up by 20% over the last three months. it is healthy for markets to consolidate gains and take a breather every once in a while. we may see that over the course of the next week or two. lisa: >> anthony, thank you for that. there you have it, the closing bell. the nasdaq and s&p down. both of them posting their worst day of 20. notable that less than 1% decline is the worst loss on the day for 2020, highlighting the theedible calm over markets. you saw utilities outperforming, like for example, hotels underperform as people get concerned about travel plans. >> and we still have not gotten a down 1% day for the s&p. >> people definitely looking for some safety amid the otherwise

record rally. let's dive deeper with our markets reporters. what are you watching? >> we've talked about how this virus is hitting the developed markets, the s&p under pressure today. the emerging markets is what i'm looking at. chinese market hit by this. take a look at latin american markets. virus shuttinghe down factories, shutting down travel, is really going to weigh on the demands for commodities, which is going to weigh on the demand for latin america commodities. it is really interesting to watch as china is affected by this news, so will latin america. mike? >> sarah mentioned we still haven't gotten that 1% down day on the markets. we did get a 1% down week for the s&p 500.

that is the worst week for the market since august. looking at the leadership, it is your classic risk off type of week. utilities up the most among the 11 groups. real estate up more than 1%. the bond markets calling the shots there. leader isn-textbook infotech. intel, the star of the show there. intel up 15% for the week. you have to go back to 2009 to find a better week for shares of intel. atmike, i'm taking a look shares of sprint. we await the earnings report coming on monday. it is interesting given that there is a potential merger with t-mobile locked up in court. we are expecting that to stay locked up. 5gwant to get updates about in nine cities and the big

issues to compensate for lack of scale. it is no longer leading to subscriber growth. come and take a look at a chart here. since that merger was announced between t-mobile and sprint, t-mobile has been ok, but sprint has been bearing the brunt of this. about 13% in the last nine months or so. awaiting for that to be finalized. >> and the markets team. still with us, vince cignarella and anthony, global market strategist. vince, i want to put the virus behind us for just a bit. we have many earnings coming up. we also have the fed meeting. with the likes of robert kaplan coming out, talking about how he might be worried that the fed is contributing to the run in risk

assets, from your point of view, you think there's any possibility that we hear further discussion on this topic from the fed? vince: they may have some internal discussions. most people are looking at this as a placeholder meeting. if other fed members weigh in in that regard and pretty much repeat what kaplan said, i think that does play on markets. then you are getting the sense that more fed members are worried that bubbles are percolating. so far they have basically said there is not an issue. we are data-dependent. don't worry about it. >> you raise a really good point. if you look at trading now, you are seeing increased expectation for a fed rate cut. how concerned are you about the lack of volatility, the fact that we still haven't seen a down 1% day in 2020?

are there consequences to that percolating right now? anthony: i think when you look at the fundamental picture, there are reasons for stock prices to be at these levels. the you look at valuations, market is pretty much priced in this year. tensions kind of stay static. justdential election, we get a status quo outcome. i think all those are in the realm, but the markets have moved ahead of that. the question we've been asking over the last couple weeks is, what is left in the tank? what is left to markets higher? at current valuation levels, we need to see the fundamentals catch-up with where prices have gone. year at500 was 30% last the same time earnings growth was flat to negative.

all that price appreciation was based on multiple expansion. you need to see those fundamentals catch-up with where expectations are. if we see over the next few months, and next week is going to be great with over 130 companies reporting earnings, we will get a better gauge of not only the last quarter, but what are these companies saying about the future, and if we see the growth,tinue to show the gdp number next week, if all of that can confirm the optimism , then stocks are correctly priced. if we start to see the data come in weaker than expected, then there is risk that the stock market could pull back. that is healthy and a correction is normal during the course of a year, so that wouldn't give us alarm, but i think investors should be more cautious at this point. say, there is reason

for stocks to be at these levels. one reason is the rebound we are expecting to see in profit growth. i wonder, when you look out to the third quarter, the fourth quarter, we are expecting to see double-digit profit growth. we know that was expected last year. turned out to be pretty much flat. how big is there a risk that we see these gains almost predicated on a rebound in growth, a rebound in profit growth, and we are looking for estimates that might be too high. is there a risk that we actually see this double-digit profit growth start to come down at the pace we saw in 2019? our view is when you look at this year, it is a tall order for companies to meet that double-digit earnings growth. when you look at the current environment, the manufacturing activity, we got an uptick today

