A fairly strong currency move this week. Time now for global exchange. We bring you todays market moving news from all around the world. From hong kong to london, frankfurt and new york come our bloomberg voices are on the ground with this mornings top stories. In asia, the coronavirus continues to spread, with south africa reporting a surge in was also inand that south korea. Joining us is stephen engle. Give us the latest. Stephen you have another revision out of china as they get previously unreported cases out of five different prisons in three provinces. You have those supposedly isolated clusters adding to the total again. They revealed the numbers and then added more. In some cases, more than 200 ands in chengdu province another in hubei province. More provinces could report outbreaks as well in those supposedly isolated ecosystems like prisons. As well, we are seeing additional clusters in other parts of asia, not just china. You are seeing a surge in cases of another 52 in south korea. They have now 208 cases, as well as one death. We are seeing another cluster in the central city where the virus has gone through a religious sect. There is heightened concern in south korea. Japan, they are seeing areas of infection in previously unconnected areas as well. Cases, as well27 as three deaths. Is Economic Impact continuing to rise. We are getting warnings from the japanese government, the to 46. 7. Ing the Economic Outlook not looking great as japan is looking forward to the summer olympics in just a few months. We are also getting news out of germany that the pmi might have been up more than expected. However, export orders plunged more than expected because of the virus outlook. Finally, the International Air Transportation Association is seeing a likelihood of its first big revenue drop in 11 years since the Global Financial crisis because of diminished air travel in asia, and in particular, china. Alix thank you very much. The spread of the coronavirus did spark some Foreign Exchange traders into action, and the dollar emerging as a winner. Laura cooper joins us from london. Not only the dollar, but also yields moving relentlessly lower. Walk us through the reaction since yesterday. Laura i think we are seeing the dollar bid testing those threeyear year highs. Andook at the dxy treasuries continue to grind lower. Yesterday we did see risk off moving into equities. That did pare back in the later part of the session, but we are seeing treasury yields sink to lows like we saw last september. With a risk off day likely today on the back of the spreading coronavirus fears, that certainly looks to put yields under pressure through the session. Particularly as traders pervak positions as traders pare back positions heading into the weekend. I was going to mention the european pmis. We did see this provide a temporary bounce to the euro, so there was some dollar weakness, but ultimately, when we look beyond the headline figure of this up beat report in germany, certainly there are signs of deterioration for the trajectory. Ultimately, we are seeing that the coronavirus supply chain disruptions are underpinning the headline number right now, but we do expect this to turn lower because new export orders actually plunged. That does tend to be quite a prominent leading indicator, so something to watch there as well. Alix thank you very much. We want to stay on that topic, where the eurozone economy shows some virus resilience on the top line, but youve got to dig a little deeper. Euro area pmis unexpectedly accelerated. Paul gordon has coverage of western European Central banks. That is the headline. If you dig a little deeper, walk us through what you have seen. Paul it has been a somewhat difficult report to get to grips with because you have to look at your Previous Report be on the headlines. Numbers out of japan and australia, the idea was that they were dismal, and you would see a dismal picture in europe as well. It hasnt turned out that way. The numbers were strongerthanexpected. Economic activity is at the highest in six months. However, that is largely services. Those are doing at least robustly. Manufacturing continues to face weaknesses. Coronavirus has messed with the report, but the bottomline, the one to remember, is that export orders are down. Expectations for future output are down. Generally, the Manufacturing Sector remains pretty tricky. Coronavirus adding to longstanding structural lows in european manufacturing. The hope was that was bottoming out. That could still happen, but at the moment, uncertainties about the coronavirus remain preeminent. Alix thank you very much. Stay with us because in the next hour, philip lane, ecb executive board member, will be joining us. Now we turn to u. S. Earnings. Deere beating Sales Estimates and left its forecast for the year unchanged. Joining me is Brooke Sutherland of bloomberg opinion. Was this a surprise . Brooke i think it was surprising just that we have not had good news out of deere for quite some time. I should caution that this is not necessarily a return to growth, but at least theres no longer deterioration. That extends to the overall market. They are still looking for Agricultural Equipment sales to be down 5 to 10 globally, but that is not any worse than they expected in november. That includes the forecast for asian Equipment Sales to be flat. It is unclear if they will have to update that given the spread of the coronavirus. Right now, they are seeing at least an uptick in former confidence. They are seeing people start to come back to the market again. Whether or not that holds will be a question for the call. Construction industry are still seeing pretty broadbased weakness, looking for a 10 to 15 decline in that market globally. That is the same as november, that they are implement involuntary layoffs there and cutting the operating profit for that division. Alix thank you very much. Finally, we end with the race for the white house. Bernie sanders remains the candidate to beat in tomorrows nevada caucuses. David westin has more. Where do we stand . David tomorrow is another day in the quest for the democrat nomination for president as we had to caucuses in nevada. Bernie sanders now has a athibitive lead in the polls 30 , joe biden number two at 16. Unionized allele it is a heavily unionized state, and one of the biggest unions in the state is not happy with Bernie Sanders Health Care Plan because it would eliminate jobs in the state. We had to a debate again in theh carolina, followed by south carlotta primary, and super tuesday after that. The former head of the dnc said, given the way the rules work and where polling is right now, you get a Bernie Sanders coming out of super tuesday with Something Like 200 delegates advantage leaning towards milwaukee, so it raises the specter of whether anyone can slow down Bernie Sanders. That is the story right now in the race for president. Alix wonderful stuff. Thank you so much. A couple of other stories we are watching today. In china, the coronavirus has kept consumers away from car dealerships. Auto sales plunging 92 in the first two weeks of february. Even before the outbreak, auto sales in china were headed for an unprecedented third street annual decline due to a slowing economy, as well as trade tensions. The Chinese Government says it will come up with some measures to stabilize sales to reduce the impact of the epidemic. Meanwhile, the virus is also hitting the airline industry. You have a trade Group Warning that global traffic for this year will drop for the First Time Since 2009. Thousands of flights have already been canceled because of the coronavirus outbreak in china, so two really stark warnings when it comes to transportation. Coming up on the program, more of your morning trade and analysis of the markets in todays first take. This is bloomberg. Alix time now for bloomberg first take. We give you the news, you get of thede and analysis markets. Joining b is vincent cignarella, voice of bloombergs micro squawk, gina martin adams, bloomberg chief equity strategist, and joining us is david lebovitz, jp morgan Investment Management bubble market strategist. You could have occurred lows on the 30 year, and you still have dollaryen bouncing off of 112. Vincent what we are seeing is some good buying demand in this area, up to about 112. 20. Nappanees banks on the offer between 112. 20 of two about 112. 