General becomes the first african megan woman on the ticket. As it trump calls her the meanest u. S. Senator. Activity in the Second Quarter dropping to levels last seen in 2003. Manas 703 million euros, the loan loss provision, thats a beat on what the market had presumed at 837. ,e talked to a number of ceos to exit all nine european Corporate Banking operations. The bank will focus on the netherlands and northwest europe. So the provision story will be the ouster of the financials and the narrative is hunker and focus at home. Absolutely, and in the past we have spoken with the ceo or the cfo on the show and ask a lot of questions on the dividend. Perhaps that will come up today as well. Abn Corporate Investment banking to discontinue trade and Commodity Finance activity. Interesting times in markets right now. Weve had a quite time in yields and suddenly that jumped up yesterday with 10 year yields. Manus absolutely, that spiked and shifted the curve. The other narrative we need to touch on is please, sir, can i have some more . Rbnz did, when steven major uses that phrase, in other words, what the rbnz and the rba does come and they did plenty today. They complained about the strength, they added qe of the said that by foreign actors, thats the benchmark and rewrites the narrative for Central Banks globally. Thats a proposition i put to you this morning. Good morning. Nejra exactly, increasing qe talk of negative rates has move the kiwi, its the worst performing gtech currency against the dollar. You can see the kiwi there on the first market board, but also i want to highlight whats happening in gold, collapsing below 1900 an ounce after the biggest drop in seven years yesterday. Consensus seems to be saying it was that jumping real yields which actually was led by what we saw in the tenure, jumping six basis points, the most since june, partly on Economic Optimism but also in anticipation of record supply coming through this week. He talked about the curve steepening, we certainly saw that as well. In terms of what happened in the equity markets, were seeing some red on the screen in asia today. Yesterday was how the s p 500 snapped a seven day winning streak, the longest since 2017. What is been really interesting is weve seen money move out of the tech sector, basically those stayathome stocks still in the russell 2000. Thats what is going on below the surface which talks about the quality of the risk on or risk off in equity markets. European futures firmly in negative territory or u. S. Futures are flat and perhaps the u. S. European market will play catchup over that concern on the stimulus stagnation and impasse. Is,s the other question the asymmetric risk. Growing fears of stimulus and the impact of washington could drag on for weeks with no end in sight. Thats the concern in the market. The key protagonist there you can see, nancy pelosi on your screen, and the key figures in negotiations, they dont have any talk schedule. The white House Democrats the white house and the democrats are still far apart on key of thesuch as the size relief package. The Senate Majority leader Mitch Mcconnell told fox news that the talks are at a stalemate and that some traders are citing those comment as the catalyst for decline. The s p 500 fell for the first time in eight trading sessions this morning. Its a mixed picture for stocks, as you have been saying. Modernaeanwhile, reached a deal with the Trump Administration to supply 100 moving notions doses of its vaccine. Great to have you with us, thank you so much for joining. Its interesting, because we did see some risk off coming into the market in yesterdays session in the u. S. I want to know what is been happening below the surface in terms of the rotation away from the tech, stayathome stocks and into the more cyclical value sectors and small caps as well. What do you make of what is going on below the surface in markets as opposed to the headline move in the s p 500, which seems to be shaken after seven days of not being shaken by this impasse in stimulus talks. Seeing in what we are markets just reiterates the idea , the framework to look at the crisis and how to manage money as opposed to reacting to the headlines, as you pointed out, its only yesterday that were seeing a reaction in markets. Underlyingn some trends in terms of the dollar, in terms of yields, and risking a shift little by little away benefitse assets which from a strong dollar, which benefit from negative real yields into other types of stocks and acquisitions, perhaps a little bit more cyclical. Sorry, go ahead. Finish your thought. In terms of our own positioning, we think the second half of the year is likely to be a little bit more shocking than the last few months, so we think that its a good idea to have a balanced approach in terms of sector and have some cyclicals , we we Like Health Care like utilities, which is expenses and industrials. The would be are picked for cyclical sector. Manus there were a whole number of things that came to play yesterday. One of them was the repricing of 30 year paper in the car. We saw the curve steepen ever so slightly. I want to get a sense from you, at the back of it, you had the ppi and you had supply. Is this a fresh reminder of what an asymmetric move might look like in the bond market . Heels had reached a very low level, and you have to say that economic numbers over the last two days have been slightly more positive. We are seeing the second wave which impacted the economy in the u. S. Having less of an impact and Economic Indicators improving their a little bit. Were seeing relatively good pmi andin europe, with the European Commission number suggesting that the mentor him over the last few months of the Second