Damage. China near a takeover of the airline hna, saying it wants to stem the economic fallout from the coronavirus. Cruise passengers return. The first batch of hong kong residents from the diamond princess are due back in the city today, but there is lingering confusion about their arrival. U. S. Attorney general william barr tries to invoke an old law that protected tech companies. Ike google and Facebook Paul nothing has been happening released since you have been gone. Lets check in on futures in asia today. New zealand already trading at the moment. X higher by a quarter of 1 . 1 in by 1 5 of australia. 771 millioned profits. Pretty flat. Qantas seeing an impact from coronavirus. Few catalysts to watch out for. Aussie jobs expected to rise a little and china expected to cut its loan prime rate. We have machine tool orders out of japan as well. Emily i want to look at where u. S. Markets closed today. Lets get to bloombergs taylor riggs in san francisco. Taylor risk on across the board led by the s p 500. Now down to a 14 handle. You are not seeing the type of risk on rally you see when you go to bonds. There is a sense of fear. 10year flat at 156. You are getting an inversion on the threemonth tenure. What is not fearful is the stocks index. If you look at the chipmakers up 2. 5 after china said they would providing more stimulus measures, since that is helping these companies. Isp up the board again, it about the apple selloff. What selloff . Because it came back today. They said they would miss their quarterly guidance due to china supply chain and the coronavirus. They are optimistic, saying this is a supply chain issue, so the rally in apple is back. Emily china is nearing a takeover of hna group, a global conglomerate, in which would be one of its most dramatic steps to contain the damage from the coronavirus. Sources tell us beijing is expected to sell the bulk of the troubled Companys Airline assets. I want to bring in our china correspondent Tom Mackenzie in beijing. What is the latest . Say, this would be the most assertive step from policymakers to put a floor on the economic pain felt across the country. This conglomerate went on a massive spending spree between 2016 and 2017, 40 billion u. S. Dollars on the purchase of everything from hotels to properties in new york and london to hong kong. It became the largest stakeholder in Deutsche Bank and hilton hotels. It had been under pressure from beijing as one of these indebted conglomerate. They wanted it to focus on their core businesses, and that is what i have been doing, focusing on they been doing, focusing on aviation and touring. That has been impacted by the coronavirus. People are scared to leave their homes. You have seen capacity for airlines slashed. You have officials on the island looking to buy out this company. They would sell off some Aviation Assets to some of the big soe airlines, air china, southern and eastern. This plan is still in the works. We may get this announcement on thursday. The negotiations are continuing, but it would be a major step. Paul the imf in the meantime is reiterating it expects this to be shortlived and an economic rebound is in the cards. Right, the imf published in its report ahead of the g20 meeting in riyadh finance ministers with finance ministers. They say the Global Economy will bottom out in the second half. The imf is saying the bulk of this will be down to fiscal support and Monetary Policy support. They highlight the risks to this forecast primarily from the coronavirus and the damage wrought on the chinese economy. Nonetheless, they are sticking to their forecast of Global Growth, up from 2. 9 in 2019. The imf director told bloomberg she expects to see a vshaped recovery in china. A lot of that will come down to how effective stimulus measures are by officials and how quickly businesses get up and running. Paul Tom Mackenzie in beijing. Thanks for joining us. Lets move on to hong kong now, where passengers released from a cruise ship quarantined off japan ra expected are expected to start arriving in the next coming hours. Kongersabout 102 hong will be coming home, on that diamond princess. We just learned the flight was delayed because more people wanted to get on this charter flight from the original 45 after changing their minds. Once they land, they will go straight from the tarmac to a Public Housing unit, where they will go through a 14 day mandatory quarantine. As for those still on board, unclear of their arrangement. Another charter flight has been arranged to tokyo later this evening. The Hong Kong Government expressed frustration of how japan responded to the Health Crisis on board, given that with 352 hong kong people on board the ship, they were some of the biggest roots of people on board, yet they said Health Officials were screening based on age and not nationality. 53 hong kong people infected by this disease on board out of the total 621. We heard from an Infectious Disease specialist who visited the diamond princess who said he was scared about being infected himself, that not everyone was being careful, and the control measures seems inadequate because there was no clear distention between the infection zone and virus free zone. Emily we will see how the situation evolves on the cruise ship. , some of itscao casinos reopening today. Macao 29 out of 41 in open at midnight today, but this will not be full capacity. 1800 gaming tables have reopened. That is just one third of the territorys total. We heard from casinos saying it will take a couple months to get back to normal. China says it will need two to three months. Saying they are taking a phased approach, given they will gauge customer demand and whether employees can get back to work. It will be relief for the sector, but Jp Morgan Says it does not change the fundamentals given the 15 day shutdown, which is unprecedented. Given the remain slow travel restrictions. Hong kong terminal still closed here. They mentioned it will take time before people start coming back. That is something to watch out for. Emily bloombergs yvonne man. Coming up, we will dig deeper into the impact the coronavirus is having on Global Markets, where the strengths and weaknesses are. This is bloomberg. Paul you are watching Bloomberg Markets. Lets check in on the first word news. Notederal reserve officials anxious to raise Interest Rates at their last meeting, but they remain on guard against global and the mystic risks domestic risks, such as the coronavirus. Officials also said they were cautiously optimistic about the outlook for Business Investment in the wake of recent trade deals. China plans to take over the troubled conglomerate hna group and so off its airline assets. The government of the Southern Island province where hna is based is said to be in talks to seize control of the group after the virus hurt its ability to meet financial obligations. Hna has been selling off assets after a global buying spree of Iconic Companies like hilton and Deutsche Bank left it heavily indebted. China expelled three reporters from the wall street journal to punish multiple reporters for an opinion piece they were not involved in. The decision was made after the journal refused to apologize for what beijing called a racially discriminatory oped. The opinion piece described china as the sick man of asia, a derogatory phrased used by european powers in the 19th century. The imf is sticking to its forecast of a Global Growth rebound this year, despite cautioning the risks dominating outlook. In a report issued ahead of the g20 finance summit in riyadh, a 3. 3 growtha forecast. Growth could be derailed by the wider spread of the coronavirus and renewed trade tensions. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Emily u. S. Stocks advanced wednesday on china may be planning further measures to support its economy as it reels from a virus induced slowdown. To see the Coronavirus Impact on Global Markets is ben emons. This is devastating parts of the economy, but you have investors looking for opportunities. Where do you see strength . Where do you see weakness . Ben thank you for having us. There is opportunity in the asiapacific region. The stock markets trade at a significant valuation gap, the u. S. Markets, but you also look at the currency and bond markets in this particular countries, there are differences with the u. S. Market. Of course the virus is an Economic Impact, and that will result over time. Resolved over time. The u. S. Markets have been in big victim and in such demand. The situation will change and enhance the global opportunities. Ben, i want to talk to you about the u. S. Dollar. You see that as overvalued. In september, it peaked and pulled back a little. Is it due for another pullback . Ratesffective exchange and other models it looks like it is overvalued. Not as extreme as what we saw in 2015, but definitely in a period where markets will understand a too strong dollar could be damaging. The other side of the story is there are opportunities in the Global Markets, currencies weaker against the dollars where the currencies have the countries have a vshaped rebound. The asiapacific markets is where the dollar could weaken against. The dollar looks to be relatively overvalued, particularly against asian currencies. Paul we are seeing a big move in the yen, weakening 1. 3 against the dollar. Do you see real value in asian equities, particularly japan . Ben the yen is another version we learn of safety as the virus has more or less peaked and things are starting to normalize. That said, asian equities japan too there is some of the virus affected too. That is bound to be a vshaped recovery in growth, not to mention they are getting ready for the olympics. You look at japanese stocks being undervalued to the s p, that is an interesting opportunity aside from the other markets. Emily what do you see happening in tech, given so Many Companies have a supply chain that originates in china . Ben that is where the attention is. We learned the spread of the viruses in the provinces where most of the intermediate goods are being produced and imported globally, you have the supply chain effect happening. That said, we are trying to be an expert on the supply chain when we dont exactly know. A lot of companies are preparing for this fact. That could mitigate the negative impact. If you look at the valuation difference, u. S. Tech is in its own world, rallying in stock market prices. If you look at asian equities in the tech sector, that too looks potentially undervalued given that some of these companies are able to manage the supply chain effectively going forward. Emily it is difficult to know how much this will happen going forward. Are we overestimating or underestimating the impact on the economy. Do you believe we are underprepared . Ben if there is a spreading of a virus, areas like africa where there is no introduction to deal with that, that could be a significant risk. That is something we have to evaluate. Aredeveloped markets itself relatively prepared. We have seen in the United States how the markets have responded so far, giving them the benefit of the doubt responding to the Virus Outbreak. Although europe looks much weaker, there is introduction there. Is