every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. >> coronavirus desktop 1000. investors overlook the economic index. stocks in europe join the rally. the u.k. government warns industry to prepare for strict border controls. financial services also face divergence. ♪ these are the markets that you

can see. the focus is on earnings. the impactfocus on coronavirus can have. coming up later today, we will speak to the german car maker. let's get first to the first word news. >> we begin in your neck of the woods. the u.k. once to have a terrible trading relationship for banks. now to germany.

angela merkel will take an active role in choosing her next successor. her heir apparent decided to not run for the chancellorship. she was not able to stamp her authority on the party. the european central bank setting itself an ambitious timetable for a strategic review. the coetzee decision by summer. the ecb has failed to restore price growth. putkrock promising to environmental concerns at the strategy.its that did not stop protesters from storming its headquarters. the firm has seen protests in

other cities. 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. thank you so much. the number of coronavirus deaths has now passed 1000. than 34,000re confirmed cases worldwide. here's what some of the industry leaders have to say. overall, if china is down 50% , that would be a huge impact on all of asia.

>> the main cry i am hearing is help. >> we already are prepared if we end up going to read. francine: some of the supply chains are safe. and yet the number of deaths has raised -- risen quite significant leap. >> those additional infections

are starting to slow. francine: a lot of reporters are at home because the coronavirus is difficult. thank you both for joining us.

>> you mentioned the rate of increase of infections slowing down. the market has already rebounded quite a lot very quickly. francine: how difficult is it to

model the impact on the economy? we do not fully understand. some supply chains are closed. we did not know if logistically they can adapt. >> indeed. there will be a significant drop in sales in the fashion industry.

this cannot be replicated in a month or so. reach that factory. no one is there. they are in the dark. given that bicycles are a seasonal product, the whole year could be out for them. that is a great example of things we could see on the larger scale. we look at earning, from the economics point of view, when we start seeing the affect. do you start seeing it in the second quarter? >> i think you start seeing effects and the first quarter. recordingare fourth-quarter 2019 earnings.

you see it across the globe, especially in the manufacturing sector. chinese travelers are not traveling. francine: how difficult is it on the larger scale to understand the impact? >> there are so many unknowns. the risk is clearly quite large. we expect a contraction in china. it is really difficult to tell. there could be quite a big drop. more than we expected. does that mean a bigger policy response? francine: the pboc has different

tools than it did 2003. it was an economy that was a time smaller. globalization was not a spread out. how difficult is it to model what the pboc can do? >> i think they have a lot of options. the government together. it has a very strong footprint on the economy. it can do important fiscal stimulus. regulation. toolbox is quite wide and deep. more than any other country. francine: our guests will both stay with us. we were telling you that china was opening up its financial services. there has now been a joint

venture with mastercard. because of the size of the pboc and the size of china, this could be quite lucrative. coming up, the state of the u.s. economy. we will discuss the outlook for growth. later, taking a tough position. this is bloomberg. ♪ it'

francine: with get straight to the bloomberg business flash. >> daimler is flashing its dividends. this is the carmaker tries to cut costs. it also wants to conserve cash to pay for the expensive shift to electric cars. as soon as today, t-mobile could learn if it won approval for its takeover of sprint. bloomberg has learned it is set to defeat a lawsuit that sought to block the deal. this is a huge win for t-mobile and its owners. and for sprint's owner. haveombined company will about 80 million monthly subscribers. a crucial deadline approaches.

bloomberg has learned flavor representatives and executives are increasingly becoming worried. facethink a sale may lengthy competitive review. that is your bloomberg business flash. francine: thank you so much. let's focus on the future of the u.s. economy. curve also dealing with another inversion. let's get more. when you look at earnings worldwide, what kind of dollar do they need? where do you want to put your money right now? let's talk about the earnings season so far. it has been a good season.

about one third of companies are guiding consensus. that is above what is typical. that is part of the reason the market has rebounded relatively quickly from concerns about the virus. valuations have risen again. that limits upside from here. francine: what happens for you to change your call on earnings ?rowth hit,nce the virus news has we have not taken down our forecast globally. there is definitely a little bit of downside risk for that. depends on policy reaction by

the pboc. and by the fed. i do think there is still some value. is there a problem with inflation? that inflation suddenly picks up in the u.s. and that changes everything? >> i don't know. we don't really see that risk. it would be flabbergasted if inflation began. but see what chairman powell says today. we will listen attentively. indication us some about what they are conducting.

let's see what they say about inflation. francine: we have a great scoop that the review started by christine lagarde could see the inflation goal decided by this july. earlier than the end of the review. this is a chart looking at u.s. stock valuations compared to the rest of the world. >> does look amazing. valuations shot up a lot in the u.s.. we were talking about all the risk to global growth. emerging markets are now on relatively cheap valuations.

u.s. stock market is now tech companies. on relatively high valuations. we to think that valuations are quite full. there is some upside over time. we will also have full coverage of jay powell's monetary report later today. and check in on european earnings. and we have a great chart looking at urodynamics. this is bloomberg. ♪

>> probably you would have substantial increase in distress

that -- debt. francine: let's focus on corporate earnings. later this week, the results become clear. heardch has coronavirus confidence? fidence.con there must be a concern out there that there is a downturn in the economy because of a spread of the virus. it does not seem to match up. are you worried about a correction that could stem from low visibility? >> there is always an increased

risk. the market is assuming there will be a bigger policy response that will make an economic impact. things can change very rapidly. was only a year and a pedicure that we had the big other than the virus, growth was picking up globally. a bit worrying because the virus is coming through just at a time when growth was starting to improve. the full year earnings should still be ok. 20/20 is the year for

europe. i have a great chart. there is a broader point that christine lagarde is doing this review at the ecb. she wants to make sure that the board gets along. things could pick up. if there are no tariffs from the u.s. on german cars. >> there are several factors. they sounded quite positive. the markets in the economy bounced back. that is the position they have taken so far. there is a whole new governing council. review will take most of their time this year. we are not expecting major

changes. the consensus is there will be no changes. as far as the economy is concerned, the last quarter of 2019 was not good or the european economy. we had a backorder for italy, france. for france, it was more linked to the strikes. we will see what germany does. the results are coming up at the end of this week. francine: we will talk about german politics a little later in the program. next, the u.k. economy.

francine: coronavirus deaths top 1000, growing by more than 100 in one day. investors overlook the economic

impact, sending the s&p to another record high. stocks in europe join the rally. the corporate sector downplays the impact of the virus on earnings. and the u.k. government warns industry to prepare for strict border controls with the e.u. chancellor sajid javid says financial services also face divergence. good morning, good afternoon, good evening, depending on where you are in the world. we are getting a copy figures for the u.k. this is for fourth quarter. we are getting fourth quarter figures, but we are also getting some figures for the month of december. gdp, quarter on quarter, first quarter flat as expected, year on year, a touch better than expected. private consumption in line with estimates. government spending much higher, at the fourth quarter accounts for the impact of the election services -- for the election. services a touch better than december. production is lower than

estimates. i will go through the numbers in detail. retail flat. retail sales were flat. again, british consumers are not buying that the economy has turned a page coming even after we had that resounding election victory. service another victory. anything could happen when it comes to either going with wto rules or finding agreement. bounce,nd, a small 1.2927. let's check in on european stock moves with annmarie hordern. annmarie: it is all about earnings in europe. ams -- we were seeing earlier is down gains, but it down nearly 4%. even the early revenue results

were good, there is pressure on the stock. ui -- thomas cook is going to benefit the company. morgan stanley is expecting a very strong summer for the company. 4%, the telekom up parent company of t-mobile. people close to the matter says t-mobile as early as today is poised for the acquisition of sprint from within $26.5 billion. i want to show you how t-mobile is trading premarket -- poised to be up. we have sprint up as well. i know sprint is up. at -- i know t-mobile is up. look at the total. join company will trade under have 80, expected to million monthly subscribers. that puts it in the same league as at&t and verizon, a huge deal

