Transcripts For BLOOMBERG Bloomberg Best 20240713

Response is . We do not. Sebastian businesses size up the dent in their bottom line while bracing for continued headwinds. We did see in february the fix was down 85 . If i talked to our colleagues in china, they say it is Getting Better everyday. We want to do our best to fight this crisis and achieve our targets. Sebastian plus investors, economists, and policymakers offer guidance in a time of financial turbulence. I think the odds are 80 that we will have a recession. The Oil Price Decline is very, very good for india, good for china. We can survive with threeity, we have for months, six months, nine not months. Many people are going to go bankrupt. Sebastian that is all straight ahead on bloomberg best. Hello and welcome. Im Sebastian Salek and this is bloomberg best, your weekly review of the most important Business News, analysis, and interviews from Bloomberg Television around the world. Lets start with a day by day look at the top headlines. Flash back to last friday and talks between saudi arabia and russia as Oil Output Cuts collapsed in vienna. Opec officials claim they will continue to work toward a deal, but the kingdom of saudi arabia announced it would start pumping more, leading to an uproar when markets opened monday. A cataclysmic implosion of confidence in the oil market, in equity markets. To the oil market, the biggest oneday plunge since 1991. There has been a really significant breach between saudi arabia and russia. Talks broke down very badly last week, and then over the weekend, the saudis have escalated. They have slashed their oil prices. They say they can pump 10 million, 12 million, big increases. They clearly want to punish russia for what they see as being disappointment between talks, the breakdown. This is really unprecedented for the oil market. We havent seen anything like this. We are dealing with a market that was already trying to digest the supply and demand shocks from coronavirus. Now we add in the collapsing crude oil prices and that is sending markets potentially into fullblown panic mode. This is a fire sale. Investors, selling everything they can get their hands on into the market in a grab for liquidity. Bond markets, sub 1 across the curve. We are shredding, shredding levels and history in the bond market. If you look at the u. S. Yield curve, some say the zero bound is a negative lower bound. We will potentially be blowing through that. The u. K. Twoyear at four basis points, japans twoyear, 31 basis points and wait for this, germans twoyear now 1 . Jonathan we are opening the s p 500 and we roll over immediately, down 5 , 6 . We are rolling over and rolling over again, down 7 on the s p 500 and triggering a market wide trading halt. I think a lot of investors are trying to figure out when does it come. How do we know . We will feel it. The panic and the fear, and not just stocks and oil. They are selling off high yield, credit is selling off. Investors are getting out of risk assets. Technically, we are nowhere near the bottom. We could see in fact days and weeks of this relentless selling, very reminiscent of 2008. We are looking at stocks in the red, deep in the red and ever closer to the bear market which would be a 20 drop from the highs to lows. Now that we do have a very large reaction in the markets, the white house might be a step closer to actually giving us something by way of stimulus. Jonathan equity futures with a lift, up by 3. 54 off the back of a couple words by the president. Pres. Trump we are seeing the senate, going to be meeting with house republicans, mitch mcconnell, everybody, and discussing a possible payroll tax cut or relief, substantial relief, very substantial relief. That is a big, that is a big number. There seem to be two camps. There is the peter navarro, Jared Kushner camp that is looking to do aggressive action, and then larry kudlow and secretary mnuchin and are looking for timely and targeted reactions. It seems like a debate between fdr and Herbert Hoover in terms of how they should manage the situation. Mark President Trump meeting with republican senators earlier on capitol hill, telling them he wants a payroll tax holiday at least with a november election, dealing with economic fallout from the coronavirus outbreak. We have a market that is rallying right now on the hopes there will be some bipartisan compromise. Do we have some actual details up to what the fiscal response as to what the fiscal response is . We do not. We do not have anything on paper, remain. Weve got a lot of talk about some sort of a economic stimulus bill coming out of congress. Trump told senators he wants a payroll tax holiday through the election. I dont think anybody, at least among democrats, think that is enough of a stimulus for the economic threat that coronavirus presents. We have a little bit of whiplash because of all of the green on the screen with yesterdays bloodbath. Pretty much a Straight Line up in the last two hours of trading. We closed at session