Any sale must include a substantial payment to the u. S. Government viewed and results season continues. Bps dividend expected to be cut for the First Time Since the deepwater horizon disaster. We will look at the toll coronavirus has taken on a drinks giant. Manus is just gone 6 00 a. M. In london and 9 00 a. M. In dubai. There is no sort of outstanding alpha driver this morning. We are grappling with different things. The unilateralism is alive and where. Unilateralism of trump to stand the unappointed benefits, of trump to deal with tiktok. That unilateralism i think is fed w rather than the this is betwixt good morning. Good morning. Nejra i am with you, it is hard to see any great conviction or catalyst in the market today. The rally we are seeing in asia seems to be feeding off what we saw in the u. S. Yesterday in terms of tech stocks. Was it just about the stay at home trade . Apple hit another record. Also interesting what we heard from the rba, especially since you are seeing the aussie a little big considering they are talking about resuming bond purchases and yields fell a little bit. Havent joined tiktok yet, i know the whole newsroom would quite like to see me doing a little bit of tiktok, but we e that crisis which is the crisis date, which is the 15th of september. To me, thats a in the market sand defining the market escalation. Back in the house, back in the office. I know more about quarantine rules than i care to. Good morning. Nejra [laughs] is good to have you back and see you looking so refreshed after the holiday. About green on the screen in asia and we are seeing that on a headline level, now back at a record yesterday. U. S. Futures not getting a lot of direction. European futures edged into the green. We talked about the aussie and that might have to do with dollar weakness. The dollar fairly steady in todays session but of course dollar weakness has been the big story with the loss we saw, the biggest monthly drop in july in a decade for the dollar. 10 year yields not giving us a lot of direction at the moment, around a 55 handle. Oil getting back, though. It is edging lower after the biggest gain in two weeks. The biggest gain in two weeks yesterday was due to data out of the u. S. U. S. Manufacturing expanded at the fastest pace since march 2019. The institute for supply and management said its gauge increased to 54. 2 last month, exceeding bloomberg estimates. More factories boosted production. But improvements and output are still not generating much hiring as manufacturers remain cautious about the sustainability of demand viewed demand. The employment gauge shows employment declining but at a slower pace. Manus President Trump as we have said has said he may impose , andatorium on evictions enact a payroll tax holiday. This comes as talks on a new virus relief plan are making slow progress in congress. Meanwhile, arise in infections in the u. S. That slowed the previous week with california and arizona were in fewer new cases after battling a surge in infections last month. Our guest host of morning is malik. Malik ali a lot to digest. What strikes me this morning is your phrase, we remain invested, equal wake. I get the sense that there is a lack of bullish convention from you for the overall equity, all in trade. Ali good morning. You are right, there is definitely a sense of caution. We are still invested in equities but we are neutral, and seeing the runup from the march 23 lows, we are cautious going into the second half of the year was a lot of major events such as the u. S. Election happening. So yes, we are cautious. Nejra a little bit cautious on equities. What does that mean elsewhere . Are you bullish on fixed income even as a lot of people say theres not a lot further for yields to fall from here on government bonds . Ali we have been emergingmarket highyield bulls for a while now. We still see value in that space. Emergingmarket highyield. If you look at emergingmarket highyield, it is positive year beit fromalbee it al investment market grade. See further room for depression there too. Manus the other big theme this morning is the new date the market has, we love a date. 15th of september, we will be all eyes down, dont work at the election date, that might shift. How do you look at this new week of risk with china and the u. S. . Do you act upon it, by more gold, take more yen . To these newt definitions of escalating risk . Ali its definitely escalating, no two ways about it. Started with intellectual Property Rights and went on to technology and 5g, then blacklisting officials, then going as far as closing the consulates, and no direct orders to sell tiktok before a deadline. This has escalated really fast. How we are acting upon it is we cny ask sea and why most only on the news. It is escalating to 6. 