for these companies and the parent companies combined. francine: annmarie hordern with some of the biggest movers. let's get to first word news in new york city with viviana hurtado. viviana: would begin with demands for the e.u. of ahead oft -- for the e.u. ahead post trading talks with the u.k. controversially, the e.u. wants to force the u.k. to continue to abide by its rules. in an area such as state aid. boris johnson already dismissing some of the demands. more than 1000 people have died from coronavirus. thanwide, there are more 43,000 confirmed cases, as criticism is mounting over china's transparency and its handling of the epidemic. yesterday president xi jinping visiting hospital. this was his first public appearance since the death of the doctor who spoke out about

the coronavirus. 30% bracing for a 25% to plunge in tourism after the outbreak. the city state is losing up to 20,000 visitors a day, and that could get worse if the virus persists. that is a bigger impact than the 2003 sars epidemic, china accounting for about 20% of singapore's tourism. >> i'm hearing help from the entire tourism industry. there is anecdotal evidence of business drying up, but that is not surprising given how much visitorntributes to our rivals. francine: donald trump -- viviana: donald trump is proposing deep cuts to spending programs. the federal death would be pushed up to 30 chilean dollars. no binding power because federal spending is

decided by the u.s. congress. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in and than 120 countries, viviana hurtado. this is bloomberg. francine? francine: thank you so much. chancellor sajid javid says the country will break away from european union rules. in an article, he wrote that he wants a reliable equivalent process on which a durable relationship can be built. meanwhile, as we just heard, u.k. gdp growth slowed to zero in the fourth quarter, but that was as expected. still with us, they're seo pagani. --for britt ceeo to get .abrizio pagani we don't know with the future trade relationship will look like between the e.u. and the u.s. given all these unknown factors, what does it mean for the european economy? i think we are at the beginning of a long story

because there are too many moving pieces. the relation between the e.u. and the u.k., u.k. and the u.s., and the e.u. and the u.s. my view is that in the last couple of years we have been focusing a lot on trade tension between the u.s. and china. this year will probably be the year of tension between the european union and the u.s. there are several work streams. we have to follow them. tariffs, the dispute, the digital tax, which has been only postponed. there is a process at the oecd on that. and then last but not least, the isbon border tax, which potentially explosive because if the european union goes ahead with the idea of putting up a to contrast the

carbon leakage coming from outside the union, the u.s. could be hit big time. francine: so your base case is that we are either going to see tariffs on the e.u. or threats of tariffs on the e.u. because president trump thinks tariffs work. fabrizio: i think so. we will see a lot of tension. processe end of the there will be tariffs or not has to be seen. perhaps there could be an agreement. some of these issues, with the digital tax and the carbon border tax, are particularly complex. it has to do with a lot of different policies and tax and environment and climate change. the ramification of those is much deeper. as far as the e.u. and u.k., we are really at the beginning of a new chapter. i think markets will start for focusing on that the closer we

get to the deadline. francine: can the e.u. do something to counter the threats from the u.s. and china? apple products, which is maybe why we saw the phase one deal right before christmas. can the e.u. speak with a common voice and deter president trump from threatening them? takezio: the e.u. can tariffs on american goods, and they have done it. they can sting where it hurts. it has already happened. at the same time, the european union is a very big market for u.s. goods, and vice versa. let me give you one number. u.s. -- sales to the sells to the u.s. 300 million cashmere pullovers, and there have been tariffs on those. that of: something course people are talking about. you were in the previous ministration of the italian

government. is there anything -- is italy far worse off now that the u.k. ?as left the e.u. because i guess they were at the pro--- the fabrizio: so who will be driving the e.u.? i think the impact and inference of the u.k. as being looking up in the last years, i don't think it will be a major change. francine: thank you so much. fabrizio pagani stays with us. tomler slashed its dividend the lowest since that financial crisis. up next, the first votes have been cast in the new hampshire primary. we will focus on the race for the white house next. this is bloomberg. ♪

francine: this is "bloomberg surveillance peter: let's get to the bloomberg -- ." let's get to the bloomberg business flash with viviana hurtado. toiana: alibaba is blocked the stock link in china. it cannot be included linking the financial hub to chinese investors. the exclusion of copies with secondary listings and weighted voting rights is part of an agreement between the mainland and hong kong's exchanges. it will take several quarters to return the global 737 max to the skies. it follows a grounding that left about 700 planes on the tarmac. the jet was taken out of service

after two fatal crashes. by mid 2020, boeing aims for it to fly again. exxon mobil scrutinizing employee travel budgets. explorer posted its largest profit for four years. it was one of the major explorers to avoid job or dividend cuts during the oil slump. francine: the democratic presidential race is changing shape. senator bernie sanders is now the favorite to win today's new hampshire primary, head of joe biden. the results will not necessarily produce a clear frontrunner to take out president trump, with polls showing other candidates growing in popularity. first of all, for our international audience, we have always looked at new hampshire. is this time different? always look at new

hampshire because it is right out the gate, and you start to see candidates fall away. it by no means always indicates who is going to win. but you can already see some importance happening right now. bernie sanders is likely to win. pete buttigieg, who did quite well in iowa, is pulling second, so he is getting a pretty good month. you also have amy klobuchar, who is getting into at least double digits for the first time. so it is an interesting race, but then you have the big ones once you move on to super tuesday. francine: when can we start really guessing who the democratic candidate is? toc: i think you are going have to wait until around super tuesday. you have a couple of big votes in between now and then. you have a debate between now and then. you have mike bloomberg, who will be entering the race when you get to super tuesday.

so i think that is when you really find out. francine: as a disclaimer, michael bloomberg is running for the democratic nomination. he is also the founder and bloombergwner of news. you kind of wait and see. do we trust the polls in the u.s.? marc: as always, you should not trust them greatly, but they are the best indicator we have. that is the unfortunate truth always with polls, and there are -- there are a couple of big trends that you can see. one is that bernie is ahead nationally and in new hampshire, and that is a change. seems a bit to be collapsing. he is pulling around 11% in new hampshire, 17% nationwide, whereas the last nationwide poll had him at around 25%, 26%, and ahead of bernie. now bernie is pulling around 25%

nationwide, biden only 17%. for the first time you have mike bloomberg nationally only really appearing at 15%. francine: you also have a question for mark echo marc? we always talk about fiscal consolidation. will we see fiscal consolidation in the u.s., or relaxation of the debt? admitteds is a trump -- trump administration proposal on the budget. it is a political statement. the congress will actually pass a budget and they will not even talk about it until november. the second thing, in that budget there are some absolutely hero ic assumptions about growth. a decade out, the administration is assuming 3% growth for the u.s. the imf assumes 1.6% over that

period. majorher sort of institutions that look at this stuff, it is below 2%. so that is a big difference. a percentage point for an economy like the u.s., what you're really talking about, there was one set of numbers that crunched this and said the administration is saying that by the time we get to 2030, this level of growth will bring down the debt to gdp to around 66%, whereas the congressional budget office and so on, they are talking 89%. there is a big difference. fromine: it is a long time february 11 to november 3, which is election day. i don't need to remind you that a lot can happen. if there was a vote today, what would americans vote on? president trump has made this about the economy, about the stock markets. do we have insight as to what people want policies to be like? has notthink one thing

really changed since the election that brought trump to power, which is that -- you know, we have shifted from a world in which politics is clearly about the economy, stupid, and we have moved to one ,here it is also about identity and various different issues which trump has been very -- whatever you think of him -- incredibly politically astute at being able to tweak. he also plays politics in a kind of total war away. he never stops. in a way, previous presidents were pretty good at this, too, but i don't think we have really seen -- for example, yesterday, he was up north in new hampshire, getting out crowds bigger than the democrat crowds, getting really involved in the democratic race, making clear who he would prefer to win, who he doesn't want to win. it is a different kind of politics. francine: on the u.s. economy,