highs. It has been a busy day in the u. K. First thing this morning, the bank of england surprised the market with a 50 basis point cut. News of a plan to help provide easy credit to businesses. We also saw a reduction in bank capital buffers. Then came the second part of the onetwo punch. The banks move, followed by the u. K. Budget which delivers 30 billion pounds in stimulus. Thats what the market has been waiting for, a onetwo punch, monetary and fiscal policy working in coordination. I think all of us were surprised the 50 basis point cut was coming. That was the whole shock and awe, so i am more than impressed with that sort of delivery, particularly with what the government has done for the budget. So this set a template for the world. Market losses are accelerating as the world Health Realization declares covid19 a pandemic. This, amid concerns about the Trump Administrations response to the novel coronavirus. The president has failed to deliver on his promise of a sweeping stimulus package to help combat the outbreak. We had this massive rally yesterday after the market closed. We were going to hear from the president not only about a policy prescription but also addressing the Economic Issues here. He did not show for that can be he did not show for that. Futures began to plunge. We got down 57 points this morning and have gone down since. In the 10year treasury yields, it is higher on the day. The last time we saw a selloff like this in equities and people also selling treasuries, we have to go back to october 2008 to see that. We are 19 down. This is the drawdown from the highs we were just talking about. 19 on the s p 500 so we havent got into official bear territory but 20 , does that matter at this stage . Donald trump has suspended all travel from europe for the next 30 days. Travel ban excludes the u. K. The president has promised to boost market liquidity by 200 billion and asked congress to approve immediate payroll tax relief. The big headline obviously was the travel ban from europe and he said it just that way, that it would be for 30 days, take effect on friday. And he basically blamed europe for allowing chinese residents, chinese visitors into europe, and he said that caused the spread of the virus. He called it a foreign virus. He then mentioned measures, other measures like the tax extension and things like that, but they were more limited than the markets had hoped for. The ecb leaves the main refi rate unchanged at 0 , but they do announce the a new tltro. It is a longterm refinancing package. They boost qe also. They are adding a temporary envelope in asset purchases, boosting liquidity, boosting qe, Interest Rates on hold and go nowhere. It is wonderful to see the Central Banks finally starting to get it. Why do i say that . First, in terms of what the ecb did not do. They did not cut Interest Rates further negative. That is actually a good move. I think people have realized that just cutting Interest Rates is ineffective, but also in the case of the ecb, counterproductive. So i think that is a really important signal that they understood when policy can be counterproductive. It has been brutal, absolutely brutal out there for European Equity markets. These are the days you remember. The stoxx 600, weve never seen a day like it in the scale of the downside move in europe today, down 10 , nearly 11 . Investors look past the liquidity injection today after being underwhelmed by the ecbs measures and President Trump has addressed the nation. The closing bell. We are getting ready to close the books on another day of massive moves to the downside. Officially now the s p is in a bear market. No fluff, no filler. All the major indices are in bear market territory. It is just unbelievable. I think the combination of the speed of everyone watching the parts of the economy shut down all at the same time is like nothing we have ever seen. Jonathan stocks bounce back following the worst day since 1987, Central Banks stepping in, china cutting reserve requirements and finally, the fiscal plan from d. C. To europe slowly coming together. Today so far, the pboc reducing its reserve ratio, getting more money into the economy. Nor just think, the norwegians cut their key rate from one to 1. 5 . The riksbank is setting up a lending program. Bank of japan is buying jgbs. The australians are going into the repo market like korea is considering an emergency meeting. Where does that leave the fed . Right now we are looking at a 100 basis point cut according to fed funds futures. Meanwhile, yesterdays fed action, having an impact. 