>> vaccine optimism. a moderna trial clears an important milestone for a coronavirus vaccine. and qualcomm's special status pulled. sanctions for chinese officials. thatan sachs report survey j.p. morgan, citigroup, and wells fargo set aside almost 20 $8 billion of bad loans for the first quarter. welcome to "surveillance."

in dubai.f quite the risk-on rally along these markets. let me give you a rundown with stocks in the u.s., with futures up .7% as we speak, and this is given thee impressive climate. monetary currencies are powering forward. euro-dollar trade at the highest since march 10. in terms of the bank space, we have the german-10 year -- the german 10-year, again, a lot of these haven bids. barrel, you are looking at counterbalancing forces that are kicking in, even though they are revising their forecast to the plus side. let's get to the first word news

now and cross assets with leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, yousef. beijing is in a new position that drew a rebuke from china and added fresh uncertainty for businesses in the financial hub. legislation,gned saying u.s. officials responsible for cracking down on dissent in the city. italy has set a course to nationalize controversial tollroad operator auto strata after all night talks on the politically-charged issue. taking the company of atlantia, owned by the billionaire family. a national tragedy, though the company maintains its safety tracks triggered no alarms. u.s. supreme court justice ruth bader ginsburg has been hospitalized for a few days after being admitted to treat a

possible infection. the 87-year-old liberal is of course the oldest justice and a four-time cancer survivor. in the bank of japan has left monetary stimulus untouched while painting a global picture. the boj, the world's third-largest economy, is facing a different 2020 but a slightly faster pick up in the following years. global news, 24 hours a day, on air and @quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am leigh-ann gerrans. this is bloomberg. yousef? yousef: thank you very much for that. let's get to our top story. a covid-19 vaccine has safetysted in an initial trial, though some did see a side effect. the hurdle, bringing to market

quickly, as more were recognized in the united states. had fidelity's, to top it off in florida, the fed governor they are painting a somber picture of the economy, calling on the central bank to. pivot a longer-term accommodation. . joining us now is stephen gallo, dear pn head of ethics strategy at bmo capital markets -- stephen gallo. strategy at bmo capital markets. in generalty complex are not as high as we have seen. how sustainable are these moves? stephen: well, for the time being, they look pretty real, like the real thing. rather than just a fx markets are also

trading. the drew -- june trade line in china, picked it up, meaning there are less likely to be dollar shortages. we are moving toward an excess of dollars, but is somewhat likely to happen with. the treasury is now over the coming weeks. and. that of course fiscal policy is because it looks increasingly like that will not be additional fiscal stimulus in the u.s. on this side of the election, and that, too, leaves more dollars sloshing around and doing nothing. the vaccine headline, as you rightly pointed out, is not hurting things, but this is a reflation trade and a liquidity trade more than anything else. yousef: yeah. stephen, so weakness in the greenback, that makes sense for the most part, but when we look at other key benchmarks when it comes to implications of the china-u.s. tensions, there were

quite a few set of developments. you cannot tell me they were insignificant, but i am also not seeing the market reaction at tells me that this is really a source of concern for the capital markets. at the moment,t and it may be the case that global investors have simply said, look, you know, there's enough political uncertainty in the u.s. right now. maybe there will be just bluster and rhetoric this side of the election, and then the ,.s.-china trade relationship the decoupling theme and so on, that will be more a story for after the election and 2021, of course depending on the outcome of the u.s. election. so that may be why the rhetoric so far, you are not seeing it reflected to a significant lar forwardhe dol points, not to a significant degree in the dollar cnh upside, but it is still a lingering

risk, which is why i would -- if i were to put a position right now, i would not shortsighted aggressively, i would want to be buying downside optionality, like one year forward puts or low delta deep out of the money ats in dollar cnh, just as hedge, or just to be on the saver side. yousef: right. i mean, let's of flesh that out. the next big data point is going to be what we get from chinese. has this on the perspective. a bloomberg survey analyst is suggesting, or would you say you are a little more on the conservative side? stephen: [laughs] well, it is chinese data, and, c, the powers cp that be are very image-conscious, and they are very concerned about optics.