Quarter is being continued into the first months of the third quarter. Relatively good numbers from china. It seems to be in the short term a slightly better tilt toward in terms of how we get out of the recession, we think that after an initial bounce, it will be quite a while before we go back to precrisis levels. We dont expect that in the u. S. 2022 and we dont expect to go back to full potential for the economy until probably 2024. So quite a long time to go back, less long than it took us after the great financial crisis. It was more than nine years to go back, but certainly quite a long ride back up. Much. Thank you very stay with us, we have much more on the markets to get to. Democratic president ial candidate joe biden has picked center Kamala Harris as his running mate. She becomes the first lap woman and first asianamerican on a major party ticket. Harris is known as an aggressive campaigner. She has a legal background as District Attorney of San Francisco and then California Attorney general. The u. S. Is risking a crisis at the yuan over iran sanctions. The restrictions were eased under the nuclear deal that President Donald Trump quit more than two years ago. Russia and china have threatened to veto the proposal. U. S. Allies germany and france may even fight against it. s,er last weeks explosion sending rain to lebanon to avert a crisis. Enough to suit fly the nation for threemonth. The blast on august 4 for through major grain silos in the capital, leaving the country with only six weeks of flour. 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. Manus laura, thank you very much. Harris, theooses, former California Attorney general. Shes the first black woman and first major american on a major party residential ticket. We discuss that next. This is bloomberg. Nejra this is bloomberg daybreak europe. In dubai. Ny is joe biden has picked senator Kamala Harris to be his running mate. Shes the first black woman and first asianamerican on a major Party President ial ticket. Had long been considered a front runner for the number two slot payment lets get the. Atest live from d. C. John, great to have you with us. What does she bring to the democratic president ial ticket . John as you point out, first of in this one decision, joe biden made history, by putting a female of African American that, there is a contrast here. I think for the campaign a useful one. She is a generation younger than biden, at 55. She grew up in california, a child of immigrants. He of course was of a middleclass background, his family had struggles in pennsylvania and later moved to delaware. Politician,soned having run statewide campaigns in california, first as attorney general and then senator. And she quickly rose to prominence in washington. This is only her first term. Manus good morning to you, john. Capacitya private donated twice to her campaign 6,000 in 2011 and 2013. His morning he was going after her hard, choosing some very interesting words. What is the drawback with this lady . Comes he came to prominence not as a legislator but as a prosecutor, and for a long time, her trademark was being tough on crime. Occurslly, this moment as there is great scrutiny of of law enforcement, police and prosecutors. Ignoringeen accused of appeals from people who turned out to be wrongly convicted in california, and shes going to have to address that with progressives in the democratic soty, who may not be , where ino someone the past with a tough on crime candidate. A formidable pairing there. John, thank you very much staying up late for us. You are underweight the u. S. And you cite two very important things. One of thems election risk. Moves use these momentous as we hit record after record, as an opportunity to reduce risk and increase cash . Underweight,gh the and what do you do in that context . Our underweight in the u. S. Is due to valuation levels which of theen high, and a lot news is discounted in the price. Shortterm, things can be a little a little bit more choppy. In terms of betterthanexpected earnings, in terms of the risk package in europe and in the u. S. Is already being discounted. We just think it is prudent to be a little more cautious. Were watching a number of things, including infection levels particularly in september. Were looking at vaccines and were looking at the u. S. Elections. Its the number one concern in a survey of our traditional investors. It is not surprising because we have both the recession and a pandemic. We remind investors is very important to remind our clients policy, the reserve Business Cycle in the long term is a lot more important to determine the direction of Financial Markets then elections themselves. About thewere talking recent rebound in treasury yields earlier. Stephen england at Standard Chartered said the rebound is mirroring increased investor optimism that the coronavirus will be contained, and the moving yield has been closely tracking a basket of covid19 sensitive equity since february. Do you expect investors to shift from that sentiment to u. S. Election concerns, and if they do, what bears the brunt of that . Is the equity market in the u. S. , or is it the dollar . The dollar is already being impacted. Dynamics,ig change in sentiment can change very quickly. Thatan have optimism now things are being contained and suddenly you have trends in the infectionts, levels are reducing. They are increasing slightly in Continental Europe from the low levels. Very things can change we guard against taking a position solely based on your views of the infection levels and how they may change over time. Our guest stays with us. Coming up, preparing for ofative rates, the return the virus threatens new zealands economic recovery. This is