500 billion on offer. Hearing the right things for germany, hearing the right things from brussels. Maria, are we taking that big leap toward fiscal stimulus . We had the german finance minister saying there will be unlimited cash to help german companies, and hes using that term now. He is saying the countries are determined to keep liquidity going and here in brussels, you have the European Commission saying they are ready to ditch the fiscal rules. And that means you can spend that money, and you wont be punished for it. The European Commission is now saying that countries that need to spend to protect themselves from the coronavirus and shield their economies from further turbulence should do it now. Mr. Trump to unleash the full power of the federal government in this effort, today, i am declaring a national emergency. President donald trump, there, speaking to the nation for the second time this week. The main headline, obviously the mobilization of some of the health efforts, the idea testing kits will be available. He is also waiving some rules, some regulations for hospitals. He talked about potential economic measures. He said he would buy oil for the Strategic Petroleum reserves. We should also point out that once he started speaking, we saw the stock market here in the u. S. Have a tremendous bump up, about 170 points. The close was actually the best day weve had going back to 2008. I think the appearance that there is actually some plan in motion, a huge relief to investors, whose expectations for the response have become pretty low. Sebastian still ahead as we review the week on bloomberg best, Larry Summers says only a huge stimulus can hold off the worst economic effects of the coronavirus. And it will be worth the price. Plus, conversations with some of the brightest minds in business and finance about the shock that is bringing back memories of 2008. We are going to have a global recession and it is not just my view anymore. Sebastian up next, more of the weeks top headlines from italy to australia. Governments take action against the coronavirus threat without a clear view of what lies ahead. We are very much focused on providing temporary relief, temporary support. Sebastian this is bloomberg. Sebastian this is bloomberg best. I am Sebastian Salek. Lets continue our tour of the top stories as coronavirus spreads around world. Governments were forced to take extraordinary measures to protect Public Health and provide economic support. Italy has gone into a nationwide lockdown. It is the first country in the world to attempt a complete shutdown, affecting more than 60 million people. What does this lockdown entail . Basically, theyve just taken the limited lockdown they did in the northern parts of italy and just blanket extended it to the whole country. All the universities are closed, all schools, almost all activities that you dont absolutely have to do are recommended against, and all travel has to be justified. Manus the italian Prime Minister Giuseppe Conte is looking to increase the countrys fiscal stimulus for the fourth time in a month. Finance Ministry Officials are looking at how to double the existing package to as much as 16 billion euros. The situation is so serious from the coronavirus that the government has decided it needs to act strongly. By friday, they will already pass a package for 12 billion euros. That is relief for mortgage payments, to have a moratorium on mortgage payments, loans for small to mediumsized businesses. All kinds of measures to boost the economy, with the complete lucked out in the country is basically at a standstill. The japanese economy, contracting more than initially estimated in the last quarter. How likely is it that we are looking down the barrel of a recession in japan . I think it is very likely. I think most economists now think that we are already in recession in japan. Todays figures, the revised gdp showing a 7. 1 slide in the economy in the Fourth Quarter. Some of the figures are quite alarming. Business investment was being cut at the fastest rate since the Global Financial crisis, and that was before the virus hit, so chances of recession are, i would say, very, very high. Prime minister shinzo abe announced a fiscal support package around ¥430 million to support the economy from any virus fallout. We had two steps taken by the japanese government today. You know, alix, they have been criticized. They have today put in place a system that will allow them to declare a state of emergency if things get worse, and the virus has been pushing the economy into recession according to economists, and at the same time, thats why we had some new fiscal measures announced today. It is not new money, but they are allocating extra spending about ¥480 billion odd to the medical sector and that brings the total loan package around one trillion for Small Businesses and families struggling with the virus fallout. It is important to note it is not new money, but it is another sign of the government moving toward fiscal stimulus. Australia has unveiled an 11. 