English premier league along with a spat with the u. K. , all reports prius president xi jinping could close the u. S. Consulate in showing do. Tension and political Mitch Mcconnell good unveil a gop plan opening up discussions with immigrants. Cost cuts assifies it sees a considerable slump in economic output. Confirms its diagnostics unit. Units from unilever coming from across the wire. What are you seeing . Anna we got the numbers from unilever. Lets get to the story in london. Unilever with underlying sales, down. 3 , but better than the market anticipated. The estimate was for a drop. 3. 89 . That is a good number for the underlying sales story. They were telling us about what they plan for their tea business. They talked about moving it on in some way. Now with a that will hold they will hold on to some of it. They are retaining the tea businesses in india and indonesia and interest in the ready to drink tea joint ventures they have, but they are telling us the operations they will separate out according accounting for 2 billion euros in 2019. They are still planning to get rid of a substantial part of the tea business, but they are hanging onto a couple sections. We will be speaking to the ceo later on in the program. We will bring that to you after 7 30 a. M. U. K. Time. Matt looks like markets have found their direction. An hour away, we see futures up across the board, not huge gains but looking at dax futures up more than half a percent as our euro stocks. U. S. Futures showing green as well. It looks like it could be a risk on day for european and u. S. Stocks, possibly driven by good news on earnings. Absolutely. We will keep the earnings story, a mixed bag of results from european corporates. Looking here, you see things are finding their feet and that is the same in the asian session. We are up broadly. We have some movers to the downside in china and south korea. Japan is closed. Making modest gains. In terms of the overall story, we are being pushed and pulled by basic pieces at the moment. Geopolitical tension is one of those. We will keep an eye on whether we will see pressure or instruction to close a consulate in china. Supports around fiscal of when they are going to come. Lets step away from the markets and get a bloomberg first word news update. Laura wright. The u. S. Ordering the closure of the consulate in houston, it estimates tensions between washington and beijing already under heavy strain. The global Times Newspaper tweeting the chinese response will cause the u. S. Real pain. The south china warning post warns you china may close a u. S. Consulate. Global coronavirus cases. And accounts for nearly half of all confirmed infections and 40 fatalities. It is the biggest france has recorded its biggest daily increase in deaths. Italy is targeting 25 billion euros of extra spending to rescue the economy hit by the coronavirus pandemic. A senior official says the government has approved the plan which now goes to parliament. This extra money be used to help his misses and provide subsidies. Providebusinesses and subsidies. 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. This is bloomberg. Matt we have got some breaking news from repsol, more big oil stories and earnings stories. The loss in the Second Quarter little bit better than anticipated. They lost slightly less money than the street was looking for. They thought they would lose. Epsol 284 Million Euros the adjusted loss was 258 Million Euros. Losing still a quarter of a billion euros, but better than anticipated. Repsol booking a 1. 2 9 billion euros impairment on lower price estimates. We are looking at a big impairment on lower oil rice estimates. Maybe impairment was to be expected but this is a large number. The company says it will announce a new Strategic Plan in november. Getting these headlines a from repsol. Not sure if anyone watched the race sunday, but mark marquez had a horrible crash, broke a big bone in his arm and doesnt look likely to be World Champion again this year. That man has performed miracles in the past. Lets it to markets now, stocks putting higher, the dollar dipped to knew the weakest level near the weakest level since march. This amid new uncertainty and the timing of an american stimulus package. Flynn joins us now. Let me first ask you what you think about these u. S. China tensions that seem to be front and center for markets although not driving futures down. Simon you are right. Markets broadly dont think this is going to lead to a sustained deterioration in trade relations. We recognize these are quite worrying. It is worth noting things could sound worse overnight because mike pompeo is due to speak later on today. He is going to publicly have a fairly aggressive or surface speech towards beijing. China will have to give a strong rhetorical response. What does that mean for emergingmarket assets . What does it mean for chinese assets, the chinese currency . We saw the chinese currency move on the back of this that flirts with seven right now. But flirts with seven right now. A nervousare in for few days. We will see how the chinese respond. May be a bigger response then change it closing one consulate would be to force a significant reduction in staff at the hong kong embassy. The global times suggested that was a possibility. That would be inconvenient and be a further assertion that hong kong is part of china. People might think that would lead to a little bit further run along in terms of negative news. Then say we have to get through the pompeo speech. My nervously held assumption is there wont be any major deterioration at least until after labor day in the u. S. From the u. S. Perspective, it makes more sense to wait until they have the electorates full attention before they launch a more assertive china policy. Matt thanks very much for stopping in this morning. Simon flint at bloombergs emergingmarket strategists, what is important to give your eye on that universe. On thatyour eye universe. We will talk to the ceo of skanska. And we will be speaking with a host of ceos including on this ,rogram alone Bernard Charles alan joke and this is bloomberg. Welcome back to the European Market open. Startutes to go until the of equities trading. In europe we see a further footing, futures expected to be up there lets get a Bloomberg Business for you now. Business flash. Tesla has managed to stay profitable even in the midst of a global pandemic. The orderly Quarterly Earnings for the fourth in a row. It joins the s p 500 index. That is elon musk wanting to grow the company, announcing it will build a plant in texas. Softbank approached apple for bidding in a chip design firm arm, but the iphone maker is not planning to pursue an offer for a key part of the company. The licensing would fit poorly with apples hardware focused model. Microsoft is reporting slowing growth. It is failing to match lofty Investor Expectations for continued boom in demand. Revenue rose 47 , but it missed predictions for 49 gain. It was notably