plus, save even more with $100 off galaxy a50. click, call or visit a store today. dubai. this is bloomberg "daybreak: europe." nejra: i am nejra cehic. from european headquarters in london, these are today's top stories. the death toll from the coronavirus tops 100. cases on mainland china soar over to 4500. contagion fears. treasury yields steady after falling below 1.6%. japanese stocks edge toward their worst back-to-back daily losses since august. contingency planning. starbucks and we work shop

locations in china as the sun -- as nissan looks at plans to shield employees. the response on corporate europe. manus: a very warm welcome to "daybreak: europe." to the art of the manufacturing and global demand story. phillips estimate, 4.7 billion, just below where the markets had 1.8 billion. comparative sales rise by 3%. the guidance was between 4-6 percent. we will be interested to see what kind of guidance they give. for philip's, one of the most important issues, part of their

global production was in china. when it comes to the personal health operations, phillips ceo will lead the personal health operations as an interim ceo. fourth quarter profit. 602 million euros for the fourth quarter profit. that is the top line for them. you have a little bit of breaking news on some of the other things breaking. nejra: we looking at s.a.p.. anding non-ifr s revenue profit targets for 2020. profitability a big question especially since elliott management came in. 2020 business outlook is on a non-ifr s basis. it has raised the forecast. 29.2.8.6 to

the 2020 operating profit view, it has raised that to $8.9 billion, from a range of 8.8 to 9.1. cloud kings, a key number to look out for. 8.7 billion euros to nine lien. to 9.1.een 8.6 that seems to be roughly in line. quarter cloudurth and software revenue, 6.8 6 billion euros. that is a little bit soft. of course, a surprise leadership ceoge back in october, the bill mcdermott stepping down. co-ceo apeak to the little bit later on in the show to discuss the results. do not miss that exclusive interview right here. manus: i want to go back to phillips.

obviously, the order intake, important metric. increased 3% for them in the fourth quarter. fourth quarter sales, 6 billion euros sales growth income from continuing operations. fran's been putin will be -- houten will be with us shortly. we will jump off with some of those big issues around china. i think that market will focus in on the evident cuts. fromhe dividend to 8.8 14.2 swedish krona. they are saying the core ratio rises from 16.6%. this is all about the expenses related to money laundering. this was the big concern for the marketplace. they are saying concerns rose on

money laundering. fourth quarter net interest income fourth quarter profit, we are seeing -- let me just tell you what we have got. 988 million.f so, we will of course be talking andhe ceo, yen hendrickson, dig a little bit deeper into the numbers. stay tuned as the morning rolls through. let's get into some of these markets. one could say that there is definitely still a concentrated whiff of panic. the 10 year government bond market. citigroup, commonwealth bank of australia, they said that this trend is firmly in place. obtainedhat could be on this push lower in yields. there is this wariness from a number of different houses. this is the most overbought

market since late last year. this juxtaposition between what goldman-s is saying. jp morgan saying it is overbought. the aussie dollar, let's look at the rest of the market. the yield on aussie bonds, you are looking at one of the biggest drops since 2016. you are just seeing that slightly turnaround. gold, ironically, just that little bit of a dip. the struggle for what is the next concrete piece of information that re-rates from hedging to de-risking. nejra: i wonder if that has to be clear signs of containment of the virus. close the 600 and europe lower, the biggest drop since october. in the u.s., all three benchmarks dropping 1% for the first time this year. the dow erasing gains.

