l for isth edition of "dateline." i'm natalie morales, thank you for watching. [music playing] good morning welcome to "street signs." i'm joumanna bercetche >> and i'm julianna tatelbaum. these are your headlines >> european stocks rise posing a growing selloff over the growing concern of the coronavirus which has now claimed over 100 lives >> software giant hit by light cloud bookings co-ceo jennifer morgan tells

cnbc she's positive. >> we have great momentum and we are looking forward to 2020. when you think about the cloud portfolio. it has an incredible stickiness. we've seen where those mikio groups form. airbus shares soar after the french plane maker strikes a deal to settle three international corruption investigations uk prime minister boris johnson promises a huawei solution as they prepare to make a decision in the chinese rollout. >> there is no reason why we shouldn't have technological success in the uk to have access to fantastic technology but also protect our security interests

welcome sto "street signs. the death toll from the coronavirus has surpassed 100 and the cases have risen to 4,500. china says all but six of the deaths have occurred in wuhan where the virus is believed to have emerged on monday, the virus claimed the first victim in beijing. many remain on lockdown while lunar events have been canceled. >> the u.s. and canada have issued travel warnings to citizens planning to visit the region as the virus continues to spread abroad germany, slir lan kau and cambodia all confirmed first cases of the disease on monday u.s. president donald trump

skr expressed concerns tweeting that the u.s. is in close communication with china ready to offer any help. a japanese news agency says a person in the country who hasn't visited wuhan has contracted the disease. hong kong chief executive has suspended all personal travel permits to the city from main land china carrie lam is speaking now we are not going to take a listen but earlier, she did say they are planning to halt high-speed rail service amid the coronavirus concerns >> they had to introduce measures a couple of days ago but this is the first official press conference she's given extending school holiday

closures until february 17, canceling all new year's celebrations and halting all official visits to main land china, and halting high-speed rail services between the city and the main land. so really blocking off hong kong from main land china here. big steps in light of the multiple demonstrations and riots we've seen >> we'll continue to monitor carrie lam's speech. germany has become the second european country to confirm a case after france. health officials in the state of bavaria said the patient is in good state but remains under medical surveillance let's take a look at how european markets are fairing you can see, there is a spot of

green on the board on contrast to yesterday around this time when almost every single stock in the stoxx 600 was negative this is after a very weak close for wall street yesterday. dow and s&p posting the worst performance since october. apple very much in the firing line yesterday the weak performer for the dow and s&p. china exposure there and earnings coming up later overnight in asia, hong kong and chinese markets are closed for the holiday. selling pressure as well as south korean markets we'll talk more about that we are seeing an attempt to trade more positive in europe. initially stoxx 600 opened up on positive footing up around 0.2%. you can see we've paired some of those gains and are now treading

on water so very much in the midst of being gripped by fear for what this coronavirus may mean for companies and business sentiments that's one of the reasons european stock markets did trade so weak yesterday. >> you can see the picture among all of the majors. it is pretty much positive ftse 100 slightly green. almost up 0.1% in the uk, we'll be talking about why shortly but the uk government has to make a decision whether or not to let companies work with huawei that will have big significance on the 5g roll out dax just below the flat line here auto, bmw, daimler down dragging down the german index.

sep reported results in line with expectations but the market isn't reacting very well that stock is down about 2%. cac in france down around 0.7% we are seeing those names up from 0.4% to 0.6%. yesterday, italy was one of the relative outperformers after the reaffirming pd's strong hold in that particular part of the country. a positive step for the coalition. let's talk about some of the european exposed stocks here these are the names we were looking at yesterday starting with mining and basic resources. you can see these are downey where from 2% to 1%. luxury is struggling

they were up now they are down. lvmh up 0.4% they will be reporting later today. turning attention to travel names and companies have been extremely hit by the coronavirus here in europe, we have air france and klm down 2% lufthansa down 1.4 and british down as well travel companies continue to get hit. let's turn to asian markets. matt taylor joins us live from singapore with the impact on asian markets. i've been saying the markets have been closed for the holiday but it seems the theme is still very much of selling chinese proxies. >> absolutely. you'll see the red picture china markets closed until third of february.

hong kong still with the lunar holiday. tokyo is okay. we do see a stronger yen australia and new zealand down about 1% south korea was the big decliner, off by around 3% it was really the travel stocks. in particular, airlines. south korea marking the biggest fall marked by the airlines off by 6%. quantas in australia off by 3% medic makers a big decline relying on chinese visitors. these names down 11% and 14% respectively hand and face mask producers, two big names we saw almost up 29%. up a maximum of 30%. those are big winners today.

