paul: good morning. markets have just come online in sydney. taylor: i'm taylor riggs in san francisco. welcome to "bloomberg markets." ♪ top stories this thursday, the world health organization has called an emergency meeting as the coronavirus claims more victims, at least 169 people have now died. tesla in the fast lane, earnings have beaten expectations and the new model y is ahead of

schedule. and rates stay on hold amid moderate u.s. growth. and we have just opened for trade in australia. it is a stagnant open. right now, we are weaker by about 2/10 of 1%. let's see how that evolves. we will give you a check of futures. we have futures for the nikkei looking weaker. crosby futures pointing lower as well. and if we take a look at currencies, not a lot of action either, this despite fears over the coronavirus. we saw the aussie losing ground over that, as well as the japanese yen pretty much stable. the fed has concluded its two day meeting. it did not really move the needle for currencies. now more on that story, and our first word news. >> the fed left rates and a policy on hold, as expected,

saying the labor market is strong and of economy continues to grow. it says consumption is moderate and investments and exports are weak. the philadelphia fed says economic activity declined in eight states last quarter and was stagnant in three more. president trump has assigned the successor to nafta, ceiling a political win he hopes will nullify the tax on his record. the usmca marks a rare piece of bipartisan cooperation, for the democrats say they were not ceremony. the signing the world health organization has called a meeting for thursday to discuss a formal global alarm over the coronavirus outbreak. governments are tightening travel restrictions into several airlines are cutting services to china as the death toll goes up. the yuan says the world must be on alert. china is racing to contain the virus and ability and work continues around the two new hospitals.

the epicenter of the outbreak ha s the majority of deaths recorded there. they have ordered extra supplies to help the fight. one official has been fired. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. get the latest now on the coronavirus with our correspondent in beijing and david in hong kong. selena, we will start with you. what are the latest developments? >> the province just reported an additional 37 deaths, bringing the total to 169. and more than 6000 cases. if you take a look at the chart, you will see that the vast majority of the cases are concentrated in china, but it has quickly spread across asia

as europe with new cases -- was the first case in the middle east. governments are tightening travel with resources saying the u.s. government is considering a number of measures, including banning all flights in and out of china. u have airlines at suspending flights to the country as well. the u.s. and japan are evacuating citizens from the center of the outbreak. the world health organization is meeting again on thursday to determine whether or not this should be called an international emergency. they stopped short of it last week, saying it was a local crisis, but they are monitoring things closely and if they do label it an international emergency it would allow them to better coordinate international responses. taylor: david, it was interesting, you seem to get positive market reaction, bullishness returning to the u.s. are we not seeing that translate

into asia? david: i guess it depends which market we are talking about. certainly, you look at how, i guess, when it comes to the fed, i am sure you talked about that story, it playing out across some markets but not so much when you look at the more acute areas of the market affected by this. we all know what happened in hong kong yesterday, the massive drop we had, especially with the mainland shares. the nearest and most obvious proxy because the main the markets are still closed. i i'm watching that closely, when hong kong opens up, as well as within that market the property plays and the casinos. 17%casinos have dropped from a week and a half ago. paul: selena, one of our previous guests, a biotechnology ceo was saying while the

mortality rate is lower than the mortality for sars, the death rate is a solo right now, why so much concern from health authorities? selina: there is still a lot we do not know. if you look at the case number's commute take the 6000 number, the mortality rate is about 2%, far lower than the death rate of ebola or sars, but that is partially what is worrying health experts, because they say that the new virus can spread undetected very far and very wide and will hit the most vulnerable. chinese authorities say that this can also be spread by people showing no symptoms at all, which really hurts efforts to detect the spread of the virus. inside of china, as well as the withl -- may be higher some saying it could be as much as 28,000 people. a relatively mild virus can

spread a lot of damage. they say that sars was easier to recognize because it was, in part because of cases being much more severe and they could be recognized. that was after a slow government response. we are dealing with a case here where it is spreading quickly and widely and there is still a lot we do not know. even though the death rate is low now, there is the chance it could mutate and become more deadly. paul: david, we have seen the business impact fairly extensive and wide-ranging, tourism hit as well. what is the latest guidance we are getting from corporations? david: i will give you a good example. we are getting daily data in terms of the visitor numbers, if you compare it to comparable period, right after lunar new year last year. we are down about 80% or 90%.

when it comes to the casinos in macau, they are saying they are encouraging employees to take unpaid leave. foot traffic is down. we talk about airlines. it is a sensitive story on the bloomberg, talking about the growing list of airlines from cathay pacific, united, british airways yesterday, completely suspending flights to the major cities in china and substantially reducing capacity. i guess on that note, we are also getting this announcement out of cathay pacific, on top of which a reduction of capacity, they are also tweaking in-flight service. instead of giving you a pillow or blanket, they are saying, no, they cannot do that in order to help stem the spread of the virus. taylor: final question, what else are we hearing from the government? what is the latest response? selina: the number of reactions

from the top leadership in response to the backlash, you saw the first government leader get ousted because of the coronavirus outbreak. that person was removed. the government is quickly building hospitals in a matter of days, trying to address the shortage of doctors and medical equipment. and so you see that quickly moving forward. in addition, they are sending 6000 medical workers to the area, trying to address that shortage again. thankselina and david, for joining us. we will have more on the coronavirus coming up and white it's a spreadable dampen consumer demand -- why its spreadable dampen consumer demand. and staying on hold for this election year. we will talk about the fed.

