Havens. Gold surges with a spot price nearing 2000. Bullish bets on the euro hit a record ahead of todays pmi number. Cash tradings one hour away. Here are your top headlines from the bloomberg terminal. Tictoc terminal tiktok turmoil. Stocks and futures trading mixed. Toe pompeo suggests action protect National Security will not stop with this company alone. Surging baddip on loans. The group says it will accelerate cost cuts. Hear from our exclusive interview with the cfo. 16. 4 billion. They broker a deal for speedway gas stations. Just under one hour away from the start of cash equity trading, take a look at what is going on in terms of futures. Ftse futures down this morning, about. 2 . Dax futures rising. If you were to broaden out this view, you would see an even bigger range. Cac futures are up more than. 5 percent right now. Omx futures are down. 7 . Take a look at what is going on in the u. S. A little bit of a mixed picture as well with nasdaq futures higher this morning. S p and dow futures down. Annmarie lets take a look at what is going on across assets this morning. I want to start with the u. S. 10 year yield. That is because i want to talk about what happened in the real yield. A record low closing out around 1. 03 . The dollar index this morning relatively unchanged. A brutal july. The worst in decades. Gold hovering around the record levels and oil, 43 dollars, 36 cents for brent. We are lower because opecplus will start opening the tabs a bit more and as you see, we have some countries and cities going into partial lockdown. That has a question about what this means for the demand recovery. Lets get the bloomberg first word news with laura wright. Laura the u. S. Plans to act against Chinese Software companies. That is the latest from mike pompeo, speaking to fox news. On friday, President Donald Trump told reporters he planned to ban the Popular Video apps. Pompeo says it should come soon. The u. K. Is considering the worstcase Case Scenario of lockdown in london again, according to the sunday times. It would include travel curbs in and out of the and 25 and would see at people ask to stayathome. Robert genvec said he is not aware of any specific plans to seal off london but the u. K. Will target local flareups rather than blanket action across the whole country. A hard lockdown can deliver a faster economic recovery, according to Neel Kashkari, speaking to cbs. He says while the move would be very unpopular, it can restore growth more quickly rather than waiting for a rateari said the surging means the country can afford to finance more fiscal aid. Global coronavirus cases topped 18 million. The pandemic is adding around one million new infections every four days. Australia expanded its restrictions in melbourne in an effort to curve rising infections in the city. New zealand is delaying its travel zone with the outbreak. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thanks very much. Laura wright in london. Asian stocks start august in a mixed fashion amid a resurgence in covid19 cases and simmering u. S. China tensions. U. S. Futures are flat and european futures are edging into the green, but a little bit mixed there as well. For more on the markets, we are joined by a garfield reynolds. Let me ask you first of all what lockdowns. Bout fresh how bad is this going to be . Garfield it depends on how bad the actual lockdowns are and it has been a little bit of a surprise that melbourne has gone so hard with its law downs and also the philippines, what is going on there. Thoughy, it does seem as there is not a huge appetite to those governments have gone. And there is also, you know, something of a coronavirus fatigue when it comes to the impact on markets. Thats partly explained by when the first pandemics came along, we did not have the level of monetary and fiscal support coming. What seems like some sort of clarity on the data front. We know what the lockdowns did. We know how the reopenings worked when it comes to some level of economic rebound. And we also saw the way that equities came roaring back from a combination of all of those. Is a lower quantum of fear factors there. This is now less of a complete unknown than it was before. Is the date of the reason why you argue this morning, garfield, that equities are going to fly higher in the next coming weeks . This week, we are starting off with more tense geopolitical tensions between beijing and washington. We have a fiscal deal in the united states. Some of the stimulus measures actually have ended now, so americans are not going to be getting the checks they need but you say equities will be moving to that side. Equities have not reacted particularly strongly to the huffing and puffing out of washington. Either investors are assuming that there will be a deal at some stage or they are assuming that the fed put is what matters. Even that is one of the other lessons of the post pandemic move in financial assets. Fine thanks do just to stimulus programs, even if the economy is not doing so well. Getting back to that data pulse, on the one hand, what looks like happening in the real world, if there was a massive collapse, and then theres been a recovery , but that point where we might get back to Something Like where the world was before cobit keeps on getting pushed further and further out because the recovery has been much more shallow than the collapse was. However, the data pulse that produces is continued improvement in the data outcomes, and that is what investors are looking at. Itt is why they are saying does not matter that the pmi has dropped to 10. We have sort of ignored that. What do you know, now, they are back up at 50. The problem is, if you are expanding from the level you dropped to, only slightly, its going to take you a long time to get back to where you were and that is something that i do not think markets are going to appreciate until at least next year. Anemic, a slow and very recovery still looks like paradise compared to what investors were fearing back in ma and april. Back in march and april. Matt it is different with the dollar. Trading down as equities have traded up. She mentioned july was the worst month and probably a decade now. How do you see that playing out, garfield . We see it hitting commodities prices in gold terms, but how else do you see it playing out . The driverslot of are there for the dollar to go lower. I would expect it to go lower at a slower pace because a lot of what is done is get back to about where it before the pandemic hit, and to be honest, the real concern would be if the dollar took off again. That is what happened in march,. Nd that was the sign to panic it took off when the panic took hold. So there are plenty of reasons to expect the dollar to come down, and most of those are benign. After