Donald trump orders in and to hong kongs special status well signing legislation to sanction chinese officials. Beijing vows to take strong countermeasures. Earnings season continues. In the united states, Goldman Sachs reports after jp morgan, citigroup, and wells fargo set aside almost 28 billion for bad loans in the Second Quarter. Welcome to the program. Just under an hour away from the start of the cash equity trading day, lets have a look at futures. We do have a lot to talk about when it comes to the Banking Sector and the bad debt story in the u. S. All of that was quite dominant in yesterdays session, but we do have some catch up to play in the europe in europe. Plus, we work in the latest trial data from moderna over in the u. S. That particular vaccine getting some headlines. As a result of that, we see that lifting stocks in asia and futures in europe and the united states. Lets get to some breaking news. Some numbers coming through from burberry. Lets get to those in the fashion space, in the luxury space if you like. Q1 retail comparable sales down by 45 . The estimate was down by 48. 3 . Retail sales coming through at 257 million. That is just a shade under anticipation. They say q2 will continue to be materially impacted. Anticipate the first half 2021 sales declining around 40 50 . When they talk about q2, i think they are talking about what we would call a calendar q3. Organizational changes have been proposed a burberry. We have heard quite a lot about that already under the relatively new ceo. The simplification of some of the things happening. The organizational changes have been proposed and savings of 55 Million Pounds are being targeted. Just a couple of other things to drop into the conversation. We are hearing numbers coming through from the fast fashion retailer asos. They see profit for the topend of market expectation. Sales up by 10 . A lot of Online Shopping has been part of the lockdown story. If you are predominately exposed on that channel, perhaps that goes fairly well for yourself. Expected to be at top end of estimates. That is the picture for the retail, the fashion retailing space. Plenty of news out of that from fast fashion in the luxury end. Lets get to the gmm and look at the markets more broadly. Nice picture of the asian session. Just a quick note the trend is obviously to the upside. I mentioned the modernity trial, obviously outweighing chinau. S. Tensions and the actions taken by President Trump on hong kong. So the virus is trumping trump, if you like. The philippines does look like an outperform or. Focus on the infection rate there, also an upcoming ipo perhaps removing liquidity from other parts of the market. We do have a bit of a by everything story going on. We also seem to be buying some sovereign debt, as well. That is a quick look at the asian equity session. We look ahead to a positive session for europe and the u. S. , perhaps, according to futures. Most asian stocks climb. That is amid optimism that progress is being made in developing a defense against the coronavirus. The u. S. And china continue to ramp up actions against one another. President trump said he issued an order to end hong kongs special status with the u. S. He signed legislation that would sanction chinese officials responsible for cracking down on dissent in hong kong. Lets get to the markets with laura cooper. Thank you very much for joining us. Let me ask you about the tradeoff. It does seem as though the vaccine and hopes around a vaccine are trumping other concerns. Trumping concerns around what President Trump is doing with china geopolitically. Laura i think that is the case. I think what we are seeing is the fact that this week, there is just such this exceptional news flow in terms of how much there is for markets to digest. So, whether it is kind of from a geopolitical tension around hong kong. We are having numerous Central Bank Speakers hinting at more stimulus. Then we have these Bank Earnings, where we are seeing troubling undertones. But with the vaccine coming out after the u. S. Market close yesterday, that really seems to be dominating the price action we are seeing today. It is clear that europe looks to have some catch up with the u. S. Futures also higher. There is just such choppy news flow, it remains to be seen whether this optimism can prevail one more Bank Earnings are expected today and we are also going to see more undertones come out from the news flow. What have we taken away so far from the Bank Earnings season . More to come today. Even what we heard yesterday was mixed in terms of the response we saw two individual stories, individual market reactions, individual stocks. But where there any broader themes . The level of provisioning getting a lot of attention. Laura absolutely. Heading into the Bank Earnings season, the bar was exceptionally low in terms of profit beats. Etf expectations were in excess of 70 decline from year ago, so the bar was quite low for beats. On isarkets are focusing the accompanying commentary and how it is quite needs downbeat tones in terms of the outlook. Thate are seeing remarks the outlook overall is deteriorating. Interestingly, we are seeing that they are putting aside 28 billion in the Second Quarter, ofch comes only short of q4 2008. What they are saying is that stimulus has deferred any kind of default or delinquency in payments. And instead, it is not eliminating them. In contrast to previous recessions, what we are likely to see this time is the deferred recessionary effects. Those are still to come. That is why we are seeing banks strike quite a downbeat town in commentary. Markets are grasping onto that within the sector. Anna and when it comes to looking ahead to what might move markets next, weve got to talk about chinese gdp numbers. What do you think could be the impact of chinese gdp reports on assets . This stage,nk at investors are expecting a sharp readout to the Second Quarter. This is reflective of the fact that the economy is exiting a lockdown. We saw in your 7 contraction in the First Quarter. Even these market consensus thes for 2. 