Its possible. Nr investors weigh Economic Data against coronavirus investors anna weigh Economic Data against coronavirus warnings. Netflix shares sink on disappointing subscriber forecasts, but the Company Announces its chief operating officer will become its coceo. Bloombergo surveillance. One of the themes in the u. S. Equity market this week has been the underperformance of the nasdaq against the s p 500 after five weeks of out performers against small caps as well as s p 500. We are seeing european equities edge into the red. They started slightly in the green. Global equities still heading for a weekly gain, not getting any direction from s p, but interestingly, nasdaq futures are posting more green on the screen than s p 500 futures. The 10year yield slipping a basis point. We are steady in european bond markets, and the dollar heading for a third weekly loss with the optimism weve had about a prospect for a vaccine for covid. Lets get to first word news. India has seen coronavirus cases exceed one million, becoming the third country to cross that mark. U. S. , Anthony Fauci says many states reopened to quickly. This as florida and texas report a Record Number of coronavirus debts. Cases rise inious the philippines. The u. S. Warns russia is seeking to steal Coronavirus Vaccine research. Has facilities in multiple countries have been targeted by a group which is almost certainly part of russian state intelligence. U. S. House Speaker Nancy Pelosi says she is confident congress can pass another virus relief plan in the coming weeks. Democrats have called for 3. 5 trillion more spending as the coronavirus continues to rage across the country. Pelosi says republicans have already shifted positions to but at least 1 trillion extra relief is needed. Cant go home without it. Setuse of the unemployment to expire and the rest of that, we have to have the legislation. Its been two months. More people have died. More people have been unemployed. More people have been infected. News 24 hours a day on ,ir and at Bloomberg Quicktake powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra thank you so much. Morgan stanley reporting record profit by capitalizing on the feds exploratory rescue measures. The ceo told bloomberg the bank had a strong strategy going into the pandemic but the Economic Outlook remains uncertain. What we designed was a business that in times of severe stress would be fine, and when markets are very active and volatile, we would still perform well across the whole Investment Banking franchise. This was that crisis, and thats what we delivered with a 15 plus r. O. E. It validates the strategy, but its our strategy. It does not work for everyone. It has been a strong argument over the past week. We have heard from several ceos and wall street institutions on this program that we have not fully realized the risks in this session, that fiscal policy has made it more difficult to assess credit worthiness and there will be more pain in the months ahead. Would you characterize it differently . With the economy, it is hard to tell. It depends how quickly the covert outbreak we have seen across the south and southwest people comingwell back to their place of work functions, continued liquidity in the market, so it is too early to tell. We are not a creditcentric institution, so for us, it is not terribly relevant, but you are going to have Consumer Credit problems, theres no question. Take anw Goldman Sachs impairment tied to hurts yesterday, and that is just one bankruptcy. Impairment tied to hertz its a natural consequence. Small and big businesses struggling. Look at all the restaurants, Small Businesses, the hairdressers, the doctors, before you even get to big companies. Thats part of why we saw such a massive wave of financing in the last quarter, as a lot of Companies Got ahead of that and build up stronger Balance Sheets in anticipation of these tougher times. I want to talk more about the small customer. Retail traders are front and center in this market and buying tesla at 340 times earnings. Are they flirting with danger . Is this the top of the market . If you can tell me where the top of the market is, i would be in a different business. The market reflects future expectations on earnings, and thats what we have. Retail investors have clearly been more active. We have seen a lot of new investors coming into this market, as you see whenever there is a period when the market is on fire, which it has been the last couple of months. But, no, tesla should be valued based on tesla based on what tesla is able to do, and they have created an extraordinary company. Street has seen huge amounts of success in the last couple of months, and it is a question i get asked a lot, so let me ask it of you what is the best way of explaining that in a moment like this . How wall street has done so well in the last couple of months when the economy and labor market is still pretty much on its knees . I guess im not sure i would describe it as huge success. I think we and maybe one other bank are the only banks that beast beat cost of capital, that huge that had huge trading revenues but paid huge credit provisions. What