♪ taylor: this is bloomberg markets. coming up in the next hour, notice --rts, a notable miss on services. will break down all you need to know on first quarter results. plus the u.k. said yes to huawei , breaking with the u.s. by doing so. we'll see what it does for the u.k.'s 5g future. and containing the coronavirus.

we'll talk to one biotech firm racing to develop a vaccine. but first let's take a look at u.s. markets. what goes down yesterday comes back up, led by stocks leading the s&p 500. that means the vix is a little lower by about two points. as the fear sort of goes away for now. that means you getting a lift in yields, bone -- bond price lower, yields higher. finally, return to positive sentiment about global growth. crude back to $54 a barrel. paul: that's a theme we expect to see reflected when trading gets underway in this part of the world. we have met -- one market open, that is new zealand, already higher by about .3%. nikkei futures pointing higher to bel and sydney looking up more than .5%. we will also have some fourth-quarter cpi numbers for

australia out a little later on. both the aussie and the kiwi dollar both upbeat down recently may be due to their exposure to chinese trade. the japanese yen holding steady. let's check in on the first word news with ritika gupta. trumpa: president insisting his actions on ukraine don't warrant removal from office. white house counsel pat cipollone said his team has made of case, adding the articles impeachment falls far short of any constitutional standard and are dangerous. meanwhile, democrats are pushing for john bolton to be called to testify. president trump has announced plans for middle east peace that he says provide a win-win solution to make israel and the whole region safer. he started complaints that palestinians have already rejected the proposal and didn't

take part in drafting the plan. the hope -- proposal offers a way to two-state solution that leaves jerusalem as israel's undivided capital. it has been met with strong opposition from palestinian leaders. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. taylor: back to our top story, shares of apple are up in after hours trading as the company second quarter forecast top estimates. apple came in with the highest quarterly revenue avenue. iphone revenue was up to $6 billion in the holiday quarter, compared with the average analyst estimate of 51.5 billion dollars. it looks to be the second highest ever iphone quarterly revenue. you i have to come to first, giving you made the call at $400 a share in the beginning

cycle. super upgrade are you satisfied? dan: i view this as a game changing quarter. this is magnitudes of that. engine.eling the the stock will continue to go up . this as clearly a best case scenario. taylor: julie, let me come to you on this. it seems the iphone revenue was all we cared about this quarter, making sure the cyclicality of the stock was so dependent on the iphone revenue coming in strong. your take? julie: i think that will always be the case when you have one

product that is the dominant part of the portfolio. it gives it a boost during the holiday season. iphone, we look at the it was impressive for the quarter, but is this a sustainable way forward for apple, just ongoing upgrades to its flagship product? things as we the look forward, a lot of the upgrades we will see in hardware will be incremental. there's only so far you can go with cameras and displays. when you're depending on a lot of acquisitions and r&d, apple continues to make an acquisition every few weeks. the spending on r&d is going up. it may be hard for the consumer to articulate why they like it better, they just know the experience is great because so many little things work so much better. paul: we do have tim cook

speaking on the earnings call, saying the results were fueled by iphone services and wearables. services,ask about when is that really going to start paying off for apple? dan: i think we're right at the inflection point of it paying off. , you through a super cycle combine it with what we're seeing on wearables, that is the second at for apple. we are seeing a metaphor for -- a metamorphosis. forward, be key going in our opinion. taylor: julie, you have been nodding your head. your take on services? released anyhasn't details. we need to see apple release details more around like a wireless service provider. how many people are in the installed base, what is the monthly service revenue per user and how penetrated are they on a service by service basis?

is it cloud and music? how are they doing on gaming and some of the other services they offer? until they unpacked the details, it's hard to predict going forward how well apple is doing. taylor: tim cook comes out and says services are at an all-time record, that every analyst i speak to is worried about the and are youition worried at all about services revenue in the cloud? dan: apple has something that no other tech company has. not only 25 million iphones , we are only in the beginning of a massive upgrade cycle. i think that could add another $15 per share to the stock.

