tv Bloomberg Markets European Open Bloomberg December 2, 2020 2:00am-4:00am EST
anna: welcome to bloomberg markets, "the european open." the cash trade is just under an hour away. a fresh offer. treasury yields the spike and u.s. stocks close at records. fiscal stimulus talks are revived. jerome powell and steven mnuchin back further aid. taking it slow. joe biden declares he is in no rush to remove phase one tariffs on china. he says he will conduct a full
review of policy and reengage with allies. salesforce agrees to buy slack for almost $28 billion in one of the biggest tech deals of the year. we will hear from management. just on 7:00 in london. in the u.k. is where we start with breaking news. pfizer and beyond tech, the covid-19 vaccine has been approved for use in the united states -- the united kingdom. the united kingdom has a lot of this vaccine, although it has more of the astrazeneca one, waiting for approval. this is the first time we are seeing approval of a vaccine in the u.k., in western europe -- western countries, it seems. the pfizer-biontech vaccine approved from next week. things could move apace. we kept hearing from the new
vaccines are and the prime minister that things are ready, the infrastructure if you like behind vaccine rollout is ready to start once the vaccine is available and once the vaccine is crucially approved. this is approval by the regulator here. the nhra has approved the vaccine according to an email statement. it will be available from next week so we will see how quickly those needles can get into arms. now just under an hour away from the start of the cash equity trading session. let us see if that approval has made any impact on futures. we do not see a great deal of movement from where we were before we got this news. perhaps the market was already assuming this kind of approval would be coming. this is where we are. futures pointing to the downside. u.s. futures have been pointing to the downside, but let us remember.
we rallied by 1% in yesterday's session. u.s. futures point to the downside, but not by much. also the gmm and what's going on through the asian session, asian markets around 0.3%, pretty mixed. china and hong kong underperforming. the new york times op-ed around biden, the conversation with president-elect biden that they have turned into an op-ed, that is having an impact on the chinese currency. that along with a share sale at xiaomi that has been weighing on markets in china and hong kong. the yuan was trading higher, then dropped as a result of that biden op-ed, now fairly flat in this morning's trade. that is what we are seeing around the asian equity market story. european stock futures pointing lower after a record month for global stocks. the rally that has been fueled by vaccine breakthroughs looks as though it could be cooling. it is just one jurisdiction approving.
meanwhile joe biden has told the new york times he will not immediately remove phase one tariffs on china. a lot to discuss on the markets. morning to you. i will start with this news around pfizer beyond tech -- pfizer biontech. how much vaccine optimism is priced into the markets? we have the first major economy approving a vaccine, approved for use in the u.k., which opens the door to distribution with getting this into people. is there still a sense the markets could move on this? is not only the u.k., it the eu, it is not the united states. is there a sense this news has the power to move risk assets? >> by implying that not in the short term, quite a lot of positive vaccine use is priced in. having said that, i think in the
more immediate term, once the global economy is able to normalize the consequence of wide vaccine distribution, this will eventually be reflected in market prices. but you are right, the short-term, it does not have the same effect anymore. anna: this is ftse 100 futures, a little bit of a tick up. there is a disconnect between the ftse 100 and the u.k. economy as a whole. they are not a perfect pairing. other big news overnight coming from that op-ed in the new york times. it is very timely. we have been talking about the one. what do you read into this comment by president-elect biden that he is not going to be in a rush to remove tariffs? i was not sure anyone in the market thought he was going to remove phase one tariffs on chinese products in a hurry. >> you are absolutely right. it was not a surprise.
there are two things to know. polls very china poorly among the u.s. electorate. there is no incentive to move quickly. secondly, biden will want to use removing his tariffs to get something in return, may be market access to services, improving standards. you want to trade these up against something. anna: what do we think this does to the chinese currency? we have the yuan ahead. where does this tie into where we have seen the chinese currency trading of late? you are asking what can revive the rally? it has done well earlier on this year. then that rally had faltered well risk appetite gathered elsewhere. yuan'sn revive the faltering rally? >> the most important thing will be the participation of locals.
if you look at fx department within china, they are still increasing even though the renminbi was appreciating. it is a question of locals joining in and converting more of their dollars into renminbi. i think you will get a followthrough rally in the yuan. anna: where does that leave us with the bigger picture story around demand in the chinese economy? your focus is often on emerging markets. i wonder how you sent investors are viewing china versus other emerging-market stories. quick to get out of it by international standards. how are investors still viewing china? is that a story that is becoming old? really good point. i think it is slightly old with respect to the currency. we are very high in trade-weighted terms.
people are wondering whether these forces will try and slow down the appreciation of the currency. more profoundly as well, once we get a vaccine distribution relative china's advantage of having been superb at dealing with the covid crisis initially, that dissipates. the rest of the world looks relatively good. in that respect, the trade is a little bit tired. anna: thank you. adjusting a little, on the ftse 100, around noon news we got of the top of the hour. pfizer-biontech, the covid vaccine approved in the u.k.. the first approval from a developed market ahead of the eu, head of the u.s., approval and it could be in use as early as next week. the government saying they have accepted this recommendation from the medicines agency.
that is according to an email statement. big news if you live in the u.k.. which they canto still move markets. let's get up bloomberg first word news update. >> congressional efforts to pass a stimulus bill are stepping up again after a six-month stalemate. nancy pelosi and mcconnell are touting a revised plan amid evidence the surge in coronavirus cases are undermining the recovery. president-elect joe biden is urging swift action. president trump has discussed pardons with his eldest children and rudy giuliani. sources told the paper the president is concerned a biden justice department might target his children and his son-in-law jared kushner. he has talked with advisors about granting a preemptive pardon. it will playnaling hardball with budget holdouts.
it could significantly cut funding as soon as next year over threats to vito the $2 trillion spending package if a budget is not agreed, the eu kinship spending priorities and delay money going to the two nations. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. coming up on the program, the u.k. approves use of the pfizer-biontech vaccine. we will get the latest on the pharmaceuticals behind this. ♪
offset the recession we have in 2020, but it is a step toward a brighter future. what will be important is that we can achieve recovery once the vaccine will have been deployed. oecd chiefwas the economist talking to bloomberg about the group's outlook, talking about a brighter future, a vaccine part of that. , hasnews this morning approved the pfizer-biontech vaccine, making britain the first western country to license a coronavirus vaccine. -- samet to sample deli for selling. different jurisdictions have different processes. there have been a lot of talk about getting things done as quickly as possible and as safely. why are we going to see
different jurisdictions approving at different times? why does it work that way? >> good morning. obviously this is a matter of days we are talking, so today is the second of december, the usda is very likely to also approve the vaccine on the 10th of december, eight days away. timelines are pretty much nothing in the scheme of things. well the european union is taking so long to do this is a bit more perplexing. even the u.s. convened a panel of experts to discuss the data. they use internal experts to do it. why the eu is taking longer, i do not know. maybe it is bureaucracy of the system that requires it to take more time. then we are looking at the same date of the u.k. did.