the industry has done has been to support corporations that needed support during this crisis. That provided the financing that let Companies Stay stable and position themselves for future growth. In absolute terms, the profitability on wall street is dramatically down. We have a different business model. Thats why we performed the way we did this quarter, but if you look at the Banking Sector, the hits they are taking Consumer Credit, Small Business credit, corporate credit, the bankruptcies we were just talking about. No, i dont think theres a disconnect. I think the Banking Sector reflects what is going on in the economy. Stanleyst was morgan ceo, james gorman. Eu leaders are attempting to reach a deal over the recovery plan. Blocarket is hopeful the will secure an historic agreement. Arriving at the summit moments ago, german chancellor Angela Merkel said she hopes for a solution, but the talks will be tough. Joining us now is our reporter in brussels. Great to have you with us. How likely is a deal by monday, given some of the comments we have already heard, not just from german chancellor Angela Merkel, but also the dutch prime as well . Europeanen you talk to leaders, you can see that the mood here is very cautious. There are still big differences when you look at the southern European Countries and the socalled frugal for frugal 4. There are differences in plans for this recovery. We know there are different ideas for the format of it will it be all grants . Increasingly, there is a debate about governance. If you do see countries like italy and spain get this windfall of cash through the Recovery Fund, who is going to ensure that the money is well spent . That is something that i asked of the Prime Minister of netherlands earlier, and he said this is not about blocking a deal, but he just wants to ensure the money is spent well and spend properly. I asked how likely it is we get a deal by the end of the week, and he was very cautious. Lets have a listen. I would say less than 50 , but lets be hopeful. You never know. Whats going to change from now to two weeks if theres another summit . Thats one of the questions which we have to answer. We could still get to a compromise. I mean, its still possible. Mark rutte, the Prime Minister of the netherlands speaking to us earlier. Negotiateans have to among themselves, so they also have to speak to their domestic audience. Show that heeds to is fighting hard for his taxpayers, fighting hard for their money. When you think of just epic on, its a very different story. When you think of giuseppe conte, its a very different story. He needs to go back to italy with a deal and anything that looks like a troika will be very difficult for the italians. Ofra we have seen a lot tightening in the bcb boom bund spread. Even if we do not see an agreement straight, Capital Markets are aware that some things sometimes things move slowly in brussels. Is it possible if we do not see an agreement this weekend, is there a plan b, or should we just assume there will be an agreement at some point . Maria it is difficult to see what a plan b looks like in terms of the content because germans have repeatedly said they dont want to see the 500 billion euros in grants be watered down. A lot of this has to do with the optics of a deal. European taxpayers need to be able to see that their leaders are fighting hard for their money, and a lot of it has to do with the optics and the timing. Theres a lot of speculation we could be in for another summit towards the end of the month, but going back to your question anything that stretches beyond july, you could argue as Christine Lagarde said. Esterday, could be problematic if we see the negotiations stretching on too much, that could be problematic. Bloombergs maria tadeo in brussels, thank you very much. Up, the Home Appliances group still sees negative fullyear demand. We will be speaking with the ceo next. This is bloomberg. Economics, finance, politics, this is berg surveillance. Home Appliances Group electrolux has reported a narrower than expected secondquarter loss. The Swedish Company says it still sees negative fullyear demand in most of its main markets but that the pace of recovery will vary greatly between regions. Joining us now, the electrolux ceo. Great to have you on the show with us. Shares have dropped the most in more than a month today. You talked about the pandemic situation remaining fluid, creating on strict creating extraordinary uncertainty, but the comments around negative demand for the full year in most main markets no doubt causing concern for investors. How are you planning to manage that situation . First of all, the first half of the year saw negative demand in most markets, so it would have to be very Significant Growth in the second have to make up for that. In the near term, we actually see quite solid demand in most markets. In the Third Quarter, we expect to be relatively benign, but of course, we are still in the middle of a pandemic with impacts on Consumer Behavior as well as the economy in general, so it really is an extremely uncertain environment to navigate, and we have to remain agile and responsive to the