Transcripts For BLOOMBERG Bloomberg Markets 20240713

Lifeline. We will hear from the Morgan Stanley ceo on the big 13 billion acquisition of e trade. Paul. Paul thanks, emily. Lets check on how futures are looking in asia. Looking like a much quieter day than yesterday. Sydney futures looking fairly flat right now. U. K. Futures looking weaker by 0. 4 . A bit of a move down in costly futures. We saw u. S. Markets ending modestly low. Concerns about earnings downgrade. More on that later. New zealand also trading right now. Currently flat. Emily thanks. Lets get a check of where the u. S. Markets closed today. Taylor riggs is in the newsroom. What were the highlights . Taylor sort of a risk off day. Really 500 Big Companies leading the losses. Bonds rallying five basis points after the crucial 1. 51, and the yield curve is inverted by the most since october, six basis points. Take a look at the chart in my terminal that put the selloff into perspective. The chip performance relative to s p 500 performance is still near an 18 year high. On a longterm basis, that performance has been very strong. As you mentioned in the intro, the big deal of the day is all stanleys 13 billion takeover. The stock up 20 . This is the online trading. Brooke which is under pressure since Charles Schwab came in with a bid for td ameritrade. Emily we will have james gorman on the show later this hour, Morgan Stanleys ceo, to tell us more about the acquisition. Meantime, more on the coronavirus. Organization is urging countries to boost funding to fight the epidemic. This as we await the daily bible is told from the center of the outbreak, which reported a sharp decline yesterday. There are reports of rising cases in beijing. That is where our reporter Tom Mackenzie joins us now. What is the latest . As you said,ly, the World Health Organization putting out a call for countries and nations around the world to contribute to funding. For 675 million u. S. Dollars. They say the response has been limited and countries are not taking this seriously enough. At the moment, the virus is manageable, but of course time is of the essence and they need countries to step up with the funding to ensure this does not spread beyond the nations we have seen here in asia. In china, the numbers of additional cases have started to slow and the number of people being discharged and recovered have increased. So it seems like at least on the surface if you take the data at face value that there is a positive trend at play here in china. Globally, there remains a concern. That was highlighted by the World Health Organizations director general. In terms of Clinical Trials, we have heard from the who that we may get some preliminary results in the next two to three weeks of two different Clinical Trials done here in china. Gilead sciences. There have been positive signals from those clinical tests. We are likely to get more details the next two or three weeks. A lot a focus on whether or not doctors and experts can come up as of cure for this virus course they continue to battle it. Here in beijing, there is a concern we may spike in cases. In a district, there has been a tick up in the number of cases from nine about one week ago to 36, particularly in a hospital in that district. There are concerns and restrictions on the movement of people put in place. So far, the official numbers suggest there are about 395 infections in the chinese capital. So far, for deaths four deaths. The population is 22 million. There may be a spike happening in the chinese capital. Paul meanwhile, chinas credit numbers spiked. Will this help mitigate some of the economic damage . Possibly. This is of course in the lead up to the Lunar New Year and of course at that stage, the economy looked like it was stabilizing before we knew about the full extent of the outbreak of the coronavirus in hubei. This is the january numbers. 5 trillion yuan in terms of credit. That compares to a december number of about 2 trillion. Equal to 720 billion u. S. Dollars. A lot of it is gone to bond issuance which was frontloaded as an attempt to shore up the economy. We did see a pickup in new you yuan loans, particularly the longer dated loans. That is a positive. For the First Time Since march of 2019 as well. Bloomberg economics said come february, the credit data is expected to slow because of the impact. Itterms of the coronavirus, would drop significantly because businesses here have been hammered but that is likely to pick up again in march. Paul all right. Tom mackenzie in beijing. Thanks for joining us. The outside of china, number of coronavirus related fatalities is growing. South korea reported its first death while the number of confirmed cases there more than tripled. Ivan is in hong kong. Tell us the details. Deaths outside of china now. The first in south korea. Death. But we know it happened in a hospital in a city where we lened of a cluster of cases that were tied to infringe religious sects after one patient infected multiple people at a Worship Service where up to 1000 people reportedly attended. A lot of concern there. The number of verified cases as well in south korea tripled within a day to 104 now. That is concerning to the point where we saw on social media trending to shut down dyegu. Health officials telling local media that it is spreading locally but with unlimited scopes. They perhaps dont see that much of a concern at this point. But many taking their own measures now. The u. S. Army garrison banding visitors, family friends, and those who traveled overseas. Emily that is a troubling sign for neighbor japan, which reported a jump in numbers. Those dont include the two diamond princess cases as i understand it. Yvonne yes. The country is becoming the most one of the most riskiest places for the virus to continue to spread. If you include the numbers from the diamond princess cruz, which the country cruise, which the country does, that number went to 84 in japan. Most of those cases were not tied to people who traveled to china. We also saw japan report its second and third death in the country. The country has been accused of being too lax when it comes to travel restrictions. They avoided a blanket ban from chinese arrivals, similar to what we saw from australia, the likes of singapore. Instead, they restricted travel from two provinces in china, including hubei. Bloomberg spoke with the Infectious Disease specialist who visited the cruise ship earlier this week and said the control measures were inadequate. He now says japan is in a critical period and how it handles this crisis in japan by saying they need to prevent a second wuhan. Here in hong kong, we learned of 60 Police Officers quarantined after one of their coworkers contracted the disease. They were attending a farewell party. The total cases here now at 69. Paul lets talk about some of the corporate impact. Impact ofabout the the virus. What are they saying . Yvonne at this point, saying the virus will have a negative impact on their 2020 revenue, which is no surprise. They are still cautious about restarting their production in their factories. In terms of their factories in india, vietnam, and mexico, fully loaded right now. Also, we heard from shery ahn spoke with the head of a company. 2020 will be a tough year for airlines. Expecting the first annual decline in passenger demand, traffic demand, and 11 years since the Global Financial crisis. Emily thanks for your continued reporting from hong kong. Still ahead, a new outlook on the big risks that could affect markets as barbara spears continue. We will speak with someone markets as the virus fears continue. We will speak with someone, next. Paul you are watching Bloomberg Markets. Now lets get the first word news from jessica. Jessica thanks. The Airline Industry is expecting the first yearly decline in Global Passenger demand since 2009 in the wake of the Global Financial crisis. The International Air transport Association Says while it is too early to predict the impacts on profit, the outbreak will cut 30 billion from revenue. Chinese carriers will be the worst hit. About 80 of the countrys domestic fleet is grounded. Havef frances biggest warned the country not to ban huawei. Martin boyd said his company would face difficulties changing suppliers for its nextgeneration wireless network. So far, france has refrained from an outright ban on huawei, but orange and iliad say they will not be using huawei in there 5g networks. Roger stone, a longtime ally of President Trump, has been sentenced to three years and four months in prison. He was convicted in november of lying to congress, tampering with a witness, and obstructing the investigation into traumatized with russia during the 20 trump ties with russia during the 2016 election. He is the eighth advisor to be convicted over the Robert Mueller investigation. The president says he has been treated unfairly. German chancellor Angela Merkel says her country must overcome what she calls the poison of racism. That after 11 people were killed in shootings near frankfurt. Officials say it appeared to be a right wing extremist attack by a lone gunman who was found dead hours later. A german newspaper later published the governments manifesto in which he calls for the destruction of about 20 nations, including india, turkey, and israel. 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. Im jessica summers. This is bloomberg. Paul thanks very much, jessica. U. S. Stocks traded lower on thursday as investors struggled to find their footing amid the coronaVirus Outbreak. Lets get more perspective on this now from an investor whose team manages more than 266 million in multiasset class portfolios. Dan farley joins us now. Thanks for being with us today. We did see a selloff in u. S. Equities after a run really that defies what was going on in terms of the coronavirus. If we take a look at this chart on the bloomberg, we can see citi downgrading its expectations for global earnings. Goldman sachs warning we are underestimating the impact of this. What are your thoughts . Dan we are in a tricky spot in the sense that this story continues to evolve. We continue to get a handle of how it is spreading, how it is being contained. We see the market movements going with the pendulum of sentiment. The report to say dont underestimate where this could be is probably a good piece we should all be sticking about. But at the same time, we probably should not swing the pendulum to the other extreme, which means we need to be over fuel from of it overly fearful of it. A hit on global growth. Our expectations this year for gdp would be around 3. 5 . Off for virus0. 2 issues but would not great but not if youre that we will go into a recession or major selloffs. The volatility we are seeing is people time to get their footing on this and probably to be expected for the next few months. Paul so early in 2020. Already one lacks one event you described grey swan possibilities for the coming year. Dan sure. People talk about the possible black swans that could happen. Put a list of 10 or 20 things. Black swans are not supposed to happen often so 20 of them seems odd to us. Things that we feel are not in the base case but are potentially going to happen. So they are not always bad. For example, one that we think that could happen that could be positive is if we start to get better fiscal unification in europe, for example. There has not been a great history of the eurozone being able to prepare themselves and work in that direction. If that were to happen, that could be a nice catalyst we could see there. On the flipside of that, another example might be if the fed were to let things when a little bit too hot and we start to see inflation coming down. Not a base case but something not many people are thinking about. To the extent they get behind the curve ball, that could be a risk. Another one might be around technology and what we call the market gets defanged. There is so we see in the market in general, but in technology specifically, has been driven by the technology stocks. To the extent we see regulations, or increased taxes, a number of these Different Things that we are starting to see governments around the world, that could be a challenge for technology stocks. If you look at the fact that tech makes up a little over 18 of the market cap but less than 15 of the earnings, we have a bit of a mismatch there. That can be one of the risks. Those are the types of things we are talking about for that. Emily this is emily. Speaking of tech, what do you think the impact is of not just lingering u. S. China trade tensions but what is happening with the coronavirus and tech given how intertwined so Many Companies are . Whether it is apple or intel with the chinabased supply chain. Dan clearly, the supply issue will be one that the Companies Need to be working towards and working through in terms of how that impacts their ability to meet demand. So that is going to be a challenge we are going to see why we are seeing the drop off in our x petition for growth and why we are seeing Companies Come through with the earnings expectations that paul mentioned earlier. I think this will be something that they are going to have to deal with and the market will have to deal with for the next quarter, quarter and a half. The peace in my mind that is a bigger concern is that oftentimes people are talking about this in the sense of a v shaped recovery we will see after this. Once we get through it, it will all go back to normal. I think it is beyond just the technology providers, but really into tourism, travel, and other sectors where it may be a much longer road that the demand side of the equation starts to impact. I think we have to be very mindful of this. It is not easily severable issue. The impact on consumer demand for a number of different sectors is going to be something we need to be watching out for. Emily you also