Narrow their differences. Forecasters dont see a deal before the november 3 election. Well be speaking to the speaker of the house today. Ireland imposes some of the most draconian restrictions in europe. In the United States cases are soaring in battleground states. We are just two weeks ahead of the election. Very warm welcome to you. We just had numbers out from u. B. S. About 15 minutes ago. Manus cranny is interviewing ergio armanti. Manus will be back me with a preview. The interview will be airing on Bloomberg Television at 7 00 a. M. London time, 8 00 a. M. If youre across the continent. U. B. S. Income beat estimates. Were underway with the earnings season. U. B. S. Kicking off with the major banks. I want to show you the close yesterday in the Banking Sector in europe. They close up more than 6. We is that you read of course into u. B. S. The stoxx 600 bank closed spoup 9 . A strong start in europe for the financials. Lets take a look at what were pricing in this morning when it cops to markets globally. We had a down day across wall street. S p futures up. 3 . A little bit weaker on the euro stoxx 50. Euro down this morning. Rent crude above 42 a barrel. Comes to when it brent. I want to get back to banking again. U. B. S. Posting a better than expected Third Quarter profit. Setting aside 1. 5 billion for share buy backs. The Worlds Largest bank. Ncreased market volatility and profit based on income. The interview with Sergio Ermotti will be aired at 7 00 a. M. London time. Well get his take and sentiment from outgoing c. E. O. Sergio ermotti. Lets get what dani burger has to say. Friday barclays. Next week, deutsche bank, redit suisse all report. Dani, could this earnings season be the catalyst to turn around European Bank shares . Were seeing a strong start. It is part of the reason according to strategists is that the bar is set so low. European banks have lost more than 40 so far this year. According to barclays strategists, they say European Banks are too cheap to ignore. The market at the moment is really pricing in too much of whats happening with the coronavirus cases and perhaps banks are a little bit more protected than market is saying. But the issue is if youre expecting European Banks to really be the standout like we saw in the u. S. , the market is too fragmented to have results like we saw. If we look at the market share that europe has versus the u. S. , europe is such a smaller portion. Really when it comes to all of the big segments, the u. S. In orange here rsh, it is much larger. This share that europe has continues to sh shrink. It hasnt been European Banks that have been taking the share. It is the u. S. Banks. Things like advisory, underwriting. All of the deal making is dominated by u. S. Banks. What hope is there for European Banks . One is the loanloss picture looks more positive. Strategists say that is really what we want to here. The potential is m a here. Some of the recent takeovers. All ears are glued to the earnings statements. The European Market is so fragmented and this earnings season might renew those calls for more m a. Thanks. Digging through banking results near europe. Last week it was all about the u. S. Results. Joining us now is a chief Market Strategist at hsbc. U. B. S. Is looking optimistic this morning. Banks have really been unloved around the world this entire year. But were seeing a strong start to this earnings season. Is this a sector investors should maybe start potentially moving some money into . Potentially, selectively if at all. Just looking at evaluations, we are not buying cheap stocks just because they are cheap. You saw in september buying something simply for that reason is not a good idea. Banks at this point in time are seeing the benefit from more volatility and from the investment perspective as well. Anks are more exposed. Loive loan losses are likely to increase. We are starting to become more optimistic around the upcoming cycle. That could ultimately benefit the Banking Sector. I think there are could be a number of investors saying we have gone through the recession. It is logical to be in financials. When it comes to selection, i wonder if the dividends matter to you. Julius said yesterday they are going the restart their dividends november 6. U. B. S. Said the 2019 dividend will come the end of november. This come a. F. C. The defacto been a we had on dividends ban we had on dividends due to the pandemic. Dividend stocks have always been an interesting idea for private clients. Something that private clients are very interested in, especially in the low yield environment. Looking for all of the ways to get some more income. We would prefer to be in the credit market and the yields there and also to be invested and not be sitting on a lot of cash. That can be a drag on income. Dividend stocks have been some of the worst performers over the last year. Amongst all of the so we have been extremely selective there end stocks and are some the expectations of dividends by the markets have dropped a lot. There is any significant reason to expect a pickup there. This quarter is going to be the mother of all profit turnarounds as we head into earnings season this quarter if europe. Stock up 20 from the depths to have march lows. Do you think that earnings recovery is already priced in o the European Equity markets . Obviously in a bad situation, people were fearing we were going to have a scenario. Like 2008. More evaluations than earnings. With reduction. It is not only Monetary Policy but fiscal policy as well. That is change that were seeing in europe. The earnings start to increase. We see positive positions. We see Companies Getting more positive guidance. I think they are still relatively low. We have more optimistic around the u. S. Than china. You see a manufacturing