40. They are short a lot of calls at to blowif this starts out, we could see a big run. Folks are looking at when 15. Alix and that would happen looking at 115. Alix and that would happen fairly quickly. This is also crazy because you have 115, and then you have the dollar stronger, and then yields at record low on the 30 year. That has to mean something for equities. Is most think what interesting about equities is it feels like the rally has been technical in nature. If you look at call premiums data,paid, positioning everything is elevated, so it feels like this bull has momentum. If you look at where the 30 year is, where the 10year is, it really feels like this is evolving into a tale of two markets to an extent, with equities pushing higher, but obviously theres a risk off trade also happening at the same juncture. Gina i think if you look at the dynamics of what has driven the equity market higher, it is tech and utilities. Youve got this polar opposite story. Weve had billions in inflows into low vol this year. So theres very clearly this defensive trade underlying the equity market that is very consistent with what is happening in the 30 year, with what is happening in gold. Theres not a lot of risk tolerance out there despite the fact that stocks are at new highs. When utilities is leading that roar, it says something. On the other hand, you have tech , and tech is very vulnerable to what happens with the yen. If the yen breaks out higher, you will see that impact tech stocks. I would expect in the equity market, youre going to see a lot of churning, a lot of rotation. You got this big defensive trade telling you investors are not risk on. They are actually still risk off, but theyve got to find somewhere to put their own capital. They are struggling to find places, and the equity market is, by default, one of those places. David if you look at the market cap of the s p 500, 60 of that index is gross and defenses. Coming back to some of the technical aspects, everybody who is passive and buying the index, that is exactly what they are buying. Vincent speaking of technicals, gold is really at an Inflection Point. Look 1635 level, if you , it is right at this level where if it doesnt hold, you are going to see a big blow to the topside and you may get that goldman call of 1800. With that, you will probably see level,yen at that 115 and i dont know how equities hold up, to be honest. David you can talk about gold in a portfolio given where rates are, and part of what is also driving this narrative is the realization that if you are yearng paid 1. 6 on the 10 , you are losing money in real terms over time, so people need to think how they play defense within their portfolios. Clearly, bringing things like is underlying that risk off exposure they have. Alix i dont know what is different in the story we are talking about that wasnt here six months ago. Vincent it is literally just the virus. We were talking about it offcamera. When you really look at it, it is more hype than reality. We dont know. You have to look at what is the mortality rate over the people that have been infected. I imagine it is not a terribly high number. We lose more people to the common flu. Alix it is much less than sars. Vincent until this, and hopefully it never does come a reach a population that can not really handle it because of the way their hygiene levels are, if you will, and it really spreads, it is nothing more than really a controlled virus. Alix can i offer another option . I was reading this article that talked about how fiscal stimulus has been coming on from other countries. Is that explain the dynamic we are seeing, where you do have money into the bond market in gold because you have countries moving more into fiscal and expanding their budgets . That is also able to fuel the equity rally. Is it that simple . David fairpoint, and i would take it one step further. If you look at what is happening within the u. S. Political sphere , that is usually a point of concern for investors and everybody gets uncomfortable, but it looks like regardless of who gets in the white house, the fiscal taps are going to be open. So theres expectation of fiscal showing up not just in the rest of the world, but the u. S. As well, and that is one of the reasons why equities continue to trend higher. Gina i think wouldve the biggest changes has been liquidity and Monetary Policy. If you flashback to six months ago, the fed Balance Sheet just started expanding. You didnt have all of this ,rovision liquidity coming on and Monetary Policy is significantly more meaningful for asset prices than fiscal policy. Maybe there is anticipation that we have ongoing continuation of fiscal policy, but it is a big maybe, and i dont think it drives allocation. Monetary policy does. Vincent to that point, china has definitely been driving it. We talked about that months ago, how everybody is looking at the fed. The pboc was probably going to be laced to watch. They takees of calm, that all away. It is not like the fed. They do that very quickly. So if this situation does pass, watch the pboc take that liquidity, and the market will have to find another stimulator. David the question is, what does the fed do . Thefed is signaling that Asset Program will probably one its course will probably run its course. That is partially would this ise easing partially what encourages me to lean into fiscal. That a lot of stimulus will be pulled not only by the pboc, but by the fed. Alix what does this all due to volatility . I will get back to the dollar with all of this. This is by far my favorite chart, volatility for fx, for treasuries, as well as equities. Ill of this is happening, volatility is not picking up. If we are seeing structurally lower vol forever, and the dollar is now going to be seen as the carry trade because it is higheryielding that anything else like, what . Vincent nothing lasts forever, and neither does low volatility. It will come back. Alix how do you know . Vincent because ive been around longer than all of you. Thats how. [laughter] vincent because i remember Mortgage Rates at 78 . All of this will turn, and we will come full circle again. Not to the levels we probably saw in the 1980s, but we will not stay at 1. 5 , 1. 6 forever, nor will volatility stay low forever. There will be points down the road where structurally, things change. Whether get an exorbitant amount of fiscal stimulus, which will wake up volatility and yields, and that will change. David the question is really about inflation. Central banks have been able to remain accommodative because there is no inflation. The big concern, to bring it back to what we have been talking to clients about, is what happens if that stockbond correlation that has been negative for the past 25 years flips back into positive territory like in the late 1980s and early 1990s. If the feds hiking rates because they see signs of inflation, the stock market is going to like that and is going to pull structural volatility back into this market. Struggle to hand, i see how Interest Rates can move above the pace of nominal gdp from a debt service standpoint. In the interim, i think there is to foot on volatility by policymakers, but inflation would be the key variable to watch. Gina i totally agree. I think you can have inflation start in a couple of ways. Man driven inflation is very good for equities over time. Supply driven inflation, probably due to some kind of policy error, is not good. I think you want to Pay Attention to what is driving that change, but a shift may change a lot of the dynamic we have become very accustomed to in the equity market, especially over the last 10 years. Alix which of feels like we have been waiting for for the last 10 years. Gina martin adams and vincent cignarella, thanks a lot. David lebovitz of jp morgan Asset Management will be sticking with me. For all of the charts we use, go to gtv under terminal. Browse the features, check it out. This is bloomberg. Viviana this is bloomberg daybreak. We begin with wells fargo. Bloomberg has learned it is set to pay billions to end investigations into consumer abuses. Officials announced the bank will be fined 3 billion to put in and to scandals that has led to billions of dollars in operating losses. Now to goldman sachs, preparing for more unexpected legal costs. The firm bumping up the number from 2. 9 billion last fall to 3. 3 billion. The firm didnt identify the cases involved. It has been trying to rake free of criminal probes related to the malaysian 1mdb scandal that has led to three goldman bankers barred from the industry. Tesla got the legal goahead to resume clearing for a forest in germany. Blocked then carmaker from building a factory there. It avoids a lengthy delay for the project. Alix if you want to learn more about tesla, tonight at 9 00 p. M. , you can tune into my new special, evs on the brink of change. Evs have been around for a long time, but this really feels like an Inflection Point for when they start taking over. What is going to stand in their way, and if you are a car company, how do you pivot while staying profitable with something everyone has been successful with . Coming, Nevada Democrats convene for their caucus tomorrow. More about hedging for political risk, next. This is bloomberg. Alix this is bloomberg daybreak. In the markets, this feels like a typical friday. Equities selling off as we tend to see into the weekend, although in europe, you are still having them hanging onto a rally. Travel and leisure stocks are up by 0. 