Jes staley says lets get back to the office. Morei think the banks are of a pressing concern, absolute critical. If you think about the advantage that sector needs to make, the changes in diversity, in terms of gender and race, Corporate Culture really important in a bank as well when dealing with risk. All of these things, i can understand why he wants to bring people back into the office. I suspect it is going to be a little more flexible bringing everybody back to the 9to5. Tom Credit Suisse flexible as well. Francine lacqua in zurich. We will get her in the hour. With our first word news in new york city, here is ritika gupta. Ritika negotiations resumed saturday on a compromise Coronavirus Relief plan. Areblicans and democrats nowhere close to an agreement, under pressure because of people losing Unemployment Insurance this week. A stopgap measure would extend those benefits. Federal reserve chairman Jerome Powell calls it the most severe economic downturn in our lifetime. Powell says policymakers promised to use all their tools to support the recovery. Interest rates were left near zero by the fed. Powell says plan for the worst and hope for the best. The number of americans killed overe coronavirus has gone 150,000. California, florida, and texas waves appear to have leveled off. And a record slump in the second quarter, output falling 10. 1 , the most since germany went to quarterly gdp report in 1970. Coronavirus restrictions, exports continued spending, and investment indicated signals that growth has returned, but unemployment remains high. Global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i am ritikantries, gupta. This is bloomberg. Guy . Tom . Tom thanks so much, richie go. Equities, bonds, currencies, commodities. We are going to get to kit juckes here. It is about equities, about bonds, bonds, bonds. All you need to know is that yields come in with a vengeance and continue to grind down after the Powell Press Conference. You see in the 10year,. 55. Fiveyear yield out to record low as well. You really see it in the inflationadjusted space, however you want to measure that. Guy, to me the yield story is front and center. Guy absolutely. It was interesting to see that powell did not stand in the way of the weaker dollar. We have a stronger dollar, and you can certainly see that in eurodollar. Trading at 1. 1739. A huge earnings day in europe. We had german cd german gdp to contend with. Unemployment better than anticipated, but the Banking Sector we are focusing on, yesterday you talked about jes staley. Our clays painting a grim picture barclays painting a grim picture for the u. K. Economy. Airbus out with better news this morning. The company is trying to manage its cash flow position very, very carefully, and it is talking about a pickup in deliveries in the second half of the year, which will help that cash flow. The fed is absolutely front and center. The Federal Reserve bank used all of its tools to support the recovery from that economic downturn. Jerome powell. Speaking about the road ahead in that virtual news conference. Tom absolutely, it has been a huge exchange. We are told to do what we can and as long as it takes to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy. The path of the economy is going to depend to a very high extent on the course of the virus, on the measures that we take to keep it in check. The data are pointing to a slowing in the pace of the recovery. But i want to stress, it is too early to say both how large that is and how sustained it will be. The rising joblessness has been especially severe for lower wage workers, for women, and for africanamericans and hispanics. The fiscal policy actions taken thus far have made a critical difference to families, businesses, and communities across the country, and it will take continued support from monetary and fiscal policy to achieve that. The Federal Reserve has been taking broad fiscal actions to support the slowing in the economy, for households, for businesses large and small, and for state and local governments. These are lending powers, not spending powers. There is great uncertainty about the development of therapeutics and vaccines. All of us want it to happen as soon as possible, but we cannot plan on that. We have to hope for the best and plan for the worst, i guess it goes. Lots to unpack in there. Kits dig in and get juckes joining us now to help us with that. Lets kind of work our way through it and see what the dollar, first of all did Jerome Powell further dollar weakness last night . Nothing to what did we expect him to say other than what he did say . There is a lot in the price. My concern is about the dollar and the amount it has gone down recently, probably sent around the fact that august is illiquid and dangerous for markets and has been for a long time, and that is not bad for the dollar, and the market has now got a pretty solid bearish consensus sitting here. Inthe dollar is still here september, i will be selling it again with enthusiasm. Right now, i want to sit back and be where of volatility. Tom kit juckes, we usually talk with you about foreign exchange. I want to shift to the fixedincome space. It is real simple. The bond market is speaking and speaking in volumes. There is an assumption that the United Kingdom can avoid negative rates. There is certainly an assumption that the United States can avoid negative rates. The market is testing that right now, isnt it . Kit for sure. The trouble with negative rates is that they are in nobodys plan. Plan until they are punched in the face, and this pandemic is punching policymakers firmly in the face. You cannot rule it out. Wisenk the u. K. Would be to do everything they can to avoid negative rates, given the size of the current account deficit, the position of the currency at the moment here. Would avoid from Different Reasons from the United States, but we may have to find something that we can do. It becomes a