Transcripts For BLOOMBERG Bloomberg Markets European Open 20240712

At the same time, we generated more capital through earnings. Thats why are ratio is 12. 5 . Talk to me about the merging of the two units. What is the reasoning behind that . The Investment Bank merger is something weve been discussing for months. Even my predecessor, it was already a topic. 2015, clearlyn the two had to be separated. We had to restructure the trading business. Are at a stage or we can put them back together again. Most of our competitors have it anyway. This is not a cost exercise. There will be some cost benefits. Its really about having one overriding business to have one Investment Bank globally, one equities business. A Global Trading solution business, which build on our success. It serves our equity, fixed income, transactional business for the private bank and institutional business. How difficult was it to do this in the middle of the pandemic . Thomas it was relatively good. You get used to resume calls. Zoom calls. We had many internal calls to get this lined up. It actually worked very well. Personto say, not one within Credit Suisse was against that combination. Is stepping down from the board. He was as convinced that we should do this. It was not a move where we had to convince a lot of people. Matt doesnt mean you will see a more streamlined credits we Credit Suisse . Thomas no. We believe in the original model. It makes total sense. We want to keep the regionalization. What is your biggest concern over the next 12 months . We seem to have gotten over the worst with the pandemic, more or less. Kong, up to 65 in the office. Now we are back below 20. The biggest concern is a second wave of infections. We are doing well in switzerland. We are almost back to 50 working at the office. Thats the biggest concern. How many people do you have working from home . When do you expect that to change . Thomas globally, 20 working in the office. 80 can from home. We have 90 enabled to work from home. Up in mosts going countries, in terms of people working at the office. As i said, there are certain wheres like hong kong youve gone the other way. Do you spect any permanent changes . What does it mean for the real estate you own around the world . Thomas in the midto longterm, i expect that we will have more people working from home. One day per week or two days per week. I still think its very important that you have informal exchange. Therefore, coming back to the office is something everybody wants. Everybody was so happy when they could come back here. It is something that people want to do. Annemarie that was the Credit Suisse ceo speaking to bloomberg. Lets get more from francine lacqua. Its great to see you back out in the field. Tell us about the Credit Suisse restructuring plan. New tv sector related out. Its hard to bank on the strength of the Investment Bank. Its putting together compliance and risk. He says this doesnt have anything to do with the risks we saw in asian markets. Overall, theyve had a good quarter. This is news for the executive. Hes been in charge for six months. Its interesting he decided to do it in the pandemic. He said most of the people were behind it. [inaudible] in terms of how it was received by share price, we dont have much market movement. They been outperforming some of their peers. Matt weve been talking to bank ceos about their plans to return staffed office. What does he say about Credit Suisse . You heard him say that for the moment, 90 of employees can work from home. Only 80 are. That practices will be much more flexible so people can take one or two days working from home. The under their other interesting part was dividends. He told me there was an egm that was approved. Hes expecting the dividend to be paid out after that. Thanks for joining us. We have shell and tou thao earnings hitting the wire now. A massive surprise in terms of profit for both of these companies. Profitsecondquarter came in at 38 million. The market was expecting a loss. 126 million. They were expecting a net loss of 443 million. All of this, these Oil Companies can thank their trading units. Their trading units handled more than 25 Million Barrels of crude oil a day. Thats equal to more than a quarter of global consumption. There were deep trades. Paid offed off handsomely for these companies. Matt fascinating stuff. A lot of earnings beats today. Major oils and the big beats at Credit Suisse. Every single line, the bank beats on. Everything for which bloomberg had estimates, you can say the bank did better than the street was looking for. Cases, in terms of bottomline earnings in topline revenues, they did better than the consensus and the highest estimate we had from the analyst community. To ceos ofspeaking many of these companies with earnings out today. Euronext is up. We will speak to the ceo of anglo american. As well as astrazeneca expecting their earnings soon as well. Keep on the european open for the top ceos from the Top Companies on the continent. Up next, whatever it takes. The fed valves to use all of its tools to support the u. S. Economic recovery from the coronavirus. We will look into Jerome Powells comments, next. This is bloomberg. Matt welcome back. This is the european open. We are 50 minutes away, 40 nine minutes away from the start of cash trade this morning. Futures are pointing higher as we continue to get earnings beats out of the Biggest Companies in europe. Lets get to the first word news. For that, we go to war right in london. Laura during congressional testimony yesterday, Facebooks Mark Zuckerberg broke ranks. It was part of an antitrust hearing. He says facebook lags behind its competitors, calling out google and amazon. Lawmakers grilled them, arguing they have too much power over digital markets. The u. S. Death toll from the coronavirus has top 150,000, the highest tally in the world. Florida, and california have reported daily record fatalities. Warns eyeuci protection may be needed. He says if you have goggles rate they shield, you should use it. U. S. Announced plans to withdraw 12,000 troops from germany. Some will be redeployed. The defense secretary says the move is to bolster nato and determine russia from interfering in europe. Donald trump has signaled the move is largely about punishing germany. He has long complained about German Defense spending. 