>> good morning from london, i'm nejra cehic. these are today's top stories. amidl stocks retreat concerns of the coronavirus. 52 reported cases bring the total number higher. oil heads for a second weekly rise, supported the u.s. stockpiles. we got a take on the impact of the coronavirus. longe expectations of how the virus might last and its impact, people have probably been reducing your worst-case

scenarios. nejra: unicredit shares close emerges as theo top contender for the top job at hsbc. ♪ nejra: welcome to "bloomberg daybreak: europe." overnight, we learned allianz will buy back $1.6 billion in shares. allred headline is saying young's sees operating profits of 11.5-12.5 million euros. the estimate was 12.4, so that is in line with what was expected. revenue is a beat on that number.

are-year operating profits 11.86, the estimate was 11.7. we will be looking out for a potential positive rebound in the solvency ratio, which is something that showed weakness in recent quarters. update already had the on the buyback program. we learned the program starts next month and runs through december. this is part of returning capital to shareholders because the ceo was unable to pull off big deals he was looking for. that is something we will discuss with the cfo later in the show. don't miss that interview at 6:30 u.k. time. we saw records in european stocks on wednesday, but since

then, it's looking like a day of declines. are pointing lower and the 10 year yield is slipping. ,hat a story of dollar strength looking like it might move into a golden cross. the yen is interesting because it has had its worst today's since 2017 -- two days since 2019 -- 2017. the yen is slightly getting back its mojo in the general session and gold is up .5%. top 75,000 atses the death tolls surpassed 2200. over theare growing pace of infection in other cases. south korea reported 50 new

cases and to new cruise ship patients tested positive in australia. the biggest economies in asia are feeling the brunt, forcing the government to boost spending. manufacturing in australia and japan fell while export orders and south korea slumped. the tourism sector in china has been particularly hard-hit by the outbreak. the airline industry expects the first decline in global passenger demand in the years. -- in years. we are keeping flexibility. it would be the equivalent in grabbing 680 an aircraft. >> the coronavirus is not here and it is being tracked.

it sets us up very well for that rebound. >> if things continue, it will extend until june. >> we are cautious and we should see a recovery in 2020. asia should come back. >> we will come back when the situation has resolved. asia is an important market. nejra: joining us is edward park , deputy cio of brooks mcdonald's. we are seeing a risk off for a second day now, but your core view is to be overweight equity risk. what would make you pull back on that? edward: we need to separate coronavirus impacts and the broader economic muted music -- mood music, which is becoming more positive. , we we look at the virus

need to look at the impact of global earnings. i'm not saying we are complacent at all, but if we look back to sawsars outbreak, what we was an economic hit when sars was there. but in the following quarter, we saw a large economic rebound and some growth is lost in that. we are trying to work out whether we should see that search -- surge. impacted, ind be part because of the monetary stimulus. ways, it has been and everything rally. credit at bond, and all-time lows with high-yield. you have had gold rallying.

well you are positive on equities, you are cautious on credit. edward: we are. there are two things that worry us. one is liquidity, which is not really a problem. but it is also credit quality, and we are looking at the amount of investment grade index. index atver 50% of the triple be, and with that comes the risk of downgrades. crafte seen renault and move into the sector. it is probably not itself the , two of but remember the largest issuers are now in the high-yield index. that could be a major problem for the high-yield market. it's one to watch, but as you mentioned, we are spread really tight. nejra: we have got the chart

showing that it is forming this .olden cross will the bulls be unleashed even further? what does that mean for asset allocation? edward: valid point. the u.s. dollar story is intact.

interest rate in the u.s., but it's got the strongest consumer and economic outlook. if there was one thing out there thinking inflation is conspiring to a positive story, that is the united states. the u.s. dollar should perform well. in terms of our asia view, we are looking at an economy trading around 13 times 12 month earnings. it is very cheap. a bit of dollar headwind could be accepted in the numbers. nejra: bond traders are doubling down. futures are moving closer to pricing a half-point cut. what is your sovereign bond strategy? are you offsetting risk with long-duration treasuries, or anything in fixed income? we have got gilts in treasuries where we would have wed credit last year, but have got a shorter duration. we are in a more risk-on environment and yields have moved to a slight upside. two cutsoned almost have been priced in, and we

think given what powell has been saying about the high bar for cuts, we believe that rhetoric. what markets are doing now is using the fed as a release valve. i think things need to get significantly worse

us. let's get to first word news. nejra: president trump has purchased coveted advertising space for early november. digital ad spending typically focuses on targeted messages. the top spot on youtube is usually a super bowl tv at. election surges competition the search for a prime minister and all of the main candidates have failed to muster support pray current government, including lee overactive -- lee overactive veradke. angela merkel has vowed to combat anti-semitism, saying racism is poison and germany will work against those trying to divide us. roger stone has been sentenced to three years and four months in prison for lying to congress.

the corona virus impact was compared to a house on fire or -- fire. what would you suggest opec use? a garden hose or a fire brigade?

