days of debate over the budget. the extraordinary summit will nail down a seven-year spending plan, but no time limits have been set. diplomats fear negotiations could drag on through the weekend. one issue, britain's departure leaving it 50 billion euros francine: coronavirus deaths hole. billed either need to be past 2000. or spending cut. hong kong has its first hong kong in -- heading for its fatality. first back-to-back recession. the coronavirus spurred many cancellations of flights. economists forecasting a contraction of more than 1% this turkey has straight rate year. that follows a 1.2% decline for reduction during rising 2015. inflation. andill market bigger dip slower recovery than from the stars outbreak. president donald trump announcing a new round of clemency's and pardons, including financier michael good morning, good afternoon, good evening. this is "bloomberg milken, convicted of securities fraud, and former illinois surveillance." i'm francine lacqua in london. governor rod look oy vey, convicted of corruption and

coronavirus. obama'so sell barack we saw apple yesterday or the day before. we saw a-shares selloff because vacated senate seat. it is difficult to do guidance. fly up tol apply -- puma says the negative impact from coronavirus on sales will four paying customers on the be felt. ship it uses to fly astronauts we don't have a number yet. into space. it is a very fluid situation is it opens the way for private a lot of companies try to figure space tourism, but there is no out what it means for their price tag yet. globalist when he four hours per supply chains and when it will quicktake. and in pick up again. we are watching individual stocks across the board. stocks in europe being supported by the idea that the pboc and daylobal news 24 hours per officials in china will do more quicktake.on to spur the economy. .09.t crude at 58 francine: russia temporarily we will speak with a deutsche banned the chinese from entry. telekom chief executive. the who says beijing's continuing efforts in hubei 11:30 a.m. london time. a lot of it on huawei i'm sure. delayed the global spread by two or three weeks. here is viviana with the first china considering measures such as direct cash infusions and word news. >> the u.k. will end the mergers to bailout and airline industry crippled by the

coronavirus outbreak. nation's dependence on cheap low singapore says the country has skilled labor. enough firepower to deal with in new points phased immigration the economic slowdown resulting system will come into effect in from the coronavirus. january 20 21. he told bloomberg he also field workers must prove they can speak english and they will expects the global economy and the country to have a fairly need an offer for a job paying at least 25,600 pounds as parter negative impact on the outbreak. global supply chainuch on thede is a lot more integrated. therefore, the effects of what is happening in china will have a crippling effect on the rest of us. that is what we think it is important to stabilize the economy. >> you said during your budget announcement that there is money to spend if needed. are you concerned at all, the kind of signal on fiscal prudence you may be sending to investors if it comes to that? >> it is because of our fiscal prudence that we have this large reserve that we could use in

this current term of government. at the same time, we also have our past reserves if we ever have to call in it. if that is the case, we will need to get the approval of the president. i have enough firepower to deal with this for now. [laughter] >> prior to the budget, singapore cut its cost projection to within a range of a contraction of 0.5% to 1.5%. given the budget announcement yesterday, how confident are you that the worst is over? that a contraction of 0.5% can be avoided? >> we will have some positive growth this year. provide at will fairly large fiscal boost to the economy. francine: joining us from beijing is bloomberg's china correspondent.

governmenty is the considering to support the airline industry? >> in addition to more broad monetary stimulus, the chinese government has been trying to support the hardest hit industries. china is considering direct cash infusions, mergers to bailout the airline industry. the largest carriers controlled by the state may absorb smaller ones suffering the most from the collapse of travel. another option being explored in the government suggests a billions of dollars to bailout the industry or offering waivers and more favorable leasing terms for aircraft. discussions are still ongoing and we don't know yet what decisions will be made on the file -- final bailout package. the amended -- airline industry has been roiled thanks to this global epidemic. local airlines grounded enough planes to carry 10.4 million passengers. a very sizable impact here. francine: what do we know about

the latest case numbers? what is the read across for that? selina: we have seen stabilization in the past few days. for two consecutive days, the number of infections coming under 2000. the case numbers coming in for the lowest since the new change of methodology last week. you also had the world health organization saying that china's quarantine efforts, aggressive restriction measures to lockdown people in hubei province have been able to delay the spread of the virus by about 2-3 days in other parts of china and 2-3 weeks in other parts of the world. hubeii province -- province, they are trying to figure out the cases that have not been in the hospital. they are trying to investigate people who have recently bought cough or fever medicine to try

to get a most accurate reading of the numbers. you have people going door-to-door to try to investigate any potential illnesses that have not been investigated -- accounted for. francine: thank you so much. our china correspondent joining us from beijing. we now discuss exactly what the chinese can do with their airlines. this feels huge. this is state intervention. does this mean they think this will last for a long time? >> sure. the chinese government is not really sure what is going to go whend nobody is sure travel will resume back to normal. essentially, what carriers and what they are talking about is basically saying that essentially growth would have to account for over 6% every quarter to come back to the levels that they were in the past. majoruld have to see a

uptick in aviation demand in china. francine: how does this happen? even if this slows down, do people just not travel in china? do we have any insight into how much revenue could be lost by the airline industry? siddharth: we don't have any insight yet into what it could be, but it could be significant. especially with growing concerns about not sure when the virus impact will be fully sorted out. essentially, chinese air travel is pretty subdued. francine: thank you so much. coming up, the u.s. sanctions over ties to venezuela. the russian oil producer said the sanctions are illegal. this is bloomberg. ♪

francine: this is "bloomberg surveillance," let's get straight to the bloomberg business flash in new york city. viviana: we begin with cutter rirways, increasing -- qata airways, increasing its control of a european group after expansion in the gulf afforded by a saudi embargo. deutsche telekom expects its operating income to rise again. it is edging closer to a wireless deal for t-mobile, it's u.s. unit. sprint in a takeover to gain even more market share. sanctioning a -- unit of rosneft, for keeping ties with venezuela and

president nicolas maduro. that is your bloomberg business flash. francine: we are just getting breaking news out of tesla. this is after we understand that it would get -- this is something that we have been watching out for. it will have an impact on the stock. the stock a couple days ago was just above $850. let's get back to top story. a number of developments in the coronavirus outbreak. the death toll in china has no risen above 2000. -- now risen above 2000. the number of people infected worldwide has risen above 75,000. the epicenter has reported the lowest number of infected since the outbreak began.

thank you for joining us. a million questions on who do we trust in terms of numbers? it?do we see is the new methodology just slowing down the numbers as it spreads worldwide? x point of view, what do they actually look at to say whether there is a risk on or risk off mood? >> i think really with the cases of infection, that is certainly significant, but the market needs to be aware that this could still spread to different countries. i think there is a cautiousness, but that the market is willing to look at the data. i think underlining this is the market consensus that seems to be quite willing to take on board if you that this could be a recovery. the said, if we look at best-performing currencies in the month, we still have the yen, we still have the dollar, and these are the safe haven currencies. there is a caution, but you do see some erratic day-to-day

movements because there seems to be this flickering from hope back to pessimism. francine: ok, do we understand how this impacts the economy? how difficult is it to understand the effects of this? >> from a global economics point of view, this is a demand and supply-side shock. localized.side is if you were going to take a holiday for the lunar new year, you don't take the holiday. global supply adjusts. the disruption to global supply. some of q4, you recover it, but not all of it. withis broadly in line past experiences, strikes, bad weather, other epidemics. now the question is we look at the economic data, let's see how this develops. it is difficult to see how this

big -- how big this will be. it is only afterward that you see how big the shock was. what worries me -- typically, these things are not permanent. you get short-term demand-side effects. exposed most to supply chains, things will get back to normal in q3 and q4. we attribute to much of the economic problem currently to the corona issue and not actually the underlying issues in the global economy. if you get a recovery from corona, what happens if the economy is still disappointing to the downside while the markets are priced into recovery? francine: what happens? jane: it is certainly not pretty. if you look at the u.s. curve a little bit at the moment, perhaps it is suggesting that that does not look particularly good. , the look to japan manufacturing sectors were already looking pretty grim.

think that if we look beyond corona, if we look before corona perhaps, we see a chinese economy that was slowing. the chinese economy was going to slow even before the trade war. possibility that central banks and governments will still have to react. asia, we look at singapore, we have seen a big-budget, south korea we have seen some incentive to try to take the edge off the impacts of , it was already struggling. japan had a stimulus package two months ago. that thereis betting may have to be another. there is certainly still reason for stimulus even without corona.

