make no assumptions. christine lagarde tells bloomberg that as the ecb works on its strategic review, policy is still very much up for debate. look at the facts. let's look at how the economy evolves. that is how we do. we need to be fact driven, clear in our communication. i am saying today, do not assume. interview from that throughout the program, and on containment, china's death toll rises to 25 from the coronavirus. the government expands its lockdown to 30 million people. a population larger than that of australia. r is said to be holding discussions for all of its roundup claims for $10 billion. just under one hour away from the start of cash equity trading throughout europe and in the u.k. take a look first off that where we see futures trading. right now, looking at some pretty decent gains. the dax futures are up .8%. captain ftse futures -- cac and ftse futures up. away from theiles new york stock exchange last day of trading for the week, we do see gains on that. s&p and dow jones futures. looks set to be a risk-on session on this friday. anna: indeed. interesting to see that after we have seen a fairly drifting session in asia. a lot of markets on half-day. china and south korea closed for the whole day because of the lunar new year holiday and into next week and we have trading in hong kong and singapore, so there is less volume than you would normally anticipate, but we have been drifting through the asian session. no surprise when we think about what we haven't have not heard from the who. eventually deciding this is not a global health emergency. not yet at least. this is something more localized. market participants focused on what is going on with the coronavirus. will it stabilize over the weekend? have it. no big moves after christine lagarde's statement yesterday. some movement as a result of that but nothing too dramatic this morning. lacqua,eague, francine speaking to christine lagarde. she said that would be ridiculous. that is what we got in these markets. a little bit of upside for equity indices globally but essentially a drifting session coming to the asian markets. let's get back to davos for the final day of the world economic forum 2020, bringing together world leaders, policymakers, and executives. inentioned france -- france to christine lagarde. she joins us as well as haslinda amin. are delighted to talk about the future of the industry. recognized faces of the carmakers. the chief officer of volkswagen. early morning, braving the cold. you were here. you met with president trump at a dinner and his team at a time where we still worry that he will impose tariffs on carmakers , especially german ones what was the discussion like? >> we still worry. i think it was a possibility. i had a chance to talk to the administration, secretary ambassador lighthizer was there, and we did a lot to prepare. we invested heavily to adopt to the new regulations. doubling up capacities. we soon will put all the machinery there to ramp up production for a new electric vehicle for the united states. doing what we can to avoid tariffs. haslinda: president trump left davos saying tariffs are still out. committed and serious about it. i think the administration is happy with what we are doing. francine: committed to tariffs? herbert: it's very difficult to read president trump, but he stated he is still not happy with europe. haslinda: when you look at your biggest concern, market decline in china or tariffs? herbert: 2020 for the automotive industry will be a very difficult year because the markets are basically flared. we see slight growth in some of the markets. in europe, we have to comply with the three targets. ourave to make sure that electric vehicles make their way . we are well prepared and optimistic. a lot of new products. yearll be a very demanding for that industry. >> a very interesting time for the auto industry. take a look at tesla market values. i mean, how do you explain why investors are putting money in a company like tesla, which is not making money at, compared to a company like volkswagen? you are making money. herbert: the market devaluation tells you something about the future. no future expectations. tesla is having a product which basically describes the future of the auto industry. fully connected electric car. about thehe valuation future car. i think tesla is paving the way there. it is modeling something new for the industry. i think we are close to follow. and so, we are quite optimistic. tesla keep the pace with and also at some stage probably overtake them. the question, eventually, who will win in this space? traditional carmakers like yourself, tesla, or players like google? herbert: i would take tesla more seriously than google. peers, someom our very competitive companies like toyota. i think it will be -- the company which adopts fastest and also which has enough scale in the new world to win that race. francine: what are you doing to win the race? herbert: wrapping up our software capabilities, buying companies, building up new skills. we are heavily investing in ev .v.'s, battery sales. haslinda: in terms of stricter emissions, what are you doing? the sense out there would be gas powered. that would be the future. where do you stand on that? herbert: the future will be electric. now, thisy clear train is moving, gaining speed, gaining momentum, so we are preparing. we will see a car which is emission free, will become very safe. we will probably spend more time in a car than today, so cars would be very convenient. my view is that the car will be .he most precious haslinda: what could hinder the effort? herbert: nothing can. francine: there must be a piece of technology which would make it better? herbert: a lot of technologies. the auto industry was always about the broad variety of technologies but the new thing is to have it fully integrated on the internet so loads of data being uploaded from the car to the internet and then downloaded and that makes the car really innovative, convenient, and that makes a big change. that is something new. i want to see if there is an update. the change of pace, the change of progress to electric cars, but also to driverless car's, is it going to be quicker than we think or less quick? arbert: 2020 will be breakthrough year for electric cars because also legislation is demanding basically a percentage of electric cars in europe and in china, later than the united states. be decisive should years. haslinda: volkswagen said it wants to be carbon neutral. the question is, how much will that cost you? changing.he world is many people are talking here about the cost, but at the end, if you look at the figures, renewable energy is already as cheap as a carbon-based energy, and new technology is really stepping in, so the world will be different, but the world will still have exciting product. it will be worthwhile. haslinda: could you put a price to it, how much it would cost you? you have more than 122 factories around the world. herbert: we are continually investing. we are one of the biggest investors and we put a lot of money behind r&d. but we changed it to more new technologies. let's say focus more. i think we can go. francine: how does the merger change the landscape for you significantly? herbert: francine: not to him -- herbert: not dramatically. the industry is consolidating over the last 100 years or so, so it is a continuous process. scale methods in the future because software becomes so important. and so, i think it is a good move for the french colleagues. it is important they get a real important footprint in the united states, so they will become more competitive. >> would you be interested in consolidating? herbert: we are big enough. 