4 billion fiscal stimulus plan to fight the economic fallout from the coronavirus, which threatens to tip the country to its first recession in almost 30 years. Prime minister Scott Morrison outlined measures to protect jobs from small to mediumsized businesses. We are not imposing a short stroll increase in payments on the budget. We are very much focused on providing temporary relief, temporary support, significant as it is. When we are on the other side of this, and we experience the strong recovery that we are very confident will occur, obviously, the budget will bounce back at that point in time as well. Major League Baseball here in the u. S. , that is going to be the latest Sports League to suspend operations due to concerns about the coronavirus. This comes after we had similar announcements by the nhl and the nba with regards to suspending their season. Major League Baseball, as we know, suspending spring training, delaying the beginning of the regular season, and of course minutes ago the ncaa canceling march madness. This is devastating for the players, a huge cash cow for the league, for cbs, for turner sports, which broadcasts these games. Certainly an evolving situation here. The olympics, of course, coming up. We can imagine they are considering contingency plans. Global soccer leagues, and certainly not a good situation. President ial candidate joe biden, widening his lead against rival bernie sanders. The former Vice President , winning michigan, and that was the biggest prize of tuesdays democratic primaries. He also won in missouri and mississippi, also idaho. Hes consolidating the democratic party. When you look ahead to this weeks next weeks primaries, he is significantly ahead in almost every single state. It is pretty clear the rankandfile are moving behind biden. His overwhelming advantage amongst africanamerican voters and suburban voters is just going to dwarf him. Bernie continues to hold onto the youth vote in a pretty significant way and will have a chip to play when it comes time to negotiate terms, but this primary is pretty much done, and i think the sooner they turn and start looking at what the campaign against donald trump is going to look like, the better off it will be for the democratic party. Oil, heading for its biggest weekly drop since 2008, is an unprecedented supply demand shock that shows no signs of abating. We expect a crude build of 6 Million Barrels per day in april. We have never seen a build of this magnitude or this velocity, and as it hits the system, the question will be the logistics, ships, pipelines, storage facilities, and a key issue that may hit a bottleneck. Where it hits the bottleneck is where you see the real downside risk. I like to point out in 2016, oil prices up in minnesota went negative. Why . Because the producer had to pay somebody to get rid of it because you couldnt push another barrel into the system. When the system blows out, you breach capacity to be able to deliver or put into a pipeline or put into a ship, the downside really begins to open up. I want to emphasize, as soon as the system starts filling again, the prices spike back up. The key point is volatility, mainly to the downside, is likely to be very high in the coming months. Sebastian you are watching bloomberg best, and im sebastian you are watching bloomberg best, and im Sebastian Salek. As governments and Central Banks rolled out plans to counter the coronavirus, bloomberg wall street contributor Larry Summers discussed the response with david westin. Summers argued that the scale of the problem takes an aggressive set of solutions. Larry i think we had better have an apparatus in place that will enable us to be spending at a rate of above . 5 trillion a year by the end of the summer. Not certain at all that will be necessary, but weve got to have the capacity to be spending it more than that rate. It wouldnt surprise me greatly if we had to escalate beyond that. I think the odds are 80 that we will have a recession, and we need to have Contingency Planning for a likely recession, and we need to do that planning with the awareness that a serious inflation problem really looks very unlikely from here. David so one of the people you used to work with used to say, dont let a good crisis go to waste. Is there a possible upside to all this . You have been concerned with circular stagnation. We talked with the chairman of blackrock, and he invoked your name, saying we may have enough stimulus to get past the secular stagnation. This is what he said. This may be an opportunity where we look back, you and i, hopefully five years from now, we could say that was the moment that kind of got us out of this secular stagnation trap to get what Larry Summers calls escape velocity. Whether that will happen, who knows . I think that is where the market is really going to focus on Government Action in the months to come. David larry, is that hoping for too much, escape velocity . Larry i hope so. It will take our being willing to act more decisively and more ahead of the curve than we have traditionally as the economy goes towards downturn. Thats about fiscal policy. Thats about Public Investment in infrastructure. Thats about the federal reserves action in spurring the flow of credit. Frankly, the announcement yesterday about the fed kind of hopes banks will lend more struck me as being pretty empty and not very well specified, so i think theres the prospect that we will