futures looking more positive in the u.s. and europe today. well aftereadying as we side at its weakest levels yesterday. global efforts to curb the spread of a new coronavirus have intensified as the death toll top 100 and the number of cases soared overnight. they prepared to evacuate citizens in wuhan, the city hardest hit i the outbreak. corporations are scrambling to protect employees and asia. recently returned from trips to china are being told to work from home. starbucks has temporarily shut some of its stores. nissan plans to evacuate most of its employees and family members wuhanill when -- from using a plane. , you areok at gmm

seeing real pressure on elements likely kospi and asia oriented indices. u.s. markets are trying to find their feet. your assessment of risk this morning. >> first, i think the market is due for a correction. yesterday was the first day in 76 days that we saw the more than 1% pullback. the market has been up 13 of the last 16 weeks. isking forward, if this reminiscent of sars, we might see more de-risking. we are also getting into the tax season. but again, if history repeats itself, it might create volatility down the line. occasion to come back to the markets. nejra: where do you see the best buying opportunities in the event of pullbacks in various

risk markets? of equity markets, the geography that is most affected is going to be emerging markets. we know also from the sars that usually european equity markets are affected. i think it will be in this region which will suffer the most. we have a preference on the medium to long-term basis for emerging markets including china. we believe this would be an occasion to come back on china. manus: we are beginning to try and assess opportunity. the fx market is perhaps one of those. real pressure on the offshore yuan. the onshore yuan is closed. this is the differential between onshore and offshore. we don't often see this kind of extra premium in offshore to

onshore. i think what our team are saying, if you see 703 of offshore relative to onshore, this could be a buying opportunity, a test of the limit of the move down. does that shine for you as one of the big opportunities? >> in that kind of event, which is unexpected, what needs to be closely monitored is what will happen in terms of chinese stimulus. intervenetarting to to sustain the economy. in that case, we might see some pullback on the renminbi. we might see an excuse for some weakness on the renminbi because of intervention by the chinese central bank. chinese authorities

response function to all of this. you said they might intervene in the currency of we see further we is, but might we also see broad-based stimulus if the effects of the coronavirus really start to threaten growth? always an upside to global growth's week is. suddenly, potentially the central bank becoming less dovish, the fed started to reduce the pace of increase of the fed balance sheet. this could be reversed in the case that we do see some fear on global growth. addictthe market is so central banks that anything which could threaten global growth might be seen as a positive because we might see more monetary stimulus coming in the near term. staying with us for the hour.

coming up, phillips reports that it will review options for domestic appliance business. we speak to the ceo. this is bloomberg. ♪

nejra: this is bloomberg "daybreak: europe." i am nejra cehic in london. manus: phillips says it will maintain its 2020 sales growth target after it missed its fourth quarter comparable sales estimates. the dutch company has also announced that it will review the operations of domestic appliance businesses. ceo, frans for the van houten, who joins us. the firstk off with global story? i am looking at your position in china.

20% of your total global production is there. what are you doing as of now with regards to your production facilities and perhaps emergency preparedness in china? frans: good morning. just a simple correction. we are not in the audio business. we are in the health technology business. , europe, and china the united states. we have a balanced growth in ourfacturing about 15% of global revenue. many supply chains are anchored somehow in china. i am concerned with the rapidly expanding coronavirus. it will impact consumer sentiment in china. it can also affect consumer supply chains. is focus however right now

to support all of the hospitals with our advanced ct scanners and other technologies to aid in the diagnostics of the corona patients. that is a very intensive job. we have seen strong demand on our service organization. definitely, it is early days of the coronavirus and i think we all need to be concerned. atus: at the moment --nejra: the moment, you are focusing on diagnostics. are you starting to worry about the impact on chinese growth? how are you preparing for a potential impact that might have on chinese growth in 2020? recorded very strong growth last year, double-digit and fact. overall, we have seen that the chinese market has good demand products.er health

i think the coronavirus may impact the market demand on the short notice. but it is very early days. fully in touch with the market. manus: let's circle off on this issue. the automakers, facebook to move staff, close businesses. etc.k, are you moving any staff? some could refer to this as a disaster recovery. frans: of course, we have taken all the safety measures and we have that in hand.

we really should not speculate too much. we are not prepared for it. maybe i can pivot to global results. we finished the year with 3% revenue growth. overall through the year, 4.5% growth, well into the guided range. our profit expansion in the fourth quarter was a little bit ahead of what we guided to the market for. i am encouraged by the easing of the unitedar between states and china. i think that will also be a positive step toward 2020 results. on all thein innovations that phillips have to do their diagnoses.

