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Ease concern over coronavirus. 1 10 year yield falls below for the first time in over 150 years. Uncoordinated action. Other g7 Central Banks are yet to follow suit, though expectations for the central bank of canada, japan, and korea and furtherrowing to fall. Scott meinhardt said u. S. Equities could slump another 15 but a surprise come back for joe biden on super tuesday cease turn positive. Speaking of the biden news, we are getting a breaking headline on the bloomberg terminal that joe biden has won the Texas Democratic president ial primary, state that was expected to show strong support for Bernie Sanders, has gone instead for joe biden according to the associated press. Of super tuesday for joe biden. A contender who had almost been counted out after the initial caucuses, coming back in a big way after getting endorsements from Amy Klobuchar and pete buttigieg. Matt, lets go from the United States politics to Money Management in the u. K. Breaking news on the uks largest manager of assets in the u. K. , pretax profit missing estimate by a little bit. Pounds, the estimate was 2. 23 and the fullyear operating profit, 2. 13. They are confident they will deliver growth into the future. Yountion this on a day when would have expected them to talk about the big picture in the markets, but i mention this because we will be speaking to ceo afterand general seven 30 u. K. Time. With all of the nervousness around coronavirus, a great voice to have on the program. Just an hour from the start of equity trading in europe. Futures, green arrows here in european futures. Stronger green arrows for u. S. Futures than we are seeing across europe. Maybe it is a risk on day for the u. S. After the big drops that we saw yesterday. Equity indexes, plunging along with that bond yields. What do you see on the gmm . Anna in europe, we missed out on a lot of the drop yesterday on the u. S. Markets so perhaps the u. S. Markets have more to claw back, more risk on today. A volatile session in asia, a mixed session in the asian market, the msci asiapacific up. 2 . The australian markets, down, 2 . Kospi up a lot of diversions going on to do with the way the individual economies will be affected by coronavirus and the way authorities are responding in each place, but we have seen through thepetite Asian Session and more appetite for some emerging market fx. Itthe other side of the gmm, seems to be in the rate sovereign bond space we are seeing readjustments last 24 hours. Sovereign bonds in the Asian Session, appetite on the shorthand, the twoyear, five year horizon for sovereign bonds and yields coming down. Is there an expectation Central Banks will follow the fed lead . Aboutsia was talking preparing eight stimulus packages. Lets leave the markets there for a moment had talked about what we have seen in the last way for hours. Delivers an emergency rate cut, one chair Jerome Powell said had to happen amid concerns around the impact of the coronavirus on Economic Growth. Here is how central bankers have responded around the world. What really matters is not the epidemiology, but the risk to the economy. We saw a risk to the outlook for the economy and chose to act. Bank of englands role is to help u. K. Businesses and households manage and economic shock that could prove large, but will ultimately be temporary. Coronavirus has turned out to be a global problem. Is soed for coordination much more. The bank will take all necessary steps to support the u. K. Financial system consistent with statutory responsibilities. Further rate cuts is another option available. The other option is in terms of supporting the markets by liquidity. We dont think we have all the answers, but we do believe our actions will provide a meaningful boost to the economy. Anna lets get into the markets. Central a selection of bankers speaking before and after Jerome Powells announcement around the feds emergency rate cut. Kuba, laura cooper is with us on set in london. Last 24 take in the hours. The question of the day, how do assets price central bank impotency or is it too early to say that was demonstrated yesterday . 50 basis point rate cut from the fed and the market sold off. For many, that made the fed look fairly impotent. Laura i think the capacity of central bank to stimulate the economy, the limited capacity is more of a secondround effect. What we are seeing now is the shock and all of the fed and markets trying to digest that. Yesterday, there are two ways of reading what the fed did. Were they too dovish . Did they spook markets . Was it seen as desperation, too much too soon . Anna because of the timing. Laura exactly. Markets are positioning for coordinated policy action. It came shortly after the g7 statement. Come out without other support, that spooked markets, as well. Matt is the concern here that the fed is signaling to investors how dangerous the situation is . In terms of supply chains, in terms of people unwilling to travel . Is the market seeing this as a sign that the u. S. Is going to fall, could fall into a recession by the end of the Second Quarter . We sawi think thats why the Market Reaction we did after mondays rally because fed chair powell in his press conference did highlight the fact that fed policy is inadequate in its own, itself. It needs Additional Support from the fiscal side and is cant impact the supply chains. It certainly cant provide the stimulus needed in the current context. That being said, Monetary Policy fed work with a lag, so the is likely trying to get ahead of the situation and that is likely why they saw the need to act financialand conditions tightened quite sharply over the past seven or eight sessions, so the fed saw the need to act. Financial conditions have this is nowain, so putting pressure on other Central Banks to follow the fed and markets are certainly priced for that expectation, so the bar is quite high. See u. S. Eresting to futures tick higher. That because, is the markets are saying we overdid it yesterday, we shouldnt have been as spooked as me we were . We should be thankful, or is it because we are getting the results of super tuesday and joe biden is looking stronger than many had expected him to . Is that what we are seeing . We are seeing political risks unwind in terms of biden taking over. He is a market friendly candidate and that is likely dominating the current move. It is likely we will see other Central Banks coordinate and that is providing some risk on sentiment more broadly. Will telloming days us how markets are interpreting this and whether or not we do see other we will not central bankers have the bazooka we saw from the fed. Matt laura, thank you for joining us. Laura cooper, joining us from the mliv blog. Get her work and the work of her colleagues by typing mliv on the bloomberg terminal. Next, we will take a look at stocks to watch this morning at the open. Sensethere will be more of individualism in todays trade, certainly more than xorerday at this time as plans to sell to a french insurer. Fascinating story for the family, for sure. This is bloomberg. To theill connect european open. 45 minutes until the start of cash equity trading in europe. It looks as if we are seeing a bounce at the start of the trading day. U. S. Futures point higher as they unwind some heavy selling we saw in the latter part of the u. S. Lets get a first word news update in london. Update on the coronavirus. According to reports from around the world come over 50,000 people have now recovered from the virus or been released from hospital as the total number of infections has risen above 93,000. At least 80 of cases are mild similar to regular feeling flu. Japan said the Tokyo Olympics could be delayed until later in the year amid concerns the coronavirus could cancel the games for the First Time Since world war ii. May is the latest the decision could be made. Right now, plans are proceeding. Bernie sanders won the biggest prize of super tuesday, california. Joe biden staged a strong comeback, winning nine states including texas in one of the biggest upsets of the night, biden one thing massachusetts. Sanders had been expected to win their. 