♪ anna: good morning from london. manus cranny is in dubai. these are today's top stories. it is a mixed monday for global equities as coronavirus cases and u.s.-china tensions threaten risk appetite. mike pompeo suggests action to protect national security will

not stop at tictoc. shares did as earnings missed the mark. the group says it will accelerate cost cuts. more to come from our exclusive interview. we will hear from socio-general after a surprise -- sociale generale after a surprise loss. task force head says the pandemic is in a new phase. it has just gone 6:00 a.m. in london. it is 9:00 a.m. in dubai. normally it is yusuf and i this time. they were very clear, the single worst economy is the u.k. it is one of the weakest economies globally. they have taken a hit. they gave us a global

perspective, a wide range of losses. there has been a big shift in the global economy, but it is not going to be enough to steady the ship. the next three to six months will be critically important. interestingly, more worried about commercial debt rather than the consumer. the consumer is reducing the debt. the stock is down 3.4% in hong kong trading. there will be another major review of where they are strategically. 4000 jobs went in the first half of the year. nejra, good morning. nejra: great to have you back. great interview. we have numbers coming through from societe generale. surprise loss a after changes at the market unit. we compare that to pnb para ibas. the numbers do not look great.

you are seeing the surprise loss, the cycl second quarter equities revenue coming in. that was a loss as well. if you look at second quarter revenue, that came in at $700 million versus the estimate. that did come in better than expected.it is the equities that seem to be a challenge here. millionties hit of 200 in the second quarter from dividend cancellations is highlighted as well. a 1.3 3 socgen taking billion euro loss. coming up, we speak to their a.m.y ceo at 6:30 they have come out with their numbers, but the real news

is the deal, the $16.4 billion deal. let's get straight to our guest this morning. he joins us now. he is the ceo of siemens. great to have you with us this morning. deal.deal with the $15.4 billion deal with variant. drawn to the idea you did this in cash. how risky is it to do a deal all in cash, $16.4 billion? why did you go for a cash deal? guest: first of all, thanks for having us. of our cashination and equity rates which will follow in due course. rates also create a

lift in the tax. we are very certain about this transaction. it is the right time. we are also super confident about it. nejra: great to speak with you this morning. as we speak, we have seen over the weekend tensions increasing between the u.s. and china. china is an important market for varian. how do you plan on navigating those tensions? guest: thanks for the question. take longer, and varian is a global company. is in aotprint in china very strong position in china. it is a unique strength with more than 50% market share.

important --mous an enormously important part for china. when it comes to an essential topic like people's health, this will not be an issue politicians could touch. bernd, when we look at your relationship with varian, it has extended over the past number of years, mainly in the radiotherapy diagnostics, the complementary side of the business. where would the biggest synergies come from? what will drive this deal forward? chosen to take a leap for this transaction. it is a leap for varian to become broader in addressing cancer. all theng together

diagnostic aspects and then by oflding a digital roof combining all these into new insights, new knowledge, using our ai capabilities. topicsh synergies are in which before that no one would have been able to do under one roof. the second leap is the leap for ers, because tone become an even broader partner for our customers, we can address all major diseases and our partnerships in which we address customers' holistic needs. lot from this transaction. youa: one benefit for you, have said to us just now that the deal will lift the company

into the dax. lifting whether a dual will make sense to you from is a u.s. varian business. .uest: we feel very comfortable heardk so far we have not investorsints of from this side. community, weent are listed in frankfurt. another listing is not planned. manus: your sales are down almost 7%. that is worse than the estimates. when you were down with nejra and i before, you said you had pent up demand. had that pent up demand not

shown through last quarter? had hospitals delayed installations? what has been the drag on this? q3 we first of all, in said before the quarter in our q2 when we spoke about the quarter, we reported that this will be the quarter in which we will be hit the hardest. we are confident that we have the worst behind us. we will see a stronger q4, which also gave us the confidence to reinstate items for the full year. view, thepoint of worst is behind us and when it comes to the major trends in healthcare and the major trends

driving our business, this is completely intact. in hindsight, this will be a temporary dip in our growth rate. as serious as it is, we are addressing the right long-term trends. worst is you say the behind you, bernd. the last time you are on, we talked about your coronavirus tests. i wonder if you could give us an update on that. where are they needed the most? where are you seeing the most demand for these tests right now? guest: thanks for the question. andhe corona test side, this is part of what the team has done in terms of innovation, we have more tests. we have now two tests, an antibody test. on

