haidi: welcome to daybreak australia. shery: i'm shery ahn. i sophie kamaruddin. we are counting down to the market open. haidi: here are the top stories we are covering in the next hour. the federal reserve sweeps into action, flushing the benchmark rates near zero to save the u.s. economy from the virus. president trump says he's very pleased. cases continue to rise in the countriesmore imposing a lockdown.

beijing says mainland infection rates are falling rapidly. the virus continues to wreak economic havoc. data shows across-the-board slumping china for the first time on record. shery: let's take a quick check of the markets closed in the friday session and how u.s. futures are reacting to that emergency rate cut. we are seeing u.s. futures accelerating losses at the open, down more than 4% despite the fact we saw another emergency rate cut by the federal reserve and president trump expection -- x resting satisfaction -- expressing satisfaction. this comes on the cut friday and we saw the s&p 500 seeing its best day since 2008. we have every sector of the s&p 500 index in the green, rising at least 4% following the worst session since 1987. we did have the president also coming out with many measures to support the economy including a declaration of national

emergency and moving to prop up energy prices. a moratorium of federal student loan interest. . not to mention the private sector jumped into action. oil continues to gain ground after the surge we saw in the previous section. wti opening 9/10 of 1% higher, paring back a little bit of gains. this is after the president last week said the u.s. was still the nation's strategic reserve. worth noting, of course. job posting, the biggest weekly plunge since 2008. we put this into context. it's really coming off a very week.le let's go to sophie for a check of how asian markets are coming online. sophie: investors will want evidence that these types of emergency ashes will provide relief. nikkei futures under pressure in chicago. kiwi stocks losing as much as 2.3%. we are seeing a reaction and currency markets.

offshore u.n. trading below 699. i want to show you some of the moves we saw an reaction to their emergency move we saw from the fed. you have the yen strengthening below 107. the ewert -- euro-dollar up as much as 7/10 of 1%. pressure coming through from the kiwi dollar. let's check and non-yields. aussie and kiwi bonds. yields under pressure as we could see the rba follow the fed and the rbnz when it comes to an emergency rate cut. in the wake of the rbnz ed cut, we have cuts as much as 24 basis points. vogel,let's go to jane fhm financial interest rates strategy interest group. he joins us on the line. give us your reaction to the emergency rate cut.

we are seeing the markets not too happy with what they've seen so far. u.s. futures are on the way down. >> good evening. yes. certainly the coronavirus news on saturday on sunday has deteriorated. that is driving the s&p futures so far. it will probably take a good six to 12 hours or so to process what the fed and other central banks have done. shery: what should we be watching right now? we continue to see very random moves and different asset classes. gold climbing after the fed cut rates. we have seen a very volatile move with everybody trying to get liquidity last week. >> absolutely. friday was the first day they really felt like 2008 in the the lackecause all of of coordinated positions and things that traders and hedgers had to work out on friday. isn't the heart of the

problem that this is an issue for which there is not necessarily a monetary policy or response?cal policy how do markets deal with the fact that this really is the kitchen sink? or do you not think it is the kitchen sink? can the fed and central bank always do more? >> they can always do more. they have planned disaster recurrence the notes think case of monetary policy. this will all put it to the test. however, the fed moves right now are not necessarily about helping the economy in the next four weeks as we go through covid-19 stories, headlines, and economic impact. it's about speeding up the recovery once those have begun to plateau. we are seeing an

indication of the volatility that remains. oil erasing that initial gain. it is now trading 2.5% lower in the london session. what opportunities are there at this point? depending on who you listen to, it would benlikely a lasting flaw. i guess given that we know bear markets can produce rallies from time to time, what opportunities are you looking for? quite yet, because as we checked some of the reports on commitment of traders and what -- the way people were trying to position themselves early in the week, there's a lot of long positions and short positions that are still not positioned for both the news on the covid-19 and what the fed has just done. there's an awful lot of flow, a a lot of new

outlooks that will have to be incorporated into market trading literally every hour, probably through tuesday. shery: of course, even before the fed's latest move, we have seen zero handle on the treasury market now a reality. what happens once a treasury starts trading again? can we see the front end when asia comes back online? we are just a few moments away from that. can we see negative yields? >> we certainly could see them in the two-year and three-year at some point this week. i don't know if we will see that on any of the open stressed yet. been, all the pressure has in the 30 year over the last two trading days. but it's one of the first things people will have to sort out. then we will start looking ander at the intermediates the threes again on treasuries. haidi: thank you for joining us.

jim vogel, fhn financial interest rate strategies group manager. continues as asia wake up to this shocking news out of the fed. we are taking a look at u.s. treasury futures surging after the unexpected rate cut and the boost in bond purchases as well. let's get the latest on europe and how it's dealing with the covid-19 crisis. new coronavirus cases each day. more than china did at the peak of its viral outbreak. that's according to the world health organization. the who says the situation will worsen in many places before it improves. let's start with the hardest hit nations in the region. yet more measures out of spain and of course we are ever watchful for the situation in italy. reporter: yes. it seems like the situation has dramatically changed in europe over the weekend. are now two countries in

full lockdown, italy and spain. one country in semi-lockdown. in italy, with the number of deaths, they are above 1800. you have nearly 25,000 cases. italy has announced increasing spending to help companies deal with redundancies, unemployment, delays on taxes. lockdown under the state of emergency for 15 days with food control by the spanish government. the borders across europe are not yet officially closed, but several countries including germany could actually restrict access and increase the control that the volatility has. of course that would mean a temporary end of the zone where we have free travel within europe. shery: tell us a little better about where you are in france. we know you have the municipal elections as well.

reporter: yes, and that was a very bizarre weekend in france. on saturday evening around 8:00 p.m., the prime minister said that all shops and restaurants and nonessential public places across the country's would be shut, but at the same time, we did have local elections taking place today in france, even though the turnout was much lower than usual, just around 38%. people still came to the polling stations despite all these concerns around covid-19. in france, the situation is also increasing rapidly. we have more than 5000 cases , 120 deaths. tomorrow, schools, nurseries, universities will be closed. i expect a package as much as 40

billion euros to help the french economy. it is possible of course that france will also go in full containment in the next few days. in paris,oline connan thank you very much.we are now hearing from citigroup area,n the new york workers should work from home. we have seen governor cuomo say schools will close early this week.the new york city mayor de blasio saying it is possible schools may not reopen this academic year. china.o to china also continues to take more measures to limit the spread of the virus. our china correspondent selina wang joins us from beijing. of course, it's a whole different issue in china now that they have sort of curved their own infections. it's about limiting imported coronavirus cases. reporter: right. as the number of cases slows dramatically, authorities are shifting attention to stopping this virus from being reimported

back into the country. beijing is taking a major move and will be quarantining all travelers from overseas at designated locations for 14 days. these people have to pay their own cost of their quarantine. . this also includes trainees citizens. even -- chinese citizens. by far, this is one of the most extreme measures to be undertaken by any international help to stop the virus from coming into an area. beijing has not reported any locally transmitted cases. all the new confirmed cases have come from travelers and countries including the u.s., italy, and spain. i want to point out that meanwhile in south korea, infections have slowed as well and president moon wants to share tips for containment, asking john will trump to hold a g20 teleconference to discuss how south korea reduces the

virus. they have been praised for the fastest pace of trusting around the world which allowed early detection cases and lowering the mortality rate to less than average. haidi: what are the latest development we've seen when it comes to the virus spreading? it's interesting hearing the kind of narrative. there is some concern about complacency, even in the countries where we have seen the fed successfully curtail. reporter: that's right. we are looking at an issuer countries need to stay on high alert. south korea has been praised for their efforts. they are hoping to share techniques they have taken. most important a what we are is a data dumpay from china where we are expecting to see across-the-board contraction for the first time on record with much of china's economy shut down the january and february period. industrial output, a rough proxy for output, cut 3% from a year ago.

fixed asset also falling. retail sales also inspected who have contracted a dramatic 4% with people confined to their homes and closed shops and restaurants. this picture may be repeating across more asian economies if this containment is not successful. haidi: china correspondent selina wang with the latest out of beijing. thank you. let's get the first word news with karina mitchell. reporter: thousands of police and soldiers played around metro manila, sealing off the metropolis in an attempt to contain the coronavirus spread. this will last at least a month and will affect the lives of more than 12 million people residents. are ordered to stay at home. . school closures have been extended by another four weeks. global demand for all and free fell, heading for the largest annual decline in history as the coronavirus further weakens already fragile consumption.

there's a growing feeling among traders and executives that the decline may outstrip that of the recession of 2009 and might even outstrip 1980 when the world economy crashed in the second oil crisis. oil has fallen by almost 50% this year. goldman sachs is the markets have some way to falla. -- fall yet. by 10% to0 may fall below 2500, lowering the bottom line, saying the index could get fall to 2000 if the economy continues to be damaged by the fallout of the coronavirus. he says this has caused on unprecedented financial disruption. 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. shery: we are looking at u.s. futures. we have hit the limit down band. we are down 4.8% at the moment.

