Hong kong Police Arrest a media tycoon and prominent activist jimmy lai after the u. S. Penalizes the citys chief executive carrie lam. 15 ,s in next digital get dip 50 only to reverse losses. The inflation debate. Investors look ahead to u. S. Ppi and cpi as global debt with subzero yields top 16 trillion. A ton of negative that out there. Bob prince tells bloomberg a pickup in inflation would be mind blowing. Frome under an hour away the start of cash equity trading in europe. Lets take a look at futures this morning. Looking at gains across European Equity indexes,. 8 of the gains you seen on the widely traded euro stoxx 50 futures, also on ftse futures. In london. Dax in frankfurt. Looking at games on the u. S. Futures picture. Tradings p minis stronger than nasdaq futures, but you still see green arrows, so it could be a risk on monday to kickoff the week. Lets get the first word news with laura wright in london. Gates billionaire bill says it is mind blowing the u. S. Has not improved u. S. Testing. He described the process as slow and lacking fair access. Speaking on cnn, he cited long lines at commercial labs. He says it means wealthy people have quick access but others have to wait. Gates says no other country has such insanity. It is the most senior visit by a u. S. Official in four decades, health and Human Services secretary alex azar is in taiwan, a move likely to fuel tensions with china. He hailed the islands democracy and praised the governments response to the pandemic. Beijing last week said it was firmly opposed the trip. Hong kong police have arrested rating themmy lai, offices of his flagship newspaper. The latest action under the new security law passed in late june. It came weeks after the white house sanctioned carrie lam. Blast,ast weeks deadly World Leaders are pledging almost 300 million to help rebuild beirut after a Virtual Conference cohosted by Emmanuel Macron and the united nations. It comes amid mass protests in lebanon. Demonstrators are calling for the resignation of the government over its role in the explosion. Global news, 24 hours a day, on onir end at bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Matt thanks very much. Laura wright in london with your first witness. President trump has signed four executive orders related to the Coronavirus Relief fund. Expandednu, Unemployment Benefits company temporary payroll tax deferral, eviction protection, and student loan relief. As for the stimulus negotiations between the democrats and the republicans, the two are trillions of dollars apart on overall spending. The parties are still disagreeing on aid, state and local government, and the added jobless benefit. Lets get into markets with mark cudmore, our Bloomberg Live managing editor. Are the markets satisfied with the executive order as a stopgap measure . Mark they seem to be at the moment because they interpret it as a stopgap. There is broad assumption there will ultimately be a stimulus deal and this is buying time and it puts pressure on there being a bigger stimulus deal and before because there is no point in them agreeing to something not much different than what trump offered so the overall investors are taking this positively at the moment. Im concerned there is complacency we wont get a deal, but that is not a narrative people are worried about today. Matt speaking of complacency, weve got inflation indicators coming out this week. And weve heard warnings from bob prince notably of bridgewater but also from citi and others that the amount of negative yielding debt and ig could cause a real problem for holders if we do get inflation. Is there any possibility of a pickup in measured inflation . Dont see it just as an imminent threat myself but you are right. Many people are worried about it. For many, it is one of the biggest risks. Other things to be concerned about, particularly the u. S. China tensions, but people think it is there. Pickup, andflation i dont see it coming, but if we get that pickup, the world is badly positioned for it. The general policies and stimulus weve got have been enacted on the basis we would or any inflation soon severe consumer inflation and that is why we are seeing extreme asset price inflation. I understand why people want to keep an eye on these figures in case. Matt what do you think about the u. S. China tensions . Now a lam sanctioned and media tycoon arrested . What do you expect in terms of escalations, in a really important week, mark . The review of trade agreement at the end of the week, it is a tense week. It seems china is not inclined to respond to aggressive actions and therefore is taking opening they can tide it out until the election. The White House Administration at the moment is pressing aggressively on many fronts and i think that pressure may provoke reaction, or at least creates the risk. That is where i am really worried. If china responds on u. S. Tech companies, for example, in response to a Clean Network initiative, that would be a big blow to some of the Biggest Companies in the world and see severe market loss across the board because of the spillover chains. Cross supply people are sticking with the positive narrative this is posturing ahead of the election and nothing to severe will be done, but that may be the right base case but when you are trying to derisk your strategy, there is a risk things can be misinterpreted. That creates the danger. Speaking of china, you are writing on the blog today that the longterm case for china exposure grows in 2020. At the same time as dr. Copper told us things dont look good on friday, right . Argument you are making, that we are looking at a cold war and the u. S. Could be a loser . Mark not exactly. You mentioned the copper thing, that is a shortterm warning and i am worried for the next few weeks. Im worried august, we will see more terminal turmoil. China is one of the few in the world he was going to grow this world in a world of shrieking economies. Its share of the Global Economy will increase. Impact,t get currency but at the start of the dollar bear market, that will be exaggerated but at the moment, stable. Ouan is its economy shrinking at faster rate than the world average and the dollar bearishness, dollar weakness. You will see china becoming increasingly relevant and the world is underexposed to china, underexposed to the yuan. 2 of global fx reserves. It is 7 of the economy. The argument the convergence is going to get wider as china grows in relevance in the world economy. Matt fascinating stuff. You point out that these shifts maydp that we are seeing be, in some cases, compensated by shifts in the currency like the eurozone. I recommend viewers check out our mliv blog. Type mliv geoeye your bloomberg terminal. Join this question of the day. It was about copper. Is copper warning of a broader turning point . Reach out to us and the team if you type ib tv. Mark or someone related to mark on that team is going to get your answer and use it. Bridgewaters bond warning. Prince says that could out risk gains if inflation picks up. We will discuss next. This is bloomberg. Matt welcome back to bloomberg market