Facebook, amazon. A whole lot of the names moving this market higher giving back those gains. Joe pretty ugly all around. Off the lows but nowhere near the highs. Is,ess the consolation yesterday still up substantially on the week. Scarlet positive on the week. Down on the day, down on the year. In 2020. Ones down 9. 2 lets check in with our market reporters. Abigail im thinking about todays two top stories. Of course, the fed rate cut, the emergency rate cut, and the stock selloff. Investment traders thinking the fed has not done enough. There was another period of time when bond yields fell and stocks fell. That was in 2018. At that time, fed chair jay powell they were in a hiking mode and he indicated they would hike. They did. And became more dovish stocks fell off. Between that selloff and this selloff, even with the fed cutting rates, stocks going lower. Investors not liking the messaging, it seems. They should not be worried about message response although perhaps a looking for some stability. I am taking a look at the dollar, down on the fourth straight session, coming off the expectation of some easing from the fed. Todays move off that 50 basis point surprise cut. The 10 year yield hitting an alltime record low. All of that could be a positive for stocks. A terminal chart coming from the bloomberg, yesterdays dramatic move was coming in part with dollar weakness. You look at the move on a one day basis. Inis not as outsized as dollars. Making the point that dollar weakness is at to the sentiment. As weive keep an eye on potentially see a weaker dollar ahead. That weaker dollar is one of the reasons why gold is higher. Biggest twoday increase in about four years. This is on the back of the fed easing. Lower rates make gold a more attractive investment. A trade says that this bad action opens the this fed action opens the floodgates for other Central Banks. Romaine thanks to everyone on the markets team. Still with us, luke kawa and benjamin segal. Lets talk about what is going on outside the u. S. This was supposed to be a catch up here for a lot of international stocks. Obviously, circumstances have changed. Does that change the longterm narrative . Benjamin you are still seeing opportunities outside of the united states. I think you have less Political Risks. A lot of Political Risks in the u. S. , i think that applies less outside. Expensive sector for sector, like for like. Like the opportunity. With the weaker dollar, nonus businesses earning locally rather than globally, those nondollar earnings, having been negative in the rising dollar environment, start to become positive in the falling dollar environment. Joe i am looking at the results today and i see that e. M. Shares significantly outperforming snp, although they are down. Could we be in a situation where the u. S. Is bearing the worst of this crisis . At the same time china is fully coming back online, doing stimulus, and suddenly in a perverse way, the rest of world trade versus u. S. Has some clear logic. Luke that is where we are. Since february 20, a massive outperformance of rest of world shares versus the u. S. Nothing that has risk for is related to risk did well today. Stocks of 103 nasdaq down today. What managed to hold on. Emergingmarket currencies just barely did it. They are still there. Perhaps for happier reasons in a be thats, that might handsoff might be a little more in vogue. Scarlet when you look at opportunities internationally, how do you frame your thinking went it comes to looking for opportunities to come in. Are you looking at it by geography, sector . Benjamin all of the above. There are some sectors. Health care, we talked about health care. We did not mention the acquisition today, which has been great for our portfolio. I think those health care companies, not just the pharmaceuticals but the products and services business, they operate globally. We like the u. K. , we like u. K. Housing. We are getting greater certainty another we are past the elections last year. That is a market specific question. Then there is a number of other situations where there are Business Model or Company Specific situations where we are pretty compelled. We think we can find really good distribution businesses, for example, that operate with a low operating margin but sweat their assets so hard that they generate higher returns on capital. They are providing the logistics for large manufacturers to reach smaller retailers and consumers. Those are businesses that have existed for centuries and businesses that we can feel good about over the longterm. It is a bit of everything. Romaine take a look at the picture here and tell us about volatility. It was not anything too out of the ordinary. Vix has been i and detached. At they certain point, those are going to converge. And the past two sessions even yesterday, future outcome of future up again. You will have it closing at its highest level since 2011. That is one of the dangers we have been pointing out. Not knowing which way that will resolve. Right now, that it has been resolving in a way that has not been good. Scarlet i keep thinking what this means for the election. Someone said, when jay powell spoke, the markets were not comforted. Perhaps if Bernie Sanders does very well super tuesday, that might give investors another reason to worry. D. C. Toame down to contribute to our coverage on super tuesday. It is extraordinary how Little People seem to be thinking about super tuesday. Would have guessed that is the secondbiggest story of the day. I am curious, when you look at different Asset Classes, is super tuesday Political Risk a thing or is it getting totally swamped by the virus . Still has to, it do with some of the stickiness related to super tuesday. On the other hand, i was talking to someone who was saying markets can only really freak out about one thing at a time. In terms of Asset Classes showing pain, the fact that the is up, ip vix