>> good morning. welcome to "bloomberg markets: european open." i am anna edwards alongside matt miller in berlin. matt: good morning. today, the markets say it is not much but it is something. asian stocks head for a record as congress inches towards release on a pandemic package. equity futures are also pointing higher across the board.

cash trade is now our way. these are your top headlines from the bloomberg terminal. mitch mcconnell says lawmakers are getting closer to a deal on .timulus investors await guidance from the fed on its bond buying program. a bleak winter. germany reports a record number of daily virus deaths as the country's latest lockdown comes into full force today and pay back time. the ecb lifts its bans on dividends. interviewing you our with the supervisory board chair. awaye just under one hour from the start of cash trading. let's take a look at futures here in europe. we are seeing gains of .5% on the cac 40. up .25% andres are ftse futures gaining .3%. u.s.u take a look at the

picture, it is more mixed with drops in down and in s&p futures , only fractional drops. nasdaq futures up .2%. economic newsu.k. to give us. anna: a little bit of inflation data coming through. consumer prices rising by 0.3% year on year. the estimate was for a bigger increase. this was one month of data. we are very focused on the inflation story in the u.k. as we wait for progress towards a brexit deal if that is what we are going to get. what would a brexit deal mean for inflation? if we see no deal, what would that mean for inflation in the u.k.? onhad warnings from tesco this very program. let's talk about the gmm. beene picture of what's going on in the asian session, what's happening in life markets. broadly speaking, you said in the headlines we have just got movement to the upside. the asian equity session moving

to the upside by around .7% on that move higher in u.s. equities yesterday. some of the u.s. markets up by more than 1% in yesterday's session. that.icking up on it's the ongoing conversation around stimulus that seems to be lifting things. we don't have a great deal of movement in the dollar. the dollar fairly flat this morning. treasuries not making all that much movement also and we are going to be hearing from the fed later on this week. the fed starts deliberations so we will be hearing from them this week so that is in focus for us. let's get a bloomberg first word news update. laura: joe biden is assembling the team to try to forward his ambitious climate agenda. sources say he assigned jennifer andholm as energy secretary he has chosen obama's environmental protection agency chief, gina mccarthy, as his climate czar.

to shut.rging offices angela merkel is warning the country faces a new peak of covid-19 infections next month. it is raising doubt that the lockdown will end in early january as planned. the u.k. is going ahead with plans to ease coronavirus restrictions over christmas despite mounting pressure to stop people mixing indoor over the holidays. it is expected to set out stronger guidance on how to keep elderly relatives safe. the daily telegraph reports that may include asking people to self-isolate before joining other households. 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. matt, anna. thanks verytt: much. laura wright in london with your first word news. stocks are advancing as the u.s. congress moves towards a stimulus deal, as small as it

may be. the msci asia-pacific has climbed towards a record close on that. the s&p 500 snapped a four-day losing streak in new york. that's get in the markets with bloomberg's emerging markets strategist in singapore. simon, it seems a bit odd that even incremental gains would push asian stock in u.s. stimulus -- it would push asian stocks to a record high. how key is this for global markets? importantbeen very and i think the achievement of the stimulus is now probably 85% priced in so there's not much more scope for gains, even if that deal is confirmed. you have had so many little bits and pieces of positive news. you have both mitch mcconnell and charles schumer talking positively about the deal and mitch mcconnell specifically said republicans were willing to

give ground on the liability shield for businesses. there is been clearly a lot of progress, and as i say, most of it priced in globally. anna: so that's part of what we are watching out for very much, simon, isn't it, the stimulus conversation, waiting to see what that delivers at of the holiday season if at all. what about the fed side of things? some people saying there is a lot of uncertainty so therefore, on the fiscal side -- therefore, the fed should do something. others saying financial conditions are really loose right now so the fed does not need to do anything at all. simon: you are right. there's a couple of things that struck me about a bloomberg survey that i think was published earlier today. all, only 23 percent believe that the fomc, which shifted distribution of asset purchases to target longer and securities -- end securities,

that surprised me and may create further upside risk for stocks and downside risk for 10 year yields. suppose, we hand, i are expecting this guidance to introduce forward guidance on asset purchases. the majority are expecting that. i guess that creates some marginal risk of disappointment. my first point is the most important. there is a possibility of a positive surprise. know, you have a macro best talking about the carry trades in a soft dollar environment. i was looking yesterday. anna pulled up the screen and showed the pound as the worst performer among g10 currencies but it is still a gainer against the dollar because the greenback has done so poorly. what do you expect from the fed today and how could that alter your strategy?

suggest, i think if we get a positive surprise, it vindicates the strategy that you want to be long currencies which have a decent amount of yields in asia, indonesian rupee, and chinese yuan. you also want currencies where they are arguably undervalued and the indonesian rupee is a good one in that respect. the problem for the chinese yuan in the short run is you have some increased resistance to appreciation. i do see that as a temporary phenomenon. slightly addicted to watching this as we get towards the end of the year, which will be the worst performer? pound.ot actually the that would go to the norwegian krone. matt: among the g10 currencies.

