morning from dubai, it is bloomberg "daybreak: europe." nejra: from bloombergs headquarters in the city of london the world health organization calls a meeting of its emergency committee as the coronavirus death toll reaches 170. fed chair jay powell says they are monitoring the situation. the statement after holding rates steady, powell takes aim, a greater impetus to 52% target. in the u.k., bullish sterling tesla growsghted

and results, burning the naysayers. facebook, slower growth bites. in europe, deutsche bank and shell are the standout reports. ♪ manus: this is deutsche bank, and we focused on the fixed income commodities trading revenue. wall street had a roaring, rocking quarter. billion company fourth-quarter net loss, but the bank is 1.6 billion euros. when you go to some of the other numbers, this is the real risk in this stock.

13.6% in the fourth quarter. that might push away some of those arguments about an enforced capital raising. the expectation going into this, higher costs. if we look at higher numbers, the four-year corpbanca revenue is down. ratio,tioned the cet1 targeting 2020 ratio of 12.5%. we are seeing four-year adjusted cost, in line with target according to deutsche bank. the main number we are looking at is that fourth quarter revenue at an estimate of 1.1 coming up, we will speak to the .eutsche bank ceo

att interview right here have --. u.k. time we u.k. time. we have roche just hitting the tape. we are trying to assess the impact of a lot of companies of the spread of coronavirus. they miss for novartis. beatate, 19.96, that is a and that is the red headline. more details, cory ps targeted to grow broadly in line with sales. details on specific drug. manus: there is more breaking lines coming through, this time from nomura. quite a big beat for them in terms of net income in the third quarter. in -- aversus a loss loss of 92.2 8 billion a year ago.

that is a pretty stellar turnaround in the numbers of course, we are waiting for guidance. that is the big theme. 70,000 jobs europe, went across banking renumeration being slashed at deutsche bank as soon as we get those number we will bring that to you. i know that you have some more lines on roche coming through. quarter sales coming in at 1.2 4 billion swiss francs, estimate 1.5. that is a little bit of a mess. sales, 1.61er billion swiss francs. again, that coming in a little soft. sales overall expected to grow mid-single digit. has comeyear cory ps in with a beat. we will be spoken with the roche

ceo later on in programming, 7:00 a.m. london time. manus: the tliv blog is something i would consider all of our users to go to. but, the huge loss that i referenced is, entirely in the worlds of -- in the words of deutsche bank, driven on transformation effects. the exceptional items you are seeing in the numbers. if you dig into the core revenue, down 2% on a recorded basis. the debt trading part of the business, revenue up 31%, almost twice as much as the analysts had surveyed. this goes back to the core of what is your expertise, and is this a business that you still want to be part of we can debate . bernstein has a massive note. in china, down to 100,000 barrels. they are talking about an

exceptional moment for china demand. profound impact. in q1 and q2, recovery in q3. you see the ramifications of what one would say is a dovish tilt from the fed. scott maynard says 1.3% is theible in the eye of coronavirus storm. we can debate that any moment. copper, the longest losing streak on record, but you have to hand it, they say we are all a little bit to overrun and overdone on the downside. that is a debate for greater minds than i. nejra: taiwan back online in asia. the msci asia pacific index firmly in the red. the aussie coming under some pressure, one of the worst performers in g10.

the 10 year aussie yield dropping below 1%. what is interesting is that there are some signs that fx markets are not showing perhaps as much concern as other asset classes. risk reversals, yesterday they jumped the most in favor of buying that currency in five months. also, your-swiss looking like it may have found a short-term bottom according to some technicals. let's continue with the latest on coronavirus, which is of course sending the jitters through the market. 170. toll has risen to the world health organization has called a meeting over whether to declare the outbreak a global emergency. japan, andhe u.k., other countries have moved to evacuate citizens from the epicenter. manus: u.s. authorities will keep the first american evacuees on a military base for three days of tests, mullen --

monitored for 14 days after. jay powell saying the fed is very closely monitoring the impact. >> there is likely to be some disruption of activity in china and globally. >> this really is a temporary issue. we are going to get through it, focus on this in a way that is true to our mission and values. >> our priority right now is meeting the demand for our respirators. >> in terms of our supply chain, we are seeing a stable situation. anchoredtee chains are in china. thisst are far away from particular outbreak so we feel good of where we are in the supply chain. of our globallot revenue. >> when we think about the