question of diminishing choices. No one is going to take negative rates completely off the table. Tom what i find interesting here is the idea of a europe that instituted negative rates before the market caught up. That is one theory, one idea, versus the market directing central bankers toward policy. Is the market going to tell them that you have to avoid negative rates . Are we days or weeks away from negative rates in the United States . Really testing the central bank as an institution. Kit we are not quite there yet, but when nothing else works, the people who get negative rates first are ones with big current account deficits, who were doing it in part to force money out of the currency and weaken it in japan and europe. That was one of the means of easing Monetary Policy further. It needs to attract foreign capital. In the United States, you could easily have negative rates from the perspective of it could weaken the dollar. Im not sure policymakers could complain. The problem in the states is a more mundane one that they want to resist because the money market funds are so important, and it would damage the plumbing of the financial system. We have already seen since march how vital it is that we keep the plumbing of the u. S. Financial system, or the dollar system, working properly. I come back to it. If god for bid we get a nasty second wave globally that really sort of started impacting Economic Growth in september or october, Central Banks are going to be looking and fiddling around with what is left in their toolbox and seeing what they can do. Guy if the signal that i should be taken from negative real rates in the United States, the market doesnt believe that the current stimulus plan is going to be enough. Kit i think we could start off with the fact that there is a chronic shortage or in excess of demand of safe assets and the has aa monopoly of large part of the worlds safe assets. If you have got people who need safe yield, they get pushed involuntarily into driving these levels. I dont think it says something about expectations, it says something about the state of the world that we find ourselves in today. That does not mean it does not add implications. It has implications for gold and implications for what nominal yields do. I think it tells you that we still have a problem, when we all look for cover and when Central Banks are buying safe bonds, we want to buy the safe bonds. Tom kit juckes with us, and we will continue. It is an extraordinary bloomberg data screen right now, particularly in the rate space. ,. 1230. Year we have a terrific lineup today of wonderful conversation. Kenneth rogoff of harvard will join us in the 6 00 hour. Please stay with us, from new york and london, this is bloomberg. Tom bloomberg surveillance. Guy johnson in london, tom new york. Public service announcement, maybe more than any other time in my time at bloomberg, do we need to explain the absolute craziness that europe calculates gdp than the United States . This is going to be everywhere today all the time. Europeans will say they created create it correctly, americans will say greenspan was right, we do it this way. U. S. ,ualized gdp in the apple is in what, q. Week apples and what, kiwi . Apples and potatoes . You cannot compare the two. It is done on an annualized basis. Youre scaling one up to the other. 36, according to a round 10 drop in the u. S. Economy on an annualized asis, which is kind of comparable to what we are seeing out of germany. Am i am going to guess about see in thewhat we United States today. After that math exercise can but kit juckes is about ready to walk away from the camera. He joins us from socgen. I hope we did not embarrass ourselves. I want to talk about turkey. I brought it up for the last couple of days. We just had a seven print on the u. S. Dollarthere a. Close is turkey to unraveling . Kit pretty close, i would say. The problem that turkey has is twofold. One is they have much less foreign reserve protection available than many other countries, so they dont have much ammunition left to help currency. The second is, with the credit stimulus that they have been giving the economy recently, the danger is that there balance of payment is deteriorating, and you dont see it so much with the economic downturn. Those two things together make it vulnerable. The guys at the iif have done a really good job on plumbing some of the flows. There are good reasons to be nervous about what happens next for the lira. Tom talks about turkey unraveling. Tois getting pretty close being very, very sort of difficult for turkey to manage its way through this. Almost impossible. Int did the crisis look like turkey, and what does it mean for the rest of the International System . Kit the problem for turkey is that it is dependent on foreign capital. The problem of a pandemic is that it makes capital stay home, so we say we see already the market economies that depend on foreign capital south africa, brazil, turkey are three good examples of it. They have had strains at various points this year. The turkish lira has been holding up pretty well, and it is coming up under new pressure. The danger is that you cannot get foreign capital if you cannot get foreign capital to protect your economy, it limits voluntary pot it limits Monetary Policy and you are forced to have restrictive fiscal policy to get payments in the right place, and that deepens your economic downturn. That is the world of difference between them and the countries that can engage in quantitative easing, negative rates, all the stuff that we are exploring at the moment to offset the pandemic. The impact of the pandemic. It is a very clear example of the vulnerability of countries that rely on foreign capital at a time when the world is not working properly. We couldess maybe think about the systemic effect may be working through the diplomatic channel or the geopolitical channel. Obviously this is a company