Surveillance. I am nejra cehic. We are seeing european equities accelerate to the downside. The stoxx 600 down 0. 6 . Futures pointbut to a lower open. The five year yield hit several record lows. Target rangeow the from the fed. Lets get the bloomberg first word news. Laura the u. S. Death toll from the coronavirus talked 150,000 topped 150,000. Texas, california and florida had record cases. Dr. Fauci warned more protection will be needed. He said if you have goggles or a face shield, you should use it. Facebooks Mark Zuckerberg was speaking alongside the bosses. Rom alphabet, apple he says facebook lags behind its competitors. Credit suisse says it will merge trading and Investment Banking and combine its risk function. The chief executive says it is the first major rebound of the swiss lender. Undoes some of the decisions by the predecessor. The bank merger is something we have been discussing for months. Bute will be costbenefits, it is about having one underwriting business to have one Investment Bank globally. 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. Bloomberg. You. thank we will get back to the german gdp data in a moment. We saw a contraction in the Second Quarter, worse than the estimate of 9 . Back to the u. S. , Jerome Powell has kept his message is dovish as possible, left rates near zero. He said signs of a coronavirus resurgence are starting to weigh on activities. He will boost fiscal spending. We remain committed to using our tools to do what we can and for as long as it takes to provide some relief and stability to ensure the recovery will be as strong as possible, and to limit lasting damage to the economy. The path of the economy will depend to a high extent on the course of the virus and the measures we take to keep it in check. The data point to a slowing in the pace of the recovery, but it is too early to say how large that is and how sustained it will be. The rising joblessness has been severe for lower wage workers, women, and africanamericans and hispanics. The fiscal policy actions taken so far have a critical difference to families, businesses across the country, and it will take continued support from monetary and fiscal policy to achieve that. The Federal Reserve is taking forceful actions to more directly support the flow of credit in the economy for households, businesses large and small, and state of local governments. These are lending powers, not spending powers. All of us want therapeutic vaccines as soon as possible. We cannot plan on that. We have to hope for the best, and plan for the worst. On capitol hill, more talks between the Trump Administration democrats brought them no closer to a compromise on a virus relief plan. Joining us now is christian nolting, cio of wealth management, deutsche bank. Thank you for joining us. Yield hit aive year record several times. It continues to slide today. The 10year yield has been steady for a while. What is your strategy around treasuries . Christian thank you for having me. Only Government Bonds. If you look at a fixed income strategy portfolio, there is not much money to be made. Government bonds including in the u. S. At such low levels, you would need them lower, which is not likely. Portfolios are really key, that is why we have to look at other areas. There is no doubt we need Government Support for stability of the portfolio. If you want to create on the bond side, you need to look at more risky spaces, and that could be on the corporate side were there is support from the fed. We have to watch the risk scenarios. That is clearly necessary. It is less on the Government Bond side. Nejra you do have some preference for highyield. In terms of u. S. Versus european equities, do you see much more upside to the u. S. Versus europe . Christian it is interesting to see we have years of outperformance in the u. S. We have seen a slight change recently where we did see outperformance in europe. That was probably triggered by what we have seen on the recovery front. We have seen interest from asia and in the u. S. Into europe, but it is not overweight. Europe is the most under owned region globally. Think this will be a trend. I think we will see better , so this trend will not change. We see a Slight Movement over the recent weeks which is interesting from my point of view. Nejra what i find interesting is your outlook for the recovery is a reverse square root, but you think the quicker rebound for the u. S. Economy relative to the eurozone is a likelihood that is greater. The u. S. Economy rebounding more quickly. Some highfrequency data has shown the opposite of that. Do you stick to that view, and do you see the upside for the eurodollar capped where it is now . Christian the recent data, that might be the case. The u. S. Went later into crisis mode. We have seen europe was earlier and there were programs there. I would not be surprised, it is weak in the u. S. And in europe, but the u. S. Is recovering slower. If you look down the road, probably the u. S. Will be down. Oughly 5 7 for europe it may be more severe. Some countries had a long walk like italy and spain. The overall numbers in the euro thanwill be a bit more 7. 5 . 2021, the Growth Potential of the economy, the u. S. Will do a bit more on the recovery side than the eurozone. Peoplewhen i talked to about cyclical exposure, they either say europe or emerging markets. You do not seem positive on europe. Are you positive on emerging markets, or do you stick with the u. S. Is your biggest conviction call as a defensive market . Christian we like the emergingmarket, especially asia where there are opportunities. We have tilted to the emergingmarket space because what we see from the support function on the fiscal side and the central bank side, there is a lot going to the emerging markets as well. The Growth Potential is higher in europe, so we like emerging markets. Probably negative on the european area, but that is what we see from a growth perspective. Nejra thank you so much, christian nolting, cio of wealth management, deutsche bank. Great to have you with us today. A headline crossing the bloomberg, hong kong is borrowing prodemocracy to thetes, according media. Coming up next, our interview with guillaume faury, ceo, airbus. This is bloomberg. Good morning, you are watching bloomberg surveillance. I am guy johnson. It is 13 minutes past the hour. Lets talk about airbus, the companys paring back its widebody jet production after burning through 4. 