the european open. We are about 48 minutes from the start of cash equity trading across europe and in the u. K. , looking at green arrows in terms of futures. May be a risk on monday. I want to get the Bloomberg Business flash. For those, we go to im manus cranny laura wright in we go to laura wright in london. Pressingudi aramco is ahead with plans to pay 75 billion in dividends despite slumping profits and a surge in debt. The income fell 73 from a year earlier, but the worst may be over. The chief executive says it is already seeing a partial recovery in the energy market. Have helpedtiktok the limiter he talks about a merger according to dow jones. Not clear if twitter will pursue a deal, but the social network is smaller than microsoft and probably wouldnt face the same level of antitrust for me. Berkshire scrutiny. Berkshire hathaway bought back stock in the second quarter. It saw a 10 drop in operating profit. That was not as bad as expected. Aside from buybacks, Warren Buffett grew his cash pile, now over 146 billion. That is your Bloomberg Business flash. Matt thanks very much. Laura wright came london with the business . Investors are underestimating the risk, the Downside Risk from your zero Interest Rates according to bob prince, the bridgewater cocio. He says bond losses could far outweigh their potential gains if inflation should pick up or real yields rise from the current depressed levels. Joined by the Portfolio Manager for globally multiassets at pine bridge investments. To some extent, you agree with princes statement. Hes talking about investmentgrade debt. Do you think there is a possibility inflation would really hurt Investors Holding this kind of paper . Good to be with you. Inflation would hurt, not just investmentgrade debt. It is the risk for fall all financial assets. There are few exceptions, but within fixed income, we would say to investors, focus on real returns and real yields. Is very few options on that front and that is what has led us to shift our focus toward emergingmarket debts as really the only meaningful remaining worthve real yields taking some risk on. Matt what emergingmarket debt that you like . We saw local currency and dollardenominated debt spreads came down pretty drastically. For in ayou looking emergingmarket debt as the right choice . The spreads have tightened across the board, but it has done more so in the backstopped markets, if you will, where there has been direct central banking intervention in the u. S. And europe whereas in markets like asia, you havent seen the extent of that spread tightening yet and that is where there is from spread gain tightening as well as carry. I would focus on emergingmarket corporate debt and in the sovereign space, hard currency. We dont think the currency risk is attractive at this point and in corporate debt, you get a higher spread premium with lower risk. There is lower duration, lower Interest Rate risk, higher credit quality and higher spread. You have to give up a little bit in liquidity but that is good riskreward profile and i would agree with the focus on yieldion in terms of real terms and that is what you get from emerging markets at this point. Matt what are your expectations on inflation . Ppi and cpie are numbers coming out of the u. S. And while certain items in the basket very, for example, food stocks people cant do without, are climbing in price, other things are falling and it doesnt seem there is consensus for a real pickup in in in inflation. It is the debate we hear being discussed out there. Say we point, we would are in the early stages of a multiyear expansion beginning widea position of a very negative output gap. It is virtually impossible to generate sustained inflation with regards to the extent of slack in the system so we would say it is more in the risk ledger rather than the base case at this moment but it certainly has the ingredients to see deflation. Perhaps the most important ingredient is the fact we expect the Federal Reserve begin to adopt an inflation makeup strategy that would intentionally allow the economy to run hot for some time, allowing inflation to catch up. That does pay the ground for inflation to eventually arise, but we would be factoring into expectations at this point. Matt i want to get your dollar outlook, because it is key to these issues but it is also key to what we will talk about next so ill save that. Hani redha from Pinebridge Investments is our guest cohost for the hour. Twoday losing streak as saudi arabia predicts demand will continue to improve through the rest of the year. We will talk about that next, as well as king dollar. This is bloomberg. Matt welcome back to bloomberg market the european open. We are looking at gains across the board. Ftse futures, up almost 1 . Dax futures, gaining nine point. 9 . Thise getting headlines on u. S. Taiwan relationship. We have alex azar right now, u. S. Minister, secretary as we say, visiting taiwan. The highestranking official to visit taiwan since im going to say late 1970s. In a long time. That doesnt do anything to help u. S. China relations. Sign. S. Senate taiwan will a Health Cooperation agreement and there will be a press conference in about 40 minutes time at the market open. 1979. Time thethe last u. S. Sent such a highranking official. That was the birth year of the gclass, mercedes fabled offered cheap. Is pressing ahead with 75 billion in dividends this year despite a slide in profits and rising debt. Oil snapped a twoday losing streak as the oil giants ceo predicted demand will continue to improve through the rest of the year despite many regions across the world struggling to bring the coronavirus under control. If only we were all driving gwagons, that would be the case. Hani redha from Pinebridge Investments is still with us. What do you expect to see and what out of oil . Hani weve gone from a huge april to asurplus in sizable deficit in early july. Barrels to 4on Million Barrels a day deficit. That is really the extreme of it. Tweaking from this point, the demand recovery will start to normalize after the initial burst of activity from reopening and on the supply side, we are going to see additional supply coming through from opec plus and also the u. S. Shale players. The deficit level on a per day basis is likely to narrow to some extent so for the back half of this year going into next year, we think things will be fairly range bound and it is unlikely for us to see meaningful gains from oil prices for that period. After that, we are in a position where we think supply is more constrained than markets expect so there will be a slow grind higher in oil prices from where we are today. Matt i promised i would ask you about the dollar. Emis key to obviously the situation, em debt scenario you are looking at but also to the price of almost all commodities based in dollars. What do you expect from the greenback . Been on a downturn, but is it going to plateau here or go one way or the other . Hani the stars have been aligned for some dollar weakness for some time. It has been long expected. We are positioned for it. It is perhaps, but finally coming through