this is despite the fact that the federal reserve has implemented another emergency rate cut, coming by a full percentage point. president trump saying he's very happy with the slashing of the rate but it seems it's not really satisfying the investor'' sentiment yet has we continue to see u.s. futures down 4.8%. the japanese yen continues to search against the u.s. dollar as we see a pickup of haven demand. plenty more to come on "bloomberg markets: australia." this is bloomberg. ♪

haidi: we are getting breaking lines from the rbnz. expects theing he disruption to be of medium duration. purchases of fx as well as swapped qe could be as big as needed. really trying to put a floor under the market after the 75

basis rate cut this morning before the fed came into shock the markets. the governor saying the kiwi would involve buying bonds on as secondary market as well expecting business failures and job losses from the deputy .overnor a news conference taking place saying it could spill forth into business conferences and jobs, expecting new zealand growth and inflation to be lower. heernor or earlier saying expects banks to do the heavy lifting now that they have capital buffers they can use and the bandwidth to increase lending. we will continue to watch that but let's bring the head of research from pebble stone group, chris weston. how has your morning been? >> morning. kiwi, thatrts of the

there would be a statement from the reserve bank of new zealand. they were going to cut rates, giving us a pretty clear indication. this is about getting the cash rate down to zero as low as you can. talking to a few clients where the terminal started flashing red and you have headlines coming through from the fed. you have to ask, why wait? i think the fed might be diverse estrus appointed by the reaction so far, but what we've seen isn't necessarily designed to promote a high bid in the stock price. what we have no need to see his reaction and funding markets. fx basis, we need to see that coming down a touch. we want to have a look at when and whetherpens that contracts because it has become a funding issue. it has been a bit of a crazy

morning. i think it will continue. limit down and s&p futures now. there's more to come. there's no doubt that the reserve bank of australia should come out. they need to come out today and get the cash rate down to zero. they need to come out and talk about enacting yield curve control or going down the qe channels. then we have the bank of korea as well. this is a central bank fast and central banks will pass it over to governments. now it is your turn, show us the meat on the bone. mentioned,as you u.s. stocks futures coming down, u.s. treasury futures soaring. gold is gaining, oil volatile, but trading lower. it doesn't look like it will put a floor under the markets. what happens, this is a health care crisis, and to try and have central banks throw whatever it takes, the kitchen sink at it, will not affect the core of the

problem. do you think central banks could always do more? i think you are right but this is also a small and medium enterprises well. how bad things will get, it's difficult and i think the market is dealing with the. i think the reaction is a wave of further flows. most of the selling into s&p futures has been from the systematic crowd and i think there's more capital flows and liquidations that need to come. . once that's done, the banks will be telling us about the and we can start waiting back in. in terms of what the fed can do, they are going to the swap lines that should be good for the market that has been a bit of a problem. we want to see is a runaway u.s. dollar. i think for the markets, what they are going after now, the

idea that feds can look at the with the triple be credit spreads later three u.s. markets or toity see a reduction in credit spread and some calm before they can consider dipping their toe back into equities. the fed will probably not do it on initial terms but i think the data is not warranting it at the moment, but i think the markets will be clearly happy if the fed were to make noises in line with what they said about what they can change the fed act to purchase corporate bonds and equities. everyone's been saying it's difficult to do, there is little appetite at the moment, but the fact is, the fed act, it gives a list a different asset classes taken by. bond, gold, u.s. dollars. it doesn't actually explicitly

say what they can't buy and that is a gray area. it is just lucky we have a lawyer at the helm of the federal reserve. i think the market would love to see corporate bond buying. shery: should we get a hint of that from chair powell speaking very soon today? if the markets are not happy with the latest moves, what can we expect to hear from chair powell. surprised if we heard something that was a strong hint of this meeting. they probably say there's a range of tools at his disposal, but at the moment it is probably a little too far-fetched and the data has not warranted that side of things. at the moment, everything we are seeing from the fed is designed trying to keep, the dollar funding market and

check and he doesn't want to see a deterioration in that. perhaps we are early for corporate bond buying but the market wants to see that. we have seen that blowout in spreads to fairly worrying levels and i think the market wants to see that. but who is going to buy the market is another question. the risk parity crowd, that's a big worry in itself. buy will not be looking to into the market above 20%. that will need a rapid reduction of credit spread in my opinion. shery: in the meantime, who were you expecting to move next? we have gotten hence from the be ok that there could be an emergency meeting as well. >> > w will see something from the bank of korea, more liquidity measures. for me personally, i'm looking at the reserve bank of australia , looking at my own jurisdiction

and where we are going here. it makes no sense that they actt come out and accordingly with every other central bank. the markets are pricing it in an pricing in the reserve bank cash rate at the zero lower bound effectively. so get it over and done with. go out and do the unconventional monetary policy. we were expecting these from these rates and pass the baton to the governments because that's what the market wants to see. a scientific approach from governments to fix the issue, the market says the hard-hitting measures, they will cause economic pain. that's what we will model around small and medium enterprises, but it will be horrific for the economic impact. that's why it's so difficult to model pricing. not a lot of

conviction about the fed slashing rates near zero, the kitchen sink. great to have you. chris weston, peppers group head of research. let's get -- peppers group head of research. let's get the next headlines. apple looking to minimize disruption. apple has almost 460 outside greater china including china and the u.s. shery: flakka -- nike closing all stores in u.s. and western europe because of the coronavirus. through march 27. nike was one of the first corporate measures to address the virus closing.

at thelet's take a look asian session. the fednot convinced by move. serious downside when it comes to the open in tokyo. this is bloomberg. ♪ ♪ ♪

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haidi: 9:30 a.m. here in sydney. markets open around 30 minutes away. what a market open we are waiting for. shock and off. will the markets take this positively? the fed slashing a full percentage point today. we are really not seeing positivity when it comes to u.s. futures. treasury futures are soaring. u.s. futures limit down. green when itf comes to sydney futures into the market open. certainly, that's after the market did close higher by just about 4.5%. we do expect the volatility to

continue into the start. of the trading week i'm haidi stroud-watts. shery: i'm shery ahn in new york. you're watching "bloomberg markets: australia." let's get to sophie for a check of the markets. sophie: shellshocked this morning given the surprise move by the fed. they are continuing to overtake green as a driver. morning.y 6% this they wait to see with the government will bring up big guns as a central bank has been carrying much of the burden given recession risks rising. u.s. futures going down. the yen on the front foot this morning below against the greenback, retreating against the yen. the dollar index under pressure early this morning and asia. checking in on the commodities, gold jumping early in the 3%sion with prices up almost since 1980. the volatility rocking for crude prices. wti jumping almost 6%.

let's check on board switching it out to check in on bonds. futures surging with a basis point climb. the start of trade in tokyo. ozzie yields are sinking as the rba is seen rolling the fed and rbnz where the emergency moves to jump and check in on pricing for an rba moves. we are seeing a big anticipation for cuts from the reserve bank of australia. shery: larvae is expected to conduct one month and three month repo operations until further notice, trying to continue to give some support into the system. this is the latest we are hearing on the bloomberg terminal. they will also conduct six month or longer repo operations at least weekly. joining us on the line, raymond lee, capstone financial. thank you for joining us. we continue to see the latest

market moves in reaction to what done.d has chair powell is speaking to the pressing policymakers must do what they can to ease the hardship. given the market moves right now, what can we say on how investors are grading the fed's response? i think it's known that they have to do a little bit of price recovery, whether it's the fixed income market or the equity market. i think overall it will be a good thing for the market. when you think about last week, markets with the quiddity in the bond market, there wasn't a lot of trading going on. i think with the fed wants to do is basically undo the tightening by giving all they've got which is cutting interest rates and buying further assets. after these announcements, you will see rates move up and down until they stabilize to find a range.

i do think they see volatility along the way, but hopefully this is going to stem some of the losses we have seen. shery: we continue to hear from chair powell right now saying the rule is guided by their mandate that the u.s. economy was on a solid footing before the virus. one percentage point cut. what else could we see from the fed if this fails to put a floor into the market well down? is running a lot of tools. right now rates are basically zero. i don't think they will go negative. the only aspect they can do is to purchase accept -- asset and they have announced a big asset purchase already. i suspect you'll see them do that if this continues to be more problematic. another thing we have not heard the fed talk about is potentially brought and private

assets. haidi: i'm just going to ask you to pause for a minute because we are hearing from the fed, jay powell speaking at the moment. let's listen. >> in the past week, several important financial markets including the one for u.s. treasury security, have a times shown times of stress and liquidity. the market for treasury securities is a critical part of the foundation of the global financial system and generally the most liquid of all markets and served as a benchmark mark by which many other financial assets are available. it plays an important role in allowing firms to have a safe return and manage risk. when stresses arise in the treasury market, they can reverberate throughout the economy.

to prevent this from happening at support the smooth functioning of the market, we announced we will purchase at least 500 billion dollars of treasury securities over the coming month. similar stresses have emerged for agency mortgage-backed security which is closely linked to get aeasury market mortgage, to buy a house, or refinance an existing mortgage. to improve the functioning of this market and ensure the effective transmission of monetary policy, we will also billion at least $200 of mortgage-backed securities and immediately cease the runoff of these securities. while the primary purpose of these securities purposes is to restore smooth market so credit can continue to flow, the purchases will foster more economy of financial conditions. the federal reserve announced on november of other actions to

support the flow of credit to households and businesses, promoting maximum employment and price stability. i will highlight two. first, we reduce the interest rate on discount window loans by one point 5%, bringing that to .25%. that plays an important role in liquidity and stability of the banking system and encourage banks at the discount window to meet demands for credit from households and businesses. to make the discount window more effective, we will offer discount window loans for periods up to 90 days. of the importance of the u.s. dollar in the global economy, strains and markets for borrowing overseas can disrupt financial conditions here in the u.s. took art against such disruptions, the federal reserve maintains swamplands with five major central banks. one dollar funding emerges abroad, central banks can maintain pressures in

jurisdictions and prevent them from impeding the flow of credit at home. to address potential pressures during the current period of uncertainty, we made a cordon aided announcement with quebec england,, fink of japan, swiss national bank and the european central reduce the dollar swamplands in addition, central bank -- swap. in addition to the usual one-week operation. these long-standing arrangements carry no risk to the federal reserve or to the american taxpayer. i want to go into detail on the other actions we took but they involve eliminating reserve requirements for banks and encouraging banks to make use of intraday credit with the federal reserve and use capital and liquidity bumpers as they support lending to households and businesses. the actions we have announced today will help american families and businesses and the entire economy through this

difficult period and will foster a more vigorous return to normal once the disruptions from the coronavirus abate. we will continue to closely monitor economic and financial developments and the implications for the economic outlook. we are prepared to use a full range of tools to support the flow of credit to households and businesses and keep the economy strong and promote maximum employment. finally, let me know today's fomc meeting was in lieu of the meeting scheduled for next tuesday and wednesday. thank you. i will be happy to take some questions. >> the chair will now take some questions. please dial star one on your phone to indicate you want to ask a question. you will be on muted when you are called on. ed when you are called on.

haidi: we will contie to hang onto this call with fair power -- fed chair powell. extraordinary times in terms of this day. an audio press conference with fed chair powell taking questions now. think the recession is avoidable and can be -- is inevitable or can be avoided? secondly, do you expect announcements? thank you. thank you. based on discussions today and conversations with participants, it is fair to say we have a range of views about the path of the economy as is always the

case, but in general, i would say the u.s. economy, with arrival -- with the arrival of the virus, the measures we would take involving withdrawing from or reducing certain activities and the leisure and hospitality business, that will mean lower economic activity for a period time. these are choices we make to protect ourselves. appropriate choices we make. that means the second quarter will probably be week. in fact, in the view of many lower declining, output than it was in the first quarter. after that, it's hard to say how big the effects will be or how long it will last and that will depend on how widely the virus spreads. that is something that's highly uncertain. run itsthe virus will course and the u.s. economy words -- will resume a normal

level of activity and the fed will continue to use tools to support the flow of credit to households and businesses with monetary policy to do what we can to see if the recovery can be as vigorous as possible. you asked about other facilities. i would point out we have responded strongly, not just with interest rates, but also with liquidity measures today. we believe what we did today will be beneficial to financial said,generally and as i we are prepared to use the full range of tools to support the flow of credit to households and businesses. >> thank you. we will go to marketplace radio. >> hello. nancy marshall guns are with marketplace. chair powell, i'm wondering are you considering negative interest rates at this point? is there a scenario in which you think that would be appropriate?

