ha tt the citizens not be used for this purpose, and people will be assigned to these premises. due to the extent of the damage, we have decided to give up on states. of using the in the coming year, there will be units that will be coming on stream. these housing spaces are not usable for quarantine centers. we do not have any plans for the time being to use these premises as quarantine centers. mean we it does not would not do anything. depending on the development of the epidemic, we will decide on the amount required so the government will continue to

places. suitable i call on a public understanding , this is part of our control measures. deploying's who are these camps understand the situation that they could convert some of the camps into quarantine facilities. eventually inadequate quarantine facilities identified , the last option would be quarantine at home. the public must be prepared for this scenario if we cannot identify enough quarantine facilities. as for the equipment, money is

not an issue. we will not lack the financial means. even if we are yet to secure the financial funding, we would first inhe resources terms of various supplies. including hand sanitizers and facemasks. we are maintaining communication with the suppliers. since we are in a holiday period, it is often difficult to get in touch with suppliers during the new year period. people have rushed to

purchase various supplies. forill explain how efforts .ecuring such supplies that is all for my introduction. id for to my team before we open up for questions. i would like to report the latest situation. as of 12:00 today, there were wuhannew cases of pneumonia. there were no new cases yesterday, and 100 patients are currently in quarantine. te studiesis conducting

and contacting patients. will arrange for quarantine for these close contacts and carry out medical surveillance. has beenay camp converted into a quarantine 31ility and currently contacts have been sent to the holiday camp for quarantine. we announced the activation of the urgent response level, and having set up a working group, we convene meetings every day. together, with the department of deliberating on more effective measures, and we are closely communicating with

our experts to take their views and advice. we are also advancing disease control measures in order to minimize the spread of the disease, and any community outbreak. in terms of inbound and outbound travel restrictions -- francine: briefing the press gathered in hong kong wearing surgical masks and talking about how china will stop individual travelers to hong kong. carrie lam also said flights would be produced from mainland china to hong kong and high-speed rail will be closed. they are trying to contain the virus. international efforts are needed the virus from

spreading. markets are under pressure. european stocks were rising and are down. map and i urget everyone with a bloomberg terminal to check it out. this is live as we follow this map of coronavirus outbreak across the world. cases, numberrmed of deaths worldwide, and you can track the efforts to contain the virus. joining us now is dr. nathalie macdermott, professor, imperial college london. she has treated patients with the ebola virus. virus, we know about the and if we do not know much, when do we find out? these things take a week? how bad will it be in two weeks?

dr. macdermott: we are learning about the virus all the time. observing what is happening in china and clinically with patients, this is a coronavirus, a family of viruses. , it is a different species has a different genetic makeup to sars. it spreads through droplet transmission, so when people sneeze or cough and you breathe in or have contact with it, you can become infected. we are determining that it is possible to be infected from someone who is not showing symptoms. are not feeling unwell, you could be infected. areoportion of people causing an inflammation in the lungs and is causing pneumonia. francine: how quickly or slowly

can antidotes or vaccines be made? think it is possible to make a vaccine relatively quickly. we heard the scientific officer of johnson & johnson talk about that. the issue is in order to do safety analysis and efficacy analysis, it takes time. if you want to go through the normal procedure, you saw how long it took ebola to get a vaccine. francine: if you look at drugs they have been using, it seems they are using former hiv, is it working and how long you need to see it is working? sam: with an infection like this, you have a number of patients to know it is the drug making a difference or if the patient is recovering normally. you can do genetic analysis of the virus and try to see which

drug would fit it, but a lot of that is basic science they have to do. francine: how difficult is it to contain such a virus especially if you can affect someone before showing symptoms? dr. macdermott: it is quite difficult to contain because you cannot expect people who do not know they are infected to self isolate. that is why it becomes important to determine people's contact history. have they traveled to in infected region, or have contact with a known case of the virus. in those cases, it would be to isolate themselves for a couple weeks and avoid large gatherings. is it curable like the flu or like ebola? dr. macdermott: it is similar to the flu. it is curable in the fence that are immune systems can fight it

off. those with a weakened immune system, or the elderly with medical problems may struggle to fight it off, and it is causing more severe infections in those individuals. there is no specific treatment other than supportive treatment. if people cannot eat or drink properly, get intravenous fluids or breathing support. there is no direct treatment for the virus at the moment. francine: if you look how quickly this can spread, how different is it from sars? sam: these are similar viruses. we have a bit more in our favor this time, we have learned from .hat lesson and the swine flu the response has been rapid. the problem here is the distance of the patients being infectious

before the disease has become obvious. that is something you cannot control. with the flu, we know how many get it on an annual basis. francine: is there a worry this will generate panic, and does that make it more difficult to contain, or is it the only way to contain the virus? dr. macdermott: panic is possibly the worst thing in terms of trying to contain any disease outbreak. we do not need panic on any level. it is concerning for china and the population in china, but in terms internationally, as long as our health authorities are acting appropriately to identify people who may have traveled, and give them the right advice when to notify when they are unwell or self isolate, then we do not need to be too concerned about is spreading in our

country and developed countries with the health structure in place to isolate and treat people probably. francine: thank you for joining us. dr. nathalie macdermott, professor, imperial college london. on the have plenty more coronavirus and the impact it can have on health and gdp economics and the broader markets. we are getting breaking news out of renault, the board is considering appointing mr. demeo as chief executive. he could become the new chief executive according to earlier reports. fiat has been the front runner. we will have plenty more on renault and your stocks. this is bloomberg.

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francine: economics, finance, politics, this is "bloomberg surveillance." optionsips is mulling for its appliances unit as it focuses on health care equipment, producing things like coffee makers and air. fires, it has 2.3 billion euros of sales. >> the profit is double-digit. we think it is a great business

with a lot of growth prospects. we are at the beginning of the process of separating it into a legal entity. att will trigger interest the beginning of a 12 to 18 month office. >> airbus has reached a deal to settle bribery allegations. it could cost the plane maker $3 billion. it is subject to approval by courts in the u.s., u.k., and france. yourine: this is what markets are doing. yesterday was a tough day as focus was on chinese gdp related to the coronavirus. , thenwe started stronger we had a reversal as carrie lam was talking about measures they were putting in place to stop the spreading of the virus. the yen, there was a focus on

havens and s&p futures gaining. joining us for the hour is the global head of rates at merrill lynch. and arend kapteyn, chief economist / global head of economic & strategy research, ubs. thank you both for joining us. i have a great chart looking at the cases. how much focus and panic is on the markets that this virus will not be able to be contained? ralf: i would not call it panic, but investors are under hedged. if you look at our surveys, we have inflows and profits in equity markets where investors are most concerned about valuations. in contrast to last year, they are no longer long-duration. people are selectively looking for hedges where they make sense. francine: hedges to the coronavirus? ,alf: hedges into global growth

and the easiest way to do that is to buy. how much -- i keep being told markets are wearing, and there is a black swan. is the virus the black swan of 2020? arend: this clearly matters economically for a quarter or maybe two, but then things tend to snap back to their existing trend levels. there will be a heightened sense of alert and caution, and central banks do not want to sound tone deaf, but i would be surprised if any central bank tries to react to this. francine: you can see a few months down the line and if flights cannot get in, gdp will take a hit.

arend: this can take up to six months. it takes a while for things to spread and get under control. it is possible this is a two quarter thing, but if you go back to prior episodes, the economic damage was quite concentrated in a relatively small number of countries. even in those countries, if you go back to the sars episode, there was a snap back once things were under control. from a forecasting perspective, it is too early to lock down your china forecasts sharply because it is too soon to tell. francine: china is warning markets not to overreact. does overreaction at the margins change? i do not think it is an

overreaction, but we have a bullish feeling going into the year. investors are trying to tell themselves that everyone's forecast on the street is contingent on a turnaround in china and taiwan. this story highlights the turnaround could be weaker or delayed. you need to start factoring that in. the other investing point about functions,k reaction this is useful reminder of the symmetry of that function. it is almost impossible to come up with a scenario that the fed would hike this year. perspective, the symmetry in the rates market is why we are seeing the repricing. much,ne: thank you very arend kapteyn, chief economist / global head of economic & strategy research, ubs and ralf alexander preusser, global head

of rates strategy, merrill lynch . they both stay with us. this is bloomberg. ♪

in anne: let's bring update on breaking news. renault is looking to appoint luca demeo as its chief executive. look at demeo was the front runner for this post for quite a lot of months. what do we know about the italian? >> he was the favorite at the

end of november when bloomberg first reported it. it did take a wild because of negotiations. look at the mail is 52 years old and considered as a guru in the automotive industry. renault 25 years ago and moved to toyota and became the protege of the late ceo of fiat. he helped launch the new version 00 before moving to the volkswagen group and audi. with a lot credited of rejuvenating, brando branding models -- launching models, which will be key for the future of renault. and they had to accelerate because they had a crucial board

japan on thursday. so much. thank you the main question is if he will push for this merger with nissan. arend kapteyn, chief economist / global head of economic & strategy research, ubs is still with us. coming up, will mark carney make a cut this week? looking for it to be a nailbiter. carney's latest press conference is on thursday. we will follow everything going on with the continuing efforts against the coronavirus. this is bloomberg. ♪

francine: coronavirus concerns. the death toll tops 100.

