tv Bloomberg Surveillance Bloomberg December 24, 2020 4:00am-5:00am EST
to block it. welcome to "surveillance." i am yousef gamal el-din in dubai. the contours of a deal appear to -- service. to give you a big of a -- bit of a rundown, we are higher on the stoxx 600 at the moment. stocks are meeting, we are up about .2%. treasuries, lighter volume as you would expect this time of year. yield curve touching the steepest level in four years. 30-year yields in focus. look, the analysis done by bloomberg news suggests cable is reachesle as it december 17 high. the technical line in the sand 136.34.
we are off of that a little bit. brent crude a little slower, .5%. the u.k. in the european union are expected to announce a host-brexit trade deal today. that is after negotiations work through the night of finalize a compromise on fishing rights. there has been optimism on the markets. let's get more of the breakdown with annmarie hordern. good morning. annmarie: good morning, yousef. the ftse is flat on the day. .5%ftse 250 is up more than -- .25%. that is a domestically focused stock. they could come under pressure when you see the strength in the british pound, but the ftse 250 is doing well, and yesterday come a closed up more than 1.5%, the optimism of the brexit agreement. we are waiting for the final
finishing touches. there was a compromise on fish and others, but they still work through the night. they are still working through the morning. we are waiting for prime minister boris johnson to potentially address the press. we are seeing stocks up nearly .2%. remember, european markets will close early today, normally a dull day in terms of news flow, but not today with the potential of a brexit gift under the christmas tree. lloyd, barclays, all doing well today. the banking sector can breathe a sigh of relief, and the city of london, countenanced times that bank executives -- countless times, we have had bank executive come on the show, but potentially this deal does not lead to one, so that is why we see a little bit of a boost across financials in the u.k. finally, i want to look at what is going on with the british pound. this is the great brexit barometer. look at that, 136, the key resistant level.
we have not been able to break out of that recently. pound,pass it on british but i spoke to andreas larson earlier this morning, and he was saying all of this was pretty much baked in, a base case agreement for the end of the year. what he is waiting for is any type of comments on services, because services is 80% of the u.k. economy, and he says if we get that, we will see more upside into the british pound. yousef: annmarie, thank you. that is bloomberg's annmarie hordern. is david, now bloomberg's senior editor. david, do we have any more details around who gave into what? two big questions there, the timing of this, this being brexit of course. everyone knows better than to make hard and fast predictions on timing. we had teams out obviously
tracking this throughout the night in brussels and london. at one point, there was going to be a press conference at 2:00 in the morning. of course the timing of that could switch, so we are poised, waiting, but i am afraid no for medication yet. there still seems to be some talks going on at the margins here around some of the details, some of the wording of the final document, which is reportedly now running to 2000 pages. whether we get our hands on that is not yet clear, and it is not yet confirmed with the details are in that. we had some headlines overnight about the compromises on the fishing. that was kind of the final big hurdle. we have got the top line numbers on that, but, again, the devils on this will be in the detail. that will be the impacts on different sectors, things like industry, energy market, financial services. we are not going to know those, i'm afraid come until late in
the day, at the earliest. yousef: what are some of the risks here for boris johnson in terms of his domestic political capital? his key supporters are going to be very, very cautious around any potential signs of weakness. david: you are absolutely right, and you can imagine. in fact, some of the more hardline brexiteers in his party already saying they will be p oring very closely for any signs of surrendering, as they would put it, to any european union demand. fishing is obviously a big part of that, but many other things. on the other side of the debate, people jumping on the s&p last night, making complaints about the agricultural products. boris johnson is going to have to pull parliament back from its christmas holiday next week to ratify this deal, presumably, and you can expect a lot of heated debate in those crucial few days. boris johnson is invested in this.
