Transcripts For BLOOMBERG Bloomberg Markets European Open 20240713

Coronavirus cases climb, worries as the number of u. S. Cases increases without links to and outbreak. Joins apple and hp in scrapping its outlook on the virus. Standard chartereds cfo tells bloomberg it is too soon to say how bad it will be. Quit, factors will probably come through in march and beyond. The uncertainty at the moment is which markets is in which markets it will affect things. Matt europe on other. Matteo salvini tells bloomberg the Prime Minister is underestimating the threat. We are live in rome as Giuseppe Conte meets Frances Emmanuel macron today. We take a look at futures. They are a little worse in the is. Compared to well, no, stand corrected. They have dropped much more now in europe. Its rare you see a move in this order. Percent. Res down 1. 7 u. S. Futures have recovered a bit. They are down less than 1 across the three major indexes, although just slightly in terms of the nasdaq, down almost 1 . And more risk off news anna, do you see more risk off news on the gmm . Anna we do. It does look like where turning in our treatment of coronavirus stories. Things move closer to the United States. The lady gets traded looks to be a little bit different. Futures, as you pointed out, look negative. Up,chinese market, though, which means overall, the percentage is down. 9 , so it is weaker, the maybe not as weak as european futures indicate right now. In terms of what is driving markets, and south korea, more than 1500 cases. We have indonesia looming large. We see the rupee dropping for its eighth day against the dollar, its longest losing streak since september 2017. Foreign investors pulling out money from the nations bond and stock markets as the coronavirus spreads, so indonesia tends to loom large today. That is part of the story we are looking at, but lots of the focus is moving stateside, after we heard the press conference from President Trump, but more importantly after we got news about seemingly a Community Acquired coronavirus case in the United States, that has taken the markets attention perhaps away from asia a little bit and more toward the u. S. A macro strategist joins us in london. Good morning to you. When i look at u. S. Futures, a little earlier, we were down. Now nasdaq futures down. Still, quite significant losses again, and it seems almost inevitable that we were going to get some level of Community Acquired coronavirus in the u. S. With the amount of time it takes to diagnose, it does not take a great deal of imagination to think this would happen. Why is the market surprise . I think where we are looking at markets right now, it shows how fragile they are, how much Little Information can affect the at a marginal level. The fact that we are seeing these cases spread to the u. S. , that is why we are seeing the reaction we are. What is surprising this morning is the extent of the selloff we are seeing in european futures. This likely reflects some of the catch up from yesterday in the u. S. Session. Matt is the concern bigger for europe right now . Clearly, italy is down in the european epicenter of this virus, and European Markets have not been the european economy is not seen a strong is the u. S. , European Markets are not valued as highly as the u. S. What do we expect in terms of the equities . Look atinly, when we european equities, and a lot of the selloff has been in those more cyclical sectors, travel and leisure, autos, energy, the ones more exposed more directly tourismupply chain and impact. We are seeing less declines in terms of defensive sectors. What is surprising is we did see more of a market move yesterday on the reports that we could potentially see german fiscal stimulus come in. Certainly, there are a number of political hurdles there. Of a growthg signs recovery there on the facts of this trickling in. You would expect to see this delayed rotation from u. S. Equities likely into european equities finally take hold. Anna what about trade in the haven assets . We see gold going higher again. Interesting to see the yen catching a bit today, and that ties in with a narrative that the market focus is moving more toward the u. S. , so the dollar not the haven today. The yen is the haven today. That is quite interesting because when we looked late last week and earlier this week, the japanese yen was tumbling on the fact that we were seeing these domestic pressures within japan and now the fact we are seeing steep selloff inequities, so we tend to still see quite a high correlation between yen performance and the s p 500. Certainly, i think also where we are see me seeing this safe haven bid is in treasuries, the fact the 10year is sinking below 1. 30 percent, so it is quite exceptional. It is a question of how much more this haven bid can continue its path lower. Matt getting back to europe, i want to ask about the news out of berlin yesterday that the German Government might at least temporarily lift the debt break here. That means they would increase fiscal spending, both in local regions and on the federal level. How is that going to impact Financial Markets . This is your analyst question of the day. I think it is a case of is this too little too late because tricklingected to see in over time, not exciting to see a big sizable boost, and as well, theres a number of political hurdles to recover, but we are still seeing it play to the euro. We are seeing a slightly less in it of german bunds, but if we do expect to see this fiscal stimulus come in, it would likely provide a floor to the 10year yield. We do expect to see some positive green shoots across European Assets that have been hit quite hard so far on the back of these virus fears. Anna thanks so much, laura. You can get involved with the question of the day. Up next, we will look at our stocks to watch at ab invev. The Worlds Largest brewer forecasting lower earnings due to the coronavirus. The weight of this has impacted their business in china. We will get to this story around the drinks sector and have more on the drinks sector as we go through this morning. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. Rhea we are right now about 50 minutes away from the cash the start of cash trading. Off once againsk today. Lets get your stocks to watch. Annemarie horton is looking a Standard Charter for us. Lets start with you and Standard Chartered. Hsbc, we are seeing this morning on the coronavirus on Standard Charter and what we can expect for the for mostwhich accounts of its Revenue Growth. That is what Standard Charter had to say even though they are buying back shares. We are seeing the impact of the coronavirus hit Standard Charter, similar to what we heard from hsbc. Anna from a bank to a drinks business. Coronavirus again the culprit. Just that they are forecasting a drop in earnings for the fourth for the first quarter. Fourth came and way below expectations. On a day when you are not expect such a huge move in stocks, you would expect Drinks Companies to move within. It may be that all the Drinks Companies also take a hit today. This is a pretty bad report that certainly will raise conditions for the 2020 outlook. Matt what is the story on saffron . Coronavirus to the issues with the boeing max, it has become the latest aerospace outlookto flag its 2020 , and its as revenue is likely down over likely to be by 2. 