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 disease. it has also restricted travel

for millions. joining me on the phone is bloomberg's china economy editor. james, walk me through what happened and where we go from here. sayingthe government is they are not in control of the situation here. you are seeing increasing numbers of infected. the death toll jumps to at least 80 people today. to premier of china went wuhan today. it still seems as though the government does not have a handle on this outbreak. there was a very interesting press conference in hong kong today, where the dean of hong kong university medical school says they estimate the number of cases is about 25,000, and possibly up to 44,000 people in total who are either infected with this or in an incubation period, so much bigger numbers than we've had from the chinese government.

the situation here is still very fluid. as you said, they've extended the new year holiday for a few days. schools are now postponed for two weeks. businesses are shut down, telling people not to come back to work for another 10 days at least. there are a lot of different things happening on the ground, and also a lot of uncertainty and concern, but also, just kind of hard to see what is really the situation now because there's a lot of different information coming out. for now, the government is clear at least that they do not control.s under the lockdown of wuhan where this started wasn't really successful in shutting this down. alix: thank you. regionalaly, where end in a blow for

matteo salvini, mccain snap general elections -- salvi, electionsp general less likely. with us is maria tadeo. idea: the market likes the of continuity. they liked the idea that we are not going into an imminent election, and that this government that is now sitting in rome does appear to have a mandate to stay together. secondly, you go back to salvini , the bad boy of italian politics. he made this a vote of confidence are on the coalition and was hoping to get a snap election on the national level. that is not going to happen. the market is thinking we can forget about salvini. there is no year risk pegged to euro risk pegged to

that. thatre seeing a government stays put, salvini stays out of power, and the establishment holds onto a very key region for italy. alix: thank you very much. now we go to germany, where business expectations took a surprising turn for the worse, despite. the decline in services and construction -- for the worse. despite the decline in services and construction, production is showing good signs. >> destabilization in manufacturing we saw last year is continuing -- the stabilization in many factoring we saw last year is continuing, and we take this overall is a good sign, despite the decline in the overall index. alix: joining me from frankfurt european economy expert. walk me through some of the details. reporter: we got a little bit of

a setback this morning with business expectations and the german economy dwindling at the start of the year. obviously not how you want to start 2020. reportlso right that the was very multifaceted. the trend in manufacturing continued to point upward, which is a very good sign after the pmi numbers at the end of last week, which showed manufacturing is indeed ever so slowly coming out of its slump. what we saw today is that services and construction took a bit of a hit. those sectors have been very strong over the past couple of quarters, helping the german economy stay relatively robust on the domestic side. a bit of weakness there, you have to watch out for it. but i would agree that this should not be the beginning of a new downward trend, but more confirmation that the german

economy has a very difficult year ahead. alix: thank. we end on u.s. politics. senate republicans now face intense pressure to call witnesses in president trump's impeachment trial following any report that the president told his national security advisor in august he wanted to freeze aid to ukraine until the government investigated his political rival, joe biden. joining me from the white house is kevin cirilli, bloomberg's washington correspondent. kevin: good morning. the latest is president trump tweeting out a rebuttal even before his legal team gets to make their opening arguments during the senate impeachment trial. the president taking aim at his formal national security advisor john bolton, who, according to a "new york times" report, writes in his new book that president trump directly tied ukraine aid to getting president zelenskiy of ukraine to investigate hunter

biden. tweeting out shortly after midnight, "i never told john bolton aid to ukraine was tied to investigations." 's goes on of accusing bolton "just doing it to sell books." my sources on capitol hill, senate majority leader mitch mcconnell is still working to have an efficient even --at concludes may concludes may be even by the president's state of union address. alix: thank you. another story we have been following, the nba says they are devastated, as our fans around the world, at the death of basketball star kobe bryant. he was killed in a helicopter crash. one of the other victims, bryant's daughter.

kobe bryant was 41. last night, the grammys paid tribute to the sports legend inside the same arena where the lakers play. >> we are all feeling crazy sadness right now because earlier today, los angeles, america, and the whole wide world lost a hero. we are literally standing here heartbroken in the house that kobe bryant built.

alix: time now for bloomberg

first take, where you get the trade and analysis of the markets. joining me is gina martin adams, bloomberg intelligence chief equity strategist, vincent cignarella, voice of the bloomberg audio sqawk, and with us around the table, tony crescenzi, pimco fully manager. -- pimco portfolio manager. the virus is spreading. we do hope that china is able to deal with it quickly, and that more people can get help. that said, the market is obviously in panic mode. what do you think about on a day like today? vincent: traders really do care. something on friday, the report of potentially four cases in new york, and immediately i got an an ib from aot trader, like, what you say? so they are getting news and trading them. that said, this is a short-term

trader phenomenon. no one is expecting the end of the world, but it is going to impact growth, and that is where i hope traders are looking at this story. that this is a global growth issue, and as we just talked about, time will tell how that affects china's gdp, but that is really the story. lower growth, lower asset prices, and we will see how china deals with the situation. gina: in terms of the equity market, it is really a case of fear compounding something that started a few weeks ago. for the last two weeks, we have seen rotation out of value into momentum. we have started to see low vol take a little bit of interest. we've seen utilities start to outperform. we had a market that was overbought coming into an earnings season that is so far, not too exciting, not really confirming forecasts for better growth. then you had the virus hit, causing greater question about where growth is going to go.

that is compounding issues the market already faced, and now it is a lot of uncertainty. frankly, no one can forecast where this is headed. how much will it dampen economic growth? how much will that lead threw specifically?es that is the kind of commentary we will have to contend with over the next few weeks. companies are not going to be able to substantiate any of that speculation. tony: i agree with that. the way i would say it is that the markets are fated with uncertainty and very fragile. also, economies worldwide, if they slow down anymore, they could tip towards recession. think of europe, for example. the economy is growing about 1% or so. the big question investors have to ask is what extent is demand being destroyed versus delayed. certain demand for services will

have been destroyed. for example, travel. but certain other consumption and investments will some plea be delayed, -- will simply be delayed, and there will be an increase at some point. so the longtime investor should be thinking this is probably an opportunity, and not to get overly worried, and probably consolidation that was perhaps overdue after big gains last year. alix: these things tend to bounce back and usually provide good buying opportunity, but it just begs the question, how much of this is positions unwinding that have a real issue? vincent: you can't stand in front of it. if you are a long-term investor, you look for opportunities, you look for a bounce back type of business. obviously, travel is a perfect point. but if you are trading it on a daily basis, you don't stand in front of it. as tony mentioned, a really good

