Transcripts For BLOOMBERG Bloomberg Markets European Open 20240712

The cash trade is one hour away. Lets get your top headlines for you off the bloomberg terminal. Trump signsnald executive orders blocking u. S. Residents from doing business with tiktok and wechat. Shares in tencent plummet. The white house and democrats failed to strike a deal on stimulus. Trumps chief of staff says the differences are still significant as the july jobs report looms. We will speak shortly with Standard Life aberdeens deals, flows,bout and his successor. Results are crossing the wire as we speak. Annmarie, what do you see . Annmarie looks like it is a beach. Eps comes in at 7. 0 pounds. And then the first half adjusted pretax is 190 5 Million Pounds. The estimate was just under 180 so that is a beach and we will dig down deeper into these earnings when we have the ceo, next. I know you have some news coming out of berlin right now. Matt that is right. We have Industrial Production right now out of germany. Pretty backward looking because it is data from the month of june, but industrial output rising 8. 9 month over month. That is better than the estimate which was 8. 2 so we do have a neat in terms of german Industrial Production. Theou look at yearoveryear number, you see a 11 point course of the month over month number better than had been anticipated, and the yearoveryear number actually a little bit worse than had been anticipated but that data is from jim. Take a look at u. S. Futures. Yesterdays p 500 really rose up and we saw a gain to 33 point 49, the dow jones at 6, futures are back down today. 4 , whichres down is interesting because we will talk to a guest in a bit who has sold those big tech stocks. Bloomberg first word news. For that, we go to lower right in london. Laura thanks. There has been no laura wright in london. Laura thanks. There are still major sticking points and both sides are accusing the other of refusing to compromise. One key difference is the topline number. Democrats want 3. 5 trillion dollars of aid. The republicans want 1 trillion. Another round of monetary stimulus is expected from the bank of england. Policymakers yesterday said the hit from the coronavirus was shallower than initially thought about that upbeat assessment was lost on the market. An expectation for more flareups of the virus and a messy brexit. Governor Andrew Bailey says he is ready to support the economy as necessary. There is a very big downside skew. Theres a lot of hard work to be done to get the economy back to where it was. We have had quite a rapid recovery so far which is which i am not surprised about. The reason we issued the guidance in my view was to say forecasts can sometimes look beguiling we sort of straight beguilingly straightforward. It is obviously distributive one way and we will be there for ready to lean in, as it were, and support that. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Annmarie thank you so much. Laura wright in london. Donald trump has moved to ban tiktok and wechat pay are he signed an executive order prohibiting u. S. Residents from doing any business with tiktok or its chinese owner, beginning 45 days from today. He issued a similar order for wechat but it is not as expansive and does not extend to tencents wider is nice. Shares have slumped, erasing 30 billion of market value this morning. Lets get into the markets with laura cooper, our bluebird market strategist. What a friday morning to wake up to. We have the u. S. Jobs numbers coming out but it now seems that trade tensions are back in the forefront. How much do you think that this is going to weigh on the market, less so for today, but more so near term in the next few weeks and months . Laura we did see a kneejerk reaction on the back of this pair of executive orders and i think probably, it speaks markets, the aggressive nature of this. I think today is going to quickly shift back the jobs front. We are already seeing futures pervak those earlier declines, but i think really, at this stage, it is going to continue to be this tension on the back burner for markets because theres really, you know, a lack of details around what the implications could actually mean, and it could actually be quite widespread. I think it does signal the u. S. Administration is showing this preference to take hardline action. Whether the knock on implications are for u. S. Persuasivegiven the pervasive nature, will be a key source of tension. About t do you think gold had been kind of a safe haven asset. Historically, it always has been. But now, we see it rising with rocks and falling with users. What does that mean . Laura at the end of the day, it is the common denominator between that. It is what we are seeing occur in real yields. They are continuing to plumb you euros new lows in the u. S. On the back of these rising Inflation Expectations with the economic angst is that its becoming pervasive. If we look at the u. S. Economic recovery, it is showing signs of being kind of sluggish. Meanwhile, equities are being kind of propelled higher by these stimulus hopes. Of all ofting to kind these haven assets but as well, risk on assets outperforming. Annmarie i want to bring it back to tech. Technology and china has been absolutely on a tear. Tencent gets 95 of their revenue from china. Is this real pain for the company or is this just investors taking profit, given the fact that july was so hot . Laura at this stage, it is the fact that it is more talks than concrete action that will actually impact the company more negatively. I think, at this stage, because it is quite domestically inflated, it is going to continue to perform. What we are seeing today is this kneejerk reaction. I think crucially, going forward, for chinese tax, is really the implication of whether the u. S. Is actually going to tighten chinese listing regulations. This has been kind of on the back burner for some time. They have to show audit papers by 2022. But clearly, you know, that kind of is a broader risk, and i think the reaction today that we are going to see pretty much is a kneejerk reaction at this point. Matt yesterday, you had a great headline. A light stimulus breeze may be enough to spur sentiment. Do we need a little bit more wind today as it is deadline time in washington . Laura i think that is the case. When we look to the payroll print today, we are expecting to see it bounce. I think really, if we see any kind of miss on that, which is quite likely, given the significant range of estimates, it is going to create this urgent call for policy action. We would expect that, you know, that will ratchet up the pressure on policymakers to come through with some kind of stimulus plan. It is likely we will see stocks continue to trend higher on the back of that because ultimately, markets are still pricing in an eventual deal. Come through to have either extended benefits and some kind of potential payroll tax cut, but President Trump is expressing he could even pursue unilateral action. Annmarie thank you so much for joining us this friday morning. Roy cooper, bloomberg mliv macro strategist. Coming up, we will get more on what is going on in china. Chinese tech in the firing line as President Trump bands u. S. Prisons and companies from doing business with tiktok and wechat. That is coming up. This is bloomberg. Matt welcome back to bloomberg arkets european open. Right now, we are looking at futures that are slightly down but have really come back from bigger losses, and basically, certainly with the cap futures, you can say they are unchanged. Lets get the Bloomberg Business with laura wright. Laura thanks. For the time being, uber made more money than delivering food than it did from transporting people. That failed to offset a steep decline in ridership. Quarterly sales fell, ending a decade of growth. The company is maintaining its goal of turning an adjusted quarterly profit by the end of next year. Tmobile is now officially number two. Its merger with sprint helped the company overtake at t to reach over 98 million subscribers. It expects to add up to 1. 