bloomberg. Manus this is daybreak europe. I manus cranny into by. The central bank has expanded its qe program. It signals its opening rates further including taking them negative. Policymakers have increase or Purchase Program i 65 billion and will be expanded up to 2022 read the country tackles its first Virus Outbreak in more than three months. Juliette saly has been tracking the Market Movement from singapore. We saw a rush of blood to the downside in the kiwi. How does it stand now . Youve had time to think about it. What is the reflection. Good morning. Juliette the kiwi Still Holding at a onemonth low. The key was the active preparation, very much a changing tide from what we heard from the governor before, who has kind of resisted going down the path of negative rates, but as you say, theyve increased their bond Purchase Program as well, much more than was expected. Assets, saying the surprise here is not just the increase in qe, but its clear dovish tilt youre getting from the central bank pushing the kiwi lower. Thats what we have seen along with a move lower in yields as well, to your by niels falling below the official cash rate. Weve seen a weakness coming through in kiwi stocks as well as you saw the first increase in virus cases in 102 days, around three months. It shows that no country is immune from the virus flareups. The question now is what the rbnz has flagged its potential move into negative rates, is that something we can potentially see from other Central Banks. Nejra Juliette Saly in singapore, great to have you with us. And our guest is still with us. I noticed that in your equity allocation, you are overweight asia and youre thinking there is partly due to chinas better economic prospects. I wonder what your reflection is on equities in new zealand and perhaps australia. We spoke to a gas the other day who likes a dividend play in australia. Do the Central Bank Moves in new zealand make you positive on new zealand equities at all . Our allocation is really centered around china. The juxtaposition in new zealand, i think with the weaker dollar, it reinforces are overweight in asia and japan. Is thementioned, china key play for us there. Valuations are still attractive and Economic Indicators are encouraging, they tackled of and itssis earlier, less exposed to tourism, and entertainment than western economies. As the dollar seems to lose strikes. Manus we been looking at the perhaps sinceepy, that huge devaluation a couple of years ago. Whenonald trump says friendships wither and die, it means very little to me. I just wonder, the disruption in important in yuan your exposure to china . Are you expecting any disruptive moves in the yuan valuation . Currency is always a consideration when we make an allocation. Tensions,u. S. China weve seen detentions escalate. Its antagonism against china on one hand, and on the other hand you have china asserting itself on the global stage. Things are becoming more complicated. Theres more geopolitical issues. We think the u. S. Administration is going to try to avoid creating a big crisis which could affect the stock market so close to the elections. However, it will try and capitalize on this theme of being tough with china. Certainlypowerful and united against a common thing seems to be a strategy that could be successful. Manus they certainly dont want a rerun of 2015. Stay with us. We will talk about gold in just a moment. Manus good morning from bloombergs middle east headquarters in dubai. Im manus cranny. Nejra cehic with me. It is daybreak europe. Global stocks amid concerns over a protracted standoff over u. S. Stimulus. Gold collapses below 1900 amid the advance in u. S. Treasury yield. Joe biden picks senator Kamala Harris as his running mate, the former California Attorney general becomes the first africanamerican woman on the ticket. President trump calls her the meanest u. S. Senator. Release is. Gdp expected to confirm the u. K. Fell into recession in the first half of 2020. Productivity and the Second Quarter quarter dropping to levels we havent seen since 2003. Nejra welcome to daybreak europe. Really interesting moves yesterday, we saw a pullback in the s p 500, snapping the best winning streak since 2017. You saw treasury yields jumped the most since june. Supply coming on the market. The ppi numbers, as well. That beat down gold, too. Interesting that we saw a little bit of divergence and treasuries and a pullback in the stayathome trade at the same time. Manus absolutely. The curve steepens. When these move comes, they come in lumps and size. At the beginning of a size move. We have to begin with abn, amro. The loan losses were better than had been expected, but it is the wholesale change that is coming. They are going to split the corporate and Investment Banking into core, noncore activities. They are looking to extricate themselves from finance outside europe, focus the attention of the business. You are looking at Commodity Finance operations being dropped. The probability of 800 jobs are at risk as we look at about 45 of their client loans in those divisions they are exiting. There are a couple lines on it, as well. Nejra absolutely. Lending criteria and credit limits. We cant sort of underplay the importance of this news because every time we have spoken to clifford in the past on this show, we have been asking about the strategy rebound and what they are going to do. I do wonder what it will all mean for capital returns. Manus and the bottom line is as people extricate themselves from various parts of global banking, did they just make the big bigger and stronger and therefore a little bit more systemic risk. You talk about the consequence for gold. Gold is rerating. We continue that down 2 . It was at the beginning of an asymmetric unraveling. Preparedness for negative rates. Roll it over. Have a look at the equity story. It sets the agenda for more stimulus. It is not really translated through. 