Expected to drop 24 year on year. The futures are looking slightly lower, down four points. We are looking at some of the currencies. As david would say in the last hour, the bloomberg dollar index is on track for its worst july in a decade. A more dovish start from the fomc. No big surprises from the fed, but the lower mantra weighing on the dollar. The dollar index is flat, at least for now. Wellussie in his flat as aussieyen is flat as well. We move on to the commodities and the yield story. The question marks around oil were in focus as well towards the end of play yesterday. You saw a reduction in the u. S. By about 10 billion barrels. That gave some support to crude prices and wti, currently flat. Gold is now 5 10 of 1 . The 10 your yield on year, still below 60 basis points. 57 is barely moved, risch. Rishaad yep. Global coronavirus case is approaching 17 million. More than 660,000 people have died now. The states recording 150,000 fatalities. California, florida, and texas posting record numbers of daily deaths, with florida reporting for the first time more than 200 fatalities. The number of new infections slowed in california, florida, and arizona. China reporting 100 new cases, the most in three months, as restrictions begin tightening at infection hotspots. Province home to millions of muslim uighurs. Hong kong reported 118 new infections. Carrie lam has warned the Hospital System could be overwhelmed. Japan reporting another spike in cases. They have been searching in tokyo and osaka. Osaka is now close to passing tokyo as the nations hotspot. Osaka had zero cases for more than a month. Taiwan extending its state of emergency through the end of august as it fears a second wave. There have been no local transmissions in the country for almost two months. The ceos of amazon, facebook, and alphabets giving evidence at a hearing on the hill, although it is virtually from remote locations. The committees antitrust panel has been investigating for more than a year whether the tech giants are squashing competition. Documents appear to show facebook bought instagram to kill competition. Tom lets get back to our top story. The Federal Reserve made it clear it will continue doing everything it can to keep the u. S. Economy afloat, while it suffers what jay powell calls the worst downturn in our lifetime. Kathleen hays is here. Powell sounds more concerned about the threat of the virus than he ever has. We arehe so concerned if not going to see lockdowns, which seem unlikely at this stage . The fed back in june, had put all those programs in in april, taking so many policy seemed likey may it things were stabilizing, but because the virus has researched , or has started for the first time in so many parts of the country, he says everything will be done. Keep the bond is going bond purchases going. So goes the virus, so goes the u. S. Economy. Lets listen. The path of the economy is going to depend on the course of the virus, on the measures we take to keep it in check. Stress. Nt to it is too early to say both how large that is and how sustained it will be. Kathleen one of the things that jumped out at me, he said you are going to have a lot of workers in closeproximity professions, working in restaurants, going to an office, even, that will not get their jobs back for a while, because customers dont want to be in close proximity. He stressed the need for fiscal policy. Thats where the action has to be. I want to mention one more thing. We are talking not just the u. S. , but asia. He talked about the fed extending their dollar swat packages. To the former number two at the imf earlier on Bloomberg Television, and he said thats great for a lot of g7, g8type countries, but it leaves a big hole for a lot of emergingmarket Central Banks. They need dollar liquidity. He mentioned a country like indonesia. I think the fed is showing this by at least putting out the stimulus, the dollar liquidity, i should say, for the countries , they are signaling to us that the potential for the virus to hit not just the u. S. And other countries is still there, and thats why they are going to be vigilant. Rishaad lets talk about the fiscal side. Congress negotiating that stimulus package. Republicans and democrats getting nowhere fast. Far apart, are they not . Kathleen yes. Republicans waited too long to give us a deal, and they are saying we have to work faster. Very interesting that president trump, speaking today, said there is no stimulus deal inside, pushes for an extension to make sure they get stopgap till get a stopgap bill, which was summed up also by stephen mnuchin. Now, we are very far apart. The president and i have discussed a shortterm extension. [inaudible] kathleen to be a little more specific to what mnuchin said, the federal jobless benefits are running out, the eviction protection is running out, congress is leaving for his longest recess at the end of next week. All of this is putting pressure on them to do something. Nancy pelosi continues to say, item one a stopgap bill. I do not want a stopgap bill. She says that is piecemeal and that kind of approach does not work. My, once a conference of nts a comprehensive plan in place. He said things around here can happen at the last minute, so he is hopeful that things can get done in the next week. The republican majority whip, john kuhn, says they will look for an alternative if needed, although he did not tell the porters what that alternative might be. The ideal thing is if they can somehow have a miracle, if the republicans and democrats could compromise, number one, on the Unemployment Benefits from the federal government, you cut them from 600, is it going to go from 200 for the republicans . Is that we are the negotiation can get them together where the negotiation can get them together . But i think the virus loss negotiation that republicans want is going to be toughest ticket, because the democrats apparently dont like businesses getting protection in a way that might prevent workers from getting the protections they need to get back to work. I am an optimist. It is almost going to be the end of summer. Maybe that will help them want to get something done. Rishaad Bloomberg Economics and policy editor Kathleen Hays there. Be aandemic proving to boon for chip and gadget demand. We will talk about samsung Senior Analyst mark newman. Kongs asext, hong any sector now bearing the brunt of recession, and coronavirus cases adding to their woes. This is bloomberg. Inhaad hong kongs economy the Second Quarter contracted 9 from a year ago, falling from the fourth straight porter. For the fourth straight quarter. We have the chairman of hong kongs sme committee. Welcome to the program. How bad are things . Good morning. Virus isow, the hitting the city hard. Hong kong, we rely on outside , and itto grow our own because thetty bad u. S. , europe, everywhere, the virus situation is not coming down. Smesare seeing a lot of in the export markets, and also the retail and consumer markets, hurting quite a bit. As you know, we have been having new cases recently. This is not good. We thought it was going away, but now it is coming back. I guess this up and down situation will be going on for a while until we find a reliable cure for the disease. Rishaad michael, what about the business you run yourself, freedom Industrial Production . You make garments. Have you furloughed staff . How are you dealing with ongoing situation, and what do you see in terms of demand, globally speaking, as many other parts of the world have actually reopened . Michael well, we have had very tory two months from march may as the whole world kind of stopped. Our customers were not ordering. They were being very cautious and the stores were closed, so they could not do much about it either. We were quite pessimistic. But things are slowly picking up again. We still have to live on and stores have to be open. People want to buy. Somehow it has been a little bit better in the recent couple of months. Open. Ctories in china are they are all in operation. They have the capacity. We