manus: good morning from bloomberg's middle east headquarters, i am manus cranny, dani burger alongside me in london hq. here are the story setting your agenda. big bang earnings kick, jp morgan and goldman sachs hit the tape today. the ecb warning that -- for european lenders could be off the table.

fresh all-time highs on wall street, treasury yields little changed. the focus turns to the u.s. cpi later today. plus, u.k. scientists warned the country could see as many as 200 deaths per day in the next virus peak. in france, macron says vaccination will be compulsory for health-care care workers. good morning 6:00 a.m. in london, 9:00 a.m. here. we are going into a data sweep that will define the next move in the bond market and dollar and equities. the cpi the highest since 1992. that is the backdrop. the question is, it is a bloomberg phenomenon, dani burger. i am not in the bloomberg camp, -- boomer camp. millennials just don't care

about inflation, dani burger. dani: that means we are not vexed, we don't fit on the high end of the charge. when it comes to equities, whether you are a boomer or not, i thought you put it well before the show, it's about the math. equities don't care about the boomer, they're looking at a 10 year yield at 1.3%, and sanguine about inflation. and earnings season expected to be the best in postwar history. this from jim polson who says typically when this happens, equities return twice as much as any other time. manus: yep. rates at 1.3% is one of the definitions people will mention. we will get the earnings from the banks, that will be about reserves coming back and the dividends. lumber prices olango over, there were 17 -- prices rolling over,

they were $1700 at the start of the year and now 700. reaffirming in some way you are looking at transient movements in inflation. the bond market with a lot of angst, hanging out at 1.3%. dani: on the border, kind of a holding pattern ahead of the cpi data. if we get the stronger cpi, will it give the dollar the escape velocity to tread at new year-to-date highs? your yields a sickly just hanging tight where they are. we had that option yesterday, decent despite the lowest yields since february. we also have an equity market in asia powering higher, trying to match all-time highs we saw on wall street yesterday. when it comes to american equity futures, just barely changed, slightly lower after an all-time high. it wants to see what is coming out later today, and inflation pressures are absolutely still a

concern. you pointed out the survey that had boomers expecting it. we will get cpi from the u.s. later today. let's get the take on this from our guest, a strategist. thank you for joining us. there is a lot out there in the markets, cpi, earnings, towels testimony. what -- powell's testimony. what do you have your eye on? >> we are focused on cpi, i don't know if that puts me in the older age bracket. are we seeing a pickup in important components? we know there was a lagger there. if there was a second wind in inflationary pressures that will come from there, as well as from the labor market, as we go through the rest of the year and close out the gap. does the labor shortage persist when we have some of those

protections rolling off in the labor market in the u.s.? those are the sort of things we are looking at. we know it will be bumpy the next few months. we are likely to look through this a little bit to the end of the year when it comes to the labor market, but we will be looking at the details of cpi. chinese data to come also on trade, that something we are focused on as well, even the pboc. as well as earnings. we have seen initial signs of topping out of earnings momentum. this seems to be a strong quarter for earnings -- sorry, manus. manus: you will frighten a few people mentioning peak earnings. that is probably not what -- supriya: momentum. manus: momentum. ok, we need to understand where

we are going to deploy cash if we have it in the portfolio. i.t. up 16% in the year, and the price to sales ratio of 7.4%, but big tech -- this is my question, there are certain unavoidables in the world, one of them is i.t. and one is big tech. when we see a bifurcation between china and the u.s., does that mean you take more u.s. i.t. relative to china? supriya: absolutely and we are doing that in our portfolio. also we are taking cues from the macro picture, stabilization and bond deals have given us more of a push to balance the portfolio a little more. we have been about the value, and cyclicals, balancing that with growth, and we like the potential for companies with hike to cash flow yields to be able to distribute that to shareholders through dividends and buybacks.

