>> welcome to " bloomberg markets: asia" and i'm paul ryan sydney. taylor riggs. we are counting down to the major market open. paul: asian stocks look set to tumble. the coronavirus stretching the nerves of investors. patient bracing for a selloff as

the quality's from the virus mount. we have one other major story. the u.s. election gets real. democrats face voters for the first time in des moines. taylor: paul, in the meantime i want to take a look at where the u.s. markets closed on friday. take a look at the s&p 500, off about 1.8%. 1%are now down to tenths of year to date. .ake a look at that 10 year we are down to 161. we are below the key psychological level of 150. and look again at the dollar yen here -- dollar-yen here. earlier we were seeing the strength in the yen, which is trends.sic safe haven take a look at crude. it is down 1%. we were off 5% week before.

a fourthlling off for straight week. we have gone from 53 to 63 in a matter of 60 days. yes, opec looking to perhaps bring forward at the next meeting and that impact is expected to be fairly profound with the nikkei futures off more and soul of more than 1%. -- zealand already trading off more than 2%. we are seeing the impact on currency markets as well. the aussie dollar at 66. looking against the kiwi there, closing beyond parity once again. we will be having that conversation again. the three and the 10 year are lows.ching

let's get over to su keenan. walking back promises of budget surplus after months of devastating bushfires and the thenavirus that the -- sap economy there. in the pre-election budget last year, the morrison campaign had vowed to deliver australia's first surplus in more than a decade. moving to india now, the second modi government budget disappointed investors who were hoping for a big bang stimulus. widerposes tax cuts and deficit targets but fails to or createfrastructure jobs. india was the world's fastest-growing economy for years ago but expansion has

slipped to the weakest in a decade. finally, in the u k, prime minister boris johnson is to say later monday he will abandon talks on the future relationship with the eu if he does not get what he wants. in his first speech since friday's brexit, johnson spelled out the trade talks. the eq and eu well do the potential tariffs on good. global newspaper hours a day on tv and quick takes by bloomberg, journalists and analysts. i'm su keenan. this is bloomberg. thanks -- taylor: thanks,su. this is as the coronavirus has shown no signs of slowing, our

china correspondent joins us from beijing. what's the latest in terms of the coronavirus outbreak? hashe number of infections climbed past 14000 and that is escalating. we are getting more evidence that people may be able to transmit the disease without any obvious signs of infection. you have the first known death outside of china. a 44-year-old man died in the philippines on saturday. of 9 millionrt people, seven kilometers from the center of the epidemic -- they do have about 600 confirmed cases, the highest number outside of will hand. -- wuhan. families can only send one person out of the house every two days.

over the weekend, they also had more airlines. blocking countries are .assengers also the department of homeland security is directing groups from china to one of seven international airports. of course, equity markets return for the first time since the lunar new year break. what are we expecting to see? selina: every market has had a chance to react to the coronavirus except for china and they want to make sure they call nerves and try to contain any signs of a selloff. they had ruled out a slew of targeted measures, so the central bank is providing $21

million of liquidity for the market. on saturday they also said they would increase lending to the whole economy. and then they would relent, and this is after last week, china's biggest bank at the center of the outbreak. but really these measures have been targeted to address the immediate market and economic concerns. they are expecting this to have a more protracted impact. people are not going out and spending. and that may be impacted by the extension of the lunar new year holiday. and they do not want investors to react irrationally and they are asking investors to look

rationally at the concerns here. paul: thank you. you can keep up-to-date on the coronavirus by running the on the virus bloomberg terminal. you can also see how specific companies may be exposed. thank you for joining us. , coming back from the lunar new year holiday, do you think we will see the national team in action? >> probably so. china does not want any big panic going on. i would guess some of the officials will be in the market buying to protect against a real down move. paul: we can use that as a

guide. it was down 5%. are we expecting something similar? china, this is the first day of trading since the epidemic began, so i think it's hard to know what is going to happen, but given where happened in the u.s. on friday, it may certainly be a big down day. paul: bob, given that we are in the u.s. and really curious -- taylor: bob, given that we are in the u.s. and really curious about any fallout from china, if you look at pmi, what indicators are you really looking at to see any economic impact? bob: i think you're exactly right. those are the key things to be looking at. but really, you have to look at what the viruses doing and how serious the situation is with the virus. you have tonumbers,

say it's a real tragedy, but no one can predict how the virus is going to go. all we can predict is the example of the sars virus in early 2000. so far the transmission rate was calculated at the end of last week at 2.6. every contagious person can in fact about 2.6 people on average. i think the confidence interval is one and a half to three and a half. that is about what the sars virus was. if you look at the mortality , -- with the coronavirus mortality rate with the coronavirus, it's a lot less than the sars virus. for the sars virus i think it was one fatality for every case. the coronavirus is more like two

were three in 100, so much less than that. the biggest impact will be in china. companies have been shut down , have ceased operations. they have quarantined something like 50 million or 60 million people to their homes your that is where the biggest impact is going to be secondarily, it will be countries where chinese tourists are a big feature. the united states, right now, it does not look like it is going to be a huge problem. , jobless claims are a weekly number. that will be an indicator. we are not seeing any reaction there. looking at the bloomberg terminal -- one province is

reporting over 1000 new infections. this does continue to grow. there's really iron outlooks for growth numbers. do you think that's reasonable? do think we will see a snap back when it all ends? bob: again, i think we can go back to the sars problem. at that time, from the first quarter, i think it was two percentage points from what it would have been otherwise. there was a huge snapback in the second quarter. senses much worse in the that there are a lot more cases that infections. i think two points down in is probably in optimistic estimate. it could be more than that. bob, curious, do you see further yuan weakness here? i'm sorry, i did not get the question?

taylor: can you assume you one weakness, dollar strength from weakness,t -- yuan dollar strength from here on out? bob: i don't think so. the first strengthening, as someone said a few minutes ago yen.n the japanese i think that that is also a safe haven play. i think the dollar could strengthen somewhat. but when the epidemic reaches its peak and dies down, we think the dollar will weekend. all right, bob is staying with us. we will have more on this later. later, iowa is set to go caucusing. we are going live to des moines for a temperature check ahead of the big day. this is bloomberg. .

