Response is needed to come the followup from the virus. Jp morgan, citigroup, wells fargo kicked off reporting season for u. S. Banks. Investors are braced for heavy provisions. Trading revenue could be the bright spot. 6 00 a. M. Inne london. 9 00 a. M. Here in dubai. The defining sentiment of u. S. Markets and the world will be defined by this family, jvm, bank of america, goldman sachs. Do you want to take a look at the spread between gs and the rest of the banks . It is going to be confusing, sloppy, and shocking. Is provisions. Bank of america warns wells fargo the dividend could be toast. Ficc that saves the day . This is the defining narrative on the consumer, confidence, and the outlook for the u. S. Pandemic wont disappear in coming months as the total pace is 13 million, california closes its doors to Indoor Dining and bars, shutting its two Largest School districts as hospitalizations hit a record. Our guest is with us. Nd unsynchronized moment how does that redefine the narrative for the amount of risk you want to put in at the moment . Good morning. Welcome back. Good morning. Very happy to be with you. Restrictionsless means more infections. The only question is are we able to handle these local outbreaks. Based on what we see in asia and we can handleone, these local outbreaks, so we have reduced risk, but not as much for that reason i think we. Ave to live with the virus manus ok, lets talk about your rationale. You have been very forthright. You materially took risk off in february, doubled up in march, and you remain long. But you would a turbulent time ahead. With turbulence, i know you are an equity man, so with turbulence how do you prepare for that . Is it through options . Is it through futures . Or another vicarious trade . Maurice first, thank you very much. We stayed long until june. The market value was more infinite in policy, people were out of the market. Looking for valuations elevated enough. We are seeing that markets are priced for a recovery in 2021. , we perfect trajectory expect some volatility. Vix is quite rich already. [indiscernible] manus ok, and number of equity people would say that the options on the vicks are vix are expensive. For the brave people, you can write off the money option. I put my money down that is a defining day. The results will be confusing, sloppy, and shocking. If that is the backdrop to the banks, we are looking at provisions being the highest since 2008. What is my risk that they ratchet higher and that we are underestimating what a 9 Unemployment Rate will be in the costs for lending and borrowing . Maurice first, i agree that this will be a very interesting to get a better understanding of what it is to banks during the most brutal recession ever. On the consumer side, you noted that the actual income of u. S. During q2 because of all of these measures, i dont expect anything to be too wide. On the corporate side, we have this inundation. Probably many listed companies, they have set expectations in a manner that are set to be beaten. Know, maybe one third of the companies have grown. I think they have to come back and say, what are we going to do . It is in the context of massive liquidity. Profitability will be lower. Everyone was trading everything during this quarter. I would focus on guidance. Manus ok, it will be all about the guidance. To how theome down consumers are. Maurice stays with us. Our guest host for the morning. People. 2 million 2. 2 Million People work at walmart. Its 11,000 stores open around the world throughout the pandemic. It expects to continue doing so despite the resurgence in cases. The man that runs the business spoke to bloomberg about the impact of the crisis on the business. Consumablesood and and things people really needed during this crisis, so our former retail was deemed as essential here in the u. S. And in countries around the world, so we have stayed open mostly throughout the crisis selling food, consumables, and other things people need in stores and also online. You are right. You are alluding to the fact that ecommerce has grown during this period and that is the case for us. For everybody watching, how many total stores does walmart have . Around the world, 11,484. Here in the u. S. , we have around 4700 stores that are Walmart Supercenter and neighborhood markets and we have another 600 sams clubs in the u. S. Employees orillion associates as you call them. Correct. Your revenue is about 500 billion a year. A little bit more. Do you expect to hold onto all of these employees are you expected decline in sales after the covid19 situation . What happened is as we started into this covid period, we created a leave policy for associates that needed to stay home if they had a Family Member to take care of where they had some sort of concern, we created this threetier leave policy. Hundreds of thousands of our associates have stayed home. We