europe's so-called "frugal four" are set to be ready to accept doling out 390 billion euros in grants as recovery funds talks stretch into a fourth day. julius baer kicks off european bank earnings with a record first-half profit. the bank's chief executive tells manus cranny continued volatility will boost trading. and the pandemic continues to spread in the u.s. florida's infection rate surges, and l.a. is on the verge of another shutdown. a medical journal is due to publish more information on oxford's vaccine trial. well, good morning, everyone, and welcome to "bloomberg surveillance." i'm francine lacqua, here in london. tom keene in new york. we have a number of things we need to talk about. could morning to you. i've missed you tom, last week. nice to have you back in the studio. tom: you missed me last week. francine: i know we have always had merkel on the e.u. summit. closely howing

ministers brief reporters, and it is brutal on the negotiations. tom: brutal is the right word. there was one photo ice saw. e looking justutt exhausted. for those of you who have not followed the soap opera, it is still not over. this monday isn deceptive, extraordinary. out of china, the virus particularly in america, and this european donnybrook -- it is amazing. and then the market reaction. francine: it is quite a lot for a mid july market. now let's get straight to the bloomberg first word news. here is ritika gupta. -- the their repeating european union may be on the verge of a deal with denmark and sweden holding of the oceans. they appear to be ready to greet that $450 billion of the fund would be made available as grants with the rest of it coming as low interest or loans

-- low-interest loans. brexit negotiations are in a tense standoff, dashing hopes of between the u.k. and the european union, which failed to make progress last month. british negotiators say the e.u.'s concessions are not enough. the e.u. says its attempts to compromise or not being reciprocated. -- our not being reciprocated. told abc there should be a lockdown of the entire state of florida. the mayor of los angeles and his city -- says his city is on the brink of restrictions because of the increase in virus cases. his comments suggest that months of trade-offs between health and the economy are far from over. the president is questioning the competence of joe biden. told fox news that if he had to sit in an interview, he would

bond the ground crying for mommy. biden stillhat joe leads the race. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries, i'm ritika gupta. this is bloomberg. francine? tom? tom: let me go to the data right now. equities, bonds, currencies, commodities. you have to go right to the bond market, the litmus paper off the e.u. meetings. 1.1459. stronger at the bond market in europe really has not moved all that much. that will be critical to watch, up to what our new york 10:00 a.m.,russels -- 10:00 brussels 4:00 p.m. meeting. we will be watching the reaction of the bond market. francine: you are right that if you look at european bond lookds narrowing, if you at euro, it did strengthen to a four-month high. there are a couple of interesting notes. george saravelos publish

something early this morning. we are fans of what he says, and he says the markets at this point may move on quite quickly. i'm also looking at the .uro-dollar, 1.1458 made aus recovery fund breakthrough. joining us now is christian keller, barclays head of economics research. it has been a difficult summit. negotiations were very difficult amongst e.u. leaders. the market is out pricing in a deal. is the deal enough to deal with the economic catastrophe in certain countries, and what does it mean for the recovery plan going forward? thinkian: first of all, i this is still a success. you describe the brutality of the meeting if you want to call it that way, but this is

something quite a story. whether it is 500 billion dollars or less than $400 billion, it is an economic debtery fund, european backed by the community that will have and it is a large part to grants to countries that are in large part in the most crisis. it will not prevent it. it is going to be a very deep recession this year, but i think it will set the conditions, for the potential successful recovery in the coming years. this is a crucial year, and i think the markets are pricing not necessarily the exact side of the fund, but the signal europe is giving here with the summit. it is not 100% a done deal. does it make a difference if it is postponed, if they don't lock it down today, if it is done in a week? is this about symbolism? christian: it is always a part