-- they are looking at the same data the u.k. did. anna: early lines from the health secretary in the u.k. saying hospitals are ready to administer the pfizer vaccine. they need to take delivery i assume first. how quickly do you think countries such as the u.k. can ramp up the distribution of this , the vaccination program? there has been a lot of talk about the priority being given to certain age groups. >> the u.s. has a group deciding who gets vaccinated. they said what i suspect will be the same in the u.k., that health care workers and people in care homes would be the first target of a vaccine. u.k.,t is the case in the they have approved before the end of the year is likely to cover the 1.3 million health care workers we have.
that is in my view the first target. as you know, a lot of the work we do is to prevent overwhelming , not exposing our precious health care workers to the virus in a way that could put their life at risk. the more the workforce is damaged by the virus were put at risk, the more -- the easier it is to overwhelm the system. thank you for bringing us the lines on this. sam fazeli with regards to the latest vaccine approval news. let's talk to a guest about the potential market impact of this kind of news flow. the hour, the u.k. government has been told by the medicines agency in the u.k. it can approve the pfizer-biontech
covid-19 vaccine. we saw movement in ftse futures. some in fixed income as well. certainly not on the scale we saw around efficacy for pfizer and beyond tech. does this news flow -- is that all priced in already? >> obviously a lot of it is priced in. it has been positive news for market. now what we are seeing is consummation. it is important that the rally driven by this optimism thanks to the sustainability of the vaccine, that this is conserved. the fact it is approved in the u.k., that it is going to be approved in the u.s., is a consummation of the fact we are theg to have a future in next month. it is important to have that view, but it is not surprising the market has not reacted as
much on the initial news. anna: so buy the rumor, sell the fact is a common adage. the equivalent might be by the press release, sell the delivery. but we are not selling. with this news coming, or despite it, do you expect markets to make further gains even through difficult times for western economies in the northern hemisphere during the winter? i think you are right in saying we can see equities continue to move up. what we are going to see in the short-term term is an economy that is potentially going to move into a double-dip. we see covid still there, lockdown still having an impact. with those vaccines, i would not
sell the news. is opening thee normalization of the economies, it is the normalization of our systems next year. for equity markets, investors have the capability for short-term volatility. in the way we have positioned our portfolios, we prefer to move back to stronger equity positions because we don't want to chase the value later. i was wondering in the short-term whether this would do anything to boost those beaten up cyclical stocks that have faced such trouble during 2020, like airlines. there is a limit to how quickly anything like this can make a difference at the scale that is material. how enthusiastic are you about those cyclical assets? ,espite short-term volatility
now is a term to get involved in the -- time to get involved in those. talk about the move we saw yesterday. we saw long-term rates in the u.s. in europe a little bit -- spike a little bit because of talk about potential stimulus plans in the united states. i think it just underscores the fact that investors today are expecting the economy to recover without much inflation. that is a good environment for stocks. i think it is a good environment for the sector rotation which we have seen continue. we are going to see curve steepening on the interest rate side. we are going to see gdp growth increase next year. at the same time we still have a lot of stimulus on the monetary side. , the get normalization
cyclical rotation can continue. it will be necessary for the markets to continue to rally. the big divergence we have between growth and value, typically growth stocks are trading higher than value stocks in terms of price to earnings ratio. that is something which is not sustainable anymore if the recovery really unfolds. we think that is like a to happen.- likely to anna: further thoughts on global growth and conjunction with vaccine news flow we are getting through november and now into november -- into december as well. we will also throw in opec. we will talk about the link between the energy market and stocks next. ♪ ♪
anna: under 14 minutes to go until the start of the -- under 40 minutes to go until the start of the equity trading day. pfizer-biontech, the vaccine has been approved by u.k. regulators. we saw movement in risk assets. certainly we will be looking for reactions in the sectors said to benefit the most from this news flow. -- terms of the ftse 100 futures, not a perfect link, we don't see a great deal of movement. a really strong rally, more than 1%, in european and u.s. equity markets yesterday. oil is dropping a fourth day ahead of tomorrow's resumption of opec-plus talks. negotiations were delayed after no decision was made on output. we got thisis news morning just goes to illustrate how difficult it is for opec-plus to make decisions about output right now.
the asian growth story looks better. the western growth story has looked dreadful from an oil market perspective. it is this news flow that makes it difficult to work out when that demand comes back. >> what we are seeing is the economy, economic growth which in thelding nicely, u.s., things are going ok. fact it underlines the is good, but it is slowing. with the same in europe the slowdown being a little bit stronger. for opec, they are tempted, they have seen prices moving back to what we see as the long-term target. increasetempted to
output again. -- clearly market reaction anna: i would ask what this does to your inflation expectation. are you thinking inflation comes back strongly next year? with that overdo it? willdo not think inflation come back. we are going to have some basis into the end of the crisis to push inflation up. if you look at the supply side and potential output, there is no demand pressure in the u.s. nor in europe, even less, which could push inflation up. on the longer term, maybe. in the short-term, no. thanks very much.