this is blumberg. -- this is bloomberg. ♪

>> uncertainty is about the outlook, including those closed by the new coronavirus. there is likely to be disruption in china and possibly globally, based on the spread of the virus and business closures. we believe the current stance of monetary policy is appropriate to support sustained economic growth, a strong labor market and inflation returning to 2%. we have now had a series of a number of -- in which we reviewed what we learned, and also dug deeply into strategy tools and communications. i expect we will conclude their review and announce conclusions around the middle of the year. i would say there are now grounds for what i would call cautious optimism about the outlook for the global economy. the fedthat was chairman speaking at his press conference following the fed's

decision to keep the key interest rate unchanged. now more on that with our global economics and policy editor, kathleen hays, who has a special guest. >> a very special guest indeed. he is a professor of economics at the university of chicago school of business, the former head of the council of economic advisers under barack obama. so, welcome. great to have a. -- to have you. >> good to see you again. >> i want to talk about the press conference, how big is the to the globalsk economy and in the u.s. economy? jay powell acknowledged it was a risk, too early to make a judgment. austan: he was being very diplomatic. i do not think he is wrong on the facts. it could be a significant risk. it could definitely freak people out. we know that there is a

well-worn channel from consumer, investor and business freak out to recession. but it could end up being something very small in economic impact. it all depends critically on two factors, one, how easily and rapidly does this spread. and two, how damaging healthwise is that -- is the virus. is this like getting a cold, is it as dangerous as the flu, we do not know the numbers. in the meantime, countries like china or the u.s. are predominantly big domestically driven economies. and tourism and services are major components. so if people start getting afraid that they literally do not want to walk out the door or go visit a store, they do not want to do those things, you can definitely have a substantial short run slowdown in the

economy. hear that in his words. kathleen: we are pretty much a domestically focused economy. what about jay powell on the fed's view of the economy? it is in a good place, appropriate policy right now, what do you see? did he say and there is what do we collectively seeing the economy. i thought that in his remarks that jay powell specifically referred to the symmetric 2% toget, it sounded like a nod this idea that if they can get inflation up and it was actually above that 2% target for a little bit, he would not be stressed out because we have been below the target for a long time. there was actually content in that little nod. as i look at the economy, i see

two different economies in a puzzling way. your heart goes out to the fed foc members because one part of the economy is still very strong. the consumers are confident, consumer spending is quite lowst, the job market has unemployment rates. that part looks good. then you turn and look at anything related to manufacturing, related to international trade, or the over rate,- overall gdp growth all of those are moderate at best. we are trying to sort out which of these is it, is it major boom or is it dwindling expansion? with the fed lie will do in 2020. kathleen: are you more concerned about the weak private investment, the weaker international trade flows,

vis-a-vis the consumer looking good, or are you with jay powell, watching the risk but things are ok? austan: i am more nervous than the median member. i think if you look at these sectors which are usually harbingers and they are cyclically sensitive, so when they go down it is usually a sign that maybe the cycle is going into a slower patch. things like manufacturing. i think it is a yellow light of caution in those. i'm not saying the fed has not thought about it, they clearly have thought about it, but i am a little more nervous about the global impact on the u.s. economy and just how long we are in the tooth on this expansion. kathleen: with china, what about other weaker spots around the world, how big of a threat is that to our domestic economy? economy, ithe u.s.

think the mechanical impact of even a substantial slowdown in china, the mechanical impact on the u.s. economy is now very big. it is not that important to the u.s., and china is not that big a share of u.s. trade and it will not be that big of a slow down, so it is like maybe 2% of 15% and that is not a big number. that said, things that are not big enough mechanically to cause a recessions have caused recessions in the past through the channel of freaking people out. and i think that the coronavirus, or the credit market, financial crisis, any of those things come if they came out of china, or if we got back on that path of escalating trade war with china, any of those three things in my view could easily freak out business investment even more than it has

and it could be a negative impact. kathleen: i will use that phrase, channel of freaking people out. is the federal reserve then, 2020 and beyond, that there will be no changes in rates, we will see things just tilting on either side or is there a tipping point by the end of the year? austan: i think they might be in the rate cutting business, not the rate increasing. i think the maximum likelihood what they clearly have insinuated in their statements, is we are just going to sit and do some minor rate adjustments, but mostly we will stay where we are. as i say, i am a little more nervous about the warning lights and so i think that the risk is to the downside on rates, not the upside. kathleen: thank you for joining

us. taylor: thank you. the university of -- do not miss our chat with the bank of indonesia -- hosted by tom mackenzie, starting at 9:05 a.m. 8:00 p.m. in new york. and you can watch the .onversation at five -- live go apple is now being ordered to pay $838 million in a patent infringement case. they say they will appeal the verdict. we will have more on apple next with an analyst. this is bloomberg. ♪

taylor: this is "bloomberg markets." i'm taylor riggs in san francisco. paul: and i am paul allen in sydney. shares of apple continued to rise after reporting unexpected revenue in the holiday quarter,

more demand for iphones and wearable devices as well. wall street was positive on growth in china as well as the outlook from the second quarter. we are joined by robert mueller to discuss. anks for joining us. we will start with the china story. apple was a distant fifth in the market. single-digit market share. is the optimism misplaced? >> no, you have seen the declines year-over-year and it is nice to see an uptick there. i think there are worries about the coronavirus, what it will be doing to demand, but it is a healthy sign to see the uptick in china demand. paul: what about the news -- off you go, taylor. taylor: does it give you pause that they are making guidance $4 billion wider in response to the insurgency around -- the

uncertainty around the coronavirus, does that enter into your forecast? robert: our projections are more toward the middle point of guidance right now, it is a little bit of caution, because there could be constraints as well as domain considerations. but we are early on in the virus containment. if it happens to be less than an impact, then you will have up at revision estimates and you would probably land at the higher end of guidance. taylor: i want to get your thoughts on the supply chain issues going on. it was interesting on the call that tim cook was talking about the air pods, supply and demand issues, they cannot turnout enough of them. when do you expect those issues to be resolved? robert: it is a high-class problem. there is a four-week waitlist if you go online to try to buy them. hopefully, may be the end of the quarter, may be the next

quarter, but it does set up a tailwind for the next quarter in terms of sales, because those sales from last quota could float through to the next quarter. it should carry momentum into the start of the calendar year. paul: i know you have not had much time to digest this, but we have breaking news that taylor mentioned, apple has been ordered to pay 838 million dollars for patent infringement. i wonder what your initial reaction is and what kind of impact it might have. robert: it is still early, i would probably wait until the appeals process goes through the courts. based off the numbers i have been seeing, the company has over $200 billion in cash, s to sum this -- so to some extent it is a rounding error. it is manageable. i do not think it would really impact things except for share assumptions. paul: i have an easy one for you now.

