Very warm welcome to bloomberg daybreak europe. Lets get straight to breaking news. Fourthquarter net income, 1. 6 billion euros against an estimate of 1. 4 8 billion ahead of the estimate. The ratio, 12. 1 , looking for other numbers, the revenue number coming in at 5. 1 2 billion. It looks like it has beaten the top and bottom lines, and the dividend comes as anticipated. The story is on Asset Management for growth, trying to offset the impact of lower negative Interest Rates and Rising Capital requirements, which forced them in december to take it right down on the french Retail Banking business. More diversified and less dependent on rivals on the trading side. What expectations do they have for growth in the Retail Business . The creditak to agricole ceo on a European Market and 8 30 a. M. U. K. Time here in london. Lets get to the markets and see where we are trading at. In the asian session, the asiapacific region, the market ,ooking flat, pretty confused unwilling to take risk as we go toward the weekend. Given the change in methodology in the terms of counting coronavirus, that is leading markets scratching their heads. The japanese equity markets losing strength to hong kong, shanghai market gaining a little bit. U. S. Futures, we see upside. A decent week for u. S. Equities, we continue to see that reflected after a stumble in the early part of yesterdays session. What recovery will we get in terms of the growth trajectory for china and the Global Economy . Will this be a v shaped stumble . The chinese currency still stronger, a number below seven. Of countingmethod coronavirus infections, the 5000 cases. Ce added the latest figure is roughly double what the province was reporting daily with the old counting system. The death toll has risen to 1400. U. S. Officials escalated criticism of chinas response to the outbreak. We thought there would be more transparency, but we are disappointed. We are willing to work with the who, but they will not let us. I do not know what their motives are. Apparently more people are suffering, and that is not a good thing. Anna larry kudlow there. Lets go to Tom Mackenzie who joins us from beijing. Trump had praised china for its handling of this disease, now we see a change in tone, what is going on . There is ans erosion of trust around how china has handled this. Trust wason of articulated here in china, and now in washington. Also in countries like australia where they extended the ban on travelers from china. Triedn december, doctors to raise the alert and were punished. We know this through reporting that they have not been accounted for because of the lack of facilities. Then a change in methodology that created confusion even though it is supposed to create a more accurate estimate. There he kudlow is saying, u. S. Experts on the ground and the world health organization, all of that is eroding trust. The number of cases is increasing. Globally. Rate, 1300 in terms of the shockwaves, they continue, you see and hear from alibaba that it will be a fundamental impact on the Chinese Consumer and merchant. You are hearing from mattel saying they will take a hit to production. Cruises for royal are banning all cruises. Continue as china is trying to ensure the quarantine measures are in place. One Silver Lining is that the death rate outside of China Remains relatively low. A third case in japan, one in the philippines and now there is one Silver Lining, they are monitoring it closely. Anna a lot of focus on case numbers. Thank you very much. Studio, alain in bokobza, head of global asset allocation, Societe Generale. Good morning to you. The market dealing with a slightly confused picture around the data around this virus. How much are you focused on the daytoday reporting of the chinese virus cases, or how much can you see a path through this and have conviction around your strategy . At thishis date state, the only question several days in a row it seems they are stabilizing the way they are doing the new data, which is good. Went from 4000 down to 3000 a day, and we will see on the new data set whether the number of , if this number continues, it is possible. That would make that situation cool down. Everything is uncertain at the moment. It was down in the previous data. Is how longuestion that will last. Negativelywill be affected on china gdp, asia gdp. Europe more impacted than the u. S. Impact the entire year. Insight . We have any i guess we do not until we see some settling in the infection numbers. Can we say if this will be vshaped or lshaped . Alain the deeper it goes down when we have this data, like germany was not reacting well in the first month of this year. Policymakers have started to restate fiscal policy, they can do more. The more it goes down, the more the injection will be. V can be letter of the like this. Markets are expecting the policy injection which could be deeper than expected. Anna is that too much expectation, or wellfounded expectation . Are we right to a lot from policymakers . Alain that is the only question , it is rational we should , thet some expectation nature of reflation will trend in the u. S. It might be broad policy tools, in japan it could be fiscal. Be differentuld from one country to another, but the quantity will come if necessary. Perhaps driving down inflation, we will return to that conversation. Thank you alain bokobza, head of global asset allocation, Societe Generale. Lets get your first word news update. One of Donald Trumps most trusted cabinet members, william barr said trumps tweets in Public Comments about the Justice Department and ongoing cases makes his job impossible. He spoke to abc news. With annot do my job constant background commentary that undercuts me. Anna ubs is searching for its next ceo, they are seeking internal and external candidates. A star hire may not be among the front runners to take the top role given his brief tenure. Tesla is running money again, they sold 2 billion of shares weeks after elon musk said investors did not make sense. He seems to have changed his mind, he will use proceeds to shore up teslas balance sheets. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Withg up, our conversation the rbs cfo. Also ahead, new york fed president says his baseline outlook is good. How does the cleveland fed feel about the u. S. Economy . We will speak to him exclusively. As ite will talk oil heads for his first weekly gain since early january. Find out what Goldman Sachs has to say about the outbreak in china. This is bloomberg. Anna this is bloomberg daybreak europe. Oil is headed for its first weekly gain since the first of january. Oil demand is seen dropping for the first time in over a decade as the outbreak hurts the economy. Goldman sachs describe the situation in stark terms. The current environment is dyer, what is going on in china. The baltic freight index went negative. Kuwaitaudi arabia and will restart Oil Production sunday. That is four years after they halted output at the deposit. Alain bokobza, head of global asset allocation, Societe Generale is still with us. The key factor is demand. Then how supply responds at the moment in terms of the oil conversation. Alain to make a long story short, the demand we are seeing from the impact of the virus in china is equivalent to the u. S. Recession. How big and shocking that is. Anna in terms of the size of its impact on the Global Economy . Alain the impact on the Global Demand for oil. It is a huge impact on demand. Like other Commodity Prices like opec plus could respond. They wouldeen saying not go before the early march opec meeting, and it is a possibility some damages on the in the u. S. It to 60 a barrel, we are around 50. The longer it is, the more they will have to cut production because it is not economically viable. Here is the game between opec plus and shale, who will respond to cut production . Anna interesting you say the oil price, the significance to the oil price is equal to the recession. We expect oil prices to be lower if we were in recession . Looking where we fell to the high 30s and 40s last time with the u. S. In recession. I have a chart on volatility, that is set to continue. Alain it is set to continue because the parts are moving together. We have an expectation it will move down and demand has moved down. The prices can move fast according to one or the other changing. The next step, the opec meeting in early march, within opec plus other countries have reduced production in the last quarters. Russia has increased. Before we have credible otherwise i do not think the oil price anna what about the impactanna anna what about the impact, i was looking economist at bloomberg or send this rise in inflation will not last because of the strength of the dollar and the fall in Commodity Prices. Do we expect weakness in oil prices generally will pull down inflation globally . How they are looking and one to the other, Inflation Expectations in the u. S. Are on one side, and the oil price on the other. Inflation expectations have been falling, the reality of last months. Expectations have fallen recently in line with the fall of the oil price in the u. S. They both move together, and falling Inflation Expectations, back to the first question, it is an open door to act aggressively. Anna to cut rates . Alain you said it. Anna what is your expectation there, this is a fastmoving story around the coronavirus. In terms of the impact it is having on the economy, this is a fastmoving story and the fed is watching to see what damage this does. What is the assumption . Alain the fed is on pause. Watching,ching, i am he is ready to move in case the economy will not be as robust as we thought. In terms of market expectations, this is why the relativity of the u. S. Market has remained so uncertainty. Of the anna a lot of expectations what the Central Banks will achieve. Alain bokobza, head of global asset allocation, Societe Generale stays with us on the program. An exclusive interview shortly after 8 00 a. M. U. K. Time. Coming up, do not look down. The biggest drop in a decade. This is bloomberg. Anna this is bloomberg daybreak europe. I am anna edwards. Itsjapanese automaker cut fullyear profit outlook for a second time and scrap its yearend dividend payout. The stocks decline in profits declined in 2019. Here to discuss is dave magoon. Your thoughts on the scale of what we are seeing from the japanese automaker, nissan . Dave this is a big blow to the company, a big disappointment at the thought shares have their biggest fall in many years, to their lowest in seven years. They are back to financial crisis levels. These are shares that have been dropping quite a bit, it was a punishing day on the market showing investor reaction to what had to be a big disappointment. The company cut its fullyear outlook once, but this is the second time, they are trying to get it right and things are worse than before. In the key market, north america, profit was down by a quarter, a big blow for a company that had been looking for some place to stem losses and gain ground. Salesave not done that, are continuing to fall and they are struggling to sell their cars. Anna thank you for the update. Alain bokobza, head of global asset allocation, Societe Generale, is still with us. When you