so if i had to make a judgment call, i would say that that data comes out in line or maybe even a bit better than expected. don't forget, this equity market rally, you cannot always say with full certainty that it is free market forces that are forcing asset prices to move around in china. so the fact that those things have moved in advance of the mostlyggests to me that the data are going to show a chinese economy that is on the mend. , you have toem is remember that this is not a fully free market economy, so if you are buying into the china system, you always have to keep that into the back of your mind. yousef: what kind of tactical changes are you making to the asset allocation model? the u.k. as well has been nothing short of, well, inspiring, i mean, if you are looking to trade this. where are you telling clients to

lock in some trade? hadhen: well, i mean, if i to put trade right now, looking at the major players, i might buy euro dollars with a stop underneath 112 and try to hold it until it gets to 120. but on that trade, i would be closing my eyes at the same time. you are to remember, buying into a relatively high regulation regime. i think fiscal dynamism will be on the lower end of the spectrum. also, you have to remember there are 19 different mouth to feed, and that is just in the eurozone. and in the eu, there are 27. so it is a socialized economy, and, you know, i think this is why brussels will be pursuing member states on the individual corporate tax regimes. that britain is gone from the bloc, and that means the rest will be left to

their own devices, for lack of a better term. the more exciting trade to me is aussie. if we could get a break out above 70, and commodity prices follow suit, aussie dollar can get to 72 quite easily, i think. yousef: stephen, we are going to have to leave it there. thank you so much for sharing some of those key calls. that is stephen gallo, head of european fx try to jihad bmo capital markets. coming up next, we will talk to former u.k. culture secretary nicky morgan. that is up next. this is bloomberg. ♪

yousef: economics, finance, politics. this is "bloomberg surveillance." i am yousef gamal el-din in dubai. let's get you the bloomberg business flash headlines with leigh-ann gerrans. leigh-ann: thank you, yousef. producing anti-bodies to the coronavirus. a number's clearing side effects, some of which were severe. the vaccine will now move to a much larger late stage trial this month to determine whether it will be approved by u.s. regulators. a smi holdinger beat analyst expectations for the quarter that the chip equipment maker says operational capabilities are now largely back to normal, forecast that 2020 will be a growth year. atlantic has

finalized a rescue deal that could save thousands of dollars. -- jobs. raising money from space venture virgin galactic. u.s. hedge fund capital management will also provide a loan secured against aircraft and landing the slump. and that is your bloomberg business, yousef? yousef: thank you so much. --let schedule while wa now let's get to huawei. out of thest be u.k. by 2021. the delayed 5g rollout and businesses with billions of pounds in extra costs. morgan,us now is nicky former u.k. secretary of state for digital, culture, media, and sports. thank you very much for joining us on the program. you are closely involved with

the decision back in january in terms of allowing huawei to participate in the u.k. 5g buildout. do you think, given the changed circumstances, and looking back with the benefit of hindsight, that may not have been the right decision? well, i think you're right to say that service answers have changed anonymously in january -- enormously since january. i think the u.k. position on 5g and the opportunities offered by 5g are enormous, and we want to be one of the global leaders on that, but inevitably, once the u.s. sanction regime changed, and therefore the advice of the u.k. national private security center changed, i think it was inevitable that the decision that was announced yesterday was going to be taken. and i think, obviously, there are a number of reasons for that, but also just the geopolitical change.