, but we think when you look at is notundamentals, it really pointing to that double-digit earnings growth. over the first quarter and the second quarter, even the mid-single digit estimates, i think is a little bit of a stretch. as wehe next few weeks, are getting earnings reports, let's see what companies have to say about the first quarter of this year. i think the analysts will be very quick to adjust their numbers, at least in the first half of this year, if companies are providing a little bit of a warning about not needing those numbers. overall, we have a very strong economy in the u.s. you have a consumer that is in very good shape. all of that points to a very good environment, at least at the start of this year, but the expectations are high for earnings and we need to hear what companies say about that

forward outlook to really verify if these expectations are justified. >> vince, a lot of people have been saying this. last year it was sort of by the hope, and this year, can companies deliver in the same way? based on what we've seen so far, has the feeling been they are delivering? down: earnings have been and corporate profits continue to be down. last year, you had the fed once again, rate cuts fueling liquidity. that has been the story for the last 10 years. hard to believe that is going to be the same story. we need to see something different as a catalyst for the markets. will it come with middle-class tax cuts? or at least the promise of some? the consumer has to be retooled. their earnings are going down. if you continue to see corporate

earnings go down, wage growth is probably not going to happen. something has to fill that gap, otherwise the fed is just not going to do it. >> vince cignarella and anthony, global market strategist. that does it for the closing bell. coming up next, we will be looking at the impact of the coronavirus as it spreads. stick with us. this is bloomberg. ♪

>> live from bloomberg world

headquarters in new york, i'm lisa. >> and i'm sara. >> the biggest one-day decline of 2020. the question is, what'd you miss? u.s. health authorities monitor more than 50 people for potential infections as france reports the first cases in europe. stocks dropping and bonds rallying over fears the virus will spread further. the s&p 500 sees its biggest drop since october. we didn't see much green in the markets today, but green investment is one of the words of the week. we recap the week at the world economic fair. >> now to the top story of the day. health authorities are monitoring the outbreak of the wuhan virus. france reported the first two cases in europe and u.s. health authorities are monitoring people for potential infections. let's bring in the senior

scholar at johns hopkins center for health security. clinically practices care and emergency medicine. he joins us from pittsburgh. thanks for joining us. >> thanks for having me. >> i want to start by getting your sense of how bad this is at the moment compared to other pandemics we have seen throughout history. on to actuallyy gauge it. we don't think this is something like the spanish influenza of 1918. we are comparing it most to sars, which happened in 2003, circled the globe, and it killed 800 people and infected 8000. that is the closest model we have. but it is very early to see. thisere is a concern about specific strain of the coronavirus, but more significantly, the potential global response to a virus that

could have lethal potential. what is your impression so far of how china has reacted to this particular outbreak? >> things are very different now. outbreak, there was a lot of cover-up, and a lot of delay in reporting. this seems to have been reported quickly. there has been a lot of cooperation with international health authorities. that seems to be very good. the other part of this is what is going on in the city of wuhan with basically a blockade of tens of millions of people who are basically under quarantine, and very draconian measures are in place that may make it worse for individuals in that area and allow the virus to spread even more deeply. that is concerning. >> we now have some more unconfirmed reports of more reports in the united states, a couple in new york, in the carolinas, in addition to that one reported case in washington.