is it strong? we have the jobs numbers. the million-dollar question we are asking, is it quality jobs? answer.: difficult to i think there is a point that the whole economy growing is not growing only on the two coasts come on the west coast and the east coast. also the midwest and the blue-collar economy is growing. some of them obviously are temporary jobs, but these are probably part of the new normal, isn't it? francine: thank you very much for joining us, marc champion, and fabrizio pagani stays with us. we will get the take of the novartis chief executive. that is coming up next, and this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." novartis said the vaccine for the coronavirus could take up to two years to develop. the chief executive told us that the challenge will be coordinating the long-term response to the epidemic. >> it has been remarkable to see

the response of the chinese government in terms of the largest quarantine we have seen in modern times to tackle this epidemic. when i take a step back, i see that we have these moments where we have these pandemics or epidemics. mers, sars, h5n1, h1n1, the middle east respiratory syndrome. in each case we galvanized a massive response. then the pandemic and the epidemic fades, and the response goes down, and the work stops or really diminishes. the challenge we have had is how do you maintain the effort in those gaps? how do you create the manufacturing capacity or the scientific know-how to enable us to respond in the next moment? i am not sure we have tackled that. there have been many efforts, but again and again, the repeating history that we have with respect to pandemics. francine: where should that leadership come from? is it government, the world

health or is it private companies? excitingare some very efforts. one group is looking to bridge these gaps. longer-term, we do need government, probably in the form of whether it is a g20 or something along those lines, to come together to add some sort of sustained pandemic response over time, otherwise i think we will have these moments and we will be scrambling to find a good response after the outbreak starts. francine: do you see it changing? >> we will see. the scale of the current situation and the seriousness of the situation maybe will motivate a bigger long-term response. francine: i think you are in charge of the vaccines for h1n1, so this is -- it usually takes five or six years to develop a vaccine, and you did it in six months? case of h1n1, we were able to do it in about six months. i think with a concerted effort,

we will see the companies currently working on it that hopefully can do something within a year or two, but it is important to note that they will do the clinical trials, then we will get the vaccine. in all likelihood, hope this pandemic or this outbreak has been controlled, and then what will we do after that? i think that is the question. francine: that was the chief executive of novartis. this is what your stocks are doing. moving sideways for a lot of these stocks. the focus will be on the u.k., also on the earnings that will come out. stocks are climbing in europe as investors are pushing global equity benchmarks to record highs. this is before we hear from federal reserve chair jeb powell. momentum came from the u.s., where the s&p 500 closed at an all-time high. most sectors there actually advancing, and looking at oil, it is calling back after losses approaching a one year low in europe.

the dollar is lower versus its peers. we will have full coverage as fed chair jay powell delivers the monetary policy report. that is later today. "bloomberg surveillance" continues in the next hour. tom keene joins me out of new york, and then later we speak with daimler's chief executive -- cutsompany cussed dividend. we will get financial results from companies like alibaba, credit suisse, and airbus. a lot to ratchet up on the earnings side. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?

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that we can't do, but come in and see what we can do. we're here to make life simple. easy. awesome. ask. shop. discover. at your local xfinity store today. francine: coronavirus deaths top 1000, growing by more than 100 in one day. investors overlook the economic

impact, sending the s&p to another record high. stocks in europe join the rally. u.s. futures also in the green. the corporate sector downplays the impact of the virus on earnings. and the u.k. government warns industry to prepare for strict border controls with the e.u. chancellor sajid javid says financial services also face divergence. good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance ." tom and francine from london and new york. a lot of the focus is on politics and the impact it could have on the global economy longer-term. tom: exceptionally strong hours of "bloomberg surveillance" coming up. chairman powell has its hands -- has its hand -- has his hands full today. the era out to new weakness among other things. a lot of moving parts for

chairman powell to discuss today. francine: a lot of moving parts. we will get to that in a second, but first let's get to limber first word news in new york city with viviana hurtado. viviana: we begin with coronavirus. more than 1000 people have died from it. the chinese province at the center of the outbreak reporting its largest number of fatalities, adding 103 deaths. the government has removed two health officials from their positions. the u.s. has reported a 13 confirmed case. now to new hampshire. the first democratic presidential primary, first votes have been cast. michael bloomberg winning 50% of the four democratic votes cast in the tiny town of dixville notch, new hampshire. a new national poll by quinnipiac university has bernie sanders overtaking joe biden in first place. sanders was backed by 25%, biden is at 17%.

t-mobile is on the verge of winning court approval for its takeover of sprint. bloomberg has learned a federal judge could rule as early as this morning. a number of states suing to stop the deal. the takeover is expected to be a game changer in the u.s. wireless business. shares of sprint are soaring. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. francine? ,? tom: a note on the t-mobile sprint merger, this is extraordinary. there are four players within the mobile phone market, and now there are going to be three. i will tell you, this is just stunning. they are under $10 a share. look at that stock, up 64%. the data that matters, we go across asset -- futures, while

they continue to advance, dell futures up 64. you're a is the big story. i will do a chart on that -- the era is a big story. i will do a chart on that in a moment. the vix comes in under 15. 14.94. turkish lira, this is with true military events in syria, and the syrian border. the turkish lira weakening out. i will have a look at that. oil advancing, treasuries slipping. i think if you -- the coronavirus, you are looking at record highs because you are expecting chair jay powell to say something. that may be supportive of the markets. japan is shut for the holiday. let's look at the history of the euros. euro.is synthetic

this is the plaza accord, massive strong dollar. coughs]e tom: are you ok, francine? take a moment. christine lagarde, the long-term a 1.04s in the era, euro will be a huge deal. i am talking as long as i can, francine. francine: while i recuperate. so wellwhy we work together, tom. you bring it back to the 1800s, the euro. tom: it is a bloody mary in here. what have you got? francine: the voice is back and i am ready to talk about euros.

cameron argues -- this is a beautiful chart. hilary clark did this for me and it is looking at currency, weakening back to levels of mid-2017, so it is not only u.s. strengths, which is i guess the natural call, that you want a haven, but it is more to do with the challenges and the headwinds europe is facing. tom: migrating toward a 99 print on dxy. that is a big deal. also a big deal is china. we have been fortunate to get updates on mr. mckenzie in beijing and mr. angle in hong kong -- stephen engle joins us right now. stephen, i get the idea, the president is wearing a mask. i guess the count every day. what is the tangible fear level city to city in china? are people getting used to this, or is there a new heightened fear as we go over 1000 deaths?

stephen: i think there is heightened frustration with the response. there is growing criticism of how this has been responded to, even though the government has been lauding themselves a bit for their fast action to basically seal off wuhan and many parts of hubei province. there is growing concern the longer this goes on, and the death toll keeps on going up. the mortality rate with a number of confirmed cases up to about 2.4%. 100 18 more deaths overnight, in addition to this, we have had over 1000 now. one encouraging sign, in the --a, there were 42 thought there were 42,638 confirmed cases. we have been avenue more than 3000, 3400in 400 -- a day. this is the lowest number since february 1. does that mean containment

efforts have worked, or does that mean not enough people are being tested because there is a shortage of testing kits? francine: that is the million-dollar question. if you look at the way the market is reacting, is at the rate of infection, the rate of recovery? what data points should we look at to see how bad this thing actually is? stephen: we will be seeing that coming in the next couple of weeks. a lot of weeks. a lot of projections we have seen is that this virus could be in the middle part of this month. the later part of this month is the incubation period. we should be saying the first of those containment efforts. the priority all along since this really came to the forefront as a global issue has been containment. now there is a great article on the bloomberg terminal from number economics suggesting the government is starting to transition a little from that emergency response to now getting production backup. that is the big challenge right now, getting all these idol

factories back and getting them manned, getting all the migrant workers back to the factories. but is that a good thing when the virus numbers are still going up? francine: thank you so much, stephen engle from hong kong joining us. both for joining us. i don't really know how to look at this. if you look at the numbers, 1000 deaths is a big number. the markets are at a record high. do they not know how to price it, or do they think we are over the worst? >> i would say there is a great period of uncertainty. we are not sure if we can believe the statistics out of china, and we will wait to see in the next two weeks how much of china comes back to work. if you are a migrant worker, will you go back to wuhan in a hurry to pick up your old job? i think we could see some resistance to coming back to work. i would also say internationally, british airways just suspended flights, so we