he is having a hard time of it, with the pandemic, terrible numbers on the covid front and the u.k., an eminent lockdown. you need to win on this in order to go into the new year with any sense of optimism. are there any other hurdles that you can see that could prevent the implementation of a deal? david: well, you know, they may be arguing about it, but he does have an 80% majority. labour will probably vote for it. it has got to be ratified on the european side as well, remember. the european parliament has already said their deadline has been missed, so there will have to be some sort of special protocol to implement that. remember the canada trade deal? that was a most scuttled at the last minute by a small area of belgium. 37 countriesn all has got to agree to the deal. the expectation is that no one
will throw a wrench in the works, but this is the european brexit.t is yousef: it would not be 2020 if they were not wisps interns. david merritt -- not twists and turns. david merritt, bloomberg news senior editor. stamping out the coronavirus. -- counties is being added are being added, and that means nonessential shops will have to close. the health secretary is warning that christmas and the start of 2021 will be tough. republican members of the house plan to block speaker nancy pelosi's plans to pass a bill tosting stimulus checks $2000. president trump demanded the larger number, but the majority leader called and asked
everyone to reject the deal, which needs unanimous consent. and a new vaccine effort. researchers argue lying information out a request that the company. u.s. standard -- minimum standards set by u.s. for emergency authorization. the vaccine from pfizer and moderna have produced far better results. 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. stay with "surveillance," because we have quite a bit coming up. we will get more reaction to the news of an imminent brexit trade deal as well as more market reaction. sets,g british as european assets shift as we speak. and how speaker nancy pelosi response to president trump's demand, but will republicans approve the deal?
yousef: economics, finance, politics. this is "bloomberg surveillance." i am yousef gamal el-din in dubai. the u.k. and europe are poised to look at new developments. we are waiting to hear from prime minister boris johnson. the pound is extending gains on the news that an announcement is imminent. rbc capitals the markets chief currency strategist. i am looking at information from the markets live team, and they are basically saying fatigue from the process that took four years and countless missed
deadlines means that this is the ideal set up for a defect price action. is that something you could get on board with? and i thinkld, yes, it is more of a function where we have pretty much fully discounted the deal today, looking at proxy measures, we are at high 90% probability of a trade deal by the end of the year. and it is time for sterling to move on from that, and in doing that, there are still considerable stumbling blocks ahead, so in the early part of next year, we will likely have the significant disruption to u.k. trade, with or without a deal, as result of leaving the single market customs union. the servicewhole of
industry covered by this deal, which will be the key debate going through next year. i am of that view, that we are taking the last bit of risk premium in sterling this morning for no free trade agreement, but the road is rocky from here on. yousef: how important was it, adam, for policymakers to come together and bring out something that is meaningful to markets before the end of the year? how much was at stake here for the u.k., or how much is it? because they do not have a deal yet. how much is at stake? adam: it is certainly a positive development that we do have a deal come albeit a narrow one, that covers a relatively small ,roportion of total u.k. trade but i don't want to suggest otherwise.
there are still many negotiations to go on year. there would be a more positive system than would be the case if we left with no deal and we just traded on wto terms. so it could be on how much more of a positive environment, but i am just thinking we should not get too caught up in the euphoria around the deal that looks like it will be signed today, and not lose sight of the fact that some of the most important industries in the u.k., the service industry not least, are in no way covered by this deal. yousef: adam, when i think back to 2016, some of the seismic events of the initial push out of the european union, the markets,that we saw in even outside of u.k. borders, was clear. these last few times, the transmission mechanism or the
contagion levels are much more reduced. is that something that is going to stay that way as we get into the new year as well, is that there is less cross-ice at spillover risk from developments outside of the u.k. -- cross from spillover risk fo developing to outside of the u.k.? adam: i think that is probably true, and looking at sterling history over the last four or five years, it is clear that the biggest shift was in 2016 itself. there was a very large risk premium built and very quickly in the six months or so following the referendum outcome. subsequent to that, the variation has been more limited. i think that probably is the case going forward. some say the sterling will trade lower next year, versus the dollar as well. but relative to the magnitude of the moves and the repricing activity itself, the moves are
relatively small going forwards from here. and maybe it is true that sterling is already carrying a soy large risk premium, movement from here was already planned. banks, a fewng to tactical opportunities. are the conversations that rbc capital markets this morning just around cable, or would you say look at eurosterling, look at some others as well if you are banking on that kind of angle? so our own view, we look at longer-term through the noise that we quite possibly will get around the turn of the year. like sterling underperformers generally. we, you know, express that in our kind of, you know, head view through a simple -- we expressed that through a kind of head
because they will negotiate next year, and they can make it a sterling view, diverse find around a range of currency is probably the way to play it. but equally, we don't share the consensus view that next year will be dominated by dollar happyss, so i'm equally to play weaker sterling versus the dollar, because i am more constructive on the dollar generally than most of my counterparts are. yousef: we will get to that shortly adam, hold that thought. that is adam cole of rbc capital markets he stays with us. the u.s. how speaker faces a battle to pass a bill to boost stimulus payments for americans, as the nation ramps up vaccine roll up. our interview with anthony's outer, the government's top infectious disease -- anthony's
dr. fauci: you know, i would think it without getting the general elation vaccinated, let's say, mid april, between now and then, we are going through the various priorities. and then if we can really get vaccines going in april, may, june, july, and august, by the time we get to the end of the summer, i think we can get to that goal i am talking about about getting the overwhelming
