The Global Supply chain factor. Early facebook investor Roger Mcnamee joins us for what the virus means longterm for Companies Like apple and tesla. Paul, dramatic day for the markets and elsewhere. Why are you following . Paul tuesday trading day in asia, i guess the question is, to far is this stone going think . A drop asoking for well, about 2. 5 . Nikkei futures, big hit, 4 . South korea had one of its worst days and 17 years on monday. Japan of course playing catchup because monday was a Public Holiday. Take a look at currencies. The aussie dollar hit the yard over the past 24 hours. Currently just hanging on above . 66. The aussie 10 year continuing to slump toward historic lows. Of red. Uyh a lot in the u. S. , stocks tumbled. Three benchmarks slumped. Good to Abigail Doolittle lets get to Abigail Doolittle in new york. Abigail the markets selling off in a big way. Here in the u. S. , a three day slide. This is the worst of those three days. Friday, the disappointing pmi number. Coronavirus, the that it is primarily in china, that started a selloff on friday. The spread of the coronavirus over the weekend making it pretty clear to investors that we did not know the extent of it. There was a time when many investors and traders were thinking about this as sars. Now that we dont know, we can see investors want out of stocks. The nasdaq hit hard. Take a look at that stock, down nearly 5 . We take a look at the year to date chart, the dow is down about 2 , the s p 500 down slightly comedy stoxx down even more. The stoxxlightly, down even more. It is not just the major averages, some of the specialized averages, such as the new york faang index. Dow transports down about 3. 6 on the year. Take a look at the emergingmarket index. Off we are seeing, extending across Asset Classes. Oil selling off, copper selling off. China of course is the Worlds Largest user of natural resources. Now, the idea that businesses would eat into the profit outlook. The 10 year yield at one point today was almost at record lows. At that point, having its best day since 2011. Investors one out of risk assets. You can see the 10 year yield moving down in a big way. Risk off seems to be the case. There are technical indicators that suggest this could be the beginning of some new risk off. Emily Abigail Doolittle, thank you. Meantime, the surgeon in coronavirus case the surge in coronavirus cases around the world has sparked concerns of democratic but the World Health Organization says it is not there yet. The sudden increase in new cases is concerning. Pandemic now does not fit the facts, but it may certainly cause fear. Emily lets get the latest from yvonne man in hong kong. The story seems to be the way from china but south korea remaining a key concern. Latest burst in infections could drive potentially a second wave in this epidemic. In south korea, more than 800 cases. We just got the Consumer Confidence numbers. Plunging to fiveyear lows. A dozen or so countries had issued tighter travel restrictions. Hong kong issuing a red alert for the country. That honga saying kong will start banning nonresidents from entering if they travel from south korea starting today. In italy, at least six deaths recorded. Milan region and around in a virtual lockdown. There seems to be concerned now that the spread seems to be mostly through hospitals. They dont seem to know how this disease arrived in italy in the first place. Iran reporting at least 12 deaths. Kuwaitstan, bahrain, and reporting their first cases. Emily lets talk about the World Health Organization saying this is not a pandemic yet. Why is that significant . Or is it all semantics . Director general talked a little more about come at this point, they are not dealing with an uncontained virus. But they usually do classify it as a pandemic when you see epidemics across multiple countries at once. At this point, they are saying the total number of cases outside of China Remains relatively small, and the needs of the affected countries are tailored. Does it have the pandemic potential . They say, yes, but not quite now. They are concerned that new cases appeared in patients that did not have a travel history to china, perhaps suggesting that there is a it in chain of infection there is a hidden chain of infections now. Paul joining us for more, stephen, folio equities manager. I just want to give some historical context. We have a chart that puts the selloff in the context of the past 10 years. The purple circle is yesterdays sell down. Light blue is the taper tantrum. When you look at it over the past 10 years, it is not as severe as some of the other selldowns we have seen. Things can always get worse. There was another factor that contributed to the selloff last night, and our opinion, that is Bernie Sanders taking the lead in nevada. He is seen as bad for markets. There are a lot of negative headlines. But i actually dont think this is nearly as bad as what the market is saying. Part of the decline reflects very rich valuations. The fact of the matter is that authorities around the world are doing the appropriate thing to contain the virus. There is no antidote, so the way you contain it is by isolating people and stopping them from traveling. That is the right thing to do. Contained,once it is we could get a pretty sharp rebound. The we were hearing from ubs chairman over the weekend. 24 hours later, he appeared to be proven right. Is this idea that governments are doing the right thing really credible . We have just heard 100 new cases in italy and no one knows how they got there . Chris government is absolutely doing the right thing, quarantining people, providing information. , ofr almost 80,000 cases course that is worrying, but there are Something Like 30 million cases of the flu in the u. S. Per annum. The death rate is 3 . When we compare to other coronavirus is like sars and mer s, it is much lower the death merswith sars was 10 and was 30 . Cannot go to work, they cannot spend as much money. But it is the right thing to do, it is how you contain these touses, and it is how we normality when we get to the Northern Hemisphere summer. Emily we talked about production footholds in china. At the same time, speaking about rich valuations. Are there any names or companies that you see more likely to overcome and avoid wild swings due to the coronavirus . We have structured our portfolio to have some investments that specifically benefit from market turbulence. These companies go up when the market goes down. Another way to think about it is it is a hedge against turbulence. Some of those are derivative exchanges. Miners, and gold market makers. Market makers stand between. Uyers and sellers i encourage people to think about that. Thesis you is the are working on about the Overall Economic impact country to country, given the uncertainty. Steven it could cut about 1 trillion of global gdp, but 1 of gdp growth, which is a meaningful number. Forecasted, gdp growth, takes it from about 6 to 4. 5 . That is obviously a lot slower than we have seen in recent memory. This is going to be a shortterm impact. Once we get over it through quarantine and containing the virus, we will get a sharp rebound. We have already seen governments recommend some stimulus into the economies, cut Interest Rates in china, they are insuring against force majeure. Governments are very aware of the issue. They are doing the right things. There is great sharing of information around the world. I think it will be more coordinated this time around. Well get it under control but no doubt, that means quarantining people, which means low gdp growth, but it is not a fundamental change in the economic environment. Paul he strongly stake your position in the sharp rebound camp. Do you see any buying opportunities . There are definitely buying opportunities. But the stocks that were do to get hit on any issue that arises because they were just too expensive. Just to talk about valuation , the market cap is bigger than gm and ford. Virgin galactic is bigger than qantas. s market cap is as big as the australian stock market. We are not buying heavily right now because the stocks that have, for the most expensive ones. But certainly there are opportunities arising. Paul plenty more to come. The coronavirus is a National Security threat. Next, we will hear from the former director of the u. S. National security agency. Retired general Keith Alexander knows what the biggest phone abilities are. This is bloomberg. Paul welcome back to Bloomberg Markets. Lets check it on the first word news. Consumerin with confidence numbers, plunging the most in five years as the number of Coronavirus Spreads. Since june decline of 2015 when another virus, the middle east respiratory syndrome hit the korean economy. An Interest Rate decision on thursday. Moving to malaysia now. Intoics have been thrown turmoil after the resignation of Prime Minister my dear mom it Prime Minister mahathir quit. Ad, who he seeks to form a new government or a new leader emerges. Failing that, there would be a general election. The u. S. Is expected to sign military deals worth around 3 billion with india later tuesday. President trump announced the agreement at the start of his twoday visit. Trump also reiterated his pledge that the u. S. Would sign a significant trade deal with india, though he gave no timeline and later said he is in no rush. Pres. Trump we are in the early stages of discussion for an incredible trade agreement to reduce barriers between the United States and india. Working together, the prime fantastican reach a deal that is good and even great for both of our countries. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. I am su keenan. This is bloomberg. Emily the deadly coronavirus continues to wreak havoc across the globe. Governments are mobilizing their efforts to contain it. Many levels of bureaucracy, including intelligence agencies. Aboutg us to talk more what those intel agencies are doing, retired general Keith Alexander. He joined me now here in the studio. General alexander, thank you for joining us again. Lets talk about collective security of a not just of the United States were different countries, but im curious, does the coronavirus leave us more vulnerable . Gen. Alexander i am not sure it leaves a small leaves us more vulnerable. It does point out the vulnerability we have with china and other countries. The real vulnerability is the fact that we dont really have a collective Security Framework for companies. When you think about it, when you fly across the country or you come from china, you have an air Traffic Control picture that shows where airplanes are. Well have a picture that shows where malware is. Peoplempany has 10, 20 working by themselves. Imagine if we bought if we brought that workforce together couldild a picture that be used by the government to help our nation and allies. Emily what would Something Like that look like . Gen. Alexander take the banks. They collect information at Network Speed and share it into the cloud. All the same, they dont each have to work on their own thing individually. They can work on it collectively. I think that is the future. In doing that, you begin to build a picture. What you are doing with the coronavirus, the rebuilding that picture around the world. You dont have that same picture with cyber, so you dont know where infections are. The impact of trade, and the impact of theft of intellectual property. Slowdownre seeing is a. We are not seeing what it could be. General, how would you bring about the sort of collective security you describe . Gen. Alexander that is a great question. It started in 2015. It said, we should Work Together. Reduce liability for companies, get them willing to share their information, get past reputational risk, and get to a point where they are the victims and help us understand what is hitting them. Most of the companies that get imagine that you could see an attack going on like you would a missile attack, and you could stop that attack. That is what we have got to get to. Think about the partnerships we ,ave with the australians working together as we have in the past to build a picture about what is hitting australia, the United States from other countries. Build a collective framework that would help defend companies, sectors, states, and nations. I believe that is something the private sector can lead and share with the public sector. Paul the leading democratic president ial candidate Bernie Sanders was saying just a couple of days ago, telling Vladimir Putin to stay out of the election process in 2020. Will the collective framework you are talking about health . Talking about help . Gen. Alexander we can say to stay out. That would be akin to having a Million Dollars on a bench in new york city and telling people, dont take it. We have to defend it better than we are today. Than we i think, better are today. A framework that allows us to defend this that makes it impossible for us to get in. This network is emerging at an exponential rate. Emily where do you see the biggest vulnerabilities right now . Iran . S. Election, china, gen. Alexander i think the biggest concern i have is the theft of intellectual property. China needs that to fuel their economy. They steal it from us. Think about that, intellectual property. But it is not just us. Australia has had the same set of attacks. Europe as had the same. We are all victims. We should Work Together to defend this. That is what i am concerned about most. That is our future. You think about your three sons, daughters, or grandchildren. That is their future, this intellectual property. We have to defend that. Emily retired general Keith Alexander, thank you so much for stopping by. I have more next. This is bloomberg. Look at howtake a the markets are doing right now. New zealand, the only market trading this tuesday in asia, already off. Futures pointing south by about 2. 