and we think there is for the room for it to go. The ingredients of a very sharp whichse in the pace at of fed, and the backdrop concerns around u. S. Growth outlook because of mistakes made during the reopening really have reached their peak, so the fed will continue to grow its Balance Sheet that the ecb will grow it faster. In which thetial pace of Central Banks Balance Sheets grow is important as a driver. It means the dollar can continue to weaken for some time, but it is unlikely to keep this pace of weakness. Growth in the u. S. Is going to start to really firm up now that we have seen a wider adoption of the stimulusand that is going to be coming through, as well. That perfect alignment for the dollar weakness we saw very rapidly start to play out is likely to slow. For yournks very much time this morning. We appreciate your insight. Hani redha is a Portfolio Manager for multiglobal assets at Pinebridge Investments. Coming up on the program, prominent Democracy Advocate and arrestedoon jimmy lai, in hong kong under its controversial security law. We will bring you the details next. This is bloomberg. You doing okay . Yeah. This moving thing never gets any easier. Well, xfinity makes moving super easy. I can transfer my internet and tv service in about a minute. Wow, that is easy. Almost as easy as having those guys help you move. We are those guys. Thats you . The truck adds 10 pounds. In the arms. Okay. Transfer your Service Online in a few easy steps. Now thats simple, easy, awesome. Transfer your service in minutes, making moving with xfinity a breeze. Visit xfinity. Com moving today. Puts its customers a wiin charge . Rier well, the good news gets shared. And it gets rated 1 for customer satisfaction. But dont just take our word for it. Take theirs. Its your wireless. Your rules. Only with xfinity mobile. Call, click or visit a store today. Matt welcome back to bloomberg , this is the european open and we are 30 minutes from the start of cash equity trading. Still looking at green arrows. Ftse futures up 0. 9 . U. S. Futures also showing gains. Look like we could have a risk on monday. Some key events in the next few days. Fromng an eye out for news the u. S. After the democratic president ial nominee joe biden said he will be announced his choice for a running mate this week. Watch out for that. Tomorrow, we get the u. K. Unemployment rate. And of take in the figure is expected. And on wednesday, we will find out just how painful the lockdown was for the british economy. Showata is expected to that the economy fell in the first half of the year. Industrial production will also be published on wednesday. Analysts expect a sizable improvement in june that the numbers will still show that the recovery has some way to go. And the end of the week, we will see the second release of euro area bp data. The first publication showed the fell 12. 1conomies percent, the largest contraction salecord and u. S. Retail figures are also due out on friday. Expected to show the rebound to nude in july but economists are forecasting a smaller increase in last time. Police have arrested media type cone and democracy rating thejimmy lai, offices of his raiding the offices of his newspaper. Senior International Editor Jodi Schneider joins us now. Why is this arrest so significant . Is it his age . His wealth . And what does it mean for other democracy activist . Activists . Jodi he is wellknown. Significant that way. And also the way in which it was gotten. They arrested him and then they the offices of his flagship newspaper in remarkable fashion. Something we havent seen in hong kong. There were nearly 200 officers entering the offices there. They had obtained a Court Ordered search warrant. This is all very different under this National Security law. Fate of against. And there is also the significance to the prodemocracy movement. It is meant to send a chilling signal to them. The message that the bear is sleeping. Intended to make a real statement the way it was done today. Marching arog 72yearold man out in handcuffs certainly, these pictures are sending the message. Companyes in his dipping initially and then surging later in the hong kong session. They first went down. You would expect them to stay down. The thinking was that perhaps it was his support for him, for press freedom. Goingl see what happens forward with those shares but it was fairly remarkable. And again, this is something that happened after elections were postponed here and after prodemocracy activists were removed from the ballot after there had been some other arrests under the National Security law which took effect july 1. Lets talk about the u. S. China relationship from the standpoint of taiwan rather than hong kong. Member, the secretary of health and human , visiting taiwan. The highest u. S. Official to do so since 1979. Towan and u. S. Are going release some sort of cooperation and will have a press conference in about 30 minutes. Jodi another remarkable sites. Servicesh and human secretary, a cabinet official comic in taiwan a stent of late to talk about how well taiwan has done on the world stage with the virus. In his comments, the secretary said that taiwan was so scarred due to chinese lack of transparency and criticized beijing in other ways calling it highly regrettable that china has blocked taiwan from participating in the world health assembly. Visit byhe most senior an american official in more than four decades to taiwan. This week is particularly important for the u. S. China relationship. Not just because of hong kong and taiwan because they will go back over their trade agreements. What can you tell us about that . Di the trade agreement was signed in january before the virus took hold and before the escalating tensions when people thought this was limited, the stage one agreement where china agreed to purchase more Agricultural Products and others from the u. S. Tensions were rising. And see iflook at it this is still on the table at all. Trade officials are going ahead and looking at it. It is hard to see that they will expand this. A lot of people think this agreement is really already nullified by what is going on but they will talk. Interestingly, early in the year before the tensions started, there was talk of separating the trade talks from the other things going on between the two countries. It would seem that would be very difficult to do now especially after the last few days. Matt jodi, thank you for joining us. Is our Senior National editor out of hong kong. Let us get the bloomberg first word news and for that we go back to london and laura wright. Laura President Donald Trump executive orders this weekend including a temporary tax perfect tax referral deferral. They say it is an attempt to power grab from congress and a backhanded way to defund Social Security and medicare. Democrats and republicans are still trillions of dollars a part and there is still not a firm base for another round of negotiations. Nancy pelosi is calling for a compromise on an overall package. Steven mnuchin and prefers a piecemeal approach to a deal. Anytime they have a new proposal, im willing to listen but i will say you are right, we agreed with the democrats. Us not these off one at a time. They have refused to do that. Belarus aftere in a contentious election results. Police in full riot gear. Victoryident claimed but the opposition is challenging the results. Havenational observers long criticized elections in the country for not being free and fair. 