point, you have economies two barely into growth. -- you have economies tipping barely into growth. now that is going to go back on the back burner once again because of this, and you can't predict this. you can predict a tweet, perhaps. -- davos into green shoots was in my head, and now this. the bond call, what do you do? jp morgan says you still want to sort the long end. what do you think? tony: treasury yields are probably in of where they are likely to be. credit spreads to be larger range bound. those are the components of returns. this year is likely to be a

so-called coupon clipping year for the bond market. we wouldn't expect the virus issue or other issues to come up that are unknown that would cause interest rates to fall meaningfully. in other words, treasury yields , one thingent zone -- the current zone, 1.50%- probably right. so rates won't move much. credit spreads, for them to tighten much more, shrink relative to treasuries, would require more confidence and optimism. and for a sharp widening of credits spreads, it would take a big doom and gloom period, and we are not expecting that. so we would say just stay with the program, so to speak. don't expect much to change.

the 2-year note is trading under where the fed funds policy is. it is only marginally below, which is the market saying something could happen, but probably won't. gina: this is going to be a really interesting year for equities. that central bank impetus, the rates movement we saw last year with a huge part of the move in stocks last year. , asreated a lot of rotation well as significant multiples expansion. if we get nothing out of the bond market, we are more and more sensitive to what happens with earnings, to where the economy is headed. i think this week is going to be doubly interesting not just because of the coronavirus and what is happening with earnings, but also because it is a big central bank week. you've got the fed and the boe talking this week. what are we going to do with the balance sheet? what is the bank of england going to do with interest rates going forward?

times of stress creates focus on central banks to solve the worlds problems in this day and age. that's the impairment we've been in for the last 10 years. can they solve this problem? i think it is going to create a little turmoil this week. vincent: it is more likely than not, the way the scenario is building, the markets think the fed will more likely than not have to ease, especially. if this condition continues. the real question is, do we look at good news is bad news? i don't think that is the story this time. i don't think if the fed cuts it is good news for the equity market. alix: they are slowly purring backed what they put into the repo market -- slowly paring back what they put into the repo market. so technically, you should be selling equities. is that a thing? vincent: i would leave that to gina. alix: he's like, no, you take it. [laughter] alix: no one wants the repo question. vincent: paring back some of

those is probably a really smart thing to do. gina: my sense of what is happening with the balance sheet is as long as it is expanding,. . it is still generally supportive. . is it more supportive like it was -- is expanding, it is still generally supportive. is it more supportive like it was last year? the balance sheet is going to continue to expand this year, albeit at a much slower pace, and a normalized environment. maybe the fed cuts once, but it is not several times like last year. it is this big surge in the quiddity and optimism impacting sentiment that starts to ash in liquidity and optimism impacting sentiment that starts to slow down -- in liquidity and optimism impacting sentiment that starts to slow down. it is a positive for stocks. alix: is this the part where you yell at us and tell us it is not

qe? [laughter] alix: give us the cliff notes there. tony: or not. the problems of the money market are endemic to the financial markets in general. . there's a common thread that the intermediaries which did not supply the cash that many who were borrowing money thought they would would also be is functional relative to the time of stress. in other words, if investors sell securities in a time of stress, intermediaries would say, i don't want it. you take it. it would be a game of hot potato. so there is a common thread, but liquidity can't solve that necessarily because it is something more on a regular story front, so we wouldn't expect that to completely go away. i would just finally add that liquidity alone isn't going to be driving the equity market. we would expect global earnings

to go up 5% to 10% this year. alix: i just want to end real quick on the bdp buns spread. we got a huge move -- the btp bunds spread. we got a huge move overall. do you trade that? the center-right party got pushed off a little bit, but it is not like italy's political world is now all ok. vincent: i think the bad boy of politics is going to come back this year, whether we like it or not. as a trader, this is a great opportunity to say this move because i think it is a little bit overdone. tony: we think there is room for spreads tighten a little bit between italy and germany. the european central bank is being very supportive of the your wide -- of the euro-wide story. they are not likely to change meaningfully in terms of the reaction function, and terms of borrowing more money. gina: i think you think about

european equities and you have to think about earnings recovery as a big story. that recovery is really to strategy at the country level, and we are still pretty risk on in europe. alix: gina martin adams of bloomberg intelligence, ,loomberg's vincent cignarella thank you. tony crescenzi of pimco ob sticking with me. -- of pimco will be sticking with me. gtv on your terminal. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." sleepss retailer casper as much as $50 million in an ipo

. its marketing strategy includes the use of so-called influencers to tout its products on social media. elon musk pushing back against critics of the tesla plant in germany. he says concerns are exaggerated that the factory would cause water shortages. over the weekend, tesla had a challenge.ort of world wartonate ii bombs found on the site. that is your bloomberg business flash. alix: thanks so much. as china is scrambling to deal with this crisis, it is shining a light on online medical services. recently partnered with china mobile to provide telecom providers 9 million users. there may be a lot of demand for good dr.'s mobile concept -- for

good doctor's mobile consultation. coming up on the program, global markets roiled by the coronavirus fears and the impact it could have on global growth. that is coming up next. and in the markets, you are still seeing a 2% decline in european equities. in sb futures, down by about 42 downs -- in s&p futures, by about 42 points. in other classes, rush to safety. commodities getting completely slammed here. you are seeing the yen have a nice pop. dollar-yen down about 0.3% as safety really takes hold. this is bloomberg. ♪

♪ alix: this is "bloomberg daybreak." i'm alix steel. it is a market moving monday. s&p futures down by about 1.3%.

the travel sector in europe getting hit quite hard. we are holding this level. it was worse. the dow was down over 400 points, so we are off that low. in other asset classes, a rush into bonds come out of commodities, and into safe haven currencies. the curve kind of goes nowhere, but you are seeing yields down by as much as six or seven basis points, in italy down by as much as 18 basis points. offshore coming in right around the seven level. that has concerns about potentially destabilizing the markets. let's dig more into these concerns about the coronavirus rippling through the global markets, and also on the economic impact. china is much more integrated into the global economy and mix up nearly 1/5 of global gdp. from washington is

is orlik, and still with us tony crescenzi of pimco. there's a couple of perspectives. the first, and this is kind of the viral contagion risk rather than the direct economic impact, but the amount of travel in and out of china is just an order of magnitude larger today than it was back in 2003. think about the chinese students, the chinese tourists traveling in and out of china, returning for the chinese new year, now heading back out to their studies. think about the foreign business people, the foreign students living and working in china. the scope for contagion is significantly larger. in terms of the economics, as you mention, the share of china in global gdp has significantly increased.

