Spend time on and we have euro area pmis coming in a touch better than expected but im not sure if it is moving eurodollar that much. 39. 80, always a good test looking at command and what it means for the world economy. Point 1764 and we look at her earnings with a couple of disappointments in the banking sector. Joint manufacturing pmi coming in at 51. 8 instead of 51. 1. Lets get the first word news with laura wright. Laura the u. S. Plans to act against a wide range of chinese owned software companies, not just tiktok. Thats the latest from secretary of state mike pompeo speaking to fox news. On friday, President Trump told supporters he plans to ban the app. Pompeo said the decision should come soon. The u. K. Is considering the worst case in a real of locking down london according to the sunday times. It would see at risk people asked to stay at home. The local government secretary says he is not aware of any specific plans to seal off london but the u. K. Will target local flareups rather than blanket action. Global capacity has fallen for the first time on record as closing plants in europe and u. S. Outpatient units mostly in china. The decline is 0. 1 of capacity. It marks a turning point in history of coal. The dragon capsule has splashed down with two astronauts and tripssfully concludes the to the space station and a return to u. S. Space travel for of annd the first trip american astronaut in an american aircraft since 2011. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Francine thank you so much. Global coronavirus cases have surpassed 18 million. The pandemic ads one million infections every four days. From prompting lockdowns the state of victoria to manila in the philippines and in the u. S. , a fed official is urging congress to take action as lawmakers remain divided on the next stimulus bill. President polis fed says surging saving rates mean the country can afford to support americans who have been laid off while a hard lockdown could lead to a faster economic recovery. Ian, great to have you on the program. How do you look at the possible rise in infections with possible lockdowns and what kind of recovery you are expecting . At the moment,k the market when you look at the performance is focusing on a huge amount of stimulus we are getting from the Central Banks around the world and also now they are continued to expect from the u. S. That seems to be at the moment having a bigger effect than the and virus cases amount ofk the huge liquidity that will continue to be injected for the foreseeable future is just overwhelming market valuations. Francine what does that mean for fixedincome . Where do you find value given these uncertainties . Iain weve been saying that we want to be coinvesting with the Central Banks, so finding parts of the Government Bond market where there is some yield. I would have said the 10 year treasury a couple of weeks ago. It went down 50 basis points or so but when you look out to the the curve,t of and markets got confidence the Central Banks around the world will continue to support the credit market, investmentgrade credit. The ecb has been doing it for a long time, buying corporate bonds. I think that is the area there seems to be the biggest focus. We are seeing flows going to that market, and really, the challenge from when you go into the highyield space is rolling up your sleeves and finding companies that will still be with us over the next few quarters. We are seeing defaults picking up, but that is where the value is and the yield. That is where the hard work will be for us over the coming months. Francine how much more support can we see from Central Banks around the world . Iain i think weve heard very clearly from Central Banks that they will continue to support the economys as needed. We heard that from Jerome Powell last week. We hear from the bank of england this week. Weve had increases from the european Central Banks over the last couple of meetings so i we start to see improvements, until we start to see inflation picking back up and unemployment coming back toward full employment levels, the stimulus will be there and we will do what is required. Fiscally how much more can you see governments spend . Unless we get stimulus from the u. S. , are you more cautious about the path of the u. S. Compared to the rest of the world . Iain i think the market is very much expecting a stimulus package. A wide rangebate, between republicans and democratic numbers at the moment, but i think in an Election Year, the political ramifications of not passing this package and getting something through would be too great, so we would expect something and weve obviously got this huge refund that will be in play over the coming years, so i think the fiscal side is going to be very supportive. How do you view the possible lockdowns . I dont know if there is a model you prefer, a complete lockdown to basically keeping a lot of the companies you were mentioning hard to find a float . Sense thanean more less lockdown and more money . Iain i think the lockdown situation is interesting. There will be a reticence to go to full lockdown again. I think weve seen the harm. Weveg at the q2 numbers, seen how painful it has been for full economies to go into lockdown. U. K. , you carry the they are being very proactive in local lockdowns and targeted measures. I would expect more of that. Weve seen some areas where theyve gone in quickly. Weve seen improvement in virus cases so i think that is going to be the main path governments will take rather than have this fullblown lockdown that shuts down the economy. The longerterm impacts of the economy as a whole being shut down is going to be too great and the politicians are aware of that now. Is there averall, region you prefer to others . We mentioned some things you like and where you find value, but do you break down countrys body regions in regions . Iain there has been a debate in europe that