will see a little bit of kick over. but the market response is overwhelmed by the state of liquidity. francine: do you agree with that, peter? peter: i was waiting for that point. if you had not made it, i would have made it myself. uncertainty over where this is going to be, if it reshapes the recovery into a you or an l. the possibility of rate cuts is driving markets into an asset bubble, which they can still say is on the radar. at some point i think the game has to stop, but not yet. tom: thank you, neil, for bringing up the british air news. i see that source out of sky in london. the timeline here is extended. british shares are looking out word, april versus

march as well. what is the timeline language -- the timeline linkage to the markdown in gdp? neil: where looking at the previous precedents that we can see driving prices across the industry. if you go back to the earthquake in 1998 in taiwan, they lost seven days of production and technology and it affected the whole technology sector for a year. there was a supply shortage of chips and products for that christmas. i think we are trying to feel -- we know that the auto sector in south korea is impacted by a loss of components from the wuhan area. so kia and hyundai are no longer making stuff in korea. personally, i was supposed to be in south korea next week. i am not going. they did not want me to travel, i did not want to travel. so i think progressively, or and

more we will be making our own decisions, which could well be demand destruction rather than demand deferred. tom: that is really an important concept, the destruction and deferred. are the markets really adjusting to a central bank markdown, where central banks worldwide go all the accommodative? peter: you cannot just think of the fed going on their own. it has to be fathered by the -- followed by the other central banks are the fx channel will be operated on, so it has to be a concerted effort, unfortunately. tom: this is going to be fascinating. we are thrilled that you're both with us. in the next hour, gideon rose will join us from foreign affairs. and we are thrilled to bring you benjamin layla, -- benjamin laid letter. rumor has in new hampshire will count of votes on the edge of correct.

redux.ot a caucus this is bloomberg. ♪

tom: "bloomberg surveillance," good morning, everyone. kevin cirilli will be focused on nevada. seven days after that, north carolina. you haven't been home in three weeks. i get it. it is a fun time of the year for guys like you. it was the most focus this morning on the nevada primary? which of these candidates is focused out and looking forward from tonight's festivities? kevin: joe biden.

already some of his top surrogates are out in nevada. they are really laying the ground game to try to continue onward. we should also note that in nevada there is a widespread hispanic coalition, so look to see bernie sanders or pete buttigieg be able to form a broader coalition. joe biden has really downplayed expectations here tonight in new hampshire. andver, for buttigieg sanders there are expectations that sanders that he when, for bridges that he finished second. francine: what are we looking at? for an international audience, for a european audience, there are a million polls and a million months to go before the election. when we will -- when will we have an idea of who the democratic nominee is? kevin: after super tuesday. if i am looking at this outside america, i would be looking for one thing and one thing only.

the centrist lane and the progressive lane. who goes where? it would appear now that buttigieg-sanders have been emerging as front runners. should other candidates be able to occupy that centrist lane, we will find out in the coming weeks? tonight.s a battle what do they do today? what is the number of undecided, theclared, independents in green mountains, the white mountains? what is the level of mystery this morning? know, when i was talking with voters last night, it remains incredibly fluid because independents are able to vote in this primary. that is different than the iowa caucus. you do not have to be a registered democrat to vote in this primary. that is why so many of the electorates are undecided. tom: you look at the results tonight as well. should we anticipate people dropping out of the race? are we going to get the drama of nine or 10, 11:00 p.m., somebody

says, i'm sorry, i'm done? kevin: it has become the case for andrew yang, tom steyer, the case for other candidates involved to continue onward without a strong showing here. it is not just from a pressure standpoint but from a monetary standpoint and how much money they are able to raise. that will no doubt come into question. i have my eye on elizabeth warren and amy klobuchar. if they do not finish third, it will be tough for someone like klobuchar to continue to move her campaign forward because quite frankly she will run out of cash. tom: that is right where i wanted to go. how is vice president biden doing on cash? he has the money to continue, he says, until super tuesday, but will what he -- will he have the momentum? it is one thing to build a campaign for super tuesday, it is another to build a campaign for super tuesday but not have any momentum. that is what joe biden is at

risk for without a strong showing in new hampshire. tom: kevin cirilli, thank you very much p let's go to our guest, peter chat well and also neil dwane. let me begin with you. the american elections are really beginning to heat up as well. how does that uncertainty play worldwide. our people focused on this, or is it just an american moment? neil: i would personally say it is an american moment. we are looking to the policies that would -- we know from the budget yesterday where president is going to stand in the next four or five years, so therefore we can start to calibrate the economics behind it. but i think the last time i was on, the second have of this year, once the president knows who is standing against, we will see the focus on the politics and if there is a chance that the democratic candidate is

pulling well, the s&p has some real issues in terms of pricing change in direction we may see under a democratic president in the second half of this year. tom: this is one of our themes, really important, peter chatwell and neil dwane joining us in the next hour. what is your enthusiasm for the equity markets right now? current valuations, i find it difficult to be enthused about the fed, that they will be able to deliver the three rate cuts i expect them to delivered. -- to deliver. once that is delivered, i see the s&p 500 going on above 3400. no great shakes from current levels. but before then, we have a significant down drop that persuades the fed to deliver rate cuts that we are talking of. francine: what kind of significant downdrafts are we talking about? inflation? peter: it is all about finance

conditions with the fed. at the moment we have one aspect of type finance conditions, which is the strong dollar. because credit spreads are so tight and equity markets are so high, finance conditions are extremely easy, similar to where they were in 1998, which is quite significant. so at the moment we have the strong dollar. they do not need to move against that. but if they see the equity valuation start to fall, as confidence about future earnings decreases, and if credit spreads widen, they have reason to act. francine: would it warrant some kind of trade war between the u.s. and europe? is there something that president would like to engineer just to make sure that he gets these interest rate cuts? win-win.ems like a i don't mean to be flippant, but if he feels confident the fed is going to be there, then it would seem like that value will play.

the one scenario peter didn't mention is the u.s. analysis looks very recessionary. they may be cutting rates into a recession, which is too late to save the president and his election campaign. so i am not too sure with rates so low -- and by the way, i think the stronger dollar, it is going to 99 as we talk. the strong dollar is bad news for asia and the rest of the world. we may have this bifurcation are there is limited amounts of money for wall street and no money for the rest of us around the world because it will not get transmitted away from the u.s. market. i think the dollar could go higher, which would create more and more pain as china recovered from this epidemic. tom: very good. we will continue. of allianz global investors, and peter chatwell of missoula international.

all of the politics focused on new hampshire. we will have a conversation with the governor of new hampshire. this will be most interesting particularly with his candidate, president trump, visiting last night. from new hampshire. what a surprise. this is bloomberg. ♪

,"m: "bloomberg surveillance

good morning, everyone. let's do a data check. francine has a killer chart showing support right now. euro, 14.-- you'r francine: i'm looking at a similar data check to what you are. i'm looking at what markets are doing. definitely higher. we do have commentary from the federal reserve chair that i know and lot will be eager to hear. we are looking at oil advancing, treasuries slipping. we had gdp in the u.k. for the fourth flat. coming up in the next half-hour, get in row, the foreign affairs editor. this is bloomberg. ♪

♪ overall, if china is down 50% , that would be a 25% impact on the whole of asia, and china is

down more than that. for help. there is anecdotal evidence of business drying up. >> it is not going to impact our guidance to the marketplace. >> we are prepared. >> there is a short-term impact but we need to manage that. >> oil prices will probably be lower, but there will definitely be challenges for some of our customers. tom: that is a spectacular set of voices from our asia team insane part, earned by the near shut down of china operation. i cannot say enough about managing the message. british air extends out beijing and shanghai non-flights into april, that is a big deal. here is viviana hurtado. viviana: in new hampshire, the

latest polls indicate bernie will win today's primary. he is opening up a lead over pete buttigieg, joe biden, and elizabeth warren. a national poll has sanders overtaking biden for the top spot. also seeking the nomination, owner of bloomberg lp. the pentagon will spend more than $10 billion on a stealth bomber. it is still in research and development. they plan to buy a minimum of 100 planes. boris johnson is copying donald trump, launching a war on the mainstream media in the u.k. cabinetjohnson's ministers do not want to be seen speaking with reporters.

