♪♪ dani: good morning from bloomberg's european headquarters, it's 6:00 a.m. in the city of london, i'm dani burger and this is day break europe and here are today's top stories. fears over growth, stocks in asia follow wall street lower after the s&p 500 worse route than may. treasuries hold yesterday's rally, oil looks for respite. do not travel, the u.s. raises

its virus alert on the u.k. telling visitors stay away. the latest blow to england's freedom day. u.b.s. on fire, it beats on wealth management and investment banking for the 2:00. we speak with the c.e.o. later this morning. well, the covid trade is back on. fear and panic gripping the market yesterday, it's not just bond yields, equity markets falling further as well. much of the progress that we made in the 2021 market undoing itself. look, it's just not in the market picture either, it's corporations, apple telling its staff that coming back to work plans are being delayed because of the covid case rise numbers. in a lot of ways, this feels like a market and an environment that is slipping backwards. for a long time on the show, we have been talking about the bond market conundrum, why do yields move lower. yesterday, it gave a pretty good minute. that's that the covid trade is

once again coming back to life. basically is a long short equity basket of the best performers during the height of the pandemic selloff last year, when this is moving higher, it means the market is yet again pricing in the covid growth years. back at the levels we were last year before we had the vaccination rollout, it really shows in the words of christ that this covid rationale looks spot on for what is driving the market, even if the return of the pandemic has been hiding in plain sight. everyone agrees she should continue on, they think that the inflationary trade should come back on. so what is happening in markets? it's not back on yet in these equity markets. the asia pacific index playing some catch-up here falling by nearly a percent. the china 10-year yield dipping below 3% and trading as its

lower later in the year. we are seeing some stabilization in both of your european and u.s. future market as well. that is not indicating enough to make up for some of the damage that we saw yesterday. let me show you where bonds are as well this morning, more stabilization in this market, but we are still at very, very low levels when it comes to these yields. 10-year-year-old below 1.2% since february. we're also looking at a deeply best of the blast on there, 117, 112, that's about where we were earlier this year. that would be a record low if we can get back to that number on the real yield. a lot of market action yesterday, a lot still happening day, also, some big corporate earnings. we have been digging through the numbers and is here to walk us through them. in a billa, a pretty big beat,

isn't it? >> this is a stellar results from u.b.c. across the board. we have almost $700 millions overall. this is a great result, nine months into the job, dani. dani: what about the buyback in this quarter? >> the investors should be pretty happy with that. one word of warning, they did say they expect lower activity levels in the third quarter. we are waiting forever a little bit more detail. basically, our girls. they have hit it out of the park, facility -- facilitated

for their clients. high levels of client activity in a contrustive market environment which was a bit of a surprise. a couple of months ago, we had heard that the pandemic was wearing off, so not so at [nch] b.u. they got $25 billion more of that, assets coming in and the c.e.r. saying they, the clients invest more with us in private markets and separate management accounts. they came to create liquidities for unforeseen events. the momentum is on our side. pretty good news from u.b.s. this morning. dani: thank you so much.

that is our bloomberg finance reporter on that. we will be speaking to the c.e.o. about the results, he is leading us through that in just under an hour here on bloomberg. everything earnings and this market picture, let's dive into it more with our guest hot for this half-hour, it's the chief economist, thank you so much for joining us. let's kind of start there. it was a pretty big selloff given some of the calm in the equity market, yields moving extremely well. if this isn't a market pricing and growth concerns are those concerns warranted? >> well, to some extent, yes, if you think about the triptych with the last six months of recovery, the massive stimulus in the u.s. this is behind us and that's promising you have -- a very

high level of -- the reopening of the economy, it's to some extent in the bag, it was in the bag at to the 2020, the speed and reopening. the delta variants in some reasons of the world. >> the whole positive, negative, it's providing some at this stage. dani: if i understand you correctly, it brings concerns, it's not global at this point, it's only some some areas. i wonder if it is enough, could it affect where we see monetary policy coming out of the fed? >> the experience related to this pandemic is that

unfortunately when something bad happens somewhere, it tends to happen also in other regions, a bit later, no one escapes at least some of the impact of the veryiance, of course, it's going to have some impact, some special impact on the way the federal is going to think about it. i had casting, the growth impact of activity has been lower than the previous one. because they get better and better at dealing with the sort of restrictions we have to face. second when it comes to the u.s., the time for risk has always been higher for the u.s. related to what happens in europe that seem -- closed less than what we do in europe. things to take into account.

