whole climbs. beijing extends the new year holiday and the threat that the coronavirus is spreading. contagion here. -- as investors worry about the impact of the virus. setback for the leader of italy's redwing -- right wing elite party. welcome to "bloomberg surveillance." i am francine lacqua back in london. these are your markets.

we will talk about the january german business. it is a touch below estimates but a lot of the focus on the markets has to do with what is going on with the coronavirus. the stoxx 600 is down. movinglian 10-year yield on the back of that regional vote with mr. salvini doing more than expected. giving a boost suit to some of the bond investors. we will talk with clemens fuest. we will talk about recessionary risks. let's get to the bloomberg first word news in new york city. viviana: we began in italy. matteo salvini is suffering defeat and a key regional vote. this provides -- fragile

government. mr. salvini hoped taking it would deal a fatal blow forcing national elections that his party would lead. here in the united states, senate republicans facing pressure to call witnesses. that is after a report in the new york times says mr. trump wanted a continued freeze on ukrainian aid. john bolton was fired by the president in september. israeli prime minister netanyahu says he will make history with president trump. he is visiting washington as the u.s. leader is slated to present his middle east plan. is saidu's main rival to hold his third election in less than a year in march. the u.s. focused on getting a trade deal with u.k. this year. last week the chancellor said any deal with the eu would take precedent over an accord with

u.s. but mr. mnuchin says a lot can be done at the same time. >> there are certain issues that they need to resolve with e.u. before they finalize our agreement. a lot of this can be dealt with simultaneously and we look forward to continuing a free-trade relationship. viviana: kobe bryant died yesterday in a helicopter crash. nine people were killed including his 13-year-old daughter. bryant leaves a legacy having won five championship with the l.a. lakers. 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. i'm viviana hurtado. this is bloomberg. francine: thank you so much. containment efforts are failing to stop the outbreak of the coronavirus in china.

beijing reports the number of deaths has risen to 80. china is extending the lunar new year holiday. it has also restricted travel for millions of people. toc, how difficult is it contain this thing? we are looking at stars was 17 years ago. eric: it is very different. the tricky thing is the long incubation period it seems to have were people do not show symptoms for as much as two weeks in some cases which makes it hard to tell who's got it, how many more people may have it. francine: we know that china has really locked down some of the that thehat do we know pharmaceutical companies are working on? eric: one of the things out of the big pharma companies that is

provided some of its hiv drugs which are being used in the city at the epicenter of this virus. those are being used for treatment. there's some indication that it works. there is another company that makes ebola drugs that is looking at that for treatment. there are other companies looking at vaccines. francine: the world health organization said it is not a worldwide pandemic. eric: that is something they said last thursday. it is amazing how fast-moving this thing has been because at that point there was only a handful of deaths. today, the head of the world health organization is on his way to beijing for meetings with the government authorities to gauge the response. they said at the time this is something they will revisit if they have to. at that point, it was a local

emergency but they could always revise that. francine: eric, thank you so much. he follows all of our pharma coverage. less get more on europe's biggest economy. -- joining us now on skype is clemens fuest. i know i ask every time, what are the chances of a recession in germany? clemens: good morning. these chances are following, so we do not expect a recession but we had weak growth last year. these chances are falling although the index has gone down. this decline is coming now from the service sector and construction industry. where's the good news manufacturing is recovering. the stabilization in manufacturing we saw last year is continuing, and because

manufacturing is important for the german economy, we take this as a good sign. francine: manufacturing is recovering but what will it take for the sector to return to decent rates of growth? woulds: this recovery have to extend and the automotive industry is still weak. overall these are positive signs. we see in services and construction a slight decline that is related to rival prices in the construction industry. services are weak. entirely so we are not out of the door but we are optimistic that there is not going to be recession. francine: what does a u.s.-china trade deal mean for germany? we were in davos last week and trump talked about possible

tariffs against europe's -- against europe and germany. clemens: it is a tricky situation. it is a looming trade war that is not going away. at the same time, there is a hope that trump will not want to take the risk of a full-blown trade war with europe. it seems he is likely trying to fend off digital tax and carbon tax. i think it is unlikely that he wants a full-blown trade war when he needs a good economy in the u.s. in the run-up to the elections. francine: what is the biggest risk for germany this year? clemens: it is the outbreak of the trade war. it would also be a recession in china. china continues to be a very important market. as a huge effect on the world economy. -- it has a huge effect on the

world economy. threat.the major more than threat of a trade war the u.s. much.ne: thank you so coming up, a populace to defeat. bologna next. -- we are bologna next. ♪

francine: economics, finance, politics, this is bloomberg surveillance. let's get to the bloomberg business flash. viviana: royal bank of scotland planning to illuminate thousand -- planning to eliminate thousands of jobs.

it is a part of cost-cutting measures by the newly appointed ceo. conceivede discussed jobs cut. germany is -- a saudi royal advisor according to the financial times. it reports two former employees were-- the money transfers arranged in 2011 and 2012. deutsche's says it put measures in place to ensure -- the billionaire benetton family seeking partners to revamp its businesses. the family is considering minority investors picking stakes in a variety of units. no comment from the benetton families company. that is the bloomberg business flash. francine: turning to italy and matteo salvini has suffered a

sting defeat. the coalition has over 50% of votes meanwhile the center wide group headed by -- trailed by 44%. federico santi joins us. -- maria tadeo joins us. maria: they would argue that he is stronger to lose a regional which is been a social stronghold would've been almost a fatal blow for the coalition back in rome. i would point to the words of the prime minister who is saying we are being boulder. we are going to continue to go ahead and this coalition really stays honest. a look at the balance of power between the pd and five-star which had a horrible election.

it has shifted. ton it comes to salvini officially concede, this feels like a personal defeat because he was always that she was all over -- he was all over. that threat of a new election, of a new opportunity for salvini seems to have faded away yesterday night. when you look at the markets, it is a sign of relief the fact that there is no salvini government, no snap election and we will continue to see that r.o.e. european government in rome. -- that pro-european government in europe. francine: federico, let me kickoff with you. when you look at the result, how much does it stabilize the prime minister's alliance because it

is pretty fragile? they head of the five-star movement last week. federico: it is quite significant. the defeat which was quite expected but the victory by the democratic party really came as a huge relief for the party because of concerns that the region could stretch to the far right for the first time. this takes a lot of the pressure off pd of the democratic party to reconsider its alliance with five-star. it puts the government on a stable footing in the short-term. not wellis still clearly. the risk of a more your skeptic government. francine: is there anything the coalition canal do? -- can now do? federico: not much, that is the problem. the coalition is still divided. not more so.

it is undergoing a leadership transition. five-star did very poorly in the election. the parties weakness could be stabilized going forward. francine: what does it mean -- if you look at the markets italians -- a tine bonds surged on the back of the news. like politicalot uncertainty. i think you look at it from a more economics point of view. a lack of structural reforms. undoing some of the progrowth reform. that happened in context with what is for now with bond yields during the next downturn, things look pretty grim for italy. that is the best case you get. comeshe next downturn

exposing this inconsistency between the potential growth and the big fiscal commitment. then you do not need to look at italy. the best case is we are far away from that. for the disabled future, you get -- much economic consequence for the foreseeable future, you get not much economic consequence. to do istaly needs follow the lesson of micron, make the market more flexible to bring down the on employment rate. to compare italy to germany or the u.k., low employment countries with weak trend growth. in the case of italy, what they need to do is bring down the unemployment rate. the challenge here is for 20 years high unemployment regions have been suffering. for the sake of those workers,

what you need to do is move your wages even further so you can move into the labor market. hence, italy is vulnerable to the market. francine: what does that mean for matteo salvini? federico: this was a big setback for him personally. he was involved himself and he really tried to give the election a national flavor. this reinforces the feeling that leg hit something of a ceiling. when you look at the right as a --le, there is a point whenever that comes about. francine: think you both. -- thank you both. as you had to break, we will look at the u.s. market open. hut,tor of kfc and pizza they are under pressure. this is because of the coronavirus spread.

vaccine makers are soaring. we heard that one confirmed coronavirus came from hong kong and it turned from serious -- too serious from stable earlier. we will bring you the latest. this is bloomberg. ♪

>> let's look at the facts. let's look at how the economy evolves. we need to be fact driven, clear

in our communication. don't assume it will be on autopilot. francine: that was christine lagarde speaking to us in davos on friday. one of the few interviews that lagarde has done. in the meantime, greek bonds are rallying. it sent 10-year yields to a record low. you can see that greek italian -- that greek 10-year yield at 1.16. still with us kallum pickering and federico santi from eurasia. there's a big move and bonds. what are they looking at? lagarde says they are not on autopilot. she is asking the markets to do their job. are they? >> on the basis of those bond spreads between germany, italy, greece, i think i prefer greek bonds over italian bonds, just

looking at the political outlook. yields.has lowered bond i think there a real question in europe, how much more can the ecb do? the ecb is the financial backstop. it cannot really do much to lift domestic demand for that you need more of a fiscal stimulus. crisis, buthere for it cannot engender a material recovery. it goes back to your wheelhouse, you look at politics for eurasia and this is what people have been saying that the ecb is running out of tools. she needs to convince politicians to do some fiscal spending. physical sense in europe is going to be more supportive than we have seen which is welcome news in the context of subdued growth.