recovery around the world. To become positive from the european consumer is quite premature. You have more reason to be positive in the u. S. As a hinese consumer. Were going to talk about the u. S. Next. William sells stays with us this morning. Coming up, searching for stimulus as we count down to the elections. We dont have a deal for the american public. More on that next. This is bloomberg. President trump dont forget dr. Fauci when he said no, no, dont close it to china. I said youre a wonderful man, and he is a nice man. Youre a wonderful man. Im closing it. I saved thousands of lives he said that months later. Dont put masks. Now he says put on masks. I like hem. He just happens to have var bad arm. Ann marie talking about dr. Nthony fauch fauci. President trump and joe biden will be muted for parts of their final debate on thursday. Derek, lets start with the Supreme Court decision. How significant is this . Hey, you know, it is kind of significant here. What youre talking about is the difference between when mailin ballots can be received and counted. A lot of states the rule had been you had to get your ballot in by election day but states more and more have been going to the idea no, you just have to drop it in the mail by election day. When it gets there, it gets there. This is going to allow for a couple more mailin ballots to be able to come in. Why that is significant, pennsylvania is a swing state. Joe bide season winning there in the polls by about four points. It is a state trump feels like he has to win. The mailin ballots are skewing democratic. This would allow a couple more of the time that has been scuge democratic to come in. There still may be further challenges on this and keep in mind Amy Coney Barrett could be the sixth republican vote on the Supreme Court. The case that you mentioned was decided only 44. She could break a tie if this came up for a challenge after the election. Ann marie the debate thursday, there are going to be change a. F. C. The last one which was chaotic to put it simply. What are the changes . The main change is there is going to be a mute button which is to say after somebody gets asked a question in their two minutes of time they have to start answering initially, the other candidates microphone is going to be muted. Is that going to get rid of all the sound . Probe not. They are going to be in the same room and microphones can pick things up. The idea is to bring a little bit of structure. This is unprecedented to give people a mute button in a president ial debate. There are a fair number of people who dont support this move. Donald trump said to reporters on air force one, one of ours was with him. He said i dont like this change but im going to go ahead and do the debeat anyway. We expect him to show up even though he hates this change. Ann marie certainly seems like he does hate the change. I think our producers would enjoy a mute button at times for manus and myself. The virus is raging across the United States. We dont have a stimulus deal that so Many Americans need right now. How close are we to one . Nancy pelosi had a selfimposed deadline of today. Will they deliver . I think youre going to see a distinction in this deadline between maybe a firm agreement and a conceptual agreement. If people feel like they are really, really close, im not sure this artificial deadline becomes a hard and fast deadline. It could slip into the late hours of early wednesday or Something Like that. I dont know. He difficulty is that they are not any closer now than they were this time yesterday. There was some noise they might be good and maybe not. The markets bounce up and down on this sort of thing. At one point there is going to be that go, no go. And once you gure do, you have to get republicans in the senate onboard. We talked about this before. Trump is very confident if he gets a deal done that all the republicans are going to line up but we heard from the Senior Senate republican who is questioning whether or not there were going to be votes there on the republican side to make something happen. It is very much a wide ball. Even if they get a deal, it does not mean something is still going to happen ann marie it does not add up what mcconnell views as an appropriate stimulus deal to how close trunch is willing to go to meet pelosi. Later today we will speak with House Speaker nancy pelosi. First question has to be whether or not she will get this deal done on her own selfimposed deadline of today. William sells still with us. You talk about how stimulus how important stimulus is for the consumer. Potentially that would be a boost to consumer stocks. When is the entry point when dwonalt know when well get this deal out of d. C. . We cant speculate on exen exactly were going to get it, before or after the election. It is important but it is not everything just like the elections are important but not everything. If you look at the data, you continue to see improvements in the coming data in the u. S. Are onomic the data better than what economists are expecting. Interestingly as i mentioned this, manufacturing and youre starting to see improvement on the consumer side as well. During the lockdown over the last number of months, consumers, they now seem to be starting to spend them. Automotive sales are up quite a bit and also the o. R. Area of improvement were seeing in the Housing Market probably relates to the low Interest Rate environment. Two areas i think are doing quite well. Obviously a boost from the fiscal side would help. The improvement in the labor arket that were seeing. Service companies and Manufacturing Companies want to hire more. All of that is important for the consumer. I think there is some tail wind there. Ann marie the p. M. I. s were set to get on friday are going to be very important