Joe nowhere to hide. Really ugly back to back days to start the week. Scarlet there are plenty of places to hide. Joe 10 year treasury, swiss franc. Scarlet japanese yen. We can go on. Two charts to put this risk asset selloff in perspective. This is very simple. On bottom, bonds of top the one asset class doing well over this time period. On bottom, we have crude, copper. In white, the s p 500 down 6 . Composite in blue, down just 0. 75 may be a benchmark here. 500reason to think the s p will join the dow transports. The 200 Day Moving Average in yellow. On friday, you can see the dow transports going right through the 50 day average. When the dow transports in the past has gone below that 200 Day Moving Average, there has not been an exception. This chart would suggest more term,at least in the near for the s p 500. Worstooking at one of the performing sectors in the s p 500. 4 , theals down about worst slide since 2011. That is as fears of the coronavirus continue. One of the largest tracking industrials, state streets xl i fund, for a record outflow on monday. Some of these Biggest Holdings include boeing and honeywell international, these companies that are likely to take the biggest hit from slowing demand. As fears continue to mount, it looks like industrials may bear the brunt. Gold is normally a place where investors go for a safe haven investment. Today, even though equities are lower, gold prices are lower. Investors are backing away from that safe haven. At head of Market Analysis fc stone said gold has been ignoring overbought signals since the middle of last week and had to run out of steam eventually. Still, traders continue to load up on bets that the fed will cut rates. Gold is still up for the past couple of years. That would make gold more attractive since it does not draw interest. Romaine still with us around the desk, lumber across asset reporter luke kawa, and dan suzuki. Fedou have any hope of the that they could do something that could change Market Sentiment . Dan when you look at what is priced in the market, there is sort of 2. 5 cuts. I think that is the issue, the market is already pricing in good news from the fed. Historically, when the fed starts cutting rates, it has usually been too late to the game. By the way, there are only six cuts left that they have for whatever the next crisis is. Joe one thing is that the market is screaming for a rate cut. Also that a rate cut would not do anything in this type of environment. Is there something that they feel could be constructive from the Federal Reserve . I think they are putting on the same playbook, which is that. Hey will be preemptive rhetoricric fed since then is, we want to be proactive. The only real place where i think the fed could help is sending another message to say, you can have two proactive rate cutting cycles without a recession. Still very bullish on the u. S. Economy. Then just anything that gives us a get a little extra juice. That is really the only avenue that would happen quickly enough. Scarlet some breaking news. Disney. O at of iger will resume the role executive chairman through 2021. Bob iger kind of hand things er to bob disneyhe chairman of parks. Has been ceo of disney parks for two years now. Romaine at salesforce, marc benioff essentially taking full control. He was the coceo. The benioff has been named sole ceo. The company also coming out with results, beating fourthquarter numbers. Also raising their full year fiscal 2021 revenue guidance. Shares were down when the news of the ceo. For once those numbers came in, they moved a little bit back flat. Scarlet what does it say that i always thought marc benioff was the sole ceo to begin with . Joe uber saying that the head , jasonuber eats business droege, will depart. Brutal, a major money loser. Uber until recently had been bouncing back a little bit. News to digestof especially in the backdrop of deep market losses. Lets bring back luke kawa and dan suzuki. I get the feeling Like Companies are trying to slip out a lot of news right now on a day when people are probably not going to be paying much attention to the headlines. Timeese things take a long to plan out. Maybe they did try to slip some of these and a day early or so. I would not read too much in. There is certainly a lot of ceo turnover over the past year or so. The interesting thing will be when things actually do go bad for the economy and you have all this new leadership. How will you manage this when you are one year into her seat . Companies, disney and salesforce, they have managed to hold up through a lot of economic bumps here and there. Is there a sense that people storyefocus on the growth that seemed to be in place to work three weeks ago . Still have Companies Like salesforce that can do it. Like disneylwarts not joe weisenthal, the other stalwarts. Luke a lot of investors i have talked to expect this to pass quickly. Markets telling you that the coronavirus is not going to just disappear. Not only do we have that inversion telling you that the danger is here and now. But also what has been different is looking at the degree of backwardation in the second and third contract. What this is telling you is that there is a lot of event risk and worries about the markets ability to deal with coronavirus data. Scarlet how much lower is the s p going to go before we find a bottom . Your