the fed has to deliver. tony: that is clearly what squares the circle between record high equity markets, even though they are off the bid, very tight spreads and risk premiums, with treasury rates that are clearly pricing in what you would think are recessionary conditions. what connects the dots are global central bank liquidity, financial conditions that are very attractive for borrowers. you saw a record borrowing over the course of january, first couple of weeks in february, emerging market borrowers, investment grade and high yield. that liquidity that is helping the global risk market connects the dots between the very high-end certainty around fundamentals in growth, depending on where the coronavirus develops here, versus a treasury market that is clearly, i would say, the single safe haven in the global markets today. jonathan: today, the whole curve is sinking lower. forgive me, i feel like i say this every week. this shift in the reaction function of the fed this year is so powerful. you have a f

the thing katie also mentioned was about the fed. the fed is not going to raise rates in 2020. the bar is high in the future to do so. when you add those things together, i think global growth does we accelerate. that pushes people towards something that is more conducive to rising economic growth. stays, therehe fed is still this talk we could see inflation and that this could be the one thing the market is not priced for at the moment. are you confident that if we do start to see a really -- a re-acceleration or see inflation creep up that the fed is comfortable enough wedding that run for a bit longer before it moves? brent: absolutely. i think the shift of the fed is complete. from a cyclical basis, they are not interested in cutting off the economic cycle. the fed used to worry about cutting off inflation. they would do that every time even if it meant sacrificing future economic growth. the fed believes they can sacrifice or risk future inflation to try to get more economic growth. inhink inflation is a risk 2020. the market is not priced for that kid -- for that. metric

one white house fed nominee facing even more doubts. we begin with the big issue, low yields in the drivers seat. >> the bias is to lower yields. >> lower yields. >> yields move lower. >> lower global bond yields are certainly giving the u.s. some attention. >> that is the crux of the market. >> software happens to fall neatly in that category. >> do equities need to re-rate because rates are so low? >> are they giving us a signal that equities are at risk? >> they are able to issue whatever they want in the corporate bond market. >> you can see that has caused a change in strategy already. >> it is like everything becomes a bond. >> bonds are rallying, gold is rallying because of the nature of these things. jonathan: joining me around the table are james keenan, winifred cisar, and peter tchir. it feels like a buy everything situation. the 10-year increase below 1%. u.s. corporate borrowing costs at an all-time low. is that what this is right now, just buy everything, get when you can? winifred: everything but high-yield energy. it see

one white house fed nominee facing even more doubts. we begin with the big issue, low yields in the drivers seat. >> the bias is to lower yields. >> lower yields. >> yields move lower. >> alone global bond yields are certainly giving the u.s. some attention. >> that is the crux of the market. >> software happens to fall neatly in that category. >> do equities need to re-rate because rates are so low? >> are they giving us a signal that equities aren't risk? >> they are able to issue whatever they want in the corporate bond market. >> you can see that has caused a change in strategy already. >> it is like everything becomes a bond. >> bonds are rallying, gold is rally because of the nature of these things. jonathan: joining me around the table are james keenan, winifred cisar, and peter tchir. it feels like a buy everything situation. the 10-year increase below 1%. u.s. corporate borrowing costs at an all-time low. is that what does is right now, just by everything, get when you can? winifred: everything but high-yield energy. it seems i

ahead in a live report so much to get to on this very busy day so let's get started and we begin as fed chairman drone pal gave the 1st of 2 year early updates to congress on tuesday where he was pretty upbeat about the outlook for the u.s. economy but he is concerned about the potential economic format and fallout from the coronavirus in china 1st the good news here the u.s. economy he says is in its 11th consecutive year of expansion which is the longest on record now let's be honest here because much of that expansion is simply fake expansion made possible possible by cheap money artificially low interest rates thanks to the fed and also thanks to the fed a massive pumping of money into the economy economic expansion is well into its 11th year and it is the longest on record over the 2nd half of last year economic activity increased at a moderate pace and the labor market strengthened further as the economy appeared resilient to the global headwinds that it had intensified last summer. well as for the coronavirus paul says it is too soon to know how much of an effect that virus will

and also thanks to the fed a massive pumping of money into the economy. economic expansion is well into its 11th year and it is the longest on record over the 2nd half of last year economic activity increased at a moderate pace and the labor market strengthened further as the economy appeared resilient to the global headwinds that had intensified last summer. well as for the coronavirus paul says it is too soon to know how much of an effect that virus will have on the u.s. economy especially manufacturing listen. for ticker lou we are closely monitoring the emergence of the corona virus which could lead to destruction in china that spilled over to the rest of the global economy. not surprisingly powell also issued a very muted warning about the growing federal deficit largely because the fed is helping to create that deficit the u.s. deficit is expected to reach more than one trillion dollars in 2020 despite the relatively strong economy so joining us now to discuss is just the writer for the american institute for economic research who joins us here in s

