anna: good morning from london. this is "bloomberg daybreak: europe." stocks are mixed as investors weigh economic data against coronavirus mornings. little tensions linger as the u.s. attorney general says apple has become upon pawn of china. european leaders look to hash out covid-19 recovery plans, after christine lagarde says she will not be constrained in the

fight against the virus. netflix plunges in extended trading on disappointing subscriber forecast. they announced the chief content advisor will become joint ceo. this is "bloomberg daybreak: europe." getting some numbers from in aton, net sales coming 55.6 billion swedish kroner. a little bit of a beat there. operating profit numbers also 4.5 billiongh, swedish kroner, i had of the estimate of 3.22. they had to take provisioning in china was a question analysts were asking, and what impact that would have on their margin. the ongoing conversation about 5g and the travails of huawei, how much is that impacting the ericsson business model.

some of the market moves we had seen overnight, stock specifics in corporate reporting. plenty more of that coming. this is what we have on the data, euro stoxx 50 futures higher. s&p futures higher but not by much. the asian session has been mixed. nasdaq futures also higher, despite the disappointment of netflix. , we have had the ecb meeting, but now we face the bigger event of the european recovery fund discussed by european leaders in brussels. the dollar index is weaker. oil prices weaker as well. raw materials are back in a bull market. provisions for bad loans reached

698 million euros in the second quarter compared to the estimate of 390 million. a decline in net fee. joining us now for the first interview of the day is frank vang-jensen, president / ceo, nordea. let's get straight into the conversation around the numbers and revisions you reported. why is that number bigger than what the market anticipated? the credit remains very strong. ,e have had significant offers and we believe this is the right one. we create transparency for the market. we get a clear guidance to the market, and restating credit remains strong.

we have an offer of 650 million euro to prop up our future loan losses, and that is for the different scenarios that can play out the rest of the year. me talk to you about what you expect for the rest of the year. your full-year provisions and net losses will be below one billion euros. you have taken 850. do you see little extra provisioning in the next half? frank: that is correct. fees, thatg on to dropped in the second quarter. what is the outlook? ,rank: our income lines actually income is level as last year. that is holding up well.

supportedreased by 2% by good volume growth. marketsseen that in the from improved trading activity. due to the lockdowns and turbulence, the impact is primarily from payment, advisory fees and management. we see the latter part of the income will start to pick up. it is looking better. can i ask about a return on equities, and help us understand how that number comes to 3.1%? what makes that so low? frank: that is the buffer we are

making. provisions of 698 million euros this quarter, a substantial amount. we are going basically off of the full-year loan losses, that is having a big impact on returns for this quarter. a proffer of the 5.6% requirement, one of the strongest in europe. buffer forh a strong the potential credit losses for the future, that impacts the future. anna: what about dividends? do expect to make decisions on

dividends in october? we have the ability to pay, we have a strong capital position. tests to test our ability to continue to support our customers, and maintain our dividend capacity, that has been reconfirmed. we will follow the recommendations. anna: in terms of the overall picture of the regional economy in which you operate in the eurozone more broadly, we have seen the ecb meeting this week, and the big meeting of european leaders to talk about fiscal recovery funds. what you are seeing, do you think big efforts, sizable

efforts are required to prop up the european economy as a whole? frank: i think we need to divide it. these are quite strong, and i think what we are starting to see is economies are picking up again, although it has been a big hit taken. it is picking up. when you look at domestic , we are back close to pre-covid-19 levels. that is part of it. as smaller countries open in the our trading partners outside europe are developing. it is too early to conclude on.

