tv Bloomberg Surveillance Bloomberg October 22, 2020 4:00am-5:00am EDT
yousef: u.s. intelligence officials warn iran and russia are attempting to interfere with the u.s. election there are 12 days until the vote. is the first nation in western with one million virus cases, and italy and rome considering and permitting a curfew from overnight. u.s. hospitals asians, there's too much time here u.k. and european union resume talks over a post-brexit deal.
those arrive in london today, and the pound appears to gain after jumping to a six-week high. this is "surveillance." el-dinusef gamal in dubai. toew fiscal stimulus impact mitigate the impact of the coronavirus. reflecting that degree of caution, a little bit lower at the moment for the s&p 500. at the same time, european stocks are falling for a fourth straight day. what is happening in the states is the bund rally is likely to pick up momentum again as the focus shifts away from global input to some of the deteriorating domestic fundamentals. think along the lines of the german confidence data we got, the yields near the seven-month lows we had. benefiting from the larger dollar risk aversion.
it is very much strengthening over the past month, and at the goldt, the philadelphia and silver index up about 1.4%. let's check in on the first word headlines for you and toss it out to leigh-ann gerrans. hi, leigh-ann. leigh-ann: good morning, yousef. growing signs an agreement is insight. negotiations will begin in london later today, with the aim of an accord by the middle of november. it comes less than a week after prime minister boris johnson suspended the discussions, saying the eu was not willing to compromise. bloomberg theell person who had died in the trial and brazil had not received the vaccine. the partner, oxford university, says it has no concerns about safety. in the u.s., the vaccine problem warp speed says it expects trials for johnson & johnson two
restart as soon as this week. the u.s. is adding media restrictions on another fixed publications and must meet requirements from those imposed consulates. and secretary of state mike pompeo says they do not want to put restrictions on what the outlet can publish. instead, they want to make it clear to american people they are controlled by china. andy international monetary fund says asia faces a long road to recovery, even as china leads the rest of the world. it seems output in the asia-pacific region likely under pre-pandemic trends, warning of significant downside risk with the most vulnerable being hit the hardest. 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. i am leigh-ann gerrans. this is bloomberg. yousef?
yousef: thank you very much for that. our top story, house speaker nancy pelosi, her camp is saying that she and steven mnuchin have made more progress on a stimulus package, with the pair set to speak again today. canl, senate republicans raise objections, adding to all the election turmoil, american intelligence officials are warning of foreign interference with the vote. confirmed that some voter registration information has been obtained by iran, and, separately, by russia. this data can be used by foreign actors to attempt to communicate false information to registered voters. yousef: a bit of a wobble to the global financial markets. let's get some immediate reaction. joining us this morning is marija veitmane, senior multi as a strategist at state street. a probability of a contested
outcome in these u.s. elections. marija: yes, good morning, yousef, good morning, everyone. i think you're right, they as theed election highest risk for the markets. it has come down, and with respect, that is with the build up joe biden has in polls. so, yes, we will see that change. longer-term, that is the big risk for investors in the short-term term to get to the election. over, we can get back to what drives markets in the longer term, interest rates, and that is where we really try -- focusour a concern our attention, so it is really getting through the next couple of weeks. yousef: i mean, i am looking wasugh what ms. pelosi
saying, the speaker the house of the united states, saying it will be a bill that is bigger, better, and retroactive. as far as you are concerned, it does not matter whether we get it before or after the election, but the market would beg to differ with that. like a yeah, i think shorter volatility, absolutely, is going to be very, very high in the next couple of weeks, but if we think about kind of oflding a portfolio for kind medium-term outlook, that is what we know right now is that we will have a bill. expansionary politics, and that is what is , is aly kind of more better thing to focus on is how expansionary policy will be in the future, other than trying to kind of second-guess the short-term volatility in the market. yousef: in terms of the recommendations you are making to clients at the moment, ricky sandler, a hedge fund manager
who needs no introduction, he is bringing the argument out again that it is time to rotate into value, and he points out that value stocks are trading at a steeper discount benson's the dot-com bubble. hese names.to buy t would you subscribe to that? marija: i respectfully beg to differ. i think we talk about growth stocks every year, and every single year i was up but what about valuation, what about valuation, a year ago, two years ago, three years ago. growth stocks have been rated and re-rated. is an even the milestone in terms of their valuation, but for us, there have been three key reasons for growth, one is a slow kind of worry, and even earnings growth. overall earnings growth is fairly moderate, but with a lot
more earnings, potentially, in those growth stocks that we are seeing in technology, in consumer discretionary sectors, health care sectors, and very little in financials, energy stocks. they expected earnings growth next year. the earnings level is expected to be below pre-covid level, so that is the concern. secondly, interest rates are expected to stay very, very low for a long time. points ofhas 10 basis recovery in treasury, rally stocks, but you do need to see a lot stronger recovery in bond yields, and that is very difficult to imagine right now. yousef: yeah. marija: in the third reason is kind of pandemic-related that we saw. yousef: sure. marija: a very close link between growth stops and quality stocks. what we see with growth stocks is they have very strong balance sheets.
