tv Bloomberg Markets European Open Bloomberg March 11, 2020 3:00am-5:00am EDT
anna: good morning, welcome to "bloomberg markets: european open." i am anna edwards live this morning from westminster live along matt miller. matt: a massive surge wall street overnight. futures are pointing lower on a hearhen all stocks want to is one word, and that is stimulus. the cash trade is less than one hour away.
and of austerity. the u.k. prepares its biggest dose of stimulus in decades. it really is said to plan doubling's -- doubling stimulus to combat the outbreak. president trump appears to a coronavirus conference. he was expected to announce a major stimulus package that he hyped himself the day before. and, taking a hit. couldsays the coronavirus knock first quarter quarter china revenue by one billion euros. we will speak to the ceo in just over a half an hour. you've got some breaking news down there on the green from the bank of england. anna: absolutely, breaking news. itsbank of england reduces bank rate. the bank of bank rates by 50 basis points. 20 .25%. a surprise rate cut from the
bank of england. just as we saw a surprise rate cut from the fed. here we are seeing me -- seeing a great deal of cooperation theeen the fiscal side of monetary side in the u.k. investments are waiting for an update, waiting for the government to respond to the coronavirus. we are also hearing about a monetary policy from the bank of england. really fascinating to see this move come in today. the market has been increasingly braced for a move such as this, maybe not today. you can see the instant reaction we have seen in the past with the pound on the move against the u.s. dollar. the market was positioned for this. let's get to our market conversation. we are joined from our markets live team onset in london. a surprise rate cut in terms of its timing, but not a surprise at this time. >> not a surprise. market wast of the
anticipating we would see 50 basis points at some point, given what we have seen around the globe. i think it is a great signal, showing that various views that the u.k. government is trying to be courted native. i think this is real positive for the u.k. on a relative basis. believe that't they are getting on top of the situation in italy. if they don't believe that the u.s. is getting on top of the situation, it may help the u.k. but it could be washed by global events. matt: we are showing the pound with you. i want to pull up the futures, the equity index futures. we saw them briefly turn positive in london. now they are back down. we do have passed futures right now up about a half a percent. after the gain in equities yesterday, is the panic passed
just one of is this those rides we get with high volatility? is a chance apple answers are kind of correct. i think we do have a bumpy ride. it would be naive we would go a straight line backup. the prices in asia showed that people thought we might get v-shaped basis. but then it sinks back down to the low. overall we will have a lot more volatility. will we see the extreme panic we saw on monday? i suspect not in treasury markets. it does not set an entirely new paradigm. it does set a change. there is not even the bond of the capital appreciation and the dividend yield asset. i think with higher volatility, that does not mean we returned to the panic. in the panic we were seeing as oil andand monday on bond, we might still have greater equities in the weeks
ahead. certainly it will be volatile. i suspect we will have more of a downside the next couple of weeks. we might continue to dribble higher this week. anna: it would be interesting to see. an aggressive move by the bank of england, cutting the base rate by 50 basis points. even just in the short-term here in the european session. a 16 point market. gilt markets are already ready for a loss of issuance this year. ready for the government to go heavy on infrastructure spending. trying to level of the country. i think they will be mindful of these domestic considerations, but also the global push from lower and lower yields are what difference will we get from the bank of england announcement to the gilt market? mark: unfortunately, a lot of these rate cuts are pretty marginal in terms of changing the markets to calculus.
in terms that most of these rate cuts were price. the most important thing is that the government delivered them the market shock again. even if they don't believe it is the right policy. they don't want to shock the markets. obviously in a time when we are talking about the u.k. ramping up stimulus, going at a much standing, iive think it is important to reassure that as governments around the world have been asked to borrow more and provide more stimulus, they are able to borrow extraordinary low rates. that is a use for a part -- positive margin. matt: we are hearing from the bank of england. something beyond the rate cut. it is also something we expect to hear from the ecb later. new lending scheme targeted ad small and medium enterprises. a new sme lending scheme that will offer for your funding. the boe is saying you could
provide in excess of 100 billion pounds. as you know, people are calling for that, bloomberg intelligence is calling for that from the ecb as well. is this kind of program more important than the plain vanilla rate cut? mark: i think it is. as i said, the rate cut is not shocking markets at this time, but i think the lending is really important. we know we have stimulus coming through. we have an epidemic we are fighting, we don't know how long it will last. it is about companies who can stay in survival mode until we get the desk get past the worst of the epidemic and see spending come back into the economy. that means shoring up this lending and shoring up the smaller enterprises. it is absolutely vital to the function of the economy. i think this is a really positive package today for the u.k. thank you for joining us.
our bloomberg market live managing editor. digesting the bank of england. sterling falling as a result of the rate cut coming as a surprise. 50 basis points taken off the base of off rates of the u.k., down to 0.25%. scheme withg associates set for a medium-size enterprise. reiterating this new sme lending scheme for up to a for your funding plan. it could provide in excess of 100 billion pounds to u.k. sme. u.k. also cut to 0% from 1%. the bank of doing its part. we are here in westminster because we are waiting for the government to do what it plans to do around coronavirus. we will get the elements later on. we have banks on what they are
anna: welcome back to the european open. -- 12 just 10 minutes minutes past 7:00 in the u.k. 50 or so minutes into the start of the trading. the surprisere of rate cut by the bank of england. taking off interest rates in u.k. by the bank of england. no surprise that we see rate cuts coming. the timing of the surprise on
the day that we were expecting to hear from the government around the fiscal policy, also get that monetary policy boost. this is what we are doing for the pound. the pound is weaker as a result of this. we will keep showing you the european futures picture as well. disappointments the side with a lack of detail around president trump's plan to tackle coronavirus. let's go to bloomberg's first word news update. the bank of england has cut rates by 50 basis points at a special meeting. the special monetary committee voted unanimously to reduce the rate. they are also introducing a new lending scheme, in excess of 100 andion pounds for small medium businesses. italy is set to double the amount of fiscal stimulus to tackle the coronavirus. it is increasing the amount of money for the fourth time in a month after the european union agreed to stretch its budget to help fight the outbreak.
