But i the gdp data out think out of the United States, it continues to tick a little higher, may be the speed on this recovery we have seen in the last few months, what will we talk about later in the hour . Airbus cut jobs pretty hard. I spoke to the companys ceo. Balance how to put the business in a position where it can recover. It difficult balancing act. A lot of Industrial Companies are going through it now. A great point in terms of all of the pipelines. Economic data in the u. S. Is painting a picture of jobless claims rising, secondquarter downturn,s sharpest and now, hsbc global chief economist. With the pair the data stalled stimulus talks in the u. S. If you had a Third Quarter or Fourth Quarter gdp production years ago, what is it now . Certainly, better revisions selecting the contraction in the q2 figures, but also less than the second half of the year. As you point out, that will be influenced by what happens from the next round of fiscal stimulus, assuming we get one in weeks, which is what is it what everyone is expecting. Your model in terms of numbers for the u. S. Economy . How crucial is it . It is crucial. What was interesting was the confirmation we got today. It was not so much about the usd gdp, but what it told about stimulus that happened in q2. The contraction in gdp just about ever but personal disposable incomes grew by over 40 in Savings Rates jumped to 25 . Offt of people were better by being unemployed because of that impact. They got a bit of a buffer going into the Third Quarter. But we a fiscal stimulus do not get the 1. 5 trillion, then people will be a lot more fearful, partly because of the that fiscalctions, stimulus that we incorporated, if that is not coming through, that would lower the expectations for q3 and q4. Partly the Public Health element and fear factor. The point of disposable income as they have to spend it. I wonder if the longer this drags on and the more we see parts,ases in different is there anything like the fed can do to offset that were encourage you to go buy stuff . The fed, not as much. A significant backstop to Global Markets and anything fiscally that the government wants to do. When we are thinking about the money needing to be spent, the good side of the economy has come back. Just about everywhere, you have seen retail sales very strongly. 70 u. S. , it is closed on but it is on services. As long as you are concerned therecatching the virus, are certain elements, tourism, that will not come back. Fed cannot make people feel comfortable about going to bars and restaurants. Containment will enable people to spend services and that is when the impact of the labor market comes through. We have a sharp recovery, especially sales in the second half of the year. More of a recovery or more and more sectors will remain more depressed with more coming through because consumers are too fearful to spend it irrespective of what the fed is doing. Lets talk about the german data. It has a well documented and well understood Job Retention scheme. The numbers look really ugly. What is your take away reading between the lines of what we saw . European data, german data was fractionally worse than expected but pretty much on par with what we saw on the u. S. , just slightly worse. More tradea dependent economy. Exports make up a much bigger share of the economy. In the u. S. , they pretty much nestle each other out. Germany will not have trade nott world really coming through. What we have seen in most of europe and germany, though there has been rising cases, a lower level than we have seen in parts of the United States. They have had more localized lockdowns and in germany, what is different is the labor report scheme. They are there and that backdrop remains in place. It is not like they will lose additional unemployment insurance. You should not see see such a big rise in the savings. There will be permanent job losses but the labor market effects will come through differently and the two regions, which is why there is a lot more hanging on it in the u. S. Despite the fact that the markets are telling us that . We need to compare the versus the structural. Areuctivity wise, they lower than in the u. S. But there are a few exceptions. Some countries like spain are particularly dependent on tourism. Certainly, q3, after q2, we have got a numbers coming through in europe, which still still seems to be the market they are buying into. I will let you go. Hank you very much a look to boost the forecast this year, but not the revenue line. Developing antibodies to combat covid19. We will talk to the cfo next. This is bloomberg. They continue to provide the vaccine at a very low cost. [indiscernible] people to be able to get vaccinated. Middle income countries, we are able to make sure [indiscernible] astrazeneca ceo joining us now to discuss is eli lilly. They are looking at a potential antiby treat antibody treatment, boosting is 2020 outlook shares. Josh joins us now. We want to know when we get a vaccine and when we get treatment. Timeline . Ticipate a thank you for the opportunity. We are focused on antibody treatments for covid. We have two in clinical development. The one farthest ahead is