situation. What we are optimistic about is the fact that stimulus programs so far have been very effective in driving consumer demand. To the extent those are extended for further problems are announced, that could mitigate the impact of demand also going forward. Nejra thats interesting. In some markets, for example the u. S. , theres concern there might be some sort of fiscal cliff edge. Even in the u. K. As well, couple that with rocketing unemployment rate, and consumer demand does not look so robust. Plus, in china, there has been concern that yes, there has been recovery, but it is more industry than consumerled. What gives you that optimism, given the global picture around the consumer and unemployment . As of right now, we are seeing positive responses to those large stimulus programs that we have seen in many markets the u. S. , brazil, australia. Several european markets are right now doing quite well. A lot of what happens in the second half will continue depend on the continuation of those facts. Attempt with the stimulus programs is to get them to sort of restart the economy and get the consumer going on themselves, so to speak. What about if a second wave of coronavirus leads to more lockdowns . The consensus of the market seems to be we will not go back to a full lockdown situation like we saw earlier in the year. Is that your base case situation . I would say that is the base case. For sure, we are seeing virus resurgence in many places, and there is the risk that escalates further, but what we have seen is, of course, Consumer Behavior is changing. Consumers are more and more willing to shop online, and assuming that we dont see massive shutdowns of our production or supply capability, we can live through and manage through temporary shutdowns through online. Going on the it production and supply capability front . Right now, we are fully operational everywhere, essentially. Impactedcountry that us negatively from a production perspective was mexico, but that is now fully back up and running again. Are again going into a lot of uncertainty in the second half of the year. If you look at your different markets, where do you expect to see underperformers and out performers in terms of demand . Of course, we are concerned about some of the emerging markets middle east and africa where the ability of the abilitynt is of the government to stimulate demand is lower, so thats where im most concerned. Beyond that, actually, most markets right now are responding quite well to stimulus, as i mentioned before. So, yeah, i would say middle east and africa is our biggest concern. If the response you have seen to stimulus so far does start to taper off toward the end of the year, start of 2021, what do you do then . We continue to manage, and we have been very successful in managing our costs, we manage our pricing, and we manage the mix of products we sell, and that has proven very effective in countering lower demand. We will continue to do that, really, regardless of the situation, but we are very agile in responding to changes in market environment and our ability to produce, and we expect to continue on that path. Nejra great to have you with us. Thank you for taking the time to speak with us. Coming up, netflix shares chilled as guidance disappoints. We will discuss next. This is bloomberg. This is bloomberg surveillance. Im nejra che hedge in london. Netflix shares plunged after delivering a disappointing. Ubscriber ship forecast what should we take away, that the pandemicfueled boom is over for netflix . It certainly seems to be the confusion among investors, that they had a stellar first have first half where they signed up the same number of subscribers as they did in the whole of last year, but then they said Third Quarter numbers are going to dip significantly, so not good news on that front. Also facing a lot of competition. That must be adding to concerns for investors. Is there anything to be positive about . I think the hope is that it will have high turn, that they are not losing a lot of subscribers the hope is that it will have high turn high churn. They have become the base lay of videose layer subscriptions, so it is still a pretty rosy outlook in that sense. Nejra what about leadership . Their newlysaid named coceo has unofficially been working alongside Reed Hastings for years. Will this change much . It would seem not. It has been clear a long time sarandos was the king of ratings, and was likely to be the successor. In reality, it would seem as though Reed Hastings is still the superior partner, so to speak. Os has been reporting to him for the past many years, so it would be unlikely there would be a disruption that. A disruption in that relationship. Nejra you have to leave it there. Coming up, we will talk about the ecb. This is bloomberg. Nejra economics, finance, politics. This is bloomberg surveillance. Global equities still heading for a weekly gain. We will get to the markets in a moment, but first lets get first word news with leighann gerrans. Hi, leighann. Leighann good morning, nejra. India has seen its coronavirus cases exceed one million, becoming the third country to cross that mark. In the u. S. , Infectious Disease expert Anthony Fauci says many states reopened too quickly, this as florida and texas report a Record Number of coronavirus deaths. Meanwhile, manila may return to a lockdown as virus cases rise in the philippines. Now the u. K. Has warned that russia is seeking to steal Coronavirus Vaccine research. Britains 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 later backed up those findings. And Virgin Atlantic is preparing to return to the skies next week. Although it doesnt see travel demand at previrus levels for at least three years. Fresh from a 1. 