>> as i have noted on a number , weccasions, the committee did a year plus long study of our tools and strategies for communications and at the end of forward assetd purchases and different variations and combinations of those tools. the basic elements of the toolkit, once the federal funds rate reaches the effective lower bounds. forward guidance, asset purchases, and combinations of those. we looked at negative policy rates during the global financial, crisis. we will continue to do so. but we do not see negative policy rates as likely to be an appropriate policy response here in the united states. >> ok. we are going to the wall street journal. >> thank you, chair powell.

i wanted to understand specifically how the actions you have announced this evening will get credit to households and firms that will see large drops of incoming revenue and also to the extent that they are needed, what steps would you recommend fiscal authorities undertake to make sure that firms with large drops in income and revenue don't go bust over the next few weeks or months? -- whate tell you how we think our tools can accomplish and what they are not designed to accomplish. what the liquidity operations -- and i will talk about the treasury and mbs purchases -- are designed to do is assure the proper functioning of the treasury and mbs marker -- markets. the treasury is perhaps the most important market in the world. it's probably the most liquid large market in the world.

the mbs market is very important. it is closely linked to the treasury market. it is the way our monetary policy decisions flow through to borrowers in the real economy. very important markets. they had reached levels of very high liquidity to the point where, as you know it last week, financing, very large amounts of financing, and after that we bought assets to support liquidity and return to normal function. we found it helped, but nonetheless we thought we had to do more. we knew what we had to do which is the asset purchase programs we did today. those are designed to restore the key markets to normal function. why is that important to everyone? these are part of the foundation of the global financial system and the united states financial system. if they are not functioning well, other markets -- it will spread to other markets. those are the markets that

amount to households and businesses where they typically get credit. we know the functional financial and a dysfunctional financial system can have very negative effects on the economy. we saw that in the financial crisis. we thought it was quite important for us to take strong measures to support proper market functioning. you asked about households. we don't have the tools to reach individuals and small businesses and other businesses and people who may be out of work or whose businesses may experience a period of low activity. we don't have those tools. . we have the tools we have and we have used them aggressively for the benefit of the public, but this is a multifaceted problem that requires answers from different parts of the government and society. by far the most important is a response to the health care workers and health care policy makers.

policy, we fiscal have had one round of fiscal policy and another coming. fiscal policy is a way to direct relief toreally particular policies and groups. , intary policy has a role the original role of providing liquidity to financial systems and that is part of what we did today. the other part is to make demand for global interest rates. you asked about fiscal as well and i guess i covered that. we do think fiscal response is critical and we are happy to see the measures are being considered and we hope they are affected -- effective. >> we are going to go to foxbusiness. chairman.ou, mr. thatur statement, you say the market measures of inflation have declined. the fed has undershot inflation

in the last year. that has become one of the focuses of the fomc meeting. reserve seatral deflation coming and is this large can't -- kutch met to get in front with the fed securities buying outside of treasuries and mortgage-backed securities? >> thank you. on inflation, the economy has performed so well over the last few years, and right up through january, historically low unemployment, 50 year low unemployment for a couple years, almost 11 years of expansion so far. yet inflation lingered below 2%. we have been concerned inflation has not moved further. it's not a question of deflation. it's a question of not getting inflation up to our target on a robust time. with this coronavirus arriving, we judge that the net effects of this will be to have inflation moved down even a little more.

-- issue ofquestion deflation. it's an issue of inflation falling further. we expect with uncertainty that it will fall a little further below where it has been. of course, we don't have the legal authority to buy other securities other than the ones we already by and we are not seeking authority to do so. we have not discussed that i the fomc and it's not legal authority we are seeking. >> we will go to this financial times. powell. you, chair about thealked mortgage-backed security purchases as stability operations. i'm pretty sure every person on this call has an editor asking to determine whether or not this is quantitative easing.

how do you draw a distinction between these purchases and something you may do in the future that is explicitly quantitative easing, or can we step?of this is the first what i can tell you definitively is what the purpose of the asset purchase is. what i can tell you definitively is what the purpose of the asset purchase is. support the overall economy. you do that by supporting proper market functioning and the mbs market. i think you will see us the purchases roll forward, the treasury market and mbs market returning to normal market function. to that, we will support economic activity. that will be a positive for economic activity. in terms of what it's labeled, that is of less interest to me. i think we are very clear what we are doing this for and with the logical effects would be, which would be both better when theretion, and

is better market function, it will be -- policy will be supporting the economy. >> ok. bloomberg tv. >> thank you, mr. chairman. i want to to ask timing questions here. , qe orn whatever it is not qe, you talk about increase over coming months. is there a timetable for that? how long are we talking? 700 billion dollars over two months is a lot different than $700 billion over the course of a year. do you have a date where you would reevaluate and perhaps add more or end the program? the same with the interest rate cut to zero, how long do you think that might last, and would you be inclined to quickly go of 100 a higher level basis points or more that you cut it from, or would you

anticipate that this will be a long, slow process going back? >> ok. mike, can you ask your question? >> i can't read my writing. timing. asking about how long a period are we talking about for qe purchases and how long do you anticipate keeping rates low and how fast would you bring them back up again? >> ok. sorry. the incoming months language. let me tell you what we were doing. if there's no monthly cap or weekly cap, the desk is going to go out and purchase at a strong rate that we think will restore market function, reste liquidity as quickly as it can be restored. that language is open-ended. it is meant to sd a signal to the markets that we are not

point to be bound by $60 billion a month. we will go in strong starting tomorrow and by across the curve and by mbs and use over tools t do what we need to do, which is restore these important markets to nmal function. that's with that is. the policy rate, what we said is we will maintain the rate at this level until we are confident the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals. that is the test we've written down. seeou look at it, we will some things have to happen before we would consider. we have to become confident that the economy has weathered these recent events and also is on track to achieve maximum employment price stability goals. that's a test we will look at. i think it suggests we will be

watching and willing to be patient. >> we will go to the associated press. in 2008, you had a lot of coordination between the white house at that time, the fed, the treasury, bernanke doing things with polson. today the white house had its press conference at 5:00 and you guys had something separate. do you think it would be more or have a moreet protonated response? is that something to look for in the future? >> i would say this. we have different tools. i think we do actually work closely with the treasury department and cooperate with them on things with clear lines of delineation. the treasury department has authority over fiscal policy. that's not our job.

it's their job with other parts of the administration. it's just like that for us with monetary policy. we have sole responsibility for monetary policy and strong instructions from congress to conduct an independent and nonpolitical way. . those are one for each of us. there are middle, areas where we can cooperate. there's a long history. you would want the finance ministry and treasury to be talking it every major economy in the world at want them to be exchanging information, professional relationships not just at the chair to treasury secretary level but also through the organization. is example, the new york fed the fiscal agent. there's a lot that goes into debt management and the issuance of debt that happens at the new york fed. i think we do actually have professional, good, working relationships up and down the chain. that seems to be working.

there's also quite a lot of coordination in other respects of course with foreign central banks, but you didn't ask about that. >> we go to the washington post. the washington post, are you there? >> hello, sorry, i'm here. hello, chair powell. two questions this evening. have you personally been tested for coronavirus? are you working from home? if you could shed some light on the precautions you are taking. second, do you believe the fed has sufficient tools at the seekingor are you congressional action to expand your toolset? >> so i feel fine, i feel very well, there is no reason for me to be tested. we are observing, we are trying to model good behavior, so we

are observing a lot of teleworking. we are not having big, crowded meetings. we are trying to observe all the things professionals tell us to do. i do expect to do some teleworking because i want to model that it's ok for others to do so, in fact it's important for them to do so. i will do that. let mes of the toolkit, say i think we do have plenty of space to adjust our policy. i mentioned our liquidity tools. we have a lot of power in our liquidity tools. we are prepared to do -- use them. tohave plenty of space left offer forward guidance asset purchases and adjust policies. i think we do have room. at all made a decision to request further tools or authorities from congress. we have not made that decision. it's not something we are

actively considering right now. >> we will go to the new york times. >> hello, chair powell. thank you for taking our questions. i'm curious, obviously you held this meeting in lieu of rating this week. relief with economic projections, and if not, how should we understand how you are thinking about the economy as the coronavirus shapes up? >> i guess you are asking why no sep. a couple of reasons, first we decided thursday to move the meeting up by three days to today, before the sep's are generally filed in. we have spent our time focusing

on getting ready to make these announcements. second, a number of fomc participants had already reached out to make the point. the economic outlook is evolving on a daily basis and it is depending heavily on the spread of the virus and the measures taken to affect it at how long that goes on. that's just not something that is knowable. actually, writing down a forecast in that circumstance did not seem to be useful and could have been more of an obstacle. i do expect it will return to a regular quarterly cycle in june. forecast, as i mentioned, we see the u.s. economy coming out strong. we talked through it today, people have a range of perspectives on the way it will i think there is a broad sense

that the second quarter will be a weak quarter with outlook to clotting. after that, hard to say. what happens in the third and fourth quarters built depend on the path of the virus. we willg we do know is be doing our job and supporting the flow of credit and there to do what we can bind the recovery comes. news.will go to bloomberg >> hi, chair powell. you say the path of the economy more or less depends on the path the virus. how importt is fiscalolicy now in determining whether this sudden stop inactivity is long or short and of high human consequence or little human consequence? second, can you talk about what is on your dashboard for economic and financial

