Not good enough, eu leaders are set to say no breakthrough in brexit talks. Boris johnsons thursday deadline for walking away approaches. Bank earnings turned sour, jp morgan and citigroup slide despite posting betterthanexpected trading revenues. Bank of america and Goldman Sachs are among firms reporting today. Clinical complications, eli lilly becomes the latest company to pause its covid19 drug trial. We will bring you our interview with rival Johnson Johnson. One hour until the start of cash equity trading across europe. Thats look at what is going on in terms of futures. We are seeing gains and European EquityIndex Futures even after live trade. An you can see ftse futures up 0. 3 , and euro stocks and dax futures little changed. In terms of u. S. Futures, you can see on s p and Dow Jones Futures slight gains, a little more on s p. Nasdaq futures up 0. 3 . Anna, you have earnings out. Anna lets get the closing details, the business talking about the year but remaining cautious on the demand outlook. When you look at the forecast for unemployment from various economies going into the winter period. Profit at 142ax pounds just ahead of the estimate of 139. 8. They see themselves delivering continued improvement in underlying profits, there is an upbeat take. The focus was going to be very much on the outlook after strong results had an expected. Lets get to the broader picture. Things gradually expected to improve, asia down by 0. 25 overnight, but things looking more promising as we get to the european session were futures are modestly positive. We have been digesting comments about the chinese leadership for their vision of growth and a way to attract young people from hong kong. In south korea, we have seen some assets on the move. You can see that in the south korean kospi and the south korean won. There does seem to be concern in the u. S. On a number of fronts. One is what we heard from banking businesses around what we got from them, the profitability, was at the end of the pain or a pause in the pain . It seems to be the latter. In the earnings part of this sector, and globally about vaccines, Johnson Johnson pausing treatments, and now eli lilly is pausing their treatment. It is quite a nervous picture. The pound is a little bit weaker. We have the news that you leaders say there will be no breakthrough. Will Boris Johnson walk away from the trade talks . Laura in the u. K. Prime minister Boris Johnson is facing growing pressure to order a National Circuit breaker locked down the labour party is calling for increased restrictions for up to three weeks, after the governments scientific advisors called for that action three weeks ago. Fiscal stimulus are waning. House Speaker Nancy PelosiMitch Mcconnell is pushing for a smaller scale strategy that pelosi rejected. Mcconnells proposal appeared to be opposed by President Trump who tweeted, go big or go home. Democrats grilled Amy Coney Barrett on abortion rights, health care, gun rights and the election. She refused to say if she would disqualify herself from upcoming votes and offered no hints in regards to roe v. Wade. Larry fink says the world could be greener if Office Buildings never reach full capacity again. If only half workers return to office, traffic could be reduced in quality of life improved. 50 always working from home. Global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt asian stocks followed u. S. Counterparts lower as earnings season began and stimulus talks remain at a stalemate. Banks drag down the s p 500. ,p morgan and citigroup sank questioning if it is just a pause in the pain. Lets get more from mark cudmore out of singapore. It does seem like we heard from as well as and citi World Bank Officials that the pain to come is going to be greater than what we have seen thus far. Yes, i think there is a change in the narrative. We are at an inflection point. For most of the last few months, after we saw the massive stimulus packages globally, there has been the idea we are focused on the Second Derivative growth. Even though the economic shock was bad, from here on out it is about positive and the recovery, and it is a matter of debate how quickly we make the recovery. Now people are starting to say, wait a second. The recovery is stalling, and it could get worse especially if the pandemic intensifies into the winter months. The narrative is turning more negative at the moment. Anna we are getting lines coming through from the internal markets commissioner in the eu, talking about the readiness for a no deal brexit. He says the eu is ready, and u. K. Borders are not ready, his assessment. Market ishink the focused on . We see weakness in the pound as we go toward the deadline. The u. K. Has never been on board with the deadline this week. That im very worried about the brexit first of all, the market traded poorly for the pound, and you see that again this morning. U. K. Based traders are concerned about the situation. What is notable is that most of the rest of the world is not worried. It is not that they are complacent, they are bored with the story. The idea of a brexit headline is something we have heard for four years. So many times in the last few years we have heard this is the big one, it will be drastic if we do not get a deal, then that date comes and goes with no deal and it is not the end of the world. Many people outside the u. K. Feels, who cares if there is a deal, can we stop hearing about it . I think it does matter and it is important, and im nervous. I think u. K. Traders are focused and really nervous that we will not see the progress that is vital. Questions get to the of the day on the mliv blog. How key our Bank Earnings for risk assets . We talk about jpm and citi. More to come today. How do you think these are as mood drivers . Mark they have recently become important in the last few years because they are kicking off the earnings season. Banks really drive this. The Financial Services industry is so vital to the market. A lot has changed in that regard, and even in the last six months we have changed the focused and are not concern with earnings. This earnings season is less relevant. The last one we cared about the forward guidance. Now we are very much focused on short term drivers, the u. S. Elections, the u. S. Trade tensions, the idea of a possible vaccine for covid, restrictions in europe and of course brexit. It is all these things that matter more than the earnings theyn, so i do not think as recentevant earnings seasons. Anna it seems as if the stage was set to talk about where growth comes from in the next five years, Interesting Research linking growth in china with decline in certain sectors in the United States. This coming out of a Business School in the u. S. Has that made any dent on markets . There has not been enough details to excite the market. It is the overall message that reform,ll be ongoing and it is a positive guiding sign. A little disappointed in the short term there was not a specific grandiose announcement they can hang their hat on and get excited about chinese stocks again. Overall it is not a change in the status quo. It is marginal in the shortterm but does not derail the fact that china is the outperforming economy in the world. That is set to be the case more so this year and next year with its better handling of the covid crisis. Anna thank you very much, mark cudmore, for bringing us the latest market thoughts from the asian session. Up next, centralbank surge governments not to wind down virus spending soon. This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 47 minutes away from the start of cash trading, and we in a mixed picture futures. Ftse 100 futures are up 0. 