production after companies are cautious as the virus lows. angela merkel's successor chaoss as there is more into a once political system. investors keeps buying bonds. welcome to "bloomberg daybreak." i'm alix steel. what to buy? that is the question. gold and the in treasury market. u.s. equities are weaker. u.s. dollar sitting at the key level. today, that rally is taking a break. time for global exchange where we bring you market news from around the world, from hong kong to berlin and manchester, new

hampshire. we have the top stories. we begin in asia and the latest on the coronavirus outbreak. the death toll retain 910, higher than sars. joining me from hong kong is stephen engle. give us the latest. >> containment remains the operative word both inside china and outside. let's begin inside china. there is a total globally of 910 confirmed cases of deaths. 908 is inside of china. than theore deaths sars outbreak in china and hong kong and elsewhere around the world. there are more than 40,000 confirmed cases. the good thing according to the world health organization in china, they see the number of

new cases has plateaued, but the challenge is as many of the workers are starting to go back to work after the extended holiday and all of those travelers getting back into the factory, can china keep the number of new cases at that stable level? that will be very key to the global outbreak. outside of china, we have that , now 136ip in focus additionalases, an 66 cases were reported by japanese officials and passengers worried that the quarantine process is doing them more harm than good. alix: thank you, stephen engle. stake in china, there consumer prices rising faster than last month. the fallout of the coronavirus could cause faster inflation. in the first trading week following the lunar new year

break, the central bank provided lower costs with massive liquidity. joining me is tom mackenzie. what is the pboc done with the liquidity in the market? tom: they are in a better place. they are directly chief liquidity to smaller enterprises , focusing on manufactured goods. rates downen edging lower. overall, the chinese government says they will spend $10 billion to five the coronavirus add support the economy, but we expect further measures down the road. this underscores the challenges. but you see the consumer price index picking up 4.5%, the highest rate in eight years, and

that will pose a challenge for the central bank, who is trying to support that growth. on the flipside, you have producer prices picking up for the first time since the inflation return. but don't expect that to continue because the impact on supply chain and demand. those factory prices will drop into contraction in the month ahead, posing a challenge in company profitability. this is a difficult and challenging picture for chinese policymakers. alix: thank you to bloomberg's tom mackenzie. to germany where array angela merkel's successor is stepping angela merkel's successor is stepping down. what has caused such turmoil in

the political establishment? >> alix, real political bombshell in germany. merkel's successor announcing she will step down as leader of the party and will not run to succeed angela merkel as chancellor. by some over a decision people in her own party, local an eastern germantown to try and elect a prime minister in that state. this is something that chancellor merkel and others at the national level say they very much oppose. we are at a standstill in germany essentially over this. these local leaders saying they continue to believe this may be the best way forward, and so, a.k.a. joining -- a.k.a. throwing in the parties --

a.k.a. throwing in the towel. we will hear from chancellor merkel later this afternoon. and we are watching with the social democrats have to say. they are the junior coalition partner in the national government with merkel. they have been vocal about the fact they do not support this decision to align with the far-right. they will be speaking later this afternoon with what they plan to do going forward. alix: thank you so much, chad thomas. we head to ireland with more politics. system suffered a shift. irish stocks fell. withng me from dublin is me. what do we learn? say, we have seen a lifetime's worth of change in the political system.

in the popular vote. this does not translate into seats. what is behind this, -- what is behind this? the desire for change. the sense that people want to change. it has been a downside with the stoxx. bank stocks are down. rental and real estate companies are down 10%. are announcing some radical policies like cutting rents and freezing rents and mortgage interest rates. very radical policies. but will we see stability in the government?

since the election, we have seen change in the language from the leader, who says he excepts responsibility. former government will take place in middle of this week -- talks with the former government will take place in the middle of the week. interesting times ahead. alix: thank you so much. finally, we end with u.s. politics. pete buttigieg seems to have .ealed his success attention turns to tomorrow night's new hampshire primary. joining me from manchester, new hampshire is kevin cirilli. where do we stand? kevin: the gloves are coming off in manchester, new hampshire. thetrio of polls show vermont senator, bernie sanders, the front runner here in the

granite state, but in number two, pete buttigieg. where kids interesting is who is going to take their place? will they be elizabeth warren, joe biden, or amy klobuchar, who has been hitting the campaign trail aggressively, given her strong showing in the debates on friday night in new hampshire. she is hoping she will be able to get off aer campaign and pull success. she will be giving a rally across the street from where i am located. a sign of the republican still not giving up yet as it relates to the drowning out of the noise with democrats. from here, should joe biden not have a strong showing in new hampshire, there will be significant questions about where his campaign goes in the long-term. i would also mention after this primary, we should see some candidates drawing other questions about whether or not they can stay in this race for the long haul?

alix: kevin cirilli, thank you. ofwill have special coverage the new hampshire primary tomorrow. in case you missed it, it was an historic night is the oscars. the south korean comedy "parasite" became the first foreign language film to win for best picture, along with best original screenplay. a number of presenters debbie marconi oscar diversity problem. -- number of presenters did remark on the oscar diversity problems. one study found that women make up more than half of the u.s. population, but only 16% of hollywood riders -- writers and directors. haveg up, we will bloomberg's first take. this is bloomberg. ♪

alix: time for bloomberg's first take. mcglone,e is mike jamie, and paul richards. one of our head market guys. he says, no one knows what to buy. >> you have to buy volatility at these levels. last time i saw this was at the middle of last year. you take with the market gives you. thatis one way to build into your portfolio. bitcoin. bonds in

remember when yields kept going down? and i was saying, you had to sell them. when the number printed in bond yields, we said, they don't care. bonds keep going lower. that is the key thing to watch. >> i am in the wrong camp. alix: we like that on a monday morning. >> the markets are really calm. missing that buttigieg is doing really well in iowa. coronavirus to the market is a month old. we hope for much better things, but the market is waiting for some containment news. they will give it another week to 10 days. meanwhile, i think the market is hoping for better things. put all that together, and you got low rates and low oil, so the consumer will do well if

they can control the coronavirus. i think the month looks absolutely fine. i don't disagree with you so much with equities, but $280 billion of gdp is getting sucked out of the world due to the coronavirus. wes will be the first time have not seen gdp growth since 2009. the impact of 4% first quarter gdp on china will be five times the amount of bad loans on their banks. if you are telling me that the market will take that in stride and won't move up, i happen to think this is a great time to build protection into your portfolio. but there was no denying it. it is that buying mentality. the hear your point, but market adjustment -- we started testings ago and it was

