francine: lufthansa -- beirut is rocked by a massive explosion after an explosion kills over 100 and injures thousands. commerzbank cuts its outlook. the german lender abandoned full-year profit amid the wirecard scandal. the pandemic threatens the entertainment giant's traditional business but it plans to release mulan on disney plus. i'm francine lacqua in london. the markets have a risk off feeling to them. what they are looking at is work

-- earnings results and a price of oil. gold, topping 2000 and so you have gold topping 2010 same time, european stocks gaining so it is a risk off mood, high volatility for the month of august. the 10-year treasury yield, steady near the lowest since march. there are signs american lawmakers are making progress on an economic aid package. let's get to the first word news in london with laura wright. james: the white house and democrats hope to have a deal on a new relief package by the end of the week. sides remained far apart on key issues that they appear to be moving closer to an agreement. any vote on a deal would likely not happen until next week. u.s. and china are planing to assess their phase one trade deal this month. sources tell bloomberg the discussions between trade representative lighthizer and the chinese vice premier will take place around august 15 amid

a backdrop of rising tensions between the two countries. and u.k., lawmakers are urging boris johnson to be more open about the travel risks associated with the coronavirus. criticism over the way he talked restrictoning only to without warning. disney is doubling down on its streaming business. its live-action remake of mulan will go to disney plus, a pay-per-view film priced at about $30. the attempt payment -- entertainment giant -- global news 24 hours a day, on-air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you. let's get the latest from lebanon.

the video we are about to show is dramatic. a massive explosion at beirut's main port has rocked the city, killing over 100 people and overwhelming possible -- overwhelming hospitals. -- it is not known if it was an accident or an attack. do we know what the cause is yet? i don't know if you can hear us, otherwise we will get back to her some time. we will get back to you and here the latest on what we know the latest -- of the blast. a challenging third quarter, the german company plans to save around 25% in investment expenses this year and expects revenue and earnings to fall

significantly. earlier in the crisis, it said it would cut its dividend payout to about 350 million euros. joining us is the chief financial officer of continental. thank you for joining us. what can you tell us about how the pandemic will change her company? -- your company? washe second quarter obviously very difficult, 40% decline in sales. negative ebit. the only good thing we could say at the moment was consecutively thingsril, may, june, were improving but quarter, we were below the numbers we saw a year ago and for the midterms, will bet the world cup for some years below the level we have seen in 2017, so there

is a structural change for some years to be expected before we are back to the old levels. francine: when will that be, mr. shafer? do you have any idea of when we will get to a more normal market? probably the low level markets will be the normal markets. our expectation is it would take four to five years before we are back to the levels we saw in 2017, 2018. francine: in the meantime, what happens to the auto sector in general? will there be more demand from certain countries than others? how do you see that panning out. moment, we dothe see that china is the region that is recovering the fastest. we had some months where car production in china was even above the level of the prior

year. on thecentive programs provincial level, local level, regional level helped, but this seems to be the region that is coming best back to a type of normal, while europe specifically and the u.s. clearly in the third quarter still will be below what we have seen in 2019. francine: can you give us an update on plans to widen some of the restructuring measures? what exactly are you looking at now? taking all thee information and scenarios into account which we are building now for the next years to come, world car production and potential for us. we expect this to be below the level we expected half a year and therefore, we have to adjust our overall cost structure to these new normal developments. give us some months before we come up with a final view on that and the measures which we

will take and have to implement to make sure we can then grow with the markets in the future on a lower level and we had expected some time ago. francine: it seems there is a trend to have more local supply chains. how does that affect continental? we, in principle, do 80% of cell local, produce local. it might be this number is for the years to come not sufficient because we se trends toe more localization and we are always checking should we do it locally or can we do it from some location where exports to the rest of the world are done? it is a constant process and it is more discussed and we have discussed it some time ago. are you considering acquisitions to actually expand what you are doing for conductivity? -- connectivity?

