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tv   Bloomberg Markets European Open  Bloomberg  October 15, 2020 2:00am-4:00am EDT

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and be healthy. get off the floor and get on the aerotrainer. go to aerotrainer.com, that's a-e-r-o-trainer.com. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] ♪ anna: good morning, welcome to bloomberg market, the europe open. i am anna, alongside matt miller in berlin. matt: today the markets say it takes more than hope. asian stocks slip as investors assess fading chances of a u.s. stimulus deal before the election. european futures point to a negative open. here are your top headlines from the bloomberg terminal. listening-down london. after a curfew in paris, the
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writtish capital is set to see tighter virus measures. here in germany, new cases rise by a record amount. goldman's golden earnings. the bank posts wall street's biggest jump in bond trading so far this season. revenue at all four divisions is up on the year. and burriss johnson tells e.u. leaders he is disappointed by progress in brexit talks. the city of london corporation urges both sides to avoid an act of self harm. just under an away away from the start of european and u.k. trading. we are seeing futures down substantially across equity indexes. 66%. futures down . in terms of u.s. futures, we
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see losses of about a third after percent, a little more on dow uble-digit -- on the jones and s&p contracts. anna, what do you see on the gmm? anna: let's get to that and see what is happening over in the asian session. we are weaker. we have futures pointing lower in the u.s. and you were and weaker through the asian sector as well. outh korean sector down by .7%. a lot to think about. the virus here in europe is certainly one of those themes. what will happen in london and how quickly? the germans. the fading chance of a stimulus deal in the u.s. it feels the market has resolved itself to the likelihood or not of stimulus coming in short order. but we will talk about that in more detail. we have u.s. bank earnings, all of that adding up to a murky
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picture. wells fargo and bank of america looking less so. the australian assets on the move in this g.m.m., they are considering buying longer term bonds. the australian dollar down half a percent. we don't see the pound on here, which is a change, interesting given the brexit developments. we are in a holding pattern. they are going to wait to see what comes out of the the e.u. meeting tomorrow. we have some numbers coming out of ryan air this morning. they are reviewing their compass itf -- capacity. ryan air said they would cut their winter capacity from 60% down to 40%. a shadow of itself. here is laura for the news update. >> u.k. prime minister burriss
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johnson is disappointed by the slow progress of brexit trade talks. in a call with e.u. leaders, he said he will decide if it is worth continuing to work for a deal. he previously indicated the u.k. would walk away if no agreement was in sight by october 15. germany is still optimistic a deal can be reached. >> it is always the right way to just ask questions that are difficult up to the last moment. my experience is sometimes in the last moment you will find a solution. >> thailand has declared a state of emergency. as protests against the government continuing. yesterday, tens of thousands of pro tersors broke through police lines to march on the prime minister areas office. they want new elections, and curbs on the traditional powers of the king. they say they do not want to bring down the monday average. age ons are rising of in
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biogenesis. the latest development threatens to bring russia more coalascely into the conflict. it has a mutual defense pact with armenia and says it is studying the incident. global news on bloomberg quick take, powered by more than 2,700 journalists and analysts. this is bloomberg. anna and matt? matt: thanks very much, laura in london giving us the first word news. asian stocks, u.s. and european futures dip as investors weigh earnings reports from american banks and fading chances of a stimulus deal in washington before the election. it is the virus that is front and center here in germany and in the u.k. as well as cases rise to a new record here. london looks at the possibility of a lock-down. let's get to mark, our managing
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editor out of singapore. mark, these virus concerns continue to increase. what does that mean for risk assets? >> i think the price action in the last 24 hours has been really quite soggy. i think soggy is the appropriate word. it is not like a notably bearish, but it is just that everything has been kind of drifting lower. when you look at the g.m.m.s it has not been wild moves. it has been a relatively quiet mark with a slight risk off tone. that appears to be the back up at the moment. people are nervously awaiting for the next catalyst. for so long we were told that stimulus would dreyfuss next. it is more of a discussion of what that actually means. it goes back to the stimulus, more of a next year story. we are waiting to see if we get surprise in u.s./china trade tensions. until we see that surprise,
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they are traders. we are going with the back drop news. the virus is continuing to get worse and the economic recovery is stalling. we are entering the winter season and we still don't have a vaccine. a slight negative back drop, but not enough to see depressive selling. >> we talk about the possibility of further measures in london, we are talking about going from tier three to tier inside ning no mixing people's homes. we are not talking about the toughest measures we saw in march. we will see whether that comes to past. let me ask you about commodities. i know that is something the markets have been dealing with today. what can end commodities underperforming? i was looking at where we are onbrent, and we are static between 409 and 45 since the middle of the summer really. but what is the biggest picture story around commodities at the moment? >> well, i think the point you
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have made about oil prices being relatively stable is an important one. that is a big change from the first part of the year when we saw the collapse and the powerful rebound. underlying this is the fact that commodities best reflects that back drop, the changing back drop of how we are trading in this market. from spring onward we were trading the massive stimulus package that is came in. it was a reinflation store there. there was money to mutombo to work, and yes there was this terrible collapse in economy, but we were going to grow back. now what we are seeing is hey, those economic recoveries are stalling. we are a little bit worried. we are probably going to see some more bankruptcies as some of of the support packages from countries desire son. we don't halftime next package from the u.s. it goes back to the virus sector and we are turning more negative in the economy.
