Feds resolve. Markets like to see the Central Banks step in. They want the fed to cut. I dont the fed will cut. I dont think the fed should cut. On terry halseys prepared act Monetary Policy is prepared act, but will be effective . The effectiveness would be tremendous. Interest rates are not vaccines. The fed is fairly impotent in this environment. On the other hand if they do nothing, it can make the situation worse. Jonathan joined me the table, Subadra Rajappa and Mike Schumacher and victoria fernandez. Victoria, in this conversation, we should start with efficacy of the central bank move and the willingness of central bankers to step in. Lets start with the latter. We are they . We are not seeing them willing to do anything at this point in time. The South Koreans did not lower their rates when people expected they might. You have germany coming out and saying they have enough stimulus on the table right now. They are not willing to lower rates at this point in time. I dont think
The market is doing what is it always does. The market is testing the feds resolve. Markets like to see the Central Banks step in. The case is strong for them to step in. They want the fed to cut. I dont the fed will cut. They should be cutting. I dont think the fed should cut. Monetary policy is prepared to act, but will it be effective . The effectiveness would be tremendous. Interest rates are not vaccines. We would see a little bit of turnaround in the markets. The fed is fairly impotent in this environment. On the other hand, if they do nothing, it could make the situation worse. Jonathan joining me around the table here in new york, Subadra Rajappa of societe generale, Mike Schumacher of wells fargo, and, in houston, crossmarks victoria fernandez. Victoria, i want to begin with you. We should start with efficacy of the central bank move and the willingness of central bankers to step in. Lets start with the latter. Where are they . Victoria we are not seeing them willing to do any
Based on the risk off the further markets. It is time now for global exchange. We will bring you todays market moving news from all around the world. Our bloomberg voices are on the ground with this mornings top stories. Where to begin in asia, the coronavirus continues to spread in china, with the number of confirmed cases climbing above 75,000. Engle. Me is Stephen Stephen for the second time in about a week, china has rejigged its methodology for how to classify confirmed cases of the coronavirus in china, that has led to this now becoming a bit of a global crisis. We are seeing more speculation that the data we are getting is we necessarily reliable, or are seeing a significant dropoff in the number of confirmed cases. In hubei province, just 349 new cases reported overnight. Is that because of the new methodology, or do they have the containment efforts under control . That is raising a lot of confusion and questions. Also, it adds to suspicion that officials in china may be prema
Ken i think treasuries have run as far as they are going to run at this point. If we see improvement in growth, we are looking for improvement in growth in europe, and the message will be that the market will adjust. Are we going to go dramatically higher . No. But i think we are at the low end. Jonathan it is like chinese water torture, drip, drip, drip. Ok data from the u. S. Chinese data doing ok. That chinese data to close out the week was really terrific compared to what we had 12 months ago. Here we are, yields are up by a basis point. Does that make sense . Ken i would argue it should have moved more, but there is this tremendous damper on the system that is the fed. That is what you are seeing. Greg their version of qe is still supporting with 20 billion euros on one end. It seems like the market consensus is the fed is out for 2020. That leaves you with the 10year at 1. 80. Breakeven is 1. 75. I dont see anything breaking us out of here. Jonathan we have to talk about the trea
That is putting the fed in a bit of a bind. It creates the risk of a policy mistake. The fed will not make a policy mistake if everything is fine. If the data does not get worse. Which people are forecasting. You could have a second half where the economy is bouncing back. The second half we should see that fade. The fed is actually going to surprise to the downside on the Balance Sheet. They should not continue that Balance Sheet expansion. Is the market going to see that as the end of qe, quantitative tightening . The fed playbook is to cut big and fast and signal qe if there is weakness. Thats a big risk for the market. Jonathan joining me around the table is greg staples, lisa hornby, and ken monahan. Lets talk about it, ken. Your thoughts on that, is it or isnt it qe . Ken i know mr. Kashkari is trying to throw cold water on the idea that it is not, but even being in minneapolis, he doesnt have enough water to throw on it to convince the market it is not. I think the market call i