First time in decades. Going there for more from beijing is bloombergs selina wang. Give us an update on the situation in terms of the death toll and some of the evacuations from the ships, and also what we have heard about potential delay to the National Peoples congress. Selina we heard from the head hospital that he turning point may be reached, but we did see the number of , so it looks like the virus has not reached a peak yet. Outside china, countries have been stepping up evacuation efforts from these cruise lines. The diamond princess cruise ship in japan reporting the number of infections jumped to 454 after another 99 new cases right in the fight. In beijing, you can still feel the effects on the local economy, with stores and restaurants still closed. There has been a slight uptick in activity as people have resumed work, but only about 40 to 50 of the economy has been running at capacity this week. In beijing, anyone returning from the city has been ordered to self quarantine. For 14 days government quarantine for 14 days. The government is now considering delaying its annual political meeting for the first time in decades. It has been planned for march 5 in beijing, but given all of the travel restrictions, it would be a challenge to bring thousands of highprofile political leaders to beijing. Nejra liquidity injection we got today in terms of the mlf rate cut and talks of fiscal stimulus, is that a precursor to more broadbased stimulus from chinese authorities . Selina we havent seen any massive stimulus yet, but Bloomberg Economics is expecting that, that you may see a cut in the loan prime rate. They lower the rate by 10 basis points, but this was largely expected by analysts. We also saw plans for reducing corporate taxes and fees to try and calm Financial Markets and companies, but so far seeing incremental moves. Also want to bring up a new data point from bloombergs most recent survey of 18 economists which forecasts chinese economy will grow by 4 in the first at the, down from 5. 9 end of january, but a lot of big challenges the economy is facing. It is not going to be stimulus. Monetary a lot of workers are unable to get to the factories because of travel restrictions and quarantines. All of this putting more pressure on an already weakening economy in china. Nejra selina wang, thank you so much. For more on the coronavirus and chinese response, joining me in london is lothar mentel, tatton investment founder and ceo. Great to have you with us. Is china going to have to embark on a much more aggressive and broadbased stimulus measure, or is the assumption of a vshaped recovery a somewhat has been announced are really announced already . Lothar i think we will see some pretty significant stimulus, much more than was planned already. Lets not forget, next year is the 100th birthday of the communist party. They wouldnt want to be going through recession then. Q1 is going to be really difficult in terms of the dataflow we will get from china, so yes, i do expect there will be quite a bit more than what has been already announced. Nejra what do you expect in terms of quite a bit more . Do we get a cut to the loan prime rate, more rrr . That is the monetary side. Theres also the fiscal side of things. Do you expect both sides to be of limited . To be implemented . Lothar i think the fiscal side to the more relevant previous policy of bringing the house in order, not letting credit get carried away again, and creating something that actually pays dividends in the future. I would expect a lot of localized Infrastructure Projects kicking off quickly. Nejra the deleveraging side of thing, does that get put on the shelf . Concernill that markets, or is the focus on supporting growth and that vshaped recovery . Lothar maybe not put on the shelf, but at least put on pause. The chinese authorities will be very mindful where that could lead, but i think at the moment, the priorities will be to get vshapedmy into the recovery rather than lingering in that slow down. Nejra if the assumption is quite a bit more stimulus from china, particularly on the spending side of things, what is the best way to trade that . Lothar i think Southeast Asia is where you would want to be. Where that is comfortable in the shortterm is a different question. Certainly, that is how you would play it, but lets not forget up to this point, the stimulus was of a level where there wasnt really any expectation of massive demand over spill into the rest of the world. That could well happen, so emerging markets tend to do pretty well in those sort of arcumstances where there is demand push pull from china. Nejra could be your get support from that could the euro get support from that . Could it get much support from stimulus to ensure that vshaped recovery from coronavirus, or will there other factors or are there a third factors that will keep it stressed or are there other factors that will keep it stressed . Lothar i think there was a reaction to the slow down in china, and germany getting worse before it gets better, so that should feed through into the euro as well. Not quite sure about the timing, but that should be coming through over the course of the year. Nejra Southeast Asia is one of the ways to trade if we get this vshaped recovery, but if we get the stimulus you are talking about from china, is that going to be enough . Or do you see a response globally that is needed to keep these concerns at bay from the impact . Lothar that depends a little bit. If china gets back to work, and there are questions about how quickly that is happening, it might will be contained to china servicesm some of the and tourism side. Changes to the supply chain, it is becoming a larger global problem, and we would expect to see it more globally. From what the Central Banks are telling us, they cant do the heavy lifting anymore. It will need a concerted approach for some fiscal spending, not just from china. Nejra the disruptions