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tv   Bloomberg Daybreak Americas  Bloomberg  February 28, 2020 7:00am-9:00am EST

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worst thing i've ever seen in my career. alix: global stocks face their worst week since the global financial crisis as companies keep abandoning profit goals. and here comes the gdp downgrade. economists start to take down global growth forecasts as the virus continues to spread. investors now see three fed rate cuts this year, and one from the ecb and boe. can the cuts do anything? welcome to "bloomberg daybreak" on this friday, february 28. what a week it has been. tgif. the moves in the markets have been unbelievable. it feels like we are in a sell everything except bonds kinda friday. asd inflows reaching as much $13 billion. we are looking at the worst week since 2008 for u.s. equities. euro-dollar pretty much flat on the day, but begin is the out performer of choice in the g10 space. there is still a bid in the
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treasury market. unbelievable moves. commodities just keep getting crushed. crude is at 40 have dollars. time not -- is at $45. tom never global exchange. our bloomberg voices are on the ground with this morning's top stories. in asia, new cases of the coronavirus continue to appear outside of china. new zealand and lithuania have reported their first infections. and cases anda, south korea have gone to over 2000. joining me is stephen engle. that is the case outside of china. there'sns that if 83,000 globally, that's more than 4000 outside of china. china's rate of new infections has been slowing down. new cases since
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yesterday, but south korea nearly doubled that in one day. they reported another batch of new numbers on top of the numbers this morning. they added 571 cases from yesterday. that means they have more than 2100 cases and climbing. japan also climbing towards 1000 confirmed cases, 931 if you 700+ from the cruise ship off yokohama. tokaido has declared a state of emergency the day after shinzo abe declared all schools closed for at least a month. cases.43 new now 388 there, four deaths. we have new cases in new zealand, lithuania, and nigeria, the first case in sub-saharan africa, and that is a big concern. the business fallout continues.
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airlines in particular, no surprise there. have layoffs, and british airways says it is impossible to predict earnings going forward this year. finnair is issuing a profit warning. alix: thank you very much. all of that fear tightening its grip on the markets. global stocks seeing the rest week since the financial crisis. putting me is annmarie hordern. how big and dramatic have some of these moves been? annmarie: good morning. ,o matter where you look literally everything is screaming fear. let's start in asia. over the past 48 hours, markets have entered into technical correction. overnight, hong kong and australia split 10% from the recent peaks. ofeurope, we are on the edge the european stoxx 600 for the worst performance since the financial crisis.
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not a single sector in europe was higher today. wall street biggest banks sound the fire alarms about what is going on. bank of america said this could be the worst week since the global financial crisis. citi expecting 0% growth on global earnings, and they see that as an optimistic view. we are seeing money going to treasuries. the 10 year yield slipping below 1.2%. every time it goes lower, that is a fresh record. commodities are getting absolutely hammered. you and i are focused on oil a lot of the time. rent touching $50 a barrel today. that is a price target that vladimir putin would also be worried about, and that is driving speculation of what they would do when opec+ meets in vienna. it is really hard for investors to find hiding. alix: and now the cut may be as much as one million barrels of oil a day. that is the rumor. now we move to germany, where uncertainties continue to threaten europe's largest economy.
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the coronavirus could jeopardize german growth, even if it is unclear by how much. 20 me from frankfurt is matt miller. -- joining me from frankfurt is matt miller. matt: yesterday, we heard the economy minister here at a press conference say he may have to cut his growth target. we heard the finance minister with a new proposal to temporarily suspend the limit that germany has on how much debt is allowed to amass in order to try to boost spending, boost investment, get the economy a little bit of a goose before this coronavirus impact its home. basf,e with the caeo of and he said the supply chain has been decimated because of the coronavirus, and it really limits their visibility. that is one of the biggest problems here. a little later, i am going to talk with the president of the bundesbank in a live interview
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and ask him, what can the central bank do about it? he is on the ecb as well. what can they do? if they can't do, is it time for them to pass the baton? does germany really need to do more fiscal stimulus, or are they already spending in to make a difference -- spending enough to make a difference? there's a lot of focus on this in germany, with the dax having its worst week since 2008. the broader stoxx 600 having its worst week since 2008. we have another quarantine here in germany, 1000 people in a city on the dutch border. and south of us in switzerland, the government has banned all gatherings of more than 1000 people. i literally have my bags packed ght for theet bou geneva auto show tomorrow, but it is now canceled. not only is it a bummer for me, but it is going to cost millions of dollars to the companies that of already organized everything, already shipped those assets down to geneva, and are no
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longer going to be able to display them. alix: bloomberg's matt miller, i appreciate that. i we had to turkey, where the president held a crisis meeting after an airstrike left dead in syria. what happened? yes, tensions between russia and turkey at an all-time high. low.rry, at an all-time is now turning towards nato and the eu, looking for support, but they are not keen to jump into sub -- to jump into such a hot conflict in syria. russia is supporting the syrian regime there. a refugeeake, we have crisis. of course, hundreds of thousands of syrians now trying to flee
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idlib and heading towards turkey. and now turkish president touch a paragon -- president teddy erdoganone -- president says it may have to open the borders to europe and let refugees go there. this would be an absolute political crisis for european leaders. troops killed in syria, and the crisis is nowhere nearing an end. alix: thank you so much. now we turn to the u.s., where traders are starting to bet the fed may be forced to cut rates as soon as next month if the coronavirus impact gets much worse. here with more is bloomberg's michael mckee ahead of evo data today. at -- ahead of you for data -- ahead of ifo data today. 100 basis points of cuts. investors are basically pricing
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and mass panic among the public, people just stopping spending entirely, and a turn towards major interruption in supply chains that will shut business. the problem is, so far, that is based on nothing but declining stock prices and bond yields. there are no data that suggest the economy is heading in that direction yet. youight get some, as mentioned today. the chicago purchasing index encompasses the month of february, and it may have some indication people are getting worried because it is heavily involved in the auto industry. there are reports supply chains there are rather stretched. university of michigan consumer sentiment survey only closed on wednesday, so that might reflect a little bit of the virus concerns and the stock market falls. but will all of this translate into reduced spending? we get spending numbers today for the month of january. that will be good news if it goes up, but it doesn't tell you about how people will react
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after the virus. also, we get the latest inflation figures. the fed pce expected to reach 1.8%, just below their target, but nobody is talking about the fed raising rates right now. alix: not even close. thanks a lot. on thetics, the focus is south carolina primary this weekend and the buildup to super tuesday. westin,more is david anchor of "balance of power" and "wall street week." what is the focus? david: joe biden, joe biden, joe biden. the question is, can he have a basedll, as he calls it, on his popularity among the african-american voters in south carolina? he got a big endorsement from representative clyburn this week. he has to win big, which should allow him to go forward and compete another day. but the question is not bernie
