reports more cases in u.s. officials question beijing's transparency. germany avoids contraction. the biggest economy makes people worry. and changes at the top, beginning a search for the successor. the bank is expected to consider internal and external candidates. good morning, good evening, good afternoon depending on where you are in the world. lacqua in london and tom keene new york. getting ready for valentine's day with a red bowtie. i need to get you up-to-date with the european economy. it is significant because we saw germany not being in a contraction. this is what i'm looking over. quarter.n the fourth an important interview in zurich yesterday.

i hope that you send him a dozen roses today because he will not be there to receive them. and you have the armani story. everyone on global wall street must be focused this weekend on the soap opera going on. banking is think left, right, and center. and i have a chart looking at the swiss franc. what it means for the further negative. but first, let's get straight to the bloomberg first word news with viviana hurtado. begin with the coronavirus outbreak. it is getting tougher to gauge the true scope of it because china has provided the data that the death toll was lowered to less than 1400. now there are more than 53,000 reported. u.s. officials are stepping up criticism of china's response.

a stunning rebuke of president trump from one of his most trusted cabinet numbers. william barr saying that tweets and remarks about going -- ongoing cases make his job impossible. already vowed to veto a resolution to restrict his ability to wage war against iran. to be passed by the u.s. house, it republican senators joining democrats in voting yes but not enough to override a presidential veto. at a prime minister boris johnson is taking more control of the u.k. treasury. it could lead to a more generous trump style stimulus rather than -- stimulus. firer than giving into advisors, they quit. with mr. johnson's desire for more spending. local news 24 hours a day on quick take by bloomberg, powered

by more than 2700 journalists in more than 120 countries. this is bloomberg. tom: really good that the markets are quieter today because there are all sorts of other really important stories going on. let's look at the data on one string -- stream. it is a grinding weaker euros through the week. i see this as well. francine, what do you have? francine: i'm looking at a mixed picture for europe and asia. traders are trying to figure out this contrasting data from china on how quickly the coronavirus is spreading. it is unclear how quickly it is. markets are having second thoughts about what they do next. dollar and gold holding steady. and back in line with estimates. at the swiss franc long-term right now. this is an important chart. the -- mathematically, it is

beyond elegant. here is the broader strength of the first -- the swiss franc. money flowing into switzerland. here is control of the trend. here is the huge collapse. a stronger swiss franc to get a hold of things and stability. the rollover here in the last six months or so bears careful scrutiny. i can't convey the importance of holding this level on euros swiss. francine: i love that chart. it is probably my favorite chart of 2020 so far because it goes to the tension in the swiss national bank. they are trying to rein in the unwanted francs without being labeled a currency manipulator by the u.s.. i have a similar chart and a simpler chart. overall, you see it hitting the lowest level on the record. that is another way of looking

at the currency swings that we see. tom: stay on this chart if you would, matt. francine is dead on. this is the quiet that mr. prince of bridgewater spoke at davos. the volatility out there is worth zero bound and what does it mean for the boom bust cycle? that is a heated debate that will carry through. .t is friday evening stephen is in hong kong. terrific reporting by our team. seems, and it is my lead for the next hour, nobody knows the math in china. does stephen engle know the math in china? >> i have been a bloomberg reporter for over 15 years and i stick to the data that i have to

bring analysis to it. it is confusing to a lot of people out there beyond china and asia is the numbers are fluctuating. a new methodology revealed yesterday. it then a revision overnight of the numbers. now we have scrutiny about the transparency and the forthcoming nature of the chinese statistics bureau. let me tell you what i can tell. we had a thousand 80 new cases 5,080 new-- we had cases in china. confined to hubei province which is pretty much quarantined. it tells you with the data that that, for a large part, it is being contained. .380 deaths 121 new deaths overnight.

province or inei wuhan. just five outside. if we can trust the data, the data tells me it is being contained. francine: and we are getting breaking news out of carrie lam who says she has not seen a widespread infection. she is giving a live news conference as we speak about the use of 10 billion hong kong dollars virus control fund. and they are held up on the diamond princess cruise. what is the situation like on the ground? you expect this to go on for some time. i know we are looking at the numbers, but we forget sometimes the humid impact. you have been holed up in your apartment for 10 days now. stephen: i think longer than that. about three weeks we have been holed up here. people are frustrated, people

are not going out to dinner. it is valentines night tonight and i'm sure a lot of couples want to go out to dinner. i think a lot of people are probably staying home. it is much worse in wuhan. ,owever many are still left they are having it much worse. oftentimes you have one or two people in that small apartment who have the coronavirus but they cannot get a hospital bed. it is not -- so it is very frustrating for them. now, theyps in japan are starting to disembark today. some of the elderly and in some of those that have tested negative. it is a nightmare. tom: with all your experience across china and northern asia as well, there is a call from medical professionals that we speak to all bloomberg surveillance that americans and

the who in geneva has to to go to china to help. or skillse knowledge gap that they can bring to exhausted medical professionals in wuhan? can offerell, they the vast experience the united states and the epidemiologists have and bring it to the chinese without necessarily some of the andtape in the constraints the exhaustion that the epidemiologists in china are facing right now. they have a treasure trove of global knowledge. coincidentally, after larry kudlow blasted the chinese for not being forthcoming or not being transparent with the data, or even acknowledging the offer for u.s. experts to come in, the chinese are saying that u.s. experts are welcome to come in.

