tv Bloomberg Markets European Close Bloomberg January 21, 2020 11:00am-12:00pm EST
outbreakgion and the of a virus. live from london, i'm guy johnson, with vonnie in new york. we are now counting you down to the european close on "bloomberg markets." ♪ vonnie: the coronovirus cast day overronovirus cast a pall asian markets overnight. underneath it, you see that the casino and gaming industries, the hotel industries, tourism, flight, they are all lower in the index. that is on exposure to asia if this turns out to be worse than the early days might suggest.
down 4.5% for the casino and gaming index, the worst performer in the s&p 500. we have a reaction in treasuries as well, with the 10 year yield down to 1.77%. , and electricity distributor around the united states is one more to watch. beyond meat is up 12%. starbucks says it is exploring nonmeat alternatives for its breakfast. guy: in europe, we are looking at a negative session. a number of factors coming into play. the first is the coronovirus story coming out of the united states, knocking asian chairs into the european session. the ftse 100 is down by 0.7%. the dax a little bit of an out performer in europe your today. sector in particular trading sharply on that news.
the banks aren't helping either. vonnie: shares of ubs down sharply today after the bank missed key profitability and cost targets for 2019. the news piling further pressure on ceo sergio ermotti, who said that a revamp of the wealth unit will improve. >> in the last quarter, they had finalized the plan and had been, limiting many of the actions, and we are right now in full execution, and i do expect positive outcomes. vonnie: joining us now in london is bloomberg's correspondent. what does this mean for ubs, yet another revamp, particularly of the wealth unit which saw $5 billion pulled, mostly from the americas? reporter: what this does is pylon more pressure on ceo sergio ermotti to start seeing
results from the revamp he's announced. you are already seeing that mr. khan has taken some decisive action in terms of revamping the wealth management unit. mati a littleair bit of time to see how this ermottilays out -- mr. a little bit more time to see how this revamp plays out. all of that is very much in the to be seen, and it all remains to be seen how well ubs can execute on that plan. the jp morgan starts off u.s. bank reporting season, and it's amazing. ubs is starting off the european banking season, and it is exactly the opposite. the gap between the two seems to be widely -- seems to be
widening. is that going to take the new -- is that going to continue? haslinda: i think it is --sree: i think it is going to continue. what this bodes for some of the banks such as deutsche bank is something that is worrisome. deutsche bank in particular has already warned that the macro headwinds such as prolonged low interest rate environment is going to be continuing to dig into margins and into its profitability. this from one of europe's leading banks is not a very good sign as we head into european bank earnings season. vonnie: the goal is for it to lend more in the hopes that that will help margins. is that what happens in a negative rate environment, though? sree: a negative rate environment really becomes a very untenable situation for europe's bank ceos. spiral out of which
there are very few avenues for growth. ubs traditionally has had wealth management to help combat some of these other pressures from a macro environment. as those banks that aren't strong in wealth management as ubs is, there aren't a lot of places where they can seek relief. vonnie: our thanks to bloomberg's managing editor for european finance. guy: sustainability is the biggest topic at the world i cannot forum. president trump telling negative -- world economic forum. davos to trump urged reject environmental prophets of doom. a panel lacqua has led on solving the green growth equation. mark carney discussed how central banks are working to get
zero.zero -- get to net >> you have banks that will stress test for transition to net zero. the world's largest, most complex financial system, that is what we are doing. at the core of the system come these questions are being asked. are you on the right side or the wrong side of that transition? if you are on the wrong side, what are you going to do about it? us, peter chatwell with mizuho international managing director. it seems like they've got other things to worry about right now. their it is not only skill set, but what they can try to do is make the right noises, and perhaps when it comes down to asset purchases when the bank of england, at some point in the future, gets back into that mode , then perhaps they can adjust
things, incentivize green projects through that channel. otherwise, i think it is mainly rhetoric. guy: let's talk about the green bond story. bloomberg launching its green initiative today. there are a lot of initiatives underway. reebonz continued to gain traction. there's question about -- green bonds continue to gain traction. this questions about whether there will be demand. peter: we know demand is there because in the asset management industry, these funds continue to get inflows. the question is, are there actually enough products for these types of funds to satisfy their own demand? i think that is why green issuance is continuing to rise, continuing to move in a nonlinear manner, because the demand is still there. these bonds tend to trade at i.e. morecount,
