is bloomberg "daybreak: europe." nejra: these are today's top stories. in the green, the risk on rally continues. solid u.s. data and speculation about vaccines on the coronavirus. also, china's announcement for tariff cuts. the threat of the coronavirus remains as the who says a vaccine is a long way off. christine lagarde says the outbreak adds a new layer of uncertainty. investor -- investors will watch. the end of the saga.

the senate votes to acquit donald on charges that he abused his power and -- ♪ it is all about the banks today on "daybreak: europe." mold rate -- will mull raising capital to 60%. euros at 12% placement. this is all about capital coming through. in terms of dividend per share, a little bit larger than the march -- little bit lower than to 65.imate, 63 compared fourth-quarter loss.

, less than what the market estimated. 835 million euros. estimated losses were 1.1 4 billion. nordea bank, the numbers have had. nejra: nordea bank reported net interest income for the fourth quarter that beat analyst estimate. 1.1 billion euros, which beat estimates of 1.08 billion euros. they show signs of making progress with an organization. let's get to the ceo of nordea on the phones us from helsinki. that number, what was behind that beat? where you helped by the interest rate environment? >> know, we were helped by higher activity which is led to

basically more business in the quarter. manus: i take it from the top line you have given to us today. you talk about drastic measures. are the worst of those drastic measures past? 6000 job cuts and a hiring freeze. we have started to execute on the new business plan. after the first quarter, we are proceeding as planned. activity increased and costs went down. completedso organization changes to support our strategy. thatnk it is fair to say we have seen promising signs. nejra: frank, when will you return to positive operating?

our 22proceeding towards targets, we have a plan for that and we will stick to that. and we are determined to deliver on our financial targets, which is a return on equity of about 10% and a cost income of 50. that momentum in the business had improved. wasn't the top line really to do with rates. five years, half a decade of negative rates. do you welcome that? what difference will that make to your bottom line? is there a bigger risk with any negative rates in your view? frank: that is a very good question. we have learned to handle the

negative rates. of course, it does not help us. the deposit engine is basically going backwards. helping our income growth. we will live with that -- we have learned to live with that price also have different mechanisms. moment, we, at the are where we are. for the expect any help coming years. just need to adapt to such an environment long-term. that is what we are doing by creating better custom experiences. then you have the general

tostion, what will happen negative interest rates are the size of impact having negative interest rates. that could be a question. nejra: you said this morning that we are headed in the right direction but a lot of work remains. what are you prioritizing in the next order -- next quarter? frank: it is a little bit longer toe than a quarter but increase, improve operational efficiency. the -- in the last had 70 entities which make things smaller, simpler, more efficient. things are going on.

it is about increasing our income base. did in q4,of what we we grew our business. .ow in all countries then we acquired st finance in december. manus: i want to get your perspective for the landscape of liquidity and on trade. 20 years, positive carry, by the bonds, hold the, ship them in. that landscape has changed. what is the biggest risk to european bond trading? >> it is a different ballgame now. it, andneed to adapt to that is what we are doing. through ag repositioning. one of the questions of course

his how to handle it. we have been used to having a positive carry, which is not the case anymore. that is just a part of running a bank at a moment. thank you so much for joining us. recanted. -- very candid. frank vang-jensen, president and ceo of nordea bank. aicredit, a 12% stake of turkish business they have. at business is going to be sold. as a consequence of that, they will look toward distribution. let me grab the details. raising the capital distribution they% is one of the things are thing about.

835 million. that is below the estimate of 1.1 4 billion. they would distribute 40% of their earnings. they are reviewing that. that could go up to 50%. that is the core part of the business. they raise about 440 million euros from the placing of a 12% holding. withinre the key lines the story. it is all about capital redistribution. return on equity targets, they are sticking to those for 2020 and the 2020 revenue targets. we have had this dramatic headline in the past two hours from china. they are going to halve the tariffs from the united states into china. the yuan has taken another leg higher.

our guest in the last hour -- will they, want that. more sizable cuts that the market anticipates. you've got the differential between bank of america. you're going to see buyers coming there. he coronavirus will explode again in terms of contagion. that will take you down to 1.25%. two very different views on the bond market. jp morgan saying to percent yesterday morning -- 2% yesterday morning. terror ofejra: on the headline from china, if you are asking yourself of this has anything to do with china rethinking the trade relationship with the u.s., the market action in europe yesterday shows that this is a market ready to rally on any hints of good news.

