francine: china's stocks tumble. on coronavirus worries. as the coronavirus death toll, markets get crushed, china falls some 20% the race for the white house gets underway as isla considers who they want to take on president donald trump later this year. ng, good afternoon, e -- good evening grade -- good

evening. an acute selloff in china. they have been closed for the chinese lunar new year. stock futures in the u.s. are taking it in their stride. if you look at the u.s. 10 year yield, they are both dropping once again. manufacturing for the month of january, that is coming in at 47.9. we will be speaking to the chief executive of julius baer this morning. let's get straight to the bloomberg first word news. with china's oil demand which is plunged by 20%. executives describe it the scale and the demand caused by the coronavirus outbreak.

it's probably the largest the market has suffered since the financial crisis. opec and its allies are considering how to respond. the battle of a brexit doesn't look like it's going away anytime soon even though the u.k. left the eu. prime minister boris johnson -- in london to walk away from talks. he does not want to set of regulations of the rulings and say britain will prosper with or without a deal. in london, authorities say a man who stabbed two people before being shot by police had been in prison for terror related crimes. officers had been following the man before the attack. prime mr. boris johnson plans to introduce measures -- prime minister boris johnson plans to use measures after the attack. here in the u.s. and on capitol hill, president trump's impeachment trial is drawing to a close. republican senators are preparing to acquit the

president. senator lamar alexander supported the move to dismiss charges by being one of the few republican saying the president crossed the line by withholding you -- aid to ukraine. but says it should be up to the voters to decide president trump fate. "1917," wasdrama the biggest winner at last nights bath does. "joker,"ners include "the irishman," and "once upon a time in hollywood." 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. this is bloomberg. on to our top story. china's markets of plunge the most since 2015. reopening after the lunar new year holidays, the markets felt the impact of the crisis as the coronavirus continues to spread. that is despite beijing

introducing a raft of measures help companies hit by the outbreak. englee latest, stephen joins us live from hong kong. what is the mood like on the ground? are people just staying at home? testing thes is work from home models and many companies. inpeople are staying home china and starting to come back to work for the lunar new year holiday. 14 provinces, that main industrial heart of china, 14 provinces have extended the official holiday for another week as officials are trying to not only cope with the surge in infection and confirmed cases would also contain it and go with it now. you are seeing a slow trickle down. here in hong kong, a lot of companies and banks are doing

work from home operations right now. and we are getting economic numbers already. china we are already getting projections that in the first -- in the fourth quarter -- in the first quarter in china we could see as low as 4% gdp growth in this current quarter. hong kong reporting bad numbers for the fourth quarter. first full year recession since 2009. francine: i think we are expecting carrie lam to start speaking shortly. we have some pretty incredible story, the china stock market open saw the most savage wave of selling in years. how does this impact not only the economy but actually the stock market. carrie lam has just started speaking. >> sort of separate issues as far as what's happening on the china market. they have been on holiday since january 23 so the numbers keep

on growing. 361 deaths in china now. 17,205 cases. which carrie lam is likely speaking out -- about. fracass a bit of another going on in hong kong starting this morning, thousands of hong kong hospital professionals went on strike. they wanted carrie lam to close the border with china. she said it was impossible to do that on friday and then yesterday she refused to meet the officials so therefore thousands went on strike today. because they are worried about their well-being and being able to cope with a potential surge in infections. francine: thank you so much. stephen engle, our chief asia correspondent in hong kong. carrie lam is giving a press conference. joining us for the look at

market reaction, chief investment officer. i don't know how you trade this. >> it's very difficult to trade this. quality to theng diversification, of course the asked -- across the asset class and region. and being attuned to the policymaker reactions and in my ,iew, the chinese policymakers if this is not sufficient enough and they will lose more. i trust they will do whatever it takes to ease the tensions. francine: could this be a black swan moment. >> this is a black swan moment. into the session -- into a recession. my concern is less the policymakers and potentially more on the shift over the last decade between active and passive funds.

momentumiment and could turn it the other way. that to me is a concern. i don't believe we are there. when you say that do you mean liquidity? thanos: if it turns in a negative fashion, the systematic traders, the sentiment will also turn and momentum will start to move lower. francine: thank you so much. anythingontinue follow carrie lam says in the press conference. stay with bloomberg surveillance. plenty coming up include the worst month since august. down more than 5%. we will talk emerging markets next. this is bloomberg. ♪ berg. ♪

francine: this is bloomberg surveillance. carrie lam giving a news conference on the coronavirus update. we've been accustomed to these news conferences. brief reporters gathered in the room without surgical masks. certainly visually it makes you feel less anxious. she is saying china is stopping issuing visas to hong kong and said hong kong will reduce the flow of people at checkpoints. we had a great outline of not only the market actions but a move in china after was closed last week. assessing the economic impact

this has. let's get straight to the bloomberg business flash in new york city. ryanair,in with posting a profit for its winter low season. christmas and new year's boosting the biggest budget airline in europe. they say the current boost is also from boeings grounded 737 will kick in for another year. >> it like we won't receive our first till september october. operationseagues in at this point in time are reviewing the schedule. we will still grow by 2%. i think it's likely we will have -- we will concentrate more reducing frequencies. >> imperial brands named stephen

as their next ceo. the company hopes the appointment will help revive sales of its cigarettes alternative. under ceo allison cooper, imperial struggled to keep up with big arrivals. julius baer plans to cut 300 jobs as the chief executive tries to create a leaner business with better profit margins. over the next two years the swiss private bank plans to reduce cost by more than $200 million. that's the bloomberg business flash. francine: let's stay with the coronavirus in the market impact. a pre-bad start 2020. indicator thecial economy this year has been -- welcome andrew, partner in chief investment officer.

and with us still, thanos. you were telling us you largely invest in health care, renewable energy and financial services. what does that mean? something like coronavirus which is difficult to know how much it will impact the world economy, do you look at valuations to see if there's an opportunity or do you just wait? at the microlevel clearly activity is slowing and the macrolevel you're not seeing that reflected in forecaster on china and those have an effect on the region. we are watching carefully. we happen to be investors and businesses headquartered there. we are seeing on the ground the impact of what this means to people living in the city. one of those is a health care

business not selling masks unfortunately. it's been dramatic, the extent to which we've had this activity. francine: supplies aren't reaching the city. >> we had a distributor conference set for the end of january and that set to be canceled. so just these things happening within the economy across the board particularly in wuhan where its most severe but also across china. i've never seen the chinese new year holiday extended the way it's been. francine: foreign investor, we are mindful people are dying and losing their lives. this is at the forefront of what we think about. does it mean health care in china is something people will be more concerned about? is that the kind of factor you will be interested in? >> china is in norma's market for health care. the question is to what extent international companies will be

able to benefit. we've met -- invested in domestic chinese companies for that and they've received strong support from the government. a different approach that can be taken by international investors. asking for 20% less oil. >> generally the markets have a negative spin on china and even before this crisis. headlines of 6.1%, the slowest growth rate in 29 years were the headlines a couple weeks ago. it's over 14 time lot -- the chinese economy is over 14 times larger than it was part we are positive in terms of china and emerging markets from evaluation and growth point of view. this has come as a shock and surprise. we are hesitant to change that view until we see some clarification developments. there was a u.s. trade

war for a long time and you saw a lot of the chinese indicators. >> we were moving positive, we could start to see a real uptick in activity. i think the first phase of the trade deal was probably more positive for china in the u.s.. there were a lot of good indicators there and a lot of emerging markets were following that path. obviously what's happened it's been difficult to speculate where that ends. it has been very unwelcome shock to the system. before the coronavirus, did supply chains move. vietnam orw if it's what's benefited. or two countries in asia that have really benefited, vietnam is one of them. we've seen a huge uptick in interest in vietnam. you are seeing enormous

investment by people who historically would've looked to spread that across multiple countries including china. there's a degree of resilience saying a very interesting marketplace. >> does that change the way you view the emerging markets. , to those changes actually stay. that's likely to benefit partly from a geopolitical change but also economically. the other which we think is , i believe they will keep it stable. they are not willing in my view to raise the tensions again by allowing the currency to weaken. but how do you play that? in and you actually by the currency. thank you both. stay with us.

