tv Bloomberg Markets European Open Bloomberg December 14, 2020 2:00am-4:00am EST
anna: good morning. welcome to "bloomberg markets: european open." i am anna edwards alongside matt miller. matt: good morning. today, the markets say fingers crossed -- fingers crossed. futures sent higher while the pound gains on yet another brexit extension. the cash trade. urgent action. germany enters a hard lockdown
starting wednesday as italy overtakes the u.k. for coronavirus deaths. we will give you the latest on all of those numbers plus another shock. ursula von dernd leyen extend brexit talks with yet another deadline passed. the pound jumps. astrazeneca with a megadeal to take over a pharmaceutical company, the biggest deal ever with their ceo. cash trading across europe and the u.k. let's take a look at futures this morning. we have kind of a mixed picture here because ftse futures are down with the rising pound. elsewhere on the continent, you is futures gaining as evidenced bydaxd futures -- as dax futures up.
a little bit more on dow jones industrial e-money futures -- e- mini futures. what do you see on the gmm? much a globaly factor that is dominating the futures picture, isn't it? away from the specifics of the brexit story. let's talk about the gmm. we have a mixed picture coming through the asian equity session. we are fairly flat on the msci asia-pacific, up .1% or so. hang saying to the downside. andnikkei 225 for example, some better data out of japan, better business confidence data improving -- that seems to be lifting stocks in that market. arounde global themes, stimulus talks, continuing in the united rates around the first vaccine rollout to be deployed in the u.s. and deliveries expected today, all of that dominating the global
narrative in u.s. futures despite no progress on brexit. they are still talking and ongoing. much intensified lockdowns coming through in parts of europe including in germany. matt: let's focus in on what is going on in germany. harde set to enter a lockdown for wednesday. all nonessential stores will be closed, employees are urged to close. tooolchildren are encouraged remain at home as well. the tighter measures will last until january. and it will include a ban on gatherings over the new year although they will be an exception for christmas. joining us for more is our government reporter. seemingly fail in dealing with a second wave of coronavirus so we now get to the point where stores have to close for probably the most essential
period, revenue gaining period, in the entire year? >> good morning. managed to break it before it became bigger and this time, you can see the official people in charge here rested on their laurels, so to say, and they underestimated the resilience of the virus. forcan hear the shot coming germany's federal system which became apparent. may could not agree on tougher measures even though merkel has been pushing them. at thisen you look chart, it shows the way germany did not have the same intensity, size of spite, that we saw through the autumn but as we head to the winter, where other parts of europe have managed to e down, thespik
german trend has not been as bad as the rest of europe. it is not coming down and that seems to be the imperative to act that is driving this move. politically, what does it do to merkel's approval rating? how is she faring? >> merkel herself will probably -- she will remain popular she haspublic image -- always been on the cautious side. she just was not able to convince the other state leaders who would have had to execute her measures. out his one who sticks the state leader who has been very cautious, had very tough good measuresas next year. thanks very much.
joining us. he will be covering the upcoming election, which will be interesting to see what this will do to the cdu legacy. that's get into markets with laura cooper, our macro strategist out of london. much of these tighter lockdown restrictions and continuing concerning numbers mean for markets today? laura: we are seeing this risk-on mood today which does point to markets kind of continuing to look through these near-term challenges. what we are seeing more broadly is equities are stuck within these competing narratives of near-term risks. we are seeing stumbling economic data in terms of the economic recovery, and that is contrasted against covid vaccine deployment and stimulus hopes so in the near term, consolidation is likely due.
we saw that in a stoxx 600 mast week. that could put more pressure. today, it's all about a little bit more about relief coming on the u.s. stimulus front and the fact that brexit knows the hard deadline. we are seeing ongoing talks. ultimately, that is supported for near-term sentiment. anna: which of these deadlines are we supposed to pay attention to? is it just december 31? laura: that is what the weekend is telling us. both sides want to continue -- neither side is going to walk away. it is the year-end which continues to be the ultimate deadline. it's not the case of self-imposed deadlines. we are going to see significant economic disruptions at the end of the year regardless of whether there is a deal or no deal. there is uncertainty around the
tree disruptions so ultimately, i think we will potentially see a relief rally if we do see a deal reached before christmas, which is looking most likely, but ultimately, i think that the upside for sterling is likely capped given the development's have seen. matt: if we have learned anything about the e.u. negotiations, it's that they could manage to push the year-end deadline back as well. i don't think that would surprise any of us as well. let me get to you on the question of the day on the mliv blog. how would china -- how would the yuan pushback hit assets? what are you seeing? laura: it's interesting. we are seeing this increase in q1 appreciation that we did see in november. whatndily outpaced estimates expected. we are seeing reports that the eight spot u.s. dollars so
ultimately, it's going to be a question of what tool authorities used going forward and the extent of whether it's going to be showing persistent resistance or whether it will take a more passive approach. during may, is going to impact dollar weakness as well. some of that could begin to fade on that and then emerging markets, we look at south asian currencies which outpaced the exceptional performance on the dollar. we could see some greater intervention in terms of both currencies. is interestedint near-term risks, whether we see the u.s.-china trade tensions, whether that escalates the need for intervention or ultimately, there is a medium-long-term tensions with chinese
exceptional outperformance, strong appetite. that is going to kind of build a stronger medium-term outlook. near-term forces -- that is something markets need to focus on. anna: thank you for joining us this morning, laura cooper, bloomberg's macro strategist. coming up, the pound gains as the u.k. and e.u. leaders agreed to further extend brexit talks. they are going to go the extra mile but is a any closer to getting down? -- a deal any closer to getting down? we will discuss.