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i am not saying a positive outlook comment until at least the new year. i am not saying commodities are going to sell off aggressively, but they are probably going to stay heavy for a couple of months. >> i wonder if a new president in the white house changes in a new year. cameron has a new column. he says you always have to be careful when you think about the intersection between politics and financial markets. the temptation to project your own opinion on to the rest of the street can be overwhelming, which can result in a painful comeuppance.-- what do you think about the fact that wall street expects biden to win right now? >> i don't want to weigh in on whether that is the correct political projection, but i do think it is interesting how they have changed the reaction of how marks are focusing on that. my explanation for that is up
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until the summer it was assumed that we would be going into this election with a second stimulus package having been delivered. therefore we wouldn't say a stalling recovery and consumers struggling. that would be the back drop going into the election. biden would change other policies and not about a stimulus package. many of the people at the time were focused on his tax plans. that was perceived as more negative for macts. now it has become clear that stimulus is a post election issues and the composition of the government welcomes much more important. not only does it master which president is there, but if it is a nt that is working with both houses of congress. the idea that one party may take one presidency and both arts of the house makes it easier to pass aggressive mical. i don't think they are changing the overall perspective on biden and what the democratic party means for control the next few years, but it is balls the most important thing for
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markets right now is that we et a new at 11:00 stimulus package. that looks most eyesly to come under a blue sweep of both houses in congress. >> thank you, mark. up next, will it be lock down in london after a curfew in paris? they are set to see tighter virus measures. we will get more details on that. that is bloomberg. ♪
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matt: welcome back to the european open. we have some breaking news here, which under normal circumstances if we weren't looking at brexit, a presidential election, a second wave of the coronavirus, this would matter a lot more. tsmc sees fourth quarter seattles of $12.7 billion.
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it is raising its full year outlook and now expects sales to grow by above 30% in u.s. dollar terms. this is for the year 2020. a lot of people thinks this is the year of the disaster. for tsmc it is not. and remember, this is a company -- well, this is the world's largest semiconductoror. it really has a lot of meaning for so much of the market, even in the tech week european market, the tsmc results are important to watch today because they could affect a lot of other companies that trade around, especially london and in the netherlands. anna: yes. any read across from this to other tech is interesting. the apple dimension to this is interesting as well. i am looking at the top live blogs that some of our colleagues are running while tracking the tsmc numbers. profits jumping to 36% a
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record, held up by apple orders. there is that read across. let's get a bloomberg business slash. >> wells fargo has fired more than 100 employees suspect the of abusing coronavirus relief funds. according to an internal memo seen by bloomberg, the bank identified staff it thinks dawodued the u.s. small ball administration. it followed j.p. morgan's finding. the u.s. may be about to up its curveballs on chinese companies. it wasn't clear when a decision would be made. ford will fail to meet european limits on greenhouse gas emissions this year. it is falling short balls of a recall of plug-in hybrid s.u.v.'s after seven caught
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fire and they had a recall. that is your bloomberg business flash. >> laura wright here in london. london is on course for tighter lock-down measures as virus cases continue to rise in britain. this comes after a curfew was announce inside paris and other major cities. germany has reported the highest number of infections since it started. we have the chief economist here. from an economic perspective how much movement are you seeing in your forecast for the winter period for europe at this point given we seem to be dealing with a virus that is still very much on the move? >> yes. it is still very uncertain economic titles. the i.m.f. has just published their new world economic outlook. they have upgraded things, but still a very deep global recession they are forecasting. it is uncertain for economists
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to predict. we need to get out of the health crisis first, and that is where the focus should be. it is not a trade-off between economic well-being and health policy. the quicker we get out of this, however strict the measures have to be, the better it is for the economy in the long-term. it is going to be a challenging economic future for europe as well. i think what we have seen so far is policy makers have insulated the financial sector markets from what is happening in the economy, and some fiscal measures as well. you can't have that lack of alignment going on for a very long time. eventually the markets have to adjust or the real economy has to get better. matt: as an economist, i'm sure you are always excited to watch animal spirits, and it seems to so optimistic is when it comes to things like vaccines. have they gotten ahead of themselves a little bit in
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terms of this virus? it seems every time we get indications of a second wave, all of a sudden participants seem surprised? >> yes. i think it is probably better to be on the cautious side. science is moving slowly on this. we have had some obstacles that are being overcome. but economists have traditionally been more optimistic when it comes to technology. so it is something to be aware of for sure. anna: you are an independent forum for central banking and public investment. when you look at what central banks have done to fight this, it seems there was an initial flurry in the northern hemisphere, spring-time, and then things have been quieter of late. where do you see the next substantial move from central banks, picking up the bat on once again? >> yes, well, i think before
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this crisis hit, we were debating what would happen when the next crisis hit. central banks had run out of ammunition. they don't have any tools left in their tool box. we were surprised that they actually could do quite a lot. we are not in the same space again where we have said central banks have acted. they have taken a lot of measures. what is also important is that fiscal policy has started to move. one of the things about the recovery and how we design it is we have been two reliant on monday tony parker policy in the past. this is a crisis that requires primarily a supply side response. central about about banks. matt: can a green revolution create more jobs and output than we expect? >> i think the focus has to be on a sustainable recovery, a green recovery. we can't go back to the system that we had before.
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we have to design the recovery in a way that is also in line with what the planet needs. that is how government in europe are designing the recovery. the e.u.'s recovery fund is focused on that. in bail-outs in the economy have to take that on board. we can't go back to the same system. it has to be a sustainable recovery. matt: thanks so much for joining us. we appreciate your time this morning. chief economist, joining us talking about the effects of the virus and what we need to do economically. coming up, germany's finance minister said he is confident that e.u. recovery funds will start being used by the beginning of next year. more from my exclusive interview next. this is bloomberg. ♪
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matt: welcome back to bloomberg markets. this is the european open. right now, 38 minutes away from cash trading. you see futures are moving lower. dax futures now off .9%. the finance than minister in germany, olaf scholz said he is confident the e.u. can finalize the recovery fund this year. i spoke with him yesterday about fiscal stimulus, the banking union and brexit talks in an exclusive interview. i started by asking him if there was going to be any need a debt forgiveness plan for consumers and companies? >> my view it was right that we decided to give subsidies to many companies, especially the small and medium-sized companies so that they don't have a problem after the crisis. and it is important that we plement into the support
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mechanisms, equity instruments that are helping that a debt burden is not a problem for a company. matt: you have managed to take advantage of this crisis in a sense to strengthen the european union, as you have said before, with a hamilton moment. when will you start to deploy those funds? will selva you decide to start giving the money out to the countries that need it? >> we are working very hard to make all the political decisions, something that is a legal structure. i am quite confident that we will be able to do it this year so that the money can be used next year. matt: what are the next steps? i spoken with cristhian saving. bank c.e.o.'s don't think there is a strong enough fiscal union to make cogs-border cons cation
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work? >> we are now deciding on the very high sovereign debt of the european union, which will be paid bakt. included in this decision is the common idea that we will have our own resources for paying them back. this is creating a fiscal capacity for the european union, and this makes the difference. this is the, if he you may call it, the moment. on the other hand it is necessary that we work very hard on the other questions that are on the table. it is the banking union, the capital market union. matt: when will we see the -- uropean government deposit protection scheme? when will this come to a reality? >> anyone understands that we have to work intently on the question of banking union, and we have to understand the hopes of banking union, which includes a lot of topix that have to be solved.