it's the world's largest conference on hedge funds and venture capital. it's being held in london. turn to investments next. this is bloomberg. ♪ bloomberg. ♪

francine: you are watching bloomberg surveillance. let's talk about private equity. conference largest is being held here in london this week called the student union alternative investment

conference. attendees is with us today. andrew, if you look at private equity, i don't know how much cash there is waiting to be deployed. and whether this anything we should be nervous about because of it. >> estimates vary on the total amount but the one thing we can say is the bulk of it is aimed towards developed markets. the u.s. and europe and to a degree japan and asia but primarily the u.s. and europe the primary concern investors would have is around asset pricing. is coming through in people overpaying and that's one of the most closely watched indicators in activity. i think pricing is close to perfection, however having said that i've been in this for 25 years and one thing we do is we

overestimate, we are overly optimistic on performance and we don't take into account the way prices appreciate. if you're in a world where interest rates look to sustainably be zero, investors will look for return and that's likely to drive asset prices. francine: is that one thing we should be worried about, he could drive them to stake risk that they don't fully -- just take more risks. >> certainly in terms of private equity it's not only the low-level which makes it attractive, but a more diversified for the pension fund. forgo a littlen bit for that search for yield and i do believe the returns from that continue. francine: you are in the emerging market space, are there fewer players in the western world? >> there are definitely fewer

players. operated to dog -- to and we have to do it through a local network. i have offices around the globe sustaining that overhead is a big investment, there are a few that can do that. you have to reach a certain scale to be able to. at this point in time private equity lends itself well to the nge and emerging markets. we are very focused on building and assets in situations where there's been adequate supply, renewable energy being a great example. francine: how do you deal with domestic politics? >> it is one of the concerns. we raise money in u.s. dollars and invest them in local currency. we look to invest in businesses that generate u.s. dollar income if we can. but nonetheless that's a significant consideration. rates are impacted by central bank decisions but also by political volatility. so it is absolutely key. i think to address that and

mitigate that you have to focus on those sectors where there's a fundamental mismatch between supply and demand. those of the sectors the government can't afford to ignore. if the lights go out, the president does not get reelected. andrew we will have to get you back onto can sing -- continue this conversation. coming up, the coronavirus continues its spread. hunter, we will talk about the virus, it spreading and the corentin efforts put in place around the world. we will have a full round above your stocks, especially in china. this is bloomberg. ♪

francine: china stocks tumble. the csi 300 drops almost 8% on

coronavirus worries after reopening from the holiday. the pboc cuts rates and pledges liquidity. as the coronavirus death toll tops 360, commodity markets get crushed, china oil demand falls some 20%. and caucuses kickoff. the race for the white house gets underway as iowa considers who it wants to take on president donald trump later this year. good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance ." just over 1.5 hours into the trading day, let's check on european stock movers and more on our scoop on chinese oil demands with annmarie hordern. annmarie: in terms of corporate movers, a lot of it has to do with earnings and m&a activity. a prophet coming in at $88 million. this time last year that was a lot, quite positive, and a lot of it has to do with last-minute workers for christmas and new year's. and world line also

moving on the same story for different reasons. ingenico moving up 11%. tumbling for point when 4%. europe and actually on the global scale, they have come in at fourth, so a big tech acquisition this morning. and oil, you mentioned -- we had oil this morning intraday drop the lowest for the year. brent has fallen more than 10% since the coronavirus outbreak, and now we have the bloomberg scoop about china. demand dropping 20%. that is 3 million barrels a day on consumption. you can see on the end of the chart, commodity prices and fuel consumption just collapsing. they have cut their first quarter estimates to $54 a barrel for brent from $69. that is more than a $10 a barrel price differential. we have an opec committee

meeting this week. they will assess the situation and it remains to be seen whether or not the ministers will meet to make a market move. toncine: let's get straight the bloomberg first word news in new york city with viviana hurtado. we begin with chinese markets this morning, plunging after an extended holiday as the coronavirus begins to spread -- continues to spread. the first step outside china -- the first death outside china has been reported, and it is in the philippines. the number of cases jumping to more than 17,000. in iowa, democratic candidate bernie sanders is leading in a key pull. the emerson college survey has support for him at 28%. that is followed by joe biden at 20%. a number of factors complicate the result. voters can pick a fallback choice. about one third of caucus-goers say they could still see -- they could still change their

allegiance. boeing and the u.s. regulators saying the 737 max may not need its wiring fixed, according oh to "the wall street journal." it is the latest flareup between europe and the u.s. european officials want to the wires moved. chiefs defeating the san francisco 49ers to win the 54th super bowl. it was kansas city's first victory in 50 years. patrick mahomes is the most valuable player. according to one advertising executive, the wind may help him break in more money in endorsements. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, i'm viviana hurtado. this is bloomberg. francine? staying with our top stories, china's markets have plunged the most since 2015 after the coronavirus crisis

continued to widen. commodities and renminbi hit hard despite the efforts of the pboc. let's get straight to bloomberg's rishaad salamat in hong kong. how does it impact the economy? >> some people are calling it savage. 2357 companies being limited down. out with ato close 7.8% fall by the end of the session. itare effectively saying shut down two thirds of the economy at the moment come on holiday seville. -- holiday still. there are some 14 provinces doing that extension. we have a province there which is the center that can be closed even longer. that is where we are. the thing is that they have

moved in with these reverse repo cuts, 10 basis points 14 days, and seven days. will it make a difference? we have been seeing the oil survey, reporting on 20% down in oil production. how do you bring that back? you learn your -- the lunar new the thing is, this damage could last a bit longer fence -- than anticipated. will be get it back? currently.s also this move is not enough. at the same time the pboc instituting this liquidity injection, sure. but they have a fine line to really be walking on because at the same time they wanted to leave some guns in the chamber, as it were, which they might need further down the line

should what they have done not be enough at least for the time being. the next two or three weeks is going to be crucial, francine. thank you so much, rishaad salamat in hong kong peered the number of deaths in china have risen to 362 with more than 17,000 now infected. global efforts to contain the virus have escalated as the philippines reported the first death outside china, and the u.s. confirmed more infections. paul hunter joins us, the professor of health protection. we heard the director general of the world health organization saying the spread outside china is slow. is that thanks to the efforts being put in place? thebsolutely, yes p that is main reassuring aspect of this epidemic at the moment. that it has so far spread outside, largely limited to

people coming directly from china. francine: what do we know about the coronavirus? isolated,at italy is italy isolated the sickness. we know that france is isolated the sickness. how long will it take to have a vaccine isolated? paul: people are working at this at a moment. -- at the moment. it takes years to produce a vaccine. i am told we might have something usable within 6, 7 months, but vaccine production is never an easy thing. you have to manufacture the vaccine, you the have to -- you have to then test its safety and effectiveness. all of that takes time. and then once you have, you have doses.facture sufficient with an infection like this, we are probably talking about many, many millions of doses that

would be required if the infection has not sorted itself out by the time it becomes available. francine: what do we understand about the mortality rate of this? is it not unless a -- is it not unlike an influenza that we get every year? do we understand that yet? paul: i think we have got a fairly good handle on this. there are two aspects to mortality. the first is the probability of getting the infection, and the second is, once you have the infection, how likely you are to die. we know from, as it stands at the moment, the cases that we about 2.5% of those are dying. is probably an overestimate.

the are estimating that --ber dying are several more the mortality rate is purely on -- in terms of the prior coronavirus infections like sars or middle eastern mers, that is substantially lower. france with a mortality rate of about 10%. with mers, substantially higher as well. on the other hand, this is spreading more quickly than sars. it was about a thousand cases over about seven months. we are easily past that now within 10 weeks. what the total number of cases will be ultimately is unclear. in 2009 we had a pandemic of influenza which was estimated to kill somewhere between 250000

500,000 people globally. coronavirus, we will see is substantially less than that, but probably ultimately more deaths than we saw with sars 20 years ago. momente: is there at the something that works? is there a medicine that makes you get better, or do people just get better on their own? paul: know, there isn't. antivirals do not work. people are investigating antiviral agents to treat this. but there was no convicting -- convincing evidence of this peered most people will get better by themselves -- of this. most people will get better by themselves. with supportive care. francine: paul hunter, thank you. coming up, caucuses kick up. iowa caucus gets underway.

this is bloomberg. ♪

francine: this is "bloomberg surveillance." i'm francine lacqua in london. let's get to the bloomberg business flash in new york city. viviana: for line is buying rival ingenico. the company will create the fourth-largest services payment provider. ingenicowill get -- shareholders will get a 17% premium on friday's close. executive -- it is bringing on board the real estate veteran to turn around

the struggling startup. the company has been run by co-ceo's since adam neumann stepped down in september. that followed a failed attempts to keep the company public. pg&e says it will over her work -- it will overhaul its board of directors and create regional operating units. the company, filing for chapter 11 protection last year after facing $30 billion in liabilities after a spate of wildfires in california, where blamed on its equipment. that is the bloomberg business flash. francine? francine: turning to the u.s. and today's iowa caucuses, kicking off the u.s. election season. voters will decide which democratic candidate they want to take on donald trump later this year. later in the week we will be watching for the results of the impeachment trial. let's get straight to stephanie baker, bloomberg's senior writer who had been following the trump administration from the very beginning.

