-- england,ry t france, and the netherlands limit travelers, but some museums and theaters can open tomorrow. backlash. reallyk against the is agreement with uae can normalize relations. lai, hong kong's jimmy says he was arrested on "trumped up charges."

good morning, everyone. this is "bloomberg surveillance." i am francine lacqua here in london. the market is taking in a few things, european stocks dropping due to these new travel roles. now let's get to the bloomberg first word news in london with leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, francine. israel and the united arab startes have decided to talks. the two sides will hold a range of talks in the coming weeks. in the meantime, israel has agreed to suspend its efforts to annex part of the west bank. palestinian officials quickly criticize the move, calling it a "betrayal." the u.s. is adding france and netherlands and malta to its quarantined list. people now have to isolate for 14 days. it comes as the u.k. has even more lockdown measures and even tougher penalties for ignoring

social distancing rules. fines for not wearing a mask will double to a maximum 3200 pounds. lai kong media tycoon jimmy accusing china of arresting him on "trumped up charges." lai pushed back against laws, saying he should be presumed innocent, not guilty. and yale university discriminates against immigrants and white africans. ant is according to investigation. yale categorically denies claims of discrimination. global news, 24 hours a day, on @quicktake,oomberg powered by more than 2700 journalists and analysts in more

than 120 countries. i am leigh-ann gerrans. this is bloomberg. francine? francine: leigh-ann, thank you so much. now, european markets opening to the downside after a choppy week with fresh eyes, u.s. markets, and dredging concerns about the pandemic in europe. at 10:00 a.m. u.k. time will provide to prove what exactly we are facing. european travel stocks are down as the u.k. expanded its list of countries where mandatory quarantine is imposed on those returning to the country. joining us now is bloomberg opinion's marcus ashworth. thank you for joining us. what are we looking at? is it inflation trade, deflation trade, and an assumption on who will win the election in the november?

marcus: [laughs] well, the best way to look at it is the dollar, which we have seen a direct correlation to europe, particularly gild, but the whole gamut of u.s. and bond yields rise. so i think we can get a correlation here between the strength of the dollar, whether interest rates in the u.s. and therefore the rest of the world have got too low a month and the dollar -- too low, and therefore the dollar, as well, and gold out of a number of safety havens. are sort oft, we thinking about what happens as you come into september. we are going to see a lot more supply and demand coming from the bond markets. in a place where buyers are still trying to

navigate the daily back-and-forth of lockdowns and travel restrictions, which makes market iny, tremulous that sense. francine: what can you tell us about what the market is looking at? how will that pan out over the next several months, marcus? marcus: [laughs] one has to be confident, i think, that central banks have got the back of investors. we have seen the credit suisse in europe coming to pretty much the toughest they have been since the crisis, and that is definitely, we have seen that occur to u.s. spreads and whatever. i think the market is in a relatively strong space, you know, we are actively close to all-time highs in the stock market. i know that is being tempered, but still. i do not think there is an awful lot of trend momentum, like i said, and stocks at the market, to really put your finger on, because we have been moved

around. as far as the u.s. elections have concerned, i think it has been narrowing, the decline of poll numbers, at least arrested or slightly reversed, i think the markets are more confident than they would be with the pressure of the democratic, not just biden wing, but throughout congress and senate, and that is something the market might have struggled with, which is far less the case now. think the shock factor democraticf the blast of different measures is anywhere near like the threat it was earlier. so i don't think stocks are in a bad place, and value will have its day at some place. francine: markets, when you look

at what the fed can do is we do not have the extra stimulus in the u.s. what will it actually change? real rates, inflation market?ions, is there a marcus: if you look through it, we need to be very skeptical about whether or not inflations jumped. they havek at rents, jumped dramatically across most cities in the world, and i do not think that is through rent, which is the big that amoco the cpi. realwould be -- wishes the obstacle with cpi -- which is the real obstacle with cpi. so i would be skeptical. real pressure. the jump up in the yield is not necessarily to do with inflation. that is part of it, but it is also big supply coming and also the strength of the dollar, so in that sense, i am not, you