paul: we have welcome rain around sydney today. still burning. equity prices. futures are pointing down by 1.7%. i am paul allen in sydney. and i'm taylor riggs here in san francisco, paul. all right. we have the number two official at the federal reserve saying it's too early to tell how the coronavirus will hit the u.s. economy. for more on this, we are joined by economics and policy editor kathleen hays. kathleen, we were talking to the vice chair does you were talking to the vice chair richard clarida. what did he have to say about

all this? halfling: actually, our colleague was. and itell mentioned this made quite a splash around the world. basically, rich clarida is like everybody else. he is watching the virus. he says it's too early to say. let's listen. >> it is a wildcard. wouldk even the experts confirm that. we are looking at how it translates into the outlook for chinese growth, global growth. monitoring closely, but it is too soon to tell. and that remark, rich clarida echoed what jay powell said. we know it will impact china. then we will watch the rest of the world. we don't know what is going to happen yet. jay powell said we need to see a material change to move policy.

rich clarida echoed him in this. he does not see any need to even think about moving policy yet. the u.s. economy is in a good place. solid growth. inflation is stable. that was the right call. we think the policy is appropriate to look for continuation. and very notably -- this was a factor in -- on the richts in the u.s., clarida was asked about this. he said, i don't think this has anything to do with the change in outlook. it is foreign money looking for a safe place with all of this uncertainty. he was also upbeat on the economy after we saw the weakening in u.s. consumer spending on thursday and at a time when we know the chinese

economy is exponentially bigger than it was in 2003. in other words, it has the potential to have a much bigger impact on the global economy and that does include the u.s. taylor: thanks to global economics and policy editor kathleen hays. our guest is bob bauer. bob, i wonder if you can fold and some of your analysis to what kathleen was talking about, that they came out and said honestly, it is to soon to tell. how does this change your economic projections in the first half of this year? bob: it is certainly a negative. i think what the fed officials were saying is, in some sense, the corona -- coronavirus is an

event. peak and in,oes it's not a trend. .t will be a one-time hit as you mentioned, china is a much bigger part of the economy. if it takes one or two points off the first quarter that will probably be enough to hurt global growth. it's to soon to know, as everyone has said, but anger-term this is certainly one-time hit. there will be a significant snapback. in china, the biggest problem will likely be retail sales, some of which will come back and it hit during the lunar holiday when production is pretty well shut down, so it's possible that

will reduce the hit a little bit. this havew long does to go on for you to revise your u.s. economic projections? it would have to go on for showa lackths and of peaking in a number of cases for what a while. if this were to go into march, sure, we would see longer-term ramifications. i guess maybe one long-term ramification is it may give supply chains in china, who were considering moving them another reason to consider their supply chains. i think it can go into march. inwe have not seen a peak cases, we can revise down.

you would have expected the fed would do nothing. the yield curve inverting again. we have discussed the ongoing lack of inflation. is the fed back in play in 2020? not be surprised. it's a really could be. we have been saying the fed would do nothing in 2020. the way it looks right now, and with the yield curve in parted, even though clarida mentioned it was not going to have anything to do with the u.s. -- and with inflation really low, i think is what possible the fed could move one more time down. australia we are already seeing hits from the virus in terms of tourism, the some --n the tour is

tourism sector, students as well. how will this affect the consumer? bob: it certainly could. confidence is very high. job growth is excellent. wage growth has been accelerating. aght now, there really isn't problem with the consumer. they have been kind of frugal in some sense. if you look at the savings rate in the united states, the household savings rate has edged. usually the -- has edged up. usually the savings rate comes down as consumers get euphoric. that's not true this time. savings rates are continuing to rise. it's important for consumption. look here,, as we some of the airlines -- united, limiting their travel to china, some of the flights from china. how does that impact the major

corporations here with the u.s. in china? -- and china? certainly be a problem and we will see that in the forecast in the first corner fourth-quarter earnings. we could see ideas then from the ceo's suggesting there may be problems in the first quarter. , think it can be a problem especially for global companies you mentioned. paul: all right, principal chief bauer.economist bob we have plenty more to come. stay with us. this is bloomberg. ♪

paul: let's get a quick check on the latest business flash headlines. gaming revenue in macau fell for the second consecutive month as china placed travel restrictions.

it's down 11% from a year earlier. year.has had a dismal there's a crackdown against saudi aramco. a slump in crude prices. the oil giant fell seven gems, theing below 34 reels for first time since his debut in riyadh. a new report says a potentially dangerous wiring in needoeing 737 max does not to be rerouted. that could remove one more airliner' is

returned to the skies. regulators want changes to reduce the possibility of a short circuit. the faa is expected to issue a ruling. fromr: coming up, results the iowa caucus will likely give the person dictation of who the candidate will be. good morning!

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paul: this is bloomberg markets. i am paul allen in sydney. taylor: i am taylor riggs. i want to get a check on the first word news with su keenan. su: we are going to begin with china which has unveiled a string of measures to aid companies battered by the coronavirus outbreak. it is pledging support to financial markets when they reopened today after an extended virus induced new year's break. the pboc will supply more than $21 billion of liquidity in the markets to prevent a selloff and banks are being told to lend more and not call in loans ineffective regions.

