elections, u.s. stock markets have soared, 70% adding more than $12 trillion to our nation's wealth. >> president trump sells the economy in his state of the union, the great american comeback, with partisan tensions running high. a bottom for risk assets? the risk of infection for the coronavirus is slowing and potential treatments give hope to the market, while some investors go all in. and turbo tesla is almost the most valuable car company in the world. we speak to ross capital, who has a sell rating on the stock. welcome to "bloomberg daybreak" on this wednesday, february 5. i'm alix steele. in the markets, you're recovering from the best day for the s&p yesterday since august, and you are seeing some followthrough buying. futures up by .6%. the question is, how many of these are new positions or repositioning, and what will the stops be if we have any sort of negative headlines? euro dollar down despite the

fact it was at its highest level since august as well, and selling on the 10 year after the big move we saw yesterday in commodities, really participating in that risk. time now for global exchange, where we bring you today's market-moving news from all around the world, from hong kong to paris to new york and washington. our bloomberg voices are on the ground with this morning's top stories. we begin in asia with the latest on the coronavirus outbreak. nearly 25,000 cases of the virus now are confirmed. the death toll now climbing towards 500. hong kong announced plans to quarantine travelers coming from the mainland, and thousands remain stuck on cruise ships. joining me from hong kong is the co-anchor of "bloomberg markets asia." walk us through what we know today. >> just over there on the other side of victoria harbor, there's a ship where people have been quarantined, 3,of hundred passengers there. -- 3,600 passengers there. 3,500 are also in japan as well. but what we have are quarantine

regulations coming in here, people who been to the mainland about to have home quarantine for 14 days. but it's also really taking its toll, the human tragedies, but the economy as well is hurting. we've heard from the likes of mcdonald's. closing half its stores in china and seating other half, which are open, seeing dramatic falls in foot fall as well. we have the same time economists cutting and slashing their forecasts for growth in the first quarter, as much as 2.2%, looking between 3.8% and 4.8% growth in the first quarter. n other news as well, ma cow continues to struggle. it is something which has been really, really felt in streets near hong kong, tend to be a little bit eerie at times. very few people wandering around, and people working from home. some are calling it the biggest ever work from home experiment ever undertaken by humanity. lix: bloomberg's rishaad

salamat, thank you very much. the french bank posting a nearly of 3% jump in fixed income trading revenue after a rebound in rates. joining me from paris is caroline. walk me through some of the highlights. >> for b.n.p. paribas, the french bank had a really good fourth quarter of 2019, with a slightly disappointing outlook, as you were mentioning. 16 revenues actually jumped 63%, beating some european rivals, like u.b.s., deutsche bank, and actually putting b.n.p. paribas close to some morgan et rivals, stanley. the investment bank will keep gaining market share in 2020, in terms of retail, the french retail was actually quite

resilient, despite the strikes that we've seen in france at the end of 2019. however, if you look at the outlook, the return on equity, which they are targeting at 10% for 2020, slightly disappointed investors, that's why the shares are not moving that much in either direction at the moment. that's because, of course, of the low interest rates environment that's continuing to weigh on lending margins. and finally, we got in the coronavirus. b.n.p. paribas say their presence in the wuhan region is quite limited. they are, of course, very present in the rest of asia pacific, but so far seems to be beginning the january he has seen a continuation of business. alix: thank you so much, caroline. now we turn to the u.s., focusing on ford, up to a pretty rough start in 2020.

forecasting profit well below analyst estimates. shares falling in premarket trading. joining me with more from detroit is the bureau chief. what was so bad about the quarter for ford? >> everything, really. their costs were too high. they've had issues cutting the ford explorer to market. they've got warrant issues, which comes from quality. these are all things that were supposed to be done out of muscle memory by the conventional car companies. tesla was the one who is supposed to have trouble with this thing, and here it is ford. so they missed fourth quarter estimates, and they lost money on a net basis. they've reined in expectations below wall street forecasts for 2020, saying it's going to be a tougher year. really, the only slightly good news is they might break even europe, and they've managed to stem losses in china, but those are still not contributing to help here, and they didn't have much of the forecast on how their cost cutting plan globally is going to get them ack into better times.

lots of promises, lots of promises to get things fixed, but really, no blue sky that they can really firmly point to and say, yeah, we're going to get there, and here's when. and i think that really disappointed investors, and here we are with shares almost 9% in premarket trade. alix: totally brutal. thank you, david. staying on earnings, disney off to a magical start with its push to streaming. the company beat forecasts for its new disney plus streaming service. here in new york with more is the co-host of surveillance on bloomberg radio. walk us through the standout. >> very good quarter for the disney company. they beat on quarterly revenue and e.p.s. most importantly for the walt disney company is the pivot to streaming here. it's really subscriber numbers for disney plus, almost 29 million, in the first three months, coming in well above

expectations. they also touched upon the coronavirus. that is an issue for this company as well. they have significant, they have theme parks in shangscommy hong kong. both of those parks are actually closed right now. impacts there going forward, and that will remain so for the foreseeable future. the film business came in very, very strong once again for the walt disney company. their business is so strong with all the i.p. that they have, "frozen ii," "the rise of skywalker" were the two leading films in the quarter. the company talked about how espn, the cable network business, is continuing to do well. however, cord cutting remains a challenge. the bottom line is the company's pivot to streaming, a major deal for c.e.o. bob iger, seems to be going really well. >> thank you very much. turning to iowa's caucus chaos. the results finally trickling out in the democratic presidential race. 71% of the precincts have

reported, and pete buttigieg takes the lead, with bernie sanders coming in a close second. joining me is david westin, host of "balance of power." thank you so much for joining me. can you walk us through where we are now and how we got here, and then now what? >> well, how we got here, who knows? but where we are right now is, as you said, we still don't have the final answer. we've got 71% of precincts reporting. it's thought those are fairly representative. but the margin between pete buttigieg, the former mayor, and bernie sanders, the senator, is quite close. as you say, pete buttigieg is number one. that's the biggest news. he's doing very, very well, maybe really having a lead on the moderate slot as opposed to joe biden. that, perhaps in the end, is the biggest news, which is joe biden and how poorly it appears that he's done here, down around 15%. and he's said it's a long battle, he'll stay in it. but clearly this is a terrible blow to joe biden, his campaign has got to rethink what they're doing. but right now, it looks like

pete buttigieg is in the lead, trailing bernie sanders. and we had to go to new hampshire, and bernie sanders is ahead in polling right now. alix: david westin, thanks very much. next week, tune in for special coverage of the new hampshire primary, tuesday, february 11, 8:00 p.m. eastern time. don't miss with that. in washington, president trump striking a triumphant tone in his state of the union address. he touted u.s. economic address and a so-called great american comeback. president trump: america's fortunes are on the rise, and america's future is blazing bright. the years of economic decay are over. alix: joining me from washington is jack fitzpatrick, a bloomberg government reporter. what were some of the biggest takeaways from last night? >> the main focus of the speech was the economy and economic growth, which really got the best response, even from some

democrats in the chamber. it got more controversial when he moved off of that and turned, especially toward immigration, listing crimes that had been committed by undocumented immigrants, where there were boos and groans from the democratic side. when he said that he would protect social security and medicare, you could hear democrats groaning. they criticized him for going back and forth on entitlements. there was a mention of protecting second amendment rights, that democrats were not happy about, and even a gun violence protester who was taken out of the chamber. so, really, the top of the speech was probably the most popular or at least most unifying part, talking about simple things like the unemployment rate and economic growth. it was when he turned on to other more controversial subjects that we were left with a speech that resulted in speaker pelosi actually tearing

