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 what business is going to do about this because i

think they were already in a tough place, particularly u.s. banks. it is likely, as this progresses, the chinese will put more pressure on them, the u.s. will have to put more pressure on them. they are going to have to take sides. yesterday a guest walked the overlyot sounding enthusiastic about the decisions he had to make. it is really going to be tough. the chinese will pile pressure on. tom: maybe we will see that pressure today. we have our people in hong kong watching the story. also in beijing, karen leigh scheduled to be with us throughout the money. in new york city, here is ritika gupta. ritika: president trump is due to punish china because of the national -- the sweeping national law. he finds legislation would chinese that sanction chinese officials responsible for cracking down on political

dissent in the city. beijing told the u.s. to quit interfering in chinese affairs. here's a very hong kong brain train are increasing, china moving to tax its citizens' global income. they could have a tax rate as high as 45%. the bank of japan is out with a gloomier picture of the economy. the central bank forecasts depend gdp will shrink 4.7% in fiscal 2020. the boj left policy unchanged but indicates it is ready to take further action to help with recovery if needed. and president trump plots his revenge -- the president's former candidate tommy tuberville beat the republican in the primary. after the president named him attorney general, he turned on sessions because he recused himself from the russia investigation. global news 24 hours a day, on air and at bloomberg quicktake,

powered by more than 2700 journalists and analysts in more i'm ritikauntries, gupta. this is bloomberg. guy? tom? tom: equities, bonds, currencies, commodities. --ures up 18, dell futures dow futures down. 29.06 on the vix. the real story to me this morning is the dollar. it is really setting up, it is really technically brilliant. christopher verrone of strategas was billion yesterday. that is a blended euro heavy dollar index, and that is a big deal. for it to print a 94 handle would really signal finally for the weak dollar. i am watching that carefully.

guy: absolutely. hand of your screen, apple winning the e.u. court fight over the 14.9 billion dollars tax bill that is due in ireland. the e.u. will appeal this. there is one higher court still to go here. in terms of what is happening in europe, travel and leisure has been boosted. the moderna story is front and center for the market. the equity vote getting a push lower today, the authorities a little cautious on what is happening with the rally we are seeing in chinese equities. you talk about the dollar index. onare at 1.14 34 euro-dollar. the nasdaq once again finished below the s&p. if you look at the fair value today, it looks like that will happen again today. are we seeing shifts in that long momentum story that have driven markets over the last few months? the head of macro research at now.rock is joining us

i want to start with moderna. there are clearly going to be bumps in the road, but do i need to start positioning my portfolio for the race to finally be won in this kind of challenge that all of these biotech companies and pharmaceutical covers are facing right now in getting a vaccine? do i need to start positioning that to become a reality? : i think there is still a long way to go, and even though it is encouraging to see that the antibodies were successfully triggered, we don't know how long they actually -- and how effectively they will protect you against the virus infection. so we are at the moment mutual on equities and overweight credit, which we find offers a better risk-reward than ,asically chasing the news

which might really lead forward disappointment. we are seeing a lot of volatility around the virus news over the last couple of months. talk about that credit position. jim and diamond -- jamie dimon standing cautious yesterday, and wells was cautious as well. they are all building significant reserve. they are seeing clearly a wave of distress that is coming toward them. how is that going to impact your credit? elga: we think credit is attractive from a street you your point of view because much of the risk is already priced into the public credit market. s'w, i think from the bank perspective, on loan exposure as well as the meeting to provision

for those, architect already priced a large part of that in. a markets have already priced large part of that in. tom: wonderful to speak with you today. i think of a time, billion research on your part of germany, the netherlands and france. give us an update on these three key nations. are they in it together as we move into some form of 2021 recovery? elga: i think europe is indeed in it together. theave the e.u. summit, first in-person since the outbreak meeting, on friday and saturday. where chancellor merkel will try to get the remaining issues around that recovery resolved. but, you know, there is some resistance from a number of

