anna: welcome to bloomberg markets "the european open." today, the markets say hope for a breakthrough. investors wait for results from a key vaccine trial in the u.k. as eu leaders get closer and closer to an agreement. the cash trade is less than an hour away. here are your top headlines.

the hard-line view. -- said to be ready to accept doling out grants as the recovery fund talks stretch into a fourth day. will the rest of europe be willing to compromise? how will markets react? stocks and futures trade mixed spread inead in -- a coronavirus infections. hong kong hit a daily record as a u.s. congresswoman calls florida's outbreak out of control. julius baer kicks off european bank earnings with a record first-half profit. we will speak with the ceo in just a few minutes. an interview you do not want to miss. we are just under an hour away from the start of cash equity trading in europe. futures have turned higher this morning, likely on those eu

headlines. they could be closer to an agreement. frugal four may accept 390 billion euros in grants. angela merkel, emmanuel macron, and the rest of the main bloc wanted to see 500 billion euros in loans. overnight, the talk was that we could get a proposal from the european council president, bringing that number to 400 billion. it looks like 390 billion is the number they have settled that. anna: we are focusing on europe. the euro limps higher as we wait for news. up 0.2 percent. from what's going on in brussels also.

about the news coming through from glaxosmithkline. they are talking about some kind ,f pact with a german company one of the many new story surrounding coronavirus vaccines. they enter a packed for mrna technology. glaxo is going to make an equity investment and make an upfront payment. existing vaccine program is not included. this is tangential. interesting conversation. let's get a bloomberg first word news update. government says rescue negotiations are set to resume. tomark and sweden will agree 390 billion euros. the eu originally wanted 500 billion euros.

the rest of the 750 billion euro plan will consist of loans. the u.k. may join its international allies in suspending its extradition pact with hong kong. the move could come today. dominic raab addresses parliament. tensions between the u.s. and china have ramped up. they could see sanctions, a move beijing warns would have consequences. >> if the u.k. government goes sanctions onimpose any individuals within china, china will certainly make response to it. you have seen what happened with china and the united states. -- globalal news 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. matt: julius baer posted its

best ever first half profits. prices as sharp as that swings linked to coronavirus lose in client trading. net income just 43% from a year earlier. with missions and fees as well as income from financial instruments rising sharply. let's get over to zurich. a standing bys with the julius baer's ceo. >> a very good morning to you. good to see you. here is what we all want to know. activity in one of the most volatile periods in memory. what our clients doing? are they still active with that frenetic energy? >> it has been a very interesting and animated first

half of the year. i have been active in the market, but not just during the peak periods. activityeen continuous with a bit of on and off. into the second half, i still think there's a lot of dynamic. what are markets doing? how are those patterns happening in the different countries? it will be interesting moving forward. >> the fx derivatives and the metals, half a billion swiss francs, my question, is that hedging? is that active client engagement? how would you define that kind of number? there is theide treasury book. the treasury book has been revalued with dollar interest rates. on the trading side, we have been benefiting from light quick client activity. to needre you going

exceptional volatility again to deliver these kinds of numbers and margins? >> volatility helps. that canbusiness model capitalize on volatility, as we have proven. there is going to be stimulus in the markets. there's going to be political uncertainty. there are ingredients in the second half that can drive volatility. is the biggest risk for you? >> it is one of the risks but not the only one. manus: we look at this recovery in equities. there is a certain amount of detachment from reality. >> it is hard to comment. in reality, the real economy, the impact of the price is going to play out over a longer period of time. in the first half --

manus: do you think we are underestimating? >> maybe. what is hard to predict is the recall rate average. . those countries that have taken measures early in a thorough and deep way, they will be fast recoveries. manus: you talk about the around climate connectivity and remote working solutions. what is realistic? baerpercentage of julius can work from home? >> u.s.-made the beginning of the year whether so many people could work from home, i would have said no. we have almost 7000 people able to work from home. in some of the offices we have over 90% of staff working from home. this was quite amazing. looking forward this is not going to stay there, but we will have the opportunity for almost a new balance between physical

presence and remote working. obviously we are trying to get a number. ubs said 30% can work from home. you have to get a hold of cost. will work from home be part of that? >> if i look at it from a cost perspective. i may look at it at a client perspective first. it would have been unthinkable to have an expert at the table on the ipad. now it is possible. that gives new ways of interacting by not having physical editorial. and then obviously in different departments, i'm very sure we are using this new technology possibility and cultural element to the maximum. said people inrg different locations are paid different amounts of money.

that is surely appealing as part of the strategy for you. >> not a new concept. manus: the spread you have with client advisors will give you more dexterity. >> the localization of advisors is important. it has always been important in our global business model. advisors in relative proximity, at least within the areas of where our clients are, that's not going to change. what we can do is have much more exchanging in the back part of the -- been alatin america has slightly cantankerous area for you to deal with with regulators. transformational deals. do you feel boxed in? >> we are not. we have been out on a very clear path to implement our strategy in february, sharpening the value proposition, making

investments in people, but especially in technology. i think this is a good time to do that. we are able to take large -- smaller transactions on a country by country level. by the time the restrictions are lifted, we will be ready. you think it will be gone by the end of the first quarter? >> hard to predict the timing but i hope it is next year. you areo are your -- prepared for smaller deals. what are appeals? >> we set out on a number of core markets across latin america, brazil, mexico, but obviously in europe we have markets starting in switzerland taking germany, the iberian part, asia, hong kong, singapore, those are places we want to be. manus: i noticed net new money pop tire. you talk about hong kong and japan. what about from hong kong as a result of the political dislocation?