use this as a moment to push forward on the economy, but we cant just assume it will happen. Sebastian coming up, more compelling conversation on the most serious of subjects. The covid19 virus has officially been declared a pandemic. Experts discuss the economic imprint it may leave, but what investors should be doing their money at this moment . Now is the time to be buying. Sebastian this is bloomberg. Good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. Sebastian welcome back to bloomberg best. I am Sebastian Salek. The coronavirus and its impact on markets dominated the discussion this week on Bloomberg Television. Here are highlights from some of our interviews with highprofile guests in business and finance. Weve got stock prices and bond prices at the moment that are effectively discounting a global recession, and potentially some period of deflation. Whether it turns out like that or not is going to depend on the Economic Impact of the supply shocks. Do you see recession in 2020 and is this like 2008 for you . Do you find those comparisons useful, helpful . Is that the scale of it . I think the panic and the scale is in similar territory. I think it is very different from 2008 because we are not looking yet at the Financial System which is under threat. What we are looking at is two supply shocks, one from the virus, and the other from the issue with the oil price war. One of the things ive learned in 40 years in the business, dont see around too many corners. If the virus is wellcontrolled, and that is a big if, and if we get peace and love breaking out, we could see a stronger second half and a bounce back in market and air pocket economic activity. If we dont, then actually, it is going to be a much tougher environment. Where are you putting money right now . Right now, we are looking at all these markets because some of them are really down substantially. We are seeing incredible opportunities and bargains. Our focus is on india to begin with, because there are lots of things happening there. We must remember this Oil Price Decline is very, very good for india, good for china. It is good for all these Oil Importing companies. Countries. Things are looking good in some of those areas. Of course, you know, now is the time to be dying like porcupines, make love. You mentioned you like india. What areas sectors do you like right now . Right now i think turkey deserves a close look because they are a big oil importer, and their oil bill will be going down. That is one factor. Of course, the problems at the border is something we have to look at, but generally speaking, there are some terrific bargains in turkey right now. We are looking particularly in the consumer area and companies not so affected by the fall in the turkish lira. They are exporting. The other area would be indonesia. Indonesia is quite interesting. Again, oil importer who will benefit from lower oil costs, and there are lots of consumer stocks that look quite interesting that we are looking at. Most people in terms of the longevity of this particular shock think it will be temporary. I agree if you get the right tools in place, you could keep that from transpiring into a deeper financial situation. If we are talking about a twomonth, threemonth hit, do you think it can do that kind of damage . First of all, we are going to have a global recession and that is not just my view anymore. If you look at pimco, jpmorgan, even ebola jamie dimon, they are saying we are rolling recession the first half of this year. In q1 it was china, south korea and italy. Q2 the u. S. And europe. The question is, only first half of the year or spills over into q3 in the u. S. And europe . The answer depends on one, the policy response. Secondly, whether we contain the spread. In china they did the most containing thing and in three months, they stopped it. What will happen in europe and the United States, it will be six months to contain it and the third quarter, then things get much more ugly. Also, for the Financial System because you can survive with liquidity will help for three months, six months, but nine months, many people will go bankrupt. Even some highly leveraged players. Airlines, energy, they will be bailed out because they are national security, so we will not let them go bankrupt. We still see doubledigit growth in our Southeast Asian markets. As we are sitting now, the effect of the virus there is minimal. In hong kong, youve seen some of the most impact on political on health and certainly in china and the shape of those businesses. That is the rearview mirror, to an extent. What is the kind of forwardlooking looking like . How do you think the story is going to be affected here in europe and in the United States . I think europe has there are a couple of dynamics. The speed is coming from the same in the speed of social media, some of the protests last year, so everything accelerates now with automation, automated trading, social media platforms, 24 hour news. You can push who is the gasoline on this fire