>> good morning from london. these are today's top stories. climbvirus cases in china above 70,000. the pboc cuts rates again. japan saysbank of the virus is the biggest uncertainty the nation's clara three has taken. most in over the five years. nejra: hsbc prepares a major restructuring.

♪ manus: a warm welcome. it is a whole new paradigm. she does not know what to do. she has someone else here. nejra: great to have you in london. how are you doing? manus: not too bad. a bit shocked by the cold. there is a cognitive dissonance and credit markets. it is stunning. he refers back to britain in the 1930's. there are red flags everywhere. we point to them even without the coronavirus. that just adds a new risk. the question is, what is the size of our arsenal.

whether it is effective and if there is more to come. you see a stronger yuan. it strengthens. the question is, we have had nine days of the repo rate dropping. that turns around. but the repercussions are whether you are the through the worst of it. let's roll it over and have a look at that. you have copper better this morning. i'm talking about a meaningful shock to copper demand. although the cash market is closed for a u.s. holiday, you are still looking at the futures here. there is a world of money out there to buy treasury. it is a resilience play that make sense. how much our rate cuts going to be a supply-side shock

to the economy? this does not tell the full story. you have chinese stocks rebounding from the postlude and new year's selloff. japanese futures under pressure after that gdp data. and u.s. stock markets closed today for president's day. people are looking for rate cuts from the fed. but is it a global coordinated move? hedge funds have been cutting their losses. manus: maybe the fast money has a different position. the top story is the coronavirus. the chinese market. i will find the right camera and a moment. there is too much going on.

over the weekend, france reported the first coronavirus tatts in europe. let's get to selina wang joining us from beijing. good to see you. trend?re we with the selina: here in beijing the streets are still eerily quiet. cities are restricting the movement of residence. they are trying to get that local economy up and running again.

people returning to beijing were asked to go into a 14 day of quarantine. some hospitals saying the turning point has been reached, with new cases fall -- following over the weekend. there have been more than 10,000 people discharged. the central government is trying to prevent this health crisis from spiraling into a political one. i want to point out this interesting development over the weekend. the communist party released a speech showing xi was on top of the crisis. this is trying to delay some of that public criticism that he was stepping back. nejra: thank you so much.

we are looking out the pop -- possibility of more stimulus from the pboc. what shape to you expected to take? >> we think both monetary and fiscal stimulus will be destroyed. we believe it will be successful in helping the economy reshape recovery. nejra: we have been talking about a saucer-shaped recovery. we expect cuts.

the arsenal that they have deployed, do you think we are full force or is there much more momentum to come? >> there is more to come. for sure. impact onll have an the economy remains to be seen. evidencewe should see of those measures having an impact. helping the economy recover. the next step would be resuming normal service. and then the recovery will kick in. nejra: what part of the market will react most forcefully to what you're outlining. clearly risk assets have already responded.

the ethics may remain sideline. entertainmay want to the idea of a weaker currency. we have the phase one trade deal. i think fx may remain the more boring part of the equation in the current situation. manus: there is nothing boring about fx. don't write yourself out of a job. something that cost my eye was nhe cost of union hedging -- ye hedging. bullish calls on yen. where do you want to be positions? >> certainly gold is the ultimate hedge. many clients are unable to gain exposure.

the central presumption is that j is at the rock bottom of the easing cycle. whatever happens, it will be tough. nejra: the euronet a three year low -- at a three year low. muchlot has to do with how is still to be priced in. the negatives are already in the price. is indeed quite cheap. the markets are really short. we would argue there are a lot of negatives in the price. the best guess is that the currency will remain grounded. we will have sustained evidence

that there are improvements. there are not many buyers around. our guest stays with us. we have the corporate fallout from the coronavirus that continues. is partlys it resuming operations at three plants in china this week. bringing back some of the production it had hosted -- faulted. companies all report earnings. manus: let's get to the headlines from around the world. japan is heading toward a possible reception -- recession. to -- tax hike left the economy at the low ebb. gdp fell by 6.3% in the final

months of the year. that has been the biggest slide since a previous tax increase in 2014. nejra: tensions between the u.s. and huawei ratcheted up. manus: hopes of an emergency opec plus meeting on the coronavirus impact are fading. saudi arabia has not given up on it solution. to sticknce is likely with its scheduled meeting in march. cruden sachs cut its 2020 demand forecast by 20%. launch ae eu is set to grand plan for technology. they hope to rein in u.s. and chinese companies at the benefit of european businesses.