anna: right. so there we go. let me ask you about 2021, simon. of yourading one colleagues talking about how some of the 2021 trades are already gaining and i wonder if that applies to e.m. expectations because e.m. expectations seem to be high as we head into next year. simon: yes, it does apply. we had really strong performance, particularly since the u.s. election, so may be the easy juice in those trades has been drawn out. but i would point to two or three things that are still positive. first of all, most asian or i should say he' em currencies, ae slightly undervalued. they are still underinvested in em's, particularly equities and to some extent bonds, and thirdly and finally, most ems

are offering quite decent real yields at least compared with u.s. real yields so there's still some juice in the trade even though a lot of it is, as i say, gone now. anna: thanks very much. thanks for joining us. thanks for joining us. really appreciate your thoughts. match is very appreciated of your thoughts this morning. governments across europe are wondering whether to ease covert measures during the period. we discussed that, next. -- we will discuss that, next. this is bloomberg. ♪

banks to paybling within a certain threshold so within the support guardrail, and these are changes with respect to where we have been up to today. so it is an important opening

which has been broadly supported in the supervisory board and which recognizes that we are moving slowly back to normal. although we are not in normality yet. anna: that was the ecb supervisory board chairman speaking to paul gorman. you can watch more on the interview around the ability of remit to payecb's dividends. you can watch more of that just after that. matt. thought you were going to say on bloomberg.com. you can also watch more of it on bloomberg.com. with christmas fast approaching, governments around europe are having to make tough decisions on whether to ease coronavirus restrictions in time for the holiday period. germany has entered a hard locked down, closing schools and non-essential businesses in an attempt to stop the rise in infections.

france has introduced a nighttime curfew and the netherlands is currently under a five-week lockdown. the strictest set of measures announced since the pandemic began. i think we are looking at the strictest set of measures in this country as well and we are joined by a multi-asset strategist at hsbc. looks like the chancellor is even considering extending this lockdown that we are in here in germany to beyond january 10. are these governments doing enough, i'm wondering, from a strategist point of view, for the businesses that are getting hit by these lockdowns to make it through this without a wave of bankruptcies in q1 next year? that probably difference between europe and the u.s. have the schemes, the furlough schemes. that is very much in contrast to the u.s., so it can bring in europe down the path in terms of

defaults which probably come out of this in a better place than the u.s. i think. from a broader perspective, from a broader strategy perspective, i guess we would probably need to separate the market strategy with the economics. economists will tell you that there is a k shaped recovery. tot word has been introduced these various alphabetic orders of recovery shapes in the last few months. meaning that obviously, there is a lot of people, a lot of industries in an economy left behind, but others will actually thrive. the likes of tech for example. from a strategy perspective, market perspective, that does not play that much of a role. think about the s&p. a lot of that is dominated by the big techs. if there really is a k shaped recovery, that is actually good for markets because it means that there sectors that are

particularnted in equity indices, they will continue to thrive. they will continue to outperform. perversely and oddly, the k shaped recovery where perhaps the likes of small caps and smaller businesses are left behind, that may actually be not the worst case. it may be good for markets. anna: right. that is an interesting perspective. can i ask you about how much you are focused on the extent of lockdown we are seeing in europe as a broad theme? the beginning of the pandemic, of course, markets responded a great deal to the extent of the lockdown and duration of these lockdowns in europe and now we have a vaccine on the horizon. it seems that markets are not really moving on this narrative and i wonder if that lasts no matter how long these lockdowns last and no matter to what extent economies are locked down because it seems like there must be a point at which this starts to affect people's assumptions

for recovery in 2021. max: that is exactly the point. if we want to some it up, covid does not matter for markets until it matters. it sounds very stupid if i say that now but that is the issue that makes it so tough in terms of market timing at the moment that really the point where the market breaks, such as we have seen in october with regard to the renewed lockdowns we have seen opposed in large parts of europe, you know, it could have been four weeks before that as well. , and our for us mandate as strategists, is figuring out what is priced in and one could potentially be the point where covid starts to matter again? at the moment, it is very much overshadowed by stimulus. you had your colleague speaking about stimulus and then what kind of effect that could have on risk assets and on ems.

that's very much overshadowing any vaccine related news, any kind of -- we have seen the pfizer news a couple of weeks ago that they had a bit of logistical issues before q4 this year. that is all overshadowed by the stimulus discussions in the u.s. once that is out of the way, we all suddenly realized that it will be long enough. this is going to be a very tricky five months not only in europe but perhaps even in the u.s. it will be tough for markets to continue to look through this for just the next 3, 4, five months. has alludedue simon to 85% being priced in. if you look at equities across bonds, for example, that is pricing in new orders of north of 65 so not even -- there is no margin for error, but markets are pricing and even further improvement. -- an even further improvement.

anna: thank you so much. matt: i have more questions. sorry. anna: go ahead. matt: i have more questions for max but my producer is saying we have got to go so we are going to keep you over the break. more from max kettner at hsbc when we come back. coming up, running out of time. u.s. lawmakers must reach a deal on statement before funding for midnightgencies ends friday. mitch mcconnell says he is optimistic. we will continue to talk about that because it looks like it is driving markets. this is bloomberg. ♪ - [announcer] imagine having fuller, thicker,

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>> it's actually what you would expect if you are an investor, that the business you invest in is by the book. if they are not, then it is fines, behavioral commitments,

but there is the option to ask for a divestiture. i would not expect that we should go there. but at the last resort, i find that it is justifiable. now is the european commission executive vice speaking about increased regulation on these big tech companies in the e.u. we are seeing increased pressure on them in the u.s. as well with the biggest suits since microsoft in the late 1990's. nonetheless, valuations are through the roof. max kettner still with us from hsbc. i know this is may be unique in some ways, the ipo's, but for example, airbnb before the $18 billion.orth after lockdown, when no one is allowed to travel, all of a sudden, there is a $100 billion company. what kind of reflation trade are

we looking at right here? repression,ncial central banks pushing investors into anything risky for return? max: you have just given the answer i think. there is not a lot of that i could add i think. the thing about regulations versus why tech is still holding up so well globally, but particularly in the u.s., if -- perhaps it's not really that much about the fight. it's much more about the perfection of tech being a long-duration play, a real yield play, and as long as you see real yields so depressed, think -- -100 basis points, having fallen again over the last couple of weeks. that of course really supports the tech trade and it supports the sort of tech rally in 2021,