francine: what with the economy be looking like without the coronavirus? we are talking about isolation. --the two conditions --kallum: the two conditions necessary are contained u.s.-china trade war, we got that with phase one, and contained brexit risks, those were the two big factors which tipped global trade and production into recession last year. the conditions are in place for a rebound. own merely delays rather than derails the rebound. when do we get the eventual recovery? if you take another six months rebound, itventual makes you think it will not continue to rationalize production a little more, then you look about effects into

domestic consumption. despite the isolated issues in production. knock on wood, corona is a quarterly issue and by q3, we start to see a recovery. francine: we will have a bunch more on the coronavirus. our guests both stay with us. 12.75 percentage points, that is how much turkey has cut its interest rate since last summer. will they do it again today? we will discuss that next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." i'm francine lacqua in london. 12.75%, that is so much turkey has cut its interest rates since last summer. some of the world's biggest lenders are split over they will do it again when the central bank makes its decision again later today. the majority of analysts predict another cut, dissenters include morgan stanley and barclays. let's get more with our chief economist. what are we expecting later? >> we are expecting a rate cut, francine. we expected 50 basis points rate cut today and that is in line with the central bank's recent trends of easing these increasingly small rate cuts.

inflation is rising. the currency has depreciated. growth is picking up. think the economic conditions are likely to play second fiddle to politics. we have president erdogan, who is very vocal about interest rates and he wants local interest rates -- lower interest rates and we think the central bank will heed his call for lower interest rates. francine: what does president erdogan want and how low should they be before he is satisfied? >> he has been very vocal. he repeatedly said he wants lower interest rates. history tells us we really need to take advanced guidance quite seriously. the central bank embarked on its monetary easing and we thought

the president wanted a 12 percentage point decline in interest rates by the end of 2019 and we sell the markets react badly to this by having a run in the lira. colossalvered the reading that erdogan wanted, but the lira did not react, it remains largely stable. the central bank has been heating fiscal for lower rates. we have not seen that much market reaction. is it because there are still capital controls? jane: this is perhaps not a free currency and that is what the market is thinking. the market wanted structural reforms and those have not come around. investorsatience are going to have? is the risks that the central bank has. with the politics in mind, this is not a case of what they

should -- what the central bank should do, but what they will do in the case of the politics. francine: we also have u.k. inflation figures coming up next. coming up, u.k. inflation jumped last month. what does that mean for the bank? this is bloomberg. ♪ sometimes your small screen is your big screen.

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francine: coronavirus deaths in china pass 2000. hong kong has its second fatality. global confirmed cases top 75,000. china may offer cash or arrange mergers to keep its badgered airline industry in the air after the coronavirus spurred so many cancellations. and time for another cut -- turkey heads towards its sixth straight rate reduction amid rising inflation and a slumping lira. well, good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance."

i'm francine lacqua here in london. a poundbout to start on conversation, a brexit conversation. we are getting cpi month on month for the month of january out of the u.k., down 0.3%. the survey was expecting -0.4%. if you look at year on year, it is stronger than expected, .8%. core, 1.6% instead of 1.5%. you can see what pound is doing, 1%. -- 1.31%. than expected, but inflation forecasts, the number to look out for is core year on year, 1.6% for the month of january instead of 1.5%. rabobank joins us. and kallum pickering from berenberg. january is higher than expected. if we get stimulus on budget

day, march 11, what happens to inflation? you have this uneasy mix of weak supply growth because the labor market is tied in an business investment is weak. demand growth in and likely fiscal stimulus in march, which i think on its own could add percentage points to gdp this year. when you have this demand-supply imbalance at a time when you're supply constrained, that is the recipe for inflation you can see it in labor market. bank of england has hiked interest rates twice. my bet will be after this short period of dovishness where the bank of england is warning markets will cut if the economy is weak, i expect that. it recovers into the second half of the year. hikinge could see

interest rates. francine: the timeline could come at a time where we are still uncertain about their relationship with e.u.? it, but baderdo economic policies can give you an inflation policy -- problem. when the bank of england looks at this mix, you have persistent uncertainty, which weighs on that on its own should push up inflation and inflation expectations. we are not expected the bank of interesto hike rates by several basis points peerages to keep inflation expectations contained would make sense. the bank of england's medium-term island -- guidance for 18 months is that if global economy and the u.k. economy improves, the bank will hike interest rates. francine: do you agree with that? jane: i am less worried about

the labor market because i believe they have not been investing, which we can see in the data, because of political uncertainty. they have been using labor, which is quite cheap. suspect that if wages rise to a certain degree, they will not use it. i am worried about inflation coming from the lack of investment. lack of investment is you have this capacity and therefore you are likely to hit capacity constraints. that said, if we look back on the bank of england's monetary policy report on january 2, they revised lower their growth forecast. yes, we are expecting some stimulus from the chancellor, but he could be constrained because growth expectations are lower and that is what he will

have less money in the coffers. is what the bank of england are doing as well. hence they did not move on january 30. key for january was the -- the bank of england revise its growth 1.4% to 1.1%. you have a 2% inflation target. francine: this is for the coronavirus. kallum: in trade terms, much of the u.k. trade is with the big e.u. and the big u.s. while domestic demand is firm in europe and the u.s., u.k. trade does fairly ok when you have emerging-market problems. only 3% if you get export growth to china.

what matters to me is what is the growth forecast for europe and the u.s.? in the bank of england, it is potential growth. if you have a 1.3%, 1.4% forecast, that is above the bank estimate potential. francine: but at the same time, we have no idea what the future relationship is with the u.k. and the e.u. agreement, how pushy are these forecasts? always -- we already know at least through 2025 the government is saying we will have technology in place to reduce that. that could bring prices to rise. so we get another sort of inflation. it is not caused by excess demand, it is because there is less supply. that is another type of inflation that will be coming to bat because the consumer is doing better, that the consumer is more confidence.

it will drive down consumer confidence. that is a significant possibility that is not very attractive. germany we know is exposed to china very much because of coronavirus. that could slow down u.k. potential, too. if we look at 2017 by the referendum in 2016, the brexit referendum, u.k. growth did a lot better, and one of the reasons for that is that it was a decent year for eurozone growth. that helped slow growth. germany was impacted by coronavirus. i think that will impact the u.k., so we have the sort of trade measure. francine: the concerns about germany is through possible tariffs, that president trump could put on carmakers. kallum: it is unlikely that the u.s. and the e.u. will have a trade war. there is little appetite for a trade war outside the oval office. when it comes to the impact of

germany on the u.k., the key to german domestic demand, not how -- germany has automatic stabilizers in its fiscal policies, which stabilize employment when you have these fluctuations in global demand. if you look at german headline gdp growth, it looks very cyclical. of the fiscal measures, asch keep people in work -- long as german domestic demand is fine, the u.k. should do ok, even if corona becomes a problem for germany. francine: thank you very much p let's get to bloomberg first word news in new york city with viviana hurtado. viviana: we begin with the coronavirus death toll, topping 2000 heard worldwide, the number of people infected has risen above 75,000. hong kong reports its second death from the outbreak. the number of patients discharged from the hospital is also rising, now over 14,000.

bloomberg has learns china is considering direct cash injections and mergers to help its airline industry, crippled by the coronavirus outbreak. some of the nation's biggest carriers they absorb smaller collapsefering the o from travel. according to the country separated deputy prime minister and finance minister, this year he still expect some positive growth, but it depends on the global economy and the coronavirus outbreak. economy isthe already feeling the effects of the global slowdown. and this virus outbreak will have a fairly negative impact on the global economy as well. viviana: 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. just over 1.5 hours

into the trading day, let's check in on european stock rivers with dani burger. dani: hi, francine. we start with the biggest mover to the upside on the stoxx 600, houma. -- puma. one of the big reasons we are seeing the rally today is that the 2019 earnings are coming in much stronger than inspect -- than expected we saw a big boost to their apparel business and that is helping out sentiment. deutsche telekom, another share to the upside, trading at its highest and two decades after an earnings season increase of growth in their operating income. the fourth quarter was strong and they are reassured by the topline growth in germany. also another headline that they are getting closer to finally finishing the deal with sprint to sell their t-mobile unit shares, rallying more than 3%. to the downside, renault, falling 2%, joining the fallen

angel club. moody's has downgraded their bonds to junk, so now they are one grade below investment. moody's is saying that essentially it does not look like renault in the medium-term will be able to restore their operating margins to healthy levels, so those shares declining nearly 2%. francine: thank you so much, dani burger with the latest stock movers. coming up, another day high. brent crude has gained more than 9% in the past seven sessions. we will explain why next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash in new york city with viviana hurtado. viviana: we begin with goldman

