Meeting to tackle the threat today. Nejra an emergency and shock move from the fed. Not just rate cuts but also 700 billion of asset purchases. The markets say its not enough. Take a look at the 10 year yields. We dropped as much as 30 basis points, down 27 right now on a 67 handle. Yields dropping across the curve and we are seeing flattening. The markets not responding well from what we have seen from powell. Dollar weakness. Morgan stanley saying markets are bottoming out so it is time to sell. You want to short the greenback versus the euro, the aussie, and the loonie. We are in the final part of a severe bear market. The bear market inequities that has been continuing in the asian session, a lot of red on the screen including japan. It is a lack of faith in centralbank ammunition. Have seen a lot of action throughout the night. The boj stopping short of a rate cut by talking about more stimulus in terms of etf purchases and a rate cut from the rbnz. Attention turns to the g7 call later today. Can european and Global Leaders do what Central Banks have not been able to do for markets . The move in s p futures has been stunning as well. Yousef absolutely. You have to wonder why the fed could not wait 65 hours until their regular meeting and that is getting factored in. It is spooking some portions of the market and that is the feedback we have been getting on the program over the last couple of hours or so. S p emitting futures many features showing that mini futures showing that clearly. Buy at thatd to level. Looking at what is happening with the story around brent crude, down 4. 2 . The losses have accelerated. Even though on the fiscal and monetary side, you mentioned the boj, more is getting thrown at this. The reaction is negative. Australian stocks is another example of that acceleration in any Risk Appetite or a version of Risk Appetite we are seeing across the board. The biggest movie nazi stocks since 1992. Our top story, lets get to that. The fed has been swept into action once again amid the coronavirus outbreak. The benchmarkhed Interest Rate and promised to boost its bond purchases by 700 billion. Primary response to this challenge will come from our Health Care Providers and policy experts, Economic Policy we must do what we can to ease hardship caused by the disruption to the economy and to support a swift return to normal. President trump said he was very happy with the measures. The federal reserve, as you know, just happened minutes ago, but to me, it makes me very happy, and i want to congratulate the federal reserve. For starters, they lowered the fed rate. Joining us now, the multiasset strategist at Societe Generale. Great to see you with us today on a stunning day and markets. Whether you think that with the fed and Jerome Powell did overnight was a misfire or not, the question becomes what comes next . What more can the fed do to support markets if anything . I think centralbank global Central Banks have a lot of the firepower in response to the dollar shortage, liquidity, credit line. Now, at this point, we can head over to government. Do . Can governments riyadh whereurn to Central Banks do their best and everything in their power possible to support the economy. Yousef i want to get some more context from one of our regular columnists. He wrote in a few hours ago that the fed has put a much gone all preserveattempt to credibility, standing, and perhaps political economy as well, a monumental policy but he hopes work bet he hopes works. It does not have overwhelming odds of success. Do you agree with that . Sophie i think it depends on which you are in. Socgen, two quarters of negative gp. We look at markets, he has been reacting so far. The performance of the s p over the past two weeks. It really shows that it has been with atn a recession least 20 eps downgrade for the new year. No chance of recovery this year in terms of lshaped and we are not in this scenario. We are more in the scenario of a shape where in the near term, it can go lower. That going forward, it is supported by the recovery of china. Peak terms of reaching the in the coronavirus. Everything should be supported and we should see a recovery of the economy by q4 in 2021. Nejra certainly by the end of the year. You are seeing 3500 in the s p 500. David constant of Goldman Sachs says we could bottom at 2000 but then we end the year at 2500. What we might see his devastation in Financial Markets and that can sometimes lead to a renewed bull market. How much more devastation are we likely to see in equity markets before the rebound that you forecast . Sophie theres two things. Investorsthing is continue to price in with no havingy in 2021, meaning the 2021 eps growth by 50 , it means that the fair value of the s p could be running 300. But on the other side, what investors learned from last year in january 2019 is no one really wants to because there is where a risk at the point the recent performance of markets has not done a lot of good on global portfolios. If you look at the performance of gold and treasuries over the past week, it really means investors to leave itill have there for the moment. Sophie huynh from Societe Generale, you are staying with us. We have a lot to talk about. Meanwhile, as the outbreak continues, the spread around the world, governments have taken edges to contain the virus. Joining us now is Annmarie Hordern in new york with the u. S. Response paid meanwhile, maria tadeo response. Also, maria