up a copy of the speech at the end. alix: yeah, visual not son forgotten. jack fitzpatrick, thank you very much. one other story we're following this morning is more fallout in the corporate front from the coronavirus outbreak to apple's main production partner. they're cutting outlook because of it. hon hai said overnight, the chairman telling bloomberg it is projecting a sales increase of no more than 3% this year. that's well below what the estimates were. you can see here the blue bars are the forecast with the outbreak factored in, a disney first quarter, but then a rebound. hon hai resumes production next week. but workers who traveled outside the province where its factory is located will also be quarantined for about 14 days. coming up on this program -- we're going to have much more of your analysis in today's first take. this is bloomberg. ♪

alix: time for the if the first take." joining me for our inhouse team of insiders, former f.x. trader. and here with us, macro risk advisor founder and c.e.o. my big question is, if you're looking at the markets this morning, do you buy into the risk? what do you do? >> this is really tricky. it looks like we put the virus in the rearview mirror, but there's still more to come. the lay tenancy of the virus is 14 days for the effects to actually come through. there's still more time to see if the virus has spread. i think the markets are a little over. it's not the fear of the virus or fear of illness. we sympathize with people who are sick, but it's the way

china has clamped down and shut down economic growth. you don't take the second largest economy of the world, literally quarantine 50 million people, shut it down and expect to see growth in the first quarter to the levels that we have projected so. we're going to see shortfalls in earnings. we're going to see shortfalls in growth. and whether or not the market is pricing that in or not remains to be seen. we're going see growth delayed into the second half of the year. what's the catch-up effect? alix: and that's what we saw from hon hai. tchow had a happen? yeah, everything is greats on the back half. there's a lot of pressure on the back half. >> i think what you have to fact that at the these calls are gone, it's done. forget about that with the coronavirus. i mean, you expect more, and we're going see more probably tomorrow with the philippines and the day after with russia. we could even see indonesia

basically announcing tomorrow. for nk if you're looking the trade, that's what put the central bank on pause. >> if i could cut in one second, and this is what i worry about, the second half of what you just said, all the central banks cutting. whatever stimulus china is putting in now, they are going take back. they always do. it's a very fragile sort of line they cross. so wherever we're looking for the second half growth, china is going curb that by taking that stimulus back in the second half. >> china did come in with a shock and awe type of approach. at least in the market's mind, it's enough. there is this narrative in markets about there's no alternative. low rates they're enduring, doesn't seem like they're going away. and so you wind up in the stock market i think for a couple of reasons. one is the earnings that have been delivered now, especially for big cap tech for the most part has been pretty strong. the market is optimistic about looking past this deceleration

of global growth, that we've bottomed and going to come out of this. i take a skeptical sandrue think the market is a bit ahead of itself. we've got a lot of things we still have to get through, and it just strikes me that this rally in the market is too much too soon. >> you make a break point with negative yields. poland was the first sovereign o issue at negative rates. they're supposed to announce any minute, so i don't think there's any change there. you make a great point with china. and now food prices accelerating here, it's going to be a little bit more difficult to do the traditional, we're just going to slash rates. it's going to be fiscal stimulus. let's wait and see. i think we'll see some announcements on that side soon enough. >> if you just step back for a second and close your eyes and

look at this situation, u.s. presidential elections, two major parties could not be further apart. absolutely nothing is going to happen in the next four years some sort of ., coming together in terms of policy making in the united states. you got a virus that could potentially become a pandemic. you have stocks at record highs. everybody is like, oh, it's great. >> don't forget the whole u.s.-iran thing, that the oil guys over the last few days, like, it is not over. it's nowhere near over. >> there's a little bit of overwhelm in terms of the market's ability to juggle these things. it's two years ago to the day that the v.i.x. imploded. so the v.i.x. event was in 2018. that's a market event in which the market itself that is the

cause of the risk. it's positioning, a product run amok, but it's also, i think this is something we can look at today, it is an incredibly quick change in the risk profile, the volatility on a realized basis was very low, and it jumped to multiples of what it was. and wee seen a little bit of that in the last week or so. if you look at the last 10 days versus the previous 10 days, it's about a 2 1/2 ratio. what happens in market structures, especially in equities these days, is that the ability to absorb that, that change in risk dynamic, can quickly change people's positioning. there's a lot of systematic strategy that is hinge on low volatility itself. the trigger is a change in the profile. so for example, yesterday is a risk-on day. but they're significant in that they're big moves, and it's this inability in some context these days, in modern portfolio management, in equities at least, to absorb a fast change

in the realized profile of the market. i think that's something a little bit technical that's worth watching. >> u.s. financial conditions. they've absolutely gotten crushed. at the year end turn, i ask you, we're down to 17 basis points. i've not seen financial conditions in the u.s. this loose, this easy in my lifetime. if you look at citi group, the bloomberg financial conditions, they're all trending to all-time lows. we have varying conditions, and that's going to keep it. >> i think you make a great point. i think what people -- just take a step back and realize how few human hands touch what's actually being done these days in the markets. and everything is systematic and everything is algorithm and machine written, and i know some of the people who write these programs, and i am telling you, it there's not as much intelligence behind this as you may think. i guarantee it.

i know these people. it's really scary what this is all built on. >> wow. >> i also like watching the fed curve. as of friday, the lows at the close on friday, the fed curve priced in two cuts by the end of the year. you might say that was a probability of one cut of 50, because they're going to move more aggressively. that's since eased off. but that's really telling you something. i think the experience of 2019 with the pivot at the end of 2018 was that bond market can be ahead of other risk assets, and in some ways, the bond market can drag the fed in. so, for example, if the pricing from the bond market expected the fed to do something, by not doing, it the fed is effectively a de facto tinetting policy. i think it's really worth watching on bloomberg, let's reacquaint ourselves with this, because i think the curve itself can be instructive about how bad the bond market thinks things are.

and what the fed might have to do. just from a trade standpoint, i see gold as a winner in a couple of different ways. i think low rates, gold does well. in a risk off, gold does well. if the fed ultimately comes to the bond market, i think gold does exceptionally well. alix: we will discuss more on that. really appreciate it. any charts we use throughout the show, if you have go on your terminal, browse the features. this is bloomberg. ♪

>> this is "bloomberg daybreak." we begin with b.n.p. paribas, keeping pace with some of its biggest wall street rivals in the fourth quarter. the french bank posting a 63% jump in revenue after a rebound in activity. still they're paring back profitability targets because

of the impact of negative rates. seen as a warning, market slump isn't going to get any better. europe's largest engineering company posting quarterly profit that missed estimates. siemens was hurt by a steep decline in machine building and energy businesses. we're ending on an online poll. it may decide where tesla builds its next factory. the c.e.o. asking his 31 million twitter followers if the electric carmaker should build a plant in texas. early today about people who voted, they voted yes. and that's your bloomberg business flash. alix: thanks so much. that's one way to generate excitement. let's stay with tesla. we've seen shares more than double since the start of the year, really unbelievable rise. but it does have a way to go before it approaches what one research firm called qualcomm's truly insane rally two decades ago. if you take a look at this chart, the white line is tesla's surge, and the orange line is where qualcomm was may