indicators that you will be watching day today? we shouldhair sd start seeing the data show up in april. what will you be watching at what should we be watching? >> in terms of fiscal policy, in the first instance -- you are 'lling some of this now -- fiscal policy can do is reach out directly to our affected workers. we have seen some of that. that is an important job. more broadly, after that, there is the question of broader fial stimulus. i think that will depend on the path of the economy. there is such a wide range of possibilities here. it is hard to predict. be a needd certainly for that. was -- whatquestion was your second question? indicatorsn, what

u will be looking live, financial and real? term, going to be marketsat the treasury function. we will look to see that financial markets are turning to more normal functioning. it is an essential part of our job. that is the thing that is central banks were originally designed to do, provide liquidity to financial systems in stress. we take that job seriously. audibly the most important thing we are doing is that. we will be prepared to use our address appropriate to -- to support market functioning and support the flow of credit to households and businesses. data, i of economic think it is early. we are looking -- the economic data will follow the data on the

spread of the virus. what happens during the spread of the virus is probably not going to tell you a lot about where the economy will be in six months. quarterably have a bad and the second quarter but if things get better in the third quarter, that probably will not matter much. -- that is longer what i will be looking for. what will be the spread of the virus and the pat it will take. and the effects on the economy. >> we go to nbc news now. hi, chair powell. a lot of good questions here. i will turn to one more philosophical. you talked about the disruptions from the coronavirus and lower economic activity. the fact thatwith my kid will be out of school at april 20. we feel this acutely. i wonder if you could give us your perspective and how you

look at this, how are now melissa this is what you and your colleagues will have to reckon. we havend question, seen tools deployed over the last few weeks and the market, which is something you pay at least minimal attention to, is reacting negatively to some of that. what you make of that? questions earlier about two about and what is left in it, rates are low, does that provoke apprehension on your part that there are fewer tools? i guess your first question thehow do we think about time for this thing. .he truth is, we don't know the experts we talk to bill say they don't know and it is on the level. it will depend on a number of things. with, the measures we take

the social distancing at all the things businesses and schools and everyone is doing. that depends on how compliant people are. you can see that some countries have been able to come through aggressive measures in high compliance, been able to bend the curve and do that. whether we succeed, that is the question. will resist the impulse to gas. i don't know what that would be. toolbox, wethe think we have plenty of policy space left. particularly the liquidity tools. that ithe most important thing we are doing. uts billrest rates tter to borrowers who will get some relief, but matter more by the economy begins to recover.

in the forefront, with liquidity we have room to provide forward guidance to do asset purchases. there is room for us to do what we need to do. i would close by saying, typically fiscal policdoes play a major role when there are downsides. you have se that in past downturns. that is beyond automatic stabilizers. sometimes fiscal policy comes in on a discretionary basis and that will probably need to be the case here. we will go to politico. >> thanks for doing the call. i wanted to ask, do you see a bigger goal for the financial stability oversight council? with the stress in different markets, do you see financial stability rising? are there activities to

crackdown on? are you confidence there are banks that are systemically important? that is something the secretary that treasury secretary shares. it serves a good purpose, but you should know that we are in regular contact with the other regulatory agencies, talking about what is going on in markets. there is a lot of information on an ongoing basis. is true with our central-bank contacts around the world. we are in contact with the central banks around the world. we have group calls, calling one on one. there is a lot of information exchanged. nonbank --on was that is a judgment for the stock. i am comfortable with the

actions we have taken and if we identify a systemically important nonbank institution, we would not hesitate to designated. i guess we are working more on activities. but we still have the power to name institutions. the question was -- rising?ancial stability say that isuld something that happens when markets are as volatile as they are. when you have a big market movements while markets are trying to understand what is going on, trying to reach a view with high uncertainty. that is why you see a lot of volatility. there is more risk to financial stability like that then there

is when things are placid. at 4:00oing home endboard over here. that is not the case right now. financial stability -- those risks dubai's at a time of high volatility, particularly a time when we are presented with a , if note that is unique something we have done before. we are strongly focused on financial stability, we monitor it carefully, we have built a resilient financial system, the banks are highly capitalized, lots of liquidity, better at understanding and managing the risks resilience of stress. on --nancial -- our focus over the last 10 years will pay dividends in the sense you have a more resilient financial system then you had before. news.will go to market

i wanted to ask, a few days ago, the open markets expanded it repo operations. did you have any take away from that? did that indicate that the repose were not working as you admission it or was there something else that you learn from that? thank you. >> we saw that liquidity had become strained in the treasury markets. we decided to offer large quantities of overnight repo to address that. that makes it easier to finance the purchase of treasuries. so we did that. high as up was not as

many expected. we did learn something from that. we thought that was worth doing and what we learned was we need to go direct rather than trying to intermediate through the dealers. torealize that we would need purchase securities for our portfolio. we did that on friday. we bought across the curve and bought $37 billion worth of securities. we saw what happened with that. the market function improved a little bit, but it was not what we needed. that is why we brought together the fo one c and at our meeting announced these measures this evening, which are strong measures with the support of the committee to provide substantial amounts of liquidity. it is working through different

solutions and finding the one that we think will work and acting aggressively tonight to them lamented. waiters -- toto teuters. describe discussions you had with the major banks, this talk of drawing down capital buffers, how far can they draw it down? how much can they put out to customer finance? did you get explicit agreements that this will go to customer finance and not something else? secondly, is there discussion of using the powers of the fed to do some direct lending? >> we have given general guidance to the banks. we would like them to use their anders to provide loans work with their borrowers.

we are providing a lot of guidance across a wide range and they are saying -- they have every intention of doing that. that is good to hear. we will see how that works out. there are discussions going on and we hear the banks saying that is what they are going to do. that is a good thing. course, we have nothing to powers, that is part of our playbook that in any situation like this -- as i have --d, you're prepared >> you have been listening to a teleconference by jay powell after he cut the interest rate to near zero. we have hired -- we heard jerome powell talk about the coronavirus and its impact being unknowable. this rate cut in place of the

meeting we would have seen later in the week. we are not really seeing much reaction when it comes to u.s. equity futures. still around that limit that we saw earlier. let's bring in sophie for a check of the markets. slides up asing much as 7.4%, the biggest drop since october 2008. that bounce friday, short-lived for the asx 200. qb stocks headed for a bear market. a steady decline. while the yen is picking up steam, against the dollar. pairing earlier gains after jay powell was pushed on negative rates. let's check in on what is going with aussie assets. into theould further repo market. the aussie dollar sliding after briefly touching 63 earlier. yields under pressure. coming off the earlier about, we have the kiwi dollar swinging

this morning. puttinggency rate cut pressure on kiwi yields. u.s. futures under pressure. we are seeing dollar weakness. the fed slashed the cost of selling the greenback. checking on treasury futures come update moves there. we had treasury futures on the radar trading near session highs. jay powell was speaking after the open, implied we could see the 10 year yield followed by about 60 basis points at the start of cash trade. we will see if the fund and a session of the yield curve will drop into negative territory. let's jump to the terminal. we are seeing a blowout in dollar swap amid the funding stress. access toy broaden

its swap line after this coordinated action with other central banks to ensure there is dollar liquidity in the system. >> taking a look at early market there has not been much optimism despite the fed's move this morning. recap of whatu a we heard fun jay powell in that audio news conference, saying that fiscal policy as a major role to play puppy fed is doing what it can, moving and strong task to restore -- thus began our policy correspondent. what was most interesting to you that you heard from jay powell? >> you sort of put your finger on it. the chairman was focused on how

this will help the markets, not the average american or someone around the world. he sort of said that is the job of fiscal policy. we will do what we can to promote these with functioning of financial markets and eventually this will have an impact on the overall economy when it begins to recover. between now and then -- he said we don't know when that will be -- this is designed to keep markets functioning. they will go in strong with bond purchases to send a message to the markets that they are there. they expanded the repo lines. they are doing a lot of things traders, markets, investors, but the person at home wondering what will happen, that will be the job of fiscal policy. this is not necessarily about stimulating the economy, it is about propping up the markets. what did we see today in terms of it being effective in doing

that? one of the things happening over the past couple weeks is the global demand for u.s. dollars. it is not just in the u.s. financial system where people need dollars to do their business. it is across the world. we have seen basis swaps, the rates between major currencies. between the euro at u.s. dollar at yen and u.s. dollar, these have blowout to wide levels which shows you that japanese banks, european banks have a high demand for short-term u.s. dollars and jay powell addressed that he will work with other central banks to ensure the free flow of those u.s. dollars between financial institutions. it sound like a dry subject but it is fundamental to the working of money markets. we saw in 2008, if the money market cannot function, that has an effect across all asset classes. the fed is quick to get this under control, to make sure day

today movement in the funding markets are smooth, that we see back to normal operations in the treasury market going smoothly. this will appeal to other things like commercial paper, which is an important role in the united states. we have to get back to the plumbing of the financial markets need to be working smoothly, otherwise there will be dislocations across asset classes. >> what'd be her -- what did we hear in terms of details? give specifict details. he said we will go in strong. morning, they will be buying a lot of treasuries across the curve. they will be buying mortgage backed securities. the repo, enough rain print -- the fine print, they said they would do 1.5 trillion, now they are saying, we will do whatever you need. the repo markets will be taken care of.

mark was talking about the need for dollar funding. they activated the swap lies. what will be interesting is if there are other countries that needed swap lines. south korea is not one of the countries. we will see if they expanded that. the whole idea of the discount window, they can also use their capital buffers so they don't run into capital constraints and they would still be able to deal with counterparties. the fed put it in terms of lending but they are talking about the wholesale market rather than the retail market. giving specific numbers because they are trying to leave it open-ended. is getting to the point where we are not sure as to what individual price moves mean. i saw gold was gaining in the

wake of the decision. i was not sure whether that was risked on or off. in terms of the direction of the dollar, what the treasury curve does, is there any indication as to what we might see? erratic movement in both things for the short term. it will be hard to make predictions. what we can be sure of is the effect of having zero interest rates in the united states will meet other central banks around the world, particularly asia, will move towards that. eventually, that will become a dollar negative. the fact that there is no yield for the u.s. dollar, it can be used as a funding tool, people will gradually shift out of dollars into other places. we have seen that in previous crisis periods. when, returns, it is good for emerging-market currencies. we are a long way from that. in the short-term, people will

hang onto their havens. be yen and u.s. dollar to continue to be strong. eventually, the low interest rate will feed into that at we will see an improvement in emerging market. it'll be a long time before emerging-market currencies are back to the strength we may have seen at the beginning of the year when people were optimistic on the outlook for emerging markets. >> thank you. we have the latest news out of , saying gatherings over 50 people should be postponed for eight weeks. we continue to see the surgeon coronavirus cases and the u.s. we have, saying seen that new yk schools will close early this week to curb the outbreak. the spring and our next guest and talk about the fallout from this outbreak and the latest fed move. economist is a senior

