Cases surged across several u. S. States, while hong kong and tokyo report new high marks, and india considers new lockdowns. Wall street banks capitalizing on the Federal Reserves extraordinary rescue measures with record profits. Shery lets take a look at how markets are trading at the moment. U. S. Futures are coming online flat, after we saw losses in the regular session after two days of gains. We had investors continue to rotate out of this years top performers. Zero. 7 , fell about with microsoft and apple leading the losses. We had technology, the biggest decliner on the s p 500 as well. When it comes after hours trading, netflix also slumping on disappointing results. We had a couple of elements factoring into the market resurgence of virus cases factoring into the market, resurgence of virus cases, of course, but initial jobless claims higher than expected and the smallest weekly decline since march. Take a look at what oil is doing, Holding Steady at 40 a barrel, trading on a tight range the whole of this month. Opecplus confirming it will start tapering output cuts from next month, but confident it will not hurt whale prices. Prices oil prices. Could be set to snap a twoweek game. Futures looking mixed with little change. Today, aussie bond traders will continue to watch for the rba to perhaps resume buying for the three year yield above its target. Markets were the rbas pain point. China led the wrapping u. S. Emerging stocks and forex. They retreat from a fouryear high. We have asian futures settling higher. We could be in for a volatile session on the mainland. We saw the csi 300 give up half of the monthly gains. The largecap sse index, that markets worst drop since september. Time, my tirelast wiped out 20 billion of value, signaling a desire to cool the frosting market. The tech sector may continue to wobble today on top of a bubble. Surging in hong kong, 200 in the debut, which towards china pushes tech stock efficiency in the face of pressure from the u. S. , which has a ubs hedge fund vetting on small and incised midsized chinese tech stocks. A closer look at where the money is moving in, lets turn to Tracie Mcmillion with wells fargo. She joins us from winstonsalem, north carolina. Great to have you with us, tracie. Was it inevitable that we would see a pullback in these big tech names, especially since we are now into earnings season, and given all the names factored in already, how much room to go higher do they have left . Continue toctually like Information Technology. It is our most favored sector within the u. S. We think the winners are going to keep winning, particularly as we continue to struggle with the coronavirus. Companies that are utilizing technology the best are those that are the ones that are rising in this environment. We think that Spending Continues , Spending Continues for technology and the fundamentals , seeing support in higher prices in that sector. Shery given how extended we look, especially in the tech sector, is there a possibility this is the start of consolidation during the earnings season . What are you expecting in terms of the next few weeks . Tracie nearer term, it is very possible that some of the names within that sector have gotten a bit ahead of themselves. , veryat reason shortterm, there could be volatility here. We would not discount the possibility of that by any means. See again, longerterm, we communication services, Information Technology as the sectors that should continue to lead in 2020. So, we continue to look at netflix, because that was a shocker. It missed on every level we care about, and it should not have happened, given the expectations of the market, the surge in these stayathome stocks. When you look at netflix, which doubled for march, and maybe it should not have done that, does this look to be a cautionary tale from some of the other stayathome stocks that have been so frothy . Tracie very possibly. It will likely depend on future earnings from here, obviously. Some investors may have gotten ahead of themselves on certain names, but overall we think that these are the sectors that are probably going to continue to lead, certainly ahead of things like Energy Stocks or material stocks, industrials, or real estate. We continue to favor those stocks that are going to benefit from deliveries, from improved technology, and from the stayathome trade. When we have a look at the financials, it has been a pretty good week and it comes to bank earnings. Do you then extrapolate and think, maybe straight beenensus has on the lever side outside of tech, and when you look at it from that lens, is this market not as exuberantly priced as we might think . Tracie yes, definitely. Financials is an area where we see some value. We also see value in health care. Financials,d, the particularly, a number of large banks have put large provisions on their books, anticipating some future chargeoff rates. Certainly that has been a drag for the sector. Andgiven the book value evaluations that are near 2011 levels, we continue to