getting ready for trials across includingm of care patients already sick with covid19, patients just diagnosed, and even a prophylactic setting for residents of Nursing Homes and frontline care workers. Starting trials in the next few weeks and depending on how fast they can roll, we expect to see data this fall and certainly by the end of the year. Where does the biggest challenge lie with these products . Is it figuring out the chemistry or manufacturing . Manufacturing will certainly be a challenge. We first have to ensure antibodies will have an effect with early work to date. To the extent a drug like the antibody works, scaling up manufacturing capacity will be a challenge. Goal, by the end of the year, is to have 100,000 doses toilable, scaling up more 2021. That will be a challenge. Does that mean you need Government Support . Were working across the industry to collaborate on manufacturing, not on our products but really to look at capacity around the world. The government will not help in capacity. Uilding existing capacity around the world. We are reconfiguring so we can free up as much capacity as quickly as possible. Terms of the way it will work, everyone is getting excited about a vaccine and some see it as a silver bullet. It increasingly looks like that is not likely. Are we going to live in a world where we have some degree of immunity from vaccines but therapeutic in a big way to back that up . Of course, like everyone else, were anxious to see the data on vaccines. Scenario,best case populations will benefit from an antibody. People who do not get vaccinated, people whose immune systems may not tolerate a vaccine or may not respond well. The antibody approach as coexisting with vaccines. We are hopeful multiple antibodies work for multiple companies and multiple vaccines work for multiple companies. Into 2021, we have a therapeutic approach to the vaccines. Say two doses, do you on what it will cost . Trials upl is to get and running to see if these antibodies work. E are moving as fast as we can we anticipate by the end of the year, upward of 300 million on investments in r d and manufacturing capacity with more to come if we have products that work. We got into this because we have got scientific capabilities. Price the product responsibly but i think the biggest thing will be if we have data that indicates a possible treatment. The biggest thing will be manufacturing capacity. That is what we are focusing on now. I want to take it further in your wheelhouse. You are expecting Topline Revenue to be fairly flat. Happeningus what is with drug pricing in the United States at the moment. Data earlier on with many millions of americans currently out of work, sadly. How does that impact, given the way america deals with drug pricing, and health care, how does the large number of people currently on the unemployment list affect the way the drugs are priced, and then through your business . Outlookld say our sales that was a ofnounced effect and a lack new prescriptions. For the year is a robust growth and we see that heading into 2021. The challenge from a drug pricing perspective from our business will be in the u. S. , patients or consumers who currently have commercial insurance or had it, as they move into an unemployment status, what happens there, and if these patients are moving iso medicaid, medicaid lowerpriced than commercial insurance. Release,our earnings that would be a modest price headwind, a reminder for us. That assumes the end is in the high digits. Who knows what that will be. Our estimates are there will be some there. More importantly is the emphasis on trying to ensure that anybody showing up has a better opportunity to access the kind of rebate and pricing we offer to customers across the continuum. We are focused on ensuring that even as patients lose insurance, they do not have to make a tradeoff decision. Peoplehe flipside, more moving to medicaid and medicare, you put up put a lot of money into antibody manufacturing and President Trump signing four executive orders to bring u. S. Drug prices down to at least the cost overseas. That came out friday. I think the executive orders that came out last week, two of them focus on trying to reduce patient outofpocket costs, which these are ideas we have advocated for for a long time. I think the pieces around price ideas. G, just really bad we have got an industry now onting significant resources covid. We invest in areas like oncology, and if there is not an opportunity for good pricing at the end of very risky investments, we will see that investment base dry up. I could not justify to shareholders to continue to invest in early stage, if there is not an opportunity for reasonable pricing on the backend. We think these are really bad ideas. We will leave it there and we wish you good luck. We hope it produces good results and you can scale up and manufacture it. We all need the help right now. Thank you for your time. I spoke to thet companys ceo next. This is the european close on bloomberg markets. Airbus is bearing back its jet production after burning through 5. 