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sanders versus joe biden, but joe biden versus the other moderates. he needs people like pete buttigieg and amy klobuchar to drop out if he has a chance of standing up to bernie sanders come super tuesday, because it looks like he is on a roll for a substantial plurality of delegates in july in milwaukee. alix: thank you so much. don't miss our special coverage on super tuesday. we are going to have live coverage of the democratic context coming up march 3 at 7:00 p.m. one other thing that caught my eye, we maybe feel sorry for some of the big losers, the 500 richest people in the world. according to the bloomberg billionaires index, there worth has fallen billions this year just through wednesday. the pain isn't shared equally. the tech sector seeing some industrial,onsumer, retail, and energy shares really
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hammered, hurting some of the richest of the richest. coming up, more of your news and analysis of the markets in today's first take. this is bloomberg. ♪ ♪
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alix: time now for bloomberg first take. you get the trade and analysis of the markets. joining us is vincent cignarella , former fx and rates trader, damian sassower, bloomberg intelligence chief emerging-market credit strategist, and also with us, jeff kleintop, charles schwab chief global investment strategist, joining us from boston. wow, that was a week. [laughter] alix: i have some any questions. what do traders do today when we might be oversold, but we had
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china pmi overnight? you don't want to be caught long and that. vincent: a guy called me up yesterday and said, do you buy this tip? once it reaches -- this dip? once it reaches was america and reaches saturation point, then you can look at levels. as of now, markets pricing in it's going tos, do absolutely nothing for the economy. this is a fiscal policy issue. as you are talking about in europe, europe is constrained with the treaty. debt to gdp climbs on an annual basis. they are not supposed to exceed 3%. at the end of the day, the treaty is flawed mathematically. how they respond is going to be interesting. it is going to perhaps hold germany back from doing as much
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fiscal stimulus as they need to do. damian: what a moving u.s. yields, right? my goodness, the move in spreads has been parabolic. let me give you something to chew on. u.s. high-yield spreads, biggest move five-day rate of change since 1998. alix: right, but that is a brent below $50 thing. damian: if you want to talk -- but even we are ig. ig has had its biggest move since the 2011 european crisis. the point is that is risk premia. basically, that is fear. the market is getting to a point of capitulation. especially with the moving yields, those asset classes gave up nearly a full percentage point of total return on the year just on the move of spreads, despite yields coming off. it's amazing. alix: jeff? jeff: investors might be better
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focused on incentive. what is the duration of those moves? they may not be that long. stocks may have further to fall, but they may not stay down for the entire year. the last time we saw a major bear market was in october 2007. it lasted two and a half years because we had major imbalances to clear. we don't know the extent of this pandemic, but it seems more like a near-term one or two quarter economic hit, certainly on the earnings hit. it could go down further, but the rebound on the other side may limit the duration of decline in the markets. i think that is important to long-term investors. vincent: i am going to have to disagree with that one. i am sure it will stay to two quarters. we still have to see how it affects the supply chain. they are talking about not getting a vaccine for a year. the cdc said this could be with us for another year. some are saying this could be
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like the flu and it comes back every year. that would actually not be a bad thing because we would come to grips with it and learn how to deal with it. it is going to be interesting how businesses adapt to the lack of supply chain. if china no longer become a place where you can rely on supply, you have to go elsewhere. where does that do? it raises your cost of goods. you get wage inflation, but you need to see growth. a lot of things going back and forth. as for fed cuts, what does that consumer? we are still looking at 3.5%, 3.25% on a 30 year mortgage. if the banks don't pass that along come a fed rate cuts do nothing but bubble of asset prices. the higher you go, the harder you fall. jeff: i think that we don't know how long the supply disruption is going to last. what we do know is china's getting back to work. about 50% of industrial firms are back to work. willn't know how long it take to get to 90% or 100%, but
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recovery from the virus are now exceeding new cases of the iris in china, and that is a good sign. ingbe china is lead the rest of the world in that return to production and return to production and returned to health. that is a good outlook for recovery in the second quarter or beyond. damian: for me, it is the mixed come unique from the fed -- the from the fed.ue mm unique? communique. [laughter] instance whenry the market is fully priced for it, when you see a mixed communique -- [laughter] romaine: -- they are fully price for it. alix: i've been hearing that rumor, that powell is going to call an emergency meeting.
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vincent: i find it hard to believe that powell is going to be that aggressive because we are pretty close to the next meeting. i think we would start to see some talk from the fed before we would see something over the weekend. but markets are starting to believe that, and the more markets believe that, if they don't get it, if they don't get anything in march, we will see a pretty ugly into this month. alix: take a look at the spread, 22 basis points. this is indicative of what kind of fed reaction function we are going to see. where does it go? how do you price something like that? jeff: the fed is clearly in an awkward spot here. clearly, the market is looking to the central bankers to save us once again. earlier in this segment, there's little they can do. even if you can return to cash to consumers, as hong kong is doing, it is unlikely to go to the areas most dramatically hit,
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travel and entertainment come over 60% of the gdp decline comes from. people are not immediately going to go to big social gatherings. astead, this is more of turnaround production, and that is going to take a very different rescue then rate cuts or some of the fiscal policy. we basically have a minute, and i want to do something different. want to go to each of you and see the one asset you are looking to buy or the one you have to avoid. vincent: the one i would certainly avoid is anything that starts with europe. totally uncomfortable with how they are going to be able to handle this. damian: i think it is u.s. equities. alix: buy or avoid? damian: i think you are looking for an opportunity to add to u.s. equities. not yet, but yields are getting
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sucked away and the carry is being sucked away. u.s. equities are going to be the only game in town, and that is where you are eventually going to wind up having to go to. for me, it is looking at u.s. equities as almost a safe haven. alix: fair enough. jeff, for you? jeff: what fell the farthest might bounce the hardest, and that is looking at commodities. copper, iron ore, oil. they can turn around and bounce pretty hard if we see a turnaround in production, particularly in china. alix: great conversation on this friday. vincent cignarella, damian sassower and his -- what did you nique.t? -- comm-u charts, go to gtv on your terminal. browse the features, check it out. this is bloomberg. ♪ ut.
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this is bloomberg. ♪
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is -- thisis is this
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is "bloomberg daybreak." we begin with dell. their profit forecast coming up short. the company also announcing plans for $1 billion stock buybacks. the coronavirus a problem for basf. the world's largest chemical maker adding to the growing germany.l rout in we end with shares of rolls-royce rising the most in eight months. the ceo saying he is getting a grip on the boeing 787 engine glitches. they have hurt earnings and cash flow for all of 2019 -- and cash flow. for all of to 19, -- for all of 2019, both exceeded metrics. alix: the parent of british airways says the coronavirus makes it impossible to predict
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earnings this week. iag sees demand weakening in asia and europe. other european airlines are making similar moves as the whole sector gets really beaten up. how can they actually grow with the virus still infecting different countries? coming up, traders ramp up bets on a fed rate cut. we will look at monetary policy. is it really enough to offset the risks to the economy? and in the markets, you're still seeing weaker s&p futures, down 0.3%. but the move in the bond yields has been tremendous. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?