it is not clear that appointing more politicians the fed board or more political hacks to the fed port will solve that. for years now, people like larry summers said the fed should not raise rates until they see the eyes. in inflation's krugman, distinguished professor of economics and the author of a new book. this is bloomberg. ♪ romaine: the u.s. holds his first contest in the 2020 presidential nominating cycle today with the iowa caucus. withore, let's go to iowa david westin. we are only a few hours away from knowing the results. what are we expecting to find out? >> we will find out who the democrats in iowa think should be their candidate for president. itis the first, which makes the most important in many respects. let's be honest, we have at had afour people -- we from polls with one result, another call today with another. we don't know yet. of the winter, what is your big question? the headline, wins the caucus, but what is the next thing you are curious about? >> comes in fourth. toticularly when it comes elizabeth warren and the former vice president, if either of them

john: you talked about those risks the fed is watching. buildingntion that permits data for the month of january, what is the markets general take on the health of the u.s. economy? is: overall the market interpreting the economy as being on solid footing, with a somewhat downward bias. pullbackoned about the in some business spending. the flipside of that is the fed did deliver that 75 basis points of aggregate rate cuts in the 2019. there is a lagged of monetary policy. the fed has made a very big wager that there preemptive weight cuts -- rate cuts will be enough to avoid a recession. the problem is that was before the coronavirus. now that we have the coronavirus, the market is the twoat data in distinct periods. it is easy to look at the housing data and say hey, it is all pre-virus. we are not even to the post virus. . -- virus period. terms oft about in treasuries, generally speaking? what is worth watching in the bond market? ian: for treasuries we are expecting our range, it will be a relatively low range. 1.75% in the 10 year yie

you know the fed since that 1987 crash before that in 1907 the fed didn't intervene like it does they got together that day in 1907 when it crashed 20 percent who is it reagan rubin and greenspan they got together and formed the working group on family and markets that they got the treasury to intervene at that point because the fed can't buy stocks but the treasury can and the treasury to this day has a trading desk lord knows what they're buying but the fed can intervene with just cash new cast to lend to the banks and now apparently hedge funds that they're going to start lending to they basically isolated patients arrow and patient 0 is still alive in 1987 being fed and pumped in pump components with all this free money right the want to group on finance later known as the plunge protection team was a response to alan greenspan's reinterpretation of the role the fed not to try to take the punch bowl away when the party got frothy but to keep feeding the punch bowl ad infinitum and forget crashes and that was carried through through carry through yellen and now don't trump is tryin

comments about the fed. so, all this stuff is just rich politics. let's get down to the essence. you are the biggest regulator in the talent and there are concerns i want to address that are individually in nature that i think indians are common -- that i think intense upon the policy. these operations use that are temporary in nature. is that still true? stick our expectation is we will continue our bill purchases at least through into the second quarter and continue the operations at least into april. we are building up a level of reserves that will mean if we don't have to be involved in the open market operations on an ongoing basis that's going to take that period of time. it will reach that level of reserves on the capital requirements for the financial institutions that should be participating in the repo market. >> i think we have reviewed the supervisory and regulatory practices that may be affecting the flow of liquidity. it's of course the federal funds market and the ability to transmit our polic

the fed did not hedge. now as you put the wrist back -- whoever holds the mortgage bonds will have to hedge. that just means you are selling in the same direction as price. yields start going up, bond prices are going down. you are selling more bonds to keep your duration at the level you wanted to keep it at. it is selling into a down market and buying into an upmarket. in this case will be selling into a down market. alix: odeta, if we wind up seeing no more cuts except from the fed, how is that wind up playing into the refinance world and new millennium homebuyers. odeta: mortgage rates are not as highly determined by the fed, but more by economic and global uncertainty. the irony here from the coronavirus and some of the uncertainty going on in the world's mortgage rates have benefited from that. 3.45%e mortgage rates at and they follow the 10 year treasury yield. as that floods to safety happens , we see a decline in mortgage rates and that is where your first-time homebuyers are benefiting from the af

money pouring in valuations across the board but now the fed is actually pulling back and attempting to stem the free liquidity that we've been enjoying for some time at the same time the break is ravaging supply chains killing off manufacturing and production wouldn't that part of the story make the most sense to be creating a lot of this panic and yet it hasn't happened in the past when we knew there was going to be market disruption now it seems to be almost oddly timed your thoughts. think it's huge that it's all culminating at this point and even you've got you know really strong strong dollar that i would add to that as well so you know you had markets rising and you had earnings starting to taper off some but it didn't seem really that big of a deal and told you stack coronavirus on top of it and that really you know solidify that stumble into something so much bigger and so markets are really reacting that huge you know a couple 1000 points over a couple of days is massive and the previous person said i don't think that were done yet so we got in the gold and silver e.t.f. fo

