How well it weathered the shock of the coronavirus. A blowout performance in fixed income trading beating all but one of the large wall street banks. The cfo does not see an economic recovery anytime soon, though. There is a pickup in activity. It is stronger in some. Said, you should look at the whole world. Level,it is back to the we dont think that will happen until 2022. Nejra lets get more detail on those numbers from bnp paribas. That trading we are talking about, it surged 154 , trailing only Morgan Stanley out of wall street banks. It was a blowout performance of b. N. P. Paribas in fixed income trading. It allows the lender to move past embarrassing losses from equity derivatives at the start of the year. Basically what bnp paribas has said about that jump in fixed trading, it said volumes were driven by governments and corporations selling that to deal with the Coronavirus Crisis as well as Foreign Exchange and commodities, hedging by clients. Those results more than offset what was a decline in equities trading. That came in worse than analysts expected. The bank navigated what it called a Challenging Market for derivatives and lower volumes in the business with hedge funds. Ceo was asked it would maintain guidance in a surge of coronavirus. This is the range where we anticipate there will not be a second nationwide lockdown. Not nationwide. If you look at the results of this quarter, it is in line for us. Your fixed income activity was obviously buoyed by the extension of volatility in the market. 154 , are you worried these exceptional markets will be less supportive in the coming months . If you look at it, indeed, there have been high demand because institutionals, but also corporates, sovereigns, were active. Abovelumes were probably normal. However, as we are able to serve customers because of our strong financials, of all the services a have, we have been taking market share in those activities. Clients new and old is something we anticipate having in the second half. 11. 8 , that is worse than our estimates. Do you anticipate a recovery there . , the impact of that lockdown particularly in april, somewhat in may, if we look at the activity, the number of activities, for example, credit, prior transactions, it basically tapers out again to even levels which are precovid. That means the run rate would be as we said, clearing up to the normal. To the precrisis debt before mid2022. A pickup in activity. When do you anticipate full recovery . There is a at pickup in activity. Dynamic you see. As we said, if you look at the overall pickup, we fear before it is back to the level three, we dont think that will happen before mid2022. The ecb recommended to hold dividend payouts until the end of the year. Is bnp paribas willing to follow this recommendation . Supervisory authorities extended the recommendation not to pay dividends. Course, one assumes that when the environment does not thiser deteriorate, recommendation will not be extended. At that moment, there is a return to normal meaning the regulatory moves are applicable please precovid. Be able to return to plan dividend policy. Bnp paribas anticipates over 2022. O 50 that was the b. N. P. Paribas cfo. Second quarter provisions lowerthanexpected. Bnp also confirmed a 15 to 20 fullyear net income guidance. Lets get to the markets. Yesterday weve got new meanings for the phrase, a beat across all Big Tech Companies versus what we learned on u. S. Gdp and jobless claims. Read on the screen. That is because japan and australia are largely weighing on the msci asiapacific index with those stockmarkets, posting a little bit of red based on coronavirus developments. Futures in the u. S. Getting a lift from tech earnings. S p futures muted. Nasdaq futures outperform. European futures edging into the green as well. The 10 year yield and the dollar bore the brunt of the Economic Data. The dollar is at a more than twoyear low. The 10 year yield continuing its slide to a record low. Gold bid after stumbling a little yesterday. Americas biggest Tech Companies saw their earnings surge during the pandemic while the rest of the economy is being hammered, Quarterly Results from apple, amazon, facebook, and alphabet show the industry is capitalizing on the crisis as consumers turn to tech for entertainment, shopping, learning, and work. The companys reported revenues of 206 billion, a net income of 29 billion in the three months ending late june. Joining us for the hour is a fund manager at schroders. Thank you so much for joining us this morning. Did the earnings yesterday for come tech stocks basically in as a slap in the face, a bubble warning on tech . Not exactly. Not exactly what we expected given, as you mentioned, a lot of Tech Companies are benefiting from the current situation. They are the primary beneficiaries as they turned the primary beneficiaries of lockdown. These companies, we believe in this post pandemic, they may continue to deliver. Tech, when you look at how are you approaching it . Do you take a selective approach