whether it is speculation about vaccines which the who has pushed back on as an eminent through. ae dollar yesterday hitting 2020 high on the ism nonmanufacturing. it one above the 200 day moving average for the first time this year. german industrial production tomorrow. coming up, our exclusive interview with the ceo of societe generale. don't miss that conversation next. this is bloomberg. ♪ g. ♪

is -- it nejra: this is bloomberg daybreak: europe. manus: i am just too quick. it is because it is thursday. nejra: you like those -- you are like this equity traders, just

jumping on any good news. manus: that is better than being a meat-eating bond trader. unicredit, it has become clearer. unicredit, they are going to face 12% of their turkish business. that has implications in terms of the payoff. this is all about the restructuring within unicredit. stanley, theygan will all pile in. they will stick with the 2020 profit target comedy 2020 cost target. this is important because this is about the differential between u.s. banks. they are still saying this year they will make 4.3 billion euros. that is important. to 835ses have narrowed

million. societe generale have pledged to boost the returns. there is one man with the information. let's take a listen to frederic oudea. frederic: the 27 should be red, as plus 40. if you take into account the businesses you have that we have closed. the equity, it is pretty good. yes, in particular, it was good. , it is again, same thing encouraging for the future. the equities franchise is about 50% larger than your fixed income division. how do you plan to keep gaining market share? frederic: historically, we have

always had a bias towards equity. i don't think that is necessarily bad. wavering from equities and concentrating on fixed income. on the fixed income, icy good development. but where we are, i think we can compete. of course, we are a leader and we want to maintain this position. >> would be in your opinion the biggest headwind for your equities franchise going forward? when we look at this year overall, it is probably better than anticipated six months ago. the virus issue in china, it is not all the exposure we have in china, direct, which is small. like any company, what this could mean for the global economy. say we have i would

a slowdown in the economy. case, a little better performance in 2020 thanks to all the hard work done in 2019. >> and saying the growth forecast, just two points in the first quarter. will that have a lasting effect? frederic: the question is really how long it will last. it is not such a big deal. be more significant for many companies. >> among the banks studying the conditions for setting up in china given the new regulations. do you think the situation is actually delaying this? >> we took a very long-term

perspective. a progressive opening of the capital markets. about the much shorter term impact. there is no direct impact on this project. with thee you dealing situation with your team there? are they staying home, are they coming to the office? how are you dealing with travel there? islike any company, priority to ensure the safety of our staff. yes, we ensure that. fortunately, so far, we have no one with the virus in china. we organize ourselves to make sure we can have business continuity, but we adapt and people stay at home and do their business from home. we have decided to stop the trips. so we are focused on the safety

of our staff. again, we will see how it goes going forward. nejra: societe generale ceo frederic oudea. coming up we will speak to the cfo of ing which reported pretax profits that missed the estimates. this is bloomberg. ♪

nejra: this is bloomberg "daybreak: europe." manus: let's get to the next big report. delivered pretax profits for the fourth quarter that missed the lowest analyst estimates. it comes as the dutch bank faces mounting pressure on cost efficiency. it's get to amsterdam. tanate phutrakul is the cfo of ing. talk us through this miss for

the fourth quarter. 1.59arket and pencil that billion. what took the number below the estimate? tanate: good morning. i think, if you look at the overall q4 results, i would say it is quite challenging. having said that, our commercial momentum remains strong. 200,000 primary customers. i think we see, from a revenue perspective that is being driven by a lot more digitization, with now over 30% of our customers dealing with us purely on mobile devices. that is let to -- that is led to net fee income growth. see a different is cost increase are higher. that coincides with anti-money

laundering programs. we have seen somewhat higher risk off during the course of q4 as well. nejra: those costs have been mounting according to bloomberg intelligence, hitting earnings in the last quarter. as you look at, are you going to be able to control is better? -- control those that are? tanate: i think in terms of program,nt of our aml we are satisfied with where we are. these costs should start to plateau in 2020. our programs are delivering results, particularly in belgium and the netherlands where we do expect over time to see the cost heading downwards. manus: obviously everyone wants to know about growth and momentum for growth.