>> there has not been a direct correlation. we have seen continuous flows in hong kong. asia is our second home market. we will continue to invest their. manus: onshore in china, is that going be the hallmark? i like to think you are going to be here for a while. is that an ambition, to get onshore? >> we are always looking at our footprint. it is important to be were growth is. right now hong kong is very strong. manus: how do you deal with latin america? net new money turned positive in latin america. what are the choices? close, right the ship, or sally sell?> -- or strong corewo very markets, brazil and mexico. we have up for business, but on the other side, a strong onshore

presence. we integrated gps and reliance into brazil. we make important steps to consolidate those markets. the biggest risk going into the second half of the year, where do you think it comes from? negative rates? what is it that goes through your mind? >> we are going to see uncertainty and the uncertainty lies in the speed and the depth of the recovery patterns, where does it happen and when? that uncertainty is a big risk. and overlay from what is happening politically. we are continuing the volatile situation and it is good for those players. would how destructive negative rates be in the united states of america? swiss perspective, negative rates, negative rates

have implications that create collateral damages, for example, the long-term. that is not to be underestimated. if i look at the 10 year, hauled or i would say is a very stoic captain. what do you want to do when you are here? >> set up to reinvent wealth management when we came here at the beginning of the year. sort of coping with the new challenges, changes in margins. making sure health management is more relevant for our clients in the next decade than it was in the previous decade. we think we have that opportunity. withve a fantastic firm employees that have shown their resilience, but also there dynamic and innovation capabilities in the first half of the year.

i see myself as part of the team and working with people to actually deliver on that promise. manus: thank you for being with us. it is a pleasure to be on the road doing an interview. i'll be at a lot of masts in the a lot of masks in the room. it is official, we are back on the road. julius baer delivered barnstorming numbers. let's see what the rest of the week brings to us on the road. morning. manus in switzerland. julius baer ceo. we will see plenty of manus through the week as he talks to a number of executives. let us get a check on the markets. markets seem to be moving ahead of the official views. we have been carrying a story

that suggests ongoing conversation perhaps moving toward the deal in brussels, but we have not had any official deal announced. the euro up by 0.3%. italian bond yields seem to be moving as if we are getting closer to a deal. increased demand for italian 10 years and the yields down by 2.6 basis points. we continue to watch bond markets and fx markets as we move toward the breakthrough in brussels. next we will talk about whether we are closer to that breakthrough. the euht negotiations on recovery fund failed to secure a deal so far, but the four countries who have been dragging their heels are ready to compromise. we are live in the belgian capital next. ♪

matt: welcome back to bloomberg

markets. this is "the european open." we see futures bouncing back and forth between losses and gains. the decider for markets is going to be what news we get out of brussels. things could be looking up for eu leaders in search of a deal on this recovery fund. overnight talks failed to produce an agreement on how to structure the 750 billion euro package. now officials have told bloomberg the four countries who have been holding back in negotiations are ready to agree on a compromise. joining us from brussels with more is maria tadeo. what are the details of the agreement for which we seem to be on track now? >> that is still a question. this has been a tense, difficult summit and it is still ongoing.

we are expecting european leaders will gather again at 4:00 p.m.. another all-nighter in brussels. the sticker that is being floated is 390 billion euros, that would be the amount that would signal a compromise between the southern european countries that are desperate to the a deal that could see major component of this recovery fund. i would point out if we get to 390, that is a big cut from the money that was initially floated. remember angela merkel and emmanuel macron have both said they wanted to see 500 billion euros. the french insisted they would not go before 400 billion euros. if that number doesn't go ahead, you could argue this is a big victory. playing this summit very hardball. he has also said his country would be interested in very tough governance over this deal,

if the money is ultimately handed out to a country like italy, who is going to ensure it is well spent. these are all the? 's that we still need to find an answer to. could be 390at billion euros, the question going forward is whether this fund is ambitious enough to help the european economy recover after the coronavirus. 100 billionng at a euro cut from that initial amount that was floated. thanks very much. maria tadeo in brussels. gains to themodest upside. european futures pretty flat. u.s. futures look sluggish. focus on the virus, focused on what's going on in brussels. also focused on the earnings season.

particular, focusing on the u.s., also talking about the virus more broadly. ♪

anna: welcome back to "the european market open." we could be fairly flat. waiting for news out of brussels. the u.k. says it secured early access to coronavirus vaccine candidates. of confirmedumber cases continues to grow globally. covid-19 flareups in asian countries have prompted some governments to sign restrictions once again. banks including citigroup and ubs are suspending plans to return staff to offices in hong kong after the city reported a daily record 100 new cases.

florida's outbreak has been described as totally out of control by a democratic representative. the mayor of los angeles as his city is on the brink of new restrictions. sam, very good morning to you. we wait for any kind of news. have we heard anything that looks more promising? ,> if the rumors are right astrazeneca is going to give us and, youhit vaccine know, i'm looking forward to this data. we are looking for a vaccine, for data that comes out that shows immunity generated using both arms of the immune system. antibodies and t cells.