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that we can't do, but come in and see what we can do. we're here to make life simple. easy. awesome. ask. shop. discover. at your local xfinity store today. alix: this is "bloomberg daybreak." i'm alix steel. welcome to your cell everything friday. markets continue to rollover.
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now.a lot worse the dax rolling over as well, over 3%. it is the worst week since early 2008 for u.s. stock futures. that is an unbelievable statistic. if you switch up the board come of the superlatives just keep rolling off the tongue. continued record lows for the 10 year. the twos-tens spread is bull steepening, indicating how much action everyone thinks the fed is going to have to take. crude getting pummeled. that is going to have significant fallout in the global credit market, as well as the equity market. brent under $50 a barrel. the bundesbank is now out with its latest annual report, forecasting growth rate up to 0.6% in 2020. bundesbank president jens -- bloomberg's matt miller is standing by with the man himself. matt: thank you so much for joining us today.
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have to start with the coronavirus. you were talking in your press conference just now about the kind of recovery that you expect. will it be a v-shaped recovery that we see in this half, or do you expect the damage to continue out into q3, q4? dr. weidmann: the risks around this are increasing, and coronavirus is one of them. i expect that we will have to slightly revised downwards our forecast. the most likely assumption is still that this is a v-shaped effect, so the coronavirus will have an effect, but once it is contained, the recovery, the number location will happen -- the number elevation will happen --ckly -- the nominal iced the nominalization will happen quickly. matt: certainly, the market has
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priced in cuts. dr. weidmann: we have to acknowledge that we are confronted with a combination of a supply shock and demand stock. stability,is price and this negative supply shock could lead to a hike in prices. is, how effective are instruments to counter any possible demand effect that we are observing? the question from the press conference was, are you more likely to go eat out in a depletent if we interest rates? andctiveness is one point, then we have to see whether demand or supply side effects dominate. you have to also note that monetary policy is already quite accommodative. abundant interest rates are
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already quite low. to some extent, we provided some sort of insurance. supply, ihe issue of spoke with the ceo of basf today. he singled out the supply chain as is number one biggest problem. they are at the heart of german industry. what tools does any central bank have to deal with a supply-side stock? it is interesting because there are instruments available, fiscal policy or social policy instruments, for such cases like short time allowances that we have used in the past and have proved quite effective. in a sense, this should be addressed through fiscal policy makers and central bankers -- and not central bankers alone. matt: we heard the proposal to lift the debt rake temporarily. do you think that is warranted here? dr. weidmann: first of all, i've
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only heard rumors about his proposal. it was just reported in some newspapers, and it is completely unrelated to the current situation related to the coronavirus. it is related to the fiscal relationship between the different levels of government in germany, especially to .lleviate the debt burden it is a completely unrelated discussion. i would caution against undermining the debt rate because the debt break has been quite crucial to anchor fiscal also ton germany and inspire trust in the sustainability of public finances. don't --matt: so you don't think it should be lifted, even tomorrow early --
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even temporarily? assuming we do have a bad situation with coronavirus, we just had 1000 people quarantined in a city on the dutch border. dr. weidmann: the question is whether the debt break imposes any impediment to investment, and i would say no. there is some fiscal leeway and flex ability and some of the rules -- and flexibility in some of the rules. the rules allow for space to act. in the past, as you might have observed, public spending in in publics increased investment, but also to boost spending on social measures. matt: we heard a lot of people, including christine lagarde, ask
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for those countries that have fiscal space to use it, and we continue to hear these calls repeatedly. does it frustrate you if you already think germany is doing that? it is amann: i think situation where you can repeat your argument and explain why you have a different view, and also highlight that we have a specific setting in the euro area where countries decided to share one monetary policy, but with independent fiscal policies , the responsibility for those is at the national level. it is a bit inconsistent in that framework to ask countries to spend for other countries, and the solution to that would be more fiscal integration for national fiscal responsibility. debate we have been used to hearing for a while. matt: would it be inappropriate for those countries that have
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the money to spend for those that don't? the calculations we have done here at the bank have highlighted that these are minimal. if you construct a bridge in germany, does it really benefit other countries to the extent warranted? i would say it is unlikely. but of course, there is a case .or investing more in germany targeted public investment is certainly a subject we should have. matt: certainly if one drives on the auto bond -- on the autobahn, you understand those as well. since been the worst week 2008. that was the great fiscal crisis. how concerned are you? dr. weidmann: it depends on how uncertainties -- how
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uncertain situation is. it is unclear with the effects of the coronavirus will be. that is reflected in the flight for safety, and also in the stock market that you just highlighted. to rethink thee economic cycle, to rethink globalization? , it isdmann: well probably underlining how vulnerable we are because we are so intertwined, but we noted before that it is also not the first epidemic that we are observing. atnk of the sars discussion the time. in my understanding, it makes the case that we have to relations and
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make sure we are not artificially hampered in those movement of goods and services through further restrictions. matt: you talked about your concerns of the demand side. 13%ainly with these 10% to drops in stocks in one week, does deflation start to concern you? two people want to say, i don't want to spend money on anything? dr. weidmann: the effect of the coronavirus on prices is far from being clear. you mentioned the disruption of global value chains. china. this already in some things have registered increasing prices. matt: so you think it may likely lead to inflation? dr. weidmann: i think a supply shock would lead to a rise in prices, but we have here a combination of a negative supply shock plus a negative demand
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shock, so the overall effect on the inflation rate is far from being clear. that is why we have to monitor the situation quite carefully. matt: in terms of inflation, i know you are debating what to do internally about the targeting. you were talking about your aversion maybe to symmetrical targeting in the press conference. do you think it would be better to have a range? ourweidmann: welcome strategy has to account for the uncertainty that we are facing. we need to have some flexibility in reacting to very different shocks that we are confronted with. at the same time, and has to be forward-looking. those of the points i have been making. a pleasure.een thanks for joining us here on bloomberg. jens weidmann, president of the
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georgia bundesbank -- of the deutsche bundesbank. alix: thank you for that. still with us is jeff kleintop. do you think officials are going to be behind the curve in dealing with this crisis? jeff: well, you were talking to fiscalconservative official in germany. german economy is so export oriented, it doesn't really matter that much to germany what germany does in terms of fiscal stimulus for interest rates. china stimulus matters more for germany. remember, all the auto sales that germany since over to china, that is more important. lowering rates further in germany, what is that going to do? already negative. alix: stick with me. we already talked the ecb. what about the fed?