expensive to buy for the investor, because they know demand is going to be there for their own investors. they are going to see inflows into their funds if they can continue to show there are assets. it is a self-fulfilling type of prophecy at the moment. vonnie: how much of that demand is mandated? does that sour the whole green that isuance if some of specifically because of mandates ? well, i think where the true demand comes from is the retail investor, the asset allocator. what are they choosing to do? if they are just investing in a broad index, if they are focusing on an esg or a green fund, then there is a selection. there's an active decision which is driving demand for these assets. i think it is not just about building more demand by increasing supply. i think there's a conscious and
societal decision which is being made, and i think this is only going to continue as the country and the world becomes more educated on these topics. vonnie: how do you value these bonds, and other bonds as well? we talk about the complex of bonds in europe, sovereign bonds. is there relative value in europe, for example? peter: one can construct a calculation of the green bond discount. these bonds would actually trade typically a few basis points expensive relative to nongreen bonds on their curves. that is taking everything else is being equal. so there is a natural incentive in the way the market is currently priced for green issuance. so the markets are doing the right thing for environmental causes at the moment. essentially, what we need to see is more green issuance to make those bonds a bit cheaper to allow more investors to come into the sector, but i believe
there will be long-term structural demand for greater issuance of these bonds, and the fact that the trade extensively, marginally expensively at the moment, is the clearest evidence of this. guy: we are going to have to leave it there, peter. ell, mizuho international head of fixed income strategy. vonnie: in a few minutes, we are going to hear from bank of america ceo brian moynihan. later this hour, we will speak with hong kong chief executive carrie lam. . with climate change becoming a defining issue of our time, today marks the launch of bloomberg green, using data and in-depth reporting to illustrate the scale of the challenge. find it at the terminal online and right here on bloomberg television and radio. this is bloomberg. ♪
♪ tom: at the world economic forum in davos, i'm tom keene with jon ferro. president trump speaking with optimism on the american economic and political experiment, but there's a lot of other themes day one. you know into days, the themes will change. jonathan: we called it a victory lap, didn't we? tom: why don't you bring out our next guest. now is brianng is moynihan, ceo of bank of america. good to see you. brian: good to be here. isn't this beautiful out here? jonathan: i want to start off with one of the most annoying questions for bankers on wall street. -- the taxnings
savings, where did they go? brian: first of all, the reason why we saved taxes is we pay taxes. we still pay an 80%, 90% rate. but what do we do with the savings? from whenhree years for 95% ofwe've done teammate $1000 in cash, and above that, shares of stock equal to about 6% of compensation for three years in a row. jonathan: maybe we should get bryant is peter our agent. tom: i like it. continue. brian: eight or nine years ago, they had not had an increase in premiums for eight years.
also invested in a physical plant. branches.deled we deployed onto a tms over the last three years. people say, what you do with the money? we put down capital every year. then we announce an extra $500 million in technology. jobs because it is all coding, so it is all engineers. it's all good stuff. jonathan: nothing gets near the $39 billion of capital returns to shareholders approved last year. anything near that number? brian: i think that has nothing to do with the tax thing. that has to do with we had more capital. between dividends and capital, we are in a lot of money and we are giving it back to shareholders. the question is what would you do with it if we kept it? it would just pileup.
we have enough capital to serve our core clients. in the last few years, we've become the biggest small business lender in the united states. 5% of the mortgage market, 12% of the retail market. we are serving the clients well, so the capital goes back to those who own it. jonathan: i don't want to come across as against buybacks. not employed to have a position. what i want to reconcile is the stakeholder capitalism that is dominating become position here, the end of shareholder primacy, and reconciling that with the cold, hard numbers i see on wall street every year. brian: let's back up. 50 years ago, cost started with stakeholder capitalism, in response to the business is business paper that year. 50 years later, you've been seeing these companies -- and by the way, all of the other but dispense coming here and talking about how they solve the , the power of davos is
convenient. two years ago, three years ago, companies signed a statement that said the company sought to help drive progress. the simple point is companies have to deliver great returns for shareholders, a great experience for customers, and a great experience for their team at the same time, and deliver for society. . that is stakeholder capitalism. it is really just a statement that was made that codified what we really did. i think if you look across returns, we have delivered great returns for shareholders. we've delivered a lot of capital return. but we also deliver a lot for charity, volunteer work, investment in local communities, hired 10,000 veterans. these are all enabled by the capitalistic system. vonnie: i want to look --tom: i want to look back at all the stocks and all the banks that have picked it up nicely.
