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Worsening Downside Risk. Raphael bostic knows joblessness seems to be flattening plateauing at a high level. Netflix plunges on disappointing subscriber forecasts. The Group Announces its chief content officer will join Reed Hastings as joint ceo. Just under an hour ago to the start of cash equities trading. With have a look at what is going on on futures market, a little bit of upside for European Equity markets and u. S. Markets for when we get to the u. S. Trading day. ,eep an eye on nasdaq features quite robust, up around 7 10 of 1 despite afterhours negativity around netflix, contained to just a netflix story, not anything broader about the tech sector. Weve had pleasing reports but they havent always been accompanied. Rising share prices is an interesting dynamic to discuss. Getting some numbers from electrolux, recovering faster than predicted. The numbers look to be broadly in line with estimates. Coming up, speaking to the ceo. The ceo will be joining us later on, jonas samuelson, shortly after 9 00 a. M. U. K. Time. Tune in for more details on that. Lets move to the gmm and what weve got moving around in the hs equity asia equity session. Thats indicative of what weve seen. The csi 300eakness, down after the much bigger falls yesterday, down 4 or so on the csi 300 yesterday. In todays session, a fraction of that, shanghai down 1 10 of 1 . The asiapacific is up to 10th of 1 . Were at a make 2 10 of 1 . Mix. At a we look ahead to the meeting taking place in person in brussels later today. The dollar is fairly flat as we head into the last trading day of the week here in europe. Asian stocks, along with u. S. Futures looking quite next, on signs of fragility in the u. S. Hamperncerns they will the recovery. Lets get to markets with laura cooper. I want to start by asking about the sector. We had numbers from netflix. Disappointed. I wonder if thats a contained story, not that impacts the rest of the sector. Weve seen asml giving fairly positive updates. What do you make of where we are in tech at the moment . Laura i certainly think investors have been hiding in the tech sector. Theyre seeing the comfort as a haven plate and were haven play and were seeing that take shape. Anticipate demand is going to slow going into the q3 period. But when we look across the spectrum, tech does remain a secular grower. They are quite profitable when we look at other areas. Clearly, thats likely to continue to go forward. I think this would, we started week, we started to see this rotation. The smallcap started to outperform the nasdaq. Were seeing, its premature to see that cyclical upswing. Thats why were seeing some outperformance today, potentially futures trying to struggle because theres a lack of visibility on the economic outlook. Investors are seeking shelter intact in tech. Were going to spend time talking about the bailout fund today. We talked about the ecb, Christine Lagarde saying there seems to be differing opinions over how much commitment there is to spend all of the ecb firepower in buying up assets in europe. Onto the Recovery Fund, what is the risk for the euro there . Laura i certainly think there are High Expectations that he Recovery Fund is going to have some kind of compromise potentially this weekend. I think the bar is set too high for that, given the fact there are deep divisions remaining. Saying gry him as ryd hungry, out hunga come out and say it was going into this wicked, the year weekend, the euro is on the ts tilted to i the downside. Hase look at how the euro done against the dollar, its about 5 . Clearly, good news is already priced in. Anna thanks very much. Laura cooper joining us with a look at some of the market scenes that are moving. Were range bound on the euro right now, eurodollar at 113. 79. If you want to get in touch with us or the market live steam, ib tv is the function to use. You can get in touch with us here at bloomberg. Lets get a first word news update, some of the top stories. He was Infectious Disease expert anthony veggies has many States Anthony fauci says many states reopened too quickly, this as flora and texas florida and texas report Record Numbers of coronavirus there. Elsewhere, manila result passes to million cases as the virus spreads in the poorer, remote areas. The u. K. Warned russia is seeking to still Coronavirus Vaccine research. Britains National Cybersecurity centers has facilities have been targeted a group which is almost certainly part of russian state intelligence. Security agencies in the u. S. And canada later backed up the findings. U. S. House Speaker Nancy Pelosi says shes confident congress can pass another virus relief plan in the coming weeks. Democrats call for 3. 5 trillion more spending as the coronavirus room continues to rage coronavirus continues to rage across the country. They should agree at least one point really 1 trillion is needed. We cant go home without it. And so, because of the Unemployment Insurance expiring, the rest of that, we have to have the legislature. Its been two months. Its been two months. More people have died. More people have gone unemployed. And more people have been infected. Anna global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. Meetxt, eu leaders today for more stimulus talks. Well discuss next. This is bloomberg. Anna welcome back to the fridayn market open for s session, futures up a higher. The way as Market Expectations ways on e. U. Leaders as they thrash out a stainless package. The heads of state including Emmanuel Merkel and emmanuel ron ash Emmanuel Macron joining us is maria tadeo in brussels. It is a marathon session. I likely a deal by monday how likely a deal by monday . Maria at this point, its difficult to tell. Officials will tell you at this point, its not guaranteed there will be a deal by the end of the week. The possibility of this deal has been played down. A lot of this has to do with the optics of a difficult negotiation. When leaders come here to brussels, they need to show they are fighting hard for taxpayers and taxpayer money. What i can tell you is the action here has been pretty relentless. We know Angela Merkel has been on the phone for 24 hours, hoping to get some type of compromise. We know she was on the phone with the biggest critic. His concern about the conditions of the deal. We know Emmanuel Macron had a lastminute bilateral we with giuseppe conte, who has a great interest in making sure there is a deal by the end of the week. Its unclear. Theres many few many theories. Some suggest it could end tomorrow with no deal, or stretch into sunday only if theres a probability of a deal. Anna if there is no agreement, what happens . What is the plan b, maria . Maria that is a question we put two officials any times. If the deal doesnt happen, what could change . We know the people running the presidency. And Angela Merkel has said she does not want to see the grand component of this fund be watered down. She wants to see the 500 billion 500 billion euro safe hood. Perhaps there could be changes to the deal. There could be conditions that could make it ok but its difficult to see what could change in the content other than letting time go by, make a difficult negotiation. Optics are important and into weeks time, its a possibility. Theres a summit planned on the 21st of this month. Thanks very much, maria tadeo joining us from brussels. The impairments came in lower than many in the market had expected. There are job cuts talked about. 