we're looking at potential strategic acquisitions could helpres which us to strategically position the group even better for the future development than now and this includes conductivity -- connectivity. the car has to get more outside information, is doing functions no longer inside but outside in computers and getting information back into the car. it is not limited, potentially m&a will not be limited. francine: wolfgang schaefer, chief financial officer of continental. later today, the latest on the pandemic from dr. anthony fauci. we will also get back to the markets. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg: surveillance ." i'm francine lacqua in london. the white house and democrats hope to have a new virus relief bill by the end of the week. that's the latest from steve mnuchin. the two sides remain far apart on issues that appear to be moving closer to an agreement. any vote on a deal would likely not happen until next week. shepherdson.w, ian always great to catch up. thank you for coming on "bloomberg: surveillance." when you look at the steps we are making towards stimulus in the u.s., how important is it we get something sooner rather than could even if the amount come short of some expectations? remember, the enhanced

unemployment benefits, the extra $600 week given to about 30 million people since the pandemic began, they expired july 31 so now, we are in an interim at the least for a lot of people who have been relying on money to pay the mortgage, car payment,e the credit card payment, buy food, everything. without enhanced benefits, those people are seeing an enormous cash flow drop right now and it is imperative congress get its act together before the recess in order to restore at least some of that money. even democrats expect -- don't expect to see a full reinstitution that republicans want to cut the $600 a week to $200 weekend that is too low so i expect we get a compromise. the sooner, the better really. francine: will the compromise be enough to keep the u.s. economy afloat or do you have concerns that there will be real blind spots? clearhere is already

evidence of flattening but the flattening we have seen in the short-term indicators is probably simply a reaction or consequence to people choosing to stay at home more and some western states have been hit hardest by the second wave. step downuld see is a in spending because of the ending of the on in -- enhanced employment benefits. chunk of the economy to lose because so many have been getting this benefit. about 30 million people. almost one in 10 americans have been getting this and it stopped dead. it will make a material difference and it would trendorm that flat to a downward trend because there is no way we can find 3.5% of gdp from nowhere. both sides realize apart from

the wilder fringes of the republicans, that they have to do something. the election is only 90 days economy to allow the fall into a whole doesn't make sense. francine: depending on the kind what does itt, mean for the u.s. election? is: usually the principle whoever is in power gets blamed when things go wrong. now, thelear republicans are already in trouble in the senate and trump is behind in the presidential polls. what mcconnell really cares about is the senate and republicans are terrified something they thought was safely theirs is slipping out of the grasp and he appreciates they will be the ones who take the blame because the house has already passed a 3.5 per -- $3.5 trillion relief bill and may -- in may and the republicans look negligent for having done

nothing thinking a second wave wouldn't be happening, but everyone knows something needs to be done, so they have acted late and with the recess coming resistant toicans doing anything, he will have to do a deal that reaches across the aisle and that is difficult. splitting your own party is difficult but i don't really think he has a choice at this point. francine: where will we see unemployment or consumer bending -- spending? ian: first in the consumer spending because we get data that is almost real time. restaurant diners, weekly hotel we'vedaily air travel, so got a lot of signs that show spending being cut but the consequence will be if we see a sustained drop in spending. hiring will drop, as well. right now, to be truthful, no one knows what is happening with

unemployment because the data is so contradictory. we've got service going up, down, and sideways. pay your money, take your choice, but whatever the position, it will get worse if there is not another stimulus bill. there's no question. francine: what happens to dollar in all of this? think the weakness probably persists a while longer yet. a country suffering from a horrible second wave of covid and is about to do more stimulus is probably not a country with a strong currency. with europe doing better, my guess is the dollar will be under downward pressure for the foreseeable future but i don't see this as the end of king dollar. . dollar is still the reserve currency for the world. that is not going to change. francine: ian shepherdson from pantheon stays with us. let's get the latest from beirut . joining us from lebanon is our reporter. if you can hear us, what do we know about the explosion? >> i can hear you finally.

we are still trying to find out what happened, but the latest is there were roughly 2700 tons of ammonium nitrate stored at the port. that has been confiscated from a ship several years ago. what they are trying to figure out now is why they were at the port? why they hadn't been sold or auctioned off or destroyed or moved elsewhere, and why such a large amount of explosive material was being kept in this unsafe environment, but that appears to be the cause of the explosion and obviously, ammonium nitrate is a component used in some explosives and that --ically explains the

francine: i think we have just lost lin. we have to understand there are about 100 dead, 4000 injured, phone lines aren't as great as they were 24 hours ago. we will try to understand how the beirut explosion will worsen the crisis we have seen in lebanon. if you hit the port, the main point of trade for cargo to come in and out, this could affect the economy apart from the loss of life. we will get more on lebanon and the horrible explosions yesterday. coming up, commerce bank had its profit outlook -- cut its profits outlook. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." i'm francine lacqua in london. the u.s. and china are planning to assess their phase one trade deal. sources told bloomberg the discussion between robert lighthizer and the chinese vice premier will take place august against a backdrop of rising 15th tensions between the two countries. joining us, ian shepherdson, founder and chief economist at pantheon macroeconomics. you were talking about stimulus and concerns about jobs and when things get back to normal in the u.s. there is an added layer of uncertainty.