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. Matt . Matt laura right there in london with your first word news. Coming up, rethinking debt. Bridgwater tells bloomberg why the role of Government Debt has been upended by the pandemic. We will bring you that interview next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. We are just under 20 minutes away from cash equity trading. In terms ofn arrows futures. A story that caught my eye this weekend was bob prince who said that while governments and highgrade corporate debt have been a traditional place to hold debt, the pandemic and a number of other things before that have upended their role. Prince spoke with jon ferro. On while everyone focuses the change in payroll and the growth rate, the big issue is the depressed level of spending which is reflected in the level of Unemployment Rate at about 10 . The longer we are in that situation of a depressed level of income and spending, the more vulnerable individuals and companies are two that set of circumstances. And the most likely timeframe for that virus impact on him on income and spending is 1824 months. It is uncertain. We have just had a four month Fiscal Program or one quarter, imagine having to do that a a secondder, quarter or eight in a row to make up for the low level of income and spending in the economy. Imagine the potential on the dollar, on inflation. Lingers on, that you have a combination of economic destruction with liquidity expansion. Vulnerability is zero rates. And in a world that they cannot get away from zero, main street economy, can you speak to that . Bob it is a mind blowing thing. When you have a zero Interest Rate on the treasury bond, it means there is no Interest Rate. That means there is no discount rate on cash flows. What is the president valley of cash flows . Value ofs the present cash flows . Perspective, you have a virtually zero return and an asymmetric return because there is no limit to how much the bond yield can go up. Zero,f it goes to flat you will only make 5 7 but you could lose 20 30 . In thee that asymmetry bond market and youre not getting paid any return. I think what people are not registering is how that will impact the equity market. There are three big impacts on the equity market. First of all, you have taken away the floor on an equity decline. Economic decline and an equity decline come if bond yields fall if you cannot lower the discount rates on those earnings, the downside is bigger. The second thing is if you cannot cut Interest Rates, then you cannot put a floor under the economy except through monetization of fiscal policy. And the third impact it has on a portfolio is if the equities are falling, normally you would get to diversify the risk of way but that does not exist now. You are holding the equity side of it with not much Downside Protection and you are holding the bond side of it with an pattern andeturn zero yields. It is a very problematic scenario for any traditional investment strategy. Matt and that was Bridgwater Associates cocio bob prince talking to our own jon ferro. Have twitter and tiktok helped eliminate talks about a merger. Will not clear if twitter seal the deal. Therobably would not face same level of antitrust scrutiny as microsoft. Arkshire hathaway spent record amount to purchase back stocks. There was a tencent drop in operation profit so it was not as bad as expected. Alongside the buybacks, Warren Buffett cap rowing his cash cash pile. One in three u. K. Employers will cut jobs this quarter according to a survey. It highlights the growing risk. Englandk, the bank of warned unemployment would rise to about 7. 5 by the end of the year. That is your Bloomberg Business flash. London withright in the business flash. The second story that really caught my eye this weekend, more economic upheaval is on the horizon in europe as lands two and the unprecedented support for workers during the coronavirus pandemic threatened to tip millions of households across the eu into the debt trap. Pay. Ies cannot even in savings rich nations like germany and austria, citizens are starting to worry. Joining us now is our European Economic reporter, alex weber. This was clearly going to happen from the beginning of the crisis. Because defer payments people are not making any income and then those payments come due , no one has made any money but the debt has piled up. Why was something not done about it earlier . Alexander that is the issue. The debt pavements have been differed the debt payments have been deferred. To saidon i spoke people are living in a bubble now. Organizations expect people with debt problems will increase and norma slate enormously. Unemployment is expected to rise. That is especially true in sectors with low incomes like hospitality and travel where you dont manage to accumulate any savings. That is why these households are being hit so hard. Matt and it is especially a , forem for women minorities and immigrants for example. And i have notr been earning any money for months because the restaurant where i work is closed, my rent has been deferred until september. Now, september comes and i have to pay the last three or four months of rent and my restaurant still has not opened up. I am in a world of hurt. Alexander exactly. And what most people do is they fill digging a new hole to their exiting hole. They stop playing they stop paying other bills to pay their rent. A the end, you will deal with dozen creditors and that is why it is so important to have a debt counselor in place. It is a most important thing to have but not many countries in europe have this. This is Critical Infrastructure that should have been built up before the crisis. Up a savingsput hospital. Matt some countries that do have debt counseling, the counselors have said that a lot of people because of a pride do not come in until it is too late. What does this mean for markets . Waven, this huge debt coming for consumers cannot bode well for example for retail spending. Alexander exactly. It is one of the many issues that is a big threat to the economic recovery. That is why we keep hearing about so much uncertainty regarding the recovery. When you have a big debt pile, you will the a with it for years and years. If you cannot spend for this time, it impacts the economic recovery. If it happens on a large enough impact financial security. We have not seen that play out yet in this crisis. So far, we have not seen a level of 2008. Matt it is a very important story, alex. Thank you for coming on to talk about it. We will continue to follow it because it will have such a strong affect on the broader economy. Ofare minutes from the open stocks. About nine minutes. Up next, we will get you the stocks to watch. There is a lot to watch including an oil major that has named it new ceo to take over from another in november. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. About seven minutes to go until we start trading. Still seeing some decent day and in terms of future us. 0. 8 percent. Up stocks to watch this morning, dani burger joins us from the london newsroom corporate what is the story with the new ceo for equinor. Dani coming in is anders opedal. Ceo isans the prior retiring after running the company for six years. A significant change and it comes at a difficult time for the oil industry in general. Will have to address various issues. The aerospacesee industry get a lift as well. The trade group for the industry has proposed a new fund, one billion pounds, to help prop up the entirety of the industry. They are also urging the u. K. Government to match any funds contributed by the private sector. We see rollsroyce and airbus which called up about 1 today. The energy space in general we should keep an eye on for improving today. Brent crude climbing about 1 after aramco said they see demand for oil continuing to improve for the rest of the year. Keep an eye on the other oil majors getting a lift from the price of crude. Lot to keep your eye on. The energy story also i think is fascinating. There is a great chart out on the bloomberg. Teamnk sheldon from our bn showing renewables have done quite well compared to the oil index. But there are some warning signs that investors will watch out for. Coming up, it is the european open and futures are pointing higher this morning. This is bloomberg. W . W . Uhiono matt welcome back to bloomberg markets. This is the european open. 15are still a minute and reckons away. Executive action. President trump signed four executive orders to combat indecision in the house. Nancy pelosi though says the measures provide little real help. Hong kong Police Arrest a media tycoon, a prominent activist, jimmy lai was arrested after the u. S. Penalizes carrie lam. And then turned around and skyrocket higher. Plus, the inflation debate. Investors looking ahead to u. S. Ppi and cpi as global debt with 16zero yield tops trillion. Bob prince says a pickup in inflation would be mind blowing and by that he means in a very bad way for holders of that debt. Let us take a look at the grr screen right now to see how equity indexes are opening up. We are looking at probably a risk on monday. Sorry, gmm. The global macro movers screen. Lefthand column shows the equity indexes as they go live. They pop up in this column. You can see the ibex in madrid is gaining 0. 7 . 0. 5 percent. Up is up about a third of 1 . Are openingkets higher this monday morning after President Trump took executive action to combat the indecision in the house in terms of u. S. Stimulus negotiations. This was all part of the plan. On the menu, expanded Unemployment Benefits from President Trump as well as a temporary payroll tax deferral and eviction protection as well as student loan relief. And after a monthlong rally against the dollar, the euro seems to have leveled out just under 1. 18. European countries are pushing ahead with their plans to return to normalcy as well. Ea fxng us now is the im. Trategist at macquarie let me ask you about the euro strength and what you see in terms of it moving forward. Does President Trumps executive action and the possibility of more stimulus mean we are going to hold steady at 1. 18 . Elmear we are not one of those the dollarjump onto bearish bandwagon. Narrative, continuing to be risk on has lost a bit of that momentum. It ishe positioning starting to look really extended. We arethe other side, getting a little bit nervous. If the u. S. Does not come through with a stimulus package and these temporary measures do not prove as helpful as the administration hopes, is that bad for the greenback and good for the euro . Elmear the initial Market Reaction will be back to risk it negative. Risk negative. However, if we look back at the macro stories. The eurozone is outperforming. We have not seen a safety net in the u. S. And in some ways, we are seeing the worst of the u. S. Economy. In the eurozone, we are still seeing that play out. There is an argument that the u. S. Is outperforming the eurozone. Downsides for the the euro and now very separately, of course, for the pound . Pound case in point when you have unemployment data this week. The Unemployment Rate in the since lockdowned measures were implemented. Heading to a is fiscal cliff in october. Months, last three at ae are losing jobs lower rate than the historic goal trend rate. We have not really seen that macro weakness. Overso very true sterling. [indiscernible] up, there is a meeting in november of the european commission. End, we coming to your could see year and, we could see a lot more pressure on sterling. Matt you are one of the top but forecasters for g10 fx you are also an economist. I believe you recently got your. Asters from lse what do you think about the european safety net measures . To the european economy making a have to sit a half decent recovery compared to the u. S. . Elmear a lot has been made symbolically about this eu recovery fund. A lot is still idiosyncratic policies from the individual governments. I think we still have a risk of a downgrade in the eurozone. Do not think that has taken away the risk of the europeean break up risk. We dont see it as a game changer policy. We are going to keep you with us for just a little bit longer. Is from macquarrie. We want to talk a little more about what is going on in the u. K. May belar weakness coming to an end against other currencies as well. We will get her top calls across the board. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. Right now, 10 minutes into the session. Looking at gains. The ftse is up 0. 5 now in london. Is up almost as much as let us get the Bloomberg Business flash. Saudi aramco is pressing ahead with plans to pay 75 billion in dividends this year despite slumping profit and a surge in debt. The worst may be over. The oil giants chief executive says it is already seeing a partial recovery in the energy market. One in three u. K. Employers will cut jobs. It highlights the growing risk of a labor market crisis if Government Support is withdrawn. The bank of england thought unemployment would rise by the end of the year. Anders has appointed opedal. Opedal is currently executive Vice President of technology, projects. He joined equinor in 1997. That is your Bloomberg Business flash. Matt . Matt laura wright in london with your business flash. To the u. K. And in the second quarter, gdp plunged to levels not seen since 2003 as the lockdown forced much of the economy to shut. The median forecast is for a 20 fall. A sharper slump than many european peers. Nd the recovery is made harder the gdp number is due on wednesday at 7 00 a. M. U. K. Time. Us, i daly is still with mea fx strategist from macquarrie. How do you expect the pound to react over the next week . How important is this gdp number . It is going to be very bad. [indiscernible] we expect to see the pound it is quite limited, the impact from domestic