are just waiting for the ,rders to come in in hong kong because we are smes. Like a lot of smes lot of smes in hong kong, we dont have a lot of people working in the office. Also, the government has been giving packages over the past not toths to help smes fire people. Theaad michael, is government doing enough here in hong kong, in your view . Michael they are doing a lot, but there is never enough, because the situation varies company to company. Some dont need too much help. The big ones are getting quite a bit of money from the government , but thats only a drop in the bucket. People with a lot of saying the government cant do a lot more. I think they can do a lot more in areas that the previous two theings could not help people who are really suffering, really small businesses, lets say Consumer Product companies were the little shops in the street corners. They really need help. Tom you are in the garment industry. What part of the sme sector beyond the garment sector are feeling the most pressure at this point . We have a joblessness rate above 6 in hong kong. Do you expect the sme sector, which accounts for 45 employment in the city, to have to lay off more workers in the months ahead . Michael it really depends on how quickly the world can recover. 98 of smes in hong kong, a lot are still in business, exporting or importing, and that depends on how soon the other countries are going to be back to normal. See our china partners, the factories, they have suffered quite a bit over the past six months. Now they are slowly coming back to operation. ,hey are employing more people and everyone is in the wei tan watch and see if we can get things going back again is in wait andt and watch watch and see if we can get things going back again. Companies are not going to come back easily with a situation like this. There are a number of people we speak to that think hong kong is going to be more closely aligned with mainland china. The greater bay area is obviously something that the Central Government here and the authorities in hong kong are pushing for. At what point will that immigration a, if it does happen, start to benefit sme that integration, if it does happen, start to benefit smes . Michael we have been pushing the great bay area for a while. We have started to see some results as a a lot of smes and startups are going to that area to start their business or do something other than manufacturing. Lets say the government is also pushing and stripping fundings for Companies Like us. They are giving us funding to do our own branding and also domestic sales, to help us to ell our own brands in china. The starting point will be in the great bay area. At the same time, the same funding can be applied to the Southeast Asia area and a total of 21 countries we have signed treaties with. , i think a lot of people are taking advantage of the funding to test the water. As this goes on, i think it will make Hong Kong Companies more aligned with the china markets. We are now in the stage where we are trying to learn their buying. Abits, their styles this has been interesting because it is very different from what we have been doing as an export manufacturer. Rishaad michael, thank you so much. Dont miss our Bloomberg Television special hong kong on one for more perspective the social economic and upheaval in the city. It premieres on friday and airs again throughout the weekend. Motorsming up, general saw its first quarterly loss since emerging from bankruptcy. We are going to hear from the companys cfo on how china will play a big role in the recovery. Tom secondquarter earnings have shown the pain brought by the Economic Impact of the coronavirus crisis. General motors reports secondquarter data that was better than expected, but it is still the first quarterly loss since emerging from bankruptcy. The gm cfo joined bloomberg following the report and discussed the impact in International Markets like china. China has been nicely recovering from the pandemic, they were early in the process when they bottomed out, which happened in q1, and in q2 we saw a nice recovery. Some of that may have been pent up demand from q1, and some of that is real recovery. That is something we are watching closely. There are a couple of segments that have been showing particular strength. We have been launching key vehicles, whether it is the the buick which is our first all electric suv. Obviously what is happening in the world economy, we need to watch that closely, but q2 we did see a recovery. Is china teaching gm anything about what to expect in the recovery in the united states, or are they very different . I think there are some similarities and some differences. Obviously every country is going through this process very differently, so it is difficult to fully extrapolate over here. But whether it is Safety Measures we put into place or who are more into digital or production lessons we have learned from around the world, we felt like we were able to leverage the learnings from china and apply them in the united states. Tom that was the General Motors cfo. Samsung beat secondquarter profit estimates after avoiding an expected slump on the back of increased internet use, which boosted ship demand and gadget sales. Net income was 4. 6 billion in the june quarter. Samsung has warned of a lackluster loss in the period, but sales picked up in june after stores reopened. The Company Expects earnings to continue to recovery in the second half of the year. Talcum shares jumped in extended trading after they gave a strong sales work as for the Current Quarter and ended a longrunning dispute with huawei. The chipmaker says it is rebounding from the pandemic slump faster than expected, and revenue should come in between 5. 5 billion dollars and 6. 3 billion. Qualcomm also signed a licensing deal with huawei that it says should add about 1. 8 billion to sales. Lets have a look at markets and a look at whats going on in japan as we head towards their lunch break. Looking at general sentiment, which at the moment is just about positive. The nikkei is fractionally positive. 0. 2 . Pix down recovery, perhaps amongst consumers. That is amid wider reopenings from the coronavirus shutdown. We do have this wave in the moment in japan. ,ne company to highlight here nomura up 4. 6 . Banks up, singapores join global fears in capping dividends, but the stocks may suffer. More on this request next. Rishaad 10 29 a. M. In hong kong , 10 29 p. M. In new york. Here is a look at the first word headlines. Jerome powell warning of the most severe economic downturn of our lifetimes as the fed kept rates near zero and vowed to do all that is necessary to aid a recovery. He called the path forward extraordinarily uncertain and said a lot will depend on keeping the virus in check. He says data points to a slowing recovery and he couldnt say how long that may last or how bad it might get. The path of the economy is going to depend to a very high extent on the course of the virus. And the measures we take to keep it in check. The data point to a slowing in the pace of the recovery i want to stress, it is too early to say how large that is and how sustained it will be. The state of victoria in australia reported a record 723 cases of coronavirus. This is 200 more than ever before. There were 13 deaths, most of them in melbourne, which has been in lockdown for two weeks. Queensland is closing its border to all people from sydney after the state of New South Wales reported 18 new cases. Hong kong Police Arrested four people between ages 1620 one on suspicion of inciting secession, part of the tough new security laws. Suspect wantedhe to establish a hong kong republic and said they would fight by uniting proindependence groups. They say the youth made the comments on social media. Wanted tomple, they establish a hong kong country and also pay wanted they to unite all the independent people in hong kong with a bill to promote independence of hong kong. Is preparing to send an extra 35,000 troops to the disputed himalayan border with china as tensions simmer. 