3 percent, despite the fact that airlines could be headed for the first down year in terms of passenger sales since 2009. In other Asset Classes, two things to watch. One is what happens to the dollar rally and dollaryen. We are right around a key level. Do we actually push above that . Also, what is happening in the bond market. Three months 10 year is now at negative eight basis points, but the 30 year on a closing basis is sitting at a record low. Inactually see record lows the 30 year, and that means for growth. We will tackle that over the next hour and a half. Something also to consider is politics. The Nevada Democratic caucus takes place tomorrow. Bernie sanders remains a candidate to beat. Joining me as david westin. David lebovitz is still with me as well. No doubt this is the talk of your program. What were some of your takeaways . W the race has evolved in an interesting way, where it is basically Bernie Sanders versus the rest of the field. One of the interesting things is why the market doesnt react more to that possibility. You would think, given some of his policies, i think its been most progressive, some say radical, of any of the candidates. You would think the markets would be nervous about that. , anddont think it will be they think that he wont be about wont be able to be elected, or if he gets elected, he wont be able to do it, or just at the markets like the idea of spending a lot of money. Alix it also seems like, to your point, markets are looking through some of that political risk. Tech regulation coming down, that is clearly what is happening in europe. You can see the u. S. Catching up, not priced into that. Much on thewas very agenda this week come up with Mark Zuckerberg went to brussels going to and saying, please regulate me. Had ian bremmer on from Eurasia Group and asked him about what is going on with tech regulation in europe. This is part of what he said. When we talk about europe, its superpower is regulation. They have the Worlds Largest carbon market. Companies want in, and they are deeply effective at being able to tip those roles and others want to align with them. Unfortunately, they dont have companies. They are not creating the next round of googles and amazons and facebooks. I see the germans and french saying even though we have this strong regulatory power, we also want to build our own national champions, and i think number one that has the potential to erode regulatory capacity globally, and also it will delay the ability of the europeans to productiveon and be while not building up their own companies. This wasi thought really interesting because we hear a lot out of brussels about regulating more, but germany and france might have a different view. France said we have to compete with the chinese, so it will be interesting to see the tension between the Member States that we have really got to encourage our industries, and brussels saying we want to hold back. David l i would come back to what you were saying earlier, and that i want to move on to the tech side of things. I think part of the reason why the market continues to trend higher despite standards despite sanders making forward progress in the polls is regardless of who winds up in the white house, it looks they are going to want to spend more money. If you had a fed which is going to pivot towards being more hawkish anytime soon, fiscal policy is going to remain expansionary and perhaps accelerate, i think underlying that, theres explicit bet that Congress Remains divided. So the really polarizing stuff some of the candidates have been proposing remains on the sidelines and doesnt come to fruition. It can be a bit of a big bet. We will have to see. But time will certainly tell. On the regulatory front, this is something we have been talking about for quite some time. I think it is one of the biggest risks to the Technology Sector because once you start regulating something in one part of the world, history has shown us that tends to spread and encompass broader geographies. When we think about tech valuations, wheezing about opportunities in the Technology Sector, we are not running away from that. We have seen regulation manifest in the past. What we really want to do is understand the earnings streaks of these companies so we can profit with people to to impact would be. David w the earnings stream of the thingsone we have underestimated is the extent of barter intact. We tend to look in dollars and cents, but a lot of it is you give me your data, but theres valuation there. How do you regulate barter as opposed to just dollars and cents . Most antitrust authorities are used to dollars, not barter. Bigd l and a lot of the players utilize those smaller, upandcoming companies. So if the big guys start to get regulated, they need to change the way they do their business. Just a risk if you are a tech investor, particularly in the public markets, but also in the private market. Alix and none of that is reflected in the broader valuation. Theres a man who could help us , bloombergs senior analyst. Citigroup had a great note out yesterday saying that the and we could scroll the prompter for me. There we go. [laughter] bizarre crossover is a benchmark for a performance and growth strategies. It all feels very 1990s, and we know what happened after that. You have done some work on it. Walk us through it. Reporter yes, what we try to do is understand the perception of these Companies Growth and fundamentals, and what the reality turned out to be. So we went back five years and looked at faang stocks and a few more. We try to understand the expectation for these companies five years ago. What did they think amazon could do in 2020 . Generates expected to 22 billion. The reality is they are on track to build over 50 billion. The trend is across as well. What we have seen is if reality is significantly better than perception, multiples tend to hold high levels for a long time , and outperformance is driven by the underlying fundamentals. If you look at the future from the same lens, what is the perception right now, it goes back to the discussants on regulations to the discussions ons regulations. To the discussions on regulations. It is telling you that Regulatory Impact has weighed on expectations. It has weighed on performance of internet companies. Past year, the internet sector has been a laggard, not the leader. Delta, what we are trying to understand is what is the perception of these companies right now, and can they really outperform in the next five years . For amazon, i think the surprises going to come from the Advertising Division in general. Advertising is aws for amazon. We are not completely connecture in that phenomenon yet. For google, it is going to be the cloud. For facebook, regulations is bound to push facebook into diversified business. Facebook future profits need to come less from user generated content. Theres a push towards ecommerce, a push towards augmented reality. What we have seen this year, especially heading into elections, youre seeing that facebook has been very cautious in rolling out these products. They pulled off the dating app in europe because of relative thats because of regulatory concerns. So they are delaying product launches, and i think the new term is risky because of that, but longerterm, theres diversification that can lead to the outperformance. David l i would add, i think it is interesting to think about expectations versus reality because fundamentally, that is the business of investing. Something else we have thought a lot about with respect to technology rations is more on the accounting side of things. A lot of these companies have Robust Research and develop and, and from a cap standpoint, that gets expensive. If a lot of these companies are creating a piece of software, that hits net income in a given quarter. It doesnt show up as an asset on their Balance Sheet. There are more and poor people talking about this idea that when you look at some of these valuations, perhaps they are and maybe too high, there is more value in growth then the investor can necessarily identify. The accounting side, we saw amazon squeezing more out of their servers, so as avn becomes a big worry for investors, we have seen they heat, so that gives them fuel to fight with microsoft and google so they can compete without pricing margins. I take it completely that accounting needs to be considered. David w i wonder if all of the accounting in different ways to look at this are