♪ manus: good morning from dubai. this is "bloomberg daybreak: europe." i am manus cranny. niraj: and i am there is change in london. these are the top stories. fears over the spread of the coronavirus roil markets as south korean cases jump over the weekend. the kospi slumped, along with shares in samsung. in beijing, officials signal additional stimulus is coming. risk-off, u.s. stock futures sink. the virus is not content to asia, 13 cases -- a surge in cases in italy prompted

political backlash. to rule ea is said himself out of the running for hsbc's top job. berkley ceo jes staley is expected to leave by the end of 2021. ♪ manus: a warm welcome to daybreak: europe." the official of unicredit says mustier is staying at the italian banks. that is the headline. you have the jes staley story this morning, a little banking stories. for me it is about the conversation i had with axel weber on the weekend on the sidelines of the g20. very clear, equity markets are underpricing the gravity, longevity of the potential risk from the coronavirus. that sums it up.

and mustier is staying at the italian bank, good news contin. nejra: absolutely. who would want to take the top row at hsbc with so many challenges? in terms of the coronavirus, seems like investors are trying to find the bottom of this crisis. i think it is pretty fair to now, even ifright some of the rhetoric coming out of the g20 was a little more contained than what markets are reflecting. i think that was down to concerns that maybe some of the concern could be spreading to the u.s. economic future, with the institute for supply management dinner we had. in china, but questions whether we get any more cases coming through, even as chen is trying to stabilize the containment. manus: the bottom line is that more than italy is in lockdown. hong kong saying that there is a

tsunami-like cataclysm. you reassess risk. u.s. agree futures are lower. on the s&p 500, the first back-date back to drop in u.s. equity features we december.since i love the line this morning, gold has a cold-blooded set of gains. goldman sees $350. standard chartered saying an excess of $1700. gold is in the midst of a perfect storm. have a look at the bottom of your screen, you have oil slumping the most in more than two weeks. prince abdulaziz may say that the idea of opec+ dissipating is nonsense but the bottom line is the oil market is reassessing a demand shock. nejra: we are also seeing red in asia. japan is closed today, but the msci asia pacific index is

lower. also pointed to a lower open is futures in europe, down more than 2% earlier. in fx, a broader dollar strength story. , the dollar index, we are on golden cross, but the bulls have not been unleashed to such an extent that we got to 100. we are at 99.5. the euro is around a 108 handle, the aussie, a low, all due down to the coronavirus story, intensifying concerns for a global pandemic. that is as cases in south korea have jumped to more than 700 in the past week and they reported two more fatalities. meanwhile, italy confirms around 140 cases and three deaths. in china, the total number had claimed past 77,000, in the death toll has topped 2500. to counter the effect of the outbreak, leaders in china have signaled that they plan to increase stimulus this year. manus: on that response, the

pboc has announced plans to unleash long-term funding for the economy and consider adjusting the benchmark deposit rate at the appropriate time, as businesses bear the brunt of the outbreak, which is hurting and economy.lowing as the virus spreads, we heard from a number of industry versus on the global economic impact. >> the market has basically the view that the glass is half-full, the world will pass the stress that. >> i think the coronavirus will be more slightly neutral if not potentially a positive. >> i think it will bring chinese .5owth from around 6% to -13. percent. >> the supply chain is still winding up. getting access to trucks and logistics is taking some time. >> we can no longer depend on .he supply chain in china

on very strategic assets, we need to have our own supply chain. manus: let's get to our chief north asian correspondent, stephen engle in hong kong. good to see you this morning. can you talk us through the businesses in china and the response in south korea? stephen: first of all in china, the directives from the top, xi jinping says get business back going. but that is tough, as we just outlined. bloomberg economics last week said the chinese economy was at capacity.maybe 60% so there is a lot of room to go as far as getting people back to work and getting the factor is going. the latest developments are wuhan, the epicenter, will start to allow residents to leave the quarantine. that runs the risk of possibly spreading it further. we are also getting six provinces now lowering their level.esponse roo