talk about crypto coming of age in your note. Bitcoins performance has been pretty lackluster. What makes you so optimistic . Dan i would not say we are optimistic about bitcoin per se, but rather the point that there is a lot of work being done around the topic of crypto. Even if we think about some of what the Central Banks are doing, china in particular, around possible issuance of cryptocurrency, i think this is a situation that many are not pricing in or looking at to the extent that that comes along quickly or gets excepted much faster than is currently expected. That will clearly be an area for disruption. If we can give safe havens of the dollar or things of that nature, this absolutely puts that under some pressure. Our point with this is it is something to be aware of and the disruptor it could be when it comes out, if it comes out. Paul in terms of risk management, plenty of risk around. You say traditional assets will not do the job, so where are you looking . Dan the point with that is if we look at things like long Government Bonds have been historically a great diversifier for portfolios and probably will continue to have civil play there, but with the level of the rates where they are now, a major market move, there is not enough and you enough ammunition to do it. We think it will be widespread. You will want some of that, but you also want a mixture that is more dynamic in your portfolio, a bit more active in how you want to be positioning. So as things look to be under pressure, whether that be proactively on volatility or as volatility rises, the chance to start to move portfolios around. It is also an opportunity for active underlying to have an opportunity. You start to see an increase in volatility typically when your managers will be able to add more value. Paul your point on bonds, we have another chart that illustrates the inflows that have gone into bonds at a record. Last years record. As we take a look at what has been happening on the bond market, the great 10year 10 years ago was 4 . Where do you go now . Dan you cant. That is the point. What is challenging is all the money that has been flowing into bonds right now, some of it is people are requiring income. Albeit a low level of income right now. But our concern is they will not be able to provide the diversification it once was. It is ultimately misaligned with the objectives that people have. Very difficult to get to a 5 to 7 return when you collect that one. Even the german bonds. Never mind what you are seeing out of developed markets as well. Emily all right. Dan farley there with paul in sydney. Hadng up, the democrats gloves off last night in the president ial debate in las vegas. On social media today, i the road ahead in the sometimes bloody race to the white house. A larger ownership stake being offered as part of a merger deal. A 43 stake in the new company. Softbankasgrthe story as we get more information. Bloombergs first president ial debate performance was widely panned. He shrugged it off with a warning that democrats risk handing trumps the election if they nominate bernie sanders. Bloomberg of course course is the majority owner and founder of bloomberg lp, the Parent Company of this network. I want to get to our reporter in washington, Anna Edgerton. There is no way to sugarcoat it. His estrus was used in headlines to describe bloombergs performance. There were people calling for him to drop out of the race. Where does he go from here . It certainly was not his best night. It was an important night for him. His first time competing with other democratic primary candidates on the stage. He could have one more debate before he is ever actually on a dell it. If you mix it to the South Carolina debate next week, he has a chance to override this debate performance, but he has to get a lot better at fielding attacks, focusing on his record, and really bringing the focus to the philanthropy he has done on issues that are important to democrats like gun control and Climate Change rather than being on the defensive, defending some of his past comments and policies. Emily sanders is clearly the front runner at this point. What is the next test on the horizon that could shake his lead . Anna it really depends on how the race shakes out in terms of the number of people we have in the field. Right now, you have a strong vote for moderate candidates. In order percent just to have a real challenger, he will have to get some kind of moderate decision to get behind one candidate. What that looks like is really hard to see at this point because the support is so split between joe biden, pete buttigieg, amy klobuchar. It is hard to see who of them is going to emerge as the strongest challenger to bernie sanders. Emily right. Elizabeth warren certainly came to fight. Is there a path for warren and joe biden back to the there cou. There have only been two contests. Biden in particular is still pulling strong and some of the next stage to come up. He has put a lot of focus on South Carolina and nevada so he definitely hopes to do well there. For war income it is a harder path but we will see how she does in the next contest. Emily Anna Edgerton following all the excitement. Much more coming up with us. Stay with us. This is bloomberg. Paul the spread of the coronavirus has suddenly sparked a foreign change treating into action. The dollar is emerging into action with the yen at the other end of the spectrum. Lets bring in adam haigh. What have we learned this week and currency markets . Adam it really has been this let loose march into the dollar and the ultimate expression of safe haven trading. Treasury yields, especially on the 10 year back towards september lows. For the dollar it is about the momentum of the flows starting to come in. I think this chart captures it well in terms of how close we ,re getting to that 100 level that closely watched indicator of the dollar. Part of this is driven by the coronavirus uncertainty. As we were hearing from that guest from state street earlier, it is still a lot of unknown about how this will pan out and whether thisthere are companiese heard from this week talking about the issues that still need to be revolved before investors can feel more sanguine about the situation. So, a lot of these slows flow should a lot of these flows are a reflection of that. If we get to this 100 level, you get the golden cross and you do get kind of a relentless, or further positivity coming through for further upside for the dollar. Emily we heard from the goldman chief strategist cautioning against complacency. Is that the right thing to warn at this point . I mean, what kind of correction could we be looking at . Adam i think it is one of the things that people are struggling with clearly, and not just equity investors, but any global asset allocator who is trying to adjust his or her portfolio at this point in time. The folks at goldman sachs, their teeth strategist, he is real chief strategist, he is talking about how markets are not currently reflecting the increasing potential for downside risk, especially for equities. That is his main point. Of magnitude here is still very much up for debate but historically it is very clear that you can get 5 easily. Reasonably one characteristic of this bull market as it gets towards its birthday next month, which will be 11 years, is the fact that you have not had those pullbacks on a regular occurrence. And we have had two big shots this year. Firstly saudi troubles in the oil market, and of course the coronavirus. With the largest the market really wanting to back the idea you get fiscal response and monetary response that will upsideonetary to have for valuations. So the sense here really that you can still get a material pullback to equities and do not radar, getting too complacent about what risk asset markets are telling you. Emily our Bloomberg Global markets editor adam haigh, thank you for that analysis. For more we are joined by ashleigh oakes hart, managing director at td securities. You heard adam there. Given this uncertainty, where do you see the positives . Ashleigh in the emerging markets landscape. Obviously the coronavirus is really dominating the news cycle and dominating price action, so that is coming at a time when the market got off to a really good start in terms of investors looking for yield, and we are seeing that in the melt up in equities, in spread compression and markets, and overall yield compression across global markets. Greek bonds heading 1 ashleigh hitting 1 last week. E. M. Performing well, particularly highperforming e. M. Fx, which is our focus. Emily is it a strong environment for tech . Ashleigh it certainly can be. It is interesting to look at the disparate reactions that we see to coronavirus between the u. S. Equity market, which has done a very good job of shaking off negative news, and we have not really seen any of these 5 to 10 corrections and what would be an 11 year bull market next week, versus the fixed income markets, which are really willng the coronavirus have a longer Lasting Impact on global growth. Paul i want to talk about the dollaryen at the moment. We have a chart here on the bloomberg terminal which illustrates this big breakout we have seen, the u. S. Dollar strengthening against the yen. You say look for continued dollar strength, but at what point do we get too overvalued . Ashleigh it is really interesting for a number of reasons. In the fx market, selling dollaryen has been the flight to quality trade that a lot of us, who have been around for a long time anyway, go to. You have a situation where people really short dollar yen into this move, and combine that with weak data out of japan and you have the perfect storm. And potential rotation for capital japanese investors into treasuries, while at low levels, are still relatively high yielding. Paul if we talk about the u. S. Dollar as well, is there a political dimension here . This is one of these fun charts, the difference between coloration and causation. We have seen President Trumps Approval Rating overlaid with the rise of the dollar. At what point will you hear the president start bashing the fed again, talking about the currency, or possibly even intervening . Ashleigh it is really interesting. The dollar is very strong. We are coming up to the magic 100 level. Ultimately i think the risk is that the dollar continues to strengthen. Ironically, i guess as trumps rating goes up, the dollar strengthens. So that must be frustrating. At any rate, expect the dollar to strengthen. This is about relative yields, and even though we might look at the u. S. Interest rate market relative to the rest of the world where there is a ton of negative yielding debt, italy, portugal, greece, all below the u. S. , the demand for the dollar is real and that will processed. Persist. It is not clear if the fed can do anything. We perhaps move into an intervention situation, but that would be something new. Emily speaking of politics, we are obviously in the middle of an election. The democrats duking it out. Do you see any impacts of the u. S. Election on markets, or are they just deaf to all the noise coming out of washington . Ashleigh thus far they have. Some of the issues we are not clear who the democratic candidate is. Anyone in the debate last night is a potential contender. From the democrats point of view it is really who can stand up to trump, and who has the potential for win, and i do not think we have clarity on that yet. Expect that to pick up more in the second half, and depending on rhetoric that could spill into some markets like mexico, really damaged around the last election around the migration crisis. Emily we talked about the positives at the top. Where do you see the most pain then being felt . Ashleigh i think at the moment, the most pain well, the pain we will see is coming out of Growth Numbers from asia. We have not adjusted the impact of coronavirus on growth. It is may coming through in some data, but just fledgling amount. Ism my point of view, equities start to retreat on that. Then we have a situation where we have a major pullback in stocks and we come to the realization that unfortunately, Central Banks do not necessarily have all the tools at their disposal, given the rates where we are at now, to combat that. And they find themselves in a challenging position. Paul to your point on asia, we had china below the loan primary. , asnesia cutting to 4. 75 was widely perspective expected. Do you see more banks or is it time for fiscal stimulus . Ashleigh you might get accommodation of both. I know we are talking about fiscal stimulus in china. Broadly speaking, Central Banks are very accommodating. That extends from emerging markets to developed markets. We are seeing Central Banks continue to cut around the globe, with the exception being czheck. Aleigh oakes hart, managing director at td securities. Thank you for joining us. Still to come, will the blockchain deliver . Digital assets think so. It is a startup developing a new programming language to make it happen. That is next. This is bloomberg. Is next. This is bloomberg. Emily welcome back. Lets get the first word news with jessica summers. Jessica the head of the World Health Organization has called for nations around the globe to boost funding to fight the coronavirus. The who director general says so 675esponse to his call million has been limited. He says the money is needed now while the outbreak is manageable and he is quote, surprised the donations have been so low. The outbreak, which began in wuhan, has now placed claimed more than 2100 lives. The number of infections in japan has more than doubled in the past week to 84, leading to criticism of the governments response. Hundreds were also infected on the cruise liner the diamond princess. However, those numbers have not been reported in the domestic count. And south korea has reported his first confirm death, with cases there tripling in a day. Most of the cases came from a cluster in a religious sect. They have reported 104 cases, making it the highest number of infections outside mainland china. Pompeory of state mike is in riyadh where he met saudi arabias king solomon. They discussed security concerns about iran. Saudi arabia and the u. S. Blamed tehran for last summers attack against Saudi Oil Facilities, which temporarily halted their crude production. Iran denied any involvement in the attack. Withy says it is not happy the progress of its talks with russia for restoring calm in northwestern syria. Syrian Government Forces have been conducting a military campaign recapture parts of the last rebel held areas. The violence has driven nearly one Million People from their homes in recent weeks, and it strained relations between russia and turkey, which support opposing sides in the syrian conflict. 