francine: the selloff stopped for now. global markets rise as bankers .re ready to cut we speak with standard life aberdeen chief ceeo keith skeoch. the first confirmed case of coronavirus in new york. the death toll passes 8000. and joe biden wins in the south carolina primary, with pete buttigieg dropping out. super tuesday contest starts tomorrow. welcome to "bloomberg surveillance," everyone.

i am francine lacqua in london. these are your markets, doing a little bit great after the week we had last week. the ftse gaining some 2.2%. a risk on bit more of move. i would caution everyone that these are on thoughts that the central bank would step in, and it is not because of threats that the coronavirus is getting any better. let's get to the bloomberg first word news in new york city. number of deaths of coronavirus around the world is over 3000. new york city has reported its quarantined to her manhattan apartment after contracting the virus and iran. whennor cuomo says it was not if the virus made its way to new york. aking a hit in february after

spread of the coronavirus. pmi plunged to a record low of 40.3. the official reading also reached a record low of 35.7. china's economy is gradually returning to work. 70% of at 60% to capacity last week up from about 50% two weeks ago. in the u.s., former vice president joe biden has won the south carolina primary. it puts him closer to front runner bernie sanders. a former mayor has pulled out of the race, despite an early win in iowa. he joins billionaire tom steyer, who is also suspending his campaign. up next, super tuesday, 14 states and over 1000 delegates to grab. 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. i am break a group data -- i am ripka gupta.

this is bloomberg. francine? francine: thank you. showing a bit of science, pausing this month, central banks will once again save the day. global long could a contraction actually last? joined byighted to be keith skeoch of standard life aberdeen, and asset measure with more than $69 billion in assets under management -- an asset manager with more than $69 billion in assets under management. what has been your biggest allocation since the virus actually hit? things -- one of the thank you, francine. always a pleasure. i think one of the things that i have learned in 40 years of looking at these events is to make sure that you stay calm and think about the analysis.

had week, we certainly markets in fear. this morning, obviously some of that fear has started to re cede, as we have seen evidence of a policy market coming through. it is important, as we have seen about a fiscal policy response, obviously the prospect of easing interest rates, and people saying they will have an impact. the big issue for us at the moment is to work out whether this is a correction or whether this is a more meaningful downturn, and i think we have got to look at the data, and to be clear, i think the data gets worse before it gets better, so there is a lot of work to do. francine: there is. the centralied that banks, eight, do not have enough

firepower, but what can they do when it is fears caused by a virus, it is not a financial problem? keith: i think there are two things, and, one, over the weekend, and this morning, given the new fear, central banks can help by making positive statements and helping promote confidence to say they are on it. everybody, i think, accepts in the world, monetary policy is slightly out of gas, but nonetheless, it is worth pointing out the cuts in interest rates do, i think, help market sentiments. they then try to make sure that has ansponse appropriate impact on economic activity, and that is to some extent where fiscal policy comes in. if people were concerned two weeks ago that losing here would

risk inflation, then, you know, that prospect, i think, has really got away, because to be ay there is going pothole in the economic road. we just do not know how deep and for how long that will last at the moment. so i think a good, positive , that politicians and central banks are on it, and people will throw what is needed to make sure that any downturn modest andis recovers quite quickly. francine: a company coming out saying they will delay their ipo. this according to press reports. what will it take for the markets to improve? is that the data? what metrics at aberdeen do you

look at to get into the markets or out of the markets? keith: i think the real issue will be the market's confidence to look across any short road -- short run negative impact on a return to normalcy. one of the things we will be looking at very fully over the next month or so is the speed with which, for instance, that chinese pmi recovers, the speed with which, if we are seeing , whereon rates peak economic activity returns back to normal, the pace of that the, youhink, dictate now, the extent of, if you will come of the economic pothole that we are in danger of going down at the moment, and markets that are a discounting

mechanism will start to look across. what i can say, as of friday, and even this morning, when you look at the level of global bond yields around the world, markets, for me, are starting to price in a recession. for me,r from clear given the policy response, given the unknowns, that a recession is inevitable. if markets are already discounting that and, obviously we start to see some evidence of risk being a temporary slowdown, then, you know, markets will recover. but i would stress, i would stress that actually i suspect over the next couple of weeks markets are going to remain kind werelatively volatile, and will just have to watch as the data comes through. so that ability to look across

the valley from a temporary slowdown to pick up an earnings that i think would be absolutely back into our more aggressively into risk assets. francine: it is too soon now to go back in the markets. i think that, well, i think a few things. one of the important things is to keep calm. i think it is very early to go back into the markets. i think it is also, if you did not manage to get out before last week, history would suggest that it is actually too late, and, you know, if you look at the history of corrections in stock markets around the world, you know, they typically, during a correction crisis, drop by 10% to 50%. they stay down -- to 15%. they stay down between six weeks and three months, and very often they rally relatively quickly.

last week i think was one of the fastest corrections in terms of the speed with which equity markets were down 10% that i have seen, certainly over the last 40 years. think it is really time to do the hard work on research, work out whether you believe that this is going to or it is arecession temporary blip, and you start to adjust your portfolio accordingly, so what we are doing at the moment is lots of work and thinking about how this kind of changes the environment. is it sad that 1% yield on the 2-year note is now lamentable? never, butnever say

i think if we get further bad news in the short run, then that , theof flight to policy fact that, you know, you are going to have exceptionally low interest rates with a very long period of time, so, you know, we are very close. not,er it gets below 1% or for me, is less important than the signal that it is giving us at the moment, but long-term interest rates are currently discounting a very, very smart slowdown in economic activity. francine: keith, give us a sense of what you are preparing it -- comparing it to. i know there was sars, and we quickly came back. it was a long time ago, and china's economy was much, much smaller. what are you doing at standard life aberdeen? keith: well, i mean, you know,

we obviously are looking at the impact of sars, we are looking at the passings of other corrections that take place in markets. we are working with our equity team at the moment to work out from a practical point of view what, if any, disruptions in supply chains look like and how that impacts, you know, the economic production in the short run, and looking to build a profile of how we would expect economic recovery and a pickup in activity to come back after temporary, a temporary blip. , youorrection, typically

do seelso yet -- you also a monetary response. we are building a text are building a texture about to help us guide how we think about the world and where we actually keep assets. we are lucky that in our multi-asset portfolios we did go -- we improved the amount of duration in those portfolios earlier in the year. francine: i mean, after the impossible, the billion-dollar question, so far from easy, what are you expecting to see from the markets? know, um,, i think, you more volatility, you know, and i think you will see fear rise, if the virus accelerates. i think you will see that fear

recede if we get more policy announcements, you know, it is quite clear from last week that we are being driven by investor sentiment and investor psychology, because the level of uncertainty that is attached to the short run outlook for market has increased dramatically. so i think we are going to get an awful lot of noise, an awful lot of volatility, and as i say, i think it is important to be how you work about your way through that and not, you know, just follow every up the market on a day-to-day basis. francine: thank you so much for joining us, keith skeoch, standard life aberdeen. 16%ng up, after plunging last week, oil futures are rebounding today. that is coming up next.

plus, how are europe's tour operators planning for what is likely to be a very uncertain 2020? that is later this hour, and this is bloomberg. ♪ oomberg. ♪

francine: economics, finance, politics, this is "bloomberg surveillance." i am francine lacqua in london. russia ready to cooperate with the global oil market. that is according to president vladimir putin after last week's 16% plunge after the markets reacted to the spread of the coronavirus. , we have a guest joining from new york. >> they are down about 20% since the end of january, the outbreak

of the coronavirus, but i want to turn your attention to the rsi, one of the most oversold territories for wti, which usually signifies a buying opportunity. as you mentioned, president vladimir putin has optimism coming from moscow, but they are wedding -- ready and willing to cooperate with opec. barrelis ok with $40 a for oil, so there is still some fragility in this rebound. many of the streets are saying that 2020, you can have zero demand growth in the oil market, francine. francine: thank you so much, annmarie hordern with the latest on oil. attractionsow are planning for what is likely going to be an uncertain summer season? we will speak to the chief executive of the tourism industry. that is later on bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua in london. let's focus on the economic response to the coronavirus outbreak. before we do that, let's check on new markets. this feels like a very different day compared to last week. this is mainly on central banks, actually waiting support. what could be already priced in the market is some kind of recession. let's get more on what we were expecting from the becom economy ollthe global death t

actually surged past 3000. james mccormick, the global head of desk right a g -- desk strategy. is this a recovery now? james: listen, i think it is too early to tell. as i rode over the weekend, if you just look at risk assets, equities look like they have but you havenside, a pretty forceful response from central banks, at least what they are saying, so you will have to wait and see what they do. francine: what can they do? this is not financial, this is consumers not shopping, so even if the central banks do whatever they need to do, and that is put money in your pocket, helicopter money, what will actually change? james: i am skeptical of the central bank response. buffett is starting to whittle