80. Thats one way we have been looking at it. Overall, we have been bullish in the china fixed income space as a proxy as well. Nejra when i found interesting about the nasdaq hitting another record yesterday, the commentary around it was that the stay at home trade was alive and well. By that happened even as we had some positive economic data. The white house was set to consider acting on its own to boost Unemployment Benefits, and we have relatively good news on the virus in the u. S. You would think in that environment, you would get a rotation out of tech. What does that tell you about u. S. Tech as an Investment Case right now . Ali i will be candid, i find it very overvalued at this point. Ive been speaking to clients actively trying to make this shift in momentum into value stocks. Value has been unloved for too long right now. You can look at value under performance compared to tech and is mindboggling. I dont see the valuations justified at the levels for big tex. We saw the earnings for major big tax. Tech. We saw the earnings for the major players. Ali malik stays with us for the hour. Great to have you on the show. Lets get the first word news with laura wright in london. Itsa tiktok has to sell u. S. Arm by september 15 or close, according to president donald trump. He says he does not mind who buys it, microsoft or another firm, as long as it is a big, secure american company. The president also said any sale would have to include a substantial payment the u. S. Government. England may be undermining a green recovery. A report says the central bank is effectively subsidizing industries with its rescue program, pumping money into the dirtiest sectors in spite of being small parts of the economy. In australia, doria imposing a fine for victoria imposing a fine for anyone flouting coronavirus rules. Repeat offenders could see a court penalty of four times as much. There is a curfew in melbourne and a statewide lockdown. Is planning to leave the country he ruled for almost four decades. Years, he has raised a series of scandals and legal woes. He has not said when he will leave spain or where his ex i will take him. Global news 24 hours a day on air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you very much. Welcome to the team. Some breaking news. Gam. Ceo at they are up 6. 5 on the quarter. You saw this in the Asset Management division with ubs as well. Management, 35. 5 billion. Those are some numbers, down 6 10 on the quarter. And providing white labeling, thats the real driver here. Billion, up 9. 8 . Officialsing up, said talk up the urgent need for another round of fiscal aid to support the u. S. Economy. Exclusiveom our conversation with the dallas fed president , Robert Kaplan. This is bloomberg. Is daybreak europe. Two the fed, the Federal Reserve officials are warning that they need another round of fiscal aid to support the u. S. Economy, as the political stalemate is continuing. Democrats and republicans struggling to agree on what exactly is needed. Payments ofenefit 600 a week expired last week, republicans wanted reduced, arguing it was to generous and discourage people from returning to work. We spoke with Robert Kaplan about what is needed for the economy. Our viewn it is still we will contract for the year at five percent. Its been our view after a sharp decline in the Second Quarter. Had healthy rebound in the we will have healthy rebound in the fourth and third and Fourth Quarter. I think that rebound is more muted in the u. S. Now and causes me to think the Unemployment Rate, if we dont do a better job managing the virus, the Unemployment Rate is likely to be above 9 come up between 9 10 . We have moved up our unemployment forecast. A rebound, butot it is more muted than it was, and if we dont do a better job managing the virus, we will have lower growth and a higher Unemployment Rate, so ive been spending a lot of my time talking more about the virus than anything else because it is so critical to the recovery. Unemploymentxtra bonus and Eviction Moratorium are gone now. Has your staff modeled the impact of that on the economy, and should we expect a wave of defaults to affect credit markets . Mr. Kaplan we have looked at it. One of the things that is unusual about the downturn we stayedd is incomes had relatively solid and a big part of the reason is the Unemployment Benefits. Normally in a downturn, you see a drop in income and we havent seen that here. It is still my view that in some form we will get an extension of Unemployment Benefits. I am quite hopeful that will continue. If it didnt, you would see further weakening in the economy. In particular because consumers would not have as much money in their pocket to spend. Any Business People telling you that the 600 bonus was keeping people from coming back to the labor force . A lot of Business People were telling me that, honestly. They were telling me was challenging to hire people. Weve looked at studies and done are on work and we dont see it as much in the data, but i am hearing it from his people Business People. Whatever the right answer is, i think you still need to see an extension of unemployment. From the restructured 600 but it is important to see an extension of it. I think the increased incomes, while it may have made it harder for certain individual businesses to hire, it creates jobs because it bolsters consumer spending. Beenet effect still has positive for the economy and unemployment. A number of your colleagues, or at least