20 indian soldiers and an unknown number of chinese troops were killed ring skirmishes in have beenoth sides sending reinforcements to the area along with all artillery, guns and tanks. There have been talks but no resolution. Check the markets. The regional benchmark is down 0. 3 , a lack of conviction from investors in this part of the world despite the dovish sentiment and commentary from jay powell and the fomc. Lower for longer, concerns about the u. S. Economy and the virus and the state of infections from victoria to hong kong and mainland china. 0. 2 sci asiapacific is up so lets move it onto singapore, a suggestion from the central bank in singapore, a request that singaporean banks cap their dividends. That is weighing on the banking sector. In terms of individual stocks, samsung earnings and profits coming in beating estimates on the recovery and chipset gadgets , net income of 5. 5 trillion one won. S trillion Budweiser Brewing is up 7 . It swung profit in the Second Quarter so raising a glass to that stock. Singapore airlines down 4 and up 0. 4 . Moutai to u. S. Dollar, you saw dollar softness, the dollar index is percent,d down 0. 4 silver in similar territory. The wti, there is a focus on the inventories in the u. S. , 10 million fewer barrels so that is up 0. 1 and the yield story in the u. S. Is unchanged at 57 basis points. Singapores authorities asked banks to cap their dividends at 60 of last years levels but say local banks remain resilient. Here with the details is our Senior Analyst. What does this mean for banks . As you can clearly see, stocks are down this morning and investors clearly didnt expect this, but honestly, this shouldnt cause a surprise to people who follow banks. It is the sensible thing to do, because the singapore government has been bearing a fair bit of the brunt of the cobit impact and using its financial muscle to support the economy, which has helped banks, but this is unlikely to go on forever and banks cant remain immune to the losses especially once the moratoriums end. I think the dividend reductions help the banks prepare for the inevitable and allows them to keep lending and doing business without massively altering their risk appetite. Tom how do singapores banks look when you compare them with other lenders in this part of the world . They have always had healthier capital ratios, which holds true even today, like 13 14. 5 range, definitely better than the large japanese and chinese banks. If you recall in march, barclays and lloyds suspended payouts on this. Compared to that, this is a moderation. Given that there is limited clarity on how long the virus will last, i think the banks and regulators are bound to act against that backdrop. Rishaad we have indias biggest Mortgage Lender reporting later. What key things should we watch out for . Provisions and credit growth weakness is almost a given, and that could hurt earnings. What is important to note, they are better positioned than the other nonbanks to defend its returns, even against the weaker macro bank backdrop. It could go as low as 5 this year and a quarter of hdf sees loan book was in moratorium as of march. That is the number to watch, how that progressed in june. You for the update. Staying on banks, Credit Suisse reporting earnings on thursday. Analysts expect them to benefit from the trading bonanza that saw top firms post record profit. They are said to be planning and overhaul as the ceo speaks to tighten controls and boost profitability. Danny takes us through what to expect. Suisse reports earnings, we are expecting strong trading numbers and that should boost its figures for this quarter. We are looking out for announcements that Credit Suisse is set to make over combinations of various business units, specifically a combination of their Capital Markets and investment banking. Capital markets for them have lost money in prior quarters, so this should help boost some profitability at the securities unit. Another area they are set to overhaul is the combination of compliance and risk to help them theyol some of the risk have seen previously due to some engagements with some scandal ridden companies, the big one of course being wirecard, were Credit Suisse help to sell 1 billion worth of securities linked to the company. This was after questions had emerged over their accounting practices. Another company they took a big hit from is luck and coffee, where they helped secure a margin loan and they booked a charge, most of that coming from their involvement. We will be listening to see if we get more details on their involvement with the chinese internet giant set to go public. Bloomberg reporting Credit Suisse made an investment of about 100 million just about, so this could be a large windfall for Credit Suisse when it does go public. Coming up, samsung shares are a big winner in the session. Earnings beat expectation on Strong Demand for chips and. To see hear from analyst an upside to the stock. This is bloomberg. Rishaad samsung shares are rising after strong secondquarter results. Tom they beat estimates. Demand for memory chips is likely to recover in the second half of the year, driven by new smartphones and gaming consoles, but it also says it will not the providing annual guidance due to the covid19 uncertainties. Lets take a closer look at the numbers with a Senior Research analyst, mark newman, joining us from bangkok. What were the Key Takeaways from these earnings . Sense that it is guided for the prophet, there was slightly higher than the. 1 8. 1 trillion on theey were upbeat memory market. There was a lot of worries that Memory Semiconductors are going to weaken quite a lot in the second half of this year, and they really talked up demand. They talked about a resurgence in smartphones and gaming consoles to lead to actually a Strong Demand in the second half, so i thought that was an upbeat comment from the company. On the handset side, they have ons galaxy unpacked event august 5, so they spent time talking about the handsets. They are hopeful on the note 20 and the fold devices. A replacementting ase economies are read economies are reopening. They sounded upbeat on the handset part, as well. Overall shares are up going into todays session so it is not surprising. They were up a little bit in the beginning of the day, but right now they are up less than 1 , i cant see the second right now. In context, the shares increased a lot over the past few days. Are the shares still grossly undervalued . If they are, what is your price target . Think samsung, samsung is always undervalued. The question is, when is it going to become fairly valued . We have an outperform rating on the stock at 17,000 target price. We think it is worth at least 70,000. That is based on 10 times through the cycle earnings plus net cash, 10 times earnings is a techlow compared to global around the world. So it is growth down to value. Considering it is a leader in , a leaderrs, memory in display, a leader in handsets, and they have upside options from other industries such as the foundry business and 5g networking equipment, benefiting from huaweis issues. So i think the stoxx the stocks are poised very well to continue to do better. I think they are undervalued right now. Tom do you have a clearer sense from these earnings of the price trajectory for the chips business . Mark good question. Difficult tofairly get an accurate forecast on memory prices. Because they are quite volatile and there is a mix component. You may have some chips that are going up, some that are going down in price. It is difficult to predict. The first half of this year, pricing has been extremely strong, including q2 that just reported, strong pricing. We think there will be some weakness in the second half and some prices will fall, particularly man particularly thelash, and stabilizing in next quarter next year and increasing again later next year. That is what we are projecting. I think based on the comments today from samsung, they didnt really talk exactly about pricing, but they were sounding ire upbeat