announces 6 billion euros for tsmc.d apple good morning. just under an hour away from the start of the cash equity trading day. let's have a look at what the futures are telling us about what that they might look like. we are expecting to see a bounce at the start of the trading day. we've had a briefing from the chinese around coronavirus. the fact that we are getting regular briefings, there is a level of urgency in the program that has been brought into play. a lot of contrasts drawn with sars. that has given relief to markets. , more risk onrner than we were yesterday. u.s. futures pointing to the upside. movements on u.s. futures, a similar dynamic going on. let's have a look at the dmm and what we have in terms of the latest market moves. the hong kong market bouncing. the csi 300 bouncing in china. that press briefing from the chinese was really changing minds in the short-term. we are waiting to see how serious this becomes, this news flow surrounding coronavirus. the death toll is climbing slowly. some breaking news for you. we have the malaysian rate cut that you just saw on the screen. malaysia cutting its key rate to 2.75%. that seems to be in interest-rate cut that has taken the markets by surprise. the buyers for emerging markets ease towards cut for 2020. there have been a slew -- few surprises. south africa was a recent one. every coming through with numbers. the luxury goods company beating estimates. they see full-year revenue up. low single-digit percent. they are in the midst of a turnaround under a new creative director. it's interesting to see whether the stock continues to bounce back. we saw a big selloff in luxury goods. a climb back up words from those earlier lows. all that has to do with the coronavirus in china. we will look for updates. that is something that the luxury sector ahead of the , that isunar new year crucial for luxury goods retailers. executives are gathering in davos to talk shop while tackling inequality and the future of globalization. haslinda is in davos for us. i hope you are not too cold. haslinda: it is not too cold. it's about five degrees. two years ago, it was -20. we are doing pretty good. joining me is chairman and ceo of apb and electrical equipment firm that sells to 130 countries around the world. good to have you with us. the global manufacturing slowdown has impacted your numbers. do you expect the slowdown to persist? >> industry by industry, it is different. where we saw a pronounced was on the robotic side. in many other areas, during 2019, we were still growing. it's a real mixed bag out there. clearly, what deal it tronic side and the automotive side, this is some slowdown. i think the economy is behaving better than what we expected a few months ago. haslinda: there could be some concerns. we were talking about the coronavirus, for instance. what would be your biggest worry as you look ahead? >> the way we look at the market as businesses, we want clarity on the legal side. and then we take a long-term view. roboticsilding new factories in china. the most modern one ever built in the world. against the slowdown in order to be prepared. 2021, as we are helping the industries in their transformation on the digital side, we are well positioned to help them and help them increase their productivity. clouds on theg horizon which could slow us down. aslinda: there seems to be focus on renewable energy. how do you see abb benefiting from that? >> 60% of our revenues are actually in the field of building a new energy system electric vehicles, infrastructure charging, electrifying mobility in a wider sense. that is an absolute. for us. it is a strategic strong point which we have. already 60% going into those type of businesses. hence, we are enjoying gross. it is also tough competition. i think our renovation capabilities to help us to win enough revenues to go forward. haslinda: you expect to receive more orders from mobility products? >> we are number one in infrastructure jobs for electric vehicles across the world. we are also working on electrifying us is, trucks, trains, jets. but is a growth industry which we have. that is the one side. the other side is clearly on the data sector. for example, they need huge electricity power. these are all growth markets which we are well-positioned for. haslinda: you embarked on a portfolio review. what asset cells can we expect? how aggressively you be? revenues whichf we are looking at. we see a long-term strategic value for us. we have sold a few of them already. we have not completely close that program yet. but we will go through that. at the same time, we are also investing. we are buying companies in china. a charging company. we are doing both things at the same time to strengthen our businesses which we keep in the long-term. also cleaning the portfolio and selling things where we are not the right owner in the long-term. haslinda: how about electrification, your electrification business? would it made sense for it to be sold? with the next ceo be doing that? >> we have a strategy which we have published. we have agreed in the board of directors with management. that is based on four businesses including electrification. that is what the new ceo coming in will develop and strategically execute the plan's and increase the operational performance. about portfolio transactions at this stage. haslinda: four more weeks two-year term. what do you think his priority should be in the first three -- few years? >> business lead structures. he can finalize that. and actually put a lot of emphasis on operational performance. our operational performance from a competitive point of view has not matched our expectations over the last few years. that will be his prime goal, to accelerate the delivery of the strategy and the operation of performance. they will have the time to do this. we are waiting for him now to take the next step in bringing abb forward. lots of questions as to whether he can raise the stock price to 35 francs. that is a 50% upside. how confident are you? >> i never forecast share prices. haslinda: what would it take for your share price to get to 35? >> i think that is the wrong question. let's ask it a different way. you have everything you need to increase the value of the company. how that will be measured in the stock market, i will leave to the stock market. we are so well positioned strategically. in all the areas where the actual world will need to generate new technology, new inventions, we will need to ditch allies the business model. that is where this electrification is actually at home. from that point of view, there is untapped value which we will want to realize. gaining the trust of our investors even more. therefore, the value should be reflected in the stock price. how much that is, i leave that to you and others. haslinda: the number to watch is 35. think give so much for that. -- thank you so much for that. we are coming to you live from devils. anna: thank you very much. lots more from the devils team as we go through the program. breaking news from the u.k.. news out of same stories. -- sainsbury's. simon roberts will be the new ceo. the director of retail operations. they are trying to integrate there are goes business. that comes on the back of that high-profile failure to tie up with asda. coming up, we are headed back to switzerland. we'll be back on the slopes of devils. the after getting to -- estrogenic a ceo will be there. don't miss it. this is bloomberg. ♪ anna: welcome back to the european open. 7:13 here in london. set ton equity markets bounce at the start of the trading day. a little bit of, round the chinese virus situation in the short term. let's get back to the world economic forum in devils. sustainable iste the focus of this meeting. the first time ever it is the focus of discussions here. joining me now is chief executive for astrazeneca. you have made a commitment for zero omissions for 2025. what was the tipping point? >> pleasure to be here. the tipping point is to do the right thing. i believe we are facing a climate crisis. every company has to do something. i have a grandson. they are going to look at me