Resumption of trade talks after last weeks flop. President trump says he will call on the United Nations Security Council to restore all Nuclear Related sanctions on iran. He says tehran will never have a nuclear option. 9 00 in dubai. 6 00 in london. 7 00 anywhere in europe. Preferably paris. Good morning. The rates market is disappointed. There was a promise in this marriage. Qe infinity. Rates low for ever and ever and ever. They just didnt guide enough. Theres not much distance between a trip in communication and a temper tantrum. Good morning. Annmarie you make a good point about, is the fed embarking on miscommunication. The markets clearly unnerved about the uncertainty. When will we get Forward Guidance . The other thing that stood out for me is the virus. It is still in charge in the fed mapping out the future. Also, inflation. Theres a lot of debate on this. Some saying we could see stagflation. Interesting to see all of this this morning. Those things stood out for me. Narrative comes to mind. This new salvo on around. We have a friend that we see when we travel around the world. He turns up everywhere. Onturns up later on daybreak. You know my theory. Annmarie lets see whats going on in the markets. Rhetoric out of d. C. Adding more pressure to this morning after the fed yesterday. Msci asiapacific down. Fed,r index up after the we have seen weeks of weakness. 2000. Rading under a massive blow to gold yesterday. Interesting coming from Alexander Novak yesterday. Ahead, theretainty are black swans. Hes one of the opec ministers that contracted covid19. Lets get back to our main story. The fed disappointed markets. Backing away to clarify its bar for raising Interest Rates. Its a step that was underscoring their commitment to loose monetary policy. Policymakers tempered their optimism on a recovery in minutes. The Ongoing Public Health crisis is posing a risk to the Economic Outlook over the medium term. The virus continuing to rate around the world. Infections flaring in europe. New yorks positive test rate fell to the lowest since the pandemic began. Where you are sitting, in the uae, sitting spikes. Here to digest this is Joseph Little. Good morning. Thank you for joining us. Risk off morning today following the fomc. What is your take . Were you disappointed about the uncertainty they gave in these minutes . Joseph high. Good morning. Nice to hear you. You are right. The big talking points for markets this morning is around the fed. I think the tone that they struck was one that reflects the significant amount of macro uncertainty that remains in the system. Markets are probably a little renewedppointed by that reflection. To be honest, its a realistic assessment of where we are. There are three big unknowns, as you mentioned. Weve got the control of the virus and the trends around the virus, particularly into the backtoschool phase. Uncertainty around the u. S. Election coming up in the fourth quarter. And the significant uncertainty around the growth trajectory. We face that globally, particularly in the u. S. , especially in the environment of what will happen with policy support and the stimulus plan. Theres a lot of uncertainty. A lot of important questions this regime of lower forever Interest Rates is going to be in place. The fed has a balancing act to walk. They clearly want to provide guidance and reassurance to markets. You get into this strange game. You are providing Forward Guidance on your Forward Guidance. You try to talk around some of these issues and uncertainties and provide a clear message to markets. There is so much going on. So much uncertainty in the system. The fed is doing their best and being realistic. Clearly, a lot of uncertainty at this point in time. Thats a new one. Forward guidance on your Forward Guidance. A buy everything rally. You talk about credit commodities, equities, etc. I want your sense from this. Is the credit market listening to the minutes . More specifically to powell. There are several long runs that could hit business restructuring, slow the growth of the economy. This is the risk to credit, isnt it . Creditedit over european and asian credit. Several longrun issues that could really hit the restructuring narrative. Do you buy everything but temper credit . Joseph youre right. Inre is an everything rally markets. Weve seen an incredibly strong phase of growth action. A lot of that is linked to what is going on in the policy space. Ower forever rates it has provided significant support for a whole range of asset classes. You collapse that discount rate and factor, it supported commodities, equities, credit, everything. In terms of credit allocation at the moment, the big issue that i would be focused on is still the trend into the macro economy. Isknow the default rate quite closely statistically and find with the trends in labor markets. N unemployment is a good indicator for where default trends are going. The reality is, we are faced with a tricky and difficult unemployment situation. Year,nk by the end of the we are still going to see unemployment rates around 9 in the u. S. Thats a tricky annmarie i want to pick up on the implement rate. We saw this jump in cpi and