any impact, given the volatility we have seen . Can you hear me . Looks as if we might have a problem with our link to martin. So lets have a quick look at the markets and what they are doing whilst we wait for that connection to be reestablished. Asiaesting, matt, the msci pacific is up. 03 , which is not much, and is very stable. But is saying something, because when you look at the swings in every direction we have seen, that limit ups and the limit downs we have seen. Matt yes, it has been an historic route, as the lower there says. Crises after the 9 11 attacks in new york, we had the New York Stock Exchange shut its doors for three or four days. Martin moeller is back from ubp. Would it be too difficult for the markets to handle if certain exchanges closed on one or two extra days a week . Martin i think it would also be in favor of keeping markets open , keeping markets operational and providing liquidity for people who need to have this liquidity. Markets would make equities and Asset Classes but is less liquid than people thought. It would not be positive for the market for the shortterm and also in the longterm, as many people who are worried about this lack of liquidity would just put additional pressure on the market. So i think continue trading is a valuable thing. Also seeing the sec recommending markets open. The volumes to handle these transactions, i would be in favor of keeping the stock open. Ge anna thank you, martin. Martin moeller, cohead of swiss and Global Equities at Union Bancaire privee joining us with his thoughts. , fed actions making a difference where it counts the micro science. Fed action of making a difference where it counts. Interesting to see that the 30year spread, u. S. Treasury swap spread normalized overnight. Things that were going wrong and seizing up in Financial Markets are starting to turn around. That is being jumped on by certain people as a positive. Matt that is interesting, because it brings up the question, do we have enough liquidity . That is an important issue on markets. This is bloomberg. S. This is bloomberg. Matt welcome back to bloomberg market the european open. 30 minutes from the start of cash trading. Futures on euro stoxx 50 pointing higher. Higher as well but what do you expect after a bigger drop in the crash of 1929 . The dow lost 3000 points yesterday. Massive drop. Soup to relatives superlatives are too many to list. Of be panic buying in terms noodles, but should investors go shopping . Morgan stanleys chief cross asset strategist says the bargains are stacking up. He joins us on the phone. You think now is the right time to wade in there, dollar cost average in because if you are in it for the long haul, you are bound to pick up bargains at this price . Exactly. I think it is time to start adding some exposure. I dont think it is the time to go all in or deployed all the cash that one has, but i think the riskreward is Getting Better. Thats our view at Morgan Stanley. It is not because the current environment isnt unnerving or this will have a severe Economic Impact. It is going to have a severe Economic Impact but i think a lot of prices are getting closer to the normal pattern or markets pricing that shock, Recession Risk before it ultimately happens. Anna good morning to you. Let me ask about what clues you are looking for in markets. Apart from the fact we saw the biggest drop since 1987, is it the vix . Ive been looking at how the vix has been performing. Is it giving you reason to want to get in . Weve reached maximum fear . Andrew i think the vix is interesting thing to look at. From the Morgan Stanley side, from our strategy, we are really focused we are looking at two things when it relates to that sequencing. The first is, when we look back 2016,9 or 2010 or 2011 or as the market bottomed in those cases, you had the same pattern were first volatility peaked and then the ultimate market bottomed. Sequencing is, first the market gets comfortable with the level of uncertainty, which is the level of volatility and the markets can get comfortable with the level of price which is the overall market. The first thing we would be watching for is can we get a couple of days where human if the market isnt going up or the market is going down, volatility isnt making new highs. Yesterday,thing is, even though the equity market hit a new low, bond yields didnt make a. New low. That is also instructive, a sign that maybe the bond market is looking a little further ahead. I think the bond market is looking toward this idea that there is a lot of policy stimulus being injected into the system. The odds of fiscal stimulus get better and worse the market is doing, so i take that as also an encouraging sign. But they, it is one day facts that the bond market has been underperforming a little interpretedto be positively, that the bond market is getting less negative about growth, even if the equity market is getting more negative about it. Annmarie hordern is doing a morning call, rate Dalio Ray Dalio is betting big against european stocks. S. A. P. , asml are some of the stocks he is betting further to fall. Where do you think the best bargains are . Are you looking at u. S. Stocks, globally . Are there certain sectors that investors would be better off favoring now . Think in our view, we do it is developed Market Equities that look best. Given the poor liquidity in the market, i do think in many cases investors will have to stick to indices, or that that might be the best way to take exposure, to try to focus on simple or more liquid things. This is a market where clearly dislocations are happening in a way that hasnt happened for 10 years, if not, in some cases, back to the crisis so that certainly is opening up at the single stock level more relative value opportunities, but for our purposes, i think it is about thatg to if raising exposure, doing so in more liquid instruments. This will have lots of twists and turns ahead of us and even if the risk reward is Getting Better, events could change that. Matt you point out, typically in a market downturn like this, it doesnt go as quickly. The line doesnt simply drop down the graph. Why do you think we are seeing 11, 12 credible 10, drops day in and day out . Andrew im glad he mention it because that really is remarkable. Weve looked back at their markets since the 1920s and this is one of the fastest if not the fastest from a peak that weve ever seen. Thats remarkable if you think about all of the really serious, scary events that have hit