manus: good morning from bloomberg's middle east headquarters in dubai. i'm manus cranny it is daybreak europe. cranny.manus it is daybreak europe. virus concerns and stimulus limbo in washington continue to weigh on sentiment. it is one week to run until u.s. election day. biden picks up his campaign pace as trump blitzes the battleground.

the senate confirms amy coney barrett to the supreme court. it is earnings galore in europe. .ig oil hsbc, santander. we speak to the spanish lender's cfo. beach onis, it is a the core earnings-per-share. 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, it's a beat, but on the sales side, it just comes in below third-quarter 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. let's 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. that's 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, let's 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 it's not about the number of jobs typed. it's 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 one-day 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, let's 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. it's 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 it's 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 risk-weighted 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 don't think i can work at home two or three days a week. i don't 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. that's all they talk about, the fake news. covid, covid, covid. that's 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. that's why we show so many cases, because we do more testing than anybody else. but we are doing great. excuse me. here i am. i'm here, aren't 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 70's. 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. you're 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. there's 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 2-0 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

there's 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, it's 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 mp's are warning his pandemic strategy is disproportionately damaging the economy in the north, steepening the divide with the south. armenia's prime minister says it's 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 cease-fire. 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. turkey's is leaning calls to boycott french goods but it's unclear how widespread that will become. early responses are divided amongst familiar lines with turkey's allies on one side and saudi arabia's 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 it's 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, it'sther 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 what's coming up. the election on the horizon. vixlikelihood is that the will fall after the election and that's 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 bloomberg's middle east headquarters in dubai. i'm manus cranny. it's "daybreak: europe." asian stocks lower after the s&p 500's 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 confirms amy 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 don't. 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. that's 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 trade-off 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 to come back at a time when political risk has been reducing. this is why in terms of preference, we said there is

more opportunity, more space for european equities left to pick up. in a composition were quality, dividends. this is why we decided in relative terms to upgrade europe. you are constructive on european peripheral debt. we have the ecb on thursday. how is that narrative and much additional yield can i pick up on a constructive view and more importantly, where? .> we don't think there is much been the country where we allocated our preference. the primary reason, being

operation of the political risk economy,tment in the putting it back in order. almost covered and the ecb. friday, there was another good agency, news out of the the outlook for italy. in a moment where you for kerry, this is the treaty find it. manus: we didn't get to your hedges, so i'm going to annoy the producer and say you recommend the pillars of hedging. high-yield credit, gold, and yen. monica, stay safe in milan. my guest host for the past 40

minutes, monica defend over at amundi. let's get your first word news with laura wright. laura: it is a big win for president trump and congressional republicans on the eve of the election. the senate confirmed amy coney barrett to be the newest justice on the supreme court. thatsolidified a 60 6-3 majority. solidify a 6-3 majority. to lead the world health organization -- trade organization. some other keyof members, including china, isn't yet clear. the wto plans to announce its new leader by november 7. jack ma is poised to become the world's 11th richest person after its shares were priced of its initial public offering. it will boost his wealth over $70 billion, more than oracle's

larry ellison and the richest woman in the world. 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. manus: thank you very much. laura wright in london. keeping an eye on the turkish lira. obviously a volatile session, opening 8.099. yesterday, we broke the eight level, that critically important level, so you are seeing, going through another record, 8.1 as erdogan asks the turks to boycott french goods. the central bank did nothing to assist the currency last uckingay, so we are ch

when it comes to turkish lira risk this morning, another record. hsbc signals a resumption of dividends that could come this year as the lender beats estimates. my interview with the cfo yuan stephenson next -- ewen stephenson next. ♪

manus: it's "daybreak: europe." hsbc, paring back expecting credit losses and signals it may resume limited dividend payments for the calendar year 2020. those discussions will take place in 2021. i spoke to the cfo of hsbc, ewen stevenson.

so, we'll come back to the comments there. they are flagging the potential return to dividends. this is the discussion they will have with the regulator, the stock is up 5% in hong kong. let's see how it trades out in the european markets. certainly keep an eye on that and we'll return to hsbc's cfo in just a moment. let's move the agenda along. we've got other news flow to discuss with you. coming up, we saw the s.a.p. earnings come through yesterday. they were dire, plunging by 20% on the stock yesterday. that is the most ever in a single day. europe's largest tech company, wiping more than 35 billion euros in market value.

the software maker's results sent a wave of fear across the software space. european stocks, technology index suffered its biggest one-day loss since march, with shares of u.s. competitors also --lowing, but sales salesforce says the troubles are unique to them. >> we delivered a phenomenal quarter in revenue, highest operating margin ever had over 20%. it was 29% growth. you can see they are having very significant troubles with the ceo trend they are going through. from one co to two, then they fired one of those. the transition is not going well and their customers are saying that and now, you can see that their revenues are also troubled. some of the product --

surprising number was the poor cloud backlog. well, i think they have not executed the cloud opportunity well. salesforce has phenomenal market share. we are the customer success company. we help companies connect with their customers in whole new ways and that is our main focus. you can see the tremendous customer base whether it is at&t or johnson & johnson, or amazing technology companies transform salesforce.sing that focus has served us well. we are number one in crm. you saw the information out last week, our market share continues to grow. this has been an amazing time. couldn't haveou possibly expected and in technology, every company is going through a mass digital

transformation, the transformation is accelerating and s.a.t.'s troubles are unique to them. about 1000inated jobs earlier this year, and those included customer supporting roles. will you be rehiring? what are your plans on that front, given the strength of your results? more are actually having than far that -- 4000 new jobs added in the six-month period. we will add 12,000 jobs this year, and will shift 1000 positions. 54,000 employees worldwide and we are constantly making changes to our employment base. we continue to grow very aggressively in all geographies about are very excited the transformation that the company has gone through this year. >> how much of that has come specifically from asia given they are emerging from the pandemic faster than everyone else? >> i was in asia last week.