3 . Laura apple has unveiled its latest range of iphones, a line that wall street expects will kick off sales growth. The iphone 12 will have a 6. 1 inch screen. The 12eup also includes pro and the 12 promax with a 6. 7 inch screen, apples largest ever. Sources tell bloomberg there is a range of options that Amc Entertainment eases its debt load as the pandemic is keeping moviegoers from going to the theaters. Fidelity investments plans to hire 4000 people over the next six months. It says the new hires will be in Financial Advisors and customer invices, a 15 increases client based roles. They are adding new clients as many peers struggle. Anna thank you very much. It is too early to counteract the Economic Impact of the virus, that is the call from leading central bankers. They are urging governments to put concerns about mounting debt aside until the recovery is complete. Roadberg was told the ahead would be long and uneven. We are seeing advanced economies doing better than emerging and developing economies, excluding china. You are seeing most workers use women doing worse and labor markets. We see rising inequality. We describe this as an uneven recovery. Anna we are joined by frederique carrier, managing director head of Investment Strategy, rbc Wealth Management. The imf talks about a long and uneven path to recovery. We have heard similar guidance from some of the Banking Sector. How does that inform the Investment Strategy that you put together . Are you expecting a long recovery . Frederique we are. Over the next two months, it is possible growth will underwhelm. Our one year view, we expect the Global Economy to recover. Investors toour increase their equity provisions. We have held an underweight position. We were concerned about the risks in terms of covid. The virus is not well understood. Risks to the economy, risks to corporate earnings. We are slightly more comfortable with what they are facing, there is a better understanding of how the virus is transmitted, better understanding of what measures are needed. Central banks are committed to low Interest Rates. We think equities will be modestly higher than over the next year. In thehat is going on Banking Sector specifically . Reports. Onflicting jp morgan expects to see material losses in the consumer portfolio in the second half of next year. More pain to come, that is basically the message from the bundesbank and World Bank Leaders on the economic side. On the other hand, laura wright was telling us about Fidelity Investments looking to hire 4000 people for a client facing roles. What is the deal in the financial industry . Frederique these are two different businesses. Things are difficult for commercial banks and we expect a difficult quarter with earnings u. S. Commercial banks yearoveryear. Net Interest Income is the defining element there because Interest Rates are so low. By lowerewhat upset credit losses and higher nonInterest Income. But it is still going to be a difficult earnings season for u. S. Commercial banks. For other Financial Services, prospects are better. It is a different business model. We have to focus most people have not questioned what earnings are going to be. Our clients have been preoccupied about the u. S. Election, brexit, covid crisis, rising infection rates, and this earnings season could be a reminder there are difficult times ahead. Anna that is interesting in itself, earnings have taken a backseat. What about m a and the Banking Sector . Will it be driven by Balance Sheet strength or weakness . What will result in Real Movement to consolidation . Frederique this summer the regulator the ecb is in favor of consolidation. In markets which need consolidation, italy, spain, greece. We could see crossborder m a as complicated, and the likelihood of those somewhat reduced. Banks will have to focus on sales and expenses to improve the bottom line. Matt we are going to take a quick break that keep you with us. We have news on the eu, and you have views there as well. Frederique carrier, managing director head of Investment Strategy, rbc Wealth Management stays with us to talk more about brexit. Ofer, a new survey, 42 active euro denominated equity funds underperformed in the first half of 2020. We will discuss that in our weekly show, etf iq europe. This is bloomberg. Matt we still have gains and ftse futures. It is a little easier for british stocks again when the pound is falling. Eu leaders dont see a breakthrough in brexit talks, according to draft conclusions raised by bloomberg. It raises the prospect of a no deal exit. Boris johnson has said he will abandon talks if there is no sign of an agreement, no progress by tomorrow. Frederique carrier, managing director head of Investment Strategy, rbc Wealth Management is still with us. Calling boriss bluff . We are looking at the probability of a no deal at 5050. Difficult to say. The negotiations could go into early november or this october 15 deadline imposed by the european government does not have to be followed. Negotiations can continue. When we talk about a potential deal now, it is different from what we talked about two years ago. Whatever deal we have will be basic. Headwind to the economy. Having said that, having a deal is better than not having a deal at all. A deal gives you a basis to work from which will inevitably arrive, it means there is a continued relationship with our biggest export market. Areeal at all means there no results and misunderstandings for many months, and is a worstcase scenario. Anna given that this could be a skinny deal versus the earlier expectations, do you think a resolution mechanism is the most important thing that it will achieve, rather than what it does for that sector in terms of trade friction . Frederique i would think so, yes. Leave thee does that economic picture for the u. K. Heading into what will be a difficult winter, we have been told by many Health Officials on the chancellor, where does that leave the economic story for the u. K. . Frederique very complicated. Exit is an additional headwind at a time when the economy is already weakening. Gdp numbers for august, we expect something similar in september. October onward with additional restrictions will be more difficult. The bank of england is very much on alert. We expect more stimulus and an expansion of the qe program, possibly a cut in Interest Rates. The bank is looking at negative , if the situation warrants it. Next year we expect negative Interest Rates to arrive in the u. K. Having said all that, in terms of in terms of equities anna we are just up against the break, thank you very much. Frederique carrier, managing director head of Investment Strategy, rbc Wealth Management. We see the bank of england consulting with the Financial Sector to get their thoughts on readiness and preparedness. When we return, spain is enduring one of europes worst covid19 outbreaks. With thewe discuss spanish step he Prime Minister. This is bloomberg. Anna come back to Bloomberg Markets european open. 30 minutes into the start of cash equities trading. This is what the futures looks like