know, too confident that we have got any difference of you as far as inflation -- view as far as inflation. francine: we have right got some great charts. in terms of expectations, where first?ou see it would it be exported from china, or would it be in the u.s. first, marcus? i it were to happenf? marcus: i do not think there is much coming through from china at the moment as far as that particular threat might be. that is more of a deflationary, in fact. [laughs] but the prospect of inflation is going to be in questions of tariffs and restrictions of trade and ongoing problems with all the geopolitical stuff that is going on at the moment. and there is always at risk, it is always very wise to keep a close eye on it.

but as i said, i think there is some short-term anomalies in how it is being characteristic. there will always be some problems with inflation, because that is what a lot of people's current expenditures, stuck at all the covided supply chain issues, but they will pass, one hopes, and i think we will see a little uptick in inflation is probably going to prove temporary. so i think -- so i think housing will prove to be one. francine: marcus ashworth, thank you. coming up next, the covid-19 come of the great reset here we will speak to the author, and chairman of the world economic forum, dr. klaus schwab. don't miss it. this is bloomberg. ♪ this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i am francine lacqua here in london. now, let's get straight to the bloomberg business flash, here's leigh-ann gerrans. hi, leigh-ann. leigh-ann: hi, francine. epic games. the maker of fortnite is killing apple and google. say paymentss that must be made through apple, which gets a 30% cut. they are searching for a way to circumvent the fees, and removing it from the app store. epic claims apple and google are anti-competitor the. -- anticompetitive. daimler paying to settle diesel

issues. about $1.5includes billion were in agreement with the justice department and environmental protection agency. the rest is to settle class-action litigation brought on by consumers. and softbank's pumping an extra thatbillion into wework, as the company weathers a declining membership and coronavirus crisis. --re is one bright spot demand from enterprises who are looking for more office let's ability. -- flexibility. and that is your bloomberg business flash. francine? francine: thank you so much. bloomberg's matt miller spoke to the chief executive officer. equity markets have also

crossed before asset prices have peaked again, so i would not suspect that this is very, i mean, unusual opportunities to buy existing assets for very low prices, not in our industry. matt: so you see basically inflation there because of all of it, let's say, green new deals or the fiscal help that is being given to that side of the business. is it becoming more competitive? markus: on the one hand, it is becoming more competitive. you see the big oil companies, and there is no surprise that they are renewable and the power sector, because it is a very attractive sector, given the market growth we expect in the decades to come. but yes, if you look at what is needed to be successful, you need the expertise, which we have, you need the pipeline. there is no scarcity of money. the market growth is there, so a lot of players will be happy in that field. but i also expect competition

over time will increase, but we do not see it. we take it as a real challenge. matt: that's what makes the game fun. dr. krebber, what about demand? you already said there was a lull in the beginning of the pandemic. how does it look for power now? rebber: power demand is now down your own year by about 5% in some markets, a little bit more. it is too early to tell when we come out of the summer break, whether they start again. before, i is a year would not expect anything, for the full year, we definitely expect between 3% and 6%, lower demand than last year. we are volume attached. chiefne: that was the rwe financial absurd. the coronavirus has had an

impact on the world, all the restrictions in many countries are easing, there is still no vaccine and the pandemic will end, but some are viewing the prizes as an opportunity. well, "covid-19: the great reset " looks at what could be achieved if the world axis weekly and jointly to revamp -- and jointly to revamp the world. chairman schwab is the and founder of the world economic forum. addressab, how do we those countries wanting to reset because of the virus? dr. schwab: first, i think we have all been very effective -- governments, businesses, every individual -- so it is time to think, what does this pandemic really mean for us, not just now, where we have to find survivors, but in the long run? our house, if i may say so, has