china stops individual travelers coming to hong kong. until the virus can be under control. markets assessed. will futures rise, but there be a pause in the -- contingency planning. starbucks reworking locations in china. good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance ." i'm francine lacqua in london. 1.5 hours into the trading day, let's check on european stock movers with annmarie hordern. annmarie: a lot of earnings impacting individual movers. one of the biggest gains on the stoxx 600, up 4% per net income beat estimates. have enoughthey money put aside in case of any potential fine if there is an investigation into money laundering. 2.16%.up

about bribery allegations. with -- this has really shadowed the company for years. s.a.p., down 2.5%. even though they raised their 2020 guidance, the fact is these cloud numbers really came in less bullish than many were expecting. it is all about the cloud. francine: it is. thank you so much, annmarie hordern. let's get to bloomberg first word news with av hurtado. viviana: hong kong limiting travel from china, aimed at the coronavirus outbreak. curbing that spread. it is stopping individual travelers from entering the city as well as shutting high-speed rail. the dental from china's coronavirus increasing to at least 100. the number of new cases soaring to more than 4.5 -- 4500.

in the u.s., some republican senators are leaning toward calling john bolton as a witness. that is as more revelations emerge from the former national security advisor. "the new york times" reporting last year mr. bolton told the attorney general of his concerns about the president. they stem from conversations and the leaders of turkey and china. today prime minister boris johnson will likely allow huawei to build 5g networks in the u.k., but the chinese telecom giant is almost certain to be banned from poor areas. culture secretary nikki morgan telling bloomberg the government we keep while way out of .ritical infrastructure president trump wants the u.s. -- once the u.k. to ban while way entirely. today president trump is set to announce details of his middle east peace plan. is a good chance it will win the support of palestinians and arab nations. if not, he says, he can live

with that. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. this is bloomberg. francine? francine: the main concern driving markets worldwide is hinging on the next rate cut by the fed. traders are now pricing in the 25 basis point rate cut toward the end of this year. it is a far cry from the expectation a few weeks ago when traders were not later incut until 2020. we are talking about rates. where do you see treasuries going from here? >> we have already gone through targets.h year-end we had a bit of a bullish buyout, and 1.80 was the

year-end target. we saw iswith what the asymmetry of risks that we have got. with the fred pricing, pricing in a full cut extreme? not really, right? there's not going to be a hike. there is only a question of how many cuts. francine: we are hearing from health officials in germany that is 33rst coronavirus years old or the health officials saying that the german case was identified early. i know this doesn't change what the fed is doing. but our people going to consume less? could it change the composition of shopping in america from elsewhere or even the way that shoppers behave in america if this goes on? >> i think there is a clear question mark, that relative to

sars, china is a much bigger weight in the world economy. andism, both to china chinese tourists going abroad, is bigger than it used to be. so from that perspective it is difficult not to worry about some of the potential spillover effect, sooner rather than later. but again, it is not going to be additive to global growth over the next couple of quarters. the big question mark to me is, to what extent does this delay the underlying recovery we were starting to see in chinese data? you started to see trade data improve quite materially. so if this puts a dent into q1, q2 performance, then obviously we need to push out our stray station for stabilization in europe to -- our expectation for stabilization in europe. francine: german officials are speaking in munich about the first confirmed coronavirus case

that was identified early, and this first coronavirus infected is a german of 33 years old. we are looking at a news conference to see what comes out of it. at the same time, kenya has quarantined a passenger because they are worried about this passenger having the virus. so we will keep an eye on that. it is difficult to have a fed conversation, or a central-bank conversation because all this is coming on -- is going on. with the effect it has the -- on the economy -- would it have an in-flight on inflation? probably not. what if people stop traveling? >> one important indirect effect right now is that oil prices have gone down. the u.s. is very oil dependent. the economic breakeven is it about 5500 wti. one thing the uncertainty does is pushes oil prices down, so

that affects many countries, even though they are unaffected so far by the virus. the other effects, in terms of the effect on china, and a lot of this is affected, concentrated around china. that is where 97% of the infected people are. you have to remain -- you have to wait to see if your transmission channel is imports, you have to wager chinese data. with the countries, we have to wait to see how it spreads and how severe it is. i'm skeptical that you see anybody's behavior change. thank you all for joining us. continuing with our guests. unsurprisingly catching a bid because what we saw in the last couple of hours. given what hong kong has said, here are some of the highlights. trading threeeld

% luxuryints lower, 1.58 is getting cheaper. . lot of it luxury stocks we will have a full round up of market impact and possible economic impacts of the coronavirus. this is bloomberg. ♪

francine: welcome back to "bloomberg surveillance." germany has just confirmed a 33-year-old has been can infected with -- has been infected with coronavirus. -- carrie lam has

just finished speaking. given the gravity of the epidemic to further reduce the flow of people between the two places, we are installing the following message. number one, we would have to tackle the problem with the endorsement of the central government. issuing individual traveler enforcement. was the hong kong chief executive, carrie lam. it is pretty dramatic seeing her in a surgical mask. consumer more with our news team leader. eric pfanner, you have caught up with this and kept us up-to-date. do we have any idea of the survival rate of this? we forget that flu claims many lives. eric: that's right. flu is something we have dealt

with for centuries, so it is a little bit different. the death rate is much lower even though the cases are much higher. this is between the flu and sars in that regard. it looks like the death rate is in single digit percentages, which is dramatically higher than the flu, but may be not like sars, which had 10%. francine: how do you stop this from spreading? you could not have symptoms for two weeks but still spread it. what does it mean for pharmaceutical companies as far as identifying it and finding a solution to it? eric: that is what makes people uneasy. you could walk around and have this for 10 days, maybe two weeks. which is why we are seeing some of these unprecedented measures, travel restrictions coming in because people do not know what lleyton carriers are out there. do travel restrictions work? there are so many flights in and out, does this make a real difference?

eric: we probably will not know until mid february how effective these restrictions have been. the 45 hundred cases we have identified so far -- these are people who probably would have caught it sort of mid-january before the restrictions went in at the end of last week. francine: thank you so much for the update, eric pfanner on the coronavirus. let's get to the bloomberg is this viviana hurtado. bloomberg has learned renault's board has considered appointing luca demaio as ceo. he has been considered a front runner for the position. boeing receiving more than $12 billion of loan orders that will help bolster the plane maker during the 737 max crisis. citigroup is leading the financing. it was initially marketed as $10 billion.