matt: what does it look like in terms of a second wave? is anyone going to be able to stop a second wave? like you take an approach some states appear to have done, at least until now in the united states, the data speaks for itself. the answer is no. we need to make sure that people are respectful of two key themes. side, and the social distancing side. that has proven beyond any doubt those are excellent measures for limiting the spread. you can't stop it because it is something we cannot see. my assumption is you can limit the spread, we can keep that wave to a ripple. thispay attention to

social distancing, wear a mask, wash hands. thanks very much. this is bloomberg. ♪

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stream live tv, on demand shows and movies even your dvr recordings. download the xfinity stream app today to stream the entertainment you love. xfinity. the future of awesome. anna: welcome back to "the european market open." let's have a look at the items that could be on your agenda the rest of this week. the u.s. secretary of state mike pompeo kicks off a visit to the u.k. for a meeting with boris johnson. on wednesday the u.s. senate banking committee is set to vote on president trump's board nominees for the federal reserve. also on wednesday tesla reports second-quarter earnings. the stock has been on a relentless rally. relentless apart from when it was not rallying.

but you get the picture. friday we will be keeping an eye on the release of european pmi data for signs of a pickup in economic activity. one area that is becoming a real risk for europe's economy is unemployment. job cuts are mounting. expensive furlough programs can't last forever. once into the crisis, the outlook is uncertain for companies to commit to spending. and may not all higher back those workers that have been furloughed. we are joined by an economist at schroders. what do you think about the possibility of a jobless recovery in europe? >> the concern with europe was that going into the covid crisis, many of the periphery had quite high unemployment to start with. what europe has done quite well

is it has had huge take ups. we see unemployment remain quite low. long can it is, how continue? we think relative to the u.s. the euro zone is doing a good job trying to keep unemployment down. nonetheless, we think unemployment will increase. it will be difficult to get numbers back down again. anna: what kind of peak in unemployment are you expecting to see across europe? >> that does depend on whether europe manages to not have a second wave. at this point it is just local lockdowns. we would expect to see a lot higher unemployment. so now, an additional 5% or in the second half of the year to the end of 2021 as well.

matt: we are coming from a low base. we have a chart showing unemployment going back to the 1990's. worse been much much along before this crisis took hold. worker, theean european consumer, really doing or are as it would seem, europeans getting lower wages, you know, working more part-time jobs? is the gig economy making the unemployment rate look better than it is? >> the fact of the unemployment , you have these temporary contracts, not the unofficial employment data. that is one of the main facts hiding through unemployment.

isactivity, the main factor europe has not struggled with the second wave. pick up a lot more relative to the u.s. at this. we will have to see in the second half of the year. anna: we are on day four of talks trying to get to a recovery fund. lots of voices tell us it is about the political signal. from an economist perspective, doesn't make much difference? we were thinking it might be 500 billion euros. now it looks like less than 400, maybe 390 billion. maybe we split the difference. what difference does it make to the underlying economies? , the less impetus for stimulus. but the package has been

important from a cyclical standpoint because this would help recovery and we think there's going to be a gradual continuing to remain cautious. ultimately, funding would incorporate risk and the stability of the bloc these are crucial reforms we are going to see taking place area also reforms as part of the conditions for the grants themselves. matt: are you optimistic? do you think we are going to get those crucial reforms? or are you concerned about europe? >> i am cautiously optimistic. i am not sure we will reach a orl by the end of today negotiations continue the next couple of days. obviously between the loans and

grants, the mix has been crucial. a great sign. there is this governance issue. also, whether to cut funding for those who disrespect the rule of law. those are going to be hurdles. would still be cautiously optimistic. in terms of the risks to the picture you factored and -- factored in, what is the biggest risk? course, consumers, of and you mentioned business investments. the climate not great right now. risk that you might have to take expectations lower? >> we have mentioned the second wave. relative to the u.s., it may be

lower. out of different risks, we think that is the largest one. otherwise, we think the private sector is very much starved. in consumers are extremely cautious. businesses have taken on loans. we don't get an increase in capex. the private sector is scarred like we saw with japan in the 1990's. haped recovery. that is the biggest scenario we seem. -- see. matt: we appreciate your time this morning in the midst of these negotiations. it is interesting and important to get your perspective.

next, what earnings will matter most this week to markets? we will put that question to mark cudmore. this is bloomberg. ♪

matt: welcome back to bloomberg markets. this is "the european open peer -- european open." let's get the first word news. actually, i will pick it up. the eu government is holding up rescue negotiations are ready to agree on a key plank of the deal according to officials.

the netherlands, austria, denmark, and sweden will agree to 390 billion euros in grants. the eu originally wanted 500 billion euros. the rest of the 750 billion euro plan will consist of low interest loans. president donald trump is playing down a rise in coronavirus cases. he told foxnews many people are experiencing nothing more than sniffles and that positive tests are only up because of wider testing. he's also calling infectious disease expert anthony faucher, quote, a little bit of an alarmist area he says that two men have a great relationship. king has been checked into the hospital in riyadh. the state run saudi press agency reports after being diagnosed with gallbladder inflammation, officials have previously said the king remains in good physical health, dismissing