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. coming up, hitting a speed bump. build inan -- plans to germany has hit a snag. manus: more on the imf and the impact of the coronavirus. this is bloomberg.

ofus: the managing director the imf spoke to bloomberg and she said there is a lack of depth to reform on the global economy. the coronavirus is dimming the prospects of a pickup. she spoke to us and by.

dubai. she was asked if the virus would cause a downturn in economic activity. sharing theina is world economy. 19% of the world of china's tourists are very important part of the industry. in manufacturing terms, it represents manufacturing. some of it will be translated to the rest of the world. we need to give it a bit of time. side, were positive

see china taking very aggressive measures for containment of the virus. and also in the economy. the equivalent of $15 billion from the people's bank of china. cutting interest rates. driving stimulus. my most important message here is a broader message. we do live in an era of uncertainties. of tradeaw reduction tensions. and then the coronavirus hits. >> i want to follow up on that. you are coming off the back of these trade tensions. now you have the coronavirus. what kind of tools are you looking at for potential

synchronized response to mitigate the downside? >> we very much value the fact that when 2019 shaped up to be the worst year since the financial crisis, central banks through a synchronized rate cut and more monetary easing. they did was the equivalent of have a percentage boost. we also saw some fiscal measures . coming from countries that have fiscal space. missing is a more aggressive swing in structural reform. expect if there ,as to be more attention

monetary policy space is shrinking. fiscal measures as well as structural reforms to boost growth ought to be stronger. manus: that was the managing director of the imf. our guest host is still with us. she made the point that 2019 was all about a coordinated rate cutting cycle. do you expect more of the same for 2020? or will there be a divergence? >> divergence is more likely. it seems like the economy was hit directly by the coronavirus. countries may have to respond.

the talk of synchronized stimulus sounds great and looks great on paper. but we may be removed from that moment where we are going to be talking about more fiscal stimulus and the eurozone. debate inng at the germany. they are still discussing whether they should do more or not. it still comes back to the labor market, which is resilient. at the moment that is wishful thinking more than anything. i am struggling to find out what exactly boosting sentiment is in the expectation. tools toe have the deal with that. how many more bullets do we have to fight that? nejra: is the market having wishful thinking?

or is it thinking that china will shoulder the burden of this stimulus? >> the realistic assumption is that china has the tools. best -- really help the rest of the world deal with the currency crisis. when it comes to addressing a deeper issue, we are not there yet. for fiscal stimulus is still to be made. back toe will cycle what comes next with our guest. let's get up to speed with the business flash headlines. premium for bpa to return to private ownership. they see disruption in the

industry throwing up a number of challenges. this will give it greater flexibility going forward. he was deleting external candidate to take the job. he is the top executive in asia. the newspaper said the board is still undecided. speakinging to be tomorrow looking forward to that. bracing for a huge overhaul. a cut to trading. a lot of people saying that cutbacks might be coming. manus: i think it is not just cutbacks. it is about hong kong. it is about their exposure to china. regardless of what shape a recovery we have, it is more about the outlook and how they

cast that forward rather than the actual numbers. nejra: exactly. coming up, recession fears growing. shrank in the fourth quarter. we discuss why, next. this is bloomberg. ♪

to build an's plan electric car plant in determining -- germany has hit a legal trouble. our asia editor in tokyo joins us. how big a challenge is this for the plan factory? >> this is a very important challenge. even a delay could hurt the company. they have to keep production scaling up.

this plant was supposed to create a half a million cars a year. they have to get this thing going on time. risk amongme environmentalists to certain animals. they have to fend away -- find a way around that. that will be a pretty prompt answer. manus: thank you very much. japan's economy lurching toward a possible recession. a preliminary estimate by the office. >> japan's economy contracting. the most in more than five years. we have not had this kind of contraction since 2014. that is putting pressure on the economy.

householdes, spending, that has been worsening and the coronavirus has added to that. now the concerns are about a recession and speculation that shinzo abe will have to do more to boost the economy. maybe another package. nejra: our guest is still with us. >> the boj is at the proverbial bottom. they cannot possibly do more from here. all eyes will be on the government. in japan in particular, there is the hope that the tokyo olympics later this year will help give

the economy some boost. isiously the coronavirus complicating things a bit. we just had a massive stimulus. what did they need to show and ?ell this time >> it was meant to restore fiscal credibility. they are convincing the japanese .nvestors japanese that is predominantly held domestically. ironic that the need for fiscal stimulus is because of efforts to boost the economy. manus: it could be one of their classic policy mistakes. we can discuss that more.

to theup, despite risks global economy, she is sticking with her growth forecast for this year. we listen to the lady herself. this is bloomberg. ♪ when it comes to using data,

