Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

No limit, the ecb unveils a 750 billion euro bond buying plan to sue the markets. Christine lagarde throws the full weight of the central bank behind the single currency. The greenback becomes the haven of choice as u. S. Futures selloff again. Liquidity evaporates in the fx markets on fears of a lockdown in london. Stimulus from every angle, global fiscal support soars to trillions of dollars. I count almost 4 trillion of support. The rba cuts rates. Until the one hour start of cash equity trading in europe, and it looks like the wheels are starting to turn in little more risk on. Futures in europe are higher, they were lower minutes ago. Coming back as we see asian markets closed. S p futures still down 1. 6 , nowhere near the limit they bounced off of earlier. U. S. Futures also showing smaller losses than previously, as all this stimulus comes out. We are hearing talk of one trillion from the u. S. , 800 billion from the ecb. It adds up to about 4 trillion from Central Banks and governments. Have a lot of Government Support and centralbank support to talk about. We will keep an i on the big moves in the market. U. S. Futures are down by 1. 5 . We have corporates reporting in london, in the luxury sector and what is going on in burberry. Deterioration has been significant. Downrable retail sales are by 40 , 50 in the last six weeks. Isuidity, the cash balance what we are hearing from burberry and Companies Like that. They are ahead of the curve because of their exposure to china and the hong kong market, and the extent those countries are ahead of the rest of the world on lockdown. They will work with many others are struggling to keep up with demand. He philippines has reopened, and interesting to see if you do not escape the market judgment by doing that. After awhat you see couple days of closure, down by more than 13 . Sellia we have seen this everything mentality. Equities, sovereign bonds. Dollar strength has been the asia, but some weakness in as they are under pressure. Weak. Dian rupee also up substantially, 14 . That is a 23 handle on wti. Brent is at 26. Incredible moves. Ecb is the top story in terms of stimulus announced so far. They launched an extra ordinary bond buying with 750 billion euros to calm markets and protect the economy struggling to cope with the pandemic. Christine lagarde says extra neri times require extraordinary measures 3 extraordinary times require extraordinary measures. Central banks are catching up in the right place. You do not do Monetary Policy decisions it shows you how serious they are. Still a buying program. There will be a lot of liquidity. A magnitude we can debate if it is too little or too much. It is something trying to calm markets down. From joining us now like the, does it look stimulus is having any effect on markets, or are they too concerned about dollar shortages to payuidity issues attention to the trillions of stimulus coming from governments and Central Banks . Announcement is moving for a while. Momentum, and they are coming back. Part of the issue is there are so many headlines. People are paying attention to the stimulus and the virus headlines, they are trying to Pay Attention to economic data, jobs numbers. There are so many things happening and markets superlatives from oil going down to around 20 a barrel. There is so much going on. It is helping a little bit. People want to see more, and markets do not get what they want always, but we are seeing things in motion. Anna interesting to see the no limit line from Christine Lagarde, whatever it takes it would seem. What impact that is having on italian bond markets. It is going to have an impact, you would expect it to. Given what Christine Lagarde said about what her role is. Interesting to see that and yields coming down as a result. Let me ask you, that is where this was aimed, this package from the ecb, to shore up the eurozone. Right, and one of the things with this, they want the markets to function well. You have seen that movement in treasuries. Central banks are trying to keep things going and make sure markets are orderly if possible. Get some things in there that they want to shore up. It will not be absolutely immediate, but over time they are hoping it will smooth things out. Matt what do markets need to see to calm down the volatility . What are you hearing when you talk to sources . Is there anything besides the health issue that will calm down markets . Thing, the stimulus is it about 1. 3 trillion, markets are asking for more and more. Another thing, when you get a margin call, it will not help you even if you see headlines from the ecb or boj or bank of australia. You need this to flow through the system, and in the next few weeks as these stimulus programs take hold, that will be better. People want more comfort in the credit market which has been tenuous. It has spread to places like india, japan, australia. That will be one place that is key as people watch whether this will change anytime soon. Anna asian credit markets let me ask you about the dollar. Trength, a trend in markets indexwe see the dollar down by 0. 1 . Positive . Yes it has been a relentless ride. In addition to everything else, the markets have been caught off guard by this. On that front would be good, but it is true there is a demand for dollars. People have been asking for more dollars from the fed, we will see if that happens. Definitely if the dollar is pausing, that would help things in places like emerging markets. Matt thank you for joining us, bloombergs cross at its editor ning us from spring of our from singapore. We will talk about the ecb package, 750 billion euros more of bond buying. Will it be enough to steady the european economy . Will it be enough to tighten the spread . Bloomberg radio is live on your mobile device on dab Digital Radio in the london area. Tune in. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Look at your screen, the pound is currently 115. Ng at staggering losses on the pound. We will talk about what london might look like for fx trading. You have other measures on your screen. The European Central Bank Launched an emergency Bond Buying Program worth 750 billion euros. It adds to the global stimulus of trillions from governments to calm markets. Joining us from frankfurt is thu lan nguyen, fx strategist, commerzbank. Ecb, is itom the enough to make a difference in markets you follow . Thu lan i think so. At least for the bond markets, this is why the ecb spent in the first place, extreme stress in european bond markets. Most are increasing fiscal spending. We are under extreme stress and this is why the ecb stepped in with a massive Bond Buying Program. We were talking about an increase of this program by 30 . Alleviate the pain to some extent or lead to stabilization in the markets. As far as the capital key expansion, is that what we are getting . Thu lan i think so. The ecb has signaled it is willing to do whatever it takes, and that includes easing the capex if it should become necessary. As well as revert to emergency , and activating the program which would mean unlimited bond buying. I think the ecb is pulling all the stops. Anna are we seeing enough