>> good morning from bloomberg's european headquarters in the city of london, i am nejra cehic. these are today's top stories. returns.

global stocks return as investors cite concerns over the spread of the deadly virus from china. the yuan weekends at the most in three months -- weakens the most in three months. we will hear from the ceo of this company, sergio ermotti, in thre a few hours. theyrench president says will work with the u.s. on an agreement to avoid tariff escalation. as president trump's impeachment trial begins he will address the world economic forum, in a davos today. we will bring you the speech across bloomberg tv and radio. ♪ welcome to daybreak europe. let's get to the numbers from ubs. it was a beat on a fourth-quarter net income. investors are likely to focus on earnings per you

share missed its profitability and also cut its midterm goals. fourth quarter while management outflows came in at $4.7 billion. the estimate was for .nflows and ubs dropping its target for the wealth management business. what the numbers highlight is that they are underscoring the challenge for the new wealth qbalgement cohead, i khan, as he looks to turn around .he lenders business these numbers might be causing concern. there is a tea light blog that you can follow. a lot of commentary on their. one of our reporter saying that over all the pictures negative. the numbers are disappointing, the targets are lower, very little in this quarterly report that could bode well for these shares. speaking of the broader market,

we are seeing a lot of risk off in today's sessionp the msci asia pacific index is lowerm led by hong kong sharesm the hang seng down more than 2%. also a number of luxury and trouble stocks down. the concern is the spread of the virus that has already seen some toths and has been linked humans. at this point, we are seeing a weakness in the yuan, strength in the yen. to get a sense of how broad the risk-off is, the 10 year treasury yield has dropped as well, as stocks were closed yesterday for martin luther king day. the 10 year treasury yield and also some weakness in u.s. futures. european futures on the back foot as well after losses in europe as well. barrel,low $65 a trading in the game that we saw yesterday on the supply risk in libya and iraq. to get back to our top story, the outbreak of the deadly virus

originating in china. reported thatve this respiratory illness has affected 15 health workers, with one critically ill. the world health organization has confirmed people-people transmission, and raised concerns about the possible spread of the vilest, just as millions of people prepare to travel for the lunar new year. meanwhile, president emmanuel macron and donald trump may have agreed to a truce in their dispute over taxes. that means neither fronts on the u.s. will impose inactive tariffs this year. the french president said in a tweet -- great discussion with donald trump we will work together on an agreement to escalation.f president trump replied "excellent," to the post. the i.m.f. is predicting the world economy will strengthen in 2020 but at a slightly weaker pace than anticipated, due to threats in the middle east.

one analyst told bloomberg what is driving her forecast. >> the biggest explanation for the fairly small cut that would have is .1% for 2019-2020, and it comes from india. we had significant revisions to growth for india both in 2019 and 2020, and it explains a vast majority of the downward reduction. >> what are the downside risks it to your projection and how likely are we are to see that the trade issue remains important. . >> we have had important reviews. he could have more transit between the u.s. and the european union, u.s.-china trade tensions could return. in addition to those, political risks are an important factor that has been raising. and fairly widespread risk in other countries. haslinda: there seems to be euphoria in the markets. the s&p keeps testing new highs. is there a risk that investors

could be disappointed in the months ahead? guest: the euphoria from the market comes from the low interest rate environment. what is driving up the stock prices, very low interest rates is probably the number one factor. the one change we have seen is that three months ago it looked like earnings forecasts or more pessimistic. we are seeing a little more optimism again on the earnings side. we do flag that there are some markets slightly overvalued and some more substantially. if there were a reversal in financial conditions, that could have an impact. right now, we see signs of stabilization in the global economy and for the interest rate environment to stay the same. haslinda: there has been a call for governments to top fiscal measures to drive growth going forward. do you see 2020 being the year where fiscal measures will be governments?y

guest:, governments have started implementing fiscal measures ones that have space. the question is how much they should be doing. stabilizing,nt is but there are advanced economies around the world. that need to raise potential growth the way we look at it is that you are able to borrow at negative interest rates, and you have projects that will give you a positive return, this might be the time to do it, in a cost-benefit analysis, not a keynesian argument. that is an argument we still make. we think it is good for countries to prepare, have projects in the pipeline, so if and when there will be a more severe slowdown, if not saying that there will be, but if there was a slowdown, then they can hit the ground running faster than it was in the past. imf chief economist there, speaking to bloomberg at davos. to do we are asking the question for davos on mliv.