look at the auto sector and look at dividends for nissan , lowering its profit and dividend outlook, we saw from daimler earlier this week talk about what will happen with their dividend. Do you think companies in this sector facing requirements for investment and reorientation for shouldrent engine type, they be expected to pay big dividends . Look at theyou forces at play within the global there is soector, much pressure against the sector, headwinds to the sector reactionhat the yield from every car producer. We are all watching what it is doing. Part of the reactions to the share price from september, very technical reaction, not purely sentimental. Back to the sector, it is rational for dividend cuts, and in the case of daimler, which is not the case of nissan, divided by four for the dividends, disappointed earnings, no move on the share price. Back to strategy thinking. Everythingd to check available to invest in electric cars and what the new models will be is a good decision. Anna the market is forgiving of that . More thanis forgiving. Share prices are falling so long and so deep, not reacting divided by four on the dividend is a good reaction. This is promising in understanding it is something deep, and how you mobilize every euros on your balance sheet. Anna you mentioned tesla, this surge in the share price of tesla, does that underline how few outlets there are four. There are for Pure Electric . It is not available with the developed electric model, i , but in fiveful years time, good Quality Electric cars. However, the key question is the speed at which you do it. For tesla, the quality against the stock price in september, good quality results forced the recovery. Anna thank you alain bokobza, head of global asset allocation, Societe Generale. He stays with us on the program. We will bring you results from the french automaker, renault. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed 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. Anna good morning from bloombergs european headquarters. This is bloomberg daybreak europe. ReportsHubei Province additional coronavirus cases, even as beijing revises down the death toll. Larry kudlow criticizes what he calls a lack of transparency. Europes biggest economy reports fourthquarter gdp today and an unexpected contraction could take away a blockbuster relic of the dax. Ubs is set to begin a search for a successor. They see record inflows at its Asset Management unit. We speak with the cfo today. Here in london. Lets get to renault. Renault reporting revenue for the full year that broadly meets average analyst estimates, 55. 5 billion euros. That is the full year revenue number. So far, so good. The fully operating income number, 4. 1 one billion euros. That is less favorable compared to the estimate. 1. 10ividend per share, euros. Butestimate was wide, certainly the number has come in at the lower end of the estimate. That is the redhead line across the bloomberg best morning. Renault cuts its dividend to 1. 10 euros a share from 3. 55 euros. We were having that exact conversation with our guest in okobza, about the extent to which markets were not only forgiving, but expecting Car Companies to cut back on dividends where they needed the money to invest in new products and invest in the pivot toward electric vehicles. Coming up, we will bring you the interview with the renault cfo. That is the conversation coming shortly after 11 00 a. M. U. K. Time. Lets get to the Broader Market picture and have a look at where we are on the asian equity session and look ahead to europe. For the asiapacific, looking flat. Upres look flat to positive, by 0. 1 to 0. 2 percent. We have coverage around the world with a focus on what is going on in asia. Joining us is Juliette Saly in the singapore and nejra shah in mumbai. Effect looking at the working from home is having on fx and bond markets. Juliette many have been working from home. You have seen a collapse in volume in index and chinese bond trades. When you look at daily large transactions, they are down about have some the reopened on february 3 compared to a year ago. With volumes so low, you see 10 year sovereign debt having its best week in five years because some of those low trading levels are exaggerating the moves. This figure is less than a quarter of what was issued in the weeks prior to the holiday, and not quite 60 of the two weeks following last years Chinese New Year break. The fact that so many traders are at home is having a big impact on fx and bond trading. After a Supreme Court ruling, take us through this story. The case is against the company. [indiscernible] the Supreme Court has asked all to submit before the next hearing. It is a large sum that they now have to pay. A company has collected 30 from the highs of the session today, and large nifty as getting in on well. That is arguably the biggest news in indian markets. We are in the green, now in the red. Investors around the world very mindful of the human tragedy that is coronavirus, but also thinking about what this is doing for economies. Inspoke about losses china and hong kong, now we focus on what is happening in singapore. Shalsome are trading at home bee of the virus. It is another sound as to how much it is having an impact on daily life in singapore. We look ahead to next week, to tuesday, when we will get the 2020 budget from the government of singapore, what kind of stimulus package will be put into place or the singapore economy because of the impact of the virus. That will be a focus early next week. Lets get a first word news update. We start with the latest on coronavirus. The chinese province