in terms of acquisitions, in regards to commerzbank, and bank, are you bidding come are you interested in bidding? what would it take to get you to formalize a bid? tanate: we don't really comment on specific situations. poland is ain substantial bank there. we like the organic growth that the bank has achieved in the past five years, adding over a million customers during that period. we like our organic growth path in poland. nejra: can i come back to the net interest income. i understand there was growth in the last quarter. but can you characterize the future path? is it going to remain resilient particularly in a negative rate environment? sense of balance

because we continue to maintain pricing discipline. we are also changing our asset mix from a geography perspective to make sure we are getting the best possible returns. at the same time, we have to manage through the negative interest rates environment in home market, which is significant. so far, we have been able to do that. manus: can i just pick up a little bit further on the negative interest rate environment. the other day, it was said that the ecb policy is not working. spots? has it run its course? working? tanate: i think we have benefited as an industry from

low interest rates in the past five years. that is true in terms of benign economic situation and benign cost she is probably right in saying that the efficacy of continuing on the path of potentially deeper negative rates has less and less effect in terms of loan demand and consumer behaviors. if anything, you can see that we saw during 2019 that more customers are saving money with us than what they are doing to encourage more spending. nejra: on the ecb, the regulatory side, i understand tens of ordered to move market roles back to the continent from london. tanate: i think we first of all say that we really value our u.k. franchise.

with respect to brexit, we continue to see the major market. to makemade our plans sure that we also have a trading location on the mainland eurozone and we have chosen that to be brussels. ofdo remove a certain number risk and training teams back to brussels. we want to maintain balance, being part of the main activity on the old market. but we would not want to commit to our market in the u.k. as well. nejra: thank you for joining us, tanate phutrakul. always great to catch up. coming, ecb president christine lagarde is to testify before the eu parliament this morning, likely to be quizzed about her strategic review, negative rates, and possibly the coronavirus. we will bring you that life. manus: coming up, more banks.

you have had a little bit of banks, now it is the light at the end of the tunnel. we are joined for the first quarter numbers. we will day little bit deeper into coronavirus. the impact on osram licked. this is bloomberg. ♪ when it comes to using data,

everyone is different. which is why xfinity mobile created a different kind of wireless network. one that saves you money by letting you design your own data - giving you more choice and control compared to other top wireless carriers. now you can choose unlimited, shared data, or mix lines of each and switch any line, anytime. no one else lets you do that. design your own data with xfinity mobile. it's wireless reimagined. simple. easy. awesome. [ fast-paced drumming ] nejra: good morning from london.

i met nejra cehic with manus cranny. this is "bloomberg daybreak: europe." these are today's top stories. continues offlly of solid u.s. data. it is buoyed by china's announcement of tariff cuts for stateside goods. but the risks of the coronavirus remain as the who says a cure is a long way off. christina lagarde says the outbreak adds a new layer of uncertainty.as she testifies in

brussels, investors will look for direction. donald trump has been acquitted of charges and becomes the third u.s. president to escape removal from office after being impeached. ♪ manus: welcome to "bloomberg daybreak: europe." posted you bit data that meet the highest estimates as it confirms full-year forecasts. the number rose to 140 million euros. the group says the economic situation in the automotive segment remains uncertain. to discuss the numbers, joining us is the osram licht cfo ingo

bank. i want to get your take on any impact of the coronavirus, particularly on the auto segment. are you factoring in concerns about coronavirus? ingo: good morning, thanks for having me. we had a robust start into the new fiscal year, as you said. coronavirus, we do generate approximately 20% of our revenue in china. we do have a number of manufacturing facilities that are subject to temporary shutdowns as required by the chinese government. we do expect some financial impact. we think it will be of temporary early. but how much is the supply chains are distorted

in china so it is too early to say what we expect in impacts. manus: good to speak to you. i know it is difficult to assess where we are. market droppedo 10% in the first quarter. if you are saying it is temporary, what would a 10% collapse in the auto market mean for you. -- for you? how much of that market share are you exposed to? ingo: if you look at the overall estimates are at probably a decline of 2-3%. the chinese market is indeed important and it really depends on how long shutdowns will be required. now, if it continues for another month or two, we could see the market could be down

minus 3-4%. nejra: we got headlines today tariffs on harboring u.s. goods. that's the same time the u.s. is also lowering tariffs on china. any update on the impact of detente intentions? ingo: we encourage the reduction of tariffs, but in terms of financials this will not have a significant impact. it will not change the numbers in a material way. manus: can we talk about the business and what is going on? a long, difficult struggle with hermes. do you have a lot of glad -- bad blood? ingo: i wouldn't say so.