tadeo. Annmarie over the past 48 hours, life as americans know it certainly being put on hold. First, over the weekend, we heard from the u. S. Government. Donald trump expanding the travel ban to widen it out to include the United Kingdom and ireland and that is having a direct impact on airlines. American airlines reducing by 75 their International Flights, one of the biggest reductions we have seen out of u. S. Carriers. It will be hard to find a transatlantic flight back to london. On the government front, the cdc this evening urging americans to postpone any event that is bigger than 50 people. This is not just conferences and concerts anymore. This is birthday parties etc. From new york city to los angeles, we are seeing more cities locked down. You can only order takeout or delivery. Things are coming to a standstill. It is the schools. New york city being one of the Biggest School systems for public schools. 1. 1 Million Students will be home through april. You are seeing a huge effect for everyday americans. Nike, apple, abercrombie fitch, are closing their doors. They say manhattan is the city that never sleeps. I have never seen it to be such a ghost town. Are certainly not sleeping. Maria, lets turn to you. The big agenda item today is the between g7 leaders p are they likely to provide the reassurance to the markets at central bankers have not been able to . Maria at this point, that is a big question. Over the weekend, governments here are trying to stop the coronavirus. It will become the epicenter of this pandemic. They are bracing themselves for a recession to take hold. Spain going into a shut down, very similar the french government deciding they will put the country in a semilocked down. The g7 conference happening today is happening at the request of Emmanuel Macron who said this is probably going to be the most Serious Health crisis facing the European Union , also saying there should be no cost implied here. The government should put everything they have to battle the coronavirus. The broader g7, are they going to step up . The central bankers have come out. The question is now, are we going to see relief on the fiscal side . Yousef thank you very much. That is maria tadeo and Annmarie Hordern in new york as well. Thats get you some of the stories we are keeping a close eye on in the first word news. The bank of japan has strengthened stimulus but it stops short of cutting it couldve Interest Rates. The central bank doubled its target for the next etf purchases to around 112 billion. Boj introducing new lending programs to help businesses hit by the pandemic. The bank is set to hold a News Conference which is happening at 7 00 a. M. London time. The first oneonone debate as part of the democratic president ial primaries, joe biden and bernie sanders. They use their responses to define their visions for the country. The vermont senator called for an overall overhaul of the Nations Health care system. The former Vice President said the country needed to respond like it was a war. In israel, the former military chief any ganz has been given the first shot at coming up government after the third election in less than a year did not provide a clearcut winner. Benjamin netanyahus party won the most votes, but his block is smaller than the oppositions. If benny gantz is unable to form a government, netanyahu may get another chance. 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. Get you a bit of a snapshot of what is coming up on this program. Chinese manufacturing, Retail Investment suffered an historic slump in february. Now, gdp is all but certain to contract in the First Quarter. This is bloomberg. Nejra this is bloomberg daybreak europe. I am nejra cehic in london. Yousef i am yousef gamal eldin in dubai. That me show you some of the price action. The msci asiapacific index under pressure even though authorities are throwing quite a were. As it losses of 3. 5 on that index could s p 500 many futures minifutures reflecting the consciousness given the emergency move we saw from the fed and the similar story in european stock futures as well, down 3. 6 . China has suffered an even deeper slump than analysts feared at the start of the year as the coronavirus outbreak has shuttered factories, shops, and restaurants across the nation. It underscores the fallout facing the Global Economy as virus spreads around the world. Chinese gdp is all but certain to contract in the First Quarter compared to the same period of last year. Sophie huynh from Societe Generale is still with us. You had quite a bit of conviction on emerging markets. How does your view on china feed through to your em Asset Allocation right now . Value in terms of market we like. Couldk in this cycle, we pick up between em and em. More importantly, something to take into account, in line with recent events, is to find that there is a china and the rest of the world. They arento 2019 going to get out of it earlier. ,e are forecasting the vshape q1, as you are mentioning, is not going to be great. Chinese economics is forecasting 2. 5 . Q4 20 atcovery with 6. 