9 million new monthly customers this year. Verizon has about 119 million customers. Andosoft talks with tiktok remains focused on buying its operations in the u. S. , canada, australia, and new zealand. Sources told bloomberg the two sides have not expanded the scope of the negotiations. It comes after a Financial Times reported that the Software Giant was pursuing tiktoks entire business. That is your Bloomberg Business flash. U. K. Economy showing signs of a faster rebound than expected. Governor Andrew Bailey told Francine Lacqua that negative rates would be part of the toolbox, but at the moment, theres no plans to use them. Governor bailey further qe, further quantitative easing. Potentially use of negative rates. Francine it has not been discussed . Governor bailey we do discuss it. It is something that we have preferred to look at quantitative easing and tools in that respect. But i would make the point that we will go on looking at the toolbox. Nothing is fixed forever, but it is not in our planning at the moment. Governor bailey what would it actually take for you . Francine we have talked a lot to Central Banks who have done them. They have gone in, come out, gone in, not yet come out. Really very helpful and fascinating conversations for the work they have done. I will have two points. One, as you get into this territory, there is i think a much bigger interaction with the structure of your Financial System, particularly the structure of the Banking System. Retail deposit rate negative and i can understand why. Obviously, it means the bigger the share of retail deposits in your Banking System funding, the more attenuated the effect of negative rates. We have retail funding in the Banking System so that is one thing. The second thing, i would conclude, looking at the experience of some of the Central Banks, the effectiveness of negative rates does depend upon what point in the cycle you are using them out as well and that is an interaction with the Financial System as well. Governor bailey would you see your francine would you see yourself using negative rates in a recovery phase . Governor bailey i dont know. We are not facing that situation today. Youink it is true, when look at the experience of other they appear to have worked more effectively on the recovery phase. Qualifyould however that a bit by saying i think there is a tricky identification issue at that point as to what extent it is negative rates that are driving, for instance, the recovery of the Banking System, the lifting of the release of provisions, therefore the ability to lend, and to what extent that would have happened anyway. It is a rather tricky issue in that respect. There, but is a little hard to identify. Francine in terms of sequence, it is not something that you would rule out. It could happen at that phase. Governor bailey looks, they are in the box. I mean, there are Central Banks who are sort of not in the box. Their Financial Systems have got Different Properties and they draw different conclusions. I can understand that. They are in the box. We are not considering using them at the moment. Boe governor Andrew Bailey speaking to our very own Francine Lacqua. Coming up, dump attack and obeyed on cyclicals. That is the view around next guest and he is one of the u. K. s bestperforming Fund Managers this year. We will speak with Argonaut Capitals bearing orascom in it. This is bloomberg. Noris, next. Barry this is bloomberg. So i do think that the daily protests have really i should say solidified in peoples minds that they need to change the culture. It needs to be different. The real change will come when we change the system and the structures, and that is what they have been doing. Each year, we serve over 4000 young people, overwhelmingly black and latinx. All of us have open our eyes and said we need to make a change, and we are. The world has changed. Changes fast enough. We need to accelerate the elimination of these structural, racial imbalances, and this injustice in our system. Matt you heard several Business Leaders they are discussing how their companies are making a change by increasing diversity and inclusion. They spoke to bloomberg during our equality summit. Now i want to speak to an asset manager who has outperformed the majority of its of his peers through this crisis. Is the founder and ceo of Argonaut Capital partners to his fund is up 25 yeartodate. After dumping tech stocks in april, having gained more than 50 put that 15 during the selloff in march, he is more bullish on cyclicals than at any time since 2009. Thank you for coming on the program. It is interesting. Period of soto a much uncertainty still, the job situation is bad, incomes are falling, people are saving the money that they do have in case of continued recession or even though her depression has been thrown around. Why would you buy cyclicals, Companies Like carmakers . Barry in my experience, the only time when you buy cyclicals is for the travel back from extreme distress and normality. Obviously, you have seen a significant performance differential so far year to date between Growth Stocks and cyclical stocks. Said i was selling some of my tech stocks in april, we werehe fact that locking significant outperformance from tech versus the rest of the market, so my experience is you buy cyclicals for the travel back to some kind of normalization, that every economy now is experiencing a kind of vshaped recovery evidenced by every pmi looking suspiciously vshaped. What happens longerterm is of policyvery dependent on and understanding the truth noind coronavirus so by means is it a binary portfolio, but i think the risk is, as we go into the next couple of months, that we see, again, a like,f cyclical, if you rotation, which we saw in may and june, and i think that its probably likely to coincide with the fact that infection rates for the coronavirus in the sunbelt in the u. S. Are showing peaking, and iy think that was what derailed the cyclical trade back in may and ofe, so when those rates infection are starting to fall off quite significantly, i think that will rekindle animal spirit in the cyclical trade and that could happen in my view in the next few weeks. You say the truth about coronavirus look, i have to ask. Because we have been because we talked to you before, because we are reading about your, i know what you think, but viewers might not understand what you mean by the truth about coronavirus. You do not believe lockdown strategy employed by most of the western world was the right strategy. Barry correct. Right from the start, theres been huge amounts of misinformation. Governments have been speaking they vastly overestimated the , thetalization rate at 20 first direct error of the crisis, which was to move infected patients from hospitals into care homes. Care homes are responsible for 50 of all deaths from covid globally. That could have been avoided simply from better understanding of the hospitalization rate. It is understandable that at that stage, there was not significant widespread testing. Essentially, the government saw and the official scientists saw that the denominator in hospitalization rate was going to hospital to be tested and obviously ignored the a symptom attic infections, the population that displays some kind of natural immunity. That is how they got the statistics wrong at the very start. We moved the lockdown, which obviously, there are many studies that show infection rates have already peaked. Reallifehe experiment we had for what happened in sweden. For all its suppose it falls reported in the media, 6000 people have died from covid in sweden out of a population of 10 million. 