build up a risk the next week or so. within the closing -- romaine: the closing bell here. we are ending the day off the lows. dow, s&p, each down 0.5%. the russell 2000 in the green. transports in the green. up.ade domino's also up on the day. most traded stock only down 0.3%. stock talking about a that continues to attract attention. joe: they don't have much of an

operation yet. not much to be disrupted. romaine: let's talk to our reporters. abigail? >> i want to check in with this cross asset chart. we have bonds are the winner in pricedtreasury futures slightly above the s&p 500 by 50 thes points, but net-net, s&p and bonds are higher. everything else is lower. china is down just slightly in blue. in orange, we have emerging markets, overall taking a bigger hit wn bottom, copper in pink

and crude oil in yellow, those commodities that lag risk assets. tat could be a bearish ell on volatility ahead. >> the chipmakers are getting hit the hardest, off 1.5%, relative to the s&p 500, but if you look at this chart, i want to put the underperformance of the stock into perspective. i'm looking at stocks relative to the s&p 500. over the long term, they are still outperforming at a ratio , so you are still near the 18 year high despite today's underperformance. on a relative basis with the chipmakers holding in there. >> it was a strong day for real

estate stocks amid a week stock market. stock market. currently that is earnings driven. they are leading the game today. of a strongcative earnings season for real estate companies. if you look at the ratio of reit's that have beaten analyst estimates on operations and compare that to the number that have missed, that is 12:1. real estate is outperforming the market strongly, more than 7%, the third best performing group behind on the utilities in tech, so despite this risk on the field to the market we have seen how treasury it is yields are dictating the leadership of the stock market.

you can see that 10 year yield creeping down towards record lows, the 30 year falling below 2%, only to basis points off its record low of 1.9%, so it will be interesting to watch the stock market going forward. if we get a backup in yields, there is the potential for major rotation in the stock market. romaine: thank you. dropbox, the, fourth adjusted eps $.15 the estimate $.14. they also reported revenue of $446 million, up 19%. shares of 9% after hours. guest.ill with us is our to you.ome back before the bell, you were talking about the strength in

the regional fed survey. view ono get your -u.s.h ex it seems to exclude the impact from the coronavirus. --heard calls that 2020 what does the growth picture look like for you for europe were generally? >> the biggest thing to remember with europe is they have had one of the most savage nonresearch lastetrenchment over the quarters. they have seen an average headwinds of 73 basis points on aggregate years in gdp thanks to inventory contraction. has gotten elevated or relatively elevated in the 2016

and 2017 acceleration of activity in the eurozone, through 2018 and 2019, they have contracted substantially. that is one of the reason sentiment has been so poor in european manufacturing because they're suffering from this brutal inventory cycle. demand has held up well, like the global auto industry, said demand looks like it isn't a better position than this business flash inventory cycle of the european manufacturers in the broader european economy have gone through. if you look at employment numbers, government spending, some of the investment numbers, it doesn't look like your past weekend as much as growth has slowed down. a lot of this is because of the inventories, and inventories can only slow growth or boost growth for so long before things kick into reverse and go the other way. you're going to see a substantial reversal of the inventory story in q2 and q3 of

2020. it will probably be a positive contribution from inventories, as in adding 0.2%, 0.3% per quarter. that is a lot of the difference over the past year, so it doesn't take up much from other parts of the economy for european growth to turn around and do better in 2020. this year a big story is we would see a pickup in europe, in asia. maybe that differential between the growth in the u.s. and overseas will narrow a bit. is that still the story? >> because of the virus, we won't see that in asia. coming into the year i thought asia would be the big trade story.

the euro, i agree with george, but worry about the manufacturing sector. wherey is in a situation china has said take huawei or else. you still have to deal with the brexit overhang. no one believes working to get a trade deal with u.k. in 10 months. there is a lot of pulling in both directions. joe: george, let's go back to the risk assets in the u.s., a little surprising that markets are not taking into account more downside risks from the virus. you posted this to a lot of people. posed this to a lot of people. much do youhow attribute the strength of the

central banks versus the fundamentals we have seen since the market got into a tear in q4? most frustrating things analyzing the interplay between economies, central banks and financial markets is that it is a reflective series of systems. when one changes, others change, and it is not clear how they should run. is thaty with the fed basically they thought they could tighten more than they could come up more than was prudent to do, not by a lot, but that for some to cut a couple times in response, and now they have basically said we are pretty comfortable with the wrists as far as inflation goes. we are not going to do anything. kind of regardless with what goes on everywhere else in the economy. you will see ao,

