what will be watch? we will watch wage growth. good morning, this is bloomberg surveillance. guy johnson is with us. there is a really dramatic photo of a helicopter dropping down on a cruise ship. what is the mood in the london weekend? guy: the mood is everyone is trying to figure who has what. we don't have enough test kits. knowledge as to wether or not this is spreading quickly, slowly, how we people have it. it does not exist right now. tom: i believe it would be called unknown-unknown. screens tothree data start things off. with our first word news, here is viviana hurtado. viviana: we begin with the coronavirus. almost 100,000 coronavirus cases have been diagnosed globally. the majority in china. beijing reporting the number of new cases and deaths are falling. the u.s. outbreak is getting larger. there have been more than 130 cases reported and at least 11 desperate there is a key to wether the central banks cut rates again. this from robert kaplan. he is looking at how fast the

u.s., he tells bloomberg it is too soon to forecast what will happen at the fed meeting later this month. today, a high-stakes showdown over oil in vienna. another 1.5 cut million barrels a day to offset the impact of the virus. opecssia does not join in, could abandon cutbacks altogether. russia has opposed a saudi led proposal two/production. dimongan said ceo jamie is alert after emergency heart surgery. he had a potentially fatal condition involving a tear in a blood vessel. 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. i am viviana hurtado.

this is bloomberg. tom: thank you so much. good health to mr. dimon. i am framing the u.s. bond market. futures deteriorate. two days ago, up 1000. yesterday, down 1000. down 494., major correlated factor, american oil with crude under $50 per barrel. point 94 gets to a point of tension, if you don't keep score on the vix, that is a big number. 106, 104s stronger, handle upcoming. let's not forget the emerging markets. comment on this, the u.s. yields we reframe,

0.47, the 10 year yield is well under 1%. the german yields have given an evermore yet get of, the two-year negative .089 and the 10 year, 0.73. it is interesting to see the german yields move. guy: they are not moving that much. germany this morning, negative four basis points. the u.s., -18 basis points. the fed has room to cut. the ecb does not have room to cut. they cut 50 basis points. maybe 10 bits coming off the rate. you are seeing that spread story becoming very relevant. we have problems in the banking sector over in india. tom: there is your data check.

run through that please. another 3.25%. year, andabout the 10 we continue to monitor what is happening in india. the yield spread across the atlantic is tightening quickly at the moment. to: i looked at 15 charts find one that frames the moment, the turmoil we are seeing. really not fors tv. 2012,s where we were in very low yields. you can see the trend and then straight down the accelerant, level, that gives you perspective back to the gloom of 2013. guy: i want to focus on this dollar issue. the world needs a strong dollar right now like a hole in the head.

weak dollar will help out the global economy. .he dollar has been weakening let's look at this chart. this is the dxy. you look at the rsi down at the bottom, we are down into oversold territory. the last thing we need is a stronger dollar. if we get it, it will be problematic. we have been talking about the fact we will see a weaker dollar, that is good news for a global economy. let's get into the conversation we need to have. the delta here. let's talk about what is happening with these markets.

ago, we aree a week here now. talk about the shift you have seen and what it means for what you are doing. christian: i think last week was quite interesting because it was disorderly and you cite a sharp correction. on had gold selling off friday, the euro rallying into a risk off. i think this week is much more fundamental. last week, you had credit decoupling and equity volatility. we start to see the equity volatility spilling over to credit. had ainto last week, you lot of positioning from systematic investors, concentrated positioning, some of the favorite names of the s&p. a lot of that is unwinding. now we are getting more fundamental. from that perspective to your question when it comes to dollar strength, i think my base case would be the dollar is a safe haven and has the potential to

strengthen the bids going into this perio ofs uncertainty. -- this period of uncertainty. yen as a safe haven. this week, it has performed phenomenally. it has a lot to do with japanese investors and treasuries. we like the yen is a safe haven. with regard to the rest of the of, does is a question rate differential matter? in the past, it did not. it comes down to the cost differential. how much does u.s. growth come down compared to the rest of the world? we have downgraded from the economic side, 1.3%. it is nearly a percentage point. that narrows the growth to the

rest of the world. that could drive dollar weakness. the big trouble we find. guy: let's look at the economic story through the view of the banks. banks on both sides of the atlantic are being battered. what is going on here? is this just an economic story? is it a credit story? how problematic is that? a few days ago, this did not feel like a credit story. we start to see the potential for credit having a problem, that is a much bigger issue. marcus: it is in everything story. to a different type of market. countries that would suffer badly during the greeceisis, portugal,

and spain are trending badly. also, so is france. short-term money market overnight, three months to six months, trading like it did in the global financial crisis. this is becoming a systemic situation. euro,t quickly to the specifically on the yen, it is not so good if the dollar falls. it is great for most markets on the u.s. economy, but there is always a loser. recession becomes a severe one. that is a real worry. economy, the japanese cannot cope with a strong currency. there always losers. statement --eral good morning and thank you for being with us too often this week -- marcus ashworth, are

yields where they should be given central bank rate cuts? thane yields up more so the rate cuts to come? marcus: i think everyone is expecting for the rate cuts to come down another 50 basis points. on the next meeting for the u.k. budget on the 26, what happens -- funds have gotten way ahead of themselves. this is a friday. we are going into the weekend. it is getting out of control in terms of news from all angles at the coronavirus. people are going into protection. and asset this morning? what you do with cash?

