These are the cruise liners, the energy companies, the tourism companies, because thats whats in jeopardy. Crude is back above 50 a barrel, barely, there was a building inventory but not as much as the market was anticipating. That goldst heard futures were disappointing, we did see a big bounce but now we are pulling back. Europe, the stocks are stabilizing. Its flat today, but with decent volume. Most negative point of the day came an our into the trade, and we lifted off of that earlier. The volume is pretty good. And we are seeing the german tenyear don on offer. For the a situation loosening of the purse strings. And you are talking about the 135 on the u. S. 10 year, with a little bit of profit coming in. We could be trading 130 or 149. Around, thea going boris government johnson the Boris Johnson government may not have expected this to appear later in the year, thus the pound tracking a little low. Vonnie President Trump said to hold a News Conference on the coronavirus after Government Health officials warned that a coronavirus outbreak in the u. S. Could cause serious disruption. Max neeson. D by its not a question of if, but when. And if there is an outbreak that will cause hand, it panic. How is the president stopping us from happening . What needs to happen is that the messaging from the cdc and the president and others in the Administration Needs to be cohesive and reconciled. Right now they are quite far apart. The president emphasizing the degree to which the the diseases are under control and contained, but the cdc is making the accurate point that given how rapidly it is spreading and the rest of the world, and the particular characteristics of this virus, its unlikely that it will stay that way for too long. If the president continues to diminish the incentive to prepare, it will likely have a negative impact. Not 10, we at least need of not panic, we need to get ready now. We need to have the cdc and the president on the same page. Guy cdc funding has been cut, does it have the resources it needs . Not yet. Discussing ate is budget close to 8. 5 billion. And what number get the job done will depend on how rapidly and how far it spreads. But if there is sustained Community Transmission in multiple parts of the country, it will need more than that 2. 5 billion. And we could see this funding state efforts rather country, and vaccine efforts where they need to be. Theres a lot of catchup to be paid not just for this outbreak but future outbreaks as well. Thank you for keeping an eye on this. We will continue to monitor your opinion peaches. Opinion pieces. We have had massive buyer bonds, significant selling of stocks over the past few days, today, stabilization, what are you doing . Were not trying to forecast the future. We dont know whether the virus will last for longer and have a bigger impact on the world. But i can tell you that markets are pricing different things. The bond market has been pricing a lot of loosening in policy. But the buying of government bonds and pricing in two or three cuts by Central Banks and europe and the u. S. Is a bit expensive. Au are buying into fullfledged rate cut cycle. If things go a little better, a cure in the next two to three months, or with warmer weather the virus fades, then rates will selloff. Expensive tos protect. But if things get worse, theres a lot of companies in the highyield space or the trip will be area which are staying fragilee b area with Business Models. You have to think about scenarios and how Asset Classes which is a bad scenario. We dont like purchasing too many government bonds for protection, we prefer to go short, the upper end of the credit market, those companies which are safe but may not be. Tightredit looks a little , so much has been sold off. With this bring money back to stockmarkets . Its early to say. Its been a correction on a fiveyear chart would be hired its a correction thats on a fiveyear chart that would be hard to see. We are looking at an expensive u. S. Equity market but there are markets that are unlocked. ,urope, emerging market Sectors Energy banks. Recovery,e a ushaped there is an upside. On top of that i would add some emergingmarket local debt from relatively highly rated countries. But this is where you would have a rotation, these are the assets you are allowed, rather than the s p. Vonnie what your prognostication for how much china will get caught . Im seeing estimates of 3 . The reall not know number, but we would say four to ende are not in the lower of the range yet. We expect policymakers to react with a combination of looser Monetary Policy, which we are already seeing by the pboc and other Central Banks, and fiscal policy. Minimumowering the common denominator, we are going to a race to the bottom for. Entral banks and it is starting again. And potentially we could see some fiscal stimulus. Thehe end of will boost in market, pushing investors to purchase assets, but we have to be selective. We are buying higherquality companies which can survive, we are negative on companies where ,he Business Model is fragile vonnie thats fascinating, because if you do that and then china grows, and they only revised 4 