Offset those nearterm disruptions. Does not going to be able to go on a cruise. This is a potential supply and demand shock. The supply shock, now and oil price shock. It is difficult for Monetary Policy alone to reassure markets. Monetary policy has to go to zero. Monetary policy is at its limit. It is not sufficient. It is wasting valuable ammunition. Just cutting into it is ineffective. We have much further to go for it to be truly effective. You need massive, not kind of, massive monetary and fiscal stimulus. The monetary response has been there. Focus needs to shift onto a fisc onto fiscal stimulus. Jonathan the key question, what will stop the bleeding . City,g us in new york michael and alexia of invesco. It got real and it got real quickly. Tom extraordinarily day expert and airy day. I disagree to the parallels of 1987. The price changes are there but this is a medical event. We saw the ncaa giveaway on madness. You have all the other news around including mr. Macron becoming action active in france. With that is the market. What we are doing is some have some great guests across economics, finance and investments. Along with us, we will get to that. Michael, im thrilled you are here. I have seen something today i have never seen before or studied in history, which is a six standard deviation move in dollar over the last four or five days. We have gone from dollar weakness widely predicted by people, to the mother of all dollars snap backs to strength. If that is the deepest thing in the system, the deepest thing in the ocean, why did we see dollars snap back today . What does it indicate about the crisis . Michael there is a lot of things putting downward pressure on the dollar, particularly the rate differential. The fed was the one central bank that had the room to cut. And they did. That helped confirm the move. Look at the euro, up to 112. Now we are giving some of that back. I have been arguing since the surprise rate cut that making the fed does not have a dollar mandate. It is a huge tightening or loosening lever, not just domestically, but particularly in asia. Where the last thing that those economies need is a strong dollar. Tom it is the last thing dollar last thing donald trump needs as well. Will he reach out with 100 basis point call today . Publishing literally as we speak. Will we see the demand further for 100 basis points . Michael if there are big rate cuts, it is not about my mortgage getting refinanced. It is about the dollar. The mortgage refinancing, providing relief, the cost of capital going to lower levels on the consumer, the corporate level, sure. That is helpful. Really it is about the dollar. If we see emerging currencies seize up. Tom these are litmus papers within the greater pain everybody is feeling. Jonathan that has been the story, big trades really unwinding and unwinding really quickly. Lisa thats where i wanted to go. This market, hard to put a larger geopolitical story on it. It felt like a mass unwind of a lot of different funds. I would love to get your perspective. I point to gold. Prices plunging since 2013. 30 year treasury yields rising after the new york fed pump it offered up stimulus that could amount to trillions of dollars. Put this into perspective for us. You are really touching on the interesting points. This has been a crazy few weeks. Today yoully, only started seeing things breaking down. What i mean by that is nonintuitive ways. Patterns you that you start wondering, i didnt see that coming. The dollar sold off in the last few days. The euro, the yen, was predictable. Getting unwound. Today, the Dollar Strength is a sign of dollars shortage. Credit functioning markets, and i think the intervention of the fed on the liquidity side is aimed at primarily addressing that. Andding an unnecessary unwarranted tightening in Financial Conditions. It does not have any economic reasoning besides a function of market dislocation. Easter to see some interventions. It might stabilize if anything, a partial still Silver Lining, people have been doing this, these equity moves use to equate too much larger em fx selloffs. Somehow, in proportion, even theared to 2008, it means positioning, because em has been an asset class for the decade, the positioning might be less extreme. Jonathan really searching for the Silver Lining on a day like today. To pick up on lisas work and about,essio was talking tell us what you can, not what you want, another day of that. It is never pretty. Michael you saw the treasury market, duration, that is not a safe haven anymore. Have beenmart traders getting very bullish treasuries on the cuts and everything else. They were taking profits. Cash is the only true safe haven. Gold was off because of market dysfunction. And part of the dynamic. Everyone in the world is trying to go to cash. They are not trying to figure out a clever option trade. Lisa trying to get to cash and meanwhile, to your point about the federal reserve, you were talking about how Deutsche Bank is predicting a 100 basis point cut. You know who else is protecting that . Everybody else on the market. If you look at the implied fed funds rate it is 0. 