data. However, the risks are there in terms of the u. K. Economy and how well it is doing. I think everyone will be focusing on the index for the services number. It does look like it is the most exposed industrial sector. Longerterm, we are looking at brexit decision, a possible agreement, maybe not. That does not seem to be the focus of the markets right now. When will this become very important . There was a deadline where you had to come up with a services agreement. And the u. K. Ed never asked for an extension to the time perry o. A. T. November 26 for an extension to the time period. A deadline where we need an agreement from both sides. Think it is around that time when the risk will be back in focus. Near how shorte the market was for sterling in october of last year, for example. Will shorte market sterling going in ahead of that deadline. Matt you have already told us you see dollar weakness coming to an end. We were talking about the eurodollar or cable but what about the asian currencies. What about, for example, the renminbi . How do you see the yuan playing . We anticipate a vshaped recovery in china. The overwhelming theme is u. S. China rhetoric. The escalation. We will definitely be currencyng a weaker going into that date. [indiscernible] we are also looking at the license agreement and whether it will be renewed. And we are also watching legislation in Congress Regarding the coronavirus itself. Elmear, thank you very much. Great to get your thoughts today. Fx strategistmea for macquarrie. Coming up, saudi aramco pressing ahead with dividend plans despite rising debt. This is bloomberg. Back to bloomberg markets. This is the european open. We are 19 minutes into the trading day. And theyking at gains are improving. We are seeing a pickup in trade. The ftse gaining 0. 9 . The dax had been unchanged and now it is up about one third of 1 . And the cac 40 is also up. Italy and the u. K. Reaffirmed plans to reopen schools in september even as daily coronavirus cases rose in both countries above their sevenday average. U. S. Educators are preparing to to classtudents back for the first time in months. Johns Hopkins School of Public Health professor spoke to bloomberg about whether schools were ready. It is a very difficult time right now because a true risk of going back to school for kids is still a little unclear. One thing that is certain though tothat it is very difficult send kids backtoschool if you have a high level of virus transmission in the community. , if your community has wellcontrolled infections and you have good testing and Contact Tracing in place, then there are perhaps opportunities to open up more aspects of in Person Learning. One of the confusing things becomes the fact that it is dictated by local conditions. There will be some differences inoss states and the country terms of how schools are being reopened. Thesene has to maintain basic principles of understanding they have to minimize the risk of transmission in this population. You arew, from what hearing, are the schools that have decided to reopen taking appropriate social distancing methods . The difficults thing to put into place. There is a spectrum of plans being put in place from different schools. Some schools are trying to mix on mine with in Person Learning by limiting the number of students coming in and the days they are coming in. These approaches make sense. Difficult in any situation to justify going back to what we saw last year in terms of schools and going back to full classrooms and everyone showing up at the same time every day. Those are the scenarios where re is nowhere in the country controlling the virus enough. Are thesehow critical phase three trials . . Andrew there are a number of trialsree phase three with vaccine candidates. With antibodyal therapy where you give people that will neutralize the virus. These are incredibly important that these. Aese well not only give us better idea of any kind of adverse or safety issues that are coming along with the vaccine candidates, but they will also look for vaccine efficacy. They will keep track of the people that have been vaccinated to see how many of them actually get covid19 compared to the control group. Up until now, we have been showing that these vaccines induce good immune responses and they seem to be lasting for several weeks but we have not does Gold Standard of the vaccine protect you from disease . That is what the phase tree phase three trials will get us. Matt and that was johns Hopkins School of Public Health professor, andrew. The school is supported by michael bloomberg. Aramco is pressing ahead with the planned 75 billion in dividends this year despite a slide in profits and rising debt at the state owned company as the kingdom battles a widening budget deficit. Joining us now with details is our own Annmarie Hordern who covers oil among other things. We have seen oil majors halt their dividends. Why is aramco different . You almost made that in the ando saying saudi aramco saudi arabia are one in the same. Aramco needs to keep the dividends in order to keep the revenue for the stage. 75 plan on paying out this billion in dividends even though they have a sliding profit and a surge in debt. The country generates most revenue from crude. You can see how important the revenue is to the stage. Outside of the dividend, other things to consider include capital expenditure. They say that will come in at the lower rate they set in march which is a far cry than what they saw in january. You can see they are really trying to cut ends wherever they can to keep the sacrosanct dividend. They equally that to the purpose but one thing we may see is they may have to issue bonds in order to pay out the dividends. One thing that is for sure determined by the report they that they will pay the dividend because it is so important to the saudi state. Matt we also heard from the ceo on his outlook for the market. They are relatively optimistic and a lot of that has to do with the fact that asia is their number one priority in terms of exports regionally. A say asia is close to precrisis level. They say asia is close to precrisis level. Last year, in 2019, we had 100 Million Barrels per day. How do you make that up given the fact that around the world we are still seeing piecemeal lockdowns and the fact that flying is nowhere near precrisis levels . Is thanksthat demand to saudi arabia and russia and the cuts they have made. How do they get back to 100 Million Barrels per day in demand . That is what we are watching. Matt Annmarie Hordern talking to us about one of the biggest stories in the world. Coming up, prominent democracy activist, jimmy lai, is arrested in hong kong under this controversial National Security law. Lam hasmber, carrie been sanctioned and there is going to be a u. S. Taiwan partnership after the highestranking official from the u. S. Visited that country since 1979. This is bloomberg. Matt welcome back to the european open. We are 30 minutes into the trading day and we are looking at the stoxx 600, the broader European Equity index. Up 0. 