how will the 2020 u.s. elections affect markets? which out to us and the mliv tv on your bloomberg. coming up, don't miss our interviews with top executives microsoft,he ceos of blackstone and citigroup and we speak to the state bank of india chairman, the reserve bank governor and hong kong chief executive carrie lam, here on bloomberg tv and radio. approach. two-pronged e.u. commissioner president ursula von der leyen tells bloomberg that au needs more power to back their policy. more on that next. this is bloomberg. ♪

>> this is bloomberg daybreak year in europe, i am nejra cehic. au commission president ursula von der leyen has told bloomberg the european union has to be prepared to back up its

diplomacy with forks as ministers discussed sending troops to libya. she spoke to francine lacqua exclusively in davos and also addressed the e.u. judging relationship with the u.s.. >> the conference yesterday in berlin was certainly an important step forward because we had around the table not only the five permanent members of the security council, but also the free unions, the arab league, the african union and the european union, and other crucial players. they agreed to keep the cease-fire, to go into a process where we have a 5-5 military and toee negotiation, have a structured process to work for reconciliation, reconstruction, and finding political solution. francine: for europe to have a bigger voice, is it time that army? gets an >> the european union started to build up the european defense in union and the armed forces are put together by the member

states, of course, it is important to have a lot of theability between different forces, a common system of procurement, which we are building up now. and lake e.u. needs to have a hard power but always together with diplomacy and crisis prevention. only that together is comprehensive security. francine: what are you expecting from donald trump tomorrow as he addresses the conference. ms. von der leyen: i am glad he is coming. it is good to be in dialogue. that is what davos is there for. i am interested in technology topics as well as trade topics. i am curious to hear. francine: the figure could be terrorists -- do you think there could be tariffs filed against france in europe from the u.s.?

ms. von der leyen: i think we should sit down and negotiate, which we certainly will do. we have so much in common. so many fields where we should work together to improve things. is important not only to talk about the trade topics but also about the topics we have, interests in. nejra: that was our exclusive interview with menu au commission president at davos. let's stick with davos. now isa: joining me natixis investment manager, jean y.b . we have seen an increase in risk sentiment in the markets. we have treasuries and the yen up, the yuan the lowest since september. could this potentially be the reason why markets sell off, given the euphoria? jean: one has to look back over the past 12-18 months. the market has been very resilient. given where conditions are

today, it is difficult to see one particular event to really trigger or at least prognosticate on the ability of the event to ris trigger risk sentiment. right now we don't expect that. we think the risk-reward trade-off is skewed to the downside. but given to where we are in terms of monetary conditions, the visibility we have, growth may be slower but it is still growth, and it is right now, most regions or major economies are forecasting growth for 2020. but we are not looking at a recession anytime soon, anyway, that is what we think. geopolitics has been mainly the trigger event that could be seen as the one that could shake up sentiment, and we have had many geopolitical considerations over the past several months, and the market has shocked them off. haslinda: but if you take a look at our experience with sars, that really impacted markets

globally. what will it take for markets to rethink strategy in asia and their investment in the region? jean: if i knew that -- i think right now, one particular small event that is isolated does not seem it will have your potential -- it will have the potential to derail the markets. from my perspective, what could is a radical change in monetary policy, be it on the back of external eventn that could trigger disruptions. right now we have been talking the china-u.s. trade deal, phase one, as an appeasement in the trade environment. maybe it is just a pause. there will be other, i think, discussions, other mini trade --ls, but i think it is the right now the train is only one way. that could also overtime affect mobile growth and therefore, market sentiment.

