Transcripts For BLOOMBERG Bloomberg Markets European Open 20240712

Covid19. His physician warned he may not be entirely out of the woods. Global stocks still see modest gains. Hong kong maintains its coronavirus social distancing measures. 34 u. S. States see more virus cases than they did a month ago. The cdc warns the virus can spread indoors in the air beyond six feet. Deutsche banks ceo tells bloomberg exclusively it could consider m a as early as next year, but with one caveat. For us, it is important that we are not a junior partner. That means we first have to sustainably increase our profitability. We are just under an hour away from the start of cash trading in europe. We have german factory orders coming out on the ticker. Rising orders in august 4. 5 month over month. That is better than the estimate sorry well, the estimate and the previous reading or both 2. 8 . 4. 5 beat the estimate and the prior reading. Yearoveryear, you have to drop 2. 2 . It is not as bad as the 3. 8 that was estimated by economists, and not as bad as the 7. 3 drop we previously deemed. Slightly backward looking, but a little bit of the recovery. Thatadds to the optimism is keeping stocks, or futures i should say, just treading water. The European Equity Index Futures just above the zero line with dax futures up almost 0. 1 . Euro stoxx 50 futures up a little bit more. U. S. Futures are mixed. Nasdaq futures down. Maybe a little concern on the house panel that wants to stop marketplace owners like apple and amazon from selling their own goods. I guess it is only digital marketplace owners. You can still get Grocery Store brand goods from the Grocery Store you shop in most likely. Dow jones and s p futures higher. Watch for theing divergence between nasdaq futures and the rest. Update try to get an from our team. We did see stocks with the nasdaq up more than 2 by the close. Europe also performed well. Futuresoint out, the picture for europe looking fairly flat positive. Global equities seem to be looking on the bright side. Gains coming through on the gmm. Stimulus seems to be playing into a better picture for Global Equity markets. Yields received a boost since the beginning of october. Perhaps putting increased odds on a biden win. We will talk to the markets live team in just a moment. Lets return to our top story. Donald trump returned to the white house after three days of hospital treatment for covid19. In a video he urged americans not to be afraid of the virus. Pres. Trump dont let it dominate. Dont let it take over your lives. We are the greatest country in the world. We are going back to work. Lets get more with derek on in the white house and on capitol hill. President trump left Walter Reed Medical Center and returned to the white house. What is next . I suppose we are all everybody wishes him well but we are also mindful of many cases we have heard about in our own lives where people have deteriorated. What is next for the president . That is quite right. Has this. Trump still he has not gotten over covid. , he and the white house staff are going to be limited in terms of who can see him and get in contact. When they do, they are going to have to wear personal protective equipment. President trump has been very keen to get back to the white house. It was held triumphantly by his team. He got there, you saw video of him getting out of marine one on his own. Of stairs,flight being on the balcony, mask off. All of that was turned into a slickly produced video. There have been fundraising appeals throughout the last hours from the trumps recovery so far. Stressing those points of, you cannot let the virus control your life area President Trump lanes to be at this next debate we are told. The biden camp is a little more cautious. They are saying they are happy to debate, but it has to be safe to do so. I think for all of the people he lliance you are seeing out of the trump camp, not everybody is, hey, great, this is over. That is not the line you are hearing out of the biden campaign. But certainly out of many others as well. President get there, takes his mask off, says dont be scared of this thing, is this the taxi takes in the next the the tack he takes in the next debate . Is that the line hes going to push . I have heard two trump allies come out and say donald now has personal experience with this virus and that means hes better equipped to take it on the joe biden. That is a line that is being tested right now. We will see how it holds and how it plays and whether or not trump takes it at the next debate. But let us be clear. Overwhelminglyng they trust joe biden more on the handling of the coronavirus. At the same time they trust trump more on the handling of the economy. To the extent those things are linked, right, that coronavirus woes are harming the economic picture, so to the extent that people think trump does not really have control on it and he does not have control sufficient that he got it himself, that is theoretically good for the biden campaign. Trump can try and pivot, maybe that would be helpful. I think what is going to be instructive is the next couple of days we are going to see polls come out that were in the field after that diagnosis. It is possible that was a watershed event and we will see in the polls exactly what that means, both nationally and also in those critical swing states. Anna that is the piece of the jig so that seems to be missing. Jigsaw that seems to be missing. Mark cudmore in singapore, we saw yesterday equity markets rose on expectations maybe of fiscal stimulus, the recovery of the president , maybe just adding on a biden when thinking that is what the next polling data is going to show us. What is the decisionmaking process from here for markets . As we watch the health of the president and that narrative unfold, what are you focused on . The next catalyst is that divided view about what drove yesterday. It was one of those strange days where people with democratic leanings were going, more stimulus. It looks certain biden is going to win. Certainly to back that up you get the idea that you see the steepening yield curve and a weaker dollar. All these things tie in with democratic victory. If you are a republican you go stocks are rallying because trump is beating the virus. This shows he is there to leave the economy back and this will help and be good for the economy. Whichever way you are leaning, you had a reason to attribute. I think we saw the steepening yield curve was the most interesting thing. The idea we are going to get stimulus forthcoming, whether because you are getting a thecratic wave or because idea that now that trump has had covid hes going to make sure we get this where we needed before the election, again you can divided divide it. The stimulus hopes are really the driver right now. More are these markets stimulus means more debt and the debt to gdp load is getting heavy already, isnt it . You have given me a question i want to say yes to, but i dont know if i agree with reason. These markets are shortterm. They trade off the latest headline. I think in terms of the debt component, that is just a much longer term thing. It is all right for investors not to care about that right now especially since the world has bottomed to some extent with monetary financing. But you are right, overall, longerterm, this is a burden we have to look ahead at. What are the consequences of that . I think they are very much focused on stimulus and they are right to be shortterm in that extent, in that way. Anna mark cudmore, Bloomberg Markets live managing at a tour. You can join the debate with the markets live team. Tell you whats coming up in the