i think people have forgotten the degree to which he picked up responsibilities for the bank of america. from 2007 tolearn 2010 that you're using now as best practices at bank of america so history doesn't repeat itself? brian: the team had to get together and keep driving the core business implementation. at the same time, continued to clean up the issues around mortgage and credit card debt and whatever it was. what we learned, and we actually learned, ours chief risk officer goes out and talks individually and in small groups. it is all about over leverage, reaching the wrong parts of the credit segment, overleveraged at companies. we try to learn from those lessons, but the main one is balance. going into the crisis, we were way overweight consumer and unsecured consumer credit. we charge about $50 billion in
credit card debt. that's when our credit card doesn't grow quite the same as other people. we are actually keeping that balance relative to the size of the hole. driven to maintain excellent credit quality. tom: what are the lessons learned on how you will deploy new technology? i spoke to you 5, 6, 7 years ago, and you and a few others were way out front on the impact of technology within the financial system. what is the lesson learned forward from the deployment of capital in technology? brian: one, you've got to spend enough to maintain a lead on the competition. that requires operational efficiency. we've done that was flat expenses and declining expenses. pure, new initiatives. you have to be able to spend a lot. you have to have good ideas. the key lesson is don't get
ahead of the customers. be patient that the customers will come along. five years ago, we did not have -- or seven years ago, we did not have mobile check deposit. it is now 25% of all checks deposited. you couldn't get ahead of customers and force them to do it. now more checks are deposited the last three or four quarters then are deposited at teller lines. i see the much more in the united states that i do in the u.k. brian: it is a big deal. you keep the trust with cybersecurity expenditure. we went to over $900 million this year. on top of that, drive your competitive advantage. jonathan: let's get some numbers on the consumer business. is you could double that. do you want to double that?
when? brian: we want to drive it forward. are youext of that was too big, and do you have to go outside of the u.s. to drive that? no. we are the top chair and retail bank, but up until two years ago, we weren't in seven of them. those,ust fill out that is growth. we have gone from 10% to 15% over the last few years. you can think of this as a challenge. let's double it. poncee reality is it was to how much opportunity there is in the united states. jonathan: almost every week, there's a new shop with concerns about leverage loans. you've got great insight to this area of the market. walk us through what you are seeing at the moment. brian: going back to tom's point, overleveraged is over
leverage. when the economy slows down and the economy is most exposed, that is banking 101. our balance sheet exposure in those things is measured carefully. it is very low. the real question for the economy and what different groups are talking about is a lot of it is in funds and other types of support. what will happen when those companies don't farewell? will those funds work with the banks in terms of working them out? the other question is, in a net asset value context, that feels good at the moment, but when you trade it from that person at $.60 a dollar, what will the next person do with it? what will be the impact on the economy? our actual leverage lending is a small part of our on balance sheet reddit exposure -- balance sheet credit exposure. tom: everyone wants to dive into this come about right now but i see is everybody out there wants to be a banker.
goldman sachs wants to set up banking. to thoseu respond that want to get into the bigger platform? your scale and scope, do they understand the scale you need to succeed at this? brian: i think you need the scale to be good. that is what we keep talking about. we need our scale to do a great job for our consumers and communities. that scale allows us to keep investing at a rate, and lead other leaders in competition. people see profits, profit margins, and i can understand it, but it is not as easy as they would think to operate consumers doing millions and millions of transactions. we have three billions of dollars -- we have 3 trillion dollars of payments that go through the system in a year. tom: that's almost one and a half apples.
