Velocity to the dollar and cash, it only have i never seen it, would say biblical times but i was not around for that. Francine i will have plenty more on that. Lets get to bloomberg first word news. Viviana we begin in china for the First Time Since january the nation reporting new cases of the coronavirus in the single digits. A month ago china reported almost 15,000 cases in one day. It is a sign of viral outbreak may be coming under control. Still the disease is spreading in the u. S. And europe. Italy has more than 15,000 cases and over 1000 deaths. The u. S. Is now up to 1500 infected. A state of emergency declared in new york city last night. To capitol hill and how House Speaker nancy pelosi saying she is near an agreement with the Trump Administration on a coronavirus bill. For paid sicking leave and more aid for those who will lose their jobs. Policy hopes to have a deal today. Investors looking to the Federal Reserve. The fed unleashing a trillion dollars but failed to help the stock market rout. Next week or sooner. We end with canisters just canadas Prime Minister may be in isolation for 14 days. His wife has tested positive for coronavirus. She had been exhibiting flulike symptoms. Justin trudeaus office says the Prime Minister is in good health. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. And vivian. Tom looking at the data, it is simple. There is so much to talk about. Of our best best on the fed writing on the urgency for action. Futures up down here to futures up 515. There is the shocking numbers, this is correlated with the flight to the ultimate safe haven, cash. You want cash, you get out of bonds. The price goes down, the yields go up. The tens and 30s go up up up and yield massive steepening of the yield curve. Onto the second screen, oil with a comfortable lift. In 2008. We are back down to 69 this morning. Rinsing, i put down zero swissie which is stronger euro. It is amazing how resilient the swiss bank has been given all the gyrations. Francine it is amazing. I know with a lot more input into what affairs have been doing u. S. Futures climbed. That is something a lot of traders will take as a sign of relief. The one thing i wanted to point out, the italian 10year yield up 1. 82. For me, those are the two yields we should be watching out for today. Tom that is really important. Stay on the screen. Anthony. It is ok, it is friday. 2 . , the 30 year bond was it came down and crushed percent. Crushed. Lower bond prices, how you yields, i need cash. If i need cash, i will buy the u. S. Dollar. Right now, lets move onto the bloomberg up in canada. Totally lost. This chart, i have never seen. This is the United States dollar as exemplified by the bloomberg dollar index. Trust me, it is great math. That is not two standard deviations of band. Here, francine, from down i am going to get this right. It is my first day. Two dollar and go from here from go indtrip is to have never seen that. Francine a lot of things happened yesterday that people had never seen. Today, you will get stocks attempting to stage a comeback. Bevan and now, james paul donovan. Thank you both for joining us. What a week. We have almost survived it. James sat down and told me, how much more volatility will be see on the markets. Is there enough liquidity . James it has done externally well. As to what lies ahead, we really do not know enough about the progress of the virus. Perhaps more importantly, what happens with participants in markets. There is going to be a significant focus on what authorities do. Francine what is your take on the week . How are we measuring the economy impact . The issue is fear. It is fear in the wider economy. Fear changes consumer behavior, corporate behavior and policymaking procedure. That is the great uncertainty. Policy seen a very good we have seen some mixed policy. U. K. Did rather well. The bank of england and the government came out with a correlated plan targeting the damage in the nearterm. The Federal Reserve has been good in the markets but not in the real economy. It is not doing anything to limit the damage in the nearterm. The ecb yesterday came out with a very decent package for the real economy. It is sort of a rather hit and miss in terms of the market. Tom paul donovan, a great strategic reach. And james bevan here on the equity markets and ownership of companies that you still own or thinking of buying. This is a great pair to have. Paul donovan, i love how you made your research note. Forget about aggregate demands, you say it is a good old allamerican demand shock. Are you willing to call recession and what is the duration . Paul this is the problem economists have, recession is for you guys and the media. There is no formal definition. A bad going to have Second Quarter . Yes, of course. Are we going to have a negative Second Quarter . Yes, and much of europe and the United States. Inwe feed that peak of fear april or maybe even early may, then i think you can get a recovery or some kind of bounceback in the third quarter. Need to see that peak of fear about that virus. I wouldnt describe it as a recession. I would describe it as a really nasty but hopefully still relatively short downturn. Tom james bevan, which a bank reaffirming 100 deep rate cut. James bevan, do i take my portfolio and sit on it . Do i recession proof it . James tom, i think the single biggest challenge is a demand shock turned into a supply shock. If you think about what is going on, a lot of companies are finding it difficult so there are some signs theres already a supply shock in the making. People see the number of who have jobs in the u. S. Getting to decline. I think we have a much nastier risk. On top of that, theres the issue of who is the buyer of u. S. Equities. Companies buying back shares being the significant swing factor in pricing. Theres a chance