to a number of participants, but they are there. All the social themes are there including the virus. You get good and Bad Information at pace. We have seen that globally. Europe, expanding their fiscal policy to increase these economies, they were already struggling for growth, and i think that increases the challenges. The number of sectors hit by this and the Small Businesses, travel and leisure, restaurants, that is really the piece of it. You saw in hong kong that has taken the brunt of it. Big corporations adjust and markets like china are on the back end of this as far as their policy is concerned and gearing up for what to do as soon as they effectively have an open market again. That is the second phase. There is multiple steps to it. U. S. , europe going into the first round and then we will see how that plays out. I think in both it will be local. A lot of areas will not be affected at all. Certain areas with less infrastructure, less hygiene will be affected more, as you are seeing in other markets. The fed has acted and aggressively so. They might move again on march 18. The ecb has made a move. Weve heard from the bank of england, but still, we cant stabilize these markets. Have we terribly lost faith in the Central Banks ability to provide that Circuit Breaker . Can we say that definitively . I wish we did not lose it this way. We have been vulnerable for a long time, but understand there are three dynamics. I want to caution a little bit about throwing out all the fiscal we should do this, we should do that. We have to understand what the issue is. We have an economic sudden stop where people have lost confidence in interaction. We have the economics of fear that amplify all that, and now, we have market malfunction, and to expect a general policy response to act as a Circuit Breaker is just wrong. It will not it will be wasted. What you need to do is target first and foremost the areas of market failure, and you need to protect the most Vulnerable People and segments of the economy. That is phase one. If you deploy all these other general measures like the fed cutting 50 basis points, like you know, we, cutting taxes, its not going to make people go on a cruise. We have to be very focused, very careful as to what we think a Circuit Breaker looks like. The time will come for these general policies. It will come, and the economy will bounce right back up, but dont use your ammunition too soon. Otherwise, we will repeat the same mistake of replacing one Balance Sheet with another Balance Sheet with another Balance Sheet and not addressing the issue we have to have progrowth policies that are genuine. Malaysia is also coping with an increase in coronavirus cases against a backdrop of political instability. The new Prime Minister took office earlier this month after a power struggle. This week a new cabinet was announced including the finance minister who headed one of the countrys leading banks. The new administration has ties to the former ruling party that now faces misconduct charges in the 1mdb scandal. Bloombergs Haslinda Amin spoke with the former Prime Minister, who expressed concern over the cabinet selections. They are still tainted with the 1mdb crisis. They are still there. And when this crisis unfolded, they did nothing to actually help stop it or prevent it. [indiscernible] such a big massive crisis of 1mdb. Haslinda your suggesting that this is back to the old. If that is so, are there any policy measures that may be implemented that maybe you are hoping not to see . Yes. See that, the saying there is old wine in a new bottle, and hopefully this wine does not turn into vinegar. We want to see the policies, the corrupt regime, how entitled, if someone that you know or have this corruption in the last election, we fought against so much, so hard, and we had the people voted us in. This is such a disappointment, because we were going so well, up to 60 years of power, they now have a chance to change, transition. And even though people had high expectations, they did expect a bit more rapid change. Yet i think they were willing to give us a chance to continue. This happened and i dont think the voters are really for it. The voters are actually thinking that this is not credible or legitimate, even though it is legal. Sebastian this is bloomberg best. And i am Sebastian Salek. The impact of the coronavirus on individual businesses has been severe. This week, several Companies Reported Quarterly Earnings and in many cases announced a dip in profits and an adjusted outlook. Our roundup begins with one of asias most prominent airlines. Lets turn to Cathay Pacific, tumbling 28 last year and more pain appears on the way. Hong kongs Flagship Airline says it expects to post a substantial loss for the first half of this year. Looks like a pretty dire outlook for Cathay Pacific based on their statement today. They are in a dire situation at the moment. Across the industry they are. Cathay said in february, they have to cut capacity by 30 and in march and april, 65 of