all, we had a long period of dollar weakness, when the fed the waves of qe eight introduced following the 2008 crash. So if that is what is driving the dollar down, that will drive asset prices in general, not just in dollar terms up. Garfield reynolds, thank you so much for your time this morning. Up next, bullish bets hit a record as the e. U. s historic Recovery Fund gives them a reason to back the single currency but will todays pmi numbers cause investors to pause . We will find out, next. This is bloomberg. Annmarie we are under one hour away from the cash equities open. Ftse 100 futures to the downside. The cac 40 and the dax in the green to start a higher open at least on the continent. Lets get the Bloomberg Business flash. Here is laura wright. Laura hsbc is warning of 13 billion of loan losses as the lender missed expectations. Profit falling 57 from a year earlier. It is also feeling the weight of political turmoil in the key market of hong kong. It raises to accelerate the bank. 35,000 job cuts are expected. Buying speedway gas stations for 21 billion dollars. The owner of 7eleven is hoping and expanded footprint will deliver amid the pandemic. It will be paid in cash and partly financed by debt. It currently has around 69,000 stores worldwide. Aemens has agreed to buy company for 16. 4 billion dollars in cash. It is the biggest medical acquisition of the year. The deal will be financed through debt and equity. It gives a sizable market share in the rapidly growing field of cancer treatments and opens a potential path to the benchmark dax index. That was your Bloomberg Business flash. Matt laura wright in london with your business flash. A twoyearing out high, investors have never been more upbeat on the euro in the aftermath of the European Unions historic recovery package. Upet managers have ramped their net long positions to almost 340,000 contracts, according to cftc data. The single currency has dropped below the 118 handle after fridays dire gdp prints from across the block. With manufacturing pmi numbers later this morning likely to paint a similarly negative picture, are we to expect a more more falls for the euro in dollar terms . Ubs panlk to the european economist on her views currency. Mon currencie it is still relatively high. There are forecasts for the euro to go above 120, some forecasts i think for 130. What do you think . Of estimates, it 30,s somewhere between 1251 so we could potentially see some more strength, especially once pmis this final july according to the estimate, showing quite strong rebound in july. But at the same time, when we wenk about the recovery, remain quite skeptical that we will see a vshaped recovery. Also, we see elements of this. Eakness in pmis as well just looking at the employment component, which shows job losses continue in both manufacturing and Services Sectors in july. Aile so far we have not seen sharp pickup and unemployment across the euro zone, we think that once businesses gradually demand we assess the conditions. So far, very successful shortterm work schemes or furlough schemes start to expire. We like to see unemployment rates coming up in the second half of this year and it is likely to weigh and slow down the pace of recovery. Do you see the european Recovery Fund potentially doing another stimulus package country by country to keep a lid on this unemployment . Anna when we think about what was announced already, so the European Commission announced a new short fund that is specifically targeting National Unemployment and providing support for the shortterm work schemes across the region. That has been an important step. When we think about the latest is very fund, it significant. It accounts for about 5. 3 of gdp, but i think the key the key element is the funds from this package are going to start coming in very gradually so we should see 10 of the funds disbursed already next year. We think it will be the second half of this year with more funding being dispersed. Once the impact is significant, it will not come through immediately. Matt how much does the u. S. Failure to do finish or get through another recovery still hurt the u. S. Economy and the eris currency u. S. Currency . Anna i think, obviously, you know, when we look at how governments responded in europe compared to the u. S. , i think in europe, the response of National Governments was very quick, and one of the key elements of the policy was providing income support measures for households and once again in the form of furlough schemes. The reaction in the u. S. Has been somewhat slower. Essentially, we saw a spike in unemployment in the u. S. Coming through very quickly. Any delays in terms of providing income support measures and shielding people who lost their jobs is going to weigh on the pace of recovery Going Forwards. , ubsrie Anna Titareva paneuropean economist, stays with us. Out next, we are talking about the boe. Another lockdown in london. The u. K. Capital could siri instructions could see instructions reimposed. This is bloomberg. Annmarie welcome back to the open. We are just under 60 minutes away. A bit of a mix. Futures pointing to the start. The cac 40 and the dax pointing to a brighter start. Boris johnsons team is considering a plan to seal off london in a worstCase Scenario of the second wave of coronavirus. That is according to the sunday times. It would include travel curbs in and out of the and 25 and would see atrisk people asked to stay at home. Today marks the rolling out of the you now to help out scheme. It all comes ahead of a boe meeting later this week where expectations are dependent upon the speed of the recovery. The ubs paneuropean economist is still with us. I want to start with the boe. They describe the recovery so far but doesnt the data right now show a bit of distortion . What are you expecting the boe to say as far as the recovery in the path of the u. K. . Were a number of speakers optimistic about the shape of the recovery. When we look at the q2 data, we a somewhat less severe contraction in gdp in the Second Quarter than the scenario from may suggests. In that sense, we could see some improvement in the gdp forecast for this year, but then, as you mentioned, the speed of recovery is going to matter a lot. There are two big risk factors that are likely to weigh on the pace, so first of all, the social distancing measures. On top of the mandatory requirements, what we are seeing is that the voluntary social distancing measures are likely to weigh on consumption in sectors where social interactions are involved. Similar to what we see in europe , the big risk is the recovery of the labor market. So far, once again, we have not seen a spike in the unemployment trade in the u. K. , but Going Forward, given the scheme is set to end in october, we have already seen a collapse in the number of vacancies. There are risks that higher unemployment could lead to a longerterm and more pronounced effect. It is also likely to weigh on the speed of recovery in the u. K. Matt why is the pound so strong given this a disappointing performance by the economy, especially considering the fact that brexit looms large . We are still looking at one. 31 in the cable rate and euro pound is at also, nots a story just the pound, but more generally. Dollar weakness. As i mentioned earlier, i think some of the better than a bit better than expected q2. Compared to a negative npc to the gdph is due contracting around 25 . Mix of somewhat better data. Annmarie at any point, do we see the boe moving in with verbal intervention on the pound . It is serious strength, the biggest rally since the financial crisis. Anna generally, i think at least what we have seen over the last 3. 