last week, we got fda clearance for the first antibody test. debate in the is the community, what clinical value of antibody testing? what is the message you take from it? we from that point of view, see a relatively slow uptick of this in our number. it is not a message about us as a company, but about this category of tests and the uncertainty around it because has not been as quickly established as we thought in the beginning. be of majorntially importance once we are closer to

getting to a vaccination. nejra: great to have you with us. thank you so much for joining. bernd montag. now let's get to the first word news with laura wright in london. laura: the u.s. plans to act against a wide range of chinese software companies, not just tiktok. friday, president donald trump told reporters he plans to ban the popular video app. no official decision yet, but pompeo says it should come soon. buying a gas for $7 billion. the owner of 7-eleven is helping and expanded foot print will expand during the pandemic. it currently has around 69,000 stores worldwide. spacex's dragon capsule has splashed into the gulf of mexico with its astronauts.

it successfully completes the first messenger the space station -- the first mission to the space station. it is the first mission for u.s. astronauts in an american craft since the shuttle program ended. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. london.aura wright in coming up, global coronavirus cases top 18 million. the fed says a hard lockdown could deliver a faster economic recovery. we will discuss next. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. i am nejra cehic in london with manus cranny in dubai. global current arrest cases has surpassed 18 million. it is prompting more lockdowns from australia's state of victoria, to manila in the philippines. in the u.s., cases continue to rise in california, while arizona is seeing a slowdown. the minneapolis fed president told "face the nation" that congress needs to act to help the economy. >> while historically we would worry about racking up too much debt, we are generating savings ourselves. that means congress has the resources to support those who are most hurting. congress should use this opportunity to support the american people. if we get the economy growing, we will be able to pay off the debt. us as the head of

fx strategy europe at bnp paribas. one of the things that has cost the -- has caught the most attention is that the 10 year real rate has gone to a record low of -1%. do you expect that collapse in real rates to continue, and what does it mean for your dollar strategy? guest: good morning. yes, we do think it will continue and we think it is bearish to the dollar. the fed are keeping nominal yields very well anchored. that means when we see repricing higher in expectations, u.s. real yields are following. that is happening to a greater degree in the u.s. than it is elsewhere, particularly in the eurozone and japan, where inflation expectations are not to the same degree. relatively lower u.s. real yields, which is a trend we are expecting to continue, and to

the other factors which are setting the case for the dollar weakening move we have seen recently and we expect to continue in the second half of this year. manus: sam, good morning to you. there is no doubt there is a demolition in the real rates, but there is also demolition of tens and 30's. the destruction in 30 year yield followed a dump in the u.s. equity market. 30 year yields, tends, all the way across the curve are under pressure again. are you worried about a major correction, specifically in the next 100 days up until the election? are cautious on u.s. equities into the election, but not because of the movements we are seeing in interest rate markets. i think what is key here to is fed policyhat

likely to be into the elections? we think that the strategic , perhaps at the meeting at jackson hole we will get conclusions. the fed will shift to average inflation targeting and the fed will shift to outcome-based forward guidance. both of these policy changes are changes which effectively represent a higher tolerance to inflation overshoot, and it is refracted that policy will remain easy for longer, ieee real yields lower for longer. which should be supporting risky assets and should be bearish for the dollar. nejra: on your bearish dollar call, when do you expect dollar-yen to participate in that dollar weakness? out of g10, it has not done so far like some of the other

currencies, namely your. -- namely the year i. -- namely the euro. this year, they really had not participated in the broader dollar weakening. dollar-yen took correlate to the dollar cycle as long as it has. we think it is time that dollar-yen will begin to catch up. this presents interesting opportunities, either directionally through fx or through correlation trades by affects option markets, where the bottom line is the market attributes a too low probability fall at theen to same time yen-euro rises. dollar-yen ultimately needs to play ball. manus: but you would also argue that inherent in that dollar

weakness is structural opportunity to hedge european exposure. trades a rather uncrowded at the moment because it is directional as it stands, isn't it? positioning in your-dollar is a major focus of the market. it begs the question, where at the beginning of august they already have a decent move. reverse dueause or to extended short-term positioning. that perspective could be right. we could pause. but ultimately, we think the trend will be higher even if we do. interesting input to the discussion that absent value is quantitative fx is issuing. -- fx positioning.