speculation he may abdicate in favor of his son. global news 24 hours a day on air and at bloomberg quicktake powered by more than 2700 journalists and analysts in more than 120 countries. >> stocks and futures trade mixed amid a threat in coronavirus cases. let's get into the markets now with mark cudmore. great to have you with us. to give ourselves up for the european open, assets are trading as if we've gotten a deal in brussels. they are up 0.3% on the euro against the dollar. we have seen appetite this morning, yields coming down just a little bit. from a market perspective, what are you expecting to see here? >> the market reaction is spot

on. it makes sense to presume there is likely to be a deal. we have seen this playbook so many times before. the euro zone debt crisis and the greek crisis. to meet,leaders tend negotiated the last minute, the keep negotiating further and compromise. the history of the european union is compromised. they nearly always reach a deal. factof this delay is the politicians are playing for a domestic audience. they want to go back and say i got as high as possible. they would not be staying a fourth day if they did not think a deal was extremely close. they would not be wasting time. they would leave it to lower-level officials. so i think it makes sense for the markets to be very optimistic. when we get confirmation, assuming we do, we will get a boost in the euro. i then think what we might do is again go back to the playbook of the euro zone debt crisis.

people start looking for details and criticizing. that is when we get pullback. ultimately, if we get a deal, this is a long-term game changer for the euro and the euro zone, talking about that sharing, it is a massive step forward for the region. it is a bullish sign longer-term for the euro. even with grants down to $390 billion -- 390 billion euros, doesn't this make angela merkel and emmanuel macron look weak? it is not feeling like the bazooka that was announced or that had been planned. >> that is one perspective. way -- it is a long wrong way to look at it. the fact we are getting this package at all is amazing. after the initial positive, we will get people criticizing.

saying the hurdles are a lot to overcome, saying it is not as good as we dreamed of. the fact is it is way more than they dreamed of a couple of months ago. hey, a step toward saying, the problems of europe are problems for all of us. there is a responsibility for all of us to contribute. shift. momentous germany.rom the steps have already been made, but a deal agreed in principle will be another massive step forward and it is a possible -- a positive long-term step. anna: the landing ground looks to be narrowing, doesn't it? disagreeing now between 400 billion and 390 billion. we will see what they can do. if we look ahead this week, earnings news is going to be

part of the conversation for sure. hasow the markets life team put this idea into the question of the day a couple of times. which earnings are going to be looking to for guidance? on just how bad or how much better than anticipated the earnings season is going to be. what sentiment is most important rather than which company is telling us the most. normally you would look for either the financial sector or the sectors working in manufacturing to give us guidance on what the economy is saying. actually, it is a key issue of sentiment and sentiment in the retail sector. it will be tesla earnings that are the most important. i think if we get -- if the market reacts ok to disappointing earnings from tesla, it's going to be a positive sign we have another few weeks of this kind of momentum, bullish trade, still to come.

it is not even so much exactly what we have seen. it is how the reaction plays out in the market. what needs to be delivered to keep the market going? can negative earnings, disappointing earnings, be shut down? is theng i will say economic surprise index really started accelerating incredibly in june. that did not match with earnings revised upwards. overall we might see a positive picture of delivery expectingo -- i'm not a rally on earnings alone. the: i want to point out, --an -- robinhood burroughs -- let mee long tesla quickly ask you about the u.s.,

the possibilities of more u.s. stimulus. it seems republicans are looking at $1 trillion. the democrats want a $3 trillion package. what are the markets pricing in right now? >> i'm not sure about the exact amount. what is most important is we just get another package. the situation is very different from march and april. the political conflict index dropped to a record low. people were united by the idea we needed to deliver something to support the economy. now we are seeing political conflict rise and it is going to be harder to get an agreement. markets just want to make sure we will get an agreement, that the u.s. will continue to deliver. as for your comment about retail and tesla, 2020 has been the year where retail traders have got it right and the financial heavyweights have got it wrong. you saw that in terms of the retail investors back in march.

it was only much later in april and may that many others were going, wait a minute. maybe this is not real enough. i do not count myself as a heavyweight, but i count myself as much lower to cop on to the rally than much of the retail sector. modest as always. mark cudmore. you can join the debate on the question of the day. which earnings will matter most this week? reach out to us. is going to be about sentiment. we will see how strong sentiment is or how week. 10 minutes to go. next, stocks to watch, including julius baer. we heard from manus earlier interviewing the ceo. it's best ever first month profit.

matt: welcome back to bloomberg markets. this is "the european open. back betweening gains and losses. let's get your individual stocks to watch at the open. joining us is dani burger. phillips has come out with earnings that beat the street in a big way. >> a significant beat. they are seeing they can hold onto their 2020 estimates because of that beat. most of it was thanks to a jump in demand for hospital equipment, specifically ventilators used to treat coronavirus patient. you and anne-marie spoke to the ceo. he said we had this big demand because of the pandemic, but he says orders for these ventilators have continued to roll in, so that's going to continue to help them. saying ay, the ceo

completion of an exit of their appliance business should happen this year. above theng in estimate. -- beat thetheir re. anna: also julius baer, some strong numbers. >> record profits for the first half. a lot of this was thanks to the volatility we saw in the beginning of the second quarter. clients are trading a significant amount more. net income at 43% higher from a year earlier. what manus was talking to the ceo, asking about the volatility picture because markets have saying het, the ceo thinks markets are going to be volatile in the second half when you have things like the u.s. election, so maybe that can continue to work their earnings.