how much does that hurt the world economy and the u.s. economy specifically? long before covid struck, we saw disruption to trade flows, businesses having to find new supply chains because they became worried about their chinese counterparts or simply because it was costing them too much of year tariffs to use china to source equipment and supplies so we were seeing disruption and you can see that in the business surveys, it was a real drag. on top of that, covid exploded everything. once covid goes away, the china trade war will still be with us. that depends on timing because if there is a covid vaccine at the end of the year and joe biden is president in january, we will have a different u.s.-china relationship and new year. trump is reelected, i expect the trade war will drag on

endlessly, but it is tragic because it is an act of self harm from the u.s. perspective because americans are paying the tariffs, no matter how many times trump says china is. it is a tax increase at the same time the senate and congress is throwing money at the economy effectively to limit the damage. what one hand is giving the other hand is taking away. the stimulus is positive in net term, but the china dragon is unnecessary on an economy -- drag on the economy is unnecessary on an economy that doesn't need it. francine: the figures that are slowly coming out points to an economy that is getting back on its feet. is there anything that makes you worry longer-term? ian: china definitely is getting back on its feet. coviddealt with the outbreak earlier than anyone else, but the numbers are clearly improving across the board. threats are a second covid wave

in china. we've seen outbreaks but nothing serious so far. that hangs over everyone until he vaccine and the long-term china story is debt and the banking system that ultimately will struggle under the weight of that debt, which is dampening growth and downplaying future productive potential coupled with unfavorable long-term demographics. it is easy to build a medium-term bear case for china. the short-term picture is still pretty china favorable. francine: if we have rampant inflation around the world, given all the stimulus, where do you see it first? i don't think we will get actually inflation. ian: this is a question bouncing around. no one really has the answer. the only thing i can say for sure is we've seen increase in

money supply around the world because of the increase of public debt. normalize,onomies which will be after he vaccine, early next year, middle of next year, all of the increase will still be there floating around. if you have increased the money by 20%, which is what the u.s. has done, sooner or later, that will create inflation somewhere and i would look for it first in the u.s., but not yet. this is a story for next year at the earliest. francine: ian shepherdson from pantheon. next, the bank of england and more monetary easing. this is bloomberg. ♪

♪ francine: economics, finance, politics. this is bloomberg "surveillance." i'm francine lacqua in london. let's get to news. hi, laura.

>> a massive explosion has rocked the city of beirut. the video we're about to show is dramatic. it was so powerful it blew out windows across the capital. the latest casualty figures are over 100 dead and 4,000 injured. it was caused by highly exemployees i ever materials dudid not say if it was a planned attack or an accident. health and human services secretary will lead the delegation and discuss the global response of the pandemic. the latest signal of the u.s. support for taiwan. the question for any deal to buy tic tok's u.s. operation is how tiktok ishey worth --

how much are they worth? global news 24 hours a day on air and at bloomberg. powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.

>> have been catching up on that front. how long will it last? he perennial question.

francine: this is bloomberg "surveillance". i'm francine lacqua in london. bank of england signaling the case for more monetary stimulus is growing as the rebound from the pandemic and recession risks fade. when you look at the bank of england, what options do they have? >> well, it is the same option that every other central bank has which is to do for quantitative easing. it can take different forms, mortgages, private debt, equities. the bank of england is not at that point but rates are rock bottom. he stimulus, more q.e.