generally, a weaker picture in south korea really leading lower today. back to you. matt, thank you for bringing us the latest market moves out of asia. the director general of world health organization says he's confident in china's ability to contain the spread of coronavirus and approves of the measures taken so far. the w.h.o. head spoke. we are joined around the desk by our guests patrick, i want to kick off with you. in your latest research suggest that right now we are facing a leeman-type moment that seems pretty scream given that the world health organization hasn't yet declared this a world health emergency. >> let's put it into context

china, when we have sars, 2003, $1.4 billion economy gdp 2019, $14.3 trillion 16% of global gdp. so integrated in the global process. such a big point of demand for global companies i think people are being far too casual oh, it is going to be fine that's the point 16% of china in 2003 was rural now 60% is urban they did 660 million passenger flights. they are more densely packed they travel a lot more we've seen shanghai shut down. 66 million people. >> it just seems a little

premature to say this could be a leeman moment. i get your point they are much bigger population. we've heard they are cutting off main land china from hong kong they are acting quickly. >> no, actually. they are not if you read some reports there were elements of this novo virus already out in november. a lot of stuff out there in the media about how the authorities in wuhan kept it covered up just like in 2003 the timing is almost exactly the same you go november, january to shut down cities, i mean think about the impact on economics. leman, it was a dramatic moment.

even 9/11, you had flights stop a bit but you didn't shut down cities shanghai, 24 million another place 11 million huge amounts of people a lot of chinese companies, are going to have to cancel orders and stuff like that. >> the benefits of this happening in china, if we do see this, the chinese authorities can pretty easily ramp up stimulus efforts if we start to see the virus contained to compensate >> i completely disagree with that >> we've seen them be able to pull the trigor very quickly with already adjusted interest rates to try to cushion the blow we've seen the benefit of having a centralized government in a situation like this. >> the problem like this this has happened at a time --

this is very different from 2003 where the global economy was picking up it still grew in 2003. it had just joined wto looking at the other way around, very few people really believed that most of the people i know think it is close to 3% to 4%. that was in p the background of 2% to 4% of tax cuts a massive expansion. another further massive expansion and an overall public sector deficit forget the numbers you hear. overall, they are already stimulating enormously this is not going to arrest and collapse this is the economy collapsing or the confidence in the faith of a regime.

>> i just want to bring in beata to our chat as well. how are you thinking about china growth are you pairing down significantly what you think china can do on the back of the coronavirus? >> our forecasting right now is slight slow down from 6% to 5.8% in this year what coronavirus can do to growth, these are really early stages and it is hard to quantify our economies haven't revised the numbers. what you can look at is what you can look at during the sars outbreak and beg that growth has suffered but it suffered for a quarter or so and the overall numbers, you have not seen the impact of that >> given that you are an equity strategist, we have seen a huge

rerating of market would you say that is a function of coronavirus and fears of what that could do to companies and sentiment on international scale or is it a function of pure concentration in certain parts of the stock market? there are some overvalued and some overheld? and is this an opportunity for exposure >> the markets were up 24% last year they had a strong start into january. if anything, perhaps they were markets due for a correction and the market just takes an opportunity to think about growth prospects going forward >> i guess just reading between the lines, you are a seller of chinese markets then >> let's put it in a simple back of the envelop population.

50 working weeks in the year you pretty much shut the country down economic activity has come to a grinding halt. 2% of the gdp. the idea that that loss of production will just be caught up a lot of it will a lot wouldn't come back the impact on consumer demand which is the main stay of chinese gdp growth i think it is my own personal view of what the regime will do. it is quite legitimate for them to abandon them. saying the government is on a wartime footing. you are in a war, there are no rules. i expect them to cut interest rat rates more official total debt is over 3%

of the gdp if you read the bookings, it is probably closer to 400%. china needs lower interest rates anyway leading to questions about the currency as for the gdp, i think the language will change over time and continue to grow strongly. it is ridiculous to come out and say we are going to have 5% gdp forecast hong kong university came out and said they thought there were 44,000 people in one province alone, not the numbers we see, which are the fraction of that >> it remains to be seen what the impact will be interesting perspective there, patrick. thank you for coming on the show and beate, who will continue with us. >> we are going to take a short break.

coming up, uk prime minister boris johnson will announce his decision today on whether to us huawei technology. more after the break

you are looking there at live shots from bavaria. the german health minister is holding a press conference we'll be monitoring that press conference and bring you any key headlines. here in the uk, boris johnson will meet senior ministers today to decide on huawei's role in ta the 5g roll out. many conservatives are urging against the decision many are lobbying against a ban. johnson said he believes it is possible to progress without compromising national security