33, 32 point 25. As the curve steepens, do you want to belong cyclical . Good morning. Nejra good morning, manus. The hit we saw in equity markets seem to with a little bit of a delayed to be on stimulus. The key figures and negotiations havent spoken in days and dont have any talks scheduled. The white house and democrats are far apart on key issues such as state aid and the overall size of the relief package. Senate Majority Leader Mitch Mcconnell told foxnews the talks are at a stalemate. Manus on the other side of the coin on the virus, moderna has reached a deal to provide 100 million doses of its experimental vaccine for covid19. It is valued at 1. 5 billion. We talked about the gold. Prices have fallen below 1900, extending the Precious Metals slump for a second day. And a set a record. About 2000 an ounce last week. The rally ended as the bond market rerated. Jeffrey gundlach expects gold to be trading higher despite the setback. Manyascinated to know, how how much conversation have you had during this parabolic move on gold and how much of the conversations have translated into sizable shifts in the portfolios . We have had a lot of questions on gold both from our internal partners and from outside. Our commodities strategist is quite optimistic on gold. Of gold probability trading within its base case or bullish case. Is on average 2000 per ounce in the bullish scenario calls. That is on average. We find it an unreliable tool people often use gold for hedging purposes. ,e think if you want to hedge if you want and inflation play in your portfolio, those have a better track record as protecting the portfolio. This is not something that we have used. I take your point and that to hedge against a drop in equities, you prefer put options, inflation hedging. But the fact that so many people are attributing the parabolic move in gold recently to the drop in real rates, do you not find that a reliable correlation or do you expect to real rates to actually rise from here and therefore for gold to take a hit . As i mentioned, it is not really for us over the longterm a reliable tool. Where werly at times have had many trades in the market which have benefited from the same driver of negative real rates. Area we want to do use for managing the questionable portfolio. Nejra thank you for joining us. On the show. You ab inbev have was one of the first Global Companies to feel the impact of the virus crisis with its large exposure to the Chinese Market and a brewery in wuhan, but the beer giant is seeing demand pick up as Life Interest back to normal. The ceo told bloomberg exclusively that his Company Learned valuable lessons of operating in a pandemic early in. Early on. Have one of our close to 40 breweries, a big operation in china, it is one of our top five countries. Butn, it is a big brewery, it is one of many. Everything in the country went through a locked down, a shutdown. Consumers, businesses, everything, then we started reopening. Wuhan was one of the laster brewers to reopen, but now for the past two months everything is back to normal in china as much as it can be. Retailers, bars, restaurants, everything, they are pretty much all open. So china is way ahead of the curve. They also experienced covid and they are back to normal. Is it a bellwether for Global Consumption trends . I think we learned a lot and china. We operate in all continents. Big business around all the major countries. The big advantages of the beginning is that we learn from china early on how to be able to operate guaranteeing the safety of our people, how to observe and understand where we were going in terms of their consumption. How to adapt our supply chain to the new reality. When the pandemic started becoming going to europe, africa, and the americas, we had the protocols that were developed in china, south korea by our colleagues, so all we had to do is putting much translate everything because you had to observe social distancing within the breweries. You have to operate with fewer people. You have to work from home. You have consumers now not being able to go to bars, restaurants, hotels, or travel, and a lot of locations migrating to the inhome location. Consumers buying more in supermarkets, grocery stores, and that affecting the supply chain in terms of package mix, brand mix, in terms of delivery and distribution. It was something we learned from china that was key to navigate. Country was a bit different. And what measures governments took in terms of lockdowns. And china was key for us to navigate in europe, africa, the americas. You Just Announced record beer sales. What is driving miss . And is it sustainable . It is interesting you ask that. In china, because it was the first big country of ours affected, we did a lot of Consumer Research during the pandemic. Saw is what do you want to do when the pandemic is over . They would love to go back to their normal life, they would love to go to restaurants, travel, meet their friends physically. And do all the sorts of things. Go to ballgames, music, festivals. That give us a little bit of an insight. Trying to keep the close relationship of family and friends. We dont think those things have changed. Invev that was the ab ceo. Good morning. Larry kudlow is dismissing concerns that tensions may jeopardize the u. S. China trade deal. He says the agreement is fine and that china is increasing purchases of american goods. The relationship has deteriorated since then. Demonstrators took to the streets to challenge the president s claim of a landslide election victory in belarus. He has vowed to continue with the Police Crackdown to secure his 26year rule. The Opposition Leader has fled to lithuania after having been detained monday. Agree toreleased a deal with the u. S. To supply 100 million doses of its coronavirus vaccine, the deal is worth 1. 