Yesterdays stock rally. European equity futures suggest another grizzly session. Reject ree to restrict travel to the region. Angela merkel is not rule out joint eu debt issuance. Welcome to the European Market open. Lets get straight into breaking news from the car sector. Car sales in europe are off to their worst start to the year since 2013. Registrations declined 7. 3 . The coronavirus is shutting down car plants worldwide. Earlier on, we heard from toyota. Daimler vw, and that is the way we are heading. Things are looking to get worse before they get better. Of february looked different than the end in terms of consumer purities priorities. Lets get a look at how the car sector opens in just under one hour. Under one hour to go until the sort of cash equity trading, here is what futures look like. 4 under pressure, down by or there about. Down,utures are also nasdaq futures down more than 4 . , we saw strong gains but now things are looking more difficult through the Asian Session. Lets get to the gmm and show you what you we what we see their. There. The australian and south korean market are struggling to fend off the worst of the losses. Isasury secretary mnuchin coming through with a package of 1 trillion, warning those in congress that if they dont enact something, we will see 20 unemployment, and broadly we are seeing fiscal stimulus stories. Travel limits are being put into place and markets are dealing with daily twists of the coronavirus. Measures are being taken to offset the worst. Meanwhile, we see copper prices down below 5,000 a ton. Joining us is our cross assets markets cross markets assets editor, joanna. Why arent the markets taking the fiscal stimulus from the. , the helicopter money why arent markets responding more positively . It is classic bear market time. But the u. S. Package is not official yet. People are still wrangling over it and it is not happening yet. Consumers dont have their injections of cash. Fiscal stuff is tricky. Is it going to the right place . Are people going to spend it . It is hard to anticipate will it work the way people hope. Anna that is the critical thing. Of if the bigon numbers are sufficient, but also if the infrastructure behind the scenes is good enough, whether it is tax collectors or Social Security or whoever is giving out the cash. Whether the infrastructure in the countries is good enough to give out this cash to the people who will need it. Exactly. U. S. Are the questioning whether airlines should get a bailout, because there has been talk of that. People are saying they spent all their money on their louts why should they get one now bailouts, why should they get will now . They dont have to save money for a rainy day way consumers do. There is potential for backlash and politicians will be sensitive to that. Sits the question of who as judge of who deserves the money is interesting. What about the markets live question of the day . On the one hand, we keep an eye on the fiscal policy makers. Search he dollar surge play out longerterm . It could be tough on emerging markets. That is one place to look. See if the dollar stays out because there are numerous people saying the dollar has peaked and it is time to go into emerging markets. Right now, the dollar has been surging quite a lot. This is another place where calls are divergent right now. Even currency is seeing more volatility as we have more uncertainty. Seeinghere are we strains in credit markets . Commercial paper caught the eye of the fed and they stepped in to do something about that. Seeing examples of stresses and strains in the plumbing of the markets . A lot of places, actually. But, it is really seeping into asia, india, and japan. It is pretty widespread at this point. People are definitely watching to see if that will be a problem, because the credit markets can be so systemic. The fed is stepping in. We will see how things go, whether what they did can really help. They did take more time to put that part of the package together after the surprise announcement. Anna thanks very much. Great to speak to you. Joanna, our editor from singapore on what the markets have done and the fiscal news of late. Zara closingthe chain has decided not to impose a dividend. Huge uncertainty as to what happens to retail. They are saying the virus has a Significant Impact on the spring and summer season. Online business continues to develop. That is something that will be industry interesting. It is too early to quantify the Coronavirus Impact on 2020. The underlying growth rate still falls to 6 . Up, keeping the markets open as liquidity fears rise. Sri lanka becomes the second nation to close after the philippines. Ortalked to Stephan Bhushan next about whether it is a good idea to close markets were not and a ban on short selling. Availablebloomberg is on your mobile device or dab digital radio. This is bloomberg. Anna welcome back to the european open. Futures suggest real weakness at the start of the trading session. Such has become the way of things, i guess. Fiscal packages are keeping the markets for some, the question remains of whether the money gets to the front line. Here are your top stories. The Federal Reserve has launched to Money Lending programs help the u. S. Economy. One is eight commercial Paper Funding Facility and the other is a primary dealer credit facility, both backed by the treasury. Europe is considering a joint debt sale to help contain the threat of the coronavirus. Angela merkel refuses to rule it out. The block has agreed to close external borders. Italy has become an epicenter of the outbreak, with over 31,000 cases. Democraticwept primaries, winning in florida, arizona, and illinois. It gives him a commanding lead with over half the delegates needed to secure the nomination. Meanwhile President Trump has secured the republican nomination after only token opposition. China has taken the unprecedented step of expelling a group of u. S. Journalists in a wider battle with the trump administration. The reporters have to hand back there media cards. Beijing says the move is in response to u. S. Caps on chinese media. Top is the function to use on bloomberg for more. Lets talk about the world of exchanges. The philippines took a drastic step, becoming the first nation to close markets because of the coronavirus. Sri lanka followed suit and closed its exchange in colombo, the ceo of nasdaq told bloomberg it was imperative markets stay open. Discuss from a european context. Im pleased to say we are joined on the phone by the ceo of euronext, Stephane Boujnah. Are there reasons to close markets in europe . Stephane no, no reason whatsoever. Should remain open because they are efficiently , and becausesecure we make appropriate adjustments when needed. Weve seen it work in the past. The only reason targets were closed were operational reasons in extreme reasons, after 9 11, hurricanes. Everyone has to realize that we have invested massively in digitalization over the last few years so we have no problems. Anna you say they are efficient, functioning, and secure. Are there ways they become nonfunctioning if too many are working from home . Is there a danger we dont have a functioning market . Stephane no. E have been tested many times the system works. Many European Countries and we have essential