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. Annemarie thank you so much. Jerome powell has kept his message as dovish as possible. The fed left rates near zero. He says signs of the coronavirus resurgence are starting to weigh on activity. He urged congress to boost fiscal spending to offset the biggest shock to the u. S. Economy in living memory. We remain committed to using our tools to do what we can and for as long as it takes to provide some relief and stability, to ensure that the recovery will be as strong as also both, and to limit lasting damage to the economy. The path of the economy will depend, to a high extent, on the course of the virus, the measures that we take to keep it in check. The data is pointing to a slow rate in the pace of the recovery. How largeearly to say that is and how sustained it will be. The rising joblessness has been especially severe for lower wage workers, women, and africanamericans. The fiscal policy actions that have been taken thus far have made a difference to families, businesses, and communities across the country. It will take continued support from monetary and fiscal policy to achieve that. The Federal Reserve has been taking broad actions to more directly support the flow of credit in the economy for households, businesses large and small, and local governments. These are lending powers, not spending powers. Theres great uncertainty around the development of therapeutics and vaccines. All of us want them to happen as soon as possible. We cant plan on that. We have to hope for the worst hope for the best and plan for the worst, i guess it goes. Annemarie that was Jerome Powell. Is timothy graph. They mention fiscal support a number of times. Are you optimistic we will get a deal out of them . Timothy good morning. I suspect so. The usual horsetrading. This is an election year. No one will want to get the blame for holding up stimulus. This is similar to 2008. You had a lot of uncertainty that programs would actually get off the ground. Eventually, they did. This is an even more critical package of programs. This is actually aimed at the u. S. Consumer as opposed to a banking system. It is in no ones incentive to hold this up. The particulars will be worked out. Thats where this in uncertainty will come. There will be stimulus, im pretty sure that. Matt in terms of what Jerome Powells job is, is he done . No more qe from the fed. No more extraordinary monetary tools. Just hold and wait for the federal government to dish out trillions . Timothy i suspect it will be a situation with new wrinkles on policy as opposed to massive innovation. So moving to the average inflation targeting framework, it seems likely at the september meeting. That is probably now in the price. It is something they will move towards. ,t gives them that flexibility to not have to feel pressured to change course if you do get inflation moving higher a little faster than anticipated. Whether qe is likely to expand in the future, im not certain. I suspect their focus on it may diminish. Thats my own personal opinion. If you get a significant downturn as a consequence of ande spiking virus numbers the labor markets stalling out, you might get modest increases. Thats more of a new wrinkle as opposed to an innovation. I would not say the focus is completely dead. You will not get somebody to move the dial quite a lot. Annemarie you are talking about an inflation target for september. The former fed president of minneapolis argues that the fed wants to have maximum impact, they should be targeting unemployment. We will see some of the devastation today when we get those u. S. Jobless claims. What is a better measure for the fed to target . Timothy of course, they are both targets of the fed. At this stage. T i would question that slightly insofar as its very difficult, beyond what theyve already done, in terms of providing support for the Corporate Market and reducing Corporate Funding costs to allow corporate stop rate in a highly uncertain environment. Corporate as on well as fiscal authorities, i suspect. That can be more effective in tackling unemployment targets. I dont think its necessarily easier to do one versus the other, inflation versus unemployment. At this stage, is it in the fed interest to act as the arbiter for the labor market in the u. S. , beyond providing that support . I dont think it is. I dont know if they would view aat as their mandate, absent formal change by an act of congress. I suspect its easier for fiscal authorities and regulatory authorities to move in that direction than it is for the fed. Matt what do you think about gold at 1960 . Does that make sense to you . Will we see weaker dollar, stronger gold . The Printing Presses roaring along. Real Interest Rates way down below zero. For the we do expect it mediumterm, perhaps im not a huge dollar bear. Im not one of the ones looking for a 30 dollar crash. I think we are in a healthy correction mode. The dollar has been expensive for a long time. It had been a consensus loan for long time. Inflation expectations are only just beginning to recover. With that in mind and the fed policy in mind, it looks as though real Interest Rates have started to fall. That will be to the detriment of the dollar and the benefit of gold. Variables are going to change. We will get some recovery at some point. Inflation expectations will continue to rise, i suspect. Especially if they adopt average , the fed willcy do nothing and stand and let that happen. That continues to add to pressures on the dollar. Matt you will stay with us. Head ofh tim graph, the microstrategy at amia. I want to quickly give you astrazeneca earnings that are coming along. Most important, it is keeping its guidance. To drugmaker will continue aim for its fullyear guidance it previously had. In terms of the backward looking earnings report, there were beats on the bottom line. For 93lysts estimate was cents. Revenue was in line. They gave a number of beats or in terms of individual drugs. Farsi to revenue was better than expected. Symbicort revenue, better than expected. We have to do a package on these drug names. Who was the guy or woman who comes up with that name . What does that even mean . Beating on every single drug, beat him on the bottom line. 6. 2 8 billion. Its the busiest day in european corporate earnings. Firms worth more than 2 trillion are reporting today. We will look into the latest results and what they mean for the economy. We will speak to the ceos of a number of those companies. All of them joining us after 8 00 london time. Stay with us here on the European Market open. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. Futures higher in london and paris. Down a little bit in frankfurt as we get a slew of earnings. The most on the corporate calendar. Still with us is state street head of microstrategy. We are seeing a lot of beats. Clearly, its not been a great quarter economically. We are looking at the biggest dip ever for the u. S. Economy, at least recorded. For the european economy, also bad. How do you think these companies are dealing, considering the economic backdrop . Timothy they are probably as clueless about the outlook as we are. It was going to be taken for granted that q3 would not necessarily be a vshaped recovery, but we would take some path along the road towards recovery. And we will. Countries and states in the u. S. Reentering lockdown and case numbers continuing to rise, you are getting an increasing sense that things that things are not under control. The questions will be the more important ones to answer rather than the q2 data, which is backward looking. Everybody knows it will be varying degrees of terrible. Wasreal problem is q3 supposed to be something of a recovery quarter. Again, you probably will get recovery simply because large economies like the u. S. Will not be in as sharp a lockdown. The size of that could be questioned a bit more. If you are a corporate official looking over the rest of the year, your outlook has to have been far more uncertain today than it was six weeks ago. Optimistic are you europe can escape more economic damage from a second wave . Many say europe will recover faster than the united states. Do you agree with that assessment . Timothy the depths of the slowdown will be more shallow. There are more automatic stabilizers in the eurozone economy. Whether or not it will attain its precovid level of output faster than the u. S. , i dont know. I suspect it might, sibley because of the depths of the slowdown was more shallow. The u. S. Is a more dynamic economy. Things move faster. Dropresult, the larger the , the harder it may be to attain a crisis level. I dont really know. Europe is in a good position, a better position politically. Given its a more shallow drop, it may be. Annemarie we will have to leave it there. Thanks for joining us. Speak to the ceo of euronext. 