tv Bloomberg Markets European Open Bloomberg January 4, 2021 2:00am-4:00am EST
[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] ♪ >> good morning, welcome to the markets, european open. i am anna, and matt is in berlin. >> good morning and happy new year. today the markets say new year, same stock market catalyst. stimulus and the vaccine oll-outs continue to assuage
fears. can the momentum keep up. here are your top headlines from the terminal. the u.k. rolls out the first shots of astrazeneca's vaccine today as much of europe prepares to start 2021 under tougher coronavirus restrictions. global stocks push higher after equities ended 2020 after a fresh record high. e dollar slips amid-optimism on the recovery and a nations trade. the u.s. prepares for the high stakes senate run-offs in georgia. this as president trump urges the state's officials to find votes and flip it to him ahead f joe biden's certification. just under an hour away from equity trading in erne. futures all pointing higher right now. well, that is interesting. he dax future is higher by
about .2, and this board shows something different. we will have to double check that. ftsa futures higher. letzig more this board. get rid of that. suffice it to say we have some pretty strong green air owes across european futures, almost one percent higher and u.s. futures up about .1%. >> happy new year to you as well, matt. i neglected to say it at the top the program. i see dax futures higher. that is reflecting a broadly more positive picture across the european equity markets. also us futures a little more muted but in the green. let's have a look at where we are in the asian session. asian markets in general starting the year where we left off in positive form with the
positive momentum. clearly central banks around the world and what they have done so far, ringing in the ears of investors as we move into a near use, into 2021. we have stocks at all-time highs on new year's eve, on the s&p 500 at least. that was thursday of last week, just checking. we had stocks at record highs then, and we are not that far away from it. ails ya up around 0.% this morning. we see some weak nelson in the telecome sector because of the ction at the nyic. chinese currency the highest since the middle of 2018. a lot of moving parts. the dollar weakness in the mix. let's get into the market conversation. our manninging editor in singapore is with us. mark, good morning to you and happy new year. it seems like we are throwing around some of the same themes,
but i wonder what it is that is guiding your positivity each morning? are you going to be looking for the state of the i have been fedex story globally or some parts of the world? are you going to be looking for the roam-outs of vaccines? what getting your attention? >> happy new year to you. i think at the moment the trend is you were friend. i know we kind of bandy about this cliche', not really thinking about it. but the fact is, what is the negative catalyst now? we have got through a pandemic. we have got through the year of the black swan thanks to central bank support. we have gotten through a tumultuous political season in the u.s. we have gone through a trade war. we have overcome amazing big hurdles, and yet the marketing continue to power on. what are you expecting to derail markets now? what is the issue is programs some point evaluation becomes a factors. it is hard to evaluation to matter one day. it needs a the catalyst.
i think at the moment when they are seeing what am i looking for each day, you have to assume unless there is a new black swan or catalyst, it is going to keep on motoring higher ununtil we reach a breaking point in valuation. at some point the positions are bit retched that a small of volatility starts the de-leveraging process. you have to trade it when it comes. it could be six months away or next week. you have to watch price action, but otherwise assume we are going to be in a volatility place for assets. >> this is your question of the day. which asset then will perform best in 2021? what are you hearing. your investors interested in
assets that can resist that kind of volatility, or will they want to continue to buy the momentum assets? >> i mean what we are hearing from people, they like things like crypt currency, which is doing well today, despite the gains in bitcoin. it is lagging the broader crypto factor this year. gold will do well. the general theme is we are going to see the continued did he basement of currency, and particularly the dollar. they like the idea of commodities. they like the idea of getting out of cash and into hard assets, especially assets that have a particular bonus like crypto assets. from my side, because the unlying them is we have a massive amount of money chasing poor returns, but there is nothing to derail it versus the idea that smat point there is going to be stretch evaluations, i worry about volatility. i think it is very, very hard to buy an asset now on a 12-month horizon.
all investors must become traders this year. many of our viewers would kind of allocate some money at the start of the year and forget about it until 12 months later. they are not managing it day-to-day. unfortunately, i don't think that policy is going to work in 2021 because we are going to have some severe breaking points. the asset you want is vomit. it is still quite low on a historical basis. if you do believe we get a return to inflation, that is one area of volatility, but that will feed in double in the fx volatility. fx volatility is a very exciting asset in 2021. >> ok, we will keep that in mind. what do you make of the flurry of ma that we saw at the end of last year. we got some breaking news. we understood that m.g.m. resorts might be seeking to by
the u.k. entane. it is a six billion pound valued business. it owns a games business, a high street betting business as we call it. confirming this morning that m.g.g.m. has made an offer. they say the proposal significantly undervalues the company. we will late for the moves. -- eems like mama m and a- e a strong sector is a strong sign for economies. it says people believes stocks are undervalued. like any trend it does reach a point of kind of extreme excitement, and sometimes people say when m and a starts breaking records and gets too stretched beyond previous records, that is a sign there is too much easy credit. people are just buying assets
without doing due differently generals. it is one of those typical signals. when you have a strong m and a sector, it is good, but when you get too strong, it is a bad sign because it shows people are pouring money into assets without checking properly. i am not sure we are at that breaking point yet, but it is another one the triggers you watch this year for when the market is officer stretched. >> i feel like we finally have time to care about oil again. there was so much going on, still dealing with the pandemic, but we are finished, thank goodness, with at least part of the u.k. leaving the e.u. are, and the election is over. is there going to be more focus now on opec and crude? >> look, i am kind of divided for my team on this. i think emotion of my team is short term or probably medium term in oil. this idea that we have a lot of long-term supply taken out over
the last year because of the price action volatility and the pandemic. therefore, it is not going to get switched on easily in the u.s. when you combine that with the fact we have this global economic pickup, that gives a good supply equation for the oil field. i am a little more worried. i think that people are still finding it hard to differentiate between the signal they are getting from financial markets and what the real economy is saying. i think the fact is the pickups in the real economy this year, of course it is going to be strong growth. that is because we had a devastating draw-dawn last oher but it is a soft recovery given how hard that drawn-down was. people are saying it is an amazing environment and economy. there is great demand there. no. demand is better. i am in the minority of people who are more constructive than me.