they share price continues to keep rising, despite a sense that perhaps it is getting a bit keenly priced. how much more upside do you see for the stock? robert: we raised the target to $358. as the positive guidance gives you more momentum for the share buyback. the nice thing is with these results you get closer to 5g coming out, the plan's later this fall, and we see that we are on the forefront of a major upgrade cycle in 5g, not just a one time impact. this should be a long super cycle that could really change the face of the iphone business from either average selling price, potentially a quickened upgrade cycle, or even a lower holding period of the phones, so we are positive, especially as additional spectrum gets opened up and we see this as a long sustained cycle. taylor: take a look at a chart inside the terminal. you know the story, it is cash minus debt outstanding, still

more than $116 billion in net cash, what is the best use of cash for the company? robert: we expect them to continue buying back their shares. they are on pace to buy back about $80 million a year. it is a fortune 500 company and buybacks every year and we expect that to continue. acquisitions could occur, but buying back your own stock is a very good problem to have and it gives you industry-leading, market-leading buyback activity which will be helpful going forward. it takes off about a turn and a half of the pe multiple and you could probably knock down a turn and a half with a buyback potential. -- the buyback potential. paul: robert, thank you. coming up, we have comparisons to sars continuing to be made with the coronavirus. greater economic integration means the financial impact of the virus could be even wider. we will discuss the

implications. stay with us. this is bloomberg. ♪

>> this is daybreak asia, here are your first word headlines. the lawyers for president trump says they know the president was aware of pressure on ukraine because "i was working directly for him." lev parnas spoke as the legal cannot bed that trump impeached for taking actions motivated by a wish to boost his reelection chances. the white house is also trying to delay publication of john bolton's new book on national security grounds. the european parliament has approved the brexit deal, clearing the way for the u.k. to leave the eu on friday night. officials on both sides say the fight over the divorce deal was the easy part.

negotiations in the coming 11 months will be far more difficult. lawmakers in brussels had a veto on the deal, but voted overwhelmingly in favor. the european union has followed britain and has stopped short of banning huawei from 5g, sparking a new rift with the u.s. which has lobbied hard for huawei to be blocked from next-generation networks. china is the second largest trading partner with the eu in beijing has hinted at repercussions if huawei was kept out of the 5g rollout. ofren buffett is pulling out the new business, selling its media unit and 30 daily peppers -- papers to an enterprise for $140 million in cash. it delivers papers. it said last year that most of the titles are toast. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries.

paul: australian markets have an hour.ing half what are we watching? from the u.s.e session after the fed decided to keep rates unchanged. markets are flat on the day. we are seeing that as we see the fed policy leaving rates unchanged. about less than 1/10 of a percent. and the 10 year yield is lower as well. you look at new zealand, that is where things get interesting after a larger than expected trade of cereplast data, also catching a bid.a

looking ahead to other asian markets. we have some big tech earnings. microsoft, tesla, facebook. paul: our next guest says that the coronavirus could dampen consumer demand. great to have you here. what do you see is the greatest risk when it comes to credit? channel for credit risk that is twofold. aversion thatisk manifests itself in market

sentiment. we have seen that volatility in equity markets as news of the virus has spread. the second is more fundamental. we know from past viruses like sars when you do have an outbreak of this kind, economic activity becomes very slow. that is topline and bottom-line. so there are two different channels, both negative. taylor: i want to talk about the fundamental channel you are highlighting. are we talking about a lack of business confidence? or a bigger drop off in tourism? >> all of the above. i would rank them in the opposite way you just did. tourism, we already know, because of the travel precautions that the authorities have taken, there has been a slowdown.

it came at a time, the lunar celebrations were ongoing. this is a time when providers like hotels and airlines expect to pick up. they did not see that pickup. china now is a weightier part of the world economy than it was 10 or 15 years ago. it is not just chinese companies that are affected. it is global companies that rely on the chinese consumer or rely on production chains in china that will be affected. you are seeing headlines about companies prohibiting travel to china. effect.l have an the chinese consumer, the tourism is one aspect, but the fear of going out to media and entertainment, going to movies, malls could also bear the brunt

of it until this fear of contagion dies down. as of today, it has not yet died down. terms of the story about the domestic consumption picture, consumption is so much more important to the chinese economy than it was during the 2003 sars crisis. inhave seen empty streets beijing and stories of starbucks closing its stores. how long before we see that affecting the real economy? >> i think you will see it in the numbers that will come out for the first quarter. this really depends on how quickly the viruses contained. increasing infections is contained. we know a lot of steps have been taken. they are leading to people not going out. governmenthe chinese

is taking to curtail infection is affecting economic activity. --e the spheres dies down once this fear dies down, we will know for sure the extent of the damage that has been the. -- done. we expect authorities to take some steps to offset this. thank you so much for joining us. we have plenty more to come. the regulator in charge of commodities trading in the u.s. suggests new rules on oil markets. we have a bloomberg exclusive, next. this is bloomberg. ♪

paul: let's get back to those

after the bell earnings from facebook, tesla, and microsoft. su keenan is in new york. hadthree companies different reactions from investors. ?hat is the story facebook, there is a bit of underwhelmed. let's go through each of these if we can. let's start with microsoft. cloud growth accelerates and carries the day. cloud demand persisted. investors expected a strong performance. they got it. facebook shares fell right off the bat even though they beat

