Through 1. 55 , is back at 1. 56 . The dollar continues to strengthen as well. We are very close to the 100 mark for the dollar index. The your a particular the euro a particular feature of that. Story. Ple the big hsbc also worth focusing on, down by 6 today. The new strategy doesnt seem to be finding favor with investors. It is around 28 points off the ftse 100. Gives you idea of the skate and weight and of the of hsbc. Coronavirus certainly present when it comes to the coronavirus story. 1. 07 handle we had a one dollar zero seven cents level we had a 1. 07 level if you minutes ago. Vonnie apple saying work is starting to resume around china, but experiencing a slower to normal return a slower return to normal condition than expected. For more, we are joined by steven milunovich, Wolfe Research managing director, over the phone. Almost 50 of factory workers are not at work in china, so this statement, even though it came from apple and is providing a drag on stocks today, could almost have come from any company that has a supply chain very much linked in china. Steven steven i think thats steven i think thats really true. Apple had built in some conservatism, so clearly things are worse than they expected. They are trying to put a spin on things in terms of getting people back to work, talking of perhaps catching up. June is their seasonally weakest revenue quarter, so it gives them a chance to check out. Destocked reaction is quite mild, so i think the market is assuming this is mostly just a deferral of revenue, and that the coronavirus will be in control and a couple months. The bad news is that apple has made a big bet on china. It is 20 of revenue, a huge part of the supply chain. If the virus isnt contained, this is going to continue to be a problem. China and the u. S. Are likely to be at loggerheads. I think the virus could be a problem longer than the market thinks. Vonnie exactly. At what point do Companies Really need to start thinking about moving their supply chain, about putting in contingency plans and using those contingency plans . The chinartunately, trade issues had already gotten Companies Moving out of china to some degree. There are plants going to vietnam and malaysia and so forth. Apple is talking about moving some work. Theres question about some of their new products, likely a new lowend phone, their new 5g phones in the fall, do they have to move that . I think theres no question that this is going to accelerate that move of manufacturing out of china, which i think was going to continue longterm because of that philosophical difference, but now with the health questions, it probably will accelerate. Guy im curious as to your take on china. You are basically saying that apple is overexposed to china. Is that what it boils down to . Steven well, they made a big bet on china. It has worked in their favor historically because they have been one of the few u. S. Companies to really be successful in china, particularly in tech. It has created a supply chain that is unique in the world to build 200 million phones a year. But now we are starting to see the downside of that, the political issues that werent there for a long time, the health issues. So yes, they are overexposed to china. I think the market is assuming they will be able to work through it fine, but that remains to be seen. Guy should companies that have hardware be enjoying a premium to the market, or is this down to the market . We are seeing the supply chain right now, but if you have your someone, you cant have that is going to take over your business. If i am hardware, do i serve premium or discount . Steven generally a discount. It depends what type of hardware. I am thinking the Systems Companies like apple, dell. Those already sell at deep discounts to the market because you have secular trends of software eating hardware, and then the cloud which hurts them. Theres also the semiconductor companies, and that is more of an issue. The semis have seen valuation improvements. A lot of that it deserved because the electronic content of products around the world is rising, so they are. Becoming more important on the so they are becoming more important. On the other hand, they are at an alltime high terms of their valuation to history. Now you have the issue with the far east which is very important to them in terms of supply chains. I think the semis side is a little harder to say. We are actually underweight semis. Longerterm, it is still pretty good. Vonnie is the market a little too optimistic when you think that apple was expected to announce the new, cheaper iphone . Now it is maybe not clear if they were able to do that. And as you say, semis have had an amazing run. There is so much uncertainty, not least the coronavirus, but also the huawei issue. Steven i think the market has been a little bit too optimistic. Behind this is probably the increase in liquidity from central banks. In 2000, i around feel there are excess is here that need to be worked out over time. When you look at tech in general, it has been fairly narrow performance. Has dramatically outperformed the market, but our tech universe has slightly outperformed the markets, so you really need to be in those big cap platform Companies Like apple, microsoft, google, etc. I think that has been reflected in the market. The question is, can they continue to do so well in the face of coronavirus, as well as regulation . Guy just in terms of what you think the size of the revenue hit is going to be, apple was to 70 63 billion billion. Where do you think we are going to come below that figure . Do we have any idea at this stage . Steven it is interesting, the company did not give a new range. Revenue, 20 of the the Production Holding off shipments outside of china. I would guess it is Something Like 6 billion, so a little less than 10 of revenue. The real question is how fast can they make this up. Can they get production back up and running . Will china demand come back . Is it a one to two quarter issue . Is it going to affect the