Surveillance. Im Francine Lacqua. The markets has been trading volumes because it is august and a lot of people are still off or trading less than in the past. This is what we are looking at. If you look at the european stoxx 600. They are trading sideways. Is. Futures and gold bouncing back. The trumpet administration stoked tensions with beijing by imposing new restrictions on mayei technology which be giving some of a breather. Advancing and gold climbing back above 2000 an ounce. Lets get the latest. The race to acquire tiktok is ramping up after President Trump signed an executive order on friday forcing bytedance to sell its business within 90 days. Oracle is said to be considering a bid. Its entry could challenge microsofts bargaining position. For more on this, thats get to alex webb. Thank you for joining us. When you look at this race, is it oracle and someone elsem and microsoft, or is it just going to be the two . Alex it seems as though oracle firms,roached some other Venture Capital firms about possibly doing a joint bid on the west coast. It is going to be an expensive acquisition. 20 billion, 50 billion is the number. Oracle is sitting on quite a lot of cash on its own. Hand, cash in Something Like 43 billion. Francine who does it make more sense to acquire it does it make more sense for oracle, microsoft or someone else . Alex i think it is more logical fit for microsoft given that they already are in social media with linkedin and they have an advertising business with linkedin and bing. Beast ins build a new advertising. Online ads are dominated by google and facebook. With amazon taking an increasing share, microsoft has a little around the edges. This could create a sizable competitor in that space. It is hard to see what oracle the, which is thing for enterprise. They may be able to pull it out of the pull tiktok out of bytedance, but that would have to build a new leg to the business in order to monetize it. Francine talk to me about apple and fortnite. Whats the latest on the case . Alex weve had fortnite essentially engineer this situation which meant that apple was going to pull them from the store. Apple has really up to the antinow, saying it might go as far as to terminate epics developer account. At the moment, epic can come out with updates to fortnite and then submit to apple, only for apple to reject them. What apple is threatening to do is not even that. It is a real heightening of tensions. I think it is looking unlikely epic will win out but it raises big issues which will then be take into account clearly when antitrust authorities, the u. S. And europe, look more carefully at the gaps managed by apple. Francine as we looked onto the rest of 2020, you talk about and write about tech every day. What do you think is the big question they really want to know about . Who gets into the white house because it is a difference if the Biden Administration gets in . Are we talking about possibly breaking up these giants . Or is it Something Else . Alex i think the election is significant, but primarily to see how relations with china develop. There are so many implications of that chinese relationship. If you are cracking down on tiktok and huawei, does that mean there is going to be more stringent retaliations from china on Companies Like apple who has a huge business in china . Equally, implications for the hardware industry in the sense that the supply chain would be significantly disrupted by crackdowns on what sorts of Semiconductor Material and machinery you are able to sell to Chinese Companies, in particular huawei. The clarity from the election at the very least will be really important. And determining to what extent a Biden Administration, if joe biden were to win, would there be a softening of the position towards china. I think china is on the forefront of everyones minds. The investigation into big tech and the possible breakup, i think that will probably carry on no matter what. The reality is when you have a senate, it isd hard to arrive at a conclusion that will push through any significant change in the near term. Francine alex, thank you so much. Alex webb, bloomberg opinions European Tech analyst. We will talk about tech in the worlds biggest miner. Bhp chief executive mike henry is coming up later in the program. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. We will have a look at the markets straightaway because theres a lot going on, especially for a quiet or meant to be quiet august day. This is what the european stocks are focusing on. They are falling with u. S. Equities. U. S. Equities futures, on the back of what President Trump been doing. It is because his administration has been stoking tensions with beijing by announcing new restrictions on huawei technology. That is giving a little bit of angst in the market. A dollar gauge sliding to its closes since 2008;. Im looking at treasuries advancing. Gold climbing back to 2000 an ounce. Executive Arnold Donald speaks exclusively with carol massar on the state of the cruise industry and covid19 in the u. S. He says cruises could resume this year but it is too early to make a determination with Public Health restrictions in place. Here he is. Arnold right now, look at the u. S. , in many places, we are talking about sheltering in place, staying at home. Universities are figuring out what to do. Justng as we are not comfortably, socially gathering, then we should not be talking about cruises. When you can comfortably socially gather