Transcripts For BLOOMBERG Bloomberg Markets European Open 20240712

You from the bloomberg terminal. American contagion. The u. S. Records its biggest ever jump in new virus cases. Governors reverse plans to reopen their states. Powell puts his foot down. The fed dividends bid buybacks. Buybacks amid uncertainty around the pandemic. Wall street giant slide in late trading. An elaborate fraud. Auditors accuse them of a sophisticated scheme to hide billions of euros. Visa and mastercard consider cutting ties. Just under one hour away from the start of cash equity trading in europe. Lets take a look at the futures as they are trading now. Yesterday, we closed slightly in the green. The u. S. Also rose and rallied into the close on news that banks would get a little bit more room from regulators to trade and be able to use more of their capital buffers, so diminishing the volcker rule, helping in the u. S. European futures are up as well as we get headlines that klm is securing a 3. 4 billion euro bailout from the dutch government, so we see more hope of stimulus, more news of support from authorities holding up markets in terms of futures. Ftse futures up. 7 . Dax futures gaining. 6 . Anna . Lets talk about what we see on these asian equity markets. In terms of the grr, this is what we have for you. A fairly positive picture coming through for the asian session. The Msci Asia Pacific up by. 6 . Which is interesting given what we saw in the United States. A lot of nervousness this week with regards to the virus and a second wave in the United States. This tugofwar still going on between the virus concerns, stimulus hopes, and expectations globally, but particularly in the u. S. That is part of the narrative we are dealing with this week. The banking stocks in focus in the United States, and that is a conversation we will get to later on in the program. The banking stocks being sent on a real roller coaster ride. The ability to do buybacks. But within sessions or changing legislation, behaving a bit more positively. Matt Companies Listed on the New York Stock Exchange raise more than 35 billion while the Trading Floor was closed. That was via followon offerings, capital raising, and ipos. Daisy cunningham says more companies are considering direct listing as an alternative to the traditional ipo. A really listings are interesting innovation in the Capital Market space and while they are not for everybody, we are hearing from investors and issuers that they are looking for more choices. Withve been working the fcc very productively. We have had two companies today. The cfo of spotify came up with the idea, brought it to us. We rolled out the first one. Slack was the Second Company to choose that path for their public listing just over a year ago. We have been building on that model is to allow for capital raising. With a direct listing, it separates you can choose to go public but not necessarily raise money at the same time, so the two to date have taken that path. Now, what we are working on is what if we want to raise money at the same time but we would like to exchange and process of opening that morning to determine how that offering gets priced. That is the phase we are working on with the fcc now. We filed the first iteration back in december and we worked productively with the questions that we have. This most recent filing which we submitted on monday answers mechanical questions around how that offering will actually be priced in the morning, how it gets entered into the market as an order, and what measures need to happen that morning to get that public. Sohave been advancing that that we continue to work with issuers and investors on having another alternative to the market. None of us knows exactly how or when it will come out but from your perspective at this point, is it really a mechanical issue . That sounds like we have to work at three and it may take some time but it is not a substantive issue that we will get through sooner or later. That is how it works with spotify. It took us 1. 5 years working with the fcc. Constructive feedback and dialogue. Their goal is to protect investors. They want to make sure that they are working with us to develop a process that achieves that goal. It took 1. 5 years to get that done. We are working on this iteration. They are not substantive issues. It is about how it comes to market, how it gets priced, how investors know what to expect from a price level, range perspectives, and how do we know that all this interest gets satisfied . Theres all the mechanical issues we have been working on. You will see a direct listing to have the ability to raise capital at the same time of their listing in the nottoodistant future and there are companies that have been asked about it, too, because they are interested in pursuing that. It builds on new innovation. We have seen over this period of time that during covid19 when the markets have been very turbulent, you have seen a tremendous number of special acquisition corporations which are management teams raising money without having the Business Operations yet but planning to go out and acquire a business. The fact that we have seen so many come to market over the past few months is really indicative of the fact that they are there are opportunistic businesses out there. At the time of the business combination, the combined entity is now companies. It is one more pass we have been working on. In success, as this all gets worked out, how much difference will it make . Will more companies go public . Will they be listed in the Stock Exchange . How material would it be for the New York Stock Exchange . I dont think direct listings will be the past forever company. We are the only one that has ever held one. The fact that we have human beings involved in the process on the Trading Floor overseeing that price discovery process puts us in a unique position to be able to make sure that things are flawlessly executed, not just at a time of ipos, but especially when you look at a direct listing. What we have seen to it is those opening options are much larger than the typical opening option for an ipo. Both spotify and slack were in the top five number of shares printed in the opening options of all opening options in history. Among a list of the largest ipos of all time even though as companies, they were smaller than all of those companies. Really massive trades because so much price discovery is happening. That is why price discovery is such a critical part of the direct listing process. We are really uniquely matt that was stacey cunningham, president of the New York Stock Exchange, talking with our own david westin. We have a lot of breaking news here on the bloomberg terminal. Let me go ahead and give you first off into properties. The board says it is likely to appoint administrators, meaning it is likely to file for bankruptcy. They are continuing talks with creditors, but if the board says it is likely to appoint administrators, it is clearly a bad sign. Clearly a bad space at the open. In terms of fashion news, we have got h m right now out with a net decrease of stores. They expect to be about 40 and 2020, so the impact of the covid19 crisis means they will be closing down doors to the tune of about 40 in terms of a net decrease this year. So h m coming out with a little bit of news in terms of the Second Quarter. They say their gross margin looks like 46 point 3 . The estimate was just around that, 46. 6 . They say also that pretax loss, the pretax loss for the Second Quarter will be 6. 4 8 billion krona. The estimate was for a loss of 6. 1 billion krona. It is a little bit more than that. A little bit bigger loss than had been anticipated. Klm,iterate air france, the story that we talked about for a moment. Air france, klm, 3. 