from beijing to new york, jersey and south carolina. we have the top stories. we begin in asia, where the spread of the coronavirus is feeling concerns it is widening the pandemic. the cdc issuing a stark warning for the u.s. >> it is not so much a question of if this will happen anymore, but rather a russian of exactly when this will happen -- but rather a question of exactly when this will happen? me is selena. walk me through the latest. >> in china, the rate of infections continue to stabilize. fewer cases than the day before. the rest of china reported five new cases, and all of the additional fatalities were in smaller areas as well. city is not requiring people arriving from japan or south korea to go through a 14 day quarantine. the momentum is shifting outside of china. you have seen south korea becoming a new hotspot with infections raging up. testinginitially positive for coronavirus, which would be the first infection in latin america. italy has had more than 300 cases and 11 deaths. iran reporting 14 deaths and confirming its first case. the world health organization has refrained from calling this a pandemic buddha you have health experts questioning it is refrained from- calling this a pandemic, but you have health experts questioning it. alix: we want to stay in asia because hong kong unveiled a release package of tax cuts and an effort to shore up economic confidence with the coronavirus. joining me is sophie. what are the details of the stimulus package? >> hong kong is the latest government to announce a stimulus package to cushion the impact of the fallout from the virus. the economy is set for a back-to-back annual recession. the budget is loaded up with one off payments, going to citizens under the age of 16. untargeteday it is and will not solve the program -- and will not solve the problem of those severely hit. the shortfall is seen widening to a record. despite fiscal policy going into overdrive, bloomberg economics doesn't see this turning the tide when it comes to a recovery. will come in a half a percent for the hong kong economy, with first quarter the dp will be bad -- with first quarter gdp being bad. alix: we go to india, where new delhi is experiencing the worst violence in a decade with muslim protesters. pollard.e is ruth this was quite a staggering image overnight. what -- where do we go from here? fromeir sectarian tensions the hardline agenda have been on full display in new delhi. this latest round of violence occurred over the weekend, and intensified during president trump's visit to the capital. overe used tear gas protesters, questioning the law for religious minorities from neighboring countries, but excludes muslims. we saw a large group of hindu men attacking civilians. violence is showing no signs of easing the death toll is up to now 22, and the city's chief minister has called for lhe army to be sent in to quel the unrest. looking toill be boost growth and ease tensions. while the communists have tweeted an appeal for calm, it is not clear whether he is ready to turn down the temperature in new delhi just yet. alix: thank you, ruth pollard. we turn to the u.s. longtime chief bob iger announcing he is stepping down as ceo, and handing the reins over. the change is effective immediately, and we spoke to both of them after the news wrote yesterday. >> i intend to double down on the same strategy that bob has established 15 years ago that served us so well. the thing i'm taking away his get the content right and everything else follows suit. alix: here is paul mooney. seems like bob iger -- seems like things will stay the same even though bob iger will not be the ceo. >> the expectation was that bob would step down later this year, or into 2021, after the streaming services established mood we are doing it right now. bob schaffer is taking over immediately. of the 27 year veteran walt disney company, well respected internally, so most people feel good with the pick. it is the time that is an issue. this is a critical time for the walt disney company. the coronavirus is impacting the parks and results -- the parks and the attractions' business. the company is making a major pivot towards streaming. think about disney-plus, hulu, espn, a critical pivot for the company at a critical time. when people think about the bob iger legacy, they will think about the big acquisitions. marvel studios, pixar, lucas films, 21st century fox -- those have really positioned the company. shoes tofer has big fill with bob iger. alix: return to u.s. markets. the 10 year treasury yield hitting record lows yesterday. investors look for safety. is our guest. off the lows of that, the question is how low can be go here? >> we can go very low. fact we hit an all-time low wasn't too surprising, given we have seen extreme a low yields everywhere globally, but the thing to look out for is on additional risk-off -- if equity goes down -- if equities goes down, you can look for 1.07 is the next level nontenure treasury yields. continuing to make all-time yield lows on the back of the idea that coronavirus is going to keep central banks easier than everyone expected for a long time, and right now, we are pricing in 42 interest rate cuts -- we are pricing in two interest rate cuts this year if not three. volatility ifate the fed doesn't deliver on the market's expectations. alix: we end with a u.s. politics, focusing on super tuesday after following last night's democratic debate in south carolina. the debate is becoming a two-person race with sanders pulling ahead. joe biden may get a boost from to win -- from a win on saturday. >> i plan to earn the vote. [cheers and applause] folks, i intend to win south carolina, and i will win the african-american vote. alix: joining me is kevin cirilli. after this debate, how do we set it up now for the next week? kevin: the dynamics of the race have not changed since last night's presidential debate for the democrats. former vice president joe biden still anticipated to win in south carolina. i was talking to members of his campaign. they feel confident this will be a launch pad heading into super tuesday. beyond that, senator bernie sanders projecting momentum in his campaign, quietly laying the groundwork, not so quietly to be frank, as to whether or not he needs to give delegates to clinch the nomination. if he does, they feel that would be enough for them to make the case to have the nomination. if you look at polling as super tuesday states, he is poised to have significant gains, just one week from today, however, this is the final point i would note. after super tuesday, expect a lot of chatter about which candidates will drop out of the race. yesterday and really throughout the past couple of days in charleston, the conversation has been whether or not candidates would get out of the race post super tuesday, and that really has started the conversation we are hearing because a couple of weeks after super tuesday is when a lot of these other candidates are going to say now that the field has narrowed, this is the start of the intense period of the democratic primary. mark: all right, kevin, thank you very much. michael bloomberg is also seeking the democratic party nomination. more story we are watching today, who is selling and who is buying? hedge funds like mom and pop investors and fell in love with stocks before the selloff began. but hedge funds ramped up leveraged to increase their returns, so net leverage rose by five percentage points this month, the fastest of the in years, and it does add to this end that it is adding to the confidence. is the most popular shares. long are they going to hang in there and when will they capitulate on some of those position? coming up, we have more news and trade analysis. this is bloomberg. ♪ ♪ alix: time for the first take. are our guests. guys, good