sars took around 2% off of china's gdp growth, down from 11.1% to 9.1%, before recovering a bit in the quarters after that. but the world barely noticed. here we are in 2020, with china a significantly larger share of global gdp, so if we are looking at a negative scenario on this virus, if china fails to contain it, if the virus itself proves more resilient, we would be looking at something which impacts not just china, but also the asian region, and potentially other major economies as well. alix: i think that is the broader question. are we going to have to see some stimulative help either from the asian governments, pboc or central banks? how do you see that? tony: it's possible. there is room for fiscal authorities to do more in europe

and the united states, although deficits are large in the united states and japan, so it is difficult to see meaningful amounts of stimulus. but we would expect fiscal and monetary authorities to lean that way. the extent to which demand is being destroyed versus delayed, we are talking a lot about the drag on gdp, and it is likely there will be some drag, but there were also be some bounce back. we can't get to that point yet because we don't know to what extent the virus will go. a couple of good things, if we can say there are any come of the final outcome -- we all hope it doesn't end well for the citizens of the world -- is that the world is reacting faster than it did in 2003. it seems like there was a delayed reaction then. secondly, global financial conditions, think of the economic repercussions. they are looser today, and the economies in 2003 were just

emerging from recession. the united states had a recession in 2001. so the ability to be resilient than it waser then, believe it or not. alix: that is a great point. when china is dealing with its debt bubble, the debt was a lot higher -- the debt is a lot higher than it was in 2003. where does that leave china now? tom: i think that is another good point. back in 2003, we had china's growth slowing from 11.1% in the first quarter of the year to 9.1% in the second quarter of in growth,0% drop year,.1%, 9.1% -- of the 2% drop in growth, but

11.1%, 9.1%, still good numbers for growth. consensus for growth, and our view is we will but a chunk level, of 6% makes the optics a lot worse than a chunk out of 11%. alix: that's a great point, too. cummins had to bloomberg, where this fear of the virus intersect -- come inside the bloomberg come over this fear of the virus intersects with the markets. see, andinterested to your experience, living in china for so long, the trade-off of that. we saw more green shoots, then more cracks. does this wipe out any benefit we might have gotten from a trade war resolution? to: if we go back again 2003, the main impact of the sars virus was on the consumption and services sectors.

people stopped eating in restaurants. they stopped going to shops. they stopped visiting tourist sites, all very natural and understandable reactions in the face of a virus threat. what we didn't see was the virus hitting the industrial side of china's economy or the export side. we see that playing a gout -- if we see that playing out again, we would see china suffered domestically from weaker consumption services, and the people who benefit from china's , countries like thailand, the philippines, would perhaps not see a huge impact on the industrial side of the economy, so not a huge impact on exports. tony: that sounds right. basically, it is likely to be regional. the big complaint from the trump administration, china isn't a big buyer of goods from other parts of the world, so the impact will probably be isolated to that area of the world.

think also of davos. many individuals i spoke to at the world economic forum last week said the predominant feeling was positive regarding the global economic outlook, not putting the issue aside. it is likely there will be a step back at some point -- a snap back at some point. of course, there are tremendous unknowns, and that is what the market is responding to. alix: this goes to what we were talking about on what the fed is. if you take a look at this chart, i fed funds effective rate in the futures market. looking at about one cut now for this year as we start to rice in any kind of risk. is that legit? tony: markets worldwide are leaning toward rate cuts, here, canada, europe. but not much more is expected from. central banks. it seems as if -- from central

banks. it seems as if there is an endpoint here. but if you look at market pricing for interest rate cuts, it doesn't necessarily reflect an explicit bet on a rate cut. it is just the market saying there is some probability of x amounts of cuts, and perhaps even a move to zero. markets would price and the chance that sometime in the future, policy will hit zero, so what you see in the federal funds futures market, the math works out to it seeming like the market is expecting more than it really believes will really happen. that is part of what this whole story is. been thinking about pale risks increasingly -- about tail risks increasingly. prices will be lower than they premiumserwise be, but

would be lower. they are actually negative now. about risks to bonds. i'm worried about risks to the world. so tailwinds and anxieties probably stay with us postcrisis. alix: the spread between ccc's and bbb's is tight. based on that, what is the best portfolio allocation? the 12thare nearing year of economic expansion in the united states. one should be seeking to go up in quality, which would be more liquid, resilient, and agile. this could be decided to reduce the number of corporate bonds being held. it just depends on the security. you want to have very good security selections. shrink the amount of risky assets. bonds --d corporate

volume incorporate bonds is $20 billion a day. in a time of stress, the asset you own is less likely to perform very well, so you won't care about those unless it's worth it. so final points, reduce directional benefits -- directional bets, and make investment's that look good on a standalone basis. we don't expect rates to move much. a range bound this year, probably toward the lower end of the range now. we don't expect rate cuts, and certainly not expecting rate hikes this year. alix: fair enough. that would be a big surprise. tony crescenzi of pimco and tom orlik of bloomberg economics, thanks a lot. we do want to give you an update on what is meeting headlines outside the business world. viviana hurtado is here with first word news. viviana: an explosive leak from former national security advisor john bolton's unpublished book could scramble the impeachment trial.

he says president donald trump told him to freeze aid to and that could put pressure on republicans to agree to call witnesses in the trial. fog may have been a factor in the crash of a helicopter carrying basketball player kobe bryant and others on board. all were killed when the chopper slammed into a hillside north of los angeles. among the victims, bryant's 13-year-old daughter. bryant spending 20 years in the nba with the l.a. lakers. had begune titles and a second career as an investor. kobe bryant was 41. israel prime minister benjamin 's main election rival will also meet with president trump. global news 24 hours a day, on

air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. times"up, "financial says deutsche bank is under investigation for payments to a top saudi royal. if you have a bloomberg terminal, check out tv . watch us online, click on charts and graphics, interact with us directly. just scroll through and check it out. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." hundreds of amazon employees defined a company over climate change, putting their names on a public statement regarding amazon's climate practices. the company had threatened to fire workers who spoke to reporters without authorization. the cook political network telling washing to resist pressure -- telling washington .o resist pressure credit suisse telling staff to work from home if they visited china lately. the swiss bank is trying to prevent the spread of the deadly virus. it told staff and hong kong not to come into the office for 14 days if they've been to mainland china lately. any worker with cold or flu symptoms must also work from

home. i'm viviana hurtado. that is your bloomberg business flash. alix: we turn now to wall street beat to cover three things wall street is buzzing about this morning. first up, deutsche bank probed over saudi payments. german prosecutors probing for allegedly paying for the business of a saudi royal. and a report says rbs is planning to eliminate thousands of jobs. and it is all about the davos details. sonali basak is back with apparently no sleep and what has been on her mind -- on the mind of everyone this year. but get to the deutsche bank probe. i didn't quite understand what was happening. sonali: it is actually pretty simple. some wealth managers at deutsche bank allegedly paid $1 million to a family of a wealth advisor to a saudi royal.