markets over the last 90 years. Obviously always speculating hindsight about what is happening. The fact that markets were very expensive to start this didnt help. You had the s p 500 price to sales was at an alltime high in early february. Eventct that you have an that is uniquely difficult to price, that is affecting many of us and is affecting many people can are in personal ways add to the market psychology of it and it indicates market liquidity, which is something a lot of investors you and others have been very focused on for a number of years. It was always somewhat impaired, and when you have an event like this, it further exacerbates that lack of market liquidity. Even if we look back to 2008 or this is unusual and that is another reason to think that at least temporarily, the risk reward is better. Anna this is unusual, incredible, actually. We havent heard many people calling for markets to be closed that many wondering if this will be part of the conversation. And down 4 over the past six consecutive days. Is there any reason to close any markets . Is there any reason to even bring in shortselling vans come a which we have seen in some parts of europe already . Which we have seen in some parts of europe already . Andrew i will defer, but i will only say that if we look back through market history or think back to the eurozone crisis, or other instances, those events, werehortselling bans, etc. Not necessarily lasting solutions. They didnt make the market better on a longterm basis. Maybe they caused the market to rally for a day or two, but ultimately what the market needs is, it is looking for more certainty. I think it is looking at price levels where investors feel more comfortable stepping in and taking that exposure. At least i do think we are getting closer to those levels, especially with Central Banks finally stepping up with a much more aggressive take. Matt thanks for jumping on the phone. Andrew sheets is the chief cross asset strategist at Morgan Stanley, joining us by phone. Roche is calling for more countries to test more people more often for coronavirus. Last week, u. S. Regulators approved drug makers own highspeed test and the ceo spoke to bloomberg about how it was delivered. Im proud of what we have achieved. Not only at the company, but in an excellent collaboration with the fda. Testarted to develop this for hydro platforms in january. We developed the test in record to very good cooperation with the fda, we got emergency approval on friday. We have shipped product over the weekend and the tests are available in labs across the u. S. You are saying it couldnt have happened any faster . As far as the test is concerned, we started right away. We developed this test in record time. , other tests available in the market, there is an enormous demand for tests. Cannot yet meat supply, meet supply, but im glad we can make a difference with this new test it was approved in record time. When you take a look out, say, in april, what should we be doing today and not two weeks from now to get ahead of things . Severin the most important matter at this time is the individual responsibility of all of us to stop infections and to flatten the curve. About social distancing. It is not joining any gatherings. It is about washing our hands. That is the most effective way to stop the spread of the virus. Are we doing a good job of that right now . Severin we certainly havent done a good enough job so far. It is high time for all of us to take this very seriously and make our individual contribution, all of us. Some have suggested the older testing you have used in asia could have been available earlier in the United States and earlier in europe. Is that the case . Installed platforms out there in the system, but even if you abn to test, you need installed phase. That is also the reason why automation is so important, because you can imagine you also need a lot of people. Unique Human Resources to make it work, and with this new offering, im very glad we can bring important relief to the system. Matt that was the ceo of roche, severin schwan, speaking to guy johnson and alix steel. Fantastic interview, not only because of the test they are for countries that are woefully underprepared like the u. S. , but also because roche is one of i believe the top three heaviest stocks in the stocks 600 index. Next, into the unknown. The largest car maker in the world says it is almost impossible to predict the Economic Impact of the coronavirus. How will volkswagen cope as the regions borders in europe begin to close internally . This is bloomberg. Matt welcome back to bloomberg market the european open. We are just about 15 minutes away from the cash equities open. Volkswagen is warning of unknown financial challenges from the coronavirus today as the eu proposed a temporary halt to nonessential travel. Last week, the ceo told us about the impact of borders being closed. If borders would be closed, it is difficult to predict. We have a lot of sourcing in italy, for instance. Italy is a very affected area and our biggest concern is the logistics chains from italy to germany currently. There was a huge concern for us because if there would be a disruption in the short run, we would have to shut down some plants. To be fair, that logistics chain can still work because goods are still allowed to travel, as far as i know, across borders but some of the most in four important factories, lamborghini and ducati are shutting down right now. Porsche is trying to make bigger inroads into cost cuts. Senior transport reporter. What are we learning from volkswagen . In the last week, weve gotten a couple reports around earnings now. Are we getting anything on the outlook . Be veryutlook seems to much in jeopardy. The annual report that had just been published, the outlook is reiterated in there, but the press release that came out at the same time did not mention anything regarding specific targets, but it only made it very clear that at the moment, it is extremely difficult if not impossible to plan ahead for the full year because of the coronavirus outbreak. The unknown seems to be word many corporates are using. Interesting day talk of unknown financial challenges. Supply chain, demand could fit into that category but what do you think they are talking about . What is so unknown . We did get an update this morning, which led us to believe there are intense negotiations going on between management and the representatives, labor unions because there seems to be plans