more predictable earnings growth, and that is what investors really like. yousef: marija, if i could just interject here, because we are a little bit tight on time, and i want to get your view as well on u.s. treasury yield, because we saw them move up to a four-month high, and even though that was a notable level, it was still a distinct range in -- a succinct range in the bigger picture. what will that be, the range, or is this doomed to fail, given the yield curve control that might be taking place? marija: i think you are absolutely right. we don't expect interest rates to go substantially higher from here. i think the big issue is that we know that the fed had told us that they are not going to be accessing for many, many years. that is the future curve pricing, that there is no rate hike for the next 5, 6 years, or quite aimal, so that is
big cap on where i can go to, but more for the financials is what you need to see for yields going higher is very substantial economic recovery, to get inflation, to get growth, and that will naturally cause rates to go higher. that is maybe on the cards with a vaccine, but we have yet to see any kind of substantial development there. so it is still too early to talk about. we are not expecting higher rates, substantially higher rates. yousef: a lot of thoughts and insights there, marie out. thank you for making the time. we appreciate it. that is marija veitmane, senior multi-asset started at state street. they saysh bank seb, they are seeing limited on asset quality interview with the company's ceo is coming up, and plenty more. this is bloomberg. ♪ ♪
yousef: economics, finance, politics. this is "bloomberg surveillance." i am yousef gamal el-din in dubai. let's get to the corporate earnings season and see what is happening with the banking giant, scandinavia's biggest. is swedish bank seb weathering the coronavirus better-than-expected. there are $550 million. the bank saying it has maintained its profit level despite the challenging environment. joining us now is johann georgie -- johan torgeby, the ceo and president at seb. johan, what drove the resilience
at the bank? johan: there was a healthy underlying performance with the income coming up 5% compared to last year. in our bank, we pride ourselves to have the best because control possible, so those are showing some kind in the recovery in a tricky situation. however, i need to point out below the credit loss line, we are still down significantly compared to last year, but it is not due to lack of activity or clients supporting the recovery, it is more that we do see and have to for see -- have to foresee, expected credit losses going up. yousef: you said you were impressed by the policy actions being taken by the continent to mitigate the impact of covid-19. we are preparing for the winter. infections are rising. are you preparing for a bigger economic fallout as a result? we arei would not say preparing. we are doing some kind of
scenario analysis, where this is a very possible outcome, so i think if we were to look at it as a game or something, we just played the first set, and we survived it. now we do not know what the second one will bring. we are very wordy and therefore a little bit more cautious on the elevated level, and the opinions, they go in a different direction here around different banks, but we choose a more cautious approach. and i am still impressed by, particularly what has happened on the bankruptcy side in this part of the world, so the staggering statistic is that in september, we saw more than 30% lower bankruptcy among sme's in this country, so i think that must be explained by good government support, otherwise we would have had more. yousef: has lending growth kept up with your expectations? what are some of your insights that you have been able to glean from them?