4 . Got the coronavirus playing into this company as well, although they say that their production is almost back to normal in china, so they are working on the assumption that coronavirus is not going to be an issue after the second mayber of this year, so the situation will improve by the end of the year, but it is certainly a challenging backdrop for stocks in aerospace at the moment. Anna thanks to everybody for their contributions on the stocks to watch today. You can get the latest stories. Rom our equity team joining us now, greg peters head inmultisector strategy at pg fixed income. Good morning to you. Lets start our conversation talking about corporate debt levels and credit risk, i suppose. Are you concerned about the kind of credit event resulting from the coronavirus . I think it is too early. What i think the markets are responding to is not so much fundamental impacts on the economies, although this adjustment lower and corporates are starting to come out. To me, it is really about uncertainty. That price needs to adjust for the unknown, and i think that is where we are at. Are and a lot of companies closed. For the most part, these are small to mediumsized businesses that only have enough cash to get them through the next few weeks or months. That if somerry companies started going bust, than other Big Companies are going bust after them . That is a concern. Clearly, companies have levered up over the past 10 years. Corporate debt levels are really high. Leverage is really high, so the room for error is very small. I think that is a risk, particularly in the smaller companies, but once again, i think it is too early to assess all this, so what the markets are really adjusting to is uncertainty more than fundamentals. That is my belief. Anna a european investmentgrade companies have fitted from ecb by. I suppose if the ecb is looking for tools, they do need to step up and do more in the face of the virus threat, perhaps there will be more of the same, more of that . I think so. Markets are factoring in, although it is hard to disentangle what is going on, but the markets are factoring in a more proactive central bank, right . So there is more scope for the fed and the u. S. To do rate cuts and things than here in europe, but nonetheless, Central Banks , andresponded in the past i think they will respond again. Matt what do you expect from other Central Banks . We are waiting, for example, for a rate cut from china. What could the ecb do . Are there other Central Banks that you think have tools, or are there Central Banks that you think dont really have much ammunition left at all . The fed has the most ammunition in terms of rate cuts. There is scope for the fed to do more. Once again, i think it is too early, but the markets are definitely moving in that direction, but at the same time, you know, it is more of the same. The ecb will increase their bond buying program. Other Central Banks you know, china has more scope to cut rates. That is something we think it an important policy tool. I think there is scope to do more definitely. Insight. Nks for the lets get a couple of corporate stories for you that we are covering this morning. Wpp is one of them. This is the advertising business. Fourth quarter comparable organic sails down. The estimate was for a drop of 0. 8 , so that looks to be a little bit worse than anticipated, but they reiterated. 021 targets and 2020 views that is interesting if you are looking for companies that are not citing coronavirus as a reason to become more negative today, then there is one. Coming up on the program, edging closer to a pandemic. The fda issues a coronavirus warning as more cases are reported in countries other than china for the first time. This is bloomberg. The number of cases is now has surged over 1500 and just six days. Where is the surge coming from . What is the conversation in korea right now . What action needs to be taken . The surge is coming from a city far from the south korean capital and has to do with a religious sect as part of a religious organization. The government has actually over 210,000t of people, they secured their names and are trying to see if the people part of this organization. Ave had any physical contact that is how they are trying to track down people showing symptoms and seeing if they are also confirmed with the coronavirus. Matt what are the expectations behind them Holding Steady . What is the reasoning behind that . The bank of today, korea pretty much held a very optimistic tone about the impact of the virus having on the economy directly, although they did downgrade their outlook for gdp, they said that it is not enough to downgrade the actual central rates. They said despite the coronavirus outbreak in south korea, what the government should focus on is helping and providing support for the companies that may be impacted, but it is not yet on the level of the central bank. Anna thanks very much for your report. What i found interesting about the south korean case, they held. N rates actually with what they said about not cutting, they said mending support facilities was going to be more effective, so micro policies was going to be more effective. Is that something you think the Central Banks might be listening to . That was surprising and unique, and its clear that where the level of rates are and the qe programs currently in place that theres new tools that have to be developed. I thought that was somewhat of an ingenious tool that was talked about, but i think markets are really expecting too much from Central Banks here. The cut rates they cut rates so preemptively without any data impact. On the true i agree with kind of not cutting rates at this point in time, waiting for more data to develop and evaluate other tools in the kit. Matt we are starting to get fiscal stimulus from a lot of governments in asia and hints that more fiscal stimulus could come here in berlin. Do you think thats too early . A lot of people are saying its a little too late. Yeah. I mean, thats a different response function. That is serving a public good, so that fiscal spend that is important, markets that have been watching fiscal spending, particularly in germany now for a very long time, so i do think on the margin, that is helpful and should actually have more of an impact than rate cuts or