global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: here is what is on the agenda for central bankers. christine lagarde makes her opening statement to the ,arliament, and on capitol hill fed chair jay powell testifying before the house financial services committee. bank of england governor mark carney takes questions. we are back with neil dwane and peter chatwell. let me bring you to my chart, euros weakening. the currency is at risk of weakening. how much is dollar strength and how much is we are anxious about europe? peter: when i talk of dollar strength, the way i constructed in the model is not about the

u.s. economy. it is about the weakness in the rest of the world. beingllar suffers from the reserve currency. the weakness in the euro is related to china. francine: that is even before tariffs from the trump administration. will we see tariffs? peter: i don't think we need to factor in tariffs from the trump administration. we need to factor in the weakness from q4 and the impact of the coronavirus. the euro area will still be in need of stimulus. the currency is one way and by allowing it to weaken, there could be an increase in competitive video. -- competition. tom: this is open and closed

economies. the basic theory is the united states is a closed economy out of world war ii. how open are we now? peter: in terms of trade, the u.s. has trade deficits with most major economies. japan, china, and europe. really, rather than manufacturers, so that means the dollar if you trade less, it will appreciate. this is how the trade war has come to bite the fed through appreciating the dollar and it will not stop. hasn't really moved , but the vector is in the right direction. point whereat a chairman powell has to act on dollar strength?

peter: i would say his pitch point is a bit higher -- neil: i would say his pitch point is a bit higher. about thething weakness in the dollar and the fundamentals of the virus kicking through, the other dynamic that changed in the second half of this year as many of the bankers in europe are charging their clients half a percent negative interest rates and that money will have to find a safe return. the chances are they look at a 1.5% is aeasury at good place to park their money rather than leaving it in negative yielding bonds. even if a couple hundred billion dollars wanders into a u.s. asset, it is supportive of the dollar and undermines the euro. francine: how much of that money will go into riskier assets,

creating something that could turn ugly? i wouldr a lot of those call performance seeking investors in europe and japan, they have gone into junk high-yield and leverage markets in the u.s. this is money that wants to be held in cash but no longer wishes to pay a tax. you have got to have 100,000 euros now. francine: are we creating bubbles? bubbles, is creating but not for the reasons neil is talking about. just a safe haven, you can go into dollars and pick up 150 basis points. to be invested at a deposit vicinity and get over 1.5%, it is an enormously attractive safe haven. debasingtself is not

other asset classes, but an abundance of cash that can be used by leveraged investors to chase returns in equity markets and high yields, there is a second round effect from the attractiveness of the dollar. this is where ultimately there will need to be some move from the fed. tom: what is the call from allianz? are there bubble characteristics year that chairman powell must address today? neil: i don't see him addressing them anytime soon. i think the reaction from the end of q3 when the fed was caught asleep at the wheel when the repo spike started, they have done more aggression in saving lehman brothers. off and beendered leveraged many times in u.s. risky assets. he has gone from wanting to

remove the punch bowl in 2018 and hurting risk returns, i think he will be the punch bag when people realize the fed has inflated this and he will be blamed for allowing this liquidity bubble to start to get going. divorce from fundamentals as we see the global economy potentially slow down, and from a global perspective look very recessionary in the next three to six months. tom: michael mckee is in washington and he will stir the soup bowl as we look forward to a nuanced discussion on china. that testimony today by chairman powell front and center above all the other distractions, including new hampshire. our, hethe 10:00 a.m. tested -- hour, he testifies to

the legislative branch. ♪

♪ "surveillance," there is monopoly, duopoly, dry oly,bully, and then -- triop and i am out of words. wireless,own as the cell phone carriers in america, this is what it is all about. in america, you get a monthly bill and it is usually big. loser.e winner, sprint t-mobile will acquire sprint. cut to the chase. why does t-mobile need sprint?

alex: it is about pricing. ultimately they want to keep average revenue per user up and justifying the investment in 5g. they will argue if you have three carriers it is easier to spend money on 5g networks. this is also good news for verizon and at&t. they have a strong competitor, but you know there is greater pricing power and that is how you justify the greater investment in 5g. you are able to keep the average revenue per user up and maintain the high cash levels u.s. carries enjoy. tom: what does it mean about monopoly pricing for viewers and listeners? in london they are giving away cell phone coverage, but what does it mean for the american cell phone bill? alex: it does not look like it will go down.

vodafone will do 17, 18 pounds a month average revenue. in the u.s., you are looking at aoser to 50 box, -- bucks, large discrepancy. by some counts you have 180 carriers between the 27 countries in the region in the u.k. invest withrs can less certainty where they don't in the u.s. francine: our way over telecom? who will have to give up -- are we over telecom? who will have to give up their national jewel? has beentsche telekom trying at various junctures to move to these cross-border deals. we are still the biggest investor in british telecom. there have been times with

telefonica and orange and they have a purchasing agreement with orange so they do everything with their network. it is a decision that has to be taken at the european level, will there be change in the antitrust law to allow this? the huawei situation, carriers need to keep their costs down to cope with this lower -- if they see that effect happening on these countries, they might allow that. francine: despite president andp telling boris johnson they.k. not to use huawei, cannot build without it. why are we so rubbish at having 5g networks built by european countries? alex: huawei has had tend of billions -- tens of billions of dollars put in it.

they have been leaning on the scales and making it easier for a while why, and subsidized -- huawei, and subsidize the costs. the u.k., 35% of the components will be supplied by huawei. that is a sensible solution. the u.k. has 10 years experience managing this risk and other countries do not. in germany, huawei has between 50% and 70% share of deutsche telekom and it will be harder to manage the risk. tom: alex webb, both stocks elevated. our next hour will be extremely interesting, ben laidler will join us with an interesting equity call. and then gideon rose will join us with foreign affairs magazine, out with an exceptional edition including an important essay by graham

allison. this is bloomberg. ♪

♪

you are watching bloomberg "surveillance." intel joining the list of big tech companies pulling out of the worried conference, about the spread of the coronavirus. , and lg hadny already withdrawn from the world congress in barcelona. the parent of mercedes-benz is cutting its dividend by more than two thirds and promising deeper cost cuts. the ceo is freeing up cash to pay for a shift to electric cars. his restructuring push has failed to gain traction in nine months. francine: the european commission president and the brexit chief negotiator have been discussing possible models for the future trade relationship between the u.k. and e.u.. they spoke earlier. >> i was a little bit surprised

to hear that the prime minister of the united kingdom speak about the australian model. as aalia without any doubt strong and like-minded partner, but the european union does not have a trade agreement with australia. terms trading on the old and if this is the british choice, we are fine with that. >> given the importance of the city, whichever way we need to take stock of it, we need to resort to a toolbox including equivalents in terms of the trader when we have adequacy decisions. we are not negotiating with the united kingdom. we are checking that there is consistency and wherever on thee we will grant --

financial sector and industry. that is what we did with canada, china, and japan, so i do not see why it will not work with the united kingdom. i would like to take this opportunity to make it clear to certain people in the united kingdom, there will not be general open-ended ongoing -- intonts and to international services. francine: the u.k. must agree to a deal, that is the european side and on the u.k. side, they say maybe we diverge off of financial services. we are back with neil dwane and peter chatwell. i don't know whether this means, there was the australian model which is not a trade deal between the e.u. and australia, is this just negotiating positions that we will have 11

months of messiness and perhaps a deal or things are not looking good? neil: this is negotiation. the position is that boris wants to go in with as much flexibility as he can. it took four months for them to approve the canada deal. we were all held up. i think he is trying to make ,ure he has all options open and we think it is still highly unlikely that in the end of it the europeans will not want to deal. they have as much to lose. francine: does the u.k. want a deal? neil: obviously we would like a deal. with everything we will hear in march, the government has a lot on its plate without throwing the manufacturing industry in disarray. peter: i think of it differently because i look at this and take the game theory approach.