75 of those who died were in care homes. Annmarie we have a short amount of time. We should mention the university of washington has said that we could see deaths tentatively doubling by december due to the fact of the infection rate and the trajectory in the united states. I want to quickly get back. We have a few seconds left, about your cyclical trade. Where exactly, in what sectors, are you bullish on . Areas of theclical market, which we have been most bullish on, and this is since the beginning of the second quarter, semiconductors, which have done fantastically well, which is cyclical, and beneficiary who stayed at home, and u. K. House builders, which are obviously a special area of the economy for the u. K. Government, to benefit from low Interest Rates and very low stamp duty. As we go into the rest of the year, i would be certainly looking at those areas of the market that have been beaten down the most from the coronavirus, and you know, things like maybe even travel and leisure. Matt i appreciate annmarie that was barry norris, founder of Argonaut Capital. Standard life abba dunes ceo aberdeens, next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 30 minutes away from the start of cash Equities Trading and we have seen futures now turn positive in europe. At least we do see green arrows there. Really little change, but better than the losses that we saw earlier, if you are long this market. Lets get the bloomberg first word news. Laura . President donald trump is moving to ban tiktok and wechat in the u. S. He signed executive orders barring u. S. Businesses from doing business. The order against wechat is not as expensive and does not amount to a broadband on tencent broad ban on tencent. A president ial working group on Financial Markets is strengtheng that sec regulations. The group has not determined how to enforce guidelines but the final penalty for companies that do not comply would be a delisting. There has been no headway in talks between the white house and democrats for a new virus relief package. Both sides are accusing the other of refusing to compromise. One key difference is still the top line number. The democrats want 3. 5 trillion of aid. The republicans want 1 trillion. U. K. Prime minister Boris Johnson has pledged 355 Million Pounds to help with brexit red tape in northern ireland. Repeatedly said there would not be checks on goods from Great Britain to northern ireland. The announcement of a program to pay for the paperwork confirms there will be. Madehe time being, uber more money delivering food then it did from transporting people. That failed to offset a steep decline in ridership. Andter sales felt 29 , doing a decade of growth fell 29 ending a decade of growth for the company. Another round of monetary stimulus is expected from the bank of england. The head from the coronavirus was a shallower than initially thought, but that was lost on the market. Bailey says he is ready to support the economy as necessary. That is a very big downside skew. There is a lot of hard work to be done to get the economy back to where it was. We had a quite rapid recovery so far, which i am not surprised about, as restrictions get lifted. The reason we have changed guidance is that the forecast can sometimes look but dialing straightforward. We will be there ready to lean in to support that. Laura 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. Matt thanks very much. Aberdeen has lost its title as the u. K. s largest standalone asset manager to schroeders. The firm said it saw assets iner Administration Fall the first half, which took it below schroeders for the First Time Since it was created in a 2017 merger. The loss of the top spot underscores the challenges that the firms chosen replacement for the ceo, keith skeoch, will face when he assumes the job fulltime. Lets talk to departing ceo after these numbers have dropped. Keith, actually the headline sounds bad, but you had an outflow of less than the street was anticipating and we knew that you are going to lose this big Lloyds Banking Group Account to schroeders. So it is not really shocking and it is of course also not a horse race, i am sure. But how do you react still to falling behind a place to second. Importanthink the thing is, this is about, you know, business is not about bulk, its about scale. I think when you look behind those coronavirus affected thinks, that actually i there is underlying momentum in the business. We have improving Investment Performance thanks to the magnificent efforts of our people. We were operationally very resilient. There is clear evidence in the first half of a common culture being forged. And then you add to that the strength of our Balance Sheet and the quality of our Balance Sheet, and i think what you can see is very, very strong foundations being laid three years after the merger f future growthor for future growth. It is that future growth that becomes really very important and i think a key sign of those a strong foundations is the fact that we are now ranked in 51 strategies by Institutional Investment consultants compared with 43 at the time of the merger. So i think those foundations will leave us wellplaced to, you know, meet the challenges the industry faces. Annmarie good morning from london. So as we have these lockdown measures easing, for the rest of the year, what are you seeing in terms of the recovery . Dont i agree with what i have just heard governor bailey talking, that it is unfortunately very complex. If, for, i think instance, we were to see a vaccine and we could declare victory over covid, i think you would see a very strong vshaped recovery and a very strong recovery in markets. But given the history, it suggests that these vaccines are about 40 effective. If we dont get that, i think we have a corporate sector in parts that has to delever. E need to re equitize. That suggests that the pace of recovery in the mediumterm is going to be relatively slow, and therefore, the markets look pretty fully priced. Ex aink it is going to be, vaccine, a pretty tough economic environment. People should try to think about the mediumterm, because second half and any six month period at the moment full of complexity and therefore becomes a lottery when you are trying to forecast it. Matt the visibility so difficult but medium to longer term, what does it mean to you on a macro level . All this money flooding in, both fiscal and easing Monetary Policy . Do you expect us to see a big boom in inflation . Keith no, no. I think the inflation process, you know, is a lot longer than people think. So when i started my career as an economist back in the late 1970s, inflation was in double digits and in some places around the world was touching 20 . It has taken almost 40 years to actually get inflation out of it could takend t,other 20, 30 years for tha the inflation spiral, to ignite. I have to say, in the short run, i am much more concerned about the other side of the Balance Sheet and the fact that it is going to be quite difficult, i think, to get prices moving. About dontadage see around too many corners. Annmarie i want to pick up on that point about markets being under pressure and Economic Outlook looking pretty grim without a vaccine. Goldman sachs put out a note saying that covid19 vaccine approval could upend markets. Do you think the markets are actually prepared for a vaccine coming in the next 612 months . Dont, but