epidemiologists joined by your calling for minneapolis, have said we need another nationwide lockdown for about four weeks to defeat the virus and that should be job one over reopening the economy. What do you think . Mr. Kaplan i probably have a somewhat different view based on my conversations with epidemiologists locally and across the country. The epidemiologists ive spoken with believe we could manage this economy and the virus and have the economy open if all of us wore masks. That is first and foremost. Then we need a good testing and Contact Tracing regime. If we all wore masks in particular, they believe it would substantially muted the transmission of the virus and you would not need to do a widespread lockdown. In fact, many of them fear that , ifou did more lockdowns you still didnt have good following of health care protocols, the lockdown to some extent would be wasted. Be verytheir advice is , andul about the reopening force a widespread practice of wearing a mask and social distancing. Nejra that was Robert Kaplan speaking with Michael Mckee in an exclusive interview from dallas. Still with us is ali malik. Update, you talk about the fact that you dont really see the fed having from the right level they are at now for the next five years. Does that mean we are just at the beginning of a trend of real rates falling and the weakness . Ali absolutely. Thats what we are calling for. We dont see rates picking up anytime in the next five years. We expect them to remain low and closer to zero. We dont just yet forecast and negative rate environment in the u. S. , but we expect real yields to stay negative for the time being and the dollar to remain weakened through the course of the year. That ne of the things nejra i think we may have lost manus. See realntinue to rates on dollar and dollar gold will nothink get to 3000, for example. Ali its a good point. Gold to remain in the elevated range, about the 200020 300 range at this point. We think it could do with a breather. We are seeing finally a small pickup in the dollar at the moment and that could help be a deterrent. And if there is more reopening Going Forward, it will bolster the economy and it might not help gold continue an upward trajectory. Ali, i have it on Good Authority that technology is back with us and they have unfrozen my image. Cam wondering about triple paper. You that much,es we all fade to dust around here. [laughter] c paper, a huge compression. On the back of the kaplan conversation, the Unemployment Benefits dissipate, who knows what we will get next. Triple c compression has been predicated on support. Is that compression at risk . Ali an important point you mention. Before i get into triple c specifically, best month for highyield since 2011, july, where it was of more than 4. 5 . Talking about triple c for the benefit of the audience, anytime the spreads are more than points, that is to stress level. For the first time the points the spreads are beginning to these levels. We are seeing shrinking. For me, it is a sign of worry. Movingseeing Companies Debt missing debt payments. It is no longer distressed territory but still a warning sign. Much, thatk you very ce Bloomberg Barclays triple bond index. Patng up, will the rba hold despite headwinds from the economy as it tries to brave a new path to recovery . Sentiment from the rba right here on bloomberg. Is daybreak europe. Rate andas kept its yield unchanged at 0. 25 . They are betting this will support the economic recovery. It will also end a threemonth hiatus on bond purchases to keep yields online with its target. Manus some context, victoria, which accounts for almost 25 of the gdp, has imposed another tighter and longer lockdown. Still with us is ali malik. I listened to kaplan, a contraction in the u. S. Of 4. 5 , and a look at australia and the rba this morning, talking about a 6 contraction. The worst Economic Outlook since the 1930s. I put it to you that markets are singularly ignoring the risks and what the risk actually is of 25 of australia is lockedin. Ali i agree with you, the market is being very optimistic. I would be very cautious putting in a new position at these levels. [indiscernible] u. S. Economy contracting, quarter over quarter, 9. 5 , the biggest drop since postwar levels. As, the market is on Different Ground from reality, and there is a huge gap between wall street and main street at this point. Nejra do australian bonds interest you, particular with the yield pickup versus treasury . Ali what weve seen in the region, in the middle east in particular, people stand to stick with dollar denominated bonds and that is true for assessing trying to stick with dollar denominated bonds. I see an interest for that but not too much in aussie. What happens with local currency bonds is they give you Capital Appreciation but because of the currency, people think of the currency as usd, it doesnt translate into desired results. Not a lot of appetite. Nejra ok. Makes sense. Ali malik stays with us. New record in the largest Corporate Bond offering of its kind. We have the details 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. Manus good morning from dubai. It is bloomberg daybreak europe. Your top stories, Global Equities are mixed after tech surged in the record. U. S. I am in data and hints from President Trump that he could take executive action on fresh virus relief. Must close itsok u. S. Operations by september 15, unless it is sold. This as he insists any sales must include a substantial payment to the u. S. Government. Result season continues. Bb dividends is expected to be up the First Time Since the deepwater horizon disaster. We take a look at the toll of the coronavirus on the giant yasiel viajio. Nejra we are not seeing conviction for the broader market, but we are still seeing earnings season. I know you are looking out for this, but buyers are dropping through at 2. 