in place to widen the factory shutdowns across europe. Few daysover the last that factories in slovakia, portugal, and italy have stopped operations, but apparently that situation is only just emerging. There are plans for wider shutdowns that would include the german factories and the financial fallout of that at the moment is still very difficult to predict. Anna we are seeing in other parts the same trend, renault stopping industrial activity. Reporter, thank you for joining us. Could carmakers help the fight against coronavirus or any other manufacturers by making lifesaving ventilators . U. K. Johnson has called on manufacturers to help with production of the machines but in divorce industry voices have cast doubt over whether the plan would work. What are the voices from business telling us about it makes a nice rallying cry, doesnt it . Echoed back to the country. Oming back together his business skeptical it can deliver . Talking about how they want to help but dont know how they can help, especially with sinceators, especially you are a car it would be extremely hard to get up and running in such a short period of time. Matt i dont even understand how a carmaker could switch from producing fenders to ventilator. I guess there must be ways, but is the concern one of regulations . Telling yout makers they couldnt make it past the bodies that need to prove these things . There is they, question of regulation because you have to understand it takes a while to make those devices and even if you get those plans to make the devices, it would need to be certified before it could be used by anyone else. It would obviously take some doing and take some time. Anna what about materials . It is very hard to see how they could immediately switch over from the materials they have already. Very difficultre different from materials to make ventilators. Thank you for joining us. It is a fascinating rallying cry , but it just looks like it will be too difficult for a carmaker to switch over so quickly if and give countries the ventilators they need. Coming up, the worlds Biggest Hedge Fund betting billions of dollars against european stocks, even after yesterdays big drop in the wake of the pandemic. Find out which companies are on ray dalios shortlist next. This is bloomberg. Matt welcome back to the european open. Seven minutes from the start of trading, we are getting Pretty Amazing headlines from across the volkswagen works cancel, council, the Union Representatives say the Company Plans to shut down production at most european sites. The Works Council is urging faster shutdowns but says vw plans to shut down factories across europe from march 20. This is something, i got the sense from our interview that Herbert Dietz didnt want to do. Missed outy hadnt on producing one car thus far as of last week due to any supply chain or logistics breakdowns. Now, the union is saying volkswagen factories will shut production across europe. Pretty fascinating stuff, indeed. Abouthe was talking just a drop in demand and 8 in italy and not really across the rest of europe. The morningbout call. Bridgewater associates built up a massive bet against European Companies in the wake of the coronavirus. Here with your morning call is annmarie hordern. 14 billion, bridgewater is betting european stocks 14 million, bridgewater is betting against european stocks. String ofmade a wagers that include 1 billion against sap, 215 million against asml and on a country by country basis, france and germany top their shortlist. 16 and 12 companies respectively. One thing a bit unclear, are these bets and outside wager about a fall in shares or is this part of a bigger hedge strategy . Bridgewater associates does not comment on the strategy. Matt thanks very much. Annmarie hordern from new york giving us the morning call. A little more bearishness. Weve brought you a little of both this morning. , typically a bear with a more bullish call and from bridgewater, a bearish move in terms of 14 billion short plays. Up nextet open is in four minutes. We are seeing futures point higher, but that is after the biggest crops we have seen since 1987 in u. S. Stocks yesterday and in fact, the dow showing a bigger percentage drop them we saw in the october 31 crash of 1929. Anna breaking records all over the place. The market open is next. 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 a minute until the start of cash equity trading in here are your headlines. Mondays losses on the dow eclipse the first day of the wall street crash as the ceo of nasdaq says it is critically important to keep markets open. Emmanuel macron calls for unity in the battle against the coronavirus. The eu closes its borders as donald admits the u. S. Could enter recession. Into the unknown. Fleet of you says the economic fallout from the pandemic is impossible to predict as the union says it will stop production at most european sites. Matt take a look at futures. We are looking at gains in terms of european futures. Euro stocks futures right now, up 5 . 4. 5 on dax futures. There is a little bit of optimism after the massive drops. More than twice that we saw yesterday, and it is going to make up for less than half of that drop in terms of coming from the base. What do you see as markets get out of the gate . Anna expecting to see the bounce you suggest. Futures told we are up and we are. On thenre risk yesterday. Incredible to see moves on the s p of more than 4 in every one of the past. Six days, whether up or down. Such is the scale of the moves we are seeing on u. S. Equity markets and globally. The spanish ibex, up 5. 5 . The ftse, up 2. 