inflation. The fed was talking about deflation. ,hen you have high unemployment couldnt you see stagflation . What is your view on this debate . Joseph yeah. Its a real big question, isnt it . I think theres a risk that we are facing in markets at this juncture. It is one of weaker growth and weaker inflation trends. That. D caveat most economists have not got a good track record on forecasting inflation after the episode we saw in the aftermath of the financial crisis. There was this big debate around missing inflation. Factors inon of terms of the postcode environment supply picking up faster than demand, credit growth is picking up. They are unreliable inflation indicators. To the point that we were talking just now, theres a really big output gap in the global economy, even towards the end of the year. Loads of slack. That employs and inflation scenario to me which is still very low with some significant risk, particularly if that growth cycle or news around the virus becomes more tricky again. Manus thank you very much. I guess stays with us. First word news time. Kamala harris has officially accepted the democratic nomination for Vice President. She opened and closed the third the parties virtual conference. It also included a speech from barack obama. She called on the democrats to defy what she called republican efforts to suppress their votes. President donald trump says he will call on the un Security Council to restore all Nuclear Sanctions on iran. Its an attempt to kill off the 2015 agreement and force tehran back to the negotiating table. Allies say the u. S. Has no say in the iran deal because it left the pack in 2018. The European Union has rejected belaruss Election Results but stopped short of calling for a new vote, despite many of the leaders backing a fresh ballot. They only managed to agree to call for a dialogue and a peaceful transition. Previously announced sanctions on people responsible for violence and vote rigging will be introduced as soon as possible. Turkey has discovered energy in the black sea. Two sources have told us that the find, natural gas. They gave no indication of size or how difficult it might be to extract. President erdogan has promised to deliver good news on friday. It will usher in a new era for the nation. 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. Coming up, we talked to rob scott. Under,going on down right here on bloomberg. Manus its daybreak europe. Annmarie hordern in london. Us drugs largest employer has reported net income for the full year of 1. 7 billion aussie dollars. It will pay shareholders a special dividend. Theceo joins us now with good news. Great to have you with us. Thats a good narrative for the global investor. People pulling back on dividends. You are dealing with a myriad of issues. Rolling lockdowns, supply chains. What has been the biggest challenge in this turbulent covid time . What has been the biggest headwind . Yet, you still deliver. Rob one of the Biggest Challenges that i think weve handled pretty well is how we keep 107,000 team members engaged in what is a really turbulent time. We are really proud of the way our team has stepped up to the challenge. Weve made a lot of changes within our business to protect the health and safety of our team and customers. The results weve delivered this year are really attribute to those 107,000 team members that have delivered them. Annmarie australia now faces less of a fiscal cliff due to the job keeper program. You are one of the biggest employers in australia. How do you wait the governments response . See for the outlook for the labor market in australia . Joseph rob the federal government should become bended for moving decisively with the launch of job keeper and the job seeker program. They have been very effective on our economy. They made a real difference. What we are seeing now is that we are going to be in for the long haul with covid. From my point of view, we are in the first phase of covid. Even if we were to get fortunate and see vaccines coming to development in the new calendar year, that will still take time. The challenge now in our country, similar around the world, how do we use every at our disposable to keep people in jobs . Keep the economy going, keep investment going. That ultimately goes to ensuring that there is sufficient confidence in how we do business. Manus what does that mean for online . Home, youn, work from saw a spike on online. Did that spike continue as you saw the reopening . I want to get a sense of stickiness, where you are with online and its propensity to move higher. Did that change . That narrative is critical in your business. Rob yeah. Its really interesting point. Its really fortunate that over the last three years, we have invested heavily in our digital capability. Im pleased that we did. Weve moved ahead leaps and bounds, which has helped us through the lockdown. Theres no question that we will see a further acceleration of ecommerce and online. What has been interesting with on our business is that our stores have held up really well. Once the lockdowns and restrictions start to ease, weve seen a significant increase in demand back in our stores. Ultimately, it