within an entirely different business. That is to say, historically, as you get bigger and bigger, at some point theres a law of diminishing returns. They limit for google or amazon seems to be unlimited. The bigger it gets, the easier it gets. The networkon in effect itself that doesnt get reflected in the valuation. Da absolutely. There are about 3 billion people online, and this crowd is driving 3 trillion of spending across ecommerce, advertising. As products come online, they get a few spent they get a few cents in market value as well. I think these companies can grow at 15 for the next five years. They can double their revenues even from this point because 80 of that spending we talked about is still offline. I think that trend will continue, and the scale really helps them capture the incremental dollar. So every hundred dollar increase is spending at 300 billion for the industry, and the scale allows these companies to actually capture most of it. David w this is another industry where that promenade where that phenomenon would and reverse tendencies. Jitenda and in that note, i think regulations work in the favor of largecap companies. The maximum is not the problem. The problem is the minimum. It is millions of dollars, so its a start up is knowing after these companies, they cant afford the compliance costs. Fined, is a big deal. David w and cynical people think that is why mark sucker bird went to brussels. Mark zuckerberg went to brussels. It seems like no matter what, you have to be in these names. David l i think the regulatory issue is not going away. That is something that is just going to be on the horizon for the foreseeable future. Two key things about the tech sector today. We are going to see more automation. Not all tech is created equal, and we would lean more into software and services as opposed to semis, but i think there is opportunity intact broadly. The second thing, bring you get back to the quote from citi that you kicked off the segment with. Are we in the late 1990s . Should we be running in the opposite direction . When you look at the contribution to earnings of these sectors relative to their market cap, back in the late 1990s, there were no earnings, and tech was a huge part of the s p 500. Today the two rna much more oneonone relationship, so even if they dont generate what people are expecting, they still have fairly robust earnings screens. When we look at the broad opportunity set, everybody wants and so for growth and to theios, if you get backdrop of very low yields, you need to know the backups. Alix really good conversation. David lebovitz of jp morgan , jitenda, management david westin, thank you so much. I want to give an update on business headlines outside the on headlines outside the business world. Vienna hurtado joins us with first word news. Viviana negotiators reaching an understanding on reducing violence in afghanistan. The fighting there has turned into the u. S. s longest running war. Once the agreement is signed, talks will start between the taliban and topics kenaston nd afghanistan. U. S. Intelligence agencies are isning that russia attempting to turn the election for trump. South korea now has more than 200 coronavirus cases. Of thetill the center crisis, roughly 70 5000 infections reported there. If they knew number of cases is declining. The new number of cases is declining. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Viviana hurtado. Alix thanks so much. Coming up, wells fargo said to be ready to pay 3 billion to settle investigations into consumer abuses. That is really taking a toll on the stock. If you have a bloomberg terminal, check out tv. Watch us online, check out charts and graphics, go through anything you may have missed. This is bloomberg. Viviana this is bloomberg daybreak. Xeroxsg to block hostile takeover bid. Says the plan would encourage xerox or any other potential buyers to negotiate with the board. Now to more problems with boeing and grounded 737 max. The company failing to fix a warning light in the planes cockpit. The warning was cited as a factor in the crash of the 77 max. The 737 max. The faa isnt commenting. Neither is boeing. Tmobile and sprint taking a key step towards completing their merger. Tmobile shareholders will now get more shares of sprint for each of their shares. Sprint performance has deteriorated since the deal was announced in 2018. That has added pressure to redraw the agreement. Im to vienna hurtado. That is your Bloomberg Business flash. Alix we turn now to wall street beat. First up, wells fargo set to pay up. The bank said to be paying about 3 billion to settle federal investigations of consumer abuses. Then james gorman says they are just jealous. Morgan stanleys ceo says wall street haters are jealous of the companys 13 billion purchase of e trade. Sonsoftbank ceo masayoshi heads to the u. S. To talk about the fund after the wework implosion. Basak. Me is sonali abigail sofer sonali so for wells fargo, this is according to a report from the new york times. It is very interesting, given that charlie scharf, the new ceo, is only a few months into the job. 3 billion sounds big, but it is a pretty quick resolution to when he got here. His initial project is really improving relationships with regulators, and ultimately getting rid of that Federal Reserve asset cap so they can grow again. Alix and what about goldman . We got a headline that crossed earlier this morning. Sonali they increased their legal reserves, so about 400 million greater. We are waiting for those 1mdb resolutions as well. We dont know how much this will cost them. We have seen both of these banks have their earnings take a hit. For both of these firms, to get past these issues as quick as possible would be a huge boon. Alix lets get to james gorman. He spoke to him yesterday. My favorite soundbite was this one. You spoke to him yesterday. My favorite soundbite with this one. James they are jealous. [laughter] james they dont bother me at all. Its about four and a half months of earnings. We just put at risk for and a half months of last years earnings to an Iconic Institution with 600 billion dollars of assets, 300 billion of revenues. It is going to improve all of our financial models. It is a nobrainer from that perspective. Alix ive never same him ive never seen him make a joke like that. Sonali he can be pretty quickly, but the funny thing about that, i asked him what he would say to people who think you are overpaying. The stock only fell 4 to 5 . Thats as much as it was hauled may be over one bad earning. So from now to the end of the year as the deal closes come on now until the next three years, thats how long it will take for the deal to be accretive, is really the benchmarks we will be looking for. Alix lets wrap it up with mustier she son coming to new k with mustier she son with Masayoshi Son coming to new york. Sonali they are still talking about this vision fund, and they know they will not raise as much as they initially wanted. Remover that report that talked about them creating some sort of hedge fundlike vehicle. Im sure some of the bankers will be in those meetings as well. Hes worked closely with goldman and others. Jp morgan had a huge place in the wework story. Dash. Worked with door alix sonali basak, thank you very much. And in your off the beaten street, limitededition oreos. Youve probably heard of supreme, but it is not all hoodies and tshirts. They teamed up with nabisco for a version of the cookie dyed red , with the logo stamped on going and it is now for 15,000 on ebay. Talk about a return on your investment. They dont even look that good. I know, im sorry. I am clearly not a skater. Coming up, could gold falter, or do we get to 1800 . If you are jumping into your car, tune into Bloomberg Radio on sirius xm channel 119 and on the Bloomberg Business app. This is bloomberg. Alix time now for traders take. Joining me is vincent cignarella. You can listen to vincent on the bloomberg if you type in squa. Vincent its been a while since we talked about elliott waves. Theres two things about this. It is really at an Inflection Point. We just completed the fifth wave , and what that suggests is that this is supposed to be over. It also comes in at about the same level as where you would see a standard deviation from the average closing price. 1635 and 1640, normally you would say faded. We are at Different Levels with what everyone is concerned about. I think gold could be the canary in the coal mine. If this level breaks, i think all hell is going to break loose in the risk asset world. Again breaking further, and we may finally see the fade in equities we havent seen yet. Alix thats a protection for you. Thanks very much. Coming up on the program, philip economist and executive board member, will be joining us. 