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will it cut rates when it meets in three weeks? that's up next. this is bloomberg. ♪ loomberg. ♪
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viviana: this is "bloomberg daybreak." coming up later on "bloomberg: the open," mob it all area and .- mohamed el-erian ♪ alix: the coronavirus pummeling the market and causing traders to ramp up their bets on the fed rate cuts, almost four by january 2021. , andus are david westin jeff kleintop of charles schwab.
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david, you taped "wall street week" yesterday. we just had someone on talking about supply shocks and how to fix it. claudia song, who used to be with the fed, said we have to look at fiscal possibilities because fiscal could make a big difference. most important thing is that fiscal policy moves fast. any kind of support for the economy, if it comes early, it as the chance to make recession or whatever contraction is happening in the economy less severe. it is important to take that opportunity as soon as the recession starts to act, and there's a lot of tools they can get money out to people, to state governments. david: she was proposing essentially the equivalent of fema for fiscal stimulus. if a particular location is
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particularly hit by coronavirus, we should get money to that location to address the needs. alix: but could that happen? is there political will to do that? david: it's dubious, but in theory it would at least work. alix: we are not going to get the kind of stimulus from china we did in 2008, so don't we need this coordinated global stimulus to help target those areas? jeff: perhaps, but again, that would be on the fiscal side, and we are unlikely to see that. not only are rate cuts not the right prescription, it is not likely to make the downturn any worse, but it could make the recovery less viable. we talked about the potential for may be an inflation trigger with deglobalization taking place, in addition to the idea that we pump more money into economy without any productivity or output gains, so it is kind of a stagflation environment that makes the recovery miserable.
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that makes fiscal policy the hope, but politically, it doesn't seem tenable. alix: this also brings up the election and how it will play into the election, where president trump passes it off to mike pence and declares victory. if you have to do fiscal, who is going to get it done? david: the problem right now in washington, and this was discussed on "wall street week," we were hoping everyone would come degree and agree -- would come together and agree on how to do this. instead, it is a little disparaging. alix: how much of the fear in the markets do we need to look at in terms of politics? for example, the rise in the dollar, the role of the s&p. how much of that is senator sanders gaining in the polls or president trump's odds of reelection rising? jeff: it is hard to say. very few presidents have
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survived reelection in a recession. it supports the notion that there could be a turnover in the white house, and we are seeing that in certain sectors as well. alix: we have a chart up that you provided that shows the dollar spot index versus the trump job approval rating and how they really track each other. walk us through what that tells you. jeff: this is interesting, and it is relatively where, but trump's approval rating has really led the dollar. it has been a very consistent relationship this year. given all the shots taken into the incumbent president, could reverse some of the dollar gains we have seen. already in the last few days, we have seen this play out a little bit. the yen has been stronger. the euro has done a little better. it might even favor international investments over the u.s.. vincent: one thing we know --david: one thing we know for sure, you've seen amazing uncertainty in the political climate. before this happened, we knew
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the economy was going to be strong going into the fall. we don't know that anymore. you saw president trump really owning it, going into the white house and saying, i've got this under control. it is all going to be fine. ok. the american people are going to say, i hope he's right. alix: which makes it quite difficult to call the bottom inequities and when to buy. you could have a many factoring recession, but if consumer rolls over, that is going to bleed really quickly. how do you know when there is a bottom in? jeff: that is critical. it all comes down to good tumor -- down to the consumer. what is interesting is that confidence by consumers has been very high lately. we will see if it is shaken by this. we haven't gotten a lot of data on that, but that is true looking at business spending surveys. for italy this week, germany last week, those are pretty strong going into the coronavirus hit, improving from
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where they were late last year. that is a good sign that there was some improving momentum ahead of this. maybe this will delay, but not derail, the spending that was to come. alix: i asked you before what sold off the most will bounce the hardest, but what else might be on your shopping list? jeff: i think you've got to take a look at where the economic momentum might be. that turns me to europe. i know it is hard to get excited about that environment given the outlook for growth, but so much pessimism has been embedded there, if we do get a turning manufacturing activity, no part of the world is more keyed into a recovery then europe. i would also save the trade war was hardest on europe because of the slowdown in sales. the export driven economy was really hit hard. trade is not as much of an issue. if manufacturing come back, your could perform well -- if manufacturing comes back, europe could perform well.
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really appreciate the talk, gentlemen. jeff kleintop of charles schwab and bloomberg's david westin, thank you for joining me. make sure you tune in for the full episode of "wall street week." plus, tune in next week for our special coverage of super tuesday. we will have live analysis of the democratic contest here on bloomberg television. the anchors won't be sleeping, basically. none of that. cutng up, could another fed really have an impact on the u.s. consumer? we will break that down in today's trader's take. if you are headed to your car, tune into bloomberg radio on sirius xm china will 19 and on the bloomberg -- xm channel 119 and on the bloomberg business at. this is bloomberg. ♪
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alix: time now for trader's take. joining me is ensign cignarella,
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voice of the bloomberg audio squawk -- is vincent cignarella, voice of the bloomberg audio sqawk. we just talked about the fed cutting rates potentially. what it actually help? vincent: as mike mckee said, take two rate cuts, call me in the morning. i had to call him out on that. that little green circle is where the consumer spending just started to pick up. this was right after the fed rate increases. you are looking at where the transmission is to the consumer. consumer spending down as the fed was increasing rates. then the consumer picked it up and drove it into 2019. as you see, spending, the blue line, peaked about three months before the fed started cutting rates again. you can see where the fed rate cuts are still doing nothing. so what are more rate cuts going to do for the consumer? nothing.
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the banks are not passing the savings along. alix: is their argument to be made for stopping sentiment from getting worse and stopping sentiment from getting worse? vincent: it is basically just a sugar high for assets. they are going to be lifting up those assets. i think history is not going to look back at the federal reserve from 2008 to now with a good eye. they are going to see the fed having overdone it, overshot the runway. we really didn't get anything after qe. if they come back and do it again, that is what we are going to get again. alix: as many of you know, vincent is awesome, but this is his last they only show in the morning because apparently he wants sleep. some months ago, i said i am thinking about doing this, what you think? let's talk about stuff. he was so committed, and said i am going to give it to -- going to commit to you for six months and help you with the show. he's been such a big help, so we got you a little president.
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vincent: that is so sweet. alix: we thought about a colored shirt, but we couldn't get one in time. this is a collection of all different currencies. vincent: i will have to put my glasses on. [laughter] alix: you can go through a name them all. it is a thank you from all of us on the team. we will miss you, although you will totally be back. vincent: once, absolutely. alix: sleep in. thank you so much, vince. vincent: by the way, canadian data out today. if they miss, the other central bank on the verge of a cut, the act of canada. -- the bank of canada. alix: coming up, alessio de longis will be joining us. this is bloomberg. ♪ awesome internet.