1999 at the january 2000. you can see how tesla is not quite at that level that qualcomm had. nevertheless, it has risen a whopping 396%. qualcomm was up 557% over a similar time frame. but if tesla can really stay, tesla and also be a car manufacturer of technology and manufacturer, that's the golden ticket, or is it all short covering. we're going to talk to a bear later on in the show. coming up, president trump touts the economy in his annual state of the union address, while democrats sort out their iowa caucus chaos. we're going to have more on hedging political risk and where the volatility is going to be, coming up next. ♪

alix: this is "bloomberg daybreak." risk taking, that's name of the game for this morning. yesterday the s&p saw a really solid rally, continuing to follow through buying around the highs of the session, up about 24 points. also seeing european stocks

higher as well, and surprisingly, the autos, even though ford had dismal earnings out after the bell yesterday, g.m. coming up in about half an hour. in other asset classes, a similar story. it's the risk on currencies, as well as the dollar that are doing actually really well. euro dollar down, despite the fact their composite p.m.i. held up pretty well, but it's a bifurcated story. this is a totally different story from last friday. an unbelievable kind of turnaround here, and the v.i.x. steady at 15, and crude getting a huge boost higher. crude maybe finding some support from potential opec cuts in the market. so yesterday was all about the economy. president trump delivering his annual state of the union address. he touted the strength of the u.s. he was calling it the great american comeback. president trump: the state of our union is stronger than ever before. our borders are secure. our families are flourishing. our values are renewed.

our pride is restored. the unemployment rate for african-americans, hispanic americans, and asian americans has reached the lowest levels in history. wages are rising fast, and wonderfully they are rising fastest for low-income workers who seen a 16% pay increase since my election. this is a blue-collar boom. america's fortunes are on the rise, and america's future is blazing bright. the years of economic decay are over. alix: with me, it's kind of like a pro-pronged question. one, do you agree with him? and then two, where does this set it up for november? >> i think they call the economy blaze sag bit of a stretch, but it's not doing terribly. i think the u.s. economy is roughly at 2%, plus or minus. a lot is long-term. those are demographic issues.

i think one of the things, if you really step back and think about the u.s. government has a customer of the rest of the world, and certainly of u.s. businesses, we spent a trillion dollars last year of deficit spending. that's substantial. that's going to continue. people are worried about the deficit long-term, but the u.s. government is a big customer. the second part is the federal reserve continues to hold the funds rate basically below the rate of inflafplgse it's hard to argue that that's not reasonably stimulative, so you wind up in the situation that equities are priced based on the alternative. the alternative to do nothing, in the safe asset, u.s. government bonds and the like, can be pretty painful. so you wind up in an environment of survival from a risk taking standpoint, and you bear certain types of risk and it's hard to see it not continuing. alix: exactly. we talked about that earlier. this is measuring volatility

across all assets, and you can see they may have elevated spikes, but still really low. if we set that up heading into the election, how do you position, how do you make money and deal with hedging and volatility when you get to new hampshire, super tuesday, november? >> right, one of the things we're seeing in this v.i.x. futures curve, so you have the v.i.x. and all these contracts contracts, they go out to the end of the year. you see this very decided hump in the volatility curve. it's clearly a function of the election. the chairman made a comment that he had seen record levels of v.i.x. trading out nine months or so. you don't see people trade long futures like that, and it's clearly related to the election. there's this view that the election itself can create volatility and equities. why is that the case? well, you might argue that a far left candidate like sanders could be disruptive, but it's a long way away. and i find it actually quite interesting and a little tricky to even understand. people say the odds of bernie sanders winning are low, but

maybe the market is essentially saying the potential move is going to be significant, and that's what you're seeing in the futures curve. alix: let's do both to that. if you come inside the bloomberg, this is the probability of the next democratic nominee. we know it gets really dicey and volatile, yet it feels even more so, and you look to the decline for biden right here. pete buttigieg, how that catapulted higher, even bernie sanders rolling over, and then you pair that with the v.i.x. futures curve. where is it still cheap to hedge? >> right, so it's not cheap to hedge in general. and i think the story about options, you could say this is a 10-year type story, that post the financial crisis, going into the financial crisis, options were as cheap as we'd ever seen them, especially relative to what ultimately materialized, so that was a trade that, if you got it right, the riches to be had were substantial. post the crisis, you might call it excessive fear, you might call it the fed pushing down levels of volatility, but options have generally not been

a good deal to own for years now. i think the recent experience is not dissimilar to that. you really got to look far and wide in terms of finding hedges. i like march expirations. you get a couple of things with march. you get super tuesday. if you think the emergence of sanders could catalogue skepticism. and then you get another fed meeting, march 18. that could be interesting. if this risk on over the last couple of days goes away and we start to reengage with this concept of whether the fed is going to have to cut again, which markets are starting to price more, the fed meets gene march 18. march options expiration is march 20. i just try to line it up with catalysts, and i think you have a couple of there. our s&p options, not really cheap. you got put spreads. and even then, the odds are that they're going to expire worthless. but if you think you could get a big move, you might use something like that. alix: what about a sector

basis? same thing. you think you want options when you have elizabeth warren rising in the polls. those are really expensive now. >> right. so tech is one that i've been looking at. it's as top heavy as we've ever seen. people have been making comparisons to tesla and qualcomm. i've been looking at the triple q and its leadership now versus 1999, 2000. the top heaviness, the top five stocks occupied 54% of the entire market cap. so you're really making a bet on the big five. now, the big five has done quite well. they are printing money. i think they have a sign on their back, a target on their back in terms of regulation. i'm not an expert on it, but i do think there is a notion that data and privacy, those types of considerations are more 21st century considerations of how we value things. so i think that -- i like to look at triple q options. again, i wouldn't buy the puts

outright. i think they're kind of expensive, but you can do things like put spreads to limit the cost. alix: great point. europe coming down really hard on how google does search options. hang tight. we're going to get more trading near just a second. and i want to give you an update on what's making headlines outside the business world. viviana her tad 10 here. >> we begin with the senate. today the chamber is poised to acquit donald trump president trump. the big question, how many democrats will vote with the republican majority? the process, you may remember, began four months ago. that's when the u.s. house launched a formal inquiry into the president's dealings with ukraine. hong kong appears to be bowing to pressure to do something about the coronavirus outbreak. the city will quarantine people arriving from mainland china, including hong kong residents and visitors entering via the international airport. medical workers in the city, they've been on strike. they're demanding the government seal the border with

hong kong. and saudi arabia wants opec and its allies to cut oil production, but that push has run into a road block, and it's from russia. delegates from the cartel are in vienna. they're assessing the fallout from the coronavirus. the saudis seeing an output cut as a way to shore up falling prices, but russia pushing back. lower oil prices don't affect the russian budget as much. global news 24 hours a day, on air by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. alix: thanks so much. let's stay on commodities for a second. dean, this is a really ugly chart, sort of what we've seen monthly in the market. what do you do with oil right now? >> i think there's a secular trade here that folks know much more about oil than i do and would say this asset class is struggling. and then, of course, you have

the overlay of this virus and the implications for production and real time, i found the comments from the c.e.o. of b.p. quite interesting, just noting how significant this was going to be in terms of their near-term production and profitability. i think you just look at the speed with which oil has declined, i focus on volatility, i try to look at what the surface of options are telling me. there's a significant bid to the downside put. it's a different thing than we've seen before. it reminds me of the 2015-2016 down draft in crude. i think you got to really tread lightly in terms of positioning , because the introduction of volatility, and who knows what's going to happen with the virus. it's a moving target. alix: positioning was long going into it, same thing with copper, which explains why those were felt so heavily on the downside. you mentioned gold before.