that could pave the way for people getting back to work. dong done province -- guang province is the latest one to lower is alert level. getting people back to work is a big priority of the government. south korea has a big problem. the president there raising the national alert level to the highest. he can restrict travel. they have already quarantined much of the city of daegu. all the citizens of daegu are getting tested. some government officials saying there could be up as of 37,000 people showing symptoms of that disease. we are getting korea as well as starting dust the bank of korea is scheduled to hold an emergency meeting and widely expected to possibly cut interest rates at the regular meeting. south korea now having 762 confirmed cases, and seven

deaths. nejra: thank you so much to stephen engle, our chief north asia correspondent in hong kong. joining us now is wouter sturkenboom, from northern trust asset management. great to have you with us. investors are trying to assess the bottom. we are seeing a lot of risk-off today. do you look at the situation and say, i still believe in the v-shaped recovery because china do pledged more stimulus, or you start to be concerned because they want people to get back to work in the factories and that increases the risk of renewed cases? wouter: i think it is a balance right now. in our portfolio, we have taken steps to reduce the risk associated with the virus by taking a eurocentric approach, overweight on a low risk assets such as high-yield and being underweight on natural resources. we feel that we have position for this. but we are still exposed to the downturn we are currently seeing in the markets. we still think that in the end the recovery will be there but

the question is whether it will be in the second quarter or further out. risk is further out, the to the economy will increase and we have to contend with the risk in europe as well of a technical recession. , it is anybody's guess really how this is going to play out. if anything, we have learned the bond market, which front-footed last week, today it is equity market playing catch-up. this is the three-month 10 year curve pushing further below zero. this is the bond market really ?eginning to worry, isn't it wouter: i think you are right, the bond market is taking a cautious view of this. it understands that there is no inflation in the system. growth was recovering a little bit from the 2019 second-half slowdown, but still not in a great place.

now, you have the coronavirus uncertainty. that is being clearly priced into the bond market and yields are on a downward pressure because of this. nejra: i think you bring a really key point in that we are trying to assess with the recovery gets pushed beyond the second quarter to later in the year. if the markets come around to the idea that it gets pushed q4, how will the markets respond, with the bond market market?ty wouter: if it is far out, if there is no second or third quarter recovery, especially in china and europe, i think the estimates and have seen for the year which are fairly optimistic, will get downgraded a lot. i think that will hurt of equity market. bond markets seem to be pretty close to where the downside risk scenario is a ready priced in, you can still see yields trending lower than where they at.currently manus: we were talking about gold at the top of the show, $1850.

by the way, president donald ismp arriving in india, this at the airport. into india.ding we will keep you apprised of what is going on on that trip, i'm am sure, over the next couple of hours. defensive play. standard chartered talking about $700. what is your biggest defensive play? wouter: we are not focused on gold right now, we are more focused on u.s. assets and the u.s. dollar. we decided to put our assets there and keep the defensiveness -- get the defensiveness in our portfolio from those assets. natural resources, overweight u.s. high-yield and ove overweight u.s. equities. nejra: wouter sturkenboom will stay with us.

we were just showing pictures of them a trump arriving in india. warren buffett tells shareholders not to worry about the road ahead. more on the investors and will --ter up next best annual and will, letter. --us: and, front runners more on the democratic primaries, right here on bloomberg. ♪

manus: it is "bloomberg daybreak: europe." i am manus cranny into by. nejra: and i am nejra cehic in london. we are seeing pictures of president trump and the first lady arriving in india. president trump arriving for bilateral talks with narendra modi, it his his home state. manus: let's get a quick subject of the markets reassessing risk.

