european stocks recouping some of the losses. markets trying to focus on the containment effort of the strict rules preventing unfair competition. coronavirus. prime minister boris johnson this is what gold is doing. rejecting the demands and insists the u.k. will thrive dropping 1567. with or without a trade deal. 10 year yield at 1.57. , theg up right here powered by more than 2700 journalists and analysts. this is bloomberg. francine: thank you. forecast of slower growth in asia. we will speak to the chief executive at 10:30 a.m. u.k. time. now we are just getting some let's get to the first word news news out of opec plus. in new york city. >> we begin with breaking news russia is ready to take part in this opec plus agreement if a this morning. meeting is called. bloomberg has learned the iowa democratic party is postponing this according to the kremlin. we will have plenty more on the the release of caucus results after inconsistencies in story throughout the day. one of the big movers we saw yesterday, we have estimates on the count. the issue is reporting. how the coronavirus can impact demand from china. about 20% lower than otherwise would have been. china is helping the u.s. will allow some flex ability on their let's kick off with the latest on the coronavirus epidemic. trade deal pledges as the virus hong kong has reported a death, threatens to slow domestic growth. the second outside mainland china. phase one is due to take effect in china itself, more than in mid february butunforeseeable 20,000 cases have been confirmed with the death toll reported at 425. krugmanterview, paul told us the virus could have a big impact on the world economy. paul: china is a quarter of the world's manufacturing sector. it can be highly disruptive. we don't know that yet, but it certainly looks like it could be. then, one of the things to worry about is if it is a significant negative shock, and we don't know if this is the one, we don't have a lot of cushion. the fed does not have much room to cut interest rates. the ecb, bank of japan has zero room to cut interest rates. francine: joining us for the hour, chair of chatham house, former goldman house chief economist, amongst other things including former u.k. commerce treasurer. when you look at this, how much of a nightmare is it for the world economy? jim: it is a huge problem. the timing of it is so unfortunate. likese new year is kind of our christmas and american thanksgiving rolled into one big huge time of year for consumption. it is coming just as there appears to be evidence that china's slowdown of russia was stabilizing, so forget that. along with some of the structural challenges, the sort of interplay between the known and unknown and whether normal business make some of those problems bigger. it's really big unknown. it's problematic. francine: have we seen anything -- i know you have written about the antibiotics. and this is a virus. jim: this is a taste of what could be in the future. francine: is this a black swan or had this been predicted? jim: you could not have predicted this particular thing, from what i understand. it's indicative of the sorts of things that are out there. and, i hope the chinese and inves, the who particular other forms of likenational gatherings take healthld bank prevented this as a bigger policy issue than it seems to be generally the case. i causally find this issue with my antibiotic resistant hat on. you need to have finance and economic ministries paying attention to this stuff. francine: why are they? jim: because we are all in our own little buckets. when i speak to them, the first reaction is often aren't you the guy who was an economist? why are you doing this? shouldn't it be some help guy? why aren't you talking to help people? the answer is your health people know all about it and they need my help to find the right way to put money on it in order to stop these issues. . this is medic of all sorts of chinese challenges. francine: for an update on the virus, let's get to hong kong with our chief north asia correspondent stephen engle. tell us about the numbers. 17% on: the numbers up the number of deaths. 425 now. we were at 414 in hubei province. 17% increase from the numbers yesterday. more than 20,000 now. we are at 17,000 yesterday. we are getting the first recorded death here in hong kong. that is after yesterday, there was a death from the philippines. late yesterday, we got news the embattled chief executive carrie lam, not necessarily acquiescing to the demands of the hospital authority or professionals, but she did give into the demands to a certain degree in closing 10 of the 13 border checkpoints with china. trying to contain this and that is obviously the biggest endeavor. and struggle that china is trying to do in hubei province. francine: let's go back to jim. how do we look at this? is this supplies coming in and out? is it raw trade? or do not understand the secondary effects of this? jim: i think it would be a very false for me to give you any confident -- i don't know is the answer to that. i would encourage your viewers not to trust anybody else who pretends they do. way to thinke core about it is when stars happened 2003, 17s happen in years later, china is 17% of world gdp. chinese tourists dominate the most beautiful tourist spots in the world, all over the world. forget any of those places in the next few weeks. the chinese supply chain, the chinese consumer over a holiday period. all of these things are going -- the irony is in order to deal with it quicker, effectively, they will bring the economy to a halt and the chinese interplay with everyone all over the world i expect the near-term signs from places as far as germany to those like thailand will be big. francine: the pboc actually did quite a lot yesterday. how much more can they do? stephen: they can do quite a bit more. they have not touched the benchmark rate in the long time but they have more targeting easing measures at their disposal. injection of liquidity yesterday, quite a large injection of liquidity for the banks. a big problem as well as going to be th ese manufacturers in the central part of the country. 14 of the main industrial provinces in china, eastern and central parts of china, it will have their holidays extended by a week. we are seeing hyundai motor today announcing they will be hunting temporarily their production and south korea because they can get a part that they need from the chinese factory. this could have a spillover effect into many supply chains. francine: thank you so much, stephen engle. we will be back with jim o'neill. coming up, the iowa caucus dissents into chaos after discovering inconsistencies in the vote cap. we will get into what impacts this could have on the democratic party. this is bloomberg. ♪ francine: this is bloomberg surveillance. let's get straight to the bloomberg is this flash. vivina: bp is upping its dividends after beating estimates in the fourth quarter. it is bucking the trend as an otherwise bleak period for big oil. bp reducing and selling unwanted assets. the final results for -- he'll be replaced as ceo. we spoke to the company's cfo. >> 2019, probably one of the strongest years we have seen in both oil trading and gas trading in the last decade. we have seen that in results particularly in the upstream in the fourth quarter but also across the downstream. viviana: carlsberg posting a boost in profits, rising to the highest in at least a decade. but it is warning about the impact of the coronavirus. it's forecasting slower growth in asia. a cloud over a global beer injury -- industry focused on asia. blackrock warning negative yielding debt is a potential powder cake for portfolios, after a 2.7 trillion dollars search in a stockpile. investors are paying to lend the world's largest asset manager says as inflation and growth stabilize, brace for losses. francine? francine: now the iowa democratic party will not release caucus results until later today. the opening event of the nomination raised has turned into political debacle following inconsistencies in vote counting. preliminary results from a handful of precincts associated -- reported by the associated press shows a close battle between five candidates. joining us now is our senior analyst who has been following all the beginnings of the white house administration into the election 2020. jim is also still with us. how does this happen? we're in 2020. >> very good question, many people are asking the same. something went terribly wrong. we don't know exactly what. the iowa state democratic party is not providing many details. they were using a new app this year which allowed delegates to record the results. that appears to have malfunctioned in many cases. but the backup, calling in results did not work because many delegates were kept on hold for hours. there were reports of some giving up and just going home. the state democratic party has said this was not a hack. that they have the underlying data. they've got a paper trail. they are trying to reassure the public that the results when they are reported are accurate and can be trusted. francine: when will that be? stephanie: expected later today but depends how big the problems really are and we don't know. francine: is this a win for president trump? stephanie: definitely. he is going into the state of the union address tonight arguing that he should be given another four years. tomorrow, he's excited to be acquitted in the impeachment trial. i think the problem with this is that i a lot often provides -- iowa often provides momentum for candidates. this year, we have an unusually large field. that is likely not going to happen. you will have a scrappy your fight for the democratic nomination. francine: jim, we are talking about the virus, black swan, geopolitics. actually is it domestic u.s. politics that will give us quite a roller coaster. right?t involved in it, that was supposed to be perceived as a negative. francine: we can talk about it, but i need to do a disclaimer. michael bloomberg, the founder of bloomberg lp, who owns this network and also running as a democratic candidate. jim: i find myself listening to this, very controversial view. we take it for granted that all these technologies are supposedly boosting product services at a time where product services slowing. francine: who makes the software? jim: what on earth -- this is hilarious in a way. maybe we shouldn't be so reliant on this dumb stuff. stephanie: apparently homeland security did not vet the app. that is one question being raised on why it was unchecked more thoroughly. i'm personally surprised this is the first we're hearing about it. i never read any stories about there possibly being problems with this app. now it is coming out there were indications the app was out working right. the second, more concerning thing is the same app is being used in nevada