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. This is bloomberg. Matt laura write with your first word news. Or stocks to watch from around the newsroom, annmarie hordern, joe easton is covering dialog semiconductor. I guess more money, cashes in. Annmarie on the heels of a mass with fiatassive deal chrysler. The billionaire in italian family, investment deal. They are selling their reInsurance Business, about 9 billion in cash. Really about diversifying but we have seen these insurers pressure,res under Interest Rates lower for longer. They are getting some more cash, so watch exor at the open. Anna well also watch dialog semiconductor. Guidance for firstquarter revenue between 220 to 250 million euros. The market was looking for around 250 so the 220 lower end of the guidance is likely to be seen as negative. He also reported a 23 slump in net income in the Fourth Quarter , so it is pretty much a negative report from the semiconductor company. Unsurprisingly, they note it is mainly due to the coronavirus. Certainly not the First Company that has been talking about the virus from that sector. We saw Microchip Technology in the u. S. , 80 weak demand in china. The report came out a few days ago and the sector has been one of the underperforming among the many that have slumped in recent weeks, so keep an eye on that sector following the report from the German Company today. Thank you very much for joining us. Get the latest stock stories from our Equities Team i typing first go on your terminal and get the first word news on your mobile app. To stemhas cut rates the Economic Impact of the coronavirus but the emergency move seemed to unnerve markets by signaling it is unclear how long the outbreak will last. It either spooked markets because it shows the u. S. Economy is in more trouble than they thought or it shows that the fed was the only g7 body to react after a Conference Call from which we expected coordinated action. Joining us, the Global Market strategist for jpmorgan asset management. What is your take away from the fed cut . Spote fed were in a tough because they didnt get the Market Reaction they would have wanted in equity but had they not done anything, you could have been looking at a worse day on the stock market front. They decided to move early and aggressively. I think the market is also telling you as jay powell did that this is a question more for fiscal policy than Monetary Policy, so im not writing off Monetary Policy. Tore are helpful elements more supportive Monetary Policy in this scenario, but it is the targeted fiscal measures that we will need to see more before the market regains some confidence. Anna one of our colleagues writing on his blog, it is calling an electrician and asking him to fix your leaky faucet because you are asking the fed to do something that isnt quite their job. But they dont have the whole story. What is the whole story . What sort of macro measures should we expect from the u. S. . Indonesia is talking about preparing eight different types of stimulus packages. I think we can take france as an example in their announcement yesterday. Will havehat they public backing for loans for small to medium sized enterprise in france to get money flowing through the system. At the moment, this is all about trying to effectively prevent job losses and take a shortterm economic hit to the Balance Sheet of the government rather than the Balance Sheet of the corporate sector. You want to see loan forbearance , tax credits, for example, ways in which employees can continue to see some elements of income if businesses are shutting down on a temporary basis and when the bounceback comes, whenever that may be coming you want businesses to benefit from that, rather than feel too much of a strain in this period are we expect activity to slow. Financial conditions in are tightening substantially so the fed cant print a vaccine to if there is a supplyside problem and Central Banks cant affect it, they need to worry about the demandside problem that follows. There are tightening financial conditions, they cant be restricted. They have to come down, right . The you expect them to come down further . I think that is quite likely. Whether that is at the march meeting or they will hold back ammunition for later in the year, im not sure at this stage, but i think there will be further steps taken and the fed wont be the only bank to move. Our eyes will be turning to the ecb and bank of england, in particular as to where the move goes because the currency is the one to watch. We saw strength in the euro yesterday and the ecb will be kurt particularly concerned if they arent following the fed and seeing a stronger euro pressuring European Growth and they will feel they need to act, as well. Gh was mentioning public backing for Mediumsized Enterprises in france yesterday, clearly caught his attention as we were talking about other measures that need to be brought in and we have seen the french finance minister saying this morning the fiscal is going to be more effective than monetary in a virus crisis, speaking at the moment in france. We will keep an eye on what is going on in europe and the global story. Next, diving into debt. Investor stock up on treasuries as a rate cut suggest it is unclear how long the Economic Impact will last. We will talk about that next. This is bloomberg. Matt welcome back to bloomberg market the european open. Were looking at 38 minutes away from the start of cash trading, green arrows here although we finished in the green yesterday in terms of the European Equity indexes were as u. S. Equity indexes tanked at the end of trading so now, you see u. S. Futures gaining a little more than european futures are this morning. Concerns about the coronavirus are driving u. S. Debt to record low yields. The tenyear treasury has dropped to below 1 for the first time ever. That as ulysses s grants time in the white house. Emergency rate cut might not be enough to prevent the outbreak from chilling the u. S. Economy. Guggenheim cern cio scott minard says the rally and treasuries isnt over yet, nor is the stock selloff. I see another 15 decline, maybe even more from where we are right now in stocks and when i turn to the bond market, i think we are going to continue to see the fed have to ofe and i think our target 25 basis points on the 10year note or quarter of 1 on the 10year note and 