10 billion pounds -- intends to have plastic packaging joining a number of companies going to reduce their carbon footprint. it plans to reach net zero mission a decade earlier than the u.k. government. apple is being asked for 80 million iphones, an increase of more than 10%, including 65 million units of current models and 15 million of a new low-cost model. apple expects iphone sales to return to growth. francine: thank you so much. after 6.5 years, this thursday sees mark carney's final decision as the -- at the bank of england. time he has left them to figure it out for themselves. conflicting data has left traders split on whether there

will be a cut this time. markets are pricing in a 60% chance of a move. 18 months ago, he surprised the markets that were betting the wrong way and what bank of england would do. that's cap more with -- let's get more with our guests. expectations, 8% of a cut in december, then it shot up to 80%, now it is about 50%. >> it is in no man's land. we have been calling for what our economist has been calling for, bank of england cuts last summer, and the question this time around is if it happens now or later. irrespective of the coronavirus, you have a story of an economy that is growing meaningfully below tension with inflation meaningfully below target. why wouldn't the bank be cutting? the only question was how big that postelection balance was going to be. there is a balance, but it is not big enough to change the

underlying narrative. we are looking at a cut this week. it is a close call. if not this week, it will happen later. francine: when you look at brexit, we are coming to the end of the first phase, on january 31, this friday. the u.k. leaves the e.u., and then what? what kind of trade relationships will we have with e.u.? >> we don't yell yet. part of the issue is -- we don't know yet. part of the issue is that does the bank extrapolate that, or do you have to say that? we will go into a renewed phase of uncertainty for six months where the clock will run out, we now have a legislative threat to the hard brexit, so as you get to the end of the year and the deadline approaches, you could see businesses sees up. weakre navigating very data in q4, a completely stalled u.k. economy. a strong balance in survey

confidence, which looks like we have a snapback, but than the fear that that will fall back to where we have come from. so the market is partly undecided because it is not clear how those forces will ultimately balance out. francine: when do we find out? ralf: i think the bigger question is this easing up that you described. yes, the u.k. economy seized up for sure, but to my mind, the big issue we face is that west futuregotiation on this of the trade negotiation is going come as a corporate you know nothing more today than you did a few weeks ago. have no clue about what your future generation in the e.u. is going to look like, how your supply chain is supposed to be changing, and if so, in what direction. so from that perspective, we

will -- it is it saving drag on the long-term outlook -- a significant drag on the long-term outlook. arend: the most important data point that the bank of england is going to have and we do not have at this stage is the decision-maker panel. precisely this question, we get the diffusion, which bounces up, but if you go to corporate and ask them if anything has changed, nothing has changed the aging survey might give us a different signal than what we got from pmi's. francine: one would argue that this is the last decision of mark carney, and if he cuts, it buys him a little bit of time, his successor. the other argument is, would you not wait for the budget ralf:? -- for the budget? ralf: again, you are needing to make assumptions that the government would do something

different than from what they are telling you to do. the government is currently -- the government's currently negotiating stance on it is that it comes with an economic cost of the short-term. the same thing about the budget. we know what the rules imply. most forecasters are already penciling in that those rules will get soft enough, and they are therefore factoring in a larger fiscal balance then what is consistent with those rules. but there is a question to how far you can forward that argument. what about u.k. assets? do you like them? arend: we like equity assets. we have seen that reflective in equity market performance. with fixed income it is tricky because you are pricing some degree of easing. the big question, to we get more

than once? is, what doeson one cut do? in the grand scheme of things, as you navigating this uncertainty, it is not economically relevant. are you perceived to be doing the right thing? and then your scope for easing is quite limited. even if you do two cuts, maybe there is something to do there. i think they have constantly saying this labor market the laborsus -- market has started to weaken over the last couple of months, so i could see them going with more than one cut, but would you would have to extrapolate that labor market weakness, and it is too soon to tell. you need to see whether conference starts to retype in the labor market, stopping them in their tracks and preventing them from cutting. every single meeting, this next one is a cliff edge.

once they have cut, then i think it gets much more difficult in terms of where we are in the data. francine: thank you for joining us there. from ubs -- arend kapteyn from bank of america, ubs.preusser with this diverse case where we have explained in europe. a 33-year-old german infected with coronavirus after visiting he did notese -- but travel to china. the international health organizations rush to contain this sars-like coronavirus that so far has claimed more than 100 lives. this is bloomberg. ♪

francine: let's keep you up-to-date on the latest on the coronavirus outbreak. hong kong limiting travel from china. traveltopping individual to the city as well as shutting

high-speed rail. anxiety over demand continues to drive the oil market as the coronavirus spreads. food prices down 10% since early last week, and some are forecasting even further declines. annmarie hordern is here with the latest. annmarie: it's right, that is the big worry for these producers, that prices can fall further. we dippede on wti -- below the envelope. this is a technical analysis of a trendline below the current price. we dipped below that envelope, so that is a technical warning. some are saying wti could fall as low as $47 a barrel. amid anxiety and nervousness. what the coronavirus and it spread means for demand -- i think your guest ralf preusser had a good point. this could be worse than sars in 2003 because the share of china and asia, their share for the global economic growth and oil consumption is much bigger now than it was in 2003, and petra max and their analyst had a very good point on twitter, early

encompassing the global oil market. you have a shutdown in china and a shutdown in libya, and he says right now china is winning. the market is completely shrugging off any supply concern, squarely looking at demand, francine. francine: thank you so much, annmarie hordern there, on the latest move in the price of oil. in the meantime, china, about 40 minutes ago, was restricting travel to hong kong as global companies and international health organizations are trying stop the out how to coronavirus. european stocks are now down. this is "bloomberg surveillance." we will continue with tom keene from new york. ♪

francine: coronavirus concerns. did death told tops 100.

china will stop individual travelers coming to hong kong as officials admit the virus is not under control. u.s.ean stocks are flat, futures rise. will there be a cause that a pause in the salafi echo hong kong markets are set to reopen tomorrow. banks tell hong kong employees to work at home if they just visited mainland china. good morning, good afternoon, good evening, depending on where you are in the world. this is "bloomberg surveillance ." i'm francine lacqua in london. tom keene keene is in london. he first case in germany -- did not travel to china but was infected by someone who had come from china. we looked at the press conference was going on. european stocks actually sink. tom: we will feature the rate of change throughout surveillance today. a special good morning to all listening around the pacific

rim, with those shutdowns very tangible. we will do this all through "surveillance" today. francine: let's get straight to the bloomberg first word news with viviana hurtado. viviana: we begin with the coronavirus. governments and health organizations are stepping up the fight against the virus. the number in cases in china have soared 65 percent, passed 4500. at least 106 people have died. hong kong is shutting down high-speed rail service and keeping people from traveling in and out from china. pressure building on senate republicans to agree to call witnesses in the impeachment trial. it is coming from revelations in john bolton's forthcoming book about president donald trump and ukraine. the president's supporters are braced the possibility of more damaging disclosures. according to the new york times, john bolton was concerned that the president rented personal favors to the autocratic leaders of china and turkey. in principle, airbus agreed to

settle long-running bribery investigations in the u.s., u.k., and france. no details have been disclosed, but bloomberg has learned the settlement could cause airbus about $3 billion. -- could cost airbus about $3 billion. they were partly responsible for -- global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, i'm viviana hurtado. this is bloomberg. francine? tom? tom: thank you so much. equities, bonds, currencies, commodities. outdoing foreign exchange on that. futures rebound off a challenging two days. a curve steepening this morning. europe does not do much, oil churning a little bit weaker. gold advanced. 17.68. at 19 level, the yields are extraordinary. that should be right on the screen. we are four lower in basis

points on the two-year yield, 1.40,o an extraordinary about two hours ago. 1.46 -- 1.44,even even 1.46. there, 2.07, down to 2.03 right now. francine: i am looking at similar data points. i wanted to show renminbi again because we saw a quite strong renminbi move. we saw a rebound in european stocks that lasted a little more than an hour, but then investors ' focus returned back to the outbreak of coronavirus in china. ferro,ancine lacqua, jon lisa abramowicz, and all, trying to do a little more science and not with the angst of the virus talk. you can do that with a gentleman who studied at the esteemed institute of tropical medicine.

dr.re thrilled to bring in paul stovall's, with a small pharmaceutical shop called johnson & johnson, a vice executive of their committee. i want to go to the rate of change, the media putting out "the new- i get it -- york times" heads today with a 60% growth in cases. is that an unusual percent change in growth of cases? >> well, there is a difference between growth in cases and the number of patients diagnosed. we do not know how for the epidemic has gone so far, but now we have diagnostics available quickly. people will be able to learn whether people are infected, yes have, and people can influenza and all the diseases. i cannot say this is different than in all the cases, but it is

alarming at this moment. the speed of the epidemic. tom: is the science and the technology, the medic technology improved since the sars epidemic? companies like johnson & johnson -- even though it is in the front line in wuhan, are the tools available better than they were five or even 20 years ago? paul: dramatically. the immediate response after a global supply chain -- offers a global supply chain of devices and tools that are set up and distribute it in the entire industry, at the supply industry for medical goods or that is getting activated. the pharmaceutical industry, vaccine diagnostics and medicines, we have learned so much from ebola in the last many years. so in ebola, we had to work 5, 6 years to get a vaccine and then six months to get it from the

lab to the patient, we are now able to do this within eight to 12 months, to go from a sequence on paper to get a vaccine done. that is already being activated. two weeks ago in our company, we are now getting to a vaccine and in eight to 10 months, 12 months, we will be able to have a vaccine which can protect people. francine: paul, we are listening in, or at least following the world health organization's spokesperson speaking at the yuan daily briefing, and they are updating everyone on the virus as we speak. what is the survival rate of the coronavirus? do we know that yet? i don't know the survival rate of the flu, i think 1%. coronavirus? coronavirus is significantly higher. it is a new virus and no one has any immunity. , andenza is already around people built influenza