and, theirs r- third, vaccinations it chains a little bit. to monitor in the weeks and months ahead in which the station to life, a -- in europe or france, you want to go to restaurants, you get the vaccine. we'll see if it applies to other regions. >> the damage or economic impact of rising counts were worse than you are before. where would you look in the data, it feels so moise at this point. where do you look for signs of potential concerns? >> i don't think we will look at the traditional data. it becomes a little bit too late for sort of real time

diagnostics. so we'll be looking at the same stuff we have been looking last year in the report. i think it's going to be clear to be interesting to see if policies change, forcing people to stay home, pro during their mobility. restaurant bookies, it's an interest -- are you you intelligence me -- people decide to take things in their own hands. that is key as well. traditional data, yes, but as you said, super noisy anyway because we have changes, nothing to report, those sort of things we'll certainly keep. dani: it's fascinating to look

at the higher figures, what does it tell you about the path of normalizization, do you see us getting back to a normal level of gdp or sooner or later. >> we have plugged the upper gap last year, tutu, well a theoretical construct so you can't say for sure when you hit it. it's highly liked that it's plaolt pugged. the issue is not so much, see what kind of trajectory we can now have in an economy that would reach cruise speed. if we still have some restrictions, some people are

hesitating to retomb normal life, strugglings and so forth. for sure, the trajectory will number as strong as what i have been seeing over the last few months. it's already upset, in european it's different. at the still need to see a proper acceleration in growth. dani: we will touch more on europe in just a moment. now let's get over to the news with annabelle. >> staying with the virus, the proposal marks a shift for -- the country southwest away virus

restrictions. america's covid induced recession ended in april 2020 after just two months making it the nation's shortest downturn on record, a panel of economic research, 22 million jobs were lost last spring as the company was hit by the "bloomberg quicktake." this is bloomberg. dani: thank you so much, annabelle droulers in hong kong there. coming up, do not travel, the u.s. races its travel alert levels for the u.k., we'll discuss the risks and you are up next! this is bloomberg.

>> the road map gives me hope, i said that from the git-go. you can't guarantee that, that is something that could obviously happen, the changes are calculations. we got to be humble in the face of nature, there could be some new variant of the virus that we have to respond to in a particular way. i have always been very clear about that. dani: u.k. prime minister boris johnson speaking from self-isolation as england lifted most coronavirus restrictions. the state department issued a do not travel statement. even fully vaccinated travellers are at the risk of contrasting and spreading variants. let's get more from rachel chang. rachel, what are we seeing in

the u.k. right now, how bad is the situation that the c.d.c. thought it had to issue this alert? rachel: if we look at cases, the u.k. is reporting the most number of new cases in the world, 50,000 cases a day, goes numbers are pretty shocking. it's understandable why the u.s. looked at those numbers and said this is a scary situation. but at the same time, what's really interesting about the u.c. situation is that vaccination has reached a very high level, we're seeing fatalities remain at a very low level. sunday, 25 people die, 25 people, it's still a tragedy, compare it to indonesia, same number of peaches. the vaccination has severed that link between infection and death. the question and that is why everybody is looking at it in

the u.k. now, how far has it gone, can we do it safely? dani: how is it important in a global context, what's the takeaway here for the wider picture? rachel: the u.k. has the vaccination. let's look at this infection as something like the seasonal flu. we need to open up, get back to school and washing. that's what the businesses are doing. >> just because you're vaccinated, you may still get infected. how about about things that a long term impact to help during that story as wall. this is the only way that the world with get back to normal which is open up with high

