♪ manus: good morning from dubai. it is "bloomberg daybreak: europe." nejra: these are today's top stories. global stocks regain ground as chinese officials say they are starting nationwide screening to tackle a deadly virus. we address the issue with hong kong chief executive carrie lam in davos. >> highly vigilant system. we learned from previous incidents and other infectious diseases that in order to bring the community together through -- to control any

infectious diseases, we have to be very vigilant. nejra: president trump says he leyen is aa von der tough negotiator but they will discuss a deal. >> we have china, usmca. both of them are progrowth. to use it a cliché, we have more bandwidth now to focus on europe. nejra: another big day at davos . we speak to the saudi and french finance ministers and don't miss a stellar lineup of executives, the ceos of coca-cola, bp, and morgan stanley all live. extendedhares climb in trade as overseas growth helps it offset a domestic slowdown. the company plans to boost spending by 20% this year. ♪

manus: a warm welcome to "bloomberg daybreak: europe." we are entering the eye of the reporting storm. afml, the maker of the machines that make us the chips, sales miss, $1.3 billion. the estimate -- $3.1 billion. the estimate was for $3.26 billion. they announced a three year share buyback program of up to 6 billion euros. the dividend is a beat for the full year. a new three-year buyback program of 6 billion euros. do you know what this ties back to for me? if we go back to what apple actually said, apple has onreased the chip orders strong iphone demand. there are all of these various pieces of the global economic

place coming into play. nejra: it was very much a story of the potential and future of 5g. ml, the other things we have been looking out for is how many of the latest lithography machines they expect to ship in 2020. the three year share buyback program might have -- might perhaps be taken positively by investors, even if first quarter net sales come in a little lighter, or sort of in the range of what was expected. manus? manus: i think it will be interesting to see whether the buyback trumps everything else. --la come look at this tesla, look at this. just up and over $100 million. yesterday's performance, up 7% and crashing through the $100 million dollar mark for the first time ever.

this is what is critically important. elon musk could be online for a payday of through hundred $46 million -- $346 million. they have upped their price on about $270 to $800. a little bit of a difference. for the rest of the markets, what's going to happen in oil? goldman sachs says the risk is a demand shock on the downside. if the coronavirus is similar to sars, that could knock a demand off the board and three dollars off the price. we have the strengthening in the yuan, as growth comes in at the fastest pace since the third quarter of 2017. nascent recovery. choose your superlative. nejra: that might be one of the things getting a little bit of a risk to risk assets today in terms of south korea. we definitely see u.s. and

european futures indicate recovery from a losses yesterday. asian shares gaining as well, but only a fraction. the 10 year yield stays below 1. 80 but edges up two basis points after dropping five yesterday. as an investor, you have got to saess if you compare this to , how bad-- sars could it get? ubs out with some interesting notes in terms of how china could be impacted this time, particularly with consumption a bigger part of the economy now and the services sector at risk. manus: i think they sort of draw those reminisces back to 2003. let's talk about davos. hong kong chief executive carrie lam spoke to bloomberg in the swiss alps. she was asked about the city's economic problems. l thatam: -- ms.lam:

they are there to support the company's it so we can save as possible.as ultimately, to take hong kong out of the economic difficulties requires, first of all, stability. possible. ofondly, early restoration law & order. thirdly is continued government investment in important sectors. for example, innovation and technology. we have done pretty well on this new sector, innovation and technology, and the last couple of years by investing 100 billion hong kong dollars to the hardware and software. these are the things we continue to do. >> what would make you dig deeper? it is not enough?

the economy is in recession and we have had a moody's downgrading hong kong. you must be concerned that more needs to be done. lam: we certainly agree that more needs to be done. more than a week ago, i announced a package of livelihood improvements. more retirement protection for elderly people and more support for nonskilled laborers. what more could be done in terms of the economy is to identify the strengths of hong kong and continue to take those sectors forward. for example, financial services has grown pretty well in 2019 despite the difficulties. we are expecting 20/20 not to be a bad year. continue to capitalize on the opening up and reform of the chinese economy. hong kong is a gateway to