if this were to spread, how well prepared is the u.s. government to deal with this? cases,e's two confirmed the one in washington and another woman in chicago, and there are multiple patients under investigation. we have to expect there are going to be more cases. fortifieds. is a very infectious disease country. we went through ebola in 2014 and there was an evaluation of our system. hospitals have gotten much more adept at doing this. we have been proactive from the beginning of this outbreak. the cdc has been putting out information to hospitals. we've been stepping up travel screening. we are doing a pretty good job of it. i don't expect this to be a major issue for the u.s. we had cases of middle east in thery system and sars u.s. when those were major

issues. >> there's also a question about mutation. could this mutate into a more lethal strain? is there any sign of that or do you think those concerns are legitimate? >> every virus mutates. that is what viruses do. mutation will make something into a super virus. some mutations will be not very advantageous for the virus to spread. that is not the big concern right now. there is a spread going on with the virus and there is no evidence that it is getting more virulent. but that is something that viruses do. this always comes up when there's an outbreak. it is very popular in movies about viruses, but there's no evidence right now. >> we've seen some travel restrictions put in place in wuhan and surrounding cities in china. what about a vaccine? we've heard there are teams

working to try to figure out what this may look like. idea ofve a sense or an how long it usually takes to come up with a vaccine for a strain of coronavirus that we may not be familiar with? >> the timescale of a vaccine is usually measured in decades. this isn't something you expect before the credits roll at the end of a movie. this is something that takes some time to do. be some time before we have a commercially viable vaccine. there are companies using innovative technologies, using platform technologies, that can considerably decrease the timeline, but it is still not something we should expect to see at the beginning stages of this outbreak. it is so important to invest in these vaccines ahead of an outbreak so we have them on the shelf and ready to use when these viruses appear. >> if you could give us a sense

of why this virus is so much more important than the common flu? >> there's a little bit of a debate in my field whether this is more important. the flu is on top of everybody's pandemic lists. right now anytime you have an emerging infectious disease outbreak, it is important to pay attention to. many decisions get made, political decisions, policy decisions. it is very important that people stay alert to this, look at the guidance, look at your local health departments, and really keep abreast of what is going on. that said, it doesn't pose a major threat to the united states, but it will cause a calamity in other parts of the world. >> thank you for taking the time. the bloomberg school of public health is supported by michael bloomberg, founder of bloomberg lp.

from new york, this is bloomberg. ♪

>> stocks dropping and bonds rallying on fears the coronavirus will spread further. let's bring in brian. also joining is katie gry felt, bloomberg news cross asset reporter. let's get a sense from you about the rally that we saw in treasuries. it took hold before the selloffs in equities. is this sending a message that the economy isn't as good as equities are pricing in, or is this simply a stimulus? brian: i think there's been a divergence for a while now. it hasn't just been today.

1.7% yieldok out a on the 10 year, which was kind of a big level. now you have the best rally in treasuries for a week since october. i think it is largely a haven bid, like we've been talking about, and no one really knows what is happening, not deadly, but it is killing people, so we should worry about it -- a lot of confusion out there. >> we've heard about the replacement trade coming back. we've seen a stabilization and some of the economic data. with the way the bond market is reacting, is it telling us that the trade is over? katie: that is what it feels like at this moment. the reflation trade was one of the big bond trades coming into 2020. the logic was that you've seen global growth maybe stabilize. throws that calculus

into a bit of muddy water. it is gdp and china that is going to affect global gdp broadly. there are a lot of inconsistencies in the market. you have the bond market saying the world is on fire, stocks near record highs, and you look at junk bonds that wouldn't be so high if you look at global stagflation, which is basically what you are implying. we are still seeing yields closer to all-time lows. brian, is that concerning to you or do you think the fed has our back? >> i am concerned about it. people look at these negative yields. jamie dimon saying negative yields are a bubble. sovereign debt is a bubble. bondsu look at high-yield and the yields are so low and those have a real chance of defaulting. it is sort of a question of why are people just continuing to

think the fed has their back at the same time people are saying the fed is behind the curve -- high-yield bonds are going to get hit. >> for the first time in months, i got any mail today from a market strategist pointing out the yield curve is flattening once again. you look at the spread, now below 20 basis points. is this something we need to keep our eye on, considering the fear and concern because last year? katie: definitely something to keep an eye on. that was another consensus trade this year. the short end isn't going to move too much, and if we see that inflation start to trickle through, it is going to lift longer-term yields. we will see. we are still a healthy margin above negative. we are not at panic level yet or the levels that would make us