versus individual stocks that have more Growth Potential and more fundamental support of their valuation . Or are you buying into indexes . What is your exposure to tech stocks . Remi that is a great question. , with regards are to how well technology has done, how well the nasdaq has done, it is time to move away from the indices. Territory. Ubble positioning is extreme. It is time to move away from that. I like to use the word growth at a reasonable price. We might have to adjust what reasonable means in this environment. There are some in a good position that can continue to grow there revenue. Anna in nejra in terms of those companies would you be more interested in tech stocks that are set to benefit from this post pandemic world of people working from home more . Or those that benefit from social distancing . Anything like that . Or are you looking at other themes . Remi this new world with facil distancing, these companies that benefit, it is are afflicted in their earnings. Software, look at looking at the companies that have something different. Companies that are likely to disrupt. Thatintech world, what is disruption with regard to financial . , the looking at tech nasdaq has done very well, but what about asia, the em world . There are other ways to capture the feed without focusing on the nasdaq. Nejra so what you say you have a preference for capturing the theme away from the nasdaq . Would you still keep exposure to the big tech in the u. S. While also diversifying with other stories in emerging markets . Maybe even in europe . Absolutely. Bubble, the in a momentum is very strong for the nasdaq. If you needjustify a good time to diversify. There are takeaways to capture the theme outside of the u. S. It is really more about diversifying rather than letting go here of the nasdaq. It is time to diversify. Even more importantly, em is technology, quite attractive here. Lets get to the first word news in london. Has raised the idea of postponing the president ial election. He tweeted, ballots should be delayed until people can safely vote. This is something he does not have the power to do alone and would need the backing of congress. Mitch mcconnell says the election date is set in stone. The u. K. Has raised lockdown restrictions across the north of england. Greaterimpact the manchester and parts of yorkshire. People will no longer be able to meet indoors with other household area chinese president heping is calling for told a politburo meeting china should focus on boosting local output. As part of a socalled circulation model to reduce reliance on the international economy. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Nejra u. S. Gdp crashes. The American Economy severs its sharpest downturn since the 1940s. Next, how the pandemic has ravaged businesses across the country. Nejra this is bloomberg daybreak europe. Lets get a look at the risk radar. Coronavirus concern dragging the benchmark in australia, weighing on the msci asiapacific index. U. S. Futures getting a lift from tech earnings. Green on the screen from european tech. 10 year yields sliding toward a record low. The dollar at its weakest in more than two years. Oil in the green. The u. S. Economy suffers its sharpest downturn with since the 1940s. Gdp shrank nine point 4 in the Second Quarter from the first, an annualized pace of 32. 9 . The figures laid bare the extent of economic devastation that has resulted from the Government Shutdown and highlight the need for urgent distraction. We had a very big hit in the first quarter. The 32. 9 contraction in gdp is another continuation of what a big blow the Global Economy took. Aboutis what it told us the sheer scale of the stimulus that happened in q2. The fiscal response is to keep things moving until there is progress. We think that is a comparatively balanced case. If congress does nothing and let those rolloff, you are going to see a sharp contraction. Youre going to see a significant pullback in consumer spending. You are going to see a worsening of the Economic Outlook. Yes, if the situation worsens, we see economic down tech. It is almost inevitable. More stimulus, which we have incorporated at the order of 1. 5 trillion, if that is not coming through, that would lower our expectations for q3 and q4. If we do not get fiscal action, we will go backwards. Remi, we actually saw 10 year yields move yesterday. They have been fairly steady for a lot of data. The jobless claims because more concern rather than u. S. Gdp. We head toward a record low on the 10year treasury yield. Does that give you more conviction in holding u. S. Treasuries right now . Yes it does. U. S. Treasuries, the potential return of the moment, i think the key issue is u. S. Treasury support and the claims data, we are expecting data to be week because of the rollback. The next couple weeks and months, treasuries are still a good asset to own, a good defensive asset. I think fed chair powell was very dovish the other day. It is very supportive for treasuries as well. Nejra do you expect