some guidance which the fed is about to embark upon right now u.k. is in a spectacular position to u.s. where the initial rebound has not morphed into the v that everybody hoped for with our fingers all crossed. it is clear now that it is going to be a much longer slog to get the economy back to something like normal. we don't have a vaccine. we need entless support from banks and fiscal authorities. francine: when you look at the case for negative rates, do you see bank of england going negative rates? and what does that mean for the u.k. economy? >> i hope not. i'm not a big fan of negative rates. i think they are very distorting and they baffle and scare the public. i think they are very awkward for the financial system and

this is clearly a lesson from other country which is have tried negative rates is they are a very mixed blessing. i don't think the bank is on the verge of heading there. i don't think it will make much difference to the economy. the real stimulus, given the scale of stimulus required to get economies out of the hole they are in now, tinkering around the edges and pushing rates below zero probably would not mick a material difference to the economy. this is really the sort of situation where you need the fiscal authorities to step up to the plate. that's where the really big bang can come from. the u.k. government along with other developed economies has en fairly aggressive but i'm disturbed and depressed by the talk now about having to scale back on things and seeing the deficit hawks starting to pop their heads up again. to me it doesn't make any sense

at all. we can worry about the debt and the deficit once there is a vaccine. the time is not now. francine: what do you do with brexit depending on what kind of -- would we get with brexit? >> a delay at the end of the year is the policy from the perspective of the economy. the question is whether that is deemed to be politically acceptable. as we know, talk from especially boris johnson is very cheap. to the few, in an uncontained brexit catastrophe makes zero sense for an economy already shattered by covid. if you look at polling, brexit is a long, long way down the list. bviously covid and the economy has grown substantially. the government will push for a

deadline eventually i don't think there will be much political blowback for it. johnson would have persuade only f his brexit 'res. e -- personally persuade his brexiteers. francine: thank you so much. mirkse soft has carefully toed the line between washington and beijing for decades. bloomberg spoke exclusively with bill gates and -- about the grow growing tech war and doing business with china. >> the whole situation is quite novel in term ovs what the principle are involved here.

what principles showl we apply? 'm not at the company now. we have made investments in china. we have engineers from all over he world including in china. microsoft is very careful about its data promises and we'll try to have strong relationships globally. won't do things that are hostile or viewed as hostile. >> what about the app in general? obviously it is a very popular app. is this something you would like to see in the microsoft family? >> it is nice that tiktok created some competition through innovation. it doesn't seem like preventing that innovation from being ailable that that makes much

sense when you want new things out there. i am not in the target audience. i'm certainly not expert. i have gotten a lot of education from my youngest daughter about this. and she spends time on it. they did a great job on it and there is a lot of ways to take allowed pefully that's to happen in some form. >> let's talk about what's allowed. is the trump administration correct in trying to force this chinese company to sell tiktok's u.s. operations because it is chinese? should the company be subjected to that? 100 million americans are using it. >> what law? i mean, why wasn't it clear three months ago, six months ago. when people make investments, they should understand what is allowed and what is not allowed and what is the principle

involved in this thing. maybe i didn't read the right article. i don't understand what happened you turday but anyway, know, i'm focused on the oundation and the pandemic and i'll i'll probably provide advice at some point but i'm not at the center of the decision being made here. >> i want to combickly get your thoughts on the anti-trst situation. i'm sure that the hearings have been a bit of deja vu for you having gone through a lengthy revue process yourself. do you look at companies like apple and amazon and google and facebook and think they have become too powerful? is this an effective way to preserve? >> it is the idea that congress ghent a chance to talk to their leaders and understand what they are doing in terms of media and

competition. they were lucky, four of them on the hot seat. i was all by myself. with critics sitting next to me. hey, i guess we're getting nicer. i always felt going to washington and talk about our values and what we did was helpful. praketbly through this pandemic where these companies have done so well. now understanding what it is like to be an entrance into the market. there are legitimate issues there in a scatter shot way did et raised. francine: that was bill gates. let's get back to earnings. commerzbank cut its earnings

estimate. we have been speaking to a central officer. >> it is really important and it was much r, more inspirational to reach a positive net income given the corona impact on revenues but also on -- now we have a single case which was unexpected i have to say. and even more important we want to look into q 3 or 4 and really make progress on our program. that brings us to a negative net income for this year. >> in terms of the wire card story, before you were c.e.o. at commerzbank, long before, journalists were writing stories about the problems at this bank and the amount of smoke coming

from the company meant pretty much everybody should have known there was fire. the regulators certainly didn't seem to wise up to that until far too late. neither did the government. what do you think needs to change so we don't have another case where a german company misplaces more than 2 billion euros? >> the discussion is ongoing. i will clearly not comment on single cases. what i can say as a general thing is that clearly one question on how do you regulate. something we need to discuss with regulators. everybody has to ask who has been involved in cases like that, what have been the red flags and have we dealt clearly with the red flags which are out

