global stocks return as investors cite concerns over the spread of the deadly virus from china. the yuan weekends at the most in three months -- weakens the most in three months. we will hear from the ceo of this company, sergio ermotti, in thre a few hours. theyrench president says will work with the u.s. on an agreement to avoid tariff escalation. as president trump's impeachment trial begins he will address the world economic forum, in a davos today. we will bring you the speech across bloomberg tv and radio. ♪ welcome to daybreak europe. let's get to the numbers from ubs. it was a beat on a fourth-quarter net income. investors are likely to focus on earnings per you share missed its profitability and also cut its midterm goals. fourth quarter while management outflows came in at $4.7 billion. the estimate was for .nflows and ubs dropping its target for the wealth management business. what the numbers highlight is that they are underscoring the challenge for the new wealth qbalgement cohead, i khan, as he looks to turn around .he lenders business these numbers might be causing concern. there is a tea light blog that you can follow. a lot of commentary on their. one of our reporter saying that over all the pictures negative. the numbers are disappointing, the targets are lower, very little in this quarterly report that could bode well for these shares. speaking of the broader market, we are seeing a lot of risk off in today's sessionp the msci asia pacific index is lowerm led by hong kong sharesm the hang seng down more than 2%. also a number of luxury and trouble stocks down. the concern is the spread of the virus that has already seen some toths and has been linked humans. at this point, we are seeing a weakness in the yuan, strength in the yen. to get a sense of how broad the risk-off is, the 10 year treasury yield has dropped as well, as stocks were closed yesterday for martin luther king day. the 10 year treasury yield and also some weakness in u.s. futures. european futures on the back foot as well after losses in europe as well. barrel,low $65 a trading in the game that we saw yesterday on the supply risk in libya and iraq. to get back to our top story, the outbreak of the deadly virus originating in china. reported thatve this respiratory illness has affected 15 health workers, with one critically ill. the world health organization has confirmed people-people transmission, and raised concerns about the possible spread of the vilest, just as millions of people prepare to travel for the lunar new year. meanwhile, president emmanuel macron and donald trump may have agreed to a truce in their dispute over taxes. that means neither fronts on the u.s. will impose inactive tariffs this year. the french president said in a tweet -- great discussion with donald trump we will work together on an agreement to escalation.f president trump replied "excellent," to the post. the i.m.f. is predicting the world economy will strengthen in 2020 but at a slightly weaker pace than anticipated, due to threats in the middle east. one analyst told bloomberg what is driving her forecast. >> the biggest explanation for the fairly small cut that would have is .1% for 2019-2020, and it comes from india. we had significant revisions to growth for india both in 2019 and 2020, and it explains a vast majority of the downward reduction. >> what are the downside risks it to your projection and how likely are we are to see that the trade issue remains important. . >> we have had important reviews. he could have more transit between the u.s. and the european union, u.s.-china trade tensions could return. in addition to those, political risks are an important factor that has been raising. and fairly widespread risk in other countries. haslinda: there seems to be euphoria in the markets. the s&p keeps testing new highs. is there a risk that investors could be disappointed in the months ahead? guest: the euphoria from the market comes from the low interest rate environment. what is driving up the stock prices, very low interest rates is probably the number one factor. the one change we have seen is that three months ago it looked like earnings forecasts or more pessimistic. we are seeing a little more optimism again on the earnings side. we do flag that there are some markets slightly overvalued and some more substantially. if there were a reversal in financial conditions, that could have an impact. right now, we see signs of stabilization in the global economy and for the interest rate environment to stay the same. haslinda: there has been a call for governments to top fiscal measures to drive growth going forward. do you see 2020 being the year where fiscal measures will be governments?y guest:, governments have started implementing fiscal measures ones that have space. the question is how much they should be doing. stabilizing,nt is but there are advanced economies around the world. that need to raise potential growth the way we look at it is that you are able to borrow at negative interest rates, and you have projects that will give you a positive return, this might be the time to do it, in a cost-benefit analysis, not a keynesian argument. that is an argument we still make. we think it is good for countries to prepare, have projects in the pipeline, so if and when there will be a more severe slowdown, if not saying that there will be, but if there was a slowdown, then they can hit the ground running faster than it was in the past. imf chief economist there, speaking to bloomberg at davos. to do we are asking the question for davos on mliv. how will the 2020 u.s. elections affect markets? which out to us and the mliv tv on your bloomberg. coming up, don't miss our interviews with top executives microsoft,he ceos of blackstone and citigroup and we speak to the state bank of india chairman, the reserve bank governor and hong kong chief executive carrie lam, here on bloomberg tv and radio. approach. two-pronged e.u. commissioner president ursula von der leyen tells bloomberg that au needs more power to back their policy. more on that next. this is bloomberg. ♪ >> this is bloomberg daybreak year in europe, i am nejra cehic. au commission president ursula von der leyen has told bloomberg the european union has to be prepared to back up its diplomacy with forks as ministers discussed sending troops to libya. she spoke to francine lacqua exclusively in davos and also addressed the e.u. judging relationship with the u.s.. >> the conference yesterday in berlin was certainly an important step forward because we had around the table not only the five permanent members