kind of a classic bribery case, isn't it? they had an internal investigation. this did happen a while ago, the acts we were talking about, in 2011 and 2012. the internal investigation was in 2016, and now the german investigators are looking at it. that is a long leadtime to look at wrongdoing. i think the german prosecutors, what they would really like to make sure of, is people up early makingeprimanded, and sure the bank anticorruption system is in place. they say we have fixed a lot since then and these were isolated employees, but this is something that, when you're doing business in wealth management, certainly abroad, there's a lot of global laws to contend to. it is really easy to slip things between the crocs in a lot of banks.

cracks --ween the between the cracks and a lot of banks. alix: let's get to rbs. there has been a lot of trimming fat for these guys. sonali: we have seen this throughout europe. 37 hundred jobs is no small amount, but according to "the sunday times," that is $20 million in cost savings. is that a lot? i don't know. is it going to give them enough to invest and test knology -- to invest in technology? that's the big question. alix: let's get to davos. obviously, you went. prime it was really front and center. you were behind as well. what did people talk about? sonali: one thing that was interesting is what people talk about on the face of it is not the same. alix: no getting.

[laughter] sonali: the climate thing, a lot of people were frustrated and didn't want to talk about it by the end. that was interesting, how much of what we saw and davos will play out. the other thing was inequality. hundreds of billionaires roaming the streets. none of them wanted to talk about income inequality, not for the life of them. . when i asked somebody, they said, welcome others 25% women here. i said, wait a minute. i wasn't talking about gender inequality. alix: but we can go there i guess. 25%, good job. sonali: not to mention, remember , and davos, nothing bad happens. there's a huge sense of saidacency where others that davos is such a big contrarian indicator, it makes them worry about where markets will be six months from now. alix: that's interesting. and also, goldman has their investor day wednesday, which is a real break for goldman.

i'm wondering if people were talking about it there. sonali: absolutely. not only were the u.s. bank ceos and all of the deputy there for the whole week, the main question they wanted to know about goldman sachs is not just how big are you going to grow this consumer business -- a great story and "the financial times" about that today -- but also how fast. let's see if david solomon is willing to give that up. alix: it is going to be a really interesting day. so much.sak, thanks great to have you back. and it turns out that warren buffett is on another rich list. he is one of the world's richest fossil fuel billionaires. we found there's only two other fortunes ahead of him connected to emissions. one is the koch brothers. the other is the saudi royal family. berkshire hathaway was responsible for 180 9 million tons of greenhouse gas emissions in 2018 -- for 189 million tons

of greenhouse gas emissions in 2018. not sure that is a list you want to be on. coming up, today's trader's take. if you are jumping into your car , tune into bloomberg radio on sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

alix: time now for trader's take. joining me as vincent cignarella, voice of the bloomberg audio squawk. type in squa on the terminal. we are looking at some ranges here. vincent: normally i will come on and tell you about what i think is going to be the winner of the day or the week or whatever the case may be. this is what we think is going to be the biggest loser, and not for a lot of the reasons people think. most people look at the aero and talk about -- the you're a -- the euro and talk about brexit.

france with the digital tax, which seems to have gone away a little bit. but germany is still in the spotlight, and they have been threatened by china that if they don't use huawei 5g, they will have auto tariffs. they've been threatened by the united states this they do, they will have auto tariffs. last week, sales in autos in china declined, as they have been elsewhere. however, for audi, bmw, and mercedes, record highs. , massive declines. so if they don't use 5g from china, they are going to subject their three biggest auto industries to massive tariffs, which are at record-breaking levels. if they don't use it, you are going to see the united states -- that's not going to help them as much. alix: so if you are looking at this chart, do we break the

lower end of that range on this? vincent:vincent: i think we are already there. was year, the story whenever you get above $1.11, you fade the euro. this year, i think the story is whenever you get close to $1.11, you faded again, or even on $1.10. euro a funding currency right now? vincent: i think volatility is so low that the carry trade is less relevant. interest rate differentials count, but in the bigger picture, fundamentals matter a lot more. when all rates are so close to zero, the carry trade doesn't have enough in it to let you play this. carry trades are probably more atamvant when you look at l

currencies, mexico, for example. alix: wrapping it up real quick on the dollar, our traders looking at the dollar is a safe haven today? vincent: the swiss, the yen, and the dollar become haven place. the swiss you have to be careful with because the s&p will willvene -- the smb intervene. how i would like to know is many single use plastic bottles we used at davos last week. alix: good question. [laughter] alix: we will get back to that. vincent cignarella, thanks a lot. coming up, lori calvasina and kathryn rooney vera. this is bloomberg. ♪

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january 27. i'm alix steel. here's everything you need to know at the sour. china on lockdown. the death toll rises with almost 3000 cases of the coronavirus reported. they've extended the new year holiday to stop people from traveling. >> the government is saying they are not in control of the situation here. you are seeing increasing numbers of affected. you are seeing the death toll jumped to at least 80 people today. alix: the virus is now reported in the u.s., france, canada, australia, and hong kong. the crucialni lost election to the really collection. >> this is a key election in a key region for the government in rome. for that coalition to stay together, they had to win the election, and that is exactly what is happened here. alix: the results reduce the possibility of early general elections. >> it is going to be very

difficult for some of these senators to stand up to this president. alix: president trump's lawyers had back to capitol hill to deliver their defense on monday after an explosive leak from former national security advisor john bolton's unpublished book. kevin: the president taking aim at his former national security advisor john bolton, who, according to a "new york times that president trump directly tied withholding ukraine aid to investigating hunter biden. >> kobe was an incredible family man. he loved his wife and daughters. he was an incredible athlete, and a leader. alix: and kobe bryant, basketball icon, died tragically in a helicopter crash sunday. he was among nine people killed when a helicopter crashed into a hillside in california. >> we are all feeling crazy sadness right now, and we are literally standing here,