to the Global Supply chain, potential impacts that can have on corporates in coming quarters, fourthquarter earnings dont take into account the coronavirus at all, but could there be a significant enough the perception of a backstop from Central Banks . Lothar that is the question. Everybody must have been surprised looking at equity markets, how quickly they shook off that fear of the coronavirus, and have just decided to look through it because undoubtedly, there will be a hit to global earnings. It cant be any different if youve got that much of a slowdown from all of the actions taken to contain the virus from spreading. Theres just not much doubt in my mind that there will be an impact, but at the moment, the markets have chosen to look beyond that because the previous experience is that these things are shortlived, there is a sharper recovery coming later, and therefore, good times are ahead. Therefore, equity markets seem to be willing to not take that too seriously at the moment. Nejra what would break the resilience of Global Equity markets . Lothar i think if you got a supply chain stock that really sends us into yet another industrial manufacturing slow down, as we have just had over the last 18 months, that would probably revive fears that perhaps we are going to see a bit more than just a very slow one quarter. Also, if Central Banks are deemed not to be supportive sourh, that could also market mood. Nejra where are you in your portfolio construction right now . Are you derisking . Are you waiting on the sideline to see how this plays out . Are you loading up on duration . Lothar weve actually increased our equity exposure. We went into that market slow down and raised our allocations because we feel that the general case of growth this year, perhaps growth surprising because of trade frictions, are of trade frictions are declining, is really on the cards. Interesting. Are you offsetting that with protection in treasuries, and gold, for example . Or are you happy to take that risk . Lothar weve actually taken money away from long bonds, so we have reduced that side because we feel that bonds are going to rise again slightly, but theres not much money to be made in long maturities, and thats why we have reduced that position. Nejra interesting. Mentel of tatton investment stays with me. Lets get the first word news. Economists predicted a decline because of the impact of a renewed sales tax hike. There are concerns that the Virus Outbreak could make things worse. Prime minister shinzo abe may have to consider another round of spending. The fight between the u. S. And europe over Chinese Technology is threatening to split up nato. The u. S. And bessette are to journey warned that any nation who uses an the u. S. Warned that any nation who uses chinese hnology in 5g Networks Energy secretary said that russia will be unable to circumvent u. S. Sanctions on the project. President trump has assailed germany for buying russian gas while it benefits from u. S. Military protection. U. K. s chief exit negotiator will lay out the countrys goal for its future relationship with the European Union today. The two sides are trying to work out a trade deal by the end of the year. Boris johnson says the u. K. Doesnt want special treatment, but says the eu is offering more stringent terms than it did in the deals with south korea, japan, and canada. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im laura wright. This is bloomberg. Nejra thank you so much. Coming up, more on the Market Impact of the coronavirus and a look at headwinds facing the eurozone economy. This is bloomberg. Nejra live from london, im nejra cehic. This is a special edition of Bloomberg Markets. Ets get more reporter we are getting some relief for the time being of the coronavirus. European stocks higher by 0. 2 . We are also looking at copper. A lot of these growth sensitive gaining today. Open saying growth is going to be cut dramatically for the commodity, and slashed their price target. Closedse, u. S. Markets today for president s day, but i want to give you a check on what is going on in the futures. The Asian Session up 0. 2 . Recordek, we had that inflow into bond funds. 24 billion, to be exact. Bank of america saying that when you analyze, you get a record 1 trillion, calling it a 1 trillion bubble, so not too much action may be after that very big week. Weve heard from people like scott miner of guggenheim saying markets are acting irrational, saying theres cognitive dissidents cognitive dissonance currently. One thing that has really been hurt as of late is the euro, tumbling to a 2017 low. Today just barely moving higher. Not enough, though, to undo the damage done over the past month. A lot of this has to do with weak european data. Not only that, but the issue surrounding the supply chain that Coronavirus Impact might have. For now, a little bit of rebound in the euro. Could we see parity . Traders are most bearish on the euro cents june on the euro since june. Nejra thank you. Still with me is lothar mentel of tatton investment. Youve taken money out of treasuries to put into emerging markets. Why are treasuries not appealing to you right now, even as investors keep piling into them at the long end . Lothar treasuries are always attractive when we have an expectation that there may be a recession ahead. At the moment, there are not many catalysts that would point towards a recession. A lot of that talk of ludicrous valuations are really focused on a couple of stocks in the u. S. , in the tech sector, but if you look more globally, that is not true. Emerging markets have suffered quite a lot. Lets face it, at the very low yields that we still have everywhere in the world, where are investors going to go . Nejra when we talk about based on just some stocks in the u. S. , the s p 500 has had a little bit of a safe growth inal because shares make up a big part of it more than ever. Do you find u. S. Equities