on demand than think a lot of analysts and other companies have been saying , particularly a report recently. Samsung was more bullish on demand so perhaps on the margin, a little more bullish from samsung today. Mark, theell me, intel effect. We have seen other chipmakers see their share prices rocket after they came out and said they are behind the curve in manufacturing. What is your take on the impact on samsung . Mark the impact of intels decision, their delay on their roadmap, well, it shows number intel isrly that having a lot of issues keeping constantas law and migration towards smaller nodes. It is an opportunity for samsung. I think it is one of the reasons why share prices have been strong the last few days since intels announcement, because samsung is in the reckoning to get some of that business from intel. Sounds like they will be outsourcing part of, or more of their needs to boundary partners like tsmc and samsung. Boundaryhe larger supplier. Naturally, investors assume that tsmc is the obvious and officiate from this, but i think samsung is definitely in the reckoning. They are the only other company that can provide leadingedge silica to intel. So clearly samsung is a beneficiary. Either they get part of the intel orders or there was an overall increased tie, a larger pie of leadingedge silicon being outsourced so samsung gets part of that. We just dont know yet how it will shake out. Law is theickly, mas percentage of transistors that doubles every few years. Is it still valid . Mark not really. About half. Wn by it is happening rather than every two years, it is more like three to four years, the doubling of transistors per area. Memory andn that in frankly, i think we saw it in memory first in nand flash because that was down 14 nanometers several years ago and it ran out of room to go lower. You have to find different ways to bring down costs, so what they did is they started stacking letters on top of each other. Severe signswing of slowing down when you get below 20 nanometers, and logic is clearly, the low below 10 nanometers, it is having major issues and slowing down several delays. This is the second time intel has had a significant delay for their roadmap and i think we can see more of these things happening, not just in logic with intel, cpus, but also memory, as well. Earningsback to the with samsung, they have a take or payola contract with apple. Apple is a rival and a partner in different parts of the business. Tell us about the take or pay deal they have and how it has affected earnings. Obviously the act the exact details of the contract are confidential, but because of the huge amount of capex samsung was spending, this goes back to a few years ago when the iphone was initially lcdsitioning from the screens to todays screens, which is the majority of their phones, samsung had to spend around 10 billion of capex to expand their capacity. Bige gave them a big po, a purchase order, but in that order there is a takeorpay component in there, which is, if apples orders dont reach a certain level, there is a financial penalty to that, which is calculated once a year, and this year, it was paid in the Second Quarter and it was, we dont know the exact number but it was about one trillion won as a direct payment from apple to samsung for the lack of purchasing because they didnt purchase enough versus what the original purchase order was. Numberse, the display are artificially inflated by the one trillion profit, one trillion payment that came from apple. Mark, always a pleasure. Thanks very much indeed. Mark newman joining us from bangkok. Coming up, Singapore Air posting its biggest orderly loss on record. Quarterly loss on record. We will have the details. This is bloomberg. Rishaad taking a look at the aviation space, Singapore Air posting its biggest quarterly loss on record saying it is operating on less than 1 of usual passenger traffic. Lets get the story from our transport reporter. Not a huge surprise, is it . Given it was expected that the passenger traffic really started affecting airlines, started really dropping basically in full force in the Second Quarter, so it was anticipated that this would be for a lot ofiod the carriers. Singapore airlines has been hit more than the others because they dont have a domestic market to fall back on and it is solely dependent on the international market, which has been very slow in recovery. As you outlined, it is broadly being felt that the pain across the sector globally for the airline space, you have indian airlines, spicejet and indigo warning of more pain. What is it looking like for those airlines . It is basically the same. Travel has been sort of wiped out. Sore are lockdowns in india, if and when the domestic market there is resumption in domestic flights but they are being disrupted due to the lockdowns we have seen in india. The bigger problem really is the fact that with the additional ways of the outbreak waves of the outbreak we are seeing, it is not helping day Aviation Industry at the moment and Going Forward them until we have a vaccine, i dont think we will see passenger traffic back to the levels we saw before the virus. Tom it is like a double and triple blow. The pain felt by the regional airlines. A check of the latest headlines, Standard Chartered is set to begin a new round of job cuts as it restarts plans that were put on hold at the outset of the pandemic. Sources say a headcount in london, new york and singapore is likely to be reduced. The company is facing pressure to boost its share price. The londonbased bank reports earnings later today. Company returned to profit after getting a boost from trading. Net income more than doubled to more than 1. 4 billion in the june quarter as the revenue from the wholesale division rose. The cfo struck a cautious tone in the earnings call, saying he would continue to review the business portfolio. Sources say nomura is cutting dozens of jobs at its u. S. Investment bank. Paypal saw spending surge on its platform as more merchants switched to online sales. Earnings per share came in at 1. 10, beating estimates, 220 billion dollars on the back of increased online shoppings. More in the next bloomberg markets, including an exclusive interview with a metals group ceo. Stay with us. 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. It is almost 11 00 a. M. In singapore and malaysia. Rishaad here is a look at our top stories. The fed leaving rates near zero, doing whatever it takes to support recovery. Chairman powell calling the downturn the most severe in our lifetime. Haslinda fortescues iron ore shipment hit a record if driven by chinese demand. We speak to the ceo. Rishaad Standard Chartered looks set to begin a new round of job cuts, redundancies targeted in singapore and london. Look at theking a markets, looking mixed. Most are in the money after the fed said it will do it ever it takes. They are urging fiscal stimulus which supported the markets for months now. We are taking a look at the msci, up 0. 3 percent, off the session highs. The bloomberg dollar index, study at a twoyear low on powells comments prompting the euro to rally to a new high. Expanding00 83, gains on demand in the crisis. Gold up more than 10 in nine sessions. Taking a look at specific benchmarks, the csi 300 index 0. 3 , a rebound in chinese remains at turnover low levels we saw earlier this month. The hang seng up 8 , rising for a Third Straight day. Never mind the hong kong economy contracted for a fourth straight quarter. 0. 9 , t wse by climbing. 0. 4 . Comp down taking a look at the movers, samsung higher by 0. 