♪ manus: good from bloomberg's middle east headquarters in the city of dubai. it is daybreak europe. your top stories this morning. rising infection numbers see markets tumble. day in 500 has its worst four months. thought she says vaccines will be available in the u.s. until january. germany sees new coronaviruses

hit a record of 23.5 thousand. europe heads closer to lockdown. your money and france imposed strict month-long measures to curb the virus spread. can it spur an immediate dose of support from the ecb? earnings keep coming. we speak to the top executives of credit sees -- credit suisse and many more. your destination to understand the outlook and numbers. net incomese with a dropping by 38%. 536 million swiss francs. the pencil that number was 597. that is a mess. plans for a 2021 share buyback program producing 1.5 billion swiss for that. that's a similar trend that we saw ubs deliver last week. the provisions. this is incredibly important. the loan loss provisions come in at under 100 million swiss

franc. the estimate was 243. a very reminiscent story from credit suisse except that their net income is down 40% as opposed to the best ever across product lines at ubs. promotes brady and masters to nonexecutive positions. they appropriate to share -- pay shareholders. what do the numbers mean? that conversation, coming up when we speak to the credit suisse ceo at 7:00 a.m. u.k. time. to the markets. switzerland.k into nobody is safe. nobody is safe. there you go. we were complacent. the s&p 500 dropped under 3%. we were consensus long as long could be on the nasdaq.

we were underestimating the covid impact. europe with the tail that lacked the dog. stocks in america are rallying the morning. i take you to the macron language. a brutal break is needed in europe. look at the language that he uses about the speed of even the most pessimistic forecast didn't for c. let's roll over. the vix is up. it was up by 20%. john authers asked a question, how do you or affect on the moment that you saw yesterday relative to brexit and the yuan devaluation? it is possibly something to reflect on. money within the yen yesterday. euro, better bid this morning. the dollar index down by 1/8 of 1%. nerves, let's have a large whiskey. dani burger has been looking at volatility and whether it is here to stay. good morning.

certainly spiking yesterday. the remarkable thing is that nothing was spared. big tech got hit. small caps were hit. value, growth, bitcoin. even gold was hit yesterday. if you are looking for a haven, you are not going to find it. lockdown meltdown really hitting everything pretty hard. part of that might be because some of the strengthen the dollar. if you want to find a haven in treasuries, that did nothing for you. flat on the day. this really calls into question the viability of the 60/40 portfolio. on big lots equity days, you won't get that protection from treasuries. people say, the fed may be out of ammo. we know a big supply is coming into the market regardless of who was in the white house. that is likely keeping treasuries very flat even on such a risk off day.

you wanted me to talk about volatility. i will do that just for you. the vix moving above 40 here. one of the things we have noticed is that the real -- realized volatility of the s&p 500, there's been this cap between the two events. investors have been bracing for some time now that volatility would pop. if you were a volatility investor, you are ready for this action. what it is indicating to us right now, seeing more 2% up or down days really would not be out of the question here. manus: yeah. theseody trotted onto shows and said, no, volatility is very expensive. you don't want to buy equity voluntarily. look at that wipeout in credit and equities. the next thing you will hear them say is to buy the dip. plenty of volatility in context. go to john authers peace.

it talks about risk aversion. lockdowns are returning to france, europe, germany shutting down bars and restaurants for a month. shutn will also non-essential retailers starting on friday. maria tadeo joins us on the phone from brussels. lockdowns, new restrictions. they come down for us. -- break them down for us. maria? maria: [inaudible] me.s: maria, don't abandon maria: [inaudible] manus: no? we can say maria has officially hung up the phone. right. to put it in context for you. let me give you some context about what's going on here. bars, restaurants. a brutal breaks

needed for covid-19. the speed that even the most pessimistic forecast didn't see. bloomberg has run the numbers. this clause i'll lockdown will knock -- because i lockdown will knock 2% off of the gdp. you are looking at 210,000 people dying. let me take the risk that we are assessing to seema shah. great to have you with me. the volatility spike that we saw yesterday, 3% drop in the s&p 500. were you spooked, unsettled? where you caught unaware by this move? seema: good morning. yeah. i think everyone was a little bit spooked. the reason that we have been spooked is because what we have seen in the last few days has tested the narrative that most people have been sticking to for the last couple of months. which is that governments with national lockdown's, even if

things get bad. when we talk about the till risks ahead, one has always been if the virus gets out of control again. it has been starting to get to the bottom of the pile. now it is right to the front again. that is why you are seeing volatility markets react as they have with everything down. manus: yeah. it was a sell everything moment, wasn't it? what was more shocking for me was the drawdown on tech. there's the markets this morning. there's a small reprieve. we will see if that endures. what was shocking was the drawdown on tech. this goes back to einhorn's comment that tech is overdue and the bubble has already burst. when you look at the price action in tech yesterday, did that concern you? seema: no.