-- in affected regions. thousands of hong kong medical workers are beginning a five-day strike after the government allsed demands to shut down entry points from china. 99% of union members voted in favor of the strike. they say it is a lack of government measures to protect hong kong and its medical workers from the virus. far 15s so have -- so confirmed cases in hong kong. and anticorruption agents in malaysia say they are checking claims around the air asia group with details in a record $400 billion settlement at airbus. documents say airbus gave 4 -- $50 million to a sports team owned by air asia executives after a report for -- global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries.

i am su keenan. this is bloomberg. paul: thank you for that. let's get a check of the asian markets heading towards the open. looks like it is going to be a fairly brutal day. we have nikkei futures pointing lower by more than 2%. in australia expecting declines of 1.7%. the kospi futures off more than 1%. new zealand is trading and recovering early losses but still weaker by almost 2%. let's get more on what we should be watching as trading gets underway. adam haigh is with us and also david ingles. we have chinese markets set to open after the extended lunar new year holiday. i want to start with you. the $20 billion reverse of repo agreements is not just a band-aid. number,nusually large

which was just one half of the other, essentially initial show of force with chinese authorities. the other part of that being 30 measures plus a signal of more forceful measures would be ensure thatto financial markets remain stable and to take some of the sting off of what will likely be a massive dislocation when things reopen in china. initial indications and if anyone guesses how badly markets will get, you have to look at the spread between the offshore currency and the unsure currency. the on sure was not treating wildly off shore adjusted. not trading while the offshore adjusted. we will likely see a severe move

when things reopen in a couple of hours. taylor: what has been the ripple effect on oil? we have watched it fall in a manner of 30 days. what would be the impact on oil and other em market? same. story remains the demand shock pressure still remains. it has abated somewhat but it hasn't gone far enough to stem will presumably continue in oil markets. in emerging markets and especially in emerging-market fx, we have had a lot of adjustment already. the chinese onshore currency gets going after the close, but the offshore, the yuan has traded already and a lot of fx has built into the price. a bit of downward pressure remains, but you can see how

much of a move you are already seeing. a lot of that started already to be inflicted in the prices. the question with every incremental data point including the first confirmed fertility outside of -- fatality outside of china, in the philippines, as investors digest the latest information, how much more they want to add to the risk off positions where they have already been paring back over the last week or 10 days. paul: we did have a story before the break about what a horrible year it has been for macau. gaming stocks, that sector being hit hard by the virus. where else? earliero address your point on macau, during the spring festival, a couple of days right after chinese new year, visitors from the mainland were down 80%. you have that and the data for january showing a drop yet

again. what -- adams point, point, markets are looking at what the prolonged impact will be. everything from philippines to malaysian markets, people will start to realize how important china is as a source of tourists, as a source of consumption, as a source of deals. and all of that is being put on hold right now. you understand i will bring up hong kong gdp which is due out this afternoon for the fourth quarter, how the story in hong kong was last year, the problem was too many people on the streets. and chances are for this order it will be too few people, going back to the chinese story. taylor: outside the coronavirus, what other big events are you watching? adam: it is hard for markets to focus on anything else but the

main topic. the political scene in the u.s. is shifting with the iowa caucuses which kind of brings back into the debate around what trajectory we are going to have for the democratic nomination, who is going to be going head-to-head with trump come november for the election. that allows focus to move into another area away from some of this coronavirus focus. as we start the week here, it is about whether the chinese authorities are doing enough to stabilize markets. that is what we are going to see. has the central bank done enough to get things stable? there has been a lot of question about the response to the crisis. that is what we will see playing out. taylor: thank you to adam haigh in sydney and david ingles. [please stand by]

>> we are here in downtown des moines, where we will have the first caucuses coming up, 24 hours away now. the first test for the democratic candidates for president. we are joined by our regular political commentators throughout the year, rick davis, who was in charge of john mccain's political campaign and then a political science professor. why do we care so much about iowa? does a few things. it is the first time voters on the democratic cybele tell us which way -- democratic side will tell us which way they are leaving. is it more socialist like bernie sanders or more moderate with ? e biden or amy klobuchar

we will get a sense of that. iowa helps us win oh down the field -- winnow down the field. if somebody doesn't meet expectations, they won't stay in past super tuesday. david: so you had your fair share of the iowa, south carolina, is a difficult for democrats and republicans -- they say it is more important for a democrat to come out of iowa strong. >> they decide who the nomination will be. you could not be the nominee of the democratic party without winning in iowa or new hampshire. this week between tomorrow and the iowa boxes and new hampshire primary -- iowa caucuses in new hampshire next week usually shows with the presumptive nominee might need. i am not sure with so many candidates in the top tier, that that will hold. david: we do this every four years, but we don't usually have

this many candidates who are really in the running. >> arguably five candidates could take away delegates from iowa. the world will be looking at whether or not -- whether a person will be number one. well in a ticket to do new hampshire. that means third-place or better. david: joe biden has been the preemptive front runner for much of the race. i'm not sure now that is happening. what is the momentum? >> nationally joe biden has been ahead of the entire race but in iowa he has not been. the big question, do iowans, when they go to caucus, do they want someone who is electable and can beat donald trump on election day, or they want to go someone more like bernie sanders? i think we are going to see, does joe biden have the energy and enthusiasm behind him? there is a lot of questions for

the biden campaign and how well organized they are in iowa. can they at least come in second if not maybe third? david: he was the vice president of the united states, he has a distinguished record and here we can a socialist -- how bernie sanders be doing this well? >> no one will wrap it up before the first vote is taken. joe biden has had his issues. he came out a little slow and wasn't able to build a good grassroots organization in iowa. in addition to popularity, organization is an important aspect. there are issues with democratic party in general. when you take polls, a majority of voters who side with socialism think it is better than capitalism. he may reflect a good portion of the democratic party. david: we have pete buttigieg

who is seen as a moderate, a former mayor, and we have elizabeth warren, more progressive. >> i think pete buttigieg has been an exciting story. he is young, the first openly thepotential nominee of democratic party. he has come out of nowhere as a small-town mayor and made a name . but he and amy klobuchar have a lot at stake in this state. they have got to do well. mayor pete has put a lot of energy here. elizabeth wharton is sort of between the stretch for bernie sanders and joe biden. can she carve her way down that lane? i am not sure she will be able to, though the polls have her third and fourth and second. she is someone to watch. david: in the next couple of days we will know more. >> we will know a lot more in 24

hours and 48 hours. david: where do we go next? >> to new hampshire. a small state where candidates have had to do retail politics. it is not driven by media and the internet. this is an area where we will see a new test. that is popularity and turnout for grassroots organizing. we will see whether or not the winner of iowa can maintain their momentum going into new hampshire which is worth a couple of percentage points and capture a double win. if not it opens the process to later primaries. david: even going beyond south carolina to super tuesday? >> if we put these four states we only have a quarter of the delegates given away on super tuesday. as much media attention as they get in terms of the number of delegates, it is a small number. one unusual thing, going from

iowa to new hampshire, other things are going on like the state of the union that will take a lot of the energy from whoever does well in iowa. >> a vote on impeachment. >> by the way. not a busy week at all. with us throughout the entire election cycle. in addition to covering the primaries, we are having a super bowl party. i am in san francisco, having my own party for the 49ers. thank you to david westin and our contributors. cannot miss our special coverage of the iowa caucus at 10:00 p.m. in new york and tuesday. we will cover the state of the union address followed by the democratic response. that kicks off in a clock p.m. in new york. -- 9:00 p.m. in new york.

