Operation yet. Not much to be disrupted. Romaine lets talk to our reporters. Abigail . I want to check in with this cross asset chart. We have bonds are the winner in pricedtreasury futures slightly above the s p 500 by 50 thes points, but netnet, s p and bonds are higher. Everything else is lower. China is down just slightly in blue. In orange, we have emerging markets, overall taking a bigger hit wn bottom, copper in pink and crude oil in yellow, those commodities that lag risk assets. Tat could be a bearish ell on volatility ahead. The chipmakers are getting hit the hardest, off 1. 5 , relative to the s p 500, but if you look at this chart, i want to put the underperformance of the stock into perspective. Im looking at stocks relative to the s p 500. Over the long term, they are still outperforming at a ratio , so you are still near the 18 year high despite todays underperformance. On a relative basis with the chipmakers holding in there. It was a strong day for real estate stocks amid a week stock market. Stock market. Currently that is earnings driven. They are leading the game today. Of a strongcative earnings season for real estate companies. If you look at the ratio of reits that have beaten analyst estimates on operations and compare that to the number that have missed, that is 12 1. Real estate is outperforming the market strongly, more than 7 , the third best performing group behind on the utilities in tech, so despite this risk on the field to the market we have seen how treasury it is yields are dictating the leadership of the stock market. You can see that 10 year yield creeping down towards record lows, the 30 year falling below 2 , only to basis points off its record low of 1. 9 , so it will be interesting to watch the stock market going forward. If we get a backup in yields, there is the potential for major rotation in the stock market. Romaine thank you. Dropbox, the, fourth adjusted eps . 15 the estimate . 14. They also reported revenue of 446 million, up 19 . Shares of 9 after hours. Guest. Ill with us is our to you. Ome back before the bell, you were talking about the strength in the regional fed survey. View ono get your u. S. H ex it seems to exclude the impact from the coronavirus. Heard calls that 2020 what does the growth picture look like for you for europe were generally . The biggest thing to remember with europe is they have had one of the most savage nonresearch lastetrenchment over the quarters. They have seen an average headwinds of 73 basis points on aggregate years in gdp thanks to inventory contraction. Has gotten elevated or relatively elevated in the 2016 and 2017 acceleration of activity in the eurozone, through 2018 and 2019, they have contracted substantially. That is one of the reason sentiment has been so poor in European Manufacturing because theyre suffering from this brutal inventory cycle. Demand has held up well, like the global auto industry, said demand looks like it isnt a better position than this business flash inventory cycle of the european manufacturers in the broader european economy have gone through. If you look at employment numbers, government spending, some of the investment numbers, it doesnt look like your past weekend as much as growth has slowed down. A lot of this is because of the inventories, and inventories can only slow growth or boost growth for so long before things kick into reverse and go the other way. Youre going to see a substantial reversal of the inventory story in q2 and q3 of 2020. It will probably be a positive contribution from inventories, as in adding 0. 2 , 0. 3 per quarter. That is a lot of the difference over the past year, so it doesnt take up much from other parts of the economy for European Growth to turn around and do better in 2020. This year a big story is we would see a pickup in europe, in asia. Maybe that differential between the growth in the u. S. And overseas will narrow a bit. Is that still the story . Because of the virus, we wont see that in asia. Coming into the year i thought asia would be the big trade story. The euro, i agree with george, but worry about the manufacturing sector. Wherey is in a situation china has said take huawei or else. You still have to deal with the brexit overhang. No one believes working to get a trade deal with u. K. In 10 months. There is a lot of pulling in both directions. Joe george, lets go back to the risk assets in the u. S. , a little surprising that markets are not taking into account more Downside Risks from the virus. You posted this to a lot of people. Posed this to a lot of people. Much do youhow attribute the strength of the Central Banks versus the fundamentals we have seen since the market got into a tear in q4 . Most frustrating things analyzing the interplay between economies, Central Banks and Financial Markets is that it is a reflective series of systems. When one changes, others change, and it is not clear how they should run. Is thaty with the fed basically they thought they could tighten more than they could come up more than was prudent to do, not by a lot, but that for some to cut a couple times in response, and now they have basically said we are pretty comfortable with the wrists as far as inflation goes. We are not going to do anything. Kind of regardless with what goes on everywhere else in the economy. You will see ao, positive response from risk assets because youre getting a green flag bet funding because will stay low and real rates will stay low and inflation needs to run hotter. One of the responses we have seen is the activity in housing. The last two months of housing data, that will keep happening. Ofntually weather because the coronavirus clearing up or whatever transitory issues might come up, we will see the economy respond, then the