i don't think either side has the incentive or political capital to go all out to get a deal. it is much easier to think about the u.k. government as a majority, very strong, but if we go ahead and implement a deal, they will take ownership of that deal. anything that fails, the introduction of red tape, the attempt to divert the downside of the economy, they will own that. in five years time when they come to the polls, that will be pointed out every time they tried to get elected, whereas if they accidentally don't come to an agreement, if they portray the e.u. as a partner that just won't negotiate, won't give us what is right and fair to us -- i am being facetious -- but if that is what they do, they don't messhe mass of brexit --

of brexit after than and politically there will be upside. tom: to what we are seeing on the screen, the euro that will go down, what does it mean to these elites if we see a one -- 1.04 year -- euro? peter: getting a 1.04 euro is interesting. it means we can think about the -- attempts being to tighten rates or nudging out there inflation forecast. it does not really mean anything else. it increases the competitive competitive nests -- competitiveness of the u.k.. of thehe reduction

purchasing power that is actually going to be suffering from here, so there would be a degree of divergence between the elite and the working person. 1.03, one point 02, what does it signify? neil: u.s. dollar strength which ,urts asia and emerging markets possibly commodity markets like gold, and that would very much annoy the president of the united states as he starts to campaign more aggressively. he would put more pressure on the federal reserve, who may, depending on the state of the u.s. economy not feel inclined to do anything. euro alongook at the with a few large european chairs , as signaling the global economy is not where the u.s. equity market thinks it is. the oil market is not telling you the global market is picking

up, so it is making you feel risk off. in 2011ey were angry and they would be very angry if that level came again. i think there will be one hell of a battle at 1.05 by the system before they let the euro weaken. francine: neil dwane and peter chatwell, we covered a lot. later today, we will speak to the daimler chief executive to get his thoughts on possible tariffs from the u.s. on german carmakers. this is bloomberg. ♪

♪ tom: this morning, let the bedding begin on global growth.

yields are low and lower. what will equities do on the stock market? benjamin laidler on your hope and prayer for a double digit 2020. china is distracted, so too america. can they share the south china sea with others? gideon rose has your new required read. .here is an election today kevin cirilli will count the votes. "surveillance"rg from london and new york, not new hampshire. germanynt the chaos in for american viewers and listeners. francine: about 12 to 18 months ago, angela merkel chose her heir apparent -- or her party chose her heir apparent who

could be the next chancellor. after this deal with the far right, she was ousted and will no longer be chancellor, so we are looking at a process of choosing the next person to lead party with arkel lot of coalition partners. there is pressure to do it before the end of the year. tom: a side story now, but front and center with new populism. viviana: bernie sanders as the front runner in today's new hampshire primary, the first in the nation. democrats bring clarity to the race for the nomination and may be disappointed. 40% of new hampshire voters are undecided. michael bloomberg is also seeking the democratic nomination for president, the founder of bloomberg lp, the

parent company of bloomberg news. in the philippines, the president plans to scrap the military deal with the u.s. it is expected to bring the philippines closer to china. as soon as they canceled the visa of the man who oversaw his drug war, he has been happy with the u.s. havethan 100,000 people died from the coronavirus -- 10,000 people have died from the coronavirus. the u.s. has reported a 13th confirmed case. way -- the on the takeover with sprint. a number of states are suing to stop this deal that could be a day -- game changer. sprint shares are soaring.

global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: let me look at the sprint -t-mobile everybody wins. 10%, sprint up 64%, radar up on that transaction. equities, bonds, currencies, commodities, two wonderful guests. euro, 1.0919 getting my attention. spx is at record highs. .urkish lira, a tough day dollare: i am looking at , trading sideways. we are seeing euro weakness.

oil is rising, treasuries slipping. the focus on traders will be what jay powell has to say, and it will be on corporate news starting this afternoon. let's get an update from hong kong on the coronavirus. stephen engle joins us now from hong kong. if you look at the rate of infection, the mortality rate, the quarantines, what are the markets and people in hong kong looking at? stephen: the markets today were up and focusing on the united states, the markets seem to be feeling that the response is adequate. the signal from the fed and policymakers to contain the economic damage, the markets have been fairly resilient, especially in hong kong. the numbers paint a bit of a different story. the death rate is up by the most 118,cord, up by another

now over 1000 deaths. if there is a silver lining, you can look at the number of confirmed cases. they rose by the smallest amount since february 1, up by 2400. yes, more than 42,000 people are infected, however the rate of infection seems to be stabilizing or plateauing. that could be not necessarily the fruit of the containment efforts. it could be a result of fewer people being tested. there are not enough testing kits. seven new cases confirmed in hong kong, the united states with one more, and the persona non grata aboard these cruise ship's in asia, another being sent away from thailand and rejected from three other ports, with 2700 people on board.

tom: we have two wonderful guests from two different worlds in this hour. gideon rose is with us from foreign affairs magazine, an extraordinary, intense issue. joining us from london is benjamin laidler with tower hudson research and had the most interesting equity call in the panic of december 2018. we will dive into the stock market. on china, you are such a prism. you areel at davos, such a filter for everything right now on china. your attention on in china? gideon: whether the regime can manage to contain the coronavirus outbreak and maintain its authority and power structure as it does so.

this is a challenge to the andme, it's competence position and status within the country, so everybody is watching to see not just how the virus will be contained, but whether the effort to do that will weaken the regime and show it not to be as much in charge as people think. tom: the council on foreign relations and foreign affairs has always had a science-based approach. what is your update on the science of this as you link it to the politics? gideon: there is a wonderful development here, the actual progress of a technocratic transnational scientific establishment. unlike a century ago with the influenza pandemic or 10, 20 years ago with sars and mers, you are seeing greater international collaboration and cooperation.

we don't know the pace of the virus, whether it will go forward or has been capped. it is a race against nature rather than the politics of the situation. francine: how do you measure it, the rate of inflation? i understand we are not virologists. everyone is trying to be a virologist on the market. how do we figure out how bad this will be on the economy? gideon: what you are looking for is not just the deaths but the rates of new infections and the spread. there is a tragedy for everyone involved, but the real question for the global economy, how far does this go, how does it reinforce trends towards deglobalization, will it ultimately be a lip or some say i. or people will don't want my operation fundamentally at risk so i will

pull back? if things get out of hand, that is a possibility. francine: let's get some perspective from the economy and the markets. how do you look at this? i am surprised the market is on a tear. are we looking at fed liquidity and ignoring infection rates? ben: they are looking at sars, the mistakes they made where the markets sold off at 10 and rebounded at 30. i also think equities have been the outlier. we have seen dollar strength, bond yields reacted. i think the truth lies somewhere in between. geography matters. corporate remedies come out of em and that is anchored by china. your average investor probably has 45% of investments outside the home market, so the world is

more connected than it used to be. i give the benefit of the doubt to equities but i have been surprised at how well bid they have been. whilst the inflation rake -- rate may be pretty big, the death rate is under control. tom: are you changing your weighting of u.s. equities over to international? international had a wonderful q4. cannot sustain through the crisis? ben: i am doubtful. the consensus is into the x-u.s. trade, e built on lower valuations and this cyclical recovery globally. i think at best you will get a stabilization globally. a lot of the valuation discount is really a mirage, sector

composition discounts. manufacturing pmi's are stabilizing, not really recovering, and it is difficult for me to see where you get a strong enough inflection to pull international earnings with that and pull funds with it. the view has not changed. i believe in the u.s. exceptionalism where you have the end of the earnings recession. valuations are very well supported. i don't think they are supported -- expensive. the u.s. will continue to be wealthy. withben laidler will stay us and gideon rose will continue to count iowa caucus votes. tonight, coverage from new hampshire, a different take and a different conversation. westin on andid always interesting new hampshire primary. this is bloomberg. ♪