5 years, the pound has been since the brexit referendum the pound has been very weak and we have seen a first gauge of all the brexit uncertainty, all the headlines about brexit, and given this uncertainty is still ahead of us, negotiations are still ongoing. Months persisting. It would be a bit early to step in at this point. It is not something that will happen in the near term. A concernmuch of would another shutdown be, especially if there was on lockdown, for example, in london again . Anna i think what we have seen over the last few weeks is a change. The governments are trying to avoid national lockdowns. Deciding how costly nationwide lockdown has been both in terms of economic output and also in terms of how much fiscal stimulus governments have to provide. Now Going Forward, if we see another round of lockdowns, i think once again, you know, this would be a very costly policy both in terms of what the governments have to do to support people throughout this period but also, you know, given how big of an impact there has already been on many companies, and given the weak economic another the risks of round of very significant. Matt thank you so much for your time. Really appreciate you this morning. Anna titareva is a paneuropean economist at ubs. Coming up, we will talk about s. Bcs big mis this is bloomberg. What happens when a wireless carrier puts its customers in charge . Well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with xfinity mobile. Call, click or visit a store today. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. Annmarie welcome back to the open. We are 30 minutes away from the start of cash equity trading. A mixed chair across the futures market in europe and in the united states. Betweeng tensions washington and beijing. Earning highlights for the week ahead. Berkshire hathaway will report later today. Warren buffett is said to have purchased bank of america stocks this month. Bp will report tomorrow and make cut its dividends for the first deepwater horizon disaster more than a decade ago. Matt very interesting stuff. And disney faces an extremely difficult quarter. Business coulds be the worst affected despite cost cuts and the reopening of the asian parks. On thursday, ing reports. The dutch lender said it would have an impairment of 300 billion euros on the impact of the coronavirus. Isaking of that, hsbc warning of up to 13 billion in loan losses for the year. The profit for the quarter fell by 57 . Ghed downnk was wei by political upheaval in hong kong. It says it will accelerate its planned cost cuts and it is expected to eliminate 30 5000 jobs. Earlier, bloomberg tv spoke with hsbc cfo Ewen Stevenson and manus cranny asked him about the reasons behind the credit loss widens. Take a listen. Encourage just under 7 billion in credit losses. Businesses most impacted are in the u. K. Where we had one play 5 billion in additional losses. And commercial banking amongst the customer segments. I think the big driver in the bignd quarter though was a shift to come at a negative shift in terms of the Economic Outlook for the Global Economy in 2020. With the recovery in 2021 but not enough to offset the sharper recession that everyone is expecting this year. Expecting 500e million in cost savings. Well that program be accelerated Going Forward . And is the targeted cuts of around 35,000, will they be sufficient . We are pleased with the progress we are making in costs. We went into the year anticipating the cost would be flat. We now expect them to be down 3 this year. We had a 7 reduction in the Second Quarter. It was flattened him what by very subdued it was flattened somewhat by very subdued activity. Deliver whatck to we announced in february which was substantial Cost Reduction over the next three years. We are pleased with the progress we have managed to achieve in the first six months. Manus you had that banner headline, 35,000 jobs. You paused and restarted. Is there a reality moment we need to face . More . Ts will mean it was never a target in terms of headcount. The target was to take our cost structure down. Under 4000 employees and contractors leave the bank in the first half of the year. We did what we thought was the appropriate thing to do in march which was to deposit the redundancy program. We really started about a month ago. There is speculation as to how many people it will involve but. E do need to take costs down yousef much of your guidance depends on a variety of scenarios coming from where the economic recovery will go from here but what are you seeing in the data what will the next three months look like . There is a substantial amount of uncertainty out there at the moment whether it the it willl, brexit be important to see the impact of second or third wave and what impact that has on various economies around the world. And also what the path is to a viable vaccine sometime in 2021. We should also get some clarification on the path of a brexit as well over that period and that is why we have come out today with quite a large range of credit losses this year. Was hsbc cfo Ewen Stevenson speaking to our middle east anchor, yousef gamal eldin and manus cranny. The Trump Administration is expected to announce several array ofagainst a wide companies according to mike pompeo. In a memo to staff, the founder says it is exploring all opportunities for the platform. Sharon, mike pompeo saying it might not just be tiktok. What are we expecting from the administration . It is hard to say what will be announced. It looks like it could be a ban on ticktock and Steven Mnuchin and has also said that it could either be to force a sale of the company or the blockage of the app by executive order. We dont know if there will be other companies or apps targeted. Salvo tobe a warning chinese companies. It is going to explore all possibilities for ticktock. What other options