with the protocols, social distancing, Wearing Masks when we are comfortably doing that in u. S. Society, we can seriously take a look at cruises. Carol one thing about to ask you when we are talking about the cdc the cdc you know, you guys have Read Everything they put out. They have put out a strongly worded order as they continue to do the no sail and push that off for ship sailing in the u. S. They say the current Scientific Evidence show cruise ships pose a greater risk of covid19 transmission. You know they talk specifically some of the research at the carnival diamond princess in february. They talk about it transmitting covid19 at a reproduction rate roughly four times higher than we saw at the epicenter of wuhan. Do you agree with the cdcs assessment that cruise ships pose a greater risk of transmission . Arnold i think what the industry will do is show the history we have with other viruses. For example, norovirus and other viruses that happened. And show historically, the industry has successfully mitigated the risk of spread. Lowered the risk relative to shortsighted activities. We cannot make that claim today for covid19. Obviously, that is what we aspire to. I think we will show a body of evidence to the cdc which i am sure they are also accessing. We are being informed by very capable scientists and medical professionals around the world to take a look at this. Let me assure you, as a company as as an industry, the cruise and as a company want to expose any guests to any risk than they would have with the miller activities shoreside. Our focus is to make certain we are managing that risk at minimum relative to what they would experience shoreside. We aspire that when they cruise with us, they have less risk than the sin experience shoreside. When you talk about the diamond princess, people have to remember, number one, that happen really early on when there was very little understanding of covid19. Never to, that ship was a quarantine ship. The ship was in quarantine for two weeks. It was not just a normal cruise. It was a quarantined ship. While an example of something that can happen, i think the practices today would be dramatically different than what existed at the time with the diamond princess and was different to what happened on subsequent cruises. Carol do you think of that happened today, you would have shut down immediately . No new ships would go out . I wonder when you look back at february and march, when did you learn . What regrets did you have that maybe you had shut down ships right after the news of the virus cases on the diamond princess . Analogy ors not any breakdown to push it too far. But should the world have shut down immediately once wuhan province had a situation with covid19. I think you can only operate in the time you are in with the information you have. Back when diamond princess first started, there was not Community Spread around the world. There was very limited understanding of it. Even at the time of the sailing, there was very little understanding about covid19. Even now, we are still learning every day about this virus. So, not to make an excuse, it is similar to point out that in that point in time, we did what we always do and will continue to do. We complied. Francine that was Arnold Donald, the chief executive of carnival, speaking to bloomberg. Equities are trading a touch weaker this morning amid a u. S. Stimulus stalemate between washington and beijing. That is after the s p 500 failed at another attempt to break its record high. The nasdaq outperforming. Alphabet extended their rallies. Joining us this morning is karen ward, chief Market Strategist for j. P. Morgan asset management. As always, great to speak with you. What exactly is the market focused right now . Im struggling to understand what is priced in. Is the second wave priced in . The second term for President Trump priced in . It is always the toughest thing, working what is priced at and what is a surprise. My assessment of what is priced in is an ongoing recovery. One that is relatively constrained. The evidence from around the world and increasingly here in europe is getting back to full normality is not going to happen until we get a vaccine in place. Nevertheless, that is affecting parts of the economy which are not necessarily represented in the equity markets. I think that distinction between gdp and the stock market is very critical to understand some of those indices you mentioned. The nasdaq, s p. It is tech, it is the real winners from the covid19 recession that are keeping those markets elevated. I would say what is priced in is an ongoing recovery that is slow and very firmly supported by policy. The Central Banks keeping Interest Rates on hold for a significant amount of time. Longterm bond yields tell you how Interest Rates are going to be. The policymakers within the government spectrum are also going to keep doing incrementally adding to stimulus. Weve had germany extending, the u. K. Under pressure. I think a bill or some support package from washington is also priced. I think in terms of disappointment, it would really be that policymakers are not delivering on that stimulus. That is what what concerned me about another but that is not art poor scenario right now. Do we starten worrying about inflation . Is it something we postpone to 2021 or even 2022 . Karen its a great question. I think it is probably the question that is most prominently filling up my inbox from client of the moment. I am slightly