4 billion euro bailout for the netherlands after weeks of wrangling over how much help the carrier needs to ride out the coronavirus. We are going to speak with the cfo of h m. Adam carlsen. An interview you dont want to mess. Texas and florida halt their reopening process. The u. S. Sets a daily record for new virus cases. Trump says these flareups will be put down. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are about 48 minutes now to go until the opening of cash trading across europe and in the u. K. , we can see futures are positive here. Looks like we have more than 1 gains on the cac futures contract. Could be more of a risk open in paris. The United States has hit a Record Number of new coronavirus cases. State Health Departments reported over 37,000 new cases on thursday. Texas and florida halted the process of reopening. Both states, texas and florida, politicalican led bellwethers that won praise from donald trump for easing restrictions earlier. The u. S. President took to twitter this morning. He said the u. S. Economy will not be shut down and that the socalled embers will be put down or probably put out. ,e are joined now by justin head of retail multiasset funds at legal and general Investment Management. Thank you very much for joining us. This does not seem to have had much of an effect on markets, at least u. S. Equity indexes closed in the green yesterday. We are looking at positive futures today. Are investors a little bit more sanguine about renewed hotspots with the possibility of a second wave than they were last week . We have seen volatility the increase in numbers. Ignored. Hat cannot be however, i think it is really important to differentiate between a rise in the virus numbers that we are seeing in those hotspots, california, arizona, florida, and texas. Really define the difference between that and a second wave. A second wave is really when countries have got the virus under control and then you see a spike up. This is pretty much a continuation of the first wave, an economyhan seeing completely reopen that needs to close again, we are talking about halting reopenings. It is important to differentiate between the two. We other aspects are that have not seen death rates start to rise yet, and that is something that we are looking at , looking at very closely. Not spiking up may imply the vulnerable are staying away, and the vulnerable are not really captured by the new cases and also that because we know more about the virus, it could imply that we are able to manage it better. Anna the infections are one thing. The death rates are very different, very different dimension, and we will continue to watch available capacity at some of the hospitals. Let me ask you about, away from the human tragedy of this, back to the market story. What do you make of the recent rally we have seen in tech stocks . Does that make sense to you that tech stocks can have such strength, given people are thinking about structural changes to the underlying economy here, given the concerns around the virus, can the nasdaq, tech stocks, keep on rallying . Justin the big concern towards policy on the technology. That is really important. However, we are concerned about the concentration risks in these tech stocks, so you know, when you look at the five tech stocks making up 1 5 of the s p, this is significant concentration, so although we like tech stocks, we think it is really important to diversify away from those bigger names and create a more diversified basket in technology names, particularly for index investors, and we have seen the growth of index, both on the u. S. Side and in europe. Think mayrs think they are getting the diversified exposure across the u. S. And Global Markets, Global Market cap. Taking accidental stock concentration, particularly for retail investors, which is my field. What we have been doing go on. Matt no, i was just going to say it is fascinating, as of all the cattle are really being herded into the same pen here and that certainly is a risk we can understand. We are going to take a quick break. Justin onuekwusi from legal and general Investment Management stays with us. We have more to talk about with him. Coming up, increasing diversity. Thinking about diversity in your workforce. Companies doing more to level the playing field. We will hear from investors taking steps for change. That is next. This is bloomberg. I think diversity does not just happen. It has got to be intentional. I have to say it is not a unique experience for me to often be the only black person in the room or around the decisionmaking table. I think it is a moment in time where leaders like myself need to spend a lot more time listening, trying to understand, and then actually taking steps. This is not a time where leaders or businesses can be neutral. They have to decide that they are going to be explicit about adding Inclusive Practices and diversity into the solutions. Are activelywe recruiting minority candidates much earlier than you normally would in different places. Critically important that we get africanamericans who are on corporate boards and progressive leaders that are on corporate boards to hold their management teams accountable for diversity and inclusion. Tied directly to their pay. More and more of our clients are choosing to deal with companies who they believe meet their social their environmental ideals. The companies are starting to realize more and more that not making progress is not sustainable. A number of industry executives speaking to bloomberg about diversity in the workplace and the need for actionable steps to effect change. Let us pick up on that conversation with justin from legal and general Investment Management. We have the source on the markets a moment ago. This is something you have been leading a charge on and you were recently awarded the freedom of the city of london so congratulations on that. Will you look at the Asset Management industry is there one or maybe a step that you would like to see enacted to try and improve the diversity of the workforce . I think so. I think diversity, you have to split it into the different segments, whether it is gender, diversity, ethnicity. The key thing is to listen to the people within your business. Every culture within a business is different. To understand the lived experience of people in your business is vitally important if you are going to make steps to correct this. It is not just about guessing a diverse relation to your business. Its about creating an inclusive culture. It is that culture that i think is really where Companies Need to really focus and really understand the lived experience of their employees. Matt what is the talk about black movement that you have started here . What is the intention and how is it working . About three years. The idea is to address the underrepresentation of particularly black people in the Asset Management industry. Just a few stats when you look across the city of london, it is based on a new financial report. There were 12 black Fund Managers across the whole of the city of london out of thousands. There is only two people that we assetentify that fit in managers across the city of london. There is a lot of work to be done. It does not lump all together. It actually said ethnic minorities may have different experiences. In order to really tackle increase representation of ethnic minorities, you have to break them up and understand the lived experiences. Anna with that in mind, i wonder what you can suggest also for inspiring young black men and women, boys and girls, to get involved in the fund Management Industry and Asset Management. Inspire them to get involved. Justin one of the Biggest Challenges that we see is