Treasuries,on the we will be speaking about that in a moment with our guest from pimco. Still at 1. 35. We are off the alltime low but this is still elevated. And futures, slightly down, 1. 4 . In the 1650 an ounce range. Volatility in europe also elevated. Trading stoxx be 50 2381, pushing up to fresh session highs. 06 . Oxx 600 is down by it is not exactly a turnaround that it is a stabilization. In europe, exactly the opposite. We are trading 50 on the german tenyear, another two basis points on the downside. The bones keep getting bid Bashar Alassad bund the bid. S keep getting vonnie President Trump is seeking supplemental funding to tackle the coronavirus and he spoke earlier about chinas role in the outbreak. Pres. Trump i have spoken to president xi jinping and they are working very hard. If you know anything about him, i think they will be in pretty good shape. They have had a rough patch in the think right now, it looks like they are getting it under control more and more. Toni here with the latest about the virus and how it is spreading, Number Company and this to come up took a bit of a turn for the worse when it spread outside china and when there were no direct link to china. Why is it particularly worrisome what we are seeing in italy . Max it is processed the wayside, there was no direct link. It is a reminder that the virus can spread quietly. With people who are asymptomatic or do not have visible symptoms. When you dont have really broad testing, you are probably going to miss some of those cases. It highlights the possibility that the disease is spreading in countries like italy possibly even the u. S. , without us necessarily being aware. That will make it harder to control over the long run because in general, because of the characteristics of the disease. Guy you sometimes get double peaks in terms of these epidemics. Europe is not capable of delivering the same quarantine that we have seen in china. Do we have any idea if we were to start seeing it is, what the trajectory would look like . Max as you mentioned, there is no ability to quarantine a place the size of wuhan, china, the country is the equivalent, but i think you will start to see travel restrictions, more school closures, broader Public Health measures you can take to minimize the speed of spread. But if we see countries beyond italy start to see this aim outbreaks without a clear best of list chain of transmission, you will be seeing an acceleration even as cases in china, according to the official numbers, are slowing down a bit. Vonnie there is a supposition out there that we will have peaked by april in part because of the better weather. Is that backed by Scientific Evidence at all . Certain extent yes, viruses dont do well when it gets warmer and humid. People are not inside quite as much, they are not sneezing and coughing, you dont have the virus is with things like the flu that sometimes can be confused with the coronavirus and potentially confuse health care systems. But if you have these other areas of spread and now we have iran, another area that is worth some because it does not have as developed of a Public Health infrastructure, as developed in its ability to control people entering and exiting the country, if you dont get it under control, the impact will not be felt quite as much. It will help, but it will not solve the problem. Vonnie thank you, max neeson opinion. Guy for more on the impact and what it is doing to global markets, we are joined by nick maroutsos, yanis hendersons founderead of bonds and. Nice to see you. Yesterday was a big day. Today, little signs of stabilization. Nevertheless, tactically, what are you doing with this . Nick it is our view that things have not really changed. The Economic Impact of the virus is spreading far beyond china. We are seeing evidence of supply Chain Disruption via pmis, servicing, manufacturing, profit warnings. A lot of people are starting to realize that the flight to quality is important. People are looking for highquality assets to invest in. They are worried about the spread of the virus and also about the Economic Impact and potentially the fed looking to cut Interest Rates. There are a lot of factors at play that extend far beyond the virus. Ultimately, our view is that the recovery, while it may not be theshaped in terms of how while it may not be vshapes, it will be more ushapes. There will be continues volatility in the market because we dont have a full understanding of how this is all going to play out. Guy 1. 35 on the u. S. Tenyear. What is the value on the u. S. Tenyear . That is a good question. We have been calling for Interest Rates particularly the 10 year, to be running under 1 of next 69 months. That view has not changed as far as money goes, it comes down to what is value and what are people looking for. They are looking for conservative return, a flight to quality. They are worried about the impact of the coronavirus. They are worried about how that is going to play out from an economic standpoint. I think the fed will likely answer the call and cut Interest Rates in the nottoodistant future. Be on the lookout for that. If the fed is looking to accommodate again, like other Central Banks globally, accommodation is the key word at play here. That means the path of Interest Rates will move lower and a flight to quality will continue. That means highquality assets like treasuries, bunds. It doesnt mean government assets like btps or Spanish Government bonds, we want the highest quality, most liquid assets available. Vonnie u. S. Equities stemmed the bleeding today. We are actually looking at a positive move for u. S. Equities. Yet we still are at 1. 