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can your internet do that? xfinity xfi can because it's... ...simple, easy, awesome. [ barking ] ♪ alix: come to "bloomberg daybreak" on this friday,
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february 28. let's take it from the top. >> this is possibly the worst thing i've ever seen in my career, and i've been through a lot. i've been through the stock market crash in 1987. i went through the financial crisis. this has the potential to reel into something extremely serious. alix: global stocks agree and continue to plunge after the worst selloff on wall street since 2007. have done anwe incredible job. to it is going to disappear one day, just like a miracle. and it could get worse before it gets better. it could maybe go away. we will see what happens. alix: citigroup says they want to see markets closer to panic before going all in is global cases spread. globally more
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than 83,000 confirmed cases of the coronavirus. we have new cases in new zealand, lithuania, and nigeria. the first case in sub-saharan africa, and that is a big concern. of cases haveer gone over 2000, and germany puts 1000 people important team. an airstrike in syria kills at least 33 turkish soakers -- turkish soldiers. president erdogan vowing to strike back. they are looking for support, but no one is keen to jump into crisis in syria. the crisis is nowhere nearing an end. alix: nato agrees to meet to consult on friday. sen. sanders: we are going to win the democratic primary. [cheers and applause] alix: senator bernie sanders leaps ahead of the pack in the
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latest national poll. >> bernie sanders right now it looks like is on the role -- is on a roll for a plurality of delegates headed for that convention in july in milwaukee. the population goes to the ballot box on tuesday. in the markets, it was a brutal week. we are seeing the worst week for 2008. since early you're seeing bonds continue to have a huge bid here. the five year yield is under 1%. gold rolling over a touch because you've got to sell something to meet margin calls. crude creating a world of hurt for the credit market, as well as the equity market. it has been a tough week. alessia --y our, joining me for the hour, alessio investmentinvesco
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senior portfolio manager. take you for being with me. what do i do? alessio: gold and treasuries, or global bonds, have moved quite a bit. there are two safe havens that really stand out that haven't moved, and they are the again in the swiss franc. the yen and the swiss franc. anyone in the market the last couple of decades, this kind of move used to lead to 3% daily moves on these type of currencies. ethics volatility has been dead for a really long time. so where there is potential for some catch up and safe haven assets is those two, particularly as we run towards the lower bound on yields. alix: stick with me because we will begin much more on what to do. for a look at technicals, we are joined by katie stockton on the phone. it is really good to catch up
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with you. we are looking at the s&p and the 200 day moving average, which we broke below. otis the next support zone? how do you see it -- what is the next support zone? how do you see it? katie: it is important to look at these support levels as cushions and to always wait for confirmation of breakdowns. this is a major level in play for the s&p 500. tom looking at around 2990 3030 on the chart, based on three different factors of equal importance. we want to see this level hold on a consecutive weekly closing basis. best case scenario would be to see the s&p 500 closed above that level today to avoid an unconfirmed breakdown. that is when we talk about this pullback that has been fast and furious turning into something worse that is more prolonged and with greater downside risk. as it stands today, we have the greatest oversold extreme and
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things like sentiment that we have had since december of 2018, by my measures. that is somewhat compelling giving the weak close and somewhat panicked selling yesterday, and it does support a rebound. alessio: from an equity standpoint, do you see opportunities in u.s. equities or equity markets around the world? which markets are the most stretched? katie: to me, the long-term relative performance of the u.s. is still established as the market leader, and with that in mind, i really want to use this pullback is a buying opportunity in the u.s., but also overseas, i would be a little bit more selective, looking for spots of strengths and opportunities associated by signals. i don't think we have an entry that we can have confidence in yet, broadly speaking, but i do favor u.s. over europe, asia,
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etc. based on a long-term relative performance. alix: we were just talking about where you go for safe havens. we were just talking about the swissie. recordal move, lows. how low can we go? katie: the measured move essentially assumes the trajectory of the trend will maintain itself. 10 year treasury yields have met their downside target based on that measured move. this would be a very natural place for a rebound to develop. of course, that could be associated with a rebound in the equity market as well. the next real level of importance, because there's no support left for 10 year treasury yields, would be a psychologically significant level. if we see it rebound quickly and get back about that long-term 1.38% level from 2012, that would be an
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incremental positive, which means it is an unconfirmed breakdown for treasury yields as well. alix: katie, i appreciate you jumping in on this moment with us. i from alessio and , bokehrgh is kim forrest capital partners founder and cio. what are you buying? kim: well, i don't know where the bottom is. i don't know what is going to happen today. i don't necessarily want to try to maintain value over a very short term because i'm an equity investor. as an equity investor, and her as an equity investor, i understand my assets will go up or down, but i extend my timeframe, so i am looking at a minimum of three years. as the market drops lower and lower, i am looking at ,ndividual names and saying
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this company is a good company. what price, willing to pay for it? those are the -- what price am i willing to pay for it? those of the kind of questions i am asking before taking action. i am not doing much now because the market does seem to be falling for really good reasons, but i don't think anybody really understands what is happening with the supply chain, how long it is going to affect companies. what investors should really ask, what does this due to the cash flows coming out of these assets that i want to own or that i do own? we don't know what is happening to the supply chain. we don't know what value really is disappearing. alessio: hi, kim. we were talking earlier with alix about safe havens and defensive strategies. in equity markets, it is only one week, but we are seeing somewhat of an indiscriminate
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selloff. defensive equity factors such as low vol is really not differentiating itself too much so far. one particular quality is not revealing those characteristics just yet. is this in your mind related to the strong quality companies that are the ones most affected by the supply chains? kim: absolutely. i am a big picture, strategic kind of thinker. this is the way you really have to look at what is happening now. we will pick on apple. it is a name i have never owned because it is more consumer-oriented. i typically look at that enterprise sort of -- i typically look at enterprise sort of tech. . it uses supply chains in china. icause everyone, and by that mean companies, have so heavily depended on what china can do for the price they do it at, this coronavirus is going to
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make them rethink, and we are going to see dramatic changes that were companies do business. i think that is part of the fallout, and why investors don't really understand with the cash flows are going to look like because we can't depend on china to deliver in times of trouble. i think that is part of the panic. does that mean apple is not a good company and they have made really bad decisions, and this is a moment where apple limps off in the corner and dies corporately? i don't think so, and i don't think investors think so. they are just worried, and they are selling because of that. alessio: you are raising an interesting point. as a global macro investor, this make me sick about an interesting question. from the trade wars, we have been thinking about the benefits
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of localized production versus outsourced production in other parts of the world. now you are bringing up another dimension, which is the benefit of diversified supply chains rather than supply chains concentrated in a region just because it is the cheapest. when you think about it that way, which sectors or companies seem to be more diversified in their supply chain structure? anybody that has people as their product. a company like ibm that is a global consulting firm that, by the way, makes a little hardware and software. take a look at that. they also have some problems, ,here a lot of their assets which are people, fly around the world to different engagements. they will have to be able to do that statically. i am not recommending that you buy ibm come but that is a kind of diversified supply chain.