demand said to over these 20% concerns on the coronavirus. china is the largest oil importer. according to experts interviewed by bloomberg, chinese oil is defining 20%. we have seen brent crude falling 10% in the past 10 days. that is since january 20. opec considering whether to bring forward a scheduled 6, nowg for march 5 or looking at dates in february but no decision yet whether opec will meet early to address the sinking oil price. still to come, the earnings season kicks off this week. we will assess the likely impact from the bushfires and china's coronavirus. this is bloomberg. ♪ ♪

paul: we are counting down to the market open in sydney. futures pointing substantially weaker by more than 1.7%. it will be an interesting day on equities. here in australia, earnings season kicks off this week. any good news could be drowned out by the damage from both bushfires and the global health emergency from china. let's bring in our next guest, joining us in sydney. capital markets head of australia -- what is your outlook for earnings season in the light of all of these macro pressures? >> it seems like we will see a situation like last earnings season where the macro really overruled anything with corporate earnings.

we are going into a situation where we have the coronavirus and uncertainty around that which will be problematic. and the potential impact from gdp of the bushfires. paul: we got to start somewhere. there are so many pressures to talk about. it will be a really rough ride for financials. half $1 billion, 2800 claims. what impact will that have? karen: it will be negative for earnings. will be problematic is the fy 20 guidance. there was uncertainty and with the impact of the bushfires in corona virus is the uncertainty it creates for the markets. when you look at a market used to fairly routine valuation, -- taylor: we are trying to avoid earnings recession in the u.s., which is categorized by two negative quarters of your on your negative growth.

-- year on your negative growth. are you looking at 24? karen: we are going to the first half of 20 results in february. we are looking for earnings to be muted. we are seeing a situation where earnings are marginally up on last year. there is no exciting earnings story to be had in australia this reporting season. taylor: we were talking about heightened valuations coming in on earnings season. it means there is no room for error. it isf you are mediocre, not good enough to justify the heightened valuations. moving into valuation in australia. karen: we are sitting in that problem where we see a market trading at peak. it is 11 year bull run especially of the market is at a high level wealth records we haven't seen ever -- with records we have not seen ever.

a lot of the companies are so high, you have to deliver earnings not just in line with expectations but make positive outlook statements about the next six months to maintain. paul: let's talk about those statements. guidance can't be very good. karen: it is tricky for ceo's to give any real clarity around guidance. a lot of it will be sector specific with the consumer space, the chinese demand story. if you are in that environment, you would be loath to -- 7000 we got the asx above points at the moment and your target is about that. but in this environment, could that be optimistic? karen: the problem we have is beside the near term negative use -- negative news, which is full of uncertainty is of the

bushfires, the equity markets retain key appeal because the rates are so low outside of that. you have's offset. if we can get through this uncertainty, you could see the year end positively. taylor: you still like the tech sector. karen: you see total addressable markets are still large. valuations continue to be risky, but they are getting incredible growth. the other industrials companies, the growth numbers are huge. some of them have yet to make a profit. seems likeat are, it zero for instance, fantastic growth opportunities. there is a shift in the way people are doing business and taking advantage to the shift to the clouds for accounting. it has endless growth at the moment. that is why we prefer this over the old-school fx.

we are facing the iowa caucuses and later on get to the political elections in november. how does this affect equities? karen: this year the cycle will be a key independent of why the australian market has a good year. we are aware trump sees the s&p 500 as his key market for how he is going. i think we end up doing ok because it will provide a degree of protection in the first half of this year. paul: going to talk about the rba having its first meeting of 2020 tomorrow, the feeling for a dovish hold. is the rba going to be a big player in terms of where equities go? karen: i think you could start talking about measures like qe, and we have pushed back our first rate move, because the

recent labor data has been quite strong. the rba is always important. paul: you can watch us live and you can see our past interviews as well on the interactive tv function, tv go. you can dive into the securities or bloomberg functions we talk about and become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv go. this is bloomberg. ♪

paul: -- taylor: let's get a check of business flash headlines. india could sell 10% of its largest life insurer in the second half of next financial year. this is being compared to the mammoth operating by -- offering high aramco. this could bring greater

transparency and responsibility and will deepen the equity markets. the government hopes to raise $30 billion through the sale. new zealand's sky network is expanding its streaming service after buying lightbox from spark. they plan to offer it as a separate entity at first but then will merge with neon. has about 30,000 active users in the past month. taylor: we work has named a new ceo. he was previously the head of brookfield property partners retail group. he will replace the co-ceo's who served as the company's leader after another one step down after the failed attempt to take we work public. there is plenty more ahead in the next hour of bloomberg markets. person joins us from

singapore. she says the coronavirus contagion will spread further but is unlikely to be as bad as sars. paul: more bloomberg markets of ahead including the open on aussie equity markets. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?