"the welcome back to european market open." european equity markets despite this positive news, the pfizer-biontech vaccine approved in the u.k., despite that we have not seen a great deal of reaction. ftse 100 futures down. we will look out for individual names which could move on this kind of news flow. news coming from hong kong, the hong kong activist joshua wong has been jailed for 13.5 months for the 29 -- the 2019 protests he was a key figure in.
we know the story. the amount of protest activity we saw, the security law brought in by beijing, his arrest afterwards. now we hear the news of his fate for the next 13.5 months. hong kong activist joshua wong jailed for protests. a reversal for european banks. lenders were finally in the lead after years of playing laggard. strong thanks to a rotation led by vaccine news and better earnings with a return dividend payment and improved m&a prospects the icing on the cake. so what is the outlook for european lenders? moody's managing director for european banking joins us now. are you changing any of your ratings with regards to the european banking sector?
are you keeping the entire sector on negative outlook? we have put out a new report this morning where we for outlined our reasons maintaining a negative outlook for the european banking system as a whole. thisow banks entered crisis with historically high levels of capital and liquidity, a stark contrast to the onset of the financial crisis where it was much weaker. --far i'm afraid banks have against our expectations through this crisis, being supported by expectation of a rebound in economic growth. banks have set aside essential and capitalization has held up well or even improved ,ith regulatory intervention some restrictions on dividend payments.
however, i would love to point out we have maintained our negative outlook since late 2019. the reason for the negative outlook has changed. that the credit profiles of banks go into next year as a consequence of the pandemic will crystallize in the form of rising loans and eroding profitability. anna: let me ask you about that because you talk about -- i am interested in how much this is going to deteriorate for the european banking sector. we talk about corporate debt, we ofk about the indebtedness the european corporate space and we wonder how much the sticks. give us a sense how skate door --'sthed banks will be unscathedthed or
banks will be. >> so far that has limited or fullyd, but it will not offset the economic disruption, the negative impact. therefore, we expect more losses to crystallize. into the next year, we think the peak will be seen only in 2022. to put this into perspective, at the same time, we do not necessarily expect loans to become comparable in terms of problematic levels compared to the global financial crisis. banks are guided toward credit losses that are still below the peak we have seen in the aftermath of the global financial crisis. anna: you say domestic
consolidation will continue to be something of a driver for the sector. we have seen talk about that in spain in recent weeks, italy. where are you expecting to see domestic consolidation take place? consolidation has been ongoing for a while, several years i would say. we think domestic consolidation will accelerate further, particularly in markets that are relatively fragmented. you mentioned italy, you mentioned spain, they are some of the more prominent markets where domestic consolidation is likely to take place. also this is happening at a time where company evaluations are particularly low. opportunityes the to generate bad will which can offset restructuring. we saw aer the crisis number of regulators taking steps to try and make sure the
financial investment community would pay some cost if banks got into trouble. one viewer is writing and saying what is the probability of seeing bank hybrid capital being bailed in? is that a feature of 2021 at all? >> on the one hand we should keep in mind a lot of work has been done in terms of establishing resolution frameworks for banks in the european union, but also other parts of the world. these are still in play. there is an option if there with the situation -- excuse me. at the same time, we are also seeing at this point in time there are a lot of reports by officials toward the banking sector and at least during this a cyclicalexpect readiness to consider a more accommodative stance toward
supporting troubled banks. this is more something we think but not to be cyclical fundamentally challenging the construct of resolution approaches. anna: carola schuler, thank you for bringing us the latest on your thinking around the banking sector. coming up, the u.k. approves the pfizer-biontech, becoming the first western country to license a covid shot. ♪
down after the gains of yesterday through the asian session and now look that way into the european session. european futures pointing modestly to the downside. the u.k. has approved the pfizer-biontech vaccine for use. that makes britain the first western country to license a coronavirus vaccine. let's get more on this. availablee should be starting from next week. are there still things we need to know about the way this is getting rolled out? or this is a done deal? there could be others to follow. >> absolutely. the next one we would be looking for is madonna. -- moderna.a vaccinet the moderna which is less important to the , and always remember we have to divide by two when it comes to the number of people
who would benefit. decision is what happens with astrazeneca's vaccine. we are expecting to see publication of that data. pfizern terms of the beyond tech rollout, re-expecting other regulators to do is the u.k. has done very soon? we believe the u.k. regulators process the same as the fda in terms of the review of the data, and the european been, they have all involved together anyway well this vaccine has been in development. there has been a lot of communication. the expectation would be the fda is within the next eight to nine days. apparently isnion going to do it by the 29th of december, but frankly within the range of a week or two, it is
irrelevant. anna: russia already cleared a vaccine. china has given authorization to its three frontrunners. outside the western economic sphere, there are other approvals. way,.k. is going its own still in the transition phase, following many european rules, but on this one there was a special rule 11 drug regulators to move ahead of the eu as the country prepares for brexit transition. that is a sidebar conversation. what about the focus on quarantine time? in parts of the world there has been talk about how long you need to quarantine if you have symptoms or test positive. it seems that is an ongoing debate. there is news flow in the u.s.. >> in terms of the debate around the vaccine, the data speaks for itself. that is the data we have seen and it is strong. next week when the fda meets we will see more detail of that data, which is one of the nice
things about the regulatory process in the u.s.. they have public, open forums where experts discuss the data, companies presented, and they question the companies. that will be several hours of interrogation. back to your point about china and russia, we have not seen data, not even in press release form. we have to take that with a pinch of salt. i am not saying the vaccines do not work, we have just not seen the data. the expectation is we learn a lot from the fda process. anna: we will watch that with interest. thank you, sam. thanks so much. sam fazeli joining us from bloomberg intelligence. >> president-elect joe biden will not quickly remove tariffs against china. he tells the new york times he has to conduct a review of u.s. policy. counter hoping to
abusive practices in china. australia's economy bounced back to growth. spending surged as the government maintains support. gdp expanded 3.3% from the previous quarter. year on year it is still down almost 4%. china has landed a spacecraft on the moon as part of the first mission to bring back lunar samples in more than 40 years. that will make it only the third nation in history to retrieve the rock after the u.s. and the soviet union. the clap -- the craft is expected to be on the surface for two earth weeks. global news, 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. anna: thank you very much. softbank is quietly winding down its controversial derivatives strategy after it sustained backlash from investors. sources say the conglomerate
will let options expire instead of rolling them over. here to explain his dani burger. this was a big talking point when we were talking about the size of softbank in tech place. what has softbank decided to do? >> the news that softbank was buying the spread, it is an option bet that tech stock would rise, but less of a risky bet because of the way it was set up. it had gotten a lot of criticism from shareholders questioning why softbank, a company known for long-term investments, typically in tech startups, would do these short dated options. that pressure seems to have finally come to bear. it is harder to make money on these options bets considering not only the u.s. election being over, but vaccine news like we are getting today tends to do better for other stocks beyond tech.
they 90% of the options have expire in december. they are going to let them do just that. they are not going to roll them over. they are not going to buy new ones. they are letting these options disappear from the market, more or less. anna: dani burger joining us with the latest from softbank. salesforce has agreed to buy slack for almost $28 billion in one of the biggest tech deals of the year. the ceo did not think he would be making any deals during the pandemic. he spoke to bloomberg's emily chang. >> it is a marriage made in heaven and we could not be more excited about how it transforms our customer 360 vision and let's our companies -- our customers work from anywhere. it is the most exciting thing i have been through. looking at this as a defensive move against microsoft.