>> we are going to a chief boch objectives there is no reason why we cannot have technological progress allowing businesses in the uk to have access to fantastic technology and communications but also protect our security interests and protect our key partnerships and other security partners around the world. >> joining us from downing street nice to have you with us in london for the uk government, a big day. it feels like pressure is coming from all sides no matter what they decide, they are going to disappoint somebody >> they really are prime minister is really in between the battle here. i want to lay down what is at stake here and why 5g is

disappointing. this is not about us having faster data on our phone to be able to support future industry this is a huge critical infrastructure the national security council will be discussing huawei, the chinese giant's future roll. some of these accusations from the u.s. that huawei is a national security risk and could be used for these purposes huawei has continuously denied these allegations. one, they can block huawei outright or secondly let them into the network in a partial way as part of a noncore part of the 5g network and perhaps limit their market share as well that is seen as a half way help.

you have the u.s. pushing the uk to completely block out huawei the other side, you've got the chinese wanting huawei in the network. not only with the political relationship with the u.s. and trading relationship the chinese have threatened germany with consequences if they completely block them out another thing is to consider the 5g rollout, whether that will be slowed or the impact to these carries already rolling out with some limited equipment can you see some of the ministers turning up now for this national security council britain is placed between a rock and a hard place if there is a complete block,

that will make the u.s. happy. if there is a partial allowance, that would please the chinese but anger the u.s. johnson is really in a tough position here. he'll address that as well with the final position >> thank you for bringing us up to date on a very complex decision let's get back to our guest from citi perhaps your best place to talk about the uk market as a whole here as an equity strategist you guys see the uk as a value trade. what will be the catalyst to unlock that upside >> earlier, we prefer growth over value that's where we are recommending to the clients however, one value trade we like is the uk market what we think is brexit-related

fears have derated the markets so much, it looks like a very attractive deequitization. you can do it by buybacks and m&a. we think the uk market will increasingly become an m&a target >> can i ask what is the time line you are looking at here because of a cliff edge brexit still exists in 2020 we don't have any clarity yet. would you see that investment opportunity as short term opportunity and you don't want to run it into 2021/22 >> our horizon is around 12 months i can talk about the end of the year and of course everything depends on what kind of deal the uk is going to get and how it is going to impact growth

to do m&a's, you need confidence this is what we need to be focusing on. >> can i turn your assessment on what we have seen happening on the uk sectors on the back of the coronavirus. we've seen travel and luxury many of these performed very well into the end of 2019. we saw a good run for the last couple of months of the year do you think coronavirus and the threat of the spread of that virus will put an end to that? >> what we have seen towards the end of the year was a sick call up tu upturn, hoping that would be better bond deals starting to go up as well that all ended with the outbreak of the coronavirus we think coronavirus might be just an opportunity for the

opportunity to take a pulse. perhaps the market was due a correction but the long-term story to us is that this bull market is not yet finished what this market has been doing in the last few days, it has been behaving like a classical risk sending off the sectors doing well >> thank you for joining us today on "street signs." stay with us, the hunt for a new ceo at renault looks to come to an end. more on that in a few moments.

welcome back to "street signs. i'm julianna tatelbaum >> and i'm joumanna bercetche. these are your headlines >> european stocks trade cautionly as the treasury curve inverts for the first time since october amid growing concerns

over the coronavirus software slumps. the co-ceo jennifer morgan tells cnbc she is positive on the year ahead. >> we have great momentum. we are looking forward to a great 2020 when you think about the cloud portfolio we have, it has an incredible stickiness. we've already seen where the microsuites form around s 4. renault's board will meet today to name chief executive as the next ceo as they struggle to rebuild its relationship with nissan uk prime minister boris johnson promises a huawei solution as the national security council prepares to make a decision of the huawei's part in the 5g roll out. >> there is no reason we should

not allow businesses to have access to great technology and protect security interests european markets seem to be stabilizing a bit after selling off very sharply on those coronavirus concerns the stoxx 600 ended more than 2% lower yesterday. that was the worse daily performance since october. the fifth negative session in the last six this morning, some green on the board. the ftse mib up 0.4% monitoring the moves sick si looking at fx market investors seem to be flooding into the safe haven green back