5 . Those will reset in about 20 minutes. Make a futures playing catchup. Kospisby at its worst had its worst day in years on tuesday. Look at currencies as well. The yen played on a few gains after being beaten up last week. Towardsie tenure slip one year lows. On theat virus bloomberg terminal. This is bloomberg. Paul breaking news from United Airlines, they are withdrawing itir 2020 forecast, saying has seen a decline in demand to china, 100 , so that would be all of it. A 75 decline in demand for the transpacific route. And withdrawing its 2020 guidance there. And earnings per share at 15 18. Breaking news from united. Of course, airlines among the hardest hit by the ongoing coronavirus crisis. Now first word news. Su we are staying with the virus. The s p 500 fell the most in two years, dropping more than 3 as fears grow over the threat of the coronavirus outside of china. More than 1200 cases and more than 20 deaths have been recorded around 30 countries with spikes in italy and south korea. World Health Organization says it is too early to call it a pandemic, but countries should be prepared. Are a decision about whether to use the word pandemic to describe it is based on an ongoing assessment of the geographical spread of the virus, the severity, and impact it has on society. For the moment, we will not we are not witnessing the containment of the virus, and we are not witnessing largescale care. Su police and germanys ama deliberately rammed his car into a crowded carnival parade in a small town about 100 miles north of frankfurt. About 30 people were injured, some of them children. The 29yearold driver was arrested and is being investigated on attempted homicide. Daysncident happened in after an extreme shot and killed nine people in a town just outside of frank for. And here in the u. S. Of the frankfurt. And here the u. S. , Harvey Weinstein has been convicted of Sexual Assault and rape, more than two years after allegations as part of the metoo movement. The 67yearold, acquitted of the most serious charge, predatory Sexual Assault, was sent to prison while he waits sentencing on march 11. His lawyer said he will appeal the decision. We are disappointed. We knew that we came in and we were down 350 the day we started the trial. The jury knew everything they could know about the case. We cannot find someone who never heard of Harvey Weinstein. Su global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Getting back to the widening coronavirus epidemic, cases outside china has jumped and italy is grappling with europes largest outbreak with more than 200 confirmed cases and seven deaths. Alessandro joins us on the phone from room. So much happening there today, what is the latest . Alessandro the latest news is there has been another spike in the number of cases, we are now at 229 with seven deaths. But there has also been good news, that so far the outbreak seems to be contained in a handful of villages south of milan, and a small village near venice. So far, all the cases are linked therese two clusters, so does not seem to be an outofcontrol outbreak for now in the country. Emily any more information about the origin of this infection . Alessandro this is one of the issues that authorities are trying to grapple with here. So far it is unclear where the virus has come from. A man was in a hospital near milan and infected many people there, but this person had not been in china, and had not been in contact with anyone who had been in china, as far as we know, so it is not clear where the man got the illness from. And italy stopped all flights from china very early on, making it almost impossible to track how exactly people came back from china to italy and may have spread the illness. Paul what can you tell us about the Economic Impact of this . We know that italy was potentially already heading for a recession. Comingdro yes, this is at the worst time possible for the economy. The economy contracted in the Fourth Quarter of 2019, already probably heading for recession in the First Quarter, and the economic hit has been in the most wealthy regions of the country, now and virtual lockdown. So it is all but a given that italy will enter a recession in the first half of 2020. It is already in fragile country with the second largest debt mount in europe. Paul ok, alessandro, thank you. And we are awaiting chinas latest numbers, as confusion wuhan overin reporting methods. Now over to Tom Mackenzie envisioning. Tom, what is the latest you are hearing there . Well, as you said, another day of disarray in wuhan, in lockdown. The epicenter for the coronavirus with 11 million people. What we saw was official saying that nonresidents in that city were not allowed now allowed to leave. A few hours later, that statement was retracted. This is the second flipflop we have seen from officials there in the last week. Last week, some cities outside of wuhan, but in the province, which is on lockdown, some cities in the province removing some of the infection cases from their official town, only for the secretary of the province to say, no, add them back on. So is causing confusion and suggesting the leadership there are not to grips with the measures in place there. It suggests the dilemma that they are facing is acute in terms of restarting the economy while trying to control the spread of the virus. So we are watching to see with the latest numbers will be. We could get those at any moment now. In terms of the economic measures at that have been put in place, we heard from the central bank, saying they will still take a targeted approach to supporting the economy. They will make policy more flexible, they will support the real economy. We know from comments yesterday that they made, that they are looking at reducing the benchmark deposit rate. And they are in the process of implementing measures that they already outlined, they may also ask banks to rollover loans. The central bank trying to support Smaller Banks and it is those enterprises under so much pressure here. Paul there was a sense this was coming, but china has postponed its annual meeting. Can you explain the significance of that . Yeah, not a big surprise, but this is the first time it has been postponed in decades. This is the annual piece of parliamentary pageantry that involves about 3000 delegates, it happens every year, the National Peoples congress. It was supposed to start march 5. Price a prize that they have postponed this. We do not have surprised that they have postponed this. We do not have an exact date yet. Those officials are back in their home provinces and cities working on control measures, while also trying to restart the economy. This is an event that usually sets economic targets and the agenda for the country for the year ahead. The work of the government will continue, it will not be derailed by it. President xi saying it is a priority to protect beijing from the virus. See more expecting to enforcement measures in the capital to try to constrain any outbreak of the virus. No big surprise that the congress has been delayed. Emily ok, tom, thank you for your continued intrepid reporting from beijing. Lets stay on the coronavirus. Concerns that authorities are struggling to keep it from selling from spreading, erasing gains for the year. Anchoromberg markets joins us from hong kong. David, talk us through the damage and what is catching your eye. David i am talking about a 3 drop, though global benchmark, one of the worst days in the last 10 years. And i think what you are seeing with the equity markets is the red line is just crossing we have mastercard slashing Revenue Growth because of the coronavirus. That is coming on the back of united coming out with a revenue warning. Equity investors are pretty much right now playing catchup to the bond markets in a sense that if you believe the equity are effectively reflected in earnings, there is uncertainty as well. You have the spreading in other countries. You have started to see this come down. And the nature of this uncertainty is something that the equity markets are simply not used to. So to answer your question, it looks like asia will extend that global stopping with a massive drop on monday. Emily treasuries have been a haven, does the rally have more room to run . David fundamentally you are getting pressure pushing the ar iss down, the 10 ye five basis points away from an alltime low. Goldman sachs has an interesting note. You have fundamental forces, tgageyou have mor debtholders needing them to adjust because of the yields pushing lower. Essentially what it is is amplifying this move lower. We have a graph that shows you this. 20 basis points, nominally they are pushed down 20 basis points, but it could be 35. You are seeing this around yields pushing to 1. 25, may one. 1 . 1. 1 . The market expedition is yields will keep falling. Paul ok david ingles in hong kong. Still to come, we will continue our look at how the coronavirus is affecting global markets. Our conversation with Roger Mcnamee is next. This is bloomberg. Emily our continuing coverage of the coronavirus. U. S. Equities tumbled with the s p 500 dropping the most since february 2018, as authorities struggled to keep infections from spreading outside of china. To discuss, we will bring in the cofounder of elevation partners, and author of waking up to the facebook catastrophe. With us. Oger mcnamee we have seen the impact on apple, obviously many Tech Companies with a big supply foothold in china. What do you think the impact of the virus will be across the Tech Industry . Roger i do not think any of us really know. What we do know is this was a disease that they thought they had contained in china, so people were breathing a sigh of relief. Now it has broken out and we do not know. We know this is more infectious than most flu type viruses. We know that there are past coronavirus is like sars. But the last ones all have been when chinas economy was a lot ofller, and when our lines supply to china were less influential than they are now. I think the markets reaction is correctional and this is a setback. We do not know where it is going to mean. But if you are a tech company and your supply chain starts there, you have to approach this with caution. We do not know what is going to happen. And we are at the end of 12 years of market runs, so we cannot be terribly shocked if the market itself is a little bit fragile to a setback like this. I do not know if it will produce that, but smart investors are looking at this like the kind of black swan we have not seen for a while. Emily anytime you have a rocky Political Climate in the u. S. , the race for the democratic nomination now, Bernie Sanders confirming that he had been briefed by u. S. Intelligence at that the russians are trying to interfere with his campaign, you have the Vice President , joe biden, on 60 minutes, claiming that facebook is battling accounts tied to russia that are trying to attack him. Take a listen to him. They are involved in this race and in my primary. They are going after me on facebook. They have already been taken down, because putin knows me and he does not want me to be president. Emily you wrote the book on facebook, you have in part covered the fallout from russias interference in the 2016 election. How wellequipped is facebook and twitter now to counter potential interference and continued interference . Roger i feel like i am on a quadrennial version of groundhog day, because exactly the same things from 2016 have me focused on the danger that Facebook Post for elections, and they are happening again from the same people. The Trump Campaign has a sophisticated disinformation operation that runs internally. There is a network at George Washington university, that they of fans ofnalyzing, Bernie Sanders. Nothing happened after 2016 that happened after 2016 that shut these down, so they continue to operate without constraint. On top of that, you have Michael Bloomberg coming in with his own operation where he is flooding the zone with all kinds of things. The result of that is, even if the russians interfere it is not clear how much impact they will have because there is so much noise already. The challenge is this kind of stuff is