Will have a great chart coming up on this. Madame lagarde is worried more about big worried about more than economics. Francine this is something a lot of people, i dunno if they saw coming but certainly we should be more prepared, but your absolute right. Lets go into the data and i will have a liquidity chart in the moment. Down. Tures down futures down. All of this rocketing off the president s speech last night which was taken quite poorly by the markets. Onto the next screen with oil weaker. A couple of pretty good days. Down to a stronger yen, thats a safe haven play. Brazilian riel an example of emergingmarket stress. Francine today we have Christine Lagarde. See are all rallying, we oil sliding. I wanted to show you what im looking at in terms of the european boards. This was quite significantly because european stocks you can see individually the dax and all of them down some 5 . This is my more broader cross asset and i have to say everyone is talking about President Trumps remarks on the coronavirus. Seeing this is a catalyst for the latest let in risk assets. This is one the most famous bloomberg charts. At Merrill Lynch and Deutsche Bank. This is the Bloomberg Financial conditions index. It is set in standard deviation. Outrly the lehman low is eight standard deviations and we are rapidly getting back there, blowing through a quite normal two standard deviations and instantly we are down here. I cant convey enough going back 30 years how rare this moment is with the clarion exception of 2008, 2009. Let me bring in our cast, chief Investment Officer from Deutsche Bank. Lets go to the heart of the matter, what will it take for equities to start going back up or for markets to stabilize . Markets look at fiscal policy and Monetary Policy especially with with ecb in frankfurt Christine Lagardes most Important Press conference and decision. We need to look at the cause of this. At thelly we need to see rate of infected people is coming down. Until then expect more measures in europe and all these countries and thats bad news for the markets. It could take some time. Eventually we see some clarity on the coronavirus. If you look at the budget yesterday in the u. S. Template,n as a youve pretty aggressive package with some pretty aggressive bread that is nothing for equities or markets. Its all about the infections or is there something at this point the Central Banks can do together with fiscal. They can do something together. It makes a lot of sense. You need that from a global perspective so i think the market was a bit underwhelmed and much more was expected. Fearing then the bipartisan agreement of fiscal policy. It might take some time. Continue. You need is bipartisan agreement as long as its not in place i think they are worried and from the Central Banks at the you need to see a lot, you talked about this and thats necessary to see that. Its about fiscal policy and from the central bank i would is an morbid tom this incredibly delicate question. I want to go back to your niceties at this stern school. You are seeing multiple standard deviation moves and liquidity measurements in the acceleration of those liquidity moves are substantial whether its Interest Rates, earnings rates going back or on the banks. I know youre not on the liquidity desk at Deutsche Bank, but what do the liquidity people need today from madame lagarde. What do they need from ecb president this morning . Need liquidity what they is the Central Banks are ready to support the small and Medium Term Enterprises that this is the root cause if they get liquidity there. Mentionedats as i where they should focus not only cutting Interest Rates where theres limited room to do so, especially focus on liquidity for the small and Medium Term Enterprises. What is your perception right now of what always ends up being the challenge of liquidity particularly across trade which is leverage within the system. I know there will be individual cases that are difficult, but what is the overall leverage exposure you see off the desk at Deutsche Bank . Im not at the desk of Deutsche Bank, among the Wealth Management side so i dont have access to that data. Know them to be honest. I must not know them. Tradetalk about our impacted. See, but i side you think its important to watch this of whats liquidity and markets. Liquidity is drying out simply because the virus. What happens to the cash flows of the companies and thats why think and from the monetary side we need to work on this one and also the trading desk side. Francine do you have insight into how Money Companies could face default, are we there yet . Will it happen in a couple of weeks or months or is this just scaremongering . Its tough to estimate because what you need to learn and know is whats the timeframe , a problematic cash flow situation. We have a lot of tools in place and looking at the infections, i think its critical and whats important is the first deviation is coming down ceeo see more people infected but to a lesser extent and i think thats where you can estimate the timeframe. Otherwise i think its tough to answer at this point in time. Buy gold at the moment . We did buy gold. We increased our forecast. Helpful ina very diversifying the portfolios. Equities, we still of exposure though. From that perspective we feel relatively ok, of course we dont like what happened to the market from that perspective for now. Presume we will see in mass consolidation . Our company so exposed because of the medicine of the moment and the finance is the only solution at this goes out weeks and even months will be a consolidation of the 19 30s into the 