had a need for a lot of people to run the stores, serve as it relates to ecommerce, and also respond to the demand that has gone up. About 60 of the 400,000 we have hired since the middle of march are temporary in nature. We will retain a big portion of them, but certainly not all. Your biggest competitor in the Online Business is obviously amazon, is that correct . It is. Here in the u. S. What have you learned from amazon . Did they teach you certain things inadvertently . Certain things that could make your Online Business better . Or have you done some things they wish they would have done . Whether it is them or others, i think is the goal is to learn from them and apply what should be applied. Definitely, the customer has spoken. They want convenience, a broad assortment, and timely delivery. In some aspects, we are trying to do the exact same thing. In other respects, we have a set of assets that are unique to walmart that we are trying to put to work. Maybe one of the big difference is as it relates to a digital view is how we are using our stores and the fact you can go on your app and purchase items or reorder items you bought before and swing by the store later that day and open up the trunk and somebody will drop it in for you. Superefficient and americans particularly like that service. There are unique aspects to our strategy and of the stores underpin most of those. It has been rumored you are going to announce some type of crime equivalent for walmart prime equivalent for walmart. Is that going to be announced soon . We have a membership we have been testing call delivery unlimited. Is speculation you refer to launching a more robust membership called walmart plus. The common theme is that this grocery consumable delivery, delivery from the supercenters, which can include backtoschool , done in aen apparel really fast manner as part of a Membership Program is something we think is going to be compelling for people. Based on the success we have had with this pilot of delivery unlimited, we have some confidence people do want to membership from us. When you think about it, there is a delivery cost, picking an order and delivering in order to someones home. What the membership is fundamentally in the beginning anyway is an ability to buy in bulk those deliveries at a discount in the form of an annual fee. That is the form that we have taken. Swatch, the swiss watchmaker, has deliver their numbers. Im going to go straight to the guidance. For the rest of the year, they are saying quickly in the coming months. Stop down 4 in the past three months. Positive operating results expected for the full year. That is the guidance. Also, the first half sales come in better than expected. 2. 2 are negative, down by billion. A drop of nearly 50 , but the market had expected a drop of 2. 4 6 billion. Margin implosion. Margin implodes by nearly 15 . The profitability here is what you are seeing a real implosion year on year. Atst half net sales come in 2. 2 billion. 2. 46arket had penciled in billion. An operating loss of 327 million. The loss to that estimate was 297. 1. My apologies, both are worse on the estimates on sales and losses, but it is about the guidance. Let me get you up to speed with your first word news. Face coverings are to be made compulsory in shops in england from july 24. The move comes after pressure from unions, business groups, opposition, and politicians, who have accused the government of lacking clarity and guidance in defeating the pandemic. England mandated face coverings on public transport last month, but left it optional for shoppers. Ban huawei poised to from its nextgeneration mobile networks, reversing an earlier go ahead. The phone company will no longer be allowed to add new huawei components to 5g networks by the end of the year. All existing equipment supplied by the chinese firm will have to be removed by 2027. Boris johnson is expected to lay out those plans in Parliament Later today. Singapore plunged into a recession last quarter as an extended lockdown closed businesses, decimated spending, 41. 2 from the previous three months. The biggest quarterly contraction on record. Singapore is one of the first countries to report quarterly gdp. Figures suggest it has taken a bigger hit one of the economy then some of the other regions. 