this is a good sign for some of the biggest money managers reporting earnings. ubs reporting tomorrow and credit suisse reporting next week. astrazeneca., what's the story there? to be ones are going some data expected to be released today. a study with them and oxford about their vaccine, how effective it is, is this phase i data that is supposed to come out? we have seen astrazeneca's adrs rise 3%. so far, people are buying up the adr. it looks like they are going to open 2% of the open, expecting positive news to come out of this vaccine trial. this is a stock that rallied substantially during friday's session in europe and the u.s.. coming up, the market open.

european equity market futures suggest we will be flat at the start of trading. euro stoxx 50 futures look to be entirely flat. ftse and other markets looking to the downside. u.s. futures looking weaker. we have unfinished business in brussels. and the earnings season. he has been underway for a while, but it is going to kick into gear this week. results we've gotten today have been strong. from phillips, from julius baer. it does not look like the markets are swayed too much by that. they are paying close attention to what we get out of the european union. you watch the euro-dollar, it is climbing, but only up about a third of a percent right now. 11463. it will be interesting to see what kind of agreement we actually get out of brussels if the frugal four are willing to

go 390 million euros. we will continue to discuss. ♪

anna: a minute to go until the start of cash equity trading. europe's so-called frugal four are said to be ready to accept doling out 390 billion euros in grants after talks stretched into a fourth day in brussels. will the rest of europe be willing to compromise? stocks and futures trade mixed amid a spread in coronavirus cases. infections in hong kong hit a daily record and juliet there -- and julius

baer has record profit. matt? matt: take a look at european futures. we have been bouncing back and forth saying gains and losses gains and losses all morning. light losses. let us see how the cash trade opens right now by looking at the global macro movers. , the equityd column indexes opening up right out of the gate -- the ftse is down 0.2%. the ibex unchanged in madrid. thisill see a few swings morning although it does look like the trend is to the downside at least of the couple we have open. down 0.2% asg out well.

we are still waiting on the dax, the aex. you will likely see some red arrows there this morning as we open up to the downside of ross europe. anna? anna: both results and i expect nations evidenced with the early movers this morning. than 4%eca up by more on high hopes of what they will tell us about the vaccine. cases in the u.s. and in hong kong are on the rise but in europe, the focus is on the ongoing talks after three days of squabbling. have laigal four acceptablee levels. talks will return for a fourth day this afternoon. joining us now is ludovic

subran. great to speak to you. we are close to the landings own. a range of 10 billion eurosrmof. from an economist perspective, how -- from an economist's perspective, what do you think? onovic: the coronavirus is and we will need more budgetary resources to make sure we can fight the coronavirus. bogard may need to do more from the ecb side. this deal is important. it shows solidarity. a bit more flesh to the bones of what europe is exhibiting right now which is the image of the continental managing the pandemic right now.

important. att: we do see investors' confidence in italy right now buying bonds and pushing down the yield. is the debt still a concern for you, ludovic? i mean i think we have shown since the beginning that europe is much more prepared and much better at handling a crisis then in 2008 and 2009 so i am not concerned about debt now. i am concerned about debt to years from now. we have had drama. be most important thing will making a difference when it comes to growth and make sure

that in the medium run, we of the gdp.urden i am concerned that in two years, we will be worried about the nonperforming loans. what will be happening in these countries that have zero growth in two years? guests last week was saying that the issue is to get the my out and even if we do see a deal, we might see conditionality attached. it may take years for some of the money to arrive. are those that kinds of details that might water down the impact? we see we are not at the magnitude that was expected

from the french and german proposal. the big issue is governance. some of the countries are aid toed about tying the the rule of law. this is a big issue. these are concerns because if we faster,et this track this will be all for nothing. the magnitude and the size are need to make they sure that this is about trust and not about goals and that we make sure that we understand how this money can be dispersed. , it will be a concern. matt: i wonder what you think up to them tos it

act more strongly or will they hold their course because of the fiscal help they are getting from the eu? ecb has a think the few details or changes to make. they could agree to purchase things. extendcted the ecb to the course. as you know, the ecb is not only about the ecb but about the transition of monetary policy. my concern is that down the road we will have an issue with banks. about what wenk can put into place now. we have to put these things into place. it is important to understand that we need to be more proactive.

had we negotiated before, we would not be in this situation right now. ask you about how markets are reacting because i know you have been doing a lot fromrk on the co-movement one asset class to another. conclusion onain assets with similar risk profiles? ludovic: this is interesting because i really believe that has an exorbitant privilege. the idea is that during a crisis everyone rallies to the dollar. since the beginning of the , the policymakers at the ecb and the commission of play in the premier

league. that was very important. what happens when it comes to asset classes? apart from the u.s. treasury want, the other asset classes will explode. from the middle of march until the middle of april, there was no safe haven in the euro area. the euro is much better than it used to be -- that assumption was proven wrong. there is no safe haven assets in europe. a stronger ecb and we also need to negotiate something stronger when it comes to the union. otherwise, this will be the scenario that will push the spread up again. this is something we want to avoid at all cost. more we are going to talk about that with you, load event -- ludovic and also what we see

happening over in the u.s. coming up, los angeles on the brink of another stay-at-home order. the florida democrat says the spread of the virus in that state is out of control. we will discuss the impact on business and the economy next. this is bloomberg. ♪

anna: welcome back to the european market open. europe's first trading session of the week. downequity trading is about 0.5%. as we make our way through this losing awe seem to be little bit of momentum. and we have maybe dialed back our expert nations from the news from brussels. astrazeneca a focus for markets today. rally the share price solidly during the european session on friday. and then it moved higher in the u.s. on friday. we welcomed more than 4% out of the gates this morning. on the expectation of what they had to tell us later today about the test taking place at oxford.