protection during their lives by going to influenza epidemics -- going through influence at epidemics every year. that is probably why the death rate is much higher. it will definitely be higher in weaker people -- in elderly, young kids, but also people infected by certain diseases like lung diseases. the only thing we can do now very efficiently at this moment is containing the disease as much as we can. stoffels, how difficult, how much work does johnson & johnson do on probability scenarios for containment? if you can infect someone without having any symptoms yourself, how impossible is it to contain this? paul: it is quite difficult to contain. you have to isolate patients and be very aware of where the epidemic is going. so containment, we can only help but containment measures,

that can only go so far. we are massively mobilizing people internally to get us as fast as possible to a vaccine, hopefully in time to be ready to further -- to stop the spread in the world. with a vaccine, it will be containment. asking a lotyself of embarrassingly dumb questions. let me ask one right now, if i could. how do you get better from this virus when you get it? is it just rest and your body fights against it? is it as simple as that? paul: the body needs to take time to get antibodies to protect, and so that will be a period of a few weeks, sometimes a few weeks, sometimes up to a month. and then supportive measures -- when people get serious lung infections, sometimes you need antibiotics to prevent the bacterial infections from taking over. oxygen, simple measures like

oxygen and more ventilation could help it so a lot of different supportive measures need to happen by specialty people to bring people through these infections. tom: beautifully explained. do you believe that china and wuhan as the epicenter of all this have the bacterial medicines available if they shift from this virus over to pneumonia? do they have the pharmacy power to cure bacterial infections that follow on? paul: china has a very significant pharmacy power, so i am pretty sure they have been able to mobilize, and the world will help. this is not just a problem for china alone. we have to combat this globally. we as pharmaceutical companies will do whatever we can. we were asked yesterday to start this thing with antivirals in shanghai. be madecines will

available today and tomorrow. this is not just a chinese problem. this is a time when the world has to bond together to make sure we can combat the disease. francine: thank you so much, paul stoffels, of johnson and johnson us this morning. a globalblackrock has fixed income strategy. we will talk about different scenarios and the impact that the virus could have on gdp growth, especially in china. this is bloomberg. ♪

francine: this is "bloomberg surveillance," tom and francine from london and new york we have seen violent moves on the markets, that was yesterday. the markets seething to have a

little more of a cool hit -- seeming to have more of a cool head this morning going into asia. we had a press conference by carrie lam, which i guess actually took everyone by surprise, the markets feeling once again uneasy about where the coronavirus goes next. joining us to discuss all of this and the impact on the markets, on rates if any longer term, erin watson, blackrock's watson fromarilyn blackrock. this could not come at a worse time for the world economy is bottoming out, we had china reeling from trade. what does it mean for fixed income? marilyn: certainly the market reaction that we have seen, we have seen this risk-off tear, so we have seen a real rally in treasuries and safe havens as well. i think in this environment you would expect that to continue. it is really interesting because you look at the beginning of the year. market sentiment was pretty positive in terms of a slight

improvement in global growth, improvement in european growth, in european data as well. in china we actually have seen policy data as well. been around 6% for this year, so it is really too early to tell in terms of how the impact of the virus and how the contagion or not. it will have a negative impact in the short term at the very least. francine: does this have a negative impact -- from sars, what lessons have we learned? does it impact airlines? it does not impact inflation, but it could impact consumer behavior. marilyn: it is impacting everything from travel, hospitality, corporates as well. shutting down businesses will have a huge impact. on the other hand, there is a positive impact in health care and areas like that as well. what i think certainly in terms of trade, commodities, we saw the price of oil, a whole range

of different sectors, it is having a very negative impact. tom: marilyn, i want to show a chart right now. we are going to dive into the fed coverage. i want to take a broader market view. this is a two-year yield. this is a chart that was really widely used by me a year, a year and a half ago. the rollover here in the yield of the two-year. we maryland -- we break down here, with this latest leg down, a price up, yield lower. a little hard to see, but that is the view from 60,000 feet, the two-year. how do portfolios adjust to that? marilyn: we are certainly seeing in the bond portfolio, if you're looking at the global and constrained portfolio, there is still a role for treasuries in terms of certainly hedging capability that we are seeing it providing at the moment and the certain amount of income, but i think now it is important. first of all to be diversified, look maybe for different sources

of income. so we do select areas of emerging markets still peered likethstanding, we do select areas of investment grade, and we like different areas of the global bond markets. but we were expecting it to be tougher than last year anyway, but with this rally, there is a bit of a different scenario. given the extraordinary returns we saw last year, anyway, given the price levels we are seeing now, as you very well articulated, i think the bond investors, the key really is to be very diversified but also to have a very clear view of the risk reward that you can get when investing in bonds. tom: do you tactically adjust here, though? if i am priced up with shocking gains for three per -- for three or four or five or six weeks, the proverbial go-to-cash -- does that work here? look to takecould

some dry powder, and maybe you could see the selloff and look to reinvest it, but in this environment we do not know the impact of the virus. i also think that when you look sort of across the world, there is still this demand for income. cash is not going to give you anything at all, so you may not lose money or you may well if you have a bank account in the eurozone somewhere. if you want to have an income and protect returns, i think bond markets have a place, but in this environment i still think it pays to be very, very cautious. francine: what would change that? marilyn: what we are seeing from the previous viruses, such as sars, the one that everyone is comparing it the most to at the moment, is the trajectory of that, the spread of that, and the news flow of that, and the impact that had on the stock market and financial assets as well. what we saw with the sars virus is really you saw sort of this peak contagion. then you saw new slows drop-off,

and then you started to see financial assets continue, such as or risky assets value again. i think it really depends on the contagion, and also the news flow. we are in a different environment. technology has moved on, social media has moved on. instantly. new slow we have a lot of consensusbuilding, and it is very, very tricky. on thee: coming up radio, mohamed al area and -- mohammed al arian. more on the relationship between gdp and the coronavirus. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." we begin the business flash with boeing. the company received more than $12 billion in orders for a loan to boost finances. that is seen as a vote of confidence despite the ongoing 737 max crisis. the boeing loan was first marketed as $10 billion. citigroup is leading the financing. bloomberg learned jp morgan will not be raising bonuses at its corporate and investment bank . for 2019, bonuses are said to be roughly flat. paid consultants estimate across wall street, bonuses will probably fall 5%. that is the bloomberg business flash. tom? francine?

tom: thank you so much. stephanie baker joins us, a senior writer for bloomberg, steeped in all the different things of this administration, the criminal, the ballet we have seen the last hundred years. you brought up what i heard twice yesterday from people on the street. which cassidy -- who are those guys? who is the legal team of the president, and how unusual is this? esther seco is out of mercer university. he is a radio host. he has clearly done a lot of interesting things, what i would call religious media. is that what you need to go in front of an impeachment trial? how is his team doing? stephanie: i think it was mixed yesterday, to be honest with you. they spent a lot of their time talking about very dry subjects, executive privilege, andtitutional history,

ignoring the elephant in the room, which was bolton's manuscript,in his that trump personally told him that he was tying the freeze on military aid to ukraine's announcement of an investigation into the bidens. none of his defense attorneys even mentioned that until alan dershowitz spoke last night, and argued that even if it was true, it wouldn't rise to an impeachable offense. which is consistent with his overall argument that what the democrats have presented, abuse of power and obstruction of justice, does not rise to the level of a crime, and therefore is not an impeachable offense. many constitutional scholars disagree with him on that. livelygave the most performance of the day, i think. tom: what would you expect to see today from the same defense team? i mean, how do they respond to

the marginal senators that may want witnesses, etc.? are the reaction functions the same as you would get from noted impeachment professional washington big law firm attorneys? stephanie: well, i think the focus today will really be less on what trump's defense presents and more on how the calculus changes in the senate on whether or not they want to call additional witnesses, and i think that is the real gamble over the next few days, is, do they get four republican senators to back calls for ifton to testify, and it, so, is that part of some deal whereby they have to, you know, agree to let hunter biden or joe biden testify? and then that changes the entire nature and course of this trial. ranting kauai was going to ask -- francine: i was going to ask you, stephanie --

bolton -- was it an earthquake? stephanie: i think it was earthquake because so many republican senators were not aware that he had handed this man scripture the white house for review. and now we find out this manuscript to the white house for review. out -- it is find something unseemly, here is testifying at the house and then hocking a book. the world health organization still briefing on the coronavirus. we will have more on that next. this is bloomberg. ♪