long-term growth possibilities in china, we feel optimistic. manus: our chief north asia correspondent stephen engle is tracking the story from hong kong. these numbers are escalating. stephen: it is interesting to listen to all those voices who are actually here in asia. perhaps they do a lot of business here so they are optimistic about the long-term. isht now, everyone optimistic about the short term. -- 7711, 29% increase from yesterday. there is lots of concern. facemasks to be found. there is significant concern not only here but also in china. there have not been any reported

deaths outside of china but the concerns obviously as people to travel around the world, that that number will grow. nomura's economist saying the worst case scenario perhaps for the economy, we could see a similar dropper deceleration in china then we saw from the first of the second quarter in 2003. 11.1% 9.1%. int could be a 2% fall quarter on quarter growth in china. us for the hour, the head of u.k. rate strategy at ubs. need to what tomorrow was saying , also saying we could see rrr interest rate cuts and liquidity investments -- liquidity adjustments -- liquidity injections. what are you expecting in terms

of potential further stimulus if the outbreak gets worse? john: it is hard to say. clearly, there are downside risks for activity, clearly based around consumption, retail sales. it could spill over to the business side of the economy with investment. it goes, how contained it will be and so on. isst order of events, this about seeing with the loss of momentum is about. manus: we are grappling with reference points, aren't we? what we did, we put the equity market in context, sars and likewise, markets the year before this. we are coming into this with a 29% gain in the equity market.

sars, a drop of 17%. the impact of china on the world is different. china is like 70% of global gdp. -- 17% of global gdp. we are coming in, potential pandemic. clearly, there are similarities with previous episodes. there are lots of differences as well. there are urgent efforts to try and isolate the virus itself. the global economy is more integrated. , whatk it is fair to say was alluded to yesterday, one of the questions for hemant other central bankers around the world, to what extent does what is going on in china spread beyond their borders? oft is about the travel

people and the disease, but also what it does to economies. it is all downside risk. we are setting different levels, the amounts of accommodation available, it is putting markets and central banks on high alert. nejra: how bullish would you be on treasuries? lower,ow forecast is 1.25 for the end of this quarter. we have been bullish for a long time. more generally about downside risks and some worries we already had about other global economies. you look at the fed statement, obviously the situation in china is front and center, but there are other things going on. they downgraded their description of consumption from strong to moderate, they are worried that inflation is not going up to their target. manus: john, i am going to interrupt you. we are going to dig into your

fed views and a lot more depth in just a moment. we have to power ahead. wraith stays in the bloomberg house to discuss all things markets. you can stay up-to-date with the coronavirus on your terminal. ofll show you the globality this spread. you can see the figures, the cdc and the bloomberg news are as well, and how specific companies may be exposed to the areas that are affected. up next, it is about jerome powell. signaling a readiness to combat the global inflationary downdraft. nejra: carney's foreign -- final cut, he will chair his last policy meeting with traders and split on the possibility of a cut. we'll bring you live coverage of the rate decision at clock p.m. london time and carney's final

press conference at 12:30. this is bloomberg. ♪

nejra: this is bloomberg "daybreak: europe." manus: let's turn our attention to the fed and continue the conversation. the central bank left rates unchanged last nht. is intent on he evading the downward spiral in inflation that hounded other companies. it comes as the fed complete the review of its policy framework by the midyear. >> this is about reviewing our strategy tools and communications to ensure they are the best we can do to achieve those goals in this environment on a sustained basis. we continue these discussions at this meeting. i am very pleased with the process.