about how the u.k. will not -- both sides talking about going the extra mile. another brexit deadline has passed. the pound jumped as they agree they will go the extra mile and keep talking in an attempt to secure a trade deal. 48 hours of diplomacy. the process seemed to have been reaching the end of a very long road. guest fromed by our blackrock. do you have any nervousness around the brexit process, what that does to etf flows? it speaks to nervousness around the brexit deadline. >> actually, in november, we saw investors slowly coming back to u.k. assets after a very long period of prolonged out floats -- outflows. almost 20% of u.k. equity strategies across actives and
etf have seen assets -- a prolonged period of lack of interest starting to come back. going into this weekend, there was nervousness about potential accidents happening coming out of this weekend. it's clear that the real deadline is the end of this month and both sides are not going to walk away intentionally and that's why markets reacted more positively. manus: with the exception -- matt: with the exception of a little bit of movement on the pound, one cent in either direction, aren't investors already prepared for either outcome? are there going to be massive triggers pulled one way or another? wei: i would say probably not and the reason i say that is because if you look at the
difference between a skinny deal and no-deal, on paper and optically, it looks like there was a big difference, but at the end of the day, january 1, the country will have to embrace for big changes no matter if we have a skinny deal or no deal or postponements. that's a bit of a continuation of what we have but the difference between the two deals , the outcomes are not that big, and either way, the country will have to face big francis. anna: -- big differences. anna: it's an important point that there is big change coming anyway but if we do have no deal some currency strategists talk about seeing big moves in the pound. down to 120 was the view of nomura last week. that would have big knock on effects for other u.k. assets.
what would you expect to see in stocks if that happens? goes downthe cable from the current elevated level if we have a no-deal which would be a surprise even though chances of that happening have been rising. if that were to happen, we could see further rotation within u.k. assets, so given the large caps are more negative correlated with the strength of the currency, we could see greater focus around kind of the smaller and mid-cap if that were to happen but if we do have a no-deal, i would say international investors appetite for u.k. domestic asset would tepid, muted,te and it would take a long time for interests to come back. speaking with our colleagues, analyzing a lote portfolios by european and u.k.
investors, there is a strong home bias for u.k. investors. u.k. investors holding of u.k. assets at nine times more than international investors outside of the u.k., so this discrepancy, that gap may persist. if we have a no-deal, otherwise, we could a bit of a warming up as we see inflows coming back in november. matt: we are going to keep you with us for a little bit longer. wei li from blackrock will talk to us about the german lockdown and what that means for europe's biggest economy, next. bloomberg first word news. for that, we go to laura wright in london. laura: the u.s. government agencies have been hit by hackers. cybersecurity funds said the attack came through an update to widely used i.t. software. the washington post is reporting hackers backed the russian government are suspected of being behind the cyberattack. the is aware of the report and
they are taking all the necessary steps. italy has overtaken the u.k. as the european country with the highest number of covid-19 deaths. italy is among the countries hardest hit by the pandemic with more than 1.8 million cases. the european council president charles michelle expects the first vaccines to be approved in the e.u. in the coming weeks, maybe even before the end of the year. british novelist has died at age 89, best known for his cold war thrillers including "the spy who came in from the cold." his former officer was mi5 and am i6, he wrote tales of treachery and duplicity. the new york times once described him as the preeminent spy writer of the 20th century. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
>> [speaking german] >> we maintain that friends, relatives, and acquaintances can meet with a maximum of five people into households and there is an exception only over the christmas holidays from december 24 through 26, but on new year's eve in new york -- not on new year's eve and new year's day. you can invite for more people
beyond your household. more people beyond your household. matt: angela merkel talking about the hard lockdown in the christmas i exception. children will be urged to remain at home and non-essential shops will close during what is probably their most important week for revenue. the tighter restrictions, including a ban on gathering, as you heard, will last until january 10. that's after lockdown light daily to halt a surge in infections and deaths. wei li joins us. more responsible people -- anna has done most of her christmas shopping already, but for the rest of us, it still has to be done and i'm going to have to do or online at local stores, not in person. how hard is this going to be for the german economy? well, q4 economy is a bit
of a write-down for many countries including europe, including germany, because of the harsher containment measures, not only the outcome in one, but what we have seen so far, but in terms of what markets would react to, it's on the term because markets at ahead. understandably, we see markets buoyant, who risks boy and in response to a vaccine breakthrough bringing forward economies. also the accommodative financial conditions. a bit of an optical disconnect with containment measures coming in and markets still buoyant but we think that there is markets up. anna: it's interesting, that
opticaldisconnect -- disconnect. in terms of levels of lockdown, i would surprise investors because it seems all of these lockdown measures, wherever they are introduced, they don't seem to affect investors medium-term outlook's and i wonder if that is always going to be the case no matter how much of a lockdown we see in the short term or over what period. lockdownuse of the measures that have been in place and that will likely be put in place specifically for europe, of europeanin favor equities in comparison with our overweight in u.s. equities, for example, but i would say when it comes to lockdown measures, we are not expecting significant derailers for markets. what would be a derailer of sentiments would be the effectiveness of the vaccine if
there is significant surprises down the line or potential kind virus againof the affecting how effective the vaccine would become further down the line so if we still have that to look forward to, we could be comfortable that in six to 12 months time, we could look back and move on from this period and as long as that is still the base case, the current lockdown is not likely going to have significant impacts on market sentiment beyond the near-term kind of volatility because markets have run up so quickly, little bit of room for consolidation but not much more beyond that. matt: does that mean you don't expect this to result in a slew q2, 2021?tcies in q1, wei: well, that was always the risk and there continues to be a
risk for that, but that is why we have the policy bridge. before we had the vaccine breakthrough, we were building the bridge potentially leading to nowhere. talking about the monetary policy as well as fiscal, but now, knowing that there is light at the end of the tunnel, we are building this ridge to somewhere which is why it is so important that we don't become complacent in the interim. we continue to have further ongoingthe discussion and central banks continuing to step up. is important to prevent this situation that you are talking about. the economy needs help to reach through the crisis and we have gotten help and now we just need to work through this. of 2020 perhaps
anna: welcome back to the european market open, 30 minutes until the start of their european equity trading session. divergence performance expected for your stocks futures. we are seeing -- euro stocks futures. we are seeing upside, broadly. ftse futures expected to move to the downside. we have strength in the pound. let's get analysis now from one of our top stories, and links to trends in the pound. the u.k. and a you agree to continued talks on the toationship -- eu agree
continued talks on the relationship. a new proposal by the u.k. on sticking points how to create a level playing field could help break the deadlock. we're joined by catherine bernard, cambridge university, specializing in eu employment. good to speak to you this morning. after listening to the rhetoric over the weekend, another deadline blown through, do have a better sense of where the landing ground on level playing field might like? -- fly -- lie? can you see a way they don't need to apply too much? catherine: the starting point is it's a good news they are carrying on talking. i think no deal, lots of people think they know deal would be bad for the u.k. economy, and pretty bad for the eu economy too.