we eventually recommended the weer to our shareholders and always set that the industrial and strategic logic behind the deal extends -- makes sense. , but itill early days think the relationship is very positive because the deal makes sense for both parties. forward toing progressing the transaction. the deal is expected to close in the middle of this year. up until then there's not much we can actually do together. nejra: looking ahead, what are your priorities? ingo: we have seen stabilization in our business. we continue to drive cost reduction programs that contributed significantly first-quarter results -- to

first-quarter results. andill manage our cash flow our plans. that is the focus. manus: i know you said the deal will hopefully close, the market wants to understand whether you can hit some of the benchmarks .ou have pinned down did those numbers sound reasonable and deliverable? ingo: that is something you probably have to ask hermes. is,only thing i can say looking at the synergies overall , these should be eventually and --ch your cash reach eventually in reach. nejra: thank you for joining us

this morning. 's cfo ingo bank. nejra: over 28,000 people are infected with the coronavirus. authorities are grappling with the largest ever lockdown. sit emptyts sipped -- and hong kong will quarantine all arrivals mainland china. donald trump has been acquitted in his impeachment trial. mitt romney was the only republican to break ranks. he cleared the president of obstruction but voted guilty of abuse of power. the national institute of economic and social research says the eu's chancellors aims are unrealistic. he wants to lift growth to the postwar average but a think tank says the policies are unlikely to offset the impact of exit -- brexit. kirk douglas has died, starring

in over 80 movies across seven decades, he is perhaps best known for spartacus. as a producer, he hired a blacklisted producer, instrumental in leading band filled markers -- banned filmmakers returned to hollywood during mccarthyism. he said it was one of the proudest moments of his life. global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. opec plus talks extended to a third day as divisions over cuts remain. we will discuss that. we have also had breaking news all china is rethinking kinds of things around its economy as the coronavirus spreads. this is bloomberg. ♪

manus: this is "bloomberg

daybreak: europe." i'm manus cranny in dubai. nejra: i'm a nejra cehic in london. christine lagarde says she is on watch as the coronavirus provides a new threat to the economic outlook. speaking in paris she said while the threats of a trade war appear to have receded, the coronavirus adds a new layer of uncertainty. she is testifying for european parliament about the coronavirus and the status of the ecb's strategic review, of which there are precious few details. laura, the market is fixated on the coronavirus. how market-moving could this speech be? >> it is crucial for the region today. lowre seeing the euros slip 1.10. we are seeing fragile backdrop in europe growth fairly budged in q4.

so her comments around the economic outlook and this ongoing recovery, markets will pin onto that in terms of the trajectory or growth -- four growth. manus: if we run through the bnporate news this morning, cut profit targets as a result of the negative rate environment. you have got headwinds for all of the banks. she really has a huge balancing act. this is the difficulty, isn't it? , and it is quite a unique situation. muchuestion remains, how can further trajectory into negative rates actually stimulate the economy and inflation? they are clearly struggling. that's why i think any comments today will be crucial.

,ill they continue to see firm underlying inflation pressure building or will they need to make adjustments to try and trigger more optimism? at 8:30 yesterday, we saw a positive turn in the equity session. it seemed to be because of speculation for potential vaccines for the coronavirus. the who has pushed back on any prospect of a breakthrough. we get factory today industrial production tomorrow. if the numbers are weaker than expected, how much could make the markets want to jump? >> with the example of german factory orders, it is a look in the rearview mirror. we already have indicators that suggest some bright spots emerging for the outlook. with respect to yesterday, it

does show just how sensitive rockets are. -- markets are. so yes, positive data could spurred a market swing, but it is broader risk sentiment that propels equities higher. manus: part of that is the fiscal response. on ae think we are tiring monetary response, so it's interesting what you might say in terms of the leaning of the government. >> absolutely. this is something we have seen from christine lagarde consistently. it is the fact that monetary policy on its own cannot be the only game in town. stec --ed a stimulus to step in, especially on the inflation front. we are not seeing signs it is bolstering core inflation.

manus: let's see what the big speech delivers. our mliv macro strategist tracking the move this morning. coming up with nejra and myself former ecb economist peter prate -- praet. , we have opecec plus talks spilling into a third .ay they met to discuss the threat the coronavirus poses to the oil demand. annmarie hordern has been tracking it. annmarie: is unprecedented for -talks tohnical tax - last this long, but there is a standoff between saudi arabia and russia. they are over -- split over the

