and later tonight, president trump delivers his state of the bloomberg learns the u.s. democratic party will not be union address amid the final releasing the results of the iowa caucus for hours to come. stage of the impeachment inquiry. we should probably throw in the things to watch as a result of a death from the coronavirus is reported in hong kong, as the the iowa caucus, as those results have now been delayed. u.s. says it is prepared for a joining us still from geneva is possible pandemic. but the stocks in general regain vasileios gkionakis, global head ground as the pboc supports the of fx strategy at banque lombard. market. youtube disappoints in its first ever revenue disclosure, as we were talking how the trade alphabet results miss street deal could be impacted by what we have seen with the coronavirus. let me ask you about the yuan. estimates. the shares dipped in the brodieo slightly after-hours trade. we are getting results as well interrupt you earlier on -- rudy from bp, the oil giant right now saying that net income, adjusted interrupt you earlier on. what do you expect for the chinese currency? billion.e was $2.57 vasileios: i think there is that blows away the streets estimate of $2.17 billion, quite an extensive damage beating the street by $400 million. already priced into the yuan, let's get to annmarie hordern, our intrepid oil reporter, to now that we have seen 7.lar-china just over break down these numbers. beat.ie: it is quite the the fact that we have it even beat on the top end of improvement in trade tensions, estimates, not just the median range. we get this continuation in the bottoming out of the the top number is certainly going to have the company still manufacturing cycle being waiting for a number of headlines to come out. delayed because of the virus outbreak, i think dollar-china one thing in focus for today for the company will be this year goes lower. and, the leverage they bring on. the debt. we have a consensus here and receive dollar-china at 6.70 by they want to keep that between 20% and 30% of this year. the end of the year. it has been about 30%. that is something we will be there are two factors here, one is the chinese factor, which we expect that we are going to get watching. but the top line is doing very the continuation of the chinese well. what a way for after nine years of the company ceo bob dudley, to go out on. manufacturing bottoming out, and it is his final earnings before he gives the helm to burnout at the same time, it is a bearish dollar call. matt: thank you so much for looney -- bernard looney. joining us. really appreciate your time this morning, vasileios gkionakis, difficult to see if there are more questions towards mr. looney today, may be bob dudley global head of fx strategy at banque lombard odier. will let him speak today doing the analyst call. this comes at it has been bob dudley's final set of painted this gloomy picture for earnings run counter to the rest of the industry, following a oil, and of course, what is going on in the macro raft of weak results from his competitors. environment in the oil market. joining us is bps chief this is quite the beat for them. anna: annemarie, thank you so financial officer, brian much. gilvary. he will be speak it to a bp whether don't you tell us first off why bp is doing better than management later on about the numbers climate change and much more. the rest come and why you beat the street by so much? let's talk about where we are on the broader market picture. we see that the european futures good call, 2.6 million look positive. u.s. futures look positive, all taking their cues from this dollars, i think the market was expecting something like 2.1. by the dip session from the asian market. stronger upstream, slightly the chinese markets, what a weaker downstream. difference one session makes. in thetial talk straight fourth quarter, i think the main message was strong operating in the early part of the cash flow. session, chinese stocks lost as much as 2%. then we saw a change of hearts 38.2 billion for the year. and now it is up more than 2.6%. to come downd debt are we seeing prospects of containment being bets upon here by over one billion in the third by markets or is there something quarter and for the fourth quarter, gearing come down. we have announced a full package larger to understand? of disposals. in terms of where we are in terms of 5 billion that we will be doing by mid-2021. it points toward a major over $50 a barrel. deleveraging of the balance sheet, and that is what is we will get to the macro conversation around oil as well. wti, up by 1% in this morning giving them confidence in moving the dividend. anna: good morning, brian. that is exactly where i wanted to go. session. let's get to the market you think that gives you the conversation with our "bloomberg markets" live managing editor, confidence to increase the mark cudmore. dividends a little bit, from i know they have been writing 10.25 to 10 and 50, but perhaps some fairly strong words about ,he outlook with oil prices the extent to which many in the market are really an arising what is going on with the with china being such a big coronas -- really analyzing what consumer of oil, what assumptions have you made about is going on with the coronavirus. the sense of the global economy mark: i think there has been a then, if you are able to lack of willingness to just look increase this dividend? dr. gilvary: we laid out the at the very open information we have got on the virus, whether strategy of $55 a barrel, was it is the evolving mortality the number we set, which is exec rate, the distinction of where we are seeing the deaths, the we wear brent is today. we have seen the benefit of a information we're getting on the higher oil price at the $60-60 transmission rate, or the containment. what is becoming clear is that five dollars range. the situation in hubei is demand over the last decade has terrible, tragic. been 1.5 billion barrels a day but there does seem to be of oil growth. last year we saw quite a bit of containment of the virus. demand. 100,000 barrels a day growth. the measures china has taken has been exceptional. i think there have been two this year, we saw demand growth of around 1.2 million barrels a debts in total -- deaths in total in hubei. day. what you're seeing in terms of the short-term effect on the oil the problem has been very well price is the effect of the coronavirus. we think the virus will have an impact of anywhere from 300,000 barrels a day to 500,000 barrels contained. and i think that is why global a day. markets can start moving beyond opec,k all eyes lead to this issue. over all i think there is a bigger message to be taken from that analysis. as to whether "look to rebalance themarket to get back to it shows investors have given up on the idea of looking at $60-60 five dollars range. fundamentals and facts. but where brent is today's the bull market has gone on for so long that people have become pretty much where our resigned about, how do we look at valuations? assumptions were laid out. doesn't seem like valuations anna: it is still higher than he wanted to be. matter. people are trading off sentiment. dr. gilvary: it is, but i think buy theere saying, the big message is, that $10 billion package of disposals we'd said we would do in 2019 dip. others were going, this is the and 2020, the balance of start of the end, stocks are proceeds will arrive this year. undervalued. and along with the $5 billion that, whileuse of package for 2021, it gives us that size becomes the most important factor and the signs cushioning for this year. matt: the coronavirus wouldn't there for the massive pile of have been visible in the last negative yielding debt, which has grown quite a bit in the last couple of weeks is that there is abundant liquidity in quarter's earnings, but what are you seeing right now, brian? the system still, a good sign it strikes me that with this amount of people quarantined for global stocks overall. with this amount of travel it doesn't mean that the economic impact in china will not be massive. -- ited, it must lower it is probably being underestimated. but that is