the question is how do you resolve these really tricky issues? 95-97% of the deal has been agreed. it's these tricky issues. what has happened is that in the original draft of the text, the eu had gone from what is called a nonaggression cause, take a snapshot of all the eu rules at the end of this year, and the u.k. should not duck below that level. then it seems to have morphed into a rhetoric because, or evolution because -- cause, or evolution cause. and the eu was expected to do the same. the u.k. said that totally unacceptable for a sovereign state. you haven't gotten around the fact that we're a sovereign state. zonehere the landing appears to be, if they u.k. undercuts the eu in a significant way, not just minor
significantly, abdicated by a third party, only then can the eu slap tariffs on the u.k. and that seems to be the direction of travel. anna: how does that compare to the deal between canada and the eu, professor bernard? it gets a lot of reference on the u.k. side. they say we just want what canada has got. they say you can't have what canada has. how does that deal with the ratchet? catherine: canada doesn't do with the ratchet at all. say is thatadians essentially both sides have got to respect the load in special labor organization standards. that's good because they're, good minimum standards but they're minimal compared to eu standards, which is more developed, more progressive.
that's with the u.k. asked for in its version of the draft back in march. and for the eu, that's not good enough for the simple reason that canada is miles away. puk u.k. is 26 miles away. for canada, the main trading partner is the u.s. for the u.k., the main trading partner is the eu. all this talk about canada is somewhat misleading, one because geography matters in international trade. two, because canada is so far away, issues like road haulage are not an issue for canada, eu, and the way the u.k.-eu is a really big issue. there's a channel that physically links the two, the u.k. and the eu. so it's never been the case, but we wanted was canada. themight remember discussion of canada plus, plus, plus. it is plus, plus, plus.
we want access on health care. we want access on professional qualifications, which goes way beyond what's in the eu-canada deal. matt: how does the governance issue look right now, professor? if the u.k. were to play germany in soccer, for example, you know, britain would be at a huge disadvantage. and if all the referees were german, that would be an even bigger problem, right? catherine: you're talking a sensitive issue there on football, as you might call it. it might be germany against england, rather than great britain, but the analogy is a fair one. that's why, in the arbitration provision of the withdrawal agreement, there is already provision for both sides to pick their referees. and then there will be referees from both sides on the arbitration. you can imagine something
similar would be the case in respect to future trade deals. just remember that nobody has seen any drafts of the text since march. and we know they've evolved significantly. in all this discussion about level playing field, it's done on a nudge and a wink, depending on who you believe in the briefings publicly. matt: in terms of every time we face a deadline, it is sensationally important until after its past, and then we pretended it never existed. is december 31 really a deadline, or can you imagine a circumstance in which they fudge that, maybe come up with a one-month extension or an agreement that happens for a year, for example? are there other options? catherine: so the 31st of december deadline is the real, real hard deadline because legally, that's when the application of the current eu treaties, that apply during the
transition period, stop. now, then the million dollar question is, what happens if the eu and u.k. need an extra month, six weeks? even if a deal is concluded, that's not the end of the story. it needs to be legally scrubbed. it tallies up all the loose ends. then it needs to be in 2023 languages. and that it's got to go through the eu parliament and it's got to be agreed by the councilman. on the u.k. side, there needs to be a bill. although this might take a little bit of time. how do you give,, or a of months extension? and legally, that's really tricky. there was provision for the transition period, but the u.k. should have asked for that by the end of june, 2020. the u.k. took a conscious decision not to offer an extension. and so there are lots of legal
uncertainties about how to deliver a mini extension to buy time. that's why all the pressure is on this week and next week, trying to get a deal done, with a view to the christmas period being spent to try to get all of those processes being done. not great news for the families that were for the negotiators. anna: professor bernard, thank you for joining us, catherine bernard, thank you for bringing us your insight as we get ready for further deadlines around brexit. let's get a bloomberg business flash with laura wright. buyingastrazeneca is from for $39 billion, pushing into rare diseases and immunology. it values it at a premium. it would be the largest deal since it was founded in 1999. and entrenches its position in the 10 biggest drugmakers. dr. bank may eventually allowed new york city deutsche bank --
deutsche bank may allow new york city distributors to go elsewhere. it's discussing to allow more to work from home. the head of deutsche's americas division told they can cut america headcount and have over the next five years. the ceo elon musk is urging tesla workers to produce output through the end of the year. he says demand for its electric cars is so high, production needs to increase as much as possible. the company has a part -- target of delivery of five cars this year. the firm is being added to the s&p 500 next week. that your bloomberg business flash. matt, anna? matt: laura, thanks very much. laura wright with your business flash out of london. now, u.s. lawmakers are planning to unveil a $908 billion coronavirus plan.
death remain over whether congress will pass it. west virginia senator joe mansion guaranteed that hard-fought negotiations would produce results. >> we were on the call all day and it -- day yesterday. we will have a bill produced for the american people tomorrow. $908 billion. matt: joining us now is bruce einhorn. bruce, these negotiations have dragged on for months. rb going to finally see a deal? are we- rb going -- going to finally see a deal? bruce: we might see a resolution soon. they are facing a couple of deadlines, lawmakers. there are several provisions that they had earlier in the year. that will be expiring soon.