heartbroken, in the house that kobe bryant built. a big tragedy there for the u.s. let's take a look at the markets. really about traders digesting what the virus winds up meaning for the global economy, and if it will wind up bleeding into weaker growth. bloomberg -- joining me now for the hour, michael mckee, bloomberg international economics and policy correspondent. happy monday. michael: not so happy on wall street, as everyone is concerned about this. commentary, i saw a on that commentary that when all you have is a hammer, everything looks like a nail. wall street is going to say no

matter what the problem is, central banks are going to save us. maybe, but we don't know. alix: we are getting calls from j.p. morgan, for example, that say, in essence, buy the dip. health scares tend to not disrupt the markets for too long. lori: we will have to wait -- michael: we will have to wait and see. all of this depends on how long it lasts and how far it spreads. so far we don't have any answers. the sars virus took about six months before it was declared contained. smaller parta much of the economy, which is what we will talk about with our experts. if you take a look at this bloomberg terminal here, this is just about maybe 7% worse than about 7% of global gdp, whereas in 2003, it was much less. calvasina,is lori

rbc capital markets head of u.s. equity strategy, and from california, catherine, bulltick head of strategy and research. what do you think? >> we've been telling people for a while we thought the markets were overdue for a pullback, something in the 5% to 10% variety. valuations are extremely stretched, and positioning is euphoric. we said that if the right catalyst came along, the markets would be right for a pullback. we will see if that turns out to be this, but we are due for a breather. kathryn, the consensus is we are ripe for a pullback. how much of a pullback could we get? how nervous our people? kathryn: if we are talking about contamination from the virus, really, who knows? everybody likes to look back at

zika.ebola, the market tends to rebound pretty rapidly. in this case, china is more integrated and a bigger part of the global economy, so the question gets are asking themselves is how much is going to come off of chinese gdp, china being 20% of gdp at this point. 2% of globalout gdp came off. at the end, you see the purchase of calls on chinese equities now. the market looking past this. the market kind of thinking is a lot of uncertainty come about at the end of the day, the health concerns, a lot of times market bounce back over the course of a couple of months. i think that's where we at bulltick are looking for opportunities. michael: lori, you the u.s. expert here. obviously it will have an impact in chinese markets. how do you see people proceeding

from here? the knee-jerk reaction is sell everything. if you want to parse this out, do you start buying pharma, that sort of thing? lori: even though we have been bullish this year, we said we expect some turbulence. you want to have probably mostly cyclicals, but a little bit of defense, to get you through these turbulent times. on the bigger picture perspective, from a u.s. perspective, even on sectors like industrials, investors are hungry for evidence that this global recovery out of china is actually happening. there is this hope trade that has been going on the whole year. i question is are we threatening that with what is going on with this virus. alix: that is a great point. i was off last week, but before i left, the conversation was green shoots. destabilizingre the global economy. is that the risk, that the trade war detente will be broken in

some capacity? kathryn: the imf increased their global economic expansion forecast this year, so say we get 0.4% a can off because of this pandemic, we get back to growth rates of 2019. market is going to freak out because we have another shock, i think it would be a potential for a buying opportunity. we've been coming into this year more in a defensive stance. will it be this shock? will it be if bernie wins iowa and new hampshire? the markets are due for some pullback. there's a lot of euphoria, a lot of complacency, so you should put on put assistance. you should defend your juicy returns from 2019. alix: that's a great question. lori, you have been writing a lot about the political landscape for 2020 in the u.s. as we head to iowa, how much

defense do you need to be playing that might have been different a couple of weeks ago? lori: i think it is a question of what your time horizon is. for investors who had a great year last year and are concerned about holding onto it near term, i would buy things like utilities. thanks to give you some portfolio insurance against the election. one thing that jumped out at me last week, when we got to friday, we had that big down day , relative to these days. i had my team run the sector performance best to worst. it looks like basically, the two sectors most immune from progressive policy risk have been the best, and three of the worst performers were the ones that would be most at risk under a warrant wi -- under a warren win. we are starting to see bernie move up in the polls. we got that news last night from the "times" article. i wonder how much of this is virus and how much of this is election risk starting to creep in.

if that starting to seep in here today? michael: we are a long way from the election. how soon do you really think -- obviously, headline risk always moves the market around a little bit -- but how soon does it get into the market? it is basically tech driven, of the s&p. about 50% is made up of three sectors, health-care care, tech, and banks. so if you get sanders or warren winning iowa and new hampshire and setting up to win super tuesday, that is not priced in. i do think you would get significant correction. one would be putting your head in the sand to think that health care wouldn't drop significantly were a candidate to take hold of the prize of nationalizing health care. i think that is what we are

telling our clients. protect yourself. i don't think the market should fear u.s. recession or global recession, but taking assets down a notch because of a change at the top in terms of management of the u.s. economy i think is prudent to defend oneself against. isi: i think kathryn absolutely right on health care. seeing how bad that sector got hit last week is what may be think we had some election risk starting to creep in. my supposition had been that primary season was when the market would really be at risk because we have seen since october, when warren peaked, that is when the market really took off. . since last july, the s&p has been trading in tandem with trump expectations in the betting market, which has steadily been on the run. so isaac it is clear the market is anticipating a benign democratic contender and a trump reelection, so anything that could threaten that could be a negative catalyst for markets as soon as now. alix: great conversation, guys.

lori calvasina of rbc capital markets and kathryn rooney vera of bulltick will be sticking with us. coming up, 140 five s&p companies set to report. we will break all of that down next. financials were supposed to be the best sector. and out well for earnings season, so what does it actually look like? this is bloomberg. ♪

viviana: this is "bloomberg daybreak." sprint is posting subscriber gains that exceeded analyst addictions -- analyst predictions. it was a surprising show of strength for the smallest major carrier in the u.s. the company is awaiting a court

decision on its $26.5 billion takeover by t-mobile. mattress retailer casper sleep planning to raise as much as $159 million in an ipo that would value the company at $744 million, a steep drop from a previous valuation of $1.1 billion. casper has been reporting rising revenue, but losses have also grown. jumping. abvie health authorities are trying to come up with a vaccine for the deadly virus. that is your bloomberg business flash. alix: thanks so much. we are about a fifth of the way through earnings season, and this week ask one of the busiest, with 145 names reporting. lori calvasina of rbc capital markets and kathryn rooney vera of bulltick still with michael

and i. -- lori: it sounds like we haven't learned all that much that's new. me, we are getting into the really interesting part of reporting season, when you broaden out beyond the financials. we start hearing from more industrial companies. consumer companies are still a bit far away, but this is sort of an interesting opening act, but to me, earning season really starts this week. michael: we sort of have a storyline going here that earnings are not going to be great for the first quarter, but nobody is marking down earnings for the year because we are just pushing it out under the fourth quarter. is that how you see it, or are we really entering a period of weakness? kathryn: i think this year is going to see earnings expansion of about 10%, so i am generally on the higher side of those expectations. i think a lot of it has to do with how much demand is either eliminated or delayed, for example, with the virus.

