Italy pare down its economy to essential services. The United States tells citizens to reconsider travel abroad. 125,000. Ses to pass manus warm welcome to daybreak europe. A spectacular implosion in confidence in structures, government response, and the fiscal response from the United States. We have recovered some of the ground, 1. 5 . Australia edges a bear market. Travelstaring into a no edict from the United States of america. 17 trillion in aussie response mechanisms on stimulus. Trying to avoid a recession for the first time in 30 years. To the bond market, jp morgan warned very clearly about the threat to the bond market. 0. 5 is on the way. Trump spoke and they shredded the treasury market. Down by 15 basis points. The fed is galvanizing itself. , 175 billion. O global headt is the of flow Strategy Solutions at societe generale. Good to have you with me. First take, i would say it is an implosion of trust in confidence in response from the u. S. It clearly is a major issue. When we look at the infection curve in italy, it is expected that the u. S. Could also go through a similar curve. Particularly when you think about the fact 30 million of the uninsured andare the Health Care Coverage has to be less exhausted than when you get in european countries. Clearly the market is selling first and asking questions later. You have this massive rotation into safe haven. I think the shortterm trend will be more of the same. One thing to bear in mind is that the selloff is different to that of 2018 when we have in february bonds falling and equities falling. Today you are seeing the bond a shockcting as absorber. It is sort of like a more logical selloff. Manus logic and velocity. I love it. The velocity of people is as important as the velocity of money. We will discuss. Donald trump has promised to boost market liquidity by 200 billion and has asked congress to approve immediate payroll tax relief. The travel ban excludes the u. K. He has also extended tax filing deadlines. Pres. Trump to keep new cases from entering our shores, we will be suspending all travel from europe to the United States for the next 30 days. New rules will go into effect friday at midnight. Manus joining us from hong kong, jodi schneider. We also have david ingles on the markets trading. The details on trumps announcements were utterances and rollbacks. Thats right. The big headline obviously was the travel ban from europe. He said it just that way, that it would be for 30 days, take effect friday. He did not give many of the exemptions. It exempts american citizens, it family the immediate members of american citizens and those who are permanent residents of the u. S. They will have to go through certain airports and have health checks. Then they would be let in if they were to pass those checks. He also made it sound as though there may be cargo, that it would be anything. He later tweeted and Homeland Security secretary iterated it would not involve cargo. The president said he wants trade to continue. In making these statements about the virus and about europe, he basically blamed europe for allowing chinese residents, chinese visitors, into europe. He said that because the spread of the virus and that he did not want the same thing to happen in the u. S. He called it a foreign virus. Clearly this was the headline he then mentioned other measures like the tax extension and things like that, that they were more limited than the markets i hoped for. It is very much a foreign virus according to the president and that is an America First president with the borders going up. What stands out for you, david . David the timing of the price action. When donald trump was mentioning the foreign virus, the other was when he mentioned the travel ban from europe as well. Markets seem to take that as he is protecting u. S. Citizens. Nothing wrong with that as far as the economy is concerned. It is a definitive answer to the question, is there a policy response that curbs the infection curve but does not slacken the yield curve as well . When you look at markets right now, u. S. Futures broke through a key. They recovered a little bit. Thee through a key level in 200 week moving average, which for all intents and purposes means the u. S. Market opens later on. The s p likely falls into a bear market. We have a lot of these markets especially in Southeast Asia like thailand and the philippines that also have their own local virus problems. Manus as you say, could be one of the fastest returns from hero to zero we have seen on record. Thank you. Our Senior International editor jodi schneider, r bloomberg anchor in hong kong, david ingles. Toou, you made a reference 2018. I want you to look at a trifecta. Oil, treasuries, and the markets. We are seeing oil and treasuries linked by the most since 1998. We see this relationship between really the bond market in deep syncopation. I this the hallmark of know it is largest language, but is it the beginnings of a potential doom loop . It makes some sense. Activity indicator of in emerging markets and china in particular. The demand there has gone down in the range of 4 Million Barrels per day. It is obviously a double crisis to have the complete lack of movement of people and also the collapse in the flow of money because of the supply chain disruptions. Paymente not receiving and are unable to pay their clients. I think that does make sense and the key point here is that the Lower Oil Price also can act as a shock absorber. Clearly the cost of producing and the cost of manufacturing is dropping. That could also alleviate some of that negative impact that the economy level, it is the reflection of a symptom of lower demand, but it can also be a driver for lower