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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Daybreak EUROP podcast. Good morning, It's Tuesday,

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Speaker 2: the twenty eighth of October. I'm Stephen Carolyn London. Coming

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Speaker 2: up today. HSBC's CEO says his overhaul of the bank

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Speaker 2: is working as Europe's largest lender upgrades its profitability outlook.

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Speaker 2: France targets billions of euros and extra tax from the

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Speaker 2: country's biggest companies. Plus shining a light on Europe's shaky

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Speaker 2: energy grid. Why a solar power boom risks triggering blackouts.

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Speaker 2: Let's start with a roundup of our top stories. HSBC

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Speaker 2: has raised its profitability outlook for the year despite a

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Speaker 2: decline in earnings after taking a one point one billion

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Speaker 2: dollar hit over Bernie Madoff's fraud case more than a

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Speaker 2: decade ago. Revenue at the lender beat estimates in the

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Speaker 2: third quarter as rising income from its key wealth management

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Speaker 2: business was offset by litigation expenses. Out third quarter pre

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Speaker 2: tax profit down fourteen percent to seven point three billion dollars.

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Speaker 2: HSBC says it now expects to deliver a mid teens

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Speaker 2: or better return on tangible equity for the year, as

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Speaker 2: well as higher than previously expected net interest income. The

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Speaker 2: CEO Jorgel Hedri told investors he believes the bank is

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Speaker 2: becoming a simpler, more agile, and more focused institution. Will

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Speaker 2: turning to some breaking earnings news now. BNP parry BA

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Speaker 2: has slightly missed expectations in its third quarter results, third

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Speaker 2: quarter net income coming in at three point h four

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Speaker 2: billion euros. The estimate have been for three point zero

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Speaker 2: seven billion euros, as well. Its return on equity for

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Speaker 2: twenty twenty six twelve percent, the full year for this

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Speaker 2: year eleven point five percent as well. It's also set

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Speaker 2: aside a little bit more than expected for lone loss

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Speaker 2: provisions nine hundred and five million euros. Analysts had been

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Speaker 2: expecting just under eight hundred and eighty million euros. Goldman

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Speaker 2: Sachs CEO David Solomon says he believes the US economy

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Speaker 2: he is in quite good shape, though he cautioned that

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Speaker 2: there remains a lot of uncertainty. His comments come as

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Speaker 2: the Federal Reserve is expected to deliver its second straight

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Speaker 2: rate cut tomorrow to support a wobbly jobs market, even

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Speaker 2: as inflation remains well above target. Speaking exclusively to Bloomberg,

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Speaker 2: Solomon said inflation continues to pose a significant headwind for

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Speaker 2: many US consumers.

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Speaker 3: Businesses that are particularly sensitive to lower income or paycheck

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Speaker 3: to paycheck consumers have been a little softer, and I

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Speaker 3: would say, you know, consumers that are paycheck to paycheck

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Speaker 3: feel more pressure in an environment with three percent inflation.

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Speaker 3: And so there's no question inflation is very, very difficult

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Speaker 3: for people who live paycheck to paycheck, and so it's

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Speaker 3: something I think we have to watch very carefully.

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Speaker 2: David Solomon was speaking of the Future Investment Initiative and

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Speaker 2: read where he also told Bloomer that the Wall Street

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Speaker 2: Lender plans to triple its headcount in Saudi Arabia. The

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Speaker 2: boss of one of Wall Street's biggest banks added that

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Speaker 2: he sees artificial intelligence as an exciting driver of global

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Speaker 2: growth in the coming years, predicting significant productivity gains over

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Speaker 2: the next thirty six months. Amazon is planning to cut

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Speaker 2: thousands of jobs across core departments, including logistics, payments, video games,

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Speaker 2: and its cloud computing division. RUGS is reporting that as

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Speaker 2: many as thirty thousand rolls could be affected, with terminations

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Speaker 2: to be announced as soon as today. Sarah Friar leads

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Speaker 2: Bloomberg's team covering big tech. She says a number of

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Speaker 2: firms in the sector are in the same position.

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Speaker 4: This is something that the companies all across the board

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Speaker 4: have been doing since the pandemic era, what they call

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Speaker 4: over hiring. A lot of these companies saw the growth

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Speaker 4: in how people were relying on tech during the pandemic,

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Speaker 4: and the company hired to accommodate that, and now they

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Speaker 4: don't need as many people.