8 8 billion euros. The estimate was 2. 8 billion. That comes in at a beat. For your revenue at 43 to 44 billion euros. Is adjusted for the covid19 impact. Secondquarter sales come in a at 10. 61. Er those are the numbers we are getting through so far. In reflectors at the moment as a result of covid19, from what we could tell, there was an expectation that there would be negative fx in the Second Quarter of offormance from the pandemic lockdowns stopping people from making pharmaceutical sales. Expectatione of the from analysts. These are the numbers that have come through. I am taking a look at this, there was a presumption that the auto market would recover. I can tell you this, fave reinstated their guidance sorry, they are confirming their guidance. For the Third Quarter we have got this. Total segment is at 220 million euros. That is a base the market expected 119. 4. Markets,omes to the these are the highest of the estimates right there in the market. At 10. 1 on the tech site from 6. 42 on the expectations. Thats up 37 . Its a heat for them on margins. A considerable beat for them on margins. But also the guidance they give us in terms of the rest of the year. They are saying that the Fourth Quarter margin is going to be 14 . The estimate at 12. 3 . Ae revenue is guiding up to point 5on eight billion. That was originally 7. 6 billion. This certainly is one of those tech european stories, which is going to deliver. Way ahead of what was expected. You mentioned the nasdaq. You have microsoft. You have apple hitting a record high. The dollar is turning it around. The first time in a number of weeks that the dollar is turning around. Is it really a cause of the manufacturing data turning higher in the u. S. . Its almost like the bloomberg big brother house. Day four on the rally of the dollar. You have not seen that since june 29. The aussie dollar gives back as they have a narrative of stock bond buying this morning sorry, on wednesday. They say it will be a tough run in the economy. You had a better step than me on the dollar, but it was the worst july in a decade. It is the start of a down trend. Lets pick up on something you were talking about in terms of tiktok. President trumps latest assault on tiktok has opened a new front in the trade war with china. It may see restrictions on Tech Companies that may have ramifications for the biggest companies. U. S. K must sell its operations by september 15 or close down. Its insisted that any deal would have to conclude a substantial payout to the u. S. It was unclear under what authority. President trump United States should get a large percentage of the price because we are making it possible. Without us i use the expression the landlord and the tenant. Without the lease, the tenant does not have the value. Make ithe least, we possible for this great success. Isra joining us to discuss bloombergs Senior Editor in singapore. Asat to have you with us, always. Given what we know, there are still several issues in the air. This is not a done deal. It concerns microsoft and the trump administration. I think that is exactly right. There are a couple of things in there. One of the things i would mention is something that you all said quickly. The idea of what sort of compensation the United States federal government would get as part of the deal. It was a red headline when donald trump suggested it. Its note its not clear under what authority the United States would get what some are calling a finders fee. . Its unclear under what authority that happens, who would pay, etc. , etc. , etc. Another thing that is a possible issue is that peter navarro, and are not, may try necessarily comfortable with microsoft as the buyer. Microsoft has a more longstanding relationship with china then any other Tech Companies. There is a question of whether or not that would be white hat enough. I thinkave mentioned, its very much worth mentioning even more, there is not really a great indication of where the stops. The u. S. Has been trying to get some additional stiffness on huawei from countries all around the world. Tiktok. Y the u. S. With there are many other places that this could conceivably go. The big question is, where does the United States draw the line Going Forward . Its a really big thing for companies and countries. Manus what is the motivation for microsoft to really close this deal . Is it an additional leg to the microsoft