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but understanding the end game of a banking union is key for doing the necessary decisions. it will not be just one question. there are 10 or 12. matt: can i ask you a brexit? boris johnson had set tomorrow as a deadline and if there is no progress made he would pull out. it looks now like he is going to continue to negotiate. do you think the e.u. can make progression on this? >> it is always right to ask questions that are difficult up to the last moment, and my experience is sometimes in the last moment you will find a olution. att: german finance minister olaf scholz reminding us of something we forget daily. nothing is decided until everything is decided. as much as we like to keep track of the horse race, you really just can't until it comes to an end in this kind of
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negotiation. anna: yes, all that matters is the finish line. up next we will talk about the spanish economy and foreign policy. this is bloomberg.
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anna: welcome back to the european market open. 30 minutes to go until the start of cash equities trading. one of the big concerns of the markets as we head into winter is the fight against coronavirus. today we have had further news flow on that front. spain is enduring one of the orst covid-19 outbreaks. they announce add 72 billion you're stimulus plan. we are joined now by spain's foreign affairs minister, arancha gonzalez laya. glad to have you with us. let me start by talking about
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the fight against coronavirus. do you see any of the measures spain has introduced working? >> pretty much. much of been pretty the mind. we started early on the second wave, but all of europe is now under the second wave. the important thing is we have learned from the first phase of coronavirus, and we can now address the increase in the incidents in a much more surgical manner, in a much more direct manner, targeting the sectors, the areas and the people that are most affected and making sure that the rest of the country and the rest of the economy can continue to function. so again, covid is in spain, under control, but we are being very careful to make sure that it does not -- that we get the curve down, that we don't get a higher number of incidents in what is now a european second
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wave. >> a european second wave, all of europe dealing with it. there is a lot of talk in spain, i understand, about a shortage of nurses, and clearly this matters at this point. spanish nurses are spread around the e.u., including in the u.k. does the spanish government plan to convince those nurses to return? >> no, i don't think we have a shortage of nurses. we may have an incident here or there, hospitals that may be a bit more affected than others. but overall we do not have a shortage of nurses or doctors. it is true that after the last crisis a number of professionals in spain left to other countries in europe, including the united kingdom, which shows how interdependent we are, how much what happens in one country matters to moving country, and
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through dialogue and negotiations rather than through unilateral moves. matt: what i am hear is gone that the nurses, doctors and first responders in a lot of communities also have to double as track and trace personnel, and that they are really being worn thin. only in places like valencia ya where you have a lot of traiters do you have a good handle on the virus. is there any plan to somehow get more people ememployed as tracers around the other regions that are having issues? >> so every region in spain has to organize its own tracing efforts, and it has to get its own tracers in place. the vast majority of the regions in spain have done so. of did this after the end june when the de-escalation
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start inside spain. on top of this, the army has brought the army and tracers in the army at the disposal of the regions that would need extra run forcement of their tracing capacity so that every region has what it needs in order to undertakes tracing, which is a very important ingredient in managing the increases incidence of covid in the country. so regions are fully in charge of these, and the central government putting its capacity to support them in fully managing. if there is a particular spike like we have seen in some regions and some cities. not is not the compensation. it is what we are seeing all across europe. matt: you have long had in spain for decades issues between regions and the federal government. you have spent a lot of time in
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catalonia. but it has gotten to a point in the central government in madrid that other countries are worried. we have heard from the germans that they are concerned about the political tensions in your government affecting your ability to fight this virus. what do you think about that? >> i don't think this is fair. spain is a de-centralized country, like germany is a de-centralized there. is a system of g ands. it is true that this system is tested to the extreme with covid. the important thing to remember is that in this de-centralized system with regions taking the bulk of the fight against coronavirus in their respective regions there. is a coordination, a central coordination by the spanish government that is making sure that every region has what it needs. but what is happening in spain is not unlike what is happening in the regions in germany.
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when difficult measures have to be taken and the central government tells the regions they have to take tough measures, some of them are not happy about that, and sometimes they want to pass the bucket on to the central government. again, what happens in spain is not unlike what we are seeing in germany as an example with tough ple having to take measures, which is necessary to protect our citizens while ensuring the economy can continue to function. but in spain we will continue to work together, central governments with regions in order to exit and to nurse this economic recovery that has already started in the third quarter. >> let me ask you about something that is linked to this conversation via the recovery fund. the spanish government wants to undertake a reform of its judiciary, i understand.
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this week the polish government has said or polish officials have said publicly if brussels sanctions poland, then it should do the same to spain. what is your response to that? >> my response is very clear. the european commission has just two weeks ago put on the able the fate of the rule of law of each country in the european union. the rule of law in spain has been analyzed and scrutinized by the european union. the results are on the table. it the commission said needs to be put in place and the nominations need to be put in place as soon as possible. the opposition has been refusing to cooperate with the government to name this order of the judges. the commission has been very clear about the spain toe
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nominate the members in this area, and it has been very clear about poland. the reports are transparent that they are on the table. i don't want to comment on the reports of other countries. spain is a functioning democracy arcs vibrant democracy where the rule of law is fully respected. that is my take. anna: so spain should not be sanctioned? >> i go by what the european commission has said. it is reported basically two weeks old. it is on the table. because spain has been absolutely transparent with the european institutions when they wanted to scrutinize the functioning of democracy and the rule of law in spain, i fully trust their judgment. nna: thank you for joining us.