it was obviously surprising to see tech react that way. i would not consider it to be a bubble that burst. we still have significant space in the tech sector even before the latest news of the virus. the virus news increases the reason to have that confidence in tech. we will be working from home longer than we were originally anticipating just a few weeks ago. that reliance on text continues. -- tech continues. such high expectations for big tech. there was inevitablely a wobble. i have faith that there will be a recovery in big tech. it is probably the place to park through lot of this volatility going forward. manus: we will get another roll call tonight, aren't we, on some of those big tech names. alphabet, facebook, google.

we have a lot of things we can worry about. when you see mark zuckerberg in front of congress yesterday in a very defensive mode in regards to the guardian of what we see, what is my risk in tech in 2021? is it regulation? perhaps we are underpricing a blue suite. -- sweep. it is something we are not talking about yet? seema: look. inevitably, mega cap tech is not bulletproof. the regulatory side is one of the key long-term threats for the sector. don't think the result of next week's election will not have an impact. it's a bipartisan move. everybody is against big tech in the future. 2021, we are ok. jan there, there will be some kind of action against big tech that we need to start being concerned about. for the time being, when you have all this macro uncertainty,

bond yields are very low. big tech is a decent place to be parked. manus: ok. we will pull up the truck big tech. do not hang up the phone. maria decided she was hanging up on me. do not hang up on me. stay with me. otherwise, there will be a lot of me in this show. coming up, stimulus surprise. risks in europe shift dramatically. could we see a boost to the ecb bond buying program? more on the central-bank action, next. this is bloomberg. ♪

♪ >> we are all in this together. no member state will safely emerge from the crisis until everyone does. >> what was the best strategy?

lockdown the elderly, the most vulnerable, test, alert, protect. none of that is sufficient in the current situation. we need to take it further. >> we must act now as we have done without hesitation. there are painful choices. there is no restrictive measure that has no impact now. >> we know now that we need to reduce contact again. with this, lower the risk of infection. because of this, we need another national effort for the month of november. those were the european leaders and the commission president speaking as more countries in the continent impose lockdowns. lockdowns will be imposed by the euro zone's biggest economies, boosting the chance of a preemptive monetary stimulus by the ecb. most economists and investors still think that the central bank will wait until december to expand its bond buying program.

the dramatic shift in risks has everyone on guard for a surprise move today. consensus andy overly optimistic that that will be discovered? the market is already discounting another seven basis points of a cut by next june. the markets are already talking about more rate cuts. i have three big houses saying that's wrong. we will not see any further deposit cuts. let's start there. it is ecb day. what does she need to do to underpin our market and confidence today? all that wenk should expect -- to be honest, all that is required at the moment is that reassurance that the ecb will stand ready to do whatever it takes to calm markets if that were to be the situation that unfolds. rate cuts are on the table.

you are getting further and further into expansion territory. i think they will look to other methods with deposit rates. banks, whilst they are giving us less credit provision losses right now, standard chartered, hsbc are variation focus. ubs and credit suisse coming through with numbers. i had a guest who said, i would have to pay her money. i can't or member her name. you would have to pay her money to take banks on her book of risk. i haven't got any money. what i have to pay you money to take banks on the book? seema: let me ask you a question. which ones? european or u.s.? manus: ok. let's play that. you probably want to be longer on american banks that you would on europe. will you shoot me down? seema: no.