it will be interesting to see what they had to say when they get on the ground. francine: thank you so much. stephen engle in hong kong. owning us is joyce chang. it is so difficult to model because very few of us are virologists. how should we be looking at the spread of the virus and the effect on the economy? joyce: we have three different scenarios because the numbers are changing very quickly. one of the seer in areas goes to 128,000 cases -- one of the scenarios goes to 128,000 cases. there is risk around this. we have taken the first quarter global gdp number down to 1.3% growth. this could extend in the second quarter. francine: if it stays as it is, how much weaker gdp will we see at the end of the year? joyce: it is impossible to say right now but we have already

taken off of our base case, .5% from china. we have china going from 5.9% to 5.4% growth. and we have taken .2% from u.s. and european growth. there is a hope that this will be v-shaped, but that remains to be seen because factories will not be open -- be able to open that quickly. tom: we did not see the virus coming but no one was out front on the slow down in china like you. a vector belief in that was shockingly below 5% long-term for china gdp growth, do you need to recalibrate that long-term view lower? or do you stay with a resilient china that can produce 4% to 5% gdp long-term? joyce: you will see it next year when they come out with a five-year plan what they will signal. growthll bring the target down with a 5% handle. we are still staying there with 4% on this.

think about what the coronavirus means. you have 77% of china's gdp under quarantine. we see the slowdown. this is faster than we thought it would. and could you actually see the possibility of having a handle on this? us: you were lights out with for modeling that down to the stunning 1.0%. following that v-shaped bounce back or whatever happens. tell us what the research team says about the adjacency knock on effect to the pacific rim. joyce: let's go through the growth andchina's the impact. and if you look at commodity exporters, this is the china

demand story for commodities. it will hit emerging asia as well. in europe where we have seen the sharp slowdown, you have, for every one percentage point, it is 1.6% off of european growth. and we have taken down china by .5 percent already before downsizing this. so these reverberation will extend into the second quarter. and i think that in these scenarios, it is hard to do this with precision. tom: we will come back with joyce chang. wonderful to have her on. later, she can do the mathematics as well. she is a great mathematician for the federal reserve system, dr. master of the cleveland fed with an important and exceptionally timely conversation with michael mckee. they with us for more. this is bloomberg.

-- stay with us for more. this is bloomberg. ♪

tom: bloomberg surveillance, an interesting friday to get you to the weekend. credit suisse today, this discussion of ubs, and the uproar at barclays. francine lacqua in london with joyce chang. i want to bring it to a general discussion on the degrees of freedom of central bankers right now. i will suggest madame lagarde is usually constrained. constrained. how many degrees of freedom are they dealing with? do they have room to operate? >> we have seen negative yield spike backup.

above 12 trillion. where we are seeing easing is emerging-market and central banks. we think 13 emerging-market central banks are going to ease out of 22. before thet call coronavirus in part because we think there will be a move to more flexible average inflation targeting and we will signal for the need to be a better anchor. the overshoot and all, it is a cliche with ammunition as well. obviously, we have been using balance sheet methodology and the swiss national bank. do you want to see and monetary action as bill dudley talks about? or do you want to see more balance sheet ballet? joyce: i think you need to keep

the flex ability in place right now. just going back to the growth outlook with the coronavirus, the amount of time that they had to spend addressing the coronavirus. i think they need to keep >> ability rather than just responding right now. -- to keep concern flexibility rather than just responding right now. i think the concern is another downturn for a number of regions that will stay below potential growth. pbocine: if you look at and go back to china, if they can sustain growth, it can help the world economy. how many more tools does the pboc effectively have that they can use? it is very different than 2003. china was growing 10.5% at that point in time. what do we have in the forecast for pboc? we think there will be three

cuts in total with a 10 race -- 10 basis point cut. there will be a grace period on reporting npl for factories affected by coronavirus. materialhy we do see slowdown in china being the result. remember, china has a double-digit fiscal deficit right now. debt ratio north of 250% of gdp. it is the only country with a debt ratio of that size. i think rates will continue to go lower in china. francine: what does it mean for bi?m and be -- aminm joyce: we think it will remain stable around seven for the end of the year. if you do a bigger currency move, you risk more capital outflows. and capital outflows have been a problem for china even with the controls in place. tom: very good.

joyce chang with us. we will continue. it is an important and timely conversation or set of conversations. mr. weston in wall street week. this week is decidedly and wonderfully eclectic as well. stephen ratner in for oil. and for commanding heights, daniel juergen. this is bloomberg. good morning. ♪

this is: -- viviana:

bloomberg surveillance. let's get your bloomberg business flash. ibig changes on the way for royl bank of scotland. new ceo allison roses abandoning the three century-old name. named now west group. rose is adopting the english branch network using as a merger to weeks ago. -- two weeks ago. they say there will be challenges on income. >> we will incur some losses in terms of the consolidation of the market. the yield curve is still going in this direction. that therecipate will be another yield curve cut. it will make income harder. viviana: rbs also says for this year it is cutting profit targets. to mark zuckerberg may have pay more taxes and in different

places according to many reports. the facebook ceo is speaking to a security conference in munich tomorrow. after zuckerberg says he understands the frustration of how tech companies are taxed in europe. and we end with tesla's $2 billion offerings. it represents a discount of more than 4% from yesterday's clothes -- close. and that's the bloomberg business flash. tom: let's do a market check real quick here. ms. lam is speaking in hong kong as well. francine.europe, francine: i have a similar data check because i think it is worth mentioning in keeping an eye on that if you look at u.s. futures, they are drifting. point, it models what happens to the virus and how much of an impact it will have on isolation. we are with joyce chang of jp morgan. this model is a great way of

looking at it. we are looking at that, and the dollar is holding pretty steady, tom. if you look at the year, it was higher from gdp pretty much unchanged with treasuries up. coming up in the next hour, we will bring you our interview with interim chief executive officer. it will be interesting to see what she has to say. not only early on, but with this alliance with nissan. tom. carrie lam speaking in hong kong. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?

can you help keep these guys protected online? easy, connect to the xfi gateway. what about internet speeds that keep up with my gaming? let's hook you up with the fastest internet from xfinity. what about wireless data options for the family? of course, you can customize and save. can you save me from this conversation?