countries who still need to be overcome, but i do think that we see a joint policy response coming together in europe, and that, we think, will make for a solid recovery path. tom: the key insight is that "some resistance" -- is it the same resistance, or is it resistance to say the netherlands is different this time? that a number of other countries seem to have the level ash puts the last holdout -- puts the netherlands as the last holdout. you have heard from chancellor merkel herself that she has some issues that she also wants to have addressed, which she mentioned a couple of weeks ago. but i am positive that even if it is not this weekend, we will get a solution and for the first

time will have a really sizable safe asset in europe. i think that is an important milestone. elga, if we do see that happen and we see the redenomination risks in europe, how big will it be? elga: thank you for that question. currency, we are leaning into european equities because we think that is the place where you want to seek the cyclical exposure. we think that europe has a firmer handle on the infection situation than other parts of the world, and also was initially being late in sort of rolling out policy stimulus, both on the monetary and also the fiscal policy front, is now really getting their game on, whereas, for instance, in the

u.s., we are facing a fiscal cliff at the end of this month. so european equities have some upside here. tom: elga bartsch, please stay with us. thrilled that you're with us today, from blackrock, giving us a perspective on fixed income and particularly into european economics. mckeetoday, and michael conversation. interesting -- patrick harker on the path forward for chairman powell and his federal reserve system. stay with us. from london, from new york, good morning. this is bloomberg. ♪

tom: bloomberg surveillance.

good morning, everyone. guy in london for francine lacqua. i am tom keene in new york. it has been a resilient dollar, maybe not a strong dollar, but i am certainly going to call it resilient. that is such an in word now, and it applies. elga bartsch is with us from blackrock. with a great heritage of economics, a great heritage of fixed income. we will talk to elga bartsch, fx trader, right now. what is the significance if we get a breakdown in the dollar? what does that mean for our viewers and listeners? an orderly or abrupt move. so in terms of a somewhat weaker dollar, it obviously helps. if the fiscal were removed, then it would be more worrying because it could talk to various

dislocations that might be the reason. but as usual, with currency moves, it is not just whether they move but also why they move. what is it going to be that gets the dollar lower? i'm trying to think of potential things that could happen. there is a lot of good news in the price of the euro right now, and that is a significant portion of most dollar baskets. correlation got the with what happens with stocks. what do you think would be the catalyst for the move that tom is potentially talking about? elga: i think by looking at the dollar, there are always two drivers you need to distinguish. it is fair to say that as far as policy rates are concerned, we are not going to go anywhere. the other part, which is an important part that sometimes

gets overlooked, is the risk asset ties. aat is not necessarily country's relationship, so there can be a kind of tug-of-war between the two. yes, there is some optimism policyeurope in terms of thinkse, but i don't there is excessive optimism regarding european assets at the moment. suggestt would you madame lagarde can do? to bring it back to europe and the optionality that the resident of the ecb has, how many choices does she have forward? are she and her institution boxed in? elga: well, i think she has already shown a key determination to do as much

lifting as monetary policy can do in this environment, and it embarked on a flexible pandemic emergency purchase program, as well as i think the really -- i do think the market might not fully appreciate how powerful a tool that is. in europe. theit is also clear that nature of this crisis requires a really strong fiscal policy response. so in our view, fiscal policy really needs to lead and monitor policy essentially provides the assist because you need to put money into people's pockets, and that is basically what we have stressed in our going direct paper. so: elga bartsch, thank you much for joining us today, blackrock head of macro research. we are going to take a broader picture. mona mahajan will join us as

well. michael holland along later on this market, futures up 19. to .20.res up this is bloomberg. good morning. ♪

pres. trump: we watched what happened. not a good situation. their freedoms have been taken away, their rights have been taken away, and with it goes hong kong, in my opinion,