150. oil was down 17%. this is something of a black hoping to and we are get a resolution to in the near future for personal and market reasons, in that order. will give usarkets a break on q1. if this thing is resulted by the end of q1, the market gets going again, so to me, everyone has been given a break. giving aink trump is break in terms of the q1 deal. i think the market is missing this, the fact that they have not sustained that move is stability for the market. to put all that together, the market will give us a break on q1 and see you on q2. that means earnings season will be easily navigated. i am comfortable when you put it all together. >> we really don't have a dip.

last year at this time was the time to buy. gold is getting hammered. is. it expensive. pete buttigieg, i have a farm near where he is from. south bend is not the best town. they will rip him apart if he gets going for his lack of experience. that will be a problem later. i want to buy crude oil or copper here, but the stock market is not oversold. on friday.was down day, you havethe to look at the environment is so conducive to risk. stop waiting for dips because when you see those dips, you may want to buy them. chart is saying everyone is right. yes, you could have all of the

worries you are talking about, but central banks will bail you out, which is why you buy the dip. >> look at the chinese liquidity. they are at all-time lows. long can this last? i think the central bank has done very good at this point i'm not trying to rattle the markets , but at some point, the fed will have to pull back some of these market expectations. alix: do they? >> no, no. >> you don't think they will? >> i think they are on hold and they will get the message. although it will get beaten up, we will look fine. we are on hold and everything is under control, and we got moved to room if the coronavirus gets worse. war waited three to six months to long. central banks panicked and put

the insurance cuts in. new zealand was the first to go in august of last year, and that set off a train to other central banks. they went too far, and now they are on hold. central banks are saying they are absolutely fine. look, i have to say, i take the other side. i think central banks have been stimulated like crazy. the dollar is the real issue. i'mou look at returns, talking local currency, although the gains have been wash away relative to the daughter. , there isk at credit a massive bull flattening. spreads are widening and nobody cares. what doesn't work anymore and i read a comment and i agree

that some of this doesn't work in portfolios right now. you will probably see quite a reversal in what we are seeing in the bond market. yields will have to go a lot higher. meantime, what do you like? stay on risk, or if you're concerned about the political situation or the coronavirus, get out. , at least you is can buy protection now in this market. [indiscernible] [laughter] i light volume if you need a, and you don't need it. gold because gold is up. [laughter] alix: he is a macro guy. >> the key thing that will tip gold off is once we get a little mean reversal.

some levels, you're supposed to get overweight, and some, underway. alix: can i make one quick argument? isn't this about tack? -- is in this about technology? -- isn't this about technology? as long as tech outperforms, who cares? >> exactly. >> every day, the first thing i look at is growth. .'m talking s&p it is the divide that the market is grappling with. alix: you guys are good together. >> risk is working. it is always working until something goes wrong. what that means to me is it could be politically-motivated.

i want to get through new hampshire and i want pete buttigieg to hold it together, but i want to see where joe biden is. what is trump potentially facing? then i think the market will put a political bit in. but now, it is all about the coronavirus. >> they are going to rip pete buttigieg apart. he is a mayor of a small city. not an ex-governor or anything. alix: thank you guys so much. i really appreciate it. any charts we are using throughout the show, you can go on your terminal and browse. this is bloomberg. ♪ . ♪

♪ i have your bloomberg business flash. print insurance company co-vahe is in talks to buy a business

partner. the price could be $9 billion in cash. is the holding company for fiat chrysler. now to parent company of mercedes-benz. they will announce as many as 50,000 job cuts, according to the german newspaper. they are saying it would eliminate 10,000 jobs. the automaker wants to reduce the amount it spends on projects outside its core business. we end with oil that is hovering around $50 a barrel and is looking less like he opec and its allies will cut production, in response to the coronavirus outbreak. output on theking virus is negatively impacting the chinese economy. china is the world. largest oil importer. that is your bloomberg business flash. alix: staying with commodities. one industry getting hurt by the

coronavirus is shipping. the demand in china is collapsing. now earning 93% less for suppliers. hitseven chinese provinces the hardest make up 40% of the country's gdp. a huge center for auto making, producing 70%, and using copper. this could be an increase in inventory outside of china. recovers,he economy you have to import new things. that is when it gets murky. the coronavirus spread is front and center this week. this is bloomberg. ♪ is bloomberg. ♪

♪ this is "bloomberg daybreak." i'm alix steel. it feels like you will be wanting to buy a little safety, at least in the bond and

commodity markets. the decks is one of the underperformers and you have election dysfunction. if you switch up the board, the resilience of the euro-dollar at these levels is something to watch right last bit was about the stronger dollar. it is a little different now. the risk-on currencies are outperforming, but still feel down by oneh yields basis point. pointsll have 18 basis and the spread. crude off by 1/10 of 1%. it is not the signal from opec we need. we need the actual cuts to make a difference for the crude market. the fed is cautioning about the impact of the coronavirus in its report to congress released on friday. they said the significant distress in china could spill over into u.s. and global markets.

the effect of the coronavirus in china have prevented a new risk to the outlook. with me is paul richards. are we going to see a fed cup this year? you know you said the market is trying to move them sooner? >> ideally, the fed would rather be on hold this year, but i think they are ready and willing to cut if the market requires it. that would be a may or june event. i think you will see a signal that we -- ron powell need to be -- i think you will see a signal from powell that we need to be on alert regarding the virus. depends on what kind of recovery that we will see in china. there was a great column overnight talking about the letters.