. great to have you with us. give us your take of what we have heard from the fed. it appears to be changing every time we hear from them with the situation getting worse and worse. the fed, i think, is trying to calm markets by adding extra liquidity into the financial system and keeping interest rates as low levels. it will not stop the virus from spreading, it will not curve the outbreak, it will not change health measures that have to be put in place, but it should not asarkets to function a vertically as they have been. although based on what the futures are doing, not really seeing that happening at the moment. >> the fed seems to focus a lot on what the financial markets are doing.

how much did they provide in terms of helping prop up the financial markets and if this is not enough, what else could we see? >> i am surprised the other thing they could do is make sure theyarket understands that announced today buying $700 billion worth of assets, mortgage backed securities, and treasuries, they can mentor everyone is aware that that is an open ended program. they said they will buy that $700 billion worth, we don't know over what time frame. that is the only thing they could do at this stage. what they are trying to do is put more pressure on the government to do another round of fiscal spending because the one that was passed last week was pretty lax, markets were disappointed by that. we are in this model where is throwingh policy

and the kitchen sink and it seems that fiscal policy is hanging back to see what the reaction should be. in that sense, where you surprised the rba did not follow suit? might see an announcement later today. i would not be surprised 40 rba to wait a few hours and put through something or that they will make an announcement later this week about cutting the cash introduce somend type of yield curve told mother -- control measure or announce a quantitative easing program. i don't think that is likely. i think the central banks are trying to put pressure on the government because it is fiscal policy that can drive and stimulate spending. at the same time, if you have 20

measures in place, any -- it will help once this comes to an end, which hopefully will be in the next two months. of how do you address the issue of targeting part of the population and businesses that need financial assistance the most, for example a personal -- a person on a casual way to have to self-isolate, is that something the government should be addressing as a matter of urgency? probably would help. the government here i think was trying to sort of do that by getting the payment, that that was-- $750,000 --

targeted to those groups that probably need it. the groups that if they will be affected by the virus, back and be a step of government could do. at this stage, it looks like things need to get worse before you see the government responded with that type of package. which i think is probably delayed. curbneed to do more now to the negative impact of the academy. we will get a deep recession. think the u.s. will go into recession as well in the middle of the year. >> thank you for joining us. we are getting some breaking news across the bloomberg. one las vegas will shut its casinos, effective from march 17. they can't watch gatherings prior to this. australia, taking a social distancing policy at their melbourne casino.

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>> the primary responstohis challenge will come from our health care providers and policy experts. economic policymakers must do what we can to ease hardship caused by direction -- by disruptions of the economy. >> that was jay powell speaking earlier. the fed moved to trim the key rates. we are seeing an adverse reaction, risk off with kiwi stocks heading for a bear market. falling 11% in sydney. off aboutnew zealand

27 basis points after the rbnz delivered an emergency race -- rate cut. the weakness we are seeing should be -- is indicated as a fear overtaking greed. crude falling below $30 a barrel. gold picking up slightly after the worst week since 1983. we are seeing the dollar on the back foot. we have the dollar index under pressure and the yen picking up steam. trading at 1.06 levels and earlier below that level. the kiwi dollar is under the most pressure in the g10 space. large.ity remains at haidi: i want to bring in someone who knows what is going on at the federal reserve and situations like these.

us on the line from washington. allen, so great of you to join us. is this something unprecedented to you, the situation that the fed and jay powell are having to grapple with right now? >> very unprecedented. i was at the fed and i know how they deal with things like this but i don't think they've ever dealt with something like this. they have dealt with emergencies, stock market crashes, shutdowns or near shutdowns of financial markets. this is an entirely different animal. this is a public health emergency threatening to shut down the economy, basically. we've never seen anything like this. haidi: is this the fed's fight? has very the fed little they can do about the things that really need to be done, which are public health

things and fiscal things, a whole panoply of fiscal things are probably necessary. what the fed can do, and jay powell, i listened to the presser, he said time and again that what the fed can do is relieve any liquidity strains that result from this. there have been some liquidity strains but they are not the major or second most important or third most important or so on thing going wrong right now, but they are the one that the fed can address. and it is addressing it. haidi: was it the right move today? alan: that's a really good question. i am sure they thought long and hard about it. be that theer would liquidity strains could get worse and they did not want that to happen. that -- this could

be read as the fed panicking a little. i saw some commentary from some saying, somebody, saying it made them wonder if the fed is seeing something they are not. i don't think the fed is seeing something the rest of us are not. but that is the danger in this dramatic series of moves. >> which is perhaps what the markets may be thinking at the moment, we do not see a floor yet and we don't know what will happen when wall street opens tomorrow. we have seen chair powell talk about negative rates, saying it is not appropriate right now here in the u.s.. future wheresion a that could be appropriate if this fails to work? alan: i think that is possible. they are obviously not thinking that way right now and the fed

is very averse to negative rates in the way that a number of other central banks in europe and asia are not. slump is long and drawn out, my guess is it will not be, it will be sharp and terrible and will rebound, but i could be dead wrong. if it is protracted, the fed will be going back to the toolbox and reconsidering things that it has not done before, including negative rates. it is obviously not on their mind right now. almosti understand it is four -- impossible to do economic modeling on a situation like this. i don't think anyone could have envisioned that this would put an end to the bull run. what we are seeing is global central banks throwing the kitchen sink at the situation. we are seeing the health care response ramp up as well.

borders closed and governments taking action. fiscal is taking a step back. is that the strategy you would expect, that on the fiscal side, we wait to see what the data looks like as it becomes more apparent how long and protracted the slowdown is? alan: i think that's a mistake. i think the fiscal authorities -- now, i wasn't born yesterday and i understand the congress and i don't think this will happen, but i think the fiscal authorities are not the ones throwing the kitchen sink. it's not only the public health measures, most important by far, it is relieving stresses on individuals who lose their job or go on shorter hours because restaurants are closed. people in shops lose their jobs or lose income. small businesses that are threatened with bankruptcy because they have lost their customer base, hopefully

temporarily, but they have lost it, and a lot of these small businesses don't have a cushion to fall back on. if, as i was saying before, if this turns out to be longer than a lot of us hope, i was almost going to say think, but who knows? major,ally a more long-lasting fiscal response will be necessary. we don't know that yet. haidi: given this is the second emergency rate cut -- shery: given this is the second emergency rate cut from the fed, would it have been better to wait so it could be more effective? alan: i think if i were the fed and i think people probably on the fed probably think we can't wait for the fiscal bazooka, which will take a long time to load up and may never load up, who knows with this congress and this president.

alan, thank. -- thank you. let's turn to how the markets are reacting to the fed and bring in our editor in singapore. alan, ite saying with seems the markets are not really taking the fed measures positively. we haven't really seen the bounceback that perhaps the fed was hoping for. they focused their actions on the market response. what is happening right now? the markets, of course, have been very volatile for a while now, and they have been going on any news headline, going up or down. you could say maybe they are worrying about the fed seeing something they don't, but it is also possible that later there will be a bounceback where people say, actually, the fed is

getting in front of this and trying to take action now. there was already talk over the weekend from people about the fed doing something, so the fed did it a little earlier than some might have expected. there was talk of liquidity issues in the fed is saying we are trying to rectify this. you can get bounces in either direction. for now it is down, but it might end up being something the markets view as a positive. we are continuing to get reaction and so far, not a lot of people convinced this will put a floor under the markets. what are you hearing from strategists and market participants? was outgoldman sachs over the weekend saying the s&p could go down to 2000, well below where it is now. a lot of people thinking there is still more downside because there is this uncertainty and the only thing that will solve it is time, and seeing how it plays out to an extent, getting

coronavirusping becomes less bad in the next few weeks, months, etc. morgan stanley is saying it is time to sell the u.s. dollar because they think it is going to be bad over time for the dollar. definitely, the predictions are all over the map with this one. sometimes you have the zeieist going in one direction, but people are saying we might still ite a v soon, others saying could be forever before we come back. markets are incredibly uncertain right now and the fed did act as people wanted. we will see if that eventually works to stabilize things. haidi: thank you for joining us, joanna, a look at the early reaction to the feds move.

let's get to karina. >> western europe is the focus of coronavirus infections with new cases and deaths reported daily and italy, spain, and other areas. germany may close its borders to keep the virus at bay and preventing people from crossing the frontier without a reason. germany has at least 11 reported dead. despite the rising number of coronavirus cases in the west, there have been no new infections in the epicenter province of hubei, china in the last 10 consecutive days. the number of confirmed cases outside of hubei has been in the single digits since the end of february with new -- no new infections for three straight days. the newest china data later monday is expected to show across-the-board contraction for the first time on record as the coronavirus ravages the economy. attempt to slow the academic -- epidemic force shutdowns.

industrial performance is forecast to have shrunk 3% from a year ago in january and february. 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 karina mitchell. this is bloomberg. shery: coming up, we will have more on how the fed move is affecting the currency markets. we will be joined by our guest. this is bloomberg. ♪

♪ let's take a look at the state of play when it comes to currencies trading in the early part of the monday morning session as markets continue to get reaction on the fed's crisis management plan, cutting interest rates and increasing bond holdings, qe, really.