johan: well, in a way, it has surpassed our expectations. that is that we have seen an increase in corporate lending and the demand for having liquid cash available for a rainy day. that was, however, mostly in april, march -- march, april, may, and we have seen a tailoring off of the corona-related demand. this is the type of financing you put on the boards as a corporate but you do not necessarily draw on it, but you have it there for availability. we are at an inflection point right now where that demand is tailing off, and in the spirit of restarting the economy, working capital need, which is more of a real, firm requirement for capital is now coming in, but we are still in the early days. yousef: yep. johan, you have reaffirmed a recent decision not to impose a dividend in 2020.
what we are seeing with some of the other european lenders as there is more and more of a push on a call to reintroduce dividends. is that likely to be part of the conversation for you for 2021? johan: very much so, and just to be very clear, the board has confirmed the plan not to call it during the calendar year of 2022, to propose a dividend for 2019. technically there is still a window between the first of january and the avm for 2020 with late in march. there is some flexibility. generally speaking, we will definitely join forces with everyone who would like to reinstate dividends in a prudent, responsible way going forward. looked at your cost to income ratio, johan, and clearly the bank has been able to make a lot of progress. what i am wondering is, to what extent do rising compliant charges threaten to hold you
back from the kind of progress you have made, as you go into the new year? very: yeah, it is a relevant question, and to understand my answer, i think you just need to understand that -- for more than a decade, we used our cost control strategy in order to improve because income, provide a little bit of income growth, and keeping cost control. we have costs around $22 billion, 23 billion dollars, and within that scope, we have flexibility over the past years to invest quite significantly in the areas to fight financial crime, compliant systems, etc. we did miss our cost division by a couple hundred tolion, which we attributed mainly increased investments in compliance. we do reiterate our cost target for 2021, but we are investing quite significantly in order to make sure that capabilities are improved. torgeby, wen
appreciate your time, just running us through some of the ideas that are driving your thinking, of course the ceo of seb. coming up on the program, facing the music in nashville. trump and biden go head to head in their final debate tonight we will discuss that, next. this is bloomberg. ♪ oomberg. ♪
head to head in their second and final debate tonight you'd after a chaotic first to become of the events should have more substance on policies. it should be focusing on american families, race in america, climate change, national hearing, -- national security. joining us now is peter trubowitz, professor of international relations at the london school of economics. how will they recalibrate their strategies to make sure that they iron out any weaknesses ahead of the countdown? both trubowitz: well, they faced challenges, it seems to me to do i think trump faces more mistakes this evening. he needs to close the gap in the polls with biden, and he is really running out of time. he has 12 days to election day. in the debate gives him the last moment, i would say, to convince
the remaining undecided voters to break his way, and that means really convincing these voters that his performance in the first debate, that was widely too combativeng and on presidential, was a one-off. it is worth remembering that presidents have come back from losing the first debate before. obama did, you know, against romney back in 2012. i think that is what trump needs to do tonight. you know, i think there are a number of things that he can do to try to turn things around, and, you know, i am happy to elaborate on those. timef: i mean, last we spoke, you said that white, non-educated voters could boost the incumbent president. how much of that is going to play a primary role for him in the coming hours? prof. trubowitz: well, i think that those are the voters that he needs to reach, and there's probably, you know, even though
the percentage of undecided voters is fairly small at this point, that some of those voters that we are talking about, these blue-collar, noncollege educated voters fit into that category. i think he needs to somehow reach out to them, and, you know, i mean, there's a lot of talk about he needs to be less combative, he needs to let biden make bidenbe make some kind of epic blunder. what he needs from these voters as some kind of a sweetener and sign off independent -- independence, and one thing he could do that would be interesting as if he tries to push a stimulus package. and whether senate majority leader mitch mcconnell is for it or against it, just kind of lay down that marker. think he needs to -- that is a group of voters that they are trying to drive.