not what stocks are trading off at the moment. matt: interesting. what you are saying is that must lower demand substantially for gas and oil. brian: right now we are seeing stocks are trading on the human tragedy and not on the economic around 300,000-500,000 dollars a day demand reduction. -- because clearly, you can talk it looks similar to 2003 with about the health side of this sars, similar levels. virus, the physical side of it, we will see how this plays out. or you can talk about the fight the biggest thing you are seeing in terms of brent, flat price in against it and what it will do to the economy. terms of crude prices, we are if you quarantine 50 million or 60 million people, if you put not seeing impact in terms of overall demand, in terms of our off going back to work for week in a country, the second-biggest own system and our own fuel economy in the world, that has networks. but clearly, there will be some impact on aviation, which is got to have huge affects. what we anticipate. the idea that central banks have your back certainly was right now we are seeing something around 300 disproved by the rba decision. ,000-500,000 barrels a day. mark: matt, i think you're absolutely right. matt: how do you expect that to i don't think the rba were hit your trading profits? expected to deliver today. i don't think they are the key player here. tradingyou had a strong but over all, you are right. the economic impact on china is profit in 2019. i wonder also if you could quantify what you mean by that massive. i think people are -- all said, i think it was the underestimating how big the impact will be and how much the impact will be on other --t result in recent memory economies outside china. there is the negative impact cheryl said it was the best result in recent memory. loop, that what slows down the economy in the region slows down oo? that good for you ,tp china.outside that doesn't seem like traders are using facts and analysis. economics requires some look at the data. but that is not what is driving asset prices at the moment. brian: to put it in context, also, the economic story is a 2019 is probably one of the strongest years we have seen in slower playing one. both the oil trading and gas -- people are that trading in the last decade. you have seen that come through the results, particularly in the fourth quarter but also across the year in terms of the aware that was remove the virus out of china, there will be a downstream. massive stimulus to get growth anna: a little more about the dividend and the sustainability of that. up after that, and people don't clearly, the conversation around oil companies is their know how to discount about commitments to climate change and the like. either. the economic story, we will be discussing for many months. can you maintain this kind of dividend? what is the trajectory for the dividend is you have to invest i think six months from now, we will be weighing how much in new technology. impacted will be having. brian: if we move it dividend let analysts are saying that this is just a macro input, not the dominant driver. up, it has to be sustainable going forward. i think by the end of this week, which is what we have laid out virus economics will be just one in today's results. of those inputs in the fringe. anna: mark cudmore, bloomberg 2021, a big series of targets were focused on in terms of market live managing editor delivery, surplus free cash of keeping an eye on everything. the tune of $5 billion or $6 mliv is a function to use on your bloomberg. billion set against an $8 billion dividend in terms of dividend, that is comfortably coming up on the program, we will take a look at your stocks to watch including carlsberg. the company forecast slowing manageable. the energy transition we talk theth this year as of about, and the requirements of big investments in new technology, in terms of dealing with co2, will be important and corona virus outbreak threatens to weigh on beer consumption in asia. we will manage that within our existing financial frame. remember, bloomberg radio is we are very confident that today's dividend is sustainable. live on your mobile device or on dab digital radio in the london matt: i wonder if you would take area. this is bloomberg. a longer-term look at the transition. does it strike you that it will happen sooner than we may have thought? re. psal said that it would get away emissionso2 by 2050. a lot of car companies are saying by 2040, some even saying by 2025. is this all happening at a quicker pace or planned at a quicker pace in the last few months? brian: yes, but we have to start at the base position. today the energy demand is about -- 85% of energy demand is linked to oil, gas and coal, 4% is renewables, 7% hydro. we have 2 billion more people in the planet the next few years who will require an increase in energy. it will be a transition that will be over multi-decades. the crucial part for companies like ours and for the sector is to first and will continue to aow renewables at a faste pace as it can, then reduce co2. if you look at what we laid out 2016,e back of paris in we said we would reduce our own emissions by 3.5 million tons in 2025 we may well have hit that target already by the end of 2019, and we will be close to it after taking out 2.5 million tons by the end of 2018. come will you joinepsal, out and say that you will get rid of co2 emissions completely by 2050? brian: we have to look at this of our products and look at what we can do in terms of technology, what technologies are available to us. looking at dealing with co2 on the back of our investments in there, and we will continue to look across our suite of things. ♪ what we laid out a year ago was to reduce our emissions, improve anna: welcome back to the our products for our customers, european open. 7:10 here in london. and create low carbon opportunities. european markets look likely to we will continue to do that as biuy the dip through the asian we lay out our strategy after 2020 france. anna: is the investment committee putting pressure on session. the u.s. them are credit you on this front? have conversations with iowa caucus -- u.s. democratic iowa caucus results have been shareholders changed in the last 12 months or so? brian: absolutely. in the last five years esg as a, delayed after the party said it found "inconsistencies in the account." a spokesperson has insisted it but really climate. is not due to a hack or intrusion. in the last minute or so, five years ago, that was not on the radar screen. democrats confirmed they will release results later on it has come up in the last 18 months or two years. tuesday. it is front and center. we will get further it is part of our compensation clarification in the last 20 for to -- conversation today and it hours. -- the next 24 hours, it seems. will be part of the conversation going forward. i think investor generally, as do we, want to find a solution very good to have you with us on climate.ssue on set, kathleen. how difficult is it for democrats? the process seems to be a mess. matt: a pleasure having you this morning, thanks for coming in. >> yeah, it wasn't the local brian gilvary is bps chief there were going for. financial officer. after the fourth quarter i think what they were trying to do with i/o was potentially as a party called the field, adjusted net income beat the potentially have these street by 400 million pounds -- candidates will haven't gained as much traction, we often see sorry, $400 million. them drop out after iowa. still no result from the iowa caucuses. the first round in the race to no results toly become the democrat candidate in the election turned to chaos. report at this stage kind of makes everyone i wear. we will get to what impact this aware.yone could have on the democratic in that sense, everyone goes home with a trophy and party. ♪ this is bloomberg. the large field doesn't get smaller. anna: it was pretty surreal. in the early hours of this morning, we had candidates giving speeches that looked as if they were assuming that they had won. giving bits of their victory speeches. the way: because of that caucuses run, it is people gathering at meetingsiv thosehere there are no official results, but i think the candidates in the race do have a sense of how they finished. for those who finished strongly, people like pete buttigieg who feel like they finished strongly than an anticipated, they are giving speeches and looking ahead now to new hampshire. matt: it wasn't anticipated to come in at the top so even if he gets second place, that is good for the buttigieg -- the buttigieg.