4 bounce in Second Quarter is likely it is far away from any kind of vshaped recovery. There are still some cautionary signs. Ultimately at this stage, it is largely priced in to stocks. The question Going Forward is can that upswing feedthrough to kind of propel this remarkable rally further . Which remains to be seen just from the fact that we are seeing signs that governmentbacked funds can curb some of the speculation that we are seeing or get ahead of any kind of crash. On this point, policymakers now versus back in the Global Financial crisis are looking at more targeted stimulus measures and may be less and unleashing a fiscal stimulus that we saw back then, so it is unlikely to be the case that china could really kind of be that source of growth pulling up the broader Global Economy. I think that is unlikely to be the case this time. It is largely priced in. A miss would certainly kind of shake markets, but at this stage i dont think a strong rebound will surprise. Anna laura, thank you very much. It could become of a thursday story, i suppose, the gdp number out of china, but this time tomorrow we will know the answer to just how big or small that chinese gdp number was for the last quarter. Thank you very much, laura cooper, joining us this morning. If you want to get involved and that question of the day around china, get in touch with us on tv. Next, is 2020 the new 2008 . As we look at the earnings picture, why we have reached a new Reference Point for gauging stock performance. That is next. This is bloomberg. Welcome back to the European Market open. Some 45 minutes to go before the start of the cash equity trading day. It could be a positive start for european equities on vaccine hopes. They have certainly been missing the asians lifting the asian session. Here are the top stories we are covering at bloomberg. President trump has ordered an end to Hong Kong Special status with the u. S. , the move in the wake of beijings imposition of a new sweeping security law and hong kong drew a rebuke from china and added fresh uncertainty for business in the financial hub. Trump also signed legislation sanctioning anything for responsible for cracking down on dissent in the city. A covid19 vaccine by u. S. Drug Company Moderna produced antibodies to the coronavirus in all patients tested in initial safety trials. However, a number experience side effects, some of which were severe. The vaccine will now move to a much larger, late stage trial later this month to determine whether it will be approved by u. S. Regulators. U. K. Huaweilled the ban disappointing and wrong. Phone companies have been barred from installing new equipment from the Chinese Company from the end of this year. U. S. Secretary of state Michael Pompeo welcomed the news, saying it bolsters transatlantic security. Huaweis executive Vice President told bloomberg the decision is bad news for the country. We are urging the u. K. Government to reconsider and give us more time to identify the mitigations to the sanctions that the u. S. Have implemented year welater on this will have some mitigations and we would like to talk to the u. K. Government about it. The decision today is disappointing about disappointing and bad news for the u. K. Anna global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Lets talk about the earnings story. He new reference year the earnings season is critical for understanding the real revenue impact of covid19 and gauging their rate of the recovery. Great to speak to you once again. Let me ask you about the call of the significance of this earnings season. This has now replaced 2008 in the annals of history, the low point after which all earnings reports will be tested. This earnings season is of paramount importance. It is arguably the most meaningful data point that we have had since this all began. There are two lawyers. The first layer is essentially being able to look under the hood of corporate banks. To answer this incredibly important question to what extent were analyst estimates cut in march a kneejerk reaction . 20 . Ave a being cut by in aave analysts modeling 2008, 2009 scenario as they lacked a Reference Point. Concept of 2020 being the new reference year. Darwinianen in a motive Stock Selection where we have seen a perpetual buying of large Winning Companies and this is an opportunity to provide substance to that run. It is not for to provide substance earnings support an opportunity to provide substance earnings support for companies that have done very well in terms of expectations. Remember when i was an equity analyst. You would look back to the financial crisis, you would look back to what was happening in , dependingfore that on the sector you are analyzing, but let me about ask you about the earnings season. What significance is that going to have . What about the state of recovery for the u. S. Economy in this case . Anneka there are two sides of that. That isinformation backward looking. You get information about run rates. They are corporate behavior. The lockdown is starting to ease. Then comes the outlook statement. That is the most challenging. As many of these banks have