fed will have to reverse itself as inflation catches up. Othermay need to be factors this year to make sure they get to the core to percent core 2 pce. To the romaine thank you. Great to have you. That does it for the closing bell. Whatd you miss . Is next. We will look at last nightss president ial debate. From new york, this is bloomberg. Romaine live from new york. Joe i am joe weisenthal. Scarlet fu is off. Romaine here is how stocks close. Joe whatd you miss . Romaine Morgan Stanley agrees to buy e trade, the biggest wall Street Acquisition since the financial crisis. The japanese currency posted its biggest twoday decline since 2017. We will discuss. , theoronavirus Impact Airline industry expecting his first annual decline in more than a decade. The ceo of the International Air transport Association Joins us for more. Joe for more on that big wall street deal, lets bring in our guest. It,k market not crazy about Morgan Stanley down 5 . Is there anybody outside the company says this make sense . There are people that believe this makes sense. In the longer turn if youre another revenueal, you havethie stream at a time when they created their targets. They are trading above where they were at the beginning of the year. Doinger, they are still better than where they were before. Their pretax margin targets are 30 . There was some concern about the valuation. E trade had come down when itantly from 2018 was 66 a share. When you consider the premium, 20 plus, for e trade, do you think the returns, the additional customers in the deposits, and whatever exposure this gives them to the future, young people, is that the idea, is that worth it . This is what he had to say about the rationale. We just put at risk 4. 5 months of earnings to buy an Iconic Institution that will improve all financial models. This is a nobrainer from that perspective. , it is not about the stc he longerterm, but more about the valuation, does it make sense. They did pay a lot. It will be accretive for the next six years, so shortterm, a little bit painful. Joe does this marked the beginning of a flurry of deal fintech online bold fonts to these Big Companies . Before this, the big question is why didnt Goldman Sachs do it. They have been trying to build it themselves. That will also take time. Is this an offense if her defense of deal. It can be seen either way. They paid a lot of money to get ahead in an industry that is enormously competitive. Romaine a lot of people flagged this idea that the deposit growth come with idea that Morgan Stanley has been trying to grow that deposit based, but as a percentage, it hasnt gone up. It was 21 . The acquisition brings it up to 26 . When you have longterm rates at 1. 5 , that is pretty good for him. Is that a huge factor with regards to profitability . It is a smaller piece of the pie now. The recent goldman and Morgan Stanley want to change is that it lowers your cost of funding to have deposits. That is one reason they want to do this. You can sell these customers lending products, investment. Aking activity over time romaine when you talk to james about today, did he talk whether he is sticking around . He has been there a while. To do a big acquisition like this, it will take time to get this the regulators, integrated. I assume he has to stick around. Presumably this is his biggest day, so he wants to see this through, but there is a time when he does step down. Aasked whether he would need Wealth Management person to take over. He says that doesnt necessarily need to be the case. Romaine the big deal of the day, Morgan Stanley and e trade. Coming out, sparks flying at last nights u. S. President ial debate has six Democratic Candidates took the stage. That as wellabout as what comes next in the race for the white house. This is bloomberg. He has not managed his city well. Of stuff get a lot done. He had stop and frisk, throwing 5 million black men up against the wall. Sign has had women nondisclosure agreements for Sexual Harassment and gender discrimination in the work race. I dont care how much money anyone has. You have to come forward with your tax returns. Some of theere attacks leveled against michael bloomberg, the founder and owner of this company, last night in las vegas. He was the newcomer on stage. They welcomed him by making him the main target. Joining us for more is our bloomberg political reporter in washington. Michael bloombergs debut to much of the world, and much of his rise has been predicated on this idea he can go onetoone to one with President Trump in the general election, and im curious his performance last night, which is getting criticized this week, weakened that argument going forward, that he is an electable candidate, how much of a probable be that for him in the week ahead . He was the cousin off of her of the debate. When you watch one of those shows and they try to perk it up bringing in a new character . Like those characters, he took public programe after it aired. There are a lot of other factors. That we arething is heading into the nevada caucuses saturday, something people are talking about, and that is hard to do with advertising. You can buy advertising and get thatname out there, but has more influence over their view of things. Money gets you a lot of attention. It got him a lot of attention. States, i those two know Mike Bloomberg himself is not a player in that, what is it exactly that democratic voters are trying to choose in a candidate . Is this someone they want to be trump, or are they putting on specific issues . The two biggest thing voters are looking for, electability is big, but the second thing is somebody they can connect with in some way. The winning candidate tends to be someone who gets people to feel like they get them. Where