- pete iowa is a small state, not a great predictor of the winner, so why is this contest so significant? kathleen: it is significant because iowans vote first, there is a sense that whoever gets a "ticket" out of iowa will be a front-runner in the race. often the person finishes in the top three in iowa becomes the candidate who gets the most media attention, seen as becoming the frontrunners of the race. that drives the narrative in washington going forward particularly because there tends to be this gap of about one week between iowa and new hampshire. week, when the public's attention and the attention across the world starts focusing in on the presidential election, all they have to talk about at that stage iowa.t happens in it gives iowa this outside influence in determining at least if not the nominee, who are.nitial front runners anna: kathleen, thank you for joining us with the latest, kathleen hunter, on the iowa anna: welcome back to the european open. caucuses, carrying on a little 7:44 in london. expected.n -- equityquities of we should mention at this point markets are expected to bounce a but michael bloomberg is seeking little. let's get your bloomberg first the democratic nomination. bloomberg is the founder and word news in london. majority owner of bloomberg >> thanks. l.p.. the coronavirus continues to let's get a market perspective spread, with the number of cases on the politics. lascivious the on a case, global topping 20,000. head of fx -- vasileios the first that has been reported in hong kong, only the second fertility outside mainland china gkionakis, global head of fx mbardegy at banque lo -- fertility outside mainland china. officials are evaluating their targets for economic growth for the year and whether they need to be down the back. china is hoping the u.s. will how much of an influence does that have? visitor and to move allow sensibility on their trade deal surges as the virus -- trade deal pledges as the virus the dollar at any point? this -- fish i think growth.hese to affected the phase one contains a possibly of a consultation as "a >> i think in a medium to natural disaster or unforeseen long-term, obviously, it is event delays either side from going to have some impact. --will affect what is going complying." if unclear, china has formally requested -- it is unclear that china has formally requested such a move. who is going to be the democratic nominee, it will affect the shuffling of probabilities between the democrats and republicans. the strength in the labor and property markets give the central bank in china room to the issue i am having here is .ait and see that there are so many moving variables in terms of the fx governor philip lowe says it is too early to see what the generalnd the impact in last. in how long it will on the risk markets. you would think that if you are going to get a more less leading saudi arabian king bin salman discuss the energy markets last night, the latest signal that allies are trying to build consensus for output cuts, as democratic nominee, it is likely the coronavirus hits demand in to be negative on the dollar on the surface, but then again, this may affect the china. probabilities of trump being technical experts from the coalition will meet in vienna today. global news, 24 hours a day, on air and on @quicktake by bloomberg, powered by more than 2700 journalists and analysts in reelected. over 120 countries. historically, what matters for the dollar is what is happening in global growth. i think we will have some headlines, but i really think what is going to matter most for this is bloomberg. the fx market is what is happening to global growth, anna, matt? specifically to emerging market matt: thank you. growth. 's are you saying that you cofounder howard marks says the expected rise in think about if we get a more the debt in china presents an left-leaning candidate on the democratic side, but opportunity. oaktree is one of the largest donald trump has a better chance of winning the election? vasileios: not necessarily. distressed debt investors in the world, with about $20 million committed to credit. all i am saying is that there are so many twists in this political development that is mark spoke with bloomberg in really difficult to put all the london. >> our investment may have been a trickle because we are feeling pieces together to come up with a definitive answer about what is going to happen to the dollar our way and getting used to a new market. . let's for example take a look at , there is a good amount of 2016.appened back in dust not for them, but there is a good amount of distressed debt in china, more than a trickle. into an 16, everyone pretty much predicted a trump victory would actually be negative for the dollar. then we got trump elected we got, this conciliatory speech after he was elected, than risk -- the virus, th assets rallied led there was no tomorrow. the dollar went through the roof. and as we enter 2017, when it became evident that global growth was picking up, this is if it goes on the longer period of time, will wreak havoc in when the dollar went into a significant selloff. all i am trying to say is that certain areas of the country in economy.reas of the there are many moving variables on the surface. china is talking about having 4.5% growth in the first you would think that the left-leaning democratic nominee low.er, which is extremely dollar, but for the for a long time they said we need 6% and we will get 6%. again, what really matters to me for the fx matter will be what is happening in the global to say that they will have 4.5, extremities. matt: all right, you will stick with us. for us it would be the we have a lot more to talk about equivalent would be a very low with you. number or a negative number. clearly a lot going on in the 4.5 doesn't keep the wheels global markets. there. over lookg up, we will take a at your stocks to watch at the open, including carlsberg. and probably, you would have a the brower forecast slower earnings growth this year as the substantial increase in distressed debt, unless the bank corona virus outbreak in china injected liquidity offsets it. threatens to weigh on beer >> do you see that is at consumption throughout the region. by the way, when you are .pportunity traveling to work, tune into bloomberg radio live on your >> yes, i would think so. so an increase in the amount -- ae device or on d.o.b of debt available, you would dab digital in london area. this is bloomberg. certainly be participating and ♪ weightour -- upping you in that area. >> absolutely. >> the iowa caucuses are this evening. if bernie sanders was the democratic candidate, how would you react as an investor? howard: how would a typical investor react? guy: you are not a typical investor. howard: business would say that sanders' policies are not pro-business, that they are antibusiness. the market did very well under trump. primarily because he is a pro business president. regardless of anything else, that is the dominant consideration. deregulation, economic growth, etc.. that there is no investors' minds, that sanders would be an antibusiness president. he thinks wealth creation is accomplished with negative means that he does not believe should be undertaken, so i think that on the one hand, it would be concerning to business, and on the other hand, they would probably convince most people that trumps chances of reelection went up. anna: that was howard marks, oaktree capital cochairman speaking exclusively to bloomberg's guy johnson. we should mention that michael bloomberg is seeking the democratic nomination for president. he is the founder and majority owner of bloomberg lp, the parent company of bloomberg news. . . minutes away from the open up next, we