staff working on the platform. Most of the staff operates from home without any trouble. Accommodate able to equal levels of liquidity, so the system works, its safe and , and we are efficient and operate the market while accommodating news flow on specifics. Clearly,m works, and it is a time when we need liquidity. Idea of closing exchanges is pretty strange. No one is talking about closing liquidity, closing the internet, atms credit. So why should we close liquidity and prices . We should be more concerned about Asset Classes where volatility is more challenged, fixed income Asset Classes,. Ather than on equity touching liquidity and prices would have disproportionate consequences. Smaller exchanges can do it because they are so designed, but for larger exchanges like euronext, it is critically important to provide a home for liquidity and price formation. Anna so investors can express their views. Yesterday, on this point, they were extremely clear on this point in the imf was very clear. Important is there is every day negative news flow and countries going into mouse into lockdown, but there is positive flu news flow like stimulus which provides for certain Asset Classes insecurities. A what about the bands bans on shortselling . I remember them from the height of the eurozone crisis. Is it useful to ban shortselling . Regulators have made a cooldown approach. They have decided that in those credit conditions, short is accelerating atypical behavior and does not allow for proper treatment. They have decided that for a certain time, its better not to have instruments that are accelerating disruption of the market. Theseis it important that dont last for very long . Stephane it depends. To aure when we go back situation when markets are the balance news flow that will come depending on sectors and one that will be , it willy affected become less relevant. It is about regulators and what time we can go back. But these are simple adjustments , small adjustments that are important for the function of the market. It is better to make the small adjustments and keep the market the rather than going to binary idea of opening or closing markets. Anna really good to speak to ,his morning, Stephane Boujnah ceo of euronext. The Top Administration proposes 1 trillion of stimulus. Morgan stanley and Goldman Sachs say a global recession is now underway. We get the latest on the outbreak next. We must act like any wartime government and do whatever it takes to support our economy. Those of you who are thinking of going overseas, dont. This is the calm for the storm. Dachshund before the storm before the storm. Anna those were Prime Ministers talking about the coronavirus and the responses we are seeing. Our next guest joining the chorus, saying the next recession is underway. , chief us now is jacob u. K. Economist and head of european economics at Morgan Stanley. Help us get some perspective on how deep this recession is expected to be. Give us some numbers. Scaling thiswe are off of what we have seen in china. 25 down in investment, in retail sales, 50 Industrial Production with an untouched january. We think 5 quarterly decline in thea, 4 in the u. S. Second. 5 annualized fall in europe, the epicenter of the epidemic. Perspective,ome this is a little bit less bad but substantially worse than what we saw in 2001. Its sharper and we fall further, but we should bounce back quicker. Just dont make up the area under the curve that we lost. Heard that from the new bank of england governor, saying it should be temporary. What is temporary . What to be know about how china is recovering that tells us how temporary this can be . They are more or less back to work, aside from hubei. Lockdown was a little bit later across the rest of the country. When you dont have a cluster spreading you are just picking up on cases, you can get on top of this thing in about six weeks. Cluster that is spreading exponentially, as we are seeing in france, spain, italy, its going to be a longer shut down. Didnt we are assuming the number of cases are falling from early may. ,his is a first half phenomena not a longrunning epidemic where we have another outbreak in the autumn. It is not a worstCase Scenario. We have got a bear case, if you want it. Anna ive just been looking at the global infection curve and how it has been steepening. I have been looking at how we did in china, korea, and now into europe. The trouble is these are Service Economies to a large degree, different from china. What do we need to keep in mind . Jacob thats the point. If you are a manufacturing economy, you have got stockpiles you can sell, so you can. Aintain sales services, its very difficult to sell your services if people cant come to consume them. Its difficult to catch up on the other side. Are going to have this crisis where businesses are generating no cash. They may be solvent, viable businesses, so thats where policymakers need to support them. So that when we come out the other side, we havent lost those businesses. Anna that was certainly the focus yesterday. Nell, thank you very much for joining us. Up next, billions in loans and tax cuts as the u. S. Announces its package to support the economy. We get reaction from the federation of Small Businesses next. This is bloomberg. Anna welcome back to the european open. 30 minutes until the start of the European Equity session. I am anna edwards from Viviana Hurtado from bloombergs European Headquarters in london. Suggested weaker at the start of trade. We heard about stimulus yesterday from france, spain, the u. K. , the United States. Will it really get to the front line . Is the infrastructure there to deliver . What is going to be offered the people who need it . Marketse, european expected to follow the latter part of the Asian Session into the red. We saw big selling in australia and south korea. In bond markets, you can see the moves. The fiscal plans were announced, we saw a lot of movement of money into equity markets with some people selling bonds as a result. Boris johnson has announced a massive rescue package of loans and grants totaling some 350 billion pounds. The government promises help with mortgage payments, support for airlines, shops, and the hospitality industry. The bank of england said it will set up a new Lending Facility for businesses. We must act like any wartime government and do whatever it takes to support our economy. Plenty of wartime references coming from the u. K. Government at this point. The National Chairman of the federation for businesses, someone who will have been listening keenly to what was said yesterday on downing street. Mike, your initial response. He must be clean you are getting some money for Small Businesses. What is your response to what we heard yesterday . The announcement on monday where we saw pubs and other leisure places, people being told not to go out so trying to get this grant money through to businesses now is absolutely hours,l in the next 48 because wages and bills have to be paid and businesses arent getting trade coming through the door so that is critical and loansg how to act these is going to be important to get the process is understood so businesses have power to access it in weeks, not months, because it is now that the businesses are seeing the drop in trade and that