that we have not seen youngeep millennials, a different demographic, a different Consumer Product . Derek i think there are a couple of things in there. Microsoft put out a statement on some of the stuff. Tiktok is a major opportunity to become a place where people have gathered. Sort of sitting there saying to yourself, who is the breakout era in the coronavirus the entertainment world, its someone who got famous on tiktok, sarah cooper, whose a comedian who does donald trump all the time via lipsynching. Its a place where new stars have a thing. Its popular globally. There is a lot of things why someone like a Microsoft Might want to do something, and also might want to do something in a global really globally blessed environment where the u. S. Continues to have some relationship with a firm that has penetration in china. There is a lot of positives here if you are microsoft. Has gone into some amount of detail on to other things. But certainly, how many times you get a chance to take a bite at the next big thing . One is an opportunity, maybe the red carpet with a firm deal. We will see if they can get it done. I suppose its a question of what happens. Followers, i have known max for 20 years. I am joining tiktok. While i will try to. We will release ourselves to the world on tiktok. Nejra [laughter] manus Senior Editor in singapore. From what is a Serious Business issue, in terms of what you can achieve on social media, there thatther dominant themes are driving the board rooms from new york to london. One none other important issue is diverse city. On wall street, being black often means being alone. How that deprived one of the best opportunities. Bloomberg spoke with the president of harris and harris there management who said is far from enough representation in the industry. I do think that there is an opportunity for wall street to embrace diversity, for sure. One of the reasons why i think that there is room for growth is because as you highlighted in the article, so many of us have gone there with the hopes of achieving success to then deal reality of not being able to reach the levels that we have seen our white counterparts reach. That has been disheartening for me because i wanted to succeed. When i came out of college my goal was to achieve the american dream. That was zaneilia harris, the president of harris on harris wealth management. Juste parent alphabet has tapped the high grade bond market, aiming to support black entrepreneurs. Here to explain the tech giants record bond offering is dani burger. Good morning. Record in manya ways. The total offering was about 10 billion. Some of those bonds, specifically the sevenyear offering the 40 year has record low yields beating a previous record set by amazon. Nearly half of those bonds are going towards esg issues. By covid,s affected other green housing and sustainability projects. The most notably, supporting black entrepreneur. Google has struggled to get more representation in the staff and higher ranks. The u. S. Is 2. 6 of leadership that is black. Google has had a new Economic Opportunity initiative thats about 175 million. They are aiming to invest in , as well asartups help increase diversification among their ranks. I should say that these types of social bonds have gotten popular as of late. They have increased more than 370 in the first half of 2020. A lot of the social bonds had been raised due to the coronavirus, trying to help out the struggle that was caused by the pandemic. Google is the biggest esg offering in terms of high bonds that we have seen to date. Nejra dani burger, thank you. The Investment Institute is saying they believe the adoption of Sustainable Investment is a from theshift coronavirus. Lets get to laura wright in hunt in london. Laura the u. S. Seeks about more money. Nearly 950ise billion over the three months through september. Thats to fund the massive spending surge to help the economy through the coronavirus crisis. The figure is 270 billion higher from the projection in may. Argentina is reaching an agreement to restructure 65 billion of debt. The nations bond rallied on the news that comes after months of talks for a deal between argentina. It would mark a step toward stabilizing the struggling economy. Is being investigated by the federal trade commission for alleged privacy violations. Its another setback for the company that struggled to protect user data and account security. Use ofe probing the phone numbers uploaded for security purposes to target people with advertising. U. S. Aviation regulators boeing 737 max. Its one of the most extended requirements the agency ever issued following an accident. This is a major step in getting the 737 max back in the air. Global news, 24 hours a day, on take, poweredck by more than 2700 journalists and analysts in more the 120 countries. This is bloomberg. Manus thank you for the roundup. They are said to keep their foot on the gas of Monetary Policy this week. There are disagreements. They emerge over the shape of the recovery. We discuss. This is bloomberg. Nejra this is bloomberg daybreak europe. I am in london with manus cranny in dubai. Singaporeus