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Speaker 2: Bloomberg Sarah Friar speaking there, The plant cuts would be

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Speaker 2: the largest since rolling reductions in late twenty twenty two

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Speaker 2: and early twenty twenty three three, which affected more than

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Speaker 2: twenty seven thousand corporate employees. An Amazon spokesperson declined to comment.

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Speaker 2: The former Star trader at the heart of the twenty

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Speaker 2: twelve libor scandal is suing UBS for four hundred million dollars.

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Speaker 2: Tom Hayes's conviction was overturned by the UK Supreme Court

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Speaker 2: in July, and he now wants his former employer to

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Speaker 2: pay damages. Bloomberg James Wilcock has more.

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Speaker 5: Tom Hayes's case was the most high profile financial crime

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Speaker 5: prosecution of the past decade. That is, until July, when

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Speaker 5: the Supreme Court overturned that conviction in the UK. He

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Speaker 5: told Bloomberg at the time he had been blamed for

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Speaker 5: the entire banking sector's wrongs.

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Speaker 6: We were skategoated. We were accused of causing the global

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Speaker 6: financial crisis, which had nothing to do with how you know,

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Speaker 6: Japanese and libel moving around by one thousand sort of

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Speaker 6: percentage point had anything to do with the global crisis.

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Speaker 6: Financial crisis is completely beyond me. Now.

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Speaker 5: His lawyers are arguing his former employer UBS ruined his

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Speaker 5: life to escape more severe penalties for the libel scandal.

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Speaker 5: A spokesperson for UBS declined to comment. The case is

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Speaker 5: filed in the US State of Connecticut's court in London.

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Speaker 5: James Woolcock Bloomberg Radio.

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Speaker 2: US President Donald Trump has praised his country's close ties

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Speaker 2: with Japan. During his meeting with the new Prime Minister

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Speaker 2: Sanai Atakeiichi in Tokyo, Trump commended her plans to boost

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Speaker 2: defense spending and expressed optimism under the two countries had

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Speaker 2: overcome their trade disputes.

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Speaker 3: On behalf of our country. I want to just let

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Speaker 3: you know anytime you have any question, any doubt, anything

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Speaker 3: you want, any favors you need, anything I can do

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Speaker 3: to help Japan.

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Speaker 1: We will be there. We are an ally at the

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Speaker 1: strongest level.

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Speaker 2: Donald Trump, speaking there as leader, signed documents on trade

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Speaker 2: and critical minerals, expanding on a deal negotiated under Takeichi's predecessor.

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Speaker 2: Documents from the White House suggested that the agreements remained

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Speaker 2: ill defined, reaffirming ongoing cooperation in The meeting was a

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Speaker 2: high stakes test for Sanai Takeiichi. He was elected Japan's

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Speaker 2: first female prime minister earlier this month, and in France,

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Speaker 2: the National Assembly is voted to increase taxes on the

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Speaker 2: country's largest companies next year. The Finance ministry had originally

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Speaker 2: aimed to raise four billion euros in extra revenue in

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Speaker 2: twenty twenty six by keeping part of a temporary corporate

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Speaker 2: tax hike, Yet after lawmakers rejected other measures, including a

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Speaker 2: planned freeze and income tax brackets, the ministry increased its

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Speaker 2: target to six billion euros. Finance Minister Rollanda Secuer spoke

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Speaker 2: at the National Assembly.

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Speaker 5: The government has committed to listening to the debate that

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Speaker 5: will take place within the National Assembly, and I believe

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Speaker 5: that by introducing this amendment, that is exactly what it

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Speaker 5: is doing.

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Speaker 2: For Finance Minister rolland a Securer there, speaking via translator.

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Speaker 2: The amendment means that the corporate tax rate would fall

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Speaker 2: less than initially planned next year. It's part of the

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Speaker 2: government's efforts to rein in the deficit and find compromises

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Speaker 2: to avoid no confidence otens that could topple Prime Minister

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Speaker 2: Sebastian Nakanu. And those are your top stories on the markets.

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Speaker 2: The mscis Specific Index four tenths of one percent lower,

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Speaker 2: the MSCI China Index is down by one percent. Eurostructs

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Speaker 2: fifty Future is two tenths of one percent weeker this morning.

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Speaker 2: Goal prices sliding again today, down six tenths of one

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Speaker 2: percent at three thousand, nine hundred and fifty eight dollars

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Speaker 2: a troy ounce, so below the four thousand mark as well,

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Speaker 2: looking at the ten year treasury yield holding steady at

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Speaker 2: three point nine to eight percent this morning. In a moment,

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Speaker 2: we'll bring you more on hspc's results, plus why a

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Speaker 2: surge in solar power is stressing out electricity grids across Europe.