if you didn't own gold today, can you till buy it now, or do you have to wait? imagine how much more upside can we really see? >> right, and i think of gold, it fits nicely into the portfolio for a couple of reasons. when you put a portfolio of assets together, you think about return profile, volatility profile, and then within the portfolio, the correlation of these defrpblt assets, most assets are correlated. gold has a negative correlation for the most part, other risk as pets, like equities, for example. it's a risk reducer. that can be expensive, as we talked about. gold is a risk reducing assets, at least at this point, that's offering a reasonably positive return. so i like the quality there. but i talked about volatility efore, in gold, it's considerably lower than equities. you can still buy call option, which i advocate for call options relative to owning

gold, because i have no valuation models and know where gold can go. but i think the call options are very reasonably priced. there's still about a 10 or 11 implied volatility. that's low. the other part is gold is a very psychological assets. it doesn't have a management team t. doesn't report earnings. it's just psychology. i think when markets get very skittish, it's the sort of thing that the momentum factor can be quite powerful. alix: do you feel like bitcoin can or is falling into the same category? i've been hearing different conversations about this. >> i think it's starting to. i tend to look at the correlation of bitcoin to the s&p, correlation to gold. it's a little all over the map, but in this recent period, you do see a little bit of that positive correlation between bitcoin and gold, so it's acting a little bit like a haven. you can say these are beneficiaries from central banks just keeping rates as low as ever. skepticism about central bank policy, i think they both share that characteristic. gold being more consistent. alix: really good to catch up

with you. i love getting your perspective. dean curnutt. coming up, soft bank's vision fund takes another hit as another top executive hits to the exit in the u.s. more on today's wall street beat. and if you have a bloomberg terminal, check out tv go. watch us online and interact with us directly. skoal through, click on anything you have missed, rewatch and check it out. this is bloomberg. ♪

>> you're watching "bloomberg daybreak." we begin with merck. the company planning to spin off its women's health unit into a new company. the business is valued at $6.5 billion. the move will allow merck to focus more on cancer treatments and other innovative drugs.

drugs treat a primarily driving merck's growth. analysts believe it could soon become the biggest selling drug in the world. and to survive in the new retail era, macy's figures it has to shrink. the chain plans to close 125 of its least productive department stores, almost a quarter of the total. in the large restructuring, mails i's will cut about 2,000 jobs. and equity traders working some of industry's longest days. they have a request. shorter hours, pretty please with sugar on top. ok, that's my ad. but across europe, finance professionals say they want to reduce the current 8 1/2-hour stock market day, according to a bloomberg news survafmente the u.s. stock market day, by the way, is two hours shorter. that's your bloomberg business flash. alix: when was the last time anyone worked an 8 1/2-hour day? we turn to wall street to cover

three things. first up, soft bank vision fund executive is leaving its managing partner and its fund is stepping down after he pointed out how issues with the tech conglomerate, then escalating here. shareholders told the chairman to leave the company if you're not backing the c.e.o., and then caspar testing the i.p.o. appetizer later today. what will we learn about unprofitable startups? joining us now, let's start with -- where are we starting? soft bank. soft bank, the part that he's leaving is not the issue, but the fact they come out and they're warning about it, and then they leave, seems very dramatic. >> fantastic scoop by my colleague at the financials "time." michael ronin spent a long time at goldman sachs before he joined the soft bank vision fund in 2017. not that long ago, he led some investments like get around, and he was the u.s. managing partner of the vision fund here. he cited issues on the record, which is one thing.

and then the story also went on to talk about other people who may be departing, they're in talks about ron fischer's future at the company. ron fibber was a long-time lieutenant, had been on the soft bank board, has been on the soft bank board, and so they denied that he would be leaving. however, it is great reporting here about his future being in flux. alix: i have to wonder, what from what we know about softbank's vision fund, what are the issues with the tech company? >> there's a lot of cultural issues that we've outlined in a business cover story, and then on top of that, you also have just purely -- i don't want to say performance, because a lot of things go well, but remember, after the wework debacle, there are tons of companies laying off employees. the strategy might be changing quite a bit. how are they going pull a 180 while they also try to raise more money for this vision fund, where a lot of initial investors have gotten sour? alix: because they burned it off. let's get to the second story, which i thought was the first,

crith suisse. this is a huge -- credit suisse, this is a huge battle. >> two investors have come out publicly and said they want the chairman of credit suisse to publicly support the c.e.o. it's a really complicated situation here at credit suisse. it's really great reporting by my colleagues about how, on one hand, they've stabilized revenue here, led the bank through a massive restructurely. however, they're really struggling to move on from the spying scandal as well, and credit suisse is investigating a third allegation of spying, one they said was baseless, but then again, they're still investigating. alix: this one from david, who owns credit suisse, you must defend him, and he'll even go as far as the push for the chairman's ouster. >> that's exactly right. he's saying it's him or me. he's asking the chairman to either leave if he's not going to come out and publicly support them, and so let's see what the next move here is.

alix: i kind of think you should support your c.e.o. unless you're going fire them, right? i don't know. >> our sfrore friday, it's gotten really heated within the board. >> let's goat caspar here. we just learned some new pricing information this morning. walk us through. >> $12 a share at the low end of the range, that is $5 less than the previous low end of their range. this would make them less than half of the $1.1 billion they were valued at in their last private fund. that was last year. as a rule of thumb, as you're going public, you want to go public with momentum and you want to have a lot of fervor around the price of your stock. this $12 range is closer to where n.y.u. said that he believes it should be valued. around $13 a share. and so let's see thousand does tonight, whether it prices. remember, they can always still pull it, and i guess if they wanted to. alix: yeah, he's the valuation guy you talked about.

i guess why? if the market environment is hot, is there an urgency for them to up thape we need to know about? >> there's really not an urgency for them to i.p.o. but i think that their goal was to go public. people like n.y.u.'s scott galloway said they should have sold a long time ago when they were still commanding a billion dollar valuation. their growth rate is high, but their operating margins are not so great, and that's why their valuation is not hitting that high end. alix: we've heard that story before. thank you very much. and in today's bloomberg focus, it was all the rage when i was down in florence for baker hughes' annual meeting, and i spoke with the c.e.o., and he walked me through their green targets and how the company is progressing. >> last year we made a commitment at this conference with regards to carbon emissions, and we said by 2030, 50% reduction in carbon

emissions. by 2050, net zero. since 2012, we've actually reduced our emissions by 34%. as you look at longer term, the shift to gas is a huge enabler, and we think that gas is not just a transition fuel, it's actual the destination fuel. and we see there's an opportunity to blend in also renewables and gas together. there's aspects that are going to come to the forefront. so there's opportunity here for the energy mix to really work together. alix: i know everyone is talking their book, but literally oil was hardly mentioned at that conference over the weekend. coming up, possible trouble ahead for the british pound. that's coming up next in trade's trader pick f. you're jumping into your car, listen on your radio. this is bloomberg. ♪

lix: time for "trader's take." i can't believe you're making me talk about brexit. >> i kind of have to. alix: there's money to be made. >> there is money to be masmede i'm going date myself. there was a gentleman i knew, frank, wherever you are, 40 years ago, when you'd ask me what he thought about the pound, he was a cable trader at j.p. morgan, he'd say still hasn't won it.