that includes big tech in the u.s., and we prefer that to china. dani: is that more of a defensive posture if that is what you are going toward? are you preparing clients for a potential pullback from the more risky parts of the market? supriya: yeah, so we do call it a more balanced portfolio. we have some of the value cyclical exposure and things like financials in places like europe, we have been positive on europe and will remain that way. but we also like equities, like i said. like swiss equities, but also yield in places like emerging-market debt and property. we have increased our exposure to property. so yes, a little more defense. manus: how are you differentiated? there are a lot of stories on the terminal about differentiating in em.

down 5% on the back of you lock down's and rising covid cases. what is the most important facet for you when you look at em and how you want to expose yourself there? supriya: it is ultimately, em is linked to the global cycle, and the global trade cycle has been positive for em coming out of the pandemic. we have been -- last year, we had quite a bit of exposure in em equities. we scaled back this year because we saw more value, so we moved back to europe. like i mentioned, financials. emerging markets is one of the most important things. the dollar recently has moved in the wrong direction, and you couple that with the very particular pressures around covid in asia, and i am talking here about -- i think earlier in the show you talked about how this was becoming a pandemic in parts of asia.

-- becoming endemic in parts of asia. not well played in parts of asia, because they remain quite close and intolerant in a way of rising infection. taking a different stance that makes them a little more vulnerable in the situation, couple that with the fact that china, it is going down and policy makers are doing something about it, that it is not a good, nation of factors for asia. we would rather have emerging-market debt as the backdrop. manus: hold those thoughts, we are going to dig deeper into the china and asia exposure in a moment. our guest host this morning. let's get the first word news with annabelle in hong kong. annabelle: thanks. u.s. health authorities are warning about the risk for a rare side effect from johnson &

johnson's covid-19 vaccine. the food and drug administration said it received 100 reports of a rare condition in which the immune system attacks the nerves among people who had received the shot. so far, 12.8 million americans have been given the one dose vaccine. england is facing multiple major risks after pandemic restrictions are lifted next week, including hospitals coming under intense pressure, a new vaccine resistant variant, and as many as 200 covid-19 deaths per day, this according to newly released data that suggests the picture could be far wars -- far worse if the public abandons basic precautions like masks in crowded spaces. french president macron turned up the pressure to get vaccinated. he said giving the covid shut will be mandatory for health care workers.

vaccination or negative test will be obligatory in places like restaurants. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani? dani: thank you, annabelle. coming up, the white house officials discuss proposals for a digital trade deal covering indo pacific economies. more on that next. this is bloomberg. ♪

dani: it is "bloomberg daybreak: europe," i am dani burger in london alongside and is cranny in dubai. in china, exports unexpectedly surged in june, helping to underpin the economy amid signs the recovery is starting to slow.

juliette saly joins us in singapore with more. a very big beat here, what are we seeing in the data? juliette: exactly, and this came even though we saw a surgeon coronavirus cases that delayed shipments at some ports in june, particularly in the southern part of china. when we look in dollar terms, export growth accelerated to 32 point 2 -- 32.2% in june, they were expecting a slowdown to 23%. imports also climbing 7%, beating the overall forecast. all of that leaving a trade surplus of 51.5 billion dollars for the month, the highest since january. a lot of analysts are saying you could see a slowdown in export numbers in the second half. an economist at commerzbank saying it was a surprise we saw the exports in june, it also had to do with the surgeon commodity

-- the surgeon commodity prices. manus: we got a little bit of export data today that i suppose gave heart to the market ahead of the gdp numbers. there is a much water consensus about the china growth story, isn't there? juliette: there certainly is and we saw that reflected with the triple r cut from the pboc last week, and we expect you will see second quarter gdp numbers come down sharply, but the first quarter number was so huge. the market looking for 8% growth in the second quarter. bloomberg economics saying the economy is stabilizing and not stumbling. meanwhile, ubs assets saying the surprise dovish talk from the pboc last week is the start of more easing. the head of fixed income saying the pboc could likely lower its benchmark lending rate by the end of the year to support -- and that could send 10 year bond yields to a record low as you start to see movement in restaurant -- interest rates.

