Least. Day two of the Goldman Sachs global macroeconomic conference and goldmans chief equity strategist. We have breaking news out of south korea and Fourth Quarter g. D. P. Numbers. This is much faster than what was expected and fastest pace since the Third Quarter of 2017. These are the preliminary numbers for the Fourth Quarter. The south s also korean economy expanding 2 meeting the bank of korea projections and have seen growth in Household Spending and gains and Consumer Confidence and a lot of it supported by the south korean with their budget being passed in august and seeing a growth of 1. 2 , which would be the fastest pace since the Third Quarter of 2017 and for that 2019 growth of 2 which is atching. Lets look at what it is setting up. We had reaction across asian markets which led to the european session in declines and the u. S. As well as account of the news of the spreading china case. Avirus and one and not much of a rebound. Futures are looking pretty soft and we are seeing a pretty down side at the moment. New zealand,. 2 of 1 . And futures have turned positive and upside and little bit of green there when it comes to u. S. Equity futures as well. But yesterday, a difficult day for asian markets. Lets get you to you. We are starting with the latest. President trump used his time to ash out at environmental activists. Aavoided Climate Change and alarmists who were trying to control every aspect. E of his biggest critic is thun berg and accused the empty words about. India Supreme Court will hear petitions challenging the constitutional validity of the overnments citizenship. And has sparked violent protests and the court will consider. The hearing is expected to extend into next week. The russian cabinet held its first meeting. He told his team that the governments main priority is to raise the Living Standard who was already deposed by president putin and constitutional reform which is an attempt to maintain his own grip on power. There is declining profits when they report this month. At least the big players will post declines for the december quarter and the gambling had uncertainty. Protests in hong kong and crackdown on gaming. The news 24 hours a day. Powered by more than 2,700 journalists in 120 countries. This is bloomberg. Chinas virus continues to spread with a case in the United States. Global Health Officials are struggling to contain it. We have the latest from beijing. And the fear is we could see a peat of what happened during sars during 2002. How fast is this spreading . Travel is beginning to the major holiday in china and that citizens are expected to rack up three billion trips. There is concern this could increase the spread. Since the virus was identified, 300 people are infected and confirmed cases with more than 100 of them over the past weekend. While the majority are in the central city of china, they have been spreading. And the first confirmed case in the United States, a 0yearold who is now in Good Condition. There have been six confirmed deaths. Those have been elderly people with preexisting conditions. Health experts say most at risk are the elderly and the rate of fatalities has been relatively low. The concern is that this disease could mutate and become more deadly. The World Health Organization will be discussing whether this is of International Health concerns and could implement some Emergency Declaration that could stop travel and trade of certain goods. What about the response domestically from china because we have seen criticism online about the way it has been dealt with at the provincial level. There is some concern. And reformed debate. In terms of how it compares to back in the early 2000s, the Chinese Government has significantly stepped up the types of controls and measures. The Chinese Government implemented transparency reforms and a Disease Control and prevention system and seen all levels of government shoe statements. President xi saying that they need to be transparent and the community of communist party and any official who tries to cover this up has serious ramifications and tightness about this spreading to health care workers. You have more people Wearing Masks here in beijing not just of the pollution level. Not perfect, but miles away from back in early 2000. Thank you so much. The Virus Outbreak is picking up. They are planning for a worst case scenario. Hong kong has put in place highly vigilant system. We learned from previous that in from sars order to bring the community ogether to control any Infectious Diseases, we have to be very vigilant. And also commented on the protestors demand for suffrage in hong kong. The Central Government is tightening the script on hong kong. The Central Government has time and again made it very clear they want hong kong to succeed and high degree of autonomy. That was made clear to me by resident xi. This was caused or triggered by the government attempt to introduce amendments to the ordinance and i have almost immediately suspended the exercise following the mass confrontation in the legislative council. One has to wonder what are the underlying factors that has cost the unress in the last few months. If you said it is about political reforms. Yes, we, myself included are keen to have june versusal suffrage and we made attempts in 2014 and 2015, one person one vote. But that has to take place within the Legal Framework as laid down in the basic law. Initial suffrage, can there be a compromise and how soon . It depends on whether we could build consensus on this important issue within the framework laid down in the basic law. People said they respect and uphold the basic law because it protects the freedoms and rights of people. The basic law has a specific article 45 which made it clear that the ultimate goal is to have universal suffrage. When that happens, it has to take place through a nominating committee which is properly representative and that is when the basic law was drafted. China has made clear it will observe universal suffrage if the candidates are approved by china. They want the right to nominate those candidates. How do you bridge the two . I was involved to design the actual proposal within that framework as laid down by the National Peoples congress. I wouldnt say that required approval by the Central Government as far as the candidates are concerned. That detailed proposal says yes, you could have universal suffrage and two or three candidates to be brought forward by the nominating committee. And they brought representation comes from the different sectors. Not entirely within beijing. You have professional people and you have representatives from the trade unions, from the usiness sector, but ultimately the chief executive has to be appointed. Hong kong chief executive talking to bloomberg. Plenty more conversations from ffoost throughout the day davos. Well ask how they are dealing with the recent challenges in hong kong and the virus. Still ahead, more from davos and what c. E. O. s are saying about the biggest risk for markets in 2020. Netflix earnings is disappointing despite this graph is telling us tonight. This is bloomberg. Diversifying their portfolio for a brond market and what they ave done to the outlook. Its increased our returns as driving that force towards an alternative effort. I want to get your reaction to our market story of the day Global Markets react to the possibility of this china virus becoming more significant and widespread. I want to throw out this chart and interesting to look at history as a guiding example of what could happen. We did see a bounceback in equity markets. But we had quite a bit of stimulus and help from the overnment. What does a 2020 proof portfolio given we are halfway through january and bio security, bush fires, all becoming part of the risk mix. Interesting to think about the illness spreading. It is early to start making portfolio changes. Parallels have been