35 on the 10 year. That is a 20 basis point drop since last thursday. Why is the 10 year not selling off a little bit now that equities are being bought . Nick that is a good question. I think the bond market tends to be far more pessimistic. I think they are also calling for the fed to cut Interest Rates. While that is increasingly likely, the rate cuts are designed to stimulate demand, not address supply shortages. Aside from psychological impact it is likely that any sort of fed cuts will have unlimited Economic Impact. But it does not mean the path of Interest Rates will not be lower. The keyword of 2020 is going to be accommodation. Central banks have this put in place. The have a backstop for the markets. They want to keep equity markets elevated, and they will do whatever it takes, whether it is additional rounds of qe through the fed, unconventional Monetary Policy through other Central Banks like the ecb or the bank of england. Again, that put is having a limited effect as we continue. The fed does not really want to cut Interest Rates, but they are going to do what the market do. S them to that being said, the path of Interest Rates is likely to move lower in the foreseeable future. Vonnie the fed funds rate is certainly at 1. 58 or thereabouts right now. What is that baking in . Is it just a onetime black swan event of the coronavirus or is it saying something more . Nick i think the coronavirus was a catalyst for equity markets selling off and on the markets rallying. It was not too long ago that the 10 year was trading at 50 basis points higher. We have moved significantly lower. The coronavirus i think was a catalyst. The profit warnings, you through in uncertainty around the elections, with the momentum Bernie Sanders is getting, i think there is a lot of worry in the markets. I dont want to be pessimistic, is our review for 2020 is that all asset, classes will do well equity markets should perform, not quite to the degree they did in 2019. And bond markets will outperform. Central banks are looking to be accommodated for the foreseeable future. No inflation out there. Credit markets are still rich, but they still offer some good carry. I think the Central Banks will be there to attack the market. As for the fed, i dont think they cut once. I dont think that does anything. It is immaterial. If the fed will cut Interest Rates, they will likely cut more than once. Whether or not march is in play, that remains to be seen, but certainly april and june are in play for fed cuts for 2020. Guy nick, stay with us. You have said some really interesting things. We will pick up on them in a few minutes time. Nick maroutsos, Dennis Anderson cohead Janice Anderson cohead of bonds. Vonnie lets get the first word news. Viviana we begin with President Trump. He says a trade deal with india could happen at the end of the year. In new delhi, the president said he is urging Prime Minister modi to lower tariffs on american products. He said the two leaders understand each other on the issue. Now to the former egyptian ruler, hosni mubarak. He died, ruling 30 years before being forced out of office by the arab spring uprising in 2011. He went on trial for the killing of more than 850 protesters by his security forces. In the end, mr. Mubarak was only found guilty of fraud. He was 91. Now two former hollywood mogul harvey weinstein. He woke up in custody today in new york city. Until he is sentenced, he will be held for raping one woman and sexually assaulting another. His lawyers plan to appeal. We finish with Michael Bloomberg. Pay is looking for a doover in tonights democratic president ial debate. In his first debate last week, the former mayor of new york was widely panned. He is making it clear that he will turn his focus tonight to the newly minted frontrunner, Bernie Sanders. Bloomberg is the founder and majority owner of bloomberg lp, the Parent Company of bloomberg news. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am viviana hurtado. This is bloomberg. Guy. Indeed. Nk you very much lots more ahead on bloomberg markets, in the next hour, we will be talking about the impact that the coronavirus is having on this ceos business, very exposed to china. Ceosll be talking to the of both companies at 11 40 eastern, that is coming up. This is bloomberg. Vonnie live from new york, i am vonnie quinn. Guy and from london, i am guy johnson. This is bloomberg markets. Theail doolittle, what are markets looking like . Abigail we are not seeing the rally that the bulls may have hoped for. In the u. S. , the nasdaq is up. 02 . Yesterday, the dow and s p 500 had the worst day in two years. The dow is down. 75 , a bearish reversal. In europe, bearish on the stoxx 600. In the 10 year yield down is down about three basis points. Looking at the volatility through an overnight chart of the emini futures, and you, can see doing the Asian Session there was a nice rebound for stocks. Negative around the open, higher, then lower. Now they are about flat. The s p 500 cash is flat well. There is reason to think that the s p 500 has more work to the downside. The sellers will continue to take control. By buyers disappearing yesterday. On the bloomberg terminal, here is an interesting chart on the dow transport on bottom, below the 50 Day Moving Average, jump a below the 200 Day Moving Average yesterday and still below. The s p 500 bearish lee gapping average. 