and the government is also going to be running out of money. there's the possibility of a government shutdown at the end of the week. so there is a must pass bill and they can do the covid relief as part of that. truismt's some sort of that nothing is allowed to take place. what are the biggest obstacles in the house and the senate to getting this through? bruce: well, you just played the clip from joe mansion, saying we will have the $908 billion proposal. that's actually far from certain. there's a possibility it may be they break it up into two proposals, one for about $748 billion, which would have things that are provisions that it seems both sides can agree on when it comes to things like extension of loans for small
businesses or rental assistance, money to schools, money for the realevelopment, sticking point is what to do desire to havec money to state and local governments for about $150 billion. republicans want to have temporary liability shields for businesses that don't want to get, have exposure for potential covid lawsuits. and so those items might be stripped out and be voted on separately. anna: what do we know about president-elect biden's position on this, bruce? what is his hand -- does he stand on this particular version of the stimulus? bruce: president-elect biden is siding with the democrats,
saying let's get this done. he doesn't think that this is going to be the final thing. is going to be calling for additional aid in the new year, but says that we're in a crisis now and we need to get as much as we can. the other big question is, where does president trump stand on this? and that's also far from certain. he mentioned the treasury secretary has been proposing an alternative that would be slightly higher in terms of the total dollar amount, but wouldn't have as much -- would have very little, in fact, aid for additional unemployment insurance benefits, and instead give out checks, $600 checks to people. that's something both republicans and democrats are uneasy about, when it comes to not having unemployment insurance. anna: thanks very much, our him toy -- reporter bruce einhorn on
anna: welcome back to the european market open, 30 minutes until the start of the session, and futures point to the upside. we do see not as much, obviously, as the other markets. the other markets expected to show bigger gains despite further lockdowns from the german economy. that might impact on specific shares. in terms of m&a, lots of news to talk about and pharma. astrazeneca has been plotting its post-covid future with a $39 billion future for the rare disease specialist. the proposed acquisition will add treatment for uncommon blood
and immunological disorders to the portfolio of the u.k. based drug maker. for more, we're joined by rachel chang, who has been following this story for us. many of us in the industry, astrazeneca very involved. but very mindful of what's going to be the big theme their mom normal business is -- their normal business is all about. rachel: yeah, that's right. e really saying is the pharmaceutical industry is looking past covid and with the post-covid verdure dish future will be like. uprazeneca has been tied with testing, treatment, and vaccines. now that we have seen promising results from those front, the ceiling is clearly that things are going to normalize quite quickly and they do position themselves for business as usual for back-to-back competitive
landscapes before covid came. this i guess we could ask about a lot of companies these days, rachel, but why is astrazeneca willing to pay such a high premium? i think inht, so the global pharmaceutical industry, we're seeing that the biggest companies were taking shelter on each other. they were very active acquisition players. astrazeneca itself received a takeover offer from pfizer six years ago. and in the biotech space, there are not that many companies like this one, where they have such valuable drugs, innovation, the ip that they have, which could be billions of dollars in just one drug. and that premium that they're willing to pay is not unusual at all for this space, because it could pay. we know astrazeneca is not going to be making much money from the covid vaccine. it committed to selling at cost.
now, and it's that position itself to drive profits going forward. matt: got it. thanks very much for joining us, a lot going on in your area. rachel chang there, who runs pharma coverage for us in asia. let's get bloomberg first word news in london with laura wright. laura: thanks, at. non-essential -- matt. non-essential stores are closing. schoolchildren are encouraged to remain at home. the tighter restrictions include a ban on gathering over the new year and will last until january 10. a comes after a loser locked on failed to halt a surge. in cases. casesplans to double after a loosening of sanctions under president-elect joe biden. a good cause problems in opec, trying to keep it down. they have exempted iran from
production cuts due to u.s. sanctions. the european union called on china to allow a bloomberg assistant, who is detained last week in beijing, to have access to a lawyer, medical care, and contact with her family. detainedinese citizen on endangering national security. china says her rights and interests are fully protected in the matter is internal. global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. matt, anna? matt: thanks very much, laura wright with your first word news. we're going to get your stocks to watch, including which german stocks are set to rise, even after angela merkel announced a walk down could be devastating to gdp. commerzbank says it will beat
matt: will come back to bloomberg markets. this is the european -- welcome back to bloomberg markets. this is the european open. joining us now is dani burger to talk about the stocks you want to keep your eye on. and dani, let's start with german stocks. interesting we see futures rising even as this new, harsh, hard lockdown has been announced. dani: yeah, it certainly feels counterintuitive. but when you look at the stocks likely to leave these gains, it makes more sense. you'll see things like the frankfurt airport, lift anza certainly takei -- lufthansa certainly take a hit, but meal
service, on the chopping. in terms of what should bradley, we'll get -- should rally, we'll get things like all of these are likely to do better with new restrictions coming into place. anna: we'll watch those individual names in germany. german futures point to the upside, but i guess that the national index that the dax is, compared to the more domestic stories. what about the m&a stories? this quite a lot in the pharmaceutical stories confirmed or reported. dani: it's pharma, architectural products, video games. it's across the board. codell confirm it will buy masters for 13% premium. it started as a videogame per porter -- i started as a videogame reporter when i joined ea. we're also looking at brixon holdings, offering to buy the
rest of hudson douglas, an architectural products firm that will be at a 20. 5% freemium -- product firm. that will be at a 25% premium. the private equity firm is also going to buy rest of pharma for $2.1 billion valuation, a 22% premium. i'll be speaking to the ceo tomorrow as part of our money undercover series. so, i'm sure we'll talk about that deal in the deals they've had as of late. anna: interesting. dani burger with the stocks we are watching this morning. so, just five minutes ago, four and a half until the start of the cash equity trading session today and this week. a few lines coming out of brussels, michel barnier telling e.u. the u.k. is backtracking on fisheries just as it seems as if the focus was all on a level
