Billion in a targeted way somehow, but none of that has been deployed yet. There seems to be a willingness to wait and see, and wait for Pharma Companies to come up with solutions to the coronavirus testing and so on. Meantime, markets are selling off in terms of equities, and all that money seems to be flowing into bonds. Then we have the opec story as well on the side. ,ight now we are off our lows but down on the s p 500. No solace in the fact that we seem to be seeing deaths and cases decrease in china, and lots of fear out there. Airlines canceling more flights, and just continued, i dont want to say panic, but it feels like a tinge of panic in the air. The 10 year yield down to 64 basis points earlier on. Right now we are at 75 basis points. It seems like it was only the other day, because it was only the other day, that we were at 1. 30 , and been completely taken by surprise that this was below the alltime previous low. We were already at an alltime low. We are now at 75 basis points. The dollar index is as a 95 handle. You can only imagine where the yen is. Opec doesnt have a deal either. Economic hardship everywhere. Russia not agreeing, so far as we can tell, to that extra big decline. Wti is not taking it well. Neither is brent. We are at 42. 20 a barrel. Guy europe off our session lows, but pretty close. In terms of the bond markets, records on the german tenyear and the german 30 year. The long bonds in particular are a focus. This is what is happening with brent, trading down pretty aggressively in the wake of that russia story that you just mentioned. The big difference between this week and last week, i think we are into the credit story as well, which is pretty unnerving. In terms of what the government is going to do next, this is a critical factor. Jon ferro a little earlier on talking to larry kudlow to get his sense of exactly what is happening here. Larry, of course, president trumps economic advisor. He gave this outlook when it comes to the economic response. Mr. Kudlow we are going to see some issues coming up from the coronavirus. I get that. But i think for the united states, this is going to be a temporary problem. Watling, longview economics ceo, is here with us. Hes also the chief Market Strategist over there. In bloombergs paul dobson also joining us on set this afternoon. Lets talk about what we need to stabilize these markets. Kind of a double response, either locally or globally, do we need to see to get these markets to stabilize . Chris we are not sure exactly how the virus is going to develop, but there are some interesting things we can talk about their. That is unknown in the way it affects economic activity, containment and so on. But more important is the impact on credit markets, on the Global Economy from all of this. What is most important here is that you stop the domino type effect, the negative feedback loop. Companies going bust and laying people off, and other Companies Going bust and so on. That feeds into the credit market story as well. What governments need to do, and my opinion, is create firewalls and emergency lending to small and mediumsized business that are going to struggle from the lack of revenues as a result of the coronavirus containment. Guy what are people saying about how you stabilize this . Paul i think what people are crying out for is something fiscal, not something monetary. Central banks might be doing their best to support the economy, but what people really want is the government support. The german meeting of the coalition sunday evening, could they surprise us and give some of that targeted spending . Maybe, but just a sign that they are willing to support the that with greater bond issuance should at least give the markets in confidence. It is not going to solve the economic or health problems, but it is going to help confidence. Chris you dont want Credit Conditions and financial conditions to freeze up. Of course, if they do freeze up, then we will have banks struggling a little bit, and that will pass through into economy. Vonnie just wondering, Gina Martin Adams earlier was saying that cutting Interest Rates is really nothing that is going to salve here. What would . For an administration that doesnt like to see stocks go lower, why is the administration not ramping up the fiscal spending . Paul the reticence is a surprise. Lending some targeted to small businesses, i backstop for them within the plans. There were signs earlier today. I thing it is a wait and see, but i guess that the market is worried that the administration isnt taking the virus and the spread of the virus seriously enough, and looking at the numbers, looking at the mortality rate, the number of people dead, suggests that a lot of more people in the u. S. Are infected with the virus and walking around, and passing it on probably to more people than the data so far shows. I think that is where the market is really worried, the fear of the unknown, as well as the apparent risks to the economy that are there as well. Vonnie what about that, chris . Obviously we are seeing a cord needed response around the world. We go from session to session, with the next session taking its cue from the overnight session in hong kong, or the european session. Isnt it about time we got more coordinated response from the g7 . Chris well, they certainly started. Basically, markets in the short term are a machine. Think the discounted a lot of uncertainty over the last couple of weeks. If you look at it, the s p 500 is not lower than it was last friday. It isnt making new lows. It is just very volatile. Up 4 , down 4 . To me, the markets have voted, and now what they are doing is waiting to see what the policy response is globally, and what the virus does as well. G7 started with that phone call. There will be more. Also to things are coming out. Policy makers are starting to respond. Markets, you would say they are stable, but they are actually flat on the week if you take the most import equity benchmark in the world. Theres an issue of what we know in what we dont know. When it comes to the virus, we dont know very much. You were talking about