cash getting to them. There are questions about the selfemployed, as well. Anna yes, indeed. I see france taking measures with regard to selfemployment and the gig economy. Missing from the uks infrastructure at the moment to get the money to Small Businesses or do you think the infrastructure is there from what youve heard so far . Mike i dont believe the infrastructure is there because nobody at the moment knows what do process is. Is it the banks, local governments . Are they up to speed on what will be needed to get this money to businesses today or tomorrow at the latest, because that is when they will need it, particularly in the hospitality, retail, and leisure side. We are already seeing large retail shutting their doors. Paying the wages to keep those employees on the books wherever possible is going to be critical. Anna there is more on the table than just loans, but loans was a big part of this. What kind of mindset do Small Businesses need to be in when they look at what is on offer . To take on more debt at a time of crisis. Mike if they can get these cash grants, but in many cases, it will be loans needed. We know there is going to be a sixmonth freeze on repayments so that is very welcome, to try and get us through these and as we trade out, the viable forget,es and lets not the government is guaranteeing 80 of those loans so let the banks be flexible on how they get the businesses accepted and these loans paid out. , if possible,eeks but certainly not that much longer. Anna is there going to be an expectation money goes to any business that asks . You used the word viable. Is someone going to be making a judgment call and if so, who, as to whether the business is viable . Mike to what we want is these marginal businesses who can get through this and trade through to the other side to be able to do that. Clearly, it is not in anybodys interest to prop up bad businesses where they are just asking for cash without being a good trading record if they can get through the next three or four months, we are told and trade to the other side of this. What we are also seeing we had the announcement this morning, morrisons are paying their small pliers suppliers immediately. Large customers supporting those Small Business suppliers and paying their employees. Weve seen a lot of business for supermarkets in recent days. We heard from the chancellor that more action is coming on conversations with unions. What do you want the government to bear in mind when it comes to further action to help them with staff costs . Mike weve already said isbling sick pay in the u. K. The right thing to do. More businesses need to recover that. If it is going to be an upfront cost to the business, knowing morethe Recovery Cost is, to keep employees on the books and again trying to get the funds out to selfemployed people will be very important. What is the process . Who do they go to . How do they access it . These will need to be answered in the next 48, 72 hours. Anna weve heard a lot of whatever it takes from the u. K. Government. It is a much used phrase in Financial Markets. What does it mean to you, whatever it takes . Mike i understand and our members understanding is the government is prepared to keep all of those businesses that need support to get through this , they will do that. And we will certainly be making sure our members views are put forward so they can survive this and have a viable business going forward. Anna great to speak with you. Mike cherry, National Chairman of the federation of Small Businesses joining in response to what we heard from the chancellor and the Prime Minister yesterday in the u. K. We will continue the conversation about you take u. K. Politics with the chief of treasury and former secretary at 9 00 a. M. London time on surveillance. Let me get to the car sector, some breaking news coming through from bmw. 2020 Group Pretax Profit significantly lower than 2019. They say the guidance for 20 is affected by the spread of coronavirus. It is difficult to provide performers. It will have a negative impact giving usd they are conversations on investment, they plan to invest over 30 billion euros in research and development up to 2025. That is some expression of future confidence. Automated deliveries, significantly below 2019 is the guidance for 2020. Some other lines coming through from the ecb. Just coming to those for you right now. Talking about comparisons to 2008 and saying the crisis is different. It is likely to be temporary. Our is what we heard from economist at Morgan Stanley moments ago. He goes on to say this morning that he would like to see a response. Fiscal a lot of solvent companies will face difficulty, he says. Separately, the ecb said it stands ready to adjust all of , someasures as appropriate headlines coming through thick and fast this morning. Ot of stall wart companies lets get the first word update. Turmoil, some nations are moving to curtail shortselling. Italys regulator has beenned the practice for three months. It starts today and applies to all stocks. France and belgium has imposed similar blocks for a month each. Softbank unraveling its 3 million we worked deal. It told shareholders it could withdraw from the agreement. In a document, the Japanese Company cited numerous government inquiries. The deal was part of a rescue package for we work after its failed listing last year. Jeffrey gundlach says defaults are likely to accelerate in parts of the highyield debt market as the economy faces low oil prices and the coronavirus pandemic. The cio says downgrades could come fast and furious. Jeffrey gundlach sees the chance of recession in the United States at 90 . Top for more details on the stories. Up, sticking with a veteran. Hsbc names the interim president as its chief, ending a sevenmonth search. This is bloomberg. Anna welcome back to. The european open. 7 42 in london. It looks negative at the start of the trading day and fiscal stimulus coming from many parts of the globe. Will it get to the parts that matter . We are hearing from the french talking about how france might see a flattening of the virus curve in eight to 12 days. If you are looking at expectations as to where this goes how quickly in europe. Bankinglk about the sector. Hsbc has need to be acting ceo as its permanent chief, ending a sevenmonth search in which the lender approached three highprofile outsiders. Joining us with the details is alisa martin, who covers finance. Good to speak to you. Was this a foregone conclusion after we had heard a number of other names have been approached and it didnt work out . They look far and wide but what we are seeing in the economy and markets accelerated the decision. It doesnt come a day too soon. Were flux frustrated with the lack of clarity at europes biggest bank in the biggest restructuring in decades, even before the Coronavirus Spread and the economy started locking down a deal to curtail that. That poses gargantuan challenges facing demandany for cash. Given the circumstances we are , a veteranity insider is what the bank absolutely needed. Anna it is interesting there are times to be experimental and now does not strike anyone as a time to be very experimental, so from that perspective, having someone who has been with the business a very long time clearly makes