>> salesforce has never been stronger. we delivered a phenomenal quarter, raised our guidance this year. we are going to do over 25.5 billion dollars in revenue next year. it is the fastest growing revenue software company ever of all time. salesforce has never been stronger. , an we look at slack tremendously fast-growing company with a great technology, the idea you can collaborate, have channels, we have ,ntegrated our products already but the idea you could have this next-generation work from anywhere environment, amazing what is possible from here. >> you are no stranger to deals. 60 deals in your tenure at salesforce. that said, the stock slipped when reports of this deal broke, saying it is too expensive for a company that has less than $1 billion in revenue.
>> it is a very common narrative. i have done 60 deals, some of the largest ever done in technology. fewrew a company from a hundred dollars to a couple billion. transformation with tableau. couple billion dollars in revenue and tremendous market share gains. the deep integration with our customers and customer 360, here we are again. with slack, it is our same playbook. we have a good feeling. we know it is a deal we are going to execute and deliver tremendous value to our global customers. >> how long have you been thinking about buying slack? >> i did not think we were going to get any deals done this year.
i am home, you have been home. digital work from anywhere environment, i have been using salesforce, slack, zoom, that is my life. now everything i use is salesforce. shocked when stuart and our chief operating officer -- we have known each other for a long time. they were entrepreneurs together. they said we could bring these companies together and they showed me a vision that is so compelling. our customers are going to be so excited by what they can do from productivity. one of the things that has happened this year is our customers need so many of our core product. that is why we have such tremendous growth, especially in sales. powerful.ally b2b sales, the ability for you to actually sell directly to your customers using our
technology, in fact, we processed over 31 million orders this weekend. that is part of the 60% growth year-over-year. we are seeing a digital transformation. we are seeing the pandemic accelerate the digital world and especially customers whether it is b2b or b2c. slack is going to be making everything better. anna: that was the salesforce ceo speaking to emily chang. even he did not know he was going to do the deal he has now done. minutes away from the market open. next, we will get your stocks to watch including after the u.k. approves the pfizer-biontech vaccine for use. others will follow no doubt very soon in europe and the united states. we will look for reaction from u.k. corporates. ♪
anna: welcome back to "the european market open." eight minutes to go until the start of the equity trading session. , the vaccineontech approved in the u.k.. perhaps we will see reaction in specific domestic stocks. maybe the ftse 250. time to get our stocks to watch. i know you are starting with that u.k. stuck reaction. dani: the initial reaction did look like the fixed income market. we saw futures a slide to record -- slide two session lows. when we look at today we remember vaccine optimism has been part of what drove that november rally. in terms of a really large reaction, some of that may be capped from the gains we have already seen. you could look at things like
u.k. pubs, up 1%. one thing that might spur optimism is the pace of vaccine distribution. the u.k. saying they might start this in the coming weeks. that could help these harder hit local industries in the u.k. with pubs for example that need to serve a meal to have customers. that is where we could see price action in response to this. about teche ask you stocks. software stocks in particular. dani: they could be under pressure in europe. s.a.p. particularly because they are the closest pure to salesforce. salesforce announces the slack acquisition. within those headlines, earnings, which disappointed. fourth-quarter earnings did not get the guidance. that came below estimates. some of thoseus, could be impacted because their
usp or missed expectations -- eer missed expectations. there has been an attempt from different companies to take them over. an offer has been up for a hostile takeover coming in at 235 cents per share. have already rallied a bit because of this takeover talk, but now the bid is higher. it's going to come to just under $5 billion for the total of this deal. world as theyarda can convince shareholders this is the deal they should be doing rather than their rival suitors. anna: really interesting news flow surrounding m&a. also some m&a in the insurance space. keep an eye on allie on's --
♪ a minute to go until the start of cash equity trading. here are your headlines. the u.k. approves the pfizer-biontech vaccine for use, making bread in the first western country to license the coronavirus vaccine. a fresh offer. treasury yields at spike and u.s. stocks close at records as fiscal stimulus talks are revived. jerome powell and steven mnuchin both back further aid. taking it slow. joe biden says he is in no rush to remove phase one tariffs on china. he tells the new york times he will conduct a full review of policy towards beijing. good morning, everybody.
just under a minute to go. a second to go until the start of the equity trading day. futures suggest a move to the downside despite the seemingly risk positive news of the u.k. being the first western country to approve a vaccine. it is only a country the size of the u.k., which is perhaps why it does not have a bigger impact on sentiment. may be the assumption was that this was coming. we expect to see decisions made by european and u.s. regulators ,n very short order, very soon certainly in the early part of december. that is expected to come. european equity markets getting the first chance to respond to this news. we do see the ftse 100 opening down around 0.2% right now. the ibex in spain down by around 0.4%. and dax both down about 0.3%. interestingly also to see the ftse 250 down by 0.4%.
perhaps we might think that the ftse 100 is a bit disconnected from the u.k. story to really reflect much market movement on the back of this news flow around the u.k. drug approval of pfizer-biontech. we might look for more reaction on 4250. i am looking at the ftse 250 and it is down by 0.4%, so not seeing much positivity. we are seeing some stocks that would seemed to benefit more than others, such as the hospitality sector, aviation sector. pubs a little higher. aig up by 3% out of the gate. the u.k. has approved a pfizer-biontech vaccine for use, making brynn the first western country to license a coronavirus vaccine. let's get more with sam fazeli, bloomberg intelligence senior pharmaceutical analyst. just in terms of the pace at which this allows the u.k. to move and readjust our thinking about when we become immunized as a nation, how quickly can do this -- they do this?