4 billion euros in the Second Quarter. The company is trying to wait out the collapse in demand for new aircraft. They saw delivery slump in the Second Quarter when global fleets were largely grounded. Boeing also announcing measures to preserve cash and adapt to the shrunken market yesterday. Airbus stock is trading up, almost exactly at three euros, 5 higher on the day. , talkinglaume faury about a difficult situation ahead. The ebit line did beat expectations. He will not rampup production until he has more visibility. Guillaume faury joins us now. Thank you for your time today. We appreciate it. You say you will not rampup production until you have more visibility. Visibility is very difficult now for your business. Are you operating . How much visibility do you have . Guillaume good morning, guy. We have announced our halfyear deliverednd we have 74 airplanes in the Second Quarter of 2020. Than significantly less normal times, but slightly ahead of what we were expecting for this unprecedented situation. In this Second Quarter of the euro, we have Production System to what we think is the new from ament, and reduced production rate of 60 per month down to 40. We adapted to the situation, and we are active with their customers, the airlines around is world to understand what the right calibration moving forward. Appropriate for us for 2020 for the vast majority of 2021, and we are awaiting signals from the airlines and the passenger traffic to understand when things will recover. We think there will be a recovery, it is likely. What is more difficult to assess at the moment is when. That is where we are today, and we are never getting for a situation of uncertainty and changes. We have gone in the front foot by adapting the company, resizing, adjusting production rate, adapting to the supply chain to this new difficult environment. Guy there was a lot in that statement. Ands unpack it a little bit talk about the component parts. Lets talk about deliveries in cash. You are not cash flow positive going into the crisis. You said today you are looking to get the business to a position where it is neutral on cash in terms of the burn in the second half of the year. Deliveries are a key part of that, that improves your cash flow position. To realistic is it to get a neutral cash position in the environment you described . Guillaume you made a good point, deliveries are tied to the cash flows in our industry. Elements toin respond your question, the first is on the cost side, and we have managed to adapt to the new situation. We think we have the right way of moving forward through the second half of 2020. We see uncertainty in our cash containment, then we have to make assumptions on the delivery. A large number1, of planes are ready to be delivered but are not delivered because of the situation of the airlines and the customer. We have 145 planes produced but not delivered, very high. Will manage this significantly in the second half of the year. This will tie to the balance of the cash flow. It is an objective because there is a lot of uncertainty. We are making Good Progress on the delivery schedules, and our contact with customers, and gaining visibility in the second half of 2020 and 2021. Make our objective to be cash flow neutral in the second half of 2020. Lets talk about the customers. You described the situation you have fiscal discussions ahead. What are customers saying to you in terms of their expected deliveries . Are any customers defaulting on their commitments, and how will you extract cash from customers given what is going on . Sure it isi am not about extracting cash from customers given the situation they are in, it is about finding ways of dealing with the situation together, and preserving the vital interest of both parties. We have to recognize there is covid19 and a big drop in traffic, therefore we are working with airlines to find the most appropriate way to deal with that situation. It is a casebycase situation. Each customer has a different situation. Is a changing situation, they find ways to get inancing, gain visibility the crisis, and this is when we can clinch new agreements and gain visibility. We are longterm in the industry, and we have long cycles, therefore it is important to regain some visibility to plan production, plan are cash flow, distribute work to the suppliers, and give them some stability. This is what we have managed to obtain in the Second Quarter. We have better visibility moving forward and hope the recovery of passenger traffic will be as expected. We think it is likely airlines will stick to the agreements we have with them. Guy lets stay with reduction. You cut the widebody rate from six to five. You talked in the past about resizing the business to lower levels. How much further can you shrink production . Are you getting to the limits of your ability to reduce the rate on the widebodys . Guillaume i missed the end of your question, the connection is not very good. I think i get the substance. Basically, we have resized the production. 40, that is 60 to behind us. 350, from 9. 