italy is looking at as much as 60 billion euros of additional spending. officials saysth some parts of the country are now beyond containment. john hopkins says the total number of cases in the nation has now topped 1000. president trump did not provide any new detail on a package to fight the virus last night. instead, the economic advisor given in the be near future. global news, 24 hours a day, powered by more than 27 hundred journalists and analysts in more than 120 countries. this is bloomberg. laura in london with your first word news. bank is joining us right now. i want to ask you quickly, before we get into anything else , about this breaking news from the bank of england. points to 25sis basis points in an emergency or inter-meeting cut, and providing
100 billion with up to 100 billion pounds of lending incentives to smes. what do you think? i think the 50 basis points is without any significance to the overall economic challenge we have. i think the lending scheme is absolutely on port -- point. it is all about the companies that are really having and stealing the biggest impact from this fallout. don't forget what we are dealing with. it is both a global demand breakdown but also a global supply. in my 30 years of doing this i have never seen these two things happen. very much on point with what the bank of england did this morning. does this seem like some joined up thinking between monetary and fiscal authorities since this comes on the day that we expect the budget announcement here in the u.k.? i think the budget is a
numbers region. i think i have to congratulate the u.k. for becoming the first country to embrace mmg, giving away on the national break that has been in place. it is a absolute breaking story in my opinion. the u.k. will become the first country to go all the way. and also politically very interesting because it seems to be indicating that this transition from a london run whereu.k. to there is more power given to the role there, it is certainly a new trend. i think the budget will set to new trends you're the giving away with the fiscal break and giving support to the new political idea that, in the future, to get the voters you noncapital city structured policy. matt: are we going to get coordinated action now? we have had an emergency rate cut from the fed, now we have an
emergency rate cut from the bank of england. tomorrow is christine lagarde's time to shine. will she impress the market? steen: i am sorry to say this, but i don't think it will really matter if they are coordinating. interestay past the rate. the price of money to solve this. what we are dealing with is a potential new credit crisis. that comes from the fact i just stated. global supply lines have been going down. now the lines of coronavirus. global demand is falling. as you have seen this morning, some companies are out ticking when billion dollars of the top line with a full impact on the bottom line. i think it is only the first of a number of companies that have take these precautions. think is really disturbing the market is that we have no sense and no ability to know how long this will last for. i think the authority has been
extremely holding back in terms of getting an action plan in place to deal with this. matt: certainly the market has reflected that disappointment. i wonder when it comes to the underlying economy, we will talk with the ceo later, it is a big number for the first quarter, but he can afford it. the small and medium-size company cannot. china came out with a rescue package for them. now the bank of england is looking to support them to the tune of 100 billion pounds. bloomberg intelligence is saying that the ecb may have a program that provides 10 euros in funding for every one euro in lending to smes. is this a kind of thing the global economy needs to see now? steen: it is exactly the right thing for what is going on now. but you have to remember, it is the gratitude to what we are in. the average sme -- let me say, you're absolutely right, that is where the real structure is in
the curve system right now. but they only have an average three-month cash flow. that is the consolidated companies. business has a month maximum. even though they are now facilities available, if we look at this, the bank has been very, very slow. the bank of england, a number of times before, it was always seen as something leading in terms of the edge, but the uptick has been very disappointed. the slightly concerned that intention here, in terms of helping the average sme and companies is to be based on evidence. steen, the cio at saxo bank staying with us. fighting the market with the 60 basis point rate cut.