we are looking at all scenarios, not just the best one. althoughencouraging, it is way too early. in theou buffer up meantime. thank you for talking to us. frank vang-jensen, president / ceo, nordea. up, we will be speaking to the ceo from swedbank after 6:30 a.m. u.k. time. let's get to the first word news update. u.s. infectious disease expert dr. anthony fauci says many states reopened too early as texas and florida report record numbers of deaths. minella may return to a locked down cases rise in the philippines. the virus spreads in brazil's

most poor and remote areas. the u.k. has warned russia is seeking to steal rotavirus vaccine research. multiple countries have been targeted by a group that is almost certainly part of russian state intelligence. u.s. and canada backed up the findings. netflix shares plunged by as much as 50% after a disappointing subscriber forecast. up two .5t to sign million new users in the third quarter, less than half the number expected. toflix has a new co--ceo work alongside the current ceo. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in comingan 120 countries.

up, mixed signals, ecb officials did not come to an agreement about whether they will use all of the 1.3 trillion euros in the bond buying program. we will discuss that next. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." i am anna edwards. agreelicymakers could not

on whether to use all of the 1.3 5 trillion euro pandemic emergency purchase program when they met yesterday. in a news conference christine lagarde said it is likely the central bank will use the full plan. >> in the current environment of elevated uncertainty and economic -- the council remains committed to do everything necessary within its mandate to support all citizens of the euro area through these extremely challenging times. mixed signals reflect different confidence and the ability of the rebound as lockdowns and. joining us now is jane foley, exec. director / head of fx strategy, rabobank. what do you make of this lack of clarity?

there does seem to be a differing of views within the governing council. is that something the euro is focused on? matter. could for christine lagarde, she is cautious about not too much turmoil. what she wanted to do was keep the markets calm ahead of today's summit. , they did at the news not reach a full agreement whether they should use all of that fund. perhaps some good news, and abouts will be optimistic the outlook for growth. the contraction this year, bloomberg is reporting a .7 is what the governing council is anticipating. some think it will not be that

bad, but the reality is if the market sinks, they will not use all of that fund. a lot of people believe the today, itnks could was all about managing market expectations and asset prices. anna: in terms of where the euro trades, the ecb did not enact much policy change yesterday. the euro call slipping a little bit. option suggesting that investors are less optimistic and can make further gains from here. what is your view? jane: very much it depends on what happens at today's summit. the we have progress are not? we may not get a sign off on the recovery fund, but what we need to gauge is the degree of representation and whether or not something can be done in the

next few weeks. they indicated we may need a second summit by the end of the summer to push it through, but hopefully today we have a good indication whether or not a compromise is there for the taking. the euro has priced in good news since may on the back of this and the policy move earlier in the spring from the ecb. if they can do something today, you can go a little bit higher, but a lot of the news is not in the price, and it could be tough at these levels. statushat kind of haven is attached to the euro? what is in the price with that in mind? concern aroundng virus infections, and as we watch european leaders put

together this recovery fund, what haven status is at stake for the euro? jane: i think it is too early to attach the word haven to the euro. i would say fundamentals attached to the euro have improved with ecb policy and the idea they can take a step forward. that is an improvement. is best like to see that in now,ng near 105 right 107.5, we could go higher on the recovery fund today. we have a long way before we attach the brand haven to the euro. the yen has that mental -- mantle.

it iss one of the reasons taking the safe haven flow into the u.s. dollar as interest rate differentials have come down. reactiss franc will still to bad political moves, geopolitical news in the for seeable future. matt: stable -- anna: stay with us. morgan stanley reporting record profits by capitalizing on the fed's extraordinary rescue measures. a strong corporate strategy going into the coronavirus pandemic, but the economic outlook remains uncertain. designed is a business that in times of severe stress, and markets that are volatile, we will perform well.

this is a crisis a, and that is what we delivered. it validates the strategy. we did not want to be credit heavy. we want to be asset, and that is what we are. tom: we have heard from wall street institutions but we have not fully realize the risk this, fiscal policy has made it more difficult, and there it will be more pain in the months ahead. would you characterize this differently? the economy, it is hard to tell. it depends on how quickly the covid outbreak across the south and southwest subsides. how well people coming back to work function. continued liquidity instability in the market. it is too early to tell. for us it is relevant.