drawn to sars. It is important to think how it has changed over that period. Have seen a containment and and its very early to draw any conclusions or making comparisons. And i think if you are looking at a list, there are other things that are higher up and portfolios into 2020 is so important and why we are seeing such demand and that buffer that comes through that. And thinking about now how we drive returns in a market that has gone up quite substantially but that resilience and portfolios ap the outlook. D we are seeing bonds have a portfolio role but ensuring by e are other elements and and large we are still overweight. It is difficult to see that propagates a selloff and you have very supportive monetary policy. You have preferred regions because the last time we had rs outbreak we think the earnings outlook is more sustainable than elsewhere in the world and the economy, you know it is 2 and not great historical and we think it can maintain that throughout the course of this year and next year. We are looking for a pickup around the world from emerging asian the relief in the trade is going to improve and the 5g impacting on certain nations and emerging world and nation. D that approach and thinking evaluation and relatively good prospects as portfolio outlook. The bush fires in australia as the nation starts to rebuild and recover, that has performed better than others. I think the ramifications of the bush fires and the impact on the economy and outlook for markets, around any Natural Disaster and the growth that comes from the destruction of infrastructure and impact on jobs and Positive Side which is rebuilding. And then there is a longer run for tourism. Depending on the response from the government and how quickly this aid is being put up by people around the world will dictate the response and market reactions. The way i look at the Australian Market it is driven by equities. Income from equity markets, that is becoming quite extensive. And back towards potential and lowest still and central bank here. It adds up to a weaker Australian Dollar and offshore earners. Thank you so much. Well have plenty more to come. That said the longer it drives on and the expectations get, the more questions well have about that. Latest on boeing. May combine its business with french rival. And the two companies have held preliminary talks over the past few months. Last year, the e. U. Blocked the merger after regulateors refused to cave into warnings about the looming threats of chinese competition. Haley davidson turns another page. The selection of a new c. E. O. And former boss is fired for allegedly trying to smuggle a harley. The carrier is trying to restore the reputation and bringing down costs and plane rentals as a percentage of revenue than any of its peers. India will hear a plea next week as they seek more time to repay more loans. They want to negotiate for the 7 billion they owe. That is a combined net debt of 30 billion u. S. And reported losses last quarter as a result of provisions for courtordered payments. We are live at the conference taking place in hong kong. We will have the market outlook. And they lived happily ever after. The end. The end might not be as happy as you think. 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She said president x inch has given her his personal assurance and will not use the protests to increase chinas control. Trying to assure that hong kong is a stable hub. The Central Government has time and again made it very clear they want hong kong to succeed and high degree of autonomy and was made clire to me on two occasions and couple of months time. Moving to independent yeah, Supreme Court there to hear a petition challenging the constitutional validity of the religionbased citizenship law. The new legislation has sparked violent protests throughout the country and will request to have the law withdrawn and it is expected to end into next week. And one has been charged with homicide over the dam collapse that killed more than 250 people a year ago. E highest profile figure for brazils worst disaster. Before federal prosecutors recommended his immediate access. And 15 other people have also been charged. And more than five million cars are being recalled in the u. S. , 2. 5a is calling back almost million vehicles now by the now bankrupt. Covers honda and ack cuea vehicles. Toyota is recalling three million cars due to a faulty control units. Global news 24 hours a day on r powered by more than 2,700 jourmist and analyst in more than 120 countries. This is bloomberg. The bank of japans governor said it is too early to make predictions on the outbreak in china. On day two in hong kong, the impact of the virus is leading the discussions. Ur correspondent is there. Day two of the global macro conference for goldman sacks. Japans vice chair. Good morning to you. So lets get this out of the way, how concerned should investors be about this virus that seems to be spreading and one in Washington State and one in japan and they are doing checks at the airport and possible quarantine, is this something investors should be concerned about . No one knows the scale and scope and how serious it may become and it likens this to the sars episode but what the impact to squap ands economy might be, japan is heavily dependent on chinese tourism in the market. So to the extent there are fewer chinese traveling abroad or more restrictions put into place, there is going to be a marginal negative. About markets, wasnt concerned about the situation until i came to hong kong and getting clients asking about the impact on markets and what markets have had. And Fourth Quarter of 2019 globally, didnt take a lot of bad news and a little bit of steam out of those markets. If you are an investor and looking at an excuse to look at profits. This could be a potential excuse. But nobody really knows. We dont know. See how it plays out over the holiday period in japan and china and the rest of the region and go from there. We got south korea g. D. P. Than were higher, 1. 2 the Third Quarter in 2017 and we got a strong number out of taiwan and the economy is doing well in the Fourth Quarter. Does that bode well for japan . I think so. At least it is some indication that the very negative trade that we saw in 2019 as a result of the u. S. China trade may be bombing out and it is not nearly as high as the mashts you mentioned, korea and taiwan. There is a significant explosion that investors are mindful about. The stabilization of imports and recovering domestic demand, that form you lates the basis of why we are constructive on the market in 2020. There was a press conference yesterday and i know you were on an airplane and no real shocking news. They held steady and uped the outlook on the economy. These were expected and lowered some inflation targets. Again, also there is caution to expect that the next move might be normalization. What do you read . At the end of the day it is our view that the bank of japans ability to loosen in this juncture in a positive way is pretty limited. Yes, they continue to argue that there is to do more, but we all know that the japan is in negative Interest Rates is wreaking advantage on the japanese banks. At this point the bank is going to stay on hold and unlike to make a significant move towards further easing. Lets say the economy of japan does need to be stimulated but fall more on fiscal policy more than monetary. Monetary policy wasnt working. Big fiscal package and past projects. What kind of effect are we going to see from this large number . 