Find out, but we are getting out. We want to get out. We had good meetings with the taliban. We are going to be leaving, and we are going to be bringing our soldiers back home. Weve been there for almost 20 years. Its a long time. Weve done a great job in terms of getting rid of terrorists. Now it is up to other countries to get rid of those terrorists. Meet. Going to we have discussions to go, but weve made a lot of progress, ok . Thank you all very much. [indiscernible] press, lets go. Move lets go, press. Vonnie more of those comments from President Trump just a few moments ago. We talked a little bit about the peace signing. Very few comments on this killer occasion. He is meeting on this particular occasion. He is meeting with pharmaceutical executives today. We will hear more as the day progresses. We are monitoring gains on the s p 500. 1. 7 , nowas much down to 1. 2 . The retailers and the Food Companies are doing well. Consumer electronics, everything you might imagine would do well in an environment where people are quarantined. Detergent tight materials, personal hygiene, consumer electronics. Of course, we still have the Cruise Companies suffering, down once again after bouncing small on friday. In terms of the 10 year yield,. E got down as far as 1. 0286 we got a little bit of selling. Twostens spread is at 28 basis points, a Pretty Healthy curve, although not if you look at the actual levels. Crude oil is bouncing today by 3. 4 , still just at 46. 28 a barrel. Guy a couple of things probably worth sharing with everybody that it happened over the last few minutes. The first, looking at what is happening with the g7, i wonder whether this is what generated the bounce that we saw a few minutes ago, g7 finance minister s tuesday weighing some sort of fiscal coordinated response, and the way that Laurence Boone of the oecd was discussing with the Program Within the last hour. That is potentially providing a little bit of a catalyst for the financial markets. The other headline is the one we are watching right now, ryanair to cancel up to 25 of italian flights on coronavirus. Remember, these lowcost carriers have significant exposure to the italian markets at the moment. I am going to be speaking to Michael Oleary tomorrow. We will have that interview here on Bloomberg Television with the take on what is happening with this market. Right now, we are seeing the Airline Stocks in europe under a considerable amount of pressure. Just ryanair, but i ag easyjet, lufthansa under considerable pressure. Argue,l action, i would is at the front end of the curve, particularly in the united states. We are still six basis points lower when it comes to german ,enyear german twoyear 83. Lets get more of the impact of the coronavirus right now. We are joined for analysis by john hardy, Saxo Bank Head of fx strategy, joining us from copenhagen. We are looking at action on the monetary and fiscal front. We seen a bit of a bounce in stocks. If we do get coordinated response, how do you think different assets will react to it . Considering the almost record pace we saw in the selloff, especially in equity markets last week, the twoway risk is very much there. On the Monetary Policy side, i really wont be impressed with much. We are talking about a shutdown activity. Cutting rates is not going to increase Economic Activity or start considering a new loan or something. It is about the fiscal side. It is really difficult because it is not simply fiscal stimulus. It is about credit forbearance, and specifically, how does that forbearance propagate down to the smaller actors in the economy which are behind a lot of the jobs, etc. . Certainly there is a risk from where we have come of potentially a very sharp rally, but the devil could be in the details of how it actually shakes out and what form it takes. It is also politically difficult if you are talking about fiscal stimulus, especially in the u. S. , but also europe. Guy how does it actually work . How does it need to work properly . You talk about that granular level response that is required to make sure that small and Mediumsized Companies dont have a liquidity crunch. What does that actually look like in reality . John its a very good question. I am not sure what it looks like in reality, but that is what i will be focusing on more than simply where liquid instruments are reacting in the Immediate Response to that. We will also look at Corporate Credit to see how it is responding. We see a pretty big blowout for credit spreads coinciding with this move in equity markets. Something like the beat down Energy Sector are already things we are looking for. If we see filtering down to avoiding the natural credit cycle, and a case where we are seeing potentially a recession on this coronavirus follow coronavirus fallout. Vonnie how likely is it that we see some kind of emergency cut from the federal reserve, and how would that changed enough medics . Change the mathematics . John on the Monetary Policy side, i am sure we will see a bounce in the markets on an initial announcement. I think it would have to be 50 basis points immediately before the meeting to have any sustained impact beyond the immediate few minutes after the headline, and even then, considering we are priced for a fed funds rate of 50 basis points or so by the end of this are almost already pricing and that the fed is getting close to that zero or quarterpoint policy rate. The Monetary Policy side is not going to impress, especially the rest of the world. It is all about fiscal. It is about the feds willingness to blowout the Balance Sheet to absorb any fiscal impact that the government announces on the fiscal side, and whether we can have a political environment that allow something to proceed. It is a toxic political season. It is all