more concerned about inflation proving a little bit icky. Not running up to 4 or 5 . I think this recession that affected the supply side of the economy and the demandside. So many got their first haircut, that was priced in higher. Many businesses are very much reduced in terms of their supply. They have the same fixed cost. They have been increasing their prices in order to keep the revenues afloat and match their costs. I think we have started to see that supplyside affect come through in some of the data. There has been some others around the world. I think we need to keep a bit of an eye on that in the short term. As we look to the longerterm, the question really is whether policymakers, the extraordinary asset we have seen from the Central Banks, combined with governments, whether those tabs are turned off in a timely manner. I think there are some potentially upset risks to inflation over the longerterm. I think the Central Banks will be under tremendous pressure to help governments with these high levels of debt by keeping Interest Rates low. If governments dont turn back towards austerity, and i suspect they wont, Central Banks and governments are working in a combined fashion with their foot on the pedal, that will give us some longerterm inflationary risk. Not expecting it to run away but i think given the pricing of inflation protection at the moment, it is worth having some insurance in a portfolio. So, if theres a bit of runaway inflation, where do you see at first . What does protection against inflation look like . You just buy gold . Karen again, great question. It comes back to the supplyside disruption. Supply chains on the good side have been disrupted, not only through Domestic Production but the ability to transport those products internationally. And the service sector, the capacity constraints. Restaurants only being able to operate at half capacity, all these other service industries. Again, thinking about the longerterm. If it is the Central Banks and governments basically working together, that could lead to broadbased inflation. I am not sure it will show up in one particular place. With regards to inflation protection, think outside the u. K. Where we could have something going on with the potential transition to cvi. Started talking about inflation protection, there is still opportunity on the longerterm pricing for the index linked markets. I think it is a question of looking at real assets. I think increasingly as we look at how we build a robust portfolio, increasingly we look to alternatives, core infrastructure, core real estate. That also should serve to provide some inflation protection. Inflation would be ok for the stock market as well. If inflation is three percentage region, that is the sweet spot for stocks. I dont see it exhilarating much beyond 5 to the point it will really worry the stock market. Francine thank you so much. Karen ward, chief Market Strategist for j. P. Morgan, stays with us. Brexit is back. Talks resume in brussels but with only seven weeks ago with negotiation set to end, who will blink first . We will discuss brexit and u. K. Assets, next. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Brexit talks resumed in brussels today. Seven weeks remaining until negotiations are scheduled to finish. Is set to or u. K. Budge with officials on both camps saying they are waiting for the other side to blink first. Still with us is karen ward. We have questions about brexit, negative rates, and simply how the bank of england is modeling the recovery. Where do you see value in u. K. Assets . Karen i think, again, with the negative Interest Rates being left on the table and within the u. K. Stock market, the financials are still going to suffer while that still lingers. Energy is another big component. We note it seems until we are until full recovery, Energy Crisis being capped at around the 40 mark. I think that will continue to be an issue. And the question of sterling for the broader International Large caps. I think they market is pricing in a deal and, therefore, that support somewhat supported as the dollar has been falling. If that turns out not to be the case, i expect sterling will go to the large caps. Francine thank you so much, karen ward, chief Market Strategist at j. P. Morgan. Joe biden ready for his keynote speech. Experience the ultimate sports hub. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. U. S. Futures drift after the s p 500 failed at another attempt to break a record high. This comes as chances for a deal encumbers on congress diminishes in each passing day. The turn of the democrats. For everyone who supported other candidates in the primary, and to those who may have voted for donald trump in the last election the failed federal government that watched new york get ambush by their negligence and then watched new york suffer but all through it learned absolutely nothing. So today, six months after it began, the nation is still unprepared. Imagine if we had a national strategy. So everyone who needs a test gets one for free, so everyone who has access to a safe vaccine. Or than 150,000 people have died, and our economy is in shambles because of a virus that downplayed forbu too long. Even before trumps up a negligent response to this pandemic, too many hardworking families have been caught on an economic treadmill. Francine for more on this, lets get to jodi schneider, bloomberg Senior International editor, who joins us. Was this the most important speech