1 . Bdps are faring relatively well. We are waiting to see what is going to happen on the back end of this week. Storyl be a significant as we get a rating based on the 750 billion euro rescue fund. You want to Pay Attention to what is happening. , potentialbig supply for it to strike. That is another factor that we need to throw into the mix. What we have coming up later, we will speak to the outgoing boss of the euro group. He will be joining us to give us his take. And wille the governor be transitioning over to the ecb. We will talk more about the fiscal side of the equation. That is for later. Lets talk about what is happening now in the markets. We are trying to figure out earnings and that macro picture inthe stimulus package europe. Bilal joins us. Lets talk about europe and expectations going into this week. Clearly, expectations are high. We are waiting for a deal to be done on the 750 billion euro package. If we do get back, there could be a new rating in europe. How would you see it . How would you position for it . Bilal that is a very good question. E. U. Summit is critical. We are not sure about whether we will get a formal announcement. It is certainly clear that Angela Merkel is pushing hard to push a broader agreement to approve the e. U. Recovery fund. I think it will go through. We are not sure whether the announcement will come on the weekend or in the subsequent few weeks. Campaign from Emmanuel Macron and Angela Merkel seems to be moving toward agreement around this. , think that it is significant his recovery fund, because in addition to that, we also have germanys fiscal stimulus as well. It is suggesting there has been genuine Movement Toward the area , sharing fiscal risks. This could have a profound impact. We could see the continued rally and could see that euro continue to depreciate. Alix so, i wonder, as we move forward, are we going to look at the Recovery Plan in its health as a good thing in itself as a good thing . Clearly come of the employment flexibility we have in the u. S. Is turning into a negative, with how easy it is to declare chapter 11, that is turning into a negative in the u. S. When are we going to learn which side is doing it right so investors know where to put their money . Bilal that is a good question. The end, historians will assess which one worked faster not. The u. S. Ll say is that fiscal months to respond was large and immediate. Larges the europeans was and it is building. It is increasing and it is likely to be more protracted. There is a difference in pace as well as the structure. In some ways, it is slower and more widespread as well. That could bode well for europe as a whole. Here between europe and the u. S. Is where u. S. Companies would be much more aggressive in maintaining their profit margins. You could end up in a worse Employment Situation in the u. S. Puttinge europeans are up lower proper profit margins. It depends on what you are therefore. For. Ere the earnings season, expectations are low. I am struggling to see how this could end up with the market moving to the downside. Completes will have to disappoint. If they do, they will likely be told by the market, we will write it off. We knew it was going to be bad. U. S. There buyin that the earnings are going to be expectations . Bilal yes. It is so tough for everyone to interpret because everything is shut down. I agree , incredibly low expectations. They could even spin that positively as well. Which would set themselves up for a max out for subsequent quarters. I think it will be a challenge for the markets to be too disappointed relative to expectations. In the past, people may focus on the earnings numbers, to kind of see how marketshare trends are emerging. There could be some information in the area. Guy alix what is the number one line you will be looking at . Many are talking about loanloss reserves. European banks, that is not comparable when it comes to their loanloss reserves. The ecb says they are doing it differently and looking ahead to 2021. How do you look at a relative value situation and look at the lines on their Balance Sheet for example . Tough tothink that is compare them to each other. I would try to get some sense on their guidance in general. Any information they have on which segments of the economy are under more stress than another could be interesting. That will tie into Government Support programs and centralbank programs. U. S. , you dont see much of the Street Lending ability. Tot suggests ask are able cover wending themselves without resort to using the central banks. Seeing there is a large issue about credit and equities. About wanted to think Investment Banking and whether returns are available are not. It seems unlikely investment returns will be as good. Guy quick question on the tech sector. I keep watching the charts and i cant believe what im seeing. I kind of wonder whether or not tech is going to be the most fickle part of this earnings difficult part of this earnings season. It is the only place where expectations remain relatively high. Is there a danger that because the rest of the market has lower expectations, it does relatively better. Bilal in general, what we have seen is that what you have is a strong risk appetite. Strong riskhave a smaller tends to do well. It tends to do well when you have this broad rally. As for the broader trend in all oft has accelerated the tech trends that were going to happen anyway. I think the biggest risk for tech is probably lying around the fiscal side. Divide in the upcoming u. S. Election or the trade war the u. S. And china. I think those are the areas where you could probably see more downsized risk for tech, earnings rather than and economic models. Great toays really catch up with you. Walt disney is going to close ong kong disneyland coming july 15. That is due to a resurgence in coronavirus numbers. They opened with limiting capacity in hong kong on june 18. Significant because last weekend, disney world in florida it reopened with limited capacity. What kind of lag will we see . Same kind ofe conversation. Sending kids back to the classroom. We will discuss