lower than the previous quarter. Thank you very much. Laura wright with your business flash. Swedish construction giant skanska reported operating profit of 845 million krona in the Second Quarter, beating the estimates for 787 million krona. We did see revenue coming in light. Lets talk about that to the ceo, joining us, anders dani elson. Let me ask you about the quarter in terms of the coronavirus impact. Clearly businesses across the globe were hit hard, but we have started to see a recovery in a lot of them. I wondered how yours looked. Seers yes, we definitely improvement in the last part of the quarter here, quarter two, but we have been impacted. By themuch impacted coronavirus, but we have seen impact in central europe, u. K. , definitely in the u. S. As well. Stillng to ease up, but we are not out of the woods when it comes to this pandemic. Morning. D i saw the operating profit number dropping 59 year on year in the Second Quarter. Given what you have said about things slowly recovering, do you have visibility on what operating profit does . Anders we dont give a forecast on the rest of the year, but i can say that the underlying profitability in construction actually improved because we have some positive oneoff effect in the last year and Second Quarter. This year we have been impacted from the pandemic. That we are remains determined to continue to improve the profitability and instruction stream and construction stream and remain in Residential Development and to grow our commercial development as the market allows us to do that. Matt i wonder about your order book. We have seen a huge increase clearly in employees working from home. It makes me think maybe commercial development is not going to be as big in the second half. However our analysts at Bloomberg Intelligence says your order backlog has returned to a near record high. Can you give us any color about your expectations in that sense for the second half . Anders that is right, we have a strong order backlog. We did see a slower secondquarter, especially if oo,y take out highspeed t which helped a lot. That was a great order we got during Second Quarter. Besides that, it was quite slow. Also slow in the u. S. But nordic is ok with order intake. I am confident i am not concerned over the order backlog. I am following the market carefully. Betill believe we will impacted during the rest of the year by the pandemic. Anna that is from the construction site of things. How is it going with disposing of the commercial development you are finishing . Has that market been hit considerably . Anders going from a record high First Quarter, we had the record high gain. The Second Quarter was quite slow. We did not see a lot of transaction in the markets either. Tell a bit difficult to where the market is going right now. We just have to continue to work harder with leasing activities to make sure that we test out new products. We did have a couple of weeks warsawecord lease in when it comes to square meters. That was of course encouraging. I do believe we have a good position when it comes to our , also in rate is high line with our completion rate. We have a good position there and we have a good Balance Sheet, cash flows. We are in a good position to take the opportunity when they show up in the market Going Forward. Matt can i ask a question considering the political intensity that we have seen before between the u. S. And china, the u. K. And china, the e. U. And china have issues as well. What kind of investment to you have in terms of chinese money in western projects . How active are they . Have you seen that reduced . Anders we have not been so impacted by that. When it comes to our own product development, commercial development, there is a lot of european investors, a lot of american investors. We have plenty of investors interested in our projects. We have not suffered from that. That goes from talking about the trade, the trade war if you will between those companies, that has not affected us either. One example is pretty much all the public projects in the u. S. , we buy american. That is conditioning in those contracts. All competitors have the same condition. Dont really impact us. Thank you so much for your time. Anders danielson, ceo of skanska. Talking about the construction in scandinavia and far beyond. Settling into the earnings chasm, a investorsre ignoring the risk from investors ignoring the risk from weaker earnings . This is bloomberg. Welcome back to bloomberg markets. Less than 40g at minutes away from the start of european trading, 40 minutes from basically midnight in portland, oregon. These are pictures from the demonstrations in portland. People are protesting the use of federal agents against the will of local officials, among other things. Protests have been going on for weeks in oregon. This is one of the reasons why President Trump ordered federal agents into the area. The mayor ted wheeler is expected to speak to crowds soon. We will keep you informed on this story throughout the night and morning. Anna u. S. Stocks posted a fourth day of gains as investors continue to be optimistic over a new spending bill and the potential for a coronavirus vaccine. The s p hit a five month high. Our next guest says they are ignoring the earnings chasm opening beneath them. We are joined by paul jackson, from Invesco Asset management. Good to have you with us. You say equities are running with their eyes wide shut, ignoring the earnings chasm opening beneath them. Do you think policy support is not going to support earnings in the market is misunderstanding . Paul we are in the middle of what will probably be the deepest recession since the second world war. We know that profits, corporate earnings, they are cyclical, they suffer in times of recession. We can see that with the u. S. Second quarter earnings which from what we have seen so far were down 20 year on year. Things like in the economy lag in the economy so it takes a while for the effect to come through. Central bankers have thrown money at the problem which is causing a liquidity to wash through all asset groups. Other things we have seen, i spoke with the vice , asident of the bundesbank she is also the chair of the two big to fail reforms analysis too big to fail reforms analysis, looking at what they have done in jurisdictions the last 10 years. I thought about although this recession is going to be deep and worse than the great financial crisis, we are not looking at the kind of financial crisis we had the then. Do you think the markets are relieved the banks are in much better shape . That is probably some of it. Typically a recession when there is financial crisis is worse. We are not getting the staffing points we had to the great financial crisis which came from the financial sector. The problem is really elsewhere. Common not call it a garden recession because there are some strange things going on here when you look for example at the earnings performance in the Second Quarter of the more defensive sectors. It is not what you might expect, and the financials are doing quite well. It is a bit of a strange recession but nonetheless, it is pretty deep. Governments have put a lot of support in, which is helping companies for the moment. Anna thank you very much. Paul best paul jackson from invesco management. This is bloomberg. 