2 billion in the Second Quarter. Expect second half of the quarter, driven delivering claims that will produce i spoke to him early on. In the Second Quarter of the euro, we have completely to what we think is the new environment. Reduced from rates of 60 per month down to 40. We have adopted adapted to this situation. What is the right calibration moving forward. This is appropriate for us. This is when things will recover. We think there will be a recovery. It is very likely. What is more difficult to assess is when. We are navigating for situation with a lot of uncertainty. Front our foot on the to this newpting and difficult environment. You are looking to get the business to a position where it is neutral as we go through the second half of the year. Delivery is a key part of that. How realistic is it to get to a neutral cash flow position given the operating environment you just described . By the end of each one, a large number of plans ready for deliver for delivery, but not because of the situations of the airlines and the customer. 145, it is very high. In theged to reduce second half of the year. This will contribute to the balance in cash flow. Is an objective. There is a lot of uncertainty. We are making Good Progress on the new delivery schedules, the amendment we have with customers, and we are regaining visibility in 2021. It is to be customer financing on the second half. You want to get the position to a stage where he is able to handle the cash flow but have a decision where once demand comes back, he can start to expand the business but it will be a tough road. Itted airlines saying expects to furlough nearly 4000, or around one third of its pilots. Recite the airlines will significantly in the United States. I wonder when we hit the bottom. The bottom here, and i wonder if we have seen that for airlines. Yes. The longer it goes on, the worse the positions gap. Is Aerospace Sector certainly making dramatic cuts. Huge job cuts are coming through and boeing finds itself in a more difficult position. They feel like different positions now. But it is a real challenge. When the recovery comes, there will be demand for airplanes. Certainly, united talking about some difficult numbers in terms of decisions they need to make. Following gdp a little earlier, has traded sharply in the downside. We are running through the downside in a moment. That is what it looks like now. The close is next. Businesses are starting to bounce back. But what if you could do better than that . 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. Guy lets take a look at some numbers. We are wrapping the market up going into the option. Lets take a look at what is going on. We find ourselves in a situation where we have data today, the earnings story broadly negative. There have been some positive numbers. Airbus is one of those. The stoxx 600 has been heading in one direction, that has been south. Of the individual markets, it is worth pointing out how ugly the session has been for the dax. At one point it was down 4 . It has come back a little bit since then, but not by much. The cac 40 is sharply lower. There is the dax down. The ftse 100 down 2. 4 . Breaking down the sectors. A bunch of things worth talking about. The bank story today has been one to focus on. A lot of industrials and some of the pharmaceutical Companies Reporting numbers. Vw is one name that stood out earlier on, cutting its dividend. It did see some upside in terms of the forwardlooking story, but banks down sharply. The insurance sector under pressure, the car sector under pressure. I think of shell as a bank. Businessuts and bolts badly, but its trading business, didnt that balance things out. Shell having a top session. Every single sector but one in negative territory. Travel and leisure having a better day. Food and beverage, real estate, industrials doing better. Even though sectors were negative territory. There is a bunch of knaves you can pull out. I pulled out three of them to give you a sense of what is happening. I mentioned what is happening with volkswagen. I think that was the overriding story today despite the company pointing to good news in terms of the future demand story. Sharplyp much more towards the front of the session. It has faded since then. Clearly a tough position the management people are in it airbus. They further downgraded the 350 line from six to five. They are trying to manage cash but they are getting in a position where they think they can make it a reasonably neutral cash flow position in the second half. Royal dutch shell weighing on the london market. A huge heavyweight in the london market and it was down 6 . The Banking Sector very much in the mix. Is using its best decades as a launchpad for a restructuring. It is combining its Investment Banking and trading businesses. The new ceo told bloomberg the move has been in the works for some time. Merger isestment Bank Something we have been discussing for months. This is not a cost exercise. There will be some cost benefits, but it is about having one underwriting business, one investment bank, one equities business. Lets talk about european banks. Ctavio marenzi joining us ask you a broad question. And the good times that have investment banks see those investment arms as a drag