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. Up, china posts a surprise trade gain in june. The unexpected increase in the picture for global demand. That is next. This is bloomberg. Arab,it is daybreak , im daybreak europe manus cranny in dubai. The pandemic continues to ravage the economy even as chinas trade rose in june. Washington has rejected theings Maritime Claims in south china sea. The secretary of state, mike pompeo, called chinas actions unlawful and those of a bully. Maurice gravier is the chief Investment Officer at emirates nbd. We get a new salvo every week in the u. S. China relationship. The election narrative, and administration that needs a war to win an election. Is this the modern version of that 2020 . Salvo,fter salvo after rhetoric without implosion. Maurice for sure the last thing we need is a war. To be very clear, but you are right with the u. S. President ial election. The dispute in the south china theadds one line to geopolitical concerns between u. S. And china. Trade, hong kong, even handling of the economy. We see this as escalation rather than any action. Nobody can afford a real conflict. In addition, i would say even from a Military Point of view in the south china sea, china is kind of strong and i dont think anyone has the means to impose anything over there. Manus one of the big narratives this morning from fidelity and i want to get your opinion on this because i know you like emerging markets, but i want to know where china fits for that fidelity would say you want to belong chinese bonds and there is a real yield there. Black rock is on that as well. A real yield. There is a never to have that is growing. Within em, how does china fit into it from the bond allocation . Does that make sense to you . Maurice it definitely does. Equities and fixed income. Income, you dont have any hedging power. Should things be a bit wider down the road, they havent gone into full [indiscernible] that others dont. They are interesting. Riskadjusted yields. Absolutely. You are looking at the gross yield on china. 3. 005 percent. Maurice, stay with me. My guest with me, Maurice Gravier. Chief Investment Officer at emirates nbd. A 2g up, calling for trillion investment in clean energy. The timeframe is what matters. We will discuss u. S. Politics. This is bloomberg. Welcome back. It is daybreak europe. Im manus cranny in dubai. Jill biden is calling for 2 trillion investment in joe biden is calling for 2 trillion investment in green energy. Tracking the story is annmarie hordern. The details on this, we know that Environmental Policies are in the forefront, but it is the timeframe that matters. Alsorie yes, and it is the amount. He is really putting the green in this green deal. It is a lot of money and it is quicker. His plan is to address 2 trillion over four years in green energy. That is a massive jump from the more modest one point 7 trillion over 10 years that he had originally proposed last year when he was campaigning for the nomination. Includeshis proposal setting a clean energy standard. Y 2025 it is also going to look to put more americans behind the wheels of evs. Enticing them by cash vouchers. Also, it is a big nod to those in the Democratic Party who towardview this as a key moving the party and their agenda forward. Washington to the governor jay inslee and senator elizabeth warren. In sleep focused on Climate Change during the campaign. He proposed 100 Clean Electricity standard by 2035 and warren later endorsed it. We spoke about this challenge that joe biden has convincing progressive voters that he hasnt left them short, while at the same time taking a moderate step on the fact that he can attract republicans and independents wary of the Trump Administration. It goes without saying that they certainly contrast with the Trump Administrations more supportive campaigning for the fossil fuel industry, manus. Manus well put. Annmarie hordern on the biden policy narrative this tuesday. Robin hood users i love this story cant get enough of tesla. Accounts on the robin , added during a four hour span. Day down 3 . It is a rare down day for what is a stock that cannot be repressed. 56 return over the last 10 days. Lets take the narrative to Maurice Gravier. I always get so excited when you see phenomenal moments in markets. I put it to you that this is the four hours that we will look back at one juncture and go we e was something irrational about tech. What do you reckon . Maurice well, im afraid i may be too, because im such a conservative investor. Four hours is not a period on which you should measure anything. It doesnt mean anything. It is a lot of flows moving very quickly. We have seen many things like that in the early 2000s or on cryptocurrency a few years ago. Before, ientioned like the idea that mr. Biden wants to invest in clean energy. Start with the u. S. Maybe oneh is using third of the energy that is produced. [indiscernible] having said that, i have no clue where it will be in the next four hours, four days or four months. Manus i get that. Markets which define the next big rational response. Very, very briefly with 30 seconds, bidens narrative, 2 trillion dollars on green energy, does that play more prominently in your thinking for 2020 . Maurice yes, definitely. It is not just mr. Biden. We have to be more energy efficient. It is not just the source of energy, it is also the way we consume it. In the grid in the u. S. Manus ok, maurice, we will pick up the theme and just moments. Good to get our initial toplevel thoughts from maurice. It is a united front, angela nationsalls on the eu to back the 750 billion Recovery Fund. W . W . Uhiono manus good morning from bloombergs middle east headquarters in dubai. It is daybreak europe. Market sentiment takes a hit from rising coronavirus cases and political tension. The Trump Administration rejects beijings claims in the south china sea. Angela merkel and italy show a united front at the crucial eu summit. The chancellor says a massive response is needed to counter the fallout from the virus. Jp morgan, citigroup, and wells fargo kick the reporting season. Trading revenue could be the bright spot. 6 30 a. M. In london. 