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. tom: bloomberg "surveillance," good morning, everyone. right now with the first word news, here is viviana hurtado. viviana: chief executive carrie

lam says hong kong has not seen widespread infection from the coronavirus. more than 5300 people are subject to quarantine. hsbc revealing an employee is one of them. workers whourging had contact with this person to stay home. bernie sanders' status as the democratic front-runner is causing jitters and congress. some are concerned their chances of taking the house and senate are at risk. there are fears he could turn off some moderate voters and democratic candidates that need to be reelected. moderate democratic that need to be reelected. cloude blocking from a computing contract, microsoft asking for the delay.

we end with the trump administration putting more pressure on huawei. it is using a racketeering law normally associating with prosecutions, saying the company stole intellectual property for decades. the u.s. is trying to persuade huawei -- allies not to let huawei build 5g networks. 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: what is known in washington is a story can shift and change on a dime. the dime was shifted last night into the evening by the attorney general. here is attorney general barr. : to have public statements and tweets made about the department, people in the

department, men and women here about cases pending in the impossible make it for me to do my job and to assure the court's and the prosecutor and the department that we are doing our work with integrity. tom: absolutely extraordinary, goes to the fabric of the nation. obviously john fitzgerald kennedy, robert kennedy, eisenhower, and back to george washington, seen an interesting relationship between attorney general and president. is with us, and stephanie baker is expert. the president is bringing back the old guard. jobd you suggest mr. barr's is in jeopardy? stephanie: yes, his comments

took many by surprise. it did look like he was pushing back, however cynics would argue agreed had -- may have with trump in advance, and in andity, he had to come out reassert the independence of the justice department given what happened with roger stone's case, with those four prosecutors quitting. trump's spokeswoman came out and said he has full confidence in barr. whether or not this was really for show remains to be seen. you see the reaction from people on the hill, including mitch mcconnell, who are backing barr in this. with stone being sentenced, this needs to be handled carefully so

it does not look like trump has intervened. tom: to me, the catalyst -- and i'm speaking as an amateur, and we had a wonderful quote from the washington post yesterday from an attorney general for 12 anticipate more prosecutors will resign? stephanie: on the handling of the stone case, we have seen the prosecutors resign and have seen a lot of resignations from the just the -- justice department. a matter of is keeping their career officials and department intact. my focus is looking at what happens with stone's sentencing and what are the ramifications of that. does he get a lighter sentence? does trump turn around and pardon him? francine: is this inside

takeics, or do voters notice? stephanie: i think it depends on what the justice -- joyce: i think it depends on what the justice department does next. this may pass weekly, they are -- quickly, but they are investigating the origins of the pressure probe. barr has said he is open to information that rudy giuliani is bringing regarding hunter biden, so the justice department is seen to be intervening in way is seen as a partisan and could have an impact on the election. francine: where are the democratic candidates right now? you have two front runners, very different. is it more difficult to figure out who the democratic nomination is compared to future -- prior years? stephanie: it is emaar crowded

field, more fluid, and more voters are undecided -- you it is -- it is a more crowded field, more fluid, and more voters are undecided. we are moving on to other states with a more diverse demographic, that could change things considerably. the concern is the moderate votes are being split between pete buttigieg and amy klobuchar and joe biden, but it looks like joe biden's campaign is floundering. the question is does he do better in the more diverse states? tom: this is a delicate question. i would suggest there is almost a frantic nature to the gossip in the post and times -- bloomberg doesn't do this as much -- but just the staffing of the white house, is it business as usual, or do you detect a real shift in the relationship

of this unique president with his staff, or even the new staff members he is bringing back? stephanie: the decision to bring back hoe picks, his -- hope former communications but concern is chief of staff mick mulvaney will be sidelined as trump pivots to campaign mode, and jared kushner with hope hicks will be running the show. he is stacking the white house with loyalists and those who will not question his actions. francine: depending on the democratic candidate, depending on the next president, the economics of the u.s. will be widely different. how difficult is it to model out? joyce: it is difficult to model,

but you are getting a narrower field of candidates. we will really see what biden is, what his prospects are after south carolina and nevada. we have tried to model this on a couple of different factors, the dollar, fiscal policy, protectionism, and the regulatory regime. we see the most change when you look at the progressive policies and the moderate policies. right now, what the market is reacting to is the more splintered the democratic party, the more it favors president trump and the status quo. havedoes president trump an economy he can get reelected on? should he feel good? joyce: it is all relative. 1.7%.s. economy slowing to , but it is u.s. exceptionalism given what is happening in the rest of the world.