think this is telling you that there is still a lot of embedded concern. That is a story perhaps for tomorrow, because we only really have futures telling us anything tonight. Romaine when you look ahead at the potential risk, what are the main indicators that you are keeping your eye on that would signal any sort of trouble ahead . Benjamin certainly vix would be one. We have been in an environment for many years were volatility is low. Think i think it increases the need to be more dynamic. We have had very low portfolio turnover for years. Those using those temporary peaks to trim and temporary do well inadd will the context of markets that will be sideways. Scarlet thank you so much. Senior Portfolio Manager at neub erger berman. It is still earnings season and a couple of retailers have come out with results. Full year earnings per share guidance misses the estimate, even though the guidance does not reflect the coronavirus effect. He says there is a high level of uncertainty over the chinese supply chain. 4. 88, this is the estimate of 5. 01. Romaine hewlettpackard enterprises shares movie lower after hours. Cutting the fullyear cash flow forecast. Also saying revenue for the quarter coming in below estimates. The street was looking for 7. 2. A lot of the other metrics here also missing. Regards to coronavirus, they dont mention anything about it other than putting it in that boilerplate language of potential risk. Scarlet nordstrom is another retailer that misses on its estimate. For the forecast, employer adjusted eps giving a range that misses the consensus estimate. Tolyear adjusted, 3. 25 3. 50. Also says nordstrom will serve as the sole ceo of the company. This is bloomberg. Romaine live from bloombergs World Headquarters in new york, i am romaine bostick. Scarlet i am scarlet fu. Joe i am joe weisenthal. Romaine the dow, the s p, and the nasdaq all moved lower as treasuries surged. Surprise cut. The Federal Reserve slashes Interest Rates by half a percentage point in its first emergency move since the 2008 crisis. 1 on falling below concerns that cheaper money might not be the solution. Jp morgan asking thousands of employees to test working from home in the event that it has to close its offices due to the virus. We should point out, president mp is speaking right now just moments ago. He did talk about how he was looking for a little more activity with regards to addressing not only the coronavirus. He is also mentioned also mentioning the land and Water Conservation fund. That what i believe feet into the national parks. We are continuing to monitor any other headlines out of washington. Scarlet g7 ministers say they are ready to protect their economy but they stopped short of saying what specific measures they would put into place. For more, lets bring in Deutsche Bank chief international economist. We have all been saying that a rate cut here does not actually change anything because this is not a liquidity problem. Thatit is a strong signal the Federal Reserve is sending. With the g7 statement, it was not very specific in terms of what might be coming. Yesterday, the Economic Outlook, it did have a list of things that could be done on the fiscal front, supporting those sectors that had been hit, tourism and health services. There are things they are clearly thinking hard about we did not get that detail. As you have been debating along, this is not a Monetary Policy problem. All of the issues we are talking about, exactly what is coming in terms of details. This is not a problem that can be solved with Monetary Policy alone. Joe i think everyone would agree it cannot be solved with Monetary Policy alone, including chairman powell, citing other entities that need to act including Public Health authorities. The fed has its jump to do. Maintain price stability and employment. What does it need to say Going Forward beyond just, we will cut rates and bond market conditions. What does it need to establish now as his operating procedure so it is not just forced into this reactive thing and thing you know, it is out of ammo. Torsten question. When you think about what happened as the reaction in the stock market, one is that people see this as a sign that it is an interpretation of what the fed saw and the market did not see. The Economic Outlook has deteriorated significantly and we are not quite getting from the press conference. What he did say, we think this is good for now and we think the policy stance is enough in terms of thinking about what will happen for the next meeting. He was signaling that no more cuts will be coming for now. We need to see some Economic Data. This is actually as negative as we are all fearing. His the Economic Data potentially holding up. Looking ahead, the answer to your question, jobless claims is the number one variable we are watching. This is such a critical variable leading into the labor market. Romaine some of the reaction seemed to hedge on the comments about the toolkit and that that might not be enough. That you that sense have to have something more than rate cuts. Qe, fiscal stimulus, he did not specify. Torsten i dont think he meant to say this was qe. I do think he was trying to say qet this is fiscal policy will not solve the coronavirus either. The question, what will it be. The report yesterday, you could give targeted support not just a tax cut to everyone, but targeted support to those sectors that are most in need of support. Most importantly, health services, but also everything to do with tourism and different sectors that are effected. Tourism globally would be benefiting from temporary support because of these negative impacts. Romaine sit tight, you will stick with us. Torsten slok, Deutsche Bank chief international economist. This is bloomberg. Erg. Romaine policymakers under pressure to back up recent pledges to shield economies from the coronavirus. Korea, bank of canada, japan. Torsten , which bank chief