3 percent, five percent within an alltime high. 5 ,ra holdings surging by the most in two months. Rio tinto closer to building and iron mining guinea, trading higher by about 2 and we have runner xiamen up 43 , making a debut. Rishaad lets have a look at the first word headlines. Hong kongs economy contracted for a fourth straight quarter as coronavirus protests and u. S. China tensions extend the first recession in 10 years. He economy shrunk by 9 one more quarter of contraction will equal the longest ever recession. The Unemployment Rate has risen to a 15 year high. China reported more than 100 new cases of coronavirus, the most in three months as restrictions begin tightening as at the infection hotspots. Most of the infections were in zheng jie process province. A chief executive in hong kong warned the hospitals could be overwhelmed. In japan, another spike in cases , particularly in tokyo and 101,000 new cases wednesday and osaka is close to passing tokyo as the hotspot. They had zero cases for more than a month. Thailand, extending the state of emergency by one month to the end of august as it sees a second wave. There were have no local transmissions in thailand for almost two months. Warning of the most severe economic downturn of our lifetimes as the fed kept rates near zero and would do all that is necessary to aid a recovery. He called the path forward extraordinarily uncertain and said it will depend on keeping the virus in check. Data points he couldnt say how long that may last or how bad it might get. The path of the economy is going to depend to a very high extent on the course of the virus and the measures we take to keep it in check. The data are pointing to a slowing in the pace of the recovery but i want to stress, it is too early to say, both how large it is and how sustained it will be. Mixed in asia on the back of the fed announcement. They were talking about how it will take longer than expected for the economic recovery to start. Lets get reaction from our reporter in the lion city. Get to her slightly later after this break. Keep it here with us. This is bloomberg. Haslinda welcome back. Shares of fortescue are rising after the company stayed said it may seek to boost export volumes further. They reported shipments climbed to an annual record. We discuss this with the ceo elizabeth gains who joins us from perth. Always good to have you on the show. Strong performance, but we know the pandemic has had an impact. It raised costs of one of your minds one of your mines. Do use do you expect further impact . Minebeth this is a new project that is under construction but our operations had a better . 22 per ton pack and that was based on changes during the june quarter. That has been wound vac. As we move into the new financial year, we are focused on the health and safety of our team members and the communities in which we operate. Some of the measures associated with cleaning and hygiene and some of the testing measures will remain in place. We have that in our plan for the financial year. On the other one, a project do to in december, another short five months to go. We are focused on health and safety but we have put in place and acceleration measure to ensure we can deliver this important project in december. Haslinda the focus has been on how iron ore prices have surged. Are they reflecting fundamentals, do you think . Elizabeth we have seen strong ongoing demand in chinese crude Steel Production so it 1. 4 increase in the first half of this year. 490 9 Million Pounds of crude steel. We are seeing that in the chinese the strong rebound in the chinese economy, underpinning demand. There has been supply disruption from other markets, where there have been broader impacts of covid19 on some of their production. We have seen very strong ongoing demand coupled with the strength of supply from Western Australia in particular. Are also seeing iron ore inventories in China Building up. There are questions about chinas recovery which has been described as uneven. Perhaps prices could be near their peak . Ore inventoryn levels in china at the moment are around 100 13 million tons of inventory at chinese ports. That is a long way off from the peak, which was just over 165 million tons in april 20 see april 2018. Currently they are low, 113 million is about early days of consumption. The average holdings of iron ore are around 24 days. Inventory is seasonal but we are seeing Strong Demand for iron ore. Elizabeth, tell me a little bit about the other side. What about aluminum and the likes of that . Elizabeth we are just iron ore. We dont have any other operating assets at the moment. You might be confusing us with another company that reported yesterday, but we are iron ore. At the moment, we have diversification opportunities we are assessing, but they are early stage exploration at the moment. Rishaad my apologies, i was misled. View on price, how high prices could go on iron ore . Elizabeth i never like to predict the iron ore price. What is important is the strength of the ongoing demand. We are seeing further investment in infrastructure in china. We have seen a strong vshaped recovery in that economy driving Strong Demand for iron ore, and we have seen supply disruption earlier, weatherrelated disruptions and more recently from brazil, there have been covid19 impacts on the other major producers. That is really underpinning that strength in the iron ore price. But we have the industryleading cost position, a lower cost producer of iron ore globally. We announced our four year cost of 12. 94 per metric ton, the costs, and that includes associated with covid19. We focus on the things we can control. The market will inevitably go through cycles. We generate strong cash margins. Rishaad tell me about your breakeven costs. ,lizabeth our breakeven costs depending on shipping rates, which can be the most volatile, it is a bit hard, shipping rates have been volatile in recent times, but with the c1 costs and royalties, interest and shipping and other, interest to that as well, it will be somewhere in the mid 20s to 30. That depends on the shipping rates. The long term, china has planned to perhaps secure its own iron ore supply. Will that put into question the sustainability Going Forward . We are continuing to reinvest in our business. We have strong relationships with customers. We are seeing ongoing growth in Steel Production, even at 1 or 2 per year of growth in Steel Production that would require in tonsange of 3050 million of additional iron ore supply. The strength of the demand coupled with our investment, by 2022 we will have a highgrade concentrate product we will supply to our customers. We are in close proximity to china and we know we will remain a strong supplier of iron ore to that market. Haslinda before we let you go, benefitedrtescue has from the disruption in the supply from another company. They said they will ramp up production in the next six months. How do you see this playing out . The marketi think january disrupted in 2019 with the collapse in brazil. Million tons of production for this calendar year but prior to that, it was closer to 400 million tons. There has been a deficit ever since that event occurred. We remained a strong supplier so obviously we stay abreast of what is happening in the market but we are continuing with our plans and our project and our iron bridge project. Think iswhat do you your biggest fear Going Forward for the business . Elizabeth we are in the midst of a global pandemic. Well inmanaged to do australia and in Western Australia, we have been fortunate where the governor the government has recognized that we provided an essential service. We cant ignore the fact that we are in the midst of a pandemic and right now, health and safety is our biggest priority. In terms of my biggest fear, it is really how the pandemic continues to unfold globally and within australia. Elizabeth, thank you very much. Tokyo asking its restaurants to shorten their hours. Lets go to what the Federal Reserve has been saying, yesterday we had Jerome Powell worst the pandemic is the thing to happen in our lifetimes. We also have gold hitting another high, as well, u. S. Treasury yields at 57 basis points. The dollar spot index, its lowest since may 2018 and stocks rose after the fomc meeting. What do you make of this price action and how is this trend likely to continue . What the fed has done already and what it continued to do in the future, i think the message , they hopeovernight for the best and plan for the