pressure on the cut side for companies and customers. I hear a lot of people use language, this could be bad or use than 2008. The warning shot to Christine Lagarde. We will deal with that later. Back in time, i decided to look at bond spreads and i look at this. This is Corporate Bond spreads over u. S. Treasury and asia bond spreads over treasuries. I take your mind back to 2008. I take your mind back to 2015, 2016. They are exploding, but is it appropriate to refer to gsc as a real risk . Are we looking at something as substantial as that . This is a ghc, not a gse. Spreadrly the level of when it comes to Corporate Credit is not as wide as it was in 2008. The main difference is Central Banks are owning a lot of the bonds, especially in europe. The stress is on the highyield side of things, not the largecap. This is why if you look at the russell versus the s p or strong Balance Sheet versus weak Balance Sheet, there is an epic divergence or dispersion we are week Balance Sheets continue to underperform strong Balance Sheets. This is something that is important, particularly in the u. S. , where the collapse in the oil price could be an extinction event for some of them given how and their breakeven prices how leveraged their Balance Sheet is. I think you have to look at the smallcap universe as opposed to the global level of Corporate Credit spreads. With spreadsl deal in highyield and energy in just a moment. Show, the 50he trillion question. The treasury market of course. Liquidity crunched. Does it spell doom for Financial Markets . Crisis forirst Christine Lagardes tenure as the ecb president. Decide force her to whether to fire a few Monetary Policy bullets. Does she have many left . To stave off the Economic Impact of the coronavirus. We have special coverage of the ecb decision News Conference on bloomberg tv. It is a comprehensive package, one we believe is well targeted. To ensure we can bounce back strongly. This is not a bailout. This is considering providing certain things for certain industries. A the virus is having destructive impact. To weaken materially in the u. K. The bank will take all necessary further steps to support the u. K. Economy and financial system. Our government will be creating a billiondollar covid19 response fund. Voicessome of the tracking the Current Crisis in markets. Policymakers around the world announcing the economic measures to tackle coronavirus. To the markets, thanks very much, martin malone, quick question. Dropping 8 billion 8 trillion. 8 trillion dollar wipeout. The speed of the implosion delivered a rally in the bond market, the long bond, similar to october 2008. Hence the echoes of 2008. This is the lack of policy response for the United States of america. Fiscal response. What comes next . The ecb. Let us see what can happen. 2. 6 trillion euros. Bond buying. What are the options left in the swag bag of the ecb to counteract this virus attack . Let us get to berlin. Matt miller in berlin. Good to see you. It is always a pleasure, manus. Let me point out im in berlin and not frankfurt, where i typically would be for the ecb meeting. They will be taking questions presshe internet and the the typical press gathering stembe put off for now to the spread of coronavirus. The ecb has much tighter security than any government building i have ever been in before. Number one, lowering of Interest Rates further into negative territory, a 10 basis point cut, some analysts for example are forecasting a 20 basis point cut. They can do targeted liquidity measures we saw from the bank of england. So important to the economy with the kind of funding for lending scheme, that is expected by Bloomberg Intelligence as well. Finally, asset purchases. Ecting a doublet of asset doubling of asset purchases to 40 billion euros per month. Still, i think people are expecting markets to be disappointed by Christine Lagarde because she has not got as much ammo as the fed and the boe. She will not be able to make those kind of firework cuts of 50 basis points, or really have the same effect on asset prices as the other Central Banks have. Manus . Manus matt, let us see what she does deliver. It is as much about the toner, the intonation, and the conviction with which you talk to markets sometimes. Thanks very much. Meanwhile, my guest host is the u, if i generale koko look at the menu sheet of what matt has just laid out, what is the most effective in terms of policy response . Or do we need all of them . Tell me what you are thinking in terms of that a la carte venue and the delivery of the courses. Kokou when it comes to the a la as a menu, think of it tltro targeted that smes. The lack of flow of money, the flow of cash is being disrupted, and this is creating a risk of bankruptcy for smes. Some of them are also Zombie Companies because they have been sustained by low Interest Rates and low funding. You are able to breach provide financing, bridge financing, or helping the working Capital Finance needs, that will alleviate the pressure shorterterm. You also need to have some kind of guarantee for the bank. Banks are clearly going to see the nonperforming loan increase and they will have a lower marginal propensity to them. China has done some measures criteria,reasing the but these are shorterterm. Longerterm, the question is whether these companies will survive or not. What is less effective is cutting more into negative territory. This is hurting banks, and these banks make less money than their ability to assist the economy is going to be impaired. What we have heard from the United States of america in terms of travel restrictions and recommendations to americans to restrict their travel, how much more of a Recession Risk does that