away, -- the fed is starting to whittle away, whether or not there is in fact a recession, so i think it about creating confidence in the financial markets. what you really need is a physical response. we see that in asia, some in europe, so far not so much in the u.s. francine: ok, but is that the fed that can actually do something more -- it is here or europe, right? we have not heard from christine lagarde that much. is it because you're running out of firepower to be able to address the coronavirus? james: i think that is part of the reason. we talk a lot this year but relative firepower. europe has physical firepower, it looks like they are getting ready to use it. the one silverlining from this coronavirus it is you are putting forward a shift in policy. monetary response from the u.s., fiscal response from europe, we are getting signs that both of

those things are coming. francine: does that avoid a recession, if coronavirus gets worse or even stays as it is for a long time? james: i think technical recession in this environment is quite easy to happen, right? because you are shutting down economies for an unknown period of time. whether or not that is a true recession is neither here nor there, but i think technical recession in the first half of the year looks like a real risk for the global economy. francine: what does that mean for where you want to put your money in? buy at thisd do you point? james: i think gold is a good investment. i would like to say that fixed-income is a good investment, but i looked at it this morning, and markets are now pricing central bank policy rates back to the all-time lows of 2016, so there is not that much room left in fixed-income markets. i guess maybe cash. i do not think it is the right time to get back to global equities. put it as many safe places as you could. francine: again, how do you

actually measure the impact of the coronavirus? do you do it for data or do you look at numbers affected? james: i think both of those matter for financial markets. if you look at the coronavirus cycle, there are two cycles, the cycle going on in china, where we see an improvement in the infection numbers, but obviously a dear terrier asian of growth numbers. both -- a deterioration of growth numbers. much,ne: jim, make you so natwest markets. coming up signals from the world central bank. we will discuss that, what they could do, that is coming up next. this is bloomberg. ♪ this is bloomberg. ♪

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to do the extraordinary. take your business beyond. francine: the selloff stocks -- the selloff stops for now. global markets rise as central bankers stand ready to cut rates. coronavirus spreads stateside.

new cases are reported across the u.s., including the first confirmed case in new york. the global death toll passes 3000. and the race to the white house heats up. joe biden wins in the south carolina primary, with pete buttigieg dropping out. pmi -- somefrin manufacturing pmi. on the trade negotiations, it could move actually pound, and a factoring, pmi, a little short, so 51.7, instead of the 51.9 we were expecting, not a huge deal. 1.1763 -- one point -- 1.2763. >> i want to kick it over the energy sector, up 3% this money. it will receive optimism in both prices and as well on the policy

front. president vladimir putin saying he is willing to cooperate with opec. up nearly 4% this morning at one point they were up the highest in 11 years heard a little bit of buying on the dip as last week they were heard brutally. they were out with a profit warning on the coronavirus as many bars and restaurants in china remain closed. and finally, iag, down more than 7%. travel and leisure is doing better, but the airlines are still very fragile. of course due to the outbreak of coronavirus, but also oil prices rising higher. they will get hit from the higher crude prices, francine. francine: annmarie hordern with your main stock movers. let's focus on the economic response from the coronavirus outbreak trade pressure is piling up on the fed and other central banks to take action. the fed chair, jay powell, says he is prepared to cut rates if

necessary. is expectedoint cut this month. -- journey is now is our executive editor for economics. and from natwest markets, jim mccormick. thanks for sticking around. welcome to surveillance. when you look at what banks are doing, are they now counting -- you know, saying that recession is very likely? >> entering into this period, there were signs that the global economy was stabilizing. policy around the world was already very loose. there are some fundamental strengths, looking at labor market prices come but those recession fears have increased fears that the financial markets turmoil of last week, tighten financial conditions. central banks led off by jay powell on friday, that signal of

alert that we get it, we are on it. the question now is whether the fed can hold off until march 18, or whether it feels the need to move forward. other central banks are more constrained. as the fed, whether they need to do something. this morning the boj of the bank of england -- francine: what can central banks actually do? if the consumer stops spending, they have been holding up this economy -- if the consumer is scared and doesn't spend as much, is that what will tip the balance? that is theel that fear of the central bank, the fear with the response of the -- to the outbreak. and then the markets had that terrible performance last week, the worst since 2008. and then the central bank starts to zero in, worrying about financial conditions.

they know inflation is low, so they have some row -- some room to cut if they need to. if this is a supply shock to the economy, lower rates will not make a factory that is closed or cannot get its goods produced were out there, that will be a problem that monetary policy will not fix. on the demand side, if you have an emergency, are you going to go short, take a holiday? the central bank is well aware of that. at the same time, they know they have men bates -- mandates that they can react. francine: what about china? james: the good news is that the infection rates are stabilizing. the bad news is it is -- it is interesting to me that if you look at shanghai composite versus s&p, the massive outperformance last week his people see the light at the end of the tunnel.

china has used the right policy mix which is you shut the economy down, you don't to much -- or you don't do too much on the policy side, but you do more on the physical side. francine: we almost realized that from the supply chains, it is inevitable for china, but because of the trade war with the u.s., they had already been moved. simon: china looks like 2003 with the sars crisis. the economy is four times the size of that. it produces your iphone, your pc, it demands -- it is such a critical figure in the world economy. so the trade war has certainly woken up companies to the idea that they need to preserve the supply chain and make them more local. the coronavirus will send another shock into the supply chain industry and make companies around the world look increasingly at automation, managing the flow of goods.

coronavirus is a bigger shock to the supply chain way of working the world economy than the trade war. again, chinak, shows you the way forward. you need to shut the economy down. you need to shut activity down. it is going to have a spillover effect. next month's pmi seven globally are going to be worse than what use also for in february. but you greece that with the right set of policy, make sure credit is moving through the system, you have the fiscal response that is correct, but the rate cuts and significant rate cuts are not necessarily the right policy response to what is happening today. francine: what central bank has more firepower in response to something that could alleviate consumers? agree with jim that this is a discussion that the central banks internally feel the are not necessarily third line as they have been over the last decade, but the

fed has a 1.5% to 1.7% range or that gives them room to cut. you see comments from donald trump over the weekend that this is perhaps something they choose not to hear, but the fed has to cut and goldman sachs among others increasingly think it will. the pressure really will be on the european central bank. bank of japan rates are already in negative territory. and there is a backlash already from banks that in the euro area -- will they want to cut? they kind of feel they have to. aboutne: we are talking the fact that this could spur fiscal spending. will that make a difference to germany? they may be relaxing some deficit rules. policythis is a fiscal for once and they have to be the first line of defense. for fiscal policy with germany, famous for its dedication to a balanced budget,

a surplus or there will be some pressure there. tension is building in fiscal support. i think you see the others as well as the forecast of the central banks, the wall street banks building. certainly from germany, perhaps elsewhere. the u.k. budget is coming up. francine: thank you both for joining us purge jim mccormick, global head of strategy at natwest, and our executive editor for economics, simon kennedy. that's get to ritika gupta. ritika: the number of coronavirus deaths around the world has risen above 3000 the total number of infections, over 88,000. new york city has reported its first case, a woman is isolated in her manhattan apartment after contracting the virus in iran. governor andrew cuomo says it was a matter of a wed, not if, the virus made its way to new york.

factories took a hit in february under the weight of coronavirus. reading also hits a record low of 35 point seven. china's economy is gradually returning to work. bloomberg economics predicts activity was running at 60% to 70% of capacity. 50% from, that is up two weeks ago. joe biden has won the south carolina primary. it puts him closer to the front runner, bernie sanders. former mayor pete buttigieg has pulled out of the race. despite an early win in iowa come he joins, sire -- tom steyer, who also suspended his campaign. up next, super tuesday, 14 states and over 1000 delegates to grab. greece has declared a state of emergency as turkey has opened its border to migrants wanting .o travel to europe

there have been clashes with greece security forces along the border, but reports suggest the situation is not as dramatic as turkey and greece are making out. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, ritika group this is bloomberg. -- i am ritika. this is bloomberg. we will speak to the chief executive of the year he and tourism association that is next, and this is bloomberg. ♪

francine: this is "bloomberg

surveillance." we're getting news out of santander, the chair buying $1 million -- one million -- 3.32t three euros euros. much like a lot of the other banks, have falling quite significantly parents and tender down some 17% over the last 10 days. let's get to the bloomberg business flash new york city. we get to ritika gupta in a couple of minutes. in the meantime, eurozone factories, euro area factors so the first clear signs of coronavirus hitting their business in february. we saw widespread delivery delays, but also declines in foreign orders. everyweek's episode hit sector of the stoxx 600, none more than the travel and leisure sector, the worst performer on the index. ,otels and attractions preparing for an uncertain

