tv Bloomberg Daybreak Americas Bloomberg February 24, 2020 7:00am-9:00am EST
direst reds up to china -- the virus spreads outside of china. fall, goldnk, yields soars. and world leaders at the g20 in crete. their cry for fiscal stimulus to combat slowing growth. welcome to "bloomberg daybreak" on this monday, february 24. it is a very difficult trading day if you are long equities and short treasuries. you had the s&p down by over 2%. if we stay on this track, you are looking at the 10th largest point loss for the s&p ever. we had also seeing lows not seen in treasuries since 2016, down eight basis points, looking for potentially an all-time low. we would keep you updated. i should point out, we were holding around the lows of the
session, not necessarily getting worse. we want to go to global exchange. we are going to bring you today's market moving news from all around the world, from hong kong to riyadh and london, to new delhi, washington and new york. we want to begin with the markets, the overarching story of that russian to safety. lowestfalling to the since 2016. joining me is bloomberg's dani burger. walk us through some of the big ones. dani: today is really a day of superlatives. 2016,the lowest since gold jumping to a 2013 hi. 2013 high. as evercore strategists put this, we are in a new phase of the coronavirus outbreak. that is going to give us this knee-jerk, gut punch reaction in market. credit default swaps in europe jumping the most in two years.
when you look at both of those see thestoxx 600, you ftse made down, and europe has become the epicenter of the outbreak. that means markets are already very sensitive. these are high beta markets as they stand because of the economic weakness. a lot of what has been thrown out the last couple of weeks is v-shaped recovery. investors are a lot of -- investors are waiting on the sidelines as there's a lot of going -- a lot of fomo on. the service economy is going to take a long-term impact, a long-term hit, and we are seating that start to get priced in. alix: thank you for that. now let's go to the global story. focus is cases
jump. china climbing past 79,000. joining me from hong kong is bloomberg's sophie kamaruddin. concerns of aare second wave in the epidemic with higher mortality rates looking possible. inly now the epicenter europe, having at least 219 confirmed cases was five fatalities and one recovery. given the impact, the italian government is considering emergency relief measures while suspending public events. yeteu has not restricted shenzhen area travel. theirn and iraq reporting first infections. in china, the government has decided to post pone annual legislative meetings scheduled for march, not such a big surprise as they want to limit transmission risk. the wuhan province has walked back an earlier statement, now it is keeping warranty
measures. beijing is pushing for more companies to restart operations, but that comes with the risk of higher transmission potentially. the national health commission in china confirming that more than 3000 medical staff have been infected on the mainland. ital word on south korea, has confirmed the most cases outside of china, topping 760, so the government has raised the threatened bubble to read -- the threat level to read, last used -- threat level two red, last used during the crisis of h1n1. economic recovery could be derailed by this outbreak. the central bank will cut rates at its annual meeting this thursday, and ahead of that, the cost be sliding -- the cost be
ospi sliding. alix: thank you for that. president trump in injury a -- president trump in india, expected to strengthen his relationship with narendra modi. pres. trump: our representatives will sign deals to sell over $300 billion in the finest, state-of-the-art military helicopters and other equipment to the indian armed forces. alix: joining us from new delhi is bloomberg's new delhi bureau chief. walk us through the results so far of president trump's visit. far, this is the festive part of the visit. came in this morning, welcomed by thousands of the street on the way from the airport to a big stadium reception in the world's largest
primet stadium, where minister modi and president bush addressed the people. he spoke on the friendship ,etween india and united states and said that he and prime minister modi were very close friends. we heard him say about the military hardware, but right now as we speak, the president and first lady are at taj mahal, visiting it. later in the day, he will be heading to new delhi. tomorrow is a crucial part of the visit, was a bilateral meeting sometime in the afternoon. it has been so far pretty fruitful, and tomorrow we will ,ee the official part of it
though there isn't the trade deal that they were expecting because of hashing out differences. alix: thank you so much. now we turn to the middle east, where g10 finance ministers from the world's largest economies are realizing the coronavirus isn't just a short-term threat to global growth. the alternative scenario is that it stays there longer, and that spreads out to other just bys, and that, creating a slowdown in china, that will have a worldwide impact. an effect also create exchange, which is already happened. alix: walk me through what the word was on the ground over the weekend.
the g20 meeting here in riyadh, really one of the first high-profile meetings of the g20 under saudi arabia leadership. coronavirus definitely top of the agenda. also leading to notable absentees. chinese delegation wasn't present because of the coronavirus, but it was still one of the key topics discussed. not really a huge amount finaled out of the communique, other than a commitment to continue to monitor the progress of the disease and the economic impact, and from some of the conversations we had with the delegations afterwards, there's a recognition that there may be a need for governments to provide additional stimulus measures to the global economy. i think there's nothing really decided in terms of what format that will come, and looking around monetary policy of the g20 countries, there's not much
the central banks are able to provide. the question will be will government turn to fiscal measures to try to step in and do some stimulating spending to drive growth going forward. alix: thank you so much, bloomberg's matthew martin. where turn to iran, hardliners are celebrating a majority in parliament three elections. joining me from london is roslyn matheson. give me the latest over what happened over the weekend in iran. reporter: as you were saying, the hardliners, as expected, took control of parliament for the first time in about six or seven years. turnout was at a record low, partly because voters who support moderate candidates stayed away because those candidates were disqualified from taking part in the election. of course, this new parliament doesn't take effect until writer in the year, and between now and isn, president rouhani running a lame-duck parliament, where he may struggle to get key
legislation through on the banking sector and the economy cratering under the impact of u.s. sanctions. this is the precursor to the presidential election next year. seean expect there to also hardliners jostling for power as iran turns inwards and away from the world. of course, that means for the u.s. that the nuclear deal is further on ice. european leaders are struggling to keep some life in that deal, which is essentially dead after donald trump withdrew the u.s. from it. you can expect to see a much more antagonistic iran in the years ahead, especially against the u.s. over its nuclear ambitions. alix: thank you so much. now we want to end in the u.s. bernie sanders is one step closer to front runner status in the democratic primary race. the senator broke away from democratic rivals in a decisive win in nevada. nevada, we have just put together a
multigenerational, multiracial coalition, which is not only going to win in nevada. it is going to sweep this country. [cheers and applause] alix: joining me from the white house is kevin cirilli. where does this leave us into super tuesday next week in south carolina tomorrow? kevin: momentum for bernie sanders with a decisive victory in the nevada caucus. former vice president joe biden finishing in second. ae biden campaign heads into make or break moment in south carolina. joe biden flooding the airwaves over this weekend, saying he is still going to have the support of the african-american community, a bellwether of sorts that the campaign is saying projects longevity as it relates to super tuesday, which is just one week from tomorrow. either way, with the sanders campaign having a significant
win in both new hampshire and nevada, they feel they are well-positioned for super tuesday in the long haul. really, there's still no incentive for any candidate to drop out of this race before super tuesday. there is that debate tomorrow in south carolina, which is likely to be another bloodbath of sorts literally speaking. alix: kevin cirilli, thank you very much. one other political story we are following is the turmoil in malaysia. the prime minister unexpectedly submitted his resignation, and his party left the ruling coalition, but then the interim appointed.ter was he has refused to set a firm date for handing over power to a rival. in 2018 joined forces for a stunning election victory. coming up on the program, more of your morning trade and analysis of the markets.