appealing, or not so much because you dont have that defensive stance in your portfolio . How it is depends on going to pan out this year. Not going very much, u. S. Is still attractive because there is still more growth to be had. It is, to a certain extent, a safe haven. If we see a recovery, and this seems to be the third midcycle recovery we have experienced in this drawnout cycle, then the other, less valued areas that benefit from a pickup in global trade have a lot more recovery and upside potential than the u. S. Currently has, and that is really quite highly valued. Lothar does that include europe as well nejra does that include europe as well . Lothar that includes europe as well because if we get into china spillover demand, that should get europe out of the doldrums pretty quickly. Lets not forget, backwardlooking, the data from europe does not look pretty, but it looks like it is troughing. That may be delayed by the coronavirus, but it is still on course. Nejra youve also done a little work looking at growth versus value. This discussion getting a lot of momentum over the summer. You say we shouldnt necessarily be looking at p e ratios. Theres another measure to gauge how you pick growth over value right now. Lothar if you look at the earnings yield, obviously you want to see whether that has morphed as well. Hase we observe that there been a constant relationship between growth and value of around 2 . That hasnt really changed very much. What has changed is that yields have obviously fallen, and therefore, that differential has become so much more valuable therefore, we shouldnt look at historical comparisons. We should also look at whether the comparison in earnings yield has changed. That hasnt massively changed, although it is still pritikin that Growth Stocks will be able to grow businesswise, at least 2 faster than their value equivalent. That is going to be a tall order for some of those big names to consistently outgrow the other part of the economy by 2 per annum. That is perhaps a little bit of so eventually it will go the other way, but we are not convinced that just the high pe levels at the moment indicate that it is about to turn. Lothar when is the time for you nejra when is the time for you to turn from growth to value . Lothar we will have to watch, but we might see that more and more Growth Stocks become value stocks because their Business Models are starting to look more subscription model, and they look a lot more like utilities. Those things when really have to be watched. The other thing is if we see a recovery in global trade, the normalization of the Global Economy, then value may also be more attractive then growth at that point. Nejra while we have been so preoccupied with coronavirus, we barely talk about where we go on trade talks between the u. S. And china. Is it your base case that phase ii gets delayed, and that is a good thing for markets because at least the bad news is delayed . Lothar you could look at it that way, but the more positive thing coming out of phase one is the sentiment change that it is already bringing about in the u. S. That is coming on the back of phase one. It doesnt even need phase two at the moment. If we keep it a bit quieter until after the president ial election, that met that might be the best thinkers the the best thing for the cinnamon side. The sentiment side. Nejra lothar mentel stays with me free hour. This is bloomberg. Nejra live from london, im there hh. Time im nejra cehic. Time for the Bloomberg Business flash. Heres laura wright. Reporter gm will take a 1. 1 billion charge. The restructuring will allow gm to focus on new technologies such as self driving cars and electric vehicles. Ceo mary barra is shrinking gm to the point where it gets almost all of its profit from the americas and china. Hasch train maker elstrom confirmed it is in talks to buy bombardiers real business. It would make them a stronger rival in the business. The coronavirus may make it harder to find Nintendo Switch consoles in the u. S. And europe. Bloomberg has learned that because of a production bottleneck, there has been a shut in china. A shutdown in china. That is your Bloomberg Business flash. Nejra thank you so much. Coming up, we will hear from the imf managing director on the outlook of the Global Economy and the impact that the coronavirus. What would investors make of a synchronized and coordinated Global Response . That is next, as we see a bit of response comes into markets across asset. This is bloomberg. When it comes to using data, everyone is different. Which is why Xfinity Mobile created a different kind of wireless network. One that saves you money by letting you design your own data giving you more choice and control compared to other top wireless carriers. Now you can choose unlimited, shared data, or mix lines of each and switch any line, anytime. No one else lets you do that. Design your own data with Xfinity Mobile. Its wireless reimagined. Simple. Easy. Awesome. Nejra live from london, im im nejra cehic. This is a special edition of bloomberg market. Kristalinag director georgieva spoke to bloomberg. We need to recognize that there is a great deal of uncertainty around the nature of the virus, how exactly it is would it spread beyond china, and for this reason we do not make projections. We operate with scenarios. We are still hoping that the most likely scenario would be relatively rapid containment of drop ins, a vshaped Economic Activities in china, some impact on the rest of the world, and then very fast recovery. Would that be the case, we would know more in the next couple of weeks when we get a better handle on the nature of this virus, and also on the speed of containment. The initial drop in that, is that likely to be containable . We expected to be, yes, because today, chinas share of the World Economy is quite. Ignificant 19 of the world. Chinas tourists are a very important part of the tourism indu