or 5 , thats not as bad as the worst case scenario. And china might have been looking for an excuse to mark down. Would there be repercussions for the Global Economy in terms of Capital Markets or gdp growth if china comes out with a 4 . We expect repercussions for the countries that are more linked to the Chinese Industrial model, australia is a case in point. Brazil is another country which is not diversified its exports and is still depending upon its commodities. Company with country with structural issues. A good budget has been released but they are facing several structural issues. We are worried about countries that have jumped on the Chinese Industrialization train. We are looking at the slow down a recovery, not a recession risk. Guy stick around, alberto is joining us, and up next we will talk about the hit to european gdp. Lets check global markets, its an interesting day with kailey leinz. Afterery interesting day, days of selling we are seeing some stops with major averages up by more than 1 . Not takingound is place in european equities, try as they may have, the ftse 100 is flat, and the dax is down by half a percent. The rebound is not happening u. Is broadbased. E rally in the if you take a look at the imap function, you will see that all 11 sectors are flipping into the red. This could be the third day in a row that all of the sectors have moved in the same direction. We have not seen it happen for three consecutive days. This is the more defensive sectors where we see some consumer staples. We have the likes of industrial and Technology Leading the way. Equities,its not all Morgan Stanley is cutting its price target for carnival, norwegian, and Royal Caribbean. There are demand impacts of the coronavirus taking down the earning estimates for this company. They say in a bear case scenario, this could become by 60 . Better part down a of 3 and Royal Caribbean down by 1. 5 , we have to take a check on the bond market after a record low yesterday. We have not seen selling and bonds yet and rapid demand. This could be calm, but lower over the past two sessions and 57 basis points in 2020. Vonnie thank you. Thats kailey leinz. Remember the function on the bloombergs, we have the recent charts from bloomberg tv, you can catch up on key analysis and save your favorite charts for future reference. This is bloomberg. York, i ame from new vonnie quinn. Guy im guy johnson, this is the european close. Lets catch up with first word news, President Trump is blaming the news media over the coronavirus outbreak, tweeting that they are making the epidemic look as bad as possible. There will be a News Conference at 6 00 p. M. , the day after the Government Health officials have warned that and the data shows that china is still struggling to get back to work due to the virus outbreak. Government controls imposed and the fear of going outside have curtailed spending, many factories are not working at full capacity. According to bloomberg economics, chinese economy chinas economy was running at no more than 60 capacity last week. The violence in new delhi is the worst in three decades, hindu groups attacked protesters who mostly muslim. At least 22 people have been killed, the protesters were demonstrating against the new religion based immigration law. Congress is moving to overhaul u. S. Surveillance powers for the first time in years, that sets up a messy fight which could unravel political alliances. Debate onittee opens the farm Intelligence Surveillance act. Law wast trump says the misused during the investigation of Russian Election interference. We wanted to update you on the breaking news earlier on walmart exploring the sale of their stake in as debt, we want to issue a correction, walmart plans to keep a significant Minority Holding in the u. K. Business after the deal, thats what one person with knowledge of the matter told bloomberg. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Guy thank you. The tourismce in looks very much at risk, france is the most visited country on earth followed by spain, the United States, china, and italy. With the crucial summer period in focus, how bad could the hit the . Joining us now is andrea. Looking through the numbers, this is a huge sector for europe and timing could not be worse. Particularly with the canary islands. Thats a very popular holiday. Estination for europe and now there are some issues. So if you are thinking of taking a holiday there, or you booked a holiday there, you will probably be thinking twice about it. Serious, its not just the center estar the canary islands, its also northern italy and other countries. Cruise liners and Tour Operators are very dependent on people not just booking, but not canceling. And many people are beginning to cancel. The peak right, booking period is just behind us. That was boxing day two about the third week of january. But they will be thinking about canceling, dont forget that there are a lot of people to book. If this is contained quickly it should not have much of an impact. Goes on until around may, we could see some diligent decisions. Guy which companies are the most exposed . They have a big business in spain, a