Welcome to bloomberg daybreak europe. Volkswagen saying it is almost impossible to make a reliable forecast on coronavirus. It says to succeed in overcoming the coronavirus crisis, vw will succeed in overcoming it. 2020 will be a very difficult year. The coronavirus poses challenges. It is almost impossible to make a reliable forecast on the coronavirus. You can translate that third to equity markets that through to equity markets. 1987. Drop since we have had three backtoback days of moves at 9 . How do you trade a market like this . Investable . In 24 hours, we have gone from limit down to limit up. Is this just a bear market ounce in u. S. Futures bounce in u. S. Futures. You are seeing green in japan but right elsewhere, like china red elsewhere, like china for example. A little bit of a retreat in the yen. Dont want to say that it is risk on, but a bit of a different picture from what we were seeing yesterday. Yousef absolutely. Treasuries were trading a little bit lower. This comes off the back of the risk on mode you just talked about. The next operation by the euro fed will be front and center. 40 billion worth of purchases across the curve. The s p 500, as you pointed out nk 12 on monday, erasing its gains for 2019, as President Trump warned of a possible recession. Futures are higher at the moment but the president warned that the virus may disrupt life well into the summer. Sident trump it is critically important that the markets stay open at this time as opposed to trying to take breaks in the middle. The stock market, i am a little more concerned about. I have us in a real bear scenario. The steep decline in demand that we are seeing with the double whammy in Oil Prices Falling is really unprecedented. What you see on the screen is only a fraction of the story. This market is more or less seized up, according to participants in this space. We have to act fast. Thats whats scaring the markets right now, the bankruptcy risk. It is no longer a transient shock but could be a permanent shock. Leaders are preparing their nations amid efforts to contain the coronavirus outbreak. Governments rolled out a series of public addresses on the need for further restrictions after g7 nations held a Conference Call on monday. President trump avoid discretionary travel and avoid eating and drinking at bars, restaurants, and public food courts. We are asking people to do something that is difficult and disruptive. Apart from the mainland, macau and taiwan, for all other countries and regions, we will be issuing the red leveler. The enemy is invisible and moving forward and that will affect our day to day way of life. Joining us for more is maria tadeo in brussels. Good to have you with us. President macron saying we are at war over the virus. What are some of the actions that we have seen . Because those are powerful words. Maria Emmanuel Macron speaking yesterday on prime time television, saying that france is now at war. The messages are similar to the ones we have seen play out in spain and italy, were essentially citizens are being told, you need to stayathome unless it is a necessity to be out. We know that hotels could be reconverted into hospital beds. When you look at the impact that this is going to have on public life, hes also saying that look , the pension reform, which we know is very controversial, is going to be put to the side. It was a dramatic tone from Emmanuel Macron. This is happening 24 hours after we saw those incredible images of people out and about in paris, acting as if nothing was happening. Today, we are going to see european leaders meet again for the second time. They are not meeting in person because of those restrictions that have been opposed. They want to send a message imposed. They want to send a message that if you are not allowed to leave your house, i am not going on this trip either. That travel ban was announced by ursula von der leyen yesterday. People that dont have a reason to come into the continent will not be able to do so. A lot of people are reading this as retaliation to trump. A has more to do with having one line policy by all Member States when it comes to keeping the borders shut. Yousef i am listening to boris johnson, mr. Macron, in both cases, it was hard not to get depressed. Very serious and dark speech that we heard. What about the economic measures . Are they starting to filter through . Are there sort of green shoots . We dont have green shoots. Veryials tell you it is likely that we will see a recession, not just in italy, by the way, but the whole of europe, potentially in. 2020 we had a Emmanuel Macron announced a huge credit line, almost a hundred billion euros for companies. He is saying that the goal is no almost 800 billion euros for companies. He is saying that the goal is no company go bankrupt. Rome is saying we can leverage 300 billion euros to get the economy going. The Italian Economy has been at a standstill for weeks. Thank you so much, maria tadeo. For more on the markets, lets bring in our cross asset editor. Seems like history is being made in markets every day, particularly in the equity market. Jp morgan talking about the quiddity looking like 2008. Is this a market that it is liquidity looking like 2008. Is this a market that is un investable . It really is. It is hard to say whether there will be a bottom, whether you will have a 5 rise or drop the next day. Things are extremely volatile. People are somewhat going in and saying, well, i think there are some good valuations here. Definitely come on any given day, it is quite uncertain definitely, on any given day, it is quite uncertain. Thank you so much. Way, sayingy the that stocks will not be saved by steeper yield curves. They recommended selling on any strength, as we get an indication of a little bear market bounce. Joining us for the hour is sarah hewin, chief economist for the americas and europe at Standard Chartered bank. When you look at the Market Action that we have