really bad for democracy, we are not actually seeing real issues being debated at a point in time when these really matter, things like climate change, health care, when they ought to be Commanding Center stage. What we are seeing is disinformation clogging things. And it is really too bad. Paul we do have to mention that Michael Bloomberg is seeking the democratic president ial nomination. He is the founder and majority owner of bloomberg lp, the Parent Company of us here at bloomberg news. But i do want to ask to what degree social media and fake news, two sides of the same coin, can they even be disentangled . Roger not at present. The real problem is the Business Model, which is based on attention. The whole idea is in order to command attention, you want to hit those emotional weak spots. Thatost of this of us will be fear and outrage. The best content for appealing to those things, things that people react to, will be hate theories. Conspiracy the things you do not want to have during a president ial election, prickly during any kind of democratic election. As long as the Business Model stays in place, google, with youtube and facebook with instagram, are going to be a clear and present danger in these elections. Mark wouldkind of you give facebook and twitter so far when it comes to addressing the problems we had in 2016 . I imagine not a good one. Roger facebook has made many small changes, largely cosmetic changes, which is a lot better than what we have seen from google. For all intensive purposes we have seen nothing from google. Youtube in particular, as well as gaming of the Search Engine google, those were huge issues in 2016 and nothing has been done to prevent that from happening in 2020. At where they tried to do a bunch of things, but it has not been helpful and the obvious things that twitter should be doing, because journalism, politics and celebrities all live on twitter, so disinformation there as an amplifying effect that is really dangerous. And twitter is incapable of dealing with it. Emily so what is your outlook for 2020 . We have the coronavirus happening, we have potentially massive Economic Impact, and we have the u. S. Political elections happening and we do not know how that is going to turn out, so how does that impact to some of these names, especially the big tech names and that we follow . Roger quite clearly the strategy employed by facebook and google in particular, where they basically take the position that they are equivalent to a sovereign nation, therefore should not be regulated, that has been working out fantastically for investors. So the stocks until recently were trading at highs. They are persisting in that model and will, until a government shows it is powerful enough to regulate them, and none have been able to do that. What happens next is anybodys guess, because of the coronavirus ,in all probability it will turn out not to be the end of the world for us, but there is some measurable chance that 12 years into a market cycle, with china representing so much larger parts of the supply chain and demand, that it will turn out to be a big deal. In an election year, if you had some kind of declining activity, that will throw things in the air. What is clear to me is we are not in the United States on a path that will lead us to the best election we could have under the circumstances, and it makes me incredibly frustrated because i have spent three years trying to call attention to the problem. Because everyone, it does not matter your political party, what your preferences are, we should all want to have elections be fair and decided by americans based on real issues. Where we are really addressing what needs to be done. Because there is huge Economic Opportunity in these problems, but we are not going to get to that if we cannot have an honest conversation about what we should be doing. Emily quickly, i know it is hard to be concise, but where do you place your bets then for 2020, if you are still investing . Roger it is a great question. Im in a very conservative posture because i think we are within a year over the end of the economic cycle, and i do not time things long enough to predict it more finally than that. I obviously did not see the coronavirus coming, but i could see many other things going on, you know, what happened with softbank and all that. I have a large personal position in apple. And i own other stocks. But i think apple is wellpositioned, notwithstanding the coronavirus, because there is demand for the product and they are one tech company that on average is being really responsible. Emily interesting given their strongholds in china. Roger it is an issue. In the longer term i really like it. Emily ok Roger Mcnamee, managing director at elevation partners. Always good to have you. Thank you for stopping by. Much more coming up. Stay with us. This is bloomberg. Emily welcome back to Bloomberg Markets. We are looking at the business flash headlines. United is withdrawing its guidance for 2020 because of the impact of the coronavirus. The airline says it has seen a 100 drop in nearterm demand for travel to china. And a number of suspended flights represent 5 of its total capacity. Despite that, they maintained guidance for the Fourth Quarter at adjusted earningspershare. And toyota is buying credit,. The Software Giant behind turbotax pain 7. 1 billion in cash pain 7. 1 billion in cash for credit karma. It offers financial services. Intuit says that credit, generated 1 billion in revenue last year, up 20 . Jumped after hours after saying it overturned billions more to shareholders in the hopes of finding operate fromng off a takeover xerox. They want to boost buybacks and raise their costcutting program to 1. 2 billion dollars by 2022. They said they would reach out to xerox to explore a combination on its own terms, rather than give in to its hostile takeover bid. On its doubling down floating smartphone. It says the new phone has a faster processor and a three to graphics. It has been sold mostly in china, but this version will not be sold in europe. It will be just over 2700 u. S. Dollars when it goes on sale in march. Those are the business flash headlines. Paul ok, thank you. Now a quick look at the markets. We are just over two minutes away from the open in australia with futures pointing lower by a little more than 2. 3 . New zealand has been trading for over two hours, or just under two hours, up 3 . The nikkei playing catchup today. Monday was the emperors birthday. Futures are weaker by 4. 4 . Kospi 200 had its worst day in years. Stick with us. This is bloomberg. When you move homes, you move more than just yourself. Thats why xfinity has made taking your internet and tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Paul good morning. Im paul allen in sydney, and we are just coming online in australia. Welcome to Bloomberg Markets. Paul top stories this tuesday, markets tank, oil plunges amid fears of a pandemic. There are more than 1200 cases of the coronavirus in 30 countries outside of china. Northern italy has come under lockdown as the origin of the coronavirus remains a mystery. And china cancels its National Peoples congress as the outbreak continues to hammer the domestic economy. Lets take a look at how we are doing right now. Australia has been open for about one minute, currently off but we expect that to fall as more stocks come online. We open in f a medical order here. New zealand has been in alphabetical order here. New zealand has been trading for a couple hours, off by 3 . Nikkei was in negative territory, now slightly in the green, even though japan is returning from Public Holiday this monday. Futures are looking flat after the sell down in the u. S. On monday. Prize of coronavirus world hasound the not yet been named a pandemic by the World Health Organization. The cases are concerning and i have spoken about the need for facts, not fear. Using the web pandemic now dashboard pandemic now does not fit the facts, but it may cause fear. Paul ok, lets get the latest and now from hong kong. Ivan, has the story moves away from china, it appears south korea is coming into focus as a key concern. The concern now is the latest burst of infections we are seeing outside of china will start a second wave in this epidemic. In south korea, we saw more than 800 cases, now eight deaths in that country. Now more than a dozen countries have issued tighter restrictions for people traveling from the country. Hong kong has issued a red alert on south korea. The local media here saying that residents traveling from south korea will not be allowed to enter starting today. Meanwhile, we are looking at italy as well, which continues to see an outbreak in europe, the biggest epicenter of that, with more than 200 cases into seven deaths. With the prosperous regions around milan, the financial hub, in a lockdown. The virus is threatening an already weak economy and could push it into a recession. Adding to the concern, the spread is happening mostly in hospitals, and they do not know how the disease got to italy in the first place. Meanwhile, we are also hearing of more cases in the middle east, iran reporting 12 deaths. New cases in afghanistan, as well as kuwait. All recording the first cases. Paul the World Health Organization has stopped short of calling this a pandemic. Why is that . Does it not satisfy the definition yet . Yvonne there are not many guidelines around it. If you seen epidemic happening in several countries they my call it a pandemic. There is not really a number of cases where they call it a pandemic, but what we heard from the director general earlier, he mentioned that they are not listing the uncontained spread of the virus, in terms of cases outside of china still being small. Does it have potential for a pandemic, absolutely. But he has consistently backed china, despite the evidence we have seen of the government acting too slow when it came to the outbreak. They have silenced scientists at home. He is in a diplomatic dance with china, a government sensitive to negative comments. They are also a big financial supporter for countries across africa as well. So keep in mind that he was a former Health Minister in ethiopia. He does need president xis support for on ground access to those experts. So it is a bit of a thankless job. Paul ok, thank you. And now the virus took a huge toll on markets on monday. U. S. Equities tumbled, the s p 500 dropping the most in two years. Shall we expect more dramatic moves Going Forward . Theresa spath. Did markets complacent or we see in overreaction . I think it was a combination of both. They were not complacent, but they were fully valued, if not overvalued. So you are always at risk for a selloff when you have an overvalue situation. And that is what we saw today. We are still close to record highs, so it is a selloff, a swift selloff. But i think to be determined as far as what happens next. Paul i am curious, were you part of the selloff . Did you exit positions . Or are you looking at buying opportunities . Terri i am not a doctor or medically trained person, i do not know more about what is going on with the coronavirus that isbody else, and probably most investors. We do not have any information, so it is helpful to have a process. At her holdings today and even with the big moves, we have shifted from uptrends to not uptrends, but we have not hit self signal. We are in a hold territory based on everything we can see, the technical indicators. Paul one of the things the market seems to agree on is the potential for the gold price. If we take a look at the chart, you will not be able to see it but i will describe it. You probably do not need to see it. You know the forecast. There has big a big run in gold and other havens. Bonds as well. How long do you see this persisting . Terri yeah, i know that people are running to gold. That is typical. But i think what is more useful, especially from our position, is to look at the bond market. Seeoes make us st record lows for the 10 year and 30 year. And we are inverted on the fed rate. And until we see the yields stabilize and stop dropping, i think we will continue to have concerns for the stock market. While we are not using gold, we are looking at the bond markets to give us guidance as to how much. Is out there and how much continues to play into the. Through all paul this, there has been paul paul through all this there has been confidence in the u. S. Economy, in terms of its resiliency. We have another chart that shows pmi data starting to drop. Is this the start of a trend, is the u. S. Starting to feel the impact of this global problem . Terri when it comes to economic data, things still look decent in terms of it. The pmi number was worse than we expected. Itwe go back to the 10 year, is pricing in. 7 growth rate. If you think we will have it better in the u. S. , we will probably have upside based on what we know so far. I think we will see some pain in terms of global growth, but what remains to be seen is how longlasting that will be. If it is just a couple