will look at the structure should be watching, including bp, after the oil maker bumps up dividends. and your stocks watch. this is bloomberg. ♪ anna: welcome back to "the european open up your court european equity markets are set up for a bounce, buying the dip at the start of the tuesday trading session. a few individual stock moving stories to cover. dani berger is looking at the jewelry maker pandora. and we have someone covering carlsberg, and annmarie hordern is covering glencore. annemarie, let's come to you first. annmarie: we are getting production numbers from glencore, the world's biggest commodity trading company. we have seen commodity numbers get hit given the outbreak of the coronavirus and what that means for demand. looking at copper, they said on the year it is down more than 5.5%. that might show the weakness in the share price today. to remind viewers, they did say their outlook remains the same as what they gave in december. matt: joe, you have the don't-low on carlsberg. looks like the coronavirus is affecting pity much everything. joe: carlsberg is forecasting earnings to grow inmate single-digit percent -- grow around a mid-single-digit percent. this is actually the second blow for the company in asia in a few weeks. we saw the shares drop significantly a couple of weeks ago on news that vietnam is changing their drink driving laws. that is expected to weigh on sales as well. so asia is really the focus for company. it is worth noting that they tend to give a conservative forecast in the beginning of the year and then actually upgrade their forecast as the year progresses. nevertheless, the stock gained about 40% last year. like for impact on peers heineken, which reports tomorrow, and also ab inbev, who reports at the end of the month. anna: let's go to pandora. what has a company said today? >> investors have not really been expecting fireworks when it comes to earnings. there were week numbers. sales would be down 6%. they have been trying to make the brand more popular, with consumers pulling some of their matt: welcome back to "bloomberg underperforming brands. markets," this is the european open, seven minutes away from but here's the kicker, they hadn't priced in the coronavirus the start of trading it across europe and the u.k. . it is said to have an unprecedented impact on their reserves from the first business in hong kong and china. democratic presidential anna: annmarie, joe and dani: nomination contest were do hours hours ago bute thank you so much for joining us. you can get all of these numbers on your bloomberg app. they have been delayed after the democratic party stated inconsistencies in caucus the virus, hong kong precincts.m certain has reported in death from the novel coronavirus, the second fatality outside of mainland what does this contest mean for markets question mark here with china, where the number of cases the details and your morning call is dani berger. now tops 20,000. dani: look at the iowa caucuses. but chinese stocks are only 60% of the time does iowa predict who the eventual party stabilizing. investors gauging the efforts to nominee would be. contain the virus and the spread so far. however, it doesn't mean the race is inconsequential for markets because it actually going back to geneva, predicts the democratic nominee. 78% of the time in that vasileios gkionakis still with context,. this could be a closely-watched race for market observers. us. what do you think of the virus's however, a sanders win is effects on the market? already somewhat expected and we have seen a rout in equities, somewhat already priced into the markets. of course, the wind specifically commodities, yields, but we for iowa. haven't really seen a huge move in fx. you still see the same among the entirety of the field, you would have the most bearish outcome for markets. old 1.08, 1.09 handle on the by far and away, both sanders japanese yen. and warren had really, really vasileios: that is true that, but nonetheless, i would have to high rankings when it came to a bearish impact on markets should say that we have seen a rebound they clinch the nomination and eventually win the presidency. on the dollar. the dollar went into a pretty anna: thank you very much, burger.rg's dani berge chunky selloff due to -- 2.5%, quite large on a trade weighted basis in the fourth quarter of you can join with our markets of the day, how will primary impact last year, but it has actually the markets? rebounded. something to keep an eye on, i agree with you that the market has not really been active. particularly for global investors. nonetheless, there have been join the debate on your some quite meaningful moves. the australian dollar was bloomberg. let's tell you about the stocks to watch ahead of the open. bp, very topical. down quite significantly. we spoke to the cfo. in general, all commodity a very well beat for bob dudley currencies like the norwegian as profits exceed the highest krone have been very much estimates on wall street. penalized with what is happening dividends getting a boost. selling more assets. with the coronavirus and the impact it is having on commodities and oil prices. i think they have confidence in their balance sheet despite gear it is one of these things -- we are not epidemiologists, and ing being above the target they had set for themselves. even if we were, we don't know interesting to see the company how things will pan out. all we can do is try to draw giving such a detailed estimates some similarities from the past, of what the coronavirus does to and even these are very much fraught with problems and demand. matt: right, we have the virus effect on brewers as well with carlsberg results out. mistakes because we are in a different phase in the cycle. it posted record earnings but that i said, it warning, this back then there were more things going on. you could come up with a central scenario in which you just put year earnings growth is going to slower. down the things you know. you have quite a high infection rate and at the same time, a girls burger now expects operating profit to rise in the much lower mortality rate, if mid-single-digit percentage this of 11%d earnings growth one wants to compare it with sars. each of the past two years, so at least we know with some it will slow down now because the chinese and asians drink that whenconfidence less beer. you get the infection rate ♪ the market open is next. this is bloomberg. peaking, is when the market this is bloomberg. starts pricing in better prospects. and this is when you get risk assets starting to rally again. i think our fundamental among our base case remains that the dollar will be weaker this year. anna: i am looking at a chart on the bloomberg the number of cases of coronavirus everybody looking for when the number does peak making estimates perhaps or not when that will happen. hastrade deal, phase one things to say about where the yuan should trade. how does this change matters? vasileios: it has definitely changed them from a short-term perspective, because everyone had anticipated we were going to chinese activity. to a certain extent, flows will be affected, trade and portfolio flows. at the same time, you are getting a response from chinese authorities via injected liquidity into the system and lower short-term rates. what we have seen so far is that the chinese authorities have been quite proactive. matt: we have to -- we have to cut you off there, bubble will come back and talk more about this. vasileios gkionakis, head of fx strategy at ban bank lumbered and see will be with us. anna: one minute until the start of cash equities trading, this tuesday morning. yournc -- dnc delays, the results of the iowa caucus not to be released for a day. stock regain ground as pboc support continues. be disappoints in its first-ever revenue disclosure. matt: we are seeing european futures higher this morning, so it looks like we are set for another risk on session here as the markets sort of look at the coronavirus and the affect they expect to have on the economy. right now, dax futures up 0.7%. ftse futures gaining 0.8%. cac futures up 0.5%. we should come out of the gate strong. what