of the first night of the Democratic National convention . Those were the people who were the most important on that first night. Energize and to unite the party, and Michelle Obama and Bernie Sanders were the ones to do that for him, and they both gave speeches that really sought to do that. Bernie sanders in his speech was unequivocal. He almost begged progressives to vote for biden. Four years ago, he did not back Hillary Clinton in the same way, and it cost the party. His speech last night was all about, he basically said to everyone who supported other candidates, you need to get behind joe biden, you need to defeat donald trump. Michelle obamas speech was powerful because first of all, she doesnt usually give that political of a speech. She supported her husband her eight years. She supported him while he was in the white house, but this was not overtly political. She came right out and said what the party wanted her to say, that President Trump is in over his head and he is the wrong president for the country at this time. She talked some about joe biden, that she knew joe biden and the kind of man he was, but she was very, very critical of the issues, of the sitting president , the issues of the party that they wanted her to be critical on, particularly the coronavirus pandemic. This was the democrats first night, an important night to come out swinging. They will come they will have the chance to do that in the next few days, and then it is the republicans turn. Francine it feels like the first night was about unity, that the democrats have a united front, that they stand together and support joe biden. What are they going to get for the rest of the week . What messages are they working on . Jodi they want to prevent this unified message. They dont want problems like they had four years ago when there were people who were going to vote for Hillary Clinton, they were not going to vote for donald trump, but they were not going to vote for Hillary Clinton. They need turnout. It is going to be complicated because of the disrupted voting. People will have to vote and different kinds of ways. They want to come out of the convention getting people energized and getting them to want to vote, no matter how to do that in november. They also want to prevent to present an image of not only unity, but they want to take on this president directly and on and never of issues. That is what we are going to see over the coming days and all these speeches. Onncine what is the latest the ranking between democrats and republicans on the stimulus bill . Are we going to have some kind of agreement . If we dont, people need the money. They dont have the funding that they had. Who are they going to blame, the republicans jodi or the democrats . A gooddi thats question. Right now it looks like they might blame both sides. Senate republicans plan to introduce a scaledback stimulus bill, with the standoff that has stretched out for weeks. That could take a long time. There are no immediate signs that Mitch Mcconnell will call center just back from their august break to vote on it. Any legislation would need at least some democratic support. This is what we are hearing from people familiar with the plan, that there is a 300 a week unappointed benefit, and that proposal would be about 1 trillion. Some republicans thinks that is too much. But it is much less than the 500 trillion plan that the democrats passed in may. People have not had their Unemployment Benefits now and are not getting them. This will become an issue with 78 days until the general election, and there certainly will be a lot of blame. Democrats would likely get some of the blame as well. Much,ne thank you so jodi schneider, bloomberg Senior International editor. The u. S. Has announced further restrictions on huawei, and yet aimed at the latest move in an increasingly tense relationship between the worlds two biggest economies. The founder and president spoke to us about why ongoing u. S. China tensions wont affect the quality. Is an amazing company, and i think really, we only have we have zero things in our top 10 right now, in our hedge fund, we have a long only fund where amazon is in the bottom half of the top 10. You know, we have been able to outperform on the long side of our book, not being overly exposed to things. That said, i dont think it is a bad place to invest. I think your general equity investor, consumer, they could do a lot worse than having big exposure to faang stocks. These are some of the bestperforming companies and businesses in the world. We are not afraid to have a little faang exposure, specifically on amazon. They have had the number one ecommerce business in the world , quite dominant in the u. S. , in continental europe, as well as other International Markets like india and the middle east. You know, that econ business is worth about half of the companys value. The other half has been built up on the Cloud Computing business with aws, and we continue to see them being one of the giant. Eaders in that business the fundamentals there, it is growing 30 , margins are higher than 30 , or at least close to 30 . They bounce around, depending on the quarter. We think that is going to be a great leader, so it is why it is one of our largest holdings. A lot of your peers also sold out. A lot of the tiger cubs getting facebook. Flix, why is the industry starting to sour on these big names . Glen it is probably a rebalancing, you know, in terms of looking for Companies Whose