and say, what did you do? they are expecting us to do something. haslinda: how about shareholders? how much pressure are they putting on companies like astrazeneca to do the right thing? >> shareholders are starting to show that sustainability matters to them. there's more and more of our shareholders asking. it is what we do in this area. the pressure is not yet strong enough, to be frank. companies will have to incentivize to do something about the climate crisis. haslinda: how should they be incentivized? >> everybody will be incentivized by the wrong thing. as a leader, you talk to your children. children will look at us and say, what did you do for me? our grandchildren were say, what did you do for me? the millennial's, young people are expecting us to do something. i think this is really what will drive everybody ultimately. shareholders should also demand that their companies do something. what is the point if nothing is done? haslinda: you establish flexibilities in china. how soon do you expect to be china -- china to be a major player? >> it is a major player. thathave large companies are consolidating. they also have a very vibrant biotech ecosystem. you see small and medium-size companies emerging in china very rapidly. haslinda: a lot of potential in china especially with the aging population. you are seeing headwinds when it comes to prices. what is your take on that? are you concerned that other countries may adopt the pricing model that china has done? >> the way i look at china, we are number one in china, china is normalizing. strategy is's clear. he wants china to open up to the world. what that means for the pharmaceutical industry is that they are fast tracking innovation and new products and reimbursing new products that would not have been reimbursed in the past. they are trying to save money. everybody is trying to save money on these products by reducing prices. there's nothing unusual here. it's what's happening everywhere else. haslinda: in terms of the challenges you face in the drug industry right now, what would that be? challenge is to ensure that society is around the world, particularly in the developed world. understanding the need to have a proper reward for the pharmaceutical industry if you want us to invest innovation. think about 20 years ago. it is much different. survival rates have improved substantially. in most countries, they are improving a lot. the u.k. is a good example. we are based there. the u.k. has had improvement in survival rates. innovation in the u.k. is not adopted very quickly because there are lots of barriers to adoption. haslinda: you talk about cancer. a current space. you talk about innovation. where do you see the biggest risks for cancer in the next five years? >> it will continue to be in the area of procedural medicine, immuno oncology will continue growing and developing rapidly. it has not progressed as quickly as we might have thought a few years ago. we will get there. there are many new technologies that are emerging that will lead to breakthroughs in the treatment of cancers. haslinda: as the industry picks up, there are concerns about how drugs are disposed. there have been reports of drugs being disposed in streams. inulators are not consistent the recommendation of how they should be disposed of. what is your take on that? what can there be a standard regulation? >> like many things in our industry, regulation will globalize and normalize. i think we need to make sure that the disposal of drugs is done in a proper manner. this will happen. every country will come up with their own regulation. patients will be advised how to do that. haslinda: as we sit here, there are growing concerns about the coronavirus in china. it seems to have picked up pace and spread in several countries now. what is your take? how contained can that be? >> we have to wait to hear from --. it looks like it is relatively contained. this is a threat that should be taken seriously. we will come up with recommendations on how we should deal with this. believe me. i think personally, there's a bigger threat. that is global warming. climate change. we need to do something about it. haslinda: to do with the coronavirus, will any lessons be learned from the sars outbreak? >> absolutely. lessons have been learned. viruses like the coronavirus keeps mutating. new viruses, just like the flu, it except sars is even more dangerous. they keep mutating. you have to adapt and react to these new viruses. haslinda: one final question before we go. what excites you the most? clearly, the explosion of science. it's not only about astrazeneca. it's about the world. the solution to the threat we all face is technology-based, science-based. in our company, we follow the science. that is one of our values. themost exciting is really explosion of new science and new medicine that will help us develop new medicines that will modify the treatment of cancer. our goal is to eliminate cancer as cause of death. it is not that far away. haslinda: thank you so much for your time. there you have it. the ceo of astrazeneca coming to you live from the world economic forum in davos. anna: thank you very much. there he interesting conversation touching on something that is preoccupying investors at the moment. climate change is one of them. also contagion fears around the coronavirus. coming up, we will continue to talk about that. carrie lam tells bloomberg how hong kong is using the lessons from sars to protect against the coronavirus. that interview, we will bring that to you next. this is bloomberg. ♪ anna: welcome back. 35 minutes to go to the start of equity trading europe. the coronavirus is spreading. china says it will start to tackle screenings the outbreak after the number of mentality's has risen to nine. there are no confirmed cases in hong kong. carrie lam told bloomberg that the city is planning for the worst. >> i am very concerned. from the 31st of december when the first notification came, hong kong has artie put in place a highly vigilant system. we learned from previous incidents, over sars and other infectious diseases, that in order to bring the community anyther, to control infectious diseases, we have to be very vigilant. sometimes doing more than we should. we have to be very transparent with the people so that they know exactly what is the situation so that there will not be unnecessary fear and anxiety. s have been hosting daily meetings with the experts. we will continue to exercise that high level of vigilance. at the same time, we have to plan for the worst. up until now, we have not had a single case of confirmed coronavirus yet. we have been warning people. they could come at any time. >> are you confident china can contain it? thaten the who has said they are assured by the measures taken. i understand that there will be a videoconference between the theland authorities and world health organization. hong kong will continue to receive through the establishment of vacation system the latest information and our experts will continue to of isaiah's -- advise us. this really requires community efforts. we are appealing to the people of hong kong. it's better to plan and be very cautious in order that we could prevent the spread of this disease. >> has anything been learned from the sars outbreak that could be implemented to ensure that there's no contagion? >> we have learned a great deal from the sars incident. we have put in place contingency plans in the hospital authority. we have provided, when needed, more isolation facilities. we have planned contingency measures for isolation facilities. on neededocked up equipment and materials. i hope very much that what we have learned in the past could help us to overcome this public health challenge. matt: that -- anna: that was hong kong's chief executive carrie lam endeavors. keeping an eye on the market reaction to the coronavirus. we see some bounce in the hang seng. we do see gaining stocks -- gaming stocks are the latest ones under pressure. health care stocks gaining. plenty to come from davos today. we will speak to the ceos of here on this right program. much more to come