saying,n: as marcus was it feels like you are in portfolio protection mode and it feels like the bond market has entered a correction and given us the right signal. as a result of the bond yield, a bit ahead on risky assets and that creates a risk with diversification because if you get another 10% letdown, in a lot of bond markets, there is no yield buffer left. in the u.s., there is a low yield already. i think raising cash can be an alternative to diversifying. we will see central banks cut rates. they don't expect any return from cash, it is more about loss protection. futureshave the s&p getting back to where they were march 2 and approaching february 28 lows that we saw. we will continue with our

guests. it will be quite an interview. a discussion with lawrence kudlow, the national economic conference director, not in every day with larry kudlow. much to talk about during banana clock hour. stay with us. this is bloomberg. ♪

♪ is we willould say have an interruption, we will have severe deterioration. >> we are coordinating with her magistrates treasury to make sure any initiative is complementary. and they collectively will have maximum impact. >> a strong sense we are on the

same page dealing with exactly the same thing. >> the bank will take all necessary steps to support the u.k. economy. >> it will help to mitigate some of that inevitable tightening of financial conditions. tom: central bankers confronting an additional 16 basis points of lower yields this morning. exceptionally an important shift. for rate cuts by the june meeting. they don't mince words. they make very clear they are not calling recession in the united states. we continue this discussion with christian mueller-glissmann of goldman sachs and marcus ashworth of bloomberg opinion. out of goldman sachs economics worldwide, what is the distinctive feature you see in asset management?

what is in your global team that sticks out to you? christian: i think our team has turned this fast in the sense that literally within a week, a significant easing across central banks. andxpect 10 basis points extra measures from the ecb. there is further cuts from the fed to come and that has been a sharp shift. the question has shifted from why to why not. that has been a big shift. side --s on the macro global growth has been downgraded from 3% to 2%. these are big downgrades. of a lot of ahead fundamental investors right now. to have dr.onderful bailey come into the bank of england with his historical

perspective. the impact of the napoleonic wars on the development of the cotton industry. what will andrew bailey do given the history of the bank of england? the aversion to negative interest rates? what will he do in the coming weeks? marcus: the head of the financial conduct authority and part of that is -- he is part of the bank of england which is more important. the termlking about fund him scheme, allowing corporate debt. it is allowing banks and the markets to be relaxed on certain things. he has been at the heart of this.

it is the right person at the right time. they will have fiscal and monetary action together as one. that is a message that must get through to europe. guy: do you think they wait for the budget? marcus: yes. they might do some stuff together at the same time. i think funding, whatever it aboutbe, other things relaxing buffers allow money to flood back into the banking ,ystem and keep liquidity capital and credit change going. that might come first and we might see the monetary response on the 26th. a rate cut now or in two weeks, everyone knows it is coming. qe is not going to help. this is real direct action in

the banking system, combined with a fiscal booze. boost. -- marcus: fiscal christian: the political economy means the fiscal response will not be as fast and aggressive as needed. i think you are very close to the so-called reversal rate for the ecb. it feels like if they cut lower there will be negative side effects to deal with. address somert to of the current issues you have in markets. it needs to happen quickly. there is a history with european central bank's that it takes time. it takes a pretty big crisis to react and i don't think we are there yet. only now do we start to see credit moving and that is something they really target. guy: stick around. christian mueller-glissmann of goldman sachs -- actually, i

think we will let you go. you have another report. marcus ashworth will stay with us. we are looking forward to the conversation with the canadian finance minister. bank of canadae with a 50 basis point cut. this is bloomberg. ♪

♪ you are watching bloomberg

surveillance. viviana: we begin with u.s. national security officials wanting president donald trump to block a takeover of a semi conductor. bloomberg has worried -- bloomberg has learned they are worried the $8.7 billion deal will threaten the outcome. unit isving car reportedly valued at $30 billion according to the financial times. billion from outside investors. with u.s. federal aviation administration expected to test the 737 max in a few weeks. after two fatal crashes, the plane has been granted. the faa must approve new training for pilots. tom: thank you so much. i can do a one hour data check

and 20 seconds. deteriorate and we have the same yield compression but not curve flattening, steepening, that is a huge distinction. at least from a market point of view, what do we have coming up later on here on bloomberg? at 12:30 p.m. in london, this is bloomberg. ♪

♪ johnson, tom keene in new york. . let's talk about the virus, the

number of cases globally is nearing 100,000 and more cases in the united states, germany, and south korea. the health director of the palladium group is joining us in washington to join -- discuss this. let's talk about what we don't know. we don't have enough test kits and we don't know exactly how many people have got the virus, how fast it is spreading, what the delta is. what can you tell the -- tell last? >> that is correct. we don't have enough test kits and don't seem to be able to enoughonalize how to get test kits to people. how many people have been exposed, how many people develop clinic goal -- clinical