anna: a minute to go onto the start of cash equity trading. good morning. here are your headlines. italy overtakes. theu.k. for coronavirus deaths . brexit talks extended with another deadline ignored. michel barnier tells the u.k. backtracks. the pound jumps. astrazeneca lands a megadeal to take over alexia pharmaceuticalss, the company's biggest deal since it was
founded. matt: was take a look at european futures. we had -- let's take a look at european futures. we had a mixed picture. mecca optimism. interesting to see dax futures, as we just talked about with dani, even as germany faces a new, harsher lockdown on wednesday. is your global macro remover screens -- here's your global macro mover screen. changing -- start trading. that's probably due to, the most part, the strength in the pound as these brexit negotiations pass. can you believe it? another deadline. the ibex in spain up more than 1%. will be one of the bigger gainers on the continent, the
spanish ibex really soaring out of the gate this morning. around karen in paris up .75%, the cac not doing poorly. we should expect the dax to point higher, as well. that even as germany is set to enter a hard, harsher lockdown from wednesday. non-essential stores will be closed before, remember, what is the all-important pre-christmas shopping day, or pre-christmas shopping week. employers are urged to close offices, schoolchildren to stay home. these will last well beyond christmas, will be on new year's as well, until january 10 at least, and include a ban on gatherings. chancellor merkel was serious about that. no one will be partying on new year's eve this year, or at least not legally. joining us for more is our
germany reporter, arnie dell. how do these new measures compare to early reluctance? this is one of the harshest lockdowns we seen in this country. arnie: hi, matt. wave,, during the first we had similar measures. the difference was is they came earlier and they were fit to break away before it became bigger. this time, we were actually passed the wave already. so it's kind of a last-minute effort. especially the christmas and new year's measures, you know, are pretty tough for germans who are, as you also know, especially on new year's, are used to fireworks. that will happen this year in germany. say, i spent a
lot of money buying fireworks this year, so i'm of this -- little -- i'm a little personally bummed out. i'm guessing hotels will be shut down. what is this mean for most germans over christmas? well, that you have to bring a tent probably, if you want to come down there. it will mean they will have to stay home. states,e, in certain there's a certain moving of members, so there are four people plus, five of another hassle. so, it will be a very quiet christmas, and probably also with the left present this year, may be or amazon last-minute here. and many germans, this is one thing i don't understand, why this only starts on wednesday
because, of course, today and tomorrow the shops will be crazy and the shops will be filled. it's a bit strange. matt:h, absolutely. i mean, i'm going to rush to do all of the shopping that i need to, at least anything brick-and-mortar in the next couple of days. i guess i'll just wear two mas ks because i know those stores are going to be packed. thank you very much. arne is going to continue covering this for us. he'll be covering very closely over the next year. this is going to be, especially if it results in a big hit to gdp and bankruptcy is next year, it's going to be tough for angela merkel for the city you, for the ruling party -- cdu, for the ruling party, because it doesn't look good. anna: we'll have the political implications and economical
implications in an hour's time. let me just mention other lines coming up from michel barnier, pointing to an eu diplomat. a narrow path to agreement is something that he sees. we are seeing the pound pickup on the back of that, 1.3% over level -- 134 34 level last week. we've got brexit negotiations not resolved that maybe we were anticipating, facing further talks. european markets is about putting higher, lifted by stimulus stateside. banks and travel and leisure lead the index. the pound is going higher. joining us is bob parker, investment committee member on the downside, we've got for the lockdown member here's -- measures in germany. to the upside, the does seem to
be substantial brexit relief already, despite lack of finality on those talks, and some talks around u.s. stimulus re: surprised to see just how up -- stimulus. re: surprised to see just how markets are taking this -- are you surprised to see how markets are taking this? bob: the support the passage of supportudget and the for the people recovery plan. one states last week, that recovery plan and the budget looked in jeopardy because of a physician from poland and hungary. but that's $1.85 trillion if you include the budget and recovery plan. it's a very strong fiscal support for the eurozone economy going into 2021. i think last week, the expansion of the pandemic emergency purchase program by the ecb, and also some easing in the lending
to the banking system through the tltro program. to the first point, to answer to your question, the answer by the eu on the physical side and the monetary side is market supportive. i think the second area is what's happening in the states. it looks as though there will be some progress this week towards a fiscal package. it looks as though it will be just over $900 billion u.s. there are still areas of debate, particularly the question of guaranties and support for companies which may be supported -- exposed to lawsuit due to coronavirus. ir of optimism that it will go prior to year reported.hat is we have the fed meeting this week, with a high probability they will expand their qe
program. matt: you know, we can talk about the state, and we will, bob, because the s&p 500 keeps hitting new highs. it's up 14% year-to-date. so, investors like something there. it's kind of a mirror image in what's happening in europe. the ftse is down. in fact, almost all of the major european equity indexes are down, your to date, even the dax -- year-to-date, even the dax. why is europe so far behind? have the shutdowns been harsher? has the bridge been weaker? are we going to see more bankruptcies here? 'what's the recent? bob: a number of factors. the eurozone economy has been hit, and the eurozone economy across the u.k. has been hit marsh harbour -- much harder
than the u.s. the differential has been greater this year. that will probably reverse in 2021, your outperforming -- europe actually outperforming the u.s. the other factor is the components of the s&p versus the components of the euro stocks. they're up until recently. the s&p has been led by the tech sector. that's demonstrated by the performance of the nasdaq. whereas the u.s. is tech heavy, the euro stocks is industrial heavy, consumer heavy, and tech like. that also explains the performance of the s&p. also, you can argue one goes back to the second quarter of this year. the fed action was probably more aggressive in easing monetary policy than the ecb. i would actually say now, the fed and the ecb are moving together. i think it's interesting that,
in recent weeks, we started to see the euro stocks start to perform the s&p. we are seeing, finally, the rotation back in europe by investors. much,bob, thank you very bob parker stays with us on the program. up next, we'll get to that conversation about the u.s. plans to unveil a not hundred $8 billion relief proposal. one of the negotiators say there's no guarantee congress will pass it. plus, amazon unveils a self driving taxi. we will hear from our exclusive interview with the cto on that techrmance, chief officer. this is bloomberg. ♪ the usual gifts are just not going to cut it. we have to find something else. good luck! what does that mean?