threats the coronavirus poses. ask outlooks willing to extend the current agreement they reached in december, but that is due to expire in march. they don't want any new additional measures while saudi arabia has been pushing for more cuts and urgent action. can be much more resilient. $40 are pegged to about while the kingdom needs closer to 80. what worries these gulf countries is the collapse in price since the outbreak of the if we potentially see more on the downward trend in the price of oil. , theyf we get a consensus have to agree on a day and meet face-to-face before taking any sort of action. let's see who will blink first in the coming war for oil. to the cfowe speak

of a norwegian oil company that reported fourth quarter earnings. that's at 7 a.m. this morning. we have got some business flash headlines for you. u.s. authorities are opening a criminal case against jp morgan after accusing six employees of breaking precious metal features. it has been described as racketeering and raises the prospects of significant charges. no formal accusations have been made against jp morgan. brexit may be about to get worse for london. authorities want to walk away from concessions they made in the six years it took to complete the regulations.

stocks and commodities are likely to be revised. u.s., models -- u.s. models will help gm offset weaker sales by shifting more expensive models. but the 40 day strike hurt profits at the automaker. those are your business flash headlines this morning. coming up, don't go jason momentum. that is jp morgan's recommendation. premier risk despite the rebound. your morning call on daybreak europe. ♪

manus: this is "bloomberg daybreak: europe." nejra: i am nejra che pitch in london. cehic in london. christine lagarde testifies at

eu parliament. we look for any comment on the coronavirus. non-farms., we get productivity and jobless claims. manufacturing hit a five-month high yesterday. will: robert kaplan address the economic outlook at the university of texas 2:00 p.m. london time. on the earnings front, they continue unabated. twitter, philip morris, t-mobile, and many more. we have our macro strategist laura cooper still with us. i was saying to somebody yesterday, we had the market putting on almost 3% in the last couple of days. the momentum is clearly on the eco-front, isn't it? >> absolutely.

like esau, we saw -- like you said, we saw ism's to the upside. we expect payrolls to have an upside as well. this continues the theme of u.s. exceptionalism playing out in the equity market. nothis stage, there does appear to be a catalyst in the near term to proudly pullback in u.s. equities, but at the same time but are due for a pullback. it is trending within the top of the range since 2013. clearly, is going to be difficult this expansion to propel higher. nejra: does the idea of exceptionalism build a case for the dollar? >> it's interesting.

when we saw fears come in, we did see haven bids support the dollar. but yesterday, the dollar continued to extend gains on the back of positive data. ultimately, the case does remain a dollar weakness when we look at key drivers like rate differentials. dissipating coronavirus fears support a weaker dollar, b is being delayed because we continue to see u.s. exceptionalism. manus: let's pick up on that. we popped the repricing in the bond market to our gtd library. it's the biggest one-day move this year. move --ave that kind of we are capped at 1.7%. test theon you can

record low in the second half because of contagion risk jpm saysjvm says 2% -- 2% because exceptionalism will carry through. >> it has risen nine basis points, but that is coming from a relatively low base given how much yields fell on the back of these fears. currently, yes, the risks are to the downside. extreme if we don't -- may be extreme if we don't see coronavirus fears. but what the markets are expecting from the fed is just one rate cut this year, so there is the scope for downside risks building. i expect that is likely to increase and to have more cuts

priced in. and on the inflation front, the fed is pinned on firming up inflation. risks for treasuries are yields further to the downside. that risk of yields further to the downside and the prospect of more cuts, isn't that just going to lift the equity markets? >> that's what we have seen so far. is almostl bank becoming a backstop to markets. so long as we don't see pressures building in the u.s., the fed does not have a reason to materially shift its policy bias. until we see a catalyst externally, it will not come from the fed. nejra: laura cooper, thank you for joining us. de-risk as thed

economic impact from the coronavirus unfolds, according to jp morgan. annmarie hordern has the details. annmarie: it's all to do with these factories reopening in china. jp morgan says we could see a re-acceleration of the virus as people see each other and a delay would be a negative for the market. portfolio but the boost to the corporate bond holdings. quickly, definitely risk off in terms of the note. they have exited underweight from gold in the commodity section. nejra: thank you. after record inflows, european etf's have assets under management of almost one trillion euros, but how can you take advantage of these opportunities? join francine lacqua for bloomberg's new show.

the european open is up next. we are looking at green on the screen on european and u.s. futures. ♪

anna: good morning, welcome to "bloomberg markets: europe." we are live from london. i'm anna edwards alongside matt miller in berlin. matt: today mott the markets say thanks for the early valentines gift. markets surge on the news of a tariff cut. futures point to the upside as well. cash trade is less than one hour away. ♪ matt: reasons to rally.