symptoms, how many people die. we have only done about 1500 been so far and there have quite a lot of missed opportunities in order to get to a broader implementation of testing so that we have a better picture of the epidemiology of this virus in the country. you it is wonderful to have with us and with your decades out of johns hopkins and work with government facilities. i am not going to mince words. there is a parting of the ways between the president of the united states and people like you representing the institutions of science and the government. how do we get this fixed by monday morning? how do we get the virologists front and center and advising the public, given the messaging we are seeing from the executive branch? christian: one way is to activate mechanisms that are

tried and tested, for example that ebola epidemic, where we have a platform, and the country does have such a platform called the one health platform. government, ae of very articulated system from top to bottom where the government in charge, the executive branch as well as branches of government that have responsibility for health and safety are coordinated with state governments and local governments. there is a plan of action that allows people to take actions without doing it on their own. this is something we have not seen in the last few days in the u.s. we definitely need more coordination. the ability to test people is a critical part to understanding the epidemiology of a virus. tom: just to give you the local

press cores are closed as they clean those buildings. we have our local community stories. i look at the complexities of the test kit and cdc, and i don't want to get to a discussion of rna and dna dynamics, which you are expert in. they to replicate, manufacture, and introduce to the public? farley: these are viral nucleic tests looking for proteins in the virus and using a method called pcr called polymerize chain reaction. you take human tissue which comes from your nose, your mouth, your trachea, and subjected to this test where you are looking to amplify these bits of rna. cr test and results

should be available in 24 hours. we have not leveraged the private sector enough to get enough test kits out to the american public. this is in stark contrast to china and south korea. south korea has done over 100,000 tests to date. they are using their own home cone -- homegrown tests. that hard to do. you need to get the primers made and get them out to the people who run the tests. will rapidly increase the number of tests available in the u.s. re countries with universal health care more capable of dealing with this

virus then those that don't? farley: in terms of planning, the idea is to new -- do enough risk planning and have a risk strategy that avoids fear and confusion, which is what you get when you do not have an articulated plan. some of the volatility in the stock market represents fear and volatility. systems, health systems to respond appropriately , they must have as part of that plan identified the number of provided icus that can the respiratory care for patients with severe disease who are at risk of death, primarily older people who have concurrent illness and develop pneumonia after they are infected. in many countries, even highly

developed health systems like the u.k., if you had a sustained epidemic over time, it would stress the system so you would have to bring into play new respiratory icus. the problem in the u.s. is we are a system of systems so as far as i know yet we do not have a coordinated planned -- plan for an extended epidemic. tom: because of time i only have one more question. i am at home with my daughter and we are washing our hands with soap and water singing "happy birthday." that is when it comes down to. let me go to the most racist idea floating around to get our viewers through the weekend. the number one thing collapsing in america are chinese restaurants. would you order chinese take this weekend?

would you go into a chinese restaurant? if that is the height of the paranoia we are facing, i want to hear from you, can i get chinese takeout this weekend? should, one,you because you are helping the economy, two, the very notion of having chinese food and increasing your risk borders on racist. i think yes, you should have chinese food. i hope it is good chinese food, and lather up. 20 seconds soap and water, the secret is in the lather so if you do not lather up, those bubbles break down microorganisms. we willt is great, and be sure we have the right soap. this has been extremely valuable. dr. farley cleghorn with palladium group. we have to lather up this weekend. i have that bar of irish spring

on a rope and i will just lather up. guy: we are going to leave that when there. i think the psa test that one there -- that one there. announcementsa are helpful. in brent crude, dropping to its lowest since july 27 as opec plus meets in vienna. the russians are involved. the other thing i wanted to 365 on thewe are stoxx 600, taking us back to the lows last august. that is completely unwinding. keep an eye on the stoxx 600. we will work out what is coming up next because these markets are at critical levels. we begin with this

declaration, all in for joe biden, from michael bloomberg. he prepared a new organization in six states to help mr. biden beat bernie sanders. then mr. bloomberg will target president trump in the election. before dropping out, mr. hundreds is spending of millions of dollars on his own presidential bid. canada where the trudeau government says it will not be bullied to use huawei for 5g. trump administration pushing allies for a complete ban. allow huawei access to nonsensitive parts of the network. another cease-fire between turkey and russian backed syria forces, the latest and more than two years of trying to contain the fighting. president erdogan did not get

everything he wanted in talks with vladimir putin. he hoped for a zone to resettle refugees. british prime minister boris johnson may go after those who are uber rich. the budget is more than $500 billion in tax breaks could be targeted. the government needs every penny it can find to spend. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: there is a jobs report at 8:00 this morning. carl riccadonna will join us later, making very clear who cares. we will talk jobs, markets on the move, and we are fortunate to have with us marcus ashworth. market?ou define a bear