entrylevel. Entrylevel, when you speak to students and universities, when you speak to kids in schools, in communities, they dont know the Asset Management industry exists or simply, they do not see it as being attractive because they do not see people that look or sound like them in the industry. What the industry can do in this case is obviously reach out to those communities, number one, but also showcase role models, showcase the people that are more diverse. Because that will help attract a more diverse that should lead to better results in the future, as you should get greater cognitive diversity by having a more diverse of people. Matt are you interested in getting a more diverse slate of people, justin . Whenever you talk about quantitative easing, Central Banks, boosting income inequality, it is all about the fact that, for the most part, you have got, you know, white people invested people of color are not quite as much. Do you look to change that or has that come down the line . Justin that is something we are looking to change. You identified a number of things. An analogy which stops black talent from rolling through. In particular, high crime is where we want to address this. Learning about investing, learning about saving, comes pretty early. Currently, working on wanting an afterschool program. Go out into communities and teach people softer skills, teach people about networking and things like that. Also importantly, teach people about how to invest their own money. Anna really important messages. Thank you so much for joining us today. Justin onuekwusi, head of retail multiasset funds. Apologies for interrupting. Next, we will talk about banks. 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. Anna welcome back to Bloomberg Markets european open. 30 minutes until the start of the European Equity trading day. U. S. Futures have been volatile through the asian session. U. S. Futures a little more negative. Lets take a look at what you. Should be watching out for today. Coming up, we will get battalion Italian Consumer confidence, matching factoring confidence manufacturing confidence. We will bring our exclusive interview with the u. K. Chancellor. We will have more u. S. Data. We have personal income and spending figures at 1 30 p. M. U. K. Time. Matt . Matt Jerome Powell is taking action on wall street. The fed told the biggest u. S. Banks they cannot boost dividends or resume buybacks until at least the fourth quarter. Uncertainty over the course of the Global Pandemic ways on lenders. Joining us is bloombergs dan moss to talk about this. Whats the idea here . That these banks may have so much in terms of loan losses that they need to conserve cash with keeping dividends where they are now . Matt, i think theres probably a couple of things going on. One, this shows the value of the stress tests, which were one of the really big takeaways from 2009. 2009, there was a big rally in bank stocks that began around mid march when the first stress tests were complete. Thats a legacy from the last news showsch todays is still proving its worth. What they are saying to the banks is, ok, so far, we need to do a little bit of Civic Service here. It would be a good idea if you kept dividends. They are not saying dont pay them, they are saying cap them. It would probably be imprudent for you to engage in buybacks as well. I dont think the banks would argue too much with this. They probably were not planning to increase dividends anyway. Less thanould have a in publicable odor opinion right now. Do you recall how the banks became one of the bad guys after the crisis . The last thing they want to be accused of doing right now is buying back stock. If i were a bank, i would think this was a pretty good deal. Anna yes. The Banking Sector has been quite keen to paint itself as one of the agents of positive change and positive support through this crisis, rather than the cause of any crisis. Let me ask you about the stress tests and how tough they were. I dont suppose anybody when divid devising stress tests would have thought that you need to prepare for the idea of a pandemic. Pandemic preparation is something that governments do think about but i wonder if the stress test had ever stressed banks to that degree. I was running the u. S. Economics team for bloomberg in d. C. At the time of the stress tests in 2009. The scenarios they gamed out were really to do with economic and financial dislocation. And, you know, technically speaking, they were supposed to provide for a number of bad scenarios. Also fair to say you did not hear too much at that time about the dangers of a Global Pandemic that would produce the biggest economic downturn since the great depression. So the vehicle is there. Has will tell whether this been this is a vehicle that is easily modifiable. As we start to get signs from a second wave, it is really important to know that at least this is a model that has proven its worth over the last decade it is so far, so ok. We want to say so far, so good. Ok is probably a pass mark for now. Anna thanks very much. Lots to talk about on the Banking Sector this morning. Dan mazza joining us with his thoughts dan moss joining us with his thoughts. Out eating out. Cafes and restaurants in england have been given the green light to reopen next weekend. We look at the impact of the threemonth a lockdown on the restaurant industry, on the hospitality sector. Thats coming up next. This is bloomberg. Welcome back to bloomberg. Rkets european open still 20 minutes or so to go into the start of the European Equity trading day. U. S. Futures have been volatile for u. S. Futures. They point downward. European futures point to the upside. Englands hospitality sector will be the next to open as the country eases its lockdown. Many restaurants have already announced their permanent closure and others are warning that it will not be viable for them to operate if social distancing measures remain in place. We will return to that conversation shortly and hopefully bring into the conversation one of our guests for this morning. Real estate has been at the center of economic hit from coronavirus. Start with Capital Growth chairman and ceo barry sterling, who spoke to Erik Schatzker about reopening travel and how the pandemic will reshape the real estate landscape. That mostry clear likely, rates stay low for a while so that has to inform your longterm view of, will you invest in property . What kind of property . There is the major food groups of real estate, like hotels, hotels, airlines, cruise ships, they were most impacted. We were asked to close hotels in major cities. International and Domestic Travel was cut back. A city like new york or los ,ngeles, chicago, new orleans business takes a while to come back. You are not going to see a big resurgence in International Air travel. Markets that are mostly domestic and evened weekend business where people can get to ia hotel on the weekend, that business is coming back very quickly. Are end hotels our hotel in los angeles is shuttered, our hotel in new york has no demand whatsoever. In miami, for july 4 weekend, we will run 70 occupancy. And everybody is driving. Most people are not flying. It will be a while and thats hotels. They will be better only one we have a vaccine and air traffic returns to more normal levels. Groups, businesses are willing to book conventions and what will be the longterm impact on Group Meetings . I dont know how it certainly will affect the rate of growth and perhaps they will cut group travel for a while. Offices i am not worried about. Office tenants are paying. Geographies like new york city, i am worried about office, but really for other reasons. And then retail. Retail is like 9 11, its a hurricane. Everyone who did