it wouldn't be fair to expect any sort of big bang spending program that markets have demanded. those big important differences across countries but a more subtle fiscal stance. francine: even germany? >> yes. the slowdown we have seen their -- seen there. there is some room at the margin for the german government to spend more. francine: is the ecb running out of tools, it is something they would push against. this comes almost too late. >> it depends on the job you're asking the ecb to do. can the ecb given the interest rates are lower, lift domestic demand by stimulating a rising credit? probably not. low interest rates do not mean that monetary policy is easing.

excess.s not in wage growth -- there is no excessive risk taking. there is a question of just and context of low growth, low equilibrium interest rates, how easy can monitor policy come? the ecb is basically running up against a wall. output.o lift economic francine: thank you both. steady.p, holding no change is expected from the fed. we talk more central banks. this is bloomberg. ♪

francine: the death toll climbs. beijing extends the lunar new year holiday amid reports that

the spread of the coronavirus is accelerating across the globe. at least 80 people have died. contagion fears -- stocks, crude oil, and yuan tumble, spurring haven assets as investors worry about the impact of the virus. and, setback for salvini. the leader of italy's right wing elite party is defeated in a key regional vote, providing a boost to prime minister giuseppe conte's government. good morning, good afternoon, good evening, everyone. this is "number surveillance." i'm francine lacqua in london. let's check in with annmarie hordern. annmarie: risk of the coronavirus is hitting a number of injuries. energy, mining, travel, luxury. thes go to iron ore on singapore contact ashdown 6%. areworries about demand being played out in the oil market. or bury down more than 5%. we saw luxury -- burberry done

5%. we saw luxury take a hit. with fears of the coronavirus spreading, there will be less people out there spending. of down more than 5%, a lot exposure to asia, similar to air france and also similar to lufthansa, all these airlines down as china is stopping a lot of travel between a number of cities. more people just want to stay the, given the fact that coronavirus is spreading. francine: annmarie hordern with some of your biggest stock movers. let's get straight to the bloomberg first word news in new york city with viviana hurtado. hi, francine. we begin with a deadly coronavirus, at least 80 people have died. beijing has as extended the lunar new year holiday. cases are reported in 15 other countries. president xi jinping is pushing local officials to strengthen prevention and containment.

israel is allowing its citizens limited travel to saudi arabia. israelis have been prohibited from visiting the kingdom. the announcement coming ahead of the nation's you eat -- middle east peace plan. there are no airline flights directly between the two countries per libya's fragile truce is in trouble. the government has repeated attacks by rebel commander is rendering it all but meaningless. this as the united nations that more empowered are fueling the fights. both sides accuse each other of bridging the cease-fire. basketball icon kobe bryant died in a helicopter crash yesterday. nine people were killed in the incident. this includes his 13-year-old daughter. he leaves a legacy spanning 20 years. he won five national basketball championships with the los angeles lakers nba commissioner says the league is devastated by the news.

global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. francine? francine: thank you so much. only commodity tumbling today in the coronavirus fears. surges and prices collapse. here with the latest, dani burger. dani: once these fears takeover, most of the asian markets are closed because of the lunar new year ye. it is a clear standout of these agricultural commodities like wheat, coin, soybean, all down when 1% -- wheat, corn, soybean, all down 1%. for the second biggest producer in consumer of corn, if the coronavirus impacts consumption, this is the pain being priced in. and the economy there just got

over the african swine flu virus that's what the markets last spring, that that swept the markets last spring. you look at the impact of the trade war. we said it was the lunar new year, so this is really remarkable. the white var -- the white bar are the volumes that we have seen. we have seen volumes as high as 200% for one what a usually are on the market. even his more esoteric markets taking a hit today. francine: thank you so much, dani burger there with the latest agricultural commodities. let's focus on the fed, no change expected from jay powell and the fomc, but foreign policy makers and veteran fed watchers are increasingly preoccupied with what the central bank will be able to do and the tools it will need for the next downturn when it arrives. how much firepower does the fed still have? ? the fed is by far the most central -- the most important central bank in the world.

we should all care about whether or not the fed has the tools during the next downturn. the fed balance sheet is the most important thing. the fed can cut interest rates more than we can he in europe, but probably not buy enough to correct what would be a generic downturn. on ansay the fed cuts average of 200, 200 50 basis points. with a balance sheet you can contain a crisis, and it draws us back to the point we made earlier. central banks can help in a crisis, but when equilibrium interest rates are low, they cannot steer domestic demand to offset a downturn, so we would inevitably have to look to fiscal policy and supplied sign reform -- supply-side reform. u.s. suffers a rise in unemployment and the fed is constrained, does the treasury have the firepower, given the deficit, in order to steer the u.s. economy out of it.

that would be the bigger question or the fed can end the panic in financial markets that would come near the downturn, but when it looks to fiscal policy, does treasury have the headspace? is america,day it so if anyone has fiscal space, do the concerns come to the forefront in 10 years or five? kallum: it is a good question. bank's job is to make sure the government can meet its debt obligation. it is almost inconceivable that the u.s. could not make payment on any of its bonds. but the question is under what contest could you do a stimulus -- under what context could you do a stimulus? the thing we can learn from the japan experience is that so long as economies do not have major inflation risks, governments can borrow quite a lot, quite a long time, as long as the central bank is helping out without running to a panic and bond markets. but again, there are limits to that. suppose you can end the downturn

with a 4.5% deficit. 7.5%, 8% on the deficit, big you could push it to a year or two, but not without signaling that the market is going to correct this. francine: at what point does the u.s. come under scrutiny for being a reserve currency? china wants to become that, the-year-old wants to become that. does the u.s. reserve currency status actually get challenged? because that would change everything. kallum: not for the foreseeable future. privilegenjoys a huge --ut fundamentally this is a the fed provides a lot of liquidity, so investors should feel safe about holding those bonds. in the experience of the last 10 years, you might call that age justxiety -- not government bonds but corporate bonds, too. it is the dollar which rises,

the value of those bonds that rises. when we start going into risk off, and that is what we have seen over the last year and a half. the trouble we will see in the next few months if we worry about the coronavirus, so now the u.s. is pretty safe. francine: it is now creeping back up into things that people are actually considering. allum: i find an nt a bit of distraction. you could make the case for pills -- for fiscal policy stimulus in certain parts of the broker you do not need something as mmt. it should be able to borrow more ,er the same goes for the u.k. the same would go for continental europe, countries that cannot afford it. more widely in europe, you will not get the anglo american type stimulus. will actually amount

to a fairly large kick for the economy. francine: what do you see dollar doing this year? kallum: it depends on where we are with risk. the virus is overwhelming positive news from u.s.-china trade, but base cases after an industrial and trade downturn next year. allows atics issue recovery and ultimately more risk on. that would be good for europe, good for risk assets. we had to break, let's look ahead to the u.s. market open in some of the stocks moving on the back of the coronavirus spread. young china, operator of pizza resorts, areand slumping. not all aboutis the fed this week. thursday also marks one of the bank of england's trickiest rate decisions in years. we discussed the boe next, and this is bloomberg. ♪

francine: this is "bloomberg surveillance." withearnings, beginning apple, followed by facebook, microsoft, and amazon later in the week or there's plenty more to were look out for on wednesday. then watch out for the european banking earnings. followed by deutsche bank on thursday. the same day the bank of england decision. as the u.k. is set to leave the e.u. let's get straight to the

bloomberg business flash. here is viviana hurtado. viviana: ahead of south africa's state power company will present a draft plan with changing how it operates. the cost of servicing loans is higher than the revenue it is generating local media reporting that the ceo is considering breaking up the utility at a slower pace than the government wants. a former employee of softbank has been arrested for stealing confidential information. local media reporting he was believed to have given the data to russian officials. softbank says the worker was dismissed in december. he had worked on building out the local carrier facilities. u.k. supermarket change iceland denying reports of major job cuts after the sunday telegraph reported hundreds of management jobs were at. it says it recently began review of its management structure. in the u.k., the firm employs more than 25,000 people. that is your bloomberg business flash. in seen? francine: let's get more on the

u.k., the bank of england, and one of the trickiest rate decisions in years. two officials are pushing to ease policy, and at least three will have to join them to force it this week. there is a 59% chance of a cut. joining us, kallum pickering. rate moveof the boe has increased from 8% in december to something that was at 70% pre-davos. what is going on? kallum: i put it at 40%. what is going on is that think you for the economy was doing very bad. ahead of the election. lots of uncertainty, downside risk, and it showed up in economic activity. election, all the data suggested a material improvement in confidence and economic activity. the question is, how much weight potential -- the