15 at this point. We are talking about in the 100 basis point rate cut going to zero, going to the lower bound we have seen in recent history. Jonathan the story in the market is pricing the rate cuts but also, they will not work. That seems to the story in the yield curve. We think the fed is going to cut. We also think it will not work. Alessio we are in this horrible situation where the only worst thing then cutting rates is not cutting rates. We all agree that it will not do much. Thein my opinion, it is only message that all policymakers can send to really delegate the next steps to government authorities and fiscal authorities. Michael there are three policies. Theres Monetary Policy, fiscal policy. And health the reality is we are not fighting our own creation of subprime mortgages into thousand eight. We are fighting a virus. That Means Health Care policy has to be aggressive. Aggressive Health Care Policy means bad economic conditions. What happens, arguably in d. C. , is they are not squaring the circle. That is really i have been arguing the best policy, what we really need from how you stop the bleeding and the markets point of view, is an aggressive Health Care Policy. You take the pain nationally jonathan reinforcing that. The fed if the fed does anymore, they are fated, reinforcing the argument that Monetary Policy is not the cure. The fed did through more added. Look at an intraday chart. You will see this pump around midday. It was when the fed took further action to stabilize markets. The treasury securities operations schedule includes a change in the maturity competition of purchases to support functioning in the market, u. S. Treasury securities. Michael mckee joining us now for more. It smells like qe. Is it qe . Mike it is sort of qe. It is important to realize that we had two Central Banks are doing two different things. The ecb trying to prop up its economy. The fed trying to prop up the market. Rkings of the you mentioned a minute ago selling what you can. What if you cant sell . That was the gist of the problem. Let me show you on this chart, when stocks go down, we should see bonds rise. Look at the 30 year yield. It went the other way yesterday. Some of thees and longer maturities were not finding buyers. We have got a statement from the fed today that you mentioned. They are going to put 60 billion that they were spending on treasury bills, they will put it into the whole curve, buying across the curve, and then they are conducting massive repo operations. 1. 5 trillion today. And they will continue with 1 trillion in the coming weeks and continue with their overnight repo operations. You can see the result of that has been this liquidity. Taylor was mentioning this earlier, the overnight repo rate has just collapsed. The fed coming you mentioned qe. Here is what we are looking at. And why it is not really qe. Is very small. This is the amount, the green, is the amount of key bills they have been buying. That is what they will be replacing with across the curb. It is only going to go until april. It really is not going to add much to the overall Balance Sheet and it is not really going to push down on interest rates, but it is going to spread out the feds buying and take pressure off the markets, especially because the fed tends to buy off the run securities. The ecb trying to help its economy. They didnt do so well. There was no rate cut. They are doing a temporary bank lending program, dual rate delta row. That could be really important down the road. Because banks can borrow at a cheaper rate than they can lend. Maybe that will force them to push money out. They will do an additional 120 billion in their own qe. Only shortterm. There will be capital relief for banks. A lot of criticism, and we talk about this, earlier today of Christine Lagarde for her comments in the press conference. Not only was there no rate cut the markets wanted, but she said we are not here to narrow your spreads. That did not go over well. She tried to walk that back a little bit. This is not a liquidity flood from the ecb in the way the fed did it. The question is, will it have an effect on the markets . I have one more chart to show you. Loansat is the demand for in the euro zone has been falling for some time. Even if you lower interest rates, even if you put more money into the banking system, the banks have to go get it. Then they have to find people who want it. If this line doesnt turn around, the ecb will have to do something else. Two different banks doing two different things. The fed more successful so far. Jonathan great to catch up with you. We will touch on the ecb decision later. Lets turn to Deutsche Bank research. Tom keene sent this to me. It comes from someone who writes a following we have changed it looking for an immediate 100 basis point fed cut. One wonders if the fed has to Start Talking about qe as well. Tom moments ago publishing on this. The keyword is immediate. I really want to convey the urgency to get there fast, like tonight. Jonathan feels like a lifetime away. Joining us on the phone, preout. Walk me through all of this. You are one of the first bloomberg customers to find a message and soon as the terminal. Your thoughts, please . Sure. Thanks for having me on. I think we have been talking and i have been on your show before, we talk how this went from a supply shock to a demand shock. To the last couple of days, it felt like the market was breaking. The u. S. Rates market, the most there, u. S. T out treasuries, it seemed market functioning had become an issue. That is why i think the market was screaming for policy help across the board. Fiscal, we have not had anything. The president didnt give us anything specific. Monetary, and think we are looking for the fed to cut rates to zero. They have not done it. On the market functioning front, they need it to come out. I was thrilled they did. At least on Balance Sheets, the fed is providing 60 billion a month. I think we can debate qe versus nonqe, the fed will probably say this was not qe. They are buying across the curve. Their big distinction between what is not qe versus qe weather was across the global bills. They are taking people off the Balance Sheets. And essentially, as we move to return off capital rather than return on capital, everyone flocks to the most liquid assets. It will end up holding onto the less liquid. At least now we have an outlet at the fed. I think it was a big deal. Does it solve the virus . No. At least it can solve the market functioning. Tom with your mathematics, you understand magnitude and scale. The basic theme icy, and this is to all of our viewers and listeners who are saying wait a minute, market turmoil should do something, it sounds like fdr in 1932. Heres the reality. Theres a little bit of were neat of worry that their Tour De Force did not do enough along with the chancellor. Michael for row of jp morgan moments ago said that washington