majority of the population vaccinated. yousef: that was dr. anthony fauci, director of the institute of national and infectious diseases. to block nancy pelosi's bill boosting relief checks to $2000. that is according to sources that participated in a call with house minority leaders. adam cole of rbc capital markets is still with us. another rights that the market is now underpricing the gambit of this virus relief bill dying out. is that something you agree with? way thertainly the markets have traded in the last , still posited by the that anerally, does show solution will be found, one way
or another, either through the andident stepping back letting congress have its will ,ith the package, or vetoing you know, overruling the stimulus package, or some compromise being reached on the contents of the package itself. one way or another, the markets sanguinee quite sayin on the stimulus being delivered one way or another. i don't think that is unreasonable. there is some risk that does not happen, but as a base case, i do not think it is believable that market surprised for a solution of one kind or another that does eventually see the household checks delivered in the stimulus package relief. yousef: yeah. let's go to the scenario where they do go back to congress and they come up with a bigger package, wind is the needle get moved in terms of making a difference in economic growth
projections for the first half of 2021 and, ultimately, your bullish dollar call? adam: yeah, so, well, the immediate risk of course is because the stimulus bill is mixed up with the general funding bill. it needs to get past a very early next week to prevent a government shutdown, and, again, i think we all think that is the case, but that is the immediate hurdle we have got to get over. in terms of the impact on growth expectations, it is not critical, i think, for the outperformance of the dollar that we expect going forwards, and the notable feature of recent months has been improvement in growth expectations, relative to the rest of the world, despite that fact that you had the complete failure to deliver a second dose of fiscal stimulus. so if we look at expectations on consensus ofey, a expectations, the quality that
people have, for the mention of weakness next year, is all about the rest of the world catching up with u.s. economic growth, and actually the exact opposite is happening, so looking out across 2020 and 2021, the u.s. is the only major economy where growth is positive over those two years, and it is positive and rising, whereas almost all of the rest of the world has some sense of growth -- yousef: adam, we will have to leave it there. adam cole from rbc capital markets, he is the chief currency strategist there. we are looking at a live shot of london as we count down to the press conference. what are we going to get? this is bloomberg. ♪ this is bloomberg. ♪ yousef: welcome back to
to the press conference i the prime minister boris johnson. we were expecting him earlier but that has not come through. the u.k. and european union are expected to announce what will amount to the details of the deal. we understand some have crystallized, and they are in the rooms hashing out the polishes. let's get details with rosalind madison. thank you for coming on the program. give me a rundown as to the domestic political challenges boris johnson will have to juggle with any deal he gets from the eu? to makerst thing is good on his promise, which he made going into the last election, to get brexit done. if he manages to get a trade deal announced in the next couple of days, that will be a win for him, especially after a
tricky year politically. not just brexit but his handling of the pandemic. he vowed to get brexit done, then returned to the domestic economy and help out northern england. he needs a reset to throw that narrative forward and say we can put this behind us and move on, and focus on the high land areas where he pulled the labor vote away in the last election. the chaos at the ports did not help him, he needs to avoid that happening again. yousef: this is getting excruciating and tiring and terms of the last minute wait. we were scheduled to get something early in the hour. what is holding things up? rosalind: it is like kids in the back of the car sank, are we there yet? we are close but it is
finalizing the deal. there is a question of how it is worded in the document. johnson has accepted the u.k. waters catch should fall 25% over five years, down from the u.k. wanting an 80% reduction and 30% reduction. fishing is an emotional thing for both sides. it is part of national identity, centuries of maritime history. the wording of how it is done is delicate. yousef: if we do not get a deal in the coming hours, is there another window for this? lastve heard this is the opportunity, then it gets rolled over. hoping iteverybody is does not lag into christmas day. we are hearing there is likely
to be an announcement today. negotiators are locked in a room in brussels trying to push this through. boris johnson and ursula von der leyen have been talking constantly. aat would give boris johnson nice christmas present, but they are running out of road. d andransition perio december 31. if it has to go through broader approval, they are looking at an extension or bridging arrangement that allows it to continue into january. they need to get it done in the next couple days. yousef: great speaking to you, rosalind madison. fraser,us now is simon flint global, managing partner. get a read from you on
what looks like an outline of a deal. simon: yes, it looks like finally after 4.5 years we are on the verge of a deal. i would be surprised if it was not completed today. it will be a deal that probably gives us tariff free" a free trade in goods and agriculture, that is important. it is also important to say we have to look at the detail in terms of different sectors and how it applies to different industries. there are a lot of things like trade and services, data provision which we do not know whether they will be covered to what extent. it is a limited deal but it looks like a deal of some sort. yousef: were you surprised they did come through with something? throughout the process you are skeptical that anything would
come at all. simon: i have always thought it would more likely we would get a deal because of the political pressures and consequences of no deal. i have been arguing against a no deal, that would have been a bad outcome. the point i was making before, it is a limited deal. it is good news but not a great triumph, it is an orderly withdrawal in terms of the economic relationship. even with a deal of this sort, the british finance minister he says it will reduce growth in the british economy by 5% over 15 years compared to what it would've been. let's not exaggerate how good an outcome it is, but we will welcome it because it is better than the alternative. yousef: because they are able to sign a deal at the table does not mean it is smooth sailing.
