LIVE MARKETS-"Put that into your equity risk premia models and smoke it!"

* Europe falls on Trump's travel ban * Travel and leisure down 9% * ECB stimulus plan disappoint * Dow down over 8%, S&P 500 over 7% Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London. "PUT THAT INTO YOUR EQUITY RISK PREMIA MODELS AND SMOKE IT!" (1513 GMT) At current levels, there could a reasonable case be made to find sovereign bond yields quite low and the valuation of stocks on the cheap side. But not for SocGen's perma bear Albert Edwards! "Let me make one thing clear: I do not believe government bonds are expensive or that equities are cheap. And if one more person tells me the equity risk premium is very high and equities are priced for recession, I will scream", he wrote in his latest note. "In the Ice Age, with the threat of outright deflation, both bond yields and PEs will be rock-bottom low", he adds, giving a target of -1% on the U.S. 10-year yield and a PE of around 8x. "Put that into your equity risk premia models and smoke it," he tells bulls. (Julien Ponthus) ***** WANTED: "AMBITIOUS AND COORDINATED FISCAL RESPONSE" (1336 GMT) Lagarde's opening speech made clear that EU governments now need to step up with big spending plans if this crisis is to be tackled. Some would argue that a rate cut would have helped. In the meantime, the STOXX 600 is falling 9.5%!!! Here's our news flash: 12-Mar-2020 13:32:56 - LAGARDE SAYS AMBITIOUS, COORDINATED FISCALY POLICY RESPONSE NEEDED (Julien Ponthus) ***** WORST FALL EVER FOR EUROPE (1323 GMT) The ECB statement sent the STOXX 600 to -8.1%, which would be the worst day ever for European stocks should that level be met at the close. As you can see below, this would be unprecedented: (Julien Ponthus) ***** THAT ECB STATEMENT DIDN'T GO WELL, DID IT! (1306GMT) It took a few minutes for the markets to decide what to do with the ECB statement, which promised fresh liquidity but fell short of cutting rates. About 30 minutes ahead of the (everyone now hopes she really is) wise owl presser, the jury has given its verdict and it's a clear negative, even for euro zone banks which were expected to benefit if rates were left unchanged. Basically, European benchmarks are now 1% to 2% lower than they were before the statement. Funny to note that while most of the ECB statement has been amended to detail the stimulus package, one part hasn't changed much. Yep, rates... (Julien Ponthus) ***** THIS IS 2008-LIKE SCARY, EUROPE'S FEAR INDEX SHOWS (1222 GMT) It doesn't take an in-depth analysis to get what Europe's fear index is telling us: this coronavirus crisis is scary. At 64, today's high, the volatility gauge of European blue chips is at its highest since the financial crisis. It's still below its 87.8 record hit on October 2008 but it sure seems to be heading towards there. Look at this chart, speaks for itself: (Julien Ponthus) ***** HAS GOLD CAUGHT THE VIRUS AS WELL? (1212 GMT) Following bitcoin's cratering, gold (the real safe haven?) is selling off as well. Is it the sell everything and go home approach? (Thyagaraju Adinarayan) ***** HAS BITCOIN CAUGHT CORONAVIRUS? (1153 GMT) The crypto currency is in freefall, down 27% and on course for its biggest fall since 2013. So much for a safe haven uh? "We recognise that it's a speculative asset, and it's been hard to escape its extreme short-term correlations with equities over the last few weeks," said Thomas Puech, partner at London-based crypto exchange Enigma Securities. "It had been holding up relatively well considering that, but we unfortunately hit a breaking point today." It's not quite clear what exactly happened to trigger the crypto's fall so fast: (Tom Wilson with Julien Ponthus) ***** DISASTER MOVIE SCENARIO: "TOTAL LOSS OF REVENUE" While it's impossible to quantify the economic damage the coronavirus is about to unleash on Europe, it's fairly easy for companies to imagine a worst case scenario. For Cineworld, it's pretty straightforward as it would materialise in "a total loss of revenue across the enlarged estate for between one and three months". The group believes that disaster movie scenario is unlikely but the consequences would be brutal: "Under the specific downside scenario, however, of the Group losing the equivalent of between two and three months’ total revenue across the entire estate