of symbolism. -- it will not be correct for me to say it doesn't matter until a week later. it happensthat before august, so in the span of the next two weeks. fromere is a postponement this week with a lot of acrimony that could take away from it. so ideally they do get a deal done today. if they go out and say we could really finalize things and come back for technicalities a week later, that is fine. light, if there is a bus where several of the participants go out and speak angrily about the others, that will be a negative, but i don't think that will happen. tom: good morning. i'm fascinated in my reading over the weekend on this, the internal politics of each leader. i would like to focus on what i see as a desperation with mr. rutte as he looks at the

netherlands coalition government. is he playing to the whole audience or his he trying to do -- or is he trying to do diplomacy here? christian: i think a bit of both. he is in a particular precarious he hason, given that only half of the vote. he is reliant, his coalition, to a position vote. nevertheless, i think there is a by -- to have, being led i think there are others, not only by the frugal four, but also by the german government. how is the accountability, do we spend the money? forworst thing would be europe to spend $400 billion by the end of the year, and you may not have the results you wish for. with all the acrimony that comes out with this kind of diplomacy that we are used to in europe, i

think it is useful debate, and conditionality is not necessarily a wrong thing. that is even seen by many economists that way. tom: how great is the divide between the continent and the new members toward eastern europe? there are so many memories there, back to the iron curtain, back to world war ii. great is that distance to warsaw, to budapest? yeah, that is an entire new element. -- to have of course simplify, i guess you could call it that way given what you just mentioned. .t is mainly hungary if you are cynical, and that is what i hear from some of the diplomats. they say they are making this point in the end to be bought

off and they will ultimately be agreeing, but they would want more of a package. -- that cannot really despite the fact that there are these differences in views between what europe stands for and how liberal it should be between western countries between germany and france and what the current governments have to say -- this is not something that is necessarily intrinsic in these countries, but it comes with governments that come and go. francine: what does this mean for euro? what happens from now until the end of the year? currencieswell, always have two sides. what we could see here is optimism on the euro, and also some pessimism. i think you discussed this earlier with regard to the u.s. so uncertainty in the u.s., the

more optimism in europe, possibly a deal. i think it took leaders to a stronger euro, and that is on the weaker dollar side, it should leave us higher and euro-dollar. francine: thank you so much, christian keller of barclays, who stays with us. coming up in the next hour, chetan ahya. that interview at 6:30 a.m. in new york, 11:30 a.m. in london, and this is bloomberg. ♪

tom: "bloomberg surveillance." here's where we are.

sleeping monday in the summer -- not. the markets are sleepy. full disclosure, we have not -- the news the vix on politics and international relations, the ramifications in august really extraordinary. christian keller with us from barclays. i want to go to where we are in the u.s., which is a gaming of furlough to lay off, and the gaming of how businesses are going to adjust, and the firings to come. does europe have the same challenge right now, where there is that sense of pending layoffs or rightsizing by businesses? christian: i think it is to some extent a group forward phenomenon. we had different responses, given the different labor market institutions, employment schemes, etc.. payroll support act in the u.s., and you had

germany, the short work scheme for workers. that creates a different situation and how the rate goes keeping, but also people on the payroll or supporting them generously when they were unemployed. this can come to an end. to seew, it is difficult how this will be prolonged for a very long period, and at the same time it seems like structural changes to the economy where a lot of these workers may not be able to -- jobs in particular, that may be permanently damaged from the corona. francine: bring that to price change and also through inflation. is it a europe of disinflation, or can there be bouts of deflation indicated by the negative rates? well, there is always the risk of a deflationary

scenario when you have this type of economic encounter plus high unemployment. i would say that if you look at the policy response on the fiscal side, but in particular on the monetary side, a lot of that risk of an inflationary scenario is taken out. the question is then, is it enough to go back to a reflationary, inflationary scenario, whereby we are getting close to targets in a few years, meaning 2%? i think that jury is still out. the inflationary risk i think has been addressed by very large policy responders. francine: how much more policy space is needed to do more? is a policy response at the moment appropriate because we think that there is going to be a gradual recovery, or that we don't go back into lockdown? how do you view it?