♪ alix: time for bloomberg first take. we are going to give you the news. you get the trade and analysis of the markets. joining me is markets ashworth -- is markets ashworth, laura cooper, plus david owen, economist.ropean what's happening today? marcus: chaos. alix: come on. marcus: we got a disconnect between bond yields, and 10 years have caught up, but more important become a stocks are
down big. that is the first time that has separated way. laura: i think that is crucial. we have seen overall complacency in equity markets, and any drawdown tends to be followed by quite a sharp bounce back. i think when we look at european action today, a lot of it is travel and leisure, specifically airline stocks. airline stocks are what is propelling the indices lower. it is actually quite an outside move, just given the fact that ultimately, it is italy. we are seeing containment measures, but much smaller in scope than we would expect in china. probably a bit of and overshoot there. marcus: everyone has been banging on about which letter. david: i am going to say something controversial. i do not talk about the markets. i simply do my research and
obviously, i'm aware that german ifo was stronger-than-expected. pmi's friday were stronger-than-expected. we just watch the markets and wait to see where they go. but we are not sitting there reacting to market moves. marcus: but there is a wider point that the european central bank, you could argue that it's renewed qe along with the fed has propelled this case where you have equities go up and bonds fall. do they have to react now that italy is in this situation? it could be a perfect excuse for them to start using more. laura: it is interesting because what we are seeing overnight, fed fund futures are starting to price in a third cut. this is against a backdrop of a fed that has a great reluctance to ease. when we look at the u.s., the economic fundamentals are there. the consumers healthy. cuts hard to see why a rate or even three rate cuts coming
from the u.s. could curb any sentiment from the virus. david: the fiscal response is obviously the way forward. in terms of italy, what i would say is that as europe's weakest link in terms of sovereign. the spread right now is not to kill her the encouraging news desperate ticket is not particularly encouraging news. -- is not particularly encouraging news. in terms of the fallout, are we surprised that certain companies are reporting problems with their supply chains? absolutely not. chainsthe pmi's, supply are a problem in manufacturing. prices go up. i think the wider thing is that oil company's will be repositioning supply chains globally. this is not just because of the virus. this also tariff war's.
but also because of brexit, i'm afraid. i have to mention that. alix: oh no! [laughter] alix: i thought it was ruled out. what i don't understand, why today? europee happene/ -- happened over the weekend, particularly italy. if china can contain it at some point, italy should be able to. south korea is already on it. why today? i think it is italy. the bond yields have risen recently in italy alone. is ink it's because it europe, and elevate sudden it is in a very important part of the world -- and all of a sudden, it is in a very import part of the world. david: at the end of the day, a lot of investors are looking at this bottoming out in asia, and now it spreads to italy, and that is a concern of whether it continues spreading through europe and then potentially the u.s.
that is the concern at the moment. marcus: we don't know how it got to italy is the key factor. alix: and they don't seem to know that. when you look at yields, at what point does that search to really freak you out because they are so low? in going to buy the dip equities because we have the 10 year under 1.4%. decided to hike quantitative tightening, completely reversed it, but we think it is probably going to continue on with low yields. yields could go lower. laura: exactly. now a 30 year yields are negative territory. the differential between u.s. yields is anywhere from 180 to 200 basis points, so there's that search for yield alongside
relatively strong economic fundamentals in the u.s. that are going to continue to underpin the bond rally, at least in the near term. david: in italy, the spreads continue widening, and we see an impact on credits and so forth. that is where people get slightly more concerned. yields are so low. it is more about spreads widening out. there's a problem emerging here which we can't quite track. the data flow in europe is going pretty well, but it is all backward looking. alix: in terms of corporate credit, too. on friday, you had record low in the corporate junk-bond are getting europe. that does not seem to say the ecb is healthy here -- is helping here. marcus: anytime something good happens in europe, it instantly gets smacked in the head. that is what happens the last four years. great -- can't a catch a break, europe. alix: excellent conversation.
viviana: you are watching "bloomberg daybreak." barclays is reportedly ready to search for a replacement for ceo jes staley. according to "financial times," by the end of next year, he expects to leave. he's had two run-ins with british regulators since joining barclays. he is under investigation for his ties to the late disgraced financier and sex offender jeffrey epstein. -- into it is in
talks to buy credit karma. it recommends financial products from credit cards to car loans. warren buffett gave berkshire hathaway investors a preview of the future. in his annual letter, mr. buffett saying we will be hearing more from his top executives. they are seen as top contenders to eventually replace mr. buffett. he is 89, but gave no indication he would step away anytime soon. that is your bloomberg business flash. alix: thanks so much. part of what is fueling this market selloff is this, supply chains. how the virus is disrupting all world supply chains, from watches to auto parts. the outbreak has hobbled china's economy, and is having a ripple effect around the world. this map i love. it shows you the share of all imports of intermediate products coming from china. in other words, all of the parts used to make stuff. a hong kong watchmaker can't get the parts he needs for his
high-end timepieces. he has orders for 2000 watches that can be made. a german auto parts maker had to shut down for two weeks. eight employees came down with the virus following a visit from a chinese colleague. all of that playing into the selloff in equities. the question, is it a second quarter recovery, or are we pushing into the third and fourth quarter? is it v-shaped, or are we now u? coming up, we are going to break down more of the coronavirus and how it dominated the g20 gathering in riyadh. more on that next on this risk off day. do you need to be buying the dip or waiting on the sidelines to see where equities check out? this is bloomberg. ♪
if this holds, it will be the 10th largest points loss ever for the s&p. european stocks also getting hit hard, following the most since 2016. the dax rolling over despite the evo data not being as bad as we data not- the ifo being as bad as we thought. that is the story and the bond market. is to have the three months-10 year really inverting, -16 basis points. dollar-yen lower. gold getting a safe haven bid. an unbelievable move from $1500 to $1700 in a matter of weeks. crude touching a critical level around $51 a barrel. coronavirus was the backdrop as officials convened in riyadh over the weekend. much of the conversation centered on appropriate policy response. >> the asian central banks are out there. we already saw interest rates
being cut, and there are further expectations of interest rate cuts. usually, central banks are the speedboats, and they need to be out fast. >> we have a very accommodative monetary policy, and there is no more room for maneuver within the monetary policy, either from the fed or the ecb. it is time to use the fiscal have that some states do the support growth. >> any intervention that might help the economy in this case should usually come from the fiscal side. >> on the fiscal side, we are not preparing for a package in indonesia. >> the countries that have the capacity, the fiscal capacity to spend more, the countries that are saving money because they are paying less interest on their debt because interests are historically low use that capacity. alix: still with me on set,
