Transcripts For BLOOMBERG Bloomberg Markets 20240713

Results as leadership speculation swirls. Lets look at how we are positioned on the markets. Australia, looking like a flat open. Moved loweres have on that news from apple. Nikkei futures off about a fifth of 1 . New zealand has been trading for about an hour now. Ospi futures the latest company to announce fallout from the coronavirus. Joining us, mark gurman. Background into this announcement. Apples second revenue adjustment to years in a row. This time it also has to do with china but for a different reason , coronavirus. Billion for the march quarter. They are not saying what the new Revenue Target is. It is very clear that this is happening an impact on them. Sales in china are down dramatically. Two stores, most of which have been closed in february. China is the third biggest market. Second, the iphone is temporarily constrained, meaning they are producing less and selling less in the quarter. Andiphone makes between 50 60 of the revenues depending on which quarter you are looking at. Paul mark, how enduring do we expect this to be for apple . Mark this is largely significant. Underscores apples reliance on china might not be so great. Youre talking about a company that not only relies on china as its thirdbiggest revenue driver, but that is also where 95 of their stuff is made. Paul in terms of where stuff gets made, apple obviously has an enormous supply chain. Is it possible to see what kind of knock on effects this might have . Mark this might push apple to execute their plan to moving more production facilities outside of china. These facilities are not in wuhan specifically. This slower than expected rampup. Paul thanks for joining us. Courset it was of all inspired by the coronavirus. The total number of cases of coronavirus has reached 71,000. Global death toll at 1,775. Tom mackenzie is in beijing and yvonne man is in hong kong. Tom, some broad concerns not with the apple, but supply chain. Can you run through some of the factors . Tom it is interesting that apple talked about those supply chain constraints. Some of that was inevitable. , we tell foxconn we know they told some of their employees not to return to their headquarters in shenzhen. Thatt is not surprising they are struggling to get into the factories. In terms of those store closures, they did reopen apple stores. I went into one. That was the busiest store in that mall but the footprint was still lower than it would be on a normal day because people here are still concerned about going out. More broadly, we have seen a survey out of the American Chambers of commerce in shanghai. They have been talking to members, manufacturers. They say 80 of them dont have enough workers to be back at full capacity. That dovetails with what Bloomberg Economics has been saying, saying the economy was capacitying at 40, 50 last week. The latest Median Survey that thesuggests , down fromwth number the Previous Survey of 5. 9 . Yvonne in Hong Kong Paul it hong kong, not only the coronavirus but also months of clinical protest before that. We are bracing for some pretty grim employment numbers. Yvonne we have seen four straight months of increases, the longest stretch we have seen in a decade. The double whammy. They will not affect the full effect of this coronavirus. Happen fromrted to the coronavirus later. It could get worse. Cathay pacific coming out with another profit warning. First half earnings could be down. They said this was the most challenging Lunar New Year holiday for them. They said they carried nearly 4 fewer passengers in january. That drop is likely to steepen given that they cut capacity to china. Similar declines from the likes of the big three. Thathile, macau announced casinos can reopen this week on thursday after that 15 day shutdown. They said that macau had reported 10 coronavirus cases but they have seen 12 Straight Days of no new infections. Perhaps the shutdown has worked containing this virus there. Paul in the next hour or so, we have become accustomed to receiving updates from china about the spread of the virus. What is the latest . Tom we heard from chinas premier saying that the spread of the virus has weekend and they have avoided an outbreak thanks to these allout control measures. We have seen those restrictions ramped up again in the province of hubei and even here in beijing, where authorities have set anyone returning to the city would have to sell chordate for 14 days. Ne you have had four deaths in a population of 22 million. It looks like chinas leaders are relatively confident they will not see any outbreaks beyond the province of taylor the province of hubei. Perhaps the meeting of chinas annual parliamentary session might be postponed. March 3 is when it normally kicks off. They may now be looking to push that back as a result of concerns about the virus. This is a meeting that normally sets economic targets and policy priorities for the year. The work of government of course will continue. That it hasntnt happened since 1999. Paul about concerns over the fear of spread of the virus is as we have passengers from cruise ships being repatriated. Yvonne the diamond princess. We heard the who, they were a little bit more cautious. They were saying, at this point, when it comes to the risks involving Cruise Travel are still manageable. Carefuld we have to be about suggestions like banning Cruise Travel lower people saying they should steer clear of cruise ships, airports, or certain ethnic groups. Further concern of endangered in terms of the diamond princess. We mentioned the more than 300 american passengers evacuated. 14 of them had tested positive for the coronavirus. They were still allowed to board the flight but were kept in isolation for the whole way back. Paul Tom Mackenzie in beijing and yvonne man in hong kong, thanks so much. Lets check in on the first word news. The u. K. Has launched an unprecedented attack on the aropean union over terms for trade deal. The trade negotiator dismissed the eus position that britain would have to abide by its rules in terms of any trade deal. Toss said the u. K. Had create laws to suit the country, otherwise democracy will be undermined. Support for Prime Minister shinzo abe of japan has fallen in the wake of the coronavirus. Has reported more than 400 cases. 355 of them on board the cruise ship diamond princess. The pole comes as new data shows that japans economy contracted in the last quarter of 2019 but the most in more than five years. 10 bezos has committed billion to combat, change combat climate change. He says the fund will start issuing grants in the coming months. Bezos has been under pressure to balance amazons need for best delivery with the consequences of rapid growth of online shopping. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Keenan. This is bloomberg. Paul still to come, the coronavirus taking a toll on corporate. Apples announcement that it wont reach its Revenue Target. Outbreakgnaling the drop in demand forecast if the coronavirus is not contained. This is bloomberg. Paul lets get to more on that apple news story. The company saying it is not expected to meet its revenue guidance for the quarter. Joining this, the director of research. Thank you for joining us. We were hearing from our Technology Reporter mark gurman at the start of the show, pointing out that with a supply chain the size of apple, this cant come with a huge surprise. I would say less of a surprise and more of a bellwether. What this says to me is other Major Industries down the line will start to announce similar announcements due to running inventories, outsourcing production, having intermediate goods come out of china. This can have a lot of knock on effects. Apple is a case in point. As much as they are trying to shift themselves into a service industry, over 80 of sales are still iphones apple not being able to sell iphones is not the same as mcdonald not being able to sell hamburgers. If youre hungry, you will eat something else. For the iphone, you will probably wait. While to actually destroy consumption. We are not there yet. Paul what about the timing of this announcement . It is a Public Holiday in the u. S. Prices expecting to see in asia . And what will happen when u. S. Markets return to trade . Andy i think the Market Impact will be muddled with the u. S. Being closed today. On the other hand, i think this will have a Material Impact in some parts of asia, in particular for the suppliers that killed intermediate components that build intermediate components that go into iphones. Obviously one of the biggest casualties to date in the corporate world from the coronavirus. What is your assessment of chinas response so far in terms of giving markets confidence . Andy confidence is incredibly important in financial markets. Faithof value is based on that earnings will continue to grow, that a debtor will make payment. To do aaction yesterday little bit of monetary stimulus can go a long way on the confidence side. Impacter way it has an is consumption. There is a fine line between delayed consumption. And it a week or two more, we are starting to talk about destruction of demand, which could have ramifications not just for china but around the world. Have been promised stimulus from china, we have seen some as well. You can be pretty confident that sameebt will be about the will be greater at the end of the year that it was at the start. Andy i think it will make deleveraging a lower priority at least for the first half of the year. The leverage in the system, i worry more about the products that china is a major consumer of and how long they can get away with china not being a major consumer. China be a major importer of energy, natural gas, base metals. When i look around passions of the Global Market that are most sensitive to a worsening of coronavirus. Their supply chain is certainly getting hit. What i worry about the most is producers of base commodities. With china essentially being closed for business at the moment and relatively slow to start up, they are currently in an environment where prices have been low for a long time. They are already down and this could put them out. Paul we have had bhp report today, the mornings might be coming down the track. I think you have to be very prudent with your approach to identifying bargains at the moment. You have to identify quality companies. Bhp is a good example. It is, on the one hand, certainly a producer of iron ore, certainly struggling. Companys a profitable and downright huge. , thanks forght joining us today. Plenty more to come. For its thirdng Major Overhaul in a decade. We will break down what to expect. This is bloomberg. And, you can get a round up of the stories you need to know to get your day going. This edition of daybreak. Bloomberg subscribers