program. Deutsche bank remains focused on executing its through teaching plan. Strategic next, the interview with the Deutsche Bank ceo. Ank ceo. Matt welcome back to Bloomberg Markets. We are still over 45 minutes away from the start of cash equity trading. A mixed picture in terms of futures right as ftse futures fall, cac and dax futures just barely treading water. Deutsche bank could consider a merger or acquisition as early as next year. This profitability and share price recovered. Told me then sewing bank remains laser focused on implementing its turnaround plan. We see an increasing domestic deals, not yet crossborder. Things like Capital Market and banking unions, not with the way it should be. And yes, covid for sure accelerated certain developments. Scale is an issue. Integrate to fully two or three years ago. We are well underway. That is happening in other countries, too. It is domestic so far. Crossborder i would say matt every time i talked to a bank ceo they tell me they are not ready at the European Union level. Whenever i talk to eu leaders they say, youre free to do crossborder deals. Which shoe has to drop first . Both are right. We are free to do crossborder deals, but if the regulatory headwind and certain restrictions are still there, the free flow of liquidity or capital is not there to a degree which really makes such a merger reasonable and constructive, and obviously something still needs to happen. To wait for further development. Regulators understand this issue and i am confident we will see progress on the banking unions side. I know the german finance minister is working on this. Is the time being, my view you will see domestic mergers before crossborder mergers. Matt you have the most audacious Transformation Plan the bank has seen in decades. For that mean you rule out now any acquisitions . Christian the focus of Deutsche Bank is to finalize the transformation. I would say we are laser focused on this one. Over the last 15 months proves our point this transformation was and is the right one for the bank. This is top priority. Matt but what does that mean exactly . When is the transformation going to be out of point when you can finally start to consider bigger deals . And 2020rstepped 2019 are kind of the key years. The second half of 2019 and the full year 2020 where we really have to focus on transformation. We made Good Progress in q3. 2019 and 2020 is the key of the transformation. With certain items still to come , our Key Financial Targets for the year 2022, it is a three to four year transformation. The first two are key. So far we have been very successful. Management focus needs to continue. Matt when you look beyond that and you hear reports in the financial boulevard press about axel webers dream mergers, do you think Deutsche Bank could be part of a big deal . Christian in general idation must happen in europe. We need to be competitive with u. S. Banks from the point of investing into technology. You need a certain size for that. The theme of consolidation is something europe will see. For us it is important we are not a junior partner to such thoughts. That means we first have to sustainably increase our profitability. That was Deutsche Banks ceo christian sewing speaking exclusively to us at bloomberg. Yesterday the german day of industry. Lets get our bloomberg first word news. President donald trump returns to the white house after three days of treatments for covid19 at the military hospital. Officials plan to restrict physical access to him as he continues his recovery. In a sign of defiance honor on arriving at the white house removed his mask and refused to put it back on entering the residence. Euro area finance ministers the sole picked candidate to replace the top policy team in december. It means the executive board will not achieve gender balance which may be contentious in European Parliament Boris Johnson will commit to boosting offshore wind power. Speaking at the conservative party conference, he said Renewable Energy can drive the recovery. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in this isn 120 countries bloomberg. Coming up on the program, president returns from hospital. Joe biden opens up a clear lead in the polls. Why arent stocks starting to rule out election volatility . Ion volatility . Anna welcome back to the European Market open. Mixed withthe u. S. The nasdaq underperforming because of regulation there. European futures flat. Not buying into reduced political risk. That is despite the fact real clear politics is showing joe biden with his Strongest National League june, ahead of barack obama and george bush at this stage of the campaign. Futures for november remain above 30 showing traders do not believe chaos can be avoided. Us now is an Investment Committee member at coming out do you think markets should still be as nervous as they are . Around the outcome of the election, despite what we have been seeing leading up to president s diagnosis . Yes, there is clearly one key factor of uncertainty. This scenario of a stalemate remains quite present. S is reflected in revisedty has somewhat for the weaker and there is good news. Seen in to what we have 2000, markets are more prepared for such a scenario. It matter to markets whether it is biden or trump . As long as we get a clear victory either way, would a clear victory for donald trump with the markets be able to breathe a sigh of relief there . The worst scenario is a stalemate and potentially a prolonged period of uncertainty after the election and the nomination. This period where the fiscal package needs to be negotiated, this would be the worst scenario. Then again, whether it is mr. Trump or mr. Biden who is elected in fact, would be rather different than what we are looking at. Price movement. Week, beginning of this we are seeing the nasdaq underperforming. We are seeing a steeper yield curve, higher rates, higher real rates. All of those are pointing toward the probability of markets implying mr. Biden being elected. Matt we are going to keep you with us for more. We have Little Movement in terms leastures right now or at a little bit of a mixed picture in terms of european and u. S. Futures. Still waiting to get some direction this morning in markets after President Trump came home last night. Backwardation by 2021. And as we have been talking about, the possibility of a biden win pushing yields down. Anna 30 minutes to go until the start of cash equity trading this tuesday. European futures fairly undecided. Plenty of centralbank action today. Christine lagarde will take part in a Video Conference on economic and monetary union. Euro area finance ministers picked to join her team at the ecb. Reserve chair Jerome Powell will speak at the National Association for business economics, their annual meeting. At 1 00 a. M. Tomorrow, still london time, boj governor kuroda will address the conference. That is always very popular. Lets get your morning call. Decision makeba november a more live meeting according to economist . It certainly does. You will remember it was initially called we would see a rate cut. That was pushed back to november saying today was going to be about the budget, about australia. Capital markets joining on that saying even though we saw a rates hold today as euro. 25 , in november you could see a basis point cut taking the 0. 