6 right now. Take a look at the group ranked returns. Grr on your bloomberg terminal, you can see the industry moves. Banks are doing the best right now followed closely by oil and s as well as insurance. The only losers are technology. This is interesting. If you are preparing for the u. S. Open today, we did see that dow and s p futures are doing better than nasdaq futures which are unchanged right now. Dow futures are up about 0. 5 . Worsttocks performing the right now. We will see how they do in the u. S. Let us get the bloomberg first word news and for that we go back to london and laura wright. Laura President Donald Trump announced four executive orders this weekend. They include expanded Unemployment Benefits. By move was criticized opponents. They say it is an attempt to power grab from congress. Says it is mind blowing the u. S. Has not improved coronavirus testing. He describes the process as slow and lacking for access. He cited long lines at commercial labs and it means wealthy people have quick access. He says no other country has such insanity. Hong kong police have arrested democracy activist, jimmy lai ng the office of his flagship newspaper. U. S. Mes days after the placed sanctions against carrie lam. ,fter last weeks deadly blast World Leaders are pledging almost 300 million to help rebuild beirut after a Virtual Meeting was held by french president , macron and the united nations. Protesters are calling for the resignation of the government because of its role in the explosion. 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. Matt . Matt laura wright in london with your first word news. Hong kong police have arrested media tycoon and democracy activist, jimmy lai. Raiding the offices of his flagship newspaper. It is the latest action under the new National Security law passed in june. Jodi schneider joins us now to talk more about this. Jimmy lais arrest is this the highest profile arrest we have seen . He is a very rich, older gentleman. It is very high profile and the way it was done was also high profile. They are arrested him at his the and then they went to flagship newspaper. Almost 200 officers entered the offices with warrants and searched the offices of the newspaper while it was being live streamed by reporters there. This is under the new National Security law. Under have been arrested suspicion of a breaches of the legislation including secession and collusion with Foreign Countries which is what it appears that jimmy lai will be charged with. It was very high profile and it spoke to a lot of fears that people have in the seed in the city that basic rights will be eroded. It was a fairly shocking display of power. And is a 72yearold man they had hundreds of officers in that office. Matt he owns Media Properties through his company, digital limited. Digital limited. Shares in that stock initially dipped and now have absolutely soared. Up 216 . At one time, it was up over 300 . Heavy volume. There had been a morning decline right after the arrest. The search came after prodemocracy supporters went on social media urging people to purchase the stock. This is a big moment in hong kong. And it is about the National Security law as much as it is about jimmy lai and his property. Matt we are getting headlines right now. The chinese have no interest in interfering in the u. S. Election foreigng to the China Ministry spokesperson. Saying they do not have any interest in interfering in the u. S. Election. Probably not thrilled though with what china may see as interfering in its relationship with taiwan. Alec cesar, the u. S. Secretary the u. S. Secretary of health and Human Services going to taiwan to talk about a joint venture on health. He is the highestranking u. S. Official to visit taiwan since 1979. Talk to us about that. this is the highest ranking u. S. Official to go to taiwan in more than four decades. He is a sitting cabinet member. The virus talk about and what taiwan has been doing with it. He also made some very direct criticisms of a beijing. He said taiwan was so scarred by chinas lack of transparency during the sars outbreak in 2003, that the world did not trust what china said. Criticism ofrect beijing. And the fact that he is there is a very direct kind of criticism of china. Provocation they have made it very clear that they do not want to see the u. S. Interfering in taiwan just as they did not want to see the u. S. Interfering in hong kong. And this comes amid the other escalation including last week. Just days after President Trump moved to ban tiktok and wechat which sent shockwaves through the world tech community. Matt Jodi Schneider talking to us about the u. S. China relationship. In a week, they are preparing to go back over the trade agreement so far. U. K. Firms aree 10 times more profitable when they have executive boards that are at least one third women but still, the industry is lagging far behind when it comes to gender equality at the top. We will discuss. N. Next. This is bloomberg. Matt welcome back to bloomberg markets. This is the european open. 40 minutes into the session. We are looking at almost a 1 gain to the ftse 100 in london. Theus go there now and get Bloomberg Business flash and the cop and the top corporate stories. Laura saudi aramco is pressing ahead with land to pay 75 billion in dividends despite slumping profit and a surge in the debt. Net profit fell 73 but the worst may be over. The chief executive said it is already seeing a partial recovery in the energy market. Helder and tiktok have preliminary talks about a merger. Dow reports that the social network is much smaller than microsoft and probably would not study. E same antitrust the risk ofhlights the labor market. If Government Support is withdrawn. Warnedk of england unemployment may rise to 7. 5 by the end of the year. That is your Bloomberg Business flash. Matt laura wright in london. The ftse right now now, there are more ceos called peter then there are women. That is still the case. Not only does it highlight a start lack of equality among corporate britain but the disparity also contributes to a sizable loss in profits. Here is dani burger to explain. Much anis is as economic issue as a social one. For u. K. Firms whose executive boards are one third women, they are 10 times more profitable then those with all men. 195 billion pounds of profits that these companies could unlock if they simply added more women to the top of their ranks. This is especially an issue as the disparity worsens. Last year, there were equal amounts of men as there were women in the ftse 100. Because of the coronavirus, we have seen this disproportionately impact women who are more frequently out of jobs and suffering more. The u. K. Market is not focused on this at the moment because of the coronavirus. In fact, they have Led Companies no longer report their statistics. I spoke to the cofounder at the pipeline. I asked her about this lack of data and she said it was absolutely a mistake from the government to allow this. Take a listen. The meagert let advances we have made become vulnerable because of how we behave during covid. Thet of our clients are in category where they have to collect data and the data