that makes a difference. >> china has two years of a trade issue and then gets hit with this. alix: and they have this great level of debt. >> however, they have the ability to move. they are managing this thing. i think the market is at least relatively calm because of the way they are reacting. we are truly hoping for better things. but from here, the markets are not prepared to give up on q1. we will hopefully have this virus under control by the next month, and then, what does q2 look like? it will be the kickoff but we thought in january. alix: they feels like expectations were strong for the back half of the year. and now, the expectation for a back half recovery are that much stronger because of this. that is a lot of pressure. >> but also a lot of liquidity

and market ups. it may mean that what happens is the markets will take another leap up or down from here. it will consolidate. they will wait for better knees, or if it is bad news, they will react -- they will wait for better news, or if it is bad news, they will react. we are hoping the carmona virus gets better to qualify and nash we are hoping that the coronavirus is better to qualify -- we are hoping that the coronavirus gets better. alix: there is a huge expansion at the end of 2019 -- there was a huge expansion at the end of 2019. how sensitive do you feel your clients are to this? >> they don't even talk about this. the thing that would potentially keep me awake at night is the size of the u.s. deficit. again, no one ever talks about a. just let the good times roll until they don't, and then we

will panic. the wayet is respecting they are managing the repo issue in q4. you can see the commentary coming through from the fed. overall, with respect to the balance sheet and to the dips, -- market is alix: they do not care until they care? >> 100%. >> we are in a new paradigm. but it is good because we don't have to worry about in part it is good until it is not good, and that they will creep up on us. if you are taking a look at equities, does it grow? momentum? >> i am in the momentum camp. i don't think you stand in the way of the steam train that is running nicely along the tracks.

year upet with the 10 at four, this could be the year where the fed even hikes. i did not buy that argument. i am not buying it now. i think we have liquidity around central banks this year. we know where we stand. there probably won't be a cut, and if there is a cut, it will be because we need one. it is a momentum trade on equities and risk, in general. what we are seeing is there has to be more legs for repositioning for those things that have gone into value. now they have to recalibrate. i have to go buy apple. i am underperforming if i don't get into these stocks. >> you mentioned europe. a month ago, the market was bullish on the year, but i wasn't. i was like, hey, guys, back off here.

the market got caught. you look at the euros. they had a few political issues in germany. you have a situation where the market is looking for something other than the u.s., but europe is so dependent on china that i think trade has to wait. you have to get comfortable on china before you get more comfortable on europe right i think the market came out a little early on that. europe. i think the market came out a little early on that. alix: bald, stick with me. unicredit is telling -- paul, stick with me. aboutdit is telling us the cutting of jobs. they may cut 6000 jobs in italy. quite a lot. there was an article over the weekend talking about italian bank mergers. unicredit coming out saying they may cut 6000 jobs in italy, after they came out with earnings.

see many bridge closures in italy, part of their 2023 strategic plan. i want to give you an update on what is making headlines outside of the business world. >> we begin with amy klobuchar who was making a late surge new hampshire. tracking polls have her in first place. this is the day before tomorrow's primary, the first in the first in the nation. bernie sanders and pete buttigieg are running one-two. amy klobuchar getting high marks in her closing arguments in friday's debate. now to president donald trump's new budget that was spend billions more on defense and cut social programs and at almost $1 trillion to the debt. the spending plan today will be unveiled in the president budget is more of a political document

because the congress after appropriate the money and lawmakers are not likely going to finish the budget until after the election. angela merkel's successor is stepping down. she says she won't run for chancellor. this coming after her christian democratic union party was criticized for joining forces with the far-right party in a regional election. global news, 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. alix: thank you so much. paul richards is still with me and we were talking about europe. when you read about the dysfunction in german politics, what was your take? :: the market got pretty relaxed after the announcement from aka.

europe is struggling to find a replacement for angela merkel. i think angela merkel knows she has roughly about another year, and i think germany is struggling to find that replacement. i think the market will give them time. read about it. no surprise, no initial market reaction, is my take. alix: i was surprised we did not see a weaker euros. but people went long euros. -- a lot of people went long euros. think the one await is the line. the market will get cautious regarding his comments.

it should be here because china has gotten an issue. i would not expect the euro to go much more in the near term. alix: we brought up u.s. politics in one of our last segments. how do you deal with risk in relation to the election? paul: i was a little concerned that we would see the sanders' surge. i think buttigieg has upset that. the market has yet price a left-leaning candidate to truly take on trough. there is a long way to get there, but the market was getting ready to say, ok, it is looking like sanders, and that would be a surprise for the market. buttigieg is pushing soft. my sense is we get through new hampshire and if we see the polls come out similar, the market risk gets pushed. with the market is thinking about is michael bloomberg.

his runway, he is sitting on the runway kind of waiting to lift off and it is starting to play out. alix: we are looking at the charts and the possibility of the next nominee. the white line is what you are talking about regarding sanders. and is a joe biden fall off elizabeth ward, a slower grind lower. the big jump is buttigieg, but even if you were to worry about it, what do you do as a market participant? paul: there will be appointed to the election where the market will have to price a surprise. four years ago, many would not have imagined trump winning the presidency. in the same way that there will be a point for the market that potentially, someone like sanders or a left-leaning candidate might have to be pressed. then what do you do? you sell equities and the dollar. windowss come off and does that happen? it depends on when we get that

nominee. if you get a more centrist, the market will breathe, but if we midyear, that is when the market will start pricing this. but to judge has pushed back that event, so that event is still likely. alix: paul, so great to catch up with you. always great to catch up with you. howng up on this program, climate change is changing wall street as a shareholder group is trying to kick out a jp morgan board member. if you have a bloomberg terminal, check out tv and watches online, and check out all of our graphics or anything you may have missed. this is bloomberg. ♪

♪ you are watching "bloomberg daybreak." a big takeover on mama operators industry. property group agreed to buy 6.6r rivals valued at billion dollars, representing a 51% premium over there close on friday. we have learned that they have , puttinging talks pressure on mama operators to consolidate. hsbc joining other banks to help customers make it through the coronavirus outbreak. providing more than $3.9 billion in liquidity relief for borrowers with loans secured by properties. moratoriumviding a for loans. carlos ghosn going hollywood. the former nissan chairman has hired legendary agent michael

obit. this is to negotiate his movie and tv deals. that is your bloomberg business flash. that that is the story keeps us giving us so much entertainment. we are covering wall street. unicredit negative on negative rates. the ceo says bank profitability would be hurt if this continues. the u.k.'s largest fund plans to hedge fund holdings after high fees and climate changes, s&p morgan, nonprofit group is calling for the ousting of lee reymin from the board, saying he compromised the profitability.