the turnout will be key on whether the economy is doing well. the turnout happens to be lower, and that is keeping the watch. the market uncertainty last year was due to trade, and i don't think that will come back into focus. he is going into more campaign mode. ande passed super tuesday whether we have a brokered convention on the democrat side. to behat are you going thinking about this weekend? in this do of mr. trump's washington, what are you focused of mr. trump's washington, what are you focused on? stephanie: there is so much to focus on, the justice department and accusations it has become politicized are incredibly important going forward, whether

they will weaponize investigations as they go forward with the campaign. another key thing is keeping an eye on voter turnout in the next two states. voter turnout in new hampshire was very high, and i think that will be a determining factor in trump's ability to get reelected, the motivation to replace trump so high that they will come out in droves. it will be interesting to watch. francine: stephanie baker and joyce chang stay with us. we will have more on the banking sector, not only the swiss banks going through a sift -- shift. rbs is rebranding itself. we will be speaking to the ceo, kate murray. this is bloomberg. ♪

♪ >> i have been very transparent with the bank and very open and willing to discuss the relationship i had with him. the board has done its own review and they have looked back at my transparency, and concluded i have been transparent and open with the bank and the board all along in this process. tom: jes staley. i did a wonderful panel with mr. staley at davos a few years ago. atre is no other story global wall street, it is about

barclays and mr. staley, his decades at j.p. morgan and building the asset antigen meant company -- asset management company, some related to mr. epstein, and you see him fighting for his corporate life. sonali basak joins us. when i say he is fighting for his life, is his goal to get to monday morning? sonali: it takes a while to conduct a probe, but the stock could be under pressure. this is the second fca probe since his tenure. one is pretty untested -- unprecedented. out sir howard davies went and said, this is not good for the institution, i have got to resign. with all of your reporting and

bloomberg folks, the article is must read, lights out. does he need to do acer howard davies and say this is what is good for the institution? sonali: there is no sign -- and bank ceos have nine lives. he made it through one probe. he is sticking to his guns and said, i have disclosed everything. i have been helping jonathan ferro support premier soccer league, and i have this guy jes staley and photos next to this convicted guy and he visited him after 2008. would you explain with all of your banking contacts, how this guy retains his position? sonali: another interesting story, the financial times reporting that jp morgan emails

are part of what is citing this fca probe. when epstein was considered a client, it appears they had a friendlier relationship than he has let on. fabulouscine's interview yesterday in zurich with the guy going out and credit suisse, can you imagine this in an american bank? sonali: talking about american banks, staley is not the only one with ties to jeffrey epstein post 2008. this issue has virtually gone off the table, so u.s. firms, those relationships exist. they are not seeing them the same way as jes staley right now. tom: thank you for your coverage. right now, we need to tell you about the new hampshire primary. ancient news.

rested from all of the reports we have. it is on to nevada and south storyna, writing up the of the various and sundry candidate. there are big states, california and texas makes super tuesday different. this is bloomberg. ♪

♪ you are watching bloomberg "surveillance, we itsn with renault, posting first net loss in a decade. sales declining, plus income from nissan plunging. incomel-year operating lunging a worse than expected 30%. wells fargo plans to cut hundreds of workers in the philippines. some jobs will be moved to india where the bank has about 12,000 workers. wells fargo is joining a pledge to have workers in fewer

locations. nextwith the price of its playstation, manufacturing costs are about $450 per unit. sony may wait for microsoft's xbox group to make the first price move. the end of the year is when sony typically finalizes its cost. francine: thank you so much. the u.k. chancellor of the -- to talk more about the u.k. and europe is joyce chang of jp morgan. the markets seem to be pricing in because number 10 downing street has taken control of treasury, we will see a trump style massive stimulus for the u.k. economy. joyce: even if germany is not willing to do something, in the u.k. they are sending the signal

they are willing to use more fiscal stimulus. he is shaking it up. that is what the market is focused on an disappointment in germany that you have not seen marv a response, given some of the numbers -- more of a response. placate: is it just to the constituencies that voted for brexit? joyce: everybody is looking at the constituency and the election and what they need to do before the end of the year. they have a binding deadline. given the concerns about the global slowdown, that is the key question investors are asking, wilmar be done on the fiscal side? germany? how broken is they will deal with trade headwinds, the virus, and they have a fractured political system. joyce: germany is still the engine so where it stumbles,

there are for the entirety of the region. the pmi's story is one i am worried about with china being 30% of manufacturing and going through slowdown, that will hit europe and germany which is car country. i do see there could be more downside. tom: not to give you an image of america, but let's go with it, you are talking about fiscal stimulus in germany, estonia, the united kingdom. are we going to build roads like in west virginia, to know where? do you get a sense there is a plan to do with all of this money that will be minted? joyce: the u.s. deficit will come up as a problem so i don't see that much will get done in an election year furthering the infrastructure agenda, but what i do see is that china is in a position where they must do more.

they have no choice, given how much growth is slowing down. you are seeing this in the u.k., not really in germany, and in the u.s. the fiscal support is coming off over the last two years. piece,hn norman's weekly turkish lira out to a 6.05, real brazilian riau -- flat out ugly. what is the indication? being --r fx, that is it will be the higher beta currencies that respond the most. take a look at latin america. the impact of china comes out almost one to one on the growth numbers, given the commodities what sensitivity there is to china's economic

performance. off thetaken recommendations on emerging markets fx. we still have the rates recommendations and duration on. markets,in emerging 40% now have negative real rate and we still have 13 out of 22 central banks cutting, so there is a local bond story but you have the fx story which is the adjustment of the headline risk and growth risk. francine: when you look at emerging markets, what are you most worried about? joyce: it cuts across the complex. a couple of different things, the agricultural commodities purchases. some of the agricultural commodities exporters in latin america for soybeans and going -- corn suffer because you have got to buy from the u.s. you have china and latin america below potential growth for six

consecutive years now. much more about the supply chain story, what supply chains get hurt most by the slowdown in china? from jp morgang has been shockingly refreshing. in our next hour, we are thrilled to bring you lord adair turner. we must speak on the state of the united kingdom, ubs, and swiss banking. stay with us. this is bloomberg. ♪