the gdp number we are looking for tomorrow is very much going to be in focus for authorities, and whether or not we see concerns alleviated that this a triple r cut on friday was ahead of some kind of expectation of a wobble coming through in gdp figures. manus: thank you, juliette saly in singapore. white house officials are discussing proposals as well for a digital trade agreement. that will cover the indo pacific economies, according to bloomberg sources. it could cover pam, canada and -- japan, canada and chile. a digital trade agreements. we will cycle back to that in a moment. the triple r cut, is it a pre-stage -- presage to a deeper movement?

supriya: absolutely. we expect we might see more triple r cuts to come, and weakness and inflation in china, we expected 1.5% in china this year, it is the pboc more room to take easier policies. we're also looking at the concept of global liquidity in market cycles. china had been earlier in the cycle and filed back stimulus earlier. now they are loosening at the time when everybody else is talking about tapering and potential rate hikes and so on. we have divergent central-bank cycles in the world. we see this as a bullish sign, because it evens out the recovery and also potentially prolongs the cycle. there is risk at hand over, but we see it as a positive. dani: some risks there, and the story is twofold in china, data

the one part and tech data, a crackdown on data from tech firms to the u.s. this story of u.s.-china relations, it used to be enough during the donald trump administration to spook markets need time we got a headline. we have a biden team weighing a digital trade deal to check china's influence in the region. do we get back to a time when these types of headlines, these tensions between the two biggest economies, upset assets again? supriya: you've got to price in some risk premiums for that. you've got to price it into chinese assets potentially, but also companies exposed to those global supply chains, which obviously are going to be disrupted and there will be more cost in the system impacting companies throughout the supply chain. you've got to expect that is the base case. of course, there is a bit of sort of a tussle for influence in asia and emerging markets,

and you will have oath of sort of blocks -- both sort of blocks wanting to set the terms for digital trade, that's what's going on with this trade deal. including japan, canada and so on. but i think you have to expect there will be this growing divergence between the chinese trade, tech supply, and the u.s. one. that is your base case. manus: also divergent stories in terms of the inflation narrative, and it could be china, perhaps a little slow down. decelerates inflation for the rest of the world. can i get your take in terms of decisioning in china? 8% growth is what we are looking for, down from 18%. where does that make you want to take more exposure outside of tech? supriya: yes, so absolutely. in china, we have long on

chinese government bonds, that's where we have had our exposure. the rallies strongly in the wake of the unexpected pboc triple r cuts, and we expect more of those so we take our exposure there. we have a bit of exposure in asia and emerging markets. as i said, we've been more positive on europe and the u.s. relative to asia and china. and when it comes to emerging markets, we have been long also on emerging hard currency debt. we have yield there and spreads there, credit for example. we could be headed more into a goldilocks period where you have less inflation pressure, and you want more cyclical growth, but you want to give up on value. dani: sorry for interrupting you, we have more to get from you. you will stick with us.

coming up, big dividends from the european banks may be off the table after an easy -- after the ecb says the central bank to take steps to stop payouts. more on that next. this is bloomberg. ♪

manus: this is "daybreak: europe ," with me manus cranny and dani burger in london. the european central bank could state -- take steps to make sure investors don't pay dividends later in this year. we spoke to maria delgado yesterday. let's get more, maria tadeo is tracking the story. this is last thing the banks want to hear, a caps on dividends. maria: and this is coming from

an interview with the deputy of the bank of spain. she was also a former bank executive herself, and she says banks are operating in crisis mode and this is about lending and not about paying out shareholders. she says the european central bank will monitor and cautious about excessive dividend payouts and that something we should highlight. she's not saying you won't be paid back, but if there is anything in excess that could be problematic to the system, the ecb will have the tools to tone that down. going back to your initial question, for the european bank yields, we know there have been complaints that the european banking space is becoming almost un-investable. you can't pay dividends to shareholders or make yourself look attractive and it makes it difficult to track investment at the european banking space.