up and former fed insider danielle. so danielle this is the really the big question of the day right now beyond the balance sheet everything else expects and is expected to be quite unremarkable so how and when will the fed taper treasury bill purchases because if they suddenly the liquidity just isn't there anymore that really what's with the market and bring us right back to square one you know it really does and the fed has backed itself into a corner with the moves that it's made i hear that the willingness and i hear the desire on the part of policymakers to rein this in but i don't think the market's going to allow it just because every single day it pushes the fed further out on the spectrum and the fed is saying april the minutes reiterated april we will have to see you know if we get through tax season and the fed is truly able to unplugged this because to me it's a monster of their own making. you know we want to move to the outlook for inflation and employment here right now inflation is steady on the low sid

fed independence is up to the fed. i have a lot of confidence that chair powell and his colleagues will call it the way they see it, and it won't be because of political pressure >> have you spoken with president trump about your op-ed since it came out? >> no, i haven't i scarcely have spoken to him since the interview, which you referenced at the beginning of this >> kevin, when did you feel like this was developing as a crisis that needed action i mean, this is something that's changing pretty rapidly on a day-by-day basis >> my views on this probably changed a little more than a week ago and there was some hesitancy before i decided to put pen to paper and put it in the newspaper and come on this show. you know, quite frankly, i didn't want to make the job of the fed any harder but i thought about what marty feldstein did to us, he was a mentor and a great man and a fine economist, and we miss him at a time like this. and he gave us tough love at a conference in jackson hole, and we didn't want to hear it, but he m

the market will look to the fed and the fed will have to deliver. tony: that is clearly what squares the circle between record high equity markets, even though they are off the bid, very tight spreads and risk premiums, with treasury rates that are clearly pricing in what you would think are recessionary conditions. what connects the dots are global central bank liquidity, financial conditions that are very attractive for borrowers. you saw a record borrowing over the course of january, first couple of weeks in february, emerging market borrowers, u.s. corporate buyers, both investment grade and high yield. that liquidity that is helping the global risk market connects the dots between the very high-end certainty around -- very high uncertainty around fundamentals in growth, depending on where the coronavirus develops here, versus a treasury market that is clearly, i would say, the single safe haven in the global markets today. jonathan: today, the whole curve is sinking lower. forgive me, i feel like i say this every week. this shift in the reactio

the fed has to deliver. tony: that is clearly what squares the circle between record high equity markets, even though they are off the bid, tight spreads and risk premiums, with treasury rates that are clearly pricing in what you would think are recessionary conditions. what connects the dots are global central bank liquidity, financial conditions that are very attractive for borrowers. you saw a record borrowing over the course of january, first couple of weeks in february, emerging market borrowers, investment and high-grade yield. that liquidity that is helping the global risk market connects the dots between the very high-end certainty around fundamentals in growth, depending on where the coronavirus develops here, versus a treasury market that is clearly, i would say, the single safe haven in the global markets today. jonathan: today, the whole curve is sinking lower. forgive me, i feel like i say this every week. this shift in the reaction function of the fed this year is so powerful. you have a federa

ahead in a live report so much to get to on this very busy day so let's get started and we begin as fed chairman drone pal gave the 1st of 2 year early updates to congress on tuesday where he was pretty upbeat about the outlook for the u.s. economy but he is concerned about the potential economic format and fallout from the coronavirus in china 1st the good news here the u.s. economy he says is in its 11th consecutive year of expansion which is the longest on record now let's be honest here because much of that expansion is simply fake expansion made possible possible by cheap money artificially low interest rates thanks to the fed and also thanks to the fed a massive pumping of money into the economy the economic expansion is well into its 11th year and it is the longest on record over the 2nd half of last year economic activity increased in a moderate pace and the labor market strengthened further as the economy appeared resilient to the global headwinds that had intensified last summer. well as for the coronavirus paul says it is too soon to know how much of an effect that virus will

the fed to give guidance on monetary policy until the fed has more data. but he added if the fed sees something that requires adjustment, i'm confident we will give it all the consideration it needs >> so now we get into this debate, steve, of when the fed should move. should it preempt the data and get ahead of the curve and do sort of an insurance cut, or should it wait to see whether this is a longer lasting shock i don't know the answer, but i do know that stephanie remembers december 2018 and one of the big reasons for the freakout in the markets was that the fed was seen as behind the curve. >> i'm going to throw something out here, which is an idea that i've been having, which is what is the data the fed needs to see? is it the economic data, production, consumer demand, or is it the data that meg terrell is coming on with, which is the infection numbers? i think that may be something that if it's shown that this virus is widespread and it's in the united states in a big way, i think that may be something that the fed will have to incorporate as par