can go to dayb on their terminals. You can customize your settings so you only get news on what you care about. This is bloomberg. Hsbc employees from london to hong kong are bracing for major changes, the possibility job cutsr reshuffle, around the globe it is expected to be announced on tuesday. Lets bring in finance reporter emily cap. What are hsbcs problems that the first two did not address . Emily hsbc is facing the same problems as many banks in the developing world. Low interest rates. The bulk of their profits come from asia. It has struggled to really leverage its presence out there to get the levels of growth some investors want to see. There is the normal complaint when a banks growth doesnt deliver about costcutting, etc. We are here for the third time again. Paul potentially a new ceo as well. We have been talking about apple and the impact the coronavirus has had. Emily hsbc headquarters in hong kong. Is a major Profit Center for the bank. Know, hong kong itself is in a technical recession. The coronavirus has really constricted dealmaking. Lookingally going to be to what the cumulative impact will be. Paul in terms of a potential ceo, who are the candidates and why not the caretaker ceo, noel quinn . Emily that is what we will find out today or maybe not find out today. It was clear that noel quinn was the heir apparent. Is the board looking elsewhere . At this stage, it is all speculation. We have heard Different Things from different media sources. I think today we may or may not get more implication more information. Paul we wait and we watch. ,inance reporter emily cadman thank you. We willtwo the ceo be talking to the ceo following the earnings release. French train maker alston has buyed to buy a bardis bambardias rail units. The acquisition is likely to generate as much as 400 Million Euros of savings for alstom over five years and it will make the number two Rail Equipment maker. Rio tinto is cutting price targets after cyclones hampered operations for the second year in a row. They say output will be between 324 and 334 million tons. 2019. Re had records in prices are expected to decline this year. Two groups of private equity firms are through to the next round in the heated takeover battle for thyssenkrupps elevator business. A consortiumle backed by carlisle. Iposenkrupp says an remains an option if no Sale Agreement is agreed. Coming up, how coronavirus is playing out for supply chains. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Paul it is 9 30 a. M. In sydney, the market open 30 minutes away. Futures looking flat at the moment, bhp at the moment, the worlds biggest miner reporting a record dividend, saying the coronavirus is not well contained and bhp would revise expectations. Im paul allen in sydney. Lets check in on first word news with su keenan. Su the iphone making giant apple, the latest company to issue a virus related guidance as the outbreak hits factory output and demand for its product. The company says its facilities resumed operations in china but they are ramping up production more slowly than expected and globalll constrain iphone supply. Apple also said demand for products in china would be affected by store closures and significantly reduce customer interest. Casinos in macau will be able to resume operations thursday, ending two weeks of closures to curb coronavirus. The city reported 10 confirmed cases of the virus but hasnt had any new infections for 12 days. Says thestimates Current Crisis could wipe out 3. 3 billion in cash flow from the citys casino operators. Whether you should be able to take a cruise or not. The World Health Organization says cruise ship travel remains a manageable risk despite the threat of coronavirus, which is seeing around 3000 travelers stranded on two highprofile stricken vessels. , now 328 american passengers have been allowed to leave the diamond princess after just out of yokohama, japan. Global news, 24 hours per day, onair and on quick pick by bloomberg covered by 27 hundred journalists and analysts in 120 countries. This is bloomberg. Thanks. Lets get a quick check on the markets. We saw nikkei futures dipped a little on the news from apple that it is not going to make those march quarter revenue estimates. Futures for seoul and australia looking flat but the market in new zealand powers on, up by 1 after 90 minutes of trading. More on what we should be watching as trading begins in and Andrea Ingles are with me now. Mixed day for stocks but doesnt seem to be a great deal of panic. Thats right. What we have been hearing from investors recently, they are concerned but they are not panicked. The stimulus measures from china have obviously helped and cushioned some of the markets in asia. I think at the moment, investors are looking at this as being manageable. Lack rock coming out black rock coming out saying it will delay an optic in Global Growth but will not delay it. Officials said if you economysars, the global absorb 1015 weeks of impact from the virus. At the moment, they say it is manageable. There is a lot of unknowns. There could be greater downside if this turns out it is not as contained as we think, or it will go on for longer. The apple news will be a focal point for investors and they will look for more companies to come out with this sort of guidance. The u. S. Markets were closed today, apple will be a focus. At this stage investors are concerned but waiting to see how stimulus will play out for the markets. Paul david, i want to get to you. We had that big news of apple today come are you watching for the followed from that . It wasnt completely unexpected. Central banks [indiscernible] liquidity in these markets. Certainly, a confirmation that the corporate fallout that will eventually show up in earnings is probably still a fluid concept now. I bring that up because you mentioned nikkei futures, dollaryen dipping on the back the suppliersnd of apple listed in the asiapacific are, lots of the stocks [indiscernible] areheir respective indices within the top five. Taiwan is a good example. [indiscernible] 9 00 a. M. In tokyo so we get a lot of stocks coming online, as well. When apple says it will miss its guidance, a lot of other companies that depend on apple will likely also come under pressure to beat their targets respectively. Andrea, china has been forthcoming with the stimulus. One beneficiary has been emerging markets. Thats right. Emerging markets have shown quite a bit of resilience and they are more confident as these measures come out of china to stem the virus. Last week they had one of the best weeks this year, stocks, bonds, currencies rose because rising, because of the raw material prices. China is intent to meet its growth targets so that was a positive. Emergingmarket equities climbed we havey, and people spoken to are very confident on emerging markets, the potential for emerging markets this year largely because of the stimulus from Central Banks. These are markets that have underperformed, the developed market space. Valuations are so attractive in emerging markets. They have displayed more confidence that this virus will eventually peter out. Paul earlier on, we were talking about the absence and of panic. Chinese stocks hit a milestone yesterday. They did. They recouped all the post holiday losses on the shanghai composite and the csi 300. We are looking at perhaps the january 22 closeout, we are 2. 5 away on the shanghai composite. That would mean if it climbs above that level, a reminder to viewers, before the long lunar holiday, chinese stocks [indiscernible] into that long break. We would probably be able to say if we get to that point, the chinese stocks have essentially erased all the losses when the outbreaks wait on markets. We will probably get there at some point. Onlineasinos coming back thursday, hong kong employment coming up, plus i think we have a bloomberg chart on this, a lot of the Virus Outbreak related plays, logical panic buying or illogical panic buying like toilet paper, things like noodles, online consultations, we put together a chart. Basket,ook at how that if it exists, outperformed markets. And Andrea Ingles pepper, thanks for joining us. Check out our charts. Find them at gtb go on the bloomberg channel. Revise growth protection projections if coronavirus isnt contained. The worlds biggest miner reports earnings. This is bloomberg. Paul im paul allen in sydney and you are watching Bloomberg Markets asia. Check on markets, trading in new zealand underway. Higher. Xes australia set to open in a few minutes. The futures, not a great deal of much flat, off about four points. The aussie dollar hanging on above . 67 u. S. , weave seen a bit of a hit had nikkei futures earlier that declined a little on the news that apple is likely to miss its guidance for revenue in the march quarter. This, all to do with demand and the supply chain issues surrounding the iphone. That has had something of an impact. Itsaw the japanese yen pare losses on that. We are starting to see knock on effects for the supply chain in the world of tech and it is not just apple, we had Bloomberg News report on monday our time in australia that the Nintendo Switch factory in vietnam is also struggling to get parts. When we get going in australia, we will be closely watching bhp as well. We saw bhp announce a record dividend, but also similarly to that itescribing issues might face down the track if the coronavirus isnt contained within the march quarter. We may well see some declines there, as well. All right. To that bhp story in a moment but our facebook ceo, mark zuckerberg, is lobbying the eu for new tech regulations. He wants the eu to issue tougher rules for governing content. He made the push earlier monday in an oped in the Financial Times and the publishing of a paper, both coinciding with a visit to brussels. Mark zuckerberg, the facebook ceo, telling european regulators he would be happy to work with them if that means winning back the trust of users. Zuckerberg spent a day in brussels meeting with senior eu officials and he says he now sees areas in which the two of them can Work Together, on issues like taming hateful speech, privacy, election meddling. The timing of the visit is interesting because it is days before the eu unveils new framework to regulate artificial intelligence. European authorities made it clear they want to see tax reform on the Digital Services and issues like election meddling fixed at social media companies. You can look at this as a pr company, or the ceo actually trying to preempt moves from regulators here, weing it is not just us, want clear guidance from governments and we want to Work Together to solve some of these issues. Thanks, maria. We will be keeping an eye on bhp when trading kicks off in sydney in just over 15 minutes. This is after the aussie miners