how much of the population will this enable them to vaccinate? sam: one thing to bear in mind is that it is very easy because we know that there is a lot of interest from politicians to get these things moving. -- things moving to assume that there was a lot of political pressure to getting this done. december is the mother that we expected these vaccines to be approved across -- month that we expected these vaccines to be approved. i do not think we should put to much emphasis on the fact that there might have been some political interference. to your question specifically, pfizer is expected to provide , 40 2020 and into 2021 million doses, so enough for 20 million people. -- moderna, which i expect to be the next approval, would be another 7 million doses.
from then on, we will have to wait for either the astrazeneca approval, or whatever comes out of novavax. anything more than the 23.5 million people covered by these vaccines will need other vaccines or new contracts with pfizer or moderna. anna: how quickly do we think we can -- clearly, a priority has been set out by the u.k. government in terms of vaccinations. is that the same globally? is it the case that many western countries will start with those who are employed in caring for others and the elderly and then move down the age brackets? is that how this works everywhere? sam: i think that is exactly how this will happen. people have not studied those under the age of 18. the same, you have got process being applied everywhere. as i said, the u.s. had a gathering yesterday that discussed this, which would be no different to what the u.k. is the same i am sure
across the european union. you have to protect the people who are at most risk of catching it. meanwhile, those who are exposed home cared people, workers, health care workers, long-term facility workers. that's -- that would be the process i expect to see everywhere. anna: thanks so much for the update. sam fazeli with the latest. let's get some other market reaction we are seeing, this around brexit. chief barnier, the negotiator for the eu, says there may not be a post-brexit deal. important to get the context around this. he has been briefing ambassadors and making these comments. the three main brexit issues are still unresolved, he says. in a sense, this does not tell us anything new. this is not them sank there will be no deal, just pointing out that there is always the
possibility that no deal will be reached. the mood music in the last few days has been quite positive. certainly, our reporting has been talking to some people involved who have been suggesting that there was a more positive mood, some momentum. the irish were talking about finding a landing zone by the end of this week. with that as the backstory, that had set us up in a pretty pound positive. the euro had been fairly flat against the british pound and now it spikes up. let's get to karen ward, j.p. morgan asset management chief market strategist. i am torn as to where to start our conversation. i will linger on the brexit news flow a little bit. that is the most recent new information. michel barnier saying to you envoys, thereo eu may not be a post-brexit deal. give us your thinking around the importance of getting a deal, the likelihood of getting a deal
as we head towards the 31st of december. well, i think we are truly at the midnight hour. there talkingised -- they are talking right up until the clock strikes 12. they have been arguing for the same thing for about 4.5 years. the u.k. wants to maintain access to the market but wants to regain fuyll sovereignty -- full sovereignty. there has to be a compromise on both sides. in terms of likelihood of deal, i have always said yes, i think we will get a deal. it's important to distinguish, and i think if people analyze this over the coming days, to me, it's a little too simplistic to think about deal or no deal, because the substance of the deal is just as important. so, we need to see how comprehensive in terms of the sectors that are covered, but , whatccompanying the deal
the transition area arrangements are to ease the burden of change so as we don't have a particularly large january 1 event -- effect. i think we will get a lot of those transition every rearrangements. both sides do not want to inflict further damage on their economies, which have been struggling. another week. we prepare ourselves for more volatility around the subject. it's interesting you talk about the detail mastering. given where the red lines were drawn by both sides, it seems deal haveness of the become quite evident as these last four years have unfolded and under the boris johnson administration. are there limits to how substantial the details can be here? we already know that large parts of the u.k. economy will probably not be touched by this deal. karen: you are right, but i think it is things like -- for
example, what sectors has there been a compromise on agreeing regulatory standards and on for what time horizon? , whichpromise i expect allows both sides to declare victory, is the u.k. both aligning standards in key sectors for a rolling. -- rolling period of time. i think it is about understanding the breadth of coverage, the time horizon. i think probably more importantly as we think about the near term is what those transition every rearrangements, how amicable things were in the final hours to know exactly the day one disruptions. is this really going to be businesses have got a year to understand the new customs and import system and therefore, that really smooths the transition? that substance of the deal will
be really important. anna: the people of kent will be keen to understand that detail. away from that sort of u.k. specific story, but sticking with the u.k., we have seen pfizer-biontech, their vaccine approved by u.k. regulators this morning. i was wondering what potential vaccine news flow has to move markets, to increase appetite for risk asset at this point? i guess we are seeing the limits of their ability to move markets. u.k. markets are not moving substantially higher. but certain sectors are moving higher. i guess you would expect to see that. karen: yes, exactly. this is a game changer, in our view. we released our year ahead outlook at the end of isaac -- at the end of last week. the vaccine provides us, we can now see the landscape at the other side. the policy support that is getting us to the other side. havingink -- i think
visibility on that landscape just gives everyone, governments, companies the confidence to just slog through the winter. we know the next few months are going to be grim. it's going to get a lot worse in the u.s. in terms of .ear-term data it's that data that -- it's that news flow that gives everyone the confidence to sort of knuckle down and plow on using all of the support that they have been doing. now, we can see the landscape on the other side. as you say, with regards to market reaction today, we have already been moving in that newstion incorporating the as the vaccine efficacy came through. as we look forward, we still see potential for some of these rotations away from the winners of the covid story towards now
the losers and life starts to normalize and we can see the other side of covid. anna: thank you very much. stay with us. karen ward, j.p. morgan chief market strategist for emea. we will talk more about fiscal support coming as we go into 2021. what should we expect? coming up, joe biden says he will not immediately remove phase i tariffs on china. more on that next. this is bloomberg. ♪
♪ >> we are seeing with the , governmentsght were indicated in implementing this huge support to firms and people and they must continue to do so. there will be a time to reflect , but that will not be 2021. anna: that is the ecb chief economist speaking about the y have for nexte year. joe biden will not immediately remove phase i tariffs on china. furthermore, we are joined by -- for more, we are joined by jodi schneider. what are we learning about president-elect joe biden's likely posture towards china from this? >> the first thing we are