i went to singapore and it is amazing the difference between singapore and the united states. everythinged states, is closed, everyone is going through unbelievable difficulties, the pandemic is hitting record case numbers, and in singapore, they had no new cases. every restaurant was open, every business, every store and we can learn a lot from asia. we can learn a lot from singapore. we can learn a lot from japan on how to handle these pandemics. now, this is not their first pandemic in singapore or even in japan, so they have learned before and they are executing their playbook, but in the united states, boy, we are having troubles. >> not the first pandemic in china, either and you entered with alibaba's cloud business last year. where are you seeing strength and challenges? >> i'll tell you, daniel zhang, when this pandemic hit, he's been a tremendous friend and partner of us.

he helped a secure more than 60 million units of ppe, and that has now gone to over 300 hospitals in the united states and around the world, and we could not have done that without our partnership with daniel and alibaba and we will be eternally grateful. was the salesforce ceo. hsbc beat on the quarterly numbers, pared back expected credit losses. they signaled a good intentions on the dividend for the calendar year 2020. i caught up with the cfo ewen stevenson. ewen: it will be conservative, but we are pleased, though relative to what we've seen in this quarter. we think we have seen a real stabilization in credit costs and the credit outlook. we think we've had another 15.6% beat on our ratio, up.

we will make an evaluation at the back end of this year, early next year on the economic outlook. obviously, tough to engage but our regulators in due course but the market should expect us to start conservatively the outlook for 2021 is still uncertain, so we'll want to retain some buffer for that uncertainty and look to build a conservative position from the. -- there. manus: how much capital position has the pra allow you to play? ewen: we are building a buffer of excess capital. we are always going to be conservative on the building of coffers, especially in this time. we have a degree of excess capital today that we are comfortable with but don't expect us to normalize that at four-year -- full-year results because we still think 2021 carries an elevated amount of

risk. manus: let's talk about the credit losses. they have improved, 785 million dollars, below estimate and you are guiding in their range of eight to 13. where have the biggest improvements in the credit outlook come from and will you be to the lower end of that range? closer to the eight than the 13? a big shift between the first half of this year and into the third quarter was in the first half of the year through the second quarter results, we saw a fairly steady forrioration in the outlook the global economy of 2020 and 2021 with consensus continuing to shift down. what we are seeing this corner is a bottoming in those expectations, which means we haven't seen the big provisioning uplift you would see for forward economic guidance change.

i do think this quarter was unusually low. of why didgher level ask them what would normally see but we will be toward the lower range of the range -- end of the range. manus: you've given us a new number and i would like clarity on it. this $6 billion of costs you refer to. the number i have is $4.5 billion of cost cuts, so is this the new target on cost cuts? are you going to have to go faster and be more radical in the cost cuts? where are they going to hit? when he announced in february we were planning to cut $4.5 billion in cost out of the business through 2020-2022. we said it was going to cost $6 billion in restructuring charges to achieve that. i think what we are signaling is we now expect to exceed the 4.5 billion over that period. we are making good progress

against that. ambitious in what we would like to be able to achieve . what we are seeing as a result of covid is changed customer behavior, so higher levels of digital engagement than what we saw pre-covid in some places. that will allow us to be more assertive about reducing some of the physical distribution costs most of ournd also, employee base is working from wee and when we've reached, think about how we will change that model to a hybrid model so people can spend more time at home, some in the office, and doesn't require us to fly so much. manus: that was ewen stevenson, the cfo of hsbc. the stock reacting nicely in asia, up over 5%.

next, the race for a vaccine. how fast is astrazeneca, oxford as their trial resumes.

manus: it's "daybreak: europe." i'm manus cranny in dubai. we have a message from his royal highness, the worst is over. he was at the india energy forum. you see what happened. an absolute battering yesterday when the market woke up to the fact america was not going to control the virus. that was the message from them, down went the market and we managed to put a little more on the sheet today. we tanked by 3% yesterday but the prince says stay vigilant. stick to the agreed production cuts. he was speaking at the india energy forum. oil demand is recovering.

there will be a deficit of 8 million to 9 million barrels. he wants us all ouching. aresbc, the shareholders ouching less because they've got a narrative on credit losses, accounting principles, meaningless provisions. we will get closer to the 8 billion, not 13 billion. dividends, asian shareholders will like that. there is talk of return to a dividend and the cost cut narrative, also escalating in terms of what ewen stevenson has got to execute in terms of jobs cuts. ofis not the absolute number 35,000, but where you reduce the risk weighted ascot -- risk-weighted assets. the stock, up over 5.25%. s back by popular demand.

annmarie hordern. this is bloomberg. ♪

♪ >> good morning. alongside annmarie hordern, i am jonathan ferro. european policymakers short on options facing lockdown. an ugly start to the trading week. american election wrapping up one week today. actionet to the price after yesterday's brittle session. the bounceback is