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will jes staley make it until monday? will barclays say here is the door, or should he resign and say it is impossible to do my job? adair lord turner in this next hour. dollars strength and the mystery of the math, the calculus of a viral epidemic. renewed life and death struggles from the pacific rim. this is bloomberg "surveillance," from our world headquarters in new york, i am tom keene. francine lacqua back from zurich. last day.. thiam's francine: yesterday was his last day. today, he is no longer chief executive of credit suisse. we understand that sergio ermotti of ubs wants to leave. this is not be can -- been

confirmed through the bank. we understand they are looking at candidates internally and externally. the dynamic at ubs was fraught between the chairman and chief executive 12 to 18 months ago, but they seemed to have put those differences aside. interesting this is coming into the forefront. tom: a ramification on financial performance as well. viviana: we begin with the coronavirus outbreak, beginning to gauge -- difficult to gauge the true scope of it because of the data. another 4800 cases are confirmed. there are now than 63,000. u.s. officials are stepping up their criticism of china. now to a surprising rebuke of president donald trump by one of

his most trusted cabinet members. saidney general barr presidential tweets make his job impossible and told abc news the commentary undercuts him. veto atrump vows to resolution to restrict his ability to wage war against iran. the senate approving the measure, and it is expected to be approved in the house. there are not enough votes to under -- override a presidential veto. boris johnson is taking control of the u.k. treasury. rather than giving into demands to fire top executives, mr. javid quit. 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: i have one screen today.

markets are interesting but quiet, futures up five, dow futures up only 25. euro weaker through the week. francine: euro also gets my attention but i'm looking at renminbi. oil rising, treasuries advancing. outers are trying to figure the contrasting data from china and what the coronavirus means. tom: it will be interesting to see. francine: it is day two of china's new method for spotting infection cases. joining us now from beijing is bloomberg's tom mackenzie. with the new methodology, cases are rising. how quickly do we know this is spreading? had an today we

additional almost 5000 cases, so the global total is 63,000, in terms of deaths, 1380. up againee that tick yesterday. it was accounting for a number of weeks in terms of clinical diagnosis, adding to that people who have been tested with the new test. there is an argument to be made that the art -- market put too much faith in the chinese data and now are being overly skeptical. experts are saying by changing the methodology, it gives an accurate representation of how far this virus has gone. we are looking at the impact in the region in places like hong kong and singapore, the prime minister of singapore warning this could push them into recession. one trend people are looking at is the death rate, and you have had three deaths outside of

china. that is still relatively small and some people are looking at that is a potentially positive trend. about 350, you have cases and three deaths. tom: you were brilliant yesterday on the migration and past of the mayor of shanghai, and how he no goes out to -- now i to run thehubey show. there is more of a military field to this china operation. militaryour feel, the is taking over logistics? tom m.: certainly, a military mindset from the former mayor of shanghai has taken over. we have seen proclamations from party leaders saying the cities outside of will hand, tesh who wuhan, thereand --

are other cities where they want officials to step up. we have seen cases of individuals locked and barred in their own home to prevent them from getting home, so we are seeing a stronger message and stronger set of regulatory instruments from officials on the ground as a result of this leadership. tore is an emphasis to try kickstart the economy back into action. the pboc came out with measures to ease loans in the real estate sector amongst other measures they are looking at to try to restart the economy. tom: tom mackenzie, thank you so much. greatly appreciated. right now with us is adair turner. to say that lord turner has had an impact on financial regulation in the united kingdom barely describes his work at the

fsa. he is at the institute for new thinking. on climateat davos change. the marketsbrief on is cameron crise as well. adair turner, we have so many things to go out. rebranding,th the renaming of a 300-year-old institution, the royal bank of scotland. are they saying, we are not going to do markets and we are going retail? adair: i think royal bank of scotland since the crisis has been significantly reducing the scale of its investment banking ambitions. epicenter of its afterms back in 2008, and 2008, there are intensive debates in the u.k. government with the leadership of the bank

as to whether they should significantly cut back markets in investment bank operations. just over time, it has become aware that it is very difficult to make money on that if you are relatively second-tier player. tom: as you know, sir howard davies came in to provide gravitas and intellect to the royal bank of scotland. there was a moment at the london school of economics tarnished by libya where howard davies fell on the sword and walked out the door. now we have barclays and jes staley. what should be the plan of action for mr. staley, given the uproar? does he wait for the study or leave as howard davies left lse years ago? adair: it is difficult to comment on these highly personalized, specific issues. i think it will come down a lot do not just the substance of the

situation, but often it comes down to the process. andwhat he told the board the regulator, was it absolutely clear? if there is any lack of clarity that there was complete openness, that will be a negative. it will have to be a personal judgment for him as to whether he wants to keep going in circumstances where he is criticized. i think he genuinely i am sure is personally upset he is in the situation. disgusted is clearly by what has come out about epstein and regrets what he has done, but these are very personal decisions at the end of the day. they are often driven by the individuals deciding it is not worthwhile on a personal basis living under the attacks, rather

than it being a board decision or anybody else saying it has to come to an end. i also want to talk about brexit and financial equivalency. what kind of regulation does the u.k. need? can they diverge from the rest of europe? adair: i have a slightly counter point of view on brexit than other people. i think the crucial issues are relating to the manufacturing sector and how close we will be to the customs union of europe, and the free movement of physical goods across the channel and other links. that is my major concern with much, wef we go too could have a free-trade environment. we do not get a frictionless trade in physical goods. i think honestly come in the area of the financial --