we know from estimates there are about 20 billion euros of potential dividends that could be paid out. but the question is whether they will be paid out. dani: a stark contrast compared to the u.s., where u.s. banks have started to release reserves, they are not concerned about nonperforming loans. how concerned is the ecb about nonperforming european loans? maria: that's a good point, you look at the measures taken in europe, government and states supporting a lot of the unemployment schemes, the help to businesses during the pandemic. that will now be removed as we reopen and restrictions come off. for the european central bank, this is when we will see the extent of the damage done. you remove the moratoria and the help. she says they will monitor very closely. dani: maria, thank you, that

is'bloombergs maria tadeo -- that is bloomberg's maria tadeo. our guest is still with us. how do you treat the european markets, are you concerned about some of those economic pickups that might come to corporations? supriya: i mean, the issue with banks are very specific, and you have to contrast that with the greater freedom in u.s. banks, where they can return cash to shareholders, whether they are dividends or buybacks. that's part of the reason why we have so much financial exposure in the u.s. that said, we are quite positive on europe. this is broad-based exposure we have to the european index, so with regards to europe, we think economic momentum is still quite strong here. we are about consensus, european

growth at 4.7% in the euro area. that is the physical package making its way through the system. the ecb still has room to stay on the sidelines and continue to support the economy rather than stepping bank -- stepping back like other central banks. we think with the earnings momentum, which is strong in europe, but we think there is room for consensus to catch up with our stronger, higher than consensus expectations on earnings in europe. when you look at the u.s., the consensus -- we had consensus, growth rate in the u.s., it is already there. in europe, we think there is further to go. for this reason, we are positive on europe, and it is broad-based. when it comes to areas like banks, the movement is more constrained in europe and we

would rather be exposed to the u.s. for that. manus: thank you very much. our guest there, a senior asset strategist. next, we continue the bank conversation stateside. ♪ in business, it's never just another day. it's the big sale, or the big presentation. the day where everything goes right. or the one where nothing does. with comcast business you get the network that can deliver gig speeds to the most businesses and advanced cybersecurity to protect every device on it— all backed by a dedicated team, 24/7. every day in business is a big day. we'll keep you ready for what's next. comcast business powering possibilities. [ "me and you" by barry louis polisar ] ♪ me and you just singing on the train ♪ ♪ me and you listening to the rain ♪ ♪ me and you we are the same ♪

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dani: good morning from bloomberg's european headquarters, i am dani burger alongside and is cranny in dubai. this is bloomberg daybreak. big bank earnings kickoff, j.p. morgan and goldman sachs report today. the ecb warns excessive dividends for european lenders may be off the table. asia stocks power higher after

fresh all-time highs on wall street. treasury yields a change and focus now turns to the u.s. cpi print later today. plus, the u.k. scientists warned the country could see 200 deaths per day. in france, macron says vaccines will be compulsory for health care workers. what caught my eye first thing coming in and overnight last night was the new york fed survey of inflation expectations at 4.8% for the next 12 months. a serious high through the data going back to 2013. not all respondents are created equal, are they? manus: no, it is a boomer thing. not that i am a baby boomer. it is from the new york fed, and it talks about people over 60 being most vexed about inflation. that is followed by 40-60, my age group. they remember rates at 15%.

i remember a mortgage rate of 5.5% on my first mortgage. and then millennials, they don't care about inflation, it is not top of their list, is it? dani: it is really not, and i personally have the memory of a goldfish, so my memory goes back to a few months ago when we had lumber prices skyrocketing to new highs. it has come down, along with not these inflation expectations, but they market inflation expectations like the five year breakeven. we see commodity pressures easing up. i can't believe we are back to the end of 2020 levels when it comes to lumber. that story came and went so quickly, it feels like. manus: there are some lumberjacks out there working extra hard. on a more serious note, the bond market seems to have looked through this, they rolled over on the five year breakevens and the 5-10 year breakevens from 2.75 on the 52 2.5 now.