even though the fed chair did not really want to put a label on the strategy. this is what we are seeing on the bloomberg dollar index, not a great deal of conviction that the trade in the dollar, dirty basket, will continue. we are seeing a jump when it comes to the n as well, 1.4% higher when it comes to trading in the yen-dollar. the aussie dollar is pretty flat. were seeing measures out of australia -- we are seeing measures out of australia with a ban on large gatherings today. also checking in on the q. u.s. after the rbnz cut rates by 75 basis points. asian markets are likely to

maintain the pressure to the downside as more countries go into coronavirus lockdown. nick, we are getting to this point in the markets where we don't really understand what each volatile move to the upside or downside means. we are trying to interpret moves into gold, for example. for an sx,u watching particular the u.s. dollar? raining --tainty is reigning. certainly the dollar, with an unprecedented cut from the fed like we saw today, you would normally expect the dollar to be a lot lower than it is. as you said, the clean shirt in the dirty basket is still relevant. we are expecting the dollar to retain is strength over the next week or so. is cut aturrency, it

the moment. i think short-term, the reaction we've seen since the fed cut seems to be that the markets are not taking it particularly well. i think we probably got in the short-term, the downside for risk currencies and were probably looking at dollar-yen, and something like the a ussie-yen under pressure in the short term. the volatility we have seen already today has been excessive. day,ussie is flat on the 200 points already is the range at 11:00 in the morning. it feels like short-term, we will see more downside for risk plays. but medium-term, that is the big question, and the uncertainty will be whether the market further today or in the week makes moves, then we could see some topside corrections for

currencies. where theterms of aussie dollar goes from here, is that where we continue to stay? long probably not for too my given the current volatility in the markets. [laughter] nick: i think it still does come back to this week. focus on the a coronavirus, how fast it is spreading and how hard. if we do see a correction, the expertsrts -- and most think it will get worse before it gets better. i think we have further downside for the aussie. i think the trade over the medium turn is when we see numbers getting better. numberseeing china's slowly correcting and we are not seeing an increase in the spread. the nexttarts to go in

week, two weeks, three or four, that's when we will see risk currencies gain more ground them up at the moment, more and more volatility on that news and sentiment play. china we have a lot of data coming out today. meantime, the offshore yuan strengthening after a lot of weakness last week. what does this mean for the chinese yuan if we have more measures coming from the fed and central bank's around the world? i think initially we will see more downside for the yuan. if forcing something like china, and it is hard to say at the moment, but it seems like a light at the tunnel. maybe there could be some appreciation. uan,o-yo k at the investors might be looking at a short position on that with

coronavirus so prevalent on mainland europe. we could see some progress in china, so that could be the way to go. shery: we will be looking forward to those moves. we are expecting some moves from the vanke of korea as we continue to see the korean won holding steady. thank you for joining us. we are waiting for numbers out of japan. machine orders for january breaking right now. coming in at a contraction of 0.3% for the month of january. this would be the year on year numbers. this is a smaller contraction than was expected. the month-to-month number is a rise of 2.9% instead of contraction, which was what economists had expected. this is a leading indicator of investment. virusey taken before the disruption. these are the numbers for

january, so they are better than expected. month on month rising 2.9% instead of a contraction, and also really recouping a lot of the losses we saw in the previous month, down 12%. we are getting breaking news out of the bank of japan as well. the blg holding an emergency -- boj holding an emergency to discuss money control matters, according to the bank of japan. this as we saw the fed cut rates by a full percentage point. we had expected a measure from the bank of japan after governor kuroda pledged ample liquidity for the markets. again, the bank of japan holding an emergency meeting from noon today. let's go to our asia cross assets editor, joining us now. what can we expect out of this emergency meeting? the last we heard was governor

kuroda was pledging ample liquidity for the market. chris: that's right. unclear is whether this is a policy meeting or a meeting simply to assess the state of the markets, the fed decision. we will presumably learn more. will be thejapan's next pressure point for the markets. the fed was willing to do a one percentage point cut and that will lift expectations for some sort of action by the bank of japan this week. what we have seen so far is that governor kuroda is very much focused on liquidity and not so much on expanding monetary policy stimulus. kind of a key question people have, are they going to expand qe? would they expand the range of assets they purchase?

targetedy undertake credit facilities to provide lending to banks, through banks to companies that have been hard-hit by coronavirus? at this point, from an investor perspective, everything is on the table given how volatile things are. haidi: what are the implications for the yen even what the fed did, and a limited -- the oj has? tools the bl chris: we saw the yen strength in today after the interest rate cuts by the federal reserve. that could probably stay for some time if the boj does not cut interest rates itself. my guess is that japanese policymakers, as long as we stay on the weaker side of 100 per

dollar, probably not too upset about dollar-yen. is dollar inoblem the financial system. we saw the dollar strength of the most last week since the 2008 level financial crisis. fiscal not what any banker wants to see. this decisive action by the fed theeploy these actions with boj, europeans and canadians to inject greater dollar liquidity into global financial systems is something that will likely be applauded by the boj, and not countered. shery: thank you very much. our asia cross assets editor. bringing forward their policy meeting to noon today. it was expected later in the week. the japanese yen no paring some gains after the boj brought

forward the meeting viewed -- meeting. this is bloomberg. ♪

>> here is a snapshot of where we are standing, figures and osaka pointing to some green shoots where they yen is paring with the boj bringing for their meeting. ,hecking in on treasury futures in focus, given the expectation. encz mark 10 year yield fell more than 25 basis points. are expectedbanks to ease after the fed came out with aggressive moves. a former fed vice chairman told us earlier that he thinks the government should be throwing the kitchen sink at the problem. we haveust a reminder,

a big guest later today. we will be joined by the former malaysian prime minister for his first interview since his resignation. lots more to come. this is bloomberg. ♪ good morning!

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haidi: good morning. asia's markets have opened for trade. shery: i am shery ahn in new york. to "daybreak:e asia." ♪ haidi: our top stories, the fed sweeps into action, slashing to near zero to save the u.s. economy from the virus. president trump says he is very pleased. cases continue to rise in the west with more countries imposing a lockdown. beijing says mainland infection

rates are falling rapidly. the virus continues to wreak economic havoc. upcoming data could show -- for the first time on record. japan and south korea coming online. let's get to the market action with sophie. sophie: the nikkei 225 gaining more than 1%. this was the worst week for japanese stocks since 2008, and the boj will be holding an emergency meeting today. let's check in on what is going on and south korea this morning. officials say that quick moves will be taken. the korean won trading about 12.10 this morning, the kospi holding. -- aussies stock hit hard.

commodities, gold getting ground, brent headed toward $32 per barrel. earning forecast for asian energy company slashed by about 14% since the outbreak began. we are seeing the dollar retreat reachingffshore yuan seven and aussie bonds sliding rateshe anticipation that will be cut. we have the rba so far just injecting cash. let's look at treasury markets. jay powell trying to smooth market functions. check out the drop in the 10 year yield at the start of cash trade. sliding 32 basis points. haidi: let's get a deeper look at the fed's emergency action. let's bring in mcquarrie group head of asian strategy. we are seeing the u.s. treasury

dropping 32 basis points after the fed rate cut, cutting to almost zero and boosting is bond purchases, we could call it qe. jay powell did not want to put a label on it. this is certainly a whatever it takes moment. notes,in your been -- you are saying central banks will do whatever it takes to keep their heads above water. are they going to get much from the markets? victor: you are right. they are basically doing everything they can right now. can buy a variety of asset , they can have unlimited qe. they can start managing the yield curve. there are a range of thingshat could be done that the ecb and boj have been doing for years. but you are right, earlier in the year, i thought everybody

would be doing just enough to keep their nose above the water, but then coronavirus came along and a collapse in oil prices. now we are trying to restore liquidity flows, and reducing volatility. anyy instance you have or battle you fight is different but the objective is the same. corral and reduced volatility and make sure capital and liquidity are flowing. i think that's what they were trying to do last night. haidi: i was talking to an investor over the weekend and he said he holds enough excess cash in most of his strategies, but not one of them is prepared to deal with a 25% drop in markets. do you expect things will get worst? how opportunistic are you at this point or is it too early to say? as was once said, you isuld be buying when blood

in the street even if it is your own blood. the question for investors, do , the markets could state rational longer than you could stay liquid. trying to reach the bottom is almost impossible. what i would prefer to do is to maintain steady investment strategy. we think at the end of the day, most of the pandemics are transient and most of the crisesal crisis is -- are transient. through this world, investments will still be needed. my preference is to buy things you really like at a cheaper price without trying to really find the bottom. they: we continue to see treasury rally, the 10 year yield at 26.2%.

how low can yield go at this point? viktor: my view for the last five or six years was that if we allow monetary levers to guide the economy, ultimately interest rates have to go negative everywhere around the world. not just in europe or japan, but in the u. also emerging markets. the reasoning is simple. we must generate more capital an liquidity than we need. if we generate more money than we need, the marginal utility of that money declines. capital must continue to goown forever. from the equities perspective, thequestion is would negative risk-free rates correspond with high equity agreements and whether somehow we can find a way around this and actually reduce or at least keep equity at the same level. and ave interest rates

monetary world are guaranteed. the only way to get out of it is switching more to monetary theory. that's the only way out. shery: what will this do to the credit market? we have already seen a meltdown in the u.s. viktor: increasingly credit markets will become less and less relevant. is, whether ultimately banks will not be functioning the way they do. it's not just negative interest rates but blockchain and other things technologically happening at the same time. at the end of the day, central banks are banks. they can lend and take deposits. they can change how they function substantially. to my mind, negative interest rates make it hard for conventional credit markets to function, but we don't live anymore in a conventional world or in conventional credit.

inevitably central banks will become more dominant over the next two or three years. warning about a reversal to globalization two or three years ago. as we get to the end of this at some point, do you think that will be the case? globalization is driven by a number of things. technology drives it. i think the next five or 10 years we will see a revolution in manufacturing. prettys will be produced much in the same spot. the need to shift things around will get less pronounced. the second thing happening of course is income and wealth inequality between countries and the hemorrhaging of the middle class. that will force politicians to shut down borders and accelerate the purchase of deglobalization.