49. 50 i found you good job. Now im gonna stay here and you go hide. Watch your favorites from anywhere in the house with the Xfinity Stream app. Free with your xfinity service. Now any room can be a tv room. Stream live tv, on demand shows and movies even your dvr recordings. Download the Xfinity Stream app today to stream the entertainment you love. Xfinity. The future of awesome. But what if you could stdo better than that . K. Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. A breakdown in relationships with china whereas this is a surprising move, it certainly fits within the fabric of a structural deterioration of relationship. We have moved from strategic cooperation with china to a time of significant should to take competition significant strategic competition. It looks as if china is in the process of moving its most important external relationship if it has not lost it already. We will have to see what happens after the president ial elections in november. The Trump Administration has been stronger with china than any other previous administration, and that is in some cases important to be demonstrated. If pompeo thinks this is going to change chinas behavior, he is mistaken. Statements like his and others weekend weaken reforms in china. We expect the decoupling to accelerate regardless of which already takes control of the white house. The number one we were should have is making sure our own houses in order. We have been naive in terms of how we have predicted ourselves. Protected ourselves. Matt some of our guests reacting to the u. S. Decision to close the chinese consulate in houston. China vowed retaliation after kickedsulate staff was out. The editor of chinese owned news outlet the global times said china could consider cutting staff at the u. S. Consulate in hong kong. Paul jackson is still with us. This is clearly our most read story. I think the number one thing markets, if they have a list of what to watch, this is right there at the top. What do you think about the u. S. Chinese tensions and are you expecting them to escalate . Will they somehow get better . I would expect them to escalate in the short term because this is a good the current president thinks this is a good editorial gambit. He is putting hitting the chinese bogeyman hard. That could improve if we have a change of administration in november. Although i think everybody is biden willggest joe not be soft on china. I think there would be less aggression. Is interesting. If you are looking to protect yourself on the turmoil, do you like gold and the way it has increased . And paul i think gold has done what you expect. Gold goes up when real yields go down, when the dollar weakens. Since the financial crisis, gold tends to go when inflight Inflation Expectations go as well. What i noticed literally from the day of the election in 2016, the u. S. Election was gold went to a significant premium. It would suggest there is premium inike a 200 gold since the elections and i suspect it is a geopolitical premium. I think gold does play that kind of safe haven in terms of stress. Matt what are your favorite assets . What gets you most excited in investment terms when you are looking through a portfolio and you need to make rebalancing changes . Paul given where many asset groups are, it is hard to get excited. Across the fixed income space, valuations are stretched. Equities are not at all where i would expect in the middle of a deep recession. The essay groups i think that are the most interesting, not exciting but giving a good combination of risk reward and diversification is Investment Grade credit. If you are looking at cyclical assets, the one that has not formed and perhaps for good reason because of changing working patterns as a result of the virus is real estate. If you are looking at the Second Quarter earnings numbers that have come out so far in the u. S. And europe, the real estate numbers have been good. This is a sector where you can see valuations that are more generous than usual and in some cases they reached Global Financial crisis levels looking at the yield. That is one of the areas you go to the what about the highgrade area . Jump onsabout u. S. Suggesting they could junk bonds suggesting they could hit new lows. What about that asset . Paul i am a little bit overweight highyield. My concern about highyield is the same as equities. In the middle of a recession you would normally expect a lot of defaults. The fed and the Central Banks have successfully depressed spreads. They cant do much about the defaults. Asm not as willing to go gung ho into highyield as i am in Investment Grade. Valuation start to push me away from it. Things i of the thought was interesting from Bloomberg News recently was a story saying over 1 trillion in sovereign debt is coming to market outside of europe, and Central Banks other than the ecb are not going to take up as much of the slack as necessary. They see yields continuing to rise. What do you think of that . You have and underweight but it has become more interesting. Has. It we have boosted allocation to sovereign debt recently because of what has been happening relative to other assets. Frankly it is hard to find anything that would get me excited of outside of emerging markets and yes, there will be more issuance. We have seen that already. This will continue the next couple of years. It is a question whether Central Banks to continue buying at the volumes they have done and keep those yields down. The economies recover that these seals would go up. I would look for limited returns on developed world sovereign debt. The only place i could get excited about is in emerging markets. Thank you very much for joining us. Paul jackson. Lets take a look at the things you could feature in your day ahead. Update on progress sentiment in the u. K. With the Business Optimism survey for july that will be then. Expected. Change is 130 u. K. Time we will get an update on the u. S. Labor market, always in focus for Global Investors with the weekly jobless claims numbers. And germanys foreign minister had a meeting with his u. K. Counterpart near london. That is what is happening. Systems raises its targets for the year after a solid set of Second Quarter results we will speak to the ceo Bernard Charles next. This is bloomberg. Anna welcome back. 20 minutes until the start of European Equity trading day. Lets get a bloomberg first word news updates. Australias budget deficit is said to hit a postworld war ii record. It will be 132 billion u. S. , more than double the last year. That is according to the governments economic and fiscal update released earlier this morning amid a surge in spending to mitigate the impact of the virus on the economy. Goldman sachs calling for more spending to help revise the economy. He is speaking on a webinar. The comments come as congressional leaders remained deadlocked. Leave an economic bubble in the future saying there is no free lunch. Even though it is hard and expensive we are better to blunt the Economic Impact in the shortterm by suspending more than to allow it to get worse and deal with the consequences of it being worse. 