a scheme to encourage lending to the economy. helping to reinforce the transmission of that bank rate. too to incentivize banks provide credits for businesses and households, to bridge them through a time of economic dysfunction. we will have plenty more on the response of the bank of england move, and look ahead to westminster. bloomberg radio is available on your mobile device or on digital radio in the london area. this is bloomberg. ♪
futures turn from negative to positive in terms of equity indexes. that it takestle to change market sentiment. as opposed that is not little an emergency rate cut a 50 basis points and a lending program targeted at smes. take a look at the pound right now, in terms of the british currency, we see a little bit of a drop at about a quarter percent in dollar terms to 12878. but i think really the more interesting seeing is a market sentiment move that you see right now and equity index futures. let's get your stocks around the newsroom. looking at this company for us. our equities team is covering the u.k. budget and impact on stocks. many burger is focusing on this. it is called that because the founders name was this. what you have on them? he was just talking
about the fact of looking at this big headline that came out for the company. the are saying sales could fall 800 million to one billion euros. of course this is due to the impact of the coronavirus. they are also saying chinese 2019 were 80% below the level. we are also seeing slowing in japan and south korea. be oneen said this could of the first retail companies actually really dire impacts the coronavirus is having on the battleground. let's come to you on the u.k. stocks in focus because of the budget. i guess because of the lending measures to sme being announced by the bank of england as well. right, leading up to the budget i think the concern for the markets has been the virus and what kind of spending would be coming in the budget related to the virus and ensuring that the economy would take much of the attention away
from what was expected to be infrastructure spending. now with what the bank of england had done, it would appear that it is for the real economy, specifically virus focus. the huge amount of spending we are expecting from the governments very later on will indeed quite a big impact on infrastructure stocks. construction companies across the board, and also the supply chain. the main place to watch is the ftse 250. the more domestically focused of the index. matt: what is the story there? >> they are freezing their investments to ease their -- they are canceling them are putting them on hold. the a hub and of visibility of the coronavirus impact and this is something that if enough companies are doing it could really impact the economy. you see things like the bielby in the lending facilities they are offering. cannot seey we
clearly what the impact is going to be for their earnings. one positive note they did say, that china is starting to improve. they're trying to start to see some peaks of green shoots coming out of china. morgan stanley notes it is ready with airport sales. one of the most exposed luxury companies to airport sales. that trend is likely to get worse before it gets better. thank you for joining us. get all of the latest stock stories from our equities teams by going at first go on your bloomberg terminal. you can also get the first word news on your mobile app. last nights 5% surge on wall street, investors are looking for stocks to capitalize on. any turnaround, however brief it may be, saxo bank has got a number of companies in its bounceback basket. they includes chp and some semiconductor stocks. how likely do you think it is -- how risky is getting out there
and trying to catch the proverbial falling knife? steen: it is very risky. i'll the we have seen this fall impact the economic crisis. been slow ins response. but the bounceback that we released is really based on the fact that stocks that sold the most during the last four weeks, and who has a highest quality in terms of the number of metrics we use, they are among them. but we are really saying, here is stocks you should be buying from 5%-15% from where we are today. but overall it is getting from being extremely expensive to being fair price. normally we have to get it cheap before we buy. but i think it's the next 5% to 10% in my opinion. it's fast to get the names on your watchlist and look at these
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♪ matt: welcome back to "bloomberg markets: european open." we are 30 minutes from the start of cash equity trading and just about 15 minutes ago, we got an emergency rate cut from the bank of england, lowering its benchmark lending rate by 50 basis points to just 0.25%. as a result, we saw futures turn higher. although the ftse futures are not up very much, because the pound has come down in response, dax are higher, cac and futures building even more. the pound initially dropped more than a quarter of a percent, now
it is coming back a little bit. aankly, it has been stuck in pretty tight range lately and it does not seem to move very much outside of that. that is not, in my opinion, as interesting as the change in sentiment or direction. we will bring you the bank of england news conference at 9:00 so stay. time tuned for that. right now, we want to get the bloomberg first word news. >> the bank of england has cut rates by 50 basis points at a special meeting. the monetary policy committee voted unanimously to reduce the rate. the central bank is introducing a new funding scheme in excess of 100 billion pounds with incentive for small and medium businesses. democratic presidential candidate joe biden has won michigan. missouri and mississippi, further widening his lead over bernie sanders. next week, the focus turns to
illinois, florida, and arizona. oil's rally appears to be faltering after the biggest crash in a generation. the price war between saudi arabia and russia still clouding the outlook. russia says it could also up output. >> i think that in the short-term, we can increase production to 200-300 thousand barrels per day. the potential is for 500,000 barrels per day in the near future. first of all, i want to say that orders are not slowed. it does not mean that we cannot further interact with countries of opec and non-opec. >> 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. this is bloomberg. matt: thanks very much.
let's pick up on that oil story. since we got the headline from the saudis that they are going to boost their production again to 13 million barrels per day, about 40 minutes ago, it has been the most read story on the bloomberg. cio at saxo bank is still with us. looks like nbs is willing to go all out. shirley, that must be good for a market that needs oil just about as much as it needs water. isn't it good for the price of oil if the commodity is cheaper for the rest of us to buy? >> it is definitely a boost to the consumer and businesses in terms of lower energy costs. you have to remember that the problem is right now at a time where the global economy is at eight standstill. theenergy sector is one of most capital-intensive and leveraged places there is in all
of the sectors in the u.s.. in other words, the energy sector is always at the sort of -- of the energy price is always at the forefront of any crisis we have. what happens when the price is too low, we have capital destructions. and ablee very willing to increase production and live through the cycle, the downturn. not only governments as well as companies are being destructed in terms of this capital structure. i think we will see some of the credit crisishe in the energy. in my 30 years of doing this job, i have never seen such a fast rise in the spreads in the high-yield bonds. high-yield bonds and all the companies that have very high margin of cost and access and
credit. anna: the relationship between the u.s. economy and lower oil prices not necessarily what it might have been the last time we saw oil prices down the slope. -- down this low. what do you make of estimates of recession in the united states? taking into account what you see on oil, what that does to the oil industry in the u.s., also, coronavirus, of course, and what that does to the u.s. economy. 53% chance of a recession in the u.s. over the next 12 months. what is your assessment of recession risk? this kind of survey has never been hundred percent. 55% can effectively translate into 90% possibility of a recession. i think the u.s. is already in a recession. i think the desperation at which the administration is trying to get the new payroll tax cuts and other stuff in place is a clear sign.
the trend of gdp in the u.s. has been coming down very slowly. there has been no deviance from the trend. we are heading towards zero on negative growth in the u.s., which of course is also what the federal reserve's outlook is. i think we have 75 basis points from the fed coming in less than a month. another market is right now i think100% to 50, but they need to go ahead of this and give zero bound. the fact that the federal reserve is not going zero bound. this time, they have to deal with the fallout from the capital structure of the energy sector and major businesses, blake shelton -- businesses, like shale and energy under attack.