is the u. S. That across the equity markets, we saw the euro do well from a currency standpoint. I think maybe the negative news around the virus cases in the u. S. And how the rest of the world is doing, as we get a pickup in cases in australia, local lockdowns in the u. K. , we are starting to see cases in germany and other spots of europe. Maybe that dispersion or difference between the u. S. And the rest of the world is coming in a little bit. From the fixedincome standpoint, the value to be had is within the u. S. I feel that is where you get the highest yields for a major developed market, major credit market, and i feel it is the area where you get the most support on the fiscal side which will be coming, but Central Banks are going to continue, the Federal Reserve will continue to support markets for as long as it takes. Francine thank you so much, iain stealey, from jpmorgan Asset Management stays with us. We also have the pound at 1. 30. We will spend more time with iain stealey. Withding its losing streak a 5. 1 billion loss in the Second Quarter. We will hear from the french lenders Deputy Director next. This is bloomberg. Economics, finance, and politics. This is bloomberg surveillance. Laura hsbc is warning of 13 billion of loan losses as the lender missed expectations and profits fall 57 from a year earlier. It is facing political turmoil in hong kong. It raises pressure on the chief executive to accelerate the overhaul of the bank. Job cuts are expected. There is substantial uncertainty at the moment, geopolitics, whether it be brexit, covid. The next three to six months will be important to see the impact of second and third wave of what impact that has on various economies around the world and what the patent is to a viable path is to a viable vaccine in 2021. Laura Societe Generale has extended its losing streak with a loss of 1. 3 billion euros. A tough. Bang for the bank saw revenue decline. The chief executive faces increasing pressure to reduce risk and increase profitability. About 16. 4 billion in cash, the biggest medical acquisition of the year. The deal will be financed through debt and equity, giving a sizable market share in the rapidly growing field of cancer treatment. It is a potential path onto germanys dax index. That is the Bloomberg Business flash. Francine the Trump Administration is expecting to announce measures against the broader chinese and software companies, not just tiktok. That is according to mike pompeo. Chinas factory activity rebounded, the gauge shows a growing faster than july and any point since january 11. Still with us, Severin Cabannes iain stealey from jpmorgan Asset Management. How do you look at the trade war . How much worse could it be and what is the impact on markets . Iain you could argue markets have been sanguine to it to the moment. Thee saw last year and negative impact it had on the overall market and the destruction it was causing to equity markets at some point, it is actually very tame at the moment. Rhetoric could pick up and we could see a larger impact to comes back tot does the u. S. Administration nant this to be happening in a Election Year because we got a number of other things going on ath the gdp print, we need pact with china the next few months. At the moment, the market is saying no. It is not going to be a big impact, but as it picks up, the market will have to sit up and watch. Francine does it impact some supply chains . Does it make it more difficult to look at companies where you could find value . It does and this is the big issue because it is so difficult to see what is going on around the world at the when you think about the virus, the possibility is just ans, it added concern that really does make it a challenging environment to invest in. Francine when will it be easier, the environment, generally and do you worry about inflation taking hold in 12 to 18 months and things would be more complicated . How does the investment landscape change forever because of covid . Iain when you look at what is happening to real yields, gold and nominal yields with the high it seems unemployment, to be a challenging environment to really be concerned about inflation in the near term. Longerterm, i think it will depend. It will be medical driven as to whether we get a vaccine and the Global Economy can come out of this the other side as to whether we see the pickup in inflation, but for now at the high levels of unemployment and people out of work, you really do struggle to see inflation picking up and when you look at the bond market at the moment and where 10 year treasuries are at 50 basis points, the market sees the same thing. Thecine if you look at dollar as the reserve currency, will it lose its shine and what does that mean for treasuries . The dollar question is an interesting one because weve bout of dollar strengthening in the first stage of this crisis and recently, weve seen dollar weakness and july, one of the bad months for the u. S. Dollar. U. S. I would say is the dollar, the bad news is in the price. Some of the negative news around virus pickups in the u. S. Relative to the rest of the world is fading to a small extent, so i think the big dollar negative move in the near term has happened but i still think the dollar looks very much overvalued on a longterm basis and we can continue to see in the more mediumterm some dollar weakness, you will see shifts in reserve currencies and when you think about people who wanted to move away from the euro, move away from europe very concerned about what was going on in the eurozone, the action weve seen from the central bank and the Recovery Fund could give people more confidence to have another and it appears now europe has its house in order, which could see flow move in that direction. Francine is there anything in asia that you quite like other than anything from the chinese side that you could be buying as a proxy . One of the things that has