Transcripts For BLOOMBERG Bloomberg Surveillance 20240713

Ahead of the Conference Call to the g7, leaders, a lot of focus will be on whether they will step in with coordinated action or words to assuage the markets. Ahead of that, markets are rising. The stock europe 600, 4 and the that saw a lot of losses because of the epicenter in europe still in italy, up today. The dax up. S p futures, gains across the board. A caveat. Yesterday, we saw similar gains and they peter off as the day went on. Today, there is expectation from g7 and that the fed will possibly step in. Lets get to the bloomberg first word news in new york city with Viviana Hurtado. With an update on the coronavirus. Governments around the world preparing for emergency measures to fight the outbreak. Drugmakers hope to have antiviral treatments ready within the month and vaccines by next year. Of cases number worldwide, topping 90,000 but reports suggest over half those people have now recovered or have been released from the hospital. Central bank, it has cut rates and signals it is open to further easing as policymakers try to cushion the blow from chinas slowdown in the coronavirus. Rate by ae cash quarter percentage point to 0. 5 , a new record low. It says the virus is having a significant effect on the australian economy. Now to opec, the cartel going ahead with as much a muchanticipated meeting this week despite mounting concerns about travel because of the coronavirus outbreak. Ministers from the group and its allies will gather in vienna to discuss if additional production cuts are needed. Last week, crude prices experienced the biggest slump since the financial crisis. Israel, where Benjamin Netanyahu appears within striking distance of forming the next government after a yearlong political crisis and three elections in less than a year. Netanyahushow party and his allies are ahead of the former military chief. Ahead of super tuesday in the united states, joe biden has gotten a boost from some former rivals including Pete Buttigieg, amy klobuchar, and beto orourke. After his big win in South Carolina on saturday. Today, 14 states and one u. S. Territory are up for grabs. That amounts to one third of all the delegates in the democratic primary. 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. m Viviana Hurtado this is bloomberg. Francine calling the g7 hotline. Leaders will hold a call at new london time to discuss the response to the norovirus. Steve mnuchin will take the lead, Christine Lagarde says the ecb stands ready. Global equity markets. Joining us for the hour is the Global Equities fund manager at Jupiter Asset management and from the market live team, laura cooper. He will be a hectic conversation in the next 60 minutes. Laura, the rba today was the First Central Bank to cut because of the virus. Given the g7s meeting, the markets are saying they are going to do something. Is the bar of disappointment high . Laura exceptionally so. When you look at how stocks rebounded yesterday on the mere news we are going to see a coordinated policy response today, i think that points to a high bar in terms of Market Expectations actually being reached today. Some see some words, commitment come out of the statement today, i would expect that would provide some shortterm bounce, but ultimately, i dont think it will be a solution at this stage. Francine it has been a pretty insane couple of weeks. We havent really seen this since the financial crisis. What can the g7 leaders do . I agree, the disappointment may well be of a certain size, but at the end of the day, if we can see some concerted action to come, to reassure markets, it will be helpful. We know that the unknown about the spread and damage to the Global Economy is the main question. Whatever they announce, whatever can come and support markets, it is just not going to be the answer. Francine what are the markets expecting . Some words like mario draghi back in the day said in london, ill do whatever it takes but are they expecting something concrete today . Laura when we look at Market Pricing for today, they are expecting some action today. We have almost 50 basis points of cuts priced in for the fed next week. We have a full basis point cut cut for the ecb next week priced in. I wouldntd expect banks to come out today and do that kind of bazooka stimulus, but markets are prepared for that. Francine when you look at the markets the last couple of weeks, how much do you change your positions . Guy you have to look through it. At the end of the day, Central Bank Governments can bring of flow ofin terms credit. Companies continue to function, markets can continue to function. All we need to focus on is when the vaccine will come and how long this issue is going to last for, and thats where, if you are relatively positive about how long it will take, lets say make, april, when the peak in infection will probably come and weve got a vaccine and perhaps a cure, then you look through that and you start to buy. Francine you are waiting, or have you started buying . Last few days, we have been picking up a few names in specific sectors we like, but at the end of the day, the unknown is large here. It is quite big and you have to just look through it and be confident. It is about your risk profile. Francine it is also about what markets are pricing in. Are they pricing in a recession already or not . Laura i certainly think when we look at where bond yields are, the u. S. 10 year and 30 year at record lows, it is pricing in such a degree of caution. The bounce yesterday in spots point stocks points to the emergence. The tightening in financial conditions and Inflation Expectations have plunged in recent days on the back of this equity selloff, certainly that does beg for some action from the Central Banks, but i dont think it will be nearly to the degree that markets are expecting because we havent yet seen the imminent signs of the downturn at this stage. They want to keep some powder dry for when we see recessionary risks intensify. Francine thank you both. Laura cooper from mliv and guy de blonay from Jupiter Asset management. Europes airlines begin paring back their schedules as passengers delay or cancel their flights. We will focus on the travel sector and the challenge from coronavirus. Plus, america wakes up super tuesday. We will bring you the race for the white house later this hour. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua in london. Lets get to the Bloomberg Business flash with Viviana Hurtado. Said to bermotti is nominated as the chairman of swiss reading a year. At the 2021 shareholder meeting. Last month, ubs named hammers to take over for ai the sergio ermotti. To settle u. S. Criminal charges. The alledge it conspired with other pharmaceutical companies to fix the prices of generic drugs. The settlement, marking the largest penalty in a domestic cartel case. Reacher has agreed to gender balance across its Global Management team a year ahead of target. Half of the anglo dutch companys support team thousand managers are female, of from 38 in 2010. That includes 50 in the finance department, an area where women have historically been underrepresented. Thats your Bloomberg Business flash. Francine they do so much, Viviana Hurtado. Ryanair is cutting a number of shorthaul flights may to and from italy. It says it has seen a drop in bookings over the late march and early april period. It is the latest airline to warn over the effects. By agee says it can no longer give a forecast for the year. Lufthansa will cut up to 25 of shorthaul flights in the coming weeks. Lets get more with guy johnson in london at an air conference. Is this something the industry will be able to handle . Guy absolutely. That is the impression being given here. Financial crisis when airline Balance Sheets were really stressed, many of these airlines have put their Balance Sheets in better order. I caught up with the guy who runs easyjet. He says this is something the industry is prepared for, understands the mechanisms it has to go through to deal with it. It is a challenge. Clearly, we dont at this point have any other way of dealing with the coronavirus than simply imposing quarantines. China has done it and we are seeing it in europe. We see consumers deciding they dont want to travel, businesses dont want to travel, so the taking placeports at the moment, the lack of people traveling at the moment is ultimately going to hit these airlines. There is an expectation that once things settle down, that these bookings will pick up again, but that remains to be seen. It is a one quarter phenomenon. It could be a two or three quarter phenomenon. I asked mr. Lundgren about this and he said we are in a position where it is far too early to start making expectation calls about what the full year is going to look like, but the industry feels it has got it. There are weaker airlines in europe that will potentially struggle and that was something mr. Lundgren pointed out to me but the big five carriers, iag, lufthansa, easyjet have the Balance Sheets. The market has marked these stocks down aggressively. It will be fascinating to see how strongly they bounce back. Some of them are bouncing back quite strongly today. Francine guy johnson in brussels. Dont miss exclusive interviews ash the chief executives flight demand is hit. Catch that here on bloomberg tv. Lets go back to guy de blonay, Jupiter Asset management. When you look at the airlines, do you have any of holding in airlines you are cutting off . What is priced in the markets right now . Guy what is priced in . Well, after the move yesterday, what is priced in is an intervention from Central Banks. Cuts, we saw rate australia cutting rates. I think we are looking for the fed to cut rates by 50 pips by the end of march. Inhink we are also pricing some government announcement on fiscal measures or stimulus. That probably will take a bit longer, so i think we are certainly markets are certainly getting some relief on the basis that the g7 and perhaps governments around the globe, Central Banks are trying to get together and find a solution to keep markets functioning until this virus es and hopefully disappear soon. Francine are you worry about how the market reacted . We are trying to figure out if there was complacency before the selloff last week when it hit europe or if there was an overreaction. Guy it certainly was a liquidity driven rally. Markets were at alltime highs some froth in the market had to be taken out. That virus issue has certainly helped markets to regain or rebase on some earnings expectations that have been revised down for the remainder of the year. Lets look through it and if we a concerted effort from governments and Central Banks to stimulate the economy, it could certainly have a rebound in Economic Growth in the second half of this year. Francine does anything short of giving 100 pounds into the pocket of consumer going to help with coronavirus fears . Guy we said earlier in the program, we need a vaccine. We need a cure and that is what we need. We dont really need Interest Rates to go negative around the world. Thats not going to be enough. It is going to be enough to keep a level of confidence and markets to function, to Keep Companies afloat, credit slowing, but what we need really is a chair. Cure. Francine guy de blonay, from Jupiter Asset management stays with us. The future of nissan. We will bring you an exclusive into the companys chief executive. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Nissan is ready to make deeper cuts if the business deteriorates, according to makoto uchida. Since first interview taking the helm of the struggling automaker, he promised to unveil a plan in may. When i look at the individual nissans ability, it is more than what i know today. Very good companies, direction, it should be the result is better than what we are showing in terms of our performance. Whatart from costcutting, sort of investment needs to be made in the business . Our humanfinitely, asset. That is what we have to seek for. And when we talk about the new era of business and what competency has to be enhanced, that will be the area to invest. The shift in the automotive business is happening rapidly. Electrification, self driving automobiles. Technology. Where is nissan going to be in that space . Like to enhance our electrified vehicle come our core of technology and an area we can demonstrate value for the customer. A Mobility Service would be the area we need to have some partnership in the future, which we need to further discuss with a lot of stakeholders to find out the direction. Consider a meeting that has happened with nissan over the last 18 months, it is not an easy challenge for any executive. Youve just come on at the end of 2019. And you tell us a little bit about how you view the challenge and whether it has changed your view on whether success is reachable or not . I mean, it is probably going to be absolutely necessary, but was there anything that surprised you about the scale of the challenges facing you and the company right now . First time tos my be ceo, so it has challenges that were in expected, but day would like to further discuss with our employees to understand how they are feeling about the company, what has been the way they wanted to be. It is important for me to know transparently what is going on from the executives down to the employees. After having those to be united or something to be together, then i believe the power will come from there. Once we have better strength, that will be external. Francine that was the new chief executive of nissan, makoto uchida, speaking to bloombergs Reed Stevenson exclusively. Lets get more thoughts with guy de blonay. Industry like banks, media, that will be disrupted. How do you deal with these disrupted industries . Where do you find value . Guy we obviously do two things here. We continue to look at traditional Financial Institutions and how they cope with disruptive innovation, and how they invest, and how they protect themselves, and where they see themselves in five to 10 years time by investing about 10 of their revenues into it legacy and also innovation. On the other side, we invest in companies that are bringing solutions to Financial Institutions, such as payment solutions, analytics, and cybersecurity. It is all about building this ecosystem that once you have a client, its retention rate goes that0 because the journey the client is having within the ecosystem of the Financial Institution is the best it could get. Francine the payment is a hot industry. Everyone is trying to get a piece of that. Do you worry about overpaying for capital pacific specific . Guy the migration from cash economy to a cashless economy is inevitable. It is not only about providing a network and enabling a card payment rather than cash payment. It is about addon services. Obviously, you have the big Networks Providing the bulk, but you also need for ecommerce purposes, the right Payments Solutions in addition to the mastercard that visas helping there is deficiency. Francine guy de blonay from Jupiter Asset management stays with us. Coming up, is a super tuesday. An idea have more of which democrat will be facing donald trump in november as the race narrows. More on that next. This is bloomberg. Francine coronavirus hotline g7 leaders will hold the rare Conference Call to discuss the response to the outbreak. Will finance chiefs do whatever it takes . Cuts President Trump calls for more easing from the fed as the rba slashes rates to a record low to contain the virus fallout. And it is super tuesday. Joe biden picks up endorsements ahead of todays crucial vote in the democratic contest. Well, good morning, good afternoon, good evening, everyone. Im Francine Lacqua in london. Lets check in on your european stock movies with Annmarie Hordern. Annmarie a lot of movers to the upside, all in the green. 19 , the nearly biggest mover on the stoxx 600. Fordutch Company Testing coronavirus. Up nearly 8 ,a, much reprieve near did for the airlines today. Down for eight consecutive sessions over the past week and a half, finally moving higher with investors buying in some of that dip. And then finally, we have caixabank, up 6 . We are seeing this among the spanish lenders. The e. U. Court of justice, a court ruling on whether or not customers who were sold mortgages that were tied to the central bank what the court said, they were handled casebycase. A pretty positive ruling. Many were expecting it to be much harsher. Wasa bank was kasha bank francine Annmarie Hordern with main stock movers. We are getting breaking news south africa. South africa, the Fourth Quarter gdp saw an annualized 1. 4 instead of the 0. 2 percent we were expecting. That means the economy is slumping into a second recession in two years, having an immediate effect on the South African rand. The daily move currently at 15. 5921. Ingerterm, the chart moving the South African rounds. Moments ago, the South African economy slumping into a second recession in two years with the 1. 4 nnualized 1. 4 down for the Fourth Quarter. Joe biden is consolidating support for his democratic president ial campaign. Centrists are lining up behind him to try and block Bernie Sanders from winning the party nomination. Here is what to expect from super tuesday. [cheers and applause] the selfproclaimed democraticsocialist took the conventional wisdom and turned it upside down. All that talk about sanders support being limited to young white liberals who are disaffected no one is saying that now. Sanders won 47 of the vote in the nevada caucuses, and he did it with a broadbased coalition that looked more like the Democratic Party as a whole. Now sanders is eyeing bigger prizes. Dont tell anybody. I dont want to get them nervous. We are going to win the democratic primary of texas. The boko texas is just 1 states ons one of 14 super tuesday. There are 1357 delegates up for grabs. One third of the total number available. California and texas are the two biggest prizes. Others include north carolina, virginia, and massachusetts. The big question is, can any sanders moderates band together to stop the front runner . We are live and coming back and we are going to win. Biden was the Longtime National front runner. He had not won a state until saturdays victory in South Carolina. His supporters hope that could give him a boost on super tuesday. There is the Michael Bloomberg factor. The billionaire will be on the ballot for the first time. His performance in his first debate was widely criticized, but he has spent a fortune on advertising that will likely sure up his support. That means beating the biggest of all. Bloomberg is the majority owner of the Parent Company of bloomberg news. The candidate who took bloomberg down in that debate is looking for a balance. Every for a bounce. Otherswarren and the will not get a chance unless they figure out a way to stop Bernie Sanders. Super tuesday could be one of their last opportunities. Francine joining us now is jerry cap perry keyless jacob perry you look at the explanation we have had so far, how has joe biden engineered his astonishing comeback, and he is going to be the winner and easy going to be the winner . That is hard to say. Was baseds comeback entirely on his firewall state of South Carolina. He has consistently pulled among higher among africanamerican voters. Withdrawalated the of amy klobuchar, both of whom endorsed him along with beto orourke, although endorsed him last night along with former Senate Majority leader harry read, a coming together of people who had generally been described and were flattening, but generally were described from the more centrist to moderate parts of the Democratic Party. But he has a little bit of a hill to climb. Sanders overtook him in the National Polls, long overtook him in california, pulling in texas. A number of issues for biden, buttigieg and klobuchar are still on the ballot. People voting early or by absentee have already sent in votes for them. So you cannot necessarily capitalize on the support. An Michael Bloomberg is in that same pool of reporters, so there are a lot of complications. It is a strong narrative for him last night, but we have to wait and see. Francine what have we really learned . That democratic moderates are calling for unity, behind one candidate to stop Bernie Sanders . Yes. by and large, we dont know what the impact of bloomberg on the ballot will be because, as your correspondent said, this is the first time he is appearing on a ballot anywhere. He has appeared on a couple of debates, and there has been discussion on what kind of appeal he might have. But until today, no one gave him a chance to no one took a chance to vote for Michael Bloomberg, so we dont know if he is understated or overstated, whether he is competing for some of the same voters as biden because Voter Preferences