A lot of the focus is on oil, a lot of the focus on what we heard from bp. Lets get a data check. European stocks really fluctuating, failing to Carry Forward the momentum that we saw. Yesterday, we had a technology fueled rally, which got support from positive Economic Data and potential further stimulus. Today, things seem to be going a bit sideways. Treasuries maintaining some of the losses. You can see european stocks down some 0. 5 . Lets get straight to the bloomberg first word news. Tiktok has to sell its u. S. Arm by september 15 or close. That is according to president donald trump. He says he does not care who buys it, microsoft or another firm, as long as it is a big, secure american company. The president also says any sale would have to include a substantial payment to the u. S. Government. Victoria imposing a fine for anyone who violates isolation rules. Fines could be around 3. 5 thousand u. S. Dollars. Repeat offenders may see a penalty of around four times as much. Victoria has imposed a curfew on melbourne and a statewide lockdown. Spains former king is planning to leave the country that he ruled for almost 4 decades. He was acclaimed for guiding the nation after the death of the franco. He has faced a series of scandals and illegal and legal woes that have tarnished his image. He does not say where he will go or where his travels were taken. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Francine . Francine thank you so much. Lets kick it off with the u. S. And Federal Reserve officials are warning of the urgency of another round of fiscal aid to support the u. S. Economy. The political stalemate continues and democrats and republicans are struggling to agree on what is needed. Enhanced unemployment payments expired last month. Republicans wanted it reduced, arguing it was too generous and discouraging people from returning to work. Joining us now is john wraith from ubs. Think you so much for joining us. When you look at what treasuries are looking at, what kind of stimulus do you think they are pricing in, if any . Think, francine, one thing that is interesting if you look at the 10 year point on the curve, it is all about real yields. Real yields are at record lows. Inflation expectations are at perfectly stable levels. Investors are saying that the outlook for inflation is not the outlook for real growth. So policies that stimulate that, or at least hold the economy through the current situation, are the ones that are going to reinsure investors. I think that is why perhaps partly the fed is saying it is not about Monetary Policy, not about trying to stimulate inflationary pressures, it is about fiscal support for u. S. Consumers and businesses. That is what they are urging the government to pursue more. Francine where you see do you see the best value among fixedincome . John well, it is a difficult one because fundamentally, yields in all of these markets are arguably much lower than fundamentals suggest. That is partly driven by risk aversion, but also the programs by Central Banks to buy bonds aggressively to keep yield suppressed. It seems that with uncertainty still as elevated as it is, they are going to have to keep doing that for some considerable time to come. I think for now, yields will if we seesuppressed investor views on the outlook of picking upc massively. For now, they seem to be in a Holding Pattern of these very low levels. Francine when you look at the path to recovery, john, how difficult is it to know what kind of recovery we are going to get . Is it going to be patchy, one step forward, two steps backwards . John obviously, that is the key question in all of this, francine. We would say that we are through the first act and may be a scene playo of a big five act that nobody knows the narrative of. Some policymakers, some investors are obviously more optimistic. They are looking for more of a vshaped rebound. Others more concerned that as restrictions are eased, we will see infection rates pickup. A medical solution to the virus could be some significant way off. It is really a matter of opinion , i think, as much as trying to follow the science and the evidence. For now, those doubts are very evated. I think it is more of a matter of opinion than fact at this point. It makes forecasting very difficult and makes investor decisionmaking very difficult as well. Francine what do treasuries tell us . Or what does the fixed income space tell us about what is to come . John i think it tells us that risk aversion is alive and well. As ive said before, if you look at what real yields and Inflation Expectations are telling you in combination, it is concerns about the real growth alec more than worries about outlook more than worries about a longterm inflation or deflation. Lation expectations investors do not need to worry about Inflation Expectations becoming entrenched. As long as a risk aversion increases demand as well, then as we said, yields are likely to stay around these sorts of levels and will only start to rise materially when the concerns about the economic and Health Outlook are materially alleviated. Francine you say we should not worry about deflation. 