1 on the long bond are almost inevitable at this point. Anna our guest is still with us. We had the view of scott minard, below 1 on u. S. 10 year. A 150 your first. What is the lower bound for that . I dont think we know what that is because i think the market is extrapolating that the fed are going to find it difficult to stop, because in my expectation, the data in the u. S. Is going to deteriorate over the coming months and the real impact of this virus starts to feed through. Of thent seen much weakening in the Economic Data so far in the u. S. And if that data starts to print in the coming weeks, pressure is going to build on the fed to keep delivering more stimulus. If they are perceived to be on the way to zero, there is plenty of downside for u. S. Yields in this. Matt and plenty of downside for stocks. Scott minard is out there with one opinion. Jim bianka says it could drop 20. We could see another 20 to 30 decline from here. I think hes talking about the s p 500, but pes last month for the s p were 20. So if you have declining Economic Growth, if you have rates that are falling further, if you have supply and demand problems, pes should be more like 10, 11, 12, he argues. Hugh to me, for the selloff to find a real floor, you need to see two things. First, a peak in the increase in infection rates and that one, we have to pass into the dont know category. Piece, the market space in coordinated and fiscal policy backed up by Monetary Policy to strengthen. Seee, we are starting to some measures but the question remains isnt as to when that will come. It is more how effectively managed that is going to be, particularly in the european case. Anna thoughts on credit moving away from highyield, more into investment grade, is that the story . Hugh simply, yes because you have the Central Banks in the higher parts of the market. Dont want to need to refinance on a regular basis to be coming back to Capital Market in these periods of elevated volatility. Grade issuers are benefiting from much longer dated maturities, less need for immediate refinancing, so it is unsurprising ig has been better behaved. Anna the publishing business, issuingish europes first bonds in a week. Things have been closed up and now maybe a little loosening. Hugh gimber, Global Market strategist for jpmorgan asset management. Later in programming, we will speak to the st. Louis fed president James Bullard at 4 00 p. M. London time. [ fastpaced drumming ] [ fastpaced drumming ] matt welcome back to bloomberg market the european open. 30 minutes from the start of cash equity trading here. You can see we have futures rising, although not the kind of gains in the u. S. 1 futures up more than because those markets came down 3 yesterday. The greenin yesterday, so we will not see the kind of gains the u. S. Will see. Possibly due to super tuesday, possibly a dead cat bounce. That has been the pattern. Huge drops, little bounce. The events you should be watching today, the European Commission will unveil its draft eu climate law and cement on the a new goal of climate neutrality by 2050. Watch also for Greta Thunbergs address at noon u. K. Time and in imf managinghe director holds a News Conference at 2 00 p. M. U. K. Time banks, today,ral the Incoming Bank of england governor mander bailey expected to speak at his appointment hearing with the Parliament Treasury committee. Watch his comments on coronavirus policy response. Cut canada expects a finally, after the fed delivers an emergency. 5 Interest Rate fed 7 00 p. M. The u. K. Time what will they say about the growth story in the United States . Results of super tuesday are still coming in, but a surge for joe biden, edging ahead of rival Bernie Sanders is giving u. S. Equity futures a boost. Sanders took home the greatest prize, winning the delegate rich state of california. Joining us now from new york with the latest is bloombergs taylor riggs. Good morning to you. This has been joe bidens big night so far. Many people have wrongly written him off, clearly, in recent months. What does this mean for the other candidates. Update us on the race . Taylor the latest numbers, numbers out of texas with biden continuing the momentum. Texas, biden can say he is taking that state. Joe biden, clearly getting a big night. Carolina,north massachusetts, that was a big loss for senator Elizabeth Warren whose home state is massachusetts. With these clear front runners between biden and Bernie Sanders, it does look like where does the rest of the party fit in . That are some calls progressives like Elizabeth Warren maybe tries to give her votes to Bernie Sanders and consolidate the progressive party, but unclear if the voters would even go that way. On the flipside, a lot of calls for the moderates now to consolidate with mike bloomberg, who we know is the majority founder and owner of bloomberg lp, the Parent Company here at bloomberg news. Perhaps he tries to then get his support behind joe biden. We are still waiting for updates on both of those campaigns. I should be clear, no one has dropped out yet, but i think tonight was a very clear win for joe biden and of course, dont count out Bernie Sanders as he is still saying he is the candidate that can beat donald trump, and as you know, that is the goal for the democrats. Matt what are the market implications of what we saw yesterday . Taylor this was interesting. S p 500 closed down 2. 8 after the fed cut their rates by about 50 basis points. The market does not like the fact that you could see a Bernie Sanders as the candidate. The minute joe biden starts winning those states, that is the moment you saw futures start to turn positive again. He saw a lift in crude, some Dollar Strength again. The one caveat, bond yields still falling, perhaps trading on the news of the fed cutting those rates but a little more of given on momentum here that the markets are more comfortable with a biden candidacy than they are Bernie Sanders. Matt taylor, thanks very much. Taylor, putting in latenight duty in new york city. We will keep you updated as we get more results through the day. Senior us in berlin, the transatlantic fellow at the think take the German Marshall Fund of the United States. What do you take from hes been called the comeback kid. Biden had this late surge. We saw that charge taylor was showing. It is pretty amazing, the gains he made. What does that mean to you. . As her correspondent said, certainly a win for joe biden last night and i think it means the u. S. Electorate is saying we want restoration rather than transformation or revolution. Playbook ofe the nancy pelosi from 2018, meaning moving to the way to win elections in the u. S. Seems to be the signal we are hearing after last night. Anna good morning to you. What is the implication of what we have seen in the democrat race for europe. A horse inope have this race . Absolutely and this will be cast more about can the democrats win against President Trump . Post policy makers berlin and i imagine other capitals are thinking they are bracing themselves for the reelection of donald trump, because they saw disarray and fragmentation in the democratic party, but now that we have seen it what looks like a twoperson race after last night, there will be more hope a candidate like joe biden will get the