>> we are really trying to correct for that 200 million barrel demand loss. in terms of the cuts to bring the markets back into balance and to leave a positive impact for the second half of the year if the objective is to correct for that demand loss. nejra: annmarie hordern joins us on set. plus.ked us about opec where do we go from here? annmarie: it's obvious they have to do something. where does russia stand? we still have not heard from novak or putin on where they stand. on top of the already $2.1

million a barrel they are already cutting. the base case is an extension, but it's clear what the saudi's would like to do is call the fire brigade. yeah you may damage the furniture but save your house. the russians want to use a garden hose. it will be interesting to see where we line up. is opecg that certain will impact the market. goldman sachs is already assuming a cut. we could potentially see a selloff if they don't. nejra: exactly. we are headed for a weekly gain on oil. on-demandhas shifted through the coronavirus. what is the longer-term outlook? annmarie: for the second half of the year, russell hardy was --ing he was feeling this

viewing this as there will be more optimism. on the supply side, there are two things to worry about. libya is basically off-line right now and cannot get any exports due to politics in the country. then we have renewed sanctions on venezuela. already, that's another 300000 and libya is one million. we could see supply concerns. nejra: thank you so much for joining us. edward park is still with us. just a quick thought on how you might be integrating your expectations? they have been saying it has moved to the side because of the coronavirus, but there is an

opportunity in things like energy shares. the coronavirus and that demand story is becoming less of a concern. expectation that the asian block would see increased demand by the tail end of this year. the upside on this is always capped by marginal shale production. the overall story is still challenging in terms of a major rally. people have come on the show and said to buy gold. you say no, why? edward: it is a fascinating area. february, we have seen it move to risk on, the risk off its -- off assets have

carried and there are arguments for gold. one is that inflation expectations are going to two is about the cost of gold. the global stock of negative yielding debt peaked but is now down to about 14. but the gold prices still intact. we think that is on a long-term basis, quite a good read on where the gold price should be. i agree that is against market consensus. nejra: edward park stays with us and we discussed havens you prefer. --ing up john paul misty mustier has said -- is said to have emerged as the contender for the top job at hsbc. that's next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." the ceo of unicredit jean pierre mustier has emerged as one of the contenders for the top job at hsbc. joining us to discuss from rome is our european finance editor. what credentials does he have that makes him suitable for this top job? all, he is a slasher. his record at unicredit has been a lot of rationalization and jobs to be saved. doing,ch what they are so that is very parallel. he does have some asian experience and worked as an investment banker in asia

earlier in his career. it is more the experience in rationalizing making the bank more efficient and doing cutting. nejra: we heard that in the latest earnings. cost cutting and suspending the share buyback meant the shares took a hit. what does this mean for noel quinn, ross? >> still in limbo. you have to wonder how long his patience is. i think investors might find that a bit confusing. he still has not nailed down the top job and still has not been ruled out. it's more limbo for him and more questions as to whether he is

really there guy -- their guy. nejra: speaking of the guy or lady they might land with, are they going to have a challenge finding someone with all the credentials needed? >> good question. it's also a good question whether the new person coming in the wants to come in with an overhaul in place. i assume someone like him will want his own plan and would not want to be in the position of executing an existing plan. as we have seen several times, hsbc is far-flung and groping for an idea. beenl say his plan have quite consistent and he has been steadily executing it. both of them are in rationalization mode but it is left unicredit willy-nilly.

nejra: coming up, we speak to the alley ends -- allianz cio. that's next. this is bloomberg. ♪

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i met nejra cehic. -- i'm nejra che pitch. -- cehic. south korea reports 52 more cases of the coronavirus. oil is lower in the session but heads for a second weekly rise. vitol's ceo gave us his take on the impact of the virus. expectations of how long it might last, people have been

reducing worst-case scenarios over that time. nejra: unicredit shares close tier has emerged as a contender for the top job at hsbc. nejra: we have seen records in equities on wednesday but futures are pointing to a second day of declines. we have concerning date or overnight from south korea. what a run the dollar indexes have had, headed towards 100. the yen has had its worst two days since 2017 but is getting its mojo back. gold at a seven-year high.