18 months for deflation 18 months from now. Should we worry about rampant inflation . John i mean in the minds of investors into the medium term, we dont need to worry about deflation. Clearly in the shortterm, with demand hit as hard as it has been, there are clearly some very strong disinflationary forces at work and in all of the Major Economies unsurprisingly so far this year, we have seen headline inflation slowed significantly towards zero or thereabouts and most Major Economies. Clearly, it may slow further in the shortterm. This is one of the issues policymakers face if they over stimulate byerring on the side of caution and aggressive response only to find that economies have reaccelerated sooner than anticipated, then yes, there will be some inflation to deal with. To use an old cliche, that is a nice problem that they would like to have. They will err on the side of doing more of than less. John, is there a part of the world that is at risk of stimulus doing too much or do we just not know yet . John i would say we just dont know. Others may have a more informed opinions than i do. But i think certainly from everything we can see, there just is not any certainty over when how this pandemic is going significantg a influence over the global economy. And by extension, because it is everywhere, an influence over every single one of the independent National Economies as well. And as ive said before, some are more optimistic than others and some will have their own views on this. My opinion is the uncertainty remains very elevated and until we have some clarity over how and when this ends, i think markets are just going to have to keep trading in the dark to a large extent. Anna john wraith from ubs Francine John wraith from ubs stays with us. Disagreements emerge over the shape of the recovery. We will discuss that next with john wraith. This is bloomberg. Economics, finance, politics, this is bloomberg surveillance. Lets get straight to the Bloomberg Business flash. Bp has cut its dividend for the first time in a decade. It was widely expected after shall made a similar move but it was unthinkable before this year. Big oils generous payouts have long been one of the Main Attractions for investors. Bp reported a loss that was not as bad as expected. Bayer said the pandemic has hurt demand for some of its medicines, hitting outlook for the year. Its Consumer Health unit got a boost earlier this year from people stockpiling overthecounter medicines. That affect waned in the second quarter. Commerzbank has appointed hansjoerg vetter as its Supervisory Board chairman. It is a blow for its secondbiggest shareholder, cerberus, which tried to block the move. The private equity firm launched a campaign in june to change the lenders strategy. It resulted in the exit of the banks chairman and ceo. That is the Bloomberg Business flash. Francine . Francine the bank of england is set to keep its foot on the gas of ultraloose Monetary Policy when it meets this thursday, despite some disagreement over policymakers. The boe chief economist is optimistic about a quick rebound, saying that it is early days, but my reading of the is so far a vshaped recovery. Still with us is john wraith. What kind of recovery are you expecting . John probably something in between those two or three. We are not looking for a rapid, vshaped recovery for some of the obvious reasons we touched on before. Easing ofartial restrictions only for some backward steps to be taken when it emerged that the infection rate already much reaccelerates. It is hard to see how things can suddenly, dramatically improve. We do think and hope we are through the worst of the pandemic and the associated restrictions and therefore see costs for ther economy going for. As i mentioned forward. As i mentioned, we think the committee and the u. K. And elsewhere will err on the side of giving more rather than less. Also, i does that guess, safeguard any kind of brexitence, you know, of if there is a no deal come december . John that is a interesting thatn layer for the u. K. We have on our radar screen, albeit it is not front and center at the moment because of the Current Issue with the pandemic. But yes, in q3 and more particularly q4, even if the pandemic does ease off, there is this extra hurdle and uncertainty that is not specific to the u. K. , but clearly most relevant to the u. K. Our opinion is that that situation will be handled not necessarily with a comprehensive deal, but at least with arrangements to stop the worst of the possible disruptions, which benefits neither the u. K. Or european union. It does give us some additional concerns for the u. K. , for sterling, investment going into the second part of the year. Francine where do you see the most scarring in the u. K. Economy, john . Is it unemployment . Is it somewhere else . Is nott the moment, it really unemployment because of the furlough scheme. That is due to end completely in the u. K. In october, which is somewhat earlier than other economies. We have seen the first pairing