bring react at all . Ou equity . N fx, credit, or kokou this is going to hurt more of the airline stocks. Any stocks that are exposed to the might have as opposed to the musthave are being hurt. Etc. About travel, hotels, the impact is going to be on equities first, then credit will clearly follow depending on the Balance Sheet of these companies. Companies do have a way to respond. They can cut dividends as we saw. They can do more share buybacks, etc. Flag. You raised the red for me, the biggest red flag of all. Italy could trigger another eurozone debt crisis. If it were downgraded, given the stimulus program, the debt load. Risk . The kokou this is sending us back to 2012. If we were to hit a recession, the ratio could increase significantly. Leading to abuse that italy case downgrade, in which asset manager could have to sell btp, the Italian Government bond, and that could create another cycle of euros on best practice. We are not there yet. This is another scenario which explains why european banks and financial have been hurt so much and badly in this recent selloff. It is interesting how we saw the doom loop was dead. Shelf, the u. K. In fired the first real shot the campaign against Economic Impact of the virus. Smoking. L barrels are we talk more about britains response to the pandemic. Manus this is bloomberg daybreak europe. The coronavirus is turning out to be bad for the health of the treasury markets. Liquidity is quite literally gripping the markets, not seen since your chart, it matters. We are seeing liquidity fears hurting markets. This is really a mindnumbing roller coaster ride for treasury yields. Have seenok platforms trades sink to a level not seen since 2008. This is a measure of market depth. If im going to trade in the treasury market, will it move the market . Thes at the worst since financial crisis. Jp morgan say it is the worst in the longterm bonds and we are also seeing costs widening. Still one ofet, the most liquid in the world. If you need a cash grab, you might have to sell. That is mission up messing up normal functions. They have had a difficult time trading, which causes their order books to fin. Thin. Trillion value themselves of the treasury yields. Thank you very much. Back to crunch time. Undergoes aengland stimulus program, the first interestrate cuts is the financial crisis. The move was coordinated with government fiscal response. Allianz chief Economic Advisor says the bank of england showed the path to start dealing with the global crisis. U. K. Could manage to punch well above its weight on financial issues. They might have lost the reserve currency status, they may have had a little bit of brexit, but they know how to give swag when it comes to policy response. What did you make of the Double Barrel . Smoking . Kokou absolutely. S is one of an interesting both having monetary and fiscal acting at the same time. The u. K. Has been running through more of an Austerity Program from the fiscal front and it is interesting to see how quickly it was able to switch into more stimulative package on the fiscal front. Clearly this is something markets have been expecting, and the issue is brexit. At the end of the year, whether the u. K. Could manage this is another risk. Manus we will pick it up very shortly. We talk oil next. From good morning bloombergs middle east headquarters in dubai. Charge. S are in global stocks fall as the u. S. President announces travel restrictions from europe to the u. S. For 30 days. He offers no details on an economic rescue package. Itbal response, the who says is now a pandemic. A rally in haven assets sees the yen climb. Bond yields tumble. The boj pledges liquidity. The ecb unveils its response today. And shutdowns all around. Down pairs down the economy to essential services. Cases surpass 125,000. Manus lets get to market coverage. We are reacting to an implosion in confident. Confidence. An announcement from the white house shatters the world travel concept. Saly, gargantuan selloff in the first wave. Is the nausea receding or are we still in full grip . Still a lot of nausea. You have to have a strong stomach because we have been seeing widespread selling from sydney to mumbai. It is as if trump actually launched a major trade war with europe with what indias market on the cusp of a bear market territory, australia extending bear market territory. This is the worst day for aussie stocks since the height of the financial crisis despite the morrison government announcing 11. 4 billion coronavirus stimulus. Hong kong on the verge of bear market territory. In korea we had a halt on trading on the kospi, falling by pare so then we saw a back. Very close to bear market territory in south korea. Manus the bears are certainly in charge. Dani burger, good to see you. The question as everybody reflects back to 2008, the credit spreads are not there yet, but we are seeing a deepening in market stress. Im going to refer to credit spreads again. It is remarkable what is happening. Have private equity behemoths telling their companies it is time to draw down on those credit lines, so what are we seeing . Exploding spreads. Not where we were at the financial crisis, but asia dollar denominated bonds, also the u. S. Certainly widening to a significant degree. The market here starting to price in the possibility of a recession. What do they want . Coordinated policy effort between Central Banks and governments as well. But it is not just the cost of credit that could help. It is also just the flow of credit. We are seeing Companies Like boeing pulling down their entire loan to try to get that cash to get them through the period. Look for the Corporate Credit market to really be exhibiting symptoms of th