are not about some biology. In terms of personality, past history it is not just a matter of saying i am 75 liberal, so im going to take a candidate who is closer to that figure. Francine if you look at the polling now, who would have a better chance against winning donald trump winning against donald trump . Is it Bernie Sanders or a centrist candidate . both sanders, bloomberg, and biden all regularly beat trump in National Polls. Althoughes, too, generally by a smaller percentage. There is an argument that they all have a roughly equivalent chance of beating trump. Of course, the National Polls come as we found out in 2016, what ssarily reflect i dont think we can fairly we are going to leave it there because mark carney is also testifying at the treasury elect committee. He is talking about coronavirus. The prc and our Financial Market infrastructure supervisors are reviewing the contingency plans of banks, includes and this assessment of operational risks and the ability of these firms to serve customers and markets with split teams and remote working. Thank management is reviewing its own operations and contingency plans to make sure the Payment Systems and sterling money market framework remains operational and resilient. Our management framework has been reading been meeting for over a month to steer these efforts, and the share has been briefed on the banks contingency planning. The fpc, mpc, and p. R. C. Met jointly to arrange macroeconomic and system scenarios and their implications and will continue to meet as needed, and we will act as appropriate. We are in continual contact over this whole range of issues consistent with our statutory responsibilities and in order to ensure a smooth transocean on march 6 transition on march 16. We are in frequent contact with our international peers, imf,ding the g7 and g20 and the bank of england will provide further updates as appropriate. Thank you very much. Governor, very much indeed for that. We will come back to coronavirus and the economic challenges later in this session. You, before i come to thank you for all the many appearances that you have made before the treasury committee. Im told this is your 37th, that you have given around 90 hours houridence, including 14. 5 north on session. I dont believe any of it, because you look far too calm and collected for that to be the case. To when youou back first appear before this committee, and you told this committee at that time that over the next five years, one of the main policy challenges will be ultimately exit from unconventional Monetary Policy come and here we are with the bankrate early higher in seven years, no withdrawal on the horizon. Are you disappointed that Monetary Policy is not achieved you the velocity that wanted . Thank you for your opening comments. Is thatppointing thing the Global Economy remains in a relatively lowgrowth, lowinflation equilibrium, verging on a trap that way may come to that. And the bankrate has had to remain very low in order to support the activity and to achieve the inflation target. , there aremained major Structural Forces that have kept down the equilibrium rate of interest in other words, the rate of interest at which the economy would offer at full capacity and inflation would remain a target absent any other shocks. That never is the situation where there are not shocks. But conceptually that is right. Structural forces, longerterm forces around demographics, the changing nature of the Global Economy, lower productivity those factors have weighed on socalled rstar, that equilibrium rate. In addition, the united kingdom, for most of that period, we have had two additional shorterterm sustained period of fiscal consolidation, which has provided a headwind in monetary period, ad then for a very l. A. Rated degree of uncertainty associated with determining our future economic relationship, full relationship with the european union. The complement of those factors has been appropriate to keep and create low at historic lows, the committee made a judgment early on about i think my testimony was in february of 2013 before i took on the position in our february 20 14 francine that was bank of England Governor Mark carney, who is stepping down in about 12 ys from the outcome his 37th appearance before the committee. He says that bank of england will take on necessary steps to help the economy. G7 centralcting the banks and finance ministers at the 12 00 p. M. London time. Lets get to first word news in new york city with Viviana Hurtado. Viviana the topic of coordinated rate cuts will not be included in the g7 draft statement about the coronavirus, all of this according to reuters. Later today the top finance ministers and Central Bank Governors are scheduled to hold a Conference Call. Amid mounting concerns that the disease is doing major damage to the economy. The oecd is saying a longlasting epidemic could risk a worldwide recession. The ecb joining other Central Banks pledging to take action against coronavirus. President Christine Lagarde saying the central bank is monitoring the situation and will take appropriate measures. It echoed statements from the Federal Reserve, the bank of japan, and the bank of england, and demand overwhelming amazons prime and fresh delivery services. It is a sign that shoppers are returning to the online retailer. There will be limited availability and orders will be delivered more slowly than usual. One anonymous amazon driver says the company had seen a surge in demand for bottled water. Bmw is betting on a new electric vehicle. It will battle pressure from in 2020 one, the i4 it is goingg look. More mainstream matt miller speaking with the chief executive about the outlook for the year. Expect growth in china and we also expect growth for the rest of the year. Whether that is true for the next coming weeks, i would not be able to confirm, but i think it is far too early to predict for the full year. Viviana global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, Viviana Hurtado. This is bloomberg. Francine . Francine thank you so much. We will have plenty more on your markets. Plenty more on the g7 call due in about two hours for now. Two hours from now. With theof interview chief executive of access is next. This is bloomberg. To provide stimulus to help smooth through a period of adjustment. And what we did specifically, and this would be my third point in terms of the reaction of successes, if i could put it that way, or contributions is maybe a better way to put it, Monetary Policy, is to further increase the transparency of Monetary Policy. After the referendum, we did our best estimate of where we thought the economy was going to go and where inflation was going to go, and our view is that inflation would remain above target for a period of time. We faced a choice at that time as a committee. We could have, in a strict read, and under the old agreement, we could have tightened policy in an effort to get inflation back an 18 to 24month horizon, or we did what we could do, which was to support stronger growth, better employment outcomes, and inflation returning to stronger francine this is bloomberg surveillance. Lets get to our exclusive interview, following the takeover of diamondback. It now plans to 22 africanin countries. I am pleased to be joined by herbert wigwe. Welcome to the program. Where do you go first . 22 countries in all. Where do you want to open this year and next year . Herbert 22 countries in the next five years, and the idea is to be present in the large part of the continent so we have a presence coming on in kenya right now, and of course we will do something in angola, etc. We currently dont have a presence in one region. We will be known in africa and throughout the world. Francine any plans to be in south africa. South africa, we just got news that it is slumping. Get themwe will because it is important and because it is impacting the economy. The three biggest continents in nigeria, angola we will be there. Francine are you raising equity, raising debt . Raising we are not equity. We are raising capital. Ouro have enough to support growth trajectory. Francine do you have a loan growth target for this year . Herbert it has come down a little bit because of the nigerian economy. Nominal growth will be about 10 or slightly less, but across the continent you will see francine there were concerns about the nigerian economy tied to the spread of coronavirus impacting the price of oil. What do you model your revenue on . I have a lot of trade happening between nigeria and china. Large supplier of oil. Havee tell you what we seen. Over the last 60 years, modeling any of these pandemics, what you find is that it will have a limited effect. That all ofion is this should return back to normal. In the shortterm it will have an impact on the economy, so there is the impact of risk assets on the bank. What it means for the consumer purchasing power and all of that. Francine do you worry about with nigerian banks, the central bank with the cash reserve ratio, quite significantly. What kind of impact does that have . Herbert Monetary Policy is very there has been a room created by which the the rule is simple. The idea is to continue to get back to support real effective lending, lending to retail and all of them. And i think there will be a balance somewhere. Given what the coronavirus is doing right now, lending has to be monitored very cautiously. Francine we are talking a little bit about fintech before and the parts of the markets that you want to be invested in. Is there anything else in the Banking Sector . My question to herbert would be quite simple. When it comes to banking and technology, how do you deal with that . Herbert in our case, we have embraced syntax. Where wes critical come from, and given our growth aspirations. There are a lot of things happening. Payments as far as that space is concerned, so there is big competition. Are good contributors for all of that. And we are readily embracing them. Francine you became number one by strategically buying things in nigeria. Is there anything else you would like to acquire in nigeria . Herbert acquisition is not done for acquisitions sake. We will have 20 million customers across africa. But i think payment emma innovation, driving, that is you will see things coming up in evenext couple of weeks, in europe, i think. To drive our growth. What is supporting the velocity of payment within nigeria intraafrica, as well as across haveorld, the large banks left africa. Because of the great concern. Francine thank you so much for joining us today. Herbert wigwe president of access bank, and guy de blonay. Of Jupiter Asset management. Go back to mark carney, explain it some decisions taken so far. He just moments ago said they would not be negative Interest Rates. That is something he told bloomberg in our leaders interview. What is interesting is him talking about coronavirus, saying Interest Rates are unlikely to remain low for some time, but they are ready to act if needed. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Francine coronavirus hotline g7 leaders will hold the rare Conference Call to discuss the response to the outbreak. Will finance chiefs do whatever it takes . Cuts President Trump calls for more easing from the fed as the rba slashes rates to a record low to contain the virus fallout. European stocks rally. And it is super tuesday. Joe biden picks up endorsements ahead of todays crucial vote in the democratic contest. Well, good morning, good afternoon, good evening, everyone. This is bloomberg surveillance. If we look at markets, and we do that almost every 10 minutes, surging on the back of expectation of something after the Conference Call in two hours from now from g7 leaders, i will also point out to mark carney, who is testifying for one of the last times at the Treasury Select Committee saying the bank of england stands ready to act if needed. An interestingn morning to say the least come with further market recovery. Be g7 meeting appears to unprecedented. Can you imagine if they dont deliver the goods . Francine they could actually deliver the goods by talking about it, like mario draghi did in london a couple of years ago. It depends on if they want to put their money where their mouth is, or get some kind of general support. Euro area inflation has slowed to 2 . The corporate rate rises to 1. 2 . That is something we will look at closely. Lets get to the first word news with in new york city with Viviana Hurtado. Group finance ministers are holding a rare Conference Call on the coronavirus out right. They are under pressure from investors to map their pledges to shield the Global Economy. But the teleConference Call may not result in coordinated rate cuts and physical action. It starts at 7 00 a. M. New york time. President trump, for his part, is calling again on the Federal Reserve to cut rates. The u. S. Death toll from the coronavirus has climbed to six. All of the deaths have been in the seattle, Washington State area. Using the areare worldwide, more than 90,000 people have been infected. More than 3100 people have died. And the vatican says pope francis come hours ago, tested negative for the virus. I the a show of force Democratic Party establishment. Go button picking up key endorsements on the eve of his super tuesday showdown joe biden picking up key endorsements on the eve of his super tuesday showdown. And peteklobuchar buttigieg dropped out of the race after the South Carolina primary. Today 14 states hold primaries. Global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in im than 120 countries, Viviana Hurtado. This is bloomberg. Tom thanks so much. We get to the data right away. I have a great chart on the g7 meetings that we will show in a moment. It has been a 7000point swing in the dow, above 3000 on spf. The curve flattening because of the twoyear dynamics. Oil gets a nice lift of about three dollars over the last two days. Next screen showing the vix from the 40 level, nicely down 10 points, 32. 29 over the last 48 hours. The twoyear yield does better. That is a lower yield than what we have seen over some form of 24 hours. But all in all, a bit of twoyear relief. The yen comes back as well, but not as much as i would think. I throw in here today the fed funds target rate. This is the benchmark rate that chairman powell will look at. 1. 75 . It is just a number. What has changed, francine, is that we are talking about some houses predicting four rate cuts a presumed quarterpoint each, so that would take it down to. 75 . Francine if you look at the percentage change, 3 since june of 2016. There is only one focused today, and that is the teleconference between g7 finance chiefs about coronavirus, and that will make or break equities. Treasuries hitting another record, asian stocks paring gains after reports suggested every sector in europe is actually rising. Tom there is the chart of the day, and this has to do with the g7 meetings and the idea of accommodation. 2007 look right now at the and massive real inflation rate. This is the fed fund target rate, less inflation. Then down we go with a massive accommodation across 8, 9 years. This is the point where stan fischer, the vice chairman of fed, now at blackrock, was talking about ultra accommodation. We come up here with a reflation, get to barely positive reflation rolled over. What is important here, francine, one rate cut. Cuts,te cuts, three rate four rate cuts gets you back to where we were in 2016. Francine my chart is a simple chart. It is probably the chart of the month, actually, because it is looking at 10year treasury yields. They fall to record lows over the 1 watch. Will touches below 1 , we probably see it on this chart first. G7 officials will hold a rare Conference Call today, under pressure for pledges to shield the World Economy from the coronavirus with action. Just moments ago, bank the bank of England Governor Mark carney spoke about the virus. The bank of englands role is england bank of francine we are having a couple of technical difficulties, but we were listening to mark carney talking about what the bank of thing the end could or could not do, saying that under no circumstances does he see negative rates. Oining us now is jeremy thank you for joining us. Lets kick off with you. Are we expecting too much from this g7 call . I think that is the risk. Clearly markets are clamoring for Monetary Policy stimulus during the course of yesterday, so we were seeing aggressive moves as markets were pricing more and more Monetary Policy stimulus. Also hoping that the Central Banks and the finance ministers would come to a conclusion in terms of them degree of fiscal policy as well. There is a lot built into the teleConference Call today, and that has to be a risk that optimism is misplaced. Case withem to be the comments from carney trying to provide more support as we go into the teleconference itself. Francine what are markets expecting . Are they expecting a stingless package and saying we need to come together . Saying they will be ready to act and do whatever it takes will that be enough . Jeremy if they are really true to their word and ready to stand , standing ready to act because we have a number of policy meetings upcoming, so at the ecb next weekend the fed upcoming as number ofe are a Central Banks that have opportunities under their own regular scheduled agenda to ease policy. But i think markets are looking for some degree of coordination. A risk that might have of temporary or shortterm disappointment. What we are seeing now is a , many firms to two beginning to think about potentially four rate cuts. Where do you stand on that . Jeremy you are absolutely right. We have recalibrated our expectations for north american Interest Rates through the course of 2020. As they get the context of the virus and the impact in terms of the Global Economy playing out, we are looking for 75 basis points of cuts now coming from the fed through the course of this year. We have now moved or adjusted to consider the sort of levels the market would have late last week. The market has moved a little bit beyond that. I think that is once again a reflection of the market getting a little bit ahead of itself or 75 basis points is now a view for the fed this year. Tom Leslie Vinjamuri of Chatham House is considerings super tuesday. About the to ask you interesting global relationship of treasury, of a chance with the exchequer, secretary mnuchin to proceeding centralbank independence. Is that was these going on today . Everybody isnk concerned and people have been concerned for a little while. But remember, at the moment we are in a very uncertain environment, not only with super tuesday, which is important for this election, but americans are beginning to be very uncertainty very uncertain and scared about coronavirus, where it is going. So it is not surprising that they are looking to the government and to the markets and trying to understand what the Economic Impact will be at a time of deep uncertainty. Both, jeremynk you stretch and layins jeremy stretch and Leslie Vinjamuri. Through bloomberg reporting, a replacing bill winters. It is unbelievable. In the last two to three weeks we have had oustings and replacements at the top banks in the world. As the coronavirus disrupts global travel, we will speak to the chief executives of some of europes weakest airlines. All right here on bloomberg tv. That is coming up next. I believe we can do this together. Rallying the country together to heal donald two beat donald trump. I will be casting my ballot for joe biden. Joe biden. Joe biden. We need you, we want you. For thisa place campaign, so join us. Tom predictive but still a shock to see people rally around the former Vice President as they confront the senator from vermont. That will be one of the Great Stories of super tuesday. We will go through the different election returns and really tonight im really not sure is it going to be 8 00 p. M. . 