south korea most of the highest warning in terms of the health warning. australia warns against travel to south korea and japan. msci is excluding dust japan is closed. s&p futures in a four-day decline. equities taking a tumble on the futures. money goes into bonds. governorn, kuroda stands ready to do what it takes. nejra: as we kick off in new week, we might end up seeing equities wake up to the economic pain treasuries have been signaling. annmarie hordern explains in this morning's chart that matters. annmarie: right, the treasury pain is a signal of what is going on in the stock market. look at what is going on with treasury. last week we had a weekly close that we have not seen since july of 2016. many are expecting we could breach the recor record

low. there has been a rally in equities. but last week we had a dip in pmi's. plus many, due to the coronavirus, are saying it could have a bigger impact on the global economy. many are saying the s&p 500 is overextended. unless we have a wave of fiscal stimulus announcements driving a turnaround in yields, this could cross into global equity markets. manus: on marie, we will see what the best that response mechanism is. there is a prediction of a massive hit to the global economy from the coronavirus are brick. he says growth could fall to a .5%. x november told me that the markets are underpricing risk, in an exclusive interview on the sidelines of the g20 summit in riyadh. the view thathas the glass is half-full, that the world will pass the stress test. it is a temporary one quarter

impact on gdp and trade, and we will move on from there and rebound. that is also paste into our projections. manus: the g20, the language that is being used as i came into town, was a potential coordinated response to a slowdown in the world as a result of this new black swan. what is the coordinated g20 response in 2020? what is 2020? acel: in our estimates, this will ring global growth from 3.5% 2.5%, which is a massive drop. it will bring chinese growth from around 6% to -1.5%, the first time china will post a negative growth number. that requires a response. the global number basically tells you that it is not just china, it is impacting neighboring countries like hong kong, singapore.

and we have seen policy loosen their. the support the rest of the world can give in fiscal policy is to keep the door open for exports and for trade with these countries rather than shutting it down. manus: when i look at markets, 10 year treasuries at 1.45 10 year record low. equity markets are only just slightly shaking. underpricing, are are they underpricing those numbers you just said? are. they definitely at the moment they look at this, there will be a sharp decline and sharp recovery than we are done. that will not be the case. manus: may be this morning we rerate that comment from axel weber. wouter sturkenboom is still with us. weno le maire said that

depend too much on china for our supply chain. axel has talked abou keeping global trade corridors open. is this the biggest unintended risk of the coronavirus, but global trade doors begin to narrow? wouter: i think basically it is speeding the process up. we are the expected global trade to become less global. that globalization would take a step back over the next five years. we have seen it trade tensions in the u.s. and china visibly on display. this is speeding the process up. we are seeing companies reassess their dependence on china as a big supplier of important vital parts to their supply chain. that reassessment will speed up and they will take back more of their production home. nejra: will the impact of the market be satisfied with a more aggressive response on the monetary side? or will they want to see more fiscal and a global, synchronized, coordinated response? wouter: that is a good question and one i would love to be able

to answer. [laughter] willnk a global response come. we already see the monetary policy makers talking in that china.on, especially in we also expect the fed to come under renewed pressure to cut rates. we expect two more rate cuts this year. the question is to -- do investors need the fiscal inching to kick into gear. china has a substance the fiscal deficit. europe has room to maneuver but it is not willing to use it. that will be the question, is the fiscal going to kick in and will that be enough? thes: two more rate cuts on slate for you this year. do they come early, and if so, does that mean 1.25 on bonds, as morning? this wouter: that is again a very good question. we do think that 1.50 on the u.s. 10 year is ripe for the growth environment we expect. but in this uncertainty

environment, you could dip below. we have a range around the 1.50 mark. the question comes back to the second-quarter growth number. ck up, or will it be a good to the downward move? if it is, the downside, the lower end of the trading range becomes more viable than the upper and. nejra: it is interesting, citi was bullish on the 10 year treasury yield since before the coronavirus. you wonder how much reassessment will happen. wouter sturkenboom from northern trust asset management stays with us. this weekend, the g20 gathering is saudi arabia could have marked a sigh of relief for global finance chiefs. trade tensions have cooled, and the global economy had started to stabilize, but then came the coronavirus. the i.m.f. is looking at more dire scenarios for global growth. and the outbreak is hitting supply chains. >> we can no longer depend on

the supply-chain in china for so sensitive and strategic goods for our population. i believe in trade and i believe in fair trade. i believe in reciprocity. on veryso think that strategic assets, we have to have our own supply chains. manus: in germany, chancellor -- tomsulaelu hit a agela merkel's cdu hit post-world war ii low. that and that her succession plans. the social democrats secured the biggest victory, but the biggest gainer was the green party saw its share of the vote double. global news, 24 hours a day, on air and on @quicktake by bloomberg, globa powered by more than 2700 journalists and analysts in over 120 countries. coming up, staying the course. unicredit ceo jean-pierre mustier will not take the hsbc top job.