nothing is 100% certain except bank intervention and death that i don't say 100%. anna: is there anything dangerous for the financial system, though, if the fed does this? one of our colleagues suggesting they need a reverse operation to steepen that yield curve to avoid at all costs the zero bound. >> absolutely. friends in thef industry i have talked to feel that keeping the yield curve positive is the number one objective of the federal reserve. doing a yield curve control and other things to maintain that yield curve. we have seen the fallout in japan and europe on the banking sector as soon the yield curve goes flat or negative. i am seriously concerned about the banking sector. i know the u.s. overall banking sector is more well-capitalized than the european one. nonperforming loans going through the roof rayna -- right
now. we have a number of banks across europe this morning announcing that they will give a grace period for paying mortgage rates. bank of england is only tapping in. as we talked about earlier, nonlisted companies will be hit first. energy very much in the forefront because they have the highest margin of cost to capital and most capital-intensive structure. matt: absolutely. we see the sme's already struggling to make ends meat. we see company -- meet. we see companies like chesapeake worth now less than $400 million. thanks for joining us. appreciate your time, especially on a morning like this. let's continue the conversation about what the u.s. can do. president trump was a no-show at the white house coronavirus briefing that he very much hyped
the day before. cases in the country topped 1000. instead, vice president mike pence and trump's top economic advisor, larry kudlow, showed up at the event and said more details are coming soon. annmarie hordern is in new york to talk about what happened to the stimulus announcement he said was going to be very dramatic and didn't and up coming through -- end up coming through. >> it was hyped. it was a package that just was not delivered. trump didn't show up to the press conference, leaving kudlow -- mike to field questions pence to field questions. kudlow declined to answer questions on whether or not this has congressional support, how much this will cost, and even how that will look. futures are down in the u.s. more than 2% today after we had some optimism yesterday and
equities ending the day higher. day presidente trump can salvage some of that, given the fact that he will be joined by some of wall street's biggest leaders. we are talking about david solomon, brian moynihan expected to be at the table in d.c. with him. anna: ok. annmarie hordern with the latest on what president trump is planning or not planning with regards to coronavirus. adidas estimates the coronavirus outbreak could slice $1 billion of revenue. we will speak to the ceo of adidas, kasper rorsted. his operation in china a really rather than conversation this morning. conversationevant this morning. this is bloomberg. ♪
the bank of england putting a fire under european futures this morning. the bank of england cuts its base rate by 50 basis points to just 0.25%. we initially sought retreat in the pound against the u.s. dollar, as you would expect in the event of a central bank cutting interest rates. the market rethinking what this might do to the relative performance of the u.k. economy, not just in the interest rate cut, but also the lending scheme they put in place to small and medium-sized businesses. we are going to bring you a bank of england press conference at 9:00 a.m. u.k. 10. andrew bailey is expected to be speaking, as well as mark carney, suggesting that there will be some read across from one tenure ship, if you like coming to the other. let's get the bloomberg business flash. >> jp morgan is warning that
coronavirus may worsen trading conditions for liquid assets, u.s. treasuries. banks could be flooded with an extra 300 billion worth of u.s. government debt, posing a challenge to repurchase markets. --plans to create a hero asset assetment unit -- euro management unit. the french insurer will divide its asset management business into two units, core and alternative. found $2.7 billion of debt that was hidden from its board. it puts the troubled the hospital operator into a full-blown accounting scandal. the company is trying to establish the exact nature of the debt facility. some of the money may have been used for unauthorized purchases. outbreak cutss travel demand.
challenges facing the carrier after it battled through the hong kong protest lester. it comes after their net income for 2019.% that is your bloomberg business flash. matt: thanks very much for that. i want to quickly recap what we have got in terms of the bank of england emergency rate cut. they dropped their benchmark lending rate by 50 basis points to 0.25%. and you to a presske conference from the bank of england. in what is looking more and more like a coordinated response to the coronavirus, after we had the fed dropping its rates, now we have the boe. we will see what christine lagarde can bring to the global stage. let's talk about a company that
has felt the impacts firsthand. adidas said it could take a first quarter revenue hit of up to a billion euros as a result of the coronavirus. sales in china were 80% below 2019 levels from january 25 through the end of february. since then, stores and warehouses have gradually reopened and consumer traffic in china's slowly picking up. let's get a better picture with the ceo of adidas, kasper rorsted. he joins us. painted me a picture of what -- paint me a picture of what this returned to business looks like. kasper: good morning. matt: good morning to you. what's it like on the ground in china? how quickly and how much is traffic coming back to normal in your stores? kasper: let me just spend one second on last year. 15%rowth on the top line, on the bottom line. the highest margin in the history of the company. we are an extremely well-founded
company at this stage. we did see in february business was down about 85%. we are seeing a china decline this quarter around one billion. we are growing the other regions. we are seeing a slight return to the stores, a slight increase in traffic. we are at the end of the food chain. your first thought is not to purchase a pair of sneakers, it is to restore your fridge. the recovery for the sporting-goods business will take a little longer. china anding slow that will last for a while. anna: something that is changing very quickly is the rate of spread of the infections across europe and the expense on the clampdown on life as normal. what are you assuming now? what are you modeling for the