next week so they need to sort this out as soon as possible. in the u.k. too reliant can -- on technology? jim: the technology, not only one part of the british system is the full-blown technology. this justifies having this to make it safer how it is currently functioning. we no longer have any where people can go when they have a problem in their car. francine: how do you fix that? are we too reliant on technology or do we need to make it more nationalized? jim: we are taking it for granted that all of these technologies are, by definition, improvements for our well-being. francine: is there a concern when we have the results people will not believe the results? stephanie: i think that is the biggest concern. that president's hold narrative for the past three years from the trump administration on an assault on institutions and the concern going forward that even when they come out with results, there will be lingering doubt about how accurate they are. i think it is supposed to be a very tight race. 2016 was a very tight race between bernie sanders and hillary clinton. if there are just a few percentage points difference between, just a few delegates between, say a top three, possibly four candidates, there will be people questioning whether or not it was not handle. the lack of information now is not helping matters. jim: they have to believe it. stephanie: i would be very surprised if they did that. it would have to be a major malfunction. if they do have the paper trail, like they say they do, they worst-caseble -- scenario, it could take longer. francine: do you think president trump is a two-term president. he is getting acquitted. jim: what do i know? i thought the polls suggest the two front runners at the moment will both beat him. it seems to be the current kind of flavor that trump is done for another term, but you can't divorce it -- if this coronavirus thing is not solved, way too early to have confidence. francine: it is early february and the vote is november 8, 2020. stephanie baker. jim o'neill stays with us. coming up, can opec beat the bear as crude goes down 20%? opec gathers how to deal with the shock from the coronavirus. more on that later this hour. this is bloomberg. ♪ francine: this is bloomberg surveillance. still with us is jim o'neill from chatham house. we talked about the coronavirus, we talked about iowa, the fact was that don't have results. stephanie baker just told us -- november 3 is the election. if you look at europe, u.s. trade, if you look at geopolitics, what makes you nervous about 2020? jim: well, right now, this coronavirus because we need to have some confidence that the of infection is slowing. until that is dealt with, that is itself going to provide a bigger negative economic shock than anything else we could have dreamt of, because of the sheer impacts of china -- this is sort of like the japanese tsunami on top of sars rolled into one and more. so, that bothers me a lot. francine: pboc did quite a lot, trying to shore up the companies that have difficulty with liquidity. do central banks need to come together if this gets worse? jim: i view the chinese policymaking reaction to make sure the system is functioning. they are deliberately weakening the economy themselves in order to get the infection under control. touchingthat them of rates will affect the economy is for the birds. if it gets worse, we might have to think about emergency efforts of a lot of other policymakers around the world francine: thank you so much. next, youtube disappoints but we look at alphabet figures. this is bloomberg. ♪ francine: coronavirus cases top 20,000. the u.s. says it is preparing for a possible pandemic. all trades near a bear market on demand fears. after uncovering inconsistencies in iowa, the democrats postpone the results of the caucuses. we will ask what went wrong. and alphabet releases estimates as youtube disappoints in its first-ever revenue disclosure. shares drop in extended trading. well, good morning, good afternoon, good evening, everyone, depending on where you are in the world. this is "bloomberg surveillance." i'm francine lacqua here in london. lets into the trading day, it is all about earnings today, and i want to start with and boo. thes giving a boost to shares this morning. bp, up more than 4% today, bucking the trend and what we have seen with a gloomy start to the quarter from other big oil majors. bp beat on the top line. they raised their dividend and announce for the $5 billion of toposal, the cfo spoke blumberg's anna edwards and matt miller earlier. document -- to bloomberg's anna edwards and met miller earlier. all eyes lead to opec. biggesto focus, the loser, down some 14% as the sales met estimates, but they see a challenging year ahead. a lot of it has to do with the hp integration. francine: thanks so much. alphabet post fourth quarter revenue that missed analyst estimates. sales of youtube disappointed on wall street. stock fell more than 4% on extended trade. still with us is jim o'neill. bloomberg now is opinion's european tech collin miss. they disclose for the first time what their business was doing, alphabet. -- they had been talking about the profits with youtube without actually breaking out how good are badly it was doing, and then the moment they do reveal it has 15 billion dollars in annual revenue, they say that is not quite as great as we thought it was. that excludes some subscriptions. paying $10 a month, for you to coreum, but ultimately the is not as strong as people thought. makes more than $8,000 per month. important is that for alphabet? : google still makes 82% of revenue from ads. that is a lot of it you look it, choose on google, and will show you shoe shops. youtube is seen as a pillar of growth both for advertising and media. francine: they do ok in cloud this is the first time they reported, right? alex: yes. youtube in cloud used to be locked together. a bit more visibility on the cloud now. amazonmain so far behind and microsoft. they have done some acquisitions in the cloud space over the past year. those have not closed yet. we do not know to what extent they will and if that the business, but they will get more aggressive peer they have a more effective management team in place. they stillre sticking with alphabet? can we just not call it google? this holding company structure i think does give them an amount of room to not have the other businesses tainted by google if google gets into the troubled waters. francine: thank you so much. let's get to the bloomberg first word news in new york city with viviana hurtado. theana: we begin with number of coronavirus cases. they are topping 20,000 as the virus continues spreading. the first death has been reported in hong kong. that is the second fatality outside mainland china. beijing is working to contain the outbreak. officials are evaluating a target for economic growth for the year, if it needs to be dialed back. shares surged 20% yesterday, the blessings 13. tesla added $23 billion to its stock value. itsas lifted by news that panasonic battery plant was already operable. tesla's 26% gain for 2019. to italy, that is where the leader of the right wing brothers of italy wants the e.u. to compensate members who have lost out by adopting the your. but she does not want to leave the common currency. she has also taken a page from donald trump, saying she will put her country's interests first. i think that what donald trump is doing in usa could work even here -- low taxes, money on investment, defending the italian brand, which is the most important and precious thing we have. that could create a different future for our economy. viviana: earlier today, australia keeping rates on -- unchanged as the specter of a slowdown occurs in the economy. governor philip lowe says it is too early to say how long the impact of coronavirus on the chinese economy will last. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. francine? francine: thank you so much. let's focus on the u.k. and the brexit battle is resuming is boris johnson classes with the blocks of chief negotiator. that is ahead of 11 months of talks on a future trade deal. our guest spoke to, saying that the city of london could be a huge loser from brexit. johnson, saying that the city of london could be a huge loser from brexit. foode of the things is prices will definitely go up. you could, depending on what the u.k. does with the rest of the world, have a reestablishment of local quality food. simply because you were not able to get the cheaper food from europe. all of a sudden if you cannot buy cheap tomatoes from the u.s. and other countries, you have a chance to start growing them locally. however, that depends on the trade deals that the u.k. does with the rest of the world. the risk is we end up doing trade deals with the rest of the world, which allows us to take in good which are very cheap from the rest of the world. we cannot export the goods which have a huge added value into europe, and we get the worst of both worlds. francine: still with us, jim o'neill from chatham house. first of all, what will this government do with the u.k.? what are we going to see? how much more are they going to give to the north? jim: i have my fingers crossed. i am very hopeful that it may not just be a budget for the north, but a budget where the north is going to be, i'm if it is not, and all this noise that we have heard for the best six months, what on earth are these guys taking these kinds of risks for? i can just about get my head around that they are going to disrupt the past 50 years worth of u.k. trade relationships if they are going to treat the domestic places as really weak productivity and inequality more seriously. that makes sense in a strange way, because these issues are more important long-term to the u.k. but if they are not, what are these guys planning? francine: there is talk about losing it up north. are you supportive? jim: i think that is slightly in the gimmicky category, what i read with interest the superlative exploration going on. i was a minister, so in the treasury, i had to get the vote within certain minutes. how could you be the minister in the lords unless you have conquered going -- concord going from westminster to new york? how would that work? unless you brought it electronic of thati am not sure unless it is the prelude to significantly diminishing the lower of the lords. that would not be crazy either, mind you. francine: what do you think is the grand plan for this economy? i keep hearing he may want to do it like -- the most of the north -- i don't know how you marry the two. jim: i would suspect behind the scenes, they are vying for space going on. of the world,s probably pushing for this major disruptive approach. there will be others that they will hang on a minute, and the only reason they have this majority is because we want to -- the other