the dollar to find a bottom soon . That is a good question. Stronglar was stubbornly months ago. Reflectar really does u. S. Growth concerns, particularly around the increases in infection rates in the u. S. The dollar isor whether that turns to the rest of the world. In asia right now, the virus picking up, the likes of japan, australia, that is a concern. Infection moves away from the u. S. , if it stabilizes in the u. S. , that could hold this decline in the dollar we are seeing. What is your base case for how the u. S. Recovers for the rest of the year . That it really depends on the virus, the trajectory we are seeing at the moment. Our base case is that things stabilize, the infection rate start to stabilize. I do not want to start celebrating yet. If we start to see that stabilization, we do think growth projections in the u. S. Can continue to improve. Yesterday, that is the worst we expect. The rate of that recovery has to be adjusted. We expect the rate of recovery to continue from here. In terms of equity markets, i know you see more attractive opportunities elsewhere other than the u. S. We will talk about that. But if we see the u. S. Market, we were talking about tech earlier. Is tech your preferred Industry Group exposure if you see more growth as the pandemic continues . Or are there other industries you are favoring in the u. S. . Remi in the u. S. It really is a tech story. What is really our base case . Our base case is we can only see a vshaped recovery if a vaccine comes through earlier than expected. The v is related to the vaccine. That, we resume the trick trajectory the trajectory we are in at the moment. That is an environment of slow growth and deflation. An environment of excess liquidity. That favors those companies that are able to grow their earnings in an environment where growth is down. Our base case is still tech, which lends itself to the u. S. We see that vaccine come areas have value on their side. That would be very good for industrials, for materials, for energy. Financials, that should be good with financials. The problem is the Financial Sector is also very exposed to the implications of the lockdown. Vaccine, weo see a are likely to see more of that. Nejra chinas domestic recovery continues. The Manufacturing Outlook improved in july. Nejra this is bloomberg daybreak europe. We will get data from the euro area with gdp and inflation. Analysts expect the economy contracted by a staggering 14 in the Second Quarter. We will get inflation for italy. , another bigfigure day for earnings in the u. S. , exxon mobil reports before market, and on the auto front, Fiat Chrysler is expected to post Quarterly Results. Chinese president xi jinping calls for a greater push on reform to stimulate domestic demand. That is as the economy continues its steady recovery from the slump. The out earlier today show Manufacturing Outlook improved for a second month in july. Thelooks good for manufacturing pmi. Whiche nonmanufacturing, is in positive territory. The underlying employment numbers, not looking so great. Do you have confidence xi jinping is going to boost the domestic side of things in china . Anything can happen. It is possible. It is just, how quickly can that happen . That is the question. The employment picture impacts confidence. That confidence needs to come through. Ishink that willingness supportive, the willingness to do so is questionable. How quickly it can happen what we are seeing across the world is just a big hit in consumer confidence. Employment figures, understand how that can happen. Have in equity if you upgraded china. How are you expressing that . A question about active and passive. Em in china are very interesting areas, particularly improving manufacturing, strong activity, also a weaker u. S. Dollar. It tends to provide tailwinds for those areas. Chinese equities have done very well this year despite the issues we have had with coronavirus. It really is about being active. That is how we are expressing that view. Taking an active approach. Ising up on the show, what the Coronavirus Impact on euro area economies . We are about to find out from secondquarter gdp data from the region. European futures position positively along with u. S. Futures. U. S. Futures giving up gains right now. The nasdaq futures still outperforming. Nejra good morning from london. This is bloomberg daybreak europe. Big tex gets bigger. Google thele, and street. Those results push u. S. Futures higher after the s p closes in the red thanks to a record downturn in gdp. Growth figures out of europe will reveal how well it whether the economic shock of the coronavirus. A lowerbas reports performance in fixed income trading, beating all but one of the wall street banks. The lender does not see economic recovery anytime soon. There is a pickup in activity, it is stronger in some, slower in others. Said, we fear before it is back to the level, we dont that will happen before 2022. Nejra welcome to daybreak europe. Tech earnings plus Economic Data out of the u. S. Highlighted that phrase that has been coming out more. The stock market is not the economy. More specifically, tech is not the economy. If we look across the asian session, we are seeing read on the screen. That seems to be largely because japan and australia benchmarks are weighing on the asiapacific index with coronavirus concerns. Theires have given up gains. They are reflecting more the concerns around the u. S. Economy, whereas nasdaq futures are outperforming, up 0. 