anna: welcome back to the european market open, by a lot of movement on these markets. european equity markets up .8%. the ftse 100 up a laggard. the move on seneca will be $39hing on the ftse, billion deal for alexion. that is weighing on share prices. elsewhere in london, we do see optimism around the brexit talks, michel barnier saying he
can see a way to a deal. as result of that noise, moving higher the domestically focused banks. delivery hero moving to the upside on the back of germany going to a much tougher lockdown for just under a month, it would seem, at least. that will be dish -- introduced on month day -- on wednesday. matt: u.s. lawmakers are pushing nine put a billion-dollar coronavirus pandemic -- 9.8 billion-dollar coronavirus pandemic relief. death remain over whether congress will pass it. hard-fought negotiations will produce results. of course, there's a completing billion package from steven mnuchin. bob is still with us. do we assume some kind of basically trillion dollar package goes through now, and then president biden starts
working on more relief after january? week's pritikin rickel -- pretty critical. they extended the debt ceiling. that needs to be extended further unless that doesn't happen, we're going to get a government lockdown. that's one thing to watch. the centricus is as you describe, which -- central case is as you describe, which is this week, or next week. that is more important because if no package goes through, that 12 million workers in the u.s. will actually lose their benefits at the end of the year. that obviously has negative implications for consumer demand and activity for the u.s. economy into january. after strong october numbers in the u.s., recent data on
consumption activity numbers, in theer of the surveys like new york fed manufacturing survey, has started to show data for november, december as weakening. i think that was confirmed in the jobless claims numbers. there was a lot of pressure. i don't think go get the $2 trillion package the democrats want. but a two-stage process, $9 billion this week, followed by a possibly $1 trillion of physical relaxation once president-elect biden finishes the inauguration process. anna: we talked a lot about the potential for further regulation on businesses in the u.s. that was newsworthy around facebook. you drawn our notes to the pharmaceutical sector. some parts of farmable make money after the global pandemic. others won't. many are getting publicity and
playing in the spotlight this and i make has created for the sector. will that be followed by positive momentum? odc regulation coming from that sector, as well? well, -- or do you see regulation coming from that sector, as well? bob: well, i think coming from your point, that potentially is a drag on what has been the top-performing sector in 2020. coming onto the pharma sector, i think the key issue for the incoming biden government is pricing of pharmaceuticals. and i do think there's going to be increased regulation there. so, it's basically in the consumer sector of health care that i think the biden administration will increase regulation and try to put a cap on pharmaceuticals. so, then again, it's something to watch. having said that, the valuation
of the health care sector is reasonable compared to other sectors in the s&p. price-earnings ratios well below the pe on the s&p. that's one factor, which is fueling this increase in m&a activity and pharmaceuticals. -- in pharmaceuticals. matt: i wonder what you expect the covid follow-up to be in the u.s. surely, it's going to be horrendous in obviously, italy, spain, obviously have more deaths per capita than the u.s., but not many more. and how is that going to hit the economy? bob: i think the hit to the economy we are already seeing, and that frankly started, as i mentioned, in november, with very heavy restrictions in california, most notably southern california, likewise in new york and certain other major series -- cities like chicago.
it hits the service sector very hard. and in europe, we saw that over the last two to three months with that downward movement in the service sector pmi's. a veryk we're in interesting period at the moment, where all the news out of europe our continued to be very worrying. conversely, in the states this week, vaccination programs are rolled out. they started last week in the u.k. i'm assuming over the coming week, we will see vaccination programs rolled out across the rest of europe. we're in this slightly odd period, where coronavirus numbers are bad, but the good news is vaccinations are starting to be addressed. anna: it's the short-term and medium-term. bob, thank you. bob will be continuing his
conversation with matt and i at and :00 a.m. u.k. time coming up, cruising into the future on a bloomberg exclusive, we speak to the ceo of zeus, self-driving startup and by amazon. we have that story next. this is bloomberg. ♪ - [announcer] imagine having fuller, thicker, more voluminous hair instantly. all it takes is just one session at hairclub. introducing xtrands. xtrands adds hundreds or even thousands of hair strands
right now, 23 minutes into the session. we're looking at gains across europe. banks are doing rather well. the fan is up more than 1% on increased optimism. i guess, optimism that we just danced past one more deadline on sunday. now, to matters further to the west, zeus, the self-driving startup owned by amazon, has unveiled a fully functioning robo taxi. the company plans to deploy fleet of the self-driving caret in its own autonomous ride-hailing service at some point. in an exclusive interview, the ceo spoke with ed ludlow about the challenges of getting the product to market. >> this is one of those technologies were there's an advantage for everybody. there's an advantage for cities. there's an advantage in terms of infrastructure. we're working closely with city
and federal level. and we are putting things together. now, are there laws and things like that? not yet. but in nevada, and in california, drivers permits are being dispersed. >> there are other distinctions as well, china being an example. some european nations. we see zoox establish itself outside united states? >> yes. step-by-step, but we have global ambitions. >> do think public will be accepting of a vehicle like that? where is momentum going to come from? >> i think, again, it's safe. it's clean. it's enjoyable. there's a contract with customers. they see what we're using to drive. so, it will take time.
little by little, we'll earn it. but we think it's an inviting way to basically liberate customers to not worry about driving, parking, and all of the things, and just be transported. and what they do during the time that liberated is also up to them, in terms of entertainment, music, and productivity. >> do you see a world in which people don't own cars? >> not in the foreseeable future. we think it will be a mix. public will -- what we will see is in cities. is about inpatient sees -- it's efficiencies. matt: hopefully we don't ever see a world like that. anna: talking exclusively to ed ludlow on the company's ambitions of the future. i'm, sure matt miller will get in it no problem.
i'm still trying to figure which is the front and which is the back. sterling is driving against peers this morning. the pound was set higher on u.k. and u.k. leaders working on a trade agreement. there's still plenty of unease around the risk of a no trade deal. dani burger is here to talk us through what is going on in the markets around this theme. what are you spying? dani: -- spotting? dani: this has been a perennial problem. if you want to hedge, you spend money on options that once you get to these deadlines, they just pass and nothing happens, rendering what you've spent more or less worthless. the option on cable really explains this well. the spike over here in march is when we saw the pandemic it. then you get the spike going into this wiccan. a comes down -- weekend. it comes down, he's is now.