10 million cars. and we have a relatively good footprint. very strong in china. strong in europe. a lot of room for improvement in the united states, where we are focusing. that is why we are investing. it makes sense for us to invest in the united states. we feel with our size and brands, we have think the right brands. we are well prepared for the change to come. francine: thank you so much for giving us a little bit of your time here in davos. anna, back to you. there will be plenty more from haslinda and i throughout the day. matt: looking forward to it. i want to bring you some headlines we are getting on the coronavirus right now out of singapore. found twothat it has more people infected with the coronavirus. it says both people were residents from wuhan. of course, that city of 11 million people has been, in effect, blockaded or quarantined. singapore says the total suspected cases of the coronavirus there have risen to 28. we know now that about 800 people are affected. 25 reported to have died. we are going to continue to update you on that. anna: let's tell you what's coming up on the program. we will bring you our interview with christine lagarde. caughtleagues in davos up with the ecb president a-day after announcements after the strategy review and some important guidance on what markets should or should not focus on. we will hear from the self-described towel of scent -- owl of central banking. this is bloomberg. ♪ matt: welcome back to bloomberg markets. this is the european open. we are 45 minutes away from the start of cash in equities trading. solid green arrows in terms of european equity index futures right now. you see gains in u.s. futures as well. this friday could be a risk on day. bloomberg first word news with lower right in london. china's virus is not a global problem yet. the world health organization decided against declaring the new coronavirus outbreak a worldwide health emergency. it has jumped to 25. 10 chinese cities and restricting travel. the outbreak will not impact credit ratings. wildfires in australia are set to push the rising global co2 levels to a record. willrecent updates say it release 900 million tons of carbon dioxide into the same as allthe global aircraft. atomic scientists cited the rising nuclear threat and a lack of action on climate change. they move the clock to 100 seconds to midnight, a 20 second advance. the clock has been maintained since 1947. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you very much. christine lagarde says investors should not assume that current monetary policy is on autopilot. she spoke to francine lacqua at davos a day after announcing a review of the ecb's inflation goal and policy tools. >> if markets are interested in what happens in the next 12 months, they should not pay too much attention to the strategy review because we are conducting two separate exercises here. we will have our monetary policy ,ssessment and review as usual every six weeks. we will get together, look at the numbers, look at the markets, look at the views of the citizens in terms of inflation expectations, and we decide whether things should be way or another. that will be conducted irrespective of the strategy review. think watch out because things change. and we might have different signals, and we might reconsider. we might. i do not know at this point in time. what i know for sure is that it will be two different exercises and a strategy review will be on its own on a standalone basis and will progress because we are looking at what we do in the future, not what we do next week or in may or in july. overine: don't interpret to quickly? christine: we always over interpret. i told them on day one, do not over interpret. we will say what we can say. some people are disappointed that we have not said much more yesterday, but a strategy review starts here, finishes there, and you cannot hear say what you are going to do their -- here say what you are going to do there. learn from other countries around the world in the process. the fed is undergoing the same exercise. we need to take time to reach out to the parliament, to academics, to people, to those who are interested in these issues, to hear the voices, to understand what their views are. we will listen to markets as well, but they are one of the voices we will listen to. francine: economists believe monetary policy at the ecb will be on autopilot. is that a mistake? christine: to those who think that is autopilot, that is ridiculous. there is a forward guidance, which is a, which is setting a very clear timetable that is factor dependent, but let's look at the facts. let's look at how the economy evolves. we need to be fact driven. we need to be clear in our communication, and we will be. i am saying today, do not assume it will be on autopilot. francine: yesterday, you talked about negative rates. is there a point where we -- the side effects of negative rates means you need to scale it back? christine: we will be looking at the side effects as part of the strategy review. there is no question about that. we need to be attentive to that. financial stability is not our first driver of concern and consideration, but we will have to look at it, of course. don't forget that we need to have a banking sector in the year or area that acts as a good channel of transmission. matt: that was ecb president christine lagarde speaking with minutes at davos just ago. china expands its travel therictions as new cases of coronavirus emerge, and the death toll continues to climb, now 30 million people under quarantine. and when you are traveling to work, tune into bloomberg radio, live on your mobile device and dab digital radio in the london area. tune in for the latest. this is bloomberg. ♪ anna: welcome back to the european open. we have 35 minutes or so to go until the start of cash equities trading in europe. futures suggest we will see some movement to the upside. tech results from intel up. nasdaq futures. that part of the narrative as well of course as focusing on a lackluster session, drifting session through the asian markets as we try to get a handle on just how serious the coronavirus really is. china is rushing to contain the coronavirus, which has killed 25 people. the country has expanded travel restrictions to 10 cities, affecting 30 million people as new cases continue to emerge, but the world health organization -- a global health emergency. the time.not it is too early to consider this event is a public emergency of international concern. joined by tomow mackenzie, anchor of the china open on bloomberg tv. he is in beijing for us. tom, what is the extent of the virus now? give us the size and scope of this, and how is it impacting the country ahead of what is a really important holiday period? tom: this is really the equivalent of the evening before thanksgiving or christmas. it is meant to be a time of joy, but there is a deep-seated anxiety. you only need to scratch the surface to get a sense of how concerned people are. you look at the numbers you want to break down. so far, 25 deaths at least. there is 1000 suspected cases. 