i fully agree. we've had some pretty decent surprises from a lot of the european banks in this earnings season. the market has moved on. it is focusing on the macro challenges ahead. for europe, the challenges look far greater than in the u.s.. manus: ok. there you go. enough of this discourse. i don't think i'm supposed to have an opinion on which banks anybody wants to hold. that's why i need experts like you. stay with me. some old characteristics you can't kill. coming up, the ecb president will speak to a press conference today after the meeting. what is the message from madame lagarde? that is 1:30 u.k. time. this is bloomberg. ♪

manus: it's bloomberg daybreak: europe. we've had the numbers from standard chartered, better than estimated earnings on loan losses, easing, and key asian markets rebounding. it has ample room to fund growth, they say. that holy word, dividends, for next year. the chief financial officer. let's start with this magical word. i love it. you are mulling shareholder return. you can't say you are mulling. what are you thinking of doing in terms of dividends? hsbc said conservative and not a token. qualify mulling for me. good morning. andy: good morning. i'm not sure where that word came from. is that wee said will definitely be considering shareholder returns at the end of the year when we are in a

position where our capital is now above the range that we normally have credit impairments. year, when wethe have more clarity from regulators, we will decide what we are going to do. we have no intention of sitting on excess capital for the sake of it. we have to see whether regulators are coming. manus: obviously, you used the word ample capital. can i ask you what scale of capital you have on the side? , prior to covid, we said that we would aim for a 14% range. months into the whole covid situation. banks think, many we are high on capital.

14.4%. we are above the top of the range. we will look at where we are at the end of the year. a decision at that point in time. manus: buybacks were a critical part of your story. you sold some indonesian assets this year. as you guide on the dividends, will there be buybacks? if so, will it be all of the residual value from the indonesian assets? what kind of quantity could we expect? andy: not yet taken. the next step is to see whether there is capital available. we will be clear on that. the second question will be, by what mechanism to return? we have done both in the recent past. decision is one we will

take early next year. manus: are you getting pressure from institutional shareholders to favor cash over buybacks? andy: we are not really getting pressure from anybody, shareholders included. it moves in both directions. whether we will be allowed to make returns is the question that will people -- most people are asking at the moment. manus: the other big headline is provisioning. that is improving. the most significant part of your business is in greater china. is that a materially better outlook for the fourth quarter and for 2021? if so, where, and how much? andy: the impairment charges we've taken have progressively improved over the course of 2020. we took about one billion in the first quarter. today fors we printed the third quarter were 350

billion. the trend on that is in a favorable direction. good part of by a this being in norther asia. our credit is typically good. those parts of the world are coming out of covid earlier than many others. what is difficult to forecast going forward, nobody knows quite where covid will lend. at this point, we are happy with the way the credit portfolio is behaving. we are happy with where we are at. china is the only g20 country that will see growth this year. it's an increasingly hostile environment for many foreign businesses in china. how concerned are you about vesting ever larger amounts of your capital in an authoritarian state? chartered has had

a presence in china, hong kong, and many of the markets in that region going back a huge time. 100 to two years or so. -- 160 years or so. we are genuinely apolitical. ,e are there to help them particularly with cross-border activity. there is a continuing need -- manus: andy. we know and understand the history of you and hsbc. the essence of it is, are you becoming more uncomfortable with the position as tensions rise around the world with china? andy: no. we are not becoming more uncomfortable. we are becoming watchful. that that parte of the world is very considerable. we will remain committed to that area.

major narrative from yourself and the team has been about india. i was looking at some of the numbers from yesterday. the central bank thinks they will see a 10% implosion in the fourth quarter. that in and of itself wouldn't shock anybody. i want to get a sense from you about how confident you are about the expansion of that market complement and your china position. interestingly, both china and india have been two of our fastest-growing markets this year. dynamics between the two are very different, we have been making good progress in both markets. yes, the indian economy is still in choppy waters. as a business, we've had a very good year in that environment. we are very happy with the performance there.

we are happy that we have potentially spread our activity across several markets. it has been really encouraging this year. manus: i'm going to close with one on the currency. yuan iswledge of the worth getting an opinion on. in the past few weeks, we've seen a more robust case for globalization of the remember. is that what the pboc is doing? desire.think that's the the proportion of global trade flows with china has risen over the years considerably. of proportion of global goal -- growth is fighting that slightly. that plays very much to our strength. yes.