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Speaker 2: But I just wanted to mention another story that I've

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Speaker 2: been reading this morning, perhaps another nail in the coffin

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Speaker 2: of London's black calves. Our opinion columnist parme Elsen has

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Speaker 2: been writing about how after private hoire car cars, Airport

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Speaker 2: Express trains and Uber calves are now facing a threat

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Speaker 2: a new threat from Waimo's driverless cars. The company seeking

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Speaker 2: a license to test their cars on London streets from

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Speaker 2: next year, and a Weimo claims that its cars are

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Speaker 2: in fewer collisions than those driven by humans and that

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Speaker 2: many passengers actually prefer the silence of not having a driver.

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Speaker 2: But Parmi writes about the potential cultural loss, although she

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Speaker 2: does say a Weimo executive told her that nobody says

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Speaker 2: I missed the conversations with drivers. Black cab numbers are

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Speaker 2: already dropping in London. Just one hundred and four new

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Speaker 2: drivers were given licenses last year. That number was closer

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Speaker 2: to one thousand, less than a decade ago on A

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Speaker 2: twenty twenty five study by Transport for London warned that

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Speaker 2: black cabs could be wiped out entirely by twenty forty five.

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Speaker 2: For Parmi, she says this could be worse than the

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Speaker 2: loss of London's phone boxes and it spells out our

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Speaker 2: preference for algorithmic convenience over human connection and skill. It's

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Speaker 2: a great piece I recommend it a Bloomberg dot Com

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Speaker 2: forward slash opinion, and we'll put a link to it

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Speaker 2: in our podcast show notes. Well, let's dig into the

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Speaker 2: earning from HSBC now revenues. The bank came in higher

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Speaker 2: than expected in the third quarter, even as it took

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Speaker 2: a one point one billion dollar hit tied to fraud

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Speaker 2: cases link to Bernie Madoff, Our Asia Finance reporter and

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Speaker 2: Brien Chowdry joins me now for more. And this is

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Speaker 2: a strong set of earnings aside from that legal provision.

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Speaker 2: What drove the strength.

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Speaker 7: Stripping out the made of litigation charges if you look

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Speaker 7: at everything else. Basically, its key driver was the Hong

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Speaker 7: Kong business and that drew profits before tax. It basically

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Speaker 7: jumped eleven percent to about two and a half billion

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Speaker 7: in the quarter, and that ultimately is being driven by

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Speaker 7: the higher client activity across its wealth management business, which

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Speaker 7: has been a key focus for the bank over the

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Speaker 7: past few years. You know, in short, since becoming CEO

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Speaker 7: about a year ago, the new CEO, Newish i should say, CEO,

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Speaker 7: Georgia Silhedri, has struck a noticeably bullish tone in Hong

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Speaker 7: Kong as a financial center. He's predicted that the city

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Speaker 7: will surpass Switzerland by the end of the decade to

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Speaker 7: become the world's largest cross border wealth hub. And you know,

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Speaker 7: to a certain extent already seeing that is true because

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Speaker 7: they are making so much money from Hong Kong and

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Speaker 7: over the past few years, the wealth business has been

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Speaker 7: a huge earner for them, despite all the other legal

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Speaker 7: issues elsewhere.

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Speaker 2: Well, interesting with that bullish sentiment Hong Kong that actually

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Speaker 2: one of the wrinkles in HSBC's earnings reports was the

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Speaker 2: bank's exposure to the Hong Kong property markets.

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Speaker 7: Yes, exactly, that has been a bit of a wrinkle

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Speaker 7: for them, so they are quite grim. It makes for

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Speaker 7: quite grim reading. They basically are warning that market conditions

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Speaker 7: remain tough in the near term as a result of

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Speaker 7: weak leasing conditions, and it's said that the commercial property

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Speaker 7: sector continues to face downward pressure, with both rental and

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Speaker 7: capital values impacted by oversupply, particularly in the office market

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Speaker 7: in Hong Kong. And their current exposure in this quarter

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Speaker 7: stands at around two hundred million US dollars, which isn't

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Speaker 7: too bad, but still an ongoing issue for them.

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Speaker 2: So what does this update tell us then about how

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Speaker 2: Jorge L. Hadrie's strategy in leading HSBC is going. I

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Speaker 2: suppose the outlook as well looking pretty positive for the

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Speaker 2: bank for now.

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Speaker 1: That's right.