to have you back on this side. what are you doing? >> the thing most traders and what we are looking at today is the way their different major asset classes are reacting to the virus. you have seen the pick stock selloff, and everything is looking at this big 10% move. look at the fixed income market. it is three times as large as the equity market is doing, so when you pair them up, something has to give, and as traders, we are looking at this. do you buy the equity dip? yes, but when you look at the selloff, or the rally at fixed income and the drop in yields, and i am not wanting to jump into a 10-year at the record lows ever. you probably will see a situation where equities need to come off a bit more to catch up to where the bonds are, maybe a selloff in bonds to move back towards the mean, to where this rally in u.s. treasuries came from. >> i think is right. not only has a fixed income markets often, it started way sooner. predicting what we said before. retailers have been ridiculously exuberant and bullish since the beginning of the year, going back to october of last year, when the trade agreement was first announced. some ofare smarter than those guys, i can tell you that. alix: we knew that, but it took a catalyst to trigger that. equities toating of see what we are seeing in a lower growth environment, or is it panic of a coronavirus and we need a buy? >> i think it is a combination of both. i don't think the equity market was pricing in what the fixed income market was. utilities was one of the leading performers. they are trading above their long-term valuations. you don't see utilities rally without a bond rally, right? estate,this in real leading the market higher. you have the separate story is respect to spreading of the coronavirus and downward estimate revision. there is apart of the equity market that was absolutely pricing longer. it is not the entire story. it is related to earnings and if thearound, coronavirus continues, what will happen to supply chains and growth? that is being estimated very quickly to sectors. mostly consumer and industrial stocks. >> some of the equity markets have been priced in. >> this is highly unusual to see technology and utilities being the top two sectors. i have never heard a more dire call coming out of the cdc. it is coming here, whether you like it or not, so the odds of this being a short-term thing, which everyone has predicted, are incredibly small. vaccinebly won't have a for a year, meaning the virus could be with a center next year as well. it may be more of a flu-type disease as opposed to the pandemic. >> the who and cdc set it was inevitable that -- said it was inevitable that it is coming, and it has the potential of being a global pandemic, but yet , retail investors have been ignoring that for quite a while. the bloomberg shows what gina was talking about. our earnings positively estimates, coming down for materials, but you have tech holding up. i don't buy that. how does that confidence day when you have bond yields at record lows? into the details of what is happening in consumer discretionary, most of those stocks are falling quickly. domestic-oriented companies that are holding up. amazon's are huge portion of consumer discretionary, now that netflix is not apart of the space. if you look at it i segments, all four categories -- if you look at it by segments, all four categories have held. but the standout is tech. they started to fall last week. our analysts have done a lot of work, and you need to be careful not to paint tech with one, big brush. some might have demand impacts later in the year, but it is not likely to be a permanent loss of income for tech, which is different for travel. if you are selling coffee, they are not going to buy two more cups of coffee. it is a permanent loss. alix: i do like coffee. >> exactly. but i think that is the difference. you have to distinguish if it is a permanent loss of income or short-term. >> it is delayed versus destroying the business model. i think you are right, but overall, we are not coming to grasp with how this will effect earnings and global growth. we still have certain countries -- look at the euro. people are talking about the euro being a haven. you want to buy a segment of the market that is absolutely no real growth prospects whatsoever because you think there is nowhere else to go? that is ridiculous. it is insane. i cannot even go there. [laughter] >> those prospects were limited before the virus. >> now, it is spreading across europe. >> this is the consequence of access the did it. all of that money has to go somewhere, so it goes to save havens. -- safe havens. the fact that u.s. is a safe --en relative to the world, >> i mean, it is crazy. >> if you look at everything from a relative perspective, it makes sense to buy u.s.. if you think of the impact from the virus, whether it is the supply chain or whatever, it is likely to have the smallest impact in the u.s. places in japan are being clobbered by this. you spoke earlier, they can step in stimulate the market with monetary easing. for the people there, that will not help. >> it could provide liquidity. it doesn't help the economy, but it does help the market. >> the liquidity is not our problem. we have plenty of money on the sidelines, and plenty of people plentyt to invest, and of consumers who want to consume. this could create strange inflation. if you have demand for products in short supply, that could drive prices higher. alix: we will leave it there. thank you very much. great conversation. this is bloomberg. ♪ ♪ "bloombergwatching daybreak." the housing market. the home improvement chain post-e fourth quarter sales a miss estimates. the demonstrates that the ceo has plenty of work to do. has018, he took over, and close underperforming stores and revamped operations. stronger second half of the year. the company said they expect china to boost growth after the coronavirus outbreak. we spoke with the ceo. the second half of the year. the chinese government will implement -- --m past history, when china [indiscernible] >> rio tinto reporting profits that matched estimates. the ceo says the world must be willing to sacrifice growth to meet goals. the mining industry has come under pressure to curve emissions caused by the use of their products. the ceo says it will require a lot of sacrifice through shareholders and the government. much more coming up. speaking with mark dandy over at mood's mood's ♪ alix: this is "bloomberg daybreak." i'm alix steel. flat and the nasdaq is flat as the tech chart will over. you have the tech sector falling yesterday. european stocks are really ugly, particularly in travel and leisure. in other asset classes, you can imagine what is happening. by three tens of 1%, but today, it doesn't seem like the dalian is playing -- like the dollar-yen is playing to the safe haven. vix staying relatively elevated, but no breakthroughs. a recession is likely of the coronavirus becomes a pandemic. rise the pandemic to 40%. what does that do to growth? we have seen talk about company starting to re-rate. how do you look at the global growth landscape? virus jumpsif the and it is a pandemic, a global pandemic, then i think we have a global recession, which means, the global economy will retract. we already see how disruptive this is in china. the chinese government has shut down, and the economy will shrink in q1, so if this is symptomatic of what will occur itoss the globe, which probably will be, that means economic activity will decline. anx: there was a quote in article today, talking about the differences we are hearing from companies versus the lack of global growth downgrades. so when would be see these downgrades start to happen on a girl will glow basis versus a company basis? mark: it will be showing up in the economic data