-20, or is there an ashworth line? marcus: we know it as a correction of 10%, in a bear market 20%. if you just work off the fact that it is a bear market off 18% or 20%, you are asleep and should be doing your job. it is momentum and what kinds of things are going down, that is what we need to break it down to. growth versus value and momentum, and what is driving it and likely to alter it. you look at warren buffett, we want to see him come in and buy something for $10 billion or $20 billion and people will calm down. guy: a coupon is usually his modus operandi. there is no upside here. if it is a bad number, the market will go, out so there is

ch so there is probably no upside. marcus: the only economy in the world that has momentum and it is important to have that. the bear market, which economy will recover the quickest and the best? the united states. guy: when do stressed companies start to lean on labor? when do we see that? if you are struggling with cash flow, one of the labor -- levers you can pull is labor. do you see that showing up in claims? will it show up in the next few weeks? marcus: i have no more clarity than anyone else, but i do not see it as a major problem. definitely want to keep our eye on that sort of stuff, but it is the u.s. economy's domestic

strength, but the banking system is in a better place than it has been over the last decade. that is the problem. as long as the fed keeps the why wety going, that is worry about jp morgan and jamie dimon and making sure they are playing their part with collateral, that is much more important, keeping it from seizing up and credit crunch. tom: citigroup 124 rate cuts by fourune meeting -- went to rate cuts by the june meeting. george sarah bellows says -- x -- inflation expectations everywhere, looks for euro-swissie to go to a 1.00. guy: george is also super negative on the dollar.

that is one of his big calls. the dollar goes down from here. others are taking a different view but he is firmly on that mind. marcus, thank you so much. marcus ashworth joining us. late today this conversation, larry kudlow, financial counsel economic director, that conversation with jon ferro at 9:45 a.m. it is always a fascinating conversation. this is bloomberg. ♪

"surveillance," guy johnson in for francine.

,eterioration of the market -285 and futures, -650. that jumpstatistics out on the page in a historic week. week in "the this telegraph," capital economics boutle onbrutal -- china gdp. we are thrilled he could join us. your statistic on the collapse of china gdp is stunning. does that signal global recession? roger: not necessarily, because of course although china is a very big economy, second largest in the world, the rest of the world economy matters more. for us in europe, if the united

states holds up and the rest of the world holds up even if china is in a bad way, that does not necessarily mean recession, but the way things are going it does not look as if the rest of the world is going to hold up. tom: one of the things that is so important as with all of the discussions of monetary, fiscal, all the impulses and the do something tone is the idea that you have to clear markets. how do we clear the debris in the market so we can move forward after this medical event? great although i am a awfulr, i don't think an lot of good will be done by clearing anything out. i am hopeful that these big falls in equity prices will not be helpful, i am hopeful that we will not see a major financial

event like the collapse of a bank or financial institution. that kind of thing triggers a complete crisis, and the times are reasonably reassuring we will not see that. although there are big drops and long as theyes, as do not trigger a major financial bankrupt they don't bring major economic disaster. guy: you are not worried about the credit markets? ther: i am worried about credit markets. even before this virus, things were looking pretty dodgy. there were going to be -- quite a few corporate bonds were going to be of dubious quality. all of that brings big changes, but this is not the same situation the banking system faced a few years ago. historically, property is the

thing that could threaten the banking system because of its major exposure. sanguine am relatively we will get through this comfortably. tom: one final question -- into the weekend, what is the insight from your team at capital economics that we need to hear? what is the thing that sticks out for your team? roger: on the policy front, it is the need and likelihood of substantial fiscal stimulus. across europe, that is the theme. you can cut interest rates as you have done. i don't think it will do good and the governments will have to spend money to boost the economy. tom: roger, thank you so much on short notice, roger bootle. jon ferro, during the labor report and after the labor

kudlow joining him and mohamed el-erian as well. important conversation through the morning on this crisis. futures -81. this is bloomberg. ♪

♪ trading at july 17 lows, let's see what is happening in your market. in viennataking place yesterday with opec, today with opec plus. russia is involved. will they play ball? manus cranny joining us from the opec plus meeting. what will the russians do? -- you and tomm and roger are talking about policy failure on a governmental level. is that in the price, a dying 4%?

that is more reflective of the global risk aversion around the world, but in vienna there is a bilateral meeting happening at the moment. what will the russians squeeze out of this agreement? the risk according to the guests i spoke to was that policy failure here would take it toward the standard charges of $30. they cannot afford that. incredibly geopolitical -- incredibly important geopolitical relationship that opec,etween russia and the geopolitical have to they get -- heft they get as being part of this organization. what if russia walked out? would opec react unilaterally? tom: jeffrey curry yesterday

stunning us with a brent crude to the low 40's. he has gotten halfway there easily and hinting to the 30 pricing. let's do a data check now, not an unraveling but very much major changes in the market. futureswere -81, dow -589. give me another screen. we will reset they data check at the top of the hour. and tensions at realront and center, 4.62 per u.s. dollar. we have a good conversation, stay with us. when you move homes, you move more than just yourself.

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bonds are bead. -- bid. test, real-time reverse transcriptase. kit and it istest in short supply. -- it is just my hunch. jobs day in a fully employed america. i watch wage growth. this is bloomberg "surveillance," from new york and london. dr. bailey, dr. carney, do they do an emergency rate cut? guy: i think the bank of england will see what happens on the fiscal front. we have a march 11 budget coming up in the u.k. and you may see

some coordination between the monetary and fiscal authorities. that would be fascinating. weights,oint, the bank watches the fiscal story, and responds. probably out of all the g7 countries have the potential to deliver monetary and fiscal policy at the same time. tom: let's do a data check. massive gyrations three days in a row, -77 futures. dow futures -593. this is the key distinction, we have a lower yield regime with curve flattening. that says global slowdown. 4%, that ises down american oil. crude acreen, brent little bit above that, 48.07.