because it gives them a lower rating. Are we seeing evidence if you are a bank, it is better to have a balanced business . You need to have trading that when difficult times, you can balance it out. Youve seen that in santander air versus Credit Suisse. Are we seeing a resurgence of the idea that that kind of model does work . Octavio it is certainly a model that has worked over the course of the past couple of quarters. I would go further. The more you are exposed to Investment Banking and trading, the better you did. The banks that did spectacularly well where people at Goldman Sachs and Morgan Stanley who had little Retail Banking or Corporate Banking and a basic trading shock. Credit suisse was able to ride the results on the bank of Investment Banking and the Global Markets group. I suppose you can make the argument it would be best to be Morgan Stanley and Goldman Sachs and to generate the Retail Banking side overall. I think these are very unusual market conditions. O not think six months ago at the beginning of the year things were looking lackluster in the investment Banking Sector, and then it roared into shape starting at the end of march. People areink fundamentally rethinking their strategies. It is like a lucky bonus more than anything else, and it just happened that people active in Global Markets and fixed incomes did well this quarter and the quarter before. Alix i was curious when it comes to Credit Suisse that their loanloss positions were much lower than estimated. Do you feel like Credit Suisse frontloaded the First Quarter or is not being conservative enough or is there loan book a little bit different . Octavio there loan book is certainly different. They have the swiss universal banking unit which is basically a swiss only business. They are really exposed to the swiss market on that Loan Portfolio more than anything else. Loan losses in switzerland tend to be more limited than other countries, so there is more of a buffer there. They are fairly conservative in terms of lending practices. Some of the other european banks have loaded up on Loan Loss Provisions and might have to unroll those, particulate in the u. S. The credit models theyve used to make the predictions and in particular, things like unemployment numbers are a key factor in the credit loss models. Unemployment in the u. S. Is a very difficult to compare with previous readings because they have changed the eligibility, they have massively expanded the benefits, that will try for more people into unemployment than before, and with much more generous unemployment benefits, people are less likely to default on the loan. It would be not surprising to see the banks rollback the provisions they made and count this as profit for some quarters in the future. Can i pivot to a difficult question that some european banks will have to deal with . It is a global phenomenon european banks have more exposure than u. S. Banks, and that is the issue of what to do with china. Todaye Standard Chartered , you will see hsbc tomorrow. Having to navigate difficult waters with regards to their positions in hong kong and thus far when it comes to the security law, the new security law, they are putting their eggs in the chinese basket. To does a u. K. Domicile bank these institutions continued to keep one foot in both camps . Octavio you are right to ask the question. It is extraordinarily difficult, the idea of one country, does k systems is going out the window. That means chinese law will be the law of the land in hong kong , that means a lot more restrictions in terms of what goes in and out, what funds you can buy and what Asset Classes you can handle. A lot of the business is leaving hong kong. If you look the mutual fund outperformance, that money is disappearing, i would not say it is evaporating but it is moving quickly to taiwan or singapore where there is safety. On hong kong to carry on being the Financial Sector in that part of asia, i think that is a bit of a fools errand at will not be the way it works out. They will have to look at beefing up activities and having one foot in the Chinese Market for a european or u. S. Bank is exceptionally difficult. Guy ok. We will leave it there. Thank you very much, indeed. We greatly appreciate it. Enzi octavio marenzi, thank you very much indeed. These are the final numbers. Pretty ugly. Certainly for the dax, but broadly across europe. The Banking Sector under pressure. We did see the dax underperforming. We will carry on the coverage of what has been going on, particulate digesting some of the data from both sides of the atlantic, both the claims data and the german data very weak. We will do that at the top of the hour on dab Digital Radio with the cable show. This is bloomberg. I expect life at home for the until able future, vaccine is widely available, that will benefit certain parts of our business, the bigger part. That was ceo speaking to alix yesterday on how Consumer Trends are changing. Abigail doolittle is looking at how europe has been faring. Abigail a mixed picture on the european close. Some of the european staples companies that reported earnings recently, again a mixed close. We have nestle trading lower. Nestle