♪ "surveillance." a lot of news coming up, fed day tomorrow, but focused on the global impact of what we are

seeing with the virus. a better screen than yesterday, the futures up six. , 17.46. carrie lam, we saw in davos, a good interview. out with comments this morning on the virus. wuhan is directly north of hong air, 750 miles by miles by train. minutes four hours 33 on the high-speed train, and the basic idea we are hearing from many other cities and nations is to shut down movement of people. let me go back to the idea of limiting travel and trains, that is from hong kong to wuhan, here's viviana hurtado. viviana: the u.s. taking more

ascautions over the virus the state department says americans should reconsider travel to china. expand travel may screenings. so far in the u.s., five cases have been concerned -- confirmed. investigators describing the last moments of kobe bryant's helicopter flight. the pilot asked for permission to climb, made a descending turn , and smashed into a hillside. the white house calling the supreme court ruling a massive win for american taxpayers, justices clearing the way for enforce antration to emigrant wealth tax -- immigrant wealth tax. the vote lets the policy take effect for now while the fight

moves forward. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: the main concern driving markets worldwide and filtering into the next rate cut by the fed, the market is pricing in a rate cut, a far cry marilyn watson is with us. where do you see inflation this year? marilyn: our core view is that .nflation will remain modest when you look at economic activity and data from last year that has fed through the system, inflation will increase a little bit. modestoing to be very because you have structural

factors. francine: is this on the assumption that the world economy is at a turning point, or if the current -- coronavirus gets worse or stays where it is and we are forcing a global downturn, what does that mean for the u.s.? marilyn: if we were to see the coronavirus become a greater problem and the economic impact, we saw with the u.s.-china trade spat the impact on the u.s. economy, eurozone economy, and worldwide. if we were to have a negative impact now in asia and the rest of the world from the spread of this virus. we will also see a negative impact in the u.s. in the eurozone, we are starting to see green shoots come through, and inflection turning could, and this virus squash that before we see that follow through.

at the moment, it is crucial whether we see the spread of this virus have a bigger impact. tom: i want to bring up something, a little hard to see, but it shows how out of whack the system is that the fed is dealing with. you see a yellow line on the famed bloomberg taylor function. this is the mathematics of john taylor of stanford university and all you need to know, we have never seen a gap between a vanilla taylor rule and where the central bank is, never back 20 years. what does that indicate about how out of whack the system is that you have to live with? marilyn: we have seen a structural change. the unemployment rate is incredibly low. you would argue unsustainably low levels. the fomc projections on the

unemployment rate have come down from 4.4% to 4.1%. inflation remains muted and we are seeing a dichotomy of it not feeding through in terms of the taylor rule. people have argued because of demographics, globalization, a whole range of things that could be impacting this. else, the anything fact that we see this loose monetary policy in the u.s., the market is expecting it to become looser and at some point we will have a recession, not necessarily this year but at some point, it is hard to see the rate go lower in the eurozone and elsewhere. i think we are seeing a break down in economic theories. we do not see it when we look at

the labor market and inflation, they are not matching up in the same way. tom: if we have a recession, we understand what that means for the equity markets. what does the bond market do in a recession? marilyn: if you look at what we have seen over the past few years in terms of central bank policy in the bond market, it has been a one-way street in the bond market. you could argue that yields are incredibly low across the spectrum when you look at corporate bonds and down at high yields. the spreads have been high. valuations are high, and if you were to have a recession, the ecbral bank, the fed or the will have to find a way of doing more. fall and continue to if you were to have a recession and you will continue to see

bond prices grind higher, certainly in risk-averse measures. francine: marilyn watson of blackrock. airbus reached an agreement to set a long-running bribery investigation in the u.s., france, -- boeing will receive alone as it grapples with the 737 max crisis. joining us now is john strickland. than $12ceived more billion of orders for this new loan. how long will it tie it over? john: this is a challenging condition. we have seen continued bad news flow for boeing over the last year, year and a half with the 737 max story playing out. the latest elements are the stop to production this month.

have an immediate effect in terms of costs ratcheting up. it could have a knock on effect on subsupplier's and questions about variability to gear up. we had boeing's guidance that they would not expect to see a return to service of the aircraft until the beginning of the year. i think it is the right move. it gives more breathing room for the regulators to go through the progress -- process, and it all affects cash. compensation claims keep ratcheting up. southwest had massive impacts yesterday. they said they are going back for more. it is open-ended. tom: thrilled to have you on

with your decades of experience. there is a game theory. somebody has got to go out. boeing will do all the right plane, andet the then there will be a theory of first mover status, who first uses the airplane when it returns. how do you perceive that will work? john: in terms of the airlines themselves? tom: somebody has to put it in service. john: on the u.s. side, southwest is the biggest 737 operator overall. how were pointing out important this aircraft is to their growth plan. they are losing market share. they have always sold aggressively on price. provided, its --

is a big caveat, they see it is safe. in europe, if we look at the bullish approach of michael o'leary, he cannot wait to get his hands on his aircraft. he should have 60 this summer and he will be lucky to get any. he has gone out to say customers will not know if it is a max or a previous 737 generation. airlines will be think about just thinking about doing their level best to communicate with the public and their staff. we are getting a bigger and bigger debt off of capacity shortfall day by day. francine: a quick question before we leave you, on the virus. how painful is something like this as you try to contain it and airlines need to cut their flights to and from china, how painful could it be for the

aviation industry? john: it could be significant. we cannot yet tell how this will be develop compared to previous things such as sars. when that was going on, cathay pacific was decimated. they canceled a phenomenal amount of capacity and they had aircraft grounded substantially for months after it happened. we are not at that point yet. airlines have not had an immediate hit. chinese domestic on what would have been a peak new year europe'swhat follows, 10% of capacity to china and 40% more widely, so airlines will be watching this base. delicate line a of being careful. francine: john strickland.

today will mark close to the new year. and -- stockebay, market results. this is bloomberg. ♪

london,ncine lacqua in tom keene in new york. the bank thing is done. charge-offs,g, this come about, and the other thing. technology was going to be like a walk in the park, apple

expected with a blow out today, but beginning to look at the impact in china. tech week through wednesday, thursday onto charter communication, friday as well. with us is marilyn watson with blackrock. she asked eileen burbage to come on. we have a whole bunch of questions, but i have to start the your perception of supply chain of apple products out of china. when you look at the interdependencies of this virus and how the cities are shutting down, how do you perceive that affect what mr. cook will have to deal with? eileen: there will be an impact, but these industrial giants, including psa out of france, they have hundreds of people out of wuhan and they are working on

contingency planning and getting people out of there. they will have to be going to plan b. ago you were there months and had the class to say apple is still apple. everybody else thought it would roll up and die. what happened? does the moonshot continue? eileen: you are giving me too much credit because i have always thought apple was overrated, but they continue to impress. in the last quarter, their adjustments to the iphone strategy have proved successful. 11ing out with the iphone but reducing the price point on the lowest model compared to the xr was a stroke of genius and the fact that they allowed customers to have different financing options and trade-ins made it a more accessible product. at boosted sales. they have knocked it out of the park with wearables.

everybody has a pair of air pods. everybody wants a pair. tom: everybody does not have a pair. everybody in the keene household loses their air pods. eileen: you are there perfect customer. francine: you lose one, you get a fresh one. we should do a study on keene economics. what do you do with huawei? will they, won't they accept the technology in the u.k.? eileen: we will have to see what the security council says today. it is a diplomacy question because whether the u.k. will align themselves more closely ,han the u.s. -- to the u.s. that administration is blowing a lot of hot air. we will restrict how much excess vendors have but cannot be held ransom. it will be one or the other. francine: if you are big tech, what are you worried about in 2020? is it a case of do i get broken

up? eileen: you would be worried most following amazon about what is happening in the states and back and forth between trump and bezos. amazon is in a good position and it has a place to say, we are the other ad provider other than facebook and google and we are breaking up the duopoly between ups and fedex. basically inflation, as long as you have a sharing economy, it remains subdued. eileen: our view is inflation will tick up a little bit but will remain subdued. we continue to like the tech sector because it is investing in r&d. when you look at some of the other manufacturers or companies, we do continue to

like technology. tom: one of the things that thomas that continued to come up was 5g, the european feeling that it is the best thing since sliced toast. give us the eileen burbage approach on why i need to care about 5g. technologyhink the definitely has its merits. it will enable greater accessibility and ease of data communications between devices, smart devices at home, and industrial applications. my sense is the reason that americans or the administration is not quite as bullish is because there is not a network vendor but can provide the technology infrastructure for 5g , so it gives them pause from an international relations point of view. in europe, we are looking forward to it and trying to figure out how to make that

infrastructure functional. late to get on the boat? eileen: you cannot check marilyn under the bus like that, but it is never too late. we are all optimists. that is why we are here. so much, thank you eileen burbage, marilyn watson. we are talking u.k. carney'ssday sees mark ecb -- boe.t the this is bloomberg. ♪

