manus: this is "bloomberg daybreak: europe." nejra: these are today's top stories. emergency cut misfires as jay powell's press conference fails to ease concern over coronavirus. the u.s. 10 year yield falls below 1% for the first time. the comeback kid. u.s. stock futures regain. bernie sanders wins big in california, the nights top prize. said's olympics minister delay is possible.

the eu finance minister told an emergency call today. manus: warm welcome. i am in zurich. it's all about the bond market. andcurve could go negative we run the risk of japan if japanification. good morning. >> did jerome powell cut and undercut himself? is history showing when you have these cuts in meetings, the stock market does not take it well because you get emergency cuts, what it is really saying is the cuts are not effective to solve the underlying problem.

jerome powell did hint at that. hitequity market took a big as well as the bond market. inus: jp morgan say we are quicksand to negative yielding territory. you saw this collapse in yields. the question is, are treasuries now pricing in an aggressive recession in the united states of america? you have the rate cut from the fed, but was it a bozo in terms of communication? have a look at gold, have a look at oil. the gold price belies the bigger move. the biggest rally in for years yesterday. we are up 8% this morning. the biggest rush in ever in terms of gold etf. goldmillion tons of flowing into the oil market. does opec plus deliver their bazooka? how does the market take that?

super tuesday in play as well. there may be no bottom in tuesday giving u.s. futures a lift. a surprise comeback for joe biden, so we are up more than 1% on u.s. futures after a drop of more than 3% in yesterday's u.s. session. taking a look elsewhere, green on the screen in asia, but it has been a volatile session and a mixed picture across the regional equity benchmark. the yuan seeing risk on come through. how long can it last? we are still waiting for the coordinated central-bank policy. and fiscal response fell short. the fed left carrying the torch that burned equities. manus: it did indeed. we are joined by our reporting team around the world. maria tadeo is in brussels. michelle is in singapore.

maria, we had the fed deciding to do their rate cuts. has the ecb got the capacity to do something? -- will europe stand up and be counted on the stimulus front? >> at this point, we don't know that. what is undeniable is the fed moving so quickly and so aggressively has really put pressure for the europeans to follow suit. we know the euro area finance ministers will meet today at 2:00 p.m.. anno le maire has called for aggressive response. we know the italians need a stimulus package. that economy has been badly hit. economies are expecting it will fall into recession. what will germany do? germans have been hesitant about

putting more stimulus on the table. they do not know the extent of the virus. when you look at the european, we know christine lagarde promised or hinted she would take action if necessary. she mentioned the word target measures. can she allow herself to go further into deeper negative territory? debate.created she can look at other measures and there have been reports that with the ecb looking at many loans to help companies, that could be better for italy. the coronavirus has affected the industrial belt of the italian economy. that is really the concern. not so much the rates, but to get financing going for companies. the bond rally in europe signaling more ecb qe. what you are talking about his other measures. commerzbank saying the ecb needs to cut following the fed's

decisive action. -- long can routinely christine drag her feet? >> not long. the european governing council will be meeting. we want to see whether they feel the coronavirus will damage european gdp or how bad they think this is going to be for the european economy. at this point, everyone expected her to take some action. whether that means going for rates, going for another round loans, everyone has already expected there should be something to come out of that. the question is on what front? i would point out the situation for the ecb is different to the fed. we are already in negative territory. it is not just italy. there is pushback. economy and if anything would be needed right now, stimulus on the fiscal front to help companies that

have been shut down because of the virus. the debate, if we price it in markets, we went from 0% probability of a rate cut from the ecb to excess of 50%. ecb is the risk that the comes up with something minuscule on rates but proffer something different in terms of a policy response? more loans, a different -- you program something slightly different in terms of alternative policy. it is hard to balance for madame lagarde. >> it is difficult for her to do this, i would point to the statement she put out. for the european central bank, what they said is they would consider, they were looking at target measures to help the european economy. that could mean many things, but at the same time, one thing

christine lagarde can say which she has been saying for a while perhaps can work for the european economy is to say, this is all i can do. this is time for governments to jump in. there is huge pressure to do something. -- calls there should be a euro budget in place for cases like this. it could push countries like germany to say at this point there are too many headwinds. this one is different. we need to take measures. the french are pushing very hard for it. the italians need it. it would fall to berlin. thank you. if we turn to the virus, with total cases around the globe turning to the 100,000 mark and economies suffering the impact, attention turns to governments. south korea has joined italy and hong kong in announcing an economic aid package including an extra budget of $9.8 million.

