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tv   Bloomberg Markets Americas  Bloomberg  February 13, 2020 1:30pm-2:00pm EST

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are looking ahead to the biggest prize on the primary calendar, super tuesday. when more than a dozen states go to the polls is march 3. vermont senator bernie sanders let the popular vote in iowa and new hampshire, with former south bend indiana mayor pete buttigieg a close second. in the u k, chancellor of the exchequer sajid javid said he is no choice but to resign. he quit after a showdown with prime minister boris johnson. bloomberg has learned johnson fire allthat javid five of his most senior treasury aides. he said he was unable to accept conditions for being chancellor. kong, schools will remain closed for at least another month as officials try to rent the spread of the coronavirus. the city's students have not gone to school since the schedule in the near new year break began in late january. hong kong has confirmed 50 cases of the virus and is on the front
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lines of the global battle to contain the illness. tokyo olympic organizers are reiterating their message, that the 2020 games will go on as scheduled despite the virus outbreak. the olympics open in five months and the torch relay begins next month in japan. japan reported its first death from the coronavirus today and has confirmed almost 250 cases. the virus is keeping chinese athletes from china -- traveling to qualify, which could put their presence in tokyo in jeopardy. 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. i'm mark crumpton. this is bloomberg. shery: live from bloomberg world
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headquarters in new york, i'm shery ahn. amanda: live in toronto, i'm amanda lang. welcome to bloomberg markets. the top stories we are following from around the world. uncertainty returns as china reports more cases of the wuhan coronavirus. the death toll topping 1300. u.s. stocks rebounding off session lows, looking to extend the three-day winning streak after opening well in the red. a rising debate over canada's relations with china. justin trudeau facing calls to take a harder line amid growing signs of beijing's long reach. aanda: of course, there is chinese impact on the markets today of a different nature. taking a look at the different averages, it is a new count on the coronavirus that seem to rattle stocks today. the north american markets following asian markets weaker. the who saying the new method of counting, which sent the count
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higher, doesn't necessarily indicate a more serious spread of the disease. but we are watching energy weak, industrials across the s&p. have, coming we out of the white house, we cannot trust the date out of china in any event. all of that just reminding people this is a live issue and markets are still chewing over with the impact will be on individual businesses. shery: headline started trickling out in the middle of january, so we already see the impact on data coming out of china with car sales plunging by the most in about eight years in january. take a look at the carmakers. they will not only be taking a hit from decreased sales but also because of supply chain disruptions. general motors coming back online, restarting their factories this weekend. we have heard from gm korea that they may have to halt the plant because they cannot get the parts from china.
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yet chrysler also looking at possibly idling a few of their plants in europe because they don't have enough materials. tesla has a different story right now. they have already reopened in shanghai but there are also selling about $2 billion of common stock, and that is being reflected in the market. it is all about car sales, down by the most in a year. we are talking about sales to dealerships falling 20%. the passenger association car forecasted a february plunge of 30%. this would be the biggest fall in eight years. for more details on the spread of the coronavirus, we are joined in hong kong by sophie kamaruddin. explain to us this change in hubei provincet adopted here, and give us the latest numbers. >> the revised methodology includes the category of patients that have been
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diagnosed with clinical symptoms. that will allow for further detecting. but this has done is increase the number of total cases by 45% , to nearly 50,000. as amanda noted, the who clarifying, the lion's share of these newly added cases under this new category date back two days and weeks ago, so that representing a sudden surge. even so, this complicates matters for china's leadership, as there is more doubt being cast over the veracity of data from the mainland. we are waiting to see the trajectory of the outbreak. there are reports chinese national congress may delay a key meeting scheduled for march 5. usually, after this session, annual economic targets are released, and there is likely to be a tweak given the ongoing outbreak. amanda: one impact of the total new cases is that the percentage of fatalities declines. what is the reaction to the
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revision of how it is counted, assuring, or undermining chinese credibility? sophie: there are several ways to parse the data. we had that surprise decision initially seen as a risk off sentiment in markets, so there was a bounce in metals. given the implications of the scale of the crisis, these numbers add challenges. there is also a political shakeup to consider on thursday. two top officials in wuhan and hubei have been replaced given their failure to curb the spread of the virus. this is a sense that clean slate moment before these new officials take the helm in wuhan. shery: sophie kamaruddin, thank you for the latest on this ongoing outbreak of the coronavirus. turning to the u.s. economy, a
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key measure of u.s. prices remains subdued in january. upset. costs were joining us for more insight is oxford's chief economist. the inflation picture is benign, the same with the pce numbers. does this mean the fed has plenty of room to cut if it wants to this year? gregory: that is the message we are getting from most inflation gauges. essentially this gives the fed a lot of room to continue to try to run the economy hot and cut if it needs to. it is expected that inflation will not meet the 2% target this year. this would be the ninth consecutive year that the inflation target has not been met. that should allow the fed to allow further easing it economic conditions deteriorate. that is our forecast now.
