The Senate ConfirmsAmy Coney Barrett to the Supreme Court. It is earnings galore in europe. Ig oil hsbc, santander. We speak to the spanish lenders cfo. Beach onis, it is a the core earningspershare. 44. Market penciled in 1. When it comes to net sales, they are expected to grow to mid single digits. They are talking about core operating income at a low double digit to mid teens so in terms of the earnings per share, its a beat, but on the sales side, it just comes in below thirdquarter sales. In 12. 4 8penciled billion, so certainly a solid delivery. They are upgrading their core operating income guidance as well. Analyst is parsing the numbers at the moment. We will have he will join the team. That is with jonathan. Bank, the banks have come hard and fast. They beach on their estimates. They said the full year will be around 5 billion in terms of profits. That has improved from 3. 66 on the estimate. Net income, 1. 75, up from one billion on the estimate. Jose joins the team. Emerging in the European Market open this morning. Lets give it to hsbc. The dividend story is there for the year. Thebank beat in terms of profits paid stephen is outside hsbc hq. Run me through the top line. I finished a conversation with you. The choice in phraseology he said is i think where the asian investors is going to focus the most. Absolutely. Thats why the stock soared up more than four point 5 . This is the Hong Kong Bank here. People look to this bank for any kind of guidance on optimism and the future of the economy, on mortgages, and the like. And of course, coming out of covid, we are still it has battered the economy here. Hsbc shares have been down 47 year to date. Month, andr low last you know, it is such a big stalwarts here in hong kong. They rallied on any good news. We knew that the Interest Rate environment globally was going to be low. Net interest margins were going to be squeezed. We knew that. We got signals from the bank that they were not going to talk about any type of dividend until the Fourth Quarter and we know about the expected high level of credit losses because of covid. Neededket wanted and some good news. And hsbc, lets face it, they delivered. They exceeded expectations on pretax profits. They exceeded the forecast on those credit losses coming in at 785 adjusted expected credit losses, 785 million. The number we were looking at is potentially 2 billion so they beat that handily. The cost structure, it looks as though in the conversation you had with the cfo, they are on track to have bigger cost savings than initially projected. The ceo had a big restructuring he announced in february over three years, cutting 35,000 jobs. In your interview, the cfo saying its not about the number of jobs typed. Its about the cost savings. He gave a lot of assurances to the market, including a possible, possible conservative dividend for 2020. Kind of jumping ahead of the forecast that they signaled, that they would possibly announce a dividend which they suspended earlier this year, not until the Fourth Quarter. There were some positives coming out of hsbc, much needed for this hong kong economy. Manus that is the key with asian investors. A u. K. Authority restraining the dividend for the bulwark of the engine coming from china and asia. Great reporting. Nice to tie it together with your interviews. Looks like they can breathe a bit easier. We will see you in a wild. Stephen engle, our report on the ground in hong kong. My guest host is monica. Look at the quick markets for you at the moment because of course, we had a 2 blow off the top and the equity market yesterday. Was that a reappraisal of risk . Got is really a reappraisal of risk because as far as the equity markets are concerned, do you really want to care yourself completely long . Sweetue sleep narratives are dissipating. With blackrock, a 2 drop in equities gave you 5 five basis points on the bonds. Blackrock downgraded their view on treasuries. They say a blue sweep is off the agenda for them. It will be a fiscal expansion. And then blackrock had another note on the dollar. It had a flashy tone to it but we are back to basics. You are going to have dollar weakness. Those are the things. My guest is monica, global head of research. Good morning to you. We are all scrabbling around for a justifiable reason to a 2 move in the s p 500. Things are pretty desperate. You say we are at a crossroads in these markets. What is the biggest risk to the markets as we stand right now . Good morning. Monica good morning. Glad to be here. Unfortunately and it is spread worldwide. Europe, u. S. , that tom latam. And unfortunately, this is really moving to be uncertain. Expect economics the policy intervention to boost and to recover when they can. This is the crossroads. You areou say that neutral overall on risk and cautious on your u. S. Equity position. One of the narratives that has come through from a number of other people is equity volatility is expensive relative to credit volatility. With that in mind, is it too late to buy volatility in the equity market, which would correspond with your moderately cautious view on u. S. . Monica i would say cautious for the time being. Prices are increasing. There is uncertainty. I wonder why this has not been happening before. The micro fundamentals from the equity market and in particular to the credit markets. It was something that makes us feel comfortable. This is the reason why we were oriented to this. The earnings season might onvide and shed more light the direction, and may be we can into the value equities. It is an amazing couple of days in terms of the markets. You have sap bear market yesterday. The biggest oneday drop since 1999 yet i flip to cyclicals like hsbc this morning, good news coming through on the guidance and on the credit losses. I just had a conversation with intimated to me that things have sort of almost reached a potential bottoming out for him in terms of the view that they had from the start of the year or the middle of the year, march, lets say, at the end of q1, to where we are now. Do you get a sense that perhaps the worst is behind us even though we are seeing ratcheting covid numbers . There is no proclivity to lockdown economies, is there . Vaccine mightk a be the real game changer. The worst is behind us. We really expect growth moving is inntil a vaccine the treatment. Its very strong. If not, uncertainty is going to remain. I would feel uncomfortable to say that the worst is behind us. You just see numbers from sap yesterday and that disturbs their cloud outlook and then you look at the credit side and its like two roads. Monica stays with us. Great to have you on camera. My guest host. Coming up on the show, just the week to go until the u. S. Election. The senate fails to deliver stimulus but cements a conservative majority on the Supreme Court. We run through the details. This is bloomberg. Manus it is daybreak europe. Pricek flash on the hsbc in hong kong. We had a conversation with the cfo about the absolute number of job cuts. The credit numbers are improving. 