7 . Green on the screen for european futures. Now, the 10 year yield is heading toward a record low, roundabout that 51 handle. Continuing the slide on a 52 handle. We saw that reaction, both to jobless claims at u. S. Gdp data, and the dollar bearing the brunt of that painful data out of the u. S. At its lowest in more than two years. That techseems to be is outperforming the rest of the economy, perhaps more concern for investors. Gold on the front foot after taking a break from its nineday rally yesterday. In terms of the economy, we are looking ahead to data from europe. The French Economy shane shrank 13. 8 . The estimate was a drop of 15. 2 , so not as that is expected. Still a significant drop. Italyk ahead, spain and contracted at least 15 while the euro area reading is set to show a 12 slump because we are looking ahead to that data. We talked about the u. S. Data yesterday. If we look at equity markets, you dont have such a preference for the u. S. Equity market. Europe remains your preferred developed market. Is that based on europes recovery outpacing the u. S. . Is that your base case . For the time being, we favored the u. S. For many years. We recently shifted toward europe about two months ago. , the preference in europe is based on the way europe has handled the coronavirus. The consequence, improvement with regards to the coronavirus should be should lead to faster recovery and growth. The european recovery package is very supportive, particularly as we see week data coming through. Data, wehe weak growth expect it highlights the need for that recovery package. We think this should give europe opportunity to outperform. Nejra what does that mean for the outperformance of credit markets versus the u. S. . Are you making a distinction between ign highyield . Make a distinction. Side,vement on the ig from a valuation point of view, there is not a valuation distinction. Think european credit is attractive, both ig and highyield on the basis of what the central bank is doing. Alsoey difference is composition. The sectorial composition gives a little bit of a lead. It is slightly higher quality. If you combine all of that together, europe has a little bit of a lead in terms of its credit market. You mentioned fiscal packages. I wonder which fiscal packages you think will prove more supportive in terms of labor markets. Anare still waiting for agreement on the u. S. Package. Do you think by the end of the year the support of the labor market will prove more effective in europe than the u. S. . Have ise challenge we we dont know how long we are going to be in this current state. The package in the u. S. Is supportive for a slump in recovery. The package in europe is more supportive if we continue to be if this virus lingers on. It is a question of timing. The u. S. Is naturally more optimistic with regard to the outlook. If the virus situation does not linger as long, if we get a vaccine, the package in the u. S. Is more supportive for a recovery with people getting back to work, with companies reopening. Europe, it really supports a lingering impact of the coronavirus. It is really a question of timing. Nejra interesting. Thank you so much for joining us. Great to have you on the show today. Now lets get to the first word news with nora right in london. The economic rebound in the u. S. Shakier. Gross domestic product shrank the most on record, a massive 32. 9 when annualized. The labor market is showing further sign of strain. The number of people continuing to claim Unemployment Benefits rose. Talks in washington over a new relief package are making little progress. Senate republicans are planning to vote on extending stopgap unemployment insurance. Democrats say measures must be part of a comprehensive plan. If it fails, it gives republicans a chance to say they tried to save jobless aid before it expired. The u. K. Has reimposed lockdown restrictions across the north of england. The announcement comes as the government says some residents have been failing to adhere to social distancing measures. It applies to lancashire and west yorkshire. They will no longer be allowed to meet indoors with people from other households. Global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Thank you so much. Coming up, big tech gets bigger. 