we now have a series of fomc meetings where we dug deeply into strategy tools and communications. i expect we will conclude the review and announce our conclusions around the middle of the year. right now, we are just at the point of coming together to put all that together. that was powell, a almost of takes on the news conference, his lack of satisfaction. my last guest said to me, actually, this is a subtle hint that not only will they want to try to get to 2%, but possibly compensation, meaning we have to start expanding our minds about what compensating for the bygone era really means. what would you interpret a compensation factor to be from the fed? what they are unhappy with to a degree is the

economy has been running so well in itself over the past year, yet inflation has been consistently below that 2%. they are trying to let the markets know, that is not good enough. they want to get the level back there sustainably, they want to increase market inflation expectations. 2%that rate does get back to , they will be less determined to chase it down. it does talk about a change in the reaction function. i did see what the market did with it. it was interesting, the breakevens did not relief in move. the market is relaxed about them taking that sort of attitude. as we were talking about before, there are some downside risks arguably proliferating, not just with the fed but other central banks do seem to be adopting a more proactive response, a willingness to act more rapidly to any downside risk and so on. average inflation

targeting becomes the modus operandi, you said that you are targeting the 10 year yield by the end of the first quarter, what you want to put any trades on in breakevens even though he did not see reaction yesterday? john: not really. it is sort of a reminder that even though central banks are trying to keep up with inflation targets, they are struggling to do that, even though they have a reasonablyu.s. robust situation. this is more of a move in nominal growth expectations and drift down in nominal yield. said your target by the end of this quarter was 1.25%. by the way, scott miner over at guggenheim was with you. my question to you, pricing in one rate cut by november. are we under pricing the

nearness? should we be pulling that further forward? john: yes, in a word. our forecast is aggressive compared to most. through still scope for them to do that. not remotely anticipated. we are expecting to see retail sales softened more. we expect to see jobless claims pickup significantly over the coming weeks. that would essentially start to reinforce what the fed chair was talking about yesterday about consumption moving from strong to moderate settings. slowdown,e signs of a they will stand ready to act inflationd this new cements that. nejra: the other big mention in the news conference wednesday

repo response. bill dudley has a column saying the fed's report response is not fueling the market. john: policy is obviously a stimulus. it is going to find a home somewhere. if you look at the u.s. stock market in the context of the economic recovery, it seems clear to us that some of that is about the way the fed has been using policy. they have been doing it for technical reasons as well. we saw the rate spike above the target range in september. that is why they are doing this, moving things around as well, and they are successfully keeping the rate within the band. i thing it is fair to say it is more monetary policy operation. turn our attention to the truck maker volvo. 9.2 2 billion, that is a beat on the estimate of 8.58 logan for the fourth quarter.

margins slip 8.8%, from 10%. that is the fourth quarter operating margin, just to be clear. the overall fourth quarter margin expands to 8.9% from 3.4%. that may rerate that stock, a proposition that is coming to the fore. we are going to talk about all things tech. you might be active on facebook, but how does it play out to the bottom line? this is bloomberg. ♪

nejra: this is bloomberg "daybreak: europe." manus: tesla delivered a second straight quarter of blowout earnings. with all the details, annmarie hordern is with us.

>> huge blowout. one of the huge things everyone was looking at, what will they say about 2020? they said they can comfortably exceed 500,000 units for delivery. elon musk must be elated. earlier this month, the stock was one of the most bet against american companies. short sellers a percentage of equity, dropping compared to the share price. gene munster says the shorts are just eroding. elon musk, as personal fortune just after yesterday grew north of $2 billion in just 60 minutes. thank you very much. talk about turnaround in your fortunes. we broke the deutsche bank numbers but the bank joins its wall street peers, writing that intain -- writing that surge

fixed income trading. we speak to the ceo. you don't want to miss that conversation. the top line is that ecb is starting to mitigate the impact of negative rates. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london. manus: we broke the top line for deutsche bank. the key lines are this -- fixed income trading jumped by more than 30% in the fourth quarter. that is similar to news you have from the likes of jp morgan along with the rest of wall street. the bank's core equity pier 1 ratio is 16 point 1%, ahead of expectation. our editors have been parsing through the top line, and this is where it gets interesting.