so the big question for me is if we get a pullback, if the first quarter gdp and economic activity drop significantly, will we see a to q -- will we see 2q, 3q rebound in a significant way. the u.s. economy remains strong, and led by the consumer, which is every reason to continue to consume, in my view, and invest, so i am generally positive. michael: the story you are telling, square the circle for me here. consumer is strong, and everyone is looking at the consumer to keep things going, but you are looking at utilities and reads, which are not consumer stocks. like financials and industrials, frankly. our evaluation model is showing that we are near the lows of the past cycle. we think any kind of bad news is already baked in and it can only

get better from here. if we look at the consumer, one thing we found is if you look at consumer discretionary stocks and internet, they tend to trade in opposite directions. orders arewhen ism rising, consumer discretionary stocks to to underperform. whenutperform manufacturing is weakening. we know the consumer saved us from tipping into recession countless times since the financial recession. so i am asking people to pare back on those discretion are stocks, hold your nose and buy the industrials right now. alix: interesting point. it also has come up is the rotation into value, how that started to pick up steam. we saw it on a global basis at the end of last year, more into europe and emerging markets. does that continue, and can it continue if earnings are meh and

you still held these geopolitical head risks? onceyn: i agree with lori again and say emerging markets are the place that you are already seeing a lot of rotation into. it has been one of the underperforming asset classes. it is playing catch-up. if we get a bullish scenario where you either get a trump reelection or a benign democratic nominee ultimately taking home the prize, i think markets will continue to move higher and look for more risk, more premium, and that is squarely in the emerging market space. em is going to continue to move higher. you are seeing a significant amount of flows your to date into both em equities and em debt. if you get a dollar weakening and emerging-market effects going up strength, that is only going to be tailwinds for this asset class. michael: i got a question for both of you, but i want to start florida, where

everybody goes to retire. [laughter] michael: this is an old expansion. are we in danger of it tripping and falling a hit -- and breaking a hip and expiring this year? the fact that there is so much headline risk -- kathryn: you know as well as i that expansions don't die of old age. there has to be something to precipitate that turn. politicale risks are in nature, and the second one is this misconception that inflation is dead and buried. i am not saying it is going to roar back in and 2020, but negative interest rate policy, which has fixed income and negative rates, is a pernicious phenomenon for the global economy and for markets. once you do get inflation coming back, once you get the dollar depreciating and central banks realizing it hasn't worked, i think fixed income investors that have been burying

themselves in long-duration for the sole requirement and necessity to get yield i think are going to be burned, and both consumers, emerging-market sovereigns, and corporate's recordand we have seen high yields in corporates, are going to feel the pain. this is a phenomenon i think will bring this cycle to a halt. michael: we've only got about 30 seconds here. kathryn: i think it's been -- lori: i think it's been a weird cycle. we had several mini cycles since the financial crisis. the idea of thinking that late cycle doesn't make sense, maybe we should be thinking early cycle. michael: tell the fed that. [laughter] alix: you're comparing the cycle to old people in florida? that's a new one. lori calvasina of rbc and kathryn rooney vera of bulltick, both are sticking with us.

coming up, how they categorize the global economy. this is bloomberg. ♪

alix: basketball fans around the world are mourning the loss of nba legend kobe bryant, who died in a helicopter crash in california yesterday. five nba chevy and chips with his career as an l.a. lakers -- nba championships in his career as an l.a. lakers. aporter: as you said, he was very successful investor. he was a media mogul. he just won an oscar. one of the reasons you saw this massive outpouring from people beyond sports is that they were cited every thing he did just beyond sports. michael: is this just bringing people into the nba and a

bizarre way? you don't want to say capitalize, but it increases the league's profile. they lost former commissioner stern a couple once ago. a lot of focus -- a couple months ago. a lot of focus on the league. kobe is the exact kind of player the nba wants younger players too thick about. lebron james is doing the same kind of thing kobe did. i think we will see lebron james getting into a lot of the things kobe did after he retired. telling younger players, look, if you are successful, you can do these things after you retire as well. alix: talk about where he put some of his investment, what kind of companies, what kind of people. reporter: before he retired, he cofounded a vc fund, and they have invested in a bunch of companies people know. tallulah hot sauce, dell

technologies, epic games. they are kind of all over, growth stage early, but he amassed a very impressive list of investments. he veryof his vc fund, famously invested in body army -- in body armor, a gatorade and powerade competitor, when it was very small. it recently got a massive investment from coca-cola. his investment was about $6 million five or six years ago, now worth over $200 million. so he's done very well with a number of companies. this is not him investing just so he can be in a press release or commercial. he was hands-on with a lot of these as well. michael: he was an ambassador for the league that helped build it. was raised in italy. fluent in italian. china.key for the nba in

reporter: it is one of the most popular sports in china. . if you look at the future of the nba from a revenue perspective, the fact they are so popular in china is a massive deal for that league, and kobe bryant had a big stake in that. it was not a coincidence that after he retired, when lebron james would go over or other stars would go over, kobe would go over as well. he remained a very important person for the nba's overseas efforts. alix: thanks very much. i appreciate that. nba legend kobe bryant died sunday. he was 41.