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. Summers. Ca this is bloomberg. Blockchain and 2020, will reality live up to the hype . Digital asset is a Blockchain Startup hoping to help deliver on the promise of this technology. It is backed by tech giants like salesforce and samsung. As the cofounder and ceo joins us now. Want to start about talking about the new funding. What are you going to use the money for . We are looking to use the money to expand our reach into Different Industries. We are also looking to increase some of the developer tools that we have been building in recent years. And help some of our clients the ambitionsf using this. Paul you do have some very high profile clients. Including amazon. Can you tell us more about some of the things you are working on for them . Yuval yeah. As the industry progressed over the past few years, what you start seeing is similar to the early days of cloud. The text stack of blockchain is becoming more and more mature and you are seeing players like microsoft, amazon entering the space and offering some of their services. We have both clients that would help develop solutions, but also partners such as beyond where, hypo ledger, microsoft. We Work Together with them to bring some of our expertise and their expertise to be able to deliver some of these projects to our clients. Emily you have seen and heard so much hype around blockchain. When do you think, is it one to five years out when we will really see the promise of the technology that people like you and others have been touting . That already this year you are going to start seeing some projects in production. There is some announcement that recently happened that are reshaping how you trade u. S. Treasury repo using blockchain. You are going to see that happening this year. You are going to start seeing other projects in Different Industries like the Health Care Space starting to move closer and closer into production. At the end of the day this technology is pretty evasive and there was a lot of hype but at the end of the day to implement this technology, it is pretty invasive into some core cases and it will take some time. But at the end of the year you will see these products projects. Emily facebook with libra made a lot of noise last year. We have seen some of the biggest players drop out. Would you count facebook out of this discussion at this point . Yuval yes. First of all, this entire industry should thank facebook for their effort, because i think those that were skeptics have gotten a wakeup call, and that is a good thing, because of the end of the day this technology will happen and will shape the next generation of technology. So from that perspective, i think the industry owes a lot of thanks to facebook. I think that when it comes to Capital Markets and to money, regulators are extremely concerned, and i think what could have been done better is how the industry worked with regulators. This is something that we take to heart extremely with every project that we do. We work with regulators to work within the current Regulatory Framework and if there are changes that need to happen, we work with them on that. I think in the case of facebook and libra, that caught the regulators by surprise, and i think that is what has created a lot of the backlash on facebook. Paul i just want to interrupt for a moment because we have some breaking news from one of the worlds biggest miners, the biggest iron ore minor. To 3. 5uarter adjusted billion. Also cutting its forecast for iron ore amid heavy rain and safety concerns slowed operations. This may potentially prop up the prices of iron ore. Anyway, lets get back now to yuval rooz. Yuval, you also got a client here in australia which has been walking on clearinghouse electronics of register system, chess for short. They are pouring money into this. Is it all on track for testing this year . Yuval the asx system is already in testing. There have been multiple props to the clients. Already many participants that are testing the system, and currently the project is on track and going according to plan. Just wondering as well more broadly in this industry, do you see any major player emerging, like an oracle for blockchain . Yuval i kind of hinted at that earlier, and that is why you are seeing some investors in the lack around, like you saw in the early days of cloud, there were startups that were trying to be the infrastructure providers, but the second that industry started showing there was real merits to it, some of the big tech giants started entering that space and started offering their services. So i do believe at the end of the day, blockchain is a distributive database and will become a commoditized product and an entry of players like samsung, microsoft, that, to me, a very good signal to the market that this is real and going to happen, but i do think that when it comes to providing infrastructure, you will see those players become the key players, where companies such as Digital Asset be able to provide Additional Services and products on top of blockchain. Paul all right. Yuval rooz, thank you so much for joining us. Want to get you some more breaking news. We are getting earnings numbers out of singapore for uob. Fourthquarter net income coming a slight01 billion, miss. The estimate was for 1. 04 bil lion. Ab saying it has implemented range of violent or inch we are expecting earnings out also from ucbc, a big day for Singapore Bank earnings. Emily coming up, our interview with Morgan Stanley chair and ceo following the firms confirmed buyout of the online brokerage e trade. This is bloomberg. S is bloomberg. Emily a quick check of the latest business flash headlines. The ceo of unicredit has emerged as one of the main contenders for the top job at hsbc. The 59yearold french executive is set to be in talks with europes biggest bank. The board says it is still undecided, considering internal candidates as well, including hsbcs interim chief. Earlier they announced a major restructuring, including 35,000 job cuts. Samsungs latest phone is seeing Strong Demand and south korea. The galaxy flip which was released on valentines day sold out on day one, and is now out of stock on samsungs own website. It cost about 1400 and is the companys second try at a compelling foldable device after last years galaxy fold. Morgan stanley shares limited while e trade surged on news of the firms acquisition. Morgan stanley set to buy the brokerage for 13 billion. We spoke with joint we spoke with james gorman earlier today. Firm. A great day for our we have had a strategy in place for a long time and continue to diversify and build out our balance sheet. The transaction was historic in 2009. Mesa west was a small asset measurement deal. I have always felt e trade was an incredible brand and company, a great technology. On ae clearly doing stuff digital side at a pace ahead of where we were. We had a constant debate of build versus buy, and we felt we were in a condition to make a bold move and we went for it. You have the number one stock trading business in the world as well now. Jp morgan is trying to knock at your door when it comes to that business. How does the e trade acquisition add to your trading business . James that is the equities business. We were number fivepost crisis. It was can add to it. We are excited about using some of that technology, not just in world management, but across our Asset Management platform as well as equities and fixed income. You are doubling down on Wealth Management and banking, but what does this mean where the Investment Banking sets . James i am less focused on percentages. Once upon a time it was 100 . In 1972 we were 100 a Corporate Finance business. By 1977 we were 50 sales and trading. 1977, first acquisition we did, two decades before dean witter. We are in a constant state of motion. Our aspiration is to marry the worldclass investment bank, which is gain share and equities, fixed income, and Investment Banking for the last five years, mary that with the ballast that a huge Asset Management business gives us. The analogy i used is an aircraft carrier. We have a ballast that is really exciting,. The biggest deal we have seen in u. S. Banking. Do you think this can set off a wave of consolidation among your peers . James it is not really consolidation among peers. I do not think you will see any consolidation among the giffy institutions. But these kind of bold acquisitions, if they make sense, absolutely. But you have to be in the condition to do it. Your stock has to reflect the value of your company. You have to have the momentum investors want to see. And they have to be related to what you do. I never think about strategy in terms of mb. I think about strategy in terms of, what are we good at . Would we bought that, debt accelerate what we are good at . We are good at Wealth Management. We are good at trading. That is exactly in the wheelhouse of you trade. This was a of e trade. This was a perfect trade. Does this extend your time at the top of Morgan Stanley . James i dont think it changes anything. We have an Unbelievable Team here. This is not about me. It is about the huge group of people who are very talented. I want to see this thing get done and implement it. I will be around for a few years to see that happen. But no, the future is not me after a few years. Emily james gorman with bloomberg earlier today. That does it for this hour Bloomberg Markets. Plenty more still ahead. Stay tuned. This is bloomberg. 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. A very good morning. Markets have just come online. Japan and south korea open in one hour. Welcome to Bloomberg Markets asia. Our top stories ahead of the World Health Organization calls for more funding to fight the coronavirus. He says donations so far have been disappointing. Tough times ahead for the Airline Industry. The International Air transport Association Says the outbreak could cut 30 billion from global revenue. After a week of difficult data from japan, latest figures are due within the hour. A mixed outlook when it comes to the asian friday. Creeping back into u. S. Markets overnight. Spikesrs contending with in coronavirus cases. Japan has seen a doubling of cases in the last week. A flat start to trading here in australia. All the action is in fx with the aussie dollar hovering at the 10, 11 year low. The u. S. Dollar flexing its muscles. We are seeing a little outside when it comes to trading in new zealand. Not a great future headed into the tokyo session. Nikkei futures sitting a little lower at the moment. Concernsrs as well as over a recession for that economy. Lets get you the first word news now with jessica summers. Jessica one of frances biggest os has warned the government not to ban huawei. Ceo said his company would face difficulties changing suppliers for its nextgeneration wireless network. So far france has refrained from butoutright ban on huawei, secretary of state mike pompeo is in riyadh where he met saudi arabias king solomon. They discussed shared security sermons concerns about iran. They blame tehran for last summers attack which temporarily halved their crude production. Iran denies any involvement in the attack. Roger stone, longtime ally of President Trump, has been sentenced to three years and four months in prison. Stone was convicted in november of lying to congress, tampering with a witness, and obstructing the investigation into trumps ties with russia during the 2016 election. Aide or the 6th trump advisor to be convicted over Robert Muellers pressure investigation. The president says he has been treated unfairly. Merkelchancellor angela says her country must overcome what she calls a poison of racism. That, after 11 people were killed in shootings near frankfurt. Officials say it appeared to be a rightwing extremist attack by a lone gunman who was found dead hours later. A german newspaper later published his manifesto, in which he calls for the disruption of about 20 nations, including india, turkey, and israel. 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. Im jessica summers. This is bloomberg. Shery breaking news out of singapore. We are getting the latest fourthquarter numbers for ocbc, saying Noninterest Income came in at 1. 24 billion. This would be beating expectations of 1. 15 billion sing dollars. Also saying fullyear fiscal year 2020, growth is inspected to below, saying the ratio coming in that 1. 5 , which was as expected year on year, saying the low Interest Rate environment is expected to persist. When it comes to net interest markets margins, ocbc saying it is likely to trend below 2019, but stay above the levels of 2018. Uob Earnings Report follows which reported earlier. They missed estimates slightly. Singaporean banks very much exposed to the coronaVirus Outbreak and pressures from their business in china. We know dbs is most exposed but also followed by ocbc and uob when it comes to that exposure to china. Singapore could be upset. The Banking Industry could see some upside from those flows coming from hong kong, especially when it comes to their Wealth Management business. We have seen ocbc beating estimates for the Fourth Quarter with net income coming in at 1. 