more qe, but i think a move on the fiscal side is important and will have more impact positively then a rate cut wood, for example. Matt their currency strategist daybreak europe and was saying that this year, there is less fiscal stimulus coming out of the u. S. Government, out of the u. S. Budget then there was last year so there will be a drop in terms of u. S. Spending. Are you concerned about that . Do you think it will change . Well see. I mean, the u. S. Has really kind of increased their deficit pretty sizable he over the past year and a half. There was this big fiscal ofgram a year ago, so some that is coming off, but you did get this boost towards the end of last year when they raised the spending caps in the u. S. , so it is something to watch, but , you know, you are quite right. You are not going to see the same type of yearoveryear spending in the u. S. , so if you believe that other countries have to kind of step up to fill that gap, then, you know, watching germany and other countries is important, so the u. S. Is not going to lead the charge here. Anna briefly, what did you make of the hong kong announcement . Literally cash for residents. That is one way to do it. It was unique, lets put it that way. Once again, another example of policy tools that are unconventional, and that is highly unconventional, and we will see. Definitely a direct impact. Yes, direct impact and unconventional. Thank you for joining us. President trump downplays the risk of the coronavirus to the u. S. , but markets are not convinced the country identified the first markets are not convinced as the country identifies the first case without ties to a known epidemic. 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. Back to Bloomberg Markets. This is the european open. We are just about a halfhour away from the start of cash trading across europe and in the u. K. You can see that we have futures down deep in the red right now. Im matt miller here in berlin alongside anna edwards at our European Headquarters in london. Anna lets get back to our top stories. In the United States, Health Authorities say they have identified the first coronavirus case that does not have ties to a known outbreak. That follows assurances from President Trump as he tries to ease fears around the virus. Because of all weve done, the risk to the American People remains very low. We are ready to adapt and ready to do whatever we have to ask the disease spreads. Placedresident trump Vice President mike pence in charge of leading the response. Investors concerned about the outbreak have driven six Straight Days of losses erasing the s ps gains on the year. The yield on the u. S. 10year currently sits at 1. 31 . What is the lower bound for the u. S. 10year yield . How low can ago . Well, lower in what is the answer. Our view all along has been a ared in the u. S. Attractive. We think the scope for yields continues to move lower, so i dont have an exact target, per se, but it is definitely a bias for lower rates, so our central tendency has been kind of 1. 5 . Its possible 1. 25 percent now, but i think the bottom line message is that u. S. Rates are still attractive versus other destinations. Matt the fed has been worried that there would be issues of over leveraging to the consumer for businesses if they continue to be accommodative, but that does not seem to have happened in this current cycle. Are you concerned about that . I see the 30year come down and i start thinking about to go back to the u. S. And buy a house, but it does not seem that everyone is doing that. Wait, having said that, new home sales were off the charts yesterday. Yes, but there has been a very different pattern in the corporate side versus the consumer side. The access to Consumer Credit has been really quite challenging, so as a consequence of that, the u. S. Consumer actually looks to be in a really healthy spot. Particularly at this time in the cycle. Feastedorate side has on low rates and levered up, so theres a big difference in the u. S. Between the Consumer Sector and the corporate sector. Do you see a bubble in high . Definitely not a bubble. I like highyield bonds. That said, levered loans is an area that concerns me much more because what happened in this cycle is that the leverage moved out of the highyield bond market and into the levered loan market, so i actually feel like highyield is an attractive place to invest as there is a conflation between the loans involved, and i think that is an opportunity. Matt what is your take on the economy, bottom line . I recognize there is uncertainty with the coronavirus, but how does it look going into, say, november of 2020 for the u. S. Economy . Think it rebounds. If you study history and from sarsyou know, and other types of things, what goes down bounces back. Maybe it is not oneforone. If you look past it, which is really difficult to do and uncertainty is extremely high, but my expectation is that when we get to the second half of this year, you will see a pretty robust rebound as that production that comes off line comes back online. Is there any since that we get inflation has been far from any investors minds of late. Is there any since that the coronavirus drives a bit of inflation with the exposure it will produce and supply chains . I think investors and economists have been hoping for inflation the past 10 years, right . I dont think this is the event that is going to push inflation higher. I think there are structural issues in the marketplace that keep inflation low. Watching fiscal spending is an important input here, but you need a lot more fiscal spending to move inflation higher, and i dont think we are even close to that place. Matt is there any place in the western world where you see that . Any major economy where you see Central Banks capable of creating inflation . They all seem to be trying. Know, i think that is the lesson learned, that Central Banks cannot create inflation. The Central Banks hands anymore to create inflation, and i think that broke a lot of economic models textbooks. N i think it is really up to the fiscal side and you need to see a pretty substantial fiscal impulse to get inflation moving higher, and i dont think we are there yet, nor do we have the capacity in terms of debt levels many of these sovereigns ado spend as much as inflation we haveneed nor do the capacity in terms of debt levels of many of these markets to spend as much as inflation markets need. Mark matt coming up, the virus weighs on companies around the world. We speak exclusively to be worlds secondlargest distiller. This is bloomberg. Back to thee european open. 7 38 here in london. 8 38 in paris or berlin. 20 minutes until the start of another gloomy session. Another day of negativity, of course, surrounding coronavirus. Lets get the latest Bloomberg Business for you. Standard chartered says they coronavirus outbreak will hurt this years results and delay its ability to achieve a return 2021. Ity target of 10 by the underlying pretax profit came in at 4. 