european side of your business at this point in 2020? 4 so first of all, -- kasper: so first of all, we don't need any money, we don't have any debt. with the price of money going down, i think that will probably stabilize the market. we are seeing a very slow italy for the reason we are seeing a slower consumer traffic the normal. we are not seeing at this stage any significant impact on a european level. in italy, we are. we assume this will take a while before we get through the crisis. the reverse, coming back to the normal behavior, we will eventually come back. that is why we deal with the short-term. the sporting-goods industry has really changed, despite the virus. matt: you seem unusually sanguine for somebody selling sporting-goods. we are talking about teams playing games to empty stadiums. we are talking about nobody
being allowed to fly in and out of italy, which is arguably the most important soccer country in europe. we are talking about, you know, new york city that is going to be cut off from suburbs. thousands and thousands of people are already sick at the very beginning, at the very beginning of this outbreak. 2020? you worried for kasper: so i think this is extremely important to understand where we are. of course, we are concerned about the demand for 2020. we also know from the pastor that viruses will pass -- from the past that viruses will pass. we make sure we take the long-term decisions, sign the right contracts and develop products for the future. what the near-term is bringing us, we can't really control. that's where having a strong balance sheet, cash in the bank and understanding that we are
one of the best brands in the world gives us the confidence that there might be pain in the short-term, but frankly, there could be gains in the long-term. we will relatively suffer much less than other brands because of our global dominant position. anna: ok, keeping your head and focusing on the balance sheet strength. what is your response to the suggestion that varies sporting events can be canceled? how damaging can that be for a business like yours? 4 of course, it it does have an -- kasper: of course, it does have an impact. people will still be watching sports and purchasing sporting products. when the events are canceled, it does have an impact. it is on acceleration of the situation. it is a nuisance. it is not a strategic setback for company. eventually, the sporting events will start coming up again. that's why we have to get through the slump. that's where it's important to
react to what you can control and be very transparent to the market of what the impact is. the overall fundamentals in sporting-goods does not change with or without participants in stadiums. theresome strong points and a strong 2019 hopefully put two in a good place to weather the storm here. kasper rorsted, the ceo of adidas coming to us. remember that bloomberg radio is live on your mobile device or dab digital radio in the london area. tune in. this is bloomberg. ♪
minutes away from cash trading on a day when the bank of england cut rates in between meetings. so on emergency rate cut the likes of which we saw from the fed, the same size as well, 50 5%sis points down to just 0.2 for the lending rate in england. we saw futures down earlier. they are now up across the board. fore see a gain of 0.5% equity index futures in the u.k., even with a pound that is a little bit weaker. the pound has been stuck in a maddening range lately, even as everything else shows the kind of volatility you have not seen since 2008. the bank of england with an emergency rate cut 50 basis 0.04% and the pound moves against the dollar.
sometimes i wonder if cable traders are just looking at other things all the time. they never move the pound out of this range, even with something as unprecedented as this. anna: indeed. i suppose there are two reaction functions here. you factor it in immediately to the pound. you asked what that does to the economy longer-term or even in the medium turn when we are looking around for what is going to make that marginal difference between one economy and another. there are a lot of big differences between what the u.k. is doing right now and what other parts of europe are doing right now. big news from the bank of england this morning. the effective that clear in the pound and on european futures. we will be bringing you that bank of england news conference taking place at 9:00 a.m. u.k. time. we were already planning to be in westminster of course, because we have other big events to look ahead to in the u.k.
start of cash equities trading. the bank of england makes its first emergency move since the financial crisis. biggest prepares its dose of fiscal stimulus in decades. president trump fails to appear at a coronavirus news conference. she was expected to announce what he calls a major stimulus package. das says the coronavirus could knock china revenue by one billion euros. the brand can
weather the slump better than competitors. we have features that have turned around substantially from , beforeust one hour ago we got the news the bank of england would cut by 50 down to one quarter percent. ftse futures are up 1.4%. strong, thes look actual open is not looking strong. basically flat up to basis points, but it is clear here with the turnaround of losses that investors want stock and policy.cy -- awe that is why we are seeing this sentiment in europe. are we going to have a coordinated policy effort? that is the hope we are seeing.
some of that was a disappointment in the u.s., which is why futures are still declining. the pound is flat at the moment. it started the day with gains and drops in losses. get us out of to their market territory? ast indexes right now are in bear market. go ahead and see how some of these individual sectors are looking. certainly more green then is typical. than is typical. consumer discretionary's are still red. the ideas ceo said the first thing you will buy is a food and not sports apparel. otherwise, some decent amount of green. morgan stanley is saying tech is actually a financial -- a fantastic financial sector.
what do the movers look like? stock,t's not a european but activision blizzard released a new version of its call of duty video game. number one, it's free, number two, you can play for hours. that has boosted the stock in the u.s. almost 6%. take a look at european markets. we see a ton of gainers after the bank of england came out with this surprise cut. 50 basis points down to one quarter percent. gainersult, you see 550 , only 21 stocks are down. petroleum is one of those, but you can see oil and carmakers. everything from persimmon to
carnival. on the optimism that there will be coordinated action between central banks and governments. you had the fed, tomorrow you've got the ecb. as far as the losers, adidas is one of the most notable. ceo, whoalked to the the 2019 jobd that of strengthening the balance sheet puts them in a good position to weather the storm. you have got to keep a cool head and focus on the business. nonetheless, investors are selling off the shares, saying they will take a hit to first-quarter earnings. really interesting to hear him talking about the impact on china and italy.