now, the london market going its own way which has to do with the brexit narrative, which is moving fast this morning, the eu suggesting little progress on any of the sticking points. Elsewhere in europe we see flat futures. Lets get an update, this is the picture for the futures market. We can get an update on some of no,news this morning lets talk where we are in these markets. The asian equity session looking fairly negative. We have concerns around the u. S. Banking season. That is the focus of things. Also the vaccine and treatment around eli lillys therapy that has been paused, ongoing concern in terms of treating the vaccines. Sorry, asg the virus, well as trying to find a vaccine. Matt we can give a look to investors as to what is going on today, what to watch out for. 30 minutes to go until the cash trade starts, here is what you need to keep your eye on. Christine lagarde will speak at the global roundtable organized the united nations. The g20 finance industries and Bank Governors hold a virtual meeting. Later, the ecb as well as lleroy at the european monetary finance forum. At 2 00 p. M. U. K. Time, the vice chair Richard Clarida speaks, and at 4 30 p. M. Steve mnuchin speaks. Those at the milliken global conference, not sure if that is virtual or irl. Fed 00 p. M. , dallas president Robert Kaplan will speak at an event hosted by the hoover Economic Policy working group. Hoover seems like the type who would do an actual reallife meeting but i am not sure about that. Everything could be virtual these days. Laura the news Going Forward, the sprint to find a medical breakthrough stumbled this week. Eli lilly is that latest company to pause a vaccine trial. Johnsonws johnson after a trial volunteer fell ill. Chinese president xi jinping is bowing to open the economy and inh ahead as a Global Leader technology. He made the comments to mark the 40th anniversary of shenzhen as a special economic zone. Former colonies of hong kong and macau. China must encourage more young people and teenagers from hong kong and macau moved to the mainland to study, work, and live. We should encourage more exchanges and integration among the young people, and strengthen their devotion to the motherland. Laura the European Union has permission with 4 billion of tariffs over the ongoing boeing airbus dispute. They will likely hold fire until after the president ial election next month. Global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Wright ink, laura london. We will take a short break. We will bring you an interesting conversation, Central Banks very much to the fore, and we will continue that conversation, talking to the bank of israels governor. Amir yaron will join us shortly. This is bloomberg. Matt welcome back to Bloomberg Markets european open. There 24 minutes away from start of cash trading, looking at a slightly positive picture in terms of futures. We are expecting to see a game gainrms of ftse stocks in terms of ftse stocks. That may be due to the drop in the pound as we get closer to a no deal brexit. Continued or worsened lock in the u. K. Spain is also enduring one of the worst covid19 outbreaks in europe. This month so far the country unveiled a 72 billion euros stimulus plan and imposed a state of emergency on madrid. The capitalist is the center of a political row with the center right challenging the governments demands. All of this, and they are waiting for money from the eu. Joining us is maria tadeo in brussels on the ground at the european capital. And exclusively, spains Vice PresidentNadia Calvino santamaria. Thank you for joining us. Lets talk about the european recovery fund. Have you seen the money, or do you know when the money will hit your accounts . Negotiations are still ongoing in brussels. Obviously we are doing our utmost to accelerate the process so we can start the implementation of the Recovery Plan on january 1, 2021. A maria i want to ask you about the situation in madrid. We have seen that lockdown go into effect. We have seen the lack of coordination between the central government. Want to ask about the Economic Impact on the recovery. The imf and the numbers they put out for spain, they do not see a vshaped recovery taking hold. What do you see . Tensions arecal going on in many parts of the world. We see them in many European Countries and the u. S. We have to be ready for this situation because citizens have been undergoing a tough situation for many months. That is bringing up these tensions. Belong the political atmosphere, what we see is that health and economy go handinhand. Those areas of spain which have been able to have an effective prompt manner with the outbreak have had a minimal Economic Impact. That is why we want to address the Health Situation as efficiently as possible to minimize the potential for a slowdown of the recovery, which is underway in spain. All numbers show the Third Quarter may have reached 13 . Gdp quarter on quarter growth. We want to continue that trend because the outlook for 2021 is quite positive. Our forecast is gdp growth of imf, which is the same the published yesterday. That could be increased with the implementation of the Recovery Plan i was mentioning a moment ago. Matt is sustainability of spains public finances dependent on ecb support . Not that that will be pulled, in is that an ss a necessity terms of your Financial Plan . Nadia ecb support has played an important part throughout europe. It has provided a framework of stability which has facilitated all government, and europe taking the appropriate measures to minimize the potential economic and social damage of the pandemic. We have implemented similar measures which have been effective to minimize the cost in terms of job losses, drop a economic tissue rid everything points to a continuation of commodities and Monetary Policy, which will be key Going Forward. But what we also see is market confidence in spain is strong. Our risk premium and yields are going down in a stable manner. We are able to extend the maturity. We have been able to announce we will reduce our planned issuance from now until the end of the year by 15 billion. It is not only the ecb but Market Sentiment that is helping us to face the coronavirus pandemic in the most effective manner possible. Are right to point out the yields in spain keep going down, that is a fair point. I have to ask about the budget because investors care about this. The track record for the government looks challenging on that front. Do you have the votes you need, and when do you put this to a vote . Intenselyare working to try to have the votes which will be necessary. We consider having a budget for 2021 as a top priority, not only because of the framework it would provide for us to undertake the necessary investments next year, but as a way to channel these investments and funds and resources that will come from the eu, i hope from the first of january, 2021. That is why we are working hard, and i am optimistic we will reach an agreement. In the coming weeks we will put the proposal up to the congress. Party every political stands up to the responsibility of these challenging and extraordinary times, and supports having a budget that would allow for large investments to be in lament it in 2021. To support the recovery and the transformation of the spanish economy, which is much needed to have a more sustainable and inclusive growth in the