connecting. there's to patients through the cloud, through telehealth, and supporting consumers with their own health. i think it is an exciting strategy. of course, what we announced around the domestic appliance business is going to enhance that focus on our health technology solutions. nejra: you said you are feeling encouraged about the easing of u.s.-china trade tensions. when concrete trends are you seeing on the ground that makes you more optimistic about 2020 in light of u.s.-china trade? world whereve in a there is still an aging population with no chronic disease -- with more chronic disease. coronavirus points toward more health care. that is the -- we are core positioned in the rapidly evolving technology that will

aid providers and delivering better health outcomes with higher productivity and a better staff experience. we have seen, for example, strong growth in our business where procedures can be done the first time right thanks to phillips systems and software and services. i think the choice that phillips has taken in the past to become a health technology business sets us structurally for that 4-6 percent growth, something we have delivered over the past years. we have also been able to expand profitability with an average of 100 basis points. we are delivering on our strategic plan. there have always been ups and downs and a quarter but the momentum and direction looks strong. manus: can i ask you, you are mulling the sale, we understand,

of your appliance business. a figure we have here, $2.5 billion worth of sales. what is that business worth? have you had letters of interest ? when can we expect a deal on this? frans: the domestic appliances business covers categories like kitchen appliances, air quality enhancement. it is a global leader. the business has been growing consistently. the prophet is double-digit. greatnk that it is a business with a lot of growth prospects. we are just at the beginning of the process of separating it into a legal entity. triggerthat will interest for me now at the beginning of a 12 to 18 month process.

i think it is rather early to answer. helps to boost that portfolio further. nejra: can you give us an update on the order intake? the fourth quarter tends to be quite strong. does it tell us about the company's health? frans: 3% quarter growth overall. within that, we could see strong growth on equipment that underpins the growth rate of 2020 in a good way. we have also seen strong traction on the services side. we have seen a step up in the fourth quarter around, for example, monitoring and analytics. forink we are well set up

2020, although the the year will be gradually strengthened as we go forward. , thankfrans van houten you very much for joining us this morning. that was the very latest on the numbers. a couple of pieces of breaking news in regards to the coronavirus. this from the japanese prime minister, shinzo abe. he said those japanese nationals who returned from wuhan will be home quarantined. evacuees will stay in their homes for two weeks for checks. this is all about containment. nejra: airbus has confirmed that it has reached an agreement with authorities. it has reached an agreement in principle. are made in the context of investigations into allegations of bribery and corruption.

for legal reasons, airbus cannot make any comments about investigative authorities but it can confirm it has reached an agreement with those authorities. agreements are subject to approval by courts and the regulators. coming up, we will take a look at the day ahead. this is bloomberg. ♪

nejra: this is bloomberg "daybreak: europe." isus: charles-henry monchau our guest host this morning. charles-henry: listening into the -- listening into the frans van houten interview, your first take? think thenry: here, i bar is not too high for many companies. one take away is that it

is too early to take the coronavirus to impact guidance. i don't think we will hear much on this from companies. europeanck to equities and companies, what i want to hear is also how they will be impacted trade deal phase one. thet importing a lot from u.s., probably at the extent -- at the expense of other geographies, including europe. 19% of chinese imports coming 10% from theersus u.s. it will be interesting to hear what companies might affected in the coming years from the redistribution of imports from china. coming up, we will be speaking with the ceo of spread

bank. stay tuned for that interview next. this is bloomberg. ♪

nejra: good morning from bloombergs uric it -- bloombergs european headquarters in the city of london. i am nejra change. manus: it is bloomberg "daybreak: europe." the death toll from the coronavirus tops 100 whilst confirmed cases on china's 4500.nd sword to over the world health organization director general -- the u.s. raises the travel alert. contagion fears. treasury yields steady after falling below 1.6%. toward theocks edged worst back to back daily losses

since august. gold trades near its highest in six years. contingency planning. shutucks and we work locations in china while facebook and nissan enact measures to shield employees. ♪ ."nus: "daybreak: europe 6:30 in london, 7:30 in paris. protection, and does a 1.6% yield appeal to you in this world? 10 year government bonds back at a level we have not seen since autumn of last year in terms of an overbought situation. citigroup says 1.5 as possible.