been interesting for us is a lack of performance of chinese Government Bonds. The 10 year chinese yields today were up around 3 compared to the other major markets. Basis points, germany deeply in negative territory. It does look attractive. It is possible to wait chinese are doing their stimulus is different than the support of the Federal Reserve but in a world of low yields and income, when you are talking 3 for a market that is growing in popularity, making its way into the major indices, we expect huge support for chinese Government Bonds over the coming years. Pretty interesting to us so there is something to be done there. ,rancine iain stealey international chief Investment Officer for fixed income at jpmorgan Asset Management. Coming up, the most volatile month. If history is any guide, investors are about to see the most turbulent time of the year. We discuss august and volatility next. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Equity bulls dealing with the pandemic and bleak Economic Data have Something Else to worry about. August. Over the past decade, it has proved to be the most turbulent and it is another risk for already vulnerable markets. With the details is dani burger. Breakdown the volatility we are expecting. On average, every august we see the u. S. And european volatility gauge rise by more than 2. 5 percentage points. The typical month we see a decline of 30 basis points. This is definitely a standout month. Be it isg tends to summertime so we see traders going on holiday, less people around, lower volume, lower liquidity and that means the potential for markets to get pushed around the threshold for doing so in trades is much higher. In some ways, it could be a selffulfilling prophecy. Traders know august is coming so they start to prepare, take on more protection. Interestingly, we know this is a difficult time for traders given difficulty counts, getting stimulus through in the u. S. And the economic turmoil, but according to one trading firm in boston, mitchell or financial, they think the rise in retail in the current environment will settle markets because they tend to be more consistent. As to which time of day they invest rather than when markets open or close. That consistency should prevent spikes and dips in the market. Francine what are we seeing traders due to prepare . Dani we are seeing a lot of flow into etfs. You watch the sector a lot. Volatility etfs, when you by them, you are getting a longterm position. Millionr, we saw 100 get poured into them, the sixth consecutive week weve seen etfs getting close. Traders see volatilities on the horizon. Volatility contracts that expire this month or next month, so this is nearterm volatility here. It tends to be elevated at this point. Francine thank you so much, dani burger with the latest on the volatility we are expecting. Coming up, ministers are considering a london why lock down the event of a flareup in virus infections. We will discuss how far the world is from an effective vaccine. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. The firststraight to word news with laura wright. Laura the white house and democrats are still far apart on the new coronavirus replete relief plan. Talks will resume today. Democrats want to keep the 600 jobless benefit in place, but republicans want to reduce it to 200. Lockdown could deliver a faster economic recovery according to neel kashkari. He says while the move would be unpopular, it could restore growth in hiring more quickly rather than waiting for a he says the surge in u. S. Fiscal rate can afford t aid. The pandemic is adding a million new infections every four days. Australia has expanded restrictions in melbourne in an effort to curb rising infections in the city. New zealand is delaying its quarantined free travel zone in the country due to the outbreak. Murdoch was chief executive of the familys main Media Business until last year. He steps down most of assets were sold to disney. Since then he has become increasingly vertical of the conservative editorial direction of news corp. And fox news. He has left news corp. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more this is countries, bloomberg. Francine . Francine thank you so much, laura. Lets get the latest on the coronavirus. The u. K. Government is looking at all options for tackling local flareups. A london wide lockdown is one of the scenarios under consideration. At how ar far away is vaccine . Deenan pillay joins us. Professor, thank you so much for joining us. Does the u. K. Have a handle on the virus . Are we testing enough, and do we understand where it is . The u. K. Has had one of the worst outbreak pandemics in europe, and demonstrating the largest number of deaths also, for the longest period of time. So the u. K. Has not had a good pandemic, and various reasons for that, one of which is the ,elay in establishing testing and the development of structures that have taken some time to that in. Francine what would be your advice to the u. K. Government . What do they need to do differently than they have so far . I think dealing with a pandemic is difficult, and ive got to say for all injuries this is a unique circumstance. There needs to be clarity and ive got to say for all countries this is a unique service stance. There needs to be clarity, and public understanding a unique circumstance. The needs to be clarity and public understanding. What is happening is that messages have been confused, and against the backdrop of navy inadequate testing, of maybe inadequate testing, inadequate ,eing able to trace and isolate and in that context the epidemic has continued. I would say two main things, first of all to establish and make sure very rapidly that the structures in place for testing and Contact Tracing and supporting those in isolation are instigated, and secondly, a clear, consistent messaging, which means that the public remain confident of government. Francine