paul: forgetting a few more lines from tim cook on the tvnings call, he says apple as well is off to a rousing start. that's pretty much all it is at this stage, a start. the programming lineup is looking really thin compared to established rivals like netflix and the like. are we just seeing the beginning for apple tv? see 100ink you could millionsubs in the next three or subsyears -- 100 million in the next three or four years. you are seeing the stock continue to reread. you go back a year ago, look at the growth. rock of gibraltar, renaissance a one-two punch.

out -- tim cook coming sorry, paul. let me bring some headlines from tim cook. let's talk about apple pay revenue, which doubled year-over-year. apple pay for transit coming to more cities in the spring. where does apple pay fit into your thesis? julie: apple pay is one of the critical elements. apple pay makes accessories like the apple more essential. right now the apple watches nice to have. you have text messages, and if you like to work out, it's a great tool for that. until apple pay becomes our identity so we can do something like getting on or off the bus, it's not becoming the next device that apple wants it to be.

the record quarter we saw for the air pods, and tim cook saying the air pods in the apple watch have some supply constraints. your thoughts on how the air pods can meet the demand would also overcome some of the supply constraints we are starting to see? dan: we saw that in december. in terms of what they sold on no doubt it's a problem but they will have to accelerate production from the air pod perspective. littleing to be a volatile for the wearable side. julie, we are expecting the earnings call to address the

question of the coronavirus and the potential impact on apple supply chain there. what are you listening for? thee: i don't follow chinese supply chain to that extent. anytime you have a crisis in a country and there's a lot of uncertainty around travel and workers being able to go to work, you will always experience some uncertainty there. very smart analysis of all things apple. thank you both for joining. sticking with earnings, advanced micro devices falling in light trading now on the lackluster forecast for the current period that suggest gains against intel may take longer than investors had hoped. revenue is below estimates.

what do u.s. and global markets look like as concerns around the coronavirus row? we'll have all the details next. -- as the concerns grow? listen on sirius xm. this is bloomberg. ♪

back to bloomberg markets. i'm paul allen in sydney, with taylor riggs in san francisco. as china's coronavirus has spread, bloomberg markets -- a marginal rise after sliding the most in six weeks on monday, suggesting easing panic among local investors. smit in newin susan

york. coronavirus concern is overcooked, because there was a rally in u.s. stocks, maybe it's not as bad as everybody thought? susan: i think that is a reflection of better sentiment around. u.s. market is notorious for having a knee-jerk reaction to bad news. i think investors at the same time are hearing some positive reports from earnings, and data and facts that are giving them comfort going forward. i think now they realize that perhaps the coronavirus is going to be contained, it won't be as wide reaching, and they were a little too fearful in adjusting stock prices for that. paul: there are some comforting signals, as you say, but there are also some discomforting ones. i offer a chart that shows what the copper market is telling us. we've seen a steep decline in copper prices. what are you to make of this?

andt a question of sale now ask questions later? think the panic was that if china shuts down travel, is it going to slow the overall chinese economy and does it have ripple effects throughout the world? i don't think that is a concern when you look longer term. if anything, they are constraining economic growth near term, they're helping to ensure economic growth longer-term by containing whatever impact the virus may have. i think the copper markets are very reactive. i think there is a nervousness about this recovery. how long can they keep going? and industrials and industrial stock certainly reflect that, but earnings are here. still have a lot more companies to report, but the majority of them are reporting better than expected earnings, and i think that is a good sign. taylor: amid the nervousness you

selloff yesterday only to rebound today, are you positive we can avoid a correction? susan: we are in a solid orchid. the u.s. consumer continues to be very confident and spending. overall, we are hearing better confidence from management teams. in the last year or more when management has come out and talked about earnings, they haven't been particularly clear on the outlook, because they haven't had a good idea of what the cost will be. that's because we had the overhang the trade issues with china. the phase one resolution put some for into the market. i think the coronavirus may have tamped that down just a bit, but management is coming back and saying it's a positive outlook and feeling confident about their businesses. if they project that, i think the market will pick up on it and we will see that. taylor: as you mentioned, we are

in earnings. some analysts are estimating we earningsk of growth in , a decline year-over-year. are you confident we could avoid an earnings recession, and if not, what does that mean? susan: i think you have to look beyond quarterly in this case. the coronavirus is impacting cash flow. if you look at it annually, longer-term in the investment plan, we do see positive year-over-year results. i don't think the quarterly number should hold a lot of weight with investors. i think it is a one-shot impact. longer-term is what cash flows are dependent on. that is what people should focus on. are looking atou buying opportunities, you say it is a stock pickers market. is that a vote of no confidence