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somebody that is part of the market. i am most concerned about pharmaceutical companies that have huge reliance on both china and india for the basic chemicals that are the building blocks to make mocha -- to make most of the drugs we use. i'm looking at that and saying, this whole industry has to rethink. maybe that supply chain is going to look medically different in five years. remember, this all takes incredible lengths of time to move and change, but investors should be aware of this as they look at their portfolios. alix: really great conversation. thank you both so much for that perspective. andsio de longis of invesco kim forrest of bokeh capital are going to stick with me. coming up, what wall street is saying next. this is bloomberg. ♪
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>> this is possibly the worst thing i've ever seen in my career. -- from a fed point of view, i think this is on the table. >> i think the fed will respond by lowering rates. >> the policymakers are going to do everything possible to prevent the u.s. from going into a recession. >> lowering interest rates isn't going to encourage somebody to take a risk. >> more likely, they will deliver, even if they don't see hard evidence in the economy. alix: that was just some of the comment to coming from investors on how the fed might respond to coronavirus. alessio, do they cut 3, 4 times this year? do they cut in march? alessio: i think we are setting
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up for that scenario to be more and more likely. i think three times this year, especially if the so-called v-shaped recovery in q3 or q4 fails to materialize to a certain extent, i think that is very possible. what we know is that preemptive cuts end up being somewhat permanent. we rarely come almost never, the fed does a preemptive cut and ends up taking it back. the signal of hiking interest rates in an environment of low inflation, low growth is never good. so as of this week, one could argue it is the coronavirus and exogenous shock, but the more this lasts, the more it becomes and exogenous shock with endogenous consequences. widen in thes dollar strengthens. now it becomes tightening financial condition, and the fed
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has to react to that. alix: and that is not necessarily something that can be easily fixed. so the rhetoric three months ago is that the fed is easy. the balance sheet is expensing. what is the story now? fed is going to need to step up and have some sort of coordinated global central bank moment. the coronavirus clearly is a global event. i don't think we practically need lower rates. just look anywhere on the yield curve. they are as low as they can be. asy've dropped dramatically the coronavirus has rolled throughout the new cycle. interest rates have led the markets lower. practically, i don't know that we need lower rates, but i think this is all about optics.
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i don't know that anything he fed can do will actually improve our lives other than say, look, we are talking to everybody. we are not going to let a strong dollar happen by default by keeping rates where they are. we are going to move all in concert, and i would expect that shortly because of a panic in the markets. alessio: you bring up an interesting point, the power from a sentiment standpoint that a coordinated central-bank message would send. where do you see the likelihood of that actually happening on the fiscal front? andrnments taking a stance reacting together on this? we know that could actually have a much more palpable -- a much more powerful multiplier on growth rates. kim: here's the problem. if you are going to buy things as i government, you need to buy them from people and companies that supply them. if it looks like we are rolling
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quarantines, where people aren't supposed to go out, not supposed to buy things, not supposed to go to their jobs, i'm not sure how the governments are going to spend. if it is to come back quickly, i think that would be great. let's just say the central banks come out and say we are going to be coordinated, and then the larger governments of the world come out and say we are going to make sure this is a snapback by doing some projects are spending on our part. theink that could lead to mystical v-shaped recovery we are all talking about now from the coronavirus. alix: hang tight with me, guys. we will talk about the credit impulse and when this becomes a credit event, coming up next. this is bloomberg. ♪
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♪ viviana: you are watching
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"bloomberg daybreak." dell's latest profit forecast coming up short. it says demand for personal computers will take its toll. salesd declining server from last quarter will rebound. it also announced plans for $1 billion stock buybacks. basf is adding to the growing industrial gloom in germany. it is warning for a second year in a row, profit may fall. an ongoing auto slump is also being blamed. we end with the selloff in junk bonds. energy is leading the decline. meanwhile, leveraged loans tied to american airlines is falling. there are concerns be travel industry will be battered by coronavirus. alix: thank you so much. still with me, alessio de longis of invesco and kim forrest of
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bouquet capital. we have seen high-yield -- of bouquet capital -- of bokeh capital. move.e seen high-yield what does it tell you? alessio: it still doesn't compare, it doesn't seem of a magnitude that is systemic to the entire credit cycle. the sequencing would be high-yield, e.m. dollar debt, ig. that is the usual sequencing. then you would begin to see a tightening in lending standards. that would be, for me, the most concerning event. if you look at what is the weak link in this 10 year business is the nonfinancial corporate debt cycle economy. all of the leverage has gone into doing share buybacks and m&a, but it hasn't built a stock of capital, and certainly this type of develop meant is not
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going to signify any business investment. alix: to that point, we have seen investors by a lot -- investors borrow a lot to dubai back. that supports the equity market. kim: right, and that has been the story. but if you can't see your way to revenue growth, you can do earnings growth through that buyback. it is a point. look at what is in your portfolio. who has been the biggest companies that have done that, and with the weakest balance sheet. those are your targets to maybe lighten up on. alix: if you are not in the place where we are at a credit event, are there opportunities in high-yield? alessio: among the credit woulds, e.m.-dollar debt be the place where i would feel thatcomfortable to see buying opportunity. emerging markets have lagged the
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cycle, have gone through that very slow and painful adjustment of underperformance to develop targets. the way we are thinking about it is to look for those buying opportunities that also line up well to medically with the next -- fairly well somatically with the next long-term opportunities. the well fiscal turn should be y emerging markets. also -- but it is also the place that, once things start to get better, it should begin there. alix: guys, stick with me. alessio the longest of invesco and kim forrest of bokeh capital are sticking with me. we have some economic data coming out. strong income growth, week spending. we will take a look at that as the data rolls out. s&p futures off by 0.8%.