if there were an on and off lockdown for the next 18 months, what does that mean for the economy? christian: that is correct. i think most of the forecast, based on this assumption that we will have a recovery from here and that it may be long, euro, not a v-shaped come but i think it will get better from here. we gocall it a v, where back into a recession and possibly we will have to go back as bad asns, closing the ones that we had in march and april. i think that would raise difficult questions, particularly on the fiscal side. is veryas inflation weak, i would assume that central banks continue to support the policy meetings. they would continue to load the debt that is being issued by fiscal agents on the balance sheet. if there is no inflation, it does seem that there is something that they can do for some time.

i think that combination of fiscal largess, combined with an aggressive qe, would remain the policy response if we had a second wave. kind of policy response are we going to see from pboc and chinese authorities? rally two weeks ago was suddenly stopped. does that give us more of a sense of things to come? well, if you talk market,e chinese stock it is very much driven by the retail sector. that is at times being boosted or being taken back a bit through state media. i think it was interesting that on the day that we saw large declines in this chinese stock market, we saw a consensus for the second quarter. it doesn't really seem very much related. it is much more a matter of mood. at thefar, if i look

situation in china, it does seem that the policy response, even though it is more muted than 2009, it is quite effective. the chinese economy is recovering relatively well, and it is a mix of fiscal and some monetary easing. obviously not the qe that we see in the west, but they have more room on the fiscal side, and in terms of the policy response, i think china has room to support the economy. tom: christian keller, thank you so much, with barclays. a nice update in the midst of this fractious e.u. summit. we will have a lot more conversation, purchase early at 10:00 a.m. new york time, where maybe we will get a photo out of it, who knows. dividend up has will join us from the world bank. where is the -- david malpass will join us from the world

bank. we will touch on that. from london, from new york, it is monday. "bloomberg surveillance." good morning. ♪

francine: this is "bloomberg surveillance." julius baer kicking off european bank earnings with a record first half profit. bloomberg daybreak anchor manus cranny spoke with the bank chief executive earlier.

we have seen continued client activity through the entire year with a bit of on and off, but coming out of the first half into the second half of the year, i still since there is a lot of dynamics of clients looking at what are the markets doing, how are those recovery parents happening in the different countries. manus: when i look at treasuries, the fx derivatives in metals, and half a billion swiss francs -- my question is, is that hedging, or is that actual active client engagement? how would you define that kind of number in the report? philipp: obviously are balance sheets come on the one side there is the treasury book, and that has been revalued with the huge change in dollar interest rates throughout the first half of the year. but obviously on the trading side we have been benefiting from very high client activity throughout that period, which is reflective in the numbers. manus: the guidance going into

the second half of the year, are you going to need exceptional volatility to deal -- to deliver these kinds of numbers and margins? philipp: i think obviously volatility helps. we are a business model that capitalizes on all the till of the come as we have proven, and i think we are going to have it, and obviously from a market perspective. there is going to be stimulus, political uncertainty, but i think there are a few ingredients in the second half of the year can that -- that can drive volatility. manus: will the election in the u.s. drive that? philipp: that is one of the risks, but not the only one. and a scope do you think there is a certain amount of detachment from our markets from reality? philipp: it is very hard to comment. i think obviously in reality come in the real economy, the impact of the crisis is going to play out over a longer period of time. in the first half of -- manus: i think we are underestimating the length of

time. philipp: maybe, but it is hard to predict recovery patterns. those countries that have taken measures early and in a thorough and deep way, they will see faster recoveries, whereas other countries will be in for a much longer game. manus: the biggest risk going into the second half of the year -- what do you think it comes from? negative rates, china? what goes through your mind? philipp: i think we are going to see uncertainty, and i think the uncertainty lies in the speed at the depth of the recovery pattern. where does it happen and when? that uncertainty is a big risk. and then a bit of overlay from what is happening politically. but i think we are continuing the volatile situation, and it is good for those players to capitalize on that. the juliushat was baer chief executive speaking to manus cranny. there isnderstand that initial public offering with plans to list simultaneously in

hong kong and china's newtek force in shanghai. we understand that the valuation will be of at least $200 billion. coming up on leadership why would david ridge sign -- david rubenstein, speaking with mike everts about how the chief commerce giant is navigating the covid-19 crisis. that interview, 4:30 p.m. in new york, 9:30 p.m. in london. right here on bloomberg. ♪