fromf those factors, technology to income and wealth distribution will continue to work. which means that gradually we will continue to globalize -- globalizing. i don't think the coronavirus will make that much difference. force are saying it will deglobalization fester, i don't think so. there are more powerful forces driving this. shery: thank you very much for that, mcquarrie's head for asian strategy. let's bring in our global economics and policy editor, kathleen hays. the bank of japan, the latest , jumping into action. a global it started as movement with the swap lines at

the central banks, the fed cutting the right to charge companies around the world to borrow in dollars at a time when you see a company like boeing -- remember last week, they were going to call on a credit line early just in case they need the cash. they are trying to loosen financial gears and keep things flowing. we have the fed, the boj, the bank of england. the boj, you saw what happened to the yen, trading around 107, moving to 105. look at what is happening with its series of letters, it has a key rate at -.1, yield curve control, and they have to decide what they will do to keep things stable in the japanese spectrum. we saw the reserve bank of new zealand cutting by 75 basis points, promising to keep it there for a year. earlier on bloomberg radio i was speaking to james leyland and he

was talking about the reserve bank of australia cutting its , perhaps,on as it can by 50 basis points. this is a move heard and felt around the world, and i think broadly for asian central banks, people have been saying, and aggressive rate cut by the fed is the move to cut and not worry about pressure on currencies. very important. we are not going to get fed forecast probably until june. between now and then, what will jay powell will be watching? kathleen: i thought that was a great question asked by our team and washington, d.c. y powell said i am watching the treasury market. at the beginning of the press conference, he listed the treasury markets and mortgage markets. we are seeing lack of liquidity. these are things he is watching.

that is number one. here is how he put it, jay powell. atwe are going to be looking the treasury market function. we are going to be looking to see that financial markets are returning to more liquid, more normal functioning. kathleen: an important point. people are saying the fed can't cure the coronavirus with a rate cut and the fed knows that. but they know what is happening is not so much that they think they can get the economy going right now. can't get the economy going when people are staying home and can't shop or do anything. but you can prevent the coronavirus crisis from turning into a financial crisis. that is very important. something jay powell added to his list of what he is watching now is how the virus progresses good let's jump into the bloomberg. we can find a chart to help us understand what is going on. this is how this curve of the coronavirus is steepening in the

is. and in europe, but this something they will watch. the fed knows as long as the virus is getting worse and infections are accelerating, markets will be unsaddled and -- unsettled and markets will be unsaddled. is saying we will see what happens in the second half. meantime, the fed is making sure markets stay stable. haidi: kathleen hays there. we will get more analysis on how global central banks and markets are reacting to the feds's move through the day. variousbe joined by guests. let's get you the first word news with karina mitchell. karina: western europe has become the focus of the ronavirus infections, with new cases and deaths reported daily and italy, spain and other countries. durney says it may close its borders -- germany says it may

close its borders to prevent the spread of the virus. germany has about 4000 confirmed infections with at least 11 reported deaths. despite the rising number of corona -- coronavirus cases in the west, china says there's been no new infections in the epicenter province. -- in the last 10 consecutive days. the national heal commission says the number of new cases outside hubei has been in single digits since february and no new infections for three straight days. on latest china numbers monday are expected to show an across-the-board contraction. attempts to slow the epidemic forced lockdowns and closures, crippling output and demand, leading to an unpcedented celebration -- deceleration. global news 24 hours a day on air and on quicktake by bloomberg, powered by morehan 2700 journalists and analysts in more than 120 countries.

i am karina mitchell. this is bloomberg. haidi: thank you. lots more to come, including the latest rating on china's economy with the domestic activity numbers in today. we will look at where the country stands in the face of the coronavirus pandemic as people return to work and factories reopen. our guest from standard charter will be with us. howy: next, a look at commodities are weathering market volatility, including gold coming off its worst week since 1983. ♪

♪ this is "daybreak: asia."

shery: oil's collapse has deep in asian trade this morning as extreme volatility continues. go to james thornhill in sydney. what is the move like in the market right now? is it all about potential oil demand falling more from here given the coronavirus outbreak? james: good morning. another wild ride. [indiscernible] that got that got better down very quickly and now we are in sharpening negative territory. and inas the mood certainty continues with extreme volatility. whatesn't really matter global monetary authorities do, you can't really legislate the manned destruction we are seeing by this virus. the amount of economic activity now in lockdown as a result of

this. it has had a huge impact on oil seems like any rallies are just a cell by traders at the moment -- a sell by traders at the moment. haidi: what are the shorter-term drivers to be watching out for? james: i think people will still have and i on the amount of the spread. i think the u.s. will be a focus on the numbers, and how they are if theyth the virus, are on top of it. i think we will see moves like the one from the fed and various authorities around the world. china will be in focus, what can they do to stimulate? that is a potential bright spot. the economic data is almost irrelevant. we have the destruction we have

seen from the virus. china has some economic data out today. it probably will not be good news. i think people are going to be focused on the impact of the virus first and foremost. aramco, theysaudi will be splashing their capital across this year. , andve seen a price drop i'm sure all of the big producers will be looking to cut --ts where they cantered the where they can. also we have the price war between the saudis and russia. can we continue with the standoff given the uncertainty in the market? that remains to be seen. haidi: thank you for joining us. let us look at the metals market with our commodities reporter. gold is looking more appealing again. markets are playing how low can u.s. rates go after the worst

week since 1983. what are we watching? what does the behavior of gold even tell us in markets like this? david: [indiscernible] gold,st couple of days in gaining again this morning. up as much as 2.7% in trading, quite a reversal, as you say, tom last week, when it comes weekly declines since 1983. probably led by the move by the fed. [indiscernible] gold tends to have more appeal and times of lower interest rates. what we saw last week was surprising. gold is thought of as a haven assets. 9% last week.of

[indiscernible] markets.ses in other guess, we will be looking this week to see how much of an influence the fed moves by on the market, or whether we continue to see people selling out of gold to cover losses elsewhere. there will be more volatility ahead this week. [indiscernible] fundamentals to still look good for gold. shery: what does this mean for palladium? it was once a casualty in the selloff. it was one of last year's best performing assets but not anymore. what is going on? -- david: absolutely. a terrible week including a 20% drop on a single day. it erased the gains from last

year. [indiscernible] palladium is used in pollution control devices for cars and catalytic converters. [indiscernible] concerns over the supply-demand allen's and -- balance and that there could be shortages. twoit is confronted with pieces in negative, not just the broader market piece, but the auto industry. we have bad numbers out of china , a key car market. there are certainly forecasts for demand growth to be less than expected. it is certainly being hit on that. sector look at the auto and a broader selloff across metals. shery: our senior commodities

reporter, thank you for that. today, a big guest later the former malaysian prime minister for his first interview with foreign media since his resignation. this is bloomberg. ♪ ♪

♪ this is "daybreak: asia." haidi: let's get you a check on the latest business flash headlines. astas slumped as much as 11% the global clampdown on travel hurt the stocks. fallen as much as 50% this year. qantas had made three cuts to schedule services in less than a month and will ground some of its fleet. closing old is

white stores outside of greater china for at least two weeks and is moving to remote working to minimize destruction caused by the coronavirus. tim cook says the most effective way to navigate the crisis is to close as let's and -- outlets and move from -- and work from home. about 270 stores in the u.s.. they have already closed and italy and spain. haidi: nike is closing all stores in the u.s. and western europe the shutdown includes canada, australia and new zealand and will be through march at least. they close half their outlets and china in early february and were operating others in reduced hours. stores in japan will remain open. forgetting the latest numbers out of china on the coronavirus infection and death rate. hubei had four additional virus

.ases cases -- latest this is bloomberg. ♪

haidi: we are getting the latest numbers from china on the latest coronavirus infection and fatality rate. china says the province of hubei as of march- deaths 15. 12 of the 16 latest cases are imported and we have seen that over the past two weeks or so, that the numbers are coming down but the national numbers are heavily dominated by returning people into china, hence places like beijing have put in place stringent quarantine measures for international arrivals to prevent this from escalating. 4 additional cases and

14 deaths nationally, 16 cases across all of china. let's get more on the virus around the world with karina mitchell. hasna: western europe become the focus of coronavirus infections with new cases and deaths reported in italy, spain and elsewhere. germany may close its borders toh france and austria prevent people from crossing the frontier without a valid reason. germany has about 4000 confirmed infections with 11 reported deaths. goldman sachs says the markets still have room to fall. they say the s&p 500 may drop by 10% in the next three months to below 2500, lowering the bottom he called last week. he said the index could fall to 2000 if the economy continues to be damaged by the coronavirus. he says the infection caused unprecedented disruption. the virus hit perhaps most famous carmaker.

ferrari is shutting down production for at least two weeks, saying it is suffering from supply chain issues. work at two of its plants will be suspended until march 27. this follows a similar decision by lamborghini to halt production. for robbery workers will continue to be paid as normal. saudi arabia retained hundreds government employees and will charge them with crimes like money laundering. amounts to funds more than $100 million. those detained include members of the interior ministry and two judges. global news 24 hours a day, on air and on quick take by bloomberg powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. let's get to sophie with the latest on the markets. sophie: asian stocks led lower by sydney, the asx 200 following

-- falling 7% amid volatility. highs, at october 2011 banking stocks hit hard as well in sydney as margins are seeing -- are seen coming under pressure. as we wait on the boj's emergency meeting, there may be a cut to boost bonds and drag on the yen. it -- and kiwi dollars, we see the greenback on the retreat with the kiwi dollar trading near a may low with bets building on the kiwi. the korean won advancing, rising the most since march 10. couldfor the ems x space look fragile given recession fears are not put to bed. i want to check in on the terminal to show you what chart

with what is going on in the treasury he lots of focus as the to's move -- the fed moves ease stress. u.s. bonds surging with the 10 year yield facing 32 basis points. they are watching a move lower than 0.5% on a volatile day. the yield rve, deepening for the steepest since 2018. shery: thank y. let's bring in the chief u.s. economist for bloomberg economics. eems to be focused on the market strains we have seen recently. why aren't we seeing a more positive reaction? >> this is clearly evidence the fed has to make to eergency meetings between the regularly scheduled meetings. that is evidence there are problems the fed is privy to. the fed is not waiting to look at economic ada. ofy have a vast array

business and financial contacts so they can get a quick read of what is happening. they are seeing major signs of strain in global financial systems, hence they opened dollar swap line, cut rates that were lower bound and took aggressive asset purchase measures, which we don't think of as quantitative easing. quantitative easing is designed to simulate the economy. this is an expansion of the reserve management purchases they started last friday. when they started the program they had to do a lot more than what they scheduled, which was massive, so today they announced $700 billion purchases for both treasury securities and mortgage-backed securities. this is not stimulus for the economy come otherwise we would seek stocks moving higher. instead, this is trying to keep the lights on in the treasury market and keep treasury products trading in a deep and liquid fashion. are starting to