summer season. rejoining -- joining us is tom jenkins. seems like an absolute nightmare. how do you deal with it? tom: it is not an unfamiliar nightmare. we have seen this before. with major terrorism scares, you've seen major punctuations and consumer -- fluctuations in consumer confidence. we are moving into uncharted territory. normally we would see a big reduction in the area i specialize in. but at the moment we're seeing a big reduction in intra-european terrorism. yesterday the louvre was closed. self-imposed places where you cannot do festivals with more than 1000 people. you need to close things off. tom: it is an interesting parallel. the point of a terrorism scare is that the public has almost a

moral imperative to carry on as normal. here is slightly different. there is a genuine scare running through the population. and it is fear we need to worry about most. coronavirus is very serious, but the fear causes real damage. this is what we are starting to see. francine: yeah, but you cannot underplay it, either. for tourism, how much does it actually impact tourism? tom: it is difficult to say. we are seeing cancellations, total cancellations from china at the moment. there is no business moving from china the other big problem is that this is occurring right at the peak booking season for the high season of europe. this plays right across the european -- indeed, the world fears, too. francine: italy is impacted, i imagine. and germany is impacted, saying -- not saying

don't go, but be careful in going. francine: have you seen numbers, the impact on revenue? tom: this has broken in the last seven days per die thing from china we are fairly clear that chinese inbound business will be down as much as 40% to 50% this year. francine: this is where to where? tom: hundreds of different factors, booking season, depression and the chinese economy, it is probably in that region. the china -- china represents a small fraction of european business. timesa is four to five the size of china. the big business is intra-european traffic. people have no confidence to go out or cross borders, then we will be in difficulty. we have got to try to establish confidence. confidence, but also following the advice of

health authorities. with tourists move from traveling from london to milan does tourism stop completely? tom: we don't know, i cannot make that prediction. this is a new fear. the decision to cancel big events is not a world health authority decision, it is a political decision made by governments. we are moving into a similar sphere to the reactions of governments with terrorism. it is not so much needing to do things but being seen to be doing things. this is the thing that we are very scared of. francine: may be seem to be thin things but al also protecting te population if they don't have enough beds, right? talk to me about what it means for some of the tour operators. do you worry that some of them will go bust? tom: this is not good news for tour operators. but tour operators, certainly the larger inbound tour

operators that i specialize in, are used to handling shocks. regularly every four or five years we have something coming over the horizon that punches demand, and most should be able to ride this out. francine: even something so big? tom: we don't know the scale of this yet. francine: are airlines in trouble? these are companies that we saw what happened with -- there are companies that are not at the forefront of what people want anyway. is that fair? tom: well, they are -- francine: they are tricky businesses. tom: well, i wouldn't say they are tricky businesses, they are businesses. i would say the nature of these things, you get a sudden collapse in demand, you will get a return in demand. i think viruses tend to be seasonal, so that is good news at the moment. they tend to expire over the

summer, and we are anticipating a bounceback. depths of the problem is and when the bounceback occurs, if i knew that, i would probably not be sitting here. francine: tom jenkins, chief executive officer of the european tourism association. joe biden clinches a big win in south and this is bloomberg. ♪

economics, finance, politics. this is "bloomberg surveillance." let's get the hate latest -- the latest from hong kong. the financial secretary paul chang says despite the turmoil, he sees the market holding up. we spoke to him earlier. chance of high another contraction, but we remain hopeful because we still have several months to catch up. it really depends on the current epidemic situation and also after this is over, how much

into theople put economy. kongu are encouraging hong residents to spend, spend, spend. the cash handout of $10,000 was one of the main features of your budget. back in january you seemed to play down the plan of a cash hand down. what changed your mind? paul: welcome exceptional measures and exceptional circumstances. businesses are suffering, people are suffering. i think spending some of the reserve to help businesses, to help people will be the expectation of the people. >> with a cash handling of this size, will that get people to spend? what is to stop them from putting it in a bank or spending it overseas? >> people would spend the money depending on their circumstances. we would encourage them to come out and spend and encourage the

business sector to come up with different incentive programs to attract people to come up. >> what do you say to the economists out there who say this cash handout is not targeted enough? that this is just a drop in the ocean for many, and you could have used the same amount of money to help the people in need? what do you say to those people with that view? paul: people of hong kong like to have choice. in it is a difficult situation. in the image was circumstances, it varies. by giving a cash handout and peeling to the people to come out and spend or have other business, encouraging the business sector to come up with the incentive programs, to complement the initiative from ,he government, i think people of course depending on their personal circumstances, will support us, and hong kong.

>> the last time you gave out a cash handout, about $4000, it was a bit of a chaotic process. can you ensure that this will be a smooth process? distribute it by july or by summary echo >> these are very different. this one is very targeted. there are administrative procedures to safeguard against abuse, but now at this time it , and holding a cut would be a lot simpler. interfacing with the banking sector has already been kick started. it is very hopeful that we can start the registration in early july and start processing payments in the summer. >> when do you think that could actually start feeding into the economy? how quickly could it boost consumption? >> i think in summer.

with that expectation, perhaps from now on, people would be more willing if circumstances allow to come out to spend. francine: that was the hong kong financial secretary, paul chan. it is super tuesday tomorrow. what is at stake in the race? 14 states will take part with a total of 1000 63 delegates up for grabs. is --eatable majority will there be as unbeatable a majority is 1990? ♪

francine: the selloff stops for now. global markets rise as central bankers stand ready to cut rates. goldman sees cutting rates 50

basis points this month. coronavirus spreads stateside. new cases are reported across the u.s., including the first confirmed case in new york. the global death toll passes 3000. and the race to the white house heats up. joe biden wins in the south carolina primary, with pete buttigieg dropping out. the pivotal super tuesday contests are tomorrow. good morning, good afternoon, good evening, everyone. depending on where you are in the world. this is "bloomberg surveillance ." we are seeing a number of downgrades to the world economy. this is from the oecd. let me bring you that as soon as i have it. i am bringing it up on my bloomberg terminal. the oecd is warning that the global iraq to me strengthen -- the global economy strengthened this quarter, cutting forecasts to 2.4% instead of 2.9% on coronavirus. tom: that is the new slow i have in my opening for 6:00 a.m., lufthansa delaying tigh flightso china through april 24.

that is amid fantastic market news we are seeing. we will have plenty more on that, but first let's get to first word news in new york city with ritika gupta. ritika: americans are grappling with the possibility of a widening coronavirus epidemic per new york city reported its first case of the disease, a woman who contracted it while traveling in iran. president trump will meet with pharmaceutical executives today. china says its total number of infections has risen above 80,000. south korea has more than 4200 cases. the federal reserve is prepared to cut interest rates this month. still, policymakers recognize monetary policy cannot completely protect the u.s. economy that is threatened by the coronavirus. goldman sachs says the fed may act for its meeting begins march 17. the bank of england also says it would take steps to protect

stability. democratic presidential candidate pete buttigieg has dropped out. he made that decision only a month after he won the delegate race in the iowa caucuses. buttigieg could not attract a diverse coalition needed to win the nomination. he was the first openly gay presidential candidate to win delegates. turkey's president erdogan has triggered a global crisis in the european union. greece has quit accepting allegations for asylum and cleared a state of emergency. of migrants flocking to the greek border, with greek security forces trying to hold them back. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, ritika gupta. is bloomberg. tom: the turkish lira a little

stronger today after a difficult week last week. up 20, do get about -- dow futures up 400 earlier. steepening, but it is not what you want. that is because of the two-year yield. -- theweaker, oil with a vix still elevated, not out of the 40-ish level. still elevated. these are extraordinary numbers. that is the two-year yield. the united kingdom, two-year yield, 0.25 heads toward the worry of a negative yield. that should be read on the screen. didly that the control room this. u.s., u.k. we just saw. germany with a big negative yield, and switzerland as well with a substantial negative yield. that is a 20-year yield on

switzerland, nothing two-year yield. francine? francine: a lot is going on because of central banks. first crude oil rebounding, but in general there is a lot of optimism that central banks will the impact ofrom the global virus -- of the coronavirus. trying to stabilize financial markets that were rattled last week as pressure was building on policymakers to try and safeguard their economy. we are seeing that reverberate to all asset classes. if you think about what the european central bank has said, a lot of money market traders now expect them to ease rates by 10 basis points in april. you can see european stocks gaining 0.3 percent. our top story is the mobile death toll from the coronavirus outbreak, that's the global death toll from the coronavirus outbreak. cases are surging in south korea. argus joins us.