could there be a potentiall of a rate cut? there is a caveat. after the june 2016 e.u. referendum, the survey data was very bad for the two months after the referendum, and the bank of england panic. it did some qe, only for the data to rebound and underlined economic activity to remain stable. the question is, do we go to the survey data and say things are better this year, or do we say the underlying trend is weak? francine: why not wait for the budget? if you read governor carney's speech in january, you have couldmakers coming out -- the markets also just be pricing in the wrong thing, hence you have it at 40%? all of these features came at the wrong time. kallum: it could be a timing issue here the flurry of hard economic data from today few

committee members to sound dovish to say that if things get bad we can do something about it, and the survey data is what is going to matter. a fiscal issue is tricky for the bank of england. so versus the september announcements last year, you're .2% --y going to get a -- from the bank of england point of view, it cannot preempt the stimulus, it has to wait for the passing of the legislation. with the forecast on friday, it will reflect last year's fiscal projections when in fact the markets that we know in march were going to get something, it sets the stage for a big upgrade in march. francine: the boe probability of a surge, you can see it moving from basically just really early january, kind of going up and up. his last assertion before bailey takes up march 16, would be

doing andrew bailey a service or a disservice? kallum: it would be virtually neutral for him. monetary policy makers do not make such comments lightly, so it is sensible that they like my that -- that the markets listen to them. the bank of england will have a serious discussion over whether interest rates -- base case, they don't, the global economy looks like it will improve. we have more political uncertainty in the u.k., big fiscal stimulus. francine: the budget matters because we are not affecting fiscal stimulus and we are specter to give more to the north. kallum: fiscal stimulus will be dominantly a demand-side phenomenon. the economy is at full employment. the supply side, there may be restraint because the labor market is tight and wildly supply-side is constrained, at full employment, you suddenly get fiscal stimulus, that is a recipe for inflation. if we do get a cut, it is possible that it is one and done, and then for the second

half of the year, the bank of england starts to hike interest rates again. francine: what do you expect for the pound? kallum: the pound is undervalued even with a pessimistic outlook for britain. the fiscal stemless, no hype from the egg of england, my bet would be against the dollar at 1.37 by the end of the year. francine: what kind of deal does that you need to get rate hikes back on the table? if we see prime minister johnson pushing that deadline and saying i do not to offer an extension, what does that mean for the economy? kallum: what matters is if we get a cliff edge. we stay inside the sickle market. i worry about how we go from being in the single market to whatever the future trade arrangement is. he will ask for a trade agreement in goods. that might be ready by the end

of the year, or may be a six-month extension, but not a very long one. can the u.k. and that you come up with some kind of bridge loan, temporary agreement to smoothie agreement to allow firms to -- to smooth the agreement. when they realize in terms of the objective and the narrow trade agreement in goods, there is a second stream of negotiations that say let's make sure we don't get a mess in these areas at the end of the year. francine: can they do that in the timeline that was set out? or does he go back to political uncertainty? do they ask for an extension or not? kallum: i don't think there will be a formal extension, but i think they will go for a political fudge. in the areas where they do not have any ambitions for a trade agreement, they will come up some emergency agreements to smooth the transition. to give us a glimpse

of what happens with the u.s. -- i feel like everything is muddled, but this could be a significant develop on whether president trump still has johnson's back. kallum: it is a political call. the u.k. is going to find out tother or not you need size -- it is linked to trade. francine: it is an economics question. kallum: it is. there is no way the u.k. can offset losses from leaving the roadside but single biggest market that is on its towards -- on its doorstep, no matter how big the trade deal is. the priority should be the e.u. i would completely discount any prospect of a u.k.-u.s. trade agreement by the end of this year. the priority will be the e.u. if we get something with the u.s. at the margin, that is a benefit, but i am not going to change my longer economic outlook because of the u.s.-u.k. trade deal. francine: kallum pickering

there. coming up, basketball icon kobe bryant, who won five nba l.a.ionships with the lakers has died in a helicopter crash. this is bloomberg. ♪

francine: economics, finance, politics this is "bloomberg surveillance." basketball icon kobe bryant has won five nba championships with the los angeles lakers. he has died in a helicopter crash. annmarie hordern has the details. annmarie: an absolute icon for the nba, an inspiration for those even outside basketball. we are seeing an out pouring of love, support, and sadness, even tributes from presidents trump and obama. he was among nine people killed when a helicopter slammed into a hillside in calabasas, california. his 13-year-old daughter was among the victims. he leads that she leaves behind leavesi -- fight -- he behind a legacy.

he joined straight out of high school at the time, making him the youngest player in the league. in addition to his nba titles, he won two gold medals in the liv-ex and received an oscar for a short animated film -- in the olympics. lastly, he was embarking on a second career, becoming an investor. he showed the same intensity in the office as he did on the court. francine: it is amazing to see the outpour of emotions. a lot of people are saying this kind of grief has very little words and is very difficult to describe, especially for his family. this is what markets are doing. we will continue our coverage of the coronavirus and the impact this is having on the markets. deathsseeing chinese jumping as measures are put in place by the chinese government that have failed to slow the spread of the virus. isse vote -- the virus stocks,the slow in

tumbling today as a lot of money flows into havens. i am looking at 10 year treasury yields, to the lowest levels since october. also west texas crude slumping the most since august. now, bloomberg surveillance continues in the next hour. tom keene joins me out of new york. will talk with the chief fx strategist at societe generale. there is a lot to talk about. "bloomberg surveillance" continues. ♪

francine: the death toll climbs. beijing extends the lunar new year holiday amid reports that

the spread of the coronavirus is accelerating across the globe. at least 80 people have died. contagion fears -- stocks, crude oil, and yuan tumble, spurring haven assets as investors worry about the impact of the virus. and, setback for salvini. the leader of italy's right wing league party is defeated in a key regional vote, providing a boost to prime minister giuseppe conte's government. good morning, good afternoon, good evening, depending on where you are in the world. a lot of folks will be on central banks given that we have the boe on thursday, finally, decision day. the last decision for governor carney before he sets down on march 15. tom: i'm glad you mentioned governor carney. very visible at davos. good to be back in new york. what is so interesting about davos is how much of it is run by new york and london. it is a changed america.

kobe bryant -- but what i noticed on this monday, early american morning is this virus story is changing by the half-hour. we will do a lot of that on "surveillance" today. francine: we have to look at what virologists tell us how we can contain it. it has an impact not only on citizens but also on the pharma companies. we will have a full round up. let's get to first word news in new york city here is viviana hurtado. viviana: that is where we begin, with the coronavirus. beijing is reporting the number of deaths has risen to 80. there are more than 2700 confirmed cases. to try and stop the spread, china is extending the lunar new year holiday by three days. cases have been reported in 15 other countries and territories. formerosive leak from national security advisor john bolton's unpublished book could

scramble the impeachment trial underway. mr. bolden is saying until the government agreed to investigate democrats, president donald trump told him to freeze aid to ukraine, according to "the new york times." that could put pressure on republicans to agree to call witnesses in the trial. benjamin netanyahu says this week he will make history with president trump heard mr. netanyahu will be in washington when the president unveils a middle east peace plan. his main election arrives oh -- rival is any gantz, who will also meet with president trump. the national basketball association says it is devastated. so our basketball players and fans around the world. they are mourning the loss of one of the sports about icons, kobe bryant. bryant and eight others were killed when their helicopter crashed into a hillside north of l.a. one of the victims is his 13-year-old daughter. at the time, there was heavy fog. thent played 20 years for l.a. lakers and won five nba titles.

kobe bryant was 41. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. this is bloomberg. tom: thank you so much per let's go to the data right now. it is very affected by all that is going on in china. i want to make clear, this is a market trying to discover a bid in the early american morning. francine has a more european view. futures were -35, now -40 three. those were s&p futures. futures, -3.67. within all the statistics, you have to look at oil. 52.37, down almost two dollars. whipsaw after what we saw after iran and iraq. crude, 58.70. next screen, please, if we could. the vix comes out near 18. there is the close on friday.

we are very far away from that. add that up together, you do the math. we're looking at a 500 point pullback. the 30-year bond is one of the indicators i am looking at. francine, what do you see in europe? atncine: i am looking similar data boards to you, tom. i do have you on, i am also looking at the italian bond markets are this is on the back of the defeat of but teo salvini . the virus fears is driving off a lot of these stocks. you on tumbling -- the yuan tumbling. we will have plenty more on that. let's get more on the coronavirus p china is extending the lunar new year holiday by three days to try to stop the spread of the disease. it has also restricted travel for millions of people. we joined by the bloomberg health care editor. talk us through what we know. we do not know how it spreads or

how to stop it. our health officials working around the world? : they have taken extraordinary measures to stop china from travel, especially from wuhan. as well, mongolia taking those kinds of steps. and so even while the world health organization last week has said it is more of a local emergency rather than a global emergency at this point, the situation as changed over the weekend that you are seeing a stepped-up response as a result. the distinction this morning seems to be the incubation period of the given virus. i do not you to play virologist here. we seem to know a lot more about what we don't know now dan on friday. where would you guess we would become wednesday? are a lot of unknowns about the situation.