because there will be very little change to that. you just alluded to that and i guess if we look into the inflation outlook to the first half of next year, there is a base that inflation will actually rise, particularly in the first half of next year with base effect in energy prices and food prices, nothing lasting. i think the reflation trade is rather something that you want to have in the first half of the year. i think that's going to be very dangerous. that means particularly, you know, for the first half of the year, that they will either have to stay as low as they are now or even decreased even further and that will just support tech even further in the next couple of weeks and months. anna: just this morning, we got new u.k. inflation data and that means the countries real 10 year yield pushed up to zero, so we are in danger of getting a

positive real yield in the u.k., but speaking with the broader reflation seen, which she seemed skeptical or wary of, when you talk about markets pricing in a reflation trade, how much reflation are we really talking about? something that just looks like the last five years, which was not exactly a runaway inflation environment, or are we talking about something much greater? expect, i would not that. what i would expect is exactly what you have been referring to, something like 2016, 2017, where we have come out from these enormously negative base effects. energyeld of the companies, they are coming out from 2016 until the end of 2017. really, we have this gradual reflationary period that was pretty much only driven by base effect in energy prices. the difference now, this is pretty much confined to a little bit more than 1.5 months, pretty

much two months, so nothing really to get overly excited about. the second point i would make, i have a lot of sympathy with what your colleague said in the beginning of this show, where he said 85% of the stimulus is already priced in, and actually, a lot of the 2021 trades seem to be already priced in so that's a very good point. we pushed our 2021 outlook in october already and we were saying it looked like there is reflationaryect period. nothing sinister. we are notblem is even in 2021 and all of those trades are pretty much already playing out or have already played out to a very large decree. matt: great to get some time with you this morning. big fan of the lockdown. as well. max kettner, multi-asset strategist at hsbc. hope we get you back on the program soon.

thanks so much for your insights. up next, investors and strategists see 2021 as a year of recovery as we have just been talking about, but some risks are not going away anytime soon for emerging markets. we will talk about that after the break. this is bloomberg. ♪

anna: welcome back to "bloomberg markets: european open. 30 minutes into the start of cash equity trading. futures point to the upside, u.s. futures look more mixed. they had a solid performance yesterday. his month bob dylan sold catalog worth $200 million, but behind the scenes private equity investors are getting in on the action, investing in everything from music rights to film and tv. joining us is dani burger. this is a fascinating asset

class. why would private investors want to buy these? dani: we do not think of song rights because we jointed every day -- enjoy it every day. with interest rates so low, buying music rights is an income generating annuity. mariah carey, analysts reckon because of the streaming her songs get, she has accumulated $3.3 million in royalties. that is why we see a lot of deals whether it be bob dylan, after knicks, "dreams" was played in the background of a video, and taylor swift's catalog was sold to a private equity group for $300 million. these generate income with streaming being as dominant as it is. matt: i want to point out, i

thought it was amazing that went foratalog three times stevie knicks, but fleetwood mac has sold 87 million certified units, and millions only sold 46 certified units. fleetwood mac and stevie knicks popularity is stronger than i would've have thought. why, from the artist perspective, would they sell their music catalogs? why bother adding out of it for dylan at 80 years old? dani: this is a good question. i wish i knew them and could ask them, but i took this question to someone who knows artists. she is the founder of atwater capital, a private equity fund who invest in these assets. she knows a lot of these

artists. here is what she had to say. >> is a personal decision. artists, their craft is very personal to them. personals a lot of narrative and story goes into that. there really is no one size fits all approach. artists, it makes financial sense. artists have made a decent income from live events. with covid happening, that income stream dried up overnight. dani: these are more valuable because of interest rates being so low. anna: thank, dani burger. hear thatg to conversation. let's get a first word news update. laura: president-elect joe biden is assembling a team to drive forward his ambitious climate agenda. he picked former michigan

governor jennifer granholm as energy secretary, and obama's environmental protection agency chief as his climate czar. the u.k. is going ahead to ease restrictions over christmas despite mounting pressure to stop people mixing indoors of the holidays. the government will set out stronger guidance to keep elderly relatives safe. that may include asking people to self isolate before joining other households. australia plans to challenge china at the wto over the decision to impose tariffs over 80% on barley exports, a further sign of deteriorating relations between the trading partners. it could take years to be resolved. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. matt: thank you very much, laura wright in london. let's talk emerging markets, investors and strategists expect wendy 21 to be a year of continued recovery, but some risks are not going away soon for em investments. vaccine rollouts, debt levels in developing countries and monetary policy moves. we are joined by giampaolo isolani, head of em investment solutions, amundi. you for your time this morning. let me ask you what your biggest concerns are for emerging-market investors, what are the biggest headwinds? giampaolo: [indiscernible]

anna: so sorry, i'm going to jump in. we have some problems with our audio. we will try to get to our conversation with him in a moment. we are looking forward to talk about what is happening with emerging markets right now. european commission vice president says it is justifiable for big tech companies to face hefty fines if they continue to engage in monopolization

tactics. she spoke to bloomberg's maria tadeo. >> what we worry about is competition and a fair marketplace. we have been consulting extensively, talking with everyone. we have experts, member states, parliaments, businesses, organizations. what they worry about is doing business, and too much content in products and services. this is our worry. we are balancing things, which is why we think this is a proportionate opposable. maria: you said this is not targeting anyone in particular, and you hope you do not have to fine anyone, is that something you are looking to do if needed? >> i think that anyone would want to comply with legislation that has been passed by the parliament, why wouldn't you want to do that?