sachs, planning a hiring spree to wrap up the fees from advising wealthy clients. it is not alone. number has learned teams of advisors overseeing 10 billions of dollars in assets are leaving the bank for rivals, include an ubs and first republic. now to a potential new problem for boeing. the plane maker is inspecting within 400 stored 737 max jets tools,iscovering debris, and rags left in fuel tanks of several newly built craft. the safety checks are not -- are likely not to create a new delay. theydyear boeing hopes will fly again. an agreement opens the way for private space tourism, but there is no price tag at for the orbital flights. that is the bloomberg business flash. francine? francine: thank you so much st on the to the late

world economy. brent crude has jumped back. u.s. sections on russia's -- annmarie hordern joins us now. the iaf are holding a joint meeting. how worried are they about the chinese situation? iea talks about the chinese in their latest report, about the fact that this quarter will be the first in more than a decade that we have seen global oil consumption declined. they were actually expecting a growth of 800,000 barrels a day, but we will see a contraction of more than 400,000 barrels a day. and talks about the energy outlook of short-term demand, which is really what is out on everyone's mine.

-- on everyone's mind. sources tell me that he was asked about this and they don't know the impact yet on the coronavirus and what that meant for demand. what he did say is that they need to mitigate uncertainty, and the big question is whether or not russia is going to come on board for more production cuts, technical committees suggesting 600,000 barrels a day. when asking about incentives, the prince said people do not always agree. there are still details to be worked out between moscow and riyadh to come to a consensus to potentially cut more production. they are already cutting 2.1 million barrels a day. we will have to wait and see for the march meeting. francine: the biggest concern is the breakeven for russia being different from saudi. is it up to -- are they the first line of defense, or is it something that shale oil in the u.s. can step up? annmarie: the first thing coming into 2020 was going to be worry

about oversupply because of u.s. shale. on top of that, they are dealing with the coronavirus because china is a global engine of growth. it is different from sars because of china's place in the world economy and because of oil consumption today. everything comes down to price, especially when you're looking at the opec plus members. the oil price of $40 a barrel, putin has said they can stack their budget too. the saudis are closer to $80 a barrel. looking at the price differential, it is obvious why. when coronavirus was hitting impacted demand, 30% of oil consumption will be slacked in 2020 alone. it is obvious why the saudis wanted to act urgently and potentially cut more. i have to say, one thing is starting to become clear, watching this group apart from the last three years. putin and russia are going to have a bigger negotiating hand at the table. francine: annmarie hordern

joining us from riyadh. jane, i don't know what you do --this kind of 20 outlook 2020 outlook for currencies linked to oil given that chinese demand got widened by 20% because of what we saw with a virus. it is a coal exporter. very much reflected in their. the ruble is very much a significant energy currency, too. it is -- another one, we have seen that one react to the oil price in recent weeks, too. in, domestic politics comes particularly, but the commodities currencies are still really very sensitive to lows. what is the relationship right now between oil and global growth. -- between oil and global growth?

the correlation has been lost. kallum: i always focus on what is causing the oil price to change rather than the oil price change itself. taking us back to 2015, the oil price came down and that was more global oil supply in the market because of u.s. shale. looking at the shocks in the oil market since the advent of u.s. shale, largely in 2015, you have much more competition in the global oil market. global oil supply is much more elastic than it was before, so you have much more of an equally price- of an equilibrium around $60, $65. the u.s. produces more oil with a higher oil price. with weaker demand because of china and the like, you get a cutback in oil production so the oil price is more stable, the inflationary consequences are more muted. from an economic point of

view, we get distributional issues, but from a macro economic point of view, it is not something you have to worry about as much as you did 15 years ago. francine: with us. of the biggest european banking deals has been launched in a decade, but will it mark the start of an m&a in the sector? that is up next. this is bloomberg. ♪

finance, economics, politics. this is bloomberg surveillance. unsolicited foot $.9 billion you're a bid for smaller rival ubi bangka. here with the details is dani burger. dani: hi, francine. italy's banking sector before the deal look for another slow -- slow year of dealmaking. saw ast time an industry tie up this large, we have to go

back to when he 17. before then, it looked like banking deals did not exist in the european market. you can see that throughout europe. it fell off since the financial crisis. bankers frequently blame the patchwork of patchwork regulations as well as difficulties moving money between countries. the deal flow when you look at italy is especially anemic, and the yellow, all coming to a standstill over the last three years. regulars have advocated for consolidation because the banks need to reduce costs and improve margins, and they are dealing with that intense competition from american rivals and negative interest rates. dealmaking would certainly be a welcome change for the lenders. deutsche bank's cfo is one of the people to talk about this. saying that his rivals in europe frequently speak about the need for mergers. >> it is a topic that management teams across europe will need to be thinking about in the background. and ourion that scale

competitive position relative to u.s. banks is something that is an issue over time that we would need to address, and consolidation is an answer to that. moltkehat is james von speaking in the past month. thecine: dani burger on latest with the consolidation phase in italy. still with us, jane foley from rabobank and kallum pickering from berenberg. i don't know if this has an impact on your, but if you have , but this- on euros could go a little way toward helping the block. jane: if you look at the weakness in the year over the last few years, it is certainly -- these are all in the mix. i think in particular with italy, when it is making euroines, it is a

negative factor. whether due to labor market reforms are the political situation, when it comes to the banking sector in europe, you have structural issues which over time need to be resolved. there are two consequences. first, do you worry about the transition mechanism for the ecb, which is trying to stimulate european demand? while you might think that is going to be a problem, if you look at the economic and money data in europe, you do not see supplied side there supply-side issues. it is mainly demand-side. so far the ecb is not having trouble pushing the stimulus through. i worry that during the next downturn this transition mechanism gets very gummed up because of the structural issues in the banking sector. if you focus on the issue of italy, you have an economy which is structurally weak trying to grow. it is undoing some of the

supply-side reforms, and over time those fiscal excesses are accumulating. it is probably a candidate for a debt crisis during the next downturn not yet, that in five years from now it might be a big problem. francine: thank you, jane foley from rabobank, kallum pickering from berenberg. more with tom keene. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?

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[ fast-paced drumming ] francine: coronavirus deaths in china pass 2000. hong kong has its second fatality. global confirmed cases top 75,000. china may offer cash or arrange mergers to keep its badgered airline industry in the air after the coronavirus spurred so many cancellations. and time for another cut -- well, turkey heads towards its sixth straight rate reduction amid rising inflation and a slumping lira. well, good morning, good afternoon, good evening, everyone. this is "bloomberg surveillance."

i'm francine lacqua here in london. tom keene is in new york. a lot more steam those coming from the chinese authorities. no we understand from kyoto, there are 621 passengers infected from the virus on the ship dock in japan. tom: we will go to stephen engle in a moment in hong kong. my story today, besides a huge debate in nevada, is simply strong dollar. that folds into the challenges for a nation like turkey. francine: strong dollar. i have a great chart looking at dollar versus gold, and maybe the story over that is kind of n effect. we will have more on that, but first let's get to number first word news in new york city with viviana hurtado. viviana: we begin with the coronavirus outbreak in addition to what francine just broke about the cruise liner in japan. a number of those development

include the death toll in china. it has risen above 2000. worldwide, the number of people infected is more than 75,000. but since the way of counting them has changed, the chinese province at the center of the epidemic reported the lowest number of new cases. now to hong kong. economists morning that it is headed for its first consecutive annual recession. the coronavirus shut down its battered economy, already hurt i months of political turmoil. last year, hong kong's economy shrinking by 1.2%. this year a 1% decline is predict. u.s. attorney general william barr is telling associates he may quit. he is frustrated over donald trump's tweets and comments about justice department investigations. last week he issued a rare public rebuke of the president. we end withnext january, a new d immigration system goes into

effect. skilled workers must prove they can speak english and they must have an offer for a job paying at least $33,000. 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. tom: thanks so much. let's look at the data right now lots of good conversation on the strong dollar, as francine mentioned, strong gold, equity markets moving after a churning yesterday. the curve flattening. that is important after 14 basis points, 13.55. let's look at your, the weakness from yesterday. the brazilian real -- at euro, the weakness from yesterday. gold, gold, gold -- we will have a chart on that later. francine: i like that you are looking at gold. i am looking at yen, yen, yen. european stocks rising. the fact that china is planning

