francine: fear tightens its grip on global markets. historic route on wall street. downgrades to global economic growth people rolling in. california is sheltering thousands for signs of illness and the number of infected and south korea tops 2000. ♪ welcome to "bloomberg: surveillance." these are your markets. yesterday, we had quite a selloff.

600, youok at the s&p can see it stands at 0.7%. it is mostly travel or leisure stocks. index is a great test for how much fear is on the market. you can see it is gaining 12%. s&p futures are having one of the biggest routes since 2008. is ats. 10 year yield 1.18. urges deep cuts. this is in the review. i don't know whether it comes from commerzbank itself. we will have plenty more on that shortly.

crop --gin with facing in thekrupp selling biggest private equity deal in a decade. consortium beat out a rival bid from a another group. now to saudi arabia. the kingdom is planning to sell more of its stake in aramco. it is looking to fuel its plans for economic diversification, according to the head of saudi aramco. but an international listing could face hurdles. investors may question the valuation at a time when crude prices are slumping. it toare looking into have more offerings. saudi.ontinue to be in

have any stocks we think could bring value investors to us, we will consider it. >> you can catch more of that interview on the david rubenstein show. turkey is coming close to military confrontation with killedafter an airstrike turkish soldiers. assad has set the regime will pay a heavy price for the attacks. turkey has tried to persuade the kremlin to drop it support for damascus. new doubt has been cast on keith rose third runway at the government says it will not appeal a ruling. the court overturned a ruling against the expansion. heathrow says it will take the case to the supreme court. global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

francine: thanks so much. tumbling incks are futures signal more pain to come after the biggest route on wall street since 2011. this comes as the coronavirus keeps appearing out of china. the number of cases south korea has gone over 2000. joining us is james, a chief investment officer. what needs to happen for the state to be better? -- this day to be better? james: i think it will rumble on for some time. identified theve coronavirus, a far wider spread than anticipated. the market generally finds it what a seto square

about the disease, that isn't particularly serious, with the very bearish statements which come out of the cdc and united states. francine: there are a lot say it is much worse than flu because the mortality is 5%. is it that we just don't know yet? james: nobody under 10 has down yet. -- died yet. francine: we don't know if it is less violent than flu. james: the other problem has two parts. seeing ourns we are and unwinding of the exuberance markets displayed earlier. issue is that this

overhang was always going to take time to work through. expectations of growth was always a tall ask. the question for me is if we .ill see 2% growth how do you look at whether this has piqued? -- peaked? james: it is not a real issue of the disease, but what authorities are doing about it we are back to the trouble in china. of the supply chains relate to china's decision. this has really been the cause of the problem.

one does anticipate supply chains are going to be in trouble. that is possibly worse than thoughts of the disease. do we need to guess what markets are doing? james: absolutely, because we are making decisions with people's money every day. when i look at what markets are ,oing in terms of repricing equity prices and premieres are higher. numbers are currently 6.5 percentage points higher. i can take companies with sustainable is this models and .dequate opportunities this is a buying opportunity. francine: what do you do with havens?

james: i would say a lot of the so-called havens are not havens at all. gold has been shifting from -20 basis points minus 80 basis points, which is utter madness. i deftly am not buying gold. thanks very much. this is what the markets are doing at the moment. we are taking a significant downturn. down,oxx european 600 are sectors are losing the most. that's all coming out. -- coming up. this is bloomberg. ♪

francine: good morning, everyone. this is "bloomberg: surveillance." these are the sectors on the move. on monday, there was a huge selloff because the coronavirus has spread outside china. that means the markets have been trying to figure out what needs for them. if you look at the sectors, food and beverage, real estate, telecoms retail, it's all of the sectors that have been hit the most. on yourve a lot more sectors shortly.

let's get to your bloomberg business flash. >> iag says the coronavirus makes it impossible to predict earnings as demand weakens in europe and asia. airways parents say this will reduce capacity through march if carriers have canceled flights. basf is adding to the global gloom by warning of a second annual profit drop. it says the outbreak be a significant impact for half the year. they do not expect to be able to offset the effect during the course of the year. facing a record decline for its role in the catastrophic wildfires that raged in california.