how did this change south korea's approach to the coronavirus impact? >> even with mixed market reaction, overnight action as well as the g7 plunge we saw yesterday, you are seeing a flurry of new activity across asia. korea is just one that is potentially newsworthy. an emergency meeting from the bank of korea. as you mentioned, the budget is being rolled out on top of an annual budget that was already the biggest on record. they are planning to fund this new stimulus with a flurry of government bonds. it looks a lot like what others in this region have already rolled out. targeted financial support or the medical response immediately as well as a package for businesses and separately for households, especially low income and support jobs. they already released tax subsidies and rent subsidies -- tax breaks and rent subsidies, i

should say, but we did see the bank of korea holding the benchmark interest rate. the bank of korea said they wanted to target businesses that were affected by the virus outbreak instead of just taking a blunt tool. the fed's interest rate cut has change the calculation. we could see more from the bank today. history will write it up as a bold choice or stupidity if the credit event happens there. there is a debate about the lack of cohesion from the g10 response. the fed move, the aussie move. when we look at the rest of asia, do you get a sense it is a fractional last response rather than coordinated thinking?

>> everyone is finding their own way. it is very fictionalized. nalized.o -- made a full throated effort at a coordinated response. everybody looking at easing fiscal and monetary easing at the same time. perhaps giving a bigger economic hit than originally anticipated. everyone is finding their own way there. malaysia and australia cut interest rates. a week ago we would have thought perhaps they both would be on hold. this is a rapidly evolving picture. we are seeing more creative measures not just for the state budget, not just the interest rate cut, but other things the central bank and the fiscal side can do. we are seeing different ways of -- indonesia, reserve requirements reduced, but other tax breaks, other delays in loan

prices, other ways of loan relief for businesses, governments are trying to get creative about what they can do that is very targeted, very sharp impact instead of a blunt measure. nejra: asia economics editor in singapore. thank you so much. joe biden saw early wins on super tuesday. we are live with the latest. manus: we are indeed. u.s.' up, we speak to the biggest life insurer. don't miss the conversation. ♪ ♪

manus: it is "bloomberg

daybreak: europe." a drop in u.s. equities after the rate cut from the fed fell flat. joe biden making a comeback, looking at futures in general, seeing european futures up as well. the 10 year yield below 1% for the first time ever. oil on the front foot. getting back to super tuesday, joe biden got off to a good start. projected to win alabama, virginia, and north carolina. bernie sanders has scored the biggest prize of the night, california. manus: let's get to taylor riggs. this now looks like a head-to-head between sanders and biden, but it is not a done deal yet. sanders got california, didn't he? >> you are right. the key takeaway is like you said, very can -- and neck.

drastically different views of all those who -- super tuesday, a big win for joe biden. virginia, arkansas, massachusetts. massachusetts was a big loss for senator elizabeth warren. that is her home state. a lot of people were questioning joe biden's ability to become a presidential candidate, to be able to defeat donald trump. a lot of those questions are in the rearview window -- mirror, i should say. he kind of takes a look at what could be a big night for him. bernie sanders, don't count him out. success.ad some california, like you said, a big winter there. vermont, colorado, texas, looks neck and neck.