an interesting beat on coffee and pet food strength. Danone put up a bad quarter. The one stop that closed higher. They put up a better than feared quarter. Relative to nestle, the reason the stock is down probably had to do with the fact of too far, too fast. Stable company out of the march lows. While it was a good quarter, some of that was already priced in with the rally at the march lows. Danone has been known for their dannon yogurt and a lot of issues they have had with that, keeping up with the greek yogurt. You can see that is about 50 of their business. Also they have specialized nutrition, and 18 of their business is donald water, water has done worse than expected. That has everything to do with a locked and the shutdown. People are not out to buy all of that bottled water. Finally, this is interesting. During the pandemic we have Alcohol Consumption up in a big way, but the beer makers have been hit hard. Ab put up a better corded than expected. That is what we are looking at on the year. It looks like a lot of their troubles have to do with the fact that similar to bottled water, people are not out so they are simply not buying as much bottled beer out. Alix also takes. Dont have cakes at a also kegs. Dont have kegs at a bar. Kellogg reporting betterthanexpected secondquarter results. Joining us is the ceo, steve callahan. It is great to see you. I want to tied into the news of the day and politics and not being able to get a stimulus passed in losing the 600 a week tomorrow. How do you see that impacting your business in the back half of the year . Steve obviously challenging times around the world, challenging times in the United States as the virus gets worse and worse. The way we have approached it is there are certain things that are unknowable. A benefitwe have seen to our business in the first half of the year. You see that in the results and the elevated consumption. , wehe back half of the year are planning for things to get back to normal by the Fourth Quarter. You can agree or disagree with that, but is an unknowable thing. We would love to see the federal government come together and help consumers in the United States as much as possible, but for us we do everything we can come and our mission is to provide food safely to consumers in this challenging environment. You talk about a return to normal. Is that normal different than the normal we knew before . Steve it is a great question. It is an unknowable thing. There are certain things your intuition would lead you to believe there is going to be a new normal, and a lot of the debate around what that will be like continues. Elevated at home consumption likely will continue. Until there is a vaccine, people will be less inclined to go out of the same levels they did before. They will be less mobile. When a vaccine does come, it will take some time to be socialized so people feel comfortable. More at home consumption, less mobility, more working at home. We think these will be the new normal. How you plan against that is another question. Plan also when you have to for the unpredictability of how people will be allocating their money, how sensitive are your products to what people are making . Steve we are not very sensitive to Macro Economic conditions. We are packaged food, we are very affordable, and we are well known. We have brands people have grown up with and have been around for generations. In recessionary times, people often go to brands they trust, they know, they love. We have weathered many recessions. We have a recessionary playbook which we pulled out because we do expect times to continue to be difficult, and we will do everything we can to support our consumers around the world. It is different as you go around the world. Affordability becomes important everywhere, but it is especially important in emerging markets. In our portfolio today in emerging markets, it is much more affordable than it has ever been. We look at the affordability pyramid. The base of the pyramid are things like noodles and household staples that we are in in markets like nigeria and brazil and all around the world. Have a much more robust portfolio to deal with a recession which is now upon us. Are you going to change the offering . You talked about the brands and they had been around for a long time. Will they be as many, will they be different, is your Product Offering going to change as a result of what you learned . Steve it will. I would suspect brochures around the world i would suspect its around the world has everything to do with Companies Like ours being efficient as we possibly can to supply food that is in very high demand. Toused around hero skus sell at very high velocities. Coming out of the pandemic, i suspect many of those skus will be added back but not nearly all of them. You will have fewer skus working harder for retailers and suppliers like us. Alix can you give me insight into what your unit labor costs look like in the back half of the year . Steve it has been elevated in the first half of the year and has been elevated because we are paying special bonuses to our people on the front lines in our plants and distribution centers. Increased sanitation, cleaning, things