Worse than people think. We are confronted with a condition of supply and demand shocks. It will have effect on global gdp, that is for sure. But it is not like the world will end tomorrow. Nejra meanwhile, president s trump and modi meet in india. The countries did sign defense deals worth 3 billion, and they pledged closer ties on Maritime Security. Nejra jpmorgan lays out goals on its invest today. They said u. S. Wealth is going to be one place where they can still growth. Nejra and the iger era comes to a close. Disney names a new ceo. I intend to double down on the same strategies bob has established. Nejra its all straight ahead on bloomberg best. Hello and welcome. Im nejra cehic. This is bloomberg best, your weekly review of the most important business news, analysis, from Bloomberg Television around the world. Lets start with a day by day look at the top headlines. The dominant story throughout the week was the global spread of the coronavirus, and on monday, as reported infections climbed, Financial Markets felt the pressure. Coronavirus continues to spread beyond china and outside asia, raising concerns about the prospects of a pandemic. South korea, which raised its Infectious Disease alert to the highest level over the weekend, just confirming 161 new cases and two more deaths, and now seven deaths and over 750 new cases, all in south korea. We heard from the finance ministry. They will be announcing, they say, extraordinary measures for the economy. And italy as well this is the epicenter of where the brick has has been in europe. More than 140 cases there. Indeed, milans stock market opened down 4 this morning. Spreads are spiking already, and italy was already in for a giant economic situation. The economy contracted in the last quarter in 2019. It was preparing for a recession in the beginning of 2020, and the government is fragile. Francine stocks plunging around the world. President xi jinping has urged china to spare no efforts to contain the coronaVirus Outbreak. That is as the nations top government postpones guy northern italy grinding to a halt today. This as the government imposed a regional lockdown to contain an outbreak of coronavirus that has already affected over 200 people. Milan, the countrys financial hub, has seen schools, museums, all closed, with many staying away from work. Investors starting to price in the risk of a recession. We estimate that the northern swaths of the country, like in an arc from here east toward the veneto region where venice is, probably accounts for Something Like 1 3 of the economy. So as you can imagine, just shutting that down for a number of days or even possibly a week or more would have a devastating effect on the economy for sure. [bell ringing] u. S. Stocks having their worst day in more than a year, the dow and s p erasing their gains for the year. And it is a third day of losses. Lets not forget that the momentum is to the downside. I do not think it was panicky. It did not feel like at any point we were about to just keep selling. Nonetheless, the fundamental news out there is not great, because people, i think, just feel like they have no sense of where this virus could be. Francine the spread of the coronavirus outside china, including south korea, iran, and italy, has seen the number of cases worldwide top 80,000. But, for now, the World Health Organization is not yet calling the outbreak a pandemic. We are now seeing transmission in countries where we had not seen transmission before. And we are now seeing clusters or chains of transmission where we do not know what the originating factor was. We do not know did someone travel and spread the virus . How has it arrived in that country . We have another sea of red. Yesterday, we were down sharply. Every single sector here in europe is off today. Ftse 100 down 2 . The dax down 1. 8 . The madrid market, where we have seen more cases of the coronavirus. The Costa Adeje Palace Hotel in adeje, tenerife has been quarantined. Madrid, the market down by 2. 32 . The impact of the coronavirus is being felt worldwide by big businesses. United airlines, mastercard, and apple all emerging as latest companies to warn that profits could be hurt. More than 300 companies in the s p 500 have recorded downward revisions to their First Quarter estimates, so we have gone from an anticipation of about 2 , 2. 5 growth in q1 to negative growth expected already. I think that is only going to get little bit worse as long as the coronavirus continues to extend, the duration extends, and it continues to ramp up globally. U. S. Centers for Disease Control and prevention is warning americans to prepare for a coronaVirus Outbreak here at home. We cannot hermetically seal off the United States to a virus. And we need to be realistic about that. It is all eyes on the bond market. The 10year treasury yield finally broke that record low it has been flirting with. Your new record is now 1. 3155 . [bell ringing] and there you have the closing bell. We are looking at losses of more than 3 for the dow and s p. This is a fourday selloff for the major indexes. The russell 2000 off by more than 3. 