is a second lockdown in the cards, or will it be a more targeted lockdown . I dont know if what is happening, we can look at what is happening in the north of Great Britain and can be used as a template for london. Deenan i think infections continue. Abouthas bee never been thats less than 2000 infections in the u. K. There were more infections underway in dan and many other countries across europe who started to release the whoin many other countries started to release the lockdown. We are now seeing is that verse of infections are associated with some aspects of the release of lockdown. For instance, social gatherings, particularly young people, factories, and those places where people have to go back to work. Whatever we define it as, there needs to be very of consistent testing and tracing, and of course the ability to pass that data back to local authorities, local Public Health structures as soon they can in order that local containment can happen. Francine professor, is it safe outsidel right now, or travel what is spreading is further . Deenan well, if you mean travel within the u. K. , then clearly there is a big demand for travel. Have beenerstandably in lockdown for months, and with the government release of lockdown, of course that has released a lot of tension and people want to get out and about. Governments are actually recommending people, if possible, stay within the u. K. For holiday, so there is an encouragement to do that. And of course there is the economic underpinning of that as well. Thingy the most important is wearing masks, washing hands, the basic aspects of Infection Control, recognizing again that a lot of infections are still being transmitted particularly indoors. So it is indoor settings that remain a risk. The key thing is that the people, the population understand what the key Infection Control processes are. They are not complicated, but they do interfere with normal life. With regard to overseas travel, of course we have recently seen in the u. K. That the acceptance of travel to spain has now been truncated, and those people coming back to the u. K. From spain have to quarantine. As for luxembourg and belgium as well. So it seems sensible to maintain travel within the u. K. Just in order to avoid what potentially may be future lockdowns. Francine thank you so much for joining us, deenan pillay, professor of virology. Loan losses could reach 13 billion this year. Cfo andspeak to the before that we will have an with the conversation montclair chief executive officer. This is bloomberg. Francine this is bloomberg onveillance. The focus is the virus, the focus is on some of the Companies Reporting earnings out there, and the focus is also on hsbc speeding up the shakeup of its global business, warning that loan losses may reach some 13 billion this year as it battles the economic fallout from the coronow, a couple things i am watching back, european stocks are down. Lets also focus on one of the sectors hit pretty hard by the pandemic, earnings at montclair, best known for ski jackets, fall short of forecast. It is another confirmation that the luxury industry is struggling amid the coronavirus, at Retail Assets around the world. Of montclaircutive joins us. I know that you have been patiently waiting, so thank you for joining us today. When you look at the coronavirus pandemic and how it changes the luxury sector in the future, how will it regroup. Will you have less shops . Will you have to sell more online . How will you change your company . Think for sure we have to check mentality. The world is changing. The store was almost closed. It was closer almost a couple of months. But now we have an opportunity, impossibility to rethink about the new normal. I think the new normal is much and i think we need change 360 degrees. We need to work to change the approach. I feel really this. Its the experience has become more important. It could be online, through retailers, whatever it is. For sure in europe and the United States. I think we have to adopt our strategy and speed our strategy to respect this moment. I think this is one of the most important things. Cancel what we did in the last year, but really we have to reshape and rethink about almost everything or speed our strategy. It is important to realize the experience around the content that we have with the consumer. Francine what will be the biggest change for montclair cler . Ontc will you accelerate other things . Deenan it is a lot of things. Now we have a direct operating commerce. Now through next year. Market spending was basically traditional. We have different channels, a different approach. Doinge the possibility of business a different way. Week, 30te last million contact i think was, at a certain point, now we have the possibility not only to sell because ecommerce is very important. You have to move with the consumer 360 degrees. Where they buy the property is very important. I think it is really to build up your and community. Without community, you cannot do anything, and we must be able to talk with them basically everyday. Capital,d our business every month we change our approach and are content, correction, our view of the customer, and then pass it off already because we have already, our strategy is already there. Verynk it is very modern, good within the market. I am quite confident that we have a lot of benefits because we really think there is a lot of opportunity in the next year that is going to come. At thee when you look recovery, where can you see the Recovery First . Are you seeing people spending more in china on your product . Where do you see people actually start to spend more than in the previous month . Honestly, the recovery is already there. China is already back after the lockdown. Mall, ande shopping for sure europe is not easy because we are we have a lot of visitors and there is no traveling anymore. They are not traveling anymore. The United States i dont