estimates across the board. the number of active users is the issue. starting to be questions if the company's growth has peaked. tesla blew out the numbers. they reported their second straight quarterly profit. that is important because each of the last two years started out low. thatis the stock chart shows the past three months, just soaring higher. elon was on promises that musk could cut costs and deliver profits. he delivered. call has justa begun. he is in fine form. he called the truck better than people realize. issues,g into these key what caused tesla to store and facebook to think? su: let's start with facebook. , particularly in

u.s. and canada, started to stagnate? that is what these numbers show? a stronganalysts global growth was expected and right now we have a very tight regulatory environment here in the u.s. and particularly abroad. growth is just not showing up. warned forberg has several quarters that growing at the same rate is going to be more difficult in the future. there is a limited number of users out there who already have a facebook or whatsapp or instagram or messenger. that raises questions about future growth. let's talk about tesla. what was really strong on this call, you are looking at the future of the company, the model y. they accelerated the launch of this into the current quarter. that is impressive. they came through with promising they would deliver more than one third of vehicles this year.

investors tong push that stock by double digits after hours. taylor: thank you to su keenan. we are monitoring that conference call. we are hearing from the chief financial officer. and of course hearing from elon musk. he is super fired up about the company. produce 1000will times more cars in 202010. - in 2020 than they did in 2010. the fcc chairman explained a new role to us. limitsulative position were something that congress passed 10 years ago as part of the dodd frank act.

dodd-frank act. the reason we are putting these in place is to prevent corners and squeezes. applyere never meant to to anyone who is actually hedging. agriculture,ed on energy, to make sure if you are going to these markets and hedging risk, you can do so. >> on the same day that president trump signed into law the usmca, now you have this new development. two industries that sometimes but heads seem to have a significant deregulatory pushback. >> i think this is a tremendous victory for the agriculture industry. and probably the injury and -- industr ay as well.

the presence of more traders provides liquidity. their position should be limited at a certain point. we want to make sure that hedgers, energy companies that are actually going to this market to hedge risk, can do so. i have been in washington covering financial services many years now. you mentioned dodd-frank in 2010. why did this take so long? >> we have had countless proposals, countless drafts, for proposals in front of the -- four proposals in front of the commission. that was one issue. the one proposal that was actually finalized was struck down by the courts. . the bigger issue and the one congress is concerned about is that previous proposals did not include the right hedging exemptions. >> some are saying this will be

good for big business. how does it help small business? durings out in kansas the summer and met with a farmer who said, she uses the futures markets to hedge. >> i do not think people get that. what happenedca with the u.s. and china. farmers in the heartland are really looking at this. >> a farmer needs to hedge his or her exposure. sometimes they do that directly through the futures market. more often than not, they will enter a forwarding agreement with their local grain operator. an agricultural company will use the future markets for their exposure. that goes all the way back down the chain to farmers and ranchers. >> it is really fascinating. i think wall street has woken up to see how heartland america is

engaging in the financial services sector. this is our seventh open meeting. we have been working tremendously hard to get things done in the right way. we have done capital proposals. what is next is a couple of different things. swap data reporting. it is an area that everybody agrees has been a complete mess. that havef fields different requirements. >> a global turf for. > -- war. that,want to focus on streamlining it to the point that we get the data that we need. there is a broad overlap between what other regulators are asking for. that is a key agenda item. , we have not

changed our regulations to update them for bankruptcy. things are going great now. but every now and again we may have a futures commission merchant fail. that person has customer money. things like that that people have not thought about for decades, i am putting on the agenda. talked about the increasing role of cryptocurrency and that is something that your team is looking into. give us an update on that? i think, not only in the digital aspect but that underlying blockchain technology, i want the u.s. to lead in this. i want to encourage innovation. wemodities are what regulate, particularly derivatives on commodities. right now, the two biggest types of digital assets, they actually fall within our jurisdiction.

we are doing a lot in the digital assets space. we have seen bitcoin futures cash settled and delivered. if things start to migrate in the commodities space, we will see even more. that was an exclusive interview. want to get you across some breaking news on the coronavirus. china updating the number of cases. 711, a jump of about 30% on the number we previously had. 170 fatalities. we also have breaking news on samsung with fourth-quarter results coming in at a slight mist -- miss. it is a little unusual to see samsung miss on these numbers.

2020 memory demand will be solid. that is about $450 million u.s. it will open along with the cost be at the top of the hour. stay with us.

paul: i am paul allen in sydney. taylor: i want to bring in some other breaking news. china confirms more coronavirus cases. we are hearing from the tesla of talking about the impact the coronavirus on their operations in china and beyond. he said they are in the early

stages of understanding the impact. at this point, tesla looking to and a half week delay. the coronavirus continues to impact all of these tech companies. half week i want to switch gears. we have a developing story concerning facebook. they will pay half $1 billion to settle a case that they improperly collected user data. that will be one of the biggest in history. >> this is been an ongoing case for a very long time. it has been really the most forceful case on biometric data and how facebook auto tags people in your photos and can recognize those people without

having permission. new regulations from europe, there has been a lot of change on facebook and on -- end on how they deal with this. if you could not prove that someone's getting face recognition actually hurt them in their lives, then there was no case. in this case, they said even just having that data, it is you losing control of your biometric information. the u.s. election about 10 months away. facebook faced a lot of criticism after what happened in 2016. is there the risk of more scrutiny coming down the line? >> absolutely. that type of scrutiny may come first and foremost from the states. we have a consumer privacy act in california that will cause a

lot of changes this year for the company. this is from illinois. even if the federal government does not to sweeping legislation , we may still see a lot of protection for consumers coming from individual governments. taylor: it is interesting, it talks about this being one of the largest in u.s. history. but last july we had another suit that came. to all of these have an impact on the company at any point? >> it is merely a rounding error in their earnings today. they reported record earnings. so far this scrutiny has not hurt their business. however, they expect more of the headwinds from the private scrutiny to come up in future quarters. we have not seen the end of this. we may see it hurt facebook's projected revenue as it becomes