5 . The dow, the s p, and nasdaq have all erased their gains for the year. They are all negative for 2020. Jonathan the coronavirus wreaking havoc on markets, despite President Trump and the administrations best efforts. You may ask about the coronavirus which is very well under control in our country. So far as containment is concerned, we have tightly contained this. So it is an early success for our side. Jonathan the cdc sounding less optimistic, telling reporters in washington the last 24 hours it is not so much a question of if this will happen anymore but rather a question of when this will happen and how many people in the country will become infected. If the president emphasizing the degree to which the disease is under control or contained . Which is correct, but the cdc is making the point that, given how rapidly it is spreading across the world, given the particular characteristics of this virus, it is pretty unlikely it will stay that way for too long. Because of all weve done, the risk to the American People remains very low. What we obviously saw was an attempt by President Trump, the administration, along with their Health Experts to try to align their messages. There were clear areas of disagreements, though, between the president and his Health Experts. Just after the press conference, you got confirmation from the cdc that one person in the u. S. Has been confirmed to have the virus with no known links to any areas of outbreak, suggesting that could be the first instance of persontoperson infection within the u. S. More coronavirus cases were reported in countries other than china for the first time, a Significant Development highlighting the spread of the epidemic around the world. Markets are lower this morning. Strategists from Goldman Sachs warned against buying the dip in the s p 500. And on the company front, microsoft and hp joined the ranks of other corporates, from apple to united airlines, warning of a hit on the outbreak. This is the first time we have had more new confirmed cases on a daily basis outside of china than inside of china. Saudi arabia does not have any confirmed cases, but they are taking the precautionary step to temporarily suspend pilgrimages to mecca. Japan also has more than 200 cases now, and we just heard from shinzo abe, the Prime Minister. He is going to cancel or at least suspend, i should say, for about a month, through midapril all schools across japan. There is a lot of red out there. Markets down 3 , 3. 5 . Ftse, dax, the main markets in europe all down over 3 . This is possibly the worst thing i have ever seen in my career. And, you know, i have been through a lot. Ive been through the stock market crash in 1987. I went through the financial crisis. This has the potential to reel into something extremely serious. It is very hard to imagine a scenario where you can actually contain this thing. It is getting worse by the second, more or less. Nasdaq now looking for declines almost 4. 5 . S p a little better, 4. 3 . Scarlet but session lows. We are going straight for session lows. The 10year treasury yield is still below 1. 3 . The vix is off to the races. These virus headlines, it feels like they are not slowing down at all. This is still a very jittery and panicked market. Nejra wipeout on wall street. Global stocks head for their worst week since 2009. A painful day in asia. Francine european stocks are tumbling. U. S. Futures signal yet more pain to come. This comes as new cases of coronavirus keep appearing outside of china. New zealand and lithuania have reported their first infections. So has nigeria. Bank of america said this could be their worst week since the Global Financial crisis. Citi is expecting zero growth on global earnings. And they say even that is an optimistic view. So as we move money out of equities, we see it of course going into treasuries. The 10 year yield slipping below 4. 2 . 1. 2 . Ow every time it slips lower is a new records. Brent touching 50 a barrel today. The implied probability of a recession has gone basically through the roof. This is not as bad as 2008. But it is worse, i think, than anything we have seen since then. Futures now pricing in a 100 chance of a 25 basis point cut next month and a 40 chance of a 50 basis point cut. But everyone in the market seems to be telling me this is a shock that policymaking on the monetary side will have very little impact upon. I would completely disagree with that assessment. The central bank absolutely has ammunition to at least help deal with the crisis. My own team trimmed our first half Economic Forecast by 50 60 basis points, based on the equity route alone. And it gets us to gdp growth of about 1. 5 in this quarter, 1 next quarter. That is going to convince the fed that they do need to step into the picture sometime soon. Fed chairman jay powell issuing a statement on the coronavirus and the impact of n the economy, saying the fed is closely monitoring developments and the implications for the economic outlook. We will use our tools and act is appropriate to support the economy. I think the markets really wanted to hear something, anything, from the head of the fed. His statement was not that encouraging, i think, to markets. It extended a rally in treasuries. The s p 500 is battling that 2900 level. It is not a huge pop, but i think it at least gives a little bit of relief that there is a fed backstop in some capacity. [bell] it is hard to believe, in a century spanning the Great Depression all the way up to the financial crisis, the current correction that we are in, is the fastest ever. The dow, s p, and the nasdaq all slowing the most this week since 2008. Nejra still ahead, as we review the week on bloomberg best, much more on the impact of the coronavirus. The ubs chairman is among the experts who believe the longterm economic effects may be severe. Likely, in our estimate, this is going to bring Global Growth from 3. 