does it have . Sharon it is in talks with microsoft. That has been confirmed. Microsoft is trying to of peas donald trump appease of donald trump. Ticktock or the company that ktok says there is or the company that owns it says there is no evidence of wrongdoing. [indiscernible] we will be keeping a close eye on tiktok. Thank you to sharon chen. It is the Biggest Health care deal of 2020. We are looking at the acquisition by Siemens Healthineers of very and. Of varian. This is bloomberg. Matt welcome back to bloomberg markets, this is the european open and we are 20 minutes away from the start of cash equity trading across the continent. Acrossa mixed picture the markets. Lets go to the first word news. Laura the u. K. Is considering the worst Case Scenario of a locked down again in london according to the sunday times it would include travel cuts and it would ask at risk people to stay at home. The secretary says he is not aware of any specific plans to seal off london. They will target local flareups. The white house and the democrats are still far away from the Coronavirus Relief plan. Talks will resume today. A Sticking Point is the 600 jobless benefit. The republicans want to reduce that to 200. The deadlock comes. Global coronavirus cases have talked 18 million. The pandemic is adding around one million new infections every four days. Estoril you has expanded restrictions. New zealand is the leading quarantine free travel due to the outbreak. Dragon capsule has splashed down in the gulf of mexico. It successfully concludes the First Mission to the International Space station for the company. It is the First Mission for the since the Shuttle Program ended in 2011. 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. White lara right there in london with your first word news and one of the Coolest Stories ive seen definitely the coolest story ive seen in a while. Let us talk about m a. The Biggest Health care deal of 2020 looks set to happen. Siemens healthineers is buying varian for 16. 4 billion. Entry intoe company the cancer market, one of the hottest areas in medical opens the but it also dax to accepting Siemens Healthineers. Take a listen. It is a combination of cash and equity which will follow in due course. Willhis equity rate which willnal lift the index. We are certain of the transaction. It is the right time and we are also super confident about financing. Matt that was the ceo of Siemens Healthineers talking to us just a bit earlier on daybreak. For more on this, we are joined by bloombergs oliver. What does that mean for the business at healthineers . Oliver good morning. This is a huge deal for healthineers. Wholeically opens up a new business area for them. They make imaging and mri machines. They also work on noninvasive procedure stuff. Therapy. Radiation it opens up a whole new market to them that they basically had no presence in before. Annmarie oliver, this gives them a path to get into the dax. Why is that such a big deal . Oliver the dax is important for two reasons. One, it is a prestige thing. In germany, if you are in the dax, you are among the 30 biggest companies. Importantly also is there is a bunch of passive trading once you get into the dax. It is the same reason that tesla wants to get into the s p 500. Matt what does this mean for the Parent Company . What does it mean for siemens ag . Oliver they are also participating in this and will be paying for it ahead of time. Like a good parent, they say you cannot afford this yet. They are doing a bridge loan which will pay for the deal. Healthineers then will do a capital raise. Ag isially, siemens biting the company just as much as healthineers is. Annmarie oliver, thank you ford joining us on this big m a day. Heineken reported firsthalf organic beer volume that beat the estimates. We will hear more from the heineken ceo, that interview is coming up next. This is bloomberg. Annmarie welcome back to the open. We are about 12 minutes to the cash equity trading. As pubs begin to open, heineken results are more positive than expected but the dutch brew works is still cautious. To any us now is dolf van den brink, heineken ceo. Thank you for joining us. Do you see this sequential improvement the company saw in the Second Quarter to continue . Dolf good morning. Thank you for having me. We did see a sequential improvement in the second cautious. We wont be we expect the markets to remain very volatile and it will the two steps forward and one step backward as we have seen renewed lockdowns in the south african market. Parts of mexico are also closing down again. On the side ofr caution and remain agile to ramp up or ramp down depending on local market circumstances. Cautiousaking of being , you want to focus more closely on your expenses. Where do you think you will be able to make cost cuts . What is your focus going to be there . Dolf well, first of all, it is important to reiterate our commitment to have no structural layoffs related to covid until year and. That is the promise we made to our employees. We are doing an amazing job in the middle of this crisis. I cant tell you how proud and impressed i am with our people all over the world. That does not stop us from taking a look at our cost base. We wanted to make sure in the Second Quarter that we are right we willur expenses and continue to do so for the second half of the year. It is finding the balance between minimizing the impact on our people and safeguarding the health of our business Going Forward as well. Annmarie talk to us about the second half of the year. Where are you bullish . General, ec a couple of stories. Around 40 ors 50 in year to date. That part of the business will remain volatile. Insee doubledigit increases the european market. We are growing market share in the off trades. We have very good results with certain brands. Been much as has publicized, certain brands are doing very well. Heineken is the most prestigious beer brand in the world. If it was not for the south , we would bedown in positive territory. We see doubledigit growth in 14 different markets. Doingen 00 is still doubledigit growth in many regions. These are the areas we continue to invest in and lean into. We continue to invest in the heineken branch. Ecommerce see really picking up. We have built a consumer it has doubled its revenue in the first half of the year. Over 3 Million Consumers order daily and weekly there. Therel be volatile but are a lot of good parts in our portfolio. Brands that wed will continue to invest in. Matt it is a great place. A greatgermany, it is place to be able to order those kegs. I have always enjoyed heineken beer. Alesetting more into pale and craft beers. You have room for expansion in that area. Will the pandemic create opportunities for you to do more m a . Are always