think possibly sector is priced. Haidi thank you for joining us. Tracie mcmillion. Still ahead, we will have a lot more on tech as netflixs latest forecast signals its pandemicfueled boom is over. The Technology Research president joins us to discuss his outlook for streaming and more. Imax is betting on movies in china, expanding its deal with wanda. This is bloomberg. Karina the Trump Administration is turning on some of americas biggest companies, saying they are simply pawns of china. Attorney general bill barr says disney and others are doing beijings bidding and working at the expense of u. S. And western democratic values. Says disney and apple have been manipulated by the Chinese Communist party has a strategy to make money. While, the Republican Party is planning to scale back its conviction has month its Convention Next month, and some say they wont be attending. Only eight delegates will be allowed. That decision will cut attendance at the Rnc Convention to about 2500 people, well down from the usual tens of thousands that attend. The European Union is threatening new tensions with the u. S. After striking down big tex program of transferring data across the atlantic. The European Court of justice ruling says that businesses that chip information to the u. S. Face increased scrutiny. The u. S. Says it has doubts of increased Protection Laws in the wake of at snowdens revelation about u. S. Surveillance. And the european banks as it will not be constrained by dogma through the virus fallout. Rusty lagarde says she expects Christine Lagarde says she expects despite some policymakers saying that may not be necessary. The Ecb Governing Council came to know decision at its latest meaning. Global news powered by more than 20 700 journalists and analysts 2700ore than 120 journalists and analysts in more than 120 countries. This is bloomberg. Haidi the coronavirus continuing to set grain records. Global case is now above 13. 5 million. In brazil, they are topping 2 million cases, india at one million. Singapore sees a spike in new infections. The u. S. , though, is still the epicenter, with florida and texas reporting record numbers of fatalities. For more, lets go to maxine new york. Max in new york. I am interested in focusing on the issue of children and young people. In the beginning, the cdc said only about 2 of cases occur in young people. That is starting to change, though, with worrying numbers we are seeing across the u. S. Max absolutely, and there is some question as to whether that 2 number was ever accurate in the first place, or whether it was more an artifact of less available testing and less testing of people with minimal or not much in the way of symptoms. But what is clear is that it does in fact children in fect children and a somewhat decent rate, which come the case opening economies and getting back to school, not because the risk to children in terms of severe disease appears to be all that high, but more because many kids live with older adults back at home, or with people that are immuno compromised in some way. It brings up the notion that with more gatherings, more travel becomes more difficult when you have the high rates of infection that many states do right now. Max, we are getting the latest lines from Army Secretary ryan mccarthy, commenting on russian hacking, saying he will unveil a bill in a few days and will try to hold Russian Hackers accountable. At a few governments accusing russia of getting into vaccine research. What is the latest on that front, and what sort of harm was done . Max that is still really early in terms of assessing what exactly they were after or what they might have taken. It does not appear there was any appearance of disrupting. An efforte, perhaps, to steal intellectual property or its information on these programs. Obviously not a good thing, but it does highlight the stakes for the vaccine race are really high in terms of who gets a vaccine first and whether it will be widely available and equitably distributed. Definitely something that highlights that issue, which i think has not fully been worked out in terms of global coronation on what is going to be a really important issue for global coordination on what is going to be a relief important issue for people and global economies. Sticking with the coronavirus, Johnson Johnson says it is accelerating that element of a vaccine accelerating the development of a vaccine. Human trials are expected to launch next week. Since we have announced our lead candidate for a vaccine on march 30, we have made great progress, so in the next few weeks, we will have preclinical data published in a very prestigious scientific turtle, but we have so much conviction and confidence based scientific journal, but we have so much conviction and confidence based on that data that we will move into trails for humans next wednesday. It is going to be better than a thousand people, ranging from the ages of 18 all the way to 65 and beyond, so the most vulnerable population. We will also be studying