it is a good incentive, and the incentive of a 10% turnover is a good incentive. maria: is that a warning? worke strange thing, in my as competition enforcer, i've seen a lot of practices that have been damaging for other businesses. now we say in general, these are the things you must do, these are things you should not do. it will bring a better balance into the marketplace, that is what we need. this is a bit more than enforcement. this is beyond addressing unfair trading practices. we have seen no matter how vigilant we are in competition enforcement, we need to work hand-in-hand with regulation to have an open market. maria: in terms of the gatekeepers, having too big of a position in the market means you

could look into breaking up or asking a company to disinvest and split up their business. that is something investors worry about, a nuclear option. are you willing to use that? will have we compliance, because i think it is proportional and reasonable and what you would expect if you are an investor, that the business you invest in is by the book. if not, then there is another fine, repeated fines, behavioral commitment -- there is the option to ask for a divestiture, splitting up the company. i expect we will not go there, but as a last resort it is justifiable. maria: but not something you're looking to do soon? >> of course not, what we want is an open contestable marketplace where businesses can find customers. away froming

competition, the internet controls information, especially fake news, and stuff that is not factual. specifically, we have seen a lot of fake news when it comes to covid. what are they telling you and how quickly they will take it down, and will they be held liable? >> actually i think we have had good cooperation with a number of platforms to make sure when people are looking for information about the pandemic and vaccines, that they get official information. this will not regulate content. if it is illegal and you are flagged, you have to take it down. the other thing is, they have to tell the people behind it, we have taken down your content. do you want to complain? it is important that what is illegal offline is taken down online.

freedom of expression is also key. matt: that was european commission executive vice president speaking with bloomberg's maria tadeo. i want to point out turkeys central bank governor is speaking right now, saying price stability is a prerequisite for sustainable growth, and he is determined, and the central bank is determined to curb inflation. now,ira a little stronger and much stronger sense he has taken over. -- since he has taken over. payouts are back. on ecb has listed its ban dividends, but with strict limitations, they are talking about banker bonuses as well. we will bring you the details next.

this is bloomberg. ♪

anna: welcome back to "bloomberg markets: european open." 17 minutes until the start of cash equity trading. thisfutures look flat hour. let's try to get act to our conversation with giampaolo isolani, head of em investment solutions, amundi. a good time to speak to you, we just saw a headline across the bloomberg about turkey, which is moving the turkish currency. the turkish central bank saying it will tighten policy further if needed. how significant is the arrival of how he is handling policy in turkey? giampaolo: this is exactly the reason my colleague in fixed income are becoming more constructive on target.

they make the central bank more and -- [indiscernible] we are seeing this as most favorable. it from an equity point of view, it is more of an exporter in 2020, and when we adjust for geopolitical risk, we find more region, the cyclical especially brazil. this is angle, positive development. matt: yesterday, investors were telling anna and myself that at least in the western world, the byiness cycle has been reset

the covid pandemic. and that it will be aligned across developed markets. i wonder what emerging markets are going to look like in terms of the business cycle when we come out on the others of the crisis. giampaolo: thank you for the question. you asked before regarding the risk, for sure the emerging market can be difficult in terms of distribution. [indiscernible] with this condition and financial condition, we think there is a high chance of global

recovery, and the fed policy can keep the dollar weaker. there are good conditions for emerging markets to outperform. inflation --hat inflation in the emerging markets is not always a negative thing. only when it comes without growth. for us, it is a constructive scenario. for: thank you very much joining us, apologies for the audio issues earlier. giampaolo isolani, head of em investment solutions, amundi. very good to get his thoughts as we track comments coming through from the turkish central bank, to underline tightening policy further. the lira extending gains on the

dollar on these comments. the ecb has lifted its ban on dividends while imposing strict limits. it says they should keep dividends below 15% of profit for 2019-2020. the ecb supervisory board chairman told bloomberg it is an important opening. >> it is an important day and an important decision. payre enabling banks to within a certain threshold. the so-called guard rail. and change with respect to where we are today. it is an important opening which has broad support on the supervisory board, and recognize that we are moving slowly back to normal. although we are not to normality yet. was very broad support.

>> the conditions you are putting in place, the limited dividend payouts you will allow on a case-by-case basis are stricter than those we saw announced in the u.k. and u.s. will that be a problem for the banking sector in terms of competing for investment? >> i don't think so. the important signal is the opening two dividend payments, and we give forward guidance. we tend to repeal this recommendation when it comes to an end. we are going back to the ordinary situation where supervisors will vet the dividend payments and normal supervisory process. >> you could argue bank -- asolders should not long as banks are getting the regulatory relief.

there is that argument. why have you decided to let bank shareholders get something? >> there has been an intense discussion over the last month on my board. on one hand we recognize there has been a reduction. the macroeconomic task is clearer. our economy has been more resilient. will be back022 we to precrisis levels. hand, we do not have a lot of visibility on the asset quality, trajectory going forward. great risk. and there is a lot of support coming from the central bank, the supervisors, and the fiscal policies which is supporting bank profits. the is behind

recommendation to remain prudent. >> what about bonuses? >> we are prolonging our recommendation to remain moderate in the payment of bonuses. also we are getting forward guidance that by september we plan to go back to the old normal. >> the banks would say they need to pay their staff. they had a good year in trading for various reasons, and if they cannot pay bonuses, they risk losing their best staff. >> we have never asked banks to not pay their bonuses. we say be moderate and consider a bonus as an instrument to a postponement of these payments. be moderate even the conditions we are working in. a, thethat was andrea enri

ecb supervisory board chairman. minutes from the open, up next, your stocks to watch. the french lender is taking a $1.1 billion on its right down on its italian unit. -- write down on its italian unit. this is bloomberg. ♪