250 billion. Fiscal 20, we are going to 20 lift to g. D. P. And concentrating in the areas they have been talking about. Ere is tie foon damage and is that like giving medications to patients in a coma. The historical argument against this is definitely that. At the end of the day we saw everybody in japan saw the amage and suffering. And tripping and sliding. Means that people have been displaced. What really has to be done in japan. We talked about the need for structural change. How are we going to get to that ext step of what you described u. N. Panel in december in the tokyo, you described the economy as in a coma. How do you get to that next step where you are going to change . I dont think it used to be in a coma and the patient is now walking, talking and breathing again but to get the patient healthy and vibrant it needs to implement serious structural reforms. And through europe this past week, i find it quite striking that a lot of people dont appreciate what has happened in the seven plus years under this administration. Corporate governance reforms, independence of boards, that was an oxymoron in the past but its the actions that come out of that, returning a lot more cash to Share Holders and we have seen a Record Number of women entering the workforce. Japan has seen participation higher than the United States and europe, albeit they are working parttime but they are out of the house. We have this new new law passed. There was some concern this could take a step back for corporate governance. Whats your view . When it first brock out, everyone in the market paniced and wasnt sure. But now we have seen some more information by the minister of finance, they are trying to protect National Security and now going through the nitty gritty and hammering out the details and publishing the list of companies by april so they can go live with this new rule in may. If you invest more than 1 in a Japanese Company and you have no intention of influencing management be it proposing a board member or selling a business unit, you dont have to worry about this. Its those investors who want to influence this that this may impact you. Thats the scope. Thank you for your time. Ime for some more coffee here. We will be getting more ices after the Goldman Sachs conference in hong kong and the chief equity strategist. Coming up next, President Trumps impeachment trial is formerly under way. We will have the latest from washington. This is bloomberg. America is winning again like never before. Just last week alone, the United States concluded to extraordinary trade deals. The agreement with china and the United States, mexico, canada agreement, the two biggest trade deals ever made, they just happened to get done in the same week. Here is somebody who is having the impeachment process start with a trial today. And i think this is a speech to basically say i think we need some perspective and lets look at whats happened under this administration. And i think thats not just for domestic consumption. I think its meant to be heard in a broader con tech. President trump impeachment trial began on tuesday with republicans pushing to aquit him as quickly as possible and democrats saying it is a coverup. We are tracking these developments. Run us through day one, procedural but still meaningful. The senate is setting down some rules that were changed what senator mcconnell originally proposed. Theyll have three days for each side to present their arguments. Total of 24hour period and now they are proceeding with a series of votes on amendments that the democrats have been offering asking the senate to subpoena records from the white house, office of management and budget. Those have gone down on a partyline vote with republicans all hanging together and democrats doing the same, but with their majority. Republicans are getting to set the tone and for the impeachment trial that could lead to a vote to adopt the rules tonight with arguments by the house impeachment managers and the president s defense team beginning perhaps as early as sometime tomorrow. There are quite a few series of votes to go through. It is a pretty dry procedure where the senators have to sit quietly while the other actors in the case make their statements and argue their case. President trump at the same time at davos and talking at the World Economic forum and was more positive on trade, what exactly did he say . His speech was somewhat of a Campaign Speech for domestic and foreign audiences. He has been keeping a pretty hard line on trade not only with china but with u. S. Allies, such as the european union. But he went in there with a truce on digital task with france that had threatened to erupt on other tariffs and he is talking positively of working out a trade deal with the u. K. As well as with the european union. And particularly with the european nations such as germany and france. It has been a little tense as of late there was a threat of tariffs on automobiles. But he is offering the carrot rather than the stick at davos. Thank you very much for that. And bank of america c. E. O. Said the bank has sets it sights of oubling its market sights. There is such opportunity in the United States, even though our market share is high, in the top 30 markets, we are the top market share. Bru the route is up until two years ago, we werent in seven. If we fill those seven, thats a lot of growth. The context, we have gone from 10 to 15 the last few years and think of this as a challenge. Go with it. But its a response of how much opportunity there is left. You are responsible for growth. Almost every week there is concerns about leverage loans. You have great insight. Walk us through what you are seeing at the moment. At the end of the day, back tore toms point, over leverage, over leverage. Thats banking 101. The reality, our Balance Sheet exposure is measured carefully and very low. The real question and what different groups are talking about, a lot of it is in funds and other types of support and what will happen when they dont fare well, will the banks work with them. The other question is, in a Net Asset Value context, that feels good at the moment. But when you trade it from that person to 60 cents on the dollar and those questions are open and what will be the impact. Our actual lending is our credit. Everybody wants to dive into this and get into wealth management. But right now, what i see is everybody out there wants to be a banker. Goldman sachs wants to set up banking. How do you respond whether it is in the Internet Technology ar traditional investment houses that want to get into the bigger platform . Do they understand the scale you need to succeed at this . You need the scale to be good and thats what we keep talking about. We dont need our scale. We need our scale to do a great job for our companies and consumers. That scale allows us to keep investing in a rate and we are leaders in the competition. When people see Profit Margins and i can understand it. Its not as easy they think to operate 66 Million Consumers who re dolling millions of transactions. To keep it all straight and gets into your account almost one and a half apples. And thats somebody talking to a artificial Voice Recognition machine that will translate your request and get it done. And finding that one transaction. These are remarkable things and you have to keep investing in technology. That was bank of america chairman speaking to us. More to come. This is bloomberg. Boeing plans a 52week low it will fax the 737 to return to service sometime in the middle of this year. It says it is confident that the plane will be clear to fly. The f. A. A. Has no timetable for the maxs return. Billion. May cost 10 exxon is working on a mobile brand of car. Came up with other partners to set up a network and offer a an operation which is expected to open in the next few months and integrate suppliers and customers with other vehicle maintenance goods. Lyft is turning to the nbas player. Lebron james is on board to promote lyft up. The plan sees young people being offered within year bike membership. Lebron says having a bike hanged his young life. Lets look at asia markets. We have the risk of selloff yesterday which extended through to the europeanu. S. And risk aversion with the spread of the chinese virus and rebound. The stocks are up a quarter by 1 . That market going into territory despite earnings expectations. New zeal land a tenth of 1 and futures swinging into the green and could see an upside. Pretty flat at the moment espite that. Fastest in the Third Quarter of 2017. We will be discussing the market open next on the next episode. Slugging off the threat of u. S. Sanctions. Our conversation with him in davos and microsoft c. E. O. , we will be hearing from him as well. So do tune him for his conversations. Japan and south korea will be kicking off trading and korea after we saw the fastest pace in the Third Quarter. Plenty to come. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Can you help keep these iguys 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. Haidi very good morning. I am haidi stroudwatts in sydney. Asias major markets have just shery open for trade. Shery i am shery ahn. Welcome to daybreak asia. Haidi our top stories this tuesday, a few signs of a market rebound as chinas mystery virus six people are dead with one case confirmed in the u. S. Health authorities are struggling to contain that infection which comes as the start of the mass migration seen at Lunar New Year. We hear from the huawei founder. Increasing criticism from the United States. Japan and south korea are kicking off trading. We are seeing the nikkei and the topix under a little bit of pressure. Financials and Consumer Discretionary stocks are leading the declines. The Energy Sector is in the red. We have seen crude prices trading below 60 a barrel. We have global supplies. Seen the riskoff sentiment in Global Markets with case of coronovirus reported in Washington State as well. Six deaths globally reported, playing into market sentiment. The japanese yen has strengthened in the previous session, weakening a little bit. The kospi unchanged despite the fact that we have pretty strong readings for the first quarter, the fastest pace of growth since 2017. The korean won unchanged after we saw it fall to the weakest level in almost two weeks against the u. S. Dollar. Riskoff sentiment. 3 n, the asx 200 gaining while kiwi stops have also reversed earlier losses and are gaining ground. For more on what to watch in markets today, we are joined by mliv managing editor mark cudmore. We are seeing this outsized reaction. Is this a bit too early to be panicking about what this could mean and comparisons to sars, when a lot of experts have said the mortality rate really does not compare . Mark i think how you approach depends. Ignoring the humanitarian side and looking at it from a markets perspective, normally, the history of sars these scares, even the sars one history of these scares, even sars, did not affect markets too badly. Torall, stock markets tend move on from these scares, but the reason why people tend to get nervous in the shortterm, there is the tail risk that this gets out of control, that it mutates, it evolves, that we lose track of how it is moving from persontoperson, that it spreads much whiter. Until they have more knowledge of the underlying virus and how it is being transmitted, there is tail risk that something might go wrong. That makes people nervous. Shortterm overreaction. That is heightened at the moment because it is coming before the Lunar New Year holidays. Not only is it a worry that it might spread the disease more quickly but it might also hinder spending over this really important period for the chinese economy so theres a genuine economic effect that might spill over some of the other emerging market economies but longerterm, if you are a retail investor, if this is about your pension, you probably can ignore this story for the moment unless the music the the disease really mutates. Mortality rate is very low. The flu kills hundreds of thousands of people. Haidi we have spoken to some investors who have said that they are opportunistically taken this selloff to build their positions. If we take a look at the sentiment that is really driving the selloff, is there a sense that we are going into chinese new year, the markets are going to be closed and some of these countries, and we are seeing such valuations, is there a sense that investors are looking for a reason to pull back . Mark i think that is fair. The way you phrased that question suggests all the inputs. It is a combination that we have had a good run, we have stretch valuations, we have got a holiday. All these things in isolation probably would not be a reason to take money off the table but now, we have this extra kind of tail event of this disease and this unknown of how it will evolve over the Lunar New Year holidays, and people go shortterm traders. This is a reason to take risk off the table. Why would i hold a position over that period of no liquidity, over that period of close markets in china, when we just do not have the information. I have made a lot of money. There is a good time for shortterm traders to take risk off the table, not because the fundamentals are suddenly turning very negative. Shery when talking about fundamentals, we have seen fourthquarter gdp numbers out of south korea really accelerating much faster than expected. We are talking about the fact of growth since the Third Quarter of 2017. Quarter on quarter growth of 1. 2 . When you take into account the stabilizing economies, not only south korea, but perhaps china as well, how should investors look at what is happening with fundamentals, with those Growth Numbers . Mark i think it is another data point which emphasizes this story that Global Growth is doing ok. It is not exciting. You are not going to be piling into asset because there is a great booming growth story pretty much anywhere on the global macro level. What you are doing is saying, the growth story is good, solid. It is subdued but consistent growth yet we have all this liquidity continuing to be pumped into the system by Central Banks. The environment remains constructive for risk assets for the foreseeable future because of this combination of a steady growth picture without a bad inflation element and that is very important. The gdp is often one of the most lagging indicators. The preliminary gdp number comes in quite early, in the middle of january for the Fourth Quarter, but it is quite backwards looking but the sizes the economy did not come out last year because the trade war now is in a better standing. That is overall positive for growth and we have Central Banks as well. This is a Good Environment for risk assets. Haidi mark cudmore. You can follow more on this story, all the days trading action on our markets live log on the bloomberg at mliv. Lets get you the first word news now with su keenan. Su we start with trump at the davos forum. Expanding on this years key theme of Climate Change, issuing a dismissive reference to what he calls alarmists who are determined to control every aspect of our lives. One of his biggest critics, greta sundberg, is also in davos. She accused her audience of empty words about Climate Change. Hong kong leader carrie lam is at the conference, and she has told bloomberg that china has no intention of tightening its grip on the city. Speaking at the World Economic forum in davos, she said president xi has given her his personal assurance they will not use the longrunning street protests as an excuse to increase chinas control. Ensuretrying to them that hong kong remains a stable financial hub. The Central Government has time and again made it very clear they want hong kong to succeed under one country, to systems, and a high degree of autonomy. That was made very clear to me under president xi jinping on three occasions that i met him in a couple of months time. Su to india, the Supreme Court theylater on wednesday will hear petitions challenging the new constitutional validity of the governments new religion based citizenship law. Narendra modis controversial legislation sparked often violent protests across the country and the court will consider having the law withdrawn. The hearing is expected to extend into next week. The reshuffled russia cabinet under the leadership of michaela schuster. It is to increase peoples Living Standards. He was elevated by president putin. It is widely seen as an attempt to secure his own grip on power. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. The huawei founder is not scared of more sanctions. Coming up next, we head back to the Goldman Sachs global macro conference in hong kong to speak with their chief economist. This is bloomberg. Pres. Trump america is winning again like never before. Just last week alone, the United States concluded two extraordinary trade deals, the agreement with china, and the United Statesmexicocanada agreement, the two biggest radios ever made. They just happened to get done in the same week. Haidi President Trump touting his trade policies at the World Economic forum in davos. Globalet back to the macro conference in hong kong. Stephen engle is standing by with his next guest. Steve. Stephen good morning. Thank you so much for joining us. Thank you for having us at the Goldman Sachs macro conference here in hong kong. You are the chief economist for Goldman Sachs, so lets talk about the outlook for Global Growth. Slightly downward revision but still, things are going well for the global economy. You have some headwinds out there, whether it is geopolitically or with the coronovirus. What is your outlook for 2020 . Generally, positive. 2019 was a weaker year and i think the downward revision from to that. S testament only 3 Global Growth,. 5 or so less than generally expected a year earlier, but for this year, we think we will be moving so,er to 3. 5 , and improvement relative to last year and we are somewhat above the Consensus Forecast which is still closer to three. Stephen i was looking through all your calls. You are above consensus on just about all of the major economies. Jan in many of the advanced economies, it is true in the u. S. , to a lesser degree in europe as well, and a number of the emerging economies. India, for example. Russia, a little bit more positive. China, more in line with consensus, although even in china, the latest numbers have been a little bit more encouraging. Around the region, we have seen from some of the smaller economies some positive members. Taiwan, we talked about earlier. Stephen lets talk about china. You are saying may be the authorities are going to accept slightly lower than 6 rather than the 6 to 6. 5 . Jan quality rather than quantity has been the mantra. Be the6 seems to indication, which might mean, you know, high 5 is except of all. At the moment, based on our highfrequency indicators, current activity indicators, that summarizes all of the monthly members, we are growing somewhere around six, so there does not seem to be a need for a large amount of stimulus from the authorities in 2020. Stephen more targeted easing . They are not doing the headline numbers. More targeted easing, where they need it, perhaps . We mentioned the coronovirus and the trade war. That could offer some friction as they get into phase two negotiations. Jan our baseline is that the trade impact falls on the u. S. And on china. It was pretty clearly negative in late 2019, subtracting something like. 4 in the u. S. From sequential annualized growth. China. In we think those numbers move back towards zero, so in that environment, they would not need to ease to offset that, however, of course, it is uncertain. We do not know. There could be a hick up. If there is a hiccup, policy will be potentially in a different place. Stephen what is the net impact from the clearing off, signing of the phase one trade deal . Jan effectively, those numbers moving back to zero, effectively a boost of. 4 in the u. S. And. 6 in china, but that is only one of the influences hitting the economy. There are a number of other influences, policy impetus from monetary policy, fiscal changes, and financial conditions. When we take all of them together, we do think that things are becoming a bit more positive. Haidi central bankers and authorities stephen central bankers and authorities are looking at that incident monetary. Also in the United States, really. With your baseline call for the economy, no chance in your estimation that the fed is going to move in 2020, right . Definitely not ease . Jan i would never say definitely, but i think the baseline is very much nothing through 2020. No hikes, no cuts. I think hikes are also quite unlikely given the inflation is. 4 below the feds target. On fiscal policy, it depends a lot on where you look. Japan is becoming more expansionary. Europe is becoming more expansionary. The u. K. Is putting in a bigger spending package on infrastructure, so that should have an effect in 2020 and into 2021. In the u. S. , the fiscal policy impact is going to become a bit more negative after a large boost in 2018 and to some degree, 2019. That is taking away a portion of the positive impulse from the reduction in trade impact and easier financial constraints. Stephen are you concerned that we are getting a little frothy or is the debt burden not a concern . Jan equity prices have risen. Credit spreads are tight, so it is natural to ask that question, and several fed officials have brought this up again. That said, the big difference with the last couple of cycles, in my view, was not that private sector debt growth has been much, much smaller, especially in the household sector. So i do not have the same kinds of concerns that we had in 2000 or 2006, 2007. ,tephen davos jan hatzius thank you so much for your time on bloomberg television. Stephen engle, thank you so much for that conversation. We have plenty more coming up on Bloomberg Markets. Steve will be joined by Peter Oppenheimer at 10 00 a. M. If you are watching in hong kong, 9 00 p. M. In new york. Motor falling as much as 7. 1 . This after news that its german subsidiary is being probed by frankfurt prosecutors or allegations that the diesel engines may have been equipped with devices to cheat on emissions tests, right now losing more than 4. 5 . This would be the biggest fall since november. Coming up next, microsofts ceo talks about his companys commitment to technologies to remove or reduce carbon from the atmosphere. His bloomberg interview from davos is next. This is bloomberg. Climate change is not going to be fixed by a central bank. We want to invest in clean technology, in green procedures. For every major investment, we assess that the teams identify all the Climate Change risks. We will divest in a company where we think we are not getting the traction that we need. Hery speakers at davos microsoft ceo was among Business Leaders at davos, who are increasingly focused on climate. He spoke with John Micklethwait about microsofts recent commitment to invest 1 billion in companies and organizations working on carbon reduction technologies. Saying whatown to is microsofts responsibility . We are increasingly becoming a big consumer of energy because of what we are doing with the cloud, and it was very clear to us that given the signs that Climate Change requires immediate action, this is a decade, so we wanted to start by saying lets make some good commitments, and the commitment to being carbon negative for 2030 means we have to make sure all of our Data Center Operations are consuming Renewable Energy and also we take all the carbon that we have put out and ensure that through new technology or by natural means, we can take it out and become carbon neutral. John that is all the historical carbon. Satya that will be by 2050, so we want to go back to 1975, when we were founded, and take care of all the historical carbon as well. That is the other commitment. When it comes to the billion dollar fund, we need real breakthroughs. No