been damaged, and now is the time not to look only at how we repair it, but how we may rebuild it, because the fundamentals of the house have been substantially damaged. francine: what does it mean, you know, that we need to reset? is this rethinking our objectives? do we need to finally focus on health and climate change instead of our obsession with economic growth? dr. schwab: i think the objective should be to make our societies more resilient, more inclusive, and also more sustainable, which means we have now an opportunity with all of 7 trillion,, the which have been committed by governments, not only just to repair the damage that has been done, but to think and to reimagine, what should we do

to address also major deficiencies in our economic and social systems? which actually had been apparent before the crisis even broke out. francine: do you see any appetite, professor schwab, of politicians around the world wanting to do that, or are they just too focused on the pandemic? are they too much in emergency mode right now? dr. schwab: yes, that is right. so short-term thinking, people are still in a crisis mode, but we should not have to miss this opportunity, and of course we have enough of a problem and enough of a challenge, which means that surprises and the damage, which is stewing on our economies and on our societies, leads to much greater egoism, egoism on an individual basis but also on a national basis. this crisis has shown us our global

connectivity, has reminded us how much we are interdependent, and at the end, the global reset will only be possible if we have a global effort, a common effort, to address those challenges. francine: how narrow is that window of opportunity, to change things and to reflect? dr. schwab: yes, we have a great opportunity now. do not have only the opportunity in terms of, let's say, reflection. we have a very real opportunity money,ng sure that the which is in some way helicopter money, $7 trillion, and so on, are spent in a positive way, not only to look short-term, to create or to make sure that the economy is rebounding, but that

the economy is really rebuilt, with a long-term perspective, which means perspective of greater inclusiveness and with the perspective of decarbonization, taking greater care of our natural environment. taking care of, the environment is not a cost. the world economic forum just published a study some weeks ago, where we showed an intotment of $250 billion nature-related efforts could create something like up to 77 million new jobs. we all know that one of the drastic consequences of this pandemic will be a substantial increase of unemployment and of jobless people. francine: professor schwab, i

know a lot of our viewers and listeners on radio and tv also want to know what will happen to davos 2021. what are your plans at the moment? how many people do you think will actually be there? dr. schwab: our first priority, of course, is the health of every single participant. we are working very closely, together with the host country, and i am very confident that we meetinguct the annual 2021. it is even more important than ever it has been before, because there is now a need, when we this, to come together in a personalized way call "thecuss what we thet reset," and to find common ground, so we will come back to the annual meeting, definitely. as far as the timing and the

place is concerned, it depends on the health situation, but we are very confident that, at the beginning of next year, with advances in treatment possible, possibly in vaccines, and certainly testing, we can provide a safe environment. francine: professor schwab, thank you so much for giving your time. an important message from klaus schwab, the chairman and founder of the world economic forum. countries are spending billions on a coronavirus vaccine, but the ceo of novartis as a vaccine on its own is not enough. our interview shortly. this is bloomberg. ♪ is bloomberg. ♪

francine: this is "bloomberg surveillance." i am francine lacqua here in london. the markets focused on the pandemic and also what is happening with jobs in the u.s. here in europe, tourism stocks are actually dragging on the european stoxx 600. that is dragging down some of these yields. treasury yields are steady. this is bloomberg. we will have plenty more on the markets and on covid-19. ♪ hike!

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i'm francine lacqua, here in london. let's focus on etf's. another quantity exchange rated product bites the dust. credit suisse is planning to close its national -- natural gas exchange rated. falling under increasing coronavirusthe affected the market. dani burger, what happened with this fund that credit suisse has decided to close the echo dani: it has been a wild ride. first of all, these are etn's, not like etf's. it is backed by a bank, so it is a debt obligation, so it is banks backed by bank credit. last month they made the decision to delist them, taking them off exchanges, but they said that you can still trade them over-the-counter. this is where the weirdness happens. this three times leveraged inverse national gas -- natural -- the chart is

wild. at one point it surged 6000%, looking nothing like it should have if it was actually tracking this inverse natural gas index. so this week, credit suisse makes the announcement they are closing this fund for good. they did not give a lot of details of what happened, why happens, why they were closing it. a lot of confusion has ensued, but we think it has something to do with the creation and redemption process of a now over-the-counter fund. it was wild to watch this fund completely take off from what natural gas investment should have looked like. francine: are these types of leveraged products risk investments, especially for retail type investors? dani: they are certainly more risky than your plain-vanilla type etf's. this, it iss like important to note that not a lot of retail investors are involved