a number ofs and others say this is overdone and overrun, that it is the most overbought in four months. we are seeing a rereading of the market. the rest of the markets. the australian government bond market again rereading in tandem with the moveon treasuries. 10 year government bond yields time 1% for the first since november. that has ramifications for the aussie dollar. the gold market, it drops an eighth of 1%, which brings back the conversation we just had with frans van houten from phillips. it is too early for us to make substantive comments or extra moves. nejra: if you are seeking protection in bond markets, when will you see the buying

opportunities in equities? higher after we saw losses of more than 1% for the first time this year yesterday. at is weakest since december 8 yesterday's session. we stabilize a little bit in today's session on the offshore. let's get to our guest host. the main concern worldwide filtering into bets on the fed as investors try to quantify the economic impact of the coronavirus outbreak. they are pricing in a 25 basis point praise god. a few weeks ago, traders were not seeing a cut until 2021. is it the right time to be repricing the fed this early on in the coronavirus out rake? there arenry:

disconnects between what the market says and the fed dot plot. i think one of the focuses of the market is also on the fed balance sheet. one of the key equity price drivers has been the expansion of the balance sheet. we know that, after the end of march, there is a kind of tapering. the expansion is going to slow, to $30 billion. here, i think the market would like to hear during the fomc conference what will happen to these balance sheets. as i mentioned earlier, one positive on the global growth outlook is that at some point, we could see central banks starting to become more dovish. again, this is the addiction of the market. that could be a positive down the line. manus: you mentioned that the pboc could be pushed into action

that we don't expect. are we entering into the realms of may be a material change. the language that jay powell used is that there needs to be a material change for the fed to move. we are still a long way from material change in the u.s. economic outlook. charles-henry: there is no central bank that is on autopilot with the currency. last week, the ecb was a surprise, a slight change from light to moderate. we see with the bank of england this week, it could be unchanged. thethe fed, i don't think market is expecting anything this week in terms of change. then, in terms of language, comments could be surprisingly more dovish than what was expected before. manus: maybe they want to

inflect that back into the market that they will do whatever it takes. withes-henry monchau stays us. we have the prime minister of japan, shinzo abe, saying that japanese citizens have been flown back from wuhan and will be quarantined for two weeks. china is reporting more than 100 deaths. let's bring in our asia cross at that's managing editor. -- cross assets managing editor. what movement are we likely to see when these markets reopen on your side of the world? had an mind, we have number of markets open past couple of days. japan. today, we saw south korea and australia pack. south korea had a really bad session today, down about 3% or more throughout the day as

korean shares were catching up to the declines, spurred by concerns about the virus over the past couple of sessions. tomorrow, hong kong comes back online and we expect to see a significant decline. potentially further liquidity in the offshore yuan tomorrow as hong kong comes back online. tradingd, hong kong could still be impeded by all of these companies and banks telling employees to maybe work from home, consider the health and safety situation with the virus. clearly a big concern there in hong kong. nejra: a concern it seems for china's top security regulators as they have called for investors to assess the situation rather -- rationally.

does this give us any sense of how they might respond if the situation gets worse? >> this is interesting. i separate out the securities regulator from the monetary policy makers and fiscal policy folks. the securities regulator, keep in mind it is still in the middle of the lunar new year's holiday, they put out a statement this afternoon saying that they want everybody to take the virus prevention and control as their top priority but, at the same time, they said they would like to make sure that markets open and are working. so they have called for market players to come up with contingency plans. they want companies to be transparent about the virus. and they are calling on securities companies to encourage investors to take a long-term investor perspective. obviously, from a regulator,