1 alsoash rate to saying the rba would commit to buying bonds. Expectseconomics additional purchases of government bonds. Greg james suggesting you would see a rate cut come november, but he is jumping on that qualitative easing could be in bond purchases. There is one thing that is clear and that is that rates are going to remain lower for longer into 22, 23, good news for the iness sector an anna we seem to have seen the bond market deciding for itself or at least factoring in the chances of a biden win more seriously. What are you hearing from analysts . Yes, a similar call we have heard a lot, that we can the more fiscal spending and that could weigh on yields coming saying youh a call would see lower yields under a biden presidency. There would be a limit to what you would see in the 10 year as well according to Cibc World Markets in tokyo, saying bidens policies would drive the 10 year yield lower, but the limit in the drop would be limited to about 50 basis points. He does not see it falling further than that. We are quite a way away from 50 basis points at the moment. Brentwe have a call on from Morgan Stanley. Tell us about backwardation. Could be coming back in late 2021 of into Morgan Stanley. According to Morgan Stanley. Morgan stanley analysts analysts coming out with this call based on number of factors. Brent could fall back into backwardation with the market undersupplied on a modest recovery in demand and subdued nonopec supply. This comes after Morgan Stanley lifted their target call for brent into the second half of 2021 by five dollars a barrel to 50 a barrel. Anna thanks very much. Juliette saly with your morning calls. Lets get back to strategy. Kevin, i wanted to start with your thoughts on china right now. It is golden week and we see the chinese population in under nine months or so of being stuck inside seems to be back on the move. Levels forjewels golden week are less than last year with 25 Million People traveling domestic domestically. How do you invest around recovery in china . China has been among our Core Investments within our Global Equity funds. What is happening is quite remarkable. Managingry has been very well, the pandemic. It was the first to be affected but the first two get out of it as well. Very strong recovery. A quitebined with modest fiscal option, quite modest monetary options, it is on a strong path to recovery. First exports, now toward services. The way we invest, we invest mainly in local domestic plays, longterm structural things we chinese consumers, that is true for electric vehicles, commerce and ecommerce stances as well. There are lots of things to be done in china. Best where do you see the opportunities . When you look at emerging markets, does china strike you as that, or are there better places to go . It remains the main area where we want to allocate capital. It reason for this is that will be the country where you are getting positive gdp growth this year. It is a country where you are getting lots of visibility as well and it is starting to attract capital helping the currency as well. We are going to be hearing a little bit more about what the central bank will are will not do as we head through the difficult task of dealing with the pandemic, trying to avoid lockdown. Do you expect the ecb to be doing more . Goldman sachs seeing an increase in purchases in december because inflation remains low. Yes, clearly the ecb will have to do more. It will probably be later than sooner. But they are possible, are unlikely because theres not that much of a margin for maneuver approaching the lower bounds. Increasingost likely in terms of ppp. Be aiming or probably a bit higher than that, between 350 and 500 billion for a longer period of time. Pressureeflationary remains in europe. Over the short term, theres not that many fears for the disposal of the ecb. They remained vocal on the try toh of the euro to tame deflationary pressures as well. Matt thanks for joining us today. Thozet kicking off this Tuesday Morning for us on the European Market open. Next, covid19 is making a come back across the united states, heading places it had not hit hard yet. Has evidencee cdc the virus is more contagious than it previously believed. D. We already have transferred a Balance Sheet to frankfurt. We are now awaiting the final outcome. That is what you can expect from us. We are fully prepared. London is so important as a Capital Market location. London will always play a Critical Role in Deutsche Bank. Whatever the outcome is, which is hard to judge at this point, we are prepared. The ceo ofwas Deutsche Bank speaking to me exclusively yesterday. We will play more of that interview throughout the program. Now, covid19 is making a dangerous comeback cost most of the u. S. 34 states are seeing more virus cases over the past week than they did in the same week a month ago. That is as the coronavirus hammers Rural America in smaller cities. This is amid updated guidance for the cdc that says it can spread through the year to those more than six feet away. More contagious than previously thought. Joining us now is the director of research at bloomberg intelligence. Drives likely to americans to be more careful, or will they look at President Trump already in his 70s, he got the virus and recovered very quick and think, this is not a big deal . Good morning. That latter point you just raised, especially when the president says the things he what hiso not know name is with doing these things aim is with doing these things, to show how strong he is or get people to not worry about ever it is,ch, what its going to backfire. I do not think he is out of the woods. I wish him all the best. Anybody who catches covid. But he did not look particularly great in his video and we do have this question still as to how far he is along his infection. I do not think anybody should count their chickens until you have figure out exactly things can turn very quickly. Anna that is what we hear from not necessarily news reports, but people who talk about their experience with covid. Asymptomatic. It can be easy to get over or it can take a turn for the worse after 10 days for no particular reason. What do you make of the drugs he was given and the state of the disease the stage of the disease he is that . Variables. E so many one of them being the viral load when you start. And then of course comorbidities. If the president or anybodys viral load is low when they catch the virus, it gives the immune system time to react the right way. The problem is we do not know the answer to that. We also do not know when he caught it, when he tested positive, and now you have all these drugs, some of which do not seem to have been done at the right time. If it was indeed the level doctors are saying. It is maybe confusing. To my mind, there is a risk this could turn bad. In the next few days, weeks. Sam, for me, you know, t changes everything, there is a binary outcome. You either make it through or you dont. Have faith probably in themselves. The problem comes when you add bloomberg has done fantastic reporting on the longterm effects. Some people live with longterm effects for an amount of time we dont understand yet. I saw a story last night, four out of five agents in the icu have neurological problems after infection. This could be something you live with. It scars you for life. Is right. Unfortunately, everybody keeps focusing on the death rates. Impactsa virus that biology, the functioning of your body and various organs. We do not know the longterm impacts. Whether it is going to cause risks to cardiovascular disease Going Forward. We just do not know. You cannot especially the attitude the president has in terms of being a very positive and all that those things add up to perhaps something that hopefully he would stop doing and pushing people to think covid is not a bad disease. Fazeli, director of research at bloomberg intelligence, talking to us about the disease and the unknowns involved. Chicago fred chicago fed president says he welcomed 2. 