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welcome to bloomberg markets asia. i am paul said -- paul allen in sydney. taylor: i am taylor riggs in san francisco. ♪ taylor: our top stories, asian stocks set for a tumble as china returns from the extended new year break. the coronavirus is stretching the nerves. blazing pledges -- beijing pledges support -- the u.s. could impose a flight limits on passengers from china.

and the u.s. election getting real as democrats face voters for the first time. we will have the latest live from des moines. paul: australian markets have just come online. we had the staggered open, already setting the tone, off white 5% and not a single stock trading in positive territory. that is unusual but also may change as more stocks come online. new zealand has been trading for a couple of hours, paring back losses but still off a shade under 2%. nikkei futures retaining ground. it is in positive territory. back toi want to get our top story about china pledging to support financial ankets as they returned from extended new year break with the virus showing no signs of slowing. selina wang joins us. what is the latest on the

ground? selina: the total number of infections has surpassed 14,000 with 300 deaths. we have the first known case outside of china of a death. wuhan to traveled from the philippines. you also have the first quarantine of a center outside of hubei province, in an eastern port. this province have the second-most confirmed cases outside of hubei, and families are told only one person can leave the house every two days to shop for necessities. you have airlines in asia, the middle east stopping service to mainland china and countries blocking arrivals from china. you have the u.s. department of homeland security saying u.s. flights carrying citizens from china will be redirected to one of seven international airports

to be screened for possible cases of coronavirus. paul: chinese equity targets returning after the long lunar new year break. give us a sense of what we can expect. selina: it is expected to be an ugly start. the markets have had a chance to react and now we are waiting for china in a matter of hours. we see the market bracing for a major selloff. the government is rolling out a variety of measures to try and contain the size. over the weekend they announced several targeted measures including $21 billion to the money markets to ensure there is ample liquidity. saturday the pboc said they would increase lending. threaded billion yen, and this follows the announcementwhere china's

biggest banks -- announcement where china's biggest banks said they would support the province. thee are aimed at targeting immediate impact, and economists are expecting a more protracted -- because of the extended lunar new year holiday. sources have told bloomberg that china's oil demand has dropped by about 3 million barrels a day or about 20% of total consumption. this drop is the largest demand shock. taylor: thank you for joining us. be sure to stay up dated -- stay updated by running the graph map of iris go -- virus go.

for more on the impact, we are -- ed by mizuho bank's what i liked the most is you say the wuhan virus echoed but is not a rerun of sars. how are you modeling your economics if we are echoing but not following in lockstep with sars? >> the caveat is i am not a medical expert. the connection will not be quite good. but it will be a lot more infectious, even though the vitality is less than sars. we expect the spread of the virus could be quicker. proliferation is a problem. we compound that without chinese tourism has exploded since sars. international travel has gone up tenfold since sars. -- we take experience

from before that the immediate impact and most lasting came through in tourism, logistics and construction sectors. we put this into the model for asian data, how much of these sectors constitute in asia and how much chinese relies on these. hard hitcould be quite by the tourism sector and philippines now moves up a lot more exposed than it was during sars. a lot of previous experience where we saw in the past thai stocks were barely dented during sars, aussie dollar was not impacted, philippines was not impacted, we need to change our views and possibly for a longer burn impact on the economy as well. taking a look at commodities and currencies, you have crude is off .7%, rent off

.9% -- rent -- brent now off .9%. chinese demand has dropped 20% given the coronavirus. what are your expectations of demand in china and how the virus might affect global growth? we try toe one thing bear in the back of our mind, and i don't want to adhere to this, but what had happened with sars was after the containment phase came through and we saw the number of cases receiving and recovery coming through, there was pent up demand that came up. that is one sector we continue to look at. for the next six months we are looking at rather deep shock. with a high pass through to the rest of asia. something to the extent of 20% in terms of the broader sectors, looking across tourism, and we

also bear in mind a lot of the new orders with infantry holdings, that inventory holdings, that has an effect something people have been bracing for an those are the indicators that should be coming through. but we are still in the outbreak stage so it is difficult to determine how much worse it gets. what is the implication of this for growth in china? we have had a number of analysts putting a handle on chinese growth which is something we haven't considered possible for quite some time. what is the knock on effect for the global economy? vishnu: this one is a tricky one. expecting a four handle is overdone.

the backstop is in place and activity in the health-care sector and supporting sectors of the economy could limit the downside. we are seeing something five to 5.5% growth for the first half of this year with a bit of recovery with pent-up demand in the second half leading full-year growth around 5.7%. the economies could also feel a big brunt from it. the continual gdp pathway, but we have seen from the affect is that over three quarters to four quarters, the output of an economies could be hit between 3% to 8% of where gdp would otherwise have ended up. on regulated basis, the -- accumulated basis, the output levels would suffer 3% to 8%. if the effect was greater there could be a 10% effect. year on year will be distorted by a weaker base.

paul: we had pmi numbers out and they were not as bad, but it didn't take into account the survey period, perhaps not covering the period where the virus broke out. looking at these tie she numbers -- taishin numbers, what about that? vishnu: it shows going back into contraction territory. the timing suggests a fairly long time frame. some could carry that them -- downside, some may not. this would reflect not the china impact but also broader spillover impact on market demand and i think this one, the ofact could be to the tune

three or four times the headlines and that is where another weakness and worries like. -- lie. paul: he will be staying with us. we will have more on the coronavirus ahead with stephen morrison. a.m.is going to be a 10:30 if you are watching from sydney. let's get you across breaking news out of iowa where the democratic caucus is taking place. whiche an amazon poll shows bernie sanders leading with 28% support, joe biden 21%, pete buttigieg 15%. sanders leading the field according to that poll as the caucuses get underway. checking in on first word news. thousands of hong kong medical workers are beginning a five-day strike later monday

after the government refused demands to shut down all entry points from china. 99% of union members voted in favor of this strike to protest what it says is a lack of vernment measures to protect hong kong and is medical workers from the coronavirus -- its medical workers from the coronavirus. there are 15 cases in hong kong. in australia the company is -- country is set to keep on interest rates on hold as policy makers weigh the risks for further economic slowdown in china. 22 of 25 economists expect to see rates stay the same. the bank is still searching for clear indicators stimulus measures are encouraging household spending. australia is walking back promises to return the budget surplus as months of devastating bushfires in the widening coronavirus crisis fastens the

economy. government's the control will have an impact. the morrison campaign vowed to deliver the first surplus in more than a decade. the second mode i government budget has disappointed investors who were hoping for stimulus to help the economy. it proposes tax cuts and wider deficit targets but fails to fix the struggling financial sector and improve infrastructure or create jobs. india was the fastest-growing economy three years ago, but expansion has slid to its weakest in a decade. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. taylor: i want to get a quick