anna: six minutes of the start of cash equity trading with futures pointing to the upside. u.s. futures fairly flat. dani burger is here with a rundown with the banking sector. dani: credit agricole-like lead to move lower today, writing the $1.1 billion to reflect impact of low interest rates. it did say this will not affect underlying earnings, solvency or liquidity, but this is as a

french bank tries to expand business in italy. price offer is a 30% premium from the prior offer. 24% increase in yesterday's price. for a rally. they are clearing way for this deal to take lace. one shareholder was opposed to this. they opened an investigation. that investigation has been dropped. biontech had a rally over the past few months, 30% since october because of the vaccine. securedpharmaceuticals 100 million doses of the vaccine and will make an initial payment of $300 million. those are up 3% today. matt: thank you very much, dani burger with stocks want to

watch. coming up, it is the market open with futures pointing higher. this is bloomberg. ♪

anna: we are one minute from the open of cash equity trading here in europe. here are your headlines. incremental gains, mitch mcconnell says lawmakers are getting closer to a deal on a stimulus. investors await guidance from the fed on bond buying. a bleak winter, germany reports a record number of deaths after the lockdown comes into force. payback time, the ecb lifts its but can payends, out 15% of profit. see futures higher across the board as we await the

fed meeting. it will be interesting to see what the fed does, because the dollar is so weak, and if they give more forward guidance and information about the bond are moreogram, if they active, it could weaken the dollar more witches great for euro investors from overseas. you see the live trade on the global macro movers screen. indexes -- wee have to get that changed. i don't know how programmers got indices through. the ftse comes out 0.2% up, 0.3% up and gaining. we had futures on the continental equity indexes gaining as well. if and when they open for trade, they will rise. showingand cac

gains. a markets higher across the board even as governments around europe are having to make tougher decisions on tighter lockdowns around the holiday period. germany going into its tightest lockdown so far. starting today, you are no longer allowed to drink alcohol in public, which for germans is a huge infringement on liberty. joining us now is peter kinsella , global head of fx strategy, union bancaire privee. markets do the completely look through tighter lockdowns? or have they been priced in already? peter: i think they are looking through them. if you look at what is happening with respect to vaccine development with moderna and pfizer, the market is in a place

where they will lock down for a little while, but the overall value trade will continue running. they are looking through the lockdown. with good reason, too. i do not think we are near the bubble people are talking about. looking through the lockdowns is the correct thing to do in my view. anna: where does this leave the euro? it seems to have been rising on bearishness on the dollar and the ability to put together the recovery fund. that seems to be in place going into 2021. how much stronger does it get? peter: if you look at the euro on a trade-weighted basis, it is not a huge amount. most of the euro rises as a reflection of dollar weakness. whether the dollar will continue to weaken and whether the ecb is happy or can do anything about

euro appreciation. there is room for the dollar to fall further, it is heavily overvalued. deficit will widen aggressively in the first half of next year. there is a budget deficit in the states and the fed printing money. all the signals are there for the dollar to continue weakening. , it we tracked this before could weaken by another 15%-20%, by no means impossible. that will pull the euro higher. the question is if the ecb can do anything to prevent that, and in my opinion, no. there is not much realistically they can do on qe. the thing they will do next year is the possibility of further negative rates.

the euro would benefit from that. it islike the old saying, our dollar but your problem. that will be it for the ecb. matt: that is a great quote, our dollar but your problem. what will we see in terms of emerging-market currency? we are talking about that a lot today. somee mliv blog, we have carry trade recommendations in terms of a macro view from simon flint. thatll face headwinds develop markets will not. are talking about going long carry, those trades have not worked structurally over a longer term period since 2008. if you are setting up a carry trade, they have not worked for a long time.

it is lowerry, today than in 2009. emthat basis, jumping into looking for a carry story is not compelling in my opinion. there are pockets of interest, the ruble and mexican peso could benefit from higher oil prices. central banks have indicated they are at the end of the line with the rate cutting cycle, that is fine, and i think they will do reasonably well. i am skeptical about other em currencies. not the bestira is way to allocate risk in a portfolio, given the fact it is under the guise of political influence and interference. that will continue to be the case six months from now. i could see them coming under pressure from authorities.

ism.thy skeptics one of the em currencies we like the most, you are continuing to see a decent yield pickup over developed market equivalents. likewise, you are seeing large inflows into the equity and bond markets in china, which tripled this year from $50 million a month to current levels around 150. the overall macro picture in china is a compelling one. rally on thete a back of that. there is talk about various things in the european parliament, talking about vaccines but also now brexit.

brexit talks have a path to an now, and the same stories are cited, fisheries and a level playing field are the two outstanding issues. the pound looked to push up, but now back. we have seen a spike this morning. your expectations -- what is the timescale you are looking at? think in terms of timescales, i would not be surprised if these negotiations go on for another week or two, and we get a deal early january signed off. in terms of a timescale, within a week or two. matt: you think they can fudge the december 31 deadline? peter: if we go over by a few

days, that will not be the end of the world. it does not surprise me that these talks are going on the way they have done. standard negotiations tell you that. the one with the least leverage makes -- waits into the last minute to make concessions. me in thet surprise least. tend to gootiations to the last minute and the eu so what we see is standard and to be expected. matt: you will stay with us, peter kinsella, global head of fx strategy, union bancaire privee. we will continue talking currencies. coming up, u.s. lawmakers much reach a deal on stimulus before funding for federal agencies and's at midnight friday. mitch mcconnell says he is optimistic. more on that next.