on the outlook. As you would expect, i cannot comment on any specific plans we have but we will always be looking for opportunities where there is a strategic fit, where the timing is right, and the price is right. But no specific plans can i comment on. Appreciate that you cannot comment on specific plans but which areas do you think the heineken Business Needs to build on . What is the tick ktok of beer brand . Dolf that is a great question. I think there are many at this moment in time. Is doing extremely well. Heineken has been the leader. We have really been leaning into this brand. We see heineken continue to do well. We launched heineken silver which was for markets like vietnam and china. We see beautiful and regional brands like a beer brand from sardinia. And we do see continued momentum on several other brands. That our consumers will be looking for more variety , more choice, more quality and we will do everything we can to give them as many choices as possible. You forlf, thank joining us. Dolf van den brink, the ceo of heineken. Coming up, five minutes to go equitye start live cash trading. Futures are mixed. The first trading day of august. Historically the most volatile month of the year. Capt now, we see gains for and dax futures. The market open is up next. This is bloomberg. Annmarie we are a minute away from cash equity trading. Tiktok turmoil. Suggests action to protect National Security will not with one company. Missing the mark. Hsbc shares dip on serving bad loans. To the cfo,lusively Ewen Stevenson. Siemens healthineers buys the for 16. 4 varian billion. Matt, good morning. Futures are mixed but it has been quiet in terms of m a but we have had quite a bit of news this morning as well as over the weekend which may impact markets. Matt a lot of m a news. And this gives Siemens Healthineers a chance to change the name. In terms of futures come a mixed picture. Let us open of the global macro movers screen on the bloomberg terminal. It shows you a number of risk assets of across different columns. Wherefthand column is they live equity indexes will start popping up as they open up. The ftse is down 0. 1 im sorry. It is unchanged. It is bouncing back and forth between gains and losses. Up dax has just opened gaining 0. 5 . And the cac 40 is up 0. 3 . Spain,e exception of most of the european markets are trading higher. Up one third of 1 . There. Rising a bit Siemens Healthineers is buying systems foral 16. 4 billion. A littleto the ceo while ago. It is a combination of cash and equity raise which will follow in due course. This equity raise will create additional free flow which will lift us into the dax. We are very certain about this transaction. It is the right time and we are confident about financing. Is boboining us now parker come Investment Committee management. Ilvest thank you for joining us. Let me get your take on the m a season thus far. It has been relatively tepid. It is probably more difficult to make deals when you cannot leave your house. Do you expect it to pick up given the volatility of markets . I think the answer is probably yes. Will we were turned to the high volumes of volatility we saw in 2018 and 2019 . Probably not. But we do have a backlog of deals that have not been done in the last 23 months for obvious reasons. I think the backlog will get cleared. And we have positive financial conditions in terms of nominal and real bond yields being low and credit spreads are tight. And investors are relatively long cash. The financial backdrop is relatively positive. Thirdquarter, early fourth quarter, the focus , as wellalth sector is where m a will pick up. Annmarie this could have a real impact on europes economy. Bob given the data coming out of europe and we will get quite a bit of data this week which will be important for investors but if we look back to june and signs of ave seen sustained recovery in the eurozone. I think the economic backdrop for european activity and m a activity is positive. Overas i have questions the thirdquarter u. S. Growth, i think investors may be disappointed. If anything in europe, i think the surprise is that we will be to the upside. I think you are seeing some quite Strong Quarter on quarter gdp numbers. This is a positive for coming back to matts question, on m a activity. Click thecan timeseries cap and see the deals going back. An incredible 10 years of deals behind us. If you look right after the great financial crisis, there was a huge lull. There was a financial crisis and we have thus far avoided that fsb. E thanks to the do you expect us to continue to a void a crisis avoid a crisis . We had big numbers out of spain last week. Do you expect a financial crisis to come . Bob the answer to that is no. If we look at what has happened so far in 2020, it is a severe demand and supply shock. That has been reflected in the second order numbers and the gdp numbers across the developed economies. The only economy that is all positive growth in the Second Quarter was china. What is different between now and 2009 is that the Financial System, despite the provisions being announced at the moment and we have seen hsbc this morning, despite the heavy provisions, i would argue the Financial System is very resilient. For example, look at the leverage ratios today relative to 2008, the Financial System delevered ly delevered. Remely i would be very surprised we will see financial pressure but i do not think we will see any shocks. Annmarie you dont think we will see any failures . Meaning the u. S. And a slew of bankruptcies will that happen in europe . Clear have to make a distinction between mats question which is will we see failures in the Financial System and my answer is no. If we look at corporate debt, most of the Credit Rating agencies are forecasting that default rates in the highyield market which are currently running just over 5 will probably increase to over 10 by the end of this year and in the Third Quarter of next year we could see 12 or 13 . The Investment Grade corporate will stay low. Credit spreads will remain tight. But if you are going to look for pockets of problems, the highyield market will tdiv erge. Fortunately have a couple more blocks with you so we will keep you with us. Bob parker is an Investment Committee member at quilvest Wealth Management. We are glad to have time with bob. Hsbc missing estimates as political upheaval in its biggest market hurts it and rising bad loans way on the lender as well. You our exclusive conversation with the chief Financial Officer of hsbc, Ewen Stevenson. That is next. This is bloomberg. Annmarie good morning and welcome back to the european open. We are 10 minutes into the trading day. Let us get the business flash. Here is laura wright. Laura seven and i has purchased speedway gas station for 21 billion. The owner of 7eleven is hoping for an expanded footprint. The deal was paid in cash and partly financed with debt. It is the biggest deal for seven and i. Siemens healthineers has agreed to purchase varian were about 16. 