with the pandemic, i think the view of china and the concerns raised in westminster, all of that contributed to the decision. the real challenge now is -- how do you find new suppliers? diversification? a global market failure and relying too heavily on a small number of companies. we need more companies in this space. yousef: yeah. this has been a very precarious time for both people who are running telcos and people invested in telcos. what would you say would be that key challenges for u.k. telecommunications companies? malcom: well -- ms morgan: well, i do think it is about the diversification strategy. it is about finding a new supplier to replace huawei. it is also about making sure that, as i say, they maintain their lead in that 5g rollout. and, of course, although the

decision yesterday does not fulldiately affect huawei's broadband rollout, i think and inevitably the pressure will, that, too. for telecom companies, it is going to be, obviously, about making sure, as they replace equip me, they will be shifting , and we know that huawei will be several years now. yousef: we have heard time and time again that the bigger plan is to improve productivity across the u.k. is that going to get set back a little bit now, would you say? think whatwell, i has been remarkable, and even now, we have seen that the u.k. connectivity has seen enormous demand because of the pandemic, because people working from home, being educated from home, and it has held up remarkably well. but that does not mean there is

not a long way to go. that does not mean there are not people in the u.k. in europe need faster broadband who are not able to get it at the moment. would --ncement made in terms of the 5g rollout by two years to three years. of course, it may well be that the telcos are able to do things more quickly, at that time period does come down, but that is to say we have broadband rollout as well. the prime minister's target of 2025, that is ambitious anyway. but the more you change the players, obviously that target date will be strained. yousef: nicky, talk to me about the u.k.'s relationship with china,, because i look at the development, tensions have been building and mounting. this is not going to hell, is it? ms morgan: no, -- help, is it? no, this is not going

to help, in part because of the global pandemic that everyone has been suffering from i think has really contributed to a feeling both in westminster but actually out in the country as well that we need to be very clear come excited about our relationship with china. but i think in westminster what we see our three clear groups. first, a much stronger relationship with the u.s.. the u.s., as we know, has a very clear view about china, and very clear demand of its allies in terms of lessening their links and things like that with china. then you have got people who generally are just suspicious of china. last marketo your reporter, the guy you are interviewing saying china is not a normal market economy, and we need to remember that, for example. but very common in the house of lords in particular, very concerned about human rights abuses going on in china. you put all that together, and

it becomes i think a mix where people are very skeptical about whether we can carry on with a relationship with china. yousef: sure. strong views there, nicky. i appreciate the time you made. nicky morgan, a conservative member of the house of lords. still to come, trump and hong kong's special status. sanction chinese officials response will for cracking down in the city. we will be live in hong kong next. this is bloomberg. ♪ is bloomberg. ♪

yousef: you are watching "bloomberg surveillance." i am yousef gamal el-din in dubai. the u.s. and china -- the tit for tat continues. donald trump has ordered an end to the hong kong special status in the united states. joining us now is bloomberg's caringly, the china executive editor. bloomberg's china executive editor. treats hong kong differently on commerce and trade and the other important areas. they have revoked several important provisions, including hong kong, does not include

eliminating passport holders, certain experts, da and eve neither trump nor his administration have specifically set how it will impact certain sectors here, including the financial industry, and that has a lot of people wondering what the material impact will be. karen, what was this theme for the city itself? confronting the geopolitics but also having to deal with the new tax code from china for ex-pats. that is a double whammy, isn't it? karen: yeah, the white house has not specified which chinese officials would be sanctioned, but it raises deep questions about the city's future as a financial hub that have already been swirling for a

few weeks as china imposed a sweeping national security law on hong kong. it is increasing worries about a hong kong brain drain if china moves to tax its citizens' global income. i could appeal and keep bankers and white collar workers from china there are people facing a tax break, 45% in a city that usually taxes ex-pats at 15%. chinese workers are going home in order to avoid getting squeezed or seeing their savings disappear. yousef: yeah, karen, thank you so much. bloomberg china government reporter karen leigh. coming up, we will get into some consumer confidence trends with fresh ideas. this is bloomberg. ♪ g. ♪

yousef: economics, finance, politics.