best call. Dan that is probably a better call for the traders and the quads, the positioning. It was all pretty elevated, so if people do want to derisk, there is a lot more to go. Scarlet dan suzuki, deputy cio lukeinci advisors, and kawa, thank you both. Whatd you miss . Is up next where we will look at supply chains in the wake of the coronavirus outbreak. This is bloomberg. Romaine live from bloomberg World Headquarters in new york, here is a snapshot. A four year a fourday rout. Global supply chains. Low toocks plunging to a records. Americansg that should prepare for significant disruptions of their daily life. Disney naming a new ceo as bob iger focuses on the companys creative endeavors. U. S. Centers for Disease Control and prevention warning americans to prefer to prepare for a coronavirus outbreak at home. Shery ahn joins us with the latest. The story of the last several days is that people are not just talking about containment. Shery yet President Trump and his top officials keep insisting that it has been contained. Yieldve seen the 10 year fall to record lows. There are concerns that this will have a major impact on the u. S. Economy. In the meantime, larry kudlow coming out this afternoon and saying that this has largely been contained. The next stepis here . Is there any sort of coordinated effort . Are people working with beijing and the italians . China we have seen the who team working diligently. But they are saying, outside of china, the world is not ready. Saying last week that there was not enough funding out of the money they were asking for globally. The cdc warning that if this comes into the u. S. , they are not prepared. We are talking about only some states and regions having the right test kits. This means that because this has such mild symptoms, it could be silently spreading across the United States. Joe we have been focusing on italy, iran, south korea. What about china and the original countries where we saw it . Is the news better there in terms of the trajectory . Shery we have seen the numbers within china start to slow down. That was really hard to gauge the last two weeks because they keep changing the counting methodology. But the numbers have been going epicenter,ast in the hubei province. Iran reporting the highest number of fatalities outside of china. South korea reporting the highest number of confirmed cases outside of china. Four what about japan . We even heard the head of the International Olympic committee talking about the potential that you could even cancel the olympics later this summer. Shery so far, officials have maintained that the olympics are safe. Prime minister abe said health and safety are their top priority. Japan of course has the unfortunate case of having the process diamond docked in yokohama, the cruise ship that saw hundreds of confirmed cases. Andre seeing these random sporadic cases. Ship is to be the largest custer largest cluster outside china. Now it seems to be south korea. Us, srs seniorg Vice President and medical director, dr. Robert quickly. The cdc earlier today. They briefed reporters on a phone call and talked about how social distancing, maybe americans might have to get familiar with it. Can you talk about what that means and whether that is effective . Dr. Quigley i think that the warning coming out from the cdc is emphasizing universal precautions, but that includes and is not limited to keeping 12 meters away from other people. Coronavirus is spread through aerosol droplets, through a cough, also could be spread through putting ones hands and once beth after having tech in ones mouth after touching the surface. If indeed pandemic is declared america is going to have to respond accordingly, if we are all now practicing universal precautions as advised by the cdc, it buys our infrastructure sometime to make sure we are scalable. You how concerned are simply about the capacity of the u. S. Medical have the Structure Medical infrastructure . Suddenly people wanted to go to the doctor or hospital every time they have a fever or cold. How concerned are you about that and how does the medical Community Think about addressing that risk . Community the medical has been on standby for some time. Mostca, we have one of the if not the most sophisticated and robust medical infrastructure in the world. It is definitely scalable. 80 of mind that over the people who contract the symptoms athave any all. If american symptoms if americans are taking some ownership on limiting the transmit of this disease, we might not have to text infrastructure like you refer to. Romaine whether we have to segment people off either voluntarily or by nonvoluntary measures, do you think a country like ours, where we sort of human liberty, if it is dr. Quigley if it is mandated, we might not have any choice. My experience with the human species, when they realize there somebody, a hurting disease. A, the fatality rate is still quite low, in the 24 percent range. I think they will do what is appropriate to mitigate the spread. I do have confidence in the american population. In ahat they will respond responsible fashion. Joe our thanks to dr. Robert quigley, senior Vice President and medical doctor at sos. This is bloomberg. A corporate shakeup at disney. Naming bob chapek the new ceo. Lets bring in laura martin, managing director and senior entertainment analyst