End Coal Financing being undermined by new credit from china and japan. Lets take a look at the markets now. Looks like very much like the past couple of weeks although potentially more so. Very volatile, s p 500 futures have begun to trade and we automatically have begun to see a decline of 2. 8 . We saw last week a gain in the u. S. The s p but the average move was three points. Olatility is still reigning sustaining stocks losses for a second day. The safe even been coming back coming safe haven bid back strong. The u. S. The yen is strongest since the 2016 election in the u. S. A rough day, 41 a barrel for oil. Now investors are expecting more. Lets take a longer look at wti crude. Not even not only did the meeting in vienna not result in agreement, but saudi arabia has initiated an allout price war saying they will pump 10 Million Barrels a day next month. Some analysts are expecting 30 oil prices again, near the lowest level over the past two decades. One analyst said he sees potential for us to see some of the lowest prices over the last two decades, implying a drop to below 20 a barrel. That is all the way to one end of the spectrum and it would give you an idea how this prices would be compared to history. Paul thank you. Saudi arabias planned production joining us to assess the impact of as the cofounder Consulting FirmSandhill Strategy in washington. Opec plus apparently at war with itself. Where do you see Oil Prices Heading from here . It is at war with itself, going to war with u. S. Shale, something they have avoided 2016. Since i think the floor is up for grabs because what the market is trying to figure out now is how low do crude prices have to fall to discourage u. S. Producers from pumping more oil. We havent found the floor since 2008. The question will be is 20 low enough . I have seen analyst commentary in the 20 to 30 range. That is taking us back to where we were in the first half of 2016 that was a major shock to the markets. It did not lead the market to directly cut production. It is a dire situation the market to try to work out of a major oversupply with them demand uncertain as well. Question, thathe is one. Dure . Ng will it en isour primary Climate Group the investor committee. For that audience you are seeing some a different pressures and risks not only on the supply side now with saudi arabia increasing production but also on the demand side. No one really knows how severe the impact from coronavirus is likely to be on Global Economic output. The last major uncertainty is the u. S. President ial election. We cant as of recently joe biden maybe the front runner on the democratic side but Bernie Sanders is right up there. The whole keep it in the ground side of the political spectrum and this progressive focus on Climate Change is out there. When you look at where oil markets are and what Commodity Prices are trying to tell you, in a lot of ways prices can be a sort of confidence in an industry. With Commodity Prices low and plunging further, likely later today, that is a good signal that the market is not confident and energy rules longterm. Very optimistic. Paul was there a sense of complacency heading into the opec talks . We got used to the brinkmanship, russia would extract something and then the cuts would be on again . Were surprised . Maybe the market was were you surprised . Maybe the market was overconfident that russia would fail the industry out. I agree with you that that has become a foregone conclusion which underestimates the Political Capital involved to keep that coalition together. Beyond that, to get saudi arabia reacting the way they have so far by cutting prices, benchmark prices into europe and asia more they havent test than they have in 20 years and signaling they could increase reduction up to 12 Million Barrels a day, both of those moves increase production up to 12 Million Barrels a day, both of those moves suggest saudi arabia has total control and the Political Leadership has total control and all of the dynamics around opec have taken a strain on saudi arabia as well. They are actually reacting to the situation foisted upon them in a rather impulsive way. One of the matter major takeaways is a crumbling of this cartel thats power has been built on oil, as oil loses significance in the mobile becomesnd as demand very brittle around the risks of the virus. Brent justve got starting treating now, going towards the more dire of 33 ans, off by 24 barrel. [speaking simultaneously] that has got to be the biggest move in a decade. Paul it is a huge move. Who is going to bring first here . Russia has this big Rainy Day Fund. It is set to tough this out for some time. So who breaks first . Russia or u. S. Shale . Starting with shale, the issue has been u. S. Shale is not a single actor. There are thousands of individual actors who have to reach decisions around what their production goals will be. We have seen many of the major u. S. Producers signaling that they will dialback production or growth plans which has been healthy, but it is clearly not the dramatic moves the market needs to stabilize price. On russias side, we are relatively clear where they are. As you said, they can whether through someather the diverse prices. Saudi arabia is in a position somef trying to instigate pressure on their fellow opec nations, remind everyone else in the cartel and maybe even russia how important it is these countries which can plan production work together. Saudi arabia has been the since 2016. Opec there is not so many other countries in the opec cartel that can agree to cut production , venezuela, libya, so many of these countries have come under political pressure and have