unionsre talking to the about 6000 job because for unicredit. they were blaming negative rates. think this is the case. we think rates will normalize. so, it is him and everybody else. battalion and swiss banks are complaining about this. german banks are complaining about this. the job cuts are boating well in advance. this is coming from a bank where people have started to really like the job-cutting plan. , they can bes derailed. the country has to be ok

with the job cuts. >> there are job because that are in issue. a lot of how much are these costs being cast out of the consumer? the bank cannot take on these costs forever. we have seen cases in switzerland where people are paying to save. savers are being punished so far from this debacle in europe. let's see how long this lasts. alix: the second story is u.k.'s largest pension fund will have their hedge fund holdings. who is in hedge funds anymore? pulled $103 million, the most in three years. they only have a $2.3 million investment. they are having that. that is hundreds of millions instead of billions.

harvard is increasing their weocation, but in the u.s., will want to look out. because this year will be another year of very big pension names pulling their money. alix: who wins and who loses? there are hedge funds still running money. >> there are people still invested. some of the german strategies have been pulling in more money than other types. some of the macro funds have really suffered. some of the futures strategies have suffered. let's see at that pension funds are willing to pay for talent. some of these want to do these strategies on their own, but they have to be able to hire. alix: the third story, combining our two loves. this is private activists pressuring lee raymond to get off the board. wrote, aleague

nonprofit group is looking to oust the lead independent director at jp morgan. a long shot that this is the oldest director at all the wall street banks. push, the., the shareholder pushing regarding think relationships, the profit yielding companies have been around. you go to these meetings and you see a lot of activists. not a whole lot happened in europe -- not a whole lot happened. in europe was a little bit different. barclays are facing a lot of pressures. we will see you both of these banks do a lot to change course with these investors. alix: i understand lee raymond led exxon and has tied is to the commodity world -- and has ties to the commodity world. >> how much influence does he have on jp morgan? he has a lot of influence on the banks' long-term strategy.

what majority action is saying is they believe his long-standing relationship with big oil compromises jp morgan's ability to react to the climate crisis. jp morgan has an investor day at the end of this month as well as their annual meeting, and this is something they will address. much.thank you very inside a's off the beaten street , there was fund in the opening of the oscars. targeting a certain billionaire. >> jeff bezos is here! >> wow, i great actor. [laughter] rights got cash, but he the checks. he is the is so rich, boss and still the richest man in the world. -- he got a divorce and is still

the richest man in the world. he thought "marriage story" was a comedy. martin says he likes getting his amazon packages on time. got to love it. who will hurt more over the china fallout? if you're jumping into your car, tune into louvered radio on sirius xm, channel 119 and on the bloomberg business app. this is bloomberg.

♪ take.time for trader's if you are looking at euro, china, u.s., terminal -- germany doesn't like to talk about this. they like to keep a low profile

as how much they export to the u.s. and the rest of the world. they are a main exporter to china, especially with the machinery that china uses to build the products we export. we will see germany rollover. industrial production is getting lower and the buyers will exacerbate the situation and this will weigh heavily on the euro. -- this currency could fall from -- this currency could fall to 105 from 109. by on the 111 handle saw traders buying it on the 110. we are already seeing that. i think if the virus fears continues, this could go further. alix: what happens when we break one away? is it a straight stone dropped to 105? >> that is one of the bad things about this because it is such ethically-traded currency -- ly-trailingis a thick

currency. so euro has a lot of volume, it will be a slow grind lower. what that does to traders is more painful. when you see a quick move, you know you have to get out. but when you see a slow drip, should i buy or average? and ends up being more expensive. alix: good to see you. coming up, our chief market strategist will be joining us. what do you buy in this market? will this be about the dollar, gold, and what type of risk should you take on? this is bloomberg. ♪

♪ >> what is everything you need

to know this hour. it lets take it from the top. >> the reported numbers have -- of both confirmed and prospective cases have declined for a few days with one-day day exception. alix: the infection rate slows while the death toll climbs in china restarts production after an extended holiday. plus, they spend billions to combat the disease. >> the government will be spending $10 billion to fight become a virus to try to support the economy. you expect further measures down the road. with a february peak 500,000 infections predicted in wuhan. >> we are getting a huge political headline from germany across the ticker. karen bauer will step down. alix: angela merkel's successor resigns after fallout in the east german state elections.

out over ayed decision by some people in her own party. a local chapter in the eastern german state to align with the far-right is something that chancellor merkel and others at the national level say they very much oppose. alix: this leaves the door wide open as to who will succeed merkel. >> i'm mad as hell. and what we will do at the end of this cycle is have a further conversation about whether or not state parties should be running elections. alix: democratic national committee chairman tom perez iowa caucust the fiasco. >> vermont senator bernie sanders the frontrunner in the granite state, but pete buttigieg -- where it gets interesting, alex, is who will take third place. will it be warren, joe biden, or

amy klobuchar? raises $2klobuchar million to challenge frontrunners in friday's debate. -- after friday's debate. ,nd the oscars, making history the first foreign-language film to win best picture. and jeff bezos roasted. >> great actor. [laughter] writes checks, the banks bounce. he is still the richest man in the world. he saw marriage story and thought it was a comedy. for: the oscars took heat the lack of diversity among the nominees. and in the markets, it's what do you buy with all the risk out there? nothing really concrete. s&p futures are down .1%.