5 down to 6 in the early days of the pandemic, early april. We have decided to go from six to five, and this is the best production rate that fits with demand for the next couple of months. We are ready to further adapt. What we have proven with the unexpected situation is it takes for than a quarter production going down. At the end of 2021, 2022, when we think there will be a rampup of production again. Flexibilityave moving up, because traffic will recover, airplanes will come back, and we need to be ready for that. We need to be realistic in the shortterm, but not too pessimistic for the longterm. We have a Bright Future and we need to serve demand when it comes back. Guy a pleasure to speak with you today, thank you for sharing your time with us. Guillaume faury, ceo, airbus. Coming up, our conversation with the chief executive of renault, that is in around 10 minutes. This is bloomberg. Nejra this is bloomberg surveillance. I am nejra cehic. Arnings onslaught coming up coming up, our conversation with the deputy ceo of renault. We will talk carmakers next. This is bloomberg. Save hundreds on your wireless bill without even leaving your house. Just keep your phone and switch to xfinity mobile. You can get it by ordering a free sim card online. Once you activate, you only have to pay for the data you need, starting at just 15 a month. There are no term contracts, no activation fees, and no credit check on the first two lines. Get a 50 prepaid card when you switch. 5g is now included with all new data options. Switch and save hundreds. Xfinity mobile. Welcome to camp tonsafun on xfinity its summer camp, but in your living room. Learn how to draw with a minions expert. How to build an indoor Obstacle Course plus. Whatever shes doing. And me, jade cattapreta. The host of es the soup camp tonsafun. Its like summer camp, but minus the poison ivy. Unless you own poison ivy. In which case, why . Just say summer camp into your xfinity voice remote to join. Nejra this is bloomberg surveillance. Im nejra cehic and london. Risk off with european equities and futures. Get first word news with laura wright. Laura Jerome Powell is warning of the most severe economic downturn in our lifetime. He kept his message yesterday as dove adjust possible. Sounded a downbeat tone on the road ahead. Powell sounded a downbeat tone of the road ahead. Path of the economy is going to rely on a high extent on the path of the virus and the measure that we take. I want to stress, it is too early to say both how large that is and how sustained it will be. Laura Standard Chartered is set to begin a new round of job cuts. Sources tell bloomberg it could see several hundred positions eliminated. Earnings beat estimates. Less money than expected for bad loans, but the second half of the year may see sluggish growth. A 8. 1 billion right down as push to cut Carbon Emissions and pandemic have raised questions. Airbus is paring back its production of widebody jets after burning through an added for. 4 billion euros in the Second Quarter. It wades out the collapse in demand. Biggest plane maker global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, this is bloomberg. Nejra . Nejra thank you so much. Breaking news from hong kong. We learned earlier that hong kong is barring prodemocracy candidates from the Legislative Council election. We are now hearing from the shanghai south china, excuse me, warning post, saying joshua fromis barred from those the hong kong election. , june in retail sales hong kong, down 28. 4 year on year, a little bit worse than the expectation of a drop of 24 . Earlier we spoke with credit sse ceo, scott stein gomas koch done thomas ottstein. Thomas we have good results ,oth on the p l, the revenues or on the balance sheet. Very pleased. What happened with the share one ratio . A lot of people were expecting it to go down and it has actually gone up. Thomas we were obviously cautious when we gave guidance at the end of the First Quarter because we did not know how much risk rated assets would increase, and at the same time we generated more capital through our earnings come and that is why our ratio is at 12 points 5 at 12. 5 . Thecine talk about structuring of the merging units. Thomas even with my predecessor it was already a topic. 2015, clearlyn the two had to be separated because we had to restructure the trading business. Now we are at a stage where we can put them back together again, and most of our competitors have anyway. This is not a cost exercise. There will be some cost benefits, but it is about having one underwriting business, to have one Investment Bank created, and we also trading solution business which builds on our success we have in its, and that serves our equity and fixed income transactional business for the private bank and the institutional business. Francine how difficult was it to do this in the middle of a pandemic, where it is less easy to speak to people facetoface . Thomas it was relatively good. Zoom callscalls and internal calls to get this up, but it worked very well. You know, i have to say not one person within Credit Suisse was against that combination of icbm and global markets. Given millers stepping down from the board, he was actually david millers seven gun from the board come he was actually convinced, and it was a move where we had to convince a lot of people. It was a move where we did not have to convince a lot of people. Francine do you see Credit Suisse streamlined more in two divisions in the future . Thomas no, we believe in the original model. We like to have the swiss business, the asia business, and that makes total sense. Francine what is your biggest concern over the next 12 months . We seem to have gotten over the worst with the pandemic, more or less. Thomas yes and no. In hong kong we were up to 65 in the office, and now we are below 20 . The biggest concern is a second wave of infections. We are doing well in switzerland, almost active 50 working at the office, but that is the biggest concern. Francine how many people overall do you have working from home as opposed to the office . When do you expect active change . Thomas globally we have only 20 working from the office, 80 working from home. We have 90 enabled to work from home. The trend is going up in most countries i