tom: well said. sars least compared with 17 years ago, which is obviously very deadly, spread quite rapidly. the confusion in this case is that people do not know how fast it is spreading because there is that long incubation period you mentioned, up to two weeks in some cases. it could be a lot of people carrying this fires who do not necessarily know it and are transferring it to other people. the i want you to speak as amateur i am an amateur you are as well. there is ebola virus. we heard from a chinese official, this is definitely not sars. this is definitely different from sars. what kind of virus is it? is it a more extended virus that keeps a given 12-year-old out of school for three days? : it does seem more serious than that. seem to bet it does the coronavirus. that family. which is what sars was part of

as well. the death rate is so far lower than sars come and some experts are saying it is not transferred quite as readily as sars, but again, there is that incubation period, which is longer, which means there is a whole lot more unknowns or that is what is causing the uncertainty in markets at the moment. people just don't know how wide could this go. francine: eric pfanner with the latest on the coronavirus. joining us now, kit juckes. and kallum pickering. let me start off with you. if you look at how health officials are trying to do with this, it is positive because we have coordinated action, or do we still not understand enough of it? >> they are deploying all the possible resources, doing it in a coordinated way. he different from 2002, 2003.

region,ook at the wider knoll government wants to be seen as not doing enough about this. as you mentioned before, there are plenty of uncertainties. for us, when we look at it from the political side, there are two dimensions. see safer we going to standards in the region in china in the future? china-u.s.f the trade dispute was already a reason for conflict in the neighborhood, is this another reason to do the same? that is what we will be looking in terms of on the policy side. francine: what does that mean for the markets? kit: we know we are not experts in terms of the medical side of it, but we do know that this is a hit to an economy that was just stabilizing or trying to stabilize off last year, so this is going to hurt chinese growth,

tourism, domestic growth. for a period of time. at the point when every forecaster you have seen was looking for stability. that is inevitable, and that will feed on in terms of the longer period of weakness in global trade, so it will kick on , hong zealand, taiwan kong. we are trying to get over the hong kong riots. and then back into europe because the big loser from china last year was germany. ground with ar negative impact from that, and that is why we are buying bonds, then we are double guessing comparisons with sars in terms of what that meant specifically, to be honest. tom: it looks to be significantly correlated, and in a crisis like this, you never know the why, but it gets you to a suction view that is pretty sluggish, yields lower, -- a that is pretty

sluggish, yields lower, futures now 43. kit, how do you play this? which asset category gives you the opportunity not to lose money and to actually use the opportunistically this terrible crisis? kit: this is good for bonds. this is always good for government debt in this kind of environment because it just means interest rates will be even lower for longer. given the news in italy, inevitably the bigger winner is the china bond market. all european bonds will continue to have a bid on the back of that. that is something that is going to persist. in the foreign-exchange market, the swiss franc under pressure from the americans to go higher because they do not like the swiss national bank intervening that will probably do well. the japanese yen always does well in this environment. tom: anthony in the control room, bring up the bond chart that you just brought up.

six basisoming in points. those are extraordinary moves. they are not back to historic lows, but we are getting there rapidly. this is the china chart, which we have used any years ago, and this goes back 13 years to 2007, and the feel-good before the crisis. i'm sorry, kid jukes, this is a linear feel. joyce chang of jp morgan down in -- a margin of 5% growth. contagion limit a like this into what it does to a nation separate economic growth? kit: you don't do it in a very precise way, but you say if i was looking for a reason for that line to stop going down in a straight line, this ain't a reason for that to stop. i don't even say anything more sophisticated to that. economy has too slow and it is going to continue slowing. they will probably be under more pressure to ease both monetary

and eventually fiscal policy this year than they were already. francine: thank you both, kit juckes of societe generali. and wolfango piccoli. a key regional vote -- we listeningext you are to matteo salvini give a live news conference as we speak. he is responding to a question there in bologna. we will have plenty more on that. this is bloomberg. ♪

tom: good morning, everyone. "bloomberg surveillance." let me do a data check right now. we will do more of these through

the morning, and it is usually coordinated that hugely coordinated. unknownlibrating of the knowns of the virus eerie futures -44, dow futures at -375. watching your, that would be a big deal. , flatteningpread out aggressively over the last two hours. francine: italy's matteo salvini has suffered a stinging defeat in a regional vote, making a snap general election less likely. our guests are still with us. when you look at italy now, does it actually make the government more stable, or is that wishful thinking from the markets? wolfango: i think it is wishful inking. i think it provides governments some relief, but does it make it more stable? no.

the condition remains fragile. the five-star has collapsed. we should look at what happens to the five-star. where they went from 43% to 6% yesterday. the pd would have to acquire a greater way within the coalition. has noe-star they say leadership and they have a very different view of key items on their agenda. so they get to live another day, does not get a reelection, but the government remains chaotic. francine: what does the government need to do in terms of -- i don't know if it is handouts, or with their flawed structure to stay in power. wolfango: they need to agree on what they want to do, to stay in power. they are not there. on the key items, what to do with it tally a. there is no agreement. they should review their priorities, try to create some

and pusharound that, ahead. the majorities become thinner, more than 20 lawmakers have left the bardi or been kicked out. -- the party or been kicked out. there are more than 1000 city councils going into election, and we have a referendum coming as well. head of the new rounds of elections. the time to get things done is short. does it matter -- and i say that respect to the x number of italian governments since world war ii. i guess it is business as usual. does it really matter that they find some political stability, or does it just keep going on and on in an italian way? goes on in an, it italian way as long as the market allows italy to do that. that is likely to be for the foreseeable future, given the environment where we are. does it matter? yes. salvini is still there.

the stress of the populace is there, and the economy is not going anywhere. structural at more issues, the demographic for italy is horrendous. there are more and more ofllenges, and with the lack political stability, they are simply wasting time back home. francine: but the markets since that. kit: bond yields will stay low. the size of the debt to gdp ratio at this level of yield and this level of backdrop is the least of anyone's concerns. back in the early 1990's, we worried about that, and today you are not going to get very far worrying about the italian government's ability to repay debt. but the longer term issues, in terms of italy needing stronger government to tackle these key issues, that has been there for all of my career, life, something. but right now, it is not going

to have much of an impact on the currency, to be honest. it is peripheral to that. you see it all in those moves lower in bond yields because the short-term relief -- because if we reduce the number of relevant parties in italy, you do in the long run get closer potentially to be able to find some kind of system of government, trying to cobble together coalitions of strange bedfellows, which is what happens in italy quite a lot. it doesn't solve things. this takes an actor effectively off the stage. francine: thank you both, kid juice with societe generale, and wolfango piccoli. they stay with us. there is fear that the coronavirus has spread. it is not contained for the moment, which is why we are seeing very clear risk off moves. andks are under pressure, havens get a bid. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." let's get your bloomberg business flash. china is using this company's hiv drugs as an ad hoc treatment for the coronavirus outbreak. health companies are trying to come up with a vaccine. royal bank of scotland reportedly will cut thousands of jobs at is mount west unit, according to london's "sunday times." the paper says the dismissals are part of a cost-cutting

effort by the new ceo, one proposal calling for 3700 retail banking jobs to be cut. elon musk pushing back against critics of the test plan he is building in germany he says concerns that the factory would cause water shortages are exaggerated. over the weekend, tesla had a different sort of environmental challenge. said seven world war ii moms were found on the site that is your bloomberg business flash. ii moms were found on the site eerie that is your bloomberg business flash. tom: kid juice is with us, along with wolfgang piccoli. -- kit jukes is with us, along with wolfgang piccoli. on the curve, the vulgar oddities of the 1980's. 2008, -- the full curve oddities of the -- how does this constrain any central bank, were

not only are we at the zero bound but where it is nicely negative yields, even out 30 years? kit: and we are going to have to get used to it. it does not constrain the fed in terms of moving the fed funds rate down, but i think it does genuinely limit the potency of the policies. moree fed is going to ease by the time this year is done, they will go through a series of meetings where the options are, everything is ok and we are doing nothing, or everything is a little bit of a threat to the downside and then they ease. i don't think lower fed funds does much for an economy with bond yields here. getting nominal yields back down toward their lows will not make a lot of difference to the economy. i would be surprised. maybe it does something for the s&p because that is the easiest thing to move. the gospel in davos is that the united kingdom could never

see negative yields. says who? kit: says a few people who don't know that you should never say never. we have seen enough negative yields to know that -- i don't think they help in nominal terms. the swiss wish they did not have negative yields. we have seen that once you start passing negative yields on a lot to retail customers, it is very unpopular and it may be counterproductive. but when you are faced with a slowing economy, what do you do? that is what will be facing the bank of england fed. jukeshank you, kit joining us -- kit jukes with us all day on wednesday. markets are weaker, and politics in washington. this is bloomberg. ♪

tom: good morning everyone. francine lacqua in london and i am tom keene in new york. right now, the "first word

news." china's death toll from the coronavirus is climbing. beijing says at least 80 people have died, about 2700 have been infected. countries and territories have reported cases. oil prices are tumbling, fears that the virus will hurt demand. believes the prices will have a limited impact on consumption. fourth quarter hiring at u.s. companies show signs of cooling off. association of business economics essay 18% of companies says employment rose and an equal share said it fell. fog may have been a factor in the crash of a helicopter carrying kobe bryant and for others.