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manus: good morning from london. it is "bloomberg daybreak: europe." i'm manus cranny. nejra: i'm nejra cehic. coronavirus cases in china climb above 7000. hong kong and singapore join beijing in pledging extra stimulus. the imf urges coordination. manus: the bank of japan says the virus is its biggest uncertainty as the nation's growth rate takes a hit from the sales tax. gdp contracts the most in over five years. nejra: awaiting the overall hall as hsbc prepares for restructuring. hasleading candidate brought himself out of the top

job. stimulus from china, giving a boost to equities in today's session. japanese stocks retreat after the gdp data. the cash market is closed for president's day in the u.s. but futures in the europe and the u.s. look strong. manus: grappling with what the pboc has done in terms of liquidity and rate cuts and how that plays out. for the equity story. we have juliette solly in singapore and dani burger in london. we've got a nice rebound in china stocks. we pretty much made up everything we have lost its the lunar new year kicked in. how does it look? juliette: at least on the csi

300, that rebound actually happened in early trade on the back of all these efforts by authorities to mitigate the fallout from the coronavirus impact. if you look at my chart, the csi 300 is back above those levels and when team before the lunar new year break. itsmeasure, remaining below close of the year of 2403. the shanghai comp getting close to her racing its level it lost after the lunar new year. we've seen the smaller chinese index reverse its post-holiday slide after the central bank lowered one of its interest rates and said it would support firms that could restart production as quickly as possible and reducing corporate fees and taxes over the weekend. a lot of effort to pump stimulus into the economy, giving a boost to investor confidence. nejra: juliette saly, thank you.

you are looking at a correction in india's public sector stocks. niraj: good morning to all of you. much unlike what juliet had to say, which was good news, indian markets have come off highs of the day but the public sector space is one reason this is happening. on friday, we spoke about how telecom companies paying updos. the same with -- ruling was given for other sector units. they have to cough up a large amount and give to the government. until that happens, the last two days, they have done quite strongly and trading at nearly the lowest point of the day. manus: well then. niraj in mumbai. dani, you are looking at a wave of bond flows. rate cutsnly took 800

later and hear we are, the biggest week ever of bond fund flows. about $24 billion coming into the sector in terms of funds. america, they said we are currently living in a $1 trillion bond bubble. that means the pile of negative debt continues to rise as yields sink lower. what has changed? arebank --coronavirus fears sending investors flocking to havens and we get higher piles of cash into bond market flows. interesting ticking you to look to see whatrminal we are looking at on a company basis. it is stark in the bond fund flows. nejra: thank you all. let's get to the first word news and the number of cases of the coronavirus have topped 70,000. the head of the hospital says a turning point has been reached

as new cases fellow the weekend but u.s. health officials say if containment fails to show more signs of success, we could be on the verge of a global pandemic. we spoke to the imf managing director about the outbreak. >> do not make projections. we operate with scenarios. we are still hoping that the most likely scenario would be relatively rapid containment of the virus. v-shape drop in economic activity in china, some other parts of the world, but very fast recovery. manus: the u.k. is setting out its goals for post-brexit trade talks with the eu. the chief brexit negotiator david frost is speaking in brussels today as the two sides work out how to thrash out an agreement by the end of the year. the u.k. says it isn't seeking special treatment, but wants a deal similar to those agreed

between the eu and other countries. nejra: folks for an emergency plus meeting on the coronavirus are fading. saudi arabia hasn't even up on its push for a gathering, but russia isn't keen. the alliance will likely stick tots meeting in march as the outbreak continues, goldman sachs has cut its 20 crude demand forecast by almost half. 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. u.s., let's focus on the the release of the feds january meeting. policymakers were in agreement, great seeing modest growth in the economy and the labor market described as strong. speaking to bloomberg, cleveland fed president loretta mester weak businessts data it pick up later this year. loretto: i think the consumer side is holding up. the business side has been weak. we've had signs of stabilization

on the manufacturing side, so that is a good thing, notwithstanding today's numbers, and that is the way the u.s. economy has been. the consumer side has been driving things. the business side has been weaker, but that looks like it is stabilizing and i expected to pick up later in the year. manus: valentin marinov from credit agricole is our fx strategist this morning. loretta mester uses the rhetoric -- that isvery much very much fed speak. the dollar has had a cracking start to the year. it is like hotel california, you can't check out. is it still more of a reserve currency and haven than anything else in times of great crisis? valentin: it is a safe haven with yield and that is a matter for central banks who need to

park their liquid cash somewhere. it is the case negative rates have not destroyed but significantly diminished the appeal of any euros fixed-income assets and the dollar has been benefiting from that. overall, it should be mentioned that in terms of reserve currency, fx reserves haven't been growing as quickly as we have seen in the last 15 years. part of the story being the trade war between the u.s. and china, and the fact that the chinese officials will now have to implement more aggressive fiscal stimulus. there will be less demand for dollar reserve assets. even so, the dollar remained supported.