10 00 p. M. . In the wee hours of the morning . As we get to understand the in the washington election season. I am thrilled to start with you, emily. It backed up to me is a petrified Democratic Party about losing Speaker Pelosi and losing the majority of the house there at how much is that at risk as we go into super tuesday . Emily up on the hill, and a lot of people are watching this competition very closely. Remember, the reason that democrats have the majority in the house is because they won a lot of swing districts, districts that previously voted republican, previously voted for donald trump, but in 2018 decided we want to give a democrat a chance. Those are the districts that democrats are going to need to in again to keep the house 2020. A lot of them have said it is going to be difficult to do that with somebody like Bernie Sanders at the top of the ticket , with someone who supports medicaid for all. Tom i understand that mr. Bloomberg is the founder of bloomberg lp, but my new vocabulary word is something on the order of this combination of Michael Bloomberg and joseph biden together, a moderate survivor against summit senator sanders. What is the dynamic you sense within your washington of the linkage of Michael Bloomberg to joseph biden . There as you pointed out, they are both moderate, same blockthis of voters. When you look at the polls, joe biden does seem to be ahead of Michael Bloomberg in many cases, despite the amount of money that Michael Bloomberg has spent on advertisements. Clearly surpassing the rest of the candidates. Joecine how do you explain bidens astonishing come back . If you look at the polls, do they suggest a centrist would do better against President Trump than Bernie Sanders, or not . Emily at this point you are seeing the reason we are looking at biden right now is because of the strong showing in South Carolina, his strong showing with africanamerican voters, a critical block for the Democratic Party. At this point there are supporters of Bernie Sanders where he beats trump, supporters of joe biden that will. 2 polls where he beats trump. Trumpare polls that show beating both. We expect a lot more clarity after today about who the democrats might nominate as their potential candidate. Tom thank you so much. Emily wilkins in washington and london, Leslie Vinjamuri joins us from Chatham House. I will cut to the chase. Explain the dynamic you see between the former Vice President and the former mayor of new york city. Leslie it is difficult to say. Two people think these are moderate candidates piggybacking off the same electorate, the same voters. It is also the case that Michael Bloomberg is something different. He has not come from the inside, and so he may well be taking some of Bernie Sanders votes. Bernie sanders is clearly a progressive, very different from Michael Bloomberg, but they are both different. They are not the mainstream. They are seen as outsiders. There will be some voters that may actually be tossing up the vote between those two. Most of them, it is about the moderates. What is interesting is that bloomberg and biden are not aligned in their rhetoric right now. They are speaking out against each other, so they are looking at two very different candidates. Tom some focus on california. I have been shocked about texas. Give us your explanation, that swath of the south, alabama, and then we will get to texas. What are your thoughts on texas and the other central southern states. Leslie we should expect Vice President biden to do well generally in the southern states, which tend to be moderate, not big on socialism, and Bernie Sanders has been seen as a socialist. Last night the rally with amy klobuchar, Pete Buttigieg endorsing in texas joe biden. But i think we will come out of today as those votes come in with division. We will have 40 of the delegates cast after today, 60 in another two weeks, 90 by the end of april, and the likelihood of pushing up to the july convention with neither candidate. No candidate having a majority. I think that is very high. But it is astonishing, the comeback of joe biden since South Carolina. Even larger we always thought he would do well in South Carolina. He did better than anticipated with 7 up in california just since the South Carolina primary. Above sanders in virginia. These are very significant numbers, and i think you cannot discount coronavirus. People are now worried, they are worried about what is going to happen to the economy. They want stability, they want clarity. There is a tendency for those who might be undecided to say lets go for the sure thing, and joe biden has demonstrated years in office with working for a president who brought america out of a very significant economic recession. Francine leslie, if you look at the coalescing of democrats behind joe biden, is it because they want a centrist, because technically they think a centrist would do better against President Trump . Leslie i think there is a lot of technical tactical voting in this primary. Numberf democrats, their one priority is to see President Trump defeated in november, and they are weighing it up. That is why South Carolina was so important, not only independently but in driving momentum, funding for joe bidens campaign, and shaping how voters are likely to make their choices today. Absolutely, it has absolutely been critical. Francine jeremy, if you look at dollar dynamics, how much do they take their cue from coronavirus, and how much do they take their cue from election returns . Themy the identity of democratic candidate, which side that hasmocratic party chosen to race against President Trump will be important. I have been on this show before talking about when Elizabeth Warren was higher in the polls. Clearly if sanders were to win the nomination, that would raise the risk of a more extreme outcome in the election, and that essentially would be risking a more dynamic dollar outcome. Clearly as we move toward the increasing degree of coronavirus in north america, the risk of the economy being curtailed and the impact that will have on Broader Market sentiment i think does had does add to the uncertainty on the dollar side of the equation. Tom what is your dollar call ambiguity o in the on the dollar trend is just extraordinary. Good luck with the call. But what is it . Jeremy the terms of the strategic bias is remarkably difficult. Last year the dollar was being the net beneficiary. You could argue that the u. S. Was causing some of those trade ities. V depending on your assumptions to the extent and the proliferation of the virus, you want to be in those safe haven currencies like the yen and the swiss franc, but be. Baird be prepared to be nimble. Jeremy stretch on the dollar. Tonight, super tuesday. We will have our coverage and analysis of the different races. Look for that at 7 00 p. M. This is bloomberg. Francine this is bloomberg surveillance. Toline executives speaking guy johnson at the a4 to summit in brussels. I know you have caught up with a lot of them. British airways, iag canceling a lot of flights to and from europe and also various other places because of lack of demand and threats from coronavirus. If you can see in the last two months the Parent Company of British Airways, down 25 . Tom the data on their airlines leading the way of grimness or there has been a twoday recovery as well. The vix has a solid 10 points over the last i am going to call it three days. The target rate down at the bottom. Dont forget the g7 meeting in about 90 minutes. So much more to talk about today on a super tuesday, a super tuesday for the g7, for guy johnson, in brussels. We will have important interviews with Airline Executives in a moment. It is beautiful in london. This is bloomberg. Growth is going to pick up. My own perspective carney testifying in his 37th testimony. The bank of england, answering some questions. It was interesting to hear Governor Carney talking about the fact that he thinks it is possible to go to negative rates. Him also talking about some of the steps the bank of england could take in case the Coronavirus Spread gets worse. Governor carney, due to step down march 15, so 12 days from now and Andrew Bailey will take over. Boris johnson is said to unveil a suite of emergency measures to tackle coronavirus after he was criticized for not doing enough to prepare for the spread of the disease. Still with us, jeremy scratch. G7, markfolks on carney, the chancellor will be on that call, but overall, how tricky or how much of a benefit is this to the u. K. . They can closely the borders, they have more control of what they can and cant do. I suppose one shouldnt lose sight of the fact that the u. K. Is in the united nations. There is that impenetrable water around u. K. That makes it easier in terms of border crossings and going back, that has helped atigate the u. K. Having susceptibility to certain diseases which have ravaged the continent of europe over the last thousand years or so, but there is still this ongoing issue than International Travel is universal, we see people traveling through the major u. K. Transport hubs and this does raise the issue of persontoperson transmission so it will be interesting to see what measures the government are planning to set out, especially how the transmission of the virus plays out over the days and weeks. Francine how do you see the pound reacting . Because of be a cut the coronavirus but we are in the negotiation with the eu without a clue on the governments position. Jeremy absolutely. We have many issues in play. We are just over a week away from the new chancellors first budget. Had initiallyich been framed by his predecessor is being overshadowed by the impact of the coronavirus. It may be the case that the budget itself will be overshadowed in terms of the Bigger Picture story in the leveling up strategy Prime Minister and chancellor have been discussing and it may well be about fullterm measures and headline grabbing information to try and maintain that political momentum, but there are a lot of euu. K. T play, the trade negotiations have started facetoface yesterday and we timetable andsed the u. K. Trying to discuss with the u. S. At the same time. There are many variables at play, and there is ensuing negativity that will probably play out. Sterling rally will probably be shortlived. I think markets are still of aplaying the risk breakdown or at least a temporary breakdown in negotiations between u. K. And eu in those trade discussions. Tim was around for the plague of 1665. London lost 15 of its population in that terrible, terrible epidemic. Are we overreacting now . Andrime minister johnson others dealing with a modern overreaction with all of our speed of media and speed of markets . Well, fortunately i dont remember 1665 but in a sense, we are seeing an increased degree of issuing of 24 hours media. That amplifies the need for response. What we have seen is a couple of weeks ago, markets were talking about sars and the potential for followthrough in the impact that had in market sentiment. Late last week, it felt we were talking about a replication of the spanish flu of 1918, 30 of the globes population. Weve seen extreme market exemptions over the course of the last two to three weeks. We swung toward the latter over the last few days as the spread of the virus has extended worldwide across