policymakers standpoint, china would not like to see a massive selloff. manus: thank you very much. we are trying to squeeze a lot in here. sorry to rush you. we have a ceo sitting on the sideline. biggest course sweden's mortgage bank, which is being investigated in europe and the u.s. for money laundering. compliance.re on let's get to stockholm. jens henriksson is the president and ceo of swedbank. good to see you this morning. thank you for joining us. cost, 20ook at the million kroner, is that the top of the cost structure for implementing change? are you resolute on that number as you deliver your results this morning? jens: good morning from

stockholm. first, i am very happy to present the results for 2019 during a very turbulent year. we have profits for around 20 billion kroner. it is going down a bit compared to last year. i think the main reason for that is because both the investigation and the allegation against money laundering, and also the increased cost of running a bank. on those numbers, when we were hearing from you in october, you said that the u.s. investigation may take years to conclude. can you give us any kind of update on the investigation? i think the key point is that during march, the swedish

regulator will come with their verdict on whether we have broken any rules. at the same time, we will try to convey all the results from our investigation. then, they will probably look at us for a while. i cannot say how long that will take. historical other examples, it has taken everything from three to five years. that is not in my hands. we are constantly trying to work out provisions and the size and scale of the potential fines. morgan stanley says you could face a fine as much as 6 billion kroner on the back of the money laundering allegation. does that number fit with the bandwidth that you have made your assessment? if so, when do you begin to provision for the intentional fine?

potential fine? jens: we have not made provisions because, first, we do not know if we will get any fines. has a stable financial position and if there would be any possible fines, we have enough money to pay them. nejra: what number, if you could put a number on it, would lead to a further cut in the evident payout ratio? payoute have a dividend ratio that is 50%. we intend to stick to that. i am not going to go into a position on guessing whether we will be fined or how big such a fine would be. manus: can i ask you that about the business? we saw a shift in rates back to zero.

i just want to get a sense of what that has done to business demand, the complexion of the bank. that, whenwe know is interest rates go up, it is actually good for the bank in the sense that we have a strong deposit base and we can use that to lend out especially in mortgages. had negative interest rates on people's savings accounts. that means when interest rates go up from a negative levels of zero, that is good for the bank. satisfied with many of the recent changes with executives in the bank, yourself included of course also the chief leaving? -- is it leading to systemic changes within the

bank? jens: i think you are asking the right question. in many ways, it is a new bank coming forward. we have a new chairman, new vice-chairman, new ceo, new head of swedish banking, we are going to recruit a new head of baltic banking, a new compliance officer, we are going to recruit a new risk officer. we also have an incoming new communications officer. in many ways, it is an incoming bank coming forward. i think that is good because it will strengthen the confidence of the bank. manus: that is a lot of change. a lot of new. as you say, a root and branch change within the bank. is that a headwind to growing the business as you go through a transformation process? no, i see it as a way of having a new start.

these are challenging times for banks. you see increased competition for fintech companies. bank of england came out the other day and said you see falling interest rates for 700 years. it is a challenging environment. a new start to the bank, i think actually that is pretty good. nejra: thank you so much for joining us from stockholm, jens henriksson, president and ceo of swedbank. a breaking headline here. the world health organization chief says he does not encourage evacuation from china. we learned that the who director general was traveling to china to assess theeak situation on the ground. let's get back to earnings. europe's biggest software company boosted revenue and profit forecasts for 2020 after it reported fourth-quarter

quarter income that exceeded estimates. joining us comedy co-ceo of -- joining us, the co-ceo of sap. give us an update on cloud bookings. it is a key metric people watch. what are your outlooks for the cloud bookings as well? christian: thank you. q4 was a strong finish to a strong year from 2019. we actually delivered on all of our guidance. cloud bookings were up on a total year basis. actually, excluding our infrastructure for service business. we see high demand for our latest acquisition as customers more and more realize that they have to measure experience in the digital age. our core solution is ever strong. we expanded market size and we are now twice as big as our next

