The 10 year yield at 1. 56 . The dollar index continues to strengthen, and crude oil is above 53. Guy we are seeing Dollar Strength beginning to ease a little bit right now, but you still got the dollar up against the turkish lira. The Turkish Central Bank cutting rates again. Still, the pressure is building on the lira. Eurodollar flat to negative right now. We are still below 1. 08. How low does the single currency go . European stocks not at session highs, but fairly close to them. Oday vonnie we begin with the latest on the coronavirus as china makes moves to stimulate the economy. Possible bailouts for hardhit Industries Even as the death toll continues to rise. Bloomberg also reporting that china plans to take over the indebted conglomerate hna group. For more, lets get to bloombergs Sophie Kamaruddin in hong kong. Continuings and illnesses. What is the latest. Mr. Prystaiko with the report sophie with the report on hna group, bloomberg has learned conglomerate is in talks with the government for a took over as the firms ability to meet its financial obligations has been hampered by the out. An announcement on this may come as soon as tomorrow. Hna Airline Assets may be sold off to local players as part of this deal. Seemingly, the pivot for the group back in november to focus more on tourism and travel related business is certainly taking a hit, given the impact on china travel. As for the broader airline industry, china is reportedly considering measures to support the aviation sector such as direct cash infusion and perhaps mergers. When it comes to the wider saying that itc is calling for a rational view when it comes to the Economic Impacts from the outbreak, saying it will be shortlived and limited in terms of time and scope, and the central bank is planning to roll out more measures to promote consumption and investment. Uy we are just showing , suffering for demand out of china. How long is it going to take for chinese consumers to get back into stores . We see macau opening, or reopening. What is the story on the streets in some of those key retail areas . Sophie there may be some hesitation on the part of chinese residents to go back out and flock to stores, even as we are seeing some big names. Eopen, the likes of apple, drop inosted an 85 business on the mainland given the number of stores it has had to shudder. Uma also suffering, although saying it doesnt see an impact beyond this quarter perhaps. To your point about whether or not we will see a pickup in besumer activity, that will as we have noted in recent days, several cities have ratcheted up restrictions on residential compounds, and more quarantine efforts have been put in place as well. Vonnie Sophie Kamaruddin in hong kong, thank you for that update. Guy lets get some insight into the state of the markets and their reaction to what is happening with coronavirus. We are joined by Derek Halpenny, european head of Global Markets research at mufg. Are you surprised at the sanguine approach risk assets are taking to the coronavirus story . You would have thought on the face that this is a very market negative event. It doesnt appear to be perceived that way by those investors that are putting large amounts of money in here. Derek i think for sure, there is this huge assumption, hope in the markets that this plays out, however bad the data gets. That ultimately, you will have Central Banks and governments who stepped in very aggressively. On the central bank side, that has already been happening. But certainly in terms of china specifically, that there is more stimulus to come, both fiscal and monetary, and that ultimately we will get this kind of transitory impact and ultimately a large rebound. Guy i am trying to get my head around what transitory is. Transitory seems to mean q1. Is that transitory . If it goes into q2, this becomes a different story. Derek my sense from the markets is that, yes, everyone is focused on real gdp growth in china getting hit by potentially 2 , but then ultimately getting a rebound in q2, so for sure. You were talking about the question to your colleague about predicting wendy stores start to open predicting wendy stores start to open pretty thing when do stores start to open. It is very difficult to predict. That assumption i mentioned a moment ago, certainly as each day ticks by, at some point the current risk rally could reverse quite sharply, as does a reassessment of that vshaped rebound activity in q2. Vonnie what are you looking for the dollar to do . Euro ises well, the obviously front in focus. Three big figures in the month of february to where we are is a pretty big move. Of course, we have to also incorporate where we were before coronavirus became the issue in january. In that context, i think the fx market has been playing out the very surprising weakness that is now come to the fore in terms of fourthquarter gdp. We had the contraction in gdp in japan, which was way worse than what the markets were expecting. Not only do we have the coronavirus to deal with, we have the running to that in the Fourth Quarter of last year, where markets are now seeing that being far worse than expected. It is playing through in the fx market. Eurocale of the move in is significant. Now you are back to the cyclical lows, and this entire cycle lower in eurodollar, so below 1. 05, below the levels we have reached before. Those are very credible targets for the market to be looking at. Vonnie the parody calls we had the parity calls that we have had, are they slightly beyond what you would anticipate . Derek in my view, they are. I still think the window we are talking about for Dollar Strength is playing out in the backdrop of what we have at the moment, but the u. S. Economy in our view, while it is relatively better than elsewhere because of what is happening in relation to coronavirus, it has its own issues as well. In own view at mufg is that the second half of this year, we are going to see more pronounced evidence of slowdown in the u. S. Economy. The physical support that has been there is now evaporating the fiscal support that has been there is now evaporating. We are going back to trend growth after a sugar high from the trump stimulus. 