i think they are discounting a vshaped recovery at the moment, and thats no surprise. When you become very shortterm and data dependent, you know, we have seen as lockdowns have ended quite a strong balance from some unbelievable lows in Economic Activity coming through. I think markets have just been relatively myopic. I think they are discounting a vshaped recovery, but what i am toing is, i think for that be sustained and to reach new alltime highs, that really would require an effective vaccine that was distributed and deployed well around the world. That just seems like a very special set of circumstances in the short run. You have a pretty sour outlook, it seems, but you still want to complete a 400 Million Pound buyback in the second half. I wonder about your dividend policy, then. How much do you really want to return to shareholders, given are to many corners to see around, given that the outlook is so foggy right now . Keith i think that one of the things that we do have and one of the things when the environment is tough, you want to have a very strong Balance Sheet. We have taken action during the first half of the year to make sure that that is exactly what we have. We saw an increase that we now billion of liquid resources at the gross level and 1. 8 billion at the net level. So i think the combination of that financial strength, plus the underlying operating improvement that i talked to, that meant that the board felt they could maintain the interim p. Vidend at 7. 3 we recognize that is pretty important to a lot of shareholders, both large and small. So we had the financial wherewithal, as i say, to maintain that interim dividend. Annmarie also important to shareholders, of course, who is going to be running Standard Life aberdeen. You once joked, we are not just a keith and martin show. What should the markets expect from the new ceo . Keith i think you will have to ask him. In due course, i am sure you will. What i can tell you is, i think he is a great guy, he gets a lot of support from me. One of the big trends that we have talked about on this show in the past is, you know, the democratization of financial risk and the importance of people, you know, being financially resilient and looking after themselves and their families. That, i think, has been accelerated by covid. That is a huge area of expertise his savvyn, as is about the digital world, Something Else that is going to be important. One of the reasons i think i am looking forward with confidence is i think we are going to have, you know, a really good leader and leading a really strong executive team. I have got a team that has done a fantastic job through the first half of this year in very, very difficult circumstances. These results of today are credit, not just to me, but to all of them. Matt yes, certainly unprecedented circumstances, to say the least. Thanks so much for your time this morning. Keith skeoch there is the ceo of Standard Life aberdeen. For the fedraze does praise for the fed praise for the fed. Our interview with howard marks, who says fiscal spending helped stave off a depression, but Monetary Policy saved us as well. It could now all lead to inflation, nonetheless. This is bloomberg. Annmarie good morning. Welcome back. We are about 15 minutes from the cash equities open. Futures relatively unchanged in europe today. The focus today will be on trade and the tension between beijing and washington. France june industrial output rose 12. 7 month over month. 8. 4 , so ae was for bit better on the month. The feds unprecedented intervention at the peak of the pandemic was absolutely necessary, according to oaktree capitals howard marks. He says companies had to be supported to avoid a potential economic shutdown, even though that is giving his firm fewer distressed debt targets. Howard i believe that the injection of that kind of money, liquidity into the economy is likely to have some longterm ramifications. The most likely that is some pickup in inflation. But that doesnt mean that it was a mistake. The mere fact that you do has possiblet negative consequences does not mean it is a mistake. They had to do it. If they have not done the things they did, we would be talking about a much more serious economic event now. We might even be using the word depression and the words global depression. What we are talking about at the moment is largely a macro issue. Lets try to focus for a moment, if we could, on the credit markets. Howard, can government ever put the genie back in the bottle . Or is there now something of anl but the most unsalvageable of Zombie Companies . Howard thats a question. Whats the answer the question. Whats the answer . Howard i dont know what they are going to do next time. This time, they are providing liquidity to a lot of companies. Some of them are zombies. We use that term to define a company where the cash flow is less than the debt service or garments. In other words, cash requirements requirements. In other words, they have to borrow money to service their debt. The provision of liquidity now is keeping them alive. Another thing we say, however, is that the fed can provide liquidity, but it cannot provide solvency. Which is to say, it cannot make a Zombie Company a moneymaker. For the time being, these companies would not have survived were it not for fed and treasury action . Howard many of them, yes, yes. A great example is the airlines, you know. The airlines have tremendous ongoing costs every day, whether they are flying or not. Planes and have them go through a long time when they are not flying or when they are underpopulated, many of them would have gone under. Them innt grants kept business. Do you think that we have crossed the line into state capitalism . Howard well, state capitalism, we have not passed the line into government ownership of businesses, but clearly there is an unwillingness to let companies go. Unwillingness to let the chips fall just anywhere. Sinceou know, this period march has been a period where the government has been providing revenues and incomes to people and incomes to people in businesses that they otherwise would not have had that they need. Without those, there would have been very serious consequences. But there is a necessary quality to free markets that has been staved off for the time being. At what point is it right look, every Credit Investor is wrestling with this, because you have to make decisions accordingly about how you think you are going to generate a return. It is fundamental in this equation. At what point does that need to start happening . Howard well, look, we use the term creative destruction, which is to say that companies that are unsuccessful should perish. Societal resources keeping Unsuccessful Companies in business, then there are other parts of the population or the economy we cannot do as much for. Howard marks, oaktree capitals cochairmen and cofounder, speaking with erik schatzker. We take a look at stocks to watch, including right move. The property website sees revenues slump in the first half as lockdowns hurt real estate sales. Thats next. This is bloomberg. All right, less than 10 minutes away from the market open. Dani burger, what do you got . Dani starting us off withrightmove start off with e, which saw first half revenues slump. They may need to wait a while until cities come back to their total fruition. I spoke with simon marks, the head of research at lasalle investment management, who said the role of the Central Business district will take a wild to be restored. Take a listen. Vaccination. E s will hard to cbd return. They will lag behind smaller cities where you can walk, psycho, and drive. Dani he did say that after we get a vaccination, there