manus: well done on the numbers. let's see if the trajectory can continue. the cfo a standard charter, thank you for your time. coming up, and election is approaching. didn't you know? five days until polling in the united states. more than 76 million people have already voted. 76 million people have already voted. we get the latest on trump versus biden. this is bloomberg. ♪

manus: morning from bloomberg's middle east headquarters in

dubai. it is "bloomberg daybreak: europe." showg infection numbers markets tumbling, the s&p 500 had its worst day in four months. dr. fauci says vaccines and the u.s. will not be available until january at the earliest. germany and france impose month-long measures to curb the spread, could the resurgence spur an immediate dose of support from the ecb? earnings onslaught continues, we speak to top executives from credit suisse and many more. warm welcome to the show. 6:30 in london. two very different stories, one is raising the guidance, sanofi,

earnings-per-share beats. in pharma and drugs, you have a raising of the guidance. they see earnings-per-share .ising 7%-8% that is a raising of the guidance. to the other side of the polemical trade, volkswagen upgrading profits positive lower year on year. 1.4motive cash flow will be billion versus 8.6 billion euros last year. lighter than aon year ago. it sales revenue falling significant he below year on year. deliveries to customers significantly below. this is a warning from volkswagen. a warning from airbus ripping up the no guidance. only sanofi can give you the confidence that you need, and that is a tenant of the market.

shows a different story. nasdaq being battered yesterday 3.7%. the stoxx 50 coming off a five month low. shutdown circuit breaker, whatever narrative you want, do we reflect back on what christine lagarde will give, to us in terms of language and rhetoric relative to actual action? wel it over and look at what did with risk. this is a must read on the bloomberg terminal, it refers to the volatility moment that you are looking something worse than in implosion of the yuan 2015. the dollar drops by zero point 8% this morning as the equity debacle -- there is nothing assured and that. let's talk about the vix

spillover, the equity selloff, was it across assets? was it coming for everybody? dani: they were indeed coming for everybody. this locked down sparing nothing. one of the things that makes it unique from earlier in the year, high yield was hit, high-grade corporate credit was hit. some analysts recommend going in to this asset class to protect you from the selloffs. nasdaq, small-cap, big cap, all of it was hit. treasuries also did not protect you from this action, flat on the day, showing us the 60-40 portfolio may be called into question. the volatility spaces one as you mention to keep your eye on. traders are bracing for what is not one risk event. as you pointed out, brexit. you have a risk that is

continued, spread out, not a one day binary event. you have the vix in the white higher than realized volatility for some time. traders are bracing because usually realized volatility operates on a lag it you get implied volatility kicking up in the vix. we could see more days like this when we get selloffs of more than 2%, because you have this issue of the coronavirus cases, then put in the confusion and concern over the u.s. election. whatding to strategists, could happen is when you get the 40, triggersbove bracing themselves -- traders bracing themselves for more volatility. manus: thank you very much. it is vix ripping it up again. people have voted for

the presidency of the united states. in the campaign trail, hitting the western swing states in arizona and nevada. joe biden voted early in his state of delaware. derek wallbank will get no sleep in the next five days, he is tracking the vote. are these polls narrowing? you said biden was executing a strategy you have never seen before in the history of american politics. that unnerves me. derek: good morning, there is no rest for the wicked here. we are a couple days away. joe biden is keeping with the strategy, doing some rallies, doing some events, but it is not nearly what donald trump is doing, and part of it is reflected by the covid reality and how biden is trying to prosecute the story of his campaign. trump is going out and barnstorming.

we got another notification today that on halloween, trump will be in three cities in pennsylvania, which might be the most critical swing state on the map this year. it is one of the most critical. it is coming down. board, i would say democrats are feeling pretty good about what they are seeing with the early vote, but with the overall fact that so many people are voting, it looks like it will be a massive turnout. democrats are really happy what they are seeing in houston, texas. we are saying kamala harris will go to texas and make a late play for that. at the same time, a little democratic nervousness about some places in nevada where democrats are doing well but not as well as they wanted to with this moment. also seeing some concern about

miami-dade county in florida, to see whether or not trump has closed up some of the margin in that reliable democratic stronghold among particularly cuban and venezuelan immigrants. manus: i have a lot to squeeze in. from potus to scotus, the supreme court, the tilt is there. there was quite a serious hand-me-down from the supreme onrt rejecting any extension ballots, but it was the language of brett kavanaugh that was the most ominous of all. take me through the vote in the ramification. derek: there is a great story out by the best supreme court reporter in the world. i encourage everybody to read that and get the details. the top line on that story is democrats saw in brett kavanaugh's wording that he might be -- and conservatives on the court -- might be open to