mainland china. we have this international connectivity to bring enterprises also to the outside world -- mainland enterprises also to the outside world. nejra: world leaders, policymakers, and executives are gathering in davos to talk shop while tackling inequality and the future of globalization and climate change. dancine lacqua is in avos. >> i am joined by the ubs chairman, axel weber. axel weber, thank you so much for joining us. so early in the morning. you make us smarter about microeconomics. you had to roll back your targets yesterday. it is the third time in just a couple of years. what does that mean for your investors? are you worried it hurts your credibility? target onad a point

return on equity of 15%. it was an ambitious target. starting to see more clearly the road ahead. at the end of the too big to fail discussion in switzerland and given everything in the pipeline, you have to have a sense of realism prevail about the possibility of return you can have relative to relatively high cet requirements. we adjusted the range. we are not aiming at the lower part of that range. in a really bad world, we can get down to the 12%. normally, i think we would still look at the middle to the upper part of the range. >> why is it so difficult to get your cost to income ratio down? >> the retail part is exclusively in switzerland. our numbers in terms of cost

income ratio in the swiss bank are as good as everyone else's numbers on cost income ratio. wealth management is a business where you deal with billionaires, where you have on a gridisors related to their performance. it is much harder for a wealth manager and we are the number -- wealth manager, and we are the number one globally, to get costs down in this business. >> how do you expect the business to perform in the next 8-12 months? are shareholders coming up to you saying, what does it look like? axel: we did the strategic review already. we basically said we want to focus on wealth management. now, we have seen a draft of money going out during the entire transformation of the financial center. we have seen a lot of money come in as well. we now want to focus on efficiency and wealth management.

we want to maintain our number one position globally and build the market and really build that part. we are very focused on gaining market share in all of the markets we are in, in particular in the u.s., we want to build a business. i am optimistic we can do that. we get a lot of positive feedback by clients. the you look at davos, world of impact investing, green finance, we are among the dow jones industrial leaders in that area. that is producing a lot of inflow. >> can you compete with the american banks? axel: we cannot compete with the american banks on american soil. >> do you want to? inl: we want to compete wealth management. there is just no way a non-us bank, however large, can't compete with major banks in the u.s., because they can holistically bank clients in multiple dimensions. as a player in the united states , i think we want to improve our position and catch up and close

the gap to some of the leading u.s. makes. we have -- banks. we have ambitions in the u.s. but we are realistic and we know that we cannot be the number one bank in the u.s.. >> how do you make sure outflows in the business does not continue? axel: in the u.s., that was one of the characteristics we have seen over the year. basically, we still need to build that top segment for which we are known. we are around 300 locations in the u.s.. our brokerage business is probably as good if not better good if not better than that of many competitors, but we really need to focus on our core of billionaires and the most affluent people. that is where we have room to improve in the united states. >> what about outflows across-the-board? axel: we have seen outflows over the last couple of years with regularization of clients. really, what matters is in asia, the businesses very

strong -- the business is very strong. we want to build that market-leading position. therein a period where is discussions around distribution, socialist candidates, left-wing candidates threatening to come in when there is a discussion of wealth and inheritance tax, our clients are targeting a lot of their money into other forms of investment. >> how is succession planning progressing? axel: we are adding -- heading adding -- heading into our ninth year, which is a long 10 year. we want -- tenure. we want to hand over the bank to our successors in a very orderly fashion. at the moment, we are very laser focused on the french drought. the best we can do for shareholders in the first half of this year is to really focus on the trial in june. the rest we will look at. >> do you think those french finds will go away?

axel: we have some good arguments that we feel in the first-round not all of the arguments were taken duly into account. we fully rely on the french judicial system that our arguments will be heard in the second round. >> axel weber, thank you so much. the ubs chair stays with us. we will talk about the u.s.-china trade, and everything else, including negative rates. stay with bloomberg. we are live from devils 2020 -- davos 2020. ♪

♪ >> good morning, good afternoon, good evening, everyone. we are live from davos. less colder than usual. it is day three. we were having a good conversation with the chair of ubs, axel weber. we were talking about ubs specifically. i want to talk about the macroeconomy. davos is very optimistic.