a pretty heady cocktail for how this shakes out. Year, the far this new Zealand Dollar is down more than 7 versus the u. S. Dollar. So is the norwegian krone. How much of these are due to the coronavirus, and how much has to do with centralbank inaction . Well, before the Coronavirus Impact was shaking through the system, we had a set up where we were seeing a chase for yield. These economies are getting close to their effective lower bound. Enthusiasm for markets where there is still yield to be had. We are seeing those currencies of new zealand and australian dollars quite weak. That is effectively why we are seeing the negative dynamics there. Theres no real yield of holding these currencies, especially from the commodity angle and the asian demand angle from the coronavirus outbreak seeing more weakness there. I still see some potential Downside Risks as we look on the credit side and consumption side of these economies. They are experiencing quite significant private leveraging over the previous cycle, so theres a risk of a very weak outcome economically, and a bit of a down cycle before receiving turning up. Guy is the euro up because people are removing the euro as a funding currency . Is it the removal of shorts setting it up right now . Is that logical . John i think that is very logical. E. U. Is the biggest surplus economic bloc in the world. Theoretically, was a huge shock to the economy, it should be suffering. You had a market that was increasingly looking at the euro as a spectacular funding currency for this reach for yield and putting it on a short euro versus other trades, hedging Long Exposure in eu stocks to the short euro side. I definitely think that the vast majority of this upside is on a squeeze on positioning. You had the euro positioning in u. S. Futures reaching multiyear lows just ahead of this. Where it stops, it is hard to say. It is hard to say if we will get a very ugly market like we saw last week, but even if we have seen the bottom of the cycle in eurodollar, we are not going to go in one way higher given the other aspects of what the euro and the e. U. Economy, the risks it faces over this episode from the coronavirus. Guy on a more mediumterm basis, would you still be a seller . John i like to have some sort of optionality for some more euro weakness. Maybe eurosterling could be an interesting trade on that front. That is also positioning. Sterling was short the euro before this. We are seeing positions grow there. That is really tricky in these illiquid markets. Maybe consult a technician daytoday on patterns as this plays out in coming days and weeks, and who knows, months. Guy maybe months. John, stick around. John hardy, Saxo Bank Head of fx strategy. Vonnie lets check Global Markets now. Heres taylor riggs. Taylor one to take a look at where we stand on all the major averages. Pretty positive sentiment, up solidly 1. 5 . Trying to hold on to some earlier gains we had seen in the stocks. That had some positive momentum from china overnight. The csi 300 at one point at its best gain since may. I want to flip up the board and show the wild swings we have seen within the s p 500 and the last two days. Earlier bottomed out friday, youve now gone up about 5 or so. Earlier on the session, we had dropped down. Now going higher to 3000, holding on right around the 2990, 3000 or so on the major averages, despite some of the wild swings we have seen. I just came from san francisco, so i am still all about big tech. Some of the major market caps have been falling by 100 billion, 200 billion or so, but spinal he trying to reverse a lot of those losses. Up 2 , microsoft, apple 3 , 4 or so. They had lowered some Sales Forecast guidance for the next fiscal quarter as they look for further gains. Finally, it comes all the way about bonds. Earlier this morning, the twoyear and the tenure had been off, trying to rebound a little bit as yields fall. The tenure now still hovering at about 1. 07 . That is unchanged from earlier this morning. I keep hearing, though, that as long as yields keep falling, until those stable out and yields start to rise, the equity market rally may not have a lot of legs. We really need to see these yields start to bottom out before we can transition back to full risk on mode. Vonnie taylor, thank you, and good to have you back in new york. Some breaking news now on coordinated action. We are seeing the g7 finance ministers and central bankers will join a call on tuesday to weigh responses to the virus. Once again, finance ministers and central bankers. A very unusual pairing of the two, but exactly what has been called for by the oecd and many other political actors looking for a coordinated response, not just domestically, but globally, to the coronavirus. So there will be a call on tuesday of g7 finance ministers and Monetary Policy makers. Right now, the dow is up to percent. 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 catch up with bloomberg first word news. Heres courtney donohoe. The u. S. Supreme court will hear an appeal to reaffirm actsfordable care constitutionality. The administrations backing. Fforts by republican states the democratic partys best chance to stop Bernie Sanders from winning the president ial nomination comes tuesday, but his top challengers face huge obstacles. Joe biden is trying to capitalize on his we can win in south carolina, but he is low on cash, and his super tuesday operation is negotiable. Is the founder and majority owner of bloomberg lp, the Parent Company of bloomberg news. Americans are grappling with the possibility of a widening coronavirus epidemic. Caseork reported its first of the disease, a woman who contracted it while traveling in iran. President trump will meet with pharmaceutical executives today. Meanwhile, china says its total number of infections has risen above 80,000. South korea now has more than 4200 cases. Jack welch has died. Jack welch was the champion of corporate efficiency who built General Electric into one of the Worlds Largest companies, and influenced generations of business leaders. Ge stock rose almost 3000 over as ceo. Two decades welch was 84. 