and thanos papasavvas is still with us. thank you so much for sticking around. stephanie, on impeachment, is it a done deal that the president gets acquitted? stephanie: yes, that looks all but certain that he will be acquitted on wednesday. a day later than he was hoping. he wanted to do his state of the union address tomorrow night having been acquitted and doing a victory lap, but the vote is all but certain. it does not mean, however, that some of the investigations will not continue. the house will probably press on. we will hear from former national security advisor john book, likely, in the house. francine: the iowa caucuses are a big deal. for an international audience, why are they so important? stephanie: they are often a predictor of who will go on to win the nomination. i think seven out of 10 winners of the iowa caucus in the

democratic field since the early 1970's have gone on to women the nomination. i think it will likely -- gone on to win the nomination. i think it will narrow the field. clustered at the top it will force one or two to drop out. and, you know, it could give wind in the sales to whoever wins going into new hampshire, and then nevada. francine: do we trust the polls? stephanie: no. i think in the case of iowa, the remarkable thing is the number of undecideds going in. i think it is very volatile and very hard to predict. francine: and this is the point you were making, that we are not looking at this correctly. thanos: i think the market was not looking at this at all and they were considering biden to be the clear choice. as a result, there is an thatased probability

sanders could win the nomination. still something the markets have not priced in. francine: what are we watching out for? the caucuses in iowa last week, there are a couple of key days more than others? stephanie: we will find out tomorrow night who will be the winner. we will find out tomorrow night. and they will announce the number of -- it is a complicated procedure -- the number of delegates that they will eventually take into the nomination in the summer. know, if candidates do not reach 15%, then they drop out and those caucus-goers either realign to other candidates. so that is why it is quite difficult for candidates who are polling below 15% to breakthrough. francine: are you watching the caucuses to have an idea of what will happen? in south carolina, biden

has a high probability there impact states.e in the next couple of weeks i will expect some caution because of these developments. both,ne: thank you stephanie baker and thanos papasavvas. coming up, the u.k. prime minister will set up his vision tray trade deal later today, but can he get it done in less than 12 months? more on that next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." let's get an update with dani burger. ofi: over the past, fears the outbreak, we have seen commodities get hurt, but since the opening of china's future market, we are seeing these markets having to play catch-up. in china it is everything from steel to agriculture which is getting hurt. we are seeing a lot of these markets hit, 8% down per you can see iron ore, crude, steel, these are all dependent on

china. as soon as they open, they are still hanging around the 8% level. the pboc has attempted to shore the situation by ingesting more liquidity. is, is it justso a knee-jerk reaction? is it panic selling, is a china catching up with the rest of the markets? people familiar learned that chinese oil demand has fallen by 20%, one of the worst drops in demand since the financial crisis. and citi came out with estimates slashing their forecast across commodity markets, and saying that these markets will not cover until the fourth quarter of this year. so, yes, we are seeing markets selloff. according to citi, it might continue until late this year. francine: dani burger with the latest on commodities. will send out his

vision for the future trade deal today. he is ready to walk away from talks if he does not get his way. we are expecting a speech from officials later today. thanos papasavvas, when you look at the u.k., the break that happened on friday, what future relationship chem the u.k. and the e.u. have? thanos: they will avoid shooting themselves in the foot with the u.k. and the e.u. you have to go hard in terms of initial steps, but i believe there will be a window of compromise. there is going to be a positive outlook in terms of the u.k., partly because of the fiscal stimulus that goes through. but also, the undervalued levels of sterling, in my view. sterling will appreciate over the next few years. deal,ne: on the trade would it be canada plus, but different -- or it would it be different than canada plus? thanos: it has to be different.

water, fisheryhe -- it will be more complicated. these are the elements they have to work with. francine: is there something -- when you look at advising your clients and what they should be looking at, if they do not define an environment on fisheries, doesn't mean there will be an acrimonious trade? aanos: there is an element of -- stick on that. francine: what do you see on pound? thanos: the pound is undervalued . we are waiting for some signs of structural development to take place before going for an overweight and positive outlook. medium to long-term, 1.40 to 1.60 is where the pound is valued to the dollar. francine: so pound versus euros is how you would trade it or is it at cable? thanos: at cable. i think it is more of a driver driverpound is more of a

than sterling or the your. francine: talking about the ira -- the iowa caucuses, do expect -- do you expect wage growth to -- thanos: wage growth to start to rise within the u.s., putting potentially some pressure in terms of the fed to consider raising rates, which they will not be able to do in 2020. but then behind the curve for 2021. i am more optimistic on the u.s. economy, but at the same time, the positive u.s. economy and a broader realization within the should be positive for u.k. growth and european growth, and germany more preacher early. a thank: that are scum you very much. equity futures are rising, european stocks edging higher. we saw steep losses in china. this is as investors are trying to digest the latest

developments in the coronavirus outbreak. shares actually plunged significantly. markets reopening today after a long holiday. looking at some of the chinese stocks, a savage selloff is how some people have been describing it. the csi 300 down almost 8%. now, this is on the back of a deadly outbreak, which is largely centered in china, and it showed no signs of slowing with the nation's death toll exceeding 360. we will have plenty more on gold. it is actually down. the king at treasuries, they are also down a touch. "bloomberg surveillance" ntinuein the nt tom keene joins me out of new york. we speak with the chief executive of swiss bank. this is bloomberg. ♪

francine: china stocks tumble. the csi 300 drops almost 8% on

coronavirus worries after reopening from the holiday. the pboc cuts rates and pledges liquidity. as the coronavirus death toll tops 360, commodity markets get crushed, china oil demand falls some 20%. and caucuses kickoff. the race for the white house gets underway as iowa considers who it wants to take on president donald trump later this year. good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance ." i'm francine lacqua in london, tom keene in new york. we had a full round of the selloffs in china. some calling it brutal. the csi 300 down some 8% as we speak. we also take a measured approach to the impact this could have on the world economy. the measured approach is appropriate. what i would notices their three and four days catch up with the markets in china including the ugly closing china on friday. futures are up 10.

toncine: let's get straight first word news in new york city with viviana hurtado. viviana: we begin with the coronavirus outbreak. china is trying to come to grips with the spread, stocks plunging the most since 2015. it was the first day of trading after the extent of the lunar new year holiday. the central bank pumping money into the system. the number of cases of the disease in china soaring past 17,000. more than 360 people have died. outside of china, the philippines reporting the first death. a new poll in the united states says bernie sanders will win tonight's iowa caucuses, the first real test for the democratic presidential hopeful. the iowa college poll has sanders at 28%, joe biden at 21%. pete buttigieg will tie for third -.

rather than accept demands from brussels, boris johnson will threaten to walk away from trade talks mr. johnson will reject sign-upands the u.k. for the block single market regular and the ruling of its port. the people expected to set out its own redline for a trade deal. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. francine? tom? tom: let's do data and put it into perspective. equities, bonds, currencies, commodities. a lift in the u.s. as we see asia catch up off the lunar new year. futures up 9. the curve's deepening -- the curve steepening. --'s go to american oil 18.86 on the vix. thisure -- the currency, is onshore renminbi, 7.02. that has been close for a number of days. that jumps up a few would, a

weaker statistic. francine: i also looked at gold. this is the one thing i wanted to show you. if you look at european stocks, they are rising. investors trying to figure out the latest development since the coronavirus outbreak. i put pound for good measure because we expect a possible speech by prime minister johnson later, on the back of the u.k. leaving the e.u. that was friday at midnight. tom: joining us from hong kong, stephen engle, our most senior asia correspondent. an open question to get things started. what did you learn this weekend that is of matter? stephen co. the numbers have gone up cyclic currently, and we need to get more information out of china, whether they are -- stephen co. the numbers have gone up significantly, and we need to get more information about containment and coping. they have sealed off wuhan, they have sealed off other parts of

the province. 50 million plus have been quarantined in their homes. they have set up the new hospital, which has just been handed over to the military yesterday with its wealth of medics. then just coping with the shortages in testing kits, in facemasks, and dealing with the overworked health care professionals in china. the numbers have jumped up significantly. i don't want to be the alarmist and i am not, i just look at the numbers and i see that from the last time you and i talked on friday, the number of deaths in to 361as jumped 69% deaths. 17,000-plus confirmed cases. that also is up by about 75% from friday. so have they contained it? are they coping with it? it is still yet to be seen the success rate. tom: an important bloomberg is --n, admiral severe

admiral's every does -- admiral stavridis. imagine the reaction if the u.s. government shut off all transportation in and out of the chinese steps government has taken in a similarly sized but troublous of wuhan. the admiral saw this response to cholera in haiti. the department of defense had an impressive response to ebola in west africa. viruses cannot be defeated by anyone state and every country on earth has a vested interest in defeating a pandemic. what is the interest in china? the people's army is under control of the commission and the chairman of the party, xi jinping. the 2 million having plus soldiers of the pla are at his discretion. he can move them where they want. i just mentioned about that hospital, on fire got mountain, that it was built in 10 days.