in the broader macro outlook? susan: no, i think the macro is to positive. in the u.s. economy, grassroots are strong. we are seeing economic data points that support the continued recovery. we are also in an election year, so remember that this administration has every reason to keep this recovery going. with the tailwinds behind it and confidence in the market, i think we can see continued growth in a positive outlook for the year. we do think it is a stock pickers market, to outperform indices each will have positive results. you have to dig into the weeds and see which countries have differentiating events that can have them meet expectations. taylor: as we look at your notes and find out how you are digging in the weeds, you like industrials, consumer, financials. what about those do you like? susan: there's a lot of

opportunity in all of them. you are able to find some opportunities where the market has gotten ahead of itself on how bad it could be. the consumer is changing their pattern, understanding how and where they spin is important and in financials, we continue to see mergers happening, strategic changes happening, and we have regional banks looking to consolidate and get scaled to be more efficient operators, and there's opportunity there in the u.s. market. tradingyou have stocks on a forward pe basis. are we fully valued at these levels? susan: when we look at 20 times, we have to compare that to other multiples that we have seen over history. the problem is we haven't had a backdrop like this in history before. even how low interest rates are, i don't really see a promising alternative for investors to turn to that is different, other than u.s. equities and certainly global equities. i'm biased because i focus on

the u.s. market. that's where we prefer to invest on our u.s. funds. finding value on still. when you have negative interest rates globally, it's tough to find a return. institutional investors need to find that return. therefore we think more money will flow into the equity markets. schmidt, thanks so much for joining us today. still to come, is the u.k. setting itself up for conflict by giving huawei access to build 5g networks? we are going to find out next. this is bloomberg. ♪

taylor: welcome back to bloomberg markets. i'm taylor riggs in san francisco, with paul allen in sydney. u.k. prime minister boris johnson risk a clash with gus president trump after giving huawei the green light to build

britain's 5g networks. it's a blow to the trump administration, which wanted johnson to impose a ban on the chinese tech giant due to concerns over u.s. national security risk. we have more on the news from london. >> after year of back-and-forth, britain has decided it will let huawei supply telecom equipment for its next-generation 5g network. forst johnson had encountered resistance from the u.s., saying the chinese firm is a major security risk. johnson is imposing major limitations. they will not be allowed to use huawei products in the core network and in the radioactive network, huawei will be restricted to 35% market share. it's a sensible compromise because telecom carriers were worried reduce competition would lead to price gouging by nokia and ericsson.

u.k. residents can pick from three main suppliers. cauterize is the most sensitive parts of the network , and a law was introduced in china three years ago that compels companies to assist the state with espionage efforts. that is what motivated u.s. fears. this is a deal the u.s. should be able to get behind in private, if not in public. the commissioner of internal markets and services is expected to unveil similar guidelines on the decision in britain. coming up, more on apple's first-quarter earnings. the tech giant coming out with better guidance and revenue. ceo tim cook on the call touting exceptional demand for the iphone this quarter. this is bloomberg.

wasur record performance fueled by iphone where december quarter revenue was up 8% year-over-year, and by our fifth consecutive quarter of double-digit growth outside of iphone, including a new all-time record for services and another blowout quarter for wearables. ♪ and they lived happily ever after. the end.

the end might not be as happy as you think. after all, 4 out of 5 people who have a stroke, their first symptom is a stroke! but the good news is you can rewrite your ending and get screened for stroke and cardiovascular disease. life line screening is the easy and affordable way to make you aware of undetected health problems before they hurt you. we use ultrasound technology to literally look inside your arteries for plaque that builds up as you age- and increases your risk for stroke and heart disease. so if you're over 40, call to schedule an appointment for five painless screenings that go beyond annual checkups. and if you call us today, you'll only pay $149-an over 50% savings.

read it again, papa? sure. i've got plenty of time. life line screening. the power of prevention. call now to learn more. taylor: this is "bloomberg markets." on in sydney. out let's get a look back at apple earnings with bloomberg's su keenan in new york. better than and forward guidance for the notable mix. the miss on revenue and the services revenue is a lag when you considered that 34% surge in the wearables. i votes were off the chart terms of sale. cook, thiss of tim was a record all around. you look at the after-hours a you notice shares are up half a miss on services.