from Central Banks . Look at threemonth cross currency and measure how expensive it is to get a hold of dollars, it seems what they are doing is not having enough of an impact on markets. Do we need more action . Thu lan we saw temporarily some easing of funding stress. It is increasing again. I believe Central Banks will have to do more to ease stress here. As you can see from the last couple of days, they are willing to do everything and that includes injecting unlimited liquidity into the markets. They will do that until we see an easing of stress in the markets. Matt does this coronavirus ecb, the eu, the Angela Merkel cover to increase the federalization of europe . Are we looking at shared debt soon . Thu lan i think this is something that will be discussed. On coronadiscussions bonds. Ae uncertainty gives them chance to do so, and probably subsides, which we hope will be at some point, this could be a blueprint for europe. Crisis isrtainly this an opportunity to try everything, not only in the eurozone. The u. S. Is reverting to helicopter money. Anna by whatever name. Do we need action on the dollar . The dollar rally has been stunning. It suffered a big drop before that. We talk about cooperation between nations to stabilize currencies, what efforts do we need around the u. S. Dollar . Obviously the speed of the dollar appreciation may be concerning for the u. S. Central bank should it continue at this pace. Think moment i do not there is action needed. In when ittep becomes a problem for other countries, not only the u. S. , arer economies which indebted to the u. S. Dollar but i do not think we are there yet. We will see further significant dollar appreciation at a high g7 agree theyhe will step in if they see disorder in the markets. I do not think we are there yet, but we could be there. At this moment, we cannot exclude anything by Central Banks. Matt we will keep you with us for a little longer. Thu lan nguyen, fx strategist, commerzbank stays with us on the market open. Coming up, the worlds biggest fx market and fears of a lockdown in london. The pound plunging back to 1985 levels against the dollar. When you are traveling to work, livein to bloomberg radio, on your mobile device or dab Digital Radio in the london area. You are not traveling to work. Just tune in at home on the internet. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Parts of europe, lets have a look at the markets. Few to european equities, we see the and cac futures, smallscale of those moves comes with lets check out bond markets. Perhaps this is were we see the ecb actions taking affect. Bond yields are coming down across europe. Yields coming down, french yields coming down, i italian yields coming down. Lets get a first word news update. The u. K. Schools will close on friday as Prime Minister Boris Johnson tightens restrictions as the coronavirus outbreak continues. He warns he could impose strict controls on london and elsewhere if necessary. 40 underground stations are closing, and tomorrow there will be no waterloo or city lines. For the First Time Since the Coronavirus Crisis started, the chinese province at the center of the coronavirus outbreak has reported no new cases. Confirmed cases around the world have talked to hundred 10,000. 85,000 have recovered. 8700 have died. 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. Much. Thank you very plunged yesterday as much as 5 to its lowest level since 1985 against the dollar. Liquidity evaporated and the currency market with you traders wanting to take position against a surging greenback. Investors worry what a lockdown of london would mean for the worlds biggest fx trading hub. Thu lan nguyen, fx strategist, commerzbank is still with us. What do you think about the and are there, concerns of a london lockdown . Are we all looking down . Is it hasy feeling more to do with the fact that people are faring the u. K. Government was too hesitant taking measures to contain the virus. There was criticism schools in the u. K. Have been open while in other countries they had been shut. Now the u. K. Government has reacted and announced the lockdown of london. Escalate withuld respect to the virus. Fears are easing and that could lead to stabilization. On the pound, in indonesia we see a cut to the repo rate, 25 basis points to 4. 5 . We see emergingmarket currencies under considerable pressure overnight. I was looking at what we had on 3 . Korean won, down by your expectation for emergingmarket fx at this point . Thu lan i think they will remain under pressure particularly against the u. S. Dollar, which is gaining because we are seeing funding stress in the u. S. Market. On the other hand, some emergingmarket currencies will be under pressure because of the fiscal space the governments have. We are seeing industrial countries where not only Central Banks are acting, but fiscal stimulus increasing. Imaging markets may not have that space. They might come under pressure because of it. Matt thank you for joining us, thu lan nguyen, fx strategist, commerzbank. This is bloomberg. Good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. 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 ] matt welcome back to bloomberg open. european we are 30 minutes from cash trading. We are seeing green arrows here, although considering the losses we have seen recently, and i dont mean to make light of it, because they have been severe, these gains are really very little. Especially considering the amount of stimulus we have seen already pass, seen floated, and centralbank easing and quantitative easing, its just tremendous. To see all that, then only 1 gains in futures, is shocking. Ansaw oil go up, but from incredibly low level, and we still see it down. 25 right now for a barrel, almost 26 for a barrel of brent crude. Gain, two dollar gain from the 20 level we saw before. Joining us is bloombergs asia energy reporter, dan murtaugh. Wen with these gains, dan, are still at incredibly low levels. Im reading about bankruptcy concerns for a lot of the u. S. Shale producers. Im sure those ripples go global as well. What does it look like to you . Dan youre right. Is little gain here today just a mix of Short Covering and maybe a few people trying to catch a falling knife. Nothing compared to the losses we have seen the last couple weeks. Were seeing a lot of really volatile movement. The wti already posted four doubledigit increases this month, most since january 1991 when the gulf war was going on. Still looking at a fundamentally bleak picture with a supply glut coming onto the market at the end of the month when the opec cut agreement ends, and demand is cratered globally, by governments trying to suppress spread of the coronavirus. So it doesnt look like we will get out of this mire anytime soon, and possibly even deeper to go as far as oil price looks. Anna dan, is there anything that will put a floor under these prices . Maybe a little less fx volatility might help, a little less dollar surge might help, but what are we watching for in the energy markets, to see what stocks this rock what stops this rout . Dan it is a parlor game right now in the energy market, looking at what floor levels there are. Traders try toas