Results as leadership speculation swirls. Lets look at how we are positioned on the markets. Australia, looking like a flat open. Moved loweres have on that news from apple. Nikkei futures off about a fifth of 1 . New zealand has been trading for about an hour now. Ospi futures the latest company to announce fallout from the coronavirus. Joining us, mark gurman. Background into this announcement. Apples second revenue adjustment to years in a row. This time it also has to do with china but for a different reason , coronavirus. Billion for the march quarter. They are not saying what the new Revenue Target is. It is very clear that this is happening an impact on them. Sales in china are down dramatically. Two stores, most of which have been closed in february. China is the third biggest market. Second, the iphone is temporarily constrained, meaning they are producing less and selling less in the quarter. Andiphone makes between 50 60 of the revenues depending on which quarter you are looking at. Paul mark, how enduring do we expect this to be for apple . Mark this is largely significant. Underscores apples reliance on china might not be so great. Youre talking about a company that not only relies on china as its thirdbiggest revenue driver, but that is also where 95 of their stuff is made. Paul in terms of where stuff gets made, apple obviously has an enormous supply chain. Is it possible to see what kind of knock on effects this might have . Mark this might push apple to execute their plan to moving more production facilities outside of china. These facilities are not in wuhan specifically. This slower than expected rampup. Paul thanks for joining us. Courset it was of all inspired by the coronavirus. The total number of cases of coronavirus has reached 71,000. Global death toll at 1,775. Tom mackenzie is in beijing and yvonne man is in hong kong. Tom, some broad concerns not with the apple, but supply chain. Can you run through some of the factors . Tom it is interesting that apple talked about those supply chain constraints. Some of that was inevitable. , we tell foxconn we know they told some of their employees not to return to their headquarters in shenzhen. Thatt is not surprising they are struggling to get into the factories. In terms of those store closures, they did reopen apple stores. I went into one. That was the busiest store in that mall but the footprint was still lower than it would be on a normal day because people here are still concerned about going out. More broadly, we have seen a survey out of the American Chambers of commerce in shanghai. They have been talking to members, manufacturers. They say 80 of them dont have enough workers to be back at full capacity. That dovetails with what Bloomberg Economics has been saying, saying the economy was capacitying at 40, 50 last week. The latest Median Survey that thesuggests , down fromwth number the Previous Survey of 5. 9 . Yvonne in Hong Kong Paul it hong kong, not only the coronavirus but also months of clinical protest before that. We are bracing for some pretty grim employment numbers. Yvonne we have seen four straight months of increases, the longest stretch we have seen in a decade. The double whammy. They will not affect the full effect of this coronavirus. Happen fromrted to the coronavirus later. It could get worse. Cathay pacific coming out with another profit warning. First half earnings could be down. They said this was the most challenging Lunar New Year holiday for them. They said they carried nearly 4 fewer passengers in january. That drop is likely to steepen given that they cut capacity to china. Similar declines from the likes of the big three. Thathile, macau announced casinos can reopen this week on thursday after that 15 day shutdown. They said that macau had reported 10 coronavirus cases but they have seen 12 Straight Days of no new infections. Perhaps the shutdown has worked containing this virus there. Paul in the next hour or so, we have become accustomed to receiving updates from china about the spread of the virus. What is the latest . Tom we heard from chinas premier saying that the spread of the virus has weekend and they have avoided an outbreak thanks to these allout control measures. We have seen those restrictions ramped up again in the province of hubei and even here in beijing, where authorities have set anyone returning to the city would have to sell chordate for 14 days. Ne you have had four deaths in a population of 22 million. It looks like chinas leaders are relatively confident they will not see any outbreaks beyond the province of taylor the province of hubei. Perhaps the meeting of chinas annual parliamentary session might be postponed. March 3 is when it normally kicks off. They may now be looking to push that back as a result of concerns about the virus. This is a meeting that normally sets economic targets and policy priorities for the year. The work of government of course will continue. That it hasntnt happened since 1999. Paul about concerns over the fear of spread of the virus is as we have passengers from cruise ships being repatriated. Yvonne the diamond princess. We heard the who, they were a little bit more cautious. They were saying, at this point, when it comes to the risks involving Cruise Travel are still manageable. Carefuld we have to be about suggestions like banning Cruise Travel lower people saying they should steer clear of cruise ships, airports, or certain ethnic groups. Further concern of endangered in terms of the diamond princess. We mentioned the more than 300 american passengers evacuated. 14 of them had tested positive for the coronavirus. They were still allowed to board the flight but were kept in isolation for the whole way back. Paul Tom Mackenzie in beijing and yvonne man in hong kong, thanks so much. Lets check in on the first word news. The u. K. Has launched an unprecedented attack on the aropean union over terms for trade deal. The trade negotiator dismissed the eus position that britain would have to abide by its rules in terms of any trade deal. Toss said the u. K. Had create laws to suit the country, otherwise democracy will be undermined. Support for Prime Minister shinzo abe of japan has fallen in the wake of the coronavirus. Has reported more than 400 cases. 