♪ francine: stocks fall on fears of a second wave of infections. 20 u.s. states see arise in cases. your reopens its borders. france, germany, and others remove travel restrictions to the eu to spur tourism during key summer months. china's economy continues its recovery. industrial output rises through --though the number falls short of retail estimates. good morning.

this is bloomberg surveillance. i'm francine lacqua in london. a lot of fears in

officer while fleeing during an arrest late friday. the police chief resigned hours after the killing and the officer was fired. three dozen people were arrested after people set fire to the restaurant where the shooting took place. global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm dani burger. this is bloomberg. francine? francine: thank you so much. china's new virus wave, beijing has -- over the weekend. chinese authorities say risks it will spread are high. cuomo york, governor warned against triggering the second wave of the virus. he said he would be invoked --

reimpose shutdowns. is the us for the latest head of bloomberg intelligence here in europe and longtime pharmaceutical analyst. always good to speak to you. when you look at the possibility of a second wave, cases in the u.s., cases in beijing, as is linked to reopening the economy? sam: good morning. know, i'mthe -- you not so surprised about the numbers rising in the u.s., because you see constantly pictures and videos of people walking around without masks in high concentration, etc. but when you think about beijing, this is a country that is used to wearing masks. asia, in general, does that. so, i'm a bit surprised unless this is an outbreak, although i'm hearing this is a virus that seems to genetically resemble those circulating in europe.

so how on earth a cut into china, god knows, unless it was a mutation that happened there. so, it's very difficult to read this. nonetheless, it shows how capable and sensitive this situation is in terms of how quickly you can get a new infection running. francine: sam, just a we 100% understand, there was a train of errors that kicked off, the first time, end of january. then did it mutate in the u.s. and europe, and did that virus come back to china? is it people that had covid that were reinfected? how much do we understand this situation? sam: i don't know any of that detail. all i read -- and let's hope it's not a random piece of information that has come across my feet -- but at the end of the day, what i read is that the virus seems to resemble the

mutations that's being seen in europe. but that could easily have been generated by virus in china. so it's difficult to tell whether this is brand-new infection. is it reinfection? too early to tell. i think they need to do a lot more analysis to understand. but the point is none of that matters. the fact is it's happening. when i go and see people seem to have forgotten there's a virus running around. francine: what do you think that is? there seems to be evidence, maybe not as deadly as first thought. statisticsknow about about how serious that is? sam: i don't know where that comes from because we need to the number of people hospitalized, you still have a significant proportion of people within community suffering severe fatalities. but anyone that goes to

hospital, i doubt the people who come out are back to normal straightaway. there are lots of people suffering for weeks after, so this is not something i'm going to accept that is less bad than we thought. but at the end of the day, i think usually these viruses tend to take out the most susceptible first. so, we have to be aware of that, as well. francine: what can you tell us about the vaccine? it seems the first wave of vaccine -- this comes from a doctor -- wouldn't when i do percent protect against the illness -- wouldn't when i do percent protect against the illness. 100%at right -- wouldn't protect against the illness. is that right? sam: that's based on work done by various groups. it's very hard to tell because we need the human data. even will beget the human data to get the comparison of the analysis we need to prove that point, it's going to take a long

time. you need to vaccinate tens of thousands of people and let natural infection take place to tell whether disease is protected, etc. the based on the nonhuman primate data we have seen so far, it does look like some of the vaccine we have seen the data for seems to protect against the bad disease, but doesn't stop you from getting the virus and getting infected. but that doesn't matter, does it? we don't mind having an infection. we get a cold every day, so why does that matter as long as it doesn't kill people? francine: you're absolutely right. thank you. coming up, we talk about the shape of the recovery and what's next. that's coming up shortly. this is bloomberg. ♪

francine: economics, finance, politics, this is bloomberg surveillance. i'm francine lacqua in london. let's get the bloomberg business flash with dani burger in london. dani: oil major will make billions in write-offs and impairments after reducing its assumption for the price of oil. it is brent trading around $55 a barrel in the long-term. it's also reviewing plans to develop some of its prospects. spain is to announce a $4 billion stingless program for the auto industry today -- stimulus program for the auto

industry today. the two sectors account for almost a quarter of the nation's gdp, with carmakers up 1/5 of exports. both sectors have been hit by coronavirus pandemic, with the spanish economy expected to shrink by 50% this year. -- 15% this year. the consumer goods giant aims to zero out all emissions from its own operation, as well as suppliers, by 2039, and it's going to show off its work. the labels on the products will show how much greenhouse gas was emitted in the process of manufacturing and shipping them to consumers. and that's the bloomberg business flash. francine? francine: thank you so much. the markets sinking today as second wave fears hit investors. turning us now is the chief correspondent. thank -- great to speak to you again. when you look at the possibility of a v-shaped recovery, is it up