see is a global trend. central banks, throwing everything and the kitchen sink in this whatever it takes moment. isthe same time, fiscal lagging behind. modest fiscal packages from most countries. is that how you think it should work in terms of addressing some parts of the economy, special groups and targeting these parts that need the most assistance? suggestchair seemed to that. >> that is one approach. unfortunately, if we want to recession,bly global certainly recession in the u.s., we need a blunt force fiscal stimulus to come into action. benefits,e expanding unemployment benefits and food stamps, that is critical support. that is more microeconomic than macroeconomic. we need something large enough to move the needle in terms of

fiscal stimulus. there are a couple ways to do that. whether we mail stimulus checks out or even reduce payroll withholding taxes, like social contributions, something like that that would put in place prevent the could economy from sinking into contraction in the second quarter which is something chair powell said was a possibility. the fiscal measures happening right now are more small-scale, dealing with the health care crisis and specific industries. we will need something more macro-oriented. if we want to move the needle on gdp, we are talking a price tag of 200 billion dollars-$400 billion. that is what it will take to avert a recession. haidi: how much has the fed done to keep credit slip -- credit flowing to households and businesses yet of >> they have

taken aggressive measures. we can see that reflected in the decline in the intro to the segment. they will need a little time to see how this is percolating through the financial system, but jay powell signaled a willingness to engage in additional methods, further asset purchases or something along the line of the special credit facilities put in place during the financial crisis, like tarp and those types of measures. they are acutely focused on a hurtingrunch, further an economy that is hitting a hard stop doing -- due to the virus. they are doing what they can to support lending conditions, but i wouldn't be surprised if they move further down that path to try to prevent a health care crisis from turning into an economic and financial crisis. conference,e press

powell took pains to reassure that there is more the fed can do. carl, appreciate your time. the aussie dollar is continuing to see weakness. the asx seeing heavy selling. taking emergency measures. paul allen joins us with the latest. rbnze the fed -- the -- and somesay the say they wouldn't be surprised if we sign off cycle cut. >> there were rumors circulating we would see that today but we didn't. we got an injection of liquidity, the rba to be conducting one month, three-month cooperations until further notice, a six-month operation as long as market conditions warranted. and the emergency rate cut from the rbnz, and there is always more central banks can do.

qe is not the only tool they will be using. digitsy by fx and more and type measures. the regulators in australia, encouraging lenders to work with customers, emphasize -- emphasizing the credit aspect. shares continuing to suffer in new zealand, cutting capacity, maybe jobs. qantas getting hit. it is more of the same at the moment. ingive us the latest australia's coronavirus outbreak because we are now seeing more moves to tighten border controls. , imposing what new zealand imposed 24 hours earlier. foreign arrivals now being told to self-isolate for 14 days. the state of victoria declared a state of emergency which means anything -- anyone who doesn't self-isolate could face fines of up to $20,000.

the chief medical officer has the authority to do whatever necessary to contain the virus. similar measures to new zealand, as well. the number of cases, 279 with five deaths, three of them concentrated at an aged care facility just across the harbor from us in sydney. cruise ship's are banned from docking for 30 days from foreign ports. mask the rings of 500 plus people, banned as well. plenty of action being taken in australia to contain the spread. allen, thank you very much. plenty of action to contain the spread in the philippines. minella officially on a month-long locked down in an effort to contain the outbreak. manila on a month-long locked down. >> we are starting to get an idea of what this could mean. so far, domestic travel in and

beenf metro manila has suspended, as has school and most people are working from home. the president is considering a curfew from a :00 p.m. until 5:00 a.m. for the next month for the entire capital, a region of 12 million people. before that, many cities all -- are imposing curfews including the central district. this means restaurants and shops will be closed except for the essentials. financial markets have already announced shortened trading hours. stocks closed at 1:00 p.m. instead of 3:30. >> the bsp set to hold a policy meeting this week if infected is like what the fed in the boj have done, which is bring it forward. what are we watching? we have heard from the central bank is, it should go on on thursday. surely, the economic impact will

beingey consideration, that domestic consumption is a key driver of philippine gdb growth and metro manila accounts for 40% of gdp. officials saynd, they expect growth to be at about 6% at the worst case. even then, analysts expect a 25 basis point dive. >> thank you so much. through the latest coronavirus measures for the philippines, looking ahead to the central bank decision. we are getting breaking news crossing the bloomberg, hong kong economy has been affected by the coronavirus. their federal -- february visitor arrivals, falling more than 96%, coming in at just under 200,000 arrivals for the month of february. board saysng tourism

after the outbreak is addressed, they will be working on joint trade and tourism promotions to speed up the recovery in the services sector involving retail, dining, conventions, and more. of 96% yearant fall on year. lots more to come. this is bloomberg. ♪

>> this is daybreak asia. haidi: i'm haidi stroud-watts in sydney. a check of the latest headlines, google is to launch a new website monday offering the latest information on coronavirus and medical education and prevention. the site is a separate project from the testing platform built by the sister company, which live monday. that site will provide services

to san francisco bay area only for the time being. oil price wars forcing saudi aramco to review spending. they are slashing planned expenditure in a sign that falling prices of crude is having a damaging effect. aramco says it will be between $35 billion and $30 billion with the following years under scrutiny. almostfell in riyadh to -- extending declines to almost 20%. a company is promoting the vice president to the top job as it seeks to draw a line under the utilities payoff scandal. dozens of the company's officials took millions of dollars from a former local deputy mayor to approve a nuclear plant. despite the change, the scandal may delay their efforts to bring reactors back online. bank is seeing deposits shrinking following a

seizure in the biggest bank rescue in indian history and deposits totaled just over $18 billion as of march 5, when the r&b i took control, down 17% year, which of the followed a 26% year on year slide. haidi: we have breaking news. we are hearing mgm resorts las vegas casino operations will close starting march 16. they will temporarily close their las vegas properties following a statement by the chairman and ceo of mgm resorts saying despite their commitment to dedicate additional resources for cleaning and promoting good health, they will have close their properties given that it is apparent this is a public health crisis. at the closure, following wynn closing their las vegas casinos,

march 17. in china, data on the country's industrial output, investment, and retail sales are two later. they are forecast to show an across-the-board in traction for the first time on record because of the coronavirus outbreak. joining us from hong kong is macro head of china strategy. great to have you with us. how bad are you expecting the numbers to be? >> we are looking for all the high frequency data for [indiscernible] ip's to contract by 11%. if this is the case, it could mean [indiscernible] it also means [indiscernible] meetight not be able to the market consensus. assuming zero risk [indiscernible] leastl have to grow by at

7% or 8% to achieve the market consensus. >> how soon can we expect the pboc to cut the deposit rates, something they haven't done in the past five years? >> the deposit rate [indiscernible] cut in the coming few months, but immediate action is more likely to be a cut from the open market operation rate or the nrf rate, which is [indiscernible] for the moment. this could come as soon as today. [indiscernible] deposit rate cuts, there are other considerations because the key reason for the cuts is to lower the cost of funding at the chinese banking system, which has been hard for the banks to lower rates. the rise in funding was due to structural change, a migration of the traditional deposit into liabilities that [indiscernible]

depositthe traditional rate might even accelerate this process. that would be possible but we expect that to be cut, that to be used [indiscernible] at a later stage. >> i wanted jet -- to look at a chart when it comes to growth expectations for china. these are the median expection -- expectations for quarter on quarter growth. it is not surprising given the economy was brought to a standstill. what has changed, correct me if i am wrong, the expectation of a quick recovery, is that in danger in the sense that outside china, we are seeing a complete collapse potentially in demand? >> indeed it is in danger. we are looking for a u chip recovery instead of av shaped recovery. [indiscernible] when it comes to infrastructure

investment and production, because we have already seen early signs of a faster recovery or faster restoration of normal life and operation in china, especially after the president's visit to wuhan last week. local governments have announced they will reopen schools so we can assume production and economic activity can be resumed even faster. for some of the other components, especially when it comes to demand and chinese consumption, on the back of this anecdotal evidence showing [indiscernible] labor market in china, we expect consumption to be hit harder for a longer time and slowing recovery [indiscernible] together with domestic demand. andoes that mean the yuan chinese equities that have been behaving like havens since this started, does that mean that is a short-lived phenomenon? >> we expect [indiscernible]

major currencies. this is despite the weaker expectation for china growth in the near term. china [indiscernible] emerging out of the virus because of the signs of containment within the country. on the other hand, when we look at the pmi, it appears to be -u.s.g but we now see china interest-rate differential is widening to [indiscernible] rate cuts, this is likely to march towards 200 basis point later this week. at the same time, there has been a potential decline in demand for foreign currency by the chinese domestic evident because has alwayss tourism been the biggest component for chinese trade and looking at the current situation across the ismbe, it looks like tour [indiscernible]

these are factors preventing capital outflow in the immediate future, so the cmi has been outperforming [indiscernible] theeciating 2.4% against [indiscernible] we expected to maintain some strength. >> becky, thanks for joining us. from china'smore economy. we will be joined by our giant -- our china economist julia as we get domestic activity numbers. we will have another guest malaysian, the former prime minister, in his first interview with foreign media since his resignation. this is bloomberg.

>> you're watching bloomberg daybreak asia. i want to highlight, expecting chinese and hong kong stocks to end, citing year policy easing from china. i want to jump to the terminal because we are watching what the pboc may do this monday after delivering another rrr cut which takes effect today. the market economist expected the pboc will restart hash injections to help banks get to the end of the quarter, but so

far the pboc played by its own rules as authorities have to contend with rising debt. checking on another chart, we will get a read on activity for china in one hour. retail sales, factory output investment for the first two months seen contracting. sophie kamaruddin with a look at the markets. coming up, the china open. the head of asia asset allocation will be with us to give us interviews on the fed's move sent preview china's upcoming day. this is bloomberg. ♪

>> it is 9:00 a.m. in beijing, shanghai and singapore. >> we are counting down to the open of trade on the chinese mainland and hong kong. the top stories, central banks take action on the virus. the fed slashes to near zero to save the u.s. economy, the negative japan held an emergency meeting. >> more countries are imposing a kdown. down -- a loc continues to wreak economic havoc. across the board contractions for the first time on record.