2 4 billion sing dollars. All to do right now on the impact of the coronavirus, not only in the Banking Sector but the rest of the Asian Industries and economies. We are awaiting the daily virus tool from Hubei Province after that sharp decline in new confirmed cases yesterday as the World Health Organization is urging countries to boost funding to fight the epidemic. While cases are still mostly confined to china. Lets bring in Tom Mackenzie in in hongand yvonne man kong. We still have to see the latest numbers coming not only out of hubei but the national numbers, especially after they again corrected their methodology. Tom they did. They changed the way they count for the rate of ascension. We saw that drop off 349 yesterday. But as you say, some criticism externally from how china is dealing with the data once again causing confusion with a change to methodology. So we are waiting for the latest data. The World Health Organization really taking countries beyond china to task over their lack of preparation as they described it for this virus. The director general asked for 675 million. Response has been limited and they said at the moment event the virus is manageable but it may not stay that way. It is public enemy number one, that is how the public director described it. Calling on countries to step up to tackle this disease to make sure they have the processes in place to make sure they do not see any spikes in their countries. In terms of the moves and the work being done to try to find a vaccine, we have an update from the who on that front. Expecting some early data maybe in about three weeks three weeks from two Clinical Trials being done. Another made,g, an experimental drug. Updates in terms of the moves to try to find some cure for this disease. And Health Experts rushed to find some treatment. And to meet that treatment. There has been a surge of treatment. In one hospital you saw the cases go from nine to 36 in the space of about two weeks. Maybe you fears that are going to see a spike in the chinese capital. We have seen some restrictions on the movement of people in the district concerned. That is also in focus as we like wait for the latest numbers. Shery we are also seeing not only infections, but also fatalities rise outside of china. Yvonne yeah. The number of deaths outside of china, at least 11 at this point. And south korea reporting its first fatality. The cdc is not giving a lot of details. We did learn it happened in a hospital in a city where we saw a cluster of cases involving and tied to a fringe religious sect. Reports of one patient there spreading it to several people at a Worship Service, where up to 1000 people reportedly attended. Those are alarming headlines of course. This, as we saw the number of infected cases in south korea triple in a day to 104 now. The concern you see on social media, shut them down trending on twitter in korea, and some calling for a similar type of lock to what we are seeing in wuhan. Thish officials there at point saying it is spreading locally, but in a limited scope right now. But alarming signs. Neighboring japan also becoming one of the riskiest places for outbreaks. Also reporting its second and third death. This is also excluding the number of cases from the diamond princess, which the country does not count for its total. Still, more than doubled to 84 now. The Infectious Disease specialist, the one who visited the cruise ship, he warned that this is a critical time for japan on how they handle this crisis to prevent a second one. A second wuhan. Haidi we had januarys credit numbers showing a surge, albeit a lot of the lending would have come through before we saw the coronavirus take hold. But to some extent does it mitigate the economic fallout . Tom according to bloomberg economics, it may well do, to some extent. In terms of aggregate social financing, you saw a surge in january. About 723yuan, billion u. S. , which is about the highest number on record. Compare that to what we saw in december, 2 trillion yuan. A big jump in terms of total aggregate finance. And a lot of that comes down to special bond issuance. Towards the end of last year they were pushing forward local Government Special on issuance to put a floor on the economy before we knew the coronavirus was on the horizon. We also saw it pickup in new loans. That is seen as a positive for the corporate sector. Interestingly, shadow banking rose for the First Time Since march of 2019. Our own inhouse economists site in february the data is likely to fall off significantly because of the disruption to the economy. They think it will pick up again in march. This is about the pboc taking a targeted approach to support the economy as they battle the coronavirus. Rates anden cuts to trying to lower the cost of loans. See the anxiety creeping back into equity markets as we get more warnings with from the corporate world about the impact. Yvonne right. We heard about how this will have a negative impact on 2020 revenue. I guess no supplies. The iphone supplier still cautious about starting production in their factories in china. Instead they are expanding their capacity overseas. They mentioned factories in india, vietnam, mexico, fully loaded right now. Also hearing from the likes of lenovo, offering signs of reassurance after posting earnings that beat even the highest of estimates. They said their factories are coping well. They do expect shortterm volatility and challenges, but most of their factories are back online and they expect rebounds and demand once the outbreak stabilizes. They talked about their forecast, now expecting an annual decline in Global Passenger demand, the first time in 11 years since the Global Financial crisis. Airlines going to have a tough year in 2020. Haidi yvonne man in hong kong and Tom Mackenzie in beijing. Coming up next, we are counting down to inflation data out of japan later this hour. And dissectanalysis those numbers as we get them. Shery first we speak to a guest who says the fed has become the biggest risk for markets. Right now we are getting chinas Hubei Province reporting 115 coronavirus deaths on february 20. We are also seeing 411 new coronavirus cases for february 20. Both numbers are higher than the previous day. Yesterday we had seen the death toll lower, and confirmed cases o lower. 2144. An, theseer that we had seen infection cases following because of a change of the accounting methodology, only classifying patients of suspected cases and confirmed cases, eliminating the whole category based on ct scans. So right now reporting 411 new cases, 115 deaths for Hubei Province, which is a slightly higher the number than yesterday. Plenty more to come. This is bloomberg. Is bloomberg. This is Bloomberg Markets asia. The Hubei Province numbers when it comes to coronavirus cases rising 411 new a slight5 deaths, uptick from the previous day when we saw the numbers plunge because we had seen china change the accounting methodology again. Talking about only classifying patients to be suspected and confirmed cases, and eliminating the entire category of clinically diagnosed cases by ct scans. When it comes to the discharges, which is the Silver Lining of patients being discharged from hospitals, coming in at 1451. We are still awaiting for the China National numbers as well. The, as we continue to see rise in infections around the world including japan and south korea. Lets turn to the market impact. U. S. Equities slumping on this thursday session on concern the coronavirus will take a heavy toll in fourthquarter earnings. What if the impact extends into the Second Quarter . Lets get straight to our next guest to discuss. Yousef, great to have you with us. We were thinking it was going to be a peak in changing of methodology. Concern around this infection. Signaljust single a wakeup call for markets . They have been pretty sanguine despite the fact we are not seeing an end to this. Yousef the realistic view of the market has been to be weary at first, but is more information has come out the market has adjusted. The tricky part is getting the market to care again. Because the market almost looked past the coronavirus over the past two to three weeks. To get it to care again is going to be significantly more difficult. What investors are taking for granted is a lot of them believe this will be contained to q1. And a lot think if it spills into q2, here comes the fed to save the day. And that is a dangerous way to be thinking but it is really the way the market has thought about things since october. They just since 2018, Fourth Quarter when we had the fed come to the rescue. Yousef absolutely. Shery so in that sense, are they necessarily wrong . That is what we have seen the past few years, so markets are used to this. Yousef they are not just wrong, it is that they are stretching more and more. They are willing to pay higher and higher multiples to get those exposures. If it comes a dangerous game when you continually have that backstop. The fed released a paper the other day looking at u. S. Life insurance companies. There exposures to more of the some more of the riskier assets has grown dramatically. The exposure it was almost nothing to some of these insurance. 20 ofy are 15 to portfolios. Particularly if the fed ever stings they can step away thinks they can step away. Haidi seems inflationary risk is the only thing that can derail this market. Gethis a greater risk if we further dislocation of supply chain . Yousef i think it does if you do get that. And we are starting to see it. In suchfed has come out a way, they attempt to insect these ideas. They start to trickle them out. You see opeds and fed speakers. We know the fed is going to be reviewing their Monetary Policy stance and they are going to publish a massive paper in june or july. Toy are already paring us suggest inflation can run high just as it has run low for a time despite the fed having to react. Despite the fact we get some transitory jumps in inflation, the fed is going to likely continue to hold onto this idea that we can let inflation run hot, as it has run cold for so long. Haidi it is really interesting. It seems like what you are picturing is a market that is choosing to be glass halffull regardless of how bad the coronavirus situation gets. If it is shortterm then the economy recovers globally. Longerterm, central bank is to the rescue again. Yousef that is the indication we get on a daytoday basis. Today we had an opportunity. There was a large mini trade that occurred, markets moved dramatically lower, folks were looking for a reason, and what happens is the market covers nearly half of that move and you start to look at the beta names, you see the recovery in them as well. So there is this idea that the market is very well insulated and this goes to the point that i believe the Central Bank Put is the strongest it has been in years. That is the dangerous precedent we are on. Does that continue . Sayhear some fed speakers the next move will more likely be a cut than a hike. Others are saying we are balance but you can see the leaning and it seems to be leaning dovish despite what we are seeing in asset prices. Shery yet we continue to see investors taking more hedges. Dollarollar gold, all up. Fall into the weakest level in eight years, basically saying Everyone Wants both of those assets. How do you hedge . Yousef this is rather interesting. We are seeing equities move higher. The u. S. Dollar move higher. This is a perfect example. These correlations have gone to one because investors are anxious but afraid to miss out on a rally. The way to hedge would be to think about, particularly in the beta names, how you would consider taking profits or limiting losses if there is a dramatic unwind. Something like today screams is thiss this to me, a foreshadowing of a more dramatic unwind which could grow cpis and paritytype traders into a frenzy where you get a risk off unwind in a big spike like what we experienced a few years ago. That has to be the real concern. Because longerterm, everyone sees the fed support. Shorterterm, you may get these gyrations that get wilder and you may see volatility increased dramatically. Shery so what do you do . Do you put cash under the mattress . Yousef i think you stay engaged, but you are looking for value. You stay engaged in terms of gold. And youre are probably going to want to be, despite the fact that everyone was bullish on the euro, still want to the on the u. S. Dollar for safety. This has been the trade that has worked and it will continue to work with the Central Banks staying as they are, and very likely moving forward with more stimulus. Haidi plea dollar just looks bulletproof in whatever situation, whether you are talking about greater risk or risk aversion and haven demand. What are the implications then for emerging Market Opportunity . Yousef it becomes more challenging for emerging markets, particularly those that are owed in u. S. Dollars. You have the dollar appreciation impacting you on the debt side. I guess the key here is that Interest Rates are remaining very low, and that the investor has a voracious appetite to gobble up bonds. So yields will stay relatively low or may even decline, and that kind of will be the saving grace for these countries borrowing u. S. Dollars. Yes, please are some of the warning signs that are flashing and investors need to Pay Attention to, all the while realizing that the fed will be there, at least for the time being. Shery what a difference a few months makes. Last year remember when we were talking about 2 yields . Yousef absolutely. I got out of my office today and ahead of fixed income in my group was talking about it. Shery yousef abbasi, thank you very much. Much more to come. This is bloomberg. Welcome to Bloomberg Markets. Unicredit has emerged as one of the main contenders for the top job at hsbc. The 59yearold french executive is said to have been in talks with europes biggest bank. Hsbcs board is still undecided and is considering candidates including their interim chief. Earlier this week the bank announced a major restructuring, including the loss of around 35,000 jobs. Shery shares surged the most in a year after profits beat the highest estimates. But the Worlds Largest pc vendor warned of shortterm volatility and challenges due to the coronaVirus Outbreak. It sees disruptions at its suppliers into the transport of parts, but said most of its plans to restart operations and demand should rebound once the outbreak stabilizes. We arecoming up next counting down to japans latest Inflation Numbers, which are unlikely to help the bank of japan reach its longheld 2 everhopeful target. We are looking at eight slowing when it comes to headline Consumer Prices for japan in the month of january. Those numbers will be crossing the bloomberg in the next few minutes. This is bloomberg. Mberg. Haidi we are just getting japans cpi numbers crossing the bloomberg. The national cpi excluding fresh crude year on year for the month of january in line with expectations,. 