now. you can see the leading edges of it now in some other pmi's across the globe, but i think -- i would be pretty surprised if it doesn't show up in the economic data in the next few days or weeks. responding asre if their economies are at risk of going into a recession. ,ou can see folks in hong kong what they are doing, singapore, china, central banks everywhere, so policymakers are acting as if this will be a big hit to the economy, and potentially, a recession, but i would expect it immediately. alix: are the steps the government are taking are enough? is it enough? --k: properly not enough probably not to avoid a recession. there is a lot less room to maneuver to central banks. central rates are very low. europe is the poster child for that. , and no interest rates policy response there. on the fiscal side, there is some room, but not as much room as we need because governments have run up a big deficit post financial crisis, and don't have the room to maneuver. i think the most significant consent will be around the transparency governments provide to us as this becomes more of an issue. if governments hunker down and become opaque, our transparent -- and our transparent, and people stop trusting with what they are in, governments, that will be a significant problem particularly for financial markets. kevin: if we -- alix: you did have reaction function from the fed with loss were clue it it -- from the fed from loss liquidity. what happens? mark: it depends on the virus and how long lasting. i was always skeptical of the logic that the recession would be short and shallow, because of that policy response. historically, take the federal reserve in a typical recession since world war ii, the fed has lowered interest rates by five percentage points, while the rate is 1.5%. it gives you a sense of the lack of room to maneuver, so if you go into a recession, you know, we need to buckle in because it will be tough to get out. alix: mark zandi, moody's analytics chief economist. thank you. still with me is randy frederick. that was a grim description of what could happen. on the markets riep for that at all? randy: i think this has been viewed as primarily a q1 issue, march,are about to start so it will spill over into q2, so mark is right about seeing downgrades. there will be a q1 recession in china with negative gdp growth. i'm not sure that is the case. boost the past, it was to demand. we don't have a problem with demand. alix: can you look at the volatility market, and this is the chart three months versus one month. you can see the volatility -- you can see with the volatility is priced now versus later. is that right? randy: it probably is. let me tell you why. the vix index goes back to 1993. you get these spikes and they short like this. remained fortility several months, but most of the time, they are relatively short events. the further out contracts will be priced lower. that is a challenge for those pricing higher. they are not tied to the vix. they are tied to futures. if this market continues to go down moderately -- if we have continued down days, volatility will remain elevated, but if the , thet drifts lower volatility will be moderate and will come back down and level out. not to where it was before odie it will get closer -- not to where it was before, but it will get closer to where it was before. alix: i want to give you an update with new south side of the business world. >> we begin with the violence in new delhi. it is the worst in almost three decades. at least 20 people have been killed. the protesters were demonstrated and india's new citizenship law. a new think tank in u.k.'s urging the chancellor to raise taxes. they say he needed to fund his spending plan. we end with the democratic debate. it turned into a free-for-all. all six of bernie sanders' rivals taking shots. elizabeth warren accusing him of stealing part of her health plan. says vladimirerg putin wants donald trump to be reelected. global news, 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. alix: thank you so much. randy frederick is still with me from charles schwab. are you playing the election at all? is there a way to trade it? randy: cannot now. it is being overshadowed by the coronavirus. if you go back to 2016, the markets did not pay attention until mid september of 2017. but with the coronavirus, i don't think anybody is paying attention. alix: if you go inside the bloomberg. this does not mean there is a result, but i want to point out over here. this is the green line, which is the s&p. we saw something somewhat similar when it came to elizabeth warren. you had a blip in the equity market. do we need to look at this at all? randy: i think if the coronavirus issues was not around, you might be able to draw correlations, but it is no question it is overshadowing. it is all based on speculation. there is a belief out there that because of bernie sanders being -- having some socialist-type perspectives on things, it would be very, very bad for the equity markets. that doesn't necessarily -- that isn't necessarily the case. there are questions about even if he is electable. i don't think that is an impossibility. buy: is this the time to vo? ll randy: we have been seeing that happening already. you see a bump in the price. i don't think it is tied to a specific candidate. i think it is tied to the fact that there is an uncertainty event. that is the right thing to do. i encourage people. the virus is a black swan event. most events are on a calendar. we don't know what is going to happen. it is either going to be a democrat or republican that gets elected. we know know which, but it will be one of the other. alix: if someone wants to make money, is it selling like you mentioned? randy: you cannot just put a strategy in the vacuum. if you were doing now, that has been a pretty lucrative strategy throughout all of the last two to three years. but then a black swan event comes along like this. it is safe to say that this volatility spike was very rapid. it is likely to dissipate slower, but it will dissipate. as long as we have these negative days one after another, volatility will remain high, but those things won't go on forever. and the short term when you have high volatility, you have large, down days. soundss event that remotely positive about the coronavirus. let's say we have a quick, political stage trial on the vaccine and it comes out positive, the markets will rally on a note like that. if you are a short-term trader, you can take advantage. even if you are a long-term trader, if we have a couple of quarters of negative gdp, ultimately, it will be a buying opportunity, but not yet. alix: there are day trades you can be making echo randy: yes. alix: what is one you are looking at? randy: it comes down to -- the main thing i want people to know is, historically, no one knows exactly how long this will go on, or when the market will bottom, but what we knew historically is if you wait until you get a solid update, and a second solid update, that is not a bad time to buy. a month ago, that is exactly what happened. people who bought the dip got hurt. then we had two weeks of rally. you will see the same thing here. at least wait until you get a few solid updates. everyone wants to buy the bond. it is much better to miss the bottom on the way back up then on the way down. alix: randy frederick of charles schwab, thank you very much. coming up, you have big banks and sm managers doubling down on investing. plus, check out tv . you can watch is online and interact with us directly. you can look at anything you may have missed. this is bloomberg. ♪ ♪ up, we have the carlyle group's co-ceo. >> i have your bloomberg business flash. tesla and panasonic have a partnership. panasonic is holding back on repeat businesses. the two companies have struggled