only just started to unwind youeuro short exposur. the trend has been european and japanese investments buying u.s. fixed income products. that creates a large structural dollar short that we have not begun starting to unwind. nejra: let's also talk about the fact that the trump administration is expected to against aeasures broad array of chinese owned software companies this week. that is according to mike pompeo, talking to foxx on sunday. on the economic front, china's activity grew at a faster in july as the economic recovery today.auge showed how does your outlook on china

fit into your strategy? guest: we think the market is really going to focus on the strong recovery we are seeing in the data. the details out, no have been strong. and is gaining its caution -- it's cautiousness. new export orders are rising. the recovery is broad-based and china leads the cycle. i think this is really interesting in the context of the first topic we were discussing around real yields, because if china is recovering more strongly, the market could price in some reflation. and that is really bearish for the dollar via the real yield channel due to the fact of keeping nominal rates and

potentially having the most tolerance for inflation across all the central banks at the moment. we arevery briefly, tracking the high-frequency data. you worry about a leveling off in china as a result of an unsynchronized global exit from covid-19? is useful ability because it is high-frequency, but it is not a perfect guide to economic activity. we see that clearly in china where the level of gdp is well above where it was pre-covid. yet, the metrics are still well beneath where they work. china is not perfect. consumption is a greater proportion. but we have an amount of caution. sam stays with us. a losing streak with a surprise

$1.5 billion loss in the second quarter. we will speak with the deputy ceo next. this is bloomberg. ♪

good morning from dubai. and thatbreak europe, are our top stories. it is a mixed monday for global equities as coronavirus cases and u.s.-china tensions threatened risk appetite. mike pompeo suggests action to protect national security won't stop at tiktok. dipped and earnings

missed the mark on surging dad loans. the group says it will accelerate cost cuts. there is more to come with our exclusive interview. we hear from socgen after a surprise loss. top 18onavirus cases million as australia declares a state of disaster in victoria. a white house task force head says the pandemic is in a new phase. nejra: welcome to daybreak europe. we are deep into earnings season, and it is banks we have been focusing on today. you spoke with hsbc earlier and we have had numbers through from socgen. manus: we have indeed. the markets are trying to digest the differential between covid and those new escalating fears in australia and japan. to the markets, let's take a look at 10 year government bond yields in gold.

real yields at record lows. since 2012 for gold. the dollar peaks higher. it has had a fairly tortured month in july. nejra: let's get back to societe generale. swinging to a surprise 1.2 6 billion you're a loss in the second quarter, extending a losing streak that is set to increase pressure on the ceo. the bank took large charges after a review of its global markets and investors services business. it caps a tough period for the lender which saw equities trading revenue decline 80%. joining us is severin cabannes, deputy ceo of societe generale. great to have you with us. let's look forward. can you talk to us about the outlook on equities? we just talked about the pain you have endured.

has the situation normalized? is the worst behind you? is it going to improve? guest: thank you very much. if i might comment on the loss you quoted, it is non-cash items which have impacted our bottom line this quarter. on the true cash views, our bottom line is positive this quarter, which is important to mention. we have a limited profit. it is fair to say that the crisis peaked in april to mid may. the good news is since mid-may we have seen a significant rebound of all our businesses, including in our global market activity, as you just mentioned. our liquidity business, which has been the most impacted in the first quarter and at the beginning of the second quarter, is rebounding since mid-may to today.

ficc has done well, and the equity side possibly better than the markets expected. the guidance for covid exposure for this year was around 70 basis points for 2020. is that still the case? has that deteriorated? can you guide the markets in terms of that accelerating, or as is? guest: on the second quarter, our losses increased significantly. this has to do with the rule. a 70% loss on the credit side. closer to 70 basis points. to me, this quarter is a peak.

this quarter is peak in terms of credit loss. i may, coming back to the fixed income, this quarter in fixed income has been a recalled quarter for us. we are lesst exposed means we have not been impacted on the bottom line. we are more geared toward equity and structured equity products. but we benefited this quarter from a huge next income activity. businesses, global and investment banking, this has also been a record quarter for these activities. the fact that societe generale is been impacted, it is doing well for this quarter. let's talkhat case,

about the review you have announced, because you have just been talking about the training business. what are the main changes you will implement in the trading business? guest: the main point i want to positione have a wide with equities underlying. we have decided to perfect this. but to avoid being a slave to such markets as we had to manage in the first quarter, we decided to adjust our product mix. we are less sensitive to this market dislocation, to dividend consolation, and instability. engineersnumber of over the last 30 years inventing new products in this area. we are well equipped to design new products. we will perfect our strength of equity structures.