8 higher. The cpi headline number, 0. 7 also as expected. Excluding crude and energy for the month of january. Seeing a gain of. 8 . All three of those gauges hitting expectations. We were expecting a little more of a slowdown when it comes to headline inflation would lower fresh food prices and utility prices. Energy prices looking like they picked up a bit because of a slightly lower base effect. Still, our economists are bloomberg expecting the inflation number four consumer inflation to hover below 1 with the coronavirus creating downside to very much that key risk there. Japan january Inflation Numbers on the consumer side premuch in line with market excitations. This still means the bank of japans 2 inflation target seems to be further and further out of reach. No great supplies to the upside or downside when it comes to Consumer Price numbers we just got for the month of january. Still, given a poor string of data that gdp print from the Fourth Quarter, the machinery auto numbers pretty weak. There is race concern about Recession Risk for japan. What more can the government and the bank of japan do at this point . The inflation number was very in line with our expectations. Inflation in japan is still at a low level, even after the sales tax hike last summer. It had a limited impact on inflation, and much of the upward pressure was upset by various government measures to provide free preschool education and lower mobile phone charges. We still expect inflation to be at a low level, which is below the bank of japans 2 target. Some macro headwinds coming out from the coronavirus on japans inflation. We are already seeing oil and Commodity Prices falling under pressure due to the Virus Outbreak. Yen has a tendency to strengthen in events that will push down the prices of imported goods in japan. So that may create some downward pressure on inflation in japan on our view. Haidi the underlying basket seeing some pressure from coronavirus. Also seeing past the service industry, tourism, and the broader economy, given it seems with everything going on with the diamond princess and the other surges we are seeing in infection rates in japan, it is emerging as one of the riskier places in asia outside of china for the coronavirus. And the government has been criticized for how it has handled. Handled it. Jessie yes. The coronavirus situation in japan is very concerning. Japan is now the country with the highest number of infected cases outside of china. Continueve seen we to expect the impact from coronavirus coming out from two main channels. The primary will be through consumerrelated activities that will have a heavy impact on transport, tourism, and retail sectors. The Tourism Sector in japan is likely to be one of the most affected by the Virus Outbreak in our view, because the tourists from china actually contribute almost one third of total International Revenue in japan. And the travel ban imposed by the Chinese Government is going to further reduce the number of tourists coming from china to japan. And that is going to weigh on the Tourism Sector in japan. We also know that china is an important trading partner of japan, and about 20 of japans exports go to china, and about 25 of japans imports come from china. So those close ties between japan and china makes japan vulnerable to any supply chain disruptions in china due to the Virus Outbreak. And the secondary channel that we see will be coming from the spillover effect from the supply chain disruptions in china, because japan has been increasingly integrated into Global Supply chains over the past two decades. So any shocks to the Global Supply chain is going to have a greater impact on japan. Those economic concerns weighing on the japanese yen right now . Havens we see these safe move to push the japanese yen higher, but as this chart showing, we are seeing the dollar yen out of that longterm downturn that has been in place fact the2015, in biggest today loss since 2017. Jessie right. The japanese has been experiencing ups and downs in response to the coronavirus situation. And the sharp decline that we saw in yen yesterday can be attributive to a few factors in our view. Japan was seens to be in a weaker position after the surprisingly weak q4 gdp we saw earlier. Recession fears in japan have increased, so that may weigh on the yen a little bit. We also had a sharp decline in orders, which may add up to the concerns of the session. So those are the factors that may have weighed on japans yen yesterday. Shery the japanese yen around 112. How helpful is that for the boj . Jessie well, i think the boj is more concerned about the inflation momentum in japan. Given the fact that inflation is still stuck at a low level, we think that the boj is going to maintain its current level of monetary easing. Of we do think the risk recession has definitely increased in japan. We will probably see a technical twossion in japan, which is consecutive quarters of decline in gdp growth. But we think our best Case Scenario is still that japan could narrowly avoid that recession, and that could see the bank of japan maintain its current level of monetary easing and let the fiscal policy to do its job in driving the economy forward. Lu, thank you very much for that. Take a look at the markets at play right now. We are seeing aussie and kiwi stocks falling at the moment, with the australian asx down. 2 . Consumer stocks leading the declines, but remember, this is coming from the highest level on record. We are seeing in the aussie dollar holding study after falling to that 11 year low. The aussie is sometimes seen as a proxy to the chinese currency and we have seen the yuan weaken. Kiwi holding study while nikkei futures are holding study. Cpi numbers coming in line with estimates, but the japanese yen surprisingly really under pressure, despite being seen as a haven asset. U. S. Futures also down. We saw sentiment turning sharply negative. Uob,pore to ocbc and capping off Major Bank Earnings earlier, posting reports largely in line with expectations. Also had dbs numbers last week. Most exposeds the to china and the coronavirus risk. Our chief International Correspondent Haslinda Amin joins us now. Talk us through these numbers. Haslinda like you said, the numbers put much in line with expectations. Ocbc coming in at 1. 24 billion sing, and uob just above 1 billion sing, in line with expectations. But they are not the focus anymore. Investors looking at the guidance Going Forward given expectations that the coronavirus will have an impact on future earnings. To that end, both banks did say they expect to have an impact on long growth and credit cards expected to rise as well. This is what was also reflected by them earlier this week when they said to expect to take a hit on revenue Going Forward. Mind,in mind, bear in expectations are the coronavirus would hit longer and deeper. The potential impact could be even greater, potentially greater. You talk about exposure to china, exposure to hong kong. They have the deepest exposure when it comes to marcus. 25 exposure for ocbc. Less for uob. Banksony is singapore look towards china and hong kong for growth, given the easing growth in loans in hthe lion city. But that is becoming a risky strategy. It came up late last year, saying the operating environment for Singapore Banks is now pretty risky. In fact, downgraded the operating environment negative from neutral precisely because of that. So a difficult time for Singapore Banks, given the expansion and reliance on china and hong kong. Is thehas, what then longerterm outlook for singapores banks, given the challenging environment, the uncertainty related to coronavirus, some concerns over supplier side dislocation and the such . Haslinda if you take a longerterm perspective, that reliance on china and hong kong will continue, given that china is opening up its financial industry, it is lifting the limits on Foreign Ownership of banks in the country. So not surprising that Singapore Banks continue to rely on it. , in the shortterm it will bear the brunt of it. They are megabanks in china itself, dampening the revenue Singapore Banks are getting from china. We talk about every bank as ccb and so on and so forth. Those banks eating into Singapore Banks. Looking at the last six years in particular, the return on assets have been up fully, and that is expected to continue. The challenge coming from fintech. Fintech is eating the business of traditional banks like those in singapore, and that is becoming quite a challenge. Shery our chief International Correspondent, Haslinda Amin, taking a look at the Singapore Banks and those challenges faced. More analysis on the outlook in the next hour. 8 40 a. M. Joined at lets get you the first word news with jessica summers. Jessica Global Health officials are calling for nations around the world to boost funding to fight the coronavirus. While the outbreak is still mostly confined to china. The head of the World Health Organization says he is surprised by the limited response to his call for 675 mi llion in funding. He says it is a sign that countries are not treating the outbreak seriously enough. The number of infections in japan has more than doubled in the past week to 84, leading to criticism of the governments response. Hundreds were also infected on the cruise liner diamond princess. However, those numbers have not been reported in the domestic out. And south korea has reported its first confirmed death, with cases tripling in a day. Most of the new cases came mostly from a cluster in a fringe religious sect. South korea has now reported 104 cases, making it the single highest number of infections outside mainland china. The Airline Industry is expecting the first yearly decline in Global Passenger demand sense 2009 in the wake of the Global Financial crisis. The International Air transport Association Says while it is too early to predict the impact on profits, the outbreak will cut about 30 billion from revenue. Chinese carriers will be the worst hit. About 80 of the countrys domestic fleet is grounded. Turkey says that is not happy the progress of its talks with russia on restoring calm in northwestern syria. Syrian Government Forces have been conducting a military campaign to recapture parts of the last rebel held area. The violence has driven nearly one Million People from their homes in recent weeks, and has strained relations between russia and turkey, which support opposing sides in the syrian conflict. 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. Im jessica summers. This is bloomberg. Were just highlighting an earlier Earnings Report that came in over the last hour or so. 1. 