but the euro-dollar is also holding the level despite the complete political dysfunction happening in germany. the 10 year yield down to basis points. commodities continue to rollover. it doesn't feel like you can take on a lot of risk. what are you supposed to do? .oining the is art hogan happy monday. what are you talking about with your clients? >> we are almost exactly where we were before the virus broke out. s&p points, we are where we were. given the just a position of we don't know -- juxtaposition of we don't know how bad this gets and the slowing growth, it has been much better than expected economic data in the united states with earnings that do better in the fourth quarter than anticipated. should we anticipate this gets much worse? or are we getting close to the

counts pressing. if you like the policy response has been so rapid that that is probably the case. alix: liquidity keeps getting pumped in. offer forpping the hp, $24 a share. they say that they have basically met with some of hp largestrgest -- hp's stockholders. if they want the humans capital, they wound up increasing the price the $24 a share. we will see if that winds up generating that kind of buzz with a 40% premium of the volume weighted average of about 17 dollars. it is a significant premium. we will update you with any details as they come out. as art was just talking about, market participants are weighing the consequences of the coronavirus and if the impact will be short or long lived.

an advisor said not to expect a v-shaped recovery. >> i am much more worried that we have started dynamics that are not easy to reverse. theke efforts of containing virus and resumption of economic activity. otherwise we will not get the v and it will look more like l or u. alix: and from washington, tom orlik. i wanted to get your take on that, tom. if it is v, that is great. l or u is a different story. tom: i completely agree that the first thing we need to see is when this outbreak is going to be contained, right? imminently,tained it leaves the groundwork for a v-shaped recovery. orwe look at escalating spreading cases into q2, we will

look at something that has a much longer lasting impact. in terms of the economic dynamics, once the outbreak is under control, i think one isson for cautious optimism that this virus is not going to be taking out any of the capital stock, right? the people go back to work, subway will be working. the factory will be there. the office will be there. kind of at that physical barrier. everyone has been impressed by the extremity of the measures that the government has taken to contain the virus. it putting nearly 60 million people under lockdown. if that is what they can do under containment, think about what they can do when they want to kickstart the economy again. we have to assume they can put in some unexpectedly large

efforts. when theoptimism that outbreak is under control, the economy will come back to trend. art: tom makes a really good point. 2003 and sars to with comparisons and numbers. of global gdp2% then and 16% of global gdp now. with that comes the ability for china to have a more sophisticated health care system. the response seems to be more rapid now. should we be looking at where we are today or comparing to sars? >> i think it has been a wrong comparison for a lot of reasons. authorities are reacting completely differently. reaction function was very much criticized. there was no concerted effort to get it under control. that is why the reaction has been so vicious. you will probably see a bigger

downdraft and a bigger bounce back. , everybody work from home, there are restrictions on movement. this has been much more vicious. the longer it lasts, the more likely a v-shaped recovery does occur because of the pent up demand and restrictions we have had relative to sars. i think there is permanent and income- permanent lost for some companies. a consumer oriented company that would benefit from lunar new year travel, that is a permanent loss. locatedthe industries in the production chain that are globally integrated, i think you will have a bigger bounce back. ultimately it is something of a wash thinking 12 months out. it is why the market absorbs this. short term disruption and longer-term growth. it is akin to a hurricane's impact. abouthen you think

permanent loss, travel, leisure, casino stocks -- what percentage of gdp do we think we will lose? what part will we see rebound? gina: i don't know the percentage of gdp but i can say the percentage of earnings. the s&p 500 is less than 1.5%. for the s&p, a bigger share of china earnings and asia-pacific earnings. small are talking really percentage terms when it comes to the s&p 500. that explains why stocks are somewhat stable in the short term. think about some near-term potential damage. that is getting offset. fourth-quarter earnings are much stronger than expected right now. alix: also a massive amount of liquidity. i will show the chart on my terminal. , largest on yuan

record. something like $4 billion injected already. it ability to go up to $10 billion. is that why investors take this in stride? tom: the important difference between now and 2003 is that we have a much more sophisticated chinese financial regulator. the people's bank of china has gone from being a clunky soviet era central bank with very limited set of instruments it can use to being a much more sophisticated market oriented flexible institution with a lot of instruments it can use and a lot of credibility. yuanwe see 1.2 trillion coming in after chinese new year, yes, we had a very big drop in the chinese market. the bad news came out during holiday. but following the 1.2 trillion seention, it we have

something that looks like calm in the chinese markets. art: we hear about china being on its back foot a bit when it comes to u.s.-china trade. does this have an impact on how phase ii goes? is there any impact whatsoever or is that part of the narrative we like to throw out there? tom: clearly there is a risk there, art. the risk is that the u.s. will say a deal is a deal. you're not buying the things you said you would buy so phase one is off. view is the risk of that happening is rather low. the phase i deal was done partly because the u.s. wanted to lock in more sales. mainly because they wanted a truce. they recognized it was an election year and with downward pressure on the economy, it did not make sense to go in guns

blazing in a damaging trade war. the logical response from the u.s. is to say that this is force majeure with our friends in china. we will get back to this after the outbreak is under control. alix: just wondering how long that will be lasting. both.you art hogan will be sticking with me. we have upheaval in german politics. we will have uncertainty over who will succeed -- that is coming up next. this is bloomberg. ♪

alix: moving to germany where

angela merkel's successor is stepping down as leader of the democratic union. and what does this mean for investors. richard jones joins us from berlin. art hogan is still with me on set. what is your biggest take away and the lack of market reaction to all of this? the lacki think that of reaction is because -- i think it is twofold. one, the race to succeed kramp-karrenbauer as head of the cdu will be a multi-month process. it is very early days. the market can afford to play the wait and see game until we get clarity about who will be running to replace her and what is going to come next. i think the most important thing is that what has happened so far does not undermine angela merkel's current coalition government governing to the end of the term. if anything were to happen in

german politics that undermines that, we get a big market reaction. .his is a multi-month process in the current coalition will be able to continue governing. that is why we have seen muted market reaction. art: a really interesting point that we will have status quo for several months. what are your thoughts around how exposed germany is to china in terms of manufacturing and exporting? it felt like german pmi was starting to stabilize. are you concerned it will get worse before it gets better? richard: i think that's a good point, art. this political uncertainty now happens at a really bad time for germany economically. looks like the pmi's they are starting to turn, but the data is coming in weaker than expected. although the sentiment is turning, it is not feeding into the hard data.