infrastructure there. They can deal with it. It will not lead to a global recession. Paul ben emons, thanks for joining us. Still to come, we are setting the stage for the democratic debates in the data in nevada. This is bloomberg. Emily the latest chance for the was democratic president of hopefuls to get their messages out kicks off later in las vegas. This time there will be a new face on stage, Michael Bloomberg. News hour marist poll Shows Bloomberg qualify. Bernie sanders remains on top of the pole, while poll, while Pete Buttigieg leads the delegates. Michael bloomberg is the owner of the Parent Company of bloomberg news. Talk to us about bloombergs situation here. Obviously his rising to the top of the polls makes him a target. This is a very big night for Michael Bloomberg, because it will be his first opportunity to compete with the other candidates on the stage and act as a primary candidate rather than a general election candidate. With his ad purchases, he has been able to focus his attention on donald trump as the eventual opponent in the general election. In this debate tonight, he will have to interact with different Democratic Candidates and explained why he is a better choice than the other people on the debate stage. Emily who else on stage as the most at stake . Anna this is important for everyone on stage for different reasons. For Amy Klobuchar, she has to show she is a viable alternative for people and tested in a moderate candidate. Interested in a moderate candidate. If you are wary of bloomberg or Pete Buttigieg, if you think joe biden is sounding not very confident on the campaign trail and hasnt performed well thus far, Amy Klobuchar is a Good Alternative for voters looking for that kind of candidate. However, if you are someone like Elizabeth Warren or joe biden, who at some point has been the front runner, you have to show you have what it takes to be competitive, not just in nevada and south carolina, but in the super tuesday states awarding the most delegates. Paul lets talk more about Bernie Sanders, leading the field for the democrats. I wonder if there is a lesson from Jeremy Corbyn and the united kingdom, who had tremendous appeal from the grassroots, but elections are won and lost in the center, arent they . Anna that was discussed after the election in the u k and something Bernie Sanders will have to respond to. At the beginning of this primary race, we were talking about Bernie Sanders as this person to beat with the most grassroots support carrying through from the 2016 election. He seemed to have lost that earlier in the year, sharing his enthusiasm with Elizabeth Warren. He has burst out of iowa and New Hampshire with a strong showing, even though he was not first place in iowa. He had a very strong show of support and was making the case he has a coalition that cannot only win the nomination, but the donald trump in november defeat donald trump in november. Paul in terms of Michael Bloomberg, we had a taste of what welcome he might expect on race and his of treatment of women. In this post donald trump world, is it going to matter . Anna we have seen from democrats the most important thing is leading donald trump. Beating donald trump. Democrats are determined to keep him a one term president. If they think Michael Bloomberg is best to do that, they may overlook policies in his past, comments made in past interviews. It may be a liability with the progressive wing very enthusiastic for Bernie Sanders. It will be adjusting to see if his ad buys and poll numbers thus far can translate into delegates moving into the summer. Emily this is the first time bloomberg has the opportunity to lay out his policies on the national stage. What policies do you think will be taking front and Center Tonight . We have seen him clarify positions on Financial Markets and health care. These are issues the other candidates have been battling out over for months. Anna one thing we will look for tonight is the pitch from Michael Bloomberg that he is not just a rich candidate that can participate because he has a lot of money, but he is a successful mayor. Even some of the more controversial policies, he can explain why he supported those. He can point to his Business Record and making sure people understand he can pitch himself as a pragmatist, a centrist, someone willing to work with democrats and republicans to achieve accomplishable things. That is a contrast he will draw with Bernie Sanders who describes more of a political revolution, tearing down the systems in place. Michael bloomberg is a capitalist and he will try to appeal to voters that want not so much of but more of april megan more of a pragmatic solution to the problems in the United States. Paul thanks for joining us. Plenty more to come. We will have fears of the global contagion risks as passengers from the princess diamond. In japan docked in japan start heading home. Plenty happening with markets. The nikkei had a big move down in the yen. We could see moves in japanese stocks. Futures pointing higher by 1. 6 . In australia, futures higher. Qantas out with earnings as well. That is a stock to watch. 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. The peoples bank of china has announced more support for the economy after highlighting the coronavirus as its most important work. Good morning from hong kong. Thisve been waiting for since the Virus Outbreak. It is essentially the rate that banks use to press the loans for their most creditworthy clients. It will send a big signal in terms of what the support is like. A previous days, we have seen 10 races point cut which would we will probably see a cut today. The magnitude of which is up for debate. Markets haves rate anticipated todays likely rate cut. Cuts outsidelarge of the chinese market. I just looked at the dollar. Wasration of this yesterday. Europe has set a record high. This keep in mind that quarter was supposed to be the quarter that japan would have recovered from the Fourth Quarter. What is happening in china, the supply Chain Disruption that is costing to the Japanese Corporate as well as one of the reasons recession signals are slashing roundly in japan. We might see a contraction this quarter read i want to point out quickly the move up in precious metals. Gold and palladium are good examples. It is starting to really show up and continuously across assets. Bythe situation is changing the day. What should we be following when it comes to china . We are still a bit below the if you look at the csi 300, we are 2. 5 away from the january 22 closing level. If we get above that and we are back at this level, to borrow a i would back for good . I also want to mention the turnover. The yuan turnover is the First Time Since april of last year. David thank you for joining us. Contagion fears are on the rise as thousands of passengers on to cruise ships are heading home. Among them are the first 500 guests japan has allowed to disembark on the diamond princess. There are worries the country has not done enough to stop the spread of the disease on the ship. Do we have any idea how the virus is spreading . There are many questions one is how and how readily is the virus transmitting . We are starting to get more information on that. For a long time, we have been hearing that it is transmitted through droplets like when people call for snape. Cough or sneeze. We are getting more information that it may be in small aerosolized particles like a breath. Were also getting information on exactly the time the people are infectious. Does that make the disease more infectious and if so, how . Sars, 17 years actually sick that they were infectious. That was the peak of their transmissibility. With the novel coronavirus, it turns out that people are able beforesmit the virus they are sick. There was some Research Published today in the new england journal of medicine that shows they are able to cultivate the virus and show that it was actively replicating in the nose and throats of people while they were just developing illness. We are just getting breaking news. Our is cases from Hubei Province , a huge decline. Just 349. We are used to numbers in the thousands. This is after National Guidelines were revised. Numberkes the total 62000 and 31. In terms of this, not a huge change to the death rate. On new deaths reported february 19. The total in Hubei Province is 2029. It that is a huge drop in new cases. One final question, that of transmissibility. Our bathrooms emerging as a culprit . That one virus is notorious on spreading through cruise ships. We know that coronavirus it is excreted through the stool and that is creating a lot of interest in whether they may be some transmission on ships through the fecal oral route including bathrooms and contamination from fecal germs on inanimate objects. Thank you so much for keeping us updated. We will continue to monitor those new daily numbers. Meantime, the Semiconductor Industry last year suffered its worst drop in almost two decades hurt by a trade war between the u. S. And china. Intel urges the chinese and u. S. To engage in constructive dialogue. Out. Oke to us while i was for a global company, we have and manufacturing presence in the u. S. Winning markets outside the u. S. , creating and making money allows us to invest in r d. We have all had to adjust and adapt in a variety of ways. We play a large role in china. It is a big consumption market for us on the pc and server side. We have a Large Manufacturing base and a large chunk of employees in our design centers. It is an important market for us and for our customers. Adapte had to adjust and to our supply chain to have flexibility to allow some of our oems to move their assembly. Toy dont have to do a have export control laws, we have had to stop shipping to some customers hurry and our priority and our focus is about retaining market access, protecting our intellectual property and adjusting and adapting to the rules of the road. How serious is the risk that china could double down on the development of its own indigenous chipmaking capability . Over the longterm, is that a threat to intel . I look at it in a different way. Forher it is a hyper Scale Venture capital going into semiconductors. Whether it is China Building us,r own capabilities, for it leads back to the rate and pace of innovation. Andontinue to defy the odds do something nobody else can do such that when they have to make these decisions, the role that we play in the world is near the top of their list. Ask that presumes they are thinking rationally. Thinking istional National Security and independence. Is it more realistic the china develops a chip capability because of these global tensions . Ways, we have to focus on things we can control. We also focus on things we can control and influence. I still come back to the same answer. And animations and other things that nobody else can do. Thats the best path to continue the trajectory for the company. Speaking of things you cannot control, have you moved production out of china . Footprint a global irelandu. S. , israel, that is our fabs. Very global footprint so we have the flexibility to adjust and adapt to where we make things along the world. Around the world we have diversity in our footprint. So wea virtual factory always have the ability to move things around, to optimize, create opportunities and manage risk. That was the tune into the ff studio 1. 