5 inflation in the u. S. The average is running below target. Addinge to bloomberg more fiscal stimulus is needed to support jobs and the economy. Economic recovery has been pretty good. It has been quicker than i was expecting in june when i submitted a forecast. I had been quite nervous about, there is a normal recovery will be get back to the level where we were going into this, you sometime in 2022 may be, and we seem to have been doing better than that. Even though covid caseloads have been very high in the u. S. , counts have been 200,000 or more, we have continued to grow through this. The last employment report was more modest than many were expecting. Tore are real questions as how quickly we recover after this, but i think we are trying to figure out where the labor market is going to settle, how much improvement we are going to get in terms of bouncing back from when we were close down, and how much recessionary dynamics we are going to be faced with in the spring of next year. In that environment i do think inflation is going to be weak. We could get relative price changes which lead to higher measure inflation for the time. I dont think thats likely to be persistent, but we will see. You said this morning you anticipate in your forecast more fiscal stimulus. Have you modeled what happens if we dont get it . Can you give us a picture of what we will see . Im hopeful there is going to be more fiscal stimulus. A trillion, which is not as large as some proposals, but that does have that effect on the forecast. I think if you take that away, and reduces demand by a lot. That means the road back in terms of employment is going to be harder. I cannot begin to guess how this is going to work its way out. The economy is slowing is there anything more the fed can do . Or are you pretty much done when you can . We are going to use all of our tools available. We are going to be paying attention to what the state of the labor market is and how the economy is growing, where the labor market is. At the moment, we are trying to figure out where the recovery is going to stabilize in terms of what normal recessionary dynamics might look like. To get additional stimulus, if we were to see continued recovery, if we got unemployment down to 5. 5 by the end of next year, those are circumstances where the fed we are in the ballpark. Inflation could be moving toward our objective. Things could be improving. I think we are going to have lower for longer interest rates. It will be uncomfortable for many people. We just need inflation up to 2 and beyond. We need to ensure the labor market continues to improve. Fiscal support would be welcome. They figuredciding out how to grow in this new environment, bringing on more workers, that would be very welcome. It is going to have to play out and the virus spread is going to continue to be important for some time. Anna that was our exclusive interview with chicago fed president. 10 minutes to go until the start of equity cash trading. Next we will get your stocks to watch. A Telecom Giant selling its carrier unit for more than 1 billion. Anna welcome back to the European Market open. Futures are pretty flat this morning. Lets get into your stocks to watch. Now joining us is dani burger. Of ourain a focus attention, talking about what they can do to fend off takeover attempt for the business. This has been dragging on a while. Has, for the past couple months here. Veolia was toe by buy a stake from ng in suez. Ng says it agreed to selling the stake because they promised they would keep everyone employed and not pursue a hostile takeover. A to not do aveoli hazel a hostile takeover there has to be a change of heart at suez. It says it intends to fight the takeover by any means at its disposal. Matt by any means at its disposal . Exact wordswere the they used. Y may not have seen matt in germany we dont have the classic american disposal system. In america you flip a switch and the blade Eats Everything up. Im not sure they have that, we call that a disposal. All right, the Company Going to sell its carrier business. What is the story . Is worth morel than 1 billion. To reason this is likely give the stock a boost is because with this large cash , it plans to bring back its dividend, suspended due to the coronavirus. Not only is it bringing it back, it is bringing it back at the level first proposed in january. That should give decent attention from investors this morning. Anna what about k s . Ni k s is selling morton salt. A very iconic logo. For 3. 2ling the unit billion. Is going to give it the much needed funds to pay down debt. Yesterday, word it was in advanced talks. Confirmed today. Matt very good stuff. Morton salt, that is iconic. Look it up. The futures pointing higher. The open is up next. Anna the minutes until the start of cash equities trading. Hereunder headlines. Out of hospital, but not out of the woods. Donald trump is out of hospital but dr. Strike a cautious tone. The goes all out after stage is set for a full takeover. The french government still wants to see a friendly deal. Thus, Deutsche Bank ceo tells it could consider m a as early as next year with one caveat. Well hear more from that interview shortly. Ast lets look at futures we head into the opening of trading. Looking atwe are gains, ftse futures treading water. They had been down moments ago so a little back and forth here and really not substantial moves on the london index. The dax and euro stoxx 50 are. 25 and if you take a look at the percent mispriced on your screen, you can see all equity indexes are looking like theyll open in the green this morning. 1 , far opening up left hand column on your global macro movers screen. The ibex in madrid opening to the upside. 3 . Theo see European Markets, ac. 2 . 25 , the c we see European Markets opening higher after President Trump returning to the white house and optimism over extra stimulus in the u. S. Bankng us, the union cohead of swiss and Global Equity. Thanks for your time this morning. Thisdo you take from optimism to u. S. President has recovered, hes back at the white house, and maybe a little more impetus to getting a stimulus package passed. Think probably it is the stimulus package which is the most important. Mr. Trump is playing typically to the way he does appear, and im delighted he is feeling better. What matters for equity markets is that the stimulus package and Economic Outlook. Anna i read one of our colleagues describe the stimulus as certain, but uncertainly timed. Is that the markets base case . Eleanor i would agree with that. The market sees both the , tight, as uncertain but probably not particularly important whichever candidate wins, there are advantages and disadvantages to either candidate winning and the stimulus package is always helpful to know there will be an two been a better situation Going Forward but that would be the most important solution shortterm. You over concerned are the growing cases of covid19 in the u. S. And in europe . Investors . Roblem for will be a problem for investors if it leads to further tightening measures, which will further slow the economy. It is not a surprise to me to see we have more covid cases at the moment. With open schools, which is absolutely vital for the young population of our countries. It is absolutely vital we try to keep some Economic Activity going. Comfort from is although we do seem to have more cases being positive, that comes in the background of more testing happening that what we saw in march, and it would appear there has been some progress in the way one is treating covid. Citizens continue to be responsible, common sense practiced by governments and citizens together and there is a unity of purpose between authorities,health and citizens, this is something we can weather together. We havehe other hand, measures put in place that are difficult to understand, which if not accepted by citizens, we have a situation where the Health Authorities are unable to handle, it could get more serious again. Anna one of the strands of fiscal stimulus getting a lot of attention, particularly in europe from a green perspective is spending on infrastructure. In your experience watching this space, do you expect we will see further spending on infrastructure as a result of covid . Eleanor in many ways, some of the pentup demand for infrastructure with perhaps governments waiting for a theres crisis, where would be a reason in order to spend on infrastructure, in order to get people working again, so that gives me some hope there will be some type of spending on infrastructure. 