until we get that happening, i think it will be difficult for the german economy for us to say that we can give it the all clear. the coronavirus stuff is not feeding into the hard data. i think it will be a challenging few months for the german economy. any political uncertainty that you add into the mix will make it difficult for the your to rally. -- for the euro to rally. i think the economic and political mix right now is not optimal. art: what do you think 2020 looks like in terms of germany bowing to pistol policy reform -- fiscal policy reform as opposed to monetary policy? it feels like it's finally a good time to see germany do something about taxes in a significant way. wouldd: the one thing i say is that if we look at it from the outside, that makes a lot of sense. but within germany, there's not

a lot of enthusiasm for that. there is a feeling that they want to spend more on fiscal, but they don't want to run deficits. it they are committed to the black zero here. from thefrom outside, ecb, it will continue to be applied to the german government. but there is not a lot of enthusiasm as it stands. things will have to get a lot worse for that to become the we get a lot of fiscal policy expansion. alix: i always enjoy talking to you, richard jones. art is sticking with me. it we will take a look at tomorrow night's new hampshire primary, talking about politics in the u.s. and i want to recap what is happening in germany. a.k.k. seeing live, talking. she says the cdu leaders have to

be together. she confirms that she will not be seeking the german chancellor position. they euro-dollar not moving at all. this is bloomberg. ♪

viviana: this is bloomberg daybreak. we begin with a takeover in the mall operators industry. a property group is set to buy their arrival with an all cash deal and $3.6 billion. theyberg has learned that had been holding talks. a wave of bankruptcy had put pressure on operators to consolidate.

giving up on trying to buy hp. -- not giving up on trying to buy hp. the company boosted their offer to two dollars higher than the previous offer. they want to replace the entire hp board through a proxy fight. and in talks to buy a business partner read, the price could be about $9 billion in cash. xr is the holding company for fiat chrysler. that is the bloomberg business flash. alix: democratic presidential candidates are turning the heat up on one another ahead of the new hampshire primary. we have kevin cirilli joining us from manchester, new hampshire. then, give us the lay of land as we head into this next primary. kevin: bernie sanders and pete buttigieg. last 24 hours the

and all of them indicate that bernie sanders has the advantage heading out of iowa. pete buttigieg trying to say that this will be a closer race then people counted him for but look out for senator amy klobuchar. if she can finish in third place, there is an argument that she has the momentum to be a centrist alternative to joe biden. the biden campaign is trying to inject new life to this campaign. two say if that south carolinian firewall is realistic. and elizabeth warren, whether or not she is able to have a strong showing. on afterure will be tomorrow night for many of these candidates about whether or not they can stay in the race. iowa was a bit of a disaster and new hampshire the first actual primary, how many participants will we have

heading into super tuesday? does this then the crowd out? the widowterms of wing of the field, the pundits can't do it. it has to be the voters. from an economic standpoint, we talk about these candidates as if they are politicians, which they are, but they are also ceo of the campaign. that is where cash flow and ability to raise money really matters. there will be pressure on them to see if they can not just face the voters but if it will impact the campaign bottom line. alix: we will have special coverage of the new hampshire primary tomorrow night at 7:00 p.m. eastern time. are your clients talking about the election at all? talkit is far too early to about this, but there is some sort of irrational fear that there is a candidate that is bad for the market. somebody very far to the left with a bunch of aggressive

policies. it's too early. it's always too early to think about this until you get closer. and presidents don't have a whole lot to do with what goes on in the economy. the ability to get anything radical done in the u.s. government is almost impossible. you would have to have a clean sweep of everything. concerned about that is a touch irrational, especially when it comes to health care. alix: when you take a look at volvo, you see volatility picking up as you had to new hampshire. do you think about that getting closer or is this a strategic opportunity? art: think about it as you get closer. iowa and new hampshire are too early to start contemplating that. to as have gotten down couple of candidates, than the market will pay more attention to this. and it probably should. i will warn you that is for your

selling of health care is always exaggerated. we get concerned that health care will have a reimbursement regime that has never existed before. a lot of administrations have talked about this and none of them have got it accomplished. alix: it feels like the opposite of infrastructure. the more they talk about it, the less it happens. it's just about how we pay for it. we desperately need that. health care is just as important but just as hard to get accomplished. alix: coming up, trump administration says boeing is the reason that the gdp grew less than 3%. is it really boeing's fault? this is bloomberg. ♪

[ fast-paced drumming ] [ fast-paced drumming ]

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a little bit you -- a little bit lower in europe. if you wanted to sell, where would you put your money? if you look at other asset classes, a stronger dollar all week. now dollar losing a bit of speed -- a little bit of steam, but just kind of good and the bond market, you are still seeing the risk off feel. at 210 spread rolling over just a touch. crude cannot get a bid. cut otherwise it is hard for the crude market to stabilize. if you look at gdp, the trump administration wants to blame it on boeing. they say the plane maker is the reason. michael mckee will give us the breakdown. issue thatis is an

has been around for a while. brooke sutherland writing for a while. megan greene wrote about a couple months ago. max they ground of the 737 it took production out of the economy and brought down the manufacturing numbers. those are shipments of nondefense aircraft and they came down as boeing stopped making the plane. the blue line is inventory. the inventory of those planes piled up because they cannot fly them off to their customers. what those lines did was offset each other. the economy did not take a hit from boeing yet. not only of the stuffed making the planes, they will be building up inventory. is it what is causing the u.s. economy to slow? it is not. look at this forecast from 2020. it has always been, since 2018, early 2018, below 2%.

the boeing 737 max stop flying in 2019. there is no real change. the forecast has always been, and you can see the redlines i at in, it has always been for slow year ahead. now we come out with the donald trump budget going forward. on presidentock trump. paul sweeney and i were talking, we cannot remember the last time a president's budget was taken seriously -- they are always dead on arrival on capitol hill. here is why. gdp is the cbo forecast for going forward to 2029. they see it at 2% for the next year and then it goes down to 1.82% over the rest of the decade. these are the two forecast for the next year. this is the president's assumption, we will grow 3% for two years and over 2.8%, 2.9%.