nomination and perhaps there will still be issues like china and defense spending on the table, but the tone will change if joe biden goes into the white house. Matt do you think joe biden can beat President Trump . A lot of people have been saying he is the democratic partys mitt romney. Want to go with someone to extremist so they go closer to the center and although im sure hes roughly the same age as donald trump, he does hes always made gaffes, which come off to some as senior moments. Sudha it is very hard to make predictions when it comes to elections these days. No one really knows what the electorate is thinking and we are still a long way off. It will be essential who is his Vice President pick, because he will not only have to convince american voters, but he has to unify the democratic party. Anna. Ad, anna i was wondering how much the coronavirus has potential to sway things between now and november, because there is an opportunity for an administrator to impress if they get things organized and if they seem as if they are in control. There is also an opportunity for an administration to feel very badly when tested in the circumstance. Sudha absolutely. Coronavirusr has been the black swan we all need to contend with and put a little wind at joe bidens back over the weekend. Representative clyburn after plugging him in the South Carolina primary, that gave joe biden momentum but i also think the coronavirus was a signal to people that we need experience when it comes to public officials. People want a steady hand in the white house, most likely. Matt related to the election, but not to the primaries, it struck me this morning as everyone was talking about the fact that there were no fiscal measures coming with the fed move, that the democrats will be loath to help support the economy going into the election. Prove tax want to cuts and make people thrilled with the economy under trump going into november, right . Sudha im not sure, because nancy pelosi was shrewd when it came to passing the new nafta i thinkt year because the democrats have to show they are not just the party against trump, but they also want to make sure they can ensure prosperity for the american people. Of course, a Strong Economy has been a boon for President Trump, but if that turns, things will able change with the election. Matt i wonder, on biden. Please had issues with hunter, as son showing up working for Ukrainian Oil and gas company even though he didnt have any experience in that. Are the republicans going to start use that again or will they bring them back into the narrative . Cant imagine they wouldnt. Im sure that will come back into the rhetoric for campaigning on the republican side, but it seemed it didnt matter for joe biden. It mattered at the beginning for the first set of primaries, but minorities, women came out in force and chose the moderate candidate. Matt thank you for coming in. Sudha davidwilp, senior transatlantic fellow at the German Marshall Fund of the United States. Miss our exclusive conversation with st. Louis fed president James Bullard at 4 00 p. M. London time. Fascinating, considering the emergency decision yesterday. This is bloomberg. We have seen bookings declined by on average 25 to 30 on a daily basis over the last seven days. The decline in traffic from milan has been more significant, over 50 . A shortterm effect around bookings in italy. Northern italy, we had double digits and we have pulled back. We are seeing that gradually recover but it is still significantly down from where it was. Dismay yvonne very quickly in the next two or three days. There is already fragility in the market and with coronavirus, it will be putting more pressure on carriers. Anna interesting insights from aviation executives in brussels this week about the impact of coronavirus on their businesses. Lets get a Bloomberg Business flash with laura wright in london. Laura jp morgan is asking thousands of u. S. Employees to work from home as it tests a contingency plan for closing offices if the coronavirus spreads. About 10 of staff are working. Emotely banks around the world are working to ensure businesses stay up and running. Chevrons boss is open to suggesting fracking with whoever wins the president ial election. He says the industry has an obligation to explain the process involved. We speak to him about the impact of the coronavirus. In certain regions of the world, more than others, Global Demand really coming off and prices reflect that. Is postponing a supply summit scheduled for washington, d. C. As concerns escalate over the coronavirus. Boeing is grappling with health and safety concerns from workers as a hotspot emerges in the seattle area where the Company Makes most of its jets. That is your Bloomberg Business flash. Laura, thank you. Laura wright with your business flash. Andanies, lawmakers, bankers are all stepping up efforts to respond to the economic fallout do to the coronavirus, but there is little space to act. Here is annmarie hordern. Annmarie on the mollusks policy front, Central Banks talking about the fiscal area, bearish ahead of the sovereign ratings. This note they put out, saying the proper context for any upcoming fiscal support pledges is the fact that the g7 public finances are consistently among the weakest relative to their respective rated peers so they say little space across the g7 for this fiscal act, fiscal flexibility. One thing on the Monetary Policy front is the fed, australia, malaysia. Promptly atd pretty the g7. Today, many are expecting canada to potentially act. A have a Rate Decision today and south korea is having an emergency meeting but canada is poised to do a 25 basis point cut. It will be interesting considering the fact they have been able to hold onto their rate for the past 16 months while we saw everyone around the world easing. In terms of fiscal support, fitch says it will be tight. Anna will we see something from canada and beyond . As you were speaking, we got an update from s p saying they forecast the ecb will cut policy rates by 10 basis points. Same way the fed does, certainly so interesting to see the ecb suggested to move. We heard from the french finance minister that the fiscal side of things will be more important so all eyes on him and finance ministers in the g20 and beyond. Wilson,rogram, nigel ceo of legal and general will be joining us from the london stock exchange. Thoughtse get his on big mover is related to the coronavirus. What does he expect from markets and his Insurance Business . This is bloomberg. Anna 12 minutes until the start of equity trading in europe and we expect a bounce at the start of the trading day. Not as much as u. S. Futures suggest as they had a different trajectory. Legal and general reported pretax profit for the full year that missed the average analyst estimates that the company saw a full year return on equity of 20 44 2044 as the race 20. 