positive response from risk assets because you're getting a green flag bet funding because will stay low and real rates will stay low and inflation needs to run hotter. one of the responses we have seen is the activity in housing. the last two months of housing data, that will keep happening. ofntually weather because the coronavirus clearing up or whatever transitory issues might come up, we will see the economy respond, then the fed will have to reverse itself as inflation catches up. othermay need to be factors this year to make sure they get to the core to percent core 2% pce.to the

romaine: thank you. great to have you. that does it for the closing bell. "what'd you miss?" is next. we will look at last nights's presidential debate. from new york, this is bloomberg. ♪

romaine: live from new york. joe: i am joe weisenthal.

scarlet fu is off. romaine: here is how stocks close. joe: "what'd you miss?" romaine: morgan stanley agrees to buy e*trade, the biggest wall street acquisition since the financial crisis. the japanese currency posted its biggest two-day decline since 2017. we will discuss. , theoronavirus impact airline industry expecting his first annual decline in more than a decade. the ceo of the international air transport association joins us for more. joe: for more on that big wall street deal, let's bring in our guest. it,k market not crazy about morgan stanley down 5%. is there anybody outside the company says this make sense? >> there are people that believe

this makes sense. in the longer turn if you're another revenueal, you havethie stream at a time when they created their targets. they are trading above where they were at the beginning of the year. doinger, they are still better than where they were before. their pretax margin targets are 30%. there was some concern about the valuation. e*trade had come down when itantly from 2018 was $66 a share. when you consider the premium, 20% plus, for e*trade, do you think the returns, the additional customers in the deposits, and whatever exposure this gives them to the future, young people, is that the idea, is that worth it? >> this is what he had to say

about the rationale. we just put at risk 4.5 months of earnings to buy an iconic institution that will improve all financial models. this is a no-brainer from that perspective. , it is not about the stc he longer-term, but more about the valuation, does it make sense. they did pay a lot. it will be accretive for the next six years, so short-term, a little bit painful. joe: does this marked the beginning of a flurry of deal fintech online bold fonts to these big companies? >> before this, the big question is why didn't goldman sachs do

it. they have been trying to build it themselves. that will also take time. is this an offense if her defense of deal. it can be seen either way. they paid a lot of money to get ahead in an industry that is enormously competitive. romaine: a lot of people flagged this idea that the deposit growth come with idea that morgan stanley has been trying to grow that deposit based, but as a percentage, it hasn't gone up. it was 21%. the acquisition brings it up to 26%. when you have long-term rates at 1.5%, that is pretty good for him. is that a huge factor with regards to profitability? >> it is a smaller piece of the pie now. the recent goldman and morgan stanley want to change is that it lowers your cost of funding to have deposits.

that is one reason they want to do this. you can sell these customers lending products, investment .aking activity over time romaine: when you talk to james about today, did he talk whether he is sticking around? he has been there a while. to do a big acquisition like this, it will take time to get this the regulators, integrated. i assume he has to stick around. >> presumably this is his biggest day, so he wants to see this through, but there is a time when he does step down. aasked whether he would need wealth management person to take over. he says that doesn't necessarily need to be the case. romaine: the big deal of the day, morgan stanley and e*trade. coming out, sparks flying at

last night's u.s. presidential debate has six democratic candidates took the stage. that as wellabout as what comes next in the race for the white house. this is bloomberg. ♪

>> he has not managed his city well. of stuff get a lot done. he had stop and frisk, throwing 5 million black men up against the wall. sign has had women nondisclosure agreements for sexual harassment and gender discrimination in the work race. >> i don't care how much money

anyone has. you have to come forward with your tax returns. some of theere attacks leveled against michael bloomberg, the founder and owner of this company, last night in las vegas. he was the newcomer on stage. they welcomed him by making him the main target. joining us for more is our bloomberg political reporter in washington. michael bloomberg's debut to much of the world, and much of his rise has been predicated on this idea he can go one-to-one to one with president trump in the general election, and i'm curious his performance last night, which is getting criticized this week, weakened that argument going forward, that he is an electable candidate, how much of a probable be that for him in the week ahead? >> he was the cousin off of her of the debate. when you watch one of those