-- and four others. among the deaths were his 13-year-old daughter. local police had granted their helicopters because of the fog. spent 20 years in the nba. he also had begun a growing second career as an investor. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by over 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you. right now, on the book-of-the-month club which it seems like every 30 days is a new book out about the trump administration. phil rogers, a very stable genius, seems to be doing pretty well right now. be -- theyng to spent their career writing about

different government affairs. finding the difference between john bolton's book to come and a manuscript. what is the discriminant -- the distinction of a manuscript with fiery language versus an actual published book? >> based on the new york times report, he had submitted this manuscript to the white house for review by national security officials for any sensitive security information. whether or not it sees the light of day in the current manuscript form is a real question. the revelations that have come time in at a pivotal the senate impeachment trial and has the potential to change the nature of the trial and the way it is handled. the white house had bolton not to cooperate with the house impeachment committee -- impeachment hearing. earlier he said he would cooperate if he was subpoenaed. according to this manuscript, he

is directly contradicting trump's defense would says there is no link between this freeze on military aid to ukraine and that the president of ukraine announce an investigation into the bidens. bolton looks to be a first-hand witness contradicting that, giving evidence of an actual quid pro quo. francine: the michael schmidt article suggests -- tom: the michael smith article suggests the white house could block part of the book, redact part of the language. can they do that? stephanie: on national security grounds they can. this could be legally contentious. they could appeal, but they do have wide latitude to block him from releasing some of this information. the real important thing is that it could change the calculus on a number of republicans willing to back calls for witnesses.

before this it looked unlikely that they would get four republican senators, the number they need to back calls for witnesses. now that is up in the air. it increases pressure on those moderate republicans to back those calls. why not call bolton in? he is willing to testify. why not hear from him? is calledif bolton in, would that be a smoking gun? i think it is a smoking gun. it change the chances of trump being impeached? i don't think so. he still has enough republicans backing him, i don't think he will be impeached or removed from office. doesdditional information change voters minds. francine: what are we hearing from trump today? stephanie: today we are hearing

from alan dershowitz. he will be arguing that house managers have not proved that whatever trump did was impeachable, that it doesn't rise to the constitutional standards of bribery, treason or other high crimes. a lot of other constitutional experts disagree with him on that. they see what trump has done as a clear abuse of office. dershowitz will be pushing that ite that it does -- that just doesn't rise to the levels of impeachment. francine: stephanie baker, thank you very much. coming up, one of the trickiest decisions in years. we discussed the boe next. this is bloomberg. ♪

tom: bloomberg surveillance. more data checks today. everywhere there was a correlation. we have seen some real deterioration. , negative four. this is worse than the last hour, the last two hours. within all that, the yield markets giving you the most information. been kind enough to mention that. francine: the u.k. is set to end its 45 year relationship with the european union this friday. the boe is expected to make a

pivotal rate decision. they have not lowered interest rates since 2016 after the brexit vote. let's get back to kit juckes and wolfgango piccoli. the problem is that the markets is really front running this. if you look at the probability of a boe interest rate cut, it was 8% in december, and now it is around 59%. what are the reasons the boe should cut? kit: if you are going to cut, why not just get on with it? there is a 100% chance of a rate cut in the first half of the year and we just shuffled often to the next couple of meetings. if i decide of the economy needs help because of the headwinds it was facing, then should not just get on with this and do it now to help? otherwise don't bother cutting at all. francine: would you not wait for

the budget? this is a new conservative government, tied to much more fiscal spending on infrastructure. wolfgango: i would put on the budget because the messaging has been fairly mixed. in my view, going back to the point that kit was making, i am not sure that a rate cut would make much of a difference at the to of the day because sustain growth in the u.k. would not be overcome with a rate cut. the issue is much bigger, much more political. tom: within this constant is -- within this caution is where is the fiscal space? a lack of austerity, it is easy

to talk about turning on the switch. kit juckes, do you see fiscal stimulus coming in the united kingdom? kit: i do, with more of a focus on long-term investment. we have been through a lengthy of getting our deficit down to 2% of gdp. there is no point in doing the -- of getting government spending back under control if you are not going to use it when the economy could use some help. a lot of the end -- a lot of the emphasis is on long-term budget. more significantly, we have a prime minister whose track record as mayor of london was definitely not one of fiscal austerity. francine: what kind of relationship will the u.k. have with the eu once they negotiate the trade agreement? we need to negotiate

that agreement and the time available is not much. will hear about this negotiation for a long time. we are looking for a company in agreement, the alternative is but was suggested in a scum of the minimum. if we are looking for something meaningful, we are going beyond december. if we are looking for some bare-bones, there is a chance but there will be economic price to pay for it. kit: i don't think that is how they're going to debate it right now but i am not sure i can see the point of it. the housing market is just stabilizing. the mortgage rate cut will definitely put some juice into that and getting the economy moving in the right direction.

trade talks are going to matter for the next 30 years. they just need to do those right and take as long as they need to. wolfgango, where are we going to be on the 31st? the idea that january 31 is a big deal but when the sun comes up the next day, what happens? u.k.,ngo: in terms of the e.u., the u.k. will lose their voice in european parliament. the rest will not change much. the clock will start ticking basically. will not start ticking until mid-march when they will give the mandate for the next round of negotiations. we have mid-march until the end of june to decide whether you want an extension or not. narratives will

be back on the agenda. tom: kit juckes with us and wolfgango piccoli. i want to show you a four-day chart. hugely influenced by the news flow and the virus. those of you waking up in america in five hours, some real market stability. here is the weekend right here and this new leg down is one of two down this morning. s&p futures down -55.0. down futures down 429. stay with us, this is bloomberg. ♪

viviana: you are watching bloomberg surveillance. let's get to the bloomberg business flash. tech companies under fire in tohington resisting pressure police political ads or give the government access to encrypted devices. billionaire brothers charles and the late david coke founded this company. british promised her boris

johnson's expect it to let huawei take a role in setting up the u.k.'s 5g network and that could put his friendship with president donald trump to the test. president trump once the chinese company band. banned.ny 350 people have put their names in public statements regarding amazon's climate. the company has threatened to fire work -- workers who talk to reporters without authorization. that is the bloomberg business flash. tom: part of our effort at bloomberg surveillance is to provide a little bit of information among the good reporting we have seen from bloomberg and other news outlets. right now we are going to do what we did last week which has been set with thomas monier. he is the health care editor, most importantly he is in

geneva, switzerland, one of the world's center points of the world health organization. help us with the great fear that is the incubation. we have fever, malaise, aches and pains and that can vary, virus to virus. smarter in geneva about the incubation then we were a week ago -- then we were a week ago -- than we were a week ago? thomas: it can take about two weeks for the virus to incubate and then show symptoms. that raises questions to all the numbers that we have been getting of reported cases, so far it is 2700 reported cases but will that number start ballooning given this delay? tom: it is a fancy name, coronavirus.

there is ebola virus, poliovirus. norovirus as well. what kind of virus is this coronavirus? is it comparable to something? they are all viral diseases. this one is very much comparable -- there is one study saying it is something like about 70% to similar to the sars virus. still trying to assess this and it does seem to fatalities rate of seems to be different than the sars case. francine: how long does it take a company or health care companies to come up with an antidote against this? a vaccine. thomas: companies are already

trying the best that they can. what is being used right now in chinese hospitals is an antiviral aids treatment, two treatments. they are trying to use that to treat patients. another thing that is going on antesting whether or not ebola treatment could be revamped to use for this. francine: doing know what the next step is? we know that china is building hospitals. beduhan there is a 1000 hospital that should be done by february 3. do we know what other steps could help with this? ofmas: it is a matter research. it is a race against the clock to find something that could treat this virus effectively.

happenedhing that just is the bill and melinda gates foundation offered $10 million to help the first treatments against this in china and africa. it is early days. there is no effective treatment yet. we need to see what can be done. tom: thomas mulier, thank you so much. he is in geneva, leading our coverage on health care. right now leading our coverage on the markets, we are thrilled kit juckes is with us. we have to go over to the medicine which the market looks a lot like what socgen was predicting. offyou make your 2020 move of this terrible thing in china? literally in three weeks? kit: no is the answer to that.