put oil in storage, do those bids create floor . And secondly, when will people stop production of u. S. Shale and will that put a floor under it . Talking to traders, the range we get, a a lot of people think hundred 20, some think as low as 10. You hear analysts at citigroup saying a bear case of an average five dollars per barrel in the second quarter. Matt wow. dan the downside is looking pretty scary. Matt imagine someone paying you to take barrels of oil off, getting paid to take barrels of oil off their hands. Dan, thanks so much. Bloomberg asia energy reporter, dan murtaugh. Obviously the coronavirus has send volatility through all sorts of global markets. Analysts are forecasting recessions, but the question is how long and how deep will they be . Is there anything to be gained from buying stocks at these levels . Do you wade in now . Joining us is edmund chin, global director of strategy at b. N. P. Paribas. I guess some people are. That is what makes a market. Although we have seen mostly drops. What are you hearing about big names, big strategies, that are getting back into the market and starting to pick up what you be lieve are undervalued stocks . Edmund im not sure so many clients are doing that at the moment. If you look at markets across the board, what we see is a re correlation of suppose it safe haven markets with risk assets. Equities have been falling hard, but at the same time neither sovereign bonds nor gold has acted as safe haven assets with negative correlation, so that suggests Something Weird going on. Quite clearly what we have been seeing is a forced liquidation to a large extent. Why . People may have to cover margin calls, and more importantly for Institutional Investors, they have to cover redemptions. As we know, at times like these Retail Investors in particular are prone to sell, at any price. Ands what we see, Institutional Investors have to respond, and if they cant sell all the exposure, they sell what they can, typically safe haven assets. That is what we see at the moment. Institutional investors are not buy equitieso until there is stabilization, and thats on two planks. Widespread fiscal stimulus, number one, which we start to see, and with europe at the epicenter of the virus, you need to see slowdown in infection rates, which hopefully we will see soon. Anna interesting to talk about margin calls and redemptions. We heard from one of our colleagues that yes, when facing byse minute by minute, hour hour, some of the big numbers we are hearing froms government are not cutting through. Everyone is sort of dealing with the here and now. Are you impressed with the numbers we have heard so far from global actors, or do you need more . Edmund i have a feeling. Its difficult to know. On the one hand, its depending on how longlasting these locks downs for instance in europe go on. The longer they go on, the greater damage, the more stimulus you need, so to some extent you are chasing your tail and this all comes down to stemming the rate of infection growth and particularly the number of serious cases requiring hospitalization. I think we are getting there. I dont think were there yet. The numbers may need to unbelievably be even bigger still, but we are getting to the right orders of magnitude, and i think what we hear from the u. S. Perhaps a, in europe more coordinated response is what we need. So far this has been led very much by individual national governments, and what we do need is a little more coordination areas like theom european commission. Areas like the european commission. Matt so in terms of edmund it is about meeting, finding liquidity. Not so much for the margin calls but perhaps more to meet client redemption requests. Because at times, the clients do want to go to cash and they feel nothing is as safe as cash. With massive gyrations in the u. S. Dollar, even within cash there is clear preference for the u. S. Dollar, ahead of any other currency, so a big retreat to the safest of safe haven, cash liquidity at a time like this. Anna yes. Edmund this is a crisis, but it can change quite quickly as well. Anna it can. We are looking at a big spike in the vix, above 75 right now. Is that something that still gives you clues as to where we head next . Edmund the interesting thing, funnily enough about the vix, i like to look at the term structure of the vix. Looking at the futures, comparing one month forward against four months. Order we seethe now, quite extreme, the front month being quite a lot higher than the fourth month out, that tells us we are in extreme market dislocation, but we have already peaked in terms of the spread, and the spread is reducing. What that tells me is that between one to six months out, equity markets could well be substantially higher than today. That doesnt mean we have seen the bottom already. We may see it ahead of us. But it does suggest that we are in the process of forming a market bottom in equities, albeit in very volatile fashion. I think we are bouncing between finding new lows, but then f those,o rally of the process of finding a bottom. That suggests that a few months later we could see equities higher than today, similar to 2002, 2008. Matt of course this is different because you have the health care component here, edmund. Can we hit a bottom if we get enough stimulus or a coordinated enough response, or do we see need to see the number of new cases start to fall rather than continue to rise in the u. S. For example . Edmund in europe and the u. S. We absolutely need to see rate of infection slow, because we need to see the rate of hospitalization can be contained, the number of serious cases can be contained. What we need to see clearly is on the horizon, an end to the current very severe lockdown conditions we are under, in countries like france. Clearly, for the economy to restart, people need to be able to go about their daily business, and at the moment it is simply not possible and it will not be possible until the infection rate slows. As for instance we see in china, where they are reporting basically no new cases and the economy is restarting. Its not got back to the rhythm it was at before the virus, but it is at least restarting, starting to reclaim lost growth once again. Thats what we need to see on the horizon before you can see any sort of durable rally of risk assets. Anna life in london perhaps going to get harder before it gets better. Thanks very much for joining us. Edmund shing, global head of equity strategy at b. N. P. Paribas. Coming up, airlines around the world announced measures to counter violence pain virus pain. Grounds 80 of planes. More on that coming up. This is bloomberg. Anna welcome back. This is what we are seeing in futures right now in European Equity markets expecting things to go higher by the start of the trading day. By no means making up for recent losses, but maybe the ecb and the no limit strategy, the new whatever it takes, will have an impact on stocks. Given margin calls and redemption requests from clients as we just talked about with edmund shing. Lets go to bond markets, which seems to see a real read across from what the ecb is doing. Yields dropping, a welcome sign for the ecb no doubt after what it did last night, the plan to buy further assets in the euro zone. Including and that greek government debt, a big change from previously. As a result, we see greek 10year bonds dropping 108 basis points to 2. 