south korea and the ability to understand the virus. Lay the compare and contrast. Paul if you look at the number of deaths in south korea due to the virus, it is three times as many as in the u. S. But if you look at the number of cases of coronavirus and south korea, it is 20 times more than what there is in the u. S. That tells you that somewhere, theres inconsistencies in the data. It suggests theres a lot more people in the u. S. That have got it already that havent yet been diagnosed. Guy and this is a problem. Trying to value something based on incomplete data is incredibly difficult. At the moment, the markets have no idea what is going on in terms of the progression of this. Chris i dont think they are whistling. I think they are in the guts of this. Lots of Different Countries are putting out lots of different stats. Singapore is a great example. Their Health Website is terrific. The patterns wont be any different in the states as they have been in other parts of the world. Basically, if you are a warmer country, people tend to get less sick. If you are sophisticated in your health care, they tend to die less. Areink actually, markets getting to this. It is not as complex as one might imagine. There are also unknowns, but we are starting to get the facts out. It is just a little bit worse than the flu, is it not . Vonnie not really, it is all most twice as bad as flu right now, and that is just in the general population. We dont know a lot about this yet, i would suggest, but may be that is going a little bit too far. Let me ask you where the low could be on the 10 year yield. Paul when we are looking at the u. S. , everybody is focused on zero now. I dont know if we will get there. We shouldnt over or underplay the importance of the crude oil move today, for the bond market as well. It is bringing down inflation expectations, which is why you are seeing the longest security bonds coming down the most, but also because of the exposure of bbb rated companies to the oil sector. It is also having that widening effect on the credit spread. Some riskier bonds are the ones widening out. That reinforces the safety back into treasuries and puts more pressure on yields. Theres a third effect that is more important than those, and that is the global stimulus effect. The move over the last few had stimulus at 0. 7 percent of gdp. It has probably gone up to 1 . This is something people dont talk about. There are lots of positives when markets adjust. Dont get me wrong, i realize theres a lot of uncertainty, and its not a good signal, but it actually helps the economy adjust as well. Guy we are going to wrap things up as well. We will carry on the conversation with chris in just a minute. Paul, thank you very much indeed. Chris watling of longview is going to sit around. Vonnie lets get a roundup of where we have been in global markets, because really, thats all that counts these days. Heres kailey leinz. Kailey looking at the markets, you would never know that we saw a payroll print in the u. S. This morning. The market could not care less. Granted, we are off the lows of the session, but still lower by 2. 2 in the u. S. In europe, the stocks down by 3. 25 by 3. 75 , at its lowest level since back in august. We have seen seven months of gains wiped out in the past few weeks. Coronavirus scares still percolating through the market. As dramatic as the action has been, every day we have seen a move of 2 or more on the s p 500, the bond market is even more so. Are, in germany, 30 years hitting a record low. The 30 year deal down by 25 basis points. If we hop into the terminal at gtv , that puts it on pace for its biggest oneday drop since all the way back in 2011. At one point in the session, it had the biggest decline since back in 2008. We will see where the session ends today, but the bond market is really reflecting a lot of fears about growth, and investors are just tumbling into those safe haven bonds. In other asset classes, you are seeing fear reflect it as well. Well is a risk asset. Of course, the big story of the day is opec not agreeing to a Production Cut deal. That has to be uti down by about 8. 5 . Aboutt has wti down by 8. 5 . Gold is actually not getting a bid today. The safe haven asset has been higher. The dollar also weaker, and take a look at volatility, up six today. We are looking at nearly a 46 handle on the vix. The volatility is really just so elevated. Given the action we are seeing in these asset classes, no surprise there are some movers along with them. E p Companies Like occidental really getting hit. Banks under continued pressure as those yields go lower and lower. Questions about profitability. Wells fargo and jp morgan down by nearly 5 . Investors also have to worry about jamie dimon, and his emergency heart surgery possible raising questions about succession. Vonnie kailey leinz, thank you for that. Do rim ember the function gtv on the bloomberg allows you to browse do remember the function gtv on the bloomberg allows you to browse all of the charts, save your favorites for future reference. This is bloomberg. Guy live from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is the european close on bloomberg markets. Watling,ve with chris longview economics ceo and chief Market Strategist in london. In new york, with us his Cameron Crise. This insane 12 year event continues. Special update, he says it is different this time. Explain. Cameron for the first time today, it kind of felt a bit like 2008 because you had a discontinuous move in bond markets, which, if you take the pricing at face value, it is kind of pricing a quasiarmageddon economic outcome, and even if you dont choose to do that, it certainly suggests that the liquidity available to investors in the marketplace has deteriorated markedly. Given all the leverage and positioning in risky assets that we have seen build up over the last decade or so with the connivance of our Central Banks, you have to wonder if there wonder if there arent a few pennies that are going to drop. It might be a little painful. Vonnie let me give a paragraph from this. It is fascinating to read somebody whos been in the markets so long and has seen so many of these events, even if the last big one was 12 years ago. Our view is that oneday moves and historical precedents is fruitless. We have is one example but a ytock was was considerabl higher. In this market, even our triedandtrue approaches are overwhelmed by emotion. Suggests that perhaps, Chris Watling, it is a market to just wait on and see what happens next. Chris i think it is a market to wait out. Im not suggesting you should do anything other than that. In these kind of markets, it is very much risk on, risk off. Risk appetite tools are a very good way to trade the swings. But for any investor, i think there are parallels to the last 10 years, and really what we had during the euro crisis. 