And the 775 barely. Seven point 75 barely. China is trying to cool down more. This rally also in tech stocks in shenzhen. Marginal gains in the csi 300, but the chinext seems to be on fire. 8 10 of 1 higher for shenzhen small caps. Keep in mind, offshore investors also sowed sold a record amount of stocks recently. Seems tohe hang seng, be brushing aside the executive order from President Trump. We are seeing the rally up more than 200 points for your hang seng. We are watching things like export data out of indonesia, indian trade numbers. When it comes to the philippines, that is the only loser on the board today. We are expecting to hear from the president to announce the latest quarantine measures. They have not really been able to stop this virus there. The nikkei up 3 10 of 1 . Steady stream of earnings in tokyo. Taking a look at the dollar, that seems to be dropping. You are watching things like your dollaryen unchanged around 107. U. S. Yields at. 63 basis points. Oil after fourmonth highs, opecplus may not pay for as much is expected. And we are looking ahead to the boj meeting later today. The firstlets get word news with Karina Mitchell in new york. Karina rising tension between the u. S. And china. President trump has ended Hong Kong Special trading status with the u. S. U. S. This comes after weeks of the criticism of beijings handling of the coronavirus. Legislation would penalize banks for doing business with chinese officials, seen as undermining one countrytwo system. President trump watch what happened, not a good situation. Their freedom has been taken away, their rights are taken away and with it goes hong kong, because it will no longer compete with free markets. A lot of people will be leaving hong kong, i suspect. We will do a lot more business because we just lost one competitor. Karina china is accusing organizers of an unofficial primary vote in hong kong over the weekend of seeking resolution. The event was illegal and benefited from the support of foreign forces. It aimed to unify opposition ahead of legco oppositions. Beijing may prosecute or disqualify antigovernment figures. Sources in the white house tell us President Trump has ruled out any u. S. Move to weaken the hong kong dollar peg, amid worries it could hurt the u. S. The president on monday and he came down against a move. It comes as washington and beijing ramp up tensions with disagreement squaring over hong kong and the treatment of muslims and control in the South China Sea. The u. S. Continues to suffer as the epicenter of the coronaVirus Outbreak. New cases are rising around the world. They reported record new fatalities, in arizona, the most infections in 11 days. The u. K. Is warning of more than 1100 u. K. Deaths. Japan says a new state of emergency is possible. Global news, 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Yvonne talk us through these markets. Start off with the top stories parade President Trump signing this executive order to end the special status with hong kong. Look at the fine print. There is no measure mention of tariffs or undermining the hong kong dollar. China made the biggest port biggest purchase of corn. Seems like they are committed to the trade one deal. Can markets rest easy knowing that those three narratives are intact . I think the underlying narrative is that china and the u. S. Need each other in terms of trade. There is no doubt about that. The two of economies are linked. Buyer a seller, one as a and they are much likely to continue. Underlying it is the common need for each other. A lot of other things are happening on the surface. This issue with hong kong is interesting partly because it is a complete you might say why is hong kong different from china . In some ways i think we have had a pretty good for 20 odd years and this is just almost a natural closure of something that is actually a bit surprising. How will this order affect the financial industry, if any . I think where trump is right, and there is a lot of what he said, i think hong kong quieter, maybe slightly less energetic. People will be moving out. I think we are more likely to see a natural erosion. Perhaps instead of having the bigger unit in asia and hong kong compared to singapore, that may switch. You may have people moving from hong kong to singapore, but i think that is on the market. I think business will still continue, banks still need china, china still needs banks and hong kong is a great place to do business. Impacta how about the on the market . E know hong kong is a leg up is there a value to be had, what would that be . Richard i dont think there is value to be had. If you look at where the Property Market was last year, it was priced to perfection. We will see liquidity coming from china, which is entirely possible. There seems to be no reason why the Property Market should be held up. That drives a lot of what happens in hong kong domestically. I think there is a further impact happening, which is that hong kong does benefit from a major Financial Center for china. As companies leave or are threatening to leave the u. S. In terms of the listings, they will list the Chinese Companies that have had a lot of ipos in hong kong recently. All of that has supported the domestic Financial Markets here. Of course some of the liquidy the liquidity that is being created in china that superseded the recent surge in the chinese stock market also becoming to hong kong as well. We have statistics selling, that does not mean to say that there is not a lot of domestic buy. Haslinda outside of hong kong, valuations are looking pretty stretch. You say life in across the board. Richard i think what we are seeing here is a race between, are we going to have this v shaped recovery. Most estimates are fanciful. We wont see previrus levels come back. Recoveryl see av shape with a bit chopped off the