overall slowing economy, slowing inflation, i think, is the latest development on the back of the coronavirus and weaker commodity price, stronger dollar will force them to cut again and that could turn the dollars appeal for a bit, but not a reversal. nejra: you expect the rate cut innejra: june. you've seen bets in the euro-dollar market for rate cuts, for the fed, but if the fed cuts and the rest of the world is cutting, is that why you only receive short-term dollar weakness impact? valentin: it will not change the overall outlook dramatically. it is worth highlighting that if the ecb cut rates, 60 basis points is the rock-bottom of their own easing cycle. we mentioned the boj adding to the rock-bottom already. it may have a more lasting impact against the lower yielding currencies, were central banks are running out of options to ease further, from

the fx perspective, running out of options to herd the currencies. you can have euro-dollar bit higher september into october lowerof the election, against japan but longer term, we are talking multi-your outlook, the dollar could maintain great advantage and as long as that the case, it should remain resilient. manus: i've got this vision of blissful neutrality, sitting at the fed. nejra: that is you every morning, isn't it? manus: that is the biggest understatement on matt:" -- understatement on "bloomberg daybreak: europe" in 10 years. this is treasuries. the dollar is a haven, treasuries are a haven, scott has said by the treasuries. can i make any linkage between bond market flows into haven and theike treasuries

underbelly of supporting the dollar, is there any correlation to the flow? valentin:valentin: it is certainly the case we are seeing, especially out of japan, there have been massive outflows and an increasing portion of that has been unhedged. the fact being that you need yields, you need return. that is not the case in the eurozone so you have to hedge a lot of those flows so the overall impacts is rather muted. eurosave really driven lower and lower was the corporate flow of different design which is the so call reversed yankees. that flow of u.s. corporate's coming from europe into dollars almost immediately is correlating rather well with the euro-dollar. that particular flow in investment grade, all-time record of $102 billion last year and from what you can tell, anecdotal evidence continued stronger and is contributing to the latest downfall in the

euro-dollar, so it is a fixed-income story, but in the case of the eurocom and it has emerged as the ultimate funding currencies, surpassing the yen and swiss in terms of appeal and euro-dollar is where most of the price action has taken place. the dollar story and more the euro-dollar story in relation to the election? valentin: overall, you could attribute some of the price action and some of the money, to risk reversals leading investors placing hedges, or bearish dollar hedges, especially against currencies like the yen or indeed the euro-yen this respect, and talking to clients, it is the case that uncertainty surrounding the presidential outlook is making them more bullish on the yen versus the bureau. is the preferred hedge against a bernie sanders outcome and all of these scenarios, but you could

attribute some of the price action and risk reversals in the euro-dollar space to that positioning where investors are concerned about the dollar longer-term and part of the reason is the election. do you believe that we are right reversal rates in any central bank? i.e. japan and europe if i am being frank about it? do you agree with that? case of japan,e we no longer believe they are able to cut rates and one of the that if theye fact were to cut again, the negative implication of that may be greater than any positive associated. we are not that -- there yet in the eurozone. nejra: valentin marinov, credit agricole stays with us and we always want your beliefs. facing will be

officials. what you need to know next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic in london. manus: i am manus cranny in london with her. nejra: facebook ceo mark zuckerberg is in brussels meeting with senior officials. is on the media giant charm offensive to ease tensions after coming under scrutiny over user data, privacy, and taxation. nejra: -- manus: maria tadeo is outside the european commission in brussels. is there a with of compromise -- whiff of compromise? what can we expect from zuckerberg? >> what we do know is this is the first he is in brussels in august 2 years in which the company has come under huge

pressure over a number of issues from data protection to hate speech to concerns over privacy overall. you could read this as a pr offensive, charm offensive from mark zuckerberg. officials he is taking the issue seriously and he is committed to fixing some you couldroblems, but also move away from the pr and argue he is trying to preempt moves from the regulators because one thing's for sure and is clear by now, the europeans are serious about tax reform when it comes to digital services. they want increased taxation on some of the american tech companies and have also said they want to get serious on the data and privacy that comes around it. we note he is meeting with the become ther who has face of antitrust and higher taxation for american companies. of what to expect from mark zuckerberg, a lot of this we are told will depend on how proactive he is today on some of these issues. tadeo in brussels.