in the air because of a possible second wave? no, i don't really think so. i think the second wave, if there is a second wave, is going to flatten out the v, but i don't think a restore is going to be completely canceled. and the reason is the following. even if we do have a second wave, i don't think governments are going to put their economies back into this kind of complete lockdown. because a, the economic damage is simply too great. the long-term damage, in particular. also, we've become better at dealing with the virus. globally, even though the total infections were confirmed cases are increasing, death rates are continuing to decline. so i think there are a number of reasons like that. just to be clear, in the u.s.,

the second wave is a really nist -- is really a misnomer because the first wave never ended. francine: if you look at what the scoring will look like, what you look like first -- scarring will look like, what do you look like first? klaus: scarring is going to be more severe. it is put in place because they have less fiscal space for a variety of reasons. with the severe beating that theencies have experienced, scope for monetary policy is smaller. lastly, emerging markets tend to have weaker medical systems. so, limitations have to be more severe and longer-lasting. we also believe scarring is going to be somewhat larger in the u.s. than the euro area, so anre looking at more of l-shaped recovery. you're going to get an initial v

in the third quarter, that clear. but the reason why it is much a medic in the u.s. is, first of a verye u.s., you've had steep increase in on a plummet, and-- in unemployment, resources are remaining high. but also, we think the u.s. economy was weaker. we expected a recession for different reasons. the proposition going into the crisis was much worse. if you look at reasons around the world, how do you planning out, given they're all dealing with the virus when they were at different stages within the economic cycle? course,ell, china, of

you got a state sector that is very, very large, and the chinese government is quite clearly willing to pump up this economy so the chinese economy is probably the one that comes closest to a v-shaped recovery. but i think we should also note that in a v-shaped recovery, the loss of output is never made up, only in what they often call a -- recovery is when you get a rebound. u.s.e initial phase, the and european economies will behave similarly. it's a more when you look further out towards 22 anyone 2022, there021 and will be differences. the situation will be more in their favor if the economies begin closing the gap. foreven by 2022, we look the european economy to be around to put 5% smaller than the trends we predicted --

2.5% smaller than the trans we predicted. francine: is this on the assumption we don't get a hard brexit, or even if we get a hard brexit or a no brexit deal, it's fine because we have this support of action from the commission? klaus: it would be better if we didn't have a hard brexit, but let's not forget who's going to be damaged the most a hard brexit, the u.k. economy, not the eu economy. klaus, thankight, you so much. klaus stays with us. fed chair jay powell is expecting to downbeat his assessment as he heads to capital will sta -- capitol hill twice this week. this is bloomberg. ♪

♪ this is bloomberg surveillance. i'm francine lacqua in london. fed chair jay powell is expected to bring a cautionary message to capitol hill. his remarks to lawmakers will include a downbeat assessment, given last week when policymakers said rates will stay zero through 2022. this performance has gone criticism from larry kudlow for being overly negative. still with us, klaus. what exactly do you see is the biggest concern in the u.s.

economy? is it on a plummet? as a deflate -- is it u.s. on a plummet? is it deflationary -- is it unemployment? is it deflationary measures? klaus: it is an employment. some people argue that the u.s. is doing more or less the same thing as europe, that it's just a different route. in europe, the german model has been widely adopted, which is the government subsidizing companies so they can continue to pay payroll. employment.y in in the u.s., it's different. the u.s. companies have fired people and the government supporting the household incomes through unemployment insurance, etc. but i still think there's a higher threshold to rehire someone than it is to fire someone who has been furloughed.

and i think getting the people back into the jobs is far and away the most important challenge. francine: what does this all mean for dollars? ,f you look at dollar dynamics it is probably the one question people will want to know. how difficult is it to see what dollar does, given the uncertainty between the china trade war? know, ifll, you currency forecasting is a highly peerless affair -- but no, i think the narrowing of the expected growth differential between the united states and the euro area suggests the euro, which is still on all measures, pretty undervalued at this stage , that it is going to support the euro. the idea there is going to be more scarring in the united states is actually not one that is limited. it is only our view.