jonathan: that's not bad. brian: and that is somebody talking to an artificial intelligence reckon dish machine that will translate your request and get it done -- intelligence recognition machine that will translate your request and get it done. that's why we've got to keep investing in technology. keeps taking. market share from europe. we talk about it almost on a weekly basis now. what gives you such a great position to take market share away from european clients? brian: in the peer markets business, because we don't operate consumer outside of u.s., but in the pure sense of the markets, what you have in our company is a great fixed income platform and equities platform by the heritage of bank of america, a big fixed income m -- andd merrill. the reality is that business
earned $600 million, $700 billion a quarter for us. retail earns three or four. so you have stability. that is what makes us competitive. we can extract the value of the business across all of these other businesses. the research platform works with wealth management. that scale allows us to be competitive. we can balance it off. that are 90% in a business, that is trickier execution. tom: i want to talk about not so much the past, but the branding and marketing forward. hong kong and shanghai banking corporation has an image that goes back to the 19th century. bank of america, certainly the modern bank of america that you were given responsibility for, and the minds of people in san ,rancisco, the carolinas
boston, how are you going to bring forward the image of the bank of all america? brian: bank of america has also been operating since the first bank to operate in japan, 100 years in argentina, something like that. it has been operating all of over the world. bank of america stands for excellent service for institutional and retail clients. we wanted to stand for stability and knowledge and intelligence. and we will stick with you through thick or thin. that is what we've been after. so the brand that we have is a strong brand. our customer score is the highest on all businesses. it is a great company, and i have the honor of running. jonathan: we've got to wrap things up. tom: it's been a while. brian: it is like they want to
get rid of me. i am happy doing this job as long as the board will have me. tom: but if the red sox want you to manage, you will take it, right? brian: if there's one thing i am not confident enough to do, it is red sox manager. jonathan: going into election season, is wall street going to become a political football again? brian: we serve society. that isn't going to change. people say, how about those elections? how tough is it going to be? well, the one in 1800 was pretty tough. it is part of doing what we all do, which is run companies that society depends on to help fuel the economy. therefore, we have regulation. therefore, we can get caught in the discussion, but that is part of life. tom: thank you. brian moynihan of bank of america. vonnie: our thanks to bloomberg's tom keene and jonathan ferro at the world economic forum in davos.
a very interesting interview with brian moynihan. all guns blazing, even though some analysts are getting slightly concerned about the q2.ook for q1 and brian moynihan saying we are going to double our share of at least the retail banking side of things in the next year. guy: it's amazing. you compare and contrast that conversation with the conversation earlier on with banks ermotti, european finding life incredible difficult at the moment. then you've got banks just knocking it out of the park on a regular basis, and you wonder where the u.s. banks are getting too strong. they were meant to be turned into utilities after the financial crisis. european banks, completely the other end of the spectrum. they just continue to struggle, continue to cut.
nothing is turning them around. you've got this amazing divide, and i think that interview really highlighted it. vonnie: we will have much more about banks, but first, let's get back to tom keene at the world economic forum in davos, tom: thank you so much. this is a joy because it is an -- the past year has been extraordinary. he has done it through the lawrence school, through harvard in filmmaking and has gone on to work on the industry in india. a pleasure to have you with us today. >> i want you to introduce me every time. tom: give me an update with you as the arch filmmaker in davos
of the indian film economy. we are transfixed with how it is taken so seriously in india. tell me about polly would. -- about bollywood. >> you know i studied film as an undergrad. it is the six. plot but a plot that -- it is a shakespearean plot. we have the shakespearean villains which are things that are out of our control. i think you're going to see an ending which will be happy. it might not be shakespeare. maybe the analogy is wrong. the film is being produced. it is on the floor. i think it will be a blockbuster. tom: i want to talk, moving from that to the cultural imperative in india which is a nation transfixed by things we have seen in the west before. this is moving a muslim community aside, not against
hindu, but distinctly moving muslims aside. your response to this legislation? anand: the amendment by itself is completely inoffensive. if you look at it as the government has been saying, i have to say you cannot argue with them. the amendment is about letting the minorities from certain surrounding countries in as refugees. there has been a long-standing demand. in india people are confused about what to make of this because the protest in the state had nothing to do with the protests elsewhere in the country. ofy were against any kind acceptance of new citizens because they said they had been facing the influx of migrants for a long time. it has caused them and even though ich will sound like an apologist for the government is overdone. i believe in america there is
--ething -- an amendment everyone around the world is trying to manage their borders. somehow this mix has been unfortunate and has resulted in reactions which are difficult to understand. the indian economy is distinctive and complex within the borders of india. why are we seeing slower economic growth in india? anand: i could talk all day about that but i will not. tom: i have a bunch of other topics. anand: i think the common phrase being used is that what was underway for a while is the detoxification of the economy. the prime minister has been quite -- the kind of growth he wants is transparent and free of corruption. tom: is he succeeding?