let us get a bloomberg business flash. >> dividends paid by u.k. companies could take six years to recover according to a report from link group. payouts this year could shrink by nearly half. over 200 companies either canceled or cut dividends which resulted in far more drastic reduction during the financial crisis. -- it comes as a coronavirus pandemic is affecting business. the chief executive in may said the pandemic had given m&s a chance to consider a turnaround. spending onashing facebook. it is a blow to the social is the because disney number one advertiser on the

platform. it comes as a growing list of companies are cutting spending. no official response yet from disney. that is your bloomberg business flash. anna, matt? wright there with your bloomberg business flash. in the u.s., talks on a new coronavirus stimulus package will start at the white house today before those talks begin, the seeds of division have been sown. the trump administration is not in support of the testing package. by otherfavored lawmakers. outbreaks as a virus worsens in key hotspots around the country. a democratic lawmaker in florida said the state was out of control and on the pacific coast, the mayor of los angeles says he is considering imposing

another stay-at-home order. ludovic subran from allianz is still with us. the situation in the u.s. looks pretty bad certainly compared to here in europe. are you concerned about it worsening? are you worried about it getting out of control as far as the spread? ludovic: i am not an epidemiologist so it is not my place to say. they are discussing over 25 billion euros there but they have put a lot of money into the fight against the pandemic as well as stimulating the economy. , we are all very concerned. we are very concerned about the new restrictions that could happen on the economy and we are

of course concerned about the number of contaminated people and the number of casualties. is tog issue now for us see what will happen in the next couple of months because how -- how will firms behave? you mentioned some of the difficulty in paying corporate conversationast and you mentioned in your notes the looming solvency timebomb. give us some sense of that. ludovic: in the u.s., may and top were months of a record level of bankruptcies. there is a risk of a domino effect.

increase more than 40% in solvency's. for us, it is a concern because of the cost to the economy and the cost to jobs. and the idea that we have only seen the beginning of this. for us, this is what we call a timebomb. this is a major issue when it comes to the crisis because it is a cash flow crisis. we try to make sure that the credit risk is kept under control. matt: why do the guests that we speak to especially fixed income guests say they are more concerned about the u.s. in terms of increased bankruptcies than they are for europe? ludovic: because in europe, they

have in place a lot of keys to protect companies from going bankrupt. they have put in place guaranteed loans. in the u.s., you do not have these kinds of keys. in europe, we have a sort of protection. we displace the problem for the second half of the year. the u.s. is doing a lot especially the fed is doing a lot to protect companies. does not solve the problem of the small and medium companies like we are doing in europe. ludovic, thank you for joining us today. continue this conversation with matt and i on bloomberg radio at 9:00 a.m. u.k. time. we go there after the tv show. coming up, as infections in hong

record and aily u.s. congresswoman calls florida's outbreak out of control, we look at the coronavirus situation up next. this is bloomberg. ♪

matt: welcome back to the european open. 21 minutes into the session. we are looking at drops of on the ftse.

and almost 1% on the cac as well. the u.k. says it secured early ofess to 90 million doses coronavirus vaccine candidates. confirmede number of cases continues to grow globally. covid-19 flareups in asian have prompted some governments to tighten restrictions again and banks are suspending their plans to return staff to offices in hong kong after that city reported a daily record of more than 100 new cases. outbreaks., florida's has been described as totally out of control by a democratic representative while the mayor of los angeles says his city is on the brink of new restrictions and possibly going back to

shutdowns. first get from you, sam, the current expectation in terms of a vaccine. when will we have one? and how useful will it be? sam: one of the ways i have aied to put this is we have word called "food" and you can eat a bag of chips or fries and that is food or a major state dinner in a restaurant with a lot of sides is also food. definition is important. what is a vaccine? you can have something that you can inject into people and it gives you an immune response. you can call that a vaccine. or you can wait and get the full data and results out of all types of populations. that is also called a vaccine.

but a very different game. , iwe want a quick answer think it is possible to have something by the end of the year that i'm not sure how many people will be queuing up to take that vaccine. anna: it is interesting to put thehat way because definition of food or in this case a vaccine has shifted considerably. what wesk you about might hear from astrazeneca later today. there is a lot of expectation about whether the oxford test have been -- has been successful. a viral vector is not unique to oxford. what is important about that? sam: we know of three similar including the oxford astra one. canadian-chinese company has

a similar approach. the aim of the viral vector is to induce or activate at the best possible activation level to the two key arms including an antibody response. an anti-body quickly finds the virus or the virus-infected cell and tags it and helps to clear it. the other one is the longer term in unity. you have these surveillance cells that hang around blood and tries to kill the infected cells and get rid of it. that is where we think the astrazeneca and johnson vaccines are going to be differentiated but we have to see the data. the hope is there but it will all come down to how much and how different are they on the anti-body side? are they as good or are you

paying a price by losing that? sam, thank you for stopping by today. we want to take a look right now at your movers this morning. up bigg with one that is time on positive trials of a covid-19 treatment. gaining one edges 63%. %,l -- it is gaining 163 almost tripling expected results. is up 3.5%. putting up big gains. 600. weight on the stoxx beatingaer also

expectations for profits. the bank's shares are down more than 5.5%. we are waiting for a breakthrough in brussels. will we get a deal for a rescue package? this is bloomberg. ♪

anna: welcome back to the european market open. we are hurting minutes into the monday trading session and things are looking more gloomy than expected. u.s. futures have been worsening. looking sector to sector, all sectors in negative territory. forstors perhaps looking new sources of optimism. they make come in the form of renewed issues in brussels. we are waiting for news from brussels.