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. 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. Annmarie welcome back to the european open. European futures looking brighter this morning. A slew of earnings out today. The busiest day so far this year for corporate earnings. Euronext reported earnings that beat estimates. They benefited from a surgeon volatility and volumes during the pandemic. The stock is up 30 year to date. Joining us now for an exclusive interview is the ceo, stephane boujnah. Thank you for joining us and good morning. I want to start with the shorter trading hours. Many say this could lead to more diversity. Isnt it high time to start making changes that would lead to any diversity in this very largely dominated male profession . Stephane there is no debate about the need to boost and favor diversity within our industry. Clearly, no debate on that objective. The only answer we have provided to the market is that following consultation with all the stakeholders, traders, the Retail Investment community, there were just completely mixed views on whether or not trading hours should be shortened. In order to avoid fragmentation of the market, in order to address the lack of consensus, we have decided to go with the status quo. But you are right. Placeebate must take within the industry about the diversity issue. I dont think shortening trading hours is a onesizefitsall solution. I believe that across europe there are very different situations. Issome countries, there heavy reliability on daycare. You can find some on the continent more female managers than in london. The situation is much more differentiated and i dont think that trading hours was the only way to address the issue. As i said to one of your colleagues yesterday, firms have invested in a lot of money for gyms the past 10 years. Maybe they can invest a little bit in daycare. Matt you know, we see study after study showing more women on boards means more profitable companies. Moodys having the benefit of the doubt to companies that have more diversity. It seems like it is in the best interest of your shareholders to diversify. Metrics of course are necessary in order to meet goals. Do you have any specific metrics that you want to meet in terms of diversifying your board or business . Again, in the various countries where we operate, lisbon, paris, amsterdam, oslo, dublin, copenhagen, there are these sort of metrics locally and we are committed to meet those different standards. I do share your comments about thefact that unleashing energy of female colleagues is the best way to provide Sustainable Growth to respective organizations. That is what we are doing. Annmarie speaking about culture , what about work from home in your company . When do you plan to bring staff back . What percentage of your employees are still working from home . Stephane the vast majority of our staff works from the office. We are back home by default since the end of may. Situation obviously is slightly differentiated in some of our offices. We have a large team in london where it is what you are familiar with. E believe the best way we do believe there is a sustainable model where the vast majority of employees operate from zoom or skype and we believe that in addition to analytical contributions, people ,ust contribute for creativity for client interactions, and that is why the model will be a model where they will continue to work from the office because we dont want to become a cloud of staffr a consortium employed people working from their living rooms. That is a very profound choice. Obviously, we are not blind. We are not immune from the consequences of the past few months. Flexibility for people to work from home in more of a regular manner than in the past, but by default people will have to meet together for euronext. Matt even with the situation the way it is, you beat the highest estimate in terms of your revenue in the Second Quarter with 210. 7 million euros. ,ou still were profitable beating Second Quarter estimates. What kind of improvements do you see in q3 and q4, if any . Can you quantify your expectations for the second half . Stephane we dont provide guidelines, except where we have renewed the existing guidelines. Is that theell you current semester, which has been good and strong, actually we delivered for the first part of 2020, as we did for the full year in 2016, just three years ago. This is the outcome of volatility and volumes. But also hard work for the past dayyears to do disciplined, and we arened m a yielding the benefits of a disciplined acquisition strategy. Boosters, volatility, butne has a crystal ball, disciplined deployment of capital will remain for the second part of the year. Line, the on the top equity trading franchise, it remains to be seen whether the sort of relative slowdown in you q2 will continue in the new normal. Annmarie earlier this month, deutsche had a Technical Glitch that frustrated traders and muted market activity. What steps are you taking to make sure your exchange doesnt suffer any similar Technical Glitches . Stephane we have not suffered these glitches because we have invested money in the complete overhaul of our technological platform and we are operating completely brandnew technology, 20182019released in and at the beginning of 2020. It is something completely new with stability and we just invest a lot of resources and technology and that is how we deliver to clients stability. Profound, longterm commitment. Right, a pleasure having you on today. Thanks for joining us. Stephane boujnah, the ceo of euronext, talking us through his earnings, his technology, and his plans for diversity in the future. Great to get some time with you. Lets get some Bloomberg Business flash from london. Thanks, matt. Burning through it is pulling back further to safeguard cash as it waits out the collapse in demand. Airbus will produce 5 aircraft rather than the 6 it targeted in april. Credit suisse will merge trading and Investment Banking. Says that executive is looking to save 440 million annually from 2022. Rivals byoutshining reporting sales growth amid Strong Demand for coffee with people working from home, but sales of bottled water slumped as bars and restaurants were closed during lockdown. It may focus on more of its previous premium offerings. Annmarie thank you so much. Coming up, Standard Chartered delivered profit that tops estimate. The bank plans to cut several hundred jobs around the world. You will hear from our exclusive interview with ceo bill winter next. This is bloomberg. Annmarie welcome back to the open. Just about 20 minutes away from the open in europe. We do have futures pointing to a brighter start in europe, fluid earnings