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? we are doomed. [laughter] that's it. i figured it out! we're going to give togetherness. that sounds dumb. we're going to take all those family moments and package them. hmm. [laughing] that works. anna: welcome back to "bloomberg

markets: european open." european equity markets on the front foot. also the pound, a little higher. ursula von der leyen has stopped speaking at the european limit but says the next days will be

decisive. she says she cannot solve fisheries. let's turn to the united states and similar stocks. mitch mcconnell says he is optimistic the size will be able to complete an understanding soon. he was speaking after a late night negotiating session with nancy pelosi and other democrats. the aim is to get aid in time to attach it to spending bills before federal funding for agencies runs out friday at midnight. peter kinsella, global head of fx strategy, union bancaire privee. we talked about your view on the dollar. many expect the dollar to weaken. how much does a spending bill and avoiding these cliff edges and further stimulus for the u.s. stick to the dollar narrative? peter: what it does, in a normal year, having increasing spending, you would think it

would be good for the dollar over the longer term. this year u.s. budget deficit, debt has expanded by $4.8 trillion. not a single piece of rail or road has been spent. that is not necessarily good by any means for the dollar over the longer-term because it increases the indebtedness of the u.s. dramatically, and that prevents the fed from being able to raise rates in any manner over the longer-term. even an increase on borrowing ines would bring 150-200,000,000,000 in interest payments. if we get infrastructure spending, that would be good, but we are seeing it is going for consumption and consumer

support. cure.s not a longer-term when -- thesepens central banks will raise to devalue their currencies. no one will let the fed get away with weakening the dollar. how does the ecb strike back when you start to see 1.25, 1.30 on the euro? peter: it doesn't. if you look at the ecb, the point for them is they are concerned about the rates of change rather than the level. trading and the ecb did not enter been then, they will intervene now. it is the rate of change they are concerned about. if you read between the lines of the ecb and eu politicians, they

are focusing on fiscal spending. that starts with a recovery fund. particularly if it is implemented next year, which we hope it will be. this will be the first time we have a combination of fiscal stimulus and aggressive monetary stingless in the eu. that could be good for the eu economy if it happens in an effective manner. secondly, if you listen to what the eu is saying, they are continuing to roll out as much liquidity as they can to the banking system and helping companies refinance themselves at low levels. it is doing everything it can to focus on the euro zone domestic economy, and worrying about the dollar is secondary. let me take you to what is moving the euro at the moment, we got new lines from france on

pmi. these look strong compared to forecast which were poor for services. french december pmi services rises against the forecast. that is well ahead of where it had been anticipated, almost in growth territory, which may be impressive. manufacturing pmi is more in-line but above the estimate. how much do these numbers matter to you at this point? how good of a clue are they for the prospects of the economy? it is important data. thatooking at the pmi data gives you a good idea. that we are seeing constructive pmi data in the euro zone is good news for the euro. it does not surprise me much, if

we look at leading indicators, pmi's in china, they have been doing well for a number of months. you are seeing that spillover effect into the euro. we tend to find that the euro trades tied to global growth. news for the euro and will drag it higher. thank you so much for joining us, great to get your thoughts. peter kinsella, global head of fx strategy, union bancaire isvee, on a day when fx sitting in the spotlight. peter continue the conversation with us on bloomberg radio. listen to that on london dab digital radio. coming up, volkswagens aboard resolves a week long conflict, but has the damage already been

done? we will speak to jurgen pieper about the stock that gained more than 7% in one session yesterday. this is bloomberg. ♪ every year, we set out to do one thing: help the world believe in holiday magic. and this year was harder than ever. and yet, somehow, you all found a way to pull it off. it's not about the toys or the ornaments but about coming together. santa, santa, you're on mute! just wanted to say thanks. thanks for believing. >> we are enabling banks to meet

a certain threshold, a guard rail.

this is a change in respect to where we have been up to today. it is an important opening which is supported by the supervisory board, and recognized that we are moving slowly back to normal. we are not to normality yet. matt: that was the ecb supervisory board chairman witha enria speaking bloomberg. we will continue to show you snippets of that interview. volkswagen supervisory board has resolved a week long conflict between the ceo and key stakeholders. the carmaker board gives its full backing to the chief executive while granting concessions to the unions, as well as bowing to keep the brands lamborghini and ducati on board. joining us now is jurgen pieper, head of research: automobiles, b metzler seel sohn & co.

i think you would agree this is a fascinating couple of weeks for shareholders. has does it mean that dietz the full backing? backing,he full principally yes. , normalther hand contracts were wanted until 2025. i would not say it is 100% a perfect situation. ago, wantedths more, took some risks and was possibly fired. , andly back to a situation

volkswagen took a little damage that ultimately passed. i think the outcome is fairly .ood for everybody he is almost 65, so it is a normal outcome in a turbulent situation. it is fairly good for everybody. matt: i am a big fan of the ducati brand of motorcycle. what does this mean for the peripheral brands, lamborghini, gotti, ducati that winkleman wanted to get rid of. now they will keep.

what difference does that make to the volkswagen shareholder? think there was a brands.l to sell these one must say volkswagen has too many of them. one of the problems of giantagen it is just a and complex company. it would be good if they would get rid of a few of these brands . and also maybe for the valuation of the company. you look at the ferrari value and crazy valuation of tesla. porsche,dy looks at , yourghini, bugatti get the impression the valuation of the company, a spin off sale

would have been the better way. anna: we see the share price moving aggressively higher the last couple of days. yesterday he is pitting their plant against tesla in berlin. that would involve bringing down the time it takes to build a car . how achievable is that? jurgen: this would be a great achievement. it is the right direction and shows that mr. dietz and many of these things has the right attitude. he knows exactly where volkswagen could stand at some it is the i think biggest industrial plant in the world.