numbers are you seeing now? matt: waiting for the markets to come out of the gates. anna: we have the expectation of going higher this morning. ftse 100 opening up .75%. yesterday, chinese stocks sold off as expected, but european markets keeping their head above the water and pushing higher. matt: welcomloberg markets"." looking performance yesterday on chinese markets, and today was different in asia, buying the dips. even if the chinese market started in negative territory, it pushed into positive. ftse 100 up just shy of 1%. a weaker pound this morning once again. the 2020 new low for the pound euro by contrast fairly flat. waiting for other markets, the european equity markets this morning. broadly pictured, the sectors look positive. the mood, buying the dip. utilities an area of red, but that can be the case when you see a risk on session unfolding, and we seem to see that, even health care going higher. industrials, big area of green underneath the energy businesses. doing, better is than anticipated numbers. we spoke to the company. better-than-expected numbers, selling more assets, able to increase the dividend. we will see how much that stock moves. matt: we are seeing it as the biggest gain or, -- gainer, biggest addition of points to the stoxx 600. 500 and change up, only 67 are losers. bp upright now 4%, adding the most points to the broader index. the losers there, you see for roup,le ireland's aib g falling 5%. it set aside 300 million euros for legal cases that involve some tractor customers. now falling about 3%, so keep your eyes on the danish jewelry maker pandora, shares down after the ceo said 70 stores in china are closing due to the coronavirus. so we are seeing the coronavirus affect pretty much every industry, and still on a risk-on day like this can affect individual stocks. in general, european markets are higher this morning as investors continue to assess efforts to contain the coronavirus. concerns are sparking a selloff in asian junk dollar bonds, indeed, high-yield debt has been truly problematic while investors have been piling into investment grade debt. joining us is steven major, the global head of fixed-income research at hsbc. is it possible to look at any aspect of this market without talking about the coronavirus? stephen: good morning, matt. best to achieve that in this interview. i think it's a factor in valuations, but pushing in the same direction of many of the manmade factors that were in palclace beforehand. we already had slowing economies. we already had the impact from the trade agreement, or the fallout from that rather, fading fiscal impulse, the need for more monetary stimulus. all this was in place, right? so i don't want to belittle what's going on around us, but i just think it's part of the same direction. anna: good morning, steven. let's talk about where that direction takes us,t hen -- then. but there up today, flight to safety the coronavirus sparked, you say it is pushing in the same direction as other dynamics. go in the yields face of that flight into safety? steven: yields are down 30 basis points this year across developed markets. is down to the lat doing my best not to mentionest, i'm it, you see? [laughter] there were disappointments on the reflation trade. why is it every year everyone thinks it will be better? there is this perennial optimism, somewhat fallacious in my opinion, that gets found out very quickly. this year is no different from any other, apart from what's going on right now. it, the scale of of it, why it is difficult for market participants to get their heads around. but we are already seeing revisions chinese -- to chinese growth. steven: historical president will not help. anna: 2003. steven: the chinese economy was not as big as it is today. it is several times bigger today. trade is more important today. the supply chain is more important. the leverage is so much greater. two-threeevels are times gdp in most big countries around the world. unfortunately, it is worse. and trying to extrapolate anything out of it is impossible. i think people are hoping for a v-shape, a quick shock and then a recovery whereby the stimulus then kicks in early. but the risk is we have to look more like an l-shape, more prolonged. as i say, for me the direction is the same, just the amplitude that has increased. so if you were hoping for you're thehis year, wrong way around. matt: you know, without talking about the virus, the medical, physical problem, with your you can'that on possibly ignore a country the size of china, the second-biggest economy in the world, shutting down travel for 60 million people. that producetories stuffer apple, tes -- stuff for the supply chain has been disrupted and we heard from bp demand has been driven down. doesn't that have longer-term impact on the markets you cover? steven: of course it does, and it is something we are dealing with real-time, every hour, every day, business as usual. f pay percent do we revise gdp down? it depends how long this goes on . anyone who comes on the show and tells you exactly what that number is is a better man or woman than me. what wedirection is need to know for now, and what i'm talking about here is bonds. clearly the bias is in lower yi elds, lower policy rates, more support from central banks and ultimately if this continues for s no enough, it will -- it' coincidence the most exposed is the high-yield. that has caused a change in strategy already, because the fault lines in some of the more fragile sectors have been exposed. and if you get money flowing out of the riskier assets, it tends to go to the safe havens, and that helps contain the bond yields in the developed markets. anna: steven, thanks very much. steven majors from hsbc stays with us. a great note recently with a great title which we we will not tell you now. you will have to wait until after the break. anotherp -- coming up, conversation with carlsberg 's ceo. the stock is rising, despite having a lot to say about what coronavirus is doing to business and production facilities in china. this is bloomberg. ♪ ♪ ♪ to theelcome back european open, 11 minutes into the session right now. you can see pretty decent gains here. 1.25% on the ftse. gains across continental indexes as well. take a look at the groups that are moving. all of them are higher. basic resources leading the pack after bp beat the street's estimate for profit by $400 million. oil and gas, basic resources on top, a little bit of a bounceback after investors were so concerned about the coronavirus. we heard from brian gill very -- pushed down has demand in a substantial way. that is why they are leading the pack now after that bounceback. steve major is still with us from hsbc. --onder if we can get onto get on to the economy. we see earnings in the u.s. coming in at least as good as expected, without huge downward revisions into this season. exs it look solid, ex asia, coronavirus, in terms of the u.s. economy? steven: that is interesting. some of the big u.s. companies are clearly quite resilient to what's going on. they have strong balance sheets and can withstand some of the macro headwinds. they'll also have to focus on where the cycle is. and the geopolitical risk. you're quite right. if global demand is falling, it will have an impact on even the best companies. so yes. but then again, it becomes about relative value, doesn't it? that's what markets are about. do we look at u.s. investment grade compared to u.s. high-yield? where does it fit compared to e.m.? in this regard, it seems ok for now. one thing at a time. anna: let me ask about what central banks do in this context, then. fed, other developed markets. a viewer asks, how much can central banks in developed countries cut rates? we can see where they are now and how many basis points are left to zero, but then there is minus, i suppose. and goes on to ask, it seems crazy to this person that the central banks would do the same over and over again hoping inflation expectations meet their targets. how much more cutting do you think central banks do? steven: the definition of madness, continuing to do the same thing whilst expecting a different outcome. a great man said that, not