let's get back to earnings season. allianz plans to buyback billions in shares. they reported an operating profit that was 3% below estimates. joining me is the ceo of allianz. great to have you with us. talk us through the rationale of the buyback. giulio: good morning. andave announced a buyback this is part of our capital deployment strategy. buybacks withng host acquisition and we have bought a stake. financedk., have acquisitions and that is part of deploying capital on opportunities we see that could

strengthen our franchise. and on the other side, we want to make sure we are returning cash to our shareholder. this strategy has been serving us well and we have achieved 13.6% in 2019. when you look at earnings per share, you can see a growth which is double-digit. nejra: can investors expect more buybacks to come? going to finalize a buyback of 1.5 billion. are going to reevaluate what we do with buybacks and it will be a function of how much capital we deploy. for 2020, we stick to the 1.5

billion buyback. m&a and itmentioned leads me to pose a question about where we go with the and where we go in asset management. there were smaller transactions last year, including buying shorter businesses. what is the strategy now? do you pull back on the m&a strategy? i will say the strategy is based on bolt on acquisitions , a strategy that is serving us well. it does not mean that we might not also have larger opportunities.

that theritical is financial mathematics have to be .here we can see that we can conceal our strategic agenda, and at the same time, get a nice return on investment. i would not discount the acquisition we did in the u.k. because we are getting to the number two. considering the operations, we are getting to the number two place in the u.k.. these are acquisitions that are giving us a stronger presence in critical markets. nejra: speaking of, if not critical, important markets. i want to speak about the coronavirus. give us a sense of the

coronavirus impact on your business. from an underwriting point of view, the impact is limited. clearly, we see impact in china and production in china is going to slow down. we are going to see a slowdown over there, but fundamentally, the impact on financial results is going to be very limited because our presence in china is still relatively small. issueould be more of an is the prolonged status of the coronavirus. eventually the economy could significantly slowdown and be reflected in corrections to the capital market.

there are corrections in the market and prolonged times of this disease, but that is a totally different conversation. clearly, we are allowing our employees to work from home. we are making sure that the premises is very, very safe and that is a concern from our side. we are making sure our employees are as safe as possible nejra: there are a couple of things i want to pick up on. the first thing is china. the main coronavirus impact for you is on china, what does that mean for the prospect of you increasing your stake? is it slow your ambitions in china at all? giulio: the coronavirus is not going to impact our long-term strategy for china.

the strategy is completely unchanged. nejra: you mentioned that if there was a correction in the capital markets, that would be a different story. puthe latest, investors $2.2 billion into global allianz. pimco has seen inflows. is there a read across for the impact of the coronavirus on capital markets to what you can expect in terms of flows? giulio: the time being, we don't see an impact on flows. our flows were definitely positive, and so moving forward,

you might see a correction on the equity side, but always keep in mind that over 80% of assets under management are in fixed income. the coronavirus will most likely affect the equity side, which is relatively minor. not necessarily be fixed income side. operation, ites of think the coronavirus will be most likely neutral, if not potentially positive. nejra: great to have you with us , giulio terzariol, cfo of allianz. -- world health organization says that the coronavirus outbreak might become a wider threat. the total worldwide is now over 76,000 and over 2200 have died.

expects theindustry first global decline in passenger demand in years. conservative estimates assume losses will be in markets linked to china but some seed impacts continuing into the summer. impactill also operations. we welcome the chinese for tourism and holidays in summer. impact duringn the summer. nejra: turkey has asked the u.s. to deploy patriot missiles on its border to deter action in syria and allow and kara to reduce future attacks. it was followed by more violence and turkish fatalities. turkey has not yet received a response.

global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tense talks on the eu budget dragged into the evening. this is the story you need to now. we are live from brussels. this is bloomberg. ♪ nejra: this is "bloomberg

daybreak: europe." coronavirus concerns take the steam out of equity markets after records on wednesday. arech the board and you seeing money move into the 10 year. yen and oil on the back foot. european leaders have failed to reach a breakthrough over the budget. member states have battled over key financial contributions.

gapdebate is how to fix the of the u.k.'s exit. no breakthrough so far. can we get one today? >> that is the big question. we knew it would be a long summit, and as it often is, the best idea is to take a break and come back in the morning and that's what we are expecting today. here is that we do have a funding gap of 75 billion euros. gap isy way to fill this to go for spending cuts were forced money on the table -- or force more money on the table. just one percentage point between the two sides, but they are not able to get an agreement done.