seen since the weekend and think about the fact that a market is trading with so many unknowns, including the Economic Outlook, can you give us any kind of Economic Outlook when it comes to the u. S. . Do you see a u. S. Recession this year that president talked about yesterday . We do see a recession. We think it will be inevitable when we see such a disruption to the economy, the halting of a lot of businesses, people hunkering down, consumers pulling back. Inevitably, this will cause a recession. How deep and how long . We think that the big hit is going to be seen very much in the second quarter. The data that we have had up until yesterday was showing the economy to be doing reasonably well in the first couple of months of the year. But the Empire Manufacturing survey yesterday was the real signal about whats to come, an absolutely massive decline there. We think the as we move into the coming days and weeks, then the downturn in the economy is going to become intensified. Yousef thats exactly the point, is that they are beginning to beginning for bargains to be had out there. We had this question that tries to find out which risk asset is going to move first if we do see a recovery. What would you be keeping an eye out for . Sarah i think we need to step back and look very closely at what is happening with the path of the coronavirus and at what point people start to fell that the number of cases is plateauing. We have an example in china, where the virus really started to accelerate through the middle of january. Now, we are seeing a plateauing. New cases seem to be associated more with sort of being brought in from outside rather than from within china. The data are showing the big collapse in industrial production, in sales, in all activity that was evident through january, february. We are seeing people returning to work. It is relatively slow, particularly on the services side. We are seeing people still very cautious about interactions, going out for meals, or anything that involves close contact. We think that probably, markets the need to have in view virus starting to plateau and really be aware that the Economic Data are going to look pretty horrible for the next few months. You do wonder when the data actually comes through whether we could see a pause in the risk off. At the moment, the trading is on the unknown. Sometimes, that is worse than the reality. Sarah hewin from Standard Chartered bank stays with us for the hour. Lets get to the first word news. President trump says the u. S. Will strongly industry fter the sorry. I get excited about this. Boeing is asking officials for shortterm aid. They are seeking to avoid layoffs and damages to its suppliers, hundreds of Smaller Companies that make parts and systems for its aircraft. Theemocratic primary in u. S. , joe biden has won washington state. Inls were set to open today the ohio primary but the governor has invoked a health emergency. Over in italy, the government a 25mproved approved billion euro package to help its health system. The plans include suspending tax payments and mortgage really. Italy says it will leverage about 340 billion euros in financing. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is what working together is called. Sometimes you get a glitch on the prompter. I love dougs. Dogs. Yousef in times of crisis, nation is called for. Whatever it takes. G7 leaders have pledged to do what is necessary to help economies. We will get into that. This is bloomberg. Yousef this is bloomberg daybreak europe. I am nejra cehic in london. Lets get a quick look at your risk radar. It is looking more risk on today after the worst rout since 1987 for stocks yesterday. Futures in the greek. Is this green. Is this really the time to be getting in . Jp morgan says sell on any strength in equities. It is a little bit muted and a mixed picture. Some red in china. We are seeing treasuries give back some of their gains today. Tomorgan saying, dont look a steepening yield curve for a sign of rally in equities. A bit of a retreat in the yen, reflecting a little bit of selling of those payments. We went from limit down to limit uptodate in terms of u. S. Today in limit up terms of u. S. Futures. Yousef lets get to the Bloomberg Business flash stories. Amazon is hiring 100,000 people to meet added demand due to the coronavirus. Is also giving u. S. Workers eight two dollars per hour raise. The ecommerce giant struggles to cope with the increase in demand. Many people are going online for Household Essentials rather than going to crowded stores. I sure am. A Swiss Health Care Company says countries need to test more people for coronavirus. Anyone showing symptoms it should be tested, regardless of age. Emergency authorization from the u. S. For its new highspeed coronavirus tests. There are, of course, also other tests available in the market. There is an enormous demand for tests. I cannot yet meet supply but am very glad that we could make a big difference with this new test, which is actually approved in record time. Yousef bank of america and ubs are among the banks selected for its proposed merger with it paves the way for china to create the worlds first global carmaker. It is working with hsbc on the potential transaction. No official comment from anyone involved. That was your Bloomberg Business flash. I want to get back to what is happening in terms of policy responses. As countries around the world impose restrictions to limit the spread of the virus, g7 leaders pledged to do whatever is necessary to fight covid19. The imf says they are ready to use the 1 trillion lending capacity they say they have to help nations counter the coronavirus outbreak. Managing editor called for global coordination. He highlighted that the fund had 50 billion in emergency funds for developing nations, with as much as 10 billion available at. Zero Interest Rate sarah hewin from Standard Chartered is still with us. Every time the imf has said