jennifer, thank you for joining us. we spoke to you a couple of weeks ago. i'm not sure how you would describe it. is it much worse and people are overreacting, or do people need to take as many precautions as the government is telling them. >> i did not expect to be talking about this again. i think it is reaching a bit of a tipping point. i am quite concerned by how things are going. francine: this is because isolation doesn't work, or it is the spread? there are these super spreaders, two or three people not realizing they have symptoms either because they are a symptomatically because they have a cold. jennifer can we have people spreading the disease that are documented to spread the disease without ever being in contact with anyone from these hot spots. it could have been spreading for weeks in seattle and we are hearing more and more of these kinds of things. francine: what do you look at for data? the fatality -- the mortality rate is difficult to judge

because it could be quite low because so many people have it without realizing. jennifer co. people are fighting over the mortality rates, anywhere from 1% to .1%. the most recent estimates i have seen have been closer to 1%. this is much more than the seasonal flu. moreif it is .1% it is than seasonal flu. we still have a lot of deaths to worry about. tom: thank you so much for being with us again. yourt to cross-section expertise with bacteriology and virology. do masks work? jennifer: masks work to a certain point. they block physical droplets, did big chunks of cough from hitting her face, but they do not screen out the smaller particles and the bacteria that can go into your eyes. people do not use masks properly, they often adjust them or touch their face. to a point they can do a little bit, but you're better off

washing your hands and not touching your face. tom: right now in berlin, there is a report in manhattan and greater new york city, one, maybe two reports as well. how should our viewers and listeners adjust to that? to do you adjust to the day one report in the given multimillion population city? jennifer: you cannot stop the virus really. it is like stopping the win. you have to be sensible and take precautions, and life goes on. we have to assume that life goes on and most people are not going to die and we really shouldn't panic. but it is spreading and we do need to be vigilant about that in public places. a lot of people in a close space. you should think about what is going on in the air between you. francine: some of the things where it is difficult for the market, and with anyone because we are all inspected to be

virologists at the bat of an eyelid. what i'm concerned about is the national health service in the u.k. or the u.s. or italy can cope with it. there is the possibility of the u.k. government trying to delay this because it will be much easier to deal with this over the summer. is that true? jennifer: we don't know what is going to happen in the summer. our predictions, but we don't know if it will get better in the summer. we hope so because some respiratory viruses do, that there are no guarantees. francine: is it easier for a health service to deal with it in the summer? jennifer: i would say so, because there are so many things in the wintertime that overstress the health services. francine: i know it is difficult to talk to the markets, but the markets got scared. 80% of theecting population to be infected but a small percentage to actually pass away, or how should we look at this? jennifer: i think a lot of people will become infected. i don't think a huge number of people will die, but we really

don't know what is going to happen. at the moment i am not panicking, i just think it is important to be vigilant. but this thing does keep rolling. know you study this at the university of washington a few years ago. let me cut to that shakespeare and how long do these things last? ," to goding "the plague back to microbiology. how long does this last? jennifer: we don't know. it could be that it will come to some sort of accommodation and it will become our new seasonal flu. in may just trickle out like mers did. we don't know. that is the big thing, that we don't know and we have to watch and wait. thank you for joining us today. just superb come all the different medical practitioners we have been speaking to about this horrific virus. in berlin, erik nielsen of unicredit. let me bring up the litmus paper for the central bank system, and that is the two-year yield.

if you're waking up, particularly in the u.s., all you need to know is that two-year yields are testing central bankers, top to bottom, u.s., u.k., germany. markets wantthe the fed to act. what is the history of central bankers when they are told what to do? tom, they usually do something, and particularly with a store near circumstances like now, i think -- i would not be surprised if the fed moved ahead of the meeting, but certainly the fed rate cut is on its way almost without a doubt. tom: the first rate cut is on its way. your former -- goldman sachs, made it quite clear today about a coordinated fashion and how do central bankers coordinate? nobody wears burberry plaid, or how do they coordinate an intervention to cut rates? erik: i don't think you really

can. there is a cord coming up on the g7 level. -- communication is taking place between central banks and between the fiscal and central-bank authorities. but how do you correlate a rate cut -- if god for bid the ecb comes out and does 10 basis points or something, for me, it is the ecb, liquidity, and the trims on liquidity that would matter, not a rate cut. a rate cut at the ecb could be bad, in my opinion. francine: i don't really understand -- central-bank, what central-bank help could do to ease markets. market fear,ase marc going out toear on spend. eric: we have to understand the difference between a supply shock and a demand shock. even a demand shock, there are a

lot of demands going on right now, but if the demand shock is that people are scared of traveling -- it is not that it is forbidden, there is a demand shock with the effects like a supply shock. you can give a tax break or a low interest rate, but they will still not move. they will still be scared. that is the economics of fear. what the central banks can do is that they can provide liquidity, they can stem some of the negative impact of the type of financial conditions, that the market is imposing on the world. and then also you can, along with the fiscal authorities, buy liquidity or guarantees so that companies which are temporarily impacted in a negative way don't go out of business. francine: who has the least firepower? is it the ecb, and will germany relax fiscal rules? in thisntral banks

environment have unlimited firepower. you can extend the balance sheets, you could come if you wanted to, do an onc. it could be done overnight if you wanted to. we are not there at all yet, but the fiscal authorities should come in and provide -- you could , as has beeneaks in italy now for some of the regions, but you could also provide guarantees for liquidity for companies so that employment doesn't get hurt permanently because businesses which are otherwise sound will be strapped for a month or two because of this virus. francine: erik nielsen of unicredit. thank you so much. oecd chiefthe economist on the interim economic outlook. they are saying right now, moments ago, actually, that the global economy is facing the greatest threat since the crisis as the coronavirus is spreading to that is according to the oecd, and we will be speaking

with a chief economist. this is bloomberg. ♪

tom: good morning, everyone. ."loomberg surveillance francine lacqua and london, i'm tom keene in new york. the markets moving, we cover that all the way through "surveillance" until the 10:00 a.m. wall street. ouran do no better than guest with us, you know him from global wall street. now it is seek u.s., there chief macro strapless, and erik nielsen with unicredit. with these -- chief macro strategist.

and erik nielsen with unicredit. >> they need to show they are doing something, and i think we are still in the defensive stage of policymaking, and the reason that i contextualize this is that the market has moved dramatically in terms of what is pricing with expected rate actions. i think the most important element for the markets going forward would be the fiscal component of what comes next, and in particular, i think it comes next from china because that is where the epicenter still is. that is where the most important note of the supply chain is with the global economy. tom: i want to look at the velocity, the convexity of the two-year yield. year, the the two 10-year as well. it is a massive move. let's bring that up. you can see the normal disinflationary trend. we have had since the end of 2018. and then we go down here with the virus. erik nielsen, what is the

velocity of the market -- what does the velocity of the markets signal? eric: in my opinion, a complacency up until a week ago. we wrote about it, speaking about it on your program, we saw it happening in china for the last 3, 4 weeks, and people made that of suit -- suggesting it is like sars, quickly over not really appreciating that the world is very different from 2003. i think markets were too complacent until a year, a week ago, then we got the italy event, and suddenly we got this in norma's -- this enormous move. until we have seen a leveling off of new cases in europe, probably sometime away, i still think there is volatility and downside risk. francine: do you think markets are pricing in a recession? eric: yeah, i mean that is

basically starting to look that way. a natural level in europe or america, you could have a typical recession, that the q1 will be lost, and it does not take much, for example, in europe until the two becomes negative. then you have a technical recession with that definition. but for me the real story is when we see the leveling off and we get back to a more normal analysis again, if you will, a more logical one, now it is fear and uncertainty. and not officially about supply disruption. what will the story of this week be? there are a couple of elements here. the starting point for me is a negative productivity shock, which can justify both obviously supply responses and demand

responses. the close to example that i can think of is the september 11 attacks -- the closest example i can think of is the september 11 attacks. with a market reaction, we did get rate cuts. the downside over the near term was not as dramatic as thought. in context was different terms of the cycle, but ultimately it is a situation where at some point the market is pricing too much. you have to think about, even looking at the rates moving, we have a number of significant leveraged positions being long on fixed income. especially on the short end of the curve. let's say in a few hours we get a strong -- number. on reaction we may get a lot of additional location in the market. data, the manner of supply shock, we got terrible numbers

out of china. bottom for china? we don't know. it is a highly uncertain situation. but guess what, these are the lowest numbers we have seen forever. what happens after the bottom? i am just saying, there have been dramatic moves, too much. we heard before there was complacency. in terms of the markets before. but it swings both ways. tom: i want to go to the chart right now and we will come back without two good guests this morning. this chart is the two-year yield. bring it up very quickly as we go to break. the two-year yield coming down. tests support that we have seen, -- four digits. adam jonas and the automobile business, you will see that in the 8:00 hour, but before that, more than timely, it is about tourism and it is about the

trade that is tourism. the united kingdom international trade minister will join us here in the 6:00 new york hour. stay with us. this is bloomberg. ♪

>> this is "bloomberg surveillance let's get to the bloomberg business flash. the free fall oil has been halted, at least for now. opec and its allies are expected to agree to data output cuts this week. vladimir putint

is ready to cooperate with the market. futures rose as much as 3.7% after tumbling 16% last week. shares of european airlines are falling today eerie lufthansa is extending its suspension to china because of the coronavirus, also cutting back on some flights within germany. that is the bloomberg business flash. tom, francine? francine: global economic growth will sink to levels not seen in over a decade, according to the oecd. we also found out the number of cases in iran have surged to 1501. that is 500 more cases. this is bloomberg. ♪