production of some of these new units were not . The market seems to be saying it shouldnt affect it too much, and time will tell. Guy in my being simple a stick about this . If i dont buy a phone this week and i was going to buy one, i will go out in a couple of weeks when the store reopens. Im assuming this demand isnt lost. There probably is some service hit, but i assume people. Steven i think you are. I read a headline that samsung is going to pick up share here. Not really. You are pretty well tied into the apple ecosystem, and they have done a great job with services, the new Video Service and so forth to keep you in that environment. That is why i think the market is saying this is just deferred revenue. If you are not buying a phone today, you are going to buy one in a few months, and it is going to be from apple. Vonnie thank you very much for your time today. Steven milunovich, managing director at Wolfe Research, joining us. We have a massive investing deal with legg mason and franklin getting together. We have with us Martin Gilbert, revolut chairman, on the board of glencore, and much more. First of all, your brought opinion of why we are still at records here, given all of the complex challenges facing companies at a micro level, as well as macro. Martin i think one of the main reasons is there is nowhere else to put your money that offers the same value is equities. We are seeing markets at pretty near record highs, and we will managementhe asset ceos at lower levels than in the past. Vonnie how difficult is it for managers to continue to find new opportunities . Is that primarily why we are seeing such consolidation . Obviously, you were responsible for some of them. Today, a huge deal as well. Martin i think the Asset Management industry is under systemic pressure, which we havent seen for many years. We are seeing feed pressure, and then quite a big move from Public Markets to private hitting thech is long only type of Asset Managers , hence the reason i think we are seeing mergers like the gigantic when we are seeing today, which takes them i think to number six in the world. Theres going to be consolidation, and it is going to be consolidate into either peaks. Firms or the i think they should get earningspershare accretion, but a lot of that comes from costcutting. Hopefully not too much revenue leakage. The industry is not in as good a place as it was a masse, 5, 10 years ago because of unprecedented headwinds we are seeing. Guy can scale protect active managers at this point . Martin i think it can. Consolidation, but obviously, active managers need to perform and beat the index, which has been difficult. Just listening to that interview just before, you can see the effect apple, google, and so on have had on indexes. So active managers, i think they need more normalized markets to outperform. Guy lets talk about what is happening in the market right now. What do you make of the reaction to the coronavirus story . At the moment, there is an assessment that we are going to get a vshaped recovery, it is going to be contained, and if not, we are going to get a whole bunch of central bank liquidity. Is that the right way of looking at it . Martin im not sure about central bank liquidity, but certainly if you are an active equity manager, you should look through the shortterm and look to what the earnings will be next year or the year after. We heard that with the apple story just on. People will buy an apple phone or replace their apple phone in most cases. It may just be put off for six months or three months. So i think we are seeing a bit of that. Vonnie. Terms sorry, vonnie on that note, is china a place where you have to be wary of investing if you are an emergingmarket value trying emergingmarket manager trying to look for value . Martin it has always been something to be wary of in terms of governance, but then we saw good quality there rather than the state owned enterprises. So there is value in china, but again, it is down to picking the right stocks more than just buying the index. Vonnie do you buy that the u. S. And china are veering off in different directions, or is this whole effort of trade renegotiation blocking china from taking a role in the next generation of u. S. Broadband and so on, that that will cause the two countries to move apart . Can they at this point . Martin i am probably more pessimistic on the trade talks than most people. Think the countries are diverging to a certain extent. I think the more the u. S. Nationalistic tendencies, and china as well, are really coming to the fore, so i think it is going to be difficult to get really meaningful trade talks or results from these trade talks. Guy in this scenario, what do we do . At the beginning of this year, everybody thought we were going to be rotating out of the United States and the world was going to look pretty good in 2020. We have now dealt with a situation in iran. We are dealing with the coronavirus. The dollar is going up. U. S. Markets are going up. We are continuing to outperform. Is that the safest place to be right now . Martin you always ignore u. S. Equities at your peril. That is a mistake that most nonus Asset Managers make. One of the reasons i think that active global managers have underperformed because of that. Somethink america, theres really Good Companies here. As Good Companies in emerging markets. Theres still Great Companies in india, china, asia. U. K. Looks good value at the moment. There is good value. Youve just got to look for it. Vonnie we are going to have much more with Martin Gilbert next, this on a day when glencore is writing down coal and oil, freezing share buybacks, and issuing a warning surrounding the coronavirus. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is bloomberg markets. After the fireworks surrounding the departure of the u. K. Chancellor, theres now belief that the u. K. Is about to embark on a very big fiscal easing. The question is how big. We are back with Martin Gilbert, vice of Standard Life aberdeen. Weve got a new chancellor. Are we going to see the taps being open, and how open should they be . Martin i think we are going to see some infrastructure spend. Theres never been a better time for a government to borrow money with these 200 year low interest rates. We have seen them push the noton on highspeed, too, that i would probably be around to see at by the time it is finished. But i would expect to see infrastructure spend, especially towards the north, which is where he really won a lot of these seats, and he wants to repay the voters up there for voting him in. Guy how much divergence do you think we are going to see between the u. K. And the eu rulebooks, and where is that going to leave the city of london . Martin i think the city is in good shape. At least we now have certainty. As you know, the Financial Services sector in london is pretty resourceful. It will do pretty well. Of course, we have all opened maines in europe, and the beneficiary has undoubtedly been dublin, which has just exploded with the number of people and Financial Institutions opening their, relocating there. It will be a mixture of working through these subsidiaries or going direct. As i say, the city will work it out, in my opinion. Vonnie very serious news coming from glencore today, obviously writing down 2. 8 billion worth of assets, freezing buybacks and so on. How will the miners make it through this period . Martin things have changed for miners since the forest fires in australia. Obviously, pressure was building before that. But certainly, we are all having and we at our emissions, at glencore have said we will cut hours by 35 , will cut we are takingo the emission question very seriously now. As to the writedowns, that is really a technical, noncash item, which a lot of the analysts ignore. It is just writing it down in the value we are holding them. So i wouldnt pay too much attention to that. But certainly, what i would say is sentiment has changed, and Companies Like glencore are taking it seriously and moved ahead with our scope three emissions, and then we will obviously go to scope two and scope one. What we sellre , but theal to do cobalt and copper we produce is really for the new world. Vonnie thats sort of the longterm strategic question. In the immediate term, is there trouble very much waiting in the wings for these miners . Bhp also saying today that the next six weeks are going to be crucial, just on the coronavirus alone. Martin i think i would give this shortterm pressure with the copper price falling slightly because, of course, if the factories arent open in china, theres nowhere to buy them. ,ut certainly on energy usage coal, shall we say, it really is the core for most countries baseload, so i wouldnt expect to see too much change. But certainly, the coppers and so on of this world, we are seeing a slight drop in demand. Guy martin, what do you think of esg . Doing well, weve been it for 20 years, and have a very big team of 20 looking after it. Everyone says they do it. It is whether they do it or not youve really got to ask the question. But one things for sure, you will not win a mandate now unless you have an esg capability. I think theres probably been too much emphasis in the past on the governance side of it, and i am glad to see a lot of emphasis moving now to the sustainability , which is, of course, a subset of esg. I think it is heading in the say, direction, and as i we actually do it, which is a big thing. Guy a lot of it is directed by the stock market. That seems to be the channel of choice when it comes to focus on esg. Big funds like yours hold huge quantities of government bonds around the world. Is that another way that ultimately, you think investors could potentially have an impact here . Martin i totally agree. One of the issues to date is we have been concentrating on equities, and really, if we are buildto ask countries to ultra low emission coal fire stations, we really need to put pressure on governments as well to try and encourage them to do so, so i totally agree. I think bonds are going to be another big area of esg. Guy martin, always a pleasure. Thanks for spending time with us today. Martin gilbert, vice chair over at Standard Life aberdeen, we really appreciate it. Thank you. Guy a bit of breaking news. The russian ruble down, rosneft stock trading down come on news that the u. S. Is going to sanction a key rosneft unit as a result of its ties with venezuela. It is a trading unit as rosneft. There has long been annoyance in washington that the russians were providing support for the administration in venezuela, and that was largely achieved by what has been going on in the oil market. Byember that rosneft is run a guy that is incredibly close to Vladimir Putin. Basically, this is a big blow for the kremlin. The rosneft sanctions will stand as a worldwide prohibition. That is the line coming out of u. S. Officials. The u. S. Is confident that the Energy Markets will remain stable as a result, but anyone trading with rosneft runs sanction risks now, this u. S. Official is saying. Basically, this has been down to hasfact that rosneft been propping up Venezuelas Oil sector, and much annoyance about that in washington. I suspect quite a lot of annoyance now in moscow, as well. As i say, Vladimir Putin is very close. Lets figure out what is happening more broadly. Kailey leinz, over to you. Kailey we are off the lows, but still decidedly lower. Other companies warning about the coronavirus, really weighing on sentiment today. The dow is the under performer in the u. S. , down by about 0. 6 . The s p 500 off by about 0. 4 . The nasdaq is down by about 0. 25 . There are some that are offsetting it, making that loss less than you would think considering apple is driving that lower by about 30 points today. Apple is lower by about 2 on that revenue warning, but there are big tech names that are higher today. Among them are microsoft and facebook, higher by about 1 respectively, and also tesla. The stock is up 3. 5 today. It got two price target raises on the street today,