including and are chartered. Results topped estimates for the first half of the year. Almost 2 billion. Ceo bill winters says the Balance Sheet is in good shape, but economic pressures from the pandemic linger for some time. The to call the end to most challenging period would be premature at this point. We certainly see economic stress is continuing to be very present. In theicular, even markets where we have our biggest operations, so in greater thailand and north asia. They were the first into the pandemic, but the first out in terms of recovery. While the recovery has been strong from a very low point, Economic Activity is still subdued. We are also seeing an very important markets for us like hong kong, what we are calling a third wave of the pandemic has been the most severe. The economic pressures coming from that will linger for some time. Too early to call the end of the pandemic, but what we can say is Standard Chartereds Balance Sheet is still in good shape. We think we should be held in good stead through the expected course of the economic recovery. The fact that you talk about economic stresses continuing to be present, you have also said it could take longer to achieve your 10 return on tangible equity target, so i wonder what that means for cost cut. Weve reported you are planning several hundred job cuts worldwide. Our significant job cuts on the cards . Inl what we said early back march is that we would make no redundancies as a result of the pandemic and we have not. We said we would resume the ongoing transformation of our bank which has been going on for years. Processes,omating digitizing everything from end to end, repositioning the way our branches operate to be more Consultation Centers and to a lesser extent pure transaction centers as more is happening online. While we put transformation efforts on hold during the most acute phase of the pandemic, many markets are recovering healthfully and we will continue with our transformation activities. The most important thing for us is to give every single one of our employees a chance to move inside Standard Chartered and not have them forced to leave. The best way is to focus on reskilling. We have made massive investments on development and learning tools for our employees so they have the best possible chance to be redeployed in the organization. Inevitably, some people will choose to leave or we wont be able to find the right job, but we are talking about a small number of people in the context of our 100,000 fulltime workers. You also said that Standard Chartered hopes to reinstate the dividend as soon as possible. Should shareholders expect a resumption of dividend and buyback before next year . First of all, that is something we will be consulting on with regulators. The regulators particularly in the u. K. Said they will only consider this in the Fourth Quarter of the year. Our approach to returning capital to shareholders has been first and foremost making sure we have a strong and healthy Balance Sheet. From the first half results, we ratio ofa tier one 14. 2 . This is a very Strong Capital number. It leaves us confident we have the right capital base to weather whatever comes ahead in terms of economic related stresses. Maintained ave very healthy investment program. Our First Priority is to investing growth. We operate in Growth Markets. These Growth Markets will recover. We want to make sure we capture that. We would like to restore the dividend at the appropriate time, but we will do that in the conversation without regulators. To the extent we have a surplus, we will look at other ways to return capital to shareholders, pretty much as what we were doing before the pandemic when we had an active stock buyback program. Matt that was the ceo of Standard Chartered bill winters speaking to us exclusively at bloomberg. The coronavirus is taking its toll on earnings across industries. Airbus cut plane production after burning through more than 5 billion in the Second Quarter. Both renault and vw reported losses in the first half of the year when the pandemic shuttered showrooms. Joining us is our Senior Editor in berlin. With the playmakers. It is not just airbus. Boeing has ended production of my alltime favorite passenger aircraft, the almighty 747. Yes, it is the end of an era. We reported that the end of that plane was in the cards and boeing confirmed as much. Surprise, you might remember that airbus ended production of its a380 superjumbo. The era of superjumbo is coming to a close. Heard from boeing and airbus is that the next category down, the widebody aircraft, the large overseas planes, that is also a category in trouble. Its 77is cutting dreamliner production. Airbus saying they would also pervak slightly on the a350 plane, which is sort of the equivalent. Theng again is delaying production of its triple seven. That is a category that is in trouble because overseas travel has all but dried up. When and if travel does return, it will be on the short routes and that is the 320 category or the 7374 boeing. Annmarie i want to ask about bw. They cut the dividend. They are trying to preserve cash. They said they are still going to make a profit for the year preserving cash. Exactly. Cash preservation is the theme across the industry. It is one of those massive earnings days with lots of Companies Reporting. That is the overarching theme. Not just the carmakers, but everybody. Vw is cutting its dividend to make it through that first half of the year. It is a crucial year. Volkswagen just released a new golf, the breadandbutter car. They are introducing another electric car. The only way to do this right now is to cut the dividend and to pervak costs. It is painful for some of its , includingreholders the state of lower saxony, because they also need that kind of money. This is really the only way to make it through this pandemic for the carmakers and really the wider industry. Help from about governments . Are we going to see the German Government, in and help out with carmakers . Is there going to be a backs tax cut . Interestingly, a couple of weeks ago when the German Government announced it big economic aid package, the carmakers drew a bit of a blank. They hope to that would be something similar to the cash for Clunkers Program that we had had a couple of years ago and that did not happen. Instead, a lot of money was poured into renewable resources, hydrogen and so on. To try to wean people off fossil fuels. Whether there will be another aid package, it will be interesting to see. It is different in germany and france. We also had numbers from renault this morning. Worth reminding people that the french government is a big shareholder and they have an 8 billion euros loss, which is a record, so we can very much imagine that the french state will look at this closely and reconsider what they can do. For now, at least in germany, no direct aid going to the carmakers, but whether that will remain the case as the pandemic stretches on, that is unclear at this point. Annmarie we will certainly be watching that. Up next, stocks to watch including ab inbev, which sold more beer than expected during the lockdown. I wonder if matt is responsible for that. This is bloomberg. Matt we are minutes away from the European Market open. 6. 