♪ lacquau heard francine with the headlines out of iran, and that has moved the markets. francine, help me with a review of the headlines out of iran. here is the two-year yield normal, down we go on a curve,

and we are broken out to a new weakness at 7.3%. francine, what is iran saying? francine: we heard from them 10 minutes ago, about the number of cases of coronavirus patients. they have jumped to 1501. it is spreading, so we are keeping in i on the number of deaths. it is 3000 worldwide, and there are two epicenters. in italy and in iran. the markets be paying attention. tom: here is another snapshot of where we are right now. this is the global safe haven of the yen. use is not what we normally , but from the 112 level, down

newco, stronger yen -- down you go, stronger yen with a new weakness of 108 this morning. the yen. are the safe havens working? are they showing the correlated information now, or is it like the safe haven? >> it is not that unusual. there are a couple of elements to clarify. the dollar-yen has been perplexing people because it did not go down. the yen did not rally. at least, not in a significant mind, it is an my regional currency and that is where things started. it might be worth looking at what are the safe havens that move first?

in this case, it was not what we mostly pay attention to. mainly fixed income and gold. you remember the beginning of the year, it was the dollar itself. it is interesting to look at other variables at when they attempt to table eyes -- and when they attempt to stabilize. attempt to stabilize with the first safe havens. that is worth paying attention to. tom: let's go to eric nielsen. this is an important safe haven relationship. francine has a lot of questions, gentlemen, over the continent of markets as well. i am doing this quickly, folks. but down strong euro, we go. form ofth this little

resistance, how is this interpreted by madame lagarde and people like eric nelson? how does the ecb interpret a strong swiss franc? >> i am not sure they are paying a lot of attention to that market. they are more worried about the credit flows in europe because they are looking ok, but when they look at the world more broadly, i suspect they are slightly confused, or i am slightly confused, about this move to safe haven, and with safe havens, and when? banker, ia central would consider how markets are word and confused at the moment. francine: what does that mean? if you are the ecb, do you have to go to unconventional policy, or do you wait for a coordinated

action? what do you do? they have been quiet so far. eric: i am worried about the ecb being this quiet. i wonder whether this could be that we don't have a super-seasoned central banker at the ecb right now, but central onks need to come out friday, and be ready. the ecb has to come out and to make clear that this is on the agenda, and they are watching it very the carefully -- watching and very, very carefully. consider easyto terms to help the credit flows. some type of policy pension. the last thing we need in europe is another interest rate cut that everybody knows would not be fruitful for the real economy, but would hurt the

mechanism. francine: what do you think the ecb is thinking right now? >> they are still thinking, and handle situations, you tend -- and might be dominant to shoot first and ask questions later, so i think they are examining their options, and potentially waiting from some leadership from the fed, at least in this case, but everything is available. among the developed markets, the ecb has focused on the greatest leeway with expanding its toolkit without being constrained, if need be. that is what they need to come out and say, as opposed to saying what they are going to do. tom: i look at the market function. we have a board of the. the equity markets coordinated rather, toted in these other asset classes? are you concerned about equity

dynamics, or are they separate discussion? >> well, no, by definition, they annot be separate because of great interrelatedness of global markets in terms of the economies in the markets themselves, the way that asset managers operate mood i think with what -- operate, but i think what has happened, we were starting the year and a fairly mode, thinking the only way was up with big moves at the beginning of the year, but we needed to have some adjustment. andvirus was a good excuse, it underlies two things go. one is where the growth prospects are ahead, and where is the discount rate? the discount rate has made a tremendous move already, and we will have to wait and see in terms of the growth outcome in the next few quarters.

this first quarter will not be good. equity markets did what they were supposed to do. but moved a bit too fast, because of a temporary shop. 500, stills the s&p very early in the morning at 5:37 wall street time. we have a little bit of a bounce coming off those terrible friday lows that we saw. eric, a question on europe. to much is tourism a factor the greater european economy? eric: it is big, tom, and that is the number one reason i started worrying about europe. we have the immediate impact of people who are traveling, but what we are seeing now, we are seeing people delaying the booking of their spring vacations, or maybe canceling

them. even if this thing hopefully has stabilized within the next two to five weeks, you probably would have a negative effect on the european economy that runs well into summer because of the lack of peoples' behavior. from the we found out italian government that they are seeking a wider deficit. but a number of economists are saying it is not enough. should they see things much larger? >> i think we will see much larger. it will be an initially passive deficit us economy slows down, and i think this event has raised the possibility that we will see, at some point, some coordinated action. it started with germany, and that is a key element here. they themselves have a lot of room, and that will trickle down

to the rest of the economy. tom: this is a wonderful conversation, folks, and we will be doing this all through "surveillance" today. you see futures on the screen that were up earlier. china, the economy could be headed for a worse than expected contraction in the first quarter. the manufacturing sector reported activity is a record low last month because of the coronavirus. economists and investors are cutting their growth estimate. the field of democratic presidential candidates just got smaller. pete buttigieg has dropped. he won the delegate race in the iowa caucuses, but he cannot attract the diver support needed food the nomination. keep the is hoping to momentum going in tomorrow's super tuesday primaries. a saturday, he was the runaway winner in the south carolina race. the u.s. is racing to see if the

taliban would live up to the peace deal signed over the weekend. it is saying winding down the war in afghanistan. president trump says he plans to meet with taliban leaders, but secretary of state mike pompeo says he doesn't know when or where that happens. plus, he wants to see if the treaty holds. 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. this is bloomberg. francine: thank you so much. coming up, what a difference a weekend makes. joe biden clinches a big win in south carolina, but pete buttigieg breaks -- pete buttigieg drops out. couldl discuss how this impact markets. this is bloomberg. ♪ s bloomberg. ♪

francine: this is bloomberg surveillance. getting breaking news in terms of negotiations. the u.k. is asking the e.u. -- actually this is relating to the u.n. we heard various members from brussels saying talks could come in the next two weeks any the discussing the airbus disputes that are coming from the u.s. side of the european side. financialreduce friction with the u.s.. as i go through the details of what we are hearing to find out eric areiannis and still with us. i am confused about some of these headlines, but overall, if

you look at u.s. and u.k., or u.k., e.u., what will be more tricky? yiannis: anytime we have trade negotiations, they are tricky, even with the best of intentions, we are finding out the positions, the initial positions being stated some the e.u. and the u.k. are fairly polarized, so the representatives might run out of topics to talk very soon. i think that is a difficult situation. with respect to the u.s., it is a function of time. there are things to be gained, and it is possible that at some point, the e.u. and the u.k. will end up with a deal, but information we are getting now says it will be front-loaded and difficult. francine: how difficult, eric, are you expecting this to be, given brussels and varies e.u. countries are dealing with the

coronavirus? maybe brexit isn't a priority? eric: it is difficult, but as yiannis said, it is not starting on a good foot. london morei think than brussels, but it sounds like they think of this as is zero-shot game. it is starting on a bad end, and then comes a distraction, an important discretion of the virus. good at comingy up with a deal at the last moment, so i am not giving up yet. the fancyw you are in part of london buying fancy chicken, but it comes down the food standards. going back 23 years, the united -- we are not going to

take your chlorinated chicken. i will not go into the science, pro or con right now. how is the united kingdom supposed to compromise on food standards? is exactly right, but i would pave it the other way around and say we have a .uropean system one country leaves and says we may not have the same standards as you anymore. you cannot expect 27 countries to say, we will take yours and we have ours, but if you want to sell us something else, we will have to go through the processes like other countries. but peoplecult, underestimate the complexity and the cost of this going out of the single market. there are 15,000 people they have to hire. the cost is in norma's, but the slowdown in the business -- the

cost is a norma's, but the slowdown in the business -- tom: i have to mention yields are deteriorating. to 7.253 on lows the two-year yield, and we have a 10 year yield. i love this green party u.s., u.k., germany, switzerland -- those are all the two-year yields. just extraordinary. tomorrow, super tuesday. we will have some good coverage. this is bloomberg. good morning. ♪