355 of them on board the cruise ship diamond princess. The pole comes as new data shows that japans economy contracted in the last quarter of 2019 but the most in more than five years. 10 bezos has committed billion to combat, change combat climate change. He says the fund will start issuing grants in the coming months. Bezos has been under pressure to balance amazons need for best delivery with the consequences of rapid growth of online shopping. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Keenan. This is bloomberg. Paul still to come, the coronavirus taking a toll on corporate. Apples announcement that it wont reach its Revenue Target. Outbreakgnaling the drop in demand forecast if the coronavirus is not contained. This is bloomberg. Paul lets get to more on that apple news story. The company saying it is not expected to meet its revenue guidance for the quarter. Joining this, the director of research. Thank you for joining us. We were hearing from our Technology Reporter mark gurman at the start of the show, pointing out that with a supply chain the size of apple, this cant come with a huge surprise. I would say less of a surprise and more of a bellwether. What this says to me is other Major Industries down the line will start to announce similar announcements due to running inventories, outsourcing production, having intermediate goods come out of china. This can have a lot of knock on effects. Apple is a case in point. As much as they are trying to shift themselves into a service industry, over 80 of sales are still iphones apple not being able to sell iphones is not the same as mcdonald not being able to sell hamburgers. If youre hungry, you will eat something else. For the iphone, you will probably wait. While to actually destroy consumption. We are not there yet. Paul what about the timing of this announcement . It is a Public Holiday in the u. S. Prices expecting to see in asia . And what will happen when u. S. Markets return to trade . Andy i think the Market Impact will be muddled with the u. S. Being closed today. On the other hand, i think this will have a Material Impact in some parts of asia, in particular for the suppliers that killed intermediate components that build intermediate components that go into iphones. Obviously one of the biggest casualties to date in the corporate world from the coronavirus. What is your assessment of chinas response so far in terms of giving markets confidence . Andy confidence is incredibly important in financial markets. Faithof value is based on that earnings will continue to grow, that a debtor will make payment. To do aaction yesterday little bit of monetary stimulus can go a long way on the confidence side. Impacter way it has an is consumption. There is a fine line between delayed consumption. And it a week or two more, we are starting to talk about destruction of demand, which could have ramifications not just for china but around the world. Have been promised stimulus from china, we have seen some as well. You can be pretty confident that sameebt will be about the will be greater at the end of the year that it was at the start. Andy i think it will make deleveraging a lower priority at least for the first half of the year. The leverage in the system, i worry more about the products that china is a major consumer of and how long they can get away with china not being a major consumer. China be a major importer of energy, natural gas, base metals. When i look around passions of the Global Market that are most sensitive to a worsening of coronavirus. Their supply chain is certainly getting hit. What i worry about the most is producers of base commodities. With china essentially being closed for business at the moment and relatively slow to start up, they are currently in an environment where prices have been low for a long time. They are already down and this could put them out. Paul we have had bhp report today, the mornings might be coming down the track. I think you have to be very prudent with your approach to identifying bargains at the moment. You have to identify quality companies. Bhp is a good example. It is, on the one hand, certainly a producer of iron ore, certainly struggling. Companys a profitable and downright huge. , thanks forght joining us today. Plenty more to come. For its thirdng Major Overhaul in a decade. We will break down what to expect. This is bloomberg. And, you can get a round up of the stories you need to know to get your day going. This edition of daybreak. Bloomberg subscribers can go to dayb on their terminals. You can customize your settings so you only get news on what you care about. This is bloomberg. Hsbc employees from london to hong kong are bracing for major changes, the possibility job cutsr reshuffle, around the globe it is expected to be announced on tuesday. Lets bring in finance reporter emily cap. What are hsbcs problems that the first two did not address . Emily hsbc is facing the same problems as many banks in the developing world. Low interest rates. The bulk of their profits come from asia. It has struggled to really leverage its presence out there to get the levels of growth some investors want to see. There is the normal complaint when a banks growth doesnt deliver about costcutting, etc. We are here for the third time again. Paul potentially a new ceo as well. We have been talking about apple and the impact the coronavirus has had. Emily hsbc headquarters in hong kong. Is a major Profit Center for the bank. Know, hong kong itself is in a technical recession. The coronavirus has really constricted dealmaking. Lookingally going to be to what the cumulative impact will be. Paul in terms of a potential ceo, who are the candidates and why not the caretaker ceo, noel quinn . Emily that is what we