830 confirmed cases. we know it has spread well beyond the epicenter, wuhan, the capital of -- province. there are places across china, many of the provinces and countries like the u.s. and south korea and thailand. they have locks down the city of wuhan, a city of 11 million people, and then they restricted the travel on nine other cities in that province. about 30y, talking million people. there are serious questions about whether this is too little, too late, whether these measures will be effective, because millions of people would have been traveling from these cities prior to the restrictions put in place. we are holding our breaths to see the extent of the impact of this virus as these numbers are tripped across the country in the region. matt: christmas and thanksgiving are holidays where people spend a lot of money on travel, spend a lot of money on food, restaurants, hotels. how much damage has this done to the economy in china? christine: -- tom: that is the key concern because consumption and services, that is a much bigger driver of the chinese economy than anything like manufacturing, which accounts for less than 40% of gdp. services and consumption is what it is all about. anecdotal examples, disneyland in shanghai, they are closing that. that is a huge province with cities like shenzhen. they are closing all the cinemas. macau is potentially looking at closing all the casinos there. report saying you could see, if there is a drop of 10% in terms of consumption, that could lead to a cut in gdp of 1.2%, so it is significant. anna: tom mackenzie joining us there with the size and scope from beijing. next up, we will speak to the access ceo. that interview from davos, next. this is bloomberg. ♪ matt: welcome back to the european market open, we are a half hour from cash equities trading in europe. equity index futures are gaining significantly, it is the last trading day of the week and dax futures up their appointed percent. let's get the bloomberg -- futures up 0.8%. billion --p of $10 the chemical giant is setting aside $8 billion to resolve cases and $2 billion for future claims. by declining to comment under the terms of negotiation, 85,000 suits may come within the month. malera of the all-white board may be coming to an end. goldman sachs will not do business with companies if they lack a director who is the male or diverse. women onachs has four its 11 member board. awardedmon has been $31.5 million in compensation that includes $25 million of stock. million in cash. he has run the company since the end of 2005. they sell record profits for the second year in a row. anna: thank you very much. we are back to davos, the bringing together world leaders, policymakers and company executives. one of those joins bloomberg's haslinda amin. haslinda: with me is thomas buberl, ceo, axa. coronavirus has spread beyond wuhan, from an industry perspective, how do you view it? thomas: this is the new norm because we see more viruses popping up due to climate change because viruses do travel. we have to deal with it, and when you look at the response in wuhan, it was very professional and detected early. it was condemned early on, and we were involved a lot. towas a good opportunity show to our customers that we are there and we can help in a normal situation. haslinda: has the world learned from the sars outbreak? was learned in emergency situations but forget when they have gone. we need to remind ourselves the environment is changing, it is getting warmer everywhere and therefore new viruses will pop up. -- theorward the end indication on health is something we need to understand better. haslinda: australia is a case in catastrophes. how is the industry evolving to take that into account? you see more true natural catastrophes, but the pattern is not clear yet. if you go back to last year there were more smaller ones. if you go back further there were fewer big ones. the patterns are not clear other than we had more of them. the insurance industry is looking at this because it is a bigger burden in terms of loss. we try to help our customers do better with prevention. globally, the majority of these catastrophes are not even insured. $130 billion is the protection gap of people suffering not being insured, and that is a problem. haslinda: i want to look at the bushfires in australia. we had a conversation yesterday, and it was said that it is tommy early to estimate a cost. is there a way how much this will cost australia? very difficult to say, when it comes to your exposure it is clear what your exposure is, but if you look at the total thesure you will have noninsured part which is the majority. therefore it is difficult to estimate. when you look at the imprecations on australia from the bushfires and beyond, the consequences on the economy will be tremendous. haslinda: will it be increasingly difficult for individuals and companies to ensure themselves -- to insure themselves? there isn insurance never a bad risk only a bad price. every risk is insurable, but when you look at what is happening around the environment , prices are increasing. the only way we can insure more people to cover the protection gap, we need to work more on prevention. that is the angle we are taking. we are helping customers to be better protected. that is the way we can afford insurance. seeing a loware rate environment and people are saying it will be low for longer. it is not great for your business. how are you coping with that? to streamlineuing your businesses to cope with that? thomas: we have taken a strategic decision in 2016, we were exposed to financial risk. tohave shifted our portfolio go more into technical risks that are not related to financial risks to be less dependent on the financial markets. i look at it from the purpose perspectiveom the of populations. when you look at low interest, it is a question around what does it mean for the retirement of people? if you want a thousand dollars of retirement today, you need double the initial amount you used to 10 years ago. how do we cope with the fact that low interest rates are everywhere, and we have to get used to the fact that we need to work longer and save more efficiently to have more when we are older. haslinda: bloomberg ran a story isterday suggesting axa considering its options in the middle east. can you confirm that? thomas: i would never confirm market rumors. haslinda: given issues with lebanon, what implications could there be on your business? thomas: in 2016 we embarked on a new strategy which was going away from financial risk and focusing ourselves on the large countries we have in order to transform the business because you cannot do it everywhere. we continue that strategy. when you change a company, many rumors come up. haslinda: the u.s.-china trade viewensions, how do you it? thomas: it is very good news that china and the u.s. have found a first phase of an agreement. that was very much appreciated by the markets. when i look at it more longer-term, i see many questions that are not yet dealt with. the question is when will the question about technology be dealt with? and what does it mean for europe? if china and the u.s. have a they do not have a deal yet with europe, is europe the next china? , thanka: thomas buberl you for your insights. thomas buberl, ceo, axa. no confirmation on what they are doing in the middle east. anna: thank you very much haslinda amin in davos. up next, another interview from davos. we are joined by the german health minister. what preparations are being made? jens spahn joins us from davos. this is bloomberg. ♪ matt: welcome back to "bloomberg markets: european open." we are 20 minutes and expect to see equity indexes rise as we see futures rising as well, up by 0.8%. let's get the bloomberg first word news. to putrals are coming limits on u.s. companies supplying huawei. the company was blacklisted last year because of security threats. it prevented many companies from selling its components. the role is not to cut huawei office supplies but to protect national security. >> huawei has been encouraging american companies to flaunt the u.s. laws, to flaunt the regulations that we have. that is a dangerous practice, and not a good practice. in the longer-term, it will not be good for them. >> facebook may be in cahoots with president trump to get him reelected. the billionaire says there is .othing to stop them facebook rejected the accusation saying they are wrong. the doomsday clock is closer to midnight than ever before. atomic scientists cited the rising nuclear threat and in action on climate change, and they moved the clock 100 seconds to midnight. it has been maintained since 1947 when it was seven minutes to midnight. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. much.thank you very i want to quickly point out we are looking at bund yields that dropped yesterday below negative 30 basis points. today asome back up investors feel comfortable and buyo sell out bunds stocks, but it gives a great reminder the fact germany can borrow money at cheap levels. money. paid to borrow let's get back to the world economic forum where francine lacqua is joined by our german guest. francine: we are delighted to be joined by jens spahn, minister of health, germany, thank you for joining us. there is so much concern about the coronavirus. what can you tell us? jens: there is a big difference where we have a more transparent china. already.more effective we have international cooperation and are in daily contact. the european cities see the international community daily checking what is going on. ist i find important is it put into perspective. in germany, 20,000 people die because of the flu. if you put it in that perspective, we are taking it serious, we are prepared and keep on preparing, but we have to put it into perspective. francine: is there any advice you are giving citizens, cannot travel to china, to take the cautions? jens: just to realize if there is something like a flu coming, as soon as you realize that and if you are coming from china back to europe, you should see a doctor. health systems in europe and the u.s., we are able to deal with it as soon as an infection is found. we will put them in an isolated station, and we will realize was met in the past days, and if there is anything we should do. we know what to do. we are prepared, and that is important. it is extremely important to reassure. did you learn anything from sars? jens: we learned a lot because of sars, and the experience back then. the world health organization reformed and developed new institutions of permanent exchange around this. a permanent exchange with the cdc. germany has put in place real-time practice for leaders as well, what do we do, how do we engage with each other when something like this is happening? to get together with the other health minister's. we are practicing and preparing since sars. five years ago we had the same and we are in a different situation, and it has definitely changed. francine: will we ever get on top of some of these viruses before they happen or a couple of weeks after we find out about them? you are focused on innovation in health. what do people not realize scientist are working on? jens: there are many new drugs that for the first time might heal people with diseases. we see that for rare diseases. a good development, and at the same time the distillation is in over and is ongoing health. with online treatment, we reach out to patients all over the world. how can we reach out to people who have not been treated because we cannot reach them? through mobile devices we can reach out and treat the untreated, and that is something new. is health the last industry that sees disruption? jens: i am not sure it is the last one. in germany the health sector is ,he area where taxes are used the main medication tool and that was an issue in 2020. we are about to change that in 2021, speeding up. question is not if we buy from china, it is why are we not able to produce it anymore in europe ourselves? the same should not happen with health and digital help. we really need to speed up in europe, and that is what we are doing. francine: people worry about germany, the coalition, there are important talks next week. what do you see as the most difficult point? is a challenge for germany is after 10 years of growth there is the risk of taking it for granted. we obviously need to reform and become more competitive. countries around us are lowering taxes, and we need to have the right framework for the use of data. and of course investment in infrastructure, and it is important to see for the international community it is not a problem of money in germany. we have enough budget for investment in infrastructure, it is a problem of the planning process. we need to speed them up. that is a european and german issue. it should not take 10 years. re-regulae area of ting. francine: there was planning to get someone in place of the cdc, are you happy with the process? uss: it is a new process for in germany. the first time in our history that they are not the same person, that is a time of transition. we are still learning how to get on with that. on one hand we have chancellor merkel who is internationally respected for what she has achieved and is achieving. know after time we 15 years of angela merkel need to planow we and shape a future without her. that is an interesting process. francine: what does that mean? is it something you would consider putting yourself forward for? jens: while we are governing and want to keep on governing in this grand coalition, we have to shape the '20's. , how do we remain a nation of growth and prosperity in the next 10 years? how do we keep our society it iser when we see polarized and politicized like have never seen before in the past? how do we develop germany in the middle of europe? the pax americana, the u.s. is taking care of our security, and we do our business at the same time. that does not work anymore. we need to rearrange that within europe. europee: is it time for to have its own army? need is within the european union starting the defense union, and that is an commonnt step to have troops who could engage in our neighborhood when necessary. in thewhat is going on middle east, north africa, and we should not rely on the u.s. to solve problems for us and keep stability and peace. we must be able to do it on our own. we are not yet they, and the defense union is an important project. francine: thank you so much for your time. that was jens spahn, minister of health, germany. thank you, francine lacqua in davos. coming up, analysts saying the s&p 500 is not richly valued enough. we have the annual morning call from wells fargo and stocks to keep an eye on. this is bloomberg. ♪ anna: welcome back. five minutes into the start of cash equity trading. u.s. futures not so positive. keep an eye on ericsson. profits missing around uncertainty around t-mobile and sprint and if they would tie up. phone companies in the u.s. are reluctant to spend on infrastructure. bayer,omething to lift settling all of its roundup cases for $10 billion. investors typically like that kind of certainty. lowerthe price tag is than some would have expected. there are some court cases that awarded more than that better on appeal. rising in the premarket on that settlement update. this is bloomberg. ♪ anna: good morning, a minute to go until cash equity trading. make no assumptions, christine lagarde tells bloomberg as the ecb works on its strategic review, policy is very much up for debate. >> let's look at the facts, let's look at the economy evolves. we need to be fact driven and clear in our communication. it will be on autopilot. riseschina's death toll to 25 from the coronavirus. the government expands its travel ban to 12 cities and 30 million people. discussions for its claims for $10 billion. matt: we are saying european futures rise on this friday morning. we see bond yields rising as well. the dollar is strengthening against the yen and gold is coming down. it looks like it will be a risk on session to end the week. anna: let's get to the market open. we are playing catch-up in europe. if you look at the s&p session yesterday, your closed when it was at its session lows. we saw heavy selling across european equity markets yesterday, and we are bouncing off of that to catch up with the u.s. u.s. futures are flat. we got numbers from intel. we have the french market as expected up 0.8% as is the dutch market and the ftse 100. it seems markets are trying to deal with the coronavirus. try to get it in the right perspective and how much this will become more than issue for markets. it is devastating for populations involved, very restrictive on movement in china. from a market perspective, trying to get a handle on the background context. we just spoke to jens spahn about that moments ago. the earnings story is very much at the center, and we could see stocks react to that. matt: in terms of winners and losers, it is almost all movement to the upside. gainers, only 45 stocks are minutes intotwo the session. the ones adding the most points to the stoxx 600, the asml, and other tech companies. up there as oil rises. back fromton bouncing losses yesterday. on the downside, nestle is the biggest loser in terms of taking points away from the stoxx 600 index. a couple of companies that make stuff you want or need the by our dropping. ande that make alcohol other consumer staples. said, the market open out of the way, let's get back to the world economic forum in davos where francine lacqua is. francine: we are joined by klaus regling, managing director, european stability mechanism. thank you for speaking to bloomberg. the you were a political at thelity, which is not forefront, but not political stability in europe means it is more difficult to take reforms needed to protect the euros in tough times? klaus: i think that is the experience in many areas that it is easier to come together and find agreement when there is a crisis. that is pressure from the outside, and we have seen that in the euros area. 10 years ago, it all happened with the surprising speed because 19 countries had to agree on something new. when we are out of a crisis -- and we are happy to be out of the crisis -- it is not surprising that it takes longer because 19 countries have to come together. they have different views and starting positions. but i prefer to be out of crisis. francine: are you worried they will delay doing the reform? need a consensus, so every country is important. but we work very well together. we had a meeting of the europe group and the italian finance minister is fully on board with the reforms that have been in discussion. i am glad we can find an agreement by march. of utmostis this importance to get finalized by march? my expectation. it should happen and will happen. francine: will we get a common deposit insurance scheme? the reforms is one important element. the mandate will be broadened. new facilities will be created. it is only one element to strengthen the monetary union. a lot happened in the last 10 years. what is still missing is to complete the banking union. the element that is missing is common deposit insurance. that will take a while and not be wrapped up by march or june, but we are starting a political process to make it possible to happen over the next two years. how important is it for financial stability? what compromises for member states? klaus: we need to complete the banking union to be better prepared for the next crisis. today we are much better prepared than 10 years ago. these are additional elements that would make the monetary union more robust and resilient. the other elements which are controversial at the moment, but ,verall we have to remember three quarters of the things that were needed 10 years ago have happened. that makes the union much more stable, but it would be good to do the remaining elements in order to be better prepared. we do not know when the next crisis will come. happen towhat will the controversial elements? will people back down or will it be abandoned? a crisis are not in and it takes longer to come to consensus, but we have shown in the european union and the andtary union that we will we are able to come to an agreement after a while even if the starting position is controversial. the elements are clear, common deposit insurance, one day even safe assets. the agenda is well-defined. we have done a lot. francine: president trump arrived and talked about a lot of things. he talked about possible tariffs against europe. as an economist, trade wars are bad for growth. and for all sides it is bad. i hope that can be avoided. it has already had a negative trade is note growing very fast anymore. last year was the slowest growth in decades. that means it has a negative impact on growth rates in every country. hopefully this can be avoided, but it does not mean we are entering a new crisis like 10 years ago. it is regrettable, trade wars are regrettable because they mean lower growth than what is possible, but it does not mean the next crisis is around the corner. euros need to the challenge the u.s. as a reserve currency long-term? commissioneuropean is in charge of our trade policies, and they have made clear they will take action if the u.s. imposes tariffs. the international role of the -- thees beyond that international role of the year that.oes beyond people are in more favor of having a stronger role for the euro. united states is withdrawing from multilateral is him. theway to strengthen to strengthen the euro, and we have to work on the agenda that i talked about. francine: thank you so much for joining me. klaus regling, managing director, european stability mechanism. back to you in london. thank you very much. let's talk about the markets, nine minutes into the trading day. we mentioned a couple of these, but let's focus. the share there is under pressure, they missed on their sales numbers out of hong kong in particular. ons is something weighing the sector more broadly. , up by 3.2%.gher reporting of bloomberg says they might settle for a $10 billion payout with regards to the round up cases. that is something the market is watching closely. erickson down by 7.3%. 