there. francine: that was the commerzbank chief financial officer. coming up, disney gets down to business. they top earnings estimates and plan the debut of its live action remake of mulan. ♪

francine: this is bloomberg "surveillance." i'm francine lacqua here in london. b.p. has slashed its dividend for the first time in a decade. we spoke to their chief executive. >> we had a strong quarter and a very strong quarter. i think we called it an exceptional quarter in trading. it was one of the few highlights in the second quarter. we're very fortunate to have an incredible trading organization that is global. i don't think that level of performance is ratable. the second quarter is probably one of the most challenging quarters in our industry's history. and it played well in a market

and played to people who had the capabilities like we do and place plays to people that have the infrastructure like we do. a strong quarter but not one we expect to be repeated. >> when you were talking about return, this brings in prices. is it by your own admission you say power products make a lower return but over all you see higher returns of 14%? how much is that predicated on oil and if we stay at $45? >> that is a good question. yesterday we laid out the economics to shareholders and it has has three elements, committed distributions, a set dividend and commitment to do shared buy backs and the return to growth and the third is around sustainable value where

we're saying here is an opportunity to invest in a company that is decarbonizing and helping the world decarbonize. returns in the early part of this decade is driven by our existing hydrocarbon business. as when he had into the second half of the decade, you will see the new businesses come to the fore. we're optimistic about what we can do in this space. we said we expect to go from 2 1/2 gig awatts of power to 50. yesterday in the region of 15% to 20% returns. our transition story is not just a renewable energy story but also a consumer story and a mobility story and you know, eople may not know, b.p. sells coffee. we sold 150 million cups of coffee last year this is a very strong business. it is a growth business. we're going to go from 10

million customers a day to 20 million. we're as excited about that as we are about the low carbon energy part? >> don't you sell the need $60 oil to make that happen? >> what we did with the distribution policy reset is what we wanted to do. this decision was rooted in strategy. absolutely rooted in strategy. we want to become an integrated energy company. we need to invest into the transition. to do that we want to be able to do it at a range of prices. what we set out yesterday was a framework, a financial framework that had a balance point of $40 oil. we can do these things at $40 oil. if oil is less, we will take actions to preserve that. what we have laid out is a very resilient distribution policy that enables us to invest into

the transition while giving shareholders a -- a fixed dividend and potential for at least 60% of buybacks if there is excess cash flow. francine: that was the b.p. chief executive speaking with alix steele. disney is leaning harder on its streaming business. they announced that "mulan" will go straight to disney plus. joining us to discuss all of this is dani burger. good morning. what is disney's strategy expanding its streaming offering? >> good morning. this definitely seems like a shift in strategy and it is one that is preparing disney for for a new world where people are traveling less to go to theme parks and likely not visiting cinemas as much either. theme parks still the core of their business but they have a lot of safety measures. the "mulan" move is interesting.

there had been hesitation from disney to launch this on streaming services instead of straight to theaters but again this really shows they know that the world has changed. perhaps that change will continue. their c.e.o. said view this as a one off but at least for now. they are going to charge $30 to see "mulan" along with the charge of having disney plus and if it works well, don't be surprised if disney continues to make moves like this and continues to release movies to their streaming services. they have also said that star is a tv package they acquired when they bought 21st century fox. they are going to take that internationally as well. shares moved as high as 5.5% higher after the announcement that they would make this change, focusing on streaming. francine: it was a surprise profit. what drove their earnings? >> we definitely saw that

coronavirus drove their earnings down and they had a big hit at the theme parks. what helped is their sports fees like espn and they got to defer some of that. that helped them post a profit. francine: thanks so much. dani burger with the latest of disney challenges ahead. coming up, we'll be talking with -- later today we get the latest on the pandemic with dr. anthony fauci and ahead of that, a look at the economy. this is bloomberg. ♪

♪ francine: the root -- beirut is

rocked by a massive explosion, injuring thousands. commerzbank cut its outlook. the german lender abandons its portfolio target. and as dependent threatens traditional businesses, disney plans to release new titles on disney+. we will spend quite a lot of time looking at the disney business model to try to understand exactly what that means going forward, as less people go to theme parks and stay in more. i guess the only thing they can do is try to bet on the streaming service. tom: it was a really interesting call yesterday. one of our producers is going to hit.t seven times, $29 i