models that the fed uses, the things of that sort, the fed won't cut rates because unemployment is going to stay low. look at the yield curve the fact that the whole curve is trading through the midpart of it is a problem. and the fed should be cutting rates but i don't think they'll do it. >> you think they should stay roughly where they are. >> i didn't think they should make the last cut let alone another cut. yeah, i hear what you're saying. it doesn't make sense logically. >> we need a steep yield curve. >> thanks, guys. we have to leave it there. >>> all right. we have a news alert on the airlines and the coronavirus phil lebeau? >> tyler, you were talking about the chinese economy being shut down or is it essentially shut down well, there's certainly not demand for fights between the u.s. and china american airlines postponing when it plans to resume flights from the u.s. to china now pushing it back to late april. previously, it was going to resume flights between dallas-ft. worth, the hub and hong kong on february 21 that is moved to late april then you have the flights between

of economic update and daniele de martino booth a former fed insider thank you both for being here. so richard let me begin with you on this question these these antidumping duties they essentially are price controls on russia by lifting those duties does the u.k. not give themselves some leverage when it comes to steel exports from the united states or coming from europe. perhaps a little but i see this more as an act of desperation you know the british have now disconnected themselves from a major global trading bloc europe and so they're now but twixt and between they have to please europe still because they trade with them they have to try to build some sort of relationship with the united states just as a time at a time when the united states is becoming more inward focused more nationalistic itself and they're looking around for who they can make some kind of deal with to try to find a way as now a relatively small economy in a world dominated by much bigger ones i see the deal with russia as as a kind of desperate grabbing for what might be possible and also a defense against

is no different from a greenspan fed or a bernanke fed. they are cut from the same cloth. the put is in place. it is in their best interest to keep equity markets elevated. despite it not being there ultimate mandate, i think the fed is a little scared of the fact that the stock market is so addicted to what the fed does. keeping interest rates low will encourage risk-taking. in our view, what you're seeing is the fed saying, we are going to keep equity markets elevated, and we will keep trying to push the market higher, regardless of what is happening in the economy. vonnie: thank you for your time today, we appreciate it. that was nick maroutsos, janus henderson cohead of global bonds. this is bloomberg. ♪ g. ♪ guy: from london, i am guy johnson. vonnie: and from new york, i am vonnie quinn. this is "bloomberg markets." iphone sales in china plummeted 28% last month. ubs warning, that this month numbers are likely to be far worse the cause of the coronavirus outbreak. the have now reopened 29 of 42 stores that have been closed in mainland china due to the virus. amaz

former fed insider danielle. so danielle this is the really the big question of the day right now beyond the balance sheet everything else expects and is expected to be quite unremarkable so how and when will the fed taper treasury bill purchases because if they suddenly the liquidity just isn't there anymore that really would split the market and bring us right back to square one it really does and the fed has backed itself into a corner with the moves that it's made i hear that the willingness and i hear the desire on the part of policymakers to rein this in but i don't think that the market's going to allow it just because every single day pushes the fed further out on the spectrum and the fed is saying april the minutes reiterated april we will have to see you know if we get through tax season and the fed is truly able to unplugged this because to me it's a monster of their own making. we want to move to the outlook for inflation and employment here right now inflation is steady on the low side with personal

the fed is uniquely positioned. you want to put guardrails on this so it is not something that leads to a loss of confidence in the institution. with appropriate guardrails, the in aas a good role to play policy sense. coordinatedo have to an advance on policies like this. part of the proposal would require congress to think hard about this. it is not the fed role to decide how to distribute the cash, that should be congress. once it has been destroyed it -- once it has been decided how to distribute it, it is the fed's decision to explain it. alix: it would be a premade tool you would not come up with in the middle of the recession, but you would have it now when everything is good, and then the fed executes on it? julia: exactly. it does require approval by congress in advance. it is not something the fed can make up on its own. alix: how do you get out of it? competent --quite it is quite complicated. the experience i have is want everyone to buy hard and not worry about what the future consequences might be. the

you did get some fed help. then you kind of found a way by the way, after that, all of the straight reports of a bomb threat or suspicious activity the market just didn't care after a while. i don't know where we are in that process >> we're at the point where it seems like headlines are still very sensitive we're down another thousand points on the dow. the w.h.o. world health organization is conducting a news conference right now saying they've increased their assessment of the risk of spread and risk of impact of covid 19 to a very high global level stopping short of calling it a pandemic they update the numbers. they do say, though, they can trace most cases to contacts or clusters of cases. they don't see evidence as yet that the virus is spreading freely in communities in the past 24 hours. seven countries have reported cases, though, for the very first time it feels like this is still a market that is very focused on these types of headlines >> yes >> and reacting. >> it is focused on those headlines. it