months, and a little bit of a ding to First Quarter growth, earnings, then we can recover a little bit, maybe that would be something we expect at this stage. Paul in terms of the 10 year yield, can you see potential for interrater zero in for it to reach zero in a couple years . Terri never say never. When we last saw these levels on the 10 year, i thought that was the lowest level i would see in my lifetime or anybody elses in the 10 year treasury. But there is a lot of pressure globally. So, you know, is it possible that we drop that low . I suppose so, but right now i think that we still have good value in the u. S. And one way to play that uncertainty is to participate in some other areas of the fixed income market that are a little bit better yields. Weore i lose your audience, i thinkboring well and you can pick up yields in the fixed income space, while that continues to work itself out. Paul boring is so underrated. I want to ask one more question about the role of the fed in all of this. We had the former minneapolis fed president calling for a preemptive strike with a rate cut of 50 basis points, but we have seen this before, havent we . Do not worry, the fed will save the date. Day. Is that going to happen . Terri i think the fed has trained participants, oh, we are the elixir for all your problems. We will provide liquidity. There has been a ton of liquidity washing around, not just in the u. S. , but globally. Im not sure with 25 or 50 basis points, what that coat would do. Cutough that has that would do. Although that hasnt worked to has worked to calm things down before. Right now, i think there is no reason for the fed to do that unless they want to keep weining the markets, like, are always here to save the day. Paul thank you for your insight. Now first word news. Su ok, we will start with thrown intoolitics, turmoil by the resignation of the Prime Minister. The 94yearold quit and dissolved cabinets after a power struggle over who should be anointed his successor. It is a position he had promised to his deputy. Now, he will stay on as the interim Prime Minister. Until a new leader emerges. If that fails there would be a general election. To the u. S. , it is expected to sign military deals worth about 3 billion with india later on tuesday. President trump announced the agreement at the start of his twoday visit, addressing a crowd in india. He reiterated his pledge that would sign a significant trade deal with india, later saying he was in no rush. We are in the early stages of discussion for an incredible agreement to reduce barriers between the u. S. And india, and i am optimistic that working together the Prime Minister and i can reach a fantastic deal that is good and even great for both of our countries. Hasand Harvey Weinstein been convicted of rape and Sexual Assault. The verdict came two years after allegations against the hollywood producers parked to the metoo movement. The 67yearold, who was acquitted of the most serious charge, predatory Sexual Assault, was sent to prison as he awaits sentencing. His lawyers say he will appeal the decision. Has been a disappointing day. We knew that we were down 350 the day we started the trial. The jury came in knowing everything they could know about the case, we couldnt find a juror that had never heard of Harvey Weinstein. Su global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. Im su keenan. This is bloomberg. Paul thank you. Still to come, we will discuss the impact of the coronaVirus Outbreak on samsung and south koreas tent companies, as cases in that country store. Soar. And we will talk about the implications of President Trumps visit to india on Foreign Policy. This is bloomberg. Paul we are counting down to the market open in seoul. Futures in korea looking substantially weaker after a big sell down on monday. Also getting news on the bottom concerning the coronavirus and south koreas armed forces. We reported earlier that south korea and the u. S. Were considering scaling back military exercises because of the coronavirus, now 13 confirmed cases in their forces as the number of cases in the country spikes into the 100s. We will also be watching samsung when trading kicks off, as far as concerns disrupt the supply chain of the tech sector. One facility was closed over the weekend after a worker tested positive for the virus. K newman, more from mar joining us from hong kong. 4 simpson was off samsung was off 4 on monday, worse than the index as a whole. They have a plant that will reopen. Could we see a bounce today . But it is difficult to say what will happen today things are looking negative related to the coronavirus. It may drag textiles down in the short term. But i would see this as a buying opportunity. I still think that samsung is very cheap. I think the issues with shutting down the factory, it was a shortterm shutdown that lasted only the weekend. The busierot one of production plants. It is not operating 247, like others do. So the amount of handsets lost from that down or the damage at that plant, very small. And a majority of the handsets are made in vietnam anyway. But there is risk to the supply chain for handsets, but the majority of profits come from memory conductors anyway. That has not been impacted so much. So i would look at this as a buying opportunity, i not today than if not today than in the coming days. Paul to your point on a buying opportunity, if you look at samsung it is still trading at a fiveyear high. If you are prepared to look through the crisis, what is the longterm upside for samsung . Mark you know, we think that the target price it could get about 7,000 come a 12 month price, and i they they could break through that. There is still upside to that. The issue for samsung and other the earningsat of memory is very cyclical. If you are looking at any multiple on your screen, it might scream as expensive because of the earnings of memory right now. Gone conductors have ok, that was sanford c bernsteins mark newman. We will try to get back to him in a moment. You can get all the stories in todays edition of daybreak. Thecribers can go to terminal or the bloomberg app. Customize your settings so you are only getting news on the about. You care this is bloomberg. Paul this is bloomberg asia. u. S. Equities tumbled on monday with the s p 500 dropping the surged a year and havens over concerns with the coronavirus. Is it is all good news for gold. We spoke with him earlier, lets see what he had to say. In terms of gold, we see upward trajectory underpinned by a number of things. Obviously, the coronavirus is very topical, around that is global growth, would it might mean with features being lower for longer. You put that together and it is a very strong argument that gold is going to continue where it is now. Then you look over the longer term and we have discussed this, the demand fundamentals are very positive. So we see this as good trajectory Going Forward. I want to talk about the fundamentals in a moment, but the human aspect, we do not want to sound crass, but there is no doubt that gold is getting a safe haven play on the back of this. From an operational standpoint, will be get to the point where this affects miners and there is pain as a result . We are monitoring that carefully, particularly the Global Supply chain. We have a network of suppliers, some in china and many outside of china, so that is something we are tracking. So far, no impact. Depending on the extent of the virus and how long it is around, it isnt they we will watch carefully. We are monitoring carefully into we are seeing where it is. You listed all the reasons you think gold prices are well supported around these levels, or do you see them going higher . I think they can go higher. How much higher . Certainly we have seen joe jacksons test projections of them going into the 2000 range, which i would not rule out. From our companys perspective, we are highly leveraged to the gold price, but it does not change how we are running our business, we have the same discipline in place, we are not changing metrics, and so we would love to take advantage of the increase, but we are not changing how we run the business. But you raised your dividend at 74 last week. If you go to 2000 an ounce gold, is there room to go higher . It is a good story for us and our formula is 10 of Free Cash Flow before growth capital. So if the gold price continues to be supported, and has a further upward trajectory, and we run our business well, we will generate more cash and we will continue to have a greater dividend. We saw positive response to that. When i spoke with you last year, you had moved over from barrick and at the time you said that anglo gold was interested in increasing its portfolio in north america. I want to ask about that, because i was speaking with another ceo last night, he is also interested in a shallow north american gold assets, so it looks like that space could be hot Going Forward. We have an asset in nevada we have been developing and we are exploring. We have a significant budget in terms of further athletics exploration this year. So is shaping up nicely. We love to take a position in nevada and move forward with the project down the track. But before that, we are completing our project this year. It is really big. Have had an important milestone. And now we are ramping up production. At the same time, we are dancing projects advancing projects in columbia, one where we are partnered with bt gold. And another with a large copper gold project that we are developing on her own. So we are nicely situated in columbia, potentially nevada, and meanwhile we are investing in the portfolio to develop more around what exists already. Gold that was that anglo ceo. Now the latest headlines. Iphone sales in china fell 20 in january as the coronavirus but across the country. The drop, which came before the full extent of the outbreak, was bigger than usual. Ubs is expecting the numbers for february far worse. Chinas data also showed her the over Smartphone Market saw a 30 drop in sales, as they saw a huge drop in consumption. The ridesharing apps in Southeast Asia are in talks for a merger. Grab and subject have been locked in a costly struggle to build an app and have been battling over payment services. A merger would create one of the most highly valued startups. But they are said to be far from an agreement. Third point has taken a stick in a british insurer. It acquired just under 5 of prudential shares to become the secondbiggest shareholder. As part of the deal, they want potential to split the u. S. And asia operations. No response yet from the insurer. Third point want the company to expand in china. More to come. This is bloomberg. We are tracking it very carefully. Airplanes are not as full as what they would have been coming out of china. We know the economic effects are coming down the road. Everybody is on the edge and taking this very seriously and the uncertainty around it. And it does have an effect on our customers, which has an effect on our results. It is a problem for china. Carefulpose we will be under these conditions. About how we manage supply chains so we can be more resilient. Global Business Leaders speaking about the impact of the coronaVirus Outbreak so far. Also, we will hear more from the ups ceo in just a few minutes, but lets check on markets for now. We have had australia up and running now for a little over 30 minutes, and right now, the asx is weaker by about two point 3 . New zealand is pulling back some of those earlier losses by 2. 5 . Nikkei futures in positive territory. Lets see what happens when we get going in 30 minutes time. Of course, japanese markets will be playing catchup, having been closed on monday for the emperors birthday. S p eminis are in positive territory by. 2 5 . We are awaiting chinas latest virus numbers as confusion continues in wuhan over quarantine measures and reporting methods. Lets get over to Tom Mackenzie now in beijing. Tom, what is the latest . Paul, we have this rather extraordinary event yesterday out of the city of wuhan. Population 11 million. It is in lockdown, has been for about a month. Some of the restrictions were being eased. But only a few hours later, that statement was retracted and this follows, as you rightly said, some confusion we have already seen in the last few weeks about how officials in that city are accounting for the numbers of cases when it comes to infection. It suggests that there is still continuing disarray in the city of wuhan despite a change in leadership and it also points to the dilemma for officials as we have been discussing, the fact that they want to kickstart the economy. Also containing the virus. Reiterating that it will put an emphasis on a flexible Monetary Policy. It also said in a statement to the central bank that it is going to try to urge banks to roll over some of their loans to businesses and also to raise the quota of loans for businesses and regions and cities that have been impacted by the virus. The central bank saying it is focused on implementing the measures it has already outlined but reiterating that it may consider we heard this yesterday a reduction in the benchmark deposit rate. Reiterating from the central bank here in china that there is now, it seems, and easing bias. A fit an easing bias. Tom, we are expecting an announcement from china about the postponement of its annual legislative meeting, and we have got it. What are the implications of that . Essentially, in terms of governance, no major implications, but symbolically, it is significant. This is the first time at least since 1985 that the National Peoples congress has been delayed. It was meant to start on march 5. No doubt it has been postponed. Delegates have to travel all over the country to the chinese capital. When it comes to keeping this virus in check, that would pose its own challenges. It would have been an Agenda Setting environment. The parliamentary session. The annual parliamentary session with us at economic target in gold. We will have to see when they are going to restart this and if it will happen this year, but it should not affect in terms of the fundamentals how governments are continuing in china. Certainly symbolically, it is important. Xi jinping reiterating that protecting beijing is essential and it is a priority for him and his team and that may be another reason why they have held off on holding a National Peoples conference. 