what are you sensing the mood from participants? is 20/20 the year where europe comes back and maybe negative rates will be less negative. axel: there is clearly a turnaround in europe. germany is improving, italy is improving. the delayed affects of tariffs were introduced and not removed the trade agreement. at the same time, some of the stimulus from the past is having an effect now, including monetary policy. we are not as optimistic as some of the participants here. last year, everyone was very pessimistic. i was not and it turned out to not be such a bad year. a middle down the road is where i would play this year. >> how helpful is the u.s.-china trade phase one deal? we heard from president trump yesterday, he seemed to actually

not want to antagonize europe with extra tariffs. no, so i think the way it has been set up is it will be very hard to reach a phase to deal. it is more of a signal -- phase deal. is more of a signal that the u.s. and china have agreed to address the current state of trade between them. china importing more from the u.s. in a year vital for president trump for his reelection. at the same time, i think they will go separate ways on technology in some of the more difficult questions. you can look at it as a decision for an orderly divorce rather than putting together and going at it together. >> what is the biggest market unknown for 202? 2020?as -- axel: in the u.s. election, the more extreme the candidates are that run against the incumbent, the more likely they will get pretty strong support. that is what we saw in the u.k. election.

expectted trump -- trumpâ to really prevail that trump -- trump to really prevail . i think addressing china issues in the second term will take key priority again. ceis is a short-term pea agreement, not a long-term agreement. if the major factor for global growth over the last 10-20 years was the emergence of china, the biggest risk for the next 5-10 being moreina isolated. i am sure europe will go its own at.ght on that -- way on th the u.k. is probably on a different point. >> we have the ecb decision on thursday, together with more of a framework for the review. what would you do? how difficult is it to change

inflation? is it inflation target or something like that? axel: i do not ask myself anymore what would i do, but i asked myself, what will they do? it is important for our clients. once you open the strategy discussion without a very clear view of what you want to do, it is like pandora's box, you can never get closed again. i think what is important is central bank have to be committed to long-term objectives. i don't think the 2% objective is out of date. they have to be clear about their tools. in europe, the one thing that is more of a distortion than a useful tool is negative interest rates. >> will they go further negative? axel: i have a hard time believing they would do more than edge slightly more negative. the longer you keep that policy, the more the side effects become important and the less direct bang for the buck you get.

i think they will take another look at given at weather -- again at whether there are for purchase programs can be changed again. i don't think they will go further into negative rates. >> axel weber thank you for joining us,. we will have plenty more from davos 2020. ♪

♪ >> welcome back. it is bloomberg at the world economic forum. let's join malaysia's trade minister, darell leiking, who joins me this morning. we have been talking about the phase one trade deal. how does that impact malaysia? given that malaysia benefited

from the disruption in the supply chain. darell: thank you to bloomberg. great been given this opportunity to talk to you. the phase one of the agreement just signed, obviously, there will be some impact. we are confident to say that the chinese and americans will continue to have their traded deals with malaysia -- trade deals with the malaysian continue having a good relationship with our country. >> tariffs remain on china until at least november. how will that filter through? how much benefit can there be from this deal? darell: from our side, i think we will continue having the continuous relationship with china, as well as america. we are glad that america and china have at least tried to take some global responsibility over the challenges that the whole world has faced because of their tariff disagreements.

thatphase one, we hope they will find some solution on overcoming all those challenges. also, the tariff that is still implemented. >> how will the benefits filter through? when you look at global pmi we are seeing encouraging signs. what is your take on that? darell: continuously, we are seeing encouraging pmi's. china being a huge market for malaysia, as well as america, i think that we hope some positive developments continue this year. >> china has committed to purchase more soybeans from the u.s. or that mean that china will buy less palm oil from malaysia? axel: i don't think so -- darell: i don't think so.

the challenges faced recently with america, malaysia has always offered help in many ways, diplomatically and economically. china, likewise, has helped us to make huge orders of palm oil. we were challenged by other nations, where there was a boycott of palm oil. china continued to be a good friend. had a kind currently of disagreement with india, india taking an issue with the stand of the prime minister on some of his policies and has put limits on imports from malaysia. how has that impacted the country? has that been resolved? darell: these issues that have been raised are close to -- heart. he should be given the opportunity to be heard as well. we do this to india as well on their views. when it comes to trade on palm oil, i don't think malaysia was singled out. some people may want to single