0 today. Barr goes after the internet shield. A 1996 section of Communications Law has been protecting social media companies. That could change if he gets his way. Paul we want to update you on the numbers out of Hubei Province. Reported but it is a huge drop to the numbers that have been reported every day. China is removing the c. T. Scan is a test. China is once again changing the way the cases are diagnosed. Plenty more to come, this is bloomberg. Paul lets check in on first word that is. Thousands of passengers on to cruise ships in separate ports have begun disembarking sparking fears they may still have the virus. Passengers and crew have been ship dockedeaving a off of cambodia. Focus on tackling the converter coronavirus outback as its most important work according to its quarterly policy implementation report. Support will increase and calls for the full use of funds controlling the epidemic. Eu has an unveiled a new strategy for deploying Artificial Intelligence and other emerging technologies and europe read the plans exposed thatules and test on firms want to deploy similar technologies in europe. Companies like this book and google will not be exempt. Lawyers for Julian Assange claim that President Trump was proposed to offer him a pardon if he agreed to say russia was not involved in the 2016 election. The emails which embarrassed Hillary Clinton were exposed on wikileaks. The white house has called the claims a total lie. Day onnews 24 hours a air and on quicktake by bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Emily the decency act passed protects Companies Like google and facebook from lawsuits. Back then, the hope was that it would allow the internet to flourish that it bill barr gets his way, the rules will change. He says giving broad immunity to platforms that purposely blind does not create incentives to make the online world safer for children. He may does comments at a workshop. What is the upshot here . The upshot is there are a lot of complaints. We heard bill barr layout a lot. Child safety, the power of platforms, we heard others spee. The ques is what we do about it and that is up to congress not the doj. That is not something that has been settled on. We may be getting closer but ultimately, congress will have to change the law. That means passing something in an Election Year. Not quite there yet but what we are seeing is a lot of pressure on these companies as part of the broader tech now coming. Facebook andogle, the like responding . This is one of their bottom line issues. Andve always be going out talking about how important it is in their lobbying. They did not come to this workshop, it is unclear whether they were invited. They dont necessarily talk about it publicly, it is often through trade groups. What groups will tell you is that section 230 protects free speech online, makes the platforms less likely to cut you off. It also allows the platforms to takedown defense of stuff. It protects what you do not takedown also what you do. They said that creates a Legal Environment that provides the actuallycentive to take down the most offensive content that none of us really want to see online. Paul i want to interrupt you for a moment we have breaking news. Ubs naming a new ceo. Become the new ceo effective november 1. Run ing. Eviously again this is effective november 1. Just to get back to your point about social media companies, Mark Zuckerberg in europe recently calling for more regulations. It had is that call being received . A lot of people say it does not go far enough. They dont really belve that the platforms have the publics best interest at heart. What is fascinating is seeing these companies approach what is essentially fracture regulation around the world. , these companies saying we are worldwide businesses how to we harvest these regulations . You see facebook coming up earlier this week saying what content is offlimits and we will block it. You have to tell us precisely. You have technology trying to get language like this provision into our trade agreements with other countries to tragic export it which is uniquely american around the world. You see these companies trying to get uniformity on a variety of Different Levels lever that looks like. How does that fit into the broader and ongoing scrutiny from the doj, the ftc, looking into acquisitions that would obviously have a Global Impact even how enormous and influential these companies are . Bill barr told us something we didnt know before which is that the idea to do this section 230 workshop according to him grew out of, they are already looking to competition. In his mind, those things are closely linked. Whoou talk to people studied tech policy, they will sell you the 230 and antitrust are vastly different and taking down to 30 could possibly entrench the biggest income is. Mike,st in William Barrs these two issues are like, they thing andf a bigger he wants to pursue them at the same time. This workshop, even if there is not consensus, he is providing a forum to go to congress and say here are the complaints, the things we think you could do about it. It is on your plate. Thank you very much for joining us. Still to come, lithium batteries have long been touted as the carbonion solution to emissions. We will have details next. This is bloomberg. Omberg. Emily a quick check of the business flash headlines, we are looking at tesla. They got a new street high target from the most bullish analyst on the street. Raising the price target to 928. Citing the potential of the battery and solar powered products. As much as 7 today. Vulnerability in hightech cars is under scrutiny after mcafee said they were able to trick a tesla into speeding. They put a strip of electrical tape over a speed limit sign causing the vehicle to mistakenly read 85 Miles Per Hour and automatically accelerate. Tesla has not responded. Tesla has agreed to buy cheaper batteries that do not use cobol for the model three production in china. The lithiumion phosphate varies are an alternative. To cobaltas mines sell 8 on the news. Production of lithium batteries causes its own environmental and ethical problems. The 20th century was the age of the internal combustion engine. At the 21st century will belong to the battery. Met fewerwill be pollutants than gas guzzlers for the batteries have their own challenges. Guzzler. S a water if prices stay low, it may not be worth the cost to mine. Medical is used in lithiumion battery cap ends. It boosts Energy Density to allow vehicles travel faster and farther. It is not clear whether minors in indonesia can keep it coming. Cobol presents an ethics problem. It keeps the battery cool but they are terrible conditions for cobol miners in congo. Some are as young as four years old. A cleaner car may not be made more cleanly. That was alix steel. To catch more, tune into bloomberg of this friday at 9 00 p. M. Eastern. Qantas whenatching it starts trading after its earnings report. Plus we will speak to the ceo later. For more on the Coronavirus Impacts on the airline. Im emily chang, stay tuned. Everyone uses their phone differently. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of wireless network, designed to save you money. Switch and save up to 400 a year on your wireless bill. And save even more when you say bring my own phone into your voice remote. Thats simple, easy, awesome. Click, call or visit a store today. Good morning. In sydney, the markets have just come online. Welcome to Bloomberg Markets asia. Shery the number of new cases of the coronavirus falls dramatically in Hubei Province raising questions about how they are tracking the outbreak. Come as earlyld as thursday. Qantas slashes flights and freezes hiring as the virus in roads and demand. We will speak to the ceo later this hour. Is one of the stocks we are watching. Its not quite online yet but the markets are just starting to come online here in australia. Watch forinuing to the corporate fallout of the coronavirus. The s p up a 10th of 1 . Zealand up for tencent 1 . Nikkei futures moderately higher after the biggest decline when it comes to the yen. Watching s p active futures, we are seeing u. S. Futures training to the upside. Has reportedvince 349 new cases which is a drop from previous days. This comes as china has revised its National Guidelines on the virus. Its interesting they have gone this is a significant change in how they account for the infections. What they are saying is that they look for people who are being suspected of getting the infection. That is a change from the previous methodology which includes people who have been clinically diagnosed. Scans and those who have had their test confirmed in a lab. It is a change to the methodology. There was a concern that you are getting a clinical diagnosis of people with pneumonia symptoms but not having the coronavirus. You are correct to point out that the increase is a significant slowdown from the 1700 or so that we got yesterday. Again with the caveat being, they have the methodology change. There is a dairy that we might into slowing peak infection rates. In terms of the economic damage, that is a sharp focus by the news in the bloomberg scoop the government looking to bailout the conglomerate hna group that was one of the most aggressive overseas purchases. It spends about 40 billion between 2016 and 2017. Huge stakes in Deutsche Bank, the biggest shareholder in hilton group. It has to rain and a lot of that activity on pressure from beijing. It has been selling down assets but essentially has been focusing on the airline. Tourism has been pummeled by the coronavirus. Youve seen a slash in the capacity of airlines. Pain not felt this being empty paydown their debts and now the government is looking to take over the company. The plan would be to selloff stateowned airlines. In the meantime, we are not only seeing more physical desk fiscal measures coming from china. What expecting to contain all of this . Youre right bloomberg thinks we will get a 15 basis point cut. Sayingeral bank here now that the coronavirus and containing it was the other most important work. The results inrt production and manufacturing and tried to get credit for the sectors. Theyre also saying the scale of the impact for this virus will be limited. In terms of the imf, they put out a forecast ahead of the g20 meeting. They say they think there may be a Global Growth picture will start to bottom out toward the end of this year on the back of fiscal and monetary policies. They still have a forecast of 3. 3 growth this year compared to 2. 