is a chance, i high likelihood that the cities come back. Matt . Matt thanks very much. Dani burger there. Coming up, it is the market open. We are looking at futures that are currently, well, getting back to unchanged levels. They had been down far further earlier, and now we see dax futures unchanged, ftse and cac futures unchanged as well. It does not look like it will be such a risk off day after we got u. S. Stocks rising back to their best levels of the year yesterday and then some. The s p 500 is up more than 3 year to date. Annmarie it is going to be a very long day, given the fact that we still do not have a deal out of d. C. The deadline was last week. On top of that, we have a jobs report where if you look at the forecast, they are all over the map. It does not seem like anybody knows where this u. S. Labor market is going. The European Market open is next. European futures relatively unchanged. Lets see how they open right here from the city of london. This is bloomberg. Good morning. We are one minute away from the opening. Tech under attack. President trump signs as i couldve orders blocking u. S. Residents from doing business with tiktok and wechat. Deal or no deal. No deal at the moment. The president s chief of staff says the differences are significant in stimulus measures. And no longer number one. Aberdeen earnings Beat Estimates as the firm loses its title as the largest asset manager to schroeders. Futures looking relatively unchanged. Lets see how these markets open. Matt absolutely, although we did see futures down more earlier, and we saw asian markets all overnight fall overnight as well. The mood is very risk off. Maybe it turns around now on hopes for a better jobs number than the market is anticipating, and some stimulus out of washington. We see equity indexes starting to open up. You will see the lefthand column populate as these equity indexes open up live. When there is little change, the block stays gray. It needs to move more to turn red or green. I think we will see a lot of gray across the lefthand column today, although the ibex goes down half a percent. The ftse opens up with very little change. The cac opens a quarter of 1 down this morning. Are not movingy much, they definitely seem to have a direction, and that is to the downside. Stocks in asia dropped as u. S. China tensions escalated. President trump has signed executive orders banning u. S. Residents from doing business tiktok i apps always say tictac like it is a snack with one calorie tiktok and wechat. The move knocked tencent down. Two othersnd africa, are also sliding. They hold shares. They are the proxy for tencent. In action goes into effect 45 days, but marks a significant escalation in tensions with beijing. Ouring us to discuss is guest. Investorse question are asking a little bit longer term is are we in eight u. S. China cold war . Is this one more move that takes thiseper into conflict . Course it could well be, and the protagonist clearly throughout this series of escalations. If he has no third election to fight and the rains off, while markets may cheer the reregulation in some areas, that one warina silic will be in the forefront of investors minds and way in the relevant parts of the market. Is counter argument to that that trump is not the favorite to be returned to the white house because it is not necessarily the route he would choose to take to get himself back into the white house either. Annmarie what about this trade meeting on august 15 . Could that ease some of these tensions . Guest yes, it could. Apparent thatem you can get an immediate turnaround. But when you are doing covert negotiations with such bold steps, it is hard to take a dramatic uturn so soon after, and i dont think china is going to offer the concessions that trump would need to step down from his current position. If therebe a surprise were sufficient ground to put an u. S. Chinaampen trade consensus at this moment. In the case of worsening relationships between the worlds two most important economies and coronavirus news, this looks bad every time you check. Is saying carrie lam the situation in hong kong remains severe. But it looks severe in a lot of really important places. Why have markets continued to rally . Yesterday, we got a new high in the s p 500 at 3349. Global stocks have turned positive for the year. Why this bullishness in risk assets amidst such bad news . Guest you are right, it is likely that string of news, the collection of news, could weigh on sentiment and bring about volatility. But if we are thinking fundamentally about how we value shares, we look not just to this intos earnings, but well the future for the potential cash flows. Thaturse, there are some have been structurally impaired, and other big parts of the market where their market share and their dominance and consumers lives have been elevated. It is not certain the earnings outlook well into the future for the broad market has been undermined by these issues. The other issue is how are we going to value those future earnings today . You typically do that using discount rates, real rates, the various measures. Of course, they have fallen dramatically, which elevates the value of those future cash flows today. Markets are behaving quite rationally, but it does not remove the risk of shortterm volatility for these very serious issues you raised leaking into investor sentiment. Annmarie also, investors care about dividends. We have seen a lot of dividends cut. That weighing on sentiment in your view for earnings . Domestic my own market, it has weighed heavily on sentiment. The ftse 100 typically a big dividend payer, a big concentration where you get the biggest concentration of dividends from. We have seen pretty big dividend cuts in terms of the delivery of dividends. That is a pretty big number, 41 . I dont think it is too heroic to suggest that perhaps we have reached the base in dividend could look at forecasts with more confidence they are going to receive those. Maybe that flaw represents a chance to perform better relatively than they have done to date. Matt ben, we are going to keep you with us. Ben stays with us on what is a pretty important day for the u. S. Economy. President donald trump could take executive action if a new stimulus deal is not reached. That is one thing we are going to be watching. Then the granddaddy of all Economic Statistics comes out, the nonfarm payrolls number in washington later on. We will discuss. This is bloomberg. Welcome back to the european open. You can see red arrows across the screen. Relatively flat. The jobs number out of the u. S. Will be critical today, and all these trade tensions impacting the market. Lets get more with the Bloomberg Business flash with laura wright. Laura for the time being, over may terminate delivering food that offsets a steep decline in ridership. Of growth forcade the ridehailing giant. But the company is maintaining its goal of turning a profit by the end of next year. Tmobile is officially number two. Its merger with sprint helped the company overcome at t to reach 98 million subscribers. It expects to add up to 1. 