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 dvrd shows and movies on the fly. Even record from right where you are. Whether youre 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. Alix welcome to bloomberg this friday, february 21. Im alix steel. Lets take it from the top. We think weve lost upwards of 200,000 barrels of demand. Alix trying to define the demand structure and from the coronavirus while industry creeks under the pressure. In the Economic Impact is continuing to rise. We are getting warnings from the japanese government as well. Factory pmi dropping considerably. Alix infections in china now 75,000, and increasing in south korea and japan. In strongeromes than anticipated, while under the surface, cracks appear. We did see a temporary bounce to the euro, so some dollar weakness there, but when we look beyond the headline figure of this upbeat report in germany, certainly there are signs of deterioration for the trajectory. In australiaturing and japan came in light. Betterthanexpected quarterly results. It is surprising given the fact that we have not had good news out of deere in quite some time. It is not necessarily a return to growth, but at least there is no longer deterioration. Alix early signs of stabilization in the u. S. Farm sector countered a construction slowdown. In the markets, at least in the u. S. , still a bit of risk off. Not a lot of positions are usually taken into weekends. Eurodollar a little bit higher at 1. 07, but it has been a huge rally for the dollar. At one point, the dollar index at its highest levels since 2017. The real movies in the bond market. If we get the intraday low, that will be something as well. Putting me for the hour is Julia Coronado, Macropolicy Perspectives founder and president. I feel like it is literally the same conversation we had last time, but now all the moves are more. We are almost at record low in the 30 year. Julia very different signals coming from the bond market and the equity market. The idea is if all of this proves to be transitory, we should have a period of weak data and then sail right back. We were starting to see some stabilization in the Manufacturing Sector globally, so the equity market may be clinging to that hope, and the bond market is worried a little bit more. Alix what are your clients talking about the most . Julia fed rate cuts, are they going to happen. That is still a big question. The pricing has gone back and forth. There are cuts priced. The interviews you have done they are notcials, blessing that expectation. They are not denying it if the coronavirus gets bad. They are willing to take some policy action. But there is a debate as to whether, you know, how low the bar is for a cut right now. Alix lets talk to the guy who did all those interviews. Joining us now is michael mckee, bloombergs International Economics and policy correspondent. He is joined by the plain, ecb economist and management board. Michael thank you for joining us this morning. Lets talk about the issue all investors are talking about, and that is the coronavirus. You said that europe could take a severe shortterm hit, but can you be any more specific about what you see happening . Philip like everyone else, i think the base case is vshaped. Number one, lets see how quickly the spread of the virus is contained. The sooner that happens, the more confident that this will be something that is mostly in quarter one, maybe spilling over into quarter two. But our main focus is on yearend, going into next year in the hereafter. For us as Monetary Policymakers, if this is indeed contained, even if there is a hit in terms 2020, ifitial weeks of the recovery happens as we expect in the mediumterm policy challenge remains something that is not going to change our base case. But is definitely a Downside Risk until we see the containment, until we see the recovery after that. We have to keep a close eye. Michael one of the issues is this could be a supply chain disruption. Monetary policy cant fix that. What are the odds that the ecb would take any action . Philip this goes back to any supply chain disruption. If it is a matter of weeks, it doesnt tame the median it doesnt change the mediumterm path for the economy. We think the main mechanism is what hasemand, with been necessary to contain the virus, the spending levels in china are not what they would have been. The supply chain scenario does exist,. Does exist. We are tracking it. So long as these remain temporary in nature, it is not a dramatic issue for the horizon. Michael the january policy Meeting Minutes released yesterday showed the covering positive,rning although you werent signaling to much optimism. Do you feel vindicated by this black swan event . Hilip no, of course really, the issue is we have an economy that is growing because even though the manufacturing challenges, lot of overall demand has been significant, and it continues to be. What we have is a scenario where the economy is going to grow one point something this year, which is modest, but not a scenario where we see an accelerating problem. The fact where we have seen stabilization in manufacturing, the fact where Services Continue to grow gives a lot of reinsurance gives a lot of reassurance that we have an economy that is growing. Continued, we do see wage growth. Signs of continued gradual improvement in inflation that remain something we can rely on. Michael you are three weeks away from publishing your new quarterly projections. Do these developments suggest we will see any change . Philip we are right in the middle of the forecast exercise, so the big headache right now is the virus. But in the base case where it is concentrated in the first weeks and months of 2020, this does not particularly have implications for the key mediumterm element of our drivest, which is what our Monetary Policy assessment. The fact that the pmis this morning and other indicators are coming in broadly in line with forecastxpected, the is not closed yet, but most of what we see is in line with how we saw the world in the last forecast in december. Michael a big discussion in the United States from the Federal Reserve is whether the u. S. Is in secular stagnation, an excess of savings overinvestment. I wonder if, given europes numbers, you would say that europe is in the same position. Philip of course, this is a global conversation. There may well be some differences across countries, but the Global Financial system is essentially integrated. Theres no doubt about it. I am not so sure we need to focus on that particular interpretation, but what we agree upon is the Underlying Forces of how much people want to invest versus how much people want to save. I seen a big reduction in the ,nderlying real Interest Rates the Interest Rates that would match desired saving, and that has major implications for us, for the fed, for every central bank. Michael you and the governing council have said that means that the central bank cant be the only game in town anymore, that you need fiscal help. But what if that doesnt come . The germans are very adamant they arent spending. Philip after many years of austerity, and we project forward, there has been a turn to fiscal policy making a positive contribution. A mild amount of easing is helpful in our forecast now of the growing economy that is supported by fiscal policy. Maybe the second point i would like to make on this, theres no doubt about it, and a low interest weight world Interest Rate world, the is that we do not say that fiscal policy is required for inflation to return to target. What we do say as we think the path will be quicker. That we remain confident that operate morecy may gradually in this world of low Interest Rates, but we see Monetary Policy being effective and capable of inflation returning to target. Michael one suggestion has been a greater use of tltros because you can set two Interest Rates and help savers at the same time as you help borrowers. Philip im aware of that line of research. All of the time, we are reviewing our instruments, what is effective, what we can learn. Think with tltros, theres always interesting to mentions to that. Say isome of what you you have to interpret tltros in combination with the Interest Rate policy and asset purchases. Get thewe are always to efficiency of these instruments and tweaks to these instruments. Ashael you have started, the fed has, a wideranging strategic review. Is a review of your target. Some have come out in favor of a tolerance ban. What are your thoughts on that, not just day points forecast . Philip keep an open mind. At this point in the early weeks of review, essentially the machinery of the review is going to really address all of this. Fromomc minutes this week manyry, that range has different interpretations. , we willthis review look at this. There