bernie sanders saying he is best positioned to defeat donald trump. questions remain about who consolidates now versus moderates and progressives, who drops out. a lot of questions as we wake up in the u.s. tomorrow morning nejra: in terms of how the equity market might wake up, futures on the front foot after they take a hit. the u.s. equity market dropping 3%. what are the market implications of a joe biden win? is it positive for u.s. equities? >> as much as we were hearing the s&p, the dollar, crude, and yields were all down after the there was a hint of that bernie sanders win. once joe biden came out and it looked like he was going to have a strong night and take in a lot of delegates, that is when you

see futures start to turn positive. you had crude positive on the day. the bloomberg dollar index started to strengthen again. yields lower, that is more of a fed play. are much moreists comfortable with a joe biden candidacy than a bernie sanders candidacy at this point. nejra: that us get the bloomberg business flash. jp morgan is asking thousands of employees to work from home. about 10% of staff across the consumer bank are working remotely as part of a scheme, banks are working to ensure businesses remain up and running. -- concerns escalate over the spread of coronavirus. boeing is scrapping with health and safety concerns for workers as a hotspot arises in the seattle area where the company makes most of its jets.

a deal for partner rebirth $9 billion in cash. .t will help command diversify it marks a significant gain for the billionaire who owns the exor.ty of a new plan could see libra except multiple coins in an effort to woo reluctant regulators. that is your bloomberg business flash. it is the only chart that matters. the roles benchmark bond trading below 1%. in 150 yearstime we have the u.s. 10 year yield below 1%. uncharted territory. this comes after the fed had an emergency rate cut of 50 basis points. we take it as a sign of desperation. after that g7 finance chiefs

call, the fed asked nobody else, the bank of canada is widely expected to act today. the market is pricing in more from the fed. so is donald trump if you look at his twitter feed. the market wants 25 basis points in march and many on the street are expecting 100 basis points for the first half of this year. depending on where the fed moves, that is where we will see the yield go next. great work. annmarie hordern within the chart that matters in new york. coming up, emerging market volatility. mark mobius from mobius capital partners joins nara and myself. 6:30 a.m. london time

nejra: this is "bloomberg

daybreak: europe." snapshot of how the markets are reacting to historic intra-fed cuts. bonds sub 1% could they get to zero? futures, dollar-yen is on the move, the bank of japan is said to mull cutting. will they get a bazooka from opec plus? i will tell you friday. joseph, i want to get straight to the fed action. a 50 basis point cut, and some would say that was the bazooka. your assessment of a 50 basis point cut? was it a bazooka enough? how things play

out over the next few days. certainly the move is significant. the fed has taken preemptive action to deal with the anxiety and fears arising from the virus. what you have seen in markets with bond yields moving decisively lower is really a realization that some of these challenges are not going to purely be solved by monetary policy. it's also going to require fiscal policy. you have to applaud mr. powell and the fed for being preemptive, trying to improve financial conditions and support confidence and get ahead of the story. nejra: you were saying investor psychology is hamstrung over concerns of the economic impact , has investor

sentiment shifted to saying, mitigate?sures cannot >> that has been the tug-of-war. nejra: has that changed after the fed? extremee moving to the on that on the negative side. there is a lot of pessimism when we look at different parts of markets today. what i call episodic volatility. haveommodity markets, we seen really abrupt moves. equity markets of course, we know what has been going on. a shift lower in global bond yields, most noticeably in the u.s.. we are on the extreme side of fear and nervousness around the macro fallout from the virus and what's going to happen next. is the important thing to bear and mind -- in mind. we are in an interesting and

difficult stage. there is a high level of complexity, high level of uncertainty. there are unknowns and knowns at this point. and aeans having a shock we policy response, those are the tools we have to have ready. donaldou are channeling rumsfeld. i always wonder where i'm going. let's dig into the bond story. we have the treasury markets for you in the gtv library. likergan has a note out quicksand. we are in quicksand. would be forced into this hyperbolic motive cutting, we run the risk of japanification from the fed being pushed to take rates lower and lower. what is the probability of 0%? what is the consequential risk

in two to three years of japanification? >> a very real risk and a great question. it is likely we see more easing has early as march. potentially more measures that looked to address the challenges in the credit markets, too. the difference in the situation we face now is what we faced in 2008 is it is the mirror image. in 2008 we had a problem in the credit market. that was impacting the real economy, or being -- beginning to challenge the macroeconomy. ans time what we have is external shock which is beginning to see in credit markets. we have parts of fixed income markets as well. what the fed is worried about is the spillover that can happen and they have to get ahead of that. i suppose the problem is, have they gotten ahead of it?