david owen of jefferies. true? david: yes, fiscal policy is the way forward. the ecb can cut further. the boe can cut rates further, and also the fed could. they can wrap it all within structured spending and the public sector. that is where the u.k. is going in the budget. that is where many other countries should go to one fourth as well. alix: what is your level of confidence that we will actually see it? and germany, we had that 54 billion euro package, but that was peanuts. when will we see them take advantage of what the oecd was talking about? david: i think the data really does roll. german looked week -- germany looked weak last year, but there were some reasons for that. alix: it has to be services, then. david: yes, and this can happen. manufacturing is the epicenter, but at the end of the day, so
many services are wrapped up in manufactured goods. when you think about buying a car, you are buying not just the physical thing. your bag -- you are buying the software in the car, all of those things that, for the company involved, could be more value added. so those services based companies service manufacturing companies. if the services sector in europe starts rolling over, and germany in particular is seeing be services sector begun to go in reverse, i think pressure for a fiscal response will grow. alix: can that happen when merkel's coalition seems like such a mess? david: it is unlikely, but at the end of the day, you've got more countries around the edges moving forward with this. i think that is going to be what we see. the u.k. is leading the charge. we all assume there's going to ,e a major fiscal giveaway here and it will be targeted for the
regions for infrastructure spending and so forth. that is where we should be going. it would be interesting to see the u.k. because it feels like they are going to do the experiment. they are going to have fiscal and monetary policy doing the same thing at the same time. it will be interesting to see if it actually works. david: the thing about the u.k., we do have brexit. alix: no, we don't do that on this show. [laughter] david: brexit represents a massive supply shop. boris johnson does recognize that, along with donna conning's -- with dominic cummings, his chief advisor. government needs to be seen to addressing those original advances. it is quite clear that infrastructure gets money, partly due to brexit come although the government won't say it. but if it works in the u.k., which i thing it will come other european countries should follows who.
alix: are we at risk -- should follow through. alix: are we at risk at all of inflation down the road on the supply shock? i talked about that watch and the supply chain. how much more is that going to cost me, and how much does that filtering to the economy? david: central banks have to look through this. the data is going to be extremely noisy, so the signals on those ratios are going to be very low. they are going to a lot of estimates about what is going on , but you are absolutely right. supply chain complications will push up prices and wages. the central bikes have to take of you, is that a supply shock -- the central banks have to take a view, is that a supply shock? it seems complicated, but central banks have to make that judgment call. is trend growth going forward going to be lower? by the way, brexit is part of that mix, but also other things in the same mix.
it is just another reason for central banks really have difficulties setting monetary policy. alix: we will talk about climate change and a second, but if i look at the euro-dollar at $1.08, how low can it stay? does it go even lower? david: the eurozone is running a huge current-account surplus. it should make sense. we are seeing from the eurozone still substantial net debt outflows. we are seeing capital leaving the euro zone and going into u.s. credit, going into the u.k. gilt market. we have massive flows. the euro zone is the biggest exporter of capital globally. some of these things were driving down the currency. a be the currency can go lower from here. if the euro zone does little -- does go lower, the print will lower. alix: we want to give you an -- updatehow blades on headlines outside the business world. -- has been stunned by
coronavirus. there are now 219 confirmed cases in italy. five people have died. italy approving a lockdown on an area near milan. it canceled the remaining days of the venice carnival and several universities are closed. president trump began a 36 hour trip to india, with talks of billions of dollars in weapons deals. an estimated crowd of 100,000 people heard the president speak alongside prime minister narendra modi. administrationmp giving in to pressure from europe over the environment. the u.s. allowing the word climate into a joint communique from a g20 meeting in saudi arabia. at first, u.s. treasury secretary steven mnuchin objected, but eventually, the u.s. reluctantly agreed to a mention of climate change. 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'm viviana hurtado. this is bloomberg. alix: thanks so much. debit own of jeffrey's is still with me. we were laughing at that story -- david owen of jeffrey's is still with me. we were laughing at that story. how does climate affect your work? david: people are looking at the behavior of the stock market, trying to figure out whether green stocks will outperform brown stocks going forward. in terms of central banks, it is really the euro system and the bank of england which have been leading the charge. they are concerned that they assets whichbuying no longer really exist post climate change. abouts also worries financial stability concerns, the banking sector, the insurance sector, and so forth. buy greenld the ecb
bonds? should they help develop the market? david: i think they should. christine lagarde is looking at it. they need to sustain growth, but they should to sting in their credit buying between green and brown bonds, and they shouldn't just buy bonds regardless. but this is up for grabs, so christine lagarde's ecb is currently doing a major strategic review. the markets are refocused on the inflation target, and this whole issue about climate change will really go forward on the inflation target itself. alix: when you look at the carbon tax, what is the direct relationship here? david: any economist would argue that there should be a substantial carbon tax to address climate change viviana: that hasn't -- to address climate change. that hasn't happened yet. that is where we could go. obviously in the u.k., we've got this target of no net emissions by 2050, which the government is
trying to bring forward. this requires substantial investment by government and authorities to try to come up with alternatives. at the end of the day, it is going to be costly. that is the issue. i think there's more and more people addressing the issue. , thehing i did last week university of notre dame looking at this climate measure, and it clearly shows that some countries in europe are going to have more problems addressing climate than others. and coming back to italy, italy is more exposed to climate change than, for example, germany. italy doesn't have the fiscal space. unless they address some of these issues right now, they could have problems to align. alix: david, really great to catch up with you in person. first time i've actually met you in person. coming up my corporate fallout in response to the coronavirus outbreak. we will speak to david abney, ups ceo, in an exclusive
change for prada. the company hired a star designer at as its cocreative a head ofpreviously calvin klein. political protests in hong kong and coronavirus are hurting the fashion brand. now to walmart. it is in talks to sell its vudu online platform to nbc universal. it hasn't been able to turn its service into a version of amazon's video prime. morgan, -- davey with jp morgan. offer a rangeedly of savings-and-loan products under its chase brand that could bit jp morgan against goldman farkas.nline bank alix: thanks so much. the chief executive for forum is purpose hosts
taking place today, and sonali basak joins me with an exclusive interview with avett abney. sonali: thank you. really wondering how this is impacting your international operations in the supply chains of you and your customers. david: first, for the coronavirus, the emphasis has got to be on the people. really have a lot of empathy for the people going through this. it is a very self -- a very tough situation. from a business standpoint, we definitely see that our planes aren't as full as what they would have been coming out of something weat is have the flexibility come about the longer this continues, it is going to have an effect on exports out of china, imports