>> we will continue to follow the conversation. mark, thank you very much. bloomberg's online managing editor coming to also from singapore. coming up, relation faces its first test with this week's georgia senate run-off, deciding whether the democrats will control the senate. we will talk next with lima this. is bloomberg. ♪
>> welcome back to bloomberg markets. this is the european open. we have got about 46 minutes to go until the start of cash trading across europe and in the u.k. we can see that futures are higher across the board. dax futures about a half percent. let's get the first word news. these are today's top stories. opec plus is warning of risks
to the oil market from a resurgent coronavirus. the alines of producers is meeting today to decide whether it can continue to restore crude supplies without hitting the price recovery. at a late meeting yesterday, several countries, including saudi arabia sounded cautious about increasing production. schools in england may need to stay closed for longer than planned. prime minister boris johnson says tougher restrictions will probably be needed to combat the pandemic. they are poised to give the first shots from astrazeneca at oxford today. nancy pelosi has been re-elected speaker of the house of representatives, the only woman to hold the speaker's gavel. she was select the with 216 votes, just two bhore than the majority she needed. it comes despite some wings of the democratic party calling
for a new generation of leadership. pelosi is 80 years old. that is your bloomberg first word news. anna: matt, let's talk about some of the big picture themes guiding us into 2021. global stocks said to start 2021 at new records as january shapes up to be a pivotal month for the reflation trade. the fall out from the pandemic remain uncertain. biden presidency will be more clear after the elects in georgia. we talk to an economist. we have this reflation trade, the highest in two years. but two years ago we weren't talking about run away inflation. how much inflation should we
expect to see in the u.s.? >> good morning and happy new year. i think the inflation story has a further leg to run. it is understandable that at the time of the pandemic, credit demand is going to be depressed. so that traditional understanding of monetary reflation is still contained. what we do have is central banks setting the foundation here for a future reflation really taking hold, which is what the marketses discounting mechanisms are now pricing in. we can see this across a number of sectors. we have seen it in the activity. that is desperate credit deterioration in real economies. we have seen this in the housing markets. we have seen this in the prevention of a new financial crisis in europe desperate the astronomical rise in dad in
places like italy and greece. and we are seeing this in the direct stimulus to the point of 10% of g.d.p. in record times. in the short term we have central banks preventing a depe depression, with collateral evaluations. we are nowhere near there. at the time when borrowing costs are so low. tt: how close will central banks come to retightening. if we do see reflation creep up to the 10-year yield get up 1.50% or 2%, how quickly will the fed to be to go act? >> this is a key point.
in the short term the answer is unanimously not close at all. i think that -- it has ngineered a successful eflation strategy. in the rise of 10-year breaks towards 2% and higher now. backed by the strong correlation between the break even and the yields or gold or the reflation of bitcoin. every single segment of the market is telling us that there is a financial overhang of reflation that is waiting to ripen as we move out of the the pandemic. imexpect that 2021 will be the bounce-back year. but with respect to how the fed will react, they have mapped out in projections that the gap between nominal g.d.p. and
10-year rates is only going to get wider. which is a strong cyclical impulse. urther yield curve steepening. matt: we have a reflation chart up. i just thought it was very interesting. hawkins put this together and it shoals also us break-evens at the highest point since 2018. we are looking at almost 2% here. so this isn't just investors talking about something or new equity highs. this is actual bets on inflation. >> it is. given we are at this point in the recovery, we are very much in an environment now where
there the new economic outlook is going to get darker before it gets better. if we are here now on the yield curve, as we move into 2021, as the roll-out of vaccines takes shape in the first half of the other s opposed to things begin to materialize in consumer confidence on the ground. the constraints on business investment balance sheets. then we will -- and of course also cyclical impulses of credit eases that are virtually unspent. we have savings and the financial aspects and credits, it is going to provide a platform for recovery. i do see that potential for a
break-out in yields, see no, ma'am neal yields right at the point where the fed may engage a form of control to avoid a sharp steepening in the euro credit market. matt: take a breath for a minute. we are going to take a break. economics chief economist stays with us. coming up we are going to get her concerns. she has laid out her fears for the year ahead. we will discuss her potential worst case september osi. one of them didn't come true. there was no no-deal brexit, although maybe we got close. but we will figure out what she sees as risks in the coming year, that is this year now. this is bloomberg. - [announcer] imagine having fuller, thicker,
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anna: welcome back to the ayesha market open. just under 40 minutes to go to the start of the trading session. futures pointing to the up side this morning. now for the ongoing pandemic to the debt and the widening gap between market evaluations in the real economy, she has compiled her pessimist guy to 2021. she is still with us. i don't think you are always feeling pessimistic, but these are things to feel that about. where do the debt worries fall heaviest, do you think? >> i think that the twin forces here are shaping up both in the real economy and provide sector balance sheets, and government balance sheets. the pandemic has seen a record decline. this is the global cries and
the euro crisis the, and we are not at the end of it yet. it is likely that the environment will get worse before things get better. we have the triple affect of the coronavirus must tigerses, the late fiscal checks in the u.s., the slow mass testing rolling out, especially in the u.s. and the u.k. that does expose market evaluations, particularly in the credit space to a further downgrade. of course later down the line, we are looking at the risks of a sharper steepening in the yield curve to resurrect fears. we are not there yet, but we are not on a sustainable path for credit risk. that means that more pressure will spill over on to central bank and government balance sheets. that is that so far we haven't
had a credit event despite a record situation in credit evaluation because of that back stop provided by governments. but that back stop has only been made possible from the support through central bafpks, particularly in places like europe where there isn't a policy stabilizing mechanism for the balance sheets. if it wasn't for the european central banks negative interest rates and working to close spreads, we would be in a nancial crisis with global systemic effects. it is impossible to be complacent about this, but i don't think we are at the end of the cycle. a final point here. we are now in the delaying of long economic. the shock of the winter wave of virus spread.
>> we have some good news in terms of vaccines, and a chance to overcome the health crisis. but we are not there yet. >> we need the fiscal stimulus, and we need it relatively quickly. i can see where the second wave is coming, you can see consumer spending. they are beginning to get impacted again. >> we need surveillance to be stronger. we need public health mergers. this is your west weapon. you need to use it well.