>> many of those cases are young people who will heal in a day. they have the sniffles, and we

put it down as a test. i guess it is like any 9.7%. people are going to get better, and in many cases, they will get better very quickly. audience, anglobal extraordinary sunday for the president and this nation. oft was with chris wallace fox news. it was a contentious interview by all opinion get a lot of fact checking of the president and his posturing about mr. biden as we stagger towards an election. right now with a perspective on this is a man with a wonderful cv. peter trubowitz is a professor within lse's prestigious to national relations office. do you buy the polls? thell remember in 2016 when polls did not work.

do you show -- do you buy the polls that show mr. biden ahead? prof. trubowitz: yes, if the election were today, biden would win and probably the republicans would lose the senate. but i expect this to tighten between now and november. it is fair to say that these polls have to be taken with a grain of salt. that is to say there are a lot of trump voters -- people who will vote for trump who are not saying this to the pollsters. it could be as much as 4% or 5% of the vote. arehat -- of what you seeing the polls. by 15% is a pretty big margin. that was in the washington post/nbc poll yesterday. tom: there was a swirl this weekend from the legacy of voting rights from the legacy of john lewis to the president questioning the quality of the

vote in november. should our viewers and listeners prepare themselves for a contentious counting of the votes in november? prof. trubowitz: yes. i think it really depends on how close it is. if it turns out that trump is able to close the gap -- and we can talk about how he might do that -- and it gets close, that i think there will be disputes, especially if it is close in battleground states over these absentee ballots. you heard the president yesterday on this very topic in that fox news interview about how he has serious questions about the integrity of the absentee ballot. close,t that, if it is they will push on that, trump's team. it comes as no surprise that biden is lowering -- la wyering up.

he has 600 lawyers in his stable if this issue comes up. francine: good morning from london. how does the president try to get it back to win in november? prof. trubowitz: i think he has two ways to go here. one is to blame everyone and anyone for the pandemic. and you can bet your bottom dollar that china will be singled out. he is already moving on this front. why? because in many voters' minds, china is already seen as an economic threat to american jobs. and since the pandemic, their views on china has become -- have become even more negative. there are if you pulls out, pretty recent polls, that showed two thirds of americans right now hold a negative view of china. the other side of this, though, is i think you will hear a lot more chatter from the president

about a vaccine. and the vaccine may be the president's october surprise. even if a vaccine does not materialize and time for the election, i expect to hear a lot "hope is just around the corner" as we get closer to election day. francine: unless the number of deaths goes down, the number of infections go down, it does not matter who you blame. even if the president says this is all china's fault, the handling of the crisis at home is on him. prof. trubowitz: well, i think that -- i do not disagree with that. that is biden's strongest play. at the end of the day, the reason that trump would be trying to blame china or some other -- somebody else, dr. -- for the pandemic, what is happening in the united states, is because this has boiled down to a question of

competency. and a question about what trump does not what, what any sitting president does not want who is up for reelection is for the election to be a referendum on them. that is what biden will try to do. it is the smart move. it is because that is where trump is weak. i mentioned that washington post/nbc poll. the thing that really caught my eye in that poll is what is happening to trump in rural america, his base. he had a commanding 47% lead just a couple months ago. to 18as been trimmed down points, and you do not have to be a rocket scientist to understand why. basically, these voters are trump's voters, and they are being hit by the pandemic right now. that is what is driving this, and that is a problem he faces. it is a question about his competence, so he has to change the conversation. tom: those people may not care

about international relations theory, but a lot of people think about the american theory forward. the london school of economics are looking at europe-asia i.r. what is your theory about what international relations theory will be? prof. trubowitz: that is a big, big question. the problem is that the united froms has been retreating the international order. frankly, this did not begin with donald trump, it started earlier, but it has been accelerating with the rise of nationalism in the u.s. we see a lot of the same thing over on this side of the pond. ,t will take some real, new fresh thinking in the united states. the possibility -- and in europe.