it as a single dose regimen as well as a prime plus boost regimen. We are also in discussions with the nih to see if we can be possibly be getting our phase three data and trials at the end of september. That would be ahead of time lines, and it would measure the vaccines effectiveness. We are working 20 to address covid19. Are going to do it on a notforprofit basis. Can you explain what that in reality actually means . Good question. We are currently working through our cost structure. We think we have a good handle on that. It depends on the demand that comes through. We have an agreement with barda in the u. S. , but we are also working with the Gates Foundation and major countries to determine what that notforprofit price will be. As you can imagine, the units that go into that cost will be a big driver of that, but we think it will be very competitive. It is notforprofit. We have so much transparency around that that we are willing to have it audited by one of the major Accounting Firms to make sure people understand what notforprofit means in this case. You mention what the intro costs are going to be. When you thing about scaling up, what are you missing . What is going to cost you the most money . Say,t really is, i would almost a 50 50 split in terms of the development it really is, i would say, almost a 50 50 split in terms of the development and research as well as the capacity. We have a few bioreactors in the netherlands. That capacitynded with contract manufacturers in the u. S. It will be dependent on the demand that not only the u. S. , but many other countries across the globe tell us they are going to need in terms of vaccinations. Guy some want to go about this in an underhanded way. The u. K. Authorities have accused russia of trying to steal details on vaccines from key companies, potentially such as yours. Have you had any problems, any issues with security around your Vaccine Development program . Guy, the news is just breaking. I will speak more generally, but we take cybersecurity very serious. We have for a number of years. It is on the forefront of my just the management teams mind, but also our board of directors. National in a think with a natural segue is, joe, is people want a vaccine and they want it fast. It raises the question, who gets a vaccine first . How do you protect to you give it to . Joseph we are working through that to produce as many vaccines as possible. You probably heard the talk today on our Earnings Call specifically that we should be in a position to have hundreds of millions of vaccines through the early part of next year, with a goal of achieving a billion vaccines. We think, positions the overall global marketplace in a pretty good position. Haidi that was the Johnson Johnson cfo speaking to us earlier. Lets get you an update when it comes to Production Output out of rio tinto. Particular, when it comes to pill brow put just shy of 87 million tons, that is pretty much bang on forctations, saying that your capex of 6 billion, they previously expected that to be 5 billion, so on the higher end. Pilbaraing a fouryear shipment of 300 million tons. We have seen big numbers ats when it comes to iron ore production. This as iron ore continues to boom. Rio saying that china secondquarter conditions are and looking to stabilize the gdp numbers. Next, Morgan Stanley wrapping up the week winning big banks in the u. S. We get more details next. Shery Morgan Stanley wrapped up a week of wins for wall street trading desks. Bankames gorman says the is well prepared to handle the crisis caused by the pandemic. Alison Williams Joins us. Morgan stanley had a high bar, but it seems that they delivered. And, in fact, their fixed income trading, an area that was strong across all the stanley cappedan it off with a very strong 170 increase. Equity trading, where they are a leader, they actually also grew revenue, but not as strong as Goldman Sachs and Morgan Stanley, who are two of their main competitors. I would say that in general, for Morgan Stanley, the highlight was that they were able to turn in the highest profitability. Cross Morgan Stanley did the best on that front. We also expect them to turn in the best profitability for the year. As we wrap up this week, on the loan provision front, is it concerning that they are bracing for a situation where they dont really know how bad it could get . N i think time will tell if things are being very bad. One way to look at the provisions is to look at the reserve ratio and compare that to the buses that the banks had the losses that the banks had in the stress test, specifically the loss ratio that the Federal Reserve used for each bank in the test. Conservative the ratio versus that stress loss rate, we are at 40 to 45 80 and across the banks, which means that the banks have set aside provisions to cover about half the loss rate and the severe adverse scenario of stress tests. Obviously there are a lot of assumptions going into these tests, and a lot of uncertainties, probably the most popular bird word that