sense. Elisa absolutely. At the moment, every company, including banks, are facing operational challenges, financial challenges, and they ,re trying to steer the company cutting jobs, cutting costs, and these projections for bad loan billion,s of 600 potentially very long economic slump. That restructuring may have to be deepened. Anna it was quite strange a person who was not confirmed as the final choice of ceo would launch such a big restructuring. That seems unusual in the Banking Sector. If you are going to be doing something so radical, you wouldnt do it normally under temporary leadership. Elisa absolutely. Ofcertainly raises questions the board of the chairman and their leadership, but at the moment, all hands will be on deck dealing with the economic and financial fallout of the coronavirus. Anna thanks very much for your time. Elisa martinuezzi, Bloomberg Opinion columnist with the latest on hsbc. Is putting theh chances of a recession in the next year as high as 90 and says the u. S. National debt will likely grow to 30 trillion in two or three years as spending explodes in response to the virus crisis. His you is if oil stays below barrel, you will have default in parts of the highyield bond market and downgrades should be coming fast and furious. Oil is below 30 a barrel on brent and wti. Brent is at 28. 32. We will get more on the global recession calls. Sachs, Morgan Stanley, more on that in your morning call next. This is bloomberg. Anna welcome back to the european open. 11 minutes until the start of the cash Equities Trading day and we will be down more than 4 , the expectation for the major markets in europe. From of fiscal largess governments, certainly in the u. S. And u. K. , but we will get to the parts that matter to the european governments coming through with those measures enforce. But skin first word news update for you with todays top stories. Steven mnuchin believes u. S. Unemployment could rise to 20 without government action. He raised the possibility with republican senators amid mounting concerns over the Economic Impact. He said the fallout could be worse than the 2008 financial crisis. Joint is considering a debt sale to contain the threat of coronavirus and germany is softening its opposition to the move. Chancellor merkel has refused to rule it out. Agreed to restrict most travel into the continent. Italy has become an epicenter of the outbreak with over 31,000 cases. A u. K. Has announced a massive package of loans and grants to businesses, the latest attempt to stop the coronavirus pandemic wrecking the u. K. Economy. Forest johnson promises help with mortgage payments and support for airlines, shops, and the travel industry including 350 billion pounds of governmentbacked loans. That is your first word news update. For more details on those stories. Economists at Morgan Stanley and Goldman Sachs say a local recession is underway and likely to be worse than 2001. Annmarie quarter and has your call Annmarie Hordern has your call. Annmarie Morgan Stanley says this is now their base Case Scenario and they expect growth to fall. 9 this year. Goldman sachs economists predicted weakening to 1. 25 and Jeffrey Gundlach giving his webcast puts the chance of recession and 90 . He calls this the end of the longest postwar expansion. He said we are unprepared for this. The debate is over about whether the world is going into recession. Now the debate is how long will it run and how deep. Anna interesting. To talk to Morgan Stanley about this earlier and how long it lasts and the difficulty of the chinese experience, which is in so service reliant. The liquidity crunch in treasuries has led to a 5 trillion present thomas from the fed to calm markets. One small corner of the bond market has come under scrutiny. Here with the detail is bloombergs dani burger. Dani i have the origin story train. Cash let me walk you through the timeline. The coronavirus scares cause people to want to move into treasuries but what do you do, you buy the most liquid assets and that is futures. In terms of that, you see the futures all of a sudden start to rise in the market but the cash underlying doesnt have the same effect. This spread blows up. This is twoyear bonds. Skyrocketsprice while the underlying cash market standstill. You usually have a bunch of leveraged players who play the spread when it is small. They have a lot of money borrowed to play this but when that blows up, all of a sudden, there risk limits, the wands go off so they go back and dont want to be in the trade anymore. Enter real money. Large investors who typically dont use leverage. They say look at all this yield i can make. They step in and start to play this spread, but they on things like commercial paper, fx exchange forwards. All of a sudden, they need to allocate into the future cash bread and they need to get that money from somewhere. Here is where they pull it from and this is where the problem arises. All of these huge traders take a bunch of money away from things like commercial paper, and we know this is what the fed has stepped in to buy because these are things that Companies Use to fund their payrolls, they used to fund investment, and all these real money investors no longer are playing in this pool. Liquidity is pulled away. In terms of how this actually played out, we will never know the exact victims of this liquidity drain but it is clear real money had a big impact here and you saw on the other trade, the spread has come somewhat. It is likely not as many people are playing this trade as they had, but still ongoing, leading to the liquidity crunch. Anna the fed having to step into the commercial paper market. Thank you for the update. Fascinating insight into what is going on behind the scenes. Amazon is to hire 100,000 people to meet soaring demand from customer shopping online rather but iting to stores, says it will prioritize household staples and medical supplies as it struggles to fill orders. See growingat demand over coming months. We are joined by joe easton from the equities team. Talk us through some of the demand changes we might see, especially in the retail space. Amazon is an interesting one, hiring 10,000 more 110,000 more workers to meet demand. It shows what kind of demand increase they have seen. They will see cost increase potentially around 350 million. This is really interesting to look at what types of products the companies are seeing demand for. It is not necessarily going to be the highend, highmargin products. It will be the lowend products we see in supermarkets in terms of the stockpiling by a number of companies who have interesting updates. Morrison said what they are seeing is orders being pulled forward seven months. It will necessarily be highmargin and of the business. It wont necessarily impact their fullyear. Definitely those Companies Providing for what we are looking at. Anna thanks for the update. Interesting to see how this plays out for retail. Text decidinginto not to propose a dividend and talking about the Significant Impact the coronavirus will have on spring and summer. High street still very much in focus. 