the continent and now, we are seeing how western democracies are starting to deal with that to try to stall or at least arrest the rapid accumulation. Beernments cannot be seen to sitting idly by and allowing the situation to develop. There has to be planning and preparation, and i think the u. K. Government are trying to get ahead of that. Mr. Johnson was deemed to be behind the curve over the last few weeks in his initial response. Tom what will be the response you read from Prime Minister johnson today . What is his to do list . Is it the link with nhs and testing, or can it be more dramatic and more holistic across the nation . Jeremy when we look at some of the measures we have seen discussed in other european countries, that will be something that will be on the agenda in mask at the rings mass gatherings, limiting those and looking at degrees of discussion around how areas or sectors can be quarantined if necessary. It is also the National Health Service Preparation to make sure there are centers designated in terms of testing, where the individuals can be tested away from the general population to try and keep the spread of the disease in a containable fashion. It is all about preparation being seen to be prepared in this instance. , thank you stretch for that holistic interview. Way away from foreign exchange. Let me show you the charge. This is an important chart. Were slow matters. The number of cases is still rising. You can see a little arise here still seen and the number of deaths very clearly, that slope has not turned around yet. We certainly dont have all clear looking at the logs of the medicine and the corolla g involved. With the first word news is Viviana Hurtado. Investors may need to brace for a letdown. The announcement ministers have a Conference Call soon and pledged to shield the Global Economy from the diseases impact but according to reuters, a draft statement does not mention coordinated rate cuts and fiscal packages. The call began at 7 00 a. M. New york time. Will this week the group issue travel warnings and go ignore travel warnings and discuss whether they need to cut Oil Production further. The coronavirus outbreak has led to a sharp falloff in demand. Now to israel, where Prime Minister batten mentioning netanyahu is edging closer to victory. It is israels third election in 11 months and exit polls show is within two seats of a majority. The Prime Minister has been indicted in three Corruption Cases and gambled on repeat elections to win the majority and possibly stay out of jail. 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. Im Viviana Hurtado. This is bloomberg. On the will focus airlines with all the other news, super tuesday, the g7 meeting. As you go to the ryanair website, it is simple. Flights ofshine, 29. 99. Guy johnson a shining brightly in brussels. He joins us right now. Guy . Guy good morning, tom. Joined by michael oleary, the ceo of ryanair. Coronavirus, having a substantial impact in the shortterm. How much visibility do you have in terms of how it will affect us . A lot of visibility over the next two or three weeks. Weve taken up to 25 of our flight schedules, mainly focusing on northern italy over the back end of march and first week of april. Holiday, the school is to holiday, but second or third week of april, we dont see any reduction in travel demand over that time. That could change as the situation evolves over the next couple of weeks but all of my experience in the industry suggests it will be a shortlived phenomenon. There is hysteria at the moment. The good news is more the information, the credible information like washing hands is getting out there. Dont get outnts of control and i dont think they will. Guy at the moment, restricting travel. We dont have a medical way of dealing with it other than quarantining people. If you look at restricted travel, it will not be effective, either. You would have Free Movement across europe. More self isolation where people develop symptoms, the numbers are tiny at the moment, anyway. The number of people who are suffering from the virus are very small. I think that would be the wrong measure. Clearly passengers are beginning to cancel or avoid aircraft travel. A large drop in shortterm bookings, but i think it will be reasonably shortterm. Guy shortterm, but that doesnt take you out to easter . Moment, we are going to complete the flight changes the next two weeks. We wont cancel flights unless we can get all passengers two weeks notification. The last two weeks of march, first week of april. The big issue over the next week or two is through april, the possibility we might. Isuspect we wont because think travel demand will be reasonably positive and we are merging into a time when temperatures are rising, the conditions for the spread of the virus are not very pernicious across europe. Guy what are you seeing in shortterm demand . Michael i mean, we have seen bookings declined by an average 25 to 30 on a daily basis over the last seven days. Yesterday was better. Now, it is higher in the routes we are focusing on traveling to northern italy. Severes suffering a very downturn in air travel. Spain, less so, the u. K. Less so, ireland, nothing at all. This may evolve in the next two or three days, but i suspect that is the model Going Forward. I think airlines will continue to look at taking out up to 25 of shorthaul capacity, perhaps on a rolling basis. If it rolls forward, on balance, it would be better than that. Not a lot. Government are communicating, the u. K. Government yesterday are not banning sport events. They are not shutting down the tube in london. For are calling for calm, everyone to take measured steps and continue to wash her hands, personal hygiene, and those people who feel they are developing flulike symptoms, dont go to your daughter, dr. , get the doctor to visit you. We find it difficult in the shortterm to isolate between the two. There is an immediate drop in business, leisure, short term tends to book well in advance so we dont see that disappearing, or allow cancellations so we dont see cancellations in leisure. I would have thought the more immediate dropoff in bookings toward the first week of april are largely business, it is not leisure. It is more business and it can stop very quickly. We dont yet see that drop off. We are seeing a strong twoweek easter period. We have made the decision not to reduce prices. Previous events, we have slashed prices, key people keep people flying. If people want to travel they stimulatingbut excess air travel while the virus is spreading across europe is not the thing to do. We will take the hit on our load factor the next couple of weeks and manage sentiment. Guy what is boeing telling you there is a consensus we will see returned to service in america in mid june, july time. Before august. We delayed our first deliveries to october and september. There is a degree of confidence at this stage that it will return to service in north america in june, july, in time for their summer peak. Im not sure those grounded aircraft will be back to flying in europe in time for the julyaugust period. 400 50lieve the manufactured grounded aircraft in north america will then get delivered over the period from august to the spring of next year. I think there is a greater doubt at the moment about how fast boeing can ramp up production. I think he will restart the production line, but they are a long way away from getting back to 40 or 50 aircraft. Maybe 10 or 20 aircraft a month. We are less confident that the backlog of aircraft deliveries will be caught up quickly, but im absolutely insured by boeing that ryanair will be at the front of the queue. Have theirmers will deliveries prep postponed so they can service the likes of ryanair. The the group, youve got a320 airbus. If airbus came to you and said we will offer you earlier slots, a320s how . Do you think about the way the fleet will develop . Right, if the price is we will buy aircraft today, tomorrow. Guy if airbus came to you and said we will offer you in early slot at a great price . Michael earlier slots at a better price. I like to buy aircraft that enable to me lower my operating cost and transfer savings to my customer. Been light largely full and the price has been high for the past four or five years. If that changed and their pricing offer changes, i would order them today, tomorrow, and on friday. I would do the same with both boeing. I am in discussions with boeing about new aircraft focusing on more macs to hundreds and on the bigger max 10. Always a pleasure. Guy michael oleary, the ceo of ryanair. Much, guythanks so johnson with great interview with the ryanair chief executive looking at the concerns out there, where he expects to pick up and when he doesnt. Guy is at the aviation summit in brussels. , he will talk to the easyjet chief executive with a similar conversation on the impact of the virus and any possible flight cancellations. A full roundup of the airlines conversation coming up shortly. This is bloomberg. Our hands with soap and water. There will be people tuning in to this for the first time francine you can listen to Boris Johnson telling people they should wash their hands with soap and water. We are expecting Boris Johnson, who started speaking moments ago to set out the governments coronavirus plan. There have been a number of reports out of the press over the last 24 hours about worstcase scenarios and the Prime Minister is also speaking at the News Conference with his chief medical advisor. There have been talks about quarantining people, about keeping people away from the office in the u. K. As we listen to Boris Johnson, lets get in jeremy stretch. Town and the you ks preparedness in this. We talked about the g7, which we expect markets to take their cue from. What else would you be watching for . To see how bad or better this gets. Do you wait for Economic Data . Do you track the infection number, cases . How do you track this . Jeremy there are a number of issues. Going back to where we started in the context of this, going back to china. Traffic numbers in china to see how the traffic numbers are starting to increase at the start of this week, implying workers are going back to work. Maybe that will impact the supply chain, but tom was showing the graphics in terms of the rate of cases and deaths. We will undoubtedly monitor that. We then try and look at that in terms of the implications it will have