are pros and cons. I dont want to preempt this. Michael sure. Philip it would not be correct. We have to keep an open mind. What i would say, everyone in this game of Monetary Policy needs to be sufficiently humble to recognize, lets let the staff work on this, all of the voices, and then we will come to a decision. Michael the ecb considers Inflation Expectations to be one of the key determinants of future prices. Your researchers published a paper this week that suggested that while Consumers Trust you to keep inflation low, they dont necessarily trust you to get inflation up. How do you get around that credibility issue . Philip my view is very simple. The only way we deliver that credibility is by getting inflation up. I am sympathetic that this is a situation which has few examples in previous history. For ahard for anyone, professional economist, for financial traders, let alone people who have spent their lives to understand the connections between the Monetary Policy moves we make and inflation moving over time. See,i will say, what we do especially in recent months, is outlying measures. The speed with which we get to the target has to be more gradual than if we had started at a different level of Interest Rates. Way to reallyly make a dent in the issue of credibility is to deliver. Really a separate topic. We have to deliver, and we have to be tear in communicating as much as we can we have to be clear in communicating as much as we can. Michael given your ratesetting now and the policy you have adopted, can you do more . Do you need to do more to make this happen faster, or are you basically at the limit of monetary policies ability . Philip i think we are clear that we stand ready to adjust all of our instruments. We stand ready to lower the rate if necessary. Remember, we have a very simple mandate of delivering price stability, and we remain confident that this remains a monetary phenomenon. Is thewill say to you speed at which we can deliver inflation targets may have changed in this low Interest Rate world, and given change like globalization, but the underlying economics remains the same. The underlying economics will be that Central Banks can deliver whatever inflation rate they want, but maybe over a different time horizon. Michael thank you very much. We will have to leave it there. Hope you will come back sometime soon. Alix thank you. Really great interview. Julia coronado of Macropolicy Perspectives still with me. What was a big take away from that interview . Julia i think he did a great job, but it highlights the challenges for central bankers of communicating that they still have tools. We just need to be patient they can still affect the economy in the same way. It is just going to take a longer time. That is the message the market tends to read as you dont have any, left any ammo left. We see that in things like Inflation Expectations, which remained very low in the market. They dont necessarily believe. I think talking about tools like widening the band, which the fed is talking about, widening the band around the 2 target, again, the market looks at that and says you are admitting defeat because you are ok with being below promote is where we have been. It is a very tricky communications challenge. Alix what is the correct way of looking at all of that . Julia thats a good point. Is there a disconnect between the market and the economic reality . The jury is out on that. It is the phillips curve still effectively what was just expressed, that the phillips curve is still buried underneath there . That if you run the economy hot enough for long enough, you will get real wage and inflation pressures . I think theres a lot of distortions. Technologyon and in a rep that effect that come about i think we do see real but growth effect that, i think we do see real wage growth. Alix coming up, investors rushing into safe havens today. They seem to shield themselves from any Coronavirus Impact and the we can. This is bloomberg. Alix airlines joining the corporate chorus of impacts due to the coronavirus. An estimate shaves off of traffic, almost all of the impact in the asiapacific region. Joining us now is chris differ zook, is christopher caz investments. You are still seeing s p around record highs. What do you do . Christopher it is a hard question to answer. I heard you talking earlier, the bond market is telling us something really bad is going on, and the stock market is telling us nothing bad is going on. None of them is going to be wrong, and it is going to be very painful for those on the wrong side. So right now, we think you dont press the bet. We think you get more conservative, not more aggressive, and it is a good time to be a better seller. Julia how broadly do you expect these hits to go in terms of airlines is the obvious hit. What about lodging, retail, the Restaurant Industries that have relied on china for growth . Have they come through with any sort of salient information for us . Christopher a lot of them are still trying to play it safe and not want to warn the market for turnaround and alarm people. But at the same time, it is only a matter of time the longer this goes on. They are going to be impacted. Theres no question they are going to be impacted. The question is the magnitude, and that is hard to say because it depends on how long the virus continues and how widespread it is. Dont like what we heard out of the spread into south korea. That is very disconcerting. It is some we have to watch, but ultimately, this is not a time to play really aggressive. Julia that brings up a question. One of the things that might explain the u. S. Market resilience is that, relatively speaking, companies in australia or south korea or japan might get hit a lot harder than u. S. Companies. Do you think that is one of the reasons why the u. S. Market stays so strong . Christopher i think that is very plausible, and it is a very interesting consideration withse we live in a world no alternative. If money is trying to find a home and the far east is going to potentially have more challenges than the u. S. , then it is natural that money could move to the u. S. To find at home. The conversations about the supply chain are disconcerting. Conversations about growth from china limiting some of these looks, if we dont get Significant Growth of earnings and growth of cash flow, it is going to be very hard to justify these valuations. Alix fair, and yet value continues to underperform. If you take a look at global pmis versus value versus growth , this is what bank of america was talking about, they tend to track, and now they are diverging. Pmis are moving higher. How does that make sense . Christopher i would argue that it doesnt. [laughter] alix ok. Christopher but you can hypothesize that people say i am more comfortable investing in microsoft, which has no more concerns about this than, say, john deere. People are going with what they feel safest with and most comfortable with, and it tends to be the same big names driving the index performance and skewing exact value metrics you are referring to in that chart. And up the same time, you have a dollar index which had the highest levels since 2017, and then these record low yields. When does the dollar start to hurt on a fundament basis . Julia that is a great question. The other question is Monetary Policy. How much of that is the expedition that Interest Rates again . Ver go up how much is that feeding into the willingness to look through this, even if it is bigger and longer than we think . It is still temporary, and at the end of the day, Interest Rates are not going to go up, so i am safe grabbing these valuations. And chrisa coronado differ zucca, up with a and Christopher Zook, both of you are staying with me. This is bloomberg. Alix we are going to check in on some of the premarket movers. Sprint up more than 5 , tmobile slightly lower. The two companies revising the terms of their trading deal. Dropboxve got rallying, topping estimates and promising buybacks. First solar sinking after the First Quarter came up short of estimates and it disappointed in its outlook. Coming up, is there a need to change the fed Monetary Policy . We will talk to simon porter we will talk to simon potter. This is bloomberg. G. 