4 . Are stille if we taking a little more time to process these borders. The dollar, up. 2 . The pound, weaker, the euro weaker and the swiss franc weaker. Sovereign bond markets, we are seeing a return to normal trading, if you could ever say that at this point in time. At least on the day when we see stocks higher, we see bonds lower and yields coming up. From a sector perspective, there is not much of a story apart from Consumer Discretionary, where we see an area of red. That is an area we want to talk to our guests about because it includes supermarkets and certainly those have been doing a roaring trade in many parts of the world, from the lines gathered outside of them as Shoppers Look to stock up on essentials and other things. We will talk the Consumer Discretionary story but we are green across all these factors this morning. Of those markets. We are up one day, down the next. Today, we are up. Matt in terms of supermarkets, i dont know if it is Silver Lining is putting it too lightly, but some good news out of german regulations is open onkets will be sundays now. We have this dark ages thing about shutting supermarkets and a lot of Retail Stores on sundays. They will now be open, at least for the time being. Screen. Ook at the mov we got a lot of breadth to the upside, 438 stocks are gaining. Only 16 are down. A bit of a rising tide, and weve seen this. Either moves one way or the other over the past couple of weeks of trading. One of the biggest gainers where the biggest gainer is sanofi. You see lvmh, s. A. P. Even, although that is the subject of a billion dollar short from bridgewater and ray dalio. Of analso the subject almost billion dollars short from bridgewater. Interesting to see those two names at the top, but otherwise, there is not really a theme. These are just the Biggest Companies adding the most points to the stoxx 600. Take a look at the losers. Lpp, compassu see group revised to the downside. Not a lot of losers here. Auto trader, down 2. 11 . Not a lot of losers to pick from and almost all of the stocks are rising. Anna we are getting further news out of vw. You were talking about what the union was saying about stopping production at most european sites. Now getting confirmation from the ceo. Spain, portugal, slovakia, and italy. Prepare to talk for two to three weeks. We will see how long these manufacturing halts, this hiatus in the car sector in spain weve heard from renault on this subject today and we will see how long this lasts in germany. To the biggest plunge in wall street stocks ands 1987. European markets are opening higher to the tune of 4 . Henry johnson is cohead of Capital Markets at Deutsche Bank. Henry, good to speak with you this morning. Let me start with a question about the broader markets and the clues you are looking for to whether we substantially priced in all of the downside from coronavirus. Is it possible to say that yet . Unfortunately, i think it is pretty clear there is potentially more downside to come. It is obviously great to see the markets opening a positive way this morning, but i think this has much further to run. We are only at the beginning of the social isolation in europe and the u. S. And the effects on the real economy are yet to be felt so while there has been a valuation adjustment, it is fair andthat it is a just meant at this point, but obviously, the real effects of individual companies are still only going to be found out over the next couple of quarters. Matt how bad do you expect it to be . Theave been talking about people who need it most are probably going to find it difficult to get assistance. Restaurant, a a bartender, personal trainer, a lot of those people are going to be out of money and looking for rent. Virgin sayingot they want their employees to weeks unpaid leave and now volkswagen will halt factories. This is the biggest carmaker in the world that will stop making cars in spain, portugal, slovakia, italy. What kind of effect or how bad is the effect of the sudden stops on the economy . Henrik two questions, there. First of all, you still have a technical unwind to come. Investors and individuals are anding cash, selling etfs credit and equity to hoard cash to survive the downturn. That is something that will play out throughout the markets, particularly day the credit raised a good point about the real economy and how difficult it is for Central Banks to reach to the people that need help. Unlike the great financial crisis, this is not a banking crisis per se. Loanloss provisions will take many quarters to come in to threaten bank capitalization. The difficulty policymakers are struggling with is how do we help those individuals . We are going to have to be in unconventional territory, whether that is helicopter money or different forms of assistance, because as you can tol from the Market Reaction the Monetary Policy that announced has been so far, we can all agree are substantial and heading in the right direction, but how do you make the last transmission mechanism into individuals . Anna important point you raised. Monetary policy necessary but not sufficient. Is it Something Like a policy that gives out 1000 to every single american or more . Or a Global Policy of that kind . Is it helicopter money policy that can draw a line in the selling of risk assets . Is that what we are looking for . Berik it would certainly one way that has worked relatively successfully in hong kong. It would be taking things into very, very uncharted territory, and how you would even do it obviously would be a question mark and take some time to put into place. Obviously, there would be risks of fraud and lots of implementation issues. That may well be something that ultimately is necessary, together with other policies like mortgage forbearance, etc. And support of Small Business with tax rebates. On the way into work today, talking to people working at coffee shops or drivers and individuals like that, they are the ones that in the next few weeks are going to feel the brunt of the social isolation, and really, they probably have a chance to pay their mortgages for a month or two on average but after that, it gets written really dire so it depends on how long these extraordinary Public Health policies last. Matt absolutely. Ive been in those jobs and i would not have been able to pay my rent for two months, for sure. Hopefully, governments around the world are thinking of policies that can reach people like that. Henrik johnsson is cohead of Capital Markets at Deutsche Bank. Hes our guest cohost for the hour. Coming up, risk assets may be gaining today, but credit markets havent heard the news. We will talk about debt and the threat of corporate failures next. This is bloomberg. Anna welcome back to the european open. Witnessed a balancing european stocks after a heavy selling yesterday. The u. S. Equity markets, losing the most the biggest drop on wall street since 1987. This is the picture we are left with in europe despite the fact that after the european close, u. S. Stocks continued to fall. Line under that and looking to the bright side, it seems. Lets talk about credit markets. In a troubling sign for policymakers, credit markets seem to be missing out on the rebound. Spreads on dollar bond in asia blew out this morning to the highest in over eight years. New debt offerings have stalled and the cost of insuring against defaults is at the highest