-- on the five to the 2.5 now. where does the dollar go next on a spike perhaps in cpi? that is on your board. asian stocks higher on the back of tencent eating the go-ahead on the purchase of a internet company -- tencent eating the go-ahead and the purchase of an internet company. msi asia-pacific up. jp morgan, goldman sachs will set the tenor and tone. tech did well last night and the dollar index just flat. i think that is much more to do with delta and the risk from covid-19 in the back half of the year. and the end potentially of on qe. let's reset and talk about what was a soaring first half of the year for u.s. bank stocks, wasn't it? that has come under pressure.

second-quarter earnings get deliver the next couple of days. the pullback began early in june, that was when jamie dimon and mark mason signaled insults will not be as strong as expected. let's get to octavia founder and ceo. jp morgan and goldman sachs will raise the curtain. what will be the drive, the reserve release, or the drop in trading? which will be more important to the equity valuation? good morning. in u.s. bank stocks? >> in u.s. bank stocks, it is up to the bank how much they want to release the reserves they put away. they have a broad latitude in terms of doing that, is not like trading revenues where you make money or lose it. the load reserves has a fair degree of latitude the banks can employ. they might release a lot and they might release very little.

some banks have been more aggressive like jp morgan, and then wells fargo has been more cautious. i think they are trying to catch up this quarter. it is hard to say. bear in mind, the trading revenues are very good. this time last year in q2 of 2020, we saw equities and fixed income trading go through the roof. now they will be down about 30% compared to that quarter but we are still way above pre-pandemic levels. things are still looking very good. it's known as if the trading has fallen through the floor. still good volumes and a lot of volatility, it is encouraging. dani: even with that positive picture, how much of an upside surprise we get in equities? manus mentioned that maybe stocks have started to underperform the past months, but they are still 28% higher year compared to the s&p. how much is priced in? octavio: i think u.s. banks have

not entirely gone the credit they deserve for the pandemic. they got through the pandemic beautifully. they did very well, particularly investment banking and trading, they did fantastic as well. they will do a bit less well this time. i think they have not got the credit they deserve for doing so well in the pandemic. i think they are set to benefit from that in the coming quarters , and s&p the -- and outperform the s&p 500 handily. i expect some earnings coming out in the next few hours not as stellar as q1 and perhaps not as stellar as q2 of 2020, but i think we have a paradox where we are seeing revenues decline a little bit, and lending certainly and interest margins not going up, and so revenues will be flat to down, but we will see lost reserves that will bolster things nicely. we will see that paradox where

revenues are down but earnings are up. manus: curves are flattening, else are dropping by 50 basis points from q1 to q2. how material a red flag are those to the earnings compression for banks? octavio: it's not so much the overall level, it is the shape of the yield curve. the steeper the yield curve, the better it is for the primary banking business of lending. that is the watchword in terms of interest margins banks can generate in the coming quarters and how steep is the yield curve. i think we get a bit confers on that point, the absolute level of interest rates drive interest earnings at banks, and that is not the case. it is how big the yield curve is and how steep it is. that is flattening and it will put pressure on the interest margins. i don't expect to see too much on the interest margins a change of this quarter, but in the coming quarters, it could be an issue at the yield curve

continues to flatten. that is something to watch lending -- to watch your lending is --to watch. dani: we are hearing wall street bank after wall street bank, they are talking about raising salaries, trying to attract different talent to come in. does that play at all into the cost-cutting story or does it not really factor in? octavio: they have to continue to attract the best talents, but i think what you will keep seeing in these banks are the top earners earning more and more and the cost pressure being lower on the ladder. operations will continue to have strong cost pressure. but you want to attract the superstars and keep them, the traders and investment bankers. i think the real pressure will come in terms of keeping cost down on the back office operations and the post-trade side of things, and automating

as much as possible. there are a lot of manual steps in trading, there's still a lot of cost to be squeezed out by technology and that sort. i think we will continue with a later focus on cost, and the next couple of years we will see a strong focus on using technology to automate more processes to get a higher straight processing and we have right now in many areas of the banks. manus: you can tell i'm a bit obsessed about the boomer seen this morning my from inflation expectations. dani doesn't remember mortgages at 5.5%. but it is a roomer -- boomer thing about where you go to work. this was are driving at, ubs offering flexibility. you talk about technology, but how important will it be for the europeans and swiss to try and level the playing field by offering flexibility, i offering and using less space?