in the current credit focused marketplace, company say, we really didnt want to spend our money on buying back shares. We might need it to run our companies. To me, this is still an issue of sticking to quality. , thosees in the u. K. Names will weather the storm well. I want to ask paul donovan about recession. Let me ask you this, how bad will growth be . Paul we will get growth later this year. Remember, markets, forecasters, universally underestimate the speed of recovery and after aimate recovery dominant narrative, after a really big narrative story. You always underestimate the resilience of human beings. People adapt. I can remember, i was giving a speech when the earthquake hit and it was terrible. People were saying there was going to be no electricity in japan for years, and it is going to be 30 down. You know what happened . People put on their shorts and tshirts and turned off their airconditioning units. People adapted. People will be resilient in the face of this in the end. It is going to be a terrible three months. We are going to have that negative shock in terms of demand, induced by policy. Adapt. Ople will francine thank you both. We will be back. Coming up, and excuse of conversation with the bank of italy governor. That is coming up a 6 30 a. M. In new york. This is bloomberg. The spread of the coronavirus as a new and substantial source of what matters is not the epidemiology of the risk to the economy. We saw a risk to the outlook for the economy. We decided on a comprehensive package of Monetary Policy measures. This is a big package, and a judgment was that it was sufficient. In terms of forwardlooking, i will just note the statement that the bank will take of necessary further actions. We will make use of all the flexibility embedded in the framework of the asset purchase program. It is turned out to be a global problem. When the problem is global, the need for resolution is so much more. Central banks are doing what makes sense in their institutional context. Overall, talking to each other. Ambitious and coordinated fiscal policy response. Ambitious and coordinated fiscal policy response is required to support businesses and workers at risk. Tom bankers ambitiously managing the message forward. What you need to know is every single expert i have read or talked to said it is not enough. The magnitude and scale of fiscal response has been even people criticizing the United Kingdom for not doing enough. These officials are learning as they go. We will learn from james bevan from ccla. Paul donovan, economist with ubs wealth management. Paul, last night j. P. Morgan said this is ridiculous. The United States has to think in terms of 500 billion half of cholla dollars of stimulus. Is it too small of an effort . Our central bankers strapped because of fiscal people cannot their act together . Paul the trouble i have with the feds response is that is great for the second phase. That is great for getting us in the bounceback. It doesnt do very much at all for the next three months, when the problem is Small Businesses are forced to close. Households having problems with their cash flow. That is the stuff we need to deal with immediately. The fed can do more. It can do more to facilitate, to encourage Financial System support for the enterprises. We need fiscal policy. Good news, the senate has said it will not go on holiday today. They will be prepared. The good news the bad news, what is being proposed is pretty small scale. We dont know the extent of the virus yet. We dont know the extent of the fallout. We know it is not going to be good. More would be quite desirable. Tom james, what is been your experience of great accommodation by any central bank and how infused in the stock prices . Everyone has gone on the table for rate cuts. Some say do it friday morning. On thea headline bloomberg moments ago that the cuts. Considering further how does that filter into your world . James once we get back to business as usual, the forwardlooking equity risk premium is way to elevated. The way i looked at this is to calculate the problem before cash flows that investors will receive in markets. I take a rate which is required to discount cash flows back at todays market level and i get to a number close to 8 . That is in the context of what i think is fair which is just over 6 based on a combination of credit spreads. The ifn some sort of proxy. On that basis, i think that next move is a longterm by. Where cash flow yields can be secured with growth, people will play pay very high prices. Francine what happened yesterday, does the ecb have the tools or does it want to support italy . Ecb is supposed to prevent disorderly markets. It is supposed to make sure the Financial System is functioning in a normal, reasonable manner. I think, yes, ultimately, that does mean if you see disorderly markets pushing out the italian spreads, the ecb should take action. That is what it is supposed to do. I think what happened yesterday lagarde doesnt have a background in economics. The focus of her remarks was more political. We are not bailing out the italians, rather than economic. We are not going to allow disorderly markets. Tom we will continue. Paul donovan and james bevan, thrilled they are with us. It is accommodation friday. Widely expected. We will see that from the spread from the fed. Accommodates. A couple of program notes. We have some guests coming up. Brutal on germany earlier this week. Also, with all of you at home on the terminal, check us out at tv. This is bloomberg. Stay with us. Francine we just got breaking news. Pboc joining the central bank chorus as the legs, with measures of pboc cutting the rrr for some banks. They are cutting it to one Percentage Points. Aftertom, of course comes we had cuts from the regions central bank. It doesnt feel like it is correlated, but you are seeing places around the world trying to do more to prop up the economy. Let me do a daily check. Yes, it is a better take after this today but lets have some humility. Futures up 90. Figuresis in seven big with 68 on the vix down from that historic 74, level 2008. 