the possibility is that the pandemic could make things worse by fueling nationalism. on the other hand, it it could force people to rethink and think more clearly about how the international system needs to be structured to serve people's interest. so i am hopeful that there will be some rethinking. tom: professor, this has been wonderful. inlook forward to seeing you our studios in london, maybe a pandemic removed. now, new york city, our first word news. >> in new jersey, a gunman reportedly dressed as a fedex driver and shot and killed the son of a federal judge and wounded her husband. law enforcement says it does not know of any specific threats against her. lastly, she was assigned to a lawsuit against deutsche bank

linked to jeffrey epstein. the european union is set to sign off on a key proposal. the netherlands, denmark, and sweden are satisfied with $450 billion on the fund being made available as grants. the rest will be in the form of low interest loans. the e.u. leaders will meet again today to work out the remaining issues. playing downmp is a resurgence of coronavirus cases in the u.s. he told fox news that many people experience nothing more than sniffles. the president called the u.s. response to the outbreak the envy of the world. the white house and senate majority leader which mcconnell begin talks today on a new coronavirus stimulus package. the administration is blocking -- balking on money for --

global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm ritika gupta. this is bloomberg. tom: thanks so much. great interest into the november elections. those democrats that are -- well, suburban. who may be away from the more progressive and liberal wing. we will talk about that from don who some people would call the people's republic of arlington. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom, shares of astrazeneca are rising today. set to release an early version of a covid-19 vaccine. there -- now you have a lot of insight into what these reports and trials actually mean. what do we expect from the oxford trial? is it positive and would be conclusive or is a baby steps? sam: i think baby steps is the way to put it here this is an early-stage trial. these are designed to be testing things in healthy people with comorbidities or not

any at all. this will give us an idea of how well it has worked in this early phase one trial. so waiting and waiting and waiting on when that data is coming. francine: i spoke to you last hour, and you reminded me to sin argan? furthest --e most focused on therapy than prevention. from astrazeneca, we are waiting on the vaccine news. u.k. biotechy tiny company, which is rare to get info from. shown pretty decent data that they can reduce the risk of patients going from being on oxygen to being on a ventilator.

this is now the third therapy. tom: this is a critical point, which came up this weekend at least four times, maybe five times. are we trying to find a vaccine to help with therapy or are we trying to find a more traditional vaccine that is a "cure" for the virus? sam: i do not know who you socialize with, but this is an incredibly good question. we will not know the answer to that until a long way through the development of this. will it be able to be a vaccine like the visas -- like the measles vaccine, which you do not even get the infection, it just kills the virus at point of entry. or will it be something that leaves you exposed to the infection but prevents the development of the disease?

very tough to tell. at the moment, the signs from the animal studies is it is good at preventing the disease, but you really need data from humans. crucial. is memory of clearest mothers in tears in school as a for the little pink drops in our mouths. will we get that drama? sam: it looks like it, if the mask story is anything to go by. you will get people who worry about it and you will get people who do not worry about it. but i am pretty hopeful this ends up a vaccine that come at the very least, turns the covid-19 infection into a less serious of a problem. i will not call it a common cold, because you really do not know until you see the data. but certainly less risky. tom: well said. we will let the president talk about sniffles. bloomberg with

intelligence on medicine, truly expert discussion on this pandemic. we have been doing that with the johns hopkins university. an update from joshua sharfstein -- look for that later today. future slightly negative. we await news from the e.u. summit. this is bloomberg. ♪ ♪

ritika: this is "bloomberg surveillance." let's get the bloomberg business flash. group ared his kicking off their ipo. the largeste one of ipos in years. billionvalued at $100 in the last funding round. citi says that is a matter of time before gold could go over $2000 an ounce in the last -- in the next three months to five months. shares of apple air pods' maker jumped today. the company clinched a deal to become the first mainland