6 . Thats the trend of things around the euro zone right now, as we see those Government Bond yield spreads tightening. Lets get a bloomberg first word news update with leighann gerrans. Leighann Australias Central Bank has cut rates 25 basis points at an emergency meeting. A 50serve bank announced billion u. S. Funding facility u. S. Dollar funding facility for they had towards their first recession in almost 30 years. The white houses top Economic Advisor says the u. S. May take stakes in companies that want aid. Larry kudlow caution to the idea was only one of many, but added the 2008 bailout of General Motors had been a good deal for the federal government. He said the administration could up the ante beyond the 1. 3 trillion stimulus plan. Early coronavirus drug trials have yielded mixed results. A drug normally used for hiv showed little benefit, but a flu medication from fujifilm seemed to result in faster clearance of the virus. Another chemical trial is ongoing in china, but we dont have any results from that yet. The biggest factory shutdown since world war ii is hitting the u. S. And europe. The coronavirus outbreak closing the plants on both sides of atlantic as the impact shifts to heavy industry, echoing the shutdown in china earlier this year that reverberated throughout the Global Supply chains, adding to the case a global recession may already be underway. Global news 24 hours a day, on air and on quick take by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Matt thanks very much. Leighann gerrans in london with your first word news. The Airline Industry of course feeling the impact severely of the coronavirus. Lufthansa announced it is temporarily grounding 700 of its airlines go into survival mode focusing on preserving the cash they have and using its handful of flights for repatriating german citizens stuck abroad. Even those who want to be abroad have to come home. Other airlines around the world meanwhile announced similar measures. That includes delta parking 600 planes, cutting capacity. Mosts has furloughed employees and scrapped all international flights. Ryanair is canceling almost all flights as europe goes dark. As the u. S. Government tries to save the aviation it is straight the aviation industry, guggenheims cio said the idea of a bailout for the industry among the pandemic is able that it will nightmare. Airlines have purchased back 45 billion worth of stock. Today, they are asking for approximately 50 billion of aid to bail them out. I think that is a political nightmare. Matt joining us now is mark simpson, senior aviation at a list analyst. What do you think . Is a bailout inevitable . Can governments avoid bailing out at least their National Champion sort of airlines . Mark good morning. I think governments across europe are still trying to work out whats needed. Within the industry, some airlines would love to see the government step back and let the weakest go to the wall. I think a number of airlines have cash resources to go well into next year without flying a planme for the rest of 2020. Perspective, using cash in reserves and letting the weakest go. Obviously thats quite a political challenge. But i think there will definitely be failures. The question is, who is bailed out, who is let go . But more importantly, you have to keep infrastructure in place. So governments are having discussions on one side with airlines, but on the other side with airports, because they have got to keep open for when the recovery eventually comes. Anna yes. Bek, if we see governments judge and jury as to which company survives and which fails, what are the strict criteria on which they should make those decisions . Mark the critical issue is i think, are the businesses sustainable . What is the footprint those airlines have, in terms of are they critical from a strategic perspective. As you mentioned, the flags, its very likely a company like access towill have government secured credit lines, and less likely that a sun expressed tourism to turkey would have that same support. So it is going to be a clinical hot potato, in the sense of who may be supported and who is not, but the criteria is sustainability and relevance to the network. Matt is lufthansa going to become more of a German Airline in terms of ownership . Is australia going to have to own qantas . Will the u. S. End up owning delta . Mark no. I think governments dont want to nationalize unless they have to. Course, the nontechnical term of being a basket case, coming into government ownership. But at the other end of the crisis, the government will have andecide the correct size structure of assets they took control of. Being offeredp matt it looks like we lost the line from mark. Anna that is a shame. But we thank mark simpson, senior aviation netlist from goodbody stockbrokers. Om onereading a piece fr of our columnists, uncharted territory ahead perhaps. We are minutes away from the market open, eight minutes in fact. Coming up, with stimulus around the world, what else is needed to fix the Global Economy . We look at some of the answers in morning call. Thats next. This is bloomberg. Matt welcome back to blended markets. Just five minutes until the start of cash equities trading. Could see a little bit of a bounce in some indexes, but you will see volatility for sure. The European Central Bank Launched an emergency Bond Buying Program worth 750 billion euros. With monetary stimulus around the world, what else is needed . Here is Annmarie Hordern. Annmarie following the emergency ecb decision, we heard from citi saying that bottom line the ecb came through as expected, and now the onus is on fiscal policy. We think it is clear Central Banks use all their instruments. However, we think we need further fiscal easing to stabilize Financial Markets more durably. Alsoalso saying citi saying that these are substantial enough to tighten btp spreads. Anna we have seen tightening in those spreads already. We are seeing lower yields on greek debt. The frenchire, finance minister, saying the ecb help came late but is very welcome. Very welcome in athens, i am sure, as it is a break from the past. The ecb was previously unable to buy greek debt because of rules, and they have changed those rules, so a drop of over 160 basis points of yield on the greek 10year. The market open is next. Expect a bounce at the start of trade, but how much will that be . The opening is next. This is bloomberg. Anna minutes to go until cash equity trading. No limits. The ecb unveils a eurobond the buying plan to sue the markets as Christine Lagarde throws the full weight of the central bank behind the single currency. The greenback becomes the haven of choice as futures fluctuate in a volatile premarket session. Fears of a lockdown in london. Stimulus from every angle. Sword. Fiscal support the rba cuts rates ahead of a decision from the s p and the philippines central bank. Matt . Matt lets take a look. 20 seconds ago, we had futures dropped and then,. Gains of more than 1 . Now it is coming back down. The 820 billion dollars stimulus from the ecb not impressing markets that much. Neither is the 2 trillion of fiscal stimulus we have seen announced so far. We will see how markets get out of the gate. Anna, what do we see . Anna waiting to see the start of the trade. Futures suggesting we see a little bit of strength coming through, maybe these measures arent designed to support equity markets and equity prices. Everybody who has been following the stock market story will be pleased to see any sign of rebound on the back of the measures from such a banks. Measures from Central Banks. By 1. 