and what's going on in the politics between boris johnson and michelle, setting up for what has to happen at the end of the year as a trade deal, looks really poor to me. the opportunity i think, as you look at this trend line, obviously we've had spikes above it as the line shows, but i honestly believe by the end of the year we're going to be closer to the 121, 122 level in sterling. there are so many obstacles facing the u.k., e.u. trade deal. it's taken 30 years for the u.s. to renegotiate usmca, and we had a deal on the tavenlt i don't see this getting done. alix: i know you're focusing on the cable rate, but is there another area en exposes sterling? >> the you're very going to have the same difficulty. hand in hand, they're probably going to go down the drain together because they're not going to get it done. the interesting thing, and this is not getting a lot of play, what was talked about yesterday, this new law that's

being put on the books about the united states being able to put tariffs on any country they think is manipulating the currency, the e.c.b. and the euro rate have been very much in the crosshairs for trump. this will come up again before the election. it will play with the midwest as he tries to gin up his base across detroit, michigan, wisconsin, and minnesota, and the euro is definitely going to come to the crosshairs. so hand in hand, i think they walk this down. alix: he's looking at the weaker dollar. vincent, always a pleasure. thank you very much. coming up on the program, nathan, the chief economist, will join me, his take on the global growth issue and the virus and what happens in china. this is bloomberg. ♪

alix: welcome to "bloomberg

daybreak." here's everything you need to know at this hour. let's take it from the top. >> the risk of it becoming more widespread globally remains high. now is the moment for all countries to be preparing themselves. alix: the rate of infections of the coronavirus slows, and an experimental drug could fight the virus. meanwhile, companies warn of the impact on earnings. >> the recent closure of our parks in both shanghai and hong kong due to the ongoing coronavirus situation will negatively impact second quarter and full year results. alix: and an apple supplier cut its outlook due to the virus and lost production. >> since my election, u.s. stock markets have soared. alix: president trump highlights the strength of the u.s. economy in a deeply partisan state of the union. >> the top of the speech was probably the most popular or at least most unifying part. it was when he turned on to other more controversial

subjects that we were left with a speech that resulted in speaker pelosi actually tearing up a copy of the speech at the end. alix: the senate is expected to vote today to acquit the president on impeachment charges. >> i have never been more confident in our campaign, in our team, and in the missions that brought us to this point. alix: democratic presidential hopeful pete buttigieg maintains his lead in iowa as results trick nell. >> we still don't have the final answer. we've got 71% of the precincts reporting. it's thought those are fairly representative, but the margin between pete buttigieg, the former mayor, and bernie sanders, the senator, is quite close, so that could switch. alix: former vice president joe biden is currently in fourth place. >> it's insane, and i think what you have is a company with 130 million or 140 million shares short, and it's trading $30 billion worth of stock every day. it lost its fundamentals. alix: tesla charges higher, while other traditional automakers like ford struggle as forecast trail estimates.

>> their costs were too high. they've had issues getting the ford explorer to market. they've got warranted issues, that comes from quality. these are all things that were supposed to be done out of muscle memory by the conventional car companies. tesla was the one who is supposed to have trouble with this kind of thing, and here it is ford. alix: general motors set to report. and speaking of general motors, earnings out just now t. looks like they came in about five cents a share per innings that looked like it was going to be better than estimates. revenue light, but full-year adjusted forecast adding one cent on the high end. i mean, i guess you could then call that positive. the overall takeaway is that the auto market is still quite weak, and wiping out any gains that they may spree their new s.u.v.'s, that's really the issue for g.m. u.s. and china, the weakness there, and the market conditions off setting any benefits of their new truck and big s.u.v. models. we're going to delve into general motors more as we head throughout the program.

the stock still holding on to gains, up .4% in the premarket. i guess following ford yesterday, it was definitely better than estimated. we had a huge rally yesterday, biggest since august, climbing on that, up .7% for the s&p. the dollar and other risky currency, the ones that are actually gaining steam, the euro weaker despite the fact the composite pimpim was stronger. the selloff picking up steam, yields backing up. the move yesterday was really unbelievable. 170 is the level that most are watching as buyers might come back into the market at that point. joining me for the hour, i'm pleased to sigh nathan, chief economist. always a pleasure to be with you. i really enjoy talking to you. welcome. >> thank you. good to be here. alix: what do you most interested in right now? it feels like this is in the longest year, and it's only the beginning of february already. what are your clients talking about? what's the zeitgeist? >> i'd say now that the question is, how do we play off

the near-term uncertainties, which are real, associated with this coronavirus, against a medium to long run field that this global economy is still pretty solid. that the manufacturing sector felt like going into the coronavirus, that it was starting to pick up. inflation was still well contained, and central banks were stimulative. how do you balance the short term consideration against the medium to longer run factors? alix: here's one option, cut rates. i say that jokingly. however, we've heard from multiple central banks that are talking about that as the virus takes hold. >> well, i think that that is a crucial point. they're often thinking about central banks, central banks are running out of ammo. when you look at these, i think that is broadly true. a little less true for the fed, but the fed doesn't have as much ammo as it would like.

in the emerging market economy, they've got a lot of space, and they have cut rates over the last six months, and it wouldn't shock me, as you were saying, if they cut rates in response to this. and i think the bottom line there is that as we think about the global monetary policy impulse, it is more and more about emerging markets. part of that is the emerging markets are a bigger share of global g.d.p., but it also reflects the fact that they have room to maneuver. alix: to that point, here's this quote. >> china is part integrated with all these supply chains. it can be highly disruptive. we don't know that yet, but it certainly looks like it could be. and then one of the things to worry about is if it is a significant negative shock, and we don't know if this is the one, we don't have a whole lot of cushion. the fed doesn't have much room

to cut interest rates. the e.c.b., the bank of japan has zero room to cut interest rates. alix: so is that where we're going to learn, developers of emerging markets, how much firepower they actually have? >> i'm afraid that the answer to that is yes. to be clear, these major central banks are never going say we're out of ammo. they're going to find new teams. but i think what we learned is that central banks discover the new tools. theernt as powerful as the tools they had before. so the best -- the most powerful stimulus central banks have is cutting rates, and they've done that. and then from there, it's probably asset purchases and forward guidance, and they've done that. and then when you go down that list, lower and lower and lower, you're getting to -- are they impactful? maybe a little bit. but it's like cutting rates. alix: how do you see the fed in

all of this, in that the bond market, are they leading the fed at all, in that we have two cuts priced in for 2020 from the fed? i hear nowhere from fed speakers. >> the fed is underscoring that it expects that it its stamp for policy is going prove appropriate, but i think the fed also is signaling that if we see the downside materialize, that it will respond, it will respond with rate cuts. and i think the bond market is saying, look, we think there's some downside risk associated with this coronavirus. and we think that it will prove to be sufficient, at least for a while, to get the fed to move. and i think the jury is still out, as you said when we started this conversation. there are lots of uncertainties, and as a result of the uncertainty, there are also lots of plausible scenarios. you know, where is this economy going to be at the end of the year?

if alix: not to mention the fact that financial conditions are already so loose that then if you have all this central bank easing, like if they're already this loose, how much looser can they get to stimulate any growth? >> yes, yes, and then as they're easing financial conditions substantially to support the economy and growth, one of the implications of that for financial markets and pricing, especially when this coronavirus potentially goes away, and you get in a world of what is financial stability. and that's another area where central banks are, frankly, a little behind the curve in developing macro tools, to address those financial stability. alix: does that mean that you want to be in emerging markets or you don't? like u.b.s., j.p. morgan, they all rotated into that. what do you think? >> i guess i'm still bullish on emerging markets.

could this period of coronavirus take a bite out? absolutely. but when expectation of coronavirus is temporary, and as such, corona, particularly from the end perspective, may represent a buying opportunity more than anything else. alix: nathan, so great to chat with you. you're going to stick with me for the hour. nathan sheets, and just to recap for you what happened with g.m., the stock up by .6%. full-year earnings coming in at the high end of $6.25. it looks to be one cent higher than estimated. however, the overall story is the same. weaker market conditions in china and the u.s. wiping out any potential gains from their new s.u.v.'s and truck models. however, at least it's a better story than we heard yesterday. we'll break that down later on in the hour. we'll also be speaking with g.m.'s c.f.o. coming up live from the new york stock exchange. stay with us for that, as david westin will do that interview.