rio Hotel Business has been building up with cruise operations and theyve been hit today. Vonnie so when can we expect a rebound . If theres uncertainty with Tour Operators and cruise operators, would anyone want to be in them right now until theres a retroviral drug available . To see theseve rebounds fairly quickly, may and early summer will be decision time. I am skeptical that cruising will bounce back quickly, given the images of the quarantine on cruise ships. The industry has raced instances of that. And cruising has been a fastgrowing part of the market, luxury cruises was a big part of the luxury market, goods, cars, and luxury cruising was the fastestgrowing part of the market. Guy thank you. Vonnie we are back with alberto. If you are morbid, looking for opportunities, and obviously people will not stop going to northern italy forever, is now the time to get into Something Like a cruise operator or a Tour Operator . We are actually negative on these Business Models. And we have been even before the virus its because there are sectors linked to consumption, theres 31 of revenue in the u. K. , where the consumers are fairly stretched, they used to have an airline which had the boeing 737 max which was a troubled aircraft, there are firms that have these Business Models, and the virus could push them over the edge like has. Appened with thomas cook similarly, its a Business Model we dont like and we dont like the cruise liners. We would not go into these companies at all, but there are Business Models which are may be unlocked and sovereigns are banks which are strong, which is what we are looking at. Its a bit early to pull the trigger. Light, there was a nothing left to buy market until a month ago. So we have a lot to spend. Vonnie so we have a chance to talk to about the banks, but what about the airlines . They were already under pressure thanks to the climate strike. This is another pitch. Somee airlines recover at point . The airlines, with some exceptions, they have delivered mostly, so the Large Airlines do not have a large problem. But if you look in the secondorder companies, the airport operators, the Logistics Companies mayse have a highyield rating. And they are a lot more vulnerable. So we are looking at them. Right now i would say that credit markets have gone from being very expensive to a little more reasonably priced. But we dont have anything that has those things that are binding at the moment. Hurte virus continues to the economy, we could see more selloff. So we are waiting, but on the sectors we are careful, because the impact could be long lasting for several months. With good Business Models in the banks, we see they are not readily had. Italyiven the fact that is exposed to the tourism sector, and we have a significant number of cases, and northern italy is shut down, is this reasonable or will it widen . We are waiting, weve long been aware that there are changes in government, and you italy has a coalition. You need a wider spread to get in in the case of italy. We will get this conversation very shortly. Turkey. Economy, really exposed to the Global Economy, can you walk me through the risk with turkey . Turkey has been pushing credit, first in the public sector, and now when the private sector. Asre is a huge credit, and Bank Balance Sheets grow, there exposures, and we have a worsening of the institutional framework, and theres a strong reliance on capital inflows. Boosting credit, boosting lending to get growth higher is a game you can only play to a point. Turkey remains vulnerable. One of the countries where we are negative. Guy thank you. We are counting down to the european close up next. This is bloomberg. Guy four minutes to go until the european close, its been a mixed session in europe, remember that the pound is lower, this has come up really sharply today, we are seeing this rising, the cac is actually flat. 1 10 of 1 . This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Guy european markets trading for regular trading. Stabilization is the best way to describe what we are seeing in europe. Not getting a bounce. Some markets up more than most. The italian market adding a little bit. This is what the session has looked like. We hit lows early on in the session and then bounced back. We have been on an upward trajectory ever since. The u. S. Market coming in strongly has helped. Europe still looking like it will close flat to fractionally down. Might close a little bit more positive. 400 is a big line for the stoxx 600. The main markets look like this. The pound has been under pressure. That is a factor for the ftse 100. Some stocks bounced more than most. Some of the miners. Some of the car stocks have been positive. The dax is still down. Some of the french stocks have been higher. Flat. C 40 absolutely we are up 1 . We are up. 1 . In terms of the sector breakdown, cars at the top. Utilities having a good day. Tech is bouncing back. Asml having a good day. Banks ok. Stabilization. It does not mean we are done on the downside. Talking of the downside, where do we see weakness . The travel sector. Some of the Airlines Continue to fall. Ryanair is still under pressure. 