panic. >> frankly, we shouldn't be. heard, thehing we've coronavirus hasn't necessarily been catastrophic. i'm just wondering if perhaps this is a feeling that things are pretty good, central banks have our back, let's call it a day. brian: i think people don't know what they don't know. we buy stocks or sell stocks. we buy bonds or sell bonds. you have this virus and you don't know much about it. so it makes sense to go into the obvious trades for now. >> we will see what happens over the weekend. to brian much chappatta and crazy gry failed. -- katie greifeld. mcdonald's shrinking u.s. locations, prioritizing profitable locations. mcdonald's saw its net worth

shrink by more than 100 locations. the chain still has over 13,000 of them. >> walmart is testing out a higher minimum starting wage for certain jobs in hundreds of stores. some workers will see their pay rise from $11 an hour to $12. >> american express has high hopes for 2020, predicting earnings that surpass many analyst expectations at expecting more rational competition from its rivals. plus, american express spent less than expected on bonuses for some of its charge cards. and that is your business flash update. speak to the we oecd secretary-general on how the trade tensions are causing disruptions in the economy. this is bloomberg. ♪

>> i am mark crumpton with bloomberg's first word news. france is the latest country to confirm cases of the deadly new virus that originated in china. french health officials say both of the sick people had traveled to china. two cases have been confirmed in the united states. the centers for disease control and prevention expect that number to climb. the coronavirus has killed 25 people and second more than 800 and china. house democrats opened their final day of arguments in president trump's impeachment trial focused on the charge that he obstructed congress.

been00 senators have sitting through hours of presentations on the articles of impeachment brought by the house. the president's lawyers will begin their defense tomorrow. the pentagon says 34 american troops suffered traumatic brain injuries in the iranian missile strike on an iraqi airbase. a pentagon spokesman says about half have returned to work and half are under medical observation. president trump said he was told that no troops had been injured. after the first reports that some soldiers had been hurt, the president referred to them as headaches and said the cases were not as serious as injuries involving the loss of limbs. mr. trump called it his profound honor today to be the first president to attend the annual march for life rally in washington. he accused democrats of embracing radical views on abortion and praised those attending the event, saying

unborn children have never had a stronger defender in the white house. romaine: all of us here today understand an internal truth. every child is a precious and sacred gift from god. together, we must protect, cherish, and defend the dignity and sanctity of every human life. trumprs ago, mr. proclaimed himself to be pro-choice. the president has twice addressed the event from the white house rose garden. protesters visit the capital each year to mark the year to mark thee supreme anniversary of the supreme court roe v. wade decision that protected the right to an abortion. mr. trump in 2018 told the crowd he would veto any bill that weakens the protection of human life. 24 hours a day powered by more than 2700 journalists and analysts in over

120 countries. i'm mark crumpton. this is bloomberg. were they and trade main topics in davos this week. tom keene and ann francine lacqua spoke to the oecd secretary-general to get his thoughts on trade tensions. >> basically, we have to get back to productivity. we have to get back to skills. and we basically have to find a way to lower the trade tensions. they've already cost us more than 1% of the world's gdp growth. the rate of growth of trade went from 5.5% to practically flat. the rate of growth of investment went from -- >> were you able to corner donald trump and say this is the way it is for the oecd? >> we have said it in so many ways, written it, published it,

and basically saying the trade tensions are causing disruption because they are causing uncertainty. uncertainty kills investment. investment is the seed of growth of tomorrow. basically by creating the trade tensions, you kill the investment, you kill the growth. >> does the u.s. administration think this works and will they use them against europe? >> i hope they don't use them against europe. where there's a will, there's a way. yesterday, we found a way. defer the agreed to action on their digital taxation law, and the americans agreed to defer the actions on their potential sanctions, etc.,

because it was not just a question against french champagne. it was the europeans against the united states issue. and what happened? they both agreed that they would give multilateral solutions a chance. that means the mandate to work on a final solution. >> europe can't come together, so how can the oecd come together? countries we have 137 working on the solution. it is not just europe. we had strong support from every european country and the u.s. has been participating rather enthusiastically because there are a number of elements that we are proposing on digital taxation that are very a can to the tax reform that was done in the united states a couple years ago. >> so you think you will be able to broker a deal? >> francine, think of the