to ramp up production at the plant in buffalo, new york. they will still produce car batteries together. to salesforce.com. rampedthe co-ceo who we -- who revamped the company stepping down. in his seven years, sales increased four fold. showatest sales reports purchases rose 40%. to the times, expecting temperature then expected scrutiny by regulators. they agreed to buy the financial data for $4 million. we turn to wall street beat and three things wall street is covering. cells property to blackstone. strategys investing different hitting himself -- differentiating themselves. -- joining us is our guests. let's start on the blackstone thing. is this a u.k. thing or a blackstone-global thing? >> it does say a lot about the private equity industry, as it builds the merchant banking division. goldman was an advisor on this transaction. seeing reports around 2016, is when they started the venture at around $2 billion. but then it is a pretty good exit for them. instead of an ipo was able to take it on, and you see goldman working symbiotically here. and citi, america it is an indication of what is going on. they are fighting to get a piece of the industry. carlolet's talk about coming back with impact investing strategy. everything that everyone is doing it. what is different? >> they have an impacting investing fund different from the rest of the company. you can be invested in the and greenl industry, initiatives. pension funds have been struggling because they want to do more with impact investing, but there are conflicting interests. carlisle is saying they are looking at impact investing across the entire firm, and they have created some data that shows why this is better for performance. we will see how this looks, long-term and if others will follow. >> this reminds me of what other large asset managers have said. passive ineen pretty terms of investing strategies. climate change will be central to their whole investment strategy. alix: but there is no common screen, so companies can make up their own definition, which makes it harder for investors to say, i prefer the strategy over that strategy, and it is their own interpretation. >> people say private market is easier to do, and what i like is taking it more broadly. they are thinking about the letter as and the g. how are they treating their employees? what are their carbon emissions? you're thinking about this in a broader scope -- they are digging about this story in a broader scope. >> they mentioned carlisle underwrote the loan that have particular metrics the company had to meet that are transparent, and that do make sense in terms of a transition to a carbon -- a lower carbon future. so that is one way to do it hard -- that is one way to do it. alix: we will get a chance to co-ceo. carlyle group's the last story on climate is jp morgan. you can count on jamie dimon to say something fun at investor day. what was the standout? >> the biggest thing that came out of investor day was jamie dimon saying he will be aggressively and looking for his next big acquisition. this is a big shift from two years ago because you saw a huge slow down and emanating in the bank world. jamie dimon was to be very, very creative try -- creative. he says he wants to be very the -- he wants to be very creative. the other thing that came out of investor day or after investor day, was the and report. you will notice the added a new risk factor. they say something that could materially impact their business going forward is climate change. had to is after michelle be funneled into the back door of jp morgan. >> that was because of the protesters outside. they had to take me through the loading dock. jp morgan is doing $200 billion in green financing, social financing. let's see if that is enough to move the needle. alix: saying it is different from doing it. i think that is the same issue they will have with implementing that across their strategy. >> they announced monday that they would be restricting several companies, and protesters and activists have said, this is great, but it is not enough. diamond -- jamie dimon acknowledging this issue and it showing up in the report shows that they are transitioning. alix: thank you very much. coming up, you have stopped dropping on the coronavirus fears, but the movement in fixed income has been more dramatic. tune into bloomberg radio, heard across the u.s. this is bloomberg. ♪ ♪ alix: time not for trader past take. -- time for trader's take. i enjoyed the extra two hours of sleep. somebody ran this by me the other day. we have seen the move of the lower end, the white line, annotated on the bloomberg. the move on the 10-year note from the beginning of the year, where the markets got a group of the buyers, was going on. the fixed income guys are way ahead of the equity guys. it is roughly a 30% move in basis points for the 10-year. when you look at the drop in the equity market, you see roughly 10%, so looking at the two asset classes and how the virus will thect him, i'm sticking to fixed income guys. the equity guys have catching up to do. thise news continues in way, even a few you take 50% of a move, you are looking somewhere around 800? is what they were saying. equities are moving and there has to be some catch up. but how much do they catch up? >> looks like tech is the place to avoid. but you cannot avoid it. alix: that will become my favorite chart. .oming up ♪ alix: welcome to "bloomberg daybreak." i'm alix steel. that's take things from the top. -- let's take things from the top. hong kong unveils a $15.5 billion relief package to help the city better by the coronavirus and political unrest. hong kong is the latest government to announce a stimulus package to cushion the impact of the fallout from the virus as the economy is set for a back-to-back annual recession. economic growth will be between -1.5% and positive .5%. >> it is not a question of if it will happen, but a question of when. alix: the cdc issues a warning of the coronavirus with numbers rising across the country. korea reporting its first case. >> the epidemic may be shifting outside of china. you've seen a spike of cases around the world with korea seeing their first case. alix: the cdc's assessment contracts with the white house saying the coronavirus poses little threat to the u.s. delhi.e erupts in new >> sectarian tensions unleashed by the hardline agenda has been on full display in new delhi. this latest round of violence began over the weekend and intensified during president donald trump visit to the capital -- president donald trump's visit to the capital. will have to use my imagination to figure this out. -- i will have to use my imagination to figure this out. i will not take my eye off the ball until i retire from the company at the end of 2021. alix: disney-plus ceo bob iger is handing over the reins to bob chapek. >> the timing was of the prize. the expectation the marketplace as bob was stepping down later this year, or into 2021, after the streaming businesses had been more established. throughger will stay 2021. >> bernie sanders. alix: senator bernie sanders took the heat in last night's democratic debate, as a solid five front runner. >> senator bernie sanders projecting momentum, and his campaign laying the groundwork as to whether he could get the delegates needed to clinch the nomination. alix: most of the candidates spent more time focusing on michael bloomberg as he spent billions on advertising -- millions on advertising. s&p failed..s. futures up .2%. the safe haven bid is a dollar. sellingseeing a little on the 10 year yield. it feels like investors are like, we don't want any more low yields. will others comply? katie koch joined skiing. -- joins me. we are going to go near term, but there is no shortage of things to talk about. alix: yesterday, we were to percent