5 billion rescue package, carrier will resume flights to hong kong, l. A. , and new york, but says u. K. Quarantine Restrictions Mean it is basically essential travel only. Corporate demand will take time to recover, and there is no doubt aviation will take time to recover. We agree that it will take three years to get back to earlier levels. Global news 24 hours a day, on air and at Bloomberg Quicktake, powered by more than 2700 journalists and analysts in more im 120 countries, leighann gerranss. Nejra . Thank you so much. Is to be policymakers did not agree on whether they expect to use all of the 1. 3 5 trillion euro pandemic 1. 30 5 trillion Christine Lagarde says it is likely the central bank will use the full plan. And the current environmental elevated uncertainty, the governing council remains fully committed to doing everything necessary within its mandate. To support all citizens of the euro area through these extremely challenging times. Joining us now is the head of macro Geopolitics Research at oak era. Great to have you with us today. I guess this is agreement on this come to light on the governing council shows some members are more optimistic about the euro economy. But if those voices suggest that all of the plan is not going to be used to become stronger, what impact could that have . There is a lot of uncertainty, both without policy evolves overonomy the coming months. What is happening over with qe, we have seen more flexible qe over the past couple of months, and we should expect that to be the case going forward. Thin trading conditions with the central bank we are seeing this across in terms of Balance Sheets. We saw it with the fed as well, that during the summer it may sort of taper off a bit, but we should expect things to pick up inconditions materialize september, october. When it comes to what happens next with ecb policy, we see the risk tilt more, not less, easing over the next few months. We see is strong likelihood that we see another euro 500 billion expansion over the pace of this year. Nejra how crucial is it for euro strength and other European Assets to outperform, like equities . How crucial is it for the ecb to be clear that they are going to keep providing support to weaker economies, namely italy . It is crucial to the euro in terms of where we have seen prices over the past couple of weeks. On the euro Recovery Fund, we have been to this party before and it did not end well. To some extent, it feels like deja vu. Weve seen the euro tradeweighted index at six year highs. To me, the good news is priced in. The risk shortterm, the tilt to the downside even though the Recovery Fund is not been agreed, it is highly water down. It is too slow to have an impact on europes recovery. ,e look for a tactical pullback so namely euro again and eurodollar will be seeking as euro value dollar is overshot. Optimistic are yuan the agreement over the fund . Even if we dont get an agreement are you on the agreement over the fund . If something doesnt come out of this weekend do you think markets will react strongly next week if there is no agreement and not much light at the end of the tunnel . Viraj i think the longer this gets dragged on, the more risk gets pulled from the euro and equity markets that had pressed in to some degree optimism. No one is expecting anything to happen overnight, but equally, the longer this goes on, and the more he gets pushed back, the euro becomes a negative headline. Nejra given the vulnerability that you see, is that one of the reasons you would not put yourself and the dollar bear cap you just yet bear camp just yet . Viraj i would not put myself in the dollar bear camp just yet. There is clear evidence to suggest that conditions that have underpinned dollar bear trends we have seen a substantial decline in dollars carry advantage over the last six months. But shortterm rates are not the lowest in the g10 space and it means the dollar is not necessarily going to be used as they go to funding currency. One thing especially for the dollar that is being challenged over the next couple of months could be the bounceback ability of the u. S. Economy relative to the rest of the world and europe. The consensus is that the rest of the world, including europe, will emerge quicker out of the covid19 recession than the u. S. Could be challenged. For us, the noisy highfrequency base at this stage does not help us to build good strategic views. We think the picture on relative Growth Potential has become much clearer later this year. Right now we are strategically neutral on the dollar