emerging real is an weekendndicator, it has dramatically -- weakened dramatically as the yen has strengthened. the german yields really begin to catch up. they do not move like the u.s. yields but they begin to move ever more negative. seeing spreade tightening across the atlantic. u.s. yields come down more aggressively than german yield. you were mentioning the oil story. it is now being potentially reported that russia wants to wait until the june meeting before deciding on deeper cuts. that is upsetting the oil market, which is why we saw that drop on the headlines. it is something to pay attention to. the russia's -- russians do not sign up to this story that we

need cuts now. bond yields continuing to move lower. low for the2019 rupee,00 and the indian fresh lows against the u.s. dollar. -- daniel ahnl on at bnp paribas as their chief u.s. economist, i want to go to the chart and the greek letters. it is not alpha, not beta, it is gamma. on a log chart that shows percentage move, slope matters. we have just given way. this is a gamma of an extraordinary amount, and acceleration. what do acceleration signal? daniel: it is signaling a lot of

nervousness about not just the short-term but medium-term growth outlook. i cannot think of a week when the jobs report would be less relevant. it is backwards looking as we know, and there are so many known unknowns around the virus that is dominating headlines. tom: the scope of your work has been a historical view of all of this game. as we see gamma in the market and all of this bloomberg data check stuff, all of a sudden it rolls over to the systemic, the excellent. -- epsilon. indian rupee near record lows. are we nudging toward systemic risks we are familiar with? daniel: when you look at things like credit spreads, a lot of the other indicators you mentioned, this is not just a small operation -- aberration or

short-term aberration. people are bracing to understand what if any lasting scars to the global economy that a potential pandemic might bring. guy: what is the policy response to a problem in the credit market? daniel: it has been a combination of both monetary easing and hopefully some fiscal support. a saw congress go ahead with $78 billion fiscal package that not only is providing some more funding for the cdc and for health authorities, but also billion to give out an estimated $7 billion in low interest loans to affected firms. i think we will see more of that in weeks and months to come. guy: how big a problem is the

supply chain crunch we are seeing? if i'm a small company in the united states, a manufacturer, i cannot get a critical part therefore i cannot sell my goods to the next customer and i have a cash flow problem. how big a problem is that in the united states economy and how big will it become? daniel: it is becoming bigger. it initially was just a china originated stock to global supply chains, and while china is of course central, the workshop of the world, the united states is a pretty large closed economy and is not that dependent on trade. the trade tensions helped inoculate the u.s. to some degree and we are seeing reverberation back to china with chinese factories saying they don't have enough parts from south korea and japan and so on,

so it is looking like it will be a longer and deeper supply chain issue. tom: bmp bear paw -- bmp buried -- bnp paribas estimates, reset your call on gdp. are you persistently under 2%? daniel: i don't know about persistently under. we should remember that even a much -- some of the most severe pandemics in history, the 1918 spanish flu, the bubonic plague, all of that, you have seen economies surge back from those pandemics before. camo ando to albert the bubonic -- camus and the bubonic plague or something more recent, they were not the service sector dominated network linkage to global economy that we are now.

can you use those templates in a modern world? daniel: obviously, history doesn't exactly repeat itself and there are major differences. at the same time, it does rise to some degree when we think back to the bubonic plague. historians and medical experts believe it was carried by rats originating in china through silk road. that was a period of globalization at the time as well. other pandemic disease doesn't distinguish borders, doesn't distinguish between ethnicity or religion or ideology. will are global shocks and be with us as the world becomes interconnected. guy: we are seeing spread tightening across the atlantic.

do we get a weaker or stronger dollar? daniel: that is an interesting question. it has to do with both how much further and how quickly will the , and hownue to ease quickly will growth expectations continue to vary across economies. before this started to happen, the u.s. economy was in a fairly strong place and for what it is worth, i did have an above consensus view on jobs for today. it is in that context when the u.s. economy was in a fairly strong footing that we see this global shock. tom: i want to do some data into our forward view of the our, intoes -75, oil correlated west texasn intermediate.

coming up, we will drive this conversation forward. lori calvasina will join us. later today, lawrence kudlow with our jon ferro. this will be a spirited conversation late in the 9:00 hour. this is bloomberg. ♪

♪ now, we will do another data check. u.s.d weakness versus the dollar, i am looking at the brazilian real, 4.62. with bnp paribas with

us, just an outstanding set of work on the american economy, and lori calvasina joins us now with rbc capital markets. what is the strategy this morning? lori: we have not made any big changes to our calls. a lot of investors say in this volatility, they are not making trades. i am trying to take some comfort in the math and data. two things we are watching closely, we will be getting the cftc data. it is the best thing that told us we were ripe for turbulence this year and saw a major plunge last week but was still showing some froth from a sentiment perspective. we will be looking to see how much that fell. we are watching the aaii has not survey which

gotten bearish enough yet so we are trying to understand how much room we have to go to the bottom. tom: looking at your fundamental securities research, does corporate america have the elasticity to cut cost in real-time with a reduced top line? lori: i was talking to one of my analysts about this the other day. we had the fantastic lesson of the trade war last year where companies managed to keep flat earnings through cost-cutting, particularly in the materials and industrial sector but it crept into financials. one of the questions was is there more room for these companies to continue to cut costs? there ists and i think more room to cut costs. we think the creativity, the management skills of these teams will be crucial getting us through this. guy: will they lean on labor?