because they will not be able to compete with free markets. a lot of people will be leaving hong kong, and we will be doing a lot more business because of it because we just lost a competitor. tom: whenever we speak to people on foreign policy, or as we see a, international -- or as we say, international relations, there is an adverb -- "suddenly." that certainly seems to be what we are seeing now in hong kong. guy johnson and tom keene with you this money. karen leigh is the bloomberg china government editor, but that barely describes her encompassing pulse of what is going on in hong kong and the pacific rim. what has changed in hong kong? in the day to day life of people in hong kong, these are stored restatements by elites. but what has changed for the people of hong kong? people,or a lot of whether they are ex-pats or

local, hong kong has in many ways been a safe haven, especially with business, or to protest, or any of the freedoms that people enjoyed before. they are worried about the preservation of those freedoms and about the autonomies of the mainland. china and acting a sweeping national security -- china enacting a sweeping national security legislation a couple of weeks ago. and then measures from the trump administration revoking a number of provisions that led it to treat hong kong differently than the mainland on trade, on commerce, and on other areas that are really important. that has a lot of people wondering what the material effect is going to be on the ground and what that means for hong kong's future as a safe place to do international business, as a safe place to speak freely, all of those things. is: the president's timeline for the first tuesday of november, and that is what we call the presidential election.

what is the timeline for and the comments party in china? the commonest party is still well in power. china and the u.s. ahead of this -- the communist party is still well in power. hong kong is really a cornerstone of those worsening ties that we have seen over the last several weeks, and they have been are willing on everything from hong kong to the trade agreement to taiwan, and it will be interesting to see how the move by the trump administration affects that relationship over the next weeks and months leading to the election in november. what does this all mean, do you think, karen, for u.s. businesses? what does it mean for u.s. banks? they have seen china as being an area of opportunity. is that relationship becoming increasingly untenable he echo

-- untenable? of things are up in the air, and a lot of questions for banks. something that is really interesting is that under trump's measure, there is a year-long grace period to stop doing business with what the u.s. calls "primary offenders." -- then there are a lot of borrowing top executives, restricting the ability to engage in u.s. dollars and denominated transactions. it will be interesting to see what happens to banks on the chinese side, on the american side, as we go forward here. what about the hong kong dollar as well? what is the future? the administration has decided not to -- clearly it is concerned about the impact on dollar dominance. the hong kongard,

dollar will not be paid with the u.s. dollar but rather with chinese currency. isen: that is something that discussed all the time, whether you are in business circles, an ex-pat with savings here, or whether you are a hong kong resident with savings here. for the foreseeable future, top advisors to trump have ruled undermining that peg as we look upon china for infringing on hong kong's freedoms. this is something that people are going to be watching very closely, but we have not seen anything toward that. tom: karen leigh, thank you so much for the brief. in hong kong, karen leigh, are china hong kong editor. certainly advancing stocks get your attention after the nice lift yesterday, up 21. let me give you those levels on spx -- 3.203. vicks does not catch up yet.

28.80 nine. we will see how that sets as we get closer to the opening. it has been a challenging -- challenge to spend from a challenge a scandal, criminal challenges to say the least. we will talk to the seb chief executive officer about the challenges forward and not messing it up in the baltic states. this is bloomberg. good morning. ♪ w?w?uhió'ñó

>> this is "bloomberg surveillance." i am ritika gupta. let's get the first word news. a big victory for apple at the european union general court.

apple won its battle over an order to pay ireland a billion-dollar tax bill. the court ruled that apples and ireland's a richmond to pay less tax were not illegal. we will be live in brussels at this hour with more. china is warning the u.s. to stay out of hong kong affairs, after president trump ordered an end to hong kong special status with the u.s.. who also signed legislation to sanction chinese officials responsible for cracking down on political dissent in the city. the trump has reversed itself on student visas, after a high-profile fight with harvard, m.i.t., and hundreds of schools. the government originally required that all international students take at least one class on campus. many colleges are preparing for the.e-instruction on

supreme court justice ruth bader ginsburg is in hospital, being treated for a possible infection. the 87-year-old general is a four-time cancer survivor. global news, 24 hours a day, on air and @quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i am ritika gupta. this is bloomberg. tom, guy? much.hank you very the swedish lender, seb, says this morning that net profits fell in the second quarter due to an accident a higher credit loss provisions, and a find for inadequate money laundering. he is assuming a second wave of covid 19. he joins us now to talk through how the business is looking right now and what the market looks like going forward. good morning to you, johan torgeby.