5 to be exact. Lets get your stocks to watch with the dani burger. Dani oil majors to reporting today and we are seeing some surprise profits. At 638 million for their quarterly profit. The estimate had been over 660 million lost. They did lose money pumping crude, but at the end of the day, oil trading really saved to them, playing off the deep trades. It cited this for why it has such a strong Second Quarter. It did cut its dividend . 16 versus . 47. Total also booking a surprise profit. Credit suisses numbers beating every single metric. They did book a profit in Investment Banking and capital markets. Officiallys also announcing their restructuring, combining markets and investment trading and trading markets, as well as the risk and compliance. They are hoping to cut down cost , specifically 438 million swiss francs annually from 2022. Ab inbev, the pandemic did not stop anyone from drinking beer. Doing better than expected. Profit coming in sales coming in at 10. 3 billion. This is pretty significant considering bars and breweries were closed, but it seems the market has mostly shifted to at home. I should also mention they did book an impairment charge in their Africa Business really do to the pandemic. Matt, annmarie . Annmarie thanks so much. Banks, brewers, oil all coming up. We will see how corporates react. European market open it next. Futures a bit mixed ahead of the open. The open on the other side of the break. This is bloomberg. Annmarie good morning from london. A minute away from the open of trading. Here are todays top stories. Whatever it takes. Stocks trade mixed in the fed leaves rates near zero. U. S. Gdp do later is set to be the ugliest report ever. On tex gets a grilling capitol hill, lawmakers accuse the ceos of using their power to crush rivals and squash competition. All four Companies Report later today. It is an earnings bonanza. European Companies Worth 2 trillion report this morning. Ceos this hour. Im looking forward to these three executives, some of them have some big surprises in their earnings. Matt yes, absolutely. Huge surprises. Especially from Credit Suisse, all to the upside. We have a number of earnings coming up. We will see if that moves markets. Futures are not doing much of anything. About zero point 1 . The live cash trade starts now. Column see each represents a different risk asset. The lefthand column shows you the live equity indexes as they open up. Indexes. Style is i dont know who wrote indices. [laughter] matt anyway, that is a thing the way. Nd annmarie by maybe a little bit of inside baseball. The ibex in madrid opening down 0. 4 . Then you really dont see otherwise a lot of movement. Really, these markets are searching for direction. Really mixed. It is interesting that the earnings, we have seen so many be, they dont give us a boost to the upside. Annmarie we should let our viewers decide. Here in europe, they want to hear the word indexes, very american, or indices, which ive gotten used to. We do have the markets opening up mixed. The fed stuck to its whatever it takes message. This a grim milestone morning, death stopping 150,000. The busiest earnings day of the summer. Dani burger joins us for a first take on the market. Degree wased to some a nonevent. We knew this is what would happen. A continuation of that elvis message. They only thing that seems to be influencing it is some of the bigger macro stories. This gives the green light to treasury yields to trade lower. Because of this, what we saw yesterday in the u. S. Session is the idea that tina has reemerged. Yesterday, you saw the u. S. Session surge. You cant get yields from treasuries anymore, but now when we look through todays data, we are having somewhat of a pullback because the tension is going to be extremely divided. On one hand, we have german gdp estimated to sink about 9 , but some estimates are much worse. Gdp iss thinks germanys going to fall 15 . Overall, that all the gdp figures we are getting end, we have a lot of data coming in that investors have priced in grim data, but perhaps they have not priced in as bad as it really wasnt as bad as it may get in the Second Quarter moving into the third order. Because of that, you have a very mixed trading day. A lot of competing stories for attention that really are struggling to win out in terms of directionality in this market. Huge earnings day. The biggest on the calendar. European Companies Worth almost 1. 3, American Companies will report today. What are we seeing and expecting . Dani i think we should expect a lot of volatility in individual stocks. For some traders, stock pickers, this is going to come is welcome news to the market dominated by macro headlines. See we are starting to emerge is correlation between individual stocks coming down. They are moving less alike. All of these companies are hit hard by the pandemic, but the story has really changed toward preservation. We saw that with auto figures like airbusnies cutting production. So it is less about how exactly is this virus hitting them . We do know more about the impact of then we did a order ago, but we want to know how companies are coping with this . How they are keeping Balance Sheets, how they are keeping liquidity, i think that is starting to dominate the picture more, not to mention the dividend story. Banks needing to cut their dividend. Shell cutting dividends. That making a big investment impacts. Matt dani burger talking to us about the earnings reports out today, more than 2 trillion worth of Companies Reporting in europe. Anglo american is one of those that has been forced to rely on profit from iron ore and to support debeers unit. Pandemic crippling almost the entire gym industry. Joining us now is the ceo, mark cutifani. Thanks very much for your time. Let me ask you about the diamond market, the collapse we have seen, what kind of recovery do you expect . Mark thank you. Expect to see the Fourth Quarter start to pick up. If you look at what we have seen in china, you almost could not sell a diamond in the first order, yet in may and june, we set our best levels for over 18 months. View, may and of june, very strong. The u. S. We expect will take longer to come out of the covid issues. We dont expect to u. S. Numbers to materially move probably until thanksgiving through to christmas and new years, so probably a Fourth Quarter story into 2021. Annmarie good morning. Part of what is going on with debeers is that there is no urgency to really cut these prices yet. How long can you take that . How long could you not cut these prices . The diamonds were your biggest drag on earnings. Mark youve got to remember, diamonds are a luxury product. From our point of view, they are rare, they are in demand, as we are seeing in china. From our point of view, we would prefer to cut production, then cut prices on something as rare as a diamond. From our point of view, better off holding back our production and making sure we match and demand that the product then undercut the value of our products, which we think is undervalued in any case. From our point of view, big pickup and diamonds in china, we expect the world to follow as it resets around a different type and we dont think there is an argument that supports cutting across. Matt i wonder what you think about the lesson glitzy materials, but maybe more important for the Global Economy that you