a lot of destabilizing elements. There is not a lot of other figures behind its besides saudi arabia that can agree to lower production. It is a bit of an impasse but i would not be surprised to see be surprised to see emergency sort of opec sessions later this secondquarter especially if the virusinfected impacted still is still accelerating. Paul that is another complexity, holding a meeting in the environment. Who are some of the other winners and losers . Is the happy with this. The saudi aramco not so much. Rosneft and alexander knew going into the meeting they were going to say no to the present cuts. Then you going in this was going to at least lead to the crumbling if not dissolution of the opec plus group. They had to be prepared for some kind of reaction. What i have been working with our clients on and we have been focusing on is looking within the boundaries of north america, looking for value opportunities that are focused on catalysts which are not contingent upon global macro issues like coronavirus and like opec. Looking at we have seen the marsalis drillers, the gas drillers outperform because of the presumption that less associated Gas Production will take the heat off of low natural gas prices. Looking at groups like that, companies with lots of existing infrastructure and cash flows, there is some overlooked spaces in energy that have gotten beaten up with the rest of the complex, energy overall, friday down 40 in 2020. That is incredible, the only factor in a bull market. This is an environment where kind of everything is getting beaten up area that is not rational. There are pockets of value especially for companies that have existing production or capacity. You forl right, thank joining us on what is one of the big macro stories of the day. We will have more analysis on the Energy Sector. I am joined by a new guest. To recap some of the big moves we are seeing in the oil markets now, we have brent off of more 34 a0 , currently barrel. West texas also off. 31 a barrel. Sachsg at the goldman recalibrated secondquarter forecast of 30 a barrel, huge moves in oil markets this morning. Lets get on to the other macro factor. That would be coronavirus screen we have the u. S. State department coronavirus. We have u. S. State department morning citizens with Health Issues to avoid cruise ship spirit that is adolor from the u. S. State department cruise ships. That is an alert, u. S. State department. In italy the virus is surging as well. Lets get over to man. The situation in italy is starting to deteriorate. Yvonne perhaps that is why we saw the big locked down over the weekend. When it comes to the number of the biggest numbers outside of china and even surpassing south korea, the 366 deaths reported in italy and cases topping 7300. That is why we are seeing 17 Million People in 14 provinces under lockdown. Talking big cities like milan, venice and much of the country industry, that is under quarantine. Now we are seeing this spread across europe with Health Officials in france saying large galleries or banned gatherings are banned. There are first cases in the u. K. , greece, the netherlands. We are monitoring the situation with the grand princess cruise ship with more than 20 crew members and passengers that tested positive. That is set to dock monday in oakland. Sunday, talking about half of the worlds countries have seen cases of covid19 and the death toll outside of china beyond 700. China export numbers out, plunging more than expected in january. Some seasonal factors but what are those numbers telling us about the virus . Yvonne this is the first two months of the year. Usually they are quite volatile with the Lunar New Year but now you see this start from the coronavirus outbreak, the effect from this virus. It was pretty bad. Exports for january and february falling 17. 2 , imports not as big of a blow but still contracting 4 . That could be a lag when it comes to imports now. We saw a surprise and swing in the trade balance to a deficit of 7 billion. Perhaps the trade to visit is a trade deficit is a temporary one. Businesses in china could start toresume work and come back capacity and exports could rebound in the coming months. Given the fact this virus has spread to chinas trading partners, the external demand outlook looks dicey. Thank you for keeping an eye on that for us. We will be speaking with the later onresentative today. He will give us an update on the spreads as reported cases slow sharply from the epicenter. Dont miss that interview. Lets check in on first word news with karina mitchell. Oil traded in london lunch dust plunge the most since 2008 as opec and other leaders talks collapse. Ministers left vietnam without agreement. The cartel is free to pump with saudi it saudi arabia expected to flood the market with additional supplies. Russia said the two american shale producers. Chinas exports fell more than expected in the first two months of the year as the coronavirus led to an extended Lunar New Year break. It disrupted transport and supply chains. Incoming shipments fell by more than 17 in dollar terms from a year earlier. That left a trade deficit of 7 billion for january and february. Reports from riyadh reveal saudi authorities have begun releasing royal family members and others detained amid security clampdowns. As was ordered by the Crown Prince Mohammed Bin Salman and included a brother and nephew of his father. At least two of the dt detainees were accused of treatment treason. This is concern for challenge within the family. 