results beat estimates. Our commodities reporter joins us from melbourne. Bhpsave we learned about likely strategy under the new ceo . Mike henry, the new ceo, is a Company Veteran but promoted a postat role from overseeing operations in australia. He has given us some hints of future strategy, not much detail but some of those key things and ideas. It comes down to two areas. He wants to squeeze the existing asset base and improve , reap more from that portfolio, and that kind of reflects a longterm picture of declining demand for Raw Materials in china. On the second front, he wants to add more of what he described as future facing materials of the kind of commodities that will be needed in a world that is decolonizing. He says being bhp will add morning, copper, and potentially of the protection of fertilizer. Is canadian, i guess. Do we know more about how bhp will be impacted by the coronavirus . This point, bhp has said they are not seeing any major impacts on either demand, payments, it seems to be a fairly muted impact for now but they have raised the alarm on the potential hit to chinas growth and world growth. They are saying if the Virus Outbreak isnt fully contained this quarter, they certainly expect to revise down their expectations both on Global Growth and global commodity demand. They see it as something that could, if not contained quickly, hit that Growth Outlook and start to erode demand this year. Iron ore is so important to australian miners. How central is it to bhps earnings and what is the outlook . Seence again, we have another ceo who will be dependent on that profit engine that is iron ore. It accounts for the lions share, almost half of revenue in the first half of earnings. It is really the thing that propels bhps earnings. Profits from iron ore, profits from that material rocketed last year. Profits have helped to company lift its dividend, although important to note, it did suggest that dividend would have been higher headed not been for the uncertainty around coronavirus. Certainly, iron ore continues to be the real key driver for phps earnings. Bloombergs reporter david stringer in melbourne, thanks for joining us. Lets bring in our guest for his view on bhps results. David is a resource analyst who joins us now. See you again. We want to start with david stringers point on iron ore. We want to bring up this chart that shows how critical china is to everything iron ore, basically. We see the yellow circle at the end, that is shipments falling to fiveyear lows. What is the outlook and the context you cup the context . Is what theption markets have fear over. When you see bhp and other companies suggesting they want to see the coronavirus actually quarantined very quickly in terms of its impact on the Global Economy and chinas economy, if it does persist over a number of quarters, we are going to start seeing numbers inside china. It will show slower activity and that is going to feed through to demand for commodities. Iron ore is a big import into china, and if we do see those , the demand for iron ore will start to follow. Paul that is the question, one of timing. You game this out . How long do you see this lasting . Can be at the post another regular record dividend . Peak of thethe virus has probably passed us and we are not seeing it developing deeply into other parts of the globe, as perhaps the fear was earlier when it first came on. It appears as though it is concentrating into the asian region. If that is the case, that will disrupt china. Be offset bytually the fact that manufacturing done inside china may be just passed through to other sections to the of the world. We think we have seen the peak of the coronavirus, but it is still not contained and that is where the fear lies. Is very forthcoming with the stimulus. There is going to be a rebound. I think we can count on that. What is your outlook for the price of iron ore . When you look at what china has done, they have taken actions to stimulate the economy and Commodity Markets started to take that out two or three weeks ago when the announcements were starting to be made but that is what the chinese authorities were going to do. We did see further commodity base coming into the pricing. We would believe if that is the case, that we are expecting iron ore prices to be somewhere of this100 by the end calendar year. Given that at the start of the year, it was 93, we are not looking for the same drive in the iron ore prices we saw last year but we would have said without the coronavirus, there in theugh momentum chinese and Global Economy to drive demand higher and demand for iron ore. Paul i want to start with copper. Another there are a number of factors, the virus, bhp signaling potential disruptions politically in chilly in chile for the next couple years. The electric vehicle revolution is ongoing. How do you balance this . Copper has been a bit of a recalcitrant child if you look at the past couple years. They did well in copper this half with increased volumes and for once, pricing, so that gave them quite [indiscernible] in that division. We are expecting to see some disruptions group through inle. There is changes attitudes towards mining in various parts of that country so we are watching that closely. The one thing that has gripped the copper market, quite tightly, although it hasnt impacted the copper price is the evolution of the use of copper inside electric vehicles. , which is incoal australia potentially a sector on the decline, thermal coal particularly, pretty small for bhp, 3 of the asset base. Credit coming under pressure to get rid of it . One would suggest there is agitation from the Shareholder Base to get out of thermal coal especially. It is an important ingredient in manufacturing of steel and iron ore ultimately. We would think perhaps yes, they may have a look at what is thermal coaltheir area but it is such a small division. I would imagine the new managing director has other things on his mind in terms of squeezing the oil asset base to get better assettivity the hotel base to get better productivity. Gethe whole asset base to your productivity. Paul the new ceo are is just getting his feet under the desk. Taking bhp, which has been a intotional minor miner, a more valuable miner, perhaps those commodities where there is higher value to be had in terms of processing them a little further upstream and downstream, then sending them to final market, ultimately it is going to be problem publicly those sorts of m probably those sorts of miners where we think the future of mining lays. Paul we have been hearing about potash. Bhps interests are in canada. Will this be potashs moment to shine with bhp . The global population is going to grow and quite rapidly 1015 years. The amount of arable land will , thereand Global Climate will certainly be changes in where things can be produced and the density in which we can phosphates, potash, and that will play a part in lifting the productivity. In the future, i think they will keep the project they have got going until it comes to production. Paul david, thanks so much for joining us. We will be speaking to the ceo of bhp, mike henry, later tuesday. The interview will be at 1 20 p. M. In sydney, 10 20 a. M. In hong kong. Wehave an update for you as traditionally get this time, in terms of coronavirus cases. There are 1807 new cases reported on february 17, and an additional 93 deaths. Total cases to 59,989. Fewer cases and fewer deaths. Han the day before the issue appears to be stabilizing. An additional 1807 new cases, 93 deaths today. You can watch us live and see our past interviews on our interactive tv function, tv. You can dive into securities or bloomberg functions we talk about and you can become part of the conversation by sending us instant messages during our shows. This is bloomberg support subscribers only. This is bloomberg. Paul im paul allen in sydney and you are watching Bloomberg Markets asia. Lets recap the latest numbers interns ofprovince coronavirus, the total confirmed cases 59,918 nine, an additional 1807 new cases reported on february 17. 93 deaths, so fewer cases and fewer deaths than the day before. A total of 59,989. Lets get a quick check on the markets. We have trading in new zealand underway, we have the nzx up about 0. 5 percent, australia futures somewhat weaker, almost off almost a fifth of 1 with the open little more than two minutes away. The aussie dollar . 67 u. S. Bhp, we just had earnings from them. We will have the ceo of little later on. The head of research will also join us. This is bloomberg. Everyone uses their phone differently. 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Japan and south korea open in an hour. Welcome to Bloomberg Markets asia. Our top stories, the coronavirus bites apple. It wont meet march quarter guidance as the outbreak slows iphone production and demand. Bhp warning of an impact from the outbreak as firsthalf earnings surge on higher iron ore prices. To report leadership speculation. And cuts at trading. Lets look at how markets are trading. We have australia trickling online in the early part of this tuesday. When it comes to earnings we will speak to the bhp ceo later on. Dividends provision from them, but lots of concern over the coronavirus and the demand story, if it is not contained by the end of the march quarter. A little downside when it comes to training in sydney trading in sydney, down zero point 1 , kiwi stocks trading higher, a great january when it came to home sales data. And it comes to the start of the session, nikkei futures down a little bit. U. S. Financial markets closed for the president s day holiday. A light day when it comes to data but we have the singapore budget so that will be an indication of the fiscal Spending Plans across the region from governments in this part of the world. S p futures, 0. 