he needs to reach out to them. yousef: yeah, peter, we will have to leave it there. we will see how the debate plays out. that is peter trubowitz, professor of international relations at london school of economics. the debate is happening at 1:30 a.m. london time tomorrow morning. in the meantime, markets are trading lower amidst reports of potential meddling interference attempt from russia and iran. that is according to a top u.s. intelligence official. about .5%europe down already. look out for u.s. 10-year yields as well. plenty more right around the corner. from dubai and the rest of the world, this is bloomberg. ♪ ♪
over the u.s. election meddling claims, switzerland is the quasi-liaison for u.s. interests. iranians are responding to claims from a u.s. official that there were attempts to interfere with your selection, not only from iran but also from russia. other stories, first word news with leigh-ann gerrans. leigh-ann: there seem to be further progress on a stimulus deal in washington. senate republicans are continuing to raise objections about the size of the package. a spokesman for nancy pelosi says democrats in the white house -- democrats and the white house are getting closer to legislation. coronavirus hospitalizations have hit the highest point since late august. new york account double from early september. now across the country, 37 states are reporting increased
hospitalizations with -- according to johns hopkins university, the hardest hit region is the midwest. nigerians are defying a curfew after security forces cracked down on protesters in africa's most populous city of lagos. hundreds of people have returned of hisstreets allegations of police brutality. they have chased cars and set tires on fire. many have died amid the violence. global news 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more i'm 120 countries, leigh-ann gerrans. this is bloomberg. yousef the ec? tosef: the u.k. and e.u. are resume talks over a post-brexit j deal. david frost tweeted the negotiators will arrive in
london today for discussions. deal as showna gains since. ian, where do the talks go from here? do we have any particular guidance? >> we reckon they've gotten about three weeks now to get a deal. that is certainly what the negotiating teams have been told. they are meeting in london today , and they are probably going to be either carrying on in london next week or back here in brussels. basically what happened yesterday is that the e.u. said fair enough, we will agree to run these talks like you want them to go, a really intense period. sharing texts with each other, some legal technicalities, as long as you are prepared to come back to the table and start making compromises. both sides agreed yesterday we are going to go for it. let's see what we can do. yousef: what exactly happened
yesterday to get the u.k. back to the table? not that long ago, it was only friday when boris johnson basically came out onto the streets of downing street and said the u.k. will probably -- they were looking for the e.u. to get some signal it was prepared to make compromises. it was prepared to recognize the government in britain was really keen that the e.u. command and recognized they are an equal partner, not just some old former member state. this was set on european parliament yesterday and that unlocked the door to negotiations. running usnk you for through that, ian wishart from brussels. drivingany says -- investors out of the stock market. the president and ceo discussed
that, and the nasdaq latest earnings, which were boosted by higher trading volumes, volatility, and a strong ipo market. 13% of the top and 27% of the bottom line in the third quarter. when we look at the catalyst for growth, it is a robust , but also businesses are leaning into longer-term trends as well. strategy longer term with markets including financial crime technology that supports the industry and managing the challenges of operating in this environment, particularly in the digital environment we are operating in. our solutions are easy to implement and can provide assurances across a diversified and remote environment. we also have our analytics platform in our analytics franchise that is leading into longer-term investment trends and investor needs from a data perspective. so we have long-term trends but then we also have the
shorter-term backdrop that you mentioned before with strong market performance in terms of volume and new issuances into the market as well as market cap of the indexes that we operate has also been strong on the year. short-term and long-term we are seeing strong trends for nasdaq. the trading volumes that wonder, thehe -- i re-engagement of retail, the contribution to some of the shift, whether it is likely to stay beyond covid or 2020. >> we are seeing two key trends driving the market. the first is market volatility, and that comes from the fact that investors have different opinions as to what might happen next and they will express that is opinions in the market. that will create more volume and at the same time we are seeing a change in the participation of retail.