2 billion dollars, slightly below estimates. Coronavirus is very much on everybodys minds. We have seen for the first couple of months businesses perform very well. Also, clearly the impacts of that will probably come through in march and beyond. I think the uncertainty for the willt is i which markets it affect. Microsoft is the latest tech giant to cut its outlook due to the coronavirus. Meetes not expect to earlier guidance as the supply chain is returning to normal but at a much slower pace than expected. Apple and hp have also cut estimates based on virus disruption. Saudi aramco starting early preparations for an international listing. We learned that the Worlds Largest publicly traded company is in discussions with wall street banks. They are looking to draw up scenarios for the secondary listing. Aramcos ipo sideline global lenders and ended up being very domestic. That is your bloomberg is in his flesh. Bloomberg business flash. Matt ab invev, the Worlds Largest brewer, has joined drinks makers and reporting a hit from the coronavirus. Last week, the worlds secondlargest distiller cut its forecast for the year by about half as the outlook were is the outlook weighs on sales of drinks including the jamison whiskey it makes in its key chinese market. Joining us now is alexander the ceo. Thanks for your time. Let me just ask you how your view of the impact has developed. Certainly, the market has taken this virus more and more seriously over, say, the last six trading sessions than it did last month. Of weeks ago, when we issued our statements, we to be truly transparent in terms of the assumptions we took into account for our Business Model and therefore for our new revised guidance. These were pure assumptions. They are assumptions, and they are not market predictions. We dont know what is really going to happen, but we gave enough information to the markets for them to update their models as things develop, and that is what we decided to do, given that we dont know what tomorrow is made of. Main concern the in terms of your drinks . Not to drink your grandfather invented 70, 90 years ago. Whats the main beverage lines that are hit . So far, and based on the isumptions we took, china our second largest market, and are cognac and scotch whiskey to start with. Our assumption there is a gradual recovery starting during the month of march, to get back to somewhat of a normal june, obviously excluding the hubei province, and second and that is our thirdlargest market, if it were withket obviously chinese passengers that have dropped quite significantly, we are assuming again a gradual recovery starting again probably in april to reach something normal by june. Anna alexander, good morning. You mentioned the recovery outside of hubei province. You mentioned recovery in the month of march. Do you see signs of that coming yet . We heard yesterday some specifics about bars and restaurants the enclosed, that nightlife grinding to a halt. Do you see signs that things will be different in march . Because we are close to march now. We are close to much, but for the month of february, we assumed everything would be closed, which was the case, by the way. These things change on a daily basis. I think what is important for us is to be fully transparent with the market. First and foremost, health and safety for our employees. We have taken a number of clear measures not just in asia but globally. To second, to stay committed deliver our strategic plan. At the end of the day, we need to remain focused on our business as well and the good news is we are very diversified to startraphically, with europe, america, and asia, and as well in terms of rent, we have 13 Strategic Brands. But as we see the global spread, so china was the focus, then south korea has become something of a focus. Italy in europe is now a focus, and you see that global spread. How are you tackling this internally as a business . Do you set up special teams to deal with it . Do you respond to each country as it comes up . How do you set about game planning . From a health and safety point of view, absolutely that is something we put in place. We have some strict rules internally. We also follow local authorities guidelines ruthlessly. But from a purely business point of view, we are still working on delivering our strategic plan, which has nothing to do with covid19. Of thattside, speaking strategic plan, outside of the coronavirus, what do you see as the Revenue Streams and profitability of your drinks in 2020 . Oure are in year two of threeyear strategic plan. What we are seeing is continued diversification of our sources of growth, so all regions are growing. Also of regions are growing. Our Strategic International brands are growing. Our local Strategic Brands are growing. Our Specialty Brands are growing. Our wine business is stabilizing based on a value strategy of pricing for a second year in a row is pretty good. Strong. 2 pricing. Plan is delivering as expected. Of course, the Current Situation , but putting that situation aside, the plan is fully delivering as expected. Anna what about one of your newest shareholders taking a stake in the business . What meetings have you had . What are they asking for . First of all, they are not new anymore. They have been here over a year now. Investors,th other we have ongoing discussions on a regular basis, just as we do with our key other investors. Anna are they asking for anything different . What all our investors want to see is a wellrun business, continued expansion of our margin, of course, but at the worry ofe day, we topline growth and the fact that we are today for a second year in a row growing literally testimony is a good to the Fiscal Development of our strategic plan. Matt what about m a . Are there any brands out there that you think you could pick up and get at a good price right now . If i look around at your is, allors, wherever it the distillers and brewers have really dropped over the past few weeks and months. Does that create an opportunity for you . Busy inve been quite terms of acquisitions over the last 12 months. We made a series of partnerships acquisitions. You should expect to see it continue to be quite active on the front. At the same time, as we try to continue to dispose of assets which no longer fit our strategy. Anna a lot to watch for them. For joining us exclusively here in the london studio. As the coronavirus spreads across the world, big business is starting to come the cards. Several companies warning that profits are getting hurt. We have heard from Many Companies this week and today is no different. And mary has the breakdown for you. Anna thats right. With Standard Chartered. Pressure on revenue, slumped in asia which accounts for the majority of its revenue will contribute to 2020 Revenue Growth falling short of its target. Ab invev expects the worst quarter in 10 years. This could mean a 10 slumped in firstquarter earnings due to the impact of the coronavirus, especially since they have been in china. Bayer says the coronavirus has not affected their 2020 out bro outlook. That means that is likely going to be negative when they start to put that back into their outlook. Matt thanks very much for joining us with a look at companies that are impacted. We are minutes away from the open. Up next, wall street is sounding the alarm. We give you that in your morning call. Next, a really big morning call. Remember, Bloomberg Radio is live on your mobile device. Tune in. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are eight minutes away from the start of cash trading and looking at futures that are down about 1. 5 to 2 . Two of wall streets biggest banks are out with a warning, by the way. Thats right. They are signaling more pain is on the way for the stock market. Goldman sachs saying we might not see a bottom until july at is least and what citi talking about is when you want to get into by these risks or to the s py point 500, that would require it to drop another 12 and from the record high we had in february 2019, that would put us on the cusp of a bear market. Both banks signaling more pain is on the way. Anna lets get a bloomberg first word news update. Italian Opposition Leader Matteo Salvini has accused the government of underestimating the threat of coronavirus, urging them to earmark at least 10 billion euros for emergency measures. I think it will be an economy composed of this government composed of factions that do not like each other. The virus, which will evidently slide us into a recession, a government that has been disagreeing on everything for the past six months cannot be the one to give answers. Has decidedof korea against cutting rates, instead providing loan support for coronavirus hit companies. Says it is bank still too soon to gauge the full impact of the outbreak. The bank also downgraded its growth forecast for the year saying it is possible the economy will contract in the first quarter. And should you be buying the dip . Dennis cartman does not think so. Is warning the s p is egregiously overvalued and says investors should seek safety in gold and government bonds, but that is not the take ubs. It is advising High Net Worth clients to load up on chinese shares. Ubs says they have attractive valuations and china seems to be containing the virus and getting back to business. Prime minister Boris Johnson is that to put the u. K. On a. Ollision course with the eu the eu says no deal will be possible unless the u. K. Signs up to a socalled level playing field. That is meant to ensure it does not gain a competitive advantage by undercutting the blocs regulations. This is bloomberg. Anna thanks very much. Again, london with first word news. Quick look at stocks to watch. First is wpp. How low will that one go at the open . The advertising business coming in below the lowest of estimates. Remember, this is a stock that muddy waters was short. Oft im watching the maker baby formula, which it got with the infant nutrition acquisition of mead johnson. It is taking a 5 billion pound charge on that acquisition of roughly 6. 5 billion dollars. Watch that stock at the open in just 4 minutes time. This is bloomberg. Anna a minute away from the start of trading this morning. Coronavirus cases climb. Unexpectedlyorea holds its rates despite the threat. Microsoft joins apple and hp in scrapping its outlook on the virus. Andy harrellson tells bloomberg it is too soon to say how bad it will be. Matteo salvini tells bloomberg the premise or is underestimating the threat. We meet with Emmanuel Macron today. You look at futures, you see substantial losses. Futures are a little bit more than 2 . Riskoffaded for a session and we are seeing losses of half as much in the u. S. Interesting to see the u. S. Futures. They looked quite negative. Losses are being pared. The spanish ibex is down. Stoxx as a whole are down. 7 weaker. Interesting to see the Market Attention focusing less on china as we increasingly talk to companies expecting some kind of normalization. Time as the u. S. Investor is more focused rest and spread within the United States. That seems to be how the market is moving. We heard from President Trump yesterday and from the cdc. The European Equity market is still in the crosshairs of this. Withtle bit of catchup the u. S. Yesterday as well. It was volatile for u. S. Stocks yesterday thrown off by trumps press conference. We have got everything in red. Its no surprise to see that all of the sectors in europe are in red. Greensee a small area of but thats nothing to get excited about. You do wonder to what extent some of the stories are going to cut through. Increasingly, they are on the same page. We see corporate talking about the coronavirus and its impact on the business. At numbers did not impress that that we can anyway. Matt there are only 16 gainers so that is some real breadth to the downside. See, thisiners we screen holds basically all of them. British American Tobacco is at the top. Nokia has a fascinating story about the possibility of linking up with another company. You see a lot of Consumer Staples here, basically very defensive winners with the exception of. Of nokia. A lot of stocks went dividend today. Hsbc is one, astrazeneca is another. That, these are all exdividend. Falling aside from the general malaise, and as a result, they are taking points away from the stoxx 600. Lets talk about where we are with our guest. Joining us on set is luca paolini, chief strategist at pick day asset management. We hear from a number of wall street banks that this is just the start of the selling. What is your expectation for downside to come in markets . Luca this quarter will probably be negative and is already significant. There was a lot of complacency in the markets. Question is how much the markets can fall. Is still not cheap enough markets are down not significantly oversold these indicators oversold. These indicators are telling you to buy and a policy response is missing. Matt are you saying that buying the dip is the right strategy . Luca i think it is too early because we have not seen the impact from the outthink outbreak of the virus. But that is a matter of weeks, maybe months. Are you saying buying the dip is out until april . Course, the impact is not going to disappear. Whats important is a policy response that would convince markets that there is action being taken to make this not as bad. Anna let me show you a chart from confirmed corona cases in china. The reason to split this out is because the global story is different than inside china. Market optimists would like this because it shows how you can get withdle on this, albeit draconian methods shortterm damage and shortterm damage. Do you start to bet on recovery in china . We see indicators of a very slow return to normal conditions. What is important is that this has happened with a huge hit to gdp. And thisowing at six quarter is negative3 . That the situation is Getting Better is not a reason to be optimistic in the shortterm matt what is a significant rewriting of equities in your mind . As we see the second largest economy, the factory of the world frozen. Is a 20 drop out of the question . 