peoplegh unionization of , 98% are in the union. andhange things there, bring things forward quickly, i would say is almost impossible, but it is right to address these things. attitude.e right thingsifficult to change , especially of volkswagen. on mostu have a buy automakers you cover, volkswagen as well as daimler, and a hold on bmw. can you explain that? jurgen: [laughter] overall i'm positive for the sector. the third quarter has shown, it

gave a signal how quickly the industry can come out of the crisis, out of the recession. this was already the case. sorry, i have to cut you off, we are running into a break. ♪

anna: welcome back to "bloomberg markets: european open." 30 minutes into the trading session, and the stoxx 600 up 0.9%. broad gains across the european equity markets. the auto sector doing well. u.s. futures point to the upside. to some extent london and the rest of europe is playing catch up with what happened stateside. u.s. futures suggest more to the upside. matt: we have pmi's coming out

in germany. the german manufacturing pmi coming out better than the , 58.6.and prior number bettervices pmi is also than the previous number, but below 50. is the services pmi which indicates a contraction. you can expect that to be accelerated in this harder locked down. expansion in the manufacturing pmi. let's get the bird first word news -- bloomberg first word news. isra: president-elect biden assembling a team to drive forward his ambitious climate agenda. he has picked former michigan governor jennifer granholm as energy secretary.

he has chosen obama's environmental protection agency chief as his climate czar. germany is entering a hard locked down, closing nonessential stores and urging offices to shut. chancellor merkel is warning the country faces a new peak of infections next month. it is raising doubts the lockdown will end in early january as planned. australia plans to challenge china at the wto over the decision to impose tariffs over 80% on barley exports, it is a further sign of deteriorating relations between the trading partners. the process could take years to be resolved. global news, 24 hours a day, on air and at bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. anna: thank. europe is inching closer to starting its covered vaccination campaign.

regulators will review the biontech and pfizer vaccine next week. it is being rolled out in the u.s. and u.k. the moderna vaccine has been found safe and effective. regulators could grant emergency approval for that. joining us now is bloomberg intelligence. good to speak to you today. given the summing up of the vaccine rollout, i was taken by a line of the spanish prime minister saying we are at the beginning of the end of the pandemic. does it feel that way to you? yes. you walk around the streets and see people with masks, and we will see that for ages as we hear about shutdowns and lockdowns. but the sooner we start seeing friends -- i have one who got her first shot in london

yesterday -- more people will have more optimism about ending this nightmare. heard the term i new variant, which freaked me out. will we see different strains of this virus that the vaccine is not capable of coping with? sam: i will answer that in segments, new variants, this virus has had many new variants. that is what viruses do, they do not stay still. it is part of their nature of evolution. it is not a surprise, we found one in scotland, in denmark. there are variants that will come up. you cannot answer the question if there will be a variant that escapes the vaccines.

if thatgood, that happens, the technologies we vaccines can respond rapidly. things at least one good if that happens. anna: can i get your assessment, as we listen to further lockdowns across europe and angela merkel talking about how long measures might be in place in germany and ongoing talks about many parts of europe, living mask wearing a side which is something we have to get use to for a long time, in terms of the tougher measures, closures of certain facilities and inability to see friends and family, how long will that be with us in europe if you look at it realistically? springtime? what horizon do you have in mind? midyearould say by

would be highly surprising if we do not get it after that. you have to vaccinate the people most at risk, as we all know. if 30% of the population in doses, it have enough will be about will the doses get here and be deployed correctly? if we do that, we have to be bad getting this done if we cannot protect us by the middle of the year so we do not have to have draconian lockdowns. so much foryou joining us, sam fazeli. germany has entered its hardest locked down yet, closing schools and nonessential businesses, banning alcohol on the streets. buyill not even be able to alcohol for a few hours on new

year's eve as chancellor merkel attempts to stop the rise in infections. measures will be in place until january 10, but maybe longer. let's get over to marcel fratzscher, president, diw german institute for research. like the worst possible time for the economy to go into harder lockdowns. some any retailers are turning profitable for the year and will not be able to. is the government capable of financing businesses in a way to save them or will we see a wave of bankruptcies? the german government is doing everything they can. there is hardly any country who has put on bigger stimulus programs helping companies and compensate them for the cost and

the revenue. neverrnment can compensate entirely for the cost of such a pandemic. the german government has announced further stimulus measures starting from january. it does what it can. probably one of the biggest risks for the german economy is a wave of corporate bankruptcies next year. the german government suspended the legal obligation to declare bankruptcies for companies this year. this will expire at the end of december. many companies are highly indebted, many expect revenues to stay weak for much longer, and we expect a contracting german economy in the first quarter of next year. one big risk will be a wave of corporate insolvency. it is not a question of whether it will come, but if companies will fail.

matt: is this the right measure now? we have been in lockdown-lite since november. it has not helped. will this do the trick? marcel: the lockdown-lite has helped but not enough. it is important to emphasize there is no trade-off between protecting people's lives and protecting the virus from spreading. and from protecting the economy. we have seen the last few months saleshe german economy, in stores have declined 50%, so the economic downturn started in october. stop theer germany can second wave of the virus, the earlier the german economy can be restarted.

it did very well in the third quarter. the experts have been booming, consumption picking up. the biggest challenge will be to stop the second wave of the virus. the earlier it happens, the better for the economy. germany's government is resilient. it has the physical means to support companies and households. it has done so fairly effectively. the honest truth is germany so far in the first wave has been doing better than most of europe but is now catching up and suffering the second wave as much and even stronger than other countries in europe. anna: we saw manufacturing data, pmi data that showed 58.6, ahead of the forecast. services is a different story. you talk about how we will see bankruptcies. where we see those? will it be skewed toward the

services sector? or will manufacturing also be under pressure? has beenanufacturing doing better than services. germany's benefits are exports which are hit in the first way strongly, but with china and asia recovering, germany's exports are doing well. the problem is corporate investment, and consumption in services sectors, even traveling , going to restaurants, shopping, these are the sectors hit particularly hard. and smaller companies. the structure of the german economy is different from many other countries. we have a strong focus on midsize and smaller companies. those are somewhat less resilient and more reliant on bank financing than the corporate bond markets.