worst. There wasnt anything that can change investors mindset. It is not terrible. Gold is hitting a record. Gold is key. Gold investors believe [indiscernible] your way out of it. The thing to remember about gold, gold is an inflation hatch. Playing paying much attention to inflation expectations. But this is a good reminder of that. The dollar spot index is 10 down from midmarch. Is not really seeing [indiscernible] stocksasian [indiscernible] the dollar downtrend in the money. It comes over virus containment, the Growth Outlook and valuation. Asia stocks are primed to do well in the second half against this backdrop. Electronic earnings beat estimates. Pmc, and other chipmakers, painted a rosy outlook for the Semiconductor Industry second half. What are investors looking at . Today, earnings were impressive. What is groping my attention, it will start production of chips. The p smc, they are going nuts, especially after intel announced a delay in nanometer production. It is turning into food for its rivals at home and overseas and intel is going to outsource. Roduction to chipmakers they will be the main beneficiaries. Earnings reports have been hitting also lenders. All cylinders. In the second half [indiscernible] sung and although there all other chipmakers are focused on a better future. To me, what was working prior to covid was tech companies. What is working better during covid is, they are continuing to work after the pandemic [indiscernible] these tech companies. From here, chipmakers could be front and center because [indiscernible] amazon and facebook are coming under regulatory scrutiny. We havent seen great momentum in the Semiconductor Industry. They continue to do well despite concerns over rising inventory levels. I have my conviction in that industry. Mo tech coming up, u. S. Giants, chinese tech theft. This is bloomberg. Rishaad getting more on the report coming through from nikkei news that the tokyo authorities asked restaurants in the city to shorten the hours they operate due to the coronavirus. This is to contain what is happening there as the pandemic had 1002 cases in tokyo and osaka, a record. That is the nikkei news saying tokyo has asked restaurants to shorten their hours. In hong kong restaurants are closed for at least the next five days. Ceos from facebook, apple, amazon and alphabet testified before the antitrust panel on accusations of china stealing u. S. Technology. Lets get more from our Senior Technology reporter. And hours of questioning tech executives gave different views on that issue involving china and technology. It was a really interesting hearing, because the executives all tried to frame their success as something that was patriotic and american, something that couldnt have happened anywhere else. Zuckerberg in particular was setting up a contrast with china and saying facebook is espousing American Values in its expansion around the world, and that facebook, as a leader around the it was anrican interesting tactic they used. It is not surprising, though. How do these tech executives dependent defend their company against the accusations of having too much market power . It was different for each company. Generally the argument is that they are giving consumers what they want. Todoing so, they are able continue to grow and they wouldnt to grow and wouldnt get to survive unless people actually wanted what they were delivering. The pushback on that is, how do you know that the reason isnters have chosen you because they dont have another choice . That was the theme throughout apple and the app store, amazon and its own line of products versus the one sellers sell, its own business line versus what is growing in amazon web services, google and search results, facebook of course the social media landscape. Among the tech executives, who came across the best . Sarah tim cook no question. The committee in general didnt ask him as many questions as they asked the other tech executives. I would also say jeff bezos, although he did get frequent questions, he was one of the most dodging of those questions. He would continually say that he either didnt remember, or wasnt familiar with the thing congressional investigators were asking about. Sort of claiming amazon is a company that tried to do good and all the things investigators were revealing were new to him, which of course cant be the case. Thank you, sarah. Lets have a look at a couple business flash headlines. Paypal out with its best ever quarter, seeing a spending surge on its platform. This as more merchants switched online sales. Secondquarter adjusted earnings per share 1. 07 a head of the average estimates. The payment volume jumping 30 to 222 billion. Online shopping, responsible. Paypal expects revenue to climb by 25 . Says a recovery is happening but it is uneven across the country. Stores are seeing big sales discrepancies depending on where they are. Of kfc and taco bell in china says the eastern part of the nations recovering faster than the rest of it. Sales improved in april and may before weakening in june. Comparable sales falling 11 in the Second Quarter, which was deeper than anticipated. A look at qualcomm, its shares had a bit of a jump in the extended session, the Company Giving a strong Sales Forecast for the Current Quarter and ending a longrunning dispute with huawei. The chipmaker said it is rebounding from the pandemic slump faster than anticipated and suggested revenue should and in between 5. 5 billion 6. 3 billion. They said a licensing deal with huawei should add billions of dollars. Shenzhenhanghai and going on their lunch breaks. Those markets are in the green at the moment. We have the japanese reopened after their lunch break after this. This is bloomberg. Haslinda live pictures of hong reporting hongv kong will relax its dining band and will allow morning and Lunch Service. There has been pressure for the government to ease those bands bans. They are allowing morning and Lunch Service on the back of hong kongs economy contracting for four straight quarters as the virus and political tensions expand the first recession in a decade. Hong kong, reeling from a second wave and a third wave of the virus. Lets hear from executives of Deutsche Bank and barclays following the results. Been anly, there has extraordinary economic contraction. The underlying performance was really strong in the quarter given the pandemic and macroEconomic Impact. The volatility in the first two quarters were exceptional, and i think people are expecting a degree of normalization. Part of it is participating in the better Market Opportunities that have existed in the Second Quarter and we do expect a normalization of that. There are a few ingredients in the second half that can truly drive forward. The situation is challenging and difficult to predict. We should never be complacent. We had a strong first half but we are focused on managing the second half of the year. Ofwe are in a period uncertainty. That led to new opportunities but it can also lead to more muted markets. Asiaad profitability at pacific banks going to be dragged down according to moodys because of the effects of the virus affecting structural change in this part of the world. Ats bring in an analyst moodys. Explain the thinking. What happened over the last few years was that lower rates have translated into narrow Net Interest Margin and together with lower credit growth during declinesd, there was in net interest and income across many Banking Systems in asia. This is detrimental for asian banks because these banks rely heavily on Net Interest Income as their key source of revenue. Over the next few years, we do see broadly downward forces on profitability. Margins will decline at Central Banks in this region, and they are cutting policy rates to soften the impact of the pandemic. Banks in this region are supporting peoples affected by through granting new loans. On top of all of this margin pressure, we see credit costs rising because asset quality will weaken. Finally, we see the pandemic accelerating transformation in banks