capacity has been cut. And they are looking at further cuts probably into may. That is really bad news because you know we get into the travel season, and pretty much things might have been better for cathay this year with protests of it subsiding toward the end of the year, but with the coronavirus, it has really become a serious problem for not just Cathay Pacific, but across all the industry. Adidas says it could take a firstquarter revenue hit of up to one billion euros as a result of the coronavirus. The sports brand said sales in china were 80 below 2019 levels from january 25 through the end of february. But the but since then, stores and warehouses have gradually reopened, and consumer traffic in china is slowly picking up. What is it like on the ground in china . How quickly and how much is traffic coming back to normal in your stores . What we are seeing, we indicated in february the business was down 85 , which means we are seeing an in china decline this quarter including takebacks around one billion. We are growing the other regions. We are seeing a return into the stores. We are seeing a slight increase in traffic, but we are at the end of the food chain. In two weeks in your apartment, your first move isnt to buy a pair of sneakers. It is to restore your fridge. That is why the retail is we are seeing slow china, which will last for a while. Deutsche post reporting Fourth Quarter ebit falling short of estimate, the largest express Delivery Company suffering the largest of 60 million to 70 Million Euros but confirmed guidance for the full year. Brave move. Does this feel like the beginning of a global recession . You lived through the eye of the 2008 storm. Your interpretation . I think we are not at that moment. The headlines are, but not the reality. It was a different situation in 2008 and 2009. If i talked to our colleagues in china, they say it is Getting Better every day, so i think there are encouraging signs, even if that is not over. I think we have to stay calm. You have to be clear what your strategy is. We as a Strong Player know what we have to do to help our customers, and we definitely will go out of that stronger than we went into it in this situation as a company. Now schaeffler has reported fullyear revenue of 14. 4 billion euros. The german automaker says it expects revenue contraction this year between 2 and zero. Im assuming the forecast for contraction is a lot to do with china and the coronavirus. How severely is that impacting your business . Numbers today are better than we are showing expected for the year 2019. It is not only topline what counts, but margin and Free Cash Flow. I think we have shown in 2019 that we are able to generate significant Free Cash Flow even better than expected. That gives me confidence that we will also cope with the unexpected situation now with this coronavirus. Our guidance says 5 for the auto sector in 2020. Thats in line with what others have said so far, and it is a clear commitment that we want to do our best to fight this crisis and achieve our targets. Chinas thirdlargest ecommerce platform reporting fourthquarter sales that missed analyst estimates, but even faced with the added challenge of the coronavirus pandemic to the business, the Vice President of strategy said the view was staying positive. We expect the First Quarter because of the coronavirus to see negative impact to our gdp and our growth. That said, we have been observing positive trends in consumer behavior. As china begin to resume work since february 10, so we are roughly a month into the resumption of work. We have seen 90 of recovery in the Delivery Network in china and we have seen pickup in activities among merchants and users. The airlines, very much under pressure. At least those that are exposed to the transatlantic traffic that has been so profitable. We have seen basically a reaction to President Trumps ban on europeans visiting the United States, another hammer blow to the airline industry. Do you think good airlines are going to fail as a result of what the president announced . I think that those airlines which are operating over the atlantic will survive. We anyway urge governments everywhere in the north america, in the United States, but also in europe and the world to engage strong, Financial Support to help the industry. We are facing an exceptionally difficult situation, probably among the worst we have had for the last 20 years, so we need an exceptional set of measures, financial, regulatory again, and Cost Reduction measures to help us. The Worlds Largest carmaker is the manufacturer most exposed the coronavirus outbreak in china, according to s p, but as the effects on supply chains and on demand growth spread around the world, how is volkswagen preparing . Let me ask you, first of all, what do you expect in terms of sales . We had that horrifying figure for february, a drop of 80 . A lot of people already saw chinese sales on a decline, so what do you think for 2020 . Yeah, you know, china is our biggest market so it