comes back to what is the quality and proposition you have in your retail stores. We are fortunate that we have phenomenal brands, well loved brands, powerful options. Customers have been very keen to get back into our stores once lockdown started to subside. Annmarie speaking of your stores. One of your biggest is a hardware store. We saw a trend due to covid19 about online sales. We see a trend in more hot home improvement. Will that trend continue . Hope that some of that will continue. Theres no question that is people spend more time at home, more time working at home, that has benefited businesses like ours. Our office works business as well. That somegue categories have very strong demand. Areas such as paint. Will that continue . Hard to tell. As you also know, australians love travel. A are not able to travel at the moment. What do you do on the weekends . We have benefited from that. Manus im there with a paintbrush. Everybody knows that i love a ladder and a paintbrush. You got the brand. You are in the transformation zone in terms of the brand. You have target, you are closing down some stores, converting them into kmart. Can the target brand, will it endure and survive as a brand . Kmart . Be subsumed to what is the pace of that transformation . Back in may, we announced a very significant restructuring of our Department Store businesses. Successful and largescale Profitable Group called kmart. In australia, it is performing well. Target has been more challenging for us. We are converting more stores over to kmart to reinforce the strength and profitability of that model. We are reshaping target. Target will become a more online oriented business. It has a slightly higher price level ofn the discount kmart. Im still confident that over time, the target business will have a place in the market. Ultimately, it will be a smaller business with a much stronger online offer. Annmarie i want to ask you about the bushfires. Covid19 has clearly dominated 2020. We cant forget what australia dealt with. Have you taken on or change any of your Government Company policies to deal with the environment, given what we have seen in australia . Rob youre right. It was not that long ago that the bushfires wreaked havoc through many parts of our country. Its worth remembering that a lot of those regional communities are still in the recovery mode. Is this is our working handinhand with them. Bushfires have raged raise more focus on what we are doing around caring for the environment, reducing carbon emissions. We have been on a journey to reduce carbon emissions. We are going again. Clearer targets. More initiatives to reduce emissions within our businesses. Much for thank you so joining us. Ceo of west farmers, one of the biggest employers in australia. Coming up, something rob is looking closely at. Trade talks between the u. S. And china could be back on the cards. That doesnt mean easing tensions. This is bloomberg. Manus this is bloomberg daybreak europe. Annmarie hordern alongside me in london. Washington, the extradition treaty with hong kong as well as Tax Exemptions are the latest move against chinas Controversial National security law. Annmarie there is hope that a trade deal could be agreed. Trump did say he canceled the meeting last weekend. Sources say plans are set to resume. Trumps top Economic Advisor also dismissed concerns about rising tensions. Is still with us. I want to kick it off with emerging markets. You talk about your notes, you favor em forces. Where is the fortress . Joseph thanks. Idea is really a reflection of the fact that there are still many uncertainties with the outlook. What we wanted to identify his parts of the market, em economies, the em space, where there is resiliency to some of the key uncertainties, challenges we face around the virus. We have good control around covid, good resilience to the trade story. Spacehave we got policy and room to maneuver to manage and support the growth cycles and the macro fundamentals . Still to have a to think approach, carefully about where those fortresses might be. To my way of thinking, it is still that north asian region. Korea, taiwan, china. They have performed very strongly in the em space. It still looks as if some of that fortress quality that we see in those economies has not been fully recognized in terms of how equity markets and currencies are trading. That . Can i jump in on citigroup has a big piece on that this morning. We were looking at the inverse relationship between the dollar and em. Slightly counterintuitive when you look at the graphics. Theres this inverse relationship. They say, you get more bang for your buck when the dollar is dropping in latin america em relative to the rest. Your narrative is more skewed towards asia. Why . Joseph thats a really interesting point. The environment, if we think about the macro trends at the moment, we have seen better news and growth. We are in this recovery phase. Question marks about the recovery phase. We have a weaker dollar. We have rising commodity prices. Take that complex together. You are right. That sort of set up is potentially a really strong set up for em, generally. Manus thank you. Joseph little, cheap global strategist. We talk oil, next. This is bloomberg. You doing okay . 