206 billion in sales. It puts the sector in spotlight. More on tech earnings next. Nejra this is bloomberg daybreak europe. Read on the screen in asia. We saw a rally earlier in u. S. Futures you might have thought would translate into asia, what has been weighing on the benchmark, u. S. Futures giving up the gains now. Nasdaq futures still outperform following the tech earnings. European futures turn into the red as well. Maybe it is the concern around the economy. We look ahead to more from europe. A 10 year yield heading toward record lows. Jobless claims data, the bloomberg dollar index at its weakest in more than two years and gold catching a bid. Now, Quarterly Results from apple, amazon, facebook, and ofgle, basically, the group tech stocks thriving during a pandemic, only increased pendants on their products with a combined profit of 30 billion, the result of the group in the spotlight. Beats across the street. What did we learn below the surface . This is so remarkable. These Companies Generating billions of dollars showed us how well and how resilient their businesses are, how they can thrive during the pandemic. Definitely the biggest earnings sales figure coming from apple with a net profit of over 11 billion. Really sales did very well with their timing releasing a cheaper iphone product. Amazon, we knew those figures would be good considering the shift to online shopping. They showed a sales increase of 40 yearoveryear. Rounding out, we have the advertising giant facebook, Advertising Sales growing by 10 . Google did not do as well, people are spending less considering they are hurt by the lockdown, so google ad revenue falling by 2 , but still handily beating expectations. Thank you so much. Joining us now is an Equity Analyst at hargreaves lansdown. Before we get into individual stocks, on a headline level, is this growth you expect to continue for the big four . You are absolutely right to point out that growth has been pretty phenomenal, to be honest. What we are seeing is ultimately, the pandemic has boosted the tech giants. Operationally, i would like to point out supply chains and services have held up really well. That is what has surprised me to be honest. Sustainability of this success, thats going to be looked at on a casebycase basis. If you look at Something Like apple, looking forward, you want to be looking at that Discretionary Spending and how people are feeling there. Facebook, we are going to be looking at advertising revenue spending. I would argue they are really wellplaced with digital rather orn relying on billboards expensive tv ads. I think they are in a really good spot to take this boost and run with it, to be honest. Nejra interesting. It is also interesting because you talked about Discretionary Spending, but what some people have been commenting is that these tech giants through the pandemic have become consumer staples. If we look at the products, lets look at apple for a second. Which part are you most focused on to make a judgment on whether the Growth Continues from here . Fundamentally, this is really a mixed bag. It is very strange we have seen. Hat knowng ahead at apple we the se model resonated with customers, but it was also about half the price of a normal iphone. If we look ahead to the iphone 12, for example, thats going to be for me a real kind of cornerstone about how successful apple is at managing to keep spending at elevated levels while the Economic Outlook looks pretty shaky. Key point. A really on facebook as well, you talk about sort of potential challenges or red flags to look out for. The social political pressure they are under. In general this is something a lot of these firms are facing pressure for, pressure for thriving during the pandemic when the rest of the economy is struggling. Are those challenges going to weigh facebook down . Minde thing to bear in when we look at this topic is that this is not the first Time Facebook has faced a regulatory speedbump. It is not my place to say right now whether they are simply too big. That judgment is yet to be made. You i can say is that if think about this from a really kind of toplevel, facebook has incredibly deep pockets and trying to cooperate with authorities. It will want to do that, protecting the average revenue per user over the longterm, it needs to make sure its customer base, its user base, that it is doing the right thing by them. Right now, it is too soon to say. I think i have faith that this will not derail that story. Nejra talking about the investment case, do you still have a lot of conviction investing in these companies . Is there anything that might change that view . As i said, they are doing incredibly well right now. Particularly, you look at facebook. It is still an incredibly highmargin successful company. There is a bit of a headwind at the moment. Spending is slower than ideal. It is really well priced wellplaced to capitalize on the shift we are going to see in where advertising channel spending is going. I still have a lot of conviction there that if facebook is prepared to wipe out these kind background,in the there is a lot of opportunity. The same with apple. They have proven they can continue to pick up these next generations of great products. The only thing i will be watching out for their that i would hold off