but right now in 2020, given the environment and visibility we have, i don't see any specific cause of could trigger massive corrections. that could happen. there risk is due to the downside given where valuations are. they are. elevated, a bit somewhat less elevated in european markets and asia than they are in the u.s., but not completely out of sync with the underlying economic fundamentals. haslinda: your business has a very unique model, a network of autonomous boutiques. one of your have affiliates, saw a rash due to bonds. since that incident, are you looking at tightening risk controls? what are you looking at doing? announced some measures that could enhance our risk controls both at the level withe group as a whole and

three affiliates. that being said, if i want to go back to h2o for a second, the promise of liquidity was outflows.ite massive since then, there have been inflows coming back to h2o and performance has been good. i will also observed that as you said, our model is unique or at least very differentiated. what has happened at. h2o did not have any impact on the rest of our business. since then, business has been very good. haslinda: should h2o have been allowed to make those investments? jean: this is part of the europe, where the sits toor is allowing u have a pocket of investments in nonlisted assets, i should say. perhaps because the regulator feels that money should go into situations where there can be a

development of the economy. haslinda: you are doing an audit of h2o. what has been found so far? jean: we will not come at that, they are still working on the audit. haslinda: when do you expect it to be completed? jean: shortly. this is something that is really for internal purposes, not for the public. announcedtioned, we earlier in november, measures designed to address some of the lessons learned from that episode. haslinda: does this autonomous model make it easier to make acquisitions? clear that some teams hit the glass ceiling at some point. benefits ofe the our model where the retainer their entrepreneurial spirit, their brand, where they are able to be entrepreneurial in many respects, yet have the benefit of scale through our centralized distribution, through our provision of seed and sponsor money to launch new products,

our ability to support them in terms of communications, hr, and even with mergers & acquisitions, to bring new teams on. . . our model is very selective lots of teams are knocking on our door. we have the of blue to really be selective and bring into the group affiliates to which we can bring something and which bring something to the group. we are not private equity and asset management. haslinda: fair to say you are looking at acquisitions? jean: as always. haslinda: where, what assets? jean: we have made acquisitions recently, or to seed new money, new teams. areas where we felt we could be more present. that is private debt within the ago.t, a year and a half that was in australia two years seeding and asset management which really brought expertise.p so we want to expand on areas

where we have shortcomings, or areas which are very key for our clients, not to play in the private asset space given where yields are, and given the visibility we have on the fact that yields are likely to remain low for a long. ean raby, merci. you.to nejra: coming up, we bring you president donald trump's keynote speech at davos at 10:30 a.m. london time. japan took a better view on the economy today. but how can group strengthened when they say prices will weaken? more on that next. this is bloomberg. ♪ next. this is bloomberg. ♪

♪ >> this is bloomberg daybreak: europe. i am nejra cehic in london. the bank of japan kept policy

unchanged and took a broader view of the economy by raising projections. at the same time, it cut its inflation outlook. bloomberg's annmarie hordern is here with the bloomberg chart that matters. annmarie: they raised their growth projections. a lot of that to do with the fact that shinzo abe unveiled a $120 billion stimulus package. but trimming the inflation forecast, making this 2% goal the boj has as their target ever elusive. economists are scratching your heads and asking the question how do you have growth strengthen when at the same time, prices weaken? the former head of the boj statistics division. he says even their 2021 target of 1.4%, he says it is still so much weak for the bank of japan given that we've had years of massive easing. he says it might be time for them to start rethinking the price target.

haslinda: annmarie hordern, thank you so much. now, back to davos where the diversity of views in 2020 will be thrown into sharp relief, as president donald trump and climate change campaigner greta thunberg compete for the spotlight. least 119 billionaires meet in switzerland this week for their annual pilgrimage to the alps. they appear on the guest list, 3000 names representing the roughly 117 countries for the world economic forum in davos. our correspondent joins us. it will be great to see you. donald versus greta thunberg. who are the candidates more excited to hear from? guest: the whole thing about this setup is that greta is speaking before and after president trump. so you could say she has advantage. how are people likely to respond to president trump? on the one hand, everything he has done in said goes against what is happening here in davos

in terms of what they are trying dialogue.n terms of what are they trying to do? they are trying to say that companies should be more concerned about stakeholders other than their shareholders, they should be thinking about inequality and climate change. that could lead to more government intervention to do things. remember, trump for the american economy has really lined up on government regulation. privately, i think a lot of davos goers will welcome his message, but outright come out what davos stands for this year does have some tension with trump's message. nejra: and 18% of the sessions this year, which is more than the previous year, will be dedicated to talking about climate change. not only that, the global report for climate changes at. the top there have been a number of conversations from them on this topic already. how will this conversation thrown forward today?