vaccination, at the same time it's -- dani: coming up, quarterly earnings are due out this morning, covid in the travel picture going to feature heavily here. we speak to the c.e.o. about that and how shifting travel restrictions could impact the airline's summer expectation. now, we still have with us gilles from access. the travel picture quickly changing. do you think we can basically write off the summer season when it comes to tourists and travel and leisure in europe and the u.k., can we right it off? gilles: the restriction is not new, of course. it's quite clear that there is a lot of prudence there, the european institutions have

gathered together to create this vaccine passport to allow more people to travel. there is a tendency for people to say in their country of normal residence even if it's a neighboring country with issuance of warnings in the wayner of traveling to spain, it's been accused against traveling to spain and so forth, it was the hope of some complete normal liesization of travel, it's not going to be complete enough, the course will add to the diversions to the north and north of europe. pipe, support gal, greece, it's not going to be to the health graders as expected. dani: this is all happening as

have another e.c.b. meeting this week. will it be a live meeting or just a tactical inflammation part of their target. >> they are to make their guidance in conjunction with a review last week. they will now say that the infection, that's quite technical. i think one message they might send is before making any decision on any normalization policy, what they will need to see is an improvement in the actual, in their forecast. income based approach instead -- i expect dakota.

>> thanks for catching up with us this morning. kris, the volvos operating profit coming in just under mate at 9.73 blgd, the estimates had to be 9.9. the new borders are very high, 57 thundershowers versus 26 dangerous for the second quarter. that is obviously a good sign for what's to come. weighing heavily on the auto sector as well. still thinking their new market at 290,000 units as well. so a mixed picture when they are busy now. coming up, u.s. and its allies for carrying out a major attack on michael.

dells on that next. this is bloomberg ♪♪

dani: welcome back to bloomberg day break, 6:25 a.m., i'm dani burger in longer, president biden has tied the chinese government to the massive cyber attack on microsoft early in year. jennifer has missed theable conversations as well. for more, we're joined by jake so good cyber attacks over the last year. i'm sorry, i think you'll to remind you and whatever what happened with my kro so the -- >> this was an attack that took

place in february or march of this year, an attack on microsoft exchange's email service and affected tens of thousands of users. these were manufacturers, healthcare institutions, state and local governments, many others. microsoft attributed it to hackers coming from china and now we're seeing that the u.s. government says with a high level of certainty that, yes, the u.s. thinks the hackers was from china with the support of the chinese government. dani: is that unusual to blame china for an attack like this? bruce: most of the attacks that we have seen have been contributed to ransom wear, groups up in racial sha, eastern europe and north korea. we're seeing the u.s. government saying the chinese government has been aiding and abetting

these attacked from china. in many ways, i'm saying emphatically that this is something that was supported by the china government. the minister of safe security. dani: the u.s. isn't alone with it. who else would you say is responsible? a lot of countries out of the u.c., australian, canada, japan, new zealand, they have all got in on it. china is responsible for this attack. dani: thanks so push for the update. that's bloomberg's bruce einhorn in hong kong. we'll be speaking -- extremely

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>> good morning from bloomberg's european headquarters. six: 30 a.m. in the city of london. i am dani burger. this is "bloomberg daybreak: europe." fears overgrowth. stocks in asia follow wall street lower. u.s. futures stabilized. treasuries for yesterday's rally and oil looks for respite. the u.s. raises its violent risk

-- virus alert from the u.k.. plus, ubs on fire. investment banking and the second quarter. we speak with the ceo later this morning. we have some stabilization in this market after a day of heavy selling in the equity market and buying in the bond market. we talked on the show before about the bond market conun about what is the yields lower. over at our mliv team, cameron crise says that fear of the pandemic trade has been hiding in plain sight this whole time and he points to this chart, the reopening charts and the 10 year yields that have been trading very closely. take your cue from this chart. it is this resurgence of covid fears that are driving market. we are seeing asian equities starting to catch up a bit with u.s. trade.