of the security council, but also the free unions, the arab league, the african union and the european union, and other crucial players. they agreed to keep the cease-fire, to go into a process where we have a 5-5 military and toee negotiation, have a structured process to work for reconciliation, reconstruction, and finding political solution. francine: for europe to have a bigger voice, is it time that army? gets an >> the european union started to build up the european defense in union and the armed forces are put together by the member states, of course, it is important to have a lot of theability between different forces, a common system of procurement, which we are building up now. and lake e.u. needs to have a hard power but always together with diplomacy and crisis prevention. only that together is comprehensive security. francine: what are you expecting from donald trump tomorrow as he addresses the conference. ms. von der leyen: i am glad he is coming. it is good to be in dialogue. that is what davos is there for. i am interested in technology topics as well as trade topics. i am curious to hear. francine: the figure could be terrorists -- do you think there could be tariffs filed against france in europe from the u.s.? ms. von der leyen: i think we should sit down and negotiate, which we certainly will do. we have so much in common. so many fields where we should work together to improve things. is important not only to talk about the trade topics but also about the topics we have, interests in. nejra: that was our exclusive interview with menu au commission president at davos. let's stick with davos. now isa: joining me natixis investment manager, jean y.b . we have seen an increase in risk sentiment in the markets. we have treasuries and the yen up, the yuan the lowest since september. could this potentially be the reason why markets sell off, given the euphoria? jean: one has to look back over the past 12-18 months. the market has been very resilient. given where conditions are today, it is difficult to see one particular event to really trigger or at least prognosticate on the ability of the event to ris trigger risk sentiment. right now we don't expect that. we think the risk-reward trade-off is skewed to the downside. but given to where we are in terms of monetary conditions, the visibility we have, growth may be slower but it is still growth, and it is right now, most regions or major economies are forecasting growth for 2020. but we are not looking at a recession anytime soon, anyway, that is what we think. geopolitics has been mainly the trigger event that could be seen as the one that could shake up sentiment, and we have had many geopolitical considerations over the past several months, and the market has shocked them off. haslinda: but if you take a look at our experience with sars, that really impacted markets globally. what will it take for markets to rethink strategy in asia and their investment in the region? jean: if i knew that -- i think right now, one particular small event that is isolated does not seem it will have your potential -- it will have the potential to derail the markets. from my perspective, what could is a radical change in monetary policy, be it on the back of external eventn that could trigger disruptions. right now we have been talking the china-u.s. trade deal, phase one, as an appeasement in the trade environment. maybe it is just a pause. there will be other, i think, discussions, other mini trade --ls, but i think it is the right now the train is only one way. that could also overtime affect mobile growth and therefore, market sentiment. but right now in 2020, given the environment and visibility we have, i don't see any specific cause of could trigger massive corrections. that could happen. there risk is due to the downside given where valuations are. they are. elevated, a bit somewhat less elevated in european markets and asia than they are in the u.s., but not completely out of sync with the underlying economic fundamentals. haslinda: your business has a very unique model, a network of autonomous boutiques. one of your have affiliates, saw a rash due to bonds. since that incident, are you looking at tightening risk controls? what are you looking at doing? announced some measures that could enhance our risk controls both at the level withe group as a whole and three affiliates. that being said, if i want to go back to h2o for a second, the promise of liquidity was outflows.ite massive since then, there have been inflows coming back to h2o and performance has been good. i will also observed that as you said, our model is unique or at least very differentiated. what has happened at. h2o did not have any impact on the rest of our business. since then, business has been very good. haslinda: should h2o have been allowed to make those investments? jean: this is part of the europe, where the sits toor is allowing u have a pocket of investments in nonlisted assets, i should say. perhaps because the regulator feels that money should go into situations where there can be a development of the economy. haslinda: you are doing an audit of h2o. what has been found so far? jean: we will not come at that, they are still working on the audit. haslinda: when do you expect it to be completed? jean: shortly. this is something that is really for internal purposes, not for the public. announcedtioned, we earlier in november, measures designed to address some of the lessons learned from that episode. haslinda: does this autonomous model make it easier to make acquisitions? clear that some teams hit the glass ceiling at some point. benefits ofe the our model where the retainer their entrepreneurial spirit, their brand, where they are able to be entrepreneurial in many respects, yet have the benefit of scale through our centralized distribution, through our provision of seed and sponsor money to launch new products, our ability to support them in terms of communications, hr, and even with mergers & acquisitions, to bring new teams on. . . our model is very selective lots of teams are knocking on our door. we have the of blue to really be selective and bring into the group affiliates to which we can bring something and which bring something to the group. we are not private equity and asset management. haslinda: fair to say you are looking at acquisitions? jean: as always. haslinda: where, what assets? jean: we have made acquisitions recently, or to seed new money, new teams. areas where we felt we could be more present. that is private debt within the ago.t, a year and a half that was in australia