the uncertainties are still there in terms of what is happening. when the dust settles around this, the big question will be whether the global economy is still slowing, whether the u.s. economy is losing momentum. the question right now is how much does this affect that? is certainly done dealt a serious blow to the chinese economic rebound. issue for global economies, on your side of the atlantic is this u.s. economic slowdown that is pretty well entrenched lb at extremely gradual -- albeit extremely gradual. tom: above 98 on dxy. we dipped below that. the big market index as well.

can you establish a belief in the dollar here or do you do what the adults do and just stand aside? kit: you slightly stand assigned. the current environment is not bad for the dollar. the current environment is good for swiss franc but right now, the current state of play, the u.s. economy loses some momentum and fed rate cuts come back on the table more meaningfully. it is worse for the euros than the dollar right now. now is theright eurodollar breaks back down. francine: what happens after 1.10? kit: i get bullish about the long-term and skittish about the short-term. is that euro-dollar is very stretched in real terms. the euros very cheap. it only goes down painfully slowly because it takes a ton of bad news to drag it lower.

the danger is that euro-dollar moves very slowly lower, volatility dies and the entire focus of everybody is on other stuff. francine: we had an important conversation with the swiss national bank governor -- or president and davos. how impossible would it be to defend the currency? kit: it is already very difficult, going into the u.s. and saying we are not intervening in dollars swiss. one of the things that has happened is the swiss has done remarkably well given the level of currency pull-ups the last couple of years. swiss gdp growth is running at the same rate as european gdp growth. is living with this monstrously overvalued currency. it is a very overvalued currency but it does not hurt the economy. there is not much they can do to

stop it. one of the things that will make people buy it is we are not sure you can prevent this currency strengthening now. tom: thank you so much for being with us. thrilled with how much we see a view and the perspective on the markets. mr. juckes. a must-read on london and the city. we are scrambling to keep you up-to-date on the breaking story and china. so much of asia shut down for the holidays. neeson will join us from bloomberg news. he is our number one guy on and wecare and virology got lucky, carl weinberg with us next. xt.

by the strolle♪s ♪ i want to go, go, go where my baby is ♪ hey. hey. you must be steven's phone.

now you can take control of your home wifi and get a notification the instant someone new joins your network. only with xfinity xfi. downlaod the xfi app today. tom: this morning in central

china, the fear of a virus. this is very different from sars. it is an epidemic. it is not yet a pandemic. america and france will fly their citizens out of central china. markets are still reacting this hour. oil is weaker. gold is more valued. futures at -55. suddenly, basketball. all of l.a. grieving. what a difficult day yesterday. good morning, this is bloomberg surveillance. francine lacqua back in london. we have to go to the virus. this nation grieves this morning. francine: a lot of people around the world grieving the great legend when it comes to prowess on the field but if you look at u.s. futures and european stocks, the virus fears of the

coronavirus is really driving quite a selloff in stocks and oil and a lot of people are trying to figure out what comes next. how any people have been infected, how do you stop it, how you isolate and how it moves from one person to the next. tom: i want to bring up a chart. great data by our team. spx futures through the day, the weekend on the right side. we will get this chart out at some point and you can see the linearity, the decline of learning out -- learning about the virology of the virus. with that we get our "first word news" in new york with viviana hurtado. viviana: we begin in china with containment efforts that are failing to stop the coronavirus. the number of deaths has risen to 80. more than 2700 cases are confirmed. newa is extending the lunar

year holiday by three days. 15 other countries and territories have reported cases. an explosive leak from former national security advisor john bolton's unpublished book could scramble the impeachment trial. all of this according to the new york times. that puts pressure on republicans to agree to call witnesses in the trial. multiple reports this morning from afghanistan about a plane crash. the passenger plane went down in a tele-band area of the country. one report says it was a boeing but they say their flights are operating normally. the nba says it is devastated and so are basketball players and fans around the world, morning the loss -- morning loss of -- mourning the loss of kobe

bryant. one of the victims of the helicopter crash was also his daughter. at the time there was heavy fog. he played 20 years with the lakers. he was 41. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by over 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: let's get to the data right now. i want to get through this quick. we showed early data in the hours. futures negative 458. there has been deterioration. oil down 3.5%. the vix now out pushing your 19 as well. 0.7.ar bond was francine: looking at treasuries, i am also looking at italian bonds jumping after regional elections but if you look at

china's vernon be -- china's rename be -- tom: we got lucky and have carl weinberg scheduled. prodigious and acclaimed on his chinese note. we will get to that in a moment but right now we get even more lucky. darkening the door of our world headquarters is drew armstrong. our lead pharmacy expert and he really is that on pharmacology. antibiotics, virus, good luck. what does the industry do to rapidly do the good luck of trying to stop a virus? drew: right now an industry standpoint you are talking about the long road towards getting a vaccine targeted, tested, manufactured. we are in the middle of this right now but that is going to

take months if not years. this outbreak may be long over or at an entirely different phase of the time any of that happens. instead this is a public health measure. this is going to be about quarantines, tracking bad cases, trying to stop the spread of this thing. tom: you did not get into a fancy school without reading about the plague in high school. a very difficult book. withre what you see now the medicine and virology of the sars epidemic. the coronavirus is in the same group but is this a different discussion? drew: it has some similarities from what we know and it has some key differences. sars at this point got much bigger, killing 800 people. we are watching to see if this isn't outbreak that aggressive measures will contain before it

gets that big and if it will have the world economic effect that sars did or are we talking about the thing that continues to grow and becomes endemic. tom: have you been to wuhan? carl: i haven't but i did go to penn and that entitles me to literature about this disease. it seems the death rate is not different from other diseases. drew: this is something to keep in mind. worry about the flu, it is worse. the flu hits hundreds of millions of people every single year. that is really bad. if we were talking about a new flu in the world, that is a catastrophic thing from a public health standpoint. right now this is in a relatively small number of people. the death rate seems to be relatively low. that is a good thing but we also

don't know what the whole scale of this impact could be and this is kind of a viral sweet spot. a low level of acuity means if it has a long incubation, you can spread it to lots of people. right now you are talking about several thousand to 10,000. if you ramp it up to several million like the flu, that is what you don't want. the flu is really bad. francine: how long does it take to actually come up with a vaccine for this type of virus? drew: we have been told at least three to four months to get something in the early stages of testing. that is then going to take months to years to get out to the point of being able to manufacture a vaccine. it takes a really long time. it doesn't take a long time in the history of the world, but in terms of truly rapid response to

an emerging outbreak, a vaccine is not the thing that is going to solve your problem. it is going to be public health measures like corentin, identification, hospitalization and taking care of people as they are sick. francine: there is a clinical toal underway using drugs treat the new cases of the coronavirus. when will we know if these work? drew: one of the things you see often in an outbreak is if you are in a position on the front line of this thing, this is your clinical trial. your essentially trying something out to help with patients because there is no clinical history. you don't have any kind of medical literature you can turn back to and say what if we tried this? we know there are efforts on other coronavirus is to identify of this category of drug works but it is early. there is not a ton of clinical evidence but they will continue to try everything to help. tom: this is really intelligent discussion and i shift from

ebola, sars and that drama over issomething mundane, which the 1918 spanish flu, the 1957 asia flu. is that the better compare from what we know right now? that no one is saying because that was a catastrophic world event. even the who, as concerned as everybody is, this is for now a regional china emergency. i think until you start to see sustained transmission outside of china, that is when you start to meaningfully worry. everybody that has this outside of china is traveling from china. they were in wuhan or nearby and they have come back home. that is to be expected with the chinese new year. putting those people outside of china means there is potential for this, especially with the long incubation period, concerns about if this is transmissible

but we don't have that yet. chinaarl, how distant is from all the cities, beijing, the pacific rim. china is linked together, tied together, or is it distinct from the geography we are talking about? carl: you are comparing today to the early 20th century and the mass transit options means that geographic distances don't matter. the high-speed trains, the planes, even auto traffic is very rapid. truck traffic, moving food and produce from one place to another. even just moving physical goods can also transmit the disease if they are not properly disinfected. the linkages are not dependent on geography and china is a highly integrated nation with the most advanced mass transit,

freight transit lines, the possibility for spreading is much greater than 18 -- much greater than 1918. we still don't know where this is going. a couple thousand cases in the nation of 1.4 billion is not a huge penetration. we don't know how it is going to spread and economically the extension of the lunar new year peopleuary 2, a lot of would bridge that holiday and not reopen their companies or come back to work. we are not talking about a huge this unprecedented national shutdown and to my mind that tells me to take a deep breath, the markets are panicked that at the end of the day this could just as easily turn out to be like sars. we look at gdp over the span of the year, there is no --

francine: more than 1000 people will be sent to one to assist in efforts to contain the spread. are you just stuck there for the foreseeable future? drew: in a lot of ways, wuhan is more or less shut down. you have a curtailing of public transportation, private ridesharing services. i was in china last month and i used their version of uber to get around everywhere. no trains in or out. foreign dignitaries and workers are being evacuated. the u.s. is bringing out the consulate workers. this is essentially like quarantining a city bigger than new york. if you could imagine that in the united states, people describe hahn as the chicago of china. it is a truly massive place. you have other cities in addition to that that have been locked down from travel. it is really meaningful.