in four years. Henrik johnsson is cohead of Capital Markets at Deutsche Bank. As you said, the market for new debt, new corporate issuance seems to have stalled. Are you still seeing opportunist are you being opportunistic about borrowers coming to market . Market . Henrik there is a lot of interest in issuance. The main task is to watch their liquidity, particularly in the industries that are most affected by the coronavirus shutdown and they are drawing down on the revolving credit facilities, product placements and the new has been a new issue for the market but that will require a heightened issue premium but if i were to guess what part of the Capital Markets eligiblek first, ecb euro Investment Grade bonds would be high on the list, and there is a lot of issuers who are looking. We just need to find enough stability that investors are willing to stand still and take the other side. Matt the have a viewer question, writing in and asking what happens with Banks Holding all this debt on their Balance Sheet if they cant sell it . Is that a concern for you . Henrik it is a very good question. It goes to why the crisis is very different from the great financial crisis. Whole, are the safest they have ever been from capitalization view and risk point of view. Although you have seen bank stocks selloff in line with the rest of the market, the amount of liquidity, Capital Buffers in the systems are substantial and a lot of the work on the central bank side is to provide funding to the banks to be able to meet the requirements for cash. We are in a phase of financial triage. I dont mean to say it is anywhere near as important as the actual triage in hospitals, but for banks like ourselves, we have clients calling us on a daily basis from various industries saying here are the requirements, problems, how can we help . We are doing the best to help but obviously, looking for some support from central bank and policymakers in order to make it possible. Anna you mentioned some of the positives where you might see parts of the market coming back, pcb eligible lawns. Bonds. What would you need to see from policy makers remove concerns about credit markets . Henrik i dont think anyone can remove concerns. Crises whereus orre was china trade War Limited War in the middle east and so on, this is going to run for probably months. I dont think anyone can remove the concerns and thats why i think Capital Markets are going to continue to swing up and down, but i think valuations, depending on which asset class will eventually hit the bottom. We are not there yet. Particularly in credit markets where there is an unwinding of liquidity to come. You mentioned the crossover index. At the moment, that is the best guide to sentiment because cash bonds are very difficult to trade because there is a fundamental lack of liquidity in the secondary markets so people are expressing their view in the indices and that is showing that we still have some pain to come on the cache site. One other thing you mentioned in your introduction why credit markets havent gotten the memo. Ist we will be seeing now Asset Classes that have performed on a relative basis quite well, those are obviously the ones that investors are going to be looking to utilize to raise liquidity to invest in other banks so for example, if you have the view that equity markets are bottoming but you have a finite amount of cash, you might highquality singlea rated to get the funds to invest in the equity markets. Matt which is why we see a lot of times in situations like this gold selling off. My neighbor yesterday was like, why is gold selling off . I thought that would be the safest thing to hold. I explained people need to access funds, they need liquidity. Henrik johnsson, cohead of Capital Markets at Deutsche Bank will stay with us. Morning after the crash part two. Restaurants, and cinemas around the world close their doors, could Financial Markets be next . Person tothe perfect talk to about this as he runs Capital Markets. This is bloomberg. Anna welcome back to the european open, 20 minutes into a positive trading day for European Equity markets, unwinding a little of the losses of yesterday. The philippines took the best ever the first country to shut its markets in response to the widening coronavirus outbreak and the economic fallout from it. Erik schatzker spoke to the nasdaq about the possibility of u. S. Markets following suit. Our view is it is very important to keep the markets available to investors, but also recognizing that the markets are used to raise capital, whether a Health Care Company leaning into companiesion or other who need ready access to capital in this environment, it is critically important markets stay open in this time as opposed to trying to take breaks in the middle. That will just push off the situation a little bit that could create other pentup issues if you do close the markets. Our view is it is much better to keep them open. The sec chairman agrees with you but let me play devils advocate. Why keep the markets open now when confidence is so fragile and these repeated selloffs can destroy confidence, not just among investors, but among consumers, as well . Think our economy is based on open access to markets. Open access to capital, Price Transparency and the ability for investors to manage their wealth in an open environment. Managing the markets while we are managing through a situation is critically important. We need to do it successfully and make sure that the Market Participants can openly and easily participate in the markets and manage their liquidity as they are managing through the situation, but the fact of the matter is it is a testament to our economy to demonstrate we can manage the markets and allow investors to express their sentiments while we are going through the situation. As you know, stock trading volumes have been hitting records on the nasdaq. Has it been orderly or have you encountered technical issues . We have been able to manage everything successfully. It is definitely a time when we have been adding capacity to our systems. Weve been making sure we can manage through the traffic. We have seen 60 plus billion messages coming through our systems in a day and that is about double the last peak we we are managing through that successfully. It is definitely an area we are on high alert around and we have the teams managing them very successfully. Suggest liquidity in the market, but some claimors liquidity is not the same thing as market depth. Do you