ecb starting to mitigate the effect of negative rates. that comes down to the remuneration, shifting dates and amounts. this is the cfo. obviously very alive to the considerations in our home market on these topics. look, compensation overall is one of the most important management processes that we run every year. that is for the whole company and also for the management board. we gave deep consideration to considerations and as a group. between recognizing the cost for shareholders and employees of the significant restructuring that we are undertaking and that are leading for the company but also attempting to align our interests with the long-term interests of shareholders. we think we struck the right balance both in the shareholder

environment and as responsible stewards of the company. >> walk me through how you get to this loss. >> our commentary is that really the loss this year after tax and pretax is entirely driven by restructuring costs, transformation effects, as we call them, and that is across a range of areas. it is more or less in line with what we guided the market back in july when we announced this restructuring. we announced we wanted to finance it from our own resources and we have demonstrated in the first two quarters that we were able to do that. ourave in effect decreased capital ratio. all this is on track against the goals and targets we have set

out. we hit every single target, every single milestone of this restructuring. what i think is important is the message of the underlying business performance, once you strip out all the noise created by the restructuring, it is actually quite positive, showing stability and revenues, growth and pretax profit in the core bank. we are pleased with that result. >> are you on track or are you ahead of schedule? i notice you are getting a lot of the headcount reduction out .f the way >> we are on track with every single metric or ahead. on the say ahead is capital side. as you say, personnel reduction's have been moving apace and with this step off into 2020, that underscores the confidence we have been communicating to the market and

the progress we are making in this restructuring, in the decisions we made strategically realign, reappoint the business, but also in the confidence we brought back to the company with our employees, with our clients, with capital markets. we see that in the securities in markets, but also in our everyday business and our engagement with our frontline. >> how are clients dealing with that interest-rate situation? the rateew is environment can finally be stable in europe for the foreseeable future, in part because the ecb will go through a strategic review that madame lagarde has announced. as it relates to our business and clients, of course, we in

the industry are adjusting to a sense that this rate environment will persist longer than anyone had previously thought, so those dialogues are ongoing, so we have to find ways to make our balance sheet more efficient to sort of cease the practice of absorbing the impact of negative rates on behalf of our clients. that is mostly focused in the corporate business where we have had very constructive dialogue with clients on how to manage their businesses, how to manage their use of our balance sheet in a more efficient, effective out ofcreate a win-win our relationships with our clients. on the retail side, it is mostly in a sort of wealth management area that we would be having that dialogue. again, i would say it is a constructive dialogue because what we are trying to do is help our clients were checked their

wealth. in today's world, if you are invested in deposits, over time, that is going to be wealth destructive. over time, that is productive. in the retail business, my colleagues in the front office and branches around the country, they are having that dialogue with our clients in germany. bank'sthat was deutsche cfo speaking to matt miller, who joins us live with more on the story. great to see you. will investors interpret the earnings as stable for deutsche bank, and if they do, will that be enough? matt: that is certainly what the bank wants to project here. stabilization and recovery maybe sooner than expected. christian saying he is optimistic for 2020. he thinks they are a little bit

ahead of schedule here. one of the important numbers to look at is the 13.6% capital that because that cushion they can use as they continue this transformation, this restructuring the bank through 2020, and it is more than expected, so they can use more than expected and get more than they would like to done. they say they already have 70% of restructuring costs behind them. interview.t great, candid responses, i thought. we've been talking about remunerations the past few days and one of the top lines of one of our editors, the mitigation from the ecb. talk to me about what you have thened on a remuneration on pain trade. matt: on the remuneration, they have cut illnesses across the board 20%. they are not going to pay out

the raises until april 1, and the executive board is taking kind of about half -- they are not taking the personal performance share of their bonus. still, you will see probably at least a little bit of a populist backlash in germany because they are posting their 50 year of net losses in a row. i think a combined 15 billion euros in losses over the last five years. nonetheless, it seems shareholders and owners of the bank are ok with this. shares are up 15% so far year to date and they could rise further this morning if investors take this news as positively. so you've got that, and as far as the tearing goes, that is starting to take effect. they actually have a number of measures in place to try to fight back against the negative rate environment, including charging commercial clients with

much bigger -- a fee to hold that money, including some other things that started to take effect in the fourth quarter and should be ready to fully take effect now. >> thank you so much. from thatt a lot more interview throughout programming. coronavirus.om the the world health organization is considering issuing a global alarm over the outbreak. president trump earlier also announcing a task force to look into the spread of infection. governments are tightening .nternational travel jerome powell paving the way for a possible shift to more dovish policy, signaling the central bank has pulled out all the stops to combat disinflation. the fomc also tweeted a statement hinting at greater resolve if inflation hits its target. >> we expect inflation to move closer to 2% over the next few

