Good morning and welcome to bloomberg surveillance, im Francine Lacqua. The focus firmly on earnings. Impetuso give a bit of to industry groups. European stocks rising. We had pretty good earnings for american tech giants. Speaking of Economic Data and some of the bad data we had out thee, we are also getting italian gdp figure. 15 and itmate was fell less than perspective. Somee also getting breaking news out of the bank of japan. Lets get straight to the bloomberg first word news. The spanish and french economies have suffered their sharpest contractions. Output dropping 13. 8 in the quarter. The eurothe whole of area comes out at 10 00 a. M. And is expected to show a 12 slump. Talks in washington over a new pandemic relief package making little progress. Senate republicans are planning to vote. It must be part of a comprehensive plan. It gives republicans a chance to say they tried. The u. K. Has reimposed lockdown restrictions across parts of the north of england. Some britons have been failing to it here to social distancing measures. Today, they will no longer be able to meet indoors with people from other households. Chinese president xi jinping is calling for reform. That chinaeeting should focus on boosting local output. The speculation is to reduce reliance on the international economy. 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. This is bloomberg. Francine . Francine thank you so much. Americas Biggest Tech Companies saw their earnings surge while the rest of the economies being showred, Quarterly Results the Industries Capitalizing on gothe crisis and consumers to tech for the entertainment shopping and learning. Net income of 29 billion in three months ending. Our tech analyst joins us from bloomberg intelligence. If you look at what was behind the beat, is it simply the way we worked and what were they saying about Forward Guidance . It is the way we work. Perhaps the way we are living now. I think one of the biggest the generally of surprising numbers was Facebook Advertising revenue. You compare that and the ad revenues were down eight percent more broadly in the Second Quarter. Really some performance down to instagram. Buying things perhaps we did not expect to buy. Brilliant platforms to help advertisers to get you to buy stuff. The really big standouts. Also the continued addiction with the iphone. 26 billion sales. Just kind of continuing. Is there anything we should worry about . Is there anything that should make us question what Tech Companies will do next . I think in terms of what the companies are doing, not really. Facebook has shortterm issues. Generally, these companies are operating well. Externalityrisks of , washington, and brussels, antitrust issues, and that dominance. I think their single biggest risk continues to be whether there is some kind of force to break up or some kind of new rules and regulations that disrupt to the way they are operating today, which is helping them to be such a dominant platforms in the u. S. And to killer. Matthew, thank you so much. Earlier, we spoke to the bnp paribas cfo and asked if the banks would maintain guidance with the surge of coronavirus cases. This is the range where we anticipated there will not be a second nationwide lockdown. Results of at the this quarter, it is in line for us to confirm that. Your gdp was boosted by the volatility in the markets. Worried that these exceptional market volatilities will be less supportive and the Common Market . It, there has at been a high demand because institutional, but also corporate sovereigns were active. They were about what you would have and they will probably taper a bit off. However, as we are able to serve customers because of our financials because of all the services we have, we have been andng both a market share that above market share being there for clients old is basically something we anticipate and to sit something we anticipate in the second half. [indiscernible] do you also anticipated recovery there . Lockdownpact of the had an impact in april and somewhat in may. Activity, thethe tapering uptivities again to levels which are precovid. That basically would be tapering up. Shortages will take time. That will basically be not before. When do you anticipate the full recovery . Can you give us a little bit it is a little bit stronger in some, it is a bit lower in others. If you look at the overall pick level, weback to the dont think that will happen before 2022. The ecb recommended to haul dividend payouts, are they willing to follow this recommendation . Supervisory authorities recommended until the end of the year. One assumes that when the at that moment, there was a return to normal, meaning the regulatory rules that are applicable precovid. That will be toward the planned dividend policy. Anticipates returning to the 50 . Francine that was the bnp paribas chief Financial Officer. Coming up, the initial shock of the pandemic has not been fully hedged we speak to the chief Financial Officer of the world secondbiggest reinsurer next. This is bloomberg. Francine economics, finance, politics, this is bloomberg surveillance. Says that the worst effects of the coronavirus is already hedged. The worlds secondlargest reinsurer surprised markets. That claimsadded and reserves are there to cover the majority of losses. Joining us is the chief re. Ncial officer of swiss when you look at how many more losses we could see from covid19, how difficult is it to model central lockdowns and the number of companies that will be affected by this . Offrancine, we have a series scenarios we have run based on the first half of the year. We believe we have a pretty good handle on the losses which are likely to come. We believe most of the insurance thees were incurred in first half of this year. It is due to the fact that the the pandemics yes, there will