"surveillance." marilyn watson with blackrock. one of the themes of the last few years has been financial repression, whether it is a negative real rate, nominal

rate, or the little guy cannot get ahead in fixed income. has it ended? marilyn: no, it has not ended. financial repression, we expect to see further loosening on the fiscal side and the u.k. and elsewhere. otherwise, no, we will not see interest rates rise anywhere very soon in developed markets in particular. we will continue to see very low hard, continue to see it for investors to get the income they are looking for. i understand institutionally there is fancy things you can do. what does the little person do, buy apple computer? targeted andink diversified so have your allocation for corporate bonds and treasuries, and have us

flexible does have as flexible approach as possible -- have as flexible approach as possible and be nimble in changing allocations. be nimble and realistic about the earnings you can achieve. francine: are there bubbles in fixed income that are about to burst? marilyn: i would not say about to burst, but some of the valuations are really on the punchy end of the spectrum. whether that is the investment grade bonds in particular, some of those are relatively expensive. obviously in treasuries, government bonds, if you look at or treasuries, they are expensive. i don't know there is a bubble that is going to burst, but it is harder to find genuine sources of value. emerging markets are one, especially local currency, but it is hard.

it is difficult. francine: marilyn watson of blackrock, thank you for joining us. markets are volatile. stocks are pulling back after china barred travel to hong kong. the yuan fluctuating, treasuries trading higher. tom: soybeans have rolled over. statistic, jon ferro looking offshore where we have seen a weaker yuan. coming up, the effect of the virus on em investment. gabriela santos, jp morgan. ♪

sometimes your small screen is your big screen. and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. whether you're travelling around the country or around the house, keep what you watch with you. download the xfinity stream app and watch all the shows you love. ♪ this morning, it is not the number of cases of the wuhan

virus, it is the percent change of the cases of the cases a virus from central china overnight. those ill increased 60%. the markets react now and a future slowdown in china. gold, modestly bid. how can apple manufacture the next air pods or iphone in china? this is bloomberg virus front and center now and we are seeing the ramifications of this around our hong kong office and across the bloomberg china world. francine: we are seeing ramifications. i would point everyone to a great story by enda curran. we go looking beyond how the virus affects and what it could morph into, but trying to figure out the economic impact.

he wrote a beautiful piece that explains the components about how many companies have closed in china and this is only the newest threat to an already fragile world economy. tom: we say good evening to all of our bloomberg people working from home across asia. right now with the first word news, here is viviana hurtado. viviana: we begin with the coronavirus, governments stepping up action. the number of cases in china have soared 65%, past 4500. 106 people have died. china is limiting flights and shutting down high-speed rails. germany is the nest -- latest country to confirm a country -- case in one man. john bolton's forthcoming allegations and a book about

president trump and ukraine. according to the new york times, he was concerned the president granted personal favors to the autocratic leaders of china and turkey. president trump will unveil his mideast police -- peace plan. he will be joined by prime minister benjamin netanyahu and the proposal is expected to be favorable to israel. mr. netanyahu is facing another election, but the palestinians are not speaking to the president because they do not feel their side is being equally heard. there are fears this could spark violence. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: let me do the data. we have a wonderful hour for you to make a more informed, futures up seven. heroholding above 1.10 --

holding above 1 -- euro holding above 1.10. , 1.40eld complex comes in on the two year yield. francine: i am looking at a similar data check and i would point to a lot of fluctuation in volatility when it comes to chinese renminbi. china a moment ago curbing travel from china as deaths exceed 100%. markets fleeing some of the risk on positions they put on last night. let's get back to our top story on the coronavirus. joining us is dr. jennifer rosen. for joining us. there are a million questions. survival rate in the best way to contain this virus? appears tohe virus

be slightly less fatal than sars , so a death rate of less than was 9%, butn sars it is still early days and we are not really sure. francine: what worries you the most about this coronavirus? we found out you can transmit it in the incubation period. if you look at past epidemics, how dangerous is that phenomenon? jennifer: it is very dangerous. this could spread everywhere before people realized. people are putting in strong border controls, checks at airports. there is a diagnostic test but they are running out of tests in china. the numbers we are hearing may be the tip of the iceberg. tom: we are thrilled to have you on. is university of washington the jewel of microbiology, truly one of the definitive programs in the world.

you are one of the world experts on feline leukemia virus, a really difficult disease with cats. this means you understand the inter-animal thing. animal thingintra- of this virus. jennifer: viruses are really adapted to infect a certain kind of species. we have human viruses, cap viruses, monkey viruses -- cat viruses, monkey viruses. usually it does not want to kill its host. it wants to thrive and pass on. the problem is that when a virus human,rom an animal to a it is in a strange environment and anything could happen. -- the biggest

outbreaks we have are that situation. tom: the idea of how viruses mutate, are we dealing with a stable illness or do you presume this virus can mutate into forms good or bad? jennifer: that is a good point. the virus is made out of rna, not dna, making it inherently less stable, so it could mutate. sometimes, one of the first things it does, it shuffles around to get it bearings and changes. less stableslightly than other viruses but it is a bit more stable than something like influenza. francine: what works? there have been a number of things put in place, blockading cities and stopping travel, but if you are a normal citizen looking at this, do you wear surgical masks, wash your hands more? jennifer: the spread appears to

be through droplets through sneezing. this includes touching surfaces where people may have sneezed, so stay away from sneezing people and if you are really paranoid, stay off of public transport. in the u.k., i don't think that is the case. there is mixed messaging on the mask. many are not effective. the best thing to do is stay out of crowded places where the virus is known to be circulating , and hand sanitizer is a good idea. tom: part of your act is a wonderful grasp of history. how does this stuff and, whether it is -- end, whether it is the plague? is it the greater weather pattern? jennifer: a viruslike ebola virus can burn out. a virus without a host is dead in the water. sometimes viruses come to a new

agreement with their host and they become less virulent. we hope we can come up with cures and vaccines. sars is the best comparison we can make and we got it under control with public health measures. we did not even need to deploy the wonderful vaccine we developed. with us, one rohn of the leaders of virology. right now with us, gabriela santos. i can segue over to em and equities but let me segue over to how your bank will change because of these travel restrictions. you will not have the breadth of knowledge of the em world as you did for this virus. gabriela: we are speaking with colleagues in china and hong kong and they are taking precautions, as i'm sure bloomberg and other businesses are. we can speak via email and

telepresence, so our communication is bloomberg -- open. we are still in the early stages for the market where it is a focus on contagion and severity, and we do not have a clear picture. the market really bottoms as the cases plateau, so the next phase is starting to see when we get things under control and when there is treatment. tom: is low yields opportunistic? i don't just mean for em. yields create an opportunity or is it a hindrance into 2020? gabriela: we had such an amazing year for fixed income last year, bond yields fell 100 basis points. we had 9% return in some fixed income indices. this year we were thinking fixed income returns will be in line with the coupon, but what you

learn in these moments of risk aversion is bond yields can fall further and still can provide that offer. it is still worth having things like treasuries for these moments of protection even if things stabilize and the returns will not be that interesting. francine: do you worry that the virus will have a huge impact on markets and a huge impact on the consumer and could tip the world economy over? gabriela: it is still in the early stages of figuring out the economic and market impact, but the market impact tends to be short-lived. it bottoms when the cases speak and we recover -- cases speak and we recover it -- cases peak and we recover. pace so thehaped pattern will be lower for the second quarter and may be stronger for the third and fourth quarter.

for our long-term investors in asset management, we are thinking it is a buying opportunity, especially emerging asia. francine: when you look at everything that is been going on with the consumer, it is the consumer that has held strong and spurred the world economy. what is the state of the consumer now? weriela: before this year, felt good about the consumer globally, not just in the u.s. but in europe and emerging asia. we saw a slowdown in job growth but more than enough jobs being created to keep unemployment rates low and to keep consumer confidence high and spending going. for now, maybe we see a temporary hit on consumption in china and hong kong, but the consumer carries us forward. tom: how much cash do you have right now? what is the recommended cash level?