people think they are braving the statute model. and a lot of the ideas related to the north in some people's mines, are linked to that. it is not clear, other than the fact maybe they are going to try to do both, as to how they are going to pull this off. i am now starting to think they are going to try to do both, which i think is actually quite exciting. it might cost a lot of money, which means quite why the bank of england was thinking of cutting -- i have no idea. it seems to be a bit out of touch because we could be on the verge of a very expansionary fiscal policy. francine: can we afford it? jim: not with a current interest rates because it will definitely mean additional net debt, and it ,ight mean the economy strangely cyclically, and subduing immediately better than people currently think. despite these remarkable risks, it seems to be deliberately taking on trade. francine: it is the first time we have heard the position of the e.u. on this trade negotiation. where do you think we will end up? jim: i am taking for granted that this is positioning, but the idea for boris to mention some kind of australia type trade deal is quite funny. i mean, a lot of what boris says is funny, but there is no real trade deal between the e.u. and boris, and it is essentially the forgeterms, which means the auto industry and any other industry with very tight profit margins because they could not operate here and ever make any money on those kinds of terms. now, if it is the disruptive model, it might well be the likes of don cummings and others, trying to encourage the pm to go for that approach. on a 30 year basis, it might not be crazy. some voting factors, one of the first places to vote out, second-biggest effective also -- what is it doing for people? francine: wto rules -- what does the bank of england, what does the prime minister need to do the next day? is it lower taxes? in thesen't think circumstances they should be thinking about cutting taxes. what is clear is that we are going to be spending more money, and it could be a lot. though we could be in the early stages of not only reducing -- the idea ofut cutting taxes, which in most of the voters' minds, i do not think that is reasonable. for the bank, i am shocked by what the bank has done less week. it looks like they are using things as an excuse to essentially acknowledge the productivity forecasting error they made and just now assume productivity is going to be weak forever. they could be right, but if you get these policies following through, they be some of these things will help i don't feel that we should be cutting interest rates. for british reasons. in the event of the coronavirus escalating and the world markets collapsing, and everybody worrying about a complete meltdown in the world economy, yes, of course. but links to our own issues, i don't see what on earth is the purpose of cutting interest rates. francine: jim o'neill from chatham house stays with us. stay with "surveillance." can opec beat the bear? last month, 20% opec and its allies gathered today to discuss how to offset demand shocks for the coronavirus. more on that next. this is bloomberg. ♪ francine: this is "bloomberg surveillance." russia says it is in opec plus part if the meeting is called. the price slump was discussed in a rare phone call. joining us now with more on the story is annmarie hordern. first of all, there was talk that russia and the saudis did not get along to try and do that. one block to this kind of stalemate? annmarie: it has to be the call last night between president putin and the king. a very rare phone call. russia is at least on board an emergency meeting leading up to march or february, we could see next week or the week after. the question is, does russia have the appetite to cut further? what we have kicking off is the technical meeting. they will go off for talks tomorrow. after that, the technical analysis, they will assess the market situation. from there, we will probably hear whether or not an emergency meeting is needed. francine: this is criminal virus, right? because we have the cities on quarantine, there is a spectacular figure that china is consuming 20% less oil. annmarie: 300 to 500,000 barrels annually a day could be lost, more than a third of global oil demand growth, based off coronavirus. more than we, much saw with sars because right now china compared to 2003 has a bigger share of the global economic growth outlook. that is why we are seeing this opec meeting, that is why we heard bp cfo talk about it. the bp cfo did say all roads lead to opec, the ball is in their court right now. francine: annmarie hordern with the latest on the opec plus. jim, this is what you were saying. the chinese economy since sars is so much bigger, and it is the economies that are getting beaten. week -- last year with his softest increase. of global gdp is five times bigger than it was in 2003, so that kind of -- i had not heard that about the 20% cut in oil demand that makes a lot of sense to me because that is the scale of shutting china down quickly. and contending with shale oil producers. jim: you have all of that, too. francine: if you look at the world economy 15 years ago, was it easier to forecast a price where it would be good or bad for the consumer? is definitelyt more complex because as you say, with shale you have a big increase in supply that was stimulated by what is going on. how do you factor all of that in? with the whole remarkable and justifiable approach to battling climate change, what is really going on and what is kind of a long-term elasticity echo many decades ago i wasted four years of my life doing a phd about oil. francine: i'm sure that wasn't a waste. jim: one thing i learned is that the long-term elasticity, the demand to high shocks is actually higher than what people think at the time. so quite what the right decision, what opec needs to do to stabilize the market here, good luck. francine: going back to coronavirus, is it easier even if it is such the economy is a controlled economy? does it mean we sometimes don't understand the secondary effects he e? we heard that 300 million chickens were at risk of dying because they are not being fed in the wuhan province. wuhan is bigger than london. china completing -- completely shutting down wuhan? if there is a blessing and all of this, thank god it is china and not india. could you imagine if this is the middle -- in the middle of dubai or delhi francine:? jim, thank you so much. a surprise slump in france and italy. worries,e coronavirus that is sparking tariff concerns from the trump administration. we will talk about that next. this is bloomberg. ♪ francine: economics, finance, and politics. this is "bloomberg surveillance." focusing on the your area, the surprise slump in france and italy has drank the arizonan in its worst quarter in almost seven years. gdp, 0.1%. the outlook had become less pronounced. still with us, jim o'neill from chatham house. i have a million questions and we only have two minutes left. the that must be before coronavirus. for germany, this coronavirus thing is a nightmare. francine: just leaving davos 10 days ago, president trump said we are still thinking about the tariffs. what can the german economy do? jim: i think germany is in a real problem here. what the past 18 months had showed already was germany set by ridiculous dependence on autos, a great thing, but in the circumstances it shows how vulnerable they are. and the remarkable success of exporting to china. if you have an overhang of those two things, even without trump tariffs, you have a challenge. the only way to change that number significantly is for the germans to fall in love with domestic demand stimulus. and they still don't seem to want to do it, which to me is remarkable. francine: you speak to a couple of policymakers or some of the ministers and they say we are doing more in terms of fiscal, especially when it comes to green bonds. will they do more with clean energy to kind of -- jim: i would hope so. i dreamt about what i have learned, one of the few things i learned in over 30 years of finances, never let a crisis go to waste. the germans have a great chance to be really, truly genuine leaders and smarts fiscal stimulus in the battle against climate change. i mean, these guys have got a remarkably strong fiscal position, and they sit at the core of a persistently economically unstable euros on. it is an incredible opportunity. of ecbing to a sort leader who i think is probably in a better position to have an influence, so i hope she does. she needs our support to do so. it is what europe and the world needs. francine: jim o'neill, thank you so much. he is with chatham house. in the next hour, tom keene joins me out of new york, forecasting slower growth in asia. we will be seeing how the coronavirus impacts impacts -- impacts beer drinking in china. this is bloomberg. ♪ francine: worldwide coronavirus cases top 20,000. the u.s. says it is preparing for a possible pandemic. all trades near a bear market on demand fears. -- oil trades near a bear market on demand fears. after uncovering inconsistencies in iowa, the democrats postpone the results of the caucuses. and alphabet releases estimates as youtube disappoints in its first-ever revenue disclosure. shares drop in extended trading. this is "bloomberg surveillance." tom, a lot more going on today. we try to figure out if the chinese economy will make markets a little more level than yesterday. we look forward to asking ourselves what happened in the last 24 hours. with iowa. is truly a mess. viviana will have an update on that, and kevin cirilli i believe is somewhere in des moines and maybe he will be able to explain it. absolutely store near how this first presidential event of 2020 is just one giant mess. francine: it certainly is let's get to the bloomberg first word news with more on iowa with viviana hurtado. viviana: that is where we begin. the first major test for democratic presidential hopefuls turning into a technological disaster. the iowa democratic party will not release results from the caucuses until sometime this morning. officials say they discovered inconsistencies from some precincts. the associated press did report preliminary results from a handful of precincts. they indicate a post-battle among five candidates. now we move to the coronavirus outbreak and a number of development. first we begin with a death that was reported in hong kong, and it is only the second fatality outside mainland china. there the death toll has risen to at least 425 eerie beijing reporting there are more than 20,000 confirmed cases, and because of the outbreak, hong kong based cathay pacific planning cuts to its flight schedule. and opec and its allies are trying to figure out how the virus could hurt demand for oil. today they meet in vienna. oil producers are under pressure after crude prices fell below $50 a barrel for the first time in a year. fuel consumption in china appears to have plunged as much as 20%. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. this is bloomberg. francine? tom? tom: thank you so much. let's look at data right now. equities, bonds, currencies, commodities. two days in a row, a nice bounce back from friday. .ow futures up everything going in the way of risk on, and oil come as francine mentioned, $50 with a quick print on american oil yesterday. the dow closed let's say 600, even 700 on the dow. renminbi is important. 702-ish. it comes in with a stronger yuan in the last one he four hours. francine: if you look at oil, it is rising after a four-day retreat. treasuries falling, gold is falling. investors are trying to gauge efforts to contain the deadly virus and are a little bit less freaked out than a couple of days ago. if you look at offshore, it also regained some declines yesterday. the end weakening. -- the yen weakening. tom: it is interesting. francine: we need to have an update on the chinese economy. jim o'neill from chatham house is still with us. thank you for joining us. jim and i, tom, had a good conversation about a number of things. it just pinpoints how you would look at the coronavirus and the impact it could have on trade, the effect it could have on gdp growth. jim: the key thing in terms of the latter part of your question is that china is now five times a bigger share of global gdp then when we had sars, and it has become the dominant marginal player in tourism, in foreign education for many countries, u.k., u.s., australia, many others, etc., etc. that being said for years, china is way more important for the world economy these days than the u.s., and that is why the markets reacted quite rightly the way they did last week. oil demand down 20%, and to get this thing under control, ironically, the chinese have got to shut the chinese economy down. and so in order for us to have more confidence for dealing with it, they have got to be more aggressive. the evidence may one of the reasons people might be a bit relieved. appear appeared to be -- to be more transparent, open about how we made some mistakes. that is the kind of thing we want, but it may lead to ugly economic numbers. tom: we want to celebrate 19 with brick, concept which jim o'neill changed. jim: i am inspecting you to hold the party. chart righto to the now. jim, this is a chart nobody in the west is talking about, and it is a commodity index. this is a straight bloomberg commodity index with the 2006 low p with this crisis we are getting down there. basis,inflation-adjusted commodity inflation. and evene brics india move forward giving -- given pernicious commodity inflation? jim: for india this should be a big thing because it is such an importer of oil. this should be good. for the likes of russia and brazil, that is why they are close to a decade with virtually no growth. these guys have got to wean themselves off being so commodity dependent. but china is the sort of mixed lessing because for the consumers it would be helpful to have persistently weak commodity prices and we are moving to -- anymore super -- driven chinese economy, so that part helps. there are a lot of big businesses rich in producing or commodity related things. so it is a very nuanced position. tom, welife below it, need to have proper positive structural reforms. we just got an indian budget over the weekend. i have been chatting with francine for the better part of an hour, and interestingly enough, the first time india has come up. nobody pays attention to them because india is getting slower too. india should be the biggest economy in the world, but they need to be doing things in order to pick up their rate of growth in the last year in order to get that. tom: bring it over then to the western world, which is service sector inflation at a certain level, and good inflation, disinflation, in another. do we need a different central-bank paradigm given the separateness of these two inflation series? i have been thinking a lot about this in the u.k. we need to get the central banks away from this 2% inflation and nothing else. some of this ongoing low inflation or disinflation we are seeing shouldn't be regarded in a traditional sense, in my view, of being a deflationary risk. they need to think about broader parameters. increasingly, i am a believer of the idea that while qe was fantastic 10 years ago, the persistence of it everywhere is actually not ironically but indirectly contributing to the perception when it comes to wealth as opposed to income, strongly can tribbett into global wealth and economy becoming bigger. see a can see -- we can that people are not happy about it. because of the 2% inflation mandate, people are can tribbett into it. we need to get away from that. francine: first about inequality and the role that central banks have played in this, also going back to coronavirus, the timeline is difficult because we only found out about this two weeks ago, two or three weeks ago. it has been going on for possibly one or two months. when do we understand the economic impact and a possible central-bank response to it? >> i would say the first data that we are going to find out the impact about is the february pmi's. the january ones were strong but it was too early. they were collected midmonth, the outbreak was really toward the end of january. we should be getting a sense of things. it is clear that the impact on chinese growth will be deep in q1. you could have negative growth in the chinese economy. as jim mentioned, china is to be 5% of the global economy. it is 20% now. it is a deep impact. in our view can w, we will view it as a temporary one. francine: jim, going back to your point, what did they do? they still have a mandate. jim: i think it requires a bit more imagination by the central bank leadership. i think they need to stand back and think this is monetary policy we are talking about. they cannot solve some of these structural particular -- particularly commodity related issues. this idea that monetary policy can permanently solve everything is increasingly based on some kind of fantasy belief in my view. i am not sure how healthy it is because at some point they are going to have to get out of this world. it was a slow dripping consequences of more and more things were on this never-ending world of free money. the private equity world i would have thought -- a lot of that is reliant on ridiculously persisting lower or negative rates. false expectations. francine: we will have a lot more on that through the next couple of days. jim o'neill from chatham house, and nicola mai from pimco stays with us. a descent into chaos after inconsistencies -- we will get into what impact this could have on the democratic party. this is bloomberg. ♪ viviana: you are watching "bloomberg surveillance." the outgoing bp ceo, bob dudley, the british industry giant posting quarterly profits that beat estimates. bp says it received a nice bump from its in-house energy trading unit. today shares of alphabet falling. google reported quarterly revenue that missed estimates. new sales numbers on youtube disappointed investors. before yesterday, the company had never broken out numbers on youtube. that is the bloomberg business flash. tom? francine? tom: if you go to your iphone and bring up an app, and you know what that yellow cover -- that yellow color is, go hawkeyes, this is the iowa hawkeyes app for men's basketball and their beloved football team. they even have wrestling on here. iowa state is real sports, as we all know. kevin cirilli is all app right now in des moines, and he joins us this morning. kevin, the first thing i want to go through -- this software app," is it?t "an kevin: the bottom line is this relates to the infrastructure of the iowa caucuses and several questions we will be following throughout the next 24 to 48 hours as we await those official results. first and foremost, the most important, who won? we still don't know. i can tell you that campaign staffers have been really not sleeping one wink in the past several hours as they wait for details. the biden campaign had the general counsel their campaign who says -- sending a letter to the iowa democratic party saying they want to make sure the campaigns are alerted every step of the way as this is done. the second point, the one you alluded to, is this raises questions about how this caucus is organized, precisely the infrastructure surrounding it, and as one senior democratic donor bundler put it to me, in a text message over the last several hours, it raises questions about the future of the iowa caucus. tom: that is where i wanted to go. this is an outraged the president will have a field day with this with his state of the union address. everiowa lose its first status because of the snafu? i don't know. but to your point precisely, the state of the union address -- last night they wanted to have, the candidates wanted to have the winner of the caucus to be able to address the nation, to be able to get free earned media, to speak directly to america. now there is nothing but confusion. there is no front runner, no winner p the results have been cast into question. this could take a day, several days, it could take months for this to happen. but i want to just say something, tom. a broader step back here, where the you are a republican or a democrat or not registered with any party, this is part of a broader conversation that washington is having about the integrity of u.s. elections as a whole. it is a bipartisan conversation, it is a conversation that sources in the intelligence committed have told me have been going on in earnest in 2016, and the shadow of this you cannot ignore is the conversations that were had since 2016. francine: are you suggesting that there was malfeasance, that this could have been a hack? we are saying this is a botched software job. no, i'm not suggesting in any way, shape, or form that there was malfeasance. i am suggesting -- what i am saying, rather, is that the integrity of the elections has been a conversation in u.s. politics about democratic institutions that has been had for the past several years. for iowa to really botch this is left to -- has already incredibly influential people on the campaign, their donors, their media, incredibly frustrated as to how this is done. i want to be crystal clear -- i am not suggesting there was malfeasance. all we know at this point is that the iowa democratic party is saying we will get the results sometime later today. tom: kevin cirilli, you need a cup of coffee. kevin cirilli, an incredible 48 hours for him. david westin will have political coverage as well. it is important we listen to the candidates. forget about chads and missed apps. let us listen to two democratic party candidates. >> today marks the beginning of the