going in, and it does have an effect on our customers, which has an effect on our results. sonali: over the weekend, you have peter navarro saying the u.s. is outsourcing too much. what is your reaction to that? david: i think it depends on the viewpoint and how things are taken out of context. my view is we want to see balanced trade, so we went to u.s.he u.s. imports into to grow, exports out of the u.s. to grow. of course we want to feed those markets. sonali: at one point, you have the coronavirus shifting to europe, as well as other geopolitical issues. are you concerned at all about your operations there and how they may be impacted by the spread? david: we are monitoring in all parts of the world. in europe, the biggest focus
right now is in northern italy. in asia, you've got south korea. obviously, and places where we operate, we are training our people and giving them all of the safety precautions that they need because that is most important to take care of them. we follow all laws and authorities as far as where we can operate. sonali: we have so many world leaders at the g20 in riyadh right now. you are here in new york for an event that focuses on corporate responsibility. when you look at how world leaders, u.s. in particular, are handling the issue of climate change, do you feel they are doing enough? david: i don't think we could ever say we are doing enough. and i am not being critical. i am just saying continuous improvement. we have to do better. the reason i am here is the fact that it is almost like preaching
to the choir. the ceos that are here, we all believe in social and environmental responsibility. we meet once a year. i have been going to these meetings really since i've become the ceo. it is really first to talk to each other, and second, we meet with investors that are really focused on sustainability issues. sonali: sustainability is just one asset of stakeholder capitalism. another aspect is employees. you have been doing a lot of work to automate your workforce, and spending a lot on out of nation. how is -- on automation. how is that impacting your employer base? david: they are the ones that take care of our customers. we have 495,000 people scattered throughout the world. they are our drivers, our service ambassadors to customers. that is how important they are.
but what transformation and embracing technology, but we are really doing is focused on becoming a stronger company. then continue to grow, even when you add automation, you are still increasing jobs come about at the same time, you are much more efficient. that is the focus of our initiative. sonali: automation has allowed you to open a sixth hub in the united states. you are opening one in europe as well, and germany. what are your plans for these super hubs? how many people are you able to employ? david: each super hub is going to be different because, depending on the size and region -- i will just give you a recent example. the one we did in atlanta, our smart hub, we are processing over 100,000 packages and our -- packages an hour. we increased our efficiency by
30% or 35%. at the same time, we created 3000 jobs that are very important for that neighborhood. the great thing about ups jobs, even a part-time job has a very good chance to become full-time in a few years. we are really proud of what we are doing there. as ceo, you were very quick to understand what the importance of e-commerce would be. when you are looking ahead in the next year or two years, what is the amazon effect going to look like? how is it changing? sonali: first, on e-commerce, absolutely right. we made a decision, this is not going away. it is here to stay. we've got to embrace it. we had to lean in and make the necessary changes throughout that time. amazon is a part of that. it is a significant part. but there's still a lot more to e-commerce than amazon. 90% of the world's largest retailers are our customers, but
what we are really focused on is all of those small and midsized businesses in this space. we call it the e-commerce ecosystem, and those are the customers we are developing specific programs to allow them to compete with the big companies. sonali: amazon, we reported, had been cutting a lot of their relationships with a lot of their distributors. how are you reacting to this? how is this impacting your business, if at all? david: our business has grown with amazon. we monitor closely. they are customer, and they are important. they are also a competitor in some ways. we are not going to be naive. we are going to watch exactly what they do. but the key to any of these collaborations, as long as they are mutually beneficial, then you keep doing them and they provide more value to your
customers. if they are no longer mutually beneficial, you decide to do other things. that is for sure. sonali: thank you for joining us. back to you. alix: thank you so much, bloomberg's sonali basak with ups ceo david abney. one other story we are following this morning's hsbc's search for its new chief executive. the ceo of unicredit will not be going to hsbc. jumpy or mustier has pulled out of the race -- jean-pierre most -- johnjumpy or mustier mustier has pulled out of the race to be the new ceo. they have announced plans for a third major overall and a decade. coming up on the program, u.s. 30 year at a record low as the 10 year sinks to levels we haven't seen since 2016. how low can i go? youru are heading out into
♪ alix: time now for trader's take. joining me is marcus ashworth, bloomberg opinion columnist. tell me what you see? marcus: i think they are calling this tractor beam of lower rates around the world. europe is adding more qe, and arguably may be more. japan yields are falling negative as well. the german 30 year is below negative. yield?n happen to u.s. it has dragged down to zero because they are so cheap compared to the rest of the world on liquid markets. the yield curve is pricing in perhaps a series of more rate cuts coming. it is worrying that you've got this record low yield in 30 year, that we haven't quite hit that on the 10 year, a duration from thebbing anything
biggest yields, that is going to drive everything lower. alix: doesn't it tell you anything other than it is a flight to safety? david: i think it is global, and the sense that the u.s. will try to break free and raise rates and do quantitative tightening. did gotten some of this track from the global financial crisis. well, not so fast. things are being dragged back in by europe. alix: i feel like it is "the godfather." are you with me on that? marcus ashworth speaking my language. coming off them -- coming up on the program, we speak to andrew sheets, as well as paul donovan, ubs global chief economist. this is bloomberg. ♪
monday," on this monday, february 24. here's everything you need to know. let's take it from the top. > this is a stress test for the world, a stress test for china. alix: global leaders talk about the need for fiscal stimulus, while china spares no effort to contain the coronavirus outbreak in beijing. >> we are seeing virus hotspots emerge outside of china, sparking concerns of a seven wave in the academic -- a second wave in the epidemic. alix: italy locks down an area of 50,000 people near milan. the origin of the contagion is still unclear. partyllor angela merkel's in hamburg taking only 11.2% of the vote. >> it is the end result of what's happened in another german state a few weeks ago, where the cdu, and its loss to
the right wing in this region. alix: the party is also struggling to find a new party leader. pres. trump: america loves india. america respects india. and america will always be faithful and loyal friends. alix: president trump kicks off his trip to india with an event called namaste trump at a trichet -- at a cricket stadium. >> will be heading to new delhi into the more official part of the visit, with a bilateral meeting sometime in the afternoon tomorrow. it is so far pretty fruitful. nevada, we have just put together a multigenerational, multiracial coalition which is going to not only win in nevada, it is going to sweep this country. alix: senator bernie sanders
solidifying his lead in the democratic primaries, winning the nevada caucuses. now with the sanders campaign having a significant win in both new hampshire and nevada, they feel they are well-positioned for super tuesday and the long haul. now: democratic hopefuls prepare for their next debate in south carolina tuesday night. in the markets, you are looking at a severe risk off mode. a roasted to safety, rush out of any kind of risk. the question is, is this a by the dip kind of scenario, or is there much more to shake out? s&p futures off by 2.8%. if we continue, it will be the 10th largest point loss for the s&p ever. move into the treasuries, into risks expected. with us is andrew sheets, morgan stanley cross asset strategist.