not as down as much as 2% as we saw some european markets but it is down more than .8%. china 10 year bonds -- yields are at their lowest for more than a year. we have u.s. and european future sessions pointing higher, indicating a higher start, not enough to make up for some of the losses we saw yesterday but a more calm market so far this morning in the same goes for the bond market as well. your u.s. 10 year yield trading below 1.2% for the first time since february. a little bit of selling in the long end of the curve. real yields slightly higher but will very deeply negative, at a -1.07. for more on this market action, we are joined by the ceo. fiona, what a perfect day to have you on after yesterday's market action. what do you make of yields below

1.2% in the 10 year? fiona: it is a healthy correction after six months of constant growth in equities. valuation was quite high. this correction is welcome because it puts back a bit of cyclicality which is welcome. markets think that there is growth and inflation which will be there for quite a while and those that think that growth and inflation are transitory and there's a risk of deflating. today or yesterday -- growth is deflating. dani: if growth is going to pick up, if this is a healthy correction, should we be using temporary selloffs to go in and to buy those more cyclically oriented assets? fiona: i would be careful because the market has been going up quite strongly and in

terms of valuation -- nevertheless, in the long term, we could have other short-term corrections of 2% to 5%. in the long term, we are positive on growth assets because we believe growth will stay for a while. we are at the beginning of the recovery cycle. it will catch up. dani: the catch-up trade in europe. if you are looking at specific set is, what would you be interested in at the moment in terms of the trade you are interested in in the longer term as well here? fiona: we are constructive on cyclicals because we think, at one point, it will come back with growth being more stable.

some banks have softened this. we believe they should profit from strong growth to come. dani: a lot of this is being driven by the bond market and it has certainly felt that way, barring yesterday. steven major says that we have seen the cyclical highs in the 10 year and his call is for yields to go to 1%. would you agree we have seen the cyclical peak in nominal yields? fiona: i think it is very rare. we have a very strong growth, strong and nation and interest rate so we would imagine that interest rates at one point will go up. we know that they will not go up too much because they are

controlled by the central bank in a way an institutional banks need allocations in the bond yields. we believe that the bond yield will go up again. dani: does it need to be central banks that act as a catalyst for the central bond yield? is there anything else that could see some selling in bonds? fiona: bronze will be correlated to inflation but also what central banks are saying. how long will they be accommodative and how long will they let it run above it target? dani: i don't envy you at all in this market. can you give us a sense of what

your conversation has been like with colleagues and clients? how much confusion is out there in some of the action we have been seeing? fiona: we see confusion in the short-term but in the long term, we are quite positive so we see a growth environment that is positive because it aims that there is growth. we believe that the delta variant will be there and we see that the relationship between the delta variant and deaths has diminished quite strongly. if the vaccination continues, we think we should see the growth story which will be positive for markets. dani: fiona, how much of it can you write off as technical in terms of bond markets? how much of it is due to that?

fiona: not so much. there are different signs. if you look at the vix, the curve was quite steep. investors were looking at the long-term. valuations are very high. any company will have results under expectations. we will have the risk of having quite a correction. 10% correction could be something to lean on. dani: expectations seem very high, priced perfection this earnings season. great catching up with you this morning, ceo. let's get over to the first word news with annabelle droulers. annabelle: americans should avoid travel to the u.k. because of a surge in covid-19 cases,

the warning from the u.s. state department. the move comes after the cdc raises the u.k. travel alert to its highest level. the country added more than 100,000 new cases over the weekend. vaccine certificates are set to become a requirement to enter night labs and other large indoor venues in england from the end of september. the proposal marks a shift for boris johnson, who has been reluctant to endorse compulsory back passport. nightclubs in england reopened yesterday for the first time in 16 months as the country swept away virus restrictions. bloomberg learned that apple is pushing back its return to office deadline by at least a month to october at the earliest. the company is responding to a resurgence of covid variants across many countries. apple will give its employees at least one month running before mandating a return to offices. ibm reported its biggest sales increase in three years, beating estimates on the back of strong demand for cloud computing.