40s . I honestly wouldnt think of it too serious or compared to the 1930s. I dont think so. Its a very tough situation, but if you look at the model. If you want me to go back, the spanish flu is 19 eight teen, 1919, the expense of growth of , itsion going away warmer where perspective we should look at six to 12 months out we should be in a much better position from that perspective. Theres opportunities in the market we see companies under stress and i wouldnt say its the kind of 1929, 1930 situation. Im not in that camp at this point. Francine thank you very much. A very valuable conversation, we will get back shortly. Stay with blumer for live coverage. The ecb decision followed by Christine Lagardes press conference. We talk about italy and coronavirus with the former Prime Minister of italy. He joins us shortly. This is bloomberg. Oomberg. You are watching bloomberg surveillance. We begin with soft futures plunging after President Trumps primetime speech even though his farreaching measures are meant to stop the spread of new coronavirus. The president said he is spending all travel from europe and suggested this restrictions would apply to trade. Later he tweeted trade would not be affected. Travel secure restrictions generally apply those who been europe within 14 days. Tom hanks and his wife rita wilson tested positive for coronavirus. They are in australia for a movie suit movie shoot. Italy were normal life is on hold. Shutting down nonessential services. All stores except groceries and pharmacies will be closed until march the 25th. Caseshas more than 12,000 of the disease. At least 827 people have died. 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. This is bloomberg. Staying on the coronavirus. Joining us from rome is matteo renzi, former italian Prime Minister. Thank you for joining surveillance. When you look at the latest efforts and when you look at President Trump restricting travel from europe, what more can be done . Mr. Renzi in italy its a strange situation because for the first time after world war this is really life, but i think this is the right decision because coronavirus is a new today is the only way lock the contagion. Italian people made some wetakes in the past because blocked directly from china but we lost the people who arrive, so from beijing the people dhabi using moscow or abu or paris and that created a lot of sanctions and put them in our nation. Please around is the world, dont make the same if present trump blocked the planes from europe, this is not the solution. Solution is because of the spread of contagion is a problem and now in italy like it will be in france and germany, u. K. And spain and more unfortunately in the usa. Please dont waste time and dont make the same mistakes of the italian government. Thecine do you think European Union and its countries should have closed borders to trying contain the virus . Virus is a very strange enemy. Is european, if you look at the number, it is clear. So the numbers today in france and germany and spain are the same eight days ago, nine days ago in italy. Block the virus is not to block the borders, its the occasion opportunity. Yesterday in the Champions League soccer event around the , the supporters were very. Appy because the team won but the authorities blocked entering the stadium. Maybe thousands stayed outside of the stadium and that is unbelievable good news for the virus. Eventy happy to use this to create contagion. My opinion is the first thing is for theblic Events People permit for the people. O stay altogether and we know my request is be wise, be , this is theble message. Advantage,e week of if we lost this time, you lost an unbelievable opportunity. When you look at how you measure this getting better, what is life daytoday like an do you look at the number of deaths, the number of infections, how does the country know when things are turning a corner for the better . All the most important scientists explain us worstvirus is not the virus in terms of lethality. The problem is if too much infected,ogether are the problem is that unbelievable partr of people there is a who needs a hospitalization. That is the problem because if altogether entering the hospitals the risk is the collapse of the system. That is the great problem particularly for old people. Our idea is block the people that probably will be very effective to block the contagion. That ise the number of a problem but the average is not. The real problem is the organization of such. Francine what would you ask in the European Central bank today . We had a number of measures and money reported by the government to help some small and Mediumsize Enterprises in italy, what can you ask frankfurt today . Mr. Renzi i believe theres only one way, give liquidity because you can block. The people a very happy, you can block also the italian people, we cantroblem is definitely give to the people liquidity because we look at without freedom of movement, its important to encourage small and Medium Enterprise to have the money necessary. Ecb,e all the board of moment very crucial because its important for the economy. We have difficulty for germany to continue the export of china. We have the problem of brexit. A lot of tensions and politics in a lot of areas of europe so its time to change the Business Model of the European Union. ,e need more infrastructure more investment in innovation. But we need also a lot of liquidity. With qe, whatever it takes, the great strategy of president draghi. Its time to write a new page ,nd i believe Christine Lagarde its time to act now. Next week for all the other countries. Tom thank you so much. Former Prime Minister of italy and i must say, the images we see including a completely vacant spanish steps just absolutely extraordinary as well. Right now are coming in. 10 year yield roughly lower here. 17 basis points. 