for the marketplace, until people get back to work, you will have credit problems. america isrporate seeing bankruptcies in a faster -- that isan sachs just one bankruptcy. how does the industry get ahead of the bankrupt? >> i do not know you can get ahead of it. businesses are struggling when they do not have clients coming in. look at the restaurants and small businesses, hairdressers, doctors and dentists, before you get to big companies. that is why we saw a massive wave of financing in the last quarter as companies got ahead of that and built up stronger balance. sheets. >> the trade deal is close to closing. are they flirting with danger?

is this the top of the market? >> if you can tell me where the top of the market is, i would be in a different business. market reflects future expectations on earnings, and that is what we have. retail investors are more active. we see new investors coming into the market as you see whenever there is a period where the market is on fire like the last couple of months. -- tesla hase created an extraordinary company. not expect the target price on tesla. wall street is seeing huge amounts of success, and it is a question i get asked a lot, what is the best way of explaining that change in a moment like this? inl street has done so well the last couple of months, and the economy in labor market is on its knees. i wouldnot sure

describe it as a huge success. we and maybe one other bank are --they have huge trading revenues but huge credit provisions. what the banking industry has done is support corporations that needed support during this crisis. they provide the financing to keep those companies stable. the profitability of wall street is dramatically down. we have a different business model. if you look at the banking sector, the hits they are taking on consumer credit, corporate credit, bankruptcies, i do not think there is a disconnect. the banking sector reflects what is going on in the economy. anna: that was the morgan stanley ceo on the conflict or not on wall street and

underlying economists are saying in the united states. coming up, wall street economists see a perfect storm for britain that could prompt more from the bank of england. we discussed the outlook for the u.k. next. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." i am anna edwards. a couple of banks outlook negative forecasts in the u.k., unemployment, headwinds, let's get back to jane foley, exec. director / head of fx strategy, rabobank. how negative are you on u.k. assets? when you think about unemployment and the brexit trade deal that is still in discussion? abouti am worried

sterling because of both of these. going back to forecasts about the u.k. economy, this is the trend we see in our own models. the u.k. economy is likely to see one of the worst outcomes from the coronavirus recession of all the developed countries. this is a function of the lockdown was long. if we look at the fact we have had in the u.k. a high number of deaths, that is leading to anecdotal evidence that even though shops, restaurants and headdresses are reopening, people are reluctant to go out. we have a consumer confidence issue. the expectation is we will have more people unemployed. that means -- anna: thank you very much for joining us.

sorry, there is no more time for our conversation. this is bloomberg. ♪

♪ anna: good morning from london. i'm an edwards. this -- i'm anna edwards. this is bloomberg daybreak: europe. his other stop -- these are the top stories. political tensions linger as the u.s. attorney general says disney and apple have become pawns of china. we're live in brussels as european leaders hash out a recovery plan after ecb president christine lagarde says

she won't -- against the fight of the virus. netflix plunges on disappointing subscriber forecasts. the group announced its chief content officer will join reed hastings as joint ceo. welcome to the program, it is half past 6:00 in london. quick look at the futures market for you then, and we've got positive futures for europe, but not by much. u.s. futures looked. positive -- look positive. nasdaq futures look positive, despite reactions to netflix earnings. 113.85 is where we trade, downside in the dollar, downside in crude. raw materials back in april market. let's get -- a bull market. let's get to things that could move the market, brussels. eu leaders meet. at stake is a 750 billion euro

package, backed by germany, to be funded by joint borrowing. tensions remain among member states, the netherlands leading countries calling for stricter conditions and smaller contributions. the market is hopeful it will seal an historic agreement, but negotiators are playing down the chances ahead of talks. let's get to a reporter. maria tadeo joins us. good morning. it is a marathon session but how likely is a deal by monday? maria: we just don't know. the official line is a deal by the end of the week is not guaranteed. but what i can tell you, the last 24 hours, it has been relentless. angela merkel has been on the phone hoping to get a deal by sunday. mark.oke to merkel -- to he is the holder at this point -- hold out at this point.