more difficult for advertisers to target their advertising because they do not have as much data. should point out that the stock has fallen about 7%. that was just about the earnings. what else did you learn on the call about potential headwinds facing the company? >> the biggest headwinds as they are simply not growing as fast as they used to. they have already connected much of the world to facebook. there are really not that more people to add. they have to figure out what to do with the people they already have and expect to have slower growth in the future. for newd to experiment business models that go beyond the traditional advertising that

has brought their business to these record highs. facebook does own other platforms, notably instagram and whatsapp. what is the growth outlook for those two? little coy was a about those two properties. excitedysts are very about shopping revenue from instagram. expanded instagram checkout, which is a way to buy items directly from instagram accounts. paul: thank you very much. get a check of how we are markets wise. tokyo and seoul opening at the top of the hour. futures looking a little weaker. kospi kind of flat. we are watching samsung closely after fourth quarter earnings

seem to be a little bit of a miss. coming up, more talk of how the coronavirus could be a game changer for markets. this is bloomberg. ♪

>> asia's major markets have just open for trade. markets:bloomberg asia." our tops toy this hour, the world health organization calls an emergency meeting as the coronavirus claims more victims. at least 170 people have now died. no change of strategy as fed rates stay on hold. reports its fourth annual

loss since 1977 and takes it new charge on the 737 max. and south korea coming online. let's get straight to the market action. >> japan and south korea just open. you can see lower on the day off the coronavirus fears. above 7000.nt up the nikkei under pressure. the yen a bit lower on the day. different story if you move over to south korea. those of the markets i will be watching.

the south korea 10 year yield a little bit lower. australia and new zealand markets have been open for a now. they left their rates unchanged. very different story. they just saw a surplus of trade rallying. shery ahn: some of that uncertainty that the fed is watching. organizationlth considering issuing a global alarm over coronavirus. we have the latest numbers out of china. >> the numbers continue to rise. the desk tell -- death toll at

least 170. some experts from the u.s. will be sent to help contain the virus. the vast majority of these cases are contained on the mainland. but if you take a look at this chart, it has spread across asia and the united states and europe. we've seen the first case in the middle east. governments are tightening their borders and international travel. the u.s. is considering measures such as banning all flights in and out of china. airline suspending some of their flights to china. the world health organization is meeting again to decide whether or not to declare this and international public health emergency. they refrained from doing so last week, saying it is still

localized. but they will be monitoring it very closely. , ithey give it that label will give them the efforts -- ability to coordinate international efforts. shery ahn: the death rate is at 2%, considerably lower than sars. how concerning is this that this is spreading so fast? elina: even though the death rate is low, how quickly it is spreading is concerning. ity say the mildness of allows it to go undetected. through their daily lives without any detection. people can still be traveling and doing the routines.

a potentially mild virus can cause a lot of damage. the actual number of cases could be higher than what is reported. as many as 28,000 people. it was such an easily recognized problem. we don't know behind the science. thank you so much. at --get to our next just. he joins us from singapore. let me start with the spread of the coronavirus. we have seen some volatility but

it is not a panic selloff. it seems to be rather controlled. even the hong kong market did not fall as much is feared. >> you have to put this into the context of the bull market. the real question is whether this could disrupt china's supply chain and impact global growth. this could be the catalyst that so many people have thought about. what is more infectious than the virus is often the fear. the impact on investor sentiment. hearing from are the bank of korea deputy who

says it is too early to see the coronavirus to cut rates in south korea. central banks have really been helpful. the fed is being pretty positive. how concerning is this for the markets? this idea has been the driver of the bull markets. we are potentially running into fundamental resistance. the stockght see in market because of the coronavirus is more sector rotation.

more inflows into swiss stocks. the swiss pharmaceutical industry has around a 3% dividend yield. those sectors might potentially outperform going forward. we could see more value investors coming back. growth is becoming less attractive at these levels. they are quite stretched. shery ahn: we were expecting value to outperform growth. shows, growth stocks are reclaiming the lead. can we expect that to finally happen in 2020? >> over time this is the reversion to mean that comes into the market. global growth has been disappointing.

the coronavirus could potentially lead to supply chain disruptions and lower growth in china and lower gdp growth globally. that, in the overall stock market, we might see more return to value versus just growth. that is potentially the new trend. how about the fact that we are seeing more safe haven values? especially with gold? this chart showing how holdings in gold backed etf's reaching record highs. in gold, the trend is your friend. it looks like gold is in a bull market. it is up against every currency in the world. not just emerging-market currencies. gold is outperforming against hard currencies and safe haven

currencies like the swiss franc. switzerland had record trade surplus. there currency is very strong globally. in gold, the trend is your friend. shery ahn: we have seen the pricesand food fluctuating a lot depending on the latest headlines, whether it is on the supply or demand side of things. what happens to the energy sector? energy stocks have been really lagging. energy stocks are true value investments. they have underperformed. question is one question. another is if u.s. gdp growth could underperform. potentially with the coronavirus, we could see u.s.