is very, very relevant for us. China is wellmanaged, and the government is really focused on finding the right balance between containing the virus, but pushing for economic growth. And they are doing it in a very balanced way, so we expect over the rest of the year, there is the potential to recover. So we have scenarios between minus three, 15, or worstcase scenarios for the market, but we still thing that china could be a decent year. It could be a decent year in china. You are looking at the map of the virus here and what we have done here is put together a couple of things. The purple circles, you see it clearly, those are your hotspots. As you can see it has largely disappeared in china. Sebastian there are about 30,000 functions on the bloomberg and we enjoy showing you our favorites on Bloomberg Television. Who knows, maybe they will become your favorites. Here is another function you will find useful. Quic go will take you to our quick takes, where you can get fast insights into timely topics. For instance as chinas economy takes a hit from coronavirus, the impact rippled across the many projects that make up its belt and road initiative. What is that Global Investment and Construction Program . Take a look. Chinese president xi jinping calls it the project of the century. Chinas sprawling belt and road initiative, sometimes called the new silk road. Measured in todays dollars, it has already cost more than the u. S. Marshall plan that rebuilt europe after world war ii. The world bank estimated some 575 billion worth of energy plans, railways, roads, ports, and other projects have been built or are in the works. With 130 nations signing deals or expressing interest from power plants in pakistan to a highspeed rail line in indonesia, it is one of the most ambitious Infrastructure Projects in human history. The stakes for the belt and road projects are astronomical, both monetarily, as Morgan Stanley estimates spending will total 1. 3 trillion by 2027, and for chinas global image on the world stage. Mr. Trump china would like to make a deal much more than i would. As President Donald Trump scales back u. S. Involvement in International Trade agreements, xi is using the belt and road to position himself as a champion of Global Cooperation and free trade. But the project is not without its critics. There are accusations china is luring poorer countries into debt traps for its own political and strategic gain with some countries even downsizing or completely canceling projects, even as new deals are being signed. Several countries have had to rethink involvement after popular backlash or change of government or both. For example sri lanka filed 8 billion to build a new port, couldnt repay the loans, and gave a 99year lease in exchange for debt relief. The port has little business now but provides china a strategic berth on key shipping lanes. Myanmar also drastically scaled back a port deal struck under its previous military regime, initially to be 75 billion, reduced to 1. 3 billion. Mr. Trump china would like to get some kind of a rollback. The Trump Administration sought to capitalize on doubts with mike pence telling Southeast Asian nations the u. S. Would not offer a constricting belt or a oneway road. In the face of criticism, president xi jinping is doing damage control, calling the project a road for peace. In 2018, the Initiative Extended into south america, the caribbean, and even the arctic. In 2019, italy became the first of seven nations to sign up, brushing off warnings from allies. In asia, these are the countries that approve of the belt and road project. These are cautious, and these are opposed. Overall, the World Bank Says the revived silk road has the potential to stimulate economic growth, but with that growth comes challenges. Some risks include allegations of corruption, like those the former kyrgyzstan Prime Minister is facing, which prompted a kenyan court to halt a power plant being built on a major tourist destination. Xi, who is dealing with chinas debt problems and slowing economic growth, has promised debt relief to some african nations, and a top chinese regulator called for greater social responsibility in overseas investments. Thats the kind of sensitivity china will need to show and follow through on if it is to win over their skeptics. [shouting] sebastian that was just one of the many quick takes you can find on the bloomberg. You can also find them on bloomberg. Com along with all the latest Business News and analysis 24 hours a day. That will be all for bloomberg best. Im Sebastian Salek. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Emily im emily chang and this is the best of bloomberg technology. We bring you all our top interviews from this week in tech. Coming up, hibernation disrupted. U. S. Markets enter bear territory as the coronavirus outbreak breached investor panic. We will break down what it means for tech with dan ives. Plus, speaking of vulnerable, hundreds of thousands of working from home amid virus concerns and hackers