81 compared to 74 and the vix is down to 69 as well. But we are really seeing interest in the bond market, the linkage into an ever stronger u. S. Dollar. Looking at the u. S. Dollar, i still have fractional Dollar Strength on the blended major dxy index. 97. 50, but it is right up against strong dollar. What we are going to do for the rest of the hour is frame for you. Francine . Francine Global Equities headed for the worst week since 2008. There you go. The italian yield. This is significant. Stocks are slightly up, but there are some any questions about the efficacy of policy response as cases in the coronavirus continue to grow. Restrictions on people and businesses. A lot of questions on the Ecb Press Conference and whether the ecb will be able to defend italian atp. Goma sex global head of commodities will talk about global sex global head of commodities will talk about oil. [ fastpaced drumming ] [ fastpaced drumming ] a friday, francine and tom. We say good friday to you. This historic week. Coverage, looking toward special coverage tonight. Now what their first word news. Viviana on capitol hill, nancy pelosi says she is close to an agreement with the Trump Administration on a coronavirus aid package to mitigate some of the economic damage. Democrats are holding out for paid sick leave and help for the unemployed. Ine areas are shutting down the u. S. Because of the pandemic , disney closing its theme parks. In new york, the shows will not go on, the lights no longer bright on broadway. The sports world is going dark too. College sports, Major League Baseball are the latest to be put on hold. Theu. S. Giving roche coronavirusest a test. Toallows Health Care Workers identify the infected and quarantined them. In china, an official pushing a conspiracy theory, writing the u. S. Army may have had a role in spreading the coronavirus. Tradingntries titfortat claims about its origin. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am viviana hurtado. This is bloomberg. Tom it is about Central Banks. The bank of china moving towards accommodation in a widely , the fed,d action Speaker Pelosi and others to the rescue. It comes down to investments, and too often we talk about bonds and the dollar, maybe brent and west texas intermediate but not enough about the ramifications of all of this on stocks. And paulan is with us donovan as well. What is the elasticity sector to sector of companies to cut costs . If the airlines crater, the ground the pilots, this and that, but what about the rest of the s p 500 . James there are three ways costs can be cut. Shedding labor would be bad news for the u. S. Equity markets and u. S. Economy. Cutting back on Capital Spending , we should expect this to be a bad year for Capital Spending. The third is trying to cut corners and reduce sales and obviously trying to book cash flow forward to pay the bills. In that part of the cost cutting, reducing the amount of money that goes out to buy shares will be in the crosshairs of companies. Tom what do corporations need from economists . If these people are going to be resilient and try to keep written test revenues going, what revenues going, what do they need from the fed . Paul the Larger Companies dont need so much from the fed at the moment. It is the smaller businesses. If you are running a Small Business, typically you are one bad month away from closing because Small Businesses are operating on tight cash flow. It is not the profitability, it is the ability to pay the bills. That is where assistance as with the bank of england or the ecb, that targeted assistance is useful. 50 billion from the federal government is not enough, not for an economy the size of the United States. It is not even around enough, so that sort of business for the momandpop stores, that would be helpful. Avoid the problem james was highlighting about the risk of having job losses, which one persons employee is everyone elses consumer. That we do not want to see. We want to mitigate the negative impacts of the next three months and trust in a gradual normalization after. Francine well that be enough to placate markets . A problem is always because you have to have the grandiose gesture which comes from the headlines but you need the details to work. Markets have different concerns. They are worried about the liquidity. If you come up with a comprehensive, joined up plan which shows there is Economic Leadership, that is useful. One could say that over the course of this week, we have not seen that much Economic Leadership in the United States. It has been a confused policy. We have had that in the press conference from the ecb and that is not ideal in convincing investors that policymakers know what they are doing, have a plan, and will follow it. Francine our markets concerned because there is no commonality concerned because there is no commonality, the bank of england getting it right and the markets were not 100 behind that either. Paul i dont think you need a coordinated response in terms of the g7. Is coordinated fiscal and monetary response, but this is not like 2008. Yes, we have a common enemy but it is hitting Different Countries at different paces at the same time, and we have different reactions in Different Countries. The reaction in the u. K. Is different from the reaction in china is different from the reaction in italy. Sense that to have a global policymakers have a plan and are following it. Certainly until very recently, that has been something that has not been apparent to the markets. The u. S. President was calling it flu v