revenue rose 3%, almost $19 billion in second quarter, signaling that they ceo's pivot to the cloud is starting to pay off. 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 droulers, thank you so much. the billionaire space race continues as bezos follows branson and is due to blastoff beyond earth in the coming hours. we have the story, next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london. turning to space and jeff bezos

is only a few hours away from blasting into space on blue origin first manned rocket. ed ludlow has the story from the launch site from van, texas. ed: if all goes to plan, it will propel jeff bezos, mark bezos, and others up towards 62 miles above earth as they approach the cap soul to 66 miles above earth. it is not far enough to escape earth's gravitational pull so the capsule after a few minutes of weightlessness will start falling back down to earth using its own air resistance to slow itself down. there will be drive shoots fired and as it nears the earth, three large parachutes will deployed with a sudden burst of air just

before the capsule hits the ground. as of monday evening, they completed their brief two day training. for blue origin, it is a substantial step forward in what has been slow progress. he acquired the land here in west texas for the blue origin site in 2005. it was not built until 2014. in that time what happened is spacex has leaped from blue origin in terms of technology. it has won most of the commercial contracts from private sector partners and blue origin want to catch up, providing paying customers just a few minutes of weightlessness with the original call for the company. it is the tip of the iceberg in terms of the ambition blue origin has. it wants to compete with spacex and other private-sector carriers for the satellite contracts in the lunar lander

contracts. spacex was awarded and blue origin has appealed. it also has engines for other companies. the human race is a spacefaring race and we can look to the galaxy for natural resources. first thing is first, a flight up to the common line for just a few minutes of weightlessness before buckling back and falling down, experiencing forces of five times the earth's gravity on the way down. ed ludlow, bloomberg news, texas. dani: you gotta love that it will have the youngest and oldest person in space. that was ed ludlow reporting from vanhorn, texas. do not miss our special coverage of the blue origin launch at 1:30 p.m. london time on the east coast of the u.s. to the moon for the rocket and to the moon, over to bitcoin with -- accelerating overnight,

down below $30,000. the ceo discussed the volatility in the digital asset. >> investors who are allocating to crypto know that volatility will be out of it. most of the investors are not looking at short-term price movements or short-term volatility. their allocations are over medium to longer term time horizons. i don't think people feel terribly phased when they study movements in the market like this. >> are they phased when it acts like any other risk asset? it falls in line with stocks. michael: it certainly is a diversification play but on days like today when there's market fears, doesn't really seem like there is anything or asset class that can really avoid some of that liquidity coming out of the market and a lot of the deleveraging happening. >> how are you thinking about liquidity in the market? we are showing the bloomberg galaxy crypto index. trying to talk about when the

fcc will allow any. how much of that is integral to providing not only confidence but liquidity in the market as well? michael: you are referring to our flagship fund. even though there is no bitcoin etf's, investors are not waiting to add crypto to their portfolios. it doing hundreds of millions of dollars a day in trading volume. over time as the fund continues to grow, i think we will see liquidity as well. dani: what about -- >> what about the shares that are due to release from july 12 to july 22? is that a short-term issue investors are talking to you about? what kind of pressure does it exert on bitcoin price itself? will it go higher or lower? michael: not only investors but

people in the press have been wondering what effect of the fund grown so large will do now that some of the shares are unlocking. what we have seen is within trading at a discount net asset value, a lot of institutional money has been realizing that that capital can actually help them own or control more bitcoin than it would be if they were buying bitcoin in the spot market so we ultimately see that progression happening and in the longest case scenario, it would be an etf that would arbitrage away any discount in the asset value. dani: that was my goal talking about the lack of things to hide and not even bitcoin when the market sells off wicked did yesterday. coming up, a beat for ubs. the takeaways from the swiss bank's second quarter and it's more earnings ahead as well. we will take a look at the numbers from easyjet when it comes to their sales figures. that is next. this is bloomberg. ♪

dani: welcome back to "bloomberg daybreak: europe." i am dani burger in london where it is 6:50 a.m. earnings season is getting underway. ubs beat out profit in the second quarter, adding $25 billion in assets and wealth management. let's get to our bloomberg market reporter. these look like pretty strong numbers. what does it tell you below the headlines? what is the takeaway when it comes to ubs? >> it is pretty strong indeed. as one analyst put it, it is a beat across the board with every unit at ubs doing better than expected, especially the important wealth management unit where they added another 25 billion in what they call generating assets.