honestly, in the area of the financial sector, and i speak as a chairman who had to move headquarters to france -- you can work under a whole series of different arrangements, and if you don't have full equivalents, you will create complexities, but they are manageable. my biggest concern looking forward on brexit, the debate is over, the politics are decided. it details of the trade as relates to the manufacturing secular -- sector in particular. to: lord turner, much more talk about, and cameron crise quietly waiting for dow 30,000. mr. mckee will not be waiting for dow 30,000. loretta mester will do the math on the degrees of freedom that the central bank has right now. the answer is less, the

president of the cleveland fed in the 12:00 hour. this is bloomberg. ♪

♪ surveillance,"is tom and francine from london and new york. the new chancellor of the exchequer of the u.k. after mr. still with us, lord adair turner and cameron crise. happenedlook at what yesterday, we saw a reshuffle of the u.k. cabinet which was meant to be minor and the chancellor saying, i don't want any part of this.

how damaging is this for boris johnson? adair: it is an upset politically. if he intended to get rid of his chancellor, he would have fired him. these are not the headlines the prime minister would have wanted. he would have wanted headlines about, i have a coherent team in place, promoting new people, etc. the crucial thing to ask is what does this mean for policy? what sajid javid had been saying, he had in signaling there was greater opportunity for fiscal expansion than the previous regime had been asked -- suggesting, and he had been justifying that on the grounds of the low borrowing costs. there seems to be some debate about that within the government as to what number 10 is pushing for is more fiscal expansion. we will not know until the new chancellor stands up with the

budget, but that is the substance issue underlying the issue about personalities. francine: do you worry about developments? the chancellor has always stood up to the prime minister and said, we cannot afford this. adair: throughout british politics over the last 30 years, disagreements between number 10 and number 11 have often produced dramatic political explosions. substance, to the the treasury sees itself. institutionally, it saw itself under philip hammond as the guys who say no to expenditure. everyone will want more public expenditure. , matte will want more hancock will want more for health, and the treasury internal teeth oh's is -- ethos

is we are the only guys who can work it out. the big issue across the world, are we in an environment of secular stagnation where we need big fiscal deficits to drive the global economy forward? it is true that the global economy got going again two years ago because of a big fiscal stimulus in the u.s., and the fiscal stimulus in china. i think we are in an environment where much more than five years ago people are asking whether you can run quite large fiscal deficits on a sustained basis as japan has done. i am somewhat sympathetic to that point of view. even if you are sympathetic, there has to be a limit. what the treasury i am sure will be saying is maybe there is a possibility of greater stimulus, but that cannot be limitless, because the conservatives just

won an election by saying jeremy corbyn's suggestions that it was limitless as irresponsible nonsense. i am sure the new chancellor will want to set out a regime which allows for expansion but places disciplined limits on it. tom: one question of cameron crise, and then come back with cameron on the markets. you have been so patient as we look at the flow of finance out of the united kingdom. do you see any linkage of how the market adapts and adjusts to fiscal policy? it is not in the textbooks. it is all markets, monetary. does fiscal matter? cameron: i think it does. we haven't really tested the limits. tom: recently we haven't. cameron: you can argue that the sharp rise in treasury yields in

2018 was the child not only of the fed putting rates up but also the fiscal expansion in the united states, and the fact that obviously yields in europe and japan are so low, europe in particular because there has not been this fiscal impulse the economy needs. tom: you brilliantly have written on how with all the turmoil this year, it is a relative value year. what do you mean? that is greek to me. cameron: it is one of these things, we all know the coronavirus will have an impact, but it is difficult to say with any degree of precision how it back does how big it will be. -- how big it will be. if you say bond yields are too low or equities are too high or vice versa, there is an implicit forecast that is probably too soup -- precise for the

information we have. aroundormation -- a way that is to say i cannot say that x is fairly valued, but it is cheap compared to y, so if you , you get that y out of the equation. tom: adair turner with us in london, and we will continue, much more to talk about, particularly on ceos in banking. cameron crise on the markets this week. week" stephen ratner the guest. the commanding height of saudi arabia in oil, mr. weston will do that. this is bloomberg. ♪

♪ francine: this is bloomberg "surveillance." there is a new onort from the nef electrification and decarbonization in europe. we had the big announcement from british petroleum on the climate change target. turnerith us, lord adair who was just at the bnef launch. will this hold? if you look at bp and what they said, it is in 2050.

a lot can happen and we will probably have two or three chief executives until then. adair: i take the point, but i think this is permanent. once you get a major institution endorsed by the board level making a strong statement -- and this was a strong statement, a big step forward from bp -- we will see that as part of their ongoing strategy and other oil majors thinking about how they are positioned. it is against the background of an increasing number of companies and sectors across the world believing they have to make commitments to net zero, and an increasingly dutch increasing number of countries doing it. -- increasing number of countries doing it. it is becoming a bit nonnegotiable. the flex point is what exactly do you mean by net zero? how much of that net is carbon

capture and storage or offsets? that will be subject to debate. i do not think this will be reversed. this is a bp strategy going forward and will have an impact on decisions they make between now and mid century. , lordne: lord turner adair turner. we will be back with cameron crise. we will bring you the interview with the renault chief executive officer and the interim chief financial officer. they will field questions, i am sure, on carlos ghosn. this is bloomberg. ♪