and we dont see any conviction on either side. In the shortterm, tactical support for the dollar coming either you have and overshoot in currencies, or the nonnegligible risks we could see return to sort of safe dollar, safe haven flows as we saw earlier in march. Nejra interesting. Quickly on the boe, voices building, goldman, bank of america, rbc, seeing a perfect storm in the u. K. Prompting more action from the bank of england. Money markets pricing in a cut to zero by february at the moment. What is priced in sterling in terms of boe action . Viraj i think there are two headwinds started to grow for the pound in the short term. From a valuation perspective, i think if these two short headwinds materialize more potentially over the coming weeks and months, we could see a pullback down to 1. 22, 1. 23. They will naturally intensify as theead to your end, but markets potentially bring forward early next year to make this year i think a cut in the bank rate by a basis point of 10 could see it opened the door to negative rates in 2021 increase. Certainly if that narrative that the bank will shift away from qe to rate cuts as the marginal talk for supporting the economy happens, then it will be negative. Never echo great to catch up nejra great to catch up with you today. Nancy pelosi says shes confident congress can pass another virus relief plan in the coming weeks, and lawmakers are set to begin a new round of negotiations. Pelosi says republicans in the senate will be there to pass legislation. She spoke with david westin in an exclusive interview. Pelosi paying Unemployment Insurance and rent, if we dont do that, the recession will only get worse. ,he virus will spread further and the suffering of the American People will intensify. We can get this done. Scientists have shown us the way. We need the equipment to do it. The president can, with the stroke of a pen, call upon production and call upon businesses, focus on the equipment, judging the results of those tests. The equipment for personal protection equipment. David you said the republicans will come around Mitch Mcconnell and the Republican Leadership on the senate side will they do it in time for the next two weeks . What is your level of confidence that we will have legislation in the next two weeks . Let me say this. Lma we cannot go home without it. We have to have the legislation. Its been two months. Its been two months. More people have died, more people have gone unemployed as more people have been infected. Is the value of waiting . I know some people would say it is too much money, but as i have said to you before, what were doing at state and local governments is one half of what the republicans added to the National Debt in order to pass their tax scam which gave 83 of the benefits to the top 1 . We are not a caste system. We have to make sure that we have, as we recognize a consumer economy. The confidence that people have in order to have money, to spend it, to inject demand into the economy and create jobs. That is what we have to thrive on, and not just depend on some possible trickle down if it happens, good, if not, so be it. We feel pretty confident about it. There is a lot of enthusiasm because much of the injustice of health,with economics, education, coronavirus , with people and it is affecting people and people of color. We must address it now, with the threat to peoples lives, their livelihood, and it threatens the life of our democracy. David you point out that some of the least fortunate in this country have been hit by the pandemic, the disease, and the economic aftermath after that. What can you do to be sure that the money reaches those people . Reports show a lot of it has not. Speaker pelosi well, the direct payments get to them and the Unemployment Insurance does. We think the ppe, paycheck protection program, did reach a lot of people. ,ut it had collateral benefit getting to those who should not have benefited from it. That was unfortunate. We do not just assume that people will do the right thing or the fair thing. But i think what happened with george floyd and the hundreds of thousands of people who came out every day, week in and week out, for a long time, looking for justice, justice in that case and policing, but also the coronavirus was a part of that enthusiasm, and that exuberance, and so people expect to see justice done. And including environmental justice. That is why we are moving forward with legislation to include so much of green technology. Because communities of color suffer disproportionately with environmental injustice. Cleanair, clean water. The list goes on. U. S. House was Speaker Nancy Pelosi. Coming up, the u. K. Has warned that russia is attempting to Coronavirus Vaccine technology. That is coming up. This is bloomberg. Nejra bloomberg surveillance. Im nejra cehic in london. The u. S. Has warned that the u. K. Has warned that russia is coronaviruseal vaccine research. Security agencies in the u. S. And canada later backed up the findings. Russia has denied any involvement in hacking vaccine research. Yearning us is christopher granville, managing director of Global Political research at ts lombard. Great