shows and they try to perk it up bringing in a new character? like those characters, he took public programe after it aired. there are a lot of other factors. that we arething is heading into the nevada caucuses saturday, something people are talking about, and that is hard to do with advertising. you can buy advertising and get thatname out there, but has more influence over their view of things. money gets you a lot of attention. it got him a lot of attention. states, i those two know mike bloomberg himself is

not a player in that, what is it exactly that democratic voters are trying to choose in a candidate? is this someone they want to be trump, or are they putting on specific issues? >> the two biggest thing voters are looking for, electability is big, but the second thing is somebody they can connect with in some way. the winning candidate tends to be someone who gets people to feel like they get them. where you are seeing the struggle is the electability question has distracted the candidates themselves from that other question. the very opening salvo in the debate was bernie sanders talking about stop and frisk. the way he talked about it is this would depress black voter turnout. that's not how you talk to black voters. talk to him, not how it will affect them, and that is where

the electability thing is muddled. aboute have been talking the bloomberg campaign, and that got a lot of fascination because of how much money they are spending and the rise in the polls, but bernie sanders is the front runner, and after last there is there any sign is an opportunity for any of the moderates or anyone else to or the fact that other candidates are subdivided puts him in a good position going into super tuesday? solidnie sanders has a plurality with a quarter of democratic primary voters in the poll so far in the states that are about to vote, so that puts him in the position of a front runner, but that is not a lot. there are a lot of people who support someone else. is definitely a

front-runner, not a strong front-runner, but it doesn't really matter. donald trump did not win a majority in a contest in a republican primary in 2016 until long into the debate season. -- the primary season. he make continue to rack up delegates and be the front runner unless an alternative emerges. there are so many people jockeying for that with that go on aill have to lucky streak, winning streak. romaine: we will see how far that goes. let's get a check of the business flash headlines. theflags tumbled today, company reported disappointing fourth-quarter results and cut its dividend and warned of lower earnings. twolso terminated plans for

theme marks in china after its global dilemma and partner defaulted on payments. appleerg has learned that could let users choose third-party web browser and mail application as their default option. apple is responding to criticism it has been providing an unfair advantage. a former tesla engineer is heading up another electric vehicle motors backed by saudi arabia's sovereign wealth fund, which invested more than $1 billion. they spoke with broberg about securing more funding. raise more tod to accelerate growth of the company because we have a wonderful window of opportunity for the next few years. we want to accelerate our growth. we need more capital to do that, and we need to accelerate the growth of sustainable mobility to the world. that premieres friday

at 9:00 p.m.. from new york, this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?

can you help keep these guys protected online? easy, connect to the xfi gateway. what about internet speeds that keep up with my gaming? let's hook you up with the fastest internet from xfinity. what about wireless data options for the family? of course, you can customize and save. can you save me from this conversation? that we can't do, but come in and see what we can do. we're here to make life simple. easy. awesome. ask. shop. discover. at your local xfinity store today.

>> i am mark crumpton first word news. roger stone was sentenced to s and four months in federal prison. november.victed in the sentence is in line with what the justice department acommended after it overruled longer term sought by prosecutors. roger stone is the six person to be convicted in connection with

robert mueller's russian investigation. says theresident putin ousting of the country's prime minister and cabinet reshuffle that caught many off guard last month was not unexpected. in an interview, he remains vague about the reasons for the move. the reshuffle came hours after he announced a controversial constitutional reform during his annual state of the nation address on january 15. it was widely seen as a strategy for him to stay in power well past the end of his term in 2024. a united nations spokesman said the world body is very alarmed about the safety and protection of over 3 million civilians in syria. reportersts to following courts of heavy air strikes and shelling in northwestern syria. >> a massive cross-border

operation in the northwest is currently underway to assist as needs are growing. trips ofred 27 humanitarian assistance crossed through the cross-border checks last month, compared to 928 trucks in december. this is the largest amount of eight the united nations has sent across the border in many months since the operation was authorized in 2014. >> hostilities are now approaching densely populated areas in syria, which have among the highest concentrations of displaced veins in the northwest part of the country and serves as a humanitarian lifeline. portugal's parliament voted today in favor of allowing euthanasia and physician-assisted suicide for terminally ill people. the landmark boat left portugal post to be one of few countries

in the world permitting the procedures. the country's president could still block the legislation. hundreds of people outside parliament protested the measures. global news 24 hours a day on air and on quick take by bloomberg powered by more than 2700 journalists and analysts in over than 120 countries. i am mark crumpton. this is bloomberg. currency markets bursting to life, the dollar emerging as the winner, rising by most since september. the yen suffered its biggest 2017 decline going back to joining. us for more analysis now joining us now for more is our guest.