valuations are more stretched, and reducing some of those holdings. We have certainly done that with some of our big winners. With companies that look especially attractive. Of being amal course portfolio manager. More than 40 of your portfolio is outside the u. S. Some of that is in Chinese Companies. What is your feeling about investing in chinese firms amid all these tensions between the u. S. And china . Glen i think there has been tension, increasing tension over the last 10 to 20 years. There is tension specifically around Chinese Companies that list in the u. S. What we are seeing happen is that many chinese internet firms , and having listing an ipo in the hong kong market, and that gives them optionality perhaps to, in the future, perhaps they will only be listed in hong kong. These are such incredible businesses, we are long alibaba come along j. D. We are long j. D. , forong instance. These are companies that have commerce. Resence in i dont think the conflict between china and the u. S. Will change this businesses longterm. They have little or no exposure to our end markets here, and we are quite bullish on them. Francine those lake Street Capital that was lake Street Capital management founder and president glenn katcher. Our interview with the chief executive of bhp, mike henry, is up next. This is bloomberg. Francine this is bloomberg surveillance. Im Francine Lacqua in london. Lets get the latest on the worlds biggest mining company. Bhp says his plans to exit coal operations as judgment reshapes the company portfolio. We spoke with chief executive mike henry. Continues toovery be underweight and appears to be strong in china. Underway and appears to be strong in china. It was who volatility and uncertainty with the rest of the way the with the way the rest of the world recovers. It will take the rest of the year for the road to get back to precovid level activity. Three years to get back to the trajectory we would have been on. That is the broad economic outlook. In terms of iron ore itself, demand remains strong in china. It appears to be holding up quite well. Of course, on the supply side we will see more supply coming from our competitors as they get past some of their challenges, our strategy of being the lowest cost supplier, continuing to improve quality, and delivering Continuous Improvement reliably year in and year out, that is the winning strategy. Do you expect iron ore prices to average 100 a ton next year . Mike i would not want to give an exact production. We could see a retracing in iron ore prices, bhp is a diversified resources company, and weve got other commodities in the portfolio that as the rest of the world recovers, we expect that would result in more favorable market dynamics. The resilience of the portfolio that we have, which has helped us see through the last six months of covid, is going to stand us in good stead Going Forward as well. In spite of all the uncertainty, their brilliance the resilience of our portfolio and people will continue to make us perform strongly. Youre looking at an exit from coal, but bhp is not alone in this. How confident are you that you will have enough buyers who will get the right price, or is there appetite for a spinoff entity . Mike i want to be very clear here, this is an exit from four of our coal operations. Ourontinue to see upside in high quality coal, which as steelmakers reduce their farm reduce their carbon footprint, there is going to be more demand more upside for high quality coal. We have other assets whose value will be realized through things like major capital investment, which are unlikely to compete well for capital within bhp, given our broader portfolio and the other options we have available to us. As to how we go about doing that, we are open to all options. One reason we have come forward early on on this is to get out there and explore different options. Merger,rade sale, d will land the right solution in the next year or two, and that will be the one that maximizes value for shareholders. You have also talked about the plan forhat is bhp in oil . Mike we see oil is being attractive, and that is on the basis of both ongoing demand for oil, given its underpinning to human mobility and many of the industrial processes underpinning better standards of living. Coupled with, on the supplied side, on the supply ongoing decline curves. There is going to be more oil supply that is needed. We think there is great value and returns to be generated in oil for the foreseeable future, so certainly the next decade and likely beyond that. So we will continue to invest in oil and growing value and returns. Francine that was mike henry, the chief executive of bhp group, speaking to us earlier. Lets dig deeper into the sector. Grant, thank you for joining us. There is a lot to talk about when it comes to mining stocks. What are the main challenges to the Mining Sector . We have been in lockdown for the World Economy going down, but is there anything else we should be looking at . Grant good morning, francine. Thank you for having me on. It has been good for mining stocks, but i think they have weathered the storm very well. Perspective,tional they implemented a lot of social distancing, but despite having to cut workforces down to sometimes 30 to 40 of recoded levels, production has hardly dropped. That is why bhp has said next year copper might be down slightly. I think they set about 5 because we cannot staff operations quite fully. But in the big scheme of