not have an amazon prime card now has one. My 86yearold mom figured out how to order a thermometer online and figure out how to get it delivered the next day for free. Why do you say you are worried about new york . Is this the market that faces the toughest climb out of this crisis . A 12, new york took punch. When people in new york look around the country and say, they dont understand what they are doing in iowa, georgia, some cities that are barely shuttered, they are looking at it from their experience in new york, which was pretty bad. Also, the rioting after george floyd scared a lot of new yorkers. People realize the pandemic been spread by the density of new york and the need to take public transportation. It was a scary time for new york. I think executives are also now looking at all the other factors that have kept them in new york, including tax rates. Have aprivate firm, we recently investing in the red states. Not because it is a political commentary, but red states are growing, whether it is florida, texas, or tennessee. States with the lower taxes are just adding people. States with higher taxes are actually moving people and they are voting with their feet and cars. That was Eric Sternlicht speaking to Erik Schatzker. We touched on the hospitality sector a little bit in the interview. Lets get back to the more european conversation around with Jonathan Downey , joins us now downey, who joins us now. Very good to have you with us. Part of the reason you have jumped into the conversation around the shutdown of the u. K. Economy and the english part of that is around rent freeze. You have been arguing that it is not appropriate for hospitality businesses to be paying rent at this point when they are not allowed to reopen. What success have you had in convincing landlords that rent freezes are a good idea . Jonathan very little so far. We have been campaigning for three months on this. It would be almost four months where weve had zero revenue when we reopen. During the time when we were forced to close down, zero revenue should not mean zero rent. No cost to the taxpayer to enable in National Solution to the National Rent problem we have got. We cannot all negotiate individual deals with our landlords. At the moment, they are extremely reluctant to come to the table. Negotiations to a between landlord and tenant, landlord is in a very strong position. At the moment, it is a kind of hiatus. Until the end of september, landlords cannot change a lot. That kind of levels the playing field. It is not yet leading to solutions under agreements. I would really like the government to step in and enable a National Rentfree followed by a period of turnover rent. If the government does not do this, we are looking at about 50 of hospitality venues not reopening and a loss of about 2 million jobs. Richeyou have written to sue knock here. I am wondering what kind of response you have gotten, jonathan. And how this issue plays with the public. It certainly does not seem fair that the government should force your businesses to receive zero revenue, all businesses that operate on the high street really, but then allow landlord businesses to continue collecting from those businesses that they forced to shut down. I mean, have you managed to get this into the public conversation . Jonathan yes. One part of our campaign is to do that. We need to get this on some of the front pages of some of the tabloid newspapers, on some of the morning breakfast shows. We have lost 10,000 pubs in the u. K. We are concerned that in the next 20, 10 weeks, we will lose another 10,000 more. We have got to do something because this could be disastrous for sector. Is very difficult for government, having spent tens of billions in support of the economy in the last few weeks, to dip into the taxpayer pocket again and give money to landlords. They need to give some help to landlords. Landlords are some of the wealthiest individuals, some of the Richest Companies in the u. K. , so i think its very difficult politically or cash to be handed out to property owners. Government needs to do something. Perhaps they can give them a tax credit against rentfree. They need to come up with some ideas. The treasury has been very busy with the very many new measures to support hospitality businesses. They are not enough. They have been very welcome but they are not enough. We have seen support for jobs with the furlough scheme, but all of these moves, all these measures will be for nothing if we do not get a solution on rent. It is the absolute last thing we need. We are also looking forward to a stimulus package from the chancellor in early july hoping to see a cut in sales tax and vat hopefully. But nothing is more important than rent at the moment. It is absolutely vital we get a solution to this problem. Anna i suppose like many people, youre trying to look to the future and work out what happens from here. You operate 20 bars, restaurants, hotels. When you think about the way we used to live, do you see a way to get back to the way we use to live or has life changed forever . Jonathan i dont think it has changed forever but it has changed for a very long time. Prep, a sandwich chain in the u. K. , they are operating at less than 20 of their normal revenues. They are not dangerous places where there is a long dwell time. People are not going back to work it. We are hearing about big employers in the city in canary wharf not sending people back to their offices until september, in some cases, until next year. Those businesses that are opening in the next 10 days or so when we are allowed to on july 4, we are expecting to operate between 30 and 50 of normal capacity. There has been a big boost in bookings but that is generally what happens when nonessential retail open. There were cues around the block for places like ikea and primark. London,est end of 20 of whatonly used to be. In some places, it will not be worth reopening because there is no people there. We have to get started somewhere, hopefully in the next 10 days on the fourth of july. Matt certainly if i am anywhere near there, i will be sure to stop in in one of your bars. Jonathan downey, founder of hospitality union. Thank you for joining us. Ntu expects tor i file for administration. Definitely one of the stocks you need to watch. This is bloomberg. Me, anytime i speak about something, i think Everybody Knows that i am very educated and very thoughtful. Theres going to be times where people agree, like i said before. And there are going to be people that disagree. You learn from it. You learn from your experience. The best teacher is Life Experience and you know how to handle at the next time or handle another situation. For me, i am learning every single day. What did you learn from that . Lebron continue to get better, continue to get better. Keep yourself at baty. At bay. Its not going to prevent you from speaking out, im guessing . Lebron no, no. I would be cheating myself and the people that follow me, thats for sure. Anna that was threetime nba champion lebron james on the black lives Matter Movement. You can watch all of Bloomberg Businessweeks conversation with lebron james and his business partner, maverick carter, at 7 00 p. M. New york time on bloomberg tv. Intu properties, which owns nine of the u. K. s largest malls intends to apply for ministration. The landlord administration. The landlord is considering how to protect stakeholders. For more, our Bloomberg Intelligence reporter joins us. This has been a story that has been intensified by covid19 and closure of retail outlets. It does predate it in a sense in that retail was already under pressure. Whats the latest here than . Then . Intu has had problems going back a number of years. Its interest was always