who is next in the target line? this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." dubai.nus cranny in nejra: and i am nejra cehic in london. you are seeing pictures of president donald trump landing in india. he is landing in prime minister modi's home state for bilateral talks. manus: indeed. a lot of and ceremony there. that is narendra modi greeting ivanka trump. all eyes are on the big level relationship. unicredit has confirmed that ceo john p.m. most year is not in the running to take -- ceo john

pierre must year is not in the running to take over hsbc. who is going to get the job? let's get to singapore. our correspondent has been looking across the news. mustier is out. does this shore up quinn a little more? guest: that is the million-dollar question right now in london. as we reported, jean-pierre mustier says thanks, but no thanks. it is really a setback for hsbc. many analysts last week were saying that this guy ticks off a lot of boxes for the bank. he has asian experience, he led a similar turnaround at unicredit that hsbc is trying to do, cut a lot of jobs and cleaned up the balance sheet, and he was rewarded with gains. yet he wants to stay there. going tovid, is hsbc

struggle to find an external candidate, given all the challenges of the banks? david: it does make you wonder. there have been a few others they have talked to, but nothing seems to work. we know that they had an internal candidate in quinn who was happy to take the job. he laid out this extensive overhaul plan on tuesday to cut a lot of jobs and combine a lot of units to cut costs, yet it did not go over that while. we know that stocks fell the most in a decade that day. so the board must be thinking, we had him in our back pocket, but maybe there is somebody else out there. they don't seem to be in a great rush. they are reiterating that this process could take 6-12 months. nejra: great to have you with us, thank you so much david scanlon, bloomberg news editor for asian fines finance, joinins

from singapore. you are looking at president trump arriving in india for unofficial three-day visit. he has just embarked from the plane. this is bloomberg. ♪

from bloomberg's european headquarters in london, i am nejra cehic with manus cranny in dubai. nejra: here are today's top stories. manus: heightened concerns and fears over the spread of the coronavirus roil markets, as south korea cases jump over the weekend. the kospi slumps, along with shares in samsung, as it prepares contingency measures. in beijing, officials signaled additional stimulus is coming. u.s. features think along with crude oil and gold ascends towards $1700. virus fears are not contained to asia. however, a surge in cases in italy prompts medical backlash. and the search must go on.

unicredit ceo mustie is nor longer in the running for hsbc's top job. meanwhile, a report in "the financial times" suggests that dailyays ceo just expects to leave in 2021 -- ceo jes staley plans to leave in 2021. ♪ nara fish u.s. futures are pointed to the first three-day decline in u.s. equities since early december, european futures are down 2%. --asuries treading treasuries trading, with japan closed. commodities rocked as well. you get all the market action from around the world. manus: we do indeed. what is the next leg of the

treasury market? would it be one .25? we have juliette saly in singapore, and our annmarie hordern on in london. let me take you straight to you, jules, as we kick off. korean equities are taking a battering. juliette: they certainly are, really reflecting this risk-off mode across asia. japan is out of action. but the cost be having its biggest slide since october of 2018 in a one-day move, this after south korea announced a huge increase in the number of coronavirus cases, now more than 760. that has seen a big drop in the kospi today, which looks like it will close down about 3.9%. heavy volumes when you run the function of the terminal, it projects one billion plus shares changing hands by the close, for on a the sixth time in the last 12 years. we have seen samsung shares under heavy selling pressure.