will we see that showing up in claims? lori: we will have to watch the data and keep a close eye on jobless claims. what we got the impression of last year was that companies were doing everything they possibly could besides going to labor. to some extent, corporate america knows it is a self-fulfilling prophecy if they start cutting jobs it will have negative feedback to them, so i think they will hold off as long as they can. guy: what are you seeing as the most stressed and of the triple of thet -- stressed end triple b market? this has always been a big fear that this is becoming a credit problem. lori: i don't think we are seeing that today, but equity investors are taking cues from the market to some extent as they look at the virus headlines. tom: i want to show a chart and

go over to dr. ahn from bnp paribas. to februarying back 28, the big rebound, let's call it the biden rebound. there we go with a 1000 point pullback in this morning -- and this morning. alan would say lori calvasina's world is important for the animal spirits of the economy. do you agree? daniel: absolutely. chair powell also made that point at his press conference when he gave the inter-meeting emergency cut. he acknowledged that monetary policy can secure a pandemic and support the overall economy through financial conditions and sentiment.

tom: lori from toronto says to many rate cuts we will have. cutsroup framed four rate through the june meeting. what is your rate cut derby? daniel: we are expecting another 50 basis points in the march meeting and after that we will see how the data evolves, how much damage this virus may be having upon the economy. i think there is a significant risk but by the middle of the year -- that by the middle of the year we will be lower bound. tom: i am fascinated how you believe europe, lagarde, and bailey will synthesize the dynamics the rate cuts effected by chairman powell. what did they do in the reality of that? guy: the ecb and bank of england

are in different places. the bank of england has the granted, not as big as what we will see out of the fed, but it is probably easier for the bank of england to work side-by-side with the treasury and we see a fiscal response in a more coordinated fashion. that is much more problematic over the ecb. we have a divided governing council, something christine lagarde would always struggle with, in this scenario presents more problems. you have just got to have the physical coordination. we are seeing the ec -- fiscal coordination. we are seeing the ecb take germany does not see that type of crisis to generate a response. tom: a question to lori

calvasina. guy: what is your sense of what happens here around the world? do you think the united states is in a position where it can act and act alone, or is it getting to a point where we will see coordination? lori: one of the things that can restore confidence's stimulus from around the world, so i would expect to see more central banks get involved. that is important ultimately for confidence. if i could rewind to the market reaction, the fed decision, i thought it was very interesting that i talked to equity investors clamoring for cuts and then we saw the market reaction we did. i think we have to be very careful talking about central banks. there has been a conflation of the idea that the central banks cannot cure the virus and solve

all the problems being thrown at the market, with the idea that we should be angry at them, and i am confused by that reaction. in my mind, the fed acting early and decisively was putting the bullets they had to use as soon as possible. we should give them the benefit of the doubt. tom: lori calvasina with rbc capital markets. oil is idiosyncratic now off west, 43.01, almost got to a 40 to a 42 handle in some of the shock. oil a little discrete from yen and gold. on the open, discrete conversation, jon ferro. stay with us, this is jobs day. this is bloomberg.

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-77, let's do a data check. jon ferro and lisa abramowicz will do that as well. -574.tures down we have been worser.

oil, south, south. weighn cannot get down to 104. -- two a 104. quick, that is the u.s. yield structure up top and catching up slowly but nevertheless, greater negative yields in germany. guy: what is worth paying attention to his spread widening on the periphery in europe. germany negative four basis points today, greece plus 13. italy is up nearly for basis points. you are seeing a big move today and it includes france which is worth paying attention to. tradingx 600, we are

367. 365 was the loafer last year. the indian rupee record lows against the dollar. em: one of my major focuses, is off the radar, but we are seeing em dynamics away from turkey and italy. brazil is one issue -- indicator. i was shocked by the australian dollar against the dollar. michael mckee in an exceptionally important conversation with james bullard and the 7:00 hour. -- in the 7:00 hour. ♪

good morning! oh no, here comes the neighbor probably to brag about how amazing his xfinity customer service is. i'm mike, i'm so busy. good thing xfinity has two-hour appointment windows. they have night and weekend appointments too. he's here. bill? karolyn? nope! no, just a couple of rocks.

download the my account app to manage your appointments making today's xfinity customer service simple, easy, awesome. i'll pass. >> the choreography was a calamity. what was the reason for for shadowing it on friday --

on fridaying it except for the fact that you what is the reason for continuing to have leaks come out of the system early in the week? i don't see how they could have thought that this was going to be highly effective. harvard gentleman from featured on secular stagnation week with david westin. up.y summers fired that is not what we are talking about. thinksthat is not and he basically the fed did nothing right. secular stagnation, part of his point is it is the wrong tool. monetary policy will not to what needs to be done.