9 in 2019. In hong kong, passengers released from a cruise ship quarantines in japan are expected to arrive in a number of hours. They were supposed to have already arrived. What is happening . Things are delayed for a couple of hours. This after we learned that more people wanted to get on this flight after changing their minds. Eventually it was 45 but now at least 102 are on board and heading home. As for the remaining 200 remaining that are still in japan, still unclear about their plans but we are learning another charter flight is set to arrive in japan later this evening. The Hong Kong Government has expressed frustration on how japan has responded to this. Given the fact they have more than 350 people on this cruise ship. With health issue officials screening passengers based on age more than nationality. Infectedong people got out of the total of 621. This as we hear from an Infectious Disease specialist who visited the diamond princess on tuesday. He was quite alarmed by what he saw. He said the control measures were completely inadequate, everybody was not being careful. There was a distinction no distinction between the virus and a nonvirus. He said he himself was scared of getting infected. That is a sobering account. In terms of the goodness, what is the latest on macau . Most casinos opened their door at midnight today. This is after the longest shutdown we have seen in macau. What we learned so far, it will not be of full capacity. 1800 gaming tables have reopened. This is still need time to reopened their casinos, the casino has granted a 30 day buffer time for them. Resorts says they are taking a phased approach race on customer demand as well as how many employees can come back. It is welcome relief for the sector that has been reeling from the slowdown in china. It seems like it will take a while before things get back to normal. In terms of jpmorgan, they are saying its not going to do much to impact on the metals because business will remain slow given their travel restrictions here in hong kong. Very terminals, terminals if you remain closed. Saying they do not expect many customers at the beginning. It may take a few months before they get back to normal. Chinas Central Bank Says it will focus on tackling the coronaVirus Outbreak as its most important work. The pboc will increase credit support and support for the full use of reminding funds controlling the epidemic. They added it will fully support its reduction of production as manufacturing companies. The imf is sticking to a forecast of a Global Growth rebound. Report, the fund maintained its 3. 3 growth forecast saying the World Economy appears to be blossoming. It is also cautioning. Google will not be exempt. Unveiled a strategy the move is the latest attempt to leverage its markets as well as compete with the u. S. And china hightech power. In europe. Claim assange lawyers the plansCompanies Like facebood that donald trump offered to pardon him. The emails which embarrassed Hillary Clinton were published on wikileaks. The white house has called the claim a total lie. Global news 24 hours a day on air and it could take on bloomberg. Powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. At qantas. Ke a look shares are soaring. At one point, it had jumped the most since december 2014 read investors are clearly liking a strong approach when it comes to the impact of the slowdown caused by the coronavirus. They also announced they are freezing recruitment. Are applying to flights to Mainland China, hong kong and singapore. Intas says that will stay place until the end of may. We saw a dip in their profit down about half of a percent year on year. We will be getting more on qantas. For more on the earnings, we will speak to him later. Lets take a look at the other movers in metals. Mines are moving upwards. We have Precious Metal Trading at 1611 at the moment. Up. 0 more to discuss coming fresh clues from the fed. We will break down the latest. This is bloomberg. This is Bloomberg Markets. Fed officials do not seem anxious to raise Interest Rates anytime soon. The january minutes reveal officious who are officials who are cautiously optimistic. Senior u. S. Economist is now joining me. We have already seen the imf being cautiously optimistic. Was the fed as positive as the imf . What was striking in the minutes is that they were very optimistic about Business Investment prospects. Despite the fact we did not see any optic recently. Spokely, chairman powell recently about it. He said maybe business contacts are not ready to rush in and start investing really fast right now. What else came out that was very interesting in the minutes was they mentioned the coronavirus eight times in the minutes. Despite they only had one week that was late january just one week after the news broke. They did mention it several times. They do say that they are not ready to deliver any cuts. Thatnk they actually think they provide enough of insurance in terms of cuts last year that for aelp create a cushion shock like the coronavirus. In terms of the minutes, does it change expectations for the rest of the day . As far as the Election Year goes, it is very unusual for the feds to change policy during the electionyear. On axample, if they are positive right now, they will continue to be on a pause. At their cutting rates, they will continue to cut rates. That means the bar for any move of a rate cut or rate hike is very high. They will not hesitate to deliver a rate cut if they have to and if the situation changes. And the outlook deteriorates significantly. Going into the fed minutes, we are focused on the Balance Sheet. When and how they will start tapering, what do we learn . We did not learn much. It was what was kind of said during the press conferences. This as going to taper soon as the april volatility is behind us. That is the intention and the minutes confirmed that. Thank you. Columnist. In our she is a former advisor to the president of the dallas fed and a ceo. Thank you for coming in today. We were just discussing how positive the fed still was about the economy. Are they being we really dont know how the outbreak will play out. Feel like this is a rerun of last year. The fed was unsure of how big the hit from the trade war was going to be. They put it out there at the beginning of the year that they were going to be very aware and mindful of developments that came out. Hasll say that the fed never, whether it is an Election Year or not, the fed has never defined full on Market Pricing and now we have 40 basis points of rate cuts if you look at wirp on the uber terminal in 2019. This is kind of continue to take up along the stock market and that is in some way what investors are celebrating is that they went into the year thinking the jay powell was for all of on hold 2020 and as long as the coronavirus turns out to be not terrible, they will see another rate cut. Is it your sense that we could see a repeat of the Fourth Quarter of 2018 when you saw the markets telling the fed what to do . Multinationalsg take a hit and the Global Outlook take a hit then the fed could have to be forced to jump into action. If you look at historical pricing whether it is a hike or a cut, once you pass the 70 priced in mark, the fed does not usually the five markets because it does not want to send a shock into the Financial Markets. What is making jay powell and his fellow policymakers job or difficult is that we are seeing the growthe started, of the Balance Sheet, we are seeing valuations running past historic norms. If, the harder it is to pull the plug. There also seems to be some safety. Is very concerned that even if ,he Coronavirus Impact is bad you still have disruptions in the supply chain rated gm is one of these apples you give, please see this trickle through to the macro side of things. Ask with the job openings data that we get out, of the government with a big lie, the what caught mys, eye was that 75 of the industries are seen seeing yearoveryear declines in job openings. That is broadbased. It is not isolated to the industrial recession that continues to be ongoing. There is a real risk with continuing job claims taking up. If there is any other disruption does disruption on top of Companies Reeling from the trade war that we will start to see pickup. That is a big risk for the federal reserve. If this coronavirus gets back, i dont see a chance that we test the 1. 43 versus 1. 35 low in the 10 year. Other countries that are sporting negative Interest Rates will not be making any moves. Japan is going to be more quickly hurt them United States. Germany is as well given its close Automobile Industry ties. Youre not going to see them making any sudden moves in terms of getting their Interest Rates out of negative territory or he had the u. S. 10 year yield continued to be a safe haven. In her latest column, you are worried about the u. S. Housing market. Are you more relieved seeing the data today . Thehe think that i followed most closely is singlefamily housing permits. This is a leading indicator of demand for builders to continue building over the next few months. You dont let health and a week. That number is the highest since 2007. We have seen multifamilys be strong throughout. I think that as markets begin to price in further rate cuts, we do see a huge klein in mortgage rates. As there is a supposition that the fed will backstop it, you will have continued support for the u. S. Housing market with the caveat that it all ties back to whether or not we see increased joblessness. Great to have you with us. You can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. You can customize settings so you only get the news on the industries and assets you care about. This is bloomberg. This is Bloomberg Markets asia. Sydney. N a quick check of the latest headlines. Softbank is planning to borrow by putting of stock from its Japanese Telecom unit as collateral. Its part of a deal to get a twoyear loan. Investorh activist holsinger advocated for something to buy back as much as 20 billion in shares. The company will need to raise cash to meet those demands are it airbus lands to cut more than 2000 jobs by the end of 2021. The company says it has been struggling by the lot of orders. They have been scaling back since 2014 when the acknowledged that the business is to buy jetline operations rid. Were joined next to discuss airlines latest earnings and the impact of the global coronaVirus Outbreak. Our exclusive interview is next. This is bloomberg. We are continuing to ship as per our schedule. Think we will have additional provisions. We are shipping all of our product. Usually we are waiting for jobs to come and. We are safe for the shortterm. Is highlighting more generally the importance of diversifying supply and supply chain. Asia is an important growing market for us we are not abandoning it. Thehose are some of executives we his open to this week giving their take on the coronavirus operate. Qantas is slashing capacity by 15 and freezing recruitment as the coronavirus drags down demand. Using qantas shares jumping since the most since 2014. It is the worstcase scenario you are planning from the coronavirus and the associated economic slowdown, the protests in hong kong that have begun to weigh on it and how much possibility does the business have . We had an underlying profit of 771 million but we said coronavirus is going to impact to 150 million. We are removing some routes that have been infected by the coronavirus. Were keeping flexibility though. That would be the equivalent of grounding 18 aircraft and having 700 too many people. We are managing that by asking people to take paid leave. Or continue the way they are, we would extend that until the end of june. Our