♪ matt: welcome back to bloomberg markets. this is the european open. we are 30 minutes away from the start of trading. the fate of joe biden's agenda rests on the run-offs in georgia. at one time seats up for grabs will decide which party controls the senate and have a decisive influence on the president-elect's ability to push his agenda forward. for more we are joined by bruce. what is the state of play in georgia? the concern i guess for democrats is that they don't
typically show up when it comes to elections, and certainly not when it comes to run-offs, right? >> that is true tip kwli. but as we know, these are not typical times. the turn-out so far from democratic voters has been very good in the early voting and in the absentee voting. so the real challenge is going to be for the republicans. can they get their voters to turn out on tuesday, because as we have seen, republicans tend these days to vote more in person, while democrats vote early or by drop-off balts. the big challenge now, though is going to be what happens following the big news from the weekend with president trump his phone call to the secretary of state in georgia. nna: we have heard in a call
that we have played here at bloomberg how president trump has been urging the team to find more votes, urging the georgia secretary of state to find 11,780 votes for him to flip the state. have a listen to what president trump said. >> look, all i want to do is this. ,780 want to find 11 votes, which is one more than we have, because we won the state. anna: what has been the reaction so far, and how could that kind of language, this kind of intervention or commentary by president trump, how could that swing things in georgia? >> well, it was an extraordinary call, and the reaction has been swift and vocal from a lot of democrats. vice president elect kamala harris called it a bald faced
abulls of power by the president of the united states. some members of congress have said there needs to be an impeachment investigation or process started. obviously that is unlikely given we only have a few weeks to go before inauguration day. we haven't heard much from the republican side. we do know that senator david perdue, one of the two up for election in the run-off, commented saying that the big problem here was the leaking of the recording. he said that was what was disgusting. anna: bruce, thanks for the update. we will look to that as things develop in georgia this week. bruce einhorn with desotos there. a business flash. some of the largest cold front stories we are covering. the new york stock exchange has been listing three chinese telecom companies, that come come applying with an executive
order for restrictions on firms that have links with the military. they have no meaningful presence in the unless except for their listing. p.s.a. group's merger is nearing the finish line. they are poise to get share holders to even solve. it could create the fourth largest automakers. they believe they will be able to boost concerns and compete in electric cars. tesla fell just short of his 2020 target, missing its goal of delivering half a million vehicles by 450. it joined the s&p 500 with shares rallying over 700 percent over the last 12 months. in 2021, the firm is plan to go expand in china and is opening new tack doris in texas and germany. that is your bloomberg business rush. matt: now the u.k. is poised to give the first shots of the
astrazeneca oxford vaccine today. that is as the country grapples with a more contagious covid varnte. it has recorded more than 50,000 cases for the sixth consecutive -- for the last six consecutive days, more than 50 cases a day. the prime minister, boris johnson, has warned tougher restrictions may be on the way. but the u.k. is making better progress than e.u. countries when it comes to ministering the vaccine, so far giving around one million doses out. france expects to vaccine a million people by the end of january, but it is far behind that target. president macron is reportedly angry over the slow pace of delivery. how slow? well, look at this chart. total doses given out, 516. that is only 516. we are joined by our correspondent from brussels. it is shocking how few people
-- i feel like i personally could have vaccine napetted more people than that, given some syringes and doses in the last week. why is it so slow in france? >> there are number of reasons, but this is clearly very problematic. you look at the number of vaccine nations we have in the first week, it is clear that the french are not going to get to one million vaccines by the end of january. you would not be able to hit that jim. the economy and the economic rebound is depends on that. the reason why this is happening, it really is a combination. you could say there is a rot of paperwork. the add strays is become ago problem, but also the politics. the french government went into this saying we don't want to force anyone into getting the vaccine. the confidence in the vaccine has slipped since the roll-out. there is this anti-vaccine
movement that could be a problem. it is not looking good when you look at the numbers, and clearly not good when you look at the public confidence on the vaccine. it is becoming a big problem, and we hear, we understand it has been repeated in the french press that the president is not happy with this and says this needs to be changed and recommend deed calcavecchialy and in big numbers. it is a question mark given the track record, although it has only been a week. anna: it is interesting to see the vaccine skepticism we see in france relatively stronger than in other parts of europe. enthusiasm for the vaccine in some parts of europe has been increasing. what about other parts of the reopening the economy story that we are seeing across europe? sticking with france, i know there were plans for reopening restaurants and gyms. the weather or the seasons are not counting in europe's favor. what are current expectations as when we see things reopen?
>> there the french immediate yay suggesting the reopening for restaurants, a key sector and very powerful lobbyists in france, will not open on january 20 given the way the pandemic is going. there are a number of regions that have now gone into a curfew that starts earlier, being moved to 6:00 p.m. it shows that at least for the time being, the direction is that we are not reopening. if anything, the restrictions . e going to stay in place we haven't really mastered. now the prime minister says there were more restrictions to come in the next few weeks. matt: thank you for joining us. maria there in brussels talking about the vaccine roll-out it is going to be a huge issue. everyone thinks his or her own country is doing this too slowly.
you have really got to look at the percentage of people and compare that to other countries that started at similar times. anna: we will continue to track the pace of the roll-out of these vaccines as it kicks in, in 2021. sticking with the vaccine story, indian regulators have approved astrazeneca's vaccine for emergency use, clearing the way for one the world's biggest immunization drives. has r one called covacin been approved for restricted use. bloomberg spoke exclusively to the company's founder about the logistical challenge ahead. traditional 35 or 40-year-old technology of the vaccine. this vaccine, you can give it to a newborn babies.