number of failures, not just in services but amongst smaller companies including the auto sector next year. it is unfortunate, but we hope the german government can nip this in the bud. marcel fratzscher, president, diw german institute for research i hope we can get you back for this for more soon. central banks voiced their support for going green, but have yet to take decisive action according to a new survey. we will look at what needs to be done, next. this is bloomberg. ♪

>> it is actually what you would expect if you are an investor, the business you invest in is by the book. if not, then there is a fine, repeated fines. there is the option eventually to ask for a div s teacher, splitting up the company -- divestiture, but at as last resort. anna: that was the european commission speaking to bloomberg, speaking about the business of clamping down on technology firms. let's talk about another theme of 2020.

central banks are voicing support for climate change, but most are making little progress to enable this, according to a survey by the network for -- banks are called on to use their bond buying program and to shift investment out of polluting industries. thes talk to jennifer wu, global head of sustainable investing for j.p. morgan. i want to understand what corporate's in general are doing. i noticed you talk about the alignment or misalignment of a company's emissions trajectory with paris goals. if we look toward the earnings seasons to come, and we break ifnings news and talk about companies missed expectation, what can we look for in a sustainability sense if companies are on the right path?

jennifer: thank you for having me. yesterday was a pleasant surprise to see it will formally join the network of central banks and supervisors for greening the financial system. that is an alliance that focuses and theyging ideas, are exploring ways for central banks and the banking industry to mitigate risk in their balance sheets. that is a good development from a policy standpoint. back to corporate's, what we are focusing on next year, as countries and policymakers look to reset goals or renew their commitment, there will be a fair degree of realigning what a pathway should look like from a corporate standpoint. we are expecting more corporations coming out with emissions reduction plan targets, and we should focus not

so much on the end goal, which will be straightforward for most companies about net zero by 2030, but really around whether these companies are able to define their announcement near and medium term plans and targets that are realistic, achievable, and how they could asect capex, as well investing in new technologies. some of those near-term targets is what we are focusing on. matt: which central bank has the changetential to affect in this area. i know the ecb debates whether or not this should be its mandate, although christine lagarde is clear about what she thinks, and even those who

question the mandate have said they need to check whether they are unintentionally supporting companies that are environmentally harmful with policies. all centralthink banks can have a critical role to play and can be influential if they allocate money to where it should be. this speaks to one of the problems in the market, even from a private sector standpoint, which is the definition of green activities. in europe, the regulators have the framework to define what should constitute as green activity come out which serves as a guidance for investors or the central bank to allocate capital. but we have not seen that across the board. the flip side is, if we have this framework which defines green activities, there is limited disclosure by companies.

companies could be in the right industry, but without disclosures around how much their revenue is derived from greening activities, it is hard for investors or central banks to allocate capital in a way that will go to the right places. next year, the focus is -- further getting disclosures. from exxon, this week, we have seen for the first time targets to reduce their carbon intensity. that sector is a little bit behind other players. how weekly do we need to see laggards catch up with the trail blazers, the ones in the lead? jennifer: it is moving very fast. we are starting to see the difference between winners and

losers, and the implication being priced in by the market little by little. next year will be an inflection point, where companies that do not have a plan or a target, they potentially could be penalized because of lack of transparency that creates uncertainty for investors, because we are not aware what the exposure is to climate transmission risks. it will be more evident next year who are the winners and who are not moving quickly enough. setting out the target is the first step. next year, from an investment community come the focus will be on the near and medium-term plan on how they will reach those targets. matt: great to get time with you, thank you for joining us, jennifer wu, global head of sustainable investing, jp morgan asset management. up next, which assets will gain

the most from a u.s. stimulus deal? we put that to mliv. this is bloomberg. ♪

anna: welcome back to "bloomberg markets: european open." better than modest gains across the board. the u.s. congress moves toward a stimulus deal. the pound is strengthening.

let's talk about some of these. is it stimulus talks stateside that is pushing us higher on european equities now? >> yes, it seems european equities are taking their cue from u.s. developments which are considered positive. it goes to show stimulus is still main in equity markets and what is powering them to the end of this year, and possibly a story that will continue into next year. worseningasts with pandemic situation in europe and the u.s. it is a battle between these catalysts. stimulus is winning, but it might only be a matter of time before investors once again come to grips with the reality of the pandemic situation. matt: what should we expect from the fed later today? kristine: a lot of people will

take a look at the weighted average maturity of the fed purchases, because that feeds into the debate whether the yield curve will be steepening or flattening next year. it also relates to questions about catalysts that could push yields higher, including inflation. it will really be something people will look at, what maturities will be focusing, the fed will be focusing on, will they concentrate on the longer end of the yield curve? is that something that will pin longer yield terms down? one of the main concerns will be financial conditions. they want those as loose as they can possibly be. anna: thank you very much, kristine aquino who leads our markets live team.

that is it for the european market open. "surveillance" is next. this is bloomberg. ♪

francine: stimulus before christmas? mitch mcconnell says lawmakers are getting closer to a deal, guidance from the fed on bond buying. expanding restrictions. new york city mayor says prepare for a shutdown after the holidays. france and poachers eight -- imposes a curfew. bang dividends, imposes strict limits of payoff levels.