. some of them make it really expensive to discourage traders, but that doesn't mean you can get burned. if people are short to ctm, you might have borrowed and sold it for $500, for example, and then you get a margin call and you have to buy it back at $10,000. so traders lost a lot of money on this, but from what we can see, it was likely the algo trading sort of crowd that was buying and selling this. still, these etn's are getting more scrutiny. right now they are on track to see a record amount of etn close this year, francine. francine: joining us is deborah fuhr, managing partner. what are you seeing this week in terms of etf pattern? deborah: we are seeing reactions

to the news that is coming out, somebody night we heard that russia has found a vaccine, which had an impact on where investors thought they were going to put money to work, so some investors were taking money out of gold, putting it back into equities, and we have seen very different patterns in terms of investments from products listed in the u.s.. you tend to see investors moving more on fixed income. investors in europe feel better about the covid situation, and putting money to work into equities, but gold has been an important investment for many safe havens, feeling that the stimulus in the markets is going to cause inflation at some point. so people are either looking at back to work or what are the things that are going to benefit from work from home and the pandemic. francine: what does that mean for gold etf's going forward? are people rushing to create more of them? how will that pan out? at flows fore look

gold products globally through the end of july, you would see oft these are net inflows $60 billion. so right now the investments in would rank atp's sixth highest compared to central banks. there is a lot of investment in gold. some products are investing in physical gold bars, some are gold-mining stocks, and some are buying futures. you have to be careful of what you are actually buying. for many they will continue to have investment in gold because we have seen there is a lot of mixed news coming out. sometimes the news that we see around vaccines and treatments is not long-term viable, and we could call it fake news, but i think for many they see the safe men,, fighting inflation -- inflation, and many people were in a a lot of cash at the have this buying

opportunity when stocks are at a low level. it is an interesting trend to what is going on. what exactly -- francine: what exactly is a gold play right now? i have heard it is an inflation to deflation thing. deborah: i would say that you have to look at how is gold priced. what is the fed doing? and clearly there is a lot of stuff going on. what has trump done recently, because the unemployment benefits have gone away. you need to look at inflation expectations and really yields on bonds, so there is a lot of factors that you would take into effect to look at where is gold priced. i think for many, they would have said that up until the start of the week, gold was probably at a very high price relative to where it should be, we are seeing a bit of correction. so i think we are going to continue to see yields rising a bid for bonds, each puts pressure on gold. does the european

etf market compare right now to the u.s. market? it is in infancy in certain ways, but do market moves that we have seen over the last two to three months accelerate the rise of european etf's? deborah: you are right. the u.s. etf industry is 27 years old. in april.ned 20 europe is very fragmented, so the other thing playing on europe is the uncertainty around brexit and distribution of funds. so i think that the etf industry in europe has performed well, the way investors are thinking about investing is different than people in the u.s. again, because of covid, work from home. i also think that the distribution landscape in europe is much more challenging than in the u.s., because if you want to sell retail, you need to take an etf and register it and cross list it onto an exchange locally

because most retail investors see the exchange in italy as opposed to trading on the stock exchange. it is a much more challenging landscape, but i think etf's have performed well. people like them, they are low-cost. there good building block. you can generate alpha through asset allocation, and i think that is the thing that many people have appreciated, the fact that when there is a buying opportunity or when you want to make adjustments, you can use etf's to get that exposure. the other thing we are seeing is an interest in esg's. the fact that work from home has shown that less transportation airplanes, etc. -- airare seeing the overall accessory better than it was. do you think there will be more thematic etf's? for the trend of working from