moment, that impact is not coming through in the union members. european equity markets are opening higher. that's after that surprise 50 basis point cut from the bank of england. joining us now in london is christopher thiel and laura cooper. youstopher, let me come to on the bank of england. is it the rate cut that makes a tsference the nicely named smc, the term funding for small enterprises to help bridge them through the uncertainty. i was expecting -- i was not expecting bank of england to cut 55 basis points. day, there'set
obviously been some communication between the treasury and the bank of england. it's consistent with what i think global governments and finance ministers have been saying, but they are looking at ways to increase liquidity in because ofal markets the panic reaction we have seen over two weeks in equity markets. -- toncredible thing think they have reached record highs and now are in bear market territory. we have not seen these movements was a2008 when there clear problem with overextension or leverage. we don't see that this time. this is a virus that is spreading. it is unknown, but we know we have seen others in the past
where markets lose their interest in spreading quickly. the bounceback has historically been strong once we reach a drawdown. that's what it feels like to me we are in now. matt: let's get over to laura cooper from the mliv team. it's not a huge economy, but they did bring us bjork. ,celand is now cutting as well and emergency rates cut -- an emergency rate cut down to 2.25%. i don't think it matters too much to the global economy what the central bank rate is. the interesting thing here is you are starting to see more dominoes fall. does this look more to you like
coordinated action from central banks around the world? >> that is certainly the signal we are seeing with the bank of england following this aggressive cut from the fed. what was interesting about the move was it was not necessarily the cut, because market pricing is pointing to fairly even odds. it really was a question of when that would occur today. really, it was the targeted measures towards the small and medium-sized businesses. it does put pressure on the ecb to really surprise tomorrow. thistations going into where that the ecb would cut by 10 basis points. but after the move today and the fed, this does put significant pressure on the ecb to have its own whatever it takes moment tomorrow.
matt: right, the 10 basis points is little. cuts could beate more detrimental to the ecb and the economy. that are other measures some want to see. it to look expect like in the hands of christine lagarde? >> it's very difficult to say what that could actually be. certainly, it has to come from the fiscal stimulus i. ,e look at the budget later that's expected to be a significant package of measures. we had italy ramping up its government spending. whenever we see anything from germany, it's going to have to come from the fiscal stimulus side. we may be are going to have to
see an expansion of qe or further targeted measures to those businesses. channels trying all with that while they wait for some kind of fiscal stimulus measures to be more impactful in this current context. anna: laura, thank you very much. also, christopher thiel. both stay with us to continue this conversation. we have talked a lot about cooperation between central banks. i wonder if it's cooperation that matters. this will be the focus a lot here in the u.k. because we are waiting for a budget. before that, we get a press conference at the bank of england. carney and andrew bailey are expected to both be in attendance.
past start of the equity trading day. tradingsee where we are across european equity markets, getting that confidence boost. youre going to be bringing that press conference. let's get a bloomberg business flash for you as we gear up for more. >> jp morgan is warning the coronavirus may worsen u.s. treasuries. they say it could be slugged with billions worth of u.s. government debt, posing a challenge to a vital part of the financial system. an asset management unit is being created for other
alternative assets. the french insurer will divide its business into two units. the latter will bring together structured finance. this news tips this troubled hospital operator into a full-blown scandal. they are trying to establish debt, but since some of the money may have been used for unauthorized purchases. that is your bloomberg business flash. matt, anna? thank you very much, laura. christopher thiel and laura cooper still with us. christopher, let me come back to you. we have seen the bank of england acting here. what are we expecting that could really make a difference?
atsical actors are looking what they can do from one side of the virus to the other. during times like this where --re is uncertainty think uncertainty in the case of the virus, the u.s. economy was very strong as of two weeks ago. i don't think that has changed. matt, i think the bazooka it was fired over the weekend. of oillapse in the price is hugely positive for global growth, especially for countries that rely on the importation of oil. that is the stimulus there and then for the majority of europe. the ecb might cut, but it's not much. the longer oil prices kent state
down here is hugely stimulative. if we get beyond the uncertainties of the virus, the environment for risk assets, given they've just had a healthy correction, is quite positive. matt: i was thinking this morning, so many people are biting their nails over the worried that the cartel has fallen apart and the prices are artificially higher. least be rooting for free market solutions in this industry and this is one handed to us on a silver platter. do you aim your investments at regions that need to import oil? do you aim your investment at companies that are going to do better when the price of oil is lower? >> yes.
we have been shifting exposure to areas that import oil. looking at saudi reserves versus russian reserves, they can both play this game for a time. politically, they don't have to worry about going to the polls. but this is a gift when it is badly needed. certainly in the aviation space. the price of jet fuel will come down as a result of this and people will start flying. of ayou are in the midst virus-led shutdown, it does not feel that way. anna: christopher, thank you so much. christopher thiel stays with us a little bit longer. we are live in westminster
tilting up our coverage of the budget. we are going to get further into the bank of england conversation shortly. we will also bring you stocks on the move, including barclays and other english lenders after the bank of england cut rates to a quarter of 1%. the market is focusing on the stimulative effects might focus on the economy and ability of lending out. will return to that conversation around the u.k. next. this is bloomberg. ♪
about what business makes of what we have seen from the bank of england this morning. i am joined here by adam marshall, who joins me from the british chamber of commerce. thank you so much for joining us this morning. let's start with the big move this morning a new term funding scheme for small and medium enterprises to try and bridge them through the uncertainty coronavirus will bring to the economy. what is your initial response? >> i think businesses will welcome the fact the bank of england has taken decisive action. , but onelicate moment where we don't yet know the potential impact of businesses around the u.k.. we are hearing a lot of anecdotal influences, but we still don't have the hard data we need to understand how
widespread that impact is. early andk going helping business cash flow is really important. anna: they say this could provide more than 100 million pounds. it's actually going to come over andyears -- over four years will be lent at close to base rates. thing that kind of you would expect the bank of england to do? is there anything missing from that list the bank of england is doing? adam: i think it is the right set of policy measures. what we need to see our financial institutions making sure those decisions translate into real support for businesses. groups whoses of facilities might be coming up for review or have credit lines
they need to adjust. this is the kind of stuff that matters on the ground. we need to make sure the policy decision actually gets through to those firms. whether the policy decisions make their way to key handlers and banks. what else are you looking for from the chancellor later today? we've heard from the bank of england. what can the chancellors do? adam: they have got to start to tackle the upfront costs of doing business in the u.k.. you have heard a lot about corporation tax rates, but businesses have to make a profit first. we want to see action on business rates and property taxes. raises 30 billions a year for the treasury and has a huge
impact on our town and city centers. cutting those upfront costs is one of the biggest signals chancellor could send today to help businesses. anna: so you are focused on the longer-term picture. but in the short term, allowing companies to be late and that sort of thing. that something members are telling you they need, or do they not know what they need yet? adam: because cash flow is such an important issue, the more flexibility, the better. we have lobbied for revenues to thatment arrangements helped hundreds of thousands of businesses with their cash flow. bills,more time to pay employment taxes, and corporation tax bills is one of the things that helped most businesses weekly -- quickly.