♪ bei will no longer seek to the 20/20 democratic nominee for president bodie i will do everything in my power to ensure that we have a new, democratic president come january. [cheers and applause] tom: the mayor of south bend, indiana, who did better than good, particularly in the early

of the four early primaries faded in- primaries, south carolina. speaking with yiannis and erik at a view from a distance. yiannis, let me go to you on the desire of some for moderation within the democratic party to take on mr. trump, or those who want a more liberal, or radical approach, which will be better from where you sit? there areell, i think strong opinions here, but i was reminded by our geopolitics' strategist, in the previous election on the democratic side with the clinton candidacy, was assuming all the way into the summer that the u.s. would never elect a populist, and they wanted to face him, and thought it would be a easy way through it apart on the others, what we are encountering is likely a

team on the incumbent side that is thinking that facing a socialistith tendencies might be the easiest way going forward. surprised wheny it comes to politics. we should keep an open mind. study of, what is your politics in the voting booth? how do you link any economic slowdown with what we will see from the senator of vermont, or from any other candidate for that matter? erik: it will be tough. if the economy does well in america, it is relatively easy for president to be reelected. we have long thought that the u.s. will slow this year before the virus came about, and therefore, that would have an impact on the outcome of this lead, depending on who the democrats elect as their

candidate. the virus may play havoc with this picture. few people are better at spinning things than trump and his favorite network, fox, so for the critical swing voters, i don't know how they think about ons, but uncertainty again, this fiscal, it is more uncertain now, i think. francine: yiannis, how would markets reactive senator sanders is a democratic nominee? yionis: they may be reacting already, and we don't know what, but in general, they will have to concentrate on specifics, where we have direct implications out of sanders' win, and eventually, until they see him in action, if he is elected, they will have to build equity discounts at some level bodie it is still too early to see anything meaningful. francine: do you wait until

june? you are suggesting the selloff in the coronavirus could've also, in part, have been exacerbated by other factors? yiaonis: we found out that one of the more moderate candidates is out, and that raises the probability on the margin. both bloomberg and obviously biden continue ahead. they keep the 15% mark alive, and be going to a contested conference, so that means you have to wait until july. tom: let me show the delegate count. for the international audience, this is particularly instructive with the dominance of the california pull for from previous election cycles. california has always stood alone as a unique primary. dominate what we will see coming in tomorrow night. we will have our special coverage, and the nation will be transfixed by this as well.

california gets out front of anything. i don't have the ratios of california to the size of other nations as well. from where you said, what is the dominance of california internationally? erik: it is big. it is the size of a big, european country, but in addition, we talk about equities. california is the predominant home to the whole tech industry that has been the driving force in many ways any equity markets for a long time. it is the thing those of us in europe have been envious about. sitting here telling you the importance of california in america while i am in europe, but many it is a state that many of us in europe feel close in many ways. .om: thank you so much

lots to talk about. markets front and center part-time looking at the yield. -- markets front and center. i'm looking at the yield. we saw yields come down. but the headline is that two-year yield. the massive curve is deepening. we go through the day, linking markets in the central-bank action,, including the fed --, including the fed. all of his focused on kevin cirilli's good work. super tuesday 7:00 p.m. tomorrow night. stay with us. an eventful morning. this is bloomberg. ♪ this is bloomberg. ♪ when you move homes, you move more than just yourself.

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go to xfinity.com/moving to get started. ♪ tom: this morning, there is a global repricing for economic slowdown, and indeed, inflationon -- this is easing in a core native

fashion. will the fed provide relief this week, or will the fed provide released today? first manhattan and then berlin. more cities reporting first cases of the coronavirus parent -- the coronavirus. lou founds a will not fly to china. in israel, it is safe to go boeing. is upon us.y the mayor from south bend is out . saw that sunday night. good morning, everyone. this is "bloomberg surveillance." news, some non-virus news. we see that in the united kingdom's first discussion of trade with the united states. i was glancing over the document. that is a stringent statement by boris johnson, isn't it? francine: it is. u.k. waspeople in the saying, why have his cobra meeting, when is when the

cabinets discusses crises and why was not -- why wasn't that done last weaken the announcement he is having a baby this summer. days of our lives in london. we will have more on that much more later. we will also discuss the virus update. expert inhe leading moments, but right now, he was your first word news. >> americans are grappling with the possibility of a widening coronavirus epidemic. new york city reported its first case of the disease, woman who contracted it while traveling in iran. president trump on meet with pharmaceutical executives today. china says its number of infections has risen above 80,000. we have more than 4200 cases. the federal reserve is prepared to cut interest rates this month

. policymakers recognize monetary policy cannot completely protect the u.s. economy threatened by the coronavirus. goldman sachs says the fed may act for its meeting. would take steps to protect civility. democratic presidential candidate pete buttigieg has dropped out. he made that decision earlier after he won the delegate race and iowa caucuses. buttigieg could not attract a diverse coalition -- could not attract the diverse coalition needed. he was the first openly gay candidate to gain momentum parent -- momentum. 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. thank you. here is the data right now before we get to our esteemed academic on the virus. futures up six. not a good number. onlyes up 400 and now up

125, with euro strength in oil finally catching a bid from 49 down to the 44 handle. to the vix. it was 40 something and came down nicely to 37, and it has pulled back with some angst. we will have a special yield board on the two-year. look at that. i am going to get a tear in my i i the control room kneeling at this morning -- i'm going to get a tear in my eye this morning. i am overcome with emotion. your turn. francine: the was 10 year yield, i'm looking at it on a minute basis, to see if it goes below 1%. it is clear that crude oil is advancing, and if you look at the european session, we have pair earlier strong gains, and the session continues in italy.

the benchmark is still down. you can see european stocks at 0.2% lower as a number of cases are still growing, but but-dollar holding at -- euro-dollar is holding. toll from the coronavirus outbreak surged past 3000. new york city, brussels, and berlin reported their first cases. joining us is paul callum, professor of virus economics calling in from cambridge. professor, thank you for joining us. in a couple of weeks, we ignored the risk to everyone to then going over the top. make some sense of the situation we are seeing. how dangerous is it, and what do we know about the mortality numbers? >> at the moment, we are seeing what was largely predicted, wishes from the epicenter in china. the infection starts to spread

around the world with some areas being more affected than others, but gradually, there is a rising cases around the world. when you get to the number of people dying, the so-called case fatality rate, this number is always difficult to calculate because we don't always have a precise estimate, or number of the number of cases in the world. the ones that are diagnosed, we could see. the ones that are invisible to the health care system are the ones that make this number difficult to estimate. this number changes over time and in different places in the world. at the moment, it is somewhere in the region of 1%. francine: professor, we are hearing from the european commission president saying the european center for disease prevention control have racer was from moderate to high. does quarantining or isolation work? >> it certainly does, and you can see the effect of it and

places in the world, certainly in the u.k., we are staying on top of our introductions at the moment by quarantining and contact tracing. as you get more cases, then you need to move towards this sort of next stages of policy, which is the delaying of spread. the idea of that is to reduce the number of cases you have any one time, so the health care systems can cope with the number of cases they are seeing. seamless transition from containment to delay is an important part of the process here. tom: dr. callum, we are thrilled to have you on particularly on the gino. you're one of the world leaders on this. expert in the virus versus dna virus, in particularly in the fear of mutation of any coronavirus. what specifically is your fear

of the virus right now? my fear is not that the virus will mutate or change. viruses do that as part of their everyday replication, and the great pressure on viruses is to transmit. and this virus seems to transmit a just fine between humans. that is why we are seeing the outbreaks we have. when you look at the genetics of the virus as it changes, thereularly in seattle, are great experts in tracking the change, we look to see if their alterations in parts of the virus that contain the targets for vaccines. we would not expect to see those in -- we were not to expect to see those anytime soon, but that is why you keep monitoring. it to developis

an antibody treatment? can you go faster? of exercisetimeline you finding a solution with what i will call a miracle solution? how long does it take? ask finding an antibody -- >> finding an antibody or vaccine or two different things. it involves doing experiments with your candidates. that takes a number of weeks to a month or so to develop. the initial stage is proof they do something. they have an efficacy in making an antibody response in an animal model, and that work is going on both in the u.s.,, including the u.k. at the moment. once you get to that stage, you will really -- you are really at the foothills of clinical development. have to produce enough doses,

assuming it works, to go into humans first to prove it is safe, and another set of new doses to do efficacy trials. slowstage becomes quite because you have to have good manufacturing process, and you have to scale up. when you add these things up in totality, it starts up to more than a year to get to a point where you have that information and the initial vaccines. tom: how do you as an expert responded people who say, it v-shape bottom, looking for an economic rebound in short order? how do you respond to that, professor callum? beyond mynomics are ability to calm a, but in terms of the shape of the infection curve and the case curve with a v-shape bottom, that really depends on the public health measures, so a v-shape bottom

gives you a lot of cases, and a rebound because most people have become infected, and you rebound the not very many cases. a u-shape bottom indicates you're taking a more long-term measured effective try to prevent spread to give health care settings a better way of coping. so there are tensions on both sides. at the moment, we are trying to make sure we flatten this epidemic curve, which makes it more of a u-shape bottom. tom: professor, we look forward to speaking you at another time. this has been excellent. us on the dna of the world economy is carl weinberg. we speak to carl weinberg on high-frequency economics. we are focusing on the two-year yield recently. right now, the 10 year yield is inching down to new lows for the day. what does this note to you and you are in expert in international crisis work.