end for donald trump. shocked the have nation. [cheers and applause] because, by all indications, we are going on to new hampshire victorious. ♪ tom: "bloomberg surveillance." today.than good market francine and i looking at two days over narrow -- two days in a row up above friday. is the general statement, we are feeling better about the coronavirus this morning? francine: the markets are feeling better, but i think we are trying to look at exactly -- we have spoken to virologists day in and day out to figure out when it gets better. i think the markets are feeling good because a lot of what we saw from pboc, i am not sure they are feeling better about the virus itself. tom: if you're waking up in america, and worldwide, we draw your attention to the oddities of iowa. this would be the disaster known as the software of the democratic party nicola mai of pimco is doing everything to stay out of this, but we will drag him in somehow. leslie, is this any way to run a democracy? >> i don't think anybody intended for this to happen. it has been tremendously unfortunate. for those of us waking up to this news on this side of the pond, it could not have been a bigger surprise. it is obviously very disturbing to see what needs to be, i think for all parties, not just the democratic party, a healthy and well-run start of a primary season, caucuses in this case. what we are seeing is quite the reverse. a democratic party that looks in disarray, that cannot function. a tremendously bad way to start things off. tom: it comes down to all -- to how quaint all of this is. it is charming. it is like something out of middle school when you're thinking student council president. are we just going to get back to the simple idea of someone walking in a booth and voting for sanders, buddha jig -- buttigieg, whoever is candidate? unlikelyt is highly that there will be a question whether iowa should go first, setting the stage, having a disproportionate outside influence, or whether iowa, other states will have their primaries alongside iowa. i think it is likely to be heavily debated, but we are where we are. at the moment, there needs to be some sort of result. it is perfectly possible that we to newve forward hampshire without knowing what the results in iowa actually are. francine: is this damaging to iowa ornnot even trust them with iowa. leslie: i think it depends on the candidate. really it comes down to the individual candidates. one of the things we were looking perhaps to be signaled was which way the democratic party was going to go, progressive, the warren or sanders wing, or the biden-buttigieg, they be more moderate. everybody knew that i was was -- iowa was not the perfect litmus test in any case, but the fact that it can go first and drive that result -- certain candidates might actually benefit from this not being decided. the fact that candidate who when in iowa and new hampshire is pretty much set if you read back through political history. the fact that this is not decided, it leaves the playing field open. the optics are not good for the democratic already. president trump is surely going to take a swing at this when he has the state of the union address tonight. it leaves things more open then closed. much,ne: thank you so leslie vinjamuri of chatham house. next, the carlsberg chief executive on coronavirus. how that is impacting consumer demand in china and neighboring countries. 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. ♪ bloomberg "surveillance." the markets are up and yields higher as well. leslie vinjamuri and nicole of my are with us -- nicola mai are with us. rate, gilttreasury rate, and the rest of your rate and sovereign credit, are the rate set high and is your call note bond prices through the year? nicola: as we started the year, i would have thought that the recession risks became lower because of the trade truce and monetary easing. we reduced our duration exposures a little bit but we are pretty neutral in our portfolios. the coronavirus is adding another leg of weakness that is probably going to keep yields low. anchored largely because of forces like demographics, high debt levels, risk aversion post finance will crisis, all keeping interest rates low for a long time. when we choose bonds, we prefer gilt.ries to bunds or tom: what is the vector of rates to flow? j.p. morgan made a huge splash with not a forecast or a model but a belief of a lower interest rate trajectory over the coming quarters. points talking 10 basis or are you going to tell us the 10 year yield can threaten under 1% or go negative? nicola: no, we don't have a strong directional view on treasury yield. we think the fed is on hold so the market is pricing a cut, 45 basis points of cuts this year. that seems reasonable in light of the risk from the coronavirus another thing. we do not have a strong you on the level of yield -- view on the level of yield but having some duration because of the hedge and the kerry is fine. -- carry is fine. francine: let's turn back to how the virus is impacting the globe. carlsberg is threatening slower growth. the danish rumor extended the breweriesf marie's -- in china. they forecast slower earnings growth because of the coronavirus. this is very difficult to do because it is difficult to follow such an outbreak when the chinese economy has grown fivefold since the sars outbreak. can you tell us worse in best case scenario? -- and best case scenario? >> it is a sad situation for china and its people. the government is taking it variously and we hope it will succeed to stop the virus quickly. not therea, we have nanny major lockdowns of this eddie where carlsberg is present -- city where carlsberg is present, however there is a significant impact. more than 50% of dining outlets are those. impacted.also .t impacts the whole country whether the virus will impact our business negatively, it will take some time to give the full extent of the impact depending on how wide it breads. -- it spread. we have seen some studies, for 2003,e the sars virus in and that was a matter of four to six months that really impacted china after that. francine: we understand half of your market in china is on premise.o we have -- do we have an estimation of how many are closed and how many could close? cees: most of them are close. 15%aurants, dining outlets, -- 50%. i think we have seen the full impact of the virus. tom: wonderful to have you with us. , canou explain to us carlsberg say you only have a process -- pasteurized process that will keep the virus out of the beer? virusbasically, the cannot spread via alcoholic drinks. this is not an issue. products are pasteurized in china so that is not an issue, and that is not an issue anyway because it spread via food. tom: let me ask you a financial rest in. you have seen terrific dividend growth and free cash flow. will you take use of dividends to cash or share buyback? year, the results of 2019 have been created 70% from dividend. improving or increasing our returns to shareholders. china -- anate on update on china. our first word news with aviano hurtado. -- viviana hurtado. viviana: tonight, president trump will deliver the state of the union address. the theme -- the great american comeback. tomorrow, the senate is expected to acquit him in the impeachment trial. administration clearing the way for controversial new tariffs slapped on countries accused of having undervalued currencies. some are concerned it could lead to tit-for-tat global currency wars. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana tom: thank you so much. article two, section three of the constitution, you show from time to time, the state of the union and congress reprimanded -- he may bring up iowa and the ability to get a vote right. mai and leslie vinjamuri. i guess he is running for reelection and i guess it will be a reelection state of the union. we have had those many times in our history. cutswill be the tack, tax this president has been running for reelection's see began. -- reelection since he began. tonight at the state of the union we will see a president unemployment, jobs, a recession that has been held off , china trade wars, a deal with the u.s. and china will be right at the top of the president's claimed successes. he will walk down his list of what he would see -- and many of us disagree -- of his foreign-policy contributions to the middle east, iran at the top of the list. he will likely address the question of impeachment on the eve of what is in all but certain to acquit the president a few days after the republican party and senate voted to reject a call for additional witnesses. the president is riding high and we will hear quite a bit about that. tom: would you expect the democrats will sit on their hands? party: the democratic clearly has a different interpretation of most of the major events i have just walked us through. ofortunately, on the back yesterday's caucus in iowa, the democratic party will be on the back foot. politics in the way the president will portray them tonight, at least not on the middle east but on the china question. francine: does the world of central banks and treasuries and fixed income move on the back of things like this? nicola: politics is a key driver of markets these days, so when it comes to the u.s. election, it has the potential to lead to market volatility. buta big market mover, politics is on the radar. francine: what does it mean for treasuries? do you model a bernie sanders and compared to a -- win compared to a second trump turn? nicola: given the uncertainty of a candidate like sanders who could put forth radical measures on his manifesto, that is potentially a risk for market and could potentially support treasuries. we have to keep in mind there is checks and balances in the u.s. system, and the u.s. congress is important. president,a radical it is not clear how much he can push forward, but a candidate a driverers could be for risk asset. tom: new hampshire seems so different this year. you have two major candidates adjacent to new hampshire, sanders and warren. it is an interesting matchup. leslie: it will be affected somewhat by what is happening in iowa. it will be difficult to predict in which way. the thing to remember, in one month, the game could change. there will be more clarity around what is happening what the democratic party after super tuesday, so these early races are significant. they will be less significant if we do not have a result from iowa by the time we get to new hampshire, and people will keep campaigning progressive over moderate candidate will remain in play through super tuesday. people have predicted we will not have a clear result even after that. francine: leslie vinjamuri and nicola mai stay with us. we will bring you special coverage of the state of the union address today at 9:00 p.m. new york time. this is bloomberg. ♪ francine: this is