69 people have been quarantine in a district where the compound is based after one official had been infected. They are in quarantine. Beenictive measures have enforced. Something else that people have been pouring over, this teleconference that president xi held with officials over the weekend. China watchers are saying one of the Key Takeaways for chinas leader is that he wants to see potentially more centralized set of controls here in china Going Forward. The lessons he has learned from this is an authoritarian approach to controlling Something Like this virus, including using lockdowns and surveillance and putting loyalists in place, has provided dividends for him even as he seems to overlook the fact that there was something many would argue are a coverup for the disease. We could be seeing a new chapter in terms of the centralization of power in china as president xi learns these lessons from how this is unfolding. Paul china correspondent Tom Mackenzie in beijing. Thanks for the update. Growing concerns about the Coronavirus Spread sparked a selloff on monday as we all know, erasing global gains for the year. The turmoil looks set to continue into the asian trading day. This tuesday, david ingles is in hong kong. David, give us a damage report. Damage on thethe Global Equity benchmark yesterday. For context, that was the worst day in about two years. A little bit more essentially, one of the worst days in the last 10 years if you look at, you know, points of history, like the european debt crisis, the yuan devaluation in august on 2015, so on and so forth. At,ty markets are looking you know, the situation has not evolved from being just about china as well. Things toon top of reopening at a slower pace in china, our bloomberg economists have put in a very good note. There are estimates that we have now moved from 40 of 50 to 50 it is moving very slowly and you are getting a lot more revenue and profit warnings. Are shipments for january. We heard from mastercard and United Airlines so it is a global story as well. A lot of appetite for havens as well. Very good examples, what you are seeing from australia, down 2 . Pretty much everything will stop is down. Stock is down. It is looking like this reopens today and the open across other markets will be quite bad. Paul how about the rally and treasuries . Has that in treasuries . David we look at where people are hedging in the flow of money, you are getting a lot of hedges into a lot of money going into hedging. 1. 1 . A ton of money flowing into hedges, options, one point 25 percent. Goldman sachs was out with a note. Very complex. Essentially, that would amplify the fundamental forces driving down yields as well, so your tenure is down 10 year is down. On thes points lower nominal side, 40 five even. You look at the hedging. Likely basedo be on those projections. We are going to take on the record low of 1. 318 on the 10 year. It does look like this rally can continue. Paul we are about 20 minutes or so away from the open in japan and south korea. What are we looking for their today there today . David korea had a terrible day, the first day to react to the escalation over the weekend. If australia is any indication, korea will probably see further pressure. When you look at u. S. Futures, we are coming up low as well so a little bit of stability as far as u. S. Futures are concerned. Japan is where the pain is going to be thoughts. That is going to be bad with a capital mj. 24,000. D at futures are trading at 22. 1002 hundred points lower on futures. That will be a massive gap lower. To probably going japan will see at the open. Paul. Paul david and glass, thanks so much for joining a spirit i want to get you an alert at the moment. The cdc is warning americans on travel to south korea, this matches the same morning that the cdc had previously issued for china. This morning now for americans who are considering travel to south korea. The coronavirus is continuing to impact businesses globally. David abney spoke exclusively to bloomberg about the effect of virus was having on its shipping business. A business standpoint, we have definitely seen airplanes are not as full as they would have been coming out of china. Lets something we have the flexibility to move planes in longer this the continues, of course, its going to have an effect on exports coming out of china, imports going in. And it does have an effect on our customers, which has an effect on our results. He said over the weekend, you have Peter Navarro saying the u. S. Is outsourcing too much. What is your reaction to that . Depends on how things are taken out of context. My view is we want to see bounced trade, so we want to see the u. S. Imports into the u. S. , we want exports from the u. S. To grow. It is so important. 95 of the worlds population lives outside the United States, so of course, we want to feed those markets. Coronavirusthe shifting to europe also as well as other geopolitical issues. Are you concerned at all about your operations there and how they might be impacted by the spread . We are monitoring in all parts of the world. In europe, it seems like the biggest focus is northern italy. In asia, south korea. Obviously, in places where we operate, we are training our people and giving them all the safety precautions that they need because thats most important to take care of them. They follow all laws and authorities as far as where we can operate. We have all the World Leaders at the g20 in riyadh right now. You are here in new york for an event that focuses on corporate responsibility. When you look at how u. S. Leaders are tackling the issue of climate change, do you feel that they are doing enough . I dont think we can ever say we are doing enough. Just saying, continuous improvement. We have to be better. The reason i am here is the fact that its almost like preaching to the choir. The ceos that are here, we all social anda environmental responsibility. And we meet once a year and i have been going to these meetings since i have become the ceo. Its really to talk to each other, and second, we meet with investors that are really focused on sustainability issues. Oneustainability is just aspect of stakeholder capitalism. Another aspect is employees. You have been doing a lot of work for your workforce and automation. How is that impacting the fabric of your Employee Base and the ability to pay them . First, nothing is more important to us than our people. They are the ones that take care of our customers. We have 495,000 people scattered throughout the world, so very important. They are our drivers, Service Ambassadors to our customers. That is how important they are. Transformation in embracing technology, we are focused on becoming a Stronger Company and if we continue to grow, then even when you at automation, you are still increasing jobs, but at the same time, you are much more efficient, and that is the focus of our initiative. Paul that was bloombergs with david abney, the ups ceo. Lets check in on the headlines now with su keenan. Korea start in south where Consumer Confidence has plunged the most in five years. This as the number of coronavirus cases spreads. The index dropped below 100 in its largest decline since june 2015. That is when another type of coronavirus, the middle east respiratory syndrome, hit the korean economy. The reading is seen as yet another reason for the bank of korea to ease policy when it means for an interestrate decision on thursday. Malaysian politics meanwhile has been thrown into turmoil by the resignation of Prime Minister mohammed. The 94yearold quick a dissolved cabin and after a power struggle after who should be anointed as successor, a position long promised to his deputy. He will stay on as interim pm as he seeks the numbers to form a new government or until a new leader emerges. Failing that, there will be a general election. To germany now, police say a man deliberately rammed his car into acrowded carnival parade at small town about 100 miles north of frankfurt. 30 people were injured. Some of them children. The 29yearold driver was arrested and is being investigated on suspicion of attempted homicide. The incident happened days after an extremist shot and killed nine people in another town just outside of frankfurt. 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 su keenan. This is bloomberg. Thanks very much. Still to come, we discussed President Trumps visit to india and the future of u. S. India relations. This is bloomberg. Paul we are counting down to adjust first major market opens this morning. We have japan futures looking like this in positive territory. That is based on the closing price, so it looks like futures are an improvement of where they left off. We are expecting japan to open much weaker after the market was closed on monday. Playing better catch up there. This is Bloomberg Markets asia. I am paul allen in sydney. President trumps as the u. S. Will sign military deals worth more than 3 billion 300 billion. Trump reiterated his pledge that the u. S. Would make a significant trade deal with india. We gave no timeline and later on said there was no rush. From washington, d. C. Is the Brookings Institution India Project director and Foreign Policy senior fellow. Joining us. R expectations have been set reasonably low for this trip. As this announcement on the fence the best that we can realistically expect . I think in terms of concrete numbers and deals, yes, at this stage. This is a win for President Trump. Theres been a lot of cooperation on the Security Side between the u. S. And india in his last two years but one thing they have not managed to get done is a defense deal, so u. S. Industries will be very happy about that, hoping for more even on the defense side. I think this will give President Trump some numbers to throw out in terms of a deal because the trade deal has been elusive for both sides. There will be some smaller deliverables that add up in terms of bilateral cooperation and regional cooperation, but i think in terms of big deals, we might see a couple of deals on the energy side. Not sure on but also on American Assets to sell lng and oil. Of then the subject trade deal, what are some of the challenges that lie ahead, and what is sort of a timeframe that might be reasonable to expect for some progress . Tanvi both sides were hoping for essentially they have a trade skirmish rather than a trade war. There are they were hoping for a ceasefire. I think they have not been able to close the gaps in the sense that both sides come on both sides, that the other was changing the goal posts, so every time they came to a deal, one side sought the other. They had the leverage, pushing for more. There is concern about indian tariffs, concerns about market. Ccess the Trump Administration wanted movement on the Agricultural Products side and into that market, the ambient. Market,ndian dairy poultry, for example. There are concerns about u. S. Immigration rules, which india considers a trade issue. Bigger issues, which are harder to solve. I think they could maybe get some of these issues resolved over the next few months. Structural ones, particularly american concerns about some of indias Digital Economy and rules and restrictions that took place potentially. Indias ecommerce rules as well as data mobilization requirements, all of these are india. Eing in those are the things for the two sides to handle. They will reach agreements on some of the issues that have come up. Paul we want to interrupt you for a moment. We are getting breaking news out of japan right now. But ppi Services Numbers for the month of january coming in a bit better than expected at 2. 