anand: i believe the perception is it has caused a slow down. on the other hand, if you're going to detox yourself, you have a process of cleansing before you start recovering. the detoxification was with that end in mind. the tax which all of us push for , i am pleased it is here. it has cause disruption because people used to trading in cash now have to be on the radar. the government has realized that in order to get their engine moving the need to be more propulsive with the economy. forget about the obsession with the deficit for too long. they are taking the right steps. my experience from our industry
is that they are already seeing signs of life. i think from the next year, which starts in april, i think india will surprise on the upside. tom: you are a third-generation industrialist within india. you are born with privileges and you've taken it so much further. explain the generational divide in india. each generation sees to have a story of younger people rebelling and populism. explain the generational divide within india. that the more things change the more they stay the same. i used to bemoan the fact that a lot of young people. i am from the woodstock generation. it was a rite of passage. i used to think if you do not protest-- if you do not you do not have a cause you are suffering in the iq department.
i thought everybody had a three minute attention span, youtube and snapchat. when snapchat happened i almost came up. whatever the project, i think the young people who want to have a cause is a good thing in my opinion. tom: a wonderful conversation. thank you so much. guy johnson in london. guy: thank you very much indeed. a refreshing interview. tom keene in davos. plenty more to, from the world economic forum. we have just come through the auction process. this is where we have settled. european markets generally negative. you can see the ftse 100 under pressure. the cac 40 also trading lower. little to the a upside. at least it was positive. the ftse 100 well on its q1 update, seems to be benefiting from the demise of thomas truck. the most interesting story came out of the cac 40, where the luxury stocks were hit reasonably hard today, as they
were yesterday by the coronovirus story. the concerns and the memory of what happened with sars obviously still a factor for that sector. as a result, the cac 40 under little bit of pressure as a result. we'll be carrying on the market coverage at the top of the hour. switch over to bloomberg radio. "cable show" taking to the air. jonathan ferro is out in the world economic forum. we will generate some of the great sounds generated from the fantastic interviews at the world economic forum in davos today. this is bloomberg. ♪
economic forum in davos the combined bloomberg television and radio audiences. joining me is hong kong chief executive carrie lam. hong kong has been rocked by protests since june, sinking the economy into recession. your government has focused on and economic issues. the protesters have set what they are concerned about is democracy, china's tightening grip on the contrary. how do you hope to address those concerns without a political solution? ms. lam: there is no truth to the accusation the central government is tightening its grip on hong kong. the central government has made it clear they want hong kong to succeed under the one country, two systems that was made clear to me by president xi jinping.
this was triggered by the government attempt to introduce amendments to the ordinance, but i have almost immediately suspended the exercise following the mass confrontation in the legislature. i have to wonder what are the underlying factors that have caused sustained risk for the last few months. i have said it is about political reforms. we are keen to have universal suffrage in the election of a chief executive. we did make a serious attempt in 2014 and 2015 to give people of hong kong one person, one vote to select a chief executive. that has to take place within the legal framework laid down in the basic law. haslinda: can there be a compromise and how soon can
there be? depends if we can build consensus on this issue within a framework laid down in basic law. uphold thet and basic law because they respect the rights of people. the ultimate goal is to have university -- universal suffrage. if that happens, it has to take place through a nominating committee. to ensure theded long-term public interest. haslinda: china has made clear it will observe universal suffrage if the candidates are approved by china. the protesters say they want the right to nominate their candidates. how do you bridge the two? i wasexecutive lam: involved to design the proposal within that framework.