4 . Nigel is with us. Very good to speak with you, nigel wilson, the ceo of legal and general. Concernsk about the you have around your business. Weve seen the numbers and it is a backward looking story here. What is worrying to you about the market turmoil around coronavirus . Not a lot, actually. Weve had lots of markets online the last 30 years and this is another instance. Longterm player. Our business is built on longterm demographic and macro that remain very confident about the future. People will have to save more for their pensions, businesses will have to we can invest more into the economy and the economy will continue to move forward. There will be lots of opportunities from Climate Change and the need to more leveling off across the country so we are very optimistic about the future. Matt i could be being too meple here, but it strikes that you have a life Insurance Business here, so if the virus really starts to pick up, especially in your reading fromns and more people die it, isnt that a big problem for your business . Life reinsurer most of our insurance. Frankly, it is the opposite. We are more exposed to People Living a lot longer than expected. Transferon risk business is much bigger than our life Insurance Businesses, so we would actually benefit from that, rather sadly, if that was the outcome of the virus. Anna it is good to hear you are not too concerned, to get the large longerterm perspective. The you have a lack of visibility . Interest rates, . Where do you expect those to go we see the u. S. Treasury yield below 1 for the first time in 150 years. What impact does that have . Nigel there is very little impact on our profitability on a go forward basis. What the fed seems to be doing is saying lets not take confidence out of the economy. The u. S. Economy was doing pretty well, the u. K. Economy too. What we have is a shortage of investment in both economies. We need more investment to drive real wages, drive better lives for people. There are Huge Investment opportunities which are not being grasped right now. Goinge need more of forward is more investment in both the u. K. And indeed the u. S. Economies. This will be a temporary blip and the fed are responding to the potential of investment falling away. Matt do you expect other help to come in the form of fiscal stimulus . Nigel i think the government has that option. 20 billion in the u. K. Is approximately 1 of gdp. The government could easily spend another 20 billion if it wanted to. Borrowing costs are following falling all the time and new debt is much cheaper and getting cheaper still on a go forward basis. There is plenty of headroom for the government to take fiscal initiatives should they be required. Anna so the big picture around the budget, clearly in a week or so will be around what they do to shore up the economy with coronavirus. Youve talked about infrastructure projects. What is your message to the government regards regarding the budget . Chancellor has been up to parts of the north in recent weeks. There are Huge Investment opportunities in glasgow, oxford, cambridge. It is fantastic that the government is going to actually put some money behind the real requirement to invest more in lots of these regional cities and towns across the u. K. , and that will help drive Economic Growth going forward. London has done a great job in the last 20 or 30 years. It is the best city in the world to live in, but lots of inner cities in the u. K. Are Huge Investment opportunities. Weve been doing it for the last 10 years. Hugely successful for us as a firm but continuing to do it in the next 20 or 30 years and we are pleased the government is coming on board. Matt i would invite you to come visit us in berlin. Is a great city to live in, as well. Nigel it is, indeed. Matt let me ask about the finance side of your business. You mention it is getting cheaper and cheaper tomorrow and we see the u. S. 10 year now yielding less than 97 basis points. Gilts yielding less than 39 basis points. How does that affect your business at Legal General . Nigel it doesnt affect the p l of our business very much. If required, we could borrow a lot more and invest even more in the economy driving growth. Some Balance Sheet sensitivities around various interest movements, but we are a very longterm business based on 20, 30, 40 year trends for our business. Marketsdowns of various dont really have a big impact on our business. Anna you run a large number of index strategies, nigel. Theres a lot of talk in the market about the rise of the sg and whether index strategies can morend to esg and be environmentally conscious in the same way active funds can. Is this something that is driving your business at all . Nigel absolutely. For a verydoing esg long period of time and it is great, and this is becoming front of mine for many more people. We already have successful funds which address esg, very thematic funds that take specific components of esg. Because society is trying to address more of the esg type issues, that is a positive outcome for Legal General. Anna thank you very much. As always, thank you for your time. Nigel wilson, ceo of Legal General. Ill give you some headlines into intu. The Retail Property management business in the u. K. Has decided they are unable to proceed with the equity raise they had in place. We will watch that, and a bounce in stocks at the open. This is bloomberg. Anna a minute to go until the start of cash equities trading. Cut fails toency ease concern over the coronavirus. The u. S. 10 year yield falls below 1 for the first time. Banksations for central to act or growing, but france says the eu should be ready to use fiscal stimulus. And scott miner says u. S. Equities could slide but a surprise come back for joe biden sees futures go positive. We are seeing futures that are higher across the border. Matt this isnt the same height see in u. S. Futures, but still broadly positive, even as we continue to see yields on debt fall. It looks like investors are still cautious, but they are bidding futures up, even after again we saw yesterday. How do you see equity indexes out of the gate . Anna we are expecting upside, as he pointed out. The ftse 100 is up. We were expecting more modest gains in the United States. We dont have quite so much catch up to play. As you say, there is still that appetite for sovereign bonds. Investors are buying sovereign bonds and yields are falling. The fiveyear i could see particularly active in the u. K. And spain. This is the picture across equity markets. We are seeing modest movements in europe. The french and spanish market are up by less than. 1 . We have been reassured by an emergency cut in the federal reserve. We wait to hear what other players will be doing, what docal and macro policy can to shore up businesses that they will no doubt face in many quarters, especially smaller or medium ones. Matt, what do you see . We are seeing an even split. 