to have you with us. Are we seeing so far code cold war covid developing here . War,ch as the new cold with china and russia, im not at all surprised. The race for the Covid Vaccine has become part of that story. Nejra how high would allegations like this come if they turn out to be true, with that rank in terms of seriousness for the u. K. U. S. Canada, in terms of all of the other issues that they have with russia at the moment . Analyst, it cannot be that high. Lets just recall, it was only three weeks ago there was another allegation in the United States against russian intelligence, namely that they have paid the taliban to kill u. S. Troops in afghanistan. You would have thought that would rank higher on the scale of nefarious in this, and might result in sanctions because the interest of the story for Financial Markets come inside interest forublic the Covid Vaccine, the market interest it was thought on the scale of things that the alleged attempt to steal intellectual property related to the u. K. Or Oxford University would not be so serious, it like one of these espionage stories that would bubble up and go away. But that kind of analysis does not always work. Can get leveled even for no specific reason. Is that is why you get a you cannot discount these russian russian currency funds are still popular among investors. They have not been sanctioned yet, but the risk is there. Nejra so the sanction risk is there, as you say. What would need to happen for this to escalate to the level of sanctions . Iristopher as an analyst, would love to be able to construct it on a rational nature showing a level of alleged wrongdoing and response, but unfortunately it does not quite work like that. It depends on the domestic situation in the u. S. Base,ason why the afghan which i cited just a second ago, has not yet materialized in tensions is because they believe that the Trump White House is aimed at them rather than being aimed at russia. You would have thought that in the domestic political battle, there is a political battle going on in the u. K. , where russia is a kind of an instrument rather than the actual subject, potential embarrassment for the u. K. Government. You a clearld give optimism that the sanctions risk [inaudible] just christopher, finally, i know you said it is sort of difficult to get a clear answer in terms of what would lead to sanctions, but do we have any kind of clear sense about how the geopolitical globally could involve could evolve globally if vaccine element becomes a geopolitical weapon increasingly into 2021 . Think that well, i the world is dividing into garrisons, camps of alliances. It is kind of inescapable. I think the russian regulations have a reasonable prospect of authorizing their vaccine. Similarresearch on the , and the to covid chinese have candidates as well. Very much doubt that granvilleistopher from tso research group. Coming up, paying u. K. Workers per hour. 3. 5 pounds we discuss that next. This is bloomberg. Lets turn to fast fashion and the ethical issues that sometimes plagued the industry. Plungedn boohoo early this month after it was revealed that some workers in the u. K. Were being paid less than half the minimum wage. The company is reviewing its supply chain. Jen, great to have you with us. This has caused an uproar in the u. K. Talk about the issues not just in the u. K. But in the u. S. As well. Jen i will start with the u. K. You mentioned boohoo. They have come under scrutiny, but now it feels different given the pandemic and given the heightened awareness around structural and racial inequality. Over the past few days we saw boohoo drop two of its suppliers and say they are going to take a look at their facilities. I want to take you over here to los angeles where i am. Here in l. A. , the covid19 situation is worsening by the day, and one particular Clothing Company called los angeles apparel has actually been one of those companies that has sort of been hit pretty hard given the pandemic and given the situation. So they are a fast fashion company, they ramped up production of mask making, and they found out 300 of their workers actually tested positive for covid19. So i think all of this is just to say that the pandemic is really hitting hard for the most vulnerable and essential workers who are putting their lives on the line, and in many cases not being adequately compensated. Nejra jennifer, great work. Our Bloomberg Quicktake reporter, thank you so much. Tune into this weeks Bloomberg Quicktake show. U. S. Futures positive. This is bloomberg. Tom this morning, after lagarde come the elite meet and brussels. The 854 billion question is will there be Fiscal Relief for europe by the next week, or the end of the month . Of aoing in search readiness to compromise. Netflix, or amazon, or the look at bonds this morning. Yields compress lower. The 30 year Mortgage Rate is below 30 . That is stunning. 747, the beste seat in aviation is upstairs. Things change in a pandemic. British air they must and they should and they will retire the last of the boeing 747. Good morning, everyone. This is bloomberg surveillance. Nejra cehic is in for Francine Lacqua and l