as the program continues long into the afternoon. this is bloomberg. ♪ ♪ hey. hey. you must be steven's phone. now you can take control of your home wifi and get a notification the instant someone new joins your network... only with xfinity xfi. download the xfi app today. anna: welcome back to the european open, 30 minutes until the start of equity trading in the cash markets. a slightly different outlook it would seem for the china coronavirus from market perspectives. china will implement nationwide screening in a bid to contain the coronavirus which has claimed nine lives. and the 13 provinces five countries, including the first in the united states. it is having an impact on markets. we saw a reaction in equities and various sectors, and an impact in commodities markets. we are joined from hong kong. how will an outbreak impact oil markets. we saw oil prices selling yesterday in conjunction with the selloff in risk assets. is this a fair of a lack of travel around the new year? >> yes, exactly that. goldman pushed some numbers around and quantified it using a guide. demand may drop 260,000 barrels per day. that is not surprising given the impact to travel and flight. if we put that into perspective on oil prices, and how it might hurt oil prices, about a three dollar drop, which goldman describes as modest without some supply response from opec. anna: thank you for the update. some big names to look forward through the day from davos, we will speak to the french finance minister, the u.s. transportation secretary and the prime minister of jordan. later, the ceos of nestle and coca-cola will be joining us and climate change will be part of the conversation, all here on live tv and radio. this is bloomberg. ♪ anna: welcome back to "bloomberg markets: european open." of thetes into the start cash equity trading day, and we could see about after yesterday's selling. let's get back to davos and francine lacqua. francine: he is our 15th guest of the day, but he braves the cold. he is here to talk about banking and sustainability, and the changes in his industry. , ceo, barclays . jes: through the first nine 2019 we gained market share against most of the u.s. investment banks, and the press reported to the first nine withs we were ranked fifth one of the u.s. banks having a lower share than barclays. if we can stay in both rackets, being british becomes an advantage. after brexit even more. allowing investors to have a and hiring base someone other than an american investment bank, it has advantages being a british universal bank. we can and do compete. francine: are you expecting a helping hand from regulators to deregulate and look at the u.s. model? jes: we have all said, and i have been under mark carney's view that given our u.s. presence, and 40% is in our u.s. investment bank, we need to be focused on the regulatory environment in the u.s. having the flexibility to watch the fed and u.s. treasuries and what they are dealing with the financial system is important to barclays. >> the trading figures were through the roof, what does it mean for barclays? about hownnot talk the fourth quarter or first quarter is. we announce our results in a couple weeks. that thet is hopeful capital markets in europe and the u.s. will start to have a back in the go direction of travel that we saw in 2016. the capital markets are getting bigger. the requirement for liquidity is there an real, and hopefully that translates into greater volumes for the intermediaries and investment banks, and barclays will benefit from that. >> do you plan to keep running the investment bank or name a new head? jes: we put three people from the head of the corporate bank in markets on the executive committee of the bank, and that gives me a more direct line of sight. they are three great professionals. francine: what are you expecting from the chancellor with the budget? does it shaped the way you want to organize the bank? 2020 will be different in the u.k. than 2019. we will have a lyrical certainty and there is a political power that has a large majority. the reality that you hear a lot of avos, we are coming out 10 year economic recovery with record low unemployment in the united states and the u.k., yet there is no sign of inflation. this time last year central banks were talking about raising interest rates, that was forecasted. now they are talking about cutting interest rates. the response has to be that we cannot rely on monetary easing to get economies going, we need to spend. we need fiscal policy. in the u.k. the fiscal deficit was 1% of gdp. they can take that higher, and when you hear the new prime minister talking about investing in the north of england in he is going to provide a fiscal stimulus for the british economy. game changerthat a for barclays because consumers have more money? jes: we clearly are connected to the british economy in a major way. the economy is growing at a marginally faster rate. consumer credit is in better hands. lender to small businesses. having that robust economy is a positive. >> speaking of interest rates, that was a big discussion at the trump speaks, what are corporations thinking? how is the corporate community soaking in what trump had to say? jes: i believe there is a sense that in the next 12 to 24 months we will have economic growth. places likeower in china and germany, but there is economic growth out there, and there is reason to invest and be more optimistic than business last year.e the only issue is if we are wrong. francine: are the animal spirits right? our chief executives optimistic enough internet trump came here onhout putting extra tariffs europe, and they are ready to put money in? capex?money in in: supply chains get broken productivity slips and you start to see inflation, we have a long way to go for central banks to correct monetary policy in case that happens. it looks like good news, but if you see inflation, we have a lot of correction to get monetary policy in the right place. >> what is the one big risk? it is always hard to predict that. get itlly we sometimes wrong, but being in this industry for 40 years, it generally starts with credit somewhere. there is a lot of credit. fascinating number today, oxford university just raised a 100 year bond at an interest rate of 2.018. give credit is not available that you can borrow, people may get overextended. if there is a shock two inches rates, that could be a shock. francine: where do you see bubbles in the market? asset violations are overall high, and we have extraordinary valuations in some tech sectors, particularly large tech players in the u.s. when you have zero to negative interest rates, almost by definition you will have bubbles. you want to ride that wave, but keep your i open for when there is a correction. francine: could the u.s. election be a game changer for markets? depends on who is on the other slate. i think the trade deals announced last week are important, phase one with china, there is a long way to go but that is indicative of the way of travel in an election year. and the trade deal with mexico and canada, now let's see what the u.k. does negotiating with the european union and the u.s. government. it has a solid majority in parliament, and an active push to get a trade deal done is in everybody's interest to get uncertainty behind us. having brexit behind us will add momentum to the british economy. barclays credit story, is a huge leverage lender, what are your concerns in that market? market.has been a store we do like that market and have great relationships. there has been enough flex. even deals harder to push out, the market has absorbed them. the market is reasonably robust. we are cautious about which deals we go into and turns him down. overall the leveraged finance market is good. >> how would you describe competition with other banks? jes: as we look back, and the next market correction comes out of credit, i bet we will look at those institutions outside of the traditional banking industry and looking at the transformation of how they are funded versus how they are investing. for now, the economy is in reasonably good shape, and with