further measures to support part of its economy reeling from the slow down, giving a bit of support to the markets, which is why we are seeing yen weakness. tom: i will take a long-term chart, going back to the accord back in the 1980's with a booming dollar, strong dollar. here is the ruben dollar of the late 1990's, then down we go. then the recovery here, a strong dollar. dollarttle tip here, the buttressed out to new strength are you really wonder how the president will respond to the new reality of a strong dollar. francine: i like your chart, tom. my chart is more simple, looking at stock valuations. you can see the u.s. to the rest of the world, where valuations are surging compared with the msci. s&p tocally track the book ratio. it is good in earnings season to have a look at this. tom: let us go to stephen engle

in hong kong, our chief north asian correspondent. decades of experience. we can go to north asia, stephen engle, and the headline -- let me read it off the bloomberg -- a total of 621 infected from a ship docked in japan. with the zeitgeist of hong kong in your reporting, is quarantining working? stephen: well, it has to be done, doesn't it? the problem on this cruise ship is you quarantine 3700 people on a cruise ship, which has the air circulation all intertwined, the plumbing, the food -- you keep everybody on the ship and you will have co-infections. that is why the japanese response has been heavily criticized, even as far away as israel, and netanyahu, ar-15 israelis on there, -- there are 15 israelis on there. the move, and now

you're getting criticism inside japan, the disembark asian happening -- the disembarkation happening. there being criticized. you get your temperature taken today, you get off the ship, you go home, you could potentially be a super spreader. there are a number -- are .nother 79 cases it is definitely spreading. about,e: what do we know is it spreading less fast than it used to? if you look at the duffel, it is past 2000, but we had -- if you look at the death toll, it is past 2000, but we may have had encouraging news about how fast it is spreading. stephen: i think that is an encouraging sign about the epicenter, and wuhan. what i was saying was about the cruise ship and the ecosystem

there. in china, come say it is draconian, but it is quite strict, the quarantine in the hubei province and in wuhan in particular, it has at least from the evidence i have the data i have, showing some signs of progress because again, the number of new cases dropped again for a second straight day. and for the first time, i believe, the number of new cases was below the number of people who were discharged. tom: stephen, explain why the technocrats in the medical press of china will not allow in global exports -- experts, whether out of geneva and the world health organization, or out of atlanta and the cdc. explain the why of that? is it pride? sounds like foolish pride, doesn't it, to you and i and others. it goes back decades. i remember in the mid-1970's when there was a massive

earthquake in the northeast part of china hundred hundreds of thousands of people died. they did not invite anyone in. int was a different time china, in the 1970's, post mao zedong's death. i cannot read into whether they are trying to be secretive because they have secrets to be capped, however, there is -- to be kept there, however, they could use the method that is at their disposal. francine: thank you so much, stephen engle, chief north asia correspondent in hong kong. joining us, a guest host for the hour. a global market strategist mike, let's kick off with you. you look at what we have seen so far, as an economist or a market strategist, what do you follow, rate of infections, i know there is a lot about -- a lot of talk about the ship, but that does

not give us an idea of what happens next in terms of cases around the world? >> we have been tracking the daily infection rate outside isei to see what extent this spreading outside the contained area, and there has been some good news in terms of the rate coming down a little bit. but the critical question is, if people start going back to work, is this thing going to spread? that is where there is still uncertainty. all we really know at the moment is the q1 gdp growth is going to be quite materially affected on the downside for china. the trillion dollar question is, to what extent is that going to rebound in q2? francine: that is the million-dollar question. how do you track that? how do you look at data? investment standpoint, it will be more of a v-shaped recovery. if you look at the earnings season at this point, among the

400 companies that have reported, you have one company that mentioned coronavirus, as a risk. so the q1 earnings season for q1 2020, that earnings season will not be as important because it will lower to understand how fast the earning downgrade will pull out, and the selling may go away, could come back on the table. tom: let me talk with both of you on this. sophie, what is the elasticity of companies that cut costs, other it is adidas or somebody else? do they have the ability to come in and right side the income statement, whether it is a one quarter, two quarter, three-quarter shock? sophie: there could be an impact on the first and second quarter, for s&p 500 companies. what matters at this point is look at companies that have exposure in terms of supply

chain. versus others that will be less exposed. much more differentiation within s&p companies. mike, what do you think about this? bruce kasman has this down to 1t doesn't. what is the elasticity to cut cost? mike: the big risk is that the companies do start cutting costs. if this is a one quarter hit and companies do not respond to it with significant cost-cutting, then the impact on the economy should be manageable. if companies in china start to respond to the weakness in demand they are seeing as a result of the outbreak and respond to that by cutting costs in terms of job cuts, then the economic impact would be magnified. our hope is that businesses are able to look through this, but the big question is, how long

will this last? how long until people can get back out and buying stock back in the factories producing goods? until we have more clarity on that, the uncertainty around the timing of the rebound will remain. how difficult is that? people may be scared shopping. some may not want to go back to work. when do you have the first reading of the full impact? let's say that this does not get worse but stays as it is. do you figure out the impact on the economy in three weeks from now, or does it take months? mike: i think it is an externally difficult model, what that will look like, particularly the rebound. there are educated guesses at the moment as to the extent of the impact in q1. , acould be significant drawdown in terms of the extent of gdp growth coming down relative to where it would normally be. we will see on friday, the pmi data will give us the first real

indication of the extent to which manufacturing surveys are being hit by this. the china data could be quite weak, but the question will be to what extent do we and the markets feel comfortable looking through that, given the uncertainty around how long this could last? what it means at the moment for investors is that one's conviction in the economic and market outlook should be lower than it would otherwise have been. tom: very good, let us come back. at tesla right now. it has a nice pop here. this is the south side catching up with the stock. the trend is simple. up we go. i bought it right here. i bought two shares right there. down we go. the secondary offering in a key area, and a nice pop this 9.22, 9.23 on cash flow. where are you going to get a chart like this? this is bloomberg.

-- this is "bloomberg surveillance." stay with us. ♪

."m: "bloomberg surveillance francine lacqua in london, i'm tom keene in new york. i want the two of you to filter -- let me start with you, mike bell -- filter in dollar strength and how that changes the jp morgan use of funds. you have dollar strength and what does it do to equities, bonds, currencies, and commodity investment? ise: normally strong dollar difficult for the relative performance of em equities, and also for commodity prices. so i think what you need for the dollar to weaken from here is that you need the coronavirus fears to dampen down, and you

need a pickup in global manufacturing. things, to see those you would probably cem equity outperformance, and with it, a bit of dollar weakness as the growth differential between the emerging markets and the u.s. starts to widen out a little bit. i think given the uncertainty around coronavirus, the timing is very difficult to say. but our view is that over the next year or so, on the assumption that the coronavirus doesn't get much worse from here, we should see a bit of a pickup and a recovery. with that, the dollar coming down a little bit. sophie, i know suction has a more cautious view on the global economy. have you been -- i know socgen has a more cautious view on the global economy. more linkedas been to the black swan event that we have with the coronavirus.

but going forward, the u.s. dollar does not get support from the yield differential. inn some dollar weakness investors awayll from the u.s. dollar assets. much more to em equities, which mike was mentioning, away from u.s. growth, and that is one of our strategies is to belong on equities. francine: is there a point -- this goes back to my chart that i have been looking at with u.s. stock valuations -- that you believe the market is too complacent because of record this the echo sophie: at point the equity market benefits from a play of liquidity from central banks. for q2, q3,seeing is that there will be a little

room for some correction because of our scenario. having said that, i think that what changed in the current environment versus the economic cycle is the fact that if you take into account this pool of negative yielding in the system, equities tend to behave slightly more like bonds, so having equities in the portfolio becomes a duration call, and you want slightly more equities than in the past. francine: mike, if you look at dollar behaving compared to gold, which i will show you in a second, could you argue this is not dollar strength but weakness of everything else? mike: i guess they kind of go together. it is basically a risk-off trade come in terms of the dollar, and certainly relative to em, which has been hit hardest by coronavirus. but gold i think is getting a bit on the back of this more

medium-term view that if we get trouble, then you get central bank stimulus, and that central bank stimulus is supported for gold. particularly where it is significantly weaken the global outlook -- and the growth outlook and taking it to a place where central bank may have to restart qe, and the government will have more fiscal policy. does $1600 gold signal? mike: at the moment, it is a risk-off trade, and investors believe that if the downside risk to growth were to materialize, given that monetary policy is already close to maxed out in terms of the conventional type of monetary policy, with interest rates and relatively low levels by historic standards, the next phase of stimulus, where it required, told be for central banks peg interest rates at low levels and for governments to spend

more. that combination of fiscal and monetary policy working together would be supportive for gold. francine: this is my chart i was talking about, mike. i found it, tom. it is a hillary special, and it looks at the negative correlation between gold and the dollar. you can see it at eight year lows. what is this telus in general about how markets should be behaving in the future? sophie: i think it tells us that gold does not behave as a proxy for u.s. dollar anymore. the fact that investors at this -- the riskving content for portfolio, but they know that they are regulating the cycle when we need protection. gold is basically one of the best -- tom: very good. socgen andh with michael bell as well.