with your clients, what you tell them? beenw: yields have rallying all year, defensive stocks outperforming. so this idea that the market is kind of everything is fine has been challenged under the surface for a while. so the assets that have not reacted at all still have some risk of repricing. that doesn't mean a recession is certain. that doesn't mean it is all going to fall apart. that i still think, given how close we are to the highs, how close a lot of prices are to the all-time highs, there is still more justice -- still more adjustment to be had. is paulso with us donovan, ubs global chief economist. paul: we've got to room ember that in the modern age, there may be a tendency to overreact in terms of sentiment, in terms of police. the underlying economy going into this situation was actually looking reasonably solid.
we are not seeing fear, and fear is the main economic driver in the united states and most of europe. if we were to see a pickup in fear, you would get a more severe economic impact in europe and the states. at the moment, the economic impact is still relatively contained. alix: what i don't get is why now. i understand italy happened over the weekend, but we have been dealing with the virus for weeks. so why now? is it more about really high valuations anyway, having utilities lead us to record highs last week? it's not like there was a not leave it for that to shift. is that more of it, as it actually just the virus? andrew: i think it is a combination. as you mentioned, we had been going into some of the highest valuations we have seen in the post crisis. that combined with something that it is uniquely hard to anntify and address as
investor or economist. this is fundamentally about confidence. it is something that is very outside the comfort zone for a lot of investors. so when you combine those high valuations with a unique level of uncertainty, combined with this is something that i think the market that was addressed at the end of january, and that was coming back, i think those have all conspired together. nonnormale sort of a distribution of risk around this. coming into this after a year in which investment spending had collapsed because of trade uncertainties, basically companies say we are stopping investing. but the consumer was perfectly fine. the consumer was supporting the economy in europe, in the united states, and even the germans were spending money. going tonything is damage consumers, it will be fear, and it will be fear related to the virus. tippingo over that
point, if people start tweeting about this in the u.s., in northern europe, and germany, then we start to risk consumer spending. that is the thing which has been keeping the economy going at a ok-ish, below trained rate of growth. alix: maybe spending doesn't bounce back in any kind of v-shaped recovery. i am not going to go out and buy the coat i didn't buy three weeks ago because of coronavirus. paul: the people are still spending. maybe they are doing it online, but they are still spending. there is that aspect. remember, the retail sales data carriercare when the delivers the goods to you. they care when you click buy on the website. that is when it comes through. we do see some of that. if you're talking about luxury brands, that is different
because that is a leisure experience. you are going out, doing something fun. that requires you to go out in person. but a lot of the more mundane stuff can still care. andrew: there is one piece of silver lining here. i think we are still at the part of the year where investors can believe and dreamed of this will be a v-shaped recovery that is just temporary. that companies don't need to fully correct their guidance before anything larger happens. i think where the real risk nightlife is as you get further in the year, to april and may, it is very clear at that point almost by definition that if some of that demand doesn't come back, if that coat you didn't buy is never purchased, that is where the markets are in more trouble. the moment we are in this case of pullbacks and more modest shocks. where we probably need to worry is later in the year. alix:alix: so if we look at utilities, low vol, beta and tech is having led the rally so
far, does that continue if we find a base? or is it going to be different sectors? andrew: we are probably most worried about technology in that group. you have a cyclical aspect of technologic spending where companies might decide to pull back, might decide to shift some of that spending. alix: in utilities, for example. andrew: exactly. that is probably, of those defensive sectors, the one we are most worried about being less defensive than it might always appear. paul: in the longer term, economists are here for the long term. at a 10 yearng view, what does this change? one of the things could be an genous shock like this encourages spending from home more and more, so maybe we get a shift both good and bad, depending on what aspect
you are looking at. andrew: i think the other thing important about those sectors is the size of technology is so much bigger than the size of the utility sector, say, if we look at the u.s. market. utilities are only 3% of the s&p. if investors decide this is something that really changes their mindset, if there is de-risking of any material size in the market, at almost has to come from the technology side. it is just so much larger. it is the material place where funds can be raised from. alix: two questions. if you look at yields globally, that is one place that could see a longer-term shift. you can't undo breaking below 1.4% on the 10 year. it makes it harder to get to 2% and 2.5%. paul: i think the issue was yields. we were starting with a market that was rigged, effectively. alix: by central banks.