plus away from a correction. what do you tell your clients? >> the same thing i told my mom who is a 65-year-old retired teacher -- she probably won't like me sharing her age. but diversification should be your friend. active managers are putting together their buying list, and there will be incredible opportunities with a correction. bloomberg shows that 10 year versus the s&p, and how the move we have seen in 2018 now,ll about gold, and equities are trying to catch up our the question is how much do they catch up? >> there is more room to go with his correction and the selloff. there is so much uncertainty how the coronavirus will spread in the u.s.. we have cdc telling us they could get a and the president is telling us not to worry. the reality is it is probably somewhere in the middle. it is possible we could have another leg down in equity markets. the problem is it is tough to call and took a call want to get back in. we are suggesting people have diversified portfolios. from a bottom up perspective, there will be a lot of opportunity here. alix: joining us is a global strategist. great to chat with you. narrative when it comes to economists and market pendants have yet to determine the market uncertainty. most economic growth revisions are holding onto a sharp stall in the first quarter, followed by a sharp rebound in the second and beyond. how do these two square each other? is the global growth estimates are the ones that matter? >>, well from the isonavirus, the tendency that it is transitory. the economy -- the chinese economy is going through a cascading decline because of all the activity has stopped. as we see right now, activity is beginning to return to sort of a normal course. we know it will take time to go back to full capacity. right now, we are still in the process of recovery, so i will say probably by the second quarter of this year, the chinese economy most likely will be back to full capacity. the question is, will the rest of the world? alix: and what do you think? >> well, i think it is a panic. when you think about the united states, we have 53 cases confirmed. it is tiny compared with a population of 350 million. right now, it is a panic. but the panic could be self-fulfilling. what we need is the government or federal reserve to reassure markets, saying we have a policy on standby. wherever there is a need, the policy will support it and will be right there. when you think about the chinese stock market, it can be helped out very well, even though the economy is going through a very that period. assurance,d is policy makers. to tell thes markets that we will drop interest rates. the reason for the reduction of rates is because it u.s. economy and growth will be weighted. the recovery in earnings will be the blade -- in earnings will be delayed. the fed needs to make a statement. alix: i do want to point out that president trump has tweeted , there will be a conference at the white house today at 6:00 p.m. with the cdc. things theonflicting cdc coming out, saying it is when, not if, whereas president trump has been more optimistic about the virus. katie, where are the buying opportunities are going to be? katie: we think you can look at the most damage for opportunities. let me say something controversial. travel and leisure looks interesting, even over a ten-year period, but it could present a good opportunity to get into long-term wealth creation. let's take cruises. they will continue to be a preference for millennials and generation z for experiences over things. they like to travel. instagram has enabled them to take those experiences, post them, and turn them into luxury goods that have social capital. this is a trend that will play out over the next 10 years. if you look at the cruise industry, revenues have doubled over the last 10 years, and they are set to grow even more. if you think about cruises right now, you're thinking about the ship in japan, and the spread of antivirus, and that won't motivate those to book a cruise, but in three to six month some people are thinking about booking cruises, they will be thinking about drinking a drink on a cruise. that will inspire others to cruise. there are only 32 million passengers that cruise every year. there is tremendous growth opportunity with stocks correcting 30%. could be a good opportunity to step in and add capital. alix: what about japan? last time, you were bullish on japan. now japan is being wrapped up into this as well. long-term,ve those growth secular opportunities are attractive. there will be near-term disruption because of the virus and other issues of economic weakness, but we will still have secular growth in robotic and autonomous vehicles. they will spend a lot over the next 10 years, and japan will be a beneficiary of that. valuations will continue to be attractive. that story is very intact for people focused on the long-term. alix: you put -- can you put a lot of stock in the policy response? is the success of the policy response? will they do what hong kong did today with unleashing a lot of money? will it be china cutting the rrr? what will be the best prescription? u.s., trumpor the and administration needs to reassure the market that there will be a physical reaction, if the epidemic becomes a pandemic. if the disease starts to spread in large parts of the u.s. trump needs to reassure investors in the market that there will be policy actions confronting this disease. the market would like to hear that as well. the fed needs to be prepared to drop rates because economic growth, both inside the united states and outside, is weighted because of this epidemic private chinese economy needs recovery. it has weekend. the bond market is telling us this disease is deflationary in nature and damaging growth, so the fed needs to drop rates sooner than later. if they can do that, the market can start to look beyond the , and properlyc price. right now, it is a panic. panic can become self-defeating, so the policy makers to break the back of this dynamic. it is very important in a panic that the government and the central bank stand up until the markets that there will be policy reaction standing by, so that you don't need to panic. alix: we will dig more into that. you guys are sticking with me. saying itce chair is is too soon to see is spillover from the coronavirus. as we head to break, take a look at tj maxx. the discount retailer posting a growth of 6%, beating estimates and plans to boost its dividend by 13% by quarter billion dollars. i bet my mom is helping to support that company. this is bloomberg. ♪ disruptions go spillover to the rest of the global economy. but it is still too soon to even speculate about the size or the persistence of these effects. chairfederal reserve vice was speaking in washington yesterday. no one agrees with you. [indiscernible] >> the fed is always late, right? the fed is always notoriously laid. the market is already telling us some action is needed. if you look at the yield curve, it is interesting. the chinese yield curve is steepening. the u.s. yield curve is flattening and burdening. the market is bleeding. for policy is way too tight given the new circumstances. fact-movingat the theories. ,ooks like the chinese impacts look at the german industrial production, you have little recovery. now it is plunging. alix: yeah. >> i think the fed needs to move ahead and needs to be preemptive. it doesn't cost anything. if you cut rates and it is overdone, you can remove it later on. what is the problem with that? they can deliver stimulus. if it is not needed, you can always remove it later on. preemptivelyfed implemented stimulus and then removed it. alix: how do you care, katie? >> it will be good for equity markets. it is good for institutions to say they will step up and address if there is any weakness in the economy. i