bloomberg "surveillance." let's head straight to the london school of economics alternative investments conference where guy johnson is standing by. jonathan levine joining us now. the first question is the big picture one. coronavirus on a lot of people's minds. what is your risk tolerance on a itle of one to 10, and is being impacted? jonathan: difficult to put it on a scale of one to 10 because people do not know what it is and how bad it can get. the tragedy of people dying is something we cannot lose sight of, but countries are taking the steps and have been very proactive in trying to contain this. i think nobody could possibly understand the impact until we see how it plays out, does the quarantine work, do they find a vaccine? we are studying closely. guy: supply chains will be affected and there will be some macro economic effect. is your sense at this point that both of those phenomena will be temporary or will it be a more medium-term story? will this affect that story? jonathan: the best you can do is look for proxies and other examples. but itd quite an effect, did prove to be temporary and we will able to move on. -- we were able to move on. in the short run, it will have an impact, if for no other reason than the uncertainty will have a psychological effect. the next two to four weeks will have an important effect on the impact. dominating istory what has been happening in iowa. what is your sense of how the political land gape -- how the political landscape in the u.s. will do for the markets? how will bernie sanders as a candidate be taken by the markets? jonathan: the iowa lack of vote count is not a positive, creates more in certainty. there is only a certain -- uncertainty. there is only a certain amount of focus on iowa this early in. it will be important to establishing the lead candidate man the winner. -- then the winner. the markets will look for the winning end of the field and do a value calculation on the policies perceived for each candidate, and there are candidate who the market might view as more uncertain and there are candidates the market might view as more certain. then they will take the likelihood of that person beating donald trump. i think the ball will bounce a lot of different ways, and one thing to look out for is to be elected, you need to be the president of all americans and the question is will we start to see the more ideological people having more of a narrative of middle ground? guy: does the u.s. economy stay on track as we approach november? this is a big story for the president. he needs to keep the economy ticking along around 2%. our relate cycle, how late cycle -- are we late cycle, how light sickle -- late cycle, and could that be a problem? jonathan: we could be late cycle but we have 10 years to go. i always have trouble putting a timeline on it. things look pretty stable now, good not great. the longer a cycle get, the more fragile it get. this cycle has withstood a lot of air t -- uncertainty. what will be the genesee event that tips that over -- eggs are event event -- exogenous that tips that over? there are so many things that could change that victor, but i think it will continue -- picture, but i think it will bump along. guy: how much is it dominating the economy, how important to you is an esg rating in the terms and pricing of credits? esg going to be as important as a credit rating? ,onathan: the short answer is in less tangible ways that has always been true. some firms have things they will or will not do and have drawn lines. our firm got rid of plastic water bottles in 2007. buted like a small gesture we have eliminated 2 million water bottles across our firm. making good, conscious decisions for the environment, community, and government is part and parcel with good business. everyone will get at her at betterg what that is -- at defining what that is, and the key to esg will be measurement of impact, not cost-benefit, but degree which you can accomplish what you want to accomplish. it is important for businesses to consider that the world is changing and businesses have a role to play. it proved to be good business. -- prove to be good business. ney: that is jonathan lavi joining us at the lsc event in london. tom: michael nathanson will join us, coming up. we are thrilled to talk about disney and any potential profit from all this new streaming. bitube, alphabet, google a negative. this is bloomberg. ♪ ♪ francine: this is bloomberg "surveillance." boris johnson has taken a tough stand in the opening round of post brexit trade talks, saying he is willing to accept tariffs and barriers with the european union. we talked about treasuries and i have a chart looking at the 10 year yield on inflation. is there anything you want to buy in europe or gilt, given what we are seeing? nicola: we like u.s. treasuries over bunds and gilts. treasuries have a much bigger room to rally than the other treasuries. you brought up real yields. we see some values in the tips. if we don't see inflation in the near term, we think globalization and tech knowledge he will keep the phillips serves -- technology will keep the .hillips curve flat over the medium to long-term, we could have low inflation. francine: let's go back to the chart. what does this tell us about where it is going? nicola: this chart is the real yield. it shows the equilibrium level of interest rate over the long run for the u.s. economy is low and we agree. we think the new neutral interest rate is close to zero in the market is pretty much consistent with that that is -- that. that is because of long term forces like demographics, inequality, and high debt levels compressing interest rates as there is a big desire to save relative to investment. the environment for low interest rate for long is there. on the tip side, there is probably value in the medium-term. hour, the newst by kevin cirilli from des moines. smart noteg with a on the virus. really looking forward to seeing him, on renminbi and dollar. this is bloomberg. ♪ ♪ this morning, dow futures 28,700, near 44 points off the bottom the 10 year yield higher. gold is sold. the unknowns of the wuhan virus is less unknown so president xi considers stability. carlsberg has less revenue as chinese drinkingdrinking establa are not closed with kevin cirilli. the math does not work. winner, no hanging chad to count. absolute chaos in iowa. give us enough date on -- give on iowa that is new u.k. yet.ine: first, no chaos what we saw yesterday was classic brexit negotiations. go for said, we will not johnson president threatening to leave december 31 2020 -- december 31, 2020 without a trade deal. it is february 4 and we will know by june whether the u.k. gets an extension. tom: i am trying to imagine parliament with the iowa app. it would never have gotten done we will -- done. we will go to kevin cirilli but first, vienna hurtado. -- viviana hurtado. viviana: the iowa democratic party will not release results for the caucuses until sometime this morning at the earliest, officials saying they discovered inconsistencies from some precincts. some purported preliminary result, indicating a close battle among five candidate. a number of developments in the coronavirus update, a death reported in hong kong, only the second fatality out side mangy -- outside mainland china. because of the outbreak, hong kong's cathay pacific is planning cuts and eliminating 90% of service to china. opec and its allies trying to figure out how the virus could hurt demand for oil. today they meet in vienna. they are under pressure after prices fell below $50 a barrel for the first time a year -- in a year. fuel production and china appears to have longed -- plunged as much as 20%. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. tom: equities, bonds, currencies, commodities. 33.res on wti. 49 a barrel francine: what gets my attention is that stocks rallied globally, investigators -- investors gauging the effects of the virus. crude oil is up. i am looking at gold. a death has been reported in hong kong, the second fatality out died mainland china. -- outside mainland china. stephen engle joins us now. are we seeing the worst? the market today is up. does it mean they believe we can quarantine the virus? stephen: part of it could have been a breath of fresh air. the news was not as bad. in the chinaosses market but hong kong bounced back. some economists say it could be a lull because we do not know the full extent of the brett of this virus and how far it will breadth of this virus and how far it will go. precautions are be taking -- are being taken all over china and macau is considering closing casinos for two weeks. the border crossing to hong kong has been shut down. precautions are being taken. the bark -- market has breathed a sigh of relief but i am not placing any bet. tom: how does president xi operate here? how does he commit power to fix this? how does he project power given this crisis? stephen: he has to protect what he is always done, he is the supreme leader of the communist party and the government, including the military. they convened a gathering of senior officials in the communist party, and he predicted this is a threat to the social stability in china. powermmunist party took in 1949 and social stability is key, the unwritten contact -- contract they have with people. we provide you with a better living and in return you do not protest against some of the civil liberty problems. that start showing some wear and tear, that contract. tom: stephen engle from hong kong. i want to bring in jens nordvig. the eurorful book on and he is known for scratching out on a single piece of paper the math of what is going on and what you need to know is the math on the virus. congratulations on a brutally short note which shows first derivative is declining. explain the percentage of gloom and a virus whatever the issue is and the next day if that percent is less, it is good news. jens: when you look at the numbers when they come out in the chinese morning, we have seen a 20% growth rate in the headline numbers, but the key is to look under the surface, in wuhan. it is bad there, but is it bad elsewhere? the volatility in other if you look underneath the surface at the trend, it is probably down 10% to 15%. isould say the key number 12. if that goes below 12, which the projected islists the gauge, then the policy measures are starting to work. tom: from your distance you are looking at the numbers from a distance and there is the small matter of the weekend you need a lot of days -- the standard statistical measure is 30 days. do i need to wait dirty days or can -- 30 days or can we look out? jens: the markets cannot wait. what we can see in the data is over the weekend there are trends that do not make sense so we have to strip that out. that is how you get close to 12%. in the next couple of days, there is a chance we will see slowing