estimates based on this are to continue this way until the end of june. If things were to get worse, we have the capability to take more than double the capacity out. Better, you can but that capacity tracking. Sars, we saw a significant so wed after it was over want to keep the aircraft and people ready. In that sense, would you not be looking and wondering at how many planes you can potential he ground in this worstcase scenario . Job cuts ors of unpaid leave . We have crunched those numbers. We are grounding the equivalent of 18 aircraft and we will take advantage of doing maintenance so when we need the maintenance need the aircraft we will do have full use of them. We are celebrating this year we are the longest continuing operating airline in the world. We have to manage the situation for at least another six months. Keep not see the need to redundancies. We are trying to protect as many jobs as we can. We expect a rebound to occur and we expect this to be a sensible thing to do. We have had a Virus Outbreak before but overall, we continue to see a slowdown in the chinese economy. Does this make you feel like you need to diversify your business away from china even more . Less than 2 of our International Operation is china. Our domestic and loyalty business is very diversified and we are making close to 400 million per year out of loyalty and thats were we have these businesses like insurance, credit cards and a diversity of businesses there that make us very unique as an airline red on the domestic market, we have 62 market share and over 80 of the Corporate Market the best majority of the profitability and that is a very stable which we perform exceptionally well in. Wepared to most airlines, have seen some of the competitors having to take a lot more capacity out, we are a lot more diversified, a lot stronger in terms of our battles Balance Sheet and strength and more capable of managing this going forward. Were keeping a close eye. Australias links with china are big. We have to keep a close eye on what happens with the economy. Usually, when demand weakens mystically, if you get supply correct, we manage the profitability very effectively. How much of your domestic business was hurt by the bushfires in australia . See in the first month or so of the bushfires, a bit of an impact with some demand weakening in order to that we covered recovered pretty fast. Domestically, we gain a good recovery. If it wasnt for the coronavirus, we would have thought the bushfires were having a minimal impact. Their original routes our competitor withdrew from one and we believe its part of our community obligation, our social responsibility. We needed to fill that gap so we added more capacity to support the bushfire affected areas. Money through donations to help the bushfire affected regions and we have been flying around the country to try to help in that position. How much of a domestic impact do you expect to see from the arrivals and a student returns . Do you expect to have a sizable impact on domestic routes as well . We are coping with that with supply. Aref our domestic Operation International travelers and 2 of that is from the asian market. We are seeing weakness there which we have seen for the last month or so and what we announced today is for this half of the year, we will take 2. 3 capacity out of the domestic market. It is more focused on jet star. Sufficient tois be able to manage the situation. I will say that that could reverse our competitive position. We want to maintain our market share, strategic strength so we make sure that is a focus of where we are. We think our competitors are in the same boat and the sense will prevail in terms of capacity. You are due to place an order for planes including replacing boeing 737s red i wonder if a decision is getting near. When you be waiting until after the Coronavirus Impact is more certain or waiting to see whether this return to service happens . Our biggest focus is that by the end of march, we have to make a decision. To fly direct from sydney to new york and melbourne to new york. We are focused on getting that decision out of the way. In negotiations with the pilots and the regulator. We believe we will get there. In aircraft that will arrive 2023, these are longterm decisions and a company like qantas will make a longterm decisions even if there are shortterm headwinds. That is the right thing to do to plan for our future. The longhaul operations will diversify our earnings. Perthworking well on along the nonstop. We will continue with that. Once we have sunrise out of the way, later in the year we will be doing a competition to replace the 75 737s. That will likely happen after the max is in the air but that is the timeframe we are looking to. When you expect to see, you have floated the idea of hiring a new team of pilots. How much for that contingency plan cost . We are in dialogue with our pilot. We have made more progress in the past few days than in the last seven months which is a great sign. We will be putting a proposal to our pilot for the end of march. If they vote on it, they will get to fly which will result in 1000 jobs are motions, big increases for our first officers and second officers to get those promotions. That is what we are focused on achieving. We have to have a backup plan if that does not occur. Project sunrise is too important for us. That is a last resort. , i am veryocus is hopeful we will do that by the end of march. Good luck with those negotiations and thank you for joining us today. Lets get the first word headlines. Thousands of passengers onto cruise ships held in separate boards and asia have begun disembarking sparking fears he may still spread the virus or it japan has allowed the first 500 to leave the diamond princess quarantined off your,. About 100 of those are returning to hong kong. Passengers and crew are leaving the pet boat docked off of cambodia. Some countries are refusing to let the evacuees through their airports. Government is planning to take over a group and solo assets. Assets. Ff they have been selling off assets after a global buying spree of Iconic Companies. Expelled reporters from the wall street journal. Thedecision was made after wall street journal refused to apologize for a decision opinion piece. Fed Officials Say they will not raise rates anytime soon at their last meeting. Those are the highlights from the minutes of the latest fed meeting in january. Officials also said they were cautiously optimistic about outlook for Business Investment in the wake of a recent trade deal. 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. This is bloomberg. Coming up next, the yen is at the weakest level in nine months. Concern that japans economy may slip into recession and we will get more on this next. This is bloomberg. This is Bloomberg Markets asia. Lets get a quick check of the markets. We are seeing stocks at record highs right now. This is after wall street touched a record high with the s p 500 and the nasdaq composite at new levels. Were seeing nikkei futures gaining. We had a weaker japanese yen falling to a low not only amid concerns that the japanese economy could be slipping but also the dollar has been strong. Our anger joins us from hong kong. We have seen massive measures coming from the pboc side of things. What other measures are we talking about . We might get a rubberstamping of what the markets have been expecting. Ably the most important Interest Rates right now, were talking about loan prime rates. Expecting a drop as well. If the drop in related rates in recent days is any guide or indication, we had a drop in the mediumterm lending and reverse repo. That is probably what we might get not necessarily guaranteed. What we have been told is that it is expected to come down. If not frontloaded closer to where we are right now. I know we talk about how we are expecting that you always come since it than any time was First Published today probably is the most important. China,erms of outside of the yen is the big story. It has been crazy. Looking at the move overnight, it was a standard deviation move. On the back of some of the mentioning,y was japan is probably going to set the markets will see a top at the open. This quarter was supposed to be the recovery quarter for japan after the Fourth Quarter and the contraction we saw. Given what is happening in china now, people are talking about a recession in japan. The other thing i want to mention since we talked about the dollar is precious metals. That is continuing to see prices move up. Gold, silver have become wildly parabolic. That is starting to show up in other parts of this market. Lets talk about the asian markets because we are seeing aussie and other stocks at record highs created is this just following wall street today . Probably so. The other story that we have not emphasized just yet was the fed overnight signaling that they are going to sit on rates for longer. You mentioned data coming out of the u. S. Ok but the risk outside perhaps underscores a need for them to do so as well. The move in the dollar and the tolar index is very close topping 100. That is an indication that elsewhere in the world, Monetary Policy is loose and with rates expected to come down further, a good example of that, indonesia is expected cut rates. Thank you. There is our interactive tv function. You can catch up on past interviews as well as dive into the securities with the bloomberg function. You can join in on the conversation as well. This is the bloomberg. This is Bloomberg Markets asia. Im shery ahn in new york. The ninth president ial debate starts in a few hours and nevada but several candidates have begun taking shots on Michael Bloomberg before his first appearance on stage as he rises in the polls. Majority founder and holder of bloomberg news. He a stop been a candidate for office and more than a decade. What should we be watching today . A typically, anytime there is front runner in this case bernie , with the addition of Michael Bloomberg on the stage, he is going to be taking the brunt of the political attacks which is a good news for Bernie Sanders. The sources that i speak with connected to Bernie Sanders president ial campaign say they welcome the addition. They want to draw a contrast every which way. The third point i would make is that there are also openings for the other candidates including joe biden who would love to see that say that he is the unifying candidate of the bunch. In addition to Amy Klobuchar who is riding high. Elizabeth warren, Pete Buttigieg as well. Pete buttigieg in particular had a strong showing in New Hampshire and iowa is going to say dont forget about me. What should we be watching out for . First, we went with a democratic candidate. That started to change. Is like a dysfunctional family. Aside, you have to look at where the polls are moving. There was a poll released in the last 12 hours which suggests that among democratic voters, Bernie Sanders is the most electable than the onto that, based on my reporting, i dont see any of the candidates dropping out of this race between now and super tuesday because there seems to be a big volatility baked into an unpredictability. Pete buttigieg and Bernie Sanders have been no