Deal. No let up in germany. Angela merkel ruled out further loosening of measures after europes largest economy records the biggest spike in cases in four months. Asian stocks trade mixed following a fresh record on wall street. European futures point to a positive open. Good morning, everybody. Welcome to the program this wednesday morning. Lets have a look at terms of breaking news. Notes coming through mace maersk. The fullyear numbers, 6,000,000,0007,000,000,000. This is new guidance coming through. That is interesting in itself. The guidance we previously had in the year had been withdrawn by this business which operates 20 of the world container fleet. They are giving us this new guidance here. Looking at the underlying profit numbers for the second quarter. This is the backward looking part of it. The underlying profit data is 359 million dollars. They have done better than the estimates. We will be speaking into the management of maersk later on in programming. We have u. K. Cti numbers coming through. Ive been reading our preview from the Bloomberg Economics team. Consumer prices rising 1 . The estimate was an increase of 0. 6 . If you are looking to build a narrative about inflation, this helps you. The inflation number coming in hotter than has been anticipated. Thatbelow any 2 target the bank of england might have in mind. Retail prices and a few other details coming through. We will see deflation in august numbers. Part of the reason for that is the temporary sales tax cut that we saw from retailers. Like we do looks drag on prices into next month. Bigger than expected. Maybe we see Something Different in the next month. Lets get to the futures picture. This is what we have from European Equity markets. U. S. Meters flying in terms of the closing level. Alltime high. The s p and other index is making new alltime highs at the close. In terms of futures, we expect to go higher. U. S. Futures pointing to the upside. European futures up by 3 10 of 1 . More than that on dax futures. We will see where we end up at the start of trading which comes in and 57 minutes. The dollar is a big source of conversation topics at the moment. Lets get to gmm to show you what is on the move. Weve been fairly mixed through the asian session. Weve been close in hong kong during the morning session. That is something to be aware of. Chinese stocks under pressure because of new guidance to University Endowment funds about divesting away from chinese stocks. The dollar was steady today. We dont see much movement. We have seen a great deal of weakness. Steady around those two euros. Lets go to bloomberg first word news. Here are the top stories we are covering here at bloomberg. Joe biden is the democrat nominee for president. It was confirmed that a virtual rollcall during the remote convention. A slate of speakers from former president bill clinton to representative alexandria ocasiocortez. Biden himself will close out the event on sunday night. Compromise in the stimulus deadlock. Nancy pelosi says the democrats may be willing to make cuts to their rescue package to seal a deal with republicans. She wants a comeback after the election with more items on the agenda. A senior official tells us the white house sees the possibility of a pair down package of around 500 billion. Belarus is president has put the army on alert, deploying it to the countrys borders with the european union. Its an escalation of tensions as he faces mass protests to his 26 your rule. The bloc holds a special summit to discuss the situation in belarus. European leaders may decide new sanctions are needed. 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. Lets take a look at the markets. Wall street had a record close, propelled by tech shares. Betterthanexpected housing data. The dollar is steady. Near a twoyear low. Lets get into the markets with laura cooper. Assets and see risk u. S. Stocks heading from here . Between i divergence whats happening in stock markets and the underlying economy. S paw these levels on the unemployment numbers looked different. Is that entirely normal . Lookould expect them to distinct at this point. I dont think that its normal in this current context. Largely, the theme of that has remained unchanged. We look at what is underpinning the rally, it is largely the same. Datalus efforts, economic pointing to a solid recovery ahead. Vaccine optimism against the backdrop of relative case count improving. Where do we go from here . Increasingly looking like risk assets are vulnerable to news flow, given the fact that a lot of this good news is priced in. Its crucial to look at the lack of bread we are seeing in this rally. Two thirds of the s p 500 continue to remain well below their february peaks. It is driven by this tech story at this point. I think that that is increasingly vulnerable heading into election risk. Given the fact that we have u. S. China tensions as well. Anna where do we think the dollar is going to trade . Abouter of guests talked this. Volatility in the dollar heading into the election. There are so many uncertainties about how the dollar would respond to various election outcomes. Volatility lies ahead. Absolutely. We could see the dollar catch some temporary bids. We see risk beginning to dominate in terms of secondly risk, rising case counts. That could support the dollar in the near term. Ultimately, what we are going to see is the dollar continuing to remain under pressure. We are seeing exceptional stimulus coming from the fed that has yet to play out in the dollar. Hasdollar weakness to date largely been concentrated within the g10 sphere. It has held up relatively firm against the em currency. We start to cem outperformance, risk sentiment taking hold. Ultimately, we expect to see the dollar coming under greater pressure against emergingmarket currencies. Anna i want to ask about the pound. Data. T broke that cpi more inflation in the u. K. Than many had expected. We see a spike up in the pound. Not an enormous amount. Still, 132. Weve arranged all of the losses that the pound has maned against the dollar for this year. That is quite something. Is the pound as honorable vulnerable . There are brexit headlines