4 billion in cash. The biggest medical acquisition in years. It gives healthineers a sizable market share in cancer treatment. It has also opened up a potential path to the dax. He was chief executive of the company until last year. Since then, he has become increasingly critical of the conservative editorial direction at fox news. That is your Bloomberg Business flash. Wright there with your business flash. 13 is warning about the billion in loan losses for this year alone. And profit for the quarter fell by 57 from a year ago as the bank was weighed down by the pandemic and the political of people in hong kong. Hsbc now says it will accelerate its planned cost cuts. The lender is expected to eliminate 35,000 jobs. Earlier on, Bloomberg Television , ewenwith the cfo of hsbc stevenson and manus cranny asked about the reasons for the latest credit loss guidance. Incurred just under 7 million of expected credit losses in the first half. Businesses most impacted are the u. K. We had 1. 5 billion of additional credit losses in our you keep in our u. K. Bank and commercial banking among the commercial segments. I think the big driver in the Second Quarter though was a very big shift, a negative shift in terms of the Economic Outlook of the Global Economy in 2020. With a recovery in 2021 but not enough to offset the sharper recession that now everyone is expecting this year. Costf you were expecting savings in the second half. Will that program get accelerated Going Forward . And the targeted cuts will they be increased . With the pleased progress we are making on costs. Costticipated that the would be flat. We are signaling that we will be down at least 3 this year. We had a 7 reduction in the Second Quarter. That was flattened somewhat by very subdued activity on travel and our head office costs. We are on track to deliver what we announced in february which was a substantial Cost Reduction program over the next three years. We are pleased with the progress we have managed to achieve. Anus you had that banner headline, 35,000 jobs. Is there a reality moment we need to face that the job cuts and the reorganization will mean more than the 35,000 . Target ther a target was to take down our cost structure. Around 4000just employees and contractors leave. We did the appropriate thing we thought in march. We restarted about a month or so ago. To how manyas people it will involve but we do need to take costs down. Sef must of your guidance much of your guidance depends on the scenarios about economic recovery. What will the next three months look like . A substantial amount of uncertainty out there whether covidgeopolitics, brexit, in the next 36 months, it will be important to see the impact of a second or a third wave. And also what the path is to a viable vaccine sometime in 2021. We should also get some clarification on the path of a brexit as well over that period. That is why we have come out today with a large range of 8dit losses this year of billion 13 billion. That was hsbc cfo Ewen Stevenson speaking to yousef gamal eldin and manus cranny. Breaking news spanish pmi rising 53. 5 beating the estimates that were forecast which were 52. 3. Anything over 50 is growth. Let us get reaction from bob parker from quilvest. What do you make of this . The spanish gdp number came in much worse than expected. We are getting a better print on the pmi. Across the whole of the eurozone, the numbers were exceptionally bad. That was mainly driven by the shock to the eurozone economy in april and early may. Then begine economy to form a base in late may with recovery in june and that has been continued in july. That is consistent with the upturn we have seen in the pmis. One word of caution on the broughtpmi is spain has a renewed coronavirus problem. That well could be a challenge for spain in the august and september data. And their touristy industry which is and their tourist industry which is very important will experience a tough month in august and going into early september. I would not be surprised if the spanish pmi for august and september will dip back to 50. The number Just Announced is consistent with the eurozone Third Quarter recovery. Matt i was there last month in andalucia and it was lovely. I had planned a trip back to my a in a couplelorc of weeks but im not sure now because of the resurgence. Casesy is adding 1000 new a day of again. What do you think of these we arence i we ars seeing across europe . Bob first observation is that local pockets of problems. They are very serious. Spain, notably around barcelona. As opposed to a nationwide problem, they are regionalized or localized. And we see that likewise in the u. K. And the other authorities whether it is Health Authorities or other parts of the government have learned the lesson that they acted probably too late in february and march. And consequently, the response we are seeing now is much more rigorous than what we saw earlier. And i think the spanish authorities have reacted very strongly indeed in the last few weeks. To that extent, we are in a in terms oftuation markets and we saw in march when there was a very severe shock. And there was a severe fall in credit markets and equity markets. That is the mliv question of the day about the fresh lockdowns and the impact on equities. Our fiscal monetary measures good enough to go through the impact of potentially fresh lockdowns . Lets talk about Monetary Policy and the distinction between what the fed is doing and the ecb. Recent meetings coming in july for the fed and the ecb, both Central Banks were on parts and the were on pause. And that is against the background of a dramatic expansion in Monetary Policy that we saw from march through to early june. In terms of where we go from is muche coronavirus more of a challenge at the moment in the u. S. And we have recently seen a negative impact on Consumer Confidence and certain activity numbers particularly in the southwestern states which are starting to reverse. And september we will see an expansion in the fed balance sheet. Monetary easing in america i think is highly likely. Theseget as i think localized problems in europe, i continuesecb just with its Current Program and will not accelerate. The virgins between the ecb and divergence d between the ecb and the fed. I think the s p will have a problem over the next couple of weeks. Matt and will it be big enough . Bob parker is an Investment Committee member at quilvest Wealth Management and he is also governor of the Kings College school and will continue this conversation with me on Bloomberg Radio at 9 00 a. M. Q k time. 9 00 a. M. U. K. Time. On can tune in to bloomberg dab digital radio. Coming up, we are looking at the stocks on the move including Siemens Healthineers which is its 16. 