out malaysia, but the government of india has been very open. >> india has put a lid on their imports of palm oil from malaysia. darell: they did, but it is not malaysia alone. our relationship with them continues. the government of india has not banned the importation of palm oil. yes, we do face some challenges. between government to government, we will resolve them. >> india has come out to say it may impose limits on other imports. -- inuickly into a second 20 seconds. darell: they may, they may, but we will continue to talk to them. they are important partners in trade. we will continue talk to each other over this. >> the biggest risk for the malaysian economy right now? darell: a lot of fake news about things. >> minister, there you have it, darell leiking, malaysia's

international trade and industry minister. this is bloomberg. ♪

nejra: good morning from bloomberg's european headquarters. this is bloomberg daybreak: europe. these are today's top stories. global stocks regained ground as chinese officials say they are starting a nationwide screening to tackle a deadly virus. we address the issue with the hong kong chief executive carrie lam in devils. >> hong kong has artie put in place a highly regimented system. we learned from previous incidents over sars and other infectious diseases that in order to bring the community

anyther to control infectious diseases, we have to be very vigilant. talking trade. president says he knows angela von july and is a tough negotiator. they will discuss the new trade deal. we got larry kudlow's take on the eu and u.s. talks. >> we have china, we have usmca. we have more bandwidth to focus on europe. netflix shares climb in extended trade. the company plans to boost spending by 20% this year. ♪

>> the risk picture is looking more rosy today. asian equities recovering the ground they lost yesterday. u.s. and european futures are higher. the yen weakening back through 110. we get all the market action from around the world. manus: we do indeed. the dax in europe is set to open at a record high. it comes down to the south korean data. juliette saly in singapore. any burger in london. is the data that sings in the market this morning. juliette: south korea data was a positive for markets. we are seeing an impact of the coronavirus. stocks paring earlier losses. macau reporting its first case of coronavirus.

asking all casino staff to wear masks. you can see weakness in the gaming stocks. health care plays are rallying. top love in malaysia makes -- gloves, up 16% since the outbreak. you have the mask maker coke in japan up another 5% after a 17 % yesterday. we are seeing a number of pharmaceutical companies looking at antibiotics for this virus. the one on your screen is listed on mainland china. it has risen 33% since the outbreak. nejra: thank you so much. you are looking at brent crude trading back below $65 a barrel with demand concerns. dani: demand concerns are weaker today. according to goldman sachs, things could get worse from here. it is also virus related. they could see oil drop by three dollars a barrel and see demand

be sapped by 260,000 a day. if this plays out like the sars epidemic. here's a blast from the past to show you what happened during the sars virus. those bars there, it is from when the virus was first attempted, to win it was eradicated. the commodity index fell by 5%. most of this comes from jets will -- jet fuel and concerns there. will playlear if it out dramatically. opec has the capability to offset some of these losses. for now, goldman ringing the alarm on oil. manus: great note. rounding up the market action. council,nal economic larry kudlow says china's willingness to change is a great building block for the phase two of the trade deal. ferro started by asking

him about the details of the phase one deal including the agreement on's -- on good purchases. phase one is about breaking down trade e-readers. -- barriers. that's a very markey -- market oriented approach. you give the united states the chance to sell you goods and services and technology and energy and agriculture and so forth, and we will beat the pants off of everybody. we will outcompete. give us a chance to do that. that is free in a president's best. i acknowledge your point. those are not so much government management as they are targets. that's the way it was always intended to be. hopefully they are realistic targets. you know, if we can get those exports in the next year or the year after that, that's a big growth factor for the united states. that's a huge growth factor. china wants them.

they are willing to import. consumers need it. energy came up in the luncheon. they specifically said, we need coal and natural gas lng. both sides are going to win on this. jonathan: phase two has become phase to a -- two a. is that a fair assessment? >> it is not. the president has been vocal on this. his belief is that phase one was the toughest while the climb. -- wall the climb. once that structure was put in place, that opens the door to phase two. we can't tackle everything at once. andicularly exports intellectual property chapter are really important, really in there.