that sits at a key nexus in a region that is highly unstable. It will be interesting to see how president erdogan reacts to the financial crisis. Kit juice, thank you very much indeed. Kiting us to give juckes, thank you very much indeed. Coming up in the next hour, we will continue the conversation on the dollar. Jeff currie of Goldman Sachs is the global head of economics research. Concern about the dollar dominance that we have all of our lives. That conversation coming up at 6 30 a. M. In new york, 11 30 am in london. Im looking forward to it. This is bloomberg. Guy im guy johnson in london with tom keene in new york. Lets talk about what is happening in the aviation sector. Yesterday boeing, today airbus, paring back widebody jet production. Out as it basically wakes the collapse in demand for new aircraft, the worlds biggest plane maker seeing delivery slump in the second quarter. I spoke to the companys chief executive. In the second quarter, we have completely adapted our Production System to what we think is the new environment, and we have reduced comer for ac 20 familythe from 60 per month down to 40. We are adapted to the new situation and we will react to it he with our customers, with airlines around the world, to understand what is the right calibration moving forward. Isthink this 40 a month appropriate for us for 2020 for probably the vast majority of 2021, and we are awaiting signals from the alliance from the airlines and from to understand when things will recover. We think there will be recovery. It is very likely. But it is logical to assess at the moment when. That is where we are today. We are navigating for a situation with a lot of uncertain date and changes, and we have put our foot on again by adapting the company, by resizing, adjusting production rates, by adapting the supply chain as well to this new difficult environment. Guy you said today that you are looking to get the business to a position where it is neutral on cash in terms of the burden as we look at the second half of the year. Deliveries are a key part of that. Itn you how realistic is to get to a neutral cash flow position, given the operating environment that you just described . Have ahe end of h1, we large number of planes already to deliver but not delivered actually because of the situation with the airline and the customer. We have 100 45 planes produced, not delivered. It is very high. We think we will manage to produce it significantly in the second half of the year. This will contribute to the balance in cash flow that we are contemplating. It is an objective because there are a lot of uncertainties. We are making Good Progress on the new delivery schedules, the amendment to the contract we have with our customers, and we are gaining visibility when it comes to the second half of 2020 and 2021. That our we can share objective is to be cash flow neutral before customer financing on the second half of tonka guy johnson with tom guy johnson with great skill. There are differences between boeing and airbus, to say the least. One of the things we have been doing on surveillance is a lot of good conversations with virologists, with epidemiologists, on this horrific pandemic. Part of it is the apparatus that will be used forward given a recovery finally out of this terrible disaster. Stephan sturm with fully sandias with fresenius. We do that next. Businesses are starting to bounce back. But what if you could do better than that . Like adapt. Discover. Deliver. In new ways. To new customers. What if you could come back stronger . Faster. Better. At comcast business, we want to help you not just bounce back. But bounce forward. Thats why were helping you stay ahead and adapt with a network you can count on, 24 7 support and Flexible Solutions that work wherever you are. Call or go online today. You say the customers maklets talk data. S. Only Xfinity Mobile lets you switch up your wireless data whenever. I accept. 5g, everybody is talking about it. How do i get it . Everyone gets 5g with our new data options at no extra cost. Thats good. Next item, corner offices for everyone. We just have to make more corners in this building. Chad . Your wireless, your rules. Only with Xfinity Mobile. Now thats simple, easy, awesome. Switch to Xfinity Mobile and save up to four hundred dollars a year on your wireless bill. Plus, get two hundred dollars off when you buy an eligible phone. London, johnson and earnings beat estimates, helped by the performance of the , still this German Health care company has decided it will cut its guidance outlook, the ongoing pandemic a factor behind that. Stephan joins us now with insight. Thank you for your time. Lets talk about what is happening in the business. I am curious you felt the need to reduce guidance this morning. You are a company with great insight into what is happening in hospitals. I am wondering what you are seeing in medical institutions you serve. Stephan good morning. Thanks for having me. Technically, this has not been a guidance cut. I need to point out when we were provided original guidance, end of february, we made a clear this was without covid effect at that time. Covid was a more regional phenomenon out in china. This morning, we have updated guidance to include all covid effects we estimate for the remainder of the year. I would point out covid impact for us as a group is relatively benign. Difficult to accurately quantify covid effects. According to estimates at the half year mark, we would have been excluding covid more toward the top end of our per guidance. Provided it is obviously a dichotomy between dialysis treatments, you very clearly have no choice to have dialysis or you die. On the other hand, elective treatments, the bread and butter business in our hospitals in germany and spain, there, primarily because of government instigated shutdowns, when we exclusivelyorced to focus on covid patients, we are looking at a footfall and admissions r