learning is that he has not going to have a wholesale change from the policy that the current president, donald trump, had in terms of china. he says he wants to do this review of the phase one due. he also -- deal. he also wanted to consult with what had been the traditional allies of the u.s. in asia and europe. he says he thinks that the allies it should be on the same page for the best china strategy and it's going to be a big priority for him right at the start of his presidency to get back on the same page with the allies. so that really argues against him making wholesale changes in the china strategy given this. and we also think that he will probably have some tough talk on china, particularly when it comes to things like intellectual property. anna: just briefly, there has been a lot of talk about stimulus once again on capitol hill. jodi: that's right. they are back at it again in congress. we have been hearing a lot about this before the election, since
the election. it looks like nancy pelosi is bringing a new proposal from the democrats to senate majority leader mitch mcconnell. he has brought to republicans a much smaller plan, but they are really trying to do this now after a six-month stalemate in what is called a lame-duck session in congress before the new congress will take effect in january. nancy pelosi is saying that she wants to get this done because a love that stimulus, a lot about -- of those unemployment benefits are going to expire soon, just as the christmas shopping season gets underway. given the pandemic and the spread of the virus in the u.s., there is a lot of talk about going ahead and doing something pretty quickly. anna: thank you very much. now over in hong kong for us. karen ward, j.p. morgan asset management chief market strategist for emea, still with us. your expectations around u.s. fiscal stimulus given what we
heard on capitol hill yesterday and the various moving parts around the senate in january and then the transition to the biden administration? karen: yes, i mean, those sorts 500umbers in the sort of billion into a trillion are what we anticipated what would come. i think the timing has certainly been pushed back. we were questioning whether we would not get anything until after the fall inauguration. so it will be i think certainly welcome if we can get this side of the year. that would be an upside to us. say, that difficult senate election race we have coming up in georgia. it is positive news. it is really critical for thinking about the whole nature of how we are setting up the because021, -- 2021, because it has been this
enormous support to incomes, which has largely been saved, that is essentially putting a recovery fund and consumer sector -- in the consumer sector. that sets us up next year for some good spending and gdp data. anna: it's interesting the role that good news place here, whether that's around underlying economics are around vaccines, how that is translated by fiscal actors into a need to act. you could interpret good news on vaccines and economic outcomes as providing less of a reason to act. if the bridge need to cover a shorter distance. wethink that the news flow have heard around vaccines means the u.s. should be acting here fiscally? karen: yes, exactly. bridges do not work when they only go 3/4 of the way across water. bemany ways, they should
giving the fiscal authorities the confidence and also the clarity that this is exactly the right time to ask, because we can see the other side. in the absence of the vaccine, there was to a question as to whether we would see -- need a fundamental reshape of our economy, a real out -- reallocation of resources poster session. we were all going to have to get used to the -- post recession. we were all going to have to get used to the fact that we were no longer going to be going to restaurants and socializing. i think the fact we now see we can go back to normal, that we don't need that mass reallocation of resource should give the confidence to continue 2019 economyr such that it is ready to go when the vaccine goes up. anna: we think a lot of volatility in markets during 2020 as a whole, i was looking at some statistics provided by a colleague. yesterday, we saw another day of movement above 1% in the s&p.
would you expect that to be a feature of markets in the next year? not to the same extent. i would say -- because we are sort of slightly getting back into the world of known unknown. everyone on my side of the fence and desperately trying to come out, the genealogists over the course of the year will be quite happy to get back towards normal tracking of the data and interpreting what that means for activity. the only thing i would say is i do think volatility from policymakers and the signals we are getting, particularly from the central banks, that is their key source of volatility i am concerned about. we know that central banks in particular have been very supportive. that does leave us with some -- anna: thanks so much. i certainly spent 2020 learning
much more about spike proteins and epidemiology. be continuingl the conversation with us at bloomberg radio and 9:00 a.m. u.k. time. coming up, internet giants are under pressure. the european union set to unveil sweeping tech legislation plans next month. more on that story next. this is bluebird. ♪ -- bloomberg. ♪
markets: european open" 23 minutes into your trading station. we are seeing a little bit of outperformance in london. ,ig fx move on the brexit front but also the news on the approval of the pfizer-biontech vaccine. all that being worked through but markets -- by markets. the european union is set to unveil sweeping legislation adding to the regulation facing internet companies. the tech giants are warning the new rules may hinder innovation. they are holding a video call with eu officials later today. maria tadeo in brussels is covering the story for us. who is on the call and what will they be talking about? maria: good morning. we have more than a dozen companies during this call with the internal markets commissioner and all of big tech is represented, facebook, google, amazon and so on. this is not just about who is joining but also the timing of the call. this is happening just a week before the european union unveils what could be sweeping legislation for these platforms.
we are looking into the digital markets act, the digital services act and they could change things about how you and whota, change data, is responsible for the content that goes on social media. this is the final call for big tech to have a one-on-one with the regulator. it does not mean they are going to change course. it is unlikely. the european union has signaled that they do feel it is time to , that it is not for the european union to adapt to technology, but for the technology to adapt to the european playbook. we could see bigger fines in the future but also some business is being broken up if that was to be the case. that would be the most severe case. even if we do get this legislation going forward, you need to get the european council involved, the european parliament one or two years down the road. anna: how has big tech responded than? -- then?
>> i would say there has been a shift. we remember that quote from tim cook who said the u.k. regulation was responding to political bs. these companies realize they are going to have to pay more tax in europe. they argue it needs to be standardized at an eu 27 level and be made simple. convoluted legislation is not easy legislation to be followed. it would be interesting to note to see whether the dynamics change with the biden administration. president trump had said many times that u.s. companies, especially tech, i to be taxed in europe. anna: thank you very much. bloomberg's maria tadeo joining us from brussels. lots to talk about on the markets. a host of big moves we have got for you, keeping an eye on astrazeneca. that share price moving higher. some companies set to benefit from the approval by the u.k. regulator of the pfizer-biontech vaccine. up,n see jd weatherspoon
anna: welcome back to "bloomberg markets: european open." we are 30 minutes into a trading session that started off fairly negative given the strength we have seen in the previous session. that is still intact for the broader european story. by 0.3%.own we have made a few gains in the session, particularly the london markets. now -- wasitive positive is now fairly flat. the brexit news has shifted the pound around this morning. let's get a bloomberg business flash -- first word news update.