referred to come of the outlook is very cloudy. It is very tricky to gauge how things are going to unfold. ,f you go beyond the bank deeply cyclical sectors, these are areas which have massively underperformed. What you could perhaps see is the earnings upgrade. We already saw some early signs of that. That could potentially be a trigger for some set of shift to see the value growth phenomenon. Anna let me ask you about tech. Let me ask you about growth, about tech. The company not far from you. The real key part of the tech story here in europe, their numbers seeming to please. It is all to prove for the tech sector. That itstions earnings will be more robust, than the tech sector really needs to deliver this quarter. You are absolutely right. The tech space has benefited from having a robust earnings support. One could argue that covid has only accelerated digitalization, innovation anyways. Thisther big factor is fear sinning. Investmentgrade are negative , it does offer a relatively more attractive area. And the tech phase feels like an area which presents comfort. That is why this earnings season is absolutely vital to support these rallies and to allow these rallies to continue. Thank you very much. Anneka treon stays with us on the program. Lots more to discuss, including eu leaders quibbling over a Recovery Fund, but will fiscal union make the union area more investable . This is bloomberg. Anna welcome back to the European Market open. We are still 40 minutes away from the start of the European Equity trade. Says she isl prepared to compromise when eu leaders discuss their Recovery Plan this weekend. They are pushing for a decision at the meeting, but the dutch Prime Minister was less optimistic, reiterating a demand for stronger conditions tied to eu grants. Anneka treon is still with us and joins us from amsterdam. The netherlands is one of the countries that is Still Standing firm on this and wanting to be a little bit more frugal. Do you anticipate, how important is it that we get agreement from eu leaders on friday into the weekend . It is absolutely crucial. This is more than covid. If you look back over the last 10 years, europe has faced a last tough decade. European equities are barely in positive territory whereas the u. S. Has doubled. Europe has suffered from an old whereas theomenon u. S. Economy has benefited from you normas overexposure to tech. This European Recovery Fund is about more than supporting hospitality, tourism, etc. With their tax flow problems. It also includes green, digital transitions which are crucial to the region to regain its competitive advantage after a relative underinvestment period, which should allow Asset Allocation to finally address this almost structure structural underway in europe. So does this make from a global perspective, do you think this makes europe more investable and will that be the case if the agreement is in some ways water down . The rhetoric at the moment with regard to how decisionsaking should be made, the reason it is becoming more investable is also about a longawaited policy could catch up with its monetary union. Allocators have ,een difficult about europe given the political thertainties because country seems quite far apart. This Recovery Fund is the first signal of a fiscal union. All eyes are on this how this fund should be governed. Would countries specifically be empowered to make countrylevel decisions . I think the important factor is that companies should be empowered to give out grants, give out subsidies to invest not only in sectors which are struggling right now due to covid, but also to invest in some future growth in order to ,ake europe more selfreliant more sustainable, because there is a discussion about the deglobalization of covid. Timing is actually brilliant for europe to catch up. Anna ok. Great to get your thoughts. Anneka treon. Joining us there from amsterdam. Up next, positive results in modernas vaccine trial as it spikes optimism in trials. One leading expert says that jerry is out on it safety. We will discuss with our Health Editor. This is bloomberg. Its pretty inspiring the way families redefined the word school this year. Its why, at xfinity, were committed to helping kids keep learning through the summer. And help College Students studying at home stay connected through our university program. Were providing affordable Internet Access to low income families through our internet essentials program. And this summer, xfinity is creating a Virtual Summer camp for kids at home all on xfinity x1. Were committed to helping all families stay connected. Learn more at xfinity. Com education. Anna welcome back to the European Market open. 30 minutes to go until the start of wednesdays cash equity trading day. Lets take a look at what you need to be watching out for as we go through today. More u. S. Bank earnings this afternoon. Today, Goldman Sachs and bny mellon. Citi and jp morgan. At 10 00 a. M. U. K. Time, the Eu General Court will weigh in on apples 13 billion tax bill. It could empower or halt other tax probes by the eu. At noon u. K. Time, the euindia summit kicks off. There will ba Video Conference the indian Prime Minister narendra modi. Lets talk about hopes of a vaccine. The optimism in markets sparked by successful early Clinical Results from modernas coronavirus vaccine. All patients produced antibodies in the trial, though some did report severe side effects. Still, the result clears an important hurdle in bringing the treatment to market quickly. Lets get more with our Health Editor john lower men. Good morning. What is the evidence that the vaccine might work .