the largest technology company in the country, shutting down operations in whenever the plants -- in one of its plans this weekend after an employee tested positive for the virus. nejra: juliet, thank you so much. araj, you are looking at pharmaceutical company as a result of a u.s.d.a. inspection. niraj: good morning to all of you. the fda going back on a letter issued two days ago. while equity markets are down and india is obsessed with them out trump's visit, i would like to draw attention to something unique or unusual that happened three days ago. the u.s. fda issued a voluntary inspection letter to this pharmaceutical company, which means they could have a green signal for the u.s. fda for future launches. the stock rallied 20% three days after that, the fda came out and said that they are taking back the letter. i have no never seen this in

so many years of looking at indian pharma. leper together stock as a result -- that particular stock, as a result, is down. very interesting action, the to and from from the u.s. fda. that is now a result on the stock as well. back to you. manus: thank you very much. anne-marie, we are talking about gold. goldman sachs saying $1850. standard chartered saying $1800. but the records are being knocked out globally. annmarie: the big question is when we will see potentially a record in u.s. dollar? can gold take on that $1900 amounts we saw? , maybe thatpriced is good for juliette saly. gold hit a fresh record around the world. we have already seen gold whether it is in euros, pounds, australian dollar, canadian dollar. the question is when we could

see a fresh record for the u.s. dollar in gold. manus: thank you very much, team on the latest on the markets. to politics now in the u.s., because bernie sanders broke away from his democratic rivals with a decisive win in nevada. the vermont senators lead was also -- senator's lead was also large. the ap called of the race with just 4% of the precincts reporting. his win was powered by hispanic and black voters, setting him up for more wins as we head towards super tuesday states. sen. sanders: in nevada, we have just put together a multiracialtional, coalition, which is going to not only win in nevada, it is going to sweep this country. [cheers and applause] manus: very ago, the images. our bloomberg u.s. government reporter. we also have wouter sturkenboom

also still with us. catherine, good morning. for does sanders' win mean tuesday? guest: it sets him up as the candidate to beat on super tuesday. there are other candidates out there who could end up delivering really challenging -- delivering or really challenging sanders' grip on the nomination. we have south carolina coming up this weekend, a state where joe biden consistently said he anticipates a big win. for the field is still fluid but certainly, sanders delivered a bigger than anticipated win in nevada, and the fact that it came with huge support from particularly the latino community set sanders up as us front runner and potentially the candidate to beat for the nomination. nejra: does it make it more likely that president trump gets a second term if he is nominated? guest: that is the conventional view at this point.

sanders is a far left candidate, self-declared socialist, he is to the left of where a lot of americans, even a lot of democratic americans would consider themselves to be. however, what people have pointed out is that he does bring out the base. he is someone that draws a very sharp contrast of trump, someone that creates a certain amount of energy among particularly younger voters. if this turns out to be a big election, where trump has a strong base turnout, the argument for someone like sanders would be that he is someone that can bring out the democratic base and keep them from sitting home and presenting themselves to another four years of trump. manus: let's bring wouter into the conversation. i love that you say you have clairvoyance -- do you need a trump victory to sustain the haveequity exposure, or

you contest his risk? what would that mean? >> we certainly would take a sanders nomination and potentially even an election victory seriously from a markets prospect of, because clearly, from an investor perspective trump is more investor-friendly and more markets-friendly than mr. sanders. at the same time, we are careful to always highlight but the constraints politicians face are clear, and if sanders were to win the presidency and not win the senate, the constraints to implement some of his far-left on the seas would be strong, so that is something we are keeping in mind. but the market reaction would be very much contingent on that constraint-based analysis. nejra: interesting. i want to ask you about michael bloomberg, and whether he can come back from the widely-debated debate

performance, and if he can, what implications that will have on race.st of the kathryn fish i am sure we will be looking at the debates in south carolina to see whether his performance there will be front and center because of the performance delivered in vegas. i think when it comes to debates, there is always an expectations game. i think for michael bloomberg heading into the first debate, there were very high expectations. think the benefit now is that the performance delivered, expectations have been lowered somewhat, but the focus will be on him to deliver a better performance than in nevada. the question is whether or not he can do that. manus: let's take that to you, wouter. if michael bloomberg dust is should be said, michael bloomberg is the owner of this company, and he is running for the democratic nomination -- that is a caveat on the ownership structure here. if bloomberg won the democratic nomination, what would that mean -- would it shift the thinking of markets in any way? by the way, i should say