a lot of other vaccines are produced in the culture and the platform. >> if we see further mutations such as the ones we have been seek in the u.k., would this particular treatment be able to eal with that? >> wie don't have data yet, but we are in the process of getting that. >> let's talk about the efficacy of the vaccine as well. where are you with it in terms of that, and what are you aiming for ultimately? >> one has to be efficacy as a vaccine candidate. but how much we are going to get we don't know yet. certainly in the phase one, we . t to almost 100% we look at 120 details where we
see 98.5%, four fold increase. that is very significant. . that was the biotec founder up next, a new dawn. the u.k. and the e.u. may have struck a trade deal, but many questions remain for the city of london. the financial capital of the world. will it stay that way? we will discuss. this is bloomberg. ♪
president trump urged georgia election officials to find thousands of votes to flip the state in his favor in a 62-minute telephone call obtained by bloomberg. he pressed fell republicans to take action. this is the latest action. no comment from the white house or the trump campaign. india has granted emergency approval for the coronavirus vaccine from astrazeneca and oxford university, but there are concerns in other countries about getting access to a shot. "espn first take's" president is warning africa has few options. rtin: and astrazeneca -- moderna and astrazeneca have no supplies for the continent. a u.k. judge will rule later today if wick leaks founder ausage sausage -- julian
assange should be extradited. the expectation is that president trump will pardon him. lawyers say his odds of going free through a white house order is better than other ways. he has been in self-imposed exile in london for almost a decade. global news 24 hours a day on .ir and "bloomberg quicktake" anna: now the u.k. and e.u. may have reached a trade deal, but it is a side show for the city of london. its future rested on a separate process known as equivalence. so far, many crucial questions remain unanswered. join us now is our u.k. financial reporter. great to speak to you. excellent to have your input on a day like today. the u.k. financial services business is feeling very excluded from the trade deal
that we saw signed at the end of last year. what are we now focused on? how different is life today versus the end of 2020? >> well, it is significantly different in terms of the ability for big banks, traders and other financial firms to do business out of london into the e.u. that all changed dramatically a couple of days ago. going forward, as you said, there are a lot of large even four hat remain and a half years on from the referendum on just how cross-border financial services really will work. there are short-temple moves that clearly have happened between the banks moving business out of london and into the e.u. because they have to. and the same will be true for the amount of trading trocks and derivatives. but many of these questions are still yet to be worked out and
are going to be back and forth between u.k. and e.u. regulators in the coming weeks and months. as we have seen with these negotiations, they can go much loaninger than that. matt: can the e.u. afford to look the u.k. out? isn't it critical to the fangs infrastructure of europe as well that london continue to play the part of the capital? >> i think on certain key parts of the financial industry, one area being the ability to clear and guarantee trillions of dollars in derivatives. e.u. decided relatively early on that for financial stability purposes and the benefit of european investors, they did need that access to london. so they gave that ability. in other areas they have made the calculation so far that there isn't a financial stability risk, and the e.u.
really as a political and sort of economic project, they want to build up capital market,, their own capital markets and not rely so refly on london. it really remains to be seen whether that is successful. the e.u. has talked about building capital markets for several years now, and i think y all accounts it has been barely going and maybe not living up to the goals so far. that is one of the real key questions in the coming months. anna: as an example of the sort of piecemeal state of things, i saw that italy has given the u.k. finance a brexit grace period until june 30. this is a sort of specific italy-u.k. deal being done. i know bigger picture, the currently wants to focus on getting equivalent. there is a time table set out
for that. the deadline talked about is the end of march. dow have a sense of why that will be an effective deadline? >> they talk about it. oth sides make the joint decoration or pledge to come to a memorandum of understanding in terms of how regulators on both sides will operate for financial services. it is written out as sort of a goal there. as we have seen in everything about brexit negotiation things, these talks can go much longer than originally intended. you spin back to less than a year ago, back in june of 2020, both sides were supposed to have made significant progress, as they called it, best endeavors to make these equivalence findings that are so crucial for financial services, that they came and went, and there really wasn't
much progress. the end of last year came can went, and with a couple of findings, there wasn't much progress there. so we are in this situation where both sides have mapped out a new deadline or a new goal on when to come to sort of new terms of cooperation. it is not very long away from now, just three month, and these are really big questions that they haven't really been able to work out so far. matt: thanks so much for joining us. our u.k. financial reporter talking to us about the future of really the financial capital of the world, the future of the city of london. we are minutes away from the open. up next we are going to get ur stocks to watch including entane, as the online wetting company confirms it gets new ver proposals from york this. is bloomberg. ♪
020 is an extraordinary year. in the face of the suds coronavirus pandemic, we put people and their lives first. we wrote the story of tackling the pandemic with concerted efforts and perseverance. >> a year in which the government was forced to tell people how to live their lives, how long to watch their hands, how many households could meet together, and a year in which we lost too many loved ones before their time. >> there has never been a single thing america has been unable to overcome, no matter how drastic it has been. >> the coronavirus pandemic has been and continues to be a political, social and economic challenge of the century. >> we can see that illuminated sign that marks the end of the journey. even more important, we can see with growing clarity exactly
how we are going to get there. that is what gives me such confidence about 2021. >> i will give my all to containing the outbreak as soon as possible and give people peace of mind and hope. the tokyo olympics will be a testament that we overcame the coronavirus. anna: a selection of world leaders and soon to be world leaders marking the new year with a look at how the coronavirus pandemic has played out in 2020 and how it has been handled. the first trading day of the week. the picture of the as a matter of fact a fairly positive one. we have futures pointing to the up side. let's go to the stock by stock or sector by sector and have a look. we have some m&a to talking about when it comes to the gambling sector. entain receiving an offer from
m.g.m. resorts. they rejected it. it came in at about 8.1 billion pounds, but they say it undervalues shares. there is something in the auto space as well? matt: there is something going on. check out this. for one thing you have the copper rally continuing. for another thing you have the causing a r really bit of an everything rally in terms of commodities. and of course they are heavily weighted, the minors on the ftse, one of the reasons for the poor performance in 2020. coming up, the market futures are pointing higher this morning. the opening is next. this is bloomberg. ♪
>> trading for the monday morning, happy new year. the u.k. rolls on first shots of astrazeneca's vaccine today as much of europe prepares to start 202021 under tougher restrictions. goebel stocks push higher after u.s. equities ended 2020 at an all-time high. the u.s. prepares for the high-stakes senate runoff in georgia as president trump urged
the state officials to find votes and flip it for him ahead of joe biden's certification. a look ats take futures this morning. we are trading for the first day of the new year. that is exciting, isn't it? and should be to the upside. we are seeing gains on futures, up almost 1% on the ftse after what we hear all the time is such a global index had such a disappointing 2020. climbing up .25% and on this macro movers screen. equity indexes open up live as they start to trade. it takes the continental indexes a little longer than the ftse to see the british index out of the gate first, 1.3%. what a gain on the ibex, 1.3%. interest -- inng
2021. the cac 40 coming out strong. it looks like it could bring true for western markets. the ftse, cac, and ibex gaining 1% and a lot of change as european markets open higher. global stocks, surging toward record highs. the vaccine rollout and stimulus support continued to ease concerns about an escalating pandemic in europe and the americas. can the market keep up the pace of 2020? to talk about that is kohl's cole. we are seeing big gains, and let me ask you why that is. is this investors placing a bet for continued momentum in 2021? you know, there is a different picture of what is
going on in u.s. markets versus outside. a --t havingbrexit not be having brexit not be a focal issue is a big deal. i think the dollar's weakness is going to play into the story the next two to three years of global equity markets. it has been huge for a foreign investor to enter u.s. markets with a stronger dollar era. as that wanes, what does that look like for the picture we have in u.s. equities? that could change how foreign investors look at u.s. equity markets but in the interim, they are happy. using the ftse as an example, it has been a tough stretch for non-us markets and will they be more worried about that the next few years? anna: good evening, good to speak with you. it seems investors in europe are starting the year positively, at least wanting to load up on risk assets, on equity markets.