months as unusually low readings from early 2019 dropped our early calculation. nejra: the european parliament has approved prime minister boris johnson's brexit deal, clearing the way for the u.k. to leave the eu tomorrow, but officials in both sides say the fight over the divorce deal was the easy part. over the next 11 months, the u.k. and eu will argue over the terms of their future relationship. global news 24 hours a day on air and on quicktake powered by more than 2700 journalists and analysts in more than 120 countries. coming up, mark carney will meeting. last ever we will bring you live coverage of the rate decision at 12:00 p.m. london time and his final news conference at 12:30 right here on bloomberg tv, and we will discuss it next. lust, what is keeping traders up at night? is keeping traders

up at night? what do you need to know? we will discuss right here on bloomberg. ♪

this is bloomberg daybreak: europe. i'm nejra che pitch in london. manus: here is what you need to know for the day ahead. covers 650 professional traders. this is what keeps them up. >> we have in the markets trade concerns, central banks and beyond, but above all else, traders say the number one fear is the lack of liquidity and this is at least the second year in a row it has been the number one source of anxiety in the jp morgan survey. the questionnaire was conducted before the middle east tensions between the u.s. and iran flared

up and before the latest coronavirus outbreak, so those are noticeably absent from the list. still, liquidity worries earned nearly twice as much as the next biggest fear, and jp morgan itself has done a lot of research showing that market players are less capable of absorbing shocks than they have been in history. beyond that, traders said trade tensions will have the greatest market impact this year followed recession. of thank you very much. prepare for shocks. are we prepared for shocks? -- there at extreme levels ahead of one of the most uncertain u.k. industry decisions in years. the bank of england governor mark carney's final meeting has economists and traders split. about a 45%rs see

chance of a cut later. that's climbed as high as 70% in the weeks before the announcement before paring back in the last few days. goldman sachs, hsbc, and morgan stanley are among the banks calling for no change, while which bank, barclays, and netware predict a cut. data owingst survey to be enough to have a hold today? probably. we don't think they are going to cut yet, but there's a lot of speculation because of the speeches made earlier in the month. it might be that rather than any of the data we've seen that caused the likelihood of a cut to just leap. the big question is -- what do they know that we don't? are they seeing in forward-looking surveys a lack of a bounce back after the election, in which case they may very well go today, or are they

just preparing the ground for what lies ahead, talking about and more proactive approach in the same way arguably the fed is, as we were discussing earlier, and just warning that in due course over the balance of the year, if the data softens, they will act much more swiftly than people previously thought. data talked about the hard versus the soft eta. industrial production is the laggards, and the survey data you refer to is the bolstering case for waiting. how long does it take before that soft data, which we never used to pay as much

sterling rerate on a cbi survey in many years. are we overly grasping at straws? >> no, because it was in those speeches the nbc members, the governor in particular, confirmed they are going to act earlier and more aggressively than they otherwise would have done, so that tells you the sentiment surveys take on a greater importance. the truth is we do not know about this bounceback off of elections. maybe the bank of england is saying, you know, we are going to act on that softer data because by the time the hard data comes through, it is too late essentially. that's why there has been more importance put on them. as i said, we still think it is too early, but by the middle of the year, we do think they will be cutting rates. >> if you do expect a hold today, what kind of vote split are you expecting, first of all, and if the signal is dovish, will sterling still be able to remain as resilient? >> we know there are two active .oves already

it is possible that others move to that side if there is more of a split or a cut, it will be an increase in that side rather than the other. doves are not coming back on board any time soon. to your other point, the bottom line here is even if they don't cut, they are going to be dovish. they are telling us they are going to be more proactive, going to be aggressive, so even if they don't move -- obviously, january pricing and arguably that for march and may will be price a bit, but the press conference will be dovish. they will push market rates down, talk lower for lever and they are trying to cement low rates in the market to help ease monetary conditions and get the markets to do some of the work for them. manus: the other side of that is the fiscal boost we expect from the government. your view is that we need that.