you are seeing the struggle is the electability question has distracted the candidates themselves from that other question. The very opening salvo in the debate was Bernie Sanders talking about stop and frisk. The way he talked about it is this would depress black voter turnout. Thats not how you talk to black voters. Talk to him, not how it will affect them, and that is where the electability thing is muddled. Aboute have been talking the bloomberg campaign, and that got a lot of fascination because of how much money they are spending and the rise in the polls, but Bernie Sanders is the front runner, and after last there is there any sign is an opportunity for any of the moderates or anyone else to or the fact that other candidates are subdivided puts him in a good position going into super tuesday . Solidnie sanders has a plurality with a quarter of democratic primary voters in the poll so far in the states that are about to vote, so that puts him in the position of a front runner, but that is not a lot. There are a lot of people who support someone else. Is definitely a frontrunner, not a strong frontrunner, but it doesnt really matter. Donald trump did not win a majority in a contest in a republican primary in 2016 until long into the debate season. The primary season. He make continue to rack up delegates and be the front runner unless an alternative emerges. There are so many people jockeying for that with that go on aill have to lucky streak, winning streak. Romaine we will see how far that goes. Lets get a check of the business flash headlines. Theflags tumbled today, Company Reported disappointing fourthquarter results and cut its dividend and warned of lower earnings. Twolso terminated plans for theme marks in china after its global dilemma and partner defaulted on payments. Appleerg has learned that could let users choose thirdparty web browser and mail application as their default option. Apple is responding to criticism it has been providing an unfair advantage. A former tesla engineer is heading up another electric vehicle motors backed by saudi arabias sovereign wealth fund, which invested more than 1 billion. They spoke with broberg about securing more funding. Raise more tod to accelerate growth of the company because we have a wonderful window of opportunity for the next few years. We want to accelerate our growth. We need more capital to do that, and we need to accelerate the growth of sustainable mobility to the world. That premieres friday at 9 00 p. M. From new york, 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. I am Mark Crumpton first word news. Roger stone was sentenced to s and four months in federal prison. November. Victed in the sentence is in line with what the Justice Department acommended after it overruled longer term sought by prosecutors. Roger stone is the six person to be convicted in connection with Robert Muellers russian investigation. Says theresident putin ousting of the countrys Prime Minister and Cabinet Reshuffle that caught many off guard last month was not unexpected. In an interview, he remains vague about the reasons for the move. The reshuffle came hours after he announced a controversial constitutional reform during his annual state of the nation address on january 15. It was widely seen as a strategy for him to stay in power well past the end of his term in 2024. A United Nations spokesman said the world body is very alarmed about the safety and protection of over 3 million civilians in syria. Reportersts to following courts of heavy air strikes and shelling in northwestern syria. A massive crossborder operation in the northwest is currently underway to assist as needs are growing. Trips ofred 27 humanitarian assistance crossed through the crossborder checks last month, compared to 928 trucks in december. This is the largest amount of eight the United Nations has sent across the border in many months since the operation was authorized in 2014. Hostilities are now approaching densely Populated Areas in syria, which have among the highest concentrations of displaced veins in the northwest part of the country and serves as a humanitarian lifeline. Portugals parliament voted today in favor of allowing euthanasia and physicianassisted suicide for terminally ill people. The landmark boat left portugal post to be one of few countries in the world permitting the procedures. The countrys president could still block the legislation. Hundreds of people outside parliament protested the measures. Global news 24 hours a day on air and on quick take by bloomberg powered by more than 2700 journalists and analysts in over than 120 countries. I am Mark Crumpton. This is bloomberg. Currency markets bursting to life, the dollar emerging as the winner, rising by most since september. The yen suffered its biggest 2017 decline going back to joining. Us for more analysis now joining us now for more is our guest. What is behind this . Is this a haven play . The intensity of the inonavirus is concentrated asia and hasnt affected u. S. Activity so much. Residual 20 to 25 . The ecb said they could cut rates and that would help them. There has been a lot of capital , more than japan expected, affecting the yen. Of the yen has gotten a lot peoples attention in the last few days. Is related toat the coronavirus . That is a hard question because it has happened suddenly. There have been some lingering factors, as i mentioned before, some discussion of merger is they and then there coronavirus, so we are not sure which one it is. Romaine is the general issue that these will be temporary . We will see a snap back to normal . Hoping and is praying that will be the outcome. I think what is priced into the market, however painful this isms now, what is priced in somewhere between