this gap is ridiculous and no one will take it seriously, which is why the economy is forecast as we are still lower for longer. alix: i like the perspective. thanks a lot. the boeing conversation was fun. brooke sutherland did write about this. she said boeing deserves blame for many things, but dragging u.s. economic growth below 3% is not one of them. it feels like boeing is a convenient scapegoat for an administration that does not want to admit its trade war with china drags the manufacturing sector indra moderate recession. she joins us now. walk me through how you see the boeing effect. brooke: it will certainly be a drag, but to michael's point they did take production down. productions are still going full tilt before the

max crashes. he did not see as much of a drag as you might have. the production halted take effect in january. you will see some impacts. most economists are talking about a 50 basis point hit. you should mix that up if the plaintiffs not come back. planes do not come back. there was talk of a 50 basis point drag for the whole year and that is the reason we were not above 3%, which does not add up when you look at the math and when where economists forecast before the boeing drop. if you look at 2021, economists are forecasting 1.9, and you could see boeing production significantly in 2021. art: it feels like this administration always has the dog ate my homework. at some point in time, the point you made is important. how long does it take boeing to

get back into production and work out that inventory? what is the timeline? have been talking about prioritizing that inventory. you have to have some production come back because we do not want the supply chains to go too cold. we think we will see the suppliers come back before we see boeing back. they have not put firm targets on their production because they are very wary of doing that about how wrong they have been on any timeline. most analysts are looking to get back to the 52 plane per month basis until the end of 2021. they had been targeting 57 jets per month. there is some question as to whether they will ever get to that, if the demand is strong enough to climb up to that pace. michael: there are three risks. one of boeing does not get production line back anytime soon, which depresses growth on top of what we are seeing.

the other is they do get it flying and they start delivering the planes, then you have a risk of a higher growth rate. and may not be bad for art his compatriots on wall street, but it does change the forecast. the third is the coronavirus in china. a lot of the raw materials -- this plane is made up of thousands of parts sourced in china. if that does not come over, that could delay boeing beyond its certification. there are three risks in the economy. an overall point to remember is potential growth is only 1.9% or 2%. when you look the realistic forecast from economists, they are saying we will grow about as fast as we can grow at this point. so far that has not been bad for the market. brooke: aerospace has been a pocket of strength to the industrial sector and you saw broad-based weakness continuing into january and february.

the ism numbers, people got excited because they were above the 50 point benchmark but they are still slow. we are looking at a lackluster environment for the industrial sector in the first half of 2020. a lot of those companies are banking on a second-half rebound , but the coronavirus is out and you also have the election. there is a lot of risk and i do not know where you will get the orders growth in manufacturing. art: you think there is another industry that can take over and help boost gdp growth, something like residential real estate? michael: the housing industry, to a certain extent. we had a good year in the housing industry last year. on a percentage basis we will not see that kind of gain again. everybody is keeping an ion tech but we do not know what china's situation will have for the tech industry. a lot of uncertainty going forward. we want to keep an eye on what is happening with layoffs.

brooke would know better than i. all of the suppliers for boeing are trying to keep people on the payrolls. they do not want to lose them, they are highly skilled. howhis goes on too long, long can you pay people not to work? brooke: the one exception is the spirit aerosystems, and not -- theyhat production are cutting significant people. job estimates from 3m, caterpillar, emerson electric, you are seeing a step up and the cost cuts. the degree that filters into the consumer economy is limited by the shrinking share of manufacturing. alix: you raise a great point. turn that to wages. there was a great piece talking about what people actually make for the eci when you talk about all the other stuff in addition to wages versus what people expect. we think we are a lot better

than what we mind up making. is that normal? michael: obviously you can see from the chart is not normal but it has happened in the chart. this gets into the political aspect of 2020. whether people feel disappointed in the way the economy is good one thing that has helped so far -- disappointed in the way the economy is so far. one thing that has helped is that inflation is so slow. now that you have wage gains above 3%, that is faster than inflation, so people feel ok. they are getting ahead a little bit. if inflation rises, then you have a problem. art: if inflation rises. that is one of the things we have been saying for last three years. getting back to gdp growth, if you think about what structurally has changed over the last 10 years, why are gdp growth is behind us, what is the big structural changes?

michael: two things have happened at once. one is the birth rate has gone down so the labor force growth rate has been slowing significantly. now it is about half a percent a year. that is the big mystery. that is the big question -- what has happened to productivity? we have all of these advances, but they are so we can read our iphones faster and watch streaming videos. it has not increase the productivity of workers in the workplace. productivity growing 1.1% to 1.5% a year and a .5% in the labor force and you have where we are. there's a is why structural shift and why value is not working -- it may not work again in the same way you thought 20 years ago. art: that is the difficult phenomenon. if our gdp growth is 2% and you're looking at earnings growth of mid single digits, it

is much easier to navigate to technology on one side and yield on the other. we have seen that for the last two years, this barbell approach where every investor wants momentum stocks or they want to stay defensive. where we are concerned about that is not the growth side. i think you will be ok in 2020. it is about how in utilities are. i think the wrong people are in that. you have the utility index throwing off the dividend. both of those are stretched by any concept of valuation. i am much more concerned about that than the russell 2000. alix: low beta, low volatility. thanks a lot. bloombergs michael mckee and art hogan of national securities. brooke sutherland of bloomberg opinion will be sticking with me. check out the article over the weekend -- it had bedbugs in the title. you have to read it. viviana hurtado is here with first word news. viviana: a grim milestone for

the coronavirus. the global death toll then at least 910, more people than died during the sars epidemic. china says the number of condoned -- the of confirmed cases is more than 61,000. in all, 130 cases of coronavirus have been discovered on the cruise ship. andwashington, d.c. president donald trump's new budget. it would spend billions more on defense and cut social programs and at $1 trillion to the debt today the spending plan is unveiled. the budget is more of a political document because congress has to appropriate the money and lawmakers are not likely to finish work on the budget until after the election. a historic night at the oscars. the south korean comedy parasite becoming the first foreign-language movie to win the academy award for best picture. you could say parasite swept -- best director, best original