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. Where you can find games, news and highlights. All in one place, right on your tv. The xfinity sports zone. Use your voice to search every stat and score. Follow the teams you love. And, even get notifications with breaking news alerts and more. With the xfinity sports zone everybody wins. Now thats simple, easy, awesome. Say xfinity sports zone into your voice remote today. Annmarie good morning from london. Im in reporting with manus cranny. These are todays top stories. Off asstocks are risk the fomc minutes say the virus will weigh heavily on economic activity. Cases show a disturbing increase in europe while the United Arab Emirates infection surge. Trade tensions simmer as the United States suspends its extradition treaty with hong kong. Beijing and washington are set to play in the resumption of trade talks. President trump says he will call the United Nations Security Council to restore sentient on iran. Iran will never have a Nuclear Weapon damage he says. Good morning. On top of the morning after the fed, we have more rhetoric out of d. C. Not just on china. We did and on the fed. I love what Joseph Little said. Forward guidance on Forward Guidance. How much does this market want . Manus this market is built on the subplot that they will be there forever. Its a marriage made in kiwi infinity heaven. No infidelity at all for the rest of your life. At this moment in time, the market questions the commitment to the rhetoric. That is a little bit of distressed that the market has this morning. Jay powell and the fed gave a reality check to the market, saying the virus is here to say. That will dictate us. Look at equity markets, apple hitting 2 trillion. Investors have showed that shrugged off the fact that we are in the middle of a global pandemic. Manus you like that apple story. It took 38 years to get the first trillion. Two years to double that. I dont have my notes in front of me. Annmarie lets move on now. Against staying up late for us on the east coast. Donald trump will ask the United Nations Security Council to restore all Nuclear Related sanctions on iran. Its an attempt to kill off the 2015 agreement and force tehran back to the negotiating table. The other countries in that deal, including alleys like britain and france, insist the United States no longer has a say in the matter. We cannot forget, we have opecplus keeping the pressure up on nigeria to stop cheating on their crude production targets. The group is emphasizing the need for all members to stick closely to their agreement because the reckitt permit Market Recovery remains fragile. Thanks for joining us this morning. I know its late where you are. We have to start with what we heard yesterday over the trump thenistration regarding normalization of the uae and israel. Trump said saudi would likely follow suit. Do you see other middle Eastern Countries normalizing relations with israel . Amos first, thank you for having me on the show. I think the normalization between israel and the uae is a momentous occasion. One that has been 10 years in the works. A natural progression between israel and the gulf on defense and intelligence cooperation. Now, energy issues. Now, clearly becoming a more formalized process. I do think that other countries will join. Im a bit suspect that saudi arabia will join as quickly as President Trump may have suggested. Where good morning. Thanks for being with us. You were an integral part for a long time. What i want to understand, we run off with the narrative that this is about a coalescing of a trifecta of power. , israel. U. S. , ua a new sense of power against iran. Is that the correct way to look at this field . Amos no. I dont believe so. I believe that israel and the uae and other countries in the gulf have shared interests. Clearly, visavis iran. That was one of the basis for that relationship. I do believe that this has been a slowmoving process for 15 , increasing trusted relationship between the two countries. I still remember when the uae wanted to host the International Renewable Energy Agency in uae. I was involved in some of those talks. If you want to host an international organization, israel will have to be a member. Negotiating and making sure that the Israeli Cabinet members attended that first event. Since then, is really is have attended events in uae in both a more cognitive and a formal setting. Processthis is a been a of releasing the world in a similar manner. Iran was clearly a key factor. I think that its a much broader expanding of relations between the two countries. Quite frankly, between the gulf region and israel. Not juste neighborhood visavis iran but in cooperation on economic issues, technology, energy issues. This just became one more step of taking what was the worst kept secrets of this relationship and making it helpful. Annmarie [laughter] on iran, i have to ask. Presidency,biden will we see a revival of the jcpoa . Amos i think, certainly. Biden, we will quickly go back. Perhaps not right away into the deal immediately. Jcpoa would refer