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. One minute to go until the start of cash trading. U. S. Willawe, the inject 1 trillion of the economy to counteract the coronavirus. Japan considers a cash handout of its own. Fall again after yesterdays rally. United front, european leaders agree to restrict most travel to the region. Germany and france announcing more businesses. Welcome to the European Market, lets look your things will be. Future suggest we are down another day. We have heard from bmw and , big names are on the clothing retail sector. Both of those taking the plunge. Lets have a look at how we get out of the gates in European Equity markets. Dayerday seemed to be the were spain takes the market in 1 u. K. Did the same trillion for the u. S. Stimulus. Will any of this money get to the where was needed and quick enough. This is something that needs to be done in a matter of days and we are to see shops closing their doors. Euro stocks out by 1. 5 . By 1. 5 . Certainly scenes it worth a conversation. The euro and the pound we see a little bit of weakness. We see spending coming through on government bonds. Debt is the. K. Yields go higher. Yields going higher. Is it something comforting for markets . Or do they have to sell these two trying shore up elsewhere. Lets look at the sectors from equity market perspective. This is what we see for the sector picture. , we heardhese markets from stefan buettner, saying these markets are functioning normally. What we have at the moment. , the daxequity markets not which is why perhaps we are through ins coming front of me. Thats where we are. Lets get to the big picture stimulus. Stockwell is needed since yesterday. , they announced a 1. 2 trillion stimulus package. Steve mnuchin warning the devastating effects. Rate could beit up to 20 . Us from new york. For 850y this plan billion the trump on review said he wants to go bigger. When they were reviewing that plan he said we want to go big, go bigger. Its coming down to 1. 2 trillion, thats the plan being floated and where would this be going . Shortl could help businesses and direct payments to americans. A check directed to american citizens. This was cleverly called the peoples tarp. Its a change of tone from the administration. When they said the economy was resilient but now Steve Mnuchin was saying without of this kind of packet we could see a worse situation. Theyve been talking to executives from industries that have been impacted like restaurant and retail. Credit card data showing u. S. Consumers showing absolute freefall. , it system bank now matter of how long this will last, how deep it will run and clearly do administration the administration is trying to get out of that. Opening down by three paying 4 . Just a few minutes in the trading day. Stoxx 600 down. This is something. What we heard from the white house and from the fed yesterday , its initial impact. Give us the latest there. Theyre announcing two of these emergency lending programs , clearly the need for the dollars so intense now. He said we heard you loud and clear so the first one is commercial funding facility. Easingfor corporation the shore shortterm credit. The second is for them to trade directly with the fed insecure that against some stocks and bonds. Theres more cash or liquidity of the market. Admitting the plumbing is not exactly working. Bloomberg opinion article writer talks about the fact the fed wouldnt think far enough. If you look at the euro swaps or any of the swaps across the atlantic you see the pressure and the need people are so hard and fraught to get. She says that while they are making these Strategic Moves on u. S. Soil, its not helping Central Banks across the atlantic. Much. Nk you very european at we markets once again suffering. Center dax down by 3. 6 . Lets talk to our guests this morning. Chief economist at gencorp capital. Very good to speak to you. Handle on to get a the impact of the signals announcement we got in the u. S. From the u. K. The fact we are seeing selling continuing in asia inherent to europe does that mean they need to do more to digest the details further . First of all we need to digest the details. The population incorporation need to digest the details. 80 s not forget that about of the market economy are in Services Sectors are the ones being hit the most. Down, all these types of things with Global Economy. If we see 5 to develop market trillion,t under 3 this is a time for fiscal authorities and monetary authorities to get together. This is the failure in the whole thing. There is no global coordination of fiscal level. Globally g7 central bank, that was good. We need to see more of this. But aven the destruction of globalization, destruction of global trade and we have the results now. Its taken a virus to push us in that direction. On the one hand yes, i hear a lot of calls for fiscal action for a more coordinated approach. But on the other hand, isnt it more important to see policy enacted that will get to the coffee shop in the retailer and the selfemployed person that is going to struggle here. That doesnt need big global conversations, that needs the background infrastructure that actually deliver this quickly to the people who are hurting. You seen Financial Market moves. Weve seen limit up, limit down every day for the last one or so weeks. In u. S. Equities we are seeing the same thing happening in european equities, its not just a National Economy issue. Its a Global Economy issue. They need to take National Measures to support their economies but they need to at a global level. All these services and sectors are dependent on whats happening internationally. The United States is a much more close economy. Germany is 40 exports to gdp ratio. So we have very different economies there. What we need is for policymakers to start to think one or two steps ahead. They are only starting to do this in the last three or four days at a national and international level. The virus doesnt stop at any border. The crosses a border. Gettingems to be expensive and its called king dollar for a reason. I been looking at free threemonth cross currency. Areou see the Central Banks taking the actions behind the scenes at the fiscal stuff. Do you see them stepping in take outded to try and of the system in a way or the rush for dollars . Ando question about it thats what the Central Bank Statement was about. Andfed is on top of things they are always one or two steps ahead. They are all doing the best that they can at the moment. Lets face it. Announced thursday the five trading days except for the deaf and the crash functionalities we saw. These are the worst market moves weve had since the beginning of 1900 and Central Banks need to be on top of this. Fiscal needs to follow. The Monetary Policy and the fiscal policy. All three need to coordinate now. Thank you very much simon. Just a bit of breaking news and this, i mentioned this to build. He global picture iselin central bank cutting rates, lowering it and giving banks more latitude to go land. Remember they had already cut Interest Rates in iceland on march the 11th. Interesting to see banks coming forward with extraordinary measures in extraordinary times. Whatever it takes. Opening the taps and keeping the rare keep them running. Fed stimulus and data. This is bloomberg. Loomberg. We must act like a wartime government and do whatever it takes to support our economy. Those of you thinking of going out on school holidays, dont. This is