it started with the online broker going to a commission in the environment. that took friction out of the market. our job as an operator is to minimize friction to maximize investor access. taking the friction out was a catalyst to retail investors, and with the market disruption in march, he give them an opportunity to come in on what they would see as an opportunity to come in on a stock that had become cheaper on the back of the beginning of the pandemic. you had two catalysts bring them in. in terms of them staying in the market, we are seeing a new generation coming in. we anticipate -- the online brokerage firms have said they anticipate continued elevated participation going forward, but it may not be at the same levels we are seeing now. some are writing -- some are riding the short-term and some are excited to be here. our job is to make sure that those investors are performed as they participate in the markets,
and we have launched an investigation portal to make sure that this new era of investors stay with us for the long term. could talk a and i long time about a whole range of things. i wanted to talk about politics briefly. with two weeks to go until this election, undoubtedly your success, the success of wall street -- draw and divided start contrast with main street right now. if you're worried that your success will make you a target. we are already talking about financial transaction taxes. what is your response and the companies to those kinds of -- to thosecho kinds of things? adena: the net result is that investors pay more, which creates friction, which then drives them out of the market. that lowers liquidity.
in today's environment with the volatility we are experiencing, our job is to make sure we are maximizing liquidity to create a stable market as possible. with the transaction tax come you are driving investors out of the market. consider the one -- the ones who are paying the tax. ceo of nasdaq speaking earlier. number of newhe covid-19 cases jumped 21% to a isly record, and as much at -- as it is not necessarily moving the needle with some of the key benchmarks in europe -- think euro-dollar barely unchanged, this underscores the wider narrative around the increasing number of covid infections across the continent. still to come on the show, we are going to get to a around a polo.
pres. obama: donald trump isn't going to protect all of us. tocan't even take steps protect himself. i want to be honest here. his pandemic would have been challenging for any president. but this idea that this white house has done anything but completely screw this up is just not true. yousef: that was formed president barack obama hitting the campaign trail, for his vice president, joe biden, the first time. he made the comments in the
crucial swing state of pennsylvania. leigh-ann gerrans has the bloomberg business flash. leigh-ann: unilever's growth accelerated in the third quarter, driven by demand for products and concert food. thesales of ice cream with owner of ben & jerry's seeing a 4.4% increase in underlying sales. strong performance echoes with other consumer companies. iag is airways owner slashing fourth-quarter capacity, now no longer expecting to break even during the next three months. that is as fresh restrictions are keeping would be travelers at home. the carrier plans to operate no more than 30% of its usual schedule. it had hoped to be above 33% -- above 50% normal. us the 41 firm is moving its headquarters from midtown manhattan to west palm
beach. it joins a growing trend of companies moving to the sunshine state. income tax.no yousef: apollo global management -- dani burger, what are some of the details of the investigation that apollo has a barked on that has an barked? dani: we got word of this yesterday when apollo filed the case with the sec saying that leon black asked himself for this investigation. they have hired a law firm, and in the company's words, the law firm will confirm what leon black has already said about his relationship with jeffrey
epstein, a professional relationship and no ties between apollo the firm and epstein. this was purely a professional relationship between leon black and epstein. this really kicked up starting last week. they are having questions about this for some time about the relationship. the new york times came out with an article saying that leon black wired about $50 million to epstein in 2008 after his conviction on soliciting prostitution from teenagers. the 8-k filed by apollo doesn't is reallyat, and this what investors have focused on as some investors told bloomberg they are unclear what financial services would have warranted that $50 million wired from leon black to epstein. yousef: what sort of investor fallout have we seen so far? dani: we have heard from a few pension funds that have said they are no longer going to invest money with apollo.