is this phenomena we are underpricing? octavio: i am a former ubs employee and i am trying to think that in terms of flexibility and working, that was never anything emphasized at the bank and i don't see them changing that terribly soon. i think in terms of flexibility, there certainly is something to be done there, where i think in the banking industry, we have seen where you can work from home very effectively. that flexibility works very well. i know there are a lot of big banks forcing people back into the office, goldman sachs and jp morgan making noises in that direction. what we've found in the pandemic is people can work effectively from home coming into that should be used as a tool to attract more people who don't want to go through a multi-hour commute every day. dani: i mean, at some point, goldman's argument, and a lot of people not given that flex ability, his reputation. do these wall street inks still have the reputation that they don't -- wall street banks still

have the reputation that they don't have to offer as much flux ability? -- flexibility? octavio: i don't see that there is any downside for the bank. i don't think we have seen in the pandemic any serious issue and i don't see why they would force employees back into the offices. at the beginning, we saw the banks break the back on the idea of working from home. virtually all banks were unanimous, we don't want people working from home, it is a security and risk issue, we cannot monitor trading activity and that sort, and it turned out it wasn't a big deal and there was no problem. manus: yeah, i suppose until we actually go through the eye of the needle. the ft had a cracking article, there is probably a new ceo since you worked there, two thirds of employees will adopt a hybrid model working from home on a permanent basis.

let's see what they have to say on that. it is good to change, octavio. dani, what have we got? dani: governments racing to ramp up vaccinating populations. we were talking earlier, the delta variant impacting markets and complicating reopening efforts and threatening the recovery. we will talk about that next. this is bloomberg. ♪ ♪

>> for our unity and protection, we must aim to vaccinate all french people, because this is the only way to return to normal life. from early august, the health pass will not only apply in cafes, restaurants, shopping centers, hospitals, retirement

homes and medical and social establishments, but also planes, trains and coaches for long journeys. only the vaccinated and people who tested negative be able to access these places. manus: the french president urging people in france to get vaccinated, as it will speed up the return to normal life, whatever that is. meanwhile, u.k. scientists estimating england faces up to 2000 hospital cases per day and 100-200 deaths after most of the curves and. israeli health providers are also to begin offering a third dose of vaccine to patients with weakened immune systems. the country has experience a new surge in cases despite 70% of israelis being fully vaccinated. >> at this point, i have not seen the evidence yet that would make me feel it is appropriate

to vaccinate the entire population with a third dose of the vaccine. i have not seen clear evidence on waning immunity. dani: let's get more on this from emma o'brien. we have france ramping pressure on people to get vaccinated. where is the focus? emma: president macron has laid down a goal, he said the economy can grow at 6%, up from 5%, the previous forecast, and it hinges on vaccination. you heard him there saying vaccinated for will get a special health pass that will be required to enter cafes and restaurants. they are also making compulsory vaccination for health care personnel and of those that work with vulnerable people. you've got about 50% of the french population that have had one dose, but the pace is slowing and i think this is

trying to address that and incentivize people. it will be very difficult to get around and do what you want and have a more normal life if you are not vaccinated in france. manus: england, it is the roadmap and experiment, everyone watching what they are doing, planning to go ahead with the full reopening next monday, but there are concerns around that, aren't there? that it could unleash a serious virus. an unfolding disaster awaiting us in the autumn, the biggest public health experiment ever seen, a spokesperson said. it doesn't fill me with confidence about -- well, i am not allowed back in the country at the moment, but it does not only with confidence to return to the u.k. at the moment. emma: you hit the nail on the head, it is an experiment and it is giving groundhog day vibes to