2020, 2021, making staff reductions. They did see a rebound in lending activity. We had a positive take from the Banking Sector this morning. Lets get picking up on my what maria was saying, get back to that conversation and bring in ruben secura, the head of the European Economic research. Great to speak to you. We heard our colleague talking about the expectations for whether a deal will be done today or later this month. Let me start with a question about how necessary this is because Angela Merkel talked about this needs to be massive. The market is waiting for something big. Yet there are some voices talking about how the virus handling in europe now seems to have gone pretty well relative to other places. Maybe data is improving. How much need is there for the 750 euro 750 billion euro bailout . Ruben hi, anna. We really need this. It sends a very Strong Political signal. Youre right. Data is improving, but this is quite mechanical. It comes with reopening. Really is important in the Recovery Fund sends a political signal. In europe, we have large funding. The ecb is helping with the net funding needs. A political signal to stop investors from selling. Thats what the Recovery Fund is about. Im more skeptical on the Economic Impact of the Recovery Fund. This is very large, talking 750 billion euros. But at the end of the day, we are facing a very large shock. This is not going to solve structural issues we have in europe. This is not a huge game changer for the mediumterm outlook in the next couple of years. But the political thing here is key. Anna so we need this for the political signals. What about the underlying economy . You made the point that euros are needed now, not just 2023 and 2024. What will you be watching as to how soon the money is dispersed . Ruben i think that is something to watch closely. The problem with the recovery if you look at the European Commission plan and the documents a few weeks ago, a big expenditure happens in 2024. So to me, earnings signaled after negotiations, we could get the money faster. That could make me change my mind slightly. Actually, i would be willing to trade a smaller fund, lets say 600 billion euros, if this money gets there because thats one of the main issues we have right now with that Recovery Fund. Anna what do you think is the governors issues around this . How does the eu make sure the money is spent appropriately, spent on projects that will deliver, but we dont have a situation where countries feel like troika, for a situation like a troika is doing decisionmaking . Because that was difficult around greece. How does the government have to function here . Uben thats a good question and as maria was saying ready for me, the conversation seems shifting, not fully, but away from the size into the government. And that is key. That is very important because you want to avoid what you are suggesting but this looks like a four economic adjustment. This comes with three conditionality, that this comes with a vote from the governing council when it comes to moving plans and reforms, which it is what the frugal are asking for. Fundmakes the recovery quite useless. Every single country will be very reluctant. There is a space for the compromise. What the close to council was suggesting could make sense. Proposed or a bottom up approach, countries decide which they want to do based on the european semester and the recommendations and those reforms need to be approved by the council with qualified majority. You have to strike the right balance. If you move too far on giving you risk thet, political signal i was mentioning before and you risk going back to the narrative so toxic that we had back in february. Circulating ins some countries like that. Yeah, well certainly watch the details around majority voting or whether we have to see a qualified majority on whether we see unanimity. Let me ask about the ecb. How interested are you about the conversation about whether it is all spent . Do you think this is an area where the ecb has internal division . Or do we make too much of that, perhaps . Ruben i think that was raised yesterday. Now we have some strange comments, both in the outlook. Some complacency on the outlook, and also those comments on the nonneed to use that. I think lagarde did an excellent job yesterday when she was asked about this. And the message here is unless we get some massive prices, all of that will be used. Yes, there were resources thi ning whethere whether this was the broad feeling of the council. But i still think the data will force, not only to use all of addcurrent, but will also additional envelopes. Were calling for another increase by december. Anna ok, thanks for joining us. Great to speak to you. Ruben, head of European Economic research at bank of america. Next up, well talk about tech. Netflix shares took a hit after a disappointing subscriber forecast. Well discuss that next. This is bloomberg. Anna welcome back to the European Market open. We still have over 35 minutes to go until the start of the european trading day, and weve got European Equity markets looking a little bit positive at the start of trade, but no great catalyst for any move higher. We do see s p futures improving attached as we move to the open. Perhaps this is the Bank Earnings season that we have that. In the nordics, we have seen different numbers coming through. One of the drivers allowing businesses in that region to benefit, actually a rebound in the underlying economies they are exposed to. Thats what we see figure of, euro stoxx 50 up three tents of 1 . Elsewhere 3 10 of 1 . Us how farit tells through their covid crisis we are. Interesting to hear the Morgan Stanley ceo talking about a disconnect between the underlying economy and what were seeing in stocks. We didnt think so because of the way the Banking Sector has actually seen its profits fall, even if may not as badly hit as some sectors. He doesnt think his business was particularly badly hit, in that sense. Lets get some of that Business News for you with a Bloomberg Business flash. Virgin atlantic is preparing to return to the skies next week, although it doesnt see travel demand previrus levels for at least three years. Fresh from a 1. 5 billion dollars rescue package, the carrier will resume flights to hong kong, l. A. , and new york, but says u. K. Quarantine restrictions means basically essential travel only. Corporate demand will take time to recover. Theres no doubt about it. And aviation will take time to recover. We do agree with most that think it will take at least three years to get back to 2019 levels. Anna recovery in demand late in the quarter spared daimler as losing as much money as analysts were expecting. Preliminary a deficit of 1. 