this is "bloomberg surveillance." time to do first word news with leigh-ann gerrans. leigh-ann: italy has set a course to nationalize controversial operator autostrade after all my talks on the politically charged issue. the proposer could see a state lender take control of the company from atlantia, owned by the billionaire benetton family. the collapse of the bridge in genoa remains a national tragedy. however, the company maintains safety checks triggered no alarms. president trump has ordered an end to hong kong's special status with the u.s. the move and the wave of a sweeping national security law in hong kong. uncertainty to business in the financial help. trump signed legislation sanctioning chinese officials responsible for cracking down on dissent in the city. a covid-19 vaccine by u.s. drug company mike darda produced antibodies -- drug company

moderna produced antibodies. however, a number experienced side effects, some of which were severe. vaccine will move to a larger late stage trial this month to determine whether it will be approved by u.s. regulars. ruthsupreme court justice bader ginsburg has been hospitalized for a few days after being admitted to treat a possible infection the 87-year-old liberal is of course the oldest justice and a four-time cancer survivor. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. yousef? yousef: thank you very much. let's get into some of the corporate's in a bit more detail. nissan is looking to turn the page with its latest relief and electric. we spoke with the carmaker's president.

first, it is a new chapter. i will say that nissan has a great experience because we have lot ofs, we have run a the voice of the customer, which has reflected this car as a new electrical vehicle platform and which also has a lot of the ,issan good technology connected, and of course -- those are all in this car, and it is something we can open a new chapter, and provide the customer the excitement of the car. excitementiven the of the car to the customer, that can make our employees happy. that makes me most happy. ourselvesr us to make

to allow the new creation to the provide growth to nissan. >> how will consumers respond to the car? what will be the most attractive -- price, range? i would say everything. look at this car over there. don't you think the color is beautiful? we have a lot of the new technology put on this color -- on this card to be very attractive. so this car, even when you are driving, the car can be connected with you. driving, itnot could be a battery. we would like this card to be a part of the customer's life, and that is what we are providing. that is real, and i hope the customer would really, really love what we are trying to provide the customer. as this is coming from 10 year''

experience, this is one of the strengths about nissan. >> what is the main competition going to be when it comes to other vehicles in the market already? this as theoviding most competitive crossover. itself has the strength in a crossover or suv segment, so that combines our essence, and i think we would like to give good value on that segment at nissan. that is why we are saying it opens a new chapter with the new value of the electrified vehicle to the customer. be launchingwill aria.'s after the what is the strategy? this is part of our mobility strategy.

forave a dedicated platform the aria, to the next new vehicles in the system and providing what ev feels like to the customer. but this is very important for thein order for us to fix value of the nissan to recognize what the customer really needs. lockdown measures ease and the u.k., business owners are eagerly awaiting a rebound inactivity. that means trying to understand how can -- how behavior of consumers is evolving, and if gauges of measuring trends is enough. it has been designed by the investment manager of elgin partner, the firm's malcolm gooderham, joins us now.

where do they pass down some of those weaknesses in your view? malcolm: what we have noticed and what we wanted to identify is the the traditional, rational economic issues, and we wanted to try to tap into and attract and measure the consumer mindset to a much greater degree. we felt that the models that goodand are robust were for the financial crash of as8-2009 might not be sensitive to consumer confidence levels as the covid crash, because the nature of this economic event is obviously very driven -- very different and driven by social factors, more so than economic factors. yousef: when it comes to the big recovery, you say it would be misleading to ask the question

as to whether consumers are saving or spending, and instead you are suggesting that folks need to be aware of how consumers are spending. what are you seeing in the data? what insights have you been able to take out of the new model? theolm: so we have noticed -- several things. most important thing is that the consumer conference was fragile. there is a fragility there, although there is a recovery there. we think that the government's approach needs to be cognizant of that and not isolate confidence to treasury and economic levers. there is only so much that the chancellor can do as we, the consumer, can take out of confidence in a wider range of factors and issues. so what we are seeing is confidence in the government's

handling is actually declining. and that battles consumer confidence and the consumer getting out there and wanting to spend socially and be economically active. 'ousef: i look at the banks earnings and the amount of provision that came out of that. it is still a very much -- it is still very much of a struggle and a v-shaped recovery is still an illusion. would you say that a longer, outing out -- drawn conclusion is your model? of the things we are concerned about is sort of a perfect storm heading our way, which is a wave of second spikes post august when people return back from holiday, combined with the impact of the seasonal winter flu, combined with people