here is laura wright. the u.k. has approved the covid-19 vaccine by pfizer-biontech. it becomes the first western country to clear the shot which was 95% effective in a final trial. the u.k. government says the vaccine will be available from next week. the companies expect decisions from the u.s. and eu next -- this -- this month. president-elect joe biden won't quickly remove tariffs against china. he tells the "new york times" he first plans to conduct a full review of u.s. policy, consulting with key allies. biden is hoping to tackle abusive practices in china, vowing to invest in america first. president trump has discussed pardons for his three eldest children and his lawyer, rudy giuliani. that is according to the new york times. sources told the paper the president is concerned mr. biden's justice department might target his children and son-in-law jared kushner. he has talked with his advisers out -- about granting a pardon.
no comment from the president. global news 24 hours a day, on-air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in this isn 120 countries. bloomberg. anna: laura wright in london. let's turn to the u.k. retail story. in the past two days, both arcadia and governance, have collapsed. it is one of the harshest blows ever for the sector, which is emerging from lockdown today and in many parts of the u.k., specifically in england. the impactring from of covid-19 and a long-term shift to e-commerce. let's get the bigger picture about what is going on in fashion and end retail and its many forms. is a mckinseyani partner and joins us today and putting together -- and part of putting together this report on
the sector. i will start with your findings about the global fashion industry, which you say severed a 90% decline in 2020. this has been felt unevenly by various players within fashion? anita: exactly right. 93% decline in profit in the industry. we also estimate that 73% of the industry is now value destroying. i think the point that you make is very pertinent to the some sectors, or some elements of this industry, have been more resilient. we see 4 traits of greater resilience and sector. number one, digital. the players who have been able to pivot to the channel and drive more sales to digital. secondly, asia and exposure to asia has been a big driver of more resilient. exposure to sports and leisure, casual wear segments is another driver. and finally, luck. those are probably the 4 areas
where we have seen relatively speaking more resilient in the backdrop of an industry that has suffered quite badly through covid-19 with revenues expected to be down 15%-30% this year. anna: are the ones that collapsed, are they going to be the ones that did not invest efficiently in a pivot online? anita: we are definitely seeing that one of the traits and characteristics of resilience has been digital, digital participation. the players that are reborn online or peer players or reinvested ahead and able to build on their infrastructure capabilities to drive and capitalized on a huge change in digital we have seen. we have seen seven years worth of online participation at growth in seven months. that's a big step up. we do expect from our research that a majority of that step up is expected to remain sticky.
new, consumers have adopted habits around digital discovery and shopping and we expect a lot of that to continue. anna: it's difficult to give up that new behavior. you mentioned something about 73% of the industry's value destroying. that figure was 60% back in 2019. i wonder how that compares to other sectors. that seems like a very high percentage of an industry to be value destroying, even pre-pandemic. anita: i think the traits we see across all sectors, we are seeing a growing trend around polarization of performance, where you have got the winners and the super winners on the one hand and rest of the industry. what we do see in fashion and luxury is that this trend of share of businesses that are value destroying has been on a rise. unsurprisingly with the distress caused by covid, particularly
with the lockdowns and stores remaining closed. that certain exacerbated the trends in this industry. anna: why do you think that was? why such a big chunk of the industry value destroying? what is it that does not work in the way that this industry is set up to function? anita: i think what we are seeing is this industry in terms of consumer needs, consumer iscovery come etc. increasingly becoming much more global. what we are seeing is winning ning balancewin sheets that are really responsive to consumer needs are the ones that are doing well. i go back to the themes of resilience that i talked about, digital, asia, sports and leisure, luxury. of these segments have been doing well and the winners have been powering ahead. ath-leisure is
just what we call clothing now. anytime is the occasion to wear them now. let me ask you about the mood amongst executives in this sector. you have done this research talking to top industry execs. included in that, 350 fashion professionals. . you must have hit them at rock bottom to do this research at such a tough time. what are the messages of hope and recovery that you are seeing? where are the bright spots? anita: i think the industry executives are clear that next year will be a year ever recovery, but it will not be a year for recovery. they still do expect to be living with the virus come as they say, and its consequences. there are some silver linings. number one is really the whole shift towards digital. what this -- while this was a trend that the industry had, digital has always been a trend that businesses have been prioritizing on their strategic agenda, but it is really clear now that this is a channel here
that is sort of for consumers in terms of access to consumers and also the growth channel. we do think that businesses are actually and executives are positive around this opportunity and being able to -- into it as a means to digitize and simplify their business model. i think that is going to be a big trend. the other thing that the executives are embracing is the whole shift towards sustainable. again, a trend that was accelerating pretty covid, but covid -- pre-covid, but covid has only heightened the presence of sustainability. we do think themes such as digital sustainability will absolutely drive greater focus and attention. at the esgsilience scene perhaps a surprise to many. anita balchandani thank you very
much for bringing us the research. let's get a moment to look at some of the stocks on the move. astrazeneca one of the stocks that is gaining this morning, not the one who's a drug has been approved in the cape the u.k. has approved the -- in the u.k. the u.k. has approved the pfizer-biontech. drug. . . jd witherspoon up by 1.5%. we are seeing that kind of reaction in hospitality stocks. g4a says -- g4s the biggest gainer after guard well up their offer for the business. in europe thaton is broadly negative. up next, greener cards by 2030 -- cars by 2030. one company is looking to build britain's first factory gige farm. we will talk to them next. this is bloomberg. ♪
♪ welcome back to "bloomberg markets: european open." 9:42 in paris and berlin. the ftse 100 now recovered to flat. . the madrid ibex also recovering to flat territory after earlier losses. the dax and cac still in the red. manyw strong gains in markets in yesterday's session. the u.k. has approved the pfizer-biontech vaccine for use,
making britain the first country to license the coronavirus vaccine. let's talk now to sam fazeli, who is keeping us across the story of this morning. thank you very much for joining us. we heard the words from the health secretary telling u.k. media that we now see a way out of this and we can see that by the spring, we are going to be through this is the call he makes. joined up forbe that to really be the case? sam: that's a very optimistic view, i have to say. it all depends, as i said, on other vaccines being approved. million of its.5 available potentially to vaccinate 22.5 million people. that's assuming at -- 23.5 million people and that's assuming every single dose gets into the arm of a person. for the rest of that, we will need the astrazeneca vaccine and
we will need another vaccine. you do not need to vaccinate everybody to get out of the situation, but you do need to vaccinate at least 60%-70% of the population. that's where the issue is. anna: but i wonder if you need to get to that kind of percentage in order to remove many of the lockdown measures. if the big driving factor around these lockdowns has been to stop health facilities from being overwhelmed, then vaccinating 20 million people, if they are the most vulnerable, most elderly and most exposed people in the country, that perhaps does a good part of that project. sam: absolutely. then again, that depends on every single dose of this vaccine ending up in the arm of people. remember, i do not want to pour cold water on this. i am excited by the fact that we have good vaccines and that the u.k. has approved it through i ts very diligent system, but it
is optimistic. it requires perfect execution. necessarily is not -- has not necessarily happen before. specificallye for avoiding hospital overrun, but you have to make sure that it is perfectly executed. anna: ok, indeed. matt hancock did go on to say that this is going to be one of the biggest civilian projects in history. 50 hospitals are preparing to administer the vaccine and we wonder which other facilities. thank you very much for joining us. sam fazeli with her the latest on the u.k. approval of that vaccine. the u.k. wants to position itself as a leader on climate policy. the ambition has been backed by board pledges. britain will ban the sale of new diesel and gasoline cars by 2030 , a key to electrifying the auto industry and generating the jobs promised by johnson's so-called green industrial revolution could be manufacturing batteries in britain.