home, esg, like you mentioned, on the technology side, are we going to have many more etf's being created in a short amount of space? deborah: i guess i think that etf's will become much more popular because the standard sectors and industry groups do not define the themes. disrupted technology is something where we see it active, and index problems -- index products through the etf wrapper have been successful. we have seen other similar types of products here in europe doing extremely well, so i think people want help. identifying companies either in health care or technology that are going to benefit from work from home, and also looking forward to asset pandemic, what are the trends that are going to continue, and how can i invest in them? when you lookrah, at some of the trend in etf's

going forward, is there any etf that seems like it is in a bubble, or is it not the right word for some of the etf space right now? deborah: i think it is important to remember, etf's are just a mutual fund wrapper with the added benefits of being listed and traded on the exchange because they are hardly regulated. it is important that people do 's, because you cannot redact performance without the debt you cannot predict the performance throughout the day. don't confuse them with -- you cannot predict the day. not confuse them with etf's. i think the fed buying fixed income, high-yield, investment-grade etf's has proven they are a very good investment on act, and the bank of japan is also buying equities since 2012, so they are seeing it as an appropriate product for institutional investors as well

as retail investors. francine: deborah, thank you so much for the insight. deborah fuhr. coming up, jimmy lai says he was arrested on trumped up charges. we will bring you an interview with the hong kong media tycoon next. and looking at how brexit is changing the landscape. 2."g kong: on edge ♪

francine: this is "bloomberg surveillance." we are getting hong kong gdp -- actually, hong kong has cut its 2020 gdp forecast from minus

eight two minus six. early on it was minus seven two minus four. things are worse than they previously thought. jim a lie says he was shocked by his arrest under china's -- jim eli says he- jim was shocked by his arrest. he says he is also overwhelmed by the outpouring of support. continues climbed and to climb. >> i don't know what they're trying to do. -- support for the company. -- the they have been rally was not there. by buying up the stock. i asked people the first when i

came out from the police station, i said don't buy because you will lose money, and it is for support. like they bought our newspaper. 1:00 in the morning they line up to wait for the publication of it. people support for the newspaper an expression of the the mutual and the arrest of myself. shares seem in your to be short-term. i know you were precut -- i know you were preoccupied. did you consider taking advantage of this, and do you also have any plans, given the uncertainty surrounding your future, of divesting? you own 71%, according to the latest data on the bloomberg terminal. : i think this is a very

dishonest way to do it. it is not our business. the book of what is the future of apple daily? jimmy: we will proceed. there is no doubt. role in the a community. you have been critical of the government, even critical of china. many people say that you need dissenting media. you need a platform for these kinds of voices to be heard. the financialcing security law censorship and monitoring what you're saying on your next digital platform? jimmy: we cannot do that because the national security law is very weighted in general. they want people to tow the line. we cannot change what we have been doing.

we don't think what we have been doing is wrong. we are just practicing the freedom of speech, and that's it. we are just letting the community here express a voice of their own. that is what we have done. is that a crime -- if that is a crime, we cannot do anything else. >> do you have plans at all to divest any of your holdings? like i said, from at least march of 2019 is the latest data we have on your shareholdings on the bloomberg terminal. change. do you have any contingency plans to divest to sell those shares? devised -- it don't divest my holding in apple daily. present in taiwan. we are the biggest newspaper in taiwan and online, the paper and

online we are the biggest, and that is what we have divest. mean, the -- i future, what is the contingency plan, i should say? wewe are convicted, jimmy, have to talk about that prospect. jimmy: i think business will go on without me. francine: that was jimmy lai, the hong kong democracy activist and founder. with stephen engle. or north asia -- our north asia correspondent joins us from hong kong. it was a fantastic interview. what does jimmy lai say about the charges against him. were theon one side business aspects come on the other side were the -- he is the in hongh-profile person

kong arrested under charges of the national security law. this is allegedly or in collusion with foreign forces. he believes those charges and those allegations -- they are not official charges yet, but he says they are trumped up. he would not go into details of the charges because it is a legal investigation, but he says he has never supported hong kong independence. he says he wants universal suffrage promised under the basic law as an ultimate goal of hong kong. he says he has never given a single penny to a crowdfunding website that has generated a lot of money movement and is said to be part of the protest investigation, and he says he to activists. it is an ongoing process. there is no date, he says, for him to show up to the police