♪ ♪

"surveillance." lots going on, new hampshire, kevin cirilli up early. what will you do today? what will the candidates do today? are they kissing babies at the liquor store across the border from massachusetts? kevin: it is not about kissing to go, it is about trying viral and mobilize voters to the polls. you will see several candidates pop up across the airwaves this morning, and i also think what i will be watching for tonight is does bernie sanders win and win big? to expectation is for him

win and for pete buttigieg to come in second. should another candidate win, that would be a major shift in the race. francine: i am not a political strategist but i know never try to kiss babies. they are unpredictable. that is not what politics is now. if we look at new hampshire against iowa, what will we learn? kevin: who the frontrunner is, who has the ability to mobilize voters and get them to the polls? there seems to be a coalescence behind bernie sanders and away from elizabeth warren. shoulde pete buttigieg, joe biden not have a strong showing his candidate -- campaign says he will be able to continue on. what a week to have him leading the national polls and barely

finishing in the finals. tom: a delicate question, and i say this with michael bloomberg, is mike bloomberg in new hampshire this tuesday? kevin: no. i don't think it is a delicate question. there is a question about the viability of his campaign on super tuesday. you have by not performing strong in iowa and new hampshire. the bloomberg campaign has said they feel they will do this on super tuesday. frankly, we saw that from another new york city mayor, rudy giuliani. it did not fare well, so the bloomberg campaign would have to rewrite the script, to use your words. bernie sanders has an advantage in that he has momentum in the way that other candidates haven't. tom: kevin cirilli, thank you so much. gideon rose taking all this in.

is this the next issue, you can do an article on the iowa caucus and new hampshire and nevada? gideon: we do politics more than policy, but have candidates -- articles by the major candidates. we have joe biden and we have featured bernie sanders and elizabeth warren. democracy is messy. in this segment on german politics and we are seeing this and america. the succession of leaders for the next general -- generation of democracy -- tom: joe biden in your issue says he wants a foreign policy for the middle class. translate. gideon: everybody on the democratic side has pledged to reduce inequality and adopt policies that will work for the broad majority of americans. the question is getting that beyond rhetoric to talk about specifics of policy. essay,e: the joe biden

you could argue president trump is leaving again. leading again. gideon: he is leading away from traditional global leadership we have witnessed in the past. this issue is about, is the united states going to do much -- what mcgovern asked, come home, america, or continue to play a leading role? tom: this is like a different foreign affairs issue, the one you throw to the sophomore in college and say read the whole thing. in smart stuff, including graham allison. we will dive into the equity markets as well.

coming up forward across all of bloomberg, the governor of new hampshire with our david westin in the 1:00 hour. this is bloomberg. ♪

♪ "surveillance." we will revisit this but we have to do it twice with benjamin laidler, in the depths of december, 26, 27, 28, he said the markets will go up and it will be a double digit up.

20%.id we were going up it was a lonely call. what you did in december and january of 2018 and 2019 was extraordinary. a legitimate bear market and up we go. what is your call right now after up 30%? ben: i think this is probably a 10% year for u.s. equities. people are back on that 30 saying it is all done. we had a multiple re-rating and earnings were flat last year. that was a right back for the market mistake of the end of 2018. year are 18 times per very well supported by tech and low tax rates, share buybacks, and we have the end of the earnings recession right now. we will get through the fourth , may beplus one, 2%

better without energy and the drag internationally. earnings are beginning to come back so i think we hold on multiple and we get close to 10% earnings this year, giving you nearly a double-digit return. stabilizes economy and we look forward to something better next year, maybe there is upside. tom: it is still an unloved market. what are you hearing from tower hudson clients? is there any enthusiasm for the mother of all bull markets? ben: no, there is not, but there is nothing else to own. a lot of tourists have been dragged in and do not feel comfortable. there was a siren call of international equities versus u.s..s., after so much equity outperformance for so long there was a doubt it can continue. , think it can on the u.s. side

and large elements of this bull case are being made for international equities does not stand up to analysis. francine: are we creating bubbles? is it that we are pricing them to perfection or something could turn ugly quickly? ben: i am not sure it is a bubble. people look at u.s. equity valuations and say, it is 20% higher, maybe it is a bubble. tax rates are a lot lower than they have been historically. tech issustainably -- the biggest sector in the u.s. and was not 10 to 15 years ago. you have a lot of share buybacks. the u.s. is the only market with policy flexibility. where you have the strongest gdp in developed markets, the u.s., we have a lot of support and i don't think we are in a bubble.

tom: we will come back with ben laidler, and gideon rose from foreign affairs magazine. one of the issues for his new issue is lebanon and protests. mentioned more than a few times at the world economic forum. it is truly destabilized. you have the issues wrapped around the last 24 hours, the fighting among syrian and turkish forces not in the far distance, lebanon protests. live, this is bloomberg. ♪

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mr. erdogan speaking in turkey, saying they will take steps tomorrow and mr. assad will pay the price. so much of this involves outside damascus and towards the turkish quarter with the number of dead on both sides. we have gideon rose with those of foreign affairs magazine. well.h lira weaker as this is the challenge for mr. erdogan that the 20 mile border will not solve. gideon: this is the post-american world. what do we look to? what the turkish leader says, what the russians do. we will not look to washington because washington no longer considers itself a major player. tom: we do not have a presence

but we used to have massive access to a base in turkey. is that gone? gideon: turkey is a nato ally, that the route -- reality of the post-american world as we can no longer get other countries to do what we want by ordering it, and we need to take their priorities into account. turkey is a regional player with different views than ours and we need to accommodate. it is not just about turkey or syria, it is about the united states no longer being able to dominate the world. we have to take other local powers, whether it is china in the pacific or turkey in its area, take them seriously and make our policies in some way relevant to the local solo --

situation, given that there are other powers. francine: this is about u.s. foreign policy but not only about u.s. foreign policy. if we have a map of the middle east, this is about retaking idlib, which would part -- put turkey in less of a say on what will happen. where is china in this? where is europe? gideon: the more the united states pulls out of the region, because it no longer really cares directly about persian gulf oil and the north china see as a guarantor. the question is will countries like china or regions like europe feel they need to protect power and get involved in middle east stability and security because they are at risk?

the iranians on the turks and the is ronnie -- and the turks, israelisaudis and the are having a little dance. someone might think, we need to stabilize this. they have other concerns now. francine: how out of control can this become? we have deaths of turkish soldiers killed by moscow backed syrian troops. gideon: i find it hard to believe we will see any complete split. you are dealing with rulers, whether it is syria, turkey, rushdie, or iran. --se are sammy authoritarian semi authoritarian or authoritarian, but they are not reckless. these are relatively competent

and serious people so i do not see war, but i see jockeying on the ground. tom: turkish lira, we are not through the 2018 weakness. and is so important here -- this goes from the projection of the byzantine empire south -- we look at turkey and syria, but the people assembled before mr. andgan, there is a heritage culture that is almost one in the same. gideon: the ottoman empire stretched very far and various empires stretched very far. locals remember the full extent of those and want them back. tom: gideon rose, good to have you as we see this important news. in new york city with our first word news. viviana: we begin with the coronavirus, china's largest

cities remain virtual ghost towns because of the outbreaks. shanghai and beijing return to work but streets are deserted and many offices are empty, with many businesses telling people to work from home. the death toll has climbed to more than 1000. the pentagon plans to spend $10 billion over four years on a new stealth bomber. it is still in research and development in the air force plans to buy a minimum of 100 planes. boris johnson copying president donald trump, launching a war on the so-called mainstream media in the u.k. officials have been curtailed. ministers doon's not want to be seen speaking with reporters. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg.

francine: here is what is on the agenda today for central bankers. christine lagarde makes her opening statement to the european parliament in strasburg. on capitol hill, fed chair jay the bankstifying, and of england governor mark carney taking questions from the economic affairs committee. we are joined by michael mckee from washington on that jay powell speech. what are we expecting the chair to say? michael: it is always something. the fed hoped to go on hold and remain noncontroversial this year, but you have the coronavirus and everyone wants to know, what does the fed think of the economic outlook given the disease? china, sap demand from lower growth worldwide, and affect the united states?