5 to. 5 . Nejra the shadow of the outbreak hangs over earnings season. Up next, executives review their results and explain how their businesses will weather the epidemic. We are expected to have null earnings for the second half. I think the uncertainty for the moment is in which markets it will affect things. Nejra this is bloomberg. Nejra this is bloomberg best. I am nejra cehic. Earnings were top of mind for investors this week as Companies Project the Coronavirus Impact on their profit outlooks. Lets begin our reviewt with the results from metals and mining giant rio tinto. The worlds secondlargest miner is weighing the impact from the coronavirus. Rio tinto says there could be uncertainty near term and a second half boost from chinas efforts to combat the virus. So far, the virus has primarily impacted the service sector, the construction sector, and in manufacturing. The heavy end part of the industry, the aluminum smelters and copper smelters, have not been impacted. Because they are difficult to stop, we can only slow down. At this point in time, the impact on our part of the business has been very limited. However, the situation can evolve quickly. But we are absolutely confident the chinese are taking the right steps to contain the virus. We are monitoring very carefully in terms of traffic jams in shanghai, beijing. Consumption of coal for the energy sector. And we start to see a small uptick. Bluescope steel has reported a 70 drop in first half net profits. That is due to previously flagged decline in commodities still spreads. Australias largest steel producer warns that the coronavirus will heavily impact its business. What we have said for our second half outlook is that we are expecting to have no earnings out of our China Business for the second half. Of course, the second half in china is seasonably softer anyway. Typically about one third of our earnings. To put that into some context, from a year ago, we had earnings from our China Business in the second half of 69 million. We reported today a half earnings of 302 million. So that is the relative impact we are currently forecasting on h2. Standard chartered says the coronaVirus Outbreak will hurt this years results. The asianfocused bank has also reported a buyback. The lender has reported 2019 fullyear underlying profit slightly behind analyst estimates. So you have warned about the impact of coronavirus. Can you give us a little bit more detail on where you see the biggest touch points for your business . We have actually seen, for the first couple of months, actually, the business performed very well. Although clearly the impact of that will probably come through in march and beyond. I think the uncertainty at the moment is in which markets it will affect things. China, appears to be settling a little bit. Obviously, outbreaks in other countries, we will have to see how long those go. We have come off the back of that, caution that this year may be a little bit more challenging. Time will tell how challenging it is, but we will continue to do what we have been doing before. Some things we can influence, some things we cannot. The waste giant has beaten on analyst earnings, but the call was dominated by coronavirus, which could hit the firms operations in china. The ceo, bertrand camus, spoke exclusively to bloomberg about how much visibility he had regarding the virus effect. China was pretty straightforward for a while. Most of our activities were down between february and part of january as a consequence of low industry regulations in china. We see today is the request from the Global Demand of restarting operations, for example. Suez put back into operation. So we have a very precise order march in front of us with our operation, and we were able to assess impact on our accounts. Of course, assuming that things will resume and go back to normal from now on and into q2. Basf is warning of a Second Annual profit drop due to the impact of an ongoing slumped in autos amid the coronavirus. The worlds biggest carmaker chemical maker said the outbreak will have a Significant Impact in the first half, and it does not expect a be able to offset the effect during the second half. How bad, first off, is your visibility due to the coronavirus . What we expect, certainly, is we will now also see the impact globally. Because there are global value chains so far, the stocks are sufficient, but i think over time, the logistics, the supply chain will transform the topic globally. And i think we will see disruptions and we will see, also, a slowdown from the demand side. Bayer is painting a grim scenario over losses over roundup weed killer. For the first time, the company says it might have to sell assets, issue stock, or borrow money at unfavorable rates. Bayer is working to settle claims roundup causes cancer. In the u. S. , it faces more than 48,000 lawsuits. Tom when will you need a cash call to deal with the roundup issue . When do you have to go back to the market and find a new confidence to bring in money to pay for all of these legal issues . Werner the stop line, whether it is ebitda, core eps, u. S. Court. If yes, we have done quite well. To your point, we have more than 4 billion in free cash flow. I think we have a quite solid balance sheet. Also for some of the challenges ahead tom so are you saying you do not need to go for a cash call . Werner i think it is way too early. We are working diligently with the dual path approach that you know about. And we first have to know where were going to end up to answer that question specifically. Chinas top internet search engine, baidu, says total sales in Fourth Quarter growth grew 6 from last year but are expected to decline due to virusrelated shutdowns. Is there a sense baidu is getting ahead of the concern over coronavirus, or is it just not possible, at this point, to be able to accurately model what kind of impact that we are going to see from this issue . What we have to know is that generally, First Quarter is a seasonably weak quarter for advertising anyway. Usually, the merchants wait for after Chinese New Year to have a more clear idea of how much they will spend on online advertising. So, yes, i would say it is still a bit too early and premature to assess the impact. It was a happy holiday for macys as the retailer topped earnings estimates thanks to a lastminute holiday surge. I think macys is in a tough spot. Just last week, it was cut to junk, because s p analysts do not think that its big turnaround plan that it also touted this month is really going to work. The company has already said that it plans to cut about 2,000 jobs. It is shutting its most underperforming stores, about 125 of them. So the company has a really tough road ahead, and i dont think the result