higher. Swaps that ity of took prior to the financial crisis. These swaps were not allocated to any debt and they had to pay the interest on those as well. Over the last eight or nine years, they have not been able to have a positive operating cash flow. They carried on borrowing. That has already put them in a bad position. On top of that, you had brexit, the structural change in retail, and then this is the last straw with covid19. Matt i wonder about the structural change in retail . Does anybody forecasted that to change retail. Does anybody forecast that to change . A lot of mall owners were trying to install insperity and since were trying to install experiences or make them the place to be. Malls have been well out of fashion for a couple of decades now. They certainly have. There is still a big argument that people will want to visit malls, if they are really exciting to go to. The reality is, we do need a lot less space than there is out there at the moment. We have been a polarization between better malls and worse malls but everybody seems to be going down together. The reason the u. K. Is more is because we have had very long leases. It has caused stress on retailers and exacerbated the mess. In continental europe, it is havea problem because they more like three year breaks on leases. It may be something that is coming. Amazon is much more entrenched in the u. K. Than it is in other continents countries. Matt very interesting, the idea of marking your rent to market. I think a lot of people overlook that and long leases make a huge difference. Thank you for joining us. Sue monday and talking to us sue talking to us. Intu preparing to file for bankruptcy. For futures are pointing higher this morning futures are pointing higher this morning. Five minutes to go with more than 1 gains in paris. This is bloomberg. Anna a minute to go until the start of the cash equity trading day. Lets get to the headlines. American contagion. The u. S. Records its biggest ever jump in new virus cases as governors reverse plans to reopen states. Powell puts his foot down. The fed caps fed dividends and bans buybacks until at least the fourth quarter. Three giants slide in late trading. S ernst young accuses the provider of matt we see futures gaining here in europe, at least, after the u. S. Rallied into the close yesterday on optimism about more stimulus. We saw that in asia overnight as well. We are about to see the cash trade open here. Lets check out the global macro movers screen. On the lefthand column, you can see indexes starting to trade right now. The ftse gaining zero point 3 , the spain ibex gaining 0. 75 . 33 , the spain ibex gaining 0. 75 . Ax andthe netherlands amsterdam open up and the cac open up about 1 . Now, the ftse is gaining even more than 1 . Like a risk on friday. Anna indeed. Wee interesting to see where are seeing those gains come through. Stoxx 600 up by 0. 9 . Lets get a bloomberg first word news update. We are keeping our eyes on these stores. The u. S. Has hit a new record in daily coronavirus cases. The surge is being led by florida, texas, california, and arizona. Greg abbott enforcing the next reversing the next phase of reopening. Street regulators are rolling back postcrisis regulations. Changes to the volcker rules were approved yesterday to give banks more clarity on what is allowed. The lenders will soon be able to boost investments in emerging Capital Funds and pocket billions of dollars set aside to trade. P derivative germany preparing to strike back against the u. S. If it puts additional sanctions on nord stream 2. Angela merkel looking for a coordinated response over the pipeline designed to pump russian gas directly to germany. Sources tell us despite the project causing deep divisions in the bloc, u. S. Intervention may prompt a joint response. The u. S. House has passed a policeg overhaul of reform. President donald trump is accusing democrats of wanting to weaken the police. Proposedafter a plan by Senate Republicans was blocked by democrats. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Matt . Matt all right. So European Markets opening higher this morning, investors wing the prospects for additional stimulus against a new Record Number of coronavirus cases in the u. S. Joining us now is janet henry, hsbc global chief economist. Let me first ask what you make of the continued record cases that we see in the u. S. , the concern about the expansion of this pandemic or about a second wave, depending on how you see it. Is it going beyond what you would have forecast a couple of weeks ago, a month ago . The way the pandemic economy,t the global but i suppose our underlying assumption was that there would be a gradual, tentative, if slightly uneven, opening up. Broadly speaking, that is still the case. Obviously, asia and europe, it seems to have peaked and coming down. In the u. S. , where you have got you have got new york, where it is clearly coming down. Other parts of the country have much higher cases. A the moving parts have been a bit different a lot of the moving parts have been a bit different but the broad story i think has still been intact. Anna what kind of longerterm impacts do you expect this to have, janet . Or may be mediumterm in terms of the Service Sector . How quickly can that sector bounceback . We spoke to somebody in the hospitality sector in the u. K. Earlier on today who was saying totallyhas a seen attic certain visit anecdotally certain businesses operating at only 20 capacity. Where do you see services heading . Janet i think that is a good question. What we have seen from other countries that are further along in containing the pandemic is one it is not so much about people are allowed to go out or not, it is about when people feel confident. In australia, they are much further along in opening up. Just the the production side of the economy that has come back onstream. You are seeing consumer demand come back in some areas. You are even seeing employment coming back in hospitality. , butre near where we were they are way off their lows. Theyme countries, where have not necessarily been as sweden, theyike have not come back to the restaurants quite as quickly. It has come back much more quickly in the likes of germany. You have the impact of the lockdown and what that means for companies, restaurants, bars to operate. You also have this overlay of consumers. Are they confident about going back . On till consumers are confident that the pandemic is under control, at least in their country, and even more importantly, globally, that is still going to impact their behavior. Thats the risk in a large number of states in the u. S. Matt you know, janet, we saw equity indexes rally, risk assets rally on the idea that there is more stimulus coming. Course,site of that, of is the concern that governments or Central Banks will shut the door to soon. Art too soon. Are you concerned about that as well . How long do you think they need to be giving economic support . Janet i think the major Central Banks are very, very clear how long they are going to have to continue giving support for. The ecb has already set out set of the asset purchases will have to continue until next june and reinvestment beyond that. We heard from Jerome Powell and the fed on numerous occasions that policy stimulus will need to continue. Both Central Banks making it clear that it will be fiscal policy that it will have that will have to do a lot of the heavy lifting from here. It would appear that Central Banks have got their backs. Janet, what are the best pieces of highfrequency data that you are looking at at the moment to really get a sense of the shape of the recovery . Janet well, we are looking at everything. Some of the countries themselves that are