at need him at needham. Thisuch of a surprise is to you and how much does the particular choice say about disneys priorities . It is a huge surprise. Factuddenness of it, the that they dont have a new parks head, it makes it seem really sudden. Ggsl street wanted tom sca about five years ago. Today, i think they were expecting meyer to get the top job. The head of parks getting it is a big surprise, i think. Romaine bob chapek ran parks but before that he had experience running the Consumer Products division and the buena vista arm. He has been there a a while. Is this the kind of talent they need at the top or should they have looked outside the company . Laura i would say, another reason is a big surprise, the reason they did not give the job ags for is because he did not have creative experience. Guy who camee fx over from fox might get this job because he is a creative person. The stock noting that is continuing to slide after losses today. Regardless of the choice, and the oddness that it did not come from the creative side, what does the new ceo need to get done at disney . Is he has first thing to keep everyone in place to make money. The star warss, guys. He has to keep kevin mayer in place, the head additional guy. I would have said that the parks business is physical assets and where disney came from, but is not where disney is going. So this guy has to get the buyin to stay and continue to add value. Romaine what about the spending aspect . The pace of spending not only for disney but for a lot of competitors remains high. Do you think they need to ratchet it down at all . Laura i dont think they need to ratchet it down. I think they are a marketing juggernaut and they are investing in marketing. Withwill bundle it in Everything Else they do. The same kind of brand quality of consumer first. I do not expect to see them cut pricing at all. Romaine we appreciate you taking the time for us. That is laura martin, senior entertainment analyst. This is bloomberg. With i am a Mark Crumpton bloombergs first word news. The centers for Disease Control and prevention is telling americans to prepare for their daily lives to be disrupted by the coronavirus. The cdc says that is likely to include School Closings and business meetings. Signed President Trump to minimize fears about the chance of the coronavirus spreading throughout the United States, Administration Officials are warning members of congress about the dangers of a society. Alex lazar testified this morning before the Senate Appropriations committee. Cases of thee 14 china coronavirus in the United States relating to travel to china or close contact with those travelers. 40 cases among american passengers repatriated from the diamond princess. While the risk to the American Public remains low, there is now Community Transmission and a number of countries, including outside of asia, which is deeply concerning. Azar said thetary Trump Administration is taking historically aggressive containment measures but that the u. S. Is short on supplies like masks and venerate and ventilators. The president today made the unusual suggestion that two liberal justices should not take part in those or any other cases involving him and his administration. Critical of Justice Ruth Bader ginsburg and Sonia Sotomayor came during a News Conference in india. Justices decide for themselves whether to step aside from cases and it is highly unlikely that either justice would sit out cases involving President Trump. Chiefropean unions brexit negotiator is handing Boris Johnson an ultimatum. Michel barnier is warning that there will be no trade deal unless the u. K. Agrees to the blocs demands on fishing. Global news 24 hours a day on air and on quicktake by powered by more than 2700 journalists and analysts in over 120 countries. Im Mark Crumpton. This is bloomberg. Romaine first it was a trade war, now it is the coronavirus that maybe solidifying opinions. Lets bring in Bloomberg Opinion columnist brooke sutherland. The past used, for three decades or so, we created where wely chain, could get things from china or some other country relatively quickly, cheaply. A lot of people seem to be questioning whether that is still wise. Brooke you have to think about why we did that in the first place. Efficiency and cost savings. We are now finding out that it is not always the most productive. We should not put all of the supply chain on china, which i think its very valid. The shifts into vietnam, there were some grumblings in the trump ministration about this flow of goods going to vietnam. Of them claim they are localized, but the fact that you did see the tariffs influencing their costs as much as it did suggests that the circle is not fully closed. Joe you hear about companies having to diversify supply chains. But does the what does it really exist . It does not have as much experience building these highly technical things, like a foxconn plant or Something Like that. Diversification much easier said than done . Brooke i think that is true. What that will mean for companies is increased costs. Industrial software and additive manufacturing. If you think about industrial software, the big selling point is predictive maintenance. You know when your machine is going to break down. You can plan ahead. Additive manufacturing, there is a common misconception it is cheap. Benefitsorking