on the your take away fiscal argument? >> one of the reasons the npc is talking about this is they acknowledge they do not have a lot of monetary ammunition. if you are going to get growth or inflation expectations to pick up, the government and their manifesto prior to their election said they are not going to change their spending outlook. to be a biggoing increase in investment spending. when you have investment spending at these levels, we would argue for an economy like the u.k., it makes absolute sense to be doing that, so we are expecting an increase next year. infrastructure spending does not short-term impact. certain parts of the u.k. clearly require that sort of stimulus. from the a dovish tilt

bank of england, what does sterling do? >> i think at this point, sterling is likely to stabilize a bit. we're talking about can we assure markets? there got this under control. in the second half of the year, to bring back the brexit situation, it is going to start causing serious alarm that we may not get that deal done by the end of the year and if we don't, does the government mean it when it says we are going to leave whatever happens at the end of 2020? it is one reason why the bank of england, we think, wants to get the response in early and make sure the economy can potentially ride out those coming storms. still seem to have this tory victory consolidated government rhetoric going through markets. can i ask what all of this means for inflation?

in the one-year inflation expectations in january, but given the narrative, you just have lines to meet. >> not really. what we are talking about here in terms of if it is monetary or you they demand is domestically generated. if sterling falls, we are likely to get inflation picking up, but sort of for the wrong reasons, it's not the sort of inflation you want to see. u.k. has a similar issue to other economies, that inflation is a bit to sort of slow for comfort at the moment, and if their efforts are successful, maybe those domestically generated pressures will pick up in due course. coming up, after six and

a half years, mark carney will have his final meeting as boe governor. we will bring you live coverage of that rate decision at 12:00 p.m. london time and his final move conference -- his final news conference at 12:30 p.m. right here on bloomberg tv. 10:51 in dubai. retiring after a decade at the helm. he is credited with turning .round a flagging business he will remain on executive vice chairman. microsoft quarterly sales beat estimates by more than $1 billion fueled by significant .emand from corporate customers that marks the software maker's 10th street quarter of double-digit sales growth.

faces more restrictive privacy regulations. revenue increased 25%, but expenses rose 24%. growth from facebook is limited by the number of internet users around the world. most already have an account on facebook, whatsapp, or instagram. and that is your bloomberg business flash. dig in on the oil story. we are down by 10% this month as coronavirus threatens demand. we give you your morning call on bloomberg. ♪

it's daybreak europe. nejra: between flight automotivens and

cuts, chinese oil demand is set to take a cut. >> 71% -- that's the amount bernstein strategists have cut their outlook for chinese oil demand, and taking some of the biggest hits are jet fuel and kerosene amid voluntary and mandated travel restrictions. they say in the first half, they think passenger travels will drop by 20%, so definitely a significant number here. that also means gasoline will take a hit as well, so not just jet fuel. all told, without any sort of opec intervention, which they said they might do, oil would fall to $50 a barrel. right now, wti certainly higher than that, as is crude. manus: that's a heck of a note from sanford bernstein. john, i'm going to be a bit sneaky. can i take that back to the u.k.? you talk about the trends in

sterling but that that will be offset by higher oil price consumption. that has changed by 10% in 20 days. john: as much as we are talking about the oil price, the impact from what is going on in china with coronavirus, we still have to wait and see. it is developing so rapidly. we do not know how the pace is going to extrapolate from here. we do not know how it is going to be addressed or resolved and we do not know what the impact will be on chinese or global demand or activity. however, as we were saying about other issues for, it seems all the risks are to the downside. that is why there are these downward revisions, and oil price expectations or global demand outlook, and i think that's why central banks and rates markets are reacting the way they are and stressing downside risks and their willingness to react rapidly to try to offset them. usra: great to have you with this hour. thank you so much.

coming up, we will have all the coverage of mark carney's final rate eating at the bank of england. coveragering you that at 12:00 p.m. london time. in the meantime, coronavirus still dominating markets, futures pointing lower. ♪

>> good morning. welcome to "bloomberg markets: european open." we are live from bloomberg headquarters. i'm anna edwards alongside matt miller in frankfurt. say time to reassess. asian stocks headed for the biggest drop since august andite signs from the fed upbeat earnings. the cash trade is just an hour away. ♪