producing more weekly data from official sources, that is quite helpful for us to look at. But we also look at things like the opentable receipts. We can see that in terms of returns to restaurants or the go google mobility data, it all shows you in realtime. Obviously, it is not particularly useful for forecasting. This is the difficulty that a lot of economists have. A lot of those models were based on past data and we thought we could explain a lot of consumer behavior, so we are not used to being able to explain in a world of pandemic. We have learned a certain amount from elsewhere about changes in behavior and how quickly they will adjust from localized spreads or outbreaks of viruses and we are drawing on that date as well. Anna thanks very much. Henry, hsbc global chief economist, share insight with us this morning. Lets check on a couple of stocks we have been following closely, another that is part of a sector focus. Wirecard very much at the forefront of the corporate story this week. We see that share price down by 32 . It is not worth anything like it was. Fraudwas an elaborate that led to the missing billions. Mastercard cutting ties with the businesses. We see an insolvency filing from wirecard. Lets talk about what is going on at air france klm, the share price on the rise come up by 5. 7 at this hour, rising after rise, up by 5. 7 at this hour. Coming up, we will talk more about the ecb. Janet henry was just referencing it stimulating the economy. The ecb says their Bond Buying Program is the best way to do just that. More on that. This is bloomberg. Matt welcome back to Bloomberg Markets european open. Into the, 13 minutes session and we are seeing gains of almost 1 on the ftse, almost 1 on the cac right now. Looks like markets continue to be risk on after we saw gains in the u. S. Last night and then gains throughout asia overnight as well. Lets get the Bloomberg Business flash. These are todays top corporate stories. Visa and mastercard considering revoking wirecards ability to process payments. The move could cause further pain for the fintech firm that already faces an accounting scandal and bankruptcy. Wirecard helps firms around the world accept Electronic Payments from customers so its relationship with visa and mastercard are critical to its business. Not a lot of people love doing business, financial business with a company that is filing for protection from creditors. Bayer may be close to wrapping up most of its around up cases, but it is not out of the woods up cases, butnd it is not out of the woods yet. Lawyers are valley even more lawsuits vowing even more lawsuits. The active ingredient and the formulations are safe for use. They do not cause cancer. They have been and they will continue to be available. Desperates are in need of the products and because it is safe, there is no reason why we should withdraw or change the formula. Matt that is your Bloomberg Business flash. They European Central bank is bond purchases are the best way to stimulate the economy. The account of the Central Banks june governing Council Meeting saw the group tackle the core argument of the ruling against quantitative easing. Janet henry is still with us. Thisnk we all thought that would be resolved or most people thought that this would be resolved in terms of the german court issued. Issue. What about the stimulus issue . Is the ecb keeping its foot on the gas . How long do you think that less . Does it run into any similar problems as the qe with the program today . Janet i think the ecb keeps its foot on the gas, absolutely. Irday, in terms of the think they used the word evidence nine times in those accounts. An interesting point, what they are saying about the mediumterm outlook and what they have to do. The pet program is very much about the crisis response. They said what the amount will be so thats the maximum envelope. If the virus is contained and the immediate threat, disinflationary threat eases to some degree, they would not be using it. It would become much more about the mediumterm outlook and thats when they would go back pfpp. Ds using the they were broadly on track to get to 1. 6 . Not exactly high inflation but actually, this was a new disinflationary shock because of the pandemic. Thats why they needed pepp. Everything will come back to this mediumterm outlook for inflation and meeting their mandate. Anna yes, talking about inflation, janet, we have got christine lagarde, ecb president , talking as we are speaking on a webinar. She is talking about how there is no question we must use all the monetary and fiscal levers. Is there anything the fiscal side can really do in the euro zone to boost inflation . Inflation expectations as low as they are, can the fiscal side really make a difference . Janet it can. Thats whats going to be interesting at the next meeting. The latest set of projections we have had from the ecb were based on a lot of factors that have not actually happened. We have already had from european governments more in the way of fiscal stimulus, more from france, and am particular, more from germany. We have Recovery Funds coming through in mind with the european commissioners proposal. If it is ratified, that is something that is going to support demand and hopefully prevent inflation from falling further over the course of the next couple of years. It is very shortterm what is going to help them is the fact that oil prices are now higher than they were perhaps a couple months ago. Even that is going to lift headline inflation. In the near term, the numbers should actually in the next 12 months a look a little bit better on their projections from some of those other moving parts. The broader, longerterm story is they want good inflation as opposed to just supplyside shock. They will need to keep their foot on the gas and the fiscal side will need to continue. Of this Recovery Fund extends well beyond 2021. This is a sign of things to come. I think there is more the fiscal side can do. Anna thanks very much for joining us. Janet henry, hsbc global chief economist, will be continuing her conversation with us on Bloomberg Radio at 9 00 a. M. U. K. Time. Biggest Payment Networks consider severing ties with wirecard. We bring you the latest on the missing 2 billion euros scandal. This is bloomberg. Back to thee European Market open. We are 22 minutes into your european trading day. The European Equity markets are up by 0. 7 , almost a kind of mechanical catchup exercise going on. We have European Equity markets bouncing. We saw u. S. Equities bounce. After hours, banks in the u. S. Dropped. U. S. Futures now point to the downside. Thaty interesting to see the u. S. Futures are pointing to the downside matt can i just you know what i think is fascinating here . I just wanted to interject quickly. I think the bank story is so interesting in the u. S. , right. If you consider this from the perspective of executives, what they had was great news in terms of loosening of their leash from the regulators and may be it is not great news for shareholders that they cannot boost dividends for a few months or do buybacks for a quarter, but in the end, they are going to be able to boost profitability if they are smart with their trading. Then, they can pay that money back to shareholders in the future. I think it is really an up arrow story at the moment. Yes, and we did see some selloff in the some of those banking names. Lets talk about something not all that far from banking and involved in the Banking Sector in europe. The wirecard scandal continues. The german Payments Company filed for insolvency. Its a week that saw the arrest of its former ceo and unable to find 2 billion euros missing from its balance sheet. Cholz warns this risks damaging the reputation