3 percent increase. The expectation was for two point 1 . We have seen a bit of strength returning to the yen over the past couple of days, now trading 83 versus the u. S. Dollar and japan markets opening at the top of the hour. Those ppi numbers, a little better than expected from january. 2. 3 . Trump in to president india, perhaps he was a little fortunate not to start a diplomatic incident. His grievous mispronunciation of the name but he may run into other such problems in terms of trying to break up the taliban. What difficulties might that present for indian relations . Tanvi there is now an expectation india has been wanting the u. S. To stay the course in afghanistan but there is now recognition that not just President Trump because of the debate in the u. S. On forever wars here, that there is going to be a u. S. Drawdown, whether now or in the future, so its really indian concern about the terms of that drawdown and what the situation in afghanistan looks like, who is in power, and so, at the moment, there are indiau. S. Discussions about afghanistan. Earlier, it was not at the table in these discussions, but it is kind of involved at least getting updates and shaping the situation on the ground. They want the suppression of the Peace Process between the afghan stakeholders rather than the u. S. And afghanistan. Pakistan has played a bigger role. Its not going to be a dealbreaker. Pakistan related. It might be related to the Indian Economy or the social situation there. It might be because of the u. S. And china situation. I dont think it will come from afghanistan. ,aul all right, tanvi madan thanks so much for joining us. All right. We have plenty more to come on Bloomberg Markets asia. Stay with us. This is bloomberg. Paul this is Bloomberg Markets asia. I am paul allen in sydney. We are minutes away from the start of trade in korea and japan. Stocks in tokyo will be playing catchup after the Public Holiday on monday for the emperors birthday. David ingles in hong kong. David, expecting a pretty ugly drop when japan stops trading. David absolutely. Absolutely. We like to use the word catchup. Its really more a catch down. It is going to be lower with how big the gap is going to be. Context,oint, with the ppi numbers coming through better than expected. I will take this piece of data, and we will keep it there for now, because data for today, likely does not matter yeah i futures, you probably see pricing is now at about 4. 5 . Nikkei 225 closed below 24,000 on friday. It was shot yesterday when Global Equities fell about 3 . And your futures are essentially indicating theyre probably going to get a drop in the order of about 4 when things reopening about in a couple of minutes from now. I would like to point out very quickly before i toss back to you, the 200 Day Moving Average on the nikkei 225, just below 22,200. We are going to see this open a little bit above we do break below key support levels for today. Its going to be one of those days where you have corporate earnings, ecodata, at least in the opening few minutes. Paul. Kong,david ingles in hong thanks so much for that. Lets check in on asian markets right now. New zealand arresting some of the losses we saw earlier in the day here in australia. We are weaker by more than 2 right now. Standby for that open in japan and south korea. Coming up on the next hour of Bloomberg Markets this is , bloomberg. Good morning oh no, here comes the neighbor probably to brag about how amazing his Xfinity Customer Service is. Im mike, im so busy. Good thing xfinity has twohour appointment windows. They have night and weekend appointments too. Hes here. Bill . Karolyn . Nope no, just a couple of rocks. Download the my account app to manage your appointments making todays Xfinity Customer Service simple, easy, awesome. Ill pass. A very good morning. Japan and south korea have just open for trade. Welcome to Bloomberg Markets asia. Our top stories this tuesday, japanese stocks are set to plunge amid fears of a global coronaVirus Outbreak with more than 1200 cases across 30 countries. The World Health Organization says be prepared for a pandemic. Beijing cancels next months National Peoples congress and reverses the easing of quarantine measures in wuhan as the outbreak at is chinas economy. Malaysias Prime Minister resigns, throwing his country politics into chaos. He must now form a new government, find a new leader, and hold an election. Get straight to the Market Action with Sarah Ponczek in new york. Sarah it was a very ugly session overnight in markets across the globe and we are seeing this cash down trade off the bat in Japanese Equities as japan does come back from holiday. You see the nikkei 225 off by one point 9 , the topix lower for a ninth session in 11, down 2 at the moment. You do look at dollaryen. We do see the japanese yen falling just a tad but this after two very strong sessions on monday. The strongest session since august. We see the pair trading back in the range of 110 to 111. We have seen a global bond rally as we see the safe haven. Really come in. At negativealling nine basis points. Over in the u. S. , 10 year benchmark treasury yield is just a hair off of record lows. Clearly, a bid for safety. Switch up the board as south korea does come online after the near 4 decline for the kospi that we did see yesterday. The worst day since october of 2018. We do see losses expending at the moment but not nearly as bad as what we did see yesterday. I bit of a moderation. The kospi off by. 2 . Although we do see more extreme selling both in australia and in new zealand. By 2 . 200 off the kiwi stocks did see their worst day since october of 2018 as well. S p futures are finding their footing, up about. 4 at the moment. This after the u. S. Trading session. We saw the worst day in two years, a site of more than 3 . The s p erases all of its yeartodate gains. It was a bad day across the globe. If you look at the msci all country world index, that is what this is. It denotes both emerging markets and develop market countries. Your purple circle is what we saw on monday, a decline of 3 , on par with some of the worst days over the past decade. Whether that was brexit, which was blue, or the yuan evaluation, or brexit was green, inr blue was the middle 2018. Also, the european debt crisis. What we saw in the past day does rank with some of the most infamous sessions we have seen since 2009. Back to you, haiti. York Sarah Ponczek in new. Fears continue to mount over the spread of the coronavirus. Lets bring in our team on the ground. David ingles and yvonne man. Our china correspondent, Tom Mackenzie, is in beijing. Moves fromng these japanese markets, they have fallen the most in seven or eight months at the start of trading. What are you looking at today . Track what trying to the open is looking like. 30lly, what a difference seconds makes. We are pushing 900 points down on the nikkei 225. The topix down. We are getting more volume coming through. Obviously, a good indication of that. Toyou take what happened korea yesterday, and their ction there, it might see not just a percentage dropped or a massive percentage dropped. 800 points down on the nikkei 225. 3. 6 . We will see. U. S. Futures are starting to go to the bottom. Its a very fluid situation. Thei given so much of concern, things have shifted to the outbreak outside of china. What are you watching in the china open . Interesting is that china was almost at the center of the story. How really now more about this affects outside of china. Say weomberg economists are 50 to 60 as far as the capacity online in china. Profit try to marry activity warnings from different companies. United airlines, mastercard, singapore airlines. Those things are coming together to give you an indication of what the earnings shift is likely going to be for this Current Quarter so im watching that and also watching treasuries as well being so close to alltime lows and also back in china, this market opens up in 90 minutes. The value of stocks being shorted in china is now at a record high. The rallies come up quite a bit. Theives you an idea in market right now that the rally can continue, haidi. Kong, and yvonne in hong you are tracking this shift, riding concerns of the epicenter. Whats the latest that we had as we continue to watch these numbers grow from south korea, to italy, to other parts like afghanistan now . Yvonne we are hearing the concern that this burst of infections we are seeing outside of china could start another second peak in this epidemic. The who did play down the fears of calling this a global pandemic. For now, they say the cases outside of the mainland so far are relatively small and the need that these affected companies are different across the board, south korea is the pain point. We had 800 cases. We had Consumer Confidence numbers. Plunging to a fiveyear low on the virus fears. Now, you have more than a dozen or so countries issuing tighter travel restrictions of people traveling from south korea. Hong kong issuing a red alert for south korea and local media here reporting that hong kong will start banning nonresidents from south korea from entering starting today. Meanwhile, in italy, we continue to see a spike up in cases. More than 200 now. At least seven deaths in that country. Essentially, you have the prosperous regions up north in and around the virtual lockdown in the financial hub. Virus threatening to push a weak economy into recession and already adding to those concerns is that they do not exactly know how this disease got to italy in the first place. You mentioned about the new signs in the middle east as well. Iran reporting 12 deaths and countries like afghanistan, bahrain, and kuwait, reporting their first cases. Haidi in the meantime, we play the waiting game for the numbers. Confusion continuing to grow over the state of the lockdown measures as well as yet more confusion over reporting methods and timing. Yes, absolutely. Mixed messages yesterday from officials in wuhan, who put out a statement saying some of the restrictions on People Living and working there would be eased. Only for that statement to be retracted a couple of hours later. It follows a number of changes to the way that officials have been accounting for infection rates in that city as well. So it does add to confusion. It suggests it continues to be in disarray, the governance of that city, even though you have had new leadership in the province, the new party secretary, and it also points to this dilemma that officials are facing in china, which is how to ensure that you can restart the economy was also keeping a check whilst also keeping a check on this. It does suggest you have more of an easing bias. The pboc coming out and saying Monetary Policy will be flexible. They are going to ask, it seems, the banks to ensure they have a quota for loans, particularly for businesses, local governments that have been impacted by these viruses. The pboc saying they want to see additional loans to areas, companies under pressure. They are focused on implementation in the measures they have already outlined. Yesterday, they were looking at a cut for the benchmark deposit rate. You have a couple with centralbank action in terms of these targeted cuts to some of the taxes and scenes talking about local security and the cost of power. In just a reminder that officials are trying to do their of the push aside some pain being felt across the economy. Tom, it has been all but certain, but we saw the official postponement of the mpc. This is a momentous decision. Tom it is usually symbolic, even if it is in practice not that meaningful. Symbolic because it has not happened since at least 1985. It has been held at the beginning of march. Penciled in for march 5. It is not a big surprise. We have seen about 3000 officials and delegates traveling to beijing. We heard from xi jinping that one of his priorities is to ensure that the city, the capital is protected, and indeed, we have seen additional measures and restrictions in the city after a number of people the infected where government compound is. We had people quarantined after contact with the local Government Official who was affected. We have seen additional restrictions and it is partly why you have seen the National Peoples congress postpone. We dont have a new day for it. In terms of practical implications, it may not be that significant, but symbolically, it is important. China watchers are looking at how president xi has been addressing officials over the weekend. There is an assessment from some that you will see more centralized government, more of an authoritarian approach. Some of the lessons they have learned so far from this virus is that surveillance and cracking down on people vocalizing opposition to this. In terms of lockdowns as well, huge numbers of people. That has paid dividends even if they seem to overlook the fact that there was a coverup in the early stages. There is a view you will get a more centralized government, more authoritarian approach by president xi. Expertsust quickly, saying this is a pandemic in all but name but the who is saying not yet. Yvonne not yet. As i mentioned before, they are saying the number of cases outside of china, relatively small. They are concerned that the sudden surge we have seen are cases where people did not have a travel history to china. Suggesting that perhaps theres a hidden chain of infections right now. The who reiterating that, no, at this point, not singing an uncontained spread of this virus. Haidi. Haidi thank you so much for that. Yvonne man and david ingles in hong kong. Tom mackenzie in beijing as well with the latest on the virus. We are seeing one mover to the upside even as japanese markets languish at the start of the session. Fujifilm jumping 8. 