capital are huge. Romaine companies you cover, have you heard from executives talking about making a Material Change to that supply chain structure, or is it, lets just wait and see how this plays out . Ofoke you did see a number manufacturers talk about diversifying away from china in the wake of the trade war. Youre spending 40 million on expedited freight those are real numbers, even for a number like caterpillar. Even for a company like caterpillar. Joe thank you very much. U. S. Stocks tumbling to an almost 12 week low as the virus rattles supply chain concerns. Mellonring in bny Investment Management chief strategist. Since august 2015. It is hard to calculate what the ramifications will be. But does that seem right to you . Does the Market Reaction seem what you would expect . Does this seem about right, being able to model this . We know that part of the data is bad. We do not know if we are getting proper numbers out of china. Investors cannot really model the economic it. The market essentially went evenght up from october 1, into the beginning of february. The markets needed a pause anyway and this is the excuse they needed. Over 20 timesg earnings. Romaine a week ago, Something Like 30 times earnings on the nasdaq. You used the word excuse. People just looking at their portfolio, saying we have made 30 , 40 , why not just sort of move out . Priced we have richly markets, where staring into uncertainty. The democratic side of the political question seems unsettled. Markets hate uncertainty. This feels like the right reaction. I think we are going for another 3 on the downside as the first test to whether we can move higher. Of we have these bouts uncertainty. Eurozone crisis, whatever it is. Youve always gotten paid to sort of be the one to buy liquidity. At eu know when that is no longer a good strategy. Eventually, one day, people might try that and get hurt. Alicia very, very hard to time the market. You look at Technical Levels to see if thealicia market can hon certain places. You get a sense of where you think it is going to hold. You want to look for some type of bearishness in the market, the kind of thing that suggests that investors are starting to get very nervous. I dont think there is enough nervousness in the market yet. It is, ok, we are comfortable with this. Romaine given how long the full market had gone on, how long the economic expansion had gone on i guess the question, if you are already exposed to this market, what is the narrative to say, i should remain exposed, i should stay overweight equities and treasuries alicia . Question you have to ask yourself, is this a temporary exam june this shock temporary exogenous shock . If it is not temporary, then you can think about pulling some money off the table. We tend to think this is a temporary shock. We think this goes to the first half basically. Joe supply chains, it is not easy to just flick a switch and turn them on. That is a really interesting point because we had discussions today about, if the hit to china is greater than the 23 percent in the first quarter. You wind up dismantling supply chains and you get a supply shock. What does a supply shock produce globally . Inflation. You will wind up with Slower Growth and inflation and that is going to get imported to the u. S. No one is talking about the inflation aspect. The destruction of demand gives you disinflation. The disruption of supply gives you inflation. Romaine interesting times. Mellonlevine, bny strategy management, chief investor. Salesforce making the ceo change with the coceo step down. Marc benioff essentially taking full ceo ownership. And they are making an acquisition of velocity, a smaller Cloud Software company. Earnings largely beating on the quarterly numbers as well as forward guidance. This is bloomberg. Joe top u. S. Officials have described a range of measures the government could take if the outbreak of coronavirus spreads widely in the u. S. With possible significant disruptions to daily life for some. Joining us on the phone from baltimore, the codirector of the jon Hopkins Center for influenza andarch and surveillance, director of the center for Infectious Diseases in the Johns Hopkins school of Public Health. Based on what you have seen so far in terms of cdc levels of testing, coordination, how confident do you feel that officials in the u. S. Are doing what they can to prepare for a potential expansion of the virus . All the right measures are being put in place. The problem is now going to be that there are so many countries outside of china that have localized spread. Soon, it will become too large of an issue for us to deal with and things will just be entering the country despite the best efforts we have to try and screen and test. Theine when you look at situation, there is this idea that all of the nations should be coordinating to try to get things done. Coordination . That at some levels, we are. That has comeem up in the past two weeks or so has been the realization that many of the people infected with this virus have relatively mild symptoms, so things that will not cause them to go into the hospital or seek medical care. But they can still spread the virus. That has been a true game changer in terms of i should in, it is a reality check terms of our ability to try to contain this. Joe if containment is on some level not working because