there is a risk of breaching the Group’s financial covenants, unless a waiver agreement is reached with the required majority of lenders within the going concern period". Investors seem to be taking the doom scenario seriously with the share price falling close to 50%! Check out their press release here: https://bit.ly/3aRhZBo (Julien Ponthus) ***** A HERD OF ANGRY GRIZZLY BEARS (0955 GMT) The commonly accepted definition for a bear market is a 20% fall from a recent peak. That's done, we all pretty much have that t-shirt on by now with the STOXX down c. 28%. But what do you call a 30% collapse? A grizzly bear market? And what about a 40% decline? An angry grizzly bear market? Looking at some of the European sectors, there is actually a herd of them: European sector From 2020 peak Oil and gas -42% Travel and leisure -40% Autos and parts -37% Banks -36% Basic Materials -36% Financial services -30% Insurance -32% Industrial goods -30% Media -30% Tech -29% (Julien Ponthus) ***** OPENING SNAPSHOT: MORE PAIN FOR EUROPEAN AIRLINES (0846 GMT) As expected European stocks were down 6% at the open and the travel & leisure index was on free fall with big names such as Lufthansa, British Airways-owner IAG and Air France bleeding 11% to 13%. Including today's move, the STOXX travel & leisure index has shed a whopping 40% since Feb .19. Looking beyond airlines, Cineworld is the top faller across Europe with the stock sliding 27% after it said it could breach the terms of its existing debt arrangements under a worst case virus scenario. On the pan-European STOXX 600 index JUST ONE stock is in positive territory -- Pargesa Holding is up 3% after majority owner plans to take over the entire Swiss financial company (Thyagaraju Adinarayan) ****** ON OUR RADAR: BREXIT LOWS, AIRLINES (0743 GMT) The pan-European STOXX 600 and the UK's FTSE 100 indexes are likely to test June 2016 lows at the open if they open 5% or lower and oh boy, the Trump's travel ban is likely to send airline stocks into a tailspin. European stocks have lost more than 23% Feb. 19 as virus started spreading fast outside China and airlines have borne most of the brunt. Air France for instance has lost more than half of its value since mid-February. One trader expects Lufthansa and Air France to open down 10 to 15%. Meanwhile in corporate news, companies continue to come out with coronavirus warnings. WH Smith sees 40 million pound hit from virus and airport retailer Dufry said it is cutting jobs and guiding for a single-digit decrease in organic sales in 2020. (Thyagaraju Adinarayan) ***** WHOA! A 6% DROP... Looks like the extreme up-and-down swings are here to stay! European stocks are heading for an ugly open with futures pointing to a 5% to 6% drop for all major indexes as Trump's travel ban announcement and lack of substantive stimulus measures unnerved investors. "These large day-to-day swings reflect potentially extreme scenarios, in both directions, for the economy and for markets," Morgan Stanley recently wrote in a note. (Thyagaraju Adinarayan) ***** CARNAGE: TRAVEL BAN SHOCK, STIMULUS DISAPPOINTMENT (0640 GMT) Europe is likely to open deep in red as investors are shocked by Trump's travel ban announcement, while disappointed by the measures taken to combat the economic damage from the virus. U.S. stock futures slump 4% on top of the 5% selloff in cash markets on Wednesday. The virus has so far wiped nearly $14 trillion off global stocks in less than two months. "The announcement of a month-long travel ban on EU citizens to the US (plus a ‘reconsider travel’ advisory for US citizens globally) is a new stage in the coronavirus impacts," said Chris Bailey, European strategist for Raymond James. The World Health Organisation yesterday declared COVID-19 outbreak a pandemic. Financial spreadbetters IG expect London's FTSE to open 347 points lower at 5,529, Frankfurt's DAX to open 667 points lower at 9,771 and Paris' CAC to open 303 points lower at 4,307. After the Fed, BoE, Canada and a bunch of other central bank rate cuts, it's time for the ECB to act. The central bank's policy meeting is later today and it's all but certain to unveil new stimulus measures, including new, ultra-cheap loans for banks to pass onto small and medium-sized firms. (Thyagaraju Adinarayan) ***** (Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)