8 . Japan is to use the drug to treat the coronavirus and of course we have her just a couple of days ago that japan was considering using an antiinfluenza medication developed by a unit of fujifilm in the treatment of japanese patients of the Novel Coronavirus according to the Health Minister. Now, we are seeing that jump in fujifilm with seemingly a confirmation that japan will be using that drug. It will be treating the coronavirus. We will get you more details on that as they come to us. In the meantime, lets get the first word news with su keenan in new york. Withe are going to start malaysian politics, which have been thrown into turmoil by the resignation of the Prime Minister. The 94yearold quit and dissolved the cabinet after a power struggle over who should be anointed his successor. It is a position long promised to his deputy. He will stay on as interim pm while he seeks the numbers to form a new government or until a new leader emerges. Failing that, there would be a new general election. The u. S. Meanwhile is expected to sign military deals worth around 3 billion with india later tuesday. President trump announced the agreement at the start of his two day visit addressing a crowd. Trump reiterated his pledge that the u. S. Would sign a significant trade deal with india although he gave no timeline and later said he was in no rush. Pres. Trump we are in the early stages of discussion for an incredible trade agreement to reduce barriers of investment between the United States and india. I am optimistic that working together, the Prime Minister and i can reach a fantastic deal thats good and even great for both of our countries. Su Harvey Weinstein has been convicted of rape and Sexual Assault. The verdict in new york came more than two years after allegations against the hollywood producer sparks the metoo movement. The 67yearold who was acquitted of the most serious charge, predatory Sexual Assault, was sent to prison while he awaits sentencing on march 11. Weinsteins lawyers say he will appeal. Disappointed. We came in and we were down 350 the day we started this trial. The jurors came in knowing everything they could know about this case. We could not find a juror who had never heard of Harvey Weinstein. Su 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 su keenan. This is bloomberg. Haidi thank you. Still ahead, the latest on malaysias political power struggle as a rift between the Prime Minister and boils over. We will get some insights from kuala lumpur. Coming up next, china has released its monthly survey of more than 500 chinese smes. We will discuss the Business Conditions with the top china economist. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi stroudwatts in sydney. Highlighting the negative impact of the coronaVirus Outbreak. The sme i index from Standard Chartered fell to 40. 5 in february, the lowest since the gauge was created in 2014. At spring in one of the economists who compiled that data. Great to have you. What is the study of the latest results tell you then . That is borne out by our recent survey of smes. As background, Standard Chartered launched the Confidence Index in the year of 2014. Sentiment of the smes, which by far, is the biggest job creator in china. It covers hundreds of enterprises in different locations and industries. We see it as a good protector of the pmi. I, basedary, the sme the survey, a low level from 55 in january, and all the leaders of indices contractionary territory. In particular, the currency Performance Index dropped by 24 basis points to 31 point three. That is a reflection of a disruption of production and Service Delivery by the coronavirus. On the other hand, we see a for the index and performance petitions of the index. Smesxtend the credit of with preferential Interest Rates and also reflecting the hope on the part of the smes that recovery is very likely if the coronavirus is put under control by march. 70 ofsmes are almost total business revenue, almost 80 of total employment in china, so it just highlights the urgency with which the government needs to act. What can they do at this point and how quickly can help come . Meetings fories of the party suggests more is likely. From the macro side, cyclical policy is likely to be introduced including proactive fiscal quality and accommodative Monetary Policy. Chinas broadbased budget this gdp. Reach 6. 5 of it will include tax profits. Importantly, a step up in infrastructure in that sense. China emphasized they will increase investment in increments and facilities related to the coronavirus. The rrr cuts is also an option. We think the cut may come very soon, either this week or next week. In the Central Banks objective and the Central Banks objective is to keep liquidity abundant and the credit for the economy to grow at a faster rate than the nominal gdp. Leverage andting we also may see some tolerance of a temporary breach of the requirements including an increase of the loan ratio. In general, we think the First Quarter growth could drop to 2. 8 year on year. A qanna q on q basis, on on q basis, we expect growth. That is a contraction rarely seen in chinas recent history. Hopefully, the policies could resilient and the Capacity Utilization and work resumption may resume by march. In that case, that could be a recovery in the Second Quarter and for the rest of the year. Bounceback 6 for the rest of the year. Postponedh the mpc with no idea as to where it will be postponed, does that give them a bit more space as to not set the official growth target for this year and potentially give them a bit more flexibility on how much that budget will look like as well . Ding president xi emphasized the annual economic and social development targeted. Still very important. The government at different levels. I think in members of what the growth target is. We look at it in terms of the government, with new confirmed cases of the coronavirus. Gradually, the government focus has been shifted to striking the thence between a control of virus and resume the production and achieve the growth targets. Haidi thank you so much for joining us. Standard chartered head of Economic Research in hong kong. Dont forget, bloomberg subscribers can run the function for the client virus update. You will find the latest headlines from the bloomberg room, numbers from the cdc, and analysis on the companies affected. That is vrus. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi stroudwatts in sydney. Lets get you a quick check of the latest business flash headlines. Biggestt asia is two ridesharing apps are said to be in early talks for a merger. Indonesia and singapores companies have been in a costly struggle to build a super app, and have been battling over services. A merger would create one of the worlds most highly valued startups. They are said to be far from a deal. Creditcom. Uying buyingaying for credit,. Karma,. Intuit says credit karma generated 1 billion in revenue up last year, up 20 from 2018. After jumped after hours saying it would fend off the takeover from xerox. The worlds number two maker of personal computers plans to boost share buybacks to 15 billion from 5 billion and also raise its costcutting program to 1. 2 billion by 2022. Hp said it would reach out to xerox to explore a combination on its own the power struggle at the top of malaysian politics after the pms resignation sparked a leadership race. Su this is Bloomberg Markets asia. Right now asian markets are following the global selloff as coronavirusver cases outside of china. More than 1200 cases and 20 deaths been recorded in around 30 countries, with big spikes in italy and south korea. The World Health Organization says it is too early to call it a pandemic yet, but countries should be prepared. Our decision about whether to use the word pandemic to describe an epidemic is based on an ongoing assessment of the spread of the virus. It causes and impact it has on the whole society. For the moment, we are not witnessing the uncontained global spread of this virus, and we are not witnessing a large number of deaths. Su south koreas Consumer Confidence has plunged the most in five years as the number of corunna visors coronavirus cases spread. The index dropped below 100, the largest drop since 2015, which was when the last big virus hit the economy. It is seen as another reason for the bank of korea to ease policy when they meet this thursday. Sayingermany, police are a man delivery rammed his car into a crowded parade in a small town about 100 miles north of frankfurt. About 30 people were injured, some of them children. The 29yearold driver was arrested and is being investigated on suspicion of attempted homicide. The incident happened days after an extremist shot and killed nine people in another crowd town just outside of frankfurt. 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. Im su keenan. This is bloomberg. Haidi lets get a market check now where we are seeing japanese markets returning to trading after the long weekend. We are looking at both of the major indices in Japan Holding onto those earlier losses. Sarah not just holding on but expending the losses. Accelerations to the downside right after the open, roughly 32 minutes ago. Nikkei 225 down 3. 5 . Topics down roughly as much. Both having their worst days since december of 2018. Of course that was during the Fourth Quarter equity route around the globe. Both now trading at their lowest levels since october of last year. Koreaile over and south we see the kospi holding relatively flat. This comes after what was a brutal session yesterday, down near 4 for the worst day since october of 2018. In the fx and rates space we are seeing a reversal homes of large risk off moves we have seen the past couple days. Notably risk on today. Looking at the aussie dollar moving higher, one of the bestperforming currencies across the g20 g10. This comes after 2009 lows. Udc the yen trending lower against the u. S. Dollar but this has been the best day since august and still trading in the range of 110 to 111 for the dollaryen pair. At the same time we see a strengthening of the offshore yuan. A 6th straight day. 10 year treasury yields a little higher after following falling 10 basis points monday. Treasury yields in the u. S. As well, because some traders believe it still has more room to run. We had just off of record lows we saw in 2016. That was at 132 on an intraday basis. Goldman sachs reporting hedging. This happened a lot when they have to adjust duration risk. Also a factor in the decline in yields we saw last year. Saying that new record lows on 10 year benchmark treasury yields are a very real possibility by the end of the week. Certainly something to watch. Something that has been informing other Asset Classes as well. Haidi Sarah Ponczek with the latest on the markets as a selloff continues unabated, at least in part informed by the number of coronavirus cases confirmed in south korea. That continues to soar to more than 800. For the latest lets bring in our breaking News Reporter in seoul. What are the latest measures we are seeing from the government in terms of responding to the Virus Outbreak . The latest we are seeing from the finance ministry is the finance minister himself is pushing the government and the national some like to pass an extra budget l of 2 trillion bill of two trillion yuan. They want to implement this and use it to prioritize supporting fighting this epidemic which has recently spiked in south korea within a matter of weeks. Just a week ago the count was at 30. Right now it stands at 833 after one particular religious sect which led to a surge in the number in the nation. Haidi how are we seeing this virus story impact the tech sector . We saw a big move in samsung yesterday. Jihye yes we did. 3. 