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. This is bloomberg. Matt thank you very much. Laura wright. Invesco systems has raised its 2020 target after posting ubs numbers that beat the estimates. Sees atware company choppy recovery in demand which could put pressure on its license sales in the months ahead. We are joined by Bernard Charles, the ceo of do so systems. Let me ask what has made you so optimistic. Have you got some big contracts, new contracts, new clients in the second half . What leads you to boost your outlook . Befirst of all we have to realistic. Reviewed our objective at the end of the First Quarter like most companies. It is based on that framework. What we noticed today is Companies Even in the industry are doing everything to reduce they need to first stay up and running. Where our software is used. What we have noticed is an expansion in the use of our solutions for the existing customers, a slow down with new customers buying new licenses. Overall a new system is quite high at 83 . Invested to, we become the like what we do with moderna. So it is applying to all industries and that is what is sustaining our business. Anna good morning. Let me ask you more about they exposure to life sciences. Seems timely. To what does that offset the pain in other sectors and is this an area you want to increase your exposure . It is clear it has a big effect. The growth in the life science has been significant. In the first half from Second Quarter. Plansg our own internal trial were0 of the from the Covid Vaccine based on metadata platform. It happened that the move we did last year was in some way of course i dont, we circle everyone it is just right on time because this sector is concerning itself with the digital discipline to on the research on test three biggest phase three tests are on the system platforms. So the slow down in industries, however weace, should keep in mind even in aerospace there isside which is quite dynamic as in australia or in terms ofalso mobilization and mobility i see two factors. Selective investment from new portfolio. A new portfolio on the agenda, on companies from ability this. Matt what do you think about the automotive sector . You have tesla and the client which has been at least in market terms, knocking it out of the park. And everybody else making electric cars is trying tesla is the benchmark. They use your software. How do you see that sector growing in the second half . Bernard it should be noticed in the last two years or even in the last four years, there is a lot of new players in the electric mobility. Calling for money theyvelop their companies. Are our customers. We started with the next generation platform. When i think the effect for us is that it is showing to the newting players possibilities for innovation in a lean and frugal way. Tesla was the first one with us. Dynamic ands a good it is healthy because we want to p existing platforms customers. We can do the social impact is so essential. It is on the agenda. That is a good dynamic. Anna and about aviation let me ask you briefly about aviation. How much is the price of boeing and others in the sector hurting the business . Bernard first of all the sector is suffering right now. You have noticed the air traffic down significantly. At the same time those are long. Ycle businesses there is a clear need to reformat, to think about the product portfolio. Clearly the ideation specifically is driven by the different side. The question is on the agenda on sectoronts on the pharma and therapeutics. It is also about creating jobs in the different supply geographics. It is using our platform to do different collaboration is helping to transform those ecosystems to move from cost driven doing maybe something far from where you are to a new proximity and new reallocation of protection. I believe that the current economical situation is accelerating a new kind of restoration transformation for the Manufacturing Industry at large. It will apply to construction and the medical sector. This is our business and why we love it. And why we are there with our customers for many years now. I have seen a lot of conviction that the aerospace will reestablish a new type of solutions. A new type of portfolio, this has to be done now. So much foryou joining us. Systemsof dassault talking about the outlook for the business and the industry. 10 minutes away from the open, cash trading. Daimler is one of those. The carmaker expects to make an operating profit despite the unprecedented industry slump. This is bloomberg. Anna welcome back to the European Market open. Specific,to the stock the stocks we are watching, plenty to choose from, lots of corporate earnings. , youarting with unilever have been looking at the ceo interviews. I want to get down to what the company reported, a loss better than what had been expected. One of the things that benefit of them was an area that had been an issue for unilever which was north american sales. They saw customers stocking up on soap and Hand Sanitizer so it was helpful for them. They have announced they are keeping their business in india and indonesia and getting a lot of interest from private equity companies. Daimler, reporting earnings that hard byhey were not hit the pandemic as some had feared. They are forecasting a total operating profit for the year. Previously they predicted a loss. The ceo seeing a recovery, says his estimates hinge on economic recovery continuing and their not being another wave. Here not being another wave. Roche falling short and rosemont of analyst estimates. They are hit by the pandemic and they did see some benefit from covid antibody testing. Testingularly scheduled that helps their diagnostics business were put on hold because of the pandemic. It did confirm its fullyear outlook. Thank you. We have got a few lines from our unilever interview coming through. The ceo saying they will continue to look for acquisitions. Talking about no transformation deals being imminent, but there is a big conversation. Talking about returning to the office. We will get you more of that later on. More of the interview with alan ceos, the alan jope, the. And talking about how he doesnt see workers ever returning to the office 100 . That is an interesting line. Coming up, we will bring you our interview with the ceo of unilever, alan jope. Speaking of those lines that are dropping, we will give you a bigger insight into his plans for the business and his outlook for the second half. We are also going to have in five minutes the open of equity indexes across europe. We are looking right now at futures that are higher across the board. 