targeted fiscal stimulus for something the trump administration is not interested in. tom: what did you learn from your other guests? into the markets. david: she is concerned and the big problem is uncertainty. we don't know what is going on and how bad it could get, and emerging markets in the world are reacting accordingly. guy: did larry summers say anything about the size and scope of what we are seeing from an economic point of view? david: he has said before he thinks this is worse than what the markets are anticipating. now the markets may be are catching up with that. four years ago, he did a paper on what would happen with a pandemic that went through and the consequences, and he said it could be that magnitude and is worse than the markets are

pricing in. tom: david westin with his wonderful coverage of super tuesday, is this tuesday sort of like super tuesday? david: my home state of michigan is in there, potentially an important state. it is a swing state. 2016. trump it in if bernie sanders were to lose to joe biden, it might be close to game over. tom: did elizabeth warren cost the senator from vermont a number of states on tuesday? david: the numbers i have seen would say no. if they polled people who are elizabeth warren supporters, they divide almost equally between joe biden and bernie sanders. you are dubious. take you back to wednesdays market? we saw the rally. and the sense --

conversations you have been having -- tom: excuse me, guy, we call that the weston rally. rally.in guy: it did not last long is the point i would like to make. david: not really a rally. guy: was that an anomaly? was it the u.s. markets reacting? david: i continue to find the markets a mystery but at the time the thought was, we saw futures go up through that evening on super tuesday as it was clear that joe biden would have a big win. , it willre so volatile come back some so i don't think you would solely attributed to the joe biden win, but it looks like the markets are moving and the health care is moving in a significant way. guy: how the president is

reacting to this, i am curious to get your political perspective on this. this is clearly a major threat to the president and his reelection. hearing about how he is handling it? risksms to downplay the of the economy as a result of the virus, marginalizing people who know about the virus. what is your perspective as to what is happening? david: completely agree with the way the president -- and larry kudlow are playing it. they say let's get past this. the estimatessaid of mortality were overstated and he had a hunch it was under 1%. risk is a risk, political if it turns out he is wrong. the american public may not be forgiving. week" at 6:00eet

p.m. in new york. paribas and inp am thrilled he could continue with us. a chart on the net -- on the thety of negative yields in space and it is worse than 2008 and 2011. the negative yield on the 30 year bond, it is extraordinary. what does it do to the financial system? see, while it may have required a pandemic to bring us there, this has been a trend going on for a while. there is a confluence of factors that go into this but mostly central banks have been the first and only responders. we have not seen the kind of fiscal policy or structural reform that the economy needs.

tom: this is critical because ahn thein can tell dr. fiscal space should be there. we have a trillion dollar deficit and with economic slowdown, i have seen a model of $1.8 trillion or $2 trillion. daniel: it is a little bit misleading to look at it in terms of more debt or less debt. it is kind of like good calories or bad calories. there is good productivity enhancing ways of deficit financing, things we know will pay off in the long run with investment and infrastructure and education and science and technology research, but there are clearly bad ways to increase the deficit. it is striking that balance and having a healthy balanced deal of government spending that is needed. guy: what do you think is the

long-term future for long supply chains? sending the death knell for them? what is the implication? daniel: something i was debating on a panel yesterday, i think as the world has now moving into the deglobalization phase, virus is putting a hard point to it that companies can no longer afford just to think about the narrow efficiency and cost-effectiveness of their supply chains. they need to think about resiliency at a time when there is potentially a lot more shocks , both local and global. guy: what are the inflationary implications? daniel: it should be inflationary. the extent of these global value chains has been providing a lot

consumers,lation for and that may now go into reverse. tom: i look at this, look at the correlations out there and one of the great correlated features is dollar-yen. yen was resilient 10 days ago. we just had a move down to 104.99 on yen. what is the signal to the global economy and the tensions of the strong japanese yen? daniel: that is a strong point. the dollar-yen has been holding reasonably well, which has been interesting. part of it is the fed has more room to ease, but it has safe haven effects supporting the dollar. this recent move is suggesting now really everyone is fleeing for the hills. to bring it back to a great

point you made, we have to think about the em's and the broader global. tom: what are the metrics you use to observe the systemic potential tension in yen? u.s. denominated, dollar-denominated debt? domestic debt? what are the metrics you use? daniel: we look at a variety of indicators. we have a risk premium index. tom: what does it say now? daniel: i have not checked it recently. showing as of yesterday a lot of stress in the system. even more than that, i am worried about not just what financial indicators are saying. i am concerned what the potential political indications of this is for yen and

institutional resiliency. with bnp paribas. yen 105.16. power,"p on "balance of austin goolsby of chicago in the 12:00 hour. futures -72. ♪

♪ bloomberg "surveillance," guy johnson in london, tom in new york. -70 on futures.

105.16, further correlation and stress. this is a jobs day of least in fort -- importance. ahn and carl riccadonna darken the door at princeton university and join us right now. is this in the textbooks? carl: we are in the textbook territory of we are in a crisis, we are seeing twin shocks in the economy, supply and demand, and a feeble policy response. this is a classic example of the keynesian bazooka should be pulled out and fired. 50 basis points from the fed is a step in the right direction, but only a small step. ramifications for citigroup publishing complete down to the zero bound by june 10 of this year?