paul: central banks and regulation. captive a very large pool of investors who have no choice. this is why the yield curve doesn't have much of a correlation to economic reality, so on and so forth. so yes, i think that when you get a shock like this, it does tend to take a little while for investors to reassess, regain the risk appetite. they perhaps regain risk appetite a little more slowly that consumers do in this sort of situation. with that, yes, yields could stay lower for longer. but frankly, we were already in a low nominal interest rate environment going into this. that is not going to change anytime soon, i don't think. alix: the pedestrian question, do you buy this dip? andrew: i think it is a little too early. an important thing to keep in mind, this is still a relatively forgiving part of the year. we know the federal reserve is likely to be buying $60 billion
of t-bills every month through april. there's still the ability to hope that any disruption is just temporary, just one quarter of earnings. there's no incentive at this point for companies to mark down full-year guidance. i think there is still hope that maybe the global growth numbers will come back and there will be a fiscal response. i think the bigger strategic risk for the markets lies a little later in the year, and ultimately, that probably means this will be a dip to buy. alix: just not today. andrew sheetz of morgan stanley and paul donovan of ubs wealth management will be sticking with me. coming up, we will be look at the g20 gathering over the weekend. financers and central bankers talk about what they could do on the fiscal side. as is bloomberg. ♪ -- this is bloomberg. ♪
>> the asian central banks are out there, and we already saw rates being cut, and there are further expectations of central bankrate cuts. >> we have a very effective monetary policy, and there is no more room for maneuver within the monetary policy, either from the federal from the ecb. so it is time to use the fiscal space that some space do have that -- that some states do have to support growth. >> on the fiscal side, we are not preparing for a package how to stimulate consumption in indonesia. >> the countries that have the capacity, the fiscal capacity to
spend more, the countries that are saving money because they are paying less interest on their debt, because interests are historically low, use that capacity. alix: those were some of the comments from finance leaders out of the g20 meeting in riyadh over the weekend. andrewith me on set, sheets of morgan stanley and paul donovan of ubs global wealth management viviana: does it worry you -- wealth management. does it worry you that the conversation is no longer about monetary policy come but just about fiscal and backstop? andrew: the fiscal policy response is always the slower response, the one that is more difficult. there was a good quote about monetary policy in the speedboat. it is certainly the system that can be deployed most quickly. when you look at china already deploying quite a bit of fiscal stimulus, even before this was enacted, and the u.s. already deploying a lot of fiscal
stimulus that may be gets harder to deploy in an election year, there are obviously some limits on it. i think that what we've got to recognize, and we talk about the central bank policy and what it can do, central bank policy can't do everything. central bank policy can sort out liquidity crises, credit problems, banking system problems. that is what it is designed to do. if you've got a general demand shock, there is something central bank policy can do. but if it isn't originating in credit or the financial system, it is fiscal policy that is supposed to bear that burden. some countries have got more room for maneuver because they are prepared. the political situation in the states makes it more difficult. i think we will see some fiscal stimulus coming through in this country apart from anywhere else, and that will provide a degree of support. alix: but what about elsewhere? you mentioned china, but it has
still been targeted. even when you hear that we are going to fight the virus, make sure the economy is ok, it is still a very targeted stimulus, not like a 2008 kind of scenario. germany is the elephant in the room, and the better the d ata is, the less likely they are to do that. andrew: i think that is a challenge. we have seen historically it does often take a bigger economic shock to drive that larger fiscal response, and we haven't had that. the data has actually been kind of good over the last month or so before the virus reemerged. i think that is a challenge. it is a challenge that a lot of fiscal policy is already being deployed. if you look at a commodity like copper that should be quite sensitive to the scenario you described, that really big 2008 style policy, and has been really weak come us adjusting that the economy doesn't see that coming. paul: the question about china,
to judge what china will do on the basis of what they have announced so far, i think it is too early. they are going to want to see how much of a domestic demand rebound there is, how quick factories get back to full capacity before they go and commit to additional fiscal stimulus. there will be additional stimulus. i think that's been made very clear with the politburo meeting over the weekend, but the scale of that stimulus is going to depend on the scale of the problem. we just don't know at this stage. we've got to give it a little bit of time. andrew: i think also thinking about how bad this will be for markets, i think the hope and fiscal stimulus is something we are going to have in the first half of this year. there is still going to be that assumption that china will use policy further. we know the u.k. is going to do something. i think that can keep a lid on how much markets can selloff. further into the year, it is really about that fiscal policy meeting to come through. i think it will be very clear
that data at this point is just temporary, and that is something we need to keep in mind. alix: so it provides a floor for the market. andrew: that is actually the bigger risk as we get into the middle of the year, that ability to believe that further central bank policy or fiscal stimulus is coming that starts to be eroded. paul: i think it will go a little bit beyond fiscal stimulus around these events , these at least so far european economy -- alix: we talked about it before. paul: yes. what is happening with the european budget is not a great signal for what is happening between european countries on further fiscal easing, the green deal or whatever it is going to be. but if they come up with a deal, if there is more a concerted effort, that shifts things. the debate going on in the united states about what appropriate spending tax cuts,
etc., they will not get anything through this year, but on your point about keeping hope alive, that could be something we will discuss later this year. alix: andrew sheets of morgan stanley, paul donovan of ubs wealth management will be sticking with me. more on elections coming up, specifically bernie sanders' win in the democratic primaries. this is bloomberg. ♪ ♪
viviana: this is "bloomberg daybreak." president donald trump began a 36 hour trip to india, was talks of billions of dollars in weapons deals. an estimated crowd of 100,000 heard the president speak alongside prime minister narendra modi. he said the u.s. will sign military deals with india worth more than $300 billion. -pierreit ceo jean
mustier pulling out of the race to lead hsbc. this decision adding to the uncertainty at hsbc, trying to decide whether to place interim ceo noel quinn. we end with barclays. it reportedly is ready to search for a replacement for ceo jes staley. according to "the financial times," he told colleagues by the end of next year, he expects to leave. run-ins with british regulators since joining barclays. he is now under investigation for his ties to the late disgraced financier and sex offender jeffrey epstein. that is your bloomberg business flash. alix: thank you so much. bernie sanders won big in nevada, barking away from the rest of the pack headed into super tuesday -- breaking away from the rest of the pack headed into super tuesday. with me still are entry sheets of morgan stanley and paul donovan of ubs wealth management. what is the sentiment here? andrew: i think the most remarkable thing is investors
are both not focused on it, but also think it will be very close. if you look at a lot of polling of what investors expect, i think a lot of investors expect the u.s. president to be reelected. if there's potential for this to surprise markets -- and again, i don't think this is a next week or month sector -- as we get into the summer and you see more national polling, a lot of those national models start to get followed up, whoever the democratic nominee is, i think it will be a pretty close election. that is are you at morgan stanley. if there is a capacity to surprise here, it is going to be a closer election, whoever is the nominee. alix: in new york, everyone says there is going to be fiscal stimulus no matter what the election. but you guys don't necessarily think that way. what do you think? paul: there's fiscal stimulus and there is fiscal stimulus. level state and local level, you could see
fiscal stimulus because of hunters want to get reelected that's because governors want to get reelected -- because governors want to get reelected, too. at the federal level, i struggle. at the infrastructure level possibly, but it is going to be more hope than anything else. that's what you sell most of during an election campaign on both sides. maybe hope and aspiration is what is pitched. alix: you agree. andrew: i do. i think the odds of fiscal policy are really low. would we model out the numbers, there's probably more fiscal stimulus last year that people expected. the tax bill was passed in late 2017. i think most people said 2018 is the year of when that fiscal stimulus is really going to hit. when we look at the numbers, quite a bit of it landed in 2019, which helps explain why u.s. growth in 2019 was so much more resilient than the rest of the world. it is now finally fading away, but we think some of that fiscal
impulse disappoints versus expectations this year rather than surprises to the upside. paul: the only possible area where you could get an easy win because you don't need congress is trade taxes. but the thing is, the consumer isn't affected by this. it is paid by american companies, not the american consumer, for the most part. and you still have the uncertainty because the tariffs come down this week. it doesn't mean you will get a tweet next week -- you won't get a tweet next week that changes everything. alix: andrew and paul, you guys will be staying with me. coming up, commodities getting clobbered. gold nearing $1700 an ounce. we will break that down. this is bloomberg. ♪
ugly. if you are long risk today, your positions are not doing well. markets waking up to the risk of the coronavirus. the 10 year yield now in a 2016 low. markets looking at pricing and three rate cuts from the fed, not just two. all of the equity indexes deep into the red. europe on track for its worst selloff since the brexit referendum. a lot of that payment concentrated in italy which has been the epicenter for the corona outbreak. that is two times the daily average of trading volume we see , heading for a 5% decline. the thought is if it is hitting these european companies, earnings will start to look ugly. we are seeing investors rush to price in, to get safety when it comes to european sovereign debt. if you look at the credit default swap for high-yield as a, you would see that
20 basis point jump, the biggest jump since 2018. when you dive into the index, it is italy that is the standout. unicredit as well, some of the worst performers. what will the earnings picture look like for these multinational export driven countries in europe? to get the clearest picture of what is happening in the markets today, all you need to do is look at two commodities. this is the textbook risk off day. you see gold trading at a 2013 high. meanwhile oil tumbling 4%, now trading below $57 a barrel. gold is the hate of cash is the haven of choice. -- gold is the haven of choice. brent not testing the february lows. things could get uglier for oil. the risk is there for a steep selloff. it is not like equities.