come that. It is looking like an uphill struggle. Nevada, Bernie Sanders continues to lead in the polls. There is a question about where there will if there will be a contested convention. However, the Bernie Sanders campaign has put out over the past several weeks that a win is a win. Thats were momentum matters. Should he be able to win on saturday, that is another feather in his cap. The Biden Campaign has said that they feel they are particularly wellsuited. And race is intensifying the contracts are being contrast are being drawn sharper and sharper. What about the issues . Economic standpoint, you have to look out for where on issues pertaining to trade policy, where are the battle lines being drawn . What about president Bernie Sanders . Would there be much from a rhetorical or policy standpoint as it relates to terrorists . Bernie sanders and said he opposes the usmca trade deal because he thought it was not progressive enough. Issue ofat, on the Health Care Policy medicare for all, something that has drawn contrast as well. There policy standpoint, is the point between the centrist wing and the progressive wing but if you look at where the apparatus surrounding the committee has moved predating trump, ever since during the Obama Administration there has been a groundswell of new Grassroots Efforts that have been tugging the party from an economic standpoint standpoint far to the left. That was our White House Correspondent live in las vegas or it lets take a look at asian markets. Policy from pboc, we are expecting a cut in the loan prime rate. The a decision out of central bank in indonesia. Positivity is going into the tokyo open. Coming up, we will be joined by an independent analyst to discuss the airline industry. This is bloomberg. Haidi a very good morning. Asias major markets have opened for trade. Shery good evening from new york. Welcome to Bloomberg Markets asia. Haidi our top story this hour, the number of new coronavirus questions over how china is tracking the outbreak. Said to be nearing a takeover of the hna group. Shery we will have aussie jobs data this hour with the rising Labor Force Participation posing a puzzle for the rba. Some of asias major markets have opened for trade including japan and south korea. Here is sarah ponczek. Sarah the optimistic tone we saw in europe and the u. S. Trading session is speeding over. The nikkei 225 had been stuck trading in a range between its 50 day and 100 day moving average. More than 1 at the open. The topic extending the gains we saw yesterday after seven days of losses. Seeing a nice rebound in japanese equities. We see the japanese yen having a little higher versus the dollar. This comes after a brutal session on wednesday in which we had seen the yen having its worst day in three years versus the u. S. Dollar trading above 111 for the First Time Since may nine months ago. , yieldingb yields negative three basis points. South korea does come online. Yesterday, we saw the kospi underperform as we heard of new coronavirus cases. Today also seeing a rebound, up 7 10 of 1 . We also see australian stocks moving higher. Kiwi stocks hitting a new record. S p futures extending gains as after the s p 100 and the heavy nasdaq close. Lets get you a look at your fx and rates picture. The yen, the absolutely rough day we saw on wednesday. The u. S. Dollar at the highest levels since 2017. The euro steady at the lowest level since 2017. We do see the aussie dollar moving a little higher. Still near the decade long lows. On the offshore yuan trading the weaker side of seven. When it comes to treasury yields in a the yes date in the u. S. , we have we have seen them stuck between 154 and 158 king 158. Haidi the province at the center of the krone virus epidemic has recorded 349 new confirmed cases. This coming as china revised its National Guidelines on diagnosing the virus. Lets bring in Tom Mackenzie and our bloomberg anchor yvonne man in hong kong. The latest numbers are an encouraging drop. It but also explained that but also exchange the change in also explained the change in methodology. Of 49 out of hubei, which is the epicenter for the coronavirus. That compares to the 1700 we got yesterday. Deathsre than 2100 globally. The infection rate is now above 75,000. Her right to point out the methodology has changed once again. They started off by just including people who have been tested by this test in a lab. That proved problematic because they did not have enough testing kits. They changed the methodology last week to include those who had a clinical diagnosis using ct scans as well as those who had the lamp test. Yesterday, they changed the accounting once again. The reason that was problematic is some people were showing signs of pneumonia not all of those people had the coronavirus. Includested again to suspected cases and confirmed cases. Whether that is a more accurate accounting, we will have to see. It seems that trend of lower infections does continue. ,he number of people discharged was much higher than the people who were infected. That is the first time we have seen that. That seems to be a positive trend. Shery we are now getting casesn found in the region. Yvonne, we continue to see the spread in hong kong. We are seeing the passengers released from that cruise ship quarantined off the coast of japan are expected to arrive in hong kong. What is next for them . Yvonne they will be taken straight off the airport tarmac to a Public Housing estate where they will have to undergo a 14 day mandatory quarantine. This is more than 100 hong kong people who got off the diamond princess. The flight was delayed because more people wanted to get on this charter flight from the initial 45. There are still 200 remaining hong kong people in japan. There is another Hong Kong Charter flight that is said to arrive in japan leader this evening. 53 hong kong people did get infected. This is out of the 621 total confirmed cases on the diamond princess. We heard from an Infectious Disease specialist who visited the cruise ship on tuesday. He was alarmed by what he saw. He said the control measures were completely inadequate. Everybody was not being careful because there was no distinction between the virus free and the infected zones. He himself was worried about getting infected. In hong kong, we heard the cdc warning about traveling to hong kong after the second reported death here. Economic have seen the fallout from the outbreak in china. We are seeing that policymakers are trying to step in in all of these different industries. What do we know . Tom we are hearing the authorities are looking to take over hna group, which was once this huge chinese conglomerate. It went on this major global buying spree. It was the largest shareholder in Deutsche Bank. In all of then spending under pressure from beijing to get its debt in order. It had been focusing on bit on building out its tourism business. That has been pummeled because of the impact of the coronavirus and the dropoff in the number of passengers on airlines and the number of people restricted from traveling. They are struggling to pay off their debt. Officials in their island are looking at taking the company over and selling off the airline asset to some of the state owned airlines. We are hearing more broadly from the peoples bank of china trying to address the coronavirus is their priority. They want to ensure there is enough credit going to the manufacturing sector. They did say they think the impact on the economy will be limited. The imf is saying they think that maybe Global Growth will strengthen in the second half. They are seeing moderate growth. They are sticking to their guidelines in 2020. Monetarysaying that policy and fiscal policy will be essential. They do know to the risks from the coronavirus. We are expecting to get the loan prime rate out later today. Bloomberg economics expects a cut of 15 basis points. We saw the medium term Lending Facility up by 10 basis points. That suggests there is a strong likelihood the opr will be trimmed again as central bank tries to ensure there is enough liquidityeconomy. A slow returns of to some sort of normality, what is the latest on macau as they get the approval for some of the casinos to reopen . Yvonne close to reopen their doors at midnight most reopen their doors at midnight. We are learning it is not going to be full capacity. Reopenedng tables have. That is a third of the total in macau chain we are also hearing those casinos that are not ready to open today have been granted chain they are gay 30 day buffer. It is going to be slow going. Some relief from the sector which has been reeling from not just a trade war political protest but also the likes of j. P. Morgan saying this reopening me not change the fundamentals because things are going to be slow and steady given the fact there are still travel restrictions to hong kong and in china. Chinese players feel unwilling to travel at this time. About two to three months before things get back to normal. Shery yvonne man in hong kong and Tom Mackenzie in beijing. Thank you. Keep uptodate with this developing story by running the function vrus go. We will find the latest global figures from the cdc as well as how specific Companies May be exposed. Fed released its fomc minutes earlier today. It looks stocks gain ground. Bank 500 and then as and the nasdaq at record highs. What did they see in these minutes that they like . Minutest so much the themselves. It is more the promise of stimulus coming out of china, which is hoping to drive Financial Markets in the short term. The underlying feeling among a lot of investors is if the Global Situation does deteriorate and enough for people to downgrade the outlook for growth in 2020, Something Like what we saw in 2019, the fed is more inclined to help out by easing policy in the second half of the year. That is not a baseline case at the moment. The fed showed it is willing to act if the Global Situation does deteriorate. People are more interested in the stimulus coming out of china. A combination of physical moves and Monetary Policy moves. We expect a lower loan prime rate today, which will add to the repo rate cut the mls cut we have already seen. These specific measures addressing large Companies Like airlines will get support from china. We are seeing the chinese authorities do what they can to reduce the risk of lower growth in china. This is good news for the Global Economy. Stabilization, that adds to a positive mood across. He world shoul in a 2009 after the Global Financial crisis, china had a huge stimulus. Even before after u. S. Equities started to rebound. People are pinning their hopes on china this time around. We arein terms of what seeing across the rest of the market, the dollaryen above 111. Gold is holding above 1600. What is that telling us . Is a it tells you there little bit of double mindedness going on. Typically, a weaker yen is a sign of a risk on. People are more inclined to put money to up the idea they need some hedging in their banquet to go ahead just in case something turns sour in the near term. The yen in itself is a funding currency. That helps to boost other currencies and assets. Some of what we see in the weakness in the yen is specific to