4 . Futures up about the market open is next. This is bloomberg. Anna a minute to go until the start of the cash equities open in europe. Beijing hits back. China state tv cuts off the english premier league. Jinping mayports xi move to close the u. S. Consulate. Direction. H for Mitch Mcconnell could unveil a gop plan today opening up discussions with democrats. Salesamerican ice cream as the food giant says it will hold off business in india and indonesia. Futures point higher. Matt lets look at where futures are trading right now. 50. 7 gain on the euro stoxx benchmark index. Ftse futures about 0. 4 right now. , about 0. 6 gaining percent. U. S. Futures also in the green. Could be a risk on day. As far as European Markets live trade is opening up now. Here is the global macro movers screen. On the lefthand column the equity indexes as they open, and you can see the ftse and the euro stoxx have opened about a quarter to a third of 1 right now. The daxg to see opened relatively early, up 0. 6 . The ibex in madrid. Markets are opening higher, even though we have u. S. China tensions that continue to escalate. According to the south China Morning post, china is moving to close the american consulate after the u. S. Forced the closure of its houston consulate in one of the biggest threats to diplomatic ties in decade. The state department in the u. S. Senate was done to protect intellectual property. President trump said the u. S. Could close more chinese diplomatic sites. Pres. Trump as far as closing additional embassies, it is always possible. We thought there was a fire in the one we just close. Everybody said there is a fire. I guess they were burning documents or papers. I wonder what that is all about. So there is the president talking china about consulaten after its was given 72 hours to leave. The owner of the global times has warned china could continue cutting staff at the u. S. Consulate in hong kong. Us is jp morgans Global Market strategist. There are other things going on today, but these tensions have to be front and center in investors minds in terms of risks and headwinds. Why do you think we continue to see markets rally as this happens . Are thinkingrkets ahead to the election. There has been quite a lot of u. S. China trade tension over the last few years. November it could be a different scenario. Seeingerious what we are at the moment, but compared with an escalation of tariffs, which the market has had to contend with in the past, it is much less. Guest on our Previous Program talking about how this is titfortat, this is one small measure that builds on another small measure rather than being militaries that stand up against each other in any part of the world, which would be different. What about the fiscal side of things . The market seems to be putting aside concerns run geopolitics and hoping support for the u. S. Will be forthcoming. Is that critical to your Investment Strategy . It absolutely critical. You have had people getting 1000 a week, more than many people were earning before they were on that. If Unemployment Benefits become less generous, which i view as a risk, the support to income we have seen is going to be reduced. That could have a knock on effect on peoples ability to service mortgages, to do online shopping, and obviously that could impact stocks which have held off held up remarkably well so far. Matt what do you think about stocks that have not done remarkably well . A lot of people are wondering when it is going to be time for note investing and also taking a punt on industries have been hit harder. If you look at the market at the moment, you have this massive dispersion. You have Department Stores down nearly 50 yesterday. Online retailers are up over 60 year to date. If it looks like we are making progress, certainly a vaccine was approved. Rotationen significant out of the winners and into the losers. On our getting a vaccine and there is still uncertainty around that. Vaccine, it is a difficult position for investors. They are faced with either buying into the beaten up stocks , by definition, the most exposed to covid, or going to stocks which we know are less exposed, but are more defensive than they were. It creates a difficult situation. Our approach is to look for value, but look for value names which if we dont get a vaccine in the next 12 months or so can still survive. Thinking about that vaccine search that is ongoing, it does seem to pervade everything we talk about. Do you see assets that are uncorrelated . To this particular search. Not particularly. It does come down to, certainly at the equity level, you have losers and winners. , if yourisk in my mind do get a vaccine, youre going to see the irrational exuberance in the growth unwind. We have seen a couple examples of that already. There is potential for more of that. Take Online Retail sending spending. It is up sharply year to date. Is market is assuming that an acceleration in a structural trend rather than the fact that everyone has been stuck at home because of covid. We see is a vaccine announced and people go back to shopping in offline stores, that is what retail data suggests is starting to happen, you could see people switching out from Online Retailers into the beaten up sectors. Mike, right, anna j. P. Morgan Asset Management yes, we will get more. More from mike bell shortly. One of the things we are going to talk about is the earnings season. We need to talk about whats going on with unilever. Shares gaining as a sales fall by less than expected in the Second Quarter, much less than had been expected. We also got news on their planned disposals. The share price up more than 8 in london. But we have seen is the true strength of unilever. To respondity on how to unprecedented terms. Workinge we have been on the strategic picture of the company. We are long past the scott balance stock balance in north america. We are seeing big shifts. Hings like surface hygiene a lot of are gross in north america has been driven by people eating meals at home rather than on the go. Thats going to continue for quite some time. Businessher hand, our in restaurants is struggling. Matt welcome back to the european open. 0. 