what is this snow to chairman powell or madame lagarde to see these compress as they continue to do? >> good morning, tom. you look at germany, where yields are almost as negative as they were last summer, and probably heading further south card people are afraid that moving money out of stocks and they need a place to park their money. tom: here is a negative yield. let's look at this as we give you further data. a little red on the screen. francine knows the number. a high level of debt. ok, central banks. september 11. there are other crises where it is easy to add. why is it a struggle to add now? >> it is not a struggle to add. what is important is to do the

right thing, and i believe the fed's job is to protect this ability of the financial system, and to save the bank, meaning pumping liquidity in. i flashback to adam greenspan. very to the point. we know what is going on and we will do what has to be done. that statement worked. it was backed up, and i expect we will see that again, not because they are important to the economy, and the macroeconomy is not a question, but the overall statistics are quite a good, even though financial conditions have tightened. the important thing is to protect the bank sinful sentiment. it is thecarl, consumer you have to try to protect because he or she could be fearful. unless you give them cash, how does particular financial system

actually help them? >> i have been listening to bloomberg radio all week last week, and all the analysts say the problem is not demand. the concern is all about supply. the supply chain interruptions and so forth. consumers are not traveling as much, specifically with mass transportation and air lines we will see glitches there. but you know, i could put on my hat and say, we will learn how to work from home, to do more from home than we thought we could do before because of this. you put aside the travel sector and look at the goods for products and services, and every analyst i heard have said the demand is there. i view what is happening outside of china as being a supply shock. but within china is a different story. you keep 100 million people at home for three weeks and don't pay them, then you have a demand issue, but that is china-specific, but the rest of the world is looking at a

concern for a loss of goods coming in, and fear of the virus switch will have a temporary impact, but the income and demand is there any the conditions are there to keep demand going. francine: call weinberg of high-frequency economics stays with a start coming up, what a difference a weekend makes. joe biden french's a big win -- joe biden clenches a big win and pete buttigieg drops out of the race. that is coming up. this is bloomberg. ♪ ♪

♪ >> i will no longer seek to be nominee for president,

but i will do everything in my power to see that we have a new democratic candidate come -- tom: super tuesday tomorrow. super monday is going on with market deterioration. futures down from plus 40 10 -10. about 53nes is excited states going tomorrow night. terry, i was really taking -- taken by an authoritative piece on the latino vote. tell us about the effect of the smaller moment that was nevada. give us the latino angle for tomorrow night. terry: the latino angle for tomorrow night is they will be looking for the most electable candidate more than anything else. that is one factor that translates into pretty split

decision on super tuesday between bernie sanders and joe biden. what you have gotten -- what you wasis what i used to say abiding was only mostly dead, so watch out for south carolina, and that happened, and now we the get to a point where states of super tuesday will be split. sanders will, marginally ahead on delegations, but what you have after that is a total of 10 primaries after that that seem to be in trump's states and are biting-friendly. tom: you are a beltway guy. the democratic party coalescing around the vice president? it terry haynes' established meet her this morning? terry: the democratic establishment is looking to hold on to its establishment status as long as possible, and. you sanders has someone who will

put them out of business. if they have coalesced, they will continue to coalesce around biden. i don't think they have a huge ability to do that, but you can see lots of indications. so, they are looking for that is much as possible. now you have a point where none of the above is more likely to get a majority of delegates than either sanders or biden. they're looking to be powerbrokers in this whole equation. the momentum that bernie sanders has, is he really stoppable? is actually stoppable, francine. what i was telling foes before is don't believe the sanders' momentum. south carolina puts paying to that. biden as look for well. what you have does what you got

is -- what you got is you will have sanders and not sanders slugging it out to a draw. stoppable by definition is not having a majority of the delegates, and the list delegates that sanders ends up with, even though he is in the lead, the more stoppable he is, but at the convention. from a market perspective, a month or more of uncertainty about whether you get a sanders or a more centrist,-non-sanders candidate. tom: how will -- align francine: how does the coronavirus -- francine: how does the coronavirus play out? terry: it plays out in november. i am aware mayor bloomberg's three minute bid last night, where he was placed in the coronavirus centrally into this. by and large, when democrats are voting on is fundamentally

social views firstly, and secondly, they are looking for a more inclusive, broader base, spread out economic benefits. all the candidates are offering that in a variety of different ways. inhink the coronavirus pails comparison. everyone wants to do more for coronavirus stipulated. tom: thank you so much. really looking forward to picking up the pieces tomorrow night. out, mr.point bloomberg is the founder and majority owner of bloomberg lp. we have much more coming up. we have deteriorating dramatically. green on the screen, up earlier. yields are coming in. the two-year yield really testing new lows. stay with us. this is bloomberg. good morning. morning.

flexibility to move clients in and out.

♪ want to be quick here. let's look at the two-year yield chart. thingsvelocity, moving to lower yields. finally, francine, the 10 year yield joins a race to the bottom. 1.06, wow. francine, yields coming in with a vengeance. francine: yields coming and when you look at european stocks,

turned lower this monday. futures also arising some of the gains. thist struggling to end route up this is despite central banks. on "european close," chief economist on their interim economic outlook. will hear interesting thoughts on the impact that the virus will have. the attempt at a bounce earlier field a rear statement on friday opening the idea to a rate cut. this is bloomberg. ♪

♪ companies now but if-- align francine: the president of the european brussels, speaking in braving the prize, not only on the coronavirus, but the impact

of the world economy. she said the center for disease control in europe raised their parsers are moderate to high, and just behind her is the commissioner for economic affairs, saying the downside economic rest from the virus has started to materialize. we will continue to monitor these headlines, managing the message that is far more serious in europe are for those of you waking up in america, europe has had a very difficult 24 hours. flights being canceled to china. "bloombergented surveillance," was not only about conversation, but conversations across abilities as well. but we have to get in on a monday morning the first word news. >> a number of developments today and coronavirus outbreak. berlin and new york reported their first infections.

the global death toll has arisen above 3000. me well, president trump meets today with pharmaceutical executives. the ministries and is testing off-the-shelf drugs despite the coronavirus. in china, the economy could be headed for a worse than expected contraction in the first quarter. the manufacturing sector reported activity at a record low last month because of the coronavirus. economists and investors are cutting their growth estimate. the field of democratic presidential candidates just got smaller. pete buttigieg has dropped. p judy judge won -- pete caucus,g won the iowa but could not attract the delegates to continue. winneren was the runway in south carolina. the u.s. is waiting to see if the taliban will live up to their p still signed over the

weekend. the agreement is aimed at winding down the war in afghanistan. president trump says he plans to meet with taliban leaders, but secretary of state mike pompeo says he doesn't know when, or where that happens, plus, he wants to see if the treaty holds. 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. this is bloomberg. tom: thank you. strength, but a little weaker. what we want to do in this market turmoil is have experienced voices. here -- carl weinberg is another expert voice. we are thrilled on short notice to have james foley joining us. what are we seeing in dollar-yen right now?

what is it indicate to see yen test a stronger yield at 106? >> is the news of coronavirus get worse, we will see the dollar-yen go lower. ago, begin weeks with selling off. that was when the news appeared to be close to home in asia, before we had news of the operating country such as italy. the yen has been more established or re-established as a safe haven and the dollar has come under pressure. because youresting can make the speculation that effectively cutting interest see thist you have to cutting into other central blanks -- central banks. i don't think dollar weakness -- tom: let us turn right now to a gentleman on emerging markets. carl weinberg has a history of

looking at em. i want to go to the coal mine right now. the canaries -- brief dr. e.m.erg on what we see in as it pulls into the market move. >> markets are finally once again pricing in a premium for dollar assets, including emerging markets, but it is been a one-way street for all dollars spread assets, including e.m. but not last week because brazil widening and you have seen a greater spread volume. away,arl, when em slips chairman powell become central banker to the world. how is he central banker to the world right now? >> he is the central banker of the world because of the dollar.

spreads are so dollar-positive compared to any other currency. who cares if they go another 25 basis points? it is about moving to safety on the day after a bad week for the stock market. carl, is this inevitable? >> that is a tough question. i would not stand in the way of the freight train, but i would wonder about the psychology. if you flashed back to 1987, you would see the same thing. the day after the crash, treasuries rallied by a lot, and today they are rallying, just from a lower level. psychologicalhave impacts, but there is nothing sacred about 1%. if you do touch below it, i don't think we will stay there very long. yield means a sub 1%

for financial markets? >> we have seen the dead rise to $15 trillion globally. we have seen 86 fed meetings since june 2009 since expansion began. we have seen nine hides, three cuts, and the fed is never disappointed the market. we could see something big here. draghi has yields lower than this. tom: you put great thought and the lack of a toolbox for the ecb. how bare is the ecb toolbox now as you look at euro in the different foreign-exchange relationships of the continent? in terms of adding liquidity, they could do that. that is another tool they could have. what is interesting from the ecb is a rhetoric that we have had from a couple of ecb members. perhaps it suggests there is an emergency with the markets. i think tomorrow's meeting will

be interesting. that will be seen by many investors as a start of what could be a coordinated phase in march. i think many people with you as a total, but what is also going to be interesting is if we see more fiscal interventions. but we have seen fiscal interventions and south korea and singapore. will we see more? we will see australia come in? monetary policy is a very, very blunt tool, but fiscal policy can be fine-tuned to hit the sectors that are needed. beendr. weinberg, you have involved in national bailouts. his helicopter money an old concept? his helicopter money a new thing, or re-phrased from another time or place? >> it is like an old dream been an old reality.