68 billion. The country warns businesses returning unevenly, with car sales coming back more slowly than north america or china. Netflix shares plunged after it delivered a disappointing subscriber forecast. The largest paid streaming service expects to sign up just 2. 5 million users in the first quarter, less than half the number expected by wall street. Netflix also has a coceo after promoting the chief content officer to work alongside current ceo Reed Hastings. Interesting to see the move and netflix shares after hours was to the downside, but the nasdaq futures actually pointed upwards, up a 10th of 1 . The broader u. S. Picture looks broader, up 3 10 of 1 . To add riskit time aftertax rallies stalled thursday . We talk with bnp paribas about why they are optimistic for an upgrade. Thats next. This is bloomberg. 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The situation in the u. S. And china, the middle east and russia. A strong europe also means countries lagging behind in terms of reforms need to step up again. Into the summit, you are always presented as the bad guy. Guess youre feeling is you are fighting for your taxpayers ultimately. I am fighting for europe which is in the interest of everyone including the dutch citizens. A strong europe which is economically more competitive and can play with confidence a strong role on the world stage. You disagree with the idea it does not feel like that at the moment. [indiscernible] well, this is about the technicalities around the governance and im going to tell you about that afterwards. [indiscernible] , i dont want that. If they want loans and even grants, it is highly illogical that i can explain to people in the netherlands and other countries that in return, those reforms have taken place instead of only assurances that they will take place. [indiscernible] the rule of law for us is key. Voting. Majority the Commission Proposal has already been scaled down. Lengthed to debate at what it will look like. But i do not think it is possible to water down further. That is impossible. [indiscernible] this is hard work. Would you how likely is it that we see a deal by sunday . Less than 50 but let us be helpful. Less than 50 . What will change . It is one of the questions we have to answer. We could still get to a compromise. How was the italian Prime Minister . We met last friday at the hague. We are good friends. Would you advise him at this point . Im not going to advise my italian colleagues. That is not up to me. I have the highest respect for he is really taking italy forward on the path of reform to get italy into better shape. Christine lagarde said if deal, there could be a a lot of nervousness. Do you worry about a backlash from investors . I am worried about a lot of things but a weak compromise will not take europe further. [indiscernible] outcome . T a good no. What is a good outcome . A where there will be position in the framework which is comparable to the position we had in the last seven years which means including rebates. There butpal is still we have to improve on the proposal. And secondly, it is crucial that we come out of this meeting with an outcome which guarantees that reforms will take place in countries which are still lagging behind in terms of reforms. If we can achieve those two things, i think we will have a good outcome. You are going to push for the rebates . A europe where the netherlands is not only er. Ng the net pay i dont like that. [indiscernible] anna that was the dutch Prime Minister speaking in brussels i had of the eu summit. Everyone listening very intently to the comments. The dutch Prime Minister because he is one of the frugal four. Interesting to hear him mention about reforms that are needed. Reforms in the south if they want to get a hold of some of these loans. I wonder if there is room for movement around governance. Hes gently set that will be debated at length. And details later on that front. I wonder if that is what success would look like for him. Edmundget to our guest shing from bnp paribas. A very good morning to you. Watching the details unfold in brussels but taking a step back, from a market perspective, what are you looking for european leaders to agree to today to move the story forward for europe . Edmund i am not sure we can expect anything to be agreed today or even by sunday. I think what we expected to see as progress and a narrowing of the differences between the frugal four and the rest of the eu in terms of the eu Recovery Fund. Our central scenario would be we see progress but not a final agreement by sunday. I think it will be a disappointment for the markets particularly the fx market. Europe has been quite strong leading up to the summit. A disappointment would be that there is no narrowing of the gap and thethe frugal four rest of the eu. Anna do you think this fund has made europe more investable . I think yes because what euestors see is they see the Recovery Fund finally agreed, they see there is closer integration of the European Union. The more coordination of policy there is, fiscal, monetary and even political policy, the more investable it is by Global Investors. It is viewed as disparate countries. The more that europe speaks with one voice, the easier it is for Global Investors to buy that story and by the gradual restructuring and recovery in the european economy. This is all very much about political signals. We heard that from our last guest as well as the amount of money on the table. How investable is this . We are watching the euro. What else are you watching out for . If wef we look focus on the stock market, we look at the european stock market and we know it has been versus the u. S. Led largely due to a large base of growth which europe lacks. That has certainly held europe back and this latest stock Market Recovery in europe has been somewhat lost on Market Recovery. People get on board with the butess of the tech stocks they have not really got on board with buying back into europe. I think that is still a story to come. This is one step on the path of making european equities investable again. The u. S. Performance of equities versus others has been colossal. Anna and through all of that, one of the sectors that has underperformed in europe is banking which makes me think about that being where a lot of european exposure is. How likely are you to turn bullish . Seen a couple of flurries in value but these have died back rather quickly. The overarching issue is one of we need to see more sustained recovery and the more we see a vshaped recovery being sustained, the more chances we have of outperforming and the more likely we will see a resurgence of interest inflation. We dont see it in the cpi numbers yet the people are thinking about in a year or two, stimulusis massive being thrown at the economy, what if it results in pockets of inflation . What does that mean for the stock market . That would be the ultimate catalyst for the value. Is somethinghat that no one believes in yet. Everyone is looking intently. No one has pulled the trigger yet. Rallies, theyor are dramatic and they typically the point where no one believes in it. Much. Thank you very we will get back to