of that furlough scheme paring of that furlough scheme back. The government will be looking very closely at how Companies Respond to having to pick up some of those costs again. Has a pandemic still greater influence, september and october, it is difficult to see that furlough scheme ending. We are going to see a significant spike in unemployment. In that scenario, we would expect the furlough scheme to be extended, at least in terms of headline unemployment extended. In terms of headline in unemployment, the impact of the pandemic is kept at bay. Was the coming up, it 20 minutes that broke the oil when the price of crude april. E had 37 in one group of traders made as much as 500 million. We will bring you the story next. This is bloomberg. Francine this is bloomberg surveillance. Im francine the quiet london. It was the Francine Lacqua in london. Back in april, when the coronavirus was roiling assets, the price of crude briefly hit 37 per barrel. For one group of traders, it was very profitable. 500pocketed as much as million. With liam,about this who also coauthored the story. How did they make so much money . Thats the milliondollar question really. With, at most,rm a couple of dozen traders. Pub have an office above a near liver street Liverpool Street station. Very few people had heard of them. In reporting this story, it was hard to find any information at all. Many of them used to work in the pit buying and selling oil in the old london pit. As our story today talks about, that day, they managed to place a trade which involved buying settlement price and selling it throughout the day. The price of oil that day was 37. It meant that rather than having to buy oil, they got paid on both sides of the trade. By far and away, it was the biggest ever move in oil market history by a factor several times. Therefore, their trade pocketed them half 1 billion. We are not talking about jp morgan or Goldman Sachs or glencore here. We are talking about a bunch of top traders above a pub. Francine why are the regulators interested . As you can imagine, there was a lot of scrutiny over what happened that day, not least because a lot of people lost a lot of money. Retail investors that invested in funds that track the oil contract in question lust literally billions of dollars. Lost literally billions of dollars. These guys traded in such a way that it influenced the market. There is strong reason to have a look at that. Regulators are very interested to find out whether they francine what is the fallout from all of this . Will it change the way some people operate . The fallout at this point could be literally anything. Is baked intoct hundreds of billions of contracts. There has been oil companies, there has been investors from all across the entire spectrum that have had huge losses from this. The cme, which runs the exchange, turned around the next day after the fall and said, nothing to see here, this was supply and demand, the markets behaved perfectly. If that story is accurate, that is not a Fair Assessment of happened what happened that it. There will be that day. There will be a lot of questions and a lot of people trying to get their money back. Francine i know you wrote a i know it took you more than a couple months, but a couple months ago, your great book. Are regulators just as aware of the way the markets operate now as they were in the past . It is almost like a sort of a carbon copy of the flesh crash flash crash, where you have this huge global event in Financial Markets. You have an attempt at scrutiny where regulators are saying, what happened here . Beneath it all, you have a relatively tiny player that seems to have a massively oversized impact on the market. I think it is just very telling time and time again we seem to read the stories that reveal, i think, what really goes on sometimes in Financial Markets that is not necessarily the story that first emerges or is what is told, what you hear from the regulators in the exchanges and the exchanges. Thanks for plugging the book. It is Still Available now. Francine i was going to do it. Vlliam von there liam flash crash. Of it is a great read. Coming up, we talk more about markets. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. The markets are doing. A lot of the focus is on some of the earnings out in europe. Bp cutting dividends as the virus has been hastening moves to curb the oil output that we saw there. Stocks are fluctuating in europe, failing to Carry Forward the momentum from wall street. Maintaining losses. Lets get to the first word news with laura wright. Laura Federal Reserve officials are warning another round of Fiscal Relief will be critical for the u. S. Economy. The comments come as lawmakers continue to be deadlocked over a new aid package. President trump is considering executive action to help americans hit by the pandemic. Enacting a payroll tax holiday. Expects toy says it raise nearly 950 billion in debt over the three months through september. That is on the massive spending surge to help the economy through the coronavirus crisis. Is 270 billion