in this narrative. Christine lagarde talked about it the other day. Services that make up so much of the european economy is what the worry is. If you were going to buy a car in march and didnt buy it, you can buy it in october or november. If you were going to take a veaks in march or april, youre not going to take that vacation in october or november. Are you not worried about the Services Side of the u. S. Economy that many consumers spend on . Europe is in a different situation than the u. S. Therefore the manufacturing area in europe is the one that and one of the reasons we prefer germany other areas of the european economy. Think the industrials in the u. S. Are better than the services and consumer side. Youre going to have more headline risk. At the same time, obviously, people want to diversify. One of the things we have been talking a lot to about to investors is people have Technology Stocks because they see the longterm growth. How they diversify. So far we have done that to industrials. Were starting to look at the consume er as well. Ann marie thank you for joining us. Market strategist at hsbc private banking. Lets get a roundup of other news this morning. Good morning, the u. K. Is holding out the concessions from the e. U. Before restarting brexit talks. They are willing to intensify talks and begin work on the legal text of an accord. That wasnt enough for Prime Minister boris johnson. He says a trade deal looks unlikely. Irelands government has impose some of the most sweeping pandemic restrictions in europe. Nonessential stores, bars and restaurants will close their doors for at least six weeks. Travel will be further restricted with people told to stay within five clom kilometers of their homes. India has seen a peak. They think the nation may be eable to contain the worlds second largest outbreak by february. The economy contracted nearly 24 . Global news 24 hours a day, on airpowered by more than 2700 journalists and analysts in more than 120 countries. This is Bloomberg Ann Marie thank you so much. Were two weeks away from the u. S. Election. Morning we have calls. A hawkish trade bet. Were going to find out why next this this is bloomberg. Ann marie 6 25 in the city of london. Welcome back to the daily. Manus will be with me in just five minutes wrapping up that interview with c. E. O. Sergio ermotti. The rampup coincides with poles suggesting the growing chance of a democratic sweep. Both the white house and congress in the elections. What are investors looking at ahead of the u. S. Election today . It is another day. At some point these election calls i guess will stop on november 4. Well talk a lot about what is going to happen with a blue sweep, equities and rates. This could be a potentially 50 million payday if this trade is correct. The fed is not thinking about raising rates for at least a year or so. But this is a bet that basically the options on your dollar futures. 50 million bet paying out million dollars. Goldman sachs recommending a twoyear, fiveyear pay of options which pays off if rates rise. Markets are betting this is not going to happen for another 3 1 2 to 4 years. Ann marie what are the expectations in the final two weeks to have the u. S. Election campaign . A lot can move in the emerging markets regarding this u. S. President ial election. There is a lot happening as well. In the like of turkey, hungary and russia with Interest Rate decision. The market rally could be halted for the next couple of weeks. Fidelity expecting liquidity to be quite thin. It could be a playing game or a waiting game in merging markets as we have seen the run up quite strongly. It could lead to a weakened dollar and if we see a contested election, that could unravel. Fidelity saying expect things to be a little bit slow for the next couple of weeks. Ann marie thank you so much for that morning call. Coming up, the end of an era. Manus cranny is back with us next with his interview with Sergio Ermotti. This is bloomberg. Manus good morning from dubai. Im manus cranny. Annmarie hordern at london hq. These are your top stories. Ubs posts better than expected thirdquarter profits, setting aside sure buybacks in 2021. The last set of results from the longtime ceo Sergio Ermotti. The hear from him in under 30 minutes. Deadline day in d. C. Pushing higher after markets closed in the red. Continue tonuchin narrow the bandwidth on differences. Forecasters dont see a deal before the election. We hear from the House Speaker. Crisis measures, irelands government imposes some of the most draconian restrictions in europe. U. S. Cases are soaring in the battleground states two weeks before the election. 6 30 a. M. In london. A. M. It is 7 30 a. M. , Sergio Ermotti has left something in the swag bag as he sits in the seat at the end of the week. 1. 5 billion set aside for buybacks when they can do those. Sending that into an escrow account and accruing 1 billion towards Dividend Payments in 2021. When they can make those payments is anybodys guess. The top line on this report is something very nice left behind for the new ceo and good numbers all the way around the best in 10 years in Wealth Management. Annmarie he seems to be bowing out at the most opportune moment, leaving the 1. 5 billion dollars for ralph hammers. Im interested to hear what you had to say with Sergio Ermotti. Youve had this long relationship. What i found interesting, theng about him from financial times, he left school at 15 and wanted to be a football star and ended up being the head of a major global bank, the head of ubs and hes leaving on a very positive note, but im sure at some point you are going to talk about his legacy at the helm of the bank. Manus absolutely. Conversation. He i think the market will focus on the dividend story and performance in the businesses and