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. Alix this is bloomberg daybreak. I am alix steel. Market, softer trading in the u. S. S p off. 3 . Some stabilization in european stocks. The ecb chief economist philip lane talks about how the base case for the coronavirus is still a vshaped economic recovery. Other Asset Classes tell you they are worried. Looking at the three month 10 year, negative nine basis points. Gold popping higher. They move into u. S. Treasuries. The 30 year yield flirting with a record low as commodities wind up rolling over. Part of the conversation also has to do with fundamentals. One is earnings. First quarter net sales beat analyst estimates and left the forecast unchanged on because they tend to be more conservative. Still it is Christopher Zook and Julia Coronado. When youre looking at earnings revisions we have seen them down in most sectors except tech. What do you think about that . Christopher what i see is a situation where things are priced to perfection. Earnings have been ok, they have not been great, but the same time last year we got almost 90 of the move in the s p was valuation expansion on the expectation of better growth this year. That has to crank up in the next quarter or we will have problems. Alix you can see that with this chart. Materials,rgy, industrials, those investments tank while tech is holding up. Julia, how you see it . About there was concern expectations built into the earnings even before the coronavirus. From a macro perspective we are in a world of low growth. China is not trying to get back to the growth rates of the past that the companies have gotten used to. Europe and the u. S. Are looking for very modest growth. How will you get double digit earnings . It does require Financial Engineering to get there. Before the coronavirus hit we were having to rely on expectations for double digit earnings growth. Then the coronavirus hits and it seems like we are already seeing the downgrade. It does look like it will be a repeated pattern as the year unfolds. Alix we will pull up a chart of what you had been looking at. What does this tell you . Julia earnings expectations have come down to just below 8 in the aggregate s p 500 from closer to 11 when the year began. The most obvious ones are where you are seeing the downgrades, materials, energy, etc. We may see it start to spread the Consumer Companies with a global footprint. Alix that brings up the point utilities and tech is what is leading the market. What are you buying and what are you selling . How do you handle it . Christopher i will at one other comment to the valuation discussion. As we get into the second half of the year and we end up with what will most likely be a broker democratic convention, ob interesting to see how much growth we will get out of the economy with all of those geopolitical concerns. Right now, what we like is some of the things that are less expensive. Emerging markets relative to the u. S. Are much less expensive. We like the idea of selling puts against those, collecting premiums from some of the fear that is out there. We see a lot of risk in the big maker cap names in the technology world. We like areas that have been beaten up. We have been nibbling at energy. We like the emerging markets. We will look at areas around Precious Metals because we think that could continue as we get into the rest of this year. Julia that is an interesting thesis and i cannot agree with you more. It looks like the political chaos is likely to be the norm, not the exception. A brokered democratic convention. We have report saying russia is already intervening in the election. The likelihood of a contested election is very high. You are suggesting that might hurt the relative position of the u. S. , which seems sensible and yet the almighty dollar keeps marching on. How do you square that circle and reconcile those tensions between the reserve currency safe haven status of the u. S. And what are some real political unrest here at home . Christopher and it is so amazing to think about how we have gold hitting new highs, we have Interest Rates hitting alltime lows, we have the dollar being very strong, and we have the stock market strong. Those things are not supposed to happen. Reconciling that question is difficult. What it means is we need to be more on the defensive at this point and defines to find strategies less correlated to take advantage of what we see as a potential for volatility. At the same time, going back to your question, the dollar, as long as we have a higher Interest Rate differential will continue to be an attractive currency. That is tough to reconcile against the geopolitical concerns around the world, but particularly in the u. S. Over the next eight months, which will be a circus. Alix well said. Christopher zook, thank you very much. Julia coronado, hang tight with me. Inside the fed is steady as she goes. This could mean Interest Rates unchanged. Outside, economists are looking at Unconventional Strategies where the fit would engage in direct transfers of cash into consumer accounts to stimulate spending in a recession. Joining me is simon potter, Peterson Institute senior fellow and former new york fed account manager. Together you guys wrote a policy proposal on just this, how a fed backed Digital Currency can help monetary stability. What . Julia a little bit outside the box. There are two prongs. We believe the Digital Technology is something the fed needs to embrace. All Central Banks need to embrace. If they do not embrace it, they will continue developing outside of your safety net. You have a vested interest. Libra lit a fire under central bankers. You do have a vested interest in making sure the Monetary System is something you have oversight of an troll of. That is the proposal for a and control of. That is the proposal for a Digital Currency. Once you have that in place, you have an opportunity and a low Interest Rate world where Interest Rates and financial conditions do not stimulate the economy as much as they used to, you can engage in direct cash transfers when you hit the zero lower bounds, once you are in a recession. A substantial shock requires a boost in demand and the fed can to reveler that the fed can deliver that directly. Simon many of us are concern there is a shock the Interest Rate policy does not work for. Fiscal policy is a more appropriate tool. The advantages is Central Banks connect more quickly. The system we put in place would allow a central bank to do that in a more nimble way. Theory . That monetary julia it is not because you still have a role for the independent central bank. That is one of the key differences. We thanksgiving the central bank , preserving its independent role, giving it an added tool is a prudent path. The common suggestion is lets lean more on fiscal policy, but look at our fiscal policy. We are in an incredibly polarized time. It has not been functional. Both sides of the aisle agree on Infrastructure Spending and we have none of it. When you are in a crisis, lets imagine the coronavirus escalates. You do need a significant response. The time involved in legislating and haggling over the form of fiscal policy, we saw this in the crisis, it is too long. The fed is uniquely positioned. You want to put guardrails on this so it is not something that leads to a loss of confidence in the institution. With appropriate guardrails, the in aas a good role to play policy sense. Coordinatedo have to an advance on policies like this. Part of the proposal would require congress to think hard about this. It is not the fed role to decide how to distribute the cash, that should be congress. Once it has been destroyed it once it has been decided how to distribute it, it is the feds decision to explain it. Alix it would be a premade tool you would not come up with in the middle of the recession, but you would have it now when everything is good, and then the fed executes on it . Julia exactly. It does require approval by congress in advance. It is not something the fed can make up on its own. Alix how do you get out of it . Competent quite it is quite complicated. The experience i have is want everyone to buy hard and not worry about what the future consequences might be. There are mechanisms where the fed could feel comfortable. They would go all out. There are mechanisms where the u. S. Treasury would feel the fed is not usurping the role. We did think hard about some of the experiences we had had over the 2008 period, and the proposal does allow you to control inflation going forward. One of the big things you pointed out his inflation has been low over the past few years. If these policy are successful, inflation will be higher. You want to make sure you can still control inflation. Julia in contrast to some proposals for Digital Currency, where the idea is you replace cash and it allows you to go into negative Interest Rate territory, we do not like negative Interest Rates. This is not replacing cash, this is a supplement. Because you can stimulate demand directly, you should get better inflation dynamics, better Inflation Expectations, that pushes you further away from the zero lower bound. Alix because we are still close to the zero lower bound, will we not have to have a catastrophic level recession like we did in 2008 to trigger this . It does not feel like we