the "europeano market open." websites.e 0.7% up from the stoxx 600. when we look at where the gains are fallen, not so much in london, olympic way down by most of the downside in the pharmaceutical sector. astrazeneca making that play for alexion. that is weighing on the share price. technology is also under pressure. banks and retail. to the upside across europe. let's get a first word news
update with laura wright. laura: germany is entering a hardluck don't on wednesday. nonessential stores are closing. schoolchildren are being encouraged to remain at home. restrictions, they include a ban on gatherings over the new year, and they will last until january 10. it comes after a looser lockdown failed to halt a surge in cases. u.s. government agencies have been hit by hackers. and cyber security firm, fire through at came widely used software. the washington post is reporting that russian hackers are suspected. the u.s. curve and says it is aware of the report and taking all necessary steps. iran plans to double oil production next year after the country anticipates in loosening of sanctions under president-elect joe biden. extra exports could cause problems for opec, which is trying to keep output down.
spy novelist john le carré has died aged 89. he was best known for his cold war thrillers, including "the spy who came in from the cold," and "tinker, tailor, soldier, spy." he wrote more than 20 books. the new york times once described him as the preeminent spy writer of the 20th century. global news, 24 hours a day, on air and @quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. much,laura, thanks very now it is time for the brussels edition, your guide to the week ahead in european politics. a briefing envoy this morning, chief negotiator
michel barnier says he sees a "narrow path" to agreement. let's get to maria tadeo. maria: good morning. it is another day, another deadline that has come and passed. michel barnier, still briefing. saying it is difficult but still possible. to discuss this, i am joined by a professor at ucl of u.k. law and constitutional law. i have a question when it comes to the deadlines. this is becoming almost a never-ending story. would the actual deadline be december 31, or do you see a way for talks to continue beyond and going into the new year? >> talks can always continue. december 31 is the point at which the e.u. stops applying to the united kingdom.
this could, if a deal is reached, just like a couple of days before the deadline, and could be a provisional application of that deal. but the continued application of european law throughout the transition that will start on the 31st of december and that means a lot of change in all aspect of economic relationship? want to pick up on that because the timeline is crucial. you are saying that there could be a deal by december 31 that is not ratified but will still be applied nonetheless. if the european government does not ratify the deal and till generally 15, what happens in those three days? there is a lot of uncertainty for business? professor eeckhout: the fact that there are no tariffs and no quotas, which is what the deal
would include, that can be applied provisionally and it doesn't have to be necessary approved by the european government, it can be done by the e.u. council of ministers on the e.u. side, can decide to provisionally apply the agreement and give more time to the european parliament, to look at the agreement and to get it finally ratified. that is the position on the e.u. side? maria: so there could be a bridge, a legal bridge in between that. i want to clarify something, there has been a lot of speculation that perhaps we could enter a no-deal and european countries could negotiate on a one-to-one basis. is that doable from a legal perspective? prof. eeckhout: the law is complicated? prof. eeckhout:. there is a political element as well. it seems particularly that the e.u. and member states are really keen on remembering and likeness also in the new year in
the event of no-deal. be legally at scope for doing many deals between the u.k. an individual constitutess, which a trade border, but whether those states will be willing to do so is rather unclear. the position seems to be that they will want to continue negotiating with the e.u. and the european commission? maria: there is a question i want to put to you on this concept, this idea of sovereignty. the spanish foreign minister yesterday said something interesting. she said when you look at a trade deal, this is about dealing with the interdependence that you have. it is not about asserting your independence. that is by definition not doable in a trade deal. two?o you get around the at the same time he have to manage the trade relationship . there? the legal leeway
prof. eeckhout: it is finding the balance between maintaining your sovereignty and cooperating with others. obviously, when you commit to cooperate with others and you make that legally binding, you limit to some degree your sovereignty. that is indisputable. i am sure the u.k. government would recognize that is all. i think it is about fighting this out of balance between how much sovereignty the u.k. want to keep, and how well it wants to manage its interdependence. no deal would mean absolute sovereignty in the relationship with europe, because it would mean any commitments other than the withdrawal agreement which was concluded last year, but obviously it would also mean the interdependence would be very difficult to manage. each side would simply apply its own rules, which would make everything a lot more difficult? maria: right. the prime minister says, deal or
no deal, the u.k. will do well when it gets to january 1. this is not going to be doing chaos.ay, not given the uncertainty we know there is in excess already, what like?hat look prof. eeckhout: i am not sure, i am in law professor, not an economist. but i am worried. i am worried about the unknown unknowns, the things which might happen, the sort of negative cycle which might be started by the fact that the relationship breaks down, trade becomes difficult. this might have an effect on investment, there may be a run on the pound. i don't want to go to far myself in thinking of the doomsday scenarios but, it is something 1,ich starts on january which i am not sure anyone really has a full sense of what it might result in, what kind of
economic consequences. .e have seen that will just wait and see? maria: right. we will see whether or not it is doomsday, whether we can get to a deal before that. professor, thank you so much for joining us, professor at ulc of u.k. and european law. another week that we are talking about brexit, anna. anna: yes. the irish prime minister ic is saying that the real deadline is new year's eve, a point which we have made many times, but of course there is real pressure now to do something over the next few days. maria tadeo in brussels, thank you very much. coming up, angela merkel takes germany into a lockdown until january. the chancellor blames christmas shopping for the rise in cases. what will that mean. for the economy?