dollars higher than the projection in may. The finding of the think tank the new Economics Foundation says that the central bank is subsidizing industries through the pandemic rescue program. It says large amounts of money have been pumped into the industrial sector despite smaller parts of the u. K. Economy. Argentina has agreed to restructure 65 billion in debt. Of the dealnts between argentina and its creditors are still under discussion. It would mark the first step toward stabilizing a struggling economy poised for its Third Straight year of recession. In australia, victoria is imposing a fine for anyone flaunting isolation rules flouting isolation rules. Repeat offenders may see a asalty of four times as much 3500. s former king is planning to leave the country. He ruled for almost four decades. One carlos he did not say when he would leave. His or where his self exile would take him. 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, member. Francine . Francine lets focus on the battle for the worlds most valuable start company. Tiktoknt trump says operations must be sold by the 15th of september or else a must close down. The president also said the u. S. Government should receive a cut of any deal. Microsoft shares rose yesterday after you confirmed it was looking to complete a tiktok purchase by september. Joining us is richard windsor, founder of radio free mobile. Thank you for joining us. How does this end . Of two ways. Ne her microsoft can find a two quite tiktok and isolated 15, china, or by september an executive order, just like in india, and you get this user exodus abuse in favor of alternative platforms. Francine is microsoft going to come to a deal . Are there other people that will get a piece on the action . Gut, i think microsoft will acquire it, it is facing a total shutdown of its business. It is also going to be willing to sell it at a reduced price, which creates a situation for microsoft to isolated and potentially relist or sell at all. Which means other potential interested. D be the question is, can they maintain the intellectual property and the algorithm that makes tiktok such a successful app . Francine what happens with tiktok l . Who does it take market share from, if anyone . Richard basically what it is doing at the moment, if you look at what we call the digital life pie, which is how we look at the Addressable Market for users attention, tiktok sits in the instant messaging Media Consumption space. Where it will be taken if it continues to grow its engagement in the united states, it will take a bit of share from instagram, from whatsapp, from youtube, basically google and facebook, which is potentially while microsoft is quite a good choice as a destination for this asset, at least temporarily. Francine is this a deal of the decade for microsoft . Richard no, i dont think so. There have been a series of good acquisitions. Linkedin has gone very well, as well as a couple of others. What he could signify is a very healthy return on investment. Look at the scenario. Microsoft ises it, in ai already, takes a license for that really good algorithm for recommending videos that users like, and it is able to use its own inhouse expertise to migrate that, to keep it fresh, to keep it active. You isolated, that you isolate and whenu isolate it, you monetize and cash flow turns positive, think about sale or ipo and run a healthy return. Strategically, it makes no sense for microsoft to run this asset at all. Francine we have this added layer of complexity with congress and the trump administration. What is the reader cross for other deals to come . What is the read across for other deals to come . Richard this has been on the cards really ever since the pandemic began. There has been a hardening of the stops not just in the united states, but also in the u. K. , australia, new zealand, against ofna and chinese perceptions is it stealing data from citizens and so forth. If you are doing a deal with china that requires regulatory going to be is much more difficult. Onncine given where we are some of these tech giants and what we heard from amazon, what we saw from google, are they going to be also on an acquiring phase . The returns they had, especially amazon, are quite impressive. Actuallyi think you saw something from google this morning, which is it has done a deal with adt and taken a 6. 