how much more do you want to add to equity positions at the start of 2021 versus last year? in general, whether someone is an institutional investor or runs -- caution is paramount. i can't say that with enough importance. i think one of the biggest myths in the marketplace, and i see this in a litany of writing today, and even on some of your editorial desks, the idea that central banks will be friendly. my only problem with economists predicting other economists is they never predict recessions correctly. they never predict stocks correctly. they never predict bonds correctly, therefore i'm figuring out how i'm supposed to trust the people who are building policy as economists. back to equity markets, the
whole idea of belief is there can't be too much trouble in u.s. equity markets as long as the central bank is staying accommodative, and the only problem is no history of explaining that. going back to the euphoria 20 applying, we ended up much lower interest rates into a nasty bear market and the u.s. equity markets never put themselves back together, even with a more accommodative policy later. that is a prevalent problem most equity investors have. i think it is heightened by the euphoria and caution being thrown to the wind in the united states right now. i want to point out, well, first of all, i wish i were in phoenix right now. i would go play a round of golf, maybe a camelback and get cocktails at tommy bahamas, but in oxford this morning, england, you could be getting the first dose of astrazeneca and astrazeneca vaccine. we can watch some live pictures
of that happening, i believe that hospital in oxford. it raises an interesting juxtaposition. the u.k. has had a tough time of the pandemic just as the u.s. has, but it seems to be rolling out the vaccine much more quickly than other european countries and much more quickly than is happening in the u.s. in terms of percentage of people vaccinated. i wonder what you think about the importance of a fast, efficient vaccine rollout. how much is that going to matter in 2021? cole: i think the vaccine rollout will matter incredibly, but i think the initial rollout phase -- i think that is minutia. not because it is not valuable to individuals lives but in one years time, it will not matter. i am plagiarizing that completely from charlie. he did an interview to caltech
alums less than two weeks ago and argued the effects of covid will be negligible in life one year from when he was giving the interview. i say that because think of how much equity markets price things based on that being a long-lasting factor and here is considerunger, who i one of the wisest man on earth, to be saying it won't matter really at all. , i think the, matt united kingdom is going to benefit from this in an inordinate amount relative to other countries because they have been so grizzly affected by it. the u.k. in particular, think of the benefits of the vaccine. to approveuicker things using the astrazeneca oxford vaccine as an example. i agree it will hand out its love early on, but i think one year from now in the developed
world, we won't be talking about this really at all. the question is what are the news organizations going to go to next? he forgot to have something to talk about and we may not have much other than that equity markets in the united states to talk about. anna: still looking at those pictures, those pictures are coming to us just filmed a little earlier this morning in oxford. oxford university hospital and there, we see the first astrazeneca vaccine being administered. the patient, deep in thought, as we see on the screen. i suppose what you've been saying about how this matters so much right now, but won't matter vacciner because of the rollout, what we are seeing in many of the developed markets. where does this leave the emerging markets story, because many emerging markets by ♪ might be a little slower to get vaccines administered. is that something we are going to see play out in capital
market allocations or no? mean, it is possible, but if you look at the history of emerging-market assets, a weak dollar is the best strength and that plays time and again, where a strong dollar tends to produce cheap emerging-market assets and weak dollar produces quite a great tailwind for those type of assets, so i don't look at that as a vaccine related thing. momentum that more as and investor enthusiasm for a place that has done really well. not the similar to what has gone on in the united states for five or 10 years where more success begets more success begets more investor capital. that is what happens in overtime with assets in general. matt: we are going to take a quick break and come back and get some stock picks with you. i'll tell you, for one thing, next year, we are going to still be saying the name trump and we are still going to be using the
word brexit. i'm sure those things aren't going to die off in a year, but the question of what happens in georgia may be a to what we talk about next year as well and maybe it will be interesting to see if that is going to be related to your stock pick, because infrastructure spending could be a huge issue in 2021 if the biden administration gets what it wants. stayscapital's cole smead with us live out of phoenix. next, being selective is key when valuations are so high. that is a little hint about some of his picks. this is bloomberg. ♪
anna: welcome back to the the firstarket open, trading session of the new year and we are 12 minutes into it and pretty stellar gains for european equity markets. the ftse come up 1.7%, the cac 40 up 1.3%. some corporate stories we are of -- says a owner takeover from mgm resorts undervalues the company. offering 8.1 billion pounds for 22% premium to the close on thursday. it forms a joint venture in 20 kick -- 2018 to capitalize on online betting in the united
states. it is asking for more detail on the rationale behind the deal. moving higher as much as 20% -- 27%. fiat chrysler and psa group's merger is nearing the finish line. the carmakers are poised to get shareholders to sign off. it will create the fourth-largest automaker. it will boostnk returns and have greater resources to compete in electric cars. tesla fell short of its 2020 target, missing its goal of delivering half a million vehicles by 450. joins thewhich tesla s&p 500 with shares rallying over 700 are sent in 12 months. expandinghe firm is in china and opening new factories in texas and germany. this is bloomberg. that is your bloomberg business flash. matters is valuation the creed of our next guest.