and as such, we anticipate operating expenses to increase some banks over the next few years as they ramp up investments in technology. In other cases, the needs of their customers are increasingly moving to banking transactions online because of fear of the virus, lockdowns, and social distancing. Of course we have the Monetary Authority in singapore capesting that banks their their dividends to 60 of what they paid out before, is that something that is likely to be practiced across the board in the industry . Do you see it do you see 60 as being too little, like other ones in the u. K. Which had to cancel their dividends to shore up their Balance Sheets as being more realistic . Generally asian banks are going into the pandemic with Strong Capital positions. At the same time, i think singapore is not alone in pushing out such measures. Many other parts of asia, like thailand, vietnam, they have restricted Dividend Payments for banks. We generally see that as a positive, because that will allow banks to retain capital and have buffers against rising risk. About the bad loan situation . We talked about poor credit quality looking ahead as many corporations are suffering. Where do you see that concentrated more recently speaking . Do have certain sectors we anticipate more pain andparticularly airlines the hospitality sector. Really, the pandemic is farreaching and many of the under the other industries will suffer, as well. Beyond the corporate sector, we see retail and many sectors to be hit, as well, particularly if Unemployment Rates were to increase in this part of the world. That . Da can you clarify , given thenpls look businesses are struggling and workers are losing their jobs . Ca the situation is volatile and it remains to be seen, the extent of the impact of the pandemic. Many loans in this region continue to be under moratorium. They continue to be supported by measures rolled out by the government here, so it remains to be seen how the quality will look when these measures unwind. That, howhaving said resilient can banks be, like those in singapore, which the mas has said they are resilient can they remain resilient if the pandemic were to persist . Powell said the economys path is extraordinarily uncertain. Baca it is a moving situation, very volatile depending on how the pandemic pans out. But going into the pandemic, we do see asian banks, including singapore banks, holding Strong Capitalization. We see the saving increase but it remains to be seen the extent of the damage. Haslinda what about indian banks . Stress tests show they are on thin ice. The outlook on the asset quality is not looking good. Sure in april, we changed the outlook on all azor asiapacific Banking Systems to negative, india included. The broad trend is similar across asia. The negative outlook really reflects the pen the effects of the pandemic. We see operating environments becoming more challenging. For indian banks particularly in terms of the asset quality, these banks have been under stress from their corporate loan book for many years and with the pandemic ongoing, we do see retail also come under stress. At the same time, these banks have sizable exposures to the loan Bank Financial institutions and with the solvency pressure going on that particular sector, we do see the risk of contagion there. Question, parts of the world have a savings glut like the u. S. What is the savings position like in this part of the world and how much can it mitigate some of what you have been talking about . Rebaca it depends on how long the pandemic really is. You are right, savings in this part of the world is high. liquidityport banks and funding positions. Rishaad thank you so much. Rebaca tan from moodys. We will stay with banks, Credit Suisse out with earnings soon, Analysts Expect them to benefit from the trading bonanza that saw a record profits. Banks are said to be lending and overhaul as the chief executive seeks to tighten control and boost profitability. Dani takes us through what to expect. When Credit Suisse reports earnings, we are expecting strong trading numbers and that should boost its overall figures for this quarter. We are looking out for some announcements that Credit Suisse is set to make over combinations of various business units, specifically a combination of their Capital Markets and investment banking. Capital markets for them have lost money in prior quarters, so this should help boost some profitability at the securities unit. Another area they are set overhaul is the combination of compliance and risk to really help them control some of the risk that they have seen previously due to some engagements with some scandal ridden companies. The big one, of course being wirecard, where Credit Suisse helped sell 1 billion worth of securities linked the company. This was after questions emerged over their accounting practices. Another company they took a hit where theykin coffee helped them secure a margin loan and we saw them book a large charge in asia, about 100 million worth, most of that from their involvement with luckin coffee. We will be listening to see if we get more details on their involvement with a chinese internet giant set to go public. Bloomberg, reporting Credit Suisse made an investment of about 100 million in them just about, so this could be a large windfall for Credit Suisse when the company does go public. Haslinda lets get the first word headlines. Fourkong Police Arrested people between the ages of 16 and 21 on suspicion of inciting secession as part of the tough new security laws. A newsr officer told conference, the suspects wanted to salvage a hong kong republican republic and they would night proindependence groups. The youths made the comments on social media. They have some saturation. For example, they wanted to establish a hong kong country and also, they wanted to use their demands to doing these things and finally, they wanted to unite all the independent promoten hong kong to the independence of hong kong. Haslinda india is preparing to send an extra 35,000 troops to the disputed himalayan border with china as tensions continue to simmer. 20 indian soldiers and an unknown number of chinese troops were killed during skirmishes in june. Since then, both sides have been sending reinforcements to the area along with artillery, guns, and tanks. There have been talks, but no resolution. The state of victoria in reported 700 23 cases of coronavirus, a daily total of around 200 more than ever before. With 13 deaths come also a record, most of them in the city been inurne, which has lockdown for two weeks. Elsewhere, queensland will close its border to all people from sydney on saturday after New South Wales reported 18 new cases. Coming up, could mumbai slums hold the secret to beating the coronavirus . Six in every 10 people have developed antibodies in one community. We will have the details. This is bloomberg. Haslinda india is seeing one of the fastest rates of growth in Coronavirus Infections but in mumbais poorest areas, there are signs its dwellers are developing herd immunity. Lets get the story from our reporter. What are the reasons for believing herd immunity might be developing in mumbai slums . There was a big piece of evidence which came out yesterday. The municipal authorities here conducted a serological survey, a large one, of three wards in mumbai, each of which included slum areas and nonslum areas and they found across the slum areas, nearly 60 of people had coronavirus antibodies. When you take that and combine it with the fact that new cases, most of these slum areas are falling pretty rapidly, it has some epidemiologists thinking inbe immunity is developing these contained populations. Ask, howi have to could so many people have been exposed so quickly . It seems pretty possible when you look at the conditions these people live in in these communities. They are some of the densest on the planet. In fact, mumbais largest slum, which you may recognize from the movie slum dog millionaire, may be the densest human settlement on the planet. In a place