me. [laughter] the diminishing utility have isof q.e., each $100 billion less useful than the previous one. each basis point is less impactful than the previous. i think central banks get a bad rap. they are only trying to hit their targets with the tools they have been given, mainly technocrats and economists appointed by politicians. we can't put all the blame on them. you are shooting the messenger in many ways. so unless someone gives me a better idea, i don't really see what else is going to happen. central banks have to keep the accommodation in place. three choices. either inflation and growth come through, so in real terms it falls. o you have some defaultsr, which we had episodes of and doesn't end very well. and the third thing you can do is pray and wait and buy time. [laughter] matt: my question, this is probably something you discussed time, everyr a long night. i don't know what you do when you go home. [laughter] but when you talk about negative rates, you can't affect by going and growth further into accommodation. why not look at the side effects, unwanted consequences of negative rates and say, we might as well try to get back to at least something normal? steven: that's a fairly pragmatic idea, matt. that's what the swedes are doing. some countries in the eurozone are pushing and that direction as well. there's a strong lobbying from some banks and insurance companies that don't like the negative rates. but i come back to the same point. the policy rates are set by economists in the central banks. they aren't doing anything wrong. also, the policy rate is not set so that banks can make money. we've had 10 years of this now, and it could take at least 10 years before we see anything else. i get it, the proposal that if negative rates are not working, it depends on who they are working for, try something else. anna: could it lead to a big fiscal push? you wrote an interesting piece that i mentioned before the break. the title is funny, "bonds are not potatoes.' why do we need to keep this in mind looking at supply and demand dynamics? steven: i guess the potatoes and bonds analogy is born out of frustration on my part, so i admit. [laughter] i spend my time dealing with common misconceptions. farmer'sink of a market, if there is more supply of potatoes, all else being equal the price will follow, which is reasonable. you can see the queue of people, lorries arriving. bonds, you can see the supply on the screen but you do not know the demand until afterwards. it just so happens the demand curve for the bond market appears to be quite elastic, which means it is very sensitive to small moves in price. if you have inelastic supply and elastic demand, you can put a lot of supply at the market and yield does not move much. that seems to be what we have got. not lending themselves to a market stall analogy. bonds are not potatoes. anna: we will all keep that in mind. steven major, thank you very much. up next, we thing using stocks on the move this morning. bp is one of them. fourth-quarter profits beat estimates, and dividend moved up a little as well. this is bloomberg. ♪ anna: welcome back to the european open. 21 minutes into the trading day, and looks broadly positive for european equity markets. u.s. futures pointing higher, nasdaq futures in particular. annmarie hordern has individual stock movers. micro focus is down over 12%, even after sales met estimates. they said it is a challenging year, partly with the integration of hp software. their chairman of 15 years is also stepping down. 14.5%.p beating the highest analysts estimate and keeping their outlook. the market likes that area bp up 3.50%. a good quarter for bob gilvary, his last, saying goodbye on a high note with this beat, raising the dividend and planning $5 billion of more disposal's. the ceo had a very interesting comment about the coronavirus and how much they seek coming off the market in terms of demand. opec will certainly be paying attention. matt: looking at some of the movers there, and grading us on our interview as well. annmarie helped us with that interview, as she does with everything oil. european companies, just under a quarter of them, nearly half of the s&p companies in earnings season have reported so far. let's dig deeper. joining us is called to meet -- capital.d of smead we have seen companies meet expectations or beat, as with british petroleum. but we also didn't see analysts really bring down estimates into earnings season as steeply as they having the past. does it look good to you, this quarter? cole: it is hard to find analysts who aren't bullish. their numbers and say it. some names, they are dying, fighting to put the new high estimate on the street. that way they can get brokerage clients more excited. what we see in u.s. equities right now is nothing short of a thea, and what i'd call, buyer at the top is someone who would rather be short and is having to buy. look at tesla yesterday as an example. anna: that was interesting. why don't you give us your thoughts on the car sector? sound from people who say the narrative around cars is a little misplaced. this idea that young people don't buy cars anymore, and you say that's not true? cole: your colleague keith not naughton wrote a piece looking at drivers license data in the u.s., and we just had the highest pickup over a five-year. than 1974 to 1978. no one said, by the way, there is a big pickup in drivers. of16 years old, 26% 16-year-olds in america have licenses. i'm 36, you would be hard-pressed to find one who doesn't. by the time you are an adult with a life, you are more than likely a car user, a driver. say you don't own a car -- anna: just because it doesn't happen at 17 doesn't mean it doesn't happen. cole: correct. matt: so are they buying electric cars? cole: great question. 2% of all u.s. vehicle purchases are currently electric, the nissan leaf and tesla in a nutshell. 59% of people wake up today, what a gasoline vehicle. the rest in between is hybrid. executive aoyota couple weeks ago said this is not about electrics, but people wanting tesla. what it speaks to is the convenience, not the electric technology. people like the autopilot function. i think the convenience that a car brings and utility it brings is far more important than the actual way it powers itself. now, governments have a particular interest and how they power themselves. but people like that they can say, i want you to go to the it'sberg studio, and better than driving in london. anna: the infrastructure is clearly not there in some cases, and sometimes what you buy is not what you wanted but what you were able to. bp is on the rise today. why buy oil stocks now? cole: it is the only energy name that we hold. the global supply story, in the interim the global -- coronavirus is out there, but like a one-time charge in accounting. you can't deal with the circumstances except for what you have now, but that doesn't say anything about the next 10 years, which is why i talk about drivers licenses. what if global growth is better than we think? did we know an epidemic which show up six months ago and we would have to deal with odd economic circumstances? no. unknowable,s always and yet we sit at a vantage point in oil where people believe they know the future forever. matt: let's take a quick break. we will talk more on the other side. cole smead is with us. this is bloomberg. ♪ ♪ ♪ welcome back to the "european open." the trading day broadly positive for european equities. 