a time of says in surging markets, equity inflation is paramount. if i'm not mistaken, i saw the face of warren buffett creeping over your left shoulder. let me ask about the picks you've got at the moment. they seem to be related to the housing market. what is it that appeals right now on that front aside from low interest rates? yeah, the supply is tight in united states so in 2020, we went into an era where housing had been strong. you go into lockdowns that make people think we will see the end of the world and you come out of it with this housing fervor we've never seen in the last 10 to 15 years. you would only have seen in the 1970's, 1980's were americans a great suburbia is thing and metropolitan areas are not the cup of tea they thought it was.
there has been a big move in those stocks and at the same time, the remnants of what people are left with is they still don't want to be in downtown metropolitan cities, so the housing supply is tight because there has been a big move and yet we are not at any large building numbers from a historical context. we are looking at data going back about 60 years and we could double our housing -- home-building as we speak and you would get to roughly prior peaks on a population of adjusted basis or as you look at population, economic activity combined so most of the time in the last three months, those stocks have traded inversely year.he 10 the 10 year yield is going down, those stocks are going up because people are playing the affordability drum. the only problem is it is all going to come down to the economy's strength and secondly, millennial homebuying.
economists predicting rates is a stupid way to look at the homebuilders. matt: first of all, i'm going to agree with you. i love the suburbs, and i don't think the british -- and i know the germans just don't understand suburbs the way america does it. nobody else has that kind of experience, and it will be interesting to see how much these kids that have all been attracted to these superexpensive overcrowded urban centers and are all into density get out after this pandemic and back into the gold old-fashioned american suburbs. and obviously, that's why you like u-haul. what about continental? playems like a dangerous if the democrats win and if biden goes all out on the green new deal, continental resources,
another one of your picks, would be in danger, no? cole: it is a great question, and not too often i say i want to kiss a baldheaded man when i hear a question like that. let me explain. it is a very interesting concept to think about. in the last presidential debate, trump got biden to tell his hand on the energy side and biden said "i didn't say no fracking on federal lands, i said no new fracking on federal lands." he said the gavin newsom line 2030 and offeutral oil and gas by 2050. let's look at those words and has a picture of the green new deal. what he is saying is if there will be no new fracking held on federal lands, he's going to create a scarcity of leases.
existing leases on federal land automatically become worth more because they are scarcer and privately owned mineral rights become worth more immediately, as well. increasedof those because the federal government will stop the increase of capacity and if you go out and look at who has lease rights on federal land? who has the rights on private lands, congratulations. welcome to the largest energy companies in america. continental has this incredibly focused blend of the dakotas in oklahoma -- and oklahoma and sitting side-by-side with harold, who has not only created oilmmense net worth in the business but despite being on his third marriage, which is a record in and of itself, i would say. i don't know too many other billionaires who have been able to pull that off. we really think he is the entrepreneur, the operator you want side-by-side and why should you trust him? he's got over 80% of the stock.
i got done reading chris mayer's book 100 baggers. he mentioned owner operators are one of the better ways to compound wealth in a serious way. you look at his record, he has done well since he took that company public in an industry that has done terribly. i don't think investors understand the new president's policies. and the effects it will have. . back to the vaccines, i don't care what the presidential if the vaccine is negligible like charlie munger said. i think oil will be mispriced if he is right. anna: that is really interesting. more complicated obviously then the extent to which we will be relying on oil, the extent to which we are able to invest in it could take the conversation in a different direction. good to get the reminders of what biden said on the subject. cole smead, smead capital
manager, thank you for joining us. he will continue the conversation on bloomberg radio at 9:00 a.m. yucatan. coming up -- u.k. time. dealmakers worked to her christmas, making it the busiest m&a holiday will on season. this is bloomberg. ♪ ♪ you can go your own way it's time you make the rules. so join the 2 million people who have switched to xfinity mobile. you can choose from the latest phones or bring your own device and choose the amount of data that's right for you to save even more. and you'll get nationwide 5g at no extra cost. all on the most reliable network. so choose a data option that's right for you. get nationwide 5g included and save up to $300 a year on the network rated #1 in customer satisfaction. it's your wireless. your rules. only with xfinity mobile.