the international audience, america is fired up by this debate. you will see this on msnbc and nbc. candidates in one new. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." let's get to the bloomberg business flash. let's get to coronavirus p the outbreak is hammering china's oil industry.

low run rates are expected to last at least through the end of the month. the virus has sent demand plummeting. many oil workers are still trapped in their own homes and cannot get to work. now to qatar airways increasing its stake in the shares of british airways, now owning ellen within 25% of iag. iag's ceo will walk -- will leave. itsnd with palladium, record-breaking rally will not stop for a while the metal used in catalytic converters rising above $2800 an ounce per this year it is already up 40% per the reason, expectations in environmental standards will get tougher. that means cars will need more palladium and there is already a shortage. that is the bloomberg business flash. tom: i just want to remind everyone, dollar strength, as

francine mentioning, in weakness really front and center. francine? weakness, focusing on brent. coming up, we hear from the telekom ceo. ♪

♪ we are continuing to ship as per our schedule and seeing strong demand. >> i think we will have to take additional provisions. >> demand is holding up. prices are holding up. >> we are waiting for jobs to come in. sonext week in china again, the usa for the short-term. >> we are highlighting more generally the importance of diversifying the supply chain. >> asia is an important market,

growing market. we are not abandoning it. the impact ofhing the coronavirus on business, adidas and puma say business in china is being pummeled by the outbreak. because some of the components made in some of the sportswear and the shoes are coming from china, they could have disruption to their supply chain but the bigger question is when woodgate -- what they get that chinese buyer to come and get their products? tom: adidas much bigger than puma, 56 thousand employees versus 13,000. let's go to a chart, and i know we know luxury does well, apple like. this is not apple computer. that is over 20 years and that is adidas. that is extraordinary, 24.9% per year, total return of all those

sneakers you have in your closet. , if you: this goes back want to focus on the news, over the last five to 10 news -- years there was leisure year from the younger folks -- leisure where from the younger folks and cool leggings that trained is not to run. run.-- trained us not to tom: with our first word news, here's viviana hurtado. viviana: -- is looking -- china is looking at ways to help airlines hurt by the virus. beijing is looking at cash injections. one would allow the biggest airline to absorb smaller ones. donald trump is overriding his hardliners on japan. the president tweeted "we don't

want to make it impossible to do business with us." he told reporters he is concerned over the use of national security to stop tech sales. -- rob blogvict he was convicted of public corruption. the president also pardoned billionaire michael milken, the junk-bond king who went to prison for securities fraud. bernie sanders moving out to a commanding lead in california. almost one third of likely democratic voters will support him in the crucial super tuesday state. the next four candidates are four toogether between 6%. michael bloomberg is the parent , thener of bloomberg lp

parent company of bloomberg news. 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: it is good to speak with james hurtling with bloomberg news, based out of paris and london and has a grizzled american view. this will be extraordinary, strip ins artes at the las vegas, it will be extraordinary to see. what will you watch for tonight? tom, astom -- james: you know it is typical debate strategy that everybody piles on the front runner to try and drag him or her back to the pack. tonight, you will have an interesting chemistry because bernie sanders is obviously

pulling away from the pack and you have a new entrant on the debate stage who has been untested in the arena with other candidates on stage. obviously i am speaking about michael bloomberg. it will be interesting to see who the crowd goes after. tom: that is interesting. the crowd response will be fantastic and i thinks the -- i think the ratings for this will be off the chart. what is parsing liberal/progressive with moderate and mayor bloomberg's , moving fromting republican to democrat as well, how do you parse moderate versus liberal as we go into this debate? liberal,derate and bernie sanders was fighting with elizabeth warren for the more progressive wing of the party, and he has obviously for whatever reason taken a

commanding lead there. in terms of everyone else, you know they are pretty well divided and it is hard to tell right now. they are fighting amongst themselves because i think there is a deep amount of skepticism observers, party machine regulars, that bernie sanders can actually go all the way. like donald trump, he has a strong and passionate base. once you get beyond that base, it will be interesting to see what kind of support he can pick up. francine: 20/20 is unusual because at this point in the race, usually we would have had democrats still undecided and why? james: they are quite undecided for many reasons, a because

bernie sanders is so unlike by at least a substantial minority of democrats. until theydates run do not have any money left. that is what keeps them in the campaign, and elizabeth warren, they have had fairly successful fundraising operations, and michael bloomberg does not have to worry about that. francine: if i a democratic voter, do i vote for the candidate who speaks to me because of policy or do i think, i want to get rid of president trump and vote for the person who has the best chance? james: that is the $64,000 question. my family works for any number of candidates and we have this debate, they have this debate, and i generally walk away because i have to do the dishes. , you are bell

listening to this discussion and i understand it is not your province to make political talk, but we seem to have reached a new plank in the campaign. as it moves into tuesday in november, do the investors ignore it as a distraction? michael: i think all eyes around the world are on this. the reason the market at the moment is not paying that much attention would seem to be the process, because the underlying assumption, whoever, particularly if it was sanders, but whoever wins the democrat nomination, they will struggle to win the senate. if polling started to shift in some of the key states over the next few months that suggested that that assumption the market is currently making, that the democrats could win back the senate, if that started to change, that is when the market would take more notice at what is going on because the policies

being proposed by some of the left wing candidates in the u.s. come into play. tom: what is the socgen study of how this politics folds into investment? sophie: so we published on etf's today and our take is if you look at what happened over the past three years, president trump's track record is not that ,ad, so the u.s. economy resilient so far, the impeachment process over faster than we expected, and the fact that we got a phase one deal with china where president trump's approval rating is at the highest level it has been. in this context, we have some hedges put in place where we moreve that if we have a liberal contender facing president trump, it is worth looking at the market sensitive

measures, and we think u.s. tech could be a sector under pressure. francine: what happens after the democratic debate tonight? statesthere is a million , but do we trust the polls? errorlls have a margin of of like five percentage points. james: you never really know what the methodology age -- is, and these polls, it can get a bit tricky. the national polls are pretty good and reliable, but that is not how the election goes. the election is a state-by-state vote. tom: thank you so much. it will be a most interesting debate tonight. mayor bloomberg is the founder of bloomberg lp and this television and radio network. coming up next, we will speak to mohammed younis. , theto talk about

distinction of national versus state by state analysis. this is bloomberg. stay with us.

♪ watchingyou are bloomberg "surveillance." we begin with cody, trying to sell its professional hair and nails business in a deal that could be worth as much as 8 billion deals. some of the biggest buyout firms are interested. the biggest auto lender in the u.s. is getting into the credit card business. buyed financial agreeing to

subprime lender car works. allied has been seeking to diversify behind auto lending and last year at bought health credit services. goldman sachs lost two teams of wealth advisors overseeing $10 billion in assets. otheram went to ubs, the two first republic. goldman has about $560 billion in wealth management under observation. that is your bloomberg business flash. francine: tesla shares set to open at a record high. analysts predict energy will fuel the rally. joining us is alex webb. so much going on with tesla and the share price goes

through the roof. alex: fundamentally, the news this morning is that analysts at piper sandler have raised their price target. that makes it the only analyst with a price target above the current share price. everybody else is clearly below it. a majority of analysts recommend selling it. a huge amount of fear of missing out is driving this. tom: let's go to the chart, yield to musk. this is a bond chart, not a parabolic stock chart, and to ciesla, eight percent, 9%, -- to 8%, 9%, 11% yield, that is an extraordinary story.