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we expect further slowing it economic activity, especially with the outbreak of the virus. that should curb growth to about 1.5% this year, inflation under 2%. shery: chair powell did not change his outlook on the coronavirus. i did mention the supply chain disruptions we are seeing in the auto sector, the same for every other industry, because of the importance of china. how much of an impact will that have on prices, not only in asia but also in the u.s.? gregory: largely inflationary. there may be upward price pressure in the segments were there are shortages, but overall, the effect of slower growth and global activity is likely to put downward pressure on u.s. prices. domestic price pressures are fairly limited your global inflationary prices are actually diminishing. we cannot forget we are living in an environment in which global growth has been slowing for the past 18 months. we expect that slow down to continue. as it does, we don't expect to
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see upward inflationary pressures. this is largely a decline in demand that will outpace the demand and supply. amanda: let's focus on that. on the monahan, the market will cheer the fact that the fed has maneuverability because of that pce, benign inflation. on the other hand, there is a concern about the output gap, possibility of recession, and real reflationary pressure. where do you think the fed is thinking about trying to act to stave off those scenarios? gregory: in general, that that is aware of these downside risks. the canoes to be a skewed to the downside in terms of economic momentum in the u.s. the fed expects growth to be around 2%. we are looking at closer to 1.5% this year. we are not expecting a downturn in economic activity, but we are seeing signs business investment is not really moving, facing headwinds from slower growth,
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policy uncertainty, strong dollar, and now this virus. and consumers are being more cautious when it comes to their outlays,. we seem to be in an environment with slowing activity with risk tilted to the downside, which should come in from the fed's perspective, position it in a way standing ready to act shouldn't need to act. amanda: where do you see that action coming? it gets limited in its ability to move on the right side of things. do you see more on the quantitative easing side? gregory: i don't think quantitative easing in its purest form will be considered anytime soon. the first line of defense will be rate cuts. we know the fed still has room to cut rates. more importantly, the effect of these rate cuts comes more be a financial conditions nowadays. if we start to see financial markets, equity markets in particular, start to react adversely to this economic environment and coronavirus environment, and we start to see
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volatility rise, the dollar strengthened further, the fed would strongly consider loosening policy, reduce interest rates, to prevent that tightening of financial conditions, which would be detrimental to economic activity. amanda: we need to leave it there. thanks, gregory daco. coronavirus and the state of global trade. my conversation with the ceo of magnet international, one of the world's leading auto-parts makers. this is bloomberg. ♪ this is bloomberg. ♪
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shery: this is bloomberg markets. i'm shery ahn in new york. amanda: i'm amanda lang in toronto. magnet international, the world's leading auto supplier has a lot riding on a new nafta.
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i talked to live with the ceo don walker about the importance of getting that revised deal done. >> i'm very happy to see the new nafta, usmca is done. there has been a lot of work done on that. i personally think the reason nafta was redone was partly to make sure there was a good basis for going forward for trade in nafta within the automotive industry. a big part of it was too slow down the investments. there will also be a change in the regional value content. mac that is the biggest supplier in nafta. we will see the details. they will come out on friday. it should be good for nafta as a trading region to compete against other trading regions, should be good for the suppliers that are here. should be good for us. canada has to this ratified. i think there has been a real reluctance for anybody investing big money into canada while this was going on. why would you invest money if you didn't know that you would
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effectively be able to trade with our best and business trading partner in the u.s.? it has been a tough year. we deserve a lot of credit. this was a tough negotiation but it is done. amanda: you have a big foot rent in mexico. how might that change? labor costs are expected to go up as part of the deal. don: we will have to see what the details are. the careful what you wish for. it labor costs go up in some places, there is no way that is coming back to u.s. and canada. we couldn't find the people to do it here anyway. you wouldn't be competitive. if they go up too much, the business will leave. it will go to other areas of the world. to the extent that we have a lot of big operations there, we pay pretty good wages down there anyway. we are not paying $16 an hour. we will have to see how the labor value content is
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calculated, with the car companies do. i think you'll probably see more of the big, technical, heavy investment may be coming back to u.s. and canada. playing field between canada and the u.s., so should be good for canada. amanda: the auto pact was so northant fostering this american footprint for this industry. how could that change over time? than the manufacturing that has to be assembled close to customers, what keeps manufacturing in canada? we are competitive. we have do have a competitive environment in canada, which means regulation, red tape. as long as we have a competitive environment, there are a lot of skilled people here. a lot of good tradespeople, good higher education, software, engineering. if it's a level playing field,
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hopefully we can compete and get assembly plants here. andhe extent you have nafta there is motivation for people , what thein nafta usmca does an effect, it says nafta can be functional and be competitive. the big threat long-term is from china. i personally think this trade deal is all about getting a trade deal done, a stepping stone for the u.s. to negotiate other trade deals, and to push back against the imbalance of trade with china. personally, i think this is what it's all about. amanda: how does a company like magna fit into that? we are aligned with his union over here. we are the biggest in north america but we are also growing rapidly in china. they have the biggest market in the world right now for automotive. -- most of what we
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make in china is for the chinese market. europe, china is china, nafta is nafta. to the extent there are no massive shifts, we should be able to grow in all areas. amanda: of course, coronavirus has made impacts. you have restrictions on travel. what are the implications for you so far, short and long-term? don: too early to tell. we kept our plants down an extra week, working closely with the chinese government. most of them seem to be coming back this week. most of what would be in the pipeline takes five or six weeks to go to europe or north america. if production starts again and gets going, i doubt there will be too many disruptions in north america and europe. it will have an impact in china because plants have been down. we have given donations over there, medical supplies, we are doing what we can. i don't know what will happen but it looks like they are slowly getting things back. it's a big priority for the
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government. amanda: that was my conversation with magna ceo don walker. --n as one of the biggest we will discuss the latest after this. this is bloomberg. ♪
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amanda: this is bloomberg markets. i'm amanda lang in toronto. shery: i'm shery ahn in new york. time for the bloomberg business flash. a look at the biggest this is stories in the news right now. the parent of t-mobile wants to renegotiate the billion dollars takeover of sprint. deutsche has learned telekom wants a lower price because sprint shares have fallen. the sides have not yet started talks about new terms. says it is planning an ipo for universal music by early 2023.