check on the oil markets. crude extending losses, off 1.2%. brewed -- brent is off .25%. oil heading for four straight weeks of losses. stay with us because we will go to the mizuho bank head of economics and strategy. he will be giving us his thoughts on central bank action and an interview from the vice chair richard clarida. this is bloomberg. ♪ ♪

taylor: federal reserve vice chairman richard clarida says it is too early to determine whether the coronavirus outbreak will affect u.s. economy, which he says is in a good place. he spoke to david westin on friday in an exclusive interview. >> we want to acknowledge and i acknowledge the suffering and really tragedy affected -- for

those afflicted with this. it is oil guard and the experts confirm it is too soon to tell. we are looking at how it translates into the outlook for chinese growth and the global growth and the u.s. monitoring but it is too soon to tell. david: often gdp is backward looking and too late. by time you had to have acted earlier. what about yield curve? we have three-month, 10 year inverted and it has people nervous. move has been pretty recent. at the time of the december meeting the yield curve was far from inverted. my original interpretation was it has been driven not so much bytes the u.s. economy but globally when there is uncertainty, money flows in, it lowers yields. i am not concerned about the inverted yield curve because it is not reflecting the u.s. outlook. how do you avoid the risk

of being too late? whatever it means, it can't the good. probably not good for worldwide growth. >> that is the art of monetary 19 we made in fact i moves to provide downward adjustment to policy to take out insurance and get ahead of the curve. powell has indicated they can act in anticipation to offset shocks, but it is too soon to tell. we will take it meeting by meeting. slowdown in1.25% growth, it won't change the picture, but it is challenging and we will stay on top of it. david: you spent most of your career as an academic. now you are inside the decision-making. me andery important to

defendant in the political process. but the decisions you make in washington have ramifications for people's jobs and incomes. how do you take into account the likely affect what you are doing without becoming part of the political process? welet me remind folks that have one instrument of monetary policy which is we can raise or lower interest rates. we recognize it is a big economy , 300 million people, 50 states. we are not running individual policies put the unemployment is low -- but on a claimant is low and prices are stable, that tends to -- unemployment is low and stable prices, we have across the country we are doing most of the listening and we have to that. not just talking to bankers and academics but folks from labor markets and community groups. what we hear consistently is when the economy is healthy and the labor market is booming, it does lift many votes.

getting a job where we are getting a raise is important. we are honest enough to know we can't set individual policy state-by-state but there are gains to keeping the economy in a good place. paul: richard clarida there with david westin on friday. monetary policy decisions are expected in asia this week. we have got the r.b.i. meeting in australia, reserve bank as well, thailand and the philippines on the slate. we will watch out for commentary on how impacts with the coronavirus is affecting thinking. joining us his the mizuho head of economics and strategy. when you look down the list of central bank meetings, which ones are most likely to move? vishnu: we have a non-consensus view that the bank of thailand

will cut rates. that is one of the banks we think will move this week, the other being the philippine central bank. it is a consensus be of. the have got the space to cut and have been flagging for a while that they will. inflation is contained in it has got downside risks to the economy coming from the virus on top of weaker growth. i think they will cut. .t., they willo consider tourism and tourism from china plays a big part in the domestic economy so they would not want to accentuate domestic fragility. also the fiscal stimulus that was anticipated that has been held back now. the fact there will be no fiscal boost in the virus is impacting them on the wrong footing i think suggests there is a strong case to fund at this juncture.

these are the two we anticipate. a dovish pause rather than a firm hold. and for r.b.i., we think there is a desire to ease further given the economy is in a soft patch and confidence is low. given the 135 basis points of last year and inflation above 7%, the r.b.i. will weigh off macroeconomic risks and hold its process for now. they are hoping inflation will come off in the next few months. they will be looking for opportunity to ease again but not yet. paul: let's talk about india. you say a desire to ease. perhaps there was a desire for fiscal stimulus in the budget but the government between a rock and a hard place. vishnu: that is our view. certainly the government could have tried to put in a big

stimulus but it would have come at a big cost. we have already had a huge fiscal slippage for a year ending march, and i think the government needed to show some sort of fiscal consolidation plans, not immediate ones, so as not to rattle markets. bear in mind, one of the things the r.b.i. was trying to do was operation twist, bringing deficits lower. but if they got out of hand, it intereste proven the rates low. some of the middle income tax so bad. through are not we don't expect a big boost that is going to come from this idget either so that is where think the government stands in trying to put through the adequate tricks but i don't have the financing to do so. at most --

taylor: who is most at risk of a china slowdown? vishnu: i think in terms of the slowdown impacting directly china channels, our sense is we are going to put the virus impacts, having the biggest most --hong kong is the the virus impacts tourism and the impact will come through thailand, the philippines and then taiwan, singapore as well. if we are looking at it from a trade angle, there is no slowing trade. the countries that are higher on the list are countries like taiwan, korea and to some extent you have got singapore. these are the countries most exposed on different angles. australia entirely from the supply chain side of it. taylor: thank you.

plenty more to come on bloomberg markets. this is bloomberg. ♪ g. ♪

paul: let's get a quick check of business flash headlines. gaming revenue in macau fell for a fourth consecutive month after china imposed travel restrictions to contain the virus outbreak. gross revenue came at $2.8 billion in january, down 11% from a year earlier. taylor: shares of saudi aramco to the lowest level since going public. it is hit by the coronavirus outbreak. .7, tradingother below 40 riyals after the debut. but the stock is still 6% above its price of the $29 billion

ipo. paul: a potentially dangerous wiring in the boeing 737 max does not need to be rerouted. that could remove one more hurdle to return it to the skies. this is bloomberg. ♪

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su: this is bloomberg markets. we begin with the chinese province at the center of the coronavirus outbreak. it has reported 56 more deaths and more than 2000 extra cases of the virus in the past 24 hours. 350 people have now died in hubei province with 11,000 cases. the world health organization has reported the first death of the virus outside china. a 44-year-old man from hubei died in the philippines. china unveiled a string of measures to aid companies battered by the outbreak.