20 over the last few days. Easyjet down 21 over last couple of days. That sector is under pressure. Telecom is down, retail is down. The biggest loser today is definitely the travel sector. We were just talking about what will happen with the travel space and the impact and the importance that tourism has for the european economy. Single names, lets take a look at the single stops. 5 . Saying it can manage the supply chain story reasonably well. That stock being rewarded. Asm up 10 today. The market like that. Diageo another Drinks Company warning what is happening with the coronavirus. Very exposed what is happening in china. Down 1 . It was a little worse earlier on. 1 relative to where it was earlier is not a bad performance. 2930 is where it looks like the stock will close. Vonnie the state Department Just issuing an updated travel advisory on italy for u. S. Citizens, saying exercise increased caution. That is the sense of the day. It moves to the travel and tourism sector. Now it is isolated and we have a bounce back in the general market overall. Highs, up0 off its 1. 4 . The philly sox index is up and that is helping the nasdaq to the best performance of the majors. The dow also up. The 10 year yield, if you looked at it before yesterday you might think that is a low yield. 13055. Ay we reached we are five basis points above that. Nevertheless that money is coming out of the treasury market and going into the stock market. Fears are not going away. Crude oil is below 50 a barrel and we have gold futures off but still at 1639 and change announced. It might look like there are stocks higher and stocks lower, but the majority of stocks are higher. Tjx is an idiosyncratic story. Netflix and some of the semis helping the s p 500 to those gains. On the downside, that tells the story. Stocks lowerto 55 in the s p 500 and most are the cruise liners, the airlines, expedia, royal plebeian Royal Caribbean, and lowes. That is a funny one. The same person has been at the helm of lowes since 2015. He is engaged in updating operations, but he has much more work to do. Even in a Housing Market showing signs of being healthy and the fact that home depot is doing well, that is not helping lowes today. Guy talking of earnings, the french waste giant reported numbers that beat estimates. The analyst call dominated by the coronavirus, which could hit operations in china. Ceo about how much visibility he has regarding the virus affect. We have been monitoring the situation closely over the past few weeks. As you know we are an essential public service. We have an issue maintaining the continuity of Services Even when there is large disruption like this one. In china it was pretty straightforward. Most of our activities were shut down during february and part of january as a consequence of low interestrate activity in china. What we see today is the request from the government of restarting our operations. Possibly putback and operation. We have a very per size we have a very precise march in front of us and we were able to assess the impact. Assuming things would resume and go back to normal progressively and during q2. Guy we are now starting to see the virus spread to europe. France is the most visited country on earth. Spain and italy are not far behind. Do you have any concerns about the spread to europe and what impact it could have on the Summer Season for suez . , we have a clear objective of protecting our teams so they can go on operating Public Services that , providing water and collecting waste and so on. We have a lot of protocols prepared at the time of h1n1. We are prepared for this kind of event so we can go on delivering our services. What we can see on one side is it will have an impact on the demand for water and waste services. At the same time, our services we do not see a material impasse in our operations. Then what we are going to expand with the additional cost to be able to face the situation, but most of the costs are insured. Situation remains as it a contained we have dissemination of the virus, the most important impact is the one in china. Guy lets talk about your disposal plan. Youre looking to dispose of around 4 billion euros worth of assets by 2023. We have seen stock markets around the world tumble. You have a relative longterm timeframe for disposal of these assets. Do you see any effects of the stock market turbulence on your Asset Disposal Program . Were you looking to dispose of any of these assets this year . Bertrand the Disposal Program has been split in two in two in terms of capital employed and we are going to execute the first wave this year. Most of our assets are longterm assets, longterm contracts. Infrastructure very well positioned, especially in a context where there is a big demand for our services, and therefore so far we have not seen a Material Impact in the evaluation of our assets and the one we are going to dispose. Guy would you be flexible . Bertrand we have to be pragmatic in this kind of operation. We are going to run a competition and of course we are going to dispose of assets whenever we are at the value that is the correct value for those assets. Suezs new ceo bertrand camas