see enough for the issue . Adena it depends on the moment in time and we have a diverse set of Market Participants so while there may be episodic situations where the depth may not be as rich as it needs to be, a lot of times, youll see investors filling in to make sure they manage through that and create the market and liquidity we need. I also think the equities market and Options Markets are very transparent. Every trade is reported in realtime so you are able to manage through the situation in a much more liquid and transparent way than you are in some of the other markets where there have been more liquidity issues. Matt that was the ceo of nasdaq Adena Friedman , talking to erik schatzker. Henrik johnsson, cohead of Capital Markets at Deutsche Bank is still with us. Let me get your take on how liquidity has been. Have there been any issues over the last few trading sessions . Im assuming you will appreciate the view that markets need to stay open. Henrik on the markets being open point, i think it is easy when we work in finance to focus on the Financial Markets, but the reality is we are in a Public Health crisis. Second of all, an oil price shock, and only thirdly a financial crisis. On the markets being open, obviously i agree with the speaker that investors should be d to express a view, but to technicalities where we are getting tech uncle advice foru. K. Technicalities, the u. K. To only go to work in essential operations, keeping keepingpens can be markets open can be challenged because there wont be enough individuals at their desk. That is the caveat. Not everyone can trade at home and there are compliance and other issues if people are using nonapproved systems. , i think on liquidity what we have created as a market, particularly credit, over the last few years is essentially an illusion of liquidity, a liquidity mismatch because a lot of the fund flows that have gone into credit markets and therefore valuations to record lows and we only need to go back a month to have the all time on all credit products in the world with the exception of treasuries and why that has happened has become easier to invest in bonds and other credit products through daily liquidity funds. That is unwinding at the moment. Anna take you so much for your time this morning. Henrik johnsson, cohead of Capital Markets at Deutsche Bank. He will continue his conversation with Bloomberg Radio at 8 50 a. M. U. K. Time. Leaders are preparing for unprecedented actions taken across europe. This is bloomberg. Anna welcome back to european open. 30 minutes into a trading day. European equity markets are not making much of a dent. I at our European Headquarters in london. Matt miller is in berlin. Matt lets take a look at the story in terms of markets. If you are familiar with trading over the last few days, you will understand how this goes. One direction and another. Up and down. We have a green arrows we have green arrows, holding up at 1 on the stoxx, the broader european index. We have a split in terms of groups that are winning and losing. If you take a look at the grr function that we have pulled up here, you can see the group rank to returns for one day. The big winners are the defensive stocks, telecom, health care, utilities. Wello see technology doing , which is kind of surprising, especially after annemarie was talking about ray dalios up a andt bit on sap and asml european stocks in general. It is fastened it is fascinating to see those stocks, sap and asml in particular, adding points to the index. On the downside you have travel and leisure as well as real estate and financial services. Anna lets get to breaking news. Hong kong reporting and of february jobless rates highest since 2011. We have seen giving money to citizens as part of these strategy the strategy of hong kong authorities, not only coping with coronavirus, but with the destructive activity in hong kong. Lets get a first word news update with todays top stories. President trump says the u. S. Will strongly back the nations airlines, that just hours after the industry said it needed 5 billion 58 billion sorry in aid. Boeing is seeking to avoid layoffs and damage to its suppliers. Hundreds of Smaller Companies that make parts and systems for its aircraft. Amazon is hiring 100,000 people to help meet added demand due to coronavirus. It also gives u. S. Workers a two dollar an hour raise your the company has already warned that some orders were backlogged as the ecommerce giant struggles to cope with the increase in demand. Roche says Companies Need to test more people for coronavirus. Anyone showing symptoms should be tested, regardless of age peer to on friday, roche won an itsgency organization for new highspeed corona test. Other tests available in the enormoushere is an demand. We cannot yet meet supply. But i am very glad that we could make a big difference with this new test, which was actually approved in record time. That is the first word news update. Matt . Matt leaders are preparing their nations for unprecedented curbs on life, or in some cases leaders are not preparing their citizens for those unprecedented curbs on life. But still, ordering them into action. Governments scramble to keep citizens from exposure as global infections are close to 180,000 and cases in italy rose 13 . Governments rolled out a series of public addresses on the need for further restrictions after g7 nations held a Conference Call monday. Trump avoid discretionary travel and avoid eating and raking in bars, restaurants, and andic and avoid eating drinking in bars, restaurants, and public places. Mainland,rom the macau, and taiwan, for all other countries and regions, we will be issuing the enemy is there, invisible and moving forward, and that will affect our day to day way of life. Matt joining us now is bloomberg reporter in brussels maria tadeo. Moreone has been much somber in the past 24 hours, and certainly some governments seem to be preparing their citizens. In germany they are just shutting things down and wishing us luck. Maria thats right. It really has changed, a lot of it having to do with the g7. Every leader is saying this is not just a fluke, this is actually a serious situation. And of course and a lot of this also goes to the numbers we are seeing in europe, particularly italy, where we are still seeing cases klein, and a serious death toll in that contest seeing cases climb, and a serious death toll in that country. Emmanuel macron yesterday did not use the word locked down. He did say there