two years seeding and asset management which really brought expertise.p so we want to expand on areas where we have shortcomings, or areas which are very key for our clients, not to play in the private asset space given where yields are, and given the visibility we have on the fact that yields are likely to remain low for a long. ean raby, merci. you.to nejra: coming up, we bring you president donald trump's keynote speech at davos at 10:30 a.m. london time. japan took a better view on the economy today. but how can group strengthened when they say prices will weaken? more on that next. this is bloomberg. ♪ next. this is bloomberg. ♪ ♪ >> this is bloomberg daybreak: europe. i am nejra cehic in london. the bank of japan kept policy unchanged and took a broader view of the economy by raising projections. at the same time, it cut its inflation outlook. bloomberg's annmarie hordern is here with the bloomberg chart that matters. annmarie: they raised their growth projections. a lot of that to do with the fact that shinzo abe unveiled a $120 billion stimulus package. but trimming the inflation forecast, making this 2% goal the boj has as their target ever elusive. economists are scratching your heads and asking the question how do you have growth strengthen when at the same time, prices weaken? the former head of the boj statistics division. he says even their 2021 target of 1.4%, he says it is still so much weak for the bank of japan given that we've had years of massive easing. he says it might be time for them to start rethinking the price target. haslinda: annmarie hordern, thank you so much. now, back to davos where the diversity of views in 2020 will be thrown into sharp relief, as president donald trump and climate change campaigner greta thunberg compete for the spotlight. least 119 billionaires meet in switzerland this week for their annual pilgrimage to the alps. they appear on the guest list, 3000 names representing the roughly 117 countries for the world economic forum in davos. our correspondent joins us. it will be great to see you. donald versus greta thunberg. who are the candidates more excited to hear from? guest: the whole thing about this setup is that greta is speaking before and after president trump. so you could say she has advantage. how are people likely to respond to president trump? on the one hand, everything he has done in said goes against what is happening here in davos in terms of what they are trying dialogue.n terms of what are they trying to do? they are trying to say that companies should be more concerned about stakeholders other than their shareholders, they should be thinking about inequality and climate change. that could lead to more government intervention to do things. remember, trump for the american economy has really lined up on government regulation. privately, i think a lot of davos goers will welcome his message, but outright come out what davos stands for this year does have some tension with trump's message. nejra: and 18% of the sessions this year, which is more than the previous year, will be dedicated to talking about climate change. not only that, the global report for climate changes at. the top there have been a number of conversations from them on this topic already. how will this conversation thrown forward today? guest: people have been responding very well to the climate change conversation, and i think it is because corporate executives feel powered to track changes in where they are investing. with that said, changes cannot come fast enough. greenpeace said that the executives and insurance companies, the banks at davos have $1.4 trillion exposure to fossil fuel companies. blackrock supporters say this is just step one, this is a 50-year journey. so while there are people who want to make change in davos, there is a world outside davos saying how fast is it moving? you can be sure that greta thunberg will be harsh on these executives today. sonali, we are seeing equities tumble and havens rising in asia based on this coronavirus. there has been confirmation of human to human transmission. you could argue that after seven weeks of gains in equities, perhaps people were looking for an exit point. jean raby ceo of natixis investment said, one small isolated event does not have the potential to derail markets at this point. is this likely to cause concern among delegates today? sonali: it will definitely come up, especially because we have delegates from all over the world here. another question that is underpinning what you said, people were worried about this bull market, the short answer is yes. someone from guggenheim partners put out a note last night say that the market is a ponzi scheme fueled by central banks can lead he is worried about the sustainability of these asset prices in the longer term. nejra: thank you so much, great to have you with us with the diary. as she was saying, sustainability is one of the main themes this year. coming up, we speak to the chairman of the green party. coleader, robert habock. i was talking about the market reaction to concerns around the spread of the coronavirus, the hang seng is leading losses in china. treasury markets were closed in the u.s. yesterday. you are seeing this revolver across assets, u.s. and european features are lower. meanwhile, the oil gains are fading in terms of supply risk. this is bloomberg. ♪ sometimes your small screen is your big screen. and with the xfinity stream app, which is free with your service, you can take a spin through on demand shows, or stream live tv. download your dvr'd shows and movies on the fly. even record from right where you are. whether you're travelling around the country or around the house, keep what you watch with you. download the xfinity stream app and watch all the shows you love. mira: good morning from bloomberg's european headquarters in the city of london, i am nejra cehic. this is daybreak europe, and i these other top stories. global stocks drop as investors side concerns over the spread of the coronavirus in china. the yuan weakens and havens rise. ubs misses its full-year profitability market and cuts midterm goals. we will hear from the ceo, hour. ermotti, at this president trump and a minor macron edge towards a tariff truth. they say they will work together on an agreement to avoid tariff escalation. ♪ nejra: asian equity markets in the red. u.s. european features lower. 10 year yields back below the 1.80 handle. meanwhile, the yuan weaker and the yen strengthening. joining us to discuss in bloomberg, juliette saly in singapore and dani berger in london. great to see