are they changing their price targets because of the internal financials or the unit predictions of number of cars sold, or are they changing because they are capitulating from auto company, no, it is a tech company? alex: the direction they are giving is there is not enough -- the potential of the battery and the cell technology is not being priced in. that is about 6% of total revenue. billionlute number, 1.5 dollars in revenue last year, about the same the year before, wantinclined to think they reasons to find a more optimistic target price. i don't know if this potential holds. they have had it for years, never delivered on it. value, but the

scale of that potential, sales are a commoditized business where pricing has been wasrmined by china and i skeptical, but i was skeptical of tesla to begin with and look what happened to the share price. francine: we are back with mike bell and sophie huynh. mike, is tesla a microcosm for --ething, for evaluations four valuations that feel like bubbles? michael: valuations between growth stocks in the u.s. and value stocks are starting to look wide. if you look at the p differential, it is the widest it has been since 2000, not quite as high, but pretty stretched from our standards. basically since 2007, growth stocks have been outperforming.

being overweight is a risk and that could come to for ration in two scenarios, the first during a market -- come to fruition in two scenarios, the first during a market -- the second getting higher prices and the value stocks are out on the way up. francine: do you agree with that assessment or do you worry? ofhie: i think the valuation growth stocks must be driven by tech, u.s. tech, where the profitability has been an enormous. earnings momentum has been a strong backing as well as share buybacks since 2017. going forward, i think there could be some pressure not only in a recession scenario, but if you have less earnings momentum,

if you have a regulatory headwind coming through taxation,law and the both components in the equity market would come under pressure. tom: the money question as you stay on board tech, you go growth x to tack? -- tech? we will stay away from u.s. growth which is tech and go into value which is japanese equities. thinke a portfolio and we the long value make sense. tom: mike bell, this is a really important thing. i saw a chart yesterday of diversified strategies coming in at one place on the ark and owning the spx doing so much better. is your tone now to be diversified more, or do you play

more with what worked last year with the s&p 500? michael: this is a year for diversification. last year, you wanted to be long-duration and long stocks, which is an unusual scenario for both of those traits to work out to the extent they did last year at the same time. ander the data will pick up duration will go against you but equities will move higher, or if coronavirus disrupts the pickup in growth we are seeing at the moment, then equities would struggle and duration would perform well. inherent un-hair -- uncertainty, it makes sense this year compared with last year. morgane: mike bell, jp asset management and sophie huynh, societe generale.

this is the commissioner that a lot of men and women running tech companies are afraid of, maria tadeo later with that interview. ♪

♪ this is bloomberg "surveillance." turkey's central bank has embarked on an aggressive easing cycle since july. economists are split on whether the bank will cut again but makes its decision today. justin carrigan joins us from dubai. how problematic is it if they cut again but if they cut again, the marcus is not really on board. is that because of capital controls? justin: that is partly the reason. the market is not fully on board is because inflation is starting to creep up and the lira is showing signs of weakness, although it has had a good year so far, somewhat surprisingly if

you look at the general global backdrop. it has done quite well. the turkish authorities via the local banks have largely kept the lid on the lira weakness so it is a split decision. i think the consensus is at the end of the day, we will see a 25 or 50 basis point cut. tom: one of the hallmarks of justin carrigan's work is -- turkish lira challenges for the people of turkey, this is boyle and oil in -- oil and oil set depreciating turkish lira. it is an extraordinary chart, and the recent collapse of the something of a hold. how are now than

they have done for a couple of saw the least, when we currency crisis of 2018. things were looking very rough for turkey but we have seen in recent months a pickup in economic activity. some of the data in december was better than expected which would be another reason to support the argument that may be the central bank will stay on hold but not -- or not cut as much. byot of this has been fueled fx on the part of the turkish government to boost credit and cut taxes on some of the basic goods. tom: justin, thank you for the briefing. coming up, much more to talk about. we have all sorts of spectrum on the virus, particularly what is going on in japan with the

diamond princess. joining us is christopher grisanti. today's story is stronger dollar, weaker yen joining weaker euros. gold at $1600 an ounce. this is bloomberg. ♪

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♪ tom: this morning, it is simple. dollar strength and gold surges. when will president complain about the harm the dollar is doing to the economy? the president will be watching a different debate at la teatre des artes. they will gamble. in search of value, let us consider boeing, in, out.

this is bloomberg "surveillance." the major idea eme is dollar dynamics and adjusting to it. francine: em frankly also adjusting to the virus on gdp. the immediate threat right now as we are trying to figure out the supply chain. we saw apple 48 hours ago and today we seep uma. that is a -- we see uma. -- puma. turkey cutting its repo rate and we look at what the turkish lira will do in response. tom: that is so distant from the developed economy. how does any economy today move forward with a double-digit central bank rate? erdogan,f you ask mr.

he would say he wants the rate a lot lower. he wants it in single digits by the end of the year and the forecasting they will ease through the rest of the year. the question of concern, it is a good one. you would think on the surface, that is a great gap in real rates, but the reality is you cannot even have that going for it either. are negative, even more negative now after today's cut. it is still an interesting story in turkey. francine: i am looking at turkish lira, not really moving that much when you look at the chart. is it just because of capital controls? it is moving, maybe not as much is it would've been. justin: this move is in line

with at least a median expectation and in line with our economists in dubai who predicted a 50 basis point cut. we are seeing strength creep back into the lira, but it is not exactly eye-catching and not higher than earlier in the day. , we would a hold here see a much more pronounced increase or stronger move in the lira. we didn't get that, so it looks like more of the same. what looks interesting going forward, we will have a more frequent turkish bank meeting throughout the year so it will give markets more transparency as to what the policymakers in istanbul are doing with the turkish economy. tom: justin, thank you so much. here is viviana hurtado. viviana: a number of

developments in the coronavirus outbreak. the death toll has risen above 2000 and worldwide the number of people infected is more than 75,000. the chinese province at the center of the epidemic reported the lowest number of new cases. economists warn it is heading for a recession. the coronavirus shut down and economy already hurt by political turmoil, last year shrinking by 1.2%. for this year, a 1% decline is expected. u.s. attorney general william barr telling associates he may quit, frustrated over donald trump's tweets about justice department investigations. last week, he issued a rare public rebuke. the british government wanting to end the immigration of scale workers.

scaled workers must prove they can speak english and must have an offer for a job paying at least $33,000. 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 do a data check, really interesting data check. a better equity market, curve flattening, yields churning. francine was brilliant on the end. the vix showing the churn in the equity markets. that dxy is a big deal. that has buttressed up the strong dollar. the turkish lira is weaker off the central bank decision, and up $10, 1600 $18 an

ounce. -- 1613 an ounce. francine: it seems that is tempering expectations for a bank of england rate cut. areis weakening, trends turning higher as european bonds edge up. this is on the back of china considering proposals to help the airlines hit i the virus. we will -- by the virus. in total, china's death toll tops 2000, despite hubei province with less new cases. airlineto bailout an industry crippled from the coronavirus outbreak. joining us is selina wang. newsve worse than expected and the number of deaths, but the number of infections is slowing a touch.

is it getting better or do we not know? selina: if you look at the government tally, the situation points to stabilization, new numbers below 2000 for two consecutive days. that is the lowest number of new recent weeks, but the death toll has passed 6000 -- 2000. you have the world health organization praising china for aggressive quarantined efforts which put 60 million people under lockdown. that may have delayed the spread of virus by two to three days in china and two to three weeks outside of china. likewhat does china look march 1, march 2, march 10? time is moving on and the story seems to be evolving. what does the fabric of china look like the first week of march? selina: it is really difficult

to say. in the past, the economy was only running at 40% to 50% capacity. the big auto show that was slated for april has been canceled so it does not look like business will be back as usual in the coming weeks and months. you have seen china's fastest-growing private sector getting hit hard and workers not getting their full wages. some are getting delayed paychecks or no pay at all, with companies saying the virus has not enabled them to cover basic labor costs. a lot of the economy is not running at full scale and it seems that will continue in the near term. tom: right now, we want to shift after looking at what we see in dollar dynamics, we will shift

from the greater political and environmental and medical views over to value investment. christopher grisanti with us. he joins us on the karen -- 28%.drum of a market up i saw a great chart showing returns, double and high single digit, and spx is way appear. do clients -- way up here. do clients want to diversify or do they say i need to get my fair share? christopher: i think it is the latter. clients need to be handled so their expectations can be met. they hear headlines of s&p up 30% and they want the action. it is a different market than last year. clients want high returns.