25 , the big news out of the u. S. Is apple saying it may not meet its revenue of thee as a result coronavirus. Lets get to that story. Our guest is here to talk about the impact on apple and the supply chain. A Senior Analyst joins us on the line from san francisco. Thanks for joining us. Was this unexpected for you . We know in terms of the demand has and supply chain, apple been severely disrupted in china. This is not entirely surprising. Everybody was expecting some of the disruption in the supply chain to lead to Companies Like their marchs quarter expectations. I think the number one question is, more to do with not what happens to the demand. If there is a demand destruction that will sustain for more than one or two quarters, we could actually see more of a broadbased slowdown. If china were to consume less semiconductors, it would have an adverse impact and that is a bigger question that i dont think we will know for a couple more weeks. To talk about this chart. For the benefit of viewers, taking a look at apple share prices and where it has been trading, it was a banner year for usa these, apple in particular. Equities, apple in particular. Lots of questions as to whether we might see a consolidation after the monster rally of 2019 is this the unexpected shock that will knock the stock off the perch . I think that question is better asked a month from now, when we can better gauge the impact of demand on demand. Some of the disruption to demand, to consumption of the smart phone or other Electronic Devices in china, is already anticipated. The key question, would this lead to more of a broadbased slowdown . Which is difficult to answer because we still dont know to what extent consumers are going to be out there buying smartphones and other electronic gadgets. As fact that this is viewed an external shock that nobody was anticipating, we dont know its impact. Best case in, the impact will be best case scenario, the impact will be limited to one or two quarters and the second half will be better because the demand and supply disruption will be pushed out in the second half. This case an aerial, this will lead to a broadbased slowdown. The people not buying iphones would obviously have adverse impact on the supply and the factories that make the iphone, that make semiconductor chips. They would see a broader weakness which could lead to a , aadbased consumer broadbased disruption to demand. I think it is more of a demand question, but i dont think we to answerhe answers the underlying question whether this is disruptive. How much of the demand weakness can be offset by some other strong points in apples products, Like Services . Sure if come outside of china not sure if, outside of china, services could help offset that. The question is, it is more than just apple. The iceberg. Tip of other companies will come out and use apple as an excuse to reset the bar. The key question is, to what extent this is more of a disruption in demand. If apple is able to offset lower iphone demand in china by services, what about the rest of the Consumer Electronics . That is a bigger, broader question, which ultimately would if there to bite apple is more of a slower Global Economy. There would be fewer iphones sold outside of china, and that would hurt apple. This is more of a question on demand and whether the coronavirus would be a big enough shock to the entire Global Economy that would cause a slowdown globally, and i dont think we have all the answers yet. For now, could we say that on the supply side, new low cost iphones that we are expecting to be manufactured this year would be put off . Of course. It is pushed to the second half. That is why the markets have [indiscernible] we have known about the coronavirus for a couple weeks in the markets if the question is, what happens to consumers in china . Buyingcomeback and be more Consumer Electronics like iphones what they come back and be buying more it Consumer Electronics like iphones . We dont have those answers. Thanks for your insight lets discuss the coronaVirus Outbreak. Chinas Hubei Province, at the center of the epidemic, reported a drop in infections and fatalities from the day before. Tom mackenzie is in beijing and we are joined by a vindman in hong kong yvonne man in hong kong. We are seeing stabilization in the numbers. Yes, 1807 cases reported out of Hubei Province over the past 24 hours, 93 fatalities and that is terrible news in itself but the trend seems to be positive in terms of additional inspections being infections being lower than they were the previous day. Much onmains very lockdown. We talked about how families arent allowed to leave their homes and private cars are banned from roads and businesses are largely stopped and shuttered. Outside of this province, the emphasis is getting the economy back to work. It is slow going in that respect. You heard him the American Chambers of commerce in shanghai, surveying their members and manufacturers, 95 of them are back to work. 90 have their facilities open again. 80 of them say they dont have enough employees to be at full capacity. That speaks to the analysis done by Bloomberg Economics saying looking at last week, 40 50 of chinas economy was at capacity. Almost 50 not up and running. That speaks to the pressures on the broader economy. A survey of Economists Suggests you are looking at for a quarter First Quarter growth, [indiscernible] 5. 9 . We heard from the prime ear from the premier that they are trying to create more confidence and goodwill. What do they say about the spread of the virus . The data we have seen out today reinforces that the spread has started to weaken. That is according to chinas premier, that there havent been any major outbreaks outside of hubei. He says that is down to the owl the allout control measures in the province. We need to see more days where the data continues to slow to reinforce that, but the premier and his team are more confident that they have got some kind of grip on the virus domestically, at least. There is still concern and we have seen that, because the National Peoples congress, and this is a symptom of that, which is really the flagship annual event for the party, the meeting of the parliament every year in march, that is very likely now to be postponed. It would have kicked off around the third to the fifth of march and will be pushed back likely. It would involve 3000 delegates. They normally set economic targets and policy priorities. Nging those delicate delegates into beijing, there could be a risk. They need the officials to be on the ground working to impose these measures and to get the economy back on track. Symbolically, a hit to the ofitical agenda but in terms Practical Implications, slightly smaller. We have not seen a change like this since at least 1985 if it does get postponed. In hong kong we are bracing for weak employment data. Yes, this could be a big one. This could rise to three point 4 according to economists for january. It could set us up for four straight months of upticks in unemployment. The latest print could be mostly political protest related because this likely wont reflect the full effect of the coronavirus, the shutting of shops some of the flight disruptions. That will happen towards the end of january. This could look worse as the financial secretary warned, that unemployment could deteriorate rapidly given this outbreak. Cafe cathay pacific, saying firsthalf earnings will be significantly down from a year ago. This was the most challenging for them year period when it comes to passenger traffic, carrying 4 fewer passengers in january. The drop could likely deepen given that they shaved off 90 of its capacity to china given the travel restrictions. Cannews in macau, they finally reopen this thursday after the 15 day shutdown. They reported 10 coronavirus cases and they have seen 12 Straight Days where there have been no new infections, so perhaps this unprecedented lockdown of the casino operators is working to contain this virus. A bit of bright news. The cruise ship situation, it is pretty chaotic. More than 3000 passengers aboard these two Carnival Cruise liners. There are concerns about global infections. There is concern that a further contagion, we heard from the who, saying at this point, the risks involving Cruise Travel are manageable for now. They said you have to be careful on such suggestions like banning Cruise Travel. They keep saying, assuring saying they have to steer clear of the airport, cruises, certain ethnic groups, the who saying we have to be careful of the suggestions. You mentioned the 3000 passengers that evacuated the cruise ships. The latest from the diamond princess, more than 300 americans that were chartered out on flights, at the last minute they found 14 people who tested positive for the disease. They were still allowed to board but remained in isolation during the flight. Thank you so much for that. The latest on the coronavirus. Lets get you the first word news with su keenan. We will start with bh groups, 29 groups, earnings surged higher on iron ore prices. This allows the new ceo to raise dividends even as the impact of stokesonavirus shortterm uncertainty. The worlds biggest miner boosted its interim dividend by 18 but the company also warned it will revise down expectations are commodity demand growth for commodity demand growth of the virus is not an taint. Shares are lower by a few tenths of a percent at the australian open. Speaking to bhps ceo in a few hours, 1 20 p. M. In sydney, 10 20 a. M. In hong kong. An u. K. Has launched unprecedented attack on the European Union over its terms for a postbrexit trade deal. Speaking in brussels, david frost dismissed the eus position that britain would have to abide by its rules as part of any trade deal. Frost said the u. K. Must be able to set laws that suit the country, otherwise he said democracy would be undermined. To japan now. Voter support for the prime waketer has fallen in the of the coronaVirus Outbreak. Two of three new polls out today, showing Public Satisfaction with the way the government handled the crisis. Japan reported more than 400 cases, 355 of them on board the cruise ship diamond princess. This comes as new data shows japans economy contracted in the last quarter of 2019 by the most in five years. , one of the worlds richest men, committed at least 10 billion to fight climate change, announcing the bezos refund on his instagram. The amazon founder, he is the worlds richest person, there is no one richer come a says the fund will start issuing grants in the coming months. He has been under pressure to balance amazons need for fast delivery with the environmental consequences of the rapid growth of online shipping. Local news 24 hours a day, on iran on quick pick by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. This is how u. S. Futures are. Ooking at the moment down 0. 