you cannot price future fundamentals. you need to price supply and demand. according to goldman, we will not see a recovery in the stimulus for some time. alix: thanks so much. appreciate that. also want to take a look at what is happening in gold. it is outperforming oil by the most since august. i was covering gold in 2009. this has been quite a run. joining us is julian lee and andrew sheets and paula donovan are still with us. do you buy gold? julian: it is clearly performing as an effective hedge, but it is uniquely challenging as it class to invest in. trading is a different animal. i think it is uniquely difficult asset to value.
anhink conceptually this is environment that works very well for gold and gold prices, but you also had gold run well ahead of anywhere you would expect it to given how strong the dollar has been or how low interest rates have fallen, two factors that drive gold. i think at this point, what dani was mentioning about prices and credit, that is an asset class that has not move much. it is directly affected by larger economic risk. that seems like it might be a more effective cross asset hedge. alix: interesting. i do not like gold on principle. i think the market is getting way too far in terms of expectations for rate cuts in the united states. the fed is saying we are happy where we are. we have had criticism of what the market is pricing, debate of what the market is pricing for the fed vice chair.
i would say the safe haven bid is understandable. for the asian investment base, they are likely to go into gold. that is why you see unusual: dollar price simultaneously. if you move beyond the virus, it is high for me. alix: skeptical of gold people. let's turn it to oil. what i am having a hard time understanding with oil is we are still range bound, or are we breaking down at the demand and refinery offtake is worse than we thought? julian: this is the big fear that the hit to demand will be much bigger than people had been anticipating. agencies, three big international energy agency, the u.s. department of energy and opec, who all have what are now looking to be optimistic demand scenarios for 2020. they have been cutting 19. as each quarter comes to an end,
they cut the sentiment of that quarter, that is followthrough into the fourth quarter. it will almost certainly follow-through into the first half of the year. will see ary is we bigger impact outside of china. we will start seeing serious disruption to supply chains, which means the pickup when it eventually comes will be slower. all of this is on top of what has been a mild winter in the northern hemisphere. oil demand has been down in europe, down in north america, down and japan from where we would expect it to be. this is the double whammy people are worried about. alix: is the curve appropriately pricing all of that? if you could come inside the terminal, you can follow me. this is for crude. that is a bizarre looking curve. -- it seemsnder
like we are recovering the backwardation fairly quickly and i wonder if you agree with that? julian: there is a view china i thinkow money -- people are starting to question that. is it going to be v-shaped? if it is not, how long will the trough be and how quickly will it come back if you get these broader dislocation? >> i think there is an interesting fundamental business between what is going on with gold and oil. i think what is going on with gold is psychological. the things with oil, the demand disruption is real. plans are not flying as much as they usually are. things are not being transported as much as they usually are. there is a much deeper fundamental story on the oil
side than the gold story, which is different. there is also an interesting point that china is a very efficient consumer of energy. what happens in china matters more than what happens outside. china is now returning to work. over the weekend you had a serious -- a series of announcement about speeding up the return to work. at least at the moment, china will be consuming more consumable energy. if that starts to accelerate in china but is lackluster elsewhere, that may give us slightly to -- a slightly different complexion over the medium-term. alix: just because you are up and running does not mean you're at 100%. paul: that is part of the equation. we have seen from the tanker tracking we do at bloomberg that imports of oil into china in january were down 16%.
runsu consider refinery were down as much as 3 million barrels or 4 million barrels a day, 16% is not a lot. we have had crude going into storage. we have had refined products going into storage, which means you have this large buffer in terms of both products that need to be worked through before china's demand for crude oil starts to pick up again. alix: when you take a look at 50 willtocks, clearly be tough for u.s. shale producers. if you are buying value, there is no better value than energy, is there? how do you think of the value trait in relation to the energy stocks? andrew: this is the reason we like financial and bank stocks more. they are also very cheap. banks and energy are trading at 20 year lows and relative valuation. there is a fundamental earnings
improvement story on the banking side, especially in europe where the current quarter earnings are quite good, versus on the energy side. there is also a baker esg overhang that is harder to quantify. you know it is there and putting negative pressure on the scepter from a big picture standpoint. within the value space, the place we are trying to position in is in the financials more than energy. alix: appreciated. great conversation. julian lee, andrew sheets, and paula donovan. a great pleasure. good to see you in person. now let's get an update on what is making headlines outside the business world. viviana: we begin in italy where it appears to be in panic mode over the coronavirus. it has been stunned by europe's biggest outbreak of the disease. there are now 219 confirmed cases. five people have died. italy's government imposing a lockdown on an area near milan.
several universities are closed. now to new jersey where governor phil murphy says next month he will undergo surgery for kidney cancer. he says the prognosis is good. he is a former goldman sachs banker who was elected as a democrat in 2018. we end your first word in iran, where it was a big victory for hardliners. a semi-official news agency said they want a majority of elementary elections. that is seen as a rebuke to the president's engagement with the west. iran has been battered by u.s. economic sanctions, empowering conservatives. 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 viviana hurtado. this is bloomberg. alix: thanks so much. coming up, we will take a closer look at the prospects for gold. we will talk to kelvin dushnisky . bloomberg users, interact with the charts shown on gtv .