in the provinces and that is the key for me. francine: is it difficult to hedge in this kind of environment? is there a signal we should be looking out for that no one else has seen? tom: we have a mic problem. we have a virus in your mic. we have some time. i guess we will come back we have a -- back. we have a technical difficulty. coming up, iowa, kevin cirilli up, bernie sanders up, the mayor is up, the president is up, all waiting for results. if you are just waking up, it is nuts in iowa. this is bloomberg. ♪ ♪ "surveillance." jens nordvig with us. we need to go to iowa, to a sleepless kevin cirilli looking at a lack of results. when do we begin to see result? -- results? kevin: we don't know. the i would democratic party saying -- iowa democratic party saying there were inconsistencies and they will not report until they are certain. based upon my own reporting within the last 12 hours, there were complaints lodged by precinct captains about how they are able to crunch these numbers. there is this emerging story about the future of the democratic caucus in iowa and in particular, this is a republican stronghold state. this is a state where all of these candidates spent a lot of time and money to get a result to try to kick off their start. whoever wins here, the state of union is set to begin in over 12 hours. tom: let's go to a democratic stronghold that is not all white, new hampshire. what will new hampshire be like for the sanders-warren adjacency? -- a: a battle the gloves battle. the gloves will come off. they were fully anticipating to have a new trajectory coming out of iowa, but now that there is so much contusion, there will be an incredible sprint for nevada and south carolina. the urgency here is only going to intensify. g campaign is the one to watch. it was significant from exit polls from media outlets like cnn, there were numbers that suggested he would have a strong showing, maybe not with the caucus, but a strong showing with young voters and senior citizens. that will get interesting as he tries to contrast himself with joe biden and elizabeth warren. the other thing i would say about the confusion and chaos in des moines, it would put pressure on candidate to drop out of the race. that is in question as we head into new hampshire. for folksot a reason to get out of the race, because there is so much confusion. francine: when the results are out, will people trust them? kevin: that is a great question and to be honest, i am not sure they will. the last cycle was four years ago. the sanders campaign supporters raised questions about hillary clinton and her winning the caucus there -- caucus. there is so much confusion and volatility that has been in jet are -- injected and we heading to the state of the union and acquittal. if they do not get a new cycle to declare victory, this is such a shock, and the chatter among the thousands of media members from around the world who have descended upon des moines is really palpable at the confusion and the level of frustration. based upon my reporting, talking to the staffers, frustration is an understatement. some words were thrown around that i cannot repeat about how frustrated they are. tom: give me a primer for the state of the union. idea, whataph, what message will you be searching for in the comments? kevin: how does he win back the suburbs? how does president trump speak to states like pennsylvania, sconce and, ohio question -- wisconsin, ohio? how does he speak to those 70,000 voters who voted for obama and then him? strategists, that is what they will be looking for. tom: kevin cirilli from the chaos let's -- chaos in des moines. let's listen to two candidates. >> today marks the beginning of the end for donald trump. >> iowa, you have shocked the nation. [cheers and applause] because by all indications, we are going on to new hampshire tories. boreas --eas -- vic victorious. ♪ viviana: you are watching bloomberg "surveillance." a farewell for bps outgoing ceo bill dudley. they posted a quarterly profit that beat estimates and they are raising their dividends, planning $5 billion in asset sales. they say it will be a nice bump to their outside trading unit. shares of alphabet falling, reporting revenue that missed estimates. youtubes on disappointed investors. companyesterday, the had never broken out numbers on youtube. in hong kong, retailers wrapped up a miserable year. down more than 19%. months of antigovernment protest hurting stores and the virus is causing more turmoil. that is your bloomberg business flash. and we need to show a chart the thing is the x-axis. one year, two years, three years, four years, and we are in the fifth year of a dollar range bound. do we break out of that range this year? jens: we came into this year with an expectation that global growth would start to improve and we have had a bunch of shocks already. we have had the coronavirus and in europe we are having a shock because we were supposed to have relaxation around the brexit fear, and we really have the hard brexit sort of risk already on the horizon again because now we have a june deadline and boris does not down nice in terms of negotiation. tom: we speak about traders hedging hedge funds. what about businesses, should they do business assuming a range bound dollar? jens: normally, the most powerful driver of the dollar is the global growth variable. are more intors international markets so the trend we are seeing now, is that being disrupted by the coronavirus or is it a blip in the trend? that is the key question. if we look through this event, chances are we will see global growth edging higher and that could mean more for emerging-market current these -- currencies. francine: what is your biggest concern as we get into 2020? there has been at least three black swan events from january this year. is it these unpredictable events that will sway market? will the key is how long sectors in the chinese economy be shut. how long will that last? ,nother thing that is important chinese tourism has been a big driver of growth and a number of countries and this -- and if that is shut down for several months, that will be a measurable impact on global growth. is it one month or six months? that is key to global growth and to evaluate market trend. --ncine: where do you see are there pockets in these kind of markets that are unloved or undervalued? jens: we have seen the oil move be very dramatic and there are steps to address that on the supply front, so one thing to watch for on the currency market is how currencies linked to oil will recover. the russian ruble and norwegian krone have been really affected. tom: can you play foreign-exchange looking at a commodity chart that shows there is still a commodity recession? would you short resilient real orcan it -- brazilian real canada? wes: i remember in 2008 when had incredible volatility in oil prices and that was the only thing that mattered, it depends on the extent of the move. are corporates-- putting money in or are they afraid to make investments? that is key to driving markets. tom: where is the big investment low, strong capital flows -- flow, strong capital flows? jens: we had this event going into the trade deal, flows going into chinese equities and that is part of the volatility where we had good equity flows to the selloff. for the chinese authorities to sustain the market is very important not only for china but for the global trend. tom: a one-page research note on the virus today was absolutely extraordinary. ,evin cirilli in des moines david westin traveling as well. our special coverage of the state of the union will begin at 9:00. we have a great set of political guess to frame the president -- guests to frame the president's speech forward. this is bloomberg. ♪ ♪ "surveillance," francine and tom. right to the first word news. viviana: the political spotlight is turning into one night air. -- into a nightmare. i well will not release results of caucuses -- iowa will not release results of caucuses. for only the second time, a death from the coronavirus was reported out died china. -- outside china. a 39-year-old man in hong kong had an underlying illness. at least 425 people have died. toau is taking new steps stem the spread of the virus, asking casino operators to shut down. donald trump pivots from impeachment to the annual state of the union address. the theme -- the great american comeback. tomorrow, the senate is expected to acquit him in the impeachment trial. the trump administration clearing the way for a controversial new tariff slapped on countries accused of undervaluing their currencies. this couldncerned lead to tit-for-tat currency wars. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: apple, amazon, heavy-duty coverage. google, alphabet, whatever you want to call it comes out. let's listen to their chief executive officer. >> you may have seen a goal post informationsleading on the 2020 elections. as i mentioned, we are pleased with youtube's growth in advertising and subscription. tom: spellbinding. and paulvig with us sweeney joins us. says, we havezon an image of apple and google, alphabet is a mystery. paul: they are starting to give us more disclosure. they gave revenue numbers for youtube, $15 billion of revenue growing at 30%, and their cloud business. they are number three behind microsoft and amazon. we got more disclosure, not just the search business from google. we have a sense of their video and cloud businesses. tom: do you have to go in and build bloomberg intelligence? paul: it helps analysts with their investments because we have a handle on the size of the businesses. cloud and youtube are growing quickly. francine: what do they work on? by breaking it down, i guess it makes them more vulnerable unless they do what? paul: $15 billion revenue growing already percent is the good news. -- at 30% is the good news. they have to continue to grow their youtube business and also their cloud business, because we saw some great cloud numbers out of microsoft and amazon. when we look at the google numbers, they are great and growing, but much smaller than amazon and microsoft so they have some work to do. francine: how do they gain market share in the cloud? there are such formidable competitors, how do they take the lions share? paul: the pie is growing very quickly and the cloud is one of the fastest growing areas in technology. they have some big competitors and it comes down to money. they have to continue to spend on their cloud business, talent, and infrastructure, one reason we sauce ending so high at google this quarter -- we saw spending so high at google this quarter. tom: michael nathanson will join us in a bit. they put a buy on comcast and below zero.bcu you are basically getting nbc for free if you buy comcast shares. paul: that is interesting. what they are saying is it is uncertain what the media business is worth that