while that is going to have some effect on helping stop some of the transmission from outside of wuhan, you were still talking about a city of 11 million people or so where there are still people moving around in wuhan. francine with the important insight of the day. drew armstrong with us from bloomberg news. carl weinberg will continue with us. let me do a data check. i am watching the intraday screening with futures at -55, dow futures, -476. yields are working their way in. the 30 year bond at 2.05. bond prices higher, lower yields. this is bloomberg. ♪

francine: this is bloomberg surveillance. tom and francine from new york and london. we are back from dabo swinney this -- it is impacting stocks, oil but also the currency in china, all tumbling today. haven assets are feeling that. italian bonds are jumping after regional elections did not show . victory for salvini tom: is lincoln mitchell -- joining us now is lincoln mitchell. a lot of different things including political consulting and most importantly he has done a lot of work figuring out if major league baseball will survive. we will save that conversation for warmer climates.

lincoln i fully support that. francine: these are serious -- tom: these are serious times. a politics, there was sort of piece of the democratic party with the era of clinton, a piece of the democratic party with the era of obama. to me we are back to what i remember as a kid which is every democrat for himself. is that what you see in iowa, traipsing through the different primaries? the numbern you have of candidates we have, it is going to be like that. primaries divide, the term elections bring together. having said that, the actual differences between the candidates is much less. 1980 eight, you had the kind of conservative al gore and jesse jackson. those candidates did not have that big of a difference today. they are much more ideologically cohesive and that is one of the reasons we have such

polarization and division because both parties have cohesive ideologies. eight spectacular article, democrat academics have removed themselves from working-class america. just an extraordinary article. how removed are the elite democrats from the people in america that get things done? lincoln the elite democrats have positions like they want gun regulation, the support marriage equality, they want more action on what -- on climate change. from one perspective, these are framed as elite but the majority of americans hold these opinions. i'm not sure that paradigm holds up. when we say working-class, we mean white working-class. that is where the rift is. the nonwhite working-class continues to support the democratic party in extraordinary numbers. i am suspicious of that framework.

does't think -- francine: impeachment sway votes? lincoln i don't think it will sway a lot of votes. what we are seeing in the senate is not about the reelection of president trump. the question we should be asking is will this sway votes in maine and colorado, though this sway votes and other states where income at republicans have tough races? this is what this witness debate is about. republicans are going to vote on a party line to acquit president trump. mitch mcconnell, the majority leader knows that. but to do that he wants to make it as easy as possible for those endangered republicans. the more witnesses, more testimony the wrist, the harder it is because the case against donald trump becomes more clear. this may sway votes and if it does, it will sway more votes in senate races. francine: what do you think voters will decide on, come

november 8, carl? is it the economy or something else? carl: voters vote on their bellies and the economy is going to be a swaying factor and it does give president trump a bit of a leg up since he has delivered some advances for people with the tax cuts, a strong stock market. there were lots of quote unquote, accomplishments he will take credit for that will buy him some traction on the polls. the impeachment is a wildcard. he could possibly come out of it although the results seem to be a foregone conclusion. how you get there is revealed, that is a wildcard for the election. tom: we will continue with carl weinberg. lincoln mitchell, thank you so much for joining us. we look forward to speaking to you in the coming weeks as we stagger from caucus to primary to primary to primary. let me do a data check. captured it yet.

i am saying maybe, futures are negative, dow futures, -450. stay with us. worldwide, this is bloomberg. ♪

viviana: this is bloomberg surveillance. let's get your bloomberg business flash. shares of -- are jumping. china is using the company's

aids vaccine as a ad hoc drug for the coronavirus. the world bank of scotland will cut thousands of jobs at its west unit. this is according to the london sunday times. the dismissals are part of cost-cutting measures by the new ceo. musk pushing back against critics of the tesla plant he is building in germany. he says concerns are exaggerated at the factory would cause water shortages -- that the factory would cause water shortages. that is your bloomberg business flash. tom: two quick charts. this chart is very familiar to many. it is the collapse in china gdp over many years. down we go. joyce chang of j.p. morgan modeling under 5% growth. what do you have?

francine: looking at italian bonds. they surged but what i have on screen is the btb bund spread and that has been tightening after the 10 year debt split after salvini suffered a stinging loss in the regional vote. this is quite important because the democratic party, the main establishment of the government could roar back to life with its pretty big victory and a regional vote that shut down talks for the moment, so we will talk a lot more about it and we will talk more about treasuries. this is bloomberg. ♪

tom: bloomberg surveillance. saffron -- we took

separate planes home from zurich as they required us to do. we finally have a bounce off of what has been a difficult morning. the big gap is the weekend. monday and with the viral news, we go down and we do have a bounce, futures -48. call wing -- carl weinberg is with us in new york. peter dixon joins us in london. peter how do you adapt and adjust to virology? basically we don't know very much. we know there is a problem, we don't know how big it is or what the spread will be, nor do we know what the long-term implications will be for the chinese economy. it isall of that, probably a good time to take some risk off the table. sit this one out and we will come back potentially at some point in the future but the trouble is we don't know how

long we will be out of the markets, we don't know how far the market will fall before things turn around, so it is an exceptionally difficult time. peter, down 2% or 3%. that is not even a correction, have we become completely immune to understanding and studying corrections or heaven forbid a tangible bear market? yes, that is a very good question. how may times of the year have we said markets will continue to rise? i think it is a very good point. we've forgotten the fundamentals. let us perhaps because the fundamentals are what we were. we are living in a market that by been given wide support central bank liquidity for many years. as central banks remain

significant shocks such as this one, there is no real reason to expect equities to completely fall off a cliff. francine: would've they realize? --st that equities especially if you factor in that central banks could be running out of ammunition? peter: the problem is that investors have to go somewhere. they are going to go to the bond market. want the dividend yield that stocks can give them. there is no real reason for them to sell off significantly. there will be panics like we have seen but generally speaking i think investors want to stay invested. francine: will they continue getting the returns? tom and i just got back from davos. at some point, do something that

-- does something have to give that will pressure a company to reinvest? peter: maybe that will happen. certainly the tide is running in that direction but it is not something that is expected to happen anytime soon. under those circumstances i think markets will have time to adapt. you will see leveling off and some modest corrections but for the foreseeable future, i think it is business as usual. tom: carl weinberg with us, a market goober right now. bring up the chart if you would, i don't have a manner on this next. --is real simple, this is showing how absurdly simple this pullback is. the equity markets are within the study of econ 101. how do you frame a boom bull market, the fear of a bust as we saw in davos in this chart which clearly shows that we barely

rolled over even with the tension of a virus? carl: i agree very much with the point that the money has to go somewhere and it is not going to bonds or cash. there are a few places that money could go other than equities that could generate returns for investors. some call this the basis for a point but i think at this it is pre-much a wall of money argument that is keeping the stock market moving forward. look at japan, the nikkei is ising and the economy enriching. are for falling prices and falling sales and falling prices for the money has to go somewhere. yourpeter dixon, where is efficient frontier? where are you right now? peter: obviously i am constrained by the amounts i can i think right now

because there is no other alternative. in a pension fund you are restricted in the amount of equities you can hold, which is weighing on returns but i accept that there are instances such as today where you might want to question your main thesis. for the moment, it doesn't make sense to jump out the window just yet. francine: that is good to know tom: -- that is good to know. francine: what about trade? what president trump wants to do with europe, especially against german carmakers. peter: that has always been coming down the pipe. it is a problem which europe has worried about for some time, that once we get phase one out of the way, europe will come into president trump's sites.