are pulling out of the ground. Iron ore and copper are the Building Blocks of civilization. You have an incredibly interesting outlook as to how the covid crisis has hit the economy. I wonder what your take is for the recovery in terms of what you see selling these products . Certainly the recovery and china has been strong. We see more of a resilient recovery. We see more of a w type recovery in other parts. Beens, iron ore has stifled. Copper has been strong. Up. El is starting to wake pronouncements about the world being short for nickel has been helpful. From our point of view, all of those commodities have been with us in terms of price, so we expect the second half to be very strong in terms of all three. We can be a little bit more patient on diamond. Annmarie so you are not seeing china running out of steam for the rest of the year . Mark not at this stage. Their order books are pretty full in terms of the commodities we provide. I still think things will be bumpy, but certainly generally pretty strong. They are managing things pretty well. I think this will be slower recovering and other parts of the world. We also think that the u. S. Will get through and we would hope by Fourth Quarter we would be starting to see daylight. Your business specifically is facing more competition from rio tinto. They are pushing ahead with plans to build in iron ore mind that competes with your project in brazil and south africa. What kind of impact do you expect this to have on your business . Mark certainly in terms of longterm iron ore prices, we would expect the longterm price to be probably around 60 to 70 a pound, it is about 100 a pound today. We have a very high quality product. Very much in demand. The quality of our product is high quality, much higher than what we see come out today. By 2025, lets say iron ore prices are back to longterm levels, it impacts us maybe 5 or 10 , but we are growing in a whole range of other commodities, where is the two big liars rely on iron ore, so i think you will see a big shift in terms of value and value appreciation toward us as other commodities come into play. Annmarie you have outlined plans to spin off your thermal coal business to south africa. That will leave you with only one left in columbia. It is a cliff edge moment for the coal business. It is hard to get rid of these coal mines because of the price. How do you plan to exit or sell the business . We think the best pathway is to demerge. We have already reduced our thermal coal business by over 55 . Today, thermal coal only represents 5 of our earnings. At this price, it is probably a little bit less. , we purchased a business which we think is fantastic, so we are moving out and we are building a business that is probably twice the size and twice the contribution that thermal coal was, so we think we have done a good trade in terms of error shareholders and we think it supports very strong on the nutrient side. It is very much future based. You i want to finally ask about the dollar, mark. We are seeing it continue to weaken. For yours, is it Good Business . Are you happy about that . Does your outlook the dollar . We think there will be some weakness based on financial performance. We think it will recover later in the year. In the end, we want to see the u. S. Strong. Everyone is better off if the u. S. Economy is doing well. We are all a lot better with the u. S. In good shape, so we hope it picks up quickly. Mark, thanks very much for your time. Is the ceo of anglo american. From commodities to energy, coming up, big oil trading revenue saves shall shell from a dismal quarter. We will speak with the ceo next. This is bloomberg. Back to thelcome european open. European equities to the downside. Read errors across the continent. It was a big beat for big oil. Has savedsiness itself. Adjusted net income of 638 million in the Second Quarter, down 82 from the same period a year earlier, but much better than the 664 Million Dollars loss expected by analysts. Joining us now is the ben van beurden, Royal Dutch Shell ceo. Thank you for joining us. Every part of your business at the peak of the pandemic and you still managed to post a profit. This was all likely down to trading. It must make a lot of money. How much . Split out we dont our trading results. That is for good reasons. Because trading is not just trading in its own right, it is the optimizer of the company. Advantage what takes of market conditions, marketing footprint, energy footprint, and even our crude lifting capabilities. But you are right. Shows whatr, trading unique capability it is. Many different aspects of the business. Taking advantage of all sorts of arbitrage as it opens up unusual parts of the world. Indeed, working with this tremendous live Market Information that are market businesses bring and take positions that can be taken advantage of. It is an integrated capability that really shows how much we can put anything on the cake so to speak. Matt you know, the data that you get im sure gives you unique insight into supply, but also more importantly demand, i would guess, is the information we find so interesting and that you have this unique view on. Where do you see demand recovering the most . Do you see demand recovering . Picture,s a very mixed but you are absolutely right. Our trading desk got a lot of dataflow information. From our Marketing Business, but also from the fleet we have positioned around the world that we track and see what is going on. I think the picture is very mixed. We see the recovery in those , so chinahe world looks reasonably good, but surprisingly, if we look at july numbers, russia one of the strongest. India one of the weakest. It is quite mixed. You cannot make uniform statements about this is good, this is bad. Unsurprisingly, the Aviation Business is down in many parts of the world. Perhaps surprisingly, we are still able to make money in these types of markets because new type of Business Models and arbitrage opportunities opened themselves up. I want to push you on trading for a moment. Madeaid trading businesses 1. 5 billion in the quarter. We know refineries were unlikely to make a lot of that money. Can we assume that a large portion of that came from trading . Indeed, we segment a portion of our trading results into the refining business because quite often indeed it is through the refining operations and the positions we can take that traders can make money, but then again, our traders also make money around shorts and the Marketing Businesses and make money in power businesses, they make money in the gas business, energy business, and these results are segmented in those businesses. Upstream results have trading numbers in them. That is why it is a bit difficult to say this is what trading does. It is also because trading does not do these things on their own. Those results are partly reflected within the results of the businesses themselves. You know goldman sachs, which does rate your stock a buy and was impressed with your trading profits as well as chemicals earnings notes that you had relatively weak performance in integrated gas. Why is that . Is that the effect of the pandemic . That is no surprise of course, that the upstream business and a large member ,easure of course denominated they have seen a tough trading environment. Upstream is negative. There is a lag effect. See the Oil Price Effect of the last quarter. There is a lagging effect. Businesses,at our we talk about trading being a unique equity. The best inn jewel, the industry, look at the integrated gas business, the best in the industry. The Marketing Business the best in the industry, so we have four crown jewels that do really well. They are not immune to the pandemic, but nevertheless, they show what a good portfolio can do. We talked about the earnings, but more importantly, you look at the cash. 6. 