25 on the ftse. Earnings season in full swing. Electric vehicle maker tesla posted earnings as well. Posting a profit even in the midst of the pandemic. Positive Quarterly Earnings where the companys fourth in a row. Elon musk wants to grow the Company Announcing it will build a new plant in texas. For more on tesla and earnings, lets get over to mike bell. What do you think about what is now a 300 billion company . From a chart yesterday dave wilson in new york that noted teslas market value only eclipses that of other carmakers, but the entire u. S. Auto index and parts makers and the european auto and parts makers index. The size ofg tesla is a phenomenon that seems disconnected to the business, even if you are looking at the future of whats possible. Without commenting on tesla, we are looking through the market at the moment and trying to avoid overpaying for stocks where the multiple looks extremely stressed. We see that in a variety of growth spots at the moment. Know, at the moment you have causingation of covid beaten up stocks to be somewhere people are avoiding, and that is forcing a lot of money into stocks which are perceived as longterm structural gainers and winners. Creating this kind of irrational exuberance and stretched valuations. Important tos very avoid overpaying at the moment given how stretched valuations are. What has impressed you when it comes to the earnings season . Or has there been nothing . In the search for companies that have been beaten up but may be impressed with their resilience. What has been your message for earnings season . One area which has held up reasonably well has been some of the financials, taking credit provisioning. When we look at nonbank Wealth Managers businesses,nagement reasonably valued businesses have clearly got exposure to economic recovery if we get a vaccine and pickup in stock markets. But also if we were to see another leg downwards, they are not going to go bust. They have survivability and they have the exposure to the upside without being on toostretched valuation. Those are the businesses that are attractive to us. Matt do we really need a vaccine . It strikes me that we dont really have a very good vaccine for the flu or many other viral issues. I cannot imagine the optimism is as high as it looks in terms of market pricing. I look at the reopening in germany of the economy. It seems to be doing fine. There is no vaccine, but we are also not getting a spike in coronavirus cases. Germany, restaurants and things are actually up your yearur, whereas year on , where you contrast that with the u. S. And they are down sharply. Germanys rebounded Economic Activity has come without a pickup in infections where in the u. S. We have seen a rebound, with a pickup in infections which is now turning into a significant spike in people in hospitals and with that, there may have to be further social distancing measures either imposed or voluntarily imposed by people who are worried about Hospital System eventually filling up. When i look around the world, i feel optimistic about the areas where you are seeing a recovery in activity without the pickup in infections like parts of europe and china. But more cautious on areas where you are seeing a pickup in activity with a rise in infections like in the u. S. Thanks very much. Mike bell, jp morgan strategists. Mike will be continuing his conversation with us on bloomberg radio. That is around 45 minutes from now. We will certainly be focusing on that. A lot of moving parts in the markets today. Interesting earnings story coming through from appetizing, the food products. We will also get into the chemical story. A Chemical Company is confirming its guidance for the year but says uncertainty surrounding the pandemic remains high. We will speak to the ceo next. Anna we are 19 minutes into a trading session that is oddly positive for European Equity markets up 0. 4 . In most markets apart from the spanish market. Says its business was hit hard in the Second Quarter. The Chemicals Company says it is already seeing recovery in demand. The manufacturer is confirming the reduced guidance it has already issued, but says uncertainty remains surrounding the impact of the pandemic. Joining us now, for his first interview of the day, is the covestro ceo. Very good to speak to you. Let me ask you how things developed in the last quarter. With the end of the quarter much better than the start, give us the profile. Markus very good morning to you. Thank you for having me on the show. Good to talk to you again. Quarter,t the second we very consistently managed prices and took active measures. Au can see that has led to Second Quarter that was higher than the market expected. Foremost, health and safety of our employees was important. That is still and will be in the future on top of the agenda. We made sure we did not let drop orders. He there was no interruption to the supply chain. We adapted our output to market demands. We have a strict focus on development. We safeguarded our liquidity positions. Was surroundedt by april being the month that was hit the hardest. Since then we have seen improvement in may and june. That trend continues in july already as far as we can say, month today in the numbers month to date in the numbers. What kind of growth do you expect . Across regions, because here in ,urope, the middle east, africa your biggest region, if you look , but theand nafta growth you get from asia, at least over the last three years, seems to be stronger than anywhere else. Iu have extensive experience, believe you lived in china for a few years. Do you expect that to continue to be your growth leader . Markus i have some insights about how the region is developing. If you dive a little bit deeper you can say the economic wave has followed the pandemic wave. Is surfing this way very well. China came out very strongly. If you see the growth in lookpacific overall and more in detail, you see china rose by 5 . That means the rest of the week has declined by more than 30 . China is definitely the Growth Engine for the Second Quarter. It is followed by europe and also north america in that context. Sequential improvements. Rall have to say china is all i can see is that china will continue to be one of the Growth Drivers of our business also in the future. We are very well strategically positioned. We have assets that independently are able to serve customer demands from the region. That is one of the strategic advantages. I have spoken to you in the past about the circular economy and moves toward that. We talked about Environmental Issues and we ask guests whether they have been put to one side given the current crisis. Has this had an impact on the environmental agenda at covestro and a move towards a circular economy . Markus not a single bit. We have just confirmed and developed a new vision. From a few raway materials and ensure we have renewable Carbon Services for all the materials we are manufacturing. Secondly we will make sure suppliers to our customers, but also towards big retailers who bring our products run ensure that we really all our materials in circles. We are going to make sure all the energy we need, and we are a big Energy Consumer industry, energy consuming company, will be replaced by renewable sources. Last but not least we are making sure this is fully integrated in terms of a better competitive position. All of this is still running despite the current massive crisis we have seen. To ask about the automotive industry. Clearly a big part of your polycarbonate business and a big part of the German Economy as well. What kind of recovery do you expect for automotive in q3, q4 . I believe we will see a