where 80 people are sharing one public toilet, families as large as eight live , socialquare feet distancing is virtually impossible in every respect. It is more or less an ideal place for the coronavirus to spread, and it seems to have done so very quickly. But perhaps with fewer ,asualties than many had feared just because of the younger population the tent to congregate in slums tend to congregate in slums. Haslinda what lessons could there be for other places fighting the virus . , thelike i said Coronavirus Spread very quickly and widely in the slums, but there were fewer casualties. The large slum suffered only 250 deaths so far and that is in a population of about one million, that can be as high as one million. So the reason for this may be the efforts the municipal authorities took to contain the virus. Obviously those efforts werent as successful in preventing infection but they may have helped authorities identify cases early, particularly vulnerable cases in the elderly or people with preexisting conditions. Im sure those people got theted and caught it before infection developed into something lifethreatening. Ballast for the argument that we shouldnt be trying to stop all infections, but rather we should be trying to stop serious illness. Rishaad thank you very much for that. He is our health care reporter. Lets check in on indian markets, taking a look at Companies Making waves, looking at this stock, at the moment the stock is up. In advancing market anyway. It is up 1. 4 . Net losses widening for the june quarter. We also have at the moment 6 ,ance down zero point Interglobe Aviation which is the company that runs Indigo Airlines reporting its biggest net loss since listing, and that was pretty much anticipated through the aviation sector. Spicejet likewise, 1. 6 fall back for that company. Haslinda staying with aviation, general electric, one of the biggest suppliers of jet engines, is predicting slow gains this year and after the coronavirus pandemic battled results. We spoke to the ceo about what he sees for the future of the aviation business. I would say that the Second Quarter played out by and large as we thought it would. Challenging, particularly the aviation business, the Health Care Business we are on the. Ront lines of covid that area sound saw headwinds. We are down into of our best, two of our better cash generators. The turnarounds in renewables continue at a pace but we came into this thinking this was an opportunity. Although the pressures were going to be acute, we wanted to make sure we took advantage of the situation. We wanted to celebrate the transformation of ge. When you look at the pace at which our new leaders and set assimilated into the business, the adoption of new principles across the organization, the way we went digital broadly to serve customers, there are a host of examples that when the dust settles, in addition to the cost and cast preservation cash preservation efforts, we will see we accelerated the transformation of the company. Is there a change in the emphasis . You mentioned aviation was going to lead the way and it looks like it is not going to for a while. Health care is terribly important. Does it put health care higher in your list of priorities . In theink the business near term have different goals. In the operating model we are implementing, it is a bottoms up approach. What we need to do in every business is clear. Or way it adds up in 2020 2021 may be different than what we thought when we were together in early march, but what we are doing and the businesses doesnt really change. We are having to make adjustments in aviation. We talked about the cost in cash out, 2osts coming billion in cash in the process. We are looking at the departure over the next couple quarters of probably up to a quarter of our team. Those are painful decisions but one we clearly need to win light of the demand change. Relative to the other businesses, that work to continues and their progress will be more important than it might have been otherwise. In aviation doesnt change the arc of that . You sell jet engines and you have maintenance. You make a lot of your money off maintenance. As you talk to boeing and airbus and look at traffic, does it change the emphasis between one and the other . Not really. Bet i have been thrilled to a part of these last 22 months is a multidecade leadership on the part of ge aviation and the industry broadly. We want to continue to lead this industry. How do we do that . Technology sits at the core of what we have been able to do with and for customers over time. You indicate we service our engines over decades. In close proximity with our carrier customers. That is a great set up, to lead with technology and be so close to a in and day out with our customers. The business will change. We will see less aftermarket activity. We saw in the Second Quarter, we saw it in the second half, boeing and airbus will be talking about a different production trajectory over the nearterm than they were six or nine months ago. That is all right. We are confident that we will see a return in time to commercial Aviation Activity levels, passenger miles and the like. That will be good for everybody. And we will be a part of that. Ge plus chairman speaking with us. Taking a look at the earnings in the pipeline for today, this is bloomberg. Haslinda a quick check of the latest headlines. Samsung beat secondquarter profit estimates after avoiding an expected slump on the back of increased internet use which boosted chip demand and gadget sales. Net income was 4. 6 billion in the june quarter. Samsung warned of lackluster results in the period but sales picked up in june. They expect earnings to continue to recover in the second half. Nomura returned a profit lost after abuse interest a boost in trading. Net income doubled to 1. 4 billion dollars in the june quarter as revenue from wholesale rose to a record. The cfo struck a cautious tone in the earnings call, saying he would continue to review the business portfolio and reduce costs. Nomura is cutting dozens of jobs at its u. S. Investment bank. Chartered is set to begin job cuts as it resets Cost Reduction plans put on hold at the outset of the pandemic. Sources say a headcount in london, new york and singapore is likely to be reduced. They are facing pressure to improve returns and boost chair prices. The londonbased bank reports firsthalf earnings that are today. Later today. Standard chartered is expected the in less than 20 minutes. We are looking for Credit Suisse earnings later on. Will have an exclusive interview with the Standard Chartered interview just after 1 00 p. M. Hong kong time, 3 00 p. M. In sydney and 1 00 a. M. In new york. We have a raft of earnings from some of hong kongs companies, as well. That is in the pipeline as we await those earnings from Standard Chartered. Bill winters, coming up just after 1 00 in hong kong and over in singapore. Haslinda those job cuts have been delayed and it is now coming to fruition. Special, hongtv kong on edge. We will have perspective on upheaval in the city this friday. It airs again throughout the weekend. You dont want to miss it. This is bloomberg. Rishaad looking at markets, asian stocks trading mixed. A the moment, the index under bit of pressure. Looking elsewhere, it is pretty much green in hong kong. The hang seng 1. 1 to the upside, stocks in seoul given a boost by earnings at samsung. Also, gold is stationary and the dollar, marginally lower. This is bloomberg. 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. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg lp, its affiliates, or its employees. Announcer the following is a paid presentation brought to you by rare collectibles tv. The 10 indianhead gold eagle containing nearly half of an ounce of pure gold is one of only two coins legendary sculptor augustus saintgaudens was responsible for designing. The inception of this stunning coin began with Theodore Roosevelts famous letter to secretary of treasury shaw on december 27, 1904. This letter blatantly states, i