one company is going to do this so we are very committed to putting even our own Balance Sheet money on it and then looking to see the ecosystem. John the immigrant in america one of the companies has pushed hard against the current flavor of immigrant bashing. Do you think that is being changed in america . A country ofa is immigrants, a nation formed by atigrants, and to me, i look the contribution that immigrants even Going Forward can make, it is something i think the United States should be tapping into, so that is what i speak to and that is what i think microsoft has been it fended benefited from it. In terms of why immigration and enlightened immigration policy in the United States is one of the most important things for its own competitive advantage. John you worry it is now getting slightly on enlightened . Unenlightened . Satya every country is rethinking what is in their national interests. Borders are real. People think about immigration policy that helps. But i think in there, they have to maintain that modicum of enlightenment and not think about it very narrowly, and that is what has made it possible for those values that have helped people come be the attractor. People only will come when people know that you are an immigrant family country. John do you think the number coming from the cloud side is going to continue to grow . Satya if you think about it, 5 of the world gdp is tech. Thats going to double by 2030 to 10 . If you think about being in the Cloud Business and especially being in the Cloud Business across all these leaders, it means you get to participate in it. It is not about the 10 of that. What about the other 90 of the gdp . To me, what is of deep interest is to see the broad sectoral productivity growth really shape up because of Digital Technology and the contributions we make. Ceo, satyaosoft nadella, with John Micklethwait, taking place in davos. With Climate Change becoming a defining issue of our time, bloomberg dream uses green uses data to illustrate the scale of the challenge. You can find it online right here on bloomberg tv and radio. Lets get you a quick check of the latest business flash headlines. Apple is set to be planning a new cheaper iphone. Suppliers will start assembling the device next month as apple tries to boost market share ahead of the arrival of 5g handsets later this year. It will unveil the lowestcost handset in march. It would be the first lowercost iphone since the se. Shery boeing plunged to a 52week low. It expects the 737 max to return to service sometime in their love this year. It reaffirmed its commitment to aviation safety and says it is confident the plane will be cleared in the coming months. The faa says it has no immediate timetable for the return. Boeing ports may cost 10 million. Haidi bank of america is planning to expand its presence on main street usa. Brian moynihan told bloomberg he sees plenty of room to boost his Consumer Market share even though it is prevented from buying other tenders. Moynihan said he has identified gaps in key areas where the bank can expand and exploit to get new customers. Even though our market share is high, and the top 30 markets in the u. S. , we are the top market share in Retail Banking and 12 of them. We were two years ago, not in seven of them, so if we fill up those seven to be like the other markets, that is a lot of growth, and we can do that all over the u. S. And they lived happily ever after. The end. The end might not be as happy as you think. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke but the good news is you can rewrite your ending and get screened for stroke and cardiovascular disease. Life line screening is the easy and affordable way to make you aware of undetected Health Problems before they hurt you. We use Ultrasound Technology to literally look inside your arteries for plaque that builds up as you age and increases your risk for stroke and heart disease. So if youre over 40, call to schedule an appointment for five painless screenings that go beyond annual checkups. And if you call us today, youll only pay 149an over 50 savings. Read it again, papa . Sure. Ive got plenty of time. Life line screening. The power of prevention. Call now to learn more. I think the Chinese Government are taking serious measures and very quickly, and you should be very confident on our government. Hong kong has already put in place a highly regimented system because we learned from previous and otherover sars Infectious Diseases that in order to bring the community together, to control any Infectious Diseases, we have to be very vigilant. Some of our guests at davos speaking about the spread of the coronovirus. We are taking on our top story. Chinas mystery coronovirus continues to spread with a first case reported in the United States. Mobile Health Officials are struggling to contain the infection which has currently killed six people. Selina wang, what is the latest . The big concern is that travel has already begun for the Lunar New Year holiday, when chinese citizens are expected to take 3 billion trips so there heightened concerns that this could increase the spread of the disease. You have the World Health Organization meeting today to determine if the situation qualifies as a Public Health emergency. If it does, they could issue such asgestions restricting travel, restricting some sort of trading. Since this was detected in september, we have seen it spread to 300 people with more than 100 of those cases discovered just over this weekend. Even though the majority of the have seenin china, we it spread across the country to parts of southeast asia, japan, south korea, and now, that first case in the u. S. The case in the u. S. Is of a man in his 30s. He is in Good Condition according to the cdc. There have only been six deaths. Health experts say the most people at risk are the elderly and people with preexisting diseases, but the big concern here is that this disease could mutate and become more deadly so that is why you are seeing the highest levels of precaution at this point. Shery especially coming from australia. The government saying the risk of coronovirus transmission within australia is low, but they have just raised the level of travel advisory for the city, recommending travelers exercise a high degree of caution there. Lets talk a little bit about the reaction we have seen so far coming from beijing authorities because they were criticized back in 2002 on how they handled sars. This time around, people seem more happy about how they are reacting to this virus. John selina thats right. During the sars outbreak, china was widely criticized for denying the scope of the disease, which the Chinese Government has been blamed for helping to spread sars back then but that was quite a landmark moment in terms of triggering a number of reforms when it comes to transparency and china is setting up a disease and prevention control system. China has also spent 12 billion for to upgrade its system disease prevention management, so when this coronovirus started spreading, china quickly did come out with the genetic sequencing of this, which allowed other countries to more quickly identify this disease. You heard all sorts of levels of government put out statements that this is of the highest concern. You have xi jinping saying to take this seriously. Li keqiang saying this needs to have public transparency, and the top Government Official legal body saying any official who tries to cover up the spread of this disease will have serious consequences. And you are seeing increased awareness, although some people are complaining about this. You have people wearing more masks in beijing, clearly evidence. Heightened awareness and more transparency from state media and for Government Officials. Shery our correspondence from beijing. For more on how the virus is now affecting markets as well, we are joined by our china finance reporter