something, it has not made much of a difference to what investors are doing with their capital in markets around the world. Scope ofthink that the the crisis is such that investors really want to see a big response. Now, we have had a very big response. We have had a big, not quite coordinated response. Central banks really operating pretty much along the same lines, slashing Interest Rates and that has been quite dramatic. We have seen Central Banks making finance more available to the corporate sector as well, certainly across europe. I think that the next leg is on the government side. European governments are already moving forward in the u. S. As well. By comparison, the scope of what the imf can do is relatively limited. Thats not to say that it is not going to be very useful and important, but i think in the current climate, investors are really looking for a very big global effort that is going to not just address liquidity and credit, but also really support the real economy, support those businesses that are going to be disrupted by coronavirus, and also to provide some support for health care and generally for likely the rise in unemployment that we will see across the west developing countries. Yes. G7 leaders yesterday pledged whatever is necessary to fight the virus. The response in markets is very to any policy response. Aw quickly and affective can fiscal response actually be in alleviating the risk of a u. S. Recession or recessions elsewhere . Is it really going to be the panacea, this fiscal response . Sarah we saw in the Global Financial crisis that you cannot avert a recession. All that you can do is to slow the downturn and provide some relief along the way. I think that is very much a going to be what we will see this time around as well. Said, likely that we will see unemployment start to pick up. We are likely to see business is really struggling. What can governments do . Makingy going to just be sure that credit channels remain open, along with Central Banks. Or are they Central Banks . Or are they going to be much more proactive . Are they going to be providing subsidies to businesses, taking stakes in businesses . Nothing will be decided overnight. I think that we could see some relatively swift responses. Remember, it is only a couple of weeks ago that people generally were just not aware of how serious and how widespread the Coronavirus Impact was going to be. Now, i think politicians are really moving in to take action. Yousef sarah, you are staying with us. Here is what is right around the corner. Can gold lose its safe haven shine . A charge on that comes up and that is the one that matters. This is bloomberg. This is bloomberg daybreak europe. I am nejra cehic in london. Yousef good morning from dubai. Lets talk about gold. Haven asset, at least in conventional theory. In really bad bear markets, that concern. Lets get to the chart that can turn. Lets get to the chart that matters. Is gold losing its luster as that safe haven asset . When we have really bad markets like bad bear markets like in 2008 when liquidity is needed, we see gold. Selloff. Look at this chart. We see silver, platinum, and palladium. Palladium down 50 from its bubble peak this year. Will gold be the next one to join his peers . At might be. Many are stashed it might be it might be. We already saw that in some of these really volatile days, they are liquidating gold and moving their money to cash. Annmarie hordern, you have and it just on the point i was going to. Sarah hewin the still with us. With verye moment little places to hide, investors will start moving to cash . Sarah i think that is very much the case. I think that given the sheer volatility that we have seen in the markets over the last few days and few weeks, investors are becoming very cautious obviously looking for a point at which to reenter the market. Given how much uncertainty is out there, i think that it is still too early. As i said, we probably need to virus,clear idea of the the response we get from governments, the scope of the downturn before investors will start to look for opportunities. That might come sooner than we expect. But i would say that over the next few days, it is still going to be a situation of extreme uncertainty. We know that recession is coming. I think that investors are really getting to grips with that. Yousef hold that thought. Sarah hewin from Standard Chartered bank stays with us. A snapshot of what is in the pipeline. Anicon valley shut down and election delayed due to the coronavirus. We will talk the impact of the pandemic next. This is bloomberg. Yousef good morning from dubai. This is daybreak europe, i am yousef gamal eldin. Nejra and i am nejra cehic in london. These are todays top stories. Yousef at war. France posing president calls for unity. Borders. U. Closes its stomach churning, u. S. Futures after the worst day for wall street stocks since 1987. The philippines becomes the first country to shut market amidst the pandemic. Plus, President Trump dramatically shifts his tone on the outbreak, warning that the disruption could drive the u. S. Into recession. Nejra welcome to daybreak europe. Is this just a signal of a bear seeing bounce we are after the worst stock day in the u. S. Since 1987, if the day wiping out the s p 500 gains. Stock markets closing in the philippines and sri lanka. Could it happen elsewhere . U. S. Futures are in the green. Cautious to say that this is riskon yet. Yousef amid the increase of risk appetite, we are seeing u. S. Treasuries finish a bit under pressure, the yield up point 077 . The new york fed will plan in operation to the tune of 40 billion to try to inject more liquidity via six different transactions. One another so just that the liquidity indexes are starting to take effect. Thechinese yuanas been standout trader in emerging markets as investors try to look past the horrid Economic Data we had in the last 24 hours. And a quick note on the brent crude, De