5 . Sh ibex set up the dutch market down a touch of the ftse 100 as the ftse 100 down. The dollar showed a little bit of weakness. 1 . L to the upside by weakness in the pound now with a 114 handle. The euro down by 6 10 of 1 . Let me dwell on what we have not seeause today we do all stocks moving in the same direction. On days where the market moves are really big and substantial, we see everything move up where everything moves down. Today, we do not see that. We see a differentiation between sectors. Matt. Matt lets take a look at the movers. We do have a more mixed trade then we have been seeing over the last few sessions. We do see most stocks or more stocks winning than losing. 350 up. 180 are down. In terms of the winners, youve got a little bit of a balance here. Yours is organized differently. British American Tobacco up at top. If youre looking at it in terms of points, if you look at it in 11 s of actual moves, the pales in comparison to the big losses in their previously. If you look in terms of the losers, astrazeneca is taking the most points away from the indexes. Pharmaceuticals are dragging on the index the most. Sap is down. Royal dutch shell is also falling. These are the heaviest companies on the stoxx 600. Anna European Equity markets and as you see, fairly mixed as the European Central bank has launched a buyback program. It adds to global stimulus, trillions of dollars. Li. Ing us now, wei very good to see you this morning. By what measure should we judge the ecbs actions last night . Central bob centralbank policymaking. We have seen measures come through, a big asset buying program. We adjusted by how it closes . What is the right way to judge these measures . Wei madame lagarde said the spread is not something that she was targeting, but it is highly unusual to announce measures in the middle of the night. Basically, her version of whatever it takes. Can be moreicy effective when youre in conjunction of fiscal policy that all of the policies are so in our view for Market Sentiment to sustainably rebound, we have to see visibility and also coronavirus problem and evidence there is inflection points. We have yet to see on a global basis. If we have deployment of credible packages and also addressing market planning problems, then that will make things better. All eyes are on the spread of the virus. We have made progress on the latter, i. E. Policy, deployment. Economies, largest 4 of gdp. This is about Global Financial crisis response. That is necessary but not essential. Matt in terms of the health crisis, that is not really our bag. Turning those things around, is paramount. In terms of the plumbing issues which is what you specialize in, what are the biggest issues that you see still out there. Is there still a shortage of dollars . Are therel still liquidity issues that need to be addressed . The we are seeing a bid for dollar. We see that coming through in the front and. We see that in the appreciation of the dollar. Sterling, emergingmarket currency and precisely because of this in the near term beat for the dollar, we ares we are moderating our view on emerging markets that specifically dollar space we are moderating because we think the default risk may be underappreciated at this moment. Anna i wonder if you have giving given any thought to the significant way the governments are raising money, expanding their spending. Central banks are buying it. I ask this because i read a piece about maybe this is a test of modern can go out and spend, raison datre and expect the central bank to buy it all back. Raise debt and expect the central bank to buy it all back. Wei for currencies that have more fiscal spending policy space including fiscal and Monetary Policy space there is a greater room for maneuver. It becomes very impactful and effective when they work in conjunction. I about some of the Asset Allocation that would make emergingmarket debt equally. We have become a bit more positive on u. S. Equity markets, as well as chinese equity market, precisely because it is greater policy space that we see them having on the monetary front. While overall we keep our neutral equity in general, we are making selecting areas where there is greater room for maneuver. Matt we are going to get back to you. Wei li is with us. During these incredibly volatile markets. You can see we are now down across the board in terms of European Equity indexes. Coming up, will centralbank and Government Action be enough to study the Global Economy post coronavirus . We will continue with that story next. This is bloomberg. Anna welcome back to the european open. You can see European Equity markets, we are having a volatile morning. Now we see some strength coming through. The stoxx 600 up i. 4 up by. 4 . The dax up by. 6 . The ecb is launching 750 billion euro Bond Buying Program which is one of the things markets are reflecting on this morning. It is the latest attempt to bond markets. Joining us now is Annmarie Hordern. She has been covering the latest from the ecb. We will get to her and what is happening stateside. Were rhea, what is in this package . Maria, what is in this package . Take us into the detail as to what they are able to buy. Huge Market Reaction in the greek bond market, but it is not the headline figure to point out. It is really what is in the detail. The fact that the ecb is very much hinting that it could be very flexible when it comes to their own rules. What they buy, they could increase the deadline. Theyre also stepping into markets they havent before. Ecbgreek bond market, the had money tapped into that. We know there has been big restrictions. The greek crisis so those things, the flex ability and tapping into new areas to keep providing liquidity. What is interesting is the fact saidthis is a when she this is not my job to narrow bond yields, everyone else should play a role. It calls for extraordinary action. I would say in terms of the political thought we are seeing but from politicians in europe, you have the italian premier who was very unhappy about the language used by Christine Lagarde, now seeing the ecb has done a good job. It is interesting to see how politicians increase lee increasingly commenting on the ecb. Matt let me get over to annemarie covering other Central Banks. What have we heard from the fed . The fed came out another antivirus emergency measure to support money market mutual funds. This also goes alongside what we heard earlier from the fed about the commercial paper funding facility. The fed must be thinking back to one of the most drastic moments had mutual funds trade below a dollar. Anna that was a crunch