let's talk about the view of what is happening in the world with the second wave. i listened to jamie dimon, and he sounded cautious going forward. he is seeing a range of outcomes that are quite concerning to him . you sounded much more optimistic this morning on the call with analysts. why are you feeling optimistic as you are right now versus what other bank bosses are saying? johan: i am not sure i sound of that optimistic, but it looks like on the first wave, we have stabilized. the main concern is the second wave, and i do follow the you as closely as it is the main concern we see as the leading indicator, and watch responses will come from national authorities if the second outbreak is significant. we do point to very low visibility. we think we have come up as far as what we know today, taken appropriate measures on expected

credit losses. and they are, of course, elevated. guy: do you think trading -- mostat the moment banks seem to be extrinsic a positive picture, do you think it should be treated as a one-off? johan: i would not treat this as something sustainable. i would treat it as a very strong reversal from a very weak q1, particularly when it comes to market valuation. i see those as a complete dependence on where the stock market is going and where credit spreads are moving. those will reverse in this optimism is not maintained. i think you will have guidance from my side to be a bit normal, over time. so, allow for high volatility in the short-term. tom: good morning to you.

i find the document your bank published today -- and i want to make clear, it is lost in translation a bit over to the good english on the ecb website torgeby, thato document on money-laundering is one of the most extraordinary documents i have ever seen. let me cut to the chase. you take sharp disagreement with swedish authorities over the outcome of the money laundering issue that you have been involved with. what are you doing not to repeat history in the baltic states? johan: thank you for that question. juneceived on the 25th of a fine of a billion swedish krona. we put out a statement which a bit agrees and a little disagrees. there are several findings we don't understand or subscribe to. hence, we question the causality a billion swedish

krona or 100 million euro equivalent of a find. most of the things that they identified were identified by seb in the past. don't forget this review ended a team, and the last few years have been very much focused on the fight against financial crime to read we have some examination of initiatives. .e need to do more tom: you used to be at morgan stanley, in private equity. i want to talk as a morgan stanley analyst, about what you have learned as money laundering as an institution. you are correct, the financial crime is not going away. we know that. been written, about the uniqueness of the swedish digital banking society. what have you learned, so you do not repeat history on money laundering that is not going away? johan: i would say two short

reflections. hopea sea of the worst and for the best when you talk about regulatory compliance. assume the worst and hope for the best when you talk about regulatory compliance. and when you are ever in doubt, less.e rather than secondly, we, have to talk about the facts to actually stock not only regulatory compliance but actually stuffing the financial crime of exiting the banking system. that is the next level of debate when we talk on the business side. guy: is it harder to keep an eye on your staff when they are working from home? johan: yes, it is. we have this debate internally, where will the permanent situation be after this. control, about operational risk, etc.. so i think that yes. guy: and what the ado about that in terms of your kind of

history? you are clearly a bank under the microscope. when you have got staff at home, how are you making sure we will not see a repeat of history that tom is talking about? as you hinted, it is a great challenge. a role does the ecb have to play to make sure your regulatory guys are on top of every second? johan: as you may know, swedish is an outlier when it comes to distancing. we have much less of this problem in stockholm where we has more of the social functions. but we are in 20 countries, so your point is valid first we need to look through access control. you have a risk that when people stay at home, they think it is not a must to access. that is the much is your turn control within a building. then you have i.t. systems, securing connections, that you have speed, that you are