5 billion. Global news powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra thank you so much. Coming up, how hard was the u. K. Economy hit by the coronavirus in the Second Quarter . We will preview the gdp data next. This is bloomberg. Is bloomberg daybreak europe. We are expecting dismal gdp data this morning showing the u. K. Economy has dropped to levels not seen since 2003. The consensus is for a decline in the Second Quarter, while a ,ecovery is already underway thank you for joining us. Seeing such a. Dramatic contraction if the numbers come in line with expectations compared to other eu countries even though the outbreak was less severe . Lesser we did see a lockdown. Compared to other european countries, q1 data was slightly werer in italy, there contractions, so they were on the brink of recessions. There were issues with the manufacturing sector. Ande were economic concerns it would not apprise me if those countries had gone into recession anyway in q1 as they did. Also spans our earlier lockdowns than the u. K. They locked down earlier than we did. , these countries saw weaker figures. Ours was not quite as effective. Manus we are trying to assess when the real pain arrives. We have the unemployment numbers yesterday. That is artificial. That is not a real number. Thats the number of people lost a job. This is real pain. Will this go into the Fourth Quarter and is that the biggest risk . Yes. Havenk the furthest we come of the 3. 9 percent is really artificial. People say they still have a job when they are expecting to go back to a job soon even when they are not being paid. When that ends in q4, you are right. We will probably see unemployment shoot up. T could drive above 10 if businesses have to make redundancies, which they cant afford to keep their workers any longer while social distancing is in place and when we are in a severe recession. Options for the government to offset some of that pain of the furlough scheme ending . They have already put things in place. There would have incentives to bring the furloughs to work back. They also have the difference in practical terms for those businesses when wages on average are at least 30,000 a year. We have other incentives to keep the economy running. In terms of the furlough scheme ending, the government needs it to happen. It says it cannot afford to extend it. But they are insisting that the furlough scheme is going to end. Government, if it is not through the furlough then it may keep them under lockdown. The potential for lockdowns, which we all know there will be. I think the chancellor needs to really consider policies Going Forward to keep the economy running. Get a one thing i want to quick opinion on, if an Unemployment Rate triggered up to 10 , is that the leaning point for the bank of england to go to negative rates . What is it that takes us in negative rates from the bank of england . Englandnk the bank of will be very nervous to put rates negative. But it has said it is willing to do that to support economic rates and to support inflation. Inflation is also very weak at the moment, which gives the bank of england some room to maneuver, to take rates even lower. But it would be a big signal perhaps to savers that they should not be saving, so it could trigger some economic growth, but it could cause a lot of people a lot of uncertainty. A lot of people saved a great amount in q2 because there is nothing to spend on. We couldnt go on holiday, we could not go shopping. People have built up quite a lot of savings. Then if we see negative interest rates, we cause a lot of uncertainty. Manus thank you very much. Nejra spent all her money on me and remodeling. Know. Nejra next month. [laughter] it is daybreak europe. Is splitting its pricey shares. Shareholders will receive a dividend of four additional shares for each one they already hold. On theding will begin split in an adjusted basis. Dani burger is here. The thinking behind this is really about liquidity. When a stock become so gargantuan, it is good to inject some liquidity, isnt it . Dani absolutely. ,f you are a small investor affording the shares is quite a difficult prospect. They currently trade just under 1400. Changery, this shouldnt tesla. It should not have any effect on the value of the business itself. It does not necessarily dilute shares either. It does make it more profitable. For tesla, it is all about the retail investor. It has been part of the reason we have seen tesla surge so much. Robinhood accounts hold 550,000 accounts hold tesla, up from 180,000 shares in march. Nejra when apple split its stock recently, did Retail Investors pile in then . Did it work . Dani it did work in terms of it came on the heels of a positive earnings announcement. We saw apple shares surge for one split, they traded at a record price. History oflong stocks splitting and getting more interest in the shares because they are more affordable. Nejra dani burger, great to have you with us. That is it for bloomberg daybreak europe. The european open is up next. U. S. Futures edging into green. European futures in the red. I hope you are playing catchup. S p 500 snapping seven days of gains. This is bloomberg. Good morning, welcome to Bloomberg Markets european open. Edwards live in london alongside matt miller in berlin. Stimulus standoff, u. S. Stocks collapse at the close. Gold stumbles below 1009 in its biggest today lost in seven years. Picksden