the pound at 1.30. the euro trading at 1.10 versus the dollar looking at u.s. futures. we saw major indices with a selloff. the s&p also logging its worse day and the nasdaq underperforming down under 2%. a big week for tech earnings as well concerns around the coronavirus. we are looking to stabilization. green across the board in those futures. >> luxury goods have been among the hardest hit sectors. the sector grew 5% in 2018 thanks to chinese customers who purchased more than a third of all luxury goods

lvmh is posting full results today. they'll be watched as they serve as the bell weather for the industry the focus is very much on the lvmh result. the stock did outstanding last year, up more than 50% but a lot of people will have questions with exposure to the coronavirus virus. >> that's right. it has been a beat there is expectation will be strong but the attention is shifting to what this epidemic could mean for the group the chinese consumer is very important to the luxury sector 35% of sales in 2018 when you look at the sars cry sustain, that was 2% of the sales. very different picture you have the u.s./china trade tensions that seem to be fading away

potential tariffs from the u.s. on french goods on the back of digital tax. this seems to be fading away but now this new risk coming in. investors will be listening closely to the call this evening on the potential of the wider epidemic chinese new year spending is an important moment for the group you had the hong kong protest. we saw that main land china purchases have been offsetting that slow down and the potential for growing could have an impact in main land china those questions will be brought up the attention very much despite the strong quarter and good strong results for the year shifting to the potential risk could be for these groups.

>> so much of the share price comes down to investor positioning. we have the updates last week where they came out with the goods where they raise the guidance going into lvmh numbers, look at how they are positioned. >> there is a bit of profit taking there they are very expensive stock. any opportunity they could move the stock here you say richmont, the share was impacted coronavirus very much of an impact all eyes are on what could be the impact for the year. >> thank you for spelling it out for us of course, luxury sector was one of the best last year. you've got to think there is scope for rerating there our cnbc french correspondent. today renault chairman told

cnbc in davos that the new ceo would be named in a short time coming amid questions about the future of renault's alliance with nissan amid strained relations following the arrest of former chair carlos ghosn >> questions about the alliance, what are the new challenges, how we can get out of that situation where on every mind. i can understand that. the good news,what i want to insist on, we are now in the new stage of the alliance. probably back to the spirit of the alliance when it was created 20 years ago which was a success. i think we are now shaping up the whole thing in a way that we

can only have positive news in the coming future. >> on the other side, volkswagen boss also reacted to his departure. >> it will be sad that he's leaving us he played an important role. he's one of the best marketers he has a brilliant understanding of the brand but we accept that he's going to leave and he's probably in talks with renault now >> speaking about renault specifically, we are all awaiting the big announcement and suggesting that he will be rubber stamped 2019 was a year to forget for the carmaker they underperformed looking at the stock performance with the set back by macroconcerns and questions about the future of alliance, corporate governance,

manageme management they are looking to 2020 with optimism hoping they can close a chapter and put a line under 2019 which was a year of utter turmoil. >> i thought it was interesting when you spoke to him in davos asking him what every investor is asking, he said the relationship is extraordinarily positive i'm not sure the investment community necessarily believes that >> i think what is key to that alliance itself is nissan's perspective. nissan has felt from the beginning that they are a junior partner. they don't have voting rights. renault has double the stake there has to be some sort of recar recalibration between the two. they are having regular

meetings that is as far as the appliance is concerned more broadly speaking, they have a huge, huge challenge ahead particularly with europe and the dwindling demand and the rollout of electric vehicles with the likes of volkswagen as well who are really taking the lead when it comes to their own electric rollout they've had the opportunity to think about technology renault is still a negative cash flow company let's leave the auto space and push on to financials. it's a very busy week. reporting a loss of $34 million euros. seb and sentendar report

tomorrow >> our guest joins us around the desk i think it is clear european banks are under a lot of pressure in this negative rate environment. we've seen a lot of the european banks pass on negative rates or lower rates. how is this affecting relationships with their customer base? >> as you mentioned, it is mostly limited to corporate depositors i think the banks have been able to manage that the corporate entities were becoming aware of other ways they can manage their cash the bigger challenge is how they may pass this further. at the moment, it seems that mostly, it is going to be limited to higher net worth and

larger amounts of deposits we think it is unlikely we'll see it passed on to small deposit amounts. >> which again highlights the head winds posed to the banking rates. looking at 7% below average, which is well below 11% average. how much of that gap is due to industrial differences >> really hard to see it closing anytime soon u.s. banks have reported strong results for 2019 it is going to be hard for european banks this year and next and not much to change. they don't have very many leavers to alter those one of them is looking at cost we've seen a lot of cost

restructuring by big banks rbc. credits that will continue to see that and make progress in that area. even then on the cost side, they face challenges because they have to invest in digitalization, nit and compliance the revenue picture is not likely to picture anytime soon >> this has been the theme for a long time for european banks every single conversation, the focus is are they meeting the cost targets people often forget the income part of the equation if you cut costs so much you are unable to cut your revenue, surely that will backfire as well that has been very difficult for them to keep income growing while they are cutting costs