given the high expectation is limiting the big rally in the stocks. stock when you have a price to perfection and these expectations set so high, normally they need to come in and crush it. which is what they did in almost every category. a record is hard to argue. let's look at the suppliers. they got a shot in the arm from the huge outlook. very positive for the second quarter. particularly for the latest models. you have the suppliers up across the board. if you look at the one year chart for apple, you have to remember they had come back from a disappointment in the prior quarter. they had been up 30% just since that last earnings period. stocks are set to run higher. the click a headlines from a conference call. strong guidances and second-quarter revenue between 63 billion and 67 billion. at the 4.3% increase from the margin,estimate gross

between 38% and 39%. as the expectation of operating expense. 9.6 billion and 9.7 billion. and a tax rate of 16.5%. said the apple music set in all-time revenue record. third-party subscriptions grew 30% year-over-year. in terms of the coronavirus, which so many are watching, and apple has so many factories in china, the ceo says they are continuing to monitor it. no negative impact at this point. taylor: thank you. i want to bring you another story from apple. the cftc will issue softer oil speculation curves in the obama era plan. issue the cftc looking to softer oil speculation curve than the obama era plan. we will bring you more on oil and these curves as we get them.

i want to get back to our top stories. for more analysis i will bring -- cr fo analysts. we have talked about the company. 55% of the revenue comes from the iphone. you are satisfied with the iphone revenue you saw this quarter? >> i think you have to be satisfied with the iphone revenue. at view was, we looking another 52 billion. we have a number closer to 56 billion. i think it is important to easy comps invery the december quarter and the march quarter of 2019. when you look at the year-over-year number, that was one year ago where we were talking about china revenue dropping north of 20%. think that is why we are getting some good growth numbers. i think you have to be really

excited with how the iphone and 11 demand has held up given the march quarter. i think you have to be pretty happy with how things are holding up in china at the moment. taylor: i want to bring in the fundamental manus and extrapolate that out to the coronavirus. the apple cfo saying the second-quarter guidance range is a wider due to the coronavirus uncertainties. we also heard about the coronavirus from tim cook on the call. take a listen. we are closely following the development of the coronavirus. we are donating to groups that are working to contain it. we are working closely with our apple team members and partners in the affected members, and our thoughts are with all of those affected across the region. , tim cook said they closed an apple store in china. thee measuring taking

temperature of employees in china. how do you saw this into your fundamental analysis? i think tim cook is doing and saying all of the right things. -- china in general, again, when you look at china again in through we are rolling after four consecutive quarters of decline in a december quarter. our view looking forward is, it is an unknown, that being china. epic guidance, tim cook remains optimistic enough, despite the wide guidance range that was given. thanhings are going better most people anticipated them to be, despite the coronavirus starting to heat up. paul: we do have apple rising up on the back of this earnings feat. you can't see this on the bloomberg terminal, but it does illustrate that the debt was an

enormous run-up over 2019. it seems to keep going. it looks as if concern over the coronavirus will not be a catalyst for pullback. the way we looked at it, we thought the shares were getting ahead of the fundamentals. when you look at the beat they had given, i do think it is enough to move the stocks to the levels and allow starks to continue to grind higher over the next couple of quarters -- higher over the next couple of quarters. there have been expansions of the multiples, but we are seeing greater emphasis within the wearables market. you heard tim cook talk about wearables within that kind of wearables home accessory business. wearables grew 44%, the apple watch, 75% of it came from new

customers. it tells you how underpenetrated wearables remain. we think services will grow in a high teens range. when you look at profitability that will come in the next three to five years, as well as a massive opportunities, we do thek people might get -- in 5g. we look at 5g as a 3-5 your opportunity. because of that, we think the multiple stay steady at these levels. we do think there will be an upside to the consensus estimates over the next couple of years. itl: we have discussed exhaustively since the results came out. let's focus on the not so good bits. i am looking at mac and ipad sales declining. is there something else going on? angelo: we are talking about very tough comparisons where we had products on both sides of the front in terms of ipads and