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arancha gonzalez laya, spain's foreign affairs minister covering a host of countries. we have a red headline saying that singapore says it homes that a hong kong travel bubble will start in weeks. when you have been kept in a small geographical area for many months, i am sure that is an exciting prospect. this is the impact we are seeing on stocks in the region. cafe pacific has been rising on the expectation that some sort of wubble can be put together. it seems like there are few headwinds to getting it done, but these comments are coming through from singapore and the hong kong government giving its thoughts, saying it will flesh out all the details of a bubble in the cock weeks. matt: so a lot to keep your eye on today. the top story, europe intensifying its tofertse stem an unrelenting virus resurgence. some of the strictest measures came from france. that country is imposing a
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curfew in paris and eight other major cities as well. here in germany we have seen a record number of cases. that is after chancellor angela merkel warned more measures will be taken if the rise in infections doesn't stop in 10 days. so far though they just want us to keep wearing our masks, washing our hands and social distancing. joining us is bloomberg's germany reporter, andrew blackman. i noticed yesterday in a press conference saying he was amazed at how many people around berlin aren't follow social distancing rules. this is something that the government expects german itizens to actually do, right? >> exactly, matt. you are absolutely right. they have been sort of imploring the population to adhere to the rules and to be mindful and take precautions. but it appears that in some
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cases, it has fallen on deaf ears. hence the record number of virus infections that we now see in germany. anna: good morning to you. the conversation here in the u.k. is about the extent to which you need a national policy here which keeps things simple but is very blunt and the extent to which you need regional response. that is the debate we have been having for some time. where is that in germany? >> well, it is complicated, i guess. under the federal system there is -- they have consistently tried to reach a consensus on the way forward. the issues were brought ahead yesterday in this meeting between merrick el and the leaders of the various regions or states. they spent eight very tense hours in this meeting where they really failed to come up
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with a consensus. it just underlines how difficult it is to reach an agreement on that level. to result, now it has left sort of piecemeal changes and approach to attacking this problem. we will have to see how it develops, but yes, there were no major steps announced after that long meeting last night. matt: so there is so much talk, and it is only that i will point out, andrew -- but in the u.k., so much talk about a circuit breaker lock-down, bracket to the drank own yan shut-ins. how unlikely is that here in germany? >> well, certainly the message from angela merkel last night was that that would be they are really keen to avoid. she stressed very much the economic cost of returning to
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the dark details of spring where the economy was essentially paralyzed for weeks. she clearly is very reluctant to go back to that. this came through very strongly in the comments she made last night. and yes, the consequences would be extremely high. anna: thank you very much. andrew black man, bloomberg's editor in berlin. for more on europe's response to the virus, catch our webinar with the german house minister at live go at 1:00 p.m. u.k. time. up next we speak with the c.e.o. on the best performing stock on the o.m.x. index. the crow joins us next. this is bloomberg.
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♪ matt: welcome back to bloomberg markets. this is the european own. we are 15 minutes away from the start of cash trading and looking at drops that continue to increase on futures contracts. dax futures are down more than 1%. ftse are off about .9%. with the coronavirus raging across the globe this year, investors have turned their focus to pandemic rely sill yent stocks information europe, technology investor kinnevik as boosted its exposure to health care. joining us now is georgi ganev, c.e.o. at kinnevik. let me ask you about these trends. everyone is familiar because we were all locked in pretty much
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at the same time, all doing everything online that we normally would have done in the village marketplace. how sticky are these trends? are we going to stay online, all of the tasks that we have converted, are we going to keep them there? >> yeah, i mean i think it is evident that the coronavirus continues to have a devastating effect on people and economies globally. as you say, at the same time it is changing fundamental consumer behaviors and accelerating the shift to digital. we are optimistic that elevated demand online is likely to remain even as the after-effects of the pandemic subside. companies have great momentum because they are skewed toward digital, the customer group we measured, they continue to actually spend more online and do more things online even in times where the lock-downs are
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not that severe. anna: good morning to you. let me ask you about how that has influenced your strategy. has the pandemic influenced your investment strategy, or has it given you confirmation that what you were previously doing was pushing in the right direction? >> i think it is more about confirmation. we have things regarding the shift to online when it comes to e-commerce. we had the same kind of idea when it comes to digital care. we are not surprised at the behaviors we see. however we are surprised with the speed. what has happened in the last five or six months we expected to happen in the next 3-4 years. that is the only possible surprise that we have seen. matt: when you look at all of your investments, we mentioned city block, and village m.d., and cedar, i am sure they are like your children and you love
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them all. but what gets you most excited right now? >> we are just about to witness a merger between the health are company libombo we invested in back in 2017. since then we have seen several financing round. this was a fantastic company help egg people with chronic diseases. that company was acquired by a company called teledoc health, the largest virtual care provider in the world. we expect that deal to be closed by the end of the year and provide them with a full spectrum of health care services. we are very excited about that. anna: so the health care side of things, once again to the fore. you have also expressed interest in the past to online grocery start-ups. where are good margins
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achievable? some supermarkets suggest it is difficult to make money in that space? >> that is correct, it is not easy, but we know it works. again, we were invest negligence a couple of online nordics.laces in the one place in norway had a warehouse, and what they needed was actually a larger demand. uring the pandemic we saw that scale being 10 times more customers coming in during april and may compared to last year. that was needed to show the orders. we have now proof that you can make money online when it comes to food. now we are expanding that way of working to other online grocery companies. you need of course a very efficient operational network. the warehouse, and you need to have enough density when it comes to delivery to homes.