68 billion. Fourthquarter earnings trailing and no sesame. Dam incident. The expenses relating to that deadly dam disaster that killed 270 people in brazil. A clarification, the vale loss billion. A tough corridor and a tough year for them. Next andy we speak to abby aldo abby adlerman. This is bloomberg. His is bloomberg. This is Bloomberg Markets asia. Shery for our latest edition of bloomberg equality, we are heading to Silicon Valley, where many startups have struggled with diversity. Nowhere was this more clear than in wework. The company was being run by an allmale board. A recent study now showing half of ipos completed between 2014 and 2017 were done without a single female director. Joining us now is abby adlerman. Lets talk a little bit about Silicon Valley. How do Silicon Valley and these Tech Companies measure up to other sectors . Abby it is a great place to jump in, because what we are finding in Silicon Valley is that there is still a lag going on. It is no surprise even it is a little surprise given the level of innovation in the technology sector, but there are reasons for it. I think people are disappointed. Will saylot of people the excuse for this is there are not qualified candidates to fill those positions. How do you respond to that . Abby you know, that is boulder boulderdash. T is to use an old phrase. Women, people of color, both, it is not that uncommon. I think the bigger problem really is people have to get out of their own networks and out of their own pull. That is why you hear that common complaint, that there are just not enough good candidates. Well, there are plenty of good candidates if you know where to look. News, in some good should point out that australia has managed to maintain a 30 target that was hit at the end of last year in terms of representation of female candidates on boards for Companies Listed here in austria. Is it particularly difficult in the tech sector . Abby yeah, i think it is difficult if you have a really narrow definition. And that is the one of one of the things we often talk with our clients about, which is thinking about, first and foremost, what problem are you trying to solve. I want to interrupt myself and make one point, which is there are very few candidates who want to be on a board because they are checking that diversity box. It is not good for the board, it is not good for the company. So you really want to focus on what is the business problem we are trying to solve. And that is the first question any company should ask. And then say how do you come up with a solution that does not necessarily have to fall into the same old, same old type of pattern of we want aco a ceo or cfo to check that box. The more organizations push themselves, the more they will realize, especially in technology, that there are a lot of different ways to solve that problem. Lo and behold there is a much broader set of candidates that have to be diverse. Haidi going to the criticism that there are just not enough qualified female candidates for these roles, there is a point, right. s,bally you look at ceo female ceos is still under 13 . There is a lack of female representation overall. What needs to happen . Clearly gender parity is not somethg that wl just happen progressively. Abby thats right. And im glad you asked that. Because when we talk about boards and the importance of having diverse boards, that is certainly one way to help, pulling people up from the top of the organization. But i am a big believer that we also have to make sure we are looking at the middle and the bottom of the organization. Because the reality is most people find their way to the csuite by having grown up in a company or in a competitor and making the switch over. The best way for us to continue to make sure there is diversity in a top jobs is to make sure there is diversity in the bottom. As a board member, i would really like to see the companies that i work with make sure that they are thinking about diversity at all levels in the organization, because that is a longterm healthy plan. Then you will see much more parity across the organization when you do that. Shery california had its own initiative for women on board, the sea26. Tell us about that and how did that turn out . That hanovera bill is jackson, one of our lawmakers, sponsored. It got signed by Governor Brown in 2018. The first year it was really put into effect was 2019. It required every California Public company to have at least one woman on the board. Companies500 some odd Public Companies in california and about 90 got there. So that was really good progress. That law had the desired effect. In 2021, two years from now, the bar goes up. Depending on the size of the board they will have to have two or three diverse women candidates on board. And that is putting a lot more pressure, because there are about 1000 Board Members that will be needed to fill those spots in the next two years. Shery how do you address some of the criticism, like the validity, the sense of tokenism around those initiatives . Abby there is definitely some pushback on it. I will just declare myself a capitalist. Had the system worked itself and the free markets took care of this problem, i think we all would have been happier. But i think because people were left to their own devices and did not take it as seriously, we find ourselves with this litigation and the best thing to do is to as far as pushback, there are groups out there, affirmative action in all the wrong ways, not the right ways, it is not constitutional. We are seeing some legal pushback. But the results are in. 90 of the companies are in compliance. And i think most importantly, the awareness, what is the value of diversity, why diversity is a good thing, has gotten way behind her up on the board room narrative, and that is the narrative we were looking for. Haidi thank you so much for joining us, abby adlerman. Such an interesting conversation. Dont forget our interactive tv function at tv. You can catch up on any past interviews and a deep dive into any securities of the bloomberg functions are talk about. Become part of the conversation. Send us instant messages throughout the show. This is for bloombergs subscribers only. This is bloomberg. Loomberg. This is Bloomberg Markets asia. Haidi a quick check of the latest business flash headlines. Predicting a strong earnings rebound in two months it expects to see the impact of the coronavirus on global trade wane. The Worlds Largest container ship posted Fourth Quarter earnings miss and a warning about 2020 results. It expects to see operating profit come at 5. 5 billion this year. The ceo says there is still a lot of uncertainties out there. We have actually canceled more than 50 departures from china in the last two weeks. We used to have quite a Cancellation Program immediately after the chinese new year, because it takes a few weeks for manufacturing to ramp up again. But obviously this year, china has been closed for twice as long. Climbed toincome more than 700 million in the Fourth Quarter, boosted by gains in lending and Wealth Management. However, that missed analyst estimates. The bank did not explicitly mention the impact of the coronavirus, but said it expects a slight uptick in credit costs, given what it called current conditions, as well as downward pressure in margins. Latest phone is seeing Strong Demand and south korea. The galaxy zflip, which was released on valentines day, sold out in day one in several markets and is now out of stock on samsungs website. It cost about 1400 and is their second attempt at a compelling foldable after last years galaxy fold. This is bloomberg. [ fastpaced drumming ] [ fastpaced drumming ] di i am good evening. I am haidi stroudwatts in sydney. Shery i am shery ahn in asia. Haidi our top stories this hour, the latest figures from hubei showing 411 new cases of the coronavirus and 115 fatalities, slightly up from the day before but down from the peak. The World Health Organization says the outbreak is manageable. It is calling for more funds, saying donations so far have been disappointing. Core inflation claims for a fourth month in japan. Next up, manufacturing pmi figures are due within the hour. We also have ecodata out of south korea for the first 20 days of this month. Exports rising 12. 4 year on year. Imports also for the first 20 days of february, rising 4. 7 year on year, and now, interesting that the daily exports for the first 20 days have fallen 9. 3 year on year. Of course, the 20 day number being boosted by the first 10 days of february already as we now are starting to hear the coronavirus headlines impacting the markets and the economy. There have been 82 confirmed cases already in south korea. So for how long these export members will continue to recover is the big question. Of exporten 14 months declines in south korea. Finally, we have started to see some green shoots with the first 20 days exports rising 12. 4 year on year. The big question, how long will this last . In the meantime, a quick check of the markets. Japan and south korea coming online. Here is Sarah Ponczek. Sarah cpi data came out in line with expectations. We are awaiting the pmi data that will come out later in the session, but for now, some of the pressure we saw in the u. S. Trading session is feeding over a sense of caution. The nikkei 225 off by. 1 , so off modestly. We did see a slight game in the topix. Although still trading near the lowest levels since a member. At the same time, moderation in the japanese yen but we have seen some massive moves in dollaryen. The yen has fallen by 2 versus the u. S. Dollar in the past two days, the worst streak until 2017 and also Still Holding above the 112 level after breaking through a multiyear trend. At the same time, we do see yields a little bit lower. We have seen the global bond rally in the u. S. Trading session. Yielding negative five basis points. South korea does come online after the export data. The kospi off by more than 1 at the open of trading. Australian stocks falling but falling from a record ntb Stocks Holding unchanged at a fresh record high. S p futures extending the losses we did see during the regular trading session. In that session, we have seen the s p off by. 4 , but at one point, we have seen a very strange decline of 1. 3 . It was very quick although we did see some bottom feeders step in and buy that dip. Lets look at the fx markets. The u. S. Dollar index does inch closer and closer to that round number of 100 but the aussie dollar just continuing its declines. The lowest level since 2009. Thursday was the worst g10 performing currency. At the same time, we see a little bit of moderation in the euro but trading at the lowest levels in 2017, and the offshore yuan weakening once again. As i mentioned, it global bond rally has sent yields lower. Yields closer to 150 once again but right now yielding 152. Back to you guys. Haidi continuing to watch that relentless game in dollar driving assets like the aussie dollar lower. The are getting news crossing the bloomberg, confirmation from the Northern Territory Government Department commenting on two cases of australians that were evacuated from the japanese cruise ship diamond princess. They arrived in darwin yesterday morning out of 100 80 who arrived in that flight to darwin yesterday morning and two individuals have been confirmed as contracting the coronavirus. We are just hearing that by the Northern Territory Government Department. Have contracted the coronavirus and tested positive. They are in a 14 day quarantine. They have already been in quarantine on the diamond princess crews but were put into another 14 day quarantine that was 180 individuals at a workers complex near darwin. We will get you more details on that, but of course, this comes as markets get increasingly anxious about the spike we have seen in coronavirus cases outside of mainland china. These two in australia, in addition to what we have seen, is a tripling and doubling when it comes to cases in south korea and in japan as well. Lets get you the first word news now with jessica summers. The Airline Industry is expecting the first yearly decline in Global Passenger demand since 2009 in the wake of the Global Financial crisis. The International Air transport Association Says that while it is too early to predict impact on profits, the outbreak will cut 30 billion from revenue. 80 ese carriers will be of the domestic fleet is grounded. Secretary of state mike pompeo is in riyadh, where he met king salman. They discussed security concerns about iran. Saudi arabia and the u. S. Blamed them for the attack against Saudi Oil Facilities which did temporarily have the kingdoms daily crude production. Iran has denied any involvement in the attack. Happy with it is not the progress of its talks with russia on restoring column in northwestern syria. Syrian Government Forces have been conducting a military campaign to recapture parts of the last rebel held areas. Nearlylence has driven one Million People from their homes in recent weeks. Strained relations between russia and turkey, which support opposing sides in the syrian conflict. Stone, a longtime ally of President Trump, has been sentenced to three years and four months in prison. Lying tonvicted of congress, tampering with a witness, and obstructing the investigation into trumps with russia during the 2016 election. Be convictedth to over the investigation. The president says he is being treated unfairly. 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. I am jessica summers. This is bloomberg. Shery lets talk about south korea because we just saw the export numbers for the first 20 days of february rising more than 12 , but our next guest says the country is especially vulnerable to supply chain disruption. Lets bring in the chief economist at s p global ratings. Great to have you with us. We were starting to see some green shoots in these export trade numbers out of south korea. How bad will the coronaVirus Outbreak be for their economy . Its going to setback the recovery for sure this year. We think the impact, from what we have seen so far, and assuming that we see the virus contained around march or april, will be to shave. 