was interested and intrigued to see the consensus forecast for 2020 has fallen more for the euro area than the u.s. -- a little bit more. upward outward -- division is larger for the euro area than the u.s. so the idea of the damage done in the u.s. is going to be longer-lasting or somewhat greater than in the euro area is actually a pretty wide spread opinion. francie? -- francine? francine: when you look at the chinese economy, our pressures something that could be applied to the rest of the world? course deflation exporting from china is always a risk. i would be very careful by extrapolating from producer

prices because exactly as you has been depressed because of a slump in commodity price, in particular oil prices. with chinese goods still facing tariffs around the world, i think in shorter-term, the deflationary risk coming out of china are actually somewhat smaller than they have been in the past, certainly not something you can dismiss. when you look at emerging markets, what is your biggest worry for them? does it have to do with covid-19 or is covid-19 not leaving -- leading to enough structural reforms? klaus: i think at this stage, it's covid-19. emerging markets are, i think are vulnerable to this. veryyou think of india, often in the implementation, even if the government conclude and take -- make the right

conclusions and take the right conclusions, very often implementation leaves much to be desired in india. this is a bit of a disaster. the losses and the permanent loss of income in india are going to be very, very large, a percent, 9%, which is a very shades percent, naprosyn -- 8%, 9%, which is a very big number. francine: boris johnson orders britain to shop with confidence. we'll discuss risks. interview with burger king u.k. is next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance ." let's get to first word news in london with dani burger.

dani: china is racing to control a new coronavirus out rake in beijing after the biggest rise in new cases since mid april. surrounding houses and markets have been locked down. it is the largest test of the country to contain the virus since it first emerged in wuhan. according to larry kudlow, growth in the u.s. is recovering and there is a good chance of a v-shaped recovery. president trump's chief economic advisor rejected the more cautious outlook by fed chairman jerome powell, saying his comments had been remote roast that had been r in a speech to the nation on sunday, emmanuel macron said the country is ready to turn the corner on the pandemic. restaurants and bars are reopening in paris, and all

schools will resume next week. atlanta has become the focus of the nationwide black lives matter protest. that is after a 27-year-old black man was fatally shot by a white police officer while fleeing during an arrest late friday. the city's police chief has resigned hours after the killing, and the officer was fired. three dozen people were arrested after protesters set fire to the wendy's restaurant after the shooting took place. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, dani burger. this is bloomberg. francine? francine: thank you so much. let's get to one of our exclusive interviews, nonessential stores in england will be allowed to open their doors for the first time since the march lockdown. prime minister boris johnson has urged consumers to

return to stores with confidence, but will that he echo will they be fully able to reopen? alister murdock, thank you for coming in. murdock, thank you for coming in. what does it mean for profit in the u.k.? francine.very much, what it means for us is that at this stage we can open our restaurants for takeaway, and that is what we are doing. so for takeaway and delivery. not do takeaway and delivery. ,ith very few businesses because someone needs to -- it isdably marginally profitable at best. meanine: so what does that for what burger king u.k. will do going forward? how many of your overall

restaurants have you been able a 30% hit oris it arson -- are people coming in, and how much do they get in terms of deliveries? we moved relatively early and got ourselves ahead of the curve. have about two thirds of our restaurants that are open. a number of the restaurants that are not open are in what we might term slightly captured locations, like -- captive locations like airports, shopping centers have not been reopened until now. think the rate of openings going forward really depends on what sort of volumes that we are seeing with people coming back in. the early signs are reasonably we just have to

wait and see over the next week or so. francine: have you had to pay leases, or are there is a standby on it? have your leaseholders given you an easier time he echo alasdair: -- an easier time? alasdair: we were quite controversial and became very early in march and said we were not going to pay any of our rents, and i still stand by the fact that where we have no revenue, no rent. equally, i cannot be that cynical. have restaurants that are open and thriving, and not be paying some or a portion of our rent. what we have embarked on a policy of his paying for a portion of rent for the restaurants that are open. back to therading fullest extent that we were

trading before. if you are trading under 80%, you will be undoubtedly losing money, so it becomes very difficult to afford the rent. which is part of the problem. how do you create something that is fair for both sides of that? we are still very much in the middle of that. i think the next three months, understanding what the government do and what we do and what landlords do, that is critical for the future. francine: does it mean that you are worried that you will have to close restaurants down, and if that is a possibility, when will you make that decision? thatair: that is something we look at. it is not something we would do lightly. i think you are looking at the sort of fluid administration are all forms of administration going on at the moment, both in the restaurant industry and largely in the casual dining