screenplay, and top international pictures. it was a disappointing night for netflix. it's movies had 24 nominations but won only two oscars. 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. is ag up, volvo and keeley marriage that could go public. the swedish carmaker could combine with its hong kong unit. ,emember, check out gtv all of the charts you need. gtv . this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i'm viviana hurtado with your bloomberg business flash. bitcoin.with

it has gone back over $10,000 again. the largest currency is hovering around the five figure mark. some analysts have suggested investors see bitcoin and other digital currencies as steady pace in place. bloomberg intelligence says positive fundamentals should extend bitcoins price appreciation. this week google's decade-long antitrust fight with the eu resumes. the eu general court holding a three-day hearing that begins on wednesday. google is trying to avert penalty. lawyers say the court clash will help set the scene for a broader eu crackdown on u.s. tech giants. we end with samsung showing off its new folding compact smartphone. the debut took place in a commercial during the oscars. bloomberg has learned the phone will be called the galaxy z flip. there'll be a big launch for the

device tomorrow in san francisco. i am viviana hurtado and that is your bloomberg business flash. i feel like i should have held onto my flip phone. alix: i do not understand how it would fit in my hand. it is time for bottom line. the company i am watching is volvo. the company's owner geely is considering taking it private. brooke and art are still with me. this is all about you need, they need. you need the money and you're not making a profit and you need to get as much cash as you can. sayinglvo is very early by the end of the year we will be 100% electric vehicles. they are saying they cannot do that in the public market. brooke: it continues a pattern. you also have suppliers partnering route. there is a realization you need the scale and everyone is fighting for whatever technological edge the other company might have. whether these bets are smart and will pay off is a different question. for some it will load them up on

debt and not necessarily be an advantage. when it isially about competing with tesla. the majority of electric vehicles sold in china are homegrown, but with tesla in their they are beating european vehicles. art: it seems like tesla is the incumbent. ,here is a lot of competition whether it be too little, too late, or it will be a really interesting market. alix: i've a special coming up in a week. stay tuned for that. apple, watching foxconn, supply chains in china. art: part of what we talked about was what is permanently lost. what is not permanently lost his manufacturing. foxconn has four plants. two have been closed. one just got reopened. this is the type of thing where we are less concerned about the economic damage because we notice coming back.

it is not like travel and leisure where we will never get that back. brooke: i thought it was interesting there is a report they're making their own surgical masks. they have a separate line that will crank out masks for their employers. alix: to that point, you can get your employees, but if you do not have the right protection, why would you send them back to work? and it is going through a second round of trying to get improved. alix: what are you watching? brooke: i am looking at edge well company the company that makes schick razors. s,ey are going to buy harry' but the s&p said they would not a fan of the deal, so edge well is terminating the deal. there was talk they might fight this, but they thought this would be too distracting and too much of a drag on our business. we will move on. harry's has told edge well it is

,lanning litigation in response but this raises a lot of interesting question. the ftc point was harry's did not, legitimate competitor to edge well until it entered brick-and-mortar in 2016. it started being sold on the shelves of target and walmart and that was the pivot point for when edge well and p&g started responding with price cuts. it raises the question of these other direct to consumer brands -- do you have to think twice about going into brick-and-mortar, do have to be cautious about maintaining only online because i think for a lot of these companies game plan is to get noticed by the key companies and get acquired. if you cannot do that anymore, and we have seen these ipos fall flat on their face, what is the path forward for these companies? art: such an amazing story. if you are asked me this morning what i thought the competitive landscape look like in men -- dollar shape and

harry's have done a great job. harry's is now in brick-and-mortar stores. for the government -- it does not make any sense. alix: it also raises the point of a broader issue of no matter what administration we have, are we looking at a less m&a friendly regime and the oversight of m&a that already has happened, and then what you do if you are a start up you are in the mid tier? what will be the exit strategy. brooke: there is some question of do you have to sell before you get too big? if you are a founder, that is not an incentive. alix: there is so much money in the market. have seen an enforcement regime from the antitrust authorities. we talked about dollar shape -- that was acquired by unilever. there is no recognition of that in the ftc complaint. it is interesting, and if you

wonder this is to head off future deals by amazon to see no concern about taking too much of the market and buying direct to consumer brands and expanding into different avenues for your product. alix: great conversation. thanks, brooke. also, art. always a pleasure. you talk faster than me so i feel good about myself when i'm on set. coming up, tesla popping higher. we take a look at the levels to watch in today's technically speaking. if you are jumping in your car, tune into bloomberg radio, heard across the u.s. on sirius xm channel 119 and the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. bill maloney, voice of bloombergs equities squad joins me. listen to bill all day. type in squa on your terminal.

tesla, yet again. bill: i am sick of the stock but tesla is up 50 points in the premarket. first levels, seven 96, the february high. 800 being around figure. 809, 26 .3% of the move, and above 809, 834. alix: let's go to amazon. closer to record on friday. the idea that if you do not own a faang you have to over perform your benchmark. bill: amazon a bit of a breakout to a record, up around .6% right now. if we continue to go farther, the next level is probably a fibonacci focus, 2118 probably the next level in amazon. alix: let's wrap it up with fedex. what are you looking at? bill: fedex is up 2%. 187. target

we talked about the stock a couple weeks ago, how 150 was support. it seems to be holding. the long-term trend is still hello 160. -- still below 160. alix: thanks a lot. coming up on the open, lale topcuoglu will be joining jonathan ferro on a day where the question is what you want to buy? will it be the dollar, will be treasuries, or will it be u.s. equities? futures around the lows of the session but just off four points as the dollar takes a break from the rally it's all last week. this is bloomberg. ♪

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jonathan: coming up, who warning that we may only be seen the tip of the iceberg. chairman powell gearing up to confront new risks to the global economy as a construction of view -- a constructive view dominates wall street. here is your monday morning price action. a sleepy morning. equity futures down four, off more than .1%. a slimmer move on the euro-dollar. below 1.0 950. to 1.56 on the u.s. 10 year. let's begin the week with the big issue. investors hoping for one thing. >> a v-shaped recovery. >> v-shaped recovery. >> the recovery thesis. >> a meaningful recovery. >> how quickly that comes as the big issue. t this is demand