guest: people have been responding very well to the climate change conversation, and i think it is because corporate executives feel powered to track changes in where they are investing. with that said, changes cannot come fast enough. greenpeace said that the executives and insurance companies, the banks at davos have $1.4 trillion exposure to fossil fuel companies. blackrock supporters say this is just step one, this is a 50-year journey. so while there are people who want to make change in davos, there is a world outside davos saying how fast is it moving? you can be sure that greta thunberg will be harsh on these executives today. sonali, we are seeing equities tumble and havens rising in asia based on this coronavirus. there has been confirmation of human to human transmission.

you could argue that after seven weeks of gains in equities, perhaps people were looking for an exit point. jean raby ceo of natixis investment said, one small isolated event does not have the potential to derail markets at this point. is this likely to cause concern among delegates today? sonali: it will definitely come up, especially because we have delegates from all over the world here. another question that is underpinning what you said, people were worried about this bull market, the short answer is yes. someone from guggenheim partners put out a note last night say that the market is a ponzi scheme fueled by central banks can lead he is worried about the sustainability of these asset prices in the longer term. nejra: thank you so much, great to have you with us with the diary. as she was saying, sustainability is one of the main themes this year. coming up, we speak to the chairman of the green party. coleader, robert habock.

i was talking about the market reaction to concerns around the spread of the coronavirus, the hang seng is leading losses in china. treasury markets were closed in the u.s. yesterday. you are seeing this revolver across assets, u.s. and european features are lower. meanwhile, the oil gains are fading in terms of supply risk. this is bloomberg. ♪ sometimes your small screen is your big screen.

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mira: good morning from bloomberg's european headquarters in the city of london, i am nejra cehic. this is daybreak europe, and i these other top stories. global stocks drop as investors side concerns over the spread of the coronavirus in china. the yuan weakens and havens rise. ubs misses its full-year profitability market and cuts midterm goals. we will hear from the ceo, hour. ermotti, at this president trump and a minor macron edge towards a

tariff truth. they say they will work together on an agreement to avoid tariff escalation. ♪ nejra: asian equity markets in the red. u.s. european features lower. 10 year yields back below the 1.80 handle. meanwhile, the yuan weaker and the yen strengthening. joining us to discuss in bloomberg, juliette saly in singapore and dani berger in london. great to see you both. it seems to be fear around the coronavirus leading this risk off tone in the markets. but after seven weeks of gains in asian equities, is this about people seeing an opportunity to sell, or is there a real concern about the wider impact of the virus? juliette: probably a bit of both.

cmc markets put out a note saying that markets seem to be underpriced for the threat of this writing, as we hear that it has gone human to human. look at some of the main indices being affected in asia. the macau gaming companies are down 4%, because if this is going human to human, you can imagine that there will be an s exodus of people going to macau. health care stocks which have been seeing a rise, the likes of malaysian glove makers, japanese mask makers, rising the past week or so, but the index in china is off about went 3%. we have been talking about the weakness in hong kong's market, doubly hit by the moody's downgraded. the hang seng volatility index also spiking. nejra: thank you so much, juliette. the consumer exposed sectors are differently taking a hit as well. ahead,sk assets take havens are rising. what have we been seeing in gold

prices? dani: gold is approaching a seven-year high. seems like it continues to be the asset investors flocked to commit part of it might be the norovirus and the risk there, but when you look at the other geopolitical risks that benefited gold like middle east tensions for example, those risks have faded. according to ubs, it is not just -- virus, it is negative that has caused the move to .etal the opportunity cost of not holding a yielding assets is lower. you are not missing is much by not holding these yielding assets and that makes gold more attractive. nejra: bloomberg's juliette saly and dani berger in london. thank you to both of you let's get the first word news with annabelle droulers in hong kong. annabelle: the global economy will grow this year but slow than expected, according to the themos it predicts growth of --

according to the i.m.f. the imf is cautiously optimistic and says risks are now less skewed to the downside. president trump and macron may have reached a truce over taxes. according to paris, neither france nor the u.s. will impose the punitive taxes this year, but the readout from washington ma was more muted. escalation of another trade war. reportsdia in china there are 15 state workers infected. after the world health organization confirmed person-to-person transmission of this sars-like virus. for people have died. seven years ago, the sars outbreak killed it hundred people senate majority. leader mitch mcconnell is planning a timeline for president trump's trial.