it was handed over to the military and they have 1400 military medics who are going to be stationed there in the one-as in the 1000-bed hospital. the military absolutely is taking an active role. they take their marching orders from xi jinping, as they did during the 2008 earthquake in sichuan, as they did during the sars outbreak. francine: i just spoke to a professor of norwich university, and he said this is not much the influenzahan virus. what do you think of those numbers? tough onet is a compared to influenza. and i am not a virologist, so i can unnecessarily take that, but there are more cases of that. the coronavirus is attacking even healthy people and felling

very healthy people. so we simply do not have enough information as far as the virility of it. is you know, how long this going to last. sars lasted five to six months. so we are either at the beginning -- or we don't know. much,ne: thank you so stephen engle, joining us from hong kong. we will look at the immediate market impact, and of course we will look at the long-term economic concerns. what can you tell us about the big selloff in china today? >> i think this is largely expected, predicted by futures markets, marginally more dramatic than expected. we have seen a number of stocks -- we might see further losses tomorrow.

stephen outlines two angles to the virus, containment and coping. the containment has been exceptional. 361 deaths are within china. 350 of them are within hubei. tot china has done has been corentin, extraordinary corentin measures. markets are very quick -- extraordinary corentin measures. they are not coping, but they have contained it. so i think global markets turning point will happen this week. china markets turning point may take longer. francine: christian, what does this mean for the economics of china? they are consuming 20% less oil. is this the black swan event that could tip the world economy into recession? it isit is true that really contained this week, i think what we need to see really is the logistic function of a virus, where you are in an

exponential phase in the beginning and then it falls at an exponential rate, if that happens this week we could be looking to this being fairly contained and then markets turning the other way. however, i am not sure we have seen this yet. this is all about reproduction numbers of this virus. they have done enough containment measures since january 23 coming in the incubation, if it is five to seven days, we would have to see in five to seven days the numbers coming down. i am not so sure that we're seeing already the time to fake the move in terms of the financial markets anticipating recovery of the economy. tom: mark, while we have you in singapore, what have you observed in terms of logistics, the movement of stuff that singapore is famous for? has there already been an adaptation in singapore for what is going on in greater china? i think the reaction has

been incredible. the fact that we are seeing all of asia react so rapidly in terms of implementing measures, airport screening checks, breaking supply chains, so they control the virus. in that way they have been quite successful. overall in asia, despite the fact that there were thousands of new cases, we had only two new confirmed cases in all of asia today. that shows how quickly these countries have been able to close it. you are seeing that impact in singapore very quickly. you're seeing the impact on services because people are scared. they are stepping away from restaurants and cinemas. this will have a longer-term economic impact across the region. i think the economic impact will play out for some time. tom: that's keep up the commodity board the four-line commodity board we just showed, showing the percent changes. tristen keller of barclays come have you adjusted down your china gdp call? we saw jp morgan and eurasia group do that on friday. have you made a tweak the echo

christian: we made a tweak already the week before but we are holding off really for this week because we have scenarios that go -- that are quite wide. you have one where you have a strong impact on the first quarter, but then it has been made up partly in the coming quarters. that is a scenario where we would see in the coming days or at least the coming weeks the virus being contained, this in arial playing out that your colleague alluded to. in the scenario where he continues to spread beyond china, i think in that case there is a more severe scenario. some of the worst case scenarios, that it is not contained in china because then impact, have an some implications on the global economy. francine: can pboc do a lot more? or are they without limits? mark: i think they can do more

and i think they will do more. the pboc has been clear over the last you're so before the virus situation that they will do a lot for the market. they will tip gradually. they have not yet gone for shock and awe. i think they delivered a little more than inspected today but not a lot more. i suspect if equity markets fall more, you will see pboc take more measures per they certainly have a lot of tools in their toolbox to support the market. i think what investors are trying to work out is, how quickly those tools will be used. will it come through over the next couple of weeks, or will they try for the shock and awe a template of this week? tom: mark cudmore, they could so much. we will continue with dr. keller. we have much more coming up. dr. keller of barclays as well. , up scheduled to join early, kevin cirilli with a really interesting iowa caucus. he will provide perspective with mr. weston tonight at 10:00 p.m.

this is bloomberg. ♪

tom: "bloomberg surveillance." good morning, everyone. prime minister johnson will speak at some point. we will pay attention to that as it comes up. right now we pay attention to kevin cirilli, on his way to smoky road, the best coffee in des moines. he joins us now in a very early morning. that is where you hang out to get the first beverage of the day. which candidate is happiest right now? kevin: bernie sanders. yesterday i went to a biotin ally and -- a biden rally and

buttigieg rally. biden world is feeling cautiously optimistic. they feel they will be able to have a strong finish tonight. but beyond that, i think you have to look at three things. first and foremost, what are the top two spinning out of iowa? will it be a biden standard? -- one -- if biden slips to third and fourth, that could change the trajectory of the race. keep an eye out for some surprises. i have spoken with several reporters in des moines. yesterday at both of the rallies, i kept talking to voters and they said they are still undecided. i am ones take this job very seriously. tom: a lot of undecideds out there. that was written up in a lot the papers as well. i want your national perspective on this or this was michael to masking of "the new york times." i thought he was brilliant on the legacy of 50 years back on all of the silliness. the --ew hampshire, like

we need some democratic party civil disobedience. they are harder ash they are horribly unrepresentative of a party that is now 50% white. iowa, 85% white. new hampshire, 90% white. he goes on to say the first primary should be florida and michigan. is this the last time around for the importance of the iowa caucus? kevin: absolutely not. when i talked to democratic strategist, they say there are -- they say it is a catch 22. democrats are making that argument, on the other hand they are saying they have to win back the heartland. so which is it? the upper echelon of democratic established members -- i think that there are several campaigns that would be benefited from saying that iowa does not matter. but the last point i would make on that is that if you have a comesy season, where ohio

first, we all know i am passionate about pennsylvania where i grew up what is the point a going to these other states? it is a very fine line that i think a lot of these intellectual democrats have to be careful for. francine: kevin, for our international audience, and a lot of people know that iowa and new hampshire is important, but they cannot really figure out why. can you explain simply why this is so important, to give us an insight into the democratic candidate, who that will be? kevin: it is the first leg of a marathon. it is the first test for a campaign, for how to organize, fund raise, for how to get momentum. this is the first stop on the election marathon. and so when you look back on this, it really has always proven to be a test. whomever wins, does not necessarily to go on to win the nomination. however, it does change the trajectory of the race in the sense that it provides new markings.

if biden were to finish out of the top three or four, that would be a significant piece of political data in terms of the state of his campaign. should there be a surprise, should rudy judge finish ahead of biden -- should buttigieg finish ahead of biden, for example, that would also be a surprise. it is a good marker, a good data point, a good indication of where things will come as we head into new hampshire and about a on super tuesday. francine: is that it for impeachment? acquittedresident -- will the president be acquitted in the next couple of days? kevin: the odds of acquittal would be 99%. it will be a massive story if he is not acquitted. francine: thank you so much, kevin cirilli. our bloomberg chief correspondent early in iowa to brief us on what happens next in this race. christian keller is still with us. you viewhange, the way economics, but is it too early to try and model these different kinds of presidencies?

christian: well, if you go by what they say, what they want to do, i think one can -- remember, before the coronavirus, it was one of the most frequent questions, what could rattled the u.s. markets in 2020? it was always the election came people said it is whether we know the democratic candidates or their chances most people thought elizabeth warren was on a winning path. then a lot of people started looking at her policies and were wondering what he/she wanted to do with the energy sector and health -- what she wanted to do with the energy sector and with health. were waitingple with the polity ability that the democratic candidate could win against donald trump. tom: christian keller with us, a good news flow in london as well. a new separated united kingdom from europe. stephen engle, scheduled to be

with us at the top of the next hour as well. our special coverage tonight on iowa, kevin cirilli and david westin and their team looking at iowa. what we are going to do is dive in at 10:00 p.m., when we get some tangible results. look for that worldwide. this is bloomberg. good morning. ♪

>> the mandate also makes clear that this offer, it is

conditional on at least -- francine: that is the chief negotiator when it comes to brexit for the european commission. he is just briefing reporters, and of course insiders in brussels, that some of the office -- some of the offers he will give, and we expect prime minister boris johnson to rebut that, as to whether there is agreement whether he will force or threaten without a trade deal. last friday came and went and the u.k. is out of the e.u. and then you have 11 months of this, negotiating paired will the two sides be able to reach an agreement? christian: it is a big debate, and the first thing to take away is you will have continued uncertainty. the one thing we hoped to gain with the clarity of the vote as it was in december, the markets could have more certainty going forward. what we are seeing now is that it is going to be a very difficult negotiation. there will be a question to what

extent both sides are playing this as a tactic for the negotiation or to what extent they are real and they will put this through in the style all the way to the end, in which case, the lack of a very harsh and hard brexit, if you want, would be quite high. tom: the story continues. dr. keller with us, we will come back and speak on china. miranda carr will join us as well. wonderful domestic knowledge of the chinese landscape, and of course, it is deeply troubled. energy is outd with three exceptionally important tweets on the shortfall, the plunge of oil that we have in china. we will talk to miranda carr about that next. stay with us. this is bloomberg. ♪ sometimes your small screen is your big screen.