continue to be flareups. A combination of better and the subsequent reduced mortality means that the majority of the losses seems to be passed us. Mean in what does that terms of the next 1820 months in terms of panning out . We will obviously continue to update projections along the way. What we see in the macroeconomic reduction ofor Interest Rates in the u. S. In that pricemeans increases will have to continue to be strong. We have seen that and we expect to continue to support a better underwriting process in the past year. This pandemico losses, we will see how things play out. We believe most of asia has moved on even of places like tokyo or singapore do see some challenges along the way. We have got this down to a much different level of infections and deaths. Wildcardis a bit of a where you see different reactions. Francine what are your expectations for the rest of europe . Are there any regions or region that looks particularly vulnerable right now . The one place where uncertainty remains in the u. S. , we see in the states hit hard in april a curve not unlike what you see in European Countries and other places like texas, florida, california, big states with large populations. Numberssome of the peak of infections come up in july. What we think is for our own book of business, continued exposure to u. S. Mortality, the actual number of death is something we will closely monitor the second half of this year. There was also a specific line in the Insurance Business of paymentsich results in related to actual results. The state aid in European Countries in particular has seen the cushion, but we see the Overall Economic climate. You will see different claims coming through in this space. Francine what do you plan to do with the proceeds . We were able to close last week with the phoenix group. It is good for us. It is good for phoenix. This is a strong business which reaffirms their business model, i think. We have a combination of 1. 2 billion pounds of cash payment and shares in the phoenix group. Cash is coming to bolster our already strong capital. It is a very strong demand. Francine are you planning any Share Buybacks or is it too risky . The corona losses have been significant, obviously. We have suspended the Share Buyback for 2020 together with our board of directors. In the meantime, we are committed to managing what is a fairly strong dividend performance over recent years and will continue to be able to manage to pay the kinds of dividends that people would expect from the group. Francine thank you for joining us, the cfo from swiss re. Billg up, there is a new in town. The gop and democrats agree more stimulus is needed, but not on how much. That is coming up next. This is bloomberg. I think the world is waking up. We have to take a special look at race. We are doubling down on our objectives. Internationalism, what is the centerpiece. We should strive for equality. We are developing women from an early stage in their careers, bringing women in where we have an opportunity. Would be great to have a woman or someone from a minority background to be my successor. Unleashing at the right level of sin yorty the energy of female colleagues is to provide seniority the energy of female colleagues to provide the most growth. Making employees feel comfortable and welcome inside the walls of barclays. We are already taking real actions in the development of our talent that we also will come up in the year to come. I do think Society Needs to respond robustly. Francine a number of executives telling bloomberg how they plan to address the issue of diversity in their country. Lets turn to the u. S. The gop and the democrats have new stimulus bills, but there is a massive gap between the parties. The relief package that congress has passed in march was the most aggressive in history, but it did not reach everyone. There were significant disparities by income, race, and ethnicity in terms of who received the money. Joinsre on this, jennifer us now. Jennifer, great to speak to you, as always, thanks for the great work you do. What was the problem with the last bill and who got left behind . Jennifer nice to speak with you to this morning. Even though there were loose disbursements and they were historic, there were still a significant amount of people who still to this day say that they never actually got any of the benefit payments. As negotiations are continuing for a new stimulus, state and employment agencies are still so backed up with claims that more than 100 billion worth of benefits owed has not actually been paid yet according to bloomberg calculations this week. It is hitting black and brown communities particularly hard. Especially blackowned small businesses. Some of the issues with the previous stimulus was the Payment Protection Program or ppp. Some of the underreported issues included the fact that black Business Owners had problems applying for the loan. Some formerly incarcerated Business Owners were excluded altogether. Meanwhile, other white owned Business Owners did not have as much of a difficult time some of these black Business Owners. If you take all of that into account, plus the fact that black people as you mentioned because of the structural issues here in america are already further behind than white people, and you combine that with the disproportionate impact of covid19 on minority communities, this has gone from a bad situation to an even worse situation. The clock is really taking on lawmakers to address some of these issues in the next relief bill. Francine jennifer, benefits expire today. Lawmakers are at a standstill. What needs to happen now . Jennifer one of the biggest hang ups in these negotiations is this 600 a week unemployment that unemployment workers are getting on top of their own benefits. That ends today. July 31. Democrats want to