5 billion, which i think is a very credible number. Area we didnt discuss is your debt. We are above that comfort zone of 30 . Are you confident you will be able to get that back down . Ben it is relatively stable and im afraid i have to unpack the numbers a little bit for you. Mind, it is a number of effects. That debt has gone up. Impairment has an effect on the gearing calculation. The gearing is a very noisy number. If you look at the net debt per se, it has been capped relatively stable. If you take the working Capital Movement out, it has come down a little bit. So it shows that the very strong countermeasures that we have billion,eady, so 1. 1 1. 4 billion less cash, and less dividends going out of the door this quarter, that really is contributing to stabilizing the company and preserving our Financial Resilience that we are going to need in the years ahead. Let me ask you about your lng business, which you mentioned is very strong. The 36 month price lag is starting to show the effects of the pandemic. What i wonder is do you expect that to continue to worsen because those lag defects may continue to hit in q3 . Ben im afraid i have to agree with you, matt. Q3, the see in environment of q2. In some markets, it is better than q2. You do see industrial activity returning. Demandre a pickup in lng as well. It will be a tough trading environment. We have seen unusual price movements in the shortterm market with almost a convergence of price indices around the world. Q3 that will play out in remains a little bit unknown. It would be with a few opportunities again. To take advantage of. Annmarie very quickly, brent right now, 43, . 41, are you a buyer or seller on the price . A bit on both, i would say. I think it is impossible to call the market generically at this point in time. A lot ofeing still volatility. That volatility is caused by the sentiment. If i look at your website and see the news flow, we have alternating messages. Brent up, brent down because of that. I think it is reflective of the uncertainty we are facing. The world is still very fragile. We have to see how demand recovers. Supply is definitely in check. Very strong in q1. Lets see how underinvestment is going to catchup with the demand reduction. A the nearterm, i would say nearterm environment. I can say we will take advantage of that in the Second Quarter. Matt thanks so much for joining us. Great to have some time with you this morning. Ben van beurden is the ceo of Royal Dutch Shell after a surprise beat, a profitable quarter, and cutting costs quite well. Up next, some of the stock movers this morning, including ab invev surging after selling more beer than expected in the latest quarter. What else did you think people were doing when they were at home on lockdown . [laughter] this is bloomberg. Annmarie welcome back to Bloomberg Markets european open. 29 minutes into the trading session. Lloyds to the downside, down 6 as its profit was hit by 2. 4 billion pound bad loan provisions. Their sales, selling budweiser helping lift the stocks today. Credit suisse up, a beat on profits. A Sweeping Change in terms of their Investment Bank, reversing but the former ceo made. Francine spoke to the ceo this morning. Across thebeats board from Credit Suisse, really impressive. It is the estimate that matters. They beat the highest estimate on the top and bottom line. Astrazeneca has the capacity to of the 2 billion doses oxford coronavirus vaccine. At no profit for the drugmaker, they are willing to do that as an ultra stick thing for humanity. Altruistic thing for humanity. We will speak to the ceo next. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are over a halfhour into the trading day. Arrows,some big red the benchmark dax index falling 1. 6 . The cac and ftse are down less than 1 . Big drops across the continent and the u. K. Lets get the bloomberg first word news. Laura Federal Reserve chairman Jerome Powell is warning of severe economic downturn in a lifetime. His message yesterday was is dovish as possible, with the central bank holding rates near zero. Powell sounded a downward tone on the road ahead. The path of the economy will depend to a high extent on the course of the virus. Slowing inint to a the pace of the recovery. It is too early to say how large that is and how sustained it will be. Laura the white house is no closer to a deal with democrats over the next round of stimulus. They need to bridge the gap between the 1 trillion package and the 3 trillion package at the democrats passed in may. Millions about of work americans will have their stimulus set to run out. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt thank you very much. Astrazeneca is maintaining its fullyear guidance after earnings per share beat the average analyst estimate. The british drugmaker has said it has the capacity to deliver 2 billion doses of its covid19 vaccine worldwide. The experimental treatment it is developing with the university of oxford for promising results in early human testing, it is set to move into larger trials likely to determine how effective the vaccine is. Pascal soriot, ceo exec. Director, astrazeneca. I guess you are going for phase three trials. Likeder what enrollment is and what your expectations are. Pascal we are in phase 3 mode now. We have vaccinated almost 10,000 volunteers in the u. K. And we are vaccinating volunteers in brazil. That study will make it bigger. We have volunteers in south africa. About 2200 volunteers. We are about to start in the u. S. Morning. Good you said you do not want to make a profit from the vaccine during the pandemic. What about when the pandemic is over, what will your pricing plans be . Pascal our focus is to deliver the vaccine and deal with this. The reason we offered to do it at no cost, this is clearly an example of the disease we have globally. Everybody has to be vaccinated to be protected. We want to bring the vaccines to as many people as possible around the world at a low cost. Basis isne on the unit inexpensive. We have production around the world. We have 2 billion doses of capacity. Pandemic is done, the need for vaccines will be less, and we have to look at how we manage this. Right now we are focused completely on the pandemic. Matt you do not have any idea about pricing afterwards . Is relatively inexpensive to produce, but you pay for research and development. This is what you do. You make a drug and sell it to people who need it at a profit. No idea about what prices will look like . Our view is we will continue to provide the vaccine at low cost so people can be vaccinated. We intend to make a profit in the richer countries. Pricing will be appropriate across the board because we want people vaccinated. Low and medium income countries, we will make sure the vaccine can be accessed