japan. The gdp data this week even allowing for the sales increase in the sales increase tax was pretty horrible. The risk of recession in japan is serious. Japanese authorities might come might not come through quickly enough. People will be thinking. The boj may need to lower rates even further. What you are seeing is partly the yen weakening because the mood is slightly better across risk assets. It is specific to japan where the situation is not that bright in the near term. That is why gold and u. S. Treasuries and assets are retaining a strong bid. Usual. Ot as clearcut as usually when they yen is weakening, that is good news for everybody. This time, it might not be such great news in japan specifically. Haidi is definitely a bit of a muddled picture. Lets get you the first word news. Newhe e. U. Has unveiled a strategy for deploying Artificial Intelligence and other emerging technologies in europe. Rules andimpose new tests on u. S. And chinese firms that want to employ similar technologies in europe. Companies like facebook and google one up you exempt. It is the latest attempt by the you to leverage its market as well as compete with the u. S. And chinas hightech power. Leaders for Julian Assange claimed that President Trump was prepared to offer the wikileaks founder a pardon if he agreed to say russia was not involved in leaking emails. The emails the embarrassed Hillary Clinton are published on wikileaks. Julian assigned is fighting extradition to the u. S. On spying charges. China has expelled three reporters from the wall street journal in a rare move to punish multiple reporters in an opinion piece they were not involved in. The decision was made after the journal refused to apologize for what beijing because a discriminatory oped. It described china as the sick man of asia, a derogatory phrase used by european powers in the 19th century. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Still ahead, qantas reports earnings as the coronavirus continues to drive down travel demand. We will take a look at the impact it is having on airlines. Haidi chinas economy under increasing strain from the virus. How will the pboc respond . We will have more on that. This is bloomberg. Haidi does Bloomberg Markets asia. Chinas benchmark barring cost for a new corporate loans are expected to drop thursday after beijing slashed a range of policy rates to blend the Economic Impact of the coronaVirus Outbreak. Lets bring in a chinese economist. The consensus is we are going to see the loan prime rate lower today. What about the longerterm downtrend we are seeing in this rate . I think markets expect a loan prime rate to be 10 basis points earlier reflected cuts this week. Willect i think pboc still conduct more targeted easing policies in terms of the loan prime rates. I think it will reflect in a way that one year loan prime rate might be lower at the faster rate kin for our forecast, we think when year loan prime rate might be another 45 basis points lower from where we are. At 2020, we are looking at 3. 7 . Overall, the pboc will prefer to stay on a prudent Monetary Policy stance and with a target in easing measures. Pboc we have seen the injecting large amounts of liquidity into the market. When can we expect them to start tapering off those moves . In the short term, i think the pboc will remain relatively accommodative. That is because of the virus impact reducing a larger liquidity demand. We think that will normalize the liquidity injections as firms returned to productions and business resumes. See al continue to seasonal surge in liquidity demand in the pboc meeting that demand. We think the pboc will remain neutral. Haidi i just want to throw up a chart for our viewers taking a look at the fairly complex basket of rate toolkit the pboc has to look at. The one in the red is what we are watching today. That is the loan prime rate. We are expecting 15 basis points to be taken off that. Given we are expecting more to be done on a local government level in terms of tolerance for government financing debt, what does this mean to the commitment for deleveraging stability . I think in the near term given that the economy is facing a negative hit from the Virus Outbreak, the government will likely be tolerating leverage in the near term. That does not mean they will drop of the Deleveraging Campaign. Inis a campaign that started 2018 at is supposed to end in 2020. I think they are probably still going to be relatively more prudent in terms of adding leverage. Policy, i think fiscal policies will be more proactive. It will be expressed in terms of more targeted means to have tax cuts for corporate and loading up for Infrastructure Projects for the key sectors. Instead of overall addition of orerage including a Property Finance vehicles. Haidi what about government assistance to corporate see . We have seen hna, which has been troubled for some time. We have seen the government stepping in with potential bailout moves. Are we likely to see more of that in the corporate space . I think in the longerterm, the government may not be stepping in as frequently to aid corporates because they still went corporates to deleverage and face out unproductive zombie firms. From that policy perspective, i have not seen a strong change signaling a change in the policy guidelines. The Deleveraging Campaign will probably still be one of the overarching policy goals. Haidi thank you so much for joining us. Thecan get a roundup of stories you need to know to get our day going in todays edition of daybreak. Subscribers just go to daybreak go chain you can customize those setting so you just get the news on the industries and assets that matter to you. This is bloomberg. Shery this is Bloomberg Markets asia. Im shery ahn in new york. Haidi im howdy stroudwatts in sydney. Lets get your check of the latest is flash headlines. Qantas shares are higher after they reported capacity cuts to the coronaVirus Outbreak. Had alreadyangaroo trimmed capacity to hong kong in response to the antigovernment protests. 15 ill now increase cuts by in asia. Shery airbus plans to cut more than 2000 jobs by the end of 2021 as it tries to restore profitability in the lossmaking operation. The company says it has been struggling with a lack of orders. Airbus has been scaling back since 2014 when it big knowledged the business is dwarfed by jetline operations. A company has confirmed it is selling its ironman triathlon business. Discussions of potential private equity buyers. Shares gained 45 in new york on tuesday. The company says no agreement has been reached. Are momentsxt, we away from januarys jobs numbers from australia. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] haidi we are just getting numbers breaking across the bloomberg comes to aussie joblessness. The employment change for january, 13,500 new jobs added to the economy. This is a pretty volatile series. The Unemployment Rate taking , higher than the expected 5. 2 from the previous 5. 1 . The Participation Rate also just a little bit higher. Just over 46,000 fulltime jobs added at a contraction of almost subtractedtime jobs from that total. Lets bring in James Mcintyre in sydney to discuss. The labor market has been confounding for some time. What do you make of these numbers . ,ames it is quite interesting 13. 5 thousand per month. It is not the type of jobs growth they need. But really, the population growth and how many jobs you need to keep the Unemployment Rate stable is affected by the Participation Rate. What weve seen is the confounding situation of exceptionally strong jobs growth over the course of 2019, but a huge boost in the Participation Rate has meant that strong jobs growth, and we can see the participation boost, it has meant that the strong growth hasnt made a dent in the Unemployment Rate. The rba has found themselves scratching their heads, they cant work out why the Unemployment Rate is not going down, because those workers are getting pulled in. We have another uptick in the Participation Rate and that has seen the Unemployment Rate grind up to 5. 3 . It really is a case of jobs growth expected to moderate, but whether they get the reduction in unemployment that they are looking for and that they need is really going to be a story here driven by what happens with that Participation Rate. Shift ineres been a communications from the rba. What is the labor market playing in their role on how they see the economy . James what weve seen from the they were carefully focusing on the labor market developments and what it meant for their inflation target. Over the course of november, december, that evidence of the heating up of the property markets in the cities has seen the rbas communications that weve seen over the course of this month, starting with the meeting in february, then the statement, the speech, and the testimony before parliament, starting to tease out some of those Financial Stability concerns. Deliver an additional rate cut, what effects that might have on the housing market, that is the kind of switch that weve seen in the rhetoric. If we do see a bit of an increase in listings, that takes the heat out of those. The focus will be squarely back on the labor market, which has been moving in the wrong direction. If you look at everything, the coronavirus, the bushfires, does that suggest we could get uglier numbers to come . Day, itt the end of the is january. We dont know what impact we are going to see from coronavirus. Arrangements being made there. We know the number of flights, the announcements from qantas about flights being canceled. Traditionally the second busiest month. It is going to have an impact in terms of gdp. What we also dont know is what it might mean for the supply side of things. China isnt just our most important export partner. It is our most important import partner. See a bit of growth , a stagflation environment coming through. As the concerning impacts become clear from the data. James mcintyre, thank you very much. Some of asias major markets have just opened for trade. We are seeing broad upside. Heres sarah. On the back of that betterthanexpected jobs data, we are not seeing much movement, but still the asx 200 is trading near the highs of the session and hitting fresh record highs. But look at japan. After the decline in the yen overnight, we are seeing very solid strength in japanese equities. The nikkei up about 1. 5 . The topics moving higher, punching up more than 1 . Up 0. 