bank chief deutsche economist torsten slok still with us. 2008, all the banks sort of cut at the same time. Is it reasonable to expect we will get these cuts . Torsten we are really flying blind because this is the story that only evolved 10 days ago. Two weeks ago, we were at alltime highs, then we are sitting here. In some sense, we need some evidence in Economic Data. This cannot just be anecdotes from companies that things are deteriorating. If it warrants such a significant reaction. I think we are still seeing Monetary Policy around the world in wait and see mode. Even with these targeted ideas of supporting specific sectors and industries, it is something where we need more data and evidence. Scarlet assuming you can trust the data, it sounds like it seems like china is darting to recover. The number of cases is fewer than what we are seeing outside of china. Of course, the country is hard at work trying to get people back to work. I look at the bloomberg world equity indexes and it shows that the chinese stock it is actually up for the year. Up 9. 6 year to date. Assten i hear that investors saying, some things are actually coming back up. We are seeing improvements in these areas. Saying,s are probably maybe it is contained now in asia, most importantly in china, and maybe we are now moving in the direction of those countries that have contained at the best. There is almost a sequencing in terms of how bad is it in certain places . Probably the cases that will be performing better exactly is the data is suggesting. Joe would a recovery in any place, whether it is china, whether it is hereafter the worst of our virus cases peaks, would you say we have the potential for a vshaped recovery once people feel comfortable that it is on the decline. Or is the psychological damage and supply chain damage such that even when people do feel comfortable, there is an incredible amount of wreckage to sort through. Torsten i think the damage both to the supplyside and the demand side in terms of more caution globally, should i hold back consumption, that is going to take some time to repair. Saying the sentiment effect, the fact that we need to have confidence, it is going to take some time, at least a few weeks and potentially a few months before we get to the other side and everyone is convinced that this problem is behind us. Vshapedikely we get a recovery in the next few weeks. It will probably be longer before we see a more significant recovery. Q2 before we see the beginnings of a recovery if we are being optimistic. What is the number one question that clients are asking . Torsten how long it will take in terms of the virus being gone. Of course, no one has a good idea about that. What is the policy response . I may not be good at predicting what the virus is doing, but i have a much better idea of the policy response. The policy response could have come a lot sooner. Important for markets because that will be supporting Monetary Policy, fiscal policy, and specifically the sectors that get support that will be important for romaine are there any sort of parallels . The last time we had a there was this response. Torsten not really, because this is not likely financial crisis where there is something growing and brewing that can potentially become dramatic this is important, absolutely critical, and serious and so many ways, but the nature is quite different. Playbook,o textbook, also because we just dont understand the duration of the shock. Scarlet i guess the one consistency is that we are in uncharted territory. But have been there for a decade now. Torsten slok of Deutsche Bank. Thank you. This is bloomberg. With i am Mark Crumpton bloomberg first word news. President trump says the government is ahead of the coronavirus outbreak and it is not inevitable that the disease will spread in the united states. He spoke to reporters as he left the white house to visit the National Institutes of health in maryland, which is working with drugmakers to accelerate research into vaccines and treatment for the coronavirus. Washington state is reporting that nine people have died from the virus. At least 100 americans have been infected. Governor andrew cuomo says a man north of new york city is hospitalized. The second confirmed case. Manays the unidentified commuted to work in manhattan and lives in a home with his children. Workses in westchester, in manhattan. Has been with his family in westchester. We are now going through possible connections to track down possible connections to find people. Mark he added that a school in of thenx attended by one mans children has been closed as a precaution. One other case, a manhattan woman in her 30s who contracted the virus while traveling in iran. The World Health Organization is asking people around the world to stop porting masks, gloves, and other protective equipment. The head of the u. N. Agency says he is concerned that coronavirus is disrupting worldwide supplies of the equipment desperately needed to fight the epidemic. His comments came just hours after french president Emmanuel Macron said his government is requisitioning all current and future stocks of protective masks. Todays president ial primaries across 14 states marked the first major security test since the 2018 midterms. Officials say they are prepared to deal with everything from equipment problems to false information about the coronavirus. Russia interfered with u. S. Elections in 2016. Global news 24 hours a day come on air and on take by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am Mark Crumpton. This is bloomberg. Joe the fed shaved 50 basis points from its benchmark rate in an attempt to fight a Global Demand shock. Treasuries search investors are worried that the emergency cut will not be enough to impact the Economic Impact of the coronavirus. Karl, thank you for joining. You have been writing about the fed response. Did they do the right thing today . Was