7.3%.csson down by it has meant companies have been reluctant to spend, and we saw a profit miss from ericsson. up next, more from our interview with christine lagarde. she says do not make assumptions about monetary policy. this is bloomberg. ♪ anna: welcome back to the european open. catch-up withing the united states. let's get back to davos. christine lagarde says investors should not assume current monetary policy is on autopilot. she spoke to francine lacqua a day after announcing a review of policy goals. thinkine: those who autopilot, that is ridiculous. there is a forward guidance which is strong that is setting a very clear timetable. at the facts. let's look how the economy evolved. we need to be fact driven and clear in our communication. do not assume it will be on autopilot. francine: you talked extensively about negative rates. is there a point where the side effects of negative rates means you need to scale it back? atistine: we will be looking the side effects as part of the strategy review, no question. we need to be attentive to that, financial stability is the first driver of concerning consideration, we will have to look at it. we need to have a banking sector that has a good channel of transmission. francine: that means you can extend tiering? christine: we are not considering that at the moment. francine: president trump says he is thinking about tariffs against germany and europe in general. you are seeing growth in europe, how do you match the two? we are seeing modest growth and modest downside risks, that is the reason why it is balanced to the upside. see.all what i was pleased to see is there was a good first meeting between the president of the european commission and president trump. it is better to start on a good footing. difficult be relationships going forward and points of negotiations that will be hard. whether it is trade or technology or energy, multiple topics. and the united states have been friends for a long time, it will not go away. in many instances they have joined him, but europe is different with different systems. that needs to be secured for the sake of the europeans. a bigne: are tariffs concern for the european economy? christine: it is a big concern. and trust ine europe that will not be affected, but trade with the united states which is an important trade partner, if there was a sudden rise on tariffs, or a tariff war. you tariff me, i will tariff you, that will be hard on the economy. francine: what concerns do people raise with you? christine: it varies. to family members, they say, explain what you do, we do not understand what you do. that is a good signal that we need to communicate in a more explicit way about what we procure. if we explain exactly what we do, it is technically sound, experts will understand. family members and taxi drivers and hairdressers and shopkeepers may struggle to understand, but if we have growth and facilitate investment and create jobs, then it means something. is it reconnecting with the citizens? christine: that is an important factor. people in europe are quite bullish about the euro. they are pleased to have it as a currency, and we do everything we can to make sure euros flow easily and payments are secure. that what they have is solid stability. we need to do a bit more. francine: a lot of focus on sustainability. we have a danger outsized expectations what central banks can do? christine: possibly, but i think nonetheless each and every one what we can explore do about the current risks. risks caused by climate change on corporate, on the economy, on general stability have been largely underestimated, and for good areons because many risks difficult to assess. we are talking about what happens in 30 years. it is not in the cards of the stress tester to anticipate what happens in 30 years. you look at the immediate future in the market risk and macro risk, but the climate risk in 30 years that need action now if we want to remedy those risks. that is difficult. we need to do it, absolutely. president was ecb christine lagarde speaking with francine lacqua in davos. we got french pmi's across the wire, manufacturing pmi's rose and the expectations. 50.4 in but better than the previous reading. service pmi's dropped, they also tes.ed economists' estima the euro jumped up but is now the dollar.ainst let's get the bloomberg business flash. bullish is getting revenue forecasts driven by demand for chips. it sales in 2020 will be well above expectations. intel will spend $17 billion on new equipment to fill customer orders and increase manufacturing capacity. volkswagen is struggling to sell its energy unit. it is disappointed with the offers it received. they are holding talks with potential buyers since last year. engines used in shops and factories. very much. you up next, this morning need to know stories, goldman sachs is the latest to back away from doing business with white all-male boards. this is bloomberg. ♪ >> the biggest risk for markets are two types of things, u.s. domestic politics and the black swan that can happen. surprise ifnot be a we saw market setbacks in 2020. >> you look at credit risk, future interest risk, transition risk. where is a company on transition? the markets,erail a radical change in monetary policy, or and external event that could trigger disruption. borrow at a hundred years at 2%, people may get overextended. is there a shock to interest rates that could be a correction? >> there will be booms and busts but i do not see one anytime soon. like thes not seem pieces are in place for a market correction unless there is something meaningfully different in a geopolitical picture. anna: some of the voices from davos, our guests talking about what they see as the biggest risk to markets this year. the era of the all white male board is coming to an end, goldman sachs is the latest to back away from doing business with such firms. male is notand cutting it anymore for goldman sachs. david solomon issued this ultimatum, the biggest underwriter of ipos in the united states will not do business with a company lacking a director who is a woman or diverse. if a company wants goldman, the board must have one person was is not white, male, or straight. next year they will raise that to two. years, manytwo companies went public without a person of color or a woman on the board. this is a seismic change. we cover diversity and inclusion a lot here on bloomberg. will other wall street firms follow goldman, and does this represent a high watermark for diversity, or beginning to bring greater representation into boards across wall street and around the world? matt: thank you very much for that. the u.s. stock market has surged to record highs this year, will those markets go even higher? let's get over to dani burger. dani: in recent weeks we have heard from managers like ubs we say the days of u.s. outperformance are limited. but a new call is taking the opposite approach. valuations will move even higher. this is especially true for developed nations and the u.s. the s&p 500 trailing price-earnings ratio is nearing 20. three big macro reasons, the trade tensions are easing, global central banks are supportive, and we have a better growth outlook, all of which will support higher multiples. anna: thank you very much dani burger with a look at the markets. coming up, china expands its travel restrictions as new cases of the coronavirus emerge, and the death toll continues to climb. we will be live in beijing with the latest and what measures are taken to contain the spread of the virus. and what is the broader context? we heard from the german health minister earlier on. and what impact this is having on the chinese economy. this is bloomberg. ♪ beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. ♪ ♪ matt: welcome back to "bloomberg markets: european open." 30 minutes into the trading day, and looking at gains across the european equities. matt miller in berlin alongside anna edwards in london. anna: getting numbers from 41.2 --on the pmi, 45.2, better than anticipated, still below 50. so better than forecast on both of those measures. eurod see a wobble in the when we got french pmi's earlier on but nothing too excitable. 