coming up, china plans to fight the coronavirus. we'll talk about investing in healthcare infrastructure with information on the ground, the impact investor in valuable insight. this is bloomberg. ♪

>> this is "bloomberg daybreak." apple's main production partner cutting its outlook because of coronavirus. hon hai making the majority of the world's iphones. the chairman tells bloomberg this year the company is projecting a sales increase of no more than 3%, well below estimates. merck plans to spin off its new s health unit into a company. it's valued at $6.5 billion. the move will allow merck to

focus more on cancer treatments and other innovative drugs. an immunotherapy drug primarily driving growth, and it could soon become the biggest selling drug in the world. and china wants to patent an experimental coronavirus drug made by an american company. the anti-viral drug is produced by gilead sciences. the drug isn't licensed or approved anywhere in the world, but china is rushing it into trial. if this succeeds, gilead would have to get the patent owners on board. this to use the drug for treating coronavirus patients outside china. and that's your bloomberg business flash. alix: thanks so much. we want to address the coronavirus outbreak. we're joined by priscilla lu. she joins us now, before joining your company in 2014, she was the general partner of a fund that invested in clean tech in china. priscilla, i wanted to talk to you, because as someone who

really knows the inner workings of the healthcare sect, to it's you. you're one of the first investors really in there when they opened the doors up to private investment. what went wrong? i thought we were supposed to be better along in the healthcare sector in china than we are. >> i think that the healthcare infrastructure that supports the opening up of investment and also participation of investors and researchers still has a ways to go, and in particular, i think that the absent to really support -- the ability to really support communications between hospitals, diagnostic services, is critical to being able to be efficient in managing as well as regulating the information that is available, and therefore, the response. so far i think china has done well in really addressing needed critical needs of being able to care for patients by really having a good crisis

management in building out hospitals or what they would call mobile cabin hospitals, because they've been able to put three hospitals very quickly together to address thousands of patients, and that is an indication that they've taken seriously the need for better infrastructure, better systems for handling this in a crisis situation. but long term, i think there's opportunities to further improve the systems that support the hospital's information and diagnostic that will actually help facilitate more rapid discovery of issues and problems with diseases. alix: nathan? >> at 30,000 feet, how would you compare the policy response by the chinese authority to this coronavirus to what we saw 15 or 20 years ago from sars? and specifically, where would you point to in terms of

improvements in that response? >> i think this time around china is fairly open and quick in tracking and also reporting the cases once they discover how severe this coronavirus is. but locally, it took a little while before that was actually taken seriously. and i think that that, unfortunately, is always the case. people tend not to think that it is as bad as it seems to be. but again, i think that a more efficient way of reporting unknown diseases and then managing and being able to diagnose is important. they've been able to identify and do the analysis of the virus very quickly, i think within 10 days, which is already a record, i think, in being able to identify and be able to -- be able to point to

the new virus that has been uncovered. and i think that is an improvement. the rapid response significantly shows how china is ready to now really address very quickly, very responsively, and also to control basically the cross province, cross city people moving and reducing the contagious virus being spread around, and i think that that really is very new in terms of a very large country like china. and it's a new experience, and the people and the government is following. and so that is all indicative of how well they've been able to manage that, and i think that this time around, there's less of a panic, more control, and more information being presented and available to both the community inside of china, as well as to the rest of the world. >> just following up on that,

the official numbers are telling us the number of cases is somewhere between 24 and 25,000. but there are whisper that is the numbers could be much, much larger. ow do you assess that -- the intent of the contagion at this stage, and how reliable do you see these officials numbers as being? >> the numbers officially right now is around 24,363, and then i think this is always increasing as the day goes by. and these are reported officially, whereas i think because this fire does have the problem that the symptoms really are not as obvious as sars or other more critical like ebola, it's not as evident when people are actually carriers. so as a result, it is much harder to be able to identify

even for people themselves whether or not they are carriers or whether they're infected. and so that really creates the unknown, and therefore, the difficulty of knowing how big is the problem. on the plus side, a lot of the well. really respond in other words, they don't have as severe as others in terms of the condition. so not everyone suffers as badly. in that sense, it is not as bad as sars as compared to 10% for sars. alix: quickly to round out the conversation, after this is over, what would be your expectation to the government opening up their healthcare sector, even more to private investment, to really jump-start the development of this? >> i believe it is now clear that the sanitation systems and

the policies to regulate the sanitation systems, especially for food, needs really the scrutinizing and also a reconsideration and revamping, and so that creates opportunities for frain structures for waste treatment, for food, basically monitoring and all of these could very well be facilitated by processes at western world is well familiar with and has been practicing. additionally, of course, the hospital system that interconnects diagnosis and hospitals, information, and patient care, besides just equipment and it can nothing for treating, this will also help support more faster response. the collaboration that we're already seeing to help understand anti-viral treatments is going to help open up more, i would say more open research that will, for

the benefit of the world, to be able to support more aggressive treatment when you have situations like this. alix: priscilla, thank you so much, i really appreciate the perspective. nathan sheets sticking with me. in breaking news, 291,000 jobs, private jobs added, that is causing a big jump here in yields, up by five. they were you will over six basis points as the selling continues, and you're looking at equities around the highs of the session. this is bloomberg. ♪

alix: that was a senior portfolio forle manager, that was before g.m. erpgs. the automaker surprising to the

upside in the fourth quarter. revenue shy of estimates. ining us now, and nathan sheets. let's look at tesla. you look at ford and g.m. what have we learned about these two companies? >> so g.m. is more of an up arrow story. you have a case where they had a 40-day strike to end last year, so that really sort of dragged down the tail end of 2019. looking ahead to 2020, they see a really strong year on the backs of new big s.u.v.'s. this will be the first full year they have their new pickups to sell, the big chevy silverado, the real cash cows. ford, on the other hand, last night, that's a down arrow story. we have a pretty simple one there of a company that is struggling to launch new models. they really botched the rollout of the new explorer s.u.v. last year, and if it's almost kind of musk like in that they were

slow getting a new product out. they actually had a net loss in the last quarter of the year. a rough end to 2019 for them and their view for 2020 is pretty down beat as well. >> thinking of global manufacturing, i think there's no sector than more important than global manufacturing than the auto sector. where do you see the thing going more broadly in the united states and the rest of the world during the year ahead? >> i think the big question mark is china. we had i.h.s. last week talk about the idea that they saw a scenario that just in the course of a few weeks of china being down as a result of the coronavirus, the industry could lose almost two million cars worth of output. that would be a huge impact to this industry. it's already a market that's been shrinking, really struggled last year, even electric vehicles with china sort of dialing back the incentive support for those.

that caused that aspect of the market to really slow down. here in the u.s., it's a story of an industry that's been strong for several years now, and it's sort of law of gravity. you can only sell 17 million vehicles a year for so long. alix: all right, we'll leave it there. craig, nathan, thank you. coming occupant program, president trump touth u.s. economic strength at the state of the union. we'll look at how the u.s. has done under different presidents. that's coming up next. equities around the highs of the session after that blowout a.d.p. number. yields up by about five, six basis points. equity futures up by almost a full one percentage point. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. futuresarket, equity around the highs of the session. number coming into

hundred 91,000. 291,000. in you are seeing a stronger dollar, a selloff in the bond market. you are seeing the bare steepener continue. the vix goes nowhere in the risk on feel still helping all commodities. copper trying to get momentum. we have data breaking right now. that is the trade balance for december. -48.9 billion, wider than estimated, much wider sequentially if you take a look at november. nathan, when we get these trade numbers, how seriously do you take them in that we have a deal, we do not know what the deal will mean, there will be a phase days for -- there will be a phase two, what do you think? nathan: and there's all sorts of volatility in this data. on balance, we have to wait.