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Speaker 7: They basically they've raised their profitability outlook for the year

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Speaker 7: for twenteen twenty five, even his earnings fell because of

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Speaker 7: the provision tied to them made off fraud case. They've

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Speaker 7: basically said that they expect to deliver a mid teens

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Speaker 7: or better return on tangible equity for the year, as

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Speaker 7: well as higher than previously expected net interest income because

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Speaker 7: all their businesses are doing quite well despite all these

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Speaker 7: legal issues that have come to front over the past

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Speaker 7: day or so. And also, you know, we have to

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Speaker 7: keep in mind that the bank's been undergoing a broad

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Speaker 7: revamp of its businesses since Celedri took over last year,

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Speaker 7: so he has undertaken quite a radical review and also

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Speaker 7: a bunch of asset sales throughout the world.

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Speaker 2: Okay, I'm Breen, Thanks so much for joining us with

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Speaker 2: the latest on those numbers out of HSBC. Ambering Chowdy

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Speaker 2: our Asia Finance reporter with the latest Stay with us.

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Speaker 2: More from Bloomberg Daybreak Europe coming up after this Now.

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Speaker 2: Solar Power's rapid growth across Europe has countries racing to

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Speaker 2: revamp their electricity grids to prevent dramatic blackout. The situation

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Speaker 2: is getting more difficult to manage, and operators say they

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Speaker 2: lack the tools they need to balance out the effects

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Speaker 2: of solar power. Our energy reporter Will Mathis joins us

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Speaker 2: now for more. Will, Good morning. How big? First of all,

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Speaker 2: a part does solar power play in Europe's power mix?

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Speaker 2: And how fast has that grown?

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Speaker 1: Well, it's growing incredibly fast. Just in the past five

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Speaker 1: years of some places gone from sale digits like a

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Speaker 1: span to more than twenty percent of annual literacy and

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Speaker 1: just growing work everywhere, even places that traditionally haven't use

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Speaker 1: solar power all whole that's relied along in coal. They're

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Speaker 1: wrapping up solar incredibly fast, partially because it's gotten much cheaper,

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Speaker 1: and also to get rid of those imported important natural

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Speaker 1: gas that became so expensive and controversial in recent years

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Speaker 1: because so much of it was coming from Russia. And

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Speaker 1: it's just really gone much faster than anyone would have

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Speaker 1: predicted even five years ago. And you know, the strongest

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Speaker 1: solar power proponents in twenty twenty would be surprised today

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Speaker 1: how much has actually been built.

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Speaker 2: So what issues then is that creating for electricity grades.

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Speaker 1: It's really just an incredibly different system the way the

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Speaker 1: power moves in the system. Instead of going from like

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Speaker 1: a few small a few large power stations and a

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Speaker 1: few points on the grid to many, you know, you

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Speaker 1: could have just a system on my house, on your house,

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Speaker 1: on every house on the street, and that just creates

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Speaker 1: an incredibly different dynamic to manage. And what I talked

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Speaker 1: to a lot of the grid operators, who are the

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Speaker 1: people who are you know, every day, every second of

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Speaker 1: every day, keeping the lights on, managing the balance between

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Speaker 1: some event. They said, you know, if you have one

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Speaker 1: house on a street put on solar panels, that's really

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Speaker 1: no big deal. It doesn't really matter what they're doing.

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Speaker 1: But if you have every house on the street and

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Speaker 1: have solar panels and something goes wrong, then it could

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Speaker 1: cause a big problem.

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Speaker 2: So what's being done a bisas, So what's.

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Speaker 1: Being done is different things. I mean, one we did

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Speaker 1: see earlier this year what happens when enough is being

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Speaker 1: done and in some places not enough is being done,

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Speaker 1: like in Spain where they had this incredible blackout where

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Speaker 1: they didn't really have any new backup on the system,

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Speaker 1: and that led to this cascade, which European invest scaries

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Speaker 1: have described as unprecedented event and a precedented kind of blackout,

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Speaker 1: but is a sort of potemic worst case scenario of

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Speaker 1: what could happen to other places. You can do. You

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Speaker 1: can get different equipment that sort of simulates what fossil

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Speaker 1: fuel or like nuclear plants do to stabilize the grid.

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Speaker 1: Or you can also change some of the software settings

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Speaker 1: in solar plants so they don't cause problems that they

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Speaker 1: can actually help manage stability instead of worsening it. But

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Speaker 1: these things need new regulation. They take time, and we'll

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Speaker 1: have to see how the regulators who are used to

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Speaker 1: working on like quite slow time scales for power grids,

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Speaker 1: if they can adapt to the speed that this transition

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Speaker 1: is actually taking. Advice there.

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