i would not say that framework required approval by the central government as far as the candidates are concerned. yes youposal says should have universal suffrage, there should be two or three candidates to be put forward by a nominating committee. the nominating committees brought representation comes from the different sectors. it is not entirely within beijing loyalists. you have professional people, you have representatives from ultimatelynions, but there is another basic law provision that the chief executive has to be appointed by the central people's government. haslinda: what you're saying is the hong kong people can nominate? chief exec. lam: through the nominating committee, the hong kong people will elect the nominating committee. the nominating committee will
then nominate two or three candidates to be put forward for universal suffrage. haslinda: what has been the directive from china when it comes to resolving the conflict you have in hong kong? chief exec. lam: i have made it very clear that under one country, two systems, the federal government has given up a high degree of autonomy to deal with the rest. they have not given any explicit directors on how to handle it, except that they have made it clear that the solution also has to abide by one country, two systems. you cannot go beyond the constitutional requirement to solve this issue. similarly, i cannot go beyond the rule of law to solve this political crisis. haslinda: why have you resisted calling for an independent inquiry as suggested, as demanded by the protesters? is there something you are concerned about? chief exec. lam: i am concerned
about fairness and justice. as far as police operations and police behavior are concerned, hong kong does have an equally independent mechanism to deal with that. that has been fully debated when the ordinance was selected that police would be subject to investigation on individual complaints. haslinda: why not in into bid -- why not an independent body? the bodies you suggested have been said to lack investigative power. why not an independent? chief exec. lam: one of the important principles i have adhered to in dealing with this difficult situation is we need to protect the institutional strength of hong kong and uphold the rule of law. we have already independent mechanism to deal with that situation. that mechanism must be put in place for very good reason and
overall interest of hong kong then simply because i need to respond to protesters demands. by the way, they have other demands which nobody could agree to, for example an amnesty for everyone that has been arrested, committing very serious crimes of assaulting the police, throwing petrol bombs at bystanders and even setting a man on fire. , am iwer your question going to respond to those political demands in order to solve this problem? haslinda: don't the protesters have a basis for the grievances against police for the force that has been used on the people? chief exec. lam: one has to look at some perspective. i am afraid that in many of the reports many people have watched , they were based on certain video clips and a particular photo, and came to the conclusion there has been some
wrongdoing by the police. if you look at the overall contest, the police enforcing the law were dealing with large numbers of protesters who are so ready to respond to violence. haslinda: you acknowledge there has been wrongdoing yet only one policeman has been taken to task. no one suspended. not saying lam: i am there has been wrongdoing. i am telling you that if there are wrongdoings by policeman and law enforcement, these policeman will similarly be subject to scrutiny of the law. they are not above the law. we have seen that happening during occupied central movement and other protesters. eight policeman have been prosecuted, convicted, and imprisoned. we do have that system in place, a fair system in place. we cannot just throw away a
system and then bring in another system. i have to ask myself whether that is in the interest of hong kong. haslinda: are you willing to take those who have done wrong to task? chief exec. lam: hong kong abides by the rule of law. it is not a question of the willingness. haslinda: do you see that happening? chief exec. lam: it has to be subject to a detailed investigation. if i may just clarify, under the basic law, that is a very explicit document, the chief executive does not have any say over prosecution. prosecution decisions are made by the department of justice without any interference, and then cases are brought before the court. chief exec. lam: when you take -- haslinda: when you take a look at your popularity, it has dropped to 14%. why do you think you are so unpopular? have people misunderstood you? chief exec. lam: what we have seen is unprecedented. i have to admit that.
i have confessed and i've taken full responsibility for ofjudgment and for the lack a full assessment of the situation in taking forward the bill. let me make it clear. that bill was well intended to ensure hong kong could discharge her international obligations and tackling serious crime and also to plug the loophole in our existing legal regime which inhibits us from having any legal assistance on criminal matters that have anything to do with other parts of china. haslinda: you have said you are willing to quit if you could. would you quit if that would help resolve the crisis in hong kong? chief exec. lam: it is not difficult to quit. walking away from such a big dilemma and problem is in my
view not very responsible. theinda: it is one of demands of the protesters that you resign. would you to support hong kong? chief exec. lam: my decision is right now, because we have several prices we need to manage, i will do my utmost to stay in this position to help arrest the current situation. couldda: who do you think be the right person to replace you if you were to go? chief exec. lam: this is not a question you should ask me. haslinda: i want to take a look at the economy. it has sunk into a recession. some say the measures you have implemented are not enough to pull the country out of recession. ofef exec. lam: those rounds measures introduced and announced by the financial secretary are relief measures. they are there to support the companies, especially media