like that. In the back half of the year, we are planning on much the same. Rewarding our people who are courageously showing up each and every day to run our plants 24 7. We will have elevated costs that will continue into the second half and beyond. You talk about the fact you do not have that much exposure to the Macro Economic trends. One area you do is your exposure to emerging markets, which is disproportionately higher than some of your peers. What you see in the emergingmarket businesses, the regions you serve in the businesses you have in those regions . Are they likely to come back more slowly than those you see in the United States . Steve for us, the Second Quarter was a pleasant surprise at how durable our emerging markets showed. When i say durable, one of our big markets is africa, and nigeria is a huge country there. We were growing doubledigit prepandemic and that slowed to mid single digits, but still growing, because it can be an affordable portfolio of staple items, and we have a strong distribution that provides staples took him neutered to consumer that provides staples to consumers. In brazil, mexico, we sell of related we saw elevated demand because of the covid crisis. Even though we saw many shops closed, people still need to eat and they get out and they get our products and they eat them at home. We are planning a conservative stance in the back half of the year. We do know things like oil trading where it is at, the pandemic, the recession, it will be challenging for emerging markets, and we are planning accordingly, but again a robust portfolio, and we believe we will weather the recession and emerging markets well. Alix i am glad you brought up commodities, because we have seen a weaker dollar which would be good for your business, but we have seen volatility in the commodity market. Can you raise prices to affect margins . Do you feel like you have Pricing Power . Steve we look at Revenue Growth management. Prices a part of that. Volume, driving everything we possibly can to create value. It starts with the consumer. In a challenging environment, affordability is very important. Our margins are also important. It is not as simple as taking list price because you have brand power, but it is providing a price package architecture plan that works for the consumer who is under stress and works for the retailer who is showing up each and every day in a challenging environment to serve our consumers and looking at what our shareholders need and what we need to drive the right type of margin improvement. It is Revenue Growth management improvement that we have been building and we believe will continue to serve us well. We have strong brands that are capable of driving that type of value to marketplace while still being affordable to consumers. Guy one of the trends we have during this crisis is the consumer doing shopping online. That gives retailers huge amounts of data. How do you capture some of that data . Steve a great question. This whole ecommerce online world has jumped far into the future. Our ecommerce penetration has doubled. We work with a lot of different partners, a lot of different retailers on that. Sharing the data and getting as much insight as we possibly can into shopper and consumer is important because it allows us to create value for our Retail Partners as we both navigate this new environment. Interview. Could not resist the tiger move. Fork you very much, indeed the interview. Really appreciate your time as the ceo of kellogg joining us. What do we have coming up . We will talk more about what is happening with these markets, which is showing a tough day in europe and the United States. This is bloomberg. He was the son of itinerant astonishinging an personal transformation. As a young guy who is about to get his brains beat out. Former president bill clinton speaking at john lewiss funeral ceremony in atlanta. Former president barack obama will also be speaking as well as nancy pelosi and former president george w. Bush as well. After servinged 16 election cycles from georgia since 1986. He was canonized as one of the original 13 freedom riders, those who try to integrate buses on their ride from washington to new orleans and kicked off the civil rights movement. Pres. Clinton john lewis was a walking rebuke to people who thought we are not there yet, we been working a long time. David from new york to our tv and radio audiences worldwide, i am david westin. Welcome to balance of power, where the world of politics meets the world of business. We start with a check on the markets. Abigail doolittle is here. The market seem to have been really a little bit from the gdp numbers, even though weve expected them. Are they recovering . Abigail a little bit. Poor economic numbers to say the least. Thegdp number down 34 , worst since 1947. Better than estimated, but it demonstrates the idea the thatmy came to a halt in Second Quarter, hit very hard, not just the gdp numbers, also the jobless claims numbers elevated for a second week in a row, a little bit better than estimated, but nevertheless 1. 4 Million People file for second week in a row. Stocks taking a hit but you can see the naaq