different picture. First and foremost we will see slight recovery. We must not forget we have across the globe very different inventory situations. In europe, we have seen there is from thefinished goods first and Second Quarter sitting on stock. Demand,re is pickup in they have to be sold off. In china i can confirm what is ind from our industry is demand because there are few cars what consumers buy has to be produced. We have seen a clear shift and a pickup in demand predominantly in the hybrid but also electric cars. That is where covestro is wellpositioned. You just mentioned tesla. We are also collaborating with tesla. Anna thanks very much for joining us. Good to speak to you. That takes us onto what is coming up next on the program. Than 500 soared more in the past year and had its fourth positive Quarterly Earnings. Mosque still eyeing expansion. Anna welcome back to the European Market hope. 30 minutes into thursdays trading session. Were on the upside but only by. 3 . U. S. Futures up by a similar margin. Higher on the nasdaq futures. Lets get to some of the individual stories on the moving markets. Daimler up 3. 7 now. Turning a profit after weathering the worst of the virus crisis. And then an incredible ride. 12. 6 . Others higher. Ublices. 6. 8 in the up dutch listing. The c. E. O. Of unilever told bloomberg how the Company Handled the coronavirus pandemic. What we have seen in the last quarter is the true spread of unilever. The breadth of our portfolio gives us good resilience. We have shown agility how to respond to these circumstances and meanwhile we have been working on the strategic future of the company. Were long past the stockpiling phase now in north america. Were seeing big shifts. Things like hand hygiene, surface hygiene grew very quickly and i think a lot of our growth in america has been driven by the in home meals and that is likely to continue for quite sometime. On the other hand our businesses supply restaurants which are struggling in current circumstances. Are you surprised how well ice cream like ben and jerrys did in north america due to the fact that a lot of tourist locations had to be shut down. Do you think ice cream and other businesses, are they going to recover in the half as more cities begin to reopen . There is a number of Consumer Behavior changes that were seeing through this pandemic. People at home voiring about value. One of the things were observing iseeverything. Were all shopping online, browsing and shopping online and consuming media online. R ice cream tea sold and were taking advantage of food and home deliveries. One of the growths were seeing is people enjoying ice cream at the on the other hand a Meal Delivery service. That is a trend likely to continue. We must not lose sight of the fact that this disease is still global throughout the world. It is devastating in some part ovs south asia. We need to be conscious that people are suffering around the world. That is a very good point. A lot of humility you need to bring when discussing the impact and chains of behavior. When you look at chains of behavior, is there anything you could do to create more brands for more stay at home meals . Are you going the look at other brands you could potentially acquire . How did this change your portfolio Going Forward . One of the things is think brands, traditional brands are doing very well in the current circumstances. That is a time when people are feeling insecure and the trust that they have in big well known brands. We will of course continue to to for opportunities acquire, acquiring into Healthy Nutrition with the brands that are most inside asia. We will continue to engage in the acquisition process. The real move is the strength of the well trusted big, familiar brands. Youre keeping some of the tea empire inhouse but spinning off some others. What other m a do you think is potential this year or the industry, is it even maybe too far do you think the industry can maybe do more m a in this type of crisis environment . I would say our position in m a has not changed over the last six months. Were very disciplined looking at strategy, price and timing. Were in a stronghold position with a very healthy Balance Sheet to take advantage of that. The other thing that we have been working on is we announced our intention to unify the company and simplify the legal structure of unilever and further down the road, that could give us opportunities to look at more acquisition. I want to stress there is nothing of that nature on the radar now. Matt that was unilevers. E. O. Alan jope. Now lets get to the bloomberg first word news and laura. Retaliate and order the closure in houston. Escalated tensions between washington and beijing. The communist newspaper said they will cause the u. S. Real pain. Ina may close the u. S. Consulate in she think do. In she thinkdo. Texas has reported its bigs daily increase in deaths. The pressure on hospitals has leveled off in some areas including houston. Italy is targeting 25 billion euros in funding to combat the coronavirus pandemic. The plan goes to parliament. The extra money will be used to help businesses and provide subsidies to local authorities. Powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. Anna . Matt thanks very much. Laura wright in london. Tesla has managed to stay profitable in the midst of the global pandemic. The positive earnings were the companys fourth in a row. The chief executive elon musk still wants to grow the company and announced tesla will build a new plant in texas. The private bank head of direct equities joins us. What do you think about the Growth Prospect of tesla and the likelihood that it joins into the s p a 00 . S p 500 . We think tesla is really quite strong going ahead. It is retransitioning. It was a very long growth. The s p we seem to be now qualified. Now we think we can probably let the within the next few onths. Anna you think you can get into the s p in the next few months . That is interesting. I bet that plays into the evaluation conversation, doesnt it . You dont have to be a cynic about the technology or the move to e. V. How do you waking up enthusiasm for the product and for the fact that it doesnt have any marketing and all of those other selling points but still concern about valuation . I guess the biggest concern people have with tesla is the valuation. We dont depend, if you believe were transitioning toward lectric driveing for our cars, at the time, when apple entered the smart phone business, nokia eing dominant. Building Online Retail. We think over the next decade it will work its way through. Matt just looks huge. Dave wilson yesterday, his chart of the day out of the bloomberg offices in new york where teslas evaluation, not only is it worth more than volkswagen and toyota put together but worth more than the entire u. S. Auto industry index, the s p 500 auto index, were showing you in blue, the chart here. Tesla is worth more than that. This includes parts makers. Does it make sense that