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universal is the french company's take profit driver, raking in money from the popularity of music streaming. among the stars, taylor swift, drake, and eminem. american airlines was to establish seattle as an international gateway, starting with nonstop service to bangalore, india. american says that is the most requested root by the customers. american plans to add more flights. fromg pressure on huawei the u.s. as they raise racketeering charges against the tech giant. this as the arrest of the company cfo put strains on relations between canada and china as concerns grow over beijing's long reach into canadian affairs. joining us now is our vancouver bureau chief. how much pressure is prime minister trudeau facing at the moment to take a more hardline -- hardline stance against
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china? >> i think the broader context is that until meng wenzhou's arrest in 2018, canadians had an impression that they had a special relationship with china, established diplomatic ties before the u.s., a long history of cultural ties and migration. that fell apart after her arrest. china through to canadian citizens into jail on national security charges, halted $5 billion in agricultural exports, and put to canadian citizens on death row. his new ambassador to beijing came back to canada about 10 days ago and spoke to a parliamentary committee, and told them the relationship had fundamentally change with her arrest, that the chill is real. , there are more and more calls coming out for --ada to the knowledge acknowledge that beijing has a history of trying to influence
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affairs inside canada, trying to harass uighur and tibetan activists. story, you note in the influence the outcome of local elections, protesters standing outside courtrooms. these things are difficult to prove, but there is a sense china has reached into the canadian country for a long time. ada tries to play a middle ground. is there a chance they could tilt one way or another as the u.s. has done? and histrudeau ambassador came out and said publicly was, this approach in the past, engage china through trade and eventually china will -- this is a believe held by a lot of western democracies, that if you engage through trade, eventually, they will become more like us. that hasn't happened. people are especially skeptical that will happen under xi
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jinping. there's an acknowledgment now that certain redlines have to be drawn. in the case of the two canadian citizens that were thrown into jail, that is the priority. .here are calls coming out for example, if you recall, australia passing sweeping anti- foreign interference bills. there are calls in canada to consider the same. a conservative lawmaker last month also tabled a motion that would allow canada to start sanctioning chinese officials on human rights violations. so the pressure is on trudeau. i think there is this acknowledgment that things cannot go the way that they were going, that something has to change in the approach. in the meantime, we see economic relations between the two also suffering. >> that's right here in china has been canada's second biggest trading partner, $702 billion in
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to retrieve last year. obviously, that has taken a hit. alone, $5al imports billion to $6 million that was hot -- halted by china. canadian exporters have suffered. there's a broa is -- businesses, tourism, those with supply chains in china, that things are suffering, it is getting more difficult to do business there, or there are more concerned about doing business there. amanda: natalie obiko pearson, appreciate your time. to get the charts you have seen on the network, the function is gtv . from toronto and new york, this is bloomberg. ♪ everyone uses their phone differently.
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thailand, japan and the philippines refused to allow it to dock over fears it would expose them to the coronavirus. the ship operator says no cases of the virus have been confirmed among the more than 2200 rew.engers and ce opposition politics since -- politicians interrupted a state of the union speech in south africa, forcing the president to delay his remarks for over one hour. business leaders have been cking the pressure on the president there to announce decisive measures to turn around the economy and fix struggling state owned enterprises. by speech had been billed business leaders as the most important since nelson mandela's speech in 1994, the first after apartheid ended. venezuela saying the u.s. should stop punishing with financial sanctions. officials are taking their case to the iti


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