theish -- aims to build plant. give us an idea as to where you are in starting this business. where are you? >> can morning. thank you for having us -- good morning. thank you for having us on the show. we are in the middle of our feasibility study in terms of site analysis. sites, and hopefully we can announce one being the site in the u.k.. consultants,eers, etc. working full-time on the project. we aim to have the shovel in the ground during quarter two of 2021. anna: are you definitely going to put this in wales? why is it so important to have these batteries made in britain? question in terms
of wales. wales is the preferred site but we still need to do the feasibility study, because these -farms are very large and energy consuming. we need to remove the carbon footprint within the large supply chain. we need to have renewable energy. that's one of the reasons why wales is a preferred site but there are other sites in the u.k. that are very good as well. anna: you could just import the -- you could just import these batteries. why is it necessary to make them here? i'm sure there are reasons. orral: correct, we can import the batteries, but there are few things to bear in mind. in an electric arc, the batteries are roughly about 40% of the cost of the car. bearing in mind brexit, rules of origination, etc., moving forward, when he to localize the aspect of the supply chain in
europe. we only have 3% of the global battery supply in europe. if we are able to localize supply chains for the battery industry, the cell manufacturing in europe, then we are able to remove the embedded carbon footprint within the supply chain. it's not just about how much co2 end of theat the tailpipe, it's about the co2 from the mine all the way to the car. that is the point why we need to localize the supply chain on the oem's. anna: tell me about the funding for this project. have you already raised all of the money that you will need to take this project to conclusion? how big is the gap? over sevenect is years. phase one will be completed so obviously 4, raising money for future phases is not cost efficient. we are on track with our funding requirements at this stage.
thanks --veral several sources of funding, private, commercial and we are looking to collaborate with the u.k. government and have our expression of interest approved by the auto transformation fund. anna: has the pandemic slowed preparations for this project at all? or have you been able to work quite effectively around that? has come apandemic very similar to brexit, been good for britishvolt. i think the pandemic has highlighted the importance of the localized supply chain in the country. beens, the pandemic has helpful in the sense that we need to pull together a lot of different teams very fast in order to maintain the momentum to achieve the very ambitious timeframe that was put in place. yes, the pandemic has been slightly helpful, many thanks to the fact that we can work online these days. anna: briefly, the bugs
uncertainty, has that been a bit -- brexit uncertainty, has that been a barrier for investors? how has that waiting? -- weighed in? orral: brexit in general has been a dark cloud for the u.k. if you look at the investment numbers from 2017, obviously they have been on the decline. gigaplant andhe britishvolt, we have not seen a reason that brexit has caused the financiers and investors not liking the proposition. from our perspective, i think we are well aligned with industry strategy, with her majesty's government and their industrial strategy, and more importantly, we are aligned with the industry benchmarks. for us, brexit has actually -- activity. anna: thank you for joining us, orral nadjari, britishvolt founder and ceo. up next, what can revive the
vaccine, the vaccine from them being approved in the u.k. that is one of the market moving pieces of news we are dealing with this morning, along with a bit of exit news flow. let's talk to kristine aquino, who joins us from the markets live team from europe. are you seeing reaction to that approval by u.k. regulators of the pfizer-biontech vaccine news? are you seeing that in markets? we seem to see in some individual stocks. it is not really lifting risk appetite in the original way that the initial efficacy data did. >> there is a case of diminishing returns here in terms of market adjusting any subsequent vaccine related news. also, when it comes to u.k. assets in particular, we have those headlines from barnier regarding a no deal brexit once again returning to the four, just offsetting some of those gains. if you look at the ftse 100, very clear the division of gains versus losses. on one and, you have to brexit
sensitive stocks like homebuilders and more domestically focused stocks, lagging a little bit. of course you have the more cyclical names here like travel and retail and pubs kind of offsetting those losses, which makes for a flat day as far as the ftse 100 gives. anna: it's a complicated story for u.k. assets today, isn't it? the question of the day has been asking about the yuan. we did see movement in the yuan overnight after we saw that "new york times" op-ed quoting an interview with president-elect biden talking about how he is not going to be in a hurry to wind back phase one tariffs on chinese products. what can revise the -- revive the yuan's faltering rally? >> i think there is certainly china component here to consider. of course, a lot of it has to do with the path of the dollar itself.
we have seen a bit of a downtrend for the dollar this year. that may be running out of steam a little bit, at least taking a really. 'sat is very key to the yuan next steps because it is kind of a two sides of the same coin, if you will, here. the question to consider is the relative fundamentals we are seeing for the yuan versus the dollar, both in terms of economic growth, their ability to recover from the impact of the pandemic, and also a little bit about how each nation is responding to virus developments as a, because that is still a longer-term story that we will probably have to watch and see how that plays out. in their respective currencies. anna: thanks for joining us. kristine aquino leads our markets live team in europe. that is it for "bloomberg markets: european open." up next, you will have
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