230 stocks are losing ground today. You dont see those lopsided moves today. Xor is gaining. Annmarie hordern was telling us about their insurance sales. On the losing side, you see hammerson, ik. See a relatively even split in terms of winners and losers and not huge names in terms of the percentage gains and losses. European markets are little higher as the fed led the Monetary Policy response. Leading central bankers had to say about the outbreak. What really matters is not the epidemiology but the risk to the economy. We saw a risk to the economy and chose to act. The bank of englands role is to help households manage an economic shock that could prove large but will ultimately be temporary. It has not turned out to be a global problem. When the problem is global, naturally, the need for coordinated action is so much more. The bank will take steps to support the economy. Space for further rate cuts that is one available option. Ofther option is in terms supporting the markets for liquidity. We believe our actions will provide a meaningful boost the economy. Anna some of the central voices speaking in the last 24 hours. We are joined by annmarie hordern, maria tadeo, and michelle. Reflect on the Central Bank Activity we have seen and the fiscal levers that could be pulled. Sum of where we are in the United States. Annmarie the fed was the only one to come off of that rare Conference Call and to act. Intentionally why it wasnt a relief in the markets. Today, the bank of america is poised to cut. The s p is forecasting the ecb will cut by 10 basis points. And this isd alone supposed to be a sign of relief. Took it as a sign of desperation. Is if its enough to prevent damage or if it is even the right tool. Well whentor put it issue isthe bigger could covid19 trigger a global recession . Matt great to hear from him for sure. Maria, what are we hearing out of brussels . Group we know the euro will be holding another call. Undeniable is theres pressure on the europeans to do something after the fed moves yesterday. Interesting lines out of france with the french finance minister saying the euro group should be ready to deploy fiscal policy, saying its about fiscal stimulus rather than Monetary Policy the french decision is clear that it should be done quick to shield the european economy. What is key is what is berlin going to do . They have been hesitant about making big moves and have said they do not know the full extent of the crisis. The third country that matters is italy, which has been badly hit the coronavirus. We know the government is desperate to get a fiscal boost. Enough . Tion is, is that economists all agree italy will likely fall into recession this year. The commissioner said italy wont be left alone by the eu on this. Shell, it comes to you. We heard from the boj overnight. The bank of korea is such a problem, they have called an emergency meeting. Policymakers have been at it for several weeks. Give an extra nudge to policymakers as they look at options they have beyond Interest Rates. Thats not the answer for everything and some economies are concerned about the blowback they might have if they move towards cutting Interest Rates. Case, they announced a record purchase of etfs. We are waiting to hear if they follow up with more purchases. They will be mulling the Growth Outlook this month. A lot is going on in japan and korea tomorrow mulling but they can do beyond the Interest Rate. They further said they would hold as they their options. Thank you all for joining us. Coming to us in london, sebastian radler, head of strategy at merrill lynch. What was your take on the fed move and the other banks to follow . ,ebastian for our markets Central Banks are not the key question. Economists expect another 50 basis points of cuts. For us, more important is the broad impact on momentum. It is not so much the impact of the virus. Infected will only have mild symptoms. The important question is to which degree will continue measures containment measures halt momentum. We had an important piece in china and thats the key point to focus on. Anna we just got a red headline across bloomberg. Falling,ar sales are the biggest decline on record. At aise that buying a car time the virus has been spreading is not a priority. Matt but still a shocking number the most important market for carmakers drops to zero sales in february. Hot onhis measure comes the heels of the pmi numbers. That give us a sense of just how much slowdown we have seen in china . Sebastian exactly. The pmi has effectively warned us. It teaches us that if you want to do the cautionary thing to protect people, there is a very real economic costs you pay and you have to have a good balance. Measurest containment first, economic costs will amount. 600 we see the stoxx already in negative territory but we are down by. 3 . I see the catherine down by. 5 . If the market came quickly to this conclusion, what should policymakers be focused on . Thats the point i was trying to make. Its important not to have excessive measures because there is going to be a real price. We will be spending Additional Support not through Monetary Policy but additional spending. Its not going to do much to address the supply side but will address the demand side we have heard voices from the g7 that will be an extremely helpful catalyst for markets. Do you expect helicopter money . Sebastian we have been dreaming about it for the past 10 years. Its a topic that comes and goes. Given the actual disruption we have seen, we only have one ugly data point. We will have to see more disruptions for us to move further into policy territory. Thank you very much. Sebastian stays with us on the program. We will get further thoughts from him on markets and the coronavirus up next. Treasuriestock up on after an emergency fed rate cut makes it unclear how long the impact of the coronavirus will last. We talk about where bond markets move list and what that does to equity market exposure. This is bloomberg. Anna welcome back to the european open. The day started out with a small bounce to markets but we have succumbed to the downside. Is suffering major losses. The 10 year treasury yields have dropped below 1 for the first trades said the emergency rate cut might not be enough. The head of European Equity strategy is at bank of America Merrill lynch is still with us. You are clearly and equities guy. How low do you assume thank of America Merrill lynch yields go . For us, the key question is one we have just discussed a because of the direct impact and be because of the containment measures. Given the week pmi and shocking china numbers, its likely the global pmi will drop to the lowest levels since the financial crisis. That happens to be the rate of change that may drive up bond yields. Your current value is 1. 1 . Is, are yoution going to lose further momentum . We expect the shop to be temporary and that would be consistent with 50 basis points, but clearly there is a bumpy road ahead. We heard from a couple of big u. S. Names. Some are looking for the possibility of another drop. 500, which had much higher valuations last month. 20 times earnings was where we saw stocks. Where do you see european evaluations headed . Question ishe main growth momentum. The starting point was clearly overvalued. Hopeser we came in with of growth rebound. The European Equity markets were already pricing pmis to jump as the virus hit. Crisis, thehe market was above fair value. Scenario in which we see a mild slowdown, that would still be consistent with 10 upside. For us, it is too early to turn positive. We have got the 10 upside, uncertainties are extremely elevated. A lot will depend on how each society finds the right balance of mitigating the effects of the virus and the damage it produces. Policymakers will need to cooperate with the Banking Sector if they dont want banks to foreclose. What is the Banking Sector going to do with rates as low as they are . Sebastian it comes to these questions we have been debating. It depends on the slowdown in growth of mental, and crucially, policy response. If you use the old playbook you have been using, which is monetary easing, that is bad news for the banks. If you managed to switch to the fiscal challenge, the policy response will be extremely important. We are overweight in banks, cap would work if it you are focused on fiscal rather than monetary. Anna thank you very much. Sebastian stays with us. Up next, we bring you stocks on , moving, including xor higher as they agree to sell a business. Its one of the biggest rises on the stoxx 600, which is probably flat this morning. Broadly flat this morning. This is bloomberg. Matt welcome back to Bloomberg Markets europe. 