is that bazooka enough? carl: that is consistent with what the other banks are leaning towards. you need an aggressive response. anna terry policy is not the entire solution. -- monetary policy is not the entire solution. we need to push on the fiscal lever in an effective fashion. if it were up to me, declare a payroll tax holiday monday incorporations and households and that will deliver into households' paychecks. tom: the president will look like a genius coming out and eliminating tariffs. does that do it? daniel: if anyone can see a silver lining in all of this, it may be dr. peter navarro. this is certainly causing a lot of companies to reassess their focusedility to china

supply chains. momentum lose a lot of in one of their signature initiatives. guy: how quickly can fiscal policy work? in terms of the speed of action here, clearly this story is moving fast. in terms of policy tools we have, in terms of which will work fastest, how should we see this? daniel: in an ideal world, monetary policy might help around the edges but this has to be a targeted fiscal package. as we all know as years of anitics grind slow, and with election year and such hyper partisanship, the recent passage of the coronavirus response bill is a step in the right direction, but they need to move a lot more and ideally a lot quicker. 2008, a bill was

rejected before it got past once they finally realized how big of a situation they were in. i am worried there may be delays again in the keynesian bazooka. guy: is there anything states, individual states can do? carl: states have to swing into action in terms of the health care policy response, in terms of testing, making preparations, etc. just to put a dark cloud over it all, we have shovel ready projects from the 2009 stimulus that have yet to push the shovel in the ground. this is a classic example that that kind of fiscal stimulus will not work and what has to happen is cutting taxes for corporations and tax holds -- households to deliver a fiscal

stimulus immediately. tom: a jobs day question, unit labor costs are coming in light on the productivity report. wage growth today is critical. does it give cover to chairman powell to be more conservative on rate cuts? from the world has changed the middle of february when these statistics were tabulated. today's report really tells us about the preconditions before the crisis. tom: wage growth avenue we have been seeing, it gets a little rollover -- wage growth as we have been seeing, it gives a little rollover. carl: the route in the equity market and the record lows in the treasury yields and the curve flattening which tells you this market is anticipating very little growth and anticipation. tom: what are you going to write this weekend? daniel: we are trying to assess

how deeply the downgrades will go. 1%, give us a number, under v-shaped? daniel: that is most definitely on the table. i think more and more analysts are saying this will not be av but a u. we are seeing a ricochet effects of supply-chain destruction -- disruption and people are not realizing how potentially big a demand shock is coming as a whole swath of the economy can shut down over fear over the virus. carl: my concern is we are going and we will have to go to hockey stick shaped recovery. the notion of a v-shaped recovery just will not happen. guy: are you pricing a recession for europe? how big a drag will that be on

global growth? daniel: a recession in europe is back on the table. whole is, as a collective , the single largest economy in the world, so this is going to have a major impact upon global growth. i would caution, i am not quite sure whether we are at the l-shaped yet. we in a w perhaps? back and saywind right before going into this, the preconditions were local growth reasonably well. medical experts do not know and the virus mutated. and then we see the economy roaring back, i want to caution that the risk can move in the opposite direction. guy: daniel, thank you for your

time today. riccadonna.nd carl later today, larry kudlow. , conversation with jon ferro 9:45 a.m. new york time, 2:45 p.m. london. looking forward to what larry has to say about the u.s. economy. this is bloomberg. ♪

♪ 6:53 a.m. in new york, 11:53 in london. it is a friday and that is important. dobson, markets managing editor is with us. friday is important. you don't want to carry risk over the weekend and stocks are down, bonds like you have not seen for a long time. paul: i think it feels pretty nervous. the comments we have gotten are not just talking about panic, they are talking about a minsky moment, serious capitulation across the market. everything is wobbling, credit gauge risks are significant.

-- a governor looking at the spread between germany and france blowing to the widest since the middle of last year. there is a genuine sense of unease in the market. one wants to be long going into the weekend when we could get even worse news when we come back on monday. nature terms of how the of this selloff has changed, last week felt different to this week, certainly feels different to the back end of this week. it is kind of moving in the direction. paul: the market is breeding the momentum rather than the news. everything is triggering itself and becoming self-fulfilling because that is where eating. there is not a lot -- worrying.

there is not a lot that can be done until the market blows itself out. what could there be that could short-circuit this news? central banks do not have the cure. one of the smartest people i was talking to said how about german for skin -- fiscal stimulus? things that the market could use , would not help the economy or the spread of the virus, is the sort of thing that does not look like it will happen. guy: places like south korea are testing. there are data we can use out of that country. in europe, testing is not happening to any sort of great degree and the united states is a problem. we have no data to understand how this virus is progressing. paul: if we extrapolate and look

at the mortality rate, a lot more people in europe and america have it that are not aware of it than have been identified as having it, which is worrisome because it can continue to spread. how far can this go? if it means schools are closed like in italy, things will immediately start to slow down. editor fors managing bloomberg news, paul dobson. europe back down to 2019 lows for equity markets. spread widening. coming up, jim bullard at 7:30 a.m. in new york, 12:30 p.m. london. ♪

♪ alix: into the unknown.

yields fall further into uncharted territory. money fleas credit, and 30 year real yields close -- for the first time in history. next labor. we sit down with st. louis fed president jim bullard. 10 year yields down over 40 bips. now what? welcome to "bloomberg daybreak" on this friday, march 6. it has truly been an unbelievable week. the equity market looks to be an extra nearly ugly day. futures already off 2%. we have seen 2% swings every day this week. the only story is really about yields. yields are down 12 basis points in the u.s. the 10 year yield now sitting under 80. yesterday we break the 90 basis point level, and now we are already under 80. where is that bottom?

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