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it is the worst week for global stocks since the great financial crisis. if you were in the market 12 years ago, it was a really rough time. you're seeing the reaction function there as well. twos-tens spread continues to bull steepen, associated potentially with a recession. oil commodities take a real wipeout here. if companies cannot produce oil at this price level, what do they do? that is the big question? coming up, personal spending and personal income. we will break them down with ocuta of state street global investors. this is bloomberg. ♪ ♪ [ fast-paced drumming ]
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alix: we are waiting for personal income, personal spending. a quick check on the markets. lower equity futures, down almost 1%. in other asset classes it
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continues to get interesting. euro-dollar is down again. the dollar safe haven of choice in some, but the yen outperforming as a safe haven. the yen down .8%. the bull steepener keeps on steepening. crude off almost 4%. the data dropping right now. lots to go through. let's start with personal income, coming up .6%. that better than estimated. personal spending coming in light, up .2%. real personal spending also light, up .1%. intoess as we headed february. the inflation read if you look at the core pce on month on month basis, up just .1%. year on year it slipped to 1.6%. that is versus estimates. december was revised lower, coming in 1.5%. consumer taking a breather
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potentially, it may be taking a breather. wholesale inventories lighter, -.2%. the trade balance not as wide as we had expected. -$55.5 billion. the data not skewed by the coronavirus in the u.s. this is how we are setting up. now everything else taking into account the virus in the u.s. government. joining us is simone -- simon mocuta. longis and kim forrest are still with me. walk me through your initial reaction to the numbers. would: the first thing i look at is the income data which came in stronger-than-expected. if data refers to the january employment report, does that stop tell us where we are going to be -- it does not tell us where we would be, it tells us
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where we would be absent look coronavirus care. i'm expecting we would not have a repeat of these numbers and that a few months. perhaps february looks ok because the disruptions have not started. if you have a prolonged situation where people cannot get to work, it is not just the spending that will be affected, which could happen very quickly, but it is the income that may have a more lasting effect and a more downward force on what .appens to the consumer in 2020 alessio: this data is looking through the rearview mirror and not much relevance for us in the market. what is your template for the most important data point you will be looking at over the next two weeks or months both in the u.s. or globally to assess the impact of the virus?
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simona: for me is still the labor market. the consumer in most developed economy is the core of the economy. it is the most increasingly important share of the economy in developing countries. i think that is where we need to look for lasting vulnerability you can have aat lot of variation in month-to-month spending. sentiment can go down or come back. if you have lasting income, you are in a different scenario where you do not make that up later down the line in the year. what is a big concern is if you have restrictions on mobility, the demographic, the consumer and worker demographic to be the most impact it the most rollerball in the sense -- the most vulnerable in the sense that those people are paid on an hourly basis not only are going
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to be the most impacted in the first wave, but also the ones who have the least in terms of saving. in aggregate the savings rate looks great in the u.s. at more than 7.5%, but that is a concern. it is because of these worries. the challenge for all policymakers is that every data looks good, but it is what is coming next that is concerning. how do you respond? be at a whatever it takes kind of moment, but in essence you want that kind of reassurance. alix: when you take a look at that and the potential longer-term issues related to this, what do you do with the consumer sector, the consumer discretionary? kim: you play it for the longer-term. while we have this disruption
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that will happen and affect our economy somehow, i think you have to look for companies that are forward-looking as well. what that means is do not just pick what you think are cheap stocks. look for the companies who understand what the consumer wants in the future. that would be online and off-line. what i am looking for and have not found yet is the company that knows how to delight and give you some kind of wonderful shopping experience online, where you are filling your online basket like you fill your target cart when you're in the physical store. eye out for that. that will be a longer-term winner. alix: you know i do that. alessio: and i were talking in the break about how this could structurally change things. everyone realizes they do not have to travel, they can do it
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from home, things like supply chain. how do you see the longer-term structural effects of something like this? to is: what this speaks awareness, increased awareness, which is already out there in terms of creating redundancy plans. alternative work, remote work arrangements. online shopping for me works pretty well in most cases. from a business continuity standpoint, this is just another reminder there are all sorts of problems a company needs to prepare for, and remote and technology helps in this regard. i do not think it is a hugely accelerated transition or the process, but it is just a reminder that is the direction of travel. alix: what do you think when you're talking about the structural shift? alessio: this will take a long time to digest. ,rom a corporate standpoint
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this is what we experience with other exogenous shocks, whether it was hurricane sandy or 9/11. it does highlight the need that a key for business success is business continuation and a focus on the labor market to be flexible. that is the analogy i can draw at this stage. atx: when you take a look sectors where margins were already in issue and now you put that on it as well, how do you model, how do you say ok this is a margin growth story? kim: that is the really difficult part. i do not know that you can do that. we will have supply chain disruptions in just about everything. the only one we will not have is energy. those are the established routes. sector not necessarily a
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i want to look at today. that is part of the problem. part of why the selloff is happening is we do not understand how companies need to change. neither do the companies. we know change is coming. sorry i cannot answer better. alix: that is an honest answer. that is why i like you. , how do you model your forecast for this year? simona: we have to take them down slightly. the reality is there is so much uncertainty about how this is going to progress. all we know for certain is the direction of travel. the magnitude is highly unknown at this point. ,emember in the sars episode things went away by themselves. it is still a scenario, even in this case that that could happen. the range of outcomes is wide, but at the moment we are taking down global gdp growth. we were looking earlier on for a bit of improvement. that is highly unlikely under the circumstances and we are
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taking u.s. gdp back down, even though as we had top before, there were signs. every data point surprise to the upside by and large. it is a difficult trade-off but now that you are talking about the genuinely global spread, you have to expect things will get worse before they can rebound. the recovery is delayed and that impacts the 2020 average. alessio: to that point about our inability to make informed forecasts at this stage, how should we treat come over the next few days or weeks, data surprises. in other words, will they the -- will they be the result of poor forecasting or challenge forecasting, or indicative of true economic momentum? the second question is where you expect to see positive surprises first? simona: i would argue the
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positive surprises we have had over the last few weeks were genuine signals in the sense that global manufacturing was putting in a bottom. things were genuinely improving. housing activity in the u.s. looks good. those i take is genuine signals. in fact, it is the date at we will get over the next two to three weeks i will be highly skeptical because it will be in between. it will not yet incorporate coronavirus impact. it will be of little use in terms of forecasting where we go from here. for?nk -- 1 am i looking -- what am i looking for? rates should be supportive of housing because we know demand is good. what happens if you have a labor market impact and it is the income equation for those homebuyers that gets damaged? it is watch as things progress and get a sense, i think the policy response will be