chinese company to assemble the iphone. they agreed to pay $470 million for the iphone production in china. the company will join foxconn and just two others who make iphones. francine: thank you so much. declinen unprecedented in air travel, the industry is dealing not only with covid-19 but exit -- brexit. joining us now is paul everitt, ads chief executive, the main u.k. trade body for aerospace defense and space. thank you for joining us. before we get to aerospace and defense, overall, how will we travel differently? writer a great opinion saying the virus will make air travel even worse from now -- ewert flights, more expensive. paul: we will have an atypical period.

fortunately, we are beginning to see, certainly in the u.k. and europe, a slight tick up in regular flights. clearly, there is a level of nervousness. we are all looking anxiously over the next several months to see exactly how things play out. but once we get into next year, we are reasonably confident we will see passenger numbers beginning to grow, confidence beginning to return. i think the underlying fundamentals for air travel remain strong. a growing and wealthy middle-class and their desire for international travel. francine: when you look at aerospace and the aerospace sector, it seems like the u.k. has been hit harder by job losses than other parts in

europe. does it all have to do with brexit? we have covid-19 and come on top of that, we do not know how --se exit negotiations brexit negotiations will turn out. tol: europe-wide, we want see a relationship. we want to see a deal struck. we will struggle until that is done. on the broader note about resther the u.k. far better or worse. in a number of countries, there protocolsstablished or social mechanisms that kick drops inignificant production happen. in germany, they have a similar type of scheme as france. in the u.k. have not had

traditionally hide those types of schemes. unless the u.k. has drop retention schemes through the end of october -- unless of the u.k. has job retention schemes through the end of october. the u.k. has always had a more flexible labor market. in good times, that works very well for us. when times are difficult, sometimes, not so good. but on balance, i think we are i n an ok place. tom: do you think there will be a bailout not only in the united kingdom but worldwide? paul: we have seen significant investment in the u.s. as in france and germany. -- they are a national carrier. whether lufthansa or others. had a u.k., we have long more open and competitive marketspace. british airways,

virgin, amongst a range of others. when times are good, the composition means cheaper fares for the toppling -- that competition means cheaper fares for the traveling public. tom: my question is, though, is that going to change? it is all great talking that, but if you stretch to october or past october with a lack of profitability, maybe they put planes in the air, get some revenue, but they get no profitability -- will they be more lufthansa-like or airfr ance-like? paul: the challenge and the witht to the u.k. is competition from those other airlines, it is definitely a

competition around passengers. we have already seen charles de gaulle airport trying to attract passenger traffic from the u.k. but for longer hall conductivity connectivity. i think if airlines are less financially robust after their crisis, that will put more strain on the business. we need well-funded and profitable airlines in order for them to invest in their products need to be developing. francine: thank you for joining us, paul everitt, chief executive of ads. the market is looking for the e.u. leaders to meet again around 4:00 p.m. local time here that will give us a good indication if they will go for

this recovery fund. the euro climbing on the back of it because there is hope in the markets that leaders have made progress in negotiating this historic stimulus package. if you look at european shares, the actually erased some of the losses. coming up, david pearl. we will talk to him about gold and about treasuries. and of course, we will look at bond yields. italy's 10 year bond yield falling to the lowest level of risk since march. this is bloomberg. ♪ ♪

this morning, after "hard

talks," some of europe are "very "consensus support." hungaryleman from called out the gentleman from the netherlands for so-called communist tactics. volatility is less volatile. and the fifth time is a charm. mcconnell of kentucky and the gop this morning visit the white house. the president wants virus asting cut, wanting it for new fbi headquarters. good morning. this is "bloomberg surveillance ." from our world headquarters in the new york, i am tom keene. francine lacqua back in london. there is almost dueling stimulus. we really do not have an agreement in brussels, do we? francine: we do not. it is day four of this marathon and brutal summit.