by everyone. Annmarie on both sides of the atlantic, there were reports about russian hackers. Were you a victim of this, and what impact has this had on your research . Pascal we have looked at this, and our systems are sophisticated. We had some of the best Cyber Defense you can imagine. We are in contact with the u. S. Have. K. Governments, so we not seen any signs that we have been hacked in the context of the vaccine. A firm in russia for many years. Companies will manufacture the vaccine for us for a number of countries. We have a good commercial relationship with them. If you were not hacked, i am sure you have intelligenceuch as you can on the hackers. What do you think they were after . What was their goal . Pascal i cannot tell you that. We have no evidence of hacking as far as we were concerned. We continue to be very careful. We watch out for any sign of hacking inner system. In our system. There is no evidence of this in our case. We have a relationship with russia. Our focus is to bring the world canther so that countries vaccinate people and deal with this terrible disease. Annmarie pfizer earlier this week said they are considering as phases of the vaccine they prepare the world to live with covid19 for much longer than people expect. You agree with that assessment . Pascal this virus has proven to be unpredictable. It is hard to make any prediction. If you listen to the experts and look at what is happening, it is stayy the virus is here to and come back. This disease could become a seasonal as the flu. The focus in the industry, Many Companies are developing a vaccine to control this pandemic. After this, it is possible we ,ill have regular infections but there will be several vaccines and we will be able to live with this virus. Treatmentso have that you are testing. How do you come up with the names . Story. It is a long is ag up with names complicated story. We are looking at the disease across many angles. The use for treatment to protect people for many months, we are hope can turn off. Keeps we are trying other agents which show tremendous results. We are trying this drug even though people who recover from covid have robbins with their heart and kidneys have problems with their heart and kidneys. That is definitely important stuff. I am sure millions or billions of people will thank you if you are successful. Thank you for joining us, pascal soriot, ceo exec. Director, astrazeneca talking about the progress on the virus, and treatments as well. Up next, Angela Merkels office over wirecard that could overshadow the 2021 election. We will speak with a bundestag member, danyal bayaz from the green party about an inquiry into the ruling coalitions involvement. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 47 minutes into the session and seeing losses across equity indexes, with the dax posting the biggest losses. Down 1. 6 in frank for now. In frankfurt now. Big loss for german companies. Volkswagen, the biggest heavyweight down after saying it will cut its dividend. Speaking of big losers, the biggest percentage loser today is wirecard. Yesterday, two senior german ministers faced a grilling over the wire occurred scandal wirecard scandal. Been the main target of criticism over government failures. If a wider probe is called for, it could last into 2021 and overshadow the early stages of next years election campaign. Joining us to talk about it is danyal bayaz, management consultant, german bundestag. For thisortant to say interview, he has a phd in finance. He is a great guest for us. Ask about the wirecard inquiry you had yesterday. With theatisfied information you got over the involvement in the scandal . Good morning. First of all, i think we are at the beginning and not the end of this inquiry. We had an eight hour session yesterday during the course of summer in a special inquiry because of the huge damage to many investors, but to the industry in general. Questions up a lot of to the ministers. Some are answered, but others are unanswered. We need further sessions to , aar how can a mistake scandal of that size happen . We have many other questions to ask the government in the coming week. We are at the beginning of the inquiry. Need do you think you will a special investigation into this issue . This would take a lot of time and cost a lot of money. This is the dilemma we are facing. When we open up a special inquiry, this will take months to get it kick started. The elections are coming up next year, so the timeframe that remains is small. Summer isinquiry over to get quick answers, and that is what we need in the current situation. At the end of the summer, together with other parties of , if we need a special inquiry, there are many opened upthat are not. They are confidential. We need access to get a better picture why this has happened. In the sessions we are currently having, we need to focus on a special inquiry where we will ask the ministers and many other bureaucrats and auditing firms why this happened. The chances the committee is coming has risen since yesterday a lot. Matt it presents a political problem because in the past when mainstream parties have voted on the same thing or in the same , it creates a firestorm. It would look like the greens are allying with the afd. Danyal this is not the case. Democratic opposition, the leftwing party, the liberals, the greens. The three of us have enough power in parliament to set up a Committee Like that. There is no cooperation necessary with the afd. The greens will never cooperate with them. As i get from my colleagues from the leftwing, they feel the same way. We as the democratic opposition will find a solution together without the rightwing populists in the special case, which is an important signal to the public at this point in time. Matt thank you so much for talking to us about wirecard. I look forward to having you on again to talk about green esg, itnts, esd, would be a fascinating confirmation. Danyal bayaz, management consultant, german bundestag. Somext, we will bring you of the stock movers, including ab this is bloomberg. Annmarie welcome back to Bloomberg Markets european open. 55 minutes into the trading day, a weaker European Equity market. A number of big movers. Airbus is higher, they cut back on the widebody jet production. The ceo says it will be a long and slow recovery. Strazeneca up Second Quarter earnings beat estimates. The ceo says covid may be here to stay similar to the flu. 7 , more beer drinking during the pandemic, more beer sales. Matt absolutely, that was to be expected. Speaking of beer, german july unemployment falling, the numbers coming across the terminal. 18,000, we were expecting an increase of 41,000. That is good news for an economy that will take the smallest hit of the major western economies in the Second Quarter. We had incredible interviews still to come on numbered surveillance. Francine lacqua will speak to the ceo of airbus, guillaume faury. She will also speak to the ceo of renault. This is bloomberg. Whatever it takes, the fed leaves rates near zero. Powell thousand to support the recovery. To support the recovery. The largest plane maker burns through 5 billion in the quarter as it waits a collapse in demand for new aircraft. Shares rise after an overhaul of the Investment Bank. We will bring you our iteie