22 minutes into the session, you can see a mixed trade going on here. The cac and ftse med are falling. We dont see any particular direction in the last couple of weeks have seen 500 of the s p 600 stocks gaining or 500 falling. Lets get into the individual movers. Exor kicking off this morning, another big deal. Theyre selling off their insurance company. Of 3osted a cash return billion. So the family is really boosting worldshares there hostile world is seeing less bookings in asia and europe. Everyone is not traveling. And if you are going to travel, you arent going to stay in a hostile. Plunging asies is they pull their equity rates. Rep resentares nothing more than an option day for is a very bad ntu properties. Anotherwant to bring redhead line to our viewers attention. The eu is weighing tougher bank failure rules after the fury that bailouts created. Is Commission Document considering changes to recapitalization rules. One has to ask how this project fare in the face of a slowing growth economy. If businesses are getting into trouble, i wonder where this project goes. Lets talk to sebastian about some more granular details. We talked about the Banking Sector, so i wont dwell on that headline too much. But we did see that headline a weekt ago which suggested data on china. Weak data on china. You are overweight autos, which sounds brave. Sebastian it is. We are fans of saying, historically, what are the real macro drivers. Historically, correlation does not explain a lot. What explains it are two factors. Slow,ch is it going to secondly, the currency. What we like is a cyclical sector already price for bad moves. Stocks are down relative to the market in november. This is a market priced for a sharp slowdown which is currently not our base case. Your contrarian trade is a fascinating. He have a defensives you have defensiveness and energy, why . Sebastian these have performed well on the back of a rapidly slowing global economy. In a nutshell, it brings us back to the debate we have had. Recession, these do well. If you think it is a short it impact, then the sectors are overpriced. Anna interesting. Sebastian will continue his conversation on Bloomberg Radio in 20 minutes. This is bloomberg. Anna welcome back to the european open. Londona edwards here in alongside matt miller in berlin. Been volatile this morning on european stocks. Have seen a backandforth, unlike other days when all the stocks are moving together. Today, you see a mixed picture. We have been up and down on the stoxx 600, but you can see the split in terms of the groups that are winning and losing. Basic resources are all showing some gains today certainly basic resources is the biggest gain or. Up, oil andces are gas down. Travel, leisure, and leisure are falling today. Its always fascinating when you see metals and mining stocks up. Lets get first word news in london. An update on the coronavirus. Over 50,000 people have recovered or been released, thats as the total number of infections has risen. Cases are mild, similar to the flu. Pledgedministers have to do whatever it takes to support the economy and the fed cut the benchmark rate aired is the first production outside of a scheduled meeting. 10 year yields fall to a historic low. Would bes it impossible to delay the olympics , thats amid concerns the coronavirus could cause the games to be canceled. Seen as the latest a decision could be made. One woners california but joe biden got nine states, including massachusetts. Its a blow to sanders and Elizabeth Warren. Global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt . Anna thanks so much. Everyone is talking about the environment, but how will that translate into action . Opportunitymental fund has been a leader in Green Investment for a decade. Is theres from geneva Senior Investment manager. Good to speak to you. I want to ask you what makes your strategy different. I have been reading about planetary boundaries this is a broad definition of environmental concerns. Good morning, and thank you for having me. A portfolio investing in solutions. Reallyutions that are addressing Climate Change are a big issue, something we have decades, but for its not the only one. We think there are other challenges related to the biodiversity loss that are equally important. So this is a framework we that looks at all of the dimensions. There are nine frameworks developed 2009 and a tells us , thefor each dimension system should not cross in order to avoid your reversible change avoid change. Matt what does this have you buying and selling . We focus on environmental solution providers. We use a thematic approach to different that is different than a traditional approach. We are buying stocks that are related to energy efficiency, water treatment. Software for manufacturing and sustainable packaging. We have a choice within an environmental market that is over 2 trillion. 67 , more than the rest of the economy. Linkslet me ask you about you seen. The market is focused on Global Growth damaged by coronavirus. Maybe less than the start of the year on environmental concerns. Is there a link between the two . I would not say there is a direct link. The portfolio is not very exposed to consumer related industries. The coronavirus is a great human strategy, but it is not affecting our position. Our thematic approach is longterm. Believe we are going to address the issue, find a cure. At the moment, we are not really changing our approach in a portfolio because of that. You are looking after the but i wonder how important the s and g are. Social and governance, are they covered by your theory . Is moreld say the g important than the s, but we do the analysis ourselves within the team. Anna let me ask you about some stocks. You about specific stocks you are looking that here. You talk about this consulting company. What has drawn you to that Business Model . They are a 5 billion Consultant Company focused on water, environmental management, and green buildings. Its one of the first that comes to my mind and i think about Climate Change negation and adaptation. They have a lot of momentum into their business with the federal government and private sector. Consensus is under appreciating the growth and we see a lot of upside. It is a model focusing on the consulting part and not so much on the engineering. It typically carries more business risk. Have youralso , a swissn call on sgs company that looks at analysis. That is a leader in the field. Areee that Companies Increasingly asking their supply chains to become more green and sustainable. This is where sgs can benefit. The contrarian call here is simply that they have under delivered in the past. We see changes at the board level coming up that might result in more focus on growth. Luciano. Nks very much, pictet. Nvestor at to mikep, we speak worth about the impact of the coronavirus on the oil industry. To action itsplan attack on the coronavirus . We hear from mike worth next on the subject. This is bloomberg. Anna welcome back. 42 minutes into the trading session, we have dropped into negative territory and are not back into positive territory. U. S. Futures point higher by 1. 