4. 3 after the conversation with ewen who really went into quite a bit of detail in terms of where they see the areas they are going to target in terms of riskweighted asset reduction beyond the 100 billion dollars so that is something to bear in mind, and in terms of the risks that are out there, ewnw obvious ew en flagging risks. I dont think i can work at home two or three days a week. I dont think you would enjoy daybreak europe if i was at home. The senate delivered the new Supreme Court justice but not a stimulus package. Then you have President Trump and the Vice President , biden, hitting the campaign trail hard, making their final pitches to the voters. Pres. Trump covid, covid, covid. Thats all they talk about, the fake news. Covid, covid, covid. Thats all they talk about. What progress we have made on it, too. We understand it. We know we have to protect our seniors when they have heart and diabetes problems, and we are protecting them. We have the best testing in the world. Thats why we show so many cases, because we do more testing than anybody else. But we are doing great. Excuse me. Here i am. Im here, arent i . Thebiden donald trump is worst possible president , the worst possible person, to try and lead us through this pandemic, and he does not have any idea what to do or he just does not care. Jack fog bank Derek Wallbank joins us now. This is staggering. The juxtaposition that comes to mind is biden in front of a doorway and trump resplendent with his backdrop. This is the diversions in terms of Campaign Presence by one and a different strategy by biden. Is that a risk . Biden is trying a strategy that we really have not seen in modern times here, and part of it is informed by the virus, really. I think biden is a very tactile politician. He likes shaking hands and kissing babies, and neither of those things are particularly safe when you are in your mid to upper 70s. There is a virus going around. Campaign has a long time him in a different sort of scenario we are as trump wants to go out and wants to be these big spectacular rallies. He thinks that is the way he won election in the first place, doing big rallies, whatever is on his mind. He is all in on that strategy. I expect biden to travel a little bit. Youre looking at florida. We are looking at georgia. He has been a big presence in pennsylvania as well. More is going to travel over this last week for sure. Coast swing that is going to happen. Theres rallies in michigan to come. Wisconsin as well. To football. This the real football, not the american football. You can sort of think of it as biden is running a campaign where it feels like he might be up 20 and he needs to park the bus and go run out the clock here. Really, donald trump is not just fighting joe biden politically. He is also fighting the clock which is to say, when you are down a little bit in the polls, you have to turn that around and theres not quite as much time the president to turn this thing around. Will be american football analogies and not gaelic football. Thank you very much. We are going to run down the clock on the election day by day. My guest is monica. Covid is too hard to estimate. Likewise, this election is of theirloser in terms percentages, probability of a blue sweep. Either way, a fiscal deal will come down the pike. Black rock say that they have turned on their treasure review. They say you can have fiscal expansion. They are downgrading their nominal u. S. Treasury holdings and upping their inflation. Do you follow the train on the inflation narratives, and if so, how do you position from a credit and bond point of view . Is a matter of defining the time horizon. If we are looking at tony 21, obviously, we do not think that we might ever moving higher, much higher. If they ever get into the central bank targets, this is our base case over here. Here might be some spikes we look back at that. There,e effect might be but we want that inflation to move much higher in terms of the target. We expect a steepening of the curve. In thenomic conditions u. S. , in groups. Think it will be managed, markets ituity might really be a problem for risk assets. Think the rates are higher but the movement will be contained. Risk assetsabout had one economy which will grow, its china. And i was looking across the wand, offshore, onshore, the differentials exploding to the highest in three years i have an equity market which is doing quite well and an outlook from one of the biggest banks. Hsbc talking about china this morning. How do you see that risk evolving . Do you see a stronger yuan as the ground zero for risk in china . They are wiser. The movement will be contained because of currencies. They will be the most powerful for the central banks. China was believing it. They are led by china and north asia in general. Korea is in good shape. We do believe all the countries, in one way or the other, are related to china to be softer from the pandemic. Is an emerging market. That you likenow the em bonds and em equities. We will come back around. That ties to the to some of your european things as well. How guest hosts this morning. Laura wright is that london hq and she has the agenda at london hq and she has the agenda. Facingboris johnson is more pressure over his pandemic policies. More than 50 members of his own conservative