30 . Luca the market is already down 10 so i would not be surprised that we see another 10 . It is difficult to forecast that. Need todifficult is we see some fiscal stimulus. We are thin in taiwan and korea, but we need to see something in europe and the u. S. Mood, but change the there is definitely more downside from the current levels. Anna luca, thank you. A bit ofck in on market moving news. Lets look at wpp. Stock is falling after earnings and sales missed estimates. This is an advertising business based in london. Organic Sales Numbers came in below estimates, seeming to disappoint even the lowest of estimates. They are not citing the coronavirus, may be even more reason for concern. In terms of where we are on the equity picture, we have got the ftse 100 down 2. 2 . The ftse mid is joining in with the rest, so the market is not discerning too much. The news overnight has been stateside at we will get to that shortly. Schultz considers a move that could open the avenue for stimulus europes largest economy. Thats talk about what we will see out of germany. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are looking at deep losses in terms of the equity indexes. 2. 3 . Se in london is down in germany, finance minister is considering a move that could open and avenue for limited school stimulus. Avenue for limited fiscal stimulus. It would shift borrowing and give cities and towns more budgeting space to investor themselves. Assetrom pictet management is still with us. People at the ecb have been calling for this for a long time. Now olaf schultz is getting around to considering it, but already, ministers have spoken out. Is this too little, too late . Luca definitely too little, its never too late. Its not definitely enough, but i think its fair to say that the debate in germany has whered to a situation fiscal stimulus is at least discussed. Its not enough. The issue in germany is we know without aline fiscal crisis in unemployment, its unlikely they will increase public spending. I think you really need to see something more them flat growth than flat growth for a quarter. Impactow does this markets . It had a bit of impact on markets yesterday. Is it something we will be able to see in Market Expectations . What could change is what investors will do. Investors are worried about the lack of fiscal stimulus. If we see a move towards fiscal stimulus, i think this could be positive. Locations, regional it can be a significant boost for european equities. Matt my thought was olaf schultz does not care how the market takes this. His primary aim is to support local economies. He is very german here. We are only talking about 20 billion, not much more than the former city state of hong kong. What kind of size do we need to see for does make a difference to markets and it really moves the needle. Anything below 1 is not going to make a difference. Lets not forget germany as part of the european union. Whats important is for germany to doow other countries these measures. There is probably some good news , but its not enough considering the weakness. More and the need european Central Banks obviously cannot do much in the situation. Anna the euro is actually up. 4 . We leave that conversation for another time. Thank you for your thoughts, luca, chief strategist at Pictet Asset Management. Ab invev is forecasting the worst decline in quarterly profits at least a decade. Sees earnings dropping about 10 the coronavirus dense dents business in china. A jump in raw material costs did hit the business. Standard chartered says the coronavirus outbreak will hurt the years results and equity targets. Fullyearhartereds targets came in slightly below estimates. They have also announced a buyback of half 1 billion. Nokia is exporting Strategic Options as fierce competition puts pressure on earnings. We have learned they are mulling possible outlook asset sales were mergers. They do not expect a major recovery until 2021. That is your Bloomberg Business flash. Matt thanks very much. Up next, we bring you stocks on the move, including ab invev. As the brewerown forecasts the steepest decline in profits in a decade due to the coronavirus. This is bloomberg. Anna welcome back to the european open. 20 minutes into your trading day. Equity markets with red on your screen. Cac down 2 . Another day of concerns about the coronavirus, the markets are thinking increasingly about what happens in the United States and other parts of the world. And reordering has removers Annmarie Hordern has your movers. Anna looks as if we dont have so i will pick, up. A host of movers are telling us how the coronavirus is impacting is this is. In the United States Health Authorities have identified the first coronavirus case that does not have known ties to the outbreak. Donald trump tried to ease fears. Done,ause of all we have the risk to the American People remains low. We are ready to adapt and do what we have to. Anna lets get to our chief north asia correspondent in hong kong. Living theen outbreak to a large degree. Now, we see a focus on the United States. Bring us up to speed. Theres a new case identified as not necessarily connected to travel to china. That is a concern to Health Officials that perhaps it could be spreading faster than what ,onald trump has been saying assuring the American Public it should be under control. As we have seen, we have more confirmed cases outside of china than we had in china, so that is worrying. There are 1500 95 cases in south korea, and additional 334 from yesterday. Japan has additional cases as well. Schools are being closed up in hokkaido in particular hotspots should be in the Northern Island of the japanese island chain. There are a number of cases as well as deaths in iran, so the virus is definitely spreading. That means is not adverse to spreading in the United States. The case the cdc singled out is fairly serious. I dont have more details other than that it should be worrying. Our northhen engle, asia correspondent coming out of hong kong. Lucapaolini from paolini from Pictet Asset Management is still with us. I have heard people say this is a good start for gold. What do you think of the shiny stuff . Gold, wen you look at have