20 plus years ive been working on equity markets, we have been promised every year large, greater infrastructure spending, in areas that are clearly suffering and it doesnt happen. I find him to structure happens when you really have an economy which is booming, where you have a private demand for improved particularlye, when you are building a new neighborhood, for example, as opposed to being topdown directed. That is what makes me a little more cautious on some of the cyclical sectors at the moment, as to whether they will truly have that impetus coming from infrastructure and rapid impetus, which would lead to better performance and more sustainable performances for them Going Forward. Ist i do find interesting that, should mr. Biden be elected, and should the eu project go through, both of those projects seem to have quite a large emphasis on greener infrastructure, and that does mean that when looking at infrastructure, i tend to choose companies which have more emphasis on renewable wevenability approaches, also been leaked opportunities in that space from the u. K. With the conference ongoing and i understand mr. Johnson is going to be looking at wind energy and discussing it in the speeches today. That may be an interesting area to look at. I would be more cautious going in terms of invested in in traditional beneficiaries of large infrastructure. Matt we will keep you with us a little more. A little more insight into your strategy. Eleanor taylor jolidon, Union Bancaire privee cohead of swiss and Global Equities stays with us on the European Market open. Remains laser focused on executing its strategic plan, but wont rule out a merger or acquisition. Next, my exclusive interview with the ceo of Deutsche Bank, christian sewing. This is bloomberg. Anna welcome back to the European Market open. Nine minutes into a trading session that shows modest gains for European Equity markets. The stocks zero 600 sitting up. 2 , and if i pull up the sectors picture, a picture of Energy Stocks moving to the upside along with autos. Lets get a headline with laura wright. Laura veolia is taking a 30 in suez, setting the stage for a takeover. For 3. 4 billion euros. Suez as opposed to what it calls a hostile approach and is trying to frustrate plans. Ahead,acquisition goes it would create a global giant in waste and environmental services. German factory orders are up for a fourth month, the latest sign the economy is faring better than its services focused peers. Gained from germany 4. 5 , beating expectations. The rise is led by autos and investment goods. The swedish telecoms giant has agreed to sell its carrier unit in a deal worth more than 1 billion after securing a cash injection, it plans to bring back the Dividend Payment it shelved as a result of the pandemic. It manages infrastructure assets. That is your Bloomberg Business flash. Matt thanks very much, laura wright in london with your top business stories. Ontsche bank remains focused implementing its turnaround plan according to the ceo christian sewing in an exclusive interview. He told me about how the bank has been coping with working from home thus far and his plans to keep people bring people back to the office. Im sure almost all ceos are telling you that work from home and also the whole interaction during the key lockedblock shown down have worked really well and im impressed and i deeply appreciate the performance of our people during this months. Also, the day of the industry here in germany, with our clients showed not only Deutsche Bank is on the front forefront, but they are impressed at how fast we could react and respond to their questions. Thats what we need to maintain, though im also a big believer that while it is good to see that work from home works, i also welcome and hope more people return to the office because at the end of the day, a generation of new died ideas, cooperation works best if people are in the office. Matt do you expect a significant change from now on . Are your bankers going to be coming to the office three or four days a week and spending a few days more a week at home with family . Judge,an too early to to be honest. Obviously it is a huge topic. I do see we will never come back to the kind of environment we have seen great covid. At least athat we, Deutsche Bank, will end up in a certain hybrid model, but yes, that we will see bankers returning to the bank, to the office, but that we have a more flexible approach because it proved to be working ok, and i do believe also for some, it depends on the underlying divisions people working. Commuter time and so on. It made the bank in this way more efficient. In other areas, you need interaction of people and therefore, these people cant wait to come back. It really depends on the division but overall, Deutsche Bank will go for a hybrid model. Matt one of the reasons it is exciting for investors is not just because nobody ever has to put on pants again and you get to see your kids running around, but because real estate costs so much. To pay such a high cost for all of your office space and travel cost must be a huge chunk of your budget every year. Do you see those costs coming down more than you previously thought . Christian yes. Covid has shown us there are costreduction opportunities which, to be fair, we didnt have in mind to such a scale like we are now thinking about, but i would also caution that the first initial reaction of the six or eight weeks that we can reduce real estate by double digits is also wrong. We need the people also in the bank for collaboration, idea generation, in particular the young people who want to come back. Them coming to the bank. They need senior people training them, educating them. Therefore, i think the truth is in the middle, but for sure, real estate but also travel will provide us with incremental cost cutting ideas. That was the Deutsche Bank ceo christian sewing speaking exclusively to us here at bloomberg. Lets get back to. Eleanor taylor jolidon, Union Bancaire privee cohead of swiss and Global Equities. Thenor, let me start with consolidation issue. Not just in banking, but in general, we saw a big drop in m a at the beginning of the covid crisis. There has been a resurgence and we are getting more and mende stories. Are we going to come back and could covid boost the m a activity we see at the end of the year . Eleanor i think before we went into covid, we had a situation or a number of companies which did have very healthy Balance Sheets, and we were also in an environment where growth was already pretty scarce, to be honest, so it would have been an ideal environment to see m a picking up. That was slightly delayed by the pandemic, when we talk to companies, yes, they