still to come. The pound is honorable to downside from here. The core cpi was quite surprising. Thats largely a backwards looking indicator at this point. Given the fact that the u. K. Needs to brace for deflation, given the temporary tax measures in place. The collapse in demand that weve seen. Look at what markets are pricing in. Points bytwo basis the end of the year. Less than 10 basis points over the coming 12 months. Thats really optimistic, given the fact that we have these brexit risks. A very tight sevenweek timeline in order for the eu and you can reach an agreement. Looking at the underlying volatility. None of that risk premium is reflected in the currency at this stage. There are certainly risks for downside going forward. Anna thanks for joining us, as always. Next, is the best over for european stocks this year . We open up thel European Equity market this morning. Thats the forecast from a Bloomberg Survey of equity strategists. Theres not much more in the tank for europeans. We discuss, next. This is bloomberg. Welcome back to the European Market open. We still have 45 minutes to go until the start of cash equity trading. Futures are firmer. We saw a new closing high on the s p and nasdaq. Lets get a Bloomberg Business flash for you. Heres our todays top stories. Goldman sachs signed a deal with malaysia to finalize its 1mdb settlement for 3. 9 billion. The west bank announced an agreement in july but it is now concerned. It doesnt resolve the probe by the u. S. Justice department. Its a malaysian state fund at the center of Global Investigations into money laundering. Amazon plans to make it harder for merchants to slip ship products by itself. They will be more likely to pay the company to handle the task for them. Sellers will have to honor today delivering pledges. If they cant, they risk losing a prime fast shipping bad. Germanys utility giant is planning to raise up to 2. 1 billion in a share sale. 10 of market value, depending on the pricing. It could be the biggest offering has been share of new shares in the region this year. They are hoping to use the money to expand its Renewable Energy operations. That is your Bloomberg Business flash. ; 14 in london. The best days may be over for your and europes equity rally. Stocks are stuck at the same levels they were at two months ago. Equity strategists see little changing. Upside as of tuesdays close. We are joined now by nick nelson. Good to have you with us. The perfect want to get insights from on the subject. A survey of equity strategists. Would you go along with that assessment or are you more optimistic . Nick good morning. I would agree with much of that. We were significantly more bullish a few months back, seven months now. Marketspoint, clearly did look oversold. Valuations look attractive. We were starting to see policy response, both monetary and fiscal. At that point, the upsides appeared quite large. We think the markets got too fast. We have some modest downsides, about 5 . Given how much markets are moving day today, we are relatively neutrally valued right now for europe in absolute terms. Thats the headline. When you look at it relative to other assets like bonds or other equities like the u. S. , europe still looks attractive. A difficult situation for investors right now. Anna let me ask you about where europes its in the mix. Look at it versus other assets and stocks. In terms to your today performance, europe underperforming the u. S. The s p 500 up 5 . Euro stoxx 50 down 12. Does this underperformance in europe make sense to you . Bank of America Survey talked about the euro era being the most preferred for many investors. How do you tie those things together . Nick maybe theres more enthusiasm for the europe. Thats only in the last few weeks. Europe has lagged the main index. About 15 percentage points. Thats huge over this time. A lot of that has been become because of the sector. Great performance by tech stocks or biotech stocks. In europe, we dont have that market cap. We heavier into banks, energy, autos. That explains part of the gap. I dont think investors are actually necessarily overweight europe. Maybe they are starting to think about moving. Look at the currency. Moving the euro against the dollar in the last few weeks. Maybe thats a sign of assets shifting out of the u. S. And europe. You relative call coming you could see some of that underperformance potentially catching up. Strategist reading a referencing pmi data and suggesting there might be, a move in pmi. Allied moving european stocks. That relationship between pmi indicators and stocks, does that still hold . To verybe subject different influences in the covid19 period. Nick thats right. When you look back over time, a lot of the analysis we use [inaudible] greathave always been indicators for a turn in the equity market. Turned inmis december. A couple of months before the market low in march. Foras a good indicator investors to start moving back into equities. Look at europe. Pmis at a low around q1. They were down to 13. They are up over 50. Thats giving you some confidence that things are getting better. One word of caution on this. The pmis are referring to the change and Economic Activity, not necessarily the level. 50, the most recent numbers are improving compared to the month before. Given the fallen gdp in the second quarter, we are nowhere near the level of the Economic Activity we were at the beginning of the year. Downgrades are starting to slow. We are still way down from where we were in terms of the level of earnings for companies. The consensus thinks by the end 5 next year, we will be at below where we were in 2019. We think we will be worse on that. 15 below where we were in 2019. Yes, things are getting better. Pmis are a great indicator. The levels are very depressed because of the shock in the second quarter. Thanks so much. Stay with us. More coming up in the next half of the program. We will discuss whats going on in germany. No let up. Angela merkel rules out further loosening of virus measures after a surge in cases. The rest of europe watches on nervously. This is bloomberg. Anna welcome back to the European Market open this wednesday morning. 