safety as well with avag challenges brawl just at the Mount Zion School of medicine. This is bloomberg. We know that children get the virus at a far lower rate than any other part of the population. Again, there is nothing in the data that would suggest that kids being back in school is dangerous to them. In fact, it is more a matter of their health and wellbeing that they be back in school. That was the u. S. Secretary of education rounds on television. Dr. , it is so important to understand the repercussions of this. Your prescription to how we do that . With basic to be precautions in mind. There is not enough data to understand what the virus does in kids. It might be different with different age groups of children. Hard to say how to open safely. Somenk we can look to example to europe on how this was done. I dont think there is a good recipe yet. There is not enough data yet to how the conditions in different age groups of children look like. Guy i am really curious about the demographics surrounding this virus and the levels of asymptomatic patients that we have. As the demographic becomes younger, i am assuming the number of asymptomatic patients will increase and increased dramatically. How do we get a handle on this . Testing randomly is one way of doing this. I am wondering is that something that we will ultimately have to apply to schools as well as we work our way through this process. All the way of three universities as well. Universities as well. It helps to understand the dynamics of what is going on. If you dont have an understanding of the virus, you cannot take the measures. Alix to that point, it feels like picking up intensity is what we should be doing. Outbreaks, ihe have been hearing reports that bottlenecking,ch not enough tests or they cant get it done. Are a lot of people who want to get tested. This is now getting overwhelmed. If you are smart, you put systems in place. To deliver results within hours. Thaton infections say coming back within days or weeks counteract theto ongoing outbreak. Guy is there an easier way to test kids . Have had a test it was a fairly unpleasant experience. I feel for the Health Care Workers who have to have this on a fairly regular basis. Kidsere a way we can test that is actually something we can do practically, on a regular racist to try and get an idea of what is happening regular basis to try and get an idea of what is happening in school . It seems like a Perfect Place where we will have to test and test regularly. I have done the test on myself. It is very unpleasant. Throughng that goes your brain is unpleasant. That would be a noninvasive way of doing the test, through saliva. Guy i got alix i got two tests, if you laugh during the nasal swab, it does not hurt as much. My daughter cannot get tested. She is five. If you go, they will not do the test. What do we do for little kids . May be with saliva. There are a number of studies that show it is a possibility that saliva would be the more practical solution here. It would be doable with little kids. Continuing with the , whatgy of all of this level of herd immunity do we need to get among our kids . Is it easier to generate herd immunity within kids . Goes touming the virus them. If they are going to generate antibodies, im wondering how quickly they are going to do it. This is a complex question. I do not have an easy answer for you. Thatow that from a study there are some kids that can have strong antibody responses. We dont know what level of antibodies you need to be protected. If your antibody level is too low, you might not be protected. There are a lot of questions out there that we are not ready yet to address. There is a lot of research that needs to be done. A how muchfind antibodies need to be protected and how much do the antibodies last. This leads to the obvious question, which is the vaccine. With everyone having dramatic, different reactions to covid when they get it, does that change how they react to antigens . Of course. We know from other vaccines that some vaccines have nonresponders. Others might have a short lasting response. That is common with each and every vaccine. If somebody has immunity, they might respond better. Guy thank you so much for your time. I greatly appreciate it. Thank you very much, indeed. Coming up, we will get back to european politics and economics. Still ahead, our interview with the former your group boss. We will get his take ahead of fridays Council Meeting. This is bloomberg. It is time for the Bloomberg Business flash. A look at some of the biggest business stories. A big transaction in the andconductor industry, equity value of 20. 9 billion. That represents the premium to maxims Closing Price on friday. And a lot has been looking for a way to decrease the gap with texas instruments. Reported higher than expected sales and profits. The company owes doritos and mountain dew. High global share of the market. Google announced a 10 billion fund to help speed up indias digital economy. The company will invest in india over the next five to seven years. Investments will include Affordable Access and information for every indian in their own language and leveraging technologies for social good. That is your Bloomberg Business flash. When is starting to get a nice bounce. It will lift china is going to lift the quarantine requirements on macau travelers. At disney and what is happening in hong kong. You kind of pause for a moment. Alix they reopened hong kong at the end of june and now in mid july, they will close their facilities again. You may reopen but then what. It was what we are scared of months ago and it looks like it is happening. Guy it is interesting. Reopening thisda week and. European closes next. This is bloomberg. Until regulars trading ends this monday for european equities. Lets take a look at how the session has left. A pretty good legacy out of asia. We cap hire first thing this morning. This will not be captured on the chart i am about to show you. Aain, we are finishing on fairly positive note. Volume remains quite like. Keep an eye on volatility this week. That will be an important metric to gauge how the market is perceiving the reporting season as it develops. Individual markets around europe, you see the miners doing well. Pop are doing well. Some of the copper doing well. Some of the miners will benefit. Lets take a look at the ftse, the dax, and the cac 40. The outperformance it was earlier a little more. The ftse 100 up 1. 