the chinese will import more from the united states. i would be surprised if they were importing as much as they promised. on balance, the numbers are likely to reflect that. on the other hand, the u.s. economy is solid. trade balance is notoriously hard to forecast. i have spent more of my life trying to do it that i would care to admit. alix: the annual trade deficit for last year shrinks for the first time in six years. there is that. you have any read on the what the coronavirus will impact china in terms of their leverage or a phase two trade deal execution -- is that conversation percolating yet? nathan: we are still at a place where it is speculation. i think they have capacity to

import -- i think their capacity to import will be down over the next three to six months, which will make it more difficult to hit the targets. i would expect, especially before the election that president trump and his administration will be flexible and pragmatic about that. -- on the other site, may bill the tone will be different. on the others of the elections, we have to face all sorts of issues that it is not clear how we will move forward on. alix: imports from china fell over 16%. that beat the drop we saw in the global financial crisis in 2009. shipments to china fell 11%, the biggest drop since 2003. interesting to see how the noise settled out. nathan sheets will be sticking with me.

let's talk more about the u.s. economy and where the u.s. is versus the rest of the world within president trump's cycle. michael mckee, bloomberg international economics and policy correspondent looks at those numbers through different presidents. give me your details. michael: pretty clear from the state of the union the president will run the state of the economy, which he called historically good. it is not historically good, but it is solid. let's take a look the numbers behind the numbers. take a look at gdp and unemployment, numbers the president is touting, for good reason. you can see the unemployment rate at 3.5% and the gdp at 2.1% is pretty good. youou go back in history, can see harry truman and dwight eisenhower had lower unemployment and much higher growth. unfair. we are coming off of world war ii. let's look at lyndon johnson. that might not be as fair comparison, either. the best comparison is the 1990

to 1999 era, bill clinton, faster growth and lower unemployment. that would be what you would like to shoot for if you could get there. the president does have mixed numbers, good but mixed, in terms of things he can run on. he talked about people coming back to work and you can see the primate participation rate is rising. wages have been rising for production and on supervisory workers, the lower end of the pay scale. you can see faster growth during the clinton years, during the george w. bush years, but it is still good news. if the president wants to run on something that is unabashedly good, this is the chart i have shown before -- the misery rating which combines unemployment and consumer pricing is the lowest since 1953 at this point, due in part to the fact that we have a low unemployment rate as the president likes to say, but also

due to something he has no control over, an extraordinary low inflation rate. if it all combines to make americans feel good, he will take credit, deserved or not. alix: michael mckee, thank you very much. you get very excited people on when you go through the charts. carl riccadonna is with us. nathan sheets is still with me. you are nodding. carl: the misery index, unemployment rate plus inflation rate. goes back through many presidential cycles. tons of different iterations with gasoline prices, consumer confidence, and all of these metrics. what we found was that headline , you need to include food and energy, headline inflation and the conventional unemployment rate for the best way of looking at these. areld reagan in 1980 said you better off now than you were

four years ago? back then voters were decidedly not, so they throughout the incumbent. this does not favor republican or democrat, it is more incumbent versus challenger. what we found it is not the , but of the misery index we found looking closer into the details it is not compared to four years ago. voters memories have gotten shorter. it is more what have you done for me lately than what have you done over the last four years. we have seen the change in the misery index in the year preceding the election to be the most determinative of how the election comes out. when we look at the misery index, if you look at it today, it favors donald trump getting reelected. rather than put my own forecast into the model, i take the collective wisdom of the crowd. the survey of economists that bloomberg conducts, and i pluck those numbers into the misery index. when i do that, it shows the

election in tossup territory in november, given not my economic forecast, but the collective wisdom of the economist. there is a narrative that trump is invincible on the economy and the misery index, which works something like 80 6% of the time -- like 86% of the time going back to franklin roosevelt says it is not such a clear shot. part of michael's presentation that caught my eye was the comparison of the clinton economy with the trump economy. i think it highlights what does the trump economy lacked -- it has lacked road activity growth in business investment. when i think about where we are, the biggest question in terms of lengthening these cycle and strengthening the cycle, this is what president trump has aimed to do, is ensuring there is

confidence enough in the business sector to start investing, which will drive the productivity growth. we sought during the clinton years. we have not seen it over the last four years or over the last decade, since the financial crisis. the big question is what will it take to rekindle investment. to remembere politics is local. it is not necessarily the national level. we use the electoral college in this country. it matters what is happening in the swing states. one of the key messaging in the state of the union was blue-collar boom. that sounds great, but when we look at the manufacturing ism, it has been in contraction for half a year. if we look at industrial production data, for the manufacturing, it has been contracting your on your terms since march of last year. the factory sector is not in good health. it is hard to make the case this

is a blue-collar boom. that means the rust belt states are more of a tossup that a lot of people are realizing should nathan: you need the investment to get the wage growth to allow the blue-collar workers to benefit. carl: and the trade war held up the investment last year, and now election uncertainty, when you look at the possible realm of options that could kick in next january, business managers are going to sit on that capital and continue to hold off on capital investment until they know whether it is trump 2.0, whether the trade war is over, whether there is in the white house, huge consequences of the election. businesses will continue to sit on their hands. alix: which brings us back to your point. i wonder what make them pull the trigger. i ask a lot of ceos that. we get the phase one trade deal -- are your customers picking up the phone and saying pull the trigger on $1 billion of orders?

everyone says no. nathan: what will get them to pull the trigger is the removal of uncertainty and that does not happen until november 3. alix: look ahead to the jobs number. the blowout adp, when i see numbers like 291,000 jobs added, it is hard to go against that. how is that possible? where did these jobs come from? it isit is possible but not plausible. we have difficulty seasonally adjusting the data correctly. this is a common occurrence through the winter months. when you have a warm winter you do not get the layoffs in the construction sector, retail and hospitality can be affected, and i think we are seeing that kind of distortion. you take the usual seasonal patterns and unusual weather patterns and it makes they blowout numbers. i thought it would happen in the december number. instead it looks like it is

happening in the january number. what goes around comes around, you get to february march and have more normal winter shuttering of activities and those strong numbers get clobbered and it irons out in the long run. alix: we have to leave it there. carl riccadonna of bloomberg economics. nathan sheets of pgim will be sticking with me. i wanted to be an update of what is making headlines outside the business world. viviana: we begin with the state of the union address and high drama. last night the president turning his back on nancy pelosi's outstretched hand. then miss is closely ripped up her cop -- then below see ripped up hurt -- then nancy pelosi ripped up her copy of the speech. book displays of partisan ending a speech where the president touted his economic leadership. pete buttigieg claiming victory in the first test for democratic presidential contenders.