of the finance sector. Scandals such as wirecard has to be a wakeup call that we need more supervision and control for Financial Markets than we have today. We owe it to the shareholders, employees working at these companies and in particular, the german Financial Center and all of us as citizens. Anna here to discuss the latest is sarah. Wirecard is accused of elaborating an elaborate fraud. What are the details . It is a wild story, as we have mentioned in one of our headlines this week. Ys role in this was quite astonishing. They say they were provided with false statements. Pundits are asking, isnt it your job to make sure to check if there is false information . Ey trying to distance themselves from the matter. Matt now, they tell us. They could have mentioned it before. They took an unusual step of banning shortselling when journalists were exposing the fraud at wirecard, only for this stock. That had never been done before. I could use the word unprecedented in the right way this time. Are they going to go down for that . We asked yesterday. Someone saying ultimately, heads should roll. There is a matter of responsibility to bear. They are distancing themselves from any real responsibility. Scandal andssive that is responsibility that needs to be taken for it. There needs to be a close look at the german regulator and where the failings were. Matt all right. Sarah syed talking to us very briefly about wirecard. Thanks so much for joining us. The Federal Reserve caps dividends and bans buybacks for u. S. Banks in the third quarter. We will talk much more about the story, which might not necessarily be bad as the bank could end up making more money. This is uber. Bloomberg. Matt welcome back to Bloomberg Markets european open. 30 minutes into the session, we are looking at gains across equity indexes. No matter where you look, you will see green arrows. This is the broader stoxx 600 benchmark. Gaining 0. 7 . If you look at the breakdown of groups, you can see that by in the index, it gives you the group ranked returns, you can see the winners and losers today. Technology leading, basic resources doing well. The interesting thing is that banks are the losers. These are european banks, not u. S. Banks that were in the news yesterday. Certainly it is a kneejerk reaction after the dividend and buyback freeze that we heard about yesterday out of washington. Anna lets get the bloomberg first word news update. Top stories we are focused on. The u. S. Set a new record in daily coronavirus cases, topping the peak in april. Texas Governor Greg Abbott is hoping the next phase of the reopening is positing the next phase of the reopening. Ftse regulators are rolling back regulations, changes to the volcker rule were approved to give banks more clarity on what is allowed. The lenders will be able to boost investments in Capital Funds, and pocket billions of dollars. Germany is preparing to strike back against the u. S. If it was additional sanctions on. Angela merkel is looking for a designeded eu response sources tell us despite the project going deep divisions, the u. S. Intervention may prompt a joint european response. Newu. S. House passed policing rules with little expectation it will break the stalemate over the issue. It was opposed by the white house. Trump is accusing democrats of wanting to weaken the police. 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. Matt as we have been talking about, jay powell taking action on wall street, the fed told the u. S. Biggest ranks they cannot boost dividends or resume. Uybacks for a few months that is as the uncertainty over the course of the Global Pandemic ways on lenders. For more on this, we are joined by our Bloomberg Opinion columnist. It seems a lot is being made out of very little, especially considering these banks got double volcker rule loosened even further. Mark i think the bank index did nicely overnight. The line here that the banks asked for a bunch from regulators and got most of what preventted, it does not them from putting slumped into their own subsidiaries. Around, that stuff is sensible. They cannot go crazy on it. They could not increase dividends or start buybacks again. Only for next recorder. We will see how that goes. So far this crisis has been played well, and it continues to do so. It makes sense to keep a careful eye on the bank so they do not go crazy, and become more safe and secure. That is probably good news. Look at what we learned yesterday with the volcker rule changes, which are the banks we need to keep our eye on . Marcus one of the downside is wells fargo. Their profits were down, that makes it so they possibly cannot pay the same dividend in the next quarter. Of stacked up profits, toy probably should be able while other banks can maintain a dividend. The scenario, the stress test scenario are the ones that get the most exposed. Downturn insharp markets, that would affect those the most, but with the volcker rule changes, large investment will probablyets do well as they build up a capital margin to be put to good use elsewhere. It probably will not affect any of them. Anna thank you so much, marcus ashworth, Bloomberg Opinion columnist. , threetime nba champion lebron james and his friend maverick carter launched immediate empire with a 100 million investment. They aimed at provide content creators anded consumers. Jason kelly spoke on a range of topics including the black lives Matter Movement and the struggle for racial equality. Not want to sale was anticipating it, but we have been insufficient, we have had to plan for this moment. It is something i have had a passion about. That is letting people know and ,nderstand how important we are creativityers and and language in the struggle that we have had for so long. We have been through a lot this year. You look at the death of kobe bryant that we had to deal with. Withusly our prayers are vanessa and his daughters. That was a tragic moment for us. You come to the point where the playoffs are around the corner, then stopped because of a world pandemic of covid19. Toall had to be at bay see what is happening and understanding the health of every individual is so much more important at that point in time than worrying about chasing a championship. Lives are at risk and no one has an answer to it. ,hen the George Floyd Killing seeing that video and how many people were hurt in minnesota, minneapolis, but all of the world especially in the black community. We have seen this over and over, about Police Brutality and things that go on in inner cities being racially profiled as an africanamerican black man or black woman. In 2020. Going on we are still trying to make the most of it and continue to be powerful and be heard. We are using the opportunity for the better of change. It is a special moment in the. Ense you can be heard activism and activists have always been around. Andle had a closed ear close to mind, and did not want to recognize or hear. They did not want to be knowledgeable where they were coming from. The passion they were speaking with. Now it is being heard, people can be heard, black americans, africanamericans can be heard, many women can be heard on what they are passionate about and calling for help. We are just tired. Iso not want to say activism something that now everyone is doing it, it has always been around. In the case of george floyd and other innocent lives being taken away, they put up a stand. We are being heard. Everyone is being heard, not only from what muhammad ali was saying and those who came before and after him, but the local people, people in the community. Those are the real ones, people in the community who live and walk in those streets to be racially profiled and judged every day they walk in their city, they need to be heard, and they are being heard right now. Matt you can watch the full conversation with lebron james and his business partner, maverick carter at 7 00 p. M. New. Ork time on bloomberg that is 2 00 p. M. In london. Am i going backwards or forwards . Anna other way. It is the middle of the night. Matt midnight in london and 1 00 a. M. Here. Up next, germany is encouraging its citizens to download a map totrack download an app attract new coronavirus infections. We will discuss that next with sap. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 43 minutes into the trading day and looking at green arrows this friday morning. Investors seem optimistic that at least stimulus will be continued if not boosted, that is what helped us gain in asia as well overnight. Here in germany, the country is encouraging citizens to download an app develop to track new coronavirus infections. It is a joint venture between a Telecommunication Company and a software developer. The goal for the new tracing app is to break infection chains early, and allow the country to manage the return to normality more effectively. Joining us now is juergen , cto head of data operations, sap se. Let me first ask, how is this being received in a country where citizens take privacy so seriously, data privacy . How many people are downloading and using this app . Juergen thank you for having me. Than 13seen more million already, more than 15 of the population. The oxford study says 50 and if there are other measures in appe, this is where an really helps. You mention privacy, and the germans are particularly interested in Data Protection privacy. We developed this project with transparency, everything is open sourced. App already has more than 13 million downloads. Merkel sayrd angela this was the best corona app in the world, it was cited in the house of commons and the u. K. As an example of a nap up and running already of an app up and running already. Why did germany get this up and running before other countries . Juergen transparency is important. You do not need a name to sign in or an email. No data is traced. No geodata is traced. It is a tracing app that captures the least information possible. That really makes the difference. The second point is we worked to launch with google to improve the technology to make it useful measuring distances. That is what it was invented for. These improvements go out to the world and everyone worldwide can benefit. You about thesk distance tracking using bluetooth. Is it able to work out if someone is a meter from another person. Part of the conversation in the u. K. Is that it is not granular enough and cannot distinguish between one meter and five meters. Juergen if you had asked me , my clear answer would have been no, it does not work. But we worked closely with german scientists to find out what needs to be done to make it work. We did a lot of physical tests with hightech to measure different scenarios. What we can say is we have 80 accuracy, whether you are closer to me, closer than two meters or not. This is very important. If you are closer than two meters for 15 minutes, we could infect each other. 80 accuracy after a lot of testing and work together. Matt you mentioned german scientists, and i think of the founders of your company. Ofce then, i cannot think tech breakthroughs out of germany. Butcard seem to be there, it turns out it could be a fraud, we do not know what is happened yet. Why is it so difficult for germans to create the kind of tech champions we see coming out of Silicon Valley . Juergen that is an interesting one. In germany we are good at foundational research, but then the scaling factor and innovation that you need in order to get an sap up, we only see a few examples, extremely few examples. Unicorns, bute not compared to Silicon Valley. For several reasons, we would be happy to have more tech champions in germany and europe. One technology were we as europe need to become much better and scale much better. Matt is there an issue with universities . In the u. S. You have stanford feeding some of the Biggest Tech Companies in the world, or is it an issue with the government . The u. S. Government is not known for funding startups . Is it an issue with Venture Capital . Do you not have enough active vc . What is needed in germany to kickstart that . Juergen it is a combination. The government does a lot, universities are good, that is in place. Checks to do the international scaling, that is a challenge. In the u. K. If we had one bigger europe in larger markets, that is one of the advantages Silicon Valley has. Much, juergenu so mueller, cto head of data operations, sap se joining us with an interesting conversation on the progress of their covid app. What assets remain sensitive to the pandemic . Hat is next this is bloomberg. Anna welcome back to Bloomberg Markets european open. 53 minutes into a trading day that is positive. Lets get into a Broader Market conversation. Bloombergs rate strategist joins us next. Good to speak to you. What is a tradeoff between what banks and governments can around thed concerns virus seem to dominate daily. What is your thing on the role of Central Banks in markets . I think Central Banks in general have done a great job with the pandemic. Banks should also that is because policymakers have told the markets that over expect. T they can point is what happened with treasuries in the first quarter. When the fed followed the markets and set its benchmark , which is the way you would expect things to evolve, in the shortterm this will work out well for Central Banks in the market, but there are bigger problems. You aboutnt to ask the austrian century bond. Austria borrowed money for 100 0. 8 . At a yield of only it is an amazing story. Why would anyone buy that . Why would you lend your money to a country for a hundred years, getting less than 1 . Ven it is incredible. It is not surprising the bond attracted phenomenal bids. 2017, andd a bonding that has doubled in value as of yesterday for those who bought it in the primary market, which is far better than any investment over the same period. Investment to be proud of. Risks buyingrmous the latest bonds. If you go to a hundred year bond, it has a modified duration of about 70 years, meaning investors will buy today will not be alive when it actually matures. Investors are betting on price gains in order to make a profit. Then you have to ask, how much can a bond price in a rally . My proposition is, not a lot. , we know howgers that story works. We have seen that before many times, and it never ends well. Thank you for joining us, ven ram, from the bloomberg mliv team. That is it for the european open. Stay with Bloomberg Television if you want to watch surveillance, or you could switch over to radio. Anna and i will go over there right now, tune in in london on the dab digital network. Or go to Bloomberg Radio on internet to listen to us live from anywhere in the world. This is bloomberg. You say that customers make their own rules. Lets talk data. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept 5g everybodys talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item corner offices for everyone. Just have to make more corners in this building. Chad . Your wireless your rules. Only with Xfinity Mobile. Now thats simple easy awesome. Switch and save up to 400 a year on your wireless bill. Plus get 200 off a new Samsung Galaxy s20 ultra. Francine the United States reports a Record Number of new coronavirus cases. Florida and texas he pronounced spikes. Hospitalizations the sore. H m reports its first quarterly loss in more than a decade since the pandemic. We are speaking to the companys cfo. Brexit negotiator sticks to avoid a new deal. We speak exclusively