is way behind and they need to look at half 1 trillion of fiscal stimulus immediately. Are we talking about the solution being a much greater magnitude of assistance . Priya i think so, yes. I think if you listen to talk from washington, it is targeted. I think we have gone way beyond targeted relief. Targeted relief would make sense if this was just an issue with the airlines or cruise companies. This is spreading. When you look at Financial Condition tightening, it affects everyone. We dont see it in the data yet, but i think as you start seeing that, it will move up. Consumer confidence. If we are in complete lockdown mode because we are trying to control the spread of the virus, this will spread out significantly more into the economy. I would love Something Like 500 billion. You do something broader, large to pump aggregate demand into the system. That can help. Tom with a moving target that we have, they talk about Economic Contraction for the next six months. I dont think anybody including the Senate Majority leader understand that in washington. Lisa theres a question about the economy versus the markets. I would love for you to weigh in. On what we are pricing into markets at this point. Is that what we are hearing from priya and others that we will see a prolonged contraction . Alessio what we are seeing is necessary but not sufficient conditions to stop any of this. What we learned from china is not quarantines and factory shutdowns work. The new infection rate in china was 12, over the last week, in the population north of one billion. We need to follow that lead. Instead of procrastinating, if we want to solve the health part of it, the virus part of it, the first necessary condition is to shut down and quarantine very aggressively so that you can start counting. Is this a q1 contraction, q2 contraction, or something we will deal with for a longer time . Jonathan the longer you wait, the more you will have to do. I want to bring a headline from the new york city mayor. The aim is to keep a trading going with no issues. New york citys mayor is to keep the Stock Exchange trading going with no issues. I want to turn to the ecb. I thought it was this tom extraordinary. Jonathan this one stunning line from Christine Lagarde. Listen to what she had to say. Said will be there, as i earlier on, using the flexibility. But we are not here to close spreads. This is not the function of the mission of the ecb. There are other tools for that. And there are other actors to actually deal with those issues. Jonathan i have been grappling with that one line through the rest of the session and trying to work out whether that was one of the most reckless moments from a central bank ever, or the bravest. I guess time will tell. What is your take . Priya the central bank ports that every credit investor, every investor looks for. She is telling you it is not there. The threshold is not here. You should price that put appropriately. I think we have been so used to Central Banks bailing out every risk asset at the first sign of trouble, getting easing, and now you have one central bank any way you think about the effectiveness of Monetary Policy, but you are hearing the willingness being a little questioned, that nobody can take a loss. I think it will exacerbate this flight to quality because the central bank is not as strong as people thought. Tom i have to go to other fossils on the desk. That would be to my right. Take a wide shot of the two fossils. Lisa lisa are you kidding . Come on. Tom i take real issue, young one, with a banner that says worst drop since 1987. This has nothing to do with 1987. It this is the heart of the matter, the inability to take losses. We have slid along and slid along with theories that were not in the textbooks you had or i had or john had or whatever. We slid along, trying not to take losses. Is this a time where we take losses . Michael i would rather take a 5 loss than a 20 loss. Personally, my own view on the market is that we are heading lower from where we close today. That does not mean a tragedy. I think on the point of one of the fascinating things is back in 2008, we had lehman, we had systemic issues, it started downtown and wall street and emanated throughout the world and the economy. That is not one what we are talking about now. Over since then, we have had a huge change in market structure. A huge financial is asian of the s p 500. A huge cache volume in the s p have been going down and down. Options, futures have been going up and up. Everyone is trying to find their 1987, a little bit of 1987, a little bit of 1998, with the ruble client ruble crisis. Little bit of even december 2018. You are the true fossil. Jonathan i want to jump back in. Was Statement Today borderline tone deaf. From the ecb president. Eight years of work from president mario draghi can be undone with one line. We can all sit here and say it was a luck of genius. But i thought this was not the moment to have a high Risk Strategy like that from a central banker in a moment like this. Alessio i want to believe i do believe that she is a great communicator. And that this was more of a misstep of a couple of wrongly chosen words. When the bottom line of the guarantees we cannot but we are here to support and do whatever it takes. I want to believe that this is not a question about willingness. That this was just a badly chosen sentence. Lisa i personally interpreted this as the death of a central bank put. We saw it from both ecb and what they did, and we saw from the federal reserve. Jonathan im not disagreeing. I think the height of the financial crisis in europe, one of the most delicate moments in the history of markets for the year zone, someone stepped in and did something absolutely magnificent without buying a single bond. President lagarde has been unwilling to back that up in the months. That is a big problem we can sit here and say it is not a problem, but if the political situation gets worse, and you dont think the ecb will backstop italian debt, they must be