alix: this is "bloomberg daybreak." i am alix steel. a big move in the opening market. 1.3%, 400 40own

points shed from the dow jones future market around the lows of the session. picking up a little bit of steam on the downside. in other asset classes, it is a move to the safe havens. the dollar-yen may be down .3%. the ftse is a dollar story as the safe haven. you are seeing a move into the bond market. italy is the most pronounced. that is an idiosyncratic story when it comes to italian politics. crude along with all commodities getting beat up. januaryving its worst since 1991. iron ore and copper getting crushed as well. all of this setting the market stage for the fed and the bank of england, out with policy decisions this week. for more, bloombergs michael mckee is joining me. what are we expecting? michael: we know the fed is on hold for the rest of the year,

but does that -- but that does not mean there will not be interesting in information. let's start with treasury bills. the t-bill purchases start to expand the balance sheet when we saw overnight repo struggle. you can see the massive ramp up in purchases. look what happened to the overnight repo rate. now that that is flat, went to they stop? we may get a clue from the fed. they said from the second quarter they will tell us when that changes. the other question people have not been focused on -- people at the short end are watching this, that is the possibility of a rate increase. you look at what happened to the interest on excess reserves. it traded higher than the iowa yard number -- then the ioer number. the fed cut the interest on

s,cess reserve rate three time now we are seeing the effective ioerunds trade rate below and there is some thought they may do 10 to 15 basis points higher just a move that back to the middle of the range. who says there is no excitement at the fed? the real excitement may come from the bank of england. they have been sitting on the sidelines wondering what will happen with brexit. brexit will happen. with mark carney's last meeting, there is a thought that the economy is going down, that is industrial production, seeking on brexit uncertainty. there is a thought they were going to cut rates this week. all of the sudden a couple of surveys came out. numbers and ridge industries confidence numbers, and both of them shot higher. now there is a feeling they may be on hold.

thursday may be more exciting than wednesday for investment. alix: you jazzed it up for me. lori calvasina and kathryn rooney vera are both still with us. ist i found interesting maybe we are looking at something more hawkish from the fed, whether it is a technical adjustment or whether fixing the repo market or if inflation creeps up. how do you look at it? kathryn: there will be a technical adjustment. is that a market mover? absolutely not. many people are expecting the fed to stop its quantitative easing purchases in march as they have indicated. that is unlikely to happen. the fed is reluctant to watch the overnight repo market struggle again as it had before. beyond that, i will step forward and say over the course of the next few years the fed is unlikely to hike. i think the fed will look at

continuing bond purchases, perhaps by capping treasury yields as they have done in the past. alix: is that because everything is horrible? why would that be? kathryn: the fed is locked into qe. it would be difficult to envision a fed allowing a tightening to go about when you have overnight repo struggling and the market married to the fact rates are low. it is stuck in this position. you would need to see inflation accelerate in a more meaningful way for the fed to come off of this. i think europe is in a tight edot because they are weddin to negative interest rate policies. it is hard for the central banks to cut off the lifeline to the market. i would say that instead of considering monetary policy panacea for all ills, we need to

look at supply-side reform. labor market flexibility, tax codes application, these will engender growth and we have seen monetary policy aggressiveness has not led to that. michael: lori, when the fed stopped its qe program, markets had a hiccup. we got a big jumps after they started buying treasury bills, insisting it is not qe. market said it does not matter, we think it is, we will go higher. if they stop buying t-bills, can we still go up? can the market still rise without the fed? lori: i don't think so, at least in the short term. i think that would be a negative jolt. one thing we learned about the qe era and with various changes on fed policy is markets tend to react more to announcements than the actual implementation. that is why paying attention to some of this language could be important.

question, the qe anyone in the fed or economic --cles get your tate it qe or economic circles call it qe. alix: i've had contentious discussions. lori: i have as well, but it does not matter what you call it, it is a catalyst for making risks outperform. we saw volatility come down. i talked to a lot of reluctant bulls since november who have said i'm not sure if i by buy the global inflection theory, but i will not fight the fed. i think that is important, especially with markets, that could be one of the catalysts for these reluctant bulls. alix: i was going to say that to you. -- michael: do we have a stock

market without jay powell? kathryn: jay powell is definitely a backstop for the market. obviously qe is fuel for the equity markets. i think it would be healthy if the fed stepped back. i think of the fed went on hold and let the markets develop as they should, it would be a healthy correction, which is what we need. how much longer can monetary stimulus continue to push the markets higher? a lot of it has been due to the fed. also, there is a good fundamental. the u.s. economy is doing well. as i mentioned previously, this is a tech fueled market push higher. i do think it is fueled by the fed and the fed is causing this last leg up in the equity market. going,: if the fed keeps

then to we finally focus on earnings and fundamentals? to be this continue environment where it is fed stimulus causing multiples to expand, to me it is all about the multiple, not necessarily the market itself. we are at the top of the range when you will get different stages of pe we have not been able to break out of since 2013. stimulus from the fed could cause those markets to expand. when i look at my peers, myself as well, we've been saying multiples in the year at very high levels but flat. none of us anticipating a big breakout in multiples. that is the critical thing where you think about where the market will end up. earnings matter, but we do have this liquidity injection continuing, markets could go up more than earnings warrant. alix: on a global level, i read an article investors are still expecting 150 basis points worth of cuts globally for central

banks. the idea more easing is coming. you need to play that? you need to look for countries that have stimulus and central banks cutting rates? kathryn: sure. em has one of the reason the consensus for this year. i subscribed to that. if you are in a scenario where global central bank easing continues, that is a support for -- you have to look at the countries that have not cut as much of the developed markets such as brazil. brazil has slashed rates at record lows. america, the economies are finally growing again and they have the capacity with low inflation to cut rates further. impulsel be a bullish for equity prices, for fixed income in an environment of growth, low inflation, and cutting rates. how do you make the case

for u.s. equities to be a good investment? when you have the u.s. compared to em, how do you deal with it? lori: even though i am a u.s. equity strategist, we think there are better opportunities outside the u.s.. just from a valuation perspective, you do have elevated valuations on a lot of geographies, but the u.s. does look overvalued. we also look at global large-cap equity funds. european allocations are starting to work their way off lows. we think there's a lot of runway there. it is a question of what investors care about. they have an appetite for value. we do sense the thirst for value, the thirst for laggards, readiness to move on to different stuff. that has not gone away despite some of these issues. michael: is everybody still on the same trade? kathryn was saying this is a tech fueled rally.

i was wondering if we will see the possibility that something happens in china that hits the tech industry and everyone wants to sell at the same time. lori: barrel of thumb is when you get into a deep risk -- our rule of thumb is when you get into a de-risking of equities, that is a bad environment for the ti sq space, for things like software and internet names. that is a thing to watch. what we have seen his people starting to hide out in the software names. there is been a little bit of back-and-forth. months,al, the last few a willingness to rotate out of some of the tech names popping up. alix: lori calvasina and kathryn rooney vera, always a pleasure to spend time with you. we want to give you an update on what is making headlines outside the business world. viviana hurtado is here. viviana: we begin with containment efforts in china to stop the outbreak of the coronavirus.