future. Mrs. Vice president , the ecb and World Bank Leaders are encouraging government leaders not to pull the fiscal mat out from under their economies. You have pledged 140 billion euros in state backed Loan Guarantees. Those have been taken up quickly in spain. Are there any additional Loan Guarantee programs on their way . Have you planned anything else . Nadia indeed the environment in europe right now is one of support for fiscal expansionary measures that would be accompanying the expansionary Monetary Policy. This is the right stance that will continue for 2021. From march we establish , thenisms amongst which public guarantees have been effective. The Spanish Program has had the highest pickup. We acted in a fast and decisive manner. These have helped to protect economic tissue in our country. We are adjusting these mechanisms. We have seen the pickup slowing down significantly as the economy has reopened in the recovery is on its way. Companies do not need the public guarantees to get appropriate financing. We will keep these instruments in place in order to accompany the processing in the coming months, and reinforce those elements that are targeting solvency. Ensure we do not have normally solvent Companies Going down because of the lack of economic support. While not impairing the economy to restructure, of course. A when you look at the Banking Sector, we have seen m a happening. What are you intending on doing with your stake in caja bank . Do we get to a point in spain where we are left with three banks . Is that where we are headed . Nadia we are not near that kind of scenario yet, not at all. It is true right after august it became known and we have accelerated the implementation of a merger between college a bank and bankia. We are the largest stakeholder in bankia. This is an inheritance legacy from the last financial crisis. Maria do you want to keep a stake . Nadia we are in no hurry to divest the stake. The objective of the government is to maximize the value of the public stake in the bank. We will take the appropriate decisions to maximize its value, and we are in no hurry to divest it. Mrs. Vice president , thank you for joining us, we really appreciate your time this morning. Nadia calvino santamaria, deputy Prime Minister, kingdom of spain thank you so much for joining us. Maria tadeo in brussels, a pleasure to have you on the program as well. Up next, stocks to watch and samsungml, supplier delivers on analyst expectations for the fourth quarter. They will resume buybacks. This is bloomberg. Anna welcome back to Bloomberg Markets european open. Futures modestly positive. Israel entered a second locked down after a spike in covid cases. The government forced the closure of schools and nonessential businesses alongside a ban on social gatherings. Israel is starting to ease restrictions. The impact on the economy has been severe. Gdp is expected to slump, and millions of workers have been laid off forcing the government to boost spending. Yousef local assets have been under pressure, lets get perspective on what the road ahead could look like. We are joined by amir yaron, governor, bank of israel. We are just getting through this second locked down on the basis of what you have been seeing in terms of data and your conversations with your peers, what has changed for expectations for Economic Growth . , the secondof all seeingdown, we are improved data in terms of morbidity, the numbers are going down. This is essentially a Risk Management process. On one hand, lowering the morbidity so the economy can healthn next to the crisis, and we are in the process of lowering the number. Right now the decisions are whichlly toward next week steps are we going to come out of this second locked down . The main thing on the plate right now are basically businesses that do not have because theyins have low infection rates, and low grades. What is essential for us relative to the first locked down to have a clear path that that manages morbidity versus economics. On the other hand, clear enforcement, which we did not do last time not to do it too fast. If i may interject because we are pressed for time, and i want to get to more tangible views on Monetary Policy. We are running up to the Committee Meeting next week. Is an expansion of some of the government bonds on the table . A Purchase Program because of the rising deficit . Overall, the bank of israel, like many other Central Banks has proceeded with accommodative Monetary Policy in many spheres. Bonds,ing Corporate Giving subsidized loans to banks subject to conditions, basically giving credit. Lowering the rates where we were. Supervision and the of the Banking Sector to provide credit is important between the two. We will continue to do whatever accommodative measures we need as weas we go forward seek the balance needed for having a comfortable Interest Rate environment. Right now this is the case, but we are continuously analyzing what else can we do in terms of providing that environment . Yousef governor, we have the u. S. Elections around the corner. I appreciate that you cannot weigh in with a preferred outcome, but have you as a bank taken additional measures to prepare for post election volatility that might ripple through the Global Financial markets . Always look at our fx termss and investments in of our reserves, and generally the economic outlook, take into consideration many aspects. Obviously these are issues that we are analyzing, and it is not clear what will happen if one outcome becomes versus the other. Yousef quick closing thoughts on the breakthrough agreements with United Arab Emirates and bahrain. Are you expecting more announcements on the Financial Institution side of things . Amir this is a great development. It provides a great opportunity for both countries. Inre is a lot of synergies terms of agro tech, fintech, hightech industries, financials. Im happy to say the supervisor of the bank was part of the leading financial part of the delegation. We are promoting what we can so transparenttate as and ease of business as one can as to facilitate good economic ties that i foresee. Yousef lovely. Governor, thank you for your time. That is governor amir yaron, governor, bank of israel. Anna thank you to yousef gamal eldin in dubai. An interesting conversation around israel. We are counting down to the start of the equity trading day. Futures point the upside. On the ftse 100 looking particularly strong, that has a lot to do where the pound is, trading weaker against the u. S. Dollar. This is bloomberg. The one minute to go until start of cash equities trading. Here are your headlines. Not good enough, eu leaders are set to say no breakthrough in brexit talks. Boris johnsons thursday deadline for walking away approaches. Bank earnings turned sour. And morgan inserte citigroup, bank of america and Goldman Sachs reporting today. Clinical complications mount, eli lilly is the latest company to pause is covid19 trial. We will bring you our interview with rival, Johnson Johnson. Matt lets look at european futures. We have stronger gains minutes away one minute from the open. You can see ftse futures up 0. 6 . Dax futures only up 0. 25 . Lets look at the global macro mover screen. It shows you risk assets. The far left column shows the equity indexes. The ftse open first as usual. Up 0. 2 . It is easier for british stocks to gain when the british pound falls as it is doing now, under 129. , only 0. 