point. Ask you about fiscal stimulus side of things. What does the second phase of u. S. Fiscal stimulus include . Last night was a busy one. Second phase was signed by donald trump including things like paid leave for families, especially as more children are staying home from school. Also, if you want to go get a test, money. We had lawmakers rush to work on phase three. That is going to be another packets that will include things like forbearance on all federal loans. On top of that, this is where they are going to weigh whether theyre going to give that money to the industry. It could be the u. S. Government taking on equitybased. We havent seen that since gm in 2008. Matt Annmarie Hordern in new york city. Maria tadeo joining us out of brussels. Wei li is still with us. I wonder has any of this stimulus, any of this fiscal way that youd the invest . Have you decided to make different decisions based on all this information . Wei fiscal policies can take a while to see through to the underlying data. In the next week, we are going to see a deterioration in terms of data coming through and the impact of coronavirus washes us through the data. We are making a few tweets as i mentioned in terms of our assets and locations. Not necessarily to fiscal policy being announced,ot necessarily to the markets so i talked about bringing up our convictions in u. S. Equities and chinese equities, but at the same time we are lowering our convictions so downgrading Japanese Equities to underweight , because it is very cyclical, as opposed to growth and adding to a technical recession. We are keeping our underweight in european assets. Hat is on pause upgrading are volatility strategy and we keep our overweighting quality exposures that can do well at this space in the cycle, because of the year because of their robust and more quality Balance Sheet and their resilience. These are the tweets we are making to reflect recent market allocation in terms of the clients we see them also becoming quite a bit more selective in terms of how they the market. R anna talking dislocation, what is happening to european corporate debt market . European corporate debt risk drops the most on ecb action. We have ecb spending more. Obviously, they buy corporate debt. Extending that to commercial paper. This is what we expect to see that debt comes down. Wei ecb is putting a flow into deteriorate inan european corporate debt. But also european Corporate Bonds in general, so as a part of the Asset Allocation, we are also upgrading our view in terms upgrading our view in peripheral markets. Ecb. Se of the support from if you think about the packets that came out last night being quite flexible and going into countries greece for example. This would provide support in the near and medium term. We dont look to european bond markets as a source of how much lower can it go when markets are volatile . Ecb measures should create some down. For euro to come matt we are definitely seeing that today, certainly in terms of greek. Wei li stays with us. Up next we are going to bring you the stocks on the move so far this morning, including Deutsche Lufthansa after analysts improve capacity cuts. Approve capacity cuts. This is bloomberg. Matt welcome back to Bloomberg Markets. We are 20 minutes into the session and now seeing big gains in European Equity indexes. It is difficult to believe that this literally five minutes ago we were looking at drops. Now we are seeing the cat kuroda up 3. 5 . Lets get over to Annmarie Hordern to look at the individual stock movers. I want to kick off telecom, and unloved sector. It is up today nearly 3 starting to gain. More and more people having to work from home. That is going to help a lot of these companies. Lufthansa up 5 today. 700 analysts say this is a right move. The drastic capacity cuts are the right move. They are seeing they can weather the storm. Hello fresh is up 9 . Morgan stanley has upgraded them a part of the stayathome social distancing, this new trend. They say the demand is going to come follow these online groceries. They hit a record 120 billion in Exchange Rate funds making up 7 of all equity trading. Joining us now or still with us, wei li. What is it that investors are looking for from ecs . In terms ofty providing liquidity at times of the market. Also getting in as well as getting out. Investors are looking at etfs for price discovery, if we think about last week before u. S. Opened and when u. S. Futures etfs,mit down, s p 500 the most traded for investors to the to transact ahead of other vehicles become available. Investors look to etfs for price discovery and liquidity, especially at times like this. Investors are come to us and ask in terms ofs flows investor sentiment. Down . How do you boil this it is so complicated when you Start Talking about the price discovery and you are looking at all of these complicated derivatives and mechanisms, like cross currency basis swaps. I think you have a masters in math from cambridge and twotime Gold Medalist at the math olympics. How do you boil this down to a layperson to try and communicate what is happening in these markets . You think about etfs, it haslly fiscal etfs, a basket of stocks or bonds in the unit itself, and then the prices of etfs is derived from the prices of the underlying components. Buttimes etfs can trade stale pricesecause of the underlying bonds. This is another example of how at times volatility etfs can year source of price which we have seen in the last couple of weeks. Anna are you talking to any clients about getting back into these markets . Or is it too early . Wei and might be too early to buy right now but we do think having the work done and start thinking about how that should look like when the time is right is really important. So we have been looking at where markets location have been greatest in talking to clients about those exposures when they are ready to deploy that they are saying on the sideline. Staying on the sideline. Really important to contextualize it. We see outflows and riskoff pattern, but theres no broader capitulation across exposures. Matt thank you so much for joining us. Wei li there. Anna welcome back to the european open. European equity markets have been in the red, no into the green, up by 1. 6 in the now into the green up by one point by 1. 6 percent. We are flat and s p futures. From a sector perspective, we have more sectors in green than in red. If it is still low, that would be a positive. Some of the defenses also do well. Higher. Also moving matt, what is happening in terms of the central banking conversation . Matt no change in the policy rate with the snb, which is already at. 75 basis points. 75 basis points. At 1. 