5 Percentage Points off overall growth and that will bring it below 2 for korea this year and it will setback the recovery we were all hoping to see at least until 2021. Haidi the government is hinting at extra spending to deal with the virus. We saw that during sars. There was extra budget not to mention bok rate cuts. Is that something you are factoring at this point . N the bank of korea will have to do more. We are expecting two rate cuts this year to bring the rates below 1 for the first time but its also hopeful that the government is pushing a little more fiscal stimulus because the bank of korea, like other Central Banks in asia, are running out of space to cut rates. The closer it gets to zero, the more it will have to start thinking about quantitative easing. Haidi what is more effective in this environment . Monetary policy easing or lifting on the fiscal side . Asre is an argument that long as China Remains shot for business, factories remain idle, that dislocation of supply chain cannot be fixed through Monetary Policy transmission. Shaun i think thats a very good point, actually. Of mostt run impact macroeconomic policy will be much more limited in this type of shop than in your normal business cycle. Policymakers will focus on cushioning the blow rather than trying to reverse what is happening. Targeted measures to ease cash flow in certain sectors, forbearance from banks, when some corporates get into cash flow stress, those are the sorts of measures we will see and they could prove quite effective in providing at least some type of shortterm question, but certainly Macro Economic stimulus will be much less effective now than it normally would be. Thei we finally got numbers for chinas new credit data for january, and they were pretty positive. Here is a chart that shows them knocking it out of the ballpark when it comes to new yuan loans as well as aggregate financing. That would provide a bit of a cushion, particularly given most of that lending would have gone out before the economy started bearing the brunt of the Coronavirus Impact. Right. Thats actually, the credit members in china for january did show a little bit of a turnaround. We did see a pickup in new credit flows. Financial conditions had started to ease a little bit and that was pointing to the fact that green shoots were coming through across the region and including in china. Our sense is that Going Forward, as we start to see the impact of the coronavirus, we could use some week lending figures Going Forward so the impact of that little bump we saw in january is going to be completely offset by some considerable weakness in credit flows in the next few months. Shery have concerning is it that shadow Banking Credit has also grown after a drop in december . To watchthink we need that quite carefully. We need to watch how the chinese authorities manage the easing in financial conditions in response to the virus more broadly. Watching verygues closely, for example, how the regulators are allowing the blanks to banks to classify nonperforming loans. It makes sense for tanks to show some forbearance and go easier on their borrowers, but we think it can sometimes take years to return lending standards and classification of nonperforming loans back to normal after a shock and you may see companies repaymentstring out longer and longer even though the crisis has passed because sometimes, there are shortterm costs longterm costs to these measures, which makes sense in the crisis but make it more difficult to manage the risks in the longer term. Shery shery shery what about the government stimulus measures shery what about the government stimulus measures . We have not seen ratios exceed gdp. Is the widening fiscal gap going to become a problem . Shaun not really. I think, at this point, our sense is that it makes sense for fiscal policy to be eased and what we have seen so far i think is very careful and targeted so we have seen some reductions in unemployment insurance, and that is only going to last until june for most companies, but that is very targeted. I think it is recognizing that the shock, at this point, is expected to be temporary. We have seen local Government Bond quotas rise and be accelerated so far this year. That is sensible. That is just flagging that there should be a little bit more Infrastructure Investment for overall growth, but so far, we are not really seeing the sort of big think stimulus that maybe some people had expected. I think that is a good sign, because at this point, the problem might be that the stimulus hits the economy just when it starts to recover, and the other problem with stimulus is it does have longterm costs in china in terms of the debt, so this targeted approach makes sense and it makes us feel a little bit more comfortable about what china is going to be looking like this time next year. Shery thank you very much asiapacific economist coming to us from singapore. Dont forget, bloomberg vrus. Can run our launch page has the latest headlines, outbreak figures from the cdc, and analysis of the companies affected. You theead, we will get numbers from singapores Bank Earnings today. The latest from ocbc and uses a euro uob. Haidi the Worlds Largest independent oil trader. What the future holds for crude prices. This is bloomberg. Shery this is Bloomberg Markets asia. I am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. Crude prices have been picking up as they are a market tries to shake off the virusinduced demand slump. The Worlds Largest independent oil trader expects prices to recover to between 60 and 70 a barrel in the current coming months. Russell hardy told us exclusively what impact he thinks the virus will have. The expectations of how long the virus might last and its longLasting Impact, people have probably been reducing their worst Case Scenarios over that period of time. The result has been that the market has chosen probably a slightly softer path, and therefore, a higher equilibrium and price and we are back to 60 today. 200 Million Barrels of demand loss has to be that means oil has to go into storage or supply has to respond to that to balance the market so we see quite a bit of rebalancing happening through supply cuts. This week, we have had obviously revenuentained tensions in venezuela. Libya is pretty much at zero production today, zero exports today, so that is another significant supply impact. Obviously, price in the end does some work in the u. S. Around the shale base. There is an opec meeting to come in a couple of weeks time which the market is anticipating some kind of supply response from opec. All those factors will rebalance the 200 Million Barrels, which leaves the market in a better position for the second half of the year. Today so nearly at 60 there does seem to be some optimism. Do you share that view . We are a lot more positive about the second half than the first half. People have baked in the demand loss into the first half. The expectation is that it will not get significantly worse from what we have seen and obviously, the new flows suggest that is the right opinion to come to. We are hoping for a speedy recovery for everybody involved, but obviously, if we do have a speedy recovery, that 200 aslion barrel demand loss is big as it gets and the supply response will begin to correct that. How high do you think we see prices . Mark for theto 70 next few months is a reasonable expectation, but clearly, the market is going to wait to determine what happens in libya and what happens in opec because they are two extremely important factors. I just got back from riyadh, and his Royal Highness compared the impact to a household fire. You can use a garden hose or call the fire again. What would you suggest opec use . A garden hose or fire brigade in terms of a supply cut . Go big or russell you know, in terms of that the market was relatively balanced before these events came to pass. We are really trying to correct for that 200 million barrel demand pulse. And in terms of the cuts, to bring the market back into balance and to leave a positive impact for the second half of the year, i think what opec have been talking about is a reasonable measure. If their objective is to bring the market back into balance and correct for that demand loss. Shery Russell Hardy speaking exclusively with bloomberg. And you can get a roundup of the stories you need to know to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on their terminals and its also available on mobile in the bloomberg anywhere app. You can customize your settings so you only get the news on industries and assets you care about. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi stroudwatts in sydney. Shery i am shery ahn in new york. The Airline Industry expects the first annual decline in Global Passenger decline demand in over a decade after tallying up the initial impact after thousands of Flights Canceled because of the outbreak. They estimate a drop in passenger traffic forecast of about 4. 7 compared to two months ago. The ceo, alexander, earlier today. Measures to help the Airline Industry and probably more wisely, the tourist or Hotel Industry that is impacted by this virus, so you are mentioning the Chinese Government. I would like to mention the singaporean government, which money in the industry by reducing costs. We are urging the governments in the asiapacific region to take similar measures to help the industries, not only our hotels, tourists, which are similarly impacted by the drop in traffic. Chinas Aviation Industry was supposed to surpass the u. S. s this decade. In 2024. So will this be delayed because of this outbreak . If we look at the profile of what happened in the past, for sars, h1n1, you have a significant drop in traffic after the beginning of the outbreak. Recovery, somplete if things are comparable, and i remain cautious when i say that, we should see a recovery during 2020, so asia should come back in the normal profile, normal growth rate, that we have faced in the past. I was speaking to the qantas ceo last night and he was talking about cutting capacity across asia 15 or so, being flexible. Is that something you would for more Airlines Across asia . Airline by airline. Can have to see if they maintain capacity, reduce, and the degree of flexibility the regulations allow. I am not experienced enough to give advice to my colleagues, who are much more skilled than i am, but i think we will adapt, of course. Shery you have seen this industry go through so much already. Airlines reeling with the impact 737 max. 0 evan max how much more does the outbreak compound the situation for these airlines in particular . For the airlines which have already reduced capacity due to firstly, for one third of them located in the u. S. , they are not very highly impacted by the coronavirus. For the asiapacific, you have 25 of thees, airlines having operated a 737 max, so if you add the coronavirus, it should have a Significant Impact because it goes above that. Expect is duration that can be measured in weeks, months, so usually, the airlines, they have the ability or the flexibility to adapt capacity without the activity too strongly. They will go through a difficult time. That was the iata ceo. That looks like we are headed for another down day as anxiety just creeps back into markets as concerns over spiking coronavirus cases outside of china now are taking command. The nikkei 225 up. 3 . Cpi, japan cpi numbers earlier on, nothing much of a surprise. Bang on expectations. The kospi trading lower as we get investors trying to digest the latest one day to 20 day trade numbers. Not too bad but certainly an indication that the coronavirus will begin there. It is a down day for asian markets this friday. Japans pmis, up next. 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. Haidi we are looking ahead when it comes to japan pmi data, just crossing the bloomberg. The monthcturing for of february, contracting further to 47. 6 from 48. 8, so that is quite a steep climb. The are seeing pmi services contracting, falling, in fact, deep lee into contractionary territory. We had been at 51 for january. That has fallen to 46. 7 in the month of february. When it comes to the composite pmi, a contraction, falling from 50. 1 to 47 in the month of every, so is really horrible set of numbers. In january, it was a little bit of slowing and the pace of contraction, in the manufacturing sector, but again, picking up pace. 47. 6, marking a 10th straight month of contraction for japanese manufacturing pmi. Not bode well given that we had a horrible fourthquarter gdp. , machineryears orders looking pretty ugly as well as inflation, consumer Inflation Numbers that we had out earlier this morning, showing not much of a move to Inflationary Pressure either, but just a repeat, Manufacturing Services and composite pmis looking pretty dire for japan and services and composite falling into contractionary territory. Lets take a look at how markets are reacting. We will get over to Sarah Ponczek in new york. Sarah we do see equities in Japan Holding onto their gains, trading at the highs of the session. He looked at the nikkei 225, up. 3 , and the topix higher by. 5 at the moment, but remember the topix, japanese equities, still on pace for a week of declines. The topix set for a second straight heat of declines, second than 1. 7 straight week of the climb, greater than 1. 7 percent. Switch of the board, take a look at commodities, too. Ana way, we have seen, everything rally. Crude oil off by. 5 today, but still trading at the highest. 66el of the month, 53 a barrel. Gains greater than 3 . Copper is relatively modest, steady, and we see Gold Holding Steady around 16. 20 an ounce. Thats take a deeper look at gold, a longerterm view as gold trades at the highest level since seven years as investors look for safety in the way of the yellow metal. In fact, if you were to look at gld, a very popular etf that tracks gold, six straight weeks of inflows, roughly 1. 