he is concerned about the format and the size of it. yesterday, emmanuel macron had a meeting with giuseppe conte, hoping to get a deal by sunday. but there are two theories floating around that we could be in for a short summit that ends tomorrow and leaders call a new one by the end of the month, or a summit that stretches into sunday, now with a deal. anna: if there is no agreement then, is there any kind of plan b here? i suppose a meeting later might be necessary. does that constitute plan b? maria: well anna, pretty much. it's just about the timing. when you look at the content, the germans are leading this, they said they don't want to water down the grant component of this recovery fund, so they don't want to see the 500 billion euros that would go to countries like spain or italy be

watered down. in terms of content, it's difficult to see what could change to get a deal other than letting time go by, and the uptick of a difficult deal. we know there are two major sticking points, just how big is this recovery fund going to be? format grants versus loan. but also the governors, which is becoming a talking point. who is going to ensure that the money goes to italy or spain is well spent? for countries like italy, giuseppe conte cannot take anything that looks like a -- anna: absolutely. trying to make any agreement, any enforcement not look like let troika has been something we've talked about in the past. maria tadeo and brussels. she'll be across that summit through the weekend. let's get an update on the first word news. u.s. infectious disease expert anthony fauci says many states reopened too quickly, this as

flora and texas report record numbers of coronavirus there. --ewhere, manila result passes to million cases as the virus spreads in the poorer, remote areas. the u.k. warned russia is seeking to still coronavirus vaccine research. britain's national sick -- cybersecurity centers has facilities have been targeted a group which is almost certainly part of russian state intelligence. security agencies in the u.s. and canada later backed up the findings. virgin atlantic is preparing to return to the skies next week. although it doesn't see travel demand pre-virus levels for at least three years. the carrier will resume flight to hong kong, l.a., and new york, but says u.k. quarantine restrictions means essential travel only. >> corporate demand will take time to recover. there is no doubt about it.

aviation will take time to recover. most think itth will take three years to get back to between 19 levels. -- two 2019 levels. losing morer is than analysts were expecting. the reported a deficit of 1.68 billion. the country warns businesses returning an evening, -- unevenly, with car sales coming back more slowly than u.k. or china. 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. onto u.s. politics, house speaker nancy pelosi says she is confident congress can pass a relief plan in the coming weeks as lawmakers are set to begin a new rent of negotiations -- round of negotiations. she says republicans will be

there to pass this. she spoke with david westin in an exclusive interview. >> a great deal of what we have in the heroes act is essential, like direct payments to people. if we don't do that, the recession will only get worse. the virus will even spread and the suffering of the american people will intensify. we can get this done. the scientists have shown us the way. we need the equipment to do it. the president, with the stroke of a pen, can call upon the defense production act, call upon businesses to focus on the equipment for testing, the equipment for judging the results of those test, the equipment for protection. david: you say they, the republicans, will come around. will they do it in time to get this done within the next two weeks? what is your level of confidence we will have legislation within the next two weeks? >> let me just say this.

.e can't go home without it because of unemployment insurance expiring, we have to have the legislator. it's been two months. more people have died. more people have gone unemployed, and more people have been infected. what's the value of waiting? i know there's some people who say it's too much money, but as i say to you before, what we're doing for state and local government's one half of what republicans added to the national debt in order to pass their tax game, which gave 83% of benefits to the top 1%. we're not a cash system. a need to make sure we have consumer economy. the confidence that people have in order to have money to spend it, to inject demand into the