40 minutes until the start of equity trading. European equity market futures pointing to the upside. Flat to positive. Angela merkel has ruled out any further loosening of virus measures in germany. The chancellor said a doubling in the number of daily cases in the country of the last three weeks. Europes biggest economy recorded the largest increase in infections and nearly four months. Fears about a resurgence across the continent. Nick nelson is still with us. I wonder how vulnerable your thoughts are on the earnings picture for european companies. How vulnerable are they to further lockdowns . It will depend on whether we see very localized lockdowns taking place or something more national. Nick yes. We saw that in the q2 results. A few stragglers coming in. Maybe surprisingly, it has been a reasonably good result in terms of where companies have provided compared to their estimates. Its the best in almost three years. I think that comes after the massive downgrade we saw in march, april. Those were the worst since the data started 30 years ago. We had the bar lowered very aggressively. Companies beat us by far. Over the quarter, you went in with most companies countries and lockdown. Corporate profits were affected by that. You exited with us opening up. Phase, muchecond more likely to be reasonable regional lockdowns, national lockdowns. That will take a bit of financial off of the recovery and will become a problem for corporate profits. There is little visibility when we look into the second half of the year for how companies can deliver in terms of profitability. A focus on these regional breakdowns. More partly, how governments respond to that. Anna thats interesting. To thew my Attention Company guidance that weve had so far through the earnings season. 12 months Forward Guidance on margins, 7 . We will see a bottoming out in the round around that level. Thats similar to the lows we saw around the financial crisis. But the most comforting. As a body, the corporate reporting sphere is going to remain profitable for all of this. Is that what we expect to happen . Nick yeah. That is what the consensus for the estimates are. Crisisse the financial is as close a comparison that we have. We dont have any real comparison. Its a useful one. It is recent. A decade ago. Its refreshing. We are to see companies remaining profitable across sectors. I wonder. We think theres more downgrades to come in terms of the consensus estimates. Look into 2021. 40 . Ink the bounceback, we think that could be too aggressive. We are more like 25 in terms of the bounceback next year. I think you are right. Around decent profitability. Is the the issue bounceback next year. It might not be as good as people are expecting. Temporary lockdowns. We also have Government Support schemes, which have stopped the costs to companies. They will start to fall off in the new year. Anna thanks so much for joining us. Coming up next, we talk to the managers of maersk. This is bloomberg. No one knows what it is going to be like to lead during a pandemic. Welcome back to the European Market open, 30 minutes before the start of the european cash equity trading, a day of the u. S. Equities, the nest at closing above alltime highs. Lets get back to corporate earnings season. Maersk has restated their level,s at a higher between 6 billion in 7 billion, staying open for business throughout the covid19 crisis. We are joined now by the ceo of maersk, his first interview of the day, soren skou. Able, how is it you were to produce new guidance today that is better than the guidance you had to withdraw earlier on in the year . What is it that has gone well . Been our business has negatively impacted significantly from the coronavirus on our volumes. 14 , 15 , 16 . Our profits were up. We have done very well on the cost side. We have done a good job of adjusting the network to the capacity needed, so that is driving things. So that is why the higher guidance. What kind of visibility . You have given the guidance, so i assume you have some kind of visibility. How good is your visibility this year and into the next . Soren we are halfway through the quarter. Month. As the worst volumes were down by 20 yearoveryear, and since then, we expect in the Third Quarter that global trade will be down year on year, in the mid single digits. Could combine with low cost and slightly higher prices, guide ours we can operations. Improved, but what expectation do you have for when volumes will normalize, back up to 2019 levels, i suppose . Soren welcome our basic scenario has been for quite a while now that we would see a ushaped recovery, which means back to the 2019 volumes sometime in 2021. Anna you mentioned that you have been successful on cost. What is it you have been able to do to bring costs down . Soren well, like most companies, we have benefited from less travel expenses, but it is really the fuel prices, our network costs. We operate seven ships. We have cut down on the capacity that we deploy. That means we are saving money general, and then, in all of our operating costs, of course, going into the crisis, not knowing what would happen, we accelerated all of the costsaving initiatives we had in the drawer, so it was across the board. Freight rates have been going up. It some of your business, suppose, operates on contracts that were signed at different times. How much were you able to and if it from those freight rates rising . Volumes, contract volumes, so the freight rates are what the freight rates are. The other half are volumes where we benefit from higher fright freight rates when they go up. Mentioned taking some capacity out or reviewing the number of ships you are offering. How much vessel opacity have you taken out, and has that been something you think has support to those freight rates . Pandemic, through the with the capacity that our customers need, and, obviously, we took out a lot up front. Inplanned on taking that out april when the crisis really hit, and then we have been reinstating, if you will, pacitti in line. Your do you expect any of rivals to get into trouble . Will this be an opportunity for you to buy up smaller players . Is that somethin