been bullish for a long time. , it isfore this outbreak a perfect environment. You have week growths and negative rates. Down because going of fiscal devaluation. There is probably more qe to come. One of theues to be most attractive asset classes. Anna how do you plate is in fx . Play this in fx . The yen is up, the dollar is down as the market moves to the coronavirus. The dollar is not being the haven it was and we see real strength in the euro. Is that from expectations of fiscal spending to come . How do you explain what is happened happening . Have expectedd the euro to get weaker after the outbreak in italy, but it is the other way around. Low,tations were already so what happened with the risk is more in the u. S. We are very cautious on the growth isause u. S. Weaker than most investors believe, so it is a story of positioning shifting against the u. S. Do you expect the u. S. Dollar to continue to weaken . Luca i think so. I think the economy is weaker or more vulnerable than investors believe. Court retail sales have been falling, job openings are falling. Expectationson of in europe, expectations are for incredibly weak or negative growth. But in the u. S. , expectations are too high and the dollar will come under pressure. Anna thank you. Continue his conversation with us on Bloomberg Radio. Chartered standard braces for the impact of the coronavirus outbreak and a weakened economy. We hear from the lenders cfo. That business is joining the ranks of others reported today. Othere heard that from companies. Certainly focusing on the coronavirus conversation when we hear from andy halford. 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. Anna welcome back to the european open. Londona edwards in alongside matt miller in berlin. Matt lets look at the s p and stoxx 600 story. It has worsened from the open, down 2. 2 . This is the broader european index, and of course, every single Industry Group is falling. There are 587 losers, only 12 are gaining today. Leisuresay travel and down 3. 6 . It does not really make a difference. Out, alltide goes boats drop and we are certainly seeing that today. Lets go to bloomberg first word news. Matteo salvini has accused the government of underestimating the threat of an coronavirus he is urging earmark of at least 10 billion euros. Cold in thel stop north has been hardest hit by the outbreak. Economy is can photos of factions that do not like each other. The Italian Economy was already the weakest in europe in terms of growth. After the virus, we will slide into recession. A government has disagreed on everything the past six months cannot give answers. The bank of korea has decided against cutting rates, instead providing support. Two Board Members called for a reduction, but the Central Bank Says it is still too soon to gauge the impact of the outbreak. They have downgraded growth forecasts saying its possible the economy contracts. Global news, 24 hours a day on air, on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Anna, matt . Matt next very much. Thanks very much. Lets get to our top stock stories. We have movers today, almost all to the downside. Annmarie certainly. We are focusing on the impacts of the coronavirus. Standard chartered is down nearly 5 , saying it will be one of the reasons they dont reach 2020 targets. 2. 5 , sayingown earnings will slump due to the impact of the coronavirus. We see this a lot with the food and beverage industry. Nestle is down nearly 2 . People with290,000 one of the strictest travel bands. Bans. Anna Standard Chartered has said the coronavirus outbreak will hurt results. Cfo about thee impact of the epidemic. It is very much on everybodys minds. Think the business has actually performed well, though the impact will come through in march and beyond. The uncertain future is in which markets it will affect things. We will have to see how long this go we have cautioned year it may be a little more challenging. Challenging,l how we will continue to do what we were doing before. Some things we cannot influence. Manus indeed. Lets talk about credit loss. In the form of nonperforming loans and credit losses. Can you tell us about your expectations for credit losses . Back, the step overall nonperforming loans are at the lowest proportion about total bulk we have seen for about five years. Good andal quality is the trend has been improving. Monitorhat time, we things that are happening and impacts from the virus. I think it is difficult to provide quantification at this stage. We have said march is likely to have some impact. By the end of the quarter, we will take a view as to the risks, but its difficult to be precise. Anna i appreciate it is difficult. Beheard the outbreak could 600 million if it continues. Is that a ballpark amount . Andy its difficult to say. Their business is clearly much bigger. Our hope is this would not be a equally, thet, and provisions will be reversed. No guidance on the numbers, we will see where we get. Manus lets go to the good news, share buyback. However, the market was looking for one billion. Why not a higher share and when might you up that number . Andy we are now doing buybacks, plural. Our first one last year was one billion and the first we had done for a long time. A point with sufficient capital for further returns, we would. The market has introduced us to when and how we would. Today shows wet are continuing to live to that promise. Halford, thes andy cfo of Standard Chartered. Carlisle enters the esg movement. We dig in with the firms head of research next. This is bloomberg. Matt welcome back to Bloomberg Markets europe. We are 40 minutes into the trading day and looking at steep losses. The ftse 100 is down 2. 6 , but they are all down more than 2 . Its interesting as we see u. S. Futures down less than half that much, now they are pointing down 1 . You can see this continue to roll into new york and just in just abouts six hours. Impact investing has been paying off, according to carlyle group. Equity giant says goals like diversity, inclusion, and environmental sustainability are increasingly generating abovemarket returns. I am joined by the head of research at carlisle. You wrote a fantastic report on this that i got the chance to read. Makes ad that diversity measurable difference in increasing revenue and even more in profit. Research is related to losses. Matt people expect to give something up. Invest and support the club it, im going to make less money. Exactly. So i think the research has the wrong orientation. I found the societal goals of the Impact Investor are actually increasingly sources of incremental returns. Not only are you not surrendering return, it is precisely those channels that generate returns in a market where assets are so fully valued. Ways ofhe routine generating value are all incorporated into the prices. You mentioned