1 . As well the cac trading higher, 0. 2 . The ftse goes higher, gaining 0. 6 . European markets opening higher in the u. K. The market open higher than what we see on the continent. N as coronavirus continues infections continue to increase, and the problems continue to mount, certainly in terms of debt. Cooper,us now is laura mlivs macro strategist. It seems like the increasing covid19 infections was a problem for markets. Today they seem to shrug it off to some extent. They are not off to the races. Why do you think there is still optimism in markets . Laura they do still expect to see accommodative monetary conditions. There is still mediumterm vaccine thought that is prevailing, and some fiscal package, whether it comes before the election remains to be seen, and that is unlikely. It looks like we will get ongoing support on those fronts, and that bolsters risk assets. We have a busy day of policy makers today, that is likely going to drive this relatively optimistic market narrative. The dax just opening now. Coming into line with other markets, and getting off the ground. We see the outperformance by the london market which has a lot to do with the latest brexit line. Mark cudmore was saying International Investors have lost interest in the brexit trade negotiations. Do you sense things are getting real . Does that mean things get real for u. K. Assets, or the chances of a deal or no deal matter little compared to the coronavirus . We are also talking about a skinny deal increasing. Correct think you are saying of the outcome of a deal brexit or no deal brexit compared to what we were talking about the last time things came down to the wire last year. Oncially, that will weigh sterling, a pressure valve for a lot of negotiations that are looking not to pass the brickman ship Going Forward. Brinksmanship Going Forward. Is the head of potential renewed restrictions and lockdowns that will further weigh on economic activity. When we take a step back and look at u. K. Assets in the currency market, it looks like risks are asymmetrical and skewed to the downside because there has been a lot of optimism that we will see a deal come down to the wire. If that is not the case, we will see Downside Risk dominating. If there is a risk, it will be a short risk for growth concern coming back on the radar. We were talking to mark cudmore about this earlier, he said Bank Earnings have become more important. You are asking how key are Bank Earnings for risk assets . He was talking about the last few years, but i think the banks are telling us so much, certainly j. P. Morgan and citigroup did yesterday. Laura banks are setting the tone kicking off earnings season. It can be argued this earnings season is less relevant than last quarter because it did not have any insight into what banks could be telling us in terms of guidance. What we saw from j. P. Morgan and citi was that they beat expectations, but they are expecting headwinds to come. We are seeing loss provisions being elevated and the potential for deferred defaults Going Forward. Uncerte is it is an aiun recovery ahead uncertain recovery ahead. Behind us, even though we are seeing the economy recover after the unprecedented pandemic collapse earlier this year. Anna it seems like a long winter ahead. When you look at how the market responds to the latest vaccine news, we had that disappointment from Johnson Johnson. Eli lilly is the latest to talk about their treatment testing, and the way it has had to be paused, the antibody therapy. What do you make of the way the market reacts to this . They know these tests can get back in stride, but what is priced in in terms of a vaccine . Political voices are downplaying the chances of a vaccine. Laura i think that is the case. Setbacks in Clinical Trials like we saw yesterday did remind investors that the prospects for a vaccine could have an impact on markets. Whether that happens before or after that election, markets have expectations that we will see a vaccine eventually that is largely priced in. We will see volatility on any disappointment, but the mediumterm outlook, a vaccine is likely inevitable. Markets are not focusing on distribution of the vaccine and how long it can take, the lengthy process and the logistics around that. Forwardlooking markets will pin optimism on this roller coaster and the headlines around a vaccine. Anna thank you laura cooper bloomberg mliv strategist. Aning up, we will get to interesting conversation and speaking exclusively with jose vinals, group chairman, standard chartered. Dont miss that conversation, that is next. This is bloomberg. Anna welcome back to Bloomberg Markets european open. 10 minutes into the trading session, down 0. 2 on the stoxx 600. The ftse 100 up 0. 2 . The bundesbank has warned banks must be ready for increasing strain. They said the effects of the economic crisis have not yet fully arrived in the german financial system. Able tonders should be cope, projections remain highly uncertain. Lead to higher provisioning and losses with the bank, but the banks have buffers available to use to buffer those shocks and continue lending. Anna that was the bundesbank Vice President speaking to matt. Lets talk about the Global Recovery and the Banking Sector. We are joined for an exclusive interview by jose vinals, group chairman, standard chartered. We were hearing about the strains the baking sector is under. In terms of the recovery out of the global corona crisis, do you see the path as smooth or arduous . Jose the path of the recovery is not going to be smooth at all. That 2021good news is is expected to be significantly better than 2020, it is true there are many uncertainties regarding when the vaccine will be available, how it is going to be distributed throughout the population of some any countries. There are many uncertainties. It will be a rocky recovery, but hopefully we will get through it. Germany,heard that bundesbank expects germany to hit the high watermark in terms of bankruptcies in the First Quarter of next year. We heard from j. P. Morgan yesterday that its consumer portfolio is going to take a material hit in the second half of next year. In the u. S. And germany it seems everywhere the worst is yet to come. Do you see that as the cases well economically . Growth is going to be positive next year while it is negative this year. This year is the worst economic recession we have had since the great depression. It is true a number of problems that originated this year will only show up next year. I do not expect next year will be worse than this year in terms of nonperforming assets, but i think we will get more assets next year, and that is something that will differ for different countries. Very different strengths. And emerging china economies, according to the forecast we published today, china is the only country with a positive growth rate this year. Next year will have a growth rate of about 8 . Market in asia overall will do better than markets and other parts of the world. Dependssomething that on the geography we are talking about. That chinaes seem looks fairly exceptional at this point. When you think about western economies, a number of voices have called for monetary and fiscal stimulus cannot be withdrawn too soon. What concerns you in terms of the withdrawal being too early . Important withy cal