tesla is worth that much . I guess the easiest way to look at this is just through the software side. The autonomy, if you can believe it, youre selling to the consumer today a software for 8,000, probably 10,000 per car. No one has done a 10,000 dollar Consumer Software business before. If you sell 50 , thats 5 billion of software profits. It is still growing at 50 . Really that is not including the logistic potential of the Energy Business and all the other potential innovations this business is going to deliver. We do really have to look forward. Anna what about governors concerns. Many investors will sensor stocks based on Environmental Issues. Social and governance issues. Are there concerns around the unpredictable management here . What is the company doing to take that on . On the ink governance side, it is making good progress. Tesla is doing a great job. Whats happening here on the governance side, it is improving. Investors are seeing on that side. The governance has improved ignificantly actually. Anna thank you very much. Head of direct equities giving his thoughts on tesla after shares run after hours. Up next, going green. European governments approve the most ambitious Climate Change plan to date. Just how green is europes plan . This is europe. Anna welcome back to the European Market open. 45 minutes into thursdays trading session. Positive up around. 3 . A little bit of weakness, the ftse and the ibex. The european government approved the most ambitious change to date. E. U. Leaders reached a deal on he economic rescue plan. Almost 1 3 of the budget is earmarked for climate action. Joining us now with more on the story from madrid is our reporter for bloomberg green. Good to speak to you. Talk us through green credentials. What are they really . Thats right. About 1 3 of the nun european leaders agreed over the weekend and in the late hours of sunday monday morning. About 1 3 of that is earmarked for green projects so we still need to hear more from the e. U. Leaders about the details of this plan. There has been no precise guidelines of how this money will be spent. We know the intention is there to spend it on green projects. The European Union and european leaders, especially on the european commissioner have been talking about the goal to reach climate neutrality in the European Union by 2050 and the intention is that these funds will be spent on things like Renewable Energy, increasing the fleet of electric vehicles. New technology with hydrogen, etc. There are some things we know. During the negotiations, there s a rebalancing of the 750 billion euro rescue package for the coronavirus crisis. So there was a balancing of the rates between grants and loans. Some climate programs have been affected by that. There are already some analysts, some policy that have been warning but maybe some policies will be affected. Funds have gone from 40 billion to 10 billion have been cut. It was destined to have that would struggle a bit more to transition to a greener economy. Were talking about retraining workers, eths. Etc. Another interesting thing about the uropean leaders is fact that even the money that outside of this 500 500 billion euros, all the money from European Countries will have to commit to spend it and do no harm to the European Unions climate neutrality goal and Climate Change. Matt i think the president of the European Council was speaking or he was speaking and now urszula is speaking referring to how they are going to be spending this money and promising that it will that they will do a good job at it. How do the e. U. s green Spending Plans compare to those in other regions in the rest of the world . So the European Union plan and the amount of green spending makes it the worlds greenest Recovery Fund so far. The percentage of any coronavirus Recovery Funds that will go into green policies. We have seen nothing like that in any other region of the world. In the u. S. , there have been no ecific parts of the trillion nag the government has been announced so far that will be spent on green policies, in the case of china we have seen some measures that are aimed, for example, encreasing the amount of electric vehicle chargers on chinese roads which would increase the amount of supply of infrastructure for electric vehicles this china. Some measures have been announced to increase Renewable Energy projects. At the same time we have seen in china some other measures that would favor the installation of more plans and more fossil fuel installations as well. Overall before the european package was announced, 54 billion ghobally had been announced for green policies compared to 670 billion announced in policies that would support it. Anna ok. Really interesting stuff. Really interesting comparisons globally. Slow t, do record savings growth and cap yields . We will have that question next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. We are 54 minutes into the trading day right now and looking at equity indexes that are up. 5 . Ot huge gains but definitely significant green arrows here. Joining us to talk about todays markets is bloombergs currency and rates strategist. Ben, lets talk first about what is going on here in terms of headwinds or risks . You have the u. S. , china tensions escalating and yet markets are rallying. Why is that . Good morning, matt. I think the markets are periodic eruptions in tensions between u. S. And china and you can nowhere is that more clear than in the currency market where if you look at the dollar which has been big for months on end now, since the start of First Quarter really is now the markets are kind of glossing over this even though it is a definite risk if, relations go downhill, the marks are not at the moment. All kinds of things happening on the u. S. China front. We are seeing tensions surrounding hong kong and the trade deal. The markets are thinking this is just another child tantrum by the politicians. Thats right. Anna good morning. Let me ask you the question of the day. Your have been talking about this on the blogs. Do record savings slow growth and cap yields . We have been looking at charts showing savings are going higher . Yes. I definitely think record savings slow growth. Whats happening is very interesting. At the micro level, indexes are if you look at the macro been c level, there has such a huge savings glut. The economy will benefit but given the risk of a scenario that the entrepreneurs are in, there is plenty of credit and savings shaping investments. It is not really clear with the thinking. Matt thanks so much for joining us. Bloombergs currency and rate strategist. Thats it for the european open. Anna and i are headed off r radio. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Francine beijing hits back. There are reports they may shut the u. S. Consulate. Revenue comes in better than expected. Fueled by customers buying Hand Sanitizer. And russias sales take a hit from the pandemic. Well speak with the chief schwan in a few minutes. Were