anna: what will you be watching for in infrastructure? this has been talked about for a long time by boris and his governments.-- what will be the game changer? we want to see the amount of infrastructure start to increase quickly. we know we have a deficit on our road and rail network. we know our broadband and mobile productivity is not as good, and of course, we need to build more houses in the meta-kingdom -- united kingdom. is reason we are so focused because this sticks to the economy for years to come. it would be with us for a while. anna: thank you mutt -- thank
matt: we have breaking news from the ecb. christine lagarde is saying europe risks a 2008 style crisis because of the coronavirus. she told eu leaders yesterday that urgent action is needed now. she told leaders that the ecb is looking at all of its policy tools. she warns the leaders that there will be -- could be a major economic shock due to the coronavirus. this all leaves open the question, anna, what are the policy tools the ecb will use?
an f people have warned there could be a crisis dues the enough people have warned there could be a crisis do -- due to the coronavirus. so what are they going to bring to the table? a ratejust talking about cut or extraordinary measures beyond? now, kennedy joins us bloomberg's associate editor for economics out of london. simon, what will the ecb be able to do here? simon: that remains to be seen. policymakers will make their decision on thursday and there is pressure already to take a multifaceted approach to this
crisis. we saw something for the bank of england today. the bank of england might serve as a model. there was quite a debate about whether they could cut rates. in the city seems behind a rate cut tomorrow. they could possibly raise quantitative easing or take steps in an attempt to make sure the companies that are potentially taking a financial hit can access funding and continue to be supported. so there are a range of tools the ecb can put into action tomorrow. they are for policymakers to decide and announce.
anna: that could be a template are not just reducing monetary policy but the other suite of policies. it's interesting. detail is available for 12 months. this being talked about. our other banks going to take this offer, that will be the real test, i suppose. simon: absolutely. that leaves the burden on the banks to do this, like the bank of england. cut comingarge rate out of the normal meeting schedule which shows policymakers fighting this crisis in size. you then see a series of targeted masters age at
companies that feel a backlash from the virus and try to nudge back lending i capital buffers. -- lending and capital buffers. you see this hours before a u.k. budget and we will probably have to discover more in the hours ahead. it smacks of some form of coordination between fiscal and monetary decisions. you definitely have not seen that in the u.s., with donald trump continuing to criticize the fed. again, this sense of court nation from the u.k. side is an important one for investors. lagarde is saying it is important for coordination and governments to be working on this put perhaps the intensity
central banks have. matt: which is not the feeling we get here in berlin. , pretty muchknow everybody on the call yesterday was saying this could be a serious crisis. but nobody has come out with any berlins, and certainly, is the most economically prepared to do some spending. but it doesn't feel like it is ready to act. is it going to be too little, too late? simon: that is certainly the risk. germanyreporting that would be unwilling to walk away from its traditional embrace of austerity until it really feels an economic need. then the italian premier is on
the doorstep of germany, requesting help from the ecb. christine lagarde's message last night was that there is a risk atshock but can be countered economic policymaking needs to get on the case. simon, ours, executive editor for economics joining us with the latest on the ecb and the comparisons christine lagarde is making to the financial crisis. is cutting england interest rates in its first emergency move since the financial races, announcing measures to keep credit flowing. joining us now is simon french. good to speak to you this morning. we have seen an aggressive rate cut from the bank of england, but more importantly, a new
lending scheme for small and medium-sized enterprises. what difference will this make on the ground? >> i think you are right to pick up on the glamorous part of the package in terms of funding schemes, which potentially will release up to 290 million pounds worth of additional lending. what is key is how the various letters of the bank of england engage with retail banks to ensure that mechanism happens. few of us borrow directly from the bank of england and is about those banks ensuring that companies in need of credit actually get the support they need. i wonder what you take from the bloomberg scoop just
now that christine lagarde was warning leaders around europe of the possibility of a 2008 level crisis here? going to be able to convince leaders to start opening the fiscal taps, and is the ecb going to do anything to help tomorrow? simon: i think christine lagarde will be looking quite jealously at the actions mark carney has been able to make and the coordination with the budget that is coming up. that powerful message of the coordination of fiscal and monetary policy, the initial reaction has been positive. templateperceived as a , that strengthens christine lagarde's hand in negotiations. country that to a
has not been an exemplar of coordinated policymaking to one that has responded in an ambitious way to this crisis. it is more strength to what the bank and treasury will do at lunchtime. anna: interesting to see these moves and this international coordination. let me ask you about the budget. from thelready heard bank of england quite a lot this morning, but what other measures could we see soon pull out of the bags to help support businesses? could it be about requiring them not to pay taxes quite so promptly? what sort of measures do you think the treasury will have been considering here? >> forbearance for revenue and customs.