things, that is a fairly minor impact. We have also adopted technologies very well. So in terms of having technical experts view some of their projects remotely by cameras, they are being very successful, and remote operations, being able to control remotely. On the flipside, chinas surge of liquidity and credit have helped the demand side, which are currently when you look at steel production, it is up 3 year on year after a very strong 2019. That is related to very strong iron ore demand and the process that we see today and the profits that we see today. All things considered, we are in very good health. Francine what can we expect from dividends . How much of a focus from chief executives will be to make sure that investors are loyal by just dishing out . In the very shortterm, we look at bhps result, in terms of dividend, it has probably disappointed slightly considering expectations were slightly higher. But if we take a broader view, the ability to pay dividends from the miners are still very much intact. Is anf them and bhp example is right at the bottom end of the range that they feel comfortable with, and given the strong cash flows, particularly from iron ore, which continue in the second half, dividend the dividends look pretty robust. There is a slight air of caution, and that is making that is may be why bhp held back a little but a little bit in paying higher dividends today. There is uncertainty about how that plays out in the future, and maybe that is what led the company to hold back a little bit. So we are seeing an air of conservatism in terms of dividends, but overall, dividend deals look pretty healthy. Francine what this china tell us about the recovery from the Mining Sector . What does china tell us about the recovery from the Mining Sector . Grant the credit growth this year has been very, very strong, so on a total financing basis, it topped 40 year to date. And of course, the stimulus in china tends to be quite commodity intensive, and the government has pulled the lever of infrastructure property, which looks to be very healthy, and that is still particularly with steel demand. For those minors that have iron ore exposure, that is certainly a decent outlook. And although it is not quite is exposed to the infrastructure property cycle, it still has a good reader across. So even the copper demand looks as though it is picking up quite well. Francine grants, thank you so much for the great insight. Grant spore bloomberg intelligence. Coming up, we will have plenty more on elon musk. Keep on climbing, that is what elon musk is doing, for the worlds richest people. This is bloomberg. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Musk is now the worlds fourth richest person. Tesla shares and surging some 11 monday, boosting his net worth by eight lean dollars in one day. Joining us with more details is dani burger. 8 billion in one day not bad. Dani not bad at all. These numbers are so difficult to wrap your head around. Year to date, his net worth has more than tripled. 57 billion this year, and a lot of that, if not most of it, is coming from the gain in teslas share price surging 340 this year. Muska himself owns about 20 of the companies, so he has benefited from the enthusiasm around the stock, being that the stock is included in the s p 500 index. Retail traders really love tesla. His compensation package is tied to the market value of tesla, so once that hits certain milestones, he gets more in terms of tesla options. Spacex also about to close another funding round. That valuation put at 46 billion. All these different sources are contribute into this huge surge. That we have seen in musks well. His sudden surge and wealth also put elon musk and tesla under more scrutiny . Dani he is the fourth richest person and the optics are not good in the coronavirus, so in that way it certainly could. But you look at who his company is, the richest people in the world include jeff bezos. That text ceo, besides, has the biggest gain in that wealth. Muskas number two this year. Musks number two this year. Becoming aits part, huge company, surpassing pg e in market valuation, francine. Francine thank you so much, dani burger with the latest on tesla and elon musk. Bloomberg surveillance continues in the next hour. Tom keene joins me out of new york. We will be talking markets, the dnc, and about u. S. China trade tensions. It is very clear that european stocks are not taking in their stride the fact that there seems to be a bit more aggravation from the u. S. Side, certainly when it comes to huawei. We will also look at technology with that news about tiktok. We will be speaking to alex webb throughout the two hours. This is bloomberg. Francine deadlock in congress. Senate republicans plan a slimmeddown stimulus bill, but democratic support looks unlikely. Competition for microsoft. Larry ellisons oracle is said to be interested in buying tiktoks business in the u. S. Will others join the contest . And the worlds top miner, bhp, reports steady underlying earnings on a surge in iron ore. The chief executive, mike henry, speeds up plans to exit coal. Good morning, and welcome to bloomberg surveillance. Im Francine Lacqua in london. Tom keene is in new york. A lot of the focus is on aggravated tensions will tensions between the u. S. And china. August. Is the artist it is the oddest august. If you follow francine, you will know it is a surveillance Veterinary Clinic and they have a bird in the backyard and they have been