enterprises, so we could preserve as many jobs as possible. they are there to provide relief to the disadvantaged by giving them extra social security assistance. ultimately, to take hong kong out of the economic difficulties secondly isbility restoration of law & order, and thirdly government investment in important sectors, innovation and technology. we have done pretty well on this new sector, innovation and technology, and the last couple of years, by investing 100 billion hong kong dollars into hardware and software. these are the things we will continue to do. youinda: what would make dig deeper into your reserves? chief exec. lam: we are already. haslinda: it is not enough. the economy is in recession. moody's downgrading hong kong. you must be concerned more needs
to be done. chief exec. lam: we certainly agree more needs to be done. -- thatwhy one week ago will dig deep into the reserves. that will cause another 10 billion hong kong dollars on an annual basis, providing more retirement protection for elderly people and providing nor -- providing more report for nonskilled labor. what more could be done in terms of the economy is to identify the strength of hong kong and continue to take those sectors forward. for example, financial services. that has grown pretty well in 2019, despite the difficulties. we are expecting 2028 be a bad year. we will continue to capitalize on the continuing opening up and reform of the chinese economy, especially in financial services , because hong kong is a gateway to mainland china. we have international connectivity to bring mainland
enterprises to the outside world. adding to the strain is the china virus. how closely are you watching it, how concerned are you? chief exec. lam: i am very concerned. from the 31st of december, when the first notification came, hong kong has already put in place a highly vigilant system. we learned from previous order to bringin the community together to control any infectious diseases, we have to be vigilant, sometimes doing more than we should. we have to be transparent with people so they know exactly what is the situation so there will not be unnecessary fear and anxiety. my colleague, the secretary for food and health, has been
hosting daily meetings with the expert. we continue to exercise the high level of vigilance. at the same time, we have to plan for the worst. up until now, we've not had a single case of confirmed coronovirus yet. we have been warning people. they could come at any time. haslinda: are you confident china can contain it? chief exec. lam: even the who has said they are assured by the measures taken and i understand there will be a videoconference between the mainland authorities and the world health organization. hong kong will continue to receive the latest information and our experts will continue to advise us on the necessary measures to be taken. this requires community efforts and we are appealing to the people of hong kong that it is better to plan and be cautious in order that we could prevent the spread of these diseases.
haslinda: has anything been learned from the sars outbreak that can be implemented to ensure there is nothing dangerous? chief exec. lam: we have learned a great deal from the sars incident. we have put in place contingency plans in the hospital authority. we have provided more isolation facilities. we have planned contingency measures for isolation facilities. we have stopped up all these needed equipment and materials. i hope very much what we have learned in the past could help us overcome this public health challenge. haslinda: before we let you go, what you hope would be the carrie lam legacy? this is my 40th year in the public service. this has been a lifelong career for me to serve the people of
hong kong. i hope people will remember, in whichever position, facing whichever difficulty, my heart goes to the people of hong kong. i will continue to serve the people of hong kong. haslinda: chief executive carrie lam, thank you so much for your insight. we just heard from the chief executive hong kong, carrie lam. guy: fascinating interview. thank you so much. up? if we got coming with david power" westin on bloomberg television and radio. he will have special coverage as the senate begins president trump's impeachment trial. that is from 12:00 to 2:00 eastern today. what do the markets look like? vonnie: we are crawling back to zero for the dow and the s&p 500 unchanged. a lot of trepidation about the coronovirus you just heard
carrie lam speak about. that has some sectors moving, including the gaming sectors, the travel and leisure sector, the luxury sector. worst performer in the s&p 500 right now. treasuries also moving on the coronovirus fears. we have the 10 year yield in the u.s. down to 1.77. it is still there right now. the dollar index is unchanged, just down slightly. in europe, we had any of the major indices down .5%, including the ftse 100 and the cac 40. luxury stops taking a hit. anything without exposure to asia. "balance of power" is next. this is bloomberg. ♪
i'm david westin. welcome to a special edition of "balance of power" where the world of politics meets the world of business. in just under an hour the united states senate will begin the impeachment trial president trump when john roberts gavels the procedure into order. on the table today are mitch mcconnell's proposed rules for procedures. the senate will be in session six days a week. we have reports from emily wilkinson on capitol hill and congress edgerson, our editor. what we know today we do not know yesterday? statementsve gotten from the house managers that will be prosecuting the case in the senate. they said not only are the rules mitch mcconnell put out unfair, but they have also challenged the white house counsel who will be part of president trump's impeachment team. they asked him whether he should be part of that team
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