that is a very good take. investment banking was still doing great despite the very good quarter comparison we had a year ago. the equities business was doing great, still running, so overall, a solid result for ubs. dani: do we have any indication whether this is just a ubs story? whether it is their successful learning or whether it has any read across to the rest of european bank earnings? >> we have seen some decent results from the u.s. peers as well so i would expect other banks in europe will do well as well. the good thing for ubs of course is they have a steady business with the wealth management which is not as present with other lenders so we will see how big that read across will be. banks are under pressure right now in this market as we have seen yesterday. reassuring earnings to be very

important for the sector right now. dani: ubs is not all we are getting today. we have easyjet figures coming out as well. what is the market going to be paying attention to when we get those results? >> we want to see how the travel business is doing because we need those reassuring earnings in the market that is becoming a little out that more jittery. we have seen peak growth in the economy and travel sector, one that is weighing on europe's equity markets. it can provide some assurance here that is not as bad as some are fearing and it should help the overall market i would guess. dani: thank you so much. definitely lots of earnings data to be looking through today. jp morgan it from our bloomberg equity team. do not miss our conversation with the ceo of ubs in just a few minutes. of course, we will also be speaking with the ceo of easyjet in the next hour after that so stay tuned for all of our earnings coverage. it is not just earnings. let's take a look at the other

events we will be watching today. at 11:45 london time, we have the u.k. business echo terry appearing before a government committee, giving evidence on how to protect the steel industry in the wake of the collapse. we are also hearing before the commercial break, jeff bezos sets off on board the first fruit flight -- cruise fly of blue origin. we have an 18-year-old and an 82-year-old on board. the economic club of washington, d.c. hosts a conversation with the u.s. secretary of transport, pete buttigieg. the talks about travel and whether a corridor will be opened up is in close focus, especially as delta virus cases rise. netflix reports second-quarter earnings after the u.s. market closed. big pack has been a safe space in this market. not so yesterday for their

earnings figures. it will be interesting to see how much of a market reaction we will get out of that. let's go ahead and see where markets are taking us so far this morning. in asia, it has been a weaker session, down .9%. if you compare that to what happened in the u.s. yesterday, down one point 5% on the s&p 500. down 2% on the dow jones index. it is certainly not as grim but it is a more negative picture in asia. because you have that haven buying in the bond space, the china 10 year yield down below 3%. it has been for a few days. it is at its lowest since 2017, and looking at a futures market in the u.s. and europe that is performing better. here is where your bond picture is this morning. it has been moving markets. it's not what we are going to see for the rest of the year. long-term, the movie is higher in the bond market and we have not seen the cyclical peak in yields.

if you see major at hsbc, he has been calling it pretty well that we will continue to see bond yields fly. his target is 1% on the 10 year yield but 10 year yields at the moment at 1.2%. meanwhile, we are looking at a 30 year yield at 182.19 -- 1.8292. in the asian session, we see that buying turn into selling so the movement is not unusual. your real yield, -1.0714. we are not that far from it at the moment. the vix jumping yesterday to above 20% so just showing that this panic in the market is really present whether you are looking at the bond market, credit spreads widening, or that equity selloff as well. that is it for "bloomberg daybreak: europe." we are going to have the european open up next with an edwards. she will take you the market

action as we see some stabilization today in the equity space. this is bloomberg. ♪ (announcer) the core is key to losing weight,

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anna: good morning. welcome to "bloomberg markets: european open." i am an edwards in london. the cash trading is less than one hour away. here are your top headlines. stocks in asia follow wall street lower after the s&p 500's worst row since may. u.s. and european futures point higher. big beat in ubs. investment banking units up in the second quarter. we speak to the ceo about