were looking at targets but they were diligenceconclude due was saying, he was talking to people about how you could move things forward has been perhaps slightly damaged during the pandemic and looking someone in the eye and saying lets merge was something that took a hit during the pandemic, so not a big surprise to see is coming back quite strongly at the moment. Youve been mentioning european stories this morning, but we had a lot more m a over the last few months in the u. S. , so pretty classic picture developing at the moment on the m a front in view of the health of a number of companies Balance Sheet and in a low growth environment, the e opportunity for growth has to be inorganic, perhaps. Anna youve been looking at one sector weve covered m a recently, the payment space. You like fintech within that. For those who dont spend a lot of time looking at that sector, the specifics around the different payments businesses, which are the ones or why do certain businesses stand out to you over others . If many people have many credit cards and can make payments that way, why do the others make life so much easier online . M a certainly if you look at fintech in general, this is a subsector which is growing at attractive levels in terms of sales, around 14 . Earnings growth of the sector, you are peaking between 17 and you are in an extremely profitable sector. Margins are in the 36 average for fintech and that does mean you are paying a little more iney for these companies terms of ratios, but that is totally justified by that Strong Operational performance and m a helps, but just the growth in general because these are e intense companies. You got an attractive level. High cash flow return on investment level, which is what we particularly like as a measure of the strategic quality of the company. Global payments is the largest part of fintech. Mastercard is the kind of Company Everyone has heard of. If we look at m a, we had the announcement from nexi in italy, willng with sia, which create a southern european powerhouse in the payment industry and is very attractive at the moment. You mentioned on that slide a couple of things that are not necessarily in the payment space , the insurance sector and you got a number of companies beyond that large payment sector, which are attractive in fintech, which data analysis, which are helping with customer applications. We havent been going into our local bank or Insurance Broker the last few months, and that means they have to find a different way of reaching out to us and making their product attractive, so interesting growth, slightly higher growth than the general tech sector, but not all companies are equal. There are some areas of fintech we would avoid and that is why we always recommend an active allocation to a given sector as opposed to buying the index. You might have pitfalls within that. Matt got it. Excellent stuff. Thanks for joining us this morning. Eleanor taylor jolidon, Union Bancaire privee cohead of swiss and Global Equities. She will be continuing the conversation with us on Bloomberg Radio at 9 00 a. M. U. K. Time and i will tell you, shes got some under the radar insight that you might want to hear about. Definitely tune in on the london dab Digital Radio in about 40 minutes 50 minutes. Coming up, breaking up big tech. A house panel is said to propose sweeping reforms affecting giants like amazon and apple. Well tell you the details next. This is bloomberg. Anna welcome back to the European Market open 20 minutes into a trading session that is fairly flat for european stocks all the overall, down. 2 on the ftse 100. U. S. Futures, flat to slightly negative this hour. Stocks on the move this morning, lets get to dani burger. Telia,ews this morning, the swedish telecoms giant trading at a high after agreeing to sell its carrier operator. That deal gives it a little more than 1 billion. The stock is surging more than 4. 5 because it has decided with this cash injection to reinstate its dividend. It is getting it back to what it promised or at least wanted back in january before the coronavirus hit the company. Those shares, rallying. After thee downside gucci owner decided to sell part of its stake. This is something it has been doing since 2018, trying to push its portfolio of market. It is selling a 5. 9 stake, trading about where koering sold it had. More deal flow. Biggest north sea oil and gas operators. This is positive for premier because theyve been wanting to restructure debt for a while and this reverse takeover will allow to do that. Trading 13 higher this morning. One of the biggest movers we have to talk about business takeover or at least attempted takeover between veolia and suez. Suez trading at a record high aftersuez, veolia bought a 29. 9 stake from suez. It has been attempting to do this for some time. There is a big rally coming from these companies, especially ng, because it agreed to sell its stake to veolia because it up the offer price by 16 . Not yet trading at the 18 euros a share veolia said it would try to take it over at. Rallying this morning that there is skepticism in the market as to whether this will happen. Pursuesaid it would not a hostile takeover, but it is unlikely that it will be not hostile, because suez itself has said it is going to use any means at its disposal to really fight off what it calls a creeping takeover, because this really has been happening for some time. It wants to see a friendly merger between the companies, echoing what we heard from bruno le maire, the french state wants to see a friendly deal, but there needs to be a big change of heart from suez because despite the offers from veolia, it is using any means at its disposal to prevent that take over. Dani burger, going through some of the big movers for us, the big stories in markets today. Next, back to the white house. President trump returns from the hospital and says he will be back on the campaign trail soon. As soon ass mask off he gets back to the house and tells americans not to be scared or less the coronavirus takeover their lives. The next debate is scheduled for just nine days from now, october it. It will go forward according to both sides. We will discuss that and more next. This is bloomberg. Matt welcome back to bloomberg market the european open. We are 30 minutes into the stillg day right now and looking at kind of a mixed picture in terms of the indexes with the ftse down, the dax and cac slightly rising. U. S. Congressin is set to propose sweeping reforms to block tech giants like amazon and apple from selling their own products on the market places they own. Thats according to a critique of the recommendations by a republican lawmaker. If they come to pass, the reforms would be the most dramatic overhaul of competition law in decades. Joining us to explain all of this is alex webb, tech columnist at bloomberg opinions. Will applee not be able to sell its products in the apple store . Stage, weink at this are looking for what the details are going to be, but the implication is that you essentially cant sell products on platforms where you might it appears to be the case at the moment apple is able to give preferential treatment to some of its own offerings. For example, apple music versus spotify for instance and amazon, it might have incentive to do that. It seems as though that is the weak spot that this panel is targeting and has potentially wide reaching implications. Anna we were discussing this before the program a little earlier. He was making the comparison with supermarkets, they sell their own brand as well as the branded stuff. We talked about this before because this has been a talking point