challenges that the supreme court has never really considered before in terms of this vote counting. there is a worry among democrats that if this is really close and contested, they will be walking into a supreme court that has some veterans, brett kavanaugh included in that bush-gore fight in 2000 when democrats lost a at the supreme-4 court, and george w. bush was elected president. amy coney barrett is coming on to this court, she will take part in those cases we are talking about. ins is now a 6-3 majority terms of people appointed by a republican president, and amy coney barrett was put in by trump while he was saying he wanted her there in time to decide anything about the election. you are getting democratic

nervousness, and it is compounding on top of the democratic nervousness generally speaking, because they have flashbacks of 2016 when hillary clinton was up in the polls, and it came crashing down. erek, get a bit of sleep this weekend. our senior editor, derek wallbank. 2000, it was a newsreel that took us to the middle of december to sort out between bush and gore. here we are, 2020. my risk is the fiscal and political void could be quite damaging. do you think we are ready from a risk perspective for that kind of void? >> i think what we have seen in the last few weeks, the market theput a reduced chance on

contested election. the are underpricing risk. we should anticipate volatility spiking, and there would be market fallout indeed. come january, once this is resolved, markets will forget about the election and go back to thinking about fundamentals, which inevitably will be the federal reserve, the pandemic, and a fiscal stimulus bill -- which i would argue whoever comes into the white house will pass some stimulus package given the underlying economic backdrop. i will put you slightly on the spot, i know you can handle this question. the 3 trillion on a blue suite, what is the most important part of this next stimulus bill to help the u.s.

economy achieve -- and here is the point -- achieve escape velocity of growth and reduce unemployment? what is the most important part? seema: it is a great question, because it is not just about the size but the composition. one of the things we are looking it will have to be targeted. small businesses have to be the key beneficiary, because you have so many that have not felt the benefits of the cares act and support measures this year. if we can see small businesses improving, they make up the core part of the u.s. business sector. we have to see that help coming through, then we can get reassured the recovery will continue in a stronger fashion. manus: absolutely. forward to we look what comes to pass.

coming up, stimulus surprise. risks shift across europe dramatically. the ecbe a boost to bond buying program? more on the central-bank action, that is next. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." i'm manus cranny. let's get your first word headlines. laura: germany and france are tightening coronavirus restrictions for at least one month. it is the harshest clamp down since the stringent lockdowns they saw in the spring. europe's two biggest economies

will shut nonessential services. schools in most businesses will remain open. a coronavirus vaccine will not likely be available until january at the earliest according to dr. fauci. he is calling on americans to put politics aside and wear a face mask. a recent study predicts universal use of masks could prevent 130,000 u.s. deaths through the winter. the bank of japan sees a bigger economic contraction this year, a drop of 5.5%. aussie maker cited a delay in the recovery. a resurgence of the virus in europe and the u.s. is hitting japan's export led economy. 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. manus: thank you very much.

new lockdowns imposed across the euro zone's biggest economies, will it boost the chance of stimulus from the ecb? most economists investors think the central bank will wait until december to expand its bond buying program. a dramatic risk has every buddy on guard for when the ecb meets. is the cioaley fixed income, jpmorgan chase bank. given the pivotal moment that germany and france have gone into, is that enough to exert enough pressure on the ecb to act today as opposed to shifting their language more demonstrably? iain: it is a good question, the reality is it will probably be the latter. we probably will have an ecb that lays the groundwork for

further easing in december. that is what the market expects. let's not forget with the exception of the first meeting on the pandemic that did not go well for christine lagarde, the ecb has been proactive with emergency meetings and beating expectations in the june meeting when they did increase. i do not think we should rule it out, but our base case should lay the groundwork in getting that increase in december. manus: i want to dig into the market a little bit. year, the market is looking for seven base points of a rate cut. you take a more aggressive view on that. a number of houses say we are too far and aggressive in our pricing of more rate cuts, and we should fade that move. where do you sit on the narrative? i definitely agree with that. if the ecb wanted to cut rates,

they would have done so earlier this year. they had an opportunity to do it and they did not want to. i think that will continue to be the choice. i do not think we need to get base rates any lower. the idea will be to continue to push down peripheral spreads. obviously, you have the knock on impact of that if you cut rates, how much impact it has on the banks negatively. easing say quantitative and additional purchases is what they will be looking to do. manus: with that in mind, you draw startling comparisons, the move lower in treasury yields, that of german bunds, but if i extrapolate what you said, i probably want to belong on peripheral spreads relative to germany, rather than an outright long german bund position.