gdp growth coming in at 1% for the foliar. -- full year. that will mean that oil is not moving much. even though they have attractive valuations and dividend yields. shery ahn: thank you so much. you are sticking around. so we can discuss the fed. let's get the first word news. >> the world health organization has called an emergency meeting later thursday to discuss a formal global-- alarm over the coronavirus outbreak. cuttingairlines are services to china as the death toll rises. the u.n. says the whole world must be on alert. sealed a trump has political win. usmca marks a rare piece of

bipartisan collaboration. european parliament has approved the brexit deal, stealing the wave -- steering the way for the eu to leave the u.k. on friday night. coming 11ns in the months will be far more difficult. brussels voted overwhelmingly in favor. warren buffett is pulling out of the newspaper business. berkshire hathaway is selling its media unit. buffett delivered papers as a teenager but said last year that most surviving titles are toast. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery ahn: thank you. still ahead, the outlook for

boeing as its new ceo starts to reset expectations after the 737 max crisis. global growth stabilizes, but now the fed lifts some uncertainties -- list of uncertainties continues the coronavirus. this is bloomberg. ♪

shery ahn: the federal reserve kept its key rate unchanged and delivered a positive view of the economy at its first meeting of the year. there was a bond market rally. ahead, including the coronavirus. we have the latest. how big a determining factor is the virus right now? >> at this point it is only

several weeks old. no big impact on china. even there, it is all. the question is, how big does it get? the fed left its key rate on hold. that was widely expected. powell continued the theme. policy is appropriate to support growth. the labor market is healthy. weak private investments and weak exports. he talked about the risks that are still there. for the trade one phase deal to get in place. he included the coronavirus as a risk that is out there. not at all assured of a global rebound. there are signs and reasons to expected. then comes the coronavirus. it is too early to say what the effects will be.

we are monitoring it carefully. there will clearly be implications in the near term for chinese output. and i would guess for some of their neighbors. we will have to see what the effect is globally. >> he made it very clear, it is too early to tell. concerned about the human suffering. economy isstates about 80% dependent on domestic factors. he continued to stress being confident that wages have risen, they will continue to rise, the labor market will continue to be strong. consumers continue to spend. the fed is staying put when it comes to rates. shery ahn: it seems we saw this bearish reversal. stock markets fell and we saw a rally in bonds. what struck investors as bullish for bonds? he is payinghat

attention to the risk of the coronavirus. the risk that the global economy and the chinese economy. the need to get inflation at or above the 2% target. this is the fed's key measure of inflation. there is the target. it is going in the wrong direction. inflation easing up a bit. are trying to figure out, will you change the target a little bit? will you allow it to move higher? listen to what was said about the bond rally. >> taking the uncertainty out of the equation and acknowledging the risks to the expansion, the coronavirus, basically signals

to the market that the fed is ready to do whatever it has to do to keep things going. if i had to say, is this a hawkish or dovish press conference, i think it was slightly dovish. kathleen: the bond market agreed. that's look at world interest-rate projection. thinks that a rate hike might happen before the end of the year. by december. 85% really shifted in terms of where the first-rate -- when the first-t rate cut could come. if there is a move this year, there will be a cut. shery ahn: thank you so much. back to our guest in singapore.

on markets moved today chairman powell's comments. he was not very successful. you do not want that to happen. this is the bigger question. last year there was a pivot. the trump administration has been very vocal to cut rates aggressively and the u.s. the only question in my mind, why would you cut rates last year when the stock market is at an all-time high? the stocks done in market is it has led to earnings and expansion. we have to follow through in earnings. tesla is a good example of this bull market. it has done extremely well.

earnings came in better than expected. chart, it look at the is a great company, very , fundamentally changing the world as we know it. growth stocks have become overpriced. the link between policy and the equity market. there is a chart showing global money supply going up. let's talk a little bit about the technicals of this decision. we have this technical adjustment. what does that mean for investors like yourself? when you are looking at the fed and how in control they are? >> that is the trillion dollar

question. central banking is the heart of the confidence game. that has done really well and done the trick. what is the gold price telling us? they are willing to accept higher inflation. this is a clear buying signal for gold. gold is up against every currency in the world. especially hard currencies like the swiss franc. and the u.s. dollar, still the world's reserve currency. the infallibility of the central bank put is increasingly being questioned. in gold, the trend is your friend. shery ahn: with that also being very fed carefully monitoring the coronavirus impact? the question always was as an

equity market investor, what could lead to a correction in equities? the economy is still humming along in the u.s. this coronavirus could be that catalyst. it is very difficult to quantify as an analyst or economist. quantifying the potential impact is difficult. it could be worse than people think. thank you so much for your input. we do have an update when it comes to the coronavirus and how it is spreading around the world. breaking news out of japan, local media saying they have found coronavirus in three charter plane passengers. japan and other countries like the u.s. have been evacuating their nationals from the epicenter of the outbreak, wuhan

city. three charter plane passengers have coronavirus. with thess our chat bank indonesia governor later. that starts later. you can watch the whole conversation on deterrence all. we willk on bloomberg, bring you special coverage of president trump's state of the union address. that is on tuesday starting at 9:00. this is bloomberg. ♪

shery ahn: here's a quick check of the latest headlines. a lousy start of the year for the japanese messaging service.

for marketing, outsourcing, and compensation. it racked up 100 million dollars of losses in the fourth quarter. luxury stocks had a brief rebound as analysts wash off the impact. the optimism did not last. with gains being erased by the close, there was certainly a little bit of confidence. about 90 positions are being eliminated. lyft will hire more staff this year.

it is heavily subsidizing costs. companies across sectors temporarily shutting down stores in china. we will bring you our interview with the starbucks ceo. this is bloomberg. ♪ good morning!

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>> there is likely to be some disruption to activity in china and possibly globally based on the spread of the virus. >> this really is a temporary issue. we are going to get through it. we are going to focus on it in a way that is true to our mission and values. >> our focus is meeting the demand for our respirators. we are ramping up production to full capacity. >> we see a stable situation. we have safety stocks for all of our key medicines. >> many supply chains are anchored in china. >> most of our suppliers are far away from the center of this outbreak. we feel very good with where we

are in the supply chain. globala is 15% of our revenue. >> as we think about the long-term growth opportunity, we remain optimistic. >> we are carefully monitoring the situation. shery: major voices weighing in on the impact of the coronavirus. we will hear more from starbucks ceo kevin johnson. let's get a quick check of the markets. we are seeing most markets in the red except for new zealand. >> japanese stocks under pressure. the lead butowing with a different story. samsung is the big hitter. 24% of the index and missing earnings. fourth-quarter net income. the stock under pressure. saying the forward demand for the memory chip business will be

under pressure for the first quarter. let's take a cross asset view and take a look at the commodity space. copper under pressure. copper is highly correlated with the chinese economy. we are seeing at the lowest level since september. that is when the trade concerns took over. the coronavirus taking over. industrial demand outlook. interested in seeing how long the commodity space can fall. they: let's get more how coronavirus will impact asian markets. david is in hong kong. we saw a big drop on the hunt saying in hong kong stocks. he could have been worse. -- it could have been worse. david: if that is the bar at which we measure whether or not things are good, things will always good. it was a substantial drop.