2 , it is president s day in the u. S. So no trading but we continue to see the latest on the coronaVirus Outbreak. The korea local media says the president ial jet will evacuate quarantine many cruise ship and japan. Several countries have evacuated their citizens. The u. S. Has evacuated citizens, including 14 who tested positive for the virus. We are watching the fallout from the virus. Apple saying they dont expect to meet their revenue guidance for the march quarter. Still ahead, hsbc bracing or major changes from a possible new ceo to global job cuts. More on what to expect from the announcement, later. Outlook frommarket a head of research to joins us live from melbourne. This is bloomberg. As the coronavirus rick ripples through asia, asset markets are not immune to its effects. How the virus is impacting currencies, a head of research is with us. See thesetinuing to downgrades on growth forecasts and export forecasts. Even if we did see a bit of a bump in asia fx, how likely is that to be sustained . I think we could see high volatility but apples numbers today apples numbers today have them on the watchlist. To get that high volatility and sustained selloff, we need to see the data start to meander lower and that starts with the korean export numbers, the European Data coming out towards the back end of the week, the pmi, then we need to see a disconnect between weakening, actual data and sex Central Banks not coming to the party. That is where we see high volatility. If we see the data rolling over, Central Banks may follow suit and the markets could see high volatility and that will resonate in effects. Goldman sachs has cut their nearterm outlook when it comes tourismhai baht. Numbers are exposed to the outbreak. Which currencies are most vulnerable . Everyone has been focused on the singapore dollar. , andlk about the thai baht people are reluctant to buy into those. We continue to watch the guide anduan as a there has been a two way between what is happening in economics and the liquidity. Central banks have been pushing in there. If we see high volatility, i want to move outside asia and look at things like the mexican rupiah. E indonesian higher implied volatility as markets rollover, we dude see we do see select currencies that are being used effectively in the carry trade. The mexican peso, 3. 8 real rates, that will be unwound quickly. See ang for signs, do we unwind of the carry trade . That has worked well recently. We are surprised by a lack of volatility when it comes to cny tradings since the outbreak. I guess there has been structural issues and specifically, if you go into the eurocom of people have been trying to bet on higher volatility. As long as the liquidity is coming in and you do see the repo market being subdued by the amounts of liquidity being pushed in and the fact that we are not just seeing that coming through in open Market Operations but we have seen the mlf being cut and there is a good chance we will see reserve ratio requirements cut 150, 2 hundred basis points in the upcoming quarter. Going toeople arent buy one month or threemonth any kind of capacity. A little around the edges, but the liquidity is the trump card. U. S. Stocks at record highs again last week. The consumer story seems strong. Is there a sense that with everything that is happening in asia am a certainly some demand in asia, certainly some demand going on, the implications for the supply chain and commodities is widespread. Will that continue driving the story of american exceptionalism that was meant to be last years theme . Think the american exceptionalism story has benefited the dollar and people have been betting against that and having to close out those decisions, but if you look at equity stories, a strong move in some of the peripheral european equities. That doesnt necessarily closing the gap. We will be buying [indiscernible] in that market but we are looking at the story were nasdaq futures are down, last time i so. Ked 80 basis points or people are extrapolating the situation into other assets apply changed chains, things like clothing, seeing how that could get hit. For me, [indiscernible] a selloff in real rates, real bonds, which seems unlikely in this situation. [indiscernible] the liquidity argument still there. Probably what is more likely is if we do start seeing economics rolling over, we get the fact, Central Banks have moved with the exception of the pboc, you look at the rba, they moved to a more neutral stance, the rbnz, the federal reserve. If we see the economics deteriorate, we see the Central Banks dont respond and have our we could see when the equity risk premium being called into question. You could get a disconnect and maybe high volatility in the equity market that spills over into effects. Great talking to you. Thank you. On bloombergo come markets asia. This is bloomberg. Theets check in on one of movers we are watching today, bhp, their numbers were actually pretty good. 29 surge in iron ore prices. However, there is that warning if the coronavirus is not contained by the march quarter, they will have to revise down for the rest of the year. Lots more to come. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] this is Bloomberg Markets asia. I am su keenan. We begin with the latest on the virus. China says there were 1807 new ofes in ground zero as monday. Those figures represent a drop from the previous days and in line with the low whether trend with the World Health Organization cautioning it is too early to tell us the number is declining. The death toll for the entire people witht 1863 over 72,000 confirmed cases. Two apple now, the iphone maker is the latest company to issue a itse related virus facilities have resumed operations in china, but they are ramping up productions more slowly than expected which will constrain global iphone supply. Apple said demand for its products in china will be affected by store closures and reduced customer traffic. Two casinos in macau. They will be able to resume operations on thursday. This is after two weeks of closures. The city has reported 10 confirmed cases of the virus, but no impact for 12 Straight Days. Could wipe out to 3. 3 billion in cash flow for the citys casino operators. The World Health Organization says cruise ship travel remains a manageable risk. Beend 3000 travelers has stranded on the vessels which have become headline stories. 328 americanships, passengers have been allowed to the diamond princess which is docked in japan. They are taking charter flights back to the u. S. Global news 24 hours a day on air and quicktake by bloomberg powered by more than 2700 journalists and analysts in over 120 countries. I am su keenan. This is bloomberg. Lets get a check on the markets. We are seeing significant downside pressure. Especially when the nikkei future is down. Of course we have seen japans economy contracting by the most in more than five years. This is not even counting the Coronavirus Impact. Down. 4 . 0 is tech and industrials are leading the declines. Watch out for bhp, jumping 29 . Pressure. Ures under it is president s day in the u. S. Lets bring in david ingles. David, lets discuss the latest Coronavirus Impact. We are seeing this fallout becoming pretty real for businesses, including apple. That is not setting up well for the market and sentiment across asia. David which was already mixed leading up. The apple story is perhaps the widest implication of the sides of the story. Down righty we are now. The nikkei futures, the demand shock of the apple story, it affects suppliers. Those are the names to be watching in tokyo and taiwan when those markets come online. Chances are the biggest hurdle for those suppliers to meet their targets, i was listening to the interview earlier who warned many of the Companies Might use it as an excuse. The question, an interesting note that if the issue is timing, in other words if demand goes toward the latter quarter, it is unknown how quickly they will get production. That brings me to the second point, the supply shock. Even if demand is there, how do you meet the demand . The apple story, im going to give you a number, every week they are off, they are going to take a million off their forecast of reportedly sales. Just giving that a dramatic pause, dave. That is extraordinary. It counterintuitive to think china is having all the struggles as an emerging market anchor and we are starting to see revivals in assets . They are catching up. It is a great story on bloomberg talking about initially you had the s p retracing all of the losses quickly. Further behind is ems. If you take that route, china did a yesterday, if you take the you trust to, if the china backstop is enough, liquidity, physical measures, probably you will see the catch up as well. Again, it is yet to be seen. The earnings story is a fluid process. Haveguess as you said we all of those post holiday losses. What is next if all of the good news has been priced in . Especially with expectations of stimulus measures . David lets see if the good news continues, i guess. Wena for both benchmarks, if recoup january 23 closing levels, but we have not reversed all of the losses, we are about 1. 5 away depending on which benchmark. A couple of things to note, which might add to the bad news. You have hong kong unemployment do out later. Are coming back online on thursday. That is a group to watch. We have been charting this. Makers, you have done well for yourself. A couple of individual names to watch on top of the apple story. Your starter kit for coronavirus survival in one shot. Always appreciate your time. Dave ingalls in hong kong. Coming up, we get the minutes for the rba. They are due out in under one hour. Do we get any fresh news . We will take a look ahead. This is bloomberg. Markets s bloomberg asia. Am in sydney. We are getting the minutes from the february rba meeting and about one hour from now. We are watching us to there will be an upbeat stance despite the brush fires and the ongoing Coronavirus Impact, whether that has gotten more dovish. I want to bring in an economist, james mcintyre. James, lets start off with the chart, the demand side of the story. To them later. They have said the coronavirus news to be contained. Otherwise it will affect their guidance and imports from china. Tos data only goes back 2015, but call it a record low. How does that play into what the rba does . Areass is one of the key of uncertainty. One of the areas we have been considering looking at a range of scenarios. It was on the fifth of february. The bushfire crisis was evolving and we were in the early days of the coronaVirus Outbreak as well. Exports are key. We are one of the most china linked economies. From the export side, this is where the rba was considering when it goes beyond the disruption to tourism and exportsn, the commodity could mean goes from being a moderate scenario to something that is more significant. This is going to be crucial as to whether that march quarter gdp is a positive or negative number. We have seen the material Business Impact across china with apple saying they will not be able to meet their forecast for the march quarter. What happens to the rbas forecast . We heard from a top official they have not incorporated supply chain disruptions to their outlook. That is right. That is where we are looking for this ongoing data. The higher frequency information on these chinese sports and what is happening in terms of export boards. From bhptting guidance and we had rio overnight. It does look like in terms of the Coronavirus Impact and over in the northwest of australia gase those iron ore and export facilities are. They had a disruption coming through. Quite a few of these things before we