right, president trump hopes the fed gets involved soon. ordering ad they are lot of supplies to combat the coronavirus and feels confident despite the virus. he says the virus impact is unknown. curious way of describing what is happening. he says he's looking at and expanded travel ban as well. there's no details yet. he's looking at a decision very soon. we know the u.s. has already limited flights from china, certain imports of entry. more details in a few minutes. this is bloomberg. ♪ >> the virus continuing to take a toll, business process the damage from the outbreak. our next guest is calling for an impact that could last up to two years. joining us from st. louis is panos kouvelis, director of the boeing center and operations management at washington university. two years. what is it about the supply chain disruption that can have such a long trickle effect? even if the acute phase were to end globally in another few months, the consequences will be with us for a long time? >> yes. thank you for having me. howe got to understand

are pricing the fed funds today. march now you remember i have not been talking about march at all. it has been a low percentage probability. this morning, it is up to 49%. >> what was it before? >> 38, 32, 31, it was in the low 30s. i didn't have it on the screen before this is the first morning i had sort of march in play. watching if that gets over the 50% line april, 78% for that first cut and now june, 58% for a second cut november, 52% for a third cut this year. the fed said it's monitoring the virus and will make a change if there is a, quote, material reassessment of the outlook. with only a few rate cuts in his arsenal, powell faces a series of daunting questions. when to act and how much and whether cuts would even do much good in the face of a problem that at the moment, andrew, looks to be a supply problem from china >> hm. that's all you got what is that >> i want to point out very quickly look at the dow futures right now, this decline of 373 points would put us in correction territory if we were to add

knowing that the fed is there at the ready. if things come here, people aren't going to go out because points are 25 basis points lower. >> and look to the central bank is not the right body to respond to a disease outbreak. >> i think investors have to differentiate with the fed can and can't do they can respond to what's happening today, which is lower stock prices that the federal reserve will see as a tighten ping of financial conditions lower than it wants it to be what they can't do is restore supply chains that have been shut down because the virus. >> if the main problem is the market, the fed can and perhaps might address it at levels like this or moves like this, if they keep going, could certainly bring the federal reserve back in if the problem is supply changes, i think the fed's going to be skeptical that lower rates will solve that problem. >> it's a little weird we talk about falling yields needing to be met with cuts and rates why? so they can cut rates and send the yields back up >> i just wonder, steve, would

the fed is concerned. they are probably much more willing to look at the possibility of a rate cut now than a month ago. that is going to be the story we are going to hear. markets will probably like it. yousef: you talk about an equity market that you are fairly bullish about, but the reality is a lot of insiders have been selling their stock. corporate executives and officers have stepped up the shares of selling in their own companies. the ratio is nothing sort of astounding. if i am looking at this opportunity to go into u.s. equities, that is not a comforting signal. hans: absolutely not. i'm talking about the next two to maybe three months based on the low -- on the liquidity story. insider selling is much more than insider buying. yieldsid before, bond are much more indicative of economic fundamentals and equities. the bullishness has more to do phase thata blowoff can last as long as the fed is intervening in the repo market. that is not going to last forever. and then, reality sets in. you have to

because the fed put us all there. that's why e they have this parental feeling to make it a large signal in terms of "r," it's rates, and i have never seen anything like it i've been looking at interest rates since 1979 this has been a breathtaking move it's hard to use technicals because especially the long end is in extreme ranges the golden immediate has an expansion of 1.6 and we can look at a variety of different patterns that can give glimpses of where an extreme new low yield or high price stops. but way more art than science. over the skis. you know, this one i like. how many times have we talked before the coronavirus that many thought we were getting over our skis but it really didn't matter because it certainly seemed as though the low rate environment was okay it did take an he can on nows shock like coronavirus finally, the markets we are all talking about the credit spreads as if it is approaching some sort of disaster indeed it may. i don't have the crystal ball. but i will tell you this, when it comes

the fed is given the market a perception that they've got the markets back when the fed starts pulling back, i would not be surprised to see that as a point of anxiety. >> something to watch out for. >> sure. this will encourage action from central bank do you think that's likely to happen >> listen. i think certainly asian central banks will start policy. the fed sounding steady as she goes saying i don't see those as way too early. >> emerging markets policy rates are high they are being hit the hardest a lot of room to cut rates and i think they will. >> we need to talk the political cycle. it is another big risk looking at charts showing that s&p and the dollar have been moving in dan dem with trump reelection saying it would be an easier beat against trump for a leftist candidate which is why recently odds are moving higher do you think there is a little kplas kplas an si. >> you look at the polls and the issues and the states that matter we see it more 50/50 we look at sanders and trump five out of seven have sanders winning. not that we think the market is wrong but there really