options. instead of a multilateral solution, which everybody will and come to the multilateral solution, imagine 45, 50, whatever different legislatures with different types of taxes, and remember, europe, on taxes, it is not europe. it is every country on its own. so i think the alternative is so disruptive that they will all be trying very hard to get a deal. the oecdas secretary-general in davos. the bank of france governor has been one of the most vocal members on the ecb governing council. in a conversation with francine lacqua, he discussed the ecb's view and have the central bank is trying to mitigate the effects on banks. spirite is a good team

around our new president, and there is some stabilization of the economic outlook confirmed by the loss of pmi performance this morning. shouldn't conclude today as we just said yesterday -- let me stress one point. the inflation target will be one important element. but let me stress one point. it should go beyond the .raditional specialist it should go also to businesses and european citizens. important not only for reasons of democratic accountability, but also for reasons of economic efficiency.

at the end, households and businesses are the price makers. theow can you explain negative rates to citizens? will not applyes to ordinary european citizens. banks gave intention for their wealthiest customers. but they are very useful for the economy as a whole. there is little doubt, if you the at all estimates, that growth of the economy, which is very significant, that it rose to 3 million additional jobs in the last five years. jobs, sod 11 million monetary policy played a significant role. doubt that our

unconventional policy measures are good for the economy. lower rates for longer due to the economy slowdown put pressure on banks, it is true. we should try to mitigate this effect on bank profitability. it is not the only answer, but it is a very significant answer. this year, the cost of negative --es for banks of frances the bank governor speaking with francine lacqua in davos. even the fed struggles to describe what for employment means. we will describe the history of the term next. ♪

>> the meaning of for employment has long been debated. so much so that even the fed struggles to nail down a definition. here to break it all down is matt. ,he backdrop that we had difficult to define. how would you actually go about defining full employment? >> the way economists and people at the fed have looked at this question for several decades now is, kind of looking for the unemployment rate that is going to cause inflation in the economy. the idea is that the unemployment rate goes down and employers need to put up wages, and that gets passed through to higher cost as companies raise prices to recoup those higher wages. economists are trying to figure

out how low can the unemployment rate go without striking inflation. when the unemployment rate looks like it is getting too low, like it did in 2018, they started raising rates. the idea was they needed to cool off hiring so they could prevent inflation. that is kind of how the fed has operated now for decades. rate or 3% unemployment doesn't account for the people that are out of work and have been for a very long time. how good is the accounting for that population? >> that is a really interesting question. for a long time it was thought that it was sufficient to just look at the unemployment rate. we have learned that is not adequate. we have low unemployment rates now. we talk about discouraged workers who dropped out of the labor force and were no longer counted as unemployed. but there is also this bigger pool of people that are counted

by the survey as not even wanting a job. they say they wouldn't even take a job. this group of people is pretty big and has been driving a lot of the employment gains for the last seven years. speaks to our ability to look at the way these series are defined. >> we often hear, is the phillips curve broken? is it possible that the link is still there? that is one question that a lot of people have. are we just overestimating the natural rate of unemployment that the fed is looking for. ironic that as the

unemployment rate has come down, the fed has been getting more dovish. we talked to stephen stanley in the wake of the last fed decision and said this is the most dovish fed decision i've seen. it really speaks to this re-think that is going on at the central bank about how these old relationships work and whether they still work. >> how much is automation driving this as well? if people ask for more money, why not just replace them with a robot? i don't mean to make light of it, but is that changing the narrative? >> automation has been thought of as this thing that is increasing the natural rate of unemployment. it makes sense that there would be more unemployed people. highermight hit that inflation rate faster with a higher level of unemployment. but we have kind of seen the opposite playing out in the economy. that is kind of a wide open

question. obviously automation exists. but it is not really filtering into this question the way policymakers what expect. that is another confounding factor here. >> the dual mandate, employment, stability, what does the relationship mean for the fed and the economy going forward? >> the interesting aspect is that for a long time for employment has been more of a political concept. it is only in the last 40 years really that it has been kind of transformed into this more scientific endeavor. the way that all of these relationships are being questioned now, it kind of raises this question, does it thrust this whole debate back into the political realm? i think that is why we are seeing more political pressure on the fed these days. thank you so much for

bringing us that really interesting issue. coming up, how global brands are also suffering from the threat of coronavirus. we will discuss the latest from new york. this is bloomberg. ♪