the ip chapter is a thing of beauty. because the chinese are willing to make changes, they are changing their criminal procedures, their penalties, they are giving 100% ownership to financial companies for the first time, those are great building blocks for phase two. jonathan: the expectations -- a conversation of europe as well. it feels like an about turn from the administration with the europeans. you were in the bilateral earlier. what happened? >> good discussion, very constructive. jonathan: what changed? six months ago, we were talking about tariffs on european autos. >> they were very constructive talks. that was not a negotiation or anything. both sides agree it would be great to produce a good deal. there are a lot of issues at stake. that will go on for a while. kudlowthat was larry speaking to jonathan ferro in

davos yesterday. coming up, we speak to mario greco. don't miss that conversation from davos, next. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. billionaires, politicians, bankers, academics, and executives gather at the world economic forum for their annual meeting and davos. this year's theme, a more sustainable world. let's get the francine lacqua. >> i'm not sure about leading the force. keep warm.to i'm joined by the chief executive of syrup insurance. thank you so much for giving us

your time. talks climate change influencing the type of investments you make? >> the visible impact of climate change is seen in natural disasters. in the last years, we saw a lot of examples of this. recently, australia is another example of how this can impact the life of people. also, we are changing the way we underwrite our risks. we are trying to incentivize companies to move towards carbon neutral omissions. the problem is, although we follow strict rules and eliminated coal insurance, we are progressively limiting, the price of carbon, the price of pollution is not reflected in the economic decisions. this is something that we should tackle. francine: who should take the lead on that? >> the government.

institutions. private companies cannot do that. we do not set prices or taxes. that's what this is all about. francine: i was talking about the carbon price. how do you actually measure it, said it, making sure there is a level playing field? >> i don't think it matters that it has to be a level playing field. to inflecto be a way -- reflect the impact of omissions. even if it is different by countries, i don't get matters. the planet needs to take control of carbon emissions. the pricing is the vector of information. if prices don't reflect this consequences, we are in trouble. that is the situation we have today. francine: you are a big asset manager. what do negative rates mean for you? do you want to go away? >> yes, please. francine: will they go into

further negative territory? >> we don't expect that. the impact of this negative rate is marginal already. changes.eal fiscal changes touctural invest. the planet needs a set of investments which is massive in size and has to last for many years. negative yield do not help. we need a fiscal transformation in order to allow this to happen. francine: if you look at sustainability, the impetus comes from finance. you say, i'm not investing in your company if you don't have three requirements, how difficult is it to do that with negative rates? it is more difficult to make money overall. >> yes. it is, for sure.

we fully accepted that from the beginning. we don't think there's any way out of that. we are not looking for smart investments which can make the returns. we are just accepting it. we have adapted the business model to work with the negative returns on the asset management. it is difficult. it is not fun. it isally, we don't think useful. we still make enough returns for shareholders that they are pleased with that. francine: what are you most worried for in 2020? what are you most optimistic about? >> economies are fine. last year was an exceptional year. definitely we will not see that again. a lot of the positive of last year were induced by the central banks. i don't think the central banks have any chance this year to surprise like they did last year. economies are good, the fundamentals are strong. we still expect a positive year. fear theear -- we

things we don't know, especially things that belong to our geopolitical relationships. war.ar of attrition, a the economies are strong. they will continue to push this world further and better this year. francine: if we look at geopolitics, are we pricing risk accordingly? >> not really. not really. are notics so far really impacting the trends. they are more impacting the daily traits. they go up and down by days. they have not created get a trend. we have not seen investors shying away from given industries. it is more a daily theme. whenever something happens, you have immediate reaction and it

fades away. francine: how are you seeing your industry be reshaped by all of these things? will we see more m&a? will insurers have to get bigger in size and scale? insuranceail part of is under a transformation, upside down. i don't think it will be an m&a solution. the number of companies which has disappeared. the world and retail is changing. insurance is becoming a service industry. in every service industry, the customer is making the decisions. it is working in a working out. out, you arewalks out of business. when the customers walk in, you succeed. this is what is happening in insurance. customers are moving. they have not been moving for years. they never thought about changing. now they do that more and more witches great news for all of us. francine: you believe that

companies will go out of business. is there a catalyst or will it happen over time? >> it is happening very fast. it is happening. it is not in the future. it is today. customers are making decisions every day. ,e started three years ago tracking precisely customer satisfaction. it's amazing, amazing how much it matters and how important. it is a trivial truth that customers make the decisions. it is so important to think about that every moment of your day. francine: what were renewables january?anuary >> -- >> strong. we in a good market position today. we are taking advantage of the hardening of the rates. satisfactory sales. we are growing again. very positive. all the efforts we put together