on his i want to see how the iphone 12 resonates. Thats going to be important. Nejra absolutely. Thank you for joining us. There is a new bill in town. The gop and democrats agree stimulus is needed, but not on how much. We look at those left behind and what needs to change. The world is waking up. We have to take a look at grace. Our objectives on diversity. From agenda and from an ethnic perspective. Internationalism, the centerpiece developing women from the early stages of their careers, bringing women in where we have the opportunity. It would be a dream of mine to have a woman or somebody from a minority background to be my successor. Energy is thethe best way to provide. What we have to do is make sure we are focused on the culture and the values of the bank and on our efforts to make our employees feel safe and comfortable and welcome inside the walls of barclays. We are taking real action in. He development of our talent i think Society Needs to respond robustly. Nejra that was a number of executives telling bloomberg how they plan to address the issue of diversity in their company. Let us turn to the economic inequalities in the u. S. The gop and the democrats have a new stimulus bill that is a massive golf between the parties on how much they want to set aside for relief. 2. 5 trillion white to be exact. The package ranks among the most aggressive in history, but did not reach everyone. Race were disparities by and ethnicity in terms of who received the money. Black people were a large proportion of those left behind and it is reinforcing longstanding economic disparities between largely black and white neighborhoods across the u. S. Jennifer, athis, really important topic, thanks for bringing this to light for us. What was the problem with that the last bill . Exactly stood to hurt the most . Disbursement was historic, but so many people are reporting they never got benefit payments. Bloomberg calculations found out state unemployment agencies are so backed up with claims that more than 100 billion of benefits owed still have not been paid. People are still waiting to get their initial payments as negotiations for another stimulus fell off. Many of those people are black and brown and many of them are black owned Small Business owners. That is just a few of the issues with the previous bill. There were a number of issues with the payment protection program. Many have been reported. Some of the unimportant unreported issues are the fact black Business Owners had a problem applying, some black Business Owners who had served in prison were excluded from the benefits altogether, and many others were flat out getting denied for these ppp loans. Other larger corporations were getting through theres. If you take that into account, plus the fact black people started the pandemic further behind economically, and the disproportionate impact of covid19 on minorities, this is turning a situation even worse for black and brown communities. Jennifer, the fact that you were talking about a lot of black businesses not receiving the aid they needed to receive, is this because the areas where these businesses and individuals are based just do not have the people necessary to administer that . Im just try to get to the bottom of why they did not receive the 80 . Aid . A lot of it has to do with state unemployment agencies. One of the notable things is taking away this supplemental the a week and letting state handle it. The state had their own issues obviously. It is not going to end up working out if the federal government takes away that support and leaves it on the states to figure this out. We might just end up with more people in a dire situation as the supplemental payments expire , as the moratorium on evictions expires. This is just becoming a really tough situation for people who are already sitting at home waiting to get relief. These negotiations are going to continue on. Nancy pelosi is meeting with republican leaders. We are going to have to watch how the next few days and weeks play out. Us. A thank you for joining do not miss our quick takes show at 6 00 p. M. U. K. Time. Futureske a look at the. U. S. And european futures have given up gains from earlier in the asian session. Read on the screen in asia on a headline level as well. So we are not seeing a Broader Market reaction to that outperformance in tech earnings. Nasdaq futures remain in the green. Coming off the high of 0. 5 , more focused on the economic picture in the u. S. And europe, we get more data. We have contraction data for the Second Quarter for franks just a little earlier this hour. That is it for bloomberg daybreak europe. Plenty more earnings to come. I will speak to the cfo of natwest group. Good morning. Welcome to bloomberg markets. Mattin london alongside miller and berlin. Last trading day of the month. Last day of the month. Happy friday. The endets say, is that of the good news . As european nations start reporting gdp slumps, the markets look for any
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