speaking to me earlier today. Market stabilizing. The ftse was up. We have seen the pound down. The dax was barely down but it did finish down. 1 . Not much action during the auction process. We will carry on the market coverage at the top of the hour. The cable show taking to the air on dab digital radio. Jonathan ferro will be in new york. I will be joining him in london. This is bloomberg. Vonnie live from new york, i am vonnie quinn. Guy from london, im guy johnson. This is the european close on bloomberg markets. Vonnie the italian Opposition Leader accusing the premier of underestimating the threat of the coronavirus outbreak. I is urging the government to earmark at least 11 billion in aid for those hit by the disease. Maria tadeo is in rome. Talk about this man of the north does he try to take advantage of this in some way . Maria that is the question. The reality is at this point italy is a focus of the coronavirus. More than 10 people dead. Close to 400 cases that have been reported of the coronavirus. Industrial powerhouse of the Italian Economy affected by the virus. , he can smellvini blood. He knows that from this could be political repercussions. He is saying it is clear the government has not managed this correctly. We went from having just a few cases a week ago to pushing almost 400 cases. To have the country become the focus point of the virus for europe. I spoke to him and asked him this and he said it will be the economy and the italian citizens will have the final word on this , but the crisis was badly managed in his view. Lets take a look. An economy that will condemn this government opposed of factions that do not like each other. Fivestar,tic party, others who do not agree on anything. The China Economy was already the weakest in europe in terms of growth. Of 27. After the virus, which will inevitably slide us into a recession, the government that has been disagreeing on everything cannot be the one to give answers. Salvini,at is matteo the leader of the opposition in italy. He is saying there will be a recession by the end of the year. That is his prediction. He is calling on the government to put money to work to stimulate the economy. How will the government tackle the crisis we could see on the economic front . We do not have the details. What are economists saying about how severe the economic hit could be . Maria there are two things. They are saying it will not depend on the length of the coronavirus outbreak. If this does go on for longer than expected and it does continue to have an impact on the industrial powerhouse that is the north of the country, you can see serious repercussions on the Italian Economy. You have to keep in mind this was an economy in contraction at the end of last year and has been flirting with a recession. Some are saying that if this goes on longer it is guaranteed italy will go into a recession in 2020. Central banks are saying there could be Significant Impact from this. We do not want to sound the alarm too early. A lot of this has to do with Market Sentiment and we do not have to make a bad situation into something worse. When you look at the Credit Rating, there could be a hit to gdp, but when you look at the Credit Rating it will not have any impact. They are not saying they were cut anything further. At this point, the question is how is the government going to react. What kind of response are we going to get from the authorities in rome but also from the European Union . We know there are strict deficit targets the Italian Economy should put in place. Whether or not we are going to see flex ability from brussels to stimulate the economy, that remains a question mark. Vonnie thank you. That is maria tadeo in rome good guy lets turn to germany. Germany is looking at freezing its constitutional limits on public borrowing great with negative rates, it is a move public borrowing. With negative rates, it is a move many economists have long seen coming. Joining us is Marcus Ashworth. Marcus your italian is coming along. Guy thank you. Should we take it seriously . The point is he has not done without having cover from his cdu partners in the grand coalition. I imagine that having sounded out the greens, you will need them to get it through the bundestag, they have to do something or at least give the pretense they are thinking about doing something. This is a municipal federal shift to debt that could freeze up a bit of spending. Over 100 billion euros has been off because of this iron rule for the last 10 years. It is a start. You can question whether this is the right time for spending. Lagarde,for christine she must be doing backflips because she must be so excited because finally the German Government is starting to show a little bit of skin and maybe that means the other teutonic nations in europe might start to open up the fiscal mpap. Vonnie this coronavirus could be exactly that cover the German Government needs to shed what had been a burden. Shockingly, the ratio german debt to gdp has fallen below 60 . Explain why that is so funny. Say i cannotan possibly comment, but the point is it is exactly that. The old expression to make an advantage out of a