consider the east coast australia and the shutting down of flights, quite a few disruptions coming through. Andevident from the weather coronavirus. That was not there in the rba s forecast. They took us through quite a few things last two weeks in terms of statements, the statement on Monetary Policy and also senior official testimony coming through. There was an impact from bushfires, from the coronavirus, and from drought. Just on that drought impact, sadly for the rba and those communities, the data, the estimates from the government suggests the summer crop report is going to be one of the weakest on records. We did have that drought making rain, that also put out the wildfires, it did not come early enough to save the crops. Whether it is the coronavirus or crop failure, it is not shaping up to be one of the best environments for those rba outlooks. James, thank you so much. James mcintyre. Take a look at the rba minutes in just under one hour. Our next guest says ill show his extension of the travel ban will have a huge impact when it comes to the aussie economy. Joining us now out of beijing is am luckock, he is also partner at norton roads. Before we get into the business implications, i am wondering, as an expat in beijing, can you tell us what you are seeing on the ground and what sort of measures are being taken and what your daily life looks like right now . Tom thanks for that. It has picked up in traffic in the road outside. Probably 10 on last week. People are still being encouraged to stay at home. The restrictions the chinese are throwing, they everything. You come into the office, i had to have my temperature checked three times. Ive had a 14 day quarantine. Id only been in beijing and so is can say everything being thrown at stopping the people to people transmission of this virus. The numbers overnight, beijing only had one new confirmed case of coronavirus. It is too early to say we have turned a corner. It is looking better than it was three weeks ago. Are you hearing concern among your members, among your constituents and people you speak to about the australian governments measures for containment in terms of travelers . Weve been talking about it is affecting tourism and International Students that make up a substantial part of the australian economy. Starting had a sovereign right to protect its borders and do what it needed to stop the spread of the coronavirus. They can still achieve this by excluding Chinese Students from the scope of the travel ban. The reason is Chinese Students are in australia 35 years. They can do a quarantine. That is the recommendation. Andantines are recommended effective. You add on top of that the economic benefit of Chinese Students. The worry about the australian economy and on top of that, its reputation as a provider of Education Services. The thirdlargest Education Services provider in the world. The reputation for the provision of these services is important. The next question is, as the virus spreads outside Mainland China into singapore and hong kong, the implication on students from those countries as well. Our recommendation is that you can achieve the aims of stopping the spread of the virus in australia, while excluding Chinese Students from the ban. The Chinese Ambassador recently called the travel ban out of proportion. You concerned this will affect diplomatic relations . Not sure it will go that far in terms of implement impacting relations. A number of countries have applied a travel ban. Australia does need to take steps to stop the spread of the virus, just like other countries have done as well. I do think excluding students is one small step, important step that australia can do toward dealing with the broader diplomatic issues that may arrive. For those businesses, your we havein australia, seen no unified response coming from the Chinese National government. A lot of the restrictions have been draconian. What challenges are they seeing on the ground when it comes to coordinating between the different branches . Starting point is china is throwing everything at containing this virus. I can talk about what is being. One in beijing a city of 20 million people. The first thing is theres a huge amount of transparency in the figures. I can tell you i can look at a map and say the nearest coronavirus person is one kilometer away. You can run checks if you have been on a plane or a bus with a person who has coronavirus. There is a huge amount of transparency. You add the measures that are being taken. People they remind are doing everything they can to try to address this issue. In some senses you could call it . Any and. At the same time, there seems to be, based on the latest numbers, it has been effective. Theres only one new case in beijing overnight. They do have access to a huge amount of data. Job wondering, in your day in terms of your legal practice, what are you expecting to see in the aftermath . Do you expect some of these fed own enterprises will have greater leeway . Do you expect Inbound Investment might slow down in the shortterm . Outbound. Focus on Chinese Companies going out. You have to split those Outbound Investments into two categories. Crisis,l weather this not easily, but more easily than the private enterprises. Theyve got access to bank debt. Investment, the first thing is there is a long wait time. A lot of the project started in 2018, 20 19. They will continue. We are working on them. Think the next step will be hopefully we will see a relaxation in bank debt as a result. Theres also talk of a relaxation in the outbound approvals as a result. Once we move past the virus, a slight uptick in activity. The private companies, those are the ones that are going to be more affected by this. If you look at the measures coming out in beijing and shanghai, they will be focused on getting the private companies through this difficult period. They tend to be the smaller deals. A lot of them are more active in australia. It will be interesting what happens with their outbound investment. Again, most of these investments are longterm. We continue to work on them, albeit remotely, still pushing these projects forward. Tom, appreciate your time. Tom luckock, Australian Chamber of commerce. He is also a partner at norton in beijing. Theou want to track coronavirus, you can do so on the bloomberg terminal. We are just hearing from the japanese finance minister speaking, saying he sees domestic fundamentals as solid, needing to closely monitor the japant effect on the economy. We know the Fourth Quarter was walloped by that tax hike, sliding the most since 2014 in terms of growth. Lots more to come. This is bloomberg. We have breaking news out of nine merged out of china, the forh toll rising 98 deaths february on the national level. This is a smaller death toll then we saw in the previous state. Forre talking about 1886 the national, additional infection cases for china. Of course the Hubei Province, new infections just a while ago. That was also a slowdown from the previous day. Again the death toll rising by 98 nationally. Additional cases of infections nationally as well. Haidi we are perhaps starting to see the turning point. The premier saying containment efforts across the country are working. All right. London toyees from hong kong are bracing for challenges and changes including the possibility of another reshuffle and management, a new ceo, and job cuts. The third Major Overhaul in a decade is expected to be announced on tuesday. Lets bring in emily. We talk about the challenging situation in australia. Hsbc has been a long struggle. Emily it has been. Some of the factors, lowinterest the difference with hsbc is it is orientated to asia. We have seen a huge opportunity. It is never quite able to leverage the growth some investors expected. We have seen multiple attempts to quote down businesses and other parts of the globe. We are back here again looking for a new strategic overhaul. Hsbc exposed. N what impact has the coronavirus had on its operation . Like any big operator, bank in hong kong, it has had disruption. Some places close, some branches close, and with hong kong in recession, it is seeing the economics dry out. What we are seeing in these numbers, the Fourth Quarter numbers in a few hours, we will get a sense of how much the coronavirus has put hong kongs economy on a stop, really. Thank you for that. We will be speaking with the cfo following the earnings just after 2 00 p. M. In hong kong. This is bloomberg. Haidi very good morning. Adjust open for trade. Shery i am shery ahn. Welcome to Bloomberg Markets asia. Stories, the top current of apples revenue guidance for the quarter. The company says the coronaVirus Outbreak has slowed revenue and manned. And demand. Hsbc reporting fullyear results. Regulation, billiondollar writedowns and cuts to trading debts. Our cross asset reporter, sarah ponczek. News out of apple. We knew that they would be impacted by the coronavirus but now management squarely saying they will not be meeting First Quarter guidance. Plenty of suppliers across the asiapacific region. We will start with a broader check and you can see the nikkei falling 0. 6 . The seventhfor straight day. We also see the yen strengthening after that news from apple did come out and we can see the 10 year jgb yields fourng steady at negative basis points. We can see this trading in the 0. 25 . We doer by trending afters u. S. Markets were closed for the president s day holiday. Stop Holding Steady at the moment. I should mention that they both get more than 50 or half of their revenue from apple. We could see an effect here going forward. Haidi lets get more on the latest news out of apple. The total cases in china have gone past 72,000. We continue to watch suppliers across asia. We talked about how global hugesupply chains not a surprise from apple but this is the second time they have had to readjust their revenue forecast. First it was the trade war in 20 and now with this coronaVirus Outbreak. Iphoneme they said production. They said these will be reopening february 10, but the process has been slow as factory workers and manufacturing processors slow. On top of that, demand for iphones have been reduced. Lower customer a traffic turn as well. There is the duality of supply sayingand, but many are the biggest question is the demand factor. Shery should we expect more global tech firms to expect guidance . Sarah as you heard this might just be just the tip of the iceberg. Apple iseard from billion. To 67 they havent offered any new guidance for march but say we should be knowing more during the Earnings Call in april. The wordsready heard from then tendo, unlikely to meet the goals for the switch gaming console and facebook could see a reduction in this oculus vr headset. Wedbush from securities. Saying that this is basically the worst fears from the street about what apple had said today that this would dramatically impact your supply chain and have a demand and ripple impact worldwide. That seems to be the case. Now almost 72,500. The comment we have heard from the World Health Organization says it is still too early to say this is truly declining. We havent seen any major spikes it. Ide of that seems to be getting a bit. F optimism yvonne was touching on the supply chain issues. We are feeling that not just with apple but across a number of businesses. The American Chamber of commerce put out a survey. That complexity Bloomberg Economic saying that just last the, just 40 to 50 of economy was running at full capacity. Now we have a survey of economists suggesting that First Quarter growth could be looking at 4 . That was down from a previous 4 . Ey outlook from 5. 