1. 20 . Christian, what are the signals the bond market . We saw the normal price up, yields down and then not once but twice in two days aggressive swings the other way. Would you suggest that that is people on the street that have made the wrong trade getting out of their boxes as rapidly as possible . Have such highou volatility not only on equities but also bonds. Thats probably not the environment where you have these trades. If you need to do this at high probability itll get wrought youll get it wrong. Situation,n such a the markets are tough. You see massive swings. That is normal and to be expected. This is lainey to think through and not be disrupted by daytoday trading. Tom this is brilliant folks. I cant say enough the importance of what we heard from a gentleman from Deutsche Bank. It is normal and expected that you see trades clear. Is that the heart of the matter in our modern central banking that we have central bankers who are unwilling since 2007 to let their part of the world clear again with some pain and again with some damage . Are they willing to take a loss as we say date we see daytoday . And in this environment its important to look at your strategy and if you think through cannot be to trade the market on a daytoday basis. A forecast, our Strategic Asset location and thats how you work on it. Have a tactic is a location on top refused equities and then at one point in time you need to analyze the situation and go back. I think thats actually crucial. If you try to trade the day on the day market on a daytoday basis, if you missed the best day, i think daytrading for the wealth client doesnt make sense. And thats why you need to look for Strategic Asset location. Im sure this will also be very important in this market, there is no doubt. Thats always been the case. Why have we not heard from the ecb so far . Could you repeat the question . Francine why have we not heard from the ecb so far. Have a massive discussions, what they are doing. Somethey announced in hours. But i do expect they work on something, liquidity. Perspective i do expect, nevertheless lets not forget not the Central Banks but also it needs to come from the fiscal side and thats even more important at this point in time. Let me also bring in andrew, pimm cohead of Portfolio Management in germany and he joins us from munich. Talking about some of the faultlines for the market. Do you worry about liquidity and treasuries . Liquidity is important in a matter what sector it is and when we start to see the sort of volatility as we are seeing in the u. S. Treasury market, then yes liquidity becomes one of the Top Priorities in markets. Againe welcome all of you here at the half break we want to welcome all of you worldwide in europe. In the evening in asia. ,rancine lacqua and tom keene with markets on the move, i will frame that in a moment with a little bit of data and an important chart. We have been so busy in our studios preparing that i missed the vics. Andrew is with us from pimco. From Deutsche Bank, with us as well, christian. Thrilled these two gentlemen deep in the Wealth Management and asset markets join us today. Et me show the vix i completely missed this this morning but we need to frame using the Standard Poors 500 where we are versus the lehman low of november of 2008. Up we go and we go through 30 and 40. What is so important, this is the 10 Day Moving Average of the vix, the height was up here at 62. 36 we are now up at then here is the 10 Day Moving Average. We are really getting up to the tension point and this anticipates the market open. Futures, 138. Pointsnow 7000 plus below where we were two cups of coffee ago. What is it can be like when the managers get together at pimco this morning . Give us an outline of the themes your managers will deal with in your famous morning call. Market conditions right now are similar to back in the times of the Global Financial crisis and in the sorts of Market Conditions we focus on risk management, liquidity, making approach tociplined managing the assets and that the number one priority. Squeezing out the extra few basis points and the sort of markets become a priority to those higher priorities. Tom though certainly take precedent. Christian, and the time we have left with you, i need to go back to your important insight of 10 minutes ago where you said you really dont like equities. If you need to own market . We have reduced equities massively. You need to look through this crisis as always and the question is when do we get back into the equity market . We should not forget before this crisis there was focus on technology. We have rebalanced the portfolio a little bit. Is trend is still there but probably too high in valuation so this has massively come down. Think through it. This massive setback in technology is significant down the road. Thise have said, we missed last year and the years before and now there is opportunity. That is what i would think in terms of trends. Bothine let me ask you what you think it will take or whether we will see a 10 year yield on u. S. Treasuries and what has to happen to get us there . Andrew i dont think we see a negative yield on 10 year treasuries. I think we will see more actions from the fed and next week from the ecb. Zero and even negative on the 10 year, i doubt we get there. Francine do you agree . Andrew i broadly agree with th