implementation risks, domestic opposition, european research group -- any of that a red flag to you? simon: on both sides and has to be agreed by governments and parliament, and accepted in public opinion. on the british side, boris johnson is aware of the pressure from the hardline brexit or's. this is a hard brexit. i would be surprised if the erg rejected it, but they will grumble about it. a lot of them are absolutists when it comes to sovereignty, their idea of sovereignty, and some would be happy with no deal. there will be pressures, but i think it will go through and people will recognize it is better than the alternative of no deal. yousef: as we await more details
on what this deal entails, all eyes will be on further agreements with other countries down the line. you lamented the u.k. is losing its relevance in bigger foreign policy matters. is this a stepping stone to more progress on that front, to become more engaged with the rest of the world? simon: i really hope so. this country needs to move on. we have been focused on brexit and suffering from covid. we need to look to the future and work out the relationships with europe and the new administration in america, and more broadly i hope this brexit deal will be a platform to build forward both with europeans and others. this idea of global britain that the government is promoting
needs to be made a reality. yousef: one thing we have been doing on this program is looking back at 2020, such a tumultuous year, from the pandemic to brexit negotiations to central bank stimulus. what would you say has been the biggest learning take away from the wider brexit debate you can carry into 2021? simon: the thing we have learned over time is it is not a good idea for countries and governments to set out a radical course of action without a clear plan or understanding of what the destination will be. and what has happened, we have come to more extreme outcomes. that is a learning point. the other learning point has been you cannot predict things, therefore taking risks is dangerous. when you have important relationships internationally as
we do with the rest of europe, you need to be careful about how you treat and nurture them, because we need collective responses to the challenges we are facing, economic, trade, and pandemic. international cooperation is important, which is why i welcome the attitude of the incoming administration joe biden will take to relations with allies going forward. thisf: i really enjoyed exchange, thank you for your time. that is sir simon fraser, flint global, managing partner. coming up, the u.k. and european union are on the cusp an unveiling a trade deal. we speak to bob neill, justice select committee chair, u.k. house of commons about the implications of this historic announcement as we look at live images from 10 downing street. this is bloomberg. ♪
yousef: you are watching "bloomberg surveillance." i am yousef gamal el-din in dubai. the u.k. is locking down more parts of southern england in an effort to stamp out the new variant of the coronavirus. new counties are being added from december 26, non-essential shops will have to close. health minister is warning that the start of 2021 will be tough. president trump has parted his ex campaign chief, paul, convicted of lying to tax authorities about millions he earned in the ukraine. he pardoned roger stone, convicted of lying to congress.
and charles kushner, the father-in-law of his son-in-law, jared kushner. president trump vetoed the defense bill, calling it a gift to russia and china. nancy pelosi is promising swift action next week. the bill passed by enough to override the veto. 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. i want to circle back to the market action. we are cautiously risk on across the board as we await in official announcement on a post-brexit trade deal. stoxx in europe charging forward. u.s. --cable appears vulnerable. we are looking at a weaker bloomberg index, but marginally so.