the real data Going Forward. We will be tracking that forwardlooking survey data with interest. Today, we will be looking at the tip series, not a major data release, but one of the first that correlates well with sentiment. What we are trying to do is look for lead indicators in activity. Looking at the china data in terms of the traffic data to see what the supply side is doing but also looking at the impacts in western economies in terms of how it will impact confidence in economic activity. Tom johan lundgren, thank you so much with cibc. An exceptionally important interview because all of the three audiences of bloomberg surveillance either own a porsche, want a porsche or oneday wish upon a star they will have a porsche. Officer is executive with us from student guard utgard. This morning. Want to do this within the context of the history of the company. You go back with electric motors over 130 years. How are you doing against tesla . Morning from the Design Center in germany. We are coming from a 9 11,tation of our new and a comic 911 turbo. We have strategies with combustion engines, hybrid, and very modern electromobility. Athave a big tradition firste, engineered the electric engine over 100 years ago and now, we are back with electric mobility, the First Electric car. When you refer to tesla, ive got a lot of respect for what tesla is doing and all competitors. We are coming from the racetrack and competition is very good for innovation and innovation is good for customers. Tom the virus is front and center. The virus has a modern capability, as well. Can you suggest the virus will affect the Forward Momentum of porsche . The virus is a serious challenge for the world and we hope we can limit the virus in the next weeks. The concrete situations at majority inlost the france and germany and now we are opening the dealerships and looking for a better situation in march, but it is too early to give a prognosis to the end of the year. How we recover the situation in china. On the other side, it is important the supply chain of the parts, they are coming from china to the european production for the world and up till now, we are very stable, but we have to monitor it every day. Have you hadfar, any impact, really impact on sales or production . Youve said you had to close and dealerships in china. Can you quantify how much that has cost . Yeah, the Chinese Market forne of the important porsche. Quarters ofnd three our normal sales in china in february. What will happen in march now with the beginning of opening our auto centers, we will see. We think the situation in march will be a bit better, but to give an overall prognosis, it is too early. We have to watch very deeply what will happen in the next , not only in china, but other countries of the world. Francine what are you watching to make an informed decision about whether you will close dealerships in europe or slow down production . Visit number of infections or are you in daily contact with Health Authorities . We have 18 which comes which comesa Team Together to decide what we will do. We are in close connection with authorities, and i think first point, safety first. Hand, we haveer to avoid hysteric reaction, so i the best is to go stepbystep, but have a very clear sm oliver blume, porsche chief executive. Futures up 28, the dow futures at 26,700. Coming up on the structure and position in the market. Our interview of the day, christopher will join us through the hour. He looks at ample liquidity, a liquidity wave. It is coming. More on the g7 meeting. We are around 60 minutes away from an important g7 meeting. Secretary mnuchin and chairman powell believed to be part of that agenda scheduled. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] this superorning, tuesday morning, it has been a 23 plus swing of 7000 dow points. Markets pricing in a coordinated accommodation by g7 leaders. They meet in one hour. Rate cuts tod come. Bloomberg, sanders, and war in the left standing. Warren left standing. Your salvation. Christopherbrown coming liquidity way. Monitoring Prime Minister johnson out front on the virus debate. Day seems to be the politicians are stepping up to a Global Dialogue about what their initiative is. Is. Cine johnson certainly he has come under significant criticism for not doing this soon. It was yesterday he managed the intense meeting with cabinet ministers to talk about crises. We have heard from Boris Johnson and his medical advisor about the need to wash hands and he went through a worstcase scenario. We are not really more clued up then we were yesterday. Tom my single headline is i believe it was the Washington Post suggesting some form of virus observation. 15 of the 50 states in america. I am sure that is plus or minus one or two to read with the news flow, here is Viviana Hurtado. Viviana 57 57 investors are holding a meeting. The teleconference may not result in physical action. It starts around 7 00 a. M. New york time. President trump is calling on the Federal Reserve to cut rates. Climbed toirus has six. By and motel to quarantine what could be scores of patients. More than 90,000 people have been infected. Pope francisays tested negative for the virus. To u. S. Politics and a show of force by the Democratic Party establishment, joe biden picking up key endorsements on the eve of his super tuesday showdown with Bernie Sanders. Buttigiegchar and dropping out of the race after the South Carolina primary. 14 states and one u. S. Territory hold primaries and we end in israel where Benjamin Netanyahu is edging closer to victory. He is within two of a two seats majority. He repeatedly gambled on a repeat election to win the majority and possibly stay out of jail. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado, this is bloomberg. Tom lets get to the data. Two days in a row as a much of a much better trade bounce. Up 25. The twoyearing as snaps back to a higher yield in anticipation of the meeting may be in 57 minutes. Oil with a nice lift. Big 10 points. About ratelow, talk cuts, that is where chairman powell is. European stocks still surging. There is one focus today, the Conference Call about the coronavirus. I am also looking at various reports that came out overnight that actually said the group would stop short of specifying monetary fiscal news and thats tinted some of the games. Actuallyold strengthening. On the response and focus on the g7 meetings, a quick usuallyth maria tadeo talking from brussels. What is the agenda for the european g7 at this emergency meeting . Is excited to find out the content of the call happening in an hour and it is interesting, the market was excited about the idea of rate cuts and global coordination. In europe, the mood died a little after there was a story suggesting may be the statement from the g7 would be more elusive. Pushing for strong coordination, still using that word. When you look at a statement from the g7, the language changes all the time. In an earlier version, there is no mention of coordination. Isthis point, the focus whether or not we get the mention to global coordination and any hint of the measure we could see. Francine we are talking about hints. We are not expecting a package today. We are expecting to reassure that they are ready to act. Maria exactly and that goes for the European Central bank. For that statement late yesterday, that is unusual. Christine lagarde had a meeting today and the market is looking at whether the ecb is ready to cut rates or put measures on the table and there are reports already suggesting Christine Lagarde may be inclined to not cut rates, but put loans for companies and provide them help for many shortterm loans and that could be something that is good for italy because the focus point for the coronavirus is italy and it really hit the north of italy, the core of the industrial industry and perhaps that is much better than cutting rates. We look at how banks are struggling. There are many possibilities, not necessarily cutting rates into negative territory. Tom thank you very much, maria tadeo. Without question, my most important interview of the day of where we are in these markets ishristopher veron absolutely definitive on trend based analysis. If you dont know what that is, let me cut to the chase, what the grownups use. Let me show you a chart not so much with trend, but it says where are we right now. 29,000. Ality of dow at low almost near what i say is a bear market, 18 and we close in the facility of a bear market and the snapback this morning gets us up to the correction level. Christopher verrone with us. Is it over . Christopher the process of putting in a bottom has begun. There will be more drama. We thought the conditions for a good tradable low were beginning to take shape. I also think this coming liquidity wave will be important in terms of restoring confidence in markets. Said we had abs liquidity wave with the amount of money out there. You will suggest g7 will add a new liquidity wave. Is it unprecedented . Christopher i think the bond market is screaming for that to happen. You have two yield two year yields under 2 . The moving bond market screams for action from the fed. When you look at the sentiment environment, put calls have spiked meaningfully. Stress in the Options Market is about as good of a signed we have of win it is time to put risk back. Bottoming is a process. This takes some time to put a low in, but i would not be short. Francine can we take a step back and can you tell me how you see the economy evolving in the next couple weeks and months . This is no longer a supply problem, could it move toward a Consumer Problem . Christopher i will make two observations. The best hope economists will be the market itself and there are relationships we look to for some message on the markets interpretation of growth, discretionary versus staples is a great example. If the market is going to say growth will improve in the second half or next year, we want to see discretionary do better and i would watch the relationship between semis and software. Another important clue of whether the market will look past weakness and look for growth to resume. Friday and monday, we have seen some improvement, global discretionary stocks have acted better. I think that will be important Going Forward and more timely than the Economic Data. A lot of the data we see over coming days and weeks will have stale information, looking at february numbers when the crisis is the second half of the month. Watch the markets interpretation, i think it will be more timely. Francine what gives you confidence markets are the best economists . Happened 10 days ,go, the market was on a tear 2000, 3000 every day infected in china and you have a cluster of infections why is it the benchmark of liquidity . Christopher when you look at the macro indicators that led this move lower, oil was early to roll, emerging market stocks were early to roll and the bond market had this right the entire time if you look at when 10 year yields started to break down. The macro messages have been prescient telling us something was wrong. They have actually been less bad over the last week or so. We abide by this concept of first in, first out. Emerging markets have been leaders over the last week. Copper has not made a new low. Todays those are important macro signals. Tom this is the nieman low chart. The pull back up here is next to nothing. Put in perspective where we are now for the people that missed this giant bull market. Frame the emotion of the people who did not enjoy the Christopher Verrone Christopher Verrone bull market. Christopher there is a myth that we are in a bull market. There have been draw downs along the way. Same thing in 2011 and 2010, so you have had serious resets. I suspect this is another reset in what is a longtime secular bull market. 