macs. perspective, it is definitely light relative to our perspective. the growth we are seeing in the iphone business is more than offsetting. at it now kind of looking as a nonevent relative to some of these other businesses giving us a good size of wearables and services. taylor: thank you to all of that analysis. angelo zino of cfra. president trump unveiled his middle east peace plans today. one of his allies has been a frequent subject of controversy. kevin sat down with jerry ared kirschner and talked about the hacking of

jeff bezos phone. is alwaysre distractions and government. we focus on what are america's interests, what are the objectives we are trying to accomplish, and then we stay focus on one of the actions and relationships necessary to do that. you wer point of know what america's -- point of view we know what america's priorities are. there are different topics and subjects that come up every day. but president trump was elected by the people to make our economy strong and make our country safe and he will look through -- work through any issues to make our country safe. vin: i understand why this is so important, but folks outside of the washington level, why should they care about peace in the middle east? angelo: that is a great -- jared: that is a great question.

that is what president trump asked in the beginning. he has increased america's energy production tremendously. the historic reliance in the middle east for america had to do with it being an oil and gas supply to america. now america is energy independent inks to president trump's policies, which gives us a lot of flexibility and has brought us prosperity. some plans to eliminate fossil fuel's would be very detrimental to america, especially if we stopped production in america. america's big interest in the middle east right now is to stop extremism. 9/11 happen because you had radicals who wanted to kill americans, and we have this all over the world. a big fight we have been doing is how do we win the long-term ideological battle against extremism? you will never have a stable

middle east, which will allow the people to focus on how do they get better jobs and improve their lives if we don't resolve these issues? this was happening in the 1920's. they had the custodian of the mosque, what he would do is is in say the mosque trouble, the mosque is in danger and he would use it to stoke anti-'s if we can establish between israel and the islamic --ld that the mosque is safe if you are a christian, muslim, jew, if you want to come to jerusalem and pray in the way you want, you can come safely. that would be the greatest thing for humanity. that would stop a lot of terrorists from doing what they do. that is president trump's big interests. that is what he has tried to do. he destroyed isis. they had a caliphate the size of ohio. iran was the biggest a sponsor of terrorism in the world. it was funding terrorism. president trump rolled that back with his sanctions. he is doing what he needs to

everyday day to grow america's economy, create jobs and making sure he keeps america safe. how is the administration monitoring coronavirus? jared: president trump has been getting briefed regularly. the u.s. government has so many tremendous resources and incredible people. the president has been meeting with them constantly. he has reached out to china to offer any support they may need. they are being very transparent in terms of information they have been sharing with us. taylor: that was the senior advisor to president trump speaking with bloomberg. coming up next, the cdc advises travelers to avoid all nonessential trips to china to help prevent the spread of the coronavirus. doctor wasr from the biotech company has partnered with the national institute of health to try to develop a

vaccine. stick around, this is bloomberg. ♪

paul: welcome back to "bloomberg markets." i am paul allen in sydney with taylor riggs in san francisco. screening expanding for the coronavirus. checks for the virus will take place at 20 airports across the country. -- onentry in the united company in the united states is reaching to find a cure. last week they announced a partnership with the coalition for epidemic preparedness to develop a vaccine. joining us now from boston to discuss is the president.

thank you for joining us. tell us about this and the vaccine you are hoping to develop. >> first of all, thank you for having me. mentioned for you epidemic preparedness and innovations, was to support the manufacture of a medical batch of a vaccine that we will be providing to the national institute of health in the united states to conduct a phase one clinical study. it is really a remarkable partnership and they are working together. in example of a kind cooperation necessary when we are dealing with a crisis like this. it really is all groups coming together. paul: the creation of a vaccine does take time, doesn't it? and also what timeline are you looking at? that we: we have said are trying to do this in

record-setting time. about three months from when we first got the sequence for the for when wetified, hope to be dosing in a clinical study. we hope to do it faster than that it we have to be careful and responsible in moving forward a vaccine at this pace and make sure we do it in a high quality way. at the -- at the end of the day will be just in humans. taylor: i wonder how you are using technology to create a safe vaccine going forward? moderna haveat been building our entire platform on message rna technology. message rna is a is a relatively new pharmaceutical science, but it's a very agent part of biology. -- ancient part of biology. what we have been doing is developing a messenger-based therapeutics. the software of