51.17 perhanged barrel. the u.k. and european union are on the cusp of unveiling a historic brexit deal. the long-awaited announcement is expected to come today. joining us now is bob neill, justice select committee chair, u.k. house of commons. from what you have seen from this deal, will it be acceptable to the party? bob: i think it will be to the majority of the party. there are some who take an ideological view over the sovereignty issue, but the conservative party has always been pragmatic and a pro-business party. showinget is already this is a good thing, and i will be supporting it 100%. yousef: how about your euro
skeptic colleagues? will have aople bureaucratic point about sovereignty every time we strike any agreement. i think the vast majority of the party who were elected a year ago with a large majority on the basis that we back the prime minister to get the deal will want to back it now. that is what i will do and i am confident the majority of my colleagues will too. yousef: you have been in touch with your constituents. how would you describe the damage done to businesses as a result of leaving it to the last minute, the fact we are one week away from rollover? bob: it certainly has not helped. i have been keen to have a deal.
a constituency like mine in .ondon, it is really important certainly for business and a small and medium-size businesses. business uncertainty has not been helped, but better late than never. i hope the trade deal we get will also be linked swiftly to an agreement so we can continue data sharing, that is important for financial services. and that is important for security for justice cooperation. onarate strands are going around those issues. we will have an adequate set of data and protection rules to transfer the data. important, but a bigger picture at stake. yousef: you mentioned financial
services critically important for your scope of operation. how worried are you inevitably pullresult of the push and , the roller coaster ride of the last four years that the city will have to lose its position as a supreme destination for capital? bob: one of the reasons i voted remain and campaigned strongly to remain is financial services is the biggest employer in my constituency. the u.k. -- i think there will be some pressure on us. itself to beshown adaptable. although there will be difficulties for some areas, the markets are not as seamless as in the past. we have the advantage of the number of things, one is the
particular depth of our capital markets. raisedf eu 27 countries considerable sovereign debt in london, and there is no nexus of those skills in capital markets elsewhere, certainly not in europe. with some workarounds and adaptations, we can do that. there will be some job losses and loss of trade. i think we can bounce back from that. i would rather we not go through that dislocation, but accepting the referendum, we can adapt. we have the advantage of the english language, the time zone and more portly, -- more importantly, english common law which financial service contracts are written and recognized as a gold standard. deal, whatwe get a
kind of additional persuasion will be necessary to get it into the executive branch to get implementation? and do you see potential stumbling blocks? bob: we have yet to see the detail and we have to see how the implementation goes. i and others were concerned how northern ireland might work out as a stumbling block. i managed in parliament before christmas to broker a compromise over a separate piece of legislation. the government accepted, so i think that is workable. you also have to nail down the detail and relations. these are sensitive issues. sure an incoming biden administration will want to work disruptively with us on that,
and a deal will make that much better. down the details of the sector specific arrangements. there will still be transactional costs. i will not say it will be simple thereafter, but at least we have a framework to move forward. and key uncertainties are removed. yousef: as we get into the new year, what are your legislative priorities? how do you plan to hit the ground running? bob: we need to get all the legislation through to ratify the deal. it is likely parliament may be caught between now and the new year. i am happy to come in on christmas day to get the deal through. we need to get that done. i am keen to nail down data sharing and where we are on policing, criminal justice, and
legal cooperation. a lot of talks are done on that. we do not want to give organized crime a free christmas present. get signed up on international law, then we can judgments asnforce a sovereign independent nation rather than as part of the eu. get that in place as soon as possible, that is a top priority to enforce a contract trading within the eu. yousef: this has been helpful, thank you for making the time. bob neill, justice select committee chair, u.k. house of commons. eyes firmly on downing street as we wait to hear from boris johnson.
finance,conomics, politics. this is "bloomberg surveillance ." let's look at what is coming up. 11:00 a.m. and in time, they will probably raise the one week repo rate, tightening needed as inflation surged to 14% last month. the central bank has shown the capacity to surprise. with the holidays coming, most european markets will be closed. if you're going on holiday on time, all the best for 2021. if not, i'm sharing the burden with you. the stock market has a half day trading and closes at 6:00 p.m. u.k. time.
sterling is rallying on the news we could get a brexit trade deal later today. negotiators work through the night to finalize a compromise on fishing rights. andill allow for tariffs quota free trade. european stocks are powering ahead, cautious optimism as we get the contours of the deal. the press conference was expected an hour ago. we will take the story forward. this is bloomberg. ♪
tom: this morning it is a gift that keeps on giving. president trump overrides courts, juries, and prosecutors, and the presidency is "a hoax." this isbraska they say " rotten to the core." years, first time in 53 the president vetoes the defense spending guilt -- bill. the veto.ust override it is christmas eve among the pandemic partition. there is no stimulus or income replacement. under the tree, the mercedes suv starts at 160,500 with vibration reduction for the kids in the shofar, and they can listen nonstop to mariah carey killing it this year, in the 26th year of all i