interest rates this low, it is hard to see a crack in the credit markets. what we will see now from the bank strategy, that is pretty well set and people buy into it, the shareholders buying into that. our performance shows the wisdom of that universal bank strategy. the challenge for these major institutions will be around climate change, and how we think about preparing barclays for climate change, and our role in getting to a carbon neutral global economy. francine: shareholder activists want returns. will they ask you and other chief executives to be more sustainable? jes: when you read the ceo letter from larry fink, the biggest investor in the world, people are going to want both now. i do not think it will be purely the profit motive or shareholders interest in the bottom line. all of us need to embrace we have a climate change problem and we have to have a purpose to do what we can to get to a carbon neutral world. on it fors focused sure. hopefully because of technology through industry, it is a win-win. we should not look at confronting climate change as a negative scenario. it should generate investment and employment, so there is a win-win. >> if larry fink is asking you to change, will he ask you to stop lending to companies like oil and gas? jes: the conversation we focused on climate change and for major institutions to work towards a carbon neutral environment, that is real. that is real for blackrock and other shareholders. it is a discussion and a dialogue barclays has to have with its constituents. prices will be shifted during this transition, do we need more transparency to figure out the carbon price, and understand how you become more transparent? and how much of a shift in asset prices will there be? a very positive step forward by the bank of england was to bring climate change into stress testing of the financial system. ust is going to focus all of on what will climate change due to valuations and prices and sea levels, and how does that impact us? giving that a framework around what is happening with the climate and how it will impact the financial system is healthy for the banks, and great to have that partnership with governments to start that initiative. it is complex, and it will take years before we figure out how to navigate up this river. >> if you look at j.p. morgan and goldman sachs, they are pushing into germany. bank,ig london-based where are the other opportunities in europe? europe.are all over what we did in response to brexit is we strengthened our bank subsidiary in ireland and took our branches across europe from berlin to milan, and we are now the largest bank. we are prepared to do tomorrow what we were doing before brexit. it is a strong client base. we are obviously strong in the u.k. the partnership between europe and the u.k. is not going away. we like the position we have, and we have been adding staff there. we look forward to competing with the european and american banks. francine: will the european banks consolidate? i do not need what needs to happen -- i do not know what needs to happen for that to happen. legal flamer the to consolidate that position. and what we think of lot about at barclays is every major bank is in a technology arms race. what is happening with digitizing and competing with apple pay and amazon and fintech , we are investing billions in new technologies. we downloaded an updated version of our mobile app every week. you stop doing that to do a big market integration where you will spend years figuring out who's hr system to use and whose database to use, you will wake up and be behind that game. francine: how many banks to we have, too many? as: it is tough to run banking system with negative interest rates. that is a challenge in europe. i do not think it is over bank. -- overbanked. it is tough with negative interest rates. you may see consolidation. i have lived through two of them, and most often they destroy more value than they create. francine: why is it tough, the culture? jes: integrating the technology platforms is very tough. putting investment bankers together almost never works as a cultural matter. , thank youes staley for joining us, that was the barclays chief executive. lacquahank you, francine and jes staley. they were talking about climate change and what impact it will have on the investment community. we saw lines across the bloomberg, mark carney is speaking on a panel in davos just across the way from our guests there. mark carney says there needs to be a climate transition program. deutsche bank is talking about how investors and companies have not decided how much they are willing to give up on any transition in terms of growth aspirations. risk istransition becoming more important. this is an ongoing theme. itwill continue to cover from davos where it is getting a lot of attention. let's get to markets on the move, we have seen a lot of reporting in the italian media whether we will get the five-star leader. they face regional elections sunday, and the fragile coalition does increase the chances of a snap election, and the markets are speculating it does. we see a slight push up in italian yields. the open is next. we will look at stocks to watch. this is bloomberg. ♪ anna: welcome back to "bloomberg markets: european open." seven minutes until the start of cash equity trading, and it could be positive as we bounce back from losses at this time yesterday. that's get the business flash. >> netflix posted results with overseas growth offsetting a slowdown at home, but the company feels it will add new customers. they will increase spending on shows. it will increase competition from apple and disney. bank of america wants to get bigger, it's chief executive sees plenty of room for growth. >> there is an opportunity in the united states, even though our market share is high, the are 12 of them. the reality is up until two years ago, we were not in seven of them. if we feel that, that is a lot of growth. >> that is your bloomberg business flash. after a slight slump yesterday, u.s. futures are rising this morning, setting up the main equity gauge for another record high. here is dani burger. access hasrchers say reached a record, and 12.5% of the new york stock exchange volume was coal options, the second record in a consecutive week. a lot of bets that stocks will rise. hedging barely any according to sundial capital. directly from the research report, they say among everything we follow, this behavior is by far the most troublesome, and should be a worry for anyone buying. matt: thank you very -- anna: thank you very much. foreign a half minutes until the start of equity trading and teachers suggest we will be a little higher. suggest we will be a little higher. china is getting out in front of the coronavirus, which is well-received by the investment community. look out for italian banks and what is going on with chipmakers. we see big buybacks from asml. bloomberg. ♪ sometimes your small screen is your big screen. and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. whether you're travelling around the country or around the house, keep what you watch with you. download the xfinity stream app and watch all the shows you love. start of cash equity trading's. headlines. asset and occupation, china's coronavirus outbreak is spreading. talian bond yields, watch for knock on effects for italian banks stocks. announces a 6 billion euros buyback. 30 seconds until the start of cash equity trading here in europe. futures suggest we will be a little higher. we do have the coronavirus and rising, butunt is chinese authorities are speaking publicly about this and talking about public health measures to tackle it. dewpoint to the upside. we will see a little bounce do point totures the upside. see that bounce coming through this morning. u.s. futures have consistently been pointing to a bounce. we have at the start of the trading day, the danish market getting off to a decent start, up by 0.3%. 