1. 8 ,nk Something Like 1. 9 this year. We are seeing a slowing economy in the u. S. As well this year. We think theres a good chance the fed may have to cut rates later on this year, so it is a positive story for the dollar at the moment, but we are not assuming that continues. Guy lets talk about today. Dollaryen, walk me through what is going on. It is a massive move. Derek it is, and the risk backdrop today is reasonably favorable. But i think also, if you look at the two risk off episodes we have had this year, the middle east escalation and then coronavirus escalation, on both of those occasions, dollaryen dropped sharply. Occasions, if you look at the weekly flow data from japan, what that triggered was very substantial purchases of foreign bonds. Some of that, perhaps a good chunk, is hedged, but there is certainly a portion that is likely unhedged. I think that is certainly a supportive factor. Japanese investors are seen as being there to the downside, and on the two occasions when we have tested the downside, we have reversed very sharply. Today, we have broken the january highs. Of 1. 10. Re north you talked about the one dollar five cents on eurodollar be incredible. Is 1. 10 a credible target . Derek in that window we assume is open, for sure. Absolutely. It is interesting what is happening in japan. Just in the last couple of weeks, we have seen a massive drop in five year fiveyear inflation expectations. Guy they were pretty low before. Derek and it has turned negative in the recent data. Historically, that type of development which boosts real haves in japan, when you circumstances of these huge currentaccount surfaces, it becomes more and more difficult withe yen depreciation, real yields rising and having substantial currentaccount surpluses. While i can understand what happened today, i am skepticals of levels beyond the shortterm given that development. Higher real yields in japan historically is very supportive for the japanese yen. Guy talk about declining real yields in turkey. We will do that just a minute. Stay with us. Vonnie. Vonnie lets get a check on Global Markets now more broadly. Here is kailey leinz. Kailey taking a look at green all across the screen when it comes to Global Equities today. The prospect of more stimulus coming from china giving a boost to risk sentiment in the face of the coronavirus. In the u. S. , all three major averages right around the highs of the session. The dow not yet at an alltime high, but the s p 500 and the nasdaq are, as is the stock 600 and europe with a gain of about 0. 8 . One heard the phrase tough market tossed around lunch. We just keep persisting phrase teflon market tossed around a bunch. We just keep persisting. It does suggest that the rally could still have room to run. , over 70,k at the rsi indicates that we are in overbought territory. It could indicate more gains could come. The gains just keep coming for semiconductors as well. The sox index up about 2 today at a fresh record high. Of course, china stimulus really heating these names. Some of the top performers are analog devices. Nvidia up more than 4 after reporting earnings this morning. They did have to revise down the revenue for the Second Quarter a bit because of the virus, still reinforcing the idea of the company turnaround. Nvidia up nearly 5 on analyst recommendation over at bernstein. Upcoming catalysts for the stock now at another record high. I want to point out the gains we are seeing in oil today. Again, a risk asset. Growth a big player for this commodity. Maybe demand is going to be a bit better with the china stimulus. That has wti up about 2 , giving a nice lift to oil and shale stocks. Vonnie thank you for that. Do remember the function gtv allows you to browse all of the recent charts featured on bloomberg tv. Save your favorites for future reference. More with Derek Halpenny in a moment. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is the european close on bloomberg markets, lets check in on the bloomberg first word news. Here with the details, riddick ago. The details, ritika gupta. Ritika democratic candidate going toloomberg will debate state for the first time. Bernie sanders leads the way at 31 . A bloomberg is the founder and majority owner of bloomberg lp, the Parent Company of bloomberg news. U. S. Attorney general william barr told associates he may quit. Barr is frustrated over president trumps tweets and comments about Justice Department investigations. He issued a rare rebuke of the president last week. Another sign of a strong Housing Market in the u. S. Housing starts pulled back from a 13 year high, but remained at over 36 million units, the second fastest pace of the expansion. The British Government wants to end the immigration of unskilled workers. A new pointsbased immigration system will take effect next january. Skilled workers must prove they can speak english. They also must have an offer for a job paying at least 33,000. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Vonnie thank you. Halpenny,k with derek head of Global Markets research at mufg. What looks attractive to you right now across Asset Classes . Gold is doing well. Perspective, i would throw in speculation around the Monetary Policy framework reviews, and particular from the fed, on what that might mean in terms of longterm applications of the monetary stance in the United States. Impetusnk theres added to gold in terms of expectations of Monetary Policy being looser for longer. Whenever weve had these kind of risk off moments and we seem gold spike, but then risk , gold haseturns reversed, so there is this fundament a backdrop of support, and i think it is that Monetary Policy framework expectation and expectations of lower for longer. Vonnie does that mean that Monetary Policy in the United States is exhausted . Derek relative to elsewhere it is not, but of course, one of the reasons why we are having this on a terry policy framework review from the fed is exactly those concerns of being at the lower bound and what exactly can be done in order to implement stimulus into the real economy. Definitely we are reaching a point of policy being exhausted, but when you look at the fed Balance Sheet relative to gdp or relative to market size, when you look at interest rates, when you compare that to the boj or the ecb, there is certainly plenty more scope for the fed then there is in the other major Central Banks. Guy do you think this is a more important focus for the minutes coming out later than the focus that everyone seems to be talking about, when do we get the paper of the bill purchases and how they are going to work . Do you think we should be focusing more on the structure of the inflation targets and how the fed is going to reach that rather than worrying about the shortterm implications of paper . Derek we are going to start getting more and more information on the framework review, and dont forget, a small but important week to the statement in january, the removal of the reference of conditions being conducive to getting inflation near target, the removal of that and having target,nflation to the returning to the target, small change, but potentially important change. The message being the fed no inflationepts getting near 2 , and therefore, 1. 8 , 1. 7 , it is near, but it is not good enough. In the context of the fed having missed its inflation target to the downside in 95 of the last 10 years is telling you that the fed needs to address this downward, asymmetric bias to its inflation targeting. Change ine a the statement to indicate they are trying to send a message to market. Guy they have done pretty well on that. Lets talk about turkey. I just went to get your take on this. Turkey cutting rates again today. Not as much, but we are pushing further and further into this negative yield story. How much more can the turkish authorities cut before we start to get a blowup in the turkish lira . The pressure has got to be building. Derek definitely vulnerable, and the statement made reference to monitoring external conditions and inflation. In other words, that kind of dynamic of inflation undermining real yields and what is required in order to finance, its got a surplus on current accounts at the moment, but that is going to be temporary. We will go back into deficits as the year unfolds. And ultimately for the central now about real yields 150 basis points, we are historically invulnerable territory in terms of depreciation. Is 6. 40. Berg figure our view is 6. 60. The camp of greater depreciation, and there is probably more cuts to come. , but erdogance is clear in what he wants, and the central bank will deliver what he wants. More cautious from here, but we should expect further easing going forward, enough to put downward pressure on the turkish lira. Vonnie we have to leave it there, but our thanks to you for joining us in our london studio. Ofek halpenny, global head mark its research at mufg. This is bloomberg. Vonnie it is time now for a Bloomberg Business flash. The meale pioneer of kit by mail thad. Now by mail fad. Now blue apron is looking at ways to increase its business. Blue apron reported a Fourth Quarter loss that was worse than expected. Palladiums recordbreaking rally wont stop. It rose about 28 an ounce for a while today, already up 40 this year. The reason, expectations that Environmental Standards will get tougher. That means cars would need more palladium, and theres already a shortage. That is your latest Bloomberg Business flash. At wheres take a look european markets are right now. We are near session highs. Every single sector in europe is in positive territory. We are led higher by the tech sector, bouncing back from a big move to the downside yesterday. But then we get into some of the more defensive names come of the household goods, miners bouncing back. But like i say, everything is in positive territory. The european close is coming up. This is bloomberg. Guy 30 seconds until the end of trading in europe. A positive day. Every single sector in positive territory. Bright green great we are on session highs as you can see. Remember when we crossed the 400 mark . That was a big deal. Everyone was saying the market would, under pressure. Today we are up. 8 . Lets look at the individual markets around europe to give you an idea of the kind of story we are focusing on when it comes to individual components. Ftse, cac 40, dax good the cac of these markets up. 8 . Helped by00 is being the fact that hsbc is bouncing back today. As we saw yesterday, is a huge waiting on the ftse 100. Lets look at the sector stories. Every single sector is in positive territory. Tech leading. Then the minors, then the financial services. Telecoms trading strongly. Utilities are up, oil and gas is up. It is a reasonably eclectic mix. There is no clear rotation happening, which is worth paying attention to. The bond proxies are middle of the pack today. The bottom end of the market, the chemical sectors underperforming. Banks underperforming despite what we are seeing with hsbc coming back a low bid. A big drop yesterday. In terms of the sector breakdown story, i am not sure theres a clear message you can take away. Lets look at some of the individual names. This is where the story is most interesting in europe. 12 . Up this is a company that came out and said we are being pummeled in china. The footfall through our stores has cratered. We are suffering. Lookedket has basicall