it will be the largest ever imposed by the state regulator and will increase the settlement $452 million. paypal, cutting its first quarter revenue forecast. said revenue has been hit by the outbreak, following warnings from other companies as the virus continues to spread. that is your bloomberg business flash. francine: thanks, viviana. looking at the significant correction in u.s. stocks. i think the route was more than 2011. we were talking about how you are not too worried about what this becomes. you are more worried about what

is put into place. where do you see value in these markets? let's unwind and think about pricing leading into the downturn and then pick through the wreckage of where we are now. i went into this time anticipating that value be three .nd a half thousand points i think that the u.s. is still too high and we should factor in no growth for the year. we are at the point where relative to bonds, we should be buying equities again. for me, companies have already told us there is bad news. we should expect paypal to

suffer a down drop, but long-term, this company will continue to deliver. there are companies that i regard as cheap going into the downturn. francine: do you look at things like video gaming? james: absolutely. i see the long-term outlook as immensely attractive. but the valuations in the short-term have become rich. the concern is not because of the coronavirus but because too much money is being that -- bet. francine: the health minister of nigeria is briefing the press, saying it has no links to china. i wouldn't cracked jokes at the moment. joke, but thet a

reality is this man traveled from italy. i think this is a very difficult story. what are the chances this puts everything into recession? james: there is a risk. the question is how long this continues how bad it gets. i anticipated growth would be zero. would say the price has been busy discounting a shift in indicators. i think that is still optimistic, and it is still too early to buy china plays. interest having a relatively good time of this. what will it take for the world to be in a recession?

recession,here is a we will certainly have a bear fallt, by that i mean a without a immediate recovery. it would be the nasties of end since the global financial nastiest event since the global financial crisis. they can study the ship by undertaking to spend more money. francine: we are getting news out of switzerland saying that they have band events with over 1000 people, taking immediate effect and running until march 15. if you are a company, how difficult are the forecasts? james: extremely difficult. it comes on the back of the market assuming there was only

good news to look forward to. francine: what happens to the chinese economy right now? we don't know that china is under control. james: i concur that we just don't know. i assume we will have a quarter of zero growth. economies, to many china does have the capacity to print money and issue debt. there are three routes it can follow. it can borrow from abroad, which is ultimately dangerous. it can issue locally. it can print more money, which is bad news. huge impact on a consumer bonds. francine: james stays with us.

let's get a check on your european stock movers. ismarie: travel and leisure hitting the worst since 2018. iag is the worst performing the stoxx 600 of this morning. they said they cannot give an accurate view due to the impact of the coronavirus. easyjet was out with another warning after planning on holding act other flights. tui is also getting hit. the entire sector is getting hit hard. francine: thanks very much. next, we are live in italy. more onve plenty italian bonds and how they compare to german bonds. this is a bloomberg.

-- is bloomberg.

>> there is a general recognition that we are not ready for big outbreaks and we are playing catch-up right now. >> the united states government must address the spread of the deadly coronavirus in a smart, strategic, and serious way. >> we have done an incredible job. it's going to disappear one day. it's like a miracle.

it could get worse before it gets better, it could maybe go away. francine: that some of what we heard yesterday on the virus. let's get to maria tadeo in naples. how much is the government at fault here? thehere is huge pressure on administration to show it is able to tackle the virus. italy is a focus point for the outbreak and its striking we have gone from five cases to 650 confirmed here. what's interesting is the government says they are ready to put in place measures to stimulate the economy. changingtive is really over the past 24 hours. the government is saying they have a good health care system

and that this may have been the result of over testing. they really are trying to save face in concern here has to do with the economy. they do not want to see a recession. it would be that politically. down andkings are also cores could be really impacted. they are north of italy and over 40% of gdp is still affected here due to the coronavirus. francine: thanks so much, maria. we are back with james from ccla investment. crudee news on brent dipping below $50 for the first time since 2018. what happens to italy now? price ise oil

discounting an extremely bearish scenario. equity would nina -- need a rally in oil prices. if it does not go up, we should remain nervous. francine: what do you expect next week? james: the markets will continue to be nervous, simply because they were priced for optimism. francine: thanks so much. coming up, we focus on etf iq europe.

francine: welcome linger etf iq europe. we will be your guide to exchange traded funds. everything you need to know

about the funds and the flows. -- reporting its biggest ever one date drop. discussed the low-cost products product posing threats to asset managers. first, let's get started with the selloff. 600 week saw europe's stoxx and s&p 500 enter correction territory.