5 billion entering the fund alone in february, but still, with this unbelievable run that we have seen, technically, gold is overbought. Sos 14 day rsi over 70, something to keep in mind after we have seen gold make this track to the highest level since 2013. Haidi thank you. Outside of china, not surprising really that we are seeing more caution in the markets. That surprising, especially since we have seen a really impressive rebound in the chinese stock market. Investors are looking for signs to cut their bullish holdings. If we do a significant turn for the better see a significant turn for the better, people are getting money will flow back to Business Operations rather than stay in the stock market. Some signs people are watching out for is workplace assumptions as well as the plane ticket train ticket sales in china. That is alongside economic figures. If we do see any of the signs, it is likely we will see a different shift in the stock market because money will be flowing out of there. Haidi as we get to the end of the week, what else are we watching and markets . We have seen a lot of activity in the stock market itself, so something we are excited to watch out for is whether we will see another one trillion yuan trade over day. We have seen that for two days already. If the activity continues, we might see it for a third day. Another thing we are looking out for is the performance of the csi 300 gauge compared to chinese stocks listed in hong kong. The outperformance yesterday was the most since july, and we will see if that continues today. On top of that, we are looking out for weakness in the currency. We have seen a weaker hong kong dollar as well as the chinese yuan in the past couple of days. We will see if that continues. Haidi thank you so much. We will also be watching the chinese insurers, one of the potential movers in the chinese action when trading kicks off in hong kong after the countries reported results that missed estimates. Steven lam, our Asia Insurance analyst for bloomberg intelligence, in hong kong. What happened with ping ans results . the market and media picked up on the headline miss. Strengthen theey reserves, especially in the Fourth Quarter. About seven ors 8 billion yuan. Took 15 billion you want to increase research. Lower profit. In that sense, its actually to give them preemptive measures, to make sure the base in 2019 is easier for them for 2020. We expect the Profit Growth in 2020 could be stronger than peers. Ave seen that. What are some of the highlights of 2019 . Steven what is most important definitely is the ipo of the one connect unit. The share price has been performing it fluctuated a little bit due to the market conditions. It climbed back up. Second of all, what we need to notice is that this company is still investing a lot into the simtech business. Contribution from the simtech side of things will probably still be small over the next couple of years, but my dear, this company has a very strong upstream capability, so there is a lot of dividends from the unit all the way up to the group which actually allowed them to consistently pay out about 28 of dividend payout compared to operating profit. Haidi what is in the outlook when it comes to insurance sales and some of the other business lines . Where do we expect to see the Coronavirus Impact . Steven no doubt the Coronavirus Impact is definitely disrupting south asian activities. It is hard to meet clients facetoface. If you think about this, the harder part is to reach out to new clients. They are able to still connect with the existing clients and service them remotely and with the technology that ping an has, its not too much of an issue compared to peers, but what we expect in terms of the first metrics ofe key their future profit, it will slow down to about high Single Digits to low teens, which could be the slowest basically on record, but the recovery could be very strong for this company. As i mentioned earlier about the advantage they have and also the size and brand of the company. In hong kong,lam thank you. Lets get the first word news with jessica summers. Jessica thanks. Global Health Officials are calling for nations around the globe to boost funding to fight the coronavirus while the outbreak is mostly confined to china. The head of the World Health Organization says he is surprised by the limited for 675in his calls million in funding. He says it is a sign that countries are not treating the outbreak seriously enough. The number of infections in japan has more than doubled in the past week from 84, leading to witticisms of the governments response. Hundreds were infected on the r, the diamond princess. Those numbers have not been counted in the domestic count. South korea reported its first confirmed deaths. Cases are tripling in a day. Most of the new cases came in a cluster. South korea has reported 104 cases, making it the single highest number of infections outside mainland china. Busiest telcos has warned the government not to ban huawei from its 5g network. Martin boyd says his company would face difficulties changing suppliers for its nextgeneration wireless network. So far, france has refrained from an outright ban on huawei but the carriers, orange and elliott, said they will not be using huawei in their 5g network. And Angela Merkel says her country must overcome what she calls the poison of racism. That after 11 people were killed in shootings near frankfurt. Officials say it appears to be a right wing extremist attack by a lone gunman who was found dead hours later. A german newspaper later inlished gunmans manifesto which he called for the destruction of 20 nations including india, turkey, in israel. 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. I am jessica summers. This is bloomberg. Haidi thank you. News coming out on wells fargo. Its reportedly nearing settlement deals over its sales practices according to reports from the New York Times saying that wells fargo will pay penalties to the Justice Department and the fcc over its fate account scandal. The report saying it is preparing to settle with federal prosecutors over what is a widespread abuse of customers through its banking, auto mending, and mortgage businesses, according to two people familiar with the matter. These could be announced as soon as friday. We are watching softbank rising 3 at the moment after news that softbank groups head is headed for new york. He will be addressing investors on march 2. Hes would be the first time was visiting new york since the implosion of we work. The fortune of softbank has turned. Softbank trading at a oneweek high. We are getting the latest lines out of japan from Haruhiko Kuroda, governor of the boj, saying the coronavirus will hit the chinese economy first, that there is a high chance that the corona implant virus will actually have an impact on the global economy, but saying that it will hit the chinese economy first. Of course, we have seen a cluster of infections in japan of more than 80 as we have seen the princess crews quarantined cruise quarantined. They continue to battle those infections are coming up next, we dig through the latest round jeffries Equity Analyst. This is bloomberg. Haidi this is shery this is Bloomberg Markets asia. I am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. Ahead of the meeting in riyadh over the weekend, all expectations are that the Coronavirus Impact on regional and global economies will be top of the agenda. We are hearing from the bank of japans governor kuroda, speaking in parliament, just saying the coronavirus is likely to hit exports and supply chains as well as tourism, that it will be the biggest topic of discussion at the upcoming meeting. The need to closely monitor the impact on asian economies, governor kuroda saying he cannot quantitatively measure the viral impact just yet. The boj governor speaking in parliament and saying there is a high chance that coronavirus will be impacting the global economy, but that it is too early to measure the impact. At the same time, we are also hearing from the rbnz governor, adrian or, speaking in christchurch. He had already been commenting on the challenge of operating in a low rate environment. He is now saying he is happy where they are for the time being when it comes to rates, is not much of an expectation as to where they will go from there. In no rush to go lower on Interest Rates. We will continue to monitor that but certainly a lot of concern and Central Banks globally policymakers globally about the impact of the coronavirus and the financial sector, the Banking Sector, looking to be impacted as lab. Major Singapore Bank earnings earlier. They posted reports that were largely in line with expectations. We had dbs numbers. Dbs is the singaporean lender most exposed to china and that coronavirus risk. Jeffries Equity Analyst krishna joins us now. From what aspect does the risk impact the singaporean lenders the most . Is a greatsingapore dependent for economics. Tourism has increased. That definitely impacts the Singapore Banks. Impacts andg those some of those initial numbers that banks have reported this week and last week, so yes, and definitely, i think as we see one of the spread and the fallout, i think there will be a continued impact of the coronavirus. Haidi you have the potential for supply chain dislocation, which is obviously a key risk for an export and trade vulnerable economy like singapore. The fed may be forced to act if we see further deterioration of economic conditions. What does that mean potentially for credit quality and loan pricing for the singaporean lenders . For margin and asset quality, they are both challenged in this kind of an environment. What we are seeing is the efforts to build up. They have a Strong Capital position and we have seen dividends going higher, so those give support in this environment, and there will be this kind of environment as well. We do see that if there is no deteriorationrd in asset quality, the banks will have support in the share prices. What we are not finding for the upside is catalyst. In dividend is making these banks. Shery we just saw a very strong budget coming from singapore. How supportive will that be for banks . I will say that it is a relief. People need less working capital. You get lower and lower rate. As long as sales dont come to it, thats money. Nobody can help on that. We need to see how much is demand comese back. There is support for sectors which have been impacted. Tourism, retail, and the broader economy as well. It will definitely support but will it lead to the banks i dont think so as yet. Shery how big of a price spot will Wealth Management be if we see those woes from hong kong . Krishna look, i think that is definitely the relatively brighter spot for banks. We are seeing that in the Wealth Management and if you kind of look to it, then we are also seeing the funding cost has dropped significantly for banks, and that possibly can be because of the liquidity that is there in the market. It is definitely a support, but when we look forward, in this kind of environment, client activity will be a bit more muted. On the investment side. They may be willing to take more positions on the hedging, but in the sense of the overall sort of impact on Wealth Management income, i think the growth will slow down. We have seen some of the and the Fourth Quarter. Think itull year, i has low singledigit growth that will be a decent enough member. Haidi as we see increasing numbers of people working from home when it comes to hong kong, across other parts of asia, and even in singapore at the moment, how does that kind of get translated into the bottom line . You obviously do not have client meetings going on anymore, for example. Krishna yes. Activity, it of will take some time to materialize. But then, those which have existing businesses, that can continue. Refinancing, that brings into question overall the measures that all the banks and institutions have put in place, because these kind of situations are why these things are tested. We are not seeing any kind of an impact as to any kind of slowdown on the refinancing or so business. There will be some time to materialize. Krishna guha, thank you very much, jeffries Equity Analyst. Now, governort Haruhiko Kuroda speaking to parliament, saying that, right now, the virus impact is very , thatn asian economies the boj is ready to act but does not believe it is needed. He is looking forward to that g20 meeting, saying he wants to talk about the virus with other countries. We will have plenty more. This is bloomberg. Haidi we have breaking news at the moment. Bloomberg has learned that President Trump has purchased that coveted advertising space atop youtube on election day. Now, this will be in the immediate runup to the u. S. President ial election and on election day. The homepage of youtube is now set to advertise just one candidate, and that will be President Trump. You are watching him right now, speaking at a keep America Great rally in colorado springs. And right now, bloomberg learning that the president has purchased that coveted add space for ad space for early november according to people with knowledge of the matter. Be featuredt will prominently ahead of the key days ahead of the vote. Haidi lets turn to australias Wine Industry, facing its toughest year in memory thanks to the effects of the bushfire and trout. Our editor joins us. The impact of Climate Change on wine regions. We are starting to see it come to fruition. Ainsley absolutely. We have had droughts for a couple of years and we have got very select pockets of the Wine Industry as well that have either been hit by fires or smoke tainting their grapes as well. It is really hitting hard this year. Haidi tell us a little bit about shery tell us a little bit about why that is such a big issue. Issley the smoke taint, it hard to assess how grapes are going to go if they cannot test them until 10 days before harvest so you have grapes on the vine, thinking about your next vintage, and then the results come back, and if they test too high for certain attributes, basically, they cannot harvest it. The grapes get left on the vine. They have to look for other ways to use them. We are looking at some small producers basically who had their entire 2020 vintage wiped out just because the grapes had those negative attributes that can taste like ashtrays basically. Haidi lovely. You have to wonder how much more hits can australia take . Our koalas, our beautiful blue skies and clean air, and our red wine, basically. So what can winemakers actually do to mitigate the impact . We industry is really focusing on shoring up the vineyards that they have. They are looking at how they can protect them from some, how they can sun, use less water in great production, and different wine varietals, from spain and french wines. Than we could be seeing different australian varieties on your shelf. Haidi thank you so much for joining us. Next hour, aer the cio joins us. He has views on how the coronavirus will play into the market outlook. Shery that is it from Bloomberg Markets asia. Our markets coverage continues as we look ahead to the start of trade in hong kong, shanghai, and shenzhen. Marketsme to Bloomberg China open. We are counting down to trade. 411 newst figures show cases of the coronavirus and fatalities that are slightly up. The asiapacific index is set for the first weekly decline. The