would say it will not fix all the issues because we clearly have some sub i disruption that will not get fixed by lowering rates. there are other fundamental things we have to work through, but again, a rate cut would give relief to equity markets, but it is about finding the opportunities that have dislocated the most by the long-term wealth creation potential. alix: parted that is looking for running investments. i want to bring in this chart by sector in the s&p. energy, materials, and deciles all hit the hardest. consumer discretions -- consumer discretionary is holding up. how do you look for dislocations that exist? go buy energy. >> that was a discretionary underweight. we were underweight carbon and across the portfolio. you could get a short-term squeeze, but something we don't allocate a lot of capital to. taking a step back, something that has been lost is we had a very strong q4 burning. that is something we should take encouragement in. 70% of u.s. companies have reported. beat estimates. pretty healthy. then you look at what is happening about first quarter because some of the issues we have talked about. i think the energy stuff is structural, if you look at what is more protected to the chart. it has been tacked and the consumer. -- it has been tech and the consumer. tech is not a monolithic sector. there are sub-sectors that are important. mostly -- has very limited revenue exposure to china. that is a subsector that is overweight. and the big tech platforms are getting the benefit that we have totally separate tech ecosystems between china and the u.s. what can the fed do with all of that? it seems like there are those that say, maybe the shakeout is good. if we get a shakeout, maybe that is a good thing for some of them. what is a cut believe going to do than to just boost equity sentiment? well, i can imagine that after this crisis and panic, we will have a very good bond and global equities. the reason for that is, you know, what we are left with after this panic is over, what we are left with is a lot of stimulus in china. hopefully, the fed will drop rates, and for sure, long-term bond yields have been reduced. you got lots of monetary and physical stimulus. recoveryl economic outside of the united states is delayed. it is not aborted. i would say into the second or third quarter, the world economy can reemerge very strong, and before that, equity markets will have a good run. i'm bullish, especially bullish after this recent shakeout, but we do need the u.s. government authority to stand up, and reassure marcus to stop the panic, so people can rationally price their assets. that is what i feel because fundamentally, i don't think what economy can be changed forever by this coronavirus. in the grant scheme of things, the chinese economy, the chinese population of 1.4 billion people, and we got 2000 deaths. that is a tragedy, but in the grand scheme of things, that is very, very small. in the u.s., we have 53 cases. give me a break. cdc officials think it is a matter of when. how do -- how does he know that it is a matter of when this thing becomes a pandemic? i think it is totally responsible. we don't know. but what we do know is there is a heightened sense of alertness that the authorities or onto the authorities are onto the cases. unlike china and the first couple of weeks, nobody knew what was going on, so that is why the disease got spread. now, every government is into it. i think this thing will get contained. alix: we will get that news conference of the cdc and the president at 6:00 p.m. thank you to the both of you. more coming up next. this is bloomberg. ♪ ♪ with the healthy u.s. housing market. lows posted sales at missed estimates. that demonstrates the ceo has plenty of work to do. in 2018, he took over and has sold off divisions, close underperforming stores and revamped operations. tesla and panasonic, they will end their partnership for rooftop solar cells. panasonic is pulling back on money losing businesses pray the two companies have struggled to ramp up production that the plant at buffalo, new york, but will still produce car batteries. alix? with me.ie is still you mentioned tech before, but would you buy the high flyers right now? katie: we like facebook. that is for the instagram property. haveix may get a we coronavirus in the u.s. because we will have a lot more screen time. we saw that with the gaming and companies out of china. we are underweight apple. they came out with warnings in of overweighting facebook. this is like a pop quiz. will this be another record year for private equity? we will hear from the carlyle group ceo. we will break that down. this is bloomberg. ♪ alix: this is "bloomberg daybreak." i am alix steel. againlike we are trying for another bid in the u.s. equity market. futures up 12. nasdaq futures up .4%. european stocks keep on rolling over. airlines get pummeled yesterday and they continue to get pummeled in europe. two things to pay attention to. it is about the dollar and the ftse. yield, for 45 billion dollars of five-year notes coming today. maybe investors are putting their foot down as to how low a yield in. volatility remaining somewhat elevated. we are getting into seriously dangerous territory in terms of hedging the banks may have done. with more investors looking to private equity, the industry is seeing assets under management hit $4 trillion. while the u.s. is still the biggest market for deals, europe has seen rapid growth. we want to get more on that and head to berlin where matt miller sitting down with kewsong lee. matt, take it away. matt: i am happy to be here with kewsong lee, the co-ceo of carlyle group. we were just talking about the more than $4 trillion under management. last year was a record year for fundraising. you reached your target early of another $100 billion. what can you tell us about 2020? how does fundraising feel this year? kewsong: fundraising feels good. it is still a good environment. people are focused on the fundraising environment and do not appreciate you have to find interesting ways to put the money to work. you cannot talk about fundraising without talking about the fact that the opportunity for private capital, private debt, it is expanding. the number of public companies are down. there are twice as many private companies as there are public companies. opportunities to make private loans into company since the banks are retreating is increasing. if you talk about every single asset class up and down the capital structure, the opportunity set for private capital is expanding anonymously. there is a lot of fundraising. there is a lot of dry powder, but at the same time you cannot talk about the supply side without the demand side. we see tremendous opportunities to invest that money well over time. how you do that and what companies you pick is the hard part of our business, but we are not lacking for opportunities in our industry. matt: let me take the analogy of a marketplace. you are in the market with a fat wallet and now everybody else has a big fat wallet. the shopkeepers, the sellers will all be raising their prices. is that a problem for you? prices are high, but prices are higher across all asset classes. that is what happens when central banks are reflecting the way they have over the past decade. price so muchot as we know we are paying high prices. the real question is how do you draw value, how do you create return? at carlyle group, two thirds of our returns are generated by operating improvements, growing revenue, driving productivity, making margins bigger. partnering term, with our management teams and ceos to build these companies. if you do that, you drive returns. you do not have the luxury to buy low and sell high. you do not have the luxury to use financial engineering techniques. you have to create