we are searching for value and not finding it as easily. tom: what is your methodology to search for value. you have boeing, it is on sale. get the tennessee asset -- accent, shares are on sale. chris: boeing is a great example. we bought boeing in the fourth quarter and just sold it fearing it was a value trap. the shoes cap dropping -- drop -- kept dropping. the pyre let's going to have to eat -- pilots were have to going to use the simulator to get recertified,d -- that is a costly thing. boeing is like wells fargo. francine: if you look at

equities around the world, most are priced to perfection. are we talking about a bubble? chris: i don't think they are quite priced for perfection. interest rates are near record lows and 80 ratio near 20 on forward earnings, it is not cheap but it does not remind me -- remember back in the late 1990's when that was in the higher 20's and higher rates and similar numbers for hot technology stocks. we are fully invested. it is more profitable to be optimistic. , we wills grisanti have some good conversations on the equity markets as well with that strong gold call. lira,ooking at turkish 6.07. news, a polling this week in nevada and south

abclina, a linger research, washington post poll, a national poll, and decidedly it shows warren ebbing and the former vice president ebbing dramatically from january 23. mr. bloomberg is the founder of bloomberg lp. stay with us for much more. this is bloomberg. ♪

"surveillance," futures update. dollars stronger, breaking out just moments ago. strength,out to new

yen 110.86. right now, they will be in the vegas.n las they will be at the paris hotel for a debate. emily wilkins will be one of millions watching because this debate is different. candidate,ile on one and widely presumed it will be mr. bloomberg, how does that occur, do they plan it? emily: there is a lot of questions about bloomberg's record and past statements and policies. given his recent rise in the polls, you can bet another candidates are -- a number of other candidates are prepared to

go after him. we willthe first time see bloomberg on that debate stage. tom: you spend a lot of times on capitol hill. do the members on capitol hill understand mayor bloomberg's present policy prescription? emily: he is gaining support on capitol hill. you have seen a number of lawmakers come out to endorse him, favor him, members of the congressional black caucus, moderate democrats. he donated to a number of their campaigns in previous election anles, so he is not unfamiliar name to lawmakers on capitol hill. francine: does a debate convince you to vote for you, or as long as you don't crash and burn it keeps you in the race? emily: i think it all depends on the debate. if you look at past presidential

elections, you have seen key moments where things shifted for one campaign -- one or another but others where everyone exited the same -- same stage they came on. everybody will be waiting to see how he handles himself. tom: what policies come up? are they going to mention china? will foreign policy be a part of this debate or will it be about core domestic issues? emily: i can see china coming up. it is a big issue in international and foreign news. i don't know what questions will or will not be asked, but i imagine domestic issues. the bloomberg stop and frisk allah c could be a question or something another -- frisk question -- policy could be a

question or something another candidate brings up. tom: later in the hour, mohammed younis will join us. out by got another poll abc and others. mohammed younis on the nuances of these different polls, well-timed. this is bloomberg. ♪

♪ this is bloomberg "surveillance."

we begin with the coronavirus outbreak hammering china's oil industry. they are producing 25% less oil than last year. the low run rates are expected to last through the end of the month. productionhas sent tumbling. qatar airways increased its stake in british airlines, now owning a little more than 25%, giving qatar a little leverage in a time of transition. a bay area and aer lingus. rising above $2800 an ounce. this year it is already up 40%. the reason -- expectations for environmental stand old dutch standards will get tough --

standards will get tougher. tom: christopher grisanti with us. on the break you were mentioning the hardest thing for anybody to do now, the profound weight of doing nothing. bring up apple, a value stock, and it was a moonshot straight up from 13 year linear move. how do you do nothing in a time of growthiness? chris: this reminds me of the late 1990's where some of these terrific new stocks or new innovations like the iphone got expensive, but it was a mistake to sell. tom: do guys like you justify holding them on revenue growth doing better than nominal gdp? chris: not only revenue growth, but some of these guys have found ways to expand their margins. apple moving from just iphones

to a big component being services with higher margins is another reason stocks are driving higher. francine: are we ignoring the virus? we don't know what the impact will be or how long it will last. chris: anybody who tells you they know how it will work out does it know what they are talking about. as the market being complacent? we don't think so. we think we will work our way through the virus sooner rather than later -- not certain about ist -- but the smarter money staying in the market and not selling off at this point. francine: if you look at the virus, do we understand the secondary and third round fx? -- effects? lack of components? chris: one is the companies directly in the middle of that, apple, andand even

in the middle is facebook and google that have not had their business terribly affected. you see the reactions to the virus and the enormous stimulus in china. that more lasting effect by the end of this year than the virus itself. and it isis dxy breaking out over the last 24 hours into new strength, 99.5 on the blended foreign-exchange index, a big deal. how does that and a stronger dollar fold into your stronger earnings estimates? chris: i think it is germane but it is more of a symptom. we look at that is the effect of the underlying economy. i look at that and do not see disaster from multinationals. cart,his is horse before to use the analogy in english.

ands the horse and the cart you are saying the horse is the american economy doing better and the dollar strength follows on. chris: you look at the dollar strength and say that is bad news. that shows we are right about the underlying strength of the economy. francine: what if the economy was so strong that inflation pick up and that changes our fed calls? chris: maybe, but we have been saying that for 10 years. until you show me better evidence of that, like we still have the 10 year driven down by the virus lower than 1.6%, i just don't see it. my first whiff of inflation would probably be happy news, a steeper yield curve or something like that. i hope you are right, but i fear inflation is nowhere to be found. francine: chris grisanti, thank you.

pastavirus deaths in china 2000, global cases pass 75,000. this is what your markets are doing, a lot of focus on the dollar. strong dollart effect chart coming up. ♪

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

♪ shift as continuing to per our -- ship as per our schedule and seeing strong demand. >> we have to take additional provisions. >> demand is holding up, prices are holding up. >> we are waiting for the jobs to come in. >> we are safe for the short-term. iswhat it is doing highlighting more generally the importance of diversifying sources of supply, supply chains. >> asia is an important market, growing market.

we are not abandoning it. francine: those were some of the executives weighing in on the impact of the coronavirus. we are getting breaking news out of houma. -- puma. 70 of its stores in china are closed, 40 remain open. let's get back to chris grisanti. when you look at the coronavirus, is there part of the market that would not be affected by this that you want to pilot to? chris: everything is priced related. there is some odd things going on. we are shareholders of activism -- activision and video gaming has soared as people cannot leave their homes in china so revenues are pouring into that area. thereefore, in weakness, are big market darlings like

facebook and google trading at slightly more than market multiples but growing at two to three times the metrics that are not greatly affected. i would take advantage of those and i would not go too much to cash. that would be a mistake. tom: how do you play retail? how do you bet the consumer? chris: that is hard. we are redefining retail a little more broadly and what is digital retail? streaming, digital plus, apple tv. the consumer is spending its money now on roku and things like that, and that is exciting. tom: or minecraft. amazon, is it a value stock? value look at it as metrics or boring cardboard boxes? call amazon hard to

a value stock at $2200 a share, but if you look at amazon priced to sell, adding in the sales from third-party folks, they fell through. we can count those as sales for amazon and they are selling at a cheaper scale than walmart. amazon is not the space shot you think it is. tom: this is like a tom galvin analysis price sales at the top line. chris grisanti with us. with our first word news, here's viviana hurtado. viviana: china is looking at ways to help airlines hurt i the coronavirus, considering mergers and direct cash injections. one proposal would allow them to absorb smaller ones that hurt the most. president trump is overriding his hardliners on japan,

stopping -- tweeting, we do not want to to be impossible to do business with us. he said he is concerned over the use of national security to stop tech sales. -- he wasemocrat convicted of public corruption. pardoneddent also michael milken who went to prison for securities fraud. bernie sanders moving out to a commanding lead. one third of democratic voters in california will support him. the rest of the candidates are bunched together between 12% and 14%. the founder and

majority owner of bloomberg lp, the parent company of bloomberg news. 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. tom: with a vengeance in the last 48 hours, we have been inundated with this poll, that pole, a third and for -- that poll, a third and fourth poll. been -- isnis has with gallup and they have been doing this since the 1930's. you guys do first rate analysis of the mood of america. is it different than four years ago? sophie: it is, notice of -- mohamed: it is, noticeably. today, 61% of americans answered yes to that question, the highest recording of that metric since the 1990's.