there Something Else in powells messaging or anything else that said to the market, this is not enough. I was surprised they did it so soon but it was the right thing. I dont know if his messaging itself was that enough, but the crisis is well beyond 50 basis points. They will have to do more. Romaine when you look at what powell said and i guess the way he said it, this general idea that they need something beyond just Monetary Policy. Does the fed have anything else in its toolkit that he can do to stabilize the economy assuming the outbreak does not get any better or is this something where you have to pass the baton to fiscal policy makers and lawmakers . The fed, obviously they can cut all the way to zero. They can go maybe another 50, 75 in march, another quarter after that. Beyond that, the way they do their longterm messaging matters a lot. If they give the market a sense that they are going to be on this as long as the virus is here. One of the ideas joe had that i supported, they could say, once we had zero, we will stay at zero so long as the coronavirus represents a significant threat to Global Growth and u. S. Growth. Giving that level of assurance would let people know that firms dealing with cash crunches or people engaged in development plans, that they will have credit to make it through this entire episode. I think that would help stem the demand. Joe skeptics say lower Interest Rates will not get people to travel at a time they are scared about the virus. Lower Interest Rates will not get people to book hotels, go out to eat, really do anything for me real economic standpoint when they are so terrified about the virus. How do you describe what Monetary Policy does in a situation in which one cannot cut rates low enough . I think what Monetary Policy does, it insulates us from a secondary demand shock. People are not traveling as much, that will cause Financial Stress for airlines, restaurants. That can cause kind of a demand ripple. To the extent you can support either demand and other sectors of the economy or have liquidity so that businesses can make it through and so their creditors feel like there is been easy money this entire period, the more they can withstand that i think it stems the basic crisis from rippling out forward. Scarlet should the u. S. Consider Something Like what hong kong did . Helicopter money. Hand out 1500 to every permanent resident 18 and above . I dont think a policy like that is something very close to that would be a payroll tax holiday. That would money in everyones pocket. If you did that on the employer side, it would also cut employment costs. Joe great stuff. Arlomberg opinion columnist k smith, joining us to talk about the policy response. Coming up, bond Duration Risk at a record high. Frtiz. O marty this is bloomberg. Romaine of course, we are talking about fed chair jay powell cutting rates. Treasury yields moved down on fears that the cut might not be enough. Thanks for being here today. Lets start off with a general sense of it. Markets,ets, treasury are things going to improve . Is sentiment going to improve for our we just kind of back to where we were . I hope it does not improve too much with treasuries. The headline record low treasury yield keeps coming back. That is not a good sign. The highyield market of course has gone the opposite way because of the concern about the rising credit risk. It really is a function of how things go with the virus and what kind of impact that ends up having. The acuteprior to phase of the virus we have seen, we have been marveling at extraordinary demand for bonds. Change in your view, in the meaningful change direction of insatiable demand for fixed income assets . If there were a reason to ,xpect a pickup in inflation that would do it there is some concern on that front because throwing money under these conditions, when really the problem asa supply that couldfalls, and give rise to inflation and ,xpansion on the monetary front for the first time in a while, at least a theoretical concern. We always like to say that credit leads everything else, it is an asset class to watch before anything else. You are in credit. What are you paying attention to . Thein i focus a lot on highyield market. It is of course very sensitive because of the closeness to the equity market. Ast week, we actually had rise in the investmentgrade corporate market. Treasury yields, which they track more closely. High yields really had a very bad week. The yield on the highyield index rose by a full percentage point, quite a dramatic move. Joe what kind of other policy measures are you looking for . Glassrying to take a halffull perspective and talk about the fact that between monday and tuesday, we are actually still up on the week. What would be the next policy response you are looking for . Something on the fiscal side, the regulatory side, the fed side . I think it is the case where anything that is done, either physical or monetary, will take a while to kick in. The economy is just going to be hampered by the difficulty of travel, people eventually being unable to get to work because of sickness, and supply chain disruption. Think there is a emmett what can be done on the policy front other than just doing the best that can be done to manage the virus problem, which of course, limited ability. Some Public Health measures can be taken that might mitigate the impact. Toaine going back highyield, your premuch comfortable with where we are with yields at the backdrop. Are you looking at it more for . E broadbased perspective expensive side. Begin the year end the month at such an extremely rich valuation. It looked great. Ratesegative interest still prevail in, just a huge appetite for yield. That really pushed highyield levels to quite an extreme. They recently had been withdrawals from the sector, the flight to safety. Scarlet our thanks to martin fridson. Chevron trying to reassure investors because