they are not taking money out, but we heard from a report from a pension system in connecticut as well as one from pennsylvania , the public school employee retirement system, are no longer investing money. cambridge systems is a consultancy within the private equity industry and are not considering recommending apollo anymore to its clients. it is now morphing into a financial issue for apollo because they depend on these multibillion-dollar fundraising rounds to get new investments in. leon black himself is acutely aware of this. in a prior earnings call and someone asked about his ties to jeffrey epstein, leon black said it is of utmost importance to us . it is our relationship with our investors. use of? -- yousef? yousef: dani burger running us through the finer details of the
latest of ellman's. i want to go back to market action because it is downside pressure on some of the key indexes across asset classes. lower by news of potential u.s. election meddling by iran and russia, and a lack of the deal on the fiscal front in the united states. morgan stanley says if there is an election plunge in stock market, go ahead and buy. look for the german fund movement as well. still with those yields near the seven month lows we saw last week, the confidence data we got early on in the day. the dollar index is up for the first time in five days. and gold getting a little bit sold off your. . this is a story in european equities, lower across the board, lower across sectors. .2%.tse 100, down about
andef: economics, finance, politics. let's get to another corporate story, an exquisite interview, in fact. the french italian electronics company is surfing on every for --e -- on a recovery fourth-quarter revenue will be $2.99 billion, ahead of the $2.75 billion expected by analysts. the president and ceo of st micro economics -- why are you so confident that you will be able to maintain this momentum in the recovery? into 2020 one, given the number of restrictions by government to keep the coronavirus and check? >> hello, good morning.
-- we are so confident -- you knowmarket to communication and consumer electronics are driven by fx and on top ofse many -- a tick upre seeing and demand in the market. theuld like to highlight huge capability to react to the market because remember the situation in april. billion.2 so the manufacturing of the company has been good.
about thelk to me automotive sector. germany is not back up to full speed. japan is still struggling in terms of getting back to pre-covid levels. what are you seeing in those numbers? clearly getting back to a you know situation, the opportunity. immediately when they are is there. biggerdiately see a demand. this is exactly what is happening. yousef: what about some of the new product launches in telecommunications. i'm thinking in terms of 5g handsets but also of course the apple iphone. how much of a driver of additional growth is that likely to be, and maybe it even offset
some of the other parts of your business. clear that with the in q3, iy to grow never come out in detail, but we have a nice content in the new platform. it has can she routed to our guidance of q4. that is point number one. yes, ok, 5g demand is important, with a custom-designed , except for one customer at zero. microprocessor -- yousef: to what extent has the u.s.-china rivalry around semi
conductors been a distraction, been a problem for you? some call it the techno-nationalist trend that are gaining traction, in quite a few capitals around the world, and clearly it is becoming a headache for businesses like yourself. can you give me a little bit of feedback on that? the time being, we are one case. say consecutive -- we, it will be put at do not see an impact for the time being related to communication, but it is clear longer aspect here is no in thes many
semiconductor applications, we are concerned about the decoupling of the semiconductor industry, which is benefiting to -- niced because innovation, rate productivity, and always a great product. and i would like to remember that the semiconductor industry to supportchnology , or justhnology meeting our social -- yousef: i don't -- shares and they are up 27% here today, under forming the philadelphia stock exchange semi conductor index for stocks, better known as up about 28%. mark for yourto
investors in the coming period? is across balance sheets, improvement of the performance. i like how you summarize that, straight to the point. john mark sherry that jean-marc chery there. we are going to continue our coverage beyond dubai and give you the rundown of some market access as well. they are under pressure. futures called blower. election uncertainty, fiscal stimulus maybe? maybe not. this is bloomberg. ♪
not in the mail. the chancellor in the next hour will provide a statement on a new scheme for a lockdown. the scheme is evolving. it is "absolutely bonkers." met's what anna said about yesterday. stocks struggled to find a bid this morning. and biden prepares, trump does not. will there be a muted response to tonight's grand old debate. good morning, everyone. "bloomberg surveillance." tom keene in new york, anna edwards lacqua.n for francine i am absolutely bonkers over the british press trying to figure out how they are paying for what appears to be some form of national lockdown. it is an odd debate with the change speaking. anna: we are waiting for the chancellor to speak, to give more details. they want to avoid national lockdown, so we have gone through this series of regional lockdowns to get
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