9 million new monthly customers this year. Aberdeen has lost its title as the uks largest standalone asset manager. It fell to around 410 billion pounds in the first half of the year, which takes it below schroeders. That is your Bloomberg Business flash. Wright with your business flash out of london. President donald trump says he will take executive action if the deal on new stimulus is not jobsed today as the july report looms. Economists have warned further delays could exacerbate the spike in americans leaving the labor force and slow the recovery. Our guest is with us. About thist ask you stimulus. Do you think the dems and republicans come to an agreement, or do you think President Trump comes out with a satisfying executive order . Base caseuess my would be that we get an agreement between the democrats and the republicans. Is classic negotiation strategy to take it to the 12th, 11th, past 12th hour, to seem you are fighting as hard as you can. If a deal is not done, you could get the trump executive order. I think there could be an extension that allows congress to negotiate for a little bit longer. These things can inject volatility in the markets, but how it comes is up for debate. I am fairly certain it will come. Annmarie a lot of people would say we are not even at the 11th or 12th hour. Im of these measures six some of these measures expired last week. We dont know what is going to happen just yet. You are hopeful, which is good. But i want to watch the jobs number. That is the number we will be looking at today. If you look at payrolls, the estimates are so wideranging. We have a low estimate of 6000 jobs, while the highest is to add 3. 2 million. Where do you see the u. S. A premarket going . Where do you see the u. S. Labor market going . Variation style of and expectations is a reflection of the noise that is in all the underlying surveys, whether it is the homebased survey, the employment surveys. There is a lot of conflicting data out there. The general trend, whether it reveals itself in this number or next, is that job creation of aowing in the face rising number of covid cases, particularly in those southern the clear trend we are seeing is that job creation is slowing, and perhaps the fed cannot get in a more dovish, but it can cement its orientation and should be pushing congress to get over the line with this stimulus deal. Annmarie on this range, where do you stand . How many jobs do you think will be added to the u. S. Labor market today . Sorry, i would not want to commit to a number. It could be 4 million. That highest number of 3. 2, it could still get past that. It could be a 4 million number or it could be a negative number. What i expect is the markets will trade on the nose if we get a better than expected rally, but it would fade after that. Likewise, if you get a weaker fundamentalpect investments to return after. We do get anxious about this big number. Not trying to downplay it in contribution to trends, but the single day and single reaction is not something we apply. Are on a if you bloomberg terminal client, it is 1. 1 million. I guess we will have to wait for clarity. Ben, thank you so much for joining us. He will be continuing the conversation with matt miller on Bloomberg Radio at 9 00 a. M. U. K. Time. Chinese tech in the firing line as President Trump bans u. S. Residents and companies from doing business with tiktok and wechat. We bring you the latest. This is bloomberg. Annmarie welcome back to the european open. Relatively flat across the ftse and dax, but the cac under pressure. Here in london, the bank of england says it will not tighten policy anytime soon despite the economy showing signs of a faster rebound and initially expected. Governor Andrew Bailey called Francine Lacqua negative rates will be part of the banks toolbox, but there are no plans to take them out yet. For the quantitative easing, potentially we have use of negative rates and forward guidance. Francine so control has not been discussed . Guest it is quite interestingly discussed. We do discuss it. Preferred to look at quantitative easing as tools in that respect. But i would make the point that we will go on looking at the toolbox. Nothing is fixed and forever. Francine what would it take for you to go into negative rates . Guest we talked to a lot of Central Banks that have done them. I draw two points. Thisas you get into territory, there is a much bigger interaction with the structure of your Financial System, particularly your Banking System. Is expecting retail rates to be negative, and i understand why. It means the bigger the share of retail deposits in banking funding the more it affects negative rates. We have quite a high share of retail funding in the Banking System, so that is one thing. The second thing i would conclude looking at the experience of others Central Banks is the effectiveness depends upon what point of the cycle you are easing. Yourself would you see using negative rights post covid, in the recovery phase, to help the economy . Guest we are not facing that situation today. That when youtrue look at the experience of other appear to but they have worked more effectively in the recovery phase. , qualify thater by saying there is a tricky identification issue at that point as to what extent it is negative rates driving the recovery of the Banking System, the release of provisions, and the ability to lend, and to what extent that would have happened anyway because it is a rather tricky issue. The evidence is there, but it is hard to identify the causes. Francine in terms of sequence, it is not something you would roll out, but it could happen at that phase . Guest the message we have today is they are in the box. There are other Central Banks where it is not in the box because their Financial Systems are different and they draw different conclusions. They are in the box. We are not considering using them at the moment. That was the boe governor Andrew Bailey speaking to bloombergs Francine Lacqua. President trump has signed executive orders banning u. S. Residents from doing business with the chinese owned apps tiktok and we chat. In action goes into effect 45 days and marks a significant escalation in tensions with beijing. For more, Jodi Schneider in hong kong joins us. First off, walk us through the executive orders. What exactly do they say, what did they do . Jodi basically, they threaten penalties on any u. S. Resident or company that would conduct transactions with tiktok, wechat , or their owners after these orders take effect in 45 days. The measure against wechat blocks all transactions in the app, but it does not amount to a wider ban on tencent, according to u. S. Officials. The order against tiktok blocks butowners and subsidiaries, that is a bit broader. Both of these come with President Trumps push with the sale of tiktok to an American Company and comes the day after secretary of state mike pompeo urged businesses to remove these apps from their stores. Not entirely a surprise they did this, but banning but i but banning by executor border is an escalation. Annmarie what does this mean for tiktok . How does this affect their talks with microsoft . Jodi it seems President Trump is saying, if you want to do this deal, you better do this soon because these executive orders take effect 45 days from now. They have cited this National Security concern about leaving personal data exposed. There are talks between microsoft that are still going on. There are a lot of hurdles. That is a pretty quick timeframe to get something done that would satisfy the u. S. Side of things. But apparently the talks are and president g trump is trying to fuel the talks by saying they have to be done within a certain amount of time. Matt quickly on Something Else, annmarie is on the commodities beat. She pointed out that we could see new tariffs on aluminum from canada, even though the u. S. And canada, along with mexico, just signed this free trade agreement. Is that starting to unravel as well . Jodi it looks like it could. That is really interesting because there was a deal that was signed. You would think once that was signed they are in good shape to remain terror free. But the u. S. Is starting to make noises this could happen, and President Trump loves to threaten tariffs. He doesnt always follow through on them or removes them after a certain period of time, but that could certainly be in the offering. Annmarie thanks so. Much for joining us. Geopolitical tensions across to beijing, and potentially what is going on with ottawa. Jodi schneider, thank you. Coming up, rise of the social. As protests have swept the globe, we see the s rise in esg, and we have seen stocks outperform. Stay with us. This is bloomberg. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. He scores stanley cup champions touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Welcome back to Bloomberg Markets. This is the european open. Lets take a look at the broader index, the stoxx 600, and see how it has fared through the first half hour of trading. A little bit of a dip, then back to unchanged right now. If you take a look at the grr screen on the bloomberg terminal, you can see the group ranked returns. Best as are doing the well as industrial goods and services. Eutsche telekom up by 2. 3 vodafone up 3 . It is heavy as well. Those are two of the big gainers. Auto parts are doing poorly today. We do see companies that make auto parts among the top 10 processere, as well as one of the biggest losers. It holds stake in tencent. Unrelated to cyclicals, but definitely part of the top news as far as what is going on with the u. S. And china. Lets get the first word news from laura wright in london. Laura President Donald Trump is moving to ban tiktok and wechat in the u. S. He signed executor borders barring u. S. Residents from doing business with the app. It also applies to actions involving tiktok owner bytedance. Are also hopes for a speedy economic recovery in germany. The rebound in manufacturing is starting to catch up. Output gains nearly 9 in june follows from figures yesterday that showed factory demand is rising. Suggestseurope it europes economy may bounceback faster than expected. The move reflects a boost in china, butm mainland the offer has been complicated by politics. There are concerns the testing could result in dna being taken to the mainland. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thanks so much. Reliable, the once dividend stocks like bp and glencore slashed their figures. The universe of income options is shrinking. It hit Pension Funds and other investors who rely on the regular source of income. Here with the details is dani burger. Dani there is no doubt that pensions have been battered by the slashing of dividends across europe because of the coronavirus. If you look into the details, we can see the biggest dividend cuts have come from the travel and leisure sector. But some of the other sectors that have to medically cut for the year are ones that Dividend Income investors have relied on. You mentioned bp. Bp was one of the stocks that a lot of people invested in because of its income property. In the ftse 100, it was the biggest source of payouts. Regulation also said not to seek payouts. Opportunities for investors. Before entering the latest earnings season, just 20 firms were expected to generate 74 of the ftse 100s total payout. This has thrown into question the attractiveness of these income funds. It has been cut basically by a third. They were about half the level they were three years ago. A lot of this is driven by dividends being cut across the board. Matt the question that is keeping bond managers up at night is what options do they have left for income . Are basically forced out on the risk spectrum . Dani that is certainly one option. If you are thinking i need to have that steady level of income. But a lot of Pension Managers have recommended that you need to accept this temporary cut to income. If you want to achieve your longerterm goals, it means you need to have your portfolio diversified, hopefully after the virus when we get a vaccine and things returned to normal. Look at the sovereign bond yields. The stoxx 600 yields. Is still higher it is more attractive than a german 10 year yield. This means that investors need to dig deeper into perhaps more risky assets if they do want to hold onto that income matt thanks very much. Dani burger on the returns story that many of us are giving thought. We want to turn to Something Else that is taking a big piece of the zeitgeist. That is esg investing. The s has risen in prominence in the last few months. According to bloomberg and msci data, European Companies with the highest esg rankings, and in particular social rankings, outshine the broader market. Following on the push to get more women on company boards, investors want to see greater Ethnic Diversity as well, and companies have pledged to do better after antiracism protests spread across the globe. What steps can they actually take . Joins us now. About the performance of social investing, the s in esg, so far this year. Having me. Ks for esg indices have outperform for the second straight year, but particularly well during this crisis. Year,e first time in the they have been meeting their benchmark. Factory driven by exposure, highquality stocks. They have positioning that was a natural fit. But also, the rise of big tech. Companies that have taken into account were able to adapt quickly to this new environment. They were able to outperform the market. This is what has been happening on the s performance. Annmarie this pandemic has put the world upside down, fundamentally changing how we think, behave, consume. But what does this mean for investors . We saw the pandemic and the black lives matter movement. Now investors must be prepared to ask questions. There are two thigns. First, it is critical to look at how companies responded to covid. Webloomberg intelligence, designed the tracker looking at community engagement, and operation agility. Companies that were able to reinvent themselves in order to make a new context and satisfy your needs. They have repurposed facilities to purchase protective equipment , including masks or hospital grounds. General electric has repurposed their operations to produce respirators. Delta airlines, a company you would never expect, has done because leverage was killed in terms of scheduling to deliver Logistical Support hospitals, to work with the production lines, to produce face shields and masks. These companies we have identified. The second thing investors need to look at is how companies have how they haveity, responded to the black lives toter movement and we seek expand diversity measures. Is significant data to look at. You cannot manage what you will not measure. It is interesting here in germany because you cannot really collect racial or ethnic data as you can in the rest of europe. But how do companies that have access to that data measure it . True. This is absolutely racial disclosure is not treated the same way globally, and some countries might consider it unethical. However, we expect this trend to and to introduce diversity disclosure in their voting priorities next year and push for more data. But as you say, there is probably a broader set of measures that need to be inequality,o tackle and diversity and element in terms of retention along the corporate ladder. There has been challenges there, including for different types of diversity, and the one that is the most revealing where we have numbers is gender diversity. Annmarie thanks so much for joining us this morning. A really important story that we will be watching out for where we see these metrics and data going. Coming up, how a small dna Testing Company went from analyzing consumer genetics to becoming a major part of the u. K. s effort to combat the coronavirus. We speak to our guest next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. We are looking at a drop on the cac, but little change on the