is an invisible enemy, but he did not use that. When you look at the measures announced, this is a similar shutdown to the one we saw in italy where people are told you should not be leaving your house unless it is absolutely necessary. This isso saying and interesting there will be big economic measures to help companies in the country to try to make sure there is liquidity, putting on the table 300 billion euros in a credit line to make sure that happens. That is a have to promise and you are seeing that carmakers around europe are saying they will have to shut plants. The pain is very real, and again for the Airline Industry yesterday, another difficult day. Anna interesting to see president macron saying that he does not want one business to fail, they will stop any business from failing. In terms of economic measures we are hearing about, they vary from country to country. What do we know about them broadly . How much coordination is there . Maria exactly. That is the point of the stimulus packages we are seeing refer to really much each individual country, and italy, of course, again yesterday has 25 billion euros to put a fresh signal to the economy that i can leverage hundreds of billions of euros. The question is if that will be enough because the country is headed probably for a big recession. Toknow that they are open exploring more options. We did not get specific language that some of the market we are hoping for, and you see at this stage on the economic front there are countries that are still not there yet. Spain has been in a shutdown for three weeks. We have not had a single measure, and the e. U. Is saying we are coordinated, working toward that, when you look at the actual country and the measures that have been announced, there is huge divergence between member states. Anna maria tadeo with the , on countries across europe. Up next, united we stand. Is it every nation for itself . We speak with the o. A. T. Secretarygeneral. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open, 40 minutes into the trading day, and the ftse has turned down. , the cac, the well, losing ground as even after yesterday several double digit drop her in Silicon Valley is uniting to help fight this information on the coronavirus online. In an exclusive interview, bloomberg technologys and emily ofng spoke with the coo facebook, Sheryl Sandberg, about how that company is handling the out rake. This withonding to all hands on deck we are taking down any misinformation on the coronavirus. We are working with who closely and directly, taking down things they think are harmful, working with local Health Ministries purely are trying to get good information out to people. My fiance and i, we were just asked by the who director for a handwashing video, and we are asking anyone with a big following to share good information. It is about shooting down the bad and getting out the good. We are partnering with the u. N. Foundation, the w. H. O. , to launch a Covid Response fun with them. We have a 10 million we have a 10 million match. We hope people will jump income and we are going to do the same for the cdc, coming very soon. This is about taking down the Bad Information but also getting some good information, and support out to people and these incredible organizations, like the w. H. O. And the cdc, that are going to need everyone to be doing what they do to reduce the spread of the virus. Emily what about misinformation where some of the most critical information resides, and some of that is medical . Is facebook hands off when it comes to information in private on facebook . Covid19, we are not. As soon as we can find the harmful information, particularly misinformation with groups,nd Public Health we are taking it down as soon as we can. But we are seeing a lot of facebook groups doing amazing things. There are groups in italy that are particular hardhit, hitting on together getting together online to provide support. There is a doctor in italy who has been providing services to patients, not even her own, just people in the areas suffering from depression, isolation, suffering from anxiety online. We are seeing churches and synagogues put their Services Online on facebook groups to reach their community. So this is a time that we are seeing this with other disasters, even though i dont think we have seen anything like this, where people come together to support each other in any way they can. Is down almost 14 with the rest of the market. How big an economic downturn are you preparing for, and how wellpositioned is facebooks ad business to whether this . To weather this . Sheryl this is not going to be business as usual. The Market Industry will feel the impact. I dont think anyone knows how big, so we are going to watch. But again, we know we can still pay our employees, our contractors, and keep the lights on, where so many Small Businesses around the country and the world do not have that luxury. People are working paychecktopaycheck. So that is where we are focused on our efforts because that is much more important than anything we could do for our company. So we have been asking business will see more this week in terms of helping Small Businesses around the world. Anna Sheryl Sandberg talking about taking down misinformation from the platform, also helping out smaller businesses. As the world grapples with the fast spreading coronavirus, leaders are struggling to contain it. Where as in previous crises, the fear of contagion is preventing World Leaders from gathering to discuss it. Write, for business week, which talks about how we know of course have a last a lack of physical meetings, but is the lack of physical meetings resulting in a lack of leadership, or is it just a lack of leadership . That is a lack, and abundantly clear for now. In the past we have been able to sort of find these intimate settings where the leaders were able to let their guard down, and grapple with issues, and like at a moment where that is essentially dead. We are already seeing that. You add to this the idea that even these guys and these leaders are not able to physically get into the space together to hash it out really kind of magnifies the whole thing. We have seen actually more recently how the virtual video link is not really working, and we are going to be seeing a lot of a lot more of that, with people talking you chose talking over each other. Public announcements are not really going anywhere. Matt is this going to be anywhere for difficult for the European Union