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then you can make money. matt: how much room is there in the delando space? public in gro go poland. you have the cheaper version of allibaba? how much room is there for players? >> we have two companies. one is alondo, and the other is global fashion grooms, which is the leader provider of fashion in emerging markets. the trick that they have pulled off, and they have been extremely good at executing this, is they are more of a tech platform. you can call it more marketplace than a fashion player, but it is focusing around fashion and beauty. it distinguished itself versus amazon by being a niche player
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in fashion, but they are still a platform that can help the brand to actually sell their goods, both as a wholesaler and as a marketplace provider. anna: it will be interesting to see businesses trying to compete against amazon in niche areas. georgi or joining us, ganev joining us. up next, we will get your stocks to watch. the swiss drug maker's third quarter sales fell short of estimates. we will talk about how they still managed to confirm the outlook. this is bloomberg. ♪
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♪ anna: minutes away from the european market open. so futures, keeping an eye on futures, pointing to the down side. u.s. futures continue to do so. danny has a run through of stocks to watch. >> down this morning after
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disappointing with their sales figures. it was helped by its covid-related sales. however, some of the older medication customers turning to copies that are cheaper, that hurt them in their ultimate earnings. they are develop ago cocktail with regeneron, the same one that donald trump used when he fell ill. ryanair, lower by 5% this morning. they have cut their capacity down to 40%. it was at 60%. they see their full year passenger total coming in at 38 million. before the pandemic, it was 154 million. dunlan coming in 37% gross. still those things are unable to provide guidance. matt: thanks very much. the market open on the other side of this break. futures are pointing lower this
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morning. this is bloomberg. ♪ anna: one minute to go until the
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start of cash equities trading. london clamps down after a curfew in paris, the british capital a set to see tighter virus measures in coming days. in germany cases arise by a record amount. goldman earnings posts wall street's biggest this season, revenue at all four divisions up on the year. boris johnson is disappointed by progress in brexit talks. both sides are urged to avoid acts of self-harm. matt: take a look at futures.
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offstors are selling futures contracts on all the major european equity indexes. .ax futures are down 1.25% not only are they off, but going lower through the session. we could see a volatile session. take a look at the global macro movers screen, a risk asset in each column. in the far left column you see these numbers populate as the indexes open live. the ftse is the first to open up, down about 0.5% now and falling. you could see these numbers continue to get worse. in terms of other european equity indexes, they open later than the ftse, but when they have strong moves in one direction or the other, it takes longer to open. the spanish ibex out of the gate
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down 1.25% as the ftse falls more than 1%. european equity indexes looking like they will be down a full percent or more, as london is set to follow paris with stricter virus measures, and new cases in germany hit a record. the u.s. does not look like it will get a stimulus package before the election. joining us now is grace peters, exec. director european equities strategist, jp morgan. i almost forgot the other big news, brexit looks at it could go no deal. to massage hisas previous statements to continue negotiations. with this triumvirate of bad news, doesn't make sense that sellers -- that investors are selling stocks today? grace: our view is that we are in the midst of a recovery.
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markets will move higher over the next 12 months. we think the u.s. and chinese equities could make new highs over that 12 month period. but we will see periods of volatility and market consolidation through that. this is what you were alluding to, the shape of the covid virus resurgence. we would be using the volatility and consolidation to add cyclical exposures to supplement areas of structural growth. we have been long-term advocates including digital transformation by the technology sector. our conviction has not waned, but as a result of structural changes that are taking place in the post-pandemic world, it is oure news areas we have highest conviction equity ideas. in terms of what we are looking
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for, and investing in new areas of growth, we are looking for , new revenuee opportunities. we are looking to invest in alignment so growth can be stronger and more secure. we are looking closely, parts of the market that can benefit from esg that we believe in. anna: it is interesting to look at where the markets are, you wonder what is driving this wobble, this lack of confidence. the ftse down 14%. the dax down 1.5%. .- the ftse down 1.4% is this scene are movement limited over the winter months as countries deal with another wave of the virus, and these curtailment's could be long-lasting even if not as
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draconian as the first time around. grace: yes, we certainly see the economic data that has ebbed and flowed. when the virus has resurged, that has impacted the economic data in high touch sectors. the market is concerned about that. what we see is the shape of the additional restrictions coming in are much more focused with the intention of limiting -- not different from what we saw through the spring when it was a blanket lockdown to control the virus. that is a concern for the market. opportunity to buy into some of the things that we call investing for a durable recovery. we think we are in a recovery that will not progress in a
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straight line. but durable trends around energy, mobility and infrastructure spending as well are where we want to put our capital to work. if you was going to ask can take advantage of the selloffs to buy the dip. people are so quick to say london lockdown. maybe it will not be a lockdown. pubs closing at 11:00 should be the normal state of things anyway. i don't know when they started to stay open later than that. isn't it possible that the markets are too concerned on a day like today? grace: the markets have traveled a long way from march so it is natural you get volatility around key events. it is an optimistic mood in recent weeks, and we have the virus resurgence coming in.
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the worry for investors is it has moved away from being a hotspot to something broader. we think the virus will be well contained, and the economy will continue to do well. we expect a recovery in the economic data and therefore corporate profits and financial markets. whathape of that recovery, is happening underneath will be quite different when we think about the high touch sectors, travel, leisure, hospitality. that is a small part of gdp in the single-digit range. technology has played a greater role in improvement with other strong trends. the shape of what has happened below the surface has changed, but we still feel optimistic we are in the start of a multiyear cycle, and therefore we will see progress particularly around the equity opportunity pertaining to
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longer-term. anna: where do you position in tech right now? the drive toward 5g and the relationship with apple is helpful as well. grace: i think the digital transformation is a place that is extremely interesting. it is easy to say it is done. we had the pandemic and we jumped to work from home, therefore you have that change and the stocks have gone up accordingly. we don't believe that is the case. what we have seen through the covid pandemic in technology is bringing forward those trends, but we think that is to a new level from which we will see further acceleration. the amount a corporate can spend on technology is in correlation to the corporate profits. we will hear in the corporate
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earnings season that earnings, head of expectations, do not forget corporate profits are down 30% year on year. as we go to the economic recovery that we believe in, corporate profits will grow, which means the abilities of technologyo spend on and digital transformation will rise. a keyee with 5g being trend, artificial intelligence, another one. the internet of things. all of these drive activity. anna: we will get to some of those in our next conversation, stay with us, grace peters, exec. director european equities strategist, jp morgan. coming up, after strong earnings from goldman sachs, all eyes turned to morgan stanley. we preview the third quarter earnings and what to look for in these banks reporting. this is bloomberg.