0.9%.oxx 600 gaining the asian session looked very different from the previous overnight. asia did pretty well today, and european equity markets bouncing. u.s. futures point higher. the three major markets now over 1% higher, including the nasdaq. the sector breakdown for europe. all the sectors in positive territory. even travel and leisure, so beaten up of late, that sector up 0.2%. the best performer, basic resources up 2.8%. let's get a bloomberg first word news update with leigh-ann gerrans. n: the coronavirus outbreak continues to spread, with cases topping 20,000. a first death has been reported in hong kong, the second fatality outside mainland china. officials are evaluating if targets for economic growth need to be dialed back. china and the u.s. will allow some flexibility on the trade deal pledges as the virus affects domestic growth. the phase i trade deal contains the possibility of a consultation if a natural disaster or unforeseeable event delays either side from complying, and it is unclear if china has formally requested such a move. isomberg learned iowa postponing the release of caucus results after "inconsistency in the count." it says the issue is not in reporting, but is not a hack or intrusion, either. the results are expected to be released in the morning, iowa time. this is bloomberg. anna, matt? matt: thanks very much. leigh-ann gerrans with your bloomberg first word news. alphabet reported fourth-quarter earnings that missed estimates on waning search advertising growth, while new sales numbers on youtube also disappointed the street. the stock fell more than 4% in extended trading. joining us with a little more on , bloombergehemoth opinion columnist alex webb, and cole smead is still with us to join the discussion. making more than $15 billion from youtube. seems like a lot to me. what does the street expect from this company? alex: more, essentially. it is still a lot. in the context of twitter, twitter does $2.5 billion of revenue a year, and youtube did -- eight times this. alwaysw, youtube has forked up the promise subscriptions. they didn't break out subscription numbers, only the advertising numbers. that would be the disappointment for a lot of analysts who expected considerably more than that. anna: we did get some more disclosure from alphabet than we previously received. alex: we didn't know at all. a big data point. the biggest threat at the moment and one way in which they are interestingly using youtube is to try to fend off amazon. amazon is stealing share from them now, and amazon has a little more intelligence because it knows when you bought something. google can guess what drives a sale, and amazon knows it, because you have amazon.com. google is using youtube to sell things. if you look at a major -- makeup video, for example, you can click on buying the makeup in the video. that helps google, for the moment really struggling to fend off amazon. matt: what is your take on these trillion dollar behemoths? are they worth the valuations investors are paying? cole: i think that's the easiest question. the answer is no. i think the more interesting question, what your colleagues rolled out yesterday explaining bezos is jealous of musk, and the big second headquarters bakeoff was more about humanity and the fallen world we live in rather than the conversation with google. the companies are all dealing with problems, and iron he is many of them are set up where they shouldn't have to deal with the normal problems of business, and they are. the advertising thing in the case of youtube, i'd rather own discovery communications where i don't have to pay the price. i have non-scripted television, which is nothing different than the youtube world, i want to create a channel, selling advertising for google. but i can do that with cable, sling, anything like that. i don't have to pay the price. because this is a problem. like with google this morning, you will wake up this morning and they will not be bids for these stocks. anna: what is the catalyst for that? some of those things you said could have been set at various times in the past. what is the catalyst, regulation? that seems some way off. cole: the future could not have been brighter in 1999, either. it was all true. that's the terrible part, the catalyst was through the whole time but you woke up and ran out of buyers. i say that because it won't be any different this time. you wake up in a situation where you run out of buyers. many of the original theses may still work, but the question, is the price being paid meritorious for investors? say you didn't know anything about tech. i can tell you that u.s. households have more net worth in common stocks than they ever did, like 1969 and 1999, and consumer confidence is very high. but those are the biggest components of the s&p 500. matt: alex, i want to quickly get your take on tesla, a $150 billion company now. the market cap is unbelievable, speaking of high valuations. is it a tech company or carmaker? alex: a carmaker. a slight misnomer. i point everyone towards my bloomberg opinion colleague's peace last week, justifying valuation based on the discounted model, earnings would have to jump 89-fold in the next nine years. to 2016, the iphone, and earnings jumped 25 fold. not saying it is impossible, but a hell of a big ask, and it doesn't seem that a lot of rational investing, but fear of missing out. anna: we will be talking cars in the next part of the program as well. alex webb, thank you very much, and cole smead, thanks for joining as well. coming up, still no results from the iowa caucuses, the first round of the race to become the democratic candidate turns to chaos. the impact that could have on the democratic party and markets. this is bloomberg. ♪ ♪ ♪ anna: welcome back. a positive session for european equities, and u.s. futures point to more to come. nasdaq, s&p futures up both more than 1%. the winners from the first democratic presidential nomination contest were due to be announced hours ago, but the iowa democratic party has officially delayed results after they cited inconsistencies in results from some precincts at are holding up the announcement to verify the results. kathleen hunter has the latest. what have we learned? what's the process from here? kathleen: if you are a democratic candidate, you are basically looking ahead to new hampshire now. this is supposed to be a big splash for you, if you are someone like bernie sanders or pete buttigieg, who finished at the top of the pack. so i think that if you are one of those candidates, you are probably looking ahead to new hampshire while this is sorted out. anna: we could still get a big splash. we don't know the results. kathleen: there is sort of nothing left for the candidates to do here, so this is in the hands of the iowa democratic party. they have to do the due diligence. it sounds like they have the paper trail to back of what went wrong, but it may take time to sort that out. so the emphasis here is that they don't want to, they are going for accuracy over speed and want to make sure they get this right, but in the meantime at least it looks like they dropped the ball a bit. matt: exactly. is this a problem for the democrats in general? in the last election, although the mails from john podesta and co. leaked showing they essentially preferred hillary clinton over bernie sanders and wanted to help her become the no minee. is their image marred further by this? kathleen: certainly there could be elements in the democratic party that try to link those things, certainly elements of the republican party that may try to link those things. i think this is a separate issue. this is clearly a technological problem, but it does raise questions about voting integrity in the united states generally, how much we can rely on the , cast not only in iowa but again in the general election. so i think on one hand it calls question to a integrity early in the process, which could be helpful, but on the other hand doesn't really instill progress. anna: kathleen hunter on the u.s. political process. back to cars. yesterday,s up 20% most since 2013. the electric car company added over $23 billion to stock value, boosted by earlier than expected profitable operations at the and news the panasonic battery factory was already profitable. they pushed past volkswagen in market value. in the last three days, the surge more than exceeded tesla's gains for 2019. let's speak to paul lund of fitch ratings. in terms of the earnings season for automakers in the u.s. and europe still to report, is tesla the one to beat by certain metrics, even not units sold? isl: by units sold, tesla one of the smallest car companies in the world. it produced about 400,000 cars this year, so even behind the likes of jaguar land rover, always the most exposed of the carmakers on a global basis. overall, earnings are going to be slightly