we have not seen them at helicopter money before. but with the problem we are dealing with, his helicopter money the right answer? francine asked me earlier about demand. i think the demand is there. if you are looking at a supply shock, or people not being able to get to work. if you are looking at a reduction of supply chains, and the supply chain is shifting to the left. what that means is the wrong thing to do so stimulate demand against that. you will get a stagflation. the right thing to do is to encourage investment in things that will shift that supply curve back to the right, improving investment, but increasing demand right now is not the right medicine. i don't think fiscal medicine is the appropriate tool. looking at europe, i don't see anyone jumping up to increase fiscal deficit spending. mr. piedmont was interviewed last weaken said, it is not coming from germany. when you look at japan, how much more can they possibly do?

for the major economies, i don't think fiscal will be the game. foley, thinke there is no fiscal stimulus from germany, what tools can the ecb deploy that will make a road different? well, the ecb could do something. have a role to play, but i would disagree on the fiscal front. i don't think that supply chain has been hit. i think there is a demand issue. look at new zealand. for every tourist dollar lost because of the crisis, one -- i think one in 11 was because of chinese tourists. we look at the fashion industry or a lot of industries, the loss of the chinese consumer is very significant. the other fiscal policies have been used the keep people in jobs. i think there is a multi-play there. carl: jane, how important is

tourism to the overall picture of demand in an economy? there will be business travel lost, tourism lost, but outside of china, is there really that much of a drop in demand? are we seeing evidence of that whatsoever? jane: i would agree that outside of china definitely not get, but you could see that in southeast asia. good probably see it in airlines . we could see it it hong kong. there is a drop in demand as well. francine: when you look at emerging markets, damon, we tend to think of them as one, but what is the most laudable to a selloff? is the virus actually taking hold? >> the pace has the highest correlation to the s&p. just looking at one-year ones, thehree major

mexican peso, south african rand. we are pricing in a five and now part of an peso, is a 23 handle. these are pretty big moves. there was more weakness and a higher probability of us going lower. bringing up the chart. brazilian riau. here is brazilian riau with a long-term depreciation. that is seven-eight years. this is what the jargon guy is talking about. what is a five handle mean for the people of brazil? >> goodness. what is going on in brazil as a fiscal situation. inflation, while it is not coming off, it could reignite. we have seen good inflation numbers out of europe, but i don't think that will expand to brazil. if you look at fort expectations for brazil, they're expected to

go higher from here. >> not knowing anything about brazil, but burdens go up on foreign debt. tom: i will tear up, francine. this is an active monday beauty. francine: thank you so much. coming up next, greg is the u.k. trade minister, and we will ask him about will ask trade deals. this is bloomberg. ♪

♪

francine: this is "bloomberg surveillance." i'm francine lacqua in london, and tom keene in new york. been publishing of the proposals for trade deals. u.k. has said it will seek an ambitious incomprehensible agreement with the u.s. byare delighted to be joined the international trade minister, greg hands, joining us from westminster. thank you for joining us. before we talk about the agreement, i need to ask about the coronavirus, and whether you think that will hinder any kind of trade negotiation because people cannot travel, or people are just distracted? greg: i am not expecting it to have an impact on the trade negotiations themselves, but clearly, you will be aware in the u.k., we are facing -- we're

taking the problem seriously. boris johnson is convening a big government meeting today, setting our game plan for dealing with the virus and how we can communicate what we want the public to do and so on. it is a very, very big issue in the u.k. as well. francine: how do you see the virus developing in the u.k.? and thepart of meetings prime minister is discussing with cobra today. do we have a good handle on it? greg: we do. the whole of government is working on this, and we are expending all government departments to play a role in combating the virus. the situation in the u.k. is not as severe as in many other countries, but we are not being complacent about that. the situation could worsen in the u.k.. most important is making sure the public do everything they can fight the virus particularly

around simple things i washing their hands for 20 seconds, all the way through to making bigger contingency plans, making sure that our national health services are ready for more serious outbreak and so on. tom: greg hands, i found your document fascinating them early with the johnson government. explain to me how you can give way on food standards. where is the compromise that is available for you and the people of great britain on food standards, with the u.s. agricultural industry? greg: well, look, we have been absolutely clear that there is a deal to be done, but there won't any lowering of u.k. food standards. something on the table from our side, and we have been absolutely clear on that in the document and in our discussion with the u.s.

administration, and the u.s. trade representative. tom: because of the moment we are in with his virus crisis, could you expand to me entree the border flow that will be disrupted over the next week in the next quarter, when you look at all of trading great britain with europe, how will the virus disrupt that transfer? how does it disrupted at the airport and across the north sea ? greg: to be fair, i don't think we have seen a lot of destruction on trade flows, but trade,a on this kind of it tends to lag then lead, but we are aware of a significant disruption that the u.k. trade is at this point. either with europe for transatlantic, or with anywhere else. obviously, there has been a succession -- a suspension with flights from china. so far, we have not seen a significant impact on u.k. trade. francine: greg hands, when you

look at the timeline and what the u.k. has with the u.s., are we talking 45 years or longer? -- i don'tuld take know if it would take that long. both sides are committed to getting on with it. the u.s. trade representative is in the u.k. today, and we are looking to start negotiations very soon. until we start negotiations, it is difficult to tell how long the negotiations might take. francine: have you had any feedback from the u.s. and some other things you put in this working paper? greg: we have only just published it this morning u.k. time. so, we have yet to have any feedback, but we have indicated to the u.s., to ambassador lighthizer that today would be the day we will be publishing. tom: greg hands, i look at the response from the united states as well. what is the power that the british government has in these

transatlantic negotiations? what is the thrust of power you have as you begin these negotiations? greg: look, this is a trade negotiation between the world's largest economy and the world's for largest economy. in fact, we would be the world's largest economy with, which the u.s. would have a new free-trade agreement. goti think both sides have leverage, both sides have a lot to offer, and a lot to ask for, and i'm expecting the negotiation to proceed well in our initial projection. 15.3 million sterling and trade. we are projecting that will lead to a 1.8 billion found u.k. wage increase, and we are expecting regions of all england. we think it will be a good thing

for the u.k. overall, and in -- and a good thing for the united states, the ability to access high-quality u.k. goods and services. that will bring benefits to the u.s. consumers. francine: british consumers are going to brussels today to begin trade talks. the row is on fishing. how was that panning out? greg: the u.k. has been absolutely clear that fishing and control of the u.k. waters will be a massive thing for a -- for the u.k. government to decide. that is consistent with the u.k. becoming a sovereign state. again, nothing of the european union, so we have been clear on that. the prime minister has been clear on that, and i think brussels needs to understand that is our position. tom: really appreciate it. a most interesting docket from the government on trade this morning. been speaking,

markets have deteriorated. there is no other way to put it. as we go to break, i want to do a data check right now, including the reversal on equities to -25. i will call that is 60 point reversal. futures are down 900 from a bear market. yields at record levels. this is bloomberg. good morning. morning.

♪ francine: this is "bloomberg surveillance." to the business flash. the ceo at narc air is calling it quits. he has struggled to gain a foothold in all-important fifth generation market. bloomberg is recording that he is -- reporting that he is exploring potential asset sales. it is the quarter billion dollar question. who are the consultants as the russian state oil company paying $200 billion to pay for iraqi forces. they had become the dominant player in that industry. is the bloomberg business flash.

francine: thank you. this is what your markets are doing. we started the day on a high. not so much anymore. we saw a big reversal with u.s. futures down and u.k. stocks down. bonds are rallying. oil is advancing. we have flipped. certainly, markets are struggling to end the worst rout since the financial crisis amid the ongoing spread of the coronavirus, despite central bank action. "bloomberg surveillance" continues on bloomberg radio. ♪ good morning!

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simple, easy, awesome. i'll pass. ♪ alix: the central bank lifeboat. the boj provides liquidity. the fed stands ready to act.

but the selloff might not be over. continue.warns it may the 10 year drops for an eighth straight day. growth as bad as 2009. daily pd cuts at second -- the o epd cuts its outlook -- the ecd cuts its outlook. ."lcome to "bloomberg daybreak the one out performer really is the swissie. dollars swissie is down by about 0.9%. the safe haven really coming into play. really big moves in the bond market. 10 year yield down by another 10 basis points. the curve continues to bowl steepen -- two