to deal with . Will he degrade e. U. Relations, or will it bring them together . It is a huge blow to the e. U. , that is really grappling with its own existential funk. Brexit has happened, the u. K. Was one of the biggest contributors to the e. U. Fund. So there is already that. That is already ongoing. Like italy is feeling horribly let down by the e. U. , saying we are on our own. You guys are not doing anything. If anything, youre not even giving us the facemasks. So when youre dealing with that kind of emotional resentment that builds into the creaky system, yeah, i would say the e. U. Is really grappling with something much bigger than throwing money at this. It is grappling with the fact that people might not believe in it anymore. Anna thank you very much. Flavia krausejackson from bloomberg news. Lets talk about that with angel gurria, oecd secretarygeneral, who joins us now. Right to speak with you. Your organization has cooperation founded on the idea of cooperation. Lead sadly are we sadly lacking Global Cooperation right now . Angel i think we need more of it, and of course the g7 , thement ordering points will for the greater cooperation but also the need for greater cooperation. We are coordinating on the Public Health itself, first and foremost, but then the question of confidence and the question investment,ade and but then the economic consequences, which will last for, unfortunately, much longer than the pandemic itself. Angel, we had local media interviewing our economics minister, peter of meyer, earlier, and he said that germans should be prepared for these disruptions to not just be a few weeks or a month, but to last through may, through april. Actually, yesterday donald trump we could be prepared for problems going into august and september up at how long do you think this is going to last . Angel there are two items. First, the question of the thath threat itself, and has been asymmetric. We have seen tapering and then actually a reduction of the growth, and then basically no more in the case of china. So they are moving obviously ahead because they started ahead, but then the other countries are doing it in a very asymmetric way because they started at different points in time, and therefore the speed at which this moves may not be too different, depending on the responses. But the question of when it peaks in each one of the countries is going to be at a different moment, so yes, considering april, considering may is something that in terms of the Health Threat and the effect of the pandemics, yes, absolutely. But, as i said before, the question of how long the economic, social consequences will last, that is a much longer and we have to deal with that through, you know, the different mechanisms that some of the countries are starting already to rollout. Anna how radical should the thinking be from government . We are hearing talk, helicopter money, of giving cash to citizens in the United States, at least being talked about . They have done that in hong kong already. Is that the kind of policy you want to see more of, or Something Different . Like i think expressions helicopter money at this time dont apply we have never been dont apply. We have never been in a problem this day with the type of enemy like this one. Yesterday president macron said we are at war. The only problem is, this enemy is different and more difficult to fight, more difficult to seize. Stoppages, these types of confinement that we are seeing in many countries, and that we will see in more countries, are going to have a very big impact on the economy. So the protection of Peoples Health is first and foremost, but then the question of the wellbeing of people is absolutely crucial. So these measures of helping people be able to actually be confined rather than working, helping the companys, because the companies do not have demand , you have supply shock and demand shock in this particular case. The questions of payroll, the question of sick leave, the question of tax credits, the smes, which provide half of the employment, in some cases even more than half of the employment , 80 , 90 of companies, those have to be addressed. Then the large companies, which in some cases are already closing down or have closed down , and whose employees are going there without access to the factory itself, no production, obviously this is what budgets are for. This is what public budgets are for, to face these types of situations. Right now, every flux ability must be exercised in terms of both every flexibility must be exercised come in terms of the e. U. , etc. , so that countries can do whatever it takes as, you know, the famous phrase goes. But to do whatever it takes, because you have scarce resources. Coordination is crucial because the measures can be mutually. Einforcing if you act individually, what l happen is we may do a cooperation isy, key. Angel gurria, secretarygeneral of the oecd. Thanks very much for joining us. Always a pleasure listening to you, and important at a time like this. This is bloomberg. Matt welcome back to bloomberg markets. This is the European Market open. We are just about an hour into the trading day right now. Take a look at the indexes. We started out with pretty decent gains, although nothing compared to the double digit recordsetting drops that we saw yesterday. But now we are down. Stoxx 600 off 1 , gold down 2 . 1482. Anna indeed. Lets focus on the stocks there. Travel and leisure as a whole, that is down by 10 point 5 and we continue to see terrible times for that sector. Wells fargo, we have news on closing factories, including volkswagen that stuck down by 4. 3 . This is bloomberg. Francine united on stimulus. G7 leaders will do whatever it takes to overcome the pandemic. The u. K. Will announce extra support for business. U. S. Equities had the biggest bridgewater1987, makes a 14 billion short bet against equities. As debts worldwide top 7000, governments try to keep citizens safe. U. S. Airlines ask for 58 billion in grants and loans. Good morning, good afternoon, good evening, everyone, depending on where you are in the world. This is bloomberg surveillance. Francine lacqua in london, taylor riggs stepping in for tom keene in new york. We look at the markets but also the human aspects. We are trying to figure out how long the quarantine will last and what that means for the economic effects longer term. Taylor it is incredible. You walk around new york city and it is doom and gloom. There is no one on the streets. It is like