it will have a small impact on our revenue in the long term. but we have also decided to reduce, in addition to what we already did last year, our cost base, so we will have 5% with this new product mix we are targeting. by cost base will be reduced 400 billion euro. manus: the ecb has a new list of dividends that are to remain on hold until the start of next year. i want to get a sense from you, do you believe that is a prudent move? do you support that move? more importantly for the market, the scale of this excess capital you might have at the end of the year, albeit you might not be able to distribute it, but the size of excess capital you expect at the end of the year? as you saw at the end of

the second quarter, our core equity is at 12.5%. crisis is impacting us, which is represented -- it is very solid. as you said, the ecb has forbidden this distribution of dividends by the end of this year. our expectations and hopes are to come back to our previous dividend policy, which is a 50% pay off. but it is really depending on the ecb decisions. you just gave us a number in terms of cost cuts as well in the trading business. talk to us a little bit more about that. how are you going to carry those out specifically?

guest: very clearly. first of all, i want to mention that we had a cost decrease compared to last year. that goes to show you that in our global business, in the global banking investment solution, we have the label to reduce our cost base. announced our first reduction plan. now we are in a position to do more. mainly it is through our typical labors, which is the process optimization, and in some cases, we are integrating the businesses we have. it will be stricter on what we have. we have experienced a very low traveling cost and environmental and communication cost. we will maintain that in the long run and continue to

optimize our practices. ask you the just french economy, we just had historical data on the gdp. thisbody suffered on second quarter. how has it been performing in the french retail? give us a flavor of what the consumers are doing. we just spoke to hsbc. he is worried about the commercial arm. how is it for you? guest: the french economy has been one of the most severely impacted by the crisis until mid-may. we saw during this quarter a low level of service fees in retail activity, no transactions, and an increase in deposits. this had a negative impact because less fees and the deposits with negative interest rates is costly for the bank. we have observed since may a

significant rebound in transactions in terms of activity of our clients in france. so we are recovering fast. it is significant in terms of loans. we had significant activity in terms of loans. inproduced 19 billion you'reuro loans. service feesained and lower transactions of our clients. now it is better. , thankseverin cabannes you very much, deputy ceo at societe generale joining us this morning. a full and copperheads of guide to the numbers, along with the surprise 1.3 billion youeuro loss. let's get up to speed with your first word news. laura wright is with the team. the u.k. is considering

the worst-case scenario of a lockdown in london again according to the sunday times. it would include travel cuts in and out of the m 25 and would see people asked to stay at home. the local government secretary says he is not aware of any plans to seal off london, but the u.k. will target local areas rather than blanket action across the country. microsoft is in talks to buy tiktok. the chief executive sat down with president donald trump yesterday to try to salvage the potential deal, but the south they morning post reported would prefer to spin off tiktok rather than sell it to microsoft. apple is asking some u.k. retail landlords to half its rent, which is offering to extend leases for several years in return. it wants to benefit from the reduction seen by son o some of its rivals.

it has overtaken saudi aramco, surging after recent earnings. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nara, manus? nejra: thank you so much. coming up, hsbc misses estimates as political upheaval in its biggest market and rising bad loans weigh on the lender. we will bring you our conversation with the cfo. this is bloomberg. ♪

nejra: this is bloomberg daybreak europe.

let's get to the risk radar. we are eating out green in the screen following some positive pmi data out of china and other parts of asia. u.s. futures absolutely flat. we did see a fourth monthly gain for global equities. the 10 year yield edges higher as well. the real yelled at a record low as the dollar is fairly steady and oil is dipping. hsbc is warming up to $18 billion in losses in the year. profit for this quarter fell by 57%. thebank was weighed down by pandemic, political upheaval in hong kong. hsbc says it will accelerate the cost cuts. the lender is expected to eliminate around 35,000 jobs. earlier, yousef gamal el-din and

myself spoke with the ceo, ewen stevenson. i asked him about the reasons behind the new guidelines. here is what he had to say. incurred $7 billion of expected credit losses in the first half. the businesses most impacted are the u.k.. we had $1.5 billion of credit losses in the u.k. bank. and commercial banking on monks to the customers. i think a big driver in the a very bigter was negative shift in terms of the 2020 withutlook in but notvery in 2021, with the sharper recession everyone is expecting this year. about: you are expecting