crisis is the opposite one. Germany is in such rude physical health, they have the ability to spend themselves out of what is quite a big hole, particularly in manufacturing. The economy is pulling into a hole because of china and other reasons prior to that. The point is they have the money, they barred for free. They borrowed for free. Why not make Infrastructure Spending and get your domestic economy tipping over and do muchneeded stuff . It makes obvious sense to a lot of people. Germany has an iron rule. Gameis this a zerosum that if germany spends money, the ecb backs off when it comes to Monetary Policy . Marcus if they are skillful, fiscal policy and Monetary Policy will have a multi fold affect. They need to do something more. The ecb is going to do something more. It will have to. Spending, with fiscal but it will have muchneeded affect. What happens to the meetings if there is a travel advisory from the u. S. To exercise increased caution with italy. That will be around europe as well. We need europe to continue their meetings. European officials at the top levels. Can things like this be decided without the meetings happening . Marcus absolutely. One is a videoconferencing coming to the fore. They do not need excuses. They can do this easily and they need to. I hope they take action and get on with it. Otherwise it is going to be too late and that is what i worry about the european economy. Mole every time we see signs of recovery it walk straight into an oncoming truck. Guy you said the cdu and the greens all need to be on the same page. The german politics is in slight chaos at the moment. Is that a concern that this will not happen the right way or this sounds positive, i am stunned that the market is not reacting more but that the german politics could get in the wake. Years the election next will be the one that says no to freezing spending. It is not going to happen. The greens will only approve it if it has a Climate Friendly aspect, as it most logically will. I think stoltz knows what he is doing. The cdu if the cdu blocks it because of fiscal rectitude they are playing a dangerous game. I do not think that is the real issue. There a lot of politics to be done. This is not a done deal. I am thinking about it rather than formally proposing it and letting it be voted through. I think they have to react. I would be surprised if someone like stoltz, who is a very careful guy, that he is suggesting it is not going to happen at some point. Guy always a pleasure. Bloomberg opinion columnist Marcus Ashworth joining us in london on the german story. From london, from new york, this is bloomberg. Guy another update on the spread of the coronavirus around the world. Akistan the latest country the Health Minister commenting on twitter, and we are going to continue to monitor that. The Health Minister in germany saying the country no longer tracks all of the infection chains in germany. Theng germany is at beginning of the coronavirus epidemic. Words from the german Health Minister. Vonnie interesting that several big banks cracking down on italian travel, including Deutsche Bank and Goldman Sachs. They are restricting their staff from traveling to italy. In the meantime, lets look at your bloombergs newsflash. The largest private real estate transaction ever in the u. K. Is 6 billion, Goldman Sachs selling student accommodations to blackstone group. The London Stock Exchanges acquisition of roof entity is running into roadblocks. The deal is facing cather than expected scrutiny from eu regulators. The London Stock Exchange agreed to by the Financial Data provider for 27 billion. It is a bid for the company to deepen its push into providing data. Investors have checked out of the new york lodging markets. Hotels changed hands during the first months of january according to capital analytics. About 1 billion worth of hotels traded in january of 2019 alone. A growing supply of hotels in new york has limited owners ability to raise room rates. Disney shares are in the red after the Company Named a new of speculation of who might succeed bob iger. We spoke about the changing strategy after the announcement. You can see that full interview at bloomberg. Com. Ining up, balance of power the United States. Looking back at last nights debate and looking forward to super tuesday. This is bloomberg. David from bloomberg World Headquarters in new york to our tv and radio audiences worldwide, i am david westin. Welcome to balance of power, where the world of politics meets the world of business. On the brief today, the continuing spread of the coronavirus across the globe. And what the United States will do to try to contain the virus right here. So much for your continued reporting in hong kong. Where are we on the spread of the coronavirus . Thinksnt trump said he we are getting it under control. Thinks we are getting it under control. He said that the other day, and xi jinping said they had the capacity to limit what was going on and that was working. Mr. Trump will be addressing the nation and the world in about six hours from now to give an idea as to what they might be doing next to prevent an expansion of this. Chuck schuso