is question for investors real fiscal stimulus, but given the fact there is a huge fight over a number that may not seem relevant, we are not probably going to get that. we are being told there could be a path to a deal at this point today but we could also be in a situation where leaders just say there is no point and officials will tell you it's not a big deal. a lot of this has to do with the optics of a deal. as long as this is done and the first half of the year, that is good enough. nejra: great to have you with us. us.rd park is still with we are looking ahead to data in terms of the pmi. you about the are

bottoming in manufacturing in europe? the coronavirus has come onto the scene, but also we have this specter of trade negotiations. people are saying we really want this phase i trade deal to sort out the chinese demand aspect and that will really help. but that has allowed the white house to start to focus on the eu as well. it seems a bottoming out, we don't think that's going to happen. we think a german gdp is effectively flatlining. so we are not optimistic we will see the europe story.

nejra: how much of the euros euro's pain is the ruo itself versus dollar strength? edward: you are right to split that out. what i said before about the dollar being the least ugly. what they really want to see is stimulus, be it fiscal or monetary. but there is a? mark about the usefulness of further rate cuts at this point. we really need to see fiscal spending and we are unlikely to see that in the short term. that is why the euro has been struggling. it's partially that dollar strength has been global, but the euro is not putting up much of a fight. saying, it'se been

not just u.s. equity markets that have reached records, but europe, too. >> edward: it has taken a lot longer to hit those all-time highs. fact.me highs are a the u.s. market has been very muted and you have got this of fiscal lack spending and trade negotiations. we have got brexit negotiations coming through, trade talks with evan flows throughout the year. also, eu exporters. it is still quite a murky story. if you look at the 12 month forward earnings for europe, it will get out 40.5 times. it is a discount the united states, however, the u.k. is

about 13 times. if you are shopping for value, you will probably go there. underweight with your -- europe. nejra: t-mobile and sprint have agreed to add -- to a pending merger that has pleaded regulatory hurdles. when the deal closes, the german company is expected keep 43% of the merged entity. vw want to theg federal judge overseeing the case to step aside, saying his works show a deep-seated favoritism. opted out of a $10 billion settlement uber a diesel emissions scandal.

mustier has emerged as a leading candidate for the top job at hsbc. the board remains undecided and is still considering candidates. hsbc said it could take until august to name a new boss. for the first time in history, the royal mint is launching an exchange traded product. we bring you that story on etf iq every friday. up, we have got your morning call next. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." u.s. and european gauges have hit record highs in february. this week about goldman is warning markets have become too complacent.

dani: this comes from peter oppenheimer who released a note clarifying his views. he things that stocks are going to have a correction to this is technically a debt of 10% or more. it is because investors are underestimating the impact of the coronavirus on earnings. he says even if this problem only affects china, there are a lot of spillover effects. iser all, global tourism 4.4% of global gdp. a drop that could cut earnings by 10% in europe, meeting earnings are negative in europe. he classifies this as a problem that is especially prevalent here because it is twice as exposed in europe. there's a lot of exposure to asia. he does say, however, that it is

a short-term thing and we have the support of economic cycles. it means short-term corrections, but not a bear market. nejra: edward park is still with us. is your shared view because you think earnings are going to recover or because you think markets have priced in the hit? >> it's a combination of those two. earnings are starting to be watered down. -- miss, thea mess real risk is that equity earnings don't come through. the future could actually be quite supportive of earnings because they don't need to deliver now. one thing we are in is this low

interest rate world which means the cost of waiting is quite low . the markets got an excuse to ignore some of these near-term weaknesses in corporate earnings may or may not be part of the global economy. nejra: how are you expressing your overweight in equities? are you hiding in more defensive parts of the market? edward: most of where our overweight's are going is in japan. we have got a small overweight it islth care, though slightly being called by the u.s. election cycle. is a place where we will see earnings delivered

and has more impacts on the coronavirus. where we do have equity exposure, we will end up with small allocations to high-octane equity sectors. briefly, why are you negative on japan? do you not see a tailwind from a weaker yen? edward: the impact of the sales tax rise and the desire to look at the third arrow has been on the horizon for a long time. is a risk of a recession in japan and that's why you are seeing the japanese yen not acting in the classic safe haven you would expect. for the time being, we are cautious. nejra: thank you for joining us, edward. that's it for "bloomberg

daybreak: europe." the european open is up next and we could end the week in the red. futures in europe are on the back foot and global equities headed for a weekly loss. this is bloomberg. ♪

matt: good morning. this is the european open. i'm matt miller live from london this week. the trade is just under an hour away. the coronavirus epidemic enters a new phase. cases outside china multiply. global stocks drop, while treasury yields slide two september lows. oil recovery rally falters in the face of