coming up, live coverage of the u.k. parliament's treasury select committee. the incoming bank of england governor will be taking questions from lawmakers on bloomberg tv. ♪

from bloomberg's european headquarters. this is "bloomberg daybreak: europe." the fed's emergency cut misfires as jerome powell fails to ease concern over the coronavirus. the u.s. yield falls below 1% for the first time. scott maynard says u.s. stocks could fall another 15%. we will see if mark mobius agrees. and the comeback kid. u.s. futures regain some ground amid strong super tuesday for joe biden. bernie sanders wins big in california, the night's top prize.

the global impact. says a olympic minister delay as possible as south korea unveils a new budget for the virus. nejra: the shock and awe from the fed caused more shock yesterday. did jerome powell undercut the news conference? more on the super tuesday results with joe biden making a comeback. green on the screen in asia and the yen. a technical bounce. more than what we got from the fed. the big question being, when you cuts, are they

saying it has happened at a time when cuts are not working and that is what markets are signaling? manus: there is an entire generation that has never seen this. it last happened in 2008. twitter's and the real alpha is to go back in time. a 50 point cut does not have the same -- the gold market rallied and oil is waiting for moment in terms of, what bazooka can they deliver from opec plus? let's talk about the fed, let's talk about the meeting. the emergency rate cut, one that jerome powell, the chairs that had to happen amid concerns over the impact of the coronavirus on the economic growth. say over the course of the last couple weeks we have seen a broader spread of the virus. we have seen it begin to spread in the united states.

for us what matters is not the epidemiology, but the risk to the economy. we saw a risk to the outlook for the economy and tried -- and chose to act. are convinced monetary support will not be enough. the u.s. 10 year yield fell below 1% for the first time ever powell spoke. the guggenheim ceo says the selloff is far from over. decline,another 15% maybe more, from where we are in stocks. when i turned to the bond market, i think we are going to continue to see the fed have to ease. of 25eve that our target basis points on the 10-year note or a quarter of 1%, 1% on the long bond, or almost inevitable at this point. manus: let us get to cape town.

mark mobius is the founder of mobius partners. through looked intra-fed meeting rate cuts. you have seen many. you have seen many a crisis. what do you make of 50 basis points? crisis panic reaction or prudent front running response? >> i see both. the bottom line is, the problem is not so much interest rates. interest rates are already low globally. you look at japan. the problem is the supply chain coming out of china. this is the big difference between what we have now and what we had with sars and other problems in the past. the problem now is that there are so many products and parts coming out of china. everybody in the world is affected.

trade and supply chain is not really giving them what they want. if we get more cuts from the fed, the market is looking for another 50 basis points from here. is that going to succeed in a loosening financial condition? it did not work yesterday. >> i don't think so. it is good. it helps. the bottom line will be the possibility of further tax cuts. i think if trump is able to put in the tax cuts, that will help more than interest rate cuts. one about stepping in with terror relief? tax cuts might be harder to deliver in an election year. what about stepping back on the and suspending tariffs

he already has in place? >> that would help, but don't forget. it is not only the u.s.. it is a global situation. china is the supplier of parts globally. automobile parts going to mexico which eventually end up in the u.s. is the kind of thing you see. it is a global phenomenon. if you want to cut tax, you have to do it globally. i don't see that anytime soon. nejra: has the u.s. equity market found a bottom yet? >> i don't think so. from the looks of it you are probably going to see further weakness. you can see the fed cut really has not had that much impact. further cuts probably are not going to do that much good. tax cutskey would be of these companies can survive. a lot of companies are going to go bust based on this current situation.

scott maynard saying another 15% lower on equities and a quarter of 1% in treasuries. given the mobius call and it gets worse, how bad is it for private stocks? think it can be a lot worse than we had with sars. let's put it that way. unless china is able to ramp up production. i noticed the chinese government is trying to shift workers to their place of work and trying to push up production again, but a lot depends on that, their ability to get the supply chain working again. i think we will be able to assess that in two or three weeks. in the meantime the markets will be week. usually they have two or three weeks. of thesetion with any companies creates problems now. if they don't have inventory in