if you look at it in statistical averages, it is nothing you do not normally see everyday. every single stock on the hand sign and the mainland enterprises index closed lower. when you look at the move in the hsi, that is the encz mark. in -- the benchmark. wentsingle average, it through a 15 day moving average. the backdrop taking place right now is, we are not exactly seeing a hold of risk appetite. as the mention as far eco-story is concerned, we are looking ahead to export numbers out of hong kong for december. that should reflect the partial phase one trade deal. story, it hong kong is the casinos on the back of a

lot of these comments overnight. shery: the reason i say a could have been worse is we did get a rebound in u.s. markets. probably that offset the sentiment. at the same time, no rebound today. stocks struggled in the session. i am not looking forward to the open, especially for the airlines because we have seen a lot of flights being halted. david: that is correct. cathay pacific said they were cutting capacity due to mainland -- capacity to and from mainland china. they are also implementing tweaks and changes to in-flight services. a good example is, say you were in first or business class and flying from hong kong to different cities in china, you the trolley service.

they will not be giving out pillows and blankets to minimize people from passing it on to one another. dress warm if you are getting on some of those flights. you have united airlines, british airways, south korean airlines. a lot of them have either some -- have completely either suspended flight to and from mainland china if not reduced capacity. shery: what are we expecting on casino stocks and those sectors? david: we are getting day-to-day measures of how bad tourist flow to macau is being hit. you average things out over the last three or four days compared to the three or four days after the lunar new year last year.

throughg to take you some of the quote from sheldon adelson. he said walking into these casinos is like walking into an operating room. everyone is in masks. they are conducting temperature checks. for the people who were in as well. theire employees at casino business, which i think they get 60% of their business. they are encouraging employees to take unplayed -- to take unpaid leave. no one is in the casinos. you do not need that many dealers. shery: thank you for those costs -- for those thoughts. we will have more on the impact of the virus on the airline sector. us at 12:40oins

p.m. sydney time. starbucks is feeling the impact of the coronavirus, finishing trading down over 2% after saying that closing outlets in china will clearly affect result. ceo kevin johnson is telling us how starbucks is dealing with the virus. >> the coronavirus is something everyone in the market is having to another gate. it is a dynamic situation. it is one we have been focused on. on the healthcus and well-being of our starbucks partners. second is our relationship with local health officials and the government to support them as they contain the virus. through chinese new year, we typically have a number of stores closed anyway. these are stores in office buildings where no one is working. though stores have been closed. if you look at things like that hubei province where the city of

wuhan where this originated, the entire province is under a lot of restrictions. with landlords or government who might ask us to close certain stores near hospitals or universities or tourist locations. we are being thoughtful about how we do that. we have closed more than half of our stores at this point. we work closely to make sure we are making thoughtful decisions. for the stores that are open, we are ensuring the safety of our partners and customers. starbucks delivers in china. that is another vehicle for the stores who are open. this is a temporary issue. we are going to get through it. we are going to focus on this in a way that is true to our mission and values. we will navigate past this. it will be a temporary issue as we think about the long-term

growth opportunity in china. we remain optimistic. >> i you manage this very closely. are you gaining information that you need to make informed decisions? >> we have been in china over 20 years. strongainly have relationships with central and provincial local government. responsiblee a partner to them as they work hard to contain the virus. we get regular updates and communications. are doing achina fantastic job. we are in constant communications with them. day-to-day, we are making decisions. certainly the chinese new year was extended until february 2. that is another milestone. the government is encouraging people to work from home.

around february 10, we expect people to be more in office buildings. we are going to continue to do what we believe is right. it is day-to-day. shery: starbucks ceo kevin johnson speaking with david westin. let's get the first word headlines. >> china is racing to contain the virus and putting work continues round -- around-the-clock in will him. -- in wuhan. beijing has ordered extra medical supplies to help the medical flight. -- one seniore u.s. official has been fired. labor marketg the is strong and the economy continues to grow. it says consumption remains only moderate and investments and exports are week. -- are weak.

the european union has followed britain and stopped short of banning huawei from 5g. the u.s. lobbied hard for well way to be blocked from -- for a while way to be blocked from the next generation network. beijing had hinted at repercussions if huawei was kept out of the 5g rollout. the indicted associate of president trump's lawyer says he knows the president was aware of pressure on ukraine because of quote, i was working directly for him. the legal team argued trump cannot be impeached for taking actions that were motivated by a risk to boost his election chances. the white house is trying to delay publication of john bolton's new book on national security grounds. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. shery: coming up, we will break

down boeing's latest earnings and the outlook for airlines amid the coronavirus outbreak. this is bloomberg. ♪