80%, 90%? gabriela: low single-digit percent. tom: what am i doing in em? there has to be on a databases to get alpha, there has to be serious agony and a japanese headline coming on as well. this is serious stuff. there has got to be an opportunity. is it generally em has the elasticity to pick it up and be balanced out a year? gabriela: absolutely. when we have seen these viruses pop up, there is a dip and the market more than recovers. investors who have been overweight the u.s., the opportunity to start dipping our toes back into emerging asia weathering some of the short-term volatility, short-term pain, long-term gain. tom: we agreed at jp morgan there are no unknown unknowns.

gabriela santos making us wiser. we are thrilled to bring you a guy with a great essay out in the last 24 hours. mohamed el-erian will join us on radio. jonathan ferro has a list of questions. much to talk about on the game theory of this horrific illness that we see. this is bloomberg. ♪

"surveillance." headline out of japan, the health ministry says an infected woman in her 40's from wuhan visiting japan is a confirmed virus infection.

these headlines will come out across the evening of asia so we will monitor those. all inow, monitoring washington is chief impeachment correspondent kevin cirilli. i want to cut to the chase and backup. will there be a monitor -- moderate change in these four key senators? kevin: i don't think there will be. collins, lisausan murkowski, and the others were saying they are open to the idea of witnesses. they are not changing what they say as it relates to john bolton's manuscript, they are just doubling down on the issue. they have been saying that for weeks. tom: is the manuscript out? have people seen "the unpublished book"? kevin: no. if you serve in an

administration in a national security realm, any book you write has to be vetted so staffers are raising the -- this to the white house and who knew this was going to come out? francine: the senators you were referencing to where how many are needed to subpoena john bolton. kevin: precisely. from a policy standpoint, if there were witnesses the trial would drag on for several additional weeks. it is not just that they would hear from john bolton but likely from hunter biden and others. trial was of the largely anticipated to be wrapped up by the state of the union address on february 4, but if there were to be witnesses it would likely drag on for some additional time.

i would note they could have a situation where they just hear from one or get written and submitted testimony, but we will bring that news as we get it. francine: how effective was trump's defense yesterday? kevin: it is effective in the sense that nothing has changed the trajectory of the trial, and that no one is anticipating, even post-bolton manuscript, that the president will be removed from office. tom: let me switch gears to iowa. that is farther out than i thought. we have a distance to go. politics 101, it is not what you do, it is trying to avoid mistakes. mistakeshe number one these different iowa candidates have to avoid? kevin: over setting expectations. we talk about momentum, bernie

send him's has -- bernie sanders has momentum, but let's talk about expectations. you could lose the race but when the expectations game. this is why iowa and new hampshire are so important. it gets the momentum, the free media heading out of it. iowa is the state president trump by 10 percentage points. democrats want to win that state , so going around saying that iowa is not important is a mistake to the democratic party in a general election. tom: gabriela santos taking all of this in, looking at the emerging market known as iowa. do you care? gabriela: not with regard to the impeachment proceedings. the markets ignore this as an impact on politics rather than

policy but we are getting into the thick of the process, and markets will pay much more attention. it is still much more of a u.s. issue, something that matters more for different sectors within the u.s. market. that is becoming more of an issue and a lot of questions clients are asking us about our related to the presidential election. francine: gabriela santos stays with us. markets across asia are still stuck -- shut for the new year. in the u.s., the start of tech earnings. apple, ebay, and starbucks. this is bloomberg. ♪

♪ watchingyou are bloomberg "surveillance." we begin with apple's supply chain bracing for disruption from the coronavirus. nearly all of the world iphones are made in china. set tonth, apple is start producing a lower-cost iphone. the supply chain has seen millions. jp morgan will not raise bonuses it's corporate investment bank. that is after the unit posted its best year since 2011. across wall street, bonuses will

probably fall 5%. tom: let me do a data check. i will bring apple in. i usually don't do this, but the big focus this afternoon. futures up six. yields come in, very important. three years ago, apple $122 a share. now it has done a true double in a year, up 309%. what do you have on the data? francine: when you look at apple , the china virus, what does it mean for apple? some of the components are made in china and some of the manufacturers may be in lockdown, so i'm looking for an update from apple. i am seeing fluctuation on renminbi in china. stocks pulled back after we heard from carrie lam that china

will restrict travel from hong kong to curb the virus from spreading. tom: we have seen that through the morning, and other announcements as well from japan in the last minutes. in the hong kong evening, so maybe not as much, but here is ms. lam. the key one to me with my little bit of experience, when you shut down a high-speed rail in china, that is a big deal for the people of china. coming up on apple, walter piecyk will join us. we will get some perspective. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance," tom and francine from london and new york. on the back ofs

efforts to contain the coronavirus. let's get to the bloomberg first word news. viviana: we begin with the containment efforts of the u.s., the u.s. taking more precautions . americans should reconsider travel to china and the government may expand screenings. they are monitoring 110 people. in the u.s., 100 -- five cases are confirmed. describing the final moments of kobe bryant's helicopter flight, the chopper pilot asked permission to climb, made a descending turn, and struck a hillside. the helicopter crashed in foggy conditions. more revelations from john bolton, he reportedly had concerns donald trump was doing personal favors for autocratic leaders in china and turkey,

according to the new york times. pushing -- are putting pressure on senate republicans. calling theuse supreme court ruling a massive win for american taxpayers, justice clearing the way for the administration to begin enforcing an emigrant wealth test to screen out green card -- immigrant wealth test to screen out green card applicants who may become government dependent. while al take effect legal fight moves forward. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: right now, let's connect the dots with walter piecyk. he has been wonderful on apple, fiercely protective of vibrating on apple and thrilled at $308

per share. this is the idea of connect the dots, we can talk about the three pair of air pods he has lost, but draw a line from the apple logo to the at&t logo and out to the verizon logo. t-mobile is not there. of 5g to come, what level bonanza is 5g for the telephone, particularly for apple? walter: i think 5g will end up being something that has new applications, and one of the challenges apple may face is the amount of optimism people are injecting into this anticipation for 5g. there is clearly going to be some version of 5g in apple watches at the end of the year, but the u.s. is a different market than around the world and we are using different types of

spectrum that do not necessarily travel as far. what consumers will see as a reason to buy the iphone may not be driven by 5g, and you have analysts talking about super cycles. even though 5g is potentially set up to be a disappointment for the company in terms of, it will not drive 15%, 20% unit sales, at the same time, we have been in this lending of the replacement cycle, people holding their phone, people with the iphone 6 and seven that have not upgraded. if those upgrade rates stop going down, you could have enough unit growth to meet revenue expectations investors have for the company. tom: it has been a juggernaut the last 90 days. what is the organic revenue growth for apple? walter: if you look at consensus

numbers, i don't think you are looking at more than 5% or 6%, but for a company this big, that is impressive. last fiscal year which ends september, you were down 2%, so returning to growth is always positive for companies, especially big brands where companies returned to them in order to buy their products. it is not super cycle type growth like 15%, 20%. if you look at the overall growth the company can generate, iphones will be low single digits. what is driving it is the service revenue growth. what apple tv is helping to generate is on the services side , which is getting investors excited. francine: we are expecting a decision on whether huawei can be part of 5g in the u.k. do you build it without 5g?

walter: plenty of providers can provide 5g but huawei is doing it at a lower cost and they are more advanced. to the extent that there is bands in the u.s., that will not handicap the u.s. the issue is the type of spectrum they are using. it is a higher band spectrum and will take a lot more densification for the operators. that is the challenge we are referring to, not whether huawei can sell equipment into the market. versus not allowed allowed, i do not dramatically anticipate that changing the timeline on when 5g will be available. francine: if there is a chinese company or a european company, whoever is involved, the technology used in 5g is safe?