5 at thei moment. I do want to dive deeper into the mood in the japanese yen. It was a very brutal session. At one point the worst day in three years. Although we see a minor comeback this morning, we do see dollaryen above 111 for the first time in nine months, and this yellow line is the trendline. Move overnight has brought us above that trendline. It will be interesting to see if this means the yen is going to be moving lower from here. Back to you. Haidi thank you so much for that. Sarah ponczek in new york. It is a busy day for central bankers, expecting that cut from the pboc later as well as the move from bank indonesia. Not expected to make a move today, but we are watching for any signaling about regional impact of the coronavirus. Lets get you the first word news with Critical Group to. The province at the center of the coronaVirus Outbreak posted a sharp decline in new cases as china once again changed its method of counting infections. New cases for300 wednesday compared to nearly 1700 the day before. Beijing facing criticism for repeatedly revising its methodology. In the latest change, authorities are limited cases clinically diagnosed by c. T. Scan. China plans to take over a conglomerate and sell off its assets. The government of the Southern Island province is said to be in talks to cede control of the group after the coronavirus hurt its ability to meet its financial obligations. Assets been selling off after a global buying spree from Companies Like hilton and Deutsche Bank. Canas Central Bank Says it focus on tackling the coronaVirus Outbreak as its most important work, according to its quarterly Monetary Policy implementation report. The pboc will increase credit abroad and special lending funds for controlling the epidemic. The pboc added it will support the resumption of production at manufacturing companies. The imf is sticking to its forecast of a Global Growth rebound despite risks dominating the outlook. In a report issued ahead of the g20 summit, the fund maintained its 3. 3 growth forecast, saying the World Economy appears to be bottoming out. It also cautioned that any recovery could be derailed by a wider spread of coronavirus. Global news, 24 hours a day, onair and at quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im Critical Group to. This is bloomberg. Haidi thank you. Is slashing capacity on international flights. The cuts apply to flights to china, hong kong, and singapore. Earlier, we spoke to the qantas ceo, who says a contingency plan is in place for at least the next three months. We arent publishing that until the end of may. We are keeping flexibility. Having 702 many people, we are managing that. We are managing that by asking people [indiscernible] if things were to continue the way they are, we will extend that until the end of june. Haidi lets bring in brandon. Before we talk about the broader impact across asia and the aviation sector, lets talk about want us. What do you make of some of the measures that have been taken so far in terms of cutting capacity and a hiring freeze . When we spoke to alan joyce about the worst case scenario, he kind of just said, more of the same. Ask staffpotentially to take leave. Is that something that all airlines should be considering . Yes. Is sensible. Ve qantas exposure to china and hong kong is smaller than airlines in asia. They can manage this a bit easier than airlines in asia. Today, it sounds like a big number, but it is mostly hong kong and their china flight. The rest of asia is being cut very slightly. Small outside the core of hong kong and Mainland China. Qantas has also reduced capacity , which is really a response to the week domestic economy rather than the virus. I think the cuts will continue for a few months. You could see bigger cuts potentially over an extension of the cuts depending on how the market evolves in the next few months. It is kind of unknown at this point. Shery do you see that hong kong and china market really recovering outside nonchinese airlines . Before coronavirus, it was the impact of the process of reducing passenger numbers. We already had qantas stopping its sydney to beijing flights. It is just a problematic market. Yearntas announced last that they were going to stop flights to beijing. Hong kong, they are still pretty day,with four flights a which is going to be reduced temporarily. Virgin australia just pulled out. The Hong Kong Market is pretty strong. The china market is strong for australia but week for qantas. Theres over a million visitors a year from china to australia. We are seeing a major impact in australia. Qantas doesnt carry many of these people. It only has one flight to china. Big exposure for australia. Small exposure to qantas when you think about the Mainland China market. Theres concerns about how quickly this market will recover. I think it will recover eventually, but how quickly . For somebody in australia, especially in the tourism industry, that is a major concern. That is why you are seeing some impact on the economy in australia as well as other countries that rely heavily on china. Theres 1. 3 million in australia, but that is very small compared to 11 million or 10 million in japan. Shery given that it is not just about capacity, nonchina asia capacity . We should really see more of this. Surprising that there hasnt been so much announced yet. Singapore came out with a cut a couple days ago. The cut is very small. In terms of nonhong kong and Mainland China, we are talking about just a couple of percent. For qantas, it kind of makes sense. Seen i would like to see more response from the asian airlines. The disclosure by qantas today was refreshing. They said exactly how much impact on earnings there will be. Other asian airlines, their disclosure is generally not as good as qantas, but we should look to those airlines in the next couple weeks as they report to see what they say. So far, the reaction has been slow. People are just not traveling now. Not just china. People from korea, the japanese, singapore, people are not traveling. Companies have halted nonessential travel. All events have been canceled. This has a major impact on all airlines. Just quickly, we are running out of time, but we saw the news that hna could be selling airline assets. Does that make sense given the state of the industry in china . That makes a lot of sense. This is an issue that has been lingering for a long time. The virus issue kind of push to that over the edge. Of Leasing Companies have been exposed to this. Here ishink will happen that Different Airlines will probably be split up between the big three in china. The question is what happens to hong kong airlines. That will have major implications on the Hong Kong Market. Youi brendan sobel, thank very much for joining us. Coming up, we will have plenty more on the Coronavirus Impact with simon westerly. He tells us how the outbreak is hitting an industry already reeling from the bushfires. Next, Online Grocery startups are emerging as one of the rare winners from the coronavirus in china. This is bloomberg. Haidi Online Grocery startups are emerging as one of the few beneficiaries of the coronaVirus Outbreak. Areions of consumers picking food delivery services. Norris joins us. Great to have you. It is interesting. When we get to the end of this coronaVirus Outbreak, some pretty fundamental Consumer Shopping patterns may be changed. Michael that is quite right. Before penetration of grocery delivery in china was quite limited. After the outbreak of the coronavirus, weve seen a doubling to a six times increase in terms of the number of users, downloads, and deliveries coming from these apps. Change chinesel Consumer Behavior going forward. Business iselivery a global business. Even if it makes sense for those large players, how will startups stay in business . Michael that is a great question. That remains unanswered. Delivery, Fresh Grocery or food delivery, has been around for 10 years. The statistics tell us around 80 of startups are losing money in this area. This is a very low margin business. Youve only got three hopes if you are a startup. The first is to be a larger player. The second is to live with those economics. The third is to build out some kind of system where you can cross sell and make some of that money back. Continues and there is greater demand even after the epidemic subsides, do all of these businesses have the scale to meet demand . Michael great question. Weve seen to acute pain points. One is around driver shortages. Especially around the chinese new year. And because of the outbreak, they were unable to come back at a time that was most advantageous. The second issue is around inventory pressures. Some of the panic buying that weve seen in the supermarkets extends to these online platforms. With consumers getting up at 4 00 or 5 00 to have a driver assigned to them. Over the short term, those issues continue to put strain on the sector as well as the broader economics. Shery michael, will Venture Capital funding be a problem . People cant leave their homes because of the outbreak. They are stuck. For some of those projects, you need due diligence. Michael indeed. When it comes to the basic capital outlook, the guidance that weve received is that there wont be any significant fundraising activities for the next three months for some of the reasons you described. Capitals who are invested in the startups want to see whether they are able to see improvement following the virus. The other issue is a simple matter of due diligence. Haidi michael norris, thank you very much for joining us today. Coming up next, we are counting down to the release of the pboc rate. Find out if policymakers deliver on expectations of that 10 basis point cut. This is bloomberg. This is Bloomberg Markets asia. I am haidi stroudwatts. Shery and im shery ahn. Chinas markets open in less than an hour. The pboc will rates for investors expecting a cut. David ingalls joins us. It is that time of the month. The pboc has already laid the groundwork. We have seen the cuts on mediumterm lending facilities. Banksy have now given the with a 10 basis point cut more directives. Theyve given the banks a tangible incentive. Banks, [indiscernible] it is not as if the pboc actually cuts the rates, but based on guidance, i would imagine [indiscernible] isor 15 basis points roughly what we are expecting. The bondrtantly, markets have been pricing this in for several weeks now. Think the magnitude is what comes next. , some economists, whether or not this can be frontloaded and how much of that is toward the back half of this year. David, turnover is back. Yeah, we hit that milestone yesterday. The last time we saw turnover this much was april of last year. We were going to what we thought was the recovery in the chinese economy. Then we had tweets from donald trump. It is an interesting milestone in the sense that you are getting a lot more interest in these markets. We are very close to recouping all the losses from the third or fourth week of january. Watch the brokers. There certainly one group of stocks that might not see an adverse earnings affect because of Everything Else going on. Haidi david ingalls, thank you. Coming up, the china open. We will have live reaction to the pboc decision with becky liu. Plus, more analysis of the fed minutes. Tvdy krasner joins bloomberg later today. That is it for this hour of Bloomberg Markets asia. As we look ahead to the start of trade in shanghai and shenzhen haidi stay with us. The Bloomberg Markets china open is almost upon us. This is bloomberg. 9 00 a. M. Thursday in beijing. Welcome to Bloomberg Markets china open. Im shery ahn. Haidi and im haidi stroudwatts. We are counting down to the open in china and hong kong. The number of new coronavirus raising questions over how china is tracking the outbreak. Shery beijing said to be nearing takeover of troubled hna group as it looks to contain the economic damage from coronavirus. Haidi the benchmark borrowing cost for chinese corporates is expected to drop