to as a minus. The United States and iran would agree to a freeze on sanctions, change some of the designations from the u. S. Side, the iranians would go back to freezing their movement on the nuclear program. Perhaps that would give some toe for the two countries see if there are any things that need to be adjusted or changed in the original jcpoa. Certainly, the intention would be to reenter into an agreement, primarily because the believe that that is the best way to stop and delay a nuclear iran. Another couple big topics to get to. Very brief response. Trump is pushing for the u. N. To renew sanctions. Obviously, they lost the Security Council vote on that. Is this. Lecture nearing is this. Lecture nearing pure electioneering . Amos we left the agreement. If we wanted to be able to shape it, we should have stayed in it. Annmarie i want to ask you about opecplus. The group is now trying to wrangle in the cheaters. Trump was a major part of this deal. He helped bring the deal together. Could we see Something Like that happen under President Joe Biden . Policy, in energy terms of the intersection of Foreign Policy . President , he was integral in many of the issues of that intersection between energy and National Security for the United States. Clearly, a Biden Administration will see the Energy Transition as its most important goal and policy objective within the Energy Policy. Everything will stem from that. That means i would not hold my breath the next time theres a collapse in oil prices and discord in the opecplus. Rush toed states will try to knock heads together, as was done by the trump administration. I would be surprised if that happened. It would obviously depend on what that situation is and what the context is. , we have seeneen peak oil happen in 2019. We may go up from where we are now. Month telllion million barrel a day increase is quite insane. We will see a bigger focus on that Energy Transition as the key factor in these decisions. That doesnt mean that everything will be on a linear basis. What does that mean for American Energy . Under the trump administration, it was about energy independence. If we have seen peak oil at this moment, what does that mean for the midterm under the next presidency . Oil in america. Again, when you talk about people oil, we are still at 90 Million Barrels a day. We will grow from there back up towards 100 Million Barrels a day. That still requires a lot of oil. The change will be the focus of Energy Policy towards looking at, what does the future look like . How does the United States maintain its leadership position in the Energy Sector . That will mostly be on the innovation side, the technology side. Not just on the manufacturing. Making sure that we have leadership in the development of electric vehicles and battery technology. Whatever the new technologies may be that will take us to the cleaner future. It is in the United States interest to make sure that those technologies are developed in the United States and that we have the right financial incentives to make the United States a hub for those technologies. I think thats the shift. Old, more on how to direct the future and make the United States the center. If we dont do it in the next four years, we will have missed that window. That leadership role will go elsewhere. We will have to play catchup. That would be devastating for american jobs for the next 100 years, as our leadership was so central for American Economic growth in the previous century. Annmarie thanks for joining us this morning. Staying up late for us on the east coast. Sees 2019 was peak oil. Will we ever get back to 100 Million Barrels a day . Coming up, qantas posts its first lost in six years. Thats coming up, next. This is bloomberg. Annmarie good morning. International borders will close down. Part of our businesses have gone well. Our resource business. We are optimistic about the domestic business. We are working with the state and federal government to try to open up state borders more. The suppression of covid19 here in australia is a test case. We are hopeful that we can have the majority of our domestic businesses up by the end of the year. International, we can get up and running. International has 800 million in appreciation each year, we wont be able to cover it. Usthe last time the three of , you joined us on the program back in may. At that point, lots of moving parts. You told us, worstcase scenario, the cash wouldve lasted you until the end of next year. We know things have changed. You are laying off workers. You raise new cash. Say that theu conditions that you now expect to persist will indeed be the worstcase scenario . What degree of confidence can investors attach to that scenario if you had just changed those assumptions you made . One of the things we will all quiteith is that this is a bit. You have to be flexible. What we typically do is adjust our plan to go with the environment we are seeing. We did say in june, there would be 6000 redundancies. We are proud to announce more changes to restructure the business for the future. We are aiming to take avenge of the opportunities we have coming out of this. We have an unbelievably