you heard popular word that you heard on the call. We will continue to get more information, but the positive of the big trading order that we was it allowedks them to fund these provisions, and hopefully it will prove to be conservative. Shery Allison Williams with the latest. Lets get a check of the business flash headlines. The new York Attorney general has opened an inquiry into the twitter hack, as analysts say the bitcoin scam raises potential longterm threats for the company. Shares plunged after hackers targeted several public figures. Says it could lead to concerns about user and data safety. Stocks remain about 25 below its peak last september. Twitter says user passwords appear to be safe. American airlines is making a bet on new york, partnering with jetblue to help with traffic. The deal includes a code share agreement with travelers able to use either carriers website to book flights. The plan to boost the standing americanss up faceoff with delta, which has a large presence in new york and boston. We do have some breaking news. Data out of new zealand. This is a big rebound from the prior month. We have the contraction territory. We are now seeing a really strong rebound. This comes as new zealand has gotten out of that strict lockdown. Shery imax is expanding its decadelong partnership. Willpandemic demand increase a format. It is upgrading others in cities including beijing and shanghai. The ceo joins us for his first interview on the deal. Great to have you with us. At a time when people have long reawaited the reopening of theaters in china. What is your outlook for demand coming from china . It is nice that we certainly have certainty from the government. They will open with reduced shows. They will open with library new movies. Movies that have been seen before at a discounted price. That is a paramount concern to us. Make sure the protocols are followed. You will see some restriction starting to loosen. We have a netflix report with really big numbers for their own movies. Are you concerned that there could be a fundamental change when it comes to the theatrical model . How could that affect you . I am not. Blockbuster movies in a you cannot see them at home. I love my wife and i love my tv but i cannot wait to get out and go to a movie. Is the way a lot of people feel. When they know it is safe, they will run out of their movies houses and go to movies. That does not replace the social and cultural shared experience. We heard from william barr today criticizing u. S. Entertainment and tech for collaborating with china. Job. Oing their nobody likes to see tensions between the two guest economies. The Parent Company owns about 70 of the subsidiary. We have been there for about 20 years. The u. S. Likes these films. I dont think it will change. Do you expect the Chinese Government to raise its quota for the number of foreign foams . It does not rely on that happening. There is already a provision on the input quota. It allows extra imax homes. We beat our year before by 15 . Our business is very strong. Shery what about your business here in the u. S. . Theater reopenings have been a mixed bag. What are your thoughts on potential theater bankruptcies . I think the excavation exhibition industry, we liken the technology. License the technology. Invest. Directly but most of the exhibitors in north america have done a great job restructuring the balance sheets. Million. D 800 raised money. Cinemark raised money. They have recapitalized. They have good access to the Public Market here in the u. S. Will you make the film going public wear masks . Again, we dont own cinemas. We are in other peoples cinemas. We have been working on a manifesto. With all of the world. Masks are essential. I think there will be required everywhere. People should wear masks. Do you think there is an existential crisis for cinemas like businesses, anywhere there is large public gatherings . There is a view out there that the only way we can get this under control is if we permanently change human behavior. Temporarily, i understand the need for isolation. I do think other people need to consider where the cases are high. Japan has been open. The cinema is safer than a lot of places. You wear masks. You are not talking to the people next to you. Shery we really appreciate your time with us. Netflix has a range of challenges. A dimming subscriber outlook. This is bloomberg. Karina the coronavirus continues its march across the globe, with the u. S. In asia seeing record numbers. U. S. Cases rose 2 . Authorities recorded the most ever cases for a single day since the pandemic began. This park spheres it is spreading into the wider community. The resurgence has affected about 300 people in less than two weeks. India is becoming the focus. The country stands third in the global tally, behind the u. S. And brazil. Scandal now has hundreds of millions of dollars being transferred from saudi arabia to the u. K. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Netflix shares are plunging after hours. They released their latest earnings reports after the bell. Lets get some analysis. What happened . Netflix was supposed to be the great beneficiary of the stayathome trend. What exactly went wrong when it came to that decimation and . Ubscriber numbers you have to look at it in terms of the overall picture. The overall picture is still not terrible. They got this huge bump in march and april. They slow down in may and june. And now they are projecting forward. They will likely hit 200 million subscribers this year. The problem is, people have been looking for that growth to continue. That is why think the stock is taking a hit. It is also very competitive environment out there. People dont like any level of uncertainty of any time kind. They expected enormous growth. And to be fair, they got it. But it is kinda priced in the stock already. Is part of the context levels of saturation . A lot of people already have netflix. Yes, that is a great point. They have been able to ramp up new content production. There will be new content. They will need it. That has been slow. You are absolutely right. If you think back on the last couple of years, there has been onot more focus international. That will be a continuing growth factor. They have established themselves in so many different places. Canther streaming Service Touch them. Netflix is saying theyre close to full production. Given the positive news when it comes to content production and so forth, can we just say the region reason we are seeing ethics take such a huge hit after hours is because a lot of the good news and growth is already priced in . Yes, i think that is exactly what it is. Other tech earnings are starting to show the early benefit. I have done my own research. Im seeing i. T. Expenditures expect to invest a lot. Shery we will see more investors worried about it. Which companies will be at most risk . Potentially, you would say apple. But apple beats every other expectation. There are other opportunities with disney. Those kind of companies have the opportunity to whether this. More toward the enterprise facing companies . Exactly. I think the enterprise facing companies in general are going to have more of an opportunity. This is important to their ongoing functioning. They need to modernize their applications. Do the digital transformation. Now they are focusing their efforts. They need to do that. That offer some potential upside. When it comes to the international market, where do Companies Like netflix and hulu and disney have more potential to get growth . Everyone wants to look to china, clearly. India is an enormous market. I think there are opportunities there. Disney is much more western focus. Lays better in europe. But there is an enormous popularity in asia as well. Great having you with us. If you are away from a screen, you can noise find indepth analysis in the days big news acres on bloomberg radio, broadcasting live from our studio in hong kong. Listen via the app. Plenty more ahead. Stay with us. Shery lets get a quick check of business headlines. Betting against tesla might not be a good idea. He is a longtime critic of elon musk. But he told bloomberg he does not have any wagers. Skeptics say it is grossly overpriced. He says it is not convinced. I dont see this business being able to generate cash. Shorted at your own risk. I wouldnt do that. Fixed income trading triple. A 70 surge. Amid wild market swings caused by the systemic revenue growth. Profits at the Consumer Banking unit felt 98 in the second quarter. But the bank set aside 5 million for loans. The most since 2010. The ceo calls it the most tumultuous time since the great depression. Surged five more than 15 . Net income rose 11 to just over half 1 billion through june. Haidi conditions in china have improved in the second quarter. Paul allen joins us with more. Look as weis continue to see. Robust demand . Paul the quarter was pretty good. Almost spot on, the estimates. Outputs out 10 a year. It is holding a particularly well. That was lower but it still beat estimates. The ceo said he is trying to maintain business as usual. What is a very in unusual time. Conditions in china are stabilizing. Shery what sort of outlet did they get . Guidance both got downgraded for 2020. They are dealing with the same issues that everybody elses. Lockdowns due to the coronavirus. Disruptions in production. That is in line with the observations of china stabilizing and improving in the second order. We had china continuing growth yesterday and those gdp numbers. Haidi coming up over the next hour, we will have more analysis. Later today, and exclusive interview. The deputy president. Plenty more ahead. We continue to look ahead at the start of trading in asia for the final friday session of the week. This is bloomberg. Haidi good morning. We are waiting for asias major market open. Shery welcome. Our top stories this hour. Tech weakness on wall street is said to drag on asian markets. Fast post virus activity start to dim. Covid19 setting unwelcome records