you shortly. Edmund shing from bnp paribas stays with us. Let us take a look at some of the events we are watching out for today. Make sure they are marked on your schedule. Going onbout what is in brussels. Eu leaders meeting to discuss the recovery package. The need for reform. This will be their first in person summit in months. And the bank of england governor Andrew Bailey speaks at a citizens forum. And before the u. S. Market opens, blackrock will report its secondquarter earnings. We will be waiting for larry finks comments. Next, the accounting scandal shining the light on poor corporate governance. Esgill discuss the g in with edmund shing. This is bloomberg. Anna welcome back to the European Market open this friday morning. Still 15 minutes to go until the start of cash equity trading. Known asmeant to be the year of investing but the coronavirus has remained the focal point of market attention. Esg investing has continued to grow as investors look for ways to insulate themselves from shock. On the environmental front, the record amount of green loans were issued from the beginning of the year. Shows the light on this social aspects of investing. Mistakesard shows the that can be made. Edmund shing from bnp paribas is with us. You have created a basket. Tell us why you have created this and what it is you are trying to tap into here. Edmund as you said berrys a singlea, esg as you said, esg has beenally, huge in the last 12 months and that is a structural shift that shows no signs of slowing. Has been, the focus very much environmental. All about green energy and renewables and less emphasis g. D on the s or we are looking at governance. Wirecard is one catalyst and the latest in a catalog of scandals that we are bad over the last 20 years. I can remember back to the dark old days of enron. We know it is an issue. In terms of performance, it is not just an issue in terms of getting absolute performance but more in terms of avoiding disasters. In terms of risk management, it is about managing the risk to avoid and minimize the risk of poor governance because it can have a dramatic impact on company performance. The problem is when you do that come if you look at classic sri, it is very biased towards tech. We want to avoid these biases. Nna yes it is interesting when you look at governance as the way that easy toelops, it can be screen out the companys that dont do things that you like. Is that fair . Edmund i think that is right and at the moment what we lack is widely accepted standards that all Companies Report to. A lot of times, just getting the data can be tricky. On the environmental side that is improving but on the social and governance side, that can still be tricky to secure. On the government side, you can ,eparate chairman from ceos these are quite clear and simple steps you can take. And this is all available in annual reports of companies. That source of basic data you can get easily. This that we have been digging into to create these long and short baskets. Anna another theme you have been investing in is global Home Entertainment including gaming and home delivery. All of that seems to be doing relatively well. From netflix though, we see that some of these companies do not live up to expectations. It is still all about execution and with the coronavirus, as we saw even with Companies Like amazon, it has brought a boost in sales but that is not necessarily commensurate with profits because costs also go up. Itself can be somewhat disruptive and we have seen that in the results of some companies. And also come even though we can talk about the Online Retail banner or the video streaming banner, it is clear that some companies are performing better than others. For us, the overall theme is not just about covid where the post ovid economy, but these have been structures in place long before march and that is a story that will continue. We are seeing a shift in patterns towards Online Retail. It is all about more convenience and simplifying your life. A lot of these trends are about simplifying your life, more convenience and a greater diversity of offerings. Whether it be netflix or online shopping, that is what consumers are looking for. Anna simplifying life. Something good to talk about on a friday. Edmund shing from bnp paribas, thank you very much for joining us. Bloomberg first word news update. The u. S. Infectious disease expert dr. Fauci said many states opened to quickly as florida and texas report Record Number of coronavirus cases there. Manila a return to a lockdown. May return to a lockdown. Brazil has a spread of the virus in the poor regions. The u. K. Says russia is looking to steal vaccine research. Facilities in multiple countries have been targeted by a group which is on the certainly part russias state intelligence. Security industries later backed up that finding. Discussing, netflix shares plunged by as much as 50 after they delivered a disappointing subscriber forecast. Just 2. 5 million users in the thirdquarter, less than half expected by wall street. Promoted one officer to work with another. 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. To go untilnutes the start of fridays equity session. Up next, we will look at stocks to watch including ericsson weathering the Coronavirus Crisis better than expected and continued investments in 5g. This is bloomberg. Anna just a few minutes to go until the start of the market session for this friday morning. A mixed bag of sectors for Annmarie Hordern to cast her eye across. Sector. Ed i pulled out the names we expect to move to the upside. Daimler had a recovery in demand late in the quarter which prevented it from losing as much money as analysts expected. The consensus for 2. 1 billion euros. As businesses reopen, things are uneven. Streaks for car sales in europe. Coming back more slowly in china. The big question is whether demand is improving fast enough to make a meaningful difference for the entire year. Anna absolutely. Moving onto a fairly resilient story around ericsson. Telecompany equipment is very salable at this point. Particularly when you think about what is happening with huawei. Colleagueoke to our in the last hour from ericsson he said they had the capacity to compete with huawei. They really have been able to weather the storm of the coronavirus better than expected after phone Companies Cap spending to support networks that were more strained by a surge in home working and streaming. Estimates that the calls are looking higher for them at the open. With yourarie hordern stocks to watch. Ceoxpect to hear from the about the positive story at that business. The european open is up next. Future is looking moderately positive. This is bloomberg. A minute to go until the start of cash equity trading. Here your headlines. Hashean leaders look to out the recovery program. The chances of a deal by the end of the week are less than 50 . We are live from brussels. Charles evans warns about worsening Downside Risk and raphael bosket says things seem to be plateauing. Netflix had disappointing subscriber forecast. And its free for content officer will join the ceo. Nearly there