for customer development and customer retention, they are paying off. francine: what are you most looking forward to for the rest of the week? are you here to do business? >> frankly, yes. i have seen you here for the last number of years. five or six. how has davos changed? >> i think there have been years where there was a sense of emergency, especially around the financial crisis. 2010, there was a sense that the world might not .ave a break financial future -- bright financial future. lately, it became more competition. you have to talk about the next 30 years. tos is a different scenario tackle and to approach. the business side of it has remained extremely important and interesting around these

meetings. francine: thank you so much for joining us on bloomberg tv. with that, back to you in london. nejra: thank you so much. lots more to look forward to from davos. big names threat the day. the saudi and french finance ministers plus a stellar lineup of executives. the ceos of coca-cola, bp, morgan stanley, and lloyds banking group all live here on bloomberg tv. this is bloomberg. ♪

>> these issues have moved from being corporate responsible issues or niche issues to fundamental value drivers. i think we are seeing a fundamental reshaping of the financial system.

manus: that was mark carney, the bank of england governor, talking about the theme in davos for this year. climate change. lines coming through across the bloomberg at the moment. u.s. setting the rules and bandwidth on the impeachment. today, lots -- let's ask the devils mliv question. how much will he is be drive investors in 2020? join the debate on your terminal. that is for bloomberg users only. mliv has their question of the day. how much will yes g drive investors in 2020? tune into the devils coverage. not much has changed. a lot of talk, not much has changed in regard to omissions. let's get more on the stories making the agenda. live fromstick is

davos. good to see you. truck -- what has been the reaction? >> when trump had spoken yesterday, there was pushed back almost immediately from oxfam, a charity that focuses on inequality. another from greenpeace. green peas has said that if you are focused on jobs, there can jobsbs created -- can't be created unless there's a healthy environment to have them in. listen, trumpwas, is so focused on the u.s. energy and oil market, how does that pair with sustainability? they said it is embarrassing to focus on that when we are trying to be more sustainable. there was some critical thinking about what trump had said. speaking toi was some davos attendees.

the ceo of a major investment bank said, this is a weird mix of climate change conversations and dealmaking at night. tolly, people come to davos have an international conversation. everybody feels that climate change is very important. there's a question on whether this is something that people are doing because it is the vogue thing to talk about whether they are really serious about making change. looking at the science behind some of this change. investors, even more comes out of the financial returns. the blackrock ceo saying companies have to step up to tackle climate change. the conversation is centered around the fact for this to work , government has to do their part. how is the conversation being driven forward today? sonali: mark carney has definitely been speaking at the panels and very present to davos , speaking to a lot of people. the europeans have been much more on the forefront.

european insurance companies and banks have really started to already make changes in terms of who they finance and how they finance them. we spoke to the chairman of standard charter. they have artie been making changes. u.s. banks, this comes up at their annual meeting. they are much slower to make change. i wanted to know whether the european conversation will start to flow over to the u.s. in a more aggressive way when it comes to financial institutions. nejra: great to have you with us. thank you so much. after a slight slump yesterday, u.s. futures are on the rise this morning, setting up the main equity gauge for another record high. european futures are higher as well. we've hit peak euphoria. dani: according to research, we are at peak euphoria, speculative excesses in the market. week, 12.5at last percent of volume on the nicene was call options.

that's a record for the second week in a row. they say nobody is hedging these games. i want to read what they wrote in the report. the language is stark. among everything we follow, this behavior is by far the most troublesome and should be a major worry for anyone. they say in the medium-term, look for stocks to be in pain. nejra: thank you very much. some of the names that will be speaking to bloomberg from devils. the saudi and french finance ministers. , stellar lineup of executives ceo of coca-cola, bp, morgan stanley, lloyd bank, all right here on bloomberg tv and radio. nejra: at 3:00 london time, we speak to james on, ceo of trip.com. i u.s. listed travel website. we will ask her about the coronavirus will affect business ahead of the lunar new year

celebrations. there are cases in the u.s. and macau. china is working hard to contain the virus. risk is back. ♪

>> welcome to bloomberg markets the european open. i am anna edwards. the cash trade is thus an hour away. -- just an hour away. ♪ inoculation. china's coronavirus outbreak is spreading. stocks shake off the threat -- threat. netflix shares climbed in extended trade as overseas growth helps offset a domestic slowdown.