mr. buttigieg maintaining his lead in the iowa caucuses. bernie sanders a close second. joe biden finishing a disappointing fourth behind elizabeth warren. next up for the democrats, the new hampshire primary is on tuesday. hong kong appears to be bowing to pressure to do something about the coronavirus outbreak. the city will quarantine people arriving from mainland china. medical workers in the city have been on strike. they are demanding the government seal the border with hong kong. 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. alix: thanks so much. coming up, it is a unicorn check. wedding retailer casper appetites for investors for those unprofitable startups. bloomberg users, check out the chart we are using throughout the show, gtv on the

terminal. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i'm viviana hurtado with your bloomberg business flash. we begin with disney. the number of subscribers of the new disney plus streaming service soaring to almost 29 million by early this month. that success does not come cheap. disney's quarterly profit following because it is spending more for new online movies and tv shows. a french bank posting a 63% jump in fixed income trading revenue. that is after rebound in rates and foreign-exchange activities. still paring back profitability targets because of the impact of

negative rates. an online poll may decide where tesla builds its next factories. elon musk asking his 31 million twitter followers if the electric car maker build a plant in texas. earlier today, about 80% of the 125,000 who voted, voted yes. i am viviana hurtado and that is your bloomberg business flash. alix: it is like crowdsourcing. supplier and apple revising down their growth forecast for the first half of the year, in part because of the virus issues in china. joins nathanland sheets and i. it is interesting they expect that recovery in the back half, which i feel like a lot of economist are saying puts extra pressure on the back half of the year to deliver. brooke: we have seen that with the manufacturers. that is all back end waited. that has not tended to play out as planned. alix: can we get the back half

balance? nathan: i am hopeful we do. there is uncertainty about the virus and there is general macro uncertainty. in this environment, it is hard to be too confident. alix: and pencils happy razors. brooke, you are looking at casper as our read of where the appetite is in the market. brooke: and it is not necessarily a positive one. they are cutting their price range for their ipo. previously seven dollars to $19. a pretty significant step down from their private valuation of over $1 billion. this is a sign they're still not appetite for these unprofitable startups in the wake of the wework fiasco. casper is one of those questions -- is it a mattress company or a tech company. i wonder if it is even a direct to consumer company. it has 60 locations.

a lot of these companies are now turning to paper mail advertising to draw in consumers. they have to spend a lot of money to stay competitive. that is not appetizing for the market right now. nathan: how are you thinking about the valuation of the tech sector? it may be a canary in the coal mines? brooke: you have seen is enough get ron but i do not know if i see pockets of overinvestment. if you look at the tech sector at large, i do not see excess spending in any one direction. you have to factor that in. everything is overvalued right now, practically. he do at least have the growth you are not seeing from industrials. alix: which raises the question overvalued in relation to what? nathan: exactly. those that would defend the valuations are looking at yields

on bonds and compare that to dividends and with the 10 year treasury at 1.65, lots of good firms yielding 3% to 4%, there is a place for equities, even carry returns. this is a debate that is happening. equities seem reasonably valued. additionalt two valuation metrics, there is more risk. aooke: there seems to be difference between profitable tech companies and unprofitable tech companies. if you look at a company like reynolds, which makes aluminum foil, that ipo did well. i asked whether part of it is the sales pitch. we will tackle the global sleep economy and use these jargon words and pitching longer-term growth does not resonate anymore. maybe you're better off saying we are a mattress company but we

do this really well. alix: global sleep economy? i do not know what that is. brooke: they claim is more than 400 billion dollars, but i do not think anybody knows what it is. does it just mean demand for mattresses? nathan: it sounds good. alix: it does raise the question of how much risk should investors be taking on at this stage of the cycle when central banks have much less ammunition and there has not been a disruption? nathan: this is the big question. investors arearge asking themselves that question. i think once you look beyond the coronavirus using moderate inflation, iw think a lot of these investors can answer your question, let's go risk on. that is why expectations, notwithstanding all of these uncertainties. alix: a great conversation.

brooke, thank you very much. a special thanks to my guest for the hour, nathan sheets of pgim fixed income. he is the nicest person i know in real life. coming up, tesla's parabolic rise in technically speaking. we'll break it down and give you the trade, and we will give you a fair case for the stock from craig irwin. your car,heading in tune into bloomberg radio on sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. bill maloney, voice of bloomberg's equities quad joins me now. listen to bill all day in the bloomberg. let's start with disney. super solid earnings after the results yesterday. bill: they reported last night. the stock is only a little changed in the premarket. back in april they announced streaming for the first time. it has been in a massive trading rate since.

toistance zone today, 148 153, 153 being the record highs. alix: let's go to mark. the stock looks like it was taking a hit on the news. what you see in terms of a trading range for merk? the: eps beat estimates, stocks down around 3%. there also spitting up units, so there is something the street does not like. 200 day moving average has been at support since april. if we go back to 2000, the stock is still below 9150 for all-time highs. that is resistant going back to 2004 merck. alix: nouns get a tesla. that is a hugely parabolic chart. bill: we talked about it yesterday. vr our side is extreme. these gaps cannot continue.

we have a gap here, i gap your, 9.65, the stock is down 3% in the premarket. your resistance levels today 83, 87 to close, 900 969. first supportive yesterday 34. alix: unreal. we want to dig a little deeper on tesla. craig irwin joins us now on the phone. he has a sell rating on the stock with a sell rating of $350. at what point do you have to throw in the towel and say you have to buy it or i have to upgrade my price target? craig: it is simple -- will the big automotive oems cash out in two years or 10? if you believe it is 10 years, there is a lot of blue sky for tesla to execute this 50% growth rate that elon musk is talking exceedingthe company

sales of sx and the model three combined with the model one, all fromese things move being aspirational to being possible. if you believe it is 10 years before the big oem's will get it right you probably want to buy the stock. i think it is just a small single-digit number of years. maybe a couple years before we start seeing big oem get it right. vw is pulling forward their major programs. you can look at productivity across the automotive oem. money movingreign into manufacturing to allow both bmw and daimler to be competitive. i personally think we need to be cautious on tesla at these levels. alix: how do you understand the parabolic move? how much of it is stepping

investors leave it in that 10 year story that they are skeptical about versus a straight up shortcoming and how much more shorts are in the market? almost everybody has been stopped out on their short, and if they have not it is a head wind on their overall performance for this year. this move in the last couple of byths was first analyzed frothy enthusiasm for china, the idea of the incremental 150,000 units out of the shanghai facility this year. i do not see that as achievable. i think that is unnecessarily aggressive. he hide that, what we had is momentum in retail and the fear of missing out. --y of the large firms technical traders can trade quite well. momentum,rgely

strictly momentum, and those trying to put a basis around this are saying $30 in earnings in 2022, 2023. that assumes tesla operates in a vacuum, which i do not think it does. alix: is there another way you would rather be playing? you mentioned the electric vehicle transition. which carmaker do you think will be closest to being profitable in this area and you want to be playing it that way? nahda carmaker. there is a company that is a great way to play this. they are the leading materials supplier. anybody that is producing silicon car has to use their products. tesla has to use their product. they are a beneficiary to matter

who wins over the next couple of years and they have content. i heard this week they have $60,000 in content on their own models. they are a successful company and this is a much better way to play this. alix: appreciate the perspective. craig irwin of roth capital partners. we head over to the nyse where david westin is standing by with general motors and cfo. david, over to you. we are here with dhivya suryadevara. great to have you. is a complicated quarter. you have the strike. how should investors look at it? hivya: we had $4.82 of eps, and when you adjusted for the strike it will improve to six dollars and $.72. a strong performance from poor operation. when you look at calendar year

2020, we expect the momentum to continue. particularly on the cash site where we have had focus on that area. we are expecting a strong cash flow in 2020 building up to a strong 2019 are we generated $6.5 billion when you adjust for the impact of the strike. placest savings we put in have helped us mitigate some of the macro impact we are seeing around the globe. david: sticking with north america, talk about the product mix. you will in 2020 have a full year of your full-sized pickups. suv's coming in later. how should that affect the results? dhivya: we will have a full year of light-duty and heavy-duty. on the su beat we are transitioning from the old platform to the new platform. we do expect to take some downtime. trend in to see the light-duty and heavy-duty continue.