in beijing. We have seen this outsize reaction in the markets already this week. Falling ndex seeing its biggest drop in six months. So how big will the impact be depending on how this virus develops . This virus seems to be taking down markets as it spreads. Yesterday, we saw some of the biggest drops in stocks in hong kong and china in months. Enterprisesg china index dropped more than 3 , which is the largest drop since basically october 2018. Some of the biggest losers or the biggest drops we have seen were among life insurers, automakers, and casino operators, as people consider basically taking activities indoors or not going out. Sawourse, in china, we stock indexes go down more than sharpich is, you know, a contrast to where it has been going after the phase one trade deal. So, yes. Really losses across the board, and as these numbers go up, i think we are not expressing a pretty day today, either. Some companiesg and sectors profiting from the news. Lucille that is right. I mean, there are a handful of companies. For example, theres a few companies in china who basically said they have come out with detection or testing kits for the new coronovirus, and those stocks basically searched to their daily limits yesterday at about 10 . One of them, 20 , because it was listed on the star market, so the newtek board in shanghai. We have also of course seen some Japanese Companies in the air cleaning industries, emergency vehicles, those also searched yesterday. Yesterday. I think a lot of worries across the markets in terms of where this will go. Haidi thank you so much for that, lucille liu. We will be speaking to one of hong kongs top pretty developers are over the next hour to see how they are dealing with the virus concerns. Well will have an exclusive chairman with the group representative. His company could face serious risks as it was set to open a new mall in wuhan in china. That is a city where the coronovirus is believed to have originated from. Hong kongs Capital Markets have weathered the threat posed by months of social unrest, and now, the coronovirus, but the deepening economic crisis remains. Moodys downgraded its rating for hong kong earlier this week. It is a move that Hong Kong Exchanges representative says is not surprising. Aside call for them to react. I think, clearly, the last year has been challenging in hong kong. It seems to be they are reflecting that in their report now. I do not think i am terribly surprised about this happening but it is just one of the cycles that we are going to go through. The timing could not be worse. It comes at a time when theres concern in the market about the china virus. Surely that would Impact Investor sentiment . There are a lot of things that impact sentiment, but structurally, the market is very resilient, and we have a big, challenging 2019. If you look at the market, the bounceback was very quick and very strong, whether you look at trading volumes or levels of ipos, whether you look at the broader financing activity, and you know, theres really no whichl flight or capital is aggravating in hong kong. Last year again, we are number one globally in raising capital through ipos. Seven out of the last 11, we are number one. Year, 2019, we were able to be once again on top of the world in terms of ipos, the very large china ipos coming to hong kong, even the ones that went to the states and came back. I think we will see more of it. You are saying that 2020, you can maintain the venues for listings . Charles we definitely will be top cop there. It is not only what we do, but all the other markets, so this sometimes gets changed by a few big transactions, but we will always be very top there, if not number one, but number two. Terry occasionally, number three. Charles, i want to talk about the failed bid towards the lses. Are you intending to make yet another bid after the six months . Charles Everybody Knows now that we are looking at international markets, trying to anchor in china, connected world. To the extent we are able to find opportunities that allow us to implement our strategy, we will continue to look. Will lse still be the focus are you still interested be the focus, are you still interested . Looking at will be anything that allows us to gain either market or capabilities that allow us to be able to connect the world better with china, so we are now really looking for generically sort of a growth opportunity. We are simply looking at anything that allows us to do one of the three key anchors of our strategy. China volume bring and china opportunities out, all connecting china and asia better with the rest of the world. Li in davos. S su keenan. Start withgoing to south korea. It expanded at a faster pace than expected, supporting optimism that a recovery may be underway. Gdp increased 1. 2 from the previous period. It is expanding at the fastest pace since the Third Quarter of 2017. South korea is pinning its hopes on an export turnaround as trade tensions for between its two biggest trading partners, the u. S. And china. Two brazil, where the former head the big Mining Company has been charged with homicide over that dam collapse. Fabia schwarzman is the highest profile figure facing trial for the worst environmental disaster. 20led the Company Since may 17 before federal prosecutors recommended his immediate exit. As company, vale, contractor, and 15 other people have also been charged. 5 million cars are being recalled in the u. S. Honda is calling back 2. 5 million older vehicles for defective airbags made by the takatapt toccata corp. Crop. Toyota is recalling 3 million cars over a faulty control unit that would cause malfunctions in airbags and seatbelts. Reportedkorea, it is to have ended its moratorium on nuclear and missile tests, saying its opponents have failed to honor their commitments under the deal. Was speakingficial at lun conference on disarmament. He is reported to have said that there will never be denuclearization on the Korean Peninsula under what he calls a hostile u. S. Policy. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. Coming up next, while huaweisder is founder is shrugging off the threat of further attacks. This is bloomberg. Shery this is daybreak asia. I am shery ahn in new york. Haidi i am haidi stroudwatts in sydney. The huawei ceo and founder is shrugging off the threat of the u. S. Imposing even sanctions against his company. Speaking during a Panel Discussion at the World Economic forum in davos, he says he is confident that huawei can survive any further attacks from washington. Admireri used to be an of the United States. Successful today largely because we learned from the u. S. For the most part of our management. Since day one of huawei, we hired dozens of american consulting firms, teaching us how to manage our business operations. During that period of time, the entire Management System of huawei is very much like the u. S. The u. S. Should feel proud of it. The u. S. Management systems being exported and implemented extensively at huawei, contribute into huaweis development. From that perspective, i think the u. S. Should not be over concerned about huawei and huaweis positioning in the world. List,ing the entity huawei was added to the list last year and it did not hurt us much. Theasically withstood challenges. We did some preparation before that. This year, the u. S. Might but i feel thee, impact on huaweis business would not be very significant. Our year, in 2020, since experience from last year and we got a stronger team, i think we are more confident that we can survive, even further attacks. But whether the world would have been split into two systems, i do not think so, because science is about truth. There is only one truth. It is unique. Any scientist who discovers the truth would make it known to all the people around the world. We will have more from davos ahead, including an interview with another companys ceo. If