05w with the euro against the dollar at. 97, obviously it is a safe haven currency. People tende this, to flood into it, although if they are looking for some liquidity to meet arjun calls to meet margin calls and they hold, it will need to get rid of that. The snb is stepping up its market interventions, although it is going to keep its policy rate steady at 75 basis points below zero. Lets go to first word news with leighann gerrans. Hashann the european launched an emergency Bond Buying Program worth 750 billion euros. President Christine Lagarde says extraordinary times require stored in reactions, adding there are no limits to the ecbs commitment to the euro. The central bank is also considering raising its selfimposed qe limit. Schools will. K. , close on friday. As Boris Johnson tightened the coronavirus outbreak continues. He could also impose controls on london and elsewhere. Tomorrow there will be no waterloo and city line or the white house stepped top economic adviser says the u. S. May take safe haven companies that want aid. Larry kudlow caution the idea was just one of many but added the 2008 bailout of General Motors had been a good deal for the federal government. Kudlow says the administration its 1. 3o act beyond trillion stimulus plan. For the First Time Since the Coronavirus Crisis started, hubei, the chinese province at the center of the outbreak has confirmed no new cases. Cases around the world topped 210,000. According to official data, around 85,000 people have not recovered, and 8700 have died. Carmakers including General Motors, ford, and Fiat Chrysler are temporarily shutting down there u. S. Bonds. When he california has remained open. A tesla Spokesman Says the company will reduce Staffing Levels at the facility by 75 . Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in this isn 120 countries, bloomberg. Dan garins london with me. Let me talk about leighann gerrans is in london with me. We will be speaking to the Spanish Government and get a voice, the spanish economy mr. The spanish economy minister. We will speak to her. Coming down narrowing, in response to what we have seen from the ecb, we have heard words of welcome from the italian Prime Minister, from the french finance minister. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. 30 minutes into the 37 minutes into the session, we have gains a little over 1 across the major indexes, although in paris we are looking at a 4 gain, paris and milan. In the indexes, we go to Annmarie Hordern. Annmarie i want to kick it off with telecom, more than 2 up more than 2. 5 . With more people working from home, data usage is going to be needed, and that will help the telecom. Grabbing 600, 700, 700 of grounding 600, their fleet. 6 ,a fresh up more than this is one of these trends with stayathome. These are online delivery services. More people are going to have to use them as they are being banned from going outside. Interesting to see those moves. Some of the retail space, turn to retail, coronavirus is exposing chinks in the armor of companies as the possibility of long closures pile on the pressure. Resales have fallen by as much as half since late january, and about 40 of its stores are closed. Website,as closed its trying to keep customers from stockpiling groceries. Opinion columnist joins a spirit how bad could this get for retailers . This could get really bad. I mean next day are talking about a hit to sales in a worstcase scenario, of one billion pounds. That is really bad. In the last week, sales are down, and it seems that online does help, but if you are not going out, why would you buy a new outfit. A very good point. I guess if youre staying in, all you need our pajamas or sweats or whatever. I wonder how much the currency changes have to do with this, theea, because when i see pound dropped to the lowest level since 1985, i instantly think about stuff i want to buy in england. I am sure there are other cases of that dollar shoppers must be excited right now if they are into foreign goods. Is that helping at all . Andrea that will help slightly, but people are not traveling. You get the big benefit where people can travel as after brexit. , theyr european retailers buy a lot of their products from asian suppliers. And they pay in dollars. So that is going to be another shock, that costs are going up at the same time as sales are going down. The oilbelief is that price is falling, so that would help input costs. Been. It has it is up again this morning, the oil price, but it has fallen so far. Let me ask you about ocado saying they are switching off their website. That raises questions, doesnt it . Even if youre on the cash in the online business, if you cannot scale up quickly enough for demand, you will not be able to make the most of that opportunity. Andrea thats right. The ocado business is about having those big stateoftheart warehouses. Yesterdayd morrisons that has lots of stores, so it can pick from its many stores. T talked about extending you still need the staff and the equipment, but you can actually pick it in a store. You do not need to go through a warehouse. Matt andrea, thank you so much for joining us. Andrea fell stead, or bloomberg. Pinion Andrea Felsted france is helping banks, including socgen and bnp paribas, respond to the growing Coronavirus Crisis by eliminating a key Capital Requirement that says the nation seeks to keep credit flowing to the economy. Banks will be able to access money they have built up in socalled countercyclical buffers. Those were meant to strengthen lenders during good times and be used in a downturn such as this. It will free up about 8 billion euros of capital for french banks, and follows an identical move made here in germany. Joining us now on the phone to talk about this is the senior credit analyst at hermes. What do you what does the credit picture look like to you now after those moves that we just talked about, and the ecb as well . Good morning to you. It is quite an unprecedented move, especially from the banks perspective. I talked about the oil price making every day new lows, but or he hospitality fact that there will be economic loss. It looks at the moment quite stretched, but that is a reason why we see the Central Banks, policymakers around the world, making everything which is available in order to keep the flow created to the real economy. Anna talking about the flow of credit, i am looking at a chart that is the cost of assuring that european hike rates have fallen significantly after with the ecb has done, but it certainly has not close the gap compared to where it was in february. Does this suggest we need more to be done, or we need to wait and see what difference the ecb Program Makes . The ecb Program Announced yesterday, it is quite important. Peak buyingng at from the ecb, on most indiscriminately between corporate and financial and sovereign. Think if the market will keep on diving, that rates it is reasonable to expect even more from the policymaker. Crucial. Are so if the banks stop, we have a potentially even bigger problem. We are now in recession across , and the name of the game is to make the recession deep and short as opposed to deep and very long. Matt does that mean when you see big drops, you see that as a buying opportunity . Filippo i think in some large franchises, i think it is a little bit oversold. One has to respect remover in the markets because people are afraid because they cannot really quantify the risk. Think with thei larger banks in the larger jurisdiction, it will be around. There is no question around it. Anna do you expect nonperforming loans to increase . It seems like an obvious thing that they will, but at the same time regulators are talking about being