-- president trump's sights. the u.s.-eu potential problem looks like a second order of magnitude problem. if it intensifies we will think again but right now, don't panic. tom: peter dixon, thank you so much for being with us from commerzbank. carl weinberg with us. -- has a scathing note scheduled to be out today saying this is not 1999. she does not mince any words. right now with our "first word news in new york is vivid -- with our "first word news" in new york is for vienna hurtado. viviana: saudi arabia says they are monitoring the situation but believe the crisis will have a very limited impact on consumption. in the fourth quarter hiring at u.s. companies, showing signs of cooling-off according to a new

survey from the national association of business economics. sayof companies questioned employment rose and an equal share said it fell. fog may have been a factor in the crash of the helicopter carrying basketball icon kobe bryant and eight others. everyone onboard was killed when the helicopter slammed into a hillside northwest of l.a. among the victims, bryant's 13-year-old daughter. nbant spent 20 years in the with the los angeles lakers. he won five titles and began a growing second career as an investor. kobe bryant was 41. tom: right now, -- with us with bloomberg sports. looking at basketball and every other sport within america each and every day. i was surprised yesterday with the coverage on mr. bryant that nobody actually talked about how he played basketball. what was his distinction?

baseline, how did he bring the ball up court? eben: he was a relentless competitor and a gifted scorer and a pretty darn good shooter as well. number, heook at the passed michael jordan, one of his idols and two days ago, lebron james passed him for third all time but when people think about kobe as a basketball player, there is no question that his will not lose competitiveness and his work ethic stands out. tom: the work ethic of 817-year-old west a live with this agent and could not sign his contract until he was 18. when was the great shift of maturity from a wonderchild literally and then at one point it became a different bryant. when did that occur? eben: some people will tell you he was like that when he was very young. coach of hima

remembers when he was 17, 18, coming into the training facility two and a half hours before practice. you could hear the ball bouncing and kobe is in the dark shooting free throws. he had a lot of that drive when he was young. i think there was a shift in his game and his maturity once shaquille o'neal left the lakers. they won a lot of titles together. a lot of people felt like these guys could not win these titles if they were not to of the best players playing together. he won two more with a team that was largely his. what catapulted him to legend status? was it the gamer what he did off? eben: i think it is all of it. his work ethic as we said became kind of the stuff of lore around sports. there is no question he inspired a lot of people. you also have to look at what he did off the field. we talk a lot about athletes and

their investments or what they want to do. kobe espoused all the things that athletes are striving for. he wasn't just investing in companies. he was a named partner in a firm. he was not just appearing in media content, he owned his own studio. he was a bestseller on the new york times book list. thead the money behind and info structure behind a lot of the deals that basketball players and all athletes are kind of striving for nowadays when they're playing. career is over. tom: there has been extensive coverage -- when they're playing -- when their playing career is over. tom: eben novy-williams, i want to watch the new kobe bryant right now. who in the nba is playing as mr. bryant used to play? eben: the big names right now are a lot bigger guys than him. nnis, the reigning mvp.

a lot of people view him as the next star in this league. bead --h joelle and joelle embiid. that is part of kobe's legacy, that the kind of player he was might not have been as well in today's nba. tom: eben novy-williams, thank you so much. much more out of los angeles today including the investigation by the federal transportation authorities. kobe bryant, a los angeles laker. ♪\

francine: the beauty of capitol hill in washington, d.c. we will have plenty more from washington with our d.c. politics. this is bloomberg surveillance. tom and francine from new york and london. china is extending the lunar new year by a few days to slow down travel. joining us now is max neeson of bloomberg opinion and still with us is carl weinberg. max, you wrote about this extensively. what does sars teach us in how we should deal with the coronavirus? max: that was an outbreak that obviously was of great public health significance. there already appeared to be some key differences and one that is particularly relevant is

the fact that this virus has a long incubation period. people can carry it and be contagious for two weeks without showing symptoms. that will make containing it with travel bands and other public health efforts particularly difficult. it kind of heightens the importance of developing a vaccine or some other treatment for this condition as it continues to spread. francine: this great opinion story says deadly viruses are not pharmacists top priority. why not? max: the reason is money. developing vaccines for these emergent viruses is not especially lucrative. by the time to get one through testing and onto the market, often these outbreaks fade away. developing a vaccine for ebola is an exception and something that will prove more difficult this time around. large pharmaceutical companies have large vaccine units and

thus far, people trying to develop something have been much smaller biotech's without anything like the record or the budget that these larger companies have. simple, united airlines flight 199 drops into los angeles, 3:40 p.m. this afternoon from shanghai. what do u.s. officials do with an incoming aircraft right now? max: they are still trying to figure out the magnitude of the response you need to have but i think over time you will see more aggressive screening trying to figure out what the best way to test this is because when you have a virus and not everyone has a fever, it and this -- it necessitates doing more involved testing. you might have expose that system -- symptom screening or people that actually travel through wuhan getting a little more attention but i don't think we are quite at the stage where every single plane -- tom: carl jump in here.

we go back to 1919 with the spanish flu. do you look at this as ebola or sars like? or do you look at it as a more general flu? interesting is an -- just your regular flu this winter has sickened and killed more people in the united states than this disease has an wuhan. tom: carl, what max just said and we heard from drew armstrong is incredibly important. we have this drama in the media. the regular old flu is what this is about. carl: i had the flu already and it was awful. the question in china is we -- the shutdown of the entire economy and the holiday is interesting.

shutting down and locking down wuhan, a city bigger than los angeles or new york, that is a big thing economically. placesgetting stuck in where they did not get expect to get stuck -- were they not -- where they did not expect to get stuck for a long time. i am not really sure. nofar as i can see, there is solid solution and everybody is just guessing. max: that's about where we are. i saw new story that china is testing a cocktail of hiv drugs. it will be quite a long time before we have new medicines in human trials. much longer than that before they are at global production scale should that be needed into the spring and summer. francine: what is quite a long time? would it take two to three months to find a drug that combats coronavirus or even a

vaccination? max: that is the most aggressive timeline i have seen. a company hoping to have something in human trials by april. --s is a relatively slow relatively small biotech with a new approach to a vaccine but one that has not been tested on a novel outbreak like this. large-scale human trials is very much a different matter. it might be months longer than that. tom: max, thank you very much. call weinberg, we will leave it there because of time. so much on this impending and increasing story. futures at -48. we were -55 earlier. thank you. worldwide, this is bloomberg. ♪

viviana: you are watching bloomberg surveillance. let's get your bloomberg business flash. we begin with the cook political network selling tech companies coming under fire in washington

and resisting pressure to police political ads or give the government access to encrypted devices. cleaner brothers charles and the late david coke found the ochwork -- david k founded the network. british prime minister boris johnson is expected to let huawei take a role in setting up the u.k. 5g network. i could put his friendship with president donald trump to the test. the president wants to ban the chinese company over concerns it could make the network vulnerable to spying. arereds of amazon employees defined or company over climate change. over 350 of them and put them -- put their names on public statements regarding amazon's public -- over -- regarding amazon's climate policies. francine: italy's salvini suffered a stinging in a regional vote. it provides a much-needed boost to the prime ministers

government. we are now joined from the capital of the region. i think you are at the headquarters. what does a setback of salvini mean for the government? >> it is good news for the government and rome. this was a regional election but a key crucial regional election in a key region for the italian social democrats. to have lost it would have been a fatal blow for the coalition. the fact that they managed to hold onto it means that we are not going to see a snap election and we are not going to see more instability. i would point to the work of the -- who said we do have a mandate for three years, i am not going anywhere, there is no election. the biggest loser is salvini. a vote of confidence on the italian government.

he was all over the region. he campaigned for weeks and you could argue he was the biggest loser here, going home once again empty-handed. that regional election that he hoped would precipitate a national election but is simply not going to happen. francine: how will that change how he speaks to the italian people? at the same time, they won quite big in the south. >> exactly. it would be a mistake to just assume that salvini has gone away because he is still very popular. you do see that when he is interacting with people on the street. he knows how to talk to people. what i would say is it gives the coalition and rome more time to put together a coherent plan but also when you look at the balance of power, you see the establishment has gained ground and i think the traditional establishment, they do have the upper hand in the coalition. that is what the market is liking today. we do see more stability and we

do see a government in rome that is for most purposes pro-european. francine: reporting from bologna. intensifying concern about the coronavirus spreading to most asset classes around the world. looking at stocks, oil, currency in china. all tumbling today. haven assets. italian bonds after that salvini defeat, italian bonds are actually jumping. treasuries also. this is bloomberg. ♪ when it comes to using data, everyone is different.

which is why xfinity mobile is a different kind of wireless network that lets you design your own data. choose unlimited, shared data, or mix lines of each and switch any line, anytime. giving you more choice and control compared to top wireless carriers.

save up to $400 a year when you switch. plus, save even more with $150 off galaxy a70. click, call or visit a store today. or here on a wifi hotspot. lte xfinity mobile has more coverage to keep you connected to what matters most. that's because it's the only wireless network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. save up to $400 a year when you switch. plus, save even more with $100 off galaxy a50. click, call or visit a store today. ♪ alix: china extends its new year

holiday with almost 3000 cases of the coronavirus and the death toll rising. and investors flee into safe haven commodities -- into safe haven. commodities will get crushed. and really for italy. for the elections win coalition. welcome to "bloomberg daybreak" on this monday, january 27. i'm alix steel. we want to get right to the news for you with global exchange, from beijing to bologna to frankfurt to washington. we begin with the latest on the coronavirus outbreak in china. beijing now reporting the number of deaths has risen to 80, and there are more than 2700 confirmed cases. china is extending the lunar new year holiday by three days to try to stop the spread of the

e.