500 million dollars in cost savings in the second half. is that program going to get accelerated moving forward, and is the targeted cut of around $35,000 going to be -- 35,000 going to be sufficient or is it owing to be increased? guest: we are pleased with the progress. we went into the start of the year anticipating costs were going to be flat. we are now signaling we are expecting them to be down 3% this year. we had a 7% reduction in the second quarter. it was flattened somewhat by very subdued activity in the bank in things like travel and some of our head office costs. we are on track to deliver what we announced in february, which was a substantial cost reduction program over the next three years. we are pleased with the progress and what we have achieved in the

first six months. manus: you had the banner headline, 35,000 jobs to go. you paused, you restarted. is there a reality moment we need to face that the job cuts and reorganization is going to mean more than the 35,000 that you guided at the start of the year? guest: it was never a target. the target was to take our cost structure down. under 4000 employees and contractors leave the bank in the first half of this year. thought was the appropriate thing to do in march paused the redundancy program. is speculation as to how many people were involved. down need to take costs given what we are seeing in the bank. yousef: speaking of covid, much of your guidance depends on a

variety of scenarios coming from where the economic recovery is going to go from here. what you have seen from the conversations you have been having with some of your peers in the industry, what are the next three months going to look like? guest: there is a substantial amount of uncertainty out there, whether it be geopolitics, brexit, covid. the next three to six months will be important to see the impact of second and third wave and what impact that has on various economies. to also what the path is viable vaccine sometime in 2021. i think we will learn a lot over the next several months as we approach results. we should also get clarification on the part of brexit. that is why we have come out today with quite a large range of expected credit losses this year of $8 billion to $13

billion. nejra: that was hsbc cfo ewen stevenson. the share is down 4.3% in hong kong right now. coming up, tiktok. time is running out for microsoft to work out a final deal. we will bring you the latest next. this is bloomberg. ♪

this is bloomberg daybreak: europe. i'm nara change in london, with manus in dubai -- i'm nara chair at chin london, with manus cranny into by. is the biggestgh headline was a surprise, 1.3 billion you're a loss after

changes in the market unit. we wanted to know about the outlook in terms of credit losses. his comment was the second quarter was the peak of credit losses. manus: the numbers they had originally given when we caught up at the end of the quarter was seven basis points. he said it was 70 to 100. he thinks it will be more skewed toward the 70 basis points. abouteflects, if we talk hsbc, because i caught up with ewen stevenson beforehand. i thought it was really insightful where he said, we took nearly $7 billion in credit loss in the first half. the single worst economy for them globally, the u.k. nejra: that definitely was interesting. they were far more positive on asia, weren't they? let's turn to one of our top stories. microsoft says it is continuing discussions to buy tiktok's operations in the u.s.

microsoft says talks will move quickly in a matter of weeks and are expected to be finished no later than september 15. joining us to discuss is jodi schneider. great to have you with us. how has tiktok responded? what has been the reaction in congress to the latest developments? jodi: there was a lot of confusion over the weekend whether it was still being negotiated or not. the president had come out late for thend said he voted idea of an outright ban of tiktok in the u.s. on national security grounds, and also lambasted the deal. microsoft has been looking at purchasing the app and being u.s.,o use the app in the as well as canada, new zealand, and australia. basically, it was confusing

because the deal was still being negotiated. today, and microsoft said the closed door discussions with tiktok and president trump were continuing, and they helped to would bea plan that acceptable to all parties. at the same time, we heard from the secretary of state over the weekend, who said the president may go ahead not only and ban tiktok in the u.s., but could have other chinese software blocked in the u.s. it looks like these things are going out at the same time, but it looks like microsoft is negotiating again. manus: let's see where that deal goes. jodi schneider, our international correspondent. quick flash price on hsbc. the guys will pick it up shortly. down 4.43% in hong kong. there is no doubt about it, they

widened the guidance for losses this year. you can hear the interview with the cfo right here on bloomberg. this is bloomberg. ♪

>> good morning. welcome to "bloomberg markets: european open." i am annmarie hordern, in berli. mixed session in asia but august is supposed to be the most volatile month of the year. we will have to see if the pandemic has changed that given people's holiday schedules. matt: we do see it looking a little bit volatile. take a look at european futures right now. today, the markets say