the calm before the storm. Those of the Prime Minister to britain, australia and ireland talking about the responses to the coronavirus. Lets check out market action. Again down on a number of markets. The dax in the madrid markets in there for you. Seemed where the eurozone focus was. Worth dwelling on whats going on in sovereign bonds. This is 10 year yield. On the rise as we see money coming out a fixed income as well and Government Debt at least and where is it coming out of in terms of sectors . Banking is down. And the car sector. We have the week registration numbers coming through which could be the weakest that was certainly weak spot. Update from bmw about how this will impact on their business and other automakers from europe about having to shut factories temporarily. Chief economist at gencorp capital. He is still with us. Let me talk to you about the euro area european responses have been. Theres been data that suggested maybe parts of northern italy will start to get better from a number of infections perspective. Maybe even in iran. Are there any reasons to be able to put in terms of what we are looking at here . To take thee need situation in korea and china as prime examples. China had a locked down and managed to get it under control. The recovery rate in china is about 85 of the confirmed cases in korea they stabilized it and managed to keep the mortality rate below which is very important. 250,000done about tests. They said test and isolate and look to find were all these people have been exposed. Said we areou starting to see a stabilization with the lockdown. This is the only thing that seems to work. We need to talk about that is a positive. You can ask questions about how shortterm the impact will be on the aviation sector, to what extent does bounceback afterwards. That kind of reality check from credit agencies is good have repercussions for the rest of the economy. I think we have to say credits credit agencies need to be careful here. Thailand is looking into the circuit breakers. We need to analyze that and look at those steps we can take in the future. Of countries are highly exposed from tourism. The small island countries like thailand, turkey to a lesser extent. These are things i policymakers which are very concerned about that they need to take care of. We all need to work on this together. We need to work on this together. Her firstr made flapjacks yesterday which were delicious. You are interviewing me from home and you are in the studio. We need to do this together. Part, playing our discovering new hobbies and interests. What about how europe response to this . Continuingy stages, the fraying around the edges and anger in italy about a lack of support from others in the euro zone. But we also need to talk about possibly raising debt in that sounds like an operation between countries. Germany needs to start to move oneis and step ahead. They all need to be lets think about the issues later per later. Keepinghats Governments Holding back the spending. Dont think about that, think about that in 12 months time. These issues need to be thought about. Think outofthebox. Calm down the situation. To dancel leave you momentarily around her living room. Home and giving us his muchneeded insight. Up next we will bring you stocks on the move so far including into to expert inditex. Provisions for the Coronavirus Impact. This is bloomberg. Welcome back to the european open. Lets have a look at some of the stock movers. Moves to seeing big the downside in the sentiment in the red. I want to pick out three corporate stories you need to know. Bmw down nearly 5. 5 . Taking a different strategy than vw. Next up, into tech down 2. 5 . Salesner of zara, their sales are up. Clothing stores in key markets in china and now spain and italy. Ubs up a little bit this morning. Talking about the fact they can stand even the most severe scenarios. Just down to 26 and brent 28. Ago. Went low moments serious pressure on the oil market. All that despite the trump administration. In the u. K. , Boris Johnsons government announced a rescue package in a desperate attempt to stop the coronavirus wrecking the economy. Simon is still with us. , it been looking at a chart seems to be steepening. What kind of borrowing can governments get away with at this point. Clearly these are crisis times and they are taking crisis steps to shore up their economies and that seen loading up on debt. Getn i think they could away with anything at the moment. To just go out there and lend, do what you can to provide the population with confidence. This is confidence building measures, whatever happens on the bond markets to get it. Just get on with it, lets get out of this crisis and lets spend our way out, there are , wety of capacity there have had way too high ratios in equities. Do you like the u. K. Plan of loans and cash to companies or do you like checks to houses or the peoples tarp is one of our colleagues called it. Everything. As we move along in the next few days and weeks, we will adapt a strategy, they will spend and lend. All cons of different approaches will have to be taken. Clearly cash is what people need. If theyre not being paid by their employers, what we also need to see and this is something we see in continental europe, many countries providing Tax Exemptions for them to be able to continue to employ them to work. Innovative solutions coming. Thank you very much. We will continue this conversation on bloomberg radio. We will continue the conversation on the u. K. Later. This is bloomberg. Anna looking back to european open. 30 minutes into the trading day. The European Equity market under pressure. We are down on the stoxx 600 in europe, down by 2. 8 . Some of the worst in germany, down 2. 4 . Cac down 3. 2 . Really interesting to see telecom higher, retail not too badly. Frome getting through governments, relatively robust. Retail has been under a great deal of pressure, and maybe they will get some support from governments around. Elsewhere, industrial goods and services, travel and leisure continues to retreat, down by three quarters of a percent. Lets get a first word news update for you now. Hsbcs search for a new chief executive is over. Secure a struggled to candidate while responding to a decrease really and increasingly treacherous Global Economy. Noel quinn. Unravel is threating to a through billiondollar deal, telling shareholders that it would it could withdraw from the agreement. In a document seen by bloomberg, the Japanese Company cited numerous we work failed to desk wework failed to defaults are likely to accelerate in part of the highyield debt market. That as the economy faces up to low oil prices. The downgrade could be coming fast and furious. Goodk also sees the luck also sees the recession as the coronavirus pandemic with the outlook for demand, while much of the europe and United States is shutting down, it rebound in china. Last week korea made as many flights to and from the country as normal. That is 95 of large manufacturers ternary returning to regular operation and china. That is your first word news update. Bmw is holding off on closing plants and made the coble the coronavirus outbreak. Thatad, the carmaker warns pretax profit in 2020 will be lower and in 2019. Our guest joins us from munich. Talk