beijing reports the number of deaths has risen to 80. there more than 2700 confirmed cases. china is extending the lunar new year holiday by three days. 15 other countries and territories. an explosive leak from former national security advisor john bolton unpublished book good scramble the impeachment trial. john bolton says donald trump told him to freeze aid to ukraine. that could put pressure on republicans to agree to call witnesses. the white house says john bolton's claims are untrue. fog may have been a factor in the crash of the helicopter carrying kobe bryant and eight others. everyone on board was killed when the helicopter slammed into a hillside northwest of l.a.. among the victims, kobe bryant's 13-year-old daughter. local police had ground of their

chopper because of the fog. years -- 20spent 30 years with the nba and had begun a growing second career as an investor. kobe bryant was 41. thank you -- alix: thank you so much. heartbreaking story. coming up, we will look at tax heartbreaking -- we will look at movement in today's bottom line. bloomberg users, check out all the charts we use throughout the show on gtv . this is bloomberg ♪.

viviana: this is "bloomberg daybreak." i'm viviana hurtado with your bloomberg business flash. we begin with hundreds of amazon defying their company

over climate change. more than 450 have put their names on public statements regarding the company's climate practices. the company has threatened to fire reporters who -- to fire workers who spoke to reporters. billionaire brothers charles and david coke founded this network. it is shifting its network away from the tea party style politics it originated. credit suisse is telling staff to work from home if they visited china lately. this was bank is trying to prevent the spread of the deadly virus. it told the staff and hong kong not to come into the office for 14 days if they have been to mainland china lately. any credit suisse worker with fever or flulike symptoms should also work from home. alix: time for bottom line. we will look at three companies worth watching. wynnng with the story,

resorts got a downgrade at bank of america because of the risks of the virus in china, basically saying the situation could stabilize, but near-term headline risk is significant and there is limited valuation support. even if it is a short-term thing, some of the stocks will have longer-term repercussions. michael: i will hang with a story we've been talking about. the fed. mortgage rates were down and who benefits? the homebuilders. there are not enough homes being built. for companies like my stock of the day -- stock up 53% over last year. you see what happened to d.r. horton. there shares are going up as we see the number of homes being built, the number of homes for sale has fallen. it is difficult for companies, for people to find enough homes. that will keep business going. d.r. horton's orders up 19%.

alix: to the cuts do anything? yes. time for our third story. we are looking at tech. the industry's biggest names are reporting this week. valuations are currently at their highest level since 2007. joining us from miami is james cakmak, clockwise capital partners. will we see the numbers in tech earnings back up the evaluations? james: it is interesting. when you look at the valuations from a historical context, only 4% in the history dating back to 1871 have valuations exceeded 25 times earnings. where in one of those times were 60% of the components within the s&p are trading over 25 times. if you look at tech more specifically, we are not in nosebleed territory at the

moment. i think that what you're going to see is that the valuations are approaching peak multiples because of the fact there is not new levers to be able to extract amazon whenpple and you look at the broader category. michael: i will ask what i always asked. are we talking about hardware or software? are we talking about semiconductors? each may have its own outlook. james: i'm talking about primarily the tech companies that control the s&p. the trillion dollar, the big tech, the other consumer internet, the high-growth companies underlying tech. michael: if we are talking about companies like apple, how much of an impact could we see from the coronavirus. is that something that starts to

get priced in to the stop? james: i am not worried about the cyclical events. it is more about what industries continues to be advantaged? amazon and apple continue to be in a very favorable category because you have massive behind them. you have the 5g rollout, and we saw what happened with 4g. 5g will be even more impactful. you add ai on top of that. there another companies that have those type of advantages aside from amazon. if you look at the coronavirus, it will be a challenge, just like we saw last year with china. i'm not worried about it. last year we said apple is going back to one trillion, i think we can double back -- we can double down on that today. alix: you think we can go to $2 trillion? james: if you look at the services business, it almost

doubled the margin. within three years, assuming iphone growth is zero, within three years the profits and services will eclipse that of the iphone. you add on the wearables and you will shave off another year. within two years, that business will be bigger than the iphone business, assuming the iphone does not grow a single dollar. alix: dan ives is the biggest bull. -- here is what he had to say to bloomberg television. dan: the biggest will be around china. you want to see china growth year to year because ultimately -- 60 to 70 million iphones are in the window of an upgrade opportunity. looks like you definitely agree with that. when will we see it take hold? have the repurchases

that continue to provide support to the stocks. story frome earnings the faster growing segments. i think they will continue to play out in lockstep as it has been over the past year. looking at broader tech, what you will see is a bifurcation in two of the valuations. the companies that are able to continue to extract more value and the companies like the facebooks and the netflix of the world that will have to rely on third parties to fuel that growth versus leveraging their existing infrastructure like amazon on the logistics base and apple on a service basis. alix: james cakmak of clockwise capital, and michael, thank you for joining me for the hour. andael: lovely to be here grab you are back -- and glad

you are back. futuresming up, s&p sinking on coronavirus fears. we will break that down for you. if you're jumping in your car, tune into bloomberg radio sirius xm channel 119 on the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. we will set you up for trades. bill maloney, voice of bloomberg's squad joins me. to could get off with s&p -- kicking off with s&p futures. bill: the coronavirus impacting everything. s&p futures down 40 points. support around 30 to 40. below that look at 3223. first support probably around 30 to 40. -- around 3240.

u.s., six or the seven basis points. what do see here? 162, right now we are at support at 159 to 160. that dates back to august lows. aroundow that, maybe 156. first support might hold today. alix: if it doesn't, how rapidly might we shift? bill: it could be a quick jump down to around 156 or so. alix: appreciate the update. bill maloney of bloomberg. that does it for me. markg up on "the open," connors. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪

jonathan: coronavirus spreading, china struggling to contain it. treasuries higher, equities lower. ahead, the fed's first rate decision of 2020. good morning. here is your monday morning price action. s&p futures down hard. ,oving south, down 51 points off 1.55%. 1.62 is your yield on the u.s. 10 year. at 1.1027. we begin with the big issue. another global growth scare. -- concern about some sort of contagion. economies are near stall speed. >> the broader impact could be more contained. >> we have not lowered our global growth forecast. >> w