policy,d fis which is to put a floor to the economic recession even bigger. Going forward, you cannot prematurely withdrawal this support, but you can only do it in certain circumstances that improve as you are more certain you will have a really solid economic recovery. Im afraid a lot of fiscal support will still be needed next year as well, and perhaps beyond that. The important thing is fiscal support is used in the best possible way to shore up growth, and put the basis for a longer lasting, not a short one. Matt one of the things i was wheng to get yesterday, are we going to get past the worst of it . And banks, rather than being emergency vehicles that governments are relying on to bridge this economic downturn with loans, winner banks going to get back to being Companies Run for a profit, owned by shareholders that get paid specifically and dividends . When do you think banks will be allowed to pay dividends again across europe . Jose that is something that on thepend very much Economic Situation in europe is a few months from now. In the United Kingdom we have been subject to strong recommendations by the prudential authorities not to pay dividends so far. I hope as the economic recovery gets entrenched that there will be more flexibility and banks will be given the ability to pay dividends, and to initiate share consistenthich is with their economic and financial situation, so i think prudence should be the norm in policy. In a few months there should be more flexibility for banks to do things consistent with their own positions. Shareholderse saying about these restrictions . Are they putting you under pressure . Are they putting regulators under pressure to allow you to pay dividends . Jose shareholders dont like to have their dividends and buybacks stopped. They need to understand a few months ago there was sufficient uncertainty and even entropy that capital conservation was important. Banks that conserve capital, and we have capital ratios which are significantly higher than a few years ago, higher than last year, and significant buffers. Terms ofo prudence in capital conservation, i think have can use capital they two share with shareholders, otherwise they will have a difficult time convincing investors that they should come back to investing in banks if they cannot get anything out of it. I want to go across the atlantic and get your perspective on the u. S. There was an institute of International Finance panel discussion, or many discussions on what would happen if biden wins versus trump. They concluded china tariffs will not change in the phase i deal would stay in place. I wonder about the macro elements in the u. S. And how they can be affected by the different outcomes in the election . Jose in terms of u. S. China relations, the panel is correct. The relationship is not going to change much, tensions are not going to come down significantly. The difference is the way chinau. S. Tensions are managed. In a more systematic bilateral way is the consensus in a biden administration. Regarding the u. S. Economy, i think if President Trump wins, he would continue with the tax policies that he has had so far. He would keep taxes on the wealthy lower. He would want some stimulus package for the economic recovery. If biden wins, the fiscal action will be far stronger, in the sense there will be an increase in taxation on the wealthy and corporates, not to bring it back to where it was before,. That is going to help various ,ssues, Infrastructure Spending the environment, education, health. All of those will be a boost to the United States economy in the short term. If this money is put in places expected to do things that contribute to productivity, that will have a positive impact on longterm growth in the u. S. Big differences in the economic outcomes. The worst thing for the economy would be a contested election which leads to a protracted period of uncertainty that may last a few months. That would be detrimental for investment, consumption, and growth in the u. S. Anna looking ahead to the Banking Sector and how it charts a path through the current eardis, we h yesterday the panic caused a lot of fear, but people are reassessing their finances, and there might be opportunities for the Financial Sector to help customers plan their financial futures. There could be more interest from customers in doing that. Is that something you are seeing . Jose yes, indeed. This dynamic has led to renewed interest like digital, health, but also people are more conscious of their future in planning for their Wealth Management on a longerterm basis. I think that is an area we see any increasing opportunities for Asset Managers and banks who have Asset Management functions, and more and more that will be ofducted as a combination interactions. Matt thank you so much for joining us, we really appreciate your thoughts on a range of topics. Jose vinals, former imf counselor, and now group chairman, standard chartered. Coming up, everyone is getting ready for 5g. Apple unveiled its latest iphones with compatible technology. Will it spur a new area of growth for one of the Biggest Companies in the world . This is bloomberg. Matt welcome back to Bloomberg Markets european open. We are 25 minutes into the trading day and looking at gains 100 in. 5 on the ftse london. Elsewhere a mixed picture on the continent. Some of your movers, a couple of british gainers. Yetver know how to say because i never go into a store because it is an online retailer. Online retail has been doing great throughout the crisis. In its latestits reporting period. Those shares actually down 6 maybe not beating as much as investors hoped them to do. It looks like just eat take away is gaining 4. 5 . Those shares up as more people are ordering in. Toantia, up 7 , agreeing auto strada talks in italy. That could be a profitable contract. Coming up, more on what is going on in todays markets. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Matt welcome back to bloomberg market the european open. 30 minutes into trading and the stoxx 600 index is little changed. It has been mostly down. In terms of the Industry Groups that are leading and losing, really, look at the group ranked return screen. Automakers and auto parts are gainers, banks and construction and materials. Banks are gaining compared to what we saw yesterday in the u. S. On the loser side of the equation, travel and leisure down again today. Real estate down today, and utilities falling, as well. Take my word for it or type index grr. Lets get the first word news from laura wright. The u. K. , Prime MinisterBoris Johnson is facing growing pressure to order a National Circuit breaker lockdown. The labour party is calling for increased restrictions for two to three weeks after documents revealed the governments and scientific advisers called for the action three weeks ago. Breakthrough stumble this week, eli lilly is the latest to pause. A similar move by johnson and johnson after a trial volunteer fell ill. Prospects for u. S. Fiscal stimulus before election day are waning. Pelosi isker nancy calling on the white house to revamp its latest offer. Mitch republican leader mcconnell is pushing for a smaller scale strategy that pelosi rejected. Byalso appeared opposed donald come, who tweeted a big or go home. It would beaid greater if office space never returned to previous levels