it plans more than 80 billion in dividends and share buybacks, up to eight 20 increase compared with the most recent payout. The chairman promised shareholders a mix of costcutting and Production Growth centered in texas and new mexico. Google off its flagship conference on coronavirus concerns. The event brings people around the world who partner with or build websites and apps for google services. Wall street bankers tend to think of changing jobs at this time of year, once their bonus checks have cleared. Ancial and traditions recruiters say Financial Institutions have put everything on hold, travel, and they are postponing interviews of people who are sick or have spent time in south korea or china. Romaine jp morgan testing u. S. Coronavirus plans. Bloomberg has learned they are asking thousands of employees to work from home. Bloomberg finance reporter Michelle Davis is here now to give us a little bit more information. Not necessarily unusual. What is unusual about what is happening here is that coronavirus has been around for Global Companies for the past two weeks. Jp morgan, their Consumer Bank has not been affected this. That is where they have the most employees. Are consumere facing. Off theseas dusted plans and they are saying, we need 10 of staff across the bank to test out working from home so that if it comes to the point where if there are massive outbreaks and we have to shut down offices, we will still be able to function at normal. Joe this is something that, in theory, banks would have to be be prepared for . Banks by law have to have these contingency plans to make sure they can continue as usual with some sort of natural disaster. Normally, banks have not caused have not thought of pandemics as things that could cause a disruption, but, yes, these are part of existing plans. Banks like jp morgan are dusting off the existing plans, making tweaks to adjust. At this point, what we know jput all the other banks, morgan has also done that. These working from home policies, we know that jp morgan is doing this. We know that some of the other banks are splitting up Trading Operations and think about how they might have to set up backup locations outside of new york city if they want to do something to stop the spread. Romaine we have seen this sort of trickle over into things like Investment Banking and other areas where you would have that need for facetoface contact. Larger is part of the contingency plan. They have restricted travel. They have also moved more virtual online meetings instead of facetoface business. Scarlet a more flexible approach to banking. Michelle davis, thank you so much. Coming up before we get to that. Facebook is weighing a revamp to its libra payments network. Bloomberg has learned that facebook and partners are considering redesigning the cryptocurrency project so that the network accepts multiple coins, including those issued by Central Banks. We will keep you on further developments. Coming up, joe biden is surging thanks to his former rivals endorsing him. It is super tuesday. We will be heading over to washington next. This is bloomberg. Joe voters across 14 states and one territory to the polls today for super tuesday, with former Vice President joe biden surgeon. It looks like he has some momentum but can he close the gap on Bernie Sanders . Lets bring in our politics reporter. Wont of all, joe biden south carolina, but does the fact that he managed to meet basic expectations and earn endorsements give him the big mo, momentum . It is like a natural experiment for something that has been debated by political scientists. Pundits like momentum. Political Scientists Say it does not exist. They say that states that have similar demographics vote similarly. But, he does seem to be doing a lot that are in just the last couple of days. Joe how much does the fact that some of the more moderate rivals like Pete Buttigieg and Amy Klobuchar have not just dropped out but actually endorsed him it is like an experiment. The whole fact that the party decides. Here is an example of the party elite coming down and saying, biden is the guy. Buttigieg and other people dropping out, endorsing him, harry reid endorsing him as a way of signaling to the grassroots, this is the person you should be voting for if that works, that would be an interesting test of that. Joe one person who has not endorsed him, a wellknown billionaire businessman Michael Bloomberg, who runs that network. Runs this network. What is the risk that his participation locks biden from either winning certain states or clearing delegate thresholds . He and warren are sort of counterbalancing each other. Warren is doing a similar thing to sanders. The risk is that they could snag risk eithernough to one getting through on the first ballot. Then you get into these sticky situations about who deserves to get the nomination . Joe as a politics nerd, how excited are you at the prospect of possibly covering a contested convention . I have a word for it, fanfiction. It is the kind of thing where people sit around and go, what if harry potter dated draco or something. It is unlikely. Yet the math seems to be pointing in that direction. We will see what happens if Elizabeth Warren and Michael Bloomberg dropout. Joe thanks to our political reporter. Of course, Michael Bloomberg is the founder and owner of bloomberg lp, the Parent Company of bloomberg news. Ofe in to special coverage super tuesday tonight. And, dont miss this. The fed beige book released tomorrow. Scarlet a Rate Decision at 10 00 a. M. Tomorrow that does it for whatd you miss . Romaine Bloomberg Markets is next. This is bloomberg. Bloombergome to markets. Hour, up in the next Central Banks step in, but the emergency cut did not prevent stocks from falling. What policymakers can do as the infection spreads. And dont raise the white flag. The World Health Organization says countries should pursue aggressive containment stratees