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>> provisions have been down. analyst expectations up and down the street. while we are not out of the woods, there is still uncertainty where things could go, it does feel better than it did a quarter ago. cfo, that was wells fargo
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john shrewsberry, speaking after the profits slumped 56%. investor intention turns to morgan stanley, but will the figures disappoint like the rest of lenders results. joining us is dani burger. given what we have seen so far for big bank earnings, how are morgan stanley results likely to size up? for: the bar is set high morgan stanley to impress. we have seen every lender share price fall after reporting, save for goldman sachs. that is where the standard is set. part of goldman success has to do with an increase in trading specifically. fixed trading was weaker than expected and equity trading, this is where morgan stanley can shine. if they can meet where the consensus is, it will become the number one bank in terms of
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market share for equity trading. taken positively by investors. they are bullish on their m&a and deal outlook. if morgan stanley echoes that, it will be taken as a positive. investors are skeptical of what they hear from banks, and will no doubt be critically looking at morgan stanley's earnings. anna: the chart we are showing suggests morgan stanley goes alongside high expectations. we expect something strong from them. what commentary should we look for? dani: the commentary is key for all these earnings. the banks have come out with a smaller loan offers than expected, and in some cases half of what was expected. investors have not cared because of the commentary from the executives seems to indicate this is a pause in the bad debt, not an end to the turmoil we are
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seeing in markets. they will want to know morgan stanley's outlook on that, assuming like other banks they have lower loan loss figures. they will want to hear from executives about the various deals they have had, morgan stanley coming off the back of mega deals. much more retail focused businesses. it seems like morgan stanley is ining asset management a different direction. that will be a hot topic of conversation in the earnings call. anna: dani burger with a look at the banking sector. let's look at more investment, jp morgan and head of european equity strategist, i want to step away from the banking sector and look at what jumps out from your notes, around utilities. we have had a number of guests talking about an area previously considered not that exciting is suddenly more exciting. we have a chart that pulls up
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danish utility wind power focus grade we could have chosen other established wind power players to make the same point. ebitda,sector we see and is there still room to play this theme in this sector as a whole? grace: you are right utilities have moved to a sector where we see a multiyear organic growth story starting to unfold. you have players who have achieved a higher rating. those have undergone a transition, and we think others in the sector could follow suit. as businesses are more focused on renewable energy, most notably wind and solar power, as they divest in industrial parts
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of the business, we think they can not only achieve higher us thisgrowth, so for is one of the most compelling sectors to invest in. european utilities were ahead of the u.s. utilities. obviously the outcome of the u.s. election could change that. overall, it is the energy transition and environmental themes we find compelling. matt: what are the other outcomes you think could be different in case of a biden win? sweep, whata blue do you expect? grace: if there is a blue sweep, energy transition will benefit. but more environmental trends will benefit.
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that will also seep into mobility, and not just passenger electric vehicles, but in terms greenhouseto reduce emissions. infrastructure will be another piece. there are sony facets to infrastructure. -- there are so many facets to infrastructure. many of these have been long discussed. we see a renovation wave about to unfold across europe given -- driven by the eu green deal, and that can translate into the u.s. market under a joe biden win. digital infrastructure is a key part of it. 5g, internet of things, artificial intelligence, all of these digital transformations need infrastructure in place to facilitate that development. infrastructure could be
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accelerated under a democratic president. anna: it would take a lot of power on the hands of one side to push through some infrastructure. talk about infrastructure often but it does not come through in delivery, and you wonder if five years is enough to commit to these big infrastructure projects. should we have different expectations heading into next year? grace: i believe so, and the pandemic has put a different tilt on things. governments are looking to invest, there are two things they are trying to achieve. first, increasing employment, but a strategic objective and part of that is an equitable recovery. infrastructure is a good way to spend to increase a more equitable recovery. but we also need to see investment to make them more resilient and environmentally friendly. when you push that together
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under the umbrella of infrastructure, we think there is a firm need for it and accelerated need that will result in a real commitment from the government in the u.s. particularly if you get a democratic sweep. matt: how encouraged are you by the so-called hamilton moment, the eu rescue fund. yesterday i was told they are ready to disburse the money by the end of the year. is that a huge vote of confidence in european stocks? grace: i think it is helpful to european stocks. i mentioned we think markets will move up driven by the u.s. and china making new highs. we think europe will lag the global recovery but make positive progress. andeu green deal commitments we have seen is very helpful. i would say it is helpful to the
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european market also overall, but it is the real catalyst for some of the sectors we have spoken about, not just utilities but autos, construction, material. if we go back to what we are trying to achieve overall as we invest in the recovery, adding cyclicality, so when you put the eu green deal and look at the sector and what it gives you when you to your bottom up stock analysis, many of those sectors have an attractive balance of growth and cyclical exposure. we expect the third-quarter earnings season, you start to get revenue moving ahead of cost, meaning you get operational leverage into that recovery. matt: thank you very much for joining us. we appreciate your input. exec. director european equities strategist, jp morgan, grace peters.
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she will continue the conversation with anna and myself on bloomberg radio 9:00 a.m. u.k. time. google it. bloomberg radio. coming up, europe's virus resurgence. france imposes a curfew in paris. germany hits a new record in infections, but they just say, please stick to the rules. we get you all this next. this is bloomberg. ♪
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anna: welcome back to "bloomberg markets: european open." 20 four minutes into the trading day and european equity markets not taking the latest news around the virus in stride. stocks down by 1.8%. down more than 2% on the london markets. the dax similarly down, 2.2%. numbers in.virus in the virusighest story so far for germany read concern in london around further measures to tighten up movement and contact within london. of the strictest measures came from france, a
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curfew in paris and eight other major cities. germany has seen a record number of cases after angela merkel warned more measures will be taken if the rise in infections does not stop in 10 days. joining us now, sam show valley -- sam trevelli. the best way to tackle the virus , in its second coming, what are your thoughts on a circuit breaker? that seems to be in the narrative in the u.k. it may have been pushed aside, but what is the point of a circuit breaker that when you lift it, you go back to where you started? sam: that is an excellent question, and honestly the only way we can tackle this is if people's behavior in general, not just driven by circuit breakers.