into fridays session for European Equity markets. We expect to see a little upside at the start of the trading day. U. S. Futures also pointing higher particularly the nasdaq which is interesting given the selloff we saw after hours with netflix. For broadly, we are looking a little bit of upside at the start of the trading day. Focused on brussels and we will return to that conversation in a moment. European equity markets opening up. The ftse 100 fairly flat this hour. Ibex fairly flat as well. Dacing for the tax and the waiting for the cax and the dac. Cax opening fairly flat. We will return to some of the stock specific numbers including daimler. And ericsson. Keeping an eye on all of the moving parts. Broadly speaking come European Equity markets opening modestly higher. This comes as leaders gather in brussels to discuss the recovery plan. They meet to discuss the purchase of bonds. We are joined to buy Kallum Pickering from berenberg. Expectations would you describe them as high in the meeting of the european leaders today . Has some skinster in the game but what are you thinking as we head into this particular meeting in brussels, what is at stake . Tolum it is ambitious expect a deal at the end of the critical iswhat is that after the meeting is over, the market will need to have some communication that most members are happy with how things went. That can shape expert patients for a deal later this summer or in the fall. There are two things at stake. The first is the european recovery. This could be the biggest economicf crossborder solidarity and compromise and cooperation in history. If you can get that big 750 billion number come at you can tear up your expectations for the outlook. A much more critical point is the politics. Remember during the crisis in march and april, the italians were very unhappy with the way negotiations were going. They felt they needed help they were not getting. Ino skepticism was creeping to the intellect. Everyone had the question could the europeans could the eye italians could the italians leave the union . Is this all about the political signal . It is all about politics. Does the euro amount matter . Of course, it matters but is it more about what it represents . Kallum of course you could always make the argument that the ecb is the institution and it will just purchase the bonds that it needs to purchase and National Governments can borrow to the hilt if they need to. In a way, the number is not what is important but it is an expression of the commitment to the political solidarity within the eurozone. In a sort of halfway goes, it is what matters. We have european elections on euroorizon, we have the skeptics and france and in italy and if europe can come together heading intossue, those elections you worry less about a big surprise. Wonder if you think there is room for maneuver in the negotiations. We heard from the dutch Prime Minister earlier on and he mentioned a couple of times the need for some conditionality of around reform. He almost glossed over the votingation on majority and that sort of thing and projected detail for later. He was trying to push the idea of reform. Is that one of the areas where we will need to see movement . There are a lot of different ways that we will hear a euphemism for italy this weekend. Has the worst underlying economic fundamentals and the weakest potential growth and the worst structural fiscal outlook. Whether or not we have this crisis anyway. The conditionality will be that you will get the help but you need to reform your underlying economy in a serious way. That is what really matters. If you take italy at of the question, the eurozone is a fairly robust economic block but italy is the issue and they need help now. If they can get help and if the Prime Minister commits to structural reform and can lift italy, it will change the labor market rules and regulation on corruption issues if you can get a solid commitment on that, help will be fairly generous on the fiscal side. Anna what about what we heard from this ecb side . How gripped where you buy the conversation about the ecb spending all of that tech . What you think is the heart of the matter . Lose any would not sleep at all about the ecb doing what it takes. It really comes to that. The ecb is a powerful institution as are all Central Banks during the crisis. What Central Banks cannot do is lift the rate at which economies can generate prosperity and increase the Living Standards. In europe, the real crux of the issue this is an economic ,rea where for a good decade you to row for Living Standards that did not meet expectations. Carrot stick and a approach for the ecb. We are willing to give you the help you need to get out of the crisis but we cannot lift economic growth. It is two sides of the same coin. Anna ok, thank you very much. Kallum pickering from berenberg here with us this friday morning to talk about European Economics. Conversationthe around the eurozone to what is going on in britain. The perfect storm for britain that could prompt the bank of england to more action. We discussed the outlook for the u. K. Next. This is bloomberg. Welcome back to the European Market open. 10 minutes into the trading limbon that is kind of in waiting for developments in brussels. We are getting lines coming through from brussels as we gear up for the summit to take place in person among european leaders. Getting comments from Emmanuel Macron saying this is a crucial moment for europe. The question is where does the how is the common start shared . It will be interesting to see how that develops. We heard from the dutch Prime Minister earlier today and he agreement at the end of the weekend is at about 50 . We will see. Let us get a business flash of the latest stories we are covering here at bloomberg. Shares plunged by as much as 15 after it delivered a disappointing subscriber forecast. To sign up 2. 5 million new users in the third quarter. Coceo also has a new after promoting the chief operating officer to work alongside the current ceo, Reed Hastings. A recovery in demand late in the quarter has spared daimler from losing as much money as analyst were expecting. Making mercedesbenz cars prevented the deficit before interest in taxes come in second quarter. Her sales in europe are coming back more slowly than north america or china. Eric sin has weathered the Coronavirus Crisis better than thericsson has weathered Coronavirus Crisis better than expected. The Swedish Telecom equipment maker reported normal . Kallum i dont want to be another analyst of using the alphabet on your show but i do not think we will get a vshaped recovery. Where we see an initial snap back in the next few months probably recovering two thirds of the losses and then over the next 2. 