available. then you have the bankers risk of someone actually breaking into your account, or stealing a document, where confidentiality becomes an issue. that is harder to assess. we will have to figure out how to do that if we will allow more people to be in different geographical faces in the future, which i assume we will. tom: thank you so much for joining us today, johan torgeby, seb chief executive officer. coming up, we turn to american banks. securities.t jmp we will talk to him about the ballet after j.p. morgan, wells fargo and citigroup. i believe fortress solomon reports today. this is bloomberg. ♪ reports today. this is bloomberg. ♪

tom: "bloomberg surveillance." good morning, everyone. "bloomberg surveillance." johnson in london, i am tom keene in new york. into some central-bank action through the rest of the week. no question about it, the lift coming on worldwide, the pandemic and the idea with that we may get a vaccine sooner, better and at some point. the backdrop is in the united states. clearly, the president, who some would say is at war with science . peter baylor going after the president for a second day. i should say the president's advisors as well, as they criticize dr. fauci. but growth back to the science. one of our experts from science works out of victoria senior health care analyst. what is different about this virus?

this vaccine optimism versus the optimism of three weeks ago or three months ago? , the difference is that we have yet another vaccine, now number three. one from pfizer, now my dinner. moderna.om mothe data seems to indicate you are able to induce an immune afterse in humans injection. there is lot still to understand and define. again, a nice step forward given the data we saw yesterday. sam, this is the messenger rna vaccine, different from the vaccine oxford is producing. they have had some issues with i think three patients who suffered severe side effects. what do we know about the side effects, and could he be a problem?

patients whiche basically did not finish the trial, only one of them was due to side effects. the other two could not complete the trial. in the end, the side effect profile actually does not look that bad compared to what we saw from pfizer. every vaccine usually gives you a bit of body ache and temperature. like an infection, because that is the response to the immune system. based on this data, i am not worried about the side effects. we obviously need much larger trials. what i am worried about is that in the data that we just saw -- and i have to take my hat off to moderna for having the most detailed data we have to date, packed full of information, which leads us to analyze ad infinitum. what i don't see is another key arm of immune risk on scum at which is the cellular immunity. that we are not seeing in this

mrna vaccine. also,'t know the pfizer we need to see the data. guy: can you explain that? my understanding was that of antibody response was a neutralizing antibody response, effective against the covid-19 virus. , give the t cell response us the science behind the t cell so we understand. theory is that for longer-term immunity, it is important to also have a cellular immune response as well as the antibody response. you need both. that is the theory. whether it is absolutely necessary in covid-19, and whether just having a neutralizing antibody is sufficient to clear the virus, but then you need a booster every year to keep your cellular in unity going, is unclear.

so far, this data does not give me confidence on cellular immunity. tom: you have been doing this for years. you and i are old enough. guy has no clue about what we are talking about about an arms race or the cold war. are we in a vaccine war right vaccine race? are we in a constructive process, or to use the experts -- really challenging male competition? sam: tom, such a good question. when i see the comments from politicians, it does feel like a race. they are all most trying to beat their chests, to see who will win. unfortunately, i don't think we will be it were to escape that. when we talk to scientists, group ii, they seem to be a lot more levelheaded. unfortunately, sometimes the politicians beat up on the

scientists. in the middle of all of this, you have the companies, where you are getting a diversity of ofws from ken frazier good saying it is not a idea to keep pushing a vaccine by the end of the year. it comes down to the definition of what a vaccine is. that is what i think is going on here. guy: are we expecting the first to ultimately be superseded by second-round vaccines? i am assuming this process will continue to be finessed. tom talked about this arms race. it is clear that economic ad confer. i am just wondering if we are thinking too short-term in the process, that once momentum starts to build into the system, that the long-term scientific background of what we're doing here will confirm a longer-term

economic advantage as well. sam: that is difficult to answer today. i will tell you why. the data we have seen so far from these human trials are in pretty healthy folks. obesity,sting slightly overweight, in the mean age is about 35 years old. we all know the group that really need the vaccine. are looking great today, when you go into the highation with comorbidities, the higher age, this vaccine will not work so well. it might turn out that after the vaccine, you cannot reuse it once or twice. thatcomes another one works better on another patient and not so good on infants. i think celebrating a win to