the deficit by the fed is parallel to the over interest in it before these are political fads pushed mostly by the people who have something to gain one way or another and nobody wants to face the history which they ought to because then the burden would be on why the let a bubble like this develop again. given the recent history of seeing what it has cost us as a nation and it is interesting then you know as we are interested in a election season that we're kind of in the midst of it right now there is a lot of talk right now about a lot of issues and what we're not hearing is any talk about deficit spending or control on that it's like both parties or in total agreement at least on this particular issue that it's a non-issue westword you know it's truly remarkable but when you talk about crossing the aisle when it comes to debt and deficits that is where you get. total harmony between the democrats and republicans both parties want to spend and keep the checkbook open and they know that the debt ceiling is uncapped through the election until june of 2021 and it looks like they've g

growth and data, i think it is towards stability and i don't think you --l see the fed quit the fed will put liquidity. unless it turns up much worse, it will be a drag on the economy and if it goes away quickly, we should be back to 182%. so ive had decent numbers, think -- >> is this week a couple of cracks? it is actually quite difficult to get your hand on. there are certain things you struggle to reconcile. growth, at the drop rocksolid. how do you get your hands around the economy at the moment? >> december, we did not know we would have a phase one trade deal with china. i think it is very difficult. what is it like the last three or four months? nothing really seems to be changing. >> i think you will see cyclicality in the market. regions or industries and that will play into the numbers. if you smooth them out, we are in a low growth environment. >> as people moved to different regions, you are going to see this give-and-take across the country, so moving things out is really the only way you can get a sense of where we are headed. yieldst question, 10 year around 160. what wil

and the constraints on the fed. is now the right time to actually be getting in and buying any dip on u.s. stocks with the drop we've seen? >> i don't think so. but more broadly for quite a while now we said it simply time to buy overall. when you look at the polarizations of performances across sector, for quite a long time what we are buying and more -- was more important than what -- whether you are buying or not. early to buytoo anything that would be exposed to the supply chain. conversely -- those are getting hammered where is medium-term growth spot is in changed and if you have them already you keep them. if you don't you can find entry points. nejra: are you thinking about reducing your exposure to equities overall as a result of coronavirus or have you just been making little tweaks in terms of not doing it through indices but through specific sectors. even this crisis isn't happening in a vacuum. the context matches -- matters hugely. what we had until say two months ago. it was a market that had been rea

the fed could swing into action here. there's lots of talk about a fed emergency rate cut that comes maybe even next week, who knows. when that happens, that could quell some of this. the former fed governor, smart guy, he put out an interesting column in the "journal" today that said the fed should swing into action and usually those are -- liz: terry duffy of the cme said that would not be a good move. charlie: why? liz: because they've got to be calm about this and preserve dry powder. charlie: this is one of the times you do it, when you have irrational exuberance destroying market value, the one thing the fed needs to do is kind of kick in. it was talked about for years. liz: as we are looking, the dow is down 835 points. i want to let our viewers know -- charlie: i don't mean to talk it down. sorry. liz: listen, low of the session is a loss of 960 points. when we are looking at lows for the s&p down 109, we are down 93, the nasdaq down 359 points, that was at the low. we are now down about 296. as the markets drop,

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 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 coverag

of my i get to some questions, i want to thank you and the fed for moving ahead on the fed now system. i think it will save millions of americans billions of dollars when it is implanted. -- when it is implemented. we passed a huge tax cut in december 2017 that dramatically increased the annual deficit in the long-term debt. whatat time, here is president trump tweeted out. he said that his taxing to "roco growth rates of 4%, 5%, and maybe even 6%." mr. chairman, the economy hasn't gotten anywhere near 6% growth in the last three years, has it? chair powell: no. we have had continue to moderate growth of a little better than 2%. sen. van hollen: and we haven't had 5% or 4%, and the trump administration has not ever hit 3% annual growth, has it? 2018 was marked at 3%, but then got marked down to 2.5%. sen. van hollen: but we are having a reality-based conversation, so the answer is no, right? chair powell: according to the current statistics. sen. van hollen: if you look at the budget that was just submitted by the trump administration, they are predicting 2.8% growth for the coming ye

we know the fed still has room to cut rates. more importantly, the effect of these rate cuts comes more be a financial conditions nowadays. if we start to see financial markets, equity markets in particular, start to react adversely to this economic environment and coronavirus environment, and we start to see volatility rise, the dollar strengthened further, the fed would strongly consider loosening policy, reduce interest rates, to prevent that tightening of financial conditions, which would be detrimental to economic activity. amanda: we need to leave it there. thanks, gregory daco. coronavirus and the state of global trade. my conversation with the ceo of magnet international, one of the world's leading auto-parts makers. this is bloomberg. ♪ this is bloomberg. ♪ shery: this is bloomberg markets. i'm shery ahn in new york. amanda: i'm amanda lang in toronto. magnet international, the world's leading auto supplier has a lot riding on a new nafta. i talked to live with the ceo don walker about the importance of getting that