5 years, you recover the third of the loss. The data was by and large disappointing. It was more like 2 . Within that, there was some positive signs. Retail data was good. Up 10 in may. There were parts of the economy still subject to social restrictions that were held back. In june especially in the Housing Market for instance where things have improved materially. Let us wait until we get the june and july data to reduce our expectations for growth but so far, im fairly happy with the trends in the u. K. Anna going back to what you were saying about brexit, help us get some understanding from where we stand now. A lot of the projections were done before we had ever heard about covid19. Context to covid how sizable will this be and we have so many other headwinds coming across the u. K. Economy . Kallum good question. If we get the no deal, potential growth will be somewhere around 1. 5 compared to being a member of the Single Market where growth is at 2. 4 . In brexit ing cost the long run but the real question is whether or not the its Current Situation and moves to the future in an orderly way. If we get that orderly hard exit, there is so much cyclical capacity for the u. K. To catch up, it is unlikely that we will see the underlying destruction. When it comes to a negotiation, they are still far apart on a few key issues whether it be fishing, level playing field, or governance. These key watch issues carefully. It is not completely out of the question that towards late autumn they start to make enough progress that we get a partial the up by the year. The eu can be flexible as can the u. K. We have put some probabilities on that. Orderly hardof an brexit. And a 35 chance of some kind of deal at the end of the year. The risks are to the upside. You very much and it has been good to speak to you this morning. Kallum pickering from berenberg joining us to talk about expectations around the u. K. And before that, expectations for the european summit. Cominggetting lines through. The president of the eu council saying that today is a difficult summit. He says i am confident it is possible to find an agreement. We did not hear that confidence from the dutch Prime Minister earlier on. He was a little more though beat downbeat in terms of what could be a cheap. A lot might be in his hands. He said there is less than a 50 chance of finding a deal. Emmanuel macron says he is confident by careful. A lot of cautious words coming ahead of the summit. There is a lot at the. As they talk about the bailout fund. A lot of conditionality and the way that this will be voted on by the european council. That is something we will be watching carefully. Up, Virgin Atlantic returns to the skies next week after securing a rescue fund. We will bring you our conversation with the chief customer officer. That conversation is up next. This is bloomberg. Anna welcome back to the European Market open this friday. 22 minutes into the session which is moderately positive waiting for news from brussels. Virgin atlantic will be taking to the skies. It is expecting a sluggish recovery. Customer officer spoke to guy johnson. York the 21st we start new at jfk and l. A. And in early august, we will add barbados and a couple more destinations stepbystep. Bookings initially are looking limited. Heart of the issue is that these markets are still travel restrictive. There are still travel restrictions in place. There is still a quarantine in place here in the u. K. When you come back. Here . Hat is the objective it has been three months since we flew passengers so we are delighted to have passengers back on board. We have kept ourselves busy. 1400 cargorated over flight including moving a lot of arsenal protective equipment. We have kept ourselves busy with cargo. These cargo contributions we will still maintain and we will add passengers and keep growing from their stepbystep in a cash positive way. Think we willou get back to a normal environment . I mean what is your expectation in terms of the lifting of the travel restriction. We have multiple scenarios because who knows what is going to happen. We dont know when our major market will reopen. We have plans for multiple scenarios. Travel restrictions need to be confidence toils fly needs to grow as well. We have taken a lot of precautions so our customers know they are in safe hands with us and that their entire journey is safe and sanitized. We will go step by step. Guy what will the experience be like on board . We will inform our passengers about our checklist and restrictions. Everything a customer will touch will be sanitized. Mask wearing will be required throughout the journey. On board, we will board in very small groups it hearing to social districting. Social distancing. Masksl have medical grade available for the duration of the flight. All of our customer facing staff including the crew will wear masks. Our service will be somewhat limited. Food buteintroduce hot in a very controlled way. Everything will be hygienically clean with hospital grade products. Our cabins come in and stressed step of sanitization on every turn around and we will even provide hand gel and wipes including if the customer wants to wipe something down again. It is a different environment that we are looking forward to looking after our customers. Anna really interesting detail there about what to expect with flying on Virgin Atlantic. Let us get back to the markets. European equity markets not moving very much overall but we are seeing some interesting individual stories. Ericksons profits boosted. It is a fairly resilient sector. Share price is up by 8 . Swedbank also very interesting. Ceo andearlier to the he was talking about the customer deposits being part of the story. Up by 3. 9 in terms of sheer interest this morning. Pessimism about a deal. Leaders are meeting to discuss the regions emergency fund. We go live to brussels next. This is bloomberg. Anna welcome back to Bloomberg Markets european open 30 minutes into a trading day where we are seeing modest gains coming through right now. Gains to the upside on European Equity markets, not by much. Some of those gains evaporating. U. S. Futures looking flat to positive. Nasdaq futures up by 0. 8 , despite what we have seen from netflix overnight, where we saw after hours share prices moving lower. Lets have a look at the sector perspective. A fairly mixed picture coming through on sectors. Autos and parts to the upside, technology up by 1 . Banks move lower, despite decent numbers coming through from some of the banks in the nordic region. Travel and leisure also to the downside. Lets get a bluebird first word news update now. Hasnt seen coronavirus cases exceed one million, becoming the third country to cross that mark. Anthony fauci says many states reopened to quickly. This as florida and texas report Record Numbers of coronavirus. Meanwhile, manila may return to a lockdown as virus cases rise in the philippines. The u. K. Has warned that russia is seeking to steal Coronavirus Vaccine research. National Cybersecurity Center says facilities in multiple countries have been targeted by a group which is almost certainly part of russian state intelligence. Security agencies in the u. S. And canada lady the findings. Nancy pelosi says she is confident congress can pass another virus relief plan in the coming weeks. Spending asnt more the coronavirus continues to rage across the country. Pelosi says republicans have already shifted position to agree that at least 1 trillion extra relief is needed. Speaker