economy, create jobs, that's what we have to thrive on and not just depend on some possible trickle-down, that if it happens good, if not so be it. we feel confident about it and there's a lot of enthusiasm, because message -- because much of the injustice of it all, lower income people, people of color, it affects them in a disproportionate way, and we know we must address that and we must address it, especially now when there is a threat to people's lives, their livelihood, and the life of our democracy. david: as you point out, some of the least fortunate have been hit hardest by the pandemic itself, by the disease, and by the economic aftermath. what can you do to make sure that money gets to those people? there are reports while some of

it has, a lot has not. >> direct payments has gotten to them. unemployment insurance does. we think the ppp, the paycheck protection program for small businesses, did reach a lot of people. but it has collateral benefit to those who should not have benefited from it. that was unfortunate. we have to be very specific in how legislation is written, and not just assume that people will do the right thing with the fair thing. -- or the fair thing. i think with what's happened with george floyd and the hundreds of thousands of people who came out every day, week in and week out for a long time, looking for justice, in that case in policing, but also the coronavirus was part of the enthusiasm, that exuberance. so people expect to see justice done. and including environmental justice. that's why we're moving forward

with the moving forward legislation to include green technology, because communities of color suffer disproportionately from environmental injustice, clean air, clean water, the list goes on. so this is about justice. anna: that was the house speaker nancy pelosi speaking to david westin. coming up, back to the earnings story. income beats estimates. we speak to the ceo of sweden's largest mortgage bank next. this is bloomberg. ♪

anna: this is bloomberg daybreak: europe. i'm an edwards in london, still an hour and a quarter to go until the start of the cash equities trading day. we look to the upside. swiss bank has reported incomes that were slightly better than expected, 6.9 billion krona in the second quarter. provisions for loan losses came in broadly in line with where the market had predicted. joining us now is the president and ceo of sweat bank. good to speak -- swedbank. good to speak to you. it's a pleasure. net interest income. is that sustainable? first, thankme say you for having me on the show. we today delivered a strong

result during uncertain times. and one of the drivers of that is the net interest income. and the reason for that is that we've seen both an inflow of deposit and also increased volumes that we have left out. anna: do you see that as sustainable then? i imagine the deposits is all about people saving. that may not be something replicated into the future. i guess it depends on the virus. jens: well, i'm not going to make any forecast for income. i want to say people put faith in our bank and i think they will continue to do that. anna: what about the impairment story? this is something that attracted a lot of attention. how do you see impairments developing? what would the profiles of those impairments look like? jens: well, if you look at impairment, we set off 2.2

billion in pyramids -- in impairments for future losses. this quarter, we set aside 1.2 billion. but if you look at the credit losses, we talk about 130 million swedish krona during the, first quarter and 107 million swedish krona during this quarter. so we set off a lot of money due to what we see as worsening of the macroeconomic developments. anna: you do see a worsening then? can you tell me a little bit about how you expect the region in which you operate to develop underlying the recent economics? jens: we see a rushing -- we see a worsening compared to what we saw last quarter. we saw what the imf came forward with a few weeks ago and we see some of the deeper downturns. but we also, right now, cn uptick in the economy -- see an

uptick in the economy. anna: let me ask you about the trading business, a lot of banks with big trading business reported strength in trading revenues in the second quarter. is that something you've experienced, as well, at swed bank? jens: yes, we have seen some gains in trading, as well, but we saw the negative impact in the first quarter, and that meant net gains and losses had gone up. because if you look at the amount of loans, we sit on both company bonds and from credit riveters, -- derivatives, the value that had gone up during the quarter. anna: are you concerned about commercial real estate? any of the markets in which you operate concerns in that market? jens: well, if you look at swedbank, we are a bank that is

very dependent on the real estate market, but mainly we are a bank that has lent out money to people who bought houses. so it's not as big as many think. seen a trend, and if you look at house prices right now, house prices are actually slowly going up. you abouti ask something a little different, away from covid and the underlying economics, an update on the probe conducted in the u.s.? what can you tell us there? jens: well, i would say like this. when i came in, i had a strong focus on cleaning up money laundering issues. and i focused on closing the history books. and last quarter, we came out with the clifford chance report, and the different ash in sweeter