he plans to give them two days case.secute their the proposal allows the president's legal team to seek a quick dismissal of the charges. the trial is set to start today. global news, 24 hours a day, on air and on @quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. nejra:: thank you. over at the world economic forum in davos, this ceo gave his thoughts on portfolio diversification, and why he worries about illiquid assets. he sat down with bloomberg's sonali basak yesterday. >> if you sell, you have to hold something. for us, we would have to invest in something else whether that is cash or some physical something.r when we have a portfolio designed for long-term investing, we want to be generally deployed, but we want to be invested in a broad range of assets, assets that some may

perform well in a slower market, some may perform less well, but we have to diversify the portfolio. that is typically the strategy. sonali: diversified portfolio. you have been at the forefront investing.equity does it mean it is time to exit some of these positions when the market is so hot? mark: the trend toward private equity i think is still pretty robust. when we look at respected returns -- expected returns in asset classes and even risk-adjusted, private equity is still robust. to some extent american private equity, asian equity and european private equity is still a decent asset class to be invested in. what i continuously ring the alarm bell on is to not be too invested in illiquid assets. half of our portfolio is in illiquid assets. we are very comfortable with our

risk portfolio, but i do worry about the expansion of a lot of funds like ours in the land, and what you could see if there is a lurch down in the markets and people rely on the liquid things to sell. but if everyone is selling the same liquid things at the same .ime, suddenly it is not liquid so people have to be careful that they understand truly there positions, so that they can cope with that and still a their pensioners, the university or whatever else they need to be paying. nejra: that was canada pension plan investment board ceo mark machin in davos. europe's highest town, and the location of gathering of billionaires, anchors, economics and executives. this year's theme of the meeting is "stakeholders for a cohesive and sustainable world." francine lacqua is in davos for us. let's cross over to her.

francine: good morning. we are delighted to be here in davos, the second day we are here at the world economic forum, in 2020. the focus is on sustainability. look at the risk reports by the world economic forum, the five top risks are also climate change and sustainability. i am delighted to be joined at robert habock, the german green party coleader. thank you very much for giving us your time. this is your first davos. why are you here? robert: i actually grew up with the impression that in davos, all the people that are a part of the problem are meeting and gathering. now i am invited and, in the way, i'm one of them. so i am here to find out if something is changing, if they get a picture of what is happening in the world and maybe changing the strategy of the companies and the strategy of politics. francine: when you speak to chief executives, has anything changed? do protests matter, has greta

thunberg matter to the way they view the world? robert: at least some of them have children and they have the same discussions we have with our children. have to answer the same questions -- dad, what will you do to help us in the future? when i talked a company leaders, they very much talk about sustainability and changing the strategy of the company's. francine: do you think this is a moment here to stay? i don't know if you call it a movement or a conscience, but is there a danger that this is fashionable for a couple of years and then people forget about it? yes.t: people should worry about that, talks and talks and talks and then they go away and nothing has happened. in a way, we have to change the system. we don't have to fix the system, but we have to become aware that the external problems are a part of the interior system logic. we can change that.

i hope the talks in davos, i hope that is what they are about. ofncine: if you see some the european countries, some of the green parties are empowered. do you think that will happen in germany? robert: wework for that. we have been a part of the government in germany for 15 now. we are going strong in germany and we are prepared to take more responsibility. then, of course, not for the sake of it, but for the sake of changing politics. that means that ecological thinking, renewable energy, sustainability and politics, is system.the francine: if you were in charge, what kind of foreign policy for example, would you have? robert: foreign policy? francine: foreign policy? robert: you cannot divide foreign policy issues from ecological issues. a lot of problems in the world arise from struggle about water, new energy supplies and so on and so on. so this is maybe, on a general

basis, the main view we would have in mind. we would -- that would work for europe. i think we are the most pro-european party in germany, and we are not satisfied with the german government and what they are doing now. francine: critics sometimes say that you just have a single issue. the think you're being misunderstood as a green party? robert: definitely. traditione strongest of thinking ecologically, but we are not a single-issue party. we have broad knowledge in private policy and economics and interior security policy, but of course, we have this cliché that because we are the greens therefore, we are for the trees and for the weather. that is not true anymore. francine: how can you change that perception? do you think it is still a perception of voters? is there an avenue in european politics? robert: we have to be stronger than the others.