pelosi we cannot go home without it. Because of Unemployment Insurance expiring, the rest of that, we have to have the legislation. It has been two months. More people have died, more people have gone unemployed and more people have been infected. Anna global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Back to our top story. Eu leaders are meeting in brussels in an attempt to reach a deal over the recovery plan. At stake is a 750 billion euro package backed by germany, to be funded by joint borrowing. The market is hopeful the bloc will seal the important agreement. Angela merkel and Emmanuel Macron have been playing down the chances of a deal this weekend. Joining us now is maria tadeo. It will be a marathon through the weekend. Some of thesewith leaders. We have heard optimism, from others, pepto ms. Pessimism. He does have a number of concerns about this Recovery Fund. He worries perhaps it is too big. He worries about the grant component. This is the biggest sticking point, the governance of this package. If a country like italy gets a windfall of this cash money, who is going to ensure these reforms are carried out. Do we get a deal by the end of the week . You mentioned the market is hopeful. I did ask him. He said its not so clear. 50 ,would say less than but lets be hopeful. You never know. Why is that . To inill change from now two weeks. It is still possible. , prime was mark rutte minister of the netherlands, speaking to us shortly. Countries really want to see stricter positions. As you know, he will have to agree to the package and it is a unanimous vote. 27 Member States will have to agree to it. Convinced att too this point. Anna yes. What are some of the sticking points still . He seems to be emphasizing the need for reform. There are other sticking points as well, of course. Maria yes. So the governance really is becoming a major talking point in brussels. The countries, they are net payers into this budget and would like to see a rebate. That was clear from mark rutte. He says if we are going to pay that much, we want to see that rebate back. We thought that europe with rebates was done after the u. K. Left. Want toe said they do get this rebate back if there is suddenly an agreement. Many sticking points, falling back to the idea of governance. Who is going to check that the money is well spent and the overall size of this package well spent . And the overall size of this package, Angela Merkel has signaled that she does not want to see the 500 billion be watered down. For countries like the netherlands, mark rutte, they would like to see that number watered down. It is unclear if they will be able to find a compromise. At this point, when you speak to officials here, they tell you nothing is really guaranteed. Come sunday, it could really go either way. Anna maria tadeo in brussels. We hope the weather improves for the summit. , coming up, after a report that online ohoo was underpaying workers, we discuss ethical issues that have plagued fast fashion. Welcome back to Bloomberg Markets european open. European equities fairly flat some 40 minutes into the trading day. Interesting geopolitical lines coming out of china. China claims the Virus Research research virus allegations are absurd. Also interestingly, pushing back against comments we heard from the u. S. Attorney general. China cause William Barrs comments groundless. This after the u. S. Attorney general says u. S. Companies have become pawns of china, enabling the government in beijing to amass influence and wealth at the expense of the u. S. And western democratic values. Let us get to another market theme of the week. That is around fast fascination fast fashion and the ethical and sustainable issues that sometimes plagued the industries. Shares of boohoo plunged earlier this month after a report some u. K. Suppliers were paying workers as little as we. 5 pounds per hour, less than half per hour, less than half the minimum wage. Questions the presence of Fast Fashion Companies in esg portfolios. We are joined by ketan patel, fund manager at edentree investment management. Recently, the story has all been around underpayment of wages in developed markets to people making this clothing. We have known for many years that people making this clothing have been paid low wages in emerging markets. Something seems to be different this time. Is there any place for fast fashion in esg funds . That it isould argue very difficult for, you know, if you are a sustainable lee led or investor led fashion, fast fashion is predicated on two things, it is cheap and disposal. Those two things dont go together with the word sustainable. It is cheap labor, exploited labor. It is interesting because it has happened in lester, close to home. These conditions are prevalent in other parts of the world, whether it is china, vietnam, bangladesh, turkey, etc. Because it has now come close to home, people are really upset about it, but this has been going on for decades. Investors in the esg sector have to ask, is this something we want to be part of . Is this something we can change as well . Esg investors actually divest from boohoo, but there are other listed companies as well. There is a real backlash now against investing in this area. Will these companies change . Will their Business Model change . It is a difficult place for a lot of esg investors. Anna yes, i imagine there are some investors who hold the same view about this as some have said to me about oil stocks on the environmental front. There can sometimes be a role for investors to hold stock and try to influence behavior. You suspect that is not happening, though . Ketan not with this. Same with oil and tobacco. Edentree does not invest in boohoo. At its ipo inhoo 2014 and it did not pass on the s, or the g. We have to ask, can we invest in a sector or company and change how it behaves . Fast fashion is predicated on being disposable and cheap. If you remove those two things, it it is not fast. Is there a place for it in an esg portfolio . There are other firms you can invest in in the fashion chain which are fast and doing it the right way. Yes, you can invest in fashion, but not fast fashion. A lot of firms behave like this in terms of exploiting workers, poor working conditions, etc. , not just in the u. K. , but around the world. Anna you were talking about how ened boohoo at ipo, screened it out of the list of companies you would invest in, what was it about governance that screams out to you as a no . Ketan i know you were talking earlier to another guest. Part thatg fundamentally drives esg. The s has come to the forefront during the pandemic. It is about whether the company is run for the benefit of the shareholders or the directors. An independent board is key. In the case of Companies Like boohoo, the board was not independent, still isnt, by the way. Voting, all your proxies, and be transparent. We have been voting all our proxies in house and they are published every single quarter. You have to vote on behalf of your clients, the underlying shareholders. Having an independent board is key for us and that is not often found in a live