maybe the fed coming up, if there is any hint of easing or what the fed are thinking about with regards to inflation. .t is usual market stuff the coronavirus is the most important thing. we could start talking about a v-shaped recovery for china, and in europe, europe is obviously going to get killed by a weakening chinese economy. headlinesdalio made saying that investors are blowing this out of proportion, over exaggerating the market impact, yet it kind of depends on what letter it is. it v?l, is it u, is and how deep is it? kristine: i think markets are just happy to keep rallying from here. we saw the asian equity market rallying despite the numbers of deaths going up. there seems to be a sense that the focus really now is markets have discounted the initial increase in the death toll, but now it seems the focus will be on the second-order effect, and therefore, what we see as a hard impact on the economy. we are not going to get any sort of indication of that for about two and a half weeks. the first indication would be china pmi data at the end of this month. so the question is,

money pouring in valuations across the board but now the fed is actually pulling back and attempting to stem the free liquidity that we've been enjoying for some time at the same time the break is ravaging supply chains killing off manufacturing and production with that part of the story makes the most sense to be creating a lot of this panic and yet it hasn't happened in the past when we knew there was going to be market disruption now it seems to be almost oddly timed your thoughts. you think it's huge that it's all culminating at this point and even you've got you know really strong strong dollar that i would add to that as well so you know you had markets rising and you had earnings starting to taper off some but it didn't seem really that big of a deal and stack coronavirus on top of it and that really you know solidified that stumble into something so much bigger and so markets are really reacting that huge you know a couple 1000 points over a couple of days is massive and the previous person said i don't think that were done yet so we got in the gold and silver e.t.f. for a wh

money pouring in valuations across the board but now the fed is actually pulling back and attempting to stem the free liquidity that we've been enjoying for some time at the same time the break is ravaging supply chains killing off manufacturing and production wouldn't that part of the story make the most sense to be creating a lot of this panic and yet it hasn't happened in the past when we knew there was going to be market disruption now it seems to be almost oddly timed your thoughts. you think it's huge that it's all culminating at this point and even you've got you know really strong strong dollar that i would add to that as well so you know you had markets rising and you had earnings starting to taper off some but it didn't seem really that big of a deal until you stack coronavirus on top of it and that really you know solidify that stumble into something so much bigger and so markets are really reacting that huge you know a couple 1000 points over a couple of days is massive and the previous person said i don't think that were done yet so we got in the gold and silver e.t.f. f

the fed. we did hear from jay powell yesterday. he did address this situation. let's take a listen. chair powell: some of the uncertainties around trade have diminished, but risks to the outlook remain. we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in china that spill over to the rest of the global economy. theine: when we talk about weakness or strength of the dollar, when things are bad, the dollar strengthens. when things are good, the dollar strengthens. what changes the trajectory? vassili: i think there's a limit here because the dollar has been strengthening because of concerns about the global economy, but guess who has the most room to cut rates? the fed. the fed comes into play, there's probably a limit, especially considering that a lot of other central banks are at the limit. romaine: powell yesterday was asked specifically. he threw water on that idea and seems to suggest that the fed might actually move to other measures besides cutti

the fed has to deliver. tony: that is clearly what squares the circle between record high equity markets, even though they are off of it, tight spreads and risk premiums, with treasury rates that are clearly pricing in what you would think our recessionary conditions. what connects the dots are global central bank liquidity, financial conditions that are very attractive for borrowers. you saw a record borrowing over the course of january, first couple of weeks in february, emerging market borrowers, investment and high-grade yield. that really connects the dots between the very high and certainty around fundamentals in growth, depending on where the coronavirus develops here, versus a treasury market that is say, the single safe haven in the global markets today. jonathan: today, the whole curve is sinking lower. forgive me, i feel like i say this every week. you have a federal reserve that is telling us as things get better, we will not step in. if things get worse, we will be there for you. the market is l

up and former fed insider danielle. so the danielle this is the really the big question of the day right now beyond the balance sheet everything else expects and is expected to be quite unremarkable so how and when will the fed taper treasury bill purchases because if they suddenly the liquidity just isn't there anymore that really what's with the market and bring us right back to square one. it really does and the fed has backed itself into a corner with the moves that it's made i hear that the willingness and i hear the desire on the part of policymakers to rein this in but i don't think the market's going to allow it just because every single day it pushes the fed further out on the spectrum and the fed is saying april the minutes reiterated april we will have to see you know if we get through tax season and the fed is truly able to unplugged this because to me it's a monster of their own making. you know we want to move to the outlook for inflation and employment here right now inflation is steady on the low side wi