for a while. Is that a relevant comparison in this case or not . With due apologies to matt, that is what is being trotted out by amazons team. It is not true. The reality is it is more like amazon knowing that commercial activity of every shop. Walmart knowing every shop on high street and being able to look into what they are doing well and saying we are going to do this or come up with these competing products. This apple on the app store, they are the only to sell out of iphones. Matt you dont have to have an iphone. There are many other phones, right . A lot of people dont use the iphone. But thatsis fair, not quite true because you also have the market controlled by google. At the way apple has developed the iphone look, im not saying the legislation as proposed or is reported is going to be the correct solution. I could see a great deal of we are atith it, but least starting to address these issues seriously and that is something that i think is long overdue. Matt well, i defer to you as the expert on this and i recommend people read your columns, as well. Check out alexs work by typing in opin go on the bloomberg terminal. Also, if you google him, hell pop up. Google doesnt put its own products up there along with the other stories youll read if you google alex webb. Lets get the first word news from the bloomberg terminal with laura wright. Coronavirus can spread through the air to people more than six feet away from an infectious person. Thats the latest guidance from the cdc. Transition method of transmission is uncommon. Still, it raises challenges for businesses and school. Boris johnson will commit to producing offshore wind power as part of his green Industrial Revolution as he seeks to get his domestic agenda back on course. Speaking at the conservative party conference, he set the stage he said noble energy can drive recovery. Spain may extend its Emergency Support beyond january. In dread is ready to reevaluate the situation, but a lot will depend on a vaccine. Programsion of the could protect hundreds of thousands of at risk jobs. Spain has one of the regions highest unemployment rates. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna laura wright in london. Donald trump returned to the white house after three days of hospital treatment for covid19. In a video shortly after, he urged americans not to be afraid of the virus. Dont let it dominate. Dont let it take over your lives. We are the greatest country in the world. We are going back, back to work. We are going to be out front. Anna joining us now, bloombergs Senior International editor jodi schneider. President otable about trumps return to the white house . We saw a series of images of him getting there and waving to the crowd, and this released video, as well. Jodi he seems, the president seems almost defiant about the virus, that he is eager to get back to work, even though he is obviously has been hospitalized for several days, so we have a lot of Unanswered Questions about his condition. We have his position ahead of his release saying while the president was fit enough to go home back to the white house, he may not be entirely out of the woods and that further care would be provided at the white house and coming days. Within hours of him arriving after he got there and we saw him take off his mask on the balcony, heard officials were saying there would be measures restricting access to the president and offering protective gear to those meet with him. Preventintended to further infections after we saw a positive coronavirus test for several key aides including the press secretary. We are getting mixed messages that on the one hand, hes saying hes ready to get back to work, ready to be done with this and yet others are saying they will have to take protective measures at the white house. Here . What is his strategy does he seem like hes about to take the strategy of if i beat this, so can most people . Lets not worry about it and just move on . Jodi that doesnt seem to be somewhat of it the strategy. He said nobody that is a leader would not do what i did. I know theres a risk, but thats ok. Im better and lets move on. His now tackled this, campaign has launched something ga the floodtion ma the campaign trail with surrogates saying we are how bidding, how here to do his bidding even if he cant himself. He does seem almost defiant about not staying in the hospital, not seeming to be affected by the virus, even though his physician is saying he is definitely not out of the woods and we know that from what medical experts tell us about the regular path of the virus, that it usually does take more than a week. Certainly sometimes several weeks before someone can be fully recovered. Anna thanks very much. Jodi schneider with the latest on the health of President Trump. Next, we turn to something entirely different. Bugattis 3 million car. We will hit from matts interview with the ceo on how to follow up. This is bloomberg. Brake, brake, brake, break thank you. Matt there i was last week driving the Bugatti Chiron sport, a version of the worlds there arepercar, currently only 250 of them in existence and the cheapest model goes for 3 million. After taking the car around the track and driving around town a little bit, i spoke with the president and ceo of bugatti, Stephan Winkelmann. I asked about plans for a followup car to the chiron. Stephan there will be a successor, but this car is still a very young car. It has a lot of years in front of the chiron. This is, in my opinion, a supercar and we talk about the future when the future is the present. Chiron matt definitely a supercar, 1500 horsepower. Driven anything like it. It is totally an internal combustion engine. Four turbochargers, as well, but is there going to be a electrification coming from bugatti . Stephan we had last year a lot of talk about a second model lineup to be full of electric, a fourseater which you could use on a daily basis. This was blocked, the project, due to the Coronavirus Crisis said, we are as i not talking about what is coming next. I can tell you the last two years for bugatti were very successful. We had a good economic results in 2018 and 2019 and it could be a record year despite the covid crisis. The year 2020 is maybe going to be the best year ever. Matt are we talking about revenue . Surely youll break the record in 2020. Stephan if we speak about turnover and revenues, economic results, i think we can be better than 2019. This is quite sure. Matt it is fascinating because we have the lockdown, so many people had to stay in, but of course if you have enough money, what is this, 3. 