it is also pledging to support financial markets when they reopened later today after extended break from the virus. $21 billion ofy liquidity to the markets to event a selloff and banks are being told to lend in more and not call in loans and affected reasons -- regions. hong kong medical workers are giving a five day strike after the government refused their demands to shut down all entry points from china. 99% of members voted in favor of this strike, and protest to a lack of government measures to and medical kong workers from the virus. there are 50 cases of the virus in hong kong. boris johnson is expected to say later he will abandon talks of a future relationship with the e.u. if he doesn't get what he wants. in his first speech since the official exit, he will spell out

his aims for trade terms with the bloc. e.u. negotiators are set to publish their own names. no deal is reached between the you -- the between the e.u. and u.k., they would be forced to work on wto terms. malaysia already getting claims surrounding the air asia group. this is detailed in the record $4 billion bribery settlement at airbus. documents say airbus paid $50 million to a sports team owned as ao air asia executives reward for owning more than 100 aircraft. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. keenan. this is bloomberg. paul: thank you.

let's stay on markets and get davido bloomberg anchor ingles. we are bracing for a selloff so what is beijing doing to calm investors' nerves? david: buckle up is perhaps a message across the morning calls. to answer your question, beijing was out, so i went mention the deeds -- won't mention the details. liquidity into the system, 22 billion dollars in terms of a net injection. the other is to have a set of measures from a promise and the strong signal that a lot more forceful measures are shoreoming to essentially up confidence the financial system will remain operational and stable. our team at bloomberg economics described this as emergency financial support now, stimulus

later grant to the latter point -- later and the latter point they expect the rate to fall 40 basis points from 20 basis points before the virus became one of our top stories. taylor: on a sector faces we think industrials, airlines, tourism. what are you watching? ,avid: on the mainland essentially everything. we can look at all of those sectors but because there is an element of a catch down, we are onking at a big adjustment index wide basis. if you look at futures in singapore and a lot of atf's that were trading, talking of declines 4% to 6%. massive dislocation between your normal average premium of mainland shares to what has traded outside. you have difference with the unsure and offshore currency as

well. there is liquidity in the system but all indications are that we will get selling pressure at the open. what about the launch -- paul: what about the long-term impact to growth? david: 4.5% is what bloomberg economics thinks will be the growth rate for this quarter as well. standard chartered, i will bring overat note, put up a note the weekend very what they are saying is they are concerned that even if the virus situation stabilizes and economic activity resumes, the global economy may not recover the recent case of growth. you see that from breakevens falling, the u.s. tenure down 40 basis points. withll crash more than 1% tokyo.

one thing mentioned, the bloomberg story, chinese oil demand dropped 3 billion barrels today, 20% of global consumption because of the demand shock as well. in context it is probably the biggest demand shock since the global crisis and the most sudden since the september 2001 attacks. paul: thank you for that update. let's get a check of the markets. we do have the nikkei opening at the top of the hour. teachers have been moving around of it for japan. currently pointing futures out of osaka. you're seeing the aussie asx off 1.3%. at the open there were no gainers. there are now. for aussie health care stocks, some of the worst performers are the energy stocks . chinese oil demand expected to sink. we have got the aussie 10-year

yield going to record lows, speaking of things that are sinking. our next guest said true levels and modes of transportation because of the coronavirus are unknown. the real reason is unclear. ,oining us is stephen morrison senior vice president and director. thank you for joining us. i wondered if you could tell us what you know and what we can understand about this virus in terms of its transmissibility, fatality rate and ability to mutate. it is an exceptionally fast-moving story now. i believe that at the end of last week, the consensus began to take hold among the experts that this was approaching a true pandemic. that is the language being used now. there is a sense that the

numbers of truly infected within china are grossly underestimated. that they are somewhere around 75,000 as opposed to 14.5 thousand. transmissibility speed, we are not sure what is causing all of that. some of it is that people who are contagiousc and transmitting but there are other factors, scientific unknowns. we know the transmissibility is very fast. it is closer to pandemic flu, the h1n1 of 2009. it is closer to that theory this is a new pathogen and a coronavirus. it is much different in transmissibility from the sars 2003 which02 and resulted in under 8000 cases.

this is going to scale and move beyond china in all likelihood. as to the fatality rates and severity, what proportion will have extreme illness and what proportion will test away, we don't know the numbers. we have to do more work on genetic sequencing, household surveys and the like trying to get to the bottom of that. healthhe world organization last week did praise china for its response so far, but are they getting all the data out of china that they need? ofi believe after a time confusion and difficulty in the sharing of data and communications to the public and the outer world, there was a breakthrough in terms of getting commitment to sharing. we are seeing the fruits of that. we are seeing accelerated action

in the development and commitment stories, trying to get therapy and new vaccines in development. as to the sharing of data around true caseload and the profiles of that, i am not in a position to say. i know there has been discontent scientificin the expert community. outside of china we are not getting as much sharing as possible that some of those criticism have diminished lately. there is a general hope that with the scaling of this and the transition into becoming a global pandemic, that we are moving into a different situation where sharing is going to become i would presume much more logical. taylor: i am going to share headlines with you. we are getting news four more airports are -- those airports

are dallas, newark and dulles are getting redirected flights with passengers from china. explain to me more why you think china is or is not doing enough. the new york times with another scathing piece that china was hiding a lot of this information going early on. are they doing better? >> you need to make a distinction between the first six to seven weeks when the political consideration suppressed reporting and sharing internally and externally, versus what has happened after late january into where we are approaching right now. that is the pattern. there is a lot of digging. there is a lot of sense the true outbreak began somewhat earlier, maybe in mid-november. but that time is under lots of discussion right now, from early

december until the latter part of january. i think we need to focus today on what is happening right now. the points you made about the flights, we are in an extraordinary situation in two respects. one is what has happened internally in china where you have over 60 million people over tenskdown quarantine, and of millions under softer forms but still fairly coercive forms of where and team. -- forms of corentin. will those -- forms of quarantine. countries have begun to cut hair lengths and begun to take -- air to take peopleun back. the isolation of china is pretty extraordinary.