you are away from a screen, you can find indepth analysis and todays big newsmakers on Bloomberg Radio, now broadcasting from our studio in hong kong. Listen via the app, Bloomberg Radio plus, or bloombergradio. Com. This is bloomberg. Says Mahindra Mahindra indias slowing growth could be a good thing. A muchneeded detoxification has led to the slowdown of the upside sooner rather than later. He told us why you think the government is taking the right apps. What was underway for a while now is the detoxification of the economy. The Prime Minister has been quite obsessed that the kind of growth he wants is growth that is transparent and not and free of any kind of corruption and any kind of rent seeking. Is he succeeding at that mandate . The perception right now is that it has caused this kind of slow down. On the other hand, if you are youg to detox yourself, have the option. The demonetization was with that end in mind. The tax which all of us pushed for i am very pleased it is here is making it impossible for people to work in a nontransparent manner but it has cause disruption because people who are used to trading in cash and trading off the radar now have to be on the radar, so there is an enormous adjustment process underway. I think the government has realized that in order to get that engine moving, it needs to be far more propulsive for the economy, propelled consumption, forget about obsession with the deficit for too long, and they are taking the right steps now, so i think my experience from our industry in the Auto Industry is we are already seeing signs of life, and i think, from the next fiscal year, which starts in april, we are going to i think india will surprise on the upside. You are a thirdgeneration industrialist within india. He were born with privileges and you have taken it so much further. Explain the generational divide within india. Each country seems to have a story of younger people rebelling with populism or whatever nation it is, explain the generational divide within india. Anand i think it is [speaking french] i use to bet on the fact that a lot of the young people, the millennials, did not seem to be protesting. I am from the woodstock generation. It was a rite of passage. I used to think that if you do not protest, if you do not have a cause, then you are probably suffering in the iq department, or at least in the eq department. I was giving up. I thought everyone had a three minute attention span. Youtube and snapchat. Whatever the protest, misguided or not, i think for young people to want to have a cause is a good thing, in my opinion. Haidi Mahindra Mahindra chairman Anand Mahindra speaking in davos. Indias top court has agreed to hear a plea next week from vodafone as they seek more time to repay loans. The wireless carriers want to negotiate terms of payment for the 7 billion they owe to the government in back fees. They have a combined net debt of 30 billion u. S. Dollars and reported record losses last quarter as a result of provisions for the Court Ordered payments. Shery Harley Davidson drama turns another page later wednesday with the selection of a new ceo. The carrier has been rudderless since its former boss was fired for allegedly trying to smuggle a harley using a plane. The carrier is trying to restore its battered reputation and bring down high leasing costs. They spend more on plane rentals as a percentage of revenue than any of its peers. Jumped on news it may combine its rail business with a french rival. The two companies have held preliminary talks over the past few months although any type could face antitrust scrutiny. Last year, the e. U. Blocked a merger after regulations gave warnings about the threat of chinese competition. Lets take a look at Mitsubishi Motors, trading in the session. 5 . S plunging down by over this selloff coming amid reports that its german subsidiary is being investigated for allegations that its diesel engines may have been equipped with devices achieved on admissions tests. Lets crossover. What do we know about this . Subsidiarythe Continental Ag is cooperating with the investigation. In a case like this, it could be could still fall on mitsubishi since they are the one producing the cars and theing them to specifications for continental, so this is a very damaging thing for the company. The prospect that this could widen it. That is why investors have been pushing down the shares of this carmaker. Europe is not a huge market for mitsubishi, but still, everyone is going to be quick to recall a similar scandal that affected volkswagen that ended up going global and had a real Global Impact on that carmaker. If it is shown that these kind of defects are in their diesel emissions control system, it could indeed hit the company pretty hard. They any idea how big recall and legal cost could be at this point . Haidi it is very hard. I would say i do not have any idea how big they could be, except to say that it could be very serious for a company that is already sort of on its back legs. It has yet to fully recover from another recall scandal that it economy,ding fuel cheating on fuel economy, so this could be a very serious blow for the company. I am not sure how widespread it could be. As mentioned, europe is not the companys biggest market more diesel vehicles, yet at the same time, these scandals have had a way of mustache to sizing metastasizing. Once they look at the process by which these were approved, and exactly how this came to be, if the facts as alleged bear out, this could be a very serious blow for the company. Haidi we are seeing that stock falling the most in eight months in the early part of the session. Thank you so much for that, our Asia Business editor, dave mccombs, with the update on Mitsubishi Motors latest scandal. Lets get a quick look at how markets are trading so far in the asiapacific. Youre seeing a little bit of recovery from yesterdays selloff. The nikkei 225 up by. 1 and upside for korean markets as we saw gdp numbers accelerate. In australia, we have gains after the losses of yesterday. 5 higher with the market pretty close to record highs, and we do have a positive session for kiwi stocks as well. Sheree. Shery take a look at futures because the u. S. Is higher at the moment after falling from record highs. We have seen riskoff sentiment spreading, given the wuhan coronovirus being reported in Washington State. Look at futures under pressure. This index saw its biggest drop in six months on concerns of this spreading virus. We are seeing the offshore yuan holding steady. Coming up, we will have an exclusive interview with ronnie chan in half an hour. The china open is next. This is bloomberg. And they lived happily ever after. The end. The end might not be as happy as you think. After all, 4 out of 5 people who have a stroke, their first symptom is a stroke but the good news is you can rewrite your ending and get screened for stroke and cardiovascular disease. Life line screening is the easy and affordable way to make you aware of undetected Health Problems before they hurt you. We use Ultrasound Technology to literally look inside your arteries for plaque that builds up as you age and increases your risk for stroke and heart disease. So if youre over 40, call to schedule an appointment for five painless screenings that go beyond annual checkups. And if you call us today, youll only pay 149an over 50 savings. Read it again, papa . Sure. Ive got plenty of time. Life line screening. The power of prevention. Call now to learn more. 9 00 a. M. In beijing, china and singapore. Welcome to Bloomberg Markets china open. Yvonne im tom mackenzie. Yvonne im yvonne man. Ivanka im yvonne man. Yvonne im yvonne man. Six people are dead, the first case confirmed in the u. S. Yvonne Health Authorities are struggling to contain the infection, which comes during mass migration for the Lunar New Year. Tom another threat to the economy of hong kong. We