would have to fall that far to get this on the table. Simon the existing tools level off. There are some shocks out there. Mightisting set of tools not be sufficient to convince people that the central bank can stabilize. Julia it does not necessarily need to be a 2008 style shock. It could be a gardenvariety recession. You will still run out of capacity with the current toolkit. Alix to people think youre crazy . What is the response. Do they like it . Simon a little bit of both julia a little bit of both. We are still putting it out as a policy brief at the Peterson Institute. We have got a little bit of feedback. Simon we are not the first people to talk about this. The Critical Link is with the Digital Currency. There has been a lot of movement over the last year in favor of Central Banks issuing that. A bank announced yesterday it will start a test using a blockchain type that the, but a private one rather than bitcoin. Julia there was talk about helicopter money. There are specific proposals for automatic stabilizers, for qe direct to consumers. We are bringing things together. Alix i appreciate this. Simon potter of the Peterson Institute, thank you for joining me. And Julia Coronado is sticking with me. I want to give you update on what is making headlines outside the business world. Viviana hurtado is here with first word news. Viviana we begin with u. S. Plans to sign a Peace Agreement with the taliban a week from tomorrow. Negotiators reaching an understanding on reducing violence in afghanistan the fighting has turned into the u. S. s longestrunning war. Once the agreement is signed, tops will start between the taliban and the government of afghanistan intelligence officials warning the u. S. Congress russia is meddling to help donald trump get reelected. According to the new york times, the president was anchored by that disclosure. He complained democrats will use it against him. We end with the coronavirus epidemic entering a new phase. Now the number of cases outside china are multiplying south 200, and has more than japan closing in on 100 cases. China is still the center of the crisis. 75,000 infections have been reported. The number of new cases are declining. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Alix thank you so much. Julia, thank you for joining. It was great to get your perspective. If i can see you back, i wonder if we will have the conversation of equities versus yields. Julia my guess is yes. Alix coming up, ultrafast charging. We will look at how one company is investing in ev infrastructure. Users, you can interact with the chart throughout the next two hours, gtv. This is bloomberg. Viviana youre watching bloomberg daybreak. Im Viviana Hurtado with your Bloomberg Business flash. Itsfornia easing up on sweeping mandate requiring solar panels on virtually every new home state Energy Commission approving the plan. It allows homes to get power from rooftop farms instead of panels. That is a blow to panelist dollars counting on a boost to sales. Investors missing out on a rally. Power and fuel cell energy are all up 19 to 51 . The last three days volume is up to 40 million shares. Compare that to a one year 70 million. A berlin court overturning in injunction that blocked tesla from building a factory outside of berlin. Threating averting the of a lengthy delay to that project. I am Viviana Hurtado and that is your Bloomberg Business flash. Alix time for bottom line. We take a look at Companies Worth watching. Today we will look at electrified america. They built ultrafast charging station and recently completed its 400th charging station just 20 months after opening its first sight. Brendan jones, ceo joins us now. Is this infrastructure so critical to the adoption of evs . Brendan it is a great question and thanks for having me on the show. The auto manufacturers are investing over 135 billion in capital focused on bringing ev platforms to market. As they bring those platforms to market, the speed at which they need to charge is increasing. The innovation we are seeing today. When we started we were installing charges that were 24 and 50 kilowatts. Those were to serve vehicles that had a range of around 100 miles. Now we are seeing vehicles that have 250 mile an hour range, 350 mile an hour range, and there was a recent announcement by an auto manufacturer their vehicle will be 400 mile range. You have to keep expanding the range to meet the needs of these automakers bringing out higher range vehicles. Alix im strzok behind how far the u. S. Is from china. We have a heat map that can show how many charging stations are available. The deeper the green the more you have. China is well diversified and pretty well developed. The u. S. Is not. Why is that and how do we fix it . Tesla has provided us of a great example halep you build the infrastructure, the vehicle sales will follow. America, we focus on the same model. We installed over 300 Highway Infrastructure stations that can charge vehicles from 150 to 350 kilowatts. That is the fastest speed out there. We keep investing. The 2 billion we were working with is part of the decree that funded electrified america. Awesome that is an awesome responsibility we have. It is not just about having a station that is close to where someone lives. You have to have stations that interlock communities, that are close to where people shop and where they live. That is our mission is to close that gap over time. Have to spend a lot of money to make these evs before they can make a profit. For you, how much does it cost to build one and when you get paid back . Brendan the cost is quite high and we are not ready to divulge what it is. Part of it is proprietary as it relates to efficiencies. Vehicle sales are what we need. If you have more ev vehicles then you have more utilization of your stations and better economics. We are very encouraged by that. If you look at what ford did with the mustang, and lucid coming out with their new kilowatts and00 the range is 400. All of the tesla products and other oems such as audi bringing new and faster markets, we are very encouraged that the economics will become station level or improve over time with utilization. Vehicleems side or the manufacturer side, it is the same thing. You need to sell the vehicles. Tesla is providing a plausible way to get that done. Equation, andlume the last of the the rest of vehicle sales, new and exciting models. If we look at what is coming on the market, these cars are beautiful at the Technology Inside is awesome. We are quite confident the public will be able to consume the products. America iselectrify to create range confidence for the public, to place the stations where they need to be so they can drive anywhere. Alix to combat that range phobia. Brendan jones of electrify america, thank you tune into my special this evening at 9 00 this evening, evs on the brink of change airing at 9 00 tonight and ill 00 this evening. Oming up, john deere surging Bloomberg Radio heard on sirius xm channel 119 and the Bloomberg Business app. This is bloomberg. Alix time for technically speaking. Bill maloney, voice of bloomberg equity squad joins me now. Listen to bill if you type in squa. Kicking it off with john deere, they report earnings. Bill they beat estimates, up around 7 in the premarket. Going back three years, a copy a choppy range around the alltime highs. To 180. Ce level 172 if it breaks outlook for 182 and 189. Alix if you look at the 10 year, what will be the low . Bill the 10 year fell as low as 1. 47, trading below 1. 50. One 50 is the key level. 1. 50 is the key level. The next level is 1. 42. Below that, the alltime low of 1. 32. Alix wrap it up with virgin galactic. It may be lower but that move has been parabolic. Bill the stock down for present in the premarket. Traded 135 million shares. A huge range in the stock. Stocks up 414 , it almost felt like tesla. Resistance of 3872. Alix this is bloomberg. Jonathan from new york city for our audience worldwide. Im jonathan ferro. The countdown to the open starts right now. Jonathan coming up, concerns growing. The coronavirus spreading outside of china weighing on global markets, sending treasury yields to 2020 lows. G20 finance chiefs preparing to convene. 30 minutes until the opening bell, good morning, good morning. Friday morning price action down marginally. Off 14 points on the s p 500. , 1. 0807. Bouncing back market, 1. 48 is your yield. Lets begin with the big issue. The coronavirus spreading in south korea and japan, sending equity futures lower and treasury yields yeartodate lows. The Economic Impact creeping into the data with china reporting car sales dropping 92 in the first two weeks of february japans manufacturing to live very its worst performance in seven years
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