fundamental value. that is the name of the game. hownow prices are high, but do we earn back the premiums being paid to drive value creation. matt: you have a big real estate business you have helped build at carlyle group. if you were to buy an elevator unit you could put those in all of your buildings. are you bidding? kewsong: elevators go up, elevators go down. i cannot comment on any deal. matt: a lot of people are talking about the coronavirus. conferences have been canceled in europe. how much is it impacting you in terms of your exposure to china? kewsong: the human toll and the human cost is not to be ignored. i have to be thinking about our people. that is our first priority, to make sure the welfare of our employees, the folks in our portfolio companies, there are many people who been dislocated and affected terribly by the spirit that is what our focus is -- affected terribly by this. that is what our purposes. we have to put in policies to make sure we are taking care of our people. shorter term, there will be a financial impact. my guess is it will be worse than people think because we are dealing with the unknown. as this continues to evolve, i think people start to understand how disruptive lack of travel, how disruptive when traffic goes down, when people delay decisions, when the logistics of supply chains get affected. there are 60,000 containers in the wrong ports and wrong cities because the supply chains have been disrupted so badly. it will take time for that get going in the right fashion. -- i'm not an expert. nobody is an expert. we are doing our best to take care of our people. we are monitoring it carefully. i think the short-term impact is real but i am hopeful over the longer term we will navigate through this. we are seeing the fiscal wheels turning. asia and hong kong is passing out money. here in germany they have decided to start spending. we heard from the finance minister of the debt break will be temporarily lifted. it is carlyle group going to be in a position to start helping put that money to work? for example infrastructure projects. do you see that? kewsong: infrastructure, you have to be careful how you use the term. we do infrastructure in a focused term which is how do we think products add real value and take risks in terms of creating change and making things better. the more important point at a broader level is for the past 10 or 15 years central banks have been pumping liquidity into the system and i think it is clear that you cannot solve structural issues through central bank policy. what you really need to do is have a combination of thoughtful political and physical leadership in can -- and fiscal leadership in conjunction with good bank policy. that is what you need to drive structural change, improve the infrastructure, drive changes in education, improve health care so that overall you can stimulate. i think it is very important and it will be a growing discussion in regions around the world where there has got to be leadership inal conjunction with central bank policy to push the economic ball forward. matt: let me ask you about esg and impact investing. you've been pushing these changes at carlisle group -- at carlyle group. res were women.her how does that benefit you? kewsong: impact is not a product. impact is not a way to figure out how to raise more money. everything we do at carlyle group is about how can we have the maximum impact to make businesses better. you need to take the holistic approach because i do not believe in this false choice being presented that you can either figure out how to drive returns, or you can figure out how to be "good." it is all about making business is all about making businesses better to drive returns. -- you canolutely drive the sustainability practices. you can figure out how to be more friendly to the climate. all of that in conjunction with driving revenue, maximizing productivity, figuring out how to be more capital efficient, all of this together is what makes businesses better. to me it is a total vine set -- a total mindset, it is not just about checking a box. it is much more of a mindset. we are saying let's take a total approach to figuring out how to make a business better from the board room, introducing diversity, to driving cultures that are more inclusive, in addition to all of the things we do with respect to revenues and costs. when you put it together, it ends up driving better returns to investors. matt: thank you so much for your time. kewsong lee, the co-ceo of the carlyle group. alix: really appreciate that. still with me is katie koch of goldman sachs asset management. what are you doing with impact investment? katie: this is the number one thing we are working with our clients on. we are trying to buy great companies. for us that means buying sustainable businesses. we have been doing this for many decades. we are having more data so we are dialing up our focus on monitoring esg characteristics across all the portfolios. as we look for sustainable growth, which benefits all of us , we have found we are very underweight carbon-based assets. we are overweight solutions providers. we are overweight a lot of the companies that are providing solutions for many things, but for example the climate. because we have become so overweight on that theme, we have launched some dedicated products focused on these solutions providers. alix: these are companies that have already transitioned or are key players in the transition. have they performed well before you put together the funds? katie: one of our biggest would be a renewable fuel company that has 65 market share -- 65% market share. they turn stocks into alternative energy so you can put it in cars and planes without having to do conversion. we know planes are baked converters. if you use this fuel, it cuts co2 emissions by 90%. this is a great example of a company that has already transitioned and we have made a lot of money for clients off of that. a great example of where you can do well for the planet and also create shareholder return. dsm would be another example. cows are one of the biggest emitters of co2 in the world. feedakes cleaning cow which reduces carbon emission for cows. there are a lot of companies innovating. a final point is europe gets a bad rap because the growth story is challenging for europe, and it is. the demographics are horrendous. the median age in europe is 43 years old, which is 12 years older than most other places on earth. if you want to think about the growth trajectory of europe, it will look like japan. can findapan, you interesting secular growth opportunities. europe is a leader in green tech. the government has been supportive. they put the tax breaks in place. they have given subsidies that have given rise to a green tech industry. while the u.s. has led untraditional tech, europe will lead on green tech. alix: i have a question from a viewer who says that you said asset manages are ported together there -- asset managers are putting together their buying list and i wonder if that is more em or dm? --ie: yam is a great entry em is a great entry point. u.s. investors are significantly underweight emerging-market, which is already 12% of global equity market cap. if you have less than 12% of your equities into emerging markets, this is a great opportunity to step into emerging markets with an active manager and take advantage of those secular growth opportunities that will unfold over the next decade. this will be the epicenter for the most attractive consumer story in the world in the next 10 year and this would provide a good entry point. alix: where? katie: i would say a global exposure is the best. we see opportunity in latin america and eastern europe and asia, including china. a global exposure would be good. i am biased because we do active management. you