4g after billion deal to purchase bargain varian. This is bloomberg. Matt welcome back to the european open. We are 25 minutes into the session. Looking at a mixed market with the ftse down 0. 5 . And the dax up 0. 5 . Looking at the big movers. We have hsbc falling after a warning that loan losses could reach 13 billion this year and after profits fell more than had been anticipated by analysts. Siemens healthineers is down more than 5 or about 5 right now after a 16. 4 billion deal for varian. Another company is rising forng been given approval the treatment of Adult Patients with lymphoma. Theremportant treatment that i think everyone will help works out well. Annmarie we will talk about the portuguese economy. It tanked 14 in the Second Quarter. The pandemic brought the countrys towards him industry almost to a complete halt. Up next, we speak to the minister of tourism, rita marques. That is up next. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. 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. Annmarie welcome back to the european open. We are 30 minutes into the trading day. The stoxx 600 is trading lower down 0. 3 . Some of the sectors that are wei the index is travel and leisure over a concern of a resurgence of coronavirus cases. Losses. Ns of loan right now come across the European Equity market, we do have a risk off tone this morning. For more news, let us go to lara worry. Laura wright. React the u. S. Will against a variety of chinese companies. On friday, President Donald Trump told reporters he planned to ban the Popular Video app. No official decision but mike pompeo says a decision will come soon. The u. K. Is considering locking down london again. It would include travel cuts in and out and at risk people would be asked to stay home. The secretary says he is not aware of any specific plans to seal off london. They would target local flareups. Deliver akdown could faster economic recovery according to Neel Kashkari speaking to cbs. He says while the move would be unpopular, it could restore growth and hiring rather than waiting for a vaccine. He also said the surging savings rate means the country can afford more eight. Global cases have topped 18 million and there are a million new infections every four days. Australia has expanded its restrictions in melbourne. Is delaying its quarantine free travel zone due to the outbreak. 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. Laura wright there with your top news. The portuguese economy shrank 14 in the Second Quarter. Rot thenavirus pandemic Tourism Industry to an almost complete halt. Portugal which has the third highest debt ratio in the euro area behind greece is now trying attractct tourism tourism back. Joining us now is rita marques. She is portugals towards a minister. What can you tell me about hopes to bring back tourism as the second waves around europe start to flare up or pockets start to flare up and the u. K. Has told tourists coming back from portugal that they must self isolate for two weeks. Min. Marques we have been working since day one. As you said, tourism stopped here in portugal. Decrees on safety. We have been working since day one. We have been developing specific projects to develop trust. Trust is very important and dear to all of us. We have been welcoming everyone and at this stage, we are fully reopened. People are visiting the country and i guess if you comply with the rules, you will be safe. That is the main message i have to convey to you today. Annmarie rita, good morning. It looks beautiful there in portugal. I want to ask you a question to telle u. K. Decision travelers they need to self isolate self isolate for 14 days. Min. Marques we have been in contact with the u. K. Providing all of the information requested by the british government. The situation here in portugal has been evolving positively. Sohave a ratio of under 20 new cases per 100,000 is slightly below the threshold used as a reference by the u. K. Government. We have been providing all of the information. We are not sure when the decision will be revised but we are not going to retaliate. One, we could see that the quarantine was not really the solution to the pandemic. It is a worldwide phenomena. We do not plead that quarantine is the real solution. People should be tested. Possible, people when coming to portugal should comply with the rules and so far, so good. The situation is under control. And even in the first wave, back but the, we complied situation was under control. We feel that for the upcoming weeks or months we will be ok. Matt i hope we will be able to fourmonththe ecbs meeting. Always a highlight for me. Beenow though, people have canceling trips to portugal. I have a lot of friends that licia who go there. Be horrible for hotel owners and restaurant operators. Are you planning some kind of theal package to bailout people that rely on tourism in portugal . It is something we analyze continuously. Is not going to stop right away so the two strong eight packages. Ide in march two strong a packages. One in march and one a little while ago. We have been evaluating the situation on a daily basis. September we are in the peak season. We have been attracting a couple. F popular events we will be hosting formula one and not uber and the soccer championship. We believe august and september will be strong months and in october, november, and december, we will see how it goes. Annmarie what about bailout money for Hotel Operators . Approved as we have scheme. All of the hotels in order to they haveyment been supported by the government by Social Security to protect jobs. That is our first priority. We will continue to have that approach in the short term. Unemployment is something we really need to watch. And for that reason, we have been benchmarking with other countries and with the European Commission to see if we have the right type of incentives to secure trust. Those are our main priorities right now. Matt rita, thank you for joining us. Rita marques is portugals ,ecretary of state or tourism and industry incredibly important to that countrys economy. Really, us talk about really rich people. The richest family in the world is the waltons. The walmart family has topped the 200 billion mark. We talk about the annual rich list. This is bloomberg. Annmarie welcome back to the european market. We are 41 minutes into the trading session. The ftse 100 and the cac 40 are under pressure. The Walton Family has is worth more than 200 billion. The owners of omar have added 25 billion to their web the owners of a walmart have added 25 billion