us through the changes at bmw, because we are seeing substantial news from a host of european automakers this week. Unlike, other oliver bmw, unlike bmw haskers, both not shut down yet. We are expecting more news at round a halfhour today, so we might hear more than. But so far they have stuck to Flexible Working hours, flexible home initiatives, and those kinds of things, to protect workers from the coronavirus. Anna interesting. Other plants have decided to close up, some of their plants in europe. The kind of visibility does car sector have . Oliver bmw also gave us a pretty good forecast, a good idea of what to expect this year. They are expecting a record profits, a 2 to 4 margin, much lower than in the past. They said sales will be significantly lower, and just eight weeks ago they were saying they expect sales to rise again this year, so a big change from what we heard even just a few weeks ago. Anna european car sales had their worst from the year that is nota period even really reflecting consumer nervousness around coronavirus. You have to wonder what happens in march. Oliver absolutely. If you were thinking that february sales would have none of the corona worries in there, tax referrals from the previous year. Everyones eyes are going to be on what happens. I dont think with many people now at home with social distancing, i dont think people buying cars is going to be on the top of everyones minds. But we have not heard what the association is expecting. The forecast was 2. 4 a contraction of 2 in car sales. That might change now as we get more information on how people buy cars. Anna thanks very much, oliver, for your insight. Up next, an unexpected opportunity. The roads are empty. Fewer planes are in the air. A boon for the esg world. We will discuss. This is bloomberg. Anna welcome back to the european open. 30 to eight minutes into the trading day, European Equity markets 38 minutes into the trading day, European Equity markets. It did not seem to last into the second half of the Asian Session. We saw the australian and south korea market under pressure. Interesting to see where we are on crude. Brent 28. 24. There has been a lot of talk about how the gap might narrow with the u. S. Buying strategic reserves, but certainly they seem to be widening at this point. The wti price falling further today than the brent price. Is u. K. Yield story interesting. Big announcement in the u. K. Of course, lending facilities and also cash for businesses, certainly Small Businesses. There will be more to come from the u. K. Government and the itasury when it comes to is a global theme. Wes. Talking about should not worry about that, according to our guest in the 8 00 part of the show. Dont worry about the debt load for now, just save your economies. We are seeing steeper curves in the u. S. And the u. K. Reflecting that debt pile. What is the Banking Sector doing right now . European banks not at the forefront. In terms of the sectors under pressure, we have got not the Banking Sector, we have industrial goods and services at the bottom of the pile. Banks not doing all that badly. Telecom and retail actually moving to the upside. 4. 6 , retail has fallen so far, so quickly. It is really at the forefront of this, also at the forefront of government efforts to try and stem the effects on the Global Economy lets get a first word news update for you. Treasury secretary Steven Mnuchin believes u. S. Unemployment could rise to 20 without government action. We have learned he raised the possibility with republican senators, amid mounting concerns of the Economic Impact of coronavirus. He also said the fallout could be worse than the 2008 financial crisis. Europe is considering a joint debt sale to help contain the threat of coronavirus. Germany is stopping its opposition to the move with Angela Merkel refusing to rule it out. Italy has become an epicenter of the outbreak, with over 31,000 cases many other parts of europe are not that far behind. The u. K. Has announced a massive package of loans and grants for businesses in the latest attempt to keep the coronavirus from wrecking the Global Economy. Includes 350 billion pounds of governmentbacked loans. In the United States, former joe biden won in arizona, florida, and illinois, giving him a commanding lead over rival bernie sanders. Biden now has more than half the delegates needed to secure the nomination. President trump has secured the republican nomination after only token opposition. That is the first word news update. To the markets. The liquidity crunch in treasuries has led to a 5 trillion promise from the fed to car markets. As part market watchers watch, one small part of the market has come under scrutiny. Here is dani burger. Dani this is the originate should of the cash train in the market. Comeshe coronavirus outcome Everyone Wants to rush into treasuries. You go into the futures market, which means that all of a sudden futures are pricing at a significant level higher than the underlying bonds. What emerges is this huge spread that you can really see noticeably in the charts between the futures and underlying cash bonds. All of a sudden there is an arbitrage opportunity to trade that goes to differences between the underlying in the future. Real money investors step in because we do not need leverage to get yield off of this. But the real money traders they need to fund this position somehow. Here are three Asset Classes that the money traders tend to play in. What happens is they take money away from commercial paper, from fx forward, and put it into the spread between futures and the cash market. Of course that means liquidity gets pulled away from these markets that are essential for funding corporates as well, and that is where we see the liquidity drain that the fed has tried to step in and correct. Anna dani burger, with the origin of the tightness that we saw in certain funding markets yesterday. The white house is going to inject 1. 2 trillion dollars into the u. S. Economy mitigate the impact of the coronavirus, this coming as other nations including the u. K. Announce their own measures. One area which may see a fall off n. L. What is an expected and if it is esg. Carbon dioxide emissions could fall by 1. 5 billion tons, according to bloomberg intelligence. In the e. U. , this means there may be unexpected opportunity for allowing companies to buy credit at a discount. Joining us now is our guest, who for bloombergsg intelligence. Great to speak to you. What is the Biggest Surprise in your analysis from an esg standpoint . Good morning. These are surprising times. Unprecedented times globally dealing with coronavirus. One talking a lucky to you from the comfort of my home. One of the most significant surprises in our research has been the decline in Carbon Emissions and for in particular in china, which has been remarkable. In just one month, we saw a drop of 100 20 million tons of carbon you look tond if annualize the number, it would be to brazil, saudi arabia, and canada, the combined annual emissions of about 1. 