verbatim, bloomberg is the founder and majority owner of bloomberg l.p., parent company of bloomberg news? wouter: yes. we firmly believe that what we would call candidates that are more my stream, biden is in that camp -- more mainstream. biden and buttigieg are in that camp in bloomberg as well. if one of those candidates were to take the nomination, the downside risk to the markets that would come from a sanders domination would be smaller. nejra: how would all of this impact the dollar? a rocking start to the year best best since 2015? wouter: right now the dollar is a safe haven currency and it is benefiting from that on the economic front from the coronavirus. potentially, that uncertainty could increase with a sanders nomination. it would be a strong dollar trade. at the same time, the growth

impact might cause the fed to cut rates, which would push back a little bit against that strength. and all, the uncertainty safe haven characteristics of the dollar is running out and we are betting on that to continue a bit longer. manus: we are going towards super tuesday. -- when allreally the effort is going to be made. what can we expect in the run-up to super tuesday? kathleen: i think one thing to watch closely this weekend we have already seen the debate i think that will drive the narrative -- the debate in south carolina will drive the narrative heading into the weekend. and the weekend is the south carolina primary, the first time we have a state that has a very -- all most half the voters in south carolina are african-american. joe biden has said he expects to win in south carolina. in a lot of ways, the story will be joe biden and whether he can deliver that when he has promised.

nejra: great to have you with us. thank you so much, kathleen hunter, bloomberg u.s. government reporter. warren buffett tells shareholders not to worry about the road ahead. more on the billionaire investor's annual letter ahead. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe, i am nejra cehic in london alongside manus cranny in to buy. we have seen a risk-off sentiment a long coronavirus concerns, and switching abroad, it is a story of strong dollar

strength. oil is selling off, and features indicating we could see the 10 year yield further after friday. 1.7 handle on manus: let's get you set up for today. were in buffett was out with his and will letter to shareholders -- his an annual letter to shareholders. the valley of his big bets. we discussed the letter with annmarie hordern. hear, buybacks, succession, defensive play, what did you make of it? annmarie: when warren buffett speaks, we know that wall street stops and listens. there was an accounting difference between his stock takes and possess takeovers creates what he calls a standard omission in berkshire hathaway's financial results. he argues that while the dividends berkshire receives

bring a lot of earnings, they also create earnings. he says that whatever else might the the subject of the day. the second big takeaway was what life look like at berkshire hathaway after he departs. investors will be hearing from from the top lieutenants. the two of them are seed as top contenders to eventually replace it in an-year-old warren buffett. he appealed to any concern to shareholders saying, you need not worry, your company is on hundred percent prepared for my that the -- saying company is 100% prepared for my departure. manus: you have to read the small print at the end of the letter. let's get to your bloomberg business flash. barclays ceo jes staley is expected to leave at the end of next year, according to "financial times."

the u.k. lender is now searching for a replacement. he is correctly under investigation for ties to jeffrey epstein, another distraction from barclays, as it faces distractions to meet its profit goals. hasa: jean-paul mustier pulled out of the running for hsbc's top spot. he decided to remain at unicredit. hsbc said it could take until july to name and you ceo, 12 months after the insider nq named.s manus: markets are underpricing the risk of the coronavirus to the global economy. by his estimates, global growth will experience a massive drop, 0.5%..5% to just over we also spoke to ask -- axel weber about ubs. >> moving to more digital

markets, but is where he has expertise. he is an acknowledged leader in digital innovation. you might have seen some of our competitors have moved into more digital wealth and asset management services. that is where we need to go. manus: that is your bloomberg business flash. back to the coronavirus. italy has become the outbreak's european epicenter, reporting 140 cases. it is imposing public restrictions. the cut government is looking down on area near milan. authorities have canceled the venice carnival. matteo salvini used the outbreak to attack the prime minister, giuseppe conti, for defending the borders. chairs a marathon meeting in rome to counter the virus. nejra: meanwhile, ecb officials said the government must shoulder most of the burden --