industry within the restaurant but also the high street long-term has to be less competitive. are the rents that everyone is paying on the high streets, are they do much? if they are, what can we do about that? are we able to achieve those he echo or can we -- are we able to achieve those? or can we find a mechanism that works for the landlord or not? if we don't and if the landlords become too difficult -- i'm not saying that they are or they will -- but if they become too dogmatic, you will see more -- you have not been able to reach a middle ground and you will have no choice but to put these restaurants into administration, and that is not what we want. we want to keep as many people and get as many as we people -- as many people as we can back to work. francine: how close are you to bring some restaurants into

administration? alasdair: we ourselves -- we are not very close at this stage. we obviously look at all the options, but whether it is tomorrow or next week, no, absolutely not. but is it something that would be considered? yes, it could will be considered. francine: when do you expect things to go back to normal to what they were pre-covid, let's say december 2019? is this a year away, two years away, or could it come sooner? i thing can bill come sooner. the public is very keen to get back out. it will come sooner. the public is very keen to get back out. there is a matter of redundancy that people will see and associate with that. but i anticipate that it should be or will be a year.

one of the key things is you social distancing piece. it seems that the movement, we have been pushing quite hard with a lot of other people in our sector to try and encourage the reduction, a safe reduction of social distancing because safety is obviously still primarily important. as that comes down and as people can go back to restaurants and back into restarting that rhythm, i would see that -- i would see us coming back to normal at the start of next year. so it is close to a year long process. with other ones it will be shorter. year isnly could see a what we are looking at. francine: thank you so much for the interview today. alasdair murdoch today, burger king u.k. ceo. coming up, we will speak with the chief executive of clothing coming dull staff -- dell staff. areill as if there

differences between shops and restaurants. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get to the bloomberg business flash with dani burger. dani: hi, francine. bp sees the coronavirus pandemic is having a long-term impact on energy demand. the oil maker will make billions of dollars of write-offs and permits for esther reducing its assumptions for the price of oil. it is also reviewing plans to --uce exploration process prospects. the sales decline has eased that

h&m, which reopened the bulk of its stores after lockdowns. the first 13% in days of june after tumbling in may. e-commerce eased some of that pain, online sales rising 32% in the second quarter. carlos ghosn has always said he was fed up. she was set up. now there is evidence -- he was set up. now there is evidence to support the claim. him fromign to remove the sun started almost a year ago with his arrest for alleged misconduct. we are told the plan was motivated by his plan to remove -- to move closer to renault a business alliance. francine: let's get more on the u.k.'s reopening. a major milestone today as the country's non-essential stores open up for the first time in almost three months. will customers have the confidence to return, or will there be an irreversible blow to

the u.k.'s already struggling high streets. thank you for joining us on an important day for u.k. retail. when you look at the challenges that a lot of retailers, including yourself, are facing, how difficult is it to open a shop and not have dressing rooms open? >> thank you, francine. it is a big day today, a significant day after so many weeks of our stores being closed. we are absolutely ready and prepared to welcome customers back into our stores. we have reopened our munich store a few weeks ago and have in place all of those safety measures and guidelines, and we are taking all of the right care and attention. this bites effect that those are in place, there is the experience that is largely the same, but it is different in that we can do different kinds of service. we can get around the fact that a sitting room is not available.

we can get around the fact that there is less engagement between each other with product and the way that we transact at the point-of-sale. what we have seen in munich is this great confidence as we progress with the opening of the stores today. it is different but still very much -- i think an experience that our customers are longing for today. we have great enthusiasm for people coming back into the business over in germany, and high motivations come out to see us, talk to us, share their stories, and shop. francine: what kind of training has been given to staff in stores about social distancing, and how aggressive will be the enforcement of this? an absolutely thorough training. i was in the stores over the weekend to really look at how we prepared and how the journey through the store looks at how all of those touch points of

safety and protection are actually in place and the training levels in the stores. it is absolutely vital, but at the same time it needs to become integral to the journey rather than an enforcement kind of rule. so the signs on our stores say welcome back, not don't do this and don't do that. they say welcome back and they stay clearly the measures and the guidelines that are in place, and we will gently and in our own way, we will make sure that everybody come people and safemers, are kept throughout reopening and onward. francine: how far away do you think we are to going back to where we were on december 2019? to the second half of next year being a really big move back to a vibrant, multichannel corporation.