9 to and thisure remains balancing act for officials trying to check this virus while trying to kickstart the economy. Hearing in are we terms of the messaging about the spread of the coronavirus . We can tied back to the numbers we have seen from the premier saying that he thinks the spread is going to weekend. No caution a note of caution from the who and others who say it is too early to tell but the premier seems to be relatively that they have a grip on this virus at this stage saying maybe this flagship, event whichnnual normally starts march 5 and continues for 15 days will set and policyc days priorities and normally involves 3000 delegates and Business Leaders coming to the capital to meet over a two week period. Those officials are on the ground wherever they are, to get theh economy back on track. There is the concern that it risks the spread of the virus. The Practical Implications are less significant. Those will continued to be rolled out. Shery thank you to you both and be sure to keep uptodate on this. You will find our quick take landing page with the latest global figures from the cdc, headlines from the Bloomberg News room as well as how specific Companies May be exposed. The virus has hit apple. As the company says it does not expect to meet revenue guidance due to the outbreak. Bloombergs strategist joins us now. Is this a macro event for equity . Mo apple is one of the few companies that would be big enough and have such a global reach that could affect more than its own shale prior share price and the equities around it. We have seen when apple also gave a warning about Revenue Targets being missed. Insaw the yen strength considerably in a short period of time. Weve seen nasdaq futures fall slightly but this may also be because it was an american holiday. As people digest this news it could filter into defensive plays. This resilience could get a severe test now. Chinese workers are not going back to work as quickly as had been hoped. Chains will be disrupted for some time. We heard warnings from nintendo and bhp warning about commodities being affected. When you add them together as theyand more Companies Say , it will start to effect start to affect sentiment. Other Major Companies are affected by the global reach of the coronavirus. With the s p 500 and the nasdaq futures, we may see dollaryen start to move and possibly u. S. Treasury as well to take status away from the risk that this could lay into the second quarter. Most people assume the impact will only be in the Third Quarter but if people extrapolate and say that this continues into the middle of the year, then maybe its more serious than originally thought. Haidi in our building [inaudible] singapores budget today is widely expected to announce a fiscal deficit for the years ahead. There will be measures to help companies that arent hurt by the slow down. Tourism is a key area suffering a great deal but other people as well. It will certainly be in the forefront of countries which will be hit i this. Will address these things. This can be a template for other asian countries. Malaysia isnow that looking at doing something in march and we also need to respond with more fiscal measures as well. What you see in singapore could be used by other people to consider what they need to do to help address this. Address Southeast Asia and possibly even for the wider parts of the world. Fiscallooking at how measures can address the coronavirus. Haidi really setting the stage for the rest of the government around the region. Seeing some of that fallout when it comes to the investor announcement, suggesting they wont be able to meet their march quarter revenue guidance. You think you are seeing. Amsung up by 0. 1 it was down by as much as 0. 15 earlier but starting to come up. Other electronic and component manufacturers are trading in tokyo. Yesterday we had been tendo illustrating this case where you can have production outside of china but even if you rely on chinese made components for one thing, that is a dislocation of your supply chain as well. Lets get you to the first word news. We start with the World Health Organization that says remains a travel manageable risk in spite of the coronavirus which has seen 3000 travelers stranded on two stricken ships. Both of these ships have been in the headlines for almost two weeks, 328 american passengers have finally been allowed to leave the diamond princess which is docked in yokohama, japan. To the u. K. Where they have launched an unprecedented attack on the European Union over concerns for a postbrexit trade deal. Dismissed the position. Able said the u. K. Must be underwater otherwise democracy would be undermined. Two of three new poles are dissatisfied with the way he has handled the crisis. Ship. Board the cruise new data shows that the economy contracted in the last quarter of 2019 by the most in more than five years. Dayal news 24 hours a powered by more than 2700 journalists and analysts. I am su keenan, this is bloomberg. Haidi the toll of the coronavirus will risk a regional recession. Expecting more changes at the top and another major restructuring. This is bloomberg. Haidi i am haidi stroudwatts in sydney. Shery i am shery ahn in new york. 2020 gdp growth estimates as governments around the world way the impact of the coronaVirus Outbreak. Garcia is in hong kong. We are expecting the singaporean budget to come out today. They are pledging fiscal stimulus measures. How much power do they have to support their economies . It doesnt really mean they will use it. The numbers we have for singapore and the numbers that have been announced, barely 1 gdp. We dont have the numbers but we are not expecting anymore. Really means that governments in asia are very cautious in singapore has announced that they will increase gdp to 9 close to i have seen the admission that china is because a structure is changing the economic picture for asia which thes that they need to keep bullets. They will make announcement, but that means a big fiscal deficit. We are heading to the deficit anyway. Chaint about the supply across asia. Especially this integrated production picture across asia. We are hearing apple will not be able to meet revenue guidance for the march quarter because of the impact of the coronavirus in china. Expectedas to be because the minute we had the news on china and it ask about Manufacturing Sector at 70 of the capacity we had that survey showing less than that. You are bound to have a supply chain effect because china is at the center of the supply chain. Frankly the stock market doesnt want to hear this news, but they makehere and they will sure that we hear it at the same time. Coming, foxconn everybody is trying to cry at the fact that the supply chain will affect them. The stock market will react, it is just a matter of time. Haidi a psy with nintendo that they also diversified the supply chain to move predominately outside of china but we still chinese partsn for a single component this creates a dislocation of the supply chain. This is the reality of globalized trade and production. It is a china has been increasing very rapidly. You are right it is just a single part that makes the supply chain collapse or delay its orders. But the point is there are so many inputs for china. It would be very different if the country were smaller. They are the worst country to get the coronavirus. Thats why it will be bad for many companies. Haidi i want to move to the central bank response. We have seen the pboc front and center when it comes to providing support in the low prime rates were cut on thursday. What are the implications after the mandate to pursue Financial Stability enter pursuit deleveraging. We would expect to see on a local government level increased bond issuance and tolerance of debt. There is less risk in the profile. Lets move the balance sheet. That is the theme. We already have an announcement. F frontloading regulatede more leverage. Maybe we will still hopefully see a reduction but an increase haidi will have to leave it there. Haidi a quick check of the latest is this flash headlines. Chinese markets will see a significant drop as a result of the coronavirus. Also already a kong. D tourism in hong flights toas reduced the mainland by 19 . This allowed ceo mike emery to raise the dividend even as the impact of the coronavirus stroked uncertainty. This is bloomberg. When it comes to using data, everyone is different. 