0.2%.se 100 up by from a tech perspective, keep an eye on the banking sector. we heard from jes staley about the prospect of consolidation in the banking sector, he does not think there is a legal framework for that. that is what we have on european equity markets. onngs are looking more mixed european equity markets. let's look at the individual movers. we have one of the biggest movers, barclays, we heard from them. this is a housing business, barclays up by 0.4%. these are some of the movers to the upside this morning. we will have the european equity 0.1%, broadly speaking by not a great deal of gains coming through. the futures have led us to believe that we would see something more sparkling to the upside at the start of trade. .et's linger on these gainers --omberg was reporting on the downside, we have a mixed bag of movers, including asml. there,ck is announced but some concern around the sales picture for the first quarter of. that stock, the chip equipment maker moves lower as a result. monitoring the effects of the coronavirus in china and the way authorities are managing matt. -- are managing that. just a look at what is going on sector wise, we have neglected to do that this morning. we have a number of sectors to the upside. insurance and telecom to the upside. leisure make some losses. overall gains around their .8% for europe. world leaders are gathering in inequality,k shop, and the future of globalization and climate change. risk skit back to francine lacqua. francine: i am delighted to be intesaby carlo messina, sanpaolo the forefront of nonperforming loans. are you going to get more involved? 2020, we completed the business plan. shape with other peers due to our business model. it is a unique business model. significant growth, so we are close to the european level. francine: how do you describe the current state of the italian banking? there are things to be done and whether consolidation will take place? bettermy view is much than what is perceived from outside. the situation of the italian banking sector is in good shape. the italian banking sector is better than france and germany, which probably there is less emphasis on minor banks. if you have a problem in a minor it deals like a problem of the italian banking sector. francine: will it be fixed? it is a small bank, but the perception from investors is if you cannot fix that, you worry about the system as a whole. carlo: it is not true because in , theree the intervention will be a public intervention. it is under control. there is no more problem in italy in the banking sector. what will market activity look like in 2020? carlo: the situation in looking at the market and the different environment is in italy we will have an acceleration. that is my view in the italian banking system because italians, , it isis level of spread so strong all the players involved in wealth management 2020 to a positive 2021. francine: are people optimistic or pessimistic? carlo: looking at the perception, my view is there is too much pessimism. the situation in europe and than whatore positive is perceived from outside. economyook at the real and consumption, all these data are positive. i am not talking about growth china style. it is growth and enough to say for a country. francine: what about political stability? carlo: political stability in italy is something that is havecult to say you can stability. is reality in our country the companies and the families are so strong that it is not so important in the political sector. we are used to the situation, and we can deliver a trend of growth without any kind of intervention from politicians. then the politicians can do a good job and italy can grow at 2% gdp. the real economy in the country thate to the strength italy can grow at this level. francine: how big of a problem are negative rates? carlo: negative rates are a problem for the banking sector, that is completely true. for us it can be an opportunity because in an environment with negative rates, and especially an environment with stability, people with families are moving into upper management due to the fact that we are in a good position looking at the sector and benefiting from this situation. this cannot be for the next possibility tois have positive, but for us it is not negative. francine: is there a danger of a pricing risk? carlo: that is completely the problem. drug.something like a if you continue this way -- my expectation is you can continue another year without any impact that could be not so significant . in the medium-term, this cannot be the way you manage the real economy. my expectation is this trend will move to zero rates and some positive rates. aancine: are negative rates hindrance to cross-border consolidation? carlo: negative rates can try to accelerate analysis on cross-border consolidation. the real point of cross-border consolidation is if you look at europe, you will see in china that you need some champion to compete with the u.s. all the big players in europe. tothe medium-term, we need have consolidation, but we need to have some rule of the game that is the same in all the european countries. that is a problem of europe not trying to create a unique europe . the ecb is trying to push for this process. it can happen in the future. francine: you think we will have some european champion to take on j.p. morgan as long as the regulation is the same in the u.s.? carlo: if you want to play the game from a geopolitical point of view, if europe wants to play a game, we need to have champions like j.p. morgan, that is something you need to have in europe. this in my view will happen. today it is not possible, but if ,here are conditions cross-border consolidation can be the future for europe. francine: carlo messina, ceo / managing director, intesa sanpaolo, thank you for joining us. thank you very much. picking up on the m&a and the banking sector, and talking to jes staley. we got important news daimler in the auto industry. in the financial year 2019 they have given up their e-book number, 5.6 billion euros, but it needs to add into that. the additional expenses for ongoing government and measures relating to diesel vehicles in various markets, as a result of that we have a warning from daimler in relation to the profitability. aey see 1.1 billion euros to half billion in diesel related expenses. the movether stocks on when we return. this is bloomberg. ♪ anna: welcome back to "bloomberg markets: european open." day,nutes into the trading and the session is positive, all things considered, up about 0.8 is sent. -- 0.8%. price hasr share recouped some of its numbers. >> asml is launching a share buyback as much a 6 billion euros. the equipment maker says it wants orders for nine more this machines and says 2020 will be a growth year for sales and profitability, and is an important supply for chipmakers. posted resultsix after a slowdown at home. they expect new customers the and arequarter increasing spending on shows by 20% after competition from the likes of apple, comcast and disney. the electric car company looking to sustain a level that will be a massive payout for elon musk. it could net him $350 million. that is your bloomberg business flash. anna: let's check out what is happening in the markets, making muted gains. italy to the downside. it knows a bit of heat from the update on daimler. need tolly saying they add in unforeseen expenses around dieselgate. , butw the share price drop autos are a mid-performer in terms of the sector picture. theand gas is back to downside. let's get back to davos were francine lacqua is standing by with another guest. francine: we are joined by the credit suisse chief executive, tidjane thiam. i will start with u.s. banks. , j.p. morgan, should european banks compete with the u.s.? djane: we have a chance with a clear strategy. we have chosen to be a wealth manager with strong banking abilities. in that space the results have been good and we are in a leading positions in a number of markets. francine: can you compete if you have different regulations and negative rates? it does not make it easier, but if we are focused and know what we are doing, we have a chance. if you look at what we have done we are in a leading position and doing very well. we are not an u.s. wealth management, but that is a strategic choice from many years ago. in america we do investment banking, and we are restructuring our markets. we are top five in equities and doing well. francine: what your clients tell you what they want in 2020? is there a lot of pressure giving them outstanding returns? tidjane: it is early days the people are positive about 2020. are u.s.