walter: for 5g in terms of the safety, the concerns that the government has about huawei is the amount of spying technology that can be layered in. whether those concerns are valid or not, that is something the u.s. government has spent time on and i have talked to their partners around the world about the risks. that is driving the reason for the bands in the u.s. and the reason why the u.s. is encouraging other countries to do the same. tom: i am looking at the math and the fact is, in the americas , the revenue for apple is 172 gazillion and japan and the rest of the pacific rim, it is a huge company. does j.p. morgan look at apple as a u.s. company, a foreign company? how do you fit it in? gabriela: definitely a global

company. it is listed in the u.s. but it's revenue source is incredibly global. up the screen right now. walter piecyk has a tattoo on his arm of apple's revenue. this is what adults look like -- look at on the bloomberg. 60, 44, 22, 17, the sales really add up. that brings do, and another topic into play, the coronavirus and the impact it could have on big markets. couple ofre are a production facilities that could be impacted, maybe not material at the moment, but depending on whether this thing is contained enough, that will be on people's minds when the company reports. tom: do you rebalance on apple?

gotou hear from everyone, i apple, i'm going to rebalance it? would you rebalance out of apple? gabriela: i will speak more broadly about the tech sector. we would rebalance the tech sector, just because growth in tech has been such a phenomenal outperform or. we would rebalance a bit more to value. sorry. tom: you are disappointing walter. are you going to rebalance walt -- apple? walter: three years ago, apple told us they would get to net cash zero which means they have a massive cash position. it is two years later and it is only down to $95 billion. even if they were spending $20 billion a quarter, that cuts that position in half.

they are going to take this $160 billion and rebalance their own money in their own stock, and they still have tremendous firepower in terms of purchasing stock which helps earnings growth. tom: gabriela will not leave until you give a sum of the parts valuation. walter: she is going to have to wait on that. we will come back and deliver that to you first. francine: apple wants to ramp up production of its products. how much can they do that with a lot of the factories where the components are made in china are closed because of the coronavirus? walter: it will be a challenge if things get worse. right now, there is factories around the world and they can shift production. that is a critical question for the earnings call. i don't think it is an issue now, but we all read the news reports. this is obviously something that

is changing by the day see how it impacts them and other companies. francine: how nimble are they in changing the supply chain because of the trade war or the virus? walter: the trade war was supposed to be very harmful and they managed that process very well in terms of shifting when needed. tim cook, when he was first elected as ceo, part of the reason was his ability to operate a good supply chain. this is literally what he is known for. i don't think we can assume that -- we all know the timeline on what is happening with the coronavirus and how many different plants this may impact, but we have the right guy in that job. it before with challenges on the trade war and we will just have to look at it day by day. , andine: walter piecyk

gabriela santos stays with us. .om: 3m out with earnings it has been a struggle in the land of the blue-chip. organic local currency sales up to percent. %.at is not -- up 2 that is not getting it done. we will have a sharp interview coming up with david westin. the m -- 3m has struggled this decade. ♪

"surveillance."

with us, patient with all these different themes, is gabriela santos with jp morgan acid management, a -- asset strategist a global and viscerally tuned in to emerging economies. react to ainvestors years,a, one year, two three years, four years, how do we move away from that? gabriela: psychologically it is difficult. when we speak with our clients who have gotten used to the tremendous decade for u.s. stock outperformance, it is difficult otherision a world with outperformance. this decade, we had a phenomenal

period where international outperformed the u.s. and we think it will happen again over the next decade. crucial to the story more than sore is emerging -- more than before is emerging markets. to our clients, you probably have very little exposure and eventually there will be a category that will outperform. em had are the virus, nice catch up. does it have legs and if it does, why does it move beyond the fourth quarter? gabriela: we have been feeling quite optimistic about emerging markets and it is a story of economic stability for this year, combined with much cheaper valuations, cheaper currencies, and better dividend yields. that is the one year view, and maybe this development with the coronavirus changes that a little bit.

more than that it is the 5, 10 year view where the growth is. it is the ones in a generation story of the growth of the middle class in emerging markets. that will not change based on the coronavirus. francine: what will change based on the coronavirus? how likely are trend prospects to change? gabriela: it is more the short-term direction of travel. we were expecting activity to pick up short-term in asia and quarter, sod second it changes the direction of travel but i did not think it changes -- i do not think it changes the destination. francine: what does change the destination? and davos, president trump said he is thinking about imposing tariffs on europe. gabriela: we have seen this in

practice the last couple of years. it did change and economic growth in a more fundamental manner, especially when we think about long-term potential growth. trade was a huge help for korea and taiwan when they were going through their development period, and i don't think china can count on that tailwind the same way. that is a fundamental issue. celery atarrot and the jp morgan party at davos, i looked for you. esg is all the rage. let me ask the question i asked in davos -- work -- what is the worst practice in esg to avoid investing? gabriela: we have incorporated esg factors into equities and fixed income investing. it is absolutely working. we think the mistake is to say

esg, to have that incorporated means you compromise returns. that is fundamentally flawed. esg is part of evaluating a company and has an impact at the end of the day on corporate performance. was a concretego company, a telephone company, and that was it. how do you take a company and apply esg? gabriela: it is new to discuss in the u.s., but it is something we have been doing all along in emerging markets. you have to take these factors into consideration and the governance factor has been incredibly important. if you think about china, differential training between -- differentiating between state owned enterprises and private enterprises is important. you have gotten subpar

performance from si we focused -- soe focused enterprises. francine: we are just getting some pfizer results, 2020 adjusted share mid point missed estimates. i don't know if we have a pre-market share price for pfizer but it would be interesting -- there we go, down a touch, pfizer really in the spotlight as we try to figure out what these companies are doing to contain the virus and more immediately, there midpoint view has missed estimates. this is bloomberg. ♪

viviana: you are watching bloomberg "surveillance." sainsbury is going green, saying it will spend $1.3 billion to reach net zero greenhouse gas emissions by 2040. they plan to reduce water usage and plastic -- plastic packaging. swiss watch export growth

weakening to the slowest pace in three years. in the top export market for watches, hong kong, led to stores being closed. no details have been disclosed, but bloomberg learned a settlement could cost airbus about $3 billion with corruption reeking hi -- reaching high into the ranks. boeing receiving more than $12 billion in order for a loan to a boostnances, seen as in confidence despite the 737 max crisis. at loan was first marketed $10 billion, citigroup leading the marketing. that is your bloomberg business flash. francine: joining us is sid

philip to talk about what we heard from airbus and the fact that they reached a deal with boeing.ies, and if you look at airbus, they had payments to the u.k., france, the u.s.. do we know how much? sid: we understand that to be about $3 billion. francine: does that mean it is done and dusted, or will cases crop up elsewhere? sid: for the moment it seems like it is done and dusted as long as the judges sign off on it. they have an agreement in principle. francine: how much of a burden was that for airbus? sid: it was a drag in that it dragged on for four years and led to an exodus of senior

executives and an overhanging fear on the company. the fact that it is on the way to being settled is viewed as positive. doncine: what does boeing with the 737? will it fly again? sid: they are saying it will fly again but the question is when. we are seeing different stories of boeing being more conservative with its timeline saying midyear. the question is when exactly the plane will fly again and what steps and procedures the company will need to take. francine: could it be six months, 12 months, and how crucial is that $12 billion loan? sid: it is crucial for the theany, especially with company compensating customers about the 737 max and trying to tide over the cash. the 737 max was the last of the

boeing cash flow and companies rely on the 787. francine: sid phillips joining us. stock futures edging higher. we have seen a lot of fluctuation given that traders are trying to figure out what to do with this sars like virus. they are trying to follow what health officials are doing to contain the spread of the virus, including curbs on travel between china and hong kong. the yuan actually gaining. european shares unchanged. they were higher, lower, now drifting.

good morning! oh no, here comes the neighbor probably to brag about how amazing his xfinity customer service is. i'm mike, i'm so busy. good thing xfinity has two-hour appointment windows. they have night and weekend appointments too. he's here. bill? karolyn? nope! no, just a couple of rocks.

download the my account app to manage your appointments making today's xfinity customer service simple, easy, awesome. i'll pass. ♪ alix: death total rises.

china reports over 100 deaths from the coronavirus as countries even quit their citizens and china shuts travel with hong kong. fed confronts a new set of risks. new issues from confrontation with iran to the spread of a deadly virus. and 3m announces 1500 job cuts after missing estimates, the bs week for reporting -- the busiest week for reporting. welcome to "bloomberg daybreak" on this tuesday, january 28. i'm alix steel. how do you mitigate any kind of risk in the market? it feels like what we are going towards is the dollar. the dxy is dominating all currency moves. yields take a break here. equity markets are rebounding off of their lows from yesterday. we had the worst selloff in global equities since last august. we seem to be stabilizing.