competitor. now in the meantime over 2000 customers across 20 industries in over 70 countries. manus: i want to get a sense of what happened in the world in the last 30 days. take out the coronavirus for the moment a lot of people use the language of stability, going through the worst. was there a demonstrable shift in the narrative from customers in the past 30 days? theles-henry: -- christian: good thing about our business model is it is extremely robust and resilient. for rely on software. they have to adapt to new business models and drive automation. this is why we are running our business at a global scale -- global scale and we are quite

resilient against geopolitical tensions and trade sanction in the world. from davos, the sustainability topic, course at the top of our agenda. foris ahead not only setting ourselves up to be carbon neutral by 2025, but we will also help our customers become a more sustainable company by measuring the carbon footprint to drive action. nejra: what conversations are you having with elliot management at the moment? are they satisfied with the steps you are taking now? we are having conversations with most of our important investors. it is worthwhile to listen to them, to seek their feedback, and of course to the best of what is in the interest of sap.

what is the--manus: pressure? there was the promise of a special dividend of a 1.5 billion euros. is that enough to get elliott off your proverbial back? in the weeks to come, we will elevate what will be our final dividend for 2019. of course, given the results, you can expect an increase of the dividend in 2020. plus, we will of course do the share buyback. our investors are very happy with the plans for the dividend and share buyback. nejra: with respect, you keep saying that investors are happy with the business but sap is trading at a discount to a lot of new work enterprise cloud players. how do you explain that discount and how do you plan to change it

? christian: sap has two business models. , our coreen in 2019 business leading. second, we see accelerated cloud. this is also what drives the multiples. in the years to come, we have many more solutions. we are even sure that we can double down and this is what will drive the market cap and multiple of sap. nejra: when you look -- manus: when you look at the numbers, the promise was to triple the multiples by 2023. what is the biggest headwind to that promise? christian: we are coming from an extreme strong foundation.

we are expanding our market share. we are now twice as big as our next competitor. cloud lines of toinesses, sap is starting exploit the synergies by indicating and selling them into our base, also looking into our pipeline for 2020. we are staying extremely confident. nejra: manus: christian, we wish you well with the endeavor. lots of challenges for sap. coming up, top stock picks. take advantage of accelerating growth in europe. we have your latest morning call. this is bloomberg. ♪

nejra: this is bloomberg

"daybreak: europe." i am nejra change in london. improving macro data, the environment is about to get tougher for active managers in europe according to bernstein. in the details of your morning call, dani burger. >> probably the best way to describe how bernstein's strategists see the european environment is selectively bullish. they say that macro and micro data is improved there are still a lot of structural risks. they compiled lists of their favorite and least favorite stocks. they laid these out according to their favorite factors, to deal with what they say is a challenging structural environment. the part they point to are perpetually lower yields.

they say investors can do well in this environment as earnings improve. they say earnings growth will be 4% over the next 12 months. still, they need to be selective. nejra: thank you so much. charles-henry monchau is still with us. of equity strategy are you implying at the moment? a lot of people are saying that you need to take strategies that late cycle environment. are you looking at other factors that you are wanting to allocate at the moment? charles-henry: we believe we are in almost a rational bubble. we are seeing the repression. the direction market which is up is rational. there are is because

many risks out there. especially u.s. equities, the markets are very dependent on central banks. be volatility. i think the volatility of last year which is extremely low will not be reported this year -- repeated this year. you need to be more technical instance, also -- for one theme is what we call -- think about small caps, think about value stocks, emerging markets in china or asia. we think that you need to be invested but obviously it might be a very different market than the one we saw last year. manus: i like that. what was it? charles-henry: rational bubble. manus: i live in a rational bubble every day.

sane. keeps me great conversations. banking, sap, and phillips keeping the sales growth target. nejra: futures in europe and the u.s. pointing higher after losses yesterday. ♪

>> good morning. welcome to bloomberg markets the european open. we are live more headquarters in london. i am anna edwards alongside matt miller. >> today the markets say maybe there is an end in sight. asian stocks dropping on fears that equity futures are trading higher. the cash trade less than an hour away. ♪ matt: bad to worse, the u.s.