again. Global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Anna laura wright in london. Apple has unveiled its new iphone, promising it will begin her, lighter, and faster with five g technology included. Of a iphone launch 12 will spur a new era of sales growth. Of cellularration Network Technology on iphone has enabled Breakthrough Innovations and entirely new opportunities for developers and our users, and 5g is the most exciting step yet. For so many people, this all becomes real with 5g coming to iphone. Anna joining us now, amanda lyons, again investment manager gam Investment Managers. Youve seen what apple has announced and the difference these new phones will make. Will it be enough of a difference to drive a new super cycle of apple . Well, most of the announcements made last night were pretty much expected by the market so there really wasnt anything new. We think about sales Going Forward and is it going to be the new super cycle . There wasnt anything massively compelling to make people think ive got to change my handset. The thing most were focusing on falls more but that in the category of nice to have rather than must have. Even apple, when they were doing this glitz and glamour announcement last night, they didnt really show you any killer feature or killer app that is going to make you think, i need to have a 5g enabled handset. It is something you will need in the future but right now, the infrastructure is not really there for the general consumer that is going to get one of these handsets, they will not necessarily see a lot of benefit. I thought one of the things that was very interesting, and a throwaway remark to some extent yourtim cook, was he said handset will automatically shift to 4g to preserve your battery life, unless you were using something that definitely needed 5g. Maybe some realtime hardcore gaming app at that time. Even if you are in a 5g network area and you have a 5g handset and you have the phone carrier bill that is going to allow you access to 5g, you still might be getting 4g speed so you will not actually see that benefit right now. Matt exactly. Ago when ron years sommer at Deutsche Telecom was showing me how 3g was going to allow me to stream videos and it was such exciting technology. That is only really started to be possible last year. How long until 5g is really going to change the way, or improve the way we use these devices . Theda if you look at buildup, the infrastructure buildup of 5g, pr probably a couple of matt oh. Anna apparently, we have lost amanda. Matt apparently, she wasnt on a 5g line. This shows the pitfalls and the reason we need to improve our technology, sometimes these lines just drop, you know . Anna that is the problem with telephony, as you call it. Legaltalk about esg, and general turning up the heat on companies to cut carbon emission. We will be joined by legal and generals head of sustainability. Toyve got a new plan broaden their reach and their impact on the green agenda. This is bloomberg. So why ask you to do me a favor. Suburban women, will you please like me . [cheers] damn neverd your heard. I dont have time to be nice. They want me to be politically correct. Yes, lets talk about it over the next 10 years. We saved suburbia in the u. S. Proud running as a democrat, but i will govern as an american president. I will work for democrats and republicans. [car horns] ill work for those who vote as for thoses hard who vote for me. That is the job of a president , to heal. The duty to care, to care for everyone. That was President Trump and his democratic rival Vice President joe biden hitting the theaign trail yesterday in crucial swing states of pennsylvania and florida with some different messaging from the respective candidates and it seems like they were in quite a different setting, as well. I dont know, but im going to guess from the sound that joe bidens Campaign Rally was, in fact, a drive in rally because you heard all the horns honking. 20 days to go until the election. Lets get the Bloomberg Business flash with laura wright in london. Laura the Great Technology debate, serial of grades were in her short, apple has unveiled its latest range of iphones, a product line ostrich expect will kick off another cycle of sales growth. The iphone 12 will have a 6. 1 inch screen and starts at 799 with a smaller version at 699. The lineup includes a 12 pro and the 12 promax with a 6. 7 inch screen, apples largest ever. Tencent is said to be planning its increase in a stick by Universal Music Group by a further 10 . The tech giant will make the move before its option expires in january. Last year, the company let a consortium that saw 10 of the worlds biggest music coming from vivendi. The worlds biggest cinema chain is considering bankruptcy. Sources tell bloomberg it is part of a range of options for Amc Entertainment as it tries to ease its debt load as the pandemic is keeping moviegoers from the big screen. No official comment from amc. Fidelity investment plans to hire 4000 people over the next six months. It says the new hires will be in areas including Financial Advisors and customer services. It is ordering a 15 increase in client facing roles. The money manager is seeing more, as many peers struggle. Anna thank you for that. Legal and general tensed to turn up the pressure on companies to cut in missions. The asset manager has said it is committed to engage with more than 1000 companies responsible for over 60 of the Greenhouse Gas emissions produced by publicly traded companies. Joining me, legal and generals general Investment Management head of sustainability and responsible Investment Strategy. Good to speak with you. Of an earlierout program that is some four years old so you have experience and are broadening it. I know as a result of the earlier program, you do vested from exxon mobil divested from exxon mobil, for example. Who youave companies have changed behavior rather than divesting . Absolutely, what we have seen in the last four years of engagement, is the consequence models work. The companies that get put on the list improve, the as dominion, company in u. S. That wasnt disclosing a lot about climate risk, now committing today to be net zero, so we have a change from that list. Similar, being on the sanction list, Many Companies have improved through engagement. It is important many other Investment Managers engage and we are collaborating, but from our perspective, we want to bring out the right results so the results and the consequences are where we distinguish. Matt how much of a draw is this for investors . How much of a hardline do investors want their Fund Managers to take when it comes to esg . Meryam what weve seen from our client base is that esg is increasing in demand and interest, and not just in terms of our Engagement Program and voting and so forth, but in terms of funds. Every day, we are talking to climates clients about climate. What we have moved on from is, is this an ethical issue, the right thing to do . Is this an investment risk for me . Can you manage it for me. Things we can exploit so can you do that with your investment . Even the conversations are getting richer and we think it will get bigger. Youve put together this traffic light system. Hope this becomes some sort of standard for the industry to measure the level of disclosure, the level of Transparency Companies have around climate . I know the Advisory Company