5, the cac up one the dax up 1. 4 , the cac 40 up 1. 8 . The sector breakdown looks like this. Tradingseen the miners strongly. The caveat comes in terms of what we are seeing with the volume. Chemicals have done well. They bounce up a little bit. Travel and leisure, more cyclic bull more cyclical balance. Talking at one of the utilities, atlantia out of italy has been a focus of attention. The Prime Minister backing down to the political narrative developing in italy when it comes to what is going on with the auto proposal to deal with the 2018 genoa bridge collapse has been rejected by the government. Down much more. Case study of what we see with the earnings season. Expectations very low. Quite exposed to the auto sector. The numbers seem to be better. The stop being rewarded. T, Pay Attention to what 5. 3 ,pening here, down facing management changes. There has been reports of sexual misconduct. A number of people are leaving. 5. 32 as a result of that. I mentioned what is happening nobel. Zo they have been left in the dust by what is happening in tesla. To offerntinuing wideeyed abasement with tesla wideeyed amazement with tesla. Lets talk about what is going on with the auto sector with scarlet fu. Scarlet left in the dust is a generous way to put it. If you are looking at europe and the u. S. And asia, the auto sector is in the red as companies had to shut down operations completely when covid19 first dropped. In europe we know the auto sector was already trying to revamp their operations before covid19. Their specific challenge includes electrification. Tesla has fallen behind the Market Leader and now that they need to conserve cash, that tech advantage threatens to gap open even more and they cannot spend the money they need to to catch up. Is delaying its latest electric car model until next october. That gives you a sense. The auto sector is much more important for europe than the united states. In europe it makes up 7 of gdp. 14 million jobs. The u. S. Auto sector is less consequential on every count, especially total market share, although it does get closer because it does not include tesla. Of, since our stock of the hour is tesla, guiding every break has been, oh my god, it is this price. It is in a league of its own. Guy that is right. Dan ives says tesla could announce Game Changing to elements at that event in late september. In the meantime, tesla could be stock of the month and stock of the year because it is up more than 60 in july and has only fallen once. Since the march low it has gone from 361 to almost 1800. This month tesla reported betterthanexpected secondquarter delivery numbers and that has raised expectations it could posted gap profit for the second quarter. That is the last hurdle the Company Needs for inclusion in the s p 500, which would confer prestige and also give passive index funds a big reason to buy up all of those tesla shares so we can better track the index. Over 325rket cap is billion. ,f you look at the s p 500 bigger than p g, bigger than jp morgan, bigger than exxon mobil. The biggest automaker. Up with thiscame fantastic chart to contrast tesla with the rest of the automakers. Its market cap per vehicle sold orshes market cap and 290 times what fee at is that. It is like they are not even in the same sector. Alix i do not even understand looking at that chart. Thanks to scarlet fu. David wells, bloombergs Detroit Bureau chief joins us now. Scarlett brought up maybe tesla will be added to the s p. Is this what this rally is . Are we front running that . David possibly. What is going on his first we are seeing a lot of hype and a lot of money and a lot of froth in any stock related to electric vehicles. Nicola worth close to 20 billion. We have workhorse with 80,000 in revenue and theyre worth well over one billion, and this big one in tesla. The market is telling us they think now is the time where electric vehicles will take off for a variety of reasons, whether it is commercial vehicles or retail consumers. Tesla has the best technology and the best brand. Then you have this electrification day in september and everyone is assuming they will show batteries with better range, better power, and another change in leadership in terms of the technology above the conventional automakers like general motors, ford, daimler, bmw, and the rest. There is talk they will be going to india and that will be a market where they sell vehicles. Growth has been good in china. There is a lot of news that points to the direction of growth or continued prowess in electric vehicles that has investors giddy at the moment. Guy this morning i saw another headline that said they would discount by more than 3000. I wonder why that would happen, to excuse the pun. Is it because we live in a covid world, is it because they are not selling as many of these cars as anticipated and they want to boost demand, why discount a car that has only just gone to the market . David it is difficult in a covid world to tell why they are not getting the sales they need at the price they want they have to do some discounting. We are seeing a lot of deals on evs in the u. S. Market and elsewhere and unconventional vehicles as well because the demand is not quite there for anything compared to what it was a year ago. Tesla fill that plan for a certain volume and it is tough to get that in opposed covid world. That is the conclusion investors are making. I do not think it is an unreasonable one. We have to see in six or 12 months hoping that the world has normalized, whether they are actually giving the demand. It is one of those points that makes tesla so difficult to value. You have strong growth of their vehicles in china. The model y has done very well, the model 3 has done well the world over. A lot of shorts do not think those