-china trade agreement is good for markets. esg israel. -- esg is real. are large, and on the retail side, and because we are in the wealth management is this, we deal a lot with the next generation, and they are on the businesses we are investing. we created responsible consumer products and are investing in companies that are responsible. francine: what does it mean to hold feet to the fire for companies who do not do enough on esg? on back, we said in december we will not invest in coal mining. but we are focused on the transition. we need to transition to a lower carbon economy, but that will require a lot of resources. initiativeransition that we are driving to ensure companies that want to transition can transition. francine: does that go away in a recession? tidjane: i honestly do not think so, it is important. we keep driving that agenda. francine: yesterday your biggest rival, ubs, changed some of their targets to the downside. what is the read across? tidjane: as you know, i will never comment on the performances of our peers. 2019 was significantly better than 2018, and we stand by that statement. we moved up our targets by one year. the key thing is momentum. what i like is not the absolute level, but we are improving profitability year on year, and that is the long-term story for investors. goncine: will negative rates further negative, or is there a realization among policymakers that they need to rein it in? tidjane: there are two factors toving that, some are linked the crisis, rescuing the banking sector. others are more structural, with the aging population. onse long-term trends weigh the level of rates, and you can expect them negative are not to stay low for a sustained period. francine: what does it mean? tidjane: we need to be efficient. you know the work we have done to reduce our cost base. de-risk, and be able to navigate that environment because there is a layer of political risk that adds to the difficulty. i am still very positive. francine: worldwide? tidjane: in europe, but worldwide i am positive because we see growth everywhere, we see growth in asia, we are positive on asia and in latin america we are bullish and doing well. middle east is doing ok. africa is doing well, so lots of the world. francine: 2020 could be the year where europe does better than expected. what are you concerned about in europe? the mechanics of how things get done? tidjane: we are quite lucky because in europe we are debt to gdp ratio in the eurozone. i am moderately optimistic. things are getting better. some reforms will improve, but it will be a long journey. francine: what is the one thing that will impact market volatility, the u.s. elections or politics? tidjane: it is hard to name one thing but the u.s. elections is a big factor, depending on how it goes and how uncertain the outcome is, you can expect volatility in the markets. francine: our chief executives ready to put money back in investing in the real economy? tidjane: yes, i think the mood is better. i am cautious because the last three years we are here in january and we are positive, and there is something, a government closes down, etc. we are cautiously optimistic. pipeline,k at our m&a up 90%. there are signs and signals that are positive, but it is early in the year, three weeks into 2020. i remain cautious. is brexit fixed? we do not know the trading relationship. tidjane: a lot of uncertainty has been dealt with. a strategy ofe focusing on spain and germany, that has worked well. we are quite pleased with the way things have unfolded. francine: when you look at the phase one deal, are we going to get a phase two? tidjane: i think the latter, there will be a phase two, and we are pleased there is a phase one. it is an important signal, and it has been proven the u.s. and china can agree. what will bonuses look like for bankers? bit of the is a same. we are still closing the year. it has been a reasonably good year, but we are coming out of deep restructuring. results,eased with the but we need to be cautious because investors have suffered dilution, and we need to find the right balance to reward are investors and staff. the return on capital of 7 billion after raising 10 billion is very positive. francine: are you expecting consolidation? to change for real consolidation to happen? tidjane: i think it is desirable. if you look at the top concentrations, the top five european banks were much lower for this to happen, but the regulation needs to allow that to happen. about people need be a goodbanks would thing for the european economy, but we have a job to do to convince the public that larger banks can be safe. francine: does the banking union help with that? tidjane: yes, that is very important. a level playing field, flexible labor markets, a lot of things can move us in that direction. it will happen, but it will take some time. francine: you have been in the news because of the spying scandal. when will that be over? tidjane: we have talked about it publicly. measures ton improve our policies and internal processes. seems to betention regularly, but these are being investigated, and as investigations conclude, i hope we can move beyond that. internally, it is very important for me that we do not get distracted by all that, and i think when you see our results, the staff continued to focus on serving our clients. francine: can you say with certainty this will not happen again? tidjane: yes, we put in measure policies and processes. francine: what is most important to you in davos, business deals were listening to some world leaders? yesterday i was at lunch with multi-national development banks, that was very good. the asian infrastructure bank, the world bank. when we talk about esg, we have to develop projects and eight public-private partnership that have a big role to play. we are excited about that. we are focused to combat pollution and are working closely with a number of ideas. that is exciting. francine: what do you need from regulators are government? we are lacking common definition. tidjane: yes, standard is a very important. to avoid negative aspects we need standards. we are working on it. we have a climate bond initiative, and developing standards so the bond market can grow. francine: where do you see most of the appetite? is it coming from your asian clients? tidjane: across the board. look at china. europe it ison in well it is really across the board, and driven by clients and investors. i'm looking for the right word -- their fiduciary duty as owners of the asset applying more pressure on them to see all that money is put to a productive use. francine: i do you have to run, but as you look at asia, where are you most optimistic? we talk about supply changes because of the u.s. and china trade. will places like vietnam see more growth? tidjane: we are very positive across the board. philippines is also an exciting country, thailand continues to do well. all the asian countries. singapore, malaysia. we think it will be a good year in china. overall, we remain positive. 