7 aslid as much as of yesterday. Stocks quite flat today, but we still have to wait and see overall the impact throughout the day. But over the weekend an employee at Samsung Electronics was with being infected by the coronavirus and that followed by shutting down a plant. This is how companies are responding quickly, shutting down factories which may or may not impact their stocks immediately, but that is the guideline that they are following. The government has raised its alert level to the highest which means that companies and other public facilities and organizations will have to follow suit with prioritizing blocking the spread if one employee or one member of an organization is confirmed with the virus. Haidi it is also playing out in the u. S. And south Korean Military plans as well. It is interesting, because the rhetoric we have heard from President Trump is he thinks the outbreak will be contained, particularly in china. What is the latest we are hearing in terms of these developments . Jihye the latest we have heard from the u. S. Force in korea, which oversees all American Military troops within south widoweds that one Family Member of a u. S. Servicemen in south korea has been confirmed with the virus as of last night. Tos has led to the bases raise their alert level to the highest. The state Department Also raising their travel advisory to south korea. U. S. Bases in south korea at the highest alert. Serviceman that directly serves in south korea has yet to be confirmed. But once that does happen, that will affect future plans for south korea and the u. S. What we have upcoming is a march joint drill that was supposedly a plan to take place. We will still have to wait and see how that immediately affects the u. S. And south koreas military plans. Reportereaking news jay haley install with the latest. Incomeup next, net missed even the lowest estimates. We hear from the ceo, richard lancaster. This is bloomberg. Haidi this is Bloomberg Markets asia. Firmkongs biggest utility saw operating off its 20 last year due to lower electricity prices in australia also. As they shift to lower emissions, half of the electricity sold will be generated by natural gas in 2020. Joining us from hong kong is ceo richard lancaster. Great to have you. In terms of the hong kong market, what was the effect you saw when it comes to the economic slowdown that we know began the social unrest and the process, and has now deteriorated into the coronavirus effect as well. Richard we have had quite a lot of developments in hong kong in 2019. As far as the Electricity Sector goes, it had minimal impact on our electricity sales. We see the longterm effect of the economy to grow at a slower pace. On top of that we have had the recent coronavirus. It is still quite early yet to really see the Economic Impact of that. As far as our business goes come we have to take a longterm view. Thick and sane and provide an essential service to the community. It is important we get on with the business of the carbon icing our economy and ensuring we are providing a revival and economically cost of ive costeffective and environmentally from the service. Haidi just to interrupt, we are getting the latest china numbers when it comes to coronavirus cases and the death toll coming through. China saying Hubei Province has 499 additional coronavirus cases as of february 24. The death toll rising to 2663, with 71 new coronavirus deaths. So that is actually lower than yesterday when we saw the most number of deaths in about 11 days in china. Total number of cases rising to china. In 68 new deaths. Passing through those numbers we are also getting an update on the number of patients discharged, more than 2000. If you are to look at the indicators from your business, in terms of china, power consumption for example, is there a comparable indicator you would look at that would tell you about how Economic Activity is being impacted in a certain market . Richard it is very early days yet. Basicallyhave only january and part of february numbers to look at. So it is very hard to assess any sensible impact on the economy at this stage. As far as electricity consumption goes, we run a diverse portfolio across the whole of china. We had no operations whatsoever in Hubei Province. As we have seen from those numbers, very high concentration in Hubei Province, but less of an impact across the rest of the economy. Four our business, it is making sure we are providing a safe and healthy workplace for our staff, keeping the business running as reliably as possible, and making sure that our supply chain is robust and that we have all the supplies that we need. Haidi what is your assumption then in terms of when you think industrial activity in china will return to previrus levels . Richard again, that is very hard to predict and will be very patchy. Clearly where there are still concentrations in provinces such as hubei, things much may get things may get back to normal much lower. For the rest of the economy, a more appropriate pace. Haidi what about cuts to power prices . We know that can help alleviate the pressure on affected regions and businesses. How does that affect your business . Richard here in hong kong, we have offered a package to help out Small Businesses in particular who have been hardhit by the seven months of protests, and on top of that, the coronavirus. We saw a late last week the announcement from Central Government in china the drop electricity prices by 5 . That would be implemented by the two Large Companies there. So, understanding where in the economy businesses are hardest hit and working in ways that we can to help them obviously is important as well. Haidi are you considering further investment in nuclear either in china or hong kong, in creasing purchases there . Richard we want to decarbonized our business. And in hong kong, it is a very small area. So we have limited room for renewable energy. So the foundation of our low carbon Electricity Supply will be a mix of natural gas and nuclear power. Nuclearinvested in power going back to the 1990s. So, it is part of our portfolio and it is a technology we are comfortable with. And over time, we would like to explore more opportunities in nuclear power. Haidi are you seeing signs of stabilization in your australia business . I am wondering, is there a bit of a gap and what you are focused on and what the Australian Energy policy has been, which is low prices for consumers but not much of a coherent approach towards a more sustainable Energy Policy . Richard we would like to see a very consistent and predictable policy in australia. There have been flips between a focus more on price, then we see a change in policy which is looking more at the Environmental Performance of the industry. We believe that all economies around the world have to decarbonized. It is just a matter of how quickly you can do that, and managing that at a reasonable cost impact. So our policy and objective in australia is to continue to decarbonized the business there, which it as best we can, has very intense retail competition there, and delivering value to our customers, simple and competitive pricing is really what we aim to do. Haidi richard, thank you so much for joining us. Richard Lancaster Joining us from hong kong. The long simmering power struggle in alicia has boiled over, in malaysia has boiled over. Joining us from kuala lumpur to discuss is bridget welsh, an Honorary Research fellow at the university of Asian Research institute. What do you expect will come next . He hast right now, returned as Prime Minister using the constitutional powers of the king. The country is doing what other Coalition Governments do is determine who can form a government. Alliese are different and different sides negotiating with mahathir. Mahathir has emerged more powerful because he has the deciding power and two important parties with him to choose how it is going to move forward. So it is about which groups are going to come together and which positions are going to be get the one within that, and what does that mean for the direction moving forward in terms of malaysias government. Haidi so it is a highly strategic move . Bridget well, whether or not it was strategic or planned is a manager a matter of debate. Ultimately what has happened is he put himself in a much stronger position in choosing who he wants to be in government and the process ahead. Cost, has come at a high because it has destabilized mick asia malaysias economy. It left an impression among the public that the elites are not concerned about their input, their mandate. So there has been a cost to this which has ultimately damaged mahathir. Haidi what do we read into the fact that the king did not refrain from exercising his power in appointing a new pm . Bridget he did choose to appoint mahathir. Its for a supposedly interim capacity, but the constitution means effectively he has become p. M. One of the issues is whether mahathir will choose to stay as p. M. Or will he appoint someone else. Right now the issue is who are the allies and who are in positions in the cabinet. Given that there are multiple authorities of serious interest, these are intensive negotiations. The other issue is those who may not be seen as being able to get positions, what tact they will adopt. Bringrt of the ploy to them down, they are again lobbying for positions. Increased pressure to move forward to elections as opposed to allowing mahathir to try to form a government that stabilizes and puts malaysia back on track. Haidi what are the implementation implementations then if there is an alliance for the clinical system there, and clearly investors are hoping for some certainty to come. Bridget i think there are two issues. One has to do with ethnic representation. I think ultimately for malaysia, having an ethnically and regionally inclusive government is most important for the stability and integrity of the country. Ofhink one of the problems the alliance is it is not acceptable to many people in east malaysia, and it is based on the concept of exclusion, which will have important ramifications. It sends a very bad signal to the market and a bad signal to Many Companies within malaysia itself. The other issue is what is the question of longterm stability. Malaysia is in a different situation than it was before. There are Coalition Governments as opposed to one stable, oneparty system. This has been a very difficult and challenging adjustment. A lot has been driven by personality and not principal. So i think one of the issues now is whether the elites are going to recognize the cost of their political gains for the country and whether they will come together and a much more cohesive fashion. This is not easy, because of what we have seen in the last four days is quite the opposite direction. But the temperature has cooled in the context as negotiations have mood moved inside in the party. It may rise again. There are still high levels of uncertainty in this transition process. But at the same time, i think cooler heads are prevailing to move the country towards a more stable situation among some at the elite level. Haidi bridget, thank you so much for joining us. We have still more ahead when it comes to this market session, as we see the selloff accelerate across asia. This is bloomberg. Loomberg. This is Bloomberg Markets asia. I am haidi stroudwatts in sydney. Lets look at how markets are trading. We are seeing the selloff accelerate, particularly when it comes to japanese markets. We had both the nikkei and topics trading and falling the most since the end of 2018. We also heard from the finance minister they are waiting to measure the effect of existing measures to support the economy and some and contain the virus. In south korea we are seeing a as south. 25 higher korea continues to battle what has been the new epicenter of coronavirus cases outside of china. We are seeing some lines regarding a drop to supplementary budget as soon as possible. The white house saying they are transmitting 2. 5 billion in coronavirus funding. We are counting down to the opens in hong kong and mainland china, malaysia, indonesia, and taiwan. Lets go to david in glace in hong kong. David i was listening to your conversation on malaysia. They entered a bear market yesterday, as the thailand. I am not sure if you can see this chart i have for now. If you look at the rates markets, about to crack 1 for the first time in forever. I guess when you look at the complexion of markets leading up to the chinese open i would look at two separate things. When you look at japan, it is almost like when you hit your toe against the foot of the bed, that immediate pain, that is japan. The pain that lingers for the next 10 to 15 seconds, probably the rest of asia. Not quite risk off but not as much as we saw yesterday. Haidi dave, we will check in with you shortly. Coming up, we will discuss Investment Strategy in the wake of the coronaVirus Outbreak with sam lecornu you. That is it for this hour. Our coverage continues as we look ahead to the start of trade in hong kong, shenzhen, and shanghai. Bloomberg markets china open is next. 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. Its 9 00 a. M. In beijing. Welcome to Bloomberg Markets china open. Im haidi stroudwatts. We are counting you down to the open. Equities and oils slumping on fears the coronaVirus Outbreak is close to becoming a global pandemic. The infection has now spread to more than 30 countries. Revoked the easing of quarantine measures in wuhan. Struggle boilsr over with the Prime Ministers resignation
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