thatnk the narrative is the fed should keep interest rates on hold. markets are expecting a more dovish central bank, but i think with this current economic environment, the strong labor market data we have seen last the, and also generally u.s. economy is doing quite well. i don't think they really need to ease policy much more this year. seeing there still proverbial inflation, have we? bondsant to belong specifically because u.s. reflation trade may be weary due to its only bonds, not selling bonds because of the unpredictability of trump in trade and because of the fed's inability to meaningfully move the dial on inflation expectation. i think that is the core adjunct of the bond market. would you agree with bank of america? >> i think markets are not very concerned about inflation even though actually the headline and , theall are about 2.3% now level previously, people were fearful of high inflation. inerally market participants of thes, it is not top risks for us. there is actually reason to be more cautious on high inflation and be protected f

the fed is onboard the fed is watching. the fed is responsive here the problem being every time you have a downdraft in the markets the markets become conditioned the fed is going to step in and rescue >> steve, thanks >> as the sell-off gathers steam we are joined on the cnbc phone line by the president and chief investment strategist of yardeni research and not surprisingly his name is ed yardeni good to have you i think you previously identified 65 panic attacks during the bull market >> right >> this long bull market you believe that coronavirus may be the 66th. is it fair to say it is? >> absolutely. there is no doubt about it as a matter of fact, we first started to talk about the possibility that this would be the 66th panic attack the first day of trading on february and that was after the late january sell-off we just said that it could be. and then -- and at the beginning of february we actually listed it as a panic attack number 66 the question is whether it is just a panic attack which means it will be followed

solis management steve leishman alongside us helping us make sense of everything going on what the fed is thinking about all of this. the worst week for stocks since the financial crisis the vix surging, bond yields falling the even new lows. stephanie link, a minute ago the nasdaq was positive. it went from positive to down 1.5% in about ten minutes, if that. >> i know. >> what does that tell you about sort of where we are is that how a bottoming process happens? doong we are close >> i hope so i think people are very confused obviously. right? it is not surprising that the market went down because of this, because the virus has gotten so expanded the surprise has been the speed of the decline to lose $6 trillion in market company in six days, that's remarkable i don't know when we are going to bottom. but i am looking at an rsi on the s&p at 20. and vix, jon you can talk more about that but a vix at 47, to me it seems a bit extreme. then i look at what happened in the shanghai index it fell 14% the beginning of the year and then it bounced on february 3rd it is 14% and 2% off its hig

before i get to my questions, i just want to thank you and the fed for moving it on the fed now system. it will save millions of americans billions of dollars when it's implemented. we passed a huge tax cut back in december 2017. itit dramatically increased the annual deficits and a long-term debt. and at that time in december december 2017 years what president trump tweeted out. he said his tax cuts were going to rock the economy the growth rates of 4%, 5% 5% and maybe even 6%. mr. chairman, the economy hasn't gotten anywhere near 6% growth in the last three years, as it? >> no. we've had continued moderate growth over the 2%. >> we haven't had growth at 5% or 4% and in or 4% and, in fact, the trump administration has not ever hit 3% annual growth, as it? >> 2018 was marked at 3% but then got marked down to 2.5%. you never know. >> the answer is no, right? it did not hit 3% come right? >> according to current statistics. >> if you look at the budget that was just submitted by the trump administration, they are predicting 2.8% growth for the coming year. very far from what president tr

money pouring in valuations across the board but now the fed is actually pulling back and attempting to stem the free liquidity that we've been enjoying for some time at the same time the break is ravaging supply chains killing off manufacturing and production with that part of the story makes the most sense to be creating a lot of this panic and yet it hasn't happened in the past when we knew there was going to be market disruption now it seems to be almost all the time and your thoughts. i think it's huge that it's all culminating at this point and even you've got you know really strong strong dollar that i would add to that as well so you know you had markets rising and you had earnings starting to taper off some but it didn't seem really that big of a deal until you stack coronavirus on top of it and that really you know solidify that stumble into something so much bigger and so markets are really reacting that huge you know a couple 1000 points over a couple of days is massive and the previous person said i don't think that were done yet so we got in the gold and silver e.t.f. f

give any guidance on monetary policy before the fed has more data he add ifs the fed sees something that requires adjustment, quote, i'm confident we'll give it all the consideration it 23450es that echoes what other officials have been saying and pressure is mounting on the to react to this virus from former fed officials from the president and especially from markets, take a look it's been moving around all day. this is a moment in time but the key development here, i don't know if you remember, march was not in play yesterday. it is not -- a 58% probably. that's less than three weeks a 75% probablity. moving to your right and for folks on the radio, another bar in the middle. 63% probablity of a second cut as early as june september 52% probability of a third cut. this morning in t"the wall stret journal," former questioned governor kevin mor ris wyatt writing quote, the federal reserve should lead the world in taking action. the window to contain the virus in cop taning china has long since closeded the window to mitigate on the global economy remains open but not for long immed