matt: welcome back to "bloomberg market: the european open." 23 minutes into the session, let's take a look at your movers. as we see some big gains to kickoff the year. first trading day of the year for the ftse 100 and it is up 2%. the stoxx 600 travel and leisure group is gaining this morning thing, i thinke a lot of people are booking trips today. that is my own editorial, but we have entain as a huge gainer, the third listed stock as well kes and gaming brands, and mgm has made entain an offer for entain, which entain has declined. american and other minors are doing quite well as the
dollar weakens and the everything rally in commodities anglo as, so watch well as rio tinto, bhp billiton and the others. minersand leisure, and are doing well. anna: stop saying it like that. we know you want to say leisure and that is ok. please been forever divided by this common language. activity, it was the busiest holiday for dealmakers. 2000 transactions worth, $187 billion announced globally in the final two weeks of the year. ben joins us. what did we see in the last couple of weeks of 2020? this is something that caught me by surprise. of bankers were still
at their desks and it is about the pent-up demand. once things are starting to get back to normal, once they can is brighter that and with everything that has been happening in the past couple of months with vaccines theouts and he u.k. with brexit agreement being reached, and a lot of ceos have the confidence to pull the trigger. what power does this -- what power to this incredible rally in m&a? covid-19e delays of and loosening those? what drove you to because valuations continue to rise, right? valuations continue to rise but a lot of companies are deciding to use their own stock to do deals. whilese in valuations making some things more
expensive make it easier for companies to use the stock as free money to do acquisitions. at the same time, interest levels remain very low. -- found ways to shift their business model to adapt to it are now -- investors are asking what are you going to do when we are out of it? what is your story for that and a lot of times, that involves an m&a transaction. anna: briefly, what do we think things will look like in 2021? ben: a lot of the same factors driving dealmaking are continuing into the new year. deal, they offer from mgm got announced this morning. we think a lot more deals will be coming into the new year. companies still want to do
the: welcome back to european market open, 30 minutes into your equity trading session. the first of 2021. broadly, 1.6 percent higher on the ftse, the cac and dax higher. the cac, up over 1%. travel and leisure the best-performing sector. healthy moves higher in london but in tizzy travel and leisure, at least hopefully as we look ahead to 2021. we are the top stories
covering this morning, opec-plus is warning of risks to the oil market from a resurging coronavirus. the alliance is meeting today to decide whether it can continue to restore crude supply without hitting the price recovery. yesterday, several countries sounded cautious about increasing production. nancy pelosi has been reelected speaker of the house of representatives. the only woman to hold the gavel, she was elected with 216 votes, to more than the majority she needed. it comes despite some in the democratic party calling for a new generation of leadership. the top infectious disease expert in the u.s. says the rollout of vaccines is picking up speed. 's they fauci told abc week that over the past few days, about 1.5 million vaccine doses have been given in the u.s. at a rate of half a million a day. global news, 24 hours a day, on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over
120 countries. matt: today is the first trading day in europe since the end of the brexit transition period. a new era beckons for new relations, but there are still many unknowns. as we've been telling you every day for weeks now, maria tadeo joins us with a guest. what have you got? maria: that's right, matt. the first day in the post-brexit world and we are joined by david had, director at the european economy andolitical to david, the first question i have, when you look at the disruptions we didn't get over the weekend, is it fair to say so far, everything is going smooth or smoother than expected? over: not much happened the weekend. there wasn't much traffic between the eu and the u.k., so a little early to say that
everything was smoother than expected. not many traveling, not many goods on the roads. we will see what happens this week, but the deal that happened on christmas eve really will help. and when you look at the deal, which is hundreds of to be ratified by european parliament. who would you say is emerging as the biggest winner? david: when we look at the small print, the eu got most of what it wanted. it looks like the u.k. had to compromise on a lot of details faird fishing, competition. also, the u.k. didn't get what is wanted in areas like or rules forvices cars so there are questions starting to bubble up in the u.k.. what happens next on financial services? can we meet what we need to do for electric vehicles or are we not going to make the rules for
criteria? it seems the eu did better on the details. maria: you mentioned two sectors i want to focus on, the first the financial industries -- services industry. the prime minister said we didn't get it, but that what we wanted, but could get it in the future. david: there's talk in the next three months of coming up with an memorandum of understanding, atory andbout regula at the moment, the u.k. is only covered by two of the areas of equivalence in the eu, so framework. there is no official cooperation so they are supposed to put something in, but this is going to take some time and it seems the eu has the upper hand in these negotiations.
for the eu, they have london, which is still the largest supplier of financial services into the eu. it is not completely a straightforward negotiation. i expect something in the coming months but i expect talks to continue in financial services for years to come. maria: would you say the european union has an interest in dismantling the city? it would be good business for paris and frankfurt. the issue the eu has is if you dismantle london, are you going to head for a fragmented financial services landscape across the eu? overall reliance on london is a problem come i don't know if there is a solution at the moment with what to do with it. donecial sector has not what it had been hoped and picked one center to take over from london within the eu and that makes it seem like it is unlikely to happen.
i think this is going to be a services in financial between the eu, u.k., and other centers. some american institutions saying we might as well serve the eu from new york now. fish, to go back to the we know this is a political thing, we've talked about it for weeks on end, but many of the people i've spoken to say the prime minister give up on the fish to secure more access into the manufacturing. is that where he is heading, protecting manufacturing? david: i think that is what happened in the last couple of weeks. for example, nissan was more important to the government. they said they would leave from their big plant if there wasn't a deal and that tipped the balance against fish. the u.k. government had to accept it wasn't reclining all the fish, nissan had to stay so now they was going to be a big
a batterynk to get factory within the u.k. and be in a position where we could meet the rules criteria for zero s, which means a battery factory in the u.k. and at the moment, we don't have any up and running. question, thenal government says it believes there will be an economic rebound after brexit. is that questionable and coronavirus is still happening so which areas would you see our actual areas the u.k. could do better than the european union? going to be tricky. we will have an economic rebound this year but that is related to covid. in terms of doing better than we've done before, there has to be a u.k. economic rebalancing after brexit. i think the worry is it will be away from manufacturing. that is the u.k.'s strength,
thatces but policy should politicians want us to focus on manufacturing. we hope to hear more on that in the coming months. maria: thank you so much for your time. thank you for joining us on bloomberg television, talking about the exit. thank you for joining us and doing the interview. anna? anna: maria, thank you. i promise we won't be talking about brexit every monday, just some. next, a new dawn. the u.k. and eu may have struck a trade deal. many questions remain for the city of london. we will speak to the ceo of a share trading platform. aquis.tform is we will talk to the next. . this is bloomberg. ♪
merger is nearing the finish line. the two carmakers are poised to get shareholders to sign off on the deal which would create the world's fourth-largest automaker. executives think it will boost returns and have greater resources to compete in electric cars. kesain, the owner of ladbro says an offer from mgm undervalues the company. offering 8.1 billion pounds 22% premium to the close , a on thursday. it formed a joint venture in 2018 to capitalize on online betting in the united states. entain is asking for more detail on the rationale behind the deal. the new york stock exchange is the listing three chinese telecom companies to comply with an executive order imposing restrictions on firms the u.s. says have links to the chinese military.