coming off of the furlough scheme, and we don't yet know how well the program is going to work. the combination of these factors will have a very serious impact on consumer confidence, and onrefore significant effects the rate of economic recovery. yousef: what else would you say is a key lesson in terms of the analysis of what that tells us about what to expect for the road ahead? what would you be telling clients? muchlm: i think it is very looking at the fragility here, we have huge economic uncertainty driven by policy uncertainty. we have seen that in the last 24 hours on a number of fronts. so there is a combination of that policy uncertainty with covid uncertainty, and it is difficult for investors and businesses to navigate.

government policy needs to recognize that this is a help event, and make sure that they are not just moving this to the treasury. we have been active in looking at second spikes, not treating when theyocal issues could have a national impact. so that is a major concern, where i could be releasing some data about it in the coming weeks. right, we will leave it there, a fascinating conversation there the partner of elgin partners, malcolm gooderham. let's go across the markets more broadly. we have a situation where we are firmly risk-on. a fire across a lot of these metrics, equity futures, across the currency space as well with commodities, currencies powering

forward. coming up, we will talk about fargo, puttingls aside millions of dollars in bad loans. that is next. this is bloomberg. ♪

yousef: you are watching "bloomberg surveillance." i am yousef gamal el-din in dubai. the initial signal is that some

of the easing of the production cuts might not be as much as initially anticipated. you are looking at brent crude getting quite a bit up, 1.3%. the $45 a barrel is the ceiling. let's show you this remarkable risk-on that we are seeing. .7%.utures picture up by as a result of the wider risk appetite. the dollar index getting hit, 2/5 of 1%. this stoxx 600 reflecting the wider optimism around the promises in the initial safety trial of the coronavirus vaccine by moderna. you could argue that enthusiasm may be a little bit early in the process. let's get to the bloomberg

business with leigh-ann gerrans. leigh-ann: thank you said. supplier asml holding beat expectations for the third quarter. the dutch chip equipment maker says operational capabilities are largely back to normal and forecast that 2020 will be a growth year. burberry says it will streamline front office and certain retail functions to cut costs, including the loss of 500 jobs. the british fashion house says comparable retail sales fell 45% in the quarter. though this was slightly better than analysts expected. hungarian lawmakers have approved legislation to curb the growth of airbnb style apartments with over 10,000 listings. budapest relies on airbnb rentals more than any other european city. it joins paris, amsterdam, and others in imposing stricter

returns on rentals. this begins to recover from the lockdown. finalizing aic is 1.2 billion pound rescue deal that could save thousands of jobs. richard branson will contribute 200 million pounds after raising money from space venture virgin galactic. u.s. hedge fund davis and kepner capital management will also provide loans against aircraft and landing slots. that is your bloomberg business flash. yousef? yousef: leigh-ann gerrans, thank you very much. shares of wells fargo plunged after the report in the first plunged the000 -- most after -- since the report of the first quart of 2008. bloomberg caught up with cfo john shrewsberry. >> we have staffed up to solve some of the problems we have

been dealing with over the last couple of years, and in part because banking is changing. we will have fewer branches. we will still have many thousands of branches, but we will have fewer branches in the future. if got more activity happening digitally from front to back, anyhow our customers interact and how we deliver capabilities is happening in a more tech-driven way. all of those things will lead over time to a smaller headcount. 270,000-ishl it people today. that will happen over the course of the next few years. >> there was some relatively positive commentary when it came to the consumer, and i'm curious underlying that is fundamentals versus government intervention, differing mortgage payments, for example, or

unemployment benefits that we have seen, and when those run out, are you assuming inevitable losses that just push out later into 2020? john: a couple things there. credit card is recovering, still way down from where it was in the first quarter. the middle of the first quarter. debit card spend, we have the largest debit card network by payment there. we are back up to 10% year-over-year, which is where we were before the shelter-in-place went into place. it is not the same payments to the same payees, but consumers are spending at that level. this undoubtedly is supported by the level of stimulus that is being received, direct stimulus payments through extra unemployment benefits, and because banks and others are deferring required payments on installment loans, so people don't have to pay their mortgage loan, theirauto credit card loan if they opt not to for a period of time.