200 billion in assets in asia and we will continue to grow in the region and continue to invest. francine: welcome to instagram. tidjane: oh my god. francine: it has been two does. taylor: -- days. it and amxcited about learning. francine: is it a good way to talk to millennial's? tidjane: i was not an early adopter, but i'm a happy adopter. francine: thank you for the conversation. the chief executive officer. we will send it back to you in london and i will be here with many more interviews from davos 2020. anna: francine lacqua with tidjane thiam on the slopes of davos . let's get. to laura wright in london. jeff bezos mobile phone was hacked after he got a message from the crown prince of saudi arabia. digital evidence suggests mohammad bin salman's message led to the breach. if says the allegations are absurd and has called for an investigation. governments can't tackle climate change alone. companies also have to take charge according to blackrock's larry fink. he thinks dealing with the challenge requires long-term planning. last week, he outlined a plan for blackrock to adopt climate considerations in managing it $7 trillion in assets. it is not going to be fixed by a central bank. it will be fixed by accommodation of public and private. laura: boeing says it has grounded 737 max won't be clear to fly into the middle of the year. that is six months later than previous planned. it has faced recent setbacks. moreoftware will require work and some wiring needs to be shifted, but it will be u.s. regulators who make the final decision on when it is ready to fly again. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. anna: thanks very much, laura wright in london. councilonal economic director larry kudlow says china's willingness to change is a great building block for phase two with the united states. in davos asked about the details of the phase one deal including an agreement on goods purchases. >> phase one is about breaking down trade barriers. that's very market oriented approach. we are saying you give us a chance, the united states a andce to sell you goods services and technology and energy and agriculture and so forth, and we will beat the pants off everybody. we will outcompete. just give us a chance to do that. that is free enterprise at its best. i acknowledge your point, but those are not so much government management as they are targets. that's the way it was always targeted. hopefully they are realistic targets, and if we can get those therts in the next year and year after that and so forth, that's a big growth factor for the united states. that's a huge growth factor and china wants them. they are willing to import because consumers need it. energy came up in the luncheon -- energy came up in the luncheon after the signing last wednesday, and he specifically said we need coal and national -- natural gas lng. both sides will win. jonathan: phase two has become phase 2a. it looks like it is winding down expectations for phase two. is that a fair assessment? larry: no, it has not. the president's believe is phase one was the toughest walter climb and that once that structure was put in place and it took us a couple years, as you know, once that structure and framework was put in place, that opens the door to phase two. we can't tackle everything at once, but particularly, exports and intellectual property chapter are really important. the ip chapter is a thing of beauty. because the chinese are willing to make changes -- the criminal procedures, civil procedures, penalties, giving 100% ownership to financial companies the first time, those are great building blocks for phase two. thethan: one of expectations going forward, a conversation about europe, as well, outside phase two. it feels like an about turn with relation to the europeans. what happened? larry: good discussion, constructive. jonathan: what changedjonathan:. we were talking about tariffs on autos. larry: they were constructive talks. that was not a negotiation or anything. both sides agreed it would be good to produce a good deal. there were a lot of issues at stake. that will go on for a while. anna: that was national economic council director larry kudlow speaking to jonathan ferro in davos yesterday. let's get to our top movers. a lot in these markets. taking a while for investment to settle down 36 minutes into the trading day. let's get to annmarie hordern who has some interesting stories for us. annmarie: one of the biggest gainers, berkeley group up over 5% as they come to increased capital returns to shareholders and have amassed a huge pipeline of projects now under construction and they say that will boost sales. , threey to the downside .5%. their full-year sales forecast, they race that. the creative director has been out front on social media on holiday sales, but reports show they are struggling from the protests in hong kong. luxury was hit yesterday and it will be a big question for luxury as we see the coronavirus suite asia. daimler, relatively flat. unchanged off the lows, but this comes after the 2019 results are below expectation. they are putting aside more than one billion euros. it has everything to do with the mercedes diesel issues for them. a lot of expenses, but it looks like they are able to weather the storm. anna: interesting moves, the selloff on the back of the news. bouncing back and auto parts, one of the sectors doing well today. on the program, china seeks to contain the coronavirus outbreak. we will bring you the latest on the story. we are hearing from the u.k. health department saying that to the u.k. isk very low as we've seen the number of deaths slowly increasing and it has spread to other countries. theie lam, very a rare to risks to hong kong even though there are no cases of it there yet. this is bloomberg. ♪ anna: welcome back to the european open. the trading day, modest gains across european equity markets. the stoxx 600, up around .25%. better gains from germany despite the warning from daimler. we seen share prices bouncing back after we heard from them at the top of the hour. here is what you need to know today. the saudi crown prince may have been behind the hacking of amazon ceo jeff bezos' mobile phone according to people familiar with the matter. annmarie hordern is here with this intriguing story. annmarie: for controversy for the house of saud. jeff bezos' personal cell phone after a conversation with mohammad bin salman on whatsapp. it was first reported by "the guardian," which say it started in 2018 with an infected video file sent to bezos. the revelation will raise a question of if this had anything to the u.s. tabloid "the national enquirer" publishing personal details, including text messages of bezos having an extramarital a fear. also around the killing of jamal khashoggi, a dissident working for "the washington post" which is owned by bezos. the saudi embassy in a tweet said the reports are absurd. anna: indeed. story this morning. president trump, arriving in davos. we saw his helicopter landing yesterday. there he is in the corridors of ready -- getst ready for day two of the delegates in davos. he is meeting and greeting a little bit. climate change, a big part of the conversation at davos. of hisay, he spent a lot speech talking about successes behind the u.s. economy right now and suggesting we should reject the perennial prophe and their proclamations of doom. he is not on board with the climate change agenda in the same way others are. header credit suisse said it is real. those coming to us today. president trump is in the building. we will go back to those live pictures. president trump does have a habit of saying things to the media as he walks by. we will listen in to make sure we don't miss any crucial details about phase two of the trade deal with the chinese or about impeachment and all the other things on his mind this morning. "quitealuations are high," particularly in the tech sector according to jes staley, the chief executive at barclays. he said bloomberg vigilance is needed in case of a correction. i do believe there is a sense that for the next 12 months, maybe 24 months, we will have economic growth. it may slow, slower in places like china and germany, but there is economic growth out there, and so there is reason to invest and there is reason to be more optimistic than business leaders were last year. the only issue is if we are wrong. francine: for the animal spirits right? executives optimistic enough that given trump came here without actually putting on europe, they are ready to put money in capex? if the labor market begins to put ever greater pressure on gets and supply chains broken and productivity slips and you start to see inflation, we have a long way to go for central banks to correct monetary policy in case that happens. it looks like good news. we should all be happy, but if you start to see inflation rare its head, we have a lot of correction to