-- sweden and estonia closing on us. so i would say we are now at the beginning of the end. we still have the u.s. looking at us and we are answering their questions, and then we will see how long it takes before that results. anna: yeah, do you have any insight? are we talking months or years this risk hangs over the business? jens: no, i don't have any insight. it's up to the u.s. authorities to decide how long this process takes. timmy, -- to me, it's very simple. when they ask questions, i'm going to answer truthfully, and then it's up to them to decide the pace. anna: in terms of the pandemic, many banks dealing in terms of working practices and strategy. do you see this as having lasting impacts on the strategy returnbank, or do you to to business as it was before?

jens: that's a good question we're pondering a lot on right now. one thing we can seek is reduced trial within the bank, because we have now discovered if you that you can work like this, we can meet digitally. that would be one effect. we also see the customer wants wemeet us, digitally, so will continue our travel to be a digital bank with physical presence. thanks for your time this morning, president and ceo of swedbank, talking about the earnings story and the strategy. thanks for joining us. coming up on the program, u.k. retailer who are -- boohoo are hour to.50 pounds an turn out cheap fashion. we discuss that next. this is bloomberg. ♪

anna: this is uber daybreak europe. i'm an -- bloomberg daybreak: europe. i'm anna edwards, live in london. let's turn to fashion and the ethical sustainability issues that plague the industry. plunged after a report some of its suppliers were paying workers as little as 3.50 pounds an hour, less than half minimum wage. the company says it is reviewing its supply chain. jennifer joines is now over the phone. jen, good to speak to you. about workingerns conditions have been raised for years. what is new now is that we are in the middle of a global

pandemic and not only that, there is heightened awareness about structural inequality and how it's affecting marginalized groups. as it pertains to boohoo, they are the latest company having to address these concerns that there are poor working conditions in their garment factories. since those reports came out, boohoo said it dropped two of its suppliers and the company itself found no issues with working conditions at its facilities. but there's still real concerns about the rigorous turnaround schedule of that, fashion and cheap close and exploitaion of workers -- exploitation of workers. we saw some take long on the company. anna, you know, i really think we're going to have to keep a close eye on what others do as it pertains to the fashion industry throughout this pandemic. anna: yes, certainly pushing the up theg a little further

priority list. what have be -- we been hearing about fashion workers there? jennifer: i'm in los angeles county, where the last few weeks, has been worsening by the day. for the clothing company, los angeles apparel, this fight led to them having to shut down operations for what the l.a. public department of public health called fagan -- flagrant violation of mandatory control orders. the company is known for making basic tees, but once the pandemic started, reopened as an essential business. the reason they are in the news is because more than 300 of their 2300 workers, many of them minorities, tested positive for covid-19, and four actually ended up dying. we're seeing a situation where it is in the news, and there is

renewed focus on these conditions these workers are having to deal with. he does plan to reopen his facilities soon, once the public health department gives him the clear. but again, this pandemic is hitting hard for the most vulnerable workers, who are proving to be the essential workers in these communities. thanks very much . you can catch all of our coverage from around the world. tune into this week's bloomberg's quicktake show at 6:00 p.m. on facebook and 6:00 u.k. time on sunday, the 19th of july on youtube. sticking with that theme, later this morning, we'll be talking fashion with eating tree management. -- eden tree management. the open is up next. futures point to the upside. keep an eye on the banking sector. lots of earnings coming through.

also, erickson sales beating estimates. carriers are upgrading networks. more sustainable story in these difficult times. this is bloomberg. ♪

♪ anna: good morning. welcome to bloomberg markets the european open, i'm anna edwards in london. the cash trade is just an hour away. european leaders look to hash out the recovery plan after ecb president christine lagarde says she will be constrained in the fight against the virus. we're live in brussels. stocks are missed -- mixed.