depressed. we expect car demand is overly and for some manufacturers demand will be down 5% for the year. andating cash flow profitability and margin will be depressed. matt: i am sidetracked a little by the jlr comment. i wonder what your take is on the viability of jlr, especially given brexit right now and its need for funds. is this carmaker going to last? paul: good question. i think jlr is in a particular suv's in high-end particular. .ot doing so well on sedans the sort of company that needs to continually reinvent, going for the price range of car, people are always looking for someone new and innovative. ford, gm,akers, peugot, are mass-market producers whereas jlr is executive and it is harder to predict that sector. matt: they definitely need money to increase the tech presence in the range rover's, for example. i want to take a look at a chart, u.s. auto sales going back to the 1990's. the point is, we're coming down 2017-18 inhe peak of terms of sales. it looks like peak auto is behind us, as little average age of -- the blue line, average age of cars on the road, rises. as they make better products, there is no need to buy a new one. is this average sales number going to continue to fall from here? paul: we think it will fall slightly, but that it will be ultimately resilient. i think the issue is what is the mix of products people are and there isym, uncertainty in the buying public of what car they need to buy next. the second part, the coronavirus, and that sort of delayed demand in china and that's not going to hell. with the tech angle, whether to go electric or stick with your existing form of propulsion, will be the big question. to this u.k.kes us story that feeds into a global conversation. boris johnson later on today is set to talk about how 2035 he wants to see that as the last day you can buy a petrol or diesel car, by some reports even a hybrid. far, 15 years from now we could see the last sale of those vehicles. what is that doing to the consumer? when so much of the infrastructure is missing? paul: i think people's behavior won't actually be changed unless it is regulated, so if you have the opportunity. i live in a big city. i'm going to be restricted in terms of my choices earlier than people who live outside cities. anna: and you have been already as far as driving into the city. paul: so that's going to change. what people buy, if you want to force the change you have to say it is not available, manufacturers have to step up. anna: but through legislation, or forcing the infrastructure to be available? paul: that's the next question, because the infrastructure isn't currently there. when we did electric car testing in my area a number of years ago, they only selected areas with a strong enough local grid, are not strong enough in a lot of areas to support the electric cars they anticipate. a huge investment in electric infrastructure. matt: great point. the infrastructure isn't there here, either. i wonder what you think about the incredible investment, volkswagen has put more than $50 billion into, or pledged, into developing its electric vehicles. is that kind of investment going to be impossible for other automakers to meet? paul: although the automakers are doing it in some form. factor jaguar land rover, they are trying to put every model in the next two years onto a single chassis, in effect, a modular chassis with the same electric battery built up. they are building their own battery assembly plant. clearly, the big investment, going back to tesla, the big investment is battery assembly, having the tech and capacity to produce all these batteries, because at the moment the capacity i don't think is there for the anticipated volumes everyone wants. anna: called, thanks very -- paul, thanks very much. of fitch-- paul lund ratings to talk about automobiles. up next, stock movers this morning, including pandora. shares in the jewelry company fall, the stock down 3.25%. this is bloomberg. ♪ anna: welcome back to "the european open." 8:52 in london, and the session in europe is very positive, up 1% on the stoxx 600. with basic resources in mind, let's get the stock movers with annmarie hordern. annmarie: basic resources in focus, after the last few days when they were really battered by the coronavirus. glencore up 4.5%. they see new changes to 2020 guidance. anup nearly 4% today, overall beat. they also raised their dividend slightly and talked about $5 billion of disposal by the middle of next year. talkede to the cfo, who about what the coronavirus means for demand and opec may have to step in. take a listen. >> what you are seeing in terms of short-term impact to oil price is the effect of the coronavirus. we think right now coronavirus could impact anywhere from 300,000 500,000 barrels per day, which will soften demand, and then all eyes lead to opec, whether they will balance the market to get back in the $60 to $65 range. annmarie: great interview, guys. pandora, down 3.5%. 2020 sales dropping as much as 6%, and they said the coronavirus is one of the new risks they have to add to the list, in a key market for them. matt: thanks very much. looking at some of the big movers for us there for us. let's look at what is moving markets with richard jones, mliv markets and rate strategist in berlin. interesting that we see this weakness coming in in the pound. i believe annmarie flagged that this morning, the lowest level of 2020, $1.29. what's going on? richard: i think it is in reaction to what i would describe as the tough opening positions of the e.u. and u.k. with regard to trade arrangements after the transition period. i don't think this will be in a move -- a move in the pound that has legs. i think we will stay in the same range since the election. i don't think this is the start of a really big move lower. if i look at the reaction in the fx markets, i didn't see any reaction at all in the u.k. rates market. if this was something investors were really getting worried about right away, i think he would see moving the rates market. the fact we didn't tells me this is just noise in the fx market. eventually this will filter into pricing of u.k. rates and the pound. i just think it is too soon to say definitively that's happening. anna: what do you make of the yen right now? having a risk on day for global equity markets, and we talk about how fx markets maybe aren't picking up the news lines around coronavirus the same way other risk assets are. wn 0.3% goingn do along with the risk-on move. yen?matters for the richard: with everything that happened with the coronavirus, i think you are right. the rates markets, traditional havens like the u.s. treasury market and the bund market reacted much more directly to the coronavirus, and i think it has been a cleaner play. think risk we sentiment will feed into this any, also euros-swiss, swiss-related cross will move around with the coronavirus and other risk sentiment drivers. realistically, the best way to do it -- deal with it is to trade the rates market. matt: speaking of range bound, the yen hasn't moved out of 108-110 since before thanksgiving. you know when that is? october,for me it is you november. matt: my canadian friend. [laughter] that's it for the european open. "bloomberg surveillance" is next. ♪ ♪ beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. wheneveryone is different.a, which is why xfinity mobile created a different kind of wireless network. one that saves you money by letting you design your own data - giving you more choice and control compared to other top wireless carriers. now you can choose unlimited, shared data, or mix lines of each and switch any line, anytime. no one else lets you do that. design your own data with xfinity mobile. it's wireless reimagined. simple. easy. awesome. casesne: worldwide viral as the u.s. is preparing for a possible pandemic. a. the democrats postponed the results of the iowa caucuses. we will ask what went wrong. alphabet raises estimates as youtube disappoints. shares drop in extended trading. ♪ francine: good morning, good afternoon, good evening depending where you are. this is bloomberg surveillance. i'm francine lacqua. was i brutal selloff in chinese stocks.