is sitting there. The Good Companies are going to publish it. And the government needs to listen and say if they have collected the data, we should still be looking at it. Wrote theesa may also wrote thether intro to their report and she says we still need to be focused on it even amid the pandemic. Matt former Prime Minister theresa may a strong voice there. Dani, thank you. I wonder if there are any where wee we see see a lack of gender equality more noticeable than others. Im sure there are. This is across the board but if you look at retail, that is where women should be calling the shots. They make up the majority of the Customer Base as well as the workforce. In the ftse 100, there is only one woman at the helm. And we also have trouble areas like the finance industry. For those of forward in the u. K. For a senior role, only 1 5 of employees are women. When you have women that are executives, they are more likely to prioritize equality throughout the firm. And if companies are struggling for profits during the pandemic, this is a clear way to increase profitability at firms. Matt dani burger talking to us about gender inequality. Thank you. Much for that. And the damage it does to the economy. Anticsg of locker room within the banking world, back in the spotlight again. As a trial suing barclays has been underway in london. Made whenments employees referred to amanda during the credit crunch. That has emerged as part of the trial. It includes remarks about her appearance and with whom she may be sleeping. A british dealmaker with ties to the persian gulf, she was one of the few prominent women working in the financial industry at the time. She is doing barclays for cheating her out of profits for deals she brought in. For more on this, we are joined by ellen milligan. These a phone transcripts, how were they found . And why were they made public . Ellen the phone transcripts were released as part of the trial. , here the trial began lawyers obtained over 1000 documents as part of their evidence. And there were three phone transcripts in particular that contained sexist comments. Comments say these about the culture at barclays . Have attitudes changed . Ellen the Banking Industry is notoriously maledominated. It is not a secret that there are sexist comments. I dont think though they have been made out in such black and presentation. As part of our reporting, we spoke to a couple of layers that specialize in sex discrimination though the conversations happened 12 years ago, these lawyers say similar are often disclosed on whatsapp. One said there will be a mad scramble to delete messages. Thatawsuit has revealed those kinds of comments can come back to bite them. Matt we have seen resignations importanttant from lobbyists as a result as well. Milligan, bloomberg legal reporter joining us out of london. Come inflation, stimulus, and the u. S. China conflict. Those are the top stories for today and we will discuss that with the head of our european and our european mliv team. This is bloomberg. Bloombergome back to markets. This is the european open. We are looking at gains on the ftse. Gaining 34 points. U. S. , President Trump has signed four executive orders related to Coronavirus Relief. You will get expanded Unemployment Benefits possibly. A temporary payroll tax deferral a victim and student loan relief. After the stimulus negotiations in the house, democrats and republicans are still trillions of dollars a part in spending. The parties disagreeing on issues including aid to state and local governments as well as the amount of jobless benefits. Joining us now is kristine aquino. We recapped this because it has been so important to markets. We arethink the gains seeing now and in u. S. Futures is because investors see this as a decent stopgap measure . The markets is interpreting the measures as something that is good enough for now. That is why we are seeing a little bit of a lift in the market. The question is how long will the goodwill in the market last . We still have a congressional standoff hanging over us and investors are looking that looking at that recognizing it is a shortterm measure. Rally willty of the depend on the developments in congress and whether that and wef can be broken can get a more sustainable solution in terms of stimulus. Focus, the other big focus for markets is the u. S. China relationship which does not seem to be getting any better with the arrest of jimmy lai and the sanctioning of carrie lam. The secretary of health and Human Services trip to taiwan. What are the signposts . Kristine tentatively in terms of the market reception. It is one of these things keeping investors on edge and probably a reason why we are probably not getting as much of the stimulus driven lift as we could have. There is the other big risk of u. S. China tensions hanging over the market. The key things to be watching for wouldbe any retaliatory measures from china. Especially because all of this comes as well in the wake of executive orders moving against at in the u. S. H last week. Tense for a more situation. All eyes on china to see if we get any hits back. Specific targets or anything more general. The mliv me put to you question of the day. Everyonerds to china, is watching the economy very closely. As toe signal that we get how well china is doing is the price of copper. We saw it fall hard on friday. Is it the drop in copper warning of a broader turning point . At the same time, it didnt imports also soar . Copper as a macro indicator has been questioned in recent years. We have all been wondering it used to be a great macro indicator for chinese Raw Materials demand which is a great reflection of the health of the Global Economy. In recent years come it has broken down a little bit as a macro indicator because it has more to do with specific supply than adynamics rather broad indicator sentiment. When we take this in conjunction with what is happening elsewhere in markets we are seeing some exuberance in the equity rally and looking for a reason to rally their but also a rally in gold which has been at odds with the equity rally a little bit. Tois still early days as whether this is a definitive indicator but certainly, taken in conjunction with everything else, it does seem like early signs of things running out of steam here a little bit. Matt hopefully, it is not irrational exuberance. Thetine aquino who leads mliv team in europe. Her work byk out typing mliv on your bloomberg terminal. That is it for the european open. Bloombergt to see surveillance then stay right here on bloomberg television. If not, and you want to hear me on bloomberg radio, im heading there right now. You can switch over. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. He scores stanley cup champions touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Yousef executive action. President trump signs four virus relief actions. Nancy pelosi says his orders provide little real help. Hong kong Police Arrest mediatech and jimmy my media tycoon jimmy mai for curtailing political freedom. Sadia remco presses ahead with dividend plans despite saudi aramco presses ahead