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decade. income from nissan also was down. we spoke to the chief financial officer and interim chief executive clotilde delbos. she -- here she is. clotilde: this has been a difficult year. we suffered for many reasons, one being the markets. the markets have been tough on us, especially markets where we are strong like argentina, turkey, and russia, and also for internal reasons. in terms of governance, it has not been a nice trip over the last 12 months. also for internal reasons such , tooo high costs in r&d much content in our car which we have not been able to fully price to the customer. is it going to get worse before it gets better?

it will be tough in 2020, to be honest, as we suffer from the same volatility on the market, from the regulation in europe. willtheless, even if 2020 be a tough year, we are engaging in a heavy reduction plan to rebalance. >> you announced 2 billion euros of cost-cutting. the details will be provided in may. you are not excluding any planned closure including in france, but that is sensitive politically, isn't it? clotilde: it is. in the situation we are, we were dimensioned for more volume then we have. as years go by, volatility is worse on a yearly basis so we cannot afford to have such a capacity installed within the alliance, not only renault. we are reviewing that within the alliance and trying to figure

out what would be the best footprint for the alliance. tom: after daimler this week, renault managing a message for a really challenging year. i want to show a chart of the miracle that is tesla, out with an offering at $767 a share. i bought 2 -- 12 shares yesterday. this is one of the great miracles of bonds moving from a yield price up, up, up. what is so important is the market votes. the bond price was elevated yesterday with his equity offering. ever lower.p, yield equitys a dilution in make bond prices go up? cameron: the company is raising cash so their balance sheet

become stronger and they become more creditworthy. the general trend of the last six months that we have observed reflects the inner sector of everything we have been talking about here. lord turner was talking about climate change and zero emissions and then the car industry. who is the beneficiary? it is tesla. tesla and a not a ago or foura year years ago. how do you fancy guys like you change on a company when they grow up? clearly, you have seen a lot of bears throw in the towel and that might be a natural selection thing. you might be skeptical about the promises of the company but you cannot afford to stay short

getting run over by a steamroller. i kind of think we are almost in a 1999 type of scenario. it was the internet and the dot com and now we have green technology and being environmentally aware, and moving away from carbon emissions. that is sort of the raw material of irrationalout exuberance in markets. there is just a shortage of product for people to buy, and tesla is one of the obvious poster children of what to trade. tom: let's go to london. adair: what we are seeing with tesla's two years ago it was a dream, a technology, a vision but was having difficulty delivering in production terms. it has managed to move beyond that and move at the pace at said it would, and people are

saying the opportunities are huge. what we see from renault and daimler is the automotive industry is going through a complete revolution and it will be ongoing over the next 10 years. eventually, the internal combustion engine is dead. we will move beyond the internal combustion engine to almost an entirely a lecture -- electrical engine. they are cheaper to produce and have other advantages. this is a huge challenge for incumbent players. until three or four years ago, i would say incumbent players were not realizing what would hit them and now they are trying to refit into the electric age. this will be a revolution with us over the next 10 years. tom: i would like to segue off of that to a general

conversation on banking ceos. you are the arch regulator of the united kingdom, you and howard davies. , francinethe stories in zurich yesterday, our mati of so -- on hisey challenges. these guys seem almost exhausted. are we asking too much of the average ceo? are we asking too much? adair: there is an overdone cult of the ceo generally. we often tend to believe that business leadership begins -- depends on one particular individual and not focus enough on the totality of the team and capabilities of a bank or automotive company. ceos can make a difference by setting direction, motivating

ofple, having a clear set strategy, but ultimately across the world we overdo the colts of the ceo. we pay them unnecessarily because we pay them in the belief that they are godlike figures who can produce extraordinary results. they are not guard like -- godlike figures. they are damn good business managers but alongside the rest of the team. we can go through this process of building them up and building them up, but they were bound to. francine: is it more difficult being a ceo in 2020 than 2003? adair: in some ways, it is more difficult to be lots of leadership positions. the 24 hour news cycles and the twittersphere creates an environment where you are continually managing flows of

information. you are existing in a public space as well as having to do the internal management. that has created unreasonable expectations of what any individual can achieve, and we need to be more realistic about the pace of which organizations can change. tom: this is a wonderful discussion. let us look at a bloomberg chart. i have cherry picked mr. di and normalizedn back to the crisis, here is the outperform or. what is so important on a low book value is ubs, credit suisse, barclays, and deutsche bank, just this arch underperformance. this is the arch relative value of cameron crise. do you buy higher value american

banks or load on troubled european? cameron: american banks have been a financial trap since the crisis and have the headwinds of still needing to clean up balance sheets, and low in the case of barclays and negative in the case of swiss banks and in a low interest environment, and that makes it difficult to make money if you are a bank in the context of low interest rates. the fed has paying and -- has been paying interest on reserves. it is tens of billions of dollars, whereas in the eurozone , banks have been having to pay the ecb for the privilege of keeping money on deposit, and that is approaching something like 10 billion euros. u.s. banks are getting interest from the fed.

european banks are paying a tax to the ecb. wouldn't you rather own the ones that are earning interest rather than paying a tax? tom: a good week for european banks, deutsche bank above 10 euros which is a big deal. lord turner, thank you so much for joining bloomberg today. cameron crise with us as well, much more to talk about into the weekend and on the way to nevada and south carolina and super tuesday. in washington, the news flow oft or -- off of yesterday afternoon and the attorney general. there is your calendar, the real president's day. and february 12, those are president's day's as well. this is bloomberg. ♪