8 . Sophie, let me flesh that out because we have a chart, gtv for the users on the bloomberg. This is a story about chinese stocks serving as a template for what a future recovery would look like. The shanghai composite index bested the msci asiapacific index by 8 , the biggest margin since 20 15. What is your read on that . Sophie the first thing is the as athat using china template is fine unless talking about the firepower that china has. Europe and the u. S. Does not have it. Recovery, it might be slower than china. Recovery,f domestic it feels like the government has been taking things much more seriously in terms of the theentive measures coronavirus. You are going to get out of it earlier. We are not doctors. We will take a peek at the impact facing markets at some point. Of china, where we are still waiting. We need to be more patient out of china. Sophie, you were talking about the response from policymakers in china and how they have more room than a lot of other policymakers, both Central Banks and governments around the world. Do you expect more to come from china or are they done for now in terms of stimulus . Sophie it should wait. We have done everything to respond to the slowdown in the short term. I think in terms of the response for the credit market, and issuing and supporting the virus bond, i think it has been a good thing. In the short term, i think for now, it has been the proper response. We are going to see if the slowdown had ripple effects through q3. For now, its enough that in the performance of the equity markets as well, its been more muted, much more stable. When you look at the performance of the chinese it did not stay sophie, hold that thought. We still have quite a few issues to get to. Sophie huynh from Societe Generale. Lets get to some of the Bloomberg Business flash stories. Saudi aramco slashing spending this year, the first sign that plunging demand in the Oil Price War are hitting home. Capital expenditure will be between 25 billion dollars to 30 billion in 2020. They put the level at 35 billion dollars to 40 billion. Value has fallen to 1. 5 trillion. Amazon has suffered a Technical Glitch, hitting Online Grocery deliveries, as demand for Online Shopping has strained the retailers capacity. It comes as panic buying has left shelves at brick and Mortar Stores empty. American airlines is slashing International Flights by 75 , the biggest reduction so far by united is also cutting capacity by 50 and reducing some salaries as well. It comes as the demand for travel around the world has collapsed as governments imposed restrictions to try and slow the spread of the coronavirus. And that is your Bloomberg Business flash. Nejra. Nejra coming up, Central Banks around the world take measures to counter the virus impact. We get your chart that matters. That is next. This is bloomberg. Yousef this is bloomberg daybreak europe. I am yousef gamal eldin dubai. Nejra i am nejra cehic in london. We have a headline coming through from the center for Airline Warning the virus is to bankrupt most airlines by may. Carriers have lost more than 100 billion in market value this year and airlines globally facing 113 billion in lost revenue thereabouts, but they are saying the virus is to bankrupt most airlines by may. Central banks across the world have taken sweeping actions to blunt the Economic Impact of the coronavirus outbreak. There with a chart that matters is Annmarie Hordern. Annmarie we have to start with that sunday surprise from Jerome Powell. The fed cutting a full 1 . Look at where they stand at. 25 . They line up with the bank of england as well as with the reserve bank of new zealand. The highest rate amongst all these massive Central Banks is the bank of canada although Jerome Powell did say he does not think negative Interest Rates would work in the United States. That is where we are right now with the ecb in the negative rate territory. The ecb did not cut alongside many of the others who cut but they had monetary tools to combat the coronavirus. We will have to see how these u. S. Markets open up today given this massive surprise from the fed. Yousef lovely chart. Thank you very much, Annmarie Hordern, with a chart that matters to lets get back to sophie huynh from Societe Generale. You look at the cascade of cuts from the fed to the boj and investors have been relaying that they are spooked by a what the Central Banks might be seeing that the rest of the world is not seeing about the impact of the coronavirus. Sophie [no audio] nejra sophie . Sophie yes. [no audio] yousef sophie, can you hear me . Sophie i camp what was your question again . I can. What was your question again . Yousef what are these cuts we are seeing from Central Banks around the world . They might ring off an alarm with quite a few investors because Central Banks might be seeing data that the rest of the world has not had a chance to see yet. The response we got from global Central Banks has been the right one because theres been fear, as we were mentioning but theres going to be an impact on the nearterm topline revenues. Something they will find very hard to cope with, the lack of revenue and preventive measures which have been slowing down the business on the and the fact that some banks are not able to provide credit drive to corporate. They are doing everything they can to cushion the Credit Impact and to avoid unknowns in the financial market. I dont think boost equities. Nejra ok, so sophie, in terms of fixed income, how would you allocate across sovereign bond markets . Would treasury be your preference or would you prefer to look elsewhere . Sophie at this point, we are still we still like treasuries. The preferred perspective, we are overlaid on u. S. Treasuries. If the level was at 96 bips. The caution it provides becomes less and less much less attractive than in the past.