viviana: coming up later today on bloomberg markets, tom palmer. viviana: you're watching "bloomberg daybreak." i'm viviana hurtado with your bloomberg business flash. .e begin with into it it is reportedly close to buying credit card max. the maker of turbotax would pay about $7 billion. credit karma giving users access to credit scores. now to an unprecedented shakeup
for italian fashion house. the company hiring a star designer as its cocreative director. headns was previously designer at calvin klein. product returning to group -- prada returning to growth. the krona virus is hurting the fashion but -- the coronavirus is hurting the fashion brand. alix: pulled prices are soaring. -- gold prices are soaring. investors have warned about the precious metals growth prospect joining me now is bloomberg's danielle boko sitting down with kelvin jasinski. kinski --do danielle: you are one of the beneficiaries of the run-up in gold prices we are seeing. with gold approaching $1700 an ounce.
at is hows place to much more upside you see on gold? kelvin: the starting point from the coronavirus perspective, from human aspect, i can tell you it is a great concern. nobody in the sector wants to see it. having said that, it underscores gold as the ultimate hedge. in terms of the gold price, we see an upward trajectory underpinned by number of things. obviously the coronavirus is topical. beyond that, concerns around global growth, what it might mean in terms of interest rates being lower for longer. when you put that together, there is a strong argument to make that gold will continue where it is now. as you look over the longer term , and we discussed this before, the supply demand fundamentals are positive. we see it is a good trajectory. danielle: i want to talk you about the fundamentals in a
second. since you brought up the human aspect, and it is important, we do not want to sound crass about this, but there is no doubt gold is getting a safe haven play. from an operational standpoint, we will get to the point where the starts to affect gold mining operations and there is pain? kelvin: we are monitoring it carefully, particularly the global supply chain. we have networking china, many outside of china. it is something we are tracking carefully. so far, no impact. depending on the extent of the virus, it is something we will have to be watching carefully. at this point, we are monitoring carefully. danielle: you lifted all of the reasons you think gold prices are well supported around these levels, or do you see them going higher? kelvin: they could go higher. danielle: it is difficult to say. their projections of gold moving perhaps into the $2000 range,
which i would not rule out. perspective, it does not change how we are running your business. the same discipline in place, not changing any of our metrics in terms of investment decisions . we love to take advantage of the margins but we are not changing how we run the business. danielle: you raise the dividend 74% last week. is there room to go higher? kelvin: it is a good news story for us. our dividend is based on 10% of free cash flow. if the gold price continues to be supportive, that tends to a further upward trajectory, we will generate more cash and will continue to pay off the greater share of our debt. when i spoke to you goldyear you said anglo was interesting in increasing its portfolio in north america. i want to ask you about that
specifically because i was speaking to a ceo last night it was also interested in shallow north american gold assets. it seems like that space could be hot going forward. kelvin: we are lucky because we have an asset in nevada that we have been developing. we have a significant budget in terms of further explanation -- exploration. we would love to take a position in nevada. before that, we are completing our project this year, which is big. it is an engine of growth for us. we poured gold at the end of last year, which is an important milestone, and in 2028 we are ramping up to full production velocity. at the same time we are advancing developing projects in columbia, one where we are partnered with b2 gold, and another large copper-gold project. we are nicely situated.
in the meanwhile, we are investing in the portfolio to develop more ounces around the existing line. danielle: you have shed remaining assets in south africa, which is significant because of the companies large legacy there. toing the listing would seem be the next logical step. when will you make the decision? anything with value is on the table. our plate has been full, so we want to ensure the transaction is completed. danielle: no listing until the transactions are completed? kelvin: we want to make sure that is done well and make sure we do not lose track of all of the other things we are doing. this year is about delivery and executing our commitments. i do not to put a timeline on any decision-making. we will make the decision when it is appropriate. we are centered on getting done what we have in front of us.
danielle: can you tell me which of the obvious exchanges, london, new york, and toronto you would be leaning towards, as a canadian? no leading question there. kelvin: i would love to make decisions as a canadian, but i cannot because i am the ceo anglo gold. we have not made a decision. danielle: would it depend on picking up more north american assets? yesterday, they seem to have a long-term plan that would be a more aggressive presence in north america. he said the new york listing looks more likely. kelvin: we trade on new york. from our perspective, it would not relate to whether we want a larger footprint in north america, it would be a matter of where do we create the most liquidity, break down our cost of capital. that is what the decision would be made on. we can invest in any
jurisdiction. you use your revolver in cash to pay down debt, you announced that last week. do you still have enough firepower for an acquisition in north america or elsewhere should the right thing come along? kelvin: we have no interest in doing m&a. our pipeline is full. shareholders are supportive of that. they want us to maintain our discipline. as far as liquidity, we intend to retire debt by using a combination of cash and we have a strong cash position, and our rcf that will reduce our interest rates and create more flexibility. we have a lot of liquidity and it is growing. our balance sheet is getting stronger by the day. from that perspective we are in good shape. jonathan: a pleasure speaking -- danielle: a pleasure speaking to you. thank you very much. back to you. , ix: thanks a much, danielle
alix: time for technically speaking. bill maloney, voice of bloomberg equities quad, joints me now. you can listen to him on the bloomberg if you type in squa . what are the technical saying? bill: futures are plunging amid the spreading coronavirus. we will open up below the 50 day moving average. first support around 3258. then 3250. if 3250 fails, then looking down around 30 to 45.
3250 is your first key level. alix: let's take a look at treasury yields. they are dropping hard in the market. you have new record lows on friday. you also have the 10 year below 1.4%. if you look at the 30 year, how much lower can it go? bill: if you look at a chart going back to 1980, it has been going down since its 1981 peak, have a false breakout in december 2018. as long as the downtrend is intact, below 2.75%, there will not be equipped rise in yields. alix: we are also talking about gold, looking like it will get close to $1700. in terms of the charts, how much more upside? bill: it is surging right now. 1700 is your first key level for gold. it has been the uptrend since 2018, your level to watch is 1700 to 1715.
1715 is a retracement level. atve 1715, you're looking $1800. your first key resistance level is 1700 to 1715. alix: bill maloney joining us with the technical trades of the day. coming up on "the open," mithra warrier will be joining the open. , you're looking at a two day loss for the dow jones, on average about 1000 points. pretty steep. on the flipside it is about buying treasuries and buying gold as the perv continues to flatten. this is bloomberg -- as the curve continues to flatten. this is bloomberg. ♪
lisa: payments failing with the strokingus spreading, growth concerns and fueling fears of rescission in italy. treasury yields and equities in europe tumbling. investors loading up on level rate cut bets just as world leaders boost their calls for fiscal stimulus. 30 minutes until the opening bell. it is an ugly open. that is what we are poised for. s&p futures off the lows but still down 2.8%. the euro is weakening versus the dollar. yields in nine basis points on the 10 year, 11 basis points blocking the two year and the 10 year from a curb inversion. crude tumbling, down 4.7%. we begin with the big issue, a jump in coronavirus cases sending markets reeling. >>