jay powell does not have any answers. it is too early and it is hard to model because we do not know how long it will last or how far it will spread. the fed is on guard but he will not make any commitments to a rate cut. that is what wall street would like him to do, but that will not happen today. this is an election year so you will get questions about the general,the outlook in depending on whose party is asking the questions. francine: if the coronavirus stays as it is, when do we first see it in the data? what is the first data point that will look into this period? michael: it will probably show up in the pmi numbers in europe and the united states towards the end of february. you will see a drop off. obviously in china, it will have

a major impact. trade numbers are delayed by a month or two so it will be harder to get that kind of number, something you can model. we might obviously see something appear in confidence numbers, but it does not appear it will impact the united states or europe since we have not had many cases. tom: what is the run rate of gdp that the president perceives? what is the working number in the minds of a given phd at the fed? michael: the fed is looking for --g-run growth in the 2.8 1.8% to 2.8% range. that is just potential growth. when you add the labor force and productivity, they do not see it getting any faster, which will be an interesting construction for powell to talk about when he

gets questioned about this. democrats will be all over the 3% forecast. tom: michael mckee coming from the rotunda, looking towards chairman powell later. benjamin laidler with us. an accommodative fed, how does that link to an equity call up 10%? ben: the big market concern is u.s. equities 18, 19 times. i talked about a number of tillers supporting that and one is this dovish fed. powell needs to show he is open-minded. the risk to the broader u.s. equity story is two, a hard line against china. they have a policy to deal with what is going on, and the second is a fed policy mistake. we have seen that a couple of times. friday when the gloom

group publishes, what do you read of the ancient fear that we will go down and go down big? how do you respond to the human condition that it will go down because prices are too good to be true? ben: i think things are getting better. we have come through three quarters of negative u.s. earnings and they are positive this quarter. the fundamentals are getting incrementally better and what you are paying for those earnings is well supported. bond yields, a dovish fed, a big tech weight, it is a new paradigm for valuation which its distorted when you say, is more expensive than it used to be. things have changed. francine: if we ever start normalizing, what happens to

markets? ben: if we are normalizing, it is because growth and inflation are higher. valuation multiples will come down but earnings will offset that. francine: what if there is a slow down and we realize we do not have enough tools to deal with what is coming our way? i know you argue the fed has more tools than anyone else. ben: point absolutely taken. a potential manufacturing recovery, global manufacturing pmi's are up 50. things with the coronavirus do not help. that is why we are not thatcularly bulled up on and it needs a reasonably robust, cyclical recovery. i am not sure that comes through. the u.s. is the most defensive, most closed equity market and i

see some upside, but the downside protection is a good reason for the u.s. swap. tom: what do you do with a bundle of stocks, microsoft, amazon finally moving, apple moving, do you rationalize them on price to sales? how do you value these? likeyou will make me sound a bore, but i like tech. , 16, 17 times earnings globally. that is a moderate premium for the market but you have high r.o.e.'s. you are only getting single this growth out of tech year, that is far too conservative. if you look at the hardware and rather than the software -- hardwareend rather than the software end, the tech story, i

don't think is fully priced. i think valuation can be higher and r.o.e.'s are nearly twice what you are getting in the market. by the way, they have no debt. there is a lot of flexibility. tom: a value play, ben laidler. much more to go in a very busy hour, and david westin speaking to the governor of new hampshire when we come back. we will have gideon rose when we come back. jerome powell has read this cover to cover before his testimony. this is bloomberg. ♪

francine: this is bloomberg "surveillance." let's turn to european politics. germany saw a bombshell with the decision to step down from her role. with us is gideon rose. it is clear the chancellor picked a successor which was not working out well and this bombshell happened with the far right party, and she was out. the chancellor is hearing a lot of pressure from outlier -- allies to choose a successor. gideon: this is the question of how does a democracy -- the resilience of democracy is in the ability to throw leaders out and get new blood in, but the process is left to voters and that is a difficult, messy process. the question is what kind of

coalition to form, whether the populists are acceptable or not, and these questions will be bedeviling western populist countries over the next several years. in the u.s., the old guard not doing particularly well, like biden, and the young guard, questions coming up, will they represent all the constituencies that clamor for representation? we are not sure that can happen in germany and the question is not just which person will follow merkel, but how will contending forces in politics be unified enough to provide coherent government for such a crucial country? we are worried about that in the united states as well. francine: if you look at germany's turmoil, what does it threaten? it is not doing great and it is looking at extra tariffs from the u.s.

it threatens the whole of the european union because they cannot choose what to do next. this is without the u.k., the biggest market voice they have. gideon: that is a little exaggerated. if they have no leader and everything falls apart, germany, europe, and the world will be in farble, but that is a bit from one career -- one leader's career sn. -- assent. easilyy not be predictable, but in the long run, democracies adjust to the problems they have by representing in new leadership the forces driving current politics. we will see whether the western, european, and american democracies can come out of this to be resilient as opposed to a country like china where you have the same leadership

forever? it is an extraordinary issue, come home, america. the final issue on graham allison, one of the great moments on this issue -- in this issue. here is from graham allison's , a reallyote important quote for the time we toynbee from the earliest 20 century -- we are at the top of the world and have arrived at this peak forever. there is this thing called history but history is something unpleasant that happens to other people. gideon: the point is that the united states thought it would be on top forever and would create the world in its image. that is not the case. it is coming down, not dropping precipitously, and has to

accommodate other players. what will you give up? everyone talks about withdrawal. you cannot just withdraw from the world like parking your car and pulling out of a spot. what are the things you are preparing to give up? acceptu cede regions or fear from other countries? francine: gideon rose, foreign affairs magazine editor. ♪

♪ novartis says the vaccine for the coronavirus could take one to two years, despite them taking six years -- months to create one for swine for. we spoke with the ceo on the challenges for the pandemic ahead. >> it has been remarkable to see the response from the chinese government, the largest quarantine in modern times to tackle this epidemic. we have these moments where we have these pandemics or h5n1,ics, we had sars, h1n1, mers, and in each case we

galvanized a massive response. the epidemic phase, the response goes down, and the work diminishes. the challenge we have had is how do you maintain the effort in those gaps? how do you create the manufacturing capacity? i am not sure we have tackled that. this has been the repeating history we have with respect to the pandemic. francine: where should that leadership come from? government, the world health organization, or private companies? >> there is a group trying to bridge these gaps. long-term, we need government probably in the form of the g20 or something along this line, to come together and have some sort of sustained pandemic response over time, otherwise we will be

scrambling to find a good response after the outbreak starts. francine: do you see it changing? >> this will be an interesting moment. the scale of the current situation and seriousness will maybe motivate a bigger response. francine: you were in charge of vaccines for h5n1. it usually takes -- h1n1. it usually takes five years and you did it in six months. >> influenza is an area we understand very well. it was a concerted effort. hopefully the companies working on it can do something within a year or two. we will do the clinical trial and get the vaccine, the likelihood is that this pandemic is controlled and what do we do after that, that is the question. francine: you can hear the full interview on "leaders with blood

qua -- lacqua." we will speak with mark carney and we will have that on thursday. we will have a full round up what jay powell will say and what -- christine lagarde a little later. treasuries slipping. momentum came from the u.s. sprint,over target, after t-mobile was set to win a court approval. that is just one corporate news we are following today. this is bloomberg. ♪

♪ alix: pressure on powell.

fed chair jay powell testifies before the house financial services committee. to confront virus fears, stronger dollar and week inflation. ray dalio says the market fallout from the coronavirus is overdone. we speak to the autonation ceo on the impact to businesses. daimler/is its vivid end. the karmic -- daimler slashes its dividend. welcome to "bloomberg daybreak" 11,his tuesday, february coming to you from london. another recordt high, up by 0.2%. euro-dollar able to stabilize, but how much more downside is in the market? you are seeing a little bit of selling on the backend. we should see a positive takedown. crude