2010, and thenn in 2011. Both of those were precipitous, fast, hard drops, and then we basically saw the market chop for two months backwards and forwarders as the market tried to work out what exactly was going on, was the euro going to collapse, was it a Global Economic recession, all of that stuff. I think that is exactly where we are at today. We had the precipitous drop. Now we are going to chop for a couple of months why we work out all of the questions about coronavirus, about what policymakers are going to do. Guy it gets to that point, and you have to see some sort of stabilization. Ive got to keep asking the same question throughout the day. What do we need to see from governments to stabilize this market, to get things under control . Cameron i think it is twofold. In the very near term, we need to see some sort of response in terms of Public Health that can restore confidence and will let people not necessarily ignore, but put the marginal headlines about new cases and whatever into context, and then more broadly, it is pretty clear that Monetary Policy has shot its bolt. If we are going to replace demand that is being impacted by this, that is going to require a fiscal response. To date, we havent really seen a whole lot of progress on that front. Is the plumbing working . 2008 come of the fear was the plumbing wasnt working. You seen some widening in the market spreads from ois somehat have you, and to extent, that represents the ace impact nature of libor. I think it would be very dangerous if libor were to approach or go below zero, particularly in the united states, particularly given the trillions of dollars in products based off of libor. Just consider, what if you paid swaps and received the floating libor rate, and it goes below zero . Then youve got to pay on your vics leg, and on your floating on your fixed leg, and on your floating leg. That would be extraordinarily destabilized. Vonnie should the fed have done anything else this week . In the end, did they make it worse . Cameron it is easy to criticize. I understand they want to make a gesture. I think the analogy is that for the moment, they are kind of the only adult in the room. They may not have the right tools, but at least theyve got something. They chose to deploy yet. Is it a panacea . Absolutely not. The thing that monsey policy makers and Central Banks can do that will have the most bang for helpuck is to ensure or continue the efficient transmission of credit throughout the economy. Small and medium businesses in particular are and it isy this, going to be very important. That has relatively little to do with the price of money and Interest Rates. Vonnie does it suggest that the fed is very concerned that the economy is going to suffer tremendous slack, and that is when this policy will really help . s mind small and mediumsized businesses that cant make payrolls. Cameron it is not about the liquid in the pipe. It is about the pipe itself, as it were. That they ended bank of england and the ecb and other Central Banks really need to be focused on. Of ank it was more symbolic gesture. You notice that when Jerome Powell was asked in the press conference, what do you expect us to do, he kind of played his cards pretty close to the chest. I think it is nonlinear. Guy thanks, cameron. Always a pleasure. Bloombergs Cameron Crise joining us in new york, and our thanks to Chris Watling of longview economics joining us in london. From london and new york, this is number. This is bloomberg. Guy european stocks getting absolutely smacked. We are down by nearly 4 when it comes to the cac 40. Oil and gas down by 4. 5 . This is all happening on big volume as well. The european close is next. Its friday. This is bloomberg. , theres financial instruments, commodities, metal metal, commodities, and oil. These numbers have to change, hence the 1. 5 Million Barrels that we have proposed to our colleagues in the nonopec group. And the reason why we could not be in this meeting until this to get clarification, to get guidance. To make sure that the conference can join the meeting. Agreement, where does that leave us . Meeting, we do have some issues. The known here is to have everyone on board, are you hoping that you can do this soon. Do you believe you can bring unanimity soon . I was a born optimist. I believe nobody in this group of countries would like us to relapse into the last downturn that we went through in 2014 and 2015 and 2016. But this issue that we are facing, the challenges we are facing today, though they are demand driven, is interconnected. Are you worried that the market will with were in touch sovereigns and ministers ofs with sovereigns and ministers ofs finance, ministers of finance. Where does that leave us with the 2. 1 we have on the table today . Is it frozen . Does it rollover . Have decided to adjourn this meeting, but to we aree consultations, optimistic that we will be able proceed goingw to forward. [reporters asking questions] we have focused on addressing market,librium in the and the deteriorating market conditions. To do that effectively and efficiently, we need everyone on board. Have signed a resolution, reexamining our continued commitment to the target corporation. Corporation. Red there is no doubt that the board is strong with everyone on board. What is on the table with the cuts . Is it still 2. 1 . Or 1. 5 . Whats the ag