2, 3 weeks, there is trouble. nejra: are we heading for a credit crisis when you have talked about the risk of companies going bust? yes, of course. if this continues, you have a credit crisis. the loans will not be able to be paid. problems in their balance sheets and so forth. i think, yes, there is the possibility of a credit crisis area -- crisis. which at the end of the day, lowering interest rate may not help. 0.5% is not much at the end of the day. manus: what more do the emerging market central banks need to do? south korea with fiscal response. the philippines unsure about what they want to do. what do you want to see from em before you would step in? >> the first step is to get more

money in the hands of consumers. cuts.y to do that is tax in some cases, let us say the case of japan and europe, direct payments to consumers. they have money in their pocket to spend. that is one step that can be taken. at the end of the day, it is trying to push up consumer confidencetherefore generally in business around the world. the problem we have with emerging markets is there are so many etf's it is based in judgment on the index. with china having 30% waiting in the indices, the emerging market indices, these etf's have to follow that so that as china goes down, all the markets, the emerging markets, get hit. where are you seeing the best opportunities either in emerging markets where the u.s. equity market right now?

>> right now the best opportunities are those companies with lots of cash into are paying dividends. dividends are going to become more important to become more important not only in the u.s., but all throughout the emerging markets world. that's what we are looking at. we are focusing on companies with good balance sheets paying dividends. and of course we would like to see growth. dramatic epspect growth. at the end of the day it is their ability to pay out dividends. nejra: we will be right back with you. at hsbc isstrategist still with us. what opportunities are you seeing in equity markets? how risk light or heavy are you based on what we saw yesterday? x there is clearly a lot going on. we call it the age of uncertainty. a nice slogan to bear in mind.

we were in portfolios with moderate risk position and that is reflective of the evaluation opportunity set. if i'm going to be granular within equity markets, it is still the asia region that is most interesting. of have a combination reasonable valuations. i'm very sympathetic to what markets said. we are pushing on the string with monetary policy. we need to see fiscal policy. that's what the bond market is telling us. below treasury yields. toneed some fiscal support and stop theets damage to the macroeconomy. out is most likely to play in asia. the combination of valuation, the reconnection of supply chains at some stage, and the policy support, all major markets in asia.

that nbc ising news projecting joe biden to win the texas democratic primary. that is a headline just crossing. u.s. futures on the front foot very much because of this surprise come back from joe biden in the super tuesday primaries. sanders took california, so it is head-to-head. is the biden bounce less fear of sanders -- we were listening to mark and it was very prissy and. prescient.- hour -- >> what is the probability that could expand to the rest of the world? what do you make of that proposition?

>> early days, you are absolutely right. on bullishot give up policy prematurely. there is a number of tools in the toolbox that can be used by central banks around the world. this is a challenge that does require fiscal support. mark is absolutely right. there is a significant impact to supply chains. the next few weeks, we are going to get more and more of a sense of how much of a knock on effect and how much of a prolonged phase of stasis we are suffering with in terms of the macroeconomy. we are ultimately going to need to use fiscal tools. money is there on the agenda. manus: stay with us. we are going to get back to mark mobius.

mark mobius joins us again. right here on bloomberg. ♪

manus: let us continue our conversation on emerging markets in the context of coordinated central banks response to coronavirus. the -- awarning in slow morning in the markets. is au think there potential response mechanism in emerging markets, do you want to belong currencies, bonds, or equities in em? if we get through the eye of the coronavirus storm. >> dividend paying equities is the key.