>> this exception means you can invite for more people beyond your own household. matt: angela merkel there announcing a hardluck down and the holiday details, clearly the german government is more concerned people will party hard on new year's, that they are allowing you to gather on christmas but not for the new year's celebration. most importantly, from wednesday, all nonessential shops will be closed. these are the crucial days for a lot of retailers to make it to profitability before the end of the year. a group of retailers, in fact, wrote an open letter to angela published, it was saying, there will be a cascade of bankruptcies because of this.
joining us to discuss is the ing chief economist in germany. carson, what are you think this will do to the german economy? most importantly i guess, to the retailers who cannot sell anything in the crucial weeks before christmas? carson: this is an enormous hit to german retailers. , thehard lockdown double-dip will become inevitable. at the start of the fourth quarter, we still had good numbers out of the manufacturing sector. services were suffering. now with these lockdown measures, there will be an enormous hit the entire economy. retailers are right, this is their season of the year, and also the days of the christmas. so they will take an enormous hit. is the german government theg to be able to bridge
lockdown? will they be a will to give enough money to these retailers that there will not be a slew of bankruptcies? >> this is what we heard from the government. in the government announced they will pay up to 500,000 euro depending on all kinds of complicated criteria. so, yes, there will be a bit of compensation. thealso this means all retailers will go on an extremely weak footing into next year. if this lockdown is supposed to end by january 10, i think everyone knows this will not be a return to pre-lockdown time afterwards so this. -- road of uncertainty, of the road of uncertainty of locked on after a lockdown will continue. anna: before we got this news over the weekend, the bundesbank was talking about a bit of a set back over the winter but then a rebound in the second quarter.
is that the timing we are still looking at here? if we see a bigger dip in the winter, we get a bigger key to rebound? carsten: that is the pattern we are looking at. obviously, everything is depending on the vaccine and the rolling out of the vaccine, which will only start in the january, given that the european medicines agency still has to give its green light to rollout the vaccine in germany and other european countries. patcho means this soft will be really a very hard winter for the german economy. so contraction in the fourth quarter, and only a very mild rebound, depending on the weeks february,nuary and and then only with springtime, that are whether, more people vaccinated -- better weather, more people vaccinated, and we will see a better economy against. anna: if you think a little
further ahead he signs that the german economy is transforming itself to take account of recent global dynamics? i am thinking about deglobalization, whether you see that as a big driver in the coming years, and how resilient the german economy can be to that. carsten: the german economy has a good starting position given all the fiscal stimulus used to support the economy. but we just discussed the retailers. there is no alternative. germany has. to continue very quickly going crisis, having a good starting position to accelerate investment in digitalization, sustainability, fight against climate change, continue with the transition of the manufacturing industry. there is still a lot to do. i think the biggest achievement, if you want to put it this year,
2020 was the u-turn on fiscal policy in germany, and if they continue with positive come a accommodative fiscal policy, we can be hopeful that germany will master this structural transition. not: you are an economist, a political analyst, but you are not unfamiliar with the political ramifications of these moves. not only is a miracle shutting down -- angela merkel shutting down stores one week before christmas, she is essentially forbidding people from partying on new year's eve. we will not be it would shoot off that traditional fireworks. how hard does this hit the city you ahead of such an important -- the cdu, ahead of such an important election year? carsten: especially angela merkel has very high ratings. the majority is still really supporting merkel. it will depend on how we get there.
we might be able to do without fireworks, the majority of germany can do, if at least by mid-january the situation improves and we go into an easing of the lockdown measures. the longer this uncertainty, that more the damage will the for the severity of the cdu and teh spd, but currently, especially merkel, is so popular -- there aren't any voices anna: thank you very much for bringing us your perspective, carsten brzeski, ing chief economist for germany. european equity markets, 50 minutes into the trading session, we have 0.7% on the upside on european stocks. a lot of movement around the midpoint. the banking center doing really well, lifted by optimism around
the brexit deal. that also did the pound. . banking stocks in the u.k. doing well. the pound also doing well still around the 1.34 level. we will get into a conversation around the market and talk to andy vanderbilt. he will join us next to talk about those themes and everything else moving market this monday morning. this is bloomberg. ♪
matt: welcome back to "bloomberg markets." this is "the european open." we are 53 minutes of the session. looking at green arrows across the the. the dax is 0.8%. that cac is up 0.75%. ftseoot is up 0.1% -- the is up 0.1%. european stocks in general are up as the extension to brexit talks offset hard lockdown in germany. joining us is a bloomberg mliv european strategist. eddie, what is it that you think is the impetus behind the gains we are seeing? it can't be that investors are so have we that another deadline has passed, that they are out
buying german, french, and spanish stocks. >> you know, if there is one thing 2020 reminded us of it is that markets are extremely forward-looking. on the face of it, there is a lot to be worried about -- brexit still unresolved, germany entry lockdown, italy talking about the measures, new york judge halting -- they are worried in the near term. but markets historically come out of recession rallying. that is what they do. . they look forward to the growth that is coming. that is what we are seeing here. there is a bit of rallying going on. people are more optimistic, saying, it will put on of this behind us and next year will be a better year. anna: we seem to be getting some
-- a rise in bank stocks as we run into christmas. maybe that is the santa rally. in the u.k. we have the 250 doing better than the foot the ftse 100. looks like the gig economy is looking more optimistic. where do you stand on the rally, what are you watching for is the pound slumps to the 1.34 level? eddie: i had a complete breakup. i am not hearing you. matt: she is saying, what are you watching for as the pound goes through 1.33? pound, yes, we are sitting at the top of that range, where we have been recently, near the highs of 2018, at levels almost not seen since 2018. it almost feels like the pound is waiting for the big move.
either we get resolution to our problems with brexit or we don't. so we are going to see a big move in the pound one way or another, it feels like. that obviously will impact the the small caps in the u.k. are even more important. anna: all i want for christmas, eddie. thank you so much for joining us. bloomberg markets live european strategist, sorry there was a breakup in communications. 56 minutes into the trading session and we are making some headway in european stocks. the u.s. stimulus story seems to be playing a part here. matt: definitely, whether or not we get stimulus, that typically rolls around the world. but the brexit issue is very important to think about. for me, there is this huge conundrum, because if there is a no deal in the pound crashes against the euro, i can easily purchase the ducati that i want,
ursula von der leyen extend brexit witother deadline ignored. germany enters a hard locked down this wednesday as italy overtakes the u.k. for coronavirus deaths, plus astrazeneca lines up $39 billion megadeal, the company's biggest deal since it was founded. welcome to bloomberg: surveillance. i'm francine lacqua in london. the market is
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