china mobile, china telecom, china unicom have no meaningful presence in the u.s. except for their listings. that is your bloomberg business flash. the u.k. and eu may have reached a trade deal, but it is a sideshow for london. its future rep -- rests on equivalence and questions remain unanswered on where it will be granted and what that will do to business. aqstair haines, the ceo of uis. forms a large portion of european share trading, but let me focus in on the amount of business you've fromshift just today london to paris. you set up an office in paris. how much business has shifted and what does that tell us about the way things play out from here? >> it is a fascinating day. inare the sixth largest firm
europe in turnover and do five percent market share. 75% of our business has been european business conducted in london and overnight, we've seen 95.6 percent of that business shift to europe so europe has clearly at this point in time won the battle to win its share trading back into eu 27. ist: how important, then, your foothold in london or your head office in london? you are the second biggest u.k. exchange that trades in eu shares. why bother with u.k.? why not move to paris? alasdair: we view things as a pan-european marketplace and that means we saw what happened to equivalence in switzerland and you can see 18 months ago, switzerland is not granted equivalence so it is important to be able to offer a single
platform to be able to trade on the pan-european stocks. we haveately, it means to operate to offices with the ability to trade any european share, u.k. or eu 27 shares in either of the markets we operate. that is absolutely critical. investors want to have the ability to be able to trade pan-european. the problem we've got with what is with theh brexit u.k. losing its passport and the trade obligation in europe, he you investors have to trade in europe and u.k. investors for european shares will either have to go to europe portrayed in london and you can see today the choice being made is they would rather trade those in europe, to be apears to me spectacular goal as britain is losing its strong position in the trading of european equities in london. anna: there are many parts of
financial services that have said it will be sad to lose the passport, but maybe we can get equivalents. ce make avalen difference in your line of work and do you see is coming? alasdair: we don't. we see a lot of talk from the government about how we can make britain better for investors and in a low tax environment, that might be achieved. to belence it is unlikely granted by the eu. negotiation toof get that and all this talk of equivalence in the next six months is dreamland. it will take years if ever for equivalence and what britain will do is start to change its rules to try and make it a more investor friendly and more issuer friendly environment to try and win business back, but
not necessarily to trade european equities in london. borisso you don't think johnson or whoever is prime minister, you don't think william russell or whoever is lord mayor, these people aren't going to fight for business? they aren't going to make any moves to try to get back some of this european share trading you point out? has shifted completely back to the continent? >> i think they would like to but it is difficult to shift liquidity. we've only seen it a few times in history. this horse has bolted so far, it is in a different stable. back, you have to do something revolutionary and i don't think that will happen over the next few months. they will try over the next few years. remember, the financial services industry has trade surplus in europe of 60 billion. that is larger than the united
states. it is an important business for the country, and losing the equities business here is an embarrassment. they will certainly try, but it is incredibly difficult to achieve. i guess the u.k. government might suggest there could be other more global opportunities away from where the share trading of european companies take place, green finance, growing bridges -- building bridges, is that an argument you would buy? alasdair: i absolutely would buy. make't think the fact ones a mistake but it is a mistake allowing european trading to move back to europe. just making a mistake doesn't finish london by any means. london has always been a strong financial center, incredibly innovative, and i'm convinced veryn will look at ways,
clever, innovative, technology driven ways to look at different opportunities around the globe. that's what it has to do. i think it is very sad for european investors, because when you fragment liquidity and at this point, we some fragmented liquidity, what you do is create a bigger cost for the end investor and that isn't in the interest of anybody. matt: how does the city of london grow, especially for your business, for aquis? alasdair: what we want to do, and we've recently become a primary market, what i want to do is make certain we see the public come back to public markets. let's make entrepreneurs and make it easier for people to issue their shares, list their shares, and raise capital in a cheaper environment. with the government needs to do is make certain the listing process, issuer process, trading process for retail and wholesale is easier than today and certainly cheaper than today. i have high hopes they can do that, but they can only do that
in a low tax environment, and what i'm really frightened about is when you read a lot in the media and a lot coming out of government about how they are having to raise taxes, things like capital gains tax going to is marginal tax rate frightening for an entrepreneur because an entrepreneur looking to invest in the u.k. doesn't want the government as a 45% partner when he sets up his business. anna: good to speak with you and get your perspective. alasdair haynes, aquis ceo. interesting to get his take on the way european share trading has been changed by the process. today, we are asking on the markets live blog which asset will perform the best in 2021? it could elicit some interesting responses. we will put that question to markets live experts. this is bloomberg. ♪
anna: welcome back to the european market opened, 53 minutes. into your trading day. joining us, heather burke, markets life editor. -- live editor. which asset will perform the best in 2021? if you could answer this for us, then we could save a lot of time in the rest of the year. what is your thinking? heather: good morning.
expect the s&p 500 to continue rallying into 2021, but it won't be anything like the run it had from march through the year-end. conditions are ripe for the stock market to run on the reflation trade, vaccine rollout, fresh stimulus, weak dollar but momentum is likely to slow. sensitive toade the impact of the pandemic, the , if more trade stimulus isn't forthcoming in a new biden administration, and since slowing is inevitable, the moreion is whether the risk on trade like small caps, value stocks will continue to lead or whether there is room for big tech to come back in and take the leaderboard. expect?at do you you've written pieces over the last couple of days pointing out small caps have the profit
growth and evaluation to support a continued rally, and we've also heard in the reflation trade is coming back, the rotation to value stocks has started. heather: definitely. small caps are expected to have better profit than the nasdaq 100. valuations also look more reasonable. the key question as we go into are they actually benefiting from the economic growth? as conditions are ripe, but we see the economic effects of the increased pandemic play out toward midyear with earnings, that is going to be a key question. anna: the tech sector got a lot of our attention in 2020. i wonder if that continues into 2021. tech ended a turbulent 2020 with a decent performance. what our expectations ahead? tech right now got a
bit of a bounce back toward the end of the year, kind of a move back into more havens. is, comes back to is the stay-at-home trade going to come bouncing back? what will possibly be the retail trading names that grab on? the real question is, it seems like it is going to be a battle with small caps to see who takes the reins and if markets turn more defensive, more risk off because of the economic recovery slows because of rising virus cases, tech is definitely likely to take a lead over more risky sectors. matt: great to get some insight from you, heather. heather burke, bloomberg and live editor. breed her combinations to the block -- contributions to the blog. that is it for the european open.