1.10 still the handle on the eur o. open,nced out of the but not surprising after the u.s. session, which put on decent gains in the latter half of the trading day. no sectors in negative territory. the worst-performing, food and beverage. a selloff in nestle, after a downgrade. weighing cointreau, on the drinks sector, all that having to do with business in hong kong. but still making gains to the upside. let's get a bloomberg first word news update. >> george soros says facebook may be in cahoots with president trump to get him reelected. the billionaire says nothing is stopping facebook from spreading socialrmation, and the network is seeking maximum profit without regard for the harm it causes. facebook has rejected that, saying it is wrong. recent estimates suggest the australian wildfires released 900 million metric tons of carbon into the atmosphere, about the same amount as all commercial aircraft in 2018. another knockout year for j.p. morgan, and jb diamond with third -- jamie dimon with $31 million in compensation, a bonus of $5 million cash. dimon has run the company since the end of 2005. news 24 hours a day on air and on quick take, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. matt: thanks very much. laura wright in london with first word news. china is rushing to contain the coronavirus, which has now killed 26 people. the death toll continues to rise. the country has expanded travel restrictions to 12 cities, now affecting 30 million inhabitantss as new cases continue to emerge. the world health organization stopped short of calling the outbreak a global health emergency. for more, bloomberg's selina wang joins us from beijing. tell us about the latest developments. selina: the travel ban started ofh wuhan, from the center where the disease was spreading, but it has spread to multiple cities putting essentially 30 million people on lockdown. unprecedented move at a hugely that just ago -- a huge logistical challenge, coming up on the new year and having wuhan be a major hub of high-speed rails. stopthink this does not as only delays the disease, many in china think that people have left the city before. you have the spread from u everyprovince, to province in china, japan, south korea, one case in the united states. there are some concerns that some who died from the virus showed no signs of fever, the most common way of measuring symptoms. there are concerns as the death toll rises and the number of infected cases rises to over 800. researchers put that in the thousands. anna: some people i spoke to at least the speed chineseesponse from the government compared to what it was with sars. has there been criticism, comments on what the chinese government has put in place, their response? selina: a few there's a backlash. response,ationwide china was praised by the world health organization for a swift response from all levels of government. sayinging, le keqiang no officials should try to cover this up, as was the case in sars, but there is backlash on the local government level, with calls for the wuhan mayor to resign for being so slow to respond to the virus and slow to say how severe it was, and that it could pass human to human. locally, media posts you see complaints about not enough hospital beds, how people with fevers cannot see a doctor because of overcrowded hospitals, some images of grocery stores being emptied, grocery store prices being incredibly high, so a lot of criticism on the local government level. of course, china has come a long way since sars in the early 2000's, investing 12 billion and implementing transparency reforms, but there is a long way to go. matt: thanks very much. selina wang in beijing reporting on the coronavirus. let's get to top individual stock stories with annmarie hordern in london. annmarie: all about earnings. up overr to the upside, 4% as total sales met estimates even though they had a dip in the home market in france. a a lot of this was priced in. saying of analyst notes, protesters would hurt the french market. carrefour able to weather the storm on total sales. 8%, thentreau down over biggest drop since 2015. revenue fell 11%, twice as much as forecast. another protester story, this one in hong kong. hong kong sales were really dented around christmas time. everythinglling 6%, to do with soft u.s. sales. companies are reluctant to spend big on next-generation wireless there is more certainty about the megamerger between t-mobile and sprint. anna: thanks very much. annmarie hordern. , another interview from davos next. your group's -- eu rogroup's president, next with his thoughts. this is bloomberg. ♪ matt: welcome back. 40 minutes into the trading session, gains of over 1%, a risk-on friday. goldman sachs chairman and ceo david solomon told bloomberg he doesn't expect much from the fed this year and the boom and bust cycle is not over. >> the monetary policy that has been around and in place for a long time obviously has an an arm's influence. when i sit here and think about the path forward, i think we are in a period now after three midcycle cuts for lack of a better term, i don't expect much from the fed this year. the balance sheet has gone down a lot the last couple years. i think the fed has done a reasonable job even with the speedbump. >> so if they start to buy and the balance sheet expands again? >> any time that the fed uses resources to effect liquidity, it has an impact on markets. i will not answer the way you want to, because i don't think it is a black-and-white answer. you tell me what q.e. is. >> we will ask bill dudley. we get a lot of opinions, including someone who drove your economics, mr. dudley of the new york fed. we get all these opinions, and our audience wants to know what you are learning from pros on the desk, the movements you see in the short term paper market. what have you observed in the market that gives you information about these balance sheet challenges? >> well, i think everyone observed that the fed had a very significant balance sheet investment and reduced that. there have been a bunch of regulatory inputs, in the amount of liquidity banks need to hold as regulations have changed, and at some point you can reach supply and demand where for a variety of reasons some can be idiosyncratic, and supply and demand, liquidity changes and the price for shorts on the rises. andound that appropriate want to make sure there is enough liquidity in the system. we positioned ourselves so we have liquidity to contribute. >> that was the question. are you constrained by the new regulations? are you happy with them, or do you need to see amendments to feel better? thee are an adaptor to regulatory framework, so as an organization i think we have adapted well. over the decades. and the framework continues to evolve, so her job is to make sure we can serve clients well, that we have the right seeurces, and we do not constraints to running our business well based on the regulatory framework. >> over the last couple months, the investment community has been pretty polarized. a whole range of views. given him -- guggenheim saying, and bridgewater saying the boom-bust cycle as we know it is over. where do you come down on those two extreme views? >> i am generally not a man of extremes, so i'd say they will be booms and busts, although i don't see one anytime soon, and as i've talk to clients the last few days, one of the principal seegs i do here, i'd say i and hear what i call a, middle-of-the-road view. u.s. economy is in good shape. manufacturing is a little soft. capital