our narrative must be better than the other ones. combining other issues, interior issues and justice issues, european issues, foreign policy issues, other economics questions, this is the best idea to change the impression that we are a single-issue party. francine: many countries around the world are asking germany to spend more. the response from the german government is, we are doing quite a lot on climate change and on green bonds. are they doing enough? robert: know, they are not. actually, they do have a fiscal policy. we have to spend more. we are the ones, germany is the country who is saving all the money, and we have big needs in germany, and in europe, we are not spending enough. i know the discussion in the u.s. i am not a big fan of donald

trump but, the u.s. discussion is right, germany is not doing enough and is not spending enough solving the problems of the future. francine: so you need to spend on what, infrastructure? infrastructure. same discussion in the u.s. talking about the green new deal. this is what we're arguing for, spending more money, changing the system by spending more money in a new green infrastructure. francine: how is that playing out with voters? do they want to see more fiscal spending? robert: in germany, everyone is complaining about the internet is very slow, the trains are crowded and delayed, and we don't have enough renewable energy and so on and so on. the schools could be better. education could be better. we are not spending enough for scientific and education budgets. so there is a need in germany. -- still, there is this

say.hism, i would we have learned in the last 10 years of the best thing you can do is saving your money. angela merkel, with all due this.t, has taught people it would take some time to recognize that fiscal policy works in another way. francine: robert habock, thank you so much for joining us. the german green party coleader. we send it back to you, manus. manus: francine, thank you. i was watching your field and brand interview. cracking lines on the world. one other person with something to say on the world is sergio ermotti, he just delivered numbers, the third time the ubs ceo has reset the agenda and the goal post for the fourth quarter. $722 million. the market had forecasted 682. but they missed on profits, on midterm goals, reset the bandwidth for the target for 12% to 15%, down from 15%.

the have also seen an outflow of money. they missed on net new money, which was a target of 2% to 4% for this year. but that is no longer critically important. but these new targets are important. to that extent, sergio ermotti spoke to me about what they are doing, what needs to happen in the world to hit these new targets. what level of stress tests they have implemented, and the plan for change. sergio: if you look at the environment we have been operating in in 2019 and the results up to the third quarter, the fourth quarter, despite being our best fourth quarter , could not really reverse the trend of 2019. so if i look at the full year of 2019, i consider the results solid, considering the very challenging and mixed environment we have been operating in. in respect to the targets going

forward, if you look at what they are, our targets were set back in september, october of 2018, with a totally different expectation for example for rates, economic growth, and also for geopolitical uncertainty and how it would affect our clients. 2020, if youter look at what happened on all fronts, i think recalibrating the targets based on the fact and not upare down and the environment is more challenging, is an actual definition. now, the targets have been stress tested. we believe that even in very challenging environments, we can operate at 12%. in a more constructive environment, we can deliver a 12%, whicht1 of makes is already one of the best in the industry with returns on what we call deployable equity.

manus: what does it take to get towards that 15%? what needs to happen to achieve the upper bandwidth? sergio: i think when you look at ae upper band, we just need more normalized environment. we are not looking for huge headwinds. if i look at our view on the growth opportunity in wealth management, growing at 10% to returning of 12% on a look at it equity, more than the last seven years on average, if you continue to see our in personal and commercial banking and corporate banking, if you look at asset management, you can see that all transactions together with the fact that we are still managing the bank for more efficiency

both in terms of capital consumption and cost, you will get to the target of 15%. within wealthhat management, you are sticking to the 10% to 15% bandwidth. khan'st because of iqbal turnaround plan? is that why you stick with that profit target for growth? sergio: if you go back, the targets we set in 2018 for the 15% growth that we are reiterating today, they are just a reflection of the value and the position of our franchise. we are the only truly global wealth manager, and we have a reach in terms of footprint and capability that allows us to capture the wealth creation that we do expect over the next few years around the globe, particularly in asia. i think the need for clients to get advised will continue to be there no matter how technology