will find out today or maybe not find out today. It was clear that noel quinn was the heir apparent. Is the board looking elsewhere . At this stage, it is all speculation. We have heard Different Things from different media sources. I think today we may or may not get more implication more information. Paul we wait and we watch. ,inance reporter emily cadman thank you. We willtwo the ceo be talking to the ceo following the earnings release. French train maker alston has buyed to buy a bardis bambardias rail units. The acquisition is likely to generate as much as 400 Million Euros of savings for alstom over five years and it will make the number two Rail Equipment maker. Rio tinto is cutting price targets after cyclones hampered operations for the second year in a row. They say output will be between 324 and 334 million tons. 2019. Re had records in prices are expected to decline this year. Two groups of private equity firms are through to the next round in the heated takeover battle for thyssenkrupps elevator business. A consortiumle backed by carlisle. Iposenkrupp says an remains an option if no Sale Agreement is agreed. Coming up, how coronavirus is playing out for supply chains. This is bloomberg. Hi were glad you came in, whats on your mind . Can you help keep these guys protected online . Easy, connect to the xfi gateway. What about internet speeds that keep up with my gaming . Lets hook you up with the Fastest Internet from xfinity. What about wireless data options for the family . Of course, you can customize and save. Can you save me from this conversation . That we cant do, but come in and see what we can do. Were here to make life simple. Easy. Awesome. Ask. Shop. Discover. At your local xfinity store today. Paul it is 9 30 a. M. In sydney, the market open 30 minutes away. Futures looking flat at the moment, bhp at the moment, the worlds biggest miner reporting a record dividend, saying the coronavirus is not well contained and bhp would revise expectations. Im paul allen in sydney. Lets check in on first word news with su keenan. Su the iphone making giant apple, the latest company to issue a virus related guidance as the outbreak hits factory output and demand for its product. The company says its facilities resumed operations in china but they are ramping up production more slowly than expected and globalll constrain iphone supply. Apple also said demand for products in china would be affected by store closures and significantly reduce customer interest. Casinos in macau will be able to resume operations thursday, ending two weeks of closures to curb coronavirus. The city reported 10 confirmed cases of the virus but hasnt had any new infections for 12 days. Says thestimates Current Crisis could wipe out 3. 3 billion in cash flow from the citys casino operators. Whether you should be able to take a cruise or not. The World Health Organization says cruise ship travel remains a manageable risk despite the threat of coronavirus, which is seeing around 3000 travelers stranded on two highprofile stricken vessels. , now 328 american passengers have been allowed to leave the diamond princess after just out of yokohama, japan. Global news, 24 hours per day, onair and on quick pick by bloomberg covered by 27 hundred journalists and analysts in 120 countries. This is bloomberg. Thanks. Lets get a quick check on the markets. We saw nikkei futures dipped a little on the news from apple that it is not going to make those march quarter revenue estimates. Futures for seoul and australia looking flat but the market in new zealand powers on, up by 1 after 90 minutes of trading. More on what we should be watching as trading begins in and Andrea Ingles are with me now. Mixed day for stocks but doesnt seem to be a great deal of panic. Thats right. What we have been hearing from investors recently, they are concerned but they are not panicked. The stimulus measures from china have obviously helped and cushioned some of the markets in asia. I think at the moment, investors are looking at this as being manageable. Lack rock coming out black rock coming out saying it will delay an optic in Global Growth but will not delay it. Officials said if you economysars, the global absorb 1015 weeks of impact from the virus. At the moment, they say it is manageable. There is a lot of unknowns. There could be greater downside if this turns out it is not as contained as we think, or it will go on for longer. The apple news will be a focal point for investors and they will look for more companies to come out with this sort of guidance. The u. S. Markets were closed today, apple will be a focus. At this stage investors are concerned but waiting to see how stimulus will play out for the markets. Paul david, i want to get to you. We had that big news of apple today come are you watching for the followed from that . It wasnt completely unexpected. Central banks [indiscernible] liquidity in these markets. Certainly, a confirmation that the corporate fallout that will eventually show up in earnings is probably still a fluid concept now. I bring that up because you mentioned nikkei futures, dollaryen dipping on the back the suppliersnd of apple listed in the asiapacific are, lots of the stocks [indiscernible] areheir respective indices within the top five. Taiwan is a good example. [indiscernible] 9 00 a. M. In tokyo so we get a lot of stocks coming online, as well. When apple says it will miss its guidance, a lot of other companies that depend on apple will likely also come under pressure to beat their targets respectively. Andrea, china has been forthcoming with the stimulus. One beneficiary has been emerging markets. Thats right. Emerging markets have shown quite a bit of resilience and they are more confident as these measures come out of china to stem the virus. Last week they had one of the best weeks this year, stocks, bonds, currencies rose because rising, because of the raw material prices. China is intent to meet its growth targets so that was a positive. Emergingmarket equities