>> we are already looking out a very big decline that in february, chinese oil demand is more than 20% lower than a year ago and world oil demand will be lower than anticipated. we think it will be lower than the growth than other people think. 50, and thaty at is a prized interview on oil, ihs.ergin from david westin darkens the door and has the map out from nevada and south carolina. let's talk about the show. it may be has said

worse and made the point that we were getting back from have deng and now we facto decoupling. changenk it will be the and have very different views of what has come up. to yourave got to jump incredible abilities on law. this goes back to michigan years ago and your work within the legal system. what a shock this was to see the abc interview. david: it was extraordinary. we have not seen any of the loyalists to president trump come out in public chastising him, and he certainly did that. tom: here is the attorney general. barr: i cannotl do my job at the department with a constant background commentary

that undercuts me. tom: let me ask you the question i have asked stephanie baker and so many others. resigned.cutors what do the rest of them do? david: that is what the attorney general is addressing. how do i manage my department and appear before federal district court judges? tom: this is tuition friday. all of these prosecutors have tuition checks to write and bills to pay, mortgages. you are going to tell me these people have resigned? david: those prosecutors had no choice. they were totally undercut. they could not go back into the federal district court and be respected. a lot of prosecutors are doing it for the good of their hearts. they can make more money by going outside the justice department. francine: good morning from

london. doesn't make a distance -- difference with -- does it make a difference with the voter and will it tilt the balance in an election year? david: is it a bank shot to the peopleis this a way of loyal to president trump saying to tone down the tweets saying you will do better in the economy if you stop the tweeting? some republicans on capitol hill have been trying to send that message and now attorney general barr is doing it. francine: let's go back to cameron crise. how are markets trading these candidates and the election? is it too soon? cameron: to a degree it is too soon and we have to see how the democratic process plays out. regardless of your opinions, it seems to be consensus on the

street that the equity market would like president trump reelected because it has done so well during his tenure. his approval rating and the stock market have moved up in lockstep. august,ook in july, once we know who the democratic contender is and how they rate against the president, we could be in a different spot. forward to 22 of february, what are you looking for? david: the big development is unions. we have a more diverse population in nevada with hispanics and blacks and -- in south carolina. unions do not like bernie sanders because of his position on private health insurance. the unions are very powerful. also, watch harry reid. he is fragile, but the people i

have talked to say he still holds the strings in nevada. still holdingeid court in las vegas. david westin tonight, "wall street week." ♪

this is bloomberg "surveillance." royal bank of scotland is banning its 300-year-old name. the ceo discussed the change. katie: the currency and financing lines are really important. you know we are the biggest lender to business in the u.k., and the product lines we have in that market are really important for us to maintain that position , and for our customers to do the business they need to do. strategically and for the future. >> does that mean job cuts?

katie: we always have a policy about job cuts and as we shrink rates there will clearly be impacts. >> what about cost cutting through the business? katie: we have had a great year of cost-cutting. rbs has such a strong history of that, people expect us to take 4% of our cost base out each year, and 250 million is the target for next year. challenging targets to move into next year, and we need to continue that for a number of years to reshape the cost base. our customers change and the way we do business as well, digital technologies. jra: what levers do you have to pull to work on the net margin attrition? katie: the reality of net

interest margin has to do with juncker. we are in such a low rate argument -- environment and it has been driven by the rates. valuable be much more in terms of what you were trading at. it is repressing down to the lower levels. down to the lower levels. what is important is the return on equity we get, so the market earning just below 20%, even with the new inflation we are about to playre up to 15 person. -- 15%. the volume is replacing the lost income in the margin. while margin reduction is a feature, strong growth and strong r.o.e. makes it good for

us to participate. growth, youolume say you continue to see challenges for income. how far up the risk curve are you willing to go? katie: we are very clear we do not want to go up the risk curve. we did 10.4 billion new mortgages in q4. that is a staggering number. if you think our stock share is only 10%, the fact that we are managing to sell and process and make sure that we have customer engagement at 15%, and what the team has done in terms of making it more digitally able. when i look at 2020 challenges -- nejra: how do you look at the challenges? katie: it is less about mortgages. it is very much about regulatory changes coming that will have an impact on our numbers.

as we look at the high cost of credit, we clearly will incur some losses. the yield curve is still going in this direction and in our own economics we are anticipating another yield curve cut. those things all make income harder for banks. nejra: are you factoring in a rate cut from the bank of england? katie: we are. in a model it may be wrong, but we have incoming from q2. francine: let's get straight to the bloomberg business flash. viviana: bruno slashed its -- renaud slashed its dividend and posted the first net loss in a decade. income from nissan also plunged. a worse than expected 30% plunge. wells fargo plans to cut hundreds of workers in the philippines. some of those jobs will be moved to india.

they are joining a posh across the bank -- push across the banking industry to have tech workers in less locations. pushing the playstation 5 to about $450 per unit. they may wait for microsoft to make a first move on the xbox console. tom: thank you so much -- francine: thank you so much. we will be speaking to the cleveland fed president loretta mester, brought michael mckee. this is bloomberg. ♪

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

♪ alix: consumer dilemma. spending holds up while retail

stocks hit a new cycle low with u.s. retail sales on deck. the currency sinking while german growth stagnates, and china stimulus, the good and the bad. the market expects more -- [applause] -- [no audio] alix: -- markets here. you can expect we will not see a huge amount of positions being taken on into the weekend. typically you have seen a lot of taking on in treasuries, a lot of selling in stocks. euro-dollar continuing a slow grind lower after the last nine days, and a bid at the back end of the treasury market. commodities getting a bit of a respite, which is odd because we could h