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. I am karina mitchell. This is bloomberg. Paul thank you. We are going to be joined by sarah hunter of expert economics to discuss the Oxford Economics to discuss the week ahead and oil moves on the global Monetary Policy. Lets get a quick check on the oil prices. 20 for brentthan crude and west texas, already plunging towards 30 a barrel. This is bloomberg. Paul if the coronavirus was imposing enoughraders, now we have huge moves in the oil price to contend with. It appears opec plus now at war with itself and u. S. Shale drillers failing to reach an curbs. Nt on we are seeing a huge downward move in the oil price in early trading to get the week doing. We are better where better to start than with the chief australian economist from Oxford Economics. Superseded, this on top of everything else. What impact is this going to have on the macro picture . It is printing out into the financial position in the macro. It continues for a while and we dont get any media blink from fromide immediate blink one side to the other. From a macro picture, it is generally supportive buffer and that producers but this can be helpful. How hopeful it is in the nearterm remains to be seen given coronavirus is going to restrict activity no matter what the oil price is. Doesnt help if you are on lockdown. If we saw this continuing into the second half of this year, potentially supportive in terms of activity. Not great for inflation, but this is the right kind of miss, if you like. It is a fastmoving thing. We will have to see. Paul President Trump always said he wanted cheap oil and sheep money. He is now getting both but not in the circumstances that no, indeed. It willu mentioned create tailwinds for some emerging economies but others that are net energy exporters, this could be calamitous. Just starting in australia, lng exports, they are tied to the. Oil price moves, that is damaging. But across the region, this is going to be a real struggle. The government will have to manage that area in the context of lower revenues and wanting to to offsetscal support coronavirus, tough decisions to be made for some economies in the coming months. Paul we had bets that Central Banks would ease further around the world. We have a chart on the bloomberg terminal which illustrates the line you see at the top, that is the feds but other Central Banks are likely to follow suit. How useful is monetary easing in a situation like this . It is a good question. Not particularly for the immediate shock. We had that from jerry powell, but rate cuts dont prevent the spread of the virus. They cant offset any of the Immediate Impact from the lockdown. You cant know to work, you can spend and get your economy cant go to work you cant get your economy going. Governments want to reduce Financial Stress in the system as much as possible and once we get to the acute phase of the ands, the outbreak conditions certain return to normal, there will be a platform for growth and economic normalization to occur more rapidly. For right now there are particularly they are particularly impotent. What would be more effective is some kind of fiscal response. Times have you rewritten your forecast . Quite a few times in the last couple of weeks. We will be looking to rewrite it again because of the announcement yesterday in italy of the lockdown there. Of the thinking about, should we expect to see that response in other economies and what does it mean . It is an uncertain environment. You can come up with a wide range of ways this virus plays out. Just challenging for economists like me and Financial Markets. You dont know which way things are going to go. It makes it hard to price anything now. We are seeing that in the market with wild oscillations that are coming through. Paul i want to get your thoughts on fiscal stimulus. The bushfires which has prodded the government to act from the treasurer, saying he is finessing the final touches on a stimulus package. That is an excellent question and a key question. It has been a while since we have had one. What we cant avoid is a wetraction in output in q1. Will get data in early june. We could avoid a recession so we dont get a further retraction. Imports will be lower. That is not the right kind of help but it is a help for holding up the gdp number. The government will need to put in place aggressive responses and it will need to be a fairly big number in terms of where the surplus is now and certainly if we are looking at single billions similar to the bushfire response it will not be enough. It will need to be bigger than that. Much. Thank you very lets get more on the big moves in oil that is coming up next. This is bloomberg. Paul i am paul allen in sydney. We are just getting some breaking news on the bloomberg terminal out of saudi arabia. It is not to do with oil. This is about the coronavirus. Five between saudi arabia and Nine Countries are being andhts between saudi arabia Nine Countries are being suspended. They wont allow citizens from these countries, the uae, bahrain, lebanon, syria, south , italy and iraq. China on the list but saudi arabia is banning or suspending entry for citizens from those Nine Countries. We do have to make mention of the oil price, huge moves seen plus, declines of 20 west texas and brent. More details in a moment. 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. Sydney. 30 a. M. In we have got the market open 30 minutes away. Futures pointing lower by 1. 5 . 15 numbers due to reset in minutes time. We will keep an eye on further moves and what promises to be an exciting start to the trading week. I am paul allen. You are watching Bloomberg Markets. Lets take a look at the markets. I mentioned futures in australia sinking lower. We have had new zealand trading for about 90 mi