and how new competitors may challenge. so i think we have been working hard to the position the business and execute strategy in 2019. diqhe last quarter, tom an bal had finalized those plans, they had been implementing them, and right now we are in full execution and speed. i expect positive outcomes for the business. manus: we will dig into those in just a moment. i see that there is a net best there is outflows of $4.7 billion. you drop the net new money target for wealth management. talk me through that? sergio: first of all, as i always said in the past, we are not focusing on net new money in terms of quantity but quality. the volatility each quarter of net new money shouldn't be over emphasized. we are still at a very solid net

new money outcome for the year, particularly if you look at asia, where we had 9% growth, taking our client assets to 450 billion. going forward, we are definitely dropping the net new money target because, i would describe the situation we are in in terms of negative rates in euros, it is driving us to a paradigm shift. net new money will continue to be something we look at, that at the end of the day, we are very focused on growing our business and growing our profitability. manus: sergio ermotti joining me from his headquarters in zürich. nejra, good to see you, i missed you. 50 minutes without you, i never know what to do when you are not there. this is the third time in two years they have reset the agenda. he says there was a paradigm shift in, rates,, negative rates, in switzerland and in europe.

it is interesting that he says that this is about evolution and that the wealth management side of the business does not need a further radical shift or downside -- well, shift at the moment. nejra: yes, it was a really interesting interview. great to see you as well. resetting, i about was listening as he said that they are recalibrating the targets based on the fact that rates are down and not up. but when you asked him how they expect to reach the upper bound of those profitability targets, he talked about a more normalized environment. ok, that is the external environment, but what more are they doing internally? i know there has been all the work on iqbal khan and tom -- them, but izzy positive about that? manus: the context of that change, if you hop on to the terminal, you can see the rest of the headlines that came through from the rest of the conversation. no, we don't need a further shakeup. this is about implementation.

the concept is -- we know whether they will want to take risk were not, it will be manifest. apparently taking out the strip of management in the middle, it takes a client closer to the executive in terms of decision-making. that in theory means you extradite -- extradite transactions more quickly. he says management doesn't need -- wealth management doesn't need another shakeup. ,ecause just to remind us both they went without that shakeup in the investment bank in the third quarter. i think the cost was something like $100 million, is what we were expecting. v, it is allli there in terms of the lines. they are all there, the reporters, on the ubs team. that is not the only conversation from the world of banking. we had something yesterday from blackrock. we will host bank chiefs at the world economic forum in davos,

with bank of america, citigroup leaders joining us later today. you don't want to miss those conversations. that is the american side of the banking conversation. coming up, a deadly virus threatens to spread throughout asia and beyond, mounting concerns have prompted a flight from risk. strategists say it is alarming enough to cash out. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe," i am manus cranny in dubai. nejra: and i am nejra cehic in london. it is alarming enough, to cash out. here with your morning call is dani berger. dani: no question that the spread of this virus is concerning. now the question from markets is how much of an impact it will this have.

three of heard from a lot of strategists who say that the impact is big but it will be short-lived. at least that is what city strategists say. saying the impact will be on hong kong consumers. it will be significant and it quick. on the other side of things, we have heard others who think the impact will be more significant in terms of global markets. for example, td strategists think this could push treasury yields down nine basis points from where they are especially given the thin holiday trading and the general flight to safety. we heard from amber hill, a money manager, saying that this means investors should cash out before the lunar new year, avoid trouble and tech stocks in asia -- travel and tech stocks in asia, but generally, they should be cashing out. manus: it is all about the scale of this tragedy and how it unfolds. if you look at sars but epidemic

was 17 years ago, killing 800 people. hopefully escalation is not the word we use. thank you. nejra, it is all about davos. don't miss the interviews and top executives we have. blackstone, microsoft, who else? nejra: plus, we speak to the state bank of india chairman, the south african reserve bank governor, and hong kong chief executive carrie lam. this is bloomberg. ♪