life. it can be used to encode for an express any protein when you inject it. we use it for well over a dozen programs in clinical development over the last few years. whereg from therapeutics, we will express a protein that tries to treat or cure a disease. all the way through infectious diseases. --our case we have public published six successful studies with six infectious diseases influenza,ike pandemic influenza strains through minghella virus, which is a major cause of birth defects. how some just wonder of your biggest worries are with this virus, this coronavirus relative to more pandemic outbreaks we have seen mike sars, mers, zika and evil well. .- and ebola

what most concerned to about coronavirus? know if ite don't will be sufficient to slow down the rate of infection and death. i think everybody wants to hope that that is effective. vaccinelenge for us and manufacturers is, if we wait until we see of those measures are working, we will be too late to try to intervene in the event that the epidemic turns into a pandemic and we need all measures available, like vaccines to try to control that spread. thankdr. stephen hoge, you so much for joining us. still to come, tech earnings season underway. we will bring you a full preview of what to expect from teslas report. that is up next. this is bloomberg. ♪

breaking news.

senate majority leader mitch mcconnell telling republican senators in a private meeting that leaders currently do not have enough votes to block impeachment trial witnesses. this is according to dow jones. we will bring you more news as we get it. tesla preparing to report earnings and share is going on in unprecedented offense. positive updates. let's bring you details. revisions, revisions, revisions, analysts have that 2020 revising models when it comes to tesla. this after company shares surged above $500 for the first time following a record 112,000 vehicle deliveries last quarter. back to tesla's giga factory where deliveries are rolling out less than one year after breaking ground, it all has ceo elon musk dancing. earlier this month, he says he keep pushings to upwards. the stock has more than doubled since the third quarter earnings report. among those who raise their price target, oppenheim or had

the $612 price target. jefferies analysts as a 600 seller price target, but no one comes near tesla. target is based on what he says is the company's ability to -- the momentum has remained skeptical. any even admitted to picking opportune time to down growth -- downgraded the stock. >> i downgraded the stock about the man. i wish i had not done it. >> can the recent rally last? some say the market cap is the new norm while others pose caution. valuation is to lower the stock. i would say that the company's competitive position continues to improve and it's really the only way to play. i am not sure i want to buy it. >> it is difficult to compete

with them and i think they will continue to make fast tracks for the 450,000 vehicles this year. taylor: for more on what to expect on tesla's wednesday, we are joined by our commentator who covers tesla. what numbers are you looking at? >> how many cars do they expect to make and deliver in 2020? orl it be half a million 600,000, we are looking up at your ahead guidance. the other thing is earnings per share. 70y are expecting one dollar four cents according to analysts. will they be back, will they miss it? and if they do beat it, by how much? elon musk has a few options up his sleeve to support the stock. call ise earnings fascinating because a lot of it depends on what elon says. he can talk about any number of

things. the progress in china, the giga factory in berlin. regulatory credits. there is a number of different ways that they can have the balance sheet. they did that in third quarter and it will be interesting to see how they do it this time. taylor: what about the competition between the x and the y. na: we have seen cars around the bay area and people have spotted them in boulder, colorado so they might move the timeline up. musk said they are making the s and the x. but the future of the company rests on the 3 and the y. paul: elon musk talked about the production hell. dana: we moved from production held to delivery held to service station hell.

i am not sure what station we are in right now. the buyers in china are weighing on the auto industry. factories are closed, workers cannot get to work. it will be interesting to see if that comes up on the call. i don't know if it will be in the shareholder letter or not. taylor: is shanghai and that production factory the make or break? think there is one thing that is make or break. there are so many different moving pieces. shanghai is important point for the coming year. taylor: bloomberg's dana hull, thank you for joining us. we will have much more ahead from paul allen and taylor riggs in san francisco. this is bloomberg. ♪

paul:paul: good morning, i am paul allen in sydney where markets of come online. japan and south korea will open in an hour. taylor: i am taylor riggs in san francisco and you are watching " bloomberg markets." our top stories this hour, the travels china restrictions. hong kong suspends travel from the main man with more than 100 people now confirmed dead.