do have to hunt outside the benchmark. the index for emerging markets is still dominated by legacy companies that are often state owned. they are incumbent in industries and old-line bank and energy. you have to hunt for those opportunities which are available he globally. alix: we do not have time. katie koch will be sticking with me. tune into our special coverage next week of super tuesday. we will have live analysis of primary and what that means for the equity market. shares of tjx why reporting of fourth quarter earnings beat. bloomberg users go to gtv on your terminal and check out all the charts. gtv . this is bloomberg. ♪ viviana: this is bloomberg daybreak. ,oming up on balance of power the university of virginia center for politics director. ♪ alix: time for bottom line. we look at three companies worth watching. joining us is brooke sutherland. katie cox is stick -- kitty koch is still with me. to disney. the new ceo is like "i am doing nothing different." brooke: i think the executive chairman's little bit funny. it was a surprising choice for the successor. the person who runs the theme parks? or people were thinking the one who runs the streaming service would be the one to get the job. alix: it was sudden. katie: most people expected the change to happen at the end of this year into next year. they have a lot of long tenured senior leaders to take over. he has worked there for 30 years. let's go to the second story, no dare not. -- moderna. katie: they do a lot of different things but they are in the headlines because of coronavirus. health care is a super interesting sector. it is getting hit because of the election noise. there is part of the sector that one wants to avoid. the insurance providers would be parts of the health care we are avoiding. buildt opportunity to into positions on medical devices. we own a couple of companies that we can now do open heart surgery, we are invested in a company that can take a recovery time from that from two weeks to one day. the other bucket would be in the genome space. there are many ways to attack that space. the big picture is it used to take 15 years and $3 billion to decode human dna. we can now do that for $100 in a couple of hours. only are 7 billion people, one million have had their genome mapped, and those have been in the last year. we are on the precipice of getting all this amazing data. we like the information gatherers. we like the companies that are bending the cost, that would include companies. we also like the companies making the drugs, and moderna would be one of them. these are companies coming up with cures to terrible diseases. they have it in cancer and genetic diseases and the coronavirus is one they are getting the most credit for. viewtech -- on a 10 year this company will be great for humanity and investors. brooke: did they get the funding they need for these vaccines? i know influenza vaccines are not the sexiest. katie: you get a lot of headlines. they started off with funding which a lot of these companies do that are in the genome space. the 2010sunding in and then went public and shareholders are supportive of this because this is the future of medicine. the reality for the u.s. -- and this is true -- we spanned almost 20% of our gdp on health care, which is the most of any country in the world, for the worst outcomes of any developed country. that is not political rhetoric. that is a fact. do government needs to something on that, but these companies will be the ones that step up to do something. alix: let's wrap it up with t.j. maxx. the stock is much higher in premarket. brooke: they are and this will be a continuing story for t.j. maxx. people love the treasure hunt atmosphere where you go in and find deals. they have been able to do well and other retailers have stumbled. we are coming off the holiday season or you did not see great numbers for typical strongholds like target and walmart. it is encouraging to see t.j. maxx coming in with strong comparable sales. the lows are not such a good story. we had home depot yesterday with strong same-store sales numbers and the lows are not measuring up to expectations. there's been hope we might be able to take market share with home depot now they have a new ceo, but it is not happening. alix: good you like in retail? katie: t.j. maxx is a company we have owned previously. they have a fast inventory turn. that is one of the most attractive part of that company. from a millennial consumer perspective, they do love the treasure hunting mentality, myself included. i have one in the basement of a building near my apartment i go in once a week. i should get a discount the next time i go. you never know what you will find. from a financial perspective they are turning that inventory quickly. it has been one of the bright spots of retail. brooke: it is all about the experience. that is why target and walmart are trying to make stores within a store and have private labels. they are trying to get people excited about shopping in stores. alix: target is where i go when it is raining and i have to take my child. brooke sutherland of bloomberg opinion, thank you very much. katie, always a pleasure to think with you. katie koch, do you like tv better now? katie: a little bit. alix: we are looking at futures fluctuating after two days of selling. if you're jumping into the park, tune into bloomberg radio heard across the u.s. on sirius xm channel 119 and the bloomberg business app. this is bloomberg. ♪ alix: time for technically speaking. setting up you -- setting you up for some traits of the day. double load -- bill maloney joins me. listen to bill on the bloomberg at squa . bill: futures all over the place. up around 11 right now. looking at the cash, a plunge below the 100 day moving average yesterday but held 50% of the move yesterday, 3124. then look for 3100. the 150 day which held going back to march, down around 3092. 3150 to 3154 your first resistance. katie: that -- alix: that is a support level to see. bob iger is moving to executive chairman, new ceo. bill: the stock is down around 2%. to support levels are 125 126. that dates back to the april gap. it needs to hold that level. gap, 125,s into the retracement levels. alix: we were talking about retail, particularly lowe's. the stock is up a little bit great bill: the stock is responding. it was down 4%. now trading higher, around 12080. key support will be 200 day highs of 127.old 123 is your upside resistance levels in lowe's. alix: how busy have you been? bill: very busy. i am losing my voice. alix: that wraps it up for me. coming up on "the open," michael kushma of morgan stanley will be joining jonathan ferro. in the markets, another try on the wrist bid. futures up .2%. europe telling a different story. the travel and leisure sector continued to roll over. in the safe haven bid, the dollar and the ftse are holding up now. rates near record lows. this is bloomberg. ♪ jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: equity markets looking for stability after a four day route. health officials warning americans to brace for a coronavirus outbreak. president trump standing by as democrats rip into one another. 30 minutes until the opening bell. good morning, good morning. here is your wednesday morning price action. equities bouncing back from a four day route, up just eight points on the s&p 500. the euro a little bit weaker. market, yields coming off all-time lows on the 10 year, up a single basis point to 1.36. let's begin the program with the big issue. the coronavirus wreaking havoc on markets despite president trump and the administration's best efforts. president trump: you may ask about the coronavirus, which is very well under control in our country. we have very few people with it. >>

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