5 or more. The chevron chairman says oil demand has slowed down significantly amid the outbreak. He spoke to alix steel in new york. It is a rapidly moving environment. The main thing for us is the safety of our workforce. Operationschain and are operating normally, but it is rapidly evolving around the world. Structures command to stay on top of the situation. Opec saidate from they could see a cut. How do you see the supply and demand dynamic . Mike its moving quickly. Theres no doubt demand is off right now. In some regions more than others, but globally, we have seen demand really come off. Built for a low price environment. We have set ourselves up to navigate an environment like this. What is your plan based on . What oil price . Case we have laid out a built around 60 the next five years. That, we can distribute 7580 billion dollars over five years with cash from operations because we have such a strong Balance Sheet. Irth that was mike w speaking with bloomberg. Cut rates to stem the impact of the coronavirus but the move seemed to unnerve markets. Economics is the chief advisor at a credit us acreditus. The fed is the only one of the move after this call yesterday. Markets were expecting a coordinated action of some sort and they left the fed on their own. What do you think . Its a symptom of a more difficult international environment. Crisis, ia bigger could see coordination being much harder now. I think on the fiscal coordination side, there is less trust from the governments. Change, but for now i am pessimistic. There is simply not much authorities can do we have seen this from the fed. Previous emergency cuts were 2008 and 2001. We know what happened afterwards. I dont think there is very much i can do with Monetary Policy this is a major supplyside shock. There is a lockdown in certain parts of the world economy. Mitigate toably have a secondround effect, but theres not much to do. You have to ask yourself if Central Banks are well advised to fire the ammunition they have left. Wouldnt they rather keep the powder dry . Anna good morning. Cooperation on these matters is more difficult than it was, but is it the cooperation that matters where the action war the action or the action . Where do you see room for that . A Stimulus Program takes time to devise. We dont really have that time. What governments can do is provide breathing room for enterprises by spreading out tax payments, for example. Maybe providing subsidies for employment, something we have been applying in germany with some success. Want anng now we investment program, its difficult to see how this could be pulled off quickly. Also, you run into the same problems the economy is facing. I think the most important task is for the Public Sector to do everything to contain the spread of the virus is difficult because its much more and isous than sars catching on much more quickly. Wto is ratcheting up its and its probably the main responsibility of governments right now. Theres only so much to do at this stage. Seem to bent getting consistency on the methodologies. We heard yesterday from france about public backing. Is that what europe should be doing . Your former colleagues said they expected a cut from the ecb. Would that do much . What can it really do . We have plenty of liquidity. Peoplenot the problem are expecting another tltro theres not but really a dearth of liquidity that the problem. Does an ecd cut result in more liquidity . They would have to accompany this with a change in the tearing system, but even so, its not much. Christine lagarde had a bit of a honeymoon and theres a truce between hawks and doves they are trying to sort out which way to go. , the austrian central nailed their cut list to the mast. If theres a contentious , thesen to do something disruptors will reemerge and it could throw a spanner in the midst of a harmonious strategic review. Anna thanks so much. Next, we will bring you some of the stocks on the move this morning. Cisco is said to have approached this company about a potential merger. This is bloomberg. Matt welcome back to the european open. We are just about one hour into the trading day and a starting to see a real pickup in markets. Andcan see the dax gaining the ftse also gaining. The chief Economic Advisor at acreditus is still with us. What do you think about the european economy . It was already stagnating. In berlin, there has been a lot of debate about what to do. A report said all schulz would begin lifting the debt limit. Do the germans need to spend more . They do, but not because of the coronavirus. If you live in the country, there will be many stories to tell. To sustain the competitiveness of the economy. In the shortterm, there is enough we will room in the budget. The debt break is not a constraint and has not been much in recent years. There is enough surplus cash accumulated and its a question of how to apply it to what kind of spending program. There is little agreement on whether its necessary and what to do with it. The German Government has been planning on a mild expansion anyways and this would continue on the margin. Is there something in the u. K. Budget that interests you . Talked a lot has about spending big on infrastructure. Is this a significant investment theme . It would be an interesting budget. Is the first budget of the government. I would expect a much more expansionary budget than what was previously thought. . What is your biggest concern in the economy matt what is your biggest concern in the economy . We are not seeing anything like greece or the eurozone crisis. The bond markets, nothing suggests we are there. The concern is we possibly fall into a recession. I expect one in germany, possibly one in the eurozone overall. Increase the centrifuge will forces in society. We might just gradually go into politicalcircle with fragmentation and economic ability. Without reform matt just trudging through jello. Thank you for joining us. We will continue this conversation on Bloomberg Radio and just three minutes. Tune in. Tv just keeps getting better. How you watch it does too. This is xfinity x1. Featuring the Emmy Awardwinning voice remote. Streaming Services Without changing passwords and input. Live sports with realtime stats and scores. Access to the most 4k content. And your movies and shows to go. The best tv experience is the best tv value. Xfinity x1. Simple. Easy. Awesome. Xfinity. The future of awesome. Francine the fed emergency cut fails to ease concern. The 10 year yield falls below 1 . Banks fall. Tral campaign surges into front runner territory. Bernie sanders clinches the lead in california. Good morning, everyone. Good afternoon pending on where you are

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