people who remember the early approach the emphasis on herd immunity at the start of the pandemic, a massive disaster. you've got the u.k. tabloids calling july 19 freedom day, but juxtaposed with pretty dire forecast, 200, 300 people a day in hospital, pretty significant. sorry, deaths is what is predictive. up to 2000 people per day in hospital is what this onslaught could bring. you have seen some lawmakers start to dial back a little bit of the communication, probably wary of what may come if people really start to let go come july 19, telling people mixed messages about continuing to wear masks while indoors, but not mandating that anymore, which doesn't leave you with a

lot of confidence when you have mixed communication. let's see what happens there. dani: that is a stark contrast to what we are seeing elsewhere coping with new case spikes. the u.k., mixed messaging but easing. sydney is completely different, isn't it? emma: yeah, you have this bifurcation in the world, places like the u.s. and u.k. and parts of europe reopening still with many cases and very real outbreaks. and then these covid zero places , china and australia, that effectively eliminated covid. they look very differently and it comes to even one case. you have a 65 people in hospital in sydney with that outbreak growing to around 200, and the whole place is in lockdown and it looks as though the lockdown, which was extended, may last a number of weeks, potentially

similar to one of the harshest lockdowns we have seen in melbourne last southern hemisphere winter. a very different approach to the delta variant, which is driving that outbreak as well. manus: yep, it certainly seems to be what is politically deliverable, isn't it, from one society to another? they are not going to open the floodgates to people like me, my vaccine at stirred in the uae, but that precludes me because it is an amber country. they are not opening the tap to people getting in the country, it is only for those people who can vote in the country that can get out and back in. very subtle nuances. emma o'brien with the very latest on covid-19. let's get the first word news with annabelle. annabelle: thanks. white house officials are discussing proposals for a digital trade agreement covering

indo pacific economies, as the administration seeks ways to check china's influence in the region, this according to sources. details of a potential agreement are being drafted, that could potentially include canada, japan, malaysia, australia, new zealand, and singapore. britain's prince william and prime minister boris johnson let a chorus of voices and dimming online racism aimed at some of britain's black soccer players, this after england's defeat in the euro final. this follows weeks of controversy over whether the england players should have been supported in taking any during the game -- taking a knee during the games over discrimination. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. dani? dani: annabelle, thank you so

much. coming up, we turn to the u.k., where the bank of england put -- publishes its financial stability report. we will highlighting risks to the financial system and what they will be looking out for and what we want to look out for in the report. this is bloomberg. ♪

dani: the bank of england publishes its financial stability report at 7:00 a.m. u.k. time today, and this will be highlighting the potential risks to the u.k. system. let's get more with tom metcalf what are the big things -- tom metcalf. what are the big things we should be looking out for? tom: a big one is what are the risks to financial stability? will they talk about the u.k. housing market, and obviously

what has been the impact, continuing impacts of lockdowns, covid recovery programs, and will they take any steps around that? those are the big ones we are looking at the manus: -- looking at. manus: what other recommendations you think they will make to lenders given covid headwinds? we are hearing europeans talking about not paying excessive dividends. tom: i thought the story about european regulators being more cautious was interesting. the bank of england might align more closely to the u.s.. on the dividend side of things, not clear if they will mention it in this report, but certainly in the next few weeks, we are hoping some kind of announcement , along the loosening of restrictions. manus: tom, thank you very much, tom at calf there -- tom metcalf

there. you know what just clicked on? london beats new york to the office. i have trained everybody in dubai how to make my coffee. the latte index is up, you got to get out there and amongst it. in just under 45 seconds, we get that reporting. dani: the index showed people in london were willing to come back to get there latte, but maybe not back to work. a lot of europe is offering flexibility. manus: there was an american bank ceo, i can't remember who it was, who said if you can go out for dinner and be in the center of the city, get to the office. it is a boomer thing, dani

burger. it is a boomer thing. dani: we want to know the boomer thing, that is for someone else. that is it for us. european open is next. ♪ ♪ ♪

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"bloomberg markets: european open." i'm anna edwards. mark cudmore our managing editor joins us from singapore. cash trading is less than an hour away. big bank earnings keep up, jp morgan goldman sachs report today. the ecb warns excessive dividends for european lenders may be off the table. we will hear more abou