-- must shoulder most of the burden for rebooting the economy if the coronavirus hits harder. one of them said monetary policy cannot be the only response. saying, if we don't see a rapid effect, there must be a coordinated response. they were speaking at a meeting of tankers and finance ministers in riyadh, where the threat from the outbreak was front and center. >> the asian central banks are out there. we already saw interest rates being cut, and they are further announcing expectations of further interest rates cuts. usually central banks are the speedboats if you want to fight such a thing and they need to be out fast. >> monetary policy has already done their part, reducing interest rates, relaxation on reserve requirements. on the fiscal side, we are not preparing for a package, how to stimulate consumption in indonesia.

domestic consumption is still 57% of our gdp. >> we have tools to support for sure. either we use the tools we used in the past -- placement of deposits or changing the anyrest rate -- but intervention that might help the economy in this case usually should come from the fiscal side. >> the countries that have the capacity to -- the fiscal capacity to spend more, the countries that are saving money because they are paying less interest on their debt, because their interest are historically low, use that capacity. >> we will continue to monitor the situation, but we know that the estrogen economy is remarkably resilient. nejra: what are stark and bone from northern trust asset management is to with us. the euro caught a bid. one analyst says that we need to do quarters to understand the economic impact. can europe afford to wait two quarters or should they act now?

wouter: we think they should act now. budget negotiations have not gone that well. it shows that europe is again being relatively slow and its economic outlook was already week to begin with. we think it should be a little more aggressive, a little more forward-thinking, and it should act now. but we don't expect them to do so, unfortunately. which means there is a risk that if the coronavirus uncertainty continues in the second quarter, europe slips into a technical recession. manus: we have to go back and beratedo this man, he the countries. he did not name names, but he berated them. you have lightened up on europe. why? what was the driver? was it about luxury? take us through your thinking on lightening your european load. wouter: we really decided that the coronavirus uncertainty warranted a bigger overweight to u.s.-based assets so we took

money out of emerging-market equities and european equities and relocated that the u.s. equities to sure that trade in our portfolio. it has been coronavirus uncertainty-related trade, based on the petitions of dollar strength as well as economic impact, because the main impact correcting is in asia. europe is in the firing line of that slow down second, and the u.s. third and to a much lesser degree. that has been the reasoning behind that trade. manus: wouter, thank you very much, from northern trust asset management. equities, why chinese are likely to out run their hong kong neighbors. that is your morning call. this is bloomberg. ♪ ♪

manus: it is "bloomberg daybreak: europe." i am manus cranny. nejra: and i am nejra cehic in london. let's get to your morning calls today. why chinese equities will continue to run their hong kong peers. annmarie hordern on has more. annmarie: when you're looking at both these markets, when citigroup outlines they are different investors and also different sentiment. so while in china, that it s is moret -- h-share , heavy on fundamental institutional investors. their sentiment may get hurt the season due to potentially a lot of earnings revision. they also call out stocks they do like in both of them, including a lee: on the h sears -- alibaba on the h shares. chinese stocks are likely going to outperform those hong kong peers.

manus: annemarie, thank you very much. wouter sturkenboom is with nejra and myself this morning as our guest host. would you purchase chinese equities if the pboc did enough stimulus? wouter: not right now, we first want to see more clarity on the coronavirus and we hope that the rebound follows in the second or third quarter. however, if that occurs and we get a strongest runs from both the physical and the monetary side in china, we will take up look at it. nejra: if the outlook gets worse, would you slowdown your exposure? you have very little right now. wouter: we would certainly consider it, but we have a very left. allocation we are good very are right now, but we would consider it. nejra: thank you for -- very good to have you for the hour. wouter sturkenboom, great to have you with us. the european open his next. it could be a painful open judging by futures. rad astures in the

well as european futures. in the bond market pricing in some gloom as well. ♪

. i am anna edwards live from our european headquarters in the city of london. the cash rate is just under -- the cash trade is just under an hour away. ♪ coronavirus hits italy. 140, in the country reach prompting authorities to lock down an area with 50,000 people in cancel events. cdu takes a battering. angela