sustainability says there are more than 600 different ratings and rankings for esg. It is a bit of a wild west when it comes to an investor trying to understand climate risk. Data analyticso have a lot of data points, but it is important for some investorsthat what we are using, what we did is we traffic lighted about 1000 companies on our website based on what we think are the key metrics that could be applied to something as big as 1000 companies. It is not everything. It is the kind of data that is common, global, and consistent. Howcompanies can understand they are seen from the outside world through the use of a traffic light system. We are writing to companies today, saying some of the areas where you are being flagged as red, you need to start adjusting because these are minimum standards. And that will start to get escalated through our voting areram that year, but we also doing engagement with some of the key companies, as well, talking directly to companies is very important so this isnt necessarily instead of engagement. This is additional. A commitment to be transparent in the way we engage with companies. With how active do you get the companies you invest in . I know you have a masters degree in environmental decisionmaking. Executives need you to give them advice on how to run their companies in 2020 . Not to run the companies, but we make sure the boards of the companies are addressing a wide range of opportunities, including climate change. But we are not allocated for is someone with a phd in climate to sit on the board, but we want to make sure there is expertise on the board looking at technological changes, policy and regulation changes, consumer demand. These things are changing very fast, particularly as we go into this net zero transition of bringing the global emissions near 0 in the next 30 years or so and so those need to be really diverse in bringing expertise into the conversation of the board and as an investor, we need to make sure that is happening, we get comfort that the governments is in place. Governance is in place. Anna in terms of diversity on the board, how far is legal and general prepared to go if it doesnt think a board is on a path to what you defined as suitable levels of diversity . Meryam sure, there are many different aspects to diversity. In particular, on gender, we have engaged on a number of ands, being 30 or so forth as a result, our experts, we have seen in the u. K. , more than 30 of the board being held by women, we see a similar trend in the u. S. And elsewhere because we started to vote against the board for not having any female on the board or having less than 30 and so forth. We are expanding that this year to ethnic diversity. Thats been traditionally difficult because there are many data points to assess hundreds of companies on the. That, but what we have said is we will start to engage with companies. Escalatetart to through our voting policy, as well, so what we will have is by 2022, we will vote against the board for having not having any nonwhite person on the board. Matt thank you for joining us, a subject all of our viewers are interested in. Legal and general Investment Management head of sustainability and responsible Investment Strategy. Clinical complications amount, eli lilly added to the list. Johnson johnson also, those to the latest companies to pause. Trial. re covid we will bring you our interview with Johnson Johnson next. This is bloomberg. Xt. This is bloomberg. Become theilly has latest company to cause trials for its trials, this after Johnson Johnson paused its trial because of a sick volunteer. With regard to the temporary se, there is very little known in terms of details. 36 hours ago, we were formed and that information was elicited by the independent drug safety monitoring board. That data is blinded to us at this point. It is up to that independent group to determine what will be unblinded. Weve had significant confidence going into the vaccine process. We tested people on this and hiv for ebola without any Serious Health consequences and very well tolerated, so we are confident. We just have to let the process play out and hopefully the public is reassured that we are following the highest scientific, medical, and ethical standards we do for all of our drugs. That is certainly true for Johnson Johnson and i very much believe it is true for all of our pharmaceutical counterparts. We saw with astrazeneca combo their their too, process had to be halted. It hasnt been approved by the fda to continue, but it has been approved by other countries. I wonder if you can help us understand the procedure globally as to what stops, what moves forward, how quickly that can happen. Speakx, i wont specifically to astrazenecas compound, but our details are being finalized to find out about the patient. Study, 60,000 persons the largest of any vaccine being currently conducted. It is probably not uncommon to expect unexpected illnesses that occur, and thats what happened here so we will let the board do their study, do their diligence, and we will proceed accordingly. Weve been in contact with the fda and other Health Regulatory authorities around the world, so they are well advised into what we know at this point, and we will certainly work in lockstep with their direction, as well. If we talk about the timeline has saidbit, your ceo in the past, and im quoting, that he would expect the vaccine to be available late this year or early next year. Still do whene you are working to or do you think the risk is it gets pushed out further than that . Yeah, so i think the best way to answer that is the as the cfo is to say we are not changing any investment plans to change our manufacturing footprint. We are projecting success with that timeline in mind. If you could give us insight into conversations with regulators, for example. A lot of the confusion in the market comes from the fact that we do not know, if we trust a vaccine, who will that is, how do you know it is safe, etc. , what is your conversation . Our conversation has been to keep them advised of our scientific protocols. We are being transparent with not only regulatory authorities but the public at large. We have a detailed website that outlines our design protocol, our study results, enrollment is that gets posted so we are being transparent. The public i hope would look at and thetemporary pause reassured we at johnson and johnson and across the industry are following every proper safety protocol guideline to its utmost degree. Anna that was the Johnson Johnson cfo, joseph wolk. Interesting conversation. The temporary pause at Johnson Johnson and weve heard more from eli lilly around their treatment, the fact theyve had to pause a moment in their interbody treatment tests as a result of an illness. We will wait for further updates on both of those fronts. European equity markets as we come to the first hours and, fairly flat. 0he euro stoxx 50 fairly flat. We had brexit headlines this morning to deal with that have weakened the pound. That is a pretty European Market open. Stay with bloomberg television. Up next, surveillance and their etf focus. Matt shiny new apple, the tech giant unveils its latest range of iphones. , wall street expects growth for the company. Call for a circuit breaker, Boris JohnsonGoldman Sachs and bank of america and wells fargo report later today. Jp morgan and citi shares