righthand side. Or are we going to see an extension of lockdowns from an extension and recession. We are seeing some countries into quarters in the session, and thats likely to go around the world. The question is, will investors come to the state in the v . I think they will. There is every possibility of a doubledip. People will think top off their equity holdings. Ook at tesla also look at the tech indices, they have done extremely well. Some of the value stocks havent, but i would it be in there now. It probably wont do too well if we dont get a further extension of lockdowns. You said markets look like it is in a bubble. You mentioned a tech sector. Also, chinese equities. Are there other parts of the markets that you see as looking overstretched at this moment . Richard a lot of of observers are saying there is a bubble in tech. But i would disagree with them. Ishink the whole market looking top be. It has been for a wild. We have been seeing some of the estimates out of the u. S. Looking at earnings down 45 in the quarter. If earnings are down 10 , you can kind of look over the valley. It goes down 45 . That is really damaging and that will persist for a while. That is why i think that concerns about valuations are going to continue. If we are looking at stretch valuations, that is an issue. Whats holding the market up at liquidity. Is the so much liquidity has been put in the market to stimulate the economys. Richard harris, we thank you for your insight. Still ahead, new normals for safety amid the pandemic that is worsening. Creditmes as nonprofit exchanges aiming to make it easier for corporations to be responsible for their plastic footprint. Doj day. Ts the central bank trying to keep rates unchanged as they assess the impacts of the measures they rolled out in the previous months. We look ahead to that decision. This is bloomberg. The damaging impact of the coronavirus on the economies as the number one factor driving policy, including the bank of japan. Kathleen hays is here with the of the bojs policy decision coming up any minute now. Kathleen, no policy moves expected by the boj today, perhaps the worst is over . Kathleen thats exactly right. As you just said, how badly is the virus hitting the economy is what every central bank has considered. In japan, it looks like the worst may be over. Japan fort to look at a moment, because i know there is a lot of talk in tokyo hosting the emergency warning levels to the highest. Hadas of july 13, japan just over 21,000, nearly 22,000 infections, less than 1000 deaths. This is a country of 125 million people. Compare that to germany, much smaller at 83 million people. Germany has had 10 times as many cases and 10 times as many deaths. Japan has a good track record. Lets move on to the next point. Boj. Yo teamer covers the they added the emergency lending programs, a couple in march. They dont need to do more. They need to wait and see how they work. Programs areending going well. They are keeping markets stable, companies wellfunded. They send checks to families and workers. This has had an impact. There is the fact that the japanese economy has had two quarters of negative growth. The consumption tax height hit the Fourth Quarter pretty hard. First quarter came down at over 2 of decline in gdp. This is why people still expect still watch it closely, it he looks the signal be eight boj about whats next. I just want to quickly run through what people are focused on. The Economic Forecast was important. What is the tone. Boj does not want that. Maybe even bigger virus lending programs. How has inflation seen, certainly below the 2 . He will keep policy in place as long as needed. Yvonne if they are going to come out with a range of growth expectations now, which focuses on april back to the normal and median estimates. Turning to the u. S. Now. Top to Federal Reserve official spoke, but they had different views on the virus. Whats the message here . Kathleen i found this very interesting. The board of governors of the fed, when you listen to him, you got to figure you are hearing the views of jay powell. He is very close to she is very close to jay powell. Economyarning the u. S. May slow. She is urging more support for the economy, talking about longterm unemployment could become permanent and becomes damaging. She said its time for the fed to pivot for providing accommodation. Wow. She is talking about for guidance and things like that. That seems dovish. The president of st. Louis said the economy will continue to Gain Momentum in the second half. Issaid virus mitigation something he thinks is working well. And the setting the u. S. Economy up for a rebound. Not only talking about moving fulls full speed ahead, he said fed policy will state largely where it is for now. He also said the economy has every prospect for doing well. I think he is an outlier. There is so much do anglo net the fed so much doom and gloom at the fed. Everyone is figuring this could prolong this for the rest of the year and maybe longer. That arelot of ideas not doing the most. But if he is right, that could have big implications for the Federal Reserve and maybe the Central Banks of other countries. Yvonne kathleen hays, our Global Economics and policy editor. We saw the uncertainty in bank earnings. Wells fargo posting posting its first quarterly loss and announcing a round of job cuts and looks to flash slash cuts. This is bloomberg. Yvonne wells fargo plummeted after reporting its first quarterly loss since 2008 as provisions soared. The cfo says the Banking Industry is changing. Wells fargo will have a similar footprint in the coming years. Ton we have staffed up solve some of the problems we have been dealing with over the last couple of years. And in part because banking is changing. We will have fewer branches. We will still have many thousands of branches, but we will