and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. whether you're travelling around the country or around the house, keep what you watch with you. download the xfinity stream app and watch all the shows you love. tom: washington. a changed washington. on a path to acquittal for

the president? is perhapsucus afore acquittal, but it is tentative washington on a beautiful february morning. rated january go? firstrge of that with our word news is viviana hurtado. china,: we begin with the country promising financial stability in the midst of the coronavirus. chinese stock still following since -- in the most since 2015. the death toll has risen above 360. a warning from the u.s. eyes officials -- discover as passenger has come from china, the flight may be rerouted. senator lamar alexander says the president crossed the line

but says voters must decide the president's fate. the vote for acquittal is set for wednesday. last night, a thriller at the super bowl. the kansas city chiefs coming from behind to beat the 49ers, the chiefs trailing 20-10 midway through the first quarter, then scored three touchdowns in about five minutes. patrick mahomes was the game's mvp. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. tom: thank you. let me show you a chart before we got to miranda carr and christian keller from berkeley -- this is a chart with the markdowns of three firms on china. the chen -- the trend of china growth here.

statistic.th a 5-6 these are surveys from eurasia growth. certainer 5% given difficult outcomes. can we make these decisions -- is there enough information to extrapolate out what growth weakness would be? expect: for q1, you can a massive hit. consumption will go down. industrial production. you will not get the post spring festival rebound in manufacturing and construction. but beyond that is tricky. we do not know when the plateau for the virus is going to start. start it could recovering. a lot of the worst-case productions will not come true if we plateau in q2. the problem is when will that start. tom: what do you see in the

chinese press? what do you see that the chinese are saying over the weekend as they begin their tuesday? miranda: a lot of it is all about stability and trying to calm the worst fears and rumors going around, particularly on the weibo chats and to get people to behave as normally as possible in an extraordinary situation. there is a dislocation in terms of what happened over the new year, people not being able to return to work, and people changing and having to work from home, videoconferencing, radical changes to behavior. it is having a massive impact. willpends on how long that last and if there will be secondary effects or if it is just short-term. francine: we had the store last

week about 300 million chickens that were not able to be fed because supplies couldn't come in and out in that province. is it completely locked down? do we look to past events for similarities or have we never seen anything like it? miranda: there's is a difference between this and sars. sars was reported after the spring festival. so you had the restart of production after the spring festival. workers were in the right place. now you have quite a few, like property company saying they will delay construction, manufacturing delays. anbasically we are having extended shutdown, which is not, in itself, catastrophic. but once you get into march, that is when cash flows and investments start getting hit and you get second round affects on these properties, the investment, and the manufacturing companies. francine: so could we see a downturn to a point where -- is growth that 3% in china, is even

less? christian: that would be a severe scenario. our worst case is below 5%, which is quite a shock to china. china in 2003 was around 9% of mobile gdp. now it is 19%. 20 million people left china for tourism but last year it was 150 million. the role china plays has changed a lot. the duration is crucial. different to sars, this is a highly infectious, low mortality epidemic, which if you model it economically is worse than a high mortality, low infectious epidemic. tom: expand on that, please. why is a low mortality infection worse? --istian: because it spreads

low over tally and a high infectious epidemic is worse because it continues to spread. and from a short-term economic point of view, a person dying is, as i said, is not necessarily have a worse economic impact than having tens of millions of people in lockdown and a lot of these supply chains being disrupted and people not consuming services. services will not be made up in upcoming quarters. manufacturing, they can ramp up and make up some production in upcoming quarters. but if you are not traveling this quarter, you cannot take the rest of the year off and travel. tom: interesting. kristin keller of barclays and miranda carr of haitong. an important conversation with our guy johnson in london with

oaktree capital management. howard marks is always interesting to listen to, whether you agree or disagree with him. mr. marx at the 6:00 hour. this is bloomberg. ♪

this is "bloomberg surveillance." we will have plenty more on the coronavirus, the impact it will have on oil demand in china, but for such get to viviana hurtado but first, let's get to viviana hurtado in new york. the viviana is watching halftime show, that is why she was not out there. and tom: shakira,

keene -- that is what i would be watching. bloomberg has cnese oil demand dropped 20%. opec and its allies are now considering an emergency meeting. still with us christian keller of barclays and miranda carr of haitong. intensech a resource economy. 20% of oil demand -- could get worse? miranda: it is slightly confusing because you still have the spring festival effect and the rebound. 20% encapsulates that period, which is unusual anyway. it is not indicative of what will happen the rest of the year. the interesting thing will be after. obviously, the authorities are currently in we have to deal with the crisis and are dealing with that. but obviously everyone is now expecting what stimulus will come in terms of whether it will be the conventional construction

stimulus, infrastructure, more spending, more lending. back to theost goes 2008 model, which it people loosely had said it would not, but it may have to go to the more traditional stimulus. then after this crisis, you get a recovery in commodities demand driven by china stimulus in q3. francine: do you agree with some of those estimates? christian: i would agree, particularly with commodities with construction. used for trance rotation globally, so to the extent we are now seeing airlines flying with a lot of transportation down -- again, i am not sure how much one can make up for this later on, but a lot of the other commodities, definitely. china has shown a capacity to quickly boost activity if they need to come in the old-fashioned of building and constructing. tom: what is your run rate on

china gdp? are you assuming a below 6% statistic? , fortian: we have below 6% now. but that is, by now, probably a benign base for the year as a whole. firsth said earlier, the quarter, we have to shave off maybe 1%. but that is q1. march.et a payback in if this expend -- extends into q2 with ripple effects into q3, we had to think below 5% growth for the year as a whole. not a current scenario but a worse case scenario. tom: does that come out of consumption? we are playing with numbers here. 5.6%. 4.2% statistic. how does that affect chinese consumption? miranda: in some ways, the

consumption is not part of the economy to worry about, to an extent. from the spring festival, people still have money, and from when the virus passes, they go and spend again. but you easily get a consumption rebound. the problem will be private sector manufacturing where some of the orders are not coming in. you already have the trade war potentially changing the supply chain in south east asia or to other countries. we already have some of that dynamic happening. it will be that that will potentially hit, that side of the economy, which could have the longest term drag. francine: is there a limit to what pboc can do to support the economy? miranda: they can move into this infrastructure and push more money into it, and it has

already eased. you have the 10 basis point cut in rates already. it has been very generous in terms of shoveling money into the economy, into the markets today in order to stabilize everything. if a lot of this is not -- you are talking about the private sector, the property sector, it is more difficult to stimulate and support those, so that will be where the biggest risk is. francine: thank you for joining us. miranda carr of haitong and barclays.keller of coming up, philipp rickenbacher joins us. we will discuss earnings and negative rates. this is bloomberg. ♪

a goodu.s. economy is in place. solid growth. historically low unemployment. inflation stable. we left rates unchanged. that was the right call pure the policy in place is -- can support a continuation. key headlight on that for me was we are not that far away from 2% inflation goal now.

open to opinions. vice chairman richard clarida. francine: let's talk about european banking. this is the one thing we need to focus on, given negative rates. julius baer setting up to cut jobs. the chief executive of the private bank is letting out a strategy that focuses on cost cuts. meanwhile, julius baer also --pped its target for we are joined by philipp rickenbacher, chief executive of julius baer. can you ask when exactly what kind of bank you want to build. how will julius baer be different five years from now? philipp: thank you for having me. julius baer's strategy is going to be centered around our clients, our enter been a real spirit, and our international

presence. it will sharpen the focus on our clients and add more focused, more relevance, more solutions, netop clients and high worth clients. we are accelerating investments in technology to reduce costs. and it will shift focus from a primarily as a gathering strategy into net profit growth. one has cost, that is component, but that is only one component. francine: growth was the driver of the julius baer story over the last decade. why change now? philipp: growth has been the driver and will still be irrelevant driver moving forward, but we believe we need to take a more holistic focus on the outcome rather than looking at single input factor. is relativelyey easy to achieve, by editors harder in today's environment to

do it in a profitable way. that is why it is important to focus on asset growth at the same time. francine: do you rule out an acquisition if something came up, that would be a good fit for julius baer? has beenjulius baer good at acquisitions over the last decade. we have made a few landmark deals over time and integrated them well. we continue to scan the landscape and look at opportunities. we would be open to that under certain conditions, they target arrives at the right price and at the right place. tom: you know the swiss landscape like nobody. what will be the distinctive feature of julius baer to compete with the two giants? we have ae believe few distinctive features in our two key segments in high network and ultrahigh networks.