is that the correct take away from your statement? iain: absolutely, that is how we have been playing it and are allocated at the moment. we see the net negative supply that will come out of italy next year, when you take into account the european central bank buying, it will continue to weigh on yields there. negative interest rate policy in europe for the foreseeable future, you will look at areas you can get yield and find that in places like italy. you have that central-bank safety net hind those bonds. that is the best play to invest, and i would rather do it on the spread rather than outright. manus: i am looking at the italian bdp to germany, 76 basis points. how much further cannot compress into? iain: if you think about the pre-pandemic types, we were

around 120, and i cannot see why it will not go down to 100. there is huge demand for yield and income with everyone i speak to. that makes sense given where yields are across europe. europe looks more coordinated at the moment. you have the recovery plan, the european central bank that have beaten expectations over the year. that is giving investor confidence to places like italy to buy their bonds. manus: let's see what they deliver. today, my guest, iain t. stealey , cio fixed income, jpmorgan chase bank. coming up, more on the mounting restrictions around europe. this is bloomberg. ♪

manus: it is "bloomberg

daybreak: europe" hosted from dubai with me, manus cranny. p.m. u.k. time, we will get gdp out of the united states of america. p.m. the ecb, christine lagarde will speak at press conference, what will the narrative be on policy? and then we get a raft of earnings. they better not disappoint on the guidance like microsoft did. don't forget google parent, alphabet. let's get more on the unfolding story around europe, the coronavirus restrictions, what do they mean? france imposing a nationwide lockdown tomorrow. germany will close bars and restaurants for a month. maria tadeo is living through this lockdown in brussels. good to have you with me, can you contact allies these closed

downs, lockdowns, shutdowns, circuit breakers compared to march? headed to awe are picture that looks similar to march. the germans have gone into a partial lockdown that shuts down all hospitality. they want to cut down social gatherings and reduce people getting together so the german economy takes you to something similarly to what we saw in march. when you look at france, it is a full lockdown. emmanuel macron kept repeating yesterday this will be a new knocked down that will allow some industries to continue to operate, and keep schools open. nevertheless it is traumatic for the european economy. it is not a normal functioning economy and will not be for a while. there is speculation in italy, and whether they may be next because of the rate of the is similar toh

france. then there is pressure in terms of where we go next for the european parliament, there will be huge pressure to cut a budget deal to get a recovery fund going quickly. when you look at the european central bank and go back to march, christine lagarde announced the major package a few days after the french went into lockdown. if this sequence of events a similar to march, perhaps you could get action given that restrictions are coming and very tough. you could argue they are structural and will be here for much longer than anticipated. safe, be well.be maria tadeo in brussels tracking the new shutdowns. in dubai it is illegal to not wear a mask, that is one of the big issues around the world. moment ofkets, a reprieve, the stoxx 50 this

morning just a little bit in the green. london up 0.3%. jonathan and anne-marie will take you through the next two hours on bloomberg. ♪

jonathan: from the city of london, good morning. i'm alongside annmarie hordern. i'm jonathan ferro and the countdown to the opening starts now. restrictions from paris to berlin, sending markets lower and the biggest weekly losses since march. the ecb decides. one hour until trading. here is the pricing action. this is the bounce back on the

s&p 500, the dax on the euro stocks 50 up. s&p futures bounce back more than one percentage point. in the bond market, yields up a single basis point. you can turn things upside down in the fx market from yesterday to dollar weakness. a massive morning for earnings. a massive evening for earnings too. suisse, a netit income was a miss, but there provision did come in narrower. it is positive for the bank. they are joining crosstown rival ubs sang they will boost shareholder return. they are looking at targeting 1.5 billion francs of buybacks. with the we caught up credit suisse ceo, thomas p. gottstein. thomas: lockdowns are unfortunately a topic