comcast. -- worth at comcast. as the industry pivots to streaming, you are pivoting away from your cable bundle. they are saying broadband business for comcast is where the value is. tom: we did not pivot when we looked behind shakira and j. lo. paul: 200 million people watched why arewl on fox tom: they lathered up on streaming? paul: it is where the business is going. cord cutting is accelerating. even accelerating more now then two or three years ago. francine: do people still get confused by alphabet and google? paul: they have dropped the alphabet thing a little bit. the ceo is managing the entire company so it is essentially google. they were trying to say we have our core search business and then all the other things, the moon shots. the ceo is managing all of it because larry and sergei brin have stepped back -- larry page and sergei brin have stepped back from management. francine: how much is the fear not being like facebook? paul: there is some regulatory concern overhanging the sector that we have never seen in the u.s. the u.s. has taken a light touch to regulating technology and it seems they want to take a heavier hand. i don't think anybody believes the big tech companies will be broken up. tom: let's look at the chart with paul sweeney. tvs chart works that are on than it does on radio -- better on tv than it does on radio. it is a 10 year moonshot, 11 year moonshot. smartest guy on the planet? paul: he has done a heck of a the test willbut be how he pivots the model to the streaming business. ebitda onis streaming? $.85? paul: they are not making any money on it because they are in testing so heavily in content, and will not make money for another two or three years. it is a huge investment by the company. will it pay off? tom: that is a great normalized chart of apple, microsoft, and google shares. it is google. francine: google. paul: this is a google set. tom: jens nordvig patient with us. bloomberg "surveillance," see you at 9:00 a.m. on the radio. 7:00report timely in the hour. kevin cirilli in iowa, this is bloomberg. ♪ ♪ bloombergthis is "surveillance." donald trump, jr. is touting his father's trade policies and attacking democratic candidates for not getting a similar agreement past. -- passed. he spoke to kevin cirilli. >> it is where it all starts, but it is a dry run. we want to show our teams that took a chance on us in 2016. it was a lot different. my father was making promises like a lot of politicians. now it is different, so being here is a thank you for people who took a chance on us. policy, big, a huge in ohio, michigan, pennsylvania. acid,ge -- the economic how important -- message, how important is trade policy? >> my father came and said -- did those things. nafta,not renegotiate and he did he did that as the democrats are pushing the russia hoax. he signed a china deal. you will never get that done -- done. he used economic tactics to get them to the table. that is the difference between the democrats who are doing nothing and trump, who is getting things done, delivering on promises despite zero assistance. usmca i was looking at and there was a democratic presidential candidate who said it was not progressive enough. he is running as a populist -- runningr father is a populist and your father ran as somewhat of a populist. what do you say? >> i don't know how you can run as a populist and not go for trade deals that are a huge leap forward. bernie was probably very much in line with my father. the american people have seen my father deliver on trade. bernie sanders has been in office for 30 years and we cannot name a bill he has done. we have a track record of accomplishment and success where we say, we are doing these things. populism, i get. that is why people like nancy pelosi are doing whatever they can to screw bernie out of this thing. it is obvious. the last time democrats rigged a primary it worked out perfect for us. interview asimed the frenzy continues in iowa. about an houroned ago, mr. trump took iowa decisively in 2016. our single best chart, jens nordvig is very patient this morning, and this chart goes back to his book on the euro. euro offghted hero -- gf 2007, it has been an ebbin and weaker euro forever. what does madame lagarde need to do to strengthen it? jens: i am not sure she wants to. we have inflation almost 1% below the target, and they want to have stimulus on all the different fronts, monetary stimulus and stimulus through the exchange rate and fiscal stimulus, which is hard to get. tom: in the exchange rate, if you have 27 units and the number of variables in the equation within europe, it is more complicated. is it feasible given the disparate parts of europe? stimulus get a form of that affects trade, but the intratrade in the euros known, so when you have -- euros known when you have a crisis in greece or portugal -- do you want to have that cohesion or flexibility? you do not have flexibility on the individual exchange rate. francine: do you see value in europe at all given that trump threatened germany with tariffs on cars? jens: that is one of the big wildcards this year. we don't think anything negative concrete will happen in the short term, so we have a situation where we can focus on that is going on in the global economy. if you look at the european pmi's areicators, the important leading indicators. gets unfortunate we do not better sentiment around the brexit process feeding into the sentiment, but the negative negotiating stance of boris johnson means that stance will remain cautious for now. that is one missing part of the improvement we have to watch, but the pmi is getting better and that is the chance with the european economy to get on a better path. francine: you think between the u.k. and e.u. they will find an wto coment or is it 2020? jens: the rhetoric was negative and the reaction in the pound was warranted. case agoal is the best canada like deal, or a wto deal they are marketing as an australia deal even though it is not a deal, they are not good options so if that is the best case, we have to factor that in as something that is significant risk. tom: brilliant data this morning on the virus in china. bloomberg and our special coverage of the state of the union, we will try to do this differently with pointed conversation about immediate politics and the policy forward. this is bloomberg. ♪ ♪ viviana: you are watching bloomberg "surveillance." changes to theig way u.s. merchants paid to accept its card, hoping to persuade more people to invest in checks. they are hoping to invest in ride-hailing services. for the second time this fiscal year, sony raising its profit forecast, reporting strong demand for the sensors that power cell phone cameras. revenue from the playstation division dropping. good as gamers await a new console. suspending a one ,illion-dollar junk-bond trader his crime, failing to pay for food in the cafeteria. francine: favorite story of the day. did he forget? russia says it is ready to take part in opec plus if a meeting vladimir putinr and the saudi prince discussed it in a phone call. on the us now with more story is annmarie hordern. what is the latest on the opec meeting? would have to meet in person to take action on the market but just because russia says they would be willing to show up on the table -- at the table does not mean they will be willing to cut. this meeting will be two days and will impact -- discuss the impact of the coronavirus on china's demand for fuel. it has been about 20% lower. after that meeting, we will likely get an inclination if they will hold a minister meeting. opec's technical committee has someone arriving who is special, china's ambassador to the u.n., and we could hear from the chinese government on where they see feel consumption going. francine: they are consuming 20% less in china because there is a locked down cities are quarantined and factories are shut. annmarie: the bp cfo spoke about this today. day000 to 500,000 barrels a -- annually is what we could see on the impact of demand. that is quite a big hit and bp is seeing that. opec and ifad to this is the situation, they may have to act. it comes down to price. saudi arabia needs a higher price close to $80. putin says russia could deal with $40. francine: joining us is stuart wallace good morning. opec and shaleto in the u.s., what is it doing? jens: i would worry about shale -- stuart: i would worry about shale from a different perspective. people hedged and now people on the others of those hedges realize if they go back into the market and hedge themselves, they will be in a terrible problem. share -- shale is concerned, that is what we have to be worried about, their hedging counterpart is panicked. francine: what do we know about how much demand is being lost in asia if the lockdown continues? there are credible guesstimates, and if you think about the physical market, what exactly is going on, we are seeing reports of physical cargo being reoffered to the market. i have no one to sell it to, i need to sell it again. that is the thing signs are not going well on the demand side. francine: how difficult is it to model this? we were basing it on sars but it was smaller back then. stuart: it is a completely different epidemic. how do we model it? it is guesstimates at this stage. taking all the information out there, i don't see how anyone can project because i don't think we are in full command of where we are right now. francine: russia was hesitant, saying they are going back on course with saudi. why? stuart: russia has a problem, less of a problem than the rest of opec. it does not desperately need oil prices higher, but in terms of the relationships with opec numbers -- members, that is more important. what they are trying to do in the middle east and elsewhere, this is critical to their strategy. francine: stuart wallace from bloomberg. jumpequity futures following european stocks, after we saw the brutal selloff in chinese equities yesterday. investors tried to gauge this latest effort in containing the coronavirus. crude up, coffee up. some things seeing a little bit of a relief. -dollar, pretty much unchanged. this is bloomberg. ♪ ♪ romaine: on the rebound. a whipsaw start to asian equities reverberating through european trading and now looking set to boost u.s. stocks as well. stumbling out of the blocks, iowa delays results from monday's presidential caucuses as new technology and complex rules lead to inconsistency in precinct reporting. and an 87% rally to start the year pushes tesla arc it cap to $141 billion -- tesla market cap to $141 billion. welcome to "bloomberg daybreak" on this tuesday, february 4. withomaine bostick, sonali basak, in the incomparable alix steel on assignment. we saw china equities open significantly lower, down 2% to 3% across the board, but they rallied across the board by a

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