companies. A lot of companies. Anna thanks very much. Boohoo say they are investigating that supply chain. Ketan patel, fund manager at edentree investment management, thank you for joining us. The six giant u. S. Banks just cut tens of billions of dollars from profits to brace for a coming wave of souring loans. The lenders that reported have set aside any 5 billion in Loan Loss Provisions. Joining us for a wrap of the latest from u. S. Wall street and u. S. Banks and their earnings is dani burger. How bad did the environment look that banks had to set aside such a large amount, such a big figure for souring loans . Dani the environment certainly is not rosy for banks and for credit more generally. One of the strange things about this environment is that it does not quite look as what you would expect it to be, considering the 35 billion set aside, 11 unemployment rate. When we look at the amount of delinquencies, loans that thousand two delinquencies actually lessened this year that fell into delinquencies actually lessened this year. If anything, the huge amount of Loan Loss Provisions that have been set aside if anything are an indication that banks just have not a clue what the environment is going to look like at the end of the year. They are gearing up to deal with tougher times. J. P. Morgan, their model for loan losses used a 20 unemployment rate. Perhaps this is using the lessons from 2008, when these banks initially started writedowns, chargeoffs because of mortgage debts. They said the worst was over, and of course, we know that and lyat being cataclysmic wrong. Anna bank of america is often seen as a bellwether for the American Consumer. How did their earnings stack up . Dani unknowingly, bank of america made the view of the American Consumer more ambiguous because they sounded much more confident than any of the other wall street banks. They said their portfolios, their loan quality had improved. They are focusing more on wealthier consumers. Loan loss provisions were half as much as their nearest rival so they sounded extremely confident. Anna ok. Thanks very much. Dani burger on the Banking Sector. Angela merkel now arriving at the eu Leaders Summit in brussels. We have heard a few lines. We caught up with the dutch a keyer, mark rutte, such figure in the negotiations that lie ahead. He did not sound all that hopeful of a deal this weekend. He talked about the deal chances being less than 50 . We heard, in contrast, Charles Michel and Emmanuel Macron both talking about confidence going into this summit. We see what european leaders managed to get together. I can hear Angela Merkel currently speaking. We will bring that to you as soon as we can. Poised for news out of brussels. Up next, silver could be propelled to multiyear highs as the worry of missteps in Monetary Policy increases interest in precious metal. That is the view of our Bloomberg Markets live editor. We will stay across everything developing in brussels as well. This is bloomberg. Welcome back to Bloomberg Markets european open. Justean equity markets are falling into negative territory on the stoxx 600. As we hear from Angela Merkel heading into the summit, she says the differences are very big. She refers back to one of the previous meetings. We cannot say if we will find a compromise this time. Certainly, a less optimistic stance coming through from Angela Merkel than we got from Emmanuel Macron earlier on. Joining us now is Eddie Vanderbilt from the Bloomberg Markets team. To talk to you about commodities but i am also looking at some of the way the market is positioned ahead of this summit. We are hearing Different Things from different people about how optimistic or pessimistic they are. What do you think the market is looking for . The market has been very optimistic about europe generally. We have significant inflows in through europe, the market doing well. Analysts saying that europe should outperform should they strike a deal. I think the market is not really expecting an outright deal over the weekend. We have seen enough pushback , fromt that, from rutte others. The market has learned that in europe, nothing happens until absolutely the last minute. Just the fact that there is movement on this theme is very good for the european picture overall. Anna it is positive when we have heard a lot about the political signal that it sends. I was reading that Raw Materials in a bull market now, which kind of took me by surprise. What about the Precious Metals . Because of silver, will it be playing a similar role to gold in terms of safe haven status or will it continue to . Broadly,k commodities yes, we have seen significant gains in commodities. Oil has had a phenomenal turnaround. Copper has done fantastically well. Gold doing well. I think across the board, what we are seeing is not so much a picture of rampant demand resurgence. What we are seeing more is that people are worried about supply. Opec has cut. They worried about supply coming in from chile, so therefore, copper prices coming back. That has been the big story in industrial commodities. In commodities like gold and silver, the play is all about real rates. Real rates near the lows of 2017. These metals have a long way to run, particularly copper. It is looking explosive. Gold is up. Silver is a geared play on gold. There is significant room for that market to run. Anna you paint a picture of a market being driven by supply concerns. Looking at what is going on with Raw Materials more generally, this is supply then. This bull market does not necessarily tell us that the worst is over on the pandemic and we are back to much stronger growth, although i suppose there jerk reactions in that sense in some of the data we are seeing . Absolutely, categorically, lots of demand picture. If you look at copper in the first instance, it has not only wiped out all covid losses, it has started eating into some of the trade war losses as well. That shows you it is pricing more than a vshape. What it is pricing is some disruption to supply. The disease has now spread globally. It is hitting south america particularly hard and a lot of the Raw Materials, particularly the metals per used to there, it is seeing the impact of that. Whether that is overblown anna thanks for joining us. We will see. Thanks so much. Sorry to cut you short. The latest on commodities and beyond. Back to the stock markets and we saw muted gains earlier on. Now, we see a bit of negativity. Ericsson moving higher as a result of their Earnings Report they put out, up by 7. 7 . Sweat bank also of interest. Dbankmount of swea down byinterest and iag 4 after some interesting reports about what they are doing with their 737 fleet. Up next, it is surveillance. This is bloomberg. We are live in brussels as the European Union hashes out a recovery plan. Watertch have poured cold on the prospect of a deal getting done today. I would say lets less than 50 , but you never know. Whats going to change between now and two weeks if theres another summit . Thats one of the questions we still have to answer. I dont know, but we could still get to a

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