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what thisely that is virus research is telling us. people's behavior is not in tandem with what is required to stop an airborne virus. circuit breakers will help if you are trying to manage the impact on the system, or keep resetting and starting fresh every few months until we have a vaccine. i cannot see anything long-lasting from that perspective. matt: we will have to call a circuit breaker now, we are out of time. we appreciate you stopping by even if for one question. we hope to get you back on soon. from bloomberg intelligence talking about the efficacy of a circuit breaker locked down. up next, boris johnson tells eu leaders he is disappointed by slow progress on brexit talk.
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there is still a lot of work to be done. ♪
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anna: welcome back to "bloomberg markets: european open." 30 minutes into the trading session, broadly negative, down more than 2% on the dax. the ftse 100 not far behind. travel and leisure to the downside. down by news from ryanair, that is having an impact on other airlines. ryanair cutting capacity for the winter. laura: singapore and hong kong are set to create a travel bubble that will exempt people from quarantine. it reopens the link between the two top financial hubs, they
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hope the bubble will start in the next few weeks. pacific in cathay singapore airlines. the chances for a stimulus package before the election are now all but gone. steven mnuchin is blending politics, undermining the months long negotiation. the white house is criticizing the democrats, but they hit back saying the administration did not take the need for stimulus seriously. thailand has declared a state of emergency in the capital as protest against the government continue. tens of thousands of protesters broke through police lines to march on the prime minister's official office. protesters want new elections, constitutional reforms, and curbs on the powers of the king. they say they do not want to bring down the meineke. -- bring down the monarchy. tensions increase between armenia and azerbaijan.
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development threatens to bring russia more closely into the conflict. it says that is studying the incident. 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. this is bloomberg. ♪ matt: thank you very much. europeannson tells union leaders he is disappointed by the slow progress on brexit trade talks. the british prime minister says he will decide after this week's eu summit whether it is worth continuing to work for a dealer not. german finance minister tells me he expects both sides to seal a deal even if it comes at the last moment. >> this is always the right way to discuss questions that are difficult, at the last moment.
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my experience is that at the last moment you will find solutions. matt: a phone call with boris johnson, and in a tweet, the eu commission president said there is a lot of work on fisheries, level playing field, and governments. joining us now is jennifer f. revis, partner, baker & mckenzie global services. be ae ask how could there lot of work left on fisheries? it seems so simple, and economically so insignificant. jennifer: good morning. absolutely, fisheries you might not think would be a hot potato, but it is a political hot potato for different reasons. up fornt macron is election in 2022. the western part of france
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relies heavily on fisheries for the economy, and therefore president macron wants the support of that part of the electorate. in order for them to continue their activities, they need access to part of the yo u.k. fishery waters. they will be constrained and will not have sufficient access to fishing because other european member states would be accessing french fishing waters. it is a hot potato in europe at the moment. anna: from a u.k. perspective, this gives extra prominence because of pressure for another independence reference in scotland. the visibility of the fishing industry, promises that have been made to that industry, and to hold the union together.
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let me ask about the difference between a deal and no deal. you said the difference is not that great. is that because services is not included, or if you take away the services exclusion issue, they are not that different? jennifer: that is right. it depends on what industry you are looking at. looked atith oxford exactly this issue. we found a free-trade deal with the eu would see u.k. gdp fall by 3.1% in the next decade, as compared to a no deal situation where the drop in gdp would be 3.9%. thatifference is not significant. if you drill down, the benefits
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of the deal would be more significant. having a deal will be very important for manufacturing sectors in the u.k. such as the auto sector and health care that rely heavily on regulation of products and some mutual recognition between the eu and u.k. will be fundamental for those industries. the challenge with the free-trade agreements, they provide for free trade primarily for goods. less in theere is way of access to services. that is the key concern for the u.k. because the u.k. is heavily so areas suched, as financial services, they want to ensure there is access to the eu market. if the trade agreement goes beyond the traditional trade agreement to make that possible, and at the moment the way the
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negotiations are going, there were concerns that free-trade agreement may not go far enough to cover that. do all outside countries that make trade deals with the eu have to agree to have state aid issues decided by the eu court of justice? is itld it maybe be -- more typical to have a third party decide such issues? it seems more fair to have a third party than have the u.k. subject to eu law. yes, absolutely, most free-trade agreements provide for this process specific to that free-trade agreement which would be an independent body. as opposed to this resolution body of one of the two parties. from the perspective of the u.k. government, it would be
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absolutely unacceptable to have to rely on the supervision of the european court of justice to decide any matters pertaining to trade in the u.k. that will play a role in how this resolution is resolved. concern of the eu is that with the u.k. leaving the european union and having more freedom over its policies such as state aid and what subsidies it provides to boost the u.k. economy, the u.k. may depart from abiding by the european union, and therefore u.k. businesses may be given an unfair advantage in the eu point of view. eu is making it conditional
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only the u.k. retaining access to single markets for matters such as goods, but the u.k. continues to abide by eu state aid rules. anna: what about the rules of origin? you made the point a free-trade agreement is only free to the of the set out rules within the agreement. jennifer: that is an important point because free-trade does not mean free-trade, it means the goods that qualify as originating in the free trade agreement within the country -- so here the u.k. and the eu if a deal is reached. it is expected that the rules of origin that would apply for movement between the u.k. and eu are rules of origin that are set out in the pan-european
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mediterranean convention, which is a free-trade agreement the eu currently has with numerous countries around the mediterranean region such as morocco. at the moment, it is so complex to negotiate rules of origin, you have to go through products line by line rather than have the negotiation, and there is no time for that. the u.k. and eu would apply the same rules already in place with other third countries. those would be difficult for companies to apply. they rely on minimum originating content being used. that is raised as a specific concern for the auto industry, because the auto industry would use parts from third countries such as japan, switzerland, and it is clear in the negotiations that the eu will not accept parts from other countries even when the u.k. has free-trade agreements with those countries,
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they will not allow those parts to be treated as originating. that is what we call a concept accumulation. where you have a net worth of aee-trade agreements -- network of free-trade agreements, you can look at materials from other countries. anna: thank you very much. thanks for the briefing. clearly a headache, this issue. jennifer f. revis, partner, baker & mckenzie global services . up next we will be speaking to dr. severin schwan, ceo, roche holding. sales came in below estimates. this is bloomberg. ♪
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anna: welcome back to "bloomberg markets: european open." 44 minutes into a negative trading session, down two point 4% on the dax and the ftse 100 not far behind. roche third-quarter sales coming in lower than anticipated. the decline from prescription drugs overshadowed a boost from covid tests. the swiss company reported sales of 14.7 billion swiss francs, below the average estimate. joining us now is dr. severin schwan, ceo, roche holding.