what is behind this? is this a haven play? the intensity of the inonavirus is concentrated asia and hasn't affected u.s. activity so much. residual 20% to 25%. the ecb said they could cut rates and that would help them. there has been a lot of capital , more than japan expected, affecting the yen. of: the yen has gotten a lot people's attention in the last few days. is related toat the coronavirus? >> that is a hard question

because it has happened suddenly. there have been some lingering factors, as i mentioned before, some discussion of merger is they and then there coronavirus, so we are not sure which one it is. romaine: is the general issue that these will be temporary? we will see a snap back to normal? hoping and is praying that will be the outcome. i think what is priced into the market, however painful this isms now, what is priced in

somewhere between expectation that we go back to almost normal . there is some sense that maybe this will be with us for a while, but not a global pandemic. where we get the mega fiscal stimulus people are expecting. we see spending in singapore, japan, china, how does that change the picture, potential trading opportunities? likes nothing better than a risk policymakers respond to. coronavirusout that fades the same way sars phase after a couple of months, but we have central easing and stimulus akish economic activity

we were seen, it might become a lot better. romaine: let's look further ahead. you are seeing this dollar trend now. when we talk about trade issues in the u.s., now they are seen by the current administration. with this become a factor as negotiations, u.s. negotiations with europe, etc.? situation is dormant until the election. seeing consumer prices run up is not a good thing if you're running for reelection. afterwards, it is important the commerce department said they can levy countervailing duties if they determined that countries have taken action to weaken their currencies and make them undervalued, because that opens a whole range of

countervailing activities they can impose, but that is a post-election thing. it is unclear what would happen if the democrat is elected. joe: thank you. coming up, the airline industry predicting an annual decline due to the coronavirus outbreak. more on that next. this is bloomberg. ♪

joe: the airline industry expects the first annual decline in global passenger demand in 11 years. this is due to the coronavirus outbreak in china.

almost all of the impact is in the asia-pacific region according to the international air transport association. we are joined with an executive by the association. here with alexander. always great to see you. we ran some figures about the demand impact from the virus. how much revenue are we talking about right now? >> we are expecting a loss of 27.8 begin dollars in the asia-pacific region for the asia-pacific airlines, and for the rest of the world, $1 billion, so the main impact is in the asia-pacific. >> the projections assume the markets linked to china, right?

is that conservative now that the outbreak is spreading across the world? all, we have done estimates. reasonably, them taking into account all the data, our experience, but also .he changes that have occurred for instance, the chinese economy is completely different now. mainly asiaact is , thehina because up to now traffic has dropped in china, china domestic, and international routes serving china. spreads, which , weot likely to happen follow what we do every day with the who, it should be limited to that region and the limited for

the airlines and activity outside the asia-pacific region. >> when we talk about the sars outbreak 17 years ago, can you make a comparison now with this one, when this is so much more contagious? comparison, but take into account all the factors you are mentioning. it is probably more contagious than sars. has a different economic impact now, it is 3, 4, 5 times the economic impact. we are doing our estimate. >> we are seeing governments taking action, trying to deal with this impact. over hna be taking

now. does it make sense to see consolidation in the industry? >> the government is taking measures to help the airline that is impacted by this virus, so you mentioned the chinese government. i would like to mention the singaporean government, which will pump money into the industry by reducing costs. we are urging governments in the asia-pacific region to take similar measures , but that is y our industry, but entertainment, leisure, hotels, tours, which are heavily impacted by the drop in traffic. >> china's aviation industry was supposed to pass the u.s. this nowde, will this be put off

? will this be delayed? >> if we look at the profile in the past, sars, you have a significant drop in traffic. and a few months after an , so if things are , we should see a recovery during 2020, so asia .hould come back i was speaking to the ceo of airlines.t -- qantas what would you advise to other airlines across asia? >> it is airline by airline whether they can reduce and the degree of flexibility the

regulation allows. not enough not experienced enough to give advice to my colleagues, who are much more skilled than i am, but we will adapt, of course. >> you have seen this industry go through so much, airlines reeling with the impact of the much more max, so how does the outbreak compound the situation for these airlines? which haveairlines reduced capacity due to the 737 , for a third of them located in the u.s., so they are not highly impacted by the coronavirus, or the asia-pacific. it represents something like 35% the 73ines operating

seven max, so if you add the coronavirus, it should have a significant impact. , what wes above that expect is duration that can be measured in weeks, months, so usually the airlines have the ability and flexibility to adapt capacity without impacting activity to strongly, but they will go through it. >> always great having you with us. thank you. romaine: thank you. a knock on the door from the rs not something you want to hear, but if you have failed to file tax returns in recent years, they may be on the way for a face-to-face chat.