tax authority will almost inevitably be part of the package. what won't generate an awful lot of headlines but will be the most single important aspect of how the chancellor in the u.k. will try to fund businesses struggling with cash flows. i'm talking about industries like pensions, revenue customs, the architecture state. the nhs and local health services, clearly. those are organizations that, if well supported can make quite a practical difference on the ground. it is quite a micro challenge that could turn into a macro moment, but that's what i would want to see. matt: simon, do you believe
central banks and governments could stop a global recession this year? simon: our base case is still that we avoid a global recession. to the that is down actions of governments and central banks, i would be more skeptical. there is disruption, which is isl handled, and there evidence in china that really effective social distancing can get a hold china. society will take a short-term hit, but long-term damage will be curtailed. fromt isn't going to be 850 basis point cut or big policy announcements. anna: simon, thank you very much.
the bank of england needs to prepare for a demand and supply shock to the u.k. economy. simon, thank you very much. therefrench joining us after that surprise interest rate cut. with that in mind, bloomberg will bring you that bank of england news conference after the rate cut at the top of the next hour. press.m., we get the conference at the bank of england with mark carney and andrew bailey both expected to attend. this is bloomberg. ♪
matt: welcome back to the european open. we are looking at a market that is moving fast and furious on emergency rate cuts from the bank of england this morning. that on a bloomberg scoop shows christine lagarde warned european leaders of a 2008 level crisis. optimism that the ecb is going to get behind the --mulus efforts as well as
and to in governments from paris -- and bring in governments from paris to madrid. we see stocks gaining after christine lagarde warned about the urgency of the situation. certainly, the italian premier already knew and is looking to boost stimulus. you are looking at global coordinated action, at least the beginning of it, in order to stem the economic damage. with that in mind, let's get first word news in london. >> the bank of england has cut rates by 50 basis points. policy committee voted unanimously to reduce the rate. the central bank is also introducing a new scheme with incentives for small and medium businesses.
adidas says the coronavirus will cut profits in china half $1 billion. the sportswear maker says it cannot estimate full-year impacts, saying sales in china slumped 80% last month and recoveries is coming, albeit slowly. >> if you are spending two weeks in an apartment, your first thought is not a pair of sneakers, and fy recovery take longer. but the fundamentals are unchanged in this stage. set to double the amount of fiscal stimulus to tackle the coronavirus, increasing the amount of money for the fourth time in a month. at as muchw looking as 16 billion euros of additional spending. global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
anna, matt? anna: thanks very much. largest assetx managers with more than $20 trillion of assets under management have marked the worst performance in their industry s.en it comes to esg report vanguard -- blackrock, vanguard, and state street fit in the d and e band. for more, we are joined by catherine from share action. interesting report. talk hereture from we about central banks and global action, and i wonder if the cash behinde esg esg has been sucked away, given
the understandably short-term focus we have to have? >> sure. probably not. everyone is talking about whether this will be a long-term shop short-term. my sense is that esg is here to stay. is anronavirus interesting example of how a health issue can blow up global markets for a time. no reason why this will fundamentally derail the esp program. -- esg program. matt: hopefully this is short-term, because if it extends, you have to be worried that investors will care about --ernments or social issues won't care about governments or social issues. down, price of oil goes does it increase the risk that
we pay less attention to the size of our carbon footprint? that is a potential challenge. , we are stillme seeing price cuts in renewables. probably that oil is more comparable now, but i think the long-term trend is very strong, clear, and i would be surprised to see large asset managers and leading players taking their eye off the ball. , pension funds are long-term players and are seeing fromg, strong demand citizens whose pensions they look after for esg and responsible risk management. ,hether oil or the coronavirus these are ultimately clearly --
ultimately, clearly, esg issues. our analysis we published and you opened with -- anna: i wanted to ask you about the analysis. somes fairly critical of of those big money managers who were passive in nature. is that a big criticism? >> the criticism is that, overall those firms are not allocating serious resources or energy for board-level engagement with the agenda compared some of the other large global managers. particularly, we are seeing strong performance in europe. we ranked the largest fund managers globally. the third-best is legal and general, which is a large passive player, proving there's
no reason the big passives are necessarily poor performers, but it's certainly true to say that the major players have come out quite poorly in this analysis. i think all of them are focusing hard on operations. this analysis will be good operation -- ammunition for clients who can now ask tough questions about the relative performance of these asset managers compared to their european peers, that are frankly doing much stronger and better performances. matt: clearly, you are not taking your eye off the ball in your work will hopefully make the world a better place for the next generation. catherine howard is the ceo at ion, keeping tabs on ceos and their responsibilities.
matt: welcome back to bloomberg markets. we are almost one hour into the session and looking at markets at a high after a bloomberg story showed the ecb is ready to act, at least it seems so. christine lagarde told leaders of countries around europe that we could be looking at a 2008 level crisis here and that she is looking at the tools the central bank has to use and encouraging leaders to use their own fiscal tools to fight the economic effects of the coronavirus. suppose the significance of that story is christine lagarde is underlining just how serious the situation is. clearly, it has raised expectations in markets that the ecb and banks will follow hot on their heels and do something.
cuts rates by 50 basis points in an emergency move to tackle the economic hit by the coronavirus. focus shifts to the ecb tomorrow. doubling stimulus to tackle the outbreak, but president trump ails to appear at conference. no details on his economic package. good morning, good afternoon, good evening. this is "bloomberg surveillance." i am francine lacqua. tom, two hours ago it was about the bank of england, governor carney just sitting down with the new bank of england governor to his left. i think we should listen in. thank you very much. good morning, everyone. the front of combating the challenges of covid-19 comprises the