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the competition you face has surprised some in the market. how are you able to conserve your guidance even though the competition from bio stimulus seems intense? dr. schwan: indeed. the competition from bio stimulus is intense, but this was expected. yearwe have seen over this is a decline in the second quarter due to covid-19. that theood news is business recovered in the third quarter, and that was primarily driven by our newly launched medicines, they compensate more than the loss from bio stimulus. very strong demand for covid-19 tests. matt: how much of a recovery did you see in the third quarter in terms of doctors office visits? i can imagine the doctor's office is a place a lot of
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people are avoiding. that must be a problem when it comes to prescriptions. what rebound did you see, and what behavior do you expect from patients in q4? dr. schwan: you are absolutely right, this was the consequence of the lockdown in the second quarter, that patients delayed doctor visits, delayed hospital stays. there is a consequence, an immediate impact on our business, both pharmaceuticals and diagnostics. we have seen a recovery already in june, and roughly we are back at about 90% of capacities. patients are not yet returning to the doctors and hospitals at pre-covid levels, it is at about 90%. anna: how long do you think the treatment rate for chronic diseases like eye disease and
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multiple sclerosis, how long until they get back to normal? dr. schwan: if our portfolio -- as far as our portfolio is concerned, we have seen a good recovery. we are actually back in q3, and that is other medicines, that is the reason the business recovered in the third quarter. we had good growth in the third quarter. that is the reason we are confident to confirm our outlook for the full year. matt: i have to ask about the antibody cocktail that you are developing with regeneron. seekingou go about european approval for this treatment? status as of now
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, regeneron has filed for emergency use authorization in the united states. we are in discussions with regeneron to also seek approval outside of the united states. this is at an earlier stage, but of course we want to make sure we bring this treatment option two is many patients as soon as possible, also outside of the united states. matt: in the united states, president trump gave the treatment a big thumbs up and promised american citizens they would all have access for free. are you aware of exactly how that will happen? have you talked to u.s. officials about this? dr. schwan: we have not started any pricing discussions with governments around the world. our focus is to provide supply. at this stage for conducting the
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clinical trials, then ramping up supply as we bring this medicine to the market -- that is what we are focusing on. ,est assured, like in the past we will be very thoughtful regarding our pricing, and make sure access is possible for patients around the world. our focus at this stage is building up the capacities. anna: you have been suffering from shipping delays in your u.k. operations surrounding covid-19 and testing. how far along the process to clearing that up are you? dr. schwan: it is cleared up. we provide full supply for our offerings,iagnostic that is back to normal supply.
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matt: are you completely prepared for a no deal brexit? we have heard so much talk about trucks lined up, issues of getting things back and forth to the island, do you think that will be a concern or do you have plans for that? dr. schwan: we have prepared ourselves, and we have contingency plans. at that has a lot to do with bringing enough goods, medicines, diagnostics to the u.k. i'm confident we can keep a continued supply going. matt: thank you very much for joining us. dr. severin schwan, ceo, roche holding talking to us about earnings, competition, recovery from covid, and from the lockdowns, and what is going on in the united states with president trump.
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up next, a wave of corporate bankruptcies has only been deferred. it can still flood financial markets in the coming months. we will discuss this macro view with laura cooper, bloomberg's mliv macro strategist. this is bloomberg. ♪
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matt: welcome back to "bloomberg markets: european open."
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we are 53 minutes into the trading day. the dax is down 2.3%, big drop. ftse off 108 points. the cad down 1.7%. cooper, mlivlaura macro strategist. we are seeing big selloffs on concerns -- i guess brexit and stimulus for sure -- but this must be covid focused. laura: absolutely. the fact we are seeing european markets deep in the red while u.s. futures are on the back foot does signify this is concerns about the virus resurgence. the dax is leading the drop does signal we had markel -- merkel say we cannot repeat the initial lockdown we saw earlier this year.
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the fact we are seeing renewed restrictions likely coming, this is weighing on risk sentiment. this positive growth narrative in place for the last several months is starting to fade quickly. our: have we given up obsession with stimulus given what we heard from secretary mnuchin this week? , i mean before the election. laura: i think there is this wide gap between what the democrats are offering and what the republicans are willing to accept. thestors are shrugging off fears that we will not see a stimulus package ahead of the election, and anything we see creates volatility and investment jitters. it remains we will see a sizable package regardless of who wins on november 3.
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that is continuing to buoy sentiment. matt: you have been in london long enough that you say "boy" but we know it is "buoy." you have a macro view on that today. we were expecting this but did not see it, it can still come. this: we did see exceptional stimulus from central banks. we did see government intervention that was unprecedented but did defer the flood of bankruptcies we would expect given the economic collapse we saw earlier this year. we see renewed restrictions come in place as economies are struggling to return to pre-pandemic levels. this willsuggest still come into play. anna: thank you so much, laura
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cooper. these marketsying this morning. this is bloomberg. ♪ so you're a small business,
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for a natural, effortless look. call in the next five minutes and when you buy 500 strands, you get 500 strands free. call right now. (upbeat music) the second wave strikes to europe after a curfew in paris. u.k. cases rise by a record amount. election, nancy pelosi says the white house's offer remains short. boris johnson seems willing to overlook himself and post-brexit deadline, telling bloomberg a

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