we are also watching out for details on the virus vaccines. in the meantime, we see all of the sectors in europe under pressure. travel and leisure to the greatest degree and oil and gas stocks also under pressure today. let us get a bloomberg first word update. the u.k. may join its international allies in suspending its extradition pact with hong kong. the move could come today as parliament is addressed. tensions between the u.k. and china have ramped up in recent weeks. warns this move would have consequences. goes the u.k. government that far to impose sanctions on any individuals in china, china will certainly make it an equal response to its. you have seen what is happened

with china and the united states. >> president donald trump is questioning the competence of joe biden. on fox news, the president said joe biden would not be able to cope with the interview. the democratic nominee has a 15 point lead over president trump in a poll. has beenbia's king checked into a hospital in riyadh. the saudi press agency reports that after being died nosed with ,ll bladder inflammation officials say he remains in good physical health. amidst speculations that he may abdicate in favor of his son. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna, matt? they are inwright london with your first word news. things could be looking up for

eu leaders in search of a deal on their recovery fund. overnight talks failed to produce an agreement on how to structure the 750 billion euro package but now officials have told bloomberg that the four countries that have held up negotiations are ready to agree on a compromise. joining us now is our order from brussels, maria tadeo. what are you hearing as far as the number that the frugal four are willing to allow in grant? -- in grants? maria: we are stretching it to day four. long and intense negotiations with a lot of akin or over how large the grant component should be. it started at 500 billion euros. to 400 billion euros. and now we understand that it is

at 390 billion euros. the frugal four believe this should be done through credit and loans. they are willing to work with 390 billion euros. you're looking at a reduction of more than 100 billion euros. but i will say that negotiations are ongoing. we know the european leaders will reconvene at 4:00 p.m. rutte trump into marc this morning and he says he does not believe this is a done deal. he said howell -- i asked him how long this could go until and he said until the end of the weekend. anna: this does not feel like a joke. signaling -- if the deal is reached, it will seem like an important political

signal has been given by the european leaders. what about the other issues they have been talking about? conditionality. the reforms. what else is still being discussed? maria: there is a big question mark around rebates. some countries would like to see the rebate increase. including the frugal four. if they do have more money now, it is a contradiction to what we have been hearing. macron said he does not believe that the european union should engage in rebates. we also know there is a lot of back and forth on the evidence of the recovery fund. if the money goes to a country thatitaly, who will ensure the money is used to properly in the country?

and what kind of veto could another country have over those lands? leader problematic for a like the italian prime minister. they also believe that a veto over the payment and the commission -- giving that money to a country raises a lot of legal questions. what happens to the overall governance are the two big issues right now. is also a lot of speculation over who is winning this argument. of denmark --ster it is not a bad day for him despite the fact that we know he has taken a lot of heat from many leaders here. matt: will you be able to get some sleep tonight or will these talks go late again?

maria: that is a good question. we are being told 4:00 p.m. luck.good and thank you very much. maria tadeo covering the talks for us on the ground in brussels. coming up, the u.k. looks to extend its extradition treaty with hong kong. how could that not lead to an escalation in tension with china? this is bloomberg. ♪

anna: welcome back to the european market open this monday morning. it seems to be deteriorating a little bit. a little worse than what futures led us to believe. downtse 100 under pressure 1%. the relationship between the u.k. and china is about to be tested. the u.k. willhat suspend its extradition treaty with hong kong. possible sanctions over human rights abuses. jodi schneider joins us now from hong kong. good morning to you. what will this mean for the

relationship between the u.k. and china which are ready has been tested on a number of fronts? jodi: it will probably be much more like what is happening between the u.s. and china and australia and china. countries that had an escalation in the tensions given a range of disagreements. issue.ady saw the huawei is the, today, it suggestion that dominic rob will that thehe parliament u.k. will suspend its extradition treaty. there are a number of fronts on which tension is occurring including the national security law imposed in hong kong on beijing. the u.k. government expressed concern about that and now, if

it takes this step, it will be solidifying that concern in terms of its relationship with aging. -- with beijing. matt: what has beijing's response been? jodi: china's ambassador to london has spoken out. we have also heard that officials in beijing are very displeased by boris johnson's invitation for as many as 3 million hong kong residents to apply for u.k. citizenship. on a number of fronts, we are seeing tension. officials have warned british companies doing business in china. jodi, thank you for

joining us. jodi schneider, bloomberg's senior international editor in hong kong giving us insights into the growing tensions. and now we go back to lower -- laura wright. hilips is sticking to its 2020 targets. recovery in other equipment. japanese exports have fallen by more than 20%. by steep was led declines in exports of cars and auto parts. companiespaid by u.k.