at the epicenter has reported almost 5000 more cases. That confirms the nearly 15,000 reported yesterday was a oneoff situation. But chinas revisions are making it more difficult to gauge the true scope of the outbreak. The death toll in the country was lowered by more than 100 to account for some double counting, putting it at 1380. Top economicses advisor has ramped up criticism of chinese transparency surrounding the coronavirus. Echoesudlows concerns ongoing doubts about the accuracy of new cases. He is also disappointed that American Health experts have not been allowed into the country. Kudlow spoke to reporters earlier. We thought there would be more transparency, but we are a bit disappointed. We are more than willing to work with the who on this, and they will not let us. I dont know what their motives are. I do know that apparently more and more people are suffering over there, and that is not a good thing. Anna ubs is searching for his next ceo. Sources say the bank is searching internal and external candidates after being told about plans to step down. Intar higher who joined october may not be among the front runners to take the top role, given his relatively brief tenure. Markets and ib income jumped more than 50 in the Fourth Quarter of a helping revenue beats estimates. The Bank Reported record inflows at its Asset Management unit. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Lets talk about what is going on in thos eurozone economy. It fell after concerns around the economic growth. Rate speculation of possible monetary easing. The next indication of the health of the eurozone will be gdp data from germany at 7 00 a. M. London time. They are expected to have grown 0. 1 in the quarter, but some see a contraction, two straight contractions. A technical recession would be a further blow to the eurozone after wednesday showed the biggest drop in industrial outputs in four years. Okobza is still here. Your expectations for the german economy, what it can do in the face of the wellknown difficulties it is facing in the auto sector, and now coronavirus. Alain we were mentioning in the discussion earlier that the yuan is affected by its own lack of vision in terms of leadership. The Global Economy is slowing down and the automated the automotive sector is working for germany. Light gdpaking a very deployment. Overall gdp is around 1 . The key issue i think we should be looking at is the template which has been put in place by the United Kingdom to switch the impetus. The change in casting of elites to more fiscal spending in the United Kingdom to come. Anna we saw the pound move higher on the back of that appointment. Is that because the market likes this idea . They think it will stimulate growth . , you monetary policies can always do more. But it is priced to marginally affect policy. We know that the solution is some kind of fiscal spending. The u. K. Is heading for that, beyond the casting and the names. It which is for monetary to froml it switches monetary to fiscal. Can that be a template for the rest of europe in the Fourth Quarter . Into other countries to go into that. Gilt do you think the markets will be forgiving of this . Somewhere, the advisors to javid were perhaps and we were not in the room, but reading between the lines perhaps the advisors were suggesting he should not be funding quite so much fiscal stimulus and some advisors are saying, you can spend more. You can borrow more. Contentt yields stake stay content and also make an increase in daytoday spending . Alain beyond politics, at some stage, we need numbers. We have the presentation of the budgets, which is a big deal. If it were to come to that. We have the big numbers not only for one year, but the next two or three years, how much is going to be spent. Trumpsook back at fiscal policy, he spent 3 of gdp in the tax reform. That is quite a big investment, and the treasury architect did not decline, yields went up. The equity market did. Was a 3 of gdp fiscal injection. We dont know yet the quantity of injection we are going to have in the foreseeable future. That anna anna we did see a pickup yesterday, but we will wait to see. It will depend on the numbers. Alain bokobza stays with us. We were just talking about the impact of the coronavirus on the economy in singapore. A little anecdote from shell about what was happening there. Lets focus on the Prime Minister of singapore. We hear the Prime Minister saying a recession could be a possibility. This comes from the straight times. Coming up, succession drive. Ubs is the latest bank searching for a new ceo. This is the story you need to this morning. This is bloomberg. This is bloomberg daybreak europe. Im anna edwards in london. Ubs is searching for a successor to the ceo. The lender is the latest European Bank to consider changes in an industry bessette by sluggish growth. They said last month that succession was not at the forefront of his concern, but here is what he had to say a year ago. For us, succession planning is part and parcel of what we do. Eighth and i are in our year at the bank, and that is the point in time when you have to start thinking about what is it you are going to do and how are you going to pass the bank over to your successors. Successors. While. T takes a those words from axel weber about how succession planning is part and parcel, now we are hearing that succession planning is really in the works. Run us through the story. Reporter it is probably not a straightforward process, but i remember axel webers words very well, that he is accelerating potential planning on the board of directors. I find it interesting. It