extend it with added benefits. Republicans are having a bit of infighting going on within the party. Some of them want to lower the amount. Others want to let states handle unemployment. But as i was saying before, unemployment agencies within the states already are pretty broken systems. This could create a real problem for workers who are already really set back by what is happening with the pandemic, so the current impasse about relief might continue in the next few days and we will have to watch it closely. Francine thank you so much for joining us, jennifer. Show,miss our quicktake jennifers quicktake show at 6 00 p. M. U. K. Time on facebook. This is bloomberg. We talk u. S. Gdp next. Francine economics, finance, politics. This is bloomberg surveillance. Im Francine Lacqua, here in london. Lets get straight to the bloomberg first word news with laura wright. The french, spanish, and italian economies have suffered sharp contractions. Down 18. 5 for three months. Data for the whole of the euro area comes out at 10 00 a. M. And is expected to show a 12 slump. President trump has raised the idea of postponing the president ial election. He says it should be delayed until people improperly, securely, and safely vote. It is something he does not have the power to do alone and would need the backing of congress. Mitch mcconnell says the election date is set in stone. Bnp paribas has said there is a performance blowout in fixed income. 150 from a year earlier. The French Economy does not see a recovery from the Coronavirus Crisis for a couple of years. It will be stronger in some, slower in others. So as we said, we should look at before it is back to the level we dont see that mid2023. Before global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more this is countries, bloomberg. Francine the u. S. Economy suffered its sharpest downturn since at least the 1940s. Rose domestic product shrank 5. 5 . The comic devastation that has resulted from the Government Shutdown and highlights the need for urgent fiscal action. We had a very big hit in the first quarter, and the 32. 9 record contraction is yet another confirmation of what a big blow the Global Economy took. The headline gdp told us about the shift that happened in q2. The fiscal responses to try to keep things moving until there is progress on the backseat. We think that is a comparatively balanced case. Andf congress does nothing lets those rolloff, you will see a sharp contraction in overall consumer activity. You will see a pullback in Consumer Spending and a worsening of the economic outlook. If the covid situation worsens in the u. S. , you will see a downturn that is inevitable. Without the fiscal stimulus which we have incorporated at 1 trillion, 1. 5 trillion dollars, if that is not coming through, that would lower our expectations for q3 and q4. If we dont get fiscal action, then we will go backwards. Francine joining us with the latest is nikhil srinivasan. You make us always smarter about how you how we should look at the markets and look at growth. What is strange last month is that we see more lockdowns and we certainly see a resurgence of the virus. What does that mean for the economic recovery that you are expecting now . When i first came on your show in march, we have had a nice move. I think now we are in this u. S. Market, in a range where the market is going to be heavy. I dont see this as a second and third wave in the u. S. It is still part of the first wave. About are more cautious spending money, etc. , so you will see a good q3 relative to q2, but it will not be as dynamic as we expect. 1. 2 come you have an election coming up. Typically if you look at this period, elections worry markets. First and the election, every single election cycle that is also going to wear on markets. Third thing, financial engineering. Buybacks continue but at a much, much lower pace. Of this would suggest fourth, tech and health care is really representative of the economy. It was a clear buy, and now to be agnostic, i would want to get out. In other parts of the world, other Asset Classes are more exciting. Francine what are those Asset Classes that look exciting right now . Nikhil euro is the most exciting, followed by chinese assets. What happens in the recovery less in gdp,llion it is the intent that is massive. Joint insurance paid out through the european budget is unbelievable, switch adds to the fact that there is a differential between the u. S. And europe, a political differential. The people dont always think about or focus on is global central bankers. Europe is down 20 . That goes down three or four Percentage Points for me, i want to be long europe, i want to be long chinese assets. China is doing much better on a gross basis than anywhere else in the world today. You can see the on a growth basis than anywhere else in the world. You can see the pmi numbers. Chinese equities, chinese highyield, i want to be long on. I want to belong on Chinese Government bonds. Buy euro, buy singapore dollar, buy chinese assets. On the chinese assets, do you worry about politics between the u. S. And china and the possible trade war . It seems president xi many days is fighting against the u. K. And against the u. S. What if it translates into economic penalties . Nikhil i think you are right. The fights are going on again with several countries. I cannot focus on that. I cannot focus on market and investment opportunities. I dont see many in the u. S. Europe is good. Europe does well when china does well. European stocks are interesting as well. Returning tohat chinese assets look very good today. Highyield is getting 8 , 9 , in what you will get so to me, i would put the tensions to one side and just as yourself, or chinese assets investable today . I am not alone in this . If you look at the foreign capital flowing into Chi