7 30 in geneva. Speaking atwatch is a video conference, saying we will have a clearer picture in the second half of the year. Here in lies the point. This is what is going to define the earnings season. The guidance in terms of one sales will come back. He is saying he will get a clear picture as you go into the second half. They fed a strong positive operating results for 2020. That is what they are expecting. Reopencountries begin to , they made a loss of 123 million francs in the first half of the year. Jim was already profitable. Pentup demand and mainland china. Andle digit rate in may june. The pentup demand in the company has cut 2400 jobs since december. This is a transformation of resale. Retail. You have fidelity, blackrock worried about fiscal cliffs in the united states. Is ace Maurice Gravier little more prudent. Where is the bailout fund . It really is a call to arms for delivery on stimulus. London down by 1. 25 . Roll it over. What drives the dollar . What is it that drives the dollar . The political disjunction between the u. S. And china, is that what drives the dollar . Into positive territory rather than the dissipation of rates . Oil is down by 2 . Will opecplus really risk putting nearly 2 Million Barrels back in the market . Lets talk about the european narrative. The chancellor of germany Angela Merkel is showing a united front with italys Giuseppe Conte head of the eu summit friday. The two leaders have warned that the eu needs to deliver massive response to tackle the pandemics economic fallout. Tracking the politicians and the imaginations is maria tadeo from brussels. What did merkel and Giuseppe Conte actually agree going to the summit for friday . Maria it is interesting because Angela Merkel and Giuseppe Conte , the italian prime minister, which is the country that would benefit most if we do this Recovery Fund, agreed this week when european leaders meet in brussels, both said that the 500 billion in grants should not be lowballed, that amount should stay and that is needed to prop up the european economy. When you look at the differences in terms of getting this deal through the finish line, it is not so much the amount or the size of it, it is the governance. If this money is agreed, if this is handed out to countries badly had by the coronavirus by spain or italy, who is going to check that it is being well spent or used in a way that props growth in a Sustainable Way . That is where we feel at this point the tension is here. Amount, but just the governance. Who is going to make sure the money is used properly . The frugal four are now playing this very hard bank hard. Because they want to see a more traditional kind of bailout. We give you cash and that delivers on reform. That could be problematic for italy because they dont want to hear anything that looks like a troika. Manus that is the last thing anybody wants to see. What can we expect from the leaders . Do you think they will seal the deal . Is there enough momentum . Maria i think at this point the mood has changed. Likely and this could turn into a summit that runs for three days. Lets keep in mind that europeans meet for the first time and we are expecting this summit to go up to three days. The second point is whether the netherlands believe there has been enough goodwill. But the mood has changed. There is more optimism going into the meeting. If anything, what were hearing is that there could be another summit for the week of the 17th. 27th, excuse me. Manus maria tadeo no problem maria tadeo, our reporter in brussels. The former euro Group President an agreement amongst the european leaders on the proposed Recovery Fund is muchneeded to help boost investor confidence. He spoke with bloomberg in an exclusive interview from lisbon on the last day in office. It is a muchneeded deal. Closely hope leaders can weeka deal as soon as this are at the latest, at the end of the month. The euro group back in april set for the response of europe. We took the first steps of this response to the crisis and we now need to close the deal to strengthen the confidence of investors, citizens in the recovery phase of this crisis. Will the deal eventually come with any kind of