party are demanding a clear root out of law down. The mps are warning his pandemic strategy is disproportionately damaging the economy in the north, steepening the divide with the south. Armenias Prime Minister says its u. S. Brokered truce has broken down hours after coming into effect. It is the third time negotiations have failed to stop the worst fighting in the region for decades. Each side is accusing the other of preaching the ceasefire. Mediators have tried for nearly three decades to secure a Permanent Peace between armenia and azerbaijan. President Emmanuel Macron is facing a widening rift with some muslim countries over his crackdown on radical islam. Turkeys is leaning calls to boycott french goods but its unclear how widespread that will become. Early responses are divided amongst familiar lines with turkeys allies on one side and saudi arabias on the other. The recent tensions were sparked by the murder of a french teacher. 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. Manus. Thank you very much. Coming up on the show, as many continues to pour into private advancingstrategists an historic mistake. Your morning call. This is bloomberg. Manus it is daybreak europe. I am manus cranny, in dubai. 2. 4 trillion of dry powder. Investors are asking more of private equities and never before. Strategists call it a mistake. Dani burger. Not just a mistake. They are saying it is a historic mistake. More money going into the sector with investors wanting better returns after low expected returns for the public equities space and what they say is diversification. Fraser jenkins from bernstein says that is not the case. Private equity is actually more correlated with the public market. Just the opacity of the strategies in the longer timeline make it seem immune to the cycle but its closely aligned with the credit cycle. They also say that 2020 could have been the year of private equity, but instead, deal volume remains pretty depressed through the first half of the year and this is when private equity really should have been swooping in, taking advantage of the fall in asset prices. Manus. Bet, itsther popular on volatility. Is it expensive . How do i benchmark expensive volatility . Is atvolatility, the vix a seven week high, but if you want to buy options, betting that volatility will go higher is not expensive. The expensive bet right now is actually betting that volatility will fall from here. Vix is call ratio on the on a 14 year high, pretty remarkable when we think about whats coming up. The election on the horizon. Vixlikelihood is that the will fall after the election and thats when investors are betting right now. Manus i never far from a put call myself. Dani burger keeping an eye on your volatility. Quick snapshot of equity markets. Small bounce coming up in the markets. This is the reality in europe, sweeping across the canals of venice. They are quiet. A resplendent city. By quieted by covid. This is bloomberg. Manus good morning from bloombergs middle east headquarters in dubai. Im manus cranny. Its daybreak europe. Asian stocks lower after the s p 500s worst day in a month. Virus concerns and stimulus limbo in washington way on sentiment. Weigh on biden picks up his campaign pace, trump visits battlegrounds , the Senate ConfirmsAmy Coney Barrett to the Supreme Court. Numbers to flow from big oil, big pharma, big banks. Hsbc and santander beat. Hsbc tells me a returned to dividends could be on the cards. Evaluation ate a the back end of this year on the regulatorstlook, our in due course but markets should expect us to start conservatively. Very conservatively. What will the dividend be . The yield was 2. 5 before. It came down to the regulators and they dont. Markets, you had the worst selloff in a month, 2 . Is that the beginning of something bigger . We are back one third of 1 up. Notes are reevaluating the blue sweep. 2 off equities gave five basis points on bonds, blackrock downgrades treasuries, they are upping their inflation linked exposure, and at the same time guess what. It was a flashy moment in the dollar yesterday. Equities, a bit of froth came off. The dollar went bit, but block crack blackrock, back to basics. Regardless of the election outcome, the dollar will lag for one to three years. Over the get a blip election, but fundamentally, it is expensive. Europe, the second wave of coronavirus continues to rage across the continent. The one step no politician wants to take his back on the agenda, a full lockdown. Thats as efforts to limit the softerpread with measures, from mandatory mask wearing to partial curfews. Are they working . Cases, which shot 52,000 sunday, could be heading toward broader restrictions. It comes as italy imposes a partial lockdown and spain monica is in italy. How does the partial lockdown fealty do in milan . Give a sense of your lockdown and where it is heading. We had a guggenheim talking about potentially something 50 times bigger than where we are at the moment. Where we are on the road to risk in covid . Commence or your first question, we are trying to balance the tradeoff between our willingness to be safe and our worry for the economy, because the kind of lockdown that has been imposed is a curfew for all the citizens and restaurants have to close by 6 00, no cinema, no sports. Schools, from secondary school and the younger have been in school. It is really a matter of balancing the risk. Becauseunsafe, just everyone there are a lot of people that are infected and we are under stress again. This is something citizens were not expecting after march. Recovery risk, are we positioned . Monica, with that in mind, that heightened sense of risk is pervasive for all of us, the circle is narrowing in terms of who i know has covid this time around relative to the last peak. Why, then, have you upgraded your stance on europe to neutral . Matteo goes to neutral on europe and you want to do it by derivatives rather than outright. Why have you gone to neutral . What has caused you to up the risk . The first one was the deeper earnings is expected to be rebound. Flows are quite safe, so investor positioning is relatively low on european equities, so how we were expecting them