the problem with emerging markets is currencies. if you look at south africa, some countries look great. then you look at the currency and say, wait a minute. if i am bringing dollars here and buying a great company, if the currency goes, we are going to be in trouble. hopefully we are going to see a bottom in emerging-market currencies. we have seen it before and it could happen again. in the meantime, we have to watch this very very carefully africa, talking about a possible downgrade, if that happens, the currency has preempted that thinking, but at the end of the day, currency is very important to emerging markets. will emerging market equity investors respond better to stimulus from em central banks then u.s. equity investors responded to jay powell? think in places like india,

even in china, if they are getting more money in their pocket, they will respond. you see a pickup in the economy. that is the why the fiscal response is important. infrastructure spending is critical in many of these countries. you have more employment. unemployment is a real issue in many of these markets. the reason why you see these countries growing out of very low rate in south africa, for example, we have low economic growth. if you can get these people working with infrastructure projects, you can really see a pickup in the economy. that is the reason, by the way, the fiscal response is very important. if moody's bites the bullet and we go to junk on south africa, is it all in the

rand price at the moment? how much worse could it get? is not all in the price yet. there is a lot of hope this is not going to happen. at the end of the day, south africa is quite a great country. they have the rule of law. it is quite peaceful in many ways. they have problems, but at the end of the day, it is a great country. in a downgrade, the currency will get weaker. there has been preempting of that already, but if it actually happens, the currency will get weaker. they have to live with those consequences. what bright spots are you finding in investing in south africa? have ae companies that

lot of earnings overseas. many of the companies here have substantial overseas earnings. they are getting dollar income from these overseas industries, overseas posts, either in retail or manufacturing or whatever. that is the possibility we are looking at very closely. companies, as i mentioned, are paying good dividends, remember in this kind of situation, there will be winners and losers. many companies will increase market share. those are the companies we want to be looking at. that means good balance sheets and the ability to pay dividends. you now spent quite a chunk of time there. five, six days. i want to get a sense. the economicight

narrative, do you think they will do it? did they have the political might and will? >> they have the will, they don't have the might. let us put it that way. they have a lot of things against them. take the unions. they did have a written agreement to increase the union wages, now they want to cut that. that's going to be very difficult if not impossible. in some ways they are up against a brick wall and they are going to have to take other measures. , thoughthe real answer privatization is a dirty word, at the end of the day they have to move toward privatization. airline,network, the as you know, south african airlines, losing money. they cannot continue this way. it has to be moving into privatization mode. nejra: with everything we have discussed, the risk of

coronavirus, the emergency rate cut by the fed, opportunity in emerging markets, are you still putting money into gold? >> i believe people should have gold. about a year ago i said, you have to have at least 10% of your assets in physical gold. i still believe that. you have to have gold. --us: >> at the end of the day in situations like this -- yes. nejra: go ahead. >> i was saying at the end of the day from a long-term point of view, equities, dividend paying equities with strong balance sheets and good earnings growth is where you want to be from a long-term point of view. nejra: wonderful to have you with us today. thank you for your time. mark mobius. thank you so much for joining myself and manus. coming up, they bought the rumor, sold the news. now imagining what a recession looks like in equities. your morning call next. ♪

manus: it is "bloomberg daybreak: europe." the rumor, bought sold the news, now investors are back to imagining what a recession looks like in equities. >> it is coming from citigroup. earningsut their outlook. coronavirus dampened the economic front. they are saying u.s. companies will use earnings. the chief u.s. equity strategist did quote the bigger unknown issue is the covid-19 trigger of global recession. if that were to materialize. they project the need to cut eps projections by another $30. if you are an investor, stay on the sidelines for now. nejra: thank you.

joe, equities got hit yesterday. will they respond differently and rally if we get more cuts from the fed? >> the signal of more policy support is going to be important for the market. tot the equity market needs see is not just lower bond yields, which are important in themselves. we need to see reinforcements and a confirmation from the fed that the bond market action is going to be supported and justified by movement in policy. i think that's potentially very important. bear in mind that what you think about asset class valuations, the capital market line, where perspective returns live in markets, that line is quite steep. bond yields are low. equity risk premium's high. that means if policy support is being deployed and they can get it working and support macro

activity, it can work. clearly lots of unknowns. manus: we will leave it there. your thoughts on the markets. we have an exclusive coming up from the fed. ♪ from the fed. ♪

>> welcome to bloomberg markets, the european open. we are live from bloomberg's european headquarters in london. i am anna edwards alongside matt miller in berlin. matt: today, the markets say why only me? global stocks seesaw as the fed takes the first step in cutting rates, havens sore. the cash -- havens soar. the starter cash trading is just an hour away. misfire. the fed's emergency cut