strength to get the frugal 4 on board with this. Enoughink we have bargaining that it gives margin for maneuver. That suits everyone in europe. We have different views of the final agreement. Time, they see the European Council is enough to bargain. Seeing the polish election this weekend, does the reelection make it slightly more difficult to make this happen . Some would argue that poland has flouted some of the rules that are at the core of the european and the further erosion of media. Poland is a big part of the agreement. We are always having elections in europe, this is one of the characteristics of our democratic nature. We have 27 democracies. I dont think that one should be put in front of the other. But the fact that we have democratic elections in poland is of our own nature. We need to work with all governments. I think certainly the polish government and the newly elected will reach annt agreement on these subjects. I feel like going into the meeting there is going to be a lot of grandstanding from the u. S. In terms of countries threatening. How can an investor understand the difference between the noise and the negotiating tactic versus the country really taking a harder stance here . I think it is important that we understand the relevance of closing a deal. Use more hardies ways to negotiate, but honestly, i think what is important facing these weeks and having in mind for we must provide clarity Economic Agents to get out of this pandemic crisis. We have already enough uncertainty. Nottical uncertainty is important. We must look at other examples of regions and countries that in termsg difficulty of how to fight the pandemic and how to respond economically. Manus that was the former euro Group President speaking exclusively to bloomberg. My guest host is Maurice Gravier , chief Investment Officer for emirates nbd. I know that european exposure is not the core of where you are, but when i look at the difference between u. S. And europe, i look at earnings recovery from next year relative to the u. S. Does it wet your appetite to think about europe versus the u. S. . Marketsu look at equity. But how do you estimate the question, i wouldve said, just forget it. Many countries in europe, it is a fantastic company. These are exposed to the recovery. There is an interest. Manus ok, maurice. Thanks very much. Marie stays with us. Your first word news this morning. The World Health Organization says covid19 probably wont disappear in the coming months. It is unlikely a vexing will everyone. Ilable to california has closed indoor restaurants, bars, and cinemas. Hong kong has tightened restrictions to contain the resurgence in coronavirus cases. Face coverings are to be made compulsory in Shopping Centers starting july 24. Mandated face coverings on public transport last month, but that is optional for shoppers. The Trump Administration has rejected beijings claims to large parts of the south china sea, reversing washingtons previous policy of not taking sides in a territorial dispute in the area. The u. S. Has generally called for freedom of navigation in the waterway, while stopping short of taking a specific position. However, secretary of state mike pompeo says chinas claims are unlawful. 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. Just on the china story before we take a quick breather, you have a dropping by 3 . The chinext. Trade it was a little bit better this morning. Given i on those chinese stocks. Kissing that 10 trillion valuation level from 2015. Coming up, entering the endgame . As regulators look to phase out for the next 18 months, has the pandemic derailed the transition . We hear from the bank of england governor in the new york fed president. That is next. This is bloomberg. The government is spending huge amounts to protect the u. K. Economy through the coronavirus lockdown, but if history is any guide, britain could be paying it off for decades to come. The u. K. Has had a National Debt since the reign of william the third. He sold the Government Bond to a signal indicative lenders that became the bank of england. This had an alltime high after the napoleonic wars, shooting above 200 of gdp. When it has needed to come of the u. K. Has paid off instead quickly. It barred nearly 4 billion from the imf, the largest loan ever requested at that point. In the end, it only drew about half the money and paid it off by the end of the decade, but that is not usually the case. As recently as 2014, the u. K. Was still talking about paying off debt associated with the south sea bubble of 2020. The money you kod to the u. S. After world war ii, that only got paid off at the end of 2006. That may be the best way to look at this pandemic. Some lawmakers are urging the chancellor to treat it like or debt. That means it may sit on the books for a far larger than usual. That is possible in part due to costs being low, but governor