>> of course, they are going to be affected by the overall economic environment if the economy is not growing and it is sluggish in europe, that is going to clearly effect demand for lending and other products >> on the flip side, one sector that was extremely hit a year ago recovered strongly i'm talking about the italian bar banking sector how much of that is a reflection of the politics and how much is it a reflection of what those banks have done in terms of roo deucing npls and assets overall? >> when we see it with the credit rating agency, the focus on the banks themselves. things have improved a lot from the peek of an average of 14%

down to around under 8%. still some way to go we'll still see the need for more capital into the italian banking sector but, yes, you are right. that's an area where progress has been made. >> thank you for joining us on the show head of european financial institutions group at dbrs we showed you earlier, there is a press conference going on in bavaria health officials are speaking. we have some flashes for you they have said they can use the case in germany to gain more info on the virus. this is very helpful in trying to understand more about how the virus spreads and also helps medical officials and scientists try to develop treatments.

so very important line coming out of that. >> speaking of which, you are off to this afternoon to speak to some is health officials and what they are going to do to think of a potential occur and see the longevity and intensity of coronavirus definitely something to watch. coming up on "street signs," we'll look at what slowing demand in china and the launch of apple tv plus may bring to ayituss enis. st wh by the strolle♪s

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and save even more when you say "bring my own phone" into your voice remote. that's simple, easy, awesome. click, call or visit a store today. welcome back to "street signs. we've been following the advance of coronavirus closely and reaction out of the chinese authorities. we are getting commentary now out of the china central bank saying that they are extending the markets holiday until monday they will resume trading on that

day. that is another week more or less of holiday that was announced by the pboc. they've also announced they'll use monetary policy tools including open market operations to inject funds to keep banking liquidity at an ample supply many people have been speculating what the impact will be to china from the coronavirus given the impact to companies. this is the first we have heard from the pboc. moving back to europe, airbus shares are higher after the french plane maker agreed in principal over allegations of bribery and corruption airbus cannot comment on the deals. the company has been the subject of investigation by france and britain over a decade. in europe, sap shares are lower after raising profit

guidance by less than expected the company posted fourth quarter results in line with expectations the first quarterly results since the leaders succeeded mcdeterminate who had been at the helm more than a decade. saying china will remain an important market for the software company >> we have over 70% of the fortune 2,000 in china on sap. when you look at our business in q4, 35% of new business was from china. obviously we are going to continue to stay focused on china. it is an important market for us we are getting to tech earning season apple will be reporting today with the iphone 11 and apple tv

plus sales what a year it was for apple last year. the stock up more than 100% despite fears of trade war, exposure to china, the rollout of iphone. it did end up being received quite well but it seems like the bar is really high for a repeat performance in 2020 for apple. >> it is what is interesting about 2019, is that earnings for apple barely moved they were just a shade under $13. at the end of the year, they are a shade above $13. estimates for fy 31 are up as well this has been a fantastic rerating they shurged off serious concerns, most notably in china and the supply chain there being 18% of their sales

>> on that note, china was already a concern for apple. how does coronavirus kmi -- complicate things for apple? >> what i'll say on that, none of us know whether this will be somi something that impacts sales for china for a quarter or more but also a substantial portion of its supply chain there has been an announcement of fox com that they need to produce production we don't know how long this will take but it will be a topic for the call tonight >> of course, apple is not just about smartphones. 20% of the revenue does come from services. do you think we'll continue to see that growth? >> the unusual thing for apple,

despite services being higher margin, higher growth margin, they are at a 10-year low for overall operating. these services should have been driving much higher operating margins. i think it is fair to say, some of these, you mentioned apple tv plus are still not generating are he have knew you buy an apple product and get the service a year for free. we have yet to see if these will be stand alone revenue generators >> thank you very much that wraps up "street signs" for today. i'm joumanna bercetche >> and i'm julianna tatelbaum. city with cnbc hi i'm joan lunden.

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good morning it is 5:00 am here is your "five@5." coronavirus continues. death toll continues to rise companies are warning against travel to affected area. giving wall street new hopes lifeline for boeing as they expect a bigger than expected lending package. an