6 stake. That is kind of like a hit back at trying to get back to the Smart Home Security space. I would not be surprised if further down the road google acquired adt if things go quite well. I think youre seeing that in the time of the pandemic, life gets hard for Small Companies and that means there will be some Interesting Companies that are struggling financially that would arguably make good acquisitions for the larger guys who still have huge resources. Francine richard, think you so much. Richard windsor, founder of radio free mobile, thank you for joining us. We are getting breaking news out of the ecb. Philip blaine is saying the ecb says the overall ppp envelope is determinant of the ecb stance. He says it is unwise to draw strong conclusions from the secondquarter gdp. I dont know if it is moving euro, but it is something to keep an eye on. Coming up, diageo. The drinks maker was hit hard by the closing of bars and restaurants. That is coming up shortly, and this is bloomberg. Francine this is bloomberg surveillance. After weeks of negotiations and speculation about what would happen to argentina, it says now it has reached a credit deal with eight that deal with his creditor groups. At overall. Were i dont know if we can actually look at what has been happening to some of the bonds in argentina. But there were signs that are increasing about the argentines losing faith in the peso. And we went through chart by chart exactly to see how much pressure there was on the peso. We were looking at dollar purchases, the black market peso, but also future demand. Seconds ago, the headline coming in from argentina. Argentine extending bonds invitation deadline to august 24. We will have plenty more on argentina shortly. Here is laura wright with the Bloomberg Business flash. Laura twitter is being investigated by the federal trade commission for alleged privacy violations, another setback for the company that struggled in recent years to protect user data and account security. Is targetinge sec people with advertising. Proposed ns have one of the most extensive requirements the agency has ever required following a net and the full some the favorite role that by the federal Aviation Administration is aimed at getting the 737 max back in the air. Bp has cut its dividend for the first time in a decade, widely expected after shell made a similar move. But it was unthinkable before this year. Bp reported an adjusted loss of nearly 6. 7 billion, not as bad as expected. Sony is giving a conservative forecast for the year after reporting profit that topped estimates. The playstation 5 coming this Holiday Season has undercut existing hardware sales, but the pandemic has fueled the market for games, and bloomberg has learned the company is asking suppliers to roughly double her double the playstation 5 units. Appointed as its Supervisory Board chairman. Firm wants touity campaign in june to change the strategy, and it resulted in the exit of the Bank Chairman and the ceo. That is the Bloomberg Business flash. Francine . With the lets stick earnings season. Diageo shares are slumping after a report that missed estimates. Sales at the shareware hit hard as the pandemic led to the closure of bars and restaurants. Throughs and ecommerce and supermarket purchases failing to fill the gap. What Consumers Want most coming up to the lockdown and these conditions is meeting up with family and friends and going out to a bar or restaurant or a festival. , we human motivation believe is going to endure, and as conditions improve, we will see consumers go right back in. But what were doing in the meantime is creating the experiences at home. One of the things we have seen is cooking from scratch and baking has picked up. So we have moved right into that space on social media and digital engagement, and we have seen a very good response for market like china and into the united states, doing better. Johnny walker, theres a program called kitchen drinks, where online we look at what ingredients you have in your fridge at home and design cocktails that you can make at home because there is a huge desire to get bar quality cocktails at home. Consumption,tant they have not gone back up. We have seen per capita consumption come down for a long time. We obviously very much stand for drinking in moderation and tricking sensibly. You have seen the shift from out of home to inhome, but in markets like the u. K. , where 40 of businesses are at home, that has collapsed. The inhome consumption has picked up, but total alcohol has dropped about 20 . True that the overall populations are drinking more. You are seeing the shift from out of home to inhome, but what we are encouraged by is the trends toward premium as asian. Ization, were seeing tequila and others growing exponentially right now. Margins thatour investors have really appreciated, and i wonder if they can expect a boost in ,evenue with those big margins to really help in the second half, or in fiscal 2021. You are saying, i assume, a comeback in places like china as a precursor to what you expect in the western world, so can you tell us from that what kind of quality you expect in a Sales Recovery . At, so what were looking our last order was the weakest order because it had the biggest impact on the lockdowns around the world. We are seeing sequential improvement, even in the last quarter, monthtomonth, that improved. As we look forward the next couple of quarters, we are expecting things to get better. Each quarter, to your point in china, every week is getting better. Premises are reopening, and we are seeing consumption pick up. The same happens in the u. K. , where the things have where things have opened a few weeks ago. We are seeing steady recovery. All that is about 70 of normal. Weeks, itst couple of was 70 of normal. But we expect that to improve, and clearly it is based on the conditions of the virus and Government Policies that were all impacted. But overall, across the world, we do expect sequential improvement. Was dd azuret chief executive speaking to bloomberg this money. Nearly 6ells million of bonds, the largest Corporate Bond offering of its kind. Well have the details, plus we will talk about the latest headlines from argentina. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. About 10 minutes or so ago, we had breaking out of argentina. This is something investors have been wanting to know more on. If you look at what bonds have been doing, they had been climbing to a fivemonth high on optimism of the debt deal. This is what we know so far. Argentina says it reached a dead deal with creditor groups, a debt deal with editor groups, and we will have to keep a close eye on details and what that means Going Forward for argentina. That was the latest from argentina in the last 10 minutes. Turning to an important topic of diversity, at 22 years old, Lauren Simmons become the youngest that became the youngest woman to trade on the in 2017. Stock exchange she was also the second black woman to earn such a spot. They are going to have to be ok with putting themselves in different scenarios. Obviously how the recruiting process over years, centuries has not worked to get different type of talent, so they are going to have to go out they can find people in new york, they can find people in middle america, but they are going to have to stop with the traditional going to ivy leagues and picking from a certain demographic. With the we also spoke president of harris wealth management, who said there is far too little representation in the industry. I do think there is an opportunity for washington to embrace for wall street to embrace diversity for sure. One of the reasons why 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 to then to then be deal with the harsh 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. Francine sticking with representation on wall street, google parent alphabet has just tapped the bond market to support black entrepreneurs and other social causes. Here is dani burger. Dani this was a record bond offering in a lot of ways. 10 billion in total, and there were record low yields here for their sevenyear and 40year yields, beating out a record previously set by amazon. More notably, about half of those proceeds are specifically for esg tight bonds. That includes things like supporting small and medium businesses that are hit by covid , Environmental Issues like green housing, and importantly, supporting black entrepreneurs. Now, this is notable at google because the company has really struggled to diversify their ranks. Just 2. 6 of the leadership at google is black, and that is unchanged from last year. So google has undertaken an initiative, which theyre calling the Economic Opportunity package, and that is supported by 175 million. That includes black lid Venture Capital firms blackled Venture Capital firms, and also increasing diversity and black employees specifically, hiring them into higher ranks at the firm. Francine or generally, how popular is the gm socially back bonds . Seen these types of social bonds grow in issuance by over 370 in the first half of 2020 compared to last year. Some of that is due to the coronavirus. We are seeing more of these issuances to help you with some of the social impact due to the virus. But overall, it has already hit a record and we have not even finish the year yet, so we are just seeing more investors interested in this issue and realizing that it can get them that are returns. For example, moodys recently rating better what rating better Credit Rating wise. Francine dani burger, thank you so much, with the very latest on this important issue. You can catch more of our coverage in the latest issue of the markets magazine, a special edition that is out now taking a closer look at diversity. Bloomberg surveillance continues in the next hour. Duncan joins me in new york. Tomna has extended keene joins me in new york. Argentina has extended its deadline august 24. We will have plenty more on argentina and emerging markets. This is bloomberg. Francine ticking clock. President trump says tiktok must close its u. S. Operations by september 15 unless it is sold. He insists any sale must include a substantial payment to the u. S. Government. Bp cuts its dividend for the First Time Since the gulf oil spill, but the oil giants loss is narrower than expected. And the 20 minutes that broke the oil market, when the price of crude went negative back in april for one group of traders, a very profitable day. Good morning, everyone, and welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom keene is in new york. Discovering tiktok today, im excited to see everything you put online. Tom i almost missed the show opening. We are talking about tiktok, and i would not even be aware this. Show opening. The im looking at the cat videos and the dog videos, and about 80 of it i could not play on tv because it is not francine