we see these spreads around the world, and because it is difficult to contain because we cant see it spread because of mild symptoms asymptomatic transmission andrew right now, containment minus time to try and containment is buying us time to try and prepare. To make sure medical infrastructure is in place to deal with the influx of patients. Public preparedness will be emphasized, so people know how to deal with the scenario of this virus entering their communities. And i think we will get a better sense of how concerned we should be the medical standpoint, how likely it is for people to develop severe versus mild disease. The effort to contain it are buying sometime. Move to ably different set of means to deal with this outbreak that does not rely solely on containment. Romaine i want to broaden it out and talk about why we are seeing these kind of infections materialized. About some of the other epidemics, sars, h1n1. This seems to be happening more often. Is that the case or is my perception off . Andrew we have had much more frequent bouts of respiratory infections emerging from animal reservoirs. Some of the Avian Influenza virus concerns, the sars and mer s outbreak, all of those viruses, when they entered the human population, they were not able to spread from human to human very effectively. That is why some of the containment efforts did work from those viruses. This virus seems to have a much better ability to spread from human to human and shed virus, meaning you are secreting virus for longer periods of time. That makes this outbreak unique compared to the others and difficult to contain. Joe some people may have very mild symptoms. That, ina silverlining terms of mortality, not that many people are dying of the people who get tested for it. And there may be all these people that never get tested and dont die, meaning that while it may be very vital very viral, it is not very fatal. We are trying to evaluate the case mortality ratio. The deaths per infected person seems to be going down. But we have to remember that probably there is no preexisting immunity. Isow case mortality rate isanced by the balanced by the fact that virtually everybody can be susceptible to this disease. Romaine so great to get your thoughts. From johnssz hopkins. The Bloomberg School of Public Health is supported by Michael Bloomberg of a founder of bloomberg lp. This is bloomberg. Romaine systemic strategies, areties by how cheap they according to fundamentals. Value investing could be in the cards as things like minimum volatility start to show a little strength. Here to talk about a rotation in value and other factors, stewart kaiser. Decadeit has been over a since it has shown any sort of sustained gains. He would think so with the coronavirus and ability of Financial Markets as a whole, you would see people flocking to that. I think when markets are this volatile, all of this stuff will kind of be on hold. I think this is only the sixth time since 1980 that we have had backtoback 3 s p drawdowns. While we do think it is valuable, one of the key views is the need stable markets to make it happen. Fully managers comfortable with how markets are performing. We do see the recipe for this to happen. But in the current market, probably a little bit of a hold for a period of time. Joe lets imagine that at some point we can act to something more we get back to something more resembling normal. A rate we need from standpoint or whatever, to ca sustained rotation . We saw one last fall for about 10 minutes. We think the conditions were almost meant earlier this year. Growth breaking out of the range it was trapped in. Higher yields, better growth environment, and equity markets rally in. Romaine talk about Factor Investing in general, you go back to that famous paper. They also came out with a paper in january where they said it does not work as well anymore. Just because it is too popular. Stuart they are obviously the experts on it. The interesting thing with Factor Investing, especially for the past 18 months, stocks with strong earnings growth, higher dividend yield. Some of that was intentional. Bottomupat was just fundamental investors saying, i see uncertain dsa Growth Outlook uncertainty as a Growth Outlook. That is why it is such a popular topic with investors. If i am buying value, i am also probably buying a laggard, a cyclical, and a slightly less safe stock. It is one of the reasons i think this is kind of a huge focus for the markets. Joe it just works so well. It is safe, growth, low volatility. You end up owning a bunch of apple and microsoft and getting a fortune. Need a break in Global Growth and that is probably going to be accompanied by a rise in rates. It is highly unlikely that the s p 500 or the market is falling into those conditions. You need some of the risks that have disrupted the market. You probably need to associate it with the rates. Romaine great to have you. Iser of ubs. Bloomberg markets is next. Joe this is bloomberg. Bloombergome to markets. I am emily chang in san inncisco with paul allen sydney. Coming up, it is not a question of if but when. The u. S. Centers for Disease Control say americans should prepare for significant disruption if the coronavirus spreads in the United States. Stocks tumble. The spread of the coronavirus has rattled investors in both the stock and bond market. But is