want to say good, but it is quite good, and from my perspective, i think the game is, you must recovery. That she must recover. I dont think europe you must recover. I dont think europe we have a new project what we call online, offline, and i think we are able to talk with the customer that is normally used to shopping around the world and , thinkbout the chinese about china, think about l. A. Or everyone, and we will try to talk with them in a different way. People who used to buy outside, they are quite stronger. Think he is going to go a lot try tonear future, and contact the customer. Customers are used to buying outside. Hong kong is still in that think again,t i think about your community and stay in tune with them. Francine do you think this crisis will actually lead to more consolidation amongst luxury retailers . Are we going to see mergers and acquisitions, and where does montclair fit with this . Where does moncler fit with this . Nominally in the United States is not as good as before. Aboutain, if you think the channel, i think it also is small and independent. I think there could be a very good opportunity. A big luxury group is stronger, we know that. But again, we are small but we are very flexible, very fast. I think we have the possibility to redesign our company from this moment, and again i am optimistic. I am not an optimistic guy, but in general i think i see around a lot of possibility. Francine would you rule out buying something . Do you want to get bigger . I always say moncler, we opened the first door 12 years ago, like in 2009. We have many things to do now. , it is aafter use now company,enge for the to talk this new language. Digital, physical experience online. Buyver say i dont want to a company, but i never find a good opportunity. Redesign mykeen to company, to redesign the brand with really a new way to talk with the customer. I think this is the key for me, a new attitude, a new approach for the market. Francine thank you so much for your precious time, and we hope to speak with you very soon. Moncler, executive of mr. Reed feeney joining us today. We will have plenty more on the luxury sector on bloomberg. Remo ruffinindrew joining us. We encourage just under 7 billion of credit losses in the first half. Businesses most impacted are the u. K. We had 1. 5 billion of additional credit losses in the u. K. French bank. And commercial banking amongst the customers, with just over 2 billion of expected credit losses. The big driver in the Second Quarter was a very big shift, negative shift in terms of the Economic Outlook for the global , with the 2020 recovery in 2021, and a sharper recession now than people are expecting this year. You expect 500 million in cost savings in the second half. Is that Program Going to get accelerated going forward, and is the targeted customer around 35,000 going to be sufficient, or does that need to be changed or increased . Went into the start of the year with the fullyear result, anticipating costs were going to be flat. We are now signaling they are going to be down at least 3 this year. We had a 7 reduction in the Second Quarter. Flat somewhat by subdued activity in the bank with things like travel and some had office costs, so we are on track to deliver what we announced was a substantial Cost Reduction program over the next three years. We are pleased with the progress we have managed to achieve in the first six months. Headline, that banner 35,000 jobs to go. You have paused, restarted. Is there a reality moment that we need to face that the job cuts and the organization reorganization is going to need more than that 35,000 guidance at the start of the year . Will it be summing more substantial . Ewen the target was to take our cost structure down. We had just under 4000 employees bankontractors leave the in the first part of the first year. Caused the redundancy program. We have restarted as of a month or so ago. Speculation as to what it will involve we do need to take costs down, given what we are announcing in the bank. Guidance depends on a variety of scenarios coming from where the economic recovery is going to go from here. But from the conversations that you have been having with your peers in the industry, what are the next three months going to look like . Ewen there is a substantial amount of uncertainty at the moment, whether it be geopolitics, brexit i think over the next three to six months will be important to see the impact of a second and 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. So i do think we will learn a lot over the next six months as we approach your results. The year results. That is why we have a large lossesf expected credits this year of 8 billion to 13 billion dollars. Francine that was hsbc chief Financial Officer ewen stephenson, speaking exclusively to bloomberg. Bloomberg surveillance continues in the next hour. Tom crean joins me in new york. Joins tom tom keene me in new york. We will have a full round up of the banks and also tech stocks with tictoc. This is bloomberg. Francine global coronavirus cases top 18 million. In the u. K. , the government reportedly considers sealing off london if infections spike. Missing the market, hsbc shares dip on surging bad loans. Well hear from the companys chief Financial Officer. And tiktok turmoil the u. S. China tensions threaten risk appetite. Mike pompeo suggests action to protect National Security wont stop with one company. Good morning, everyone. Welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom keene is in new york. Tom, a lot going on. You look very dapper, especially for monday morning. The markets are focusing on banking stocks that disappointed in terms of earnings, and they are also looking at what else we are doing in the world of treasuries. Treasuries, wef have disinflation galore in america. 10year tips breaking down to new lows. This is unimaginable, all that in the backdrop of washington. To me wh