>> how tough as it being in

banking today? >> a very exciting time. you really need to adapt rapidly. i think it is a great challenge. shery: this is bloomberg markets: asia. boeing reported its first annual loss since 1997 and revealed a new set of write-downs tied to the 737 max prices. some relief that the outlook was not -- let's bring in the managing director of equity research. was this price action justified? >> i think expectations heading into the quarter had become very low. david calhoun,ed the new ceo, this being his

first quarter would clearly air on the side of caution. i am still cautious on the stock. i can appreciate there was some relief for investors because there was an expectation they would get as much of the bad news out as possible. shery: should they have been a bit more conservative given we have no idea when the max will return to skies? ken: boeing stuck to the messaging of midyear 2020 forgetting reauthorization from u.s. regulators. . that is probably their best estimate. it has been almost a year now. they could have been more conservative. on the flipside, they are getting a little more optimistic around the time and feeling a little bit more about it. shery: what do you make of mr. calhoun's first earnings day? ken: he is clearly trying to

strike much more of a conciliatory tone. he is trying to come across as much more open and forthright with the information. clearly, he struck the cords very well on the conference call. there is only so much he can say. there is a lot of information they do not know yet. this up to the regulators. regulators.to the he accomplished what he had to do in terms of establishing credibility, better dialogue and the perception that he is going to be more open and transparent. he had a significant amount of the negative news out there. theink he ran the call and initial quarter earnings release well. shery: give us your look on moments finances at the given that sources are telling

bloomberg they are trying to tap $7 billion or so of a facility. confirm they were trying to get additional 12 billion. financially, they are in good shape. the only have 120 billion of net debt. they have the 787 and the 767 generating cash as well as the military services business. it is not a liquidity crunch. i think it points to the fact that 2020 a cash flow standpoint is going to be worse than 2019. i think one of the key messages 2020,is the recovery into 20 21, 2022 is going to be slower and more gradual than people expected. it is a requirement for the company to shore things up. when they start to deliver the max again, paying down the debt

will be a high priority. it is necessary near term. the big take away is the climb out of this is going to be a let more gradual than people expected. shery: the other big news for the industry has been the spread of the coronavirus outbreak. does this have any material impact for boeing especially if airlines suffer? ken: it certainly does on the short term. you tend to see a significant drop in traffic just like you are seeing right now with some of the major airlines announcing cancellations or cutbacks on their travel in and out of china. the historical pattern and even back to the sars epidemic is that traffic tends to rebound fairly quickly once we get confidence you are on the other side of the virus. it is a significant risk. it has the potential to be

fairly significant. i do not think people suspect it to be long term. shery: thank you so much for joining us today on the latest on boeing and the coronavirus. reportsp next, samsung fourth quarter net that misses estimates. how the fiscal year is looking for the company next. this is bloomberg. ♪

shery: this is bloomberg markets: asia. let's get a check of the latest business flash headlines. the management board at deutsche -- as thefering to lender is set to report a multi-billion loss. it is willing to give off the component but will still get other rewards totaling $15 million. the bank is cutting the overall bonus pool by 20% and discretionary pay by almost a third. general electric hit a 15 month high after saying money from manufacturing will likely rise this year. industrial free cash flow is projected to climb from 2.3 billion last year. wall street had been expecting half of that. the numberslp says

give him a lot of encouragement. despite topping expectations in the fourth quarter. two cents above what analysts had forecast. losses in tvhow subscribers and higher outlay on the media arm. the company sold 1.2 million subscribers last year as viewers switched to streaming services such as netflix and hulu. businessays it expects to see an overall improvement in 2020 after fourth quarter net income missed estimates and the company got to a week start -- a weak start. about globalall chip prices. the biggest determinant of samsung's bottom line. we have been talking about prices bottoming out. what happened?

peter: this long anticipated bottoming out has not really taken hold so far. samsung is best known for smartphones used by so many people. more important are the component it makes for other smartphone makers and companies in the consumer electronics business. the memory chip business historically has been the most important for the company. chip prices have fallen sharply over the past year. there had been hopes price declines were going to bottom out in prices would begin to recover particularly as companies invest in data centers and 5g networks. samsung's results were a surprise. it puts out preliminary numbers. these are the final numbers that include net income and divisional breakdowns. it missed these estimates. it is largely because the memory

chip prices did not recover as anticipated. they had some troubles in their display business. they make displays for smartphones mtv's. -- smartphones and tv's. lcd displays headphone when more than anticipated. it was kind of a one-two punch. shery: this gtv chart showing prices flat despite all of the talk of the bottoming out. let's talk about mobile devices. samsung is well known for their handsets. shipments have been following. -- have been falling. have rising prices helped? peter: they have. overall, the smartphone business after years of fast growth has been flattening out. samsung is the biggest producer of smartphones in the world, but it is facing this increasing competition from huawei and

continued competition from apple. what helped the benny this quarter is they have a few premium phones that have done well. they are also coming out with foldable's they anticipate are going to do well. huawei has these global challenges with the u.s. administration is trying to hit the company and stop its ability to compete in global markets. that may help samsung outside of china in particular as they have all of the bells and whistles you need with an android smartphone. shery: the trump economic advisor, larry kudlow, saying he would like to sue the u.k. cutting wobbler and bought -- cutting huawei involvement. much for theyou so latest on samsung and the

broader outlook for the industry. get a check on how markets are trading. we are seeing pressure on markets across asia. we are talking about the nikkei falling. 7/10 of 1%. this after reseller little bit of a rebound in the previous session. we had seen positive earnings in the u.s. giving markets in japan a boost. the japanese yen holding steady does help. falling again. what is interesting in south korea is we have january consumer confidence coming in at the highest level since june of 2018 after the trade deal before the news of the coronavirus spreading across the world. the asx 100 down as well. we are seeing sectors like consumer -- larger than expected trade

surplus boosting sentiment. futures under pressure. we are seeing the u.s. down. we fell short of a bearish reversal with semi conductors falling. picture.en a mixed again50 futures in china under pressure after a little bit of a bounce back in the previous session. the offshore yuan holding steady. coming up, bow, international transportation analyst joining us to discuss the impact on chinese airlines. we look ahead to the start of trade in hong kong. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?

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shery: it is 9:00 a.m. in beijing and singapore. come to bloomberg markets: asia. here are our top stories. the world health organization calls an emergency meeting as the coronavirus claims more victims. at least 170 people have died. authorities are struggling to contain the outbreak. airlines are suspending china flights to minimize the risk. tesla is in the fast lane after the bow. earnings beat expectations.