5 billion tons. So this matters because China Remains the Worlds Largest of globalbout 30 Carbon Emissions. Another surprise has also been coming from china. In air pollution, and it also matters in china since in 2017 air pollution was linked to a third of the deaths. Lookinge two surprises at china and the coronavirus so far. Anna what are the sector implications of this . This is one way to address climate change. Possibly was not the way many people would choose. What are the sector implications of this then . Adeline we have seen gdp slowing down, having been revised down, and coupled with coronavirus, it has an effect on emissions. If we look at the power sector, we expect a 5 to 10 reduction in natural gas and demand. In turn, this would present 2 to 4 reductions in global emissions, or one billion to 2 billion tons in Carbon Emissions. It gives you a sense of the magnitude we could be seeing. Point is ancond investment implication in europe. In europe we have the european trading scheme, which is a market where carbon heavy buy tos can allow can offset Carbon Emissions. Since the coronavirus started, we have seen a drop in the carbon price, the european carbon price, the eua, by almost 50 . We expect the 2020 carbon price to be at 25 euros, down from 30 euros. This creates a window of opportunity, i guess, for heavy emitters in europe, which are steel, cement, power companies, and they have the opportunity to buy those allowances at h when he percent discount. 20 discount. We expect in 2021 that price to go to 45 euros. Anna thank you very much. Adeline diab on the response to the coronavirus. Up next, a united front. European leaders agreed to restrict most travel for the region, as Angela Merkel does not quite rule out the prospect of a joint e. U. Debt issue. We will have the latest from brussels next. This is bloomberg. Anna welcome back to european open, 51 minutes into the trading day. 3. 5 or a point down more on the major markets in the United States. Back to europe, lets get to the stock stories on the merv on the move. Lets go to Annmarie Hordern. Annmarie i want to get to airbus, jp morgan cutting them and their price target to 68 euros. Frenchalready below the price target. Been feeling the effects. Look at what is going on in premarket trading in the United States. Bowing down more than 13 . We know they are seeking government aid of 60 million for them and their suppliers. They are feeling the pain, looking for cash. And carnival down more than 9 . We see a serious pressure on the cruise lines. The stock is a deep air market, down 75 . Anna thanks very much, Annmarie Hordern, with your european leaders considering joint debt sales to help contain the impact of the virus. The move comes as spain and the u. K. Joined germany and france with businesses fearing going bust. The finances of the how seriously should we take these words . Lets get to. Taddeo, joining us from brussels. This is somewhat of a lets get to maria maria tadeo, joining us from brussels. There are already vehicles that do that, arent there, maria, at the market, at the margin, but how seriously should be taking should we be taking more paneuropean debt rating . Term to put a very simple out there, this would be a joint debt instrument, backed up by members of the euro area to almost kickstart the european economy. What i would say is Angela Merkel did not say this is going to happen imminently. She did not even say this was the final conclusion. She said i will have my finance minister look into it. The idea that she did not fully rule it out is significant enough. That is making the market very excited about the prospect that we could get something. You have to keep in mind it is a huge departure from anything Angela Merkel has said, even at the height of the euro crisis. The germans said they would not go there, thisll something they were not prepared to do. This is context something they were not prepared to do. To give you context, this was a long meeting, earning together focus of italy is the the coronavirus in europe and we are seeing that spreading. He said no country in europe will be able to do with this alone. It is not a foregone conclusion, it is not going to happen overnight, but Angela Merkel opens the door to perhaps exploring it, then it is significant. Thanks very much. The italians are focused on what they focus as a lack of cooperation in the early days. Maria tadeo with the latest on the debt conversation there. Lets continue talking about sovereign debt and what is moving markets. Fx and rate strategists in you berlin he joins us on the phone. Yields ander Government Debt, almost everywhere in europe and the United States at least, in the wake of these big fiscal pushes, what is that telling us . Good morning. I think there are a couple of things it tells us. The first thing i would say is that now that we have seen the fed cut rates to zero, there is very little more to come on that policy side. The market is saying the zero bound will be maintained by the fed, so in terms of getting support for these differed maturity yields, it is not going to come from the fed. They are done. They are pretty much done. The other thing is with all these big spending packages on the fiscal side, being promoted by governments globally, how are we going to pay for this . The combination of those two things is what is feeding into bond markets everywhere. I see spanish bond markets of 20 basis points on the 10 year sector today. U. K. Yields up 17 basis points. Itis widespread, and i think is a concern about how we pay for all this and how the fact that Central Banks are not going to be able to provide much more policy support to keep upside on yield contained. Anna it does seem to be a global theme. We were seeing a chart of what is being done to steepen the curve in the United States. Bond yields go above 0 for the first time in the month of march. We continue to watch the story carefully. What did you make specifically ruefully of the announcements yesterday . Richard if i look at the sterling fx market, it is a bit of a thumbsdown, and the pound has been trading very badly so far this month. But even in the near term, even with the additional fiscal details we got yesterday, you would think it might lift the pound with the price action recently. The price action has been terrible. I expect this to continue. Think cable goes below 120. Even eurosterling which is trading below 91, i see that moving to 94. The price action tells us something, and it is not very good for sterling. Anna thanks so much, richard, for joining us. Richard jones. Phone, asnes on the many of our contribute is have been in the last couple of days and will continue to be. Thank you for joining us. 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 ] shock and all. Of debt into the economy. Steven mnuchin says the jobless rate may climb to 20 without stimulus. S p futures fall by their limit after yesterdays rally. European markets drop at the open. European leaders agreed to restrict most travel to the region. Spain joins germany and france in announcing billions to support business. Good morning, good afternoon, good evening, everyone this is bloomberg surveillance. London,cine lacqua in taylor riggs in new york. A little bit of a different surveillance given the virus impact. We are getting breaking news out of germany, the banks, some of the money they could tap on. Taylor this is interesting. Germany is going to let banks weathering the virus impact in washington, d. C. , where we are getting a lot of discussion