that is causing more free cash flow to be available to people at the lower income spectrum. that is by design, that is having that effect. back upss we have come the other side of the v, there is likely to be some bracketing there. >> in terms of that v and in terms of coming back and giving yourself the perspective, the clarity on when you can start rewarding investors again, it is notable that you made your cut $.10. some analysts say the payment could go to zero. is that something you might have to look to if the v-shaped recovery is pushed out into the future? john: we don't have an expectation of it going to zero. it has more to do with our earnings forecasts and some recent requirements put in by the fed that govern how big a dividend banks can have. really anchoring it to be no

more than the trailing four quarters of profitability, the average of the trailing four quarters of profitability. we had a big settlement a couple of quarters ago. our trailing four quarters of profitability is relatively low, so we have struck a dividend proposal that is beneath that so that there is little less -- little risk of a going out from there. it is further impact if the rule remains in place, but it is not expected to be that way. the dividend approach really doesn't -- it assumes, as we do today, that we have ample capital. it really isn't as much of a capital issue as it is an earnings issue. we closed the quarter with an theease in capital level in constraining capital ratio for big banks earnings terms. 9%, about $23t is

billion worth of extra capital on top of the regulatory requirement. so dividends in particular are more about earnings right now for bigger banks, and a little bit less about capital's efficiency because between the big allowance bills we have all had and the relatively large cushion in equity that has been built up since the last crisis, there doesn't seem to be a lot of concern or confusion over levels of capitalization. yousef: that was john shrewsberry, the most fargo cfo. still to come, we will look ahead to the goldman sachs earnings. this is bloomberg. ♪

>> we do need aggressive intervention. these types of interventions are not easing ultimately with a pandemic. yousef: economics, finance, politics. this is "bloomberg surveillance ." i'm yousef gamal el-din in dubai. we have a big day ahead because we would be looking at goldman sachs numbers. dani burger has the details. what's in the pipeline? dani: from goldman today, we can expect a similar story more akin to j.p.morgan than wells fargo, wells fargo looking at its first quarterly losses since 2008. from goldman, and more strong

trade is underwriting, and that should offset some of that. that is what we saw was j.p.morgan with a record trading revenue. at the same time, the consumer has been looking stronger than we initially expected in these banking reports, so goldman might reflect that as well. a lot of this seems to be temporary, at least that is the commentary we are getting from ceo's, jb saying we will see the effects of the recession. ceo michael corbat warning that we should not come away with with a rosy picture behind it. it will be interesting to see what morgan -- goldman sachs says about the commentary. v-shapedee if a recovery is still a few that he holds. yousef: that is dani burger with a bit of a preview. a sizable transaction involving the jio platform.

a $4.5has agreed to buy billion state in the jio but , an onlinetform venture that has nearly 400 users for his voice and data services in india. at the moment, their reliance giving as -- they are press conference. plenty more coverage ahead on a day where risk assets are firmly in control, optimism around development's when it comes to the corona virus -- coronavirus vaccine. this is bloomberg. ♪

tom: this morning, it is a wednesday, showing promise. vaccines -- they show promise. the shift to the rest of the stock market, it shows promise, even though the week dollar call shows that the weak dollar call shows promise. "wrong about everything" czar. we have to bring them in. beyond tit-for-tat, america must "correct its wrongdoings you're cap still, the president suggests china should keep buying our soybeans. good morning, everyone. this is "bloomberg surveillance ." guy johnson is in for francine lacqua, and london. think it is remarkable how serious this has gotten, and yet even in the news articles, we are talking about a phase one trade deal like we still want to do business with them. yet here we go with some serious political moments. guy: and it is going to get tougher and tougher. i don't know