let's get the business flash nintendo likely to suffer from shortages of its consul in the u.s. and europe due to the coronavirus outbreak. the issue will likely take hold in april. the nintendo switch is hard to find in its home market of japan. bayer.more pain for the first u.s. trial over an herbicide has landed the company with another potential multibillion-dollar problem. bsf are to pay 260 $5 million after a missouri farmer blamed the herbicide for destroying his peach orchards. nejra: tesla's plan to build a plant in germany has run into legal trouble. while berlin considers a challenge by environmentalist. it threatens the ambitious timetable of having the plant up and running by mid-2021.

manus: general motors is leaving australia, new zealand, and thailand by the end of the year as it exits poor performing markets. the automaker will take over a billion dollars in charges, mostly in the first quarter to cover the cost of leaving countries. gm will shift focus to self driving cars and electric vehicles. nejra: that is your bloomberg business flash. show, up on the speculative energy in markets is out of control. that's the warning from scott maynard's guggenheim partners. cognitive dissidents. what does it mean? we will discuss. this is bloomberg. ♪

manus: "bloomberg daybreak: europe come" i'm manus cranny. nejra: i'm nejra cehic.

diamondng 14 from the princess cruise ship testing positive for the coronavirus. manus: let's talk about the other cracking piece. speculative energy in the financial markets. it is incredibly out of control according to guggenheim partner scott maynard, who has a starkly warning. the details, big words in this piece. dani: it really is remarkable. anyone who hasn't to read this thought piece because the language here is very clear. as you've been saying, he calls this an era of cognitive dissonance. yields are low, risk assets are priced to perfection but there are red flags, just the latest that could break the bubble is the coronavirus. key impacts, he says, these are stark. to in china could be slashed

a 6% annualized decline, there can be impact on free cash flow and oil could fall to $25 a barrel without an opec intervention. these are not one all caps. this is a huge -- one-offs. the guggenheim cio says you should be buying the highest policy assets. they play for the future whenever thing is priced out of control. manus: it is a stunning piece. dani burger with the latest on scott maynard. valentin marinov, we are looking at this piece over the weekend and he talks about this cognitive dissonance in credit markets and i like what he says. there is a mindnumbing excuse for investors to see -- to ignore the red flags. when are the biggest cognitive dissonance risks of cognitive dissonance? --cognitive dissonance? -- thein that moment

biggest risks of cognitive dissonance? are unablehe fact we to assess the true impact of what is happening in china and how it will impact the global economy, but yes, we will willfully close our eyes and keep pretending as if nothing is happening or nothing has happened. and thet point of view, reason we do that is because years,d again in recent whenever we are dealing with a shock to the system be if the conflict or a slowdown in europe, sovereign debt crisis, the central banks'policy officials were somehow able to brink, so it is a repeated game where we have all of these shocks that are facing us and we have to make a choice. do i sell now or do i wait? is the better strategy and that is what the markets are doing. nejra: particularly in fx

markets with bobby shocks coming up for the start of the show, you said fx is a bit of a sideshow. what will shake them out of the slumber? valentin: the slideshow comes in part, and the biggest part from the fact the dollar is a high-yielding safe haven currency and does well on the risk on and risk off. you can't do wrong being long the dollar. that has been the case three or four years and that continues. have a very big dollars negative event, which could be the u.s. presidential election if we get another populist president at the home of the biggest economy in the world or it could be a scenario where we see a synchronized downturn which will catch central banks and policy officials by surprise. that could shake us up. we are highlighting that the fed is still the only central bank with some ammunition to respond to the type of shock that has been described.

manus: even powell intimated that monetary policy might be near its age. -- edge. if we pass through the eye of the coronavirus needle, what is the biggest recovery trade for you in fx? valentin: at the moment, i like the euros swiss. we were looking at the factors driving it and it makes little sense at the moment to be buying a currency yielding -75 basis yielding -50, but if we risk, that isin where we see the biggest longs, the swiss francs and the biggest short would be the bureau. -- euros. manus: great to be with you in person. valentin marinov, the head of g10 fx research at credit agricole. nejra: that's it for "bloomberg daybreak: europe." as wethe european open

see futures on the front foot in europe and the u.s. u.s. stock markets," president's day. tune into bloomberg radio, as well. this is bloomberg. ♪

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matt: welcome to "bloomberg market: the european open." i'm matt miller live from our european headquarters in london this week. the cash trade is under an hour away. cushioning the crisis. coronavirus cases in china rise above 70,000. china and hong kong, as well as singapore, pledge extra fiscal stimulus to counter the economic hit. demand sho