early, he will likely turn up face.gg on your tom: really appreciate it, this has been hugely beneficial, sam fazeli, with bloomberg intelligence on vaccines. week tous week after get smarter, she has been stalwart for bloomberg surveillance. lauren sauer with the johns hopkins university, with emergency room expertise. a timely conversation, very difficult news on florida and texas and frankly, a little better news out of arizona. lauren sauer at the 6:00 hour. this is bloomberg. ♪ good morning. ning.

ritika: this is "bloomberg surveillance." i am ritika gupta. aogle has agreed to purchase four point $5 billion stake in india's geo-platform, the digital arm of reliance industries. that is a part of a series of larger investments.

google will receive a 7.7% stake .n geo earlier this year, facebook took a 10% stake. the first electric vehicle since management took over in september. the car is mason's latest effort to refresh the lineup that as -- is nissans latest effort to refresh the lineup. the car is designed to take on rivals such as tesla's model y. company's 88% controlled by atlantia, controlled by the billionaire. the company has been under fire since the deadly collapse of a bridge in genoa almost two years ago. that is your bloomberg business flash. guy: thank you very much. that is a big victory for apple at the european general court.

winning its battle over the e.u. order to pay ireland a $14.9 billion tax will. the court ruled that ireland's arrangement for apple to pay a lot less was not illegal state aid. maria today are now from brussels. maria, is this ruling is surprise? maria: it is on many fronts. it is a huge defeat for the european commission on a number of issues. and thethat apple european regulators have had a very difficult relationship for many years. vindicateny ways does what apple has said, which is theythey paid the tax are due to pay in a country like ireland. they have done nothing wrong. secondly for the europeans, it is a huge problem because u.s. tech companies don't pay enough taxes in europe. they profit and make billions of

euros in the european market and the tax scheme is unfair. they should be paying more. have the woman who had been a rock star in brussels -- tom: maria, this is a crushing defeat for her. this is about sovereignty, folks. basically this body tone of them know, ireland gets to make its own rules. how does she get to go forward after being absolutely crushed in this decision? isia: you can see where this problematic for her because she has made her entire political career and her name in brussels right,ng, i am they are wrong, they should be paying more taxes.

this changes the whole narrative for her because -- who is having a very bad day. it is obvious, clear as day, there is expectation about reform for digital services. it caused to question whether we can get a new digital tax hike, and it calls to question whether going after these companies by financial penalties is actually --, because even if apple does not have to pay money at this point, it does not mean anything to apple. it will call into question the strategy. and it will also call vesteyer.tion maria that.aria, thank you for she is really having a tough time in the office. tom, we are clearly feeling the moderna story. i thought it was fascinating yesterday that the nasdaq finished below the s&p.

looks like that will happen as we get going with trading this morning as well. tom: of course, the overlay is bank earnings. dxy.t to focus on it is not a breakdown, not a new weaker dollar, but clearly, at 95.98, that is really extraordinary to see a renewed effort to get to a weaker dollar. so many on the street are calling for that outcome and it hasn't happened yet. we have a packed morning, including michael holland. he will join us. this is bloomberg. ♪ it's pretty inspiring the way families

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for kids at home- all on xfinity x1. we're committed to helping all families stay connected. learn more at xfinity.com/education. morning, it is a wednesday of, quote, "showing

promise." vaccines, they show promise. from big tech to the rest of the stock market, it shows promise. even the weak dollar call, we are almost there, it shows promise. the china star who goes after the virus czar, the "mess about everything" czar, what a mess in america. tremendousing wrongdoing, still, the president phasets china has to go one and keep buying our soybeans. good morning, everyone. guy johnson in london, in for francine lacqua. i do not know how we will go after an hour. this apple ruling in support of ireland, is stunning. explain to our audience, guy, how ms. best