in high network, it is our commitment to personal service to those clients and having a dedicated relationship with each client. we have already started to build a scalable engine to make that happen. in the ultrahigh network space, more than 150 billion of assets already booked with us through our ultrahigh network clients, we are a truly dependent player pee wee have no conflicts of interest. at the same time, we have a fantastic -- that aents appreciate normal sleep -- enormously. to: they also need appreciate financials p or compare and contrast what makes you superior or not to credit suisse and ubs? philipp: if you look at our return on cte one, that is a

distant to future of wealth management. yes, we have been very space and have been rock solid, as you have been saying. on the other side, conservatives should not mask that we have a modern product range and we can offer real and deep solutions to our liens. what is your priority over the next 12 months? is there something you want to come back on bloomberg tv and say that is the one thing i wanted to achieve and i did it right? theipp: we want to get transformation going. and the dynamic across the entire julius baer network. there is a comprehensive program we are starting now into 2020. this has a big revenue element. we need to continue on those elements and continue investing. this has the cost and productivity element. we need to get that out of the

way quickly in order to look forward. then there is an element of culture. we are rolling out a new code of conduct that we want to build comprehensive culture moving forward. francine: thank you for joining us. he is philipp rickenbacher, the julius baer chief executive officer. we were looking at some of the impact that negative rates has on a lot of these banks pay let's get back to christian keller of barclays. does negative rates mean for the real economy? christian: it means a lot of things. first of all, what is interesting from the interview is how he mentioned margin pressures. where people are getting increasingly concerned is that the first thing to impact negative rates on the real economy as it makes a lot of investments suddenly feasible to carry out, which were not before with a higher interest rate. of course now, everyone looks at the potential negative side effects of negative rates on

banks. that is the famous reversal rate. at what point can the bank not pass on the negative rate to its depositors? the bank is essentially a maturity transformer, taking andy at the short, low rate lending it at a high rate. you cannot charge higher rates because the yield curve is flat. and if the banking system itself no longer works, you can argue that is a negative effect on the real economy itself. in: the lower left corner this chart, the two year and 10 year german yield. rickenbacher knows this so well. what we have seen is a modest rollover in the two-year. the persistency is getting to be huge. escape the urgency to negative rates? christian: the urgency -- first

of all, we do not have negative rates everywhere per the u.s. does not have the issue. we have the issue mainly in europe. area andnly a hero japan problem. but let's stick with the your area. differentlyis strong in different places. if you look at some of the german banking systems and the net interest rate margins, it starts creeping up in some of the areas. we are seeing massive consolidation already in german savings alone. in someit will creep up of those areas earlier then it may be in periphery banks. but we still have higher demand on lending and higher rates. francine: christian keller of barclays. we are also hearing michel barnier speaking, still in english, as tom wanted to point out -- he is speaking at the european commission in brussels. i believe we are also expecting

prime minister johnson to lay out his vision on how he sees these brexit negotiations playing out. mr. barnier saying he is setting out the vision for the u.k. -- this the first time we have heard from the e.u. commission since the u.k. left the e.u. on friday, technically, unveiling this post-brexit negotiating mandating proposal. you can see pound 1.3060. tom: a lot of interest in what sterling will do. coming up, john ryding. also, prime minister johnson to speak. this is bloomberg. ♪

this morning, the wuhan

virus in hubei province. evacuations.nues 11 cases in the united states. 11 airports now screen for viral symptoms. in iowa, let it begin. the beginning includes a record number of undecideds. mr. kevin cirilli says he is undecided, but he wants to get up this early in the morning. he will be with us in a bit. then there is the super bowl. andy and patrick and shakira and j.lo. the chiefs get it done late in the game. good morning. this is "bloomberg surveillance. " from our world headquarters in new york and francine lacqua in london kid i saw tottenham beat man city. [laughter] francine: i was looking at rugby. i think france beat england. i do not know how that will

be in a post-present world. tom: lots of talk about. seriously on the virus and also mr. johnson is speaking now. what is the substance year of prime minister johnston's first soiree independent of europe? francine: we expect him to say he is ready to walk out without a deal. what it means for the markets is they need to try to understand the starting negotiation relationships. moments ago we heard from the chief trade negotiator from the e.u. side, michel barnier. this is like a chess game. each side comes in saying this is what we want, this is our redline, and we will see if they meet in the middle or not. but this is the first time we are expecting prime minister johnson to lay out what he wants in terms of a future relationship with the e.u. tom: very good. right now, also speaking, with our first word news, here is viviana hurtado.

viviana: we begin with the coronavirus outbreak and how china is trying to come to grips with its spread. chinese stocks plunging the most since 2015. it was the first day of trading after the extended lunar new year holiday. the number of cases of the disease in china soaring past 17,000. more than 360 people have died. outside of china, the philippines has recorded the first death. here in the u.s., a new poll saying bernie sanders will win tonight's iowa caucuses. it is the first real test for democratic presidential hopefuls. 28%.oll has sanders at joe biden at 21%. pete we to judge and elizabeth warren are in a virtual tie with third. and we heard prime minister johnson speaking life moments ago -- he will threaten to walk away from trade talks, rejecting

e.u. demands. the e.u. is expected to set out its own redline for a trade deal. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you. three to reacting off five days of news. futures up 15. the your in fractionally as well. i know you are up fractionally as well. -- you are watching sterling. francine: prime minister johnson theing about the deal with e.u., shall barnier on the e.u. side saying that a deal is

challenging because the timeframe is so short. tom: thank you. what we wanted to do on a monday to get started for february is find somebody holistic on economics. not only european and the economics of his united kingdom but also the united states. beginning an affiliation now with brean capital. let us start with your tie. i have to start with your tie. as tie -- please give us close up. it is a british tie. is it because preston is doing better? john: no, it was because we were discussing brexit, so i thought we had -- i had to wear part of my halloween costume. tom: i should have worn my british bowtie. francine: i gave you one. tom: so what will british sterling do off of what we have seen with brexit? john: francine point out that

england was beaten by france in rugby yesterday. haso coin a phrase, nothing changed. formally out of the e.u. for the next 11 months, they have to behave as if they were still in the e.u., and they have to come to a trade deal. this is just a deal to discuss to get a deal. so now we are posturing. we have prime minister johnson saying he will not accept e.u. rules. i am guessing he wants a canada-style free-trade deal. the problem is banking services are so important to the u.k. it all depends whether this becomes a hard brexit in december or whether they come to a real deal to allow things to continue. will getng, i think,

volatility and will go nowhere. tom: right now, as we have been doing at the top of each hour across all of bloomberg, an update on china. our rishaad salamat is here from hong kong. it has been an extraordinary weekend. what will you try to observe in your china tuesday? what is distinctive monday to tuesday in hong kong and across the nation? rishaad: i mean the outbreak is clearly here, leaving china more and more isolated. you have the united states, india with three cases, australia, indonesia, new zealand, the philippines -- all imposing restrictions. in the 14 day and seven-day down 10repo and rates points -- cannot only help with the margin? we have the other story, oil consumptions -- 20% down.

that is the demand side. thinking on the monetary side, perhaps that -- many economists saying there are too many margins. francine: how difficult is it to understand the side effects of what we are seeing? what does that mean for how we model and look at economics? -- i mentioneds the oil consumptions story. you can extrapolate what is going on with other things. ultimately, this was the lunar new year. in the lunar new year, you give presence, you give things which you give one time a year, perhaps, so that does not come back, that kind of demand. not spend people did on some things, but they clawed that back in later quarters. will not be able to claw -- we will not be able to claw some of

that back. and export manufacturing, that is going to hurt, ultimately. and there is a triple whammy here -- versus the trade tensions. then protests on the streets and writing -- rioting taking place on the streets of hong kong. now we have this as well. a lot to contend with. carrie lam coming out and closing more borders with china, making it harder for mainland chinese to come into the city. francine: what does it mean for commodities? we are hearing there could be 20% less oil consumption coming from chinese? have a look at the shut and how it will be includingtals, jiangxi, shandong -- if you like the commodities breadbasket -- the chinese outperform any of these commodities are likely to

be severely curtailed, not just on the export side but also in demand for raw materials. it will have a circular effect. which one hopes will be able to be dealt with further down the line when containment is dealt with. tom: thank you so much. rishaad salamat with us from hong kong this morning. right now, i want to go to john ryding quickly on what we heard. is this is whether a virus from a dearth of aggregate demand. is a story on -- eli what do bankers do in the u.s. or china when there is a dearth of aggregate demand? how do they jumpstart that? john: analytically, we need to think about the economic impacts at out of china more on supply. it will be a disruption on the

global supply chain. one has to think about the impacts being more like what happened in the wake of fukushima in japan after their nuclear problem. because you're not going to get the same shipment of components of goods into u.s. factories. i think the issue is much more the supply chain for the u.s. aggregate a dearth of demand. obviously, what happens these --s is a bunch of when demand is short. tom: and if we see under 2%, trump reaction -- speaking of the president, he will be focused on iowa. we will go to to des moines with our kevin cirilli there. look at our special coverage of the winners and the losers tonight at 10:00. this is bloomberg. ♪

tom: "bloomberg surveillance." lots going on right now. francine lacqua paying attention to prime minister johnson speaking in the united kingdom. -- whateveressay your politics in america, everyone listens to the statistical depths of the author. he has written a jewel of an essay on iowa peer the democrats lost to the president and may do it again. the democratic party has always been a coalition of out groups and awkward alliance. four top contenders from the democratic northeast. it goes on to say that noncollege whites are a

significantly larger share of the electorate than exit polls have indicated. for the first time in american history, the most populous state is a political outlier. clinton's 2060 margin in california was 30 points. a good introduction to our kevin cirilli in des moines. is iowa and outlier or is it the heart and soul of the battle of these two parties? kevin: i do not think it is an outlier. i think it is a first stop in the marathon to becoming the democratic nominee. i also think it is indicative of the states democrats will need to win back in the general election if they want to pick -- take back the white house. they will have to win one of those states. tom: can bernie sanders do it? he is leading. we know he has the younger vote.