spending has been lower, but europe is a little better. headwinds, the phase i deal helps a little, but in the distribution of outcomes the overwhelmingly likely scenario is the economy cugs along -- chugs along. anna: back to the world economic forum. francine lacqua has another guest. francine: we are joined by mario centeno, president of eurogroup. thank you for giving us time. if you look at 2020 and your priorities, the budget, growth, the thinking union, what is top of your list has priority for the year ahead? mario: thank you for having me. the budget, the thinking union will promote growth, so the political priorities for the eurogroup this year will be to take on the banking union agenda. we have produced quite substantial amount of work. identified all union,ons of a banking and we have te advanc -- we have to advance. we had a push last year, with the german proposal for a lot of those dimensions that are at move, and we need to i am confident we will use the fresh institutional cycle at the european level to promote these within the next say 2-5 years. this technical differences between the countries, or more political? if it is political, it will be much more difficult to surmount. mario: the idea was to establish a bargaining set large enough so that the political dimension can be accommodated. concerns w of the that each member state has vis-a-vis this. i think we are moving in the right direction, at the right speed. this is a very sensitive issue, for all member states, so enl arging the bargaining and making everyone comfortable while we debate on what is crucial, and arean go -- some of them technical, but the main focus will be a political one. francine: when you look at european growth, u.s.-china signed a phase one trade deal, basically a truce. but does it help europe, or is there danger that the u.s. now picks a fight with europe on tariffs? mario: we don't want that to occur. the france-u.s. deal was very positive. we need to provide more clarity, though. bringing the debate to the oecd is the right way to do it, but we need clarity as soon as possible, so i encourage everyone not to delay this debate for longer, because we really need to send clarity to investors, to those that will promote a more sustainable world. the debate this year was about sustainability. we need investment to achieve with and that only happens clarity from a political side. francine: are you expecting more fiscal policies from countries? what is germany telling you about that? will: fiscal policy, it act whenever it is needed. we've made huge progress since policysis on fiscal across europe. we know some countries have more space than others to act. germany is one of those countries that can act, and we actually see some action fomr ae -- from the germany side, huge investment in the railway sector just announced by the german government going precisely in that direction. public investment, connected w that isate action, needed to make the planet more sustainable. tion expect more of those ac s to be taken in the course of finally see0 can the acceleration of the global economy and europe can play a role in that. francine: is europe becoming more like japan? do you worry about that, and how do you fix it? mario: we learned a lot about the economics of those issues. this apparentof threat of low interest rates, low inflation, we really need investment to follow through. we need our institutions to become more robust, and i don't expect those sort of difficulties. europe has a lot to do to avoid that, and we will do it. francine: thank you so much for joining us right here in davos. mario centeno, eurogroup president, and with that i send it back to you in london and berlin. matt: thanks very much. francine lacqua, in davos. we have breaking news here, on china. the e.u. and china and 15 others to going to form an alliance settled trade disputes. very interesting in light of the toothlessness a lot of critics of thing.sed the wto the e.u., china and 15 others are going to form an alliance to settle trade disputes, a breaking, developing story we will bring you more on. anna: they go on to say that to's will replicate the wr defunct applet body. appellate body established in the 1990's was there to hear appeals by wto members, but has been held up by not having the right people on it and has not gotten support from the united states. interesting to see the europeans and chinese making their own plan here. where does that leave the u.s.? what would their place be in this if any? thunberg, from greta to donald trump, there was a diversity of views on climate change at the world economic forum in davos. we will hear the highlights next. this is bloomberg. >> the claimant -- climate and topic rightis a hot now thanks to young people. but from another perspective, pretty much nothin has been done. >> we need a breakthrough. this is not something one company will do. >> we need policies to change the market. >> we are pushing our industry to be more and more responsible. i'd say that is working. >> we want to invest in clean technology, green procedures, and we know there is a lot of innovation behind it. >> i support a carbon tax, but i am not naive about it. it is one of many instruments that needs to be used. >> climate change is not going to be fixed by a central bank. it will be fixed by a combination of public and private. >> politicians need to explain we have -- embrace that we have a climate change problem and we need to do what we can to get to a carbon neutral world. >> to embrace the possibilities of tomorrow we must reject the doom and prophets of their predictions of the apocalypse. matt: from green campaigner greta thunberg to president donald trump there was a diversity views on climate change at davos this year. menttainable investor dominated, esg is the fastest growing segment. dani: all you have to do is look at the chart to see how the esg etf in europe has exponentially grown. in the last three months, more than $4 billion has been poured into this etf. than are more assets here dividend etf's and germany etf's in europe. this is a worldwide, global phenomenon that we are seeing. when we look at the list of etf leaders over the last week, five day flows, the number one is an esg etf with over $1 billion coming in. it is rare for esg to top the leaderboards, but this was partially if not completely linked to larry fink saying blackrock would avoid unsustainable companies and part of that was shifting the model to esg etf's. e.u., china and 15 others form an alliance to settle trade disputes, to replicate the widely ineffective appellate body of the wto right now. the trump administration last year precipitated paralysis at blocking nominees, so it cannot function and cases get appealed into limbo. european equity markets playing catch-up with the united states and u.s. futures point higher. this is bloomberg. ♪ sometimes your small screen is your big screen. and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. whether you're travelling around the country or around the house, keep what you watch with you. download the xfinity stream app and watch all the shows you love. francine: make no assumptions, christine lagarde tells us it is still very much up for debate. facts.arde: look at the look at how the economy has evolved. we need to be fact-driven, we need to be clear in our communication, which we will be today. don't be assumed we will be on autopilot. francine: more on that through the program. the

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