station where the magistrate right now, but he is definitely under investigation under the national security law. these are unprecedented times here in kong hong kong. francine: stephen engle, thank you very much for joining us. coming up, countries are spending billions on a coronavirus vaccine. novartis is warning that a vaccine on its own is not enough. our interview is next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." i'm francine lacqua, here in london. the global push to develop a vaccine for covid-19 is accelerating, with pressure creating the world's first for widespread use even before creating clinical trials. within 1600 clinical -- we spoke to vest narasimhan, the -- vas narasimhan. we asked how far we are from a viable treatment. vas: i see this as shades of gray. we will likely have a vaccine that is viable sometime before the middle of next year. it could be at the end of this

year. i expect that vaccine may not have the full safety data, won't be fully characterized, and won't have large-scale manufacturing capacity. what i believe is with the vaccines in development by the end of next year we will be able to solve many of those constraints and then have a vaccine that we are confident in. it can be used in large populations. what that means in practice is we will have to make difficult calls in the coming months. whether it is -- what is efficacious enough, what is safe enough, and it limits applies. those are complex discussions and those are the discussions we are going to need to have in the coming months. . francine: is there a danger that we will have a vaccine but we don't needs -- we don't need to -- but we don't understand the virus, it is difficult to track, who to give the vaccine to

first. vas: there are many open questions. a novely, developing vaccine takes about 10 years. it takes that long because we want to deeply characterize the vaccine, understand the different patient populations and phase 2 studies, go to phase 3 studies come and then go to policy. -- wes case we are going are skipping phase 2 and going directly to phase 3 without understanding the biology of the virus. even the scale of the pandemic, i understand why that is being done, what i think it is important that we support global regulatory agencies that have rigorous standards. the worst thing is that we rolled out a vaccine too fast, we lose public trust for a future vaccine for covid, and perhaps more importantly, we lose the broader public trust

for vaccines in general, which has saves billions -- which has saved billions of lives over the last entry. francine: but you develop the h1n1 vaccine, which took only six months. is there a different basis for that? vas: with the influenza pandemic, we have built up so much know-how. we deeply understand. what we do with pandemic influenza, we have the architecture set up and we change the cassette of the virus. we know pretty well that we are going to generate a strong protective immune response. in this instance, we are pretty much doing everything new. they technology platforms that we are using for the vaccine are new. the virus is new. the human population has never seen this kind of virus before, whereas with influenza, we have influence every year. so there is a lot more complexity with his tickler vaccine develop and. it is worth noting that we did not really develop a vaccine for

the first sars outbreak in 2000, or mers, which happened a few years ago, and only partially with respect to ebola. we have to be humble with respect to figuring out is a vaccine safe or effective. francine: that was vast narrow basin -- that was vast narrow of novartis. this is what the markets are looking at. some shares in europe are worried about the quarantine for france, and other countries coming back to u.k., which is why we are seeing travel companies suffer because of the travel rules. they are in stock 600 is down 1.8%. liver surveillance continues in the next hour. -- bloomberg surveillance continues in the next hour. ♪

francine: quarantined. england adds france and the netherlands to its travel list,

but prime minister boris johnson says businesses, including theaters, beauty parlors, and casinos, can reopen from tomorrow. backlash. palestinian authorities push back against the israeli agreement with the uae to normalize relations. plus, hong kong tycoon jimmy lai tells bloomberg he was arrested on "trumped-up charges." we'll hear from our interview with the next digital owner shortly. good morning and welcome to "bloomberg surveillance." happy i'm francine lacqua in friday. london. lisa abramovitz stepping in for tom keene in new york. it has been an eventful week. theill get covid-19 and news out of hong kong. lisa: it should be slow. we are in august. everyone should be away and people are away, but where are you going to go if you are going to go on vacation? my focus is the economy. there is an improvement, but it is still pretty bad. we are getting information