frame where bernie sanders is tonight. clearlyernie sanders is the frontrunner. he has painted iowa bernie sanders nation. it comes down to momentum and organization and turn out. from there, the expectation is senator sanders will win iowa. if biden were to beat him, it would be a significant win for him. finishes outside the top three, we will be talking he has -- -- buttigieg and warren on andrew my eye yang. the 50% threshold on the first caucus ballot -- if you do not reach 15%, your supporters have to go somewhere else. where do amy klobuchar and andrew yang's supporters go? this could really drive momentum tonight. , ascine: if the president

expected -- i think you told me in the last hour that there is a 99.9% chance that the president gets acquitted in the impeachment trial. what is that due to the polls? kevin: i do not think the impeachment has waited significant the on the electorate. when i talked to voters, they pointed to climate change, the economy as issues driving them. medicare, health care. in terms of what it does for trump world, i spoke with one source on the trumpet reelection campaign that set the impeachment has not had an effect on their strategy either. i think what it does, the acquittal, is just rid of that issue as we head into the rest of the calendar year. francine: thank you so much. bloomberg's kevin cirilli in iowa for us throughout the day. let's get back to john ryding of brean capital. what do the markets look at when

it comes to iowa and new hampshire. what are they looking for? john: obviously looking for clues as to who will be the democratic nominee. there is a big difference and economic policies between the warren-sanders side of the party and the more moderate centrist side. if it looks like we will see a strong showing on the left, then that raises uncertainty about what the economy might look like after 2020. the big thing we are missing in this economy's capital spending. if we replace trade uncertainty with election uncertainty, then i think that is an issue for capital spending. the u.s. desperately needs to restart growth in corporate capital spending. tom: there is an essay out with the idea of sub 2% gdp. are you there?

john: no, we were looking at 2.5% gdp growth with some pickup with the phase one trade deal. i think the economy gets knocked off quite a bit in the first quarter. it is better than 2% first quarter. because we have such a low inventory billed in the fourth quarter of last year. back to the supply chain, how china might manifest that is it creates an inventory drawdown in the first quarter. and that is output to be made up in the second quarter. it may affect the timing between the first quarter and second quarter, but i do not think we have a material impact beyond, say, 1/10 of a point or so on gdp for 2020 as a whole. tom: john ryding with us. we will try to get in fed discussion as we are wont to do with mr. ryding.

events, not only tonight. looking forward to the state of the union. the iowa caucus tonight at 10:00. then the state of the union -- we will see if the acquittal will happen before that -- now, p.m. tomorrow. this is bloomberg. ♪ ♪

."m: "bloomberg surveillance good morning. francine lacqua in london. i am tom keene in new york. right now, wonderful special guest for you in d redlawsk joi.

his wonderful book is "whyhe dor definitive experts on how we vote. professor, you have been a caucus chair in iowa. what actually goes on in those living rooms? what is the body language, the human condition in a caucus versus a voting booth? prof. redlawsk: good morning morning to the biggest difference is when you are in a caucus, for the democrats, you will show your support publicly. you will physically move around a room versus just dropping a vote in a ballot box. so when people come in, there is sometimes a bit of confusion, little bit of uncertainty. some voters do not know where they want to go to start with. others make a beeline directly to the corner with their candidate.

there is a lot of noise and anticipation and a lot of friendliness. tom: what is the game theory of the second choice? i feel like in the 17th century in america, where villages decided to do this for everything. what is the game theory after the first choice and when everybody gets to their second choice? prof. redlawsk: it is a bit like an old-fashioned town hall. when it comes down to is if you go in there and your candidate does not have enough support -- generally 15%, you have to think about what you want to do next. but some of it is going on behind the scenes. often candidates and campaigns are going -- talking to each other. precinct captains will have some instructions, perhaps, to say you should join candidate x. an example for my congress -- caucus in 2004, there was an agreement between candidates. i will say, and my precinct -- it is hard to tell iowa ands -- iowans what to do.

francine: how have these caucuses changed over the last decade or so? do we still trust them? are they still as important as they have been historically? prof. redlawsk: there is no question iowa is just as important as it has-been when it first became first in 1972. all the candidates come here. all the attention we're getting this morning, obviously. they have changed in a couple ways. the biggest change for democrats has been massively increasing turnout, particularly in 2008 but also in 2016. and there are new rules. one of the first is if your candidate already has 15% when you join that group, you will be locked down. you cannot express a second choice vote. that is different. it used to be a campaign with extra voters that they do not need to get delegates that could be sent somewhere else.

tom: your wonderful book, "why iowa?" why iowa in 2020? prof. redlawsk: the "why iowa?" in 2020 is what it is about, candidates on the ground, meeting voters, talking to voters, answering questions. i've been here for six months. i have watched candidates changed. a great example is andrew yang, talking about free money for everyone. now he is a full candidate with a complete platform. tom: we look forward to speaking to you again. david redlawsk of delaware in iowa. coming up on bloomberg radio, our conversation of the day on hydrocarbons with edward morris of citigroup. this is bloomberg. ♪ ♪

that is a very complex legal question. tom: prime minister johnson to

applause and then stepping up to the lectern again, continuing his comments today. we heard from mr. barnier earlier this morning. it is a festive day. will we see this every other day for the next year? francine: we might on so they start negotiating. there is a thing called the tunnel, when the u.k. and the e.u. that they were serious enough to find an agreement and no one spoke to the press and that period of time. we have been following the spread and containment of the coronavirus. china, we understand through our resources on the ground, is now said to review their 2020 economic growth targets on the virus. remember, chinese lunar new year was extended for a couple of days. this is the first time we saw chinese stocks open. ago, from our bloomberg reporting on the ground, we understand that china may review

its 2020 economic growth on the virus. tom: hong kong out with its adp growth as well. it was expected at -1.5 percent. they are doing a little bit better at -0.4%. here is viviana hurtado. viviana: we begin with the coronavirus and how china is promising financial stability, the central bank pumping billions into the system. still, chinese stocks falling the most since 2015. the death toll has risen above 300. a warning from the u.s. -- if officials discover a china -- a passenger has been in china in the last 14 days, flights may be rerouted, even those already flying. in capitol hill, republicans preparing to acquit the president, or one of the senator saying that the president crossed the line but that voters must decide.

the vote to acquit is wednesday. over to london. authorities say a man who stabbed two people before being shot by police had been in prison for terror related crimes. prime minister boris johnson plans to introduce measures that --ld change how terrorist bowl, the super chiefs came from behind to beat the 49ers. chiefs quarterback patrick mahomes was the game's mvp. is as a 49ers fan, it certainly the thrill of victory but the agony of defeat. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. tom: thank you. right now in the fed, our david

westin in discussion with vice chairman of the fed richard clarida. richard: the u.s. economy is in a good place. historically low unemployment. inflation stable. we left rates unchanged, but that was a right call. we think the policy in place can support a continuation. astute one has been more on wishing for inflation then john ryding of brean capital. he is with us this morning. there was one headline in there 2%.e are osort of near can the fed reflate? john: monetary policy can reflate inflation and can around the worldpay the problem is it is not a good thing. when inflation gets going, you can look at chronic inflation cases around the world, it is a bad thing. my problem with the fed here is

that there is hubris. like 1.2% is somehow meaningfully different than 2%. in the 1970's and inflation was running out of hand in the u.k. and in the u.s., double digits at times. to get even closer to percent was considered a victory. now, central bank thinking is we have to get inflation up, and we will hear it, i think, later in the view ofm monetary policy that vice chair claire to -- clarida is running that the federal want to hit 2% inflation over an average period -- my guess 3 years -- which means it will have to run about 2% for a while. meanwhile, go out to the street and find a member of the public that says they want to see the

cost of living rising faster. the fed has done an incredible job on stabilizing prices pay they should be doing victory lap's rather than trying to raise the inflation rate. thecine: is the virus, coronavirus, inflationary or deflationary for the world economy? it is obviously very -- john: it is obvious he very difficult to what we know about the virus? the last major incident like this -- it seems to spread more rapidly because this is double the cases of sars. it has a lower death rate, about 2% rather than 10%, almost 10% in the case of sars. but it will be contained. the economic damage from containing the measures will have a temporary disruption to output. temporary disruptions to output are inflationary. thosedering some of

medical surgical masks that in someant to have effort to combat the spread of the disease. they are in chemise short so -- they are in extremely short supply. withine: up next, we speak howard marks. he joins us, and we will talk about some of the valuations out there. we will also focus on what china said. china will be reviewing its 2020 economic growth target because of the virus. we will see what howard marks thinks of that. this is bloomberg. ♪

francine: this is "bloomberg surveillance."