to their wealth. Thank you for joining us this morning. Can you break down the details of the walton fortune . Family have a case of a that has a retail fortune invested over the years. Invested significantly in ecommerce. The waltons did not predict the pandemic but they were well prepared for Something Like this to happen as consumers flocked online to ecommerce but also blted up the bric it ulked of the brick and mortar stores. Matt that is the waltons have gotten richer. Y of the richest families lost money during this pandemic . Very much so. Contrasting with the waltons, compare them to three of the b. Milies behind a pandemic, imagine that during the pandemic, beer is an item to have. That is notce something you buy online at the moment so as a result, those families have slumped massively. The three families. Interesting to note though that investing way more in ecommerce. To see if interesting next year we will be talking about them being a loser again. They are still richer then the rest of us. I can tell you that. Annmarie it is really uncertain times. What is the outlook of these family fortune ands . Family fortunes . We see for the second half of the year is a lot of focus on the big american fortune as we near the u. S. Elections. Most of the fortunes, the big,st chunk come from dynastic families including the waltons leading the ranks. Family inhe mars second place. A big reason for why these families keep on increasing their gains and passing down samacross generations walton gave away a chunk of his portion of his fortune before passing away. Said heg joe biden has might do is tighten loopholes and that would be something that these families would be top of their minds. Matt it is a great list. Just looking through it. One of the interesting things is you list the generations. You get to see which are the oldest family fortunes. ,ou have cargill mcmillan. Good stuff. Wealth reporter talking about that report and i highly recommend checking it out online at bloomberg. Com. Siemens healthineers has agreed aboutchase varian for 16. 4 billion. Currently the Biggest Health addition this year. Of cash a combination and equity raise which will follow in due course. Raise willuity moneys whichonal will lift us into the dax. We are confident about financials. Annmarie great to speak great to see you and speak to you this morning. Talked about the increasing tensions between the u. S. And china. China is an important market for varian. How will you navigate those tensions . Varianth is global and a is a global company. Is veryotprint in china strong. They have a unique strength of more than 50 market share and it is an normatively important and it is enormously important for health care in china. This will not be an issue that politicians can touch. Manus when we look at your relationship with varian, it has expanded in the last few years. Where will the biggest synergies come from . What will drive this deal forward . Leap for varian to become broader in addressing cancer. So by putting together all of we bringostic aspects to the table and by building a digital roof if you will of combining all of these into new insights, new knowledge using our ai capabilities a lot of synergies are in cod innovating. Is that it will. Me a broader it will benefit a lot from this transaction. Is youbenefit for you said the deal will lift the company into the dax. Makeser if that lifting anse to you given varian is u. S. Business and your Diagnostics Division is mainly there. We feel very comfortable with the listing in frankfurt and so any we have not heard complaints from investors. In our investors interest and a u. S. Listing is not plant. Planned. Marie breaking news another pmi coming out for france. July manufacturing pmi is 52. 4. Beating expectations. The prelimit was 52. Anything above 50 is expansion. We have france providing manufacturing pmi. We will talk about how french lockdowns affect equities. We put that question to our group here inmliv europe. This is bloomberg. Annmarie welcome back to the european open. The ftse 100 under pressure. The dax and the cac are up. Joining us now is kristine aquino. Mlivt to start with our question of the day. What is your take . It is an interesting one because i feel like markets have thexed relationship with idea of lockdowns. On one hand i think it would be beneficial longerterm for the economy and the response from markets if we see lockdowns would be a signal that governments are getting a grip on the virus spread and going for the measures that will nip this in the bud. It will not be great shortterm for sentiment. It would be an indication that governments are currently not in control of the virus and that is why they are having to resort to such extreme measures. When you take that into account with the extremely high evaluations we are seeing in the market, it seems like a recipe for a pullback in the shortterm before we see a gradual recovery as we get those lockdowns impacting and bringing down the case numbers. Pmis comingseeing out. Spain. France as well. Both beating estimates. Germany is also beating estimates at 51. All in expansionary, or those three countries are in expansionary. How does that compare to the markets . Talk about a vshaped recovery at least when it comes to these pmis. They give us an indication of how much this sector has recovered especially in europe. Some of the details of their reports show that there are also sustained job cuts in the sector which will be important Going Forward. The labor market will be a crucial part of the economic recovery of any country. And europe is no exception. If we do see those sustained job cuts continuing throughout the rest of the year, that bodes longerterm risks for the economic recovery because that means the Snowball Effect for the Consumer Sector as well which would have an impact on the services sector. You could be looking at an uneven recovery and potentially a slower recovery if we dont see much improvement on the sector. For joiningank you us this morning. That is it for the european open. Relatively mixed. The dax is outperforming this morning. Matt it does look like the dax is doing better certainly better than the ftse which is down right now. In spain35 is off 0. 7 right now. A little bit as well. Bloombergding to radio and up next on Bloomberg Television is surveillance. This is bloomberg. Global coronavirus cases top 18 million in the u. K. The government considers sealing off london as infection spike. We hear from the companys chief Financial Officer. The u. S. China tensions threaten risk appetite. Mike pompeo suggests actions to protect National Security wont stop with one company. Good morning. This is bloomberg surveillance. Im Francine Lacqua in london. Markets are moving on the back of trade