inclusion. Founde look at data, we diverse boards generated growth that was faster. So interesting findings. Matt Revenue Growth . Topline Revenue Growth, earnings as well. That peoplething should change their orientation and realize that they are related. Now, at least in funic markets, you will see ds starting one specific climate or firms that are pro diversity heard what i was talking to your wes yesterday, he was saying wanted to take a more holistic approach. That this was the way we run companies and invest. May approach this as a screen where they want to limit the number or types of companies they can invest in. That is the wrong approach. ,f you are a private investor you should be incorporating these ideas into every investment you make. Rather than circumscribing the companies you subscribed in, just make these changes everywhere. An old exampler of a Famous Footwear company that had a board room full of guys. The one woman said to hire more of her. That, i get. But what about supporting the climate, governance . How does this work out to improve returns . When you look at climate the energy sector, there is a huge dispersion on renewable, sustainables, or fossil fuels. If we take companies purely ,nvolved in fossil fuels valuations are high. Very few companies that are just pure play. We found that businesses in the oil and gas space, if they reinvest into renewable and Sustainable Energy, they can increase valuations by about 40 . They can actually double valuations. Example of how investment towards Sustainable Energy and improving the climate actually generates significant returns. Matt fascinating paper i recommend everyone look at it. The coronavirus is the main issue people were talking about and focused on here. Tothinking immediately goes how to get safe. Which assets are safe to invest in . One thing people were saying is that maybe private capital is better suited to a downturn and you say there is data that supports that. You look at the vintage those are the years we have the largest outperformance. Generally, you see that actions to strengthen the business occur in private companies 69 months earlier. That thely just tripwires and intensity of the monitoring lead to quicker decisionmaking and you are getting ahead of problems relative to public companies. Thats my supposition as to why that outperformance exists. Matt jason thomas, thank you for joining us. Lets get back to the Bloomberg Business flash in london. Today as the ad Group Expects a fourth with no sales growth. They are suffering from fierce competition with north american brands. Consumer brands are beginning to spend more after years of cut. Ab inbev is forecasting the worst decline in quarterly profits in decade. It sees profits dropping 10 as nts itsonavirus de business in china. Raw material costs hurt the business in 2090. Assets yearxploring after a merger. The u. K. Growth business has attracted interest from private equity firms. Walmart plans to keep a significant stake after any deal. That is your Bloomberg Business flash. Anna thanks. Matteo salvini accused the Prime Minister of underestimating the threat of the coronavirus. He invokes the economy when asked whether he had a plan to try and force early elections. I think it will be the economy that will condemn this government. The Democratic Party and others who dont agree on anything. The Italian Economy was already the weakest in europe in terms of growth. Virus, which will evidently slide us into a recession, a government which has been disagreeing on everything cannot be the one to give answers. Joining us with more on the story is maria tadeo. Government have a plan to contain the economic damage. Damage . Exactly, and that is the big question. Governmentitalian going to deal with the implications . Heard there will be Significant Impact on the Italian Economy. You also have to keep in mind there was already an economy flirting with recession. North are 40 the of gdp. The government says they are working on a plan but we dont actually have the details. Perhaps they are looking at a moratorium on payment, but they are saying they want to get to the bottom of the impact the coronavirus. Saying this is already damaging the tourism herer, perhaps bookings have followed 40 . Fallen 40 . To government is trying reverse the reputational damage, fearing the economic repercussions. Matt thanks, maria. Hopefully, she stays healthy. Schultz considers temporarily lifting the brakes on debt levels. We discussed with Richard Jones how much that will help and how much markets care. This is bloomberg. Matt welcome back to Bloomberg Markets europe. We are almost one hour into the trading day and seeing deep, deep losses in terms of equity indexes. They are down no matter where you look across europe. Lets take a look at what is moving markets or failing to do so. Jones is in berlin, talking today about olaf schultz putting on the gas. This is something the German Government has been fighting for a long time, but yesterday, we anrned schultz is proposing allowance of 20 billion euros in spending. But as you point out, it will be difficult to even get that small amount past. Passed. Richard in theory, this is great, but there are a lot of clinical hurdles that mean im not sure this is even going to pass. You have had senior cdu Officials Say they will not support this and you will need their support. They are choosing a new leader on the 25th of april. I dont see this passing move for a new leader is put into place. If this happens, it will happen after that time. It would be a good start, i dont think we are there yet. Anna good morning. I have a chart i showed earlier. Its tied in with the strength we see in the euro. This . We retitle is this what is driving fx markets . Weakness in eight euro and yen strengths. Richard this is much more about the buyers than the european political scene. We have a lot of people who got short of the euro, perhaps at a sub optimal levels. But we are seeing now is a pain trade, i dont think its anything to do with the political scene. If there was an overwhelmingly positive takeaway, i do not think we would see the dax trading lower. Whats going on is more about the virus and less germany. I think that is something that will ebb and flow with the news, but realistically, havens will keep performing well. Anna richard, thank you. Thats it for the European Market open. Surveillance is up next. This is bloomberg. Awesome internet. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] the coronavirus spreads. The u. S. Identifies the first patient with no ties to the outbreak. The president assures the face little risk. Europe plunges deeper into the red. And warnings abound. But make her ab inbev forecasts its worst quarter in a decade. Maker ab inbev forecast its worst quarter in a decade. Nejra lets check in on the markets