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incredibly important. monetary matters but i think a fiscal response in terms of targeting those audiences, those groups that may be more vulnerable, has a lot of value and that will impact how the gdp growth outcome comes out. alix: simona mocuta of state street. kim forrest, thank you as well. alessio de longis obese dipping with me. viviana hurtado is here with first word news. viviana: more developments in the coronavirus outbreak. germany quarantined about 1000 people. switzerland has banned big events and south korea has more than 2000 cases, the most outside of china. the u.s. will need to expand the number of people being tested, adding travelers from several countries, and they will test anyone with unexplained severe respiratory illnesses. the u.s. will take a big step toward ending its longest war. tomorrow it will sign a peace deal with the taliban. that is the fundamentalist group
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the u.s. ousted from afghanistan after 9/11. that is just the start of the process. the u.s. will start withdrawing some of its 13,000 troops. in return, the taliban promises to cut ties with terrorists. joe biden is banking on a win in tomorrow's south carolina primary. the one-time front runner in the race for the democratic presidential nomination has seen his national poll numbers fall. the new monmouth university poll showing in south carolina joe biden has a 20 point lead over bernie sanders. 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, oil slides. virus fears prompting an unbelievable move. a lot of pain on oil companies. users, anyloomberg charts we use throughout the
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program, gtv is where you want to go to check them out. this is bloomberg. ♪
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viviana: this is "bloomberg daybreak." later today on bloomberg markets , democratic senator richard durbin of illinois. ♪ viviana: you're watching "bloomberg daybreak." i'm viviana hurtado with your bloomberg business flash. begin with shares of rolls-royce rising the most in 18 months. getting aying he is grip on the boeing 787 engine glitches that have hurt earnings and cash flow. both metrics exceeding estimates for all of 2019. to two of the biggest american steelmakers, they are raising their prices. nucor and u.s. steel hoping to
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capitalize on supplies. the coronavirus is holding down metal demand. end with chicken sandwich wars. it is a thing. they could end up saving the poultry industry. companies are running production at a manic pace to supply restaurant chains such as chick-fil-a and mcdonald's. the chicken industry facing a glut, but there is a shortage of the small chickens used to make the sandwiches. i'm viviana hurtado and that is your bloomberg business flash. alix: thanks so much. time for bottom line. we are looking at companies worth watching. the oil market turning bearish on coronavirus fears. exxon with the second worst reserve performance in history. the trump administration says it may be able to end chevron sanction waivers in venezuela. brent is at 50 and wti is at 45. joining me is barclays analyst
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alessio de longis. which companies cannot survive at this level in which companies can make it? ne: it is a tough time for energy companies. it is tougher anybody when oil goes from 63 to 47. there could be relative winners and losers. we think one of the catalysts for the sector will be a total washout. whether that happens at 45 is to be determined. our sense is there are some investors who are bargain-hunting for names that are high quality that have gone too far on a relative performance. we think on the winners, it is straightforward for us. strong, pioneer, are most highly hedge names are pioneer, parsley, as well as has. idiosyncratic national -- as well as hess.
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idiosyncratic international exposure -- and on a relative basis, we prefer u.s. majors over u.s. mp's. they are more defensive, they have the most firepower to act defensively. offense of m&a as well as to support returns of capital through price shops. alessio: how does the shock compared to the shock of 2014, 2015, 2016 for the sector in terms of their debt situation, their situation. was that a valuable shock early on that help prepare for this or is it pretty much the same? jeanine: i think it is pretty different. the companies on a far better position than they were in 2014 and 2015. balance sheets are strong. about 12,ge is still
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13, which is pretty tolerable. companies are prioritizing free cash flow. it is no longer time to outspend like drunken sailors. they are in better position in terms of having the balance sheets strong an understanding that now is not the time to grow. save it for another day. alix: before this the discipline was we will pervak on our -- we will pair back on our capex. does this change their ability to do that? jeanine: we tagged a bunch of dividend increases announce this quarter. .he permian led the way dividends increased. i do not think this impairs their ability to pay those dividends. a lot of our companies have said they can support the dividends 40 to $45 in terms of future dividend growth, that is more uncertain
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and it will probably be a lot more muted if oil prices stay where they are. alix: do like oil here? long, bute are not what is interesting about the selloff is it has not led to the curve going into con tangoe. if you look at the zero to 12 month part of the curve, it is still a fairly balanced market. we do not have excess inventories. it does not seem like there is an overhang for more continuation. can we fish the bottom? no. but we see the fundamentals being particular negative, arguing to chase this mover push it forward, we do not see that. alix: i have heard that the marginal barrel is clearing. that is what i keep an eye her -- that is what i keep hearing from other analysts, but it is very dislocated from the actual stop price -- the actual stock
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price. when you move forward with these companies, what does it mean for shale? does this change the game? jeanine: lower oil prices will capexnly mute any kind of increases we see. one of the big themes we saw with earnings was moderate growth that moderate oil prices. a lot of our companies set the budget at $50 to $55. there will be a rebound in oil. with that said, there will still be growth but we will not see any of our companies go off the reservation in terms of having higher-than-expected production. it will mute growth but right now we think it is too early for the companies to be changing their activity. usually, six-month is the lead time. we'll be checking back in around june. alix: thank you very much. a rough week to be reporting. janine wake of barclays, thanks
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a lot. alessio, you are a good guest coast. this would be like us -- a good guest host. this could be like a second career. talking to the camera. alessio de longis, thank. we will have much more on the trades in technically speaking. if you're jumping into your car, tune into bloomberg radio heard across the u.s. on sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪
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alix: time for technically speaking. bill maloney, chartered market technician and voice of burke's equity squad joins me now. listen to bill on the bloomberg. type in squa . bill: s&p futures down around 45 points right now. the cash tried and failed to hold the 200 day moving average yesterday. that is little bit extreme. potential support around 2940. that is the december 2018 peak.
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below that you are looking around 2850. you better hold 2940. alix: let's go to apple which also breached key support levels. bill: apple down 4% in the premarket curate plunged below the 100 day moving average yesterday. the key level is 256. alix: the last one is a tutorial. the arms index. i thought all new -- i thought i knew all of the stuff on the terminal. what is it? bill: it is something i look at for signs of panic in the market. 250 for ao be above potential bounce. yesterday at 1.66. yesterday the 2018 plunge was 3.6. august hit around 3.6. where not close to those levels right now. the selloff's quarterly and we are not in panic mode. alix: a really interesting indicator. bloombergs bill maloney joining us.
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coming up on the open, mohamed el-erian. in the markets, it will still be of tough day. the worst week for global stocks since the great financial crisis. the dax rolling over by 4%. look at the board and you can see the safe haven assets. gold is lighter. the two 10 spread continues to steepen. the rush to safety, the again otherwise thee, rush to the dollar. brent at 50, a world of pork from the corporate credit market as well as parts of the equity market. happy friday. this is bloomberg. ♪
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jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪
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jonathan: coming up, equities heading for their worst week since 2008 as fears grip investors. does joe year treasury yields drop below 1% as central bankers continue to indicate little window to act. here is your friday morning price action. six day losing streak is about to become seven at the open. down 2% on the s&p 500. there is your bid into the bond market, down seven basis points on the 10 year. your yield down to 1.20. foreign-exchange with the euro starting to show a little bit of weakness. down .1% on euro-dollar. let's begin the program with the big issue. central bankers signaling little willingness to accurate >> what is the fed -- little willingness to act. >> what is the fed going to do? >> they will not give an indication they are ready to ease. >> is a year they thought t


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