lenient, banks are being asked to be lenient on their borrowers. To what extent do you think we will see the npls rise in europe . Filippo one of the critical questions, the eurozone and the u. K. , i think worsening on the cost of risk, underperforming exposure will increase. Because distribution, so far we have seen some packages, and very focused on specific factors. I do not have to remind you that the european economy is very dependent on the sme factor, and the sme factor is the more franchised because they do not have the scale or the large business. They typically are domestic. And they are not able to far it has been Wishful Thinking that some more coordinating activity, there could be power to sustain smes across europe. Especially in italy and germany and france. It is a country where manufacturing versus the others. Matt filippo, thanks so much for joining us. Filippo alloatti is talking to us about Market Development after so much stimulus injected into the system. Up next, we are going to talk about lingering liquidity concerns, and a possible lockdown in london, with the crunch and currency markets. More on that next. This is bloomberg. Matt welcome back to the european open. We are about 50 minutes into the trading day, and we are seeing arrows pointing up, indeed in france and italy, we see more than 3 gains. And u. S. Futures are getting closer and closer to the zero mark right now, so they were down and are now climbing back up toward gains. In hind partners cio Guggenheim Partners cio scott myers expect more than 5. 5 trillion of quantitative easing to fight the globe the Coronavirus Impact on the Global Economy. This is going to be a longterm structural change. When you look at the volume of the u. S. Treasury securities that are being issued, approximately 1. 2 trillion a year, and then you look at domestic savings, last year, about 1. 2 trillion, corporate savings at 500 million, and then state and local deficits of 300 million to 400 million, the savings equation was imbalanced. But now when we go to lets say a trillion dollar program, you borrowing. Rillion in the corporate savings is disappearing. The personal savings is not going to get any better because people are going to just save to keep their houses and so forth. And i think state and local governments are going to have to continue to spend or increase spending. Since that does not balance we have about 1 trillion or so, maybe a little more, shortfall in the available credit in the financial system, it is going to force the central bank to have to participate and provide purchases of these securities. So our view is that ultimately this is going to be qe five, and that we would expect about 4. 5 trillion in quantitative easing. But in the near term, to go to the private sector, this is crowding everybody out, so, you know, the availability of credit to run business is essentially drying up right now, and it is becoming a crisis. Scott,we going to need, new stretching, say, of the fed to get the credit flowing again . You say qe, but the government doesnt need more money to buy treasuries per se, or doesnt need a backstop for treasuries. As you say, it is private credit. We have had bernanke and yellen talking about backstopping and corporate debt, kind of what mario draghi and the ecb does. Do you see that here . Scott i think they will have to revisit programs similar to tarp. The tarp program was about 700 billion, as i recall, and then there was the troubled asset Lending Facility provided by the fed. If you got protection from tarp on first loss, i think, joe, we should probably expect Something Like that. I think it is absolutely necessary. I have been saying that i think it would take about a 2 trillion tarp program, and then talf program that would be as large as necessary. Guggenheims scott minerd there. Central bank has stepped in with emergency measures to count a stretch in Global Funding markets, yet strains reemerged yesterday. Details, dani burger. Dani there definitely was a change in sentiment yesterday, announcements from the fed and the u. S. Treasury, which tends to help the markets, easing the funding stretch, but it came back late yesterday. The london lockdown really spurring feelers fears of illiquidity. The iowa spread is still its widest since 2009. This is a key indicator of stress that tells us how expensive it is for banks to borrow. The fact that the spread is so wide really shows that banks have moved into risk aversion mode, less likely to lend out, and just dollar offshore funding has gotten so expensive. One of the secondary reasons that this is occurring is that the borrowing binge happening from governments around the over 1he u. S. , trillion, and that is a lot of bonds to offer. That brings us to the other strange market dislocation that has occurred because of this. You see the u. S. 10year yield skyrocket yesterday, but u. S. Treasury yield fell negative. When we look at the onemonth, threemonth bill, those are both negative. At one point sixmonth yield turned negative. The first time that has happened. So you see investors really searching for any safe haven. These are seen as more easy to trade than their counterparts are it so investors are rushing here, and the fact that these are negative shows that investors do not care what price they will pay with cash. Matt thank you so much for that, dani burger with a look at your daily dysfunction. The New York Stock Exchange is going to temporarily shut its Trading Floor starting from monday, and move to fully electronic trading after an employee and a person who worked on the floor both tested positive for coronavirus lets get to Annmarie Hordern for some details on this. Really what is an historical decision. Annmarie it is historical. We have not seen that since 2012, and then of course and stay devastating september 11, 9 11 attacks. This is really historic. They are shutting the doors, shutting the Trading Floor, as well in san francisco. We do not know when it is going to open. But they are taking this as a precautionary measure. It does not mean that they do not want to open it again. It doesnt mean that they do not think the market should stay open. There are so many calls, the latest from bill ackman, saying the market should be shut down. Steven mnuchin says we hear you, but no, we think people should have access to their money. The market should stay open, but right now it is electronic. Question is, what if this goes well . Could we see the end of the pit, matt . Anna open outcry happening in many places. I wonder whether this will be another reason that it finds its way on the way out. Keeping equity markets their heads above water. Up by 1. 3 on the stoxx 600. The dow and s p futures are flat. Nasdaq futures just positive. A lot of that this morning. A slightly calmer picture this morning. Then we have known this week. It may come as a bit of a relief. That is it for european open on bloomberg tv. Surveillance is up next. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] no limit. The bond buying plan to soothe the markets. Christine lagarde thursday for weight of the central bank behind the euro. And the number of Coronavirus Infections leptons grounds most of its fleet,