tom and francine from london and new york. let's head back to the london investmentconomics conference. we have been speaking to people in finance. guy johnson is speaking to oaktree capital's co-founder. guy: we are joined by howard marks, cochairman of oaktree. nice to see you. you are famous for saying that you cannot beat the market by looking like the market. how do you see the market now and how much is it being affected by the conversation tom and francine were having about the coronavirus? howard: the market has done well for a long time. the u.s. economy is pretty much the enemy of the world. and stocks are selling at high valuations. given that economic preeminence. say the u.s.e to

goes on as preeminent and the stocks deserve a high valuations. but when socks are high-priced, they are susceptible to shocks. had the badly when we iranian attack, counter-attack to what we were doing. then they bounced back. now, they have suffered, relative to the coronavirus. we do not know how fundamental or overarching or long-lasting that is. there are a lot of things that could affect the environment negatively. the question is will they do so and with the sox bounce back? guy: the temptation, with the -- will the stocks bounce back? to say itemptation is is short-term. what will it take for something

like current averse to become more significant and sustained medium-term? howard: in the small term, it will take coronavirus exceeding people's expectations. geometrically, if no cure or vaccination appears on the horizon. people get negative about it. thebigger question is that markets have been dominated over the recent years by optimism. momentum. liquidity. and a belief that there is no alternative. -- and thoseis feelings. those are feelings. those are different from fundamentals. the question is how will those feelings continue to be enforced -- in force or could they change?

guy: a lot of that has been driven by central banks, the united states and europe and china. do you see any kind of negative market reaction generating a significant policy response? we have already see the pboc in the market this morning, concerned about the liquidity situation in china. --ld you expect therefore be would you expect for there to be a significant response in the united states? howard: my answers i would hate that, because i do not think it is or should be the job of the fed to care about the markets. job has beenonal to control inflation. there secondary job has been to support growth, so that jobs are created. now they seem to have taken on a third job, which is prevent recessions.

i would hate to see them also take on the job of making sure that the markets go up. guy: you would hate to see it. that is different from that is going to happen. howard: it could happen, any you could argue that it did happen. back in the fourth quarter of 2018, 1 of the things that contributed to the record declines that we experienced was said to be the hawkish view of the fed, the yellen program of rate increases, which powell said he would continue. accidentthink it is an that the market started to go down in the beginning of october, which is when the 10-year hit three and a quarter. but then they flipped. they flipped to rate cuts. there was a series of three rate cuts to the market like that

very much care the markets had a great year last year. guy: the markets also liked the repo from last year. do you think that was a can to bidding factor to the rally that we saw at the back end of last year into this year? you think that was a contributing factor to the rally that we saw at the back end of last year into this year? howard: it is hard to see the plumbing in the markets, so it is hard to tell what caused what effects. i do not hear about people talking about their repo injection. i think fed watchers and macro thinkers and so forth like the idea that the fed will come to the rescue. that is part of that. been scooping up distressed debts over the last two years, to go back -- well before the coronavirus was even talked about. do you see the trickle of

distressed debt in china now becoming an avalanche as a result of what is taking place in the country? howard: i would not even call it a trickle. our investment may have been a trickle, because we are feeling our way and getting used to a there is a good them -- but not for there is a good amount of distressed debt in china, more than a trickle. look -- clearly, the virus, figures on will wreakof time, havoc in certain areas of the country and certain sectors of the economy. china's talking about having 4.5% growth in the first quarter, which is extremely low.

for a long time, they said we need six and we will get six. to say they will have 4.5%, 4.5% a low oruld be negative number. the wheelsot keep turning over there. probably, you would have a substantial increase in distressed debt. unless the bank injected liquidity and offsets it. guy: would you see that as an opportunity? howard: yes. guy: so you will be investing. if there was to be an increase in the amount of debt available, you will be participating and upgrading in that area? howard: i would expect so. guy: let's turn briefly to u.s. politics. the iowa caucuses are this evening. if bernie sanders was the democratic candidate, how would you react, as an investor?

howard: how would a typical investor react? business would say that sander'' policies are not pro-business. that they are antibusiness. the market very well under trump , primarily because he is a pro-business president. regardless of anything else, that is a dominant consideration. deregulation, economic growth, etc. think there is no doubt that, in investors' minds, that sanders would be an antibusiness president. he thinks that wealth creation is accomplished with negative that he does not believe

should be undertaken. so i think, on the one hand, it would be concerning. on the other hand, they would public convince most people that trump's chances of reelection went up. guy: thanks for stopping by to see us. oaktree's howard marks joining us at the lfc alternative investment conference. tom: guy johnson, thank you so much a method london school of economics. coming up next, the conversation force her to lynn and all of european banking -- david herro is a shareholder of credit suisse. he has been very supportive of the present chief executive officer amidst management turmoil. this is bloomberg. ♪ erg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and

new york. a power struggle at top is coming to a head. tensions are mounting between the chairman and the chief executive. david herro, deputy chairman at harris associates, is one of the top investors in credit suisse. always, fors joining us. first of all, are you standing by the chief executive, tidjane thiam? thed: let's look at evidence. tidjane thiam has been chief executive for about four and half years. he turned what was an under earning business into one that is now very strong, from a capital position, and is growing its wealth management business and its stable earnings stream. a lot of volatility we used to see out of the global markets business is gone. he has greatly, greatly improved the operations and the

efficiency of credit suisse bank. so we have this issue that started about four months ago the ex-employees, a key employee that was going to a crosstown rival. since this has happened, there has been what i would almost guess is an assurance traded -- and orchestrated amounts of news flow trying to pin something on to this day,, does not appear to have done something wrong. we are 100% behind him. other people i talk to, owners of this business, are in the same position. why would you expect a very successful ceo, who has done an external area job at turning around a business, to leave? i am puzzled by the whole nature of this episode. francine: is it true -- and this

is on the back of reports that top shareholders, including yourself, have written a letter asking that the chairman step down next year when the term is over. david: he was scheduled, urs rohner, who has done a good job and who was the person who brought on mr. thiam -- and i believe, friday, he came out to say some of these stories were incorrect -- but he is scheduled to leave after his term expires the 21st because of best practice and how long he has been there, etc.. our view is there is plenty of time to look for a successor to urs. the board, the nomination committee, should be using this time to look for his successor. there are plenty of qualified people. but mr. rohner's term was expected to end by 2021. this is nothing new. we encouraged the board to

proceed with a plan. in the plan always has been -- and urs' own words -- urs doesn't wnat to come back for a second term, if you ask him -- was to leave by 2021. by all indications, that will happen. francine: do you see issues at credit suisse that you're talking to other shareholders about? is there anything you would change? just see a very successful turnaround being executed it in used to be, if there was a volatile quarter in the global markets, for instance, you could expect a big loss at of credit suisse. as we have seen over the last eight to 10 quarters in particular, nothing but stable growth and stable capital built. i think people are pleased with this. they do not want the apple card upset -- apple cart upset. people do not want to see the board take and risk management.

circleide of that little do not understand this kind of war against the ceo. eitherery frank, it seems envy from the competitors, or perhaps there is something else, given that mr. thiam looks different than the typical swiss banker. either one of these two rationales behind this, these attacks against him, to me, are extremely distasteful. francine: david herro, too short a time, but we will get you back on soon. "bloomberg surveillance" continues on radio. tom and jon will talk you through what we know and do not know about the coronavirus. this is bloomberg. ♪ . ♪ everyone uses their phone differently.

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romaine: china stock market the daily limit of the yuan weakens at a key level over the dollar. thephilippines reports first fatality outside china of the wuhan virus. in the iowa democratic party gathers to choose its preference for u.s. presidential nominee, the first major contest of the 2020 primary election season. welcome to "bloomberg daybreak" this monday morning, february 3. i'm romaine bostick, alongside sonali vasek. alix steel -- alongside sonali basak. alix is on assignment. sonali: interesting day, with china down as much as it is. romaine: investors have had to sit by and watch the fallout of the