6 million for the pure sport . Stephan you dont necessarilyt to wait. Where are people buying them . We have a balance between the main market. We have one third in north america, the u. S. And canada, then in europe, the main market is the u. K. , germany, switzerland. General, the european area is covering one third and we have the rest of the world, the middle east and asia pacific region. Matt i wonder if you saw a pickup sooner in, for example, asia. Seemed to like chana bounced back almost right away. Do you seek china bounced back almost right away . Stephan we are not present in china with the chiron because the car is too expensive and the taxation would kill the price. Responsive here in europe, faster than expected and also in the united states, even through the situation. It is going quite well so better than expected, but for sure, not like we budgeted. A year if we been would not have had covid. Matt that is another way bugatti is different than any other carmaker. I always ask about supply chain during the crisis and bugatti is different, as well. A lot of the components are inhouse, so highend they are local, but what was your supply chain like . Stephan when you shut down , thistion, we also formed was coming from the government, a global shutdown and we had more european and overseas suppliers. It was quite manageable and i have to say, we are pretty well on track and we have no hiccups in the production right now. Matt what are the other concerns besides one of the other concerns besides coronavirus, brexit. Do you see that having any effect on your business . Q have u. K. Suppliers, buyers. Do they care about increasing taxes . Stephan this is going to happen next year and we will see how people are reacting, but for the time being, the u. K. Market is forle and we are prepared if there is an increase, this is something we can handle and there will be no reduction due to that. President was bugatti Stephan Winkelmann talking to me at the racetrack. Joining to discuss is our autos reporter out of munich. Big impetus for me going out there to drive the car and talk to the ceo beyond the experience was there have been reports that an Eastern European electric carmaker bike might buy bugatti from volkswagen. That would be a concern, because it leaves this iconic hyper carmaker with, well, not the same kind of resources you would have under such a giant like volkswagen. Good morning, matt. Absolutely, it is like you said. There have been reports not only that volkswagen is considering selling bugatti, but similar reports about lamborghini, that they might ipo the business and it is part of a bigger strategy of volkswagen. They want to slim down their portfolio and get a lot of those higher end brands out of there to focus on the audi, porsche, and volkswagens, but the being a volkswagen is it is the Worlds Largest carmaker and that comes with the kind of resources you would expect for a company like that. Anna weve got other car news we need to talk about and look ahead to. What are we likely to hear from daimler today . They will be addressing investors who want to hear more about electric plans at that carmaker. Oliver just like volkswagen, daimler is undergoing major restructuring and today, we are expecting to hear an update on what direction the restructuring is going to take. The important thing people will be looking for is any update on the electric or hybrid model rollout, and how the talks over job cuts are going. Remember, there are talks that almost 20,000 jobs could be on the block as they try to figure out how to deal with the coronavirus pandemic with a shift toward electric, but those talks with unions, they are difficult, complicated, and there is hope we might hear something today and maybe a cherry on top investors are hoping for, alliances between renault and nissan. Matt the hard part is getting the job reductions passed the labor union, right . They have an agreement, daimler, i believe, that they wont have any forced firings before 2030. Oliver yeah, thats exactly right so it rules out forced layoffs in germany until 2030, but the problem is they still need to cut jobs somehow, so what happens then is you go to the labor union and say this is our situation. Can we do this with buyouts . Can we do this with early retirement . How can we make sure to get our costs down and meet in the middle . Obviously the labor unions have their interests in keeping those because that is where their promises to workers come in, but something is going to have to give and that is what today is going to be about. Anna thanks very much for joining us. Autos reporter, oliver sachgau, with the latest on various threads including the daimler meeting. Today, we are asking the question on our mliv blog, how cano high how high yields rise if we have expectations of further fiscal stimulus . We will talk about that with laura cooper from our markets like the next. This is bloomberg. Anna welcome back to the 52 minutes into our trading session, and we got European Equity markets on the back foot. The stoxx 600, down. 2 . Leadingth care sector some of those moves to the downside. Laura cooper, macro strategist, joins us now. I want to ask about the question of the day because we didnt get to talk about this at the top of the hour. How high can yields go on treasuries . I guess weve seen readjustment in expectations around the treasurer mark treasury market, reelection prospects pushing yields higher. What answers are you getting to this question . How high can yields debt because the fed might not want to see them this high. Laura traders are adjusting their calculations and that is what is playing out in terms of this bond market selloff, notably at the longer end of the curve and markets are getting ahead of themselves at this point because when we look at higher rates, the lack in fundamental backing at this stage. Yes, the 10 year yields have broken out of their trading range, so it opens up that basis momentum 80 to 100 point range but to break through that 1 threshold, i think we do need clarity in terms of the virus and how that is unfolding and clearly, that remains absent. I think at this stage, it is likely the case that if we see financial conditions continue to going tothe fed is potentially extend their bond purchases further at the curve. Out the curve. That ultimately keeps yields contained, but it is just as uncertain a backdrop that remains. The Labor Market Outlook is deteriorating so all those forces should cap yields to the upside. Stimulus, and get it looks like the president is more apt to push for it now post covid infection, does that mean yields continue to rise or are they capped in a sense by concern about the election still . Laura there are a number of factors. The fact markets are from running, the curve steepening already points to stimulus package expectations already largely priced in so if we look at the 5, 30 year spread, that is touching upon the 125 basis point, which has proved elusive. A stimulus package come through, it is unlikely we will see material upside from their. There. The fed will continue to be the backstop. There are objective is to keep financial conditions loose, given the uncertain Economic Outlook so ultimately, i would expect them to continue to keep thed cap and it is unlikely case we will see a sustained breakout in yields until we see clarity on the virus front and that is unlikely to come until we see potentially a vaccine. Anna thank you very much. Laura cooper, bloomberg rockets live macro strategist joining us with the latest on these markets. Weve got European Equity markets trading slightly to the downside, down. 2 . The ftse 100, weighted down by one of the laggards. U. S. Futures, the nasdaq down. 3 . A bit of concern about what the house panel may propose. We talk about this earlier with alex webb. Matt well, we will hear more about that throughout the day and we will see how that affects tech stocks that trade in the u. S. We dont have those big marketplace kind of tech stocks trading here like google, like apple, like amazon, but definitely a fascinating problem that tech has on that side of the pond. They got the tax problem on this side of the pond. Stay with bloomberg television. Next is surveillance. This is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Out of hospital, but not out of the woods. Donald trump is discharged but doctors strike a cautious tone about his health. His return to the white house comes as the cdc says coronavirus can spread indoors in the air beyond 60. 34 more states six feet. Deutsche banks chief executive tells bloomberg it could a as soon as next year. Welcome to bloomberg surveillance. Quite a lot going on in the markets. Quite a lot going