ftse and the dax. Lets get your Bloomberg Business flash. For that, we go to laura wright. Laura the time being, huber made more money delivering food than from transporting people. Sales fell 29 , ending a decade of growth for the ridehailing giant. But the company is maintaining its goals of an adjusted quarterly profit for next year. Microsofts talks with tiktok fo remains focused on buying operations. Sources say they have not expanded the scope of negotiations. That comes after a Financial Times reported that the financial giant was pursuing the entire business. Aberdeen has lost its title as u. K. s largest standalone asset manager. This takes it below schroeders. That is your Bloomberg Business flash. A small dna Testing Company that months ago was trying to get its in consumer its footing in consumer genetics is working to make hospital safer. Offer for 5000n machines to test patients for the coronavirus at hundreds of nhs hospitals and delivers results in 90 minutes, and could also identify the flu and other viruses. Joining us is the dna nudge founder and Imperial College london professor. Thank you for joining us this morning. Testing has become a sensitive situation in the u. K. Thousands of tests ordered last spring turned out to be flawed. How well does your machine hold up under scrutiny . Advantagesof the key , it was almost a solution before the corona problem existed. I have always been keen on bringing standard genetics into the Consumer World. For years, we have been looking demystifying the whole field of Early Detection and prevention, and we invented a cartridge. This cartridge has an entire laboratory inside. This has been working in the field of genetics, looking at things like risks for diabetes, risks for hypertension, cholesterol. Things that are nutrition related, which we also know is epidemic. When it came to repurposed thing it for covid, it was almost effortless because it was so simple compared to what we had done before. Before, it was looking for genetic errors. Where it came to looking at the rna of the virus, it was almost binary. You either got it or you havent. We were able to miniaturize all the chemistry, all the Detection Technologies so you could go directly from the swab to a cartridge like this, so it is very accurate. It looks fantastic, i have to say. We are all impressed by the size of it, and who doesnt love gadgets . When i hear those three numbers, antennasason bourne start to shoot up and i worry about governments having too much information on me. What if i need to get off the grid someday . Especially here in germany, where people are so privacy oriented. How do you get around those privacy concerns . Guest absolutely, and this is one of the reasons we brought the lab to the cartridge rather than sending your swab to a lab. The traditional method is you take a swab, you send it off to a laboratory. You dont know what is happening to your dna. Companies that could be selling your dna. They could be looking for information, whereas with this technology, you do the swabbing, it goes straight to the cartridge. The cartridge then well analyze your dna. Effectively, it is all done in laboratoryere is no and your dna is disposed of. There is no genetic material. Sent to thing that gets a consumer in the retail world or the hospital now for the coronavirus test is your result. It is the results of the Genetic Information we have bought, not the Genetic Information. That is the key differentiator others. Ours and we are not looking at dna in the viral world, we are looking at rna, which is very different. Annmarie thank you for showing us exactly how this device works. Given how tiny it is, it is not as cumbersome as many people would expect. Could you see this rolling out in more than hospitals . Could this be a feature of businesses or airports . Isst the use case of this decentralization. It has taken Something Like the coronavirus to bulldoze the Health Care System so that things dont always have to be operated in central labs. Tech like this is so important so you can get the results as fast as you possibly can. You can go to spoke areas, not just big wards. You can go into care homes, you can go into schools. Even schoolteachers can operate the device. You can see how simple it is. There is nothing complicated about it. It can eventually go into emergency services, then the Consumer World. Think the utility of the technology and the fact that you have no white coats or big laboratory equipment, because we have miniaturized it all, makes it perfect for that sort of direct consumer application. Matt it makes a lot of sense. I was thinking about flying to spain in a couple weeks. Not sure if i want to because the Health Minister here has said anyone who comes back from their has to take a mandatory test. This would make it so much more convenient. Have you got enough funding to scale up . It seems like you could scale way up with Something Like this right now. Guest as you mentioned at the were a Consumer Technology business trying to bring genetics to the Consumer World with diet and urging people to eat that are based on their dna. That has been going quite well. Money, we established a business. Now, we are effectively trying to scale innovation at the speed of light. Thise confronted with bulldozer of a business, which we have got to manage. It is almost that we bulldozed the Health Care System with something that was unusual for them. Up. We are mocking it will take us to a point where we can get some very early revenues. Obviously, we are selling to the nhs. It is not a big moneymaking exercise, but the private sector is queuing up as a result of the publicity we have been getting. That is where we can start making margins, so the investments should hopefully come quite naturally as we Start Building up into the private sector. Matt thanks so much for spending time with us this morning. Very fascinating device at a time when Something Like that is surely needed. Dnanudge founder and professor at the Imperial College london. Next, gold boasts several qualities that enhances its a lower. Enhances its allure. Why our reporter thinks we need to add one more to the list. This is bloomberg. Matt welcome back to the european open. We are almost an hour into the session and looking at little change, with the exception of have a drop in tariffs. Qualities. Several it is shiny, hedge against inflation. Our reporter thinks we ought to add one more to the list. He joins us to tell us what it is. That one missing ingredient that has not been added to the list so far is complexity, which is a second order derivative. It is a fancy way of saying gold has more upside when real rates stumble and less of a downside when real rates go up. In relation to longterm real rates in the u. S. , and that is what this study shows. What are the implications of the study . It shows that gold can be 2500 announced. If real rates stumble from current levels. On the other hand, gold will only fall to 1700 announced if rates go up by one percentage point. Annmarie we are going to have to leave it there. Ram, catch his column today. That is it for the european open. Anna edwards is back next week. Thank you for having me these last two weeks. Stay with bloomberg television. This is bloomberg. Francine President Donald Trump signs executive orders blocking u. S. Residents from doing business with tiktok and wechat. Shares in tencent plummet. No deal. The white house and democrats failed to agree on a stimulus. The president s chief of staff says the are still significant. Job figures are out later. Good morning, everyone, and welcome to bloomberg surveillance. Im Francine Lacqua here in london. This is what the markets are doing. We are