50 day typically when the dow transport goes below the 200 Day Moving Average, it needs more action from the s p 500. Speaking of bearish, from across an asset class check, take a look at crude oil, down 15 this year. Incredible. Down once again as investors want out of risk assets on fears that the impact of the coronavirus tragedy could be greater on the Global Economy than had been anticipated just a week or two ago. Vonnie abigail doolittle, thank you. We are back with nick maroutsos, global headhead of global bonds at Janus Henderson. We are in range of the alltime low of 1. 3 180. What looks attractive . Are you selling out of the u. S. Em bonds question mark anything that looks more attractive than the u. S. Right now . Nick from a macro perspective, there is plenty that looks attractive. We are of the mindset that credit is going to continue to outperform. We are in an environment where Central Banks will remain accommodative and that will bode well for risk assets as well as owns. But in these types of environments where you have heightened volatility, our view is that you need to keep it simple. You need to own highquality Interest Rates, u. S. Interest rates, german Interest Rates. Dollar. Ollar own the highquality assets. In a review, the best offense is a good defense particularly in times of high volatility. Find credit that offers attractive yield. Look globally, find a monopolistictype entities that are systematic to particular countries who offer attractive yields and good cash flows. Simple. Vonnie still a bit more context, that index spiked 86. 92 now. Is it a bit more sophisticated for those who want to try to make out what this particular phase of bond market activity nick there is plenty you can do. What we look to when managing our portfolios, at the end of the day, we are bond fund managers. We are looking to protect capital and income for the investor. When we see storm clouds coming, it doesnt make sense to liquidate the credits we own. We look to move to Higher Quality assets, whether that means looking to hedge out some of the credit protection we have by using credit default swaps. Shortterm trades that can mitigate volatility in the portfolio to protect the income for the investor over the short term. Coronavirusthis story not potentially going to cause problems in the bbb space . There are a lot of companies petering. I wonder whether or not a global slowdown has the potential to push them over the edge . Is that if year right now . Nick is not now . Is that a fear right nick the coronavirus was a catalyst for equities moving lower, credit spreads widening and bonds rallying. But if you look at credit spreads particularly Investment Grade, they have not moved significantly wider. If you look at the credit default index, which is the Investment Grade fiveyear index, it was trading around 44 basis points. It only moved tofour basis points wider over the course of yesterday it only moved 24 basis points wider yesterday. It tells us that there is still a bid for credit. When you are looking at the risk i bbbs moving down to bbs dont think that will be a major issue particularly now, because the economy globally is still ok. The fed will remain accommodative. They are likely to cut Interest Rates. Our biggest fear is that, essentially what they are doing is bringing knives to a gunfight, in the sense that they think cutting Interest Rates will be the Silver Bullet for the economy rebounding and getting us out of this shortterm squeeze we are seeing. What we have to do is wait it out. And thenquality assets look for highquality opportunities. Because again, this coronavirus, while it is important to watch, and the spreading has become far greater than what many of us thought, the likelihood of having pronounced effects over the course of the next year is a little bit too much of a high bar to set. So again, we think you will see recovery. Ushaped we will get back to looking at the economy in november, the election. Guy where do you think risk assets will take fed cuts well . I understand why the markets took the three midcycle adjustment well, that was completely understandable and appeared logical, but you cannot do that twice in one cycle. And you cant respond in the cycle. Y twice in one isnt there a danger that risk assets look at what the fed is doing and go, this time is a little different, maybe we are starting to see the cycle actually roll over at this time . Nick that is a good point. I will liken that to qe. Every round of kiwi we have seen has had less and less of an had a bigqe one impact,qe to had a big anything after that is having less of an impact of the market. Is no different from a greenspan fed or a bernanke fed. They are cut from the same cloth. The put is in place. It is in their best interest to keep equity markets elevated. Despite it not being there ultimate mandate, i think the fed is a little scared of the fact that the stock market is so addicted to what the fed does. Keeping Interest Rates low will encourage risktaking. In our view, what youre seeing is the fed saying, we are going to keep equity markets elevated, and we will keep trying to push the market higher, regardless of what is happening in the economy. Vonnie thank you for your time today, we appreciate it. That was nick maroutsos, Janus Henderson cohead of global bonds. This is bloomberg. G. Guy from london, i am guy johnson. Vonnie and from new york, i am vonnie quinn. This is bloomberg markets. Iphone sales in china plummeted 28 last month. Ubs warning, that this month numbers are likely to be far worse the cause of the coronavirus outbreak. The have now reopened 29 of 42 stores that have been closed in Mainland China due to the virus. Amazon taking aim at the urban growth stream mar