for the second half of 21, that is where we see business returning to more normal levels. we are at the moment in germany at $.80 of the volume that we were at for the same time last year. .o that is encouraging to see traffic levels slightly down, but the actual conversion and the motivation up. we think probably by the second half of next year, we understand of course international tourism is very much a factor in our business and in many businesses on streets like regent street and the international shopping cities of the world. and that change is going to take some time to unravel. so while we focus on a closer to home audience in the domestic markets, we will kinda -- i think we will progressively build up toward a more level proving altitude by the second

half of next year in terms of business levels. our e-commerce business, i would just note, has really grown exponentially over the less several weeks. it was already strong at the beginning of the year, but it picked up the pace of course during store closures. we were able to maintain all of the customer service and distribution of our e-commerce channels, and had seven weeks, seven straight consecutive weeks of triple digit growth in that channel. a lot of that is going to stick. closedst retail has been , we think digital will be a major driving force going forward. was going to ask you about e-commerce. how would that change the way belstaff operates in the coming years? are you pointing much more to e-commerce customer experience because that will be a big driver in the next four to five

years? you're actually right, and the answer is, yes, we are going to continue to do that. prior to the pandemic we had invested significantly in e-commerce, and having a significant presence on each channels allowed us to thrive together and to adapt to the evolving customer needs. so we are going to continue to look to digital and to the on the channel operation as being omni-channel- the operation as being the leading driver for us and leaving retail , absolutely integral in the mix, but a supporting cast member, nothing main channel anymore. so our predictions for 2020merce are start your 30% of our revenues and it will enter -- end the year in about 40%.

in the next two to three years we see it as 50% of a share of our revenue. we are very optimistic about that channel and the role it plays going forward. francine: if there is not travel going back to normal, and it does not like -- it does not look like it will be for quite some time, can you make up for that loss of revenue domestically? helen: we already enjoy quite a strong domestic customer base, so that puts us in somewhat of a protective position relative to relying heavily on tourism. but i think that it is absolutely our priority now to ensure that we cultivate, that we develop through customer relationship management, through all the work that we do to encourage the local customer. that is what we need to do, and i think you are seeing differences in different markets on that basis. in vista which

is largely reliant on tourism. so with the value retail partner, we are going to ensure that there is an absolute focus on attracting the locals, the local customer, the kind of customer that is now needed until tourism reactivates. francine: where do you see the strongest demand, when you look at your different markets? very -- therere are various easing's in the economist, where do you think there will be the most euros spent, or dollars? helen: from what we are seeing, germany looks very good, and it looks very encouraging in terms of demand and in terms of continued growth. it is a strong market for us as it was always, and it is proving to be returning to some visible signs of continued growth.

the u.k. again for us is a very strong market, and we believe that we will continue to see good traction there. for us, we look to growth coming from north america. we are a business that is investing in its own channels, so direct to consumer. our approach in north america, like everywhere, will be to have a large amount of our own operating business there, starting with our reopening of our store in new york city coming up in september. and really building that consumer ecosystem through the omni-channel that i mentioned earlier. so america is a really big market potential for us, as in china, and from north america we will look progressively over to china to actually activate business. it is a new geography for us, and one that we will approach in the coming years. francine: helen wright, thank you for joining us this morning,

chief executive of belstaff. this is what the markets are doing. a lot of the focus is on a manyble second wave or, as virologists say, it is just a continuation of the first wave. with possible new infections in the u.s. coming up, we will have a look at that and we will have a look at the markets. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." are, borisemise johnson, and the european commissioner, ursula von der

leyen, will hold a call to break the deadlock in brexit negotiations. the bank of japan announces its latest monetary policy decision, not expecting to take far-reaching measures after pledging unlimited bond purchases. one wednesday jay powell delivers his semiannual monetary policy report to the house financial services committee. thursday is another big day for central banks. the bank of england and the 6 -- swiss national bank report their rate decisions. today marks risk off. bloomberg surveillance continues in the next hour. tom keene joins me out of new york. this is bloomberg. ♪

francine: stocks fall on fears of a second wave of coronavirus infections. beijing reports a fresh

outbreak. 20 u.s. states see a rise in cases. europe reopens its borders. france, germany, and others remove travel restrictions within the e.u. to spur tourism during the key summer months. britain's non-essential shops open today. and china's economy continues its slow recovery. industrial output rises, though the number falls short of estimates, and retail sales data is still shaky. well, good morning, everyone. this is "bloomberg surveillance." i'm francine lacqua, here in london. tom keene in new york. the main narrative will be the markets, what we have seen on the market, and this links it back to the discovery of a possible vaccine, that is months if not years away and the resurgence of infections not only in the u.s. and also china. tom: huge cross current this morning. i can say i have never seen such a distant market right now. th