could take six years to recover according to a report from financial data group. companies either canceled or cut dividends that resulted in a far more drastic reduction than during the financial crisis. that was your bloomberg business flash. mats, anna? the: laura wright with business flash for you. breaking news for you on the we have aterminal -- read the headline crossing the bloomberg. dealnta said to be near a for ebay classifieds. this is something that has been talked about for a little while now. it is set to get significant combinedstake in the group. they are selling the classified business, it seems they are not

stepping away entirely. set to make the announcement as soon as monday. interesting news lines coming in there. let us get back to the banking sector. we have been talking to the manager of julius baer. they have had a record first-half profits. manus cranny spoke to the ceo of the bank earlier. >> this is not just during the peak period of march and april. we have seen a decline in activities. i still sense there is a lot of dynamic. as people consider how the recovery patterns are happening in different countries. manus: the fx and the is,vatives -- my question

is that hedging or client engagement? there is the treasury book and the treasury book has been revalued with a huge change in dollar interest rates. on the other side come on the trading side, we have been benefiting from clients activities which is reflected in the numbers. manus: will you need exceptional ball --exceptional volatility again? >> volatility helps. we are a business model that can capitalize on volatility as we have proven. we are going to have it from a market perspective. there will be stimulus and political uncertainty. i think there are a few ingredients second drive volatility. manus: is that the biggest risk for you? >> the biggest but not the only

one. an amazingook at recovery in equities. is there a certain amount of detachment of our markets from reality? >> it is hard to comment. in reality, in the real economy, the impact of the crisis is going to play out over a longer period of time. manus: are we -- underestimating it? >> what is hard to predict is the recovery patterns. countries will see faster recoveries whereas other countries will be in for a much longer time. manus: it is a market show. the biggest risk going into the second half of the year, where does it come from --negative rates, china? >> i think we will see uncertainty and that lies in

this bead and the depth of the recovery patterns. where does it happen and when? that uncertainty is the big risk. and an overlay of the uncertainty politically. it is good for those players to capitalize on that. of julius was the ceo baer speaking with our own manus cranny who is on a tour of sorts speak withh and will a number of ceos over the next few days. what earnings are going to matter the most this week? we put that question to kristine aquino. this is bloomberg. ♪

anna: welcome back to the european market open. 51 minutes into the trading session. let us take a look at some of the stocks on the move this morning. here is one you may not have had on your radar this morning. this is a treatment and not a vaccine. we know what happened to other country -- companies that released positive information about a treatment. airgen, southhampton taste. -- upone or jad percent

% at this hour. astrazeneca -- shares up by 1%. trading to the upside. julius baer also in focus. we just heard from the ceo moments ago recording a first-half profit. expecting more volatility to come. that pressure is down by 4.3%. matt: joining us now from the mliv team is kristine aquino who leads the team here in europe. -- me start by the question with the question of the day which is which are earnings will matter most this week? what are you hearing? been interested in tesla earnings for a couple of reasons. the first would be it is going to be a good gauge of where the animal spirits lie in this part

of the economic cycle at this time of the year. if there is anything that is a good indicator of that it would be the response to tech earnings and tesla in particular would be at the forefront of that. it is also interesting from the perspective of a gauge, retail investor appetite. it has been a popular stock among the robin hood crowd for instance. the response to this particular set to this particular set of earnings would go a long way towards showing us where the retail sentiment lies. it will also help us gauge whether that is a leading or lagging indicator at this point in the cycle. matt: i want to clarify for everyone at home that the robin hood crowd -- when people say that and maybe it is because i am older, i think about david playingand the poker leaders in new york who run the

charity. you are speaking of the new robin hood crowd. people who are basically retail investors. >> absolutely. we are talking about daytraders. typicalho are not your big-money investors. for whateverho are reason looking more closely at this and looking at stocks that offer high growth in a relatively short space of time. anna: important to clarify that. a fascinating retail story that we talk about. i guess you are watching what is going on in brussels. market and some asset classes are already reacting. as we approach something that looks like a deal. --this enough as a positive is this scene as a positive -- seen as a positive? >> the fact that even a deal

like this is on the table at -- just a year ago or six months ago, it would be almost inconceivable that something on this scale at the eu wide level would be on the table but here we are. the question for investors now is when will that euphoria run out? and when will investors start expecting or demanding more concrete actions towards the actual deal? there is a distinction between the fact that eu leaders are still working towards the deal and it is not near the stage where it is a done deal. we are nowhere near that at this stage. but markets seem content with the developments so far. but it will be important to watch out for when that will run out? aquino who leads

our market live team here in europe. i just want to mention one thought we have not mentioned this morning. it is down by 6.4%. we heard after hours on friday that the french cooperative group has no intention to make an offer for natixis. that is interesting for the market. by can see the stock is down 6.4%. on a day where we have lost some inour recent rallying spirit the european stocks. matt: i think there are concerns out there about the spread of the virus. more aboutk a lot that on our radio program and i encourage our viewers to tune in. you can do that if you are in the london area on dav.

you can also use the internet and type in bloomberg radio. anna and i are heading over to the bloomberg radio. up next if you stick with television is "bloomberg surveillance." ♪

francine: the hardline -- said -- theeady the billing granting of 390 billion euros. julius baer takes off earnings with a record first-half profit. the chief executive tells us continued volatility will boost trading. the pandemic spreads in the u.s., florida's infection rate surges and l.a. is on the verge of a shutdown.