have fewer branches in the future. We have more activity happening digitally from front to back, meaning that how our customers interact with us and how we deliver capabilities happening in a more tech driven way. All of those things will lead, over time, to a smaller headcount base. Have called it 270 us 270ish thousand people. We have similar Balance Sheet but on a substantially smaller footprint. That will happen over the course of the next few years. Popularemembers some commentary. I am curious how much is positive underlying fundamentals purses Government Intervention and deferring mortgage payments or extra stimulus or Unemployment Benefits we have seen, and when those run out are you assuming an inevitable losses and push out later into 2020 . Credit card is recovering, but still way down from where it was in the first quarter. The middle of the first quarter. We have the largest debit card network by payments. Up, colin 10 yearoveryear, which is where the for there shelterinplace went into place. Consumers right now are spending at that level. Its undoubtedly supported by the level of stimulus that is being received through direct stimulus payments, through extra Unemployment Benefits, and because banks and others are deferring required payments on installment loans, so people dont have to pay their mortgage loan, their auto loan, their credit card loan if they opt not time. A period of that is causing more Free Cash Flow to be available for people at the lower income spectrum. Unless we have come back up the other side of the v, then there is likely to be some reckoning. In terms of that v, and in terms of coming back and giving , itslf the clarity notable to cut you made to your dividend to tencent. Some analysts think this Dividend Payment could go to zero. Do you agree with that . Is that something you look to if that vshaped recovery is pushed out into the future . John the level of our dividend has more to do with our longterm earnings medium. And also some recent requirements that were put in by the fed that govern how big of a dividend things can have. Really anchoring it to be no more than the drilling four quarters of profitability. The average of the trailing four quarters of profitability. Between ease of allowance bills, we had a big legal settlement couple of quarters ago, our trailing four quarters of profitability is relatively low. We have struck a dividend proposal that is bonita, so there is a risk of it going down from there. The economy figures in a way were earnings are impacted and that is further impacted if the role remains in place, but its not expected to be that way. Assumes wed approach have ample capital. It is not much of a capital issue as it is an earnings issue. Quarter with an increase capital level in cet1 percentage terms, thats a constraint in capital ratio for big banks. We are at 10 point 9 today. Our requirement is 9 . Thats about 23 billion worth of extra capital on top of the regulatory requirement. Dividends are more about earnings for bigger banks. And a little bit less about capitals efficiency. Between these big allowance bills we have all had, and the relatively large cushion and equity that have been built up since last crisis, there does not seem to be a lot of concern and confusion of capitalization. Haslinda wells fargo cfo there. Here is the latest business headlines. Huawei has been banned from 5g the government reversed its decision amid u. S. Pressure. Any more huawei equipment to their networks after the end of the year. All huawei equipment must be removed from systems by 2027. The band is expected to 2. 5 billion in additional expenses. They are selling a stake. They understand that they have approached the fund as it looks to raise as much as 10 billion in a preipo funding round. Bought for 43 billion in 2017. Lets take a look at where we markets. E asia tracking gains in the u. S. On optimism about a vaccine. Modernas vaccine is producing antibodies in all patients tested. The msci asiapacific index up by 1 6 of a percent. Strong trading results. Take a look at the csi 300 index, up by a marginal 1 10 of 1 . Plenty more to come. 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. 10 29. S here are the first word headlines. Sydney is on high alert for a largescale rotaVirus Outbreak as cases may develop and move across the state border. Different cases in australia 283 newsed 10,000 with infections on tuesday. 270 of those are in the state of victoria. They went back into a six day lockdown sixweek lockdown. Tensions,e growing china continues to buy Farm Products from the u. S. The latest deal for corn is the largest fourth largest on record. The most since 1994. The usda says china has ordered about an hundred 30,000 tons of soybeans for delivery in the next 12 months. The news comes as President Trump says a phase two deal is not eminent. Imminent. Economists are expecting a return to form following the coronavirus loan. Historic 6. 8 the the client in the first quarter. China remains vulnerable to slowing growth and declining demand elsewhere as well as fragile domestic consumption. The Trump Administration has been backing off a highprofile fight with harvard, m. I. T. And other colleges over foreign student visas and online teaching. The government is resending a controversial policy that would have required International Students to go home if it cant take if they cant take physical classes because of coronavirus. Justice repair ginsburg has been admitted to hospital with an infection after undergoing surgery. She will spend a few days at Johns Hopkins getting antibiotic treatment and at 87, she is the oldest just dust. She was appointed to the court by democratic president bill clinton. A check on markets right now. It seems like we are focusing more on the vaccine. We are seeing asianpacific stocks up. U. S. Futures continu