taylor: i want to get your thoughts on the unknown. the who is saying it is the unknowns that are concerning. how do they compare to the previous diseases have talked about, sars, zika virus? center onnowns transmissibility, severity and source, source being where is it coming from, what is the animal reservoir in which this came. there is debate, it is not clear. in terms of transmissibility, what is the pace by which this is transmitted and how are the modalities? we know that today people have converged around the opinion that asymptomatic people can transmit. that creates a whole huge wrinkle in trying to predict who is contagious and who is

infected versus those who are not. it makes screening it completely scrambles screening. we haven't faced that situation. we don't know entirely how long does the virus stay on surfaces? there was a report today some of the scientists in china have come forward with data indicating it could be transmitted through fecal matter . the transmissibility issues, we know it is quick, but we don't know exactly how. issues, we don't know what percentage of the affected population will result in death, what percentage will is old in extreme illness. we don't know what the infected base population is today. so we are in the dark right now and struggling to understand what it is we are dealing with.

taylor: thank you totaylor: david -- stephen morrison. appreciate your time. we will have more on the coronavirus ahead. we will speak with iris chang from ing and societe generale. and someone from invoke, international joins us as mainland markets open. you can also tune to your bloomberg for more on the coronavirus. geto tliv and commentary and analysis from bloomberg's expert editors. paul: we will look ahead to the caucuses starting monday in iowa. this is bloomberg. ♪

paul: this is bloomberg markets.

i am paul allen in sydney. taylor: candidate bernie sanders leads the field in the iowa caucuses, according to the latest poll. the contest takes place monday and opens up the primary season. balance of power anchor david caucus.s covering the a little surprising, bernie sanders coming in 28% support from the democrats. are you surprised? david: i think we have to be careful of the polls in the last days. the emerson poll came out. they have been showing clumping at the top of the top four candidates. this is unscientific but being in des moines and reporting, there doesn't -- there is a sense that bernie sanders is gaining momentum and that joe biden is losing a bit. that is the talk but we will know tomorrow. caution, cnn'sof

goldis considered the standard, and it got canceled. news: that is the biggest story since i have been in des moines is what happened to that. there was a lot of big promotion of that poll by cnn. they had done a deal with someone out here in des moines who is highly respected. it was going to be a special at 8:00 and then they said we can't give it to you because there is contamination. there is a lot of back-and-forth about what that was. some reports are that one of the people asking the questions was someone was supposed to ask about pete buttigieg and left it out the list and pete buttigieg found out and got mad. but this historically has been the last poll, the one people pay attention to going into the caucuses and now they don't have it. people are flying blind as it were. taylor: i want to talk about issues like with bernie sanders,

we think about socialism. he is a self-described socialist. elizabeth warren is about big tech. what are the issues being debated? david: it is interesting. one thing is the issues such as, like health insurance, taxation, the economy, the pocketbook issues. the other is who will beat donald trump? the fascinating thing is going to these caucuses to what extent will that determine voters and where they come out? people might agree with the issues but not sure if bernie sanders can beat donald trump. joe biden has a better chance of beating donald trump. the big issue is who is most electable as they say but it is always pocketbook issues in the end. paul: president trump the state of the union address in a little

while. are we expected to hear some fire and brimstone around the impeachment saga? david: it is an extraordinary week because we have the caucuses, and then we fly back to the state of the union. a state of the union he will deliver while he still has not been acquitted. woclearly believes he has n this. we might hear some growing from him. who have been having the trial -- it is a very dramatic week but the president feels like he is coming out all right. own david westin in des moines. t-shirt to watch him on our special coverage of the iowa caucus starting to :00 p.m. new york and tuesday we will carry president trump's state of the union address followed by the democratic response which kicks off 9:00 p.m. in new york.

tol: want to get you breaking news, an update on the coronavirus numbers. china saying cases rising to 17,205, and the death toll 361. to grow andntinues to spread. we will keep you updated on those numbers and we will see what happens when the chinese equity markets return after the long lunar new year break. plenty more to come here. ♪

qantas is wanting the best warning the coronavirus could post some airlines in china to the wall. one of them might not be able to keep some of the operations going. our bloomberg opinion steam disagrees. let's bring -- opinions team

disagrees. why would an epidemic cause airlines to go under? >> it would cause problems. the question is whether it is a life or death matter. survival of the fittest, and the question of whether airlines don't survive. there is plenty of airlines in asia that have negative free cover,ow, interest operating income doesn't cover interest. it is worth bearing in mind airlines are not a great business. jet airways had failed to cover its interests for most of a decade before it finally collapsed last year and was doing better at the end. the reason we have got to bear in mind, one of the big albums is a lot of airlines have -- big problems is a lot of airlines have billionaire shareholders who are prepared to see them through a tough quarter or two. we don't see where this is

going, but one thing we are confident about is like most of the viruses it will be declining by the end of the second quarter. demand will come roaring back after that. taylor: it is so interesting in the u.s., looking at shares of american airlines, delta, big global carriers with exposure to china. they have been limiting some of their flights over to china. what does it mean for companies with major revenue exposure to china? >> the thing worth bearing in mind is except for chinese airlines themselves and cathay pacific is one exception, they don't have that much significance in exposure to china. one of the greatest frustrations is they have had trouble getting a foothold in the chinese market. while the chinese market for 18% of traffic worldwide, the share of that that is available to airlines outside of china is only about 5% of their traffic around the

world. it is not -- air traffic around the world. it is not that big. in terms of chinese airlines, the big three, air china, china haveern, china eastern, supporters in the chinese state. cathay pacific is controlled by someone else for seven decades. it is not always easy for them. they have always supported them. paul: thank you for joining us. let's check in on how we are doing on asian markets here. not terribly well is the short answer. in australia we are off 1.4%. energy stocks are losing the way , fighting the losing battle, gold stocks performing well. new zealand is off and nikkei futures are pointing higher. taylor: in the u.s. looking better on tech and s&p and nasdaq, getting up point --

.25%. oil is holding onto $51 a barrel. the 10 year yield 151. we will have to see how that continues to play out very plenty more in the next hour. this is bloomberg. ♪

♪ >> good morning. a just major markets have just opened for trade. welcome to bloomberg markets: asia. ♪ >> our top stories, asian markets prepare for a selloff as china but turns from an extended break. the coronavirus stretching the nerve. beijing pledges to prevent a selloff of -- as virus fatalities mount. do