16,lar moves tend to last 20 years. I would be reluctant saying this is the end. Financial assets are leaders and that is important. Tom Christopher Verrone will be with us throughout the hour. Later in this hour, guy johnson looks at the collapse, truly the collapse of aviation worldwide. Very important discussions, the chief executive offer officer of easyjet. This is bloomberg. I believe we can do this together. Rallying the country together to defeat donald trump. To heal this country and build something even greater. I will be casting my ballot for joe biden. Joe biden. Joe biden. We need you and want you. There is a place in this campaign for you, so join us. Tom that was superb about the energy we saw across america. We saw that in the afternoon yesterday into the evening. Emily wilkins watching this. The clearest memory of john how stunnednt and the beltway was. How stunned is the biden beltway going to be if mr. Sanders does better than good on the super tuesday. Sanderst does seem like is leading in a number of states. Biden got a ton of momentum in the last 24 hours. Seeing klobuchar and buttigieg come out and support him and lawmakers on capitol hill are hoping that will continue into super tuesday. At this point, it looks like sanders has a very good chance of picking up the most delegates. Tom we have to go because of scheduling, but we look forward to your report. A terrific essay from Bloomberg Government on all the congressional races, the backstory of what we see and Emily Wilkins leading our coverage on the secondary races that really have a lot to do with the first tuesday of november. First of of her own measuring the politics of the charts as well. Is the politics in your charts . Christopher in certain sectors and one thing we noticed that is different than last summer, if you look at managed care and pharma stocks, they have been more immune to Bernie Sanders r over elizabeths warren last november. I think it is a very Important Message coming out of the markets. Tom i took a long look at a bunch of stocks and not to be scientific, but toothpaste came to the rescue. A consumer durable, the things we use every day have barely gone down in this pullback. Thatu buy those stocks have barely gone down or do you buy a high beta russell 2000 disaster train wreck and climb on board . Christopher what is evidenced about a bunch of these moves is the leadership coming going in tends to be the leadership going up going out. That is where i would want to concentrate longs. If you look at the staples, even as they have rallied in price their they are not at strongest in relative terms. A lot of these stocks peaked last summer. Asples, utilities reads not strong as i would have anticipated. Tom the two year yield, 4 basis points. Francine let me bring you over to my chart on the 1 watch for the 10 year yld. What happens if we go below 1 . Christopher the relationship you want to focus on is between the two year yield and the fed funds rate. Twos have been trading south for 12 months. While you have seen them come in and out of inversion over the last year or so, they have been telling you the fed is too tight. We have a meeting in a couple weeks. I dont understand the purpose of waiting when the bond market is screaming. Care if it goes below 1 . Christopher what will be important, on any fed move, you want to see bond yields go up, not down. As the economy is going to reaccelerate in the second half of the year, it has to be with higher bond yields. That, historically, has been the message. When the bond yields rally, the market believes it. Tom oil up 1. 62 on american oil. 38. 48. As intermediate, west texas part of what we will see tonight, there are 13 states involved and they have their individual stories. I saw a board suggesting senator sanders is a little out front of senator warren in massachusetts. David westin will parse the data with Kevin Cirilli and our team. Look for that 7 00 this evening. This is bloomberg. Good morning. Tom bloomberg surveillance. Ood morning, everyone what we are going to do is focus on aviation. I saw lufthansa had a couple days ago postponing china flights into april, maybe april 24. Expert guy johnson is in brussels at the a4e meeting. The starting point is British Airways stirrers 25 million cups of tea the year, that is an important statistic. Importantis a very statistic. They will be serving less. We are joined by the ceo of aig. Lets talk about the coronavirus. What impact are you seeing on a day to day basis . Willie we had seen a sharp decline in demand in asia. It had stabilized. About a week ago, we had seen situation stabilized. Most airlines adjusted capacity. Since last monday with the situation in italy with the Italian Government we have seen we have seen a sharp fall off and they were not differentiating between the north of italy, it was italy. That has been very noticeable. I think it is having an impact to other countries as well. We have seen events like this before. The question is how long will it take for the situation to stabilize and how quick will it recover. Guy you talk about a substantial substantial hit. What do you think a substantial hit is . Asia, we saw it 25 lower than we expected it to be. We responded by reducing capacity. We were reducing capacity so flying smaller gauge aircraft 80, it was ahe a3 787 or 777. The capacity was adjusted to meet the underlying demand we saw and on the long haul side with our long aircraft, we moved the capacity into other parts of the world where we see demand quite strongly. The decline in traffic in milan has been more significant. It was over 50 . We are seeing that gradually recover, but it is still significantly down on where it was. Guy transatlantic . Willie this goes back to january, we had seen some Corporate Travel decline, getting softer. I think that is continuing. We are seeing evidence of more corporate introducing restrictions and with the largescale events, the first of them was barcelona, the conference which was canceled, a number of other events canceled. You would expect to see a corresponding weakness in the business. Not just in the business class, but Business Travel impact. It guy how quickly does business come back . Demand forerlying leisure is coming back. People are hesitating booking away from italy at the moment. I would expect most airlines of not all airlines will respond by providing some flexibility to customers booking. If they are concerned about booking to a certain destination and having to cancel. We are seeing policies from airlines change as a result. If we base this on past experience, we normally see a once rebound in traffic the if you want to call this a crisis, which i think is a fair comment, it is a crisis for a lot of people, you will see traffic respond quickly when that is over. Is your Balance Sheet strong now. Others, you cannot say the same thing. Do you think airlines will fail as a result of the coronavirus . Willie i think airlines will definitely fail. This will signal the demise of weaker carriers. I dont want to engine names. There are a number of airlines struggling financially through 2019. Some of them will get breathing space as a result of the fall off. Will bethink that enough. If the patterns of bookings we are seeing and based on other airlines, i suspect it is the same for everybody, so this will accelerate the demise of a number of carriers. Guy norwegian . Willie i wish them well. We had an interest, we were definitely interested in them, but that interest is gone and we moved on to other things. Is an airline we looked at previously, but we are focusing ropa. E acquisition of aireu while we are doing that, we are not interested in anything else. The consolidation in the short term will be through the failure of a number of weaker airlines. Generally, these are smallscale airlines. As those airlines disappear, the capacity they were providing, some of that will be replaced where there is underlying demand. A globale see it on scale. Veryhallenges are significant, made even more so by the judgment and the court of appeal last week. I have always said there are 2 really significant challenges that need to be overcome. One is the environmental issue. Nd the second is the financial i dont believe they can do that. Forward unless you can give absolute commitment to the environmental challenges and an absolute commitment at Airport Charges will not increase. Guy is willie walsh going to request really going to retire . Willie i actually love the dynamic associated with the current environment we are in. I think it suits my style and my nature, but it is time to move and i have had a fantastic time, enjoyed every single minute of it. Think will run the business differently . Willie he is committed to doing what we have been doing. We run an efficient airline. We are well able to manage capacity and capital allocation. We are responding to the demands of the shareholders by rewarding them, which they deserve given the commitment they have shown. He is a great guy. I identified him privately and publicly