is the investment advisor. Buyer infineon and breaking this hour. Buyer said it broke this. The for your revenue slightly higher than it saw previously. Third quarter total segment profit came in better than expected as well. Earlier when i asked you about tech you said you were advising investors to take profit and move into value. Is that specifically on u. S. Tech . Do you see more opportunities in tech elsewhere, particularly given what we have seen from the earnings season out of chipmakers. I know intel is a different story, but do you see Tech Opportunities in europe and asia . Ali we do like a couple of names in asia. That we wouldtor abandon completely, but taking some chips out it will have some profits. Its a sector we remain interested in but dont see too much value in. We see a big shift of people who have momentum in growth stocks. You see this in european equities again. It was a call where we took last year and we went in european equities. At that point, as much as we would have liked. We received an interest. That is being held by europe all the way from 108 to 117 levels. People are seeing a bunch more interest in the 750 billion euros repo package has been received by clients as well. I am seeing a lot of interest in european equities so far. One thing that you mentioned when the three of us were chatting, the bifurcation between u. S. Banks and european banks. We put that into the gtv library. You said they have not been justly rewarded and enough, but you can understand the hesitancy because you have 17 Million People on unemployment. And role models of 10 unemployment. You can understand the hesitation in jumping into banks. What did the clients feel about that differential . Good point. We have seen it has been consistently underperforming the u. S. Banks for a long time right now. A couple of things that are in favor for these banks, they all have negative rates and we dont expect them to go in that direction just yet. In europe we have been seeing them for quite a while. Onesbanks, especially the with more offerings than just the retail space, banks like jpmorgan have a lot more offer in terms of trading revenue, investment revenue from Asset Management. A name like that that would create 540 in the start, now trading in the late 90s. It looks compelling amongst these markets amongst other names. When you talk about wanting to pick up some value stocks, does that also include the energy in industrial sectors . Ali energy has been far sold out too fast. You start in the program by reminding clients that its on its way to cut its dividends. With exxon given out an 8 beidend, that might still aiming for a rise before it gets to the levels that are a to client again. Not too keen on energy at this point. Bank of Singapore Investment advisor, great to have you with us on the show today. We were just talking about bp. Expected tots is cut its dividend for the first time in a decade. We will bring you the details next. This is bloomberg. Manus its bloomberg daybreak europe. Im manus cranny in dubai. Nejra in london. Dp earnings in just under six minutes. The dividend is expected to become for the First Time Since the deepwater horizon disaster one decade ago. That is a multibillion dollar impairment charge. Puts it puts the payout sustainability into question. Will, a true a two dishes he raised up by 10. 5 cents. Do you think a judicious move if he does cut the dividend . We will see. I think it is fairly likely. All this move in the Fourth Quarter is going to be quite a downturn. I think that the pandemic has been hard on bp. Talked about the massive writedowns they had to make and more to the point, i think that is becoming a bit of a problem that has been rising. They were a little blase about debt. They are making a big acquisition about shale assets in the u. S. I think to get the Balance Sheet back in shape and to do the things that they talked about in terms of preparing the company for energy transition, a dividend cut may be for this. Nejra bloomberg had a great piece, recently talking about the fact that the oil prices presents bp as a chance to change. Some extent of covid19 providing the opportunity as well. We saw shell post surprise profits for that trade in divisions. Do we expect to see the same from bps Trading Division . Will i dont think we will see a surprise profit. But yes, we expect bp to have strong results. They have a very big trading operation. Companies, that barely paid dividends in the first half of the year, its what we call a contango by stalling oil when its dirt cheap when people are willing to pay more. We expect a big impact there. And it shows a integrative model can look like its supposed to. It seems as if its working in the industry. Its contango on steroids i think was the line. We go to the European Market open. Take it through the bp numbers. Will they, wont they . Futures are higher, this is bloomberg. Good morning, welcome to Bloomberg Markets european open. I am alongside matt miller in berlin. Good to see these markets could be inspired by the rally overnight in the u. S. Say today the market microsoft, apple, google and amazon