let's bring in our bloomberg tax reporter with more information on the subject. talking?we do i need to lower the shapes and turn off the lights? >> if you didn't file your tax make over $100,000 a year or may be rm, you at a law fi could be in trouble. to irs says they have a turn people they have identified as the most egregious. that is where they are going first. they will continue these visits throughout the year. couldroup right now, this be a problematic situation. is this about new tactics to collect or and increased efforts to collect overall. there has been criticism of the in that it has been lacks

wealthy filers are under audited and there is a lot of uncollected taxes from the rich. is this partly in response to that? agency has been criticized for focusing enforcement efforts on lower income people, particular the people who get the earned income tax credit. the audit rate for individuals is less than one half of 1%, and particularly the irs has realized it is high income people. that is where they are seeing the void, so a new commissioner has come in and is a former tax litigator. he knows the world from the private side and said this is where we will focus our manpower and put irs agents on the streets to track down these offenders. there hasou mentioned been some criticism of this idea that instead of going after individual taxpayers, the goal

is to recoup revenue the irs tould have, so why not go big corporations that may not be paying their fair share? >> they are also ramping up efforts on corporations as well, but corporate revenue is a relative small portion of total u.s. government revenue. the big pot of money is individuals. , whatou look at the cap the irs is owed and what it collects, the big issue is on the individual side, foricularly payroll taxes employees who are self-employed or paying for their employees. how bad does it have to be before they show up at your house? joe: do they try other things to get your attention? that point. at people who are getting a visit should not be surprised.

they tried to contact them by mail and decided this is the only way to get their attention. beis the last time we will asking nicely, so to speak. if returns are not filed and penalties are not paid, that is when they looked to civil or criminal procedures to move this along. with the latest from the irs. , apple weighs loosening restrictions on third-party services. we will discuss that next. this is bloomberg. ♪ this is bloomberg. ♪

romaine: apple is considering giving rival apps more prominence after criticism the company has an unfair advantage with in-house products. we are discussing the latest. welcome to new york. were just aght you disembodied head on the west coast.

iphone you has an have these mail apps and browsers and they are preinstalled and you can't really remove them. what will change? >> now you will be able to replace him. being a default app is key. these other services you will use. they are hard to replace. let's say you send me a text message, i click it. it will always take me to safari. there is no way to change to that, giving safari an edge over the competition. that is what apple is considering changing, putting an option in the ios to switch in that example. joe: is this to get ahead of potential antitrust concerns? >> i think that is a part of it. this is something the u.s. government is asking apple questions about. we had a big story detailing this issue.

apple seeing what is happening to google over and android in the eu, but it is also a bad user experience. let's say i'm a big google chrome user and i am not able to use it to its full potential. so apple wants to avoid that as well. joe: how many apps are we talking about that could be affected? >> apple has 38 apps preinstalled on the phone. it is more complicated to cap those than you would think, but firefox, google chrome, but microsoft outlook, yahoo! mail with the list goes on for those as well. give the if they option, you have to think of the default apps will remain the defaults from 99% of users. >> that's the best way to put it. 99% of people won't know anything is going on here, but that 1% is key. even though they have 1.5 billion customers, that small

user base of people who are early adopters, diehards was super loyal, they influence their friends another people. romaine: is there any issue that could compromise the security aspects that some people find attractive about the iphone? >> allowing some software and some features to not be defaults, it could cause security concerns from about the web browser and mail are not a big concerns and will not influence that. joe: mark gurman talking apple. thank you. numbers for u.s. existing home sales in january at 10:00 a.m. eastern. ,omaine: more earnings first-quarter earnings before the bell tomorrow. that is all for "what'd you miss?" joe: have a great evening. this is bloomberg. ♪

>> welcome to "bloomberg markets ." i'm emily chang in san francisco with paul allen in sydney. ♪ emily: containment critical. the latest on the coronavirus amid new deaths and japan. we have all the details -- deaths in south korea and japan. we have all the details. it may have been the most contentious debate so far and bernie sanders emerges as the candidate to beat.

paying up for a