seems to have an ongoing succession for European Banks. Are from theeaders post financial crisis area. So they oversaw reconstruction. They have to find avenues for growth that has been difficult for banks in a low rate environment. There are technological changes. Is there wouldy probably be a flurry of secessions over the next year. Anna a bit of a theme . I think it is a theme. Around anothera departure last week, now we have zurich all over again. Anna part of the reason for his departure, the reason for his departure was all of the scandal to ubs. Ahn going but he is not one that will take over at ubs. Reporter that is something we insinuate in the story. The Credit Suisse story. It sounds like an ordered process. Eight years is a long time. He wanted the top spot at Credit Suisse. He did not get it. When ubs started its succession bringing, it was we in more executives to strengthen the executive board, then maybe these people become successful. I still think he has a fighting chance to get the job. Understand is the search is focusing on other candidates more, more external candidates. There are also other strong internal candidates at ubs. Coo is a potential succession candidate. Now, i think the important part of this story is that ubs has started succession planning. There are people involved in this and the process is ongoing, and ermotti might step down this year. He oversaw restructuring, and now it is really about growth. I think ubs missed the chance to become a leader in many of the business areas, apart from wealth management, so they have cost issues. The share prices are not great. Anna thank you for bringing us this story. Lets get back to a broader conversation around banking. Alain bokobza from societe gen erale is with us. There have been cases where European Banks have done well, and we will talk about the sector as a whole, where European Banks have done well in investment banking, but in some cases, the outperforming has been left to the united states. This transatlantic divide, is this something you see continuing as an Investment Team . An investment theme . Alain is not only interesting for the bank, but for the sectors. As we are listening, there is more on the u. S. Side. Higher inmargins are the u. S. Anna are you talking about tech . Alain i am talking about every single sector. U. S. ,erage is 16 in the around 10 in europe, 9 in japan. Europe against u. S. It is across the sectors. That you see oligopolies allow them to deliver these higher levels of profitability. Down hopefully we cool sooner rather than later. The next big thing would be the u. S. Elections in november. Within the elections is embedded a few large companies, with their oligopolies. Have your question whether there is someone in the Democrat Party who wants to progress. It affects the Competitive Landscape the u. S. Against the rest of the world. Anna what is your biggest conviction as we sit here in midfebruary, clearly the tragedy in china still unfolding . What are your convictions, your conviction investments, as we look at the rest of 2020 and wait to see what shape the economic story looks like . We are looking for equity bonds at the peak because everywhere in the world, volatility is trying to cool down. We are looking for bonds on all the assets which have been negatively affected. Anna buying the dips. Looking for that, then we will switch to the we areresponse, whether closer in germany or not. That will be a big name changer with how you deal with european fx. It will be a big element of how you trade, which is one of the other precedents. Anna alain bokobza. Sector already hit by weak sales, carmakers are grappling with the coronavirus outbreak. How much farther can sentiment fall . We have your morning call next. This is bloomberg daybreak europe. 6 54 in london. Now to your morning call. The cube a province is the fourth largest auto producer in china, making carmakers one of the harder hit sectors from the coronavirus outbreak. The disruptions should be manageable. Dealers entered the period with a high level of inventory, which will help them weather the storm for now. Instead, the coronavirus will only impact certain automakers that concentrate their efforts in Hubei Province. Some in the area include hyundai and General Motors honda and General Motors. An interesting morning call for you on the auto sector. Lets get some finer thoughts lets get some final thoughts with alain bokobza. One of the things we talked about in relation to the coronavirus is strengthen the dollar. Do you see that strengthen the dollar continuing short or medium term . Alain one thing we had already was the u. S. Dollar against, if you are imagining currencies, the u. S. Dollar against the yen, have been quite stable lately. You had a big rise from 2009, but lately, it was more down than up. Only against the cure, but the euros has not gone down. It is more the european political situation, the german gdp you mentioned. At the moment, we are vshaped. On the dollar, it is very expensive as a currency. With the assets we follow globally, this is one of the most expensive fx. You would need a trigger for that to change. On our view, it is for the gap in growth where the u. S. Growth is above the other months. When this cap starts to fall, the u. S. Dollar well as well. Anna we will watch german gdp at the top of the next hour. Thank you very much for joining us. This is bloomberg. Anna welcome to bloomberg markets. Im anna edwards. The cash trade is less than an hour away. Anna revisions cloud the picture as chinas humane province announces Hubei Province announces additional coronavirus infections