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. Its wireless reimagined. Simple. Easy. Awesome. Thei we are just getting lines out from the february returns. See mentions of the coronavirus. They are prepared to ease further to support growth and inflation and the forecast for consumption recovery is a key. The lagging transmission is strongaking place a upswing when it comes to housing. Lets get some analysis. I went to bring in james mcintyre. Tone. A very upbeat we were expecting a bit more dovish tail. Thats one of the things that the rba has been concerned about, the hot the housing side of things. They are reluctant to cut further and those cuts they have already delivered working their way through the economy. Spurther cut could additional bowery borrowing into a housing market. That is a key thing as we go forward, particularly the ongoing evolving circumstances with the coronavirus. An impact it has on his trillion particularly those commodity exports affecting the coming months. There,rba gets easing some signs of the haters coming out could give them the green light to respond if the economy does not live up to their expectations. Seems like the labor market is very important to the rba in making their calls for the year. We have the wages data coming out for tomorrow and the question is whether it will be a continuation of the quarter. Even though they have an optimistic view of the economy, they dont think that the growth will be Strong Enough to generate enough labor demand to tighten things up, to get the wage pressure that they see as necessary to get inflation back to three target. They still think it will be not enough. Overall wherest they can see a slowdown in the economy. When they come to look at those forecasts again and do the next update in may, it could be the catalyst. At least that is what i think is likely to be the case in a few months time. Waitinghey talk about to cut further now are waiting for the lag in transmission. At what point do they get to the stage where they think they need to do more . Know,re saying, we dont it depends how long it takes and how long it sticks around. It is so different. There is a 75 reduction, not just from china but a range of other countries around the region. Something similar will have a massive impact on the economy. From 2003 to 2020, chinas dominance in the commodity exports as well and chinas rule becoming a dominant supplier. There will be such drastic shots they dont know what its going to be. When it comes to the wait and see, what are we looking for . Is the economy going to be diverting from the path where it is very gradual and they think it will take a long time to get the inflation back to target if they see it diverting from that path will drag them to act. Lay of the market on thursday. The wages tomorrow, the labor market thursday. I think we will need quite a few more readings especially details of the arrivals data which is why we think it will be a couple of months before we get to see whether the rba is going to be pushed over the line into exercising that additional energy. Lets get a broader check on the markets with sarah ponczek. See a ripple in the markets after apple announced it will not meet firstquarter guidance. That is the fourth consecutive decline, the longest losing streak since may. Thats the longest losing streak since may and that nikkei had the longest losing streak since august. Lets get you a look at the commodity complex. And crude oil falling after four days of gain now trading at 51. 90 per barrel. Gold is higher too. There is bit of a discrepancy here. The fx and look at race picture. Those minutes headed back down toward the decadelong low. Pressure after the decline we did see yesterday. We do see the yuan weakening as well but still trading on the stronger side and u. S. 10 year treasury yields smack in the middle of the rates weve seen for the last couple of weeks. Is the latest company to issue a virus related guidance myth. The company says the facilities have resumed operations in china but they are ramping up production more slowly than expected and that will strain global iphone supply. To have you with us. Its not necessarily surprising that we are seeing this guidance myth but is it worse than we expected . Of the worse in terms timing. The fact that it is middle february and they already took revenue guidance off. It shows with the ripple impact is here. For apple its in the supply and the demand side. Its a double whammy from the outbreak. What does it mean for the , already of apple taking this revenue guidance off the table what is it imply for suppliers . It is a shock to the supply chain. Of this the streets have been bracing for it. Is definitely worse than anticipated, ultimately we think this is more of a timing issue, youll see a significant rebound to june and september in terms of iphone demand. Issueore of a timing rather than one that significantly ends demand. I put up this chart for the bloomberg viewers. You were saying that this is essentially a one year chart. The most overbought scenario in a decade. There are lots of questions about what would knock it off its perch in 2020 and i dont think coronavirus would have made it into many analysis scenarios. Does it change with the price target should be . Right now the big target is going to be how many units shift and what does june and september look like. Nearterm its deafly going to add uncertainty and that will be the digestion you will see in the stock. Theuld characterize it as magnitude being stronger and quicker than expected. I would rather apple get it out there. Now the question will be how many units are we talking about and what will a rebound look like into june and september . Shery are you concerned about the demand structure or the duplication of the supply chain and the time it takes them to ramp up . Kim of the supply chain is more troubling. I do think the demand is an issue given where we are in the million,cle, 925 install base, and more than one third have not upgraded in months. The big issue is supply. Especially cupertino to rebound. Shery on the demand side how much does apple have in terms of appealing services and products coming up in the pipeline to really help with this potential bounce back in the june quarter . Services continues to be strong. It comes down to iphones. Thats the rock of gibraltar. We are going into a transformational super cycle and from a timing perspective now you need to get up quick to make sure we dont have further phonesion into those 5g coming out in the fall. What is at mean for the phones coming out this month . I dont see that moving the needle significantly. Thats not what i view as a seminal event but it is going to be a question over the coming weeks from a timing perspective. Haidi thank you for joining us. Guidance provision on the basis of coronavirus. Lets stay on the market as we look ahead to china. David ingles joins us. We were talking to wedbush earlier and he is much more concerned about the supply Chain Logistics and dislocation then the demand side. Are we seeing this play out as sentiment driver across asia . And it a competitor fires up apple in terms of the chips and displays. It cuts this is the other side of the same coin. Are equallyers important. Kong opens up in the next 60 minutes. Haidi we have seen positive sentiment across chinese stocks. They recouped. What should we be watching out for now that the milestone has been breached . The next one should be the january 22 close. We are about 1 away from that. Things will be reopening in macau on thursday. These numbers coming out and is something to look forward to. All of these many measures in the pboc that they have done repeatedly to support these markets. Haidi why are you watching whatoperators today china is doing is trying to cushion the blow on the logistics front. , one was career stocks. Finishing quite strongly because no tollally said fees. The city suggests that will substantially change the earnings as well. Haidi lets go to the first word news with sue kanaan. Chinae will start with first inlay its decades because of the coronavirus. The top leaders will meet before the end of the month. About 3000 communist Party Members were expected to convene for two weeks of meetings attended by president xi jinping. Be able tomacau will resume operations ending with two weeks of closures. The city is reporting 10 confirmed cases of the virus but has not had any new infections for 12 Straight Days. The Current Crisis could wipe out up to 3. 3 billion in cash flow. Finally jeff bezos has committed at least 10 billion to fight climate change, announcing the jeff bezos earth fund. Amazon. Com founder and worlds richest person says the funding will start with grants in the coming months. Pressure tounder balance the need for fast delivery with the consequences of online shopping. I am su keenan and this is bloomberg. Haidi hsbc is facing its third Major Overhaul in a decade. This is bloomberg. Shery i am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. Hsbc is due to report its fullyear results later today as investors prepare for the third Major Overhaul and a decade. The changes included management reshuffle, new ceo and other changes. Great to have you. Its been incredibly problematic in the sense that never picking up the opportunity so talked about in this part of the world. Ever since 2006 when hsbc faced terrible losses from [inaudible] nobody seems to have been able to deliver anything. From Hong Kong June until just now. Even the Guardian Lions were set on fire. You can expect in the Fourth Quarter alone a 2 decline. Haidi and the profit outlook is expected to be downgraded. Is it worth comparing this to sars in terms of will the profit downgrades be worse, or is it such a different trading environment . The situation in hong kong is much better than during the epidemic. Ofg kong was the epicenter the sars outbreak. China hong kong has about 60 people infected and only one person died. Widespread. Lly its manageable. [inaudible]in china if china doesnt do well, hong kong cannot do well. Analysts have pointed to structural saying they might present opportunities when it comes to cost reduction. What are you expecting on that front . The top level right now, they are not performing. Bank, theyraditional are not like the u. S. Bank like Goldman Sachs and jp morgan. Or Investment Banking merchant banking. With the world changing to Investment Banking, they cannot because the people at h sbc do not possess the mentality to compete on this side of the business. It might be right for them to hire outside the bank. We have seen an interim ceo for the longest time. Anythis uncertainty caused problems for hsbc so far . The interim ceo tried but cuttingses, expenses is not the solution. You have to try to increase business. You kept cut too much and you yourselves, nothing global bank, if they try to sell you reduce the asian bank. Shery thank you for joining us. Hsbcll speak to the cfo of just after 2 00 p. M. In hong kong at 5 00 p. M. In sydney. Breaking news crossing the bloomberg. Japan has taken samples from everyone aboard the princess disembarkinghe will start february 19 after the results have been received. This is a cruise ship that is docked in yokohama with 3000 guests. Casesrgest cluster of outside of Mainland China. This is bloomberg. Shery a quick check of the business flash headlines. Rio cut its iron ore target after cyclones hampered production for the second straight year. They say output will be between 324 million and 334 million tons, around 10 million tons short of its previous guidance. Declinere expected to this year. Of privatee groups equity firms are through to the next round. The 17 billion elevator businesses is up for grabs. The other is backed by shenzhen and the abu dhabi customs authority. We will take a look at u. S. China relations and the impact of the coronavirus. This is bloomberg. Welcome to Bloomberg Markets china open. Haidi. We are counting down to the open of trade in the chinese mainland and in hong kong. Our top stories. The coronavirus shakes the tech world with apple warning of falling sales and probably failing to make targets. And big job cuts Management Changes expected. Haidi. Investment banking in china feels the hate as the Virus Outbreak confines bankers to the