Andrew Bailey is warned the scale of intervention cant last forever, as the economy recovers and support is gradually withdrawn. The u. K. May need to make tough decisions to bring its debt level back down. That was anna edwards with a look at how the u. K. Could pay off its National Debt, which topped 100 of gdp for the First Time Since 1963. At the peak of the market intdown, a vital role Setting International borrowing costs according to the bank of england governor Andrew Bailey. Lenders and companies are supposed to make the leap away bor, but those efforts have stumbled. Francine lacqua spoke to bailey and the president of the new york fed. Have made up a lot of stocks that we need to for our fund, but we now need to set. Lear deadlines for things remarks that there march. Eason after i should say we expanded that a bit. [indiscernible] to extend that. In the last 18 months we think that the infrastructure is now there to put these in place. Off, it meansut all the focus can then be on [indiscernible] [indiscernible] the voice was cutting out for a moment. I echo what andrew said. To me, the number one thing is the stock libor contracts. We have seen this in the u. K. That is something we need to focus on. Obviously, the second is the prepare to get away from libor in terms of backing up things like that. Finally, i think the Industry Needs to be more proactive around communicating and educating the broader communities that they work with about the transition from libor. A lot of the discussions have been focused on the Banking Sector naturally in the financial industries, really getting the word out. Other reference rates and what that means to prepare for that transition, so i think that is another particular area. In,or everyone listening governor bailey, does this mean that when you talk about these legacy contracts, do you worry that we will have zombie libor after 2021 . Isdont think zombie libor really a feasible concept because if it gets to that point, it is going to fail the test. That test will have to be designed. D have to be i think zombie libor is not really feasible and that is why the government is going to put forth legislation to deal with that situation, which i very much welcome. It will give them powers to deal with that. As i deliver lisette and my and deliberately said in my remarks, dont put yourself in the hands of that when you have the option not to. They tied their hands so firmly in the structure of the contract that there is no way out. You have to get out of that contract. If youve got the choice, youve got the choice to get out ahead of that. Get out on your own terms because that gives you the freedom to design the solut that will inevitably be a onesizefitsall approach. Governornk of england Andrew Bailey, new york fed president John Williams speaking to our very own francine lacqua. Coming up, looking for the bright spots primed for an ugly earnings session. Some are pinning their hopes on strong results in trading revenues. We will talk a big banks. This is bloomberg. Manus it is daybreak arab. Daybreak europe. The big banks will kick into action with earnings today. Investors are largely expecting a lousy set of results. But there could be a few positives amid the loanloss doom. Dani burger joins us now. My favorite line, it could be sloppy and messy. What do you reckon . Dani where do you go from there . There are a lot of possibilities , a lotta volatility possible, but really what you want to do, there were so Much Negative detail of the negativity priced in. It is expected to be pretty dismal. Investors are digging through saying, where are the opportunities that may become . Rbc says the big winner this season might be the big investment banks, specifically jp morgan, goldman sachs, morgan stanley. They might do better in that investment banks of the last remaining thing that may surprise to the upside. We already know trading is likely going to be a positive for these banks. Rbc also saying Investment Banking results might be positive enough that they could reverse some of these negative market to market losses in loan provision and private equity. So, expect that from these banks. It might allow them to help build up the reserves to help some of the one chargeoffs they might have later this year because of negative credit. Manus well, there is the encapsulation. At 30 down on one of the other ones. Trade the gap. Mind the gap. That is daybreak europe. The European Market open is up next. Live shot of london. This is bloomberg. Anna good morning. Welcome to Bloomberg Markets european open. The cash trade is less than an hour away. Here are your top headlines. Common ground. Angela merkel and Giuseppe Conte present a united front ahead of the crucial eu summit. A massive response is needed to counter the fallout from the virus. Rough seas. Market
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