strong position domestically with the two brands that produce the majority of our profits. Even before covid19. We are a main competitor, coming out smaller. This further opportunities for us to grow that. We see huge pentup demand. Our Loyalty Program is performing exceptionally well. Our freight business set record profits. The international will be dependent on a vaccine. International could open bible by bubble. A similar level to us really a is no reason that the bought border should not be opened up. There are opportunities there that we are optimistic about. We are trying to position ourselves to take 1 billion of cost on an annual basis so that we may come out of this, when covid is behind us, we are the strongest airline in the region. The strongest airline with the best balance sheet. The strongest airline with growth opportunities. We think there will be some. There the qantas ceo speaking to bloomberg. Airlines began adding flights as lockdowns eased. An industry rebound during peak travel season. Asia has seen flareups in the pandemic. The Health Crisis in the americas is deepening. Europe is facing the. Position of quarantine for travelers. What does that mean for the European Airlines situation . Sid philip is the reporter on that beat. Have we any indication of how the summer has gone for the airlines at home in europe. Europe . It has been a weird summer. They started up by ramping on flights. They added flights us demand picked up. The reimposition of restrictions and quarantine, weve seen airlines saying that they are cutting back on schedules now because of the uncertainty. Even if the quarantine doesnt apply, it adds to the uncertainty, given that people arent sure if they will book a holiday. That would require them to have a quarantine at the end of it. Annmarie we have planes grounded, staff laid off. Its a huge cash burn. Any liquidity coming out of the airlines . Airlines have been doing as much as they can to raise liquidity. All sorts of liquidity measures, including iag. Weve seen airlines such as easyjet raising cash wires. It has been, there has been a lot of measures imposed to try to raise liquidity and shore up capital. Ok. S thank you very much. How these rolling. Uarantines actually impact have you been on a plane the summer . Annmarie i have. I was in new york for four months. I was on a plane in july. You gotten more travel time than i have this year. Very jealous. Manus yes. No. I did a little bit of europe. What if we got . Annmarie i might go back to new york for november, because of the election. I need to vote. Kamala harris except for Vice President ial nomination and urges americans to vote in november. We discussed the latest from the dnc, coming up next. This is bloomberg. Ive been guided by the words i spoke from the first time i stood in a courtroom. Kamala harris for the people. We can do better and deserve so much more. We must elect a president who will bring something different, something better. And do the important work. Lets fight with conviction. Lets fight with hope. I have fought for children and survivors of sexual assault. Transnationalst criminal organizations. I took on the biggest banks and helped take down one of the biggest forprofit colleges. I know a predator when i see one. Lets fight with confidence in ourselves and a commitment to each other. To the america that we know is possible. The america we love. A president who will bring all of us together. Black, white, latino, asian, indigenous. To achieve the future we collectively want. I accept your nomination for Vice President of the United States of america. Harris, california senator accepting the nomination. Chasedallbank has been tracking the voices of the dnc. What was a standout you had . Derek yeah. The biggest thing that stood out on this night three of the Democratic National convention was former president barack obama speaking in philadelphia in unusually stark terms about the man who man who succeeded him. He said he did not expect donald to take all of his policies, but he thought that trump might try to rise to the moment. He kept on with this theme that you heard emerging. Look, trump is what it is. He is what you see. Hes not going to grow into the role. He should not be allowed to continue for four more years. , the subjectcrats of human decency. Sympathy,g joe biden his ability to connect with real people, things like that. Basic stark terms you dont often hear from people like that , especially not a former president. Annmarie thanks for that recap. Senior editor derek wallbank. One of the big takeaways is when Kamala Harris said, i accept this Vice President ial see. It was silent. A stark reminder that we are living in a global pandemic. Manus we are in a virtual world. Dont break anything tomorrow. You are on your own. Annmarie [laughter] manus this is bloomberg. 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. Anna good morning. Welcome to the european open. Im anna edwards alongside matt miller in berlin. Say, brace forts a red way. The selloffs that followed the fomc minutes looks set to fill in europe. The cash trade is an hour
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