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. Ritika gupta on first word news. We are back with john hardy, Saxo Bank Head of fx strategy, from copenhagen. Where are the better carry trades right now . John [laughter] unafraid those are a little bit in absence. Businesst back down to with taking a reach for yield back. Certainly, we have seen an incredible beat down of these higheryielding currencies, although that yield is a lot less than what used to be. If you look at brazil, its not offering much yield premium like it used to, well below 5 , similar to russia, although the rate is higher there. Rates like mexico could be interesting with changing ,ourcing of supply chains, etc. On the longerterm arc, but as a trade, i am really not sniffing around here, i must admit. Vonnie so those carry trades that had to be unwound, what happened to them . Where did that all go . We didnt see the big fluctuations in currency markets that we did in treasury markets are equities, for example. Movessome pretty chunky if you look across the em space. Theres been some pretty decent marking down of these currencies. One of the interesting things is on the credit side, emerging markets have not experienced the kind of credit spread writing you would experience in past cycles. In a lot of cases, the currency has taken more of the hit. If that lay of the land changes and we see the credit spread blowing out more significantly to new wide levels, that could be a concern, and then you start to see a policy response of em banks halting their chopping cycles, and you need to go into defensive mode and defend against further currency weakness. Guy given the chinese pmi over the weekend, we got dollar cny trading at 6. 19. How big a 10 tatian do you think there will be for the chinese authorities to weaken the currency how big a temptation do you think there will be for the chinese authorities to weaken the currency . John i really dont know. I think they keep it in the range. If you look at the euro against the basket, the move is less impressive than what you have seen in dollarcny. Certainly pressure on the confidence weaken if isnt returning. I dont really have any visibility on their intentions with the currency, assuming relative stability. Guy but using the trade deal done with washington, do you think that removes that letter removes that lever . Do you think that deal removed it is an option for the pboc . Risk i think there is a that, given the stresses of this situation, and maybe an ill inability,maybe an the chinese feeling the trade deal is maybe no longer fair, we could see more hostilities break out and china wanting to walk away from the deal because it feels like the u. S. Side is being unreasonable. Under that scenario, yes, but as long as it tries to get back to stability and keeping things where they want it to go through the u. S. Election, unless we are seeing a pretty chaotic ,ituation across Global Markets that china wants to see anything but stability in the Exchange Rate. Vonnie a word about sterling and the euro, sterling trading weaker versus the u. S. Dollar. 1. 1149. stronger at where does the balance of power lie between britain and europe these days . John we could have a period of the two sides playing chicken over the shape of the trade deal after the transition at the end of the year, but i think locally, this last move taking euro versus sterling well above 87 is more about position squaring. If you are going to tell me we are going to see another wave of deleveraging, that eurosterling Exchange Rate could move another on ae of percent resquaring of positions. I still like sterling for the longer haul, but the levels are very difficult in the shortterm, for sure. Guy john, a great pleasure having you with us today. Thank you werner at thank you for your analysis. John hardy, Saxo Bank Head of fx strategy, joining us from copenhagen. Youve got the s p now up over 2 . Europe pretty firm as well. This is bloomberg. Vonnie checking u. S. Markets now, it appears that sentiment has improved since that headline suggesting the g7 finance ministers and centralbank policy makers will all jump on a call together to discuss a cord made it response to the coronavirus. We have the dow up 2. 1 , the s p as well, and the nasdaq. Guy we are getting into the story here in europe. The dax is back to flat. We are probably a little oversold, as well, pushing against an open door. Ftse 100 now positive. The dax just going positive as well, or at least unchanged, but it does seem the coordinated action seems to be helping right now. This is bloomberg. Guy european stocks wrapping up the monday session, most has not been positive. In the last half hour to 45 minutes, the story has turned around with more green on this green. On the screen. Europe, flights down to italy. The story out of asia was good and we started more positively and then faded to the early rally perhaps sideways and now moving up. Coordinated action happening tomorrow or at least a coordinated meeting happening. We will discuss that in more detail. We are up by. 2 . Also worth bearing in mind, a lot of indicators point to markets being a little oversold. Without much information, hard to make those calculations accurately in terms of where the markets go. The ftse hundred and Health Care Stocks bouncing back. Dax is under pressure. Aviation sector under pressure. This is a Health Crisis but secondly is a travel crisis. We dont have