be done to get monetary policy the right place. >> what do you think is the big risk next to inflation? hard tois always predict that and when we try to, we get it wrong, but i would say having been in this industry for some 40 years now, and generally starts with credit somewhere. there is a lot of credit. fascinating today, oxford university just raised a 100 year bond at an interest rate of 2.018. if credit is not available, if you can borrow for 100 years at 2%, people may get overextended and is there a shock to interest rates, that could be a correction. francine: you are worried we are creating bubbles and where do you see bubbles in the market? jes: i think asset valuations overall are quite high. i think we have extraordinary valuations in some tech sectors, particularly large tech players and in the u.s.. when you have zero to negative interest rates, almost by definition, you will have asset bubbles. you want to ride the wave, but keep your eyes open for when there is a correction. francine: could the u.s. election be the game changer for markets this year? is that where we will see the most volatility? know, i think -- it depends upon who is on the other slate. think the two trade deals announced last week are very important. phase one with china, i think that is indicative of the direction of travel, particularly in an election year. the trade deal with mexico and canada is an example. let's see what the u.k. does. what the u.k. does negotiating with the european union and negotiating with the u.s. government, but he's got a very solid majority in there ist, and i think an active push to get a trade deal done and it is in everyone's interest to get the uncertainty behind us. having brexit behind us will add a lot of momentum to the british economy. anna: jes staley of barclays talking to my colleagues in davos and he was positive on the u.k. economy. he talked about the spread of wealth across the country and the fiscal boost yet to come. the new respiratory virus in china is continuing to spread. u.s. authorities say a man hospitalized was infected after a recent trip to wuhan. the total number of cases in china have climbed to over 400 with nine fatalities. cases have now been confirmed in five other countries. the outbreak is having an impact on financial markets and on commodity prices. bloomberg's oil trading report for asia joins us from hong kong. good to speak to you once again. what impact are we seeing these have on oil markets? it is having an impact on stock markets. a little bit of a change in direction today, but certainly watching ledger stocks, pharmaceutical stocks. what is the story for oil? a mixed reaction for markets at the moment. if we look at oil, goldman has put some numbers on that today to quantify the impact, looking at what may have happened to oil demand. they are saying on average we may see a hit to oil demand around 260,000 barrels a day and about two thirds of that will be jet fuel am a witch is not surprising given you would expect travel to be hit if this does stem into a full-blown outbreak. to quantify it or put it in terms of an oil price, without any response from opec, any supply response, oil prices may decline by around three dollars if this turns into some epidemic or outbreak. goldman described that as a modest reaction to potentially what may happen. anna: what about the longer-term impact on commodity markets? what are we hearing? the reference, looking at the bloomberg in 2003, theex, index fell by about 8% when the outbreak came to global attention. as the months went on and the year, the outbreak was tackled. by late june, most of the losses became inped and sars the rearview mirror. commodity prices rose from their. there could be a few months ahead for the commodity prices, but it is early days yet. anna: we will keep an i on this unfolding story. ben sharples, joining us from hong kong. bloomberg's oil trading reporter. plenty more to come from davos this morning. this is bloomberg. ♪ >> given the signs that climate change requires immediate action, this is the decade so we wanted to start by saying let's make some good commitments. >> these issues have moved swiftly from being corporate social responsibility issues or more niche issues within finance to be fundamental value drivers. >> climate change will not be fixed by central banks. it will be fixed by accommodation of public and private. >> we want to invest in clean technology, green new procedures. >> for every major investment, we insist the teams identify all the climate change risks. inwe will ultimately do best in a company if we think we need. >> we need real breakthroughs. no one company will do this. anna: some of the top speakers at the forum talking about climate change, a topic taking center stage at that post this year. with that in mind, our question of the day for the markets live blog team. how much will the sg drive investors in 2020? get in touch with the markets live team. ib + tv if you want to get involved. what do you think of what you heard from the likes of others? it seems that post is focused on the environmental components of esg this year. joining us with more from babos, we are live at the economic forum. this is coming up in conversations all over the place with bank executives and many others. we heard greta bloomberg -- views.hunberg giving her what kind of reaction does she get in a place like davos? >> you've got to hand it to greta and the leader of the world economic forum. people come here to meet people from all over the world, to really start working on business plans and strike deals and whatnot. to really focus their attention on the climate change issue, i think it is something people want to do publicly, but do they really put that into action. greta made the point yesterday she is not seeing a lot of action, but focusing on the numbers have been a smart way to go about it and it is a tack the economic forum is taking. a four degree increase in rise then climate can water levels enough to wipe out all of florida. ite you look at the data and makes a very compelling case. isa: not everyone in davos on board with global warming and the climate change message, it would seem. president trump was saying we need to reject perennial prophets of doom and there predictions of the apocalypse. he pulled america out of the paris accord. what has been the reaction to president trump? maybe only touched on this issue peripherally given quite a domestic focus, economic speech? >> it is great you brought that up because part of the economic speech was his focus on the american energy industry. some of the immediate feedback we had gotten from his speech was he was focusing on energy at a time when we are talking about climate change so heavily here. had spoken about the hypocrisy in those two messages, but he did not go full on about the energy issue and focused instead on america's forests. we have here then? on the bright side, we have a collective thinking on climate change and power in numbers. just staley earlier stopped short of directly saying he spoke to larry fink about what they should do about their fossil fuel backing. barclays is the biggest backer of fossil fuel companies in europe and it was the first european banks to face an investor vote coming up in may about their involvement in the industry, but what he did say is investor activism in the space is very significant and this is coming from a bank ceo has another activist investor focused on other issues like profitability. this shows you investors can make a real difference in terms of how companies are making real changes in terms of climate. anna: thank you very much. sonali is in davos. lots more to come. the prime minister of jordan, the french finance minister and the u.s. transportation secretary. coo'sl be speaking to the of nestle, nokia, and coca-cola. this is bloomberg. ♪ francine: current: coronavirus concerns, the world health organization will decide today to declare it a world emergency. , the companyon says it is ready, investors see a solid quarter of results. president trump has breakfast with apples tim cook, we bring you all the action