tom: axios with the daily messaging of the trump positive, record high versus the month when he took over in office, what do you read on the president's popularity as we go into the democratic debate? mohamed: the approval of president trump currently is one of the highest we have captured since his presidency, 49% approval. that being said, people are generally interested and involved in following the election. most americans say they are following it closely and most are following it more enthusiastically than other elections, although historically it is not much higher than in the past. president trump is enjoying one of his stronger moments relatively speaking throughout the years of his presidency. francine: are the margin of

errors bigger than in the past? mohamed: no, they are not. they are about the same. approachesdifferent in how they ask questions and wait the data. some -- weight the data. by party to weight data but we do not do that. president trump has had one of the flattest approval ratings of any president in modern history so we have not seen a lot of movement, but we are seeing some movement and that started to uptick after the impeachment trial went on to the senate. francine: why are there so many undecided democratic voters if we don't know who to vote for? mohamed: people are still obviously making their decisions. ,ne of the questions we ask which party seems more united or divided? more americans see the democratic party as more divided.

they are competing with one another. seven in 10 democrats say they are satisfied with the candidates that are out there now competing. the same pretty much for republicans, so people are satisfied with their choices. where you find the dissatisfaction is with the process. the you ask, do you think electoral process is proceeding as it should, 52% say no. when you ask about the honesty elections that honesty of honesty of64 -- elections, 64% do not believe the elections are honest. tom: what do you see in your analysis of the negatives of the different candidates? mohamed: in terms of favorability, it is interesting. president trump, the incumbent , 50 2%pproval

favorability two on favorability. we saw the most movement with president -- vice president biden. , 51% at 44% favorable unfavorable. bernie sanders on elizabeth warren, not a lot of movement. the interesting thing to watch our mayor buttigieg and klobuchar because 25% of americans still do not know who they are. people who are very well known are much more likely to do better than those who are less known. klobuchar and buttigieg have to explain who they are to the rest of americans and get on the radar. francine: when you look at the impeachment and the controversial pardons yesterday, does that move the polls? sometimes it feels like it is inside washington and i don't

know if that makes a difference to the voter. mohamed: that is a great question and the answer has driven the changes we have made tracking these answers. the americans are more focused on local realities and primarily the economy. what are the issues you care about when you vote for president, 28% said the economy is first followed by health care. the inside conversations about impeachment are not on the front lines of most americans' minds. daily but weull poll-- pull daily that daily but we stopped doing that. impeachment was more akin to what we saw with president clinton than what we saw with president nixon in the sense that it did not seem to bring a

lot of folks outside the democratic core to the cause and say that the president should be removed. tom: what does gallup see in the arch debate between the popular vote?nd the electoral tell us what you have studied about the all in popular vote versus the state-by-state vote. mohamed: that is the crux of the matter in so many of these contests of recent history. with the electoral vote turning out differently than the popular recentre frequently in generations, it is more difficult to predict the outcome of the election by the popular vote. it is like basing the outcome of a basketball game by how many free throws each team shot. it is much more complex to get a

representative sample. we focus on the national outlook, and the metrics we follow at our election center really has those five or six key metrics that proved to be the most important in previous contests. things are changing in american politics and i am always cautioning people against assuming the past is the future. the american public is viewing about their own lives and their frustrations with the process themselves, we saw some of that after the iowa caucus. we will be focusing on how is the process unfolding for the american citizens? are they satisfied with their choices? what changes would they like to see take waste? francine: mohammed -- take place? withine: mohamed younis

gallup. michael bloomberg is the founder , thewner of bloomberg lp parent company of bloomberg news, and he is running to be the democratic candidate. he will be on the stage tonight. this is what tesla is doing premarket. we had a couple of analyst calls. pre-markets. 8.2% we will have a full round up of tesla and the auto sector next. this is bloomberg. ♪

♪ announced that you are not just going to do discount brokerage, you are going to give way brokerage for free.

if i want to buy stock, i call schwab and trade for free. how do you make money? >> a long time ago, we started taking commissions down and that is how we started this, with lower prices along the way. finally we got down to $4.95. i said, we are so close to zero, let's go there. i have had somewhat of a passion for what the success of google has been. they have made search free and they do very well by offering free search. similar in our case, we think we will do very well offering our services for free for transactions and that is the commodity part of the business. the rest of it, if people need help, advice on different kinds of things, managed accounts, banking, that kind of thing, but the fundamental service is free. >> i shouldn't worry about

charles schwab not making money? >> you shouldn't worry about it. we are giving up 4% of our revenue. tom: unless you lived it, it is incalculable the effect that mr. schwab had on the business. it was an extraordinary -- extraordinary what an outlier he was and now a philanthropist in san francisco. david rubenstein speaking with mr. schwab, wednesday at 9:00 p.m. eastern. just a good sent -- set of interviews and this is someone who profoundly changed what we do on global wall street. single best chart with chris grisanti. stock, stock, stock. forget the powell put, it is the power -- powell paul. -- call. accommodation,

rates are going higher, no they are not -- no, they are not. you are beholden to central bank policy. how do you deal with it? chris: don't fight the fed, and you look at the coronavirus and what is that doing? making the fed more dovish and adding stimulus in china. francine was talking about where is the bubble? you look at sovereign debt, german bunds, john -- japanese debt, the huge bubble seems to be sovereign debt. with one third of the international yield curve below zero, it is something we have never seen before like mortgages in 2008. francine: what does that actually mean? in europe where we are seeing real negative rates, people are saying this could hurt social cohesion and could cause protests in the street.

are we underestimating the secondary effects this could have? chris: the honest answer is that nobody knows. for us, equity investors especially on the value side, we are feeling the tailwind of the low rates because it makes the market equities seem more attractive than fixed income. you are right, people tried to predict that. we keep seeing inflation around every bend and it does not end up being true. tom: have you shifted your actuarial assumption down, thus creating a new net present value analysis which leads to higher multiples? chris: absolutely. if you somehow have a mathematic wizard who could divide out the reasons for the high sovereign, these reasons -- stocks are just

worth more in an environment 1.5% versus 4%. that is the tailwind we have been riding for 10 years. francine: chris grisanti. we hear from the deutsche telekom chief executive, tim hoettges. it is a conversation about 5g and huawei. this is bloomberg. ♪

♪ this is bloomberg "surveillance," tom and francine from london and new york. deutsche telekom's businesses are picking up steam as they edge closer to a deal with t-mobile. we spoke with the chief executive tim hoettges and matt miller asked if they would be able to give money back to shareholders. tim: without investment into infrastructure you will not convince customers, and that is what we did over the last 10 years, investing a little more than the competition, and this is paying off. we are leading the performance test.

in 12 markets, 11 we are number one and this is where we get a payback. and is creating cash flow enabling us to invest and invest to pay the dividends. we had an increase by 10% over the last six years over the dividend year-by-year -- year-over-year. we decided to cut the dividend our.5% and the yield investors would get back, we want to do this integration of sprint in a perfect manager -- manor. comingted this supervalu from the merger, 43 billion of synergy by integrating the networks. groundrgy to gain against at&t and verizon. our attempt is to become the

number one in the u.s. market. matt: when you talk about procurement and vendors along with 5g technology, there is one issue i think of. nancy last week was talking about if you use huawei in your network, you are essentially doing all your business out in the open with the chinese state police. she may be getting a little dramatic, but are you concerned if you use huawei equipment building at your 5g network in willny that the u.s. retaliate against t-mobile and you american assets? -- your american assets? tim: we are always very concerned, paranoid about the security of data and the network infrastructure. we are the enabler for a lot of industries with our technology which we have provided. that said, in the u.s. we do not have that issue.

we have nokia and ericsson being ofloyed in the architecture the access and core network is totally china free. europe is a little different from this history of how we built the networks. our main focus first on the software is that we control the ouryption and steering of software. second, the vendors. third, the software which we can better control are not the big guys we see in the world. on top of that, a security driven technology where we are controlling and highly advocated industry not as an being provided out of the industry, together but under the lead -- leadership of the tech

operators. francine: that was the deutsche telekom chief executive with matt miller. european stocks up. a conversation with the e.u. commissioner of affairs margrethe vestager. ♪

♪ >> singapore says it has the resources to support the country for the coronavirus. installation lives. u.k. prices rise for the first time in six months. pushing gold up. a bullish price target. we will talk to one investor

that was burned on negative options. welcome to "bloomberg daybreak." i'm alix steel. the thinking is that the government will come to the rescue of countries struck by the coronavirus. the euro-dollar going nowhere. the dollar hitting a five-month high, the highest since october and crude has the longest winning streak as the coronavirus dominates headlines.