>> it took nearly five decades for global leaders to put climate change at the center of the world economic forum. here are some of the biggest voices in davos speaking out about how they would tackle some of the world's biggest challenges. >> the climate and environment is a hot topic right now and a lot thanks to young people pushing, but it is seen from another perspective. >> we do need real breakthroughs. >> we've got to set up policies around the world that change the demand patterns. >> we are pushing our industry to be more responsible. >> we want to invest in green

procedures,in green and we know there's a lot of innovation behind it. >> i'm in support of a carbon tax, but i don't think i'm naive about it. it is one of many policy options that need to be used. >> climate change is not going to be fixed by a central bank. it is going to be fixed by accommodation of public and private. >> we have a climate change problem. we have to do what we can to get to a carbon neutral world. >> to embrace the possibilities of tomorrow, we must reject the perennial prophets of doom and their predictions of the apocalypse. >> this week marks the launch of bloomberg green, where we leverage the power of all of our journalists throughout the globe to dig into this issue of climate change and global warming. check it out online and hear on tv and radio. latestuick check of the

business flash headlines. boeings newest plane won't be taking to the skies today. the 777 x is so large that it wing tips can fold like a fighter jet. it is seen as the heir apparent to the 747 jumbo jet. the debut comes at a time when boeing is trying to repair its generation. sachs is making a stand against all white, all male boards. the ceo issued an ultimatum from davos, saying that goldman will refuse ipo's unless the company's board has at least one person who is not white, male, or straight. u.s. phone carriers held back on spending. they are waiting for a final decision on the proposed merger between t-mobile and sprint. erickson says the fundamentals of its u.s. business are strong. that is your business flash

update. the coronavirus outbreak is expecting -- affecting many brands. here with us to get more perspective on that is -- who covers the luxury sector for bloomberg news. what has the effect insofar in terms of share price with these luxury retailers? luxury brands really depend on the chinese market. they account for that market and those shoppers both at home and abroad when they are taking vacations. ofy account for about 35% global luxury spending. they are so reliant on them that is across-the-board. the concern about luxury brands in europe and the ones here is a problem. hothese companies were a topic when we were talking about the trade war. know howe, we don't long this is going to go on, but

is this almost a double whammy? >> it is. because they depended on that market for so long, it has kind of been a crutch for luxury brands. even if they are struggling at home in the u.s., they are doing so well in china and some of the rest of asia that they've used that to keep growth going. youhich companies are watching most closely as far as the exposure from the threat of coronavirus? >> i'm definitely looking at lvmh. if you look back in the early 2000's, when the sars outbreak happen, lvmh really suffered for several months. outdon't really think to go to buy a $4000 handbag at a time like that. >> how big of a hit is this timing wise, considering that it is the eve of the lunar new year holiday, we could see people

traveling at this time, shopping a little more, but now